<PAGE>
As filed with the Securities and Exchange Commission on February 26, 1999
Registration No. 2-78738
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM N-4
POST-EFFECTIVE AMENDMENT NO. 21
to
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
and
AMENDMENT NO. 21
to
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 /X/
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
(Exact Name of Registrant)
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Name of Depositor)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
(Address of Depositor's
Principal Executive Offices)
Depositor's Telephone Number: (781) 237-6030
Edward M. Shea, Assistant Vice President and Counsel
Sun Life Assurance Company of Canada (U.S.)
Retirement Products & Services
One Copley Place
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copies of Communications to:
David N. Brown, Esq.
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044
/X/ It is proposed that this filing will become effective on April 27, 1999
pursuant to paragraph (a) of Rule 485.
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<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Attached hereto and made a part hereof is the Prospectus dated May 1,
1999.
<PAGE>
PROSPECTUS
MAY 1, 1999
COMPASS I
Sun Life Assurance Company of Canada (U.S.) ("we" or the "Company") and Sun
Life of Canada (U.S.) Variable Account C (the "Variable Account") offer the
individual flexible payment deferred annuity contracts (the "Contracts")
described in this Prospectus. The Contracts are designed for use in connection
with retirement plans that meet the requirements of Sections 401 or 408
(excluding Section 408(b)) of the Internal Revenue Code. NO CONTRACTS HAVE BEEN
ISSUED FOR USE IN CONNECTION WITH DEFERRED COMPENSATION PLANS ESTABLISHED
PURSUANT TO SECTION 457 OF THE CODE SINCE MAY 1, 1990.
Contract owners may choose among 11 variable investment options and a fixed
account option. The variable options are sub-accounts in the Variable Account,
each of which invests in shares in one of the following mutual funds advised by
our affiliate, Massachusetts Financial Services Company (the "Funds"):
<TABLE>
<CAPTION>
<S> <C>
MFS Money Market Fund Massachusetts Investors Trust
MFS Government Money Market Fund MFS Research Fund
MFS World Governments Fund Massachusetts Investors Growth Stock Fund
MFS Bond Fund MFS Growth Opportunities Fund
MFS High Income Fund MFS Emerging Growth Fund
MFS Total Return Fund
</TABLE>
The fixed account option pays interest at a guaranteed fixed rate.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR EACH OF THE
FUNDS. PLEASE READ THIS PROSPECTUS AND THE FUND PROSPECTUSES CAREFULLY BEFORE
INVESTING AND KEEP THEM FOR FUTURE REFERENCE. THEY CONTAIN IMPORTANT INFORMATION
ABOUT THE COMPASS I ANNUITY AND THE FUNDS.
We have filed a Statement of Additional Information dated May 1, 1999 (the
"SAI"), which is incorporated by reference in this Prospectus, with the
Securities and Exchange Commission (the "SEC"). The table of contents for the
SAI is on page 20 of this Prospectus. You may obtain a copy without charge by
writing to our Annuity Service Mailing Address or by telephoning (800) 752-7215
or (617) 348-9600. In addition, the SEC maintains a website (HTTP://WWW.SEC.GOV)
that contains this Prospectus, the SAI, materials incorporated by reference, and
other information regarding companies that file with the SEC.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
ANY REFERENCE IN THIS PROSPECTUS TO RECEIPT BY US MEANS RECEIPT AT THE FOLLOWING
ADDRESS:
ANNUITY SERVICE MAILING ADDRESS,
C/O SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
RETIREMENT PRODUCTS AND SERVICES,
P.O. BOX 1024,
BOSTON, MASSACHUSETTS 02103
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Definitions 2
Synopsis 3
Expense Summary 4
Condensed Financial Information--Accumulation Unit Values 6
Financial Statements 6
A Word About the Company, the Variable Account and the Funds 7
Purchase Payments and Contract Values During Accumulation Phase 9
Cash Withdrawals 11
Death Benefit 11
Contract Charges 12
Annuity Provisions 14
Other Contract Provisions 16
Federal Tax Status 18
Year 2000 Compliance 19
Distribution of the Contracts 20
Legal Proceedings 20
Owner Inquiries 20
Table of Contents for Statement of Additional Information 20
</TABLE>
DEFINITIONS
The Contract is a legal document that uses a number of specially defined
terms. We explain some of the terms that we use in this Prospectus in the
context where they arise, and others are self-explanatory. In addition, for
convenient reference, we have compiled the following list of terms used in this
Prospectus. If you come across a term that you do not understand, please refer
to this list of definitions for an explanation.
Accumulation Account: An account we establish for the Contract to which we
credit net Purchase Payments in the form of Accumulation Units.
Accumulation Phase: The period before the Annuity Commencement Date and during
the lifetime of the Annuitant. The Accumulation Phase will also terminate when
the Owner surrenders the Contract.
Accumulation Unit: A unit of measure we use in the calculation of the value of
the Accumulation Account. There are two types of Accumulation Units: Variable
Accumulation Units and Fixed Accumulation Units.
Annuitant: The person or persons named in the Contract and on whose life the
first annuity payment is to be made.
Annuity Commencement Date: The date on which we are to make the first annuity
payment.
Annuity Unit: A unit of measure we use in the calculation of the amount of the
second and each subsequent Variable Annuity payment.
Beneficiary: The person who has the right to the death benefit set forth in the
Contract.
Company: Sun Life Assurance Company of Canada (U.S.) (also referred to in this
Prospectus as "we").
Contract Years and Contract Anniversaries: The first Contract Year is the period
of 12 months plus a part of a month as measured from the date we issue the
Contract to the first day of the calendar month that follows the calendar month
of issue. All Contract Years and Contract Anniversaries thereafter are 12 month
periods based upon the first day of the calendar month that follows the calendar
month of issue.
Due Proof of Death: An original certified copy of an official death certificate,
an original certified copy of a decree of a court of competent jurisdiction as
to the finding of death, or any other proof satisfactory to us.
Fixed Account: The Fixed Account consists of all assets of the Company other
than those allocated to separate accounts of the Company.
Fixed Annuity: An annuity with payments that do not vary as to dollar amount.
2
<PAGE>
Owner: The person, persons or entity entitled to the ownership rights stated in
the Contract and in whose name or names the Contract is issued. The Owner must
be the trustee or custodian of a retirement plan that meets the requirements of
Section 401 or Section 408 (excluding Section 408(b)) of the Internal Revenue
Code.
Payee: The recipient of payments under the Contract. The term may include an
Annuitant or a Beneficiary who becomes entitled to benefits upon the death of
the Annuitant.
Purchase Payment (Payment): An amount the Owner pays to us, or that is paid to
us on the Owner's behalf, as consideration for the benefits provided by the
Contract.
Sub-Account: That portion of the Variable Account that invests in shares of a
specific Fund.
Valuation Period: The period of time from one determination of Accumulation Unit
and Annuity Unit values to the next subsequent determination of these values.
Variable Annuity: An annuity with payments that vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Variable
Account.
We: Sun Life Assurance Company of Canada (U.S.).
SYNOPSIS
We allocate Purchase Payments to Sub-Accounts of the Variable Account or to
the Fixed Account option or both, as the Owner selects. Purchase Payments must
total at least $300 for the first Contract Year and each Purchase Payment must
be at least $25 (see "Purchase Payments" on page 9). During the Accumulation
Phase, the Owner may, without charge, transfer amounts among the Sub-Accounts
and between the Sub-Accounts and the Fixed Account, subject to certain
conditions (see "Transfers" on page 10).
We do not deduct a sales charge from Purchase Payments; however, if the
Owner makes a cash withdrawal, we will, with certain exceptions, deduct a 5%
withdrawal charge. The Owner may withdraw a portion of the Accumulation Account
each year before we assess the withdrawal charge and after we have held a
Purchase Payment for five years the Owner may withdraw it without charge. We do
not assess a withdrawal charge upon annuitization or upon the transfers
described above (see "Cash Withdrawals" and "Withdrawal Charges" on pages 11 and
13, respectively).
If the Annuitant dies before the Annuity Commencement Date, we will pay a
death benefit to the Beneficiary. If the Annuitant dies on or after the Annuity
Commencement Date, we will not pay a death benefit, except as may be provided
under the annuity option elected (see "Death Benefit" on page 11).
We deduct a contract maintenance charge of $25 on each Contract Anniversary
and on a surrender of the Contract for full value. After the Annuity
Commencement Date, we deduct this charge pro rata from each annuity payment we
make during the year. (See "Contract Maintenance Charge" on page 12.)
We also deduct a mortality and expense risk charge equal to an annual rate
of 1.30% of the daily net assets of the Variable Account (see "Mortality and
Expense Risk Charge" on page 13).
We will deduct a charge for premium taxes payable to any governmental entity
(see "Premium Taxes" on page 14).
Annuity payments will begin on the Annuity Commencement Date. The Owner
selects the Annuity Commencement Date, frequency of payments, and the annuity
option (see "Annuity Provisions" on page 14).
If the Owner is not satisfied with the Contract, the Owner may return it to
the Company at our Annuity Service Mailing Address within ten days after we
deliver the Contract to the Owner. When we receive the returned Contract we will
cancel it and refund the full amount of any Purchase Payment(s) we have
received.
ANY PERSON CONTEMPLATING THE PURCHASE OF A CONTRACT SHOULD CONSULT A
QUALIFIED TAX ADVISER.
3
<PAGE>
EXPENSE SUMMARY
The purpose of the following table is to help you to understand the costs
and expenses that are borne, directly and indirectly, by Contract Owners. The
table reflects expenses of the Variable Account as well as of the Funds. We have
restated the expense information for certain Funds to reflect current fees. The
information set forth should be considered together with the narrative provided
under the heading "Contract Charges" in this Prospectus, and with the Funds'
prospectuses. In addition to the expenses listed below, premium taxes may be
applicable.
<TABLE>
<CAPTION>
CONTRACT OWNER TRANSACTION EXPENSES MCM MCG MWG MFB MFH MTR MIT MFR MIG MGO MEG
- ---------------------------------------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales Load Imposed on Purchases 0 0 0 0 0 0 0 0 0 0 0
Deferred Sales Load (as a percentage of
Purchase Payments withdrawn)(1)
Years Payment in Account
0-5................................. 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5%
more than 5......................... 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Exchange Fee............................ 0 0 0 0 0 0 0 0 0 0 0
ANNUAL CONTRACT FEE
- ---------------------------------------- -----------------$25 per Contract -----------------
SEPARATE ACCOUNT ANNUAL EXPENSES
- ----------------------------------------
(as a percentage of average separate account assets)
Mortality and Expense Risk Fees......... 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%
Other Account Fees and Expenses......... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Separate Account Annual
Expenses.............................. 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%
FUND ANNUAL EXPENSES
- ----------------------------------------
(as a percentage of Fund average net assets)
Management Fees.........................
Other Expenses(2).......................
Total Fund Annual Expenses..............
</TABLE>
- ------------
(1) A portion of the Accumulation Account value may be withdrawn each year
without imposition of any withdrawal charge, and after we have held a
Purchase Payment for five years it may be withdrawn free of any withdrawal
charge.
(2) Other expenses for all of the Funds except MCM and MCG include annualized
fees assessed under Distribution Plans adopted pursuant to Section 12(b) of
the Investment Company Act of 1940 and Rule 12b-1 thereunder (see the Funds'
prospectuses). The Distribution Plans commenced on the following dates: MTR
and MWG, October 1, 1989, MIT, January 2, 1991 and MFB, MFH, MFR, MIG, MGO
and MEG, March 1, 1991.
4
<PAGE>
EXAMPLES
If you surrender your Contract at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
MCM.....................................
MCG.....................................
MWG.....................................
MFB.....................................
MFH.....................................
MTR.....................................
MIT.....................................
MFR.....................................
MIG.....................................
MGO.....................................
MEG.....................................
</TABLE>
If you do NOT surrender your Contract, or if you annuitize at the end of the
applicable time period, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
MCM.....................................
MCG.....................................
MWG.....................................
MFB.....................................
MFH.....................................
MTR.....................................
MIT.....................................
MFR.....................................
MIG.....................................
MGO.....................................
MEG.....................................
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LOWER THAN THOSE SHOWN.
5
<PAGE>
CONDENSED FINANCIAL INFORMATION--ACCUMULATION UNIT VALUES
The following information should be read in conjunction with the Variable
Account's financial statements appearing in the Statement of Additional
Information, all of which has been audited by Deloitte & Touche LLP, independent
certified public accountants.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
--------- --------- --------- --------- --------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MIT
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MIG
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MTR
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MGO
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MFR
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MFB
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MCM
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MCG
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MFH
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MWG
Unit Value:
Beginning of period
End of period
Units outstanding end of period
MEG
Unit Value:
Beginning of period
End of period
Units outstanding end of period
</TABLE>
FINANCIAL STATEMENTS
Financial Statements of the Variable Account and the Company are included in
the Statement of Additional Information.
