<PAGE>
COMPASS-G
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT D
DIRECTORS AND OFFICERS OF
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
JOHN D. McNEIL, Chairman and Director
JOHN R. GARDNER, President and Director
DAVID D. HORN, Senior Vice President and
General Manager and Director
RICHARD B. BAILEY, Director
A. KEITH BRODKIN, Director
M. COLYER CRUM, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
BONNIE S. ANGUS, Secretary
L. BROCK THOMSON, Vice President and
Treasurer
SUN LIFE ASSURANCE COMPANY
OF CANADA (U.S.)
ANNUITY SERVICE MAILING ADDRESS:
Sun Life Annuity Service Center
P.O. Box 1024, Boston, Massachusetts 02103
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
500 Boylston Street, Boston, Massachusetts 02116
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
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 any business day
from 8 a.m. to 6 p.m. Eastern time.
[LOGO]
PROFESSIONALLY MANAGED COMBINATION
FIXED/VARIABLE GROUP ANNUITY
FOR QUALIFIED AND NON-QUALIFIED
RETIREMENT PLANS
- ---------------------------------------------
SEMI-ANNUAL REPORT, JUNE 30, 1995
This report is prepared for the general information of contract owners and
participants. It is authorized for distribution to prospective purchasers only
if preceded or accompanied by an effective prospectus.
ISSUED BY
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
A WHOLLY OWNED SUBSIDIARY OF
SUN LIFE ASSURANCE COMPANY OF CANADA
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT D
STATEMENT OF CONDITION -- June 30, 1995
<TABLE>
<S> <C> <C> <C>
ASSETS:
Investments in mutual funds: Shares Cost Value
---------- ------------ ------------
Massachusetts Investors Trust
("MIT") Class A.................. 3,497,289 $ 41,766,684 $ 41,393,008
Massachusetts Investors Growth
Stock Fund ("MIG") Class A....... 1,095,592 12,057,446 12,226,248
MFS Total Return Fund ("MTR")
Class A.......................... 3,811,248 49,075,795 52,771,983
MFS Growth Opportunities Fund
("MGO") Class A.................. 380,235 4,273,934 4,637,543
MFS Bond Fund ("MFB") Class A..... 481,653 6,395,334 6,386,278
MFS World Governments Fund ("MWG")
Class A.......................... 380,034 4,557,559 4,647,078
Investments in MFS/Sun Life Series
Trust:
Capital Appreciation Series
("CAS").......................... 1,248,052 31,054,164 35,538,799
Government Securities Series
("GSS").......................... 2,172,888 27,139,758 27,350,816
High Yield Series ("HYS")......... 1,019,805 8,536,029 8,560,038
Money Market Series ("MMS")....... 17,080,412 17,080,412 17,080,412
------------ ------------
$201,937,115 $210,592,203
------------
------------
Receivable from sponsor....................................... 5,066
------------
Net Assets................................................ $210,597,269
------------
------------
</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> <C>
MIT-Level 2............................. 1,340,295 $23.4500 $ 31,423,835 $-- $ 31,423,835
MIT-Level 3............................. 343,126 23.5424 8,080,035 -- 8,080,035
MIT-Level 4............................. 108,831 17.3469 1,888,956 -- 1,888,956
MIG-Level 2............................. 399,856 22.6584 9,061,291 -- 9,061,291
MIG-Level 3............................. 124,182 24.9568 3,099,177 -- 3,099,177
MIG-Level 4............................. 5,158 12.8222 65,781 -- 65,781
MTR-Level 2............................. 1,709,260 22.2626 38,059,952 -- 38,059,952
MTR-Level 3............................. 546,798 20.2302 11,065,821 -- 11,065,821
MTR-Level 4............................. 236,823 15.3914 3,646,015 -- 3,646,015
MGO-Level 2............................. 182,466 19.8377 3,636,005 -- 3,636,005
MGO-Level 3............................. 45,608 21.2284 969,856 -- 969,856
MGO-Level 4............................. 2,172 14.1074 31,682 -- 31,682
