<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT E
STATEMENT OF CONDITION-- June 30, 1997
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C> <C>
Investments in MFS/Sun Life Series Trust: Shares Cost Value
---------- ----------- -----------
Capital Appreciation Series ("CAS").......................................... 671,775 $22,800,947 $25,248,628
Conservative Growth Series ("CGS")........................................... 850,480 19,827,315 25,421,512
Government Securities Series ("GSS")......................................... 658,635 8,269,537 8,104,426
High Yield Series ("HYS").................................................... 763,113 6,852,586 6,945,980
Managed Sectors Series ("MSS")............................................... 117,289 2,987,146 3,093,439
Money Market Series ("MMS").................................................. 7,458,074 7,458,074 7,458,074
Total Return Series ("TRS").................................................. 534,546 9,873,392 10,478,336
World Governments Series ("WGS")............................................. 119,866 1,338,163 1,273,056
Zero Coupon Series:
2000 Portfolio ("ZCS - 2000").............................................. 438,353 3,785,913 3,734,195
----------- -----------
Net Assets:.............................................................. $83,193,073 $91,757,646
----------- -----------
----------- -----------
NET ASSETS APPLICABLE TO CONTRACT OWNERS:
<CAPTION>
Units Unit Value Value
---------- ----------- -----------
<S> <C> <C> <C>
CAS -- Level 1................................................................. 340,753 $ 42.93130 $14,628,797
CAS -- Level 2................................................................. 246,817 43.02905 10,619,831
CGS -- Level 1................................................................. 326,508 38.70043 12,633,807
CGS -- Level 2................................................................. 329,677 38.78848 12,787,705
GSS -- Level 1................................................................. 205,895 19.36578 3,988,364
GSS -- Level 2................................................................. 212,070 19.40989 4,116,062
HYS -- Level 1................................................................. 156,765 23.63588 3,699,522
HYS -- Level 2................................................................. 137,058 23.68970 3,246,458
MSS -- Level 1................................................................. 63,339 38.07587 2,413,878
MSS -- Level 2................................................................. 17,807 38.16258 679,561
MMS -- Level 1................................................................. 326,742 15.53014 5,071,416
MMS -- Level 2................................................................. 153,341 15.56551 2,386,658
TRS -- Level 1................................................................. 197,091 27.12455 5,345,291
TRS -- Level 2................................................................. 188,811 27.18630 5,133,044
WGS -- Level 1................................................................. 43,408 18.12107 782,083
WGS -- Level 2................................................................. 27,037 18.16236 490,973
ZCS - 2000 -- Level 1.......................................................... 146,972 19.38454 2,848,896
ZCS - 2000 -- Level 2.......................................................... 45,564 19.42869 885,300
-----------
Net Assets:.............................................................. $91,757,646
-----------
-----------
</TABLE>
See notes to unaudited financial statements
1
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT E
STATEMENT OF OPERATIONS-- Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
CAS CGS GSS HYS MSS MMS
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME:
Dividend income and capital
gain distributions
received................... $ 2,137,277 $ 1,232,477 $ 550,786 $ 469,339 $ 343,928 $ 190,632
----------- ----------- ----------- ----------- ------------ -----------
EXPENSES:
Mortality and expense risk
charges.................... $ 64,955 $ 62,710 $ 22,686 $ 18,577 $ 9,271 $ 22,345
Minimum death benefit
guarantee charges.......... 27,064 26,129 9,452 7,740 3,863 9,310
Administrative charges...... 37,891 36,581 13,234 10,837 5,408 13,036
----------- ----------- ----------- ----------- ------------ -----------
Total expenses............ $ 129,911 $ 125,420 $ 45,372 $ 37,154 $ 18,542 $ 44,691