6
<PAGE>
A WORD ABOUT THE COMPANY, THE VARIABLE ACCOUNT AND THE FUNDS
THE COMPANY
Sun Life Assurance Company of Canada (U.S.) is a stock life insurance
company incorporated under the laws of Delaware on January 12, 1970. Our
Executive Office is located at One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02481.
We are an indirect wholly-owned subsidiary of Sun Life Assurance Company of
Canada, 150 King Street West, Toronto, Ontario, Canada M5H 1J9, a mutual life
insurance company incorporated in Canada in 1865.
THE VARIABLE ACCOUNT
We established the Variable Account as a separate account of the Company on
March 31, 1982, pursuant to a resolution of our Board of Directors. The Variable
Account meets the definition of a separate account under the federal securities
laws and is registered with the Securities and Exchange Commission as a unit
investment trust under the Investment Company Act of 1940.
Under Delaware insurance law and the Contract, the income, gains or losses
of the Variable Account are credited to or charged against the assets of the
Variable Account without regard to the other income, gains or losses of the
Company. Although the assets maintained in the Variable Account will not be
charged with any liabilities arising out of any other business conducted by the
Company, all obligations arising under the Contracts, including the promise to
make annuity payments, are general corporate obligations of the Company.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of one of the Funds described below.
THE FUNDS
All amounts allocated to the Variable Account will be used to purchase Fund
shares as designated by the Owner at their net asset value. Any and all
distributions made by the Funds with respect to the shares held by the Variable
Account will be reinvested to purchase additional shares at their net asset
value. We will make deductions from the Variable Account for cash withdrawals,
annuity payments, death benefits, administrative charges, contract charges
against the assets of the Variable Account for the assumption of mortality and
expense risks and any applicable taxes, in effect, by redeeming the number of
Fund shares at their net asset value equal in total value to the amount to be
deducted. The Variable Account will be fully invested in Fund shares at all
times.
A summary of the investment objectives of each Fund is contained in the
description below. More detailed information may be found in the current
prospectuses of the Funds and their Statements of Additional Information. A
prospectus for each Fund must accompany this Prospectus and should be read
together with this Prospectus.
MFS-REGISTERED TRADEMARK- MONEY MARKET FUND ("MCM")
AND MFS-REGISTERED TRADEMARK- GOVERNMENT MONEY MARKET FUND ("MCG")
MCM and MCG seek as high a level of current income as is considered
consistent with the preservation of capital and liquidity. MCM and MCG are
separate series of MFS Series Trust IV. Each represents a separate diversified
portfolio with separate investment policies.
MCM invests primarily in money market instruments, including U.S. Government
securities and repurchase agreements collateralized by such securities,
obligations of the larger banks, prime commercial paper and high quality
corporate obligations.
MCG invests only in securities issued or guaranteed by the U.S. Treasury or
agencies or instrumentalities of the U.S. Government (repurchase agreements
collateralized by such securities).
7
<PAGE>
MFS-REGISTERED TRADEMARK- WORLD GOVERNMENTS FUND ("MWG")
MWG will seek income and capital appreciation. The Fund invests, under
normal conditions, at least 65% of its total assets in debt securities issued or
guaranteed by a U.S. or foreign governmental issuer and may invest up to 35% in
debt securities issued by nongovernmental issuers.
MFS-REGISTERED TRADEMARK- BOND FUND ("MFB")
MFB will invest a major portion of its assets in "investment grade" debt
securities. Its primary investment objective is to provide as high a level of
current income as is believed to be consistent with prudent investment risk. A
secondary objective is to protect shareholders' capital.
MFS-REGISTERED TRADEMARK- HIGH INCOME FUND ("MFH")
MFH will seek high current income by investing primarily in a diversified
portfolio of fixed income securities, some of which may involve equity features.
Capital growth, if any, is a consideration incidental to the investment
objective of high current income. Securities offering the high current income
sought by the Fund (commonly known as "junk bonds") are ordinarily in the lower
rating categories of recognized rating agencies or are unrated and generally
involve greater volatility of price and risk of principal and income than
securities in the higher rating categories. The Fund may invest up to 100% of
its net assets in such securities. Accordingly, an investment in the Fund may
not be appropriate for all investors.
MFS-REGISTERED TRADEMARK- TOTAL RETURN FUND ("MTR")
MTR will seek to obtain above-average income (compared to a portfolio
invested entirely in equity securities) consistent with prudent employment of
capital. While current income is the primary objective, the Fund believes that
there also should be a reasonable opportunity for growth of capital and income,
since many securities offering a better-than-average yield may also possess
growth potential. Under normal market conditions, MTR will invest at least 25%
of its assets in fixed income securities and at least 40% but no more than 75%
of its assets in equity securities.
MASSACHUSETTS INVESTORS TRUST ("MIT")
MIT will seek to provide reasonable current income and long-term growth of
capital and income. The Fund is believed to constitute a conservative medium for
that portion of an investor's capital which the investor wishes to have invested
in securities considered to be of high or improving investment quality. The
assets of the Fund are normally invested in equity securities. However, the Fund
may hold its assets in cash or invest in commercial paper, repurchase agreements
or other forms of debt securities either to provide reserves for future
purchases of common stock or as a defensive measure in certain economic
environments.
MFS-REGISTERED TRADEMARK- RESEARCH FUND ("MFR")
MFR will seek to provide long-term growth of capital and future income by
investing a substantial proportion of its assets in the common stocks or
securities convertible into common stocks of companies believed to possess
better than average prospects for long-term growth. A smaller proportion of the
assets may be invested in bonds, short-term obligations, preferred stocks or
common stocks whose principal characteristic is income production rather than
growth. Such securities may also offer opportunities for growth of capital as
well as income.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND ("MIG")
MIG will seek to provide long-term growth of capital and future income
rather than current income by investing (except for working cash balances) in
the common stocks, or securities convertible into common stocks, of companies
believed to possess better-than-average prospects for long-term growth. Emphasis
is placed on the selection of progressive, well-managed companies.
8
<PAGE>
MFS-REGISTERED TRADEMARK- GROWTH OPPORTUNITIES FUND ("MGO")
MGO (formerly Massachusetts Capital Development Fund) will seek growth of
capital. Dividend income, if any, is a consideration incidental to the objective
of growth of capital. The Fund maintains a flexible approach towards types of
companies as well as types of securities, depending upon the economic
environment and the relative attractiveness of the various securities markets.
Generally, emphasis is placed upon companies believed to possess above average
growth opportunities.
MFS-REGISTERED TRADEMARK- EMERGING GROWTH FUND ("MEG")
MEG will seek long-term growth of capital by investing primarily in common
stocks of companies that are early in their life cycle, but which have the
potential to become major enterprises (i.e. emerging growth companies).
Investments in emerging growth companies are generally more volatile in price
and involve higher risk than investments in more established companies.
PURCHASE PAYMENTS AND CONTRACT VALUES DURING ACCUMULATION PHASE
PURCHASE PAYMENTS
All Purchase Payments are to be paid to us at our Annuity Service Mailing
Address. Purchase Payments may be made annually, semi-annually, quarterly,
monthly or on any other frequency acceptable to us. Unless the Owner has
surrendered the Contract, Purchase Payments may be made at any time during the
life of the Annuitant and before the Annuity Commencement Date.
The amount of Purchase Payments may vary; however, Purchase Payments must
total at least $300 for the first Contract Year, and each Purchase Payment must
be at least $25. In addition, our approval is required before we will accept a
Purchase Payment if the value of a Contract's Accumulation Account exceeds
$1,000,000 or if the Purchase Payment would cause the value of a Contract's
Accumulation Account to exceed $1,000,000.
Completed application forms, together with the initial Purchase Payment, are
forwarded to us. Upon acceptance, we issue the Contract to the Owner and credit
the initial Purchase Payment to the Contract in the form of Accumulation Units.
We will credit the initial Purchase Payment within two business days of our
receipt of a completed application. If an application is incomplete, we may
retain the Purchase Payment for up to five business days while we attempt to
complete the application. If we cannot complete the application within five
business days, we will inform the applicant of the reasons for the delay and
return the Purchase Payment immediately, unless the applicant specifically
consents to our retaining the Purchase Payment until the application is made
complete. Once the application is completed, we will credit the Purchase Payment
within two business days. We will apply all subsequent Purchase Payments using
the Accumulation Unit values for the Valuation Period during which we receive
the Purchase Payment.
We will establish an Accumulation Account for each Contract. The Contract's
Accumulation Account value for any Valuation Period is equal to the variable
accumulation value, if any, plus the fixed accumulation value, if any, for that
Valuation Period. The variable accumulation value is equal to the sum of the
value of all Variable Accumulation Units credited to the Contract's Accumulation
Account.
We will allocate each net Purchase Payment to either the Fixed Account or to
Sub-Accounts of the Variable Account or to both Sub-Accounts and the Fixed
Account, in accordance with the allocation factors that the Owner specifies in
the application or as subsequently changed (see Appendix A to the Statement of
Additional Information for a description of the Fixed Account). Upon receipt of
a Purchase Payment, we will credit all or that portion, if any, of the net
Purchase Payment to be allocated to the Sub-Accounts to the Accumulation Account
in the form of Variable Accumulation Units. The number of Variable Accumulation
Units we credit is determined by dividing the dollar amount allocated to a Sub-
Account by the Variable Accumulation Unit value for that Sub-Account for the
Valuation Period during which we received the Purchase Payment.
9
<PAGE>
We established the Variable Accumulation Unit value for each Sub-Account at
$10.00 for the first Valuation Period of that Sub-Account. We determine the
Variable Accumulation Unit value for the Sub-Account for any subsequent
Valuation Period as follows: we multiply the Variable Accumulation Unit value
for the immediately preceding Valuation Period by the Net Investment Factor for
the subsequent Valuation Period. The Variable Accumulation Unit value for each
Sub-Account for any Valuation Period is determined at the end of the Valuation
Period and may increase, decrease or remain constant from Valuation Period to
Valuation Period, depending upon the investment performance of the Fund in which
the Sub-Account is invested and the expenses and charges deducted from the
Variable Account.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore the
value of a Variable Accumulation Unit may increase, decrease or remain the same.
The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (a) by (b) and then subtracting (c) from the result,
where:
(a) is the net result of:
(1) the net asset value of a Fund share held in the Sub-Account
determined as of the end of the Valuation Period, plus
(2) the per share amount of any dividend or other distribution declared
by the Fund issuing the shares held in the Sub-Account if the
"ex-dividend" date occurs during the Valuation Period, plus or minus
(3) a per share credit or charge with respect to any taxes paid, or
reserved for by the Company during the Valuation Period which are
determined to be attributable to the operation of the Sub-Account (no
federal income taxes are applicable under present law);
(b) is the net asset value of a Fund share held in the Sub-Account
determined as of the end of the preceding Valuation Period; and
(c) is the risk charge factor determined by the Company for the Valuation
Period to reflect the charge for assuming the mortality and expense
risks.
TRANSFERS
During the Accumulation Phase, the Owner may transfer all or part of the
Contract's Accumulation Account Value to one or more Sub-Accounts then available
or to the Fixed Account, or to any combination of these options. We make these
transfers by converting the value of the Accumulation Units the Owner wishes to
transfer into Variable Accumulation Units of Sub-Accounts and/or Fixed
Accumulation Units of the same aggregate value, as the Owner chooses. These
transfers are subject to the following conditions:
(1) transfers involving Fixed Accumulation Units may be made only during the
45 day period before and the 45 day period after each Contract
Anniversary;
(2) not more than 12 transfers may be made in any Contract Year; and
(3) the value of Accumulation Units transferred may not be less than $1,000,
unless all of the Fixed Accumulation Units or all of the Variable
Accumulation Units of a particular Sub-Account credited to the
Accumulation Account are being transferred.
In addition, these transfers will be subject to such terms and conditions as
each Fund may impose. We will make these transfers using the Accumulation Unit
values for the Valuation Period during which we receive the request for
transfer. Transfers may be made pursuant to telephoned instructions.
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CASH WITHDRAWALS
At any time during the Accumulation Phase, the Owner may elect to receive a
cash withdrawal payment under the Contract. Withdrawals may be subject to a
withdrawal charge (see "Withdrawal Charges") Withdrawals also may have adverse
federal income tax consequences, including a 10% penalty tax (see "Federal Tax
Status"). Since the Contracts will be issued only in connection with retirement
plans that meet the requirements of Section 401 or Section 408 (excluding
Section 408(b)) of the Internal Revenue Code, you should refer to the terms of
the particular retirement plan for any limitations or restrictions on cash
withdrawals.
