<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
80 Broad Street
New York, NY 10004
abcdef
DIRECTORS AND OFFICERS
PROFESSIONALLY MANAGED COMBINATION
DONALD A. STEWART, Chairman and
Director
FIXED/VARIABLE ANNUITIES
C. JAMES PRIEUR, President and Director
FOR PERSONAL INVESTMENTS AND
S. CAESAR RABOY, Senior Vice President
QUALIFIED RETIREMENT PLANS
and Director
------------------------------------------------
RICHARD B. BAILEY, Director
SEMIANNUAL REPORT, JUNE 30, 1998
M. COLYER CRUM, Director
DAVID D. HORN, Director
JOHN G. IRELAND, Director
EDWARD M. LAMONT, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
JOHN D. McNEIL, Director
PETER R. O'FLINN, Director
FIORAVANTE G. PERROTTA, Director
RALPH F. PETERS, Director
FREDERICK B. WHITTEMORE, Director
MICHAEL A. COHEN, Vice President
and Regional Manager
MARGARET SEARS MEAD, Assistant Vice
President
and Secretary
L. BROCK THOMSON, Vice President and
Treasurer
[LOGO]
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481
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
ISSUED BY
CONY-8/98 7M SUN LIFE INSURANCE
AND ANNUITY COMPANY OF NEW YORK
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENT OF CONDITION-- June 30, 1998
<TABLE>
<CAPTION>
ASSETS:
Investments in
MFS-Registered Trademark-/Sun Life Series
Trust Shares Cost Value
---------- ------------ ------------
<S> <C> <C> <C>
Capital Appreciation Series ("CAS")...... 1,744,977 $ 58,372,475 $ 74,646,247
Government Securities Series ("GSS")..... 1,610,832 20,242,410 20,615,661
High Yield Series ("HYS")................ 1,307,203 11,715,895 12,534,632
Money Market Series ("MMS").............. 12,880,815 12,880,815 12,880,815
Managed Sectors Series ("MSS")........... 499,390 13,131,160 14,027,849
Total Return Series ("TRS").............. 2,104,739 37,052,861 43,545,440
World Governments Series ("WGS")......... 352,300 3,915,500 3,790,234
------------ ------------
$157,311,116 $182,040,878
------------
------------
LIABILITY:
Payable to sponsor................................................... 79,192
------------
Net Assets..................................................... $181,961,686
------------
------------
</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................................................ 952,583 $70.4769 $ 67,131,538 $ 322,287 $ 67,453,825
GSS................................................ 790,701 24.9380 19,715,104 92,417 19,807,521
HYS................................................ 380,408 30.3676 11,554,442 42,799 11,597,241
MMS................................................ 727,925 16.9147 12,305,089 10,672 12,315,761
MSS................................................ 255,651 46.1458 11,818,844 47,596 11,866,440
TRS................................................ 1,192,900 31.5207 37,678,697 611,064 38,289,761
WGS................................................ 183,706 18.3077 3,374,374 -- 3,374,374
------------ ----------- ------------
$163,578,088 $1,126,835 $164,704,923
------------ ----------- ------------
<CAPTION>
COMPASS 3 CONTRACTS:
<S> <C> <C> <C> <C> <C>
CAS................................................ 317,412 $22.6833 $ 7,199,747 $ 80 $ 7,199,827
GSS................................................ 65,293 12.4165 810,183 -- 810,183
HYS................................................ 62,326 14.9519 932,134 -- 932,134
MMS................................................ 47,666 11.6593 555,515 -- 555,515
MSS................................................ 111,655 19.4124 2,160,138 156 2,160,294
TRS................................................ 295,022 17.5707 5,182,883 67 5,182,950
WGS................................................ 37,507 11.1061 415,860 -- 415,860
------------ ----------- ------------
$ 17,256,460 $ 303 $ 17,256,763
------------ ----------- ------------
Net Assets $180,834,548 $1,127,138 $181,961,686
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to financial statements
1
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS-- Six Months Ended June 30, 1998
<TABLE>
<CAPTION>
CAS GSS HYS MMS
Sub-Account Sub-Account Sub-Account Sub-Account
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received...................................... $ 8,116,841 $ 1,169,791 $ 789,870 $ 305,088
Mortality and expense risk charges.............. 465,231 137,482 83,250 78,553
Distribution expense charges.................... 4,778 549 674 432
----------- ------------ ----------- ------------
Net investment income....................... $ 7,646,832 $ 1,031,760 $ 705,946 $ 226,103
