<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENT OF CONDITION-- December 31, 1998
<TABLE>
<CAPTION>
ASSETS:
Investment in MFS/Sun Life Series Trust Shares Cost Value
---------- ------------ ------------
<S> <C> <C> <C>
Capital Appreciation Series ("CAS")...... 1,628,297 $ 58,186,591 $ 74,791,926
Government Securities Series ("GSS")..... 1,498,150 18,940,733 20,067,109
High Yield Series ("HYS")................ 1,127,958 10,211,707 10,336,064
Money Market Series ("MMS").............. 13,461,310 13,461,310 13,461,310
Managed Sectors Series ("MSS")........... 456,642 12,256,459 12,897,765
Total Return Series ("TRS").............. 1,914,629 34,487,056 40,711,674
World Governments Series ("WGS")......... 306,270 3,367,700 3,744,797
------------ ------------
$150,911,556 $176,010,645
------------
------------
LIABILITY:
Payable to sponsor................................................... (88,213)
------------
Net Assets..................................................... $175,922,432
------------
------------
</TABLE>
<TABLE>
<CAPTION>
Applicable to Owners of
Deferred Variable Annuity Contracts Reserve for
NET ASSETS: ----------------------------------- Variable
COMPASS 2 CONTRACTS: Units Unit Value Value Annuities Total
--------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
CAS................................................ 881,482 $ 75.1838 $ 66,268,190 $ 328,583 $ 66,596,773
GSS................................................ 737,003 25.9309 19,108,259 90,730 19,198,989
HYS................................................ 327,184 28.8320 9,436,176 38,584 9,474,760
MMS................................................ 745,670 17.2190 12,832,044 10,439 12,842,483
MSS................................................ 230,507 46.0991 10,650,759 47,540 10,698,299
TRS................................................ 1,076,662 32.1854 34,741,822 576,282 35,318,104
WGS................................................ 158,924 20.6718 3,298,821 -- 3,298,821
------------ ----------- ------------
$156,336,071 $1,092,158 $157,428,229
------------ ----------- ------------
<CAPTION>
COMPASS 3 CONTRACTS:
<S> <C> <C> <C> <C> <C>
CAS................................................ 339,067 $ 24.1862 $ 8,200,462 $ 34 $ 8,200,496
GSS................................................ 67,394 12.9045 869,136 -- 869,136
HYS................................................ 60,336 14.1888 856,348 -- 856,348
MMS................................................ 51,357 11.8631 608,996 -- 608,996
MSS................................................ 113,778 19.3977 2,197,964 62 2,198,026
TRS................................................ 296,455 17.9323 5,315,198 27 5,315,225
WGS................................................ 35,645 12.5340 445,976 -- 445,976
------------ ----------- ------------
$ 18,494,080 $ 123 $ 18,494,203
------------ ----------- ------------
Net assets............................................................ $174,830,151 $1,092,281 $175,922,432
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to financial statements
1
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF OPERATIONS-- Year Ended December 31, 1998
<TABLE>
<CAPTION>
CAS GSS HYS MMS
Sub-Account Sub-Account Sub-Account Sub-Account
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received...................................... $ 8,116,840 $1,169,788 $ 789,871 $ 619,906
Mortality and expense risk charges.............. 816,804 242,617 140,312 146,071
Distribution expense charges.................... 98,017 29,114 16,837 17,528
------------ ----------- ------------ ------------
Net investment income....................... $ 7,202,019 $ 898,057 $ 632,722 $ 456,307
------------ ----------- ------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains on investment transactions
Proceeds from sales........................... $ 25,572,688 $7,592,128 $ 5,668,225 $ 22,116,806
Cost of investments sold...................... 15,306,482 7,070,910 5,322,173 22,116,806
------------ ----------- ------------ ------------
Net realized gains.......................... $ 10,266,206 $ 521,218 $ 346,052 $ --
------------ ----------- ------------ ------------
Net unrealized appreciation on investments
End of period................................. $ 16,605,335 $1,126,376 $ 124,357 $ --
Beginning of period........................... 16,518,885 1,051,340 1,151,909 --
------------ ----------- ------------ ------------
Change in unrealized appreciation........... $ 86,450 $ 75,036 $(1,027,552) $ --
------------ ----------- ------------ ------------
Realized and unrealized gains (losses)........ $ 10,352,656 $ 596,254 $ (681,500) $ --
------------ ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS....................................... $ 17,554,675 $1,494,311 $ (48,778) $ 456,307
------------ ----------- ------------ ------------
------------ ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
MSS TRS WGS
Sub-Account Sub-Account Sub-Account Total
