<PAGE>
PERFORMANCE SUMMARY
These performance results do not reflect any applicable surrender charges or
contract charges. Past performance is no guarantee of future results.
<TABLE>
<CAPTION>
Unit Value Percent
------------------------------------ Change
December 31, 1999 June 30, 2000 in Unit Value
Compass 1 (U.S.) Contracts: ------------------ ---------------- ---------------
<S> <C> <C> <C>
Massachusetts Investors Trust........................ $109.0939 $109.1093 0.01%
Massachusetts Investors Growth Stock Fund............ 135.5845 139.4850 2.88
MFS Total Return Fund................................ 69.9144 72.4434 3.62
MFS Growth Opportunities Fund........................ 84.5669 89.2757 5.57
MFS Reseach Fund..................................... 104.6442 110.3299 5.43
MFS Bond Fund........................................ 37.3948 38.1174 1.93
MFS Money Market Fund................................ 21.7309 22.1894 2.11
MFS Government Money Market Fund..................... 20.7776 21.1878 1.97
MFS High Income Fund................................. 45.0959 44.9492 (0.33)
MFS Global Governments Fund.......................... 37.1590 37.1160 (0.12)
MFS Emerging Growth Fund............................. 110.2608 113.8918 3.29
</TABLE>
Investment return and principal value will fluctuate, and units, when
surrendered, may be worth more or less than their original cost.
1
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
STATEMENT OF CONDITION -- June 30, 2000
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C> <C>
Investments in mutual funds: Shares Cost Value
--------- ------------ ------------
Massachusetts Investors Trust (MIT)*.......... 651,851 $ 10,183,168 $ 13,648,548
Massachusetts Investors Growth Stock Fund
(MIG)*...................................... 711,673 9,896,622 14,982,864
MFS Total Return Fund (MTR)*.................. 1,090,306 16,159,584 15,514,116
MFS Growth Opportunities Fund (MGO)*.......... 2,447,864 33,207,596 47,632,916
MFS Reseach Fund (MFR)*....................... 374,461 6,637,921 11,467,453
MFS Bond Fund (MFB)*.......................... 334,385 4,389,781 4,031,549
MFS Money Market Fund (MCM)*.................. 3,919,708 3,919,708 3,919,708
MFS Government Money Market Fund (MCG)*....... 778,924 778,924 778,924
MFS High Income Fund (MFH)*................... 1,141,809 6,020,827 5,438,648
MFS Global Governments Fund (MGG)*............ 123,851 1,350,618 1,171,960
MFS Emerging Growth Fund (MEG)*............... 337,391 10,317,188 23,355,641
------------ ------------
$102,861,937 $141,942,327
============
LIABILITY:
Payable to sponsor....................................................... (95,662)
------------
Net Assets......................................................... $141,846,665
============
</TABLE>
NET ASSETS:
<TABLE>
<CAPTION>
Applicable to Owners of
Deferred Variable Annuity Contracts Reserve for
------------------------------------ Variable
Units Unit Value Value Annuities Total
--------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
MIT......................... 123,335 $109.1093 $ 13,453,537 $ 220,353 $ 13,673,890
MIG......................... 106,739 139.4850 14,880,403 119,658 15,000,061
MTR......................... 209,246 72.4434 15,124,214 90,586 15,214,800
MGO......................... 527,523 89.2757 47,417,512 275,268 47,692,780
MFR......................... 103,704 110.3299 11,444,801 41,379 11,486,180
MFB......................... 101,451 38.1174 3,957,917 94,636 4,052,553
MCM......................... 173,980 22.1894 3,855,520 73,217 3,928,737
MCG......................... 36,653 21.1878 776,157 3,132 779,289
MFH......................... 121,473 44.9492 5,376,713 109,720 5,486,433
MGG......................... 29,671 37.1160 1,101,117 30,168 1,131,285
MEG......................... 204,329 113.8918 23,270,316 130,341 23,400,657
------------ ---------- ------------
Net Assets...................................... $140,658,207 $1,188,458 $141,846,665
============ ========== ============
</TABLE>
*Investments are made in Class A shares of the Fund.