A withdrawal request will be effective on the date we receive it. If the
Owner requests a withdrawal of more than $5,000, we may require a signature
guarantee. The request must specify the amount the Owner wishes to withdraw. For
a partial withdrawal, the Owner may specify the amount to be withdrawn from the
Fixed Account and/or each Sub-Account to which the Contract's Accumulation
Account is allocated. If the Owner does not so specify, we will deduct the total
amount requested pro rata based on the allocations at the end of the Valuation
Period during which we receive the withdrawal request.
If the Owner requests a full withdrawal, we will pay the value of the
Accumulation Account at the end of the Valuation Period during which we receive
the request, minus the contract maintenance charge for the current Contract Year
and any applicable withdrawal charge. If the Owner requests a partial
withdrawal, we will pay the amount requested less any applicable withdrawal
charge and we will reduce the value of the Contract's Accumulation Account by
deducting the amount requested. If the Owner requests a partial withdrawal that
would result in the value of the Accumulation Account being reduced to an amount
less than the contract maintenance charge for the current Contract Year, we will
treat it as a request for a full withdrawal.
We will pay you the applicable amount of any full or partial withdrawal
within seven days after we receive the Owner's withdrawal request, except in
cases where we are permitted to defer payment under the Investment Company Act
of 1940 and applicable state insurance law. Currently, we may defer payment of
amounts withdrawn only for following periods:
- when the New York Stock Exchange is closed, except weekends and holidays
or when trading on the New York Stock Exchange is restricted;
- when it is not reasonably practical to dispose of securities held by the
Funds or to determine the value of the net assets of the Funds because an
emergency exists; or
- when an SEC order permits us to defer payment for the protection of
securities holders.
DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date, we will pay a
death benefit to the Beneficiary. If the Annuitant dies on or after the Annuity
Commencement Date, we will not pay a death benefit, except as may be provided
under the annuity option elected.
Subject to the rights of an irrevocably designated Beneficiary, the Owner
may change or revoke the designation of a Beneficiary at any time while the
Annuitant is living. Reference should be made to the terms of the particular
retirement plan and any applicable legislation for any restrictions on the
Beneficiary designation. If there is no designated Beneficiary living on the
date of death of the Annuitant, we will pay the death benefit in one lump sum to
the Owner, or if the Owner is the Annuitant, to the estate of the
Owner/Annuitant.
During the lifetime of the Annuitant and before the Annuity Commencement
Date, the Owner may elect to have the death benefit payable under one or more of
our annuity options listed under "Annuity Provisions" in this Prospectus, for
the Beneficiary as Payee. If the Owner has not elected a method of settlement of
the death benefit that is in effect on the date of death of the Annuitant, the
Beneficiary may elect to receive the death benefit in the form of either a cash
payment or one or more of our
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annuity options. If we do not receive an election by the Beneficiary within 60
days after the date we receive Due Proof of Death of the Annuitant and any
required release or consent, the Beneficiary will be deemed to have elected a
cash payment as of the last day of the 60 day period.
In all cases, no Owner or Beneficiary will be entitled to exercise any
rights that would adversely affect the treatment of the Contract as an annuity
contract under the Internal Revenue Code.
You should refer to the terms of the particular retirement plan and any
applicable legislation for any limitations or restrictions on the election of a
method of settlement and payment of the death benefit.
PAYMENT OF DEATH BENEFIT
If the death benefit is to be paid in cash to the Beneficiary, we will make
payment within seven days of the date the election becomes effective or is
deemed to become effective, except as we may be permitted to defer such payment
in accordance with the Investment Company Act of 1940 under the circumstances
described under "Cash Withdrawals." If the death benefit is to be paid in one
sum to the Owner or to the estate of the deceased Owner/Annuitant, we will make
payment within seven days of the date we receive Due Proof of Death of the
Annuitant and the Beneficiary.
If the death benefit is to be paid under one or more of our annuity options,
the Annuity Commencement Date will be the first day of the second calendar month
following the effective date or the deemed effective date of the election, and
we will maintain the Contract's Accumulation Account in effect until the Annuity
Commencement Date. The Owner or Beneficiary may elect an Annuity Commencement
Date later than that described above, provided that such date is (a) the first
day of a calendar month and (b) not later than the first day of the first month
following the 85th birthday of the Beneficiary or other Payee designated by the
Owner, as the case may be, unless otherwise restricted by the particular
retirement plan or by applicable law (see "Annuity Commencement Date").
AMOUNT OF DEATH BENEFIT
The death benefit is equal to the greatest of:
(1) the value of the Contract's Accumulation Account;
(2) the total Purchase Payments made under the Contract reduced by all
withdrawals; or
(3) the value of the Contract's Accumulation Account on the fifth (5th)
Contract Anniversary, adjusted for any Purchase Payments or cash
withdrawal payments made and contract charges assessed after the fifth
(5th) Contract Anniversary.
To determine the amount of the death benefit under (1) above, we will use
Accumulation Values for the Valuation Period during which we receive Due Proof
of Death of the Annuitant if the Owner has elected settlement under one or more
of the annuity options; if no election by the Owner is in effect, we will use
either the values for the Valuation Period during which an election by the
Beneficiary becomes or is deemed effective or, if the death benefit is to be
paid in one sum to the Owner or to the Owner/Annuitant's estate, the values for
the Valuation Period during which we receive Due Proof of Death of both the
Annuitant and the designated Beneficiary.
CONTRACT CHARGES
We will assess contract charges under the Contract as follows:
CONTRACT MAINTENANCE CHARGE
We deduct an annual contract maintenance charge of $25 as partial
reimbursement for administrative expenses relating to the issuance and
maintenance of the Contract. Prior to the Annuity Commencement Date, we deduct
this charge on each Contract Anniversary. We will also deduct this charge
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on surrender of the Contract for full value on a date other than the Contract
Anniversary. We deduct the contract maintenance charge in equal amounts from the
Fixed Account and each Sub-Account in which the Owner has Accumulation Units at
the time of such deduction.
On the Annuity Commencement Date, we will reduce the value of the Contract's
Accumulation Account by a proportionate amount of the contract maintenance
charge to reflect the time elapsed between the last Contract Anniversary and the
day before the Annuity Commencement Date. After the Annuity Commencement Date,
we will deduct the contract maintenance charge pro rata from each annuity
payment made during the year.
We will not increase the amount of the contract maintenance charge. We
reserve the right to reduce the amount of the contract maintenance charge for
groups of participants with individual Contracts under an employer's retirement
program in situations in which the size of the group and established
administrative efficiencies contribute to a reduction in administrative
expenses. We do not expect to make a profit from the contract maintenance
charge.
MORTALITY AND EXPENSE RISK CHARGE
We assume the risk that Annuitants may live for a longer period of time than
we have estimated in establishing the guaranteed annuity rates incorporated into
the Contract, and the risk that administrative charges assessed under the
Contract may be insufficient to cover our actual administrative expenses
incurred.
For assuming these risks, we make a deduction from the Variable Account at
the end of each Valuation Period both during the Accumulation Phase and after
the annuity payments begin at an effective annual rate of 1.30%. We may change
the rate of this deduction annually but it will not exceed 1.30% on an annual
basis. If the deduction is insufficient to cover the actual cost of the
mortality and expense risk undertaking, we will bear the loss. Conversely, if
the deduction proves more than sufficient, the excess will be profit to us and
would be available for any proper corporate purpose including, among other
things, payment of distribution expenses. If the withdrawal charges described
below prove insufficient to cover expenses associated with the distribution of
the Contracts, we will meet the deficiency from our general corporate funds,
which may include amounts derived from the mortality and expense risk charges.
For the year ended December 31, 1998, mortality and expense risk charges were
the only expenses of the Variable Account.
WITHDRAWAL CHARGES
We do not deduct a sales charge from Purchase Payments. However, we will
assess a withdrawal charge (contingent deferred sales charge) on certain amounts
you withdraw as reimbursement for certain expenses relating to the distribution
of the Contracts, including commissions, costs of preparation of sales
literature and other promotional costs and acquisition expenses.
The Owner may withdraw a portion of the Accumulation Account value each year
without imposition of any withdrawal charge, and after we have held a Purchase
Payment for five years it may be withdrawn free of any withdrawal charge. In
addition, we do not assess a withdrawal charge upon annuitization or upon the
transfer of Accumulation Account values among the Sub-Accounts or between the
Sub-Accounts and the Fixed Account.
All other full or partial withdrawals are subject to a withdrawal charge
equal to 5% of the amount withdrawn that is subject to the charge. We will apply
the charge as follows:
(1) Old Payments, New Payments and "accumulated value": In a given
Contract Year, "New Payments" are Payments made in that Contract Year
or in the previous four Contract Years; "Old Payments" are Payments
made before the previous four Contract Years. The remainder of the
Accumulation Account value -- that is, the value of the Accumulation
Account minus the total of Old Payments and New Payments -- is called
the "accumulated value."
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(2) Order of withdrawal: When the Owner makes a full surrender or
partial withdrawal, we consider the oldest Payment not previously
withdrawn to be withdrawn first, then the next oldest, and so forth.
Once all Old Payments and New Payments have been withdrawn,
additional amounts withdrawn will be attributed to accumulated value.
(3) Free withdrawal amount: In any Contract Year, the Owner may withdraw
the following amount before we impose a withdrawal charge: (a) any
Old Payments not previously withdrawn plus (b) 10% of any New
Payments, whether or not these New Payments have been previously
withdrawn.
(4) Amount subject to withdrawal charge: We will impose the 5%
withdrawal charge on the excess, if any, of (a) Old Payments and New
Payments being withdrawn over (b) the remaining free withdrawal
amount at the time of the withdrawal. We do not impose the withdrawal
charge on amounts attributed to accumulated value.
Aggregate withdrawal charges assessed against a Contract will never exceed
5% of the total amount of Purchase Payments made under the Contract (see
Appendix C in the Statement of Additional Information for examples of
withdrawals and withdrawal charges).
PREMIUM TAXES
We will make a deduction, when applicable, for premium taxes or similar
state or local taxes. The amount of such applicable tax varies by jurisdiction
and in many jurisdictions there is no premium tax at all. We believe that such
premium taxes or similar taxes currently range from 0% to 3.5%. It is currently
our policy to deduct the tax from the amount applied to provide an annuity at
the time annuity payments commence. However, we reserve the right to deduct such
taxes on or after the date they are incurred.
CHARGES OF THE FUNDS
The Variable Account purchases shares of the Funds at net asset value. The
net asset value of these shares reflects investment management fees, Rule 12b-1
(i.e. distribution plan) fees and expenses (including, but not limited to,
compensation of trustees/directors, governmental expenses, interest charges,
taxes, fees of auditors, legal counsel, transfer agent and custodian,
transactional expenses and brokerage commissions) already deducted from the
assets of the Funds. These fees and expenses are more fully described in the
Funds' prospectuses and statements of additional information.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
We begin making annuity payments under a Contract on the Annuity
Commencement Date, which the Owner selects in the Contract application. The
Owner may change this date as provided in the Contract; however, the new Annuity
Commencement Date must be the first day of a month and not later than the first
day of the first month following the Annuitant's 85th birthday, unless otherwise
limited or restricted by the particular retirement plan or by applicable law.
For example, in most situations, current law requires that the Annuity
Commencement Date be no later than April 1 following the year the Annuitant
reaches age 70 1/2. In addition, the particular retirement plan may impose
additional limitations. The Annuity Commencement Date may also be changed by an
election of an annuity option as described under "Death Benefit". Any new
Annuity Commencement Date must be at least 30 days after we receive notice of
the change.
On the Annuity Commencement Date, we will cancel the Contract's Accumulation
Account and apply its adjusted value to provide an annuity. The adjusted value
will be equal to the value of the
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Accumulation Account for the Valuation Period that ends immediately before the
Annuity Commencement Date, reduced by any applicable premium taxes or similar
taxes and a proportionate amount of the contract maintenance charge (see
"Contract Maintenance Charge"). NO CASH WITHDRAWALS WILL BE PERMITTED AFTER THE
ANNUITY COMMENCEMENT DATE EXCEPT AS MAY BE AVAILABLE UNDER THE ANNUITY OPTION
ELECTED.
ANNUITY OPTIONS
During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Owner may elect one or more of the annuity options described below or
such other settlement option as we may agree to for the Annuitant as Payee,
except as restricted by the particular retirement plan or any applicable
legislation. These annuity options may also be elected by the Owner or the
Beneficiary, as provided under "Death Benefit."
