<PAGE>
DIRECTORS AND OFFICERS OF
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DONALD A. STEWART, Chairman and Director
C. JAMES PRIEUR, President and Director
S. CAESAR RABOY, Senior Vice President and
Deputy General Manager and Director
RICHARD B. BAILEY, Director
M. COLYER CRUM, Director
DAVID D. HORN, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
JOHN D. McNEIL, Director
MARGARET SEARS MEAD, Assistant Vice President
and Secretary
L. BROCK THOMSON, Vice President
and Treasurer
SUN LIFE ASSURANCE COMPANY
OF CANADA (U.S.)
CORPORATE MARKETS:
One Sun Life Executive Park
Wellesley Hills, MA 02481
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park, Wellesley Hills, MA 02481
LEGAL COUNSEL
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566, Washington, D.C. 20044-7566
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, Massachusetts 02110-1616
ACCOUNT INFORMATION
For account information, please call toll free:
1-800-752-7218 anytime from a touch-tone telephone.
To speak with a customer service representative,
please call toll free: 1-800-752-7215 any business
day from 8 a.m. to 6 p.m. Eastern time.
COLI 8/98
SUN LIFE CORPORATE VUL-SM-
SEMIANNUAL REPORT - JUNE 30, 1998
PROFESSIONALLY MANAGED LIFE INSURANCE ISSUED BY
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.),
A WHOLLY-OWNED SUBSIDIARY OF
SUN LIFE OF CANADA (U.S.) HOLDINGS, INC.
<PAGE>
PERFORMANCE SUMMARY
These performance results do not reflect any applicable surrender charges or
contract charges. Past performance is no guarantee of future results.
<TABLE>
<CAPTION>
Unit Value
------------------------------------
Beginning of Percent Change
Period June 30, 1998 in Unit Value
---------------- ----------------- --------------
<S> <C> <C> <C>
MFS/Sun Life Series Trust
Capital Appreciation Series Trust..... $10.0000* $11.9012 19.01%
Emerging Growth Series Trust.......... 11.0026 13.3323 21.17
Government Securities Series Trust.... 10.5688 10.9820 3.91
Total Return Series Trust............. 10.0000* 11.3838 13.84
World Growth Series Trust............. 10.5640 11.9372 13.00
Fidelity Variable Insurance Products
Fund
Equity Income Portfolio............... 10.9124 12.0614 10.53
Growth Portfolio...................... 10.2373 12.1954 19.13
High Income Portfolio................. 10.0000* 11.1446 11.45
Money Market Portfolio................ 10.5701 10.8479 2.63
Fidelity Variable Insurance Products
Fund II
Contrafund Portfolio.................. 11.0288 12.8746 16.74
Index 500 Portfolio................... 11.5522 13.5650 17.42
Neuberger & Berman Advisers Management
Trust
Limited Maturity Bond Portfolio....... 10.3519 10.6109 2.50
Partners Portfolio.................... 10.6022 11.2352 5.97
J.P. Morgan Series Trust II
JP Morgan Bond Portfolio.............. 10.6129 11.0235 3.87
JP Morgan Equity Portfolio............ 10.0000* 11.7313 17.31
JP Morgan Small Company Portfolio..... 10.0000* 11.4523 14.52
Templeton Variable Products Series Fund
Templeton Stock Fund: Class 1......... 9.6304 10.6539 10.63
</TABLE>
*Unit value on the date of commencement of operations of the Sub-Account.
