<PAGE>
DEAR CONTRACT OWNERS:
Rising global liquidity has underpinned international equity markets over the
past six months, and equities so far have ignored the "growth scare" that has
affected most bond markets in 1996. Low interest rates in Europe and Japan and a
growing money supply, plus signs of economic recovery and accelerating corporate
earnings in those areas, reinforced the positive message coming from the U.S.
equity market. Investors in these markets believe that the same trends are at
work as in the United States, but that the international markets are in an
earlier phase of their cycle. For the six months ended June 30, 1996, the
Standard & Poor's 500 Composite Index (the S&P 500), a popular, unmanaged index
of common stock performance, returned 10.09%.
U.S. OUTLOOK
Real (inflation-adjusted) economic growth in the first quarter of 1996 was 2.3%
on an annualized basis, and it appears that second-quarter growth could be even
stronger. Thus, real growth in gross domestic product has started the year at a
rate exceeding our expectations. While we continue to believe that growth from
quarter to quarter will be uneven, it is now our expectation that growth for all
of 1996 could exceed 2.5%. Although individual consumers appear to be carrying
an excessive debt load, the consumer sector itself, which represents two-thirds
of the economy, continues to be impressive as the auto and housing markets
remain resilient. Consumer spending has also been positively impacted by
widespread job growth. At the same time, however, the economies of Europe and
Japan continue to be in the doldrums, weakening U.S. export markets while
subduing the capital spending plans of American corporations. Finally, due to
the pickup in economic activity and increasing job growth, it appears that
inflation may accelerate slightly this year, and the Federal Reserve Board is
expected to continue its diligent anti-inflationary stance.
GLOBAL OUTLOOK
In the first half of 1996, we believe that the equity markets will continue to
be fundamentally driven, although the economic outlook is uncertain, with the
strength of the U.S. economy unclear, Japan starting to show more meaningful
signs of recovery, and Europe's recovery still in its early stages. Lower
interest rates, particularly in Europe and Japan, have helped support strong
equity markets. While we believe that interest rates are unlikely to fall
further, a subdued global inflation outlook could mean that rates rise little
from current levels, which should help support current equity market valuations.
Therefore, for the remainder of 1996, we believe corporate earnings growth will
be the key to further stock market gains.
BOND MARKETS
In the bond markets, persistent signs of economic weakness led to decreases in
short-term interest rates by the Federal Reserve in late 1995 and early 1996.
However, should signs of economic growth and, particularly, of higher inflation
continue, we would expect the Fed to maintain its anti-inflationary stance. In
the beginning of the year, bond markets were trading in a narrow range, as
investors shifted between concern about the lack of a budget resolution in
Washington and hopes that sluggish economic reports and low inflation might lead
to lower interest rates. Later, fixed-income markets began reacting to
conflicting signals regarding the strength of the economy with more volatile
trading patterns marked by an upward bias in interest rates. Interest rates may
move even higher over the coming months, but we believe the current rise in bond
yields is reaching a point where fixed-income markets are becoming attractively
valued.
In world bond markets, non-U.S. bonds, measured in local currency terms,
continued to outperform U.S. bonds during the period. The best performance was
within the higher-yielding European markets (Italy, Spain, and Sweden).
Virtually all the yield curves within these markets steepened dramatically
1
<PAGE>
over the period as most European central banks lowered official interest rates
due to continued slow growth and low inflation. Within the dollar bloc, Canada
and Australia also outperformed the United States, while New Zealand suffered
underperformance due to political concerns and a pickup in economic growth.
Looking forward, we believe the main issue is whether the recent trends of
rising interest rates in most markets and a stronger dollar will remain intact.
The case for a continuation of these trends rests primarily on accelerating
world growth, led by a buoyant U.S. economy. Indicators which we feel could lead
to a further rise in interest rates include the higher-than-expected growth seen
in the United States so far this year, the rebound of growth in Japan, signs of
a rebound in Germany, and strong growth among emerging economies. However, in
our view, any further rise in yield from current levels could be less dramatic
than that experienced so far this year.
STOCK MARKET
While we do not expect the U.S. stock market to match the extraordinary
performance of 1995, we continue to be positive about the equity market this
year. Although we believe the equity market represents fair value at current
levels, the expected slowdown in the growth of corporate earnings and the
increases in interest rates experienced so far this year raise near-term
concerns. Further increases in interest rates and an acceleration of inflation,
coupled with an additional slowdown in corporate earnings growth, could have a
negative effect on the stock market. However, to the extent that some earnings
disappointments are taken as a sign that the economy is not overheating, this
may prove beneficial for the longer-term health of the equity market. We
continue to believe that many of the technology-driven productivity gains that
U.S. companies have made in recent years will continue to enhance corporate
America's competitiveness and
profitability. Therefore, while we have some near-term concerns, we remain quite
constructive on the long-term viability of the equity market.
In the first half of 1996, positive local currency returns were generated in
equity markets throughout the world. The Morgan Stanley Capital International
(MSCI), an unmanaged total return index, Europe Index was up 10.4%, with returns
ranging from 2.6% in the United Kingdom to 20.9% in Spain; the MSCI Pacific
Index was up 7.5%, with returns ranging from -2.2% in New Zealand to 14.3% in
Malaysia. Meanwhile, the S&P 500 gained 10.09%, and the IFC (International
Finance Corporation) Global Composite Index, a market-capitalization-weighted
index comprising the most active stocks of emerging markets (as defined by the
World Bank) rose 13.5%. The only major negative was the strong U.S. dollar,
which gained 6% against the Japanese yen and the German mark.
Performance results for the six months ended June 30, 1996, for Regatta and
Regatta Gold contracts are shown on the table on the following page, while
information on the current strategy for each series of MFS/Sun Life Series Trust
may be found in the accompanying Series Trust semiannual report. We appreciate
your support and welcome any questions or comments you may have.
On behalf of the
Board of Directors,
John D. McNeil
Chairman
July 10, 1996
2
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
PERFORMANCE SUMMARY
These performance results do not reflect any applicable surrender charges. Past
performance is no guarantee of future results.
