<PAGE>
SUN LIFE INSURANCE AND ANNUITY COMPANY
OF NEW YORK
80 Broad Street, New York, NY 10004
DIRECTORS AND OFFICERS
JOHN D. McNEIL, Chairman and Director
DONALD A. STEWART, President and Director
DAVID D. HORN, Director
RICHARD B. BAILEY, Director
A. KEITH BRODKIN, Director
M. COLYER CRUM, Director
JOHN G. IRELAND, Director
EDWARD M. LAMONT, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
FIORAVANTE G. PERROTTA, Director
RALPH F. PETERS, Director
PAMELA T. TIMMINS, Director
MICHAEL A. COHEN, Vice President and
Regional Manager
MARGARET SEARS MEAD, Assistant Vice President
and Secretary
L. BROCK THOMSON, Vice President and
Treasurer
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
LEGAL COUNSEL
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566, Washington, D.C. 20044
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, Mass. 02110
This report is prepared for the general information of
contract owners. It is authorized for distribution
to prospective purchasers only if preceded
or accompanied by an effective prospectus.
RENY-3-2/98
LOGO
&
LOGO
ANNUAL REPORT, DECEMBER 31, 1997
PROFESSIONALLY MANAGED ANNUITIES ISSUED BY
SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
PERFORMANCE SUMMARY
These performance results do not reflect any applicable surrender charges or
contract charges. Past performance is no guarantee of future results.
<TABLE>
<CAPTION>
UNIT VALUE
-------------------------------- PERCENT
DECEMBER 31, CHANGE
DECEMBER 31, 1996 1997 IN UNIT VALUE
----------------- ------------ -------------
<S> <C> <C> <C>
REGATTA - NY CONTRACTS
Capital Appreciation Series........................ 16.8791 20.4955 21.43%
Conservative Growth Series......................... 16.5965 21.5979 30.14%
Government Securities Series....................... 11.6198 12.4617 7.25%
High Yield Series.................................. 13.3941 14.9542 11.65%
Managed Sectors Series............................. 15.8731 19.6663 23.90%
Money Market Series................................ 11.1042 11.5063 3.62%
Total Return Series................................ 14.2737 17.1690 20.28%
Utilities Series................................... 15.0048 19.6408 30.90%
World Governments Series........................... 12.5096 13.9137 11.22%
World Growth Series................................ 12.2345 12.4194 1.51%
REGATTA GOLD - NY CONTRACTS
Capital Appreciation Series........................ 11.2208 13.6249 21.43%
Conservative Growth Series......................... 11.2287 14.6125 30.14%
Emerging Growth Series............................. 10.5475 12.6847 20.26%
MFS/Foreign & Colonial Emerging Markets Equity
Series............................................ 10.0000* 8.7203 (12.80)%
International Growth Series........................ 10.2062 10.7213 5.05%
International Growth and Income Series............. 10.0000* 9.3612 (6.39)%
Government Securities Series....................... 10.2283 10.9695 7.25%
High Yield Series.................................. 10.5902 11.8237 11.65%
Managed Sectors Series............................. 11.3497 14.0620 23.90%
Money Market Series................................ 10.1193 10.4857 3.62%
Research Equity Series............................. 11.1263 13.2588 19.17%
Research Growth and Income Series.................. 10.0000* 10.7234 7.23%
Total Return Series................................ 10.7617 12.9446 20.28%
Utilities Series................................... 11.1898 14.6470 30.90%
Value Series....................................... 10.6551 10.8511 1.84%
World Asset Allocation Series...................... 10.2412 11.6505 13.76%
World Governments Series........................... 10.0000* 10.0221 0.22%
World Growth Series................................ 10.4190 11.8491 13.73%
World Total Return Series.......................... 10.6202 11.9033 12.08%
</TABLE>
*Reflects unit value on date of commencement of operations
1
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENT OF CONDITION-- December 31, 1997
<TABLE>
<CAPTION>
ASSETS:
Investments in MFS/Sun Life Series Trust: Shares Cost Value
---------- ------------ ------------
<S> <C> <C> <C>
Capital Appreciation Series ("CAS")........... 882,087 $ 30,360,699 $ 35,405,613
Conservative Growth Series ("CGS")............ 1,295,269 34,704,531 42,940,657
Emerging Growth Series ("EGS")................ 681,030 11,019,764 12,260,633
MFS/Foreign & Colonial Emerging Markets Equity
Series ("FCE")............................... 33,079 417,127 365,050
International Growth Series ("FCG")........... 181,128 1,963,413 2,023,598
International Growth and Income Series
("FCI")...................................... 8,954 89,940 86,391
Government Securities Series ("GSS").......... 732,911 9,293,541 9,557,606
High Yield Series ("HYS")..................... 1,116,886 10,241,653 10,845,783
Managed Sectors Series ("MSS")................ 333,490 8,679,762 9,724,354
Money Market Series ("MMS")................... 10,369,043 10,369,043 10,369,043
Research Equity Series ("RES")................ 1,008,519 18,031,161 19,596,299
Research Growth and Income Series ("RGS")..... 58,294 615,295 642,446
Total Return Series ("TRS")................... 1,975,084 36,164,801 42,103,386
Utilities Series ("UTS")...................... 291,819 3,978,509 4,788,286
Value Series ("VAL").......................... 48,111 648,694 670,376
World Asset Allocation Series ("WAA")......... 172,688 2,454,303 2,510,761
World Governments Series ("WGS").............. 385,890 4,345,024 4,139,309
World Growth Series ("WGO")................... 626,609 8,366,738 9,200,599
World Total Return Series ("WTR")............. 146,731 2,035,489 2,157,006
------------ ------------
$193,779,487 $219,387,196
------------
------------
LIABILITY:
Payable to sponsor............................ 70,058
------------
