<PAGE>
<TABLE>
INVESTMENT PORTFOLIO
DECEMBER 31, 1996 (UNAUDITED, IN THOUSANDS)
<CAPTION>
COMMON STOCKS - 89.9% SHARES VALUE
- --------------------------------------------------------------------------------
FINANCE, INSURANCE & REAL ESTATE - 22.7%
<S> <C> <C>
DEPOSITORY INSTITUTIONS - 15.0%
BankAmerica Corp. 1 $100
Banponce Corp. 1 37
Comerica, Inc. 1 31
Commerce Bancshares, Inc. (a) 19
Deposit Guaranty Corp. 2 50
Greenpoint Financial Corp. 2 90
Provident Bancorp, Inc. 1 41
Star Banc Corp. (a) 28
Washington Federal Savings & Loan Assoc. 1 13
Zions Bancorporation 1 94
----
503
----
INSURANCE CARRIERS - 6.0%
Cigna Corp. 1 96
Mercury General Corp. 2 89
Mid Ocean Ltd. (a) 16
----
201
----
SECURITY BROKERS & DEALERS - 1.7%
A.G. Edwards, Inc. (a) 13
Bear Stearns Co., Inc. 2 42
----
55
----
- --------------------------------------------------------------------------------
MANUFACTURING - 44.5%
CHEMICALS & ALLIED PRODUCTS - 8.9%
American Home Products Corp. 1 82
Bristol-Myers Squibb Co. 1 87
Pfizer, Inc. (a) 17
Rhone-Poulenc Rorer, Inc. 1 55
Schering-Plough Corp. 1 58
----
299
----
ELECTRONIC & ELECTRICAL EQUIPMENT - 0.7%
Hubbell, Inc., Class B 1 22
----
FOOD & KINDRED PRODUCTS - 6.4%
Campbell Soup Co. 1 64
Hershey Foods Corp. 2 70
Interstate Bakeries Corp. 2 79
----
213
----
</TABLE>
1
<PAGE>
<TABLE>
Investment Portfolio/December 31, 1996
<CAPTION>
- --------------------------------------------------------------------------------
COMMON STOCKS - CONT. SHARES VALUE
- --------------------------------------------------------------------------------
MANUFACTURING - CONT.
<S> <C> <C>
MACHINERY & COMPUTER EQUIPMENT - 1.7%
Baker Hughes, Inc. 1 $ 17
Caterpillar, Inc. (a) 22
Pitney Bowes, Inc. (a) 16
----
55
----
MEASURING & ANALYZING INSTRUMENTS - 1.4%
Eastman Kodak Co. (a) 8
Honeywell, Inc. 1 39
----
47
----
PAPER PRODUCTS - 1.9%
Mead Corp. 1 52
Potlatch Corp. (a) 13
----
65
----
PETROLEUM REFINING - 13.0%
Amerada Hess Corp. (a) 17
Atlantic Richfield Co. 1 66
Kerr-McGee Corp. 1 86
Murphy Oil Corp. 2 95
Pennzoil Co. 1 79
Phillips Petroleum Co. (a) 13
Texaco, Inc. 1 79
----
435
----
PRINTING & PUBLISHING - 6.6%
Central Newspapers, Inc. 2 88
Gannett Co., Inc. 1 67
Washington Post (a) 67
----
222
----
TRANSPORTATION EQUIPMENT - 3.9%
Chrysler Corp. 2 50
United Technologies Corp. 1 79
----
129
----
- --------------------------------------------------------------------------------
RETAIL TRADE - 7.9%
FOOD STORES - 4.6%
American Stores Co. 2 82
Giant Food Inc. 2 72
----
154
----
GENERAL MERCHANDISE STORES - 3.3%
Mercantile Stores Co., Inc. 1 69
Sears Roebuck & Co. 1 42
----
111
----
</TABLE>
2
<PAGE>
<TABLE>
Investment Portfolio/December 31, 1996
- --------------------------------------------------------------------------------
<CAPTION>
SERVICES - 2.5%
<S> <C> <C>
BUSINESS SERVICES
Omnicom Group, Inc. 2 $ 69
Sotheby's Holdings, Inc. 1 15
------
84
------
- --------------------------------------------------------------------------------
TRANSPORTATION, COMMUNICATION, ELECTRIC,
GAS & SANITARY SERVICES - 12.3%
ELECTRIC, GAS & SANITARY SERVICES - 0.4%
Teco Energy, Inc. 1 12
------
ELECTRIC SERVICES - 6.6%
Allegheny Power System, Inc. 2 67
American Electric Power Co., Inc. (a) 16
Carolina Power & Light Co. (a) 15
MidAmerican Energy Co. 1 11
New England Electric System (a) 10
Portland General Corp. (a) 17
Scana Corp. 1 13
Texas Utilities Co. 2 73
------
222
------
GAS SERVICES - 5.3%
Consolidated Natural Gas Co. 1 50
MCN Corp. (a) 12
Nicor, Inc. 1 29
PanEnergy Corp. (a) 18
Peoples Energy Corp. 2 68
------
177
------
TOTAL INVESTMENTS - 89.9% (cost of $2,689)(b) 3,006
------
SHORT-TERM OBLIGATIONS - 8.4% PAR
- --------------------------------------------------------------------------------
Repurchase agreement with Lehman Brothers, Inc.,
dated 12/31/96 due 01/02/97 at 6.900% collateralized
by U.S. Treasury notes with maturities to 2022,
market value $286 (repurchase proceeds $282) $ 282 282
------
OTHER ASSETS & LIABILITIES, NET - 1.7% 57
- ------------------------------------------------------------------------------
NET ASSETS - 100% $3,345
------
NOTES TO INVESTMENT PORTFOLIO:
- --------------------------------------------------------------------------------
(a) Rounds to less than one.