MFB-Level 2............................. 159,455 17.7625 2,857,599 -- 2,857,599
MFB-Level 3............................. 128,179 17.9151 2,308,250 -- 2,308,250
MFB-Level 4............................. 81,999 14.7624 1,220,429 -- 1,220,429
MWG-Level 2............................. 154,928 20.4523 3,168,545 -- 3,168,545
MWG-Level 3............................. 81,915 18.0476 1,478,532 -- 1,478,532
CAS-Level 2............................. 816,083 26.5937 21,700,439 3,360 21,703,799
CAS-Level 3............................. 359,949 28.1954 10,147,970 11,589 10,159,559
CAS-Level 4............................. 134,389 27.4012 3,682,259 -- 3,682,259
GSS-Level 2............................. 756,709 17.6399 13,348,625 3,499 13,352,124
GSS-Level 3............................. 351,097 17.1092 6,008,184 8,609 6,016,793
GSS-Level 4............................. 474,413 16.8195 7,979,946 350 7,980,296
HYS-Level 2............................. 217,288 18.9490 4,096,322 2,740 4,099,062
HYS-Level 3............................. 112,165 17.4978 1,962,514 7,056 1,969,570
HYS-Level 4............................. 145,988 17.0569 2,491,512 -- 2,491,512
MMS-Level 2............................. 610,483 14.4344 8,809,974 2,964 8,812,938
MMS-Level 3............................. 317,583 13.3930 4,252,915 -- 4,252,915
MMS-Level 4............................. 306,639 13.0947 4,014,681 -- 4,014,681
------------ ----------- ------------
Net Assets................................................. $210,557,102 $40,167 $210,597,269
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to financial statements.
1
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT D
STATEMENT OF OPERATIONS -- Six Months Ended June 30, 1995
<TABLE>
<CAPTION>
MIT MIG MTR MGO MFB MWG CAS
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital
gain distributions
received................... $ 453,081 $ -- $1,240,030 $ -- $ 242,264 $ -- $ 824,528
Mortality and expense risk
charges.................... 238,045 79,111 310,172 26,790 35,691 31,683 191,176
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net investment income
(expense)............ $ 215,036 $ (79,111 ) $ 929,858 $ (26,790 ) $ 206,573 $ (31,683 ) $ 633,352
----------- ----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains (losses) on
investment transactions:
Proceeds from sales....... $8,244,432 $6,625,187 $9,979,617 $1,186,422 $1,329,433 $2,934,247 $4,551,679
Cost of investments
sold..................... 9,842,072 7,268,594 9,484,991 1,192,409 1,489,028 3,061,002 3,687,059
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net realized gains
(losses)............. $(1,597,640) $ (643,407 ) $ 494,626 $ (5,987 ) $(159,595 ) $(126,755 ) $ 864,620
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation) on
investments:
End of period............. $ (373,676 ) $ 168,802 $3,696,188 $ 363,609 $ (9,056 ) $ 89,519 $4,484,635
Beginning of period....... (8,478,315 ) (2,462,728 ) (1,426,594 ) (463,526 ) (733,726 ) (687,020 ) 222,915
----------- ----------- ----------- ----------- ----------- ----------- -----------
Change in unrealized
appreciation
(depreciation)......... $8,104,639 $2,631,530 $5,122,782 $ 827,135 $ 724,670 $ 776,539 $4,261,720
----------- ----------- ----------- ----------- ----------- ----------- -----------
Realized and unrealized
gains.................... $6,506,999 $1,988,123 $5,617,408 $ 821,148 $ 565,075 $ 649,784 $5,126,340
----------- ----------- ----------- ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS FROM
OPERATIONS................... $6,722,035 $1,909,012 $6,547,266 $ 794,358 $ 771,648 $ 618,101 $5,759,692
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
<CAPTION>
GSS HYS MMS
Sub-Account Sub-Account Sub-Account Total
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital
gain distributions
received................... $1,602,218 $ 562,268 $ 501,492 $ 5,425,881
Mortality and expense risk