Net Assets................................ $219,317,138
------------
------------
</TABLE>
<TABLE>
<CAPTION>
NET ASSETS:
Applicable to Owners of
Deferred Variable Annuity
Conracts:
--------------------------------- Reserve for
Unit Variable
Units Value Value Annuities Total
--------- -------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Regatta-NY Contracts:
CAS............................ 1,098,819 $20.4955 $ 22,523,228 $ 148,002 $ 22,671,230
CGS............................ 806,893 21.5979 17,425,443 82,762 17,508,205
GSS............................ 617,817 12.4617 7,698,704 6,946 7,705,650
HYS............................ 340,853 14.9542 5,110,044 19,915 5,129,959
MSS............................ 314,374 19.6663 6,182,560 -- 6,182,560
MMS............................ 540,785 11.5063 6,218,779 1,677 6,220,456
TRS............................ 1,439,364 17.1690 24,708,258 675,018 25,383,276
UTS............................ 103,362 19.6408 2,030,553 -- 2,030,553
WGS............................ 277,498 13.9137 3,399,315 3,604 3,402,919
WGO............................ 384,999 12.4194 5,357,337 -- 5,357,337
------------ ----------- ------------
$100,654,221 $ 937,924 $101,592,145
------------ ----------- ------------
Regatta Gold-NY Contracts:
CAS............................ 933,956 13.6249 $ 12,725,326 $ -- $ 12,725,326
CGS............................ 1,722,218 14.6125 25,157,929 259,278 25,417,207
EGS............................ 966,583 12.6847 12,260,633 -- 12,260,633
FCE............................ 41,861 8.7203 365,050 -- 365,050
FCG............................ 188,749 10.7213 2,023,598 -- 2,023,598
FCI............................ 9,227 9.3612 86,391 -- 86,391
GSS............................ 168,798 10.9695 1,851,630 -- 1,851,630
HYS............................ 482,767 11.8237 5,715,745 -- 5,715,745
MSS............................ 251,868 14.0620 3,541,793 -- 3,541,793
MMS............................ 395,655 10.4857 4,148,510 -- 4,148,510
RES............................ 1,478,012 13.2588 19,596,299 -- 19,596,299
RGS............................ 59,221 10.7234 642,446 -- 642,446
TRS............................ 1,288,455 12.9446 16,675,070 -- 16,675,070
UTS............................ 187,310 14.6470 2,757,733 -- 2,757,733
VAL............................ 61,777 10.8511 670,376 -- 670,376
WAA............................ 215,473 11.6505 2,510,761 -- 2,510,761
WGS............................ 73,436 10.0221 736,156 -- 736,156
WGO............................ 324,362 11.8491 3,843,263 -- 3,843,263
WTR............................ 181,210 11.9033 2,157,006 -- 2,157,006
------------ ----------- ------------
$117,465,715 $ 259,278 $117,724,993
------------ ----------- ------------
Net Assets...................................... $218,119,936 $ 1,197,202 $219,317,138
------------ ----------- ------------
------------ ----------- ------------
</TABLE>
See notes to financial statements
2
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENT OF OPERATIONS-- Year Ended December 31, 1997
<TABLE>
<CAPTION>
CAS CGS EGS FCE FCG
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $2,541,693 $1,238,773 $ 27,866 $ -- $ 12,324
Mortality and expense risk charges.... 376,259 356,402 97,960 1,685 15,580
Administrative charges................ 45,151 42,768 11,755 202 1,869
----------- ----------- ----------- ----------- -----------
Net investment income (loss)...... $2,120,283 $ 839,603 $ (81,849) $ (1,887) $ (5,125)
----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS:
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $5,288,509 $4,278,183 $1,275,667 $ 1,790 $ 138,047
Cost of investments sold............ 3,747,924 2,772,936 1,155,970 1,936 132,654
----------- ----------- ----------- ----------- -----------
Net realized gains (loss)........... $1,540,585 $1,505,247 $ 119,697 $ (146) $ 5,393
----------- ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $5,044,914 $8,236,126 $1,240,869 $(52,077) $ 60,185
Beginning of year................... 3,141,305 3,353,456 (39,969) -- 3,206
----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation)................... $1,903,609 $4,882,670 $1,280,838 $(52,077) $ 56,979
----------- ----------- ----------- ----------- -----------
Realized and unrealized gains
(losses)....................... $3,444,194 $6,387,917 $1,400,535 $(52,223) $ 62,372
----------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $5,564,477 $7,227,520 $1,318,686 $(54,110) $ 57,247
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
FCI GSS HYS MSS MMS
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ -- $ 614,036 $ 493,671 $ 817,957 $ 497,893
Mortality and expense risk charges.... 246 112,368 98,617 99,618 125,289
Administrative charges................ 9 13,485 11,834 11,954 15,035
----------- ----------- ----------- ----------- -----------
Net investment income (loss)...... $ (255 ) $ 488,183 $ 383,220 $ 706,385 $ 357,569
----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS:
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 244 $3,378,955 $ 2,520,627 $ 1,442,208 $14,593,369
Cost of investments sold............ 260 3,341,137 2,396,565 1,129,421 14,593,369
----------- ----------- ----------- ----------- -----------
Net realized gains (loss)........... $ (16 ) $ 37,818 $ 124,062 $ 312,787 --
----------- ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ (3,549 ) $ 264,065 $ 604,130 $ 1,044,592 $ --
Beginning of year................... -- 134,986 223,152 513,054 --
----------- ----------- ----------- ----------- -----------
Change in unrealized appreciation
(depreciation)................... $ (3,549 ) $ 129,079 $ 380,978 $ 531,538 --
----------- ----------- ----------- ----------- -----------
Realized and unrealized gains
(losses)....................... $ (3,565 ) $ 166,897 $ 505,040 $ 844,325 $ --
