<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
JUNE 30, 1996 (IN THOUSANDS)
<CAPTION>
COMMON STOCKS - 89.8% SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
AGRICULTURE, FORESTRY & FISHING - 0.4%
AGRICULTURE - CROPS - 0.4%
RJR Nabisco Holdings Corp. (a) $ 12
------
- --------------------------------------------------------------------------------
CONSTRUCTION - 0.3%
HEAVY CONSTRUCTION - NON BUILDING CONSTRUCTION - 0.3%
Halliburton Co. (a) 11
------
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 17.1%
DEPOSITORY INSTITUTIONS - 7.7%
BankAmerica Corp. 1 68
Comerica, Inc. 2 71
Commerce Bancshares, Inc. (a) 14
Star Banc Corp. (a) 20
Zions Bancorp 1 65
------
238
------
INSURANCE CARRIERS - 2.3%
Cigna Corp. 1 71
------
NONDEPOSITORY CREDIT INSTITUTIONS - 1.5%
Beneficial Corp. 1 45
------
SECURITY BROKERS & DEALERS - 5.6%
Morgan Stanley Group, Inc. 1 64
Paine Webber Group, Inc. 2 57
Salomon, Inc. 1 40
T. Rowe Price Associates (a) 12
------
173
------
- --------------------------------------------------------------------------------
MANUFACTURING - 45.4%
CHEMICALS & ALLIED PRODUCTS - 14.3%
American Home Products Corp. 1 84
Avon Products, Inc. 1 63
Bristol-Myers Squibb Co. 1 72
Clorox Co. (a) 18
Monsanto Co. 1 16
Pfizer, Inc. (a) 14
Rhone-Poulenc Rorer, Inc. 1 74
Rohm & Haas Co. (a) 12
Schering-Plough Corp. 1 75
Warner-Lambert Co. (a) 11
------
439
------
</TABLE>
6
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
FABRICATED METAL - 3.6%
Harsco Corp. 1 $ 40
Stanley Works 2 71
------
111
------
FOOD & KINDRED PRODUCTS - 2.4%
Phillip Morris Co., Inc. 1 73
------
FURNITURE & FIXTURES - 1.9%
Hillenbrand Industries, Inc. 2 60
------
MACHINERY & COMPUTER EQUIPMENT - 1.5%
Baker Hughes, Inc. 1 16
Pentair, Inc. 1 15
Pitney Bowes, Inc. (a) 14
------
45
------
MEASURING & ANALYZING INSTRUMENTS - 1.7%
Eastman Kodak Co. (a) 8
Honeywell, Inc. 1 33
Mallinckrodt Group, Inc. (a) 12
------
53
------
PAPER PRODUCTS - 0.4%
Avery Dennison Corp. (a) 11
------
PETROLEUM REFINING - 8.2%
Ashland Oil, Inc. 2 67
Kerr-McGee Corp. (a) 12
Murphy Oil Corp. 1 54
Pennzoil Co. 1 28
Phillips Petroleum Co. (a) 13
Texaco, Inc. 1 67
Valero Energy Corp. 1 13
------
254
------
PRINTING & PUBLISHING - 4.2%
Gannett Co., Inc. 1 64
Washington Post Co. (a) 65
------
129
------
TOBACCO PRODUCTS - 0.4%
UST, Inc. (a) 14
------
</TABLE>
7
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<CAPTION>
COMMON STOCKS - CONT. SHARES VALUE
================================================================================
<S> <C> <C>
MANUFACTURING - CONT.