charges.................... 147,048 44,733 104,997 1,209,446
----------- ----------- ------------ ------------
Net investment income
(expense)............ $1,455,170 $ 517,535 $ 396,495 $ 4,216,435
----------- ----------- ------------ ------------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains (losses) on
investment transactions:
Proceeds from sales....... $2,297,850 $1,055,344 $6,465,107 $ 44,669,318
Cost of investments
sold..................... 2,195,723 990,754 6,465,107 45,676,739
----------- ----------- ------------ ------------
Net realized gains
(losses)............. $ 102,127 $ 64,590 $ -- $ (1,007,421)
----------- ----------- ------------ ------------
Net unrealized appreciation
(depreciation) on
investments:
End of period............. $ 211,058 $ 24,009 $ -- $ 8,655,088
Beginning of period....... (733,359 ) (111,528 ) -- (14,873,881)
----------- ----------- ------------ ------------
Change in unrealized
appreciation
(depreciation)......... $ 944,417 $ 135,537 $ -- $ 23,528,969
----------- ----------- ------------ ------------
Realized and unrealized
gains.................... $1,046,544 $ 200,127 $ -- $ 22,521,548
----------- ----------- ------------ ------------
INCREASE IN NET ASSETS FROM
OPERATIONS................... $2,501,714 $ 717,662 $ 396,495 $ 26,737,983
----------- ----------- ------------ ------------
----------- ----------- ------------ ------------
</TABLE>
See notes to financial statements.
2
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MIT MIG MTR
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, 1995 1994 June 30, 1995 1994 June 30, 1995 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income
(expense)...... $ 215,036 $ 4,140,890 $ (79,111) $ 1,353,998 $ 929,858 $ 1,645,231
Net realized
gains
(losses)....... (1,597,640) (1,439,862) (643,407) (529,599) 494,626 1,515,039
Net unrealized
gains
(losses)....... 8,104,639 (3,564,329) 2,631,530 (2,264,598) 5,122,782 (5,264,479)
------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets
from
operations... $ 6,722,035 $ (863,301) $ 1,909,012 $(1,440,199) $ 6,547,266 $ (2,104,209)
------------- ------------- ------------- ------------- ------------- -------------
PARTICIPANT
TRANSACTIONS:
Accumulation
Activity:
Purchase
payments
received..... $ 4,451,042 $10,094,923 $ 1,263,860 $ 4,254,961 $ 5,974,405 $ 14,323,755
Net transfers
between
Sub-Acccounts
and Fixed
Account...... 187,817 (414,057) (163,677) 231,366 (716,301) (637,240)
Withdrawals,
surrenders,
annuitizations
and account
fees......... (9,075,014) (6,373,758) (5,934,179) (6,618,883) (10,963,236) (11,750,450)
------------- ------------- ------------- ------------- ------------- -------------
Net
accumulation
activity... $(4,436,155) $ 3,307,108 $(4,833,996) $(2,132,556) $ (5,705,132) $ 1,936,065
------------- ------------- ------------- ------------- ------------- -------------
Annuitization
Activity:
Adjustments to
annuity
reserve...... $ (29) $ (2) $ -- $ -- $ (24) $ 5
------------- ------------- ------------- ------------- ------------- -------------
Net
annuitization
activity: $ (29) $ (2) $ -- $ -- $ (24) $ 5
------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets from
participant
transactions... $(4,436,184) $ 3,307,106 $(4,833,996) $(2,132,556) $ (5,705,156) $ 1,936,070
------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets... $ 2,285,851 $ 2,443,805 $(2,924,984) $(3,572,755) $ 842,110 $ (168,139)
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS:
Beginning of
period......... 39,106,975 36,663,170 15,151,233 18,723,988 51,929,678 52,097,817
------------- ------------- ------------- ------------- ------------- -------------
End of period... $41,392,826 $39,106,975 $12,226,249 $15,151,233 $ 52,771,788 $ 51,929,678
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
MGO MFB MWG
