SUN LIFE OF CANADA U S VARIABLE ACCOUNT F
N-4 EL/A, 1996-09-10
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<PAGE>

   
                                                      REGISTRATION NO. 333-05227
    
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                              -------------------
 
                                    FORM N-4
   
                     PRE-EFFECTIVE AMENDMENT NO. 1 TO
    
         REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933   /X/
                                      AND
   
                              AMENDMENT NO. 14 TO
    
                  REGISTRATION STATEMENT UNDER THE INVESTMENT
                              COMPANY ACT OF 1940                            /X/


                  SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
                           (EXACT NAME OF REGISTRANT)
 
                  SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
                              (NAME OF DEPOSITOR)
 
                          ONE SUN LIFE EXECUTIVE PARK
                      WELLESLEY HILLS, MASSACHUSETTS 02181
              (ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
                  DEPOSITOR'S TELEPHONE NUMBER: (617) 237-6030

                               BONNIE S. ANGUS
                  SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
                          ONE SUN LIFE EXECUTIVE PARK
                      WELLESLEY HILLS, MASSACHUSETTS 02181
                    (NAME AND ADDRESS OF AGENT FOR SERVICE)
 
                          COPIES OF COMMUNICATIONS TO:
                              DAVID N. BROWN, ESQ.
                              COVINGTON & BURLING
                         1201 PENNSYLVANIA AVENUE, N.W.
                                 P.O. BOX 7566
                             WASHINGTON, D.C. 20044
 
                              -------------------

               APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:

  As soon as practicable after effectiveness of the Registration Statement.

   
Pursuant to the provisions of Rule 24f-2 under the Investment Company
Act of 1940, an indefinite amount of securities is being registered under
the Securities Act of 1933.
    

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR 
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS 
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH 
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION 
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING 
PURSUANT TO SAID SECTION 8(a), SHALL DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

                  SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
   
                        Pre-effective Amendment No. 1 to
    
                       Registration Statement on Form N-4

               Cross Reference Sheet Required by Rule 495(a) under
                           The Securities Act of 1933


ITEM NUMBER IN FORM N-4                 LOCATION IN PROSPECTUS; CAPTION

PART A
     1.   Cover Page                    Cover Page

     2.   Definitions                   Definitions

     3.   Synopsis                      Cover Pages; Expense Summary

     4.   Condensed Financial           Performance Data
          Information                   

     5.   General Description of        A Word About the Company, the
          Registrant, Depositor         Fixed Account, the Variable
          and Portfolio Companies       Account, and the Series Fund;
                                        Additional Information
                                        About the Company

     6.   Deductions and Expenses       How the Contract Charges Are Assessed;
                                        Cash Withdrawals, Withdrawal Charges and
                                        Market Value Adjustment

     7.   General Description of        Purchase Payments and Contract
          Variable Annuity Contracts    Values During Accumulation
                                        Period; Other Contractual
                                        Provisions

     8.   Annuity Period                Annuity Provisions

     9.   Death Benefit                 Death Benefit

    10.   Purchases and Contract        Purchase Payments and Contract
          Value                         Values During Accumulation
                                        Period

    11.   Redemptions                   Cash Withdrawals, Withdrawal
                                        Charges and Market Value
                                        Adjustment

    12.   Taxes                         Federal Tax Status

    13.   Legal Proceedings             Legal Proceedings

    14.   Table of Contents of the      Not Applicable
          Statement of Additional
          Information

reggold

<PAGE>

ITEM NUMBER IN FORM N-4                 LOCATION IN PROSPECTUS; CAPTION

PART B

  15.     Cover Page                    Not Applicable

  16.     Table of Contents             Not Applicable

  17.     General Information and       A Word About the Company, the
          History                       Fixed Account, the Variable
                                        Account and the Series Fund;
                                        Additional Information About the
                                        Company

  18.     Services                      Other Contractual Provisions;
                                        Administration of the Contracts

  19.     Purchase of Securities        Purchase Payments and Contract
          Being Offered                 Values During Accumulation Period

  20.     Underwriters                  Distribution of the Contracts

  21.     Calculation of Performance    Performance Data
          Data

  22.     Annuity Payments              Annuity Provisions

  23.     Financial Statements          Financial Statements

<PAGE>

                                     PART A

                      INFORMATION REQUIRED IN A PROSPECTUS


   
      Attached hereto and made a part hereof is the Prospectus dated 
September 13, 1996.
    
<PAGE>
   
                                                                      PROSPECTUS
                                                              SEPTEMBER 13, 1996
    
 
                              MFS REGATTA CLASSIC
 
               --------------------------------------------------
 
    The   master  group   flexible  payment  deferred   annuity  contracts  (the
"Contracts") and related  certificates offered by  this Prospectus are  designed
for  use in connection with retirement  and deferred compensation plans, some of
which may qualify as retirement programs under Sections 401, 403, or 408 of  the
Internal Revenue Code. The Contracts are issued by Sun Life Assurance Company of
Canada  (U.S.) (the "Company"), a wholly-owned  subsidiary of Sun Life Assurance
Company of  Canada, having  its  Principal Executive  Offices  at One  Sun  Life
Executive  Park, Wellesley Hills, Massachusetts 02181, telephone (617) 237-6030.
The Contracts provide  that annuity  payments will  begin on  a selected  future
date.  The Contracts provide for the accumulation of values on either a variable
basis, a fixed basis, or  a fixed and variable basis  and provide for fixed  and
variable annuity payments as elected.
 
    Each Participant under a Contract will receive a Certificate evidencing such
Participant's coverage under the Contract. The initial Purchase Payment for each
Certificate  must be at least $25,000  and each additional Purchase Payment must
be at least  $1,000, unless waived  by the  Company. The prior  approval of  the
Company  is  required before  it will  accept  a Purchase  Payment in  excess of
$1,000,000.
 
   
    The Participant may elect to have values under the Certificate accumulate on
a fixed  basis in  the Fixed  Account,  which pays  interest at  the  applicable
Guaranteed  Interest  Rate(s)  for  the  duration  of  the  particular Guarantee
Period(s) selected by the  Participant, or on  a variable basis  in Sun Life  of
Canada (U.S.) Variable Account F (the "Variable Account"), a separate account of
the  Company, or divided between the Fixed Account and the Variable Account. The
assets of the Variable Account  are divided into Sub-Accounts. Each  Sub-Account
uses  its assets  to purchase, at  their net  asset value, shares  of a specific
series of  MFS/Sun  Life  Series Trust    (the  "Series Fund"),  a  mutual  fund
registered   under  the  Investment   Company  Act  of   1940,  and  advised  by
Massachusetts Financial Services Company, a subsidiary of the Company.  Eighteen
series  are  available  for investment  under  the Contracts:  (1)  Money Market
Series; (2) High Yield Series;  (3) Capital Appreciation Series; (4)  Government
Securities  Series; (5) World  Governments Series; (6)  Total Return Series; (7)
Managed Sectors Series;  (8) Conservative Growth  Series; (9) Utilities  Series;
(10)  World Growth  Series; (11)  Research Series;  (12) World  Asset Allocation
Series; (13)  World  Total Return  Series;  (14) Emerging  Growth  Series;  (15)
MFS/Foreign  & Colonial International Growth Series; (16) MFS/Foreign & Colonial
International Growth and  Income Series;  (17) MFS/Foreign  & Colonial  Emerging
Markets  Equity  Series;  and  (18)  Value  Series.  The  Series  Fund  pays its
investment adviser certain fees charged against  the assets of each series.  The
value of the variable portion, if any, of a Participant's Account and the amount
of  variable annuity payments will vary to reflect the investment performance of
the series of the Series Fund selected  by the Participant and the deduction  of
the  contract charges described under "How the Contract Charges Are Assessed" on
page 24. For more information  about the Series Fund,  see "The Series Fund"  on
page 14 and the accompanying Series Fund prospectus.
    
 
                                                        (CONTINUED ON NEXT PAGE)
 
THE  CONTRACTS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
ANY BANK,  AND  ARE NOT  FEDERALLY  INSURED  BY THE  FEDERAL  DEPOSIT  INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
 
THESE  SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED BY  THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR  ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
 
THIS  PROSPECTUS IS  VALID ONLY  WHEN ACCOMPANIED  BY THE  CURRENT PROSPECTUS OF
MFS/SUN LIFE  SERIES TRUST.  YOU  SHOULD RETAIN  THESE PROSPECTUSES  FOR  FUTURE
REFERENCE.
 
*ANY REFERENCE IN THIS PROSPECTUS TO RECEIPT BY THE COMPANY MEANS RECEIPT AT ITS
ANNUITY  SERVICE MAILING ADDRESS, C/O SUN  LIFE ANNUITY SERVICE CENTER, P.O. BOX
1024, BOSTON, MASSACHUSETTS 02103.
<PAGE>
    If the  Participant elects  to have  values accumulated  on a  fixed  basis,
Purchase  Payments are allocated to one or more Guarantee Periods made available
by the  Company  in  connection  with  the Fixed  Account  as  selected  by  the
Participant.  The Fixed Account is the general  account of the Company (See "The
Fixed Account" on page 12).  The Company will credit interest  at a rate of  not
less than three percent (3%) per year, compounded annually, to amounts allocated
to the Fixed Account and guarantees these amounts at various interest rates (the
"Guaranteed Interest Rates") for the duration of the Guarantee Period elected by
the  Participant, subject to the imposition of any applicable withdrawal charge,
Market Value  Adjustment, or  account administration  fee. The  Company may  not
change  a Guaranteed  Interest Rate  for the  duration of  the Guarantee Period;
however, Guaranteed Interest  Rates applicable to  subsequent Guarantee  Periods
cannot be predicted and will be determined at the sole discretion of the Company
(subject  to the  minimum guarantee  of three  percent (3%)).  That part  of the
Contract relating to the Fixed Account is registered under the Securities Act of
1933, but the Fixed Account is not subject to the restrictions of the Investment
Company Act of 1940.
 
   
    The Company does not deduct a sales charge from Purchase Payments.  However,
a  withdrawal charge (contingent  deferred sales charge) may  be assessed by the
Company. This charge is intended to reimburse the Company for expenses  relating
to  the distribution of the Contracts and Certificates. After a Purchase Payment
has been held by the  Company for one year it  may be withdrawn without  charge.
Also,  no withdrawal charge is assessed  upon annuitization, upon payment of the
death benefit or upon transfers. In addition,  when a withdrawal is made from  a
Qualified  Contract  to  comply  with  mandatory  distribution  requirements, no
withdrawal charge will  be applied  to the  amount required  to be  distributed.
Other amounts withdrawn, adjusted by any applicable Market Value Adjustment with
respect  to the Fixed Account, will be subject  to a withdrawal charge of 1%. In
no event  will  the the  withdrawal  charges assessed  against  a  Participant's
Account exceed 1% of Purchase Payments (See "Withdrawal Charges" on page 21).
    
 
   
    In  addition, any cash withdrawal of amounts allocated to the Fixed Account,
other than a withdrawal effective within 30 days prior to the Expiration Date of
the applicable Guarantee Period, will be  subject to a Market Value  Adjustment.
The  Market Value Adjustment  will reflect the  relationship between the Current
Rate (which is the  Guaranteed Interest Rate currently  declared by the  Company
for Guarantee Periods equal to the balance of the Guarantee Period applicable to
the  amount being withdrawn or, if  the Guarantee Period was established through
the Monthly or Quarterly Dollar Cost Averaging Options, for current  allocations
to  these options)  and the  Guaranteed Interest  Rate applicable  to the amount
being withdrawn. Generally, if  the Guaranteed Interest Rate  is lower than  the
Current Rate, then the application of the Market Value Adjustment will result in
a  lower payment upon withdrawal. Similarly,  if the Guaranteed Interest Rate is
higher than the  Current Rate, the  application of the  Market Value  Adjustment
will  result in a higher payment  upon withdrawal (See "Market Value Adjustment"
on page 22).
    
 
    The Company reserves  the right to  defer the payment  of amounts  withdrawn
from  the Fixed  Account for  a period not  to exceed  six months  from the date
written request for such withdrawal is received by the Company.
 
    Special restrictions  on withdrawals  apply to  Certificates used  with  Tax
Sheltered  Annuities  established pursuant  to  Section 403(b)  of  the Internal
Revenue Code (See "Section 403(b) Annuities" on page 22).
 
    In addition,  under  certain circumstances  withdrawals  may result  in  tax
penalties  (See "Federal  Tax Status").  For a  discussion of  cash withdrawals,
withdrawal charges  and  the  Market Value  Adjustment  see  "Cash  Withdrawals,
Withdrawal Charges and Market Value Adjustment" beginning on page 20.
 
   
    On each Account Anniversary and on surrender of a Certificate for full value
the  Company will deduct a $50 annual account administration fee ("Account Fee")
from the Participant's Account. After  the Annuity Commencement Date the  annual
Account Fee will be deducted in equal amounts from each variable annuity payment
made  during  the year.  In addition,  the  Company makes  a deduction  from the
Variable Account at the end of each Valuation Period at an effective annual rate
of 0.15% of the daily net assets  of the Variable Account. These charges are  to
reimburse  the Company for  administrative expenses related  to the issuance and
maintenance of the Contracts and Certificates. The Account Fee will be waived by
the Company when a Participant's Account  Value is greater than $100,000 on  the
Account Anniversary (See "Administrative Charges" on page 24).
    
 
                                       2
<PAGE>
   
    The  Company also deducts a mortality and  expense risk charge at the end of
each Valuation Period equal to  an effective annual rate  of 1.00% of the  daily
net  assets of the Variable  Account for mortality and  expense risks assumed by
the Company (See "Mortality and Expense Risk Charge" on page 25).
    
 
   
    Under certain circumstances  the Company  may substitute  shares of  another
series  or  shares of  another registered  open-end  investment company  or unit
investment trust both for Series Fund  shares already purchased by the  Variable
Account  and as the security to be purchased in the future. Also, upon notice to
the Owner, Participant or the Payee  during the annuity period, the Company  may
modify  the contract if such modification: (i) is necessary to make the Contract
or the  Variable  Account  comply  with  any  law  or  regulation  issued  by  a
governmental  agency to which the Company or the Variable Account is subject; or
(ii) is necessary to  assure continued qualification of  the Contract under  the
Internal  Revenue Code  or other  federal or  state laws  relating to retirement
annuities or annuity contracts; or (iii) is necessary to reflect a change in the
operation of  the  Variable  Account  or  the  Sub-Accounts;  or  (iv)  provides
additional  Variable Account and/or fixed accumulation options (See "Substituted
Securities," "Change in  Operation of  Variable Account"  and "Modification"  on
page 32).
    
 
    In  addition,  the  Contracts  provide  that  the  Company  may  change  the
withdrawal  charges,   Account  Fee,   mortality  and   expense  risk   charges,
administrative expense charges, transfer charges, the tables used in determining
the  amount  of the  first monthly  variable annuity  payment and  fixed annuity
payments and the formula used to calculate the Market Value Adjustment, provided
that such modification shall apply  only with respect to Participant's  Accounts
established after the effective date of such modification (See "Modification" on
page 32).
 
    In the event of the death of the Annuitant prior to the Annuity Commencement
Date,  the Company will pay a death benefit  to the Beneficiary. If the death of
the Annuitant occurs on or after the Annuity Commencement Date, no death benefit
will be payable except as may be provided under the Annuity Option elected  (See
"Death Benefit" on page 23).
 
    Annuity   Payments  will  begin  on   the  Annuity  Commencement  Date.  The
Participant selects the Annuity Commencement Date, frequency of payments and the
Annuity Option (See "Annuity Provisions" on page 26).
 
    Premium taxes payable to any governmental  entity will be deducted from  the
Participant's Account (See "Premium Taxes" on page 25).
 
    Subject  to  certain conditions,  and  during the  Accumulation  Period, the
Participant may transfer  amounts among  the Sub-Accounts  or Guarantee  Periods
available  under  the  Contract. Currently  there  is no  charge  for transfers.
Transfers from or within the Fixed Account  will be subject to the Market  Value
Adjustment  unless  the  transfer  is  effective within  30  days  prior  to the
Expiration Date of the amount transferred and other restrictions may apply  (See
"Transfer Privilege; Restriction on Market Timers" on page 19).
 
    After  the  Annuity Commencement  Date, the  Payee  may, subject  to certain
restrictions, exchange the  value of  a designated  number of  Annuity Units  of
particular  Sub-Accounts then credited with respect  to the particular Payee for
other Annuity Units, the value of which would be such that the dollar amount  of
an  annuity payment made on the date of  the exchange would be unaffected by the
fact of the exchange (See "Exchange of Variable Annuity Units" on page 29).
 
    The Company  will  vote Series  Fund  shares  held by  the  Sub-Accounts  at
meetings of shareholders of the Series Fund, but will follow voting instructions
received from persons having the right to give voting instructions. The Owner or
Participant  is the person having the right to give voting instructions prior to
the Annuity Commencement  Date. On or  after the Annuity  Commencement Date  the
Payee  is the person having  such voting rights. Any  shares attributable to the
Company and  Series Fund  shares for  which no  timely voting  instructions  are
received  will be voted by the Company in  the same proportion as the shares for
which instructions are received from persons  having such right (See "Voting  of
Series Fund Shares" on page 31).
 
   
    The  Company will furnish Participants and  such other persons having voting
rights with certain reports and statements described under "Periodic Reports" on
page 31. Such reports, other than  prospectuses, will not include the  Company's
financial statements.
    
 
    If a Participant is not satisfied with the Certificate it may be returned to
the  Company at its Annuity Service Mailing Address within ten days after it was
delivered to the Participant. When the Company receives
 
                                       3
<PAGE>
   
the returned  Certificate it  will be  cancelled and  the Participant's  Account
Value  at  the end  of the  Valuation  Period during  which the  Certificate was
received by the Company  will be refunded. However,  if applicable state law  so
requires,  the full amount of any Purchase  Payment received by the Company will
be refunded, the "free look" period may be greater than ten days and alternative
methods of returning  the Certificate may  be acceptable (See  "Right to  Return
Contract" on page 33).
    
 
                             AVAILABLE INFORMATION
 
    The  Company is subject to the  informational requirements of the Securities
Exchange Act of 1934 (the "1934  Act"), as amended, and in accordance  therewith
files  reports and other information with the Securities and Exchange Commission
(the "Commission").  Such reports  and other  information can  be inspected  and
copied  at the public reference  facilities of the Commission  at Room 1024, 450
Fifth Street, N.W., Washington,  D.C. and at  the Commission's Regional  Offices
located at 75 Park Place, New York, New York and Northwestern Atrium Center, 500
West  Madison Street, Suite  1400, Chicago, Illinois  60661-2511. Copies of such
materials also  can  be  obtained  from the  Public  Reference  Section  of  the
Commission  at 450  Fifth Street,  N.W., Washington,  D.C. 20549,  at prescribed
rates.
 
    The  Company   has   filed  registration   statements   (the   "Registration
Statements")  with the Commission  under the Securities Act  of 1933 relating to
the Contracts offered by  this Prospectus. This Prospectus  has been filed as  a
part  of the Registration Statements and does not contain all of the information
set forth in the Registration Statements and exhibits thereto, and reference  is
hereby made to such Registration Statements and exhibits for further information
relating  to the Company and the  Contracts. The Registration Statements and the
exhibits thereto may  be inspected  and copied, and  copies can  be obtained  at
prescribed rates, in the manner set forth in the preceding paragraph.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
   
    The  Annual Report  on Form 10-K  for the  year ended December  31, 1995 and
Quarterly Reports on Form 10-Q  for the quarters ended  March 31, 1996 and  June
30,  1996 heretofore filed by the Company with the Commission under the 1934 Act
are incorporated by reference in this Prospectus.
    
 
    Any statement contained in a document incorporated by reference herein shall
be deemed modified or superseded hereby to the extent that a statement contained
in a later-filed document  or herein shall modify  or supersede such  statement.
Any  statement  so modified  or superseded  shall  not be  deemed, except  as so
modified or superseded, to constitute a part of this Prospectus.
 
   
    The Company will furnish, without charge, to  each person to whom a copy  of
this Prospectus is delivered, upon the written or oral request of such person, a
copy  of the document referred to above which has been incorporated by reference
in this Prospectus, other than exhibits  to such document (unless such  exhibits
are specifically incorporated by reference in the Prospectus). Requests for such
document  should  be  directed  to  Margaret  Sears  Mead,  Secretary,  Sun Life
Assurance Company  of Canada  (U.S.),  One Sun  Life Executive  Park,  Wellesley
Hills, Massachusetts 02181, telephone (617) 237-6030.
    
 
                                       4
<PAGE>
                               TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                                                  PAGE
<S>                                                               <C>
Definitions                                                         7
Expense Summary                                                     9
Performance Data                                                   11
This Prospectus Is a Catalog of Facts                              11
Uses of the Contract                                               11
A Word About the Company, the Fixed Account, the Variable
  Account and the Series Fund                                      12
    The Company                                                    12
    The Fixed Account                                              12
    The Variable Account                                           13
    The Series Fund                                                14
Purchase Payments and Contract Values During Accumulation
  Period                                                           16
    Purchase Payments                                              16
    Participant's Account                                          17
    Variable Accumulation Value                                    17
    Fixed Accumulation Value                                       18
    Guarantee Periods                                              18
    Dollar Cost Averaging                                          19
    Guaranteed Interest Rates                                      19
    Transfer Privilege; Restriction on Market Timers               19
Cash Withdrawals, Withdrawal Charges and Market Value
  Adjustment                                                       20
    Cash Withdrawals                                               20
    Withdrawal Charges                                             21
    Amount of Withdrawal Charge                                    21
    Section 403(b) Annuities                                       22
    Market Value Adjustment                                        22
Death Benefit                                                      23
    Death Benefit Provided by the Contract                         23
    Election and Effective Date of Election                        23
    Payment of Death Benefit                                       24
    Amount of Death Benefit                                        24
How the Contract Charges Are Assessed                              24
    Administrative Charges                                         24
    Premium Taxes                                                  25
    Mortality and Expense Risk Charge                              25
    Withdrawal Charges                                             26
Annuity Provisions                                                 26
    Annuity Commencement Date                                      26
    Election--Change of Annuity Option                             26
    Annuity Options                                                27
    Determination of Annuity Payments                              28
    Fixed Annuity Payments                                         28
    Variable Annuity Payments                                      28
    Annuity Unit Value                                             28
    Exchange of Variable Annuity Units                             29
    Annuity Payment Rates                                          29
</TABLE>
    
 
                                       5
<PAGE>
                         TABLE OF CONTENTS--(CONTINUED)
   
<TABLE>
<CAPTION>
                                                                  PAGE
<S>                                                               <C>
Other Contractual Provisions                                       29
    Payment Limits                                                 29
    Designation and Change of Beneficiary                          29
    Exercise of Contract Rights                                    30
    Change of Ownership                                            30
    Death of Participant                                           30
    Voting of Series Fund Shares                                   31
    Periodic Reports                                               31
    Substituted Securities                                         32
    Change in Operation of Variable Account                        32
    Splitting Units                                                32
    Modification                                                   32
    Discontinuance of New Participants                             33
    Custodian                                                      33
    Right to Return Contract                                       33
Federal Tax Status                                                 33
    Introduction                                                   33
    Tax Treatment of the Company and the Variable Account          34
    Taxation of Annuities in General                               34
    Qualified Retirement Plans                                     36
    Pension and Profit-Sharing Plans                               36
    Tax-Sheltered Annuities                                        36
    Individual Retirement Accounts                                 36
Administration of the Contracts                                    36
Distribution of the Contracts                                      37
Additional Information About the Company                           38
    Selected Financial Data                                        38
    Management's Discussion and Analysis of Financial
     Condition and Results of Operations                           38
    Liquidity                                                      41
    Reinsurance                                                    41
    Reserves                                                       41
    Investments                                                    41
    Competition                                                    42
    Employees                                                      42
    Properties                                                     42
The Company's Directors and Executive Officers                     42
State Regulation                                                   45
Legal Proceedings                                                  46
Legal Matters                                                      46
Accountants                                                        46
Registration Statements                                            46
Financial Statements                                               46
Interim Period Financial Statements                                77
Appendix A--Variable Accumulation Unit Value, Annuity Unit
  Value and Variable Annuity Payment Calculations
Appendix B--State Premium Taxes
Appendix C--Withdrawals, Withdrawal Charges and the Market
  Value Adjustment
Appendix D--Calculation of Performance Data; Advertising and
  Sales Literature
</TABLE>
    
 
                                       6
<PAGE>
                                  DEFINITIONS
 
    The following terms as used in this Prospectus have the indicated meanings:
 
    ACCOUNT  YEARS AND ACCOUNT  ANNIVERSARIES:  The first  Account Year shall be
the period of 12  months plus a  part of a  month as measured  from the Date  of
Coverage  for each  Participant to  the first  day of  the calendar  month which
follows the  calendar month  of coverage.  All Account  Years and  Anniversaries
thereafter  shall be 12 month periods based  upon such first day of the calendar
month which follows the calendar month of coverage. If, for example, the Date of
Coverage is in March, the first Account Year will be determined from the Date of
Coverage but will end on the last day of March in the following year; all  other
Account Years and all Account Anniversaries will be measured from April 1.
 
    ACCUMULATION  PERIOD:  The  period before the  Annuity Commencement Date and
during the lifetime of the Annuitant.
 
   
    ANNUITANT:  The person or persons named in the Application and on whose life
the first annuity payment  is to be  made. The Participant  may not designate  a
"Co-Annuitant"  unless the Participant  and Annuitant are  different persons. If
more than one person is so named, all provisions of the Contract which are based
on the death of the "Annuitant" will be  based on the date of death of the  last
surviving of the persons so named. By example, the death benefit will become due
only  upon  the death,  prior  to the  Annuity  Commencement Date,  of  the last
surviving of the persons so named.  Collectively, these persons are referred  to
in  the Contract  as "Annuitants."  The Participant is  not permitted  to name a
"Co-Annuitant" under a Qualified Contract.
    
 
    *ANNUITY COMMENCEMENT DATE:   The date  on which the  first annuity  payment
under each Certificate is to be made.
 
    *ANNUITY OPTION:  The method for making annuity payments.
 
    ANNUITY  UNIT:  A unit  of measure used in the  calculation of the amount of
the second  and  each subsequent  variable  annuity payment  from  the  Variable
Account.
 
    APPLICATION:   The document signed by each Participant that serves as his or
her application for participation under this Contract.
 
    *BENEFICIARY:  The person  or entity having the  right to receive the  death
benefit  set forth in each Certificate  and, for Non-Qualified Contracts, who is
the "designated  beneficiary" for  purposes  of Section  72(s) of  the  Internal
Revenue Code in the event of the Participant's death.
 
    CERTIFICATE:  The document for each Participant which evidences the coverage
of the Participant under the Contract.
 
    COMPANY:  Sun Life Assurance Company of Canada (U.S.).
 
    CONTRACT  APPLICATION:  The document signed  by the Owner that evidences the
Owner's application for this Contract.
 
    DATE OF  COVERAGE:   The  date  on  which a  Participant's  Account  becomes
effective.
 
    DUE  PROOF  OF DEATH:    An original  certified  copy of  an  official death
certificate, an original  certified copy  of a decree  of a  court of  competent
jurisdiction  as to the finding of death, or any other proof satisfactory to the
Company.
 
    EXPIRATION DATE:  The last day of a Guarantee Period.
 
    FIXED ACCOUNT:   The Fixed  Account consists of  all assets  of the  Company
other than those allocated to a separate account of the Company.
 
   
    FIXED  ACCUMULATION VALUE:  The  sum of the values  of all Guarantee Amounts
credited to a Participant's Account.
    
 
    FIXED ANNUITY:   An annuity with  payments which  do not vary  as to  dollar
amount.
 
    GUARANTEE AMOUNT:  Any portion of a Participant's Account Value allocated to
a  particular  Guarantee Period  with  a particular  Expiration  Date (including
interest earned thereon).
 
    GUARANTEE PERIOD:   The  period  for which  a  Guaranteed Interest  Rate  is
credited.
 
- ---------
*As specified in the Application, unless changed.
 
                                       7
<PAGE>
    GUARANTEED INTEREST RATE:  The rate of interest credited by the Company on a
compound annual basis during any Guarantee Period.
 
   
    INTERNAL  REVENUE  CODE  (CODE):   The  Internal  Revenue Code  of  1986, as
amended.
    
 
    ISSUE DATE:  The date on which the Contract becomes effective.
 
   
    NET PURCHASE PAYMENT:   That  portion of  a Purchase  Payment which  remains
after deduction of any applicable premium or similar tax.
    
 
    NON-QUALIFIED  CONTRACT:   A Contract used  in connection  with a retirement
plan which  does  not  receive  favorable federal  income  tax  treatment  under
Sections  401,  403, or  408  of the  Internal  Revenue Code.  The Participant's
interest in  the Contract  must be  owned by  a natural  person or  agent for  a
natural  person for the Contract to receive favorable income tax treatment as an
annuity.
 
    *OWNER:  The  person, persons  or entity  entitled to  the ownership  rights
stated  in the Contract and  in whose name or names  the Contract is issued. The
Owner may designate a trustee or custodian of a retirement plan which meets  the
requirements  of Section 401,  Section 408(c) or Section  408(k) of the Internal
Revenue Code to serve  as legal owner  of assets of a  retirement plan, but  the
term  "Owner", as used herein, shall refer to the organization entering into the
Contract.
 
    PARTICIPANT:   The  person named  in  the  Certificate who  is  entitled  to
exercise all rights and privileges of ownership under the Certificate, except as
reserved by the Owner.
 
    PARTICIPANT'S ACCOUNT:  An account established for each Participant to which
Net Purchase Payments are credited.
 
    PARTICIPANT'S  ACCOUNT VALUE:  The variable accumulation value, if any, plus
the fixed  accumulation  value, if  any,  of  a Participant's  Account  for  any
Valuation Period.
 
    PAYEE:   A recipient  of payments under  the Contract. The  term includes an
Annuitant or a Beneficiary  who becomes entitled to  benefits upon the death  of
the Annuitant.
 
    PURCHASE  PAYMENT (PAYMENT):  An amount paid to the Company as consideration
for the benefits provided by the Contract.
 
   
    QUALIFIED CONTRACT:  A  Contract used in connection  with a retirement  plan
which  receives favorable federal income tax  treatment under Sections 401, 403,
or 408 of the Internal Revenue Code.
    
 
    RECEIPT:  Receipt  by the  Company at  its Annuity  Service Mailing  Address
shown on the cover of this Prospectus.
 
    SERIES FUND:  MFS/Sun Life Series Trust.
 
    SUB-ACCOUNT:   That portion of the  Variable Account which invests in shares
of a specific series or sub-series of the Series Fund.
 
    VALUATION PERIOD:   The period of  time from one  determination of  Variable
Accumulation  Unit and Annuity Unit values  to the next subsequent determination
of these values. Such  determination shall be  made as of the  close of the  New
York  Stock Exchange on  each day the Exchange  is open for  trading and on such
other days on which  there is a  sufficient degree of  trading in the  portfolio
securities  of the Variable Account so  that the values of Variable Accumulation
Units and Annuity Units might be materially affected.
 
    VARIABLE ACCOUNT:  A  separate account of the  Company consisting of  assets
set  aside by the Company, the investment  performance of which is kept separate
from that of the general assets of the Company.
 
    VARIABLE ACCUMULATION UNIT:   A unit of measure  used in the calculation  of
the value of the variable portion of a Participant's Account.
 
   
    VARIABLE  ACCUMULATION  VALUE:    The  sum  of  the  value  of  all Variable
Accumulation Units credited to a Participant's Account.
    
 
    VARIABLE ANNUITY:  An annuity with  payments which vary as to dollar  amount
in  relation  to the  investment performance  of  specified Sub-Accounts  of the
Variable Account.
 
    YEAR:  Any consecutive period of 365 days.
 
- ---------
*As specified in the Application, unless changed.
 
                                       8
<PAGE>
                                EXPENSE SUMMARY
 
    The purpose of the following table  and Example is to help Participants  and
prospective  purchasers to  understand the  costs and  expenses that  are borne,
directly and  indirectly, by  Participants WHEN  PAYMENTS ARE  ALLOCATED TO  THE
VARIABLE ACCOUNT. The table reflects expenses of the Variable Account as well as
of the Series Fund. The information set forth should be considered together with
the narrative provided under the heading "How the Contract Charges Are Assessed"
in  this Prospectus, and with  the Series Fund's prospectus.  In addition to the
expenses listed below, premium taxes may be applicable.
<TABLE>
<CAPTION>
                                               CAPITAL
                             MONEY     HIGH    APPRE-    GOVERNMENT      WORLD
 PARTICIPANT                 MARKET   YIELD    CIATION   SECURITIES   GOVERNMENTS
 TRANSACTION EXPENSES        SERIES   SERIES   SERIES      SERIES       SERIES
 --------------------------  ------   ------   -------   ----------   -----------
 <S>                         <C>      <C>      <C>       <C>          <C>
 Sales Load Imposed on
  Purchases                      0        0        0           0            0
 Deferred Sales Load (as a
  percentage of Purchase
  Payments withdrawn)
   Number of Complete Years
    Purchase Payment in
    Account
     Less than 1...........      1%       1%       1%          1%           1%
     1 or more.............      0%       0%       0%          0%           0%
 Exchange fee(1)...........      0        0        0           0            0
 
<CAPTION>
 ANNUAL ACCOUNT FEE (2)                 $50 Per Participant's Account
 --------------------------
 SEPARATE ACCOUNT ANNUAL
 EXPENSES
 --------------------------
 <S>                         <C>      <C>      <C>       <C>          <C>
 (as a percentage of
 average separate account
 assets)
 Mortality and Expense Risk
  Fees.....................   1.00%    1.00%    1.00%       1.00%        1.00%
 Administrative Expense
  Charge...................   0.15%    0.15%    0.15%       0.15%        0.15%
 Other Fees and Expenses of
  the Separate Account.....   0.00%    0.00%    0.00%       0.00%        0.00%
 Total Separate Account
  Annual Expenses..........   1.15%    1.15%    1.15%       1.15%        1.15%
<CAPTION>
 SERIES FUND ANNUAL
 EXPENSES
 --------------------------
 <S>                         <C>      <C>      <C>       <C>          <C>
 (as a percentage of Series
 Fund average net assets)
 Management Fees...........   0.50%    0.75%    0.75%       0.55%        0.75%
 Other Expenses............   0.09%    0.12%    0.08%       0.08%        0.14%
 Total Series Fund Annual
  Expenses.................   0.59%    0.87%    0.83%       0.63%        0.89%
 
<CAPTION>
 
                             TOTAL    MANAGED   CONSERVATIVE
 PARTICIPANT                 RETURN   SECTORS      GROWTH      UTILITIES
 TRANSACTION EXPENSES        SERIES   SERIES       SERIES        SERIES
 --------------------------  ------   -------   ------------   ----------
 <S>                         <C>      <C>       <C>            <C>
 Sales Load Imposed on
  Purchases                      0        0            0            0
 Deferred Sales Load (as a
  percentage of Purchase
  Payments withdrawn)
   Number of Complete Years
    Purchase Payment in
    Account
     Less than 1...........      1%       1%           1%           1%
     1 or more.............      0%       0%           0%           0%
 Exchange fee(1)...........      0        0            0            0
 ANNUAL ACCOUNT FEE (2)
 --------------------------
 SEPARATE ACCOUNT ANNUAL
 EXPENSES
 --------------------------
 <S>                         <C>      <C>       <C>            <C>
 (as a percentage of
 average separate account
 assets)
 Mortality and Expense Risk
  Fees.....................   1.00%    1.00%        1.00%        1.00%
 Administrative Expense
  Charge...................   0.15%    0.15%        0.15%        0.15%
 Other Fees and Expenses of
  the Separate Account.....   0.00%    0.00%        0.00%        0.00%
 Total Separate Account
  Annual Expenses..........   1.15%    1.15%        1.15%        1.15%
 SERIES FUND ANNUAL
 EXPENSES
 --------------------------
 <S>                         <C>      <C>       <C>            <C>
 (as a percentage of Series
 Fund average net assets)
 Management Fees...........   0.70%    0.75%        0.55%        0.75%
 Other Expenses............   0.06%    0.09%        0.09%        0.20%
 Total Series Fund Annual
  Expenses.................   0.76%    0.84%        0.64%        0.95%
</TABLE>
   
<TABLE>
<CAPTION>
                                                        WORLD       WORLD
                                 WORLD                  ASSET       TOTAL     EMERGING
PARTICIPANT                      GROWTH    RESEARCH   ALLOCATION    RETURN     GROWTH
TRANSACTION EXPENSES             SERIES     SERIES      SERIES      SERIES     SERIES
- ------------------------------  --------   --------   ----------   --------   --------
<S>                             <C>        <C>        <C>          <C>        <C>
Sales Load Imposed on
  Purchases                        0          0           0           0          0
Deferred Sales Load (as a
  percentage of Purchase
  Payments withdrawn)
  Number of Complete Years
   Purchase Payment in Account
    Less than 1...............     1%         1%          1%          1%         1%
    1 or more.................     0%         0%          0%          0%         0%
Exchange fee(1)...............     0          0           0           0          0
 
<CAPTION>
ANNUAL ACCOUNT FEE (2)                      $50 Per Participant's Account
- ------------------------------
SEPARATE ACCOUNT ANNUAL
EXPENSES
- ------------------------------
<S>                             <C>        <C>        <C>          <C>        <C>
(as a percentage of average
separate account assets)
Mortality and Expense Risk
  Fees........................  1.00%      1.00%       1.00%       1.00%      1.00%
Administrative Expense
  Charge......................  0.15%      0.15%       0.15%       0.15%      0.15%
Other Fees and Expenses of the
  Separate Account............  0.00%      0.00%       0.00%       0.00%      0.00%
Total Separate Account Annual
  Expenses....................  1.15%      1.15%       1.15%       1.15%      1.15%
<CAPTION>
SERIES FUND ANNUAL EXPENSES
- ------------------------------
<S>                             <C>        <C>        <C>          <C>        <C>
(as a percentage of Series
Fund average net assets)
Management Fees...............  0.75%      0.75%       0.75%       0.75%      0.75%
Other Expenses................  0.32%      0.20%       0.36%       0.44%      0.25%
Total Series Fund Annual
  Expenses After Any
  Applicable Expense
  Reimbursements(4)...........  1.07%      0.95%       1.11%       1.19%      1.00%
 
<CAPTION>
                                                 MFS/FOREIGN     MFS/FOREIGN
                                 MFS/FOREIGN     & COLONIAL       & COLONIAL
                                 & COLONIAL     INTERNATIONAL      EMERGING
PARTICIPANT                     INTERNATIONAL    GROWTH AND     MARKETS EQUITY
TRANSACTION EXPENSES            GROWTH SERIES   INCOME SERIES       SERIES       VALUE SERIES
- ------------------------------  -------------   -------------   --------------   ------------
<S>                             <C>             <C>             <C>              <C>
Sales Load Imposed on
  Purchases                            0               0               0               0
Deferred Sales Load (as a
  percentage of Purchase
  Payments withdrawn)
  Number of Complete Years
   Purchase Payment in Account
    Less than 1...............         1%              1%              1%              1%
    1 or more.................         0%              0%              0%              0%
Exchange fee(1)...............         0               0               0               0
ANNUAL ACCOUNT FEE (2)
- ------------------------------
SEPARATE ACCOUNT ANNUAL
EXPENSES
- ------------------------------
<S>                             <C>             <C>             <C>              <C>
(as a percentage of average
separate account assets)
Mortality and Expense Risk
  Fees........................      1.00%           1.00%           1.00%           1.00%
Administrative Expense
  Charge......................      0.15%           0.15%           0.15%           0.15%
Other Fees and Expenses of the
  Separate Account............      0.00%           0.00%           0.00%           0.00%
Total Separate Account Annual
  Expenses....................      1.15%           1.15%           1.15%           1.15%
SERIES FUND ANNUAL EXPENSES
- ------------------------------
<S>                             <C>             <C>             <C>              <C>
(as a percentage of Series
Fund average net assets)
Management Fees...............      0.00%(3)       0.975%           0.00%(3)        0.00%(3)
Other Expenses................      1.50%          0.525%           1.50%           1.50%
Total Series Fund Annual
  Expenses After Any
  Applicable Expense
  Reimbursements(4)...........      1.50%           1.50%           1.50%           1.50%
</TABLE>
    
 
- ------------
(1) A Market Value  Adjustment may  be imposed  on amounts  transferred from  or
    within the Fixed Account.
 
(2) The  Annual Account Fee is $50. The  Company will waive the Account Fee when
    the Participant's  Account Value  is greater  than $100,000  on the  Account
    Anniversary.
 
(3) The Series Fund's investment adviser (the "Adviser") has voluntarily reduced
    the  management fees  for the Value  Series, and the  MFS/Foreign & Colonial
    International Growth  Series and  Emerging Markets  Equity Series  to 0%  of
    average  daily  net  assets  on  an  annualized  basis.  This  voluntary fee
    reduction may be  rescinded at  any time. Absent  this voluntary  reduction,
    management  fees payable would be 0.75% for the Value Series, 0.975% for the
    International Growth  Series  and  1.25% for  the  Emerging  Markets  Equity
    Series.
 
   
(4) Other expenses of the Value Series and the MFS/Foreign & Colonial Series are
    based  on estimated  amounts for  the current  fiscal year.  The Adviser has
    undertaken to reimburse each of these series for expenses that exceed  1.50%
    of  the average daily net  assets of such series  on an annualized basis, as
    more  fully  described  in  the   Series  Fund's  Prospectus.  Absent   such
    reimbursement,  expenses of the MFS/Foreign  & Colonial International Growth
    and Income Series for 1995 would have been 1.63% of average net assets.  The
    other series commenced operations in 1996.
    
 
                                       9
<PAGE>
                                    EXAMPLE
 
    If  you do or do not surrender your  Certificate, or if you annuitize at the
end of the applicable  time period, you  would pay the  following expenses on  a
$1,000 investment, assuming a 5% annual return on assets:
 
   
<TABLE>
<CAPTION>
                                           1 YEAR   3 YEARS
                                           ------   -------
 <S>                                       <C>      <C>
 Capital Appreciation Series                 $22      $ 68
 Conservative Growth Series                   20        62
 Emerging Growth Series                       24        73
 High Yield Series                            23        69
 Government Securities Series                 20        62
 MFS/Foreign & Colonial International
 Growth and Income Series                     29        88
 MFS/Foreign & Colonial International
 Growth Series                                29        88
 MFS/Foreign & Colonial Emerging Markets
 Equity Series                                29        88
 Managed Sectors Series                       22        69
 Money Market Series                          20        61
 Research Series                              23        72
 Total Return Series                          21        66
 Utilities Series                             23        72
 Value Series                                 29        88
 World Governments Series                     23        70
 World Growth Series                          25        75
 World Asset Allocation Series                25        77
 World Total Return Series                    26        79
</TABLE>
    
 
    THE  EXAMPLE SHOULD  NOT BE  CONSIDERED A  REPRESENTATION OF  PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LOWER THAN THOSE SHOWN.
 
                                       10
<PAGE>
                                PERFORMANCE DATA
 
    From time to time the Variable Account may publish reports to  shareholders,
sales  literature and advertisements containing performance data relating to the
Sub-Accounts. Performance data  will consist  of total  return quotations  which
will  always include quotations for the period  subsequent to the date each Sub-
Account became available for investment under the Contracts, and for recent  one
year  and, when applicable, five and ten  year periods. Such quotations for such
periods will  be the  average annual  rates of  return required  for an  initial
Purchase  Payment  of $1,000  to equal  the  actual variable  accumulation value
attributable to  such Purchase  Payment on  the last  day of  the period,  after
reflection  of all applicable withdrawal and  contract charges. In addition, the
Variable Account  may calculate  non-standardized rates  of return  that do  not
reflect  withdrawal and contract charges.  Results calculated without withdrawal
and/or contract charges will be higher. Performance figures used by the Variable
Account are based on  the actual historical performance  of the Series Fund  for
specified  periods,  and  the  figures  are  not  intended  to  indicate  future
performance. The  Variable  Account may  also  from  time to  time  compare  its
investment  performance to various unmanaged indices or other variable annuities
and may  refer  to certain  rating  and  other organizations  in  its  marketing
materials.  More  detailed  information  on the  computations  is  set  forth in
Appendix D.
 
                     THIS PROSPECTUS IS A CATALOG OF FACTS
 
    This Prospectus contains information about the master group deferred annuity
contract (the "Contract") which provides fixed benefits, variable benefits or  a
combination  of both.  It describes  its uses  and objectives,  its benefits and
costs, and  the rights  and privileges  of  the Owner  and the  Participant,  as
applicable.  It  also  contains  information  about  the  Company,  the Variable
Account, the Fixed Account and the  Series Fund. It has been carefully  prepared
in  non-technical language to help you decide whether the purchase of a Contract
will fit the needs of your retirement plan. We urge you to read it carefully and
retain it for future reference. The Contract has appropriate provisions relating
to variable  and  fixed  accumulation  values and  variable  and  fixed  annuity
payments. A Variable Annuity and a Fixed Annuity have certain similarities. Both
provide  that Purchase  Payments, less  certain deductions,  will be accumulated
prior to the  Annuity Commencement  Date. After the  Annuity Commencement  Date,
annuity  payments  will  be  made  to the  Annuitant.  The  Company  assumes the
mortality and expense risks  under the Contract, for  which it receives  certain
amounts.  The  significant difference  between a  Variable  Annuity and  a Fixed
Annuity is that under a Variable Annuity, all investment risk is assumed by  the
Participant or Payee and the amounts of the
annuity  payments vary with the investment  performance of the Variable Account;
under a Fixed Annuity, the investment risk is assumed by the Company (except  in
the  case  of  early  withdrawals  (See  "Cash  Withdrawals"  and  "Market Value
Adjustment")) and the amounts of the annuity payments do not vary. However,  the
Participant  bears the risk that the Guaranteed  Interest Rate to be credited on
amounts allocated to  the Fixed Account  may not exceed  the minimum  guaranteed
rate for any Guarantee Period.
 
                              USES OF THE CONTRACT
 
    The  Contract is designed for use  in connection with retirement plans which
meet the requirements of  Section 401 (including  Section 401(k)), Section  403,
Section  408(b), Section 408(c) or Section  408(k) of the Internal Revenue Code;
however, the Company may discontinue  offering new Contracts in connection  with
certain  types of qualified plans. Certain  federal tax advantages are currently
available to retirement  plans which qualify  as (1) self-employed  individuals'
retirement  plans  under Section  401; (2)  corporate or  association retirement
plans under Section  401; (3) annuity  purchase plans sponsored  by certain  tax
exempt  organizations  or public  school systems  under  Section 403(b);  or (4)
individual retirement accounts, including  employer or association of  employees
individual  retirement accounts under Section  408(c) and SEP-IRAs under Section
408(k) (See "Federal Tax Status").
 
    The Contract is  also designed so  that it  may be used  in connection  with
certain  non-tax-qualified retirement plans,  such as payroll  savings plans and
such other groups (trusteed or nontrusteed) as may be eligible under  applicable
law.
 
    A   Contract  is  issued  to  the  Owner  covering  all  Participants.  Each
Participant receives  a Certificate  which evidences  his or  her  participation
under the Contract. For the purposes of determining benefits under the Contract,
a Participant's Account is established for each Participant.
 
                                       11
<PAGE>
                           A WORD ABOUT THE COMPANY,
          THE FIXED ACCOUNT, THE VARIABLE ACCOUNT AND THE SERIES FUND
 
THE COMPANY
 
    The Company is a stock life insurance company incorporated under the laws of
Delaware  on January 12, 1970.  Its Executive Office mailing  address is One Sun
Life Executive  Park,  Wellesley  Hills, Massachusetts  02181,  telephone  (617)
237-6030.  It has obtained  authorization to do  business in forty-eight states,
the District of Columbia and Puerto Rico, and it is anticipated that the Company
will be authorized to  do business in  all states except  New York. The  Company
issues  life insurance policies and individual  and group annuities. The Company
has formed a wholly-owned subsidiary, Sun Life Insurance and Annuity Company  of
New  York, which issues individual  fixed and combination fixed/variable annuity
contracts and group  life and  long-term disability  insurance in  New York  and
which  offers in  New York  contracts similar  to the  Contract offered  by this
Prospectus.  The  Company's  other  subsidiaries  are  Massachusetts   Financial
Services Company and Sun Capital Advisers, Inc., registered investment advisers,
Sun  Investment  Services  Company, a  registered  broker-dealer  and investment
adviser, Sun Benefit Services Company, Inc., which offers claims, administrative
and pension brokerage services, New London Trust, F.S.B., a federally  chartered
savings  bank, Massachusetts Casualty Insurance Company, which issues individual
disability income  policies,  and  Sun Life  Financial  Services  Limited  which
provides off-shore administrative services to the Company and Sun Life Assurance
Company of Canada.
 
    The  Company is a  wholly-owned subsidiary of Sun  Life Assurance Company of
Canada, 150  King Street  West,  Toronto, Ontario,  Canada. Sun  Life  Assurance
Company  of Canada is  a mutual life insurance  company incorporated pursuant to
Act of Parliament of Canada in 1865  and currently transacts business in all  of
the Canadian provinces and territories, all states except New York, the District
of Columbia, Puerto Rico, the Virgin Islands, Great Britain, Ireland, Hong Kong,
Bermuda and the Philippines (See "Additional Information about the Company").
 
THE FIXED ACCOUNT
 
    The  Fixed Account is  made up of all  of the general  assets of the Company
other than those allocated  to any separate account.  Purchase Payments will  be
allocated to Guarantee Periods available in connection with the Fixed Account to
the  extent elected  by the Participant  at the  time of the  establishment of a
Participant's Account or as  subsequently changed. In addition,  all or part  of
the  Participant's  Account  Value  may  be  transferred  to  Guarantee  Periods
available under the  Contract as  described under  "Transfer Privilege".  Assets
supporting  amounts allocated to Guarantee Periods  become part of the Company's
general account assets and are  available to fund the  claims of all classes  of
customers of the Company, including claims for benefits under Certificates.
 
    The  Company will  invest the  assets of the  Fixed Account  in those assets
chosen by the Company and allowed by applicable state laws regarding the  nature
and  quality of investments that may be made by life insurance companies and the
percentage of  their assets  that may  be committed  to any  particular type  of
investment.  In general, these laws  permit investments, within specified limits
and  subject  to  certain  qualifications,  in  federal,  state  and   municipal
obligations,   corporate  bonds,  preferred  and   common  stocks,  real  estate
mortgages, real estate and certain other investments.
 
    The Company intends to invest the  assets of the Fixed Account primarily  in
debt  instruments  as  follows:  (1)  Securities  issued  by  the  United States
Government or its agencies or instrumentalities, which issues may or may not  be
guaranteed  by the United  States Government; (2) Debt  securities which have an
investment grade,  at the  time  of purchase,  within  the four  highest  grades
assigned  by Moody's Investors  Services, Inc. (Aaa,  Aa, A or  Baa), Standard &
Poor's Corporation (AAA, AA, A or BBB) or any other nationally recognized rating
service; (3) Other debt instruments, including, but not limited to, issues of or
guaranteed by  banks or  bank holding  companies and  other corporations,  which
obligations,  although not rated by Moody's or  Standard & Poor's, are deemed by
the Company's management to have an investment quality comparable to  securities
which  may be purchased as stated above; and (4) Other evidences of indebtedness
secured by mortgages  or deeds  of trust  representing liens  upon real  estate.
Notwithstanding  the foregoing,  the Company  may also  invest a  portion of the
Fixed Account in below investment grade debt instruments.
 
                                       12
<PAGE>
Instruments rated Baa  and/or BBB  or lower normally  involve a  higher risk  of
default  and are less liquid than higher  rated instruments. If the rating of an
investment grade debt security held by the Company is subsequently downgraded to
below investment grade, the decision to  retain or dispose of the security  will
be made based upon an individual evaluation of the circumstances surrounding the
downgrading  and the prospects for continued deterioration, stabilization and/or
improvement.
 
    The Company  is not  obligated  to invest  amounts  allocated to  the  Fixed
Account  according  to any  particular strategy,  except as  may be  required by
applicable state  insurance  laws. Investment  income  from such  Fixed  Account
assets  will be allocated between the Company and all contracts participating in
the Fixed  Account,  including the  Contracts  offered by  this  Prospectus,  in
accordance with the terms of such contracts.
 
    Fixed  annuity payments made  to Annuitants under the  Contracts will not be
affected by  the mortality  experience (death  rate) of  persons receiving  such
payments or of the general population. The Company assumes this "mortality risk"
by  virtue of annuity rates incorporated in the Contract which cannot be changed
(except as described under "Modification" with respect to Participant's Accounts
established after the  effective date  of such modification).  In addition,  the
Company  guarantees that  it will  not increase  charges for  maintenance of the
Contracts,  regardless  of  its  actual  expenses  (except  as  described  under
"Modification"  with  respect to  Participant's  Accounts established  after the
effective date of such modification).
 
    Investment income from the Fixed  Account allocated to the Company  includes
compensation   for  mortality  and  expense  risks,  distribution  expenses  and
administrative expenses  borne  by  the Company  in  connection  with  contracts
participating  in the Fixed Account. The Company expects to derive a profit from
this compensation. The amount  of investment income  allocated to the  Contracts
will  vary from Guarantee Period  to Guarantee Period in  the sole discretion of
the Company. However, the Company guarantees  that it will credit interest at  a
rate  of not less than 3% per year, compounded annually, to amounts allocated to
the Fixed Account under the Contract. The Company may credit interest at a  rate
in  excess of the minimum rate; however,  the Company is not obligated to credit
any interest  in excess  of such  rate. There  is no  specific formula  for  the
determination  of  excess  interest  credits.  Such  credits,  if  any,  will be
determined by the company based on information as to expected investment yields.
Some of the  factors that  the Company may  consider in  determining whether  to
credit  interest  to  amounts allocated  to  the  Fixed Account  and  the amount
thereof, are: general economic trends;  rates of return currently available  and
anticipated  on the Company's investments;  regulatory and tax requirements; and
competitive factors. The Company's general investment strategy will be to invest
amounts allocated to the Fixed  Account in investment-grade debt securities  and
mortgages using immunization strategies with respect to the applicable Guarantee
Periods.  This  includes,  with  respect to  investments  and  average  terms of
investments, using dedication (cash flow  matching) and/or duration matching  to
minimize  the Company's risk  of not achieving  the rates it  is crediting under
Guarantee Periods in volatile interest rate environments. ANY INTEREST  CREDITED
TO  AMOUNTS ALLOCATED TO THE FIXED ACCOUNT IN EXCESS OF 3% WILL BE DETERMINED IN
THE SOLE  DISCRETION OF  THE  COMPANY. THE  PARTICIPANT  ASSUMES THE  RISK  THAT
INTEREST  CREDITED ON AMOUNTS ALLOCATED  TO THE FIXED ACCOUNT  MAY NOT EXCEED 3%
FOR ANY GIVEN YEAR.
 
    The Company is aware  of no statutory limitations  on the maximum amount  of
interest  it may  credit, and  the Board  of Directors  has set  no limitations.
However, inherent in the Company's exercise of discretion in this regard is  the
equitable  allocation of  distributable earnings  and surplus  among its various
policyholders and contract owners and to its sole stockholder.
 
THE VARIABLE ACCOUNT
 
    The basic objective of  a variable annuity contract  is to provide  variable
annuity  payments which  will be  to some  degree responsive  to changes  in the
economic environment,  including inflationary  forces and  changes in  rates  of
return  available from various types of investments. The Contract is designed to
seek to accomplish this  objective by providing  that variable annuity  payments
(1) will reflect the investment performance of the Variable Account with respect
to  amounts allocated  to the Variable  Account before  the Annuity Commencement
Date and (2)  will reflect the  investment performance of  the Variable  Account
after  that date. Since the Variable Account  is always fully invested in Series
Fund shares, its investment performance
 
                                       13
<PAGE>
reflects the investment performance  of the Series Fund.  Values of Series  Fund
shares  held by the Variable  Account fluctuate and are  subject to the risks of
changing economic conditions as well as the risk inherent in the ability of  the
Series  Fund's  management  to  make  necessary  changes  in  its  portfolios to
anticipate changes in economic conditions. Therefore, the Participant bears  the
entire  investment risk  that the  basic objectives of  the Contract  may not be
realized, and that  the adverse  effects of inflation  may not  be lessened  and
there can be no assurance that the aggregate amount of variable annuity payments
will equal or exceed the aggregate amount of Purchase Payments made with respect
to a particular Participant's Account for the reasons described above or because
of the premature death of a Payee.
 
    Another  important feature of the Contract related to its basic objective is
the Company's promise that the dollar  amount of variable annuity payments  made
during the lifetime of the Payee(s) will not be adversely affected by the actual
mortality  experience of the Company  or by the actual  expenses incurred by the
Company in excess of expense deductions provided for in the Contract.
 
    Sun Life of Canada  (U.S.) Variable Account F  (the "Variable Account")  was
established  by the Company as a separate account on July 13, 1989 pursuant to a
resolution of  its Board  of Directors.  Under Delaware  insurance law  and  the
Contract, the income, gains or losses of the Variable Account are credited to or
charged  against the assets of the Variable  Account without regard to the other
income, gains, or losses of  the Company. These assets  are held in relation  to
the  Contracts  described in  this Prospectus  and  such other  variable annuity
contracts issued by the Company and designated by it as providing benefits which
vary in  accordance with  the investment  performance of  the Variable  Account.
Although  the assets maintained in the Variable Account will not be charged with
any liabilities arising out of any other business conducted by the Company,  all
obligations  arising under the Contracts, including  the promise to make annuity
payments, are general corporate obligations of the Company.
 
    The Variable Account meets  the definition of a  separate account under  the
federal  securities laws and is registered as  a unit investment trust under the
Investment Company Act of  1940. Registration with  the Securities and  Exchange
Commission  does  not  involve  supervision  of  the  management  or  investment
practices or  policies  of  the  Variable  Account or  of  the  Company  by  the
Commission.
 
    The  assets  of the  Variable Account  are  divided into  Sub-Accounts. Each
Sub-Account invests exclusively  in shares of  a specific series  of the  Series
Fund.  All amounts allocated  to the Variable  Account will be  used to purchase
Series Fund shares as  designated by the Participant  at their net asset  value.
Any  and all distributions  made by the  Series Fund with  respect to the shares
held by the Variable Account will be reinvested to purchase additional shares at
their  net  asset  value.  Deductions   from  the  Variable  Account  for   cash
withdrawals,  annuity payments,  death benefits, Account  Fees, contract charges
against the assets of the Variable  Account for the assumption of mortality  and
expense risks, distribution expenses, administrative expenses and any applicable
taxes  will, in effect, be made by redeeming the number of Series Fund shares at
their net asset value  equal in total  value to the amount  to be deducted.  The
Variable Account will be fully invested in Series Fund shares at all times.
 
THE SERIES FUND
 
    MFS/Sun  Life Series  Trust (the  "Series Fund")  is an  open-end investment
management  company  registered  under  the  Investment  Company  Act  of  1940.
Currently  shares of the  Series Fund are  also sold to  other separate accounts
established by the  Company and Sun  Life Insurance and  Annuity Company of  New
York  in connection  with individual  and group  variable annuity  contracts and
variable life insurance contracts. In the future, shares of the Series Fund  may
be  sold to other separate accounts established by the Company or its affiliates
to fund other variable annuity or variable life insurance contracts. The Company
and its affiliates will be responsible for reporting to the Series Fund's  Board
of  Trustees  any  potential  or existing  conflicts  between  the  interests of
variable annuity contract  owners/participants and  the interests  of owners  of
variable  life insurance contracts that provide  for investment in shares of the
Series Fund.  The Board  of Trustees,  a majority  of whom  are not  "interested
persons"  of the Series Fund, as that  term is defined in the Investment Company
Act of 1940, also intends to monitor  the Series Fund to identify the  existence
of  any such irreconcilable material conflicts  and to determine what action, if
any, should be taken by  the Series Fund and/or  the Company and its  affiliates
(see "Management of the Series Fund" in the Series Fund prospectus).
 
                                       14
<PAGE>
    The   Series  Fund  is  composed   of  nineteen  independent  portfolios  of
securities, each  of  which has  separate  investment objectives  and  policies.
Shares  of the Series Fund are issued  in nineteen series, each corresponding to
one of the  portfolios; however, the  Contracts provide for  investment only  in
shares  of the  eighteen series of  the Series Fund  described below. Additional
portfolios may be added to the Series Fund which may or may not be available for
investment by the Variable Account.
 
    (1) MONEY MARKET  SERIES ("MMS")  will seek  maximum current  income to  the
extent  consistent with stability of principal by investing exclusively in money
market instruments maturing in  less than 13  months, including U.S.  government
securities   and  repurchase  agreements   collateralized  by  such  securities,
obligations of the larger banks and prime commercial paper.
 
    (2) HIGH YIELD  SERIES ("HYS")  will seek  high current  income and  capital
appreciation  by  investing primarily  in fixed  income  securities of  U.S. and
foreign issuers which may be in the lower rated categories or unrated  (commonly
known  as "junk bonds") and which  may include equity features. These securities
generally involve greater volatility of price  and risk to principal and  income
and  less liquidity than  securities in the higher  rated categories. Any person
contemplating allocating  Purchase  Payments  to the  Sub-Account  investing  in
shares  of the High Yield Series should review the risk disclosure in the Series
Fund prospectus carefully and consider the investment risks involved.
 
    (3) CAPITAL APPRECIATION  SERIES ("CAS") will  seek capital appreciation  by
investing in securities of all types, with a major emphasis on common stocks.
 
