<PAGE>
As filed with the Securities and Exchange Commission on February 26, 1999
Registration No. 33-19765
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM N-4
POST-EFFECTIVE AMENDMENT NO. 6
to
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
and
AMENDMENT NO. 6
to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
(Exact Name of Registrant)
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
(Name of Depositor)
80 Broad Street
New York, New York 10004
(Address of Depositor's
Principal Executive Offices)
Depositor's Telephone Number: (212) 943-3855
Edward M. Shea, Assistant Vice President and Counsel
c/o Sun Life Assurance Company of Canada (U.S.)
Retirement Products and Services
One Copley Place
Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copies of Communications to:
David N. Brown, Esq.
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566
Washington, D.C. 20044
|X| It is proposed that this filing will become effective on April 27, 1999
pursuant to paragraph (a) of Rule 485.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
C3 (NY)
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Attached hereto and made a part hereof is the Prospectus dated May 1, 1999.
<PAGE>
PROSPECTUS
MAY 1, 1999
COMPASS 3
Sun Life Insurance and Annuity Company of New York ("we" or the "Company")
and Sun Life of New York (N.Y.) Variable Account B (the "Variable Account")
offer the individual flexible payment deferred annuity contracts described in
this Prospectus (the "Contracts").
You may choose among seven variable investment options and a fixed account
option. The variable options are Sub-Accounts in the Variable Account, each of
which invests in shares of one of the following series of the MFS/Sun Life
Series Trust (the "Series Fund"), a mutual fund advised by our affiliate,
Massachusetts Financial Services Company:
<TABLE>
<S> <C>
Money Market Series World Governments Series
High Yield Series Total Return Series
Capital Appreciation Series Managed Sectors Series
Government Securities Series
</TABLE>
The fixed account option pays interest at a guaranteed fixed rate.
THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR THE SERIES
FUND. PLEASE READ THIS PROSPECTUS AND THE SERIES FUND PROSPECTUS CAREFULLY
BEFORE INVESTING AND KEEP THEM FOR FUTURE REFERENCE. THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE COMPASS 3 ANNUITY AND THE SERIES FUND.
We have filed a Statement of Additional Information dated May 1, 1999 (the
"SAI"), which is incorporated by reference in this Prospectus, with the
Securities and Exchange Commission (the "SEC"). The table of contents for the
SAI is on page 24 of this Prospectus. You may obtain a copy without charge by
writing to our Annuity Service Mailing Address or by telephoning (800) 447-7569
or (212) 943-3855. In addition, the SEC maintains a website (http://www.sec.gov)
that contains this Prospectus, the SAI, materials incorporated by reference, and
other information regarding companies that file with the SEC.
THE CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK, AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
ANY REFERENCE IN THIS PROSPECTUS TO RECEIPT BY US MEANS RECEIPT AT THE
FOLLOWING ADDRESS:
ANNUITY SERVICE MAILING ADDRESS, C/O SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK 80 BROAD STREET, NEW YORK, NEW YORK 10004
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Definitions 2
Synopsis 3
Expense Summary 4
Condensed Financial Information 5
Performance Data 6
Financial Statements 6
A Word About the Company, the Variable Account and the Series Fund 6
Purchase Payments and Contract Values During Accumulation Phase 8
Cash Withdrawals 10
Death Benefit 11
Contract Charges 12
Annuity Provisions 14
Other Contract Provisions 16
Federal Tax Status 18
Year 2000 Compliance 21
Distribution of the Contracts 21
Legal Proceedings 21
Owner Inquiries 21
Table of Contents for Statement of Additional Information 22
</TABLE>
DEFINITIONS
The Contract is a legal document that uses a number of specially defined
terms. We explain some of the terms that we use in this Prospectus in the
context where they arise, and others are self-explanatory. In addition, for
convenient reference, we have compiled a list of terms used in this Prospectus,
which appears below. If you come across a term that you do not understand,
please refer to this list of definitions for an explanation.
The terms "we" and "the Company" will be used to refer to Sun Life Insurance
and Annuity Company of New York. We will use the term "you" to refer to the
Owner of the Contract. Readers of this Prospectus should note that unless they
are the Owner of the Contract, their ability to exercise any rights belonging to
the Owner will depend on their agreement with the Owner.
Accumulation Account: An account we establish for the Contract to which we
credit net Purchase Payments in the form of Accumulation Units.
Accumulation Phase: The period before the Annuity Commencement Date and during
the lifetime of the Annuitant. The Accumulation Phase will also terminate when
you surrender your Contract.
Accumulation Unit: A unit of measure we use to calculate the value of the
Accumulation Account. There are two types of Accumulation Units: Variable
Accumulation Units and Fixed Accumulation Units.
Annuitant: The person or persons named in the Contract and on whose life the
first annuity payment is to be made. If more than one person is so named, all
provisions of the Contract that are based on the death of the "Annuitant" will
be based on the date of death of the last surviving of the persons so named. By
example, the death benefit will become due only upon the death, prior to the
Annuity Commencement Date, of the last surviving of the persons so named.
Collectively, these persons are referred to in this Contract as "Annuitants."
The Owner is not permitted to name a "Co-Annuitant" under a Qualified Contract.
Annuity Commencement Date: The date on which we are to make the first annuity
payment.
Annuity Unit: A unit of measure we use to calculate the amount of the second and
each subsequent Variable Annuity payment.
Beneficiary: The person who has the right to the death benefit set forth in the
Contract.
Company: Sun Life Insurance and Annuity Company of New York (also referred to in
this Prospectus as "we").
Contract Years and Contract Anniversaries: The first Contract Year is the period
of 12 months plus a part of a month as measured from the date we issue the
Contract to the first day of the calendar month that follows the calendar month
of issue. All Contract Years and Contract Anniversaries thereafter are 12 month
periods based upon the first day of the calendar month that follows the calendar
month of issue.
2
<PAGE>
Due Proof of Death: An original certified copy of an official death certificate,
or an original certified copy of a decree of a court of competent jurisdiction
as to the finding of death, or any other proof satisfactory to us.
Fixed Account: The Fixed Account consists of all assets of the Company other
than those allocated to a separate account of the Company.
Fixed Annuity: An annuity with payments that do not vary as to dollar amount.
Non-Qualified Contract: A Contract used in connection with a retirement plan
that does not receive favorable federal income tax treatment under Sections 401,
403 or 408 of the Internal Revenue Code of 1986, as amended (the "Code"). The
Contract must be owned by a natural person or by a trust or other entity as
agent for a natural person for the Contract to receive favorable income tax
treatment as an annuity.
Owner: The person, persons or entity entitled to the ownership rights stated in
the Contract and in whose name or names the Contract is issued. In this
Prospectus, we refer to the Owner as "you".
Payee: The recipient of payments under the Contract. The term may include an
Annuitant, a Beneficiary who becomes entitled to benefits upon the death of the
Annuitant or any person who is designated as the beneficiary of distributions
made as a result of the death of the Owner.
Purchase Payment (Payment): An amount you, or someone on your behalf, pay to us
as consideration for the benefits provided by the Contract.
Qualified Contract: A Contract used in connection with a retirement plan that
receives favorable federal income tax treatment under Sections 401, 403 or 408
of the Code.
Series Fund: MFS/Sun Life Series Trust.
Seven Year Anniversary: The seventh Contract Anniversary and each succeeding
Contract Anniversary occurring at any seven year interval thereafter, for
example, the 14th, 21st and 28th Contract Anniversaries.
Sub-Account: That portion of the Variable Account that invests in shares of a
particular series or sub-series of the Series Fund.
Valuation Period: The period of time from one determination of Accumulation Unit
and Annuity Unit values to the next subsequent determination of these values.
Variable Annuity: An annuity with payments that vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Variable
Account.
We: Sun Life Insurance and Annuity Company of New York.
You: The Owner of the Contract.
SYNOPSIS
You may allocate Purchase Payments to Sub-Accounts of the Variable Account
or to the Fixed Account or both. Purchase Payments must total at least $300 for
the first Contract Year and each Purchase Payment must be at least $25 (see
"Purchase Payments" on page 10). During the Accumulation Phase you may, without
charge, transfer amounts among the Sub-Accounts and between the Sub-Accounts and
the Fixed Account, subject to certain conditions (see "Transfers" on page 11).
We do not deduct a sales charge from Purchase Payments; however, if you make
a cash withdrawal, we will, with certain exceptions, deduct a withdrawal charge
ranging from 6% to 0%. You may withdraw a portion of your Accumulation Account
each year before we impose the withdrawal charge, and after we have held a
Purchase Payment for seven years you may withdraw it without charge. We do not
impose a withdrawal charge upon annuitization or upon the transfers described
above (see "Cash Withdrawals" and "Withdrawal Charges" on pages 12 and 15,
respectively).
Special restrictions on withdrawals apply to Qualified Contracts, including
Contracts used with Tax-Sheltered Annuities established pursuant to Section
403(b) of the Code. In addition, under certain circumstances, withdrawals may
result in tax penalties (see "Federal Tax Status" on page 20).
If the Annuitant dies before the Annuity Commencement Date, we will pay a
death benefit to your Beneficiary. If the Annuitant dies on or after the Annuity
Commencement Date, we will not pay a death benefit (unless the annuity option
elected provides for a death benefit) (see "Death Benefit" on page 13).
3
<PAGE>
On each Contract Anniversary and on surrender of the Contract for full
value, we will deduct a contract maintenance charge of $30. After the Annuity
Commencement Date, we deduct this pro rata from each annuity payment we make
during the year (see "Contract Maintenance Charge" on page 14).
We also deduct a mortality and expense risk charge equal to an annual rate
of 1.25% of the daily net assets of the Variable Account attributable to the
Contracts. In addition, for the first seven Contract Years we deduct a
distribution expense charge equal to an annual rate of 0.15% of the daily net
assets of the Variable Account attributable to the Contracts. We do not deduct
the distribution expense charge after the seventh Contract Anniversary (see
"Mortality and Expense Risk Charge and Distribution Expense Charge" on page 14).
We will deduct a charge for premium taxes payable to any governmental entity
(see "Premium Taxes" on page 16).
Annuity payments will begin on the Annuity Commencement Date. You select the
Annuity Commencement Date, frequency of payments, and the annuity option (see
"Annuity Provisions" on page 16).
If you are not satisfied with the Contract, you may return it to us at our
Annuity Service Mailing Address within ten days after we deliver the Contract to
you. When we receive the returned Contract, we will cancel it and refund to you
the value of the Contract's Accumulation Account at the end of the Valuation
Period during which we received the returned Contract.
4
<PAGE>
EXPENSE SUMMARY
The purpose of the following table and Examples is to help you understand
the costs and expenses that you will bear, directly and indirectly, under a
Contract. The table reflects expenses of the Variable Account attributable to
the Contracts as well as of the Series Fund. The information set forth should be
considered together with the narrative provided under the heading "Contract
Charges" in this Prospectus, and with the Series Fund's prospectus. In addition
to the expenses listed below, premium taxes may be applicable if you are a
resident of a state other than New York.
<TABLE>
<CAPTION>
MONEY HIGH CAPITAL GOVERNMENT WORLD TOTAL MANAGED
MARKET YIELD APPRECIATION SECURITIES GOVERNMENTS RETURN SECTORS
OWNER TRANSACTION EXPENSES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
- ----------------------------------------------- ------- ------- ------------- ----------- ------------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales Load Imposed on Purchases................ $0 $0 $0 $0 $0 $0 $0
Deferred Sales Load (as a percentage of
Purchase Payments withdrawn) (1)
Number of Contract Years Payment in
Accumulation Account
0-1........................................ 6% 6% 6% 6% 6% 6% 6%
2-3........................................ 5% 5% 5% 5% 5% 5%
4-5........................................ 4% 4% 4% 4% 4% 4% 4%
6.......................................... 3% 3% 3% 3% 3% 3% 3%
7 or more.................................. 0% 0% 0% 0% 0% 0% 0%
Exchange Fee................................... $0 $0 $0 $0 $0 $0 $0
</TABLE>
<TABLE>
<CAPTION>
ANNUAL CONTRACT MAINTENANCE CHARGE
- --------------------------------------------------- ---------------$30 per Contract ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
SEPARATE ACCOUNT ANNUAL EXPENSES
- ---------------------------------------------------
(as a percentage of average Separate Account assets)
Mortality and Expense Risk Fees.................... 1.25% 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Distribution Expense Charge (2).................... 0.15% 0.15% 0.15% 0.15% 0.15% 0.15% 0.15%
Other Account Fees and Expenses.................... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Total Separate Account Annual Expenses............. 1.40% 1.40% 1.40% 1.40% 1.40% 1.40% 1.40%
SERIES FUND ANNUAL EXPENSES
- ---------------------------------------------------
(as a percentage of Series Fund average net assets)
Management Fees....................................
Other Expenses.....................................
Total Series Fund Annual Expenses..................
<FN>
- ------------------------------
(1) A portion of the Accumulation Account value may be withdrawn each year
without imposition of any withdrawal charge, and after a Purchase Payment
has been held by the Company for seven years it may be withdrawn free of
any withdrawal charge.
(2) The Distribution Expense Charge is imposed only during the first seven
Contract Years. This charge may be deemed a deferred sales charge.
</TABLE>
5
<PAGE>
EXAMPLES
If you surrender your Contract at the end of the applicable time period, you
would pay the following expenses on a $1,000 investment, assuming a 5% annual
return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Series.......................................................................