1
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CONDITION -- June 30, 1998
<TABLE>
<CAPTION>
Assets:
Shares Cost Value
----------- -------------- --------------
Investment in MFS/Sun Life Series Trust:
<S> <C> <C> <C>
Capital Appreciation Series ("CAS").............................................. 1,878 $ 85,990 $ 80,350
Emerging Growth Series ("EGS")................................................... 925 18,783 19,486
Government Securities Series ("GSS")............................................. 13,163 170,752 168,485
Total Return Series ("TRS")...................................................... 29,346 638,304 607,173
World Growth Series ("WGO")...................................................... 49,165 743,601 759,113
<CAPTION>
Investments in Fidelity Variable Insurance Products Fund:
<S> <C> <C> <C>
Equity Income Portfolio ("FEI").................................................. 64,862 1,540,683 1,632,566
Growth Portfolio ("FGP")......................................................... 39,448 1,360,252 1,511,649
High Income Portfolio ("FHI").................................................... 2,445 30,530 30,885
Money Market Portfolio ("FMM")................................................... 521,728 521,728 521,728
<CAPTION>
Investments in Fidelity Variable Insurance Products Fund II:
<S> <C> <C> <C>
Contrafund Portfolio ("FCN")..................................................... 2,534 53,189 55,619
Index 500 Portfolio ("FIP")...................................................... 30,275 3,568,193 3,913,078
<CAPTION>
Investments in Neuberger & Berman Advisers Management Trust:
<S> <C> <C> <C>
Limited Maturity Bond Portfolio ("NLM").......................................... 3,676 49,534 49,887
Partners Portfolio ("NPP")....................................................... 46,388 971,073 892,960
<CAPTION>
Investments in J.P. Morgan Series Trust II
<S> <C> <C> <C>
JP Morgan Bond Portfolio ("JBP")................................................. 60,049 691,601 701,370
JP Morgan Equity Portfolio ("JEP")............................................... 9,150 145,783 148,878
JP Morgan Small Company Portfolio ("JSC")........................................ 20,929 288,401 282,964
<CAPTION>
Investments in Templeton Variable Products Series Fund:
<S> <C> <C> <C>
Templeton Stock Fund: Class 1 ("TSF")............................................ 16,318 385,821 375,635
-------------- --------------
Net Assets................................................................................ $ 11,264,218 $ 11,751,826
-------------- --------------
-------------- --------------
</TABLE>
<TABLE>
<CAPTION>
Units Unit Value Value
---------- ---------- ------------
<S> <C> <C> <C>
CAS.................................... 6,751 $11.9012 $ 80,350
EGS.................................... 1,462 13.3323 19,486
GSS.................................... 15,342 10.9820 168,485
TRS.................................... 53,337 11.3838 607,173
WGO.................................... 63,592 11.9372 759,113
FEI.................................... 135,355 12.0614 1,632,566
FGP.................................... 123,952 12.1954 1,511,649
FHI.................................... 2,771 11.1446 30,885
FMM.................................... 38,087 10.8479 413,249
FCN.................................... 4,320 12.8746 55,619
FIP.................................... 288,469 13.5650 3,913,078
NLM.................................... 4,702 10.6109 49,887
NPP.................................... 79,479 11.2352 892,960
JBP.................................... 63,625 11.0235 701,370
JEP.................................... 12,691 11.7313 148,878
JSC.................................... 24,708 11.4523 282,964
TSF.................................... 35,258 10.6539 375,635
------------
Net Assets Applicable to Contract
Owners..................................... 11,643,347
------------
Net Assets Applicable to Sponsor
(FMM)...................................... 10,000 10.8479 108,479
------------
Total Net Assets........................................... $ 11,751,826
------------
------------
</TABLE>
See notes to financial statements
2
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENT OF OPERATIONS -- Six Months Ended June 30, 1998
<TABLE>
<CAPTION>
CAS EGS GSS TRS WGO FEI
Sub-Account* Sub-Account Sub-Account Sub-Account** Sub-Account Sub-Account
------------- ------------ ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.......... $ 7,994 $ 598 $ 8,657 $ 64,091 $39,888 $ 821
------------- ------ ------------ --------------- ------------ ------------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains (losses) on
investment transactions:
Proceeds from sales............ $ 1,224 $ 309 $ 3,533 $202,362 $11,254 $56,572
Cost of investments sold....... 1,328 245 3,389 192,281 9,742 52,064
------------- ------ ------------ --------------- ------------ ------------
Net realized gains
