<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT E
STATEMENT OF CONDITION-- June 30, 1998
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C> <C>
Investments in MFS/Sun Life Series Trust: Shares Cost Value
---------- ----------- -----------
Capital Appreciation Series ("CAS").......................................... 687,328 $26,879,659 $29,402,370
Conservative Growth Series ("CGS")........................................... 863,203 26,098,614 31,157,543
Government Securities Series ("GSS")......................................... 610,044 7,668,089 7,807,426
High Yield Series ("HYS").................................................... 721,283 6,730,970 6,916,304
Managed Sectors Series ("MSS")............................................... 133,592 3,949,837 3,752,589
Money Market Series ("MMS").................................................. 6,401,516 6,401,516 6,401,516
Total Return Series ("TRS").................................................. 431,643 8,627,008 8,930,366
World Government Series ("WGS").............................................. 112,652 1,210,210 1,211,971
Zero Coupon Series:
2000 Portfolio ("ZCS - 2000").............................................. 402,415 3,491,475 3,466,315
----------- -----------
Net Assets:.............................................................. $91,057,378 $99,046,400
----------- -----------
----------- -----------
NET ASSETS APPLICABLE TO CONTRACT OWNERS:
<CAPTION>
Units Unit Value Value
---------- ----------- -----------
<S> <C> <C> <C>
CAS -- Level 1................................................................. 60,196 $ 54.304140 $ 3,269,548
CAS -- Level 2................................................................. 477,442 54.645350 26,132,822
CGS -- Level 1................................................................. 49,313 49.565745 2,442,370
CGS -- Level 2................................................................. 575,706 49.877063 28,715,173
GSS -- Level 1................................................................. 43,300 21.068315 913,637
GSS -- Level 2................................................................. 324,817 21.200745 6,893,789
HYS -- Level 1................................................................. 25,977 26.231780 674,751
HYS -- Level 2................................................................. 236,330 26.396636 6,241,553
MSS -- Level 1................................................................. 12,410 46.443999 579,115
MSS -- Level 2................................................................. 67,891 46.735951 3,173,474
MMS -- Level 1................................................................. 109,742 16.132049 1,766,134
MMS -- Level 2................................................................. 285,586 16.233449 4,635,382
TRS -- Level 1................................................................. 66,561 31.689545 2,108,648
TRS -- Level 2................................................................. 214,717 31.888664 6,821,718
WGS -- Level 1................................................................. 9,610 18.372892 171,942
WGS -- Level 2................................................................. 56,251 18.488451 1,040,029
ZCS - 2000 -- Level 1.......................................................... 40,856 20.638316 843,522
ZCS - 2000 -- Level 2.......................................................... 126,306 20.768079 2,622,793
-----------
Net Assets:.............................................................. $99,046,400
-----------
-----------
</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, 1998
<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................... $3,222,137 $2,093,465 $ 429,239 $ 444,519 $ 548,351 $ 154,455
----------- ----------- ----------- ----------- ----------- -----------
EXPENSES:
Mortality and expense risk
charges.................... $ 60,472 $ 61,721 $ 16,760 $ 15,240 $ 8,613 $ 14,413
Minimum death benefit
guarantee charges.......... 25,196 25,717 6,983 6,350 3,589 6,005
Administrative charges...... 35,275 36,004 9,777 8,890 5,024 8,327
----------- ----------- ----------- ----------- ----------- -----------
Total expenses............ $ 120,943 $ 123,442 $ 33,520 $ 30,480 $ 17,226 $ 28,745
----------- ----------- ----------- ----------- ----------- -----------
Net investment income... $3,101,194 $1,970,023 $ 395,719 $ 414,039 $ 531,125 $ 125,710
----------- ----------- ----------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains on investment
transactions:
Proceeds from sales....... $4,384,966 $2,389,436 $1,294,343 $1,231,776 $2,098,795 $2,240,056
Costs of investments
sold..................... 3,712,500 1,618,120 1,260,385 1,162,923 1,914,481 2,240,056