The Owner may not change any election after 30 days before the Annuity
Commencement Date, and no change of annuity option is permitted after the
Annuity Commencement Date. If no election is in effect on the 30th day before
the Annuity Commencement Date, we will deem Annuity Option B, for a Life Annuity
with 120 monthly payments certain, to have been elected.
Any election may specify the proportion of the adjusted value of the
Contract's Accumulation Account to be applied to the Fixed Account and the
Sub-Accounts. If the election does not so specify, the portion of the adjusted
value of the Accumulation Account to be applied to the Fixed Account and the
Sub-Accounts will be determined on a pro rata basis from the composition of the
Accumulation Account on the Annuity Commencement Date.
Annuity Options A, B and C are available to provide either a Fixed Annuity
or a Variable Annuity. Annuity Options D and E are available only to provide a
Fixed Annuity.
Annuity Option A. Life Annuity: We make monthly payments during the lifetime of
the Payee. This option offers a higher level of monthly payments than Annuity
Options B or C because we do not make further payments after the death of the
Payee and there is no provision for a death benefit payable to a Beneficiary.
Annuity Option B. Life Annuity with 60, 120 or 240 Monthly Payments Certain: We
make monthly payments during the lifetime of the Payee and in any event for 60,
120, 180 or 240 months certain, as elected. The election of a longer period
certain results in smaller monthly payments than would be the case if a shorter
period certain was elected.
Annuity Option C. Joint and Survivor Annuity: We make monthly payments during
the joint lifetime of the Payee and a designated second person and during the
lifetime of the survivor. During the lifetime of the survivor, variable monthly
payments, if any, will be determined using the percentage chosen at the time
this option was elected of the number of each type of Annuity Unit credited to
the Contract and each fixed monthly payment, if any, will be equal to the same
percentage of the fixed monthly payment payable during the joint lifetime of the
Payee and the designated second person.
Annuity Option D. Fixed Payments for a Specified Period Certain: We make fixed
monthly payments for a specified period of time (at least three years but not
exceeding 30 years), as elected.
Annuity Option E. Fixed Payments: We will hold the amount applied to provide
fixed payments in accordance with this option at interest. We will make fixed
payments in such amounts and at such times as we have agreed upon and will
continue until the amount we hold with interest is exhausted. We will credit
interest yearly on the amount remaining unpaid at a rate which we shall
determine from time to time but which shall not be less than 4% per year
compounded annually. We may change the rate so determined at any time; however,
the rate may not be reduced more frequently than once during each calendar year.
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DETERMINATION OF ANNUITY PAYMENTS
We will determine the dollar amount of the first Variable Annuity payment in
accordance with the annuity payment rates found in the Contract, which are based
on an assumed interest rate of 4% per year. We determine all Variable Annuity
payments other than the first by means of Annuity Units credited to the
Contract. The number of Annuity Units to be credited in respect of a particular
Sub-Account is determined by dividing that portion of the first Variable Annuity
payment attributable to that Sub-Account by the Annuity Unit value of that
Sub-Account for the Valuation Period that ends immediately before the Annuity
Commencement Date. The number of Annuity Units of each Sub-Account credited to
the Contract then remains fixed, unless an exchange of Annuity Units is made as
described below. The dollar amount of each Variable Annuity payment after the
first may increase, decrease or remain constant, depending on the investment
performance of the Sub-Accounts.
The Statement of Additional Information contains detailed disclosure
regarding the method of determining the amount of each Variable Annuity payment
and calculating the value of a Variable Annuity Unit, as well as hypothetical
examples of these calculations.
EXCHANGE OF VARIABLE ANNUITY UNITS
After the Annuity Commencement Date, the Payee may exchange Variable Annuity
Units from one Sub-Account to another, up to a maximum of 12 such exchanges each
Contract Year. We calculate the number of new Variable Account units so that the
dollar amount of an annuity payment made on the date of the exchange would be
unaffected by the fact of the exchange.
ANNUITY PAYMENT RATES
The Contract contains annuity payment rates for each annuity option
described above. The rates show, for each $1,000 applied, the dollar amount of
(a) the first monthly Variable Annuity payment based on the assumed interest
rate of 4%, and (b) the monthly Fixed Annuity payment, when this payment is
based on the minimum guaranteed interest rate of 4% per year. The annuity
payment rates may vary according to the annuity option elected and the adjusted
age of the Payee.
If net investment return of the Sub-Accounts was exactly equal to the
assumed interest rate of 4%, the amount of each Variable Annuity payment would
remain level. If a net investment return is greater than 4%, the amount of each
variable annuity payment would increase; conversely, if the net investment
return is less than 4%, the amount of each variable annuity payment would
decrease.
OTHER CONTRACT PROVISIONS
OWNER
The Owner is entitled to exercise all Contract rights and privileges without
the consent of the Beneficiary or any other person. Such rights and privileges
may be exercised only during the lifetime of the Annuitant and prior to the
Annuity Commencement Date, except as otherwise provided in the Contract. The
Annuitant becomes the Owner on and after the Annuity Commencement Date. The
Beneficiary becomes the Owner on the death of the Annuitant. In some qualified
plans the Owner of the Contract is a Trustee and the Trust authorizes the
Annuitant/participant to exercise certain Contract rights and privileges.
Transfer of ownership of a Contract is governed by the laws and regulations
applicable to the retirement plan for which we issue the Contract. Subject to
the foregoing, a Contract may not be sold, assigned, transferred, discounted or
pledged as collateral for a loan or as security for the performance of an
obligation or for any other purpose to any person other than the Company.
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VOTING OF FUND SHARES
We will vote Fund shares held by the Sub-Accounts at meetings of
shareholders of the Funds or in connection with similar solicitations, but will
follow voting instructions received from persons having the right to give voting
instructions. We will vote Fund shares for which no timely voting instructions
are received in the same proportion as the shares for which instructions are
received from persons having such voting rights. The Owner is the person having
the right to give voting instructions prior to the Annuity Commencement Date. On
or after the Annuity Commencement Date the Payee is the person having such
voting rights.
Owners of Contracts may be subject to other voting provisions of the
particular retirement plan. Employees who contribute to retirement plans which
are funded by the Contracts are entitled to instruct the Owners as to how to
instruct the Company to vote the Fund shares attributable to their
contributions. Such plans may also provide the additional extent, if any, to
which the Owners shall follow voting instructions of persons with rights under
the plans.
We will determine the number of particular Fund shares as to which each such
person is entitled to give instructions on a date not more than 90 days prior to
each such meeting. Prior to the Annuity Commencement Date, we determine the
number of particular Fund shares as to which voting instructions may be given by
dividing the value of all of the Variable Accumulation Units of the particular
Sub-Account credited to the Contract's Accumulation Account by the net asset
value of one particular Fund share as of the same date. On or after the Annuity
Commencement Date, we determine the number of particular Fund shares as to which
such instructions may be given by a Payee by dividing the reserve held by the
Company in the particular Sub-Account for the Contract by the net asset value of
a particular Fund share as of the same date.
PERIODIC REPORTS
During the Accumulation Phase, we may send the Owner, or such other person
having voting rights, at least once during each Contract Year, a statement
showing the number, type and value of Accumulation Units credited to the
Contract's Accumulation Account and the fixed accumulation value of such
account, which statement shall be accurate as of a date not more than two months
previous to the date of mailing. These periodic statements contain important
information concerning the Contract's Accumulation Account transactions with
respect to a Contract. It is the obligation of the Owner to review each such
statement carefully and to report to us, at the address or telephone number
provided on the statement, any errors or discrepancies in the information
presented therein within 60 days of the date of such statement. Unless we
receive notice of any such error or discrepancy from the Owner within such time
period, we may not be responsible for correcting the error or discrepancy.
In addition, every person having voting rights will receive such reports or
prospectuses concerning the Variable Account and the Funds as may be required by
the Investment Company Act of 1940 and the Securities Act of 1933. We will also
send such statements reflecting transactions in the Contract's Accumulation
Account as may be required by applicable laws, rules and regulations.
Upon request, we will provide the Owner with information regarding fixed and
variable accumulation values.
SUBSTITUTED SECURITIES
Shares of any of the particular Funds may not always be available for
purchase by the Variable Account or we may decide that further investment in any
such Fund's shares is no longer appropriate in view of the purposes of the
Variable Account. In either event, we may substitute shares of another
registered open-end investment company both for Fund shares already purchased by
the Variable Account and as the security to be purchased in the future provided
that these substitutions have been approved, if required, by the Securities and
Exchange Commission. In the event of any substitution pursuant to this
provision, we may make appropriate endorsement to the Contract to reflect the
substitution.
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MODIFICATION
Upon notice to the Owner, or to the Payee during the annuity period, we may
modify the Contract, but only if such modification (i) is necessary to make the
Contract or the Variable Account comply with any law or regulation issued by a
governmental agency to which we are subject, (ii) is necessary to assure
continued qualification of the Contract under the Internal Revenue Code or other
federal or state laws relating to retirement annuities or annuity contracts,
(iii) is necessary to reflect a change in the operation of the Variable Account
or the Sub-Accounts, (iv) provides additional Variable Account and/or fixed
accumulation options, or (v) as may otherwise be in the best interests of Owners
or Payees, as applicable. In the event of any such modification, we may make
appropriate endorsement to the Contract to reflect such modification.
CHANGE IN OPERATION OF VARIABLE ACCOUNT
At the Company's election and subject to any necessary vote by persons
having the right to give instructions with respect to the voting of Fund shares
held by the Sub-Accounts, the Variable Account may be operated as a management
company under the Investment Company Act of 1940 or it may be deregistered under
the Investment Company Act of 1940 in the event registration is no longer
required. Deregistration of the Variable Account requires an order by the
Securities and Exchange Commission. In the event of any such change in the
operation of the Variable Account, we may make appropriate endorsement to the
Contract to reflect the change and take such action as may be necessary and
appropriate to effect the change.
SPLITTING UNITS
We reserve the right to split or combine the value of Variable Accumulation
Units, Fixed Accumulation Units, Annuity Units or any of them. In effecting any
such change of unit values, strict equity will be preserved and no change will
have a material effect on the benefits or other provisions of the Contract.
FEDERAL TAX STATUS
INTRODUCTION
The Contracts are designed for use by retirement plans under the provisions
of Sections 401 and 408 (excluding Section 408(b)) of the Internal Revenue Code
(the "Code"). The ultimate effect of federal income taxes on the value of a
Contract's Accumulation Account, on annuity payments and on the economic benefit
to the Owner, the Annuitant, the Payee or the Beneficiary may depend upon the
type of retirement plan for which the Contract is purchased and upon the tax and
employment status of the individual concerned.
The following discussion of the treatment of the Contracts and of the
Company under the federal income tax laws is general in nature, is based upon
the Company's understanding of current federal income tax laws, and is not
intended as tax advice. Congress has the power to enact legislation affecting
the tax treatment of annuity contracts, and such legislation could be applied
retroactively to Contracts purchased before the date of enactment. A more
detailed discussion of the federal tax status of the Contracts is contained in
the Statement of Additional Information. Any person contemplating the purchase
of a Contract should consult a qualified tax adviser. THE COMPANY DOES NOT MAKE
ANY GUARANTEE REGARDING ANY TAX STATUS, FEDERAL, STATE OR LOCAL, OF ANY CONTRACT
OR ANY TRANSACTION INVOLVING THE CONTRACTS.
TAX TREATMENT OF THE COMPANY
Under existing federal income tax laws, the income of the Variable Account,
to the extent that it is applied to increase reserves under the Contracts, is
not taxable to the Company.
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TAXATION OF ANNUITIES IN GENERAL
The Contracts are designed for use in connection with retirement plans. All
or a portion of the contributions to such plans will be used to make Purchase
Payments under the Contracts. Generally, no tax is imposed on the increase in
the value of a Contract until a distribution occurs. Monthly annuity payments
made as retirement distributions, and lump-sum payments or cash withdrawals
(when permitted by the applicable retirement plan) under a Contract are
generally taxable to the Annuitant as ordinary income to the extent that such
payments are not deemed to come from the Owner's previously taxed investment in
the Contract. Distributions made prior to age 59 1/2 generally are subject to a
10% penalty tax, although this tax will not apply in certain circumstances.
Owners, Annuitants, Payees and Beneficiaries should seek qualified advice about
the tax consequences of distributions, withdrawals, rollovers and payments under
the retirement plans in connection with which the Contracts are purchased.
In certain circumstances, the Company is required to withhold and remit to
the U.S. Government part of the taxable portion of each distribution made under
a Contract.