TRANSPORTATION EQUIPMENT - 6.8%
Chrysler Corp. 1 $ 62
Ford Motor Co. 1 16
TRW, Inc. 1 63
United Technologies Corp. 1 69
------
210
------
- --------------------------------------------------------------------------------
RETAIL TRADE - 4.8%
FOOD STORES - 1.3%
Giant Food, Inc. 1 39
------
GENERAL MERCHANDISE STORES - 3.5%
Mercantile Stores Co., Inc. 1 64
Sears, Roebuck & Co. 1 44
------
108
------
- --------------------------------------------------------------------------------
SERVICES - 3.2%
BUSINESS SERVICES - 2.8%
Equifax, Inc. 1 16
Omnicom Group, Inc. 2 70
------
86
------
ENGLISH, ACCOUNTING, RESEARCH & MANAGEMENT - 0.4%
Dun & Bradstreet Corp. (a) 13
------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 18.6%
COMMUNICATIONS - 2.2%
Southern New England
Telecommunications Corp. 2 67
------
ELECTRIC, GAS & SANITARY SERVICES - 1.7%
Illinova Corp. 1 14
MidAmerican Energy Co. 1 12
Panhandle Eastern Corp. (a) 13
Teco Energy, Inc. 1 13
------
52
------
ELECTRIC SERVICES - 8.5%
Allegheny Power System, Inc. 2 68
Boston Edison Co. 1 13
Carolina Power & Light Co. (a) 15
DQE, Inc. 1 14
Florida Progress Corp. (a) 14
Idaho Power Co. 1 16
</TABLE>
8
<PAGE>
<TABLE>
Investment Portfolio/June 30, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
Kansas City Power & Light Co. 1 $ 14
NIPSCO Industries, Inc. (a) 16
New England Electric System (a) 11
Portland General Corp. (a) 12
Scana Corp. 1 14
Texas Utilities Co. (a) 13
Unicom Corp. (a) 6
Union Electric Co. (a) 12
Washington Water Power Co. 1 13
Western Resources, Inc. (a) 12
------
263
------
GAS SERVICES - 6.2%
Consolidated Natural Gas Co. 1 73
MCN Corp. 1 15
NICOR, Inc. 1 23
National Fuel Gas Co. (a) 14
People's Energy Corp. 2 67
------
192
------
TOTAL INVESTMENTS - 89.8% (cost of $2,681) (b) 2,769
------
SHORT-TERM OBLIGATIONS - 8.3% PAR
- --------------------------------------------------------------------------------
Repurchase agreement with Chase Securities,
Inc., dated 6/28/96, due 07/01/96 at 5.400%
collateralized by U.S. Treasury notes with various
maturities to 1998, market value $261,(repurchase
proceeds $255) $255 255
------
OTHER ASSETS & LIABILITIES, NET - 1.9% 59
- --------------------------------------------------------------------------------
NET ASSETS - 100.0% $3,083
======
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Rounds to less than one.
(b) Cost for federal income tax purposes is the same.
</TABLE>
See notes to financial statements.
9
<PAGE>
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
JUNE 30, 1996
<S> <C> <C>
(in thousands except for per share amounts and footnotes)
ASSETS
Investments at value (cost $2,681) $2,769
Short-term obligations 255
------
3,024
Dividend receivable $8
Expense reimbursement due from Adviser 1
Deferred organization expenses 51
Other 1 61
-- ------
Total Assets 3,085
LIABILITIES
Accrued other 2
--
Total Liabilities 2
------
NET ASSETS $3,083
------
Net asset value & redemption price per share -
Class A ($2,569/250) $10.28
======
Maximum offering price per share - Class A
($10.28/0.9425) $10.91(a)
======
Net asset value & offering price per share -
Class B ($257/25) $10.26(b)
======
Net asset value & redemption price per share -
Class D ($257/25) $10.26(b)
======
Maximum offering price per share - Class D
($10.26/0.9900) $10.36
======
COMPOSITION OF NET ASSETS
Capital paid in $2,995
Undistributed net investment income 20
Accumulated net realized gain (20)
Net unrealized appreciation 88
------
$3,083
======
<FN>
(a) On sales of $50,000 or more the offering price is reduced.
(b) Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
</TABLE>
See notes to financial statements.
10
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1996 (a)
<S> <C> <C>
(in thousands)
INVESTMENT INCOME
Dividends $21
Interest 6
---
Total investment income 27
EXPENSES
Management fee $ 6
Service fee 2
Distribution fee - Class B (b)
Distribution fee - Class D (b)
Transfer agent 2
Bookkeeping fee 7
Registration fee (b)
Custodian fee 1
Legal fee 3
Amortization of deferred organization expenses 2
Other 1
----
24
Fees waived or borne by the Adviser (11) 13
---- ---
Net Investment Income 14
---
NET REALIZED & UNREALIZED GAIN (LOSS) ON PORTFOLIO POSITIONS
Net realized loss (19)
Net unrealized appreciation during the period 88
Net Gain ---- 69
---
Net Increase in Net Assets from Operations $83
===
<FN>
(a) The Fund commenced investment operations on March 25, 1996.