<TABLE>
<CAPTION>
Unit Value
------------------------------------- Percent Change
December 31, 1995 June 30, 1996 in Unit Value
----------------- ----------------- --------------
<S> <C> <C> <C>
MFS REGATTA CONTRACTS:
Capital Appreciation Series.......................... $20.6225 $23.0428 +11.74%
Government Securities Series......................... 15.5323 15.0474 (3.12)
High Yield Series.................................... 17.8678 18.2698 +2.25
Managed Sectors Series............................... 18.9987 20.3335 +7.03
Money Market Series.................................. 12.2910 12.4985 +1.69
Total Return Series.................................. 17.8185 18.5369 +4.03
World Governments Series............................. 16.2514 16.0573 (1.19)
MFS REGATTA GOLD CONTRACTS:
Capital Appreciation Series.......................... $18.8392 $21.0502 +11.74%
Conservative Growth Series........................... 16.1344 17.6999 +9.70
Emerging Growth Series............................... 12.5675 14.3285 +14.01
Government Securities Series......................... 13.0981 12.6892 (3.12)
High Yield Series.................................... 14.7137 15.0447 +2.25
MFS/Foreign & Colonial Emerging Markets Equity
Series................................................. 10.0000* 9.9956 (0.04)
MFS/Foreign & Colonial International Growth Series... 10.0000* 10.0222 +0.22
MFS/Foreign & Colonial International Growth and
Income Series.......................................... 10.0942 10.4614 +3.64
Managed Sectors Series............................... 15.9925 17.1161 +7.03
Money Market Series.................................. 11.0111 11.1970 +1.69
Research Series...................................... 13.3663 14.9703 +12.00
Total Return Series.................................. 14.8406 15.4407 +4.04
Utilities Series..................................... 12.2403 12.8292 +4.81
Value Series......................................... 10.0000* 10.0200 +0.20
World Asset Allocation Series........................ 12.0393 13.1502 +9.23
World Governments Series............................. 13.2523 13.0940 (1.19)
World Growth Series.................................. 12.3321 13.7371 +11.39
World Total Return Series............................ 11.6516 12.1855 +4.58
</TABLE>
* Reflects unit value on date of commencement of operations.
3
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CONDITION -- June 30, 1996
<TABLE>
<CAPTION>
Assets:
Investments in MFS/Sun Life Series Trust: Shares Cost Value
------------ -------------- --------------
<S> <C> <C> <C>
Capital Appreciation Series ("CAS")........... 23,644,001 $ 687,430,343 $ 784,577,033
Conservative Growth Series ("CGS")............ 16,108,658 307,437,161 375,977,731
Emerging Growth Series ("EGS")................ 11,141,306 148,124,976 161,970,485
Government Securities Series ("GSS").......... 25,129,368 318,942,107 310,396,046
High Yield Series ("HYS")..................... 14,828,079 129,219,692 125,448,584
MFS/Foreign & Colonial Emerging Markets Equity
Series ("EME")............................... 29,702 297,052 297,215
MFS/Foreign & Colonial International Growth
and Income Series ("IGI").................... 2,342,557 24,023,322 24,759,745
MFS/Foreign & Colonial International Growth
Series ("IGS")............................... 68,599 687,449 688,165
Managed Sectors Series("MSS")................. 9,037,172 207,606,997 217,395,226
Money Market Series ("MMS")................... 285,343,757 285,343,757 285,343,757
Research Series ("RES")....................... 12,363,305 166,880,138 186,630,776
Total Return Series ("TRS")................... 63,338,340 996,513,572 1,130,871,724
Utilities Series ("UTS")...................... 4,490,028 48,597,673 55,075,151
Value Series ("VAL").......................... 183,450 1,837,288 1,839,915
World Asset Allocation Series ("WAA")......... 4,137,737 49,558,030 54,062,436
World Governments Series ("WGS").............. 12,238,756 145,172,387 130,966,683
World Growth Series ("WGR")................... 14,579,684 170,286,137 188,477,737
World Total Return Series ("WTR")............. 2,187,321 25,207,514 26,740,715
-------------- --------------
$3,713,165,595 $4,061,519,124
--------------
--------------
Receivable from sponsor....................................................... 23,576
--------------
Net assets.............................................................. $4,061,542,700
--------------
--------------
</TABLE>
See notes to financial statements
4
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CONDITION -- continued
<TABLE>
<CAPTION>
Applicable to Owners of
Deferred Variable Annuity Contracts Reserve for
--------------------------------------- Variable
NET ASSETS: Units Unit Value Value Annuities Total
---------- ---------- -------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
MFS REGATTA CONTRACTS:
CAS...................................... 6,404,437 $23.0428 $ 147,552,316 $ 250,583 $ 147,802,899
GSS...................................... 3,580,893 15.0474 53,876,257 203,891 54,080,148
HYS...................................... 1,036,275 18.2698 18,933,274 7,093 18,940,367
MSS...................................... 2,227,826 20.3335 45,294,622 68,362 45,362,984
MMS...................................... 3,979,138 12.4985 49,718,118 124,653 49,842,771
TRS...................................... 12,898,429 18.5369 239,075,142 1,127,972 240,203,114
WGS...................................... 1,586,615 16.0573 25,478,498 73,910 25,552,408
-------------- ------------ --------------
$ 579,928,227 $ 1,856,464 $ 581,784,691
-------------- ------------ --------------
MFS REGATTA GOLD CONTRACTS:
CAS...................................... 30,125,313 $21.0502 $ 634,073,430 $ 2,852,593 $ 636,926,023
CGS...................................... 21,199,556 17.6999 375,203,629 774,507 375,978,136
EGS...................................... 11,293,956 14.3285 161,806,202 113,210 161,919,412
EME...................................... 29,730 9.9956 297,214 -- 297,214
GSS...................................... 20,152,133 12.6892 255,740,242 663,701 256,403,943
HYS...................................... 7,058,202 15.0447 106,167,825 301,234 106,469,059
IGI...................................... 2,364,350 10.4614 24,733,341 26,371 24,759,712
IGS...................................... 68,670 10.0222 688,165 -- 688,165
MSS...................................... 10,036,196 17.1161 171,784,099 233,254 172,017,353
MMS...................................... 20,984,175 11.1970 234,957,437 370,530 235,327,967
RES...................................... 12,403,776 14.9703 185,687,910 1,040,716 186,728,626
TRS...................................... 57,567,010 15.4407 888,829,452 1,720,036 890,549,488
UTS...................................... 4,288,519 12.8292 55,012,191 59,618 55,071,809
VAL...................................... 183,613 10.0200 1,839,915 -- 1,839,915
WAA...................................... 4,103,829 13.1502 53,965,388 102,285 54,067,673
WGS...................................... 8,016,646 13.0940 104,981,977 478,929 105,460,906
WGR...................................... 13,666,432 13.7371 187,734,374 771,478 188,505,852
WTR...................................... 2,182,742 12.1855 26,596,679 150,077 26,746,756
-------------- ------------ --------------
$3,470,099,470 $ 9,658,539 $3,479,758,009
-------------- ------------ --------------
Net assets..................................................... $4,050,027,697 $ 11,515,003 $4,061,542,700
-------------- ------------ --------------
-------------- ------------ --------------
</TABLE>
See notes to financial statements
5
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF OPERATIONS -- Six Months Ended June 30, 1996
<TABLE>
<CAPTION>
CAS CGS EGS GSS HYS
Sub- Sub- Sub- Sub- Sub-
Account Account Account Account Account
------------ ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions
received............................................ $ 63,903,295 $14,154,273 $ 223,677 $ 18,191,771 $ 9,492,026
Mortality and expense risk charges................... 4,614,422 1,988,174 673,293 1,943,202 749,829
Distribution expense charges......................... 108,043 -- -- 41,035 13,504
Administrative expense charges....................... 445,688 238,581 80,795 192,150 76,475