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received...................................... $1,907,178 $ 4,766,358 $ 50,061 $17,420,002
Mortality and expense risk charges.............. 143,063 468,483 44,955 2,002,305
Distribution expense charges.................... 17,168 56,218 5,395 240,277
----------- ----------- ---------- -----------
Net investment income (loss)................ $1,746,947 $ 4,241,657 $ (289 ) $15,177,420
----------- ----------- ---------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions
Proceeds from sales........................... $4,712,546 $12,206,707 $2,690,172 $80,559,272
Cost of investments sold...................... 3,817,748 8,756,342 2,930,009 65,320,470
----------- ----------- ---------- -----------
Net realized gains (losses)................. $ 894,798 $ 3,450,365 $(239,837 ) $15,238,802
----------- ----------- ---------- -----------
Net unrealized appreciation (depreciation) on
investments
End of period................................. $ 641,306 $ 6,224,618 $ 377,097 $25,099,089
Beginning of period........................... 1,999,252 9,712,373 (361,046 ) 30,072,713
----------- ----------- ---------- -----------
Change in unrealized appreciation
(depreciation)............................ $(1,357,946) $(3,487,755) $ 738,143 $(4,973,624)
----------- ----------- ---------- -----------
Realized and unrealized gains (losses)........ $ (463,148 ) $ (37,390) $ 498,306 $10,265,178
----------- ----------- ---------- -----------
INCREASE IN NET ASSETS FROM OPERATIONS............ $1,283,799 $ 4,204,267 $ 498,017 $25,442,598
----------- ----------- ---------- -----------
----------- ----------- ---------- -----------
</TABLE>
See notes to financial statements
2
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAS GSS
Sub-Account Sub-Account
------------------------------- -------------------------------
Year Ended Year Ended
December 31, December 31,
------------------------------- -------------------------------
1998 1997 1998 1997
--------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income..................................... $ 7,202,019 $ 4,821,639 $ 898,057 $ 1,450,749
Net realized gains (losses)............................... 10,266,206 4,265,085 521,218 (75,949)
Net unrealized gains...................................... 86,450 3,425,610 75,036 380,386
--------------- ------------- -------------- --------------
Increase in net assets from operations................ $ 17,554,675 $ 12,512,334 $ 1,494,311 $ 1,755,186
--------------- ------------- -------------- --------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.............................. $ 2,540,950 $ 2,627,696 $ 664,851 $ 593,679
Net transfers between Sub-Accounts and Fixed Account.... (3,626,538) 668,389 (871,865) (1,912,328)
Withdrawals, surrenders, annuitizations and contract
charges............................................... (9,568,674) (7,704,458) (3,638,620) (4,863,706)
--------------- ------------- -------------- --------------
Net accumulation activity............................. $ (10,654,262) $ (4,408,373) $ (3,845,634) $ (6,182,355)
--------------- ------------- -------------- --------------
Annuitization Activity:
Annuitizations.......................................... $ 52,914 $ 67,112 $ -- $ --
Annuity payments and contract charges................... (30,074) (26,334) (12,398) (22,850)
Adjustments to annuity reserve.......................... (2,453) (3,618) 666 3,140
--------------- ------------- -------------- --------------
Net annuitization activity............................ $ 20,387 $ 37,160 $ (11,732) $ (19,710)
--------------- ------------- -------------- --------------
Decrease in net assets from contract owner transactions... $ (10,633,875) $ (4,371,213) $ (3,857,366) $ (6,202,065)
--------------- ------------- -------------- --------------
Increase (decrease) in net assets....................... $ 6,920,800 $ 8,141,121 $ (2,363,055) $ (4,446,879)
NET ASSETS:
Beginning of year......................................... 67,876,469 59,735,348 22,431,180 26,878,059
--------------- ------------- -------------- --------------
End of period............................................. $ 74,797,269 $ 67,876,469 $ 20,068,125 $ 22,431,180
--------------- ------------- -------------- --------------
--------------- ------------- -------------- --------------
</TABLE>
See notes to financial statements
3
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
HYS MMS
Sub-Account Sub-Account
------------------------------ -------------------------------
Year Ended Year Ended
December 31, December 31,
------------------------------ -------------------------------
1998 1997 1998 1997
-------------- ------------- -------------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income..................................... $ 632,722 $ 717,784 $ 456,307 $ 497,700
Net realized gains........................................ 346,052 474,628 -- --