High Yield Series.........................................................................
Capital Appreciation Series...............................................................
Government Securities Series..............................................................
World Governments Series..................................................................
Total Return Series.......................................................................
Managed Sectors Series....................................................................
</TABLE>
If you do NOT surrender your Contract, or if you annuitize at the end of the
applicable time period, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Market Series.......................................................................
High Yield Series.........................................................................
Capital Appreciation Series...............................................................
Government Securities Series..............................................................
World Governments Series..................................................................
Total Return Series.......................................................................
Managed Sectors Series....................................................................
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED TO BE REPRESENTATIONS OF PAST OR
FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LOWER THAN THOSE SHOWN.
6
<PAGE>
CONDENSED FINANCIAL INFORMATION--ACCUMULATION UNIT VALUES
The following information should be read in conjunction with the Variable
Account's financial statements appearing in the Statement of Additional
Information, all of which has been audited by Deloitte & Touche LLP, independent
certified public accountants.
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1993* 1994 1995
------------------ ----------------- -----------------
<S> <C> <C> <C>
CAPITAL APPRECIATION SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
GOVERNMENT SECURITIES SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
HIGH YIELD SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
MANAGED SECTORS SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
MONEY MARKET SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
TOTAL RETURN SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
WORLD GOVERNMENTS SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1997 1998
----------------- ----------------- -----------------
<S> <C> <C> <C>
CAPITAL APPRECIATION SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
GOVERNMENT SECURITIES SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
HIGH YIELD SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
MANAGED SECTORS SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
MONEY MARKET SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
TOTAL RETURN SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
WORLD GOVERNMENTS SERIES
Unit Value
Beginning of Period
End of Period
Units Outstanding End of Period
<FN>
* From March 1, 1993 (date of commencement of sales of the Contracts).
</TABLE>
7
<PAGE>
PERFORMANCE DATA
From time to time the Variable Account may publish reports to shareholders,
sales literature and advertisements containing performance data relating to the
Sub-Accounts. Performance data will consist of total return quotations which
will always include quotations for the period subsequent to the date each
Sub-Account became available for investment under the Contracts, and for recent
one year and, when applicable, five and ten year periods. Such quotations for
such periods will be the average annual rates of return required for an initial
Purchase Payment of $1,000 to equal the actual variable accumulation value
attributable to such Purchase Payment on the last day of the period, after
reflection of all applicable withdrawal and Contract charges. In addition, the
Variable Account may calculate non-standardized rates of return that do not
reflect withdrawal and Contract charges. Results calculated without withdrawal
and/or Contract charges will be higher. Performance figures used by the Variable
Account are based on the actual historical performance of the Series Fund for
specified periods, and the figures are not intended to indicate future
performance. The Variable Account may also from time to time compare its
investment performance to various unmanaged indices or other variable annuities
and may refer to certain rating and other organizations in its marketing
materials. More detailed information on the computations is set forth in the
Statement of Additional Information.
FINANCIAL STATEMENTS
Financial Statements of the Variable Account and the Company are included in
the Statement of Additional Information.
A WORD ABOUT THE COMPANY, THE VARIABLE ACCOUNT AND THE SERIES FUND
THE COMPANY
Sun Life Insurance and Annuity Company of New York is a stock life insurance
company incorporated under the laws of New York on May 25, 1983. Our Home Office
is located at 80 Broad Street, New York, New York 10004.
We are a wholly-owned subsidiary of Sun Life Assurance Company of Canada
(U.S.) ("Sun Life of Canada (U.S.)"), a stock life insurance company
incorporated in Delaware and having its Executive Office at One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481. Sun Life of Canada (U.S.)
is an indirect wholly-owned subsidiary of Sun Life Assurance Company of Canada,
150 King Street West, Toronto, Ontario, Canada, a mutual life insurance company
incorporated in Canada in 1865.
THE VARIABLE ACCOUNT
We established the "Variable Account" as a separate account of the Company
on December 3, 1984, pursuant to a resolution of the Company's Board of
Directors. The Variable Account meets the definition of a separate account under
the federal securities laws and is registered with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of 1940.
Under New York insurance law, and under the Contracts, the income, gains or
losses of the Variable Account are credited to or charged against the assets of
the Variable Account without regard to the other income, gains or losses of the
Company. Although the assets maintained in the Variable Account will not be
charged with any liabilities arising out of any other business conducted by the
Company, all obligations arising under the Contracts, including the promise to
make annuity payments, are general corporate obligations of the Company.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of a specific series of the Series
Fund described below.
In addition to the Contracts, we issue other variable annuity contracts
participating in the Variable Account.
8
<PAGE>
THE SERIES FUND
The Series Fund is an open-end management investment company registered
under the Investment Company Act of 1940. Our affiliate, Massachusetts Financial
Services Company ("MFS"), serves as the investment adviser to the Series Fund.
All amounts allocated to the Variable Account will be used to purchase
shares of the Series Fund at their net asset value as you designate. Any and all
distributions made by the Series Fund with respect to the shares held by the
Variable Account will be reinvested to purchase additional shares at their net
asset value. We will make deductions from the Variable Account for cash
withdrawals, annuity payments, death benefits, administrative charges, Contract
charges against the assets of the Variable Account for the assumption of
mortality and expense risks and distribution expenses and any applicable taxes,
in effect, by redeeming the number of Series Fund shares, at their net asset
value, equal in total value to the amount to be deducted. The Variable Account
will be fully invested in Series Fund shares at all times.
The Series Fund is composed of 26 independent portfolios of securities, each
of which has separate investment objectives and policies. Shares of the Series
Fund are issued in 26 series, each corresponding to one of the portfolios. The
Contracts provide for investment in shares 7 series of the Series Fund
Massachusetts Financial Services Company, an affiliate of Sun Life of Canada
(U.S.). The investment objectives of each of the 7 available series of the
Series Fund are summarized below.
(1) MONEY MARKET SERIES ("MMS") will seek maximum current income to the
extent consistent with stability of principal by investing exclusively in money
market instruments maturing in less than 13 months. An investment in this series
is neither insured nor guaranteed by the U.S. Government. There can be no
assurance that this series will be able to maintain a stable net asset value of
$1.00 per share.
(2) HIGH YIELD SERIES ("HYS") will seek high current income and capital
appreciation by investing primarily in fixed income securities of U.S. and
foreign issuers which may be in the lower rated categories or unrated (commonly
known as "junk bonds") and which may include equity features. The series may
invest up to 100% of its net assets in these securities, which generally involve
greater risks, including volatility of price, risk to principal and income,
default risks, and less liquidity, than securities in the higher rated
categories. Any person contemplating allocating Purchase Payments to the Sub-
Account investing in shares of the High Yield Series should review the risk
disclosure in the Series Fund prospectus carefully and consider the investment
risks involved.
(3) CAPITAL APPRECIATION SERIES ("CAS") will seek capital appreciation by
investing in securities of all types, with a major emphasis on common stocks.
(4) GOVERNMENT SECURITIES SERIES ("GSS") will seek current income and
preservation of capital by investing in U.S. Government and U.S.
Government-related Securities.
(5) WORLD GOVERNMENTS SERIES ("WGS") will seek moderate current income and
preservation and growth of capital by investing in a portfolio of U.S. and
Foreign Government Securities.
(6) TOTAL RETURN SERIES ("TRS") will seek primarily to obtain above-average
income (compared to a portfolio entirely invested in equity securities)
consistent with prudent employment of capital. Its secondary objective is to
take advantage of opportunities for growth of capital and income. Assets will be
allocated and reallocated from time to time between money market, fixed income
and equity securities. Under normal market conditions, at least 25% of the Total
Return Series' assets will be invested in fixed income securities and at least
40% and no more than 75% of its assets will be invested in equity securities.
(7) MANAGED SECTORS SERIES ("MSS") will seek capital appreciation by varying
the weighting of its portfolio of common stocks among certain industry sectors.
Dividend income, if any, is incidental to its objective of capital appreciation.
9
<PAGE>
Shares of the Series Fund are available exclusively to separate accounts
established by the Company and Sun Life of Canada (U.S.) to fund benefits under
variable life insurance and variable annuity products. Certain risks involved in
funding benefits under both life insurance and annuity contracts are discussed
in the Series Fund prospectus under the caption "Management of the Series Fund."
More detailed information may be found in the current prospectus of the
Series Fund and the Series Fund's statement of additional information. A
prospectus for the Series Fund must accompany this Prospectus and you should
read it together with this Prospectus.
THE FIXED ACCOUNT
See Appendix A to the Statement of Additional Information for a description
of the Fixed Account.
PURCHASE PAYMENTS AND CONTRACT VALUES
DURING ACCUMULATION PHASE
PURCHASE PAYMENTS
You must send all Purchase Payments to us at our Annuity Service Mailing
Address. Unless you have surrendered the Contract, you may make Purchase
Payments at any time during the life of the Annuitant and before the Annuity
Commencement Date. Purchase Payments may be made annually, semi-annually,
quarterly, monthly, or on any other frequency acceptable to us. The amount of
Purchase Payments may vary; however, Purchase Payments must total at least $300
for the first Contract Year, and each Purchase Payment must be at least $25. In
addition, our approval is required before we will accept a Purchase Payment if
the value of your Accumulation Account exceeds $1,000,000, or if the Purchase
Payment would cause the value of your Accumulation Account to exceed $1,000,000.
Your completed application forms, together with the initial Purchase
Payment, are forwarded to us. Upon acceptance, we issue the Contract to you and
credit the initial Purchase Payment to the Contract in the form of Accumulation
Units. We will credit the initial Purchase Payment within two business days
after we receive your completed application. If your application is incomplete,
we may retain the Purchase Payment for up to five business days while we try to
complete the application. If we cannot complete the application within five
business days, we will notify you of the reason for the delay and will return
the Purchase Payment immediately, unless you specifically consent to our
retaining the Purchase Payment until we can complete the application. Once the
application is completed, we will credit the Purchase Payment within two
business days. We will credit all subsequent Purchase Payments using the
Accumulation Unit values for the Valuation Period during which we receive the
Purchase Payment.
We will establish an Accumulation Account for each Contract. Your
Accumulation Account value for any Valuation Period is equal to the variable
accumulation value, if any, plus the fixed accumulation value, if any, for that
Valuation Period. The variable accumulation value is equal to the sum of the
value of all Variable Accumulation Units credited to your Accumulation Account.
We will allocate each net Purchase Payment to either the Fixed Account or to
Sub-Accounts of the Variable Account or to both Sub-Accounts and the Fixed
Account, in accordance with the allocation factors you have specified in the
application or as subsequently changed. When we receive a Purchase Payment, we
will credit all of that portion, if any, of the net Purchase Payment to be
allocated to the Sub-Accounts to the Accumulation Account in the form of
Variable Accumulation Units. The number of Variable Accumulation Units we credit
is determined by dividing the dollar amount allocated to the Sub-Account by the
Variable Accumulation Unit value for that Sub-Account for the Valuation Period
during which we receive the Purchase Payment.
We established the Variable Accumulation Unit value for each Sub-Account at
$10.00 for the first Valuation Period of that Sub-Account. We determine the
Variable Accumulation Unit value for any
10
<PAGE>
subsequent Valuation Period as follows: we multiply the Variable Accumulation
Unit value for the immediately preceding Valuation Period by the appropriate Net
Investment Factor for the subsequent Valuation Period. The Variable Accumulation
Unit value for each Sub-Account for any Valuation Period is determined at the
end of the Valuation Period and may increase, decrease or remain constant from
Valuation Period to Valuation Period, depending on the investment performance of
the series of the Series Fund in which the Sub-Account is invested, and the
expenses and charges deducted from the Variable Account.
NET INVESTMENT FACTOR
The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of a Variable Accumulation Unit may increase, decrease or remain the same.
The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (a) by (b) and then subtracting (c) from the result,
where:
(a) is the net result of:
(1) the net asset value of a Series Fund share held in the
Sub-Account determined as of the end of the Valuation Period,
plus
(2) the per share amount of any dividend or other distribution
declared on the Series Fund shares held in the Sub-Account if
the "ex dividend" date occurs during the Valuation Period, plus
or minus
(3) a per share credit or charge with respect to any taxes paid, or
reserved for by the Company during the Valuation Period which we
determine to be attributable to the operation of the Sub-Account
(no federal income taxes are applicable under present law);
(b) is the net asset value of a Series Fund share held in the
Sub-Account, determined as of the end of the preceding Valuation
Period; and
(c) is the risk charge factor we determine for the Valuation Period to
reflect the charge for assuming the mortality and expense risks and
distribution expense risk.
TRANSFERS
During the Accumulation Phase, you may transfer all or part of the value of
your Accumulation Account to one or more Sub-Accounts then available or to the
Fixed Account, or to any combination of these options. We make these transfers
by converting the value of the Accumulation Units you wish to transfer into
Variable Accumulation Units of Sub-Accounts and/or Fixed Accumulation Units of
the same aggregate value, as you choose. These transfers are subject to the
following conditions:
(1) you may make transfers involving Fixed Accumulation Units only
during the 45 day period before and the 45 day period after each
Contract Anniversary;
(2) you may not make more than 12 transfers in any Contract Year; and
(2) the amount transferred may not be less than $1,000 unless you are
transferring your entire balance in the Fixed Account or a
Sub-Account.