See notes to financial statements
2
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
STATEMENT OF OPERATIONS -- Six Months Ended June 30, 2000
<TABLE>
<CAPTION>
MIT MIG MTR MGO MFR MFB
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 106,357 $ -- $ 276,679 $ 2,038,825 $ -- $ 148,937
Mortality and expense risk charges.... (91,394) (97,077) (102,479) (298,302) (71,738) (25,616)
----------- ---------- ----------- ----------- ----------- ------------
Net investment income (loss)...... $ 14,963 $ (97,077) $ 174,200 $ 1,740,523 $ (71,738) $ 123,321
----------- ---------- ----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $3,168,943 $1,631,076 $3,209,966 $ 3,019,311 $ 448,214 $ 516,691
Cost of investments sold............ (1,703,229) (825,224) (3,082,184) (1,688,680) (204,049) (567,025)
----------- ---------- ----------- ----------- ----------- ------------
Net realized gains (losses)....... $1,465,714 $ 805,852 $ 127,782 $ 1,330,631 $ 244,165 $ (50,334)
----------- ---------- ----------- ----------- ----------- ------------
Net unrealized appreciation
(depreciation) on investments:
End of period....................... $3,465,380 $5,086,242 $ (645,468) $14,425,320 $ 4,829,532 $ (358,232)
Beginning of period................. 5,036,912 5,331,016 (874,521) 14,933,626 4,407,586 (363,571)
----------- ---------- ----------- ----------- ----------- ------------
Change in unrealized appreciation
(depreciation).................. $(1,571,532) $ (244,774) $ 229,053 $ (508,306) $ 421,946 $ 5,339
----------- ---------- ----------- ----------- ----------- ------------
Realized and unrealized gains
(losses).......................... $ (105,818) $ 561,078 $ 356,835 $ 822,325 $ 666,111 $ (44,995)
----------- ---------- ----------- ----------- ----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ (90,855) $ 464,001 $ 531,035 $ 2,562,848 $ 594,373 $ 78,326
=========== ========== =========== =========== =========== ============
<CAPTION>
MCM MCG MFH MGG MEG
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- -----------
INCOME AND EXPENSES:
<S> <C> <C> <C> <C> <C> <C>
Dividend income and capital gain
distributions received............... $ 115,927 $ 21,299 $ 281,644 $ -- $ --
Mortality and expense risk charges.... (27,038) (5,285) (37,253) (8,825) (146,280)
----------- ---------- ----------- ----------- -----------
Net investment income (loss)...... $ 88,889 $ 16,014 $ 244,391 $ (8,825) $ (146,280)
----------- ---------- ----------- ----------- -----------
Realized and unrealized gains
(losses):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $2,294,278 $ 162,532 $ 745,349 $ 473,968 $ 1,737,928
Cost of investments sold............ (2,294,278) (162,532) (768,001) (606,679) (473,220)
----------- ---------- ----------- ----------- -----------
Net realized gains (losses)....... $ -- $ -- $ (22,652) $ (132,711) $ 1,264,708
----------- ---------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation) on investments:
End of period....................... $ -- $ -- $ (582,179) $ (178,658) $13,038,453
Beginning of period................. -- -- (344,716) (309,146) 13,417,863
----------- ---------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation).................. $ -- $ -- $ (237,463) $ 130,488 $ (379,410)
----------- ---------- ----------- ----------- -----------
Realized and unrealized gains
(losses).......................... $ -- $ -- $ (260,115) $ (2,223) $ 885,298
----------- ---------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ 88,889 $ 16,014 $ (15,724) $ (11,048) $ 739,018
=========== ========== =========== =========== ===========
</TABLE>
See notes to financial statements
3
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MIT MIG
Sub-Account Sub-Account
----------------------------- -----------------------------
Six Months Year Ended Six Months Year Ended
Ended December 31, Ended December 31,
June 30, 2000 1999 June 30, 2000 1999
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)...... $ 14,963 $ 319,437 $ (97,077) $ 944,741
Net realized gains (losses)....... 1,465,714 777,080 805,852 820,223
Net unrealized gains (losses)..... (1,571,532) (204,618) (244,774) 2,344,071