----------- ------------ ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains on investment transactions
Proceeds from sales........................... $12,835,188 $ 4,347,495 $2,334,405 $ 12,373,954
Cost of investments sold...................... 7,221,711 4,012,873 2,104,041 12,373,954
----------- ------------ ----------- ------------
Net realized gains.......................... $ 5,613,477 $ 334,622 $ 230,364 $ --
----------- ------------ ----------- ------------
Net unrealized appreciation on investments
End of period................................. $16,273,772 $ 373,251 $ 818,737 $ --
Beginning of period........................... 16,518,885 1,051,340 1,151,909 --
----------- ------------ ----------- ------------
Change in unrealized appreciation........... $ (245,113) $ (678,089) $ (333,172) $ --
----------- ------------ ----------- ------------
Realized and unrealized gains (losses)........ $ 5,368,364 $ (343,467) $ (102,808) $ --
----------- ------------ ----------- ------------
INCREASE IN NET ASSETS FROM OPERATIONS............ $13,015,196 $ 688,293 $ 603,138 $ 226,103
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
MSS TRS WGS
Sub-Account Sub-Account Sub-Account Total
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received...................................... $ 1,907,177 $ 4,766,360 $ 50,063 $17,105,190
Mortality and expense risk charges.............. 83,687 268,268 26,125 1,142,596
Distribution expense charges.................... 1,466 3,642 319 11,860
------------ ------------ ----------- -----------
Net investment income....................... $ 1,822,024 $ 4,494,450 $ 23,619 $15,950,734
------------ ------------ ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions
Proceeds from sales........................... $ 2,305,267 $ 6,873,040 $2,034,066 $43,103,415
Cost of investments sold...................... 1,604,132 4,667,311 2,250,330 34,234,352
------------ ------------ ----------- -----------
Net realized gains (losses)................. $ 701,135 $ 2,205,729 $ (216,264) $ 8,869,063
------------ ------------ ----------- -----------
Net unrealized appreciation (depreciation) on
investments
End of period................................. $ 896,689 $ 6,492,579 $ (125,266) $24,729,762
Beginning of period........................... 1,999,252 9,712,373 (361,046) 30,072,713
------------ ------------ ----------- -----------
Change in unrealized appreciation
(depreciation)............................ $(1,102,563) $(3,219,794) $ 235,780 $(5,342,951)
------------ ------------ ----------- -----------
Realized and unrealized gains (losses)........ $ (401,428) $(1,014,065) $ 19,516 $ 3,526,112
------------ ------------ ----------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS............ $ 1,420,596 $ 3,480,385 $ 43,135 $19,476,846
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
</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
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Six Months Year Ended Six Months Year Ended
Ended December 31, Ended December 31,
June 30, 1998 1997 June 30, 1998 1997
-------------- ------------- -------------- -------------
OPERATIONS:
Net investment income...................................... $ 7,646,832 $ 4,821,639 $ 1,031,760 $ 1,450,749
Net realized gains (losses)................................ 5,613,477 4,265,085 334,622 (75,949)
Net unrealized gains (losses).............................. (245,113) 3,425,610 (678,089) 380,386
-------------- ------------- -------------- -------------
Increase in net assets from operations................. $13,015,196 $12,512,334 $ 688,293 $ 1,755,186
-------------- ------------- -------------- -------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............................... $ 1,433,424 $ 2,627,696 $ 364,353 $ 593,679
Net transfers between Sub-Accounts and Fixed Account..... (3,105,245) 668,389 (667,605) (1,912,328)
Withdrawals, surrenders, annuitizations and contract
charges................................................ (4,601,028) (7,704,458) (2,192,604) (4,863,706)
-------------- ------------- -------------- -------------
Net accumulation activity.............................. $(6,272,849) $(4,408,373) $(2,495,856) $(6,182,355)
-------------- ------------- -------------- -------------
Annuitization Activity:
Annuitizations........................................... $ 52,913 $ 67,112 $ -- $ --
Annuity payments and contract charges.................... (17,686) (26,334) (7,606) (22,850)