In addition, these transfers will be subject to such terms and conditions as
the Series Fund may impose. We will make these transfers using the Accumulation
Unit values for the Valuation Period during which we receive the request for
transfer. Transfers may be made pursuant to telephoned instructions.
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CASH WITHDRAWALS
At any time during the Accumulation Phase, you may withdraw in cash all or
any portion of the value of your Accumulation Account. Withdrawals may be
subject to a withdrawal charge (see "Withdrawal Charges"). Withdrawals also may
have adverse federal income tax consequences, including a 10% penalty tax (see
"Federal Tax Status"). In addition, if you own a Qualified Contract you should
check the terms of your retirement plan for restrictions on withdrawals.
Your withdrawal request will be effective on the date we receive it. If you
request a withdrawal of more than $5,000, we may require a signature guarantee.
Your request must specify the amount you wish to withdraw. For a partial
withdrawal, you may specify the amount you want withdrawn from the Fixed Account
and/or each Sub-Account to which your Accumulation Account is allocated. If you
do not so specify, we will deduct the total amount you request pro rata based on
your allocations at the end of the Valuation Period during which we receive your
request.
If you request a full withdrawal, we will pay you the value of your
Accumulation Account at the end of the Valuation Period during which we receive
your request, minus the contract maintenance charge for the current Contract
Year and any applicable withdrawal charge. If you request a partial withdrawal,
we will pay you the amount you request and reduce the value of your Accumulation
Account by deducting the amount paid plus any applicable withdrawal charge. If
you request a partial withdrawal that would result in the value of your
Accumulation Account being reduced to an amount less than the contract
maintenance charge for the current Contract Year, we will treat it as a request
for a full withdrawal.
We will pay you the applicable amount of any full or partial withdrawal
within seven days after we receive your withdrawal request, except in cases
where we are permitted to defer payment under the Investment Company Act of 1940
and applicable state insurance law. Currently, we may defer payment of amounts
you withdraw only for following periods:
- when the New York Stock Exchange is closed, except weekends and holidays
or when trading on the New York Stock Exchange is restricted;
- when it is not reasonably practical to dispose of securities held by the
Series Fund or to determine the value of the net assets of the Series
Fund, because an emergency exists; or
- when an SEC order permits us to defer payment for the protection of
securities holders.
SECTION 403(B) ANNUITIES
The Internal Revenue Code imposes restrictions on cash withdrawals from
contracts used with Section 403(b) Annuities. In order for a Contract to receive
tax deferred treatment, the Contract must provide that cash withdrawals of
amounts attributable to salary reduction contributions (other than withdrawals
of Accumulation Account value as of December 31, 1988 ("Pre-1989 Account
Value")) may be made only when the Owner attains age 59 1/2, separates from
service with the employer, dies or becomes disabled (within the meaning of
Section 72(m)(7) of the Internal Revenue Code). These restrictions apply to any
growth or interest on or after January 1, 1989 on Pre-1989 Account Value, salary
reduction contributions made on or after January 1, 1989, and any growth or
interest on such contributions ("Restricted Account Value").
Withdrawals of Restricted Account Value are also permitted in cases of
financial hardship, but only to the extent of contributions; earnings on
contributions cannot be withdrawn for hardship reasons. While specific rules
defining hardship have not been issued by the Internal Revenue Service, it is
expected that to qualify for a hardship distribution, the Owner must have an
immediate and heavy bona fide financial need and lack other resources reasonably
available to satisfy the need. Hardship withdrawals (as well as certain other
premature withdrawals) will be subject to a 10% tax penalty, in addition to any
withdrawal charge applicable under the Contract (see "Federal Tax Status").
Under certain circumstances, the 10% tax penalty will not apply to withdrawals
to pay medical expenses.
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Under the terms of a particular Section 403(b) plan, you may be entitled to
transfer all or a portion of the Accumulation Account value to one or more
alternative funding options. You should consult the documents governing the plan
and the person who administers such plan for information as to such investment
alternatives.
For information on the federal income tax withholding rules that apply to
distributions from Qualified Contracts (including Section 403(b) Annuities) see
"Federal Tax Status."
DEATH BENEFIT
If the Annuitant dies before the Annuity Commencement Date, we will pay a
death benefit to your Beneficiary. If the Annuitant dies on or after the Annuity
Commencement Date, we will not pay a death benefit, except as may be provided
under the annuity option elected.
You select the Beneficiary in your Contract application. You may change your
Beneficiary at any time by sending us written notice on our required form,
unless you previously made an irrevocable Beneficiary designation. A new
Beneficiary designation is not effective until we record the change. If your
designated Beneficiary is not living on the date of death of the Annuitant, we
will pay the death benefit in one lump sum to you or, if you are the Annuitant,
to your estate.
During the lifetime of the Annuitant and before the Annuity Commencement
Date, you may elect to have the death benefit payable under one or more of our
annuity options listed under "Annuity Provisions," for the Beneficiary as Payee.
If you have not elected a method of settlement of the death benefit that is in
effect on the date of death of the Annuitant, the Beneficiary may elect to
receive the death benefit in the form of either a cash payment or one or more of
our annuity options. If we do not receive an election by the Beneficiary within
60 days after the date we receive Due Proof of Death of the Annuitant and any
required release or consent, the Beneficiary will be deemed to have elected a
cash payment as of the last day of the 60 day period.
In all cases, no Owner or Beneficiary will be entitled to exercise any
rights that would adversely affect the treatment of the Contract as an annuity
contract under the Internal Revenue Code (see "Other Contractual
Provisions--Death of Owner").
PAYMENT OF DEATH BENEFIT
If the death benefit is to be paid in cash to the Beneficiary, we will make
payment within seven days of the date the election becomes effective or is
deemed to become effective, except as we may be permitted to defer such payment
in accordance with the Investment Company Act of 1940 under the circumstances
described in this Prospectus under "Cash Withdrawals." If the death benefit is
to be paid in one lump sum to you (or to your estate if you are the Annuitant),
we will make payment within seven days of the date we receive Due Proof of Death
of the Annuitant, the Owner and/or the Beneficiary, as applicable. If the death
benefit is to be paid under one or more of our annuity options, the Annuity
Commencement Date will be the first day of the second calendar month following
the effective date or the deemed effective date of the election and we will
maintain your Accumulation Account in effect until the Annuity Commencement
Date.
AMOUNT OF DEATH BENEFIT
The death benefit is equal to the greatest of:
(1) the value of your Accumulation Account;
(2) the total Purchase Payments made under the Contract reduced by all
withdrawals;
(3) the value of your Accumulation Account on the Seven Year Anniversary
immediately preceding the date of death of the Annuitant, adjusted
for any Purchase Payments or cash withdrawal payments made and
Contract charges assessed after that Seven Year Anniversary.
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To determine the amount of the death benefit under (1) above, we will use
Accumulation Values for the Valuation Period during which we receive Due Proof
of Death of the Annuitant if you have elected settlement under one or more of
the annuity options; if no election by you is in effect, we will use either the
values for the Valuation Period during which an election by the Beneficiary
becomes or is deemed effective or, if the death benefit is to be paid in one sum
to you or your estate, the values for the Valuation Period during which we
receive Due Proof of Death of both the Annuitant and the designated Beneficiary.
CONTRACT CHARGES
We will assess contract charges under the Contract as follows:
CONTRACT MAINTENANCE CHARGE
We deduct an annual contract maintenance charge of $30 as partial
reimbursement for administrative expenses relating to the issuance and
maintenance of the Contract. Prior to the Annuity Commencement Date, we deduct
this charge on each Contract Anniversary. We also deduct this charge on
surrender of the Contract for full value on a date other than the Contract
Anniversary. We deduct the contract maintenance charge in equal amounts from the
Fixed Account and each Sub-Account in which you have Accumulation Units at the
time of the deduction.
On the Annuity Commencement Date we will reduce the value of your
Accumulation Account by the proportionate amount of the contract maintenance
charge to reflect the time elapsed between the last Contract Anniversary and the
day before the Annuity Commencement Date. After the Annuity Commencement Date,
we will deduct the contract maintenance charge pro rata from each annuity
payment made during the year.
We will not increase the amount of the contract maintenance charge. We
reserve the right to reduce the amount of the contract maintenance charge for
groups of participants with individual Contracts under an employer's retirement
program in situations in which the size of the group and established
administrative efficiencies contribute to a reduction in administrative
expenses.
MORTALITY AND EXPENSE RISK CHARGE AND DISTRIBUTION EXPENSE CHARGE
We assume the risk that Annuitants may live for a longer period of time than
we have estimated in establishing the guaranteed annuity rates incorporated into
the Contract and the risk that administrative charges assessed under the
Contracts may be insufficient to cover our actual administrative expenses.
For assuming these risks, we make a deduction from the Variable Account at
the end of each Valuation Period both during the Accumulation Phase and after
annuity payments begin at an effective annual rate of 1.25%. We may change the
rate of this deduction annually, but it will not exceed 1.25% on an annual
basis. If the deduction is insufficient to cover the actual cost of the
mortality and expense risk undertaking, we will bear the loss. Conversely, if
the deduction proves more than sufficient, the excess would be profit to us and
would be available for any proper corporate purpose including, among other
things, payment of distribution expenses. If the withdrawal charges and
distribution expense charges described below prove insufficient to cover
expenses associated with the distribution of the Contracts, we will meet the
deficiency from our general corporate funds, which may include amounts derived
from the mortality and expense risk charges.
We assume the risk that withdrawal charges we assess under the Contracts may
be insufficient to compensate us for the costs of distributing the Contracts.
For assuming this risk, we make a deduction from the Variable Account with
respect to the Contracts at the end of each Valuation Period for the first seven
Contract Years (during both the Accumulation Phase and, if applicable, after
annuity payments begin) at an effective annual rate of 0.15% of the assets of
the Variable Account attributable to the Contracts. We do not make a deduction
for this charge after the seventh Contract Anniversary. If the distribution
expense charge is insufficient to cover the actual risk assumed, we will bear
the loss; however, if the charge is more than sufficient, any excess will be
profit to us and would be available for
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any proper corporate purpose. In no event will the distribution expense charges
and any withdrawal charges assessed under a Contract exceed 9% of the Purchase
Payments.
For the year ended December 31, 1998 mortality and expense risk charges
imposed under the Contracts and other contracts participating in the Variable
Account and the distribution expense charges described above were the only
expenses of the Variable Account.
WITHDRAWAL CHARGES
We do not deduct a sales charge from Purchase Payments. However, we will
impose a withdrawal charge (i.e., a contingent deferred sales charge) on certain
amounts you withdraw as reimbursement for certain expenses relating to the
distribution of the Contracts, including commissions, costs of preparation of
sales literature and other promotional costs and acquisition expenses.
You may withdraw a portion of your Accumulation Account value each year
before incurring the withdrawal charge, and after we have held a Purchase
Payment for seven years you may withdraw it free of any withdrawal charge. In
addition, we do not impose a withdrawal charge upon annuitization or upon the
transfer of Accumulation Account values among the Sub-Accounts or between the
Sub-Accounts and the Fixed Account.
We do not impose the withdrawal charge with respect to a Contract
established for the personal account of an employee of the Company or of any of
its affiliates, or of a licensed insurance agent engaged in distributing the
Contracts.
All other full or partial withdrawals are subject to a withdrawal charge
which will be applied as follows:
(1) Old Payments, New Payments and accumulated value: In a given Contract
Year, "New Payments" are Payments you have made in that Contract Year or in the
six previous Contract Years; "Old Payments" are all Purchase Payments made
before the previous six Contract Years; and the remainder of your Accumulation
Account value--that is, the value of your Accumulation Account minus the total
of Old Payments and New Payments--is called the "accumulated value."
(2) Order of withdrawal: When you make a partial withdrawal or surrender
your Contract, we consider the oldest Payment not previously to be withdrawn
first, then the next oldest, and so forth. Once all Old Payments and New
Payments have been withdrawn, additional amounts withdrawn will be attributed to
accumulated value.
(3) Free withdrawal amount: In any Contract Year, you may withdraw the
following amount before we impose a withdrawal charge: (a) any Old Payments you
have not previously withdrawn, and (b) 10% of any New Payments, whether or not
these new Payments have been previously withdrawn
(4) Amount subject to withdrawal charge: We will impose the withdrawal
charge on the excess, if any, of (a) Old Payments and New Payments being
withdrawn over (b) the remaining free withdrawal amount at the time of the
withdrawal. We do not impose the withdrawal charge on amounts attributed to
accumulated value.
The withdrawal charge percentage varies according to the number of Contract
Years the Purchase Payment has been in your Accumulation Account, including the
year in which you made the Payment, but not the year you withdraw it. The
applicable percentages are as follows:
<TABLE>
<CAPTION>
NUMBER OF WITHDRAWAL CHARGE
CONTRACT YEARS PERCENTAGE
----------------- -----------------
<S> <C>
0-1........................................... 6%
2-3........................................... 5%
4-5........................................... 4%
6............................................. 3%
7 or more..................................... 0%
</TABLE>
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Aggregate withdrawal charges (including the distribution expense charge
described above) assessed against a Contract will never exceed 9% of the total
amount of Purchase Payments made under the Contract. (See Appendix C to the
Statement of Additional Information for examples of withdrawals and withdrawal
charges.)