----------- ----------- ----------- -----------
Increase (Decrease) in net
assets from operations...... $ (90,855) $ 891,899 $ 464,001 $ 4,109,035
----------- ----------- ----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received...... $ 48,682 $ 167,331 $ 49,181 $ 122,298
Net transfers between Sub-
Accounts and Fixed Account..... (1,193,611) 294,781 989,946 1,240,969
Withdrawals, surrenders,
annuitizations and contract
charges........................ (1,397,226) (1,407,400) (1,458,207) (1,510,781)
----------- ----------- ----------- -----------
Net accumulation activity..... $(2,542,155) $ (945,288) $ (419,080) $ (147,514)
----------- ----------- ----------- -----------
Annuitization activity:
Annuitizations.................. $ -- $ -- $ -- $ --
Annuity payments................ 16,911 (37,372) 4,369 (35,111)
Adjustments to annuity
reserve....................... (544) 339 (223) 3,462
----------- ----------- ----------- -----------
Net annuitization activity.... $ 16,367 $ (37,033) $ 4,146 $ (31,649)
----------- ----------- ----------- -----------
Increase (Decrease) in net assets
from participant transactions.... $(2,525,788) $ (982,321) $ (414,934) $ (179,163)
----------- ----------- ----------- -----------
Increase (Decrease) in net
assets........................ $(2,616,643) $ (90,422) $ 49,067 $ 3,929,872
NET ASSETS:
Beginning of period............... 16,290,533 16,380,955 14,950,994 11,021,122
----------- ----------- ----------- -----------
End of period..................... $13,673,890 $16,290,533 $15,000,061 $14,950,994
=========== =========== =========== ===========
<CAPTION>
MTR
Sub-Account
-----------------------------
Six Months Year Ended
Ended December 31,
June 30, 2000 1999
-------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)...... $ 174,200 $ 1,560,346
Net realized gains (losses)....... 127,782 554,577
Net unrealized gains (losses)..... 229,053 (1,934,030)
----------- -----------
Increase (Decrease) in net
assets from operations...... $ 531,035 $ 180,893
----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received...... $ 38,523 $ 195,625
Net transfers between Sub-
Accounts and Fixed Account..... (1,075,251) (1,348,674)
Withdrawals, surrenders,
annuitizations and contract
charges........................ (2,004,803) (2,450,106)
----------- -----------
Net accumulation activity..... $(3,041,531) $(3,603,155)
----------- -----------
Annuitization activity:
Annuitizations.................. $ -- $ --
Annuity payments................ (10,331) (18,350)
Adjustments to annuity
reserve....................... (12,613) (7,275)
----------- -----------
Net annuitization activity.... $ (22,944) $ (25,625)
----------- -----------
Increase (Decrease) in net assets
from participant transactions.... $(3,064,475) $(3,628,780)
----------- -----------
Increase (Decrease) in net
assets........................ $(2,533,440) $(3,447,887)
NET ASSETS:
Beginning of period............... 17,748,240 21,196,127
----------- -----------
End of period..................... $15,214,800 $17,748,240
=========== ===========
</TABLE>
See notes to financial statements
4
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MGO MFR MFB
Sub-Account Sub-Account Sub-Account
----------------------------- ----------------------------- -----------------------------
Six Months Year Ended Six Months Year Ended Six Months Year Ended
Ended December 31, Ended December 31, Ended December 31,
June 30, 2000 1999 June 30, 2000 1999 June 30, 2000 1999
-------------- ------------- -------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)...... $ 1,740,523 $ 3,839,398 $ (71,738) $ 674,814 $ 123,321 $ 275,836
Net realized gains (losses)....... 1,330,631 2,072,403 244,165 961,202 (50,334) 12,111
Net unrealized gains (losses)..... (508,306) 5,551,542 421,946 464,071 5,339 (455,059)
----------- ----------- ----------- ----------- ----------- -----------
Increase (Decrease) in net
assets from operations...... $ 2,562,848 $11,463,343 $ 594,373 $ 2,100,087 $ 78,326 $ (167,112)
----------- ----------- ----------- ----------- ----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received...... $ 196,333 $ 319,690 $ 31,816 $ 56,994 $ 10,751 $ 36,226