(b) Cost for federal income tax purposes is the same.
</TABLE>
3
<PAGE>
<TABLE>
STATEMENT OF ASSETS & LIABILITIES
DECEMBER 31, 1996 (UNAUDITED)
<CAPTION>
(in thousands except for per share amounts and footnotes)
<S> <C> <C>
ASSETS
Investments at value (cost $2,689) $ 3,006
Short-term obligations 282
-------
3,288
Dividend receivable $ 8
Deferred organization expenses 45
Other 5 58
------- -------
Total Assets 3,346
LIABILITIES
Payable to Adviser 1
-------
Total Liabilities 1
-------
NET ASSETS $ 3,345
=======
Net asset value & redemption price per share -
Class A ($2,791/254) $ 11.00
=======
Maximum offering price per share - Class A
($11.00/0.9425) $ 11.67(a)
=======
Net asset value & offering price per share -
Class B ($277/25) $ 11.00(b)
=======
Net asset value & redemption price per share -
Class D ($277/25) $ 11.00(b)
=======
Maximum offering price per share - Class D
($11.00/0.9900) $ 11.11
=======
COMPOSITION OF NET ASSETS
Capital paid in $ 3,034
Undistributed net investment income 2
Accumulated net realized loss (8)
Net unrealized appreciation 317
-------
$ 3,345
=======
<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.
4
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
<CAPTION>
FOR THE SIX MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED)
(in thousands)
<S> <C> <C>
INVESTMENT INCOME
Dividends $ 41
Interest 7
----
Total investment income 48
EXPENSES
Management fee $ 13
Service fee 4
Distribution fee - Class B 1
Distribution fee - Class D 1
Transfer agent 4
Bookkeeping fee 14
Trustees fee 4
Custodian fee 2
Audit fee 6
Legal fee 3
Amortization of deferred
organization expenses 6
Other 1
----
59
Fees and expenses waived or borne
by the Adviser (32) 27
---- ----
Net Investment Income 21
----
NET REALIZED & UNREALIZED GAIN ON PORTFOLIO POSITIONS
Net realized gain 12
Net unrealized appreciation during
the period 228
----
Net Gain 240
----
Net Increase in Net Assets from Operations $261
====
</TABLE>
See notes to financial statements.
5
<PAGE>
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<CAPTION>
(Unaudited)
Six months
ended Period ended
December 31 June 30
----------- ------------
(in thousands) 1996 1996(a)
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income $ 21 $ 12
Net realized gain (loss) 12 (20)
Net unrealized appreciation 228 109
------ ------
Net Increase from Operations 261 101
Distributions:
From net investment income - Class A (40) --
From net investment income - Class B (2) --
From net investment income - Class D (2) --
------ ------
217 --
------ ------
Fund Share Transactions:
Value of distributions reinvested - Class A 40 --
------ ------
Value of distributions reinvested - Class B 2 --
------ ------
Value of distributions reinvested - Class D 2 --
------ ------
Net Increase from Fund Share
Transactions 44 0
------ ------
Total Increase 261 101
NET ASSETS
Beginning of period 3,084 2,983
------ ------
End of period (including undistributed
net investment income of $2 and $20,
respectively) $3,345 $3,084
====== ======
NUMBER OF FUND SHARES
Issued for distributions reinvested - Class A 4 --
------ ------
Issued for distributions reinvested - Class B -- --
------ ------
Issued for distributions reinvested - Class D -- --
------ ------
<FN>
(a) The Fund commenced investment operations on March 25, 1996. The activity
shown is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
</TABLE>
See notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 (UNAUDITED)
NOTE 1. INTERIM FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In the opinion of management of Colonial Equity Income Fund (the Fund), a series
of Colonial Trust VI, the accompanying financial statements contain all normal
and recurring adjustments necessary for the fair presentation of the financial
position of the Fund at December 31, 1996, and the results of its operations,
the changes in its net assets and the financial highlights for the six months
then ended.
NOTE 2. ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
ORGANIZATION: The Fund 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 investment 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.
7
<PAGE>
NOTES TO FINANCIAL STATEMENTS/DECEMBER 31, 1996
- --------------------------------------------------------------------------------
NOTE 2. ACCOUNTING POLICIES - CONT.
- --------------------------------------------------------------------------------
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 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.