    (4)  GOVERNMENT  SECURITIES  SERIES  ("GSS") will  seek  current  income and
preservation of capital by investing  in U.S. Government and  Government-related
Securities.
 
    (5)  WORLD GOVERNMENTS SERIES ("WGS") will  seek moderate current income and
preservation and  growth of  capital by  investing in  a portfolio  of U.S.  and
Foreign Government Securities.
 
    (6)  TOTAL RETURN SERIES ("TRS") will seek primarily to obtain above-average
income  (compared  to  a  portfolio  entirely  invested  in  equity  securities)
consistent  with prudent  employment of capital;  its secondary  objective is to
take advantage of opportunities for growth of capital and income. Assets will be
allocated and reallocated from time to  time between money market, fixed  income
and equity securities. Under normal market conditions, at least 25% of the Total
Return  Series' assets will be invested in  fixed income securities and at least
40% and no more than 75% of its assets will be invested in equity securities.
 
    (7) MANAGED SECTORS SERIES ("MSS") will seek capital appreciation by varying
the weighting of its portfolio of common stocks among certain industry  sectors.
Dividend income, if any, is incidental to its objective of capital appreciation.
 
    (8) CONSERVATIVE GROWTH SERIES ("CGS") will seek long-term growth of capital
and  future income while providing more current dividend income than is normally
obtainable from a  portfolio of only  growth stocks by  investing a  substantial
proportion  of its  assets in the  common stocks or  securities convertible into
common stocks of companies believed to possess better than average prospects for
long-term growth and  a smaller  proportion of  its assets  in securities  whose
principal characteristic is income production.
 
    (9)  UTILITIES SERIES  ("UTS") will seek  capital growth  and current income
(income above  that  available from  a  portfolio invested  entirely  in  equity
securities)  by investing, under  normal market conditions, at  least 65% of its
assets in equity and debt securities issued by both domestic and foreign utility
companies.
 
    (10) WORLD GROWTH SERIES ("WGR") will seek capital appreciation by investing
in securities of companies worldwide growing at rates expected to be well  above
the growth rate of the overall U.S. economy.
 
    (11)  RESEARCH  SERIES  ("RES") will  seek  to provide  long-term  growth of
capital and future income.
 
    (12) WORLD ASSET ALLOCATION SERIES ("WAA")  will seek total return over  the
long  term through investments  in foreign and domestic  equity and fixed income
securities and will also seek  to have low volatility  of share price (i.e.  net
asset value per share) and reduced risk (compared to an aggressive equity/ fixed
income portfolio).
 
                                       15
<PAGE>
    (13)  WORLD TOTAL RETURN SERIES ("WTR")  will seek total return by investing
in securities which  will provide above  average current income  (compared to  a
portfolio   invested  entirely  in  equity  securities)  and  opportunities  for
long-term growth of  capital and  income. The  series will  invest primarily  in
global  equity  and fixed  income securities  (i.e. those  of U.S.  and non-U.S.
issuers).
 
    (14) EMERGING GROWTH SERIES ("EGS") will seek to provide long-term growth of
capital by investing  primarily (i.e. at  least 80% of  its assets under  normal
circumstances)  in common stocks  of emerging growth  companies, including small
and medium sized companies that are early in their life cycle but which have the
potential to  become  major  enterprises.  Dividend  and  interest  income  from
portfolio securities, if any, is incidental to its objective of long-term growth
of capital.
 
    (15),  (16) AND (17) The following three series are collectively referred to
as the "MFS/Foreign & Colonial Series."
 
    (15) MFS/FOREIGN &  COLONIAL INTERNATIONAL GROWTH  SERIES ("IGS") will  seek
capital  appreciation by investing, under normal market conditions, at least 65%
of its total assets in equity securities of companies whose principal activities
are outside the U.S. growing at rates expected to be well above the growth  rate
of the overall U.S. economy.
 
    (16)  MFS/FOREIGN & COLONIAL INTERNATIONAL  GROWTH AND INCOME SERIES ("IGI")
will seek capital  appreciation and  current income by  investing, under  normal
market  conditions, at least 65% of its  total assets in equity and fixed income
securities of issuers whose principal activities are outside the U.S.
 
    (17) MFS/FOREIGN & COLONIAL EMERGING MARKETS EQUITY SERIES ("EME") will seek
capital appreciation by investing, under normal market conditions, at least  65%
of  its total assets in equity  securities of issuers whose principal activities
are located in emerging market countries.
 
    (18) VALUE SERIES ("VAL") will seek capital appreciation.
 
    The investment adviser of the Series Fund, Massachusetts Financial  Services
Company  ("MFS"), is paid fees  by the Series Fund  for its services pursuant to
investment advisory agreements. MFS, a Delaware corporation, is a subsidiary  of
the  Company. MFS also serves as investment adviser  to each of the funds in the
MFS Family of Funds,  and to certain other  investment companies established  or
distributed by MFS and/ or the Company. MFS Asset Management, Inc., a subsidiary
of  MFS, provides investment advice to  substantial private clients. MFS and its
predecessor organizations have a history  of money management dating from  1924.
MFS  operates as  an autonomous organization  and the  obligation of performance
with respect to the investment  advisory and underwriting agreements  (including
supervision  of the sub-advisers noted below) is solely that of MFS. The Company
undertakes no obligation in this respect.
 
    The investment  advisory agreements  for  the World  Growth Series  and  the
MFS/Foreign & Colonial Series permit MFS from time to time to engage one or more
sub-advisers  to  assist in  the performance  of its  services. MFS  has engaged
Foreign &  Colonial Management  Limited ("FCM")  and its  subsidiary, Foreign  &
Colonial  Emerging Markets Limited ("FCEM"), as sub-advisers of these series and
has engaged Oechsle International Advisors, L.P. as an additional sub-adviser of
the  World  Growth  Series.  FCM   and  FCEM  replaced  Batterymarch   Financial
Management, Inc. as sub-advisers to the World Growth Series as of May 1, 1996.
 
    A  more  detailed  description  of  the  Series  Fund,  its  management, its
investment objectives, policies and restrictions  and its expenses may be  found
in  the accompanying  current prospectus  of the Series  Fund and  in the Series
Fund's Statement of Additional Information.
 
        PURCHASE PAYMENTS AND CONTRACT VALUES DURING ACCUMULATION PERIOD
 
PURCHASE PAYMENTS
 
(1) PLACE, AMOUNT AND FREQUENCY
 
    All Purchase Payments are to be paid  to the Company at its Annuity  Service
Mailing  Address. The amount of Purchase Payments may vary; however, the Company
will not accept an initial Purchase  Payment to be allocated to a  Participant's
Account   which   is   less   than  $25,000,   and   each   additional  Purchase
 
                                       16
<PAGE>
   
Payment must be at least $1,000 unless  waived by the Company. In addition,  the
prior  approval of  the Company  is required  before it  will accept  a Purchase
Payment which  would  cause the  value  of  a Participant's  Account  to  exceed
$1,000,000.  If  the value  of a  Participant's  Account exceeds  $1,000,000, no
additional Purchase Payments will be accepted without the prior approval of  the
Company.
    
 
    A  completed Application and  the initial Purchase  Payment are forwarded to
the Company for acceptance. Upon acceptance, the Contract and Certificate(s), as
applicable, are issued to the Owner and/or Participant(s), respectively, and the
initial Purchase  Payment is  then credited  to the  Participant's Account.  The
initial  Purchase Payment must be applied within two business days of receipt by
the Company of  a completed  Application. The  Company may  retain the  Purchase
Payment  for up to five business days while attempting to complete an incomplete
Application. If the  Application cannot  be made complete  within five  business
days,  the prospective participant will be informed of the reasons for the delay
and the Purchase  Payment will  be returned immediately  unless the  prospective
participant  specifically  consents  to  the  Company's  retaining  the Purchase
Payment until the Application is made complete. Thereafter, the Purchase Payment
must be  applied within  two  business days.  Subsequent Purchase  Payments  are
applied at the end of the Valuation Period during which they are received by the
Company.
 
(2) ACCOUNT CONTINUATION
 
    A  Participant's  Account shall  be  continued automatically  in  full force
during the lifetime  of the  Annuitant until  the Annuity  Commencement Date  or
until the Participant's Account is surrendered. Purchase Payments may be made at
any time while the Participant's Account is in force.
 
(3) ALLOCATION OF NET PURCHASE PAYMENTS
 
    The Net Purchase Payment is that portion of a Purchase Payment which remains
after  deduction of  any applicable  premium or  similar tax.  Each Net Purchase
Payment will be allocated  either to Guarantee  Periods available in  connection
with  the Fixed Account  or to Sub-Accounts  of the Variable  Account or to both
Sub-Accounts and the  Fixed Account  in accordance with  the allocation  factors
specified in the Application, or as subsequently changed.
 
    The  allocation factors for  new Payments among  the Guarantee Period(s) and
the Sub-Accounts may be changed by the Participant at any time by giving written
notice of the change to the Company. Any change will take effect with the  first
Purchase  Payment received with or after receipt  of notice of the change by the
Company and will continue in effect until subsequently changed.
 
PARTICIPANT'S ACCOUNT
 
    The Company  will establish  a Participant's  Account for  each  Participant
under  a  Contract  and  will  maintain  the  Participant's  Account  during the
Accumulation Period. The Participant's Account Value for any Valuation Period is
equal to the  sum of the  variable accumulation  value, if any,  plus the  fixed
accumulation  value, if  any, of  the Participant's  Account for  that Valuation
Period.
 
VARIABLE ACCUMULATION VALUE
 
    The variable accumulation value, if any, of a Participant's Account for  any
Valuation  Period is equal to the sum  of the value of all Variable Accumulation
Units credited to the Participant's Account for such Valuation Period.
 
(1) CREDITING VARIABLE ACCUMULATION UNITS
 
    Upon receipt of a Purchase Payment by  the Company, all or that portion,  if
any,  of  the  Net Purchase  Payment  to  be allocated  to  any  Sub-Accounts in
accordance with the  allocation factors  will be credited  to the  Participant's
Account  in the  form of Variable  Accumulation Units. The  number of particular
Variable Accumulation Units to be credited is determined by dividing the  dollar
amount allocated to the particular Sub-Account by the Variable Accumulation Unit
value  of the particular  Sub-Account for the Valuation  Period during which the
Purchase Payment is applied by the Company to the Participant's Account.
 
(2) VARIABLE ACCUMULATION UNIT VALUE
 
    The Variable Accumulation Unit value for each Sub-Account was established at
$10.00 for  the  first  Valuation  Period of  the  particular  Sub-Account.  The
Variable  Accumulation  Unit  value  for  the  particular  Sub-Account  for  any
subsequent  Valuation  Period  is  determined   by  methodology  which  is   the
mathematical
 
                                       17
<PAGE>
equivalent   of  multiplying  the  Variable  Accumulation  Unit  value  for  the
particular Sub-Account for the immediately preceding Valuation Period by the Net
Investment Factor for the particular  Sub-Account for such subsequent  Valuation
Period.  The  Variable  Accumulation Unit  value  for each  Sub-Account  for any
Valuation Period  is  the value  determined  as of  the  end of  the  particular
Valuation  Period and may  increase, decrease or remain  the same from Valuation
Period to  Valuation  Period  in  accordance  with  the  Net  Investment  Factor
described below. For a hypothetical example of the calculation of the value of a
Variable Accumulation Unit, see Appendix A.
 
(3) NET INVESTMENT FACTOR
 
    The  Net Investment  Factor is  an index  applied to  measure the investment
performance of a  Sub-Account from  one Valuation Period  to the  next. The  Net
Investment  Factor may be  greater or less  than or equal  to one; therefore the
value of a Variable Accumulation Unit may increase, decrease or remain the same.
 
    The Net Investment Factor  for any Sub-Account for  any Valuation Period  is
determined  by dividing  (a) by  (b) and  then subtracting  (c) from  the result
where:
 
        (a) is the net result of:
 
           (1) the  net  asset  value  of  a  Series  Fund  share  held  in  the
       Sub-Account determined as of the end of the Valuation Period, plus
 
           (2)  the  per  share amount  of  any dividend  or  other distribution
       declared by the Series Fund on the shares held in the Sub-Account if  the
       "ex-dividend" date occurs during the Valuation Period, plus or minus
 
           (3)  a per share credit  or charge with respect  to any taxes paid or
       reserved for  by  the  Company  during the  Valuation  Period  which  are
       determined  by the  Company to  be attributable  to the  operation of the
       Sub-Account (no federal income taxes are applicable under present law);
 
        (b) is  the  net  asset  value  of a  Series  Fund  share  held  in  the
    Sub-Account determined as of the end of the preceding Valuation Period; and
 
        (c)  is  the  asset charge  factor  determined  by the  Company  for the
    Valuation Period  to reflect  the  charges for  assuming the  mortality  and
    expense risks and administrative expense risks.
 
FIXED ACCUMULATION VALUE
 
    The  fixed accumulation  value, if any,  of a Participant's  Account for any
Valuation Period is  equal to the  sum of  the values of  all Guarantee  Amounts
credited to the Participant's Account for such Valuation Period.
 
GUARANTEE PERIODS
 
    The  Participant may elect one or  more Guarantee Period(s) from among those
made available  by  the  Company.  The  period(s)  elected  will  determine  the
Guaranteed  Interest Rate(s).  A Purchase  Payment, or  the portion  thereof (at
least $1,000)  (or  the  amount  transferred in  accordance  with  the  Transfer
Privilege)  allocated  to a  particular  Guarantee Period,  less  any applicable
premium or  similar taxes  and  any amounts  subsequently withdrawn,  will  earn
interest  at the Guaranteed  Interest Rate during  the Guarantee Period. Initial
Guarantee Periods begin on the date the Purchase Payment is applied, or, in  the
case of a transfer, on the effective date of the transfer, and end the number of
calendar  months in the  Guarantee Period elected  from the end  of the calendar
month in which the amount was allocated to the Guarantee Period (the "Expiration
Date"). Subsequent  Guarantee  Periods begin  on  the first  day  following  the
Expiration Date.
 
    Any  portion  of a  Participant's Account  Value  allocated to  a particular
Guarantee Period with  a particular Expiration  Date (including interest  earned
thereon)  will be referred to  herein as a "Guarantee  Amount". Interest will be
credited daily at a rate equivalent to the compound annual rate. As a result  of
additional  Purchase  Payments,  renewals  and  transfers  of  portions  of  the
Participant's Account Value  described under "Transfer  Privilege" below,  which
will  begin  new Guarantee  Periods,  Guarantee Amounts  allocated  to Guarantee
Periods of the  same duration  may have  different Expiration  Dates. Thus  each
Guarantee  Amount will  be treated  separately for  purposes of  determining any
Market Value Adjustment (See "Market Value Adjustment").
 
                                       18
<PAGE>
    The Company will notify the Participant in  writing at least 45 and no  more
than  75 days prior to  the Expiration Date for  any Guarantee Amount except for
Guarantee Amounts held under a Dollar  Cost Averaging Option described below.  A
new  Guarantee Period of the same duration as the previous Guarantee Period will
commence automatically on  the first day  following the Expiration  Date of  the
previous  Guarantee Period unless the Company  receives, prior to the Expiration
Date, a written election by the Participant of a new Guarantee Period from among
those being offered by the Company at such time, or instructions to transfer all
or a portion of the Guarantee Amount  to one or more Sub-Accounts in  accordance
with  the Transfer  Privilege Provision.  Each new  Guarantee Amount  must be at
least $1,000 unless it is equal to the entire Guarantee Amount being tranferred.
 
DOLLAR COST AVERAGING
 
   
    The Participant may also elect an available Dollar Cost Averaging Option  in
connection  with selected Initial Guarantee Periods (subject to a minimum amount
of $1,000). Dollar Cost Averaging Options are available monthly or quarterly:
    
 
    1.  Monthly Dollar Cost Averaging Option: Amounts allocated will be  divided
        among  12 separate  sequentially maturing  Guarantee Periods.  The first
        Guarantee Period ends one full calendar month following the date the Net
        Purchase Payment is applied and  each subsequent Guarantee Period  shall
        end   one  full  calendar  month  later,  sequentially  thereafter.  The
        Guarantee Amount at the  Expiration Date of  each such Guarantee  Period
        will  equal 1/12 of the Net  Purchase Payment applied under this Option,
        with the  Guarantee Amount  at the  last Expiration  Date including  all
        interest earned in the 12 Guarantee Periods.
 
   
    2.  Quarterly Dollar Cost Averaging: Amounts allocated will be divided among
        four   separate  sequentially  maturing  Guarantee  Periods.  The  first
        Guarantee Period ends three full calendar months following the date  the
        Net  Purchase Payment  is applied  and each  subsequent Guarantee Period
        shall end three full calendar months later, sequentially thereafter. The
        Guarantee Amount at the  Expiration Date of  each such Guarantee  Period
        will  equal 1/4 of  the Net Purchase Payment  applied under this Option,
        with the  Guarantee Amount  at the  last Expiration  Date including  all
        interest earned in the four Guarantee Periods.
    
 
    Only  initial and subsequent Purchase Payments  may be allocated to a Dollar
Cost Averaging Option. Previously applied amounts may not be transferred to  any
Dollar Cost Averaging Option.
 
GUARANTEED INTEREST RATES
 
    The  Company periodically  will establish an  applicable Guaranteed Interest
Rate for  each  Guarantee Period  offered  by the  Company.  Current  Guaranteed
Interest  Rates  may  be  changed  by  the  Company  frequently  or infrequently
depending on  interest rates  available  to the  Company  and other  factors  as
described  below. Rates  will be guaranteed  for the duration  of the respective
Guarantee Periods. However, Participant's Account Value withdrawn from the Fixed
Account will be subject to any applicable withdrawal charge and Account Fee  and
may  be subject  to a  Market Value Adjustment  on withdrawal  or surrender (See
"Market Value Adjustment").
 
    The Guaranteed Interest Rate will not  be less than 3% per year,  compounded
annually.  The  Company has  no  specific formula  for  determining the  rate of
interest that it will declare as a Guaranteed Interest Rate, as these rates will
be reflective of interest  rates available on the  types of debt instruments  in
which  the Company intends to invest amounts allocated to the Fixed Account (See
"The Fixed Account"). In addition,  the Company's management may consider  other
factors  in determining Guaranteed Interest  Rates including: regulatory and tax
requirements; sales  commissions and  administrative and  distribution  expenses
borne  by the  Company; general  economic trends;  and competitive  factors. The
Participant bears the risk that the  Guaranteed Interest Rate to be credited  on
amounts allocated to the Fixed Account may not exceed 3% per year.
 
TRANSFER PRIVILEGE; RESTRICTION ON MARKET TIMERS
 
    At any time during the Accumulation Period the Participant may, upon written
request  received  by the  Company, transfer  all or  part of  the Participant's
Account Value to one or more  Sub-Accounts or Guarantee Periods available  under
the  Contract,  subject  to  the  following conditions:  (1)  not  more  than 12
transfers may
 
                                       19
<PAGE>
be made  in any  Account Year;  (2) a  minimum of  30 days  must elapse  between
transfers  made to or from the Fixed Account or among Guarantee Periods; (3) the
amount being transferred from a Sub-Account may not be less than $1,000,  unless
the  total Participant's  Account Value attributable  to a  Sub-Account is being
transferred; (4) any Participant's Account Value remaining in a Sub-Account  may
not  be less than $1,000; (5) the total Participant's Account Value attributable
to the  Guarantee Amount  must be  transferred;  and (6)  transfers may  not  be
allocated  to the Monthly  or Quarterly Dollar  Cost Averaging Options described
above. In  addition, transfers  of a  Guarantee Amount  will be  subject to  the
Market  Value Adjustment described below unless the transfer is effective within
30 days prior  to the Expiration  Date applicable to  the Guarantee Amount;  and
transfers  involving Variable Accumulation Units shall  be subject to such terms
and conditions as  may be imposed  by the  Series Fund. Currently,  there is  no
charge for transfers; however, the Company reserves the right to impose a charge
of  up to $15 for  each transfer. A transfer generally  will be effective on the
date the request  for transfer is  received by the  Company. Under current  law,
there  will not be any tax liability to the Participant if a Participant makes a
transfer.
 
    The Contracts are not designed for professional market timing  organizations
or  other entities using programmed and  frequent transfers. The Series Fund has
reserved the right to temporarily or permanently refuse exchange requests if, in
the judgment of the Series Fund's  investment adviser, a series would be  unable
to  invest effectively in accordance with its investment objective and policies,
or would otherwise potentially be  adversely affected. In particular, a  pattern
of  exchanges that coincide with a "market timing" strategy may be disruptive to
a series and therefore may be refused. Accordingly, the Variable Account may not
be in  a position  to  effectuate transfers  and  may refuse  transfer  requests
without  prior notice.  Persons who  wish to  employ such  strategies should not
purchase a Contract.
 
        CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT
 
CASH WITHDRAWALS
 
    At any time before the Annuity Commencement Date and during the lifetime  of
the  Annuitant, the Participant  may elect to receive  a cash withdrawal payment
from the Company. Any such election  shall specify the amount of the  withdrawal
and will be effective on the date that it is received by the Company.
 
    The  Participant may request a full  surrender or partial withdrawal. A full
surrender will result in  a cash withdrawal  payment equal to  the value of  the
Participant's  Account  at the  end  of the  Valuation  Period during  which the
election becomes effective less  the Account Fee, plus  or minus any  applicable
Market  Value Adjustment, and  less any applicable  withdrawal charge. A request
for a partial withdrawal  will result in  the cancellation of  a portion of  the
Participant's  Account Value equal  to the dollar amount  of the cash withdrawal
payment, plus  or minus  any applicable  Market Value  Adjustment and  plus  any
applicable  withdrawal charge. If a partial  withdrawal is requested which would
leave a Participant's  Account Value  of less than  the Account  Fee, then  such
partial  withdrawal will be treated as a full surrender. The Account Fee and any
applicable Market  Value  Adjustment will  be  deducted from  the  Participant's
Account before the application of any withdrawal charge.
 
    In  the  case of  a  partial withdrawal,  the  Participant may  instruct the
Company as to the amounts to be withdrawn from each Sub-Account and/or Guarantee
Amount. If not so instructed, the  Company will effect such withdrawal  pro-rata
from  each Sub-Account and  Guarantee Amount in  which the Participant's Account
Value is invested at the end of the Valuation Period during which the withdrawal
becomes effective. ALL CASH  WITHDRAWALS OF ANY  GUARANTEE AMOUNT, EXCEPT  THOSE
EFFECTIVE  WITHIN 30 DAYS PRIOR TO THE EXPIRATION DATE OF SUCH GUARANTEE AMOUNT,
WILL BE SUBJECT TO THE MARKET VALUE ADJUSTMENT.
 
    Cash withdrawals  from a  Sub-Account  will result  in the  cancellation  of
Variable  Accumulation Units attributable  to the Participant's  Account with an
aggregate value  on the  effective date  of the  withdrawal equal  to the  total
amount  by which the Sub-Account is reduced. The cancellation of such units will
be based on  the Variable Accumulation  Unit values of  the Sub-Account for  the
Valuation Period during which the cash withdrawal is effective.
 
                                       20
<PAGE>
    The  Company, upon request, will advise  the Participant of the amounts that
would be payable in the event of a full surrender or partial withdrawal.
 
    Any cash withdrawal payment will be paid within seven days from the date the
election becomes effective, except as the Company may be permitted to defer such
payment in accordance  with the Investment  Company Act of  1940 and  applicable
state  insurance law. Deferral of amounts withdrawn from the Variable Account is
currently permissible only  (1) for  any period (a)  during which  the New  York
Stock  Exchange is closed other than  customary week-end and holiday closings or
(b) during  which  trading on  the  New York  Stock  Exchange is  restricted  as
determined  by the Securities and Exchange Commission, (2) for any period during
which an emergency exists as a result  of which (a) disposal of securities  held
by  the Series Fund  is not reasonably  practicable or (b)  it is not reasonably
practicable to determine the value of the  net assets of the Series Fund or  (3)
for  such other periods as  the Securities and Exchange  Commission may by order
permit for the protection of security holders. The Company reserves the right to
defer the payment of amounts withdrawn from  the Fixed Account for a period  not
to  exceed  six months  from the  date  written request  for such  withdrawal is
received by the Company. The Company is not required to pay interest on  amounts
so deferred.
 
    Since  the Qualified Contracts offered by  this Prospectus will be issued in
connection with retirement plans  which meet the  requirements of Sections  401,
403, and 408 of the Internal Revenue Code, reference should be made to the terms
of  the particular retirement  plan for any limitations  or restrictions on cash
withdrawals. For special restrictions  applicable to withdrawals from  Contracts
used  with Tax-Sheltered Annuities established pursuant to Section 403(b) of the
Internal Revenue Code, see "Section 403(b) Annuities" below.
 
    A cash withdrawal under either a Qualified or Non-Qualified Contract offered
by this Prospectus also may result in  a tax penalty. The tax consequences of  a
cash  withdrawal payment under both Qualified and Non-Qualified Contracts should
be carefully considered (See "Federal Tax Status").
 
WITHDRAWAL CHARGES
 
    No sales charges are deducted from Purchase Payments. However, a  withdrawal
charge  (contingent deferred sales charge), when applicable, will be assessed to
reimburse the Company for certain expenses  relating to the distribution of  the
Contracts,  including commissions, costs of  preparation of sales literature and
other promotional costs and acquisition expenses. Cash withdrawals may result in
a 10% tax  penalty in  addition to any  withdrawal charge  applicable under  the
Contracts (See "Federal Tax Status").
 
    No  withdrawal charge  is assessed upon  annuitization, upon  payment of the
death benefit or  upon the  transfer of  Participant's Account  Value among  the
Sub-Accounts  or between  the Sub-Accounts and  the Fixed Account  or within the
Fixed Account.
 
   
    When a withdrawal is made from a Qualified Contract to comply with mandatory
minimum distribution requirements, no withdrawal  charge will be applied to  the
amount  required  to be  distributed during  each  Account Year.  These required
distributions may  commence during  and continue  after the  year in  which  the
Annuitant attains age 70 1/2 (or, beginning in 1997, after the year in which the
Annuitant  retires if  that is  later). Any amounts  withdrawn in  excess of the
required minimum distribution during  each Account Year will  be subject to  any
applicable withdrawal charge.
    
 
    The  withdrawal  charge  is not  assessed  with respect  to  a Participant's
Account established for the personal account of an employee of the Company or of
any of its affiliates, or of a licensed insurance agent engaged in  distributing
the  Contracts and Certificates, and the Company may waive the withdrawal charge
with respect to  Purchase Payments derived  from the surrender  of contracts  or
certificates  issued in connection with other combination fixed/variable annuity
contracts issued by the Company.
 
    For purposes of a full surrender  or partial withdrawal, each withdrawal  is
allocated  to previously unliquidated Purchase Payments on a first-in, first-out
basis until  all  Purchase Payments  have  been liquidated.  Once  all  Purchase
Payments  have been  liquidated, any additional  withdrawals will  come from the
earnings on the Contract and are not subject to a withdrawal charge. The  amount
subject  to a withdrawal charge is the  amount of the partial withdrawal or full
surrender up to the maximum of the sum of all unliquidated Purchase Payments.
 
AMOUNT OF WITHDRAWAL CHARGE
 
   
    A withdrawal  charge  percentage  of  1% is  applied  to  Purchase  Payments
withdrawn  which have been credited to a Participant's Account for less than one
year (365 days).
    
 
                                       21
<PAGE>
    In no  event  shall the  aggregate  withdrawal charges  assessed  against  a
Participant's  Account exceed 1% of the aggregate Purchase Payments made under a
Certificate (See Appendix C for examples of withdrawals, withdrawal charges  and
the  Market Value Adjustment). The Company may, upon notice to the Owner, modify
the withdrawal  charge, provided  that  such modification  shall apply  only  to
Participant's Accounts established after the effective date of such modification
(See "Modification").
 
SECTION 403(B) ANNUITIES
 
    The  Internal  Revenue Code  imposes restrictions  on cash  withdrawals from
Contracts used with Section  403(b) Annuities. In order  for these Contracts  to
receive  tax deferred treatment, the Contract must provide that cash withdrawals
of  amounts  attributable   to  salary  reduction   contributions  (other   than
withdrawals  of accumulation  account value as  of December  31, 1988 ("Pre-1989
Account Value"))  may be  made only  when the  Participant attains  age 59  1/2,
separates  from service with the employer,  dies or becomes disabled (within the
meaning of Section 72(m)(7) of the Code). These restrictions apply to any growth
or interest  on or  after January  1,  1989 on  Pre-1989 Account  Value,  salary
reduction  contributions made  on or  after January 1,  1989, and  any growth or
interest on such contributions ("Restricted Account Value").
 
   
    Withdrawals of  Restricted Account  Value  are also  permitted in  cases  of
financial  hardship,  but  only  to the  extent  of  contributions;  earnings on
contributions cannot be  withdrawn for  hardship reasons.  While specific  rules
defining  hardship have not been  issued by the Internal  Revenue Service, it is
expected that to qualify for a hardship distribution, the Participant must  have
an  immediate  and  heavy bona  fide  financial  need and  lack  other resources
reasonably available  to satisfy  the  need. Hardship  withdrawals (as  well  as
certain  other premature withdrawals) will  be subject to a  10% tax penalty, in
addition to any withdrawal  charge applicable under  the Contract (See  "Federal
Tax Status"). Beginning in 1997, under certain circumstances the 10% tax penalty
will not apply if the withdrawal is made to pay medical expenses.
    
 
   
    Beginning  November 18, 1996, a Contract  used with a Section 403(b) Annuity
must provide that amounts contributed  under a salary reduction agreement  under
the  Contract  and  all other  plans,  contracts,  or arrangements  of  the same
employer may  not exceed  the  dollar amount  of  the limitation  under  Section
402(g)(1) of the Internal Revenue Code (currently $9,500).
    
 
    Under  the terms of a particular Section 403(b) plan, the Participant may be
entitled to transfer all or a portion of the Participant's Account Value to  one
or  more alternative funding options.  Participants should consult the documents
governing their plan and the person who administers the plan for information  as
to such investment alternatives.
 
    With respect to these restrictions on withdrawals from the Variable Account,
the  Company is relying upon a no-action letter dated November 28, 1988 from the
staff of the Securities and Exchange Commission to the American Council of  Life
Insurance, the requirements for which have been complied with by the Company.
 
    For  information on the  federal income tax withholding  rules that apply to
distributions from Qualified Contracts (including Section 403(b) Annuities)  see
"Federal Tax Status".
 
MARKET VALUE ADJUSTMENT
 
    Any cash withdrawal of a Guarantee Amount, other than a withdrawal effective
within  30 days  prior to the  Expiration Date  of the Guarantee  Amount will be
subject to  a Market  Value  Adjustment ("MVA")  (for this  purpose,  transfers,
distributions  on the death of a Participant  and amounts applied to purchase an
annuity are treated as cash withdrawals). The MVA will be applied to the  amount
being  withdrawn which is subject to the  MVA, after deduction of any applicable
Account Fee and before deduction of any applicable withdrawal charge.
 
    The MVA will reflect the relationship  between the Current Rate (as  defined
below) for the Guarantee Amount being withdrawn and the Guaranteed Interest Rate
applicable to the amount being withdrawn. It also reflects the time remaining in
the  applicable Guarantee Period. Generally, if  the Guaranteed Interest Rate is
lower than the  applicable Current Rate,  then the application  of the MVA  will
result in a lower payment upon withdrawal. Similarly, if the Guaranteed Interest
Rate is higher than the applicable Current Rate, the application of the MVA will
result in a higher payment upon withdrawal.
 
                                       22
<PAGE>
    The  Market  Value  Adjustment  is  determined  by  the  application  of the
following formula:
 
<TABLE>
 <S>                        <C>
                              N/12
                      1 + I
                    ( ----- )      -1
                      1 + J
</TABLE>
 
where,
 
    I is the  Guaranteed Interest Rate  being credited to  the Guarantee  Amount
subject to the Market Value Adjustment,
 
   
    J  is  the Guaranteed  Interest  Rate declared  by  the Company,  as  of the
effective date of the  application of the Market  Value Adjustment, for  current
allocations  to  Guarantee Period(s).  If  the Guarantee  Period  was originally
established through Monthly or Quarterly Dollar Cost Averaging Options, J is the
Guaranteed Interest Rate declared for current allocations to these options.  For
all  other Guarantee  Periods, J  is the  Guaranteed Interest  Rate declared for
current allocations to Guarantee Periods equal  to the balance of the  Guarantee
Period  of the Guarantee Amount subject  to the Market Value Adjustment, rounded
to the  next  higher number  of  complete years  (the  "Current Rate").  In  the
determination  of J for Guarantee Periods other than those established under the
Monthly or Quarterly  Dollar Cost  Averaging Options,  if the  Company does  not
currently  offer the applicable  Guarantee Period, then J  will be determined by
linear interpolation of Current Rates for Guarantee Periods that are available.
    
 
    N is the number of complete months remaining in the Guarantee Period of  the
Guarantee Amount subject to the Market Value Adjustment.
 
    The  Company  may, upon  notice to  the  Owner, modify  the formula  used to
calculate the Market  Value Adjustment,  provided that  such modification  shall
apply  only to  Participant's Accounts established  after the  effective date of
such modification (See "Modification").
 
    See Appendix  C  for  examples  of  the  application  of  the  Market  Value
Adjustment.
 
                                 DEATH BENEFIT
 
DEATH BENEFIT PROVIDED BY THE CONTRACT
 
    In the event of the death of the Annuitant prior to the Annuity Commencement
Date,  the Company will pay  a death benefit to the  Beneficiary. If there is no
designated Beneficiary living on the date of death of the Annuitant, the Company
will, upon  receipt  of  Due Proof  of  Death  of both  the  Annuitant  and  the
designated  Beneficiary, pay the death benefit in one sum to the Participant or,
if   the   Annuitant   was   the    Participant,   to   the   estate   of    the
Participant/Annuitant.  If the  death of  the Annuitant  occurs on  or after the
Annuity Commencement Date, no death benefit  will be payable under the  Contract
except as may be provided under the Annuity Option elected.
 
ELECTION AND EFFECTIVE DATE OF ELECTION
 
    During  the lifetime of the Annuitant  and prior to the Annuity Commencement
Date, the Participant may elect to have  the death benefit applied under one  or
more  Annuity  Options to  effect a  Variable Annuity  or a  Fixed Annuity  or a
combination of  both  for  the Beneficiary  as  Payee  after the  death  of  the
Annuitant.  If no election of a method of settlement of the death benefit by the
Participant is in effect on the date of death of the Annuitant, the  Beneficiary
may elect (a) to receive the death benefit in the form of a single cash payment;
or  (b) to  have the  death benefit  applied under  one or  more of  the Annuity
Options (on  the Annuity  Commencement Date  described under  "Payment of  Death
Benefit")  to effect a Variable  Annuity or a Fixed  Annuity or a combination of
both for the Beneficiary as Payee.  Either election described above may be  made
by  filing with the Company  a written election in such  form as the Company may
require. Any election  of a method  of settlement  of the death  benefit by  the
Participant will become effective on the date it is received by the Company. For
the  purposes  of the  Payment  of Death  Benefit  and Amount  of  Death Benefit
sections below, any election of the method of settement of the death benefit  by
the Participant which is in effect on the date of death of the Annuitant will be
deemed  effective on the date Due Proof of Death of the Annuitant is received by
the Company. Any election of a method of settlement of the death benefit by  the
Beneficiary  will become effective on the later of: (a) the date the election is
received by the Company; or (b) the date Due
 
                                       23
<PAGE>
Proof of Death of the  Annuitant is received by the  Company. If an election  by
the Beneficiary is not received by the Company within 60 days following the date
Due  Proof of Death of the Annuitant is received by the Company, the Beneficiary
will be deemed to have elected a cash payment  as of the last day of the 60  day
period.
 
    In  all cases, no  Participant or Beneficiary shall  be entitled to exercise
any rights  that would  adversely affect  the treatment  of the  Contract as  an
annuity  contract  under  the  Internal Revenue  Code.  (See  "Other Contractual
Provisions -- Death of Participant").
 
PAYMENT OF DEATH BENEFIT
 
    If the death benefit is to be paid in cash to the Beneficiary, payment  will
be  made within  seven days  of the  date the  election becomes  effective or is
deemed to become effective, except as the Company may be permitted to defer  any
such payment of amounts derived from the Variable Account in accordance with the
Investment Company Act of 1940. If the death benefit is to be paid in one sum to
the  Participant or, if the Annuitant was  the Participant, to the estate of the
deceased Participant/Annuitant, payment will  be made within  seven days of  the
date  Due Proof of Death of the Annuitant, the Participant and/or the designated
Beneficiary, as applicable, is received by the Company. If settlement under  one
or  more of the Annuity Options is elected the Annuity Commencement Date will be
the first day of the second calendar  month following the effective date or  the
deemed  effective date  of the election,  and the Participant's  Account will be
maintained in effect until the Annuity Commencement Date.
 
AMOUNT OF DEATH BENEFIT
 
    The death benefit is determined as of the effective date or deemed effective
date of the death benefit election.
 
    If the Annuitant was  less than age  86 on the Date  of Coverage, the  death
benefit  is equal to the greatest of (1) the Participant's Account Value for the
Valuation Period during  which the  death benefit  election is  effective or  is
deemed  to become effective; (2) the amount  that would have been payable in the
event of a full  surrender of the  Participant's Account on  the date the  death
benefit  election is effective or  is deemed to become  effective; and (3) total
Purchase Payments made with respect to the Participant's Account, minus the  sum
of all partial withdrawals.
 
    If  the Annuitant was age  86 or greater on the  Date of Coverage, the death
benefit is equal to (2) above.
 
   
    If (2)  or  (3)  is  operative, the  Participant's  Account  Value  will  be
increased  by the excess of (2) or (3), as applicable, over (1) and the increase
will be allocated  to the  Sub-Accounts based on  the respective  values of  the
Sub-Accounts  on the date the  amount of the death  benefit is determined. If no
portion of the Participant's  Account is allocated to  the Sub-Accounts on  that
date,  the entire increase will be allocated  to the Sub-Account invested in the
Money Market Series of the Series Fund.
    
 
                     HOW THE CONTRACT CHARGES ARE ASSESSED
 
    As more fully described  below, charges under the  Contract offered by  this
Prospectus  are assessed in  three ways: (1)  as deductions for  the Account Fee
and, if applicable, for premium taxes; (2) as charges against the assets of  the
Variable  Account  for  the  assumption  of  mortality  and  expense  risks  and
administrative expenses;  and (3)  as  withdrawal charges  (contingent  deferred
sales  charges). In addition, certain deductions are made from the assets of the
Series Fund for investment management fees and expenses. These fees and expenses
are described  in  the Series  Fund's  Prospectus and  Statement  of  Additional
Information.
 
ADMINISTRATIVE CHARGES
 
    Prior  to the  Annuity Commencement  Date, on  each Account  Anniversary the
Company deducts from the value of  each Participant's Account an annual  account
administration  fee ("Account Fee") in the amount of $50 as partial compensation
for expenses  relating  to  the  issue and  maintenance  of  the  Contract,  the
Certificate  and  the  Participant's  Account.  If  a  Participant's  Account is
surrendered for  its full  value  on other  than  the Account  Anniversary,  the
Account  Fee will be deducted in full at the time of such surrender. The Account
Fee will  be  deducted on  a  pro rata  basis  from amounts  allocated  to  each
Guarantee Period and
 
                                       24
<PAGE>
each  Sub-Account in which the Participant's Account  is invested at the time of
such  deduction.  Also,  the  Company  will  waive  the  Account  Fee  when  the
Participant's Account Value is greater than $100,000 on the Account Anniversary.
On the Annuity Commencement Date, the value of the Participant's Account will be
reduced by a proportionate amount of the Account Fee to reflect the time elapsed
between the last Account Anniversary and the day before the Annuity Commencement
Date.  After the Annuity Commencement Date, an annual Account Fee of $50 will be
deducted in equal  amounts from each  variable annuity payment  made during  the
year. No such deduction will be made from fixed annuity payments.
 
   
    The  Company makes a deduction from the  Variable Account at the end of each
Valuation Period (during both the Accumulation Period and after annuity payments
begin) at an effective annual rate of  0.15% to reimburse the Company for  those
administrative  expenses attributable  to the  Contracts, the  Certificates, the
Participant's Accounts  and  the  Variable Account  which  exceed  the  revenues
received  from the  Account Fee.  The Company  believes that  the administrative
expense charge has been set at a level that will recover no more than the actual
costs associated  with  administering  the Contracts  and  Certificates.  For  a
description  of  administrative  services provided  see  "Administration  of the
Contracts".
    
 
    The Contract provides that  the Company may modify  the Account Fee and  the
administrative  expense charge, provided that such modification shall apply only
with respect to Participant's Accounts  established after the effective date  of
such  modification (See "Modification").  The Company does not  expect to make a
profit from the Account Fee or the administrative expense charge.
 
PREMIUM TAXES
 
    A deduction, when applicable, is made for premium or similar state or  local
taxes  (See Appendix B). It is currently the policy of the Company to deduct the
tax from the amount applied to provide  an annuity at the time annuity  payments
commence;  however, the  Company reserves  the right  to deduct  such taxes when
incurred.
 
MORTALITY AND EXPENSE RISK CHARGE
 
    The mortality  risk  assumed by  the  Company arises  from  the  contractual
obligation  to continue to make annuity payments to each Annuitant regardless of
how long the  Annuitant lives and  regardless of  how long all  annuitants as  a
group  live. This  assures each annuitant  that neither the  longevity of fellow
annuitants nor an  improvement in  the life  expectancy generally  will have  an
adverse effect on the amount of any annuity payment received under the Contract.
The  Company assumes this mortality risk by virtue of annuity rates incorporated
into the Contract which cannot be  changed except with respect to  Participant's
Accounts established after the effective date of such change, as provided in the
section  of this Prospectus entitled "Modification". The expense risk assumed by
the Company  is the  risk that  the administrative  charges assessed  under  the
Contract  may be insufficient to cover  the actual total administrative expenses
incurred by the Company.
 
    For assuming these risks,  the Company makes a  deduction from the  Variable
Account  at the end of each Valuation Period during both the Accumulation Period
and after annuity payments begin  at an effective annual  rate of 1.00%. If  the
deduction  is insufficient to cover the actual cost of the mortality and expense
risk undertaking, the Company will bear  the loss. Conversely, if the  deduction
proves  more than sufficient, the excess will be profit to the Company and would
be available for  any proper  corporate purpose including,  among other  things,
payment  of distribution  expenses. The Company  will recoup  its expected costs
associated with registering and distributing the Contracts by the assessment  of
the  withdrawal  charge  (contingent  deferred  sales  charge)  described below.
However, the withdrawal  charge may  prove to  be insufficient  to cover  actual
distribution  expenses. If this is the case, the deficiency will be met from the
Company's general corporate  funds which  may include amounts  derived from  the
mortality and expense risk charges.
 
    The  Contract provides that the Company may modify the mortality and expense
risk charge;  however,  such  modification  shall apply  only  with  respect  to
Participant's Accounts established after the effective date of such modification
(See "Modification").
 
                                       25
<PAGE>
    Mortality  and expense risk charges, administrative charges and distribution
expense charges assessed under other  contracts participating in the  investment
experience  of  the Variable  Account  were the  only  expenses of  the Variable
Account for the year ended December 31, 1995.
 
WITHDRAWAL CHARGES
 
    No deduction for sales  charges is made from  Purchase Payments. However,  a
withdrawal charge (contingent deferred sales charge) of 1% of Purchase Payments,
when  applicable, will be used to cover certain expenses relating to the sale of
the Contract and  Certificates thereunder, including  commissions paid to  sales
personnel,  the costs of  preparation of sales  literature and other promotional
costs and acquisition  expenses. Gross  commissions paid  on the  sale of  these
Contracts  are not more than 1.20% of  the Purchase Payments. In addition, after
the first  Account  Year, a  trail  commission of  no  more than  1.00%  of  the
Participant's  Account Value may be paid (See "Cash Withdrawals" and "Withdrawal
Charges").
 
                               ANNUITY PROVISIONS
 
ANNUITY COMMENCEMENT DATE
 
   
    Annuity payments  will  begin on  the  Annuity Commencement  Date  which  is
selected  by the Participant, as specified in the Application. The date selected
by the Participant may not be sooner  than the first day of the second  calendar
month  following  the  Date  of  Coverage.  This  date  may  be  changed  by the
Participant from time to  time by written notice  to the Company, provided  that
notice  of each change is received by the  Company at least 30 days prior to the
then current Annuity Commencement Date and the new Annuity Commencement Date  is
a  date which is: (1)  at least 30 days  after the date notice  of the change is
received by the Company; (2)  the first day of a  month; and (3) not later  than
the first day of the first month following the Annuitant's 90th birthday, unless
otherwise  restricted, in  the case of  a Qualified Contract,  by the particular
retirement plan or by applicable law.  In most situations, current law  requires
that  the Annuity Commencement Date under a  Qualified Contract be no later than
April 1 following the year the Annuitant reaches  age 70 1/2 , and the terms  of
the  particular retirement plan may impose additional limitations. (Beginning in
1997, current law  generally will  permit the  Annuity Commencement  Date to  be
delayed  beyond  age  70 1/2  until  April 1  following  the year  in  which the
Annuitant retires.) The  Annuity Commencement  Date may  also be  changed by  an
election  of an Annuity Option as described in the Death Benefit section of this
Prospectus.
    
 
   
    On the Annuity Commencement Date the Participant's Account will be cancelled
and its adjusted value will be applied  to provide an annuity under one or  more
of  the  options described  below.  No withdrawal  charge  will be  imposed upon
amounts applied to purchase an annuity. However, the Market Value Adjustment may
apply, as noted under "Determination of Annuity Payments" below. NO PAYMENTS MAY
BE REQUESTED UNDER  THE CONTRACT'S CASH  WITHDRAWAL PROVISIONS ON  OR AFTER  THE
ANNUITY  COMMENCEMENT DATE, AND  NO CASH WITHDRAWAL WILL  BE PERMITTED EXCEPT AS
MAY BE AVAILABLE UNDER THE ANNUITY OPTION ELECTED.
    
 
    Since the Contracts offered by this  Prospectus may be issued in  connection
with  retirement plans which meet the requirements of Section 401, 403 or 408 of
the Internal Revenue  Code, as  well as certain  non-qualified plans,  reference
should  be  made to  the terms  of the  particular plan  for any  limitations or
restrictions on the Annuity Commencement Date.
 
ELECTION--CHANGE OF ANNUITY OPTION
 
    During the lifetime of the Annuitant  and prior to the Annuity  Commencement
Date,  the Participant may  elect one or  more of the  Annuity Options described
below, or such other settlement option as  may be agreed to by the Company,  for
the  Annuitant  as Payee.  The  Participant may  also  change any  election, but
written notice of any  election or change  of election must  be received by  the
Company  at least 30 days prior to the Annuity Commencement Date. If no election
is in effect on  the 30th day  prior to the  Annuity Commencement Date,  Annuity
Option  B, for a Life Annuity with  120 monthly payments certain, will be deemed
to have been elected. If there is no  election of a sole Annuitant in effect  on
the  30th day prior to  the Annuity Commencement Date,  the person designated as
"Co-Annuitant" will be the Payee under the applicable Annuity Option.
 
                                       26
<PAGE>
    Any election  may  specify the  proportion  of  the adjusted  value  of  the
Participant's  Account to be applied  to provide a Fixed  Annuity and a Variable
Annuity. In the event the election does not so specify, or if no election is  in
effect  on the 30th day prior to the Annuity Commencement Date, then the portion
of the adjusted value of  the Participant's Account to  be applied to provide  a
Fixed Annuity and a Variable Annuity will be determined on a pro rata basis from
the composition of the Participant's Account on the Annuity Commencement Date.
 
    Annuity Options may also be elected by the Participant or the Beneficiary as
provided in the Death Benefit section of this Prospectus.
 
    Reference  should be made to  the terms of a  particular retirement plan and
any applicable legislation for  any limitations or  restrictions on the  options
which may be elected.
 
    NO  CHANGE OF  ANNUITY OPTION  IS PERMITTED  AFTER THE  ANNUITY COMMENCEMENT
DATE.
 
ANNUITY OPTIONS
 
    No  lump  sum  settlement  option  is  available  under  the  Contract.  The
Participant  may surrender a Certificate prior to the Annuity Commencement Date;
however, any  applicable  surrender  charge  will  be  deducted  from  the  cash
withdrawal  payment  and  a  Market Value  Adjustment,  if  applicable,  will be
applied.
 
    Annuity Options  A, B,  C and  D are  available to  provide either  a  Fixed
Annuity  or a Variable Annuity. Annuity Option  E is available only to provide a
Fixed Annuity.
 
    Annuity Option A.   Life Annuity:  Monthly  payments during the lifetime  of
the  Payee. This option offers  a higher level of  monthly payments than Annuity
Options B or C because  no further payments are payable  after the death of  the
Payee and there is no provision for a death benefit payable to a Beneficiary.
 
    Annuity  Option B.  Life  Annuity with 60, 120,  180 or 240 Monthly Payments
Certain:  Monthly payments during the lifetime of the Payee and in any event for
60, 120, 180 or 240 months certain  as elected. The election of a longer  period
certain  results in smaller monthly payments than would be the case if a shorter
period certain were elected. In the event  of the death of the Payee under  this
option,  the  Contract  provides  that if  there  is  no  designated beneficiary
entitled to the  remaining payments  then living,  the discounted  value of  the
remaining  payments,  if any,  will be  calculated and  paid in  one sum  to the
deceased Payee's estate. In  addition, any beneficiary  who becomes entitled  to
any  remaining payments under this  option may elect to  receive the amounts due
under this option in one sum. The discounted value for variable annuity payments
will be based on interest compounded annually at the assumed interest rate of 3%
per year. The discounted value for payments being made on a fixed basis will  be
based on the interest rate initially used by the Company to determine the amount
of each payment.
 
    Annuity  Option C.   Joint and  Survivor Annuity:   Monthly payments payable
during the joint lifetime of the Payee and a designated second person and during
the lifetime of  the survivor.  During the  lifetime of  the survivor,  variable
monthly  payments, if any, will be determined using the percentage chosen at the
time of election  of this  option of  the number of  each type  of Annuity  Unit
credited  with respect to the Payee and  fixed monthly payments, if any, will be
equal to the  same percentage of  the fixed monthly  payment payable during  the
joint lifetime of the Payee and the designated second person.
 
    *   Annuity   Option  D.     Monthly   Payments   for  a   Specified  Period
Certain:  Monthly payments for a specified  period of time (at least five  years
but  not exceeding 30 years), as elected. In the event of the death of the Payee
under this option, the Contract provides that, as described under Annuity Option
B above,  in  certain  circumstances  the  discounted  value  of  the  remaining
payments, if any, will be calculated and paid in one sum.
 
   
    *  Annuity Option E.   Fixed Payments:  The  amount applied to provide fixed
payments in accordance with this option will be held by the Company at interest.
Fixed payments will be made in such amounts  and at such times (at least over  a
period  of five years) as may be agreed  upon with the Company and will continue
until the  amount held  by the  Company with  interest is  exhausted. The  final
payment  will be for  the balance remaining and  may be less  than the amount of
each preceding payment. Interest will be credited on an
 
- ---------
    
* The election of this annuity option may result in the imposition of a penalty
tax.
 
                                       27
<PAGE>
   
annual basis on the amount remaining unpaid at a rate which shall be  determined
by  the Company from time to time but which  shall not be less than 3% per year,
compounded annually. The rate so  determined may be changed  at any time and  as
often  as may be determined by the Company, provided, however, that the rate may
not be reduced more frequently than once during each calendar year. In the event
of the death  of the Payee  under this  option, the Contract  provides that,  as
described  under Annuity  Option B  above, in  certain circumstances  the unpaid
balance of the proceeds and interest will be paid in one sum.
    
 
DETERMINATION OF ANNUITY PAYMENTS
 
   
    On the Annuity Commencement Date the Participant's Account will be cancelled
and its adjusted value will be applied to provide a Variable Annuity or a  Fixed
Annuity  or  a combination  of both.  The adjusted  value will  be equal  to the
Participant's Account  Value for  the Valuation  Period which  ends  immediately
preceding  the Annuity Commencement  Date, reduced by  a proportionate amount of
the Account Fee to reflect the time elapsed between the last Account Anniversary
and the day before the Annuity  Commencement Date, plus or minus any  applicable
Market Value Adjustment and minus any applicable premium or similar taxes.
    
 
    If the amount to be applied under any annuity option is less than $2,000, or
if the first annuity payment payable in accordance with such option is less than
$20,  the Company will pay the  amount to be applied in  a single payment to the
Payee.
 
FIXED ANNUITY PAYMENTS
 
    The dollar  amount of  each  fixed annuity  payment  will be  determined  in
accordance  with the Annuity Payment Rates found in the Contract which are based
on a minimum guaranteed interest rate of  3% per year, or, if more favorable  to
the  Payee(s), in  accordance with  the Annuity  Payment Rates  published by the
Company and in use on the Annuity Commencement Date.
 
VARIABLE ANNUITY PAYMENTS
 
    The dollar amount of the first  variable annuity payment will be  determined
in  accordance with the  Annuity Payment Rates  found in the  Contract which are
based on an assumed interest rate of 3% per year, unless these rates are changed
(See "Modification"). All  variable annuity  payments other than  the first  are
determined  by means  of Annuity Units  credited with respect  to the particular
Payee. The number of  Annuity Units to  be credited in  respect of a  particular
Sub-Account is determined by dividing that portion of the first variable annuity
payment  attributable  to that  Sub-Account by  the Annuity  Unit value  of that
Sub-Account for  the  Valuation  Period which  ends  immediately  preceding  the
Annuity  Commencement  Date.  The number  of  Annuity Units  of  each particular
Sub-Account credited with  respect to  the particular Payee  then remains  fixed
unless  an exchange  of Annuity  Units is  made as  described below.  The dollar
amount of each variable annuity payment  after the first may increase,  decrease
or  remain  constant, and  is  equal to  the sum  of  the amounts  determined by
multiplying the number  of Annuity  Units of a  particular Sub-Account  credited
with  respect  to  the  particular  Payee by  the  Annuity  Unit  value  for the
particular Sub-Account for the Valuation Period which ends immediately preceding
the due date of  each subsequent payment.  If the net  investment return on  the
assets  of the Variable Account is the same as the assumed interest rate (3% per
year), variable annuity payments will remain level. If the net investment return
exceeds the assumed interest rate  variable annuity payments will increase  and,
conversely,  if it  is less  than the  assumed interest  rate the  payments will
decrease.
 
    For a hypothetical example of the calculation of a Variable Annuity Payment,
see Appendix A.
 
ANNUITY UNIT VALUE
 
   
    The Annuity Unit value  for each Sub-Account was  established at $10.00  for
the first Valuation Period of the particular Sub-Account. The Annuity Unit value
for the particular Sub-Account for any subsequent Valuation Period is determined
by  multiplying the  Annuity Unit value  for the particular  Sub-Account for the
immediately preceding  Valuation  Period  by  the  Net  Investment  Factor  (See
"Variable  Accumulation  Value,  Net  Investment  Factor")  for  the  particular
Sub-Account for the current Valuation  Period and then multiplying that  product
by  a factor  to neutralize  the assumed interest  rate of  3% per  year used to
establish the Annuity Payment Rates found in the applicable Contract. For a  one
day Valuation Period the factor is 0.99991902.
    
 
   
    For  a hypothetical example  of the calculation  of the value  of an Annuity
Unit, see Appendix A.
    
 
                                       28
<PAGE>
EXCHANGE OF VARIABLE ANNUITY UNITS
 
    After the  Annuity Commencement  Date the  Payee may,  by filing  a  written
request  with the Company, exchange the value  of a designated number of Annuity
Units of particular Sub-Accounts  then credited with  respect to the  particular
Payee into other Annuity Units, the value of which would be such that the dollar
amount  of  an  annuity  payment made  on  the  date of  the  exchange  would be
unaffected by the fact of the exchange.  No more than twelve (12) exchanges  may
be made within each Account Year.
 
    Exchanges  may be made only among Sub-Accounts. Exchanges will be made using
the Annuity Unit values  for the Valuation Period  during which any request  for
exchange is received by the Company.
 
ANNUITY PAYMENT RATES
 
    The  Contract  contains  Annuity  Payment  Rates  for  each  Annuity  Option
described in  this Prospectus.  The rates  show, for  each $1,000  applied,  the
dollar  amount of: (a) the  first monthly variable annuity  payment based on the
assumed interest  rate specified  in the  Contract; and  (b) the  monthly  fixed
annuity  payment, when this payment is  based on the minimum guaranteed interest
rate of 3% per year. These rates may  be changed by the Company with respect  to
Participant's  Accounts established after the effective date of such change (See
"Modification").
 
    The annuity payment rates may vary  according to the Annuity Option  elected
and  the adjusted age  of the Payee.  The Contract also  describes the method of
determining the  adjusted  age  of  the  Payee.  The  mortality  table  used  in
determining  the  annuity payment  rates  for Options  A, B  and  C is  the 1983
Individual Annuitant Mortality Table A.
 
                          OTHER CONTRACTUAL PROVISIONS
 
PAYMENT LIMITS
 
    The initial Purchase Payment credited to each Participant's Account must  be
at  least $25,000 and each additional Purchase  Payment must be at least $1,000,
unless waived by the Company. In addition, the prior approval of the Company  is
required before it will accept a Purchase Payment which would cause the value of
a  Participant's Account to  exceed $1,000,000. If the  value of a Participant's
Account exceeds $1,000,000,  no additional  Purchase Payments  will be  accepted
without  the  prior  approval of  the  Company.  Purchase Payments  may  be made
annually, semi-annually, quarterly, monthly or at any other frequency acceptable
to the Company. The Participant may, subject to the minimum payment, increase or
decrease the amount of Purchase Payments or change the frequency of payment, but
the Participant is not obligated to continue Purchase Payments in the amount  or
frequency  elected.  There are  no  penalties for  failure  to continue  to make
Purchase Payments.  While the  Contract  and the  Participant's Account  are  in
force,  Purchase  Payments  may  be  made  at  any  time  prior  to  the Annuity
Commencement Date.
 
DESIGNATION AND CHANGE OF BENEFICIARY
 
    The beneficiary  designation contained  in the  Application will  remain  in
effect  until  changed.  The  interest  of any  Beneficiary  is  subject  to the
particular Beneficiary  surviving the  Annuitant  and, in  the  case of  a  Non-
Qualified Contract, the Participant as well.
 
    Subject  to  the  rights  of  an  irrevocably  designated  Beneficiary,  the
Participant may change or  revoke the designation of  a Beneficiary at any  time
while  the Annuitant is living by filing  with the Company a written beneficiary
designation or revocation in such form as the Company may require. The change or
revocation will not  be binding upon  the Company  until it is  received by  the
Company. When it is so received the change or revocation will be effective as of
the  date on which the beneficiary designation or revocation was signed, but the
change or revocation will be without prejudice to the Company on account of  any
payment made or any action taken by the Company prior to receiving the change or
revocation.
 
    Reference  should be made to  the terms of a  particular retirement plan and
any applicable legislation for any restrictions on the beneficiary designation.
 
                                       29
<PAGE>
EXERCISE OF CONTRACT RIGHTS
 
    The Contract shall belong to the  Owner. All Contract rights and  privileges
may be expressly reserved by the Owner, failing which, each Participant shall be
entitled  to  exercise  such  rights  and  privileges  in  connection  with such
Participant's Certificate.  In  any case,  such  rights and  privileges  can  be
exercised  without the  consent of  the Beneficiary  (other than  an irrevocably
designated Beneficiary) or any other person.  Such rights and privileges may  be
exercised  only during the  lifetime of the  Annuitant and prior  to the Annuity
Commencement Date, except as otherwise provided in the Contract.
 
    The Annuitant becomes the Payee on and after the Annuity Commencement  Date.
The Beneficiary becomes the Payee on the death of the Annuitant. Such Payees may
thereafter  exercise  such rights  and privileges,  if  any, of  ownership which
continue.
 
CHANGE OF OWNERSHIP
 
    Ownership of a Qualified Contract may not be transferred except to: (1)  the
Annuitant;  (2) a trustee  or successor trustee  of a pension  or profit sharing
trust which is qualified under Section 401 of the Internal Revenue Code; (3) the
employer of the Annuitant provided that the Qualified Contract after transfer is
maintained under the terms of a  retirement plan qualified under Section  403(a)
of  the Internal Revenue Code for the  benefit of the Annuitant; (4) the trustee
of an individual  retirement account  plan qualified  under Section  408 of  the
Internal  Revenue  Code  for the  benefit  of  the Owner;  or  (5)  as otherwise
permitted from time to time by laws and regulations governing the retirement  or
deferred  compensation  plans  for which  a  Qualified Contract  may  be issued.
Subject to  the foregoing,  a  Qualified Contract  may  not be  sold,  assigned,
transferred,  discounted or pledged as collateral for  a loan or as security for
the performance of an obligation  or for any other  purpose to any person  other
than the Company.
 
    The  Owner  of a  Non-Qualified  Contract may  change  the ownership  of the
Contract during the  lifetime of  any Annuitant and  prior to  the last  Annuity
Commencement  Date;  and  each  Participant,  in  like  manner,  may  change the
ownership interest in a Contract evidenced by that Participant's Certificate.  A
change  of  ownership  will  not  be  binding  upon  the  Company  until written
notification is received by the Company. When such notification is so  received,
the  change will be effective as of the date on which the request for change was
signed by  the Owner  or Participant,  as appropriate,  but the  change will  be
without  prejudice to the Company  on account of any  payment made or any action
taken by the Company prior to receiving the change.
 