----------- ----------- ----------- ----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ (3,820 ) $ 655,080 $ 888,260 $ 1,550,710 $ 357,569
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
3
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENT OF OPERATIONS -- continued
<TABLE>
<CAPTION>
RES RGS TRS UTS VAL
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 250,661 $ -- $3,176,698 $ 325,601 $ --
Mortality and expense risk charges.... 141,879 1,710 412,517 38,805 1,586
Administrative charges................ 17,026 205 49,502 4,657 191
----------- ----------- ----------- ----------- ------------
Net investment income (loss)...... $ 91,756 $ (1,915) $2,714,679 $ 282,139 $ (1,777)
----------- ----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS:
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $1,040,657 $ 15,694 $4,894,617 $ 814,262 $ 101,814
Cost of investments sold............ 875,510 15,314 4,014,252 685,996 97,187
----------- ----------- ----------- ----------- ------------
Net realized gains................ $ 165,147 $ 380 $ 880,365 $ 128,266 $ 4,627
----------- ----------- ----------- ----------- ------------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $1,565,138 $ 27,151 $5,938,585 $ 809,777 $ 21,682
Beginning of year................... 163,568 -- 3,374,017 299,360 --
----------- ----------- ----------- ----------- ------------
Change in unrealized
appreciation..................... $1,401,570 $ 27,151 $2,564,568 $ 510,417 $ 21,682
----------- ----------- ----------- ----------- ------------
Realized and unrealized gains... $1,566,717 $ 27,531 $3,444,933 $ 638,683 $ 26,309
----------- ----------- ----------- ----------- ------------
INCREASE IN NET ASSETS FROM
OPERATIONS............................. $1,658,473 $ 25,616 $6,159,612 $ 920,822 $ 24,532
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
WAA WGS WGO WTR
Sub-Account Sub-Account Sub-Account Sub-Account Total
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 73,415 $ 171,158 $ 163,398 $ 15,895 $10,421,039
Mortality and expense risk charges.... 21,036 52,642 96,511 13,526 2,064,236
Administrative charges................ 2,525 6,316 11,581 1,623 247,688
----------- ----------- ----------- ----------- ------------
Net investment income............. $ 49,854 $ 112,200 $ 55,306 $ 746 $ 8,109,115
----------- ----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 356,088 $ 911,580 $1,545,220 $ 91,277 42,688,808
Cost of investments sold............ 336,558 1,019,262 1,301,270 82,404 37,699,925
----------- ----------- ----------- ----------- ------------
Net realized gains (losses)....... $ 19,530 $ (107,682) $ 243,950 $ 8,873 $ 4,988,883
----------- ----------- ----------- ----------- ------------
Net unrealized appreciation
(depreciation) on investments:
End of year......................... $ 56,458 $ (205,715) $ 833,861 $121,517 $25,607,709
Beginning of year................... 12,514 (106,483) 248,671 9,927 11,330,764
----------- ----------- ----------- ----------- ------------
Change in unrealized appreciation
(depreciation)................... $ 43,944 $ (99,232) $ 585,190 $111,590 $14,276,945
----------- ----------- ----------- ----------- ------------
Realized and unrealized gains
(losses)....................... $ 63,474 $ (206,914) $ 829,140 $120,463 $19,265,828
----------- ----------- ----------- ----------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS............................. $ 113,328 $ (94,714) $ 884,446 $121,209 $27,374,943
----------- ----------- ----------- ----------- ------------
----------- ----------- ----------- ----------- ------------
</TABLE>
See notes to financial statements
4
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAS CGS EGS
Sub-Account Sub-Account Sub-Account
------------------------ ------------------------ -----------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
------------------------ ------------------------ -----------------------
1997 1996 1997 1996 1997 1996**
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 2,120,283 $ 1,236,544 $ 839,603 $ 283,282 $ (81,849) $ (9,735)
Net realized gains.................... 1,540,585 1,402,219 1,505,247 686,556 119,697 18,739
Net unrealized gains (losses)......... 1,903,609 955,359 4,882,670 1,857,593 1,280,838 (39,969)
----------- ----------- ----------- ----------- ----------- ----------
Increase (decrease) in net assets
from operations.................. $ 5,564,477 $ 3,594,122 $ 7,227,520 $ 2,827,431 $ 1,318,686 $ (30,965)
----------- ----------- ----------- ----------- ----------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 5,437,094 $ 8,660,397 $12,920,177 $ 6,950,910 $ 5,109,875 $3,404,586
Net transfers between Sub-Accounts
and Fixed Account.................. 2,074,585 (759,828) 6,398,425 873,302 2,532,138 178,813
Withdrawals, surrenders,
annuitizations and contract
charges............................ (1,919,576) (2,973,326) (1,877,932) (1,720,406) (237,664) (14,836)
----------- ----------- ----------- ----------- ----------- ----------
Net accumulation activity......... $ 5,592,103 $ 4,927,243 $17,440,670 $ 6,103,806 $ 7,404,349 $3,568,563
----------- ----------- ----------- ----------- ----------- ----------
Annuitization Activity:
Annuitizations...................... $ -- $ 136,803 $ 251,244 $ 68,590 $ -- $ --
Annuity payments and account fees... (31,346) (18,380) (15,570) (5,923) -- --
Adjustments to annuity reserve...... (2,576) (6,355) (12,192) (3,052) -- --
----------- ----------- ----------- ----------- ----------- ----------
Net annuitization activity........ $ (33,922) $ 112,068 $ 223,482 $ 59,615 $ -- $ --
----------- ----------- ----------- ----------- ----------- ----------
Increase in net assets from contract
owner transactions................... $ 5,558,181 $ 5,039,311 $17,664,152 $ 6,163,421 $ 7,404,349 $3,568,563