(losses).................... $ (104) $ 64 $ 144 $ 10,081 $ 1,512 $ 4,508
------------- ------ ------------ --------------- ------------ ------------
Net unrealized appreciation
(depreciation) on investments:
End of period.................. $(5,640) $ 703 $(2,267) $(31,131) $15,512 $91,883
Beginning of period............ -- 257 499 -- 10,955 1,079
------------- ------ ------------ --------------- ------------ ------------
Change in unrealized
appreciation
(depreciation).............. $(5,640) $ 446 $(2,766) $(31,131) $ 4,557 $90,804
------------- ------ ------------ --------------- ------------ ------------
Realized and unrealized gains
(losses)...................... $(5,744) $ 510 $(2,622) $(21,050) $ 6,069 $95,312
------------- ------ ------------ --------------- ------------ ------------
INCREASE IN NET ASSETS FROM
OPERATIONS....................... $ 2,250 $ 1,108 $ 6,035 $ 43,041 $45,957 $96,133
------------- ------ ------------ --------------- ------------ ------------
------------- ------ ------------ --------------- ------------ ------------
<CAPTION>
FGP FHI
Sub-Account Sub-Account**
-------------- --------------
<S> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.......... $ 34,173 $ --
-------------- -----
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains (losses) on
investment transactions:
Proceeds from sales............ $ 84,558 $792
Cost of investments sold....... 85,026 779
-------------- -----
Net realized gains
(losses).................... $ (468) $ 13
-------------- -----
Net unrealized appreciation
(depreciation) on investments:
End of period.................. $151,397 $355
Beginning of period............ 1,530 --
-------------- -----
Change in unrealized
appreciation
(depreciation).............. $149,867 $355
-------------- -----
Realized and unrealized gains
(losses)...................... $149,399 $368
-------------- -----
INCREASE IN NET ASSETS FROM
OPERATIONS....................... $183,572 $368
-------------- -----
-------------- -----
</TABLE>
* For the period April 23, 1998 (commencement of operations of Sub-Account)
through June 30, 1998.
** For the period February 11, 1998 (commencement of operations of Sub-Account)
through June 30, 1998.
See notes to financial statements
3
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENTS OF OPERATIONS -- Six Months Ended June 30, 1998 -- continued
<TABLE>
<CAPTION>
FMM FCN FIP NLM NPP JBP
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
--------------- --------------- -------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 19,634 $ 382 $48,449 $167 $ 97,246 $1,488
--------------- ------ -------- ----- ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions
Proceeds from sales................. $4,174,696 $ 843 $413,795 $785 $ 83,944 3$36,101
Cost of investments sold............ 4,174,696 718 325,742 793 84,685 329,880
--------------- ------ -------- ----- ----------- -----------
Net realized gains (losses)......... $ -- $ 125 $88,053 $ (8) $ (741 ) $6,221
--------------- ------ -------- ----- ----------- -----------
Net unrealized appreciation
(depreciation) on investments
End of period....................... $ -- $ 2,430 $344,885 $353 $ (78,113 ) $9,769
Beginning of period................. -- 609 102,939 90 960 (95)
--------------- ------ -------- ----- ----------- -----------
Change in unrealized appreciation
(depreciation)................... $ -- $ 1,821 $241,946 $263 $ (79,073 ) $9,864
--------------- ------ -------- ----- ----------- -----------
Realized and unrealized gains
(losses)........................... $ -- $ 1,946 $329,999 $255 $ (79,814 ) $16,085
--------------- ------ -------- ----- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................ $ 19,634 $ 2,328 $378,448 $422 $ 17,432 $17,573
--------------- ------ -------- ----- ----------- -----------
--------------- ------ -------- ----- ----------- -----------
<CAPTION>
JEP JSC
Sub-Account** Sub-Account**
-------------- --------------
<S> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 706 $ 4,278
-------------- -------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions
Proceeds from sales................. $115,773 $ 8,135
Cost of investments sold............ 105,713 7,750
-------------- -------
Net realized gains (losses)......... $ 10,060 $ 385
-------------- -------
Net unrealized appreciation
(depreciation) on investments
End of period....................... $ 3,095 $ (5,437)
Beginning of period................. -- --
-------------- -------
Change in unrealized appreciation
(depreciation)................... $ 3,095 $ (5,437)
-------------- -------
Realized and unrealized gains
(losses)........................... $ 13,155 $ (5,052)
-------------- -------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................ $ 13,861 $ (774)
-------------- -------
-------------- -------
</TABLE>
** For the period February 11, 1998 (commencement of operations of Sub-Account)
through June 30, 1998.
