<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
80 Broad Street
New York, NY 10004
DIRECTORS AND OFFICERS
[LOGO]PROFESSIONALLY MANAGED COMBINATION
JOHN D. McNEIL, Chairman and Director
FIXED/VARIABLE ANNUITIES
DONALD A. STEWART, President and
Director
FOR PERSONAL INVESTMENTS AND
DAVID D. HORN, Director
QUALIFIED RETIREMENT PLANS
------------------------------------------------
RICHARD B. BAILEY, Director
ANNUAL REPORT, DECEMBER 31, 1997
A. KEITH BRODKIN, Director
M. COLYER CRUM, Director
JOHN G. IRELAND, Director
EDWARD M. LAMONT, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
FIORAVANTE G. PERROTTA, Director
RALPH F. PETERS, Director
PAMELA T. TIMMINS, Director
MICHAEL A. COHEN, Vice President
and Regional Manager
MARGARET SEARS MEAD, Assistant Vice
President
and Secretary
L. BROCK THOMSON, Vice President and
Treasurer
GENERAL DISTRIBUTOR
[LOGO]
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
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
This report is prepared for the general
information
of contract owners. It is authorized
for distribution
to prospective purchasers only if
preceded or
accompanied by an effective prospectus.
ISSUED BY
CONY-3-2/98 SUN LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENT OF CONDITION-- December 31, 1997
<TABLE>
<CAPTION>
ASSETS:
Investment in MFS/Sun Life Series Trust Shares Cost Value
---------- ------------ ------------
<S> <C> <C> <C>
Capital Appreciation Series ("CAS")...... 1,690,865 $ 51,349,789 $ 67,868,674
Government Securities Series ("GSS")..... 1,720,075 21,379,490 22,430,830
High Yield Series ("HYS")................ 1,353,848 11,994,948 13,146,857
Managed Sectors Series ("MSS")........... 446,837 11,030,212 13,029,464
Money Market Series ("MMS").............. 12,406,672 12,406,672 12,406,672
Total Return Series ("TRS").............. 2,090,778 34,857,281 44,569,654
World Governments Series ("WGS")......... 478,903 5,498,072 5,137,026
------------ ------------
$148,516,464 $178,589,177
------------
------------
LIABILITY:
Payable to sponsor................................................... 70,619
------------
Net Assets..................................................... $178,518,558
------------
------------
</TABLE>
<TABLE>
<CAPTION>
Applicable to Owners of
Deferred Variable Annuity Contracts Reserve for
NET ASSETS: ----------------------------------- Variable
COMPASS 2 CONTRACTS: Units Unit Value Value Annuities Total
--------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
CAS................................................ 1,049,111 $ 59.1724 $ 62,072,312 $ 241,312 $ 62,313,624
GSS................................................ 897,267 24.1586 21,672,617 94,840 21,767,457
HYS................................................ 421,472 29.0298 12,237,445 43,066 12,280,511
MSS................................................ 270,624 41.5939 11,272,473 -- 11,272,473
MMS................................................ 713,552 16.6078 11,843,273 10,976 11,854,249
TRS................................................ 1,345,153 29.1777 39,309,920 609,566 39,919,486
WGS................................................ 256,940 18.1356 4,669,373 -- 4,669,373
------------ ----------- ------------
$163,077,413 $ 999,760 $164,077,173
------------ ----------- ------------
<CAPTION>
COMPASS 3 CONTRACTS:
<S> <C> <C> <C> <C> <C>
CAS................................................ 291,968 $ 19.0541 $ 5,562,736 $ 109 $ 5,562,845
GSS................................................ 55,194 12.0343 663,723 -- 663,723
HYS................................................ 60,217 14.3002 861,335 -- 861,335
MSS................................................ 100,687 17.4931 1,755,888 227 1,756,115
MMS................................................ 47,433 11.4533 543,064 -- 543,064
TRS................................................ 281,915 16.2726 4,586,550 100 4,586,650
WGS................................................ 42,551 11.0071 467,653 -- 467,653
------------ ----------- ------------
$ 14,440,949 $ 436 $ 14,441,385
------------ ----------- ------------
Net Assets............................................................ $177,518,362 $1,000,196 $178,518,558
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to financial statements
1
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS-- December 31, 1997
<TABLE>
<CAPTION>
CAS GSS HYS MSS
Sub-Account Sub-Account Sub-Account Sub-Account
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received...................................... $ 5,671,221 $ 1,773,033 $ 888,949 $ 1,371,268
Mortality and expense risk charges.............. 842,418 321,292 169,971 157,979
Distribution expense charges.................... 7,164 992 1,194 2,203
------------ ------------ ----------- ------------
Net investment income....................... $ 4,821,639 $ 1,450,749 $ 717,784 $ 1,211,086
------------ ------------ ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales........................... $ 14,132,590 $ 9,865,167 $5,608,186 $ 4,092,808
Cost of investments sold...................... 9,867,505 9,941,116 5,133,558 3,008,351