Net unrealized gains (losses)............................. (1,027,552) 290,335 -- --
-------------- ------------- -------------- --------------
Increase (decrease) in net assets from operations..... $ (48,778) $ 1,482,747 $ 456,307 $ 497,700
-------------- ------------- -------------- --------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.............................. $ 210,963 $ 212,184 $ 307,131 $ 361,788
Net transfers between Sub-Accounts and Fixed Account.... (1,472,620) 199,334 7,369,452 457,557
Withdrawals, surrenders, annuitizations and contract
charges............................................... (1,495,462) (2,269,739) (7,077,196) (4,535,913)
-------------- ------------- -------------- --------------
Net accumulation activity............................. $ (2,757,119) $ (1,858,221) $ 599,387 $ (3,716,568)
-------------- ------------- -------------- --------------
Annuitization Activity:
Annuity payments and contract charges................... $ (4,897) $ (5,630) $ (1,057) $ (1,179)
Adjustments to annuity reserves......................... 56 (427) (471) 10,821
-------------- ------------- -------------- --------------
Net annuitization activity............................ $ (4,841) $ (6,057) $ (1,528) $ 9,642
-------------- ------------- -------------- --------------
Increase (decrease) in net assets from contract owner
transactions............................................ $ (2,761,960) $ (1,864,278) $ 597,859 $ (3,706,926)
-------------- ------------- -------------- --------------
Increase (decrease) in net assets..................... $ (2,810,738) $ (381,531) $ 1,054,166 $ (3,209,226)
NET ASSETS:
Beginning of period....................................... 13,141,846 13,523,377 12,397,313 15,606,539
-------------- ------------- -------------- --------------
End of period............................................. $ 10,331,108 $ 13,141,846 $ 13,451,479 $ 12,397,313
-------------- ------------- -------------- --------------
-------------- ------------- -------------- --------------
</TABLE>
See notes to financial statements
4
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MSS TRS
Sub-Account Sub-Account
------------------------------ -----------------------------
Year Ended Year Ended
December 31, December 31,
------------------------------ -----------------------------
1998 1997 1998 1997
--------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................................ $ 1,746,947 $ 1,211,086 $ 4,241,657 $ 3,740,675
Net realized gains................................... 894,798 1,084,457 3,450,365 2,659,733
Net unrealized gains (losses)........................ (1,357,946) 413,062 (3,487,755) 1,621,733
--------------- ------------ -------------- ------------
Increase in net assets from operations........... $ 1,283,799 $ 2,708,605 $ 4,204,267 $ 8,022,141
--------------- ------------ -------------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received......................... $ 828,932 $ 641,130 $ 1,457,947 $ 1,583,065
Net transfers between Sub-Accounts and Fixed
Account.......................................... 179,600 83,029 (1,063,470) 101,838
Withdrawals, surrenders, annuitizations and
contract charges................................. (2,473,049) (2,113,363) (8,364,694) (6,305,584)
--------------- ------------ -------------- ------------
Net accumulation activity........................ $ (1,464,517) $ (1,389,204) $ (7,970,217) $ (4,620,681)
--------------- ------------ -------------- ------------
Annuitization Activity:
Annuitizations..................................... $ 52,940 $ -- $ -- $ 56,378
Annuity payments and contract charges.............. (3,921) (164) (92,029) (82,242)
Adjustments to annuity reserves.................... (564) (11,371) (14,828) (19,810)
--------------- ------------ -------------- ------------
Net annuitization activity....................... $ 48,455 $ (11,535) $ (106,857) $ (45,674)
--------------- ------------ -------------- ------------
Decrease in net assets from contract owner
transactions....................................... $ (1,416,062) $ (1,400,739) $ (8,077,074) $ (4,666,355)
--------------- ------------ -------------- ------------
Increase (decrease) in net assets.................. $ (132,263) $ 1,307,866 $ (3,872,807) $ 3,355,786
NET ASSETS:
Beginning of period.................................. 13,028,588 11,720,722 44,506,136 41,150,350
--------------- ------------ -------------- ------------
End of period........................................ $ 12,896,325 $ 13,028,588 $ 40,633,329 $ 44,506,136
--------------- ------------ -------------- ------------
--------------- ------------ -------------- ------------
</TABLE>
See notes to financial statements
5
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
WGS
Sub-Account Total
------------------------------ -----------------------------
Year Ended Year Ended
December 31, December 31,
------------------------------ -----------------------------