----------- ----------- ----------- ----------- ----------- ----------
Increase in net assets.............. $11,122,658 $ 8,633,433 $24,891,672 $ 8,990,852 $ 8,723,035 $3,537,598
NET ASSETS:
Beginning of year..................... 24,273,898 15,640,465 18,033,740 9,042,888 3,537,598 --
----------- ----------- ----------- ----------- ----------- ----------
End of year........................... $35,396,556 $24,273,898 $42,925,412 $18,033,740 $12,260,633 $3,537,598
----------- ----------- ----------- ----------- ----------- ----------
----------- ----------- ----------- ----------- ----------- ----------
<CAPTION>
FCE
Sub-Account
------------------
Year Ended
December 31, 1997*
------------------
<S> <C>
OPERATIONS:
Net investment income (expense)....... $ (1,887)
Net realized gains.................... (146)
Net unrealized gains (losses)......... (52,077)
----------
Increase (decrease) in net assets
from operations.................. $ (54,110)
----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 116,973
Net transfers between Sub-Accounts
and Fixed Account.................. 302,187
Withdrawals, surrenders,
annuitizations and contract
charges............................ --
----------
Net accumulation activity......... $ 419,160
----------
Annuitization Activity:
Annuitizations...................... $ --
Annuity payments and account fees... --
Adjustments to annuity reserve...... --
----------
Net annuitization activity........ $ --
----------
Increase in net assets from contract
owner transactions................... $ 419,160
----------
Increase in net assets.............. $ 365,050
NET ASSETS:
Beginning of year..................... --
----------
End of year........................... $ 365,050
----------
----------
</TABLE>
*For the period July 14, 1997 (commencement of operations) to December 31,
1997.
**For the period August 13, 1996 (commencement of operations) to December 31,
1996.
See notes to financial statements
5
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
FCG FCI GSS
Sub-Account Sub-Account Sub-Account
-------------------- ------------------ ----------------------
Year Ended
Year Ended December 31, Year Ended
December 31, 1997** December 31,
-------------------- ------------------ ----------------------
1997 1996* 1997 1996
---------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ (5,125) $ (1,435) $ (255) $ 488,183 $ 355,589
Net realized gains (losses)........... 5,393 711 (16) 37,818 39,886
Net unrealized gains (losses)......... 56,979 3,206 (3,549) 129,079 (320,489)
---------- -------- -------- ---------- ----------
Increase (decrease) in net assets
from operations.................. $ 57,247 $ 2,482 $ (3,820) $ 655,080 $ 74,986
---------- -------- -------- ---------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 680,068 $535,282 $ 53,676 $ 901,461 $1,551,889
Net transfers between Sub-Accounts
and Fixed Account.................. 731,375 49,397 36,535 537,631 606,593
Withdrawals, surrenders,
annuitizations and contract
charges............................ (20,814) (11,439) -- (577,767) (655,818)
---------- -------- -------- ---------- ----------
Net accumulation activity......... $1,390,629 $573,240 $ 90,211 $ 861,325 $1,502,664
---------- -------- -------- ---------- ----------
Annuitization Activity:
Annuitizations...................... $ -- $ -- $-- $ -- $ --
Annuity payments and account fees... -- -- -- (2,591) (2,581)
Adjustments to annuity reserve...... -- -- -- (132) (152)
---------- -------- -------- ---------- ----------
Net annuitization activity........ $ -- $ -- $-- $ (2,723) $ (2,733)
---------- -------- -------- ---------- ----------
Increase in net assets from contract
owner transactions................... $1,390,629 $573,240 $ 90,211 $ 858,602 $1,499,931
---------- -------- -------- ---------- ----------
Increase in net assets.............. $1,447,876 $575,722 $ 86,391 $1,513,682 $1,574,917
NET ASSETS:
Beginning of year..................... 575,722 -- -- 8,043,598 6,468,681
---------- -------- -------- ---------- ----------
End of year........................... $2,023,598 $575,722 $ 86,391 $9,557,280 $8,043,598
---------- -------- -------- ---------- ----------
---------- -------- -------- ---------- ----------
<CAPTION>
HYS
Sub-Account
-----------------------
Year Ended
December 31,
-----------------------
1997 1996
----------- ----------
<S> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 383,220 $ 274,052
Net realized gains (losses)........... 124,062 229,055
Net unrealized gains (losses)......... 380,978 (13,435)
----------- ----------
Increase (decrease) in net assets
from operations.................. $ 888,260 $ 489,672
----------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 2,509,428 $2,175,861
Net transfers between Sub-Accounts
and Fixed Account.................. 1,893,307 (46,281)
Withdrawals, surrenders,
annuitizations and contract
charges............................ (421,568) (738,718)
----------- ----------
Net accumulation activity......... $ 3,981,167 $1,390,862
----------- ----------
Annuitization Activity:
Annuitizations...................... $ 20,734 $ --
Annuity payments and account fees... (1,137) --
Adjustments to annuity reserve...... (79) --
----------- ----------
Net annuitization activity........ $ 19,518 $ --
----------- ----------
Increase in net assets from contract
owner transactions................... $ 4,000,685 $1,390,862
----------- ----------
Increase in net assets.............. $ 4,888,945 $1,880,534
NET ASSETS:
Beginning of year..................... 5,956,759 4,076,225
----------- ----------
End of year........................... $10,845,704 $5,956,759
----------- ----------
----------- ----------
</TABLE>
*For the period August 13, 1996 (commencement of operations) to December 31,
1996.