DEATH OF PARTICIPANT
 
    If a Participant under a Non-Qualified Contract dies prior to the  Annuitant
and before the Annuity Commencement Date, that Participant's Account Value, plus
or  minus any  applicable Market  Value Adjustment,  must be  distributed to the
"designated beneficiary" (as defined below)  either (1) within five years  after
the  date of death of the Participant, or (2) as an annuity over some period not
greater than  the life  or expected  life of  the designated  beneficiary,  with
annuity  payments  beginning within  one year  after  the date  of death  of the
Participant. For this purpose (and for purposes of Section 72(s) of the Internal
Revenue  Code),  the  person  named  as  Beneficiary  shall  be  considered  the
designated beneficiary, and if no person then living has been so named, then the
Annuitant  shall automatically be the  designated beneficiary. If the designated
beneficiary is the surviving spouse of the deceased Participant, the spouse  can
elect  to continue the Certificate  in the spouse's own  name as Participant, in
which case these mandatory distribution requirements will apply on the  spouse's
death.
 
    When  the deceased  Participant was  also the  Annuitant, the  Death Benefit
provision of the Contract controls  unless the deceased Participant's  surviving
spouse  is the designated beneficiary and  elects to continue the Certificate in
the spouse's own name as both Participant and Annuitant.
 
    If the Payee dies on or after  the Annuity Commencement Date and before  the
entire  accumulation under such Participant's  Account has been distributed, the
remaining portion of such Participant's Account, if any, must be distributed  at
least as rapidly as the method of distribution then in effect.
 
                                       30
<PAGE>
    In  any  case in  which a  non-natural  person constitutes  a holder  of the
Certificate for the purposes of Section 72(s) of the Internal Revenue Code,  (1)
the  distribution requirements described above shall apply upon the death of any
Annuitant, and (2) a change in any Annuitant shall be treated as the death of an
Annuitant.
 
    In all cases, no  Participant or Beneficiary shall  be entitled to  exercise
any  rights that  would adversely  affect the  treatment of  the Contract  as an
annuity contract under the Internal Revenue Code.
 
    Any distributions upon the death of a Participant under a Qualified Contract
will be subject to the laws and regulations governing the particular  retirement
or  deferred compensation plan  in connection with  which the Qualified Contract
was issued.
 
VOTING OF SERIES FUND SHARES
 
    The Company  will  vote Series  Fund  shares  held by  the  Sub-Accounts  at
meetings of shareholders of the Series Fund, but will follow voting instructions
received from persons having the right to give voting instructions. The Owner or
Participant  is the person having the right to give voting instructions prior to
the Annuity Commencement  Date. On or  after the Annuity  Commencement Date  the
Payee  is the person having  such voting rights. Any  shares attributable to the
Company and  Series Fund  shares for  which no  timely voting  instructions  are
received  will be voted by the Company in  the same proportion as the shares for
which instructions are received from Owners, Participants and Payees.
 
    Owners of Qualified Contracts may be  subject to other voting provisions  of
the  particular plan and  of the Investment  Company Act of  1940. Employees who
contribute to  plans  which are  funded  by the  Contracts  may be  entitled  to
instruct  the Owners as to  how to instruct the Company  to vote the Series Fund
shares attributable  to their  contributions. Such  plans may  also provide  the
additional  extent, if any, to which the Owners shall follow voting instructions
of persons with rights under the  plans. If no voting instructions are  received
from  any such  person with respect  to a particular  Participant's Account, the
Owner may instruct  the Company  as to  how to vote  the number  of Series  Fund
shares for which instructions may be given.
 
    Neither  the Variable Account nor  the Company is under  any duty to provide
information concerning the  voting instruction  rights of persons  who may  have
such  rights under plans,  other than rights afforded  by the Investment Company
Act of 1940,  nor any duty  to inquire as  to the instructions  received or  the
authority  of Owners,  Participants or others  to instruct the  voting of Series
Fund shares. Except as the Variable Account or the Company has actual  knowledge
to  the contrary, the instructions  given by Owners and  Payees will be valid as
they affect  the Variable  Account, the  Company and  any others  having  voting
instruction rights with respect to the Variable Account.
 
    All Series Fund proxy material, together with an appropriate form to be used
to give voting instructions, will be provided to each person having the right to
give  voting  instructions  at least  ten  days  prior to  each  meeting  of the
shareholders of the Series Fund.  The number of Series  Fund shares as to  which
each  such person  is entitled  to give instructions  will be  determined by the
Company on a date not more than 90 days prior to each such meeting. Prior to the
Annuity Commencement Date, the number of  Series Fund shares as to which  voting
instructions  may be given to the Company is determined by dividing the value of
all of the Variable Accumulation Units of the particular Sub-Account credited to
the Participant's Account by the net asset value of one Series Fund share as  of
the  same date. On or after the  Annuity Commencement Date, the number of Series
Fund shares as to which such instructions may be given by a Payee is  determined
by  dividing the reserve held by the  Company in the Sub-Account with respect to
the particular Payee by  the net asset value  of a Series Fund  share as of  the
same date. After the Annuity Commencement Date, the number of Series Fund shares
as  to which  a Payee  is entitled  to give  voting instructions  will generally
decrease due to the decrease in the reserve.
 
PERIODIC REPORTS
 
    During the Accumulation  Period the  Company will send  the Participant,  or
such  other person having voting rights, at least once during each Account Year,
a statement showing the number, type and value of Accumulation Units credited to
the Participant's  Account and  the Fixed  Accumulation Value  of such  account,
which statement shall be accurate as of a date not more than two months previous
to  the date  of mailing.  In addition, every  person having  voting rights will
receive such reports or prospectuses concerning
 
                                       31
<PAGE>
the  Variable Account and the  Series Fund as may  be required by the Investment
Company Act of 1940 and the Securities  Act of 1933. The Company will also  send
such  statements reflecting transactions in the  Participant's Account as may be
required by applicable laws, rules and regulations.
 
    Upon request,  the Company  will provide  the Participant  with  information
regarding fixed and variable accumulation values.
 
SUBSTITUTED SECURITIES
 
    Shares  of any or all Series of the  Series Fund may not always be available
for purchase by  the Sub-Accounts  of the Variable  Account or  the Company  may
decide  that further investment in  any such shares is  no longer appropriate in
view of the purposes of the Variable Account or in view of legal, regulatory  or
federal  income tax  restrictions. In  such event,  shares of  another series or
shares of  another registered  open-end investment  company or  unit  investment
trust  may be substituted both  for Series Fund shares  already purchased by the
Variable Account and/or as the security  to be purchased in the future  provided
that    these   substitutions   meet   applicable   Internal   Revenue   Service
diversification  guidelines  and  have  been  approved,  if  required,  by   the
Securities and Exchange Commission. In the event of any substitution pursuant to
this  provision, the Company may make appropriate endorsement to the Contract to
reflect the substitution.
 
CHANGE IN OPERATION OF VARIABLE ACCOUNT
 
    At the  Company's election  and subject  to any  necessary vote  by  persons
having  the right to give instructions with respect to the voting of Series Fund
shares held  by the  Sub-Accounts, the  Variable Account  may be  operated as  a
management  company  under the  Investment  Company Act  of  1940 or  it  may be
deregistered under the Investment Company Act of 1940 in the event  registration
is  no longer required. Deregistration of the Variable Account requires an order
by the Securities and  Exchange Commission. In  the event of  any change in  the
operation  of the Variable  Account pursuant to this  provision, the Company may
make appropriate endorsement to the Contract to reflect the change and take such
other action as may be necessary and appropriate to effect the change.
 
SPLITTING UNITS
 
    The Company reserves  the right to  split or combine  the value of  Variable
Accumulation  Units, Annuity Units or any of  them. In effecting any such change
of unit  values, strict  equity will  be preserved  and no  change will  have  a
material effect on the benefits or other provisions of the Contract.
 
MODIFICATION
 
    Upon  notice to  the Owner  and Participant(s)  (or the  Payee(s) during the
annuity  period),  the  Contract  may  be  modified  by  the  Company  if   such
modification:  (i) is  necessary to  make the  Contract or  the Variable Account
comply with any law or regulation issued  by a governmental agency to which  the
Company  or the  Variable Account  is subject;  or (ii)  is necessary  to assure
continued qualification of the Contract under the Internal Revenue Code or other
federal or state laws relating to retirement annuities or annuity contracts;  or
(iii)  is necessary to reflect a change in the operation of the Variable Account
or the Sub-Account(s) (See "Change in  Operation of Variable Account"); or  (iv)
provides  additional Variable Account and/or  fixed accumulation options. In the
event of any such modification, the Company may make appropriate endorsement  to
the Contract to reflect such modification.
 
    In  addition, upon notice to  the Owner the Contract  may be modified by the
Company to change the  withdrawal charges, Account  Fees, mortality and  expense
risk charges, administrative expense charges, the tables used in determining the
amount  of the first monthly variable annuity and fixed annuity payments and the
formula used  to  calculate the  Market  Value Adjustment,  provided  that  such
modification  shall apply only  to Participant's Accounts  established after the
effective date  of such  modification.  In order  to exercise  its  modification
rights  in these particular instances, the Company must notify the Owner of such
modification in writing.  The notice shall  specify the effective  date of  such
modification which must be at least 60 days following the date of mailing of the
notice of modification by the Company. All of the charges and the annuity tables
which are provided in the Contract prior to any such modification will remain in
effect   permanently,  unless   improved  by   the  Company,   with  respect  to
Participant's  Accounts  established  prior  to  the  effective  date  of   such
modification.
 
                                       32
<PAGE>
DISCONTINUANCE OF NEW PARTICIPANTS
 
    The Company, by giving 30 days' prior written notice to the Owner, may limit
or  discontinue  the acceptance  of  new Applications  and  the issuance  of new
Certificates under a Contract. Such  limitation or discontinuance shall have  no
effect  on  rights  or  benefits  with  respect  to  any  Participant's Accounts
established prior to the effective date of such limitation or discontinuance.
 
CUSTODIAN
 
    The Company is  the Custodian  of the assets  of the  Variable Account.  The
Company  will purchase Series Fund shares at  net asset value in connection with
amounts allocated to the Sub-Accounts in accordance with the instructions of the
Participant and redeem Series Fund shares at net asset value for the purpose  of
meeting  the  contractual obligations  of the  Variable Account,  paying charges
relative to the Variable Account or making adjustments for annuity reserves held
in the Variable Account.
 
RIGHT TO RETURN CONTRACT
 
    If the Participant is not satisfied with the Certificate it may be  returned
by mailing it to the Company at the Annuity Service Mailing Address on the cover
of  this Prospectus within ten  days after it was  delivered to the Participant.
When the Company receives the returned Certificate it will be cancelled and  the
Participant's  Account Value at the end of the Valuation Period during which the
Certificate was received  by the Company  will be refunded  to the  Participant.
However,  if applicable state law  so requires, the full  amount of any Purchase
Payment(s) received by the Company will be refunded, the "free look" period  may
be  greater than ten  days and alternative methods  of returning the Certificate
may be acceptable.
 
    With  respect  to  Individual   Retirement  Accounts,  under  the   Employee
Retirement  Income Security Act of 1974  ("ERISA") a Participant establishing an
Individual Retirement  Account must  be furnished  with a  disclosure  statement
containing   certain  information  about  the   Contract  and  applicable  legal
requirements. This  statement  must be  furnished  on  or before  the  date  the
Individual  Retirement Account is  established. If the  Participant is furnished
with such disclosure  statement before the  seventh day preceding  the date  the
Individual  Retirement Account is established, the Participant will not have any
right of revocation. If the disclosure statement is furnished after the  seventh
day  preceding the establishment of the  Individual Retirement Account, then the
Participant may give a notice  of revocation to the  Company at any time  within
seven  days after the Date  of Coverage. Upon such  revocation, the Company will
refund the Purchase Payment(s) made by  the Participant. The foregoing right  of
revocation  with respect to  an Individual Retirement Account  is in addition to
the return privilege  set forth  in the  preceding paragraph.  The Company  will
allow  a participant  establishing an Individual  Retirement Account  a "ten day
free-look," notwithstanding the provisions of ERISA.
 
                               FEDERAL TAX STATUS
 
INTRODUCTION
 
    The Contracts  and related  Certificates described  in this  Prospectus  are
designed for use by employer, association and other group retirement plans under
the  provisions of Sections 401 (including  Section 401(k)), 403, 408(b), 408(c)
and 408(k) of the Internal  Revenue Code (the "Code"),  as well as certain  non-
qualified  retirement plans, such as payroll  savings plans. The ultimate effect
of federal income taxes may  depend upon the type  of retirement plan for  which
the Contract or Certificate is purchased and a number of different factors. This
discussion  is general in  nature, is based upon  the Company's understanding of
current federal income tax laws, and is not intended as tax advice. Congress has
the power to enact legislation affecting the tax treatment of annuity contracts,
and such  legislation  could be  applied  retroactively to  Contracts  purchased
before  the  date of  enactment.  Also, because  the  Internal Revenue  Code, as
amended, is not in force in the Commonwealth of Puerto Rico, some references  in
this  discussion will  not apply to  Contracts or Certificates  issued in Puerto
Rico. Any person contemplating the purchase of a Contract or Certificate  should
consult  a  qualified  tax adviser.  THE  COMPANY  DOES NOT  MAKE  ANY GUARANTEE
REGARDING  THE  TAX  STATUS,  FEDERAL,  STATE  OR  LOCAL,  OF  ANY  CONTRACT  OR
CERTIFICATE OR ANY TRANSACTION INVOLVING THE CONTRACTS OR CERTIFICATES.
 
                                       33
<PAGE>
TAX TREATMENT OF THE COMPANY AND THE VARIABLE ACCOUNT
 
    The  Company  is taxed  as  a life  insurance  company under  the  Code. The
operations of  the Variable  Account  are accounted  for separately  from  other
operations  of  the Company  for purposes  of federal  income taxation,  but the
Variable Account is not taxable as  a regulated investment company or  otherwise
as  an entity  separate from  the Company.  The income  of the  Variable Account
(consisting primarily  of interest,  dividends  and net  capital gains)  is  not
taxable  to the Company  to the extent  that it is  applied to increase reserves
under contracts participating in the Variable Account.
 
TAXATION OF ANNUITIES IN GENERAL
 
    Purchase Payments made under Non-Qualified Contracts are not deductible from
the Participant's income  for federal  income tax  purposes. Participants  under
Qualified  Contracts should consult a tax adviser regarding the tax treatment of
Purchase Payments.
 
    Generally, no taxes are imposed on the  increase in the value of a  Contract
or Certificate until a distribution occurs, either as an annuity payment or as a
cash  withdrawal or  lump-sum payment  prior to  the Annuity  Commencement Date.
However, corporate Owners  and Participants  and other  Owners and  Participants
that  are not  natural persons  are subject  to current  taxation on  the annual
increase in the value of a Non-Qualified Contract, unless the non-natural person
holds the Contract as agent for a natural person (such as where a bank or  other
entity  holds  a Contract  as  trustee under  a  trust agreement).  This current
taxation of annuities  held by non-natural  persons does not  apply to  earnings
accumulated  under  an immediate  annuity, which  the Code  defines as  a single
premium contract with an annuity commencement  date within one year of the  date
of  purchase. Also,  the Internal  Revenue Service  could assert  that Owners or
Participants under both Qualified  and Non-Qualified Contracts annually  receive
and  are subject to tax on  a deemed distribution equal to  the cost of any life
insurance benefit provided by the Contract.
 
    The Code is unclear in its application to a group annuity contract where the
Owner is distinct from  the individuals who receive  the Contract benefits  (the
Participants).  The following discussion is  the Company's best understanding of
the operation of the Code in the context of group contracts. However, Owners and
Participants should consult a qualified tax adviser.
 
    A partial cash  withdrawal (that is,  a withdrawal of  less than the  entire
Participant's  Account Value)  from a  Certificate issued  under a Non-Qualified
Contract (a "Non-Qualified Certificate") before the Annuity Commencement Date is
treated first as  a withdrawal from  the increase in  the Participant's  Account
Value,  rather  than  as  a  return of  Purchase  Payments.  The  amount  of the
withdrawal allocable to this  increase will be  includible in the  Participant's
income  and  subject to  tax  at ordinary  income  rates. If  part  or all  of a
Participant's Account Value is assigned or pledged as collateral for a loan, the
amount assigned or  pledged must be  treated as  if it were  withdrawn from  the
Certificate.
 
    In  the case of annuity payments under a Non-Qualified Certificate after the
Annuity Commencement Date, a portion of each payment is treated as a  nontaxable
return of Purchase Payments. The nontaxable portion is determined by applying to
each  annuity payment an "exclusion ratio," which, in general, is the ratio that
the total amount the Participant paid  for the Certificate bears to the  Payee's
expected  return under the Certificate. The  remainder of the payment is taxable
at ordinary income rates.
 
    The total amount that a Payee may exclude from income through application of
the "exclusion ratio"  is limited  to the amount  the Participant  paid for  the
Certificate. If the Annuitant survives for his full life expectancy, so that the
Payee  recovers  the  entire amount  paid  for the  Certificate,  any subsequent
annuity payments will be fully taxable  as income. Conversely, if the  Annuitant
dies before the Payee recovers the entire amount paid, the Payee will be allowed
a deduction for the amount of unrecovered Purchase Payments.
 
    Taxable   cash   withdrawals  and   lump-sum  payments   from  Non-Qualified
Certificates may be subject to a penalty tax equal to 10% of the amount  treated
as  taxable income. This 10% penalty also may apply to certain annuity payments.
This penalty  will  not  apply  in certain  circumstances  (such  as  where  the
distribution  is made upon the death of the Participant). The withdrawal penalty
also does not  apply to  distributions under  an immediate  annuity (as  defined
above).
 
                                       34
<PAGE>
   
    In the case of a Certificate issued under a Qualified Contract (a "Qualified
Certificate"),  distributions generally are taxable and distributions made prior
to age 59 1/2 are subject to a  10% penalty tax, although this penalty tax  will
not  apply in certain  circumstances. Certain distributions,  known as "eligible
rollover distributions," if  rolled over to  certain other qualified  retirement
plans  (either directly or after being distributed to the Participant or Payee),
are not taxable until distributed from the  plan to which they are rolled  over.
In  general, an eligible rollover distribution is any taxable distribution other
than a distribution that is part of a series of payments made for life or for  a
specified period of ten years or more. Recent legislation has modified the rules
for  determining the  taxable portion of  periodic payments that  are not rolled
over under Qualified  Contracts with Annuity  Commencement Dates after  November
18, 1996. Owners, Participants, Annuitants, Payees and Beneficiaries should seek
qualified  advice  about  the tax  consequences  of  distributions, withdrawals,
rollovers and payments under the retirement  plans in connection with which  the
Certificates are purchased.
    
 
    If  the Participant under a Non-Qualified Certificate dies, the value of the
Certificate generally must be distributed within a specified period (See  "Other
Contractual  Provisions  --  Death  of  Participant").  For  contracts  owned by
non-natural persons, a change in  the Annuitant is treated  as the death of  the
Participant.
 
    A  purchaser of  a Qualified  Certificate should refer  to the  terms of the
applicable retirement  plan and  consult a  tax adviser  regarding  distribution
requirements upon the death of the Participant.
 
    A  transfer  of  a Non-Qualified  Certificate  by  gift (other  than  to the
Participant's spouse) is treated as the receipt by the Participant of income  in
an  amount equal to the Participant's Account  Value minus the total amount paid
for the Certificate.
 
    The Company will withhold  and remit to  the U.S. government  a part of  the
taxable  portion of each distribution made  under a Non-Qualified Certificate or
under a  Qualified Certificate  issued  for use  with an  individual  retirement
account   unless  the  Participant  or  Payee   provides  his  or  her  taxpayer
identification number to  the Company and  notifies the Company  (in the  manner
prescribed)  before the time of  the distribution that he  or she chooses not to
have any amounts withheld.
 
    In the  case  of distributions  from  a Qualified  Certificate  (other  than
distributions  from a Certificate  issued for use  with an individual retirement
account), the Company or the plan  administrator must withhold and remit to  the
U.S.   government  20%  of  each  distribution  that  is  an  eligible  rollover
distribution (as defined above) unless the Participant or Payee elects to make a
direct rollover of the distribution to another qualified retirement plan that is
eligible to receive the rollover. If a distribution from a Qualified Certificate
is not an  eligible rollover  distribution, then  the Participant  or Payee  can
choose  not  to  have  amounts withheld  as  described  above  for Non-Qualified
Certificates  and  Qualified  Certificates   issued  for  use  with   individual
retirement accounts.
 
    Amounts   withheld  from  any  distribution  may  be  credited  against  the
Participant's or  Payee's federal  income  tax liability  for  the year  of  the
distribution.
 
    The   Internal  Revenue  Service  has   issued  regulations  that  prescribe
investment  diversification  requirements  for  mutual  fund  series  underlying
nonqualified  variable  contracts.  Contracts  that  do  not  comply  with these
regulations do not  qualify as annuities  for federal income  tax purposes,  and
therefore  the annual  increase in  the value  of such  contracts is  subject to
current taxation.  The Company  believes that  each series  of the  Series  Fund
complies with the regulations.
 
    The preamble to the regulations states that the Internal Revenue Service may
promulgate  guidelines under which a variable contract will not be treated as an
annuity for tax purposes if the owner has excessive control over the investments
underlying the contract.  It is not  known whether such  guidelines, if in  fact
promulgated,  would have retroactive effect.  If guidelines are promulgated, the
Company will  take  any action  (including  modification of  the  Contract,  the
Certificate   and/or  the  Variable  Account)   necessary  to  comply  with  the
guidelines.
 
    THE FOLLOWING  INFORMATION  SHOULD  BE CONSIDERED  ONLY  WHEN  AN  IMMEDIATE
ANNUITY  CONTRACT AND  A DEFERRED ANNUITY  CONTRACT ARE  PURCHASED TOGETHER: The
Company  understands  that  the  Treasury  Department  is  in  the  process   of
reconsidering   the  tax  treatment  of  annuity  payments  under  an  immediate
 
                                       35
<PAGE>
annuity contract (as defined above)  purchased together with a deferred  annuity
contract.  The  Company believes  that any  adverse change  in the  existing tax
treatment of such immediate annuity contracts is likely to be prospective,  that
is,  it would not apply  to contracts issued before  such a change is announced.
However, there can be no assurance that  any such change, if adopted, would  not
be applied retroactively.
 
QUALIFIED RETIREMENT PLANS
 
    The  Qualified Contracts described  in this Prospectus  are designed for use
with several types of  qualified retirement plans. The  tax rules applicable  to
participants  in such qualified  retirement plans vary according  to the type of
plan and  its terms  and conditions.  Therefore, no  attempt is  made herein  to
provide  more than general information about  the use of the Qualified Contracts
with the various types  of qualified retirement  plans. Participants under  such
plans as well as Owners, Annuitants, Payees and Beneficiaries are cautioned that
the rights of any person to any benefits under these plans may be subject to the
terms  and  conditions of  the  plans themselves,  regardless  of the  terms and
conditions of  the  Qualified  Contracts  issued  in  connection  therewith.  In
addition,  Owners,  Participants,  Payees, Beneficiaries  and  administrators of
qualified retirement  plans  should  consider  and  consult  their  tax  adviser
concerning  whether the  Death Benefit  payable under  the Contract  affects the
qualified status of their retirement  plan. Following are brief descriptions  of
various  types  of  qualified retirement  plans  and  the use  of  the Qualified
Contracts in connection therewith.
 
PENSION AND PROFIT-SHARING PLANS
 
    Sections 401(a), 401(k) and 403(a) of the Code permit business employers and
certain  associations  to  establish  various  types  of  retirement  plans  for
employees.  The Tax Equity and Fiscal Responsibility Act of 1982 eliminated most
differences between  qualified retirement  plans of  corporations and  those  of
self-employed individuals. The Contract may be purchased by those who would have
been  covered under the rules governing old H.R.  10 (Keogh) Plans as well as by
corporate plans. Such retirement plans may permit the purchase of the  Qualified
Contracts  to provide benefits  under the plans. Employers  intending to use the
Qualified Contracts in connection with  such plans should seek qualified  advice
in connection therewith.
 
TAX-SHELTERED ANNUITIES
 
    Section  403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations  specified
in  Section 501(c) (3) of the Code to purchase annuity contracts and, subject to
certain limitations, exclude the amount  of purchase payments from gross  income
for   tax  purposes.  These  annuity  contracts  are  commonly  referred  to  as
"Tax-Sheltered Annuities."  Purchasers  of  the  Qualified  Contracts  for  such
purposes  should  seek  qualified  advice  as  to  eligibility,  limitations  on
permissible amounts of Purchase Payments  and tax consequences of  distributions
(See "Section 403(b) Annuities").
 
INDIVIDUAL RETIREMENT ACCOUNTS
 
    Sections  219 and 408 of the  Code permit eligible individuals to contribute
to an individual retirement program, including Simplified Employee Pension Plans
and Employer/Association of Employees Established Individual Retirement  Account
Trusts,  known  as an  Individual Retirement  Account  ("IRA"). These  IRA's are
subject to limitations on  the amount that may  be contributed, the persons  who
may  be eligible, and on the time  when distributions may commence. In addition,
certain distributions from some other types of retirement plans may be placed on
a tax-deferred basis in an IRA. Sale of the Contracts for use with IRA's may  be
subject  to  special  requirements  imposed  by  the  Internal  Revenue Service.
Purchasers of  the  Contracts for  such  purposes  will be  provided  with  such
supplementary  information as may be required by the Internal Revenue Service or
other appropriate agency, and will have  the right to revoke the Contract  under
certain  circumstances as described  in the section  of this Prospectus entitled
"Right to Return Contract."
 
                        ADMINISTRATION OF THE CONTRACTS
 
    The Company  performs  certain  administrative  functions  relating  to  the
Contracts, the Participant's Accounts, and the Variable Account. These functions
include,  but  are not  limited to,  maintaining  the books  and records  of the
Variable Account and the Sub-Accounts; maintaining records of the name, address,
 
                                       36
<PAGE>
taxpayer identification number,  Contract number,  Participant's Account  number
and  type,  the  status  of  each  Participant's  Account  and  other  pertinent
information necessary  to the  administration and  operation of  the  Contracts;
processing  Applications,  Purchase  Payments, transfers  and  full  and partial
surrenders; issuing Contracts and Certificates; administering annuity  payments;
furnishing  accounting and  valuation services; reconciling  and depositing cash
receipts; providing confirmations; providing  toll-free customer service  lines;
and furnishing telephonic transfer services.
 
                         DISTRIBUTION OF THE CONTRACTS
 
    The  offering of the Contracts is continuous.  The Contracts will be sold by
licensed insurance agents in  those states where the  Contracts may be  lawfully
sold.   Such  agents  will  be   registered  representatives  of  broker-dealers
registered under the  Securities Exchange  Act of 1934  who are  members of  the
National  Association  of Securities  Dealers, Inc.  and  who have  entered into
distribution agreements with the Company and the General Distributor,  Clarendon
Insurance Agency, Inc. ("Clarendon"), 500 Boylston Street, Boston, Massachusetts
02116,  a wholly-owned  subsidiary of Massachusetts  Financial Services Company,
which in turn is a subsidiary of  the Company. Clarendon is registered with  the
Securities  and Exchange Commission under the Securities Exchange Act of 1934 as
broker-dealer and is a member of the National Association of Securities Dealers,
Inc. Clarendon also  acts as the  general distributor of  certain other  annuity
contracts  issued  by  the Company  and  its wholly-owned  subsidiary,  Sun Life
Insurance and Annuity Company of New York, and variable life insurance contracts
issued by the Company. Commissions  and other distribution compensation will  be
paid  by the Company  and will not be  more than 1.20%  of Purchase Payments. In
addition, after the  first Account Year,  broker dealers who  have entered  into
distribution   agreements  with  the  Company  may  receive  an  annual  renewal
commission of no more than 1.00% of the Participant's Account Value. In addition
to commissions, the  Company may,  from time to  time, pay  or allow  additional
promotional  incentives,  in the  form of  cash or  other compensation.  In some
instances, such other incentives may  be offered only to certain  broker-dealers
that  sell or are expected to sell during specified time periods certain minimum
amounts of  the Contracts  or Certificates  or other  contracts offered  by  the
Company.  Commissions will  not be paid  with respect  to Participant's Accounts
established for the personal account of employees  of the Company or any of  its
affiliates, or of persons engaged in the distribution of the Contracts.
 
                                       37
<PAGE>
                    ADDITIONAL INFORMATION ABOUT THE COMPANY
 
SELECTED FINANCIAL DATA
 
   
    The  following selected  financial data  for the  Company should  be read in
conjunction with the Company's financial  statements and notes thereto  included
in this Prospectus beginning on page 58.
    
 
   
<TABLE>
<CAPTION>
                                                                       FOR THE YEARS ENDED DECEMBER 31,
                                                         ------------------------------------------------------------
                                                            1995         1994         1993        1992        1991
                                                         -----------  -----------  ----------  ----------  ----------
                                                                                  (IN 000'S)
<S>                                                      <C>          <C>          <C>         <C>         <C>
Revenues
  Premiums, annuity deposits and other revenue           $ 1,095,646  $ 1,200,143  $1,772,745  $  908,933  $ (151,073)
  Net investment income and realized gains (losses)          366,063      334,896     243,796     209,087     162,031
                                                         -----------  -----------  ----------  ----------  ----------
                                                           1,461,709    1,535,039   2,016,541   1,118,020      10,958
                                                         -----------  -----------  ----------  ----------  ----------
Benefits and Expenses
  Policyholder benefits                                    1,238,603    1,312,721   1,786,919     921,180    (161,110)
  Other expenses                                             176,660      209,819     240,440     232,221     168,689
                                                         -----------  -----------  ----------  ----------  ----------
                                                           1,415,263    1,522,540   2,027,359   1,153,401       7,579
                                                         -----------  -----------  ----------  ----------  ----------
Operating Gain (Loss)                                         46,446       12,499     (10,818)    (35,381)      3,379
Interest on Surplus Notes                                    (31,813)     (31,150)    (26,075)    (18,000)    (12,500)
Equity in Income of Subsidiaries                              59,875       62,629      62,640      49,009      42,702
Federal Income Tax Expense                                   (38,593)     (42,521)    (22,491)     (4,000)    (13,615)
                                                         -----------  -----------  ----------  ----------  ----------
Net Income (Loss)                                        $    35,915  $     1,457  $    3,256  $   (8,372) $   19,966
                                                         -----------  -----------  ----------  ----------  ----------
                                                         -----------  -----------  ----------  ----------  ----------
Assets                                                   $12,499,683  $10,137,822  $9,199,090  $7,494,407  $6,405,599
                                                         -----------  -----------  ----------  ----------  ----------
                                                         -----------  -----------  ----------  ----------  ----------
Surplus Notes                                            $   650,000  $   335,000  $  335,000  $  265,000  $  180,000
                                                         -----------  -----------  ----------  ----------  ----------
                                                         -----------  -----------  ----------  ----------  ----------
</TABLE>
    
 
See Note 1 to financial statements for the effect of the reinsurance agreements
                                 on net income.
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 
FINANCIAL CONDITION
 
  ASSETS
 
    For  management purposes it is the Company's practice to segment its general
account to  facilitate the  matching  of assets  and liabilities;  however,  all
general  account assets stand behind all general account liabilities. A majority
of the Company's assets are  income producing investments. Particular  attention
is paid to the quality of these assets.
 
    The  Company's  bond holdings  consist of  a  diversified portfolio  of both
public and private issues. It is the Company's policy to acquire only investment
grade securities. Private placements are rated internally with reference to  the
National  Association of Insurance Commissioners  ("NAIC") designation issued by
the NAIC Securities Valuation Office. The overall quality of the Company's  bond
portfolio  remains high. At December 31, 1995, 2.3% of the Company's holdings of
bonds were rated below investment grade (i.e. below NAIC rating "1" or "2"). Net
unrealized gains on below investment grade bonds were $2,133,727 at December 31,
1995.  Bond  write  downs  resulting  from  intrinsic  impairments  amounted  to
$3,500,000 during 1995.
 
    The   Company  holds   real  estate   primarily  because   such  investments
historically have offered  better yields  over the long-term  than fixed  income
investments.  Real estate investments are used  to enhance the yield of products
with long-term liability durations. Properties  for which market value is  lower
than cost
 
                                       38
<PAGE>
adjusted  for depreciation  (book value)  are reported  at market  value. During
1995, the change in the difference between  the market value and book value  for
properties reported at market value was $3,583,000.
 
    Significant  attention has  been given  to insurance  companies' exposure to
mortgage loans secured by real estate.  The Company had a mortgage portfolio  of
$1,066,911,000  at December  31, 1995, representing  25.3% of  cash and invested
assets. At  December 31,  1994, mortgage  loans represented  28.9% of  cash  and
invested  assets. The  Company underwrites  commercial mortgages  with a maximum
loan to value ratio  of 75%. The  Company as a rule  invests only in  properties
that  are almost  fully leased.  The portfolio is  diversified by  region and by
property type. The level of arrears in the portfolio is substantially below  the
industry  average. At December 31, 1995, 0.77% of the Company's portfolio was 60
days or more in arrears, compared to the most recent industry delinquency  ratio
published by the American Council of Life Insurance of 2.35%. The expense in the
year for the provision for losses and for losses on foreclosures was $4,133,000.
 
    In  1994, the Company entered into a leveraged lease agreement under which a
fleet of  rail cars  was leased  for a  term of  9.75 years.  The investment  is
classified as other invested assets in the attached balance sheet.
 
    In  the normal course of business, the Company makes commitments to purchase
investments at  a  future  date.  As  of  December  31,  1995  the  Company  had
outstanding  mortgage  commitments of  $13,100,000 which  will be  funded during
1996.
 
  LIABILITIES
 
    The majority  of the  Company's  liabilities consist  of reserves  for  life
insurance and annuity contracts and deposit funds.
 
  CAPITAL AND SURPLUS
 
    Total  capital stock and surplus of the Company was $792,452,000 at December
31, 1995. The Company issued surplus notes during 1995 totalling $315,000,000 to
an affiliate,  Sun  Canada Financial  Co.  The Company  repaid  $335,000,000  of
surplus  notes  to its  parent in  1996.  During 1994,  the Company  reduced its
carrying  value  of  MCIC,  a  wholly-owned  subsidiary,  by  $18,397,000,   the
unamortized  amount of  goodwill. The  reduction was  accounted for  as a direct
charge to surplus. The Company's management considers its surplus position to be
adequate.
 
RESULTS OF OPERATIONS
 
  1995 COMPARED TO 1994
 
    Income from operations  before surplus  note interest, equity  in income  of
subsidiaries  and federal income taxes increased by $33,947,000 from $12,499,000
in 1994 to $46,446,000 in 1995.  Reinsurance agreements with the parent had  the
effect of decreasing net income by $31,327,000 in 1994 as compared to increasing
net income by $9,637,000 in 1995. The increase in net income associated with the
reinsurance  agreements is due to the lack of surplus strain associated with the
assumption of new contracts  issued. No contracts issued  in 1994 or  thereafter
have  been assumed by the  Company. It is the  acquisition costs of new contract
issues which caused  the loss from  the reinsurance agreements  in prior  years.
Prior  to reinsurance, net  income from operations  decreased by $7,017,000 from
$43,826,000 in 1994 to $36,809,000 in  1995. Realized losses on investments  and
amortization  of  the  interest  maintenance  reserve  decreased  by  $2,315,000
primarily due to fewer writedowns in  the group pension product line.  Operating
expenses  increased by  $5,261,000 from  $32,231,000 in  1994 to  $37,492,000 in
1995, reflecting  increased expenses  allocated from  the parent  and  increased
salaries  due to  additional staffing. The  remaining decrease in  net income in
1995 as  compared  to  1994  of approximately  $4,071,000  reflects  the  strain
associated  with the Company's market  value adjusted annuity product, partially
offset by profits  associated with the  maturing block of  individual and  group
fixed annuities.
 
    Total  income decreased by approximately  $73,330,000 from $1,535,039,000 in
1994 to $1,461,709,000 in 1995. Revenues from reinsurance transactions decreased
by $4,307,000  reflecting the  assumed  block of  business  being closed  as  of
December  31,  1993. Premiums  and annuity  considerations on  a pre-reinsurance
basis decreased by $7,728,000 reflecting  decreased group pension lottery  sales
of $22,084,000 offset
 
                                       39
<PAGE>
by  increased annuitizations of $14,356,000. Fixed annuity deposits decreased by
$26,091,000 as interest  rates remained at  low levels. Sales  of group  pension
guaranteed investment contracts increased by $49,229,000 reflecting the transfer
of  the  parent's agents'  pension  fund from  the  parent to  the  Company. Net
transfers from the  separate accounts  decreased by  $80,758,000 reflecting  the
decline  in interest rates.  Pre-reinsurance net investment  income increased by
$2,219,000 reflecting an increase in the Company's invested asset base. Realized
losses and  amortization  of  the  interest  maintenance  reserve  decreased  by
$2,315,000.  Other income decreased  by $16,711,000 from  $33,377,000 in 1994 to
$16,666,000 reflecting  a decrease  in the  surplus transfer  from the  separate
accounts. Mortality and expense risk charges increased by $8,616,000 as a result
of market appreciation in the separate accounts.
 
    Benefits   and  expenses   decreased  by   approximately  $107,277,000  from
$1,522,540,000 in 1994 to $1,415,263,000 in 1995. Reinsurance had the effect  of
decreasing   benefits  and   expenses  by  $45,272,000,   primarily  from  lower
commissions due to no assumption of  new contract issues. Prior to  reinsurance,
benefits  and expenses decreased by approximately $62,004,000. The change in the
liability for annuity  and other  deposit funds  increased by  $83,094,000 as  a
result  of fewer  maturities of contracts  for which the  guarantee periods have
expired, and increased  sales of group  pension guaranteed investment  contracts
described  above. The change in reserves decreased by $16,694,000 reflecting the
decrease in  group  pension  lottery  sales.  Annuity  and  other  deposit  fund
withdrawals  decreased by  $8,424,000 reflecting fewer  maturities. Transfers to
the non-unitized separate account decreased by $124,285,000 from $455,688,000 in
1994 to $331,403,000 reflecting fewer sales and transfers from unitized separate
accounts of individually marketed fixed annuities as a result of the decline  in
interest  rates.  Operating  expenses  increased  by  $5,261,000  reflecting the
increased expenses described above.
 
  1994 COMPARED TO 1993
 
    Income from operations  before surplus  note interest, equity  in income  of
subsidiaries  and federal income taxes was $12,499,000  in 1994 versus a loss of
$10,818,000 in  1993.  The  increase  in  income  is  a  result  of  reinsurance
agreements   with  the  parent   which  decreased  income   from  operations  by
approximately $31,327,000 in 1994 and  $54,567,000 in 1993. The relatively  flat
change  in  income before  reinsurance results  from  a combination  of factors:
realized losses on  investments decreased by  $6,237,000; mortality and  expense
risk  charges increased by $9,357,000;  general expenses increased by $8,061,000
and approximately $6,000,000  of additional  surplus strain  (selling costs  and
reserves  required  on  new business  in  excess  of the  premium)  was incurred
reflecting the increased volume of new sales.
 
    Total revenues  decreased by  $481,502,000 from  $2,016,541,000 in  1993  to
$1,535,039,000  in  1994. Revenues  from  reinsurance transactions  decreased by
$690,973,000, from $959,536,000 in 1993  to $268,563,000 in 1994. 1993  revenues
include  the termination of the reinsurance agreement under which the Registrant
reinsured with its parent  100% of certain fixed  annuity contracts. Before  the
impact  of the reinsurance agreements,  total revenues increased by $209,471,000
in  1994.  Sales   of  individually  marketed   fixed  annuities  increased   by
$389,745,000  as a result  of improved interest  rates and product enhancements.
This was  offset  by decreased  sales  of  group pension  deposit  contracts  of
$271,913,000,  reflecting  management's  decision  to  limit  sales  due  to the
volatility of  interest  rates  and  changes  in  the  competitive  marketplace.
Realized  losses on investments decreased,  reflecting fewer mortgage writedowns
in 1994. Mortality and expense  risk charges increased, reflecting the  increase
in separate account net assets.
 
    Benefits  and expenses decreased by $504,819,000 from $2,027,359,000 in 1993
to $1,522,540,000 in 1994. Reinsurance had the effect of increasing benefits and
expenses by $299,890,000 in 1994 as compared to $1,014,103,000 in 1993. As noted
above, the 1993  results include  the termination of  the reinsurance  agreement
with  the  parent  under which  100%  of  certain fixed  annuity  contracts were
reinsured. Before the impact of reinsurance, benefits increased by $209,394,000.
Before reinsurance,  the  liability for  annuity  and other  deposit  funds  and
actuarial reserves decreased as a result of lower sales of group pension deposit
contracts  and  increased surrender  activity.  Annuity and  other  deposit fund
withdrawals increased as a result of increased surrenders of fixed annuities for
which  interest  rate   guarantee  periods  have   expired.  Transfers  to   the
non-unitized separate account increased reflecting the increase in fixed annuity
sales   described  above.   Prior  to  reinsurance,   commissions  increased  by
$35,497,000 reflecting increased sales of individual combination  fixed/variable
annuity   contracts.  General   expenses  increased   due  to   an  increase  in
 
                                       40
<PAGE>
the amount allocated from the parent  under the service agreement, and costs  of
selling and administration associated with the increased sales and inforce block
of  individually marketed  fixed/variable annuity contracts.  Federal income tax
expense increased as net operating loss carry forwards were utilized in 1993.
 
LIQUIDITY
 
    The Company's cash inflow  consists primarily of  premiums on insurance  and
annuity  products, income  from investments, repayments  of investment principal
and sales of investments. The Company's cash outflow is primarily to meet  death
and  other maturing  insurance and annuity  contract obligations, to  pay out on
contract  terminations,  to  fund  investment  commitments  and  to  pay  normal
operating  expenses and taxes.  Cash outflows are  met from the  normal net cash
inflows.
 
    The Company  segments its  business internally  and matches  projected  cash
inflows  and outflows within each segment. Targets for money market holdings are
established for each segment, which  in the aggregate meet  the day to day  cash
needs of the Company. If greater liquidity is required, government issued bonds,
which are highly liquid, are sold to provide the necessary funds. Government and
publicly  traded corporate bonds comprise 65.9%  of the Company's long-term bond
holdings.
 
    Management believes that the  Company's sources of  liquidity are more  than
adequate to meet its anticipated needs.
 
REINSURANCE
 
    The  Company has agreements  with its parent company  which provide that the
parent company  will  reinsure  the  mortality  risks  of  the  individual  life
insurance  contracts sold  by the  Company. Under  these agreements  basic death
benefits and supplementary  benefits are  reinsured on a  yearly renewable  term
basis  and coinsurance basis, respectively. Reinsurance transactions under these
agreements in 1995 had  the effect of decreasing  net income from operations  by
$2,184,000.
 
    Effective  January 1,  1991 the Company  entered into an  agreement with the
parent company under which 100% of certain fixed annuity contracts issued by the
Company were reinsured.  This agreement  was terminated  effective December  31,
1993.
 
    Effective  January 1,  1991 the Company  entered into an  agreement with the
parent company under which certain individual life insurance contracts issued by
the parent  were reinsured  by the  Company  on a  90% coinsurance  basis.  Also
effective  January 1, 1991 the Company entered into an agreement with the parent
which provides that the  parent will reinsure the  mortality risks in excess  of
$500,000  per policy for the individual  life insurance contracts assumed by the
Company in  the  reinsurance  agreement  described  above.  Death  benefits  are
reinsured  on  a  yearly  renewable term  basis.  The  life  reinsurance assumed
agreement requires the  reinsurer to withhold  funds in an  amount equal to  the
reserves assumed.
 
    The  Company also has executed a  reinsurance agreement with an unaffiliated
company  which  provides  reinsurance  of  certain  individual  life   insurance
contracts  on  a  modified  coinsurance basis  and  under  which  all deficiency
reserves are ceded.
 
RESERVES
 
    In accordance with the life insurance  laws and regulations under which  the
Company  operates  it  is  obligated  to carry  on  its  books,  as liabilities,
actuarially determined  reserves  to meet  its  obligations on  its  outstanding
contracts.  Reserves are based on mortality tables  in general use in the United
States and are computed to equal  amounts that, with additions from premiums  to
be  received, and with interest on  such reserves compounded annually at certain
assumed rates, will be  sufficient to meet the  Company's policy obligations  at
their  maturities or  in the  event of an  insured's death.  In the accompanying
Financial Statements these reserves are determined in accordance with  statutory
regulations which are generally accepted accounting principles for the Company.
 
INVESTMENTS
 
    Of  the Company's total assets of $12.5  billion at December 31, 1995, 58.5%
consisted of  unitized  and non-unitized  separate  account assets,  22.8%  were
invested   in  bonds  and  similar  securities,   8.5%  in  mortgages,  1.1%  in
subsidiaries, 0.7% in  real estate,  and the remaining  8.4% in  cash and  other
assets.
 
                                       41
<PAGE>
COMPETITION
 
    The  Company is engaged in a business  that is highly competitive because of
the large number of stock and mutual life insurance companies and other entities
marketing insurance products.  There are approximately  1,750 stock, mutual  and
other  types of insurers  in the life  insurance business in  the United States.
According to the most recent Best's Review, Life-Health Edition, as of  December
31,  1994 the  Company ranked  46th among  all life  insurance companies  in the
United States based upon  total assets. Its parent  company, Sun Life  Assurance
Company  of Canada, ranked 19th.  Best's Insurance Reports, Life-Health Edition,
1995, assigned the Company  and the parent  company its highest  classification,
A++,  as of December 31, 1994. Standard & Poor's and Duff & Phelps have assigned
the Company  and the  parent company  their highest  ratings for  claims  paying
ability,  AAA.  These  ratings  should  not  be  considered  as  bearing  on the
investment performance of the Series Fund shares held in the Sub-Accounts of the
Variable Account. However, the ratings are relevant to the Company's ability  to
meet its general corporate obligations under the Contracts.
 
EMPLOYEES
 
    The  Company and Sun  Life Assurance Company  of Canada have  entered into a
Service Agreement which provides  that the latter will  furnish the Company,  as
required,  with personnel as well  as certain services and  facilities on a cost
reimbursement basis.  As  of  December  31, 1995  the  Company  had  255  direct
employees who are employed at its Principal Executive Office in Wellesley Hills,
Massachusetts and its Annuity Service Center in Boston, Massachusetts.
 
PROPERTIES
 
    The  Company occupies office space owned by it and leased to its parent, Sun
Life Assurance Company of Canada, and certain unrelated parties for lease  terms
not exceeding five years.
 
                 THE COMPANY'S DIRECTORS AND EXECUTIVE OFFICERS
 
    The  directors  and  principal officers  of  the Company  are  listed below,
together with information  as to  their ages,  dates of  election and  principal
business  occupations during  the last five  years (if other  than their present
business occupations). Except as otherwise indicated, the directors and officers
of the Company  who are  associated with Sun  Life Assurance  Company of  Canada
and/or  its subsidiaries have been associated with Sun Life Assurance Company of
Canada for  more than  five  years either  in the  position  shown or  in  other
positions.
 
JOHN D. MCNEIL, 62, Chairman and Director (1982*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
 
    He  is Chairman and a  Director of Sun Life  Assurance Company of Canada and
Sun Life Insurance and Annuity Company of New York; a Director of  Massachusetts
Financial  Services Company;  President and  a Director  of Sun  Growth Variable
Annuity Fund,  Inc.;  Chairman and  a  Trustee  of MFS/Sun  Life  Series  Trust;
Chairman  and  a Member  of  the Boards  of  Managers of  Money  Market Variable
Account, High  Yield Variable  Account, Capital  Appreciation Variable  Account,
Government  Securities  Variable  Account, World  Governments  Variable Account,
Total Return  Variable  Account and  Managed  Sectors Variable  Account;  and  a
Director of Shell (Canada) Limited and Canadian Pacific, Ltd.
 
   
JOHN R. GARDNER, 58, President and Director (1986*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
    
 
    He  is President and a Director of Sun Life Assurance Company of Canada, and
Sun Life  Insurance  and  Annuity  Company  of  New  York;  and  a  Director  of
Massachusetts  Financial  Services  Company,  Massachusetts  Casualty  Insurance
Company and Sun Life Financial Services Limited.
 
- ---------
* Year Elected Director
 
                                       42
<PAGE>
   
DAVID D. HORN, 55, Senior Vice President and General Manager and Director (1970,
1985*)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
    
 
    He is Senior Vice President and General Manager for the United States of Sun
Life  Assurance Company of Canada; Chairman and  President and a Director of Sun
Investment Services Company; Senior  Vice President and a  Director of Sun  Life
Insurance  and Annuity Company of New York; Vice President and a Director of Sun
Growth Variable Annuity  Fund, Inc.;  President and  a Director  of Sun  Benefit
Services  Company,  Inc.,  Sun  Canada Financial  Co.,  and  Sun  Life Financial
Services Limited;  a Director  of Sun  Capital Advisers,  Inc.; Chairman  and  a
Director of Massachusetts Casualty Insurance Company; a Trustee of MFS/ Sun Life
Series  Trust; and a Member  of the Boards of  Managers of Money Market Variable
Account, High  Yield Variable  Account, Capital  Appreciation Variable  Account,
Government  Securities  Variable  Account, World  Governments  Variable Account,
Total Return Variable Account and Managed Sectors Variable Account.
 
   
ANGUS A. MACNAUGHTON, 65, Director (1985*)
Metro Tower, Suite 1170,
950 Tower Lane
Foster City, California 94404
    
 
    He is President of Genstar Investment Corporation and a Director of Sun Life
Assurance Company of Canada, Sun Life Insurance and Annuity Company of New York,
Canadian Pacific, Ltd., Stelco, Inc. and Varian Associates, Inc.
 
JOHN S. LANE, 61, Director (1991*)
150 King Street West
Toronto, Ontario, Canada M5H 1J9
 
    He is Senior Vice  President, Investments of Sun  Life Assurance Company  of
Canada; and a Director of Sun Investment Services Company, Sun Capital Advisers,
Inc. and Sun Life Insurance and Annuity Company of New York.
 
RICHARD B. BAILEY, 69, Director (1983*)
500 Boylston Street
Boston, Massachusetts 02116
 
    He is a Director of Sun Life Insurance and Annuity Company of New York and a
Director/Trustee  of certain Funds in the MFS  Family of Funds. Prior to October
1, 1991, he  was Chairman  and a  Director of  Massachusetts Financial  Services
Company.
 
   
A. KEITH BRODKIN, 61, Director (1990*)
500 Boylston Street
Boston, Massachusetts 02116
    
 
    He is Chairman and a Director of Massachusetts Financial Services Company; a
Director  of  Sun  Life  Insurance  and  Annuity  Company  of  New  York;  and a
Director/Trustee and/or Officer of the Funds in the MFS Family of Funds.
 
   
M. COLYER CRUM, 64, Director (1986*)
Harvard Business School
Soldiers Field Road
Boston, Massachusetts 02163
    
 
    He is a Professor at the Harvard Business School; and a Director of Sun Life
Assurance Company of Canada, Sun Life Insurance and Annuity Company of New York,
Merrill Lynch Ready Assets Trust, Merrill Lynch Basic Value Fund, Inc.,  Merrill
Lynch  Special Value Fund, Inc., Merrill Lynch Capital Fund, Inc., Merrill Lynch
U.S.A. Government Reserves, Merrill Lynch Natural Resources Trust, Merrill Lynch
U.S. Treasury
 
- ---------
* Year Elected Director
 
                                       43
<PAGE>
Money Fund, MuniVest California Insured Fund, Inc., MuniVest Florida Fund, Inc.,
MuniVest Michigan Insured Fund, Inc.,  MuniVest New Jersey Fund, Inc.,  MuniVest
New  York Insured Fund, Inc., MuniYield  Florida Insured Fund, MuniYield Insured
Fund II,  Inc., MuniYield  Michigan  Insured Fund,  Inc., MuniYield  New  Jersey
Insured  Fund, Inc.,  MuniYield New  York Insured  Fund III,  Inc. and MuniYield
Pennsylvania Fund.
 
   
ROBERT A. BONNER, 52, Vice President, Pensions (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
    
 
    He is Vice President, Pensions for  the United States of Sun Life  Assurance
Company of Canada.
 
   
ROBERT E. MCGINNESS, 55, Vice President and Counsel (1983)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
    
 
    He is Vice President and Counsel for the United States of Sun Life Assurance
Company  of Canada; Vice President and Counsel  and a Director of Sun Investment
Services Company and Sun Benefit Services Company, Inc.; Assistant Secretary and
a Director of New London Trust, F.S.B.; and a Director of Massachusetts Casualty
Insurance Company.
 
C. JAMES PRIEUR, 45, Vice President, Investments (1993)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
 
    He is  Vice  President,  Investments  for the  United  States  of  Sun  Life
Assurance  Company  of Canada;  Vice  President, Investments  of  Sun Investment
Services Company and Sun Life Insurance and  Annuity Company of New York; and  a
Director  of Sun Capital Advisers, Inc., New London Trust, F.S.B. and Sun Canada
Financial Co.
 
   
S. CAESAR RABOY, 60, Vice President, Individual Insurance (1991)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
    
 
    He is Vice President, Individual Insurance for the United States of Sun Life
Assurance Company of Canada;  Vice President of Sun  Life Insurance and  Annuity
Company  of New York;  and Vice President  and a Director  of Sun Life Financial
Services Limited. Prior to 1990 he was President and Chief Operating Officer  of
Connecticut Mutual Life Insurance Company.
 
ROBERT P. VROLYK, 43, Vice President and Actuary (1986)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
 
    He  is Vice President, Finance  for the United States  of Sun Life Assurance
Company of Canada; Vice President, Controller and Actuary of Sun Life  Insurance
and  Annuity Company of New York; a Director of Massachusetts Casualty Insurance
Company; and Vice President and a Director of Sun Canada Financial Co.
 
   
MARGARET SEARS MEAD, 46, Secretary (1996)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
    
 
   
    She is Assistant  Vice President and  Counsel for the  United States of  Sun
Life Assurance Company of Canada and Secretary of Sun Life Insurance and Annuity
Company of New York.
    
 
   
L. BROCK THOMSON, 55, Vice President and Treasurer (1974)
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
    
 
    He is Vice President, Portfolio Management for the United States of Sun Life
Assurance  Company of  Canada; Vice  President and  Treasurer of  Sun Investment
Services Company, Sun Capital Advisers, Inc., Sun Benefit Services Company, Inc.
and Sun Life Insurance and Annuity Company of New York; and Assistant  Treasurer
of Massachusetts Casualty Insurance Company.
 
                                       44
<PAGE>
    The  directors, officers  and employees of  the Company are  covered under a
commercial blanket  bond and  a liability  policy. The  directors, officers  and
employees  of Massachusetts  Financial Services Company  and Clarendon Insurance
Agency, Inc. are covered under a fidelity bond and errors and omissions policy.
 
EXECUTIVE COMPENSATION
 
    All of the executive officers of the  Company also serve as officers of  Sun
Life  Assurance Company of Canada and  receive no compensation directly from the
Company. Allocations have been made as to such officers' time devoted to  duties
as  executive officers of  the Company and its  subsidiaries. The allocated cash
compensation of all executive  officers of the Company  as a group for  services
rendered  in  all capacities  to the  Company and  its subsidiaries  during 1995
totalled $812,410.
 
   
    Directors of the Company who are also officers of Sun Life Assurance Company
of Canada  or  its affiliates  receive  no  compensation in  addition  to  their
compensation  as  officers  of  Sun  Life Assurance  Company  of  Canada  or its
affiliates. Messrs. Bailey,  Crum and  MacNaughton receive  compensation in  the
amount of $5,000 per year, plus $800 for each meeting attended, plus expenses.
    
 
    No shares of the Company are owned by any executive officer or director. The
Company  is a wholly-owned  subsidiary of Sun Life  Assurance Company of Canada,
150 King Street West, Toronto, Ontario, Canada M5H 1J9.
 
                                STATE REGULATION
 
    The Company is subject to the laws  of the State of Delaware governing  life
insurance  companies  and  to regulation  by  the Commissioner  of  Insurance of
Delaware. An annual statement is filed with the Commissioner of Insurance on  or
before  March 1st in each year relating to the operations of the Company for the
preceding year and its  financial condition on December  31st of such year.  Its
books  and records are subject  to review or examination  by the Commissioner or
his agents at any time and a full examination of its operations is conducted  at
periodic intervals.
 
    The  Company is also  subject to the  insurance laws and  regulations of the
other states and jurisdictions in which it  is licensed to operate. The laws  of
the   various   jurisdictions   establish   supervisory   agencies   with  broad
administrative powers with respect to licensing to transact business, overseeing
trade practices, licensing agents, approving policy forms, establishing  reserve
requirements,  fixing maximum interest rates on  life insurance policy loans and
minimum rates for  accumulation of  surrender values, prescribing  the form  and
content  of required financial statements and regulating the type and amounts of
investments permitted.  Each  insurance company  is  required to  file  detailed
annual  reports with supervisory agencies in  each of the jurisdictions in which
it does business and its operations  and accounts are subject to examination  by
such agencies at regular intervals.
 
    In addition, many states regulate affiliated groups of insurers, such as the
Company,  its  parent  and  its  affiliates,  under  insurance  holding  company
legislation. Under such  laws, inter-company  transfers of  assets and  dividend
payments from insurance subsidiaries may be subject to prior notice or approval,
depending  on  the  size of  such  transfers  and payments  in  relation  to the
financial positions of the companies involved.
 
    Under insurance guaranty fund laws  in most states, insurers doing  business
therein  can  be  assessed (up  to  prescribed limits)  for  policyholder losses
incurred by insolvent  companies. The amount  of any future  assessments of  the
Company  under these laws cannot be reasonably estimated. However, most of these
laws do  provide that  an assessment  may be  excused or  deferred if  it  would
threaten  an insurer's own  financial strength and many  permit the deduction of
all or a portion of any such assessment from any future premium or similar taxes
payable.
 
    Although the federal  government generally  does not  directly regulate  the
business  of insurance, federal initiatives often have an impact on the business
in  a  variety  of  ways.  Current  and  proposed  federal  measures  which  may
significantly affect the insurance business include employee benefit regulation,
removal  of barriers preventing  banks from engaging  in the insurance business,
tax law changes affecting the taxation of
 
                                       45
<PAGE>
insurance companies, the tax treatment of  insurance products and its impact  on
the  relative desirability of various personal investment vehicles, and proposed
legislation to prohibit the use of  gender in determining insurance and  pension
rates and benefits.
 
                               LEGAL PROCEEDINGS
 
    There  are no pending legal proceedings  affecting the Variable Account. The
Company and its subsidiaries are engaged in various kinds of routine  litigation
which,  in  management's  judgment,  is  not  of  material  importance  to their
respective total assets or material with respect to the Variable Account.
 
                                 LEGAL MATTERS
 
    The organization of the  Company, its authority to  issue the Contracts  and
the  validity of  the form of  the Contracts have  been passed upon  by David D.
Horn, Esq., Senior Vice President and General Manager of the Company.  Covington
&  Burling, Washington, D.C.,  has advised the Company  on certain legal matters
concerning federal  securities laws  applicable to  the issue  and sale  of  the
Contracts and federal income tax laws applicable to the Contracts.
 
                                  ACCOUNTANTS
 
    The financial statements of the Variable Account for the year ended December
31,  1995  and the  financial  statements of  the  Company for  the  years ended
December 31, 1995, 1994 and 1993  included in this Prospectus have been  audited
by  Deloitte  & Touche  LLP, independent  auditors, as  stated in  their reports
appearing herein, and  are included in  reliance upon the  reports of such  firm
given upon their authority as experts in accounting and auditing.
 
                            REGISTRATION STATEMENTS
 
    Registration  statements have  been filed  with the  Securities and Exchange
Commission, Washington, D.C., under the Securities Act of 1933 as amended,  with
respect  to the Contracts  offered by this Prospectus.  This Prospectus does not
contain all the  information set forth  in the registration  statements and  the
exhibits filed as part of the registration statements, to all of which reference
is  hereby made  for further  information concerning  the Variable  Account, the
Fixed Account, the Company, the Series Fund, the Contract and the  Certificates.
Statements  found  in this  Prospectus as  to  the terms  of the  Contracts, the
Certificates and other legal instruments are summaries, and reference is made to
such instruments as filed.
 
                              FINANCIAL STATEMENTS
 
    The  financial  statements  of  the  Company  which  are  included  in  this
Prospectus should be considered only as bearing on the ability of the Company to
meet  its obligations with respect to amounts allocated to the Fixed Account and
with respect to the death benefit and the Company's assumption of the  mortality
and  expense risks. They should  not be considered as  bearing on the investment
performance of the Series Fund shares  held in the Sub-Accounts of the  Variable
Account.  The Variable Account  value of the  interests of Owners, Participants,
Annuitants, Payees and Beneficiaries under  the Contracts is affected  primarily
by  the investment results of  the Series Fund. The  financial statements of the
Variable Account reflect  units outstanding  and expenses  incurred under  other
contracts  participating in the  Variable Account which  impose certain contract
charges that are different from those imposed under the Contracts.
 