See notes to financial statements
4
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENTS OF OPERATIONS -- Six Months Ended June 30, 1998 -- continued
<TABLE>
<CAPTION>
TSF
Sub-Account Total
------------ -----------
<S> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 22,221 $ 350,793
------------ -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions
Proceeds from sales................. $ 6,704 $5,501,380
Cost of investments sold............ 6,886 5,381,717
------------ -----------
Net realized gains (losses)......... $ (182) $ 119,663
------------ -----------
Net unrealized appreciation
(depreciation) on investments
End of period....................... $(10,186) $ 487,608
Beginning of period................. (766) 118,057
------------ -----------
Change in unrealized appreciation
(depreciation).................... $ (9,420) $ 369,551
------------ -----------
Realized and unrealized gains
(losses)........................... $ (9,602) $ 489,214
------------ -----------
INCREASE IN NET ASSETS FROM
OPERATIONS............................ $ 12,619 $ 840,007
------------ -----------
------------ -----------
</TABLE>
See notes to financial statements
5
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EGS
CAS Sub-Account GSS
Sub-Account ----------------------- Sub-Account
----------- Six -------------------------
Period Months Period Six Months
Ended Ended Ended Ended Period Ended
June 30, June 30, Dec. 31, June 30, Dec. 31,
1998* 1998 1997 1998 1997
----------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income..................................... $ 7,994 $ 598 $-- $ 8,657 $ --
Net realized gains (losses)............................... (104) 64 6 144 2
Net unrealized gains (losses)............................. (5,640) 446 257 (2,766) 499
----------- --------- ----------- ---------- ------------
Increase in net assets from operations.................. $ 2,250 $ 1,108 $ 263 $ 6,035 $ 501
----------- --------- ----------- ---------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Premium payments received............................... $ 10,390 $ 2,077 $ 2,617 $ 9,729 $ 2,618
Net transfers between Sub-Accounts...................... 68,939 13,788 -- -- 153,244
Policy and contract deductions............................ (1,229) (310) (57) (3,582) (60)
----------- --------- ----------- ---------- ------------
Increase in net assets from contract owner transactions... $ 78,100 $15,555 $ 2,560 $ 6,147 $155,802
----------- --------- ----------- ---------- ------------
Increase in net assets.................................. $ 80,350 $16,663 $ 2,823 $ 12,182 $156,303
----------- --------- ----------- ---------- ------------
NET ASSETS:
Beginning of period....................................... -- 2,823 -- 156,303 --
----------- --------- ----------- ---------- ------------
End of period............................................. $ 80,350 $19,486 $ 2,823 $ 168,485 $156,303
----------- --------- ----------- ---------- ------------
----------- --------- ----------- ---------- ------------
</TABLE>
* For the period April 23, 1998 (commencement of operations of Sub-Account)
through June 30, 1998.