**For the period August 11, 1997 (commencement of operations) to December 31,
1997.
See notes to financial statements
6
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MSS MMS RES
Sub-Account Sub-Account Sub-Account
---------------------- ------------------------ -----------------------
Year Ended Year Ended Year Ended
December 31, December 31, 1997 December 31,
---------------------- ------------------------ -----------------------
1997 1996 1997 1996 1997 1996**
---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 706,385 $ 492,034 $ 357,569 $ 247,368 $ 91,756 $ (12,306)
Net realized gains.................... 312,787 193,953 -- -- 165,147 13,199
Net unrealized gains.................. 531,538 71,876 -- -- 1,401,570 163,568
---------- ---------- ----------- ----------- ----------- ----------
Increase in net assets from
operations........................... $1,550,710 $ 757,863 $ 357,569 $ 247,368 $ 1,658,473 $ 164,461
---------- ---------- ----------- ----------- ----------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $1,282,041 $2,103,015 $ 7,367,664 $ 7,525,727 $ 7,847,808 $3,950,551
Net transfers between Sub-Accounts
and Fixed Account.................. 1,220,095 734,538 (4,368,281) (3,679,992) 6,025,796 210,522
Withdrawals, surrenders,
annuitizations and contract
charges............................ (587,414) (1,157,372) (2,272,208) (1,518,287) (239,605) (21,707)
---------- ---------- ----------- ----------- ----------- ----------
Net accumulation activity......... $1,914,722 $1,680,181 $ 727,175 $ 2,327,448 $13,633,999 $4,139,366
---------- ---------- ----------- ----------- ----------- ----------
Annuitization Activity:
Annuitizations...................... $ -- $ -- $ -- $ -- $ -- $ --
Annuity payments and account fees... -- -- (643) (646) -- --
Adjustments to annuity reserve...... -- -- (30) (38) -- --
---------- ---------- ----------- ----------- ----------- ----------
Net annuitization activity........ $ -- $ -- $ (673) $ (684) $ -- $ --
---------- ---------- ----------- ----------- ----------- ----------
Increase in net assets from contract
owner transactions................... $1,914,722 $1,680,181 $ 726,502 $ 2,326,764 $13,633,999 $4,139,366
---------- ---------- ----------- ----------- ----------- ----------
Increase in net assets................ $3,465,432 $2,438,044 $ 1,084,071 $ 2,574,132 $15,292,472 $4,303,827
NET ASSETS:
Beginning of year..................... 6,258,921 3,820,877 9,284,895 6,710,763 4,303,827 --
---------- ---------- ----------- ----------- ----------- ----------
End of year........................... $9,724,353 $6,258,921 $10,368,966 $ 9,284,895 $19,596,299 $4,303,827
---------- ---------- ----------- ----------- ----------- ----------
---------- ---------- ----------- ----------- ----------- ----------
<CAPTION>
RGS
Sub-Account
------------------
Year Ended
December 31, 1997*
------------------
<S> <C>
OPERATIONS:
Net investment income (expense)....... $ (1,915)
Net realized gains.................... 380
Net unrealized gains.................. 27,151
----------
Increase in net assets from
operations........................... $ 25,616
----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 403,727
Net transfers between Sub-Accounts
and Fixed Account.................. 216,206
Withdrawals, surrenders,
annuitizations and contract
charges............................ (3,103)
----------
Net accumulation activity......... $ 616,830
----------
Annuitization Activity:
Annuitizations...................... $ --
Annuity payments and account fees... --
Adjustments to annuity reserve...... --
----------
Net annuitization activity........ $ --
----------
Increase in net assets from contract
owner transactions................... $ 616,830
----------
Increase in net assets................ $ 642,446
NET ASSETS:
Beginning of year..................... --
----------
End of year........................... $ 642,446
----------
----------
</TABLE>
*For the period July 9, 1997 (commencement of operations) to December 31, 1997.
**For the period August 13, 1996 (commencement of operations) to December 31,
1996.