                              -------------------
 
                                       46
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
STATEMENT OF CONDITION -- December 31, 1995
 
<TABLE>
<CAPTION>
 Assets:
   Investments in MFS/Sun Life Series Trust:                                              Shares          Cost           Value
                                                                                        -----------  --------------  --------------
 <S>                                                                                    <C>          <C>             <C>
     Capital Appreciation Series ("CAS")..............................................   20,694,441  $  555,400,190  $  661,970,636
     Conservative Growth Series ("CGS")...............................................   12,268,501     217,219,949     270,130,493
     Emerging Growth Series ("EGS")...................................................    5,301,215      63,686,760      67,239,716
     MFS/Foreign & Colonial International Growth and Income Series ("FCG")............      708,797       7,067,308       7,178,745
     Government Securities Series ("GSS").............................................   21,859,555     276,753,000     292,703,791
     High Yield Series ("HYS")........................................................   13,520,748     114,301,393     120,648,644
     Managed Sectors Series ("MSS")...................................................    6,986,407     153,500,488     177,775,494
     Money Market Series ("MMS")......................................................  232,452,692     232,452,692     232,452,692
     Research Series ("RES")..........................................................    5,290,149      63,199,027      71,822,398
     Total Return Series ("TRS")......................................................   55,713,387     851,548,080   1,024,281,880
     Utilities Series ("UTS").........................................................    3,409,214      34,769,429      41,796,297
     World Asset Allocation Series ("WAA")............................................    2,115,612      23,284,489      25,862,059
     World Governments Series ("WGS").................................................   11,075,887     133,922,934     138,299,644
     World Growth Series ("WGR")......................................................   11,457,908     127,633,799     141,460,196
     World Total Return Series ("WTR")................................................    1,164,889      12,758,587      13,783,458
                                                                                                     --------------  --------------
                                                                                                     $2,867,498,125  $3,287,406,143
                                                                                                     --------------
                                                                                                     --------------
   Receivable from sponsor.........................................................................................         162,592
                                                                                                                     --------------
         Net assets................................................................................................  $3,287,568,735
                                                                                                                     --------------
                                                                                                                     --------------
</TABLE>
 
<TABLE>
<CAPTION>
                                               Deferred Variable Annuity Contracts    Reserve for
                                              --------------------------------------   Variable
 NET ASSETS APPLICABLE TO CONTRACT OWNERS:      Units     Unit Value      Value        Annuities       Total
                                              ----------  ----------  --------------  -----------  --------------
 <S>                                          <C>         <C>         <C>             <C>          <C>
   MFS Regatta Contracts:
     CAS....................................   6,615,207  $ 20.6225   $  136,410,833   $  245,038  $  136,655,871
     GSS....................................   3,535,152    15.5323       54,908,660      225,698      55,134,358
     HYS....................................   1,068,412    17.8678       19,081,169        8,030      19,089,199
     MSS....................................   2,150,361    18.9987       40,851,418       86,338      40,937,756
     MMS....................................   3,453,907    12.2910       42,442,851      164,363      42,607,214
     TRS....................................  13,106,997    17.8165      233,507,279    1,162,925     234,670,204
     WGS....................................   1,730,002    16.2514       28,118,590       77,135      28,195,725
                                                                      --------------  -----------  --------------
                                                                      $  555,320,800   $1,969,527  $  557,290,327
                                                                      --------------  -----------  --------------
   MFS Regatta Gold Contracts:
     CAS....................................  27,782,739  $ 18.8392   $  523,347,352   $2,166,217  $  525,513,569
     CGS....................................  16,712,586    16.1344      269,625,529      530,164     270,155,693
     EGS....................................   5,346,104    12.5675       67,183,165      --           67,183,165
     FCG....................................     711,179    10.0942        7,178,745      --            7,178,745
     GSS....................................  18,082,586    13.0981      236,851,391      782,886     237,634,277
     HYS....................................   6,880,080    14.7137      101,211,247      310,936     101,522,183
     MSS....................................   8,542,869    15.9925      136,616,983      216,172     136,833,155
     MMS....................................  17,186,041    11.0111      189,244,865      338,871     189,583,736
     RES....................................   5,341,160    13.3663       71,394,271      510,203      71,904,474
     TRS....................................  53,091,748    14.8406      787,862,944    1,668,256     789,531,200
     UTS....................................   3,410,047    12.2403       41,738,359       55,148      41,793,507
     WAA....................................   2,141,041    12.0393       25,776,833       90,584      25,867,417
     WGS....................................   8,272,858    13.2523      109,635,499      519,035     110,154,534
     WGR....................................  11,421,691    12.3321      140,851,336      646,294     141,497,630
     WTR....................................   1,170,586    11.6516       13,639,351      159,580      13,798,931
                                                                      --------------  -----------  --------------
                                                                      $2,722,157,870   $7,994,346  $2,730,152,216
                                                                      --------------  -----------  --------------
 NET ASSETS APPLICABLE TO SPONSOR...................................  $      126,192   $  --       $      126,192
                                                                      --------------  -----------  --------------
         Net assets.................................................  $3,277,604,862   $9,963,873  $3,287,568,735
                                                                      --------------  -----------  --------------
                                                                      --------------  -----------  --------------
</TABLE>
 
                       See notes to financial statements
 
                                       47
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
STATEMENT OF OPERATIONS -- Year Ended December 31, 1995
<TABLE>
<CAPTION>
                                           CAS            CGS            EGS            FCG           GSS
                                       Sub-Account    Sub-Account    Sub-Account*   Sub-Account** Sub-Account
                                      -------------   ------------   ------------   -----------   ------------
 <S>                                  <C>             <C>            <C>            <C>           <C>
 INCOME AND EXPENSES:
   Dividend income and capital gain
    distributions received..........  $  12,222,330   $  4,213,752   $   --          $ --         $ 15,080,454
   Mortality and expense risk
    charges.........................      6,566,319      2,296,967       245,139        9,593        3,262,464
   Distribution expense charges.....        180,081        --            --            --               80,215
   Administrative expense charges...        607,879        275,636        29,417        1,151          311,281
                                      -------------   ------------   ------------   -----------   ------------
       Net investment income
        (expense)...................  $   4,868,051   $  1,641,149   $  (274,556)    $(10,744)    $ 11,426,494
                                      -------------   ------------   ------------   -----------   ------------
                                      -------------   ------------   ------------   -----------   ------------
 REALIZED AND UNREALIZED GAINS
  (LOSSES):
   Realized gains on investment
    transactions:
     Proceeds from sales............  $ 168,445,760   $  7,669,518   $17,109,373     $ 11,837     $ 78,420,543
     Cost of investments sold.......    159,776,008      6,109,739    14,892,586       12,080       79,967,164
                                      -------------   ------------   ------------   -----------   ------------
       Net realized gains
        (losses)....................  $   8,669,752   $  1,559,779   $ 2,216,787     $   (243)    $ (1,546,621)
                                      -------------   ------------   ------------   -----------   ------------
   Net unrealized appreciation
    (depreciation) on investments:
     End of year....................  $ 106,570,446   $ 52,910,544   $ 3,552,956     $111,437     $ 15,950,791
     Beginning of year..............    (24,453,057)       124,681       --            --          (13,654,356)
                                      -------------   ------------   ------------   -----------   ------------
       Change in unrealized
        appreciation................  $ 131,023,503   $ 52,785,863   $ 3,552,956     $111,437     $ 29,605,147
                                      -------------   ------------   ------------   -----------   ------------
   Realized and unrealized gains....  $ 139,693,255   $ 54,345,642   $ 5,769,743     $111,194     $ 28,058,526
                                      -------------   ------------   ------------   -----------   ------------
   INCREASE IN NET ASSETS FROM
    OPERATIONS......................  $ 144,561,306   $ 55,986,791   $ 5,495,187     $100,450     $ 39,485,020
                                      -------------   ------------   ------------   -----------   ------------
                                      -------------   ------------   ------------   -----------   ------------
 
<CAPTION>
                                          HYS            MSS             MMS
                                      Sub-Account    Sub-Account     Sub-Account
                                      ------------   ------------   -------------
 <S>                                  <C>            <C>            <C>
 INCOME AND EXPENSES:
   Dividend income and capital gain
    distributions received..........  $  6,506,329   $  4,070,752   $  10,112,163
   Mortality and expense risk
    charges.........................     1,234,228      1,785,559       2,360,642
   Distribution expense charges.....        25,060         54,132          57,813
   Administrative expense charges...       123,047        160,137         225,464
                                      ------------   ------------   -------------
       Net investment income
        (expense)...................  $  5,123,994   $  2,070,924   $   7,468,244
                                      ------------   ------------   -------------
                                      ------------   ------------   -------------
 REALIZED AND UNREALIZED GAINS
  (LOSSES):
   Realized gains on investment
    transactions:
     Proceeds from sales............  $ 55,764,339   $ 25,990,021   $ 393,915,269
     Cost of investments sold.......    53,874,507     23,211,669     393,915,269
                                      ------------   ------------   -------------
       Net realized gains
        (losses)....................  $  1,889,832   $  2,778,352   $    --
                                      ------------   ------------   -------------
   Net unrealized appreciation
    (depreciation) on investments:
     End of year....................  $  6,347,251   $ 24,275,006   $    --
     Beginning of year..............      (491,661)    (6,047,477)       --
                                      ------------   ------------   -------------
       Change in unrealized
        appreciation................  $  6,838,912   $ 30,322,483   $    --
                                      ------------   ------------   -------------
   Realized and unrealized gains....  $  8,728,744   $ 33,100,835   $    --
                                      ------------   ------------   -------------
   INCREASE IN NET ASSETS FROM
    OPERATIONS......................  $ 13,852,738   $ 35,171,759   $   7,468,244
                                      ------------   ------------   -------------
                                      ------------   ------------   -------------
</TABLE>
 
 *For the period from May 1, 1995 (commencement of investment operations) to
  December 31, 1995.
**For the period from October 4, 1995 (commencement of investment operations) to
  December 31, 1995.
 
                       See notes to financial statements
 
                                       48
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
STATEMENT OF OPERATIONS -- continued
<TABLE>
<CAPTION>
                                               RES            TRS            UTS           WAA           WGS
                                           Sub-Account    Sub-Account    Sub-Account   Sub-Account   Sub-Account
                                           -----------   -------------   -----------   -----------   ------------
 <S>                                       <C>           <C>             <C>           <C>           <C>
 INCOME AND EXPENSES:
   Dividend income and capital gain
    distributions received...............  $    5,213    $  32,466,536   $  667,466    $    6,090    $  7,171,231
   Mortality and expense risk charges....     347,162       10,927,279      354,562       162,497       1,688,912
   Distribution expense charges..........      --              323,202       --            --              41,714
   Administrative expense charges........      41,659          988,072       42,547        19,500         160,955
                                           -----------   -------------   -----------   -----------   ------------
       Net investment income (expense)...  $ (383,608)   $  20,227,983   $  270,357    $ (175,907)   $  5,279,650
                                           -----------   -------------   -----------   -----------   ------------
                                           -----------   -------------   -----------   -----------   ------------
 REALIZED AND UNREALIZED GAINS (LOSSES):
   Realized gains on investment
    transactions:
     Proceeds from sales.................  $3,467,672    $  84,253,831   $8,132,861    $1,134,082    $ 37,103,469
     Cost of investments sold............   3,086,840       67,830,111    7,866,953     1,013,492      37,082,327
                                           -----------   -------------   -----------   -----------   ------------
       Net realized gains................  $  380,832    $  16,423,720   $  265,908    $  120,590    $     21,142
                                           -----------   -------------   -----------   -----------   ------------
   Net unrealized appreciation
    (depreciation) on investments:
     End of year.........................  $8,623,371    $ 172,733,800   $7,026,868    $2,577,570    $  4,376,710
     Beginning of year...................      11,209       12,939,657     (420,499)       17,780      (7,922,900)
                                           -----------   -------------   -----------   -----------   ------------
       Change in unrealized
        appreciation.....................  $8,612,162    $ 159,794,143   $7,447,367    $2,559,790    $ 12,299,610
                                           -----------   -------------   -----------   -----------   ------------
   Realized and unrealized gains.........  $8,992,994    $ 176,217,863   $7,713,275    $2,680,380    $ 12,320,752
                                           -----------   -------------   -----------   -----------   ------------
   INCREASE IN NET ASSETS FROM
    OPERATIONS...........................  $8,609,386    $ 196,445,846   $7,983,632    $2,504,473    $ 17,600,402
                                           -----------   -------------   -----------   -----------   ------------
                                           -----------   -------------   -----------   -----------   ------------
 
<CAPTION>
                                               WGR            WTR
                                           Sub-Account    Sub-Account       Total
                                           ------------   -----------   -------------
 <S>                                       <C>            <C>           <C>
 INCOME AND EXPENSES:
   Dividend income and capital gain
    distributions received...............  $  3,100,162   $    2,399    $  95,624,877
   Mortality and expense risk charges....     1,457,299       79,873       32,778,495
   Distribution expense charges..........       --            --              762,217
   Administrative expense charges........       174,876        9,584        3,171,205
                                           ------------   -----------   -------------
       Net investment income (expense)...  $  1,467,987   $  (87,058)   $  58,912,960
                                           ------------   -----------   -------------
                                           ------------   -----------   -------------
 REALIZED AND UNREALIZED GAINS (LOSSES):
   Realized gains on investment
    transactions:
     Proceeds from sales.................  $ 24,859,820   $  971,428    $ 907,249,823
     Cost of investments sold............    23,988,619      908,827      873,536,191
                                           ------------   -----------   -------------
       Net realized gains................  $    871,201   $   62,601    $  33,713,632
                                           ------------   -----------   -------------
   Net unrealized appreciation
    (depreciation) on investments:
     End of year.........................  $ 13,826,397   $1,024,871    $ 419,908,018
     Beginning of year...................      (867,181)       4,178      (40,759,626)
                                           ------------   -----------   -------------
       Change in unrealized
        appreciation.....................  $ 14,693,578   $1,020,693    $ 460,667,644
                                           ------------   -----------   -------------
   Realized and unrealized gains.........  $ 15,564,779   $1,083,294    $ 494,381,276
                                           ------------   -----------   -------------
   INCREASE IN NET ASSETS FROM
    OPERATIONS...........................  $ 17,032,766   $  996,236    $ 553,294,236
                                           ------------   -----------   -------------
                                           ------------   -----------   -------------
</TABLE>
 
                       See notes to financial statements
 
                                       49
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
STATEMENT OF CHANGES IN NET ASSETS
 
<TABLE>
<CAPTION>
                                              CAS                             CGS                     EGS             FCG
                                          Sub-Account                     Sub-Account             Sub-Account     Sub-Account
                                 -----------------------------   -----------------------------   -------------   -------------
                                          Year Ended                      Year Ended              Year Ended      Year Ended
                                         December 31,                    December 31,            December 31,    December 31,
                                 -----------------------------   -----------------------------   -------------   -------------
                                     1995            1994            1995            1994            1995*          1995**
                                 -------------   -------------   -------------   -------------   -------------   -------------
 <S>                             <C>             <C>             <C>             <C>             <C>             <C>
 OPERATIONS:
   Net investment income
    (expense)..................  $   4,868,051   $  27,825,823   $   1,641,149   $     147,916   $    (274,556)  $     (10,744)
   Net realized gains
    (losses)...................      8,669,752      12,649,928       1,559,779         469,410       2,216,787            (243)
   Net unrealized gains
    (losses)...................    131,023,503     (57,996,267)     52,785,863      (3,896,273)      3,552,956         111,437
                                 -------------   -------------   -------------   -------------   -------------   -------------
     Increase (decrease) in net
      assets from operations...  $ 144,561,306   $ (17,520,516)  $  55,986,791   $  (3,278,947)  $   5,495,187   $     100,450
                                 -------------   -------------   -------------   -------------   -------------   -------------
 PARTICIPANT TRANSACTIONS:
   Accumulation Activity:
     Purchase payments
      received.................  $ 120,979,478   $ 131,738,032   $  74,122,408   $  54,704,628   $  34,471,454   $   4,120,619
     Net transfers between
      Sub-Accounts and Fixed
      Account..................     51,189,081     (30,000,160)     19,980,665       5,906,300      27,751,346       3,003,996
     Withdrawals, surrenders,
      annuitizations and
      contract charges.........    (35,672,499)    (22,127,701)    (11,060,939)     (4,909,494)       (532,429)        (46,320)
                                 -------------   -------------   -------------   -------------   -------------   -------------
       Net accumulation
        activity...............  $ 136,496,060   $  79,610,171   $  83,042,134   $  55,701,434   $  61,690,371   $   7,078,295
                                 -------------   -------------   -------------   -------------   -------------   -------------
   Annuitization Activity:
     Annuitizations............  $   1,153,294   $     325,123   $     201,542   $     131,189   $      50,528   $    --
     Annuity payments and
      contract charges.........       (216,005)       (135,087)        (58,715)        (58,514)           (593)       --
     Net transfers between
      Sub-Accounts.............        531,083         (13,777)          2,298          68,480           4,223        --
     Adjustment to annuity
      reserve..................        131,042        (138,996)         30,462          (3,424)        (56,551)       --
                                 -------------   -------------   -------------   -------------   -------------   -------------
       Net annuitization
        activity...............  $   1,599,414   $      37,263   $     175,587   $     137,731   $      (2,393)  $    --
                                 -------------   -------------   -------------   -------------   -------------   -------------
   Increase in net assets from
    participant transactions...  $ 138,095,474   $  79,647,434   $  83,217,721   $  55,839,165   $  61,687,978   $   7,078,295
                                 -------------   -------------   -------------   -------------   -------------   -------------
     Increase in net assets....  $ 282,656,780   $  62,126,918   $ 139,204,512   $  52,560,218   $  67,183,165   $   7,178,745
 NET ASSETS:
   Beginning of year...........    379,512,660     317,385,742     130,951,181      78,390,963        --              --
                                 -------------   -------------   -------------   -------------   -------------   -------------
   End of year.................  $ 662,169,440   $ 379,512,660   $ 270,155,693   $ 130,951,181   $  67,183,165   $   7,178,745
                                 -------------   -------------   -------------   -------------   -------------   -------------
                                 -------------   -------------   -------------   -------------   -------------   -------------
</TABLE>
 
 *For  the period  from May 1,  1995 (commencement of  investment operations) to
  December 31, 1995.
**For the period from October 4, 1995 (commencement of investment operations) to
  December 31, 1995.
 
                       See notes to financial statements
 
                                       50
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
STATEMENT OF CHANGES IN NET ASSETS -- continued
 
<TABLE>
<CAPTION>
                                                GSS                            HYS                             MSS
                                            Sub-Account                    Sub-Account                     Sub-Account
                                   -----------------------------   ----------------------------   -----------------------------
                                            Year Ended                      Year Ended                     Year Ended
                                           December 31,                    December 31,                   December 31,
                                   -----------------------------   ----------------------------   -----------------------------
                                       1995            1994            1995            1994           1995            1994
                                   -------------   -------------   -------------   ------------   -------------   -------------
 <S>                               <C>             <C>             <C>             <C>            <C>             <C>
 OPERATIONS:
   Net investment income.........  $  11,426,494   $  10,541,212   $   5,123,994   $  3,353,160   $   2,070,924   $  10,371,457
   Net realized gains (losses)...     (1,546,621)        989,314       1,889,832     (1,835,584)      2,778,352       2,312,910
   Net unrealized gains
    (losses).....................     29,605,147     (19,932,794)      6,838,912     (3,354,235)     30,322,483     (16,183,713)
                                   -------------   -------------   -------------   ------------   -------------   -------------
       Increase (decrease) in net
        assets from operations...  $  39,485,020   $  (8,402,268)  $  13,852,738   $ (1,836,659)  $  35,171,759   $  (3,499,346)
                                   -------------   -------------   -------------   ------------   -------------   -------------
 PARTICIPANT TRANSACTIONS:
   Accumulation Activity:
     Purchase payments
      received...................  $  47,266,837   $  81,307,573   $  20,152,853   $ 25,863,588   $  34,586,296   $  29,286,189
     Net transfers between
      Sub-Accounts and Fixed
      Account....................    (42,381,252)    (10,559,956)     22,611,563    (10,800,800)      9,193,092      (4,775,869)
     Withdrawals, surrenders,
      annuitizations and contract
      charges....................    (21,245,942)    (18,857,834)     (7,980,818)    (6,561,955)     (9,392,233)     (7,012,701)
                                   -------------   -------------   -------------   ------------   -------------   -------------
       Net accumulation
        activity.................  $ (16,360,357)  $  51,889,783   $  34,783,598   $  8,500,833   $  34,387,155   $  17,497,619
                                   -------------   -------------   -------------   ------------   -------------   -------------
   Annuitization Activity:
     Annuitizations..............  $     354,393   $     519,211   $      16,894   $    143,700   $      92,920   $      68,728
     Annuity payments and
      contract charges...........       (168,285)       (131,378)        (68,402)       (71,050)        (56,337)        (32,033)
     Net transfers between
      Sub-Accounts...............        (53,070)       (128,389)          8,428        119,221          94,161             976
     Adjustment to annuity
      reserve....................         33,716          41,563         (25,024)        (8,871)         (2,133)           (388)
                                   -------------   -------------   -------------   ------------   -------------   -------------
       Net annuitization
        activity.................  $     166,754   $     301,007   $     (68,104)  $    183,000   $     128,611   $      37,283
                                   -------------   -------------   -------------   ------------   -------------   -------------
   Increase in net assets from
    participant transactions.....  $ (16,193,603)  $  52,190,790   $  34,715,494   $  8,683,833   $  34,515,766   $  17,534,902
                                   -------------   -------------   -------------   ------------   -------------   -------------
     Increase in net assets......  $  23,291,417   $  43,788,522   $  48,568,232   $  6,847,174   $  69,687,525   $  14,035,556
 NET ASSETS:
   Beginning of year.............    269,477,218     225,688,696      72,043,150     65,195,976     108,083,386      94,047,830
                                   -------------   -------------   -------------   ------------   -------------   -------------
   End of year...................  $ 292,768,635   $ 269,477,218   $ 120,611,382   $ 72,043,150   $ 177,770,911   $ 108,083,386
                                   -------------   -------------   -------------   ------------   -------------   -------------
                                   -------------   -------------   -------------   ------------   -------------   -------------
</TABLE>
 
                       See notes to financial statements
 
                                       51
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
                                                        MMS                            RES
                                                    Sub-Account                    Sub-Account
                                           ------------------------------   --------------------------
                                                     Year Ended                     Year Ended
                                                    December 31,                   December 31,
                                           ------------------------------   --------------------------
                                                1995            1994            1995          1994*
                                           --------------   -------------   ------------   -----------
 <S>                                       <C>              <C>             <C>            <C>
 OPERATIONS:
   Net investment income (expense).......  $    7,468,244   $   4,088,955   $   (383,608)  $    (4,034)
   Net realized gains (losses)...........        --              --              380,832        (3,877)
   Net unrealized gains (losses).........        --              --            8,612,162        11,209
                                           --------------   -------------   ------------   -----------
       Increase (decrease) in net assets
        from operations..................  $    7,468,244   $   4,088,955   $  8,609,386   $     3,298
                                           --------------   -------------   ------------   -----------
 PARTICIPANT TRANSACTIONS:
   Accumulation Activity:
     Purchase payments received..........  $  172,273,093   $ 169,065,890   $ 44,406,655   $ 1,223,399
     Net transfers between Sub-Accounts
      and Fixed Account..................    (115,663,895)    (47,970,496)    15,859,913     2,663,995
     Withdrawals, surrenders,
      annuitizations and contract
      charges............................     (34,523,223)    (21,288,054)    (1,251,158)      (19,412)
                                           --------------   -------------   ------------   -----------
       Net accumulation activity.........  $   22,085,975   $  99,807,340   $ 59,015,410   $ 3,867,982
                                           --------------   -------------   ------------   -----------
   Annuitization Activity:
     Annuitizations......................  $      583,368   $     559,738   $    404,830   $   --
     Annuity payments and contract
      charges............................        (185,934)       (103,980)       (20,548)      --
     Net transfers between
      Sub-Accounts.......................        (656,607)        122,710        (57,959)      --
     Adjustment to annuity reserve.......         (33,157)         96,065         82,075       --
                                           --------------   -------------   ------------   -----------
       Net annuitization activity........  $     (292,330)  $     674,533   $    408,398   $   --
                                           --------------   -------------   ------------   -----------
   Increase in net assets from
    participant transactions.............  $   21,793,645   $ 100,481,873   $ 59,423,808   $ 3,867,982
                                           --------------   -------------   ------------   -----------
     Increase in net assets..............  $   29,261,889   $ 104,570,828   $ 68,033,194   $ 3,871,280
 NET ASSETS:
   Beginning of year.....................     203,055,253      98,484,425      3,871,280       --
                                           --------------   -------------   ------------   -----------
   End of year...........................  $  232,317,142   $ 203,055,253   $ 71,904,474   $ 3,871,280
                                           --------------   -------------   ------------   -----------
                                           --------------   -------------   ------------   -----------
 
<CAPTION>
                                                        TRS
                                                    Sub-Account
                                           ------------------------------
                                                     Year Ended
                                                    December 31,
                                           ------------------------------
                                                1995            1994
                                           --------------   -------------
 <S>                                       <C>              <C>
 OPERATIONS:
   Net investment income (expense).......  $   20,227,983   $  19,183,787
   Net realized gains (losses)...........      16,423,720       9,131,549
   Net unrealized gains (losses).........     159,794,143     (56,210,282)
                                           --------------   -------------
       Increase (decrease) in net assets
        from operations..................  $  196,445,846   $ (27,894,946)
                                           --------------   -------------
 PARTICIPANT TRANSACTIONS:
   Accumulation Activity:
     Purchase payments received..........  $  114,688,434   $ 222,713,883
     Net transfers between Sub-Accounts
      and Fixed Account..................      (1,317,333)     (7,151,070)
     Withdrawals, surrenders,
      annuitizations and contract
      charges............................     (63,409,172)    (51,917,624)
                                           --------------   -------------
       Net accumulation activity.........  $   49,961,929   $ 163,645,189
                                           --------------   -------------
   Annuitization Activity:
     Annuitizations......................  $      238,231   $     816,949
     Annuity payments and contract
      charges............................        (656,053)       (624,252)
     Net transfers between
      Sub-Accounts.......................          17,486         (63,499)
     Adjustment to annuity reserve.......         (16,966)         21,464
                                           --------------   -------------
       Net annuitization activity........  $     (417,302)  $     150,662
                                           --------------   -------------
   Increase in net assets from
    participant transactions.............  $   49,544,627   $ 163,795,851
                                           --------------   -------------
     Increase in net assets..............  $  245,990,473   $ 135,900,905
 NET ASSETS:
   Beginning of year.....................     778,210,931     642,310,026
                                           --------------   -------------
   End of year...........................  $1,024,201,404   $ 778,210,931
                                           --------------   -------------
                                           --------------   -------------
</TABLE>
 
*For the period from November 7, 1994 (commencement of investment operations) to
 December 31, 1994.
 
                       See notes to financial statements
 
                                       52
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
STATEMENT OF CHANGES IN NET ASSETS -- continued
 
<TABLE>
<CAPTION>
                                                       UTS                          WAA                            WGS
                                                   Sub-Account                  Sub-Account                    Sub-Account
                                           ---------------------------   --------------------------   -----------------------------
                                                   Year Ended                    Year Ended                    Year Ended
                                                  December 31,                  December 31,                  December 31,
                                           ---------------------------   --------------------------   -----------------------------
                                               1995           1994           1995          1994*          1995            1994
                                           ------------   ------------   ------------   -----------   -------------   -------------
 <S>                                       <C>            <C>            <C>            <C>           <C>             <C>
 OPERATIONS:
   Net investment income (expense).......  $    270,357   $   (199,726)  $   (175,907)  $    (2,966)  $   5,279,650   $   9,480,795
   Net realized gains (losses)...........       265,908       (122,032)       120,590          (147)         21,142        (873,333)
   Net unrealized gains (losses).........     7,447,367       (443,189)     2,559,790        17,780      12,299,610     (16,425,541)
                                           ------------   ------------   ------------   -----------   -------------   -------------
     Increase (decrease) in net assets
      from operations....................  $  7,983,632   $   (764,947)  $  2,504,473   $    14,667   $  17,600,402   $  (7,818,079)
                                           ------------   ------------   ------------   -----------   -------------   -------------
 PARTICIPANT TRANSACTIONS:
   Accumulation Activity:
     Purchase payments received..........  $ 12,426,034   $ 17,617,955   $ 14,182,774   $ 1,457,362   $  12,226,329   $  37,946,650
     Net transfers between Sub-Accounts
      and Fixed Account..................     2,364,291      2,488,460      6,506,983     1,534,984      (8,347,691)    (17,688,160)
     Withdrawals, surrenders,
      annuitizations and contract
      charges............................    (2,335,754)      (828,336)      (403,056)       (3,895)     (8,464,694)     (8,869,406)
                                           ------------   ------------   ------------   -----------   -------------   -------------
       Net accumulation activity.........  $ 12,454,571   $ 19,278,079   $ 20,286,701   $ 2,988,451   $  (4,586,056)  $  11,389,084
                                           ------------   ------------   ------------   -----------   -------------   -------------
   Annuitization Activity:
     Annuitizations......................  $     16,672   $     27,927   $    --        $   --        $       9,873   $     303,841
     Annuity payments and contract
      charges............................        (7,291)       --             (10,989)      --             (159,462)       (162,696)
     Net transfers between
      Sub-Accounts.......................         9,915        --              78,757       --             --              (142,264)
     Adjustment to annuity reserve.......        (2,791)             1          5,357       --               49,038            (338)
                                           ------------   ------------   ------------   -----------   -------------   -------------
       Net annuitization activity........  $     16,505   $     27,928   $     73,125   $   --        $    (100,551)  $      (1,457)
                                           ------------   ------------   ------------   -----------   -------------   -------------
   Increase in net assets from
    participant transactions.............  $ 12,471,076   $ 19,306,007   $ 20,359,826   $ 2,988,451   $  (4,686,607)  $  11,387,627
                                           ------------   ------------   ------------   -----------   -------------   -------------
     Increase in net assets..............  $ 20,454,708   $ 18,541,060   $ 22,864,299   $ 3,003,118   $  12,913,795   $   3,569,548
 NET ASSETS:
   Beginning of year.....................    21,338,799      2,797,739      3,003,118       --          125,436,464     121,866,916
                                           ------------   ------------   ------------   -----------   -------------   -------------
   End of year...........................  $ 41,793,507   $ 21,338,799   $ 25,867,417   $ 3,003,118   $ 138,350,259   $ 125,436,464
                                           ------------   ------------   ------------   -----------   -------------   -------------
                                           ------------   ------------   ------------   -----------   -------------   -------------
</TABLE>
 
*For the period from November 7, 1994 (commencement of investment operations) to
 December 31, 1994.
 
                       See notes to financial statements
 
                                       53
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
STATEMENT OF CHANGES IN NET ASSETS -- continued
 
<TABLE>
<CAPTION>
                                                  WGR                           WTR
                                              Sub-Account                   Sub-Account                         Total
                                      ----------------------------   --------------------------   ---------------------------------
                                               Year Ended                    Year Ended                      Year Ended
                                              December 31,                  December 31,                    December 31,
                                      ----------------------------   --------------------------   ---------------------------------
                                          1995            1994           1995          1994*           1995              1994
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
 <S>                                  <C>             <C>            <C>            <C>           <C>               <C>
 OPERATIONS:
   Net investment income
    (expense).......................  $   1,467,987   $   (890,634)  $    (87,058)  $    (1,446)  $    58,912,960   $    83,894,299
   Net realized gains...............        871,201      1,495,414         62,601            63        33,713,632        24,213,615
   Net unrealized gains (losses)....     14,693,578     (1,584,010)     1,020,693         4,178       460,667,644      (175,993,137)
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
     Increase (decrease) in net
      assets from operations........  $  17,032,766   $   (979,230)  $    996,236   $     2,795   $   553,294,236   $   (67,885,223)
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
 PARTICIPANT TRANSACTIONS:
   Accumulation Activity:
     Purchase payments received.....  $  27,109,744   $ 62,712,792   $ 10,064,130   $   756,005   $   743,077,138   $   836,393,946
     Net transfers between
      Sub-Accounts and Fixed
      Account.......................      5,024,725     21,605,891      1,710,064       626,641        (2,514,452)      (94,120,240)
     Withdrawals, surrenders,
      annuitizations and contract
      charges.......................     (7,221,767)    (3,238,104)      (505,397)       (1,410)     (204,045,401)     (145,635,926)
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
       Net accumulation activity....  $  24,912,702   $ 81,080,579   $ 11,268,797   $ 1,381,236   $   536,517,285   $   596,637,780
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
   Annuitization Activity:
     Annuitizations.................  $     398,205   $    139,258   $    141,543   $   --        $     3,662,293   $     3,035,664
     Annuity payments and contract
      charges.......................        (48,306)        (9,292)        (6,755)      --             (1,663,675)       (1,328,282)
     Net transfers between
      Sub-Accounts..................          6,845         36,542           (394)      --                (14,834)        --
     Adjustment to annuity
      reserve.......................         42,104         (4,670)        15,473       --                252,645             2,406
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
       Net annuitization activity...  $     398,848   $    161,838   $    149,867   $   --        $     2,236,429   $     1,709,788
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
   Increase in net assets from
    participant transactions........  $  25,311,550   $ 81,242,417   $ 11,418,664   $ 1,381,236   $   538,753,714   $   598,347,568
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
     Increase in net assets.........  $  42,344,316   $ 80,263,187   $ 12,414,900   $ 1,384,031   $ 1,092,047,950   $   530,462,345
 NET ASSETS:
   Beginning of year................     99,153,314     18,890,127      1,384,031       --          2,195,520,785     1,665,058,440
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
   End of year......................  $ 141,497,630   $ 99,153,314   $ 13,798,931   $ 1,384,031   $ 3,287,568,735   $ 2,195,520,785
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
                                      -------------   ------------   ------------   -----------   ---------------   ---------------
</TABLE>
 
*For the period from November 7, 1994 (commencement of investment operations) to
 December 31, 1994.
 
                       See notes to financial statements
 
                                       54
<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 wholly-owned subsidiary of the Sponsor, is investment adviser to the
Series Trust.
 
(2) SIGNIFICANT ACCOUNTING POLICIES
INVESTMENT VALUATIONS
Investments in shares of the Series Trust are recorded at their net asset value.
Realized gains and losses on sales of shares of the Series Trust are  determined
on  the identified  cost basis. Dividend  income and  capital gain distributions
received by the Sub-Accounts  are reinvested in  additional Series Trust  shares
and are recognized on the ex-dividend date.
 
Exchanges  between Sub-Accounts requested by contract owners are recorded in the
new Sub-Account upon receipt of the redemption proceeds.
 
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately; the Variable  Account is not taxed as a  regulated
investment  company. The Sponsor qualifies for  the federal income tax treatment
granted to life insurance companies under  Subchapter L of the Internal  Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned  by the Variable  Account on contract  owner reserves are  not subject to
tax.
 
(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%.
 
Each year on the contract  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  on
the  preceding page 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.
 
                                       55
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
 
NOTES TO FINANCIAL STATEMENTS -- continued
(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
contract.  Required adjustments to the reserves are accomplished by transfers to
or from the Sponsor.
 
(5) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS
 
<TABLE>
<CAPTION>
                                                                                     Units Transferred
                                                                                 Between Sub-Accounts and
                                   Units Outstanding                                Fixed Accumulation
                                   Beginning of Year        Units Purchased               Account
                                 ----------------------  ----------------------  -------------------------
                                       Year Ended              Year Ended               Year Ended
                                      December 31,            December 31,             December 31,
                                 ----------------------  ----------------------  -------------------------
                                    1995        1994        1995        1994        1995          1994
                                 ----------  ----------  ----------  ----------  -----------   -----------
 <S>                             <C>         <C>         <C>         <C>         <C>           <C>
 MFS REGATTA CONTRACTS
 ------------------------------
 CAS Sub-Account...............   6,184,731   7,272,302       8,683       9,333    1,002,774      (455,183)
 GSS Sub-Account...............   4,235,203   4,708,841          48      10,633     (289,212)      (21,084)
 HYS Sub-Account...............     839,825   1,087,265      --          --          332,946       (47,560)
 MSS Sub-Account...............   2,066,642   2,431,072      12,503       1,536      206,072      (134,616)
 MMS Sub-Account...............   3,873,044   3,081,737       6,171       4,866      315,466     1,706,748
 TRS Sub-Account...............  14,225,539  15,806,723       4,093      10,133      117,384       (92,067)
 WGS Sub-Account...............   1,967,375   2,300,611      --           2,332      (87,581)      (73,063)
 MFS REGATTA GOLD CONTRACTS
 ------------------------------
 CAS Sub-Account...............  19,909,649  13,245,124   7,106,728   9,091,150    2,287,026    (1,559,101)
 CGS Sub-Account...............  10,979,711   6,412,270   5,181,021   4,513,854    1,359,507       483,956
 EGS Sub-Account...............      --          --       2,978,021      --        2,420,603       --
 FCG Sub-Account...............      --          --         414,060      --          301,717       --
 GSS Sub-Account...............  18,784,262  13,661,303   3,836,496   7,175,667   (3,241,260)     (868,594)
 HYS Sub-Account...............   4,605,818   3,599,473   1,439,990   1,996,981    1,286,018      (717,869)
 MSS Sub-Account...............   6,351,641   4,525,423   2,269,426   2,365,855      411,655      (238,446)
 MMS Sub-Account...............  14,774,386   6,055,673  16,108,059  16,275,632  (11,138,037)   (6,440,721)
 RES Sub-Account...............     392,528      --       3,726,811     124,868    1,346,160       269,642
 TRS Sub-Account...............  48,270,556  32,979,812   8,512,923  18,470,599     (391,980)     (520,442)
 UTS Sub-Account...............   2,273,439     279,796   1,164,148   1,824,507      204,917       258,454
 WAA Sub-Account...............     299,210      --       1,294,348     145,953      590,509       153,647
 WGR Sub-Account...............   9,182,555   1,778,644   2,422,350   5,802,910      475,925     1,954,152
 WGS Sub-Account...............   8,334,019   7,008,613     981,591   3,238,912     (532,375)   (1,467,047)
 WTR Sub-Account...............     138,126      --         922,160      75,613      159,909        62,654
</TABLE>
 
<TABLE>
<CAPTION>
                                     Units Withdrawn,
                                      Surrendered and          Units Outstanding
                                        Annuitized                End of Year
                                 -------------------------   ----------------------
                                        Year Ended                 Year Ended
                                       December 31,               December 31,
                                 -------------------------   ----------------------
                                    1995          1994          1995        1994
                                 -----------   -----------   ----------  ----------
 <S>                             <C>           <C>           <C>         <C>
 MFS REGATTA CONTRACTS
 ------------------------------
 CAS Sub-Account...............     (580,981)     (641,721)   6,615,207   6,184,731
 GSS Sub-Account...............     (410,887)     (463,187)   3,535,152   4,235,203
 HYS Sub-Account...............     (104,359)     (199,880)   1,068,412     839,825
 MSS Sub-Account...............     (134,856)     (231,350)   2,150,361   2,066,642
 MMS Sub-Account...............     (740,774)     (920,307)   3,453,907   3,873,044
 TRS Sub-Account...............   (1,240,019)   (1,499,250)  13,106,997  14,225,539
 WGS Sub-Account...............     (149,792)     (262,505)   1,730,002   1,967,375
 MFS REGATTA GOLD CONTRACTS
 ------------------------------
 CAS Sub-Account...............   (1,520,664)     (867,524)  27,782,739  19,909,649
 CGS Sub-Account...............     (807,653)     (430,369)  16,712,586  10,979,711
 EGS Sub-Account...............      (52,520)      --         5,346,104      --
 FCG Sub-Account...............       (4,598)      --           711,179      --
 GSS Sub-Account...............   (1,296,912)   (1,184,114)  18,082,586  18,784,262
 HYS Sub-Account...............     (451,746)     (272,767)   6,880,080   4,605,818
 MSS Sub-Account...............     (489,853)     (301,191)   8,542,869   6,351,641
 MMS Sub-Account...............   (2,558,367)   (1,116,198)  17,186,041  14,774,386
 RES Sub-Account...............     (124,339)       (1,982)   5,341,160     392,528
 TRS Sub-Account...............   (3,299,751)   (2,659,413)  53,091,748  48,270,556
 UTS Sub-Account...............     (232,457)      (89,318)   3,410,047   2,273,439
 WAA Sub-Account...............      (43,026)         (390)   2,141,041     299,210
 WGR Sub-Account...............     (659,139)     (353,151)  11,421,691   9,182,555
 WGS Sub-Account...............     (510,377)     (446,459)   8,272,858   8,334,019
 WTR Sub-Account...............      (49,609)         (141)   1,170,586     138,126
</TABLE>
 
                                       56
<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 December 31, 1995, the
related statement of operations  for the year then  ended and the statements  of
changes  in net  assets for the  years ended  December 31, 1995  and 1994. These
financial statements are the responsibility of management. Our responsibility is
to express an opinion on these financial statements based on our audits.
 
We  conducted  our  audits  in  accordance  with  generally  accepted   auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence  supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation  with the custodian of securities  held for the Variable Account as
of December 31, 1995. An audit also includes assessing the accounting principles
used and significant  estimates made by  management, as well  as evaluating  the
overall  financial statement presentation. We believe  that our audits provide a
reasonable basis for our opinion.
 
In our  opinion,  such financial  statements  present fairly,  in  all  material
respects,  the financial  position of  the Variable  Account as  of December 31,
1995, the results of its  operations and the changes in  its net assets for  the
respective  stated  periods  in conformity  with  generally  accepted accounting
principles.
 
DELOITTE & TOUCHE LLP
 
Boston, Massachusetts
February 2, 1996
 
                                       57
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
BALANCE SHEETS
 
<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                              ------------------------------
                                                                                   1995            1994
                                                                              --------------  --------------
                                                                                        (IN 000'S)
<S>                                                                           <C>             <C>
ASSETS
    Bonds                                                                     $    2,846,067  $    2,471,152
    Preferred stock                                                                    1,149               0
    Mortgage loans                                                                 1,066,911       1,120,981
    Investments in subsidiaries                                                      138,282         134,807
    Real estate                                                                       95,574          89,487
    Other invested assets                                                             38,387          26,036
    Policy loans                                                                      38,355          36,584
    Cash                                                                             (20,280)        (11,459)
    Investment income due and accrued                                                 62,719          56,096
    Funds withheld on reinsurance assumed                                            741,091         566,693
    Due from separate accounts                                                       148,675         132,496
    Other assets                                                                      26,349          27,683
                                                                              --------------  --------------
    General account assets                                                         5,183,279       4,650,556
                                                                              --------------  --------------
    Unitized separate account assets                                               5,275,808       4,061,821
    Non-unitized separate account assets                                           2,040,596       1,425,445
                                                                              --------------  --------------
                                                                              $   12,499,683  $   10,137,822
                                                                              --------------  --------------
                                                                              --------------  --------------
LIABILITIES
    Policy reserves                                                           $    1,937,302  $    1,765,326
    Annuity and other deposits                                                     2,290,656       2,277,104
    Policy benefits in process of payment                                              5,884           5,796
    Accrued expenses and taxes                                                        44,114          12,386
    Other liabilities                                                                 36,080          50,087
    Due to parent and affiliates--net                                                  9,498          41,881
    Interest maintenance reserve                                                      25,218          18,140
    Asset valuation reserve                                                           42,099          28,409
                                                                              --------------  --------------
    General account liabilities                                                    4,390,851       4,199,129
                                                                              --------------  --------------
    Unitized separate account liabilities                                          5,275,784       4,057,759
    Non-unitized separate account liabilities                                      2,040,596       1,425,445
                                                                              --------------  --------------
                                                                                  11,707,231       9,682,333
                                                                              --------------  --------------
CAPITAL STOCK AND SURPLUS
    Capital Stock--Par value $1,000:
       Authorized 10,000 shares,
        issued and outstanding 5,900 shares                                            5,900           5,900
    Surplus                                                                          786,552         449,589
                                                                              --------------  --------------
    Total capital stock and surplus                                                  792,452         455,489
                                                                              --------------  --------------
                                                                              $   12,499,683  $   10,137,822
                                                                              --------------  --------------
                                                                              --------------  --------------
</TABLE>
 
                       SEE NOTES TO FINANCIAL STATEMENTS.
 
                                       58
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                YEARS ENDED DECEMBER 31,
                                           ----------------------------------
                                              1995        1994        1993
                                           ----------  ----------  ----------
 <S>                                       <C>         <C>         <C>
                                                       (IN 000'S)
 INCOME
     Premiums and annuity considerations   $  274,244  $  313,025  $  469,157
     Annuity and other deposit funds          722,327     699,189   1,205,680
     Transfers from separate
      accounts--net                            21,455     102,213         350
     Net investment income                    366,598     337,747     253,496
     Amortization of interest maintenance
      reserve                                     899       3,316       2,703
     Realized losses on investments            (1,434)     (6,166)    (12,403)
     Expense allowance on reinsurance
      ceded                                         0           0       8,475
     Mortality and expense risk charges        60,954      52,338      42,981
     Other income--net                         16,666      33,377      46,102
                                           ----------  ----------  ----------
                                            1,461,709   1,535,039   2,016,541
 BENEFITS AND EXPENSES
     Increase (decrease) in liability for
      annuity and other deposit funds          13,552     (69,542)    894,128
     Increase in policy reserves              171,976     219,334     589,559
     Death, surrender benefits, and
      annuity payments                        189,744     166,889     128,902
     Annuity and other deposit fund
      withdrawals                             531,928     540,352     146,260
     Transfers to non-unitized separate
      account                                 331,403     455,688      28,070
                                           ----------  ----------  ----------
                                            1,238,603   1,312,721   1,786,919
     Operating expenses                        37,492      32,231      24,170
     Commissions                              108,672     150,011     204,016
     Dividends                                 25,722      22,928       8,074
     Taxes, licenses and fees                   4,774       4,649       4,180
                                           ----------  ----------  ----------
                                            1,415,263   1,522,540   2,027,359
                                           ----------  ----------  ----------
     Net income (loss) from operations
      before surplus note interest and
      equity in income of subsidiaries         46,446      12,499     (10,818)
     Surplus note interest                    (31,813)    (31,150)    (26,075)
                                           ----------  ----------  ----------
     Net income (loss) from operations
      before equity in income of
      subsidiaries and federal income tax      14,633     (18,651)    (36,893)
     Equity in income of subsidiaries          59,875      62,629      62,640
     Federal income tax expense               (38,593)    (42,521)    (22,491)
                                           ----------  ----------  ----------
 NET INCOME                                $   35,915  $    1,457  $    3,256
                                           ----------  ----------  ----------
                                           ----------  ----------  ----------
</TABLE>
 
                       SEE NOTES TO FINANCIAL STATEMENTS.
 
                                       59
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
STATEMENTS OF CAPITAL STOCK AND SURPLUS
 
<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                            ----------------------------------
                                                               1995        1994        1993
                                                            ----------  ----------  ----------
                                                                        (IN 000'S)
 
<S>                                                         <C>         <C>         <C>
CAPITAL STOCK                                               $    5,900  $    5,900  $    5,900
PAID-IN SURPLUS                                                199,355     199,355     199,355
SURPLUS NOTES
    Balance, beginning of year                                 335,000     335,000     265,000
    Issued during year                                         315,000           0      70,000
                                                            ----------  ----------  ----------
    Balance, end of year                                       650,000     335,000     335,000
                                                            ----------  ----------  ----------
UNASSIGNED SURPLUS
    Balance, beginning of year                                 (84,766)    (57,067)    (57,485)
    Net income                                                  35,915       1,457       3,256
    Writedown of goodwill                                            0     (18,397)          0
    Change in non-admitted assets                               (2,270)     (1,485)       (191)
    Unrealized gains (losses) on real estate                     2,009        (671)     (4,440)
    Change in and transfers of separate account
     surplus                                                        (1)       (227)        117
    Change in asset valuation reserve                          (13,690)     (8,376)      1,676
                                                            ----------  ----------  ----------
    Balance, end of year                                       (62,803)    (84,766)    (57,067)
                                                            ----------  ----------  ----------
TOTAL SURPLUS                                                  786,552     449,589     477,288
                                                            ----------  ----------  ----------
TOTAL CAPITAL STOCK AND SURPLUS                             $  792,452  $  455,489  $  483,188
                                                            ----------  ----------  ----------
                                                            ----------  ----------  ----------
</TABLE>
 
                       SEE NOTES TO FINANCIAL STATEMENTS.
 
                                       60
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                  YEARS ENDED DECEMBER 31,
                                            -------------------------------------
                                               1995         1994         1993
                                            -----------  -----------  -----------
 <S>                                        <C>          <C>          <C>
                                                         (IN 000'S)
 Cash flows from operating activities:
     Net income (loss) from operations
      before surplus note interest and
      equity in income of subsidiaries      $    46,446  $    12,499  $   (10,818)
     Adjustments to reconcile net income
      (loss) from operations to net cash
      provided by (used in) operating
      activities:
     Increase (decrease) in liability for
      annuity and other deposit funds            13,552      (69,542)     894,128
     Increase in policy reserves                171,976      219,334      589,559
     Increase in investment income due and
      accrued                                    (6,623)      (2,736)     (21,746)
     Net accrual and amortization of
      discount and premium on investments         3,127        7,272        5,911
     Realized losses on investments               1,434        6,166       12,403
     Change in non-admitted assets               (2,270)      (1,485)        (191)
     Change in funds withheld on
      reinsurance                              (174,398)    (199,826)  (1,087,862)
     Other                                      (11,160)     (71,746)      24,953
                                            -----------  -----------  -----------
 Net cash provided by (used in) operating
   activities                                    42,084     (100,064)     406,337
                                            -----------  -----------  -----------
 Cash flows from investing activities:
     Proceeds from sale and maturity of
      investments                             1,705,685    1,596,851    1,173,345
     Purchase of investments                 (1,820,843)  (1,491,159)  (1,618,587)
     Net change in short-term investments      (254,897)     (20,543)     (38,782)
     Investment in subsidiaries                  (6,000)      (4,894)     (15,250)
     Dividends from subsidiaries                 37,927       37,444       42,520
                                            -----------  -----------  -----------
 Net cash provided by (used in) investing
   activities                                  (338,128)     117,699     (456,754)
                                            -----------  -----------  -----------
 Cash flows from financing activities:
     Issue of surplus notes                     315,000            0       70,000
     Payment of interest on surplus notes       (31,813)     (31,150)     (26,075)
     Repayment of seed capital                    4,036            0            0
                                            -----------  -----------  -----------
 Net cash provided by (used in) financing
   activities                                   287,223      (31,150)      43,925
                                            -----------  -----------  -----------
 Decrease in cash during the year                (8,821)     (13,515)      (6,492)
 Cash balance, beginning of year                (11,459)       2,056        8,548
                                            -----------  -----------  -----------
 Cash balance, end of year                  $   (20,280) $   (11,459) $     2,056
                                            -----------  -----------  -----------
                                            -----------  -----------  -----------
</TABLE>
 
                       SEE NOTES TO FINANCIAL STATEMENTS.
 
                                       61
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994, AND 1993
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
GENERAL--
 
Sun  Life Assurance Company of Canada (U.S.)  (the Company) is incorporated as a
life insurance company and is currently engaged in the sale of individual  fixed
and  variable annuities,  group fixed and  variable annuities  and group pension
contracts. The Company  also underwrites  a block of  individual life  insurance
business  through a  reinsurance contract  with its  parent. Sun  Life Assurance
Company of Canada (the parent company)  is a mutual life insurance company.  The
Company,  which is  domiciled in the  State of Delaware,  prepares its financial
statements in  accordance  with  statutory accounting  practices  prescribed  or
permitted  by the State  of Delaware Insurance  Department. Statutory accounting
practices are  considered to  be generally  accepted accounting  principles  for
mutual  insurance companies  and subsidiaries of  mutuals. Prescribed accounting
practices include  a variety  of  publications of  the National  Association  of
Insurance  Commissioners (NAIC), as well as  state laws, regulations and general
administrative rules. Permitted  accounting practices  encompass all  accounting
practices  not so prescribed. The permitted  accounting practices adopted by the
Company are  not  material  to  the financial  statements.  Preparation  of  the
financial   statements  requires  management  to   make  certain  estimates  and
assumptions.
 
Assets in the balance sheets are stated at values prescribed or permitted to  be
reported by state regulatory authorities. Bonds are carried at cost adjusted for
amortization  of premium or accrual of discount. Investments in subsidiaries are
carried on the equity  basis. Mortgage loans acquired  at a premium or  discount
are  carried at amortized values and other  mortgage loans at the amounts of the
unpaid balances. Real  estate investments are  carried at the  lower of cost  or
appraised  value,  adjusted  for  accumulated  depreciation,  less encumbrances.
Depreciation of buildings and improvements is calculated using the straight line
method over the  estimated useful  life of the  property. For  life and  annuity
contracts,  premiums are recognized as revenues  over the premium paying period,
whereas commissions  and  other  costs  applicable to  the  acquisition  of  new
business  are  charged  to  operations  as  incurred.  Furniture  and  equipment
acquisitions are capitalized  but treated as  nonadmitted assets. Furniture  and
equipment  depreciation is calculated  on a straight line  basis over the useful
life of the assets.
 
MANAGEMENT AND SERVICE CONTRACTS--
 
The Company has  an agreement with  its parent company  which provides that  the
parent company will furnish, as requested, personnel as well as certain services
and  facilities on  a cost  reimbursement basis.  Expenses under  this agreement
amounted  to  approximately  $20,293,000  in  1995,  $18,452,000  in  1994,  and
$13,883,000 in 1993.
 
REINSURANCE--
 
The Company has agreements with the parent company which provide that the parent
company  will  reinsure the  mortality risks  of  the individual  life insurance
contracts sold by the Company. Under  these agreements basic death benefits  and
supplementary  benefits  are  reinsured on  a  yearly renewable  term  basis and
coinsurance basis, respectively. Reinsurance transactions under these agreements
had the effect of decreasing income from operations by approximately $2,184,000,
$2,138,000, and $1,046,000,  for the  years ended  December 31,  1995, 1994  and
1993, respectively.
 
Effective January 1, 1991, the Company entered into an agreement with the parent
company  under  which 100%  of  certain fixed  annuity  contracts issued  by the
Company  were  reinsured.  Effective  December  31,  1993  this  agreement   was
terminated.  This agreement had the effect  of decreasing income from operations
by approximately $9,930,000 in 1993.
 
                                       62
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Effective January 1, 1991, the Company entered into an agreement with the parent
company under which certain  individual life insurance  contracts issued by  the
parent  company were reinsured by the Company  on a 90% coinsurance basis. Also,
effective January 1, 1991, the Company entered into an agreement with the parent
company which provides that the parent company will reinsure the mortality risks
in excess of  $500,000 per policy  for the individual  life insurance  contracts
assumed  by the Company in the reinsurance agreement described above. Such death
benefits are reinsured on  a yearly renewable term  basis. These agreements  had
the  effect of increasing income from operations by approximately $11,821,000 in
1995, and decreasing  income by approximately  $29,188,000, and $43,591,000  for
the years ended December 31, 1994 and 1993, respectively.
 
The  life reinsurance assumed agreement requires the reinsurer to withhold funds
in amounts equal to the reserves assumed.
 
The following are summarized pro-forma results of operations of the Company  for
the  years  ended  December  31,  1995,  1994  and  1993  before  the  effect of
reinsurance transactions with the parent company.
 
<TABLE>
<CAPTION>
                                                                       YEARS ENDED DECEMBER 31,
                                                               ----------------------------------------
                                                                   1995          1994          1993
                                                               ------------  ------------  ------------
                                                                              (IN 000'S)
<S>                                                            <C>           <C>           <C>
Income:
    Premiums, annuity deposits and other revenues              $    890,560  $    962,320  $    762,553
    Net investment income and realized gains (losses)               306,893       304,155       293,557
                                                               ------------  ------------  ------------
    Subtotal                                                      1,197,453     1,266,475     1,056,110
                                                               ------------  ------------  ------------
Benefits and Expenses:
    Policyholder benefits                                         1,030,342     1,092,192       926,827
    Other expenses                                                  130,302       130,457        85,575
                                                               ------------  ------------  ------------
    Subtotal                                                      1,160,644     1,222,649     1,012,402
                                                               ------------  ------------  ------------
Income from operations                                         $     36,809  $     43,826  $     43,708
                                                               ------------  ------------  ------------
                                                               ------------  ------------  ------------
</TABLE>
 
The  Company  has  an  agreement  with  an  unrelated  company  which   provides
reinsurance  of  certain  individual  life  insurance  contracts  on  a modified
coinsurance basis  and under  which  all deficiency  reserves related  to  these
contracts  are reinsured. Reinsurance transactions  under this agreement had the
effect of decreasing income  from operations by  $1,599,000 in 1995,  increasing
income  from  operations  by  $1,854,000  in  1994  and  decreasing  income from
operations by $390,000 in 1993.
 
SEPARATE ACCOUNTS--
 
The Company has  established unitized  separate accounts  applicable to  various
classes  of contracts providing for variable benefits. Contracts for which funds
are invested in separate accounts include variable life insurance and individual
and group qualified and non-qualified variable annuity contracts.
 
Assets and liabilities of the  separate accounts, representing net deposits  and
accumulated net investment earnings less fees, held primarily for the benefit of
contract  holders are  shown as separate  captions in  the financial statements.
Assets held in the separate accounts are carried at market values.
 
                                       63
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Deposits to all separate accounts are reported as increases in separate  account
liabilities and are not reported as revenues. Mortality and expense risk charges
and  surrender fees incurred by the separate  accounts are included in income of
the Company.
 
The  Company  has  established  a  non-unitized  separate  account  for  amounts
allocated  to the fixed  portion of certain  combination fixed/variable deferred
annuity contracts. The  assets of  this account  are available  to fund  general
account liabilities and general account assets are available to fund liabilities
of this account.
 
Any  difference between the  assets and liabilities of  the separate accounts is
treated as payable  to or receivable  from the general  account of the  Company.
Amounts  payable to the general account of the Company were $148,675,000 in 1995
and $132,496,000 in 1994.
 
OTHER--
 
Income on investments is recognized on the accrual method.
 
The reserves for  life insurance  and annuity contracts,  developed by  accepted
actuarial  methods,  have  been  established  and  maintained  on  the  basis of
published mortality tables  using assumed interest  rates and valuation  methods
that  will  provide reserves  at least  as great  as those  required by  law and
contract provisions.
 
Net income reported in the Company's statutory Annual Statement differs from net
income reported in these financial  statements. Dividends from subsidiaries  are
included  in  income  and  undistributed  income  (losses)  of  subsidiaries are
included as  gains  (losses)  in  unassigned surplus  in  the  statutory  Annual
Statement. Both the dividends and the undistributed income (losses) are included
in net income in these financial statements.
 
Investments  in non-insurance  subsidiaries are  carried at  their stockholders'
equity value,  determined  in  accordance  with  generally  accepted  accounting
principles. Investments in insurance subsidiaries are carried at their statutory
surplus values.
 
Certain  reclassifications  have  been  made  in  the  1993  and  1994 financial
statements to conform to the classifications used in 1995.
 
2.  INVESTMENTS IN SUBSIDIARIES:
The Company  owns  all of  the  outstanding shares  of  Massachusetts  Financial
Services  Company (MFS), Sun Life Insurance and Annuity Company of New York (Sun
Life (N.Y.)), Sun  Investment Services Company  (Sunesco), Sun Benefit  Services
Company,  Inc. (Sunbesco), Massachusetts Casualty  Insurance Company (MCIC), New
London Trust, F.S.B. (NLT),  Sun Capital Advisers, Inc.  (Sun Capital), and  Sun
Life Finance Corporation (Sunfinco).
 
Effective  January  1,  1994, NLT  acquired  all  of the  outstanding  shares of
Danielson Federal Savings and Loan Association of Danielson, Connecticut.  These
two  banks have been merged into a newly formed federally chartered savings bank
now called New London Trust, F.S.B.
 
MFS, a registered investment adviser, serves as investment adviser to the mutual
funds in the MFS family of funds and certain mutual funds and separate  accounts
established  by  the  Company,  and  the  MFS  Asset  Management  Group provides
investment advice to substantial private clients.
 
Clarendon Insurance Agency, Inc.,  a wholly-owned subsidiary  of MFS, serves  as
the distributor of certain variable contracts issued by the Company and Sun Life
(N.Y.).  Sun Life (N.Y.) is engaged in the sale of individual fixed and variable
annuity contracts and group life and disability insurance contracts in the state
of
 
                                       64
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
2.  INVESTMENTS IN SUBSIDIARIES (CONTINUED):
New York. Sunesco is a registered investment adviser and broker-dealer. MCIC  is
a  life  insurance  company  which  issues  only  individual  disability  income
policies. Sun Capital, a registered  investment adviser, Sunfinco, and  Sunbesco
are currently inactive.
 
In  1994, the  Company reduced  its carrying value  of MCIC  by $18,397,000, the
unamortized amount of  goodwill. The  reduction was  accounted for  as a  direct
charge to surplus.
 