Adjustments to annuity reserve........................... (391) (3,618) 1,693 3,140
-------------- ------------- -------------- -------------
Net annuitization activity............................. $ 34,836 $ 37,160 $ (5,913) $ (19,710)
-------------- ------------- -------------- -------------
Decrease in net assets from contract owner transactions.... $(6,238,013) $(4,371,213) $(2,501,769) $(6,202,065)
-------------- ------------- -------------- -------------
Increase (decrease) in net assets........................ $ 6,777,183 $ 8,141,121 $(1,813,476) $(4,446,879)
NET ASSETS:
Beginning of period........................................ 67,876,469 59,735,348 22,431,180 26,878,059
-------------- ------------- -------------- -------------
End of period.............................................. $74,653,652 $67,876,469 $20,617,704 $22,431,180
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
<CAPTION>
HYS MMS
Sub-Account Sub-Account
------------------------------ ------------------------------
Six Months Year Ended Six Months Year Ended
Ended December 31, Ended December 31,
June 30, 1998 1997 June 30, 1998 1997
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................................... $ 705,946 $ 717,784 $ 226,103 $ 497,700
Net realized gains......................................... 230,364 474,628 -- --
Net unrealized gains (losses).............................. (333,172) 290,335 -- --
-------------- ------------- -------------- -------------
Increase in net assets from operations................. $ 603,138 $ 1,482,747 $ 226,103 $ 497,700
-------------- ------------- -------------- -------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............................... $ 112,176 $ 212,184 $ 219,837 $ 361,788
Net transfers between Sub-Accounts and Fixed Account..... (655,411) 199,334 5,171,928 457,557
Withdrawals, surrenders, annuitizations and contract
charges................................................ (669,616) (2,269,739) (5,143,102) (4,535,913)
-------------- ------------- -------------- -------------
Net accumulation activity.............................. $(1,212,851) $(1,858,221) $ 248,663 $(3,716,568)
-------------- ------------- -------------- -------------
Annuitization Activity:
Annuity payments and contract charges.................... $ (2,513) $ (5,630) $ (624) $ (1,179)
Adjustments to annuity reserves.......................... (245) (427) (179) 10,821
-------------- ------------- -------------- -------------
Net annuitization activity............................. $ (2,758) $ (6,057) $ (803) $ 9,642
-------------- ------------- -------------- -------------
Increase (decrease) in net assets from contract owner
transactions............................................. $(1,215,609) $(1,864,278) $ 247,860 $(3,706,926)
-------------- ------------- -------------- -------------
Increase (decrease) in net assets........................ $ (612,471) $ (381,531) $ 473,963 (3,209,226)
NET ASSETS:
Beginning of period........................................ 13,141,846 13,523,377 12,397,313 15,606,539
-------------- ------------- -------------- -------------
End of period.............................................. $12,529,375 $13,141,846 $12,871,276 $12,397,313
-------------- ------------- -------------- -------------
-------------- ------------- -------------- -------------
</TABLE>
See notes to financial statements
3
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MSS TRS
Sub-Account Sub-Account
------------------------------ --------------------------------
<S> <C> <C> <C> <C>
Six Months Year Ended Six Months Year Ended
Ended December 31, Ended December 31,
June 30, 1998 1997 June 30, 1998 1997
-------------- ------------- --------------- --------------
OPERATIONS:
Net investment income...................................... $ 1,822,024 $ 1,211,086 $ 4,494,450 $ 3,740,675
Net realized gains......................................... 701,135 1,084,457 2,205,729 2,659,733
Net unrealized gains (losses).............................. (1,102,563) 413,062 (3,219,794) 1,621,733
-------------- ------------- --------------- --------------
Increase in net assets from operations................. $ 1,420,596 $ 2,708,605 $ 3,480,385 $ 8,022,141
-------------- ------------- --------------- --------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............................... $ 535,797 $ 641,130 $ 889,256 $ 1,583,065