See notes to financial statements
7
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
TRS UTS VAL
Sub-Account Sub-Account Sub-Account
------------------------ ---------------------- ------------------
Year Ended
Year Ended Year Ended December 31,
December 31, December 31, 1997*
------------------------ ---------------------- ------------------
1997 1996 1997 1996
----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 2,714,679 $ 1,201,901 $ 282,139 $ 52,486 $ (1,777)
Net realized gains.................... 880,365 390,349 128,266 64,789 4,627
Net unrealized gains.................. 2,564,568 1,084,968 510,417 178,657 21,682
----------- ----------- ---------- ---------- --------
Increase in net assets from
operations....................... $ 6,159,612 $ 2,677,218 $ 920,822 $ 295,932 $ 24,532
----------- ----------- ---------- ---------- --------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 7,910,254 $ 7,465,981 $1,252,037 $ 766,463 $342,925
Net transfers between Sub-Accounts
and Fixed Account.................. 4,487,309 67,782 674,611 12,346 302,919
Withdrawals, surrenders,
annuitizations and contract
charges............................ (2,898,217) (1,623,155) (250,586) (114,012) --
----------- ----------- ---------- ---------- --------
Net accumulation activity......... $ 9,499,346 $ 5,910,608 $1,676,062 $ 664,797 $645,844
----------- ----------- ---------- ---------- --------
Annuitization Activity:
Annuitizations...................... $ -- $ -- $ -- $ -- $--
Annuity payments and account fees... (68,443) (59,327) -- -- --
Adjustments to annuity reserve...... (16,416) (11,982) -- -- --
----------- ----------- ---------- ---------- --------
Net annuitization activity........ $ (84,859) $ (71,309) $ -- $ -- $--
----------- ----------- ---------- ---------- --------
Increase in net assets from contract
owner transactions................... $ 9,414,487 $ 5,839,299 $1,676,062 $ 664,797 $645,844
----------- ----------- ---------- ---------- --------
Increase in net assets.............. $15,574,099 $ 8,516,517 $2,596,884 $ 960,729 $670,376
NET ASSETS:
Beginning of year..................... 26,484,247 17,967,730 2,191,402 1,230,673 --
----------- ----------- ---------- ---------- --------
End of year........................... $42,058,346 $26,484,247 $4,788,286 $2,191,402 $670,376
----------- ----------- ---------- ---------- --------
----------- ----------- ---------- ---------- --------
<CAPTION>
WAA
Sub-Account
--------------------
Year Ended
December 31,
--------------------
1997 1996**
---------- --------
<S> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 49,854 $ (877)
Net realized gains.................... 19,530 430
Net unrealized gains.................. 43,944 12,514
---------- --------
Increase in net assets from
operations....................... $ 113,328 $ 12,067
---------- --------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $1,203,801 $401,856
Net transfers between Sub-Accounts
and Fixed Account.................. 818,064 4,517
Withdrawals, surrenders,
annuitizations and contract
charges............................ (42,361) (511)
---------- --------
Net accumulation activity......... $1,979,504 $405,862
---------- --------
Annuitization Activity:
Annuitizations...................... $ -- $ --
Annuity payments and account fees... -- --
Adjustments to annuity reserve...... -- --
---------- --------
Net annuitization activity........ $ -- $ --
---------- --------
Increase in net assets from contract
owner transactions................... $1,979,504 $405,862
---------- --------
Increase in net assets.............. $2,092,832 $417,929
NET ASSETS:
Beginning of year..................... 417,929 --
---------- --------
End of year........................... $2,510,761 $417,929
---------- --------
---------- --------
</TABLE>
*For the period July 14, 1997 (commencement of operations) to December 31,
1997.
**For the period August 29, 1996 (commencement of operations) to December 31,
1996.