PREMIUM TAXES
We will make a deduction, when applicable, for premium taxes or similar
state or local taxes. Currently, no premium taxes are applicable in the State of
New York; however, if you or the Payee are a resident of a state other than New
York, a premium tax ranging from 0% to 3.5% may be assessed, depending on the
state of residence. It is currently our policy to deduct the tax from the amount
applied to provide an annuity at the time annuity payments commence. However, we
reserve the right to deduct such taxes on or after the date they are incurred.
CHARGES OF THE SERIES FUND
The Variable Account purchases shares of the Series Fund at net asset value.
The net asset value of these shares reflects investment management fees and
expenses (including, but not limited to, compensation of trustees, governmental
expenses, interest charges, taxes, fees of auditors, legal counsel, transfer
agent and custodian, transactional expenses and brokerage commissions) already
deducted from the assets of the Series Fund. These fees and expenses are more
fully described in the Series Fund's prospectus and the Statement of Additional
Information.
ANNUITY PROVISIONS
ANNUITY COMMENCEMENT DATE
We begin making annuity payments under a Contract on the Annuity
Commencement Date, which you select in your Contract application. You may change
the Annuity Commencement Date from time to time, as provided in the Contract.
The Annuity Commencement Date must be the first day of a month and not later
than the first day of the first month following the Annuitant's 85th birthday.
Any new Annuity Commencement Date must be at least 30 days after we receive
notice of the change.
For Qualified Contracts, there may be other restrictions on your selection
of the Annuity Commencement Date imposed by the particular retirement plan or by
applicable law. For example, in most situations, current law requires that the
Annuity Commencement Date under a Qualified Contract be no later than April 1
following the year the Annuitant reaches age 70 1/2 (or, for Qualified Contracts
other than IRAs, no later than April 1 following the year the Annuitant retires,
if later than the year the Annuitant reaches age 70 1/2). The Annuity
Commencement Date may also be changed by an election of an annuity option as
described under "Death Benefit." Please refer to the terms of your plan for
additional restrictions.
On the Annuity Commencement Date, we will cancel your Accumulation Account
and apply its adjusted value to provide an annuity. The adjusted value will be
equal to the value of the Accumulation Account for the Valuation Period which
ends immediately before the Annuity Commencement Date, reduced by any applicable
premium taxes or similar taxes and a proportionate amount of the contract
maintenance charge (see "Contract Maintenance Charge"). NO CASH WITHDRAWALS WILL
BE PERMITTED AFTER THE ANNUITY COMMENCEMENT DATE EXCEPT AS MAY BE AVAILABLE
UNDER THE ANNUITY OPTION ELECTED.
ANNUITY OPTIONS
During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, you may elect one or more of the annuity options described below or such
other settlement option as we may agree to for the Annuitant as Payee, except as
restricted by the particular retirement plan or any applicable legislation.
These annuity options may also be elected by you or the Beneficiary, as provided
under "Death Benefit."
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You may not change any election after 30 days before the Annuity
Commencement Date, and no change of annuity option is permitted after the
Annuity Commencement Date. If no election is in effect on the 30th day before
the Annuity Commencement Date, we will deem Annuity Option B, for a Life Annuity
with 120 monthly payments certain, to have been elected. If more than one person
is named as "Annuitant" due to the designation of a co-annuitant, the adjusted
value of the Accumulation Account will be applied under Annuity Option C, with
the survivor benefit to be calculated in accordance with such option using fifty
percent (50%).
Any election may specify the proportion of the adjusted value of your
Accumulation Account to be applied to the Fixed Account and the Sub-Accounts. If
the election does not so specify, then the portion of the adjusted value of the
Accumulation Account to be applied to the Fixed Account and the Sub-Accounts
will be determined on a pro rata basis from the composition of the Accumulation
Account on the Annuity Commencement Date.
Annuity Options A, B and C are available to provide either a Fixed Annuity
or a Variable Annuity. Annuity Options D and E are available only to provide a
Fixed Annuity.
Annuity Option A. Life Annuity: We make monthly payments during the lifetime
of the Payee. This option offers a higher level of monthly payments than Annuity
Options B or C because we do not make further payments after the death of the
Payee, and there is no provision for a death benefit payable to a Beneficiary.
Annuity Option B. Life Annuity with 60, 120, 180 or 240 Monthly Payments
Certain: We make monthly payments during the lifetime of the Payee and in any
event for 60, 120, 180 or 240 months certain as elected. The election of a
longer period certain results in smaller monthly payments than would be the case
if a shorter period certain were elected.
Annuity Option C. Joint and Survivor Annuity: We make monthly payments
payable during the joint lifetime of the Payee and the designated second person
and during the lifetime of the survivor. During the lifetime of the survivor,
variable monthly payments, if any, will be determined using the percentage
chosen at the time of the election of this option of the number of each type of
Annuity Unit credited to the Contract and each fixed monthly payment, if any,
will be equal to the same percentage of the fixed monthly payment payable during
the joint lifetime of the Payee and the designated second person.
*Annuity Option D. Fixed Payments for a Specified Period Certain: We make
fixed monthly payments for a specified period of time (at least five years but
not exceeding 30 years), as elected.
*Annuity Option E. Fixed Payments: We will hold the amount applied to
provide fixed payments in accordance with this option at interest. We will make
fixed payments in such amounts and at such times (at least over a period of five
years) as we have agreed upon and will continue until the amount we hold with
interest is exhausted. We will credit interest yearly on the amount remaining
unpaid at a rate which we shall determine from time to time but which shall not
be less than 4% per year compounded annually. We may change the rate so
determined at any time; however, the rate may not be reduced more frequently
than once during each calendar year.
DETERMINATION OF ANNUITY PAYMENTS
We will determine the dollar amount of the first Variable Annuity payment in
accordance with the annuity payment rates found in the Contract, which are based
on an assumed interest rate of 4% per year. We determine all Variable Annuity
payments other than the first by means of Annuity Units credited to the
Contract. The number of Annuity Units to be credited in respect of a particular
Sub-Account is determined by dividing the portion of the first Variable Annuity
payment attributable to that Sub-Account by the Annuity Unit value of that
Sub-Account for the Valuation Period that ends immediately before the Annuity
Commencement Date. The number of Annuity Units of each Sub-Account credited to
the Contract then remains fixed, unless an exchange of Annuity Units is made as
described
- ---------
* The election of this Annuity Option may result in the imposition of a penalty
tax.
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below. The dollar amount of each Variable Annuity payment after the first may
increase, decrease or remain constant, depending on the investment performance
of the Sub-Accounts.
The Statement of Additional Information contains detailed disclosure
regarding the method of determining the amount of each Variable Annuity payment
and calculating the value of a Variable Annuity Unit, as well as hypothetical
examples of these calculations.
EXCHANGE OF VARIABLE ANNUITY UNITS
After the Annuity Commencement Date, the Payee may exchange Variable Annuity
Units from one Sub-Account to another, up to a maximum of 12 such exchanges each
Contract Year. We calculate the number of new Variable Account units so that the
dollar amount of an annuity payment made on the date of the exchange would be
unaffected by the fact of the exchange.
ANNUITY PAYMENT RATES
The Contract contains annuity payment rates for each Annuity Option
described above. The rates show, for each $1,000 applied, the dollar amount of
(a) the first monthly Variable Annuity payment based on the assumed interest
rate of 4% and (b) the monthly Fixed Annuity payment, when this payment is based
on the minimum guaranteed interest rate of 4% per year. The annuity payment
rates may vary according to the annuity option elected and the adjusted age of
the Payee.
If net investment return of the Sub-Accounts was exactly equal to the
assumed interest rate of 4%, the amount of each Variable Annuity payment would
remain level. If a net investment return is greater than 4%, the amount of each
variable annuity payment would increase; conversely, if the net investment
return is less than 4%, the amount of each variable annuity payment would
decrease.
OTHER CONTRACT PROVISIONS
OWNER
As the Owner, you are entitled to exercise all Contract rights and
privileges without the consent of the Beneficiary or any other person. Such
rights and privileges may be exercised only during the lifetime of the Annuitant
and prior to the Annuity Commencement Date, except as otherwise provided in the
Contract. The Owner of a Non-Qualified Contract may change the ownership of the
Contract, subject to the provisions of the Contract, although such change may
result in the imposition of tax (see "Federal Tax Status--Taxation of Annuities
in General"). Transfer of ownership of a Qualified Contract is governed by the
laws and regulations applicable to the retirement or deferred compensation plan
for which the Contract was issued. Subject to the foregoing, a Qualified
Contract may not be sold, assigned, transferred, discounted or pledged as
collateral for a loan or as security for the performance of an obligation or for
any other purpose to any person other than the Company.
Subject to the rights of an irrevocably designated Beneficiary, the Owner
may change or revoke the designation of a Beneficiary at any time while the
Annuitant is living.
DEATH OF OWNER
If you are the Owner of a Non-Qualified Contract and you die before the
Annuitant and before the Annuity Commencement Date, the Accumulation Account
must be distributed to the Beneficiary, if then alive, either (1) within five
years after the date of your death, or (2) over some period not greater than the
life or expected life of the Beneficiary, with annuity payments beginning within
one year after the date of your death. The person named as Beneficiary shall be
considered the designated beneficiary for the purposes of Section 72(s) of the
Internal Revenue Code and if no person then living has been so named, then the
Annuitant shall automatically be the designated beneficiary for this purpose.
These mandatory distribution requirements will not apply when the designated
beneficiary is your spouse, if your spouse elects to continue the Contract in
his or her own name as Owner. If you were the Annuitant as well as the Owner,
your surviving spouse (if the designated beneficiary) may elect to
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be named as both Owner and Annuitant and continue the Contract; if your spouse
does not make that election, the Death Benefit provision of the Contract shall
be controlling, subject to the condition that any annuity option elected
complies with the Section 72(s) distribution requirements. In all other cases
where the Owner and the Annuitant are the same individual, the Death Benefit
provision of the Contract controls.
If you are both the Owner and Annuitant and you die on or after the Annuity
Commencement Date and before the entire accumulation under the Contract has been
distributed, the remaining portion of such accumulation, if any, must be
distributed at least as rapidly as the method of distribution then in effect.
In all cases, no Owner or Beneficiary shall be entitled to exercise any
rights that would adversely affect the treatment of the Contract as an annuity
contract under the Internal Revenue Code.
Any distributions upon the death of the Owner of a Qualified Contract will
be subject to the laws and regulations governing the particular retirement or
deferred compensation plan in connection with which the Qualified Contract was
issued.
VOTING OF SERIES FUND SHARES
We will vote Series Fund shares held by the Sub-Accounts at meetings of
shareholders of the Series Fund or in connection with similar solicitations, but
will follow voting instructions received from persons having the right to give
voting instructions. We will vote Series Fund shares for which no timely voting
instructions are received in the same proportion as the shares for which
instructions are received from persons having such voting rights. The Owner is
the person having the right to give voting instructions prior to the Annuity
Commencement Date. On or after the Annuity Commencement Date the Payee is the
person having such voting rights.
Owners of Contracts held pursuant to retirement plans may be subject to
other voting provisions of the particular retirement plan. Employees who
contribute to retirement plans which are funded by the Contracts are entitled to
instruct the Owners as to how to instruct the Company to vote the Series Fund
shares attributable to their contributions. Such plans may also provide the
additional extent, if any, to which the Owners shall follow voting instructions
of persons with rights under the plans.
We will determine the number of particular Series Fund shares as to which
each such person is entitled to give instructions on a date not more than 90
days prior to each such meeting. Prior to the Annuity Commencement Date, we
determine that number by dividing the value of all of the Variable Accumulation
Units of the particular Sub-Account credited to the Contract's Accumulation
Account by the net asset value of one particular Series Fund share as of the
same date. On or after the Annuity Commencement Date, we determine the number of
particular Series Fund shares as to which such instructions may be given by a
Payee by dividing the reserve held by the Company in the particular Sub-Account
for the Contract by the net asset value of a particular Series Fund share as of
the same date.
SUBSTITUTED SECURITIES
Shares of a particular series of the Series Fund may not always be available
for purchase by the Variable Account or we may decide that further investment in
any such shares is no longer appropriate in view of the purposes of the Variable
Account or in view of legal, regulatory or federal income tax restrictions. In
either event, shares of another series or shares of another registered open-end
investment company may be substituted both for Series Fund shares already
purchased by the Variable Account and as the security to be purchased in the
future provided that these substitutions have been approved by the Securities
and Exchange Commission and the Superintendent of Insurance of the State of New
York. In the event of any substitution pursuant to this provision, we may make
appropriate endorsement to the Contract to reflect the substitution.
19
<PAGE>
MODIFICATION
Upon notice to you, or to the Payee during the annuity period, we may modify
the Contract, but only if such modification (i) is necessary to make the
Contract or the Variable Account comply with any law or regulation issued by a
governmental agency to which we are subject or (ii) is necessary to assure
continued qualification of the Contract under the Internal Revenue Code or other
federal or state laws relating to retirement annuities or annuity contracts or
(iii) is necessary to reflect a change in the operation of the Variable Account
or the Sub-Accounts or (iv) provides additional Variable Account and/ or fixed
accumulation options. In the event of any such modification, we may make
appropriate endorsement to the Contract to reflect such modification.