----------- ----------- ----------- ----------- ----------- -----------
Net realized gains........ $ 672,466 $ 771,316 $ 33,958 $ 68,853 $ 184,314 $ --
----------- ----------- ----------- ----------- ----------- -----------
Net unrealized appreciation
(depreciation) on
investments:
End of period............. $2,522,711 $5,058,929 $ 139,337 $ 185,334 $ (197,248) $ --
Beginning of period....... 1,290,192 3,370,481 301,063 323,945 120,307 --
----------- ----------- ----------- ----------- ----------- -----------
Change in unrealized
appreciation
(depreciation)........... $1,232,519 $1,688,448 $ (161,726) $ (138,611) $ (317,555) $ --
----------- ----------- ----------- ----------- ----------- -----------
Realized and
unrealized gains
(losses)............. $1,904,985 $2,459,764 $ (127,768) $ (69,758) $ (133,241) $ --
----------- ----------- ----------- ----------- ----------- -----------
INCREASE IN NET ASSETS FROM
OPERATIONS................... $5,006,179 $4,429,787 $ 267,951 $ 344,281 $ 397,884 $ 125,710
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</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................... $ 944,899 $ 13,636 $ 212,590 $ 8,063,291
----------- ----------- ----------- ------------
EXPENSES:
Mortality and expense risk
charges.................... $ 19,332 $ 2,503 $ 8,124 $ 207,178
Minimum death benefit
guarantee charges.......... 8,055 1,043 3,385 86,323
Administrative charges...... 11,277 1,460 4,739 120,773
----------- ----------- ----------- ------------
Total expenses............ $ 38,664 $ 5,006 $ 16,248 $ 414,274
----------- ----------- ----------- ------------
Net investment income... $ 906,235 $ 8,630 $ 196,342 $ 7,649,017
----------- ----------- ----------- ------------
REALIZED AND UNREALIZED GAINS
(LOSSES):
Realized gains on investment
transactions:
Proceeds from sales....... $ 815,838 $ 508,357 $ 534,997 $ 15,498,564
Costs of investments
sold..................... 696,833 520,089 541,290 13,666,677
----------- ----------- ----------- ------------
Net realized gains
(losses)............... $ 119,005 $ (11,732) $ (6,293) $ 1,831,887
----------- ----------- ----------- ------------
Net unrealized appreciation
(depreciation) on
investments:
End of period............. $ 303,358 $ 1,761 $ (25,160) $ 7,989,022
Beginning of period....... 668,265 (14,962) 75,611 6,134,902
----------- ----------- ----------- ------------
Change in unrealized
appreciation
(depreciation)........... $(364,907) $ 16,723 $(100,771) $ 1,854,120
----------- ----------- ----------- ------------
Realized and
unrealized gains
(losses)............. $(245,902) $ 4,991 $(107,064) $ 3,686,007
----------- ----------- ----------- ------------
INCREASE IN NET ASSETS FROM
OPERATIONS................... $ 660,333 $ 13,621 $ 89,278 $ 11,335,024
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
</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, 1998
<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
1998 1997 1998 1997 1998 31, 1997
------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income................ $ 3,101,194 $ 1,882,209 $ 1,970,023 $ 985,282 $ 395,719 $ 467,783
Net realized gains................... 672,466 6,438,718 771,316 10,730,395 33,958 195,733
Net unrealized gains (losses)........ 1,232,519 (3,502,076) 1,688,448 (5,236,884) (161,726) (61,685)
------------ ------------ ------------ ------------ ----------- -----------
Increase in net assets from
operations........................ $ 5,006,179 $ 4,818,851 $ 4,429,787 $ 6,478,793 $ 267,951 $ 601,831
------------ ------------ ------------ ------------ ----------- -----------
CONTRACT OWNER TRANSACTIONS:
Transfers between Sub-Accounts....... $ (446,872) $ 646,078 $ 183,826 $ 1,029,899 $ 9,016 $ (544,385)
Transfers to loan value account...... (392,793) (579,340) (253,252) (232,983) (50,584) (14,858)
Contract surrenders.................. (961,962) (154,828) (272,515) (168,671) (444,093) (91,691)
Charges for life insurance
protection.......................... (74,993) (1,294,571) (85,718) (983,800) (39,874) (161,757)
Death benefits....................... (64,907) (261,236) (60,098) (28,855) (40,059) (68,740)
------------ ------------ ------------ ------------ ----------- -----------
Decrease in net assets from
contract owner transactions....... $(1,941,527) $(1,643,897) $ (487,757) $ (384,410) $ (565,594) $ (881,431)
------------ ------------ ------------ ------------ ----------- -----------
Increase (decrease) in net
assets.......................... $ 3,064,652 $ 3,174,954 $ 3,942,030 $ 6,094,383 $ (297,643) $ (279,600)
NET ASSETS:
Beginning of period.................. 26,337,718 23,162,764 27,215,513 21,121,130 8,105,069 8,384,669