See notes to financial statements
6
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
WGO
TRS Sub-Account FEI
Sub-Account ----------------------- Sub-Account
----------- Six -------------------------
Period Months Period Six Months
Ended Ended Ended Ended Period Ended
June 30, June 30, Dec. 31, June 30, Dec. 31,
1998** 1998 1997 1998 1997
----------- --------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income..................................... $ 64,091 $39,888 $-- $ 821 $ --
Net realized gains........................................ 10,081 1,512 303 4,508 12
Net unrealized gains (losses)............................. (31,131) 4,557 10,956 90,804 1,079
----------- --------- ----------- ---------- ------------
Increase in net assets from operations.................. $ 43,041 $45,957 $11,259 $ 96,133 $ 1,091
----------- --------- ----------- ---------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Premium payments received............................... $661,051 $517,291 $200,129 $1,537,502 $ 12,040
Net transfers between Sub-Accounts...................... (81,369) 1,174 -- 19,173 --
Policy and contract deductions............................ (15,550) (11,567) (5,130) (33,146) (227)
----------- --------- ----------- ---------- ------------
Increase in net assets from contract owner transactions... $564,132 $506,898 $194,999 $1,523,529 $ 11,813
----------- --------- ----------- ---------- ------------
Increase in net assets.................................. $607,173 $552,855 $206,258 $1,619,662 $ 12,904
----------- --------- ----------- ---------- ------------
NET ASSETS:
Beginning of period....................................... -- 206,258 -- 12,904 --
----------- --------- ----------- ---------- ------------
End of period............................................. $607,173 $759,113 $206,258 $1,632,566 $ 12,904
----------- --------- ----------- ---------- ------------
----------- --------- ----------- ---------- ------------
</TABLE>
** For the period February 11, 1998 (commencement of operations of Sub-Account)
through June 30, 1998.
See notes to financial statements
7
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
FGP FHI FMM
Sub-Account Sub-Account Sub-Account
------------------------ ----------- -----------
Six Months Period Six Months
Ended Period Ended Ended Ended
June 30, Dec. 31, June 30, June 30,
1998 1997 1998** 1998
---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 34,173 $ -- $-- $ 19,634
Net realized gains (losses)................................................ (468) -- 13 --
Net unrealized gains....................................................... 149,867 1,529 355 --
---------- ------------ ----------- -----------
Increase in net assets from operations................................... $ 183,572 $ 1,529 $ 368 $ 19,634
---------- ------------ ----------- -----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Premium payments received................................................ $1,134,362 $ -- $25,065 $ 1,420,767
Net transfers between Sub-Accounts....................................... (22,171) 245,191 6,285 (1,005,414)
Policy and contract deductions............................................. (30,824) (10) (833) (18,960)
---------- ------------ ----------- -----------
Increase (decrease) in net assets from contract owner transactions......... $1,081,367 $245,181 $30,517 $ 396,393
---------- ------------ ----------- -----------
Increase in net assets................................................... $1,264,939 $246,710 $30,885 $ 416,027
---------- ------------ ----------- -----------
NET ASSETS:
Beginning of period........................................................ 246,710 -- -- 105,701
---------- ------------ ----------- -----------
End of period.............................................................. $1,511,649 $246,710 $30,885 $ 521,728
---------- ------------ ----------- -----------
---------- ------------ ----------- -----------
<CAPTION>
Period Ended
Dec. 31,
1997
------------
<S> <C>
OPERATIONS:
Net investment income...................................................... $ 8,584
Net realized gains (losses)................................................ --
Net unrealized gains....................................................... --
------------
Increase in net assets from operations................................... $ 8,584
------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Premium payments received................................................ $ 612,754
Net transfers between Sub-Accounts....................................... (612,977)
Policy and contract deductions............................................. (2,776)
------------
Increase (decrease) in net assets from contract owner transactions......... ($ (2,999)
------------
Increase in net assets................................................... $ 5,585
------------
NET ASSETS:
Beginning of period........................................................ 100,116
------------
End of period.............................................................. $ 105,701
------------
------------
</TABLE>
** For the period February 11, 1998 (commencement of operations of Sub-Account)
through June 30, 1998.