During  1995, 1994  and 1993, the  Company contributed capital  in the following
amounts to its subsidiaries:
 
<TABLE>
<CAPTION>
                                              1995         1994         1993
                                           ----------   ----------   ----------
<S>                                        <C>          <C>          <C>
MCIC                                       $6,000,000   $6,000,000   $6,000,000
Sun Capital                                         0            0      250,000
New London Trust                                    0            0    9,000,000
</TABLE>
 
Summarized combined financial  information of the  Company's subsidiaries as  of
December 31, 1995, 1994 and 1993 and for the years then ended, follows:
 
<TABLE>
<CAPTION>
                                                    DECEMBER 31,
                                           -------------------------------
                                             1995       1994       1993
                                           ---------  ---------  ---------
                                                     (IN 000'S)
 <S>                                       <C>        <C>        <C>
 Intangible assets                         $  12,174  $  13,485  $  14,891
 Other assets, net of liabilities            126,108    121,321    112,332
                                           ---------  ---------  ---------
 Total net assets                          $ 138,282  $ 134,806  $ 127,223
                                           ---------  ---------  ---------
                                           ---------  ---------  ---------
 Total income                              $ 570,794  $ 495,097  $ 424,324
 Operating expenses                         (504,070)  (425,891)  (355,679)
 Income tax expense                          (31,193)   (29,374)   (24,507)
                                           ---------  ---------  ---------
 Net income                                $  35,531  $  39,832  $  44,138
                                           ---------  ---------  ---------
                                           ---------  ---------  ---------
</TABLE>
 
3.  STOCK, SURPLUS NOTES, CONTRIBUTIONS AND NOTE RECEIVABLE:
The  Company has issued surplus  notes to its parent  of $335,000,000 during the
years 1982 through  1993 at interest  rates between 7.25%  and 10%. The  Company
subsequently  repaid all  principal and  interest associated  with these surplus
notes on January 16, 1996. On December 19, 1995 the Company issued surplus notes
totalling $315,000,000 to an  affiliate, Sun Canada  Financial Co., at  interest
rates  between 5.75% and 7.25%. Of these  notes, $157,500,000 will mature in the
year 2007, and  $157,500,000 will  mature in the  year 2015.  Interest on  these
notes  is payable  semi-annually. Principal  and interest  on surplus  notes are
payable only to  the extent  that the  Company meets  specified requirements  as
regards  free surplus exclusive of the principal amount and accrued interest, if
any, on these notes; and, in the case of principal repayments, with the  consent
of the Delaware Insurance Commissioner. Interest payments require the consent of
the  Delaware  Insurance  Commissioner  after  December  31,  1993.  Payment  of
principal and interest on the notes issued in 1995 also requires the consent  of
the Canadian Office of the Superintendent of Financial Institutions. The Company
expensed  $31,813,000,  $31,150,000 and  $26,075,000 in  respect of  interest on
surplus notes for the years 1995,  1994 and 1993, respectively. On December  19,
1995,  the parent borrowed $120,000,000 at 5.6  % through a short term note from
the Company maturing on  January 16, 1996. The  note, which is classified  under
short-term  bonds at  December 31,  1995, was  repaid in  full by  the parent at
maturity.
 
                                       65
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
4.  BONDS:
The amortized cost and estimated market value of investments in debt  securities
are as follows:
 
<TABLE>
<CAPTION>
                                                         DECEMBER 31, 1995
                                          ------------------------------------------------
                                                        GROSS        GROSS      ESTIMATED
                                          AMORTIZED   UNREALIZED   UNREALIZED     MARKET
                                             COST       GAINS        LOSSES       VALUE
                                          ----------  ----------   ----------   ----------
 
<S>                                       <C>         <C>          <C>          <C>
                                                             (IN 000'S)
Long-term bonds:
    United States government and
     government agencies and authorities  $  467,597   $ 22,783     $   443     $  489,937
    States, provinces and political
     subdivisions                              2,252         81           0          2,333
    Foreign governments                       38,303      4,551           6         42,848
    Public utilities                         513,704     45,466         203        558,967
    Transportation                           215,786     22,794       2,221        236,359
    Finance                                  225,074     13,846          84        238,836
    All other corporate bonds              1,045,745     67,371       7,415      1,105,701
                                          ----------  ----------   ----------   ----------
        Total long-term bonds              2,508,461    176,892      10,372      2,674,981
Short-term bonds:
    U.S. Treasury Bills, bankers
     acceptances and commercial paper        337,606          0           0        337,606
                                          ----------  ----------   ----------   ----------
                                          $2,846,067   $176,892     $10,372     $3,012,587
                                          ----------  ----------   ----------   ----------
                                          ----------  ----------   ----------   ----------
</TABLE>
 
<TABLE>
<CAPTION>
                                                         DECEMBER 31, 1994
                                          -----------------------------------------------
                                                        GROSS       GROSS      ESTIMATED
                                          AMORTIZED   UNREALIZED  UNREALIZED     MARKET
                                             COST       GAINS       LOSSES       VALUE
                                          ----------  ---------   ----------   ----------
 
<S>                                       <C>         <C>         <C>          <C>
                                                            (IN 000'S)
Long-term bonds:
    United States government and
     government agencies and authorities  $  444,100   $ 5,017     $11,010     $  438,107
    States, provinces and political
     subdivisions                                252         0          17            235
    Foreign governments                       20,965       147         187         20,925
    Public utilities                         458,839    11,414      11,619        458,633
    Transportation                           215,478     5,099       9,444        211,133
    Finance                                  193,355     3,734       4,010        193,080
    All other corporate bonds              1,055,455    15,785      31,171      1,040,069
                                          ----------  ---------   ----------   ----------
        Total long-term bonds              2,388,444    41,196      67,458      2,362,182
Short-term bonds:
    U.S. Treasury Bills, bankers
     acceptances and commercial paper         82,708         0           0         82,708
                                          ----------  ---------   ----------   ----------
                                          $2,471,152   $41,196     $67,458     $2,444,890
                                          ----------  ---------   ----------   ----------
                                          ----------  ---------   ----------   ----------
</TABLE>
 
                                       66
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
4.  BONDS (CONTINUED):
The  amortized cost and estimated market value of bonds at December 31, 1995 and
1994 are shown below  by contractual maturity.  Expected maturities will  differ
from  contractual maturities  because borrowers  may have  the right  to call or
prepay obligations with or without call or prepayment penalties.
 
<TABLE>
<CAPTION>
                                             DECEMBER 31, 1995
                                           ----------------------
                                                       ESTIMATED
                                           AMORTIZED      FAIR
                                              COST       VALUE
                                           ----------  ----------
 <S>                                       <C>         <C>
                                                 (IN 000'S)
 Maturities are:
     Due in one year or less               $  678,775  $  681,119
     Due after one year through five
      years                                   844,446     866,230
     Due after five years through ten
      years                                   256,552     269,549
     Due after ten years                      884,187   1,000,908
                                           ----------  ----------
                                            2,663,960   2,817,806
     Mortgage-backed securities               182,107     194,781
                                           ----------  ----------
                                           $2,846,067  $3,012,587
                                           ----------  ----------
                                           ----------  ----------
</TABLE>
 
<TABLE>
<CAPTION>
                                             DECEMBER 31, 1994
                                           ----------------------
                                                       ESTIMATED
                                           AMORTIZED      FAIR
                                              COST       VALUE
                                           ----------  ----------
 <S>                                       <C>         <C>
                                                 (IN 000'S)
 Maturities are:
     Due in one year or less               $  209,875  $  209,527
     Due after one year through five
      years                                   953,222     930,578
     Due after five years through ten
      years                                   319,858     311,360
     Due after ten years                      877,062     885,462
                                           ----------  ----------
                                            2,360,017   2,336,927
     Mortgage-backed securities               111,135     107,963
                                           ----------  ----------
                                           $2,471,152  $2,444,890
                                           ----------  ----------
                                           ----------  ----------
</TABLE>
 
Proceeds from sales  of investments in  debt securities during  1995, 1994,  and
1993  were $1,510,553,000,  $1,390,974,000, and  $911,644,000, gross  gains were
$24,757,000, $15,025,000,  and $43,674,000  and  gross losses  were  $5,742,000,
$30,041,000 and $687,000, respectively.
 
Long-term  bonds at  December 31,  1995 and  1994 included  $20,000,000 of bonds
issued to the  Company by a  subsidiary company, MFS,  during 1987. These  bonds
will mature in 2000.
 
Bonds  included above  with an  amortized cost  of approximately  $2,059,000 and
$1,561,000 at December  31, 1995 and  1994, respectively, were  on deposit  with
governmental authorities as required by law.
 
At  year end 1995, the Company  had outstanding mortgage-backed securities (MBS)
forward commitments  amounting to  a  par value  of  $137,675,000 to  be  funded
through the sale of certain short-term securities shown above.
 
                                       67
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
5.  SECURITIES LENDING:
The  Company has  a securities  lending program  operated on  its behalf  by the
Company's primary  custodian,  Chemical Bank  of  New York.  The  custodian  has
indemnified  the Company against losses arising from this program. The total par
value of securities out on loan was $250,729,000 at December 31, 1995.
 
6.  MORTGAGE LOANS:
The Company invests  in commercial  first mortgage loans  throughout the  United
States.  The  Company  monitors  the  condition of  the  mortgage  loans  in its
portfolio. In those  cases where mortgages  have been restructured,  appropriate
provisions  have been made. In those cases where, in management's judgement, the
mortgage loans' values are impaired, appropriate losses are recorded.
 
The following table shows the geographic distribution of the mortgage portfolio.
 
<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                           -----------------------
                                              1995        1994
                                           ----------  -----------
                                                 (IN 000'S)
 <S>                                       <C>         <C>
 California                                $  153,811   $  131,953
 Massachusetts                                 83,999      101,932
 Pennsylvania                                 141,468      136,778
 Ohio                                          83,915       79,478
 Washington                                    91,900       90,422
 Michigan                                      69,125       75,592
 New York                                      81,480       93,178
 All other                                    361,213      411,648
                                           ----------  -----------
                                           $1,066,911   $1,120,981
                                           ----------  -----------
                                           ----------  -----------
</TABLE>
 
The Company has restructured mortgage loans totalling $49,846,000, against which
there are provisions of $8,799,000 at December 31, 1995.
 
The Company  has made  commitments of  mortgage loans  on real  estate into  the
future. The outstanding commitments for these mortgages amount to $13,100,000 at
December 31, 1995.
 
                                       68
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
7.  INVESTMENTS--GAINS AND LOSSES:
 
<TABLE>
<CAPTION>
                                            YEARS ENDED DECEMBER 31,
                                           --------------------------
                                            1995     1994      1993
                                           -------  -------  --------
                                                   (IN 000'S)
 <S>                                       <C>      <C>      <C>
 Net realized gains (losses) (pre-tax):
 Bonds                                     $(2,300) $     0  $      0
 Mortgage loans                                418   (5,689)   (9,975)
 Stocks                                          0        0       445
 Real estate                                   391     (334)   (2,873)
 Other assets                                   57     (143)        0
                                           -------  -------  --------
                                           $(1,434) $(6,166) $(12,403)
                                           -------  -------  --------
                                           -------  -------  --------
 Changes in unrealized gains (losses):
 Bonds                                     $     0  $     0  $     84
 Mortgage loans                             (1,574)       0         0
 Real estate                                 3,583     (671)   (4,113)
 Stocks                                          0        0      (411)
                                           -------  -------  --------
                                           $ 2,009  $  (671) $ (4,440)
                                           -------  -------  --------
                                           -------  -------  --------
</TABLE>
 
Realized capital gains and losses on bonds and mortgages which relate to changes
in  levels  of  interest  rate  risk are  charged  or  credited  to  an interest
maintenance reserve and  amortized into  income over  the remaining  contractual
life  of the security  sold. The realized  capital gains and  losses credited or
charged to the  interest maintenance  reserve were  a credit  of $12,714,000  in
1995,  a charge of $14,070,000 in 1994 and  a credit of $40,993,000 in 1993. All
gains and losses are net of applicable taxes.
 
8.  INVESTMENT INCOME:
Net investment income consisted of:
 
<TABLE>
<CAPTION>
                                             YEARS ENDED DECEMBER 31,
                                           ----------------------------
                                             1995      1994      1993
                                           --------  --------  --------
                                                    (IN 000'S)
 <S>                                       <C>       <C>       <C>
 Interest income from bonds                $205,445  $200,339  $204,405
 Interest income from mortgage loans         99,753   106,347    99,790
 Interest income from policy loans            2,777     2,670     2,503
 Real estate investment income               10,693     8,649     8,593
 Interest income on funds withheld           57,373    30,741    19,420
 Other                                        2,627     1,418       645
                                           --------  --------  --------
     Gross investment income                378,668   350,164   335,356
 Investment expenses                         12,070    12,417    12,679
 Interest expense on funds withheld               0         0    69,181
                                           --------  --------  --------
                                           $366,598  $337,747  $253,496
                                           --------  --------  --------
                                           --------  --------  --------
</TABLE>
 
                                       69
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
9.  DERIVATIVES:
The Company uses derivative instruments  for interest risk management  purposes,
including  hedges  against  specific  interest rate  risk  and  to  minimize the
Company's exposure  to fluctuations  in  interest rates.  The Company's  use  of
derivatives  has  included  U.S. Treasury  futures,  conventional  interest rate
swaps, and forward spread lock interest rate swaps.
 
In the case of interest rate futures, gains or losses on contracts that  qualify
as  hedges are  deferred until  the earliest  of the  completion of  the hedging
transaction, determination that the  transaction will no  longer take place,  or
determination  that the  hedge is  no longer  effective. Upon  completion of the
hedge, gains or losses are deferred in IMR and amortized over the remaining life
of the hedged  assets. At  December 31, 1995,  there were  no futures  contracts
outstanding.
 
In  the case of interest  rate and foreign currency  swap agreements and forward
spread lock interest rate swap agreements,  gains or losses on terminated  swaps
are  deferred in IMR and amortized over the shorter of the remaining life of the
hedged asset or the remaining term of the swap contract. The net differential to
be paid or received on interest rate swaps is recorded monthly as interest rates
change.
 
<TABLE>
<CAPTION>
                                                         SWAPS OUTSTANDING
                                                        AT DECEMBER 31, 1995
                                                  --------------------------------
                                                      NOTIONAL        MARKET VALUE
                                                  PRINCIPAL AMOUNTS   OF POSITIONS
                                                  -----------------   ------------
                                                             (IN 000'S)
 <S>                                              <C>                 <C>
 Conventional interest rate swaps                      $367,000          $3,275
 Foreign currency swap                                    2,745             290
 Forward spread lock swaps                             $ 50,000          $  112
</TABLE>
 
The market values of interest rate swaps and forward spread lock agreements  are
primarily  obtained from dealer quotes. The market value is the estimated amount
that the  Company would  receive or  pay  on termination  or sale,  taking  into
account  current interest rates and the  current creditworthiness of the counter
parties. The  Company  is exposed  to  potential credit  loss  in the  event  of
non-performance  by  counterparties.  The  counterparties  are  major  financial
institutions and management believes that  the risk of incurring losses  related
to credit risk is remote.
 
10. LEVERAGED LEASES:
The  Company is a lessor in a  leveraged lease agreement entered into on October
21, 1994 under which equipment having an estimated economic life of 25-40  years
was leased for a term of 9.75 years. The Company's equity investment represented
22.9%  of the purchase price of the equipment. The balance of the purchase price
was furnished by third party long-term debt financing, secured by the  equipment
and non-recourse to the Company. At the end of the lease term, the Master Lessee
may exercise a fixed price purchase option to purchase the equipment.
 
                                       70
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
10. LEVERAGED LEASES (CONTINUED):
The  Company's net investment  in leveraged leases is  composed of the following
elements:
 
<TABLE>
<CAPTION>
                                                           YEARS ENDED DECEMBER
                                                                   31,
                                                           --------------------
                                                             1995       1994
                                                           ---------  ---------
                                                                (IN 000'S)
 <S>                                                       <C>        <C>
 Lease contracts receivable                                $ 111,611  $ 121,716
 Less non-recourse debt                                     (111,594)  (121,699)
                                                           ---------  ---------
                                                                  17         17
 Estimated residual value of leased assets                    41,150     41,150
 Less unearned and deferred income                           (13,132)   (15,292)
                                                           ---------  ---------
 Investment in leveraged leases                               28,035     25,875
 Less fees                                                      (213)      (237)
                                                           ---------  ---------
 Net investment in leveraged leases                        $  27,822  $  25,638
                                                           ---------  ---------
                                                           ---------  ---------
</TABLE>
 
The net investment is  classified as other invested  assets in the  accompanying
balance sheets.
 
11. WITHDRAWAL CHARACTERISTICS OF ANNUITY ACTUARIAL RESERVES AND DEPOSIT
LIABILITIES:
Withdrawal  characteristics  of  general account  and  separate  account annuity
reserves and deposits:
 
<TABLE>
<CAPTION>
                                                             DECEMBER 31, 1995
                                                           ----------------------
                                                             AMOUNT    % OF TOTAL
                                                           ----------  ----------
                                                                 (IN 000'S)
 <S>                                                       <C>         <C>
 Subject to discretionary withdrawal--with adjustment
     --with market value adjustment                        $3,796,596      36.36%
     --at book value less surrender charges (surrender
      charge >5%)                                           4,066,126      38.94
     --at book value (minimal or no charge or adjustment)   1,278,215      12.24
 Not subject to discretionary withdrawal provision          1,301,259      12.46
                                                           ----------  ----------
 Total annuity actuarial reserves and deposit liabilities  $10,442,196    100.00%
                                                           ----------  ----------
                                                           ----------  ----------
</TABLE>
 
<TABLE>
<CAPTION>
                                                             DECEMBER 31, 1994
                                                           ----------------------
                                                             AMOUNT    % OF TOTAL
                                                           ----------  ----------
                                                                 (IN 000'S)
 <S>                                                       <C>         <C>
 Subject to discretionary withdrawal--with adjustment
     -- with market value adjustment                       $3,083,623      35.98%
     -- at book value less surrender charges (surrender
      charge > 5%)                                          2,915,460      34.02
     -- at book value (minimal or no charge or
      adjustment)                                           1,252,843      14.62
 Not subject to discretionary withdrawal provision          1,318,092      15.38
                                                           ----------  ----------
 Total annuity actuarial reserves and deposit liabilities  $8,570,018     100.00%
                                                           ----------  ----------
                                                           ----------  ----------
</TABLE>
 
12. RETIREMENT PLANS:
The Company participates with its  parent company in a non-contributory  defined
benefit  pension plan covering essentially all employees. The benefits are based
on years of service and compensation.
 
                                       71
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
12. RETIREMENT PLANS (CONTINUED):
The funding policy  for the pension  plan is  to contribute an  amount which  at
least satisfies the minimum amount required by ERISA. The Company is charged for
its  share of the pension cost based upon its covered participants. Pension plan
assets consist principally of  a variable accumulation fund  contract held in  a
separate account of the parent company.
 
On  January  1,  1994, the  Company  adopted Statement  of  Financial Accounting
Standards No.  87, which  is in  accordance with  generally accepted  accounting
principles.
 
The  following table sets forth the funded  status for the pension plan (for the
parent, Sun Life (U.S.), Sun Life (N.Y.)  and Sunesco) at December 31, 1995  and
1994:
 
<TABLE>
<CAPTION>
                                                           TOTAL PENSION PLAN
                                                           ------------------
                                                             1995      1994
                                                           --------  --------
 
                                                               (IN 000'S)
 <S>                                                       <C>       <C>
 Actuarial present value of benefit obligations:
 Vested benefit obligation                                 $(40,949) $(38,157)
 Accumulated benefit obligation                             (42,452)  (39,686)
                                                           --------  --------
                                                           --------  --------
 Projected benefit obligation for service rendered to
  date                                                     $(60,885) $(53,494)
 Plan assets at fair value                                  117,178   101,833
                                                           --------  --------
 Difference between plan assets and projected benefit
  obligation                                                 56,293    48,339
 Unrecognized net gain from past experience different
  from that assumed and effects of changes in assumptions    (9,016)   (1,238)
 Unrecognized net asset at January 1, 1994, being
  recognized over 17 years                                  (30,842)  (32,898)
                                                           --------  --------
 Prepaid pension cost included in other assets             $ 16,435  $ 14,203
                                                           --------  --------
                                                           --------  --------
</TABLE>
 
The components of the 1995 and 1994 pension cost for the pension plan were:
 
<TABLE>
<CAPTION>
                                                             TOTAL PENSION
                                                                 PLAN
                                                           -----------------
                                                             1995     1994
                                                           --------  -------
 
                                                              (IN 000'S)
 <S>                                                       <C>       <C>
 Service cost                                              $  3,389  $ 2,847
 Interest cost                                                4,050    3,770
 Actual return on plan assets                               (16,388)  (8,294)
 Net amortization and deferral                                6,715     (818)
                                                           --------  -------
 Net pension income                                        $ (2,234) $(2,495)
                                                           --------  -------
                                                           --------  -------
</TABLE>
 
The Company's share of the group's accrued pension cost at December 31, 1995 and
1994  was  $420,000  and  $417,000, respectively.  The  Company's  share  of net
periodic pension cost was $3,000 and $417,000, respectively.
 
The discount rate  and rate of  increase in future  compensation levels used  in
determining the actuarial present value of the projected benefit obligation were
7.5% and 4.5%, respectively. The expected long-term rate of return on assets was
7.5%.
 
                                       72
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
12. RETIREMENT PLANS (CONTINUED):
The Company also participates with its parent and certain affiliates in a 401(k)
savings  plan for  which substantially all  employees are  eligible. The Company
matches, up to specified amounts, employees' contributions to the plan. Employer
contributions were $185,000, $152,000 and $124,000 for the years ended  December
31, 1995, 1994, and 1993, respectively.
 
13. OTHER POST-RETIREMENT BENEFIT PLANS:
In addition to pension benefits the Company provides certain health, dental, and
life  insurance benefits ("post-retirement benefits")  for retired employees and
dependents. Substantially all employees may  become eligible for these  benefits
if  they reach normal  retirement age while  working for the  Company, or retire
early upon satisfying an  alternate age plus  service condition. Life  insurance
benefits are generally set at a fixed amount.
 
Effective January 1, 1993, the Company adopted Statement of Financial Accounting
Standards  (SFAS) No.  106, "Employers  Accounting for  Post-retirement Benefits
other than Pensions". SFAS No. 106 requires the Company to accrue the  estimated
cost  of  retiree  benefit  payments  during  the  years  the  employee provides
services. SFAS  No. 106  allows  recognition of  the  cumulative effect  of  the
liability  in the year of adoption or  the amortization of the obligation over a
period of up to 20 years. The  Company has elected to recognize this  obligation
of  approximately $400,000 over a period of  ten years. The Company's cash flows
are  not  affected  by  implementation  of  this  standard,  but  implementation
decreased  net income  by $142,000, $114,000,  and $120,000 for  the years ended
December 31, 1995,  1994 and 1993,  respectively. The Company's  post-retirement
health care plans currently are not funded.
 
The following table sets forth the plan's funded status, reconciled with amounts
recognized in the Company's balance sheet:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                               ----------------
                                                                1995     1994
                                                               -------  -------
                                                                  (IN 000'S)
 <S>                                                           <C>      <C>
 Accumulated post-retirement benefit obligation:
   --Retirees                                                    $   0    $   0
   --Fully eligible active plan participants                      (601)    (444)
   --Other active plan participants                                  0        0
                                                               -------  -------
   --Accumulated post-retirement benefit obligation in excess
    of plan assets                                                (601)    (444)
   --Unrecognized gains from past experience                       (55)    (110)
   --Unrecognized transition obligation                            280      320
                                                               -------  -------
   --Accrued post-retirement benefit cost                        $(376)   $(234)
                                                               -------  -------
                                                               -------  -------
 Net periodic post-retirement benefit cost components:
   --Service cost--benefits earned                               $  65    $  49
   --Interest cost on accumulated post-retirement benefit
    obligation                                                      42       33
   --Amortization of transition obligation                          40       40
   --Net amortization and deferral                                  (5)      (8)
                                                               -------  -------
   --Net periodic post-retirement benefit cost                   $ 142    $ 114
                                                               -------  -------
                                                               -------  -------
</TABLE>
 
The  discount rate used  in determining the  accumulated post-retirement benefit
obligation was 7.5% in  1995 and 8%  in 1994, and the  assumed health care  cost
trend rate was 12.0% graded to 6% over 10 years after which it remains constant.
 
                                       73
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
13. OTHER POST-RETIREMENT BENEFIT PLANS (CONTINUED):
The  health care  cost trend  rate assumption  has a  significant effect  on the
amounts reported. To illustrate, increasing  the assumed health care cost  trend
rates  by one percentage  point in each year  would increase the post-retirement
benefit obligation as of December 31, 1995 by $149,000 and the estimated service
and interest cost components  of the net  periodic post-retirement benefit  cost
for 1995 by $29,000.
 
14. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The  following table presents the carrying  amounts and estimated fair values of
the Company's financial instruments at December 31, 1995 and 1994:
<TABLE>
<CAPTION>
                                                 DECEMBER 31, 1995
                                           ------------------------------
                                                              ESTIMATED
                                           CARRYING AMOUNT    FAIR VALUE
                                           ---------------   ------------
                                                     (IN 000'S)
 <S>                                       <C>               <C>
 ASSETS
 Bonds                                         2,846,067       3,012,586
 Mortgages                                     1,066,911       1,111,895
 Real estate                                      95,575          98,437
 LIABILITIES
 Insurance reserves                              124,066         124,066
 Individual annuities                            434,261         431,263
 Pension products                              2,227,882       2,265,386
 Derivatives                                          --           3,387
 
<CAPTION>
 
                                                 DECEMBER 31, 1994
                                           ------------------------------
                                                              ESTIMATED
                                           CARRYING AMOUNT    FAIR VALUE
                                           ---------------   ------------
                                                     (IN 000'S)
 <S>                                       <C>               <C>
 ASSETS
 Bonds                                        $2,471,152      $2,444,890
 Mortgages                                     1,120,981       1,107,012
 Real estate                                      89,487          91,072
 LIABILITIES
 Insurance reserves                              129,302         129,302
 Individual annuities                            475,557         476,570
 Pension products                              2,772,618       2,668,382
 Derivatives                                          --               1
</TABLE>
 
The major  methods  and  assumptions  used in  estimating  the  fair  values  of
financial instruments are as follows:
 
The  fair values of short-term bonds are estimated to be the amortized cost. The
fair values of long-term bonds which  are publicly traded are based upon  market
prices  or dealer quotes. For privately  placed bonds, fair values are estimated
using prices for publicly traded bonds  of similar credit risk and maturity  and
repayment characteristics.
 
The  fair values of the Company's general account reserves and liabilities under
investment-type contracts (insurance, annuity and pension contracts that do  not
involve  mortality or morbidity risks) are  estimated using discounted cash flow
analyses or surrender values. Those contracts that are deemed to have short term
guarantees have a carrying amount equal to the estimated market value.
 
                                       74
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
14. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED):
The fair values  of mortgages  are estimated  by discounting  future cash  flows
using  current rates  at which  similar loans  would be  made to  borrowers with
similar credit ratings and for the same remaining maturities.
 
15. STATUTORY INVESTMENT VALUATION RESERVES:
The asset valuation reserve (AVR) provides a reserve for losses from investments
in bonds, stocks,  mortgage loans,  real-estate and other  invested assets  with
related increases or decreases being recorded directly to surplus.
 
Realized capital gains and losses on bonds and mortgages which relate to changes
in  levels  of  interest  rate  risk are  charged  or  credited  to  an interest
maintenance  reserve  (IMR)  and  amortized  into  income  over  the   remaining
contractual life of the security sold.
 
The tables shown below present changes in the major elements of the AVR and IMR.
 
<TABLE>
<CAPTION>
                                                 1995             1994
                                           ----------------  ---------------
                                             AVR      IMR      AVR     IMR
                                           -------  -------  -------  ------
                                              (IN 000'S)       (IN 000'S)
 <S>                                       <C>      <C>      <C>      <C>
 Balance, beginning of year                $28,409  $18,140  $20,033  $31,414
 Realized capital gains (losses), net of
  tax                                       (1,524)   7,977   (1,320) (9,958)
 Amortization of investment gains                0     (897)       0  (3,316)
 Unrealized investment gains (losses)        3,650        0   (3,537)      0
 Required by formula                        11,564        0   13,233       0
                                           -------  -------  -------  ------
 Balance, end of year                      $42,099  $25,218  $28,409  $18,140
                                           -------  -------  -------  ------
                                           -------  -------  -------  ------
</TABLE>
 
16. FEDERAL INCOME TAXES:
The  Company and its subsidiaries file a consolidated federal income tax return.
Federal income  taxes  are calculated  for  the consolidated  group  based  upon
amounts  determined to be payable  as a result of  operations within the current
year. No provision is recognized for timing differences which may exist  between
financial   statement  and  taxable  income.  Such  timing  differences  include
reserves, depreciation and accrual  of market discount  on bonds. Cash  payments
for  federal  income  taxes  were  approximately  $12,429,000,  $43,200,000  and
$25,000,000 for the years ended December 31, 1995, 1994 and 1993, respectively.
 
17. RISK-BASED CAPITAL:
Effective December 31, 1993 the NAIC adopted risk-based capital requirements for
life insurance companies. The risk-based  capital requirements provide a  method
for  measuring the  minimum acceptable  amount of  adjusted capital  that a life
insurer should have, as determined under statutory accounting practices,  taking
into  account  the risk  characteristics of  its  investments and  products. The
Company has met the minimum risk-based capital requirements for 1995 and 1994.
 
18. NEW ACCOUNTING PRONOUNCEMENT:
In April,  1993, the  Financial Accounting  Standards Board  (FASB) issued  FASB
Interpretation   No.  40,   "Applicability  of   Generally  Accepted  Accounting
Principles  to  Mutual  Life  Insurance  and  Other  Enterprises."  Under   this
interpretation, annual financial statements of mutual life insurance enterprises
for  fiscal  years beginning  after  December 15,  1992,  shall provide  a brief
description that  financial  statements  prepared  on  the  basis  of  statutory
accounting  practices will no longer be described as prepared in conformity with
generally  accepted  accounting  principles.  In  January  1995,  Statement   of
Financial Accounting Standards
 
                                       75
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
 
18. NEW ACCOUNTING PRONOUNCEMENT (CONTINUED):
No.  120  (SFAS No.  120)  "Accounting and  Reporting  by Mutual  Life Insurance
Enterprises for Certain Long Duration Participating Contracts" was issued.  SFAS
No.  120 delays the effective  date of interpretation No.  40 until fiscal years
beginning after December 15, 1995.
 
Beginning in  1996,  the Company  will  file financial  statements  prepared  in
accordance  with all  applicable pronouncements  that define  generally accepted
accounting principles for all enterprises.
 
INDEPENDENT AUDITORS' REPORT
 
TO THE BOARD OF DIRECTORS AND STOCKHOLDER
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
WELLESLEY HILLS, MASSACHUSETTS
 
We have audited the accompanying balance sheets of Sun Life Assurance Company of
Canada (U.S.)  (a  wholly-owned subsidiary  of  Sun Life  Assurance  Company  of
Canada)  as  of  December 31,  1995  and  1994, and  the  related  statements of
operations, capital stock  and surplus,  and cash flows  for each  of the  three
years  in the period ended December 31, 1995. These financial statements are the
responsibility of the Company's 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 Company as  of December  31, 1995  and
1994, and the results of its operations and its cash flows for each of the three
years  in  the period  ended  December 31,  1995,  in conformity  with generally
accepted accounting principles.
 
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 7, 1996
 
                                       76
<PAGE>
   
                      INTERIM PERIOD FINANCIAL STATEMENTS
    
 
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
 
   
BALANCE SHEET (UNAUDITED)
JUNE 30, 1996
    
 
   
<TABLE>
<CAPTION>
(IN 000'S)
<S>                                                                                                 <C>
ASSETS
    Bonds                                                                                           $    2,319,417
    Preferred stock                                                                                              0
    Mortgage loans                                                                                       1,024,401
    Investments in subsidiaries                                                                            143,477
    Real estate                                                                                             94,711
    Other invested assets                                                                                   46,726
    Policy loans                                                                                            39,084
    Cash                                                                                                     3,261
    Investment income due and accrued                                                                       63,941
    Funds withheld on reinsurance assumed                                                                  796,660
    Due from separate accounts                                                                             188,247
    Other assets                                                                                            36,152
                                                                                                    --------------
    General account assets                                                                               4,756,077
                                                                                                    --------------
    Unitized separate account assets                                                                     5,899,982
    Non-unitized separate account assets                                                                 1,913,542
                                                                                                    --------------
                                                                                                    $   12,569,601
                                                                                                    --------------
                                                                                                    --------------
LIABILITIES
    Policy reserves                                                                                 $    2,027,394
    Annuity and other deposits                                                                           2,074,936
    Policy benefits in process of payment                                                                    4,884
    Accrued expenses and taxes                                                                              42,130
    Other liabilities                                                                                       38,909
    Due to (from) parent and affiliates - net                                                               (9,392)
    Interest maintenance reserve                                                                            29,651
    Asset valuation reserve                                                                                 45,607
                                                                                                    --------------
    General account liabilities                                                                          4,254,119
                                                                                                    --------------
    Unitized separate account liabilities                                                                5,899,958
    Non-unitized separate account liabilities                                                            1,913,542
                                                                                                    --------------
                                                                                                        12,067,619
                                                                                                    --------------
CAPITAL STOCK AND SURPLUS
    Capital Stock--Par value $1,000:
       Authorized 10,000 shares,
        issued and outstanding 5,900 shares                                                                  5,900
    Surplus                                                                                                496,082
                                                                                                    --------------
    Total capital stock and surplus                                                                        501,982
                                                                                                    --------------
                                                                                                    $   12,569,601
                                                                                                    --------------
                                                                                                    --------------
</TABLE>
    
 
   
                  SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
    
 
                                       77
<PAGE>
   
                INTERIM PERIOD FINANCIAL STATEMENTS (CONTINUED)
    
 
   
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
STATEMENTS OF OPERATIONS (UNAUDITED)
    
 
   
<TABLE>
<CAPTION>
                                           SIX MONTHS ENDED JUNE
                                                    30,
                                           ----------------------
                                              1996        1995
                                           ----------  ----------
 <S>                                       <C>         <C>
                                                 (IN 000'S)
 INCOME
     Premiums and annuity considerations   $  140,199  $  129,067
     Annuity and other deposit funds          230,183     518,826
     Transfers from (to) separate
      accounts - net                          (57,742)     28,722
     Net investment income                    175,608     172,651
     Amortization of interest maintenance
      reserve                                     381         564
     Realized losses on investments            (1,441)     (2,060)
     Mortality and expense risk charges        38,296      28,065
     Other income - net                        40,111          (3)
                                           ----------  ----------
                                              565,595     875,832
                                           ----------  ----------
 BENEFITS AND EXPENSES
     Increase (decrease) in liability for
      annuity and other deposit funds        (215,720)     11,135
     Increase in policy reserves               90,092      85,577
     Death, surrender benefits, and
      annuity payments                         92,674      88,020
     Annuity and other deposit fund
      withdrawals                             546,281     252,324
     Transfers to (from) non-unitized
      separate account                        (78,705)    333,549
                                           ----------  ----------
                                              434,622     770,605
     Operating expenses                        22,046      18,739
     Commissions                               62,995      57,936
     Dividends                                 13,292      12,711
     Taxes, licenses and fees                   1,473       4,962
                                           ----------  ----------
                                              534,428     864,953
                                           ----------  ----------
     Net income from operations before
      surplus note interest and equity in
      income of subsidiaries                   31,167      10,879
     Surplus note interest                    (12,204)    (15,575)
                                           ----------  ----------
     Net income (loss) from operations
      before equity in income of
      subsidiaries and federal income tax      18,963      (4,696)
     Equity in income of subsidiaries          37,594      20,666
     Federal income tax expense                (7,117)     (7,324)
                                           ----------  ----------
 NET INCOME                                $   49,440  $    8,646
                                           ----------  ----------
                                           ----------  ----------
</TABLE>
    
 
                  SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
 
                                       78
<PAGE>
   
                INTERIM PERIOD FINANCIAL STATEMENTS (CONTINUED)
    
 
   
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
STATEMENTS OF CAPITAL STOCK AND SURPLUS (UNAUDITED)
    
 
   
<TABLE>
<CAPTION>
                                                                               SIX MONTHS ENDED JUNE
                                                                                        30,
                                                                              -----------------------
                                                                                 1996         1995
                                                                              -----------  ----------
                                                                                    (IN 000'S)
 
<S>                                                                           <C>          <C>
CAPITAL STOCK                                                                 $     5,900  $    5,900
PAID-IN SURPLUS                                                                   199,355     199,355
SURPLUS NOTES
    Balance, beginning of period                                                  650,000     335,000
    Paid during period                                                           (335,000)          0
                                                                              -----------  ----------
    Balance, end of period                                                        315,000     335,000
                                                                              -----------  ----------
UNASSIGNED SURPLUS
    Balance, beginning of period                                                  (62,801)    (84,766)
    Net income                                                                     49,440       8,646
    Change in non-admitted assets                                                    (958)     (1,729)
    Unrealized gains (losses) on real estate                                         (446)        737
    Change in and transfers of separate account surplus                                 0          (1)
    Change in asset valuation reserve                                              (3,508)     (5,604)
                                                                              -----------  ----------
    Balance, end of period                                                        (18,273)    (82,717)
                                                                              -----------  ----------
TOTAL SURPLUS                                                                     496,082     451,638
                                                                              -----------  ----------
TOTAL CAPITAL STOCK AND SURPLUS                                               $   501,982  $  457,538
                                                                              -----------  ----------
                                                                              -----------  ----------
</TABLE>
    
 
                  SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
 
                                       79
<PAGE>
   
                INTERIM PERIOD FINANCIAL STATEMENTS (CONTINUED)
    
 
   
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
STATEMENTS OF CASH FLOWS (UNAUDITED)
    
 
   
<TABLE>
<CAPTION>
                                             SIX MONTHS ENDED JUNE
                                                      30,
                                            ------------------------
                                               1996         1995
                                            -----------  -----------
 <S>                                        <C>          <C>
                                                   (IN 000'S)
 Cash flows from operating activities:
     Net income from operations before
      surplus note interest and equity in
      income of subsidiaries                $    31,167  $    10,879
     Adjustments to reconcile net income
      from operations to net cash provided
      by (used in) operating activities:
     Increase (decrease) in liability for
      annuity and other deposit funds          (215,720)      11,135
     Increase in policy reserves                 90,093       85,577
     Increase in investment income due and
      accrued                                    (1,222)     (25,377)
     Net accrual and amortization of
      discount and premium on investments         1,887        1,251
     Realized losses on investments               1,441        2,060
     Change in non-admitted assets                 (958)      (1,729)
     Change in funds withheld on
      reinsurance                               (55,569)     (87,977)
     Other                                      (37,840)      32,454
                                            -----------  -----------
 Net cash provided by (used in) operating
   activities                                  (186,721)      28,273
                                            -----------  -----------
 Cash flows from investing activities:
     Proceeds from sale and maturity of
      investments                               968,086      944,320
     Purchase of investments                   (672,189)    (878,775)
     Net change in short-term investments       244,181      (89,228)
     Investment in subsidiaries                  (1,000)           0
     Dividends from subsidiaries                 18,388        6,777
                                            -----------  -----------
 Net cash provided by (used in) investing
   activities                                   557,466      (16,906)
                                            -----------  -----------
 Cash flows from financing activities:
     Repayment of surplus notes                (335,000)           0
     Payment of interest on surplus notes       (12,204)     (15,575)
     Repayment of seed capital                        0        4,036
                                            -----------  -----------
 Net cash used in financing activities         (347,204)     (11,539)
                                            -----------  -----------
 Increase (decrease) in cash during the
   period                                        23,541         (172)
 Cash balance, beginning of period              (20,280)     (11,460)
                                            -----------  -----------
 Cash balance, end of period                $     3,261  $   (11,632)
                                            -----------  -----------
                                            -----------  -----------
</TABLE>
    
 
                  SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
 
                                       80
<PAGE>
   
                INTERIM PERIOD FINANCIAL STATEMENTS (CONTINUED)
    
 
   
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Wholly-owned subsidiary of Sun Life Assurance Company of Canada)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
    
 
   
1.  GENERAL
    
In  management's opinion  all adjustments,  which include  only normal recurring
adjustments, necessary for a fair presentation of the financial statements  have
been made.
 
   
2.  MANAGEMENT AND SERVICE CONTRACTS
    
   
Expenses  under the agreement with  the parent which provides  for the parent to
provide certain services amounted to approximately $10,268,000 for the six month
period in 1996 and $10,035,000 for the same period in 1995.
    
 
   
3.  INVESTMENTS IN SUBSIDIARIES
    
   
The following  is combined  unaudited summarized  financial information  of  the
subsidiaries as of June 30, 1996 and 1995 and for the six months then ended:
    
 
<TABLE>
<CAPTION>
                                                                     1996         1995
                                                                  -----------  -----------
                                                                          (000'S)
                                                                  ------------------------
<S>                                                               <C>          <C>
Intangible assets                                                 $    11,171  $    13,178
Other assets, net of liabilities                                      132,245      129,001
                                                                  -----------  -----------
Total net assets                                                  $   143,416  $   142,179
                                                                  -----------  -----------
                                                                  -----------  -----------
Total income                                                      $   329,090  $   285,222
Total expenses                                                       (285,661)    (261,384)
Income tax expense                                                    (19,454)      (9,688)
                                                                  -----------  -----------
Net income                                                        $    23,975  $    14,150
                                                                  -----------  -----------
                                                                  -----------  -----------
</TABLE>
 
   
In determining the equity in income of subsidiaries for the periods, the Company
has  excluded expenses  of approximately $15,010,000  in 1996  and $6,516,000 in
1995.
    
 
   
The change  in equity  in income  of  subsidiaries reported  in the  summary  of
operations,  differs from the  net income reported above,  due to federal income
taxes and a minority shareholder interest not held by the Company.
    
 
   
4.  SURPLUS NOTES
    
   
The Company repaid $335,000,000  of surplus notes to  its parent on January  16,
1996 after having received permission from the Delaware Department of Insurance.
    
 
   
5.  INVESTMENT INCOME
    
Net investment income consisted of:
 
   
<TABLE>
<CAPTION>
                                                                            SIX MONTHS ENDED JUNE
                                                                                     30,
                                                                            ----------------------
                                                                               1996        1995
                                                                            ----------  ----------
                                                                                  (IN 000'S)
                                                                            ----------------------
<S>                                                                         <C>         <C>
Interest income from bonds                                                  $   93,243  $   98,297
Interest income from mortgage loans                                             48,139      50,661
Interest income from policy loans                                                1,332       1,355
Real estate investment income                                                    4,992       5,398
Interest income on funds withheld                                               31,703      20,820
Other                                                                            1,177       1,684
                                                                            ----------  ----------
  Gross investment income                                                      180,586     178,215
Investment expenses                                                              4,978       5,564
                                                                            ----------  ----------
  Net investment income                                                     $  175,608  $  172,651
                                                                            ----------  ----------
                                                                            ----------  ----------
</TABLE>
    
 
                                       81
<PAGE>
   
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
    
 
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
 
   
    Net income from operations before surplus note interest, equity in income of
subsidiaries  and federal income  tax increased by  $20,288,000 from $10,879,000
for the six months  ended June 30,  1995 to $31,167,000 for  the same period  in
1996.  Reinsurance agreements with  the parent had the  effect of decreasing net
income by $8,694,000 in 1995 as compared to increasing net income by  $9,850,000
in  1996.  Prior  to  reinsurance,  net  income  from  operations  increased  by
$5,115,000 from $3,998,000 in  1995 to $9,113,000 for  the same period in  1996.
Mortality  and  expense risk  charges  increased by  $10,231,000  reflecting the
increase in sales related to  unitized separate accounts. Commissions  increased
by  $6,595,000 reflecting an increase  in sales of annuity  deposits held in the
separate  accounts.  The  remaining  charge  to  income  net  of   approximately
$1,892,000 reflects the change in earnings with respect to the individual market
value adjusted annuities for the six months ended June 30, 1996.
    
 
   
Total revenues decreased by approximately $310,237,000 from $875,832,000 for the
six  months ended  June 30, 1995  to $565,595,000  for the same  period in 1996.
Revenues from  reinsurance transactions  increased by  $6,355,000. Premiums  and
annuity  considerations  on  a pre-reinsurance  basis  increased  by $15,666,000
reflecting increased annuitizations.  Fixed annuity deposit  funds decreased  by
$288,643,000  as  interest rates  remained  at low  levels.  Pre-reinsurance net
investment income decreased by $7,926,000  reflecting a decrease in the  general
account  invested asset base  and lower yields. Net  transfers from the separate
accounts decreased by $86,464,000 reflecting  the decline in interest rates  and
less  movement of monies into the  fixed rate environment. Mortality and expense
risk charges increased by  $10,231,000 reflecting the  increase in the  unitized
separate  accounts. Other income increased by $40,114,000 reflecting an increase
in the surplus transfer from the separate accounts.
    
 
   
Benefits and expenses decreased  by $330,525,000 from  $864,953,000 for the  six
months  ended  June  30, 1995  to  $534,428,000  for the  same  period  in 1996.
Reinsurance had the effect  of decreasing benefits  and expenses by  $12,189,000
primarily  from lower commissions  due to no assumption  of new contract issues.
Prior to  reinsurance,  benefits and  expenses  decreased by  $318,336,000.  The
change  in  the  liability for  annuity  and  other deposit  funds  decreased by
$226,855,000 reflecting lower credited interest rates. Policy reserves increased
by $16,410,000  reflecting  the  increased  annuitizations.  Annuity  and  other
deposit  fund withdrawals  increased by  $293,957,000 as  a result  of increased
surrenders of fixed  annuities for  which interest rate  guarantee periods  have
expired.   Transfers  to   the  non-unitized   separate  account   decreased  by
$412,254,000 reflecting the lower credited interest rates. Commissions increased
by $6,595,000  reflecting an  increase in  unitized separate  account  deposits.
Death, surrender benefits and annuity payments increased by $4,065,000 primarily
reflecting the increased annuitizations.
    
 
                                       82
<PAGE>
                                   APPENDIX A
 
   
ILLUSTRATIVE EXAMPLE OF VARIABLE ACCUMULATION UNIT VALUE CALCULATIONS:
    
 
   
    Suppose the net asset value of a Series Fund share at the end of the current
Valuation  Period is $18.38;  at the end of  the immediately preceding Valuation
Period was  $18.32;  the  Valuation Period  is  one  day; and  no  dividends  or
distributions  caused Series Fund shares to  go "ex-dividend" during the current
Valuation Period. $18.38 divided  by $18.32 is  1.00327511. Subtracting the  one
day  risk factor for mortality and  expense risks and the administrative expense
charge of .00003133 (the daily equivalent of the current maximum charge of 1.15%
on an annual basis) gives a Net Investment Factor of 1.00324378. If the value of
the Variable Accumulation  Unit for the  immediately preceding Valuation  Period
had  been  14.5645672,  the value  for  the  current Valuation  Period  would be
14.6118115 (14.5645672 X 1.00324378).
    
 
   
ILLUSTRATIVE EXAMPLE OF ANNUITY UNIT VALUE CALCULATIONS:
    
 
   
    Suppose the circumstances of  the first example exist,  and the value of  an
Annuity Unit for the immediately preceding Valuation Period had been 12.3456789.
If  the first Variable Annuity payment is determined by using an annuity payment
based on an assumed interest rate of  three percent (3%) per year, the value  of
the   Annuity  Unit  for  the  current  Valuation  Period  would  be  12.3847226
(12.3456789 X 1.00324378 (the Net  Investment Factor) X 0.99991902).  0.99991902
is  the factor,  for a  one day Valuation  Period, that  neutralizes the assumed
interest rate  of three  percent (3%)  per year  used to  establish the  Annuity
Payment Rates found in the Contract.
    
 
   
ILLUSTRATIVE EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATIONS:
    
 
   
    Suppose  that a Participant's  Account is credited  with 8,765.4321 Variable
Accumulation Units of  a particular  Sub-Account but  is not  credited with  any
fixed  accumulation units;  that the  Variable Accumulation  Unit value  and the
Annuity Unit value for the particular Sub-Account for the Valuation Period which
ends immediately  preceding the  Annuity Commencement  Date are  14.5645672  and
12.3456789  respectively; that the  Annuity Payment Rate for  the age and option
elected is $6.78 per $1,000; and that the Annuity Unit value on the day prior to
the second  variable annuity  payment  date is  12.3847226. The  first  Variable
Annuity  payment would  be $865.57  (8,765.4321 X  14.5645672 X  6.78 divided by
1,000). The number of Annuity Units  credited would be 70.1112 ($865.57  divided
by 12.3456789) and the second Variable Annuity payment would be $868.31 (70.1112
X 12.3847226).
    
 
                                   APPENDIX B
 
STATE PREMIUM TAXES
   
    The  amount of  applicable tax varies  depending on the  jurisdiction and is
subject to change by the legislature  or other authority. In many  jurisdictions
there  is no tax at all. The Company believes that as of August 31, 1996 premium
taxes will be imposed with respect to Contracts offered by this Prospectus  only
by  the  jurisdictions  listed below  at  the rates  indicated.  For information
subsequent to August 31, 1996 a tax adviser should be consulted.
    
 
   
<TABLE>
<CAPTION>
                                                  RATE OF TAX
                                           -------------------------
                                           QUALIFIED   NON-QUALIFIED
 STATE                                     CONTRACTS     CONTRACTS
 ----------------------------------------  ---------   -------------
 <S>                                       <C>         <C>
 California                                   .50%        2.35%
 District of Columbia                        2.25%        2.25%
 Kansas                                       --          2.00%
 Kentucky                                    2.00%        2.00%
 Maine                                        --          2.00%
 Mississippi                                  --          1.00%
 Nevada                                       --          3.50%
 South Dakota                                 --          1.25%
 West Virginia                               1.00%        1.00%
 Wyoming                                      --          1.00%
</TABLE>
    
 
                                       83
<PAGE>
                                   APPENDIX C
        WITHDRAWALS, WITHDRAWAL CHARGES AND THE MARKET VALUE ADJUSTMENT
 
   
PART 1: VARIABLE ACCOUNT (THE MARKET VALUE ADJUSTMENT DOES NOT APPLY TO THE
VARIABLE ACCOUNT)
    
 
   
FULL SURRENDER:
    
 
   
    Assume a Purchase Payment  of $40,000 is  made on the  Date of Coverage,  no
additional  Purchase Payments are made and there are no partial withdrawals. The
table below presents two examples of the withdrawal charge resulting from a full
surrender of the Participant's Account, based on hypothetical Account Values.
    
 
   
<TABLE>
<CAPTION>
                                                           WITHDRAWAL
 NUMBER OF YEARS PURCHASE    HYPOTHETICAL    PURCHASE        CHARGE       WITHDRAWAL CHARGE
    PAYMENT IN ACCOUNT      ACCOUNT VALUE     PAYMENT      PERCENTAGE          AMOUNT
- --------------------------  --------------  -----------  ---------------  -----------------
<S>                         <C>             <C>          <C>              <C>
Less than one                 $   41,000     $  40,000           1.0%         $     400
One or greater                $   44,000     $  40,000           0.0%         $       0
</TABLE>
    
 
   
Minimum Distribution  withdrawals from  a Qualified  Contract will  not incur  a
withdrawal charge.
    
 
   
PARTIAL SURRENDER
    
 
   
    Assume  a Purchase Payment  of $40,000 is  made on the  Date of Coverage, no
additional Purchase Payments  are made and  there is a  sequence of two  partial
withdrawals made prior to the end of the first Year of $9,000 and $32,000.
    
 
   
<TABLE>
<CAPTION>
                             PARTIAL     PURCHASE      WITHDRAWAL
            HYPOTHETICAL   WITHDRAWAL     PAYMENT        CHARGE        WITHDRAWAL
           ACCOUNT VALUE     AMOUNT     LIQUIDATED     PERCENTAGE     CHARGE AMOUNT
           --------------  -----------  -----------  ---------------  -------------
<S>        <C>             <C>          <C>          <C>              <C>
1.           $   41,000     $   9,000    $   9,000          1.00%       $      90
2.           $   36,000     $  32,000    $  31,000          1.00%       $     310
</TABLE>
    
 
   
1.   The $9,000 partial withdrawal during  the first Year incurs a 1% withdrawal
    charge, totaling $90.
    
 
   
2.  The 1% withdrawal charge applies  only to $31,000 of the $32,000  withdrawn.
    The withdrawal charge is not applied to the total partial withdrawal because
    the  amount  of  the unliquidated  Purchase  Payment of  $31,000  ($40,000 -
    $9,000) is less than the withdrawal amount.
    
 
   
    Minimum Distribution withdrawals from a Qualified Contract will not incur  a
withdrawal charge.
    
 
   
PART 2--FIXED ACCOUNT--EXAMPLES OF THE MARKET VALUE ADJUSTMENT (MVA)
    
 
   
    The MVA factor is:
    
 
   
<TABLE>
 <S>                        <C>
                              N/12
                      1 + I
                    ( ----- )      -1
                      1 + J
</TABLE>
    
 
   
    These examples assume the following:
    
 
   
        1.   the Guarantee Amount  was allocated to a  one year Guarantee Period
    with a Guaranteed Interest Rate of 4% or .04 (l).
    
 
   
        2.  the date of full surrender is six months from the Expiration Date (N
    = 6).
    
 
   
        3.   the value  of the  Guarantee Amount  on the  date of  surrender  is
    $40,792.16.
    
 
   
        4.   no transfers or partial withdrawals affecting this Guarantee Amount
    have been made
    
 
   
        5.  withdrawal  charges, if any,  are calculated in  the same manner  as
    shown in the examples in Part 1.
    
 
                                       84
<PAGE>
   
EXAMPLE OF A NEGATIVE MVA:
    
 
   
    Assume that on the date of surrender the Current Rate (J) is 5% or .05.
    
 
   
<TABLE>
    <C>              <S> <C>     <C>
                                   N/12
                         1 + l
    The MVA factor =   ( ------  )       -1
                         1 + J
                                   6/12
                         1 + .04
                   =   ( ------  )       -1
                         1 + .05
 
                   = - .0047733
</TABLE>
    
 
   
    The  value  of the  Guarantee  Amount is  multiplied  by the  MVA  factor to
determine the MVA.
    
 
   
                      ($40,792.16) X (-.0047733) = -$194.71
    
 
   
    -$194.71 represents the  MVA that  will be deducted  from the  value of  the
Guarantee Amount before the deduction of any withdrawal charge.
    
 
   
    For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA would
be ($2,000 X -.0047733) = -$9.55.
    
 
   
    -$9.55  represents the MVA that will be deducted from the partial withdrawal
amount before the deduction of any withdrawal charge.
    
 
   
EXAMPLE OF A POSITIVE MVA:
    
   
    Assume that on the date of surrender the Current Rate (J) is 3% or .03.
    
 
   
                                   N/12
                         1 + I
    The MVA factor =   ( ------  )       -1
                         1 + J
                                   6/12
                         1 + .04
                   =   ( ------  )       -1
                         1 + .03
 
                   =   .00484264
 
    
 
   
    The value  of  the Guarantee  Amount  is multiplied  by  the MVA  factor  to
determine the MVA.
    
 
   
                        $40,792.16 X .00484264 = $197.54
    
 
   
    $197.54 represents the MVA that would be added to the value of the Guarantee
Amount before the deduction of any withdrawal charge.
    
 
   
    For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA would
be $2,000 X .00484264 = $9.69.
    
 
   
    $9.69  represents the MVA  that would be  added to the  value of the partial
withdrawal amount before the deduction of any withdrawal charge.
    
 
                                       85
<PAGE>
                                   APPENDIX D
                        CALCULATION OF PERFORMANCE DATA
 
AVERAGE ANNUAL TOTAL RETURN:
   
    The table below shows, for various Sub-Accounts of the Variable Account, the
Average Annual Total Return for the stated periods (or shorter period  indicated
in  the  note below),  based  upon a  hypothetical  initial Purchase  Payment of
$1,000, calculated in accordance with the  formula set out below the table.  For
purposes   of  determining  these  investment  results,  the  actual  investment
performance of each Series of  the Series Fund is  reflected from the date  such
Series  commenced  investment operations  ("Inception"), although  the Contracts
have been offered only  since September, 1996. No  information is shown for  the
Emerging  Growth  Series, or  the MFS/Foreign  & Colonial  Series and  the Value
Series as they did not commence operations until 1995 and 1996, respectively.
    
 
                          AVERAGE ANNUAL TOTAL RETURN
                        PERIOD ENDING DECEMBER 31, 1995
 
   
<TABLE>
<CAPTION>
                                                     5 YEAR    10 YEAR
                                                     PERIOD    PERIOD
                                                       OR        OR
                                                     LIFETIME  LIFETIME
                                           1 YEAR      OF        OF           DATE OF
                                           PERIOD    SERIES    SERIES        INCEPTION
                                           -------   -------   -------   -----------------
 <S>                                       <C>       <C>       <C>       <C>
 Capital Appreciation Series.............   32.69%   18.09%    14.32%     August 13, 1985
 Conservative Growth Series..............   35.62%   14.81%    11.17%*   December 5, 1986
 Government Securities Series............   16.06%    7.67%     7.95%     August 12, 1985
 High Yield Series.......................   15.46%   16.47%     8.52%     August 13, 1985
 Managed Sectors Series..................   30.47%   16.92%    14.94%*     May 27, 1988
 Money Market Series.....................    4.00%    2.76%     4.24%     August 29, 1985
 Research Series.........................   35.62%   28.86%*     NA      November 7, 1994
 Total Return Series.....................   25.05%   11.66%    10.49%*     May 16, 1988
 Utilities Series........................   30.65%    9.90%*     NA      November 16, 1993
 World Asset Allocation Series...........   20.00%   17.62%*     NA      November 7, 1994
 World Governments Series................   14.09%    7.24%     7.84%*     May 16, 1988
 World Growth Series.....................   14.42%   10.31%*     NA      November 16, 1993
 World Total Return Series...............   16.32%   14.09%*     NA      November 7, 1994
</TABLE>
    
 
- ---------
   
*The lifetimes of these series are less than the periods indicated.
    
 
   
The length of the period and the last day of each period used in the above table
are set out in the table heading  and in the footnote above. The Average  Annual
Total  Return  for each  period  was determined  by  finding the  average annual
compounded rate of return over each period that would equate the initial  amount
invested  to the ending redeemable value for that period, in accordance with the
following formula:
    
 
                                P(1 + T)n = ERV
 
      Where: P = a hypothetical initial Purchase  Payment
                 of $1,000
             T = average  annual  total  return  for  the
                 period
             n = number of years
           ERV = redeemable value (as of  the end of  the
                 period)   of   a   hypothetical   $1,000
                 Purchase Payment made  at the  beginning
                 of the 1-year, 5-year, or 10-year period
                 (or fractional portion thereof)
 
   The  formula assumes that: 1) all recurring  fees have been deducted from the
   Participant's Account; 2) all  applicable non-recurring Contract charges  are
   deducted  at the end of the period; and  3) there will be a full surrender at
   the end of the period.
 
   
    As the  Contracts have  only been  offered since  September, 1996,  the  $50
Account  Fee  has  been  allocated equally  among  the  Sub-Accounts.  In future
calculations,  the  $50  annual  Account   Fee  will  be  allocated  among   the
Sub-Accounts  so that each Sub-Account's allocated portion of the Account Fee is
proportional to the percentage of the  number of Certificates that have  amounts
allocated  to  that  Sub-Account.  Because  the  impact  of  Account  Fees  on a
particular Certificate may differ from those assumed in
    
 
                                       86
<PAGE>
the computation due to  differences between actual  allocations and the  assumed
ones, the total return that would have been experienced by an actual Certificate
over these same time periods may have been different from that shown above.
 
NON-STANDARDIZED INVESTMENT PERFORMANCE:
 
    The  Variable Account  may illustrate its  results over  various periods and
compare its results to indices and  other variable annuities in sales  materials
including advertisements, brochures and reports. Such results may be computed on
a "cumulative" and/or "annualized" basis.
 
    "Cumulative"  quotations are  arrived at  by calculating  the change  in the
Accumulation Unit value of a Sub-Account between  the first and last day of  the
base period being measured, and expressing the difference as a percentage of the
Accumulation Unit value at the beginning of the base period.
 
   
    "Annualized"  quotations  (described  in the  following  table  as "Compound
Growth Rate") are calculated  by applying a formula  which determines the  level
rate  of return which, if earned over  the entire base period, would produce the
cumulative return.
    
 
   
                    NON-STANDARDIZED INVESTMENT PERFORMANCE:
    
   
$10,000 INVESTED IN                       ...WOULD HAVE GROWN TO THIS AMOUNT ON
THIS SUB-ACCOUNT UNDER A                            DECEMBER 31, 1995*
REGATTA CLASSIC CONTRACT,
THIS MANY YEARS AGO...
 