Net transfers between Sub-Accounts and Fixed Account..... 548,197 83,029 (619,626) 101,838
Withdrawals, surrenders, annuitizations and contract
charges................................................ (1,555,307) (2,113,363) (4,727,934) (6,305,584)
-------------- ------------- --------------- --------------
Net accumulation activity.............................. $ (471,313) $(1,389,204) $ (4,458,304) $ (4,620,681)
-------------- ------------- --------------- --------------
Annuitization Activity:
Annuitizations........................................... $ 52,940 $ -- $ -- $ 56,378
Annuity payments and contract charges...................... (3,838) (164) (46,294) (82,242)
Adjustments to annuity reserves.......................... (239) (11,371) (9,212) (19,810)
-------------- ------------- --------------- --------------
Net annuitization activity............................. $ 48,863 $ (11,535) $ (55,506) $ (45,674)
-------------- ------------- --------------- --------------
Decrease in net assets from contract owner transactions.... $ (422,450) $(1,400,739) $ (4,513,810) $ (4,666,355)
-------------- ------------- --------------- --------------
Increase (decrease) in net assets........................ $ 998,146 $ 1,307,866 $ (1,033,425) $ 3,355,786
NET ASSETS:
Beginning of period........................................ 13,028,588 11,720,722 44,506,136 41,150,350
-------------- ------------- --------------- --------------
End of period.............................................. $14,026,734 $13,028,588 $ 43,472,711 $ 44,506,136
-------------- ------------- --------------- --------------
-------------- ------------- --------------- --------------
<CAPTION>
WGS
Sub-Account Total
------------------------------ --------------------------------
Six Months Year Ended Six Months Year Ended
Ended December 31, Ended December 31,
June 30, 1998 1997 June 30, 1998 1997
-------------- ------------- --------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................................... $ 23,619 $ 177,640 $ 15,950,734 $ 12,617,273
Net realized gains (losses)................................ (216,264) (221,118) 8,869,063 8,186,836
Net unrealized gains (losses).............................. 235,780 (115,094) (5,342,951) 6,016,032
-------------- ------------- --------------- --------------
Increase (decrease) in net assets from operations...... $ 43,135 $ (158,572) $ 19,476,846 $ 26,820,141
-------------- ------------- --------------- --------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............................... $ 82,370 $ 200,405 $ 3,637,213 $ 6,219,947
Net transfers between Sub-Accounts and Fixed Account..... (534,704) (327,982) 137,534 (730,163)
Withdrawals, surrenders, annuitizations and contract
charges................................................ (937,593) (1,751,969) (19,827,184) (29,544,732)
-------------- ------------- --------------- --------------
Net accumulation activity.............................. $(1,389,927) $(1,879,546) $(16,052,437) $ (24,054,948)
-------------- ------------- --------------- --------------
Annuitization Activity:
Annuitizations........................................... $ -- $ -- $ 105,853 $ 123,490
Annuity payments and contract charges.................... -- -- (78,561) (138,399)
Adjustments to annuity reserves.......................... -- -- (8,573) (21,265)
-------------- ------------- --------------- --------------
Net annuitization activity............................. $ -- $ -- $ 18,719 $ (36,174)
-------------- ------------- --------------- --------------
Decrease in net assets from contract owner transactions.... $(1,389,927) $(1,879,546) $(16,033,718) $ (24,091,122)
-------------- ------------- --------------- --------------
Increase (decrease) in net assets........................ $(1,346,792) $(2,038,118) $ 3,443,128 $ 2,729,019
NET ASSETS:
Beginning of period........................................ 5,137,026 7,175,144 178,518,558 175,789,539
-------------- ------------- --------------- --------------
End of period.............................................. $ 3,790,234 $ 5,137,026 $181,961,686 $ 178,518,558
-------------- ------------- --------------- --------------
-------------- ------------- --------------- --------------
</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-Registered Trademark-/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
5
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
Sponsor. These deductions are transferred periodically to the Sponsor.