------------ ----------- ----------- ------------ ------------
Net investment income (expense).................. $ 58,735,142 $11,927,518 $ (530,411) $ 16,015,384 $ 8,652,218
------------ ----------- ----------- ------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment transactions:
Proceeds from sales................................ $145,886,213 $ 3,564,068 $17,537,725 $ 49,961,530 $ 50,757,428
Cost of investments sold........................... 113,119,361 2,323,712 15,119,455 51,186,795 46,578,815
------------ ----------- ----------- ------------ ------------
Net realized gains (losses)...................... $ 32,766,852 $ 1,240,356 $ 2,418,270 $ (1,225,265) $ 4,178,613
------------ ----------- ----------- ------------ ------------
Net unrealized appreciation (depreciation) on
investments:
End of period...................................... $ 97,146,690 $68,540,570 $13,845,509 $ (8,546,061) $ (3,771,108)
Beginning of period................................ 106,570,446 52,910,544 3,552,956 15,950,791 6,347,251
------------ ----------- ----------- ------------ ------------
Change in unrealized appreciation
(depreciation).................................. $ (9,423,756) $15,630,026 $10,292,553 $(24,496,852) $(10,118,359)
------------ ----------- ----------- ------------ ------------
Realized and unrealized gains (losses)............... $ 23,343,096 $16,870,382 $12,710,823 $(25,722,117) $ (5,939,746)
------------ ----------- ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.... $ 82,078,238 $28,797,900 $12,180,412 $ (9,706,733) $ 2,712,472
------------ ----------- ----------- ------------ ------------
------------ ----------- ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
EME IGS IGI MSS MMS
Sub- Sub- Sub- Sub- Sub-
Account** Account* Account Account Account
--------- ------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions received... $-- $ -- $ -- $ 27,063,786 $ 5,919,495
Mortality and expense risk charges........................ 89 235 102,170 1,250,378 1,547,177
Distribution expense charges.............................. -- -- -- 32,204 30,384
Administrative expense charges............................ 11 28 12,260 117,842 155,277
--------- ------- ---------- ------------ ------------
Net investment income (expense)....................... $ (100) $ (263 ) $ (114,430) $ 25,663,362 $ 4,186,657
--------- ------- ---------- ------------ ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains on investment transactions:
Proceeds from sales..................................... $5,256 $83,562 $1,240,720 $ 13,097,091 $290,063,048
Cost of investments sold................................ 5,256 83,560 1,191,986 11,150,033 290,063,048
--------- ------- ---------- ------------ ------------
Net realized gains.................................... $-- $ 2 $ 48,734 $ 1,947,058 $ --
--------- ------- ---------- ------------ ------------
Net unrealized appreciation (depreciation) on investments:
End of period........................................... $ 163 $ 716 $ 736,423 $ 9,788,229 $ --
Beginning of period..................................... -- -- 111,437 24,275,006 --
--------- ------- ---------- ------------ ------------
Change in unrealized appreciation (depreciation)...... $ 163 $ 716 $ 624,986 $(14,486,777) $ --
--------- ------- ---------- ------------ ------------
Realized and unrealized gains (losses).................... $ 163 $ 718 $ 673,720 $(12,539,719) $ --
--------- ------- ---------- ------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS.................... $ 63 $ 455 $ 559,290 $ 13,123,643 $ 4,186,657
--------- ------- ---------- ------------ ------------
--------- ------- ---------- ------------ ------------
</TABLE>
*For the period from June 3, 1996 (commencement of operations) to June 30,
1996.
**For the period from June 5, 1996 (commencement of operations) to June 30,
1996.
See notes to financial statements
6
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF OPERATIONS -- continued
<TABLE>
<CAPTION>
RES TRS UTS VAL WAA
Sub- Sub- Sub- Sub- Sub-
Account Account Account Account* Account
----------- ----------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions received.... $ 2,171,375 $80,430,595 $2,685,506 $ -- $1,323,111
Mortality and expense risk charges......................... 763,811 6,654,417 301,075 719 243,412
Distribution expense charges............................... -- 174,966 -- -- --
Administrative expense charges............................. 91,657 623,564 36,129 86 29,209
----------- ----------- ---------- ------- ----------
Net investment income (expense)........................ $ 1,315,907 $72,977,648 $2,348,302 $ (805 ) $1,050,490
----------- ----------- ---------- ------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains on investment transactions:
Proceeds from sales...................................... $ 664,592 $26,935,120 $2,442,078 $26,071 $1,015,144
Cost of investments sold................................. 441,886 19,000,479 1,907,527 26,071 777,332
----------- ----------- ---------- ------- ----------
Net realized gains (losses)............................ $ 222,706 $ 7,934,641 $ 534,551 $ -- $ 237,812
----------- ----------- ---------- ------- ----------
Net unrealized appreciation on investments:
End of period............................................ $19,750,638 $134,358,152 $6,477,478 $2,627 $4,504,406
Beginning of period...................................... 8,623,371 172,733,800 7,026,868 -- 2,577,570
----------- ----------- ---------- ------- ----------
Change in unrealized appreciation (depreciation)....... $11,127,267 $(38,375,648) $ (549,390) $2,627 $1,926,836
----------- ----------- ---------- ------- ----------
Realized and unrealized gains (losses)..................... $11,349,973 $(30,441,007) $ (14,839) $2,627 $2,164,648
----------- ----------- ---------- ------- ----------
INCREASE IN NET ASSETS FROM OPERATIONS..................... $12,665,880 $42,536,641 $2,333,463 $1,822 $3,215,138
----------- ----------- ---------- ------- ----------
----------- ----------- ---------- ------- ----------
</TABLE>
<TABLE>
<CAPTION>
WGS WGR WTR
Sub- Sub- Sub-
Account Account Account Total
------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain distributions received............ $ 18,375,771 $12,008,680 $ 432,723 $256,376,084
Mortality and expense risk charges................................. 823,620 1,020,435 122,930 22,799,388
Distribution expense charges....................................... 19,437 -- -- 419,573
Administrative expense charges..................................... 79,398 122,452 14,751 2,316,353
------------ ----------- ---------- ------------
Net investment income.......................................... $ 17,453,316 $10,865,793 $ 295,042 $230,840,770
------------ ----------- ---------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment transactions:
Proceeds from sales.............................................. $ 12,834,250 $12,978,946 $1,181,460 $630,274,302
Cost of investments sold......................................... 13,373,229 10,958,343 985,913 578,292,801
------------ ----------- ---------- ------------
Net realized gains (losses).................................... $ (538,979) $ 2,020,603 $ 195,547 $ 51,981,501
------------ ----------- ---------- ------------
Net unrealized appreciation (depreciation) on investments:
End of period.................................................... $(14,205,704) $18,191,600 $1,533,201 $348,353,529
Beginning of period.............................................. 4,376,710 13,826,397 1,024,871 419,908,018
------------ ----------- ---------- ------------
Change in unrealized appreciation (depreciation)............... $(18,582,414) $ 4,365,203 $ 508,330 $(71,554,489)
------------ ----------- ---------- ------------
Realized and unrealized gains (losses)............................. $(19,121,393) $ 6,385,806 $ 703,877 $(19,572,988)
------------ ----------- ---------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS.................. $ (1,668,077) $17,251,599 $ 998,919 $211,267,782
------------ ----------- ---------- ------------
------------ ----------- ---------- ------------
</TABLE>
*For the period from June 3, 1996 (commencement of operations) to June 30, 1996.