----------- ----------- ----------- ----------- ------------ -----------
Net investment income... $ 2,007,367 $ 1,107,057 $ 505,414 $ 432,185 $ 325,386 $ 145,941
----------- ----------- ----------- ----------- ------------ -----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains (losses) on
investment transactions:
Proceeds from sales....... $12,136,098 $11,232,604 $4,632,563 $3,421,004 $ 1,565,984 $5,242,195
Cost of investments
sold..................... 8,591,975 5,449,671 4,446,214 3,131,522 1,428,257 5,242,195
----------- ----------- ----------- ----------- ------------ -----------
Net realized gains
(losses)................. $ 3,544,123 $ 5,782,933 $ 186,349 $ 289,482 $ 137,727 $ --
----------- ----------- ----------- ----------- ------------ -----------
Net unrealized appreciation
(depreciation) on
investments:
End of period............. $ 2,447,681 $ 5,594,197 $ (165,111) $ 93,394 $ 106,293 $ --
Beginning of period....... 4,792,268 8,607,365 362,748 454,205 201,521 --
----------- ----------- ----------- ----------- ------------ -----------
Change in unrealized
appreciation
(depreciation)........... $(2,344,587) $(3,013,168) $ (527,859) $ (360,811) $ (95,228) --
----------- ----------- ----------- ----------- ------------ -----------
Realized and
unrealized gains
(losses)............. $ 1,199,536 $ 2,769,765 $ (341,510) $ (71,329) $ 42,499 --
----------- ----------- ----------- ----------- ------------ -----------
INCREASE IN NET ASSETS FROM
OPERATIONS................... $ 3,206,903 $ 3,876,822 $ 163,904 $ 360,856 $ 367,885 $ 145,941
----------- ----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ----------- ------------ -----------
</TABLE>
<TABLE>
<CAPTION>
TRS WGS ZCS-2000
Sub-Account Sub-Account Sub-Account Total
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME:
Dividend income and capital
gain distributions
received................... $1,018,943 $ 50,246 $ 230,910 $ 6,224,538
----------- ----------- ----------- ------------
EXPENSES:
Mortality and expense risk
charges.................... $ 27,568 $ 3,502 $ 11,068 $ 242,682
Minimum death benefit
guarantee charges.......... 11,486 1,459 4,612 101,115
Administrative charges...... 16,081 2,043 6,456 141,566
----------- ----------- ----------- ------------
Total expenses............ $ 55,135 $ 7,004 $ 22,136 $ 485,364
----------- ----------- ----------- ------------
Net investment income... $ 963,808 $ 43,242 $ 208,774 $ 5,739,174
----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains (losses) on
investment transactions:
Proceeds from sales....... $6,142,052 $ 531,237 $1,560,219 $ 46,463,956
Cost of investments
sold..................... 4,756,329 590,235 1,752,844 35,389,242
----------- ----------- ----------- ------------
Net realized gains
(losses)............... $1,385,723 $ (58,998) $ (192,625) $ 11,074,714
----------- ----------- ----------- ------------
Net unrealized appreciation
(depreciation) on
investments:
End of period............. $ 604,944 $ (65,107) $ (51,718) $ 8,564,573
Beginning of period....... 1,841,792 (52,698) (100,915) 16,106,286
----------- ----------- ----------- ------------
Change in unrealized
appreciation
(depreciation)........... $(1,236,848) $ (12,409) $ 49,197 $ (7,541,713)
----------- ----------- ----------- ------------
Realized and
unrealized gains
(losses)............. $ 148,875 $ (71,407) $ (143,428) $ 3,533,001
----------- ----------- ----------- ------------
INCREASE IN NET ASSETS FROM
OPERATIONS................... $1,112,683 $ (28,165) $ 65,346 $ 9,272,175
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
</TABLE>
See notes to unaudited financial statements
2
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT E
STATEMENTS OF CHANGES IN NET ASSETS-- June 30, 1997
<TABLE>
<CAPTION>
CAS Sub-Account CGS Sub-Account GSS Sub-Account
--------------------------- --------------------------- ---------------------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31, June 30, December 31,
1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income................ $ 2,007,367 $ 1,610,671 $ 1,107,057 $ 547,017 $ 505,414 $ 384,238
Net realized gains................... 3,544,123 1,145,502 5,782,933 1,435,806 186,349 250,485
Net unrealized gains (losses)........ (2,344,587) 1,128,664 (3,013,168) 2,217,692 (527,859) (600,494)
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets from
operations........................ $ 3,206,903 $ 3,884,837 $ 3,876,822 $ 4,200,515 $ 163,904 $ 34,229