------------ ------------ ------------ ------------ ----------- -----------
End of period........................ $29,402,370 $26,337,718 $31,157,543 $27,215,513 $7,807,426 $8,105,069
------------ ------------ ------------ ------------ ----------- -----------
------------ ------------ ------------ ------------ ----------- -----------
</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,
1998 1997 1998 1997 1998 1997
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income................ $ 414,039 $ 399,635 $ 531,125 $ 307,001 $ 125,710 $ 287,714
Net realized gains................... 68,853 512,163 184,314 465,141 -- --
Net unrealized gains (losses)........ (138,611) (130,260) (317,555) (81,214) -- --
------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets from
operations........................ $ 344,281 $ 781,538 $ 397,884 $ 690,928 $ 125,710 $ 287,714
------------ ------------ ------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Transfers between Sub-Accounts....... $ 30,060 $ 329,847 $ (407,866) $ 597,968 $ 610,084 $(1,283,448)
Transfers to loan value account...... (22,306) (104,301) 13,570 (586,318) (68,447) (76,529)
Contract surrenders.................. (489,404) (55,836) 8,104 (34,468) (134,094) (137,588)
Charges for life insurance
protection.......................... (24,330) (256,676) (18,820) (266,808) (59,416) (762,820)
Death benefits....................... (48,659) (34,816) -- -- -- (119,653)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net assets
from
contract owner transactions....... $ (554,639) $ (121,782) $ (405,012) $ (289,626) $ 348,127 $(2,380,038)
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets.......................... $ (210,358) $ 659,756 $ (7,128) $ 401,302 $ 473,837 $(2,092,324)
NET ASSETS:
Beginning of period.................. 7,126,662 6,466,906 3,759,717 3,358,415 5,927,679 8,020,003
------------ ------------ ------------ ------------ ------------ ------------
End of period........................ $6,916,304 $7,126,662 $3,752,589 $3,759,717 $6,401,516 $ 5,927,679
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
</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 31, June 30, December 31,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................................................. $ 906,235 $ 920,490 $ 8,630 $ 37,124
Net realized gains..................................................... 119,005 2,081,108 (11,732) (97,712)
Net unrealized gains (losses).......................................... (364,907) (1,173,527) 16,723 37,736
------------ ------------ ------------ ------------
Increase (decrease) in net assets from operations.................... $ 660,333 $ 1,828,071 $ 13,621 $ (22,852)
------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Transfers between Sub-Accounts......................................... $ 118,324 $ (328,063) $ (52,539) $ 136,938
Transfers to loan value account........................................ (97,192) (132,559) (1,698) (3,301)
Contract surrenders.................................................... (182,074) (97,262) (23,216) (14,692)
Charges for life insurance protection.................................. (33,245) (2,638,585) (5,873) (72,367)
Death benefits......................................................... -- (66,858) -- --
------------ ------------ ------------ ------------
Increase (decrease) in net assets from contract owner transactions... $ (194,187) $(3,263,327) $ (83,326) $ 46,578
------------ ------------ ------------ ------------
Increase (decrease) in net assets.................................. $ 466,146 $(1,435,256) $ (69,705) $ 23,726
NET ASSETS:
Beginning of period.................................................... 8,464,220 9,899,476 1,281,676 1,257,950
------------ ------------ ------------ ------------
End of period.......................................................... $8,930,366 $ 8,464,220 $1,211,971 $1,281,676
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
ZCS-2000 Sub-Account Total
--------------------------- ---------------------------
Six Months Six Months
Ended Year Ended Ended Year Ended
June 30, December 31, June 30, December 31,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income.................................................. $ 196,342 $ 190,096 $ 7,649,017 $ 5,477,334
Net realized gains..................................................... (6,293) (155,202) 1,831,887 20,170,344
Net unrealized gains (losses).......................................... (100,771) 176,526 1,854,120 (9,971,384)
------------ ------------ ------------ ------------
Increase in net assets from operations............................... $ 89,278 $ 211,420 $11,335,024 $15,676,294
------------ ------------ ------------ ------------
CONTRACT OWNER TRANSACTIONS:
Transfers between Sub-Accounts......................................... $ (44,034) $ (584,834) $ -- $ --
Transfers to loan value account........................................ (96,950) (111,442) (969,652) (1,841,631)
Contract surrenders.................................................... (86,127) (21,919) (2,585,382) (776,955)
Charges for life insurance protection.................................. (9,938) (216,183) (352,207) (6,653,567)
Death benefits......................................................... -- -- (213,723) (580,158)
------------ ------------ ------------ ------------
Decrease in net assets from contract owner transactions.............. $ (237,049) $ (934,378) $(4,120,964) $(9,852,311)
------------ ------------ ------------ ------------
Increase (decrease) in net assets.................................. $ (147,771) $ (722,958) $ 7,214,060 $ 5,823,983
NET ASSETS:
Beginning of period.................................................... 3,614,086 4,337,044 91,832,340 86,008,357
------------ ------------ ------------ ------------
End of period.......................................................... $3,466,315 $3,614,086 $99,046,400 $91,832,340
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</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 Year Ended
Ended December Ended December
June 30, 31, June 30, 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Year................................................... 92,847 608,526 482,707 9,838
Units transferred between Sub-Accounts............................. (31,251) (486,418) 21,857 497,782
Units transferred (to)/from loan value account..................... (670) (8,244) (6,623) (5,741)
Units surrendered.................................................. (524) (17,337) (17,974) (1,402)
Units cancelled in payment of charges for life insurance
protection........................................................ (206) (2,241) (1,262) (12,763)
Units cancelled in payment of death benefits....................... -- (1,439) (1,263) (5,007)
----------- ----------- ----------- -----------
Units outstanding
End of Period...................................................... 60,196 92,847 477,442 482,707
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
CGS -- Level 1
Sub-Account
------------------------
Six Months Year Ended
Ended December
June 30, 31,
1998 1997
----------- -----------
<S> <C> <C>
Units Outstanding
Beginning of Year................................................... 78,746 632,355
Units transferred between Sub-Accounts............................. (29,147) (538,615)
Units transferred (to)/from loan value account..................... (100) (1,710)
Units surrendered.................................................. -- (2,748)
Units cancelled in payment of charges for life insurance
protection........................................................ (186) (9,717)
Units cancelled in payment of death benefits....................... -- (819)
----------- -----------
Units outstanding
End of Period...................................................... 49,313 78,746
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
CGS -- Level 2 GSS -- Level 1
Sub-Account Sub-Account
------------------------ ------------------------
Six Months Year Ended Six Months Year Ended
Ended December Ended December
June 30, 31, June 30, 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Year................................................... 556,809 13,181 62,704 436,340
Units transferred between Sub-Accounts............................. 32,682 565,351 (19,023) (364,865)
Units transferred (to)/from loan value account..................... (4,963) (4,213) (111) (840)
Units surrendered.................................................. (5,885) (1,716) -- (2,759)
Units cancelled in payment of charges for life insurance
protection........................................................ (1,640) (15,794) (270) (2,350)
Units cancelled in payment of death benefits....................... (1,297) -- -- (2,822)
----------- ----------- ----------- -----------
Units outstanding
End of Period...................................................... 575,706 556,809 43,300 62,704
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
GSS -- Level 2
Sub-Account
------------------------
Six Months Year Ended
Ended December
June 30, 31,
1998 1997
----------- -----------
<S> <C> <C>
Units Outstanding
Beginning of Year................................................... 332,752 5,190
Units transferred between Sub-Accounts............................. 19,335 336,087
Units transferred (to)/from loan value account..................... (2,317) 75
Units surrendered.................................................. (21,350) (1,947)