CHANGE IN OPERATION OF VARIABLE ACCOUNT
At the Company's election and subject to the prior approval of the
Superintendent of Insurance of the State of New York and to any necessary vote
by persons having the right to give instructions with respect to the voting of
Series Fund shares held by the Sub-Accounts, the Variable Account may be
operated as a management company under the Investment Company Act of 1940 or it
may be deregistered under the Investment Company Act of 1940 in the event
registration is no longer required. Deregistration of the Variable Account
requires an order by the Securities and Exchange Commission. In the event of any
such change in the operation of the Variable Account, we may, subject to the
prior approval of the Superintendent of Insurance of the State of New York, make
appropriate endorsement to the Contract to reflect the change and take such
action as may be necessary and appropriate to effect the change.
SPLITTING UNITS
We reserve the right to split or combine the value of Variable Accumulation
Units, Fixed Accumulation Units, Annuity Units or any of them. In effecting any
such change in unit values, strict equity will be preserved and no change will
have a material effect on the benefits or other provisions of the Contract.
FEDERAL TAX STATUS
INTRODUCTION
The Contracts are designed for use in connection with retirement plans that
may or may not be qualified plans under Sections 401, 403 or 408 of the Internal
Revenue Code (the "Code"). The ultimate effect of federal income taxes may
depend upon the type of retirement plan for which a Contract is purchased and a
number of different factors. This discussion is general in nature, is based upon
the Company's understanding of current federal income tax laws, and is not
intended as tax advice. Congress has the power to enact legislation affecting
the tax treatment of annuity contracts, and such legislation could be applied
retroactively to Contracts purchased before the date of enactment. Any person
contemplating the purchase of a Contract should consult a qualified tax adviser.
THE COMPANY DOES NOT MAKE ANY GUARANTEE REGARDING THE FEDERAL, STATE OR LOCAL
TAX STATUS OF ANY CONTRACT OR ANY TRANSACTION INVOLVING A CONTRACT.
TAX TREATMENT OF THE COMPANY AND THE VARIABLE ACCOUNT
The Company is taxed as a life insurance company under the Code. The
operations of the Variable Account are accounted for separately from other
operations of the Company for purposes of federal income taxation, but the
Variable Account is not taxable as a regulated investment company or otherwise
as an entity separate from the Company. The income of the Variable Account
(consisting primarily of interest, dividends and net capital gains) is not
taxable to the Company to the extent that it is applied to increase reserves
under contracts participating in the Variable Account.
20
<PAGE>
TAXATION OF ANNUITIES IN GENERAL
Purchase Payments made under Non-Qualified Contracts are not deductible from
the Owner's income for federal income tax purposes. Owners of Qualified
Contracts should consult a tax adviser regarding the tax treatment of Purchase
Payments.
Generally, no taxes are imposed on the increase in the value of a Contract
held by an individual Owner until a distribution occurs, either as an annuity
payment or as a cash withdrawal or lump sum payment prior to the Annuity
Commencement Date. However, corporate Owners and other Owners that are not
natural persons are subject to current taxation on the annual increase in the
value of a Non-Qualified Contract, unless the non-natural person holds the
Contract as agent for a natural person (such as where a bank or other entity
holds a Contract as trustee under a trust agreement). This current taxation of
annuities held by non-natural persons does not apply to earnings accumulated
under an immediate annuity, which the Code defines as a single premium contract
with an annuity commencement date within one year of the date of purchase.
A partial cash withdrawal (i.e., a withdrawal of less than the entire value
of the Contract's Accumulation Account) from a Non-Qualified Contract before the
Annuity Commencement Date is treated first as a withdrawal from the increase in
the Accumulation Account's value, rather than as a return of Purchase Payments.
The amount of the withdrawal allocable to this increase will be includible in
the Owner's income and subject to tax at ordinary income rates. If an individual
receives a loan under a Contract or if the Contract is assigned or pledged as
collateral for a loan, the amount borrowed from the Contract or the amount
assigned or pledged must be treated as if it were withdrawn from the Contract.
In the case of annuity payments under a Non-Qualified Contract after the
Annuity Commencement Date, a portion of each payment is treated as a nontaxable
return of Purchase Payments. The nontaxable portion is determined by applying to
each annuity payment an "exclusion ratio," which, in general, is the ratio that
the total amount the Owner paid for the Contract bears to the Payee's expected
return under the Contract. The remainder of the payment is taxable at ordinary
income rates.
The total amount that a Payee may exclude from income through application of
the "exclusion ratio" is limited to the amount the Owner paid for the Contract.
If the Annuitant survives for his full life expectancy, so that the Payee
recovers the entire amount paid for the Contract, any subsequent annuity
payments will be fully taxable as income. Conversely, if the Annuitant dies
before the Payee recovers the entire amount paid, the Payee will be allowed a
deduction for the amount of unrecovered Purchase Payments.
Taxable cash withdrawals and lump sum payments from Non-Qualified Contracts
may be subject to a penalty tax equal to 10% of the amount treated as taxable
income. This 10% penalty also may apply to certain annuity payments. This
penalty will not apply in certain circumstances (such as where the distribution
is made upon the death of the Owner). The withdrawal penalty also does not apply
to distributions under an immediate annuity (as defined above).
In the case of a Qualified Contract, distributions generally are taxable and
distributions made prior to age 59 1/2 are subject to a 10% penalty tax,
although this penalty tax will not apply in certain circumstances. Certain
distributions, known as "eligible rollover distributions," if rolled over to
certain other qualified retirement plans (either directly or after being
distributed to the Payee), are not taxable until distributed from the plan to
which they are rolled over. In general, an eligible rollover distribution is any
taxable distribution other than hardship distribution or a distribution that is
part of a series of payments made for life or for a specified period of ten
years or more. Owners, Annuitants, Payees and Beneficiaries should seek
qualified advice about the tax consequences of distributions, withdrawals,
payments and rollovers under the retirement plans in connection with which the
Contracts are purchased.
21
<PAGE>
If the Owner of a Non-Qualified Contract dies, the value of the Contract
generally must be distributed within a specified period (see "Other Contractual
Provisions--Death of Owner"). For Contracts owned by non-natural persons, a
change in the Annuitant is treated as the death of the Owner.
A purchaser of a Qualified Contract should refer to the terms of the
applicable retirement plan and consult a tax adviser regarding distribution
requirements upon the death of the Owner.
A transfer of a Non-Qualified Contract by gift (other than to the Owner's
spouse) is treated as the receipt by the Owner of income in an amount equal to
the value of the Contract's Accumulation Account minus the total amount paid for
the Contract.
The Company will withhold and remit to the U.S. Government a part of the
taxable portion of each distribution made under a Non-Qualified Contract or
under a Qualified Contract issued in connection with an individual retirement
account, unless the Owner or Payee provides his or her taxpayer identification
number to the Company and notifies the Company (in the manner prescribed) before
the time of the distribution that he or she chooses not to have any amounts
withheld.
In the case of distributions from a Qualified Contract (other than
distributions from a Contract issued for use with an individual retirement
account), the Company or the plan administrator must withhold and remit to the
U.S. Government 20% of each distribution that is an eligible rollover
distribution (as defined above) unless the Owner or Payee elects to make a
direct rollover of the distribution to another qualified retirement plan that is
eligible to receive the rollover. If a distribution from a Qualified Contract is
not an eligible rollover distribution, then the Owner or Payee can choose not to
have amounts withheld as described above for Non-Qualified Contracts and
individual retirement accounts.
Amounts withheld from any distribution may be credited against the Owner's
or Payee's federal income tax liability for the year of the distribution.
The Internal Revenue Service has issued regulations that prescribe
investment diversification requirements for mutual fund series underlying
nonqualified variable contracts. Contracts that do not comply with these
regulations do not qualify as annuities for federal income tax purposes, and
therefore the annual increase in the value of such contracts is subject to
current taxation. The Company believes that each series of the Series Fund
complies with the regulations.
The preamble to the regulations states that the Internal Revenue Service may
promulgate guidelines under which a variable contract will not be treated as an
annuity for tax purposes if the owner has excessive control over the investments
underlying the contract. It is not known whether such guidelines, if in fact
promulgated, would have retroactive effect. If guidelines are promulgated, the
Company will take any action (including modification of the Contract and/or the
Variable Account) necessary to comply with the guidelines.
QUALIFIED RETIREMENT PLANS
The Qualified Contracts described in this Prospectus are designed for use
with the following types of qualified retirement plans:
(1) Pension and Profit-Sharing Plans established by business employers
and certain associations, as permitted by Sections 401(a), 401(k) and 403(a)
of the Code, including those purchasers who would have been covered under
the rules governing old H.R. 10 (Keogh) Plans;
(2) Tax-Sheltered Annuities established pursuant to the provisions of
Section 403(b) of the Code for public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code; and
(3) Individual Retirement Annuities permitted by Sections 219 and 408 of
the Code, including Simplified Employee Pension Plans established by
employers pursuant to Section 408(k) and Simple Retirement Accounts
established pursuant to Section 408(p).
22
<PAGE>
The tax rules applicable to participants in such plans vary according to the
type of plan and its terms and conditions. Therefore, no attempt is made herein
to provide more than general information about the use of Qualified Contracts.
Participants in such plans as well as Owners, Annuitants, Payees and
Beneficiaries are cautioned that the rights of any person to any benefits under
these plans are subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Qualified Contracts. These terms
and conditions may include restrictions on, among other things, ownership,
transferability, assignability, contributions and distributions. The Company
will provide purchasers of Qualified Contracts used in connection with
Individual Retirement Annuities with such supplemental information as may be
required by the Internal Revenue Service or other appropriate agency. Any person
contemplating the purchase of a Qualified Contract should consult a qualified
tax adviser.
YEAR 2000 COMPLIANCE
The Company's business, financial condition, and results of operations could
be materially and adversely affected by the failure of its systems and
applications (or those either provided or operated by third-parties) to properly
operate or manage dates beyond the year 1999. However, the Company has
investigated the nature and extent of the work necessary to render its computer
systems capable of processing beyond the turn of the century ("Year 2000
compliant"), and has made substantial progress toward achieving this goal,
including upgrading and/or replacing existing systems. As of December 31, 1998,
over 90% of the system components had been remediated, tested and certified as
Year 2000 compliant. The majority of the remaining components are in the testing
phase and are expected to be certified by March 31, 1999. While it is believed
that these efforts do involve substantial costs, the Company closely monitors
associated costs and continues to evaluate associated risks based on actual
testing. Based on available information, the Company believes that it will be
able to manage its total Year 2000 transition without a material adverse effect
on its business operations, financial condition, or results of operations.
DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold by licensed insurance agents in the State of New
York. Such agents will be registered representatives of broker-dealers
registered under the Securities Exchange Act of 1934 who are members of the
National Association of Securities Dealers, Inc. The Contracts will be
distributed by Clarendon Insurance Agency, Inc., One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481, a wholly-owned subsidiary of Sun Life
Assurance Company of Canada (U.S.). Commissions and other distribution expenses
will be paid by the Company and will not be more than 6.31% of Purchase
Payments. Commissions will not be paid with respect to Contracts established for
the personal account of employees of the Company or any of its affiliates, or of
persons engaged in the distribution of the Contracts.
LEGAL PROCEEDINGS
There are no pending legal proceedings affecting the Variable Account. We
are engaged in various kinds of routine litigation which, in management's
opinion, is not of material importance to the Company's total assets or material
with respect to the Variable Account.
OWNER INQUIRIES
All Owner inquiries should be directed to the Company at the Annuity Service
Mailing Address shown on the cover of this Prospectus.
23
<PAGE>
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
General Information...................................................
Annuity Provisions....................................................
Other Contract Provisions.............................................
Administration of the Contracts.......................................
Distribution of the Contracts.........................................
Accountants...........................................................
Calculation of Performance Data.......................................
Advertising and Sales Literature......................................
Financial Statements..................................................
Appendix A -- The Fixed Account.......................................
Appendix B -- Illustrative Examples of Variable Accumulation Unit
Value, Variable Annuity Unit Value and Variable Annuity Payment
Calculations........................................................
Appendix C -- Withdrawals and Withdrawal Charges......................
</TABLE>
24
<PAGE>
This Prospectus sets forth information about the Contracts and the Variable
Account that a prospective purchaser should know before investing. Additional
information about the Contracts and the Variable Account has been filed with the
Securities and Exchange Commission in a Statement of Additional Information
dated May 1, 1999 which is incorporated herein by reference. The Statement of
Additional Information is available upon request and without charge from Sun
Life Insurance and Annuity Company of New York. To receive a copy, return this
request form to the address shown below or telephone (212) 943-3855 or (800)
447-7569.
-------------------------------------------------------------------------------
To: Sun Life Insurance and Annuity Company of New York
80 Broad Street
New York, New York 10004
Please send me a Statement of Additional Information for
Compass 3 Sun Life (N.Y.) Variable Account B.
Name ____________________________________________
Address ____________________________________________
____________________________________________
City____________________________ State___________ Zip______________
Telephone ____________________________________________
25
<PAGE>
[LOGO]
PROSPECTUS
MAY 1, 1999
COMBINATION FIXED/VARIABLE
ANNUITY FOR PERSONAL AND
QUALIFIED RETIREMENT PLANS
ISSUED BY
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
Annuity Service Mailing Address:
80 Broad Street
New York, New York 10004
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 IN CONNECTION
WITH SUN LIFE (N.Y.)
VARIABLE ACCOUNT B
CO3NY-1 5/99
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
Attached hereto and made a part hereof is a Statement of Additional
Information dated May 1, 1999.