See notes to financial statements
7
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAS CGS EGS
Sub-Account Sub-Account Sub-Account
-------------------------- -------------------------- ------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30,
1996 1995 1996 1995 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense).................. $ 58,735,142 $ 4,868,051 $ 11,927,518 $ 1,641,149 $ (530,411)
Net realized gains............................... 32,766,852 8,669,752 1,240,356 1,559,779 2,418,270
Net unrealized gains (losses).................... (9,423,756) 131,023,503 15,630,026 52,785,863 10,292,553
------------ ------------ ------------ ------------ ------------
Increase in net assets from operations....... $ 82,078,238 $144,561,306 $ 28,797,900 $ 55,986,791 $ 12,180,412
------------ ------------ ------------ ------------ ------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments received..................... $ 85,231,359 $120,979,478 $ 72,809,361 $ 74,122,408 $ 57,148,765
Net transfers between Sub-Accounts and Fixed
Account....................................... (21,389,224) 51,189,081 13,135,451 19,980,665 27,989,549
Withdrawals, surrenders, annuitizations and
contract charges.............................. (23,763,743) (35,672,499) (9,096,916) (11,060,939) (2,681,854)
------------ ------------ ------------ ------------ ------------
Net accumulation activity.................... $ 40,078,392 $136,496,060 $ 76,847,896 $ 83,042,134 $ 82,456,460
------------ ------------ ------------ ------------ ------------
Annuitization Activity:
Annuitizations................................. $ 687,815 $ 1,153,294 $ 293,291 $ 201,542 $ 71,400
Annuity payments and contract charges.......... (173,672) (216,005) (51,906) (58,715) (3,069)
Net transfers between Sub-Accounts............. (64,375) 531,083 (39,941) 2,298 25,566
Adjustment to annuity reserve.................. (46,916) 131,042 (24,797) 30,462 5,478
------------ ------------ ------------ ------------ ------------
Net annuitization activity................... $ 402,852 $ 1,599,414 $ 176,647 $ 175,587 $ 99,375
------------ ------------ ------------ ------------ ------------
Increase in net assets from participant
transactions.................................... $ 40,481,244 $138,095,474 $ 77,024,543 $ 83,217,721 $ 82,555,835
------------ ------------ ------------ ------------ ------------
Increase in net assets......................... $122,559,482 $282,656,780 $105,822,443 $139,204,512 $ 94,736,247
NET ASSETS:
Beginning of period.............................. 662,169,440 379,512,660 270,155,693 130,951,181 67,183,165
------------ ------------ ------------ ------------ ------------
End of period.................................... $784,728,922 $662,169,440 $375,978,136 $270,155,693 $161,919,412
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
<CAPTION>
Year Ended
Dec. 31,
1995*
------------
<S> <C>
OPERATIONS:
Net investment income (expense).................. $ (274,556)
Net realized gains............................... 2,216,787
Net unrealized gains (losses).................... 3,552,956
------------
Increase in net assets from operations....... $ 5,495,187
------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments received..................... $ 34,471,454
Net transfers between Sub-Accounts and Fixed
Account....................................... 27,751,346
Withdrawals, surrenders, annuitizations and
contract charges.............................. (532,429)
------------
Net accumulation activity.................... $ 61,690,371
------------
Annuitization Activity:
Annuitizations................................. $ 50,528
Annuity payments and contract charges.......... (593)
Net transfers between Sub-Accounts............. 4,223
Adjustment to annuity reserve.................. (56,551)
------------
Net annuitization activity................... $ (2,393)
------------
Increase in net assets from participant
transactions.................................... $ 61,687,978
------------
Increase in net assets......................... $ 67,183,165
NET ASSETS:
Beginning of period.............................. --
------------
End of period.................................... $ 67,183,165
------------
------------
</TABLE>
*For the period from May 1, 1995 (commencement of operations) to December 31,
1995.