------------ ------------ ------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Transfers between Sub-Accounts....... $ (51,792) $ 406,813 $ 944,377 $ 209,628 $ (293,214) $ 620
Transfers to loan value account...... (289,350) (371,100) (80,828) (164,547) (17,487) 68,064
Contract surrenders.................. (686,244) (1,303,907) (344,734) (832,679) (85,471) (419,571)
Charges for life insurance
protection.......................... (77,388) (164,104) (85,636) (179,663) (47,975) (110,439)
Death benefits....................... (16,265) (67,980) (9,619) (266,296) -- (148,118)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets
from
contract owner transactions....... $(1,121,039) $(1,500,278) $ 423,560 $(1,233,557) $ (444,147) $ (609,444)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets.......................... $ 2,085,864 $ 2,384,559 $ 4,300,382 $ 2,966,958 $ (280,243) $ (575,215)
NET ASSETS:
Beginning of period.................. 23,162,764 20,778,205 21,121,130 18,154,172 8,384,669 8,959,884
------------ ------------ ------------ ------------ ------------ ------------
End of period........................ $25,248,628 $23,162,764 $25,421,512 $21,121,130 $ 8,104,426 $ 8,384,669
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
HYS Sub-Account MSS Sub-Account MMS Sub-Account
--------------------------- --------------------------- ---------------------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31, June 30, December 31,
1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income................ $ 432,185 $ 413,976 $ 325,386 $ 298,327 $ 145,941 $ 317,755
Net realized gains................... 289,482 193,376 137,727 232,206 -- --
Net unrealized gains (losses)........ (360,811) 39,952 (95,228) (102,662) -- --
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets from
operations........................ $ 360,856 $ 647,304 $ 367,885 $ 427,871 $ 145,941 $ 317,755
------------ ------------ ------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Transfers between Sub-Accounts....... $ 277,802 $ 127,598 $ (56,145) $ 841,756 $ (178,868) $(1,576,921)
Transfers to loan value account...... (24,589) (179,983) (438,815) (47,472) (31,259) (547,645)
Contract surrenders.................. (105,372) (156,008) (121,973) (113,989) (330,294) (729,566)
Charges for life insurance
protection.......................... (29,623) (65,102) (15,928) (26,864) (73,628) (160,409)
Death benefits....................... -- (74,967) -- -- (93,821) (37,706)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets
from
contract owner transactions....... $ 118,218 $ (348,462) $ (632,861) $ 653,431 $ (707,870) $(3,052,247)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets.......................... $ 479,074 $ 298,842 $ (264,976) $ 1,081,302 $ (561,929) $(2,734,492)
NET ASSETS:
Beginning of period.................. 6,466,906 6,168,064 3,358,415 2,277,113 8,020,003 10,754,495
------------ ------------ ------------ ------------ ------------ ------------
End of period........................ $ 6,945,980 $ 6,466,906 $ 3,093,439 $ 3,358,415 $ 7,458,074 $ 8,020,003
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
See notes to unaudited financial statements
3
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT E
STATEMENTS OF CHANGES IN NET ASSETS-- continued
<TABLE>
<CAPTION>
TRS Sub-Account WGS Sub-Account
-------------------------- ---------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, December June 30, December 31,
1997 31, 1996 1997 1996
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................................................. $ 963,808 $ 581,053 $ 43,242 $ 171,799
Net realized gains (losses)............................................ 1,385,723 406,044 (58,998) (7,017)
Net unrealized gains (losses).......................................... (1,236,848) 172,709 (12,409) (122,467)
------------ ----------- ------------ ------------
Increase (decrease) in net assets from operations.................... $ 1,112,683 $1,159,806 $ (28,165) $ 42,315
------------ ----------- ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Transfers between Sub-Accounts......................................... $ (225,425) $ 31,593 $ 94,973 $ (174,084)
Transfers to loan value account........................................ (53,612) (90,446) (10,908) 164
Contract surrenders.................................................... (168,040) (425,897) (33,033) (57,309)