1998 1997 1998 1997
--------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)......................... $ (289) $ 177,640 $ 15,177,420 $ 12,617,273
Net realized gains (losses).......................... (239,837) (221,118) 15,238,802 8,186,836
Net unrealized gains (losses)........................ 738,143 (115,094) (4,973,624) 6,016,032
--------------- ------------ -------------- ------------
Increase (decrease) in net assets from
operations..................................... $ 498,017 $ (158,572) $ 25,442,598 $ 26,820,141
--------------- ------------ -------------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received......................... $ 172,382 $ 200,405 $ 6,183,156 $ 6,219,947
Net transfers between Sub-Accounts and Fixed
Account.......................................... (760,745) (327,982) (246,186) (730,163)
Withdrawals, surrenders, annuitizations and
contract charges................................. (1,301,883) (1,751,969) (33,919,578) (29,544,732)
--------------- ------------ -------------- ------------
Net accumulation activity........................ $ (1,890,246) $ (1,879,546) $ (27,982,608) $(24,054,948)
--------------- ------------ -------------- ------------
Annuitization Activity:
Annuitizations..................................... $ -- $ -- $ 105,854 $ 123,490
Annuity payments and contract charges.............. -- -- (144,376) (138,399)
Adjustments to annuity reserves.................... -- -- (17,594) (21,265)
--------------- ------------ -------------- ------------
Net annuitization activity....................... $ -- $ -- $ (56,116) $ (36,174)
--------------- ------------ -------------- ------------
Decrease in net assets from contract owner
transactions....................................... $ (1,890,246) $ (1,879,546) $ (28,038,724) $(24,091,122)
--------------- ------------ -------------- ------------
Increase (decrease) in net assets.................. $ (1,392,229) $ (2,038,118) $ (2,596,126) $ 2,729,019
NET ASSETS:
Beginning of period.................................. 5,137,026 7,175,144 178,518,558 175,789,539
--------------- ------------ -------------- ------------
End of period........................................ $ 3,744,797 $ 5,137,026 $ 175,922,432 $178,518,558
--------------- ------------ -------------- ------------
--------------- ------------ -------------- ------------
</TABLE>
See notes to financial statements
6
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life (N.Y.) Variable Account B (the "Variable Account"), a separate account
of Sun Life Insurance and Annuity Company of New York, the Sponsor (a
wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.)), was
established on December 3, 1984 as a funding vehicle for individual variable
annuities. The Variable Account is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 as a unit investment trust.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account is invested in shares of a specific series of MFS/Sun Life Series
Trust (the "Series Trust") as selected by contract owners. The Series Trust is
an open-end management investment company registered under the Investment
Company Act of 1940. Massachusetts Financial Services Company, an affiliate of
Sun Life Assurance Company of Canada (U.S.), is investment adviser to the Series
Trust.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT VALUATIONS
Investments in shares of the Series Trust are recorded at their net asset value.
Realized gains and losses on sales of shares of the Series Trust are determined
on the identified cost basis. Dividend income and capital gain distributions
received by the Sub-Accounts are reinvested in additional Series Trust shares
and are recognized on the ex-dividend date.
Exchanges between Sub-Accounts requested by contract owners are recorded in the
new Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately. The Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the Internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not taxable, and
therefore, no provision has been made for federal income taxes.
(3) CONTRACT CHARGES
A mortality and expense risk charge based on the value of the Variable Account
is deducted from the Variable Account at the end of each valuation period for
the mortality and expense risks assumed by the
7
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
Sponsor. These deductions are transferred periodically to the Sponsor.
Currently, the deduction is at an effective annual rate of 1.3% of the assets of
the Variable Account attributable to Compass 2 contracts and 1.25% of the assets
of the Variable Account attributable to Compass 3 contracts.
Each year on the contract anniversary, a contract maintenance charge of $30 is
deducted from each contract's accumulation account to cover administrative
expenses relating to the contract. After the annuity commencement date the
charge is deducted pro rata from each annuity payment made during the year.