<PAGE>
MAY 1, 1999
COMPASS 3
STATEMENT OF ADDITIONAL INFORMATION
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
TABLE OF CONTENTS
General Information...............................
Annuity Provisions................................
Other Contract Provisions.........................
Administration of the Contracts...................
Distribution of the Contracts.....................
Accountants.......................................
Calculation of Performance Data...................
Advertising and Sales Literature..................
Financial Statements..............................
Appendix A -- The Fixed Account...................
Appendix B -- Illustrative Examples of Variable
Accumulation Unit Value, Variable Annuity Unit
Value and Variable Annuity Payment Calculations..
Appendix C -- Withdrawals and Withdrawal
Charges.........................................
This Statement of Additional Information sets forth information which may be
of interest to prospective purchasers of Compass 3 Combination Fixed/Variable
Annuity Contracts (the "Contracts") for personal and qualified retirement plans
issued by Sun Life Insurance and Annuity Company of New York (the "Company") in
connection with Sun Life (N.Y.) Variable Account B (the "Variable Account")
which is not necessarily included in the Prospectus dated May 1, 1999. This
Statement of Additional Information should be read in conjunction with the
Prospectus, a copy of which may be obtained without charge from the Company at
its Annuity Service Mailing Address, 80 Broad Street, New York, New York 10004,
or by telephoning (212) 943-3855 or (800) 447-7569.
The terms used in this Statement of Additional Information have the same
meanings as in the Prospectus.
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS ONLY IF PRECEDED OR ACCOMPANIED BY A
CURRENT PROSPECTUS.
<PAGE>
GENERAL INFORMATION
THE COMPANY
Sun Life Insurance and Annuity Company of New York (the "Company") is a
stock life insurance company incorporated under the laws of New York on May 25,
1983. Its Home Office is located at 80 Broad Street, New York, New York 10004.
The Company is a wholly-owned subsidiary of Sun Life Assurance Company of Canada
(U.S.) ("Sun Life of Canada (U.S.)"), a stock life insurance company
incorporated in Delaware and having its Executive Office at One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481. Sun Life of Canada (U.S.)
is an indirect wholly-owned subsidiary of Sun Life Assurance Company of Canada
("Sun Life (Canada)"), 150 King Street West, Toronto, Ontario, Canada, a mutual
life insurance company incorporated in Canada in 1865.
THE VARIABLE ACCOUNT
Sun Life (N.Y.) Variable Account B (the "Variable Account") is a separate
account of the Company which meets the definition of a separate account under
the federal securities laws and which is registered with the Securities and
Exchange Commission as a unit investment trust under the Investment Company Act
of 1940.
THE FIXED ACCOUNT
If the Owner elects to have Contract values accumulated on a fixed basis,
Purchase Payments are allocated to the Fixed Account. Because of exemptive and
exclusionary provisions, that part of the Contract relating to the Fixed Account
is not registered under the Securities Act of 1933 ("1933 Act") and the Fixed
Account is not registered as an investment company under the Investment Company
Act of 1940 ("1940 Act"). Accordingly, neither the Fixed Account, nor any
interests therein, are subject to the provisions or restrictions of the 1933 Act
or the 1940 Act, and the staff of the Securities and Exchange Commission has not
reviewed the disclosures in this Statement of Additional Information with
respect to that portion of the Contract relating to the Fixed Account.
Disclosures regarding the fixed portion of the Contract and the Fixed Account,
however, may be subject to certain generally applicable provisions of the
federal securities laws relating to the accuracy and completeness of statements
made herein (see Appendix A).
ANNUITY PROVISIONS
DETERMINATION OF ANNUITY PAYMENTS
On the Annuity Commencement Date the Contract's Accumulation Account will be
cancelled and its adjusted value will be applied to provide a Variable Annuity
or a Fixed Annuity or a combination of both. The adjusted value will be equal to
the value of the Accumulation Account for the Valuation Period which ends
immediately preceding the Annuity Commencement Date, reduced by any applicable
premium or similar taxes and a proportionate amount of the contract maintenance
charge to reflect the time elapsed between the last Contract Anniversary and the
day before the Annuity Commencement Date.
The dollar amount of the first variable annuity payment will be determined
in accordance with the annuity payment rates found in the Contract which are
based on an assumed interest rate of 4% per year. All variable annuity payments
other than the first are determined by means of Annuity Units credited to the
Contract. The number of Annuity Units to be credited in respect of a particular
Sub-Account is determined by dividing that portion of the first variable annuity
payment attributable to that Sub-Account by the Annuity Unit value of that
Sub-Account for the Valuation Period which ends immediately preceding the
Annuity Commencement Date. The number of Annuity Units of each particular
Sub-Account credited to the Contract then remains fixed unless an exchange of
Annuity Units is made as described in the Prospectus. The dollar amount of each
variable annuity payment after the first may increase, decrease or remain
constant, and is equal to the sum of the amounts determined by multiplying the
number of Annuity Units of a particular Sub-Account credited to the Contract by
the Annuity Unit value for the particular Sub-Account for the Valuation Period
which ends immediately preceding the due date of each subsequent payment.
2
<PAGE>
For a description of fixed annuity payments, see Appendix A.
For a hypothetical example of the calculation of a variable annuity payment,
see Appendix B.
ANNUITY UNIT VALUE
The Annuity Unit value for each Sub-Account was established at $10.00 for
the first Valuation Period of the particular Sub-Account. The Annuity Unit value
for any subsequent Valuation Period is determined by multiplying the Annuity
Unit value for the immediately preceding Valuation Period by the appropriate Net
Investment Factor (See "Net Investment Factor" in the Prospectus) for the
current Valuation Period and then multiplying that product by a factor to
neutralize the assumed interest rate of 4% per year used to establish the
annuity payment rates found in the Contract. The factor is 0.99989255 for a one
day Valuation Period.
For a hypothetical example of the calculation of the value of a Variable
Annuity Unit, see Appendix B.
OTHER CONTRACT PROVISIONS
OWNER AND CHANGE OF OWNERSHIP
The Contract shall belong to the Owner. All Contract rights and privileges
may be exercised by the Owner without the consent of the Beneficiary (other than
an irrevocably designated beneficiary) or any other person. Such rights and
privileges may be exercised only during the lifetime of the Annuitant and prior
to the Annuity Commencement Date, except as otherwise provided in the Contract.
The Annuitant becomes the Owner on and after the Annuity Commencement Date. The
Beneficiary becomes the Owner on the death of the Annuitant. In some qualified
plans the Owner of the Contract is a Trustee and the Trust authorizes the
Annuitant/participant to exercise certain contract rights and privileges.
Ownership of a Qualified Contract may not be transferred except to: (1) the
Annuitant; (2) a trustee or successor trustee of a pension or profit sharing
trust which is qualified under Section 401 of the Internal Revenue Code; (3) the
employer of the Annuitant provided that the Qualified Contract after transfer is
maintained under the terms of a retirement plan qualified under Section 403(a)
of the Internal Revenue Code for the benefit of the Annuitant; (4) the trustee
of an individual retirement account plan qualified under Section 408 of the
Internal Revenue Code for the benefit of the Owner; or (5) as otherwise
permitted from time to time by laws and regulations governing the retirement or
deferred compensation plans for which a Qualified Contract may be issued.
Subject to the foregoing, a Qualified Contract may not be sold, assigned,
transferred, discounted or pledged as collateral for a loan or as security for
the performance of an obligation or for any other purpose to any person other
than the Company.
The Owner of a Non-Qualified Contract may change the ownership of the
Contract during the lifetime of the Annuitant and prior to the Annuity
Commencement Date, although such change may result in the imposition of tax (see
"Federal Tax Status--Taxation of Annuities in General" in the Prospectus). A
change of ownership will not be binding upon the Company until written
notification is received by the Company. Once received by the Company the change
will be effective as of the date on which the request for change was signed by
the Owner but the change will be without prejudice to the Company on account of
any payment made or any action taken by the Company prior to receiving the
change. The Company may require that the signature of the Owner be guaranteed by
a member firm of the New York, American, Boston, Midwest, Philadelphia or
Pacific Stock Exchange, or by a commercial bank (not a savings bank) which is a
member of the Federal Deposit Insurance Corporation or, in certain cases, by a
member firm of the National Association of Securities Dealers, Inc. which has
entered into an appropriate agreement with the Company.
DESIGNATION AND CHANGE OF BENEFICIARY
The Beneficiary designation contained in the application will remain in
effect until changed. The interest of any Beneficiary is subject to the
particular Beneficiary surviving the Annuitant.
Subject to the rights of an irrevocably designated Beneficiary, the Owner
may change or revoke the designation of a Beneficiary at any time while the
Annuitant is living by filing with the Company a written
3
<PAGE>
beneficiary designation or revocation in such form as the Company may require.
The change or revocation will not be binding upon the Company until it is
received by the Company. When it is so received the change or revocation will be
effective as of the date on which the beneficiary designation or revocation was
signed by the Owner.
CUSTODIAN
The Company is Custodian of the assets of the Variable Account. The Company,
as Custodian, will purchase shares of a particular series of the Series Fund at
net asset value in connection with amounts allocated to the particular
Sub-Account in accordance with the instructions of the Owner and redeem Series
Fund shares at net asset value for the purpose of meeting the contractual
obligations of the Variable Account, paying charges relative to the Variable
Account or making adjustments for annuity reserves held in the Variable Account.
ADMINISTRATION OF THE CONTRACTS
The Company performs certain administrative functions relating to the
Contracts and the Variable Account. These functions include, among other things,
maintaining the books and records of the Variable Account and the Sub-Accounts,
and maintaining records of the name, address, taxpayer identification number,
Contract number, type of contract issued to each owner, the status of the
Accumulation Account under each Contract, and other pertinent information
necessary to the administration and operation of the Contracts. The Company has
entered into service agreements with its parent, Sun Life Assurance Company of
Canada (U.S.), and Sun Life Assurance Company of Canada, under which the latter
have agreed to provide the Company with certain services on a cost reimbursement
basis. These services include, but are not limited to, accounting and investment
services, systems support and development, pricing, product development,
actuarial, legal and compliance functions, marketing services and staff
training.
DISTRIBUTION OF THE CONTRACTS
The offering of the Contracts is continuous. The Contracts are sold by
licensed insurance agents in the State of New York. Such agents are
registered representatives of broker-dealers registered under the Securities
Exchange Act of 1934 who are members of the National Association of Securities
Dealers, Inc. The Contracts are distributed by Clarendon Insurance Agency,
Inc. ("Clarendon"), One Sun Life Executive Park, Wellesley Hills, Massachusetts
02481, a wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.).
Commissions and other distribution compensation will be paid by the Company and
will not be more than 6.31% of Purchase Payments. Commissions will not be paid
with respect to Contracts established for the personal account of employees of
the Company or any of its affiliates, or of persons engaged in the distribution
of the Contracts. During 1996, 1997 and 1998, approximately $39,481, $30,614 and
$_______, respectively, was paid to and retained by Clarendon in connection
with the distribution of the Contracts.
ACCOUNTANTS
Deloitte & Touche LLP, 125 Summer Street, Boston, Massachusetts 02110, are
the Variable Account's independent certified public accountants providing
auditing and other professional services.
CALCULATION OF PERFORMANCE DATA
AVERAGE ANNUAL TOTAL RETURN:
The table below shows, for various Sub-Accounts of the Variable Account, the
Average Annual Total Return for the stated periods (or shorter period indicated
in the note below), based upon a hypothetical initial Purchase Payment of
$1,000, calculated in accordance with the formula set out below the table. For
4
<PAGE>
purposes of determining these investment results, the actual investment
performance of each Series of MFS/Sun Life Series Trust is reflected from the
date such Series commenced operations, although the Contracts have been offered
only since March 1, 1993.
AVERAGE ANNUAL TOTAL RETURN
PERIOD ENDING DECEMBER 31, 1998
<TABLE>
<CAPTION>
10
1 YEAR 5 YEAR YEAR DATE OF
PERIOD PERIOD PERIOD LIFE* INCEPTION
-------- ------- ------ -- --------------
<S> <C> <C> <C> <C>
August 13,
Capital Appreciation Series............. % % % -- 1985
August 12,
Government Securities Series............ % % % -- 1985
August 13,
High Yield Series....................... % % % -- 1985
Managed Sectors Series.................. % % -- % May 27, 1988
August 29,
Money Market Series..................... % % % -- 1985
Total Return Series..................... % % -- % May 16, 1988
World Governments Series................ % % -- % May 16, 1988
<FN>
- ------------------------
*From Date of Inception, as the lifetimes of these series are less than ten
years.
</TABLE>
The length of the period and the last day of each period used in the above
table are set out in the table heading and in the footnotes above. The Average
Annual Total Return for each period was determined by finding the average annual
compounded rate of return over each period that would equate the initial amount
invested to the ending redeemable value for that period, in accordance with the
following formula:
P(1 + T)n = ERV
<TABLE>
<C> <C> <S>
Where: P = a hypothetical initial Purchase Payment of $1,000
T = average annual total return for the period
n = number of years
ERV = redeemable value (as of the end of the period) of a
hypothetical $1,000 Purchase Payment made at the beginning of
the 1-year, 5-year, or 10-year period (or fractional portion
thereof)
</TABLE>
The formula assumes that: 1) all recurring fees have been deducted from the
Contract's Accumulation Account; 2) all applicable non-recurring Contract
charges are deducted at the end of the period; and 3) there will be a full
surrender at the end of the period.