See notes to financial statements
8
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
FCN FIP
Sub-Account Sub-Account
------------------------- ------------------------
Six Months Six Months
Ended Period Ended Ended Period Ended
June 30, Dec. 31, June 30, Dec. 31,
1998 1997 1998 1997
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 382 $ -- $ 48,449 $ --
Net realized gains (losses)................................................ 125 8 88,053 2,026
Net unrealized gains....................................................... 1,821 608 241,946 102,937
---------- ------------ ---------- ------------
Increase in net assets from operations................................... $ 2,328 $ 616 $ 378,448 $104,963
---------- ------------ ---------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Premium payments received................................................ $ 47,597 $ 6,022 $2,651,926 $897,270
Net transfers between Sub-Accounts....................................... 22 -- 341,070 --
Policy and contract deductions............................................. (847) (119) (436,374) (24,225)
---------- ------------ ---------- ------------
Increase in net assets from contract owner transactions.................... $ 46,772 $ 5,903 $2,556,622 $873,045
---------- ------------ ---------- ------------
Increase in net assets................................................... $ 49,100 $ 6,519 $2,935,070 $978,008
---------- ------------ ---------- ------------
NET ASSETS:
Beginning of period........................................................ 6,519 -- 978,008 --
---------- ------------ ---------- ------------
End of period.............................................................. $ 55,619 $ 6,519 $3,913,078 $978,008
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
<CAPTION>
NLM
Sub-Account
-------------------------
Six Months
Ended Period Ended
June 30, Dec. 31,
1998 1997
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 167 $ --
Net realized gains (losses)................................................ (8) 1
Net unrealized gains....................................................... 263 90
----------- ------------
Increase in net assets from operations................................... $ 422 $ 91
----------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Premium payments received................................................ $ 6,233 $ 2,617
Net transfers between Sub-Accounts....................................... 41,363 --
Policy and contract deductions............................................. (787) (52)
----------- ------------
Increase in net assets from contract owner transactions.................... $ 46,809 $ 2,565
----------- ------------
Increase in net assets................................................... $ 47,231 $ 2,656
----------- ------------
NET ASSETS:
Beginning of period........................................................ 2,656 --
----------- ------------
End of period.............................................................. $ 49,887 $ 2,656
----------- ------------
----------- ------------
</TABLE>
See notes to financial statements
9
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
NPP JBP JEP
Sub-Account Sub-Account Sub-Account
------------------------- ------------------------ ------------
Six Months Six Months Six Months
Ended Period Ended Ended Period Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30,
1998 1997 1998 1997 1998**
---------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income..................................... $ 97,246 $ -- $ 1,488 $ 1,837 $ 706
Net realized gains (losses)............................... (741) -- 6,221 44 10,060
Net unrealized gains (losses)............................. (79,073) 960 9,864 (95) 3,095
---------- ------------ ---------- ------------ ------------
Increase in net assets from operations.................. $ 17,432 $ 960 $ 17,573 $ 1,786 $ 13,861
---------- ------------ ---------- ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Premium payments received............................... $541,199 $ -- $ 906,413 $68,356 $ 217,641
Net transfers between Sub-Accounts...................... 230,022 122,595 27,517 30,649 (78,746)
Policy and contract deductions............................ (19,243) (5) (349,347) (1,577) (3,878)
---------- ------------ ---------- ------------ ------------
Increase in net assets from contract owner transactions... $751,978 $122,590 $ 584,583 $97,428 $ 135,017
---------- ------------ ---------- ------------ ------------
Increase in net assets.................................... $769,410 $123,550 $ 602,156 $99,214 $ 148,878
---------- ------------ ---------- ------------ ------------
NET ASSETS:
Beginning of period....................................... 123,550 -- 99,214 -- --
---------- ------------ ---------- ------------ ------------
End of period............................................. $892,960 $123,550 $ 701,370 $99,214 $ 148,878
---------- ------------ ---------- ------------ ------------
---------- ------------ ---------- ------------ ------------
</TABLE>
** For the period February 11, 1998 (commencement of operations of Sub-Account)
through June 30, 1998.