Net transfers between Sub-
Accounts and Fixed Account.... 442,824 (56,754) 124,987 39,394 (204,978) (136,413)
Withdrawals, surrenders,
annuitizations and contract
charges....................... (2,782,210) (4,743,125) (294,974) (1,597,218) (225,458) (930,409)
----------- ----------- ----------- ----------- ----------- -----------
Net accumulation activity..... $(2,143,053) $(4,480,189) $ (138,171) $(1,500,830) $ (419,685) $(1,030,596)
----------- ----------- ----------- ----------- ----------- -----------
Annuitization activity:
Annuitizations.................. $ -- $ -- $ -- $ -- $ -- $ --
Annuity payments................ (20,047) (36,385) (4,063) (10,702) (6,304) (11,120)
Adjustments to annuity
reserve....................... 3,163 16,995 1,417 3,738 2,401 (286)
----------- ----------- ----------- ----------- ----------- -----------
Net annuitization activity.... $ (16,884) $ (19,390) $ (2,646) $ (6,964) $ (3,903) $ (11,406)
----------- ----------- ----------- ----------- ----------- -----------
Increase (Decrease) in net assets
from participant transactions...... $(2,159,937) $(4,499,579) $ (140,817) $(1,507,794) $ (423,588) $(1,042,002)
----------- ----------- ----------- ----------- ----------- -----------
Increase (Decrease) in net
assets........................ $ 402,911 $ 6,963,764 $ 453,556 $ 592,293 $ (345,262) $(1,209,114)
NET ASSETS:
Beginning of period............... 47,289,869 40,326,105 11,032,624 10,440,331 4,397,815 5,606,929
----------- ----------- ----------- ----------- ----------- -----------
End of period..................... $47,692,780 $47,289,869 $11,486,180 $11,032,624 $ 4,052,553 $ 4,397,815
=========== =========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements
5
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MCM MCG MFH
Sub-Account Sub-Account Sub-Account
-------------------------- -------------------------- ---------------------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31, June 30, December 31,
2000 1999 2000 1999 2000 1999
----------- ------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 88,889 $ 171,319 $ 16,014 $ 36,210 $ 244,391 $ 546,384
Net realized gains (losses)........... -- -- -- -- (22,652) 117,904
Net unrealized gains (losses)......... -- -- -- -- (237,463) (271,484)
----------- ----------- ----------- ----------- ------------ -------------
Increase (Decrease) in net assets
from operations................. $ 88,889 $ 171,319 $ 16,014 $ 36,210 $ (15,724) $ 392,804
----------- ----------- ----------- ----------- ------------ -------------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received.......... $ 28,272 $ 89,384 $ 1,290 $ 19,501 $ 17,938 $ 56,022
Net transfers between Sub-Accounts
and Fixed Account................. (505,976) 859,466 (33,349) 12,828 (91,011) (227,923)
Withdrawals, surrenders,
annuitizations and contract
charges........................... (663,833) (1,404,142) (56,484) (586,196) (601,400) (1,258,452)
----------- ----------- ----------- ----------- ------------ -------------
Net accumulation activity......... $(1,141,537) $ (455,292) $ (88,543) $ (553,867) $ (674,473) $ (1,430,353)
----------- ----------- ----------- ----------- ------------ -------------
Annuitization activity:
Annuitizations...................... $ -- $ -- $ -- $ -- $ -- $ --
Annuity payments.................... (4,154) (8,327) (96) (941) (7,574) (15,524)
Adjustments to annuity reserve...... 203 210 35 54 1,501 5,459
----------- ----------- ----------- ----------- ------------ -------------
Net annuitization activity........ $ (3,951) $ (8,117) $ (61) $ (887) $ (6,073) $ (10,065)
----------- ----------- ----------- ----------- ------------ -------------
Increase (Decrease) in net assets from
participant transactions............... $(1,145,488) $ (463,409) $ (88,604) $ (554,754) $ (680,546) $ (1,440,418)
----------- ----------- ----------- ----------- ------------ -------------
Increase (Decrease) in net assets... $(1,056,599) $ (292,090) $ (72,590) $ (518,544) $ (696,270) $ (1,047,614)
NET ASSETS:
Beginning of period................... 4,985,336 5,277,426 851,879 1,370,423 6,182,703 7,230,317
----------- ----------- ----------- ----------- ------------ -------------
End of period......................... $3,928,737 $ 4,985,336 $ 779,289 $ 851,879 $ 5,486,433 $ 6,182,703
=========== =========== =========== =========== ============ =============
</TABLE>
See notes to financial statements
6
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MGG MEG
Sub-Account Sub-Account
----------------------------- -----------------------------
Six Months Year Ended Six Months Year Ended
Ended December 31, Ended December 31,
June 30, 2000 1999 June 30, 2000 1999
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (8,825) $ 103,833 $ (146,280) $ (127,062)
Net realized gains (losses)........... (132,711) (70,532) 1,264,708 3,829,378
Net unrealized gains (losses)......... 130,488 (123,065) (379,410) 4,044,766
---------- ---------- ----------- -----------
Increase (Decrease) in net assets
from operations................. $ (11,048) $ (89,764) $ 739,018 $ 7,747,082
---------- ---------- ----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received.......... $ 873 $ 5,219 $ 74,333 $ 155,477
Net transfers between Sub-Accounts
and Fixed Account.................. (54,699) (86,025) 1,149,121 (771,150)
Withdrawals, surrenders,
annuitizations and contract
charges............................ (408,270) (196,101) (1,387,002) (2,988,579)
---------- ---------- ----------- -----------
Net accumulation activity......... $ (462,096) $ (276,907) $ (163,548) $(3,604,252)
---------- ---------- ----------- -----------
Annuitization activity:
Annuitizations...................... $ -- $ -- $ -- $ --
Annuity payments.................... (2,543) (5,326) (12,606) (17,562)
Adjustments to annuity reserve...... (71) 1,607 3,724 15,977
---------- ---------- ----------- -----------
Net annuitization activity........ $ (2,614) $ (3,719) $ (8,882) $ (1,585)
---------- ---------- ----------- -----------
Increase (Decrease) in net assets from
participant transactions............ $ (464,710) $ (280,626) $ (172,430) $(3,605,837)
---------- ---------- ----------- -----------
Increase (Decrease) in net assets... $ (475,758) $ (370,390) $ 566,588 $ 4,141,245
NET ASSETS:
Beginning of period................... 1,607,043 1,977,433 22,834,069 18,692,824
---------- ---------- ----------- -----------
End of period......................... $1,131,285 $1,607,043 $23,400,657 $22,834,069
========== ========== =========== ===========
</TABLE>
See notes to financial statements
7
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life of Canada (U.S.) Variable Account C (the "Variable Account"), a
separate account of Sun Life Assurance Company of Canada (U.S.) (the "Sponsor"),
was established on March 31, 1982 as a funding vehicle for individual variable
annuities issued in connection with qualified retirement plans. The Variable
Account is registered with the Securities and Exchange Commission under the
Investment Company Act of 1940 as a unit investment trust.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account is invested in shares of a specific mutual fund or series thereof
selected by contract owners from available mutual funds (the "Funds") advised by
Massachusetts Financial Services Company ("MFS"), an affiliate of the Sponsor.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires the Sponsor's
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
INVESTMENT VALUATIONS
Investments in the Funds are recorded at their net asset value. Realized gains
and losses on sales of shares of the Funds are determined on the identified cost
basis. Dividend income and capital gain distributions received by the
Sub-Accounts are reinvested in additional Fund shares and are recognized on the
ex-dividend date.
Exchanges between Sub-Accounts requested by contract owners are recorded in the
new Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately. The Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the Internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not taxable;
therefore, no provision has been made for federal income taxes.