<TABLE>
<CAPTION>
                        CAPITAL APPRECIATION SERIES                            GOVERNMENT SECURITIES SERIES
            ----------------------------------------------------   ----------------------------------------------------
 NUMBER                                    CUMULATIVE   COMPOUND                                  CUMULATIVE   COMPOUND
   OF                                        GROWTH      GROWTH                                     GROWTH      GROWTH
  YEARS         PERIODS         AMOUNT        RATE        RATE         PERIODS         AMOUNT        RATE        RATE
- ---------   ----------------  -----------  ----------   --------   ----------------  -----------  ----------   --------
<S>         <C>               <C>          <C>          <C>        <C>               <C>          <C>          <C>
    1        1/1/95-12/31/95  $ 13,293.67     32.94%      32.94%    1/1/95-12/31/95  $ 11,630.92    16.31%       16.31%
    2        1/1/94-12/31/95  $ 12,669.56     26.70%      12.56%    1/1/94-12/31/95  $ 11,250.54    12.51%        6.07%
    3        1/1/93-12/31/95  $ 14,779.88     47.80%      13.91%    1/1/93-12/31/95  $ 12,089.10    20.89%        6.53%
    4        1/1/92-12/31/95  $ 16,603.65     66.04%      13.51%    1/1/92-12/31/95  $ 12,763.93    27.64%        6.29%
    5        1/1/91-12/31/95  $ 23,129.91    131.30%      18.26%    1/1/91-12/31/95  $ 14,615.57    46.16%        7.89%
   10        1/1/86-12/31/95  $ 38,642.14    286.42%      14.47%    1/1/86-12/31/95  $ 21,849.23   118.49%        8.13%
  Life      8/13/85-12/31/95  $ 41,222.58    312.23%      14.61%   8/12/85-12/31/95  $ 22,781.75   127.82%        8.25%
 
<CAPTION>
 
                             HIGH YIELD SERIES                                    MANAGED SECTORS SERIES
            ----------------------------------------------------   ----------------------------------------------------
 NUMBER                                    CUMULATIVE   COMPOUND                                  CUMULATIVE   COMPOUND
   OF                                        GROWTH      GROWTH                                     GROWTH      GROWTH
  YEARS         PERIODS         AMOUNT        RATE        RATE         PERIODS         AMOUNT        RATE        RATE
- ---------   ----------------  -----------  ----------   --------   ----------------  -----------  ----------   --------
<S>         <C>               <C>          <C>          <C>        <C>               <C>          <C>          <C>
    1        1/1/95-12/31/95  $ 11,570.77     15.71%      15.71%    1/1/95-12/31/95  $ 13,071.60    30.72%       30.72%
    2        1/1/94-12/31/95  $ 11,183.95     11.84%       5.75%    1/1/94-12/31/95  $ 12,674.56    26.75%       12.58%
    3        1/1/93-12/31/95  $ 13,017.40     30.17%       9.19%    1/1/93-12/31/95  $ 13,039.35    30.39%        9.25%
    4        1/1/92-12/31/95  $ 14,794.06     47.94%      10.29%    1/1/92-12/31/95  $ 13,728.05    37.28%        8.24%
    5        1/1/91-12/31/95  $ 21,585,13    115.85%      16.64%    1/1/91-12/31/95  $ 22,007.09   120.07%       17.09%
   10        1/1/86-12/31/95  $ 23,048.34    130.48%       8.71%
  Life      8/13/85-12/31/95  $ 23,833.68    138.34%       8.72%   5/27/88-12/31/95  $ 29,109.47   191.09%       15.10%
<CAPTION>
 
                            TOTAL RETURN SERIES                                  WORLD GOVERNMENTS SERIES
            ----------------------------------------------------   ----------------------------------------------------
 NUMBER                                    CUMULATIVE   COMPOUND                                  CUMULATIVE   COMPOUND
   OF                                        GROWTH      GROWTH                                     GROWTH      GROWTH
  YEARS         PERIODS         AMOUNT        RATE        RATE         PERIODS         AMOUNT        RATE        RATE
- ---------   ----------------  -----------  ----------   --------   ----------------  -----------  ----------   --------
<S>         <C>               <C>          <C>          <C>        <C>               <C>          <C>          <C>
    1        1/1/95-12/31/95  $ 12,529.92     25.30%      25.30%    1/1/95-12/31/95  $ 11,433.92    14.34%       14.34%
    2        1/1/94-12/31/95  $ 12,107.26     21.07%      10.03%    1/1/94-12/31/95  $ 10,796.78     7.97%        3.91%
    3        1/1/93-12/31/95  $ 13,571.63     35.72%      10.72%    1/1/93-12/31/95  $ 12,688.34    26.88%        8.26%
    4        1/1/92-12/31/95  $ 14,567.72     45.68%       9.86%    1/1/92-12/31/95  $ 12,619.00    26.19%        5.99%
    5        1/1/91-12/31/95  $ 17,511.35     75.11%      11.86%    1/1/91-12/31/95  $ 14,328.61    43.29%        7.46%
  Life      5/16/88-12/31/95  $ 21,684.52    116.85%      10.68%   5/16/88-12/31/95  $ 18,054.59    80.55%        8.05%
</TABLE>
    
 
                                       87
<PAGE>
   
             NON-STANDARDIZED INVESTMENT PERFORMANCE -- continued:
    
   
$10,000 INVESTED IN                       ...WOULD HAVE GROWN TO THIS AMOUNT ON
THIS SUB-ACCOUNT UNDER A                            DECEMBER 31, 1995*
REGATTA CLASSIC CONTRACT
THIS MANY YEARS AGO...
 
<TABLE>
<CAPTION>
                         CONSERVATIVE GROWTH SERIES                                  UTILITIES SERIES
            ----------------------------------------------------   ----------------------------------------------------
 NUMBER                                    CUMULATIVE   COMPOUND                                  CUMULATIVE   COMPOUND
   OF                                        GROWTH      GROWTH                                     GROWTH      GROWTH
  YEARS         PERIODS         AMOUNT        RATE        RATE         PERIODS         AMOUNT        RATE        RATE
- ---------   ----------------  -----------  ----------   --------   ----------------  -----------  ----------   --------
<S>         <C>               <C>          <C>          <C>        <C>               <C>          <C>          <C>
    1        1/1/95-12/31/95  $ 13,586.89     35.87%      35.87%    1/1/95-12/31/95  $ 13,089.77    30.90%       30.90%
    2        1/1/94-12/31/95  $ 13,284.01     32.84%      15.26%    1/1/94-12/31/95  $ 12,348.54    23.49%       11.12%
    3        1/1/93-12/31/95  $ 14,237.84     42.38%      12.50%
    4        1/1/92-12/31/95  $ 14,865.70     48.66%      10.42%
    5        1/1/91-12/31/95  $ 20,111.97    101.12%      15.00%
  Life      12/5/86-12/31/95  $ 26,537.27    165.37%      11.35%   11/16/93-12/31/95 $ 12,304.18    23.04%       10.26%
 
<CAPTION>
 
                            WORLD GROWTH SERIES                                      RESEARCH SERIES
            ----------------------------------------------------   ----------------------------------------------------
 NUMBER                                    CUMULATIVE   COMPOUND                                  CUMULATIVE   COMPOUND
   OF                                        GROWTH      GROWTH                                     GROWTH      GROWTH
  YEARS         PERIODS         AMOUNT        RATE        RATE         PERIODS         AMOUNT        RATE        RATE
- ---------   ----------------  -----------  ----------   --------   ----------------  -----------  ----------   --------
<S>         <C>               <C>          <C>          <C>        <C>               <C>          <C>          <C>
    1        1/1/95-12/31/95  $ 11,467.46     14.67%      14.67%    1/1/95-12/31/95  $ 13,587.24    35.87%       35.87%
    2        1/1/94-12/31/95  $ 11,668.42     16.68%       8.02%
  Life      11/16/93-12/31/95 $ 12,396.45     23.96%      10.65%   11/7/94-12/31/95  $ 13,403.82    34.04%       29.07%
<CAPTION>
 
                       WORLD ASSET ALLOCATION SERIES                            WORLD TOTAL RETURN SERIES
            ----------------------------------------------------   ----------------------------------------------------
 NUMBER                                    CUMULATIVE   COMPOUND                                  CUMULATIVE   COMPOUND
   OF                                        GROWTH      GROWTH                                     GROWTH      GROWTH
  YEARS         PERIODS         AMOUNT        RATE        RATE         PERIODS         AMOUNT        RATE        RATE
- ---------   ----------------  -----------  ----------   --------   ----------------  -----------  ----------   --------
<S>         <C>               <C>          <C>          <C>        <C>               <C>          <C>          <C>
    1        1/1/95-12/31/95  $ 12,024.70     20.25%      20.25%    1/1/95-12/31/95  $ 11,657.41    16.57%       16.57%
  Life      11/7/94-12/31/95  $ 12,073.16     20.73%      17.84%   11/7/94-12/31/95  $ 11,684.37    16.84%       14.52%
<CAPTION>
 
                            MONEY MARKET SERIES
            ----------------------------------------------------
 NUMBER                                    CUMULATIVE   COMPOUND
   OF                                        GROWTH      GROWTH
  YEARS         PERIODS         AMOUNT        RATE        RATE
- ---------   ----------------  -----------  ----------   --------
<S>         <C>               <C>          <C>          <C>        <C>               <C>          <C>          <C>
    1        1/1/95-12/31/95   $10,425.33      4.25%       4.25%
    2        1/1/94-12/31/95   $10,688.35      6.88%       3.38%
    3        1/1/93-12/31/95   $10,844.50      8.44%       2.74%
    4        1/1/92-12/31/95   $11,079.00     10.79%       2.59%
    5        1/1/91-12/31/95   $11,588.51     15.89%       2.99%
   10        1/1/86-12/31/95   $15,451.29     54.51%       4.45%
  Life      8/29/85-12/31/95   $15,696.89     56.97%       4.45%
</TABLE>
    
 
- ------------------------
   
*For purposes of  determining these  investment results,  the actual  investment
 performance  of each Series of the Series  Fund is reflected from the date such
 Series commenced  investment  operations,  although  the  Contracts  have  been
 offered  only since September,  1996. No information is  shown for the Emerging
 Growth Series or the MFS/Foreign & Colonial Series and Value Series as they did
 not commence operations until 1995 and 1996, respectively. The charges  imposed
 under the Contract against the assets of the Variable Account for mortality and
 expense  risks  and administrative  expenses have  been deducted.  However, the
 annual Account Fee is not reflected and these examples do not assume  surrender
 at the end of the period.
    
 
                                       88
<PAGE>
                        ADVERTISING AND SALES LITERATURE
 
    As  set forth  in the  Prospectus, the  Company may  refer to  the following
organizations (and others) in its marketing materials:
    A.M. BEST'S  RATING  SYSTEM is  designed  to evaluate  the  various  factors
affecting the overall performance of an insurance company in order to provide an
opinion  as to an insurance company's relative financial strength and ability to
meet its contractual obligations. The procedure includes both a quantitative and
qualitative review of each company.
 
    DUFF &  PHELPS  CREDIT  RATING COMPANY's  Insurance  Company  Claims  Paying
Ability  Rating is an  independent evaluation by  a nationally accredited rating
organization of an insurance  company's ability to  meet its future  obligations
under  the contracts and products  it sells. The rating  takes into account both
quantitative and qualitative factors.
 
    LIPPER  VARIABLE  INSURANCE  PRODUCTS  PERFORMANCE  ANALYSIS  SERVICE  is  a
publisher  of statistical data  covering the investment  company industry in the
United States and overseas. Lipper is  recognized as the leading source of  data
on  open-end and  closed-end funds. Lipper  currently tracks  the performance of
over 5,000  investment companies  and  publishes numerous  specialized  reports,
including  reports  on  performance  and  portfolio  analysis,  fee  and expense
analysis.
 
   
    MORNINGSTAR,  INC.  ranks  and   evaluates  variable  annuities  and   other
investment products on overall performance and other criteria.
    
 
    STANDARD & POOR's insurance claims-paying ability rating is an opinion of an
operating  insurance  company's financial  capacity to  meet obligations  of its
insurance policies in accordance with their terms.
 
    VARDS (Variable  Annuity Research  Data  Service) provides  a  comprehensive
guide to variable annuity contract features and historical fund performance. The
service  also  provides a  readily  understandable analysis  of  the comparative
characteristics and market performance of funds inclusive in variable contracts.
 
    STANDARD & POOR'S INDEX--broad-based measurement of changes in  stock-market
conditions  based on the  average performance of 500  widely held common stocks;
commonly known as the Standard & Poor's 500 (S&P 500). The selection of  stocks,
their  relative weightings to  reflect differences in  the number of outstanding
shares, and publication of  the index itself are  services of Standard &  Poor's
Corporation,  a financial advisory, securities  rating, and publishing firm. The
index tracks  400  industrial  company  stocks,  20  transportation  stocks,  40
financial company stocks, and 40 public utilities.
 
    NASDAQ-OTC  Price Index--this index is based  on the National Association of
Securities Dealers  Automated Quotations  (NASDAQ) and  represents all  domestic
over-the-counter  stocks except those traded on  exchanges and those having only
one market maker, a total of some 3,500 stocks. It is market value-weighted  and
was introduced with a base of 100.00 on February 5, 1971.
 
    DOW  JONES INDUSTRIAL AVERAGE (DJIA)--price-weighted  average of 30 actively
traded blue chip stocks, primarily  industrials, but including American  Express
Company  and American Telephone and Telegraph Company. Prepared and Published by
Dow Jones & Company, it is the oldest  and most widely quoted of all the  market
indicators. The average is quoted in points, not dollars.
 
    In  its advertisements and  other sales literature  for the Variable Account
and the Series  Fund, the Company  intends to illustrate  the advantages of  the
Contracts in a number of ways:
 
    COMPOUND INTEREST ILLUSTRATIONS.  These will emphasize several advantages of
the  variable annuity contract. For  example, but not by  way of limitation, the
literature may  emphasize  the  potential  savings  through  tax  deferral;  the
potential  advantage of  the Variable  Account over  the fixed  account; and the
compounding effect  when a  participant makes  regular deposits  to his  or  her
account.
 
    DOLLAR  COST AVERAGING  ILLUSTRATIONS.   These illustrations  will generally
discuss the  price-leveling effect  of making  regular investments  in the  same
Sub-Accounts  over a period of  time, to take advantage  of the trends in market
prices of the portfolio securities purchased by those Sub-Accounts.
 
    SYSTEMATIC WITHDRAWAL PROGRAM.  A  service provided by the Company,  through
which  a Participant may take any distribution allowed by Code Section 401(a)(9)
in the case of Qualified  Contracts, or permitted under  Code Section 72 in  the
case  of Non-Qualified  Contracts, by  way of  a series  of partial withdrawals.
Withdrawals under this program  may be fully or  partially includible in  income
and may be subject to a 10% penalty tax. Consult your tax advisor.
 
   
    THE COMPANY'S OR MFS'S CUSTOMERS.  Sales literature for the Variable Account
and  the Series Fund may refer to the  number of clients which they serve. As of
June 30, 1996, MFS was serving over two million investor accounts.
    
 
   
    THE COMPANY'S OR MFS'S  ASSETS, SIZE.  The  Company may discuss its  general
financial condition (see, for example, the references to Standard & Poor's, Duff
&  Phelps and A.M. Best Company above); it  may refer to its assets; it may also
discuss its relative  size and/or  ranking among  companies in  the industry  or
among   any  sub-classification  of  those   companies,  based  upon  recognized
evaluation criteria.
    
 
                                       89
<PAGE>
<TABLE>
<S>                        <C>
      REGATTA              SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) Please make checks payable to Sun Life Assurance
      CLASSIC              Company of Canada (U.S.). Send the Application and check to Sun Life of Canada (U.S.)
                           Annuity Service Center, P.O. Box 1024, Boston, MA 02103
GROUP/OWNER APPLICATION FOR COMBINATION FIXED/VARIABLE GROUP ANNUITY CONTRACT ("CONTRACT APPLICATION")
- ---------------------------------------------------------------------------------------------------------------------------------
   1. GROUP/OWNER
      (Please Print)
                      -----------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
   2. ADDRESS                                                                             3. TAX ID #:
      (Please Print)
                      -----------------------------------------------------------------------------------------------------------
                                              Street

                      -------------------------------------------------------             ---------------------------------------
                                City              State          Zip                                  (Please Print)
- ---------------------------------------------------------------------------------------------------------------------------------
  4. TRUSTEE(S) (if applicable)
     (Please Print)
                      -----------------------------------------------------------------------------------------------------------
     Ownership: Trustee(s) specified in question 4 will be the owner(s) of the contract.
  5. Unless the following box is checked, confirmation statements for the plan will be mailed to the address above.
                / /  Mail statements directly to the Participant.
- ---------------------------------------------------------------------------------------------------------------------------------
   6. PLAN SELECTION--IRS TAX-QUALIFIED PLAN ONLY
     If using SunLife of Canada (U.S.) Prototype Plan you must attach appropriate adoption agreement.
     / / SunLife of Canada (U.S.) Prototype             / / 401(k)                        / / SEP/IRA
     / / Non-MFS Prototype                              / / Corporation or  Association   / / 403(b)
                                                        / / Self-Employed                 / / Other 
                                                                                                    -----------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
  7. INVESTMENT OPTIONS:
     Please note: Participants will be limited to those options which the Group/Owner selects below. Indicate with check mark(s).
                         SUB-ACCOUNTS INVESTED IN                                                  FIXED ACCOUNT
                         MFS/SUN LIFE SERIES TRUST                                               GUARANTEE PERIODS
             --------------------------------------------------                                 ---------------------
 ---- Money Market Series (0)              ---- Government Securities Series (7)              ---- 1 year
 ---- High Yield Series (1)                ---- Conservative Growth  Series (8)               ---- DCA Guaranteed Option   
 ---- Capital Appreciation Series (2)      ---- World Growth Series (9) 
 ---- Utilities Series (3)                 ---- Research Series (13/16)
 ---- World Governments Series (4)         ---- World Total Return Series (14/17)
 ---- Managed Sectors Series (5)           ---- World Asset Allocation Series (15/18)
 ---- Total Return Series (6)              ---- Emerging Growth Series (11/12)
 ---- Value Series                        
 ---- MFS/Foreign & Colonial International Growth Series
 ---- MFS/Foreign & Colonial International Growth and Income Series
 ---- MFS/Foreign & Colonial Emerging Markets Equity Series
- ---------------------------------------------------------------------------------------------------------------------------------
  8. SPECIAL INSTRUCTIONS and Transfer of Assets information (if applicable).
- ---------------------------------------------------------------------------------------------------------------------------------
  I hereby represent the answers to the above questions to be correct and true to the best of my knowledge and belief and 
  agree that this application shall be a part of any Contract issued  by the Company. ALL PAYMENTS AND VALUES PROVIDED BY
  THIS CONTRACT WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR
  AMOUNT. ALL PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE ADJUSTMENT FORMULA, THE OPERATION
  OF WHICH MAY RESULT IN UPWARD AND DOWNWARD ADJUSTMENTS IN AMOUNTS PAYABLE. I acknowledge receipt of a current prospectus 
  and MFS/Sun Life Series Trust Prospectus.
 
 Date                                                Signed at
      ----------------------------------------                  -----------------------------------------------------------------
                                                                              City                    State
 Authorized Signature
 for Group/Owner                                     Agent
                 --------------------------------               -----------------------------------------------------------------
                                                                          Print Agent Name and Phone Number
 Trustee(s)                                          Agent
                ---------------------------------               -----------------------------------------------------------------
                       Signature(s)                                           Signature of Agent
- ---------------------------------------------------------------------------------------------------------------------------------
AGENT: Will this Contract replace or change any existing life insurance or annuity in this or any other company?
/ / Yes  / / No   If yes, please explain under Special Instructions.
General Agent 
              -------------------------------------------------------------------------------------------------------------------
Branch Office Address                                                     Phone # (       )
                      ---------------------------------------------                         -------------------------------------

RC-MVA-APP-CONT
</TABLE>
<PAGE>
                                   SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
                                   ANNUITY SERVICE MAILING ADDRESS:
                                   C/O SUN LIFE ANNUITY SERVICE CENTER
                                   P.O. BOX 1024
                                   BOSTON, MASSACHUSETTS 02103
 
                                   TELEPHONE:
                                   Toll Free (800) 752-7215
                                   In Massachusetts (617) 348-9600
 
                                   GENERAL DISTRIBUTOR
                                   Clarendon Insurance Agency, Inc.
                                   500 Boylston Street
                                   Boston, Massachusetts 02116
 
                                   LEGAL COUNSEL
                                   Covington & Burling
                                   1201 Pennsylvania Avenue, N.W.
                                   P.O. Box 7566
                                   Washington, D.C. 20044
 
                                   AUDITORS
                                   Deloitte & Touche LLP
                                   125 Summer Street
                                   Boston, Massachusetts 02110
 
   
CLASSIC-1 9/96
    
<PAGE>

                                     PART B

                     INFORMATION REQUIRED IN A STATEMENT OF
                             ADDITIONAL INFORMATION

          The information required in a Statement of Additional Information is
contained in the Prospectus included in Part A of this Amendment to the
Registration Statement.


                                     PART C

                                OTHER INFORMATION

Item 24.  FINANCIAL STATEMENTS AND EXHIBITS

     (a)  The following Financial Statements are included in the Registration
Statement:

Included in Part A:

A.   Financial Statements of the Registrant:

      1.  Statement of Condition, December 31, 1995;

      2.  Statement of Operations, Year Ended December 31, 1995;

      3.  Statements of Changes in Net Assets, Years Ended December 31, 1995 and
          December 31, 1994;

      4.  Notes to Financial Statements; and

      5.  Independent Auditors' Report.

B.    Financial Statements of the Depositor:


      1.  Balance Sheets, December 31, 1995 and 1994;

      2.  Statements of Operations, Years Ended December 31, 1995, 1994 and
          1993;

      3.  Statements of Capital Stock and Surplus, Years Ended December 31,
          1995, 1994 and 1993;

      4.  Statements of Cash Flows, Years Ended December 31, 1995, 1994 and
          1993;

      5.  Notes to Financial Statements; and

      6.  Independent Auditors' Report.

   
      7.  Balance Sheet (unaudited), June 30, 1996;

      8.  Statements of Operations (unaudited), Six Months Ended June 30, 1996
          and 1995;

      9.  Statements of Capital Stock and Surplus (unaudited), Six Months Ended
          June 30, 1996 and 1995;

     10.  Statements of Cash Flows (unaudited), Six Months Ended June 30, 1996
          and 1995; and 

     11.  Notes to Unaudited Financial Statements, Six Months Ended 
          June 30, 1996 and 1995.

    

<PAGE>

          (b)  The following Exhibits are incorporated in the Registration
Statement by reference unless otherwise indicated:

          (1)  Resolution of Board of Directors of the depositor dated
December 3, 1985 authorizing the establishment of the Registrant (Filed as
Exhibit 1 to the Registration Statement of the Registrant on Form N-4, File
No. 33-29852);

          (2)       Not Applicable;

          (3)       (a)  Distribution Agreement between the depositor,
Massachusetts Financial Services Company and Clarendon Insurance Agency, Inc.
(Filed as Exhibit 3 (a) to the Registration Statement of the Registrant on Form
N-4, File No. 33-29852);

                    (b)(i)    Specimen Sales Operations and General Agent
Agreement (Filed as Exhibit 3 (b)(i) to the Registration Statement of the
Registrant on Form N-4, File No. 33-29852);

                    (b)(ii)   Specimen Broker-Dealer Supervisory and Service
Agreement (Filed as Exhibit 3 (b)(ii) to the Registration Statement of the
Registrant on Form N-4, File No. 33-29852); and

                    (b)(iii)  Specimen Registered Representatives Agent
Agreement (Filed as Exhibit 3 (b)(iii) to the Registration Statement of the
Registrant on Form N-4, File No. 33-29852);

   
          (4)       (a)  Flexible Payment Combination Fixed/Variable Group
Annuity Contract (Filed herewith);
    

   
                    (b)  Certificate to be issued in connection with Contract
filed as Exhibit 4(a) (Filed herewith);
    

   
          (5)       (a)  Form of Application to be used with the annuity
contract filed as Exhibit 4(a) (Filed herewith);
    

   
                    (b)  Form of Application to be used in connection with 
the Certificate filed as Exhibit 4(b) (Filed herewith);
    

          (6)  Certificate of Incorporation and By-laws of the depositor (Filed
as Exhibits 3(a) and 3(b), respectively, to the Registration Statement of the
Depositor on Form S-1, File No. 33-29851);

     (7)  Not Applicable;

     (8)  None;

<PAGE>

   
     (9)  Opinion of Counsel and Consent to its use as to the legality of the
securities being registered (Filed herewith);
    

     (10)      (a)  Consent of Deloitte & Touche, LLP (Filed herewith); and

               (b)  Consent of David D. Horn, Esq. (Filed herewith); 

      (11)     None;

      (12)     Not Applicable;

   
      (13)     Schedule for Computation of Performance Quotations (Filed 
herewith); and
    

   
      (14)     Financial Data Schedule meeting the requirements of 
Rule 483 under the Securities Act of 1933 (Filed as Exhibit 14 to the 
Registration Statement of the Registrant on Form N-4, File No. 333-05227).
    

Item 25.  DIRECTORS AND OFFICERS OF THE DEPOSITOR

Name and Principal                      Positions and Offices
Business Address                        with Depositor
- ------------------                      ----------------------

John D. McNeil                          Chairman and Director
150 King Street West
Toronto, Ontario
  Canada  M5H 1J9

John R. Gardner                         President and Director
150 King Street West
Toronto, Ontario
  Canada  M5H 1J9

David D. Horn                           Senior Vice President
One Sun Life Executive Park             and General Manager
Wellesley Hills, MA  02181              and Director

John S. Lane                            Director
150 King Street West
Toronto, Ontario
  Canada  M5H 1J9

Richard B. Bailey                       Director
500 Boylston Street
Boston, MA  02116

A. Keith Brodkin                        Director
500 Boylston Street
Boston, MA  02116

<PAGE>

Name and Principal                      Positions and Offices
Business Address                        with Depositor
- ------------------                      ---------------------

M. Colyer Crum                          Director
Harvard Business School
Soldiers Field Road
Boston, MA  02163

Angus A. MacNaughton                    Director
950 Tower Lane
Metro Tower, Suite 1170
Foster City, CA  94404

Robert A. Bonner                        Vice President, Pensions
One Sun Life Executive Park
Wellesley Hills, MA  02181

Robert E. McGinness                     Vice President and Counsel
One Sun Life Executive Park
Wellesley Hills, MA  02181

C. James Prieur                         Vice President, Investments
One Sun Life Executive Park
Wellesley Hills, MA  02181

S. Caesar Raboy                         Vice President, Individual
One Sun Life Executive Park             Insurance
Wellesley Hills, MA  02181

L. Brock Thomson                        Vice President
One Sun Life Executive Park             and Treasurer
Wellesley Hills, MA  02181

Robert P. Vrolyk                        Vice President and Actuary
One Sun Life Executive Park
Wellesley Hills, MA  02181

   
Margaret Sears Mead                     Secretary
One Sun Life Executive Park
Wellesley Hills, MA  02181
    

Item 26.  PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
          REGISTRANT

     No person is directly or indirectly controlled by the Registrant.  The
Registrant is a separate account of Sun Life Assurance Company of Canada (U.S.),
a wholly-owned subsidiary of Sun Life Assurance Company of Canada.

     The following is a list of all corporations directly or indirectly
controlled by or under common control with Sun Life Assurance Company of Canada,
showing the state or other sovereign power under the laws of which each is
organized and the percentage ownership of voting securities giving rise to the
control relationship:

<PAGE>


                                                                 Percent of
                                             State or Country    Ownership
                                             or Jurisdiction     of Voting
                                             of Incorporation    Securities
                                             ----------------    ----------

Sun Life Assurance Company of Canada         Canada                   100%
- --------------------------------------------------------------------------------
Sun Life Assurance Company of Canada
  (U.S.).................................... Delaware                 100%
Sun Life Assurance Company of Canada
  (U.K.) Limited ........................... United Kingdom           100%
Sun Life of Canada Investment Management
  Limited .................................. Canada                   100%
Sun Life of Canada Benefit Management
  Limited .................................. Canada                   100%
Spectrum United Holdings, Inc............... Canada                   100%
Sun Canada Financial Co..................... Delaware                 100%
Sun Life Insurance and Annuity Company of
  New York ................................. New York                   0%**
Sun Investment Services Company ............ Delaware                   0%**
Sun Benefit Services Company, Inc. ......... Delaware                   0%**
Sun Growth Variable Annuity Fund, Inc. ..... Delaware                   0%*
Massachusetts Financial Services Company ... Delaware                   0%+
New London Trust, F.S.B.................     Federally Chartered        0%**
Massachusetts Casualty Insurance Company.... Massachusetts              0%**
Clarendon Insurance Agency, Inc. ........... Massachusetts              0%***
MFS Service Center, Inc..................... Delaware                   0%***
MFS/Sun Life Series Trust .................. Massachusetts              0%****
Lifetime Advisers, Inc. .................... Delaware                   0%***
Sun Capital Advisers, Inc. ................. Delaware                   0%**
MFS International, Ltd. .................... Ireland                    0%***
MFS Asset Management, Inc. ................. Delaware                   0%***
MFS Fund Distributors, Inc. ................ Delaware                   0%***
MFS Retirement Services, Inc. .............. Delaware                   0%***
Sun Life Financial Service Limited.......... Bermuda                    0%**


- --------

  *   100% of the issued and outstanding voting securities of Sun Growth
      Variable Annuity Fund, Inc. are owned by separate accounts of Sun Life
      Assurance Company of Canada (U.S.).


 **   100% of the issued and outstanding voting securities of New London 
      Trust, F.S.B., Sun Life Insurance and Annuity Company of New York, 
      Sun Investment Services  Company, Sun Benefit Services Company, Inc., 
      Sun Capital Advisers, Inc., Sun Life Financial Services Limited, and 
      Massachusetts Casualty Insurance Company are owned by Sun Life 
      Assurance Company of Canada (U.S.).

 ***  100% of the issued and outstanding voting securities of Clarendon
      Insurance Agency, Inc., MFS Service Center, Inc., Lifetime Advisers, Inc.,
      MFS Financial Services, Inc., MFS International, Ltd., MFS Asset
      Management, Inc., MFS Fund Distributors, Inc., and MFS Retirement
      Services, Inc. are owned by Massachusetts Financial Services Company.
****  100% of the issued and outstanding voting securities of MFS/Sun Life
      Series Trust are owned by separate accounts of  Sun Life Assurance Company
      of Canada (U.S.) and Sun Life Insurance and Annuity Company of New York.


   +  94.8% of the issued and outstanding voting securities of Massachusetts
      Financial Services Company are owned by Sun Life Assurance Company of
      Canada (U.S.).

<PAGE>

      Omitted from the list are subsidiaries of Sun Life Assurance Company of
Canada which, considered in the aggregate, would not constitute a "significant
subsidiary" (as that term is defined in Rule 8b-2 under Section 8 of the
Investment Company Act of 1940) of Sun Life Assurance Company of Canada.

      None of the companies listed is a subsidiary of the Registrant; therefore,
the only financial statements being filed are those of Sun Life Assurance
Company of Canada (U.S.).

Item 27.  NUMBER OF CONTRACT OWNERS:

   
      As of August 30, 1996 there were 37,604 qualified and 75,575 
non-qualified Contracts participating in the investment experience of the 
Variable Account.
    

Item 28.  INDEMNIFICATION

      Pursuant to Section 145 of the Delaware Corporation Law, Article 8 of the
By-laws of Sun Life Assurance Company of Canada (U.S.), a copy of which was
filed as Exhibit 3(b) to the Registration Statement of the Depositor on Form S-
1, File No. 33-29851, provides for the indemnification of directors, officers
and employees of Sun Life Assurance Company of Canada (U.S.).

      Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of Sun
Life Assurance Company of Canada (U.S.) pursuant to the certificate of
incorporation, by-laws, or otherwise, Sun Life (U.S.) has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by Sun Life (U.S.) of expenses incurred or paid by a director,
officer, controlling person of Sun Life (U.S.) in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, Sun Life (U.S.) will,
unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by them is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

Item 29.  PRINCIPAL UNDERWRITERS

      (a)  Clarendon Insurance Agency, Inc., which is a wholly-owned subsidiary
of Massachusetts Financial Services Company, acts as general distributor for the
Registrant, Sun Life of Canada (U.S.) Variable Accounts C, D,and E, Sun Life
(N.Y.) Variable Accounts A, B and C and Money Market Variable Account, High
Yield Variable Account, Capital Appreciation Variable Account, Government
Securities Variable Account, World Governments Variable Account, Total Return
Variable Account and Managed Sectors Variable Account.

<PAGE>



Name and Principal                    Positions and Offices
Business Address*                        with Underwriter
- ------------------                    ---------------------
A. Keith Brodkin.................   Chairman and Director**
Arnold D. Scott..................         Director
Jeffrey L. Shames................         Director
Cynthia M. Orcutt................         President
Bruce C. Avery...................      Vice President
Joseph W. Dello Russo............         Treasurer
Stephen E. Cavan.................     Secretary and Clerk
Robert T. Burns..................     Assistant Secretary
Thomas B. Hastings...............     Assistant Treasurer


- ------------------

 *    The principal business address of all directors and officers of the
      principal underwriter except Ms. Orcutt is 500 Boylston Street, Boston,
      Massachusetts  02116.  The principal business address of Ms. Orcutt is One
      Sun  Life Executive Park, Wellesley Hills, Massachusetts   02181.

**    Mr. Brodkin is a Director of Sun Life Assurance Company of Canada (U.S.)
      and Sun Life Insurance and Annuity Company of New York.

      (c)      Inapplicable.

Item 30.  LOCATION OF ACCOUNTS AND RECORDS

      Accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained by Sun Life Assurance Company of Canada (U.S.), in
whole or in part, at its executive office at One Sun Life Executive Park,
Wellesley Hills, Massachusetts  02181, at the offices of the Sun Life Annuity
Service Center at 50 Milk Street, Boston, Massachusetts  02103 or at the offices
of Massachusetts Financial Services Company at 500 Boylston Street, Boston,
Massachusetts  02116.

Item 31.  MANAGEMENT SERVICES

      Not Applicable.

Item 32.  UNDERTAKINGS

      (a)        Registrant hereby undertakes to file post-effective 
                 amendments to the Registration Statement as frequently
                 as necessary to ensure that the audited financial 
                 statements in the Registration Statement are never more 
                 than 16 months old for as long as payments under the 
                 variable annuity contracts may be accepted.

      (b)(c)     Inapplicable.

<PAGE>

                                   SIGNATURES

   
      As required by the Securities Act of 1933 and the Investment Company 
Act of 1940, the Registrant has caused this Pre-effective Amendment No. 1 to 
its Registration Statement to be signed on its behalf in the Town of 
Wellesley and Commonwealth of Massachusetts on the 9th day of September, 1996.
    
                                        Sun Life of Canada (U.S.)
                                         Variable Account F

                                        (Registrant)


                                        Sun Life Assurance Company of
                                        Canada (U.S.)

                                        (Depositor)




                                        By:*   /s/ JOHN D. McNEIL
                                              ---------------------
                                                   John D. McNeil
                                                   Chairman


Attest:   /s/ BONNIE S. ANGUS
          -----------------------
             Bonnie S. Angus


      As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons in the
capacities with the Depositor, Sun Life Assurance Company of Canada (U.S.), and
on the dates indicated.

   
    Signatures                     Title                    Date
    ----------                     -----                    ----

                                 Chairman and
                                   Director
                                 (Principal
*    /s/ JOHN D. McNEIL       Executive Officer)       September 9, 1996
- --------------------------
         John D. McNeil


                               Vice President
                                 and Actuary
                            (Principal Financial
                               and Accounting
*   /s/  ROBERT P. VROLYK          Officer)            September 9, 1996
- --------------------------
         Robert P. Vrolyk


- -------------------------
*     By Bonnie S. Angus pursuant to Power of Attorney filed herewith.
    

<PAGE>

   
    Signatures                          Title                  Date
    ----------                          -----                  ----

*   /s/ RICHARD B. BAILEY               Director            September 9, 1996
- -------------------------------
        Richard B. Bailey



*   /s/ A. KEITH BRODKIN                Director            September 9, 1996
- -------------------------------
        A. Keith Brodkin



*   /s/ M. COLYER CRUM                  Director            September 9, 1996
- -------------------------------
        M. Colyer Crum



*   /s/ JOHN R. GARDNER               President and         September 9, 1996
- -------------------------------          Director
        John R. Gardner




                                   Senior Vice President
*   /s/ DAVID D. HORN                and General Manager    September 9, 1996
- -------------------------------        and Director
        David D. Horn





*   /s/ JOHN S. LANE                     Director           September 9, 1996
- -------------------------------
        John S. Lane




*   /s/ ANGUS A. MacNAUGHTON             Director           September 9, 1996
- -------------------------------
        Angus A. MacNaughton



- ---------------------------

*     By Bonnie S. Angus pursuant to Power of Attorney filed herewith.
    

<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that John D. McNeil, whose signature 
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and 
David N. Brown, and each of them, his attorneys-in-fact, each with the power 
of substitution, for him in any and all capacities, to sign a Registration 
Statement on Form N-4 of Sun Life of Canada (U.S.) Variable Account F (Reg. 
No. 333-05227), and any amendments thereto, and to file the same, with 
exhibits thereto, and other documents in connection therewith, with the 
Securities and Exchange Commission, hereby ratifying and confirming all that 
each of said attorneys-in-fact or his substitute or substitutes, may do or 
cause to be done by virtue hereof.


                                            /s/ John D. McNeil
                                            -----------------------------
                                            John D. McNeil


June 5, 1996





<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that Robert P. Vrolyk, whose signature 
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and 
David N. Brown, and each of them, his attorneys-in-fact, each with the power 
of substitution, for him in any and all capacities, to sign a Registration 
Statement on Form N-4 of Sun Life of Canada (U.S.) Variable Account F (Reg. 
No. 333-05227), and any amendments thereto, and to file the same, with 
exhibits thereto, and other documents in connection therewith, with the 
Securities and Exchange Commission, hereby ratifying and confirming all that 
each of said attorneys-in-fact or his substitute or substitutes, may do or 
cause to be done by virtue hereof.


                                            /s/ Robert P. Vrolyk
                                            -----------------------------
                                            Robert P. Vrolyk


June 5, 1996




<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that Richard B. Bailey, whose signature 
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and 
David N. Brown, and each of them, his attorneys-in-fact, each with the power 
of substitution, for him in any and all capacities, to sign a Registration 
Statement on Form N-4 of Sun Life of Canada (U.S.) Variable Account F (Reg. 
No. 333-05227), and any amendments thereto, and to file the same, with 
exhibits thereto, and other documents in connection therewith, with the 
Securities and Exchange Commission, hereby ratifying and confirming all that 
each of said attorneys-in-fact or his substitute or substitutes, may do or 
cause to be done by virtue hereof.


                                            /s/ Richard B. Bailey
                                            -----------------------------
                                            Richard B. Bailey


June 5, 1996



<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that A. Keith Brodkin, whose signature 
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and 
David N. Brown, and each of them, his attorneys-in-fact, each with the power 
of substitution, for him in any and all capacities, to sign a Registration 
Statement on Form N-4 of Sun Life of Canada (U.S.) Variable Account F (Reg. 
No. 333-05227), and any amendments thereto, and to file the same, with 
exhibits thereto, and other documents in connection therewith, with the 
Securities and Exchange Commission, hereby ratifying and confirming all that 
each of said attorneys-in-fact or his substitute or substitutes, may do or 
cause to be done by virtue hereof.


                                            /s/ A. Keith Brodkin
                                            -----------------------------
                                            A. Keith Brodkin


June 5, 1996



<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that M. Colyer Crum, whose signature 
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and 
David N. Brown, and each of them, his attorneys-in-fact, each with the power 
of substitution, for him in any and all capacities, to sign a Registration 
Statement on Form N-4 of Sun Life of Canada (U.S.) Variable Account F (Reg. 
No. 333-05227), and any amendments thereto, and to file the same, with 
exhibits thereto, and other documents in connection therewith, with the 
Securities and Exchange Commission, hereby ratifying and confirming all that 
each of said attorneys-in-fact or his substitute or substitutes, may do or 
cause to be done by virtue hereof.


                                            /s/ M. Colyer Crum
                                            -----------------------------
                                            M. Colyer Crum


June 5, 1996



<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that John R. Gardner, whose signature 
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and 
David N. Brown, and each of them, his attorneys-in-fact, each with the power 
of substitution, for him in any and all capacities, to sign a Registration 
Statement on Form N-4 of Sun Life of Canada (U.S.) Variable Account F (Reg. 
No. 333-05227), and any amendments thereto, and to file the same, with 
exhibits thereto, and other documents in connection therewith, with the 
Securities and Exchange Commission, hereby ratifying and confirming all that 
each of said attorneys-in-fact or his substitute or substitutes, may do or 
cause to be done by virtue hereof.


                                            /s/ John R. Gardner
                                            -----------------------------
                                            John R. Gardner


June 5, 1996




<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that David D. Horn, whose signature 
appears below, constitutes and appoints Bonnie S. Angus and David N. Brown, 
and each of them, his attorneys-in-fact, each with the power of substitution, 
for him in any and all capacities, to sign a Registration Statement on Form 
N-4 of Sun Life of Canada (U.S.) Variable Account F (Reg. No. 333-05227), and 
any amendments thereto, and to file the same, with exhibits thereto, and 
other documents in connection therewith, with the Securities and Exchange 
Commission, hereby ratifying and confirming all that each of said 
attorneys-in-fact or his substitute or substitutes, may do or cause to be 
done by virtue hereof.


                                            /s/ David D. Horn
                                            -----------------------------
                                            David D. Horn


June 5, 1996



<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that John S. Lane, whose signature 
appears below, constitutes and appoints Bonnie S. Angus, David D. Horn and 
David N. Brown, and each of them, his attorneys-in-fact, each with the power 
of substitution, for him in any and all capacities, to sign a Registration 
Statement on Form N-4 of Sun Life of Canada (U.S.) Variable Account F (Reg. 
No. 333-05227), and any amendments thereto, and to file the same, with 
exhibits thereto, and other documents in connection therewith, with the 
Securities and Exchange Commission, hereby ratifying and confirming all that 
each of said attorneys-in-fact or his substitute or substitutes, may do or 
cause to be done by virtue hereof.


                                            /s/ John S. Lane
                                            -----------------------------
                                            John S. Lane


June 5, 1996



<PAGE>



                     SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

                               POWER OF ATTORNEY


      KNOW ALL MEN BY THESE PRESENTS that Angus A. MacNaughton, whose 
signature appears below, constitutes and appoints Bonnie S. Angus, David D. 
Horn and David N. Brown, and each of them, his attorneys-in-fact, each with 
the power of substitution, for him in any and all capacities, to sign a 
Registration Statement on Form N-4 of Sun Life of Canada (U.S.) Variable 
Account F (Reg. No. 333-05227), and any amendments thereto, and to file the 
same, with exhibits thereto, and other documents in connection therewith, 
with the Securities and Exchange Commission, hereby ratifying and confirming 
all that each of said attorneys-in-fact or his substitute or substitutes, may 
do or cause to be done by virtue hereof.

                                            /s/ Angus A. MacNaughton
                                            -----------------------------
                                            Angus A. MacNaughton


June 5, 1996


















<PAGE>
                                                                    EXHIBIT 4(A)
 
SUN LIFE
OF CANADA (U.S.) Sun Life Assurance Company of Canada (U.S.)
                 A Wholly-Owned Subsidiary of Sun Life Assurance Company of
                 Canada
 
<TABLE>
<S>                                <C>                  <C>
EXECUTIVE OFFICE:                  HOME OFFICE:         ANNUITY SERVICE MAILING ADDRESS:
One Sun Life Executive Park        Wilmington,          Sun Life Annuity Service Center
Wellesley Hills, Massachusetts     Delaware             P.O. Box 1024
02181                                                   Boston, Massachusetts 02103
</TABLE>
 
    Sun Life Assurance Company of Canada (U.S.) (the "Company") will pay an
annuity commencing on the Annuity Commencement Date to the Annuitant, if then
living, by applying the adjusted value of the Participant's Account in
accordance with the Settlement provisions. If the Annuitant dies while the
contract is in effect and before the Annuity Commencement Date, the Company will
pay a death benefit to the Beneficiary upon receipt of Due Proof of Death of the
Annuitant. Under certain circumstances, if the Participant dies prior to the
Annuitant and before the Annuity Commencement Date, a distribution is required
by law.
 
    All payments will be made to the persons and in the manner set forth in this
contract. Provisions and endorsements printed or written by the Company on the
following pages form part of the contract.
 
    Signed by the Company at its Executive Office, Wellesley Hills,
Massachusetts on the Issue Date.
 
<TABLE>
<S>                               <C>
John R. Gardner                   Bonnie S. Angus
PRESIDENT                         SECRETARY
</TABLE>
 
FLEXIBLE PAYMENT DEFERRED COMBINATION VARIABLE AND FIXED GROUP ANNUITY CONTRACT
                                NONPARTICIPATING
 
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
 
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE TO A PARTICIPANT, INCLUDING WITHDRAWALS,
TRANSFERS, AMOUNTS APPLIED TO PURCHASE AN ANNUITY, AND DISTRIBUTIONS RESULTING
FROM THE DEATH OF THE PARTICIPANT. PAYMENTS MADE FROM GUARANTEE AMOUNTS WHICH
ARE WITHIN 30 DAYS PRIOR TO THE END OF A GUARANTEE PERIOD ARE NOT SUBJECT TO THE
MARKET VALUE ADJUSTMENT.
 
USE OF CONTRACT. This contract is available for retirement and deferred
compensation plans some of which may qualify for special tax treatment under the
Internal Revenue Code Sections 401, 403 or 408.
<PAGE>
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                        Page
<S>                                                                     <C>
CONTRACT SPECIFICATIONS PAGE                                              4
- ----------------------------------------------------------------------------
DEFINITIONS                                                               5
- ----------------------------------------------------------------------------
FIXED AND VARIABLE ACCOUNTS                                               8
  Fixed Account                                                           8
  Variable Account and Sub-Accounts                                       8
  Ownership of Assets                                                     8
  Investments of the Sub-Accounts                                         8
  Substitution                                                            8
- ----------------------------------------------------------------------------
PURCHASE PAYMENTS                                                         9
  Payments                                                                9
  Account Continuation                                                    9
  Allocation of Net Purchase Payments                                     9
- ----------------------------------------------------------------------------
CONTRACT VALUES DURING ACCUMULATION PERIOD                                9
  Participant's Account                                                   9
  Crediting Variable Accumulation Units                                   9
  Variable Accumulation Unit Value                                        9
  Variable Accumulation Value                                            10
  Net Investment Factor                                                  10
  Guarantee Period                                                       10
  Guaranteed Interest Rates                                              11
  Fixed Accumulation Value                                               11
  Transfer Privilege                                                     12
  Account Fee                                                            12
- ----------------------------------------------------------------------------
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT         12
  Cash Withdrawals                                                       12
  Withdrawal Charges                                                     13
  Market Value Adjustment                                                13
- ----------------------------------------------------------------------------
DEATH BENEFIT                                                            14
  Death Benefit Provided by the Contract                                 14
  Election and Effective Date of Election                                14
  Payment of Death Benefit                                               15
  Amount of Death Benefit                                                15
- ----------------------------------------------------------------------------
SETTLEMENT PROVISIONS                                                    15
  General                                                                15
  Election and Effective Date of Election                                16
  Determination of Amount                                                16
  Effect of Annuity Commencement Date on Participant's Account           16
  Annuity Commencement Date                                              16
  Fixed Annuity Payments                                                 16
  Variable Annuity Payments                                              17
  Annuity Unit Value                                                     17
  Exchange of Variable Annuity Units                                     17
  Account Fee                                                            17
  Description of Annuity Options                                         17
  Amounts Payable on Death of Payee                                      18
  Annuity Payment Rates                                                  18
- ----------------------------------------------------------------------------
</TABLE>
 
                                       2
<PAGE>
<TABLE>
<S>                                                                     <C>
OWNERSHIP PROVISIONS                                                     20
  Exercise of Contract Rights                                            20
  Change of Ownership                                                    20
  Death of Participant                                                   20
  Voting of Series Fund Shares                                           21
  Periodic Reports                                                       21
- ----------------------------------------------------------------------------
BENEFICIARY PROVISIONS                                                   21
  Designation of Change of Beneficiary                                   21
- ----------------------------------------------------------------------------
GENERAL PROVISIONS                                                       22
  Age and Sex Misstatement                                               22
  Contract                                                               22
  Currency                                                               22
  Determination of Values                                                22
  Discontinuance of New Participants                                     22
  Governing Law                                                          22
  Guarantees                                                             22
  Incontestability                                                       22
  Modification                                                           23
  Nonparticipating                                                       23
  Payments by the Company                                                23
  Proof of Age                                                           23
  Proof of Survival                                                      23
  Splitting Units                                                        23
- ----------------------------------------------------------------------------
QUALIFIED CONTRACT PROVISIONS                                           E-1
</TABLE>
 
                                       3
<PAGE>
                            CONTRACT SPECIFICATIONS
 
<TABLE>
<S>                                                          <C>        <C>
Owner                                                        --         Trustees of ABC Company,
                                                                        Inc.
 
Contact Number                                               --         000000000000
 
Issue Date                                                   --         June 1, 1996
 
Account Fee                                                  --         $50
                                                                        See page 17
 
Maximum asset charge factor                                  --         1.15% annually or
 (for the Variable Account only):                                       .003133% daily
 
Available series of Series Fund:
 
    Money Market Series
 
    High Yield Series
 
    Capital Appreciation Series
 
    Utilities Series
 
    Government Securities Series
 
    World Government Series
 
    Managed Sectors Series
 
    Total Return Series
 
    Conservative Growth Series
 
    World Growth Series
 
    Research Series
 
    World Total Return Series
 
    World Asset Allocation Series
 
    Emerging Growth Series
 
    Value Series
 
    MFS-Registered Trademark-/Foreign & Colonial Emerging Markets Series
 
    MFS-Registered Trademark-/Foreign & Colonial International Growth Series
 
    MFS-Registered Trademark-/Foreign & Colonial International Growth and Income Series
</TABLE>
 
                                       4
<PAGE>
                                  DEFINITIONS
 
Any reference in this Contract to "receipt" and "received" by the Company means
receipt at the Company's annuity service mailing address shown on the first page
of this Contract.
 
ACCOUNT YEARS AND ACCOUNT ANNIVERSARIES: The first Account Year shall be the
period of 12 months plus a part of a month as measured from the Date of Coverage
for each Participant to the first day of the calendar month which follows the
calendar month of coverage. All Account Years and Anniversaries thereafter shall
be 12 month periods based upon such first day of the calendar month which
follows the calendar month of coverage. If, for example, the Date of Coverage is
in March, the first Account Year will be determined from the Date of Coverage
but will end on the last day of March in the following year; all other Account
Years and all Account Anniversaries will be measured from April 1.
 
ACCUMULATION PERIOD: The period before the Annuity Commencement date and during
the lifetime of the Annuitant.
 
ANNUITANT: The person or persons named in the Application and on whose life the
first annuity payment is to be made. The Participant may not designate a
co-annuitant unless the Participant and Annuitant are different persons. If more
than one person is so named, all provisions of the contract which are based on
the death of the Annuitant will be based on the date of death of the last
surviving of the persons so named. By example, the death benefit will become due
only upon death, prior to the Annuity Commencement Date, of the last surviving
of the persons so named. Collectively, these persons are referred to in the
Contract as Annuitants. The Participant is not permitted to name a co-annuitant
under a Qualified Contract.
 
*ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment is to be
made.
 
*ANNUITY OPTION: The method for making annuity payments.
 
ANNUITY UNIT: A unit of measure used in the calculation of the amount of the
second and each subsequent variable annuity payment from the Variable Account.
 
APPLICATION: The document signed by each Participant that serves as his or her
application for participation under this Contract.
 
*BENEFICIARY: The person or entity having the right to receive the death benefit
set forth in each Contract and, for Non-Qualified Contracts, who is the
"designated beneficiary" for purposes of Section 72(s) of the Code in the event
of the Participant's death.
 
CERTIFICATE: The document for each Participant which evidences the coverage of
the Participant under the Contract.
 
CODE: The Internal Revenue Code of 1986, as amended.
 
COMPANY: Sun Life Assurance Company of Canada (U.S.).
 
CONTRACT APPLICATION: The document signed by the Owner that evidences the
Owner's application for this Contract.
 
DATE OF COVERAGE: The date on which a Participant's Account becomes effective.
 
DUE PROOF OF DEATH: An original certified copy of an official death certificate,
an original certified copy of a decree of a court of competent jurisdiction as
to the finding of death, or any other proof satisfactory to the Company.
 
EXPIRATION DATE: The last day of a Guarantee Period.
 
FIXED ACCOUNT: The Fixed Account consists of all assets of the Company other
than those allocated to a separate account of the Company.
 
- ------------------------
*As specified in the Application, unless changed.
 
                                       5
<PAGE>
FIXED ANNUITY: An annuity with payments which do not vary as to dollar amount.
 
GUARANTEE AMOUNT: Any portion of a Participant's Account Value allocated to a
particular Guarantee Period with a particular Expiration Date (including
interest earned thereon).
 
GUARANTEE PERIOD: The period for which a Guaranteed Interest Rate is credited.
 
GUARANTEED INTEREST RATE: The rate of interest credited by the Company on a
compound annual basis during any Guarantee Period.
 
ISSUE DATE: The date on which the Contract becomes effective.
 
NET INVESTMENT FACTOR: An index applied to measure the investment performance of
a Sub-Account from one Valuation Period to the next. The Net Investment Factor
may be greater or less than or equal to one [1].
 
NET PURCHASE PAYMENT: The portion of a Purchase Payment which remains after the
deduction of any applicable premium or similar tax.
 
NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which does not receive favorable federal income tax treatment under Sections
401, 403, or 408 of the Code. The Participant's interest in the Contract must be
owned by a natural person or agent for a natural person for the Contract to
receive favorable income tax treatment as an annuity.
 
*OWNER: The person, persons or entity entitled to the ownership rights stated in
the Contract and in whose name or names the Contract is issued. The Owner may
designate a trustee or custodian of a retirement plan which meets the
requirements of Section 401, Section 408(c) or Section 408(k) of the Code to
serve as legal owner of assets of a retirement plan, but the term Owner, as used
herein, refers to the organization entering into the Contract.
 
PARTICIPANT: The person named in the Certificate who is entitled to exercise all
rights and privileges of ownership under the Certificate, except as reserved by
the Owner.
 
PARTICIPANT'S ACCOUNT: An account to which Net Purchase Payments are credited.
 
PARTICIPANT'S ACCOUNT VALUE: The variable accumulation value, if any, plus the
fixed accumulation value, if any, of a Participant's Account for any Valuation
Period.
 
PAYEE: A recipient of payments under the Contract. The term includes an
Annuitant or a Beneficiary who becomes entitled to benefits upon the death of
the Annuitant.
 
PURCHASE PAYMENT (PAYMENT): The amount paid to the Company as consideration for
the benefits provided by the Contract.
 
QUALIFIED CONTRACT: A Contract used in connection with a retirement plan which
received favorable federal income tax treatment under Sections 401, 403 or 408
of the Code.
 
SERIES FUND: MFS/Sun Life Series Trust.
 
SUB-ACCOUNT: That portion of the Variable Account which invests in shares of
specific series or sub-series of the Series Fund.
 
VALUATION PERIOD: The period of time from one determination of Variable
Accumulation Unit values to the next subsequent determination of these values.
Such determination shall be made as of the close of the New York Stock Exchange
on each day the Exchange is open for trading and on such other days on which
there is a sufficient degree of trading in the portfolio securities of the
Variable Account so that the values of the Variable Account's Accumulation Units
might be materially affected.
 
VARIABLE ACCOUNT: A separate account of the Company consisting of assets set
aside by the Company, the investment performance of which is kept separate from
that of the general assets of the Company.
 
- ------------------------
*As specified in the Application, unless changed.
 
                                       6
<PAGE>
VARIABLE ACCUMULATION UNIT: A unit of measure used in the calculation of the
value of the variable portion of a Participant's Account.
 
VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Variable
Account.
 
YEAR: Any consecutive period of 365 days.
 
                                       7
<PAGE>
                          FIXED AND VARIABLE ACCOUNTS
 
FIXED ACCOUNT
 
    The Fixed Account consists of all assets of the Company other than those
allocated to any separate account of the Company. Any portion of a Net Purchase
Payment allocated by a Participant to a Guarantee Period(s) will become part of
the Fixed Account.
 
VARIABLE ACCOUNT AND SUB-ACCOUNTS
 
    The Variable Account to which the variable accumulation values, if any,
under the Contract relate is Sun Life of Canada (U.S.) Variable Account F. It
was established by the Company on July 13, 1989, pursuant to a resolution of its
Board of Directors and is registered as a unit investment trust under the
Investment Company Act of 1940. That portion of the assets of the Variable
Account equal to the reserves and other contract liabilities with respect to the
Variable Account shall not be chargeable with liabilities arising out of any
other business the Company may conduct.
 
    The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of a designated series or sub-series
of the Series Fund. The values of the Variable Accumulation Units and the
Annuity Units described in the contract reflect the investment performance of
the Sub-Accounts.
 
    At the Company's election and subject to any vote by persons having the
right to give instructions with respect to the voting of Series Fund shares held
by the Sub-Accounts, the Variable Account may be operated as a management
company under the Investment Company Act of 1940 or it may be deregistered under
the Investment Company Act of 1940. In the event of any change in the operation
of the Variable Account pursuant to this provision, the Company may make
appropriate endorsement to the contract to reflect the change and take such
other action as may be necessary and appropriate to reflect the change.
 
OWNERSHIP OF ASSETS
 
    The Company shall have exclusive and absolute ownership and control of its
assets, including all assets of the Sub-Accounts.
 
INVESTMENTS OF THE SUB-ACCOUNTS
 
    All amounts allocated to a Sub-Account will be used to purchase shares of a
specific series or sub-series of the Series Fund. The Series Fund shares
available on the Issue Date are shown on the Contract Specifications page; more
series may be subsequently added or deleted. The Series Fund is an open-end
investment company (mutual fund) registered under the Investment Company Act of
1940. Any and all distributions made by the Series Fund with respect to shares
held by a Sub-Account will be reinvested to purchase additional shares of that
series at net asset value. Deductions from the Sub-Accounts will, in effect, be
made by redeeming a number of Series Fund shares at net asset value equal in
total value to the amount to be deducted. Each Sub-Account will be fully
invested in Series Fund shares at all times.
 
SUBSTITUTION
 
    Shares of the series corresponding to a particular portfolio of securities
held by the Series Fund may not always be available for purchase by the
Sub-Accounts or the Company may decide that further investment in such shares is
no longer appropriate in view of the purposes of the Variable Account, or in
view of legal, regulatory or federal income tax restrictions. In such event,
shares of another series or shares of another registered open-end investment
company or unit investment trust may be substituted both for Series Fund shares
already purchased by the Sub-Account and/or as the security to be purchased in
the future, provided that these substitutions meet applicable Internal Revenue
Service diversification guidelines and have been approved by the Securities and
Exchange Commission and such other regulatory authorities as may be necessary.
In the event of any substitution pursuant to this provision, the Company may
make appropriate endorsement to the Contract to reflect the substitution.
 
                                       8
<PAGE>
                               PURCHASE PAYMENTS
 
PAYMENTS
 
    All Purchase Payments are to be paid to the Company at its annuity service
mailing address. The amount of Purchase Payments may vary; however, the Company
will not accept an initial Purchase Payment for any Certificate which is less
than $25,000, and each additional Purchase Payment must be at least $1,000. In
addition, the prior approval of the Company is required before it will accept a
Purchase Payment which would cause the value of a Participant's Account to
exceed $1,000,000. If the value of a Participant's Account exceeds $1,000,000,
no additional Purchase Payments will be allocated without the prior approval of
the Company.
 
    The initial Purchase Payment attributable to a particular Certificate is
shown on the Certificate Specifications page.
 
ACCOUNT CONTINUATION
 
    A Participant's Account shall be continued automatically in full force
during the lifetime of the Annuitant until the Annuity Commencement Date or
until the Participant's Account is surrendered.
 
ALLOCATION OF NET PURCHASE PAYMENTS
 
    The Net Purchase Payment is that portion of a Purchase Payment which remains
after deduction of a premium or similar tax, if any. Each Net Purchase Payment
will be allocated to the Participant's Account upon receipt by the Company,
either to the Sub-Accounts or to the Fixed Account or to both the Sub-Accounts
and the Fixed Account in accordance with the allocation factors specified in the
Application, or as subsequently changed.
 
    The allocation factors for new Purchase Payments among the Guarantee
Period(s) and the Sub-Accounts may be changed by the Participant at any time by
giving written notice of the change to the Company. Any change will take effect
with the first Purchase Payment received with or after receipt of notice of the
change by the Company and will continue in effect until subsequently changed.
 
                   CONTRACT VALUES DURING ACCUMULATION PERIOD
 
PARTICIPANT'S ACCOUNT
 
    The Company will establish a Participant's Account for each Participant
under this Contract and will maintain the Participant's Account during the
Accumulation Period. The Participant's Account Value for any Valuation Period is
equal to the variable accumulation value, if any, plus the fixed accumulation
value, if any, of the Participant's Account for that Valuation Period.
 
VARIABLE ACCOUNT VALUE
CREDITING VARIABLE ACCUMULATION UNITS
 
    Upon receipt of a Purchase Payment by the Company, all or that portion, if
any, of the Net Purchase Payment to be allocated to the Sub-Accounts will be
credited to the Participant's Account in the form of Variable Accumulation
Units. The number of particular Variable Accumulation Units to be credited is
determined by dividing the dollar amount allocated to the particular Sub-Account
by the Variable Accumulation Unit value of the particular Sub-Account for the
Valuation Period during which the Purchase Payment is received by the Company.
 
VARIABLE ACCUMULATION UNIT VALUE
 
    The Variable Accumulation Unit value for each Sub-Account was established at
$10.00 for the first Valuation Period of the particular Sub-Account. The
Variable Accumulation Unit value for the particular Sub-Account for any
subsequent Valuation Period is determined by methodology which is the
mathematical equivalent of multiplying the Variable Accumulation Unit value for
the particular Sub-Account for the immediately preceding Valuation Period by the
Net Investment Factor for the particular Sub-Account for such subsequent
Valuation Period. The Variable Accumulation Unit value for each Sub-Account for
any Valuation
 
                                       9
<PAGE>
Period is the value determined as of the end of the particular Valuation Period
and may increase, decrease or remain constant from Valuation Period to Valuation
Period in accordance with the Net Investment Factor described below.
 