See notes to financial statements
8
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
GSS HYS EME IGS IGI
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
-------------------------- -------------------------- ------------ ------------ ------------
Six Months Six Months Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30, June 30, June 30,
1996 1995 1996 1995 1996** 1996* 1996
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(expense).................... $ 16,015,384 $ 11,426,494 $ 8,652,218 $ 5,123,994 $ (100) $ (263) $ (114,430)
Net realized gains (losses)... (1,225,265) (1,546,621) 4,178,613 1,889,832 -- 2 48,734
Net unrealized gains
(losses)..................... (24,496,852) 29,605,147 (10,118,359) 6,838,912 163 716 624,986
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets from operations... $ (9,706,733) $ 39,485,020 $ 2,712,472 $ 13,852,738 $ 63 $ 455 $ 559,290
------------ ------------ ------------ ------------ ------------ ------------ ------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments
received................... $ 36,542,928 $ 47,266,837 $ 15,964,510) $ 20,152,853 $ 45,708 $ 96,114 $ 10,964,757
Net transfers between Sub-
Accounts and Fixed
Account.................... 2,215,012 (42,381,252) (7,737,859) 22,611,563 251,443 591,727 6,469,673
Withdrawals, surrenders,
annuitizations and contract
charges.................... (11,219,903) (21,245,942) (6,119,855) (7,980,818) -- (131) (439,077)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net accumulation
activity................. $ 27,538,037 $(16,360,357) $ 2,106,796 $ 34,783,598 $ 297,151 $ 687,710 $ 16,995,353
------------ ------------ ------------ ------------ ------------ ------------ ------------
Annuitization Activity:
Annuitizations.............. $ 106,273 $ 354,393 $ 17,583 $ 16,894 $ -- $ -- $ 26,492
Annuity payments and
contract charges........... (134,604) (168,285) (36,912) (68,402) -- -- (134)
Net transfers between Sub-
Accounts................... (110,717) (53,070) -- 8,428 -- -- --
Adjustment to annuity
reserve.................... 23,200 33,716 (1,895) (25,024) -- -- (34)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net annuitization
activity................. $ (115,848) $ 166,754 $ (21,224) $ (68,104) $ -- $ -- $ 26,324
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in net
assets from participant
transactions................. $ 27,422,189 $(16,193,603) $ 2,085,572 $ 34,715,494 $ 297,151 $ 687,710 $ 17,021,677
------------ ------------ ------------ ------------ ------------ ------------ ------------
Increase in net assets...... $ 17,715,456 $ 23,291,417 $ 4,798,044 $ 48,568,232 $ 297,214 $ 688,165 $ 17,580,967
NET ASSETS:
Beginning of period........... 292,768,635 269,477,218 120,611,382 72,043,150 -- -- 7,178,745
------------ ------------ ------------ ------------ ------------ ------------ ------------
End of period................. $310,484,091 $292,768,635 $125,409,426 $120,611,382 $ 297,214 $ 688,165 $ 24,759,712
------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------
<CAPTION>
Year Ended
Dec. 31,
1995***
------------
<S> <C>
OPERATIONS:
Net investment income
(expense).................... $ (10,744)
Net realized gains (losses)... (243)
Net unrealized gains
(losses)..................... 111,437
------------
Increase (decrease) in net
assets from operations... $ 100,450
------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments
received................... $ 4,120,619
Net transfers between Sub-
Accounts and Fixed
Account.................... 3,003,996
Withdrawals, surrenders,
annuitizations and contract
charges.................... (46,320)
------------
Net accumulation
activity................. $ 7,078,295
------------
Annuitization Activity:
Annuitizations.............. $ --
Annuity payments and
contract charges........... --
Net transfers between Sub-
Accounts................... --
Adjustment to annuity
reserve.................... --
------------
Net annuitization
activity................. $ --
------------
Increase (decrease) in net
assets from participant
transactions................. $ 7,078,295
------------
Increase in net assets...... $ 7,178,745
NET ASSETS:
Beginning of period........... --
------------
End of period................. $ 7,178,745
------------
------------
</TABLE>
*For the period from June 3, 1996 (commencement of operations) to June 30,
1996.
**For the period from June 5, 1996 (commencement of operations) to June 30,
1996.
***For the period from October 4, 1995 (commencement of operations) to December
31, 1995.
See notes to financial statements
9
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MSS MMS RES
Sub-Account Sub-Account Sub-Account
-------------------------- -------------------------- ------------
Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30,
1996 1995 1996 1995 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)........................ $ 25,663,362 $ 2,070,924 $ 4,186,657 $ 7,468,244 $ 1,315,907
Net realized gains..................................... 1,947,058 2,778,352 -- -- 222,706
Net unrealized gains (losses).......................... (14,486,777) 30,322,483 -- -- 11,127,267
------------ ------------ ------------ ------------ ------------
Increase in net assets from operations............. $ 13,123,643 $ 35,171,759 $ 4,186,657 $ 7,468,244 $ 12,665,880
------------ ------------ ------------ ------------ ------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments received........................... $ 25,529,082 $ 34,586,296 $108,937,370 $172,273,093 $ 71,741,560
Net transfers between Sub-Accounts and Fixed
Account............................................. 7,926,535 9,193,092 (39,332,746) (115,663,895) 33,109,655
Withdrawals, surrenders, annuitizations and contract
charges............................................. (6,945,564) (9,392,233) (20,913,618) (34,523,223) (3,150,158)
------------ ------------ ------------ ------------ ------------
Net accumulation activity.......................... $ 26,510,053 $ 34,387,155 $ 48,691,006 $ 22,085,975 $101,701,057
------------ ------------ ------------ ------------ ------------
Annuitization Activity:
Annuitizations....................................... $ 34,679 $ 92,920 $ 45,281 $ 583,368 $ 341,755
Annuity payments and contract charges................ (48,643) (56,337) (94,312) (185,934) (23,080)
Net transfers between Sub-Accounts................... -- 94,161 62,433 (656,607) 122,765
Adjustment to annuity reserve........................ (10,306) (2,133) (37,469) (33,157) 15,775
------------ ------------ ------------ ------------ ------------
Net annuitization activity......................... $ (24,270) $ 128,611 $ (24,067) $ (292,330) $ 457,215