Units cancelled in payment of charges for life insurance
protection........................................................ (1,648) (5,897)
Units cancelled in payment of death benefits....................... (1,955) (756)
----------- -----------
Units outstanding
End of Period...................................................... 324,817 332,752
----------- -----------
----------- -----------
</TABLE>
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 Year Ended
Ended December Ended December
June 30, 31, June 30, 31,
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Year................................................... 43,889 283,104 238,993 5,759
Units transferred between Sub-Accounts............................. (17,888) (228,936) 19,042 241,994
Units transferred (to)/from loan value account..................... 80 (1,595) (929) (2,737)
Units surrendered.................................................. -- (1,293) (18,042) (1,069)
Units cancelled in payment of charges for life insurance
protection........................................................ (104) (5,919) (830) (4,954)
Units cancelled in payment of death benefits....................... -- (1,472) (1,904) --
----------- ----------- ----------- -----------
Units outstanding
End of Period...................................................... 25,977 43,889 236,330 238,993
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
MSS -- Level 1
Sub-Account
------------------------
Six Months Year Ended
Ended December
June 30, 31,
1998 1997
----------- -----------
<S> <C> <C>
Units Outstanding
Beginning of Year................................................... 35,850 99,578
Units transferred between Sub-Accounts............................. (22,095) (45,994)
Units transferred (to)/from loan value account..................... (1,172) (12,311)
Units surrendered.................................................. -- (698)
Units cancelled in payment of charges for life insurance
protection........................................................ (173) (4,725)
Units cancelled in payment of death benefits....................... -- --
----------- -----------
Units outstanding
End of Period...................................................... 12,410 35,850
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
MSS -- Level 2 MMS -- Level 1
Sub-Account Sub-Account
-------------------------- ------------------------
Six Months Six Months Year Ended
Ended Year Ended Ended December
June 30, December 31, June 30, 31,
1998 1997* 1998 1997
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Year................................................... 53,716 -- 133,612 524,146
Units transferred between Sub-Accounts............................. 13,015 59,823 (17,094) (351,244)
Units transferred (to)/from loan value account..................... 1,446 (3,585) (3,441) (2,890)
Units surrendered.................................................. (43) (191) (1,540) (6,639)
Units cancelled in payment of charges for life insurance
protection........................................................ (243) (1,821) (1,795) (22,637)
Units cancelled in payment of death benefits....................... -- (510) -- (7,124)
----------- ------ ----------- -----------
Units outstanding
End of Period...................................................... 67,891 53,716 109,742 133,612
----------- ------ ----------- -----------
----------- ------ ----------- -----------
<CAPTION>
MMS -- Level 2
Sub-Account
------------------------
Six Months Year Ended
Ended December
June 30, 31,
1998 1997
----------- -----------
<S> <C> <C>
Units Outstanding
Beginning of Year................................................... 240,045 1,969
Units transferred between Sub-Accounts............................. 55,100 269,405
Units transferred (to)/from loan value account..................... (847) (2,029)
Units surrendered.................................................. (6,800) (2,219)
Units cancelled in payment of charges for life insurance
protection........................................................ (1,912) (26,362)
Units cancelled in payment of death benefits....................... -- (719)
----------- -----------
Units outstanding
End of Period...................................................... 285,586 240,045
----------- -----------
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
TRS -- Level 1 TRS -- Level 2
Sub-Account Sub-Account
------------------------ ------------------------
Six Months Year Ended Six Months Year Ended
Ended December Ended December
June 30, 31, June 30, 31,
1998 1997 1998 1997+
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Year................................................... 83,559 406,929 204,285 --