VARIABLE ACCUMULATION VALUE
 
    The variable accumulation value, if any, of a Participant's Account for any
Valuation Period is equal to the sum of the value of all Variable Accumulation
Units of each Sub-Account credited to the Participant's Account for such
Valuation Period. The variable accumulation value of each Sub-Account is
determined by multiplying the number of Variable Accumulation Units, if any,
credited to each Sub-Account by the Variable Accumulation Unit value of the
particular Sub-Account for such Valuation Period.
 
NET INVESTMENT FACTOR
 
    The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of a Variable Accumulation Unit may increase, decrease or remain the same.
 
    The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (a) by (b) and then subtracting (c) from the result
where:
 
a)  is the net result of:
 
    1)  the net asset value of a Series Fund share held in the Sub-Account
       determined as of the end of the Valuation Period, plus
 
    2)  the per share amount of any dividend or other distribution declared by
       the Series Fund on the shares held in the Sub-Account if the ex-dividend
       date occurs during the Valuation Period, plus or minus
 
    3)  a per share credit or charge with respect to any taxes paid or reserved
       for by the Company during the Valuation Period which are determined by
       the Company to be attributable to the operation of the Sub-Account;
 
b)  is the net asset value of a Series Fund share held in the Sub-Account
    determined as of the end of the preceding Valuation Period; and
 
c)  is the asset charge factor determined by the Company for the Valuation
    Period to reflect the charges for assuming the mortality and expense risks
    and administrative expense risks.
 
    The asset charge factor for any Valuation Period is equal to the daily asset
charge factor multiplied by the number of 24 hour periods in the Valuation
Period. The daily asset charge factor will be determined by the Company
annually, but in no event may it exceed the maximum daily asset charge factor
specified on the Contract Specifications page.
 
FIXED ACCOUNT VALUE
GUARANTEE PERIOD
 
    The Company will make available one [1] or more Guarantee Period(s) from
time to time. Guarantee Periods will be of two [2] types: Initial Guarantee
Periods (for New Purchase Payments) and Subsequent Guarantee Periods (for
Account Values to be allocated from expiring Guarantee Periods). The Participant
has the right to elect from among the applicable Guarantee Periods and that
election will determine the applicable Guarantee Interest Rate(s).
 
    A Purchase Payment or such portion (at least $1,000) allocated to an Initial
Guarantee Period will earn interest at the Guaranteed Interest Rate during that
Guarantee Period [beginning on the date the Net Purchase Payment is applied and
ending when the number of calendar months in that Guarantee Period has elapsed,
measured from the end of the calendar month in which the Purchase Payment was
allocated]. The last day of a Guarantee Period is the Expiration Date.
Subsequent Guarantee Periods begin on the first day following the Expiration
Date and Account Values allocated thereto [referred to as "Guaranteed Amounts"]
 
                                       10
<PAGE>
will earn interest at the applicable Guaranteed Interest Rate for the applicable
Subsequent Guarantee Period until its Expiration Date. Guaranteed Amounts
allocated to Guarantee Periods of the same duration may have different
Expiration Dates and each Guarantee Amount will be treated separately for
purposes of determining any market value adjustment, in the case of a
withdrawal.
 
    The Company will notify the Participant in writing at least 45 days and no
more than 75 days prior to the Expiration Date for any Guarantee Amount, except
for Guarantee Amounts held under a Dollar Cost Averaging Option [described
below]. For Guarantee Periods established under the Monthly or Quarterly Dollar
Cost Averaging Options, on the day following the Expiration Date the Guarantee
Amount will be transferred to one [1] or more Sub-Accounts in accordance with
the Participant's instructions. The Participant can elect a new Guarantee Period
or instruct the Company to transfer the Guarantee Amount [or any portion subject
to a minimum of $1,000] in accordance with the Transfer Privilege provision by
giving written notice to the Company. To be effective, such notice has to be
received by the Company prior to the Expiration Date, failing which a new
Guarantee Period of the same duration as the expiring Guarantee Period will
commence automatically on the first day following the Expiration Date.
 
    The Participant may also elect to use an available Dollar Cost Averaging
Option in connection with selected Initial Guarantee Periods [subject to a
minimum amount of $1,000]. Dollar Cost Averaging Options are available monthly
or quarterly:
 
    1.  Monthly Dollar Cost Averaging Option: Amounts allocated will be divided
        among 12 separate serially maturing Guarantee Periods. The first
        Guarantee Period ends one [1] full calendar month following the date the
        Net Purchase Payment is applied and each subsequent Guarantee Period
        shall end one [1] full calendar month later, serially thereafter. The
        Guarantee Amount at the Expiration Date of each such Guarantee Period
        will equal 1/12 of the Net Purchase Payment applied under this Option,
        with the Guarantee Amount at the last Expiration Date including all
        interest earned in the 12 Guarantee Periods.
 
    2.  Quarterly Dollar Cost Averaging: Amounts allocated will be divided among
        four [4] separate serially maturing Guarantee Periods. The first
        Guarantee Period ends three [3] full calendar months following the date
        the Net Purchase Payment is applied and each subsequent Guarantee Period
        shall end three [3] full calendar months later, serially thereafter. The
        Guarantee Amount at the Expiration Date of each such Guarantee Period
        will equal 1/4 of the Net Purchase Payment applied under this Option,
        with the Guarantee Amount at the last Expiration Date including all
        interest earned.
 
    Amounts allocated under a Dollar Cost Averaging Option must be derived
solely from Purchase Payments. The Transfer Privilege provision is not available
in connection with any Dollar Cost Averaging Option.
 
GUARANTEED INTEREST RATES
 
    The company periodically will establish an applicable Guaranteed Interest
Rate for each Guarantee Period offered by the Company. These rates will be
guaranteed for the duration of the respective Guarantee Periods.
 
    No Guaranteed Interest Rate shall be less than 3% per year, compounded
annually.
 
FIXED ACCUMULATION VALUE
 
    Upon receipt of a Purchase Payment by the Company, all or that portion, if
any, of the Net Purchase Payment which is allocated to the Fixed Account will be
credited to the Participant's Account and allocated to the Guarantee Period
selected by the Participant. The fixed accumulation value, if any, of a
Participant's Account for any Valuation Period is equal to the sum of the values
of all Guarantee Amounts credited to the Participant's Account for such
Valuation Period.
 
                                       11
<PAGE>
TRANSFER PRIVILEGE
 
    At any time during the Accumulation Period the Participant may transfer all
or part of the Participant's Account Value to one or more Sub-Accounts or
Guarantee Periods, subject to the conditions set forth below. A transfer will
generally be effective on the date the request for transfer is received by the
Company.
 
    Transfers involving Sub-Accounts will reflect the purchase or cancellation
of Variable Accumulation Units having an aggregate value equal to the dollar
amount being transferred to or from a particular Sub-Account. The purchase or
cancellation of such units shall be made using Variable Accumulation Unit values
of the applicable Sub-Account for the Valuation Period during which the transfer
is effective. Transfers to a Guarantee Period will result in a new Guarantee
Period for the amount being transferred. Any such Guarantee Period will begin on
the effective date of the transfer and end on the Expiration Date. The amount
transferred into such Guarantee Period will earn interest at the Guaranteed
Interest Rate declared by the Company for that Guarantee Period as of the
effective date of the transfer.
 
    Transfers shall be subject to the following conditions: (1) not more than 12
transfers may be made in any Account Year; (2) a minimum of 30 days must elapse
between transfers made to or from the Fixed Account or between Guarantee Periods
within the Fixed Account, (3) the amount being transferred from a Sub-Account
may not be less than $1,000, unless the total Participant's Account Value
attributable to a Sub-Account is being transferred; (4) any Participant's
Account Value remaining in a Sub-Account may not be less than $1,000; (5) the
total Participant's Account Value attributable to the Guarantee Amount must be
transferred; and (6) allocations to Monthly or Quarterly Dollar Cost Averaging
Options may not be achieved through transfer. In addition, transfers of a
Guarantee Amount will be subject to the market value adjustment described below
unless the transfer is effective within 30 days prior to the Expiration Date
applicable to the Guarantee Amount; and transfers involving Variable
Accumulation Units shall be subject to such terms and conditions as may be
imposed by the Series Fund. Currently, there is no charge for transfers;
however, the Company reserves the right to impose a charge of up to $15 for each
transfer.
 
ACCOUNT FEE
 
    Prior to the Annuity Commencement Date, on each Account Anniversary the
Company will deduct from the value of each Participant's Account an annual
account fee to reimburse the Company for administrative expenses relating to the
contract and the Participant's Account in the amount of $50. The account fee
will be deducted on a pro rata basis from amounts allocated to each Guarantee
Period and each Sub-Account in which the Participant's Account is invested at
the time of such deduction. If a Participant's Account is surrendered for its
full value on other than an Account Anniversary, the account fee will be
deducted in full at the time of such surrender. The Company will waive the
account fee when the Participant's Account Value is greater than $100,000 on the
Account Anniversary. On the Annuity Commencement Date the value of the
Participant's Account will be reduced by a proportionate amount of the account
fee to reflect the time elapsed between the last Account Anniversary and the day
before the Annuity Commencement Date.
 
    After the Annuity Commencement Date an annual account fee of $50 will be
deducted in equal amounts from each Variable Annuity payment made during the
year. No such deduction is made from Fixed Annuity payments.
 
        CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT
 
CASH WITHDRAWALS
 
    At any time before the Annuity Commencement Date and during the lifetime of
the Annuitant, the Participant may elect to receive a cash withdrawal payment
from the Company by filing with the Company at its annuity service mailing
address, a written election in such form as the Company may require. Any such
election shall specify the amount of the withdrawal and will be effective on the
date that it is received by the Company. Any cash withdrawal payment will be
paid within seven days from the date the election becomes effective, except as
the Company may be permitted to defer such payment in accordance with the
Investment Company Act of 1940. The Company reserves the right to defer the
payment of amounts withdrawn from the Fixed Account for a period not to exceed
six months from the date written request for such withdrawal is received by the
Company.
 
                                       12
<PAGE>
    The Participant may request a full surrender or a partial withdrawal. A full
surrender will result in a cash withdrawal payment equal to the value of the
Participant's Account at the end of the Valuation Period during which the
election becomes effective less the account fee, plus or minus any applicable
market value adjustment, and less any applicable withdrawal charge. A partial
withdrawal (a payment of an amount less than that paid under a full surrender)
will result in the cancellation of a portion of the Participant's Account Value
with an aggregate dollar value equal to the dollar amount of the cash withdrawal
payment, plus or minus any applicable market value adjustment and plus any
applicable withdrawal charge.
 
    In the case of a partial withdrawal, the Participant may instruct the
Company as to the amounts to be withdrawn from each Sub-Account and/or Guarantee
Amount. If not so instructed, the Company will effect such withdrawal pro rata
from each Sub-Account and Guarantee Amount in which the Participant's Account
Value is invested at the end of the Valuation Period during which the withdrawal
becomes effective. If a partial withdrawal is requested which would leave a
Participant's Account Value less than the account fee, then such partial
withdrawal will be treated as a full surrender.
 
    Cash withdrawals from a Sub-Account will result in the cancellation of
Variable Accumulation Units attributable to the Participant's Account with an
aggregate value on the effective date of the withdrawal equal to the total
amount by which the Sub-Account is reduced. The cancellation of such units will
be based on the Variable Accumulation Unit values of the Sub-Account for the
Valuation Period during which the cash withdrawal is effective.
 
    All cash withdrawals of any Guarantee Amount, except those effective within
30 days prior to the Expiration Date of such Guarantee Amount will be subject to
the market value adjustment described below.
 
WITHDRAWAL CHARGES
 
    If a cash withdrawal is made, a withdrawal charge may be assessed by the
Company. For purposes of a full surrender or partial withdrawal, each withdrawal
is allocated to previously unliquidated Payments [on a first-in, first-out
basis] until all Purchase Payments have been liquidated. Once Payments have been
liquidated, any further withdrawals will come from the earnings of the Contract
and are not subject to withdrawal charges. The amount subject to withdrawal
charge is the amount of the partial withdrawal or full surrender up to the
maximum of the sum of all unliquidated Payments.
 
    A withdrawal charge is applied to an amount liquidated when that amount has
been in the Participant's Account for less than one [1] Year.
 
    When any liquidation is made from a Qualified Plan to comply with mandatory
minimum distribution requirements, no withdrawal charge will be applied only to
the amount required to be withdrawn during each Account Year. These required
distributions may commence during and continue after the year in which the
Annuitant attains age 70 1/2. Any amounts withdrawn in excess of the required
minimum distribution amount during each Account Year will be subject to
withdrawal charges as detailed above.
 
    No withdrawal charge is imposed upon amounts applied to purchase an annuity.
 
MARKET VALUE ADJUSTMENT
 
    Any cash withdrawal (which for purposes of this section include transfers,
distributions on the death of a Participant, and amounts applied to purchase an
annuity) of a Guarantee Amount, other than a withdrawal effective within 30 days
prior to the Expiration Date of the Guarantee Amount, will be subject to a
market value adjustment.
 
    The market value adjustment will reflect the relationship between the
current rate (as described in the formula below) for the amount being withdrawn
and the Guaranteed Interest Rate applicable to the amount being withdrawn. It
also reflects the time remaining in the applicable Guarantee Period.
 
                                       13
<PAGE>
    The market value adjustment will be determined by multiplying the amount
being withdrawn after the deduction of any applicable account fee and before
deduction of any applicable withdrawal charge by the market value adjustment
factor. The market value adjustment factor is:
 
                            [(1 + I)/(1 + J)]N/12 -1
 
    where,
 
    I is the Guaranteed Interest Rate being credited to the Guarantee Amount
subject to the market value adjustment,
 
    J is the Guaranteed Interest Rate declared by the Company, as of the
effective date of the application of the market value adjustment, for current
allocations to Guarantee Period(s). If the Guarantee Period was originally
established through the Monthly or Quarterly Dollar Cost Averaging Options, J is
the rate declared for current allocations to the Monthly and Quarterly Dollar
Cost Averaging Options. For all other Guarantee Periods, J is the rate declared
for current allocations to Guarantee Periods equal to the balance of the
Guarantee Period of the Guarantee Amount subject to the market value adjustment,
rounded to the next higher number of complete years. In the determination of J
for Guarantee Periods other than those established under the Monthly or
Quarterly Dollar Cost Averaging Options, if the Company does not currently offer
the applicable Guarantee Period, then J will be determined by linear
interpolation of rates currently declared for Guarantee Periods that are
available, and
 
    N is the number of complete months remaining in the Guarantee Period of the
Guarantee Amount subject to the market value adjustment.
 
                                 DEATH BENEFIT
 
DEATH BENEFIT PROVIDED BY THE CONTRACT
 
    If the Annuitant dies while this Contract and the applicable Certificate are
in effect and before the Annuity Commencement Date, the Company, upon receipt of
Due Proof of Death of the Annuitant, will pay a death benefit to the Beneficiary
in accordance with this Death Benefit provision. If there is no designated
Beneficiary living on the date of death of the Annuitant, the Company will pay
the death benefit upon receipt of Due Proof of Death of both the Annuitant and
the designated Beneficiary in one sum to the Participant or, if the Annuitant
was the Participant, to the estate of the deceased Participant/Annuitant. If the
death of the Annuitant occurs on or after the Annuity Commencement Date, no
death benefit will be payable under the Contract except as may be provided under
the form of annuity elected.
 
ELECTION AND EFFECTIVE DATE OF ELECTION
 
    During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Participant may elect to have the death benefit applied under one or
more of the Annuity Options in accordance with the Contract's Settlement
Provisions to effect a Variable Annuity or a Fixed Annuity or a combination or
both for the Beneficiary as Payee after the death of the Annuitant. This
election may be made or subsequently revoked by filing with the Company at its
annuity service mailing address, a written election or revocation of an election
in such form as the Company may require. Any election or revocation of an
election of a method of settlement of the death benefit by the Participant will
become effective on the date it is received by the Company. For the purposes of
the Payment of Death Benefit section below, any election of the method of
settlement of the death benefit by the Participant which is in effect on the
date of death of the Annuitant will be deemed effective on the date Due Proof of
Death of the Annuitant is received by the Company.
 
    If no election of a method of settlement of the death benefit by the
Participant is in effect on the date of death of the Annuitant, the Beneficiary
may elect (a) to receive the death benefit in the form of a cash payment, in
which event the Participant's Account will be canceled; or (b) to have the death
benefit applied under one or more of the Annuity Options in accordance with the
Settlement Provisions to effect, on the Annuity Commencement Date determined in
the Payment of Death Benefit section below, a Variable Annuity or a Fixed
Annuity or a combination or both for the Beneficiary as Payee. This election may
be made by filing with the Company at its annuity service mailing address, a
written election in such form as the Company may
 
                                       14
<PAGE>
require. Any written election of a method of settlement of the death benefit by
the Beneficiary will become effective on the later of: (a) the date the election
is received by the Company; or (b) the date Due Proof of Death of the Annuitant
is received by the Company. If a written election by the Beneficiary is not
received by the Company within 60 days following the date Due Proof of Death of
the Annuitant is received by the Company, the Beneficiary shall be deemed to
have elected a cash payment as of the last day of the 60 day period.
 
PAYMENT OF DEATH BENEFIT
 
    If the death benefit is to be paid in cash to the Beneficiary, payment will
be made within seven [7] days of the date the election becomes effective or is
deemed to become effective, except as the Company may be permitted to defer any
such payment of amounts derived from the Variable Account in accordance with the
Investment Company Act of 1940. If the death benefit is to be paid in one sum to
the Participant, or, if the Annuitant was the Participant, to the estate of the
deceased Participant/Annuitant, payment will be made within seven [7] days of
the date Due Proof of Death of the Annuitant, the Participant, and/or the
designated Beneficiary, as applicable, is received by the Company. If settlement
under one or more of the Annuity Options is elected, the Annuity Commencement
Date will be the first day of the second calendar month following the effective
date or the deemed effective date of the election and the Participant's Account
will be maintained in effect until the Annuity Commencement Date.
 
AMOUNT OF DEATH BENEFIT
 
    If the Annuitant was less than age 86 on the Date of Coverage the death
benefit is determined as of the effective date or deemed effective date of the
death benefit election and is equal to the greatest of (a) the Participant's
Account Value for the Valuation Period during which the death benefit election
is effective or is deemed to become effective; (b) the excess of (i) the sum of
all Purchase Payments made under the Certificate over (ii) the sum of all
partial withdrawals; (c) the amount that would have been payable in the event of
a full surrender of the Participant's Account on the date the death benefit
election is effective or is deemed to become effective.
 
    If (b) or (c) is operative, the Participant's Account Value will be
increased by the excess of (b) or (c) as applicable, over (a) and the increase
will be allocated to the Sub-Accounts based on the respective values of the
Sub-Accounts on the date the amount of the death benefit is determined. If no
portion of the Participant's Account is allocated to the Sub-Accounts on that
date, the entire increase will be allocated to the Sub-Account invested in the
Money Market Series of the Series Fund.
 
    If the Annuitant was 86 or greater on the Date of Coverage, the death
benefit is determined as of the effective date or deemed effective date of the
death benefit election and is equal to the amount that would have been payable
in the event of a full surrender of the Participant's Account on the date the
death benefit election is or is deemed to become effective.
 
                             SETTLEMENT PROVISIONS
 
GENERAL
 
    On the Annuity Commencement Date, the adjusted value of the Participant's
Account as determined in accordance with the Determination of Amount provision
below will be applied, as specified by the Participant, under one [1] or more of
the Annuity Options provided in the Contract or under such other settlement
options as may be agreed to by the Company. However, if the amount to be applied
under any Annuity Option is less than $2,000, or if the first annuity payment
payable in accordance with such option is less than $20, the Company will pay
the amount to be applied in a single payment to the Payee.
 
    After the Annuity Commencement Date, no change of Annuity Option is
permitted and no payments may be requested under the Cash Withdrawals provision
of the Contract. Exchanges of Variable Annuity Units are permitted.
 
                                       15
<PAGE>
ELECTION AND EFFECTIVE DATE OF ELECTION
 
    During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Participant may elect to have the adjusted value of the Participant's
Account applied on the Annuity Commencement Date under one [1] or more of the
Annuity Options provided in the Contract; if more than one person is named as
Annuitant, due to the designation of a co-annuitant, the Participant may elect
to name one of such persons to be the sole Annuitant as of the Annuity
Commencement Date. The Participant may also change any election but any election
or change of election must be effective at least 30 days prior to the Annuity
Commencement Date. This election or change of election may be made by filing
with the Company at its annuity service mailing address, a written election or
change of election in such form as the Company may require. Any such election or
change of election will become effective on the date it is received by the
Company. If no such election is in effect on the 30th day prior to the Annuity
Commencement Date, the adjusted value of the Participant's Account will be
applied under Annuity Option B, for a life annuity with 120 monthly payments
certain. If there is no election of a sole Annuitant in effect on the 30th day
prior to the Annuity Commencement Date, the person designated as co-annuitant
will be the Payee under the applicable Annuity Option.
 
    Any such election may specify the proportion of the adjusted value of the
Participant's Account to be applied to provide a Fixed Annuity and a Variable
Annuity. In the event the election does not so specify, then the portion of the
adjusted value of the Participant's Account to be applied to provide a Fixed
Annuity and/or a Variable Annuity will be determined on pro rata basis from the
composition of the Participant's Account on the Annuity Commencement Date.
 
    The Annuity Options in the contract may also be elected as provided in the
Death Benefit section of the Contract.
 
DETERMINATION OF AMOUNT
 
    The adjusted value of the Participant's Account to be applied to provide a
Variable Annuity or a Fixed Annuity or a combination of both, shall be equal to
the Participant's Account Value for the Valuation Period which ends immediately
preceding the Annuity Commencement Date, minus a proportionate amount of the
account fee to reflect the time elapsed between the last Account Anniversary and
the day before the Annuity Commencement Date, plus or minus any applicable
market value adjustment and minus a premium or similar tax, if any.
 
EFFECT OF ANNUITY COMMENCEMENT DATE ON PARTICIPANT'S ACCOUNT
 
    On the Annuity Commencement Date the Participant's Account will be canceled.
 
ANNUITY COMMENCEMENT DATE
 
    The Annuity Commencement Date is set forth on the Certificate Specifications
page. This date may be changed from time to time by the Participant provided
that each change is effective at least 30 days prior to the then current Annuity
Commencement Date and the new Annuity Commencement Date is a date which is: (1)
at least 30 days after the effective date of the change; (2) the first day of a
month; and (3) not later than the first day of the first month following the
Annuitant's 90th birthday. Any change of the Annuity Commencement Date may be
made by filing with the Company at its annuity service mailing address, a
written designation of a new Annuity Commencement Date in such form as the
Company may require. Any such change will become effective on the date the
designation is received by the Company.
 
    The Annuity Commencement Date may also be changed by an election of a
settlement option as provided in the Death Benefit section of the Contract.
 
FIXED ANNUITY PAYMENTS
 
    The dollar amount of each Fixed Annuity payment shall be determined in
accordance with the annuity payment rates shown on page 19, which are based on
the minimum guaranteed interest rate of 3% per year or, if more favorable to the
Payee(s), in accordance with the annuity payment rates published by the Company
and in use on the Annuity Commencement Date.
 
                                       16
<PAGE>
VARIABLE ANNUITY PAYMENTS
 
    The dollar amount of the first Variable Annuity payment shall be determined
in accordance with the annuity payment rates shown on page 19, which are based
on an assumed interest rate of 3% per year.
 
    All Variable Annuity payments other than the first are determined by means
of Annuity Units credited with respect to the particular Payee. The number of
Annuity Units to be credited in respect of a particular Sub-Account is
determined by dividing that portion of the first Variable Annuity payment
attributable to that Sub-Account by the Annuity Unit value of that Sub-Account
for the Valuation Period which ends immediately preceding the Annuity
Commencement Date. The number of Annuity Units of each Sub-Account credited with
respect to the Payee then remains fixed unless an exchange of Annuity Units is
made pursuant to the Exchange of Variable Annuity Units section below. The
dollar amount of each Variable Annuity payment after the first may increase,
decrease or remain constant, and is equal to the sum of the amounts determined
by multiplying the number of Annuity Units of a particular Sub-Account credited
with respect to the Payee by the Annuity Unit value for the particular
Sub-Account for the Valuation Period which ends immediately preceding the due
date of each subsequent payment.
 
ANNUITY UNIT VALUE
 
    The Annuity Unit value for each Sub-Account was established at $10.00 for
the first Valuation Period of the particular Sub-Account. The Annuity Unit value
for the particular Sub-Account for any subsequent Valuation Period is determined
by multiplying the Annuity Unit value for the particular Sub-Account for the
immediately preceding Value Period by the Net Investment Factor for the
particular Sub-Account for the current Valuation Period and then multiplying
that product by a factor to neutralize the assumed interest rate of 3% per year
used to establish the annuity payment rates found in the Contract. The factor is
0.99991902 for a one [1] day Valuation Period.
 
EXCHANGE OF VARIABLE ANNUITY UNITS
 
    After the Annuity Commencement Date the Payee may, by filing a written
request with the Company at its annuity service mailing address, exchange the
value of a designated number of Annuity Units of particular Sub-Accounts then
credited with respect to such Payee into other Annuity Units, the value of which
would be such that the dollar amount of an annuity payment made on the date of
the exchange would be unaffected by the exchange. No more than 12 exchanges may
be made in any Account Year.
 
    Exchanges maybe made among the Sub-Accounts only. Exchanges shall be made
using the Annuity Unit values for the Valuation Period during which the request
for exchange is received by the Company.
 
ACCOUNT FEE
 
    After the Annuity Commencement Date an annual account fee amounting to $50
will be deducted in equal amounts from each Variable Annuity payment made during
the year as provided in the Contract Values During Accumulation Period section
of the Contract.
 
DESCRIPTION OF ANNUITY OPTIONS
 
    Options A, B, C and D are available on either a Fixed Annuity or a Variable
Annuity basis. Option E is available on a Fixed Annuity basis only.
 
    Annuity Option A. Life Annuity: Monthly payments during the lifetime of the
Payee.
 
    Annuity Option B. Life Annuity with 60, 120, 180 or 240 Monthly Payments
Certain: Monthly payments during the lifetime of the Payee and in any event for
sixty (60), one hundred twenty (120), one hundred eighty (180) or two hundred
forty (240) months certain as elected.
 
    Annuity Option C. Joint and Survivor Annuity: Monthly payments payable
during the joint lifetime of the Payee and a designated second person and during
the lifetime of the survivor. During the lifetime of the survivor variable
monthly payments, if any, will be determined using the percentage chosen at the
time of the election of this option of the number of each type of Annuity Units
credited with respect to the Payee, and each fixed monthly payment, if any, will
be equal to the same percentage of the fixed monthly payment payable during the
joint lifetime of the Payee and the designated second person.
 
                                       17
<PAGE>
    Annuity Option D. Monthly Payments for a Specified Period Certain: Monthly
payments for any specified period of time (at least five (5) years but not
exceeding 30 years), as elected.
 
    Annuity Option E. Fixed Payments: The amount applied to provide fixed
payments in accordance with this Annuity Option will be held by the Company at
interest. Fixed payments will be made in such amounts and at such times (at
least over a period of five (5) years) as may be agreed upon with the Company
and will continue until the amount held by the Company with interest is
exhausted. The final payment will be for the balance remaining and may be less
than the amount of each preceding payment. Interest will be credited on an
annual basis on the amount remaining unpaid at a rate which shall be determined
by the Company from time to time but which shall not be less than 3% per year
compounded annually. The rate so determined may be changed at any time and as
often as may be determined by the Company, provided, however, that the rate may
not be reduced more frequently than once during each calendar year.
 
AMOUNTS PAYABLE ON DEATH OF PAYEE
 
    In the event of the death of the Payee on or after the Annuity Commencement
Date, the Company will pay any remaining payments under any Annuity Option then
in effect to the Payee's designated beneficiary as they become due. If there is
no designated beneficiary entitled to these remaining payments then living, the
Company will pay the amount specified in the schedule below for any Annuity
Option then in effect in one sum to the deceased Payee's estate. Any beneficiary
who becomes entitled to any remaining payments under any Annuity Option may
elect to receive the amount specified in the schedule below for such option in
one sum. In the event of the death of a beneficiary who has become entitled to
receive any remaining payments under any Annuity Option, the Company will pay
the amount specified for such option in the schedule below in one sum to the
deceased beneficiary's estate. All payments made in one sum by the Company as
provided in this paragraph are made in lieu of paying any remaining payments
under the Annuity Option then in effect.
 
<TABLE>
<CAPTION>
 Option    Amount
- ---------  --------------------------------------------------------------------------
 
<C>        <S>
    B      The discounted value of the remaining payments, if any, for the certain
           period.
    D      The discounted value of the remaining payments, if any, for the certain
           period.
    E      The unpaid balance of the proceeds and interest.
</TABLE>
 
    In the case of Options B and D the discounted value will be based, for
payments being made on a variable basis, on interest compounded annually at the
assumed interest rate and on the assumptions that the particular Annuity Unit
values applicable to the remaining payments will be the particular Annuity Unit
values for the Valuation Period which ends on the day before the date of the
determination and that this value will remain unchanged thereafter.
 
ANNUITY PAYMENT RATES
 
    The annuity payment rates below show, for each $1,000 applied, the dollar
amount of both (a) the first monthly Variable Annuity payment based on the
assumed interest rate of 3% and (b) the monthly Fixed Annuity payment, when the
payment is based on the minimum guaranteed interest rate of 3% per year.
 
    The mortality table used in determining the annuity payment rates for
Options A, B and C is the 1983 Individual Annuitant Mortality Table A. In using
this mortality table, ages of Annuitants will be reduced by one [1] year for
Annuity Commencement Dates occurring during the 1990's, reduced two [2] years
for Annuity Commencement Dates occurring during the decade 2000-2009, and so on.
 
    The annuity payment rates in the tables shown below reflect rates of
mortality appropriate for Annuity Commencement Dates occurring during the 1980s.
Thus, for Annuity Commencement Dates occurring during the 1990s the term
ADJUSTED AGE as used in the tables below, means actual age less one year.
ADJUSTED AGE shall mean actual age less two year for Annuity Commencement Dates
occurring in the decade 2000-2009, and so on.
 
                                       18
<PAGE>
    ADJUSTED AGES will be determined based on the actual age(s) of the
Annuitant(s), in completed years and months, as of the Annuity Commencement
Date. The tables below show annuity payment rates for exact ADJUSTED AGES; rates
for ADJUSTED AGES expressed in completed years and months will be based on
straight line interpolation between the appropriate annuity payment rates.
 
    The dollar amount of each annuity payment for any adjusted age or
combination of adjusted ages not shown below or for any other form of Annuity
Option agreed to by the Company will be quoted by the Company on request.
 
               AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT PER $1,000
                              SINGLE LIFE ANNUITY
 
<TABLE>
<CAPTION>
                                                   OPTION B
                                      LIFE ANNUITY WITH PAYMENTS CERTAIN
                          ----------------------------------------------------------
                           60 Payments    120 Payments   180 Payments   240 Payments
       OPTION A
     LIFE ANNUITY
- -----------------------
<S>       <C>    <C>      <C>    <C>      <C>   <C>      <C>   <C>      <C>   <C>
Adjusted                  ----------------------------------------------------------
  Age     Male   Female   Male   Female   Male  Female   Male  Female   Male  Female
   20      3.04   2.93     3.03   2.93    3.03   2.93    3.03   2.93    3.03   2.93
   25      3.14   3.02     3.14   3.02    3.14   3.02    3.14   3.02    3.13   3.01
   30      3.28   3.13     3.28   3.13    3.27   3.12    3.27   3.12    3.26   3.12
   35      3.44   3.26     3.44   3.26    3.44   3.26    3.43   3.25    3.41   3.24
   40      3.66   3.42     3.65   3.42    3.64   3.42    3.63   3.41    3.60   3.40
   45      3.93   3.63     3.92   3.63    3.90   3.63    3.87   3.61    3.82   3.59
   50      4.27   3.90     4.26   3.90    4.22   3.89    4.17   3.86    4.08   3.82
   55      4.70   4.25     4.68   4.25    4.62   4.22    4.53   4.18    4.39   4.11
   60      5.28   4.72     5.25   4.70    5.14   4.66    4.96   4.57    4.71   4.44
   65      6.10   5.35     6.03   5.32    5.81   5.22    5.46   5.05    5.02   4.79
   70      7.23   6.25     7.07   6.18    6.61   5.96    5.96   5.60    5.27   5.12
   75      8.82   7.56     8.44   7.39    7.49   6.89    6.38   6.14    5.42   5.35
   80     11.06   9.53    10.17   9.07    8.33   7.89    6.66   6.55    5.49   5.47
   85     14.16  12.48    12.12  11.19    8.97   8.74    6.81   6.77    5.51   5.50
</TABLE>
 
                                    OPTION C
                           JOINT AND SURVIVOR ANNUITY
              (Assumed election of Joint and Two-Thirds Survivor)
 
<TABLE>
<CAPTION>
                             Adjusted Age of Female
Adjusted Age  -----------------------------------------------------
  of Male        55         60         65         70         75
- ------------  ---------  ---------  ---------  ---------  ---------
<S>           <C>        <C>        <C>        <C>        <C>
     55            4.25       4.47       4.72       4.99       5.29
     60            4.44       4.71       5.01       5.34       5.71
     65            4.65       4.97       5.33       5.75       6.23
     70            4.88       5.24       5.68       6.20       6.81
     75            5.11       5.52       6.04       6.68       7.45
</TABLE>
 
                                    OPTION D
                    PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
 
<TABLE>
<CAPTION>
  Years      Amount       Years      Amount       Years      Amount       Years      Amount
- ---------  -----------  ---------  -----------  ---------  -----------  ---------  -----------
<S>        <C>          <C>        <C>          <C>        <C>          <C>        <C>
    5           17.91      12            8.24      19            5.73      26            4.59
    6           15.14      13            7.71      20            5.51      27            4.47
    7           13.16      14            7.26      21            5.32      28            4.37
    8           11.68      15            6.87      22            5.15      29            4.27
    9           10.53      16            6.53      23            4.99      30            4.18
   10            9.61      17            6.23      24            4.84
   11            8.86      18            5.96      25            4.71
</TABLE>
 
                                       19
<PAGE>
                              OWNERSHIP PROVISIONS
 
EXERCISE OF CONTRACT RIGHTS
 
    The Contract shall belong to the Owner. All Contract rights and privileges
may be expressly reserved by the Owner, failing which, each Participant shall be
entitled to exercise such rights and privileges in connection with such
Participant's Certificate. In any case, such rights and privileges can be
exercised without the consent of the Beneficiary (other than an irrevocable
Beneficiary) or any other person. Such rights and privileges may be exercised
only during the lifetime of the Annuitant and prior to the Annuity Commencement
Date, except as otherwise provided in the Contract.
 
    The Annuitant becomes the Payee on and after the Annuity Commencement Date.
The Beneficiary becomes the Payee on the death of the Annuitant. Such Payees may
thereafter exercise such rights and privileges, if any, of ownership which
continue.
 
CHANGE OF OWNERSHIP
 
    Ownership of a Qualified Contract may not be transferred except to: (1) the
Annuitant; (2) a trustee or successor trustee of a pension or profit sharing
trust which is qualified under Section 401 of the Code; (3) the employer of the
Annuitant provided that the Qualified Contract after transfer is maintained
under the terms of a retirement plan qualified under Section 403(a) of the Code
for the benefit of the Annuitant; (4) the trustee of an individual retirement
account plan qualified under Section 408 of the Code for the benefit of the
Owner; or (5) as otherwise permitted from time to time by laws and regulations
governing the retirement or deferred compensation plans for which a Qualified
Contract may be issued. Subject to the foregoing, a Qualified Contract may not
be sold, assigned, transferred, discounted or pledged as collateral for a loan
or as security for the performance of an obligation or for any other purpose to
any person other than the Company.
 
    The Owner of a Non-Qualified Contract may change the ownership of the
Contract during the lifetime of any Annuitant and prior to the last Annuity
Commencement Date; and each Participant, in like manner, may change the
ownership interest in this Contract evidenced by that Participant's Certificate.
A change of ownership will not be binding upon the Company until written
notification is received by the Company. When such notification is so received,
the change will be effective as of the date on which the request for change was
signed by the Owner or Participant, as appropriate, but the change will be
without prejudice to the Company on account of any payment made or any action
taken by the Company prior to receiving the change.
 
DEATH OF PARTICIPANT
 
    If a Participant under a Non-Qualified Contract dies prior to the Annuitant
and before the Annuity Commencement Date, that Participant's Account Value, plus
or minus any applicable market value adjustment, must be distributed to the
"designated beneficiary" (as defined below) either (1) within five [5] years
after the date of death of the Participant, or (2) as an annuity over some
period not greater than the life or expected life of the designated beneficiary,
with annuity payment beginning within one [1] year after the date of death of
the Participant. For this purpose (and for purposes of Section 72(s) of the
Code), the person named as Beneficiary shall be considered the designated
beneficiary, and if no person then living has been so named, then the Annuitant
shall automatically be the designated beneficiary. If the designated beneficiary
is the surviving spouse of the deceased Participant, the spouse can elect to
continue the Certificate in the spouse's own name as Participant, in which case
these mandatory distribution requirements will apply on the spouse's death.
 
    When the deceased Participant was also the Annuitant, the Death Benefit
provision of the Contract controls unless the deceased Participant's surviving
spouse is the designated beneficiary and elects to continue the Certificate in
the spouse's own name as both Participant and Annuitant.
 
    If the Payee dies on or after the Annuity Commencement Date and before the
entire accumulation under such Participant's Account has been distributed, the
remaining portion of such Participant's Account, if any, must be distributed as
least as rapidly as the method of distribution then in effect.
 
                                       20
<PAGE>
    In any case in which a non-natural person constitutes a holder of the
Certificate for the purposes of Section 72(s) of the Code, (1) the distribution
requirements described above shall apply upon the death of any Annuitant, and
(2) a change in any Annuitant shall be treated as the death of an Annuitant.
 
    In all cases, no Participant or Beneficiary shall be entitled to exercise
any rights that would adversely affect the treatment of the Contract as an
annuity Contract under the Code.
 
VOTING OF SERIES FUND SHARES
 
    The Company will vote Series Fund shares held by the Sub-Accounts at
meetings of shareholders of the Series Fund, but will follow voting instructions
received from persons having the right to give voting instructions. The Owner or
Participant, as the case may be, is the person having the right to give voting
instructions prior to the Annuity Commencement Date. On or after the Annuity
Commencement Date the Payee is the person having such voting rights. Any shares
attributable to the Company and Series Fund shares for which no timely voting
instructions are received will be voted by the Company in the same proportion as
the shares for which instructions are received from persons have such voting
rights.
 
    Neither the Variable Account nor the Company is under any duty to provide
information concerning the voting instruction rights of persons who may have
such rights under retirement or deferred compensation plans, other than rights
afforded by the Investment Company Act of 1940, nor any duty to inquire as to
the instructions received or the authority of Owners, Participants, or others to
instruct the voting of Series Fund shares. Except as the Variable Account or the
Company has actual knowledge to the contrary, the instructions given by Owners,
Participants and Payees will be valid as they affect the Variable Account, the
Company and any others having voting instruction rights with respect to the
Variable Account.
 
    All Series Fund proxy material, together with an appropriate form to be used
to give voting instructions, will be provided to each Owner, each Participant
and each Payee having the right to give voting instructions at least 10 days
prior to each meeting of the shareholders of the Series Fund. The number of
particular Series Fund shares as to which each such person is entitled to give
instructions will be determined by the Company on a date not more than 90 days
prior to each such meeting. Prior to the Annuity Commencement Date, the number
of Series Fund shares as to which voting instructions may be given to the
Company is determined by dividing the value of all the Variable Accumulation
Units of the particular Sub-Account credited to the Participant's Account by the
net asset value of one [1] Series Fund share as of the same date. On or after
the Annuity Commencement Date, the number of Series Fund shares as to which such
instructions may be given by a Payee is determined by dividing the reserve held
by the Company in the particular Sub-Account with respect to the particular
Payee by the net asset value of a Series Fund share as of the same date.
 
PERIODIC REPORTS
 
    During the Accumulation Period the Company will send the Participant, or
such other person having voting rights, at least once during each Account Year,
a statement showing the number, type and value of Accumulation Units credited to
the Participant's Account and the fixed accumulation value of such account,
which statement shall be accurate as of a date not more than two months previous
to the date of mailing. In addition, every person having voting rights will
receive such reports or prospectuses concerning the Variable Account and the
Series Fund as may be required by the Investment Company Act of 1940 and the
Securities Act of 1933. The Company will also send such statements reflecting
transactions in the Participant's Account as may be required by applicable laws,
rules and regulations.
 
                             BENEFICIARY PROVISION
 
DESIGNATION AND CHANGE OF BENEFICIARY
 
    The Beneficiary designation contained in the Application will remain in
effect until changed. The interest of any Beneficiary is subject to the
Beneficiary surviving the Annuitant and, in the case of a Non-Qualified
Contract, surviving the Participant as well.
 
    Subject to the rights of an irrevocable Beneficiary, the Participant may
change or revoke the designation of a Beneficiary at any time while the
Annuitant is living. To do so, the Participant must file the change or
 
                                       21
<PAGE>
revocation with the Company at its annuity service mailing address in such form
as the Company may require. The change or revocation will not be binding upon
the Company until it is received by the Company. When it is so received the
change or revocation will be effective as of the date on which the beneficiary
designation or revocation was signed, but the change or revocation will be
without prejudice to the Company on account of any payment made or any action
taken by the Company prior to receiving the change or revocation.
 
                               GENERAL PROVISIONS
 
AGE AND SEX MISSTATEMENT
 
    If any date of birth or sex, or both, as been misstated in the Application,
or elsewhere, the amounts payable pursuant to the contract will be the amounts
which would have been provided using the correct age or sex, or both. Any
deficiency in payments already made by the Company shall be paid immediately and
any excess in the payments already made by the Company shall be charged against
the benefits falling due after the adjustment.
 
CONTRACT
 
    The Contract is issued in consideration of the Contract Application and
payment of the Purchase Payment(s). This Contract and the Contract Application,
a copy of which is attached, constitute the entire Contract. All statements made
in the Contract Application and each Participant's Application will be deemed
representations and not warranties, and no statement will void the Contract or a
Participant's interest therein or be used in defense to a claim unless it is
contained in the Contract Application or the Application of that Participant and
a copy is attached to the Contract or Certificate, as applicable, at issue. Only
the President, a Vice President, the Actuary or the Secretary of the Company has
authority to agree on behalf of the Company to any alteration of the Contract or
any Certificate, or to any waiver of the rights or requirements of the Company.
 
CURRENCY
 
    All amounts due under the Contract are payable in United States dollars,
lawful money of the United States of America.
 
DETERMINATION OF VALUES
 
    The method of determination by the Company of the Net Investment Factor and
the number and value of Accumulation Units and Annuity Units shall be conclusive
upon the Owner, the Participant, any Payee and any Beneficiary.
 
DISCONTINUANCE OF NEW PARTICIPANTS
 
    The Company, by giving 30 days' prior written notice to the Owner, may limit
or discontinue the acceptance of new Applications and the issuance of new
Certificates under this Contract. Such limitation or discontinuance shall have
no effect on rights or benefits with respect to any Participant's Account
established prior to the effective date of such limitation or discontinuance.
 
GOVERNING LAW
 
    This Contract and all Certificates issued in connection with it will be
governed by the laws of the jurisdiction where the Contract Application is
signed.
 
GUARANTEES
 
    Subject to the Net Investment Factor provision, the Company guarantees that
the dollar amount of Variable Annuity payments made during the lifetime of the
Payee(s) will not be adversely affected by the actual mortality experience of
the Company or by the actual expenses incurred for the contract and other
contracts providing benefits which vary in accordance with the investment
performance of the Sub-Accounts.
 
INCONTESTABILITY
 
    This Contract is incontestable.
 
                                       22
<PAGE>
MODIFICATION
 
    Upon notice to the Owner, Participant(s) or the Payee(s) during the annuity
period, this Contract may be modified by the Company, but only if such
modification (a) is necessary to make the Contract or the Variable Account
comply with any law or regulation issued by a governmental agency to which the
Company or the Variable Account is subject; or (b) is necessary to assure
continued qualification of the Contract under the Code or other federal or state
laws relating to retirement annuities or annuity contracts; or (c) is necessary
to reflect a change in the operation of the Variable Account or the
Sub-Accounts; or (d) provides additional Variable Account and/or Fixed Account
options. In the event of any such modification, the Company may make appropriate
endorsement to the contract to reflect such modification.
 
    In addition, upon 60 days' prior written notice to the Owner, the Contract
may be modified by the Company to change the withdrawal charges, account fees,
mortality and expense risk charges, administrative expense charges, the tables
used in determining the amount of the first monthly Variable Annuity and Fixed
Annuity payments and the formula used to calculate the market value adjustment,
provided that such modification shall apply only to Participant's Accounts
established after the effective date of any such modification. All of the
charges and the annuity tables which are provided in the Contract prior to any
such modification will remain in effect permanently, unless improved by the
Company, with respect to Participant's Accounts established prior to the
effective date of such modification.
 
NONPARTICIPATING
 
    The Contract is nonparticipating and will not share in any surplus earnings
of the Company.
 
PAYMENTS BY THE COMPANY
 
    All sums payable by the Company pursuant to the Contract are payable only at
its Executive Office or such other place as may be designated by the Company.
The Company may require surrender of the Contract upon final payment of all sums
payable by the Company pursuant to the Contract.
 
PROOF OF AGE
 
    The Company shall have the right to require evidence of the age of any Payee
under Annuity Options A, B, and C prior to the Annuity Commencement Date.
 
PROOF OF SURVIVAL
 
    The Company shall have the right to require evidence of the survival of any
Payee under Annuity Options A, B and C at the time any payment payable to such
Payee is due.
 
SPLITTING UNITS
 
    The Company reserves the right to split or combine the value of Variable
Accumulation Units, Annuity Units or any of them. In effecting any such change
of unit values, strict equity will be preserved and no change will have a
material effect on the benefits or other provisions of this Contract.
 
                                       23
<PAGE>
SUN LIFE
OF CANADA (U.S.) Sun Life Assurance Company of Canada (U.S.)
                 A Wholly-Owned Subsidiary of Sun Life Assurance Company of
                 Canada
 
<TABLE>
<S>                                <C>                  <C>
EXECUTIVE OFFICE:                  HOME OFFICE:         ANNUITY SERVICE MAILING ADDRESS:
One Sun Life Executive Park        Wilmington,          Sun Life Annuity Service Center
Wellesley Hills, Massachusetts     Delaware             P.O. Box 1024
02181                                                   Boston, Massachusetts 02103
</TABLE>
 
  FLEXIBLE PAYMENT DEFERRED COMBINATION VARIABLE AND FIXED INDIVIDUAL ANNUITY
                                    CONTRACT
                                NONPARTICIPATING
 
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
 
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE TO A PARTICIPANT, INCLUDING WITHDRAWALS,
TRANSFERS, AMOUNTS APPLIED TO PURCHASE AN ANNUITY, AND DISTRIBUTIONS RESULTING
FROM THE DEATH OF THE PARTICIPANT. PAYMENTS MADE FROM GUARANTEE AMOUNTS WHICH
ARE WITHIN 30 DAYS PRIOR TO THE END OF A GUARANTEE PERIOD ARE NOT SUBJECT TO THE
MARKET VALUE ADJUSTMENT.
 
USE OF CONTRACT. This Contract is available for retirement and deferred
compensation plans, some of which may qualify for special tax treatment under
Internal Revenue Code Sections 401, 403 or 408.

<PAGE>
                                                                    EXHIBIT 4(B)
 
SUN LIFE
OF CANADA (U.S.) Sun Life Assurance Company of Canada (U.S.)
                 A Wholly-Owned Subsidiary of Sun Life Assurance Company of
                 Canada
 
<TABLE>
<S>                                <C>                  <C>
EXECUTIVE OFFICE:                  HOME OFFICE:         ANNUITY SERVICE MAILING ADDRESS:
One Sun Life Executive Park        Wilmington,          Sun Life Annuity Service Center
Wellesley Hills, Massachusetts     Delaware             P.O. Box 1024
02181                                                   Boston, Massachusetts 02103
</TABLE>
 
    This is the certificate which evidences the interest of the Participant
named in the Certificate Specifications page in the Combination Variable and
Fixed Group Annuity contract ("contract") issued by Sun Life Assurance Company
of Canada (U.S.) ("the Company").
 
    The contract is the legal contract. This certificate is merely a summary of
the rights, duties and benefits of that contract. A copy of the contract may be
obtained by requesting it in writing from the Company. If there is any conflict,
the contract is the controlling document.
 
    The Company will pay an annuity commencing on the Annuity Commencement Date
to the Annuitant, if then living, by applying the adjusted value of the
Participant's Account in accordance with the Settlement provisions. If the
Annuitant dies while the contract is in effect and before the Annuity
Commencement Date, the Company will pay a death benefit to the Beneficiary upon
receipt of Due Proof of Death of the Annuitant. Under certain circumstances, if
the Participant dies prior to the Annuitant and before the Annuity Commencement
Date, a distribution is required by law.
 
    All payments will be made to the persons and in the manner set forth in this
contract. Provisions and endorsements printed or written by the Company on the
following pages form part of the contract.
 
    Signed by the Company at its Executive Office, Wellesley Hills,
Massachusetts on the Issue Date.
 
<TABLE>
<S>                             <C>
John R. Gardner                 Bonnie S. Angus
PRESIDENT                       SECRETARY
</TABLE>
 
                                CERTIFICATE FOR
FLEXIBLE PAYMENT DEFERRED COMBINATION VARIABLE AND FIXED GROUP ANNUITY CONTRACT
                                NONPARTICIPATING
 
ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
 
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE TO A PARTICIPANT, INCLUDING WITHDRAWALS,
TRANSFERS, AMOUNTS APPLIED TO PURCHASE AN ANNUITY, AND DISTRIBUTIONS RESULTING
FROM THE DEATH OF THE PARTICIPANT. PAYMENTS MADE FROM GUARANTEE AMOUNTS WHICH
ARE WITHIN 30 DAYS PRIOR TO THE END OF A GUARANTEE PERIOD ARE NOT SUBJECT TO THE
MARKET VALUE ADJUSTMENT.
 
RIGHT TO RETURN CERTIFICATE. Please read this certificate. If not satisfied with
it, the Participant may, within 10 days after its receipt, return it by
delivering or mailing it to the annuity service address indicated above.
Immediately upon receipt of the certificate by the Company, the certificate will
be deemed void as though it had never been applied for and the Participant's
Account Value at the end of the Valuation Period during which the certificate is
received by the Company will be refunded to the Participant.
 
IMPORTANT NOTICE
 
It is not necessary to employ any person to collect any payment or benefit
provided by the contract. When you require help or advice, write directly to the
Company at its annuity service mailing address.
 
The contract contains many benefits. In your own best interest you should
consult the Company if anyone advises you to surrender this certificate or to
replace it with a new contract or certificate.
<PAGE>
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                        Page
<S>                                                                     <C>
CERTIFICATE SPECIFICATIONS PAGE                                           4
- ----------------------------------------------------------------------------
DEFINITIONS                                                               5
- ----------------------------------------------------------------------------
FIXED AND VARIABLE ACCOUNTS                                               7
  Fixed Account                                                           7
  Variable Account and Sub-Accounts                                       7
  Ownership of Assets                                                     7
  Investments of the Sub-Accounts                                         7
  Substitution                                                            7
- ----------------------------------------------------------------------------
PURCHASE PAYMENTS                                                         8
  Payments                                                                8
  Account Continuation                                                    8
  Allocation of Net Purchase Payments                                     8
- ----------------------------------------------------------------------------
CERTIFICATE VALUES DURING ACCUMULATION PERIOD                             8
  Participant's Account                                                   8
  Crediting Variable Accumulation Units                                   8
  Variable Accumulation Unit Value                                        8
  Variable Accumulation Value                                             9
  Net Investment Factor                                                   9
  Guarantee Period                                                        9
  Guaranteed Interest Rates                                              10
  Fixed Accumulation Value                                               10
  Transfer Privilege                                                     11
  Account Fee                                                            11
- ----------------------------------------------------------------------------
CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT         11
  Cash Withdrawals                                                       11
  Withdrawal Charges                                                     12
  Market Value Adjustment                                                12
- ----------------------------------------------------------------------------
DEATH BENEFIT                                                            13
  Death Benefit Provided by the Contract                                 13
  Election and Effective Date of Election                                13
  Payment of Death Benefit                                               14
  Amount of Death Benefit                                                14
- ----------------------------------------------------------------------------
SETTLEMENT PROVISIONS                                                    14
  General                                                                14
  Election and Effective Date of Election                                15
  Determination of Amount                                                15
  Effect of Annuity Commencement Date on Participant's Account           15
  Annuity Commencement Date                                              15
  Fixed Annuity Payments                                                 15
  Variable Annuity Payments                                              16
  Annuity Unit Value                                                     16
  Exchange of Variable Annuity Units                                     16
  Account Fee                                                            16
  Description of Annuity Options                                         16
  Amounts Payable on Death of Payee                                      17
  Annuity Payment Rates                                                  17
- ----------------------------------------------------------------------------
</TABLE>
 
                                       2
<PAGE>
<TABLE>
<S>                                                                     <C>
OWNERSHIP PROVISIONS                                                     19
  Exercise of Contract Rights                                            19
  Change of Ownership                                                    19
  Death of Participant                                                   19
  Voting of Series Fund Shares                                           20
  Periodic Reports                                                       20
- ----------------------------------------------------------------------------
BENEFICIARY PROVISIONS                                                   20
  Designation of Change of Beneficiary                                   20
- ----------------------------------------------------------------------------
GENERAL PROVISIONS                                                       21
  Age and Sex Misstatement                                               21
  Certificate                                                            21
  Currency                                                               21
  Determination of Values                                                21
  Governing Law                                                          21
  Guarantees                                                             21
  Incontestability                                                       21
  Modification                                                           21
  Nonparticipating                                                       22
  Payments by the Company                                                22
  Proof of Age                                                           22
  Proof of Survival                                                      22
  Splitting Units                                                        22
- ----------------------------------------------------------------------------
QUALIFIED CONTRACT PROVISIONS                                           E-1
</TABLE>
 
                                       3
<PAGE>
                           CERTIFICATE SPECIFICATIONS
 
<TABLE>
<S>                                                     <C>
Participant and Annuitant                               John Smith
                                                        John Smith, Annuitant
 
Certificate Number                                      000000000000
 
Age of Annuitant                                        35
 
Sex of Annuitant                                        Male
 
Date of Coverage                                        June 1, 1996
 
Account Anniversary Date                                June 30, 1997
 
Initial Purchase Payment                                $25,000.00
 
Beneficiary                                             As specified in the Application
 
Annuity Commencement Date                               October 1, 2024
 
Annuity Option                                          As specified in the Application
 
Account Fee                                             $50
                                                        See page 16
 
Withdrawal Charges                                      1% for Purchase Payments in
                                                        Participant's
                                                        Account for less than one Year
                                                        See pages 11 and 12
 
Maximum asset charge factor                             1.15% annually or
 (for the Variable Account only):                       .003133% daily
 
Available series of Series Fund:
 
    Money Market Series
    High Yield Series
    Capital Appreciation Series
    Utilities Series
    Government Securities Series
    World Government Series
    Managed Sectors Series
    Total Return Series
    Conservative Growth Series
    World Growth Series
    Research Series
    World Total Return Series
    World Asset Allocation Series
    Emerging Growth Series
    Value Series
    MFS-Registered Trademark-/Foreign & Colonial Emerging Markets Series
    MFS-Registered Trademark-/Foreign & Colonial International Growth Series
    MFS-Registered Trademark-/Foreign & Colonial International Growth and Income Series
</TABLE>
 
                                       4
<PAGE>
                                  DEFINITIONS
 
Any reference in this Certificate to "receipt" and "received" by the Company
means receipt at the Company's annuity service mailing address shown on the
first page of this Certificate.
 
ACCOUNT YEARS AND ACCOUNT ANNIVERSARIES: The first Account Year shall be the
period of 12 months plus a part of a month as measured from the Date of Coverage
for each Participant to the first day of the calendar month which follows the
calendar month of coverage. All Account Years and Anniversaries thereafter shall
be 12 month periods based upon such first day of the calendar month which
follows the calendar month of coverage. If, for example, the Date of Coverage is
in March, the first Account Year will be determined from the Date of Coverage
but will end on the last day of March in the following year; all other Account
Years and all Account Anniversaries will be measured from April 1.
 
ACCUMULATION PERIOD: The period before the Annuity Commencement date and during
the lifetime of the Annuitant.
 
ANNUITANT: The person or persons named in the Application and on whose life the
first annuity payment is to be made. The Participant may not designate a
co-annuitant unless the Participant and Annuitant are different persons. If more
than one person is so named, all provisions of the Contract which are based on
the death of the Annuitant will be based on the date of death of the last
surviving of the persons so named. By example, the death benefit will become due
only upon death, prior to the Annuity Commencement Date, of the last surviving
of the persons so named. Collectively, these persons are referred to in the
Contract as Annuitants. The Participant is not permitted to name a co-annuitant
under a Qualified Contract.
 
*ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment is to be
made.
 
*ANNUITY OPTION: The method for making annuity payments.
 
ANNUITY UNIT: A unit of measure used in the calculation of the amount of the
second and each subsequent variable annuity payment from the Variable Account.
 
APPLICATION: The document signed by each Participant that serves as his or her
application for participation under the Contract, a copy of which is attached to
this Certificate.
 
*BENEFICIARY: The person or entity having the right to receive the death benefit
and, for a Certificate issued under a Non-Qualified Contract, who is the
"designated beneficiary" for purposes of Section 72(s) of the Code in the event
of the Participant's death.
 
CODE: The Internal Revenue Code of 1986, as amended.
 
COMPANY: Sun Life Assurance Company of Canada (U.S.).
 
CONTRACT APPLICATION: The document signed by the Owner that evidences the
Owner's application for the Contract.
 
DATE OF COVERAGE: The date on which this Certificate becomes effective.
 
DUE PROOF OF DEATH: An original certified copy of an official death certificate,
an original certified copy of a decree of a court of competent jurisdiction as
to the finding of death, or any other proof satisfactory to the Company.
 
EXPIRATION DATE: The last day of a Guarantee Period.
 
FIXED ACCOUNT: The Fixed Account consists of all assets of the Company other
than those allocated to a separate account of the Company.
 
FIXED ANNUITY: An annuity with payments which do not vary as to dollar amount.
 
GUARANTEE AMOUNT: Any portion of a Participant's Account Value allocated to a
particular Guarantee Period with a particular Expiration Date (including
interest earned thereon).
 
- ------------------------
*As specified in the Application, unless changed.
 
                                       5
<PAGE>
GUARANTEE PERIOD: The period for which a Guaranteed Interest Rate is credited.
 
GUARANTEED INTEREST RATE: The rate of interest credited by the Company on a
compound annual basis during any Guarantee Period.
 
NET INVESTMENT FACTOR: An index applied to measure the investment performance of
a Sub-Account from one Valuation Period to the next. The Net Investment Factor
may be greater or less than or equal to one [1].
 
NET PURCHASE PAYMENT: The portion of a Purchase Payment which remains after the
deduction of any applicable premium or similar tax.
 
NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement plan
which does not receive favorable federal income tax treatment under Sections
401, 403, or 408 of the Code. The Participant's interest in the Contract
evidenced by this Certificate must be owned by a natural person or agent for a
natural person for the Contract to receive favorable income tax treatment as an
annuity.
 
*OWNER: The person, persons or entity entitled to the ownership rights stated in
the Contract and in whose name or names the Contract is issued. The Owner may
designate a trustee or custodian of a retirement plan which meets the
requirements of Section 401, Section 408(c) or Section 408(k) of the Code to
serve as legal owner of assets of a retirement plan, but the term Owner, as used
herein, refers to the organization entering into the Contract.
 
PARTICIPANT: The person named in this Certificate who is entitled to exercise
all rights and privileges of ownership under the Certificate, except as reserved
by the Owner.
 
PARTICIPANT'S ACCOUNT: An account to which Net Purchase Payments are credited.
 
PARTICIPANT'S ACCOUNT VALUE: The variable accumulation value, if any, plus the
fixed accumulation value, if any, of a Participant's Account for any Valuation
Period.
 
PAYEE: A recipient of payments relating to this Certificate. The term includes
an Annuitant or a Beneficiary who becomes entitled to benefits upon the death of
the Annuitant.
 
PURCHASE PAYMENT (PAYMENT): The amount paid to the Company as consideration for
the benefits provided by the Contract.
 
QUALIFIED CONTRACT: A Contract used in connection with a retirement plan which
received favorable federal income tax treatment under Sections 401, 403 or 408
of the Code.
 
SERIES FUND: MFS/Sun Life Series Trust.
 
SUB-ACCOUNT: That portion of the Variable Account which invests in shares of
specific series or sub-series of the Series Fund.
 
VALUATION PERIOD: The period of time from one determination of Variable
Accumulation Unit values to the next subsequent determination of these values.
Such determination shall be made as of the close of the New York Stock Exchange
on each day the Exchange is open for trading and on such other days on which
there is a sufficient degree of trading in the portfolio securities of the
Variable Account so that the values of the Variable Account's Accumulation Units
might be materially affected.
 
VARIABLE ACCOUNT: A separate account of the Company consisting of assets set
aside by the Company, the investment performance of which is kept separate from
that of the general assets of the Company.
 
VARIABLE ACCUMULATION UNIT: A unit of measure used in the calculation of the
value of the variable portion of a Participant's Account.
 
VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount in
relation to the investment performance of specified Sub-Accounts of the Variable
Account.
 