------------ ------------ ------------ ------------ ------------
Increase in net assets from participant transactions... $ 26,485,783 $ 34,515,766 $ 48,666,939 $ 21,793,645 $102,158,272
------------ ------------ ------------ ------------ ------------
Increase in net assets............................... $ 39,609,426 $ 69,687,525 $ 52,853,596 $ 29,261,889 $114,824,152
NET ASSETS:
Beginning of period.................................... 177,770,911 108,083,386 232,317,142 203,055,253 71,904,474
------------ ------------ ------------ ------------ ------------
End of period.......................................... $217,380,337 $177,770,911 $285,170,738 $232,317,142 $186,728,626
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
<CAPTION>
Year Ended
Dec. 31,
1995
------------
<S> <C>
OPERATIONS:
Net investment income (expense)........................ $ (383,608)
Net realized gains..................................... 380,832
Net unrealized gains (losses).......................... 8,612,162
------------
Increase in net assets from operations............. $ 8,609,386
------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments received........................... $ 44,406,655
Net transfers between Sub-Accounts and Fixed
Account............................................. 15,859,913
Withdrawals, surrenders, annuitizations and contract
charges............................................. (1,251,158)
------------
Net accumulation activity.......................... $ 59,015,410
------------
Annuitization Activity:
Annuitizations....................................... $ 404,830
Annuity payments and contract charges................ (20,548)
Net transfers between Sub-Accounts................... (57,959)
Adjustment to annuity reserve........................ 82,075
------------
Net annuitization activity......................... $ 408,398
------------
Increase in net assets from participant transactions... $ 59,423,808
------------
Increase in net assets............................... $ 68,033,194
NET ASSETS:
Beginning of period.................................... 3,871,280
------------
End of period.......................................... $ 71,904,474
------------
------------
</TABLE>
See notes to financial statements
10
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
TRS UTS VAL WAA
Sub-Account Sub-Account Sub-Account Sub-Account
------------------------------ ------------------------ ------------ ------------
Six Months Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30, June 30,
1996 1995 1996 1995 1996* 1996
-------------- -------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)............ $ 72,977,648 $ 20,227,983 $ 2,348,302 $ 270,357 $ (805) $ 1,050,490
Net realized gains......................... 7,934,641 16,423,720 534,551 265,908 -- 237,812
Net unrealized gains (losses).............. (38,375,648) 159,794,143 (549,390) 7,447,367 2,627 1,926,836
-------------- -------------- ----------- ----------- ------------ ------------
Increase in net assets from
operations............................ $ 42,536,641 $ 196,445,846 $ 2,333,463 $ 7,983,632 $ 1,822 $ 3,215,138
-------------- -------------- ----------- ----------- ------------ ------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 90,111,526 $ 114,688,434 $11,219,570 $12,426,034 $ 825,513 $ 15,670,400
Net transfers between Sub-Accounts and
Fixed Account........................... 13,358,975 (1,317,333) 1,133,992 2,364,291 1,012,834 10,122,449
Withdrawals, surrenders, annuitizations
and contract charges.................... (39,333,871) (63,409,172) (1,409,954) (2,335,754) (254) (811,225)
-------------- -------------- ----------- ----------- ------------ ------------
Net accumulation activity.............. $ 64,136,630 $ 49,961,929 $10,943,608 $12,454,571 $1,838,093 $ 24,981,624
-------------- -------------- ----------- ----------- ------------ ------------
Annuitization Activity:
Annuitizations........................... $ 298,221 $ 238,231 $ 7,689 $ 16,672 $ -- $ 10,540
Annuity payments and contract charges.... (383,784) (656,053) (5,906) (7,291) -- (6,925)
Net transfers between Sub-Accounts....... 2,135 17,486 -- 9,915 -- --
Adjustment to annuity reserve............ (38,645) (16,966) (552) (2,791) -- (121)
-------------- -------------- ----------- ----------- ------------ ------------
Net annuitization activity............. $ (122,073) $ (417,302) $ 1,231 $ 16,505 $ -- $ 3,494
-------------- -------------- ----------- ----------- ------------ ------------
Increase in net assets from participant
transactions.............................. $ 64,014,557 $ 49,544,627 $10,944,839 $12,471,076 $1,838,093 $ 24,985,118
-------------- -------------- ----------- ----------- ------------ ------------
Increase in net assets................... $ 106,551,198 $ 245,990,473 $13,278,302 $20,454,708 $1,839,915 $ 28,200,256
NET ASSETS:
Beginning of period........................ 1,024,201,404 778,210,931 41,793,507 21,338,799 -- 25,867,417
-------------- -------------- ----------- ----------- ------------ ------------
End of period.............................. $1,130,752,602 $1,024,201,404 $55,071,809 $41,793,507 $1,839,915 $ 54,067,673
-------------- -------------- ----------- ----------- ------------ ------------
-------------- -------------- ----------- ----------- ------------ ------------
<CAPTION>
Year Ended
Dec. 31,
1995
-----------
<S> <C>
OPERATIONS:
Net investment income (expense)............ $ (175,907)
Net realized gains......................... 120,590
Net unrealized gains (losses).............. 2,559,790
-----------
Increase in net assets from
operations............................ $ 2,504,473
-----------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $14,182,774
Net transfers between Sub-Accounts and
Fixed Account........................... 6,506,983
Withdrawals, surrenders, annuitizations
and contract charges.................... (403,056)
-----------
Net accumulation activity.............. $20,286,701
-----------
Annuitization Activity:
Annuitizations........................... $ --
Annuity payments and contract charges.... (10,989)
Net transfers between Sub-Accounts....... 78,757
Adjustment to annuity reserve............ 5,357
-----------
Net annuitization activity............. $ 73,125
-----------
Increase in net assets from participant
transactions.............................. $20,359,826
-----------
Increase in net assets................... $22,864,299
NET ASSETS:
Beginning of period........................ 3,003,118
-----------
End of period.............................. $25,867,417
-----------
-----------
</TABLE>
*For the period from June 3, 1996 (commencement of operations) to June 30, 1996.