(3) CONTRACT CHARGES
A mortality and expense risk charge based on the value of the Variable Account
is deducted from the Variable Account at the end of each valuation period for
the mortality and expense risks assumed by the Sponsor. The deduction is at an
effective annual rate of 1.3%.
8
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS -- continued
(3) CONTRACT CHARGES -- continued
Each year on the contract anniversary, a contract maintenance charge of $25 is
deducted from each contract's accumulation account to cover administrative
expenses relating to the contract. After the annuity commencement date the
charge is deducted pro rata from each annuity payment made during the year.
The Sponsor does not deduct a sales charge from purchase payments. However, a
withdrawal charge (contingent deferred sales charge) may be deducted to cover
certain expenses relating to the sale of the contract. In no event shall the
aggregate withdrawal charges exceed 5% of the purchase payments made under the
contract.
A deduction, when applicable, is made for premium taxes or similar state or
local taxes. It is currently the policy of the Sponsor to deduct the taxes from
the amount applied to provide an annuity at the time annuity payments commence;
however, the Sponsor reserves the right to deduct such taxes when incurred.
(4) ANNUITY RESERVES
Annuity reserves for contracts with annuity commencement dates prior to
February 1, 1987 are calculated using the 1971 Individual Annuitant Mortality
Table. Annuity reserves for contracts with annuity commencement dates on or
after February 1, 1987 are calculated using the 1983 Individual Annuitant
Mortality Table. All annuity reserves are calculated using an assumed interest
rate of 4%. Required adjustments to the reserve are accomplished by transfers to
or from the Sponsor.
9
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS
<TABLE>
<CAPTION>
MIT MIG MTR MGO
Sub-Account Sub-Account Sub-Account Sub-Account
--------------------- --------------------- --------------------- ---------------------
Six Six Six Six
Months Year Months Year Months Year Months Year
Ended Ended Ended Ended Ended Ended Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31,
2000 1999 2000 1999 2000 1999 2000 1999
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding,
beginning of
period............... 147,525 156,406 109,497 110,261 252,908 304,876 552,305 617,973
Units purchased..... 474 1,635 357 1,135 576 2,773 2,361 4,824
Units transferred
between Sub-
Accounts and Fixed
Account........... (11,436) 2,877 7,095 11,474 (15,554) (19,641) 5,028 (1,021)
Units withdrawn,
surrendered and
annuitized........ (13,228) (13,393) (10,210) (13,373) (28,684) (35,100) (32,171) (69,471)
-------- -------- -------- -------- -------- -------- -------- --------
Units outstanding,
end of period..... 123,335 147,525 106,739 109,497 209,246 252,908 527,523 552,305
======== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
MFR MFB
Sub-Account Sub-Account
--------------------- ---------------------
Six Six
Months Year Months Year
Ended Ended Ended Ended
June 30, Dec. 31, June 30, Dec. 31,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Units outstanding,
beginning of
period............... 104,992 121,411 112,651 139,906
Units purchased..... 298 647 286 941
Units transferred
between Sub-
Accounts and Fixed
Account........... 1,152 497 (5,460) (3,556)
Units withdrawn,
surrendered and
annuitized........ (2,738) (17,563) (6,026) (24,640)
-------- -------- -------- --------
Units outstanding,
end of period..... 103,704 104,992 101,451 112,651
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
MCM MCG MFH MGG
Sub-Account Sub-Account Sub-Account Sub-Account
--------------------- --------------------- --------------------- ---------------------
Six Six Six Six
Months Year Months Year Months Year Months Year
Ended Ended Ended Ended Ended Ended Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31,
2000 1999 2000 1999 2000 1999 2000 1999
--------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units outstanding,
beginning of
period............... 226,156 247,311 40,868 67,794 136,385 168,359 42,379 49,718