See notes to financial statements
10
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
TSF
JSC Sub-Account
Sub-Account ------------------------ Total
----------- Six -----------------------
Six Months Months Six Months
Ended Ended Period Ended Ended Year Ended
June 30, June 30, Dec. 31, June 30, Dec. 31,
1998** 1998 1997 1998 1997
----------- --------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income..................................... $ 4,278 $22,221 $-- $ 350,793 $ 10,421
Net realized gains (losses)............................... 385 (182 ) (2) 119,663 2,400
Net unrealized gains (losses)............................. (5,437) (9,420 ) (766) 369,551 118,054
----------- --------- ------------ ----------- ----------
Increase (decrease) in net assets from operations....... $ (774) $12,619 $ (768) $ 840,007 $ 130,875
----------- --------- ------------ ----------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Premium payments received............................... $137,853 $33,309 $19,632 $ 9,860,405 $1,824,055
Net transfers between Sub-Accounts...................... 152,776 256,714 61,298 (28,857) --
Policy and contract deductions............................ (6,891) (6,832 ) (337) (940,200) (34,575)
----------- --------- ------------ ----------- ----------
Increase in net assets from contract owner transactions... $283,738 $283,191 $80,593 $ 8,891,348 $1,789,480
----------- --------- ------------ ----------- ----------
Increase in net assets.................................. $282,964 $295,810 $79,825 $ 9,731,355 $1,920,355
----------- --------- ------------ ----------- ----------
NET ASSETS:
Beginning of period....................................... -- 79,825 -- 2,020,471 100,116
----------- --------- ------------ ----------- ----------
End of period............................................. $282,964 $375,635 $79,825 $11,751,826 $2,020,471
----------- --------- ------------ ----------- ----------
----------- --------- ------------ ----------- ----------
</TABLE>
** For the period February 11, 1998 (commencement of operations of Sub-Account)
through June 30, 1998.
See notes to financial statements
11
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life of Canada (U.S.) Variable Account G (the "Variable Account"), a
separate account of Sun Life Assurance Company of Canada (U.S.), the Sponsor,
was established on July 25, 1996 as a funding vehicle for the variable portion
of certain individual variable life insurance contracts. The Variable Account is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 as a unit investment trust.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account is invested in shares of a single corresponding investment portfolio
of one of the following mutual funds: MFS/Sun Life Series Trust, Fidelity
Variable Insurance Products Fund, Fidelity Variable Insurance Products Fund II,
Neuberger & Berman Advisers Management Trust, J.P. Morgan Series Trust II,
Dreyfus Variable Investment Fund, T. Rowe Price Equity Series, Inc. and
Templeton Variable Products Series Fund.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
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.
INVESTMENT VALUATIONS
Investments in shares of an investment portfolio of the mutual funds are
recorded at their net asset value. Realized gains and losses on sales of shares
are determined on the identified cost basis. Dividend income and capital gain
distributions received by the Sub-Accounts are reinvested in additional shares
and are recognized on the ex-dividend date.
Exchanges between Sub-Accounts requested by contract owners are recorded in the
new Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately; the Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not subject to
tax.
(3) CONTRACT CHARGES
The Sponsor deducts expense charges applied to premium consisting of the premium
tax, the DAC tax and the sales load. The premium tax varies by state but in
general will range from 2% to 4% of premium in most
12
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
NOTES TO FINANCIAL STATEMENTS -- continued
states (Kentucky charges 7%). The DAC tax is 1.25% of premium. The sales load is
8.75% of premium up to target premium and 2.25% of premium in excess of target
premium. A portion of the sales load is refunded for surrenders in the first
three policy years.
The Sponsor deducts certain charges from the account value of each contract,
through the cancellation of units, on a monthly basis. A monthly expense charge
of $13.75 per policy at the beginning of each month during the first policy year
and $7.50 for months thereafter is deducted to recover certain administration
expenses. The Sponsor also deducts a charge at the end of each policy month for
providing life insurance protection. This charge will be based upon the
Sponsor's expectations of future mortality, persistency, interest rates,
expenses and taxes. However, the maximum rates for the base death benefit for
insureds that are not rated substandard risks will not exceed those based on the
1980 CSO Mortality Tables, and the maximum rates for the APB rider death benefit
for similar insureds will not exceed those based on 125% of the 1980 CSO
Mortality Tables.
The Sponsor deducts certain charges from the account value of each contract,
through the cancellation of units, at the end of each valuation period for the
mortality and expense risks assumed by the Sponsor. The daily deduction is
currently .0020471% (which is equivalent to an annual rate of .75%) for policies
in their first ten policy years and .0009572% (which is equivalent to an annual
rate of .35%) for policies in policy year eleven and beyond.