Charges for life insurance protection.................................. (59,141) (129,803) (7,761) (19,196)
Death benefits......................................................... (27,605) (30,852) -- --
------------ ----------- ------------ ------------
Increase (decrease) in net assets from contract owner transactions... $ (533,823) $ (645,405) $ 43,271 $ (250,425)
------------ ----------- ------------ ------------
Increase (decrease) in net assets.................................. $ 578,860 $ 514,401 $ 15,106 $ (208,110)
NET ASSETS:
Beginning of period.................................................... 9,899,476 9,385,075 1,257,950 1,466,060
------------ ----------- ------------ ------------
End of period.......................................................... $10,478,336 $9,899,476 $ 1,273,056 $ 1,257,950
------------ ----------- ------------ ------------
------------ ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
ZCS-2000 Sub-Account Total
-------------------------- ---------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, December June 30, December 31,
1997 31, 1996 1997 1996
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................................................. $ 208,774 $ 115,125 $ 5,739,174 $ 4,439,961
Net realized gains (losses)............................................ (192,625) (84,500) 11,074,714 3,571,902
Net unrealized gains (losses).......................................... 49,197 (2,531) (7,541,713) 2,730,863
------------ ----------- ------------ ------------
Increase in net assets from operations............................... $ 65,346 $ 28,094 $ 9,272,175 $10,742,726
------------ ----------- ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Transfers between Sub-Accounts......................................... $ (511,708) $ 132,997 $ -- $ --
Transfers to loan value account........................................ (55,977) (125,832) (1,002,825) (1,458,797)
Contract surrenders.................................................... (89,161) (220,855) (1,964,322) (4,259,781)
Charges for life insurance protection.................................. (11,349) (28,118) (408,429) (883,698)
Death benefits......................................................... -- (65,097) (147,310) (691,016)
------------ ----------- ------------ ------------
Decrease in net assets from contract owner transactions.............. $ (668,195) $ (306,905) $(3,522,886) $(7,293,292)
------------ ----------- ------------ ------------
Increase (decrease) in net assets.................................. $ (602,849) $ (278,811) $ 5,749,289 $ 3,449,434
NET ASSETS:
Beginning of period.................................................... 4,337,044 4,615,855 86,008,357 82,558,923
------------ ----------- ------------ ------------
End of period.......................................................... $ 3,734,195 $4,337,044 $91,757,646 $86,008,357
------------ ----------- ------------ ------------
------------ ----------- ------------ ------------
</TABLE>
See notes to unaudited financial statements
4
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT E
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life of Canada (U.S.) Variable Account E (the "Variable Account"), a
separate account of Sun Life Assurance Company of Canada (U.S.), the Sponsor,
was established on December 3, 1985 as a funding vehicle for single premium
variable life insurance contracts. 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, a wholly-owned
subsidiary of the Sponsor, is the 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 shares of the Series
Trust and are recognized on the ex-dividend date.
Exchanges between Sub-Accounts requested by contract owners are recorded in the
new Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately; the Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the Internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not subject to
tax.
(3) CONTRACT CHARGES
Certain charges based on the value of the Variable Account are paid to the
Sponsor from the Variable Account at the end of each valuation period as
follows: (i) an administrative charge of 0.35% for the first ten
5
<PAGE>
contract years and 0.20% thereafter; (ii) a mortality and expense risk charge of
0.60%; and (iii) a minimum death benefit guarantee charge of 0.25% for the first
ten contract years with no deduction thereafter. Accounts are transferred from
Level 1 to Level 2 in the month following the tenth contract anniversary.