The $30 annual contract maintenance charge will be allocated among the
Sub-Accounts so that each Sub-Account's allocated portion of the charge is
proportional to the percentage of the number of Contracts that have amounts
allocated to that Sub-Account. Because the impact of contract maintenance
charges on a particular Contract may differ from those assumed in the
computation due to differences between actual allocations and the assumed ones,
the total return that would have been experienced by an actual Contract over
these same time periods may have been different from that shown above.
NON-STANDARDIZED INVESTMENT PERFORMANCE:
The Variable Account may illustrate its results over various periods and
compare its results to indices and other variable annuities in sales materials
including advertisements, brochures and reports. Such results may be computed on
a "cumulative" and/or "annualized" basis.
"Cumulative" quotations are arrived at by calculating the change in the
Accumulation Unit value of a Sub-Account between the first and last day of the
base period being measured, and expressing the difference as a percentage of the
Accumulation Unit value at the beginning of the base period.
"Annualized" quotations (described in the following table as "Compound
Growth Rate") are calculated by applying a formula which determines the level
rate of return which, if earned over the entire base period, would produce the
cumulative return.
5
<PAGE>
NON-STANDARDIZED INVESTMENT PERFORMANCE:
<TABLE>
<S> <C>
$10,000 INVESTED IN WOULD HAVE GROWN TO THIS AMOUNT ON
THIS SUB-ACCOUNT UNDER A DECEMBER 31, 1998*
COMPASS 3 CONTRACT
THIS MANY YEARS AGO...
</TABLE>
<TABLE>
<CAPTION>
Capital Appreciation Series Government Securities Series
- --------------------------------------------------------- ---------------------------------------------------------
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
- ------ ----------------- ---------- ---------- -------- ------ ----------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 1 12/31/96-12/31/97
2 12/31/95-12/31/97 2 12/31/95-12/31/97
3 12/31/94-12/31/97 3 12/31/94-12/31/97
4 12/31/93-12/31/97 4 12/31/93-12/31/97
5 12/31/92-12/31/97 5 12/31/92-12/31/97
10 12/31/87-12/31/97 10 12/31/87-12/31/97
Life 8/13/85-12/31/97 Life 8/12/85-12/31/97
</TABLE>
<TABLE>
<CAPTION>
High Yield Series Managed Sectors Series
- --------------------------------------------------------- ---------------------------------------------------------
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
- ------ ----------------- ---------- ---------- -------- ------ ----------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 1 12/31/96-12/31/97
2 12/31/95-12/31/97 2 12/31/95-12/31/97
3 12/31/94-12/31/97 3 12/31/94-12/31/97
4 12/31/93-12/31/97 4 12/31/93-12/31/97
5 12/31/92-12/31/97 5 12/31/92-12/31/97
10 12/31/87-12/31/97
Life 8/13/85-12/31/97 Life 5/27/88-12/31/97
</TABLE>
<TABLE>
<CAPTION>
Total Return Series World Governments Series
- --------------------------------------------------------- ---------------------------------------------------------
Number Cumulative Compound Number Cumulative Compound
of Growth Growth of Growth Growth
Years Periods Amount Rate Rate Years Periods Amount Rate Rate
- ------ ----------------- ---------- ---------- -------- ------ ----------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 12/31/96-12/31/97 1 12/31/96-12/31/97
2 12/31/95-12/31/97 2 12/31/95-12/31/97
3 12/31/94-12/31/97 3 12/31/94-12/31/97
4 12/31/93-12/31/97 4 12/31/93-12/31/97
5 12/31/92-12/31/97 5 12/31/92-12/31/97
Life 5/16/88-12/31/97 Life 5/16/88-12/31/97
</TABLE>
- ------------------------
*For purposes of determining these investment results, the actual investment
performance of each Series of MFS/Sun Life Series Trust is reflected from the
date such Series commenced operations, although the Contracts have been offered
only since March 1, 1993. The charges imposed under the Contract against the
assets of the Variable Account for mortality and expense risks and distribution
expenses have been deducted. However, the annual Account Fee is not reflected
and these examples do not assume surrender at the end of the period.
6
<PAGE>
ADVERTISING AND SALES LITERATURE
As set forth in the Prospectus, the Company may refer to the following
organizations (and others) in its marketing materials:
A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors
affecting the overall performance of an insurance company in order to provide an
opinion as to an insurance company's relative financial strength and ability to
meet its contractual obligations. The procedure includes both a quantitative and
qualitative review of each company.
DUFF & PHELPS CREDIT RATING COMPANY's Insurance Company Claims Paying
Ability Rating is an independent evaluation by a nationally accredited rating
organization of an insurance company's ability to meet its future obligations
under the contracts and products it sells. The rating takes into account both
quantitative and qualitative factors.
LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a
publisher of statistical data covering the investment company industry in the
United States and overseas. Lipper is recognized as the leading source of data
on open-end and closed-end funds. Lipper currently tracks the performance of
over 5,000 investment companies and publishes numerous specialized reports,
including reports on performance and portfolio analysis, fee and expense
analysis.
STANDARD & POOR's insurance claims-paying ability rating is an opinion of an
operating insurance company's financial capacity to meet obligations of its
insurance policies in accordance with their terms.
VARDS (Variable Annuity Research Data Service) provides a comprehensive
guide to variable annuity contract features and historical fund performance. The
service also provides a readily understandable analysis of the comparative
characteristics and market performance of funds inclusive in variable contracts.
STANDARD & POOR'S INDEX--broad-based measurement of changes in stock-market
conditions based on the average performance of 500 widely held common stocks;
commonly known as the Standard & Poor's 500 (S&P 500). The selection of stocks,
their relative weightings to reflect differences in the number of outstanding
shares, and publication of the index itself are services of Standard & Poor's
Corporation, a financial advisory, securities rating, and publishing firm. The
index tracks 400 industrial company stocks, 20 transportation stocks, 40
financial company stocks, and 40 public utilities.
NASDAQ-OTC Price Index--this index is based on the National Association of
Securities Dealers Automated Quotations (NASDAQ) and represents all domestic
over-the-counter stocks except those traded on exchanges and those having only
one market maker, a total of some 3,500 stocks. It is market value-weighted and
was introduced with a base of 100.00 on February 5, 1971.
DOW JONES INDUSTRIAL AVERAGE (DJIA)--price-weighted average of 30 actively
traded blue chip stocks, primarily industrials, but including American Express
Company and American Telephone and Telegraph Company. Prepared and Published by
Dow Jones & Company, it is the oldest and most widely quoted of all the market
indicators. The average is quoted in points, not dollars.
In its advertisements and other sales literature for the Variable Account
and the Series Fund, the Company intends to illustrate the advantages of the
Contracts in a number of ways:
COMPOUND INTEREST ILLUSTRATIONS. These will emphasize several advantages of
the variable annuity contract. For example, but not by way of limitation, the
literature may emphasize the potential savings through tax deferral; the
potential advantage of the Variable Account over the fixed account; and the
compounding effect when an Owner makes regular deposits to his or her Account.
DOLLAR COST AVERAGING ILLUSTRATIONS. These illustrations will generally
discuss the price-leveling effect of making regular investments in the same
Sub-Accounts over a period of time, to take advantage of the trends in market
prices of the portfolio securities purchased by those Sub-Accounts.
7
<PAGE>
THE COMPANY'S ASSETS, SIZE. The Company may discuss its general financial
condition (see, for example, the references to Standard & Poor's, A.M. Best
Company and Duff & Phelps above); it may refer to its assets; it may also
discuss its relative size and/or ranking among companies in the industry or
among any sub-classification of those companies, based upon recognized
evaluation criteria.
8
<PAGE>
[Financial Statements to be filed by amendment]
9
<PAGE>
SUN LIFE INSURANCE AND ANNUITY
COMPANY OF
NEW YORK
Annuity Service Mailing Address:
80 Broad Street
New York, New York 10004
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
CO3NY-13 5/99
<PAGE>
PART C
OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) The following Financial Statements are included in this Registration
Statement:
Included in Part A:
None.
Included in Part B:
A. Financial Statements of the Registrant [to be filed by amendment]:
1. Statement of Condition, December 31, 1998;
2. Statement of Operations, Year Ended December 31, 1998;
3. Statements of Changes in Net Assets, Years Ended December 31, 1998
and 1997;
4. Notes to Financial Statements; and
5. Independent Auditors' Report.
B. Financial Statements of the Depositor [to be filed by amendment]:
1. Statutory Statements of Admitted Assets, Liabilities and Capital
Stock and Surplus, December 31, 1998 and 1997;
2. Statutory Statements of Operations, Years Ended December 31, 1998,
1997 and 1996;
3. Statutory Statements of Changes in Capital Stock and Surplus, Years
Ended December 31, 1998, 1997 and 1996;
4. Statutory Statements of Cash Flow, Years Ended December 31, 1998,
1997 and 1996;
5. Notes to Statutory Financial Statements; and
6. Independent Auditors' Report.
<PAGE>
(b) The following Exhibits are incorporated in this Registration
Statement by reference unless otherwise indicated:
(1) Resolution of the Board of Directors of the depositor dated December
3, 1984, authorizing the establishment of the Registrant;*
(2) Not applicable;
(3) (a) Marketing Coordination Agreement between the Depositor,
MFS Fund Distributors, Inc. and Clarendon Insurance Agency, Inc.;*
(b)(i) Specimen Sales Operations and General Agent Agreement;*
(b)(ii) Specimen Broker-Dealer Supervisory and Service Agent
Agreement;*
(b)(iii) Specimen Broker-Dealer Supervisory and Service Agent
Agreement;*
(4) Form of Flexible Payment Deferred Combination Variable and Fixed
Annuity Contract;**
(5) Form of Application used with the variable annuity contract filed as
Exhibit (4);**
(6) Declaration of Intent and Charter and the By-Laws of the
Depositor;*
(7) Not Applicable;
(8) Not Applicable;
(9) Previously filed;
<PAGE>
(10) Consent of Deloitte & Touche [to be filed by amendment];
(11) None;
(12) Not Applicable;
(13) Schedule for Computation of Performance Quotations [to be filed by
amendment];
(14) Not applicable;
(15) Powers of Attorney***.
* Filed as an Exhibit to Post-Effective Amendment No. 2 to the Form N-4
Registration Statement of the Registrant, File No. 333-05037.
** Incorporated herein by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form N-4, File No. 33-19765, filed
April 23, 1998.
*** Filed herewith.
Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal Positions and Offices
Business Address with the Depositor
- -------------------- ----------------------
Donald A. Stewart Chairman and Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
C. James Prieur President and Director
One Sun Life Executive Park
Wellesley Hills,
Massachusetts 02481
John D. McNeil Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
David D. Horn Director
Strong Road
New Vineyard, Maine 04956
John S. Lane Director
150 King Street West
Toronto, Ontario
Canada M5H 1J9
Richard B. Bailey Director
63 Atlantic Avenue
Boston, Massachusetts 02110
M. Colyer Crum Director
104 Westcliff Road
Weston, Massachusetts 02193
John G. Ireland Director
680 Steamboat Road
Greenwich, Connecticut 06830
<PAGE>
Name and Principal Positions and Offices
Business Address with the Depositor
- -------------------- ----------------------
Donald B. Henderson, Jr. Director
125 West 55th Street
New York, New York 10019
Angus A. MacNaughton Director
Metro Tower, Suite 1170
950 Tower Lane
Foster City, California 94404
Fioravante G. Perrotta Director
13 Clark Lane
Essex, Connecticut 06426
Ralph F. Peters Director
66 Strimples Mill Road
Stockton, New Jersey 08559
Peter R. O'Flinn Director
125 West 55th Street
New York, New York 10019
Frederick B. Whittemore Director
1221 Avenue of the Americas
New York, New York 10020
S. Caesar Raboy Director
220 Boylston Street
Boston, Massachusetts 02110
Michael A. Cohen Vice President and
80 Broad Street Regional Manager
New York, New York 10004
James M.A. Anderson Vice President, Investments
One Sun Life Executive Park
Wellesley Hills,
Massachusetts 02481
Robert K. Leach Vice President, Individual Annuities
One Copley Place
Boston, Massachusetts 02116
L. Brock Thomson Vice President
One Sun Life Executive Park and Treasurer
Wellesley Hills,
Massachusetts 02481
Robert P. Vrolyk Vice President, Controller
One Sun Life Executive Park and Actuary
Wellesley Hills,
Massachusetts 02481
Peter F. Demuth Vice President and Chief Counsel and
One Sun Life Executive Park Assistant Secretary
Wellesley Hills,
Massachusetts 02481
Ellen B. King Secretary
One Sun Life Executive Park
Wellesley Hills,
Massachusetts 02481
<PAGE>
Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
No person is directly or indirectly controlled by the Registrant. The
Registrant is a separate account of Sun Life Insurance and Annuity Company of
New York which is a wholly-owned subsidiary of Sun Life Assurance Company of
Canada (U.S.). Sun Life Assurance Company of Canada (U.S.) is an indirect
wholly-owned subsidiary of Sun Life Assurance Company of Canada.