13
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT G
NOTES TO FINANCIAL STATEMENTS -- continued
(4) UNIT ACTIVITY
<TABLE>
<CAPTION>
Units transferred
between Sub-Accounts
Units Outstanding and
Beginning of Period Units purchased Fixed Account
----------------------- ----------------------- -----------------------
Six Months Period Six Months Period Six Months Period
Ended Ended Ended Ended Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31,
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SUB-ACCOUNTS
------------------------------
CAS........................... -- -- 912 -- 5,945 --
EGS........................... 257 -- 164 262 1,066 --
GSS........................... 14,789 -- 886 262 -- 14,533
TRS........................... -- -- 61,600 -- (6,993) --
WGO........................... 19,523 -- 43,928 20,005 1,120 --
FEI........................... 1,182 -- 135,674 1,204 1,266 --
FGP........................... 24,099 -- 104,875 -- (2,339) 24,100
FHI........................... -- -- 2,263 -- 570 --
FMM........................... -- -- 134,181 58,312 (94,400) (58,312)
FCN........................... 591 -- 503 602 3,293 --
FIP........................... 84,660 -- 209,922 86,851 27,044 --
NLM........................... 257 -- 592 262 3,930 --
NPP........................... 11,653 -- 48,484 -- 21,023 11,654
JBP........................... 9,348 -- 83,916 6,603 2,582 2,896
JEP........................... -- -- 19,370 -- (6,422) --
JSC........................... -- -- 11,895 -- 13,297 --
TFS........................... 8,289 -- 3,152 1,963 24,461 6,360
---------- ---------- ---------- ---------- ---------- ----------
Unit Activity
Applicable to Contract
owners....................... 174,648 -- 862,317 176,326 (4,557) 1,231
---------- ---------- ---------- ---------- ---------- ----------
Unit Activity
From Sponsor Transactions..... 10,000 10,000 -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Unit Activity........... 184,648 10,000 862,317 176,326 (4,557) 1,231
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
<CAPTION>
Units withdrawn,
surrendered,
annuitizations and
canceled for Units outstanding
contract charges end of Period
----------------------- -----------------------
Six Months Period Six Months Period
Ended Ended Ended Ended
June 30, Dec. 31, June 30, Dec. 31,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SUB-ACCOUNTS
------------------------------
CAS........................... (106) -- 6,751 --
EGS........................... (25) (5) 1,462 257
GSS........................... (333) (6) 15,342 14,789
TRS........................... (1,270) -- 53,337 --
WGO........................... (979) (482) 63,592 19,523
FEI........................... (2,767) (22) 135,355 1,182
FGP........................... (2,683) (1) 123,952 24,099
FHI........................... (62) -- 2,771 --
FMM........................... (1,694) -- 38,087 --
FCN........................... (67) (11) 4,320 591
FIP........................... (33,157) (2,191) 288,469 84,660
NLM........................... (77) (5) 4,702 257
NPP........................... (1,681) (1) 79,479 11,653
JBP........................... (32,221) (151) 63,625 9,348
JEP........................... (257) -- 12,691 --
JSC........................... (484) -- 24,708 --
TFS........................... (644) (34) 35,258 8,289
---------- ---------- ---------- ----------
Unit Activity
Applicable to Contract
owners....................... (78,507) (2,909) 953,901 174,648
---------- ---------- ---------- ----------
Unit Activity
From Sponsor Transactions..... -- -- 10,000 10,000
---------- ---------- ---------- ----------
Total Unit Activity........... (78,507) (2,909) 963,901 184,648
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners participating in Sun Life of Canada (U.S.) Variable
Account G and the Board of Directors of Sun Life Assurance Company of Canada
(U.S.):
We have audited the accompanying statement of condition of Sun Life of Canada
(U.S.) Variable Account G (the "Variable Account") as of June 30, 1998, the
related statement of operations for the six month period then ended and the
statements of changes in net assets for the six month period ended June 30, 1998
and the year ended December 31, 1997. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards 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. Our procedures included
confirmation of securities held at June 30, 1998 by correspondence with the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Sun Life of Canada (U.S.) Variable Account G
at June 30, 1998, the results of its operations and the changes in its net
assets for the respective stated periods in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 14, 1998
15