(b) Rounds to less than one.
</TABLE>
See notes to financial statements.
11
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Period ended
(in thousands) June 30
------------
INCREASE (DECREASE) IN NET ASSETS 1996 (a)
<S> <C>
Operations:
Net investment income $ 14
Net realized loss (19)
Net unrealized appreciation 88
------
Net Increase from Operations 83
Fund Share Transactions:
Receipts for shares sold - Class A 2,500
Receipts for shares sold - Class B 250
Receipts for shares sold - Class D 250
------
Net Increase from Fund Share Transactions 3,000
------
Total Increase 3,083
NET ASSETS
Beginning of period ------
End of period (including undistributed
net investment income of $20) $3,083
======
NUMBER OF FUND SHARES
Sold - Class A 250
------
Sold - Class B 25
------
Sold - Class D 25
------
<FN>
(a) The Fund commenced investment operations on March 25, 1996.
</TABLE>
See notes to financial statements.
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE 1. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: Colonial Equity Income Fund (the Fund), a series of Colonial Trust
VI, is a diversified portfolio of a Massachusetts business trust, registered
under the Investment Company Act of 1940, as amended, as an open-end, management
investment company. The Fund's objective is to seek current income and long-term
growth. The Fund may issue an unlimited number of shares. The Fund offers three
classes of shares: Class A, Class B and Class D. Class A shares are sold with a
front-end sales charge and Class B shares are subject to an annual distribution
fee and a contingent deferred sales charge. Class B shares will convert to Class
A shares when they have been outstanding approximately eight years. Class D
shares are subject to a reduced front-end sales charge, a contingent deferred
sales charge on redemptions made within one year after purchase, and a
continuing distribution fee.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of its financial statements.
SECURITY VALUATION AND TRANSACTIONS: Equity securities are valued at the last
sale price or, in the case of unlisted or listed securities for which there were
no sales during the day, at current quoted bid prices.
Forward currency contracts are valued based on the weighted value of the
exchange traded contracts with similar durations.
Short-term obligations with a maturity of 60 days or less are valued at
amortized cost.
The value of all assets and liabilities quoted in foreign currencies are
translated into U.S. dollars at that day's exchange rates.
Portfolio positions which cannot be valued as set forth above are valued at fair
value under procedures approved by the Trustees.
Security transactions are accounted for on the date the securities are
purchased, sold or mature.
Cost is determined and gains (losses) are based upon the specific identification
method for both financial statement and federal income tax purposes.
DETERMINATION OF CLASS NET ASSET VALUES AND FINANCIAL HIGHLIGHTS: All income,
expenses (other than the Class B and Class D distribution fees), realized and
unrealized gains (losses) are allocated to each class
13
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
NOTE 1. ACCOUNTING POLICIES - CONT.
================================================================================
proportionately on a daily basis for purposes of determining the net asset value
of each class.
Per share data was calculated using the average shares outstanding during the
period. In addition, Class B and Class D net investment income per share data
reflects the distribution fee applicable to Class B and Class D shares only.
Class B and Class D ratios are calculated by adjusting the expense and net
investment income ratios for the Fund for the entire period by the distribution
fees applicable to Class B and Class D shares only.
FEDERAL INCOME TAXES: Consistent with the Fund's policy to qualify as a
regulated investment company and to distribute all of its taxable income, no
federal income tax has been accrued.
INTEREST INCOME, DEBT DISCOUNT AND PREMIUM: Interest income is recorded on the
accrual basis. Original issue discount is accreted to interest income over the
life of a security with a corresponding increase in the cost basis; premium and
market discount are not amortized or accreted.
DEFERRED ORGANIZATION EXPENSES: The Fund incurred expenses of $53,387 in
connection with its organization, initial registration with the Securities and
Exchange Commission and with various states, and the initial public offering of
its shares. These expenses were deferred and are being amortized on a
straight-line basis over five years.
DISTRIBUTIONS TO SHAREHOLDERS: Distributions to shareholders are recorded on the
ex-date.