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, 1995 1994 June 30, 1995 1994 June 30, 1995 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income
(expense)...... $ (26,790) $ 318,763 $ 206,573 $ 406,661 $ (31,683) $ 268,342
Net realized
gains
(losses)....... (5,987) 165,154 (159,595) (307,105) (126,755) (196,908)
Net unrealized
gains
(losses)....... 827,135 (725,298) 724,670 (500,450) 776,539 (594,857)
------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets
from
operations... $ 794,358 $ (241,381) $ 771,648 $ (400,894) $ 618,101 $ (523,423)
------------- ------------- ------------- ------------- ------------- -------------
PARTICIPANT
TRANSACTIONS:
Accumulation
Activity:
Purchase
payments
received..... $ 428,741 $ 809,298 $ 568,933 $ 1,647,469 $ 451,035 $1,131,912
Net transfers
between
Sub-Acccounts
and Fixed
Account...... 10,318 111,333 (157,101) (301,547) (43,821) (327,638)
Withdrawals,
surrenders,
annuitizations
and account
fees......... (1,209,484) (1,360,155) (1,087,793) (1,813,087) (2,749,706) (911,652)
------------- ------------- ------------- ------------- ------------- -------------
Net
accumulation
activity... $ (770,425) $ (439,524) $ (675,961) $ (467,165) $(2,342,492) $ (107,378)
------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets from
participant
transactions... $ (770,425) $ (439,524) $ (675,961) $ (467,165) $(2,342,492) $ (107,378)
------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets... $ 23,933 $ (680,905) $ 95,687 $ (868,059) $(1,724,391) $ (630,801)
------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS:
Beginning of
period......... 4,613,610 5,294,515 6,290,591 7,158,650 6,371,468 7,002,269
------------- ------------- ------------- ------------- ------------- -------------
End of period... $4,637,543 $4,613,610 $ 6,386,278 $ 6,290,591 $ 4,647,077 $6,371,468
------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- -------------
</TABLE>
See notes to financial statements.
3
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT D
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
CAS GSS HYS MMS
Sub-Account Sub-Account Sub-Account Sub-Account
---------------------------- ---------------------------- ---------------------------- -------------
Six Months Year Ended Six Months Year Ended Six Months Year Ended Six Months
Ended December 31, Ended December 31, Ended December 31, Ended
June 30, 1995 1994 June 30, 1995 1994 June 30, 1995 1994 June 30, 1995
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income......... $ 633,352 $ 2,518,162 $ 1,455,170 $ 1,138,419 $ 517,535 $ 505,212 $ 396,495
Net realized
gains
(losses)....... 864,620 1,643,270 102,127 365,174 64,590 316,716 --
Net unrealized
gains
(losses)....... 4,261,720 (5,591,434) 944,417 (2,398,370) 135,537 (1,073,843) --
------------- ------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets
from
operations... $ 5,759,692 $(1,430,002) $ 2,501,714 $ (894,777) $ 717,662 $ (251,915) $ 396,495
------------- ------------- ------------- ------------- ------------- ------------- -------------
PARTICIPANT
TRANSACTIONS:
Accumulation
Activity:
Purchase
payments
received..... $ 3,415,566 $ 6,973,119 $ 2,416,468 $ 5,484,373 $ 747,650 $ 1,557,743 $ 1,512,457
Net transfers
between
Sub-Acccounts
and Fixed
Account...... (752,098) 810,553 (603,054) (2,034,565) 826,002 (164,108) (373,280)
Withdrawals,
surrenders,
annuitizations
and account
fees......... (3,780,390) (3,260,724) (2,161,958) (4,659,943) (863,110) (1,292,785) (4,076,415)
------------- ------------- ------------- ------------- ------------- ------------- -------------
Net
accumulation
activity... $(1,116,922) $ 4,522,948 $ (348,544) $(1,210,135) $ 710,542 $ 100,850 $(2,937,238)
------------- ------------- ------------- ------------- ------------- ------------- -------------
Annuitization
Activity:
Annuity
payments and
account
fees......... $ (3,305) $ (6,567) $ (2,312) $ (4,615) $ (1,185) $ (2,388) $ (111)