See notes to financial statements
8
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
WGS WGO WTR
Sub-Account Sub-Account Sub-Account
---------------------- ---------------------- --------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
---------------------- ---------------------- --------------------
1997 1996 1997 1996 1997 1996+
---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 112,200 $ 439,482 $ 55,306 $ 225,121 $ 746 $ (661)
Net realized gains (losses)........... (107,682) (43,099) 243,950 86,529 8,873 334
Net unrealized gains (losses)......... (99,232) (259,815) 585,190 89,790 111,590 9,927
---------- ---------- ---------- ---------- ---------- --------
Increase (decrease) in net assets
from operations.................. $ (94,714) $ 136,568 $ 884,446 $ 401,440 $ 121,209 $ 9,600
---------- ---------- ---------- ---------- ---------- --------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 298,940 $ 706,389 $1,760,372 $2,327,475 $ 837,139 $244,238
Net transfers between Sub-Accounts
and Fixed Account.................. (117,698) 444,392 1,155,858 914,961 955,063 4,753
Withdrawals, surrenders,
annuitizations and contract
charges............................ (305,308) (218,490) (558,141) (442,142) (14,517) (479)
---------- ---------- ---------- ---------- ---------- --------
Net accumulation activity......... $ (124,066) $ 932,291 $2,358,089 $2,800,294 $1,777,685 $248,512
---------- ---------- ---------- ---------- ---------- --------
Annuitization Activity:
Annuitizations...................... $ -- $ -- $ -- $ -- $ -- $ --
Annuity payments and account fees... (2,160) (2,242) -- -- -- --
Adjustments to annuity reserve...... (56) (105) -- -- -- --
---------- ---------- ---------- ---------- ---------- --------
Net annuitization activity........ $ (2,216) $ (2,347) $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ---------- --------
Increase (decrease) in net assets from
contract owner transactions.......... $ (126,282) $ 929,944 $2,358,089 $2,800,294 $1,777,685 $248,512
---------- ---------- ---------- ---------- ---------- --------
Increase (decrease) in net assets... $ (220,996) $1,066,512 $3,242,535 $3,201,734 $1,898,894 $258,112
NET ASSETS:
Beginning of year..................... 4,360,071 3,293,559 5,958,065 2,756,331 258,112 --
---------- ---------- ---------- ---------- ---------- --------
End of year........................... $4,139,075 $4,360,071 $9,200,600 $5,958,065 $2,157,006 $258,112
---------- ---------- ---------- ---------- ---------- --------
---------- ---------- ---------- ---------- ---------- --------
<CAPTION>
Total
--------------------------
Year Ended
December 31,
--------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (expense)....... $ 8,109,115 $ 4,782,845
Net realized gains (losses)........... 4,988,883 3,083,650
Net unrealized gains (losses)......... 14,276,945 3,793,750
------------ ------------
Increase (decrease) in net assets
from operations.................. $ 27,374,943 $ 11,660,245
------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received.......... $ 58,235,460 $ 48,770,620
Net transfers between Sub-Accounts
and Fixed Account.................. 25,876,125 (384,185)
Withdrawals, surrenders,
annuitizations and contract
charges............................ (12,226,781) (11,210,698)
------------ ------------
Net accumulation activity......... $ 71,884,804 $ 37,175,737
------------ ------------
Annuitization Activity:
Annuitizations...................... 271,978 $ 205,393
Annuity payments and account fees... (121,890) (89,099)
Adjustments to annuity reserve...... (31,481) (21,684)
------------ ------------
Net annuitization activity........ $ 118,607 $ 94,610
------------ ------------
Increase (decrease) in net assets from
contract owner transactions.......... $ 72,003,411 $ 37,270,347
------------ ------------
Increase (decrease) in net assets... $ 99,378,354 $ 48,930,592
NET ASSETS:
Beginning of year..................... 119,938,784 71,008,192
------------ ------------
End of year........................... $219,317,138 $119,938,784
------------ ------------
------------ ------------
</TABLE>
+For the period September 18, 1996 (commencement of operations) to December 31,
1996.
See notes to financial statements
9
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life (N.Y.) Variable Account C (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 October 18, 1985 as a funding vehicle for the variable portion of
certain individual combination fixed/variable annuity contracts. Sale of the
Regatta-NY and Regatta Gold-NY contracts commenced on April 1, 1993 and August
1, 1996, respectively. The Variable Account is registered with the Securities
and Exchange Commission under the Investment Company Act of 1940 as a unit
investment trust.
The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account is invested in shares of a specific series of MFS/Sun Life Series
Trust (the "Series Trust") as selected by contract owners. The Series Trust is
an open-end management investment company registered under the Investment
Company Act of 1940. Massachusetts Financial Services Company, an affiliate of
Sun Life Assurance Company of Canada (U.S.), is investment adviser to the Series
Trust.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
INVESTMENT VALUATIONS
Investments in shares of the Series Trust are recorded at their net asset value.
Realized gains and losses on sales of shares of the Series Trust are determined
on the identified cost basis. Dividend income and capital gain distributions
received by the Sub-Accounts are reinvested in additional Series Trust shares
and are recognized on the ex-dividend date.
Exchanges between Sub-Accounts requested by contract owners are recorded in the
new Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately. The Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the Internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not subject to
tax.
10
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS -- continued
(3) CONTRACT CHARGES
A mortality and expense risk charge based on the value of the Variable Account
is deducted from the Variable Account at the end of each valuation period for
the mortality and expense risks assumed by the Sponsor. These deductions are
transferred periodically to the Sponsor. Currently, the deduction is at an
effective annual rate of 1.25%.
Each year on the contract anniversary, an account administration fee ("Account
Fee") of $30 is deducted from each contract's accumulation account. After the
annuity commencement date the Account Fee is deducted pro rata from each
variable annuity payment made during the year. In addition, a deduction is made
from the Variable Account at the end of each valuation period (during both the
accumulation period and after annuity payments begin) at an effective annual
rate of 0.15% of the daily net assets of the Variable Account. These charges are
paid to the Sponsor to reimburse it for administrative expenses which exceed the
revenues received from the Account Fee.
The Sponsor does not deduct a sales charge from the purchase payments. However,
a withdrawal charge (contingent deferred sales charge) of up to 6% of certain
amounts withdrawn, when applicable, will be deducted to cover certain expenses
relating to the sale of the contracts. In no event shall the aggregate
withdrawal charges assessed exceed 9% of the purchase payment made under a
Regatta-NY contract or 6% of the aggregate purchase payments made under a
Regatta Gold-NY contract.
(4) ANNUITY RESERVES
Annuity reserves are calculated using the 1983 Individual Annuitant Mortality
Table and an assumed interest rate of 4% for Regatta-NY contracts and 3% for
Regatta Gold-NY contracts. Required adjustments to the reserves are accomplished
by transfers to or from the Sponsor.