On each Monthly Anniversary Day after the Contract Date, a charge for providing
life insurance protection is imposed by the Sponsor against the contract's
account value. This charge will be based upon the Sponsor's expectations of
future mortality experience, but it will never be higher than the amount based
upon the 1980 CSO Mortality Table C, and in most cases it will be lower.
The Sponsor does not deduct a sales charge from the premium payment. 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 exceed 8% of the single premium payment made under
the contract.
(4) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS
<TABLE>
<CAPTION>
CAS -- Level 1 CAS -- Level 2
Sub-Account Sub-Account
------------------------ --------------------------
Six Months Year Ended Six Months
Ended December Ended Year Ended
June 30, 31, June 30, December 31,
1997 1996 1997 1996*
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Period................................................. 608,526 665,756 9,838 --
Units transferred between Sub-Accounts............................. (246,261) (2,022) 242,999 9,838
Units transferred (to) from loan value account..................... (7,076) (10,667) (673) --
Units surrendered.................................................. (12,325) (37,670) (5,012) --
Units cancelled in payment of charges for life insurance
protection........................................................ (1,624) (4,793) (335) --
Units cancelled in payment of death benefits....................... (487) (2,078) -- --
----------- ----------- ----------- -----
Units Outstanding
End of Period...................................................... 340,753 608,526 246,817 9,838
----------- ----------- ----------- -----
----------- ----------- ----------- -----
<CAPTION>
CGS -- Level 1
Sub-Account
------------------------
Six Months Year Ended
Ended December
June 30, 31,
1997 1996
----------- -----------
<S> <C> <C>
Units Outstanding
Beginning of Period................................................. 632,355 687,402
Units transferred between Sub-Accounts............................. (298,610) (5,988)
Units transferred (to) from loan value account..................... (990) (5,495)
Units surrendered.................................................. (3,911) (27,922)
Units cancelled in payment of charges for life insurance
protection........................................................ (2,008) (6,168)
Units cancelled in payment of death benefits....................... (328) (9,474)
----------- -----------
Units Outstanding
End of Period...................................................... 326,508 632,355
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
CGS -- Level 2 GSS -- Level 1
Sub-Account Sub-Account
-------------------------- ------------------------
Six Months Six Months Year Ended
Ended Year Ended Ended December
June 30, December 31, June 30, 31,
1997 1996* 1997 1996
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Period................................................. 13,181 -- 436,340 473,737
Units transferred between Sub-Accounts............................. 324,070 13,181 (226,291) (4,713)
Units transferred (to) from loan value account..................... (1,213) -- (536) 4,030
Units surrendered.................................................. (5,930) -- (3,325) (22,611)
Units cancelled in payment of charges for life insurance
protection........................................................ (431) -- (293) (5,950)
Units cancelled in payment of death benefits....................... -- -- -- (8,153)
----------- ------ ----------- -----------
Units Outstanding
End of Period...................................................... 329,677 13,181 205,895 436,340
----------- ------ ----------- -----------
----------- ------ ----------- -----------
<CAPTION>
GSS -- Level 2
Sub-Account
--------------------------
Six Months
Ended Year Ended
June 30, December 31,
1997 1996*
----------- -------------
<S> <C> <C>
Units Outstanding
Beginning of Period................................................. 5,190 --
Units transferred between Sub-Accounts............................. 210,595 5,194
Units transferred (to) from loan value account..................... (387) (4)
Units surrendered.................................................. (2,905) --
Units cancelled in payment of charges for life insurance
protection........................................................ (423) --
Units cancelled in payment of death benefits....................... -- --
----------- ------
Units Outstanding
End of Period...................................................... 212,070 5,190
----------- ------
----------- ------
</TABLE>
* For the period December 5, 1996 (commencement of Level 2 units) to December
31, 1996.