RETIREMENT PLANS
The Contracts are designed for use with the following types of qualified
retirement plans: (1) Pension and Profit-Sharing Plans established by business
employers and certain associations, as permitted by Sections 401(a) and 401(k)
of the Code, including those purchasers who would have been covered under the
rules governing old H.R. 10 (Keogh) Plans; and (2) Individual Retirement
Accounts ("IRAs") permitted by Sections 219 and 408 of the Code (excluding IRAs
established as "Individual Retirement Annuities" under Section 408(b), but
including Simplified Employee Pensions established by employers pursuant to
Section 408(k)) and Simple Retirement Accounts established pursuant to Section
408(p)).
The tax rules applicable to participants in such retirement plans vary
according to the type of plan and its terms and conditions. Therefore, no
attempt is made herein to provide more than general information about the use of
the Contracts with the various types of retirement plans. Participants in such
plans as well as Owners, Annuitants, Payees and Beneficiaries are cautioned that
the rights of any person to any benefits under these plans are subject to the
terms and conditions of the plans themselves, regardless of the terms and
conditions of the Contracts. The Company will provide purchasers of Contracts
used in connection with IRAs with such supplemental information as may be
required by the Internal Revenue Service or other appropriate agency. Any person
contemplating the purchase of a Contract should consult a qualified tax adviser.
YEAR 2000 COMPLIANCE
The Company's business, financial condition, and results of operations could
be materially and adversely affected by the failure of its systems and
applications (or those either provided or operated by third-parties) to properly
operate or manage dates beyond the year 1999. However, the Company has
investigated the nature and extent of the work necessary to render its computer
systems capable of processing beyond the turn of the century ("Year 2000
compliant"), and has made substantial progress toward achieving this goal,
including upgrading and/or replacing existing systems. As of December 31, 1998,
over 90% of the system components had been remediated, tested and certified as
Year 2000 compliant. The majority of the remaining components are in the testing
phase and are expected to be certified by March 31, 1999. While it is believed
that these efforts do involve substantial costs, the Company closely monitors
associated costs and continues to evaluate associated risks based on actual
testing. Based on available information, the Company believes that it will be
able to manage its total Year 2000 transition without a material adverse effect
on its business operations, financial condition, or results of operations.
19
<PAGE>
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in those states
where the Contracts may be lawfully sold. Such agents will be registered
representatives of broker-dealers registered under the Securities Exchange Act
of 1934 who are members of the National Association of Securities Dealers, Inc.
The Contracts will be distributed by Clarendon Insurance Agency, Inc., One Sun
Life Executive Park, Wellesley Hills, Massachusetts 02481, our wholly-owned
subsidiary. We will pay commissions and other distribution compensation that
will not be more than 5.11% of the Purchase Payments. In addition, after the
fifth (5th) Contract Year, we may pay broker-dealers who have entered into
distribution agreements with us may an annual renewal commission of no more than
0.20% of the Contract's Accumulation Account value.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. We
are engaged in various kinds of routine litigation which, in management's
opinion, is not material with respect to the Variable Account.
OWNER INQUIRIES
All Owner inquiries should be directed to the Company at its Annuity Service
Mailing Address.
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
General Information....................................................................
Annuity Provisions.....................................................................
Other Contract Provisions..............................................................
Federal Tax Status.....................................................................
Administration of the Contracts........................................................
Distribution of the Contracts..........................................................
Accountants............................................................................
Financial Statements...................................................................
Appendix A--The Fixed Account..........................................................
Appendix B--Illustrative Examples of Variable Accumulation Unit Value, Variable Annuity
Unit Value and Variable Annuity Payment Calculations..................................
Appendix C--Withdrawals and Withdrawal Charges.........................................
</TABLE>
20
<PAGE>
This Prospectus sets forth information about the Contracts and the Variable
Account that a prospective purchaser should know before investing. Additional
information about the Contracts and the Variable Account has been filed with the
Securities and Exchange Commission in a Statement of Additional Information
dated May 1, 1999 which is incorporated herein by reference. The Statement of
Additional Information is available upon request and without charge from Sun
Life Assurance Company of Canada (U.S.). To receive a copy, return this request
form to the address shown below or telephone (800) 752-7215.
- --------------------------------------------------------------------------------
To: Sun Life Assurance Company of Canada (U.S.)
c/o Retirement Products and Services
P.O. Box 1024
Boston, Massachusetts 02103
Please send me a Statement of Additional Information for
Compass I--Sun Life of Canada (U.S.) Variable Account C.
Name
- ---------------------------------------------------------------------------
Address
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
City
- --------------------------------------------------- State
- ---------------------------------- Zip
- -------------------------------------
Telephone
- ---------------------------------------------------------------------------
21
<PAGE>
PROSPECTUS
MAY 1, 1999
COMBINATION FIXED/VARIABLE
ANNUITY FOR QUALIFIED
RETIREMENT PLANS
ISSUED IN CONNECTION WITH
SUN LIFE OF CANADA (U.S.)
VARIABLE ACCOUNT C
CO1US-1 5/99
ISSUED BY
SUN LIFE INSURANCE COMPANY OF
CANADA (U.S.)
Annuity Service Mailing Address:
c/o Retirement Products and Services
P.O. Box 1024
Boston, Massachusetts 02103
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley, Massachusetts 02181
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
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Attached hereto and made a part hereof is a Statement of Additional
Information dated May 1, 1999.
<PAGE>
MAY 1, 1999
COMPASS I
STATEMENT OF ADDITIONAL INFORMATION
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information..................................................
Annuity Provisions...................................................
Other Contract Provisions............................................
Federal Tax Status...................................................
Administration of the Contracts......................................
Distribution of the Contracts........................................
Accountants..........................................................
Financial Statements.................................................
Appendix A--The Fixed Account........................................
Appendix B--Illustrative Examples of Variable Accumulation Unit
Value, Variable Annuity Unit Value and Variable Annuity Payment
Calculations........................................................
Appendix C--Withdrawals and Withdrawal Charges.......................
</TABLE>
This Statement of Additional Information sets forth information which may be
of interest to prospective purchasers of Compass I Combination Fixed/Variable
Annuity Contracts (the "Contracts") issued by Sun Life Assurance Company of
Canada (U.S.) (the "Company") in connection with Sun Life of Canada (U.S.)
Variable Account C (the "Variable Account") which is not necessarily included in
the Prospectus dated May 1, 1999. This Statement of Additional Information
should be read in conjunction with the Prospectus, a copy of which may be
obtained without charge from the Company at its Annuity Service Mailing Address,
c/o Retirement Products and Services, P.O. Box 1024, Boston, Massachusetts
02103, or by telephoning (800) 752-7215.
The terms used in this Statement of Additional Information have the same
meanings as in the Prospectus.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS ONLY IF PRECEDED OR ACCOMPANIED BY A
CURRENT PROSPECTUS.
<PAGE>
GENERAL INFORMATION
THE COMPANY
Sun Life Assurance Company of Canada (U.S.) (the "Company") is a stock life
insurance company incorporated under the laws of Delaware on January 12, 1970.
Its Executive Office is located at One Sun Life Executive Park, Wellesley Hills,
Massachusetts 02481.
The Company is an indirect wholly-owned subsidiary of Sun Life Assurance
Company of Canada, 150 King Street West, Toronto, Ontario, Canada, a mutual life
insurance company incorporated in Canada in 1865.
THE VARIABLE ACCOUNT
Sun Life of Canada (U.S.) Variable Account C (the "Variable Account") is a
separate account of the Company which meets the definition of a separate account
under the federal securities laws and which is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940.
THE FIXED ACCOUNT
If the Owner elects to have Contract values accumulated on a fixed basis,
Purchase Payments are allocated to the Fixed Account, which is the general
account of the Company. Because of exemptive and exclusionary provisions, that
part of the Contract relating to the Fixed Account is not registered under the
Securities Act of 1933 ("1933 Act") and the Fixed Account is not registered as
an investment company under the Investment Company Act of 1940 ("1940 Act").
Accordingly, neither the Fixed Account, nor any interests therein are subject to
the provisions or restrictions of the 1933 Act or the 1940 Act, and the staff of
the Securities and Exchange Commission has not reviewed the disclosures in this
Statement of Additional Information with respect to that portion of the Contract
relating to the Fixed Account. Disclosures regarding the fixed portion of the
Contract and the Fixed Account, however, may be subject to certain generally
applicable provisions of the federal securities laws relating to the accuracy
and completeness of statements made herein (see "Appendix A--The Fixed
Account").
ANNUITY PROVISIONS
DETERMINATION OF ANNUITY PAYMENTS
On the Annuity Commencement Date the Contract's Accumulation Account will be
canceled and its adjusted value will be applied to provide a Variable Annuity or
a Fixed Annuity or a combination of both. The adjusted value will be equal to
the value of the Accumulation Account for the Valuation Period which ends
immediately preceding the Annuity Commencement Date, reduced by any applicable
premium taxes or similar taxes and a proportionate amount of the contract
maintenance charge to reflect the time elapsed between the last Contract
Anniversary and theday before the Annuity Commencement Date.
The dollar amount of the first variable annuity payment will be determined
in accordance with the annuity payment rates found in the Contract, which are
based on an assumed interest rate of 4% per year. All variable annuity payments
other than the first are determined by means of Annuity Units credited to the
Contract. The number of Annuity Units to be credited in respect of a particular
Sub-Account is determined by dividing that portion of the first variable annuity
payment attributable to that Sub-Account by the Annuity Unit value of that
Sub-Account for the Valuation Period which ends immediately preceding the
Annuity Commencement Date. The number of Annuity Units of each particular
Sub-Account credited to the Contract then remains fixed, unless an exchange of
Annuity Units is made as described in the Prospectus. The dollar amount of each
variable annuity payment after the first may increase, decrease or remain
constant, and is equal to the sum of the amounts determined by multiplying the
number of Annuity Units of a particular Sub-Account credited to the Contract by
the Annuity Unit value for the particular Sub-Account for the Valuation Period
which ends immediately preceding the due date of each subsequent payment.
For a description of fixed annuity payments, see Appendix A.
2
<PAGE>
For a hypothetical example of the calculation of a variable annuity payment,
see Appendix B.
ANNUITY UNIT VALUE
The Annuity Unit value for each Sub-Account was established at $10.00 for
the first Valuation Period of the particular Sub-Account. The Annuity Unit
value for the particular Sub-Account for any subsequent Valuation Period is
determined by multiplying the Annuity Unit value for the particular
Sub-Account for the immediately preceding Valuation Period by the Net
Investment Factor (see "Net Investment Factor" in the Prospectus) for the
particular Sub-Account for the current Valuation Period, and then multiplying
that product by a factor to neutralize the assumed interest rate of 4% per
year used to establish the annuity payment rates found in the Contract. The
factor is 0.99989255 for a one day Valuation Period.
For a hypothetical example of the calculation of the value of a Variable
Annuity Unit, see Appendix B.
OTHER CONTRACT PROVISIONS
RIGHT TO RETURN CONTRACT
The Owner should read the Contract carefully as soon as it is received. If
the Owner wishes to return the Contract, it must be returned to the Company at
the Company's Annuity Service Mailing Address within ten days after it was
delivered to the Owner. When the Company receives the returned Contract, it will
be canceled and the full amount of any Purchase Payment(s) received by the
Company will be refunded.
Under the Internal Revenue Code, an Owner establishing an Individual
Retirement Account ("IRA") must be furnished with a disclosure statement
containing certain information about the Contract and applicable legal
requirements. This statement must be furnished on or before the date the IRA
is established. If the Owner is furnished with such disclosure statement
before the seventh (7th) day preceding the date the IRA is established, the
Owner will not have any right of revocation. If the disclosure statement is
furnished after the seventh (7) day preceding the establishment of the IRA,
then the Owner may revoke the Contract any time within seven days after the
issue date. Upon such revocation, the Company will refund all Purchase
Payment(s) made by the Owner. The foregoing right of revocation with respect
to an IRA is in addition to the return privilege set forth in the preceding
paragraph. The Company will allow an Owner establishing an IRA a "ten day
free look," notwithstanding the provisions of the Internal Revenue Code.
OWNER AND CHANGE OF OWNERSHIP
The Contract shall belong to the Owner or to the successor Owner or
transferee of the Owner. All Contract rights and privileges may be exercised
by the Owner, the successor Owner or transferee of the Owner without the
consent of the Beneficiary (other than an irrevocably designated Beneficiary)
or any other person. Such rights and privileges may be exercised only during
the lifetime of the Annuitant and prior to the Annuity Commencement Date,
except as otherwise provided in the Contract. The Annuitant becomes the Owner
on and after the Annuity Commencement Date. The Beneficiary becomes the Owner
on the death of the Annuitant. In some qualified plans the Owner of the
Contract is a Trustee and the Trust authorizes the Annuitant/participant to
exercise certain contract rights and privileges.