Adjustments to
annuity
reserve...... 1,071 (391) (194) (103) (22) (199) (6)
------------- ------------- ------------- ------------- ------------- ------------- -------------
Net
annuitization
activity: $ (2,234) $ (6,958) $ (2,506) $ (4,718) $ (1,207) $ (2,587) $ (117)
------------- ------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets from
participant
transactions... $(1,119,156) $ 4,515,990 $ (351,050) $(1,214,853) $ 709,335 $ 98,263 $(2,937,355)
------------- ------------- ------------- ------------- ------------- ------------- -------------
Increase
(decrease) in
net assets... $ 4,640,536 $ 3,085,988 $ 2,150,664 $(2,109,630) $1,426,997 $ (153,652) $(2,540,860)
------------- ------------- ------------- ------------- ------------- ------------- -------------
NET ASSETS:
Beginning of
period......... 30,905,081 27,819,093 25,198,549 27,308,179 7,133,147 7,286,799 19,621,394
------------- ------------- ------------- ------------- ------------- ------------- -------------
End of period... $35,545,617 $30,905,081 $27,349,213 $25,198,549 $8,560,144 $ 7,133,147 $17,080,534
------------- ------------- ------------- ------------- ------------- ------------- -------------
------------- ------------- ------------- ------------- ------------- ------------- -------------
<CAPTION>
Total
----------------------------
Year Ended Six Months Year Ended
December 31, Ended December 31,
1994 June 30, 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment
income......... $ 495,394 $ 4,216,435 $ 12,791,072
Net realized
gains
(losses)....... -- (1,007,421) 1,531,879
Net unrealized
gains
(losses)....... -- 23,528,969 (21,977,658)
------------- ------------- -------------
Increase
(decrease) in
net assets
from
operations... $ 495,394 $ 26,737,983 $ (7,654,707)
------------- ------------- -------------
PARTICIPANT
TRANSACTIONS:
Accumulation
Activity:
Purchase
payments
received..... $ 3,509,838 $ 21,230,157 $ 49,787,391
Net transfers
between
Sub-Acccounts
and Fixed
Account...... 874,020 (1,785,195) (1,851,883)
Withdrawals,
surrenders,
annuitizations
and account
fees......... (6,139,245) (41,901,285) (44,180,682)
------------- ------------- -------------
Net
accumulation
activity... $(1,755,387) $(22,456,323) $ 3,754,826
------------- ------------- -------------
Annuitization
Activity:
Annuity
payments and
account
fees......... $ (224) $ (6,913) $ (13,794)
Adjustments to
annuity
reserve...... (21) 796 (711)
------------- ------------- -------------
Net
annuitization
activity: $ (245) $ (6,117) $ (14,505)
------------- ------------- -------------
Increase
(decrease) in
net assets from
participant
transactions... $(1,755,632) $(22,462,440) $ 3,740,321
------------- ------------- -------------
Increase
(decrease) in
net assets... $(1,260,238) $ 4,275,543 $ (3,914,386)
------------- ------------- -------------
NET ASSETS:
Beginning of
period......... 20,881,632 206,321,726 210,236,112
------------- ------------- -------------
End of period... $19,621,394 $210,597,269 $206,321,726
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See notes to financial statements.
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT D
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life of Canada (U.S.) Variable Account D (the "Variable Account"), a
separate account of Sun Life Assurance Company of Canada (U.S.), the Sponsor,
was established on August 20, 1985 as a funding vehicle for the variable portion
of group combination fixed/variable annuities. The Variable Account is
registered with the Securities and Exchange Commission under the Investment
Company Act of 1940 as a unit investment trust.
The 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 among available mutual funds (the "Funds")
advised by Massachusetts Financial Services Company ("MFS"), a wholly-owned
subsidiary of the Sponsor.