See notes to financial statements
11
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
WGS WGR WTR
Sub-Account Sub-Account Sub-Account TOTAL
-------------------------- -------------------------- -------------------------- --------------
Six Months Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended Ended
June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31, June 30,
1996 1995 1996 1995 1996 1995 1996
------------ ------------ ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(expense)................. $ 17,453,316 $ 5,279,650 $ 10,865,793 $ 1,467,987 $ 295,042 $ (87,058) $ 230,840,770
Net realized gains
(losses).................. (538,979) 21,142 2,020,603 871,201 195,547 62,601 51,981,501
Net unrealized gains
(losses).................. (18,582,414) 12,299,610 4,365,203 14,693,578 508,330 1,020,693 (71,554,489)
------------ ------------ ------------ ------------ ------------ ------------ --------------
Increase (decrease) in
net assets from
operations............ $ (1,668,077) $ 17,600,402 $ 17,251,599 $ 17,032,766 $ 998,919 $ 996,236 $ 211,267,782
------------ ------------ ------------ ------------ ------------ ------------ --------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments
received................ $ 7,002,857 $ 12,226,329 $ 21,237,503 $ 27,109,744 $ 9,157,058 $ 10,064,130 $ 640,235,941
Net transfers between
Sub-Accounts and Fixed
Account................. (6,323,290) (8,347,691) 13,416,580 5,024,725 3,457,382 1,710,064 59,408,138
Withdrawals, surrenders,
annuitizations and
contract charges........ (6,308,124) (8,464,694) (4,947,556) (7,221,767) (648,641) (505,397) (137,790,444)
------------ ------------ ------------ ------------ ------------ ------------ --------------
Net accumulation
activity.............. $ (5,628,557) $ (4,586,056) $ 29,706,527 $ 24,912,702 $ 11,965,799 $ 11,268,797 $ 561,853,635
------------ ------------ ------------ ------------ ------------ ------------ --------------
Annuitization Activity:
Annuitizations........... $ 37,058 $ 9,873 $ 89,606 $ 398,205 $ -- $ 141,543 $ 2,067,683
Annuity payments and
contract charges........ (73,385) (159,462) (32,326) (48,306) (7,461) (6,755) (1,076,119)
Net transfers between
Sub-Accounts............ -- -- 2,134 6,845 -- (394) --
Adjustment to annuity
reserve................. (3,984) 49,038 (9,318) 42,104 (9,432) 15,473 (139,016)
------------ ------------ ------------ ------------ ------------ ------------ --------------
Net annuitization
activity.............. $ (40,311) $ (100,551) $ 50,096 $ 398,848 $ (16,893) $ 149,867 $ 852,548
------------ ------------ ------------ ------------ ------------ ------------ --------------
Increase (decrease) in net
assets from participant
transactions.............. $ (5,668,868) $ (4,686,607) $ 29,756,623 $ 25,311,550 $ 11,948,906 $ 11,418,664 $ 562,706,183
------------ ------------ ------------ ------------ ------------ ------------ --------------
Increase (decrease) in
net assets.............. $ (7,336,945) $ 12,913,795 $ 47,008,222 $ 42,344,316 $ 12,947,825 $ 12,414,900 $ 773,973,965
NET ASSETS:
Beginning of period...... 138,350,259 125,436,464 141,497,630 99,153,314 13,798,931 1,384,031 3,287,568,735
------------ ------------ ------------ ------------ ------------ ------------ --------------
End of period............ $131,013,314 $138,350,259 $188,505,852 $141,497,630 $ 26,746,756 $ 13,798,931 $4,061,542,700
------------ ------------ ------------ ------------ ------------ ------------ --------------
------------ ------------ ------------ ------------ ------------ ------------ --------------
<CAPTION>
Year Ended
Dec. 31,
1995
--------------
<S> <C>
OPERATIONS:
Net investment income
(expense)................. $ 58,912,960
Net realized gains
(losses).................. 33,713,632
Net unrealized gains
(losses).................. 460,667,644
--------------
Increase (decrease) in
net assets from
operations............ $ 553,294,236
--------------
PARTICIPANT TRANSACTIONS:
Accumulation Activity:
Purchase payments
received................ $ 743,077,138
Net transfers between
Sub-Accounts and Fixed
Account................. (2,514,452)
Withdrawals, surrenders,
annuitizations and
contract charges........ (204,045,401)
--------------
Net accumulation
activity.............. $ 536,517,285
--------------
Annuitization Activity:
Annuitizations........... $ 3,662,293
Annuity payments and
contract charges........ (1,663,675)
Net transfers between
Sub-Accounts............ (14,834)
Adjustment to annuity
reserve................. 252,645
--------------
Net annuitization
activity.............. $ 2,236,429
--------------
Increase (decrease) in net
assets from participant
transactions.............. $ 538,753,714
--------------
Increase (decrease) in
net assets.............. $1,092,047,950
NET ASSETS:
Beginning of period...... 2,195,520,785
--------------
End of period............ $3,287,568,735
--------------
--------------
</TABLE>
See notes to financial statements
12
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
Sun Life of Canada (U.S.) Variable Account F (the "Variable Account"), a
separate account of Sun Life Assurance Company of Canada (U.S.), the Sponsor,
was established on July 13, 1989 as a funding vehicle for the variable portion
of certain group combination fixed/variable annuity 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"), an open-end management investment company registered
under the Investment Company Act of 1940. Massachusetts Financial Services
Company, a subsidiary of the Sponsor, 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.
INVESTMENT VALUATIONS
Investment 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 participants 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
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. The deductions are
transferred periodically to the Sponsor. Currently, the deduction is at an
effective annual rate of 1.25%.
13
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS -- continued
Each year on the account anniversary, an account administration fee ("Account
Fee") equal to the lesser of $30 or 2% of the participant's account value is
deducted from the participant's account to reimburse the Sponsor for certain
administrative expenses. After the annuity commencement date the Account Fee
will be deducted pro rata from each variable annuity payment made during the
year.
The Sponsor does not deduct a sales charge from purchase payments. However, a
withdrawal charge (contingent deferred sales charge) of up to 6% of certain
amounts withdrawn, when applicable, may be deducted to cover certain expenses
relating to the sale of the contracts and certificates.
For assuming the risk that withdrawal charges may be insufficient to compensate
it for the costs of distributing the MFS Regatta contracts, the Sponsor makes a
deduction from the Variable Account at the end of each valuation period for the
first seven account years at an effective annual rate of 0.15% of the net assets
attributable to such contracts. No deduction for the distribution expense charge
is made after the seventh account anniversary.
As reimbursement for administrative expenses attributable to MFS Regatta Gold
contracts which exceed the revenues received from the Account Fees described
above derived from such contracts, the Sponsor makes a deduction from the
Variable Account at the end of each valuation period at an effective annual rate
of 0.15% of the net assets attributable to such contracts.
(4) ANNUITY RESERVES
Annuity reserves are calculated using the 1983 Individual Annuitant Mortality
Table and an assumed interest rate of 4% or 3%, as stated in each participant's
certificate. Required adjustments to the reserves are accomplished by transfers
to or from the Sponsor.