Ownership of the Contract may not be transferred except to: (1) the
Annuitant; (2) a trustee or successor trustee of a pension or profit sharing
trust which is qualified under Section 401 of the Internal Revenue Code; (3) the
trustee of an individual retirement account plan qualified under Section 408 of
the Internal Revenue Code for the benefit of the Owner; or (4) as otherwise
permitted from time to time by laws and regulations governing the retirement
plans for which the Contract may be issued. Subject to the foregoing, the
Contract may not be sold, assigned, transferred, discounted or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose to any person other than the Company. A change of ownership
will not be binding upon the Company until written notification is received by
the Company. Once received by the Company the change will be effective as of the
date on which the request for change was signed by the Owner, but the change
will be without prejudice to the Company on account of any payment made or any
action taken by the Company prior to receiving the change. The Company may
require that the signature of the Owner be guaranteed by a member firm of the
3
<PAGE>
New York, American, Boston, Midwest, Philadelphia or Pacific Stock Exchange,
or by a commercial bank (not a savings bank) which is a member of the Federal
Deposit Insurance Corporation or, in certain cases, by a member firm of the
National Association of Securities Dealers, Inc. which has entered into an
appropriate agreement with the Company.
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary designation contained in the Contract application will
remain in effect until changed. The interest of any Beneficiary is subject to
the particular Beneficiary surviving the Annuitant.
Subject to the rights of an irrevocably designated Beneficiary, the Owner
(or the Annuitant, as permitted by the Owner) may change or revoke the
designation of a Beneficiary at any time while the Annuitant is living by
filing with the Company a written beneficiary designation or revocation in
such form as the Company may require. The change or revocation will not be
binding upon the Company until it is received by the Company at its Annuity
Service Mailing Address. When it is so received, the change or revocation will
be effective as of the date on which the beneficiary designation or
revocation was signed by the Owner or the Annuitant, as applicable.
Reference should be made to the terms of the particular retirement plan and
any applicable legislation for any restrictions on the beneficiary designation.
CUSTODIAN
The Custodian of the assets of the Variable Account is State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110. The Company
will direct the Custodian to purchase Fund shares at net asset value in
connection with amounts allocated to the particular Sub-Account in accordance
with the instructions of the Owner and to redeem Fund shares at net asset value
for the purpose of meeting the contractual obligations of the Variable Account,
paying charges relative to the Variable Account or making adjustments for
annuity reserves held in the Variable Account.
FEDERAL TAX STATUS
INTRODUCTION
The Contracts are designed for use by retirement plans under the
provisions of Sections 401 or 408 (excluding Section 408(b)) of the Internal
Revenue Code (the "Code"). The ultimate effect of federal income taxes on the
value of the Contract's Accumulation Account, on annuity payments and on the
economic benefit to the Owner, the Annuitant, the Payee or the Beneficiary
may depend upon the type of retirement plan for which the Contract is
purchased and upon the tax and employment status of the individual concerned.
The discussion contained herein is general in nature, is based upon the
Company's understanding of federal income tax laws as currently interpreted,
and is not intended as tax advice. Congress has the power to enact
legislation affecting the tax treatment of annuity contracts, and such
legislation could be applied retroactively to Contracts purchased before the
date of enactment. Any person contemplating the purchase of a Contract should
consult a qualified tax adviser. THE COMPANY DOES NOT MAKE ANY GUARANTEE
REGARDING THE TAX STATUS OF ANY CONTRACT OR ANY TRANSACTION INVOLVING THE
CONTRACTS.
TAX TREATMENT OF THE COMPANY AND THE VARIABLE ACCOUNT
The Company is taxed as a life insurance company under the Code. Although
the operations of the Variable Account are accounted for separately from other
operations of the Company for purposes of federal income taxation, the Variable
Account is not separately taxable as a regulated investment company or otherwise
as a taxable entity separate from the Company. Under existing federal income tax
laws, the income and capital gains of the Variable Account to the extent applied
to increase reserves under the Contracts are not taxable to the Company.
4
<PAGE>
TAXATION OF ANNUITIES IN GENERAL
A participant in a retirement plan is the individual on whose behalf a
Contract is issued. Certain federal income tax advantages are available to
participants in retirement plans which meet the requirements of Section 401
or Section 408 (excluding Section 408(b)) of the Code. The Contracts are
designed for use in connection with such retirement plans and accordingly all
or a portion of the contributions to such plans will be used to make Purchase
Payments under the Contracts. Monthly annuity payments made as retirement
distributions under a Contract are generally taxable to the Annuitant as
ordinary income under Section 72 of the Code. Distributions prior to age 59
1/2 generally are subject to a 10% penalty tax, although this tax will not
apply in certain circumstances. Certain distributions, known as "eligible
rollover distributions," if rolled over to certain other qualified retirement
plans (either directly or after being distributed to the Owner or Payee), are
not taxable until distributed from the plan to which they are rolled over. In
general, an eligible rollover distribution is any taxable distribution other
than a distribution that is part of a series of payments made for life or for
a specified period of ten years or more.
Owners, Annuitants, Payees and Beneficiaries should seek qualified advice
about the tax consequences of distributions, withdrawals, rollovers and payments
under the retirement plans in connection with which the Contracts are purchased.
The Company will withhold and remit to the U.S. Government a part of the
taxable portion of each distribution made under a Contract issued in connection
with an individual retirement account unless the Owner or Payee provides his or
her taxpayer identification number to the Company and notifies the Company (in
the manner prescribed) before the time of the distribution that he or she
chooses not to have any amounts withheld.
In the case of distributions from a Contract (other than a Contract issued
for use with an individual retirement account), the Company or the plan
administrator must withhold and remit to the U.S. Government 20% of each
distribution that is an eligible rollover distribution (as defined above),
unless the Owner or Payee elects to make a direct rollover of the distribution
to another qualified retirement plan that is eligible to receive the rollover.
If a distribution from a Contract is not an eligible rollover distribution,
then the Owner or Payee can choose not to have amounts withheld as described
above for individual retirement accounts.
Amounts withheld from any distribution may be credited against the Owner's
or Payee's federal income tax liability for the year of the distribution.
The Tax Reform Act of 1984 authorizes the Internal Revenue Service to
promulgate regulations that prescribe investment diversification requirements
for segregated asset accounts underlying certain variable annuity contracts.
These regulations do not affect the tax treatment of qualified contracts, such
as the Contracts.
Due to the complex nature and frequent revisions of the federal income tax
laws affecting retirement plans, a person contemplating the purchase of a
Contract for use in connection with a retirement plan, the distribution or
surrender of a Contract held under a retirement plan, or the election of an
annuity option provided in a Contract should consult a qualified tax adviser.
ADMINISTRATION OF THE CONTRACTS
The Company performs certain administrative functions relating to the
Contracts and the Variable Account. These functions include, among other things,
maintaining the books and records of the Variable Account and the Sub-Accounts,
and maintaining records of the name, address, taxpayer identification number,
Contract number, type of Contract issued to each Owner, the status of the
Accumulation Account under each Contract, and other pertinent information
necessary to the administration and operation of the Contracts.
DISTRIBUTION OF THE CONTRACTS
The offering of the Contracts is continuous. The Contracts will be sold by
licensed insurance agents in those states where the Contracts may be lawfully
sold. Such agents will be registered representatives of
5
<PAGE>
broker-dealers registered under the Securities Exchange Act of 1934 who are
members of the National Association of Securities Dealers, Inc. The Contracts
will be distributed by Clarendon Insurance Agency, Inc. ("Clarendon"), One Sun
Life Executive Park, Wellesley Hills, Massachusetts 02481, a wholly-owned
subsidiary of the Company. Commissions and other distribution compensation will
be paid by the Company and will not be more than 5.11% of the Purchase Payments.
In addition, after the fifth (5th) Contract Year, broker-dealers who have
entered into distribution agreements with the Company may receive an annual
renewal commission of no more than 0.20% of the Contract's Accumulation Account
values. During 1996, 1997 and 1998, approximately $32,000, $22,500, and
$ , respectively, was paid to and retained by Clarendon in connection
with the distribution of the Contracts.
ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts 02110, are
the Variable Account's independent certified public accountants, providing
auditing and other professional services.
<PAGE>
[Financial Statements to be filed by amendment]
6
<PAGE>
APPENDIX A
THE FIXED ACCOUNT
THAT PORTION OF THE CONTRACT RELATING TO THE FIXED ACCOUNT IS NOT REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("1933 ACT") AND THE FIXED ACCOUNT IS NOT
REGISTERED AS AN INVESTMENT COMPANY UNDER THE INVESTMENT COMPANY ACT OF 1940
("1940 ACT"). ACCORDINGLY, NEITHER THE FIXED ACCOUNT NOR ANY INTERESTS THEREIN
ARE SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT OR THE 1940 ACT,
AND THE DISCLOSURE IN THIS APPENDIX A HAS NOT BEEN REVIEWED BY THE STAFF OF THE
SECURITIES AND EXCHANGE COMMISSION. HOWEVER, THE FOLLOWING DISCLOSURE ABOUT THE
FIXED ACCOUNT MAY BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE
FEDERAL SECURITIES LAWS REGARDING THE ACCURACY AND COMPLETENESS OF DISCLOSURE.
A WORD ABOUT THE FIXED ACCOUNT
The Fixed Account is made up of all of the general assets of the Company
other than those allocated to any separate account. Purchase Payments will be
allocated to the Fixed Account as elected by the Owner at the time of purchase
or as subsequently changed. The Company will invest the assets of the Fixed
Account in those assets chosen by the Company and allowed by applicable state
law regarding the nature and quality of investments that may be made by life
insurance companies and the percentage of their assets that may be committed to
any particular type of investment. In general, these laws permit investments,
within specified limits and subject to certain qualifications, in federal, state
and municipal obligations, corporate bonds, preferred and common stocks, real
estate mortgages, real estate and certain other investments. Investment income
from such Fixed Account assets will be allocated between the Company and the
contracts participating in the Fixed Account, in accordance with the terms of
such contracts.
Fixed annuity payments made to Annuitants under the Contracts will not be
affected by the mortality experience (death rate) of persons receiving such
payments or of the general population. The Company assumes this "mortality risk"
by virtue of annuity rates incorporated in the Contracts which cannot be
changed. In addition, the Company guarantees that it will not increase charges
for maintenance of the Contracts regardless of its actual expenses.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks, distribution expenses and
administrative expenses borne by the Company in connection with Fixed Account
Contracts. The Company expects to derive a profit from this compensation. The
amount of investment income allocated to the Contracts will vary from year to
year in the sole discretion of the Company. However, the Company guarantees that
it will credit interest at a rate of not less than 4% per year, compounded
annually, to amounts allocated to the Fixed Account under the Contracts. The
Company may credit interest at a rate in excess of 4% per year; however, the
Company is not obligated to credit any interest in excess of 4% per year. There
is no specific formula for the determination of excess interest credits. Such
credits, if any, will be determined by the Company based on information as to
expected investment yields. Some of the factors that the Company may consider in
determining whether to credit interest to amounts allocated to the Fixed Account
and the amount thereof are: general economic trends; rates of return currently
available and anticipated on the Company's investments; regulatory and tax
requirements; and competitive factors. ANY INTEREST CREDITED TO AMOUNTS
ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 4% PER YEAR WILL BE DETERMINED IN
THE SOLE DISCRETION OF THE COMPANY. THE OWNER ASSUMES THE RISK THAT INTEREST
CREDITED TO FIXED ACCOUNT ALLOCATIONS MAY NOT EXCEED THE MINIMUM GUARANTEE OF 4%
FOR ANY GIVEN YEAR.
36
<PAGE>
The Company is aware of no statutory limitations on the maximum amount of
interest it may credit, and the Board of Directors has set no limitations.
However, inherent in the Company's exercise of discretion in this regard is the
equitable allocation of distributable earnings and surplus among its various
policyholders and contract owners and to its sole stockholder.
Excess interest, if any, will be credited on the fixed accumulation value.
The Company guarantees that, at any time, the fixed accumulation value will not
be less than the amount of Purchase Payments allocated to the Fixed Account,
plus interest at the rate of 4% per year, compounded annually, plus any
additional interest which the Company may, in its discretion, credit to the
Fixed Account, less the sum of all administrative or withdrawal charges, any
applicable premium taxes, and less any amounts surrendered. If the Owner
surrenders the Contract, the amount available from the Fixed Account will be
reduced by any applicable withdrawal charge (See "Withdrawal Charges" in the
Prospectus).