4
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT D
NOTES TO FINANCIAL STATEMENTS -- continued
(2) SIGNIFICANT ACCOUNTING POLICIES
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 subject to
tax.
(3) CONTRACT CHARGES
A mortality and expense risk charge is deducted from the Variable Account at the
end of each valuation period for the mortality and expense risks assumed by the
Sponsor. These deductions are transferred periodically to the Sponsor. The rate
of this deduction varies based on total purchase payments credited to all
participants' accounts under a contract as follows:
<TABLE>
<CAPTION>
Mortality
and Expense
Level Purchase Payments Risk Charge
----- ----------------------- -----------
<S> <C> <C>
1 $ up to $250,000 1.30%
2 250,000 to 1,499,999 1.25%
3 1,500,000 to 4,999,999 1.10%
4 5,000,000 and over 0.95%
</TABLE>
Since 1987 the Sponsor has reduced the Level 1 mortality and expense risk charge
to 1.25% and, therefore, has been accounting for all Level 1 units as Level 2
units.
Each year on the account anniversary, an account administration fee ("Account
Fee") is deducted from the participant's account to cover administrative
expenses relating to the contract and the participant's account. The amount of
the fee varies from $12 to $25 and is based on total purchase payments credited
to all participants' accounts under a contract. After the annuity commencement
date the account fee 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 6% of the purchase payments made under the
contract.
5
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT D
NOTES TO FINANCIAL STATEMENTS -- continued
(4) ANNUITY RESERVES
Annuity reserves are calculated using the 1983 Individual Annuitant Mortality
Table and an assumed interest rate of 4%. Required adjustments to the reserve
are accomplished by transfers to or from the Sponsor.
(5) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS
<TABLE>
<CAPTION>
Units
Withdrawn,
Units Purchased Units Transferred Surrendered
Units Outstanding --------------------- Between Sub-Accounts and
Beginning of Period Six and Fixed Account Annuitized
----------------------- Months ---------------------- ----------
Six Months Year Ended Ended Year Ended Six Months Year Ended Six Months
Ended June Dec. 31, June 30, Dec. 31, Ended June Dec. 31, Ended June
Sub-Accounts 30, 1995 1994 1995 1994 30, 1995 1994 30, 1995
---------------------- ----------- ----------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MIT-Level 2............................. 1,302,429 1,274,349 169,291 402,322 (356) (119,786) (131,069)
MIT-Level 3............................. 354,395 255,457 28,614 54,592 9,448 102,834 (49,331)
MIT-Level 4............................. 421,137 372,426 11,515 56,884 (2,875) (4,782) (320,946)
MIG-Level 2............................. 393,686 414,661 45,672 105,844 (6,272) (51,317) (33,230)
MIG-Level 3............................. 127,769 237,112 12,088 72,773 4,188 (85,658) (19,863)
MIG-Level 4............................. 429,508 371,521 4,780 55,455 (9,081) 277,430 (420,049)
MTR-Level 2............................. 1,726,666 1,846,634 208,425 495,574 (15,822) (275,914) (210,009)
MTR-Level 3............................. 756,604 594,218 60,919 161,446 (15,363) 192,742 (255,362)
MTR-Level 4............................. 329,757 236,241 34,401 101,630 (7,041) 98,829 (120,294)
MGO-Level 2............................. 201,423 266,312 18,452 37,872 (186) (36,593) (37,223)
MGO-Level 3............................. 59,105 23,947 4,984 8,003 1,139 38,511 (19,620)
MGO-Level 4............................. 16,384 11,887 149 1,697 (597) 2,987 (13,764)
MFB-Level 2............................. 173,242 233,667 15,452 48,654 (6,749) (44,956) (22,490)