------------ ------------ ----------- ------------
Net realized gains (losses)................. $ 4,265,085 $ (75,949) $ 474,628 $ 1,084,457
------------ ------------ ----------- ------------
Net unrealized appreciation on investments
End of year................................... $ 16,518,885 $ 1,051,340 $1,151,909 $ 1,999,252
Beginning of year............................. 13,093,275 670,954 861,574 1,586,190
------------ ------------ ----------- ------------
Change in unrealized appreciation........... $ 3,425,610 $ 380,386 $ 290,335 $ 413,062
------------ ------------ ----------- ------------
Realized and unrealized gains................. $ 7,690,695 $ 304,437 $ 764,963 $ 1,497,519
------------ ------------ ----------- ------------
INCREASE IN NET ASSETS FROM OPERATIONS............ $ 12,512,334 $ 1,755,186 $1,482,747 $ 2,708,605
------------ ------------ ----------- ------------
------------ ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
MMS TRS WGS
Sub-Account Sub-Account Sub-Account Total
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received...................................... $ 675,167 $4,275,683 $ 252,673 $14,907,994
Mortality and expense risk charges.............. 176,350 528,904 74,258 2,271,172
Distribution expense charges.................... 1,117 6,104 775 19,549
---------- ---------- ---------- -----------
Net investment income....................... $ 497,700 $3,740,675 $ 177,640 $12,617,273
---------- ---------- ---------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales........................... $14,314,584 $8,762,067 $2,194,887 $58,970,289
Cost of investments sold...................... 14,314,584 6,102,334 2,416,005 50,783,453
---------- ---------- ---------- -----------
Net realized gains (losses)................. $ -- $2,659,733 $(221,118 ) $ 8,186,836
---------- ---------- ---------- -----------
Net unrealized appreciation (depreciation) on
investments
End of Year................................... $ -- $9,712,373 $(361,046 ) $30,072,713
Beginning of Year............................. -- 8,090,640 (245,952 ) 24,056,681
---------- ---------- ---------- -----------
Change in unrealized appreciation
(depreciation)............................ $ -- $1,621,733 $(115,094 ) $ 6,016,032
---------- ---------- ---------- -----------
Realized and unrealized gains (losses)........ $ -- $4,281,466 $(336,212 ) $14,202,868
---------- ---------- ---------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS....................................... $ 497,700 $8,022,141 $(158,572 ) $26,820,141
---------- ---------- ---------- -----------
---------- ---------- ---------- -----------
</TABLE>
See notes to financial statements
2
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAS GSS
Sub-Account Sub-Account
------------------------------ -------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------ -------------------------------
1997 1996 1997 1996
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.......................... $ 4,821,639 $ 3,981,524 $ 1,450,749 $ 1,241,066
Net realized gains (losses).................... 4,265,085 4,576,791 (75,949) (27,070)
Net unrealized gains (losses).................. 3,425,610 2,015,008 380,386 (1,124,217)
-------------- ------------- -------------- --------------
Increase in net assets from operations..... $12,512,334 $10,573,323 $ 1,755,186 $ 89,779
-------------- ------------- -------------- --------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received................... $ 2,627,696 $ 2,717,881 $ 593,679 $ 894,639
Net transfers between Sub-Accounts and Fixed
Account.................................... 668,389 (1,800,976) (1,912,328) 493,206
Withdrawals, surrenders, annuitizations and
contract charges........................... (7,704,458) (7,564,122) (4,863,706) (4,694,596)
-------------- ------------- -------------- --------------
Net accumulation activity.................. $(4,408,373) $(6,647,217) $(6,182,355) $ (3,306,751)
-------------- ------------- -------------- --------------
Annuitization Activity:
Annuitizations............................... $ 67,112 $ 7,453 $ -- $ 10,761
Annuity payments and contract charges........ (26,334) (21,172) (22,850) (43,569)
Adjustments to annuity reserve............... (3,618) 775 3,140 1,408
-------------- ------------- -------------- --------------
Net annuitization activity................. $ 37,160 $ (12,944) $ (19,710) $ (31,400)
-------------- ------------- -------------- --------------
Decrease in net assets from contract owner
transactions................................. $(4,371,213) $(6,660,161) $(6,202,065) $ (3,338,151)
-------------- ------------- -------------- --------------
Increase (decrease) in net assets............ $ 8,141,121 $ 3,913,162 $(4,446,879) $ (3,248,372)
NET ASSETS:
Beginning of year.............................. 59,735,348 55,822,186 26,878,059 30,126,431
-------------- ------------- -------------- --------------
End of year.................................... $67,876,469 $59,735,348 $22,431,180 $ 26,878,059
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