The Sponsor does not deduct a sales charge from purchase payments. However, a
withdrawal charge (contingent deferred sales charge) may be deducted to cover
certain expenses relating to the sale of the contract. In no event shall the
aggregate withdrawal charges (including the distribution expense charge
described below applicable to Compass 3 contracts) exceed 5% of the purchase
payments made under a Compass 2 contract or 9% of the purchase payments made
under a Compass 3 contract.
For assuming the risk that withdrawal charges may be insufficient to compensate
it for the costs of distributing the Compass 3 contracts, the Sponsor makes a
deduction from the Variable Account at the end of each valuation period for the
first seven contract years (during both the accumulation period and, if
applicable, after annuity payments begin) at an effective annual rate of 0.15%
of the assets of the Variable Account attributable to such contracts. No
deduction is made after the seventh contract anniversary. No such deduction is
made with respect to assets attributable to Compass 2 contracts.
(4) ANNUITY RESERVES
Annuity reserves for contracts with annuity commencement dates prior to February
1, 1987 have been calculated using the 1971 Individual Annuitant Mortality
Table. Annuity reserves for contracts with annuity commencement dates on or
after February 1, 1987 are calculated using the 1983 Individual Annuitant
Mortality Table. All annuity reserves are calculated using an assumed interest
rate of 4%. Required adjustments to the reserve are accomplished by transfers to
or from the Sponsor.
8
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS
<TABLE>
<CAPTION>
CAS GSS HYS
Sub-Account Sub-Account Sub-Account
------------------------- ------------------------- ---------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------------------- ------------------------- ---------------------
COMPASS 2 CONTRACTS 1998 1997 1998 1997 1998 1997
- ---------------------------------- ----------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of
Year 1,049,111 1,149,253 897,267 1,160,869 421,472 489,793
Units purchased 15,299 25,636 17,550 22,468 2,836 3,272
Units transferred between
Sub-Accounts and Fixed
Account (44,627) 7,308 (36,206) (79,806) (49,178) 6,890
Units withdrawn, surrendered,
and annuitized (138,301) (133,086) (141,608) (206,264) (47,946) (78,483)
----------- ----------- ----------- ----------- --------- ---------
Units Outstanding End of Year 881,482 1,049,111 737,003 897,267 327,184 421,472
----------- ----------- ----------- ----------- --------- ---------
----------- ----------- ----------- ----------- --------- ---------
<CAPTION>
MSS TRS WGS
Sub-Account Sub-Account Sub-Account
------------------------- ------------------------- ---------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------------------- ------------------------- ---------------------
1998 1997 1998 1997 1998 1997
----------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of
Year 270,624 314,243 1,345,153 1,532,369 256,940 358,117
Units purchased 6,466 8,716 18,920 34,725 5,460 6,591
Units transferred between
Sub-Accounts and Fixed
Account 3,355 (1,885) (33,825) 146 (37,228) (15,604)
Units withdrawn, surrendered,
and annuitized (49,938) (50,450) (253,586) (222,087) (66,248) (92,164)
----------- ----------- ----------- ----------- --------- ---------
Units Outstanding End of Year 230,507 270,624 1,076,662 1,345,153 158,924 256,940
----------- ----------- ----------- ----------- --------- ---------
----------- ----------- ----------- ----------- --------- ---------
<CAPTION>
MMS
Sub-Account
-----------------------
Year Ended
December 31,
-----------------------
COMPASS 2 CONTRACTS 1998 1997
- ---------------------------------- ---------- ----------
<S> <C> <C>
Units Outstanding Beginning of
Year 713,552 917,551
Units purchased 11,975 14,540
Units transferred between
Sub-Accounts and Fixed
Account 426,262 50,095
Units withdrawn, surrendered,
and annuitized (406,119) (268,634)
---------- ----------
Units Outstanding End of Year 745,670 713,552
---------- ----------
---------- ----------
<S> <C> <C>
Units Outstanding Beginning of
Year
Units purchased
Units transferred between
Sub-Accounts and Fixed
Account
Units withdrawn, surrendered,
and annuitized
Units Outstanding End of Year
</TABLE>
9
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT B
NOTES TO FINANCIAL STATEMENTS -- continued
<TABLE>
<CAPTION>
CAS GSS HYS
Sub-Account Sub-Account Sub-Account
--------------------- --------------------- -------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
--------------------- --------------------- -------------------
COMPASS 3 CONTRACTS 1998 1997 1998 1997 1998 1997