MFB-Level 3............................. 130,119 105,470 11,280 35,978 (5,075) 253 (8,145)
MFB-Level 4............................. 111,663 105,162 8,903 22,608 3,274 31,354 (41,841)
MWG-Level 2............................. 158,464 198,385 15,189 37,659 (3,125) (48,956) (15,600)
MWG-Level 3............................. 101,949 69,250 7,807 19,214 3,988 39,628 (31,829)
MWG-Level 4............................. 160,179 150,969 1,660 17,899 (4,646) (5,085) (157,193)
CAS-Level 2............................. 829,460 803,255 87,054 211,791 (28,018) (84,802) (72,413)
CAS-Level 3............................. 365,537 221,334 40,901 65,235 (2,033) 115,550 (44,456)
CAS-Level 4............................. 160,474 142,742 10,955 25,687 (2,124) (3,598) (34,916)
GSS-Level 2............................. 746,715 852,889 85,587 213,604 (8,867) (124,108) (66,726)
GSS-Level 3............................. 338,634 331,847 25,020 41,254 659 49,822 (13,216)
GSS-Level 4............................. 519,083 494,094 35,636 90,628 (29,239) (52,849) (51,067)
HYS-Level 2............................. 206,627 221,068 20,040 45,703 10,077 (17,299) (19,456)
HYS-Level 3............................. 80,917 88,591 7,190 11,340 43,272 9,476 (19,214)
HYS-Level 4............................. 145,707 116,083 16,186 36,681 (4,558) (1,383) (11,347)
MMS-Level 2............................. 634,761 729,713 75,970 166,725 (36,576) (19,742) (63,672)
MMS-Level 3............................. 417,392 430,480 20,607 57,253 (19,619) 22,760 (100,797)
MMS-Level 4............................. 404,055 425,496 12,024 35,195 31,703 67,598 (141,143)
<CAPTION>
Units Outstanding
End of Period
----------------------
Year Ended Six Months Year Ended
Dec. 31, Ended June Dec. 31,
Sub-Accou 1994 30, 1995 1994
--------- ---------- ---------- -----------
<S> <C> <C> <C>
MIT-Level (254,456) 1,340,295 1,302,429
MIT-Level (58,488) 343,126 354,395
MIT-Level (3,391) 108,831 421,137
MIG-Level (75,502) 399,856 393,686
MIG-Level (96,458) 124,182 127,769
MIG-Level (274,898) 5,158 429,508
MTR-Level (339,628) 1,709,260 1,726,666
MTR-Level (191,802) 546,798 756,604
MTR-Level (106,943) 236,823 329,757
MGO-Level (66,168) 182,466 201,423
MGO-Level (11,356) 45,608 59,105
MGO-Level (187) 2,172 16,384
MFB-Level (64,123) 159,455 173,242
MFB-Level (11,582) 128,179 130,119
MFB-Level (47,461) 81,999 111,663
MWG-Level (28,624) 154,928 158,464
MWG-Level (26,143) 81,915 101,949
MWG-Level (3,604) -- 160,179
CAS-Level (100,784) 816,083 829,460
CAS-Level (36,582) 359,949 365,537
CAS-Level (4,357) 134,389 160,474
GSS-Level (195,670) 756,709 746,715
GSS-Level (84,289) 351,097 338,634
GSS-Level (12,790) 474,413 519,083
HYS-Level (42,845) 217,288 206,627
HYS-Level (28,490) 112,165 80,917
HYS-Level (5,674) 145,988 145,707
MMS-Level (241,935) 610,483 634,761
MMS-Level (93,101) 317,583 417,392
MMS-Level (124,234) 306,639 404,055
</TABLE>
6
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants in Sun Life of Canada (U.S.) Variable Account D
and the Board of Directors of Sun Life Assurance Company of Canada (U.S.):
We have audited the accompanying statement of condition of Sun Life of Canada
(U.S.) Variable Account D (the "Variable Account") as of June 30, 1995, the
related statement of operations for the six months then ended and the statements
of changes in net assets for the six months then ended and the year ended
December 31, 1994. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation with the custodian of securities held for the Variable Account as
of June 30, 1995. 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 Variable Account as of June 30, 1995,
the results of its operations and the changes in its net assets for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 4, 1995
7