<CAPTION>
HYS MSS
Sub-Account Sub-Account
------------------------------ -------------------------------
Year Ended December 31, Year Ended December 31,
------------------------------ -------------------------------
1997 1996 1997 1996
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.......................... $ 717,784 $ 942,056 $ 1,211,086 $ 1,252,707
Net realized gains............................. 474,628 281,243 1,084,457 346,321
Net unrealized gains........................... 290,335 168,726 413,062 27,275
-------------- ------------- -------------- --------------
Increase in net assets from operations..... $ 1,482,747 $ 1,392,025 $ 2,708,605 $ 1,626,303
-------------- ------------- -------------- --------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received................... $ 212,184 $ 373,887 $ 641,130 $ 728,572
Net transfers between Sub-Accounts and Fixed
Account.................................... 199,334 (133,634) 83,029 455,068
Withdrawals, surrenders, annuitizations and
contract charges........................... (2,269,739) (2,039,017) (2,113,363) (1,326,391)
-------------- ------------- -------------- --------------
Net accumulation activity.................. $(1,858,221) $(1,798,764) $(1,389,204) $ (142,751)
-------------- ------------- -------------- --------------
Annuitization Activity:
Annuitizations............................... $ -- $ -- $ -- $ --
Annuity payments and contract charges........ (5,630) (6,135) (164) (135)
Adjustments to annuity reserves.............. (427) (255) (11,371) 11,582
-------------- ------------- -------------- --------------
Net annuitization activity................. $ (6,057) $ (6,390) $ (11,535) $ 11,447
-------------- ------------- -------------- --------------
Decrease in net assets from contract owner
transactions................................. $(1,864,278) $(1,805,154) $(1,400,739 $ (131,304)
-------------- ------------- -------------- --------------
Decrease in net assets..................... $ (381,531) $ (413,129) $ 1,307,866 1,494,999
NET ASSETS:
Beginning of year.............................. 13,523,377 13,936,506 11,720,722 10,225,723
-------------- ------------- -------------- --------------
End of year.................................... $13,141,846 $13,523,377 $13,028,588 $ 11,720,722
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
</TABLE>
See notes to financial statements
3
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MMS TRS
Sub-Account Sub-Account
------------------------------ -----------------------------
Year Ended December 31, Year Ended December 31,
------------------------------ -----------------------------
1997 1996 1997 1996
--------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................ $ 497,700 $ 524,831 $ 3,740,675 $ 2,404,032
Net realized gains................................... -- -- 2,659,733 1,937,824
Net unrealized gains................................. -- -- 1,621,733 489,044
--------------- ------------ -------------- ------------
Increase in net assets from operations........... $ 497,700 $ 524,831 $ 8,022,141 $ 4,830,900
--------------- ------------ -------------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received......................... $ 361,788 $ 506,719 $ 1,583,065 $ 1,903,724
Net transfers between Sub-Accounts and Fixed
Account.......................................... 457,557 1,225,167 101,838 (23,251)
Withdrawals, surrenders, annuitizations and
contract charges................................. (4,535,913) (3,891,615) (6,305,584) (5,723,230)
--------------- ------------ -------------- ------------
Net accumulation activity........................ $(3,716,568) $(2,159,729) $ (4,620,681) $ (3,842,757)
--------------- ------------ -------------- ------------
Annuitization Activity:
Annuitizations..................................... $ -- $ -- $ 56,378 $ 19,728
Annuity payments and contract charges.............. (1,179) (4,273) (82,242) (68,505)
Adjustments to annuity reserves.................... 10,821 (11,568) (19,810) (13,885)
--------------- ------------ -------------- ------------
Net annuitization activity....................... $ 9,642 $ (15,841) $ (45,674) $ (62,662)
--------------- ------------ -------------- ------------
Decrease in net assets from contract owner
transactions....................................... $(3,706,926) $(2,175,570) $ (4,666,355) $ (3,905,419)
--------------- ------------ -------------- ------------
Increase in net assets............................. $(3,209,226) $(1,650,739) $ 3,355,786 $ 925,481
NET ASSETS:
Beginning of year.................................... 15,606,539 17,257,278 41,150,350 40,224,869
--------------- ------------ -------------- ------------
End of year.......................................... $12,397,313 $15,606,539 $ 44,506,136 $ 41,150,350
--------------- ------------ -------------- ------------
--------------- ------------ -------------- ------------
<CAPTION>
WGS
Sub-Account Total
------------------------------ -----------------------------
Year Ended December 31, Year Ended December 31,