The amount and character of income and gains to be distributed are determined in
accordance with income tax regulations which may differ from generally accepted
accounting principles. Reclassifications are made to the Fund's capital accounts
to reflect income and gains available for distribution (or available capital
loss carryforwards) under income tax regulations.
FOREIGN CURRENCY TRANSACTIONS: Net realized and unrealized gains (losses) on
foreign currency transactions includes the fluctuation in exchange rates on
gains (losses) between trade and settlement dates on securities transactions,
gains (losses) arising from the disposition of foreign currency and currency
gains (losses) between the accrual and payment dates on dividends and interest
income and foreign withholding taxes.
The Fund does not distinguish that portion of gains (losses) on investments
which is due to changes in foreign exchange rates from that which is due to
changes in market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains (losses) on investments.
14
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
FORWARD CURRENCY CONTRACTS: The Fund may enter into forward currency contracts
to purchase or sell foreign currencies at predetermined exchange rates in
connection with the settlement of purchases and sales of securities. The Fund
may also enter into forward currency contracts to hedge certain other foreign
currency denominated assets. The contracts are used to minimize the exposure to
foreign exchange rate fluctuations during the period between trade and
settlement date of the contracts. All contracts are marked-to-market daily,
resulting in unrealized gains (losses) which become realized at the time the
forward currency contracts are closed or mature. Realized and unrealized gains
(losses) arising from such transactions are included in net realized and
unrealized gains (losses) on foreign currency transactions. Forward currency
contracts do not eliminate fluctuations in the prices of the Fund's portfolio
securities. While the maximum potential loss from such contracts is the
aggregate face value in U.S. dollars at the time the contract was opened,
exposure is typically limited to the change in value of the contract (in U.S.
dollars) over the period it remains open. Risks may also arise if counterparties
fail to perform their obligations under the contracts.
OTHER: Corporate actions are recorded on the ex-date (except for certain foreign
securities which are recorded as soon after ex-date as the Fund becomes aware of
such), net of nonrebatable tax withholdings. Where a high level of uncertainty
as to collection exists, income on securities is recorded net of all tax
withholdings with any rebates recorded when received.
The Fund's custodian takes possession through the federal book-entry system of
securities collateralizing repurchase agreements. Collateral is marked-to-market
daily to ensure that the market value of the underlying assets remains
sufficient to protect the Fund. The Fund may experience costs and delays in
liquidating the collateral if the issuer defaults or enters bankruptcy.
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES
================================================================================
MANAGEMENT FEE: Colonial Management Associates, Inc. (the Adviser) is the
investment Adviser of the Fund and furnishes accounting and other services and
office facilities for a monthly fee equal to 0.80% annually of the Fund's
average net assets.
BOOKKEEPING FEE: The Adviser provides bookkeeping and pricing services for
$27,000 per year plus 0.035% of the Fund's average net assets over $50 million.
TRANSFER AGENT: Colonial Investors Service Center, Inc. (the Transfer Agent), an
affiliate of the Adviser, provides shareholder services for a monthly fee equal
to 0.25% annually of the Fund's average net assets and receives a reimbursement
for certain out of pocket expenses.
15
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
NOTE 2. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
================================================================================
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. For the period ended June 30, 1996, the Fund has been
advised that the Distributor retained no net underwriting discounts on sales of
the Fund's Class A shares and received no contingent deferred sales charges on
Class B and Class D share redemptions.
The Fund has adopted a 12b-1 plan which requires it to pay the Distributor a
service fee equal to 0.25% annually of the Fund's net assets, as of the 20th of
each month. The plan also requires the payment of a distribution fee to the
Distributor equal to 0.75% annually of the average net assets attributable to
Class B shares and Class D shares only.
The CDSC and the fees received from the 12b-1 plan are used principally as
repayment to the Distributor for amounts paid by the Distributor to dealers who
sold such shares.
EXPENSE LIMITS: The Adviser has agreed, until further notice, to waive fees and
bear certain Fund expenses to the extent that total expenses (exclusive of
service fees, distribution fees, brokerage commissions, interest, taxes, and
extraordinary expenses, if any) exceed 1.30% annually of the Fund's average net
assets.
OTHER: The Fund pays no compensation to its officers, all of whom are employees
of the Adviser.
The Fund's Trustees may participate in a deferred compensation plan which may be
terminated at any time. Obligations of the plan will be paid solely out of the
Fund's assets.