14
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS
<TABLE>
<CAPTION>
Units Transferred
Between Sub-Accounts and Units Withdrawn,
Units Outstanding Fixed Accumulation Surrendered, and
Beginning of Period Units Purchased Account Annuitized
---------------------- ----------------------- ------------------------ ------------------------
Six Months Six Months Six Months Six Months
Ended Year Ended Ended Year Ended Ended Year Ended Ended Year Ended
June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31, June 30, Dec. 31,
MFS REGATTA CONTRACTS 1996 1995 1996 1995 1996 1995 1996 1995
- -------------------------- ---------- ---------- ----------- ---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CAS Sub-Account........... 6,615,207 6,184,731 1,534 8,683 70,475 1,002,774 (282,779) (580,981)
GSS Sub-Account........... 3,535,152 4,235,203 1,574 48 259,182 (289,212) (215,015) (410,887)
HYS Sub-Account........... 1,068,412 839,825 -- -- 44,340 332,946 (76,477) (104,359)
MSS Sub-Account........... 2,150,361 2,066,642 -- 12,503 177,267 206,072 (99,802) (134,856)
MMS Sub-Account........... 3,453,907 3,873,044 -- 6,171 1,003,660 315,466 (478,429) (740,774)
TRS Sub-Account........... 13,106,997 14,225,539 2,063 4,093 440,113 117,384 (650,744) (1,240,019)
WGS Sub-Account........... 1,730,002 1,967,375 -- -- 11,619 (87,581) (155,006) (149,792)
MFS REGATTA GOLD
CONTRACTS
- --------------------------------------
CAS Sub-Account........... 27,782,739 19,909,649 4,228,013 7,106,728 (995,358) 2,287,026 (890,081) (1,520,664)
CGS Sub-Account........... 16,712,586 10,979,711 4,270,734 5,181,021 769,376 1,359,507 (553,140) (807,653)
EGS Sub-Account........... 5,346,104 -- 4,171,074 2,978,021 1,983,573 2,420,603 (206,795) (52,520)
GSS Sub-Account........... 18,082,586 18,784,262 2,866,234 3,836,496 (152,527) (3,241,260) (644,160) (1,296,912)
HYS Sub-Account........... 6,880,080 4,605,818 1,087,891 1,439,990 (570,101) 1,286,018 (339,668) (451,746)
EME Sub-Account........... -- -- 4,573 -- 25,157 -- -- --
IGI Sub-Account........... 711,179 -- 1,066,598 414,060 630,744 301,717 (44,171) (4,598)
IGS Sub-Account........... -- -- 9,587 -- 59,096 -- (13) --
MSS Sub-Account........... 8,542,869 6,351,641 1,528,984 2,269,426 268,491 411,655 (304,148) (489,853)
MMS Sub-Account........... 17,186,041 14,774,386 9,940,954 16,108,059 (4,662,087) (11,138,037) (1,480,733) (2,558,367)
RES Sub-Account........... 5,341,160 392,528 4,999,406 3,726,811 2,308,191 1,346,160 (244,981) (124,339)
TRS Sub-Account........... 53,091,748 48,270,556 5,963,323 8,512,923 352,618 (391,980) (1,840,679) (3,299,751)
UTS Sub-Account........... 3,410,047 2,273,439 917,548 1,164,148 89,898 204,917 (128,974) (232,457)
VAL Sub-Account........... -- -- 82,444 -- 101,194 -- (25) --
WAA Sub-Account........... 2,141,041 299,210 1,234,521 1,294,348 799,345 590,509 (71,078) (43,026)
WGS Sub-Account........... 8,272,858 8,334,019 541,015 981,591 (499,903) (532,375) (297,324) (510,377)
WGR Sub-Account........... 11,421,691 9,182,555 1,617,451 2,422,350 1,010,229 475,925 (382,939) (659,139)
WTR Sub-Account........... 1,170,586 138,126 778,217 922,160 291,040 159,909 (57,101) (49,609)
<CAPTION>
Units Outstanding
End of Period
----------------------
Six Months
Ended Year Ended
June 30, Dec. 31,
MFS REGATTA CONTRACTS 1996 1995
- -------------------------- ---------- ----------
<S> <C> <C>
CAS Sub-Account........... 6,404,437 6,615,207
GSS Sub-Account........... 3,580,893 3,535,152
HYS Sub-Account........... 1,036,275 1,068,412
MSS Sub-Account........... 2,227,826 2,150,361
MMS Sub-Account........... 3,979,138 3,453,907
TRS Sub-Account........... 12,898,429 13,106,997
WGS Sub-Account........... 1,586,615 1,730,002
MFS REGATTA GOLD
CONTRACTS
- --------------------------
CAS Sub-Account........... 30,125,313 27,782,739
CGS Sub-Account........... 21,199,556 16,712,586
EGS Sub-Account........... 11,293,956 5,346,104
GSS Sub-Account........... 20,152,133 18,082,586
HYS Sub-Account........... 7,058,202 6,880,080
EME Sub-Account........... 29,730 --
IGI Sub-Account........... 2,364,350 711,179
IGS Sub-Account........... 68,670 --
MSS Sub-Account........... 10,036,196 8,542,869
MMS Sub-Account........... 20,984,175 17,186,041
RES Sub-Account........... 12,403,776 5,341,160
TRS Sub-Account........... 57,567,010 53,091,748
UTS Sub-Account........... 4,288,519 3,410,047
VAL Sub-Account........... 183,613 --
WAA Sub-Account........... 4,103,829 2,141,041
WGS Sub-Account........... 8,016,646 8,272,858
WGR Sub-Account........... 13,666,432 11,421,691
WTR Sub-Account........... 2,182,742 1,170,586
</TABLE>
15
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants in Sun Life of Canada (U.S.) Variable Account F
and the Board of Directors of Sun Life Assurance Company of Canada (U.S.):
We have audited the accompanying statement of condition of Sun Life of Canada
(U.S.) Variable Account F (the "Variable Account") as of June 30, 1996, the
related statements of operations for the six months then ended and the
statements of changes in net assets for the six months then ended and the year
ended December 31, 1995. 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. 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 June 30, 1996,
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
August 2, 1996
----------------------------------------
This report is prepared for the general information of contract owners. It is
authorized for distribution to prospective purchasers only when preceded or
accompanied by an effective prospectus.
16
<PAGE>
MFS REGATTA
MFS REGATTA GOLD
DIRECTORS AND OFFICERS OF
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
JOHN D. McNEIL, Chairman and Director
JOHN R. GARDNER, President and Director
DAVID D. HORN, Senior Vice President and
General Manager and Director
RICHARD B. BAILEY, Director
A. KEITH BRODKIN, Director
M. COLYER CRUM, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
BONNIE S. ANGUS, Secretary
L. BROCK THOMSON, Vice President
and Treasurer
SUN LIFE ASSURANCE COMPANY
OF CANADA (U.S.)
ANNUITY SERVICE MAILING ADDRESS:
Sun Life Annuity Service Center
P.O. Box 1024, Boston, Massachusetts 02103-9986
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
500 Boylston Street
Boston, Massachusetts 02116-3741
LEGAL COUNSEL
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566, Washington, D.C. 20044-7566
AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, Massachusetts 02110-1616
ACCOUNT INFORMATION
For account information, please call toll free:
1-800-752-7218 anytime from a touch-tone telephone.
To speak with a customer service representative, please call toll
free: 1-800-752-7215 any business day from 8 a.m. to 6 p.m. Eastern time.
GOLD-3 8/96 120M
[REGATTA LOGO]
&
SEMIANNUAL REPORT - JUNE 30, 1996
PROFESSIONALLY MANAGED ANNUITIES ISSUED BY
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.),
A WHOLLY-OWNED SUBSIDIARY OF
SUN LIFE ASSURANCE COMPANY OF CANADA