------------------------------ -----------------------------
1997 1996 1997 1996
--------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................ $ 177,640 $ 951,977 $ 12,617,273 $ 11,298,193
Net realized gains (losses).......................... (221,118) (130,309) 8,186,836 6,984,800
Net unrealized gains (losses)........................ (115,094) (582,106) 6,016,032 993,730
--------------- ------------ -------------- ------------
Increase (decrease) in net assets from
operations..................................... $ (158,572) $ 239,562 $ 26,820,141 $ 19,276,723
--------------- ------------ -------------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received......................... $ 200,405 $ 408,414 $ 6,219,947 $ 7,533,836
Net transfers between Sub-Accounts and Fixed
Account.......................................... (327,982) (463,423) (730,163) (247,843)
Withdrawals, surrenders, annuitizations and
contract charges................................. (1,751,969) (1,295,854) (29,544,732) (26,534,825)
--------------- ------------ -------------- ------------
Net accumulation activity........................ $(1,879,546) $(1,350,863) $(24,054,948) $(19,248,832)
--------------- ------------ -------------- ------------
Annuitization Activity:
Annuitizations..................................... $ -- $ -- $ 123,490 $ 37,942
Annuity payments and contract charges.............. -- -- (138,399) (143,789)
Adjustments to annuity reserves.................... -- -- (21,265) (11,943)
--------------- ------------ -------------- ------------
Net annuitization activity $ -- $ -- $ (36,174) $ (117,790)
--------------- ------------ -------------- ------------
Decrease in net assets from contract owner
transactions....................................... $(1,879,546) $(1,350,863) $(24,091,122) $(19,366,622)
--------------- ------------ -------------- ------------
Increase (decrease) in net assets.................. $(2,038,118) $(1,111,301) $ 2,729,019 $ (89,899)
NET ASSETS:
Beginning of year.................................... 7,175,144 8,286,445 175,789,539 175,879,438
--------------- ------------ -------------- ------------
End of year.......................................... $ 5,137,026 $ 7,175,144 $178,518,558 $175,789,539
--------------- ------------ -------------- ------------
--------------- ------------ -------------- ------------
</TABLE>
See notes to financial statements
4
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life (N.Y.) Variable Account B (the "Variable Account"), a separate account
of Sun Life Insurance and Annuity Company of New York, the Sponsor (a
wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.)), was
established on December 3, 1984 as a funding vehicle for individual variable
annuities. The Variable Account is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 as a unit investment trust.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account is invested in shares of a specific series of MFS/Sun Life Series
Trust (the "Series Trust") as selected by contract owners. The Series Trust is
an open-end management investment company registered under the Investment
Company Act of 1940. Massachusetts Financial Services Company, an affiliate of
Sun Life Assurance Company of Canada (U.S.), is investment adviser to the Series
Trust.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT VALUATIONS
Investments in shares of the Series Trust are recorded at their net asset value.
Realized gains and losses on sales of shares of the Series Trust are determined
on the identified cost basis. Dividend income and capital gain distributions
received by the Sub-Accounts are reinvested in additional Series Trust 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 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. These deductions are
transferred periodically to the Sponsor. Currently, the deduction is at an
5
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
effective annual rate of 1.3% of the assets of the Variable Account attributable
to Compass 2 contracts and 1.25% of the assets of the Variable Account
attributable to Compass 3 contracts.
Each year on the contract anniversary, a contract maintenance charge of $30 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 (including the distribution expense charge
described below applicable to Compass 3 contracts) exceed 5% of the purchase
payments made under a Compass 2 contract or 9% of the purchase payments made
under a Compass 3 contract.
For assuming the risk that withdrawal charges may be insufficient to compensate
it for the costs of distributing the Compass 3 contracts, the Sponsor makes a
deduction from the Variable Account at the end of each valuation period for the
first seven contract years (during both the accumulation period and, if
applicable, after annuity payments begin) at an effective annual rate of 0.15%
of the assets of the Variable Account attributable to such contracts. No
deduction is made after the seventh contract anniversary. No such deduction is
made with respect to assets attributable to Compass 2 contracts.