NOTE 3. PORTFOLIO INFORMATION
================================================================================
INVESTMENT ACTIVITY: During the period ended June 30, 1996, purchases and sales
of investments, other than short-term obligations, were $3,136,615 and $436,376,
respectively.
<TABLE>
Unrealized appreciation (depreciation) at June 30, 1996, based on cost of
investments for both financial statement and federal income tax purposes was:
<S> <C>
Gross unrealized appreciation $114,217
Gross unrealized depreciation (25,763)
--------
Net unrealized appreciation $ 88,454
========
</TABLE>
OTHER: There are certain additional risks involved when investing in foreign
securities that are not inherent with investments in domestic securities. These
risks may involve foreign currency exchange rate fluctuations, adverse political
and economic developments and the possible prevention of foreign currency
exchange or the imposition of other foreign governmental laws or restrictions.
The Fund may focus its investments in certain industries, subjecting it to
greater risk than a fund that is more diversified.
16
<PAGE>
Notes to Financial Statements/June 30, 1996
- --------------------------------------------------------------------------------
NOTE 4. LINE OF CREDIT
================================================================================
The Fund may borrow up to 10% of its net assets under a line of credit for
temporary or emergency purposes. Any borrowings bear interest at one of the
following options determined at the inception of the loan: (1) federal funds
rate plus 1/2 of 1%, (2) the lending bank's base rate or (3) IBOR offshore loan
rate plus 1/2 of 1%. There were no borrowings under the line of credit during
the period ended June 30, 1996.
NOTE 5. OTHER RELATED PARTY TRANSACTIONS
================================================================================
At June 30, 1996, the Fund had one shareholder who owned greater than 5% of the
Fund's shares outstanding.
17
<PAGE>
FINANCIAL HIGHLIGHTS (b)
<TABLE>
Selected data for a share of each class outstanding throughout each
period are as follows:
<CAPTION>
Period ended
June 30
============================================
1996 (c)
Class A Class B Class D
======= ======= =======
<S> <C> <C> <C>
Net asset value -
Beginning of period $10.000 $10.000 $10.000
======= ======= =======
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a) 0.051 0.031 0.031
Net realized and
unrealized gain 0.229 0.229 0.229
------- ------- -------
Total from Investment
Operations 0.280 0.260 0.260
------- ------- -------
Net asset value -
End of period $10.280 $10.260 $10.260
======= ======= =======
Total return (d)(e) 3.42%(f) 3.22%(f) 3.22%(f)
======= ======= =======
RATIOS TO AVERAGE NET ASSETS
Expenses 1.55%(g)(h) 2.30%(g)(h) 2.30%(g)(h)
Fees and expenses waived
or borne by the Adviser 1.36%(g) 1.36%(g) 1.36%(g)
Net investment
income 1.90%(g)(h) 1.15%(g)(h) 1.15%(g)(h)
Portfolio turnover 16%(f) 16%(f) 16%(f)
Average commission rate $ 0.031 $ 0.031 $ 0.031
Net assets at end
of period (000) $ 2,569 $ 257 $ 257
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to:
$0.037 $0.037 $0.037
(b) Per share data was calculated using average shares outstanding during the period.
(c) The Fund commenced investment operations on March 25, 1996.
(d) Total return at net asset value assuming all distributions reinvested and no initial sales charge
or contingent deferred sales charge. The total return is calculated based on the effective date
of registration (March 31, 1996) with the SEC.
(e) If the Adviser had not waived or reimbursed a portion of expenses, total return would have been
reduced.
(f) Not annualized.
(g) Annualized.
(h) The benefits derived from custody credits and directed brokerage arrangements had no impact.
</TABLE>
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE TRUSTEES OF COLONIAL TRUST VI AND THE SHAREHOLDERS OF
COLONIAL EQUITY INCOME FUND
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Colonial Equity Income Fund (a
series of Colonial Trust VI) at June 30, 1996, the results of its operations,
the changes in its net assets and the financial highlights for the period from
March 25, 1996 (commencement of operations) through June 30, 1996 in conformity
with generally accepted accounting principles. These financial statements and
the financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of portfolio positions at June 30, 1996 by
correspondence with the custodian, provides a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 12, 1996
19