If on any Contract Anniversary the rate at which the Company credits
interest to amounts allocated to the Fixed Account under the Contract is less
than 80% of the average discount rate on 52-week United States Treasury Bills
for the most recent auction prior to the Contract Anniversary on which the
declared interest rate becomes applicable, then during the 45-day period after
the Contract Anniversary the Owner may elect to receive the value of the
Contract's Accumulation Account without assessment of a withdrawal charge. Such
withdrawal may, however, result in adverse tax consequences. (See "Federal Tax
Status").
The Company reserves the right to defer the payment of amounts withdrawn
from the Fixed Account for a period not to exceed six months from the date
written request for such withdrawal is received by the Company.
FIXED ACCUMULATION VALUE
(1) CREDITING FIXED ACCUMULATION UNITS
Upon receipt of a Purchase Payment by the Company, all or that portion, if
any, of the net Purchase Payment to be allocated to the Fixed Account in
accordance with the allocation factor will be credited to the Accumulation
Account in the form of Fixed Accumulation Units. The number of Fixed
Accumulation Units to be credited is determined by dividing the dollar amount
allocated to the Fixed Account by the Fixed Accumulation Unit value for the
Contract for the Valuation Period during which the Purchase Payment is received
by the Company.
(2) FIXED ACCUMULATION UNIT VALUE
A Fixed Accumulation Unit value is established at $10.00 for the first
Valuation Period of the calendar month in which the Contract is issued and will
increase for each successive Valuation Period as interest is accrued. All
Contracts issued in a particular calendar month and at a particular rate of
interest, as specified in advance by the Company from time to time, will use the
same series of Fixed Accumulation Unit values throughout the first Contract
Year.
At the first Contract Anniversary the Fixed Accumulation Units credited to a
Contract's Accumulation Account will be exchanged for a second type of Fixed
Accumulation Unit with an equal aggregate value. The value of this second type
of Fixed Accumulation Unit will increase for each Valuation Period during each
Contract Year as interest is accrued at a rate which shall have been determined
by the Company prior to the first day of each Contract Year.
The Company will credit interest to the Contract's Fixed Accumulation
Account at a rate of not less than 4% per year, compounded annually. Once the
rate applicable to a specific Contract is established by the Company, it may not
be changed for the balance of the Contract Year. Additional Payments made during
the Contract Year will be credited with interest for the balance of the Contract
Year at the rate applicable at the beginning of that Contract Year. The Fixed
Accumulation Unit value for the Contract for any Valuation Period is the value
determined as of the end of such Valuation Period.
(3) FIXED ACCUMULATION VALUE
The fixed accumulation value of a Contract, if any, for any Valuation Period
is equal to the value of the Fixed Accumulation Units credited to the
Accumulation Account for such Valuation Period.
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LOANS FROM THE FIXED ACCOUNT
Loans will be permitted from the Contract's Fixed Accumulation Account (to
the extent permitted by the retirement plan for which the Contract is
purchased). The maximum loan amount is the amount determined under the Company's
maximum loan formula for qualified plans. The minimum loan amount is $1,000.
Loans will be secured by a security interest in the Contract. Loans are subject
to applicable retirement program legislation and their taxation is determined
under the federal income tax laws. The amount borrowed will be transferred to a
fixed minimum guarantee accumulation account in the Company's general account
where it will accrue interest at a specified rate below the then current loan
interest rate. Generally, loans must be repaid within five years.
The amount of the death benefit, the amount payable on a full surrender and
the amount applied to provide an annuity on the Annuity Commencement Date will
be reduced to reflect any outstanding loan balance (plus accrued interest
thereon). Partial withdrawals may be restricted by the maximum loan limitation.
FIXED ANNUITY PAYMENTS
The dollar amount of each fixed annuity payment will be determined in
accordance with the annuity payment rates found in the Contract which are based
on a minimum guaranteed interest rate of 4% per year, or, if more favorable to
the Payee(s), in accordance with the Single Premium Immediate Settlement Rates
published by the Company and in use on the Annuity Commencement Date.
APPENDIX B
ILLUSTRATIVE EXAMPLES
ILLUSTRATIVE EXAMPLE OF VARIABLE ACCUMULATION UNIT VALUE CALCULATIONS
Suppose the net asset value of a Fund share at the end of the current
Valuation Period is $18.38; at the end of the immediately preceding Valuation
Period is $18.32; the Valuation Period is one day; no dividends or distributions
caused Fund shares to go "ex-dividend" during the current Valuation Period.
$18.38 divided by $18.32 is 1.00327511. Subtracting the one day risk factor for
mortality and expense risks of .00003539 (the daily equivalent of the current
charge of 1.3% on an annual basis) gives a net investment factor of 1.00323972.
If the value of the Variable Accumulation Unit for the immediately preceding
Valuation Period had been 14.5645672, the value for the current Valuation Period
would be 14.6117523 (14.5645672 x 1.00323972).
ILLUSTRATIVE EXAMPLE OF VARIABLE ANNUITY UNIT VALUE CALCULATIONS
Suppose the circumstances of the first example exist, and the value of an
Annuity Unit for the immediately preceding Valuation Period had been 12.3456789.
If the first variable annuity payment is determined by using an annuity payment
based on an assumed interest rate of 4% per year, the value of the Annuity Unit
for the current Valuation Period would be 12.3843446 (12.3456789 x 1.00323972 x
0.99989255).
ILLUSTRATIVE EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATIONS
Suppose that the Accumulation Account of a deferred Contract is credited
with 8,765.4321 Variable Accumulation Units of a particular Sub-Account but is
not credited with any Fixed Accumulation Units; that the Variable Accumulation
Unit value and the Annuity Unit value for the particular Sub-Account for the
Valuation Period which ends immediately preceding the Annuity Commencement Date
are 14.5645672 and 12.3456789, respectively; that the annuity payment rate for
the age and option elected is $6.78 per $1,000; and that the Annuity Unit value
on the day prior to the second variable annuity payment date is 12.3843446. The
first variable annuity payment would be $865.57 (8,765.4321 x 14.5645672 x 6.78
divided by 1,000). The number of Annuity Units credited would be 70.1112
($865.57 divided by 12.3456789) and the second variable annuity payment would be
$868.28 (70.1112 x 12.3843446).
38
<PAGE>
APPENDIX C
WITHDRAWALS AND WITHDRAWAL CHARGES
Suppose, for example, that the initial Purchase Payment under a Contract was
$2,000, and that $2,000 Purchase Payments were made on each Contract Anniversary
thereafter. The maximum free withdrawal amount would be $200, $400, $600, $800,
and $1,000 in Contract Years 1, 2, 3, 4, and 5, respectively; these amounts are
determined as 10% of the new Payments (as new Payments are defined in each
Contract Year).
In Contract Years after the 5th, the maximum free withdrawal amount will
be increased by any old Payments which have not already been liquidated.
Continuing the example, consider a partial withdrawal of $4,500 made during
the 7th Contract Year. Let us consider this withdrawal under two sets of
circumstances: first where there were no previous partial withdrawals, and
second where there had been an $800 cash withdrawal payment made in the 5th
Contract Year.
1. In the first instance, there were no previous partial withdrawals. The
maximum free withdrawal amount in the 7th Contract Year is then $5,000,
which consists of $4,000 in old Payments ($2,000 from each of the first
two Contract Years) and $1,000 as 10% of the new Payments in years 3-7.
Because the $4,500 partial withdrawal is less than the maximum free
withdrawal amount of $5,000, no withdrawal charge would be imposed.
This withdrawal would liquidate the Purchase Payments which were made in
Contract Years 1 and 2, and would liquidate $500 of the Purchase Payment
which was made in Contract Year 3.
2. In the second instance, an $800 cash withdrawal payment had been made in
the 5th Contract Year. Because the cash withdrawal payment was less than
the $1,000 maximum free withdrawal amount in the 5th Contract Year, no
surrender charge would have been imposed. The $800 cash withdrawal
payment would have liquidated $800 of the Purchase Payment in the 1st
Contract Year.
As a consequence, the maximum free withdrawal amount in the 7th Contract
Year is only $4,200, consisting of $3,200 in old Payments ($1,200
remaining from Contract Year 1 and $2,000 from Contract Year 2) and
$1,000 as 10% of new Payments. A $4,500 partial withdrawal exceeds the
maximum free withdrawal amount by $300. Therefore the amount subject to
the withdrawal charge is $300 and the withdrawal charge is $300 X 0.05,
or $15. The amount of the cash withdrawal payment is the $4,500 partial
withdrawal, minus the $15 withdrawal charge, or $4,485. The $4,500
partial withdrawal would be charged to the Contract's Accumulation
Account in the form of canceled Accumulation Units.
This withdrawal would liquidate the remaining $1,200 from the Purchase
Payment in Contract Year 1, the full $2,000 Purchase Payment from
Contract Year 2, and $1,300 of the Payment from Contract Year 3.
Suppose that the Owner of the Contract wanted to make a full surrender of
the Contract in Contract Year 7 instead of a $4,500 partial withdrawal. The
consequences would be as follows:
1. In the first instance, where there were no previous cash withdrawal
payments, we know from above that the maximum free withdrawal amount in
the 7th Contract Year is $5,000. The sum of the old and new Payments not
previously liquidated is $14,000 ($2,000 from each Contract Year). The
amount subject to the withdrawal charge is thus $9,000. The withdrawal
charge on full surrender would then be $9,000 X 0.05 or $450.
2. In the second instance, where $800 had previously been withdrawn, we know
from above that the maximum free withdrawal amount in the 7th Contract
Year is $4,200. The sum of old and new Payments not previously liquidated
is $14,000 less the $800 which was previously liquidated, or $13,200. The
amount subject to the withdrawal charge is still $9,000 ($13,200 -
$4,200). The withdrawal charge on full surrender would thus be the same
as in the first example.
39
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
ANNUITY SERVICE MAILING ADDRESS:
C/O RETIREMENT PRODUCTS AND SERVICES
P.O. BOX 1024
BOSTON, MASSACHUSETTS 02103
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
LEGAL COUNSEL
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110
CO1US-13 5/99
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following Financial Statements are included in the Registration
Statement:
Included in Part A:
A. Condensed Financial Information -- Accumulation Unit Values
Included in Part B:
A. Financial Statements of the Registrant [to be filed by amendment]:
1. Statement of Condition, December 31, 1998;
2. Statement of Operations, Year Ended December 31, 1998;
3. Statements of Changes in Net Assets, Years Ended December 31,
1998 and 1997;
4. Notes to Financial Statements;
5. Independent Auditors' Report;
B. Financial Statements of the Depositor [to be filed by amendment]:
1. Statutory Statements of Admitted Assets, Liabilities and Capital
Stock and Surplus, December 31, 1998 and 1997;
2. Statutory Statements of Operations, Years Ended December 31, 1998,
1997 and 1996;
3. Statutory Statements of Changes in Capital Stock and Surplus, Years
Ended December 31, 1998, 1997 and 1996;
4. Statutory Statements of Cash Flow, Years Ended December 31, 1998,
1997 and 1996;
5. Notes to Statutory Financial Statements; and
6. Independent Auditors' Report.
<PAGE>
(b) The following Exhibits are incorporated in this Amendment to the
Registration Statement by reference unless otherwise indicated:
(1) Resolution of Board of Directors of the depositor dated March 31, 1982
authorizing the establishment of the Registrant*;
(2) Custodian Agreement between State Street Bank and Trust Company and
the depositor dated November 1, 1982 (Filed as Exhibit A.(2) to Amendment No. 1
to the Registration Statement on Form N-8B-2);
(3) (a) Form of Marketing Coordination and Administrative Services
Agreement between the depositor, Massachusetts Financial Services Company and
Clarendon Insurance Agency, Inc.**;
(b)(i) Specimen Sales Operations and General Agent Agreement**;
(b)(ii) Specimen Broker-Dealer Supervisory and Service Agreement**;
(b)(iii) Specimen General Agent Agreement**;
(4) Flexible Payment Deferred Combination Variable and Fixed Annuity
Contract***;
(5) Not Applicable;
(6) Certificate of Incorporation and By-laws of the depositor*;
(7) Not Applicable;
(8) None;
(9) Previously filed;
(10) Consent of Deloitte & Touche [to be filed by amendment];
<PAGE>
(11) None;
(12) Not Applicable;
(13) Not Applicable;
(14) Not Applicable; and
(15) Powers of Attorney****.
* Incorporated by reference to the Registration Statement of the
Registrant on Form N-4, File No. 333-37907, filed on October 14, 1997.
** Incorporated by reference to Pre-Effective Amendment No. 1 to the
Registration Statement of the Registrant on Form N-4, File No. 333-37907,
filed on January 16, 1998.
*** Incorporated by reference to Post-Effective Amendment No. 20 to the
Registration Statement of the Registrant on Form N-4, File No. 2-78738, filed
on April 16, 1998.