The following is a list of all corporations directly or indirectly
controlled by or under common control with Sun Life Assurance Company of Canada,
showing the state or other sovereign power under the laws of which each is
organized and the percentage ownership of voting securities giving rise to the
control relationship:
<PAGE>
<TABLE>
<CAPTION>
Percent of
State or Country Ownership
or Jurisdiction of Voting
of Incorporation Securities
---------------- ----------
<S> <C> <C>
Sun Life Assurance Company of Canada Canada 100%
- -----------------------------------------------------------------------------------
Sun Life Assurance Company of Canada
-- U.S. Operations Holdings, Inc............. Delaware 100%
Sun Life Assurance Company of Canada
(U.K.) Limited .............................. United Kingdom 100%
Sun Life of Canada Investment Management
Limited ..................................... Canada 100%
Sun Life of Canada Benefit Management
Limited ..................................... Canada 100%
Spectrum United Holdings, Inc.................. Canada 100%
Sun Canada Financial Co. ...................... Delaware 100%
Sun Life of Canada (U.S.) Holdings, Inc. ...... Delaware 0%*
Sun Life of Canada (U.S.) Financial
Services Holdings, Inc. ..................... Delaware 0%*
Sun Life Assurance Company of Canada
(U.S.)....................................... Delaware 0%**
Sun Life Insurance and Annuity Company of
New York .................................... New York 0%****
Sun Life of Canada (U.S.) Distributors, Inc.... Delaware 0%****
Sun Benefit Services Company, Inc. ............ Delaware 0%****
Sun Life of Canada (U.S.) SPE 97-1, Inc........ Delaware 0%****
Massachusetts Financial Services Company ...... Delaware 0%***
New London Trust, F.S.B........................ Federally Chartered 0%****
Sun Life Information Services Ireland Limited.. Republic of Ireland 0%****
Clarendon Insurance Agency, Inc. .............. Massachusetts 0%*****
MFS Service Center, Inc........................ Delaware 0%*****
MFS/Sun Life Series Trust ..................... Massachusetts 0%******
Sun Capital Advisers, Inc. .................... Delaware 0%****
MFS International, Ltd. ....................... Ireland 0%*****
MFS Institutional Advisers, Inc. .............. Delaware 0%*****
MFS Fund Distributors, Inc. ................... Delaware 0%*****
MFS Retirement Services, Inc. ................. Delaware 0%*****
Sun Life Financial Service Limited ............ Bermuda 0%****
</TABLE>
- ----------
* 100% of the issued and outstanding voting securities of Sun Life of
Canada (U.S.) Holdings, Inc. and Sun Life of Canada (U.S.) Financial
Services Holdings, Inc. is owned by Sun Life Assurance Company of
Canada -- U.S. Operations Holdings, Inc.
** 100% of the issued and outstanding voting securities of Sun Life
Assurance Company of Canada (U.S.) is owned by Sun Life of Canada
(U.S.) Holdings, Inc.
*** 93.6% of the issued and outstanding voting securities of
Massachusetts Financial Services Company is owned by Sun Life of
Canada (U.S.) Financial Services Holdings, Inc.
**** 100% of the issued and outstanding voting securities of New London
Trust, F.S.B., Sun Life Insurance and Annuity Company of New York,
Sun Life of Canada (U.S.) Distributors, Inc., Sun Benefit Services
Company, Inc., Sun Life of Canada (U.S.) SPE 97-1, Inc., Sun Capital
Advisers, Inc., Sun Life Financial Services Limited and Sun Life
Information Services Ireland Limited is owned by Sun Life Assurance
Company of Canada (U.S.).
***** 100% of the issued and outstanding voting securities of Clarendon
Insurance Agency, Inc., MFS Service Center, Inc., MFS International,
Ltd., MFS Institutional Advisers, Inc., MFS Fund Distributors, Inc.,
and MFS Retirement Services, Inc. is owned by Massachusetts
Financial Services Company.
****** 100% of the issued and outstanding voting securities of MFS/Sun Life
Series Trust is owned by separate accounts of Sun Life Assurance
Company of Canada (U.S.) and Sun Life Insurance and Annuity Company
of New York.
<PAGE>
Omitted from the list are subsidiaries of Sun Life Assurance Company of
Canada which, considered in the aggregate, would not constitute a "significant
subsidiary" (as that term is defined in Rule 8b-2 under Section 8 of the
Investment Company Act of 1940) of Sun Life Assurance Company of Canada.
None of the companies listed is a subsidiary of the Registrant, therefore
the only financial statements being filed are those of Sun Life Insurance and
Annuity Company of New York.
Item 27. NUMBER OF CONTRACT OWNERS
As of January 31, 1999 there were 883 qualified and 231 non-qualified
contracts participating in the investment experience of the Variable Account.
Item 28. INDEMNIFICATION
Article 5, Section 5.6 of the By-laws of Sun Life Insurance and Annuity
Company of New York, a copy of which was filed as Exhibit A.(6)(b) to the
Registration Statement of the Registrant on Form N-8B-2 (File No. 811-4183),
provides for indemnification of directors, officers and employees of Sun Life
Insurance and Annuity Company of New York.
Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of Sun
Life Insurance and Annuity Company of New York pursuant to the certificate of
incorporation, by-laws, or otherwise, Sun Life (N.Y.) has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by Sun Life (N.Y.) of expenses incurred or paid by a director,
officer, or controlling person of Sun Life (N.Y.) in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, Sun Life
(N.Y.) will, unless in the opinion of their counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by them is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 29. PRINCIPAL UNDERWRITERS
(a) Clarendon Insurance Agency, Inc., which is a wholly- owned
subsidiary of Sun Life Assurance Company of Canada (U.S.), acts as general
distributor for the Registrant, Sun Life of Canada (U.S.) Variable Accounts
C, D, E, F, G and I, Sun Life (N.Y.)
<PAGE>
Variable Accounts A and C and Money Market Variable Account, High Yield Variable
Account, Capital Appreciation Variable Account, Government Securities Variable
Account, World Governments Variable Account, Total Return Variable Account and
Managed Sectors Variable Account.
Name and Principal Positions and Offices
Business Address* with Underwriter
- ----------------- --------------------
Jane M. Mancini President and Director
James M.A. Anderson Director
S. Caesar Raboy Director
C. James Prieur Director
Robert P. Vrolyk Director
L. Brock Thompson Vice President and Treasurer
Roy P. Creedon Secretary
Donald E. Kaufman Vice President
Cynthia M. Orcutt Vice President
Laurie Lennox Vice President
Maura A. Murphy Assistant Secretary
Peter A. Marion Tax Officer
- --------------------
* The principal business address of all directors and officers of the
principal underwriter except Ms. Mancini and Ms. Lennox is One Sun Life
Executive Park, Wellesley Hills, Massachusetts 02481. The principal
business address of Ms. Mancini and Ms. Lennox is One Copley Place,
Boston, Massachusetts 02116.
(c) Inapplicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
Accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules
promulgated thereunder are maintained by Sun Life Insurance and Annuity
Company of New York, in whole or in part, at its Home Office at 80 Broad
Street, New York, New York 10004, at the offices of Sun Life Assurance
Company of Canada (U.S.) at One Copley Place, Boston Massachusetts 02116 and
One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481, or at the
office of Clarendon Insurance Agency, Inc. at One Sun Life Executive Park,
Wellesley Hills, Massachusetts 02481.
Item 31. MANAGEMENT SERVICES
Not applicable.
Item 32. UNDERTAKINGS
Representation with respect to Section 26(a) of the Investment Company
Act of 1940.
Sun Life Insurance and Annuity Company of New York represents that the
fees and charges deducted under the contract, in the aggregate, are
reasonable in relation to the services rendered, the expenses expected to be
incurred, and the risks assumed by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act
of 1940, the Registrant has caused this Amendment to its Registration
Statement to be signed on its behalf in the Town of Wellesley Hills and
Commonwealth of Massachusetts on the 26th day of February, 1999.
Sun Life (N.Y.)
Variable Account B
(Registrant)
Sun Life Insurance and Annuity
Company of New York
(Depositor)
By: /s/ C. JAMES PRIEUR
--------------------------------
C. James Prieur
President
Attest: /s/ EDWARD M. SHEA
------------------------------
Edward M. Shea
Assistant Vice President and Counsel
As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities with the Depositor, Sun Life Insurance and Annuity Company of New
York, and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ C. JAMES PRIEUR President and Director February 26, 1999
- ------------------------------ (Principal Executive
C. James Prieur Officer)
<PAGE>
Signatures Title Date
---------- ----- ----
Vice President,
* /s/ ROBERT P. VROLYK Controller and Actuary February 26, 1999
- ------------------------------ (Principal Accounting Officer)
Robert P. Vrolyk
* /s/ DONALD A. STEWART President February 26, 1999
- ------------------------------ and Director
Donald A. Stewart
* /s/ JOHN D. McNEIL Director February 26, 1999
- ---------------------------
John D. McNeil
* /s/ RICHARD B. BAILEY Director February 26, 1999
- ------------------------------
Richard B. Bailey
* /s/ JOHN S. LANE Director February 26, 1999
- ------------------------------
John S. Lane
* /s/ DAVID D. HORN Director February 26, 1999
- ------------------------------
David D. Horn
* /s/ JOHN G. IRELAND Director February 26, 1999
- ------------------------------
John G. Ireland
* /s/ DONALD B. HENDERSON, JR. Director February 26, 1999
- ------------------------------
Donald B. Henderson, Jr.
* /s/ FIORAVANTE G. PERROTTA Director February 26, 1999
- ------------------------------
Fioravante G. Perrotta
* /s/ FREDERICK B. WHITTEMORE Director February 26, 1999
- ------------------------------
Frederick B. Whittemore
* /s/ PETER R. O'FLINN Director February 26, 1999
- ------------------------------
Peter R. O'Flinn
- ------------------------------
* By Edward M. Shea pursuant to Power of Attorney filed herewith.
<PAGE>
Signatures Title Date
---------- ----- ----
* /s/ RALPH F. PETERS Director February 26, 1999
- ------------------------------
Ralph F. Peters
* /s/ ANGUS A. MacNAUGHTON Director February 26, 1999
- ------------------------------
Angus A. MacNaughton
* /s/ M. COLYER CRUM Director February 26, 1999
- ------------------------------
M. Colyer Crum
* /s/ S. CAESAR RABOY Director February 26, 1999
- ------------------------------
S. Caesar Raboy
- ------------------------------
* By Edward M. Shea pursuant to Power of Attorney filed herewith.
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Richard B. Bailey, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Richard B. Bailey
---------------------------
Richard B. Bailey
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that M. Colyer Crum, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ M. Colyer Crum
---------------------------
M. Colyer Crum
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Donald B. Henderson, Jr., whose
signature appears below, constitutes and appoints Edward M. Shea, Ellen B.
King, Peter F. Demuth and C. James Prieur, and each of them, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign a Registration Statement on Form N-4 of Sun Life of
Canada (U.S.) Variable Account B (Reg. No. 33-19765), and any amendments
thereto, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact or his
substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ Donald B. Henderson, Jr.
-----------------------------
Donald B. Henderson, Jr.
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that David D. Horn, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ David D. Horn
---------------------------
David D. Horn
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John G. Ireland, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ John G. Ireland
---------------------------
John G. Ireland
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John S. Lane, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ John S. Lane
---------------------------
John S. Lane
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Angus A. MacNaughton, whose
signature appears below, constitutes and appoints Edward M. Shea, Ellen B.
King, Peter F. Demuth and C. James Prieur, and each of them, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign a Registration Statement on Form N-4 of Sun Life of
Canada (U.S.) Variable Account B (Reg. No. 33-19765), and any amendments
thereto, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact or his
substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ Angus A. MacNaughton
--------------------------
Angus A. MacNaughton
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that John D. McNeil, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ John D. McNeil
---------------------------
John D. McNeil
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Peter R. O'Flinn, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Peter R. O'Flinn
---------------------------
Peter R. O'Flinn
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Fioravante G. Perrotta, whose
signature appears below, constitutes and appoints Edward M. Shea, Ellen B.
King, Peter F. Demuth and C. James Prieur, and each of them, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign a Registration Statement on Form N-4 of Sun Life of
Canada (U.S.) Variable Account B (Reg. No. 33-19765), and any amendments
thereto, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact or his
substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ Fioravante G. Perrotta
---------------------------
Fioravante G. Perrotta
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Ralph F. Peters, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Ralph F. Peters
---------------------------
Ralph F. Peters
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that S. Caesar Raboy, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ S. Caesar Raboy
---------------------------
S. Caesar Raboy
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Donald A. Stewart, whose signature
appears below, constitutes and appoints Edward M. Shea, Ellen B. King, Peter
F. Demuth and C. James Prieur, and each of them, his attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign a
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable
Account B (Reg. No. 33-19765), and any amendments thereto, and to file the
same, with exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact or his substitute or substitutes, may
do or cause to be done by virtue hereof.
/s/ Donald A. Stewart
---------------------------
Donald A. Stewart
February 4, 1999
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that Frederick B. Whittemore, whose
signature appears below, constitutes and appoints Edward M. Shea, Ellen B.
King, Peter F. Demuth and C. James Prieur, and each of them, his
attorneys-in-fact, each with the power of substitution, for him in any and
all capacities, to sign a Registration Statement on Form N-4 of Sun Life of
Canada (U.S.) Variable Account B (Reg. No. 33-19765), and any amendments
thereto, and to file the same, with exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact or his
substitute or substitutes, may do or cause to be done by virtue hereof.
/s/ Frederick B. Whittemore
-----------------------------
Frederick B. Whittemore
February 4, 1999