6
<PAGE>
(4) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS -- continued
<TABLE>
<CAPTION>
HYS -- Level 1 HYS -- Level 2
Sub-Account Sub-Account
------------------------ --------------------------
Six Months Year Ended Six Months
Ended December Ended Year Ended
June 30, 31, June 30, December 31,
1997 1996 1997 1996*
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Period................................................. 283,104 304,918 5,759 --
Units transferred between Sub-Accounts............................. (120,262) 864 132,283 5,763
Units transferred (to) from loan value account..................... (377) (8,664) (679) (4)
Units surrendered.................................................. (4,711) (7,260) -- --
Units cancelled in payment of charges for life insurance
protection........................................................ (989) (3,092) (305) --
Units cancelled in payment of death benefits....................... -- (3,662) -- --
----------- ----------- ----------- -----
Units Outstanding
End of Period...................................................... 156,765 283,104 137,058 5,759
----------- ----------- ----------- -----
----------- ----------- ----------- -----
<CAPTION>
MSS -- Level 1
Sub-Account
--------------------------
Six Months
Ended Year Ended
June 30, December 31,
1997 1996
----------- -------------
<S> <C> <C>
Units Outstanding
Beginning of Period................................................. 99,578 78,440
Units transferred between Sub-Accounts............................. (19,913) 27,225
Units transferred (to) from loan value account..................... (12,327) (1,554)
Units surrendered.................................................. (3,571) (3,667)
Units cancelled in payment of charges for life insurance
protection........................................................ (428) (866)
Units cancelled in payment of death benefits....................... -- --
----------- ------
Units Outstanding
End of Period...................................................... 63,339 99,578
----------- ------
----------- ------
</TABLE>
<TABLE>
<CAPTION>
MSS -- Level 2 MMS --
Sub-Account MMS -- Level 1 Level 2
--------------- Sub-Account Sub-Account
------------------------ -----------
Six Months Six Months Year Ended Six Months
Ended Ended December Ended
June 30, June 30, 31, June 30,
1997*** 1997 1996 1997
--------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Period....................................................... -- 524,146 731,286 1,969
Units transferred between Sub-Accounts................................... 18,067 (172,171) (108,242) 160,597
Units transferred (to) from loan value account........................... (234) (1,323) (36,943) (700)
Units surrendered........................................................ -- (13,536) (48,683) (7,939)
Units cancelled in payment of charges for life insurance protection...... (26) (4,197) (10,716) (586)
Units cancelled in payment of death benefits............................. -- (6,177) (2,556) --
------ ----------- ----------- -----------
Units Outstanding
End of Period............................................................ 17,807 326,742 524,146 153,341
------ ----------- ----------- -----------
------ ----------- ----------- -----------
<CAPTION>
Year Ended
December 31,
1996**
-------------
<S> <C>
Units Outstanding
Beginning of Period....................................................... --
Units transferred between Sub-Accounts................................... 1,969
Units transferred (to) from loan value account........................... --
Units surrendered........................................................ --
Units cancelled in payment of charges for life insurance protection...... --
Units cancelled in payment of death benefits............................. --
-----
Units Outstanding
End of Period............................................................ 1,969
-----
-----
</TABLE>
<TABLE>
<CAPTION>
WGS --
TRS -- Level 1 TRS -- Level 2 Level 1
Sub-Account Sub-Account Sub-Account
------------------------ --------------- -----------
Six Months Year Ended Six Months Six Months
Ended December Ended Ended
June 30, 31, June 30, June 30,
1997 1996 1997+ 1997
----------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Period....................................................... 406,929 434,795 -- 68,055
Units transferred between Sub-Accounts................................... (198,800) 2,106 189,819 (22,394)
Units transferred (to) from loan value account........................... (1,674) (3,998) (441) (70)
Units surrendered........................................................ (6,394) (18,847) -- (1,820)
Units cancelled in payment of charges for life insurance protection...... (1,749) (5,739) (567) (363)
Units cancelled in payment of death benefits............................. (1,221) (1,388) -- --
----------- ----------- ------- -----------
Units Outstanding
End of Period............................................................ 197,091 406,929 188,811 43,408
----------- ----------- ------- -----------
----------- ----------- ------- -----------
<CAPTION>
Year Ended
December 31,
1996
-------------
<S> <C>
Units Outstanding
Beginning of Period....................................................... 81,725
Units transferred between Sub-Accounts................................... (9,411)
Units transferred (to) from loan value account........................... 8
Units surrendered........................................................ (3,197)
Units cancelled in payment of charges for life insurance protection...... (1,070)
Units cancelled in payment of death benefits............................. --
------
Units Outstanding
End of Period............................................................ 68,055
------
------
</TABLE>
* For the period December 5, 1996 (commencement of Level 2 units) to December
31, 1996.