**** Filed Herewith.
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices
Business Address with Depositor
- ------------------ ---------------------
Donald A. Stewart Chairman and Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
C. James Prieur President and Director
One Sun Life Executive Park
Wellesley Hills, MA 02481
John D. McNeil Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
David D. Horn Director
Strong Road
New Vineyard, ME 04956
John S. Lane Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
Richard B. Bailey Director
63 Atlantic Avenue
Boston, MA 02110
M. Colyer Crum Director
104 Westcliff Road
Weston, MA 02193
Angus A. MacNaughton Director
Metro Tower, Suite 1170
950 Tower Lane
Foster City, CA 94404-2121
S. Caesar Raboy Director
220 Boylston Street
Boston, MA 02110
James M.A. Anderson Vice President, Investments
One Sun Life Executive Park
Wellesley Hills, MA 02481
<PAGE>
Name and Principal Positions and Offices
Business Address with Depositor
- ------------------ ---------------------
Robert P. Vrolyk Vice President, Finance
One Sun Life Executive Park and Actuary
Wellesley Hills, MA 02481
L. Brock Thomson Vice President
One Sun Life Executive Park and Treasurer
Wellesley Hills, MA 02481
Peter F. Demuth Vice President and Chief
One Sun Life Executive Park Counsel and Assistant Secretary
Wellesley Hills, MA 02481
Ellen B. King Secretary
One Sun Life Executive Park
Wellesley Hills, MA 02481
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
No person is directly or indirectly controlled by the Registrant. The
Registrant is a separate account of Sun Life Assurance Company of Canada (U.S.),
an indirect wholly-owned subsidiary of Sun Life Assurance Company of Canada.
The following is a list of all corporations directly or indirectly
controlled by or under common control with Sun Life Assurance Company of Canada,
showing the state or other sovereign power under the laws of which each is
organized and the percentage ownership of voting securities giving rise to the
control relationship:
<PAGE>
<TABLE>
<CAPTION>
Percent of
State or Country Ownership
or Jurisdiction of Voting
of Incorporation Securities
---------------- ----------
<S> <C> <C>
Sun Life Assurance Company of Canada Canada 100%
- ----------------------------------------------------------------------------
Sun Life Assurance Company of Canada --
U.S. Operations Holdings, Inc. ........... Delaware 100%
Sun Life Assurance Company of Canada
(U.K.) Limited ........................... United Kingdom 100%
Sun Life of Canada Investment Management
Limited .................................. Canada 100%
Sun Life of Canada Benefit Management
Limited .................................. Canada 100%
Spectrum United Holdings, Inc. ............. Canada 100%
Sun Canada Financial Co. ................... Delaware 100%
Sun Life of Canada (U.S.) Holdings, Inc. ... Delaware 0%*
Sun Life of Canada (U.S.) Financial
Services Holdings, Inc. .................. Delaware 0%*
Sun Life Assurance Company of Canada
(U.S.) ................................... Delaware 0%**
Sun Life Insurance and Annuity Company of
New York ................................. New York 0%****
Sun Life of Canada (U.S.) Distributors,
Inc. ..................................... Delaware 0%****
Sun Benefit Services Company, Inc. ......... Delaware 0%****
Sun Life of Canada (U.S.) SPE 97-1, Inc. ... Delaware 0%****
Massachusetts Financial Services Company ... Delaware 0%****
New London Trust, F.S.B..................... Federally Chartered 0%****
Sun Life Information Services
Ireland Limited .......................... Republic of Ireland 0%****
Clarendon Insurance Agency, Inc. ........... Massachusetts 0%*****
MFS Service Center, Inc..................... Delaware 0%*****
MFS/Sun Life Series Trust .................. Massachusetts 0%******
Sun Capital Advisers, Inc. ................. Delaware 0%****
MFS International, Ltd. .................... Ireland 0%*****
MFS Institutional Advisers, Inc. ........... Delaware 0%*****
MFS Fund Distributors, Inc. ................ Delaware 0%*****
MFS Retirement Services, Inc. .............. Delaware 0%*****
Sun Life Financial Services Limited......... Bermuda 0%****
</TABLE>
- --------------------
* 100% of the issued and outstanding voting securities of Sun Life of
Canada (U.S.) Holdings, Inc. and Sun Life of Canada (U.S.) Financial
Services Holdings, Inc. is owned by Sun Life Assurance Company of
Canada -- U.S. Operations Holdings, Inc.
** 100% of the issued and outstanding voting securities of Sun Life
Assurance Company of Canada (U.S.) is owned by Sun Life of Canada
(U.S.) Holdings, Inc.
*** 93.6% of the issued and outstanding voting securities of Massachusetts
Financial Services Company is owned by Sun Life of Canada (U.S.)
Financial Services Holdings, Inc.
**** 100% of the issued and outstanding voting securities of New London
Trust, F.S.B., Sun Life Insurance and Annuity Company of New York, Sun
Life of Canada (U.S) Distributors, Inc., Sun Benefit Services Company,
Inc., Sun Capital Advisers, Inc., Sun Life Financial Services Limited,
Sun Life of Canada (U.S.) SPE 97-1, Inc., Clarendon Insurance Agency,
Inc., and Sun Life Information Services Ireland Limited is owned by
Sun Life Assurance Company of Canada (U.S.).
***** 100% of the issued and outstanding voting securities of MFS Service
Center, Inc., MFS International, Ltd., MFS Institutional Advisers, Inc.,
MFS Fund Distributors, Inc., and MFS Retirement Services, Inc. is owned
by Massachusetts Financial Services Company.
****** 100% of the issued and outstanding voting securities of MFS/Sun Life
Series Trust is owned by separate accounts of Sun Life Assurance
Company of Canada (U.S.) and Sun Life Insurance and Annuity Company of
New York.
<PAGE>
Omitted from the list are subsidiaries of Sun Life Assurance Company of
Canada which, considered in the aggregate, would not constitute a "significant
subsidiary" (as that term is defined in Rule 8b-2 under Section 8 of the
Investment Company Act of 1940) of Sun Life Assurance Company of Canada.
None of the companies listed is a subsidiary of the Registrant, therefore
the only financial statements being filed are those of Sun Life of Canada
(U.S.).
Item 27. NUMBER OF CONTRACT OWNERS:
As of January 31, 1999 there were 7,055 Contracts, all of which were
established pursuant to qualified plans.
Item 28. INDEMNIFICATION
Pursuant to Section 145 of the Delaware Corporation Law, Article 8 of the
By-laws of Sun Life Assurance Company of Canada (U.S.), a copy of which was
filed as Exhibit A.(6)(b) to Form N-8B-2, provides for the indemnification of
directors, officers and employees of Sun Life Assurance Company of Canada
(U.S.).
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of Sun
Life Assurance Company of Canada (U.S.) pursuant to the certificate of
incorporation, by-laws, or otherwise, Sun Life of Canada (U.S.) has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Sun Life of Canada (U.S.)
of expenses incurred or paid by a director, officer, controlling person of Sun
Life of Canada (U.S.) in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, Sun Life of Canada (U.S.)
will, unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by them is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 29. PRINCIPAL UNDERWRITERS
(a) Clarendon Insurance Agency, Inc., which is a wholly-owned subsidiary
of Sun Life of Canada (U.S.), acts as general distributor for the Registrant,
Sun Life of Canada (U.S.) Variable Accounts D, E, F, G and I, Sun Life (N.Y.)
Variable Accounts A, B and C and Money Market Variable Account, High Yield
Variable Account, Capital Appreciation Variable Account, Government Securities
Variable Account, World Governments Variable Account, Total Return Variable
Account and Managed Sectors Variable Account.
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address* with Underwriter
- ------------------ ---------------------
<S> <C>
Jane M. Mancini.................. President and Director
Robert P. Vrolyk................. Director
James M.A. Anderson ............. Director
S. Caesar Raboy.................. Director
C. James Prieur.................. Director
L. Brock Thompson................ Vice President and Treasurer
Roy P. Creedon................... Secretary
Donald E. Kaufman................ Vice President
Cynthia M. Orcutt................ Vice President
Laurie Lennox.................... Vice President
Maura A. Murphy ................. Assistant Secretary
Peter Marion..................... Tax Officer
</TABLE>
- --------------------
* The principal business address of all directors and officers of the
principal underwriter except Ms. Mancini and Ms. Lennox is One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481. The principal
business address of Ms. Mancini and Ms. Lennox is One Copley Place, Boston,
Massachusetts 02116.
(c) Inapplicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained by Sun Life Assurance Company of Canada (U.S.), in
whole or in part, at its executive office at One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481 and at the offices of its Retirement
Products and Services Division at One Copley Place, Boston, Massachusetts
02116, or at the offices of the custodian, State Street Bank and Trust
Company, at either 225 Franklin Street, Boston, Massachusetts 02110 or
5-West, North Quincy, Massachusetts 02171.
Item 31. MANAGEMENT SERVICES
Not Applicable.
Item 32. UNDERTAKINGS
Representation with respect to Section 26(a) of the Investment Company
Act of 1940.
Sun Life Assurance Company of Canada (U.S.) represents that the fees and
charges deducted under the Contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred,
and the risks assumed by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant has caused this Amendment to its Registration
Statement to be signed on its behalf in the Town of Wellesley Hills and
Commonwealth of Massachusetts on the 26th day of February, 1999.
Sun Life of Canada (U.S.)
Variable Account C
(Registrant)
Sun Life Assurance Company of
Canada (U.S.)
(Depositor)
By: /s/ C. JAMES PRIEUR
----------------------
C. James Prieur
President
Attest: /s/ ELLEN B. KING
----------------------------
Ellen B. King
Secretary
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities with the Depositor, Sun Life Assurance Company of Canada (U.S.), and
on the dates indicated.
Signatures Title Date
---------- ------ ----
* /s/ C. JAMES PRIEUR President and Director February 26, 1999
- --------------------------- (Principal Executive
C. James Prieur Officer)
* /s/ ROBERT P. VROLYK Vice President, Finance
- ---------------------------- and Actuary (Principal
Robert P. Vrolyk Financial & Accounting February 26, 1999
Officer)
- --------------------------
* By Edward M. Shea pursuant to Power of Attorney filed herewith.
<PAGE>
Signatures Title Date
---------- ------ ----
/s/ DONALD A. STEWART Chairman and February 26, 1999
- ---------------------------- Director
Donald A. Stewart
* /s/ JOHN D. McNEIL Director February 26, 1999
- ----------------------------
John D. McNeil
* /s/ RICHARD B. BAILEY Director February 26, 1999
- ----------------------------
Richard B. Bailey
* /s/ DAVID D. HORN Director February 26, 1999
- ----------------------------
David D. Horn
* /s/ JOHN S. LANE Director February 26, 1999
- ----------------------------
John S. Lane
* /s/ ANGUS A. MacNAUGHTON Director February 26, 1999
- ----------------------------
Angus A. MacNaughton
* /s/ M. COLYER CRUM Director February 26, 1999
- ----------------------------
M. Colyer Crum
* /s/ S. CAESAR RABOY Director February 26, 1999
- ----------------------------
S. Caesar Raboy
- --------------------------
* By Edward M. Shea pursuant to Power of Attorney filed herewith.
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Richard B. Bailey, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account C (Reg. No. 2-78738), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Richard B. Bailey
-----------------------
Richard B. Bailey
February 4, 1999
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that M. Colyer Crum, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account C (Reg. No. 2-78738), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ M. Colyer Crum
-----------------------
M. Colyer Crum
February 4, 1999
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that David D. Horn, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account C (Reg. No. 2-78738), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ David D. Horn
-----------------------
David D. Horn
February 4, 1999
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John S. Lane, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account C (Reg. No. 2-78738), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ John S. Lane
-----------------------
John S. Lane
February 4, 1999
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Angus A. MacNaughton, whose
signature appears below, constitutes and appoints Edward M. Shea, Ellen B.
King, Peter F. Demuth and C. James Prieur, and each of them, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign a Registration Statement on Form N-4 of Sun Life of
Canada (U.S.) Variable Account C (Reg. No. 2-78738), and any amendments
thereto, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact or his
substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ Angus A. MacNaughton
-------------------------
Angus A. MacNaughton
February 4, 1999
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John D. McNeil, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account C (Reg. No. 3-78738), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ John D. McNeil
-----------------------
John D. McNeil
February 4, 1999
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that S. Caesar Raboy, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account C (Reg. No. 2-78738), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ S. Caesar Raboy
-----------------------
S. Caesar Raboy
February 4, 1999
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Donald A. Stewart, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account C (Reg. No. 2-78738), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Donald A. Stewart
-----------------------
Donald A. Stewart
February 4, 1999