- ----------------------------------------- --------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of Year 291,968 231,231 55,194 58,052 60,217 58,945
Units purchased 73,560 72,122 17,879 6,833 8,915 9,036
Units transferred between
Sub-Accounts and
Fixed Account (4,596) 6,347 3,622 (373) (2,262) 291
Units withdrawn, surrendered, and
annuitized (21,865) (17,732) (9,301) (9,318) (6,534) (8,055)
--------- --------- --------- --------- -------- --------
Units Outstanding End of Year 339,067 291,968 67,394 55,194 60,336 60,217
--------- --------- --------- --------- -------- --------
--------- --------- --------- --------- -------- --------
<CAPTION>
MSS TRS WGS
Sub-Account Sub-Account Sub-Account
--------------------- --------------------- -------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
--------------------- --------------------- -------------------
1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding Beginning of Year 100,687 82,578 281,915 255,284 42,551 47,922
Units purchased 29,949 18,777 51,882 44,905 5,735 7,395
Units transferred between
Sub-Accounts and Fixed Account (2,112) 10,378 (2,829) 4,923 (7,056) (4,116)
Units withdrawn, surrendered, and
annuitized (14,746) (11,046) (34,513) (23,197) (5,585) (8,650)
--------- --------- --------- --------- -------- --------
Units Outstanding End of Year 113,778 100,687 296,455 281,915 35,645 42,551
--------- --------- --------- --------- -------- --------
--------- --------- --------- --------- -------- --------
<CAPTION>
MMS
Sub-Account
---------------------
Year Ended
December 31,
---------------------
COMPASS 3 CONTRACTS 1998 1997
- ----------------------------------------- --------- ---------
<S> <C> <C>
Units Outstanding Beginning of Year 47,433 83,267
Units purchased 9,088 11,190
Units transferred between
Sub-Accounts and
Fixed Account 15,416 (32,545)
Units withdrawn, surrendered, and
annuitized (20,580) (14,479)
--------- ---------
Units Outstanding End of Year 51,357 47,433
--------- ---------
--------- ---------
<S> <C> <C>
Units Outstanding Beginning of Year
Units purchased
Units transferred between
Sub-Accounts and Fixed Account
Units withdrawn, surrendered, and
annuitized
Units Outstanding End of Year
</TABLE>
10
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants in Sun Life (N.Y.) Variable Account B
and the Board of Directors of Sun Life Insurance and Annuity Company of New
York:
We have audited the accompanying statement of condition of Capital Appreciation
Sub-Account, Government Securities Sub-Account, High Yield Sub-Account, Money
Market Sub-Account, Managed Sectors Sub-Account, Total Return Sub-Account and
World Governments Sub-Account of Sun Life (N.Y.) Variable Account B (the
"Sub-Accounts") as of December 31, 1998, the related statements of operations
for the year then ended and the statements of changes in net assets for the
years ended December 31, 1998 and 1997. These financial statements are the
responsibility of management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities held at December 31, 1998 by correspondence with
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Sub-Accounts as of December 31, 1998,
the results of their operations and the changes in their net assets for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 4, 1999
----------------------------------------
This report is prepared for the general information of contract owners. It is
authorized for distribution to prospective purchasers only when preceded or
accompanied by an effective prospectus.
11
<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
80 Broad Street, New York, NY 10004
DIRECTORS AND OFFICERS
DONALD A. STEWART, Chairman and
Director
C. JAMES PRIEUR, President and Director
[LOGO]PROFESSIONALLY MANAGED COMBINATION
S. CAESAR RABOY, Senior Vice President
and
FIXED/VARIABLE ANNUITIES
Director
FOR PERSONAL INVESTMENTS AND
RICHARD B. BAILEY, Director
QUALIFIED RETIREMENT PLANS
------------------------------------------------
M. COLYER CRUM, Director
ANNUAL REPORT, DECEMBER 31, 1998
DAVID D. HORN, Director
JOHN G. IRELAND, Director
EDWARD M. LAMONT, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
JOHN D. McNEIL, Director
PETER R. O'FLINN, Director
FIORAVANTE G. PERROTTA, Director
RALPH F. PETERS, Director
FREDERICK B. WHITTEMORE, Director
MICHAEL A. COHEN, Vice President
and Regional Manager
ELLEN B. KING, Secretary
L. BROCK THOMSON, Vice President and
Treasurer
[LOGO]
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
LEGAL COUNSEL
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566, Washington, D.C. 20044
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston,
Massachusetts 02110
ISSUED BY
RENY-2/99 SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