8
<PAGE>
Notes to Financial Statements/December 31, 1996
- --------------------------------------------------------------------------------
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.
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 3. 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.
9
<PAGE>
Notes to Financial Statements/December 31, 1996
- --------------------------------------------------------------------------------
NOTE 3. FEES AND COMPENSATION PAID TO AFFILIATES - CONT.
- --------------------------------------------------------------------------------
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 reimbursement
for certain out of pocket expenses.
UNDERWRITING DISCOUNTS, SERVICE AND DISTRIBUTION FEES: Colonial Investment
Services, Inc. (the Distributor), an affiliate of the Adviser, is the Fund's
principal underwriter. During the six months ended December 31, 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 4. PORTFOLIO INFORMATION
- --------------------------------------------------------------------------------
INVESTMENT ACTIVITY: During the six months ended December 31, 1996, purchases
and sales of investments, other than short-term obligations, were $1,447,046 and
$1,449,930, respectively.
Unrealized appreciation (depreciation) at December 31, 1996, based on cost of
investments for both financial statement and federal income tax purposes was
approximately:
<TABLE>
<S> <C>
Gross unrealized appreciation $346,000
Gross unrealized depreciation (29,000)
--------
Net unrealized appreciation $317,000
========
</TABLE>
10
<PAGE>
Notes to Financial Statements/December 31, 1996
- --------------------------------------------------------------------------------
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.
NOTE 5. 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 six months ended December 31, 1996.
NOTE 6. OTHER RELATED PARTY TRANSACTIONS
- --------------------------------------------------------------------------------
At December 31, 1996, Keyport Life Insurance Company owned 100% of the Fund's
shares outstanding.
NOTE 7. OTHER OPERATIONAL AND CAPITAL ACTIVITY
- --------------------------------------------------------------------------------
<TABLE>
For the period March 25, 1996 through March 31, 1996, the Fund had net
investment income of $2,655 and unrealized depreciation of $20,247. The
following is a summary of capital activity from March 25, 1996 through March 31,
1996.
<CAPTION>
Shares
<S> <C> <C>
Receipts for shares sold - Class A $2,500,000 250,000
Receipts for shares sold - Class B $ 250,000 25,000
Receipts for shares sold - Class D $ 250,000 25,000
</TABLE>
11
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
Selected data for a share of each class outstanding throughout the period are as follows:
<CAPTION>
(Unaudited)
Six months ended
December 31
-----------------------------------
1996
Class A Class B Class D
------- ------- -------
<S> <C> <C> <C>
Net asset value -
Beginning of period $10.280 $10.260 $10.260
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment
income (a)(b) 0.077 0.038 0.038
Net realized and
unrealized gain (b) 0.802 0.803 0.803
------- ------- -------
Total from Investment
Operations 0.879 0.841 0.841
------- ------- -------
LESS DISTRIBUTIONS DECLARED TO SHAREHOLDERS:
From net investment
income (0.159) (0.101) (0.101)
------- ------- -------
Net asset value -
End of period $11.000 $11.000 $11.000
======= ======= =======
Total return (d)(e) 8.55%(f) 8.10%(f) 8.10%(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 2.00%(g)(h) 2.00%(g)(h) 2.00%(g)(h)
Net investment
income 1.46%(g)(h) 0.71%(g)(h) 0.71%(g)(h)
Portfolio turnover 51%(f) 51%(f) 51%(f)
Average commission rate $0.0330 $0.0330 $0.0330
Net assets at end
of period (000) $ 2,791 $ 277 $ 277
<FN>
(a) Net of fees and expenses waived or borne by the Adviser which amounted to
$ 0.210 $ 0.210 $ 0.210
(b) Per share data was calculated using average shares outstanding during the period.
(c) The Fund commenced investment operations on March 25, 1996. The activity shown
is from the effective date of registration (March 31, 1996) with the
Securities and Exchange Commission.
(d) Total return at net asset value assuming all distributions reinvested
and no initial sales charge or contingent deferred sales charge.
</TABLE>
12
<PAGE>
FINANCIAL HIGHLIGHTS - CONT.
<TABLE>
Selected data for a share of each class outstanding throughout the period are as follows:
<CAPTION>
Period ended
June 30
-----------------------------------------
1996 (c)
Class A Class B Class D
------- ------- -------
<S> <C> <C>
$ 9.940 $ 9.940 $ 9.940
------- ------- -------
0.044 0.024 0.024
0.296 0.296 0.296
------- ------- -------
0.340 0.320 0.320
------- ------- -------
$10.280 $10.260 $10.260
======= ======= =======
3.42%(f) 3.22%(f) 3.22%(f)
======= ======= =======
1.55%(g)(h) 2.30%(g)(h) 2.30%(g)(h)
1.55%(g)(h) 1.55%(g)(h) 1.55%(g)(h)
1.77%(g)(h) 1.02%(g)(h) 1.02%(g)(h)
16%(f) 16%(f) 16%(f)
$0.0305 $0.0305 $0.0305
$ 2,570 $ 257 $ 257
$ 0.039 $ 0.039 $ 0.039
<FN>
(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>
13
