<PAGE>
SUN LIFE OF CANADA (U.S.)
VARIABLE ACCOUNT B
STATEMENT OF CONDITION
JUNE 30, 1998
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investment in MFS/Sun Life Series Trust:
Money Market Series (MMS),
304,440 shares at $1.00 per share
(cost $304,440) $ 304,440
LIABILITY:
Payable to sponsor (73,179)
-----------
NET ASSETS $ 231,261
-----------
-----------
APPLICABLE TO OWNERS OF VARIABLE ANNUITY CONTRACTS:
Deferred contracts (58,659 units at
$3.12148 per unit) $ 183,104
Reserve for variable annuities 48,157
-----------
$ 231,261
-----------
-----------
</TABLE>
See notes to unaudited financial statements.
<PAGE>
SUN LIFE OF CANADA (U.S.)
VARIABLE ACCOUNT B
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Dividends $ 7,675
EXPENSE:
Mortality and expense risk charges 1,117
---------
NET INVESTMENT INCOME $ 6,558
---------
---------
</TABLE>
See notes to unaudited financial statements.
<PAGE>
SUN LIFE OF CANADA (U.S.)
VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1998 1997
---- ----
OPERATIONS:
<S> <C> <C>
Net investment income $ 6,558 $ 4,800
Net increase in net assets
from operations 6,558 4,800
--------- ---------
PARTICIPANT TRANSACTIONS:
Net accumulation activity:
Redemptions (12,222) (4,502)
--------- ---------
Annuitization activity:
Annuity payments (5,468) (18,486)
Actuarial adjustment (144) 1,824
--------- ---------
Net annuitization activity (5,612) (16,662)
--------- ---------
Net decrease in net assets from
participant activity (17,834) (21,164)
--------- ---------
NET DECREASE IN NET ASSETS (11,276) (16,364)
NET ASSETS
Beginning of period 242,537 263,619
---------- ----------
End of period $ 231,261 $ 247,255
---------- ----------
---------- ----------
</TABLE>
See notes to unaudited financial statements.
<PAGE>
SUN LIFE OF CANADA (U.S.)
VARIABLE ACCOUNT B
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. ORGANIZATION:
Sun Life of Canada (U.S.) Variable Account B (the "Variable Account"), a
separate account of Sun Life Assurance Company of Canada (U.S.) (the
"Sponsor") was established as a funding vehicle for individual variable
annuities. The Variable Account is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940 as a unit
investment trust. 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 tax law, investment income and capital gains of the Variable
Account are not taxable and, therefore, no provision has been made for
federal income taxes.
2. INVESTMENT VALUATIONS:
At June 30, 1998, the Variable Account was fully invested in shares of
MFS/Sun Life Series Trust, Money Market Series ("MMS"). Investment in
shares of MMS are recorded at their net asset value. Dividend income
received by MMS is reinvested in additional shares of MMS and is recognized
on the ex-dividend date.
3. MORTALITY AND EXPENSES RISK CHARGES:
A deduction based on the value of either the variable accumulation units
credited to a deferred contract's accumulation account or the annuity units
credited to either an immediate or a deferred contract, as the case may be,
is made by the Sponsor from the Variable Account at the end of each
valuation period for the mortality and expense risks assumed by the
Sponsor. These deductions are transferred periodically to the Sponsor.
Currently, the deduction is at an effective annual rate of 1.0% of the
respective values.
4. RESERVE FOR VARIABLE ANNUITIES:
The reserve for variable annuities (contracts in payment period) has been
calculated using the Progressive Annuity Table (for year of birth 1900)
with interest equal to the assumed interest rate used in determining the
annuity units and the annuity unit values. Separate tables were used for
male and female annuitants. Required adjustments to the reserve will be
accomplished by transfers to or from the Sponsor.
<PAGE>
SUN LIFE OF CANADA (U.S.)
VARIABLE ACCOUNT B
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
5. CHANGE IN ACCUMULATION UNITS OUTSTANDING:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
Redeemed during the period (3,152) (7,675)
Units outstanding:
Beginning of period 61,811 69,486
------ ------
End of period 58,659 61,811
------ ------
------ ------
</TABLE>