Units purchased..... 1,284 4,169 86 1,063 407 1,309 46 149
Units transferred
between Sub-
Accounts and Fixed
Account........... (23,167) 40,396 (1,603) 528 (2,018) (5,090) (1,512) (2,280)
Units withdrawn,
surrendered and
annuitized........ (30,293) (65,720) (2,698) (28,517) (13,301) (28,193) (11,242) (5,208)
-------- -------- -------- -------- -------- -------- -------- --------
Units outstanding,
end of period..... 173,980 226,156 36,653 40,868 121,473 136,385 29,671 42,379
======== ======== ======== ======== ======== ======== ======== ========
<CAPTION>
MEG
Sub-Account
---------------------
Six
Months Year
Ended Ended
June 30, Dec. 31,
2000 1999
--------- ---------
<S> <C> <C> <C> <C>
Units outstanding,
beginning of
period............... 205,870 249,765
Units purchased..... 712 2,037
Units transferred
between Sub-
Accounts and Fixed
Account........... 10,334 (9,296)
Units withdrawn,
surrendered and
annuitized........ (12,587) (36,636)
-------- --------
Units outstanding,
end of period..... 204,329 205,870
======== ========
</TABLE>
10
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants in Sun Life of Canada (U.S.) Variable Account C
and the Board of Directors of Sun Life Assurance Company of Canada (U.S.):
We have audited the accompanying statement of condition of Massachusetts
Investors Trust Sub-Account, Massachusetts Investors Growth Stock Sub-Account,
MFS Total Return Sub-Account, MFS Growth Opportunities Sub-Account, MFS Research
Sub-Account, MFS Bond Sub-Account, MFS Money Market Sub-Account, MFS Government
Money Market Sub-Account, MFS High Income Sub-Account, MFS Global Governments
Sub-Account, and MFS Emerging Growth Sub-Account of Sun Life of Canada (U.S.)
Variable Account C (the "Sub-Accounts") as of June 30, 2000, the related
statement of operations for the six months then ended and the statements of
changes in net assets for the six months ended June 30, 2000 and the year ended
December 31, 1999. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities held at June 30,
2000 by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Sub-Accounts as of June 30, 2000 and the
results of their operations and the changes in their net assets for the
respective stated periods in conformity with accounting principles generally
accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 11, 2000
<PAGE>
COMPASS-I
DIRECTORS AND OFFICERS OF
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
DONALD A. STEWART, Chairman and Director
C. JAMES PRIEUR, Vice Chairman and Director
JAMES A. McNULTY, III, President and Director
S. CAESAR RABOY, Director
RICHARD B. BAILEY, Director
DAVID D. HORN, Director
ANGUS A. MacNAUGHTON, Director
WILLIAM W. STINSON, Director
GREGORY W. GEE, Director
PETER F. DEMUTH, Vice President and Chief
Counsel and Assistant Secretary
DAVEY S. SCOON, Vice President, Finance
and Treasurer
RONALD J. FERNANDES, Vice President,
Retirement Products and Services
JAMES M.A. ANDERSON, Vice President, Investments
ROBERT P. VROLYK, Vice President, and Actuary
ELLEN B. KING, Counsel and Secretary
SUN LIFE ASSURANCE COMPANY
OF CANADA (U.S.)
ANNUITY SERVICE MAILING ADDRESS:
Sun Life Retirement Products and Services
P.O. Box 1024, Boston, Massachusetts 02103-9986
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 02110-2875
AUDITORS
Deloitte & Touche LLP
200 Berkeley Street, Boston, Massachusetts 02116
ACCOUNT INFORMATION
For account information, call toll free 1-800-752-7218 anytime from a touch-tone
telephone.
To speak with a customer service representative,
please call toll free 1-800-752-7215 from
8 a.m. to 6 p.m. Eastern Standard time on any business day.
This report is prepared for the general information of
contract owners. It is authorized for distribution
to prospective purchasers only when preceded
or accompanied by an effective prospectus.
CO3-8/00 5M
[LOGO]
PROFESSIONALLY MANAGED COMBINATION
FIXED/VARIABLE ANNUITY
FOR QUALIFIED RETIREMENT PLANS
SEMI-ANNUAL REPORT - JUNE 30, 2000
ISSUED BY
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
A MEMBER OF THE SUN LIFE
FINANCIAL GROUP OF COMPANIES