** For the period December 20, 1996 (commencement of Level 2 units) to
December 31, 1996.
*** For the period January 13, 1997 (commencement of Level 2 units) to June 30,
1997.
+ For the period January 7, 1997 (commencement of Level 2 units) to June 30,
1997.
7
<PAGE>
(4) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS -- continued
<TABLE>
<CAPTION>
ZCS-2000 --
WGS -- Level 2 ZCS-2000 -- Level 1 Level 2
Sub-Account Sub-Account Sub-Account
--------------- ------------------------ -----------
Six Months Six Months Year Ended Six Months
Ended Ended December Ended
June 30, June 30, 31, June 30,
1997++ 1997 1996 1997
--------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Period....................................................... -- 227,240 243,738 200
Units transferred between Sub-Accounts................................... 27,643 (72,172) 7,081 45,462
Units transferred (to) from loan value account........................... (539) (2,886) (6,693) (58)
Units surrendered........................................................ -- (4,657) (11,980) --
Units cancelled in payment of charges for life insurance protection...... (67) (553) (1,506) (40)
Units cancelled in payment of death benefits............................. -- -- (3,400) --
------ ----------- ----------- -----------
Units Outstanding
End of Period............................................................ 27,037 146,972 227,240 45,564
------ ----------- ----------- -----------
------ ----------- ----------- -----------
<CAPTION>
Year Ended
December 31,
1996*
---------------
<S> <C>
Units Outstanding
Beginning of Period....................................................... --
Units transferred between Sub-Accounts................................... 200
Units transferred (to) from loan value account........................... --
Units surrendered........................................................ --
Units cancelled in payment of charges for life insurance protection...... --
Units cancelled in payment of death benefits............................. --
--
Units Outstanding
End of Period............................................................ 200
--
--
</TABLE>
* For the period December 5, 1996 (commencement of Level 2 units) to December
31, 1996.
++ For the period January 28, 1997 (commencement of Level 2 units) to June 30,
1997.
8
<PAGE>
Compass Life
Sun Life of Canada (U.S.) Variable Account E
Directors and Officers of
PQR
Sun Life Assurance Company of Canada (U.S.)
JOHN D. McNEIL, Chairman and Director
SINGLE PREMIUM VARIABLE
DONALD A. STEWART, President and Director
LIFE INSURANCE
---------------------------------------------
DAVID D. HORN, Senior Vice President and
SEMIANNUAL REPORT, JUNE 30, 1997
General Manager and Director
S. CAESAR RABOY, Senior Vice President and
Deputy General Manager and Director
RICHARD B. BAILEY, Director
A. KEITH BRODKIN, Director
M. COLYER CRUM, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
MARGARET SEARS MEAD, Assistant Vice President and
Secretary
L. BROCK THOMSON, Vice President and
Treasurer
Sun Life Assurance Company
of Canada (U.S.)
Variable Life Insurance Service Center
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
General Distributor
Clarendon Insurance Agency, Inc.
500 Boylston Street, Boston, Massachusetts 02116
Legal Counsel
[LOGO]
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
This report is prepared for the general information of
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
contract owners. It is authorized for distribution to
A WHOLLY OWNED SUBSIDIARY OF
prospective purchasers only if preceded or
accompanied by an effective
prospectus.
SUN LIFE ASSURANCE COMPANY OF CANADA