(4) ANNUITY RESERVES
Annuity reserves for contracts with annuity commencement dates prior to February
1, 1987 have been 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.
6
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS
<TABLE>
<CAPTION>
CAS GSS HYS
Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- -------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
----------------------- ----------------------- -------------------
COMPASS 2 CONTRACTS 1997 1996 1997 1996 1997 1996
- --------------------------------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of
Year 1,149,253 1,311,905 1,160,869 1,317,288 489,793 570,116
Units purchased 25,636 34,513 22,468 29,010 3,272 5,193
Units transferred between
Sub-Accounts and Fixed
Account 7,308 (32,094) (79,806) 25,659 6,890 (6,162)
Units withdrawn, surrendered,
and annuitized (133,086) (165,071) (206,264) (211,088) (78,483) (79,354)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End of Year 1,049,111 1,149,253 897,267 1,160,869 421,472 489,793
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
<CAPTION>
MSS
Sub-Account
-----------------------
Year Ended
December 31,
-----------------------
COMPASS 2 CONTRACTS 1997 1996
- --------------------------------- ---------- ----------
<S> <C> <C>
Units Outstanding Beginning of
Year 314,243 331,221
Units purchased 8,716 11,544
Units transferred between
Sub-Accounts and Fixed
Account (1,885) 12,613
Units withdrawn, surrendered,
and annuitized (50,450) (41,135)
---------- ----------
Units Outstanding End of Year 270,624 314,243
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
MMS TRS WGS
Sub-Account Sub-Account Sub-Account
---------------------- ---------------------- ------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
---------------------- ---------------------- ------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of
Year 917,551 1,084,910 1,532,369 1,740,564 358,117 433,736
Units purchased 14,540 20,814 34,725 40,026 6,591 10,747
Units transferred between
Sub-Accounts and Fixed
Account 50,095 58,322 146 (6,258) (15,604) (20,115)
Units withdrawn, surrendered,
and annuitized (268,634) (246,495) (222,087) (241,963) (92,164) (66,251)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End of Year 713,552 917,551 1,345,153 1,532,369 256,940 358,117
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
</TABLE>
7
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
CAS GSS HYS
Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- -------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
----------------------- ----------------------- -------------------
COMPASS 3 CONTRACTS 1997 1996 1997 1996 1997 1996
- --------------------------------- ---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of
Year 231,231 184,876 58,052 39,286 58,945 43,963
Units purchased 72,122 82,988 6,833 23,535 9,036 20,780
Units transferred between
Sub-Accounts and Fixed
Account 6,347 (23,851) (373) (1,004) 291 1,055
Units withdrawn, surrendered,
and annuitized (17,732) (12,782) (9,318) (3,765) (8,055) (6,853)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End of Year 291,968 231,231 55,194 58,052 60,217 58,945
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
<CAPTION>
MSS
Sub-Account
-----------------------
Year Ended
December 31,
-----------------------
COMPASS 3 CONTRACTS 1997 1996
- --------------------------------- ---------- ----------
<S> <C> <C>
Units Outstanding Beginning of
Year 82,578 53,846
Units purchased 18,777 29,174
Units transferred between
Sub-Accounts and Fixed
Account 10,378 4,546
Units withdrawn, surrendered,
and annuitized (11,046) (4,988)
---------- ----------
Units Outstanding End of Year 100,687 82,578
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
MMS TRS WGS
Sub-Account Sub-Account Sub-Account
---------------------- ---------------------- ------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
---------------------- ---------------------- ------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of
Year 83,267 44,348 255,284 185,716 47,922 46,895
Units purchased 11,190 16,424 44,905 80,349 7,395 20,202
Units transferred between
Sub-Accounts and Fixed
Account (32,545) 25,043 4,923 10,544 (4,116) (9,737)
Units withdrawn, surrendered,
and annuitized (14,479) (2,548) (23,197) (21,325) (8,650) (9,438)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End of Year 47,433 83,267 281,915 255,284 42,551 47,922
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
</TABLE>
8
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners participating in Sun Life (N.Y.) Variable Account B
and the Board of Directors of Sun Life Insurance and Annuity Company of New
York:
We have audited the accompanying statement of condition of Sun Life (N.Y.)
Variable Account B (the "Variable Account") as of December 31, 1997, the related
statements of operations for the year then ended and the statements of changes
in net assets for the years ended December 31, 1997 and 1996. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities held at December 31, 1997 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 Variable Account as of December 31,
1997, 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
February 6, 1998
9