Units transferred between Sub-Accounts............................. (11,643) (308,338) 15,468 295,002
Units transferred (to)/from loan value account..................... (55) (1,611) (3,168) (3,280)
Units surrendered.................................................. (5,047) (2,349) (1,044) (1,308)
Units cancelled in payment of charges for life insurance
protection........................................................ (253) (9,851) (824) (84,765)
Units cancelled in payment of death benefits....................... -- (1,221) -- (1,364)
----------- ----------- ----------- -----------
Units outstanding
End of Period...................................................... 66,561 83,559 214,717 204,285
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<CAPTION>
WGS -- Level 1
Sub-Account
------------------------
Six Months Year Ended
Ended December
June 30, 31,
1998 1997
----------- -----------
<S> <C> <C>
Units Outstanding
Beginning of Year................................................... 21,982 68,055
Units transferred between Sub-Accounts............................. (12,229) (43,258)
Units transferred (to)/from loan value account..................... (55) (72)
Units surrendered.................................................. -- (551)
Units cancelled in payment of charges for life insurance
protection........................................................ (88) (2,192)
Units cancelled in payment of death benefits....................... -- --
----------- -----------
Units outstanding
End of Period...................................................... 9,610 21,982
----------- -----------
----------- -----------
</TABLE>
* For the period January 4, 1997 (commencement of Level 2 units) to December
31, 1997.
+ For the period January 7, 1997 (commencement of Level 2 units) to December
31, 1997.
7
<PAGE>
(4) UNIT ACTIVITY FROM CONTRACT OWNER TRANSACTIONS -- continued
<TABLE>
<CAPTION>
WGS -- Level 2 ZCS-2000 -- Level 1
Sub-Account Sub-Account
-------------------------- ------------------------
Six Months Six Months Year Ended
Ended Year Ended Ended December
June 30, December 31, June 30, 31,
1998 1997 1998 1997++
----------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Units Outstanding
Beginning of Year................................................... 48,519 -- 62,003 227,240
Units transferred between Sub-Accounts............................. 9,258 50,714 (14,232) (154,492)
Units transferred (to)/from loan value account..................... (38) (113) (2,887) (4,168)
Units surrendered.................................................. (1,257) (260) (3,945) (822)
Units cancelled in payment of charges for life insurance
protection........................................................ (231) (1,822) (83) (5,755)
Units cancelled in payment of death benefits....................... -- -- -- --
----------- ------ ----------- -----------
Units outstanding
End of Period...................................................... 56,251 48,519 40,856 62,003
----------- ------ ----------- -----------
----------- ------ ----------- -----------
<CAPTION>
ZCS-2000 -- Level 2
Sub-Account
------------------------
Six Months Year Ended
Ended December
June 30, 31,
1998 1997
----------- -----------
<S> <C> <C>
Units Outstanding
Beginning of Year................................................... 116,837 200
Units transferred between Sub-Accounts............................. 12,003 123,821
Units transferred (to)/from loan value account..................... (1,859) (1,566)
Units surrendered.................................................. (273) (304)
Units cancelled in payment of charges for life insurance
protection........................................................ (402) (5,314)
Units cancelled in payment of death benefits....................... -- --
----------- -----------
Units outstanding
End of Period...................................................... 126,306 116,837
----------- -----------
----------- -----------
</TABLE>
++ For the period January 28, 1997 (commencement of Level 2 units) to December
31, 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.)
DONALD A. STEWART, Chairman and Director
SINGLE PREMIUM VARIABLE
C. JAMES PRIEUR, President and Director
LIFE INSURANCE
---------------------------------------------
S. CAESAR RABOY, Senior Vice President and
SEMIANNUAL REPORT, JUNE 30, 1998
Deputy General Manager and Director
RICHARD B. BAILEY, Director
M. COLYER CRUM, Director
DAVID D. HORN, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
JOHN D. McNEIL, 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.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02481
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 OF CANADA (U.S.) HOLDINGS, INC.