Currently, the deduction is at an 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 PARTICIPANT TRANSACTIONS
<TABLE>
<CAPTION>
CAS GSS HYS MMS
Sub-Account Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- ------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six Year
Six Months Year Ended Six Months Year Ended Months Ended Six Months Year Ended
Ended December Ended December Ended December Ended December
June 30, 31, June 30, 31, June 30, 31, June 30, 31,
COMPASS 2 CONTRACTS 1998 1997 1998 1997 1998 1997 1998 1997
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ---------- ----------
Units Outstanding
Beginning of Period 1,049,111 1,149,253 897,267 1,160,869 421,472 489,793 713,552 917,551
Units purchased 7,897 25,636 10,662 22,468 1,668 3,272 8,842 14,540
Units transferred
between Sub-
Accounts and
Fixed Account (40,744) 7,308 (31,112) (79,806) (21,599) 6,890 311,818 50,095
Units withdrawn,
surrendered, and
annuitized (63,681) (133,086) (86,116) (206,264) (21,133) (78,483) (306,287) (268,634)
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
Units Outstanding End
of Period 952,583 1,049,111 790,701 897,267 380,408 421,472 727,925 713,552
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
MSS TRS WGS
Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- -------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six Year
Six Months Year Ended Six Months Year Ended Months Ended
Ended December Ended December Ended December
June 30, 31, June 30, 31, June 30, 31,
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- -------- --------
Units Outstanding
Beginning of period 270,624 314,243 1,345,153 1,532,369 256,940 358,117
Units purchased 3,670 8,716 11,134 34,725 2,823 6,591
Units transferred
between Sub-
Accounts and
Fixed Account 11,104 (1,885) (19,823) 146 (26,603) (15,604)
Units withdrawn,
surrendered, and
annuitized (29,747) (50,450) (143,564) (222,087) (49,454) (92,164)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End
of Period 255,651 270,624 1,192,900 1,345,153 183,706 256,940
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
</TABLE>
7
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
CAS GSS HYS MMS
Sub-Account Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- ------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six Year
Six Months Year Ended Six Months Year Ended Months Ended Six Months Year Ended
Ended December Ended December Ended December Ended December
June 30, 31, June 30, 31, June 30, 31, June 30, 31,
COMPASS 3 CONTRACTS 1998 1997 1998 1997 1998 1997 1998 1997
- ----------------------- ---------- ---------- ---------- ---------- -------- -------- ---------- ----------
Units Outstanding
Beginning of Period 291,968 231,231 55,194 58,052 60,217 58,945 47,433 83,267
Units purchased 42,094 72,122 8,472 6,833 4,280 9,036 6,216 11,190
Units transferred
between Sub-
Accounts and
Fixed Account (2,279) 6,347 8,271 (373) 114 291 (4,939) (32,545)
Units withdrawn,
surrendered, and
annuitized (14,371) (17,732) (6,644) (9,318) (2,285) (8,055) (1,044) (14,479)
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
Units Outstanding End
of Period 317,412 291,968 65,293 55,194 62,326 60,217 47,666 47,433
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
---------- ---------- ---------- ---------- -------- -------- ---------- ----------
<CAPTION>
MSS TRS WGS
Sub-Account Sub-Account Sub-Account
----------------------- ----------------------- -------------------
Six Year
Six Months Year Ended Six Months Year Ended Months Ended
Ended December Ended December Ended December
June 30, 31, June 30, 31, June 30, 31,
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Units Outstanding
Beginning of Period 100,687 82,578 281,915 255,284 42,551 47,922
Units purchased 18,988 18,777 31,894 44,905 2,490 7,395
Units transferred
between Sub-
Accounts and
Fixed Account 2,125 10,378 (659) 4,923 (4,411) (4,116)
Units withdrawn,
surrendered, and
annuitized (10,145) (11,046) (18,128) (23,197) (3,123) (8,650)
---------- ---------- ---------- ---------- -------- --------
Units Outstanding End
of Period 111,655 100,687 295,022 281,915 37,507 42,551
---------- ---------- ---------- ---------- -------- --------
---------- ---------- ---------- ---------- -------- --------
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8
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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 June 30, 1998, the related
statement of operations for the six month period then ended and the statements
of changes in net assets for the six month period ended June 30, 1998 and the
year ended December 31, 1997. 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 June 30, 1998 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 June 30, 1998,
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 14, 1998
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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.
9