11
<PAGE>
SUN LIFE (N.Y.) VARIABLE ACCOUNT C
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS
<TABLE>
<CAPTION>
Units Transferred
Between Units Withdrawn,
Sub-Accounts Surrendered and Units Outstanding
Units Outstanding Units Purchased and Fixed Account Annuitized End of Year
Beginning of Year ---------------- ------------------ ------------------ --------------------
--------------------
Year Ended Year Ended Year Ended Year Ended
Year Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
-------------------- ---------------- ------------------ ------------------ --------------------
1997 1996 1997 1996 1997 1996 1997 1996 1997 1996
--------- --------- ------- ------- -------- -------- -------- -------- --------- ---------
REGATTA (N.Y.)
CONTRACTS:
- -------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CAS Sub-Account........... 1,160,312 1,106,267 1,731 286,629 20,840 (41,266) (84,064) (191,318) 1,098,819 1,160,312
CGS Sub-Account........... 845,581 671,847 1,750 240,454 30,673 48,286 (71,111) (115,006) 806,893 845,581
GSS Sub-Account........... 654,198 554,873 -- 98,739 9,196 62,138 (45,577) (61,552) 617,817 654,198
HYS Sub-Account........... 355,247 334,034 1,321 86,443 9,610 (7,920) (25,325) (57,328) 340,853 355,247
MSS Sub-Account........... 326,412 277,142 -- 80,334 17,274 47,725 (29,312) (78,789) 314,374 326,412
MMS Sub-Account........... 611,608 623,252 23 364,043 109,285 (237,318) (180,131) (138,369) 540,785 611,608
TRS Sub-Account........... 1,567,221 1,365,756 2,075 324,430 26,923 (4,270) (156,855) (118,695) 1,439,364 1,567,221
UTS Sub-Account........... 112,112 97,337 -- 25,150 6,232 (2,207) (14,982) (8,168) 103,362 112,112
WGS Sub-Account........... 321,322 268,890 -- 38,923 (23,467) 31,381 (20,357) (17,872) 277,498 321,322
WGO Sub-Account........... 406,783 251,193 1,002 126,008 12,949 66,300 (35,735) (36,718) 384,999 406,783
REGATTA GOLD (N.Y.)
CONTRACTS
- -------------------------
CAS Sub-Account........... 401,401 -- 429,277 407,434 129,225 (5,259) (25,947) (774) 933,956 401,401
CGS Sub-Account........... 347,210 -- 981,150 330,331 431,451 17,455 (37,593) (576) 1,722,218 347,210
EGS Sub-Account........... 335,404 -- 442,404 320,269 209,941 16,544 (21,166) (1,409) 966,583 335,404
FCE Sub-Account*.......... -- -- 11,586 -- 30,275 -- -- -- 41,861 --
FCG Sub-Account........... 56,408 -- 65,816 52,685 68,561 4,856 (2,036) (1,133) 188,749 56,408
FCI Sub-Account**......... -- -- 5,355 -- 3,872 -- -- -- 9,227 --
GSS Sub-Account........... 40,062 -- 87,840 47,450 44,641 (7,335) (3,745) (53) 168,798 40,062
HYS Sub-Account........... 109,992 -- 220,099 105,694 157,860 4,469 (5,184) (171) 482,767 109,992
MSS Sub-Account........... 92,171 -- 97,276 89,182 65,953 3,307 (3,532) (318) 251,868 92,171
MMS Sub-Account........... 244,386 -- 720,359 356,116 (545,823) (722) (23,267) (111,008) 395,655 244,386
RES Sub-Account........... 386,810 -- 639,173 369,786 471,183 19,046 (19,154) (2,022) 1,478,012 386,810
RGS Sub-Account***........ -- -- 36,514 -- 23,014 -- (307) -- 59,221 --
TRS Sub-Account........... 321,897 -- 669,097 309,797 333,800 12,703 (36,339) (603) 1,288,455 321,897
UTS Sub-Account........... 45,474 -- 99,515 42,136 42,677 3,338 (356) -- 187,310 45,474
VAL Sub-Account*.......... -- -- 35,061 -- 26,716 -- -- -- 61,777 --
WAA Sub-Account........... 39,223 -- 108,426 38,842 71,503 430 (3,679) (49) 215,473 39,223
WGS Sub-Account........... 30,008 -- 29,573 23,592 19,615 6,423 (5,760) (7) 73,436 30,008
WGO Sub-Account........... 94,134 -- 152,296 81,554 84,074 12,751 (6,142) (171) 324,362 94,134
WTR Sub-Account........... 24,306 -- 74,918 23,899 83,263 453 (1,277) (46) 181,210 24,306
</TABLE>
*For the period July 14, 1997 (commencement of operations) to December 31,
1997.
**For the period August 11, 1997 (commencement of operations) to December 31,
1997.
***For the period July 9, 1997 (commencement of operations) to December 31,
1997.
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Contract Owners participating in Sun Life (N.Y.) Variable Account C
and the Board of Directors of Sun Life Insurance and Annuity Company of New
York:
We have audited the accompanying statement of condition of Sun Life (N.Y.)
Variable Account C (the "Variable Account") as of December 31, 1997, the related
statement of operations for the year then ended and the statements of changes in
net assets for the years ended December 31, 1997 and 1996. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities held at December 31, 1997 by correspondence with the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Variable Account as of December 31,
1997, the results of its operations and the changes in its net assets for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 6, 1998
13