YEAR: Any consecutive period of 365 days.
 
- ------------------------
*As specified in the Application, unless changed.
 
                                       6
<PAGE>
                          FIXED AND VARIABLE ACCOUNTS
 
FIXED ACCOUNT
 
    The Fixed Account consists of all assets of the Company other than those
allocated to any separate account of the Company. Any portion of a Net Purchase
Payment allocated by a Participant to a Guarantee Period(s) will become part of
the Fixed Account.
 
VARIABLE ACCOUNT AND SUB-ACCOUNTS
 
    The Variable Account to which the variable accumulation values, if any,
under the Contract relate is Sun Life of Canada (U.S.) Variable Account F. It
was established by the Company on July 13, 1989, pursuant to a resolution of its
Board of Directors and is registered as a unit investment trust under the
Investment Company Act of 1940. That portion of the assets of the Variable
Account equal to the reserves and other contract liabilities with respect to the
Variable Account shall not be chargeable with liabilities arising out of any
other business the Company may conduct.
 
    The assets of the Variable Account are divided into Sub-Accounts. Each
Sub-Account invests exclusively in shares of a designated series or sub-series
of the Series Fund. The values of the Variable Accumulation Units and the
Annuity Units described in the contract reflect the investment performance of
the Sub-Accounts.
 
    At the Company's election and subject to any vote by persons having the
right to give instructions with respect to the voting of Series Fund shares held
by the Sub-Accounts, the Variable Account may be operated as a management
company under the Investment Company Act of 1940 or it may be deregistered under
the Investment Company Act of 1940. In the event of any change in the operation
of the Variable Account pursuant to this provision, the Company may make
appropriate endorsement to the contract to reflect the change and take such
other action as may be necessary and appropriate to reflect the change.
 
OWNERSHIP OF ASSETS
 
    The Company shall have exclusive and absolute ownership and control of its
assets, including all assets of the Sub-Accounts.
 
INVESTMENTS OF THE SUB-ACCOUNTS
 
    All amounts allocated to a Sub-Account will be used to purchase shares of a
specific series or sub-series of the Series Fund. The Series Fund shares
available on the Date of Coverage are shown on the Certificate Specifications
Page; more series may be subsequently added or deleted. The Series Fund is an
open-end investment company (mutual fund) registered under the Investment
Company Act of 1940. Any and all distributions made by the Series Fund with
respect to shares held by a Sub-Account will be reinvested to purchase
additional shares of that series at net asset value. Deductions from the Sub-
Accounts will, in effect, be made by redeeming a number of Series Fund shares at
net asset value equal in total value to the amount to be deducted. Each
Sub-Account will be fully invested in Series Fund shares at all times.
 
SUBSTITUTION
 
    Shares of the series corresponding to a particular portfolio of securities
held by the Series Fund may not always be available for purchase by the
Sub-Accounts or the Company may decide that further investment in such shares is
no longer appropriate in view of the purposes of the Variable Account, or in
view of legal, regulatory or federal income tax restrictions. In such event,
shares of another series or shares of another registered open-end investment
company or unit investment trust may be substituted both for Series Fund shares
already purchased by the Sub-Account and/or as the security to be purchased in
the future, provided that these substitutions meet applicable Internal Revenue
Service diversification guidelines and have been approved by the Securities and
Exchange Commission and such other regulatory authorities as may be necessary.
In the event of any substitution pursuant to this provision, the Company may
make appropriate endorsement to the Contract and to this Certificate to reflect
the substitution.
 
                                       7
<PAGE>
                               PURCHASE PAYMENTS
 
PAYMENTS
 
    All Purchase Payments are to be paid to the Company at its annuity service
mailing address. The amount of Purchase Payments may vary; however, the Company
will not accept an initial Purchase Payment for any Certificate which is less
than $25,000, and each additional Purchase Payment must be at least $1,000. In
addition, the prior approval of the Company is required before it will accept a
Purchase Payment which would cause the value of a Participant's Account to
exceed $1,000,000. If the value of a Participant's Account exceeds $1,000,000,
no additional Purchase Payments will be allocated without the prior approval of
the Company.
 
    The initial Purchase Payment attributable to this Certificate is shown on
the Certificate Specifications page.
 
ACCOUNT CONTINUATION
 
    A Participant's Account shall be continued automatically in full force
during the lifetime of the Annuitant until the Annuity Commencement Date or
until the Participant's Account is surrendered.
 
ALLOCATION OF NET PURCHASE PAYMENTS
 
    The Net Purchase Payment is that portion of a Purchase Payment which remains
after deduction of a premium or similar tax, if any. Each Net Purchase Payment
will be allocated to the Participant's Account upon receipt by the Company,
either to the Sub-Accounts or to the Fixed Account or to both the Sub-Accounts
and the Fixed Account in accordance with the allocation factors specified in the
Application, or as subsequently changed.
 
    The allocation factors for new Purchase Payments among the Guarantee
Period(s) and the Sub-Accounts may be changed by the Participant at any time by
giving written notice of the change to the Company. Any change will take effect
with the first Purchase Payment received with or after receipt of notice of the
change by the Company and will continue in effect until subsequently changed.
 
                 CERTIFICATE VALUES DURING ACCUMULATION PERIOD
 
PARTICIPANT'S ACCOUNT
 
    The Company will establish a Participant's Account for each Participant
under the Contract and will maintain the Participant's Account during the
Accumulation Period. The Participant's Account Value for any Valuation Period is
equal to the variable accumulation value, if any, plus the fixed accumulation
value, if any, of the Participant's Account for that Valuation Period.
 
VARIABLE ACCOUNT VALUE
CREDITING VARIABLE ACCUMULATION UNITS
 
    Upon receipt of a Purchase Payment by the Company, all or that portion, if
any, of the Net Purchase Payment to be allocated to the Sub-Accounts will be
credited to the Participant's Account in the form of Variable Accumulation
Units. The number of particular Variable Accumulation Units to be credited is
determined by dividing the dollar amount allocated to the particular Sub-Account
by the Variable Accumulation Unit value of the particular Sub-Account for the
Valuation Period during which the Purchase Payment is received by the Company.
 
VARIABLE ACCUMULATION UNIT VALUE
 
    The Variable Accumulation Unit value for each Sub-Account was established at
$10.00 for the first Valuation Period of the particular Sub-Account. The
Variable Accumulation Unit value for the particular Sub-Account for any
subsequent Valuation Period is determined by methodology which is the
mathematical equivalent of multiplying the Variable Accumulation Unit value for
the particular Sub-Account for the immediately preceding Valuation Period by the
Net Investment Factor for the particular Sub-Account for such subsequent
Valuation Period. The Variable Accumulation Unit value for each Sub-Account for
any Valuation
 
                                       8
<PAGE>
Period is the value determined as of the end of the particular Valuation Period
and may increase, decrease or remain constant from Valuation Period to Valuation
Period in accordance with the Net Investment Factor described below.
 
VARIABLE ACCUMULATION VALUE
 
    The variable accumulation value, if any, of a Participant's Account for any
Valuation Period is equal to the sum of the value of all Variable Accumulation
Units of each Sub-Account credited to the Participant's Account for such
Valuation Period. The variable accumulation value of each Sub-Account is
determined by multiplying the number of Variable Accumulation Units, if any,
credited to each Sub-Account by the Variable Accumulation Unit value of the
particular Sub-Account for such Valuation Period.
 
NET INVESTMENT FACTOR
 
    The Net Investment Factor is an index applied to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The Net
Investment Factor may be greater or less than or equal to one; therefore, the
value of a Variable Accumulation Unit may increase, decrease or remain the same.
 
    The Net Investment Factor for any Sub-Account for any Valuation Period is
determined by dividing (a) by (b) and then subtracting (c) from the result
where:
 
a)  is the net result of:
 
    1)  the net asset value of a Series Fund share held in the Sub-Account
       determined as of the end of the Valuation Period, plus
 
    2)  the per share amount of any dividend or other distribution declared by
       the Series Fund on the shares held in the Sub-Account if the ex-dividend
       date occurs during the Valuation Period, plus or minus
 
    3)  a per share credit or charge with respect to any taxes paid or reserved
       for by the Company during the Valuation Period which are determined by
       the Company to be attributable to the operation of the Sub-Account;
 
b)  is the net asset value of a Series Fund share held in the Sub-Account
    determined as of the end of the preceding Valuation Period; and
 
c)  is the asset charge factor determined by the Company for the Valuation
    Period to reflect the charges for assuming the mortality and expense risks
    and administrative expense risks.
 
    The asset charge factor for any Valuation Period is equal to the daily asset
charge factor multiplied by the number of 24 hour periods in the Valuation
Period. The daily asset charge factor will be determined by the Company
annually, but in no event may it exceed the maximum daily asset charge factor
specified on the Certificate Specifications page.
 
FIXED ACCOUNT VALUE
GUARANTEE PERIOD
 
    The Company will make available one [1] or more Guarantee Period(s) from
time to time. Guarantee Periods will be of two [2] types: Initial Guarantee
Periods (for New Purchase Payments) and Subsequent Guarantee Periods (for
Account Values to be allocated from expiring Guarantee Periods). The Participant
has the right to elect from among the applicable Guarantee Periods and that
election will determine the applicable Guarantee Interest Rate(s).
 
    A Purchase Payment or such portion (at least $1,000) allocated to an Initial
Guarantee Period will earn interest at the Guaranteed Interest Rate during that
Guarantee Period [beginning on the date the Net Purchase Payment is applied and
ending when the number of calendar months in that Guarantee Period has elapsed,
measured from the end of the calendar month in which the Purchase Payment was
allocated]. The last day of a Guarantee Period is the Expiration Date.
Subsequent Guarantee Periods begin on the first day following the Expiration
Date and Account Values allocated thereto [referred to as "Guaranteed Amounts"]
 
                                       9
<PAGE>
will earn interest at the applicable Guaranteed Interest Rate for the applicable
Subsequent Guarantee Period until its Expiration Date. Guaranteed Amounts
allocated to Guarantee Periods of the same duration may have different
Expiration Dates and each Guarantee Amount will be treated separately for
purposes of determining any market value adjustment, in the case of a
withdrawal.
 
    The Company will notify the Participant in writing at least 45 days and no
more than 75 days prior to the Expiration Date for any Guarantee Amount, except
for Guarantee Amounts held under a Dollar Cost Averaging Option [described
below]. For Guarantee Periods established under the Monthly or Quarterly Dollar
Cost Averaging Options, on the day following the Expiration Date the Guarantee
Amount will be transferred to one [1] or more Sub-Accounts in accordance with
the Participant's instructions. The Participant can elect a new Guarantee Period
or instruct the Company to transfer the Guarantee Amount [or any portion subject
to a minimum of $1,000] in accordance with the Transfer Privilege provision by
giving written notice to the Company. To be effective, such notice has to be
received by the Company prior to the Expiration Date, failing which a new
Guarantee Period of the same duration as the expiring Guarantee Period will
commence automatically on the first day following the Expiration Date.
 
    The Participant may also elect to use an available Dollar Cost Averaging
Option in connection with selected Initial Guarantee Periods [subject to a
minimum amount of $1,000]. Dollar Cost Averaging Options are available monthly
or quarterly:
 
    1.  Monthly Dollar Cost Averaging Option: Amounts allocated will be divided
        among 12 separate serially maturing Guarantee Periods. The first
        Guarantee Period ends one [1] full calendar month following the date the
        Net Purchase Payment is applied and each subsequent Guarantee Period
        shall end one [1] full calendar month later, serially thereafter. The
        Guarantee Amount at the Expiration Date of each such Guarantee Period
        will equal 1/12 of the Net Purchase Payment applied under this Option,
        with the Guarantee Amount at the last Expiration Date including all
        interest earned in the 12 Guarantee Periods.
 
    2.  Quarterly Dollar Cost Averaging: Amounts allocated will be divided among
        four [4] separate serially maturing Guarantee Periods. The first
        Guarantee Period ends three [3] full calendar months following the date
        the Net Purchase Payment is applied and each subsequent Guarantee Period
        shall end three [3] full calendar months later, serially thereafter. The
        Guarantee Amount at the Expiration Date of each such Guarantee Period
        will equal 1/4 of the Net Purchase Payment applied under this Option,
        with the Guarantee Amount at the last Expiration Date including all
        interest earned.
 
    Amounts allocated under a Dollar Cost Averaging Option must be derived
solely from Purchase Payments. The Transfer Privilege provision is not available
in connection with any Dollar Cost Averaging Option.
 
GUARANTEED INTEREST RATES
 
    The company periodically will establish an applicable Guaranteed Interest
Rate for each Guarantee Period offered by the Company. These rates will be
guaranteed for the duration of the respective Guarantee Periods.
 
    No Guaranteed Interest Rate shall be less than 3% per year, compounded
annually.
 
FIXED ACCUMULATION VALUE
 
    Upon receipt of a Purchase Payment by the Company, all or that portion, if
any, of the Net Purchase Payment which is allocated to the Fixed Account will be
credited to the Participant's Account and allocated to the Guarantee Period
selected by the Participant. The fixed accumulation value, if any, of a
Participant's Account for any Valuation Period is equal to the sum of the values
of all Guarantee Amounts credited to the Participant's Account for such
Valuation Period.
 
                                       10
<PAGE>
TRANSFER PRIVILEGE
 
    At any time during the Accumulation Period the Participant may transfer all
or part of the Participant's Account Value to one or more Sub-Accounts or
Guarantee Periods, subject to the conditions set forth below. A transfer will
generally be effective on the date the request for transfer is received by the
Company.
 
    Transfers involving Sub-Accounts will reflect the purchase or cancellation
of Variable Accumulation Units having an aggregate value equal to the dollar
amount being transferred to or from a particular Sub-Account. The purchase or
cancellation of such units shall be made using Variable Accumulation Unit values
of the applicable Sub-Account for the Valuation Period during which the transfer
is effective. Transfers to a Guarantee Period will result in a new Guarantee
Period for the amount being transferred. Any such Guarantee Period will begin on
the effective date of the transfer and end on the Expiration Date. The amount
transferred into such Guarantee Period will earn interest at the Guaranteed
Interest Rate declared by the Company for that Guarantee Period as of the
effective date of the transfer.
 
    Transfers shall be subject to the following conditions: (1) not more than 12
transfers may be made in any Account Year; (2) a minimum of 30 days must elapse
between transfers made to or from the Fixed Account or between Guarantee Periods
within the Fixed Account, (3) the amount being transferred from a Sub-Account
may not be less than $1,000, unless the total Participant's Account Value
attributable to a Sub-Account is being transferred; (4) any Participant's
Account Value remaining in a Sub-Account may not be less than $1,000; (5) the
total Participant's Account Value attributable to the Guarantee Amount must be
transferred; and (6) allocations to Monthly or Quarterly Dollar Cost Averaging
Options may not be achieved through transfer. In addition, transfers of a
Guarantee Amount will be subject to the market value adjustment described below
unless the transfer is effective within 30 days prior to the Expiration Date
applicable to the Guarantee Amount; and transfers involving Variable
Accumulation Units shall be subject to such terms and conditions as may be
imposed by the Series Fund. Currently, there is no charge for transfers;
however, the Company reserves the right to impose a charge of up to $15 for each
transfer.
 
ACCOUNT FEE
 
    Prior to the Annuity Commencement Date, on each Account Anniversary the
Company will deduct from the value of each Participant's Account an annual
account fee to reimburse the Company for administrative expenses relating to the
contract and the Participant's Account in the amount of $50. The account fee
will be deducted on a PRO RATA basis from amounts allocated to each Guarantee
Period and each Sub-Account in which the Participant's Account is invested at
the time of such deduction. If a Participant's Account is surrendered for its
full value on other than an Account Anniversary, the account fee will be
deducted in full at the time of such surrender. The Company will waive the
account fee when the Participant's Account Value is greater than $100,000 on the
Account Anniversary. On the Annuity Commencement Date the value of the
Participant's Account will be reduced by a proportionate amount of the account
fee to reflect the time elapsed between the last Account Anniversary and the day
before the Annuity Commencement Date.
 
    After the Annuity Commencement Date an annual account fee of $50 will be
deducted in equal amounts from each Variable Annuity payment made during the
year. No such deduction is made from Fixed Annuity payments.
 
        CASH WITHDRAWALS, WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT
 
CASH WITHDRAWALS
 
    At any time before the Annuity Commencement Date and during the lifetime of
the Annuitant, the Participant may elect to receive a cash withdrawal payment
from the Company by filing with the Company at its annuity service mailing
address, a written election in such form as the Company may require. Any such
election shall specify the amount of the withdrawal and will be effective on the
date that it is received by the Company. Any cash withdrawal payment will be
paid within seven [7] days from the date the election becomes effective, except
as the Company may be permitted to defer such payment in accordance with the
Investment Company Act of 1940. The Company reserves the right to defer the
payment of amounts withdrawn from the Fixed Account for a period not to exceed
six [6] months from the date written request for such withdrawal is received by
the Company.
 
                                       11
<PAGE>
    The Participant may request a full surrender or a partial withdrawal. A full
surrender will result in a cash withdrawal payment equal to the value of the
Participant's Account at the end of the Valuation Period during which the
election becomes effective less the account fee, plus or minus any applicable
market value adjustment, and less any applicable withdrawal charge. A partial
withdrawal (a payment of an amount less than that paid under a full surrender)
will result in the cancellation of a portion of the Participant's Account Value
with an aggregate dollar value equal to the dollar amount of the cash withdrawal
payment, plus or minus any applicable market value adjustment and plus any
applicable withdrawal charge.
 
    In the case of a partial withdrawal, the Participant may instruct the
Company as to the amounts to be withdrawn from each Sub-Account and/or Guarantee
Amount. If not so instructed, the Company will effect such withdrawal PRO RATA
from each Sub-Account and Guarantee Amount in which the Participant's Account
Value is invested at the end of the Valuation Period during which the withdrawal
becomes effective. If a partial withdrawal is requested which would leave a
Participant's Account Value less than the account fee, then such partial
withdrawal will be treated as a full surrender.
 
    Cash withdrawals from a Sub-Account will result in the cancellation of
Variable Accumulation Units attributable to the Participant's Account with an
aggregate value on the effective date of the withdrawal equal to the total
amount by which the Sub-Account is reduced. The cancellation of such units will
be based on the Variable Accumulation Unit values of the Sub-Account for the
Valuation Period during which the cash withdrawal is effective.
 
    All cash withdrawals of any Guarantee Amount, except those effective within
30 days prior to the Expiration Date of such Guarantee Amount will be subject to
the market value adjustment described below.
 
WITHDRAWAL CHARGES
 
    If a cash withdrawal is made, a withdrawal charge may be assessed by the
Company. For purposes of a full surrender or partial withdrawal, each withdrawal
is allocated to previously unliquidated Payments [on a first-in, first-out
basis] until all Purchase Payments have been liquidated. Once Payments have been
liquidated, any further withdrawals will come from the earnings of the Contract
and are not subject to withdrawal charges. The amount subject to withdrawal
charge is the amount of the partial withdrawal or full surrender up to the
maximum of the sum of all unliquidated Payments.
 
    A withdrawal charge is applied to an amount liquidated when that amount has
been in the Participant's Account for less than one [1] Year.
 
    When any liquidation is made from a Qualified Plan to comply with mandatory
minimum distribution requirements, no withdrawal charge will be applied only to
the amount required to be withdrawn during each Account Year. These required
distributions may commence during and continue after the year in which the
Annuitant attains age 70 1/2. Any amounts withdrawn in excess of the required
minimum distribution amount during each Account Year will be subject to
withdrawal charges as detailed above.
 
    No withdrawal charge is imposed upon amounts applied to purchase an annuity.
 
MARKET VALUE ADJUSTMENT
 
    Any cash withdrawal (which for purposes of this section include transfers,
distributions on the death of a Participant, and amounts applied to purchase an
annuity) of a Guarantee Amount, other than a withdrawal effective within 30 days
prior to the Expiration Date of the Guarantee Amount, will be subject to a
market value adjustment.
 
    The market value adjustment will reflect the relationship between the
current rate (as described in the formula below) for the amount being withdrawn
and the Guaranteed Interest Rate applicable to the amount being withdrawn. It
also reflects the time remaining in the applicable Guarantee Period.
 
                                       12
<PAGE>
    The market value adjustment will be determined by multiplying the amount
being withdrawn after the deduction of any applicable account fee and before
deduction of any applicable withdrawal charge by the market value adjustment
factor. The market value adjustment factor is:
 
                            [(1 + I)/(1 + J)]N/12 -1
 
    where,
 
    I is the Guaranteed Interest Rate being credited to the Guarantee Amount
subject to the market value adjustment,
 
    J is the Guaranteed Interest Rate declared by the Company, as of the
effective date of the application of the market value adjustment, for current
allocations to Guarantee Period(s). If the Guarantee Period was originally
established through the Monthly or Quarterly Dollar Cost Averaging Options, J is
the rate declared for current allocations to the Monthly and Quarterly Dollar
Cost Averaging Options. For all other Guarantee Periods, J is the rate declared
for current allocations to Guarantee Periods equal to the balance of the
Guarantee Period of the Guarantee Amount subject to the market value adjustment,
rounded to the next higher number of complete years. In the determination of J
for Guarantee Periods other than those established under the Monthly or
Quarterly Dollar Cost Averaging Options, if the Company does not currently offer
the applicable Guarantee Period, then J will be determined by linear
interpolation of rates currently declared for Guarantee Periods that are
available, and
 
    N is the number of complete months remaining in the Guarantee Period of the
Guarantee Amount subject to the market value adjustment.
 
                                 DEATH BENEFIT
 
DEATH BENEFIT PROVIDED BY THE CONTRACT
 
    If the Annuitant dies while the Contract and this Certificate are in effect
and before the Annuity Commencement Date, the Company, upon receipt of Due Proof
of Death of the Annuitant, will pay a death benefit to the Beneficiary in
accordance with this Death Benefit provision. If there is no designated
Beneficiary living on the date of death of the Annuitant, the Company will pay
the death benefit upon receipt of Due Proof of Death of both the Annuitant and
the designated Beneficiary in one sum to the Participant or, if the Annuitant
was the Participant, to the estate of the deceased Participant/Annuitant. If the
death of the Annuitant occurs on or after the Annuity Commencement Date, no
death benefit will be payable under the Contract except as may be provided under
the form of annuity elected.
 
ELECTION AND EFFECTIVE DATE OF ELECTION
 
    During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Participant may elect to have the death benefit applied under one or
more of the Annuity Options in accordance with the Contract's Settlement
Provisions to effect a Variable Annuity or a Fixed Annuity or a combination or
both for the Beneficiary as Payee after the death of the Annuitant. This
election may be made or subsequently revoked by filing with the Company at its
annuity service mailing address, a written election or revocation of an election
in such form as the Company may require. Any election or revocation of an
election of a method of settlement of the death benefit by the Participant will
become effective on the date it is received by the Company. For the purposes of
the Payment of Death Benefit section below, any election of the method of
settlement of the death benefit by the Participant which is in effect on the
date of death of the Annuitant will be deemed effective on the date Due Proof of
Death of the Annuitant is received by the Company.
 
    If no election of a method of settlement of the death benefit by the
Participant is in effect on the date of death of the Annuitant, the Beneficiary
may elect (a) to receive the death benefit in the form of a cash payment, in
which event the Participant's Account will be canceled; or (b) to have the death
benefit applied under one or more of the Annuity Options in accordance with the
Settlement Provisions to effect, on the Annuity Commencement Date determined in
the Payment of Death Benefit section below, a Variable Annuity or a Fixed
Annuity or a combination or both for the Beneficiary as Payee. This election may
be made by filing with the Company at its annuity service mailing address, a
written election in such form as the Company may
 
                                       13
<PAGE>
require. Any written election of a method of settlement of the death benefit by
the Beneficiary will become effective on the later of: (a) the date the election
is received by the Company; or (b) the date Due Proof of Death of the Annuitant
is received by the Company. If a written election by the Beneficiary is not
received by the Company within 60 days following the date Due Proof of Death of
the Annuitant is received by the Company, the Beneficiary shall be deemed to
have elected a cash payment as of the last day of the 60 day period.
 
PAYMENT OF DEATH BENEFIT
 
    If the death benefit is to be paid in cash to the Beneficiary, payment will
be made within seven [7] days of the date the election becomes effective or is
deemed to become effective, except as the Company may be permitted to defer any
such payment of amounts derived from the Variable Account in accordance with the
Investment Company Act of 1940. If the death benefit is to be paid in one sum to
the Participant, or, if the Annuitant was the Participant, to the estate of the
deceased Participant/Annuitant, payment will be made within seven [7] days of
the date Due Proof of Death of the Annuitant, the Participant, and/or the
designated Beneficiary, as applicable, is received by the Company. If settlement
under one or more of the Annuity Options is elected, the Annuity Commencement
Date will be the first day of the second calendar month following the effective
date or the deemed effective date of the election and the Participant's Account
will be maintained in effect until the Annuity Commencement Date.
 
AMOUNT OF DEATH BENEFIT
 
    If the Annuitant was less than age 86 on the Date of Coverage the death
benefit is determined as of the effective date or deemed effective date of the
death benefit election and is equal to the greatest of (a) the Participant's
Account Value for the Valuation Period during which the death benefit election
is effective or is deemed to become effective; (b) the excess of (i) the sum of
all Purchase Payments made under the Certificate over (ii) the sum of all
partial withdrawals; (c) the amount that would have been payable in the event of
a full surrender of the Participant's Account on the date the death benefit
election is effective or is deemed to become effective.
 
    If (b) or (c) is operative, the Participant's Account Value will be
increased by the excess of (b) or (c) as applicable, over (a) and the increase
will be allocated to the Sub-Accounts based on the respective values of the
Sub-Accounts on the date the amount of the death benefit is determined. If no
portion of the Participant's Account is allocated to the Sub-Accounts on that
date, the entire increase will be allocated to the Sub-Account invested in the
Money Market Series of the Series Fund.
 
    If the Annuitant was 86 or greater on the Date of Coverage, the death
benefit is determined as of the effective date or deemed effective date of the
death benefit election and is equal to the amount that would have been payable
in the event of a full surrender of the Participant's Account on the date the
death benefit election is or is deemed to become effective.
 
                             SETTLEMENT PROVISIONS
 
GENERAL
 
    On the Annuity Commencement Date, the adjusted value of the Participant's
Account as determined in accordance with the Determination of Amount provision
below will be applied, as specified by the Participant, under one [1] or more of
the Annuity Options provided in the Contract or under such other settlement
options as may be agreed to by the Company. However, if the amount to be applied
under any Annuity Option is less than $2,000, or if the first annuity payment
payable in accordance with such option is less than $20, the Company will pay
the amount to be applied in a single payment to the Payee.
 
    After the Annuity Commencement Date, no change of Annuity Option is
permitted and no payments may be requested under the Cash Withdrawals provision
of the Contract. Exchanges of Variable Annuity Units are permitted.
 
                                       14
<PAGE>
ELECTION AND EFFECTIVE DATE OF ELECTION
 
    During the lifetime of the Annuitant and prior to the Annuity Commencement
Date, the Participant may elect to have the adjusted value of the Participant's
Account applied on the Annuity Commencement Date under one [1] or more of the
Annuity Options provided in the Contract; if more than one person is named as
Annuitant, due to the designation of a co-annuitant, the Participant may elect
to name one of such persons to be the sole Annuitant as of the Annuity
Commencement Date. The Participant may also change any election but any election
or change of election must be effective at least 30 days prior to the Annuity
Commencement Date. This election or change of election may be made by filing
with the Company at its annuity service mailing address, a written election or
change of election in such form as the Company may require. Any such election or
change of election will become effective on the date it is received by the
Company. If no such election is in effect on the 30th day prior to the Annuity
Commencement Date, the adjusted value of the Participant's Account will be
applied under Annuity Option B, for a life annuity with 120 monthly payments
certain. If there is no election of a sole Annuitant in effect on the 30th day
prior to the Annuity Commencement Date, the person designated as co-annuitant
will be the Payee under the applicable Annuity Option.
 
    Any such election may specify the proportion of the adjusted value of the
Participant's Account to be applied to 0provide a Fixed Annuity and a Variable
Annuity. In the event the election does not so specify, then the portion of the
adjusted value of the Participant's Account to be applied to provide a Fixed
Annuity and/or a Variable Annuity will be determined on PRO RATA basis from the
composition of the Participant's Account on the Annuity Commencement Date.
 
    The Annuity Options in the contract may also be elected as provided in the
Death Benefit section of the Contract.
 
DETERMINATION OF AMOUNT
 
    The adjusted value of the Participant's Account to be applied to provide a
Variable Annuity or a Fixed Annuity or a combination of both, shall be equal to
the Participant's Account Value for the Valuation Period which ends immediately
preceding the Annuity Commencement Date, minus a proportionate amount of the
account fee to reflect the time elapsed between the last Account Anniversary and
the day before the Annuity Commencement Date, plus or minus any applicable
market value adjustment and minus a premium or similar tax, if any.
 
EFFECT OF ANNUITY COMMENCEMENT DATE ON PARTICIPANT'S ACCOUNT
 
    On the Annuity Commencement Date the Participant's Account will be canceled.
 
ANNUITY COMMENCEMENT DATE
 
    The Annuity Commencement Date is set forth on the Certificate Specifications
page. This date may be changed from time to time by the Participant provided
that each change is effective at least 30 days prior to the then current Annuity
Commencement Date and the new Annuity Commencement Date is a date which is: (1)
at least 30 days after the effective date of the change; (2) the first day of a
month; and (3) not later than the first day of the first month following the
Annuitant's 90th birthday. Any change of the Annuity Commencement Date may be
made by filing with the Company at its annuity service mailing address, a
written designation of a new Annuity Commencement Date in such form as the
Company may require. Any such change will become effective on the date the
designation is received by the Company.
 
    The Annuity Commencement Date may also be changed by an election of a
settlement option as provided in the Death Benefit section of the Contract.
 
FIXED ANNUITY PAYMENTS
 
    The dollar amount of each Fixed Annuity payment shall be determined in
accordance with the annuity payment rates shown on page 18, which are based on
the minimum guaranteed interest rate of 3% per year or, if more favorable to the
Payee(s), in accordance with the annuity payment rates published by the Company
and in use on the Annuity Commencement Date.
 
                                       15
<PAGE>
VARIABLE ANNUITY PAYMENTS
 
    The dollar amount of the first Variable Annuity payment shall be determined
in accordance with the annuity payment rates shown on page 18, which are based
on an assumed interest rate of 3% per year.
 
    All Variable Annuity payments other than the first are determined by means
of Annuity Units credited with respect to the particular Payee. The number of
Annuity Units to be credited in respect of a particular Sub-Account is
determined by dividing that portion of the first Variable Annuity payment
attributable to that Sub-Account by the Annuity Unit value of that Sub-Account
for the Valuation Period which ends immediately preceding the Annuity
Commencement Date. The number of Annuity Units of each Sub-Account credited with
respect to the Payee then remains fixed unless an exchange of Annuity Units is
made pursuant to the Exchange of Variable Annuity Units section below. The
dollar amount of each Variable Annuity payment after the first may increase,
decrease or remain constant, and is equal to the sum of the amounts determined
by multiplying the number of Annuity Units of a particular Sub-Account credited
with respect to the Payee by the Annuity Unit value for the particular
Sub-Account for the Valuation Period which ends immediately preceding the due
date of each subsequent payment.
 
ANNUITY UNIT VALUE
 
    The Annuity Unit value for each Sub-Account was established at $10.00 for
the first Valuation Period of the particular Sub-Account. The Annuity Unit value
for the particular Sub-Account for any subsequent Valuation Period is determined
by multiplying the Annuity Unit value for the particular Sub-Account for the
immediately preceding Value Period by the Net Investment Factor for the
particular Sub-Account for the current Valuation Period and then multiplying
that product by a factor to neutralize the assumed interest rate of 3% per year
used to establish the annuity payment rates found in the Contract. The factor is
0.99991902 for a one [1] day Valuation Period.
 
EXCHANGE OF VARIABLE ANNUITY UNITS
 
    After the Annuity Commencement Date the Payee may, by filing a written
request with the Company at its annuity service mailing address, exchange the
value of a designated number of Annuity Units of particular Sub-Accounts then
credited with respect to such Payee into other Annuity Units, the value of which
would be such that the dollar amount of an annuity payment made on the date of
the exchange would be unaffected by the exchange. No more than 12 exchanges may
be made in any Account Year.
 
    Exchanges maybe made among the Sub-Accounts only. Exchanges shall be made
using the Annuity Unit values for the Valuation Period during which the request
for exchange is received by the Company.
 
ACCOUNT FEE
 
    After the Annuity Commencement Date an annual account fee amounting to $50
will be deducted in equal amounts from each Variable Annuity payment made during
the year as provided in the Contract Values During Accumulation Period section
of the Contract.
 
DESCRIPTION OF ANNUITY OPTIONS
 
    Options A, B, C and D are available on either a Fixed Annuity or a Variable
Annuity basis. Option E is available on a Fixed Annuity basis only.
 
    Annuity Option A. Life Annuity: Monthly payments during the lifetime of the
Payee.
 
    Annuity Option B. Life Annuity with 60, 120, 180 or 240 Monthly Payments
Certain: Monthly payments during the lifetime of the Payee and in any event for
sixty (60), one hundred twenty (120), one hundred eighty (180) or two hundred
forty (240) months certain as elected.
 
    Annuity Option C. Joint and Survivor Annuity: Monthly payments payable
during the joint lifetime of the Payee and a designated second person and during
the lifetime of the survivor. During the lifetime of the survivor variable
monthly payments, if any, will be determined using the percentage chosen at the
time of the election of this option of the number of each type of Annuity Units
credited with respect to the Payee, and each fixed monthly payment, if any, will
be equal to the same percentage of the fixed monthly payment payable during the
joint lifetime of the Payee and the designated second person.
 
                                       16
<PAGE>
    Annuity Option D. Monthly Payments for a Specified Period Certain: Monthly
payments for any specified period of time (at least five (5) years but not
exceeding 30 years), as elected.
 
    Annuity Option E. Fixed Payments: The amount applied to provide fixed
payments in accordance with this Annuity Option will be held by the Company at
interest. Fixed payments will be made in such amounts and at such times (at
least over a period of five (5) years) as may be agreed upon with the Company
and will continue until the amount held by the Company with interest is
exhausted. The final payment will be for the balance remaining and may be less
than the amount of each preceding payment. Interest will be credited on an
annual basis on the amount remaining unpaid at a rate which shall be determined
by the Company from time to time but which shall not be less than 3% per year
compounded annually. The rate so determined may be changed at any time and as
often as may be determined by the Company, provided, however, that the rate may
not be reduced more frequently than once during each calendar year.
 
AMOUNTS PAYABLE ON DEATH OF PAYEE
 
    In the event of the death of the Payee on or after the Annuity Commencement
Date, the Company will pay any remaining payments under any Annuity Option then
in effect to the Payee's designated beneficiary as they become due. If there is
no designated beneficiary entitled to these remaining payments then living, the
Company will pay the amount specified in the schedule below for any Annuity
Option then in effect in one sum to the deceased Payee's estate. Any beneficiary
who becomes entitled to any remaining payments under any Annuity Option may
elect to receive the amount specified in the schedule below for such option in
one sum. In the event of the death of a beneficiary who has become entitled to
receive any remaining payments under any Annuity Option, the Company will pay
the amount specified for such option in the schedule below in one sum to the
deceased beneficiary's estate. All payments made in one sum by the Company as
provided in this paragraph are made in lieu of paying any remaining payments
under the Annuity Option then in effect.
 
<TABLE>
<CAPTION>
 Option    Amount
- ---------  --------------------------------------------------------------------------
 
<C>        <S>
    B      The discounted value of the remaining payments, if any, for the certain
           period.
    D      The discounted value of the remaining payments, if any, for the certain
           period.
    E      The unpaid balance of the proceeds and interest.
</TABLE>
 
    In the case of Options B and D the discounted value will be based, for
payments being made on a variable basis, on interest compounded annually at the
assumed interest rate and on the assumptions that the particular Annuity Unit
values applicable to the remaining payments will be the particular Annuity Unit
values for the Valuation Period which ends on the day before the date of the
determination and that this value will remain unchanged thereafter.
 
ANNUITY PAYMENT RATES
 
    The annuity payment rates below show, for each $1,000 applied, the dollar
amount of both (a) the first monthly Variable Annuity payment based on the
assumed interest rate of 3% and (b) the monthly Fixed Annuity payment, when the
payment is based on the minimum guaranteed interest rate of 3% per year.
 
    The mortality table used in determining the annuity payment rates for
Options A, B and C is the 1983 Individual Annuitant Mortality Table A. In using
this mortality table, ages of Annuitants will be reduced by one [1] year for
Annuity Commencement Dates occurring during the 1990's, reduced two [2] years
for Annuity Commencement Dates occurring during the decade 2000-2009, and so on.
 
    The annuity payment rates in the tables shown below reflect rates of
mortality appropriate for Annuity Commencement Dates occurring during the 1980s.
Thus, for Annuity Commencement Dates occurring during the 1990s the term
ADJUSTED AGE as used in the tables below, means actual age less one year.
ADJUSTED AGE shall mean actual age less two year for Annuity Commencement Dates
occurring in the decade 2000-2009, and so on.
 
                                       17
<PAGE>
    ADJUSTED AGES will be determined based on the actual age(s) of the
Annuitant(s), in completed years and months, as of the Annuity Commencement
Date. The tables below show annuity payment rates for exact ADJUSTED AGES; rates
for adjusted ages expressed in completed years and months will be based on
straight line interpolation between the appropriate annuity payment rates.
 
    The dollar amount of each annuity payment for any adjusted age or
combination of adjusted ages not shown below or for any other form of Annuity
Option agreed to by the Company will be quoted by the Company on request.
 
               AMOUNT OF FIRST MONTHLY ANNUITY PAYMENT PER $1,000
                              SINGLE LIFE ANNUITY
 
<TABLE>
<CAPTION>
                                                   OPTION B
                                      LIFE ANNUITY WITH PAYMENTS CERTAIN
                          ----------------------------------------------------------
                           60 Payments    120 Payments   180 Payments   240 Payments
       OPTION A
     LIFE ANNUITY
- -----------------------
<S>       <C>    <C>      <C>    <C>      <C>   <C>      <C>   <C>      <C>   <C>
Adjusted                  ----------------------------------------------------------
  Age     Male   Female   Male   Female   Male  Female   Male  Female   Male  Female
   20      3.04   2.93     3.03   2.93    3.03   2.93    3.03   2.93    3.03   2.93
   25      3.14   3.02     3.14   3.02    3.14   3.02    3.14   3.02    3.13   3.01
   30      3.28   3.13     3.28   3.13    3.27   3.12    3.27   3.12    3.26   3.12
   35      3.44   3.26     3.44   3.26    3.44   3.26    3.43   3.25    3.41   3.24
   40      3.66   3.42     3.65   3.42    3.64   3.42    3.63   3.41    3.60   3.40
   45      3.93   3.63     3.92   3.63    3.90   3.63    3.87   3.61    3.82   3.59
   50      4.27   3.90     4.26   3.90    4.22   3.89    4.17   3.86    4.08   3.82
   55      4.70   4.25     4.68   4.25    4.62   4.22    4.53   4.18    4.39   4.11
   60      5.28   4.72     5.25   4.70    5.14   4.66    4.96   4.57    4.71   4.44
   65      6.10   5.35     6.03   5.32    5.81   5.22    5.46   5.05    5.02   4.79
   70      7.23   6.25     7.07   6.18    6.61   5.96    5.96   5.60    5.27   5.12
   75      8.82   7.56     8.44   7.39    7.49   6.89    6.38   6.14    5.42   5.35
   80     11.06   9.53    10.17   9.07    8.33   7.89    6.66   6.55    5.49   5.47
   85     14.16  12.48    12.12  11.19    8.97   8.74    6.81   6.77    5.51   5.50
</TABLE>
 
                                    OPTION C
                           JOINT AND SURVIVOR ANNUITY
              (Assumed election of Joint and Two-Thirds Survivor)
 
<TABLE>
<CAPTION>
                             Adjusted Age of Female
Adjusted Age  -----------------------------------------------------
  of Male        55         60         65         70         75
- ------------  ---------  ---------  ---------  ---------  ---------
<S>           <C>        <C>        <C>        <C>        <C>
     55            4.25       4.47       4.72       4.99       5.29
     60            4.44       4.71       5.01       5.34       5.71
     65            4.65       4.97       5.33       5.75       6.23
     70            4.88       5.24       5.68       6.20       6.81
     75            5.11       5.52       6.04       6.68       7.45
</TABLE>
 
                                    OPTION D
                    PAYMENTS FOR A SPECIFIED PERIOD CERTAIN
 
<TABLE>
<CAPTION>
  Years      Amount       Years      Amount       Years      Amount       Years      Amount
- ---------  -----------  ---------  -----------  ---------  -----------  ---------  -----------
<S>        <C>          <C>        <C>          <C>        <C>          <C>        <C>
    5           17.91      12            8.24      19            5.73      26            4.59
    6           15.14      13            7.71      20            5.51      27            4.47
    7           13.16      14            7.26      21            5.32      28            4.37
    8           11.68      15            6.87      22            5.15      29            4.27
    9           10.53      16            6.53      23            4.99      30            4.18
   10            9.61      17            6.23      24            4.84
   11            8.86      18            5.96      25            4.71
</TABLE>
 
                                       18
<PAGE>
                              OWNERSHIP PROVISIONS
 
EXERCISE OF CONTRACT RIGHTS
 
    The Contract shall belong to the Owner. All Contract rights and privileges
may be expressly reserved by the Owner, failing which, each Participant shall be
entitled to exercise such rights and privileges in connection with this
Certificate. In any case, such rights and privileges can be exercised without
the consent of the Beneficiary (other than an irrevocable Beneficiary) or any
other person. Such rights and privileges may be exercised only during the
lifetime of the Annuitant and prior to the Annuity Commencement Date, except as
otherwise provided in the Contract.
 
    The Annuitant becomes the Payee on and after the Annuity Commencement Date.
The Beneficiary becomes the Payee on the death of the Annuitant. Such Payees may
thereafter exercise such rights and privileges, if any, of ownership which
continue.
 
CHANGE OF OWNERSHIP
 
    Ownership of a Qualified Contract may not be transferred except to: (1) the
Annuitant; (2) a trustee or successor trustee of a pension or profit sharing
trust which is qualified under Section 401 of the Code; (3) the employer of the
Annuitant provided that the Qualified Contract after transfer is maintained
under the terms of a retirement plan qualified under Section 403(a) of the Code
for the benefit of the Annuitant; (4) the trustee of an individual retirement
account plan qualified under Section 408 of the Code for the benefit of the
Owner; or (5) as otherwise permitted from time to time by laws and regulations
governing the retirement or deferred compensation plans for which a Qualified
Contract may be issued. Subject to the foregoing, a Qualified Contract may not
be sold, assigned, transferred, discounted or pledged as collateral for a loan
or as security for the performance of an obligation or for any other purpose to
any person other than the Company.
 
    The Owner of a Non-Qualified Contract may change the ownership of the
Contract during the lifetime of any Annuitant and prior to the last Annuity
Commencement Date; and each Participant, in like manner, may change the
ownership interest in the Contract evidenced by that Participant's Certificate.
A change of ownership will not be binding upon the Company until written
notification is received by the Company. When such notification is so received,
the change will be effective as of the date on which the request for change was
signed by the Owner or Participant, as appropriate, but the change will be
without prejudice to the Company on account of any payment made or any action
taken by the Company prior to receiving the change.
 
DEATH OF PARTICIPANT
 
    If a Participant under a Non-Qualified Contract dies prior to the Annuitant
and before the Annuity Commencement Date, that Participant's Account Value, plus
or minus any applicable market value adjustment, must be distributed to the
"designated beneficiary" (as defined below) either (1) within five [5] years
after the date of death of the Participant, or (2) as an annuity over some
period not greater than the life or expected life of the designated beneficiary,
with annuity payment beginning within one [1] year after the date of death of
the Participant. For this purpose (and for purposes of Section 72(s) of the
Code), the person named as Beneficiary shall be considered the designated
beneficiary, and if no person then living has been so named, then the Annuitant
shall automatically be the designated beneficiary. If the designated beneficiary
is the surviving spouse of the deceased Participant, the spouse can elect to
continue the Certificate in the spouse's own name as Participant, in which case
these mandatory distribution requirements will apply on the spouse's death.
 
    When the deceased Participant was also the Annuitant, the Death Benefit
provision of the Contract controls unless the deceased Participant's surviving
spouse is the designated beneficiary and elects to continue the Certificate in
the spouse's own name as both Participant and Annuitant.
 
    If the Payee dies on or after the Annuity Commencement Date and before the
entire accumulation under such Participant's Account has been distributed, the
remaining portion of such Participant's Account, if any, must be distributed as
least as rapidly as the method of distribution then in effect.
 
                                       19
<PAGE>
    In any case in which a non-natural person constitutes a holder of the
Certificate for the purposes of Section 72(s) of the Code, (1) the distribution
requirements described above shall apply upon the death of any Annuitant, and
(2) a change in any Annuitant shall be treated as the death of an Annuitant.
 
    In all cases, no Participant or Beneficiary shall be entitled to exercise
any rights that would adversely affect the treatment of the contract as an
annuity Contract under the Code.
 
VOTING OF SERIES FUND SHARES
 
    The Company will vote Series Fund shares held by the Sub-Accounts at
meetings of shareholders of the Series Fund, but will follow voting instructions
received from persons having the right to give voting instructions. The Owner or
Participant, as the case may be, is the person having the right to give voting
instructions prior to the Annuity Commencement Date. On or after the Annuity
Commencement Date the Payee is the person having such voting rights. Any shares
attributable to the Company and Series Fund shares for which no timely voting
instructions are received will be voted by the Company in the same proportion as
the shares for which instructions are received from persons have such voting
rights.
 
    Neither the Variable Account nor the Company is under any duty to provide
information concerning the voting instruction rights of persons who may have
such rights under retirement or deferred compensation plans, other than rights
afforded by the Investment Company Act of 1940, nor any duty to inquire as to
the instructions received or the authority of Owners, Participants, or others to
instruct the voting of Series Fund shares. Except as the Variable Account or the
Company has actual knowledge to the contrary, the instructions given by Owners,
Participants and Payees will be valid as they affect the Variable Account, the
Company and any others having voting instruction rights with respect to the
Variable Account.
 
    All Series Fund proxy material, together with an appropriate form to be used
to give voting instructions, will be provided to each Owner, each Participant
and each Payee having the right to give voting instructions at least 10 days
prior to each meeting of the shareholders of the Series Fund. The number of
particular Series Fund shares as to which each such person is entitled to give
instructions will be determined by the Company on a date not more than 90 days
prior to each such meeting. Prior to the Annuity Commencement Date, the number
of Series Fund shares as to which voting instructions may be given to the
Company is determined by dividing the value of all the Variable Accumulation
Units of the particular Sub-Account credited to the Participant's Account by the
net asset value of one [1] Series Fund share as of the same date. On or after
the Annuity Commencement Date, the number of Series Fund shares as to which such
instructions may be given by a Payee is determined by dividing the reserve held
by the Company in the particular Sub-Account with respect to the particular
Payee by the net asset value of a Series Fund share as of the same date.
 
PERIODIC REPORTS
 
    During the Accumulation Period the Company will send the Participant, or
such other person having voting rights, at least once during each Account Year,
a statement showing the number, type and value of Accumulation Units credited to
the Participant's Account and the fixed accumulation value of such account,
which statement shall be accurate as of a date not more than two months previous
to the date of mailing. In addition, every person having voting rights will
receive such reports or prospectuses concerning the Variable Account and the
Series Fund as may be required by the Investment Company Act of 1940 and the
Securities Act of 1933. The Company will also send such statements reflecting
transactions in the Participant's Account as may be required by applicable laws,
rules and regulations.
 
                             BENEFICIARY PROVISION
 
DESIGNATION AND CHANGE OF BENEFICIARY
 
    The Beneficiary designation contained in the Application will remain in
effect until changed. The interest of any Beneficiary is subject to the
Beneficiary surviving the Annuitant and, in the case of a Certificate issued
under a Non-Qualified Contract, surviving the Participant as well.
 
    Subject to the rights of an irrevocable Beneficiary, the Participant may
change or revoke the designation of a Beneficiary at any time while the
Annuitant is living. To do so, the Participant must file the change or
 
                                       20
<PAGE>
revocation with the Company at its annuity service mailing address in such form
as the Company may require. The change or revocation will not be binding upon
the Company until it is received by the Company. When it is so received the
change or revocation will be effective as of the date on which the beneficiary
designation or revocation was signed, but the change or revocation will be
without prejudice to the Company on account of any payment made or any action
taken by the Company prior to receiving the change or revocation.
 
                               GENERAL PROVISIONS
 
AGE AND SEX MISSTATEMENT
 
    If any date of birth or sex, or both, as been misstated in the Application,
or elsewhere, the amounts payable pursuant to the Contract under this
Certificate will be the amounts which would have been provided using the correct
age or sex, or both. Any deficiency in payments already made by the Company
shall be paid immediately and any excess in the payments already made by the
Company shall be charged against the benefits falling due after the adjustment.
 
CERTIFICATE
 
    This Certificate is issued in consideration of the Application and payment
of the Purchase Payment(s). The Contract, this Certificate and the Application,
a copy of which is attached, constitute the entire Contract. All statements made
in the Contract Application and each Participant's Application will be deemed
representations and not warranties, and no statement will void the contract or a
Participant's interest therein or be used in defense to a claim unless it is
contained in the Contract Application or the Application of that Participant and
a copy is attached to the Contract or Certificate, as applicable, at issue. Only
the President, a Vice President, the Actuary or the Secretary of the Company has
authority to agree on behalf of the Company to any alteration of the Contract or
any Certificate, or to any waiver of the rights or requirements of the Company.
 
CURRENCY
 
    All amounts due under the Contract are payable in United States dollars,
lawful money of the United States of America.
 
DETERMINATION OF VALUES
 
    The method of determination by the Company of the Net Investment Factor and
the number and value of Accumulation Units and Annuity Units shall be conclusive
upon the Owner, the Participant, any Payee and any Beneficiary.
 
GOVERNING LAW
 
    The Contract and all Certificates issued in connection with it will be
governed by the laws of the jurisdiction where the Contract Application is
signed.
 
GUARANTEES
 
    Subject to the Net Investment Factor provision, the Company guarantees that
the dollar amount of Variable Annuity payments made during the lifetime of the
Payee(s) will not be adversely affected by the actual mortality experience of
the Company or by the actual expenses incurred for the contract and other
contracts providing benefits which vary in accordance with the investment
performance of the Sub-Accounts.
 
INCONTESTABILITY
 
    The Contract and this Certificate are incontestable.
 
MODIFICATION
 
    Upon notice to the Owner, Participant(s) or the Payee(s) during the annuity
period, the Contract and this Certificate may be modified by the Company, but
only if such modification (a) is necessary to make the Contract, Certificate or
the Variable Account comply with any law or regulation issued by a governmental
agency to which the Company or the Variable Account is subject; or (b) is
necessary to assure continued
 
                                       21
<PAGE>
qualification of the Contract and/or Certificate under the Code or other federal
or state laws relating to retirement annuities or annuity contracts; or (c) is
necessary to reflect a change in the operation of the Variable Account or the
Sub-Accounts; or (d) provides additional Variable Account and/or Fixed Account
options. In the event of any such modification, the Company may make appropriate
endorsement to the Contract and this Certificate to reflect such modification.
 
    In addition, upon 60 days' prior written notice to the Owner, the Contract
and this Certificate may be modified by the Company to change the withdrawal
charges, account fees, mortality and expense risk charges, administrative
expense charges, the tables used in determining the amount of the first monthly
Variable Annuity and Fixed Annuity payments and the formula used to calculate
the market value adjustment, provided that such modification shall apply only to
Participant's Accounts established after the effective date of any such
modification. All of the charges and the annuity tables which are provided in
the Contract and this Certificate prior to any such modification will remain in
effect permanently, unless improved by the Company, with respect to
Participant's Accounts established prior to the effective date of such
modification.
 
NONPARTICIPATING
 
    The Contract is nonparticipating and will not share in any surplus earnings
of the Company.
 
PAYMENTS BY THE COMPANY
 
    All sums payable by the Company pursuant to this Certificate are payable
only at its Executive Office or such other place as may be designated by the
Company. The Company may require surrender of this Certificate upon final
payment of all sums payable by the Company pursuant to the Contract.
 
PROOF OF AGE
 
    The Company shall have the right to require evidence of the age of any Payee
under Annuity Options A, B, and C prior to the Annuity Commencement Date.
 
PROOF OF SURVIVAL
 
    The Company shall have the right to require evidence of the survival of any
Payee under Annuity Options A, B and C at the time any payment payable to such
Payee is due.
 
SPLITTING UNITS
 
    The Company reserves the right to split or combine the value of Variable
Accumulation Units, Annuity Units or any of them. In effecting any such change
of unit values, strict equity will be preserved and no change will have a
material effect on the benefits or other provisions of this Certificate.
 
                                       22
<PAGE>
SUN LIFE
OF CANADA (U.S.) Sun Life Assurance Company of Canada (U.S.)
                 A Wholly-Owned Subsidiary of Sun Life Assurance Company of
                 Canada
 
<TABLE>
<S>                                <C>                  <C>
EXECUTIVE OFFICE:                  HOME OFFICE:         ANNUITY SERVICE MAILING ADDRESS:
One Sun Life Executive Park        Wilmington,          Sun Life Annuity Service Center
Wellesley Hills, Massachusetts     Delaware             P.O. Box 1024
02181                                                   Boston, Massachusetts 02103
</TABLE>
 
                                CERTIFICATE FOR
FLEXIBLE PAYMENT DEFERRED COMBINATION VARIABLE AND FIXED GROUP ANNUITY CONTRACT
                                NONPARTICIPATING
 
ALL PAYMENTS AND VALUES PROVIDED BY THE CONTRACT WHEN BASED ON THE INVESTMENT
EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND ARE NOT GUARANTEED AS TO
DOLLAR AMOUNT.
 
PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE
ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
ADJUSTMENTS IN AMOUNTS PAYABLE TO A PARTICIPANT, INCLUDING WITHDRAWALS,
TRANSFERS, AMOUNTS APPLIED TO PURCHASE AN ANNUITY, AND DISTRIBUTIONS RESULTING
FROM THE DEATH OF THE PARTICIPANT. PAYMENTS MADE FROM GUARANTEE AMOUNTS WHICH
ARE WITHIN 30 DAYS PRIOR TO THE END OF A GUARANTEE PERIOD ARE NOT SUBJECT TO THE
MARKET VALUE ADJUSTMENT.

<PAGE>
<TABLE>
                                                                                                                     EXHIBIT 5(a)
<S>                        <C>
      REGATTA              SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) Please make checks payable to Sun Life Assurance
      CLASSIC              Company of Canada (U.S.). Send the Application and check to Sun Life of Canada (U.S.)
                           Annuity Service Center, P.O. Box 1024, Boston, MA 02103
GROUP/OWNER APPLICATION FOR COMBINATION FIXED/VARIABLE GROUP ANNUITY CONTRACT ("CONTRACT APPLICATION")
- ---------------------------------------------------------------------------------------------------------------------------------
   1. GROUP/OWNER
      (Please Print)
                      -----------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
   2. ADDRESS                                                                             3. TAX ID #:
      (Please Print)
                      -----------------------------------------------------------------------------------------------------------
                                              Street

                      -------------------------------------------------------             ---------------------------------------
                                City              State          Zip                                  (Please Print)
- ---------------------------------------------------------------------------------------------------------------------------------
  4. TRUSTEE(S) (if applicable)
     (Please Print)
                      -----------------------------------------------------------------------------------------------------------
     Ownership: Trustee(s) specified in question 4 will be the owner(s) of the contract.
  5. Unless the following box is checked, confirmation statements for the plan will be mailed to the address above.
                / /  Mail statements directly to the Participant.
- ---------------------------------------------------------------------------------------------------------------------------------
   6. PLAN SELECTION--IRS TAX-QUALIFIED PLAN ONLY
     If using SunLife of Canada (U.S.) Prototype Plan you must attach appropriate adoption agreement.
     / / SunLife of Canada (U.S.) Prototype             / / 401(k)                        / / SEP/IRA
     / / Non-MFS Prototype                              / / Corporation or  Association   / / 403(b)
                                                        / / Self-Employed                 / / Other 
                                                                                                    -----------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
  7. INVESTMENT OPTIONS:
     Please note: Participants will be limited to those options which the Group/Owner selects below. Indicate with check mark(s).
                         SUB-ACCOUNTS INVESTED IN                                                  FIXED ACCOUNT
                         MFS/SUN LIFE SERIES TRUST                                               GUARANTEE PERIODS
             --------------------------------------------------                                 ---------------------
 ---- Money Market Series (0)              ---- Government Securities Series (7)              ---- 1 year
 ---- High Yield Series (1)                ---- Conservative Growth  Series (8)               ---- DCA Guaranteed Option        
 ---- Capital Appreciation Series (2)      ---- World Growth Series (9)                    
 ---- Utilities Series (3)                 ---- Research Series (13/16)            
 ---- World Governments Series (4)         ---- World Total Return Series (14/17)
 ---- Managed Sectors Series (5)           ---- World Asset Allocation Series (15/18)
 ---- Total Return Series (6)              ---- Emerging Growth Series (11/12)
 ---- Value Series                        
 ---- MFS/Foreign & Colonial International Growth Series
 ---- MFS/Foreign & Colonial International Growth and Income Series
 ---- MFS/Foreign & Colonial Emerging Markets Equity Series
- ---------------------------------------------------------------------------------------------------------------------------------
  8. SPECIAL INSTRUCTIONS and Transfer of Assets information (if applicable).
- ---------------------------------------------------------------------------------------------------------------------------------
  I hereby represent the answers to the above questions to be correct and true to the best of my knowledge and belief and 
  agree that this application shall be a part of any Contract issued  by the Company. ALL PAYMENTS AND VALUES PROVIDED BY
  THIS CONTRACT WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR
  AMOUNT. ALL PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT ARE SUBJECT TO A MARKET VALUE ADJUSTMENT FORMULA, THE OPERATION
  OF WHICH MAY RESULT IN UPWARD AND DOWNWARD ADJUSTMENTS IN AMOUNTS PAYABLE. I acknowledge receipt of a current prospectus 
  and MFS/Sun Life Series Trust Prospectus.
 
 Date                                                Signed at
      ----------------------------------------                  -----------------------------------------------------------------
                                                                              City                    State
 Authorized Signature
 for Group/Owner                                     Agent
                 --------------------------------               -----------------------------------------------------------------
                                                                          Print Agent Name and Phone Number
 Trustee(s)                                          Agent
                ---------------------------------               -----------------------------------------------------------------
                       Signature(s)                                           Signature of Agent
- ---------------------------------------------------------------------------------------------------------------------------------
AGENT: Will this Contract replace or change any existing life insurance or annuity in this or any other company?
/ / Yes  / / No   If yes, please explain under Special Instructions.
General Agent 
              -------------------------------------------------------------------------------------------------------------------
Branch Office Address                                                     Phone # (       )
                      ---------------------------------------------                         -------------------------------------

RC-MVA-APP-CONT
</TABLE>

<PAGE>

<TABLE>
                                                                                                                       EXHIBIT 5(b)
<C>                   <S>                                                                              <C>
        M-F-S            SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) 
       REGATTA           Please make checks payable to Sun Life Assurance Company of Canada (U.S.).             MFS REGATTA CLASSIC
       CLASSIC           Send the application and check to Sun Life of Canada (U.S.)                        PARTICIPANT APPLICATION
                       Annuity Service Center, P.O. Box 1024, Boston, MA 02103
- -----------------------------------------------------------------------------------------------------------------------------------
1. PARTICIPANT          Name ______________________________________________________________________________________________________
                                        First                          Middle                       Last
                        Address ___________________________________________________________________________________________________

                        City _______________________________________________________________________ State __________ Zip _________

                        Participant Sex  / / M   / / F   Date of Birth ______________________ Social Security Number ___ /__ / ____
- -----------------------------------------------------------------------------------------------------------------------------------
 2. ANNUITANT           / / Same as Participant, or _______________________________________________________________________________
                                                           First                        Middle                 Last
                        Address ___________________________________________________________________________________________________

                        City _______________________________________________________________________ State __________ Zip _________

                        Annuitant Sex    / / M   / / F   Date of Birth ______________________ Social Security Number ___ /__ / ____
- -----------------------------------------------------------------------------------------------------------------------------------
 3. CO-ANNUITANT        Name ______________________________________________________________________________________________________

                        Co-Annuitant Sex / / M   / / F   Date of Birth ______________________ Social Security Number ___ /__ / ____
- -----------------------------------------------------------------------------------------------------------------------------------
 4. BENEFICIARY         Name ______________________________________________________________________________________________________
                                        First                          Middle                       Last
                        Relationship to Annuitant _________________________________________________________________________________
                        BENEFICIARY DESIGNATIONS MUST BE CONSISTENT WITH THE PROVISIONS OF RETIREMENT PLAN LEGISLATION.
- -----------------------------------------------------------------------------------------------------------------------------------
 5. PLAN SELECTION      / / 401(K)*   / / IRA Transfers  / / SEP-IRA*       / / Non-qualified
                        / / 403(b)*   / / Self-employed* / / IRA Rollover   / / CRT**          / /  Other* ________________________
                        *Owner/Trustee ____________________________________________________________________________________________
                        **Please contact the Sun Life Annuity Service Center for the required waiver form, call 1-800-752-7215.
- -----------------------------------------------------------------------------------------------------------------------------------
 6. PURCHASE            SUB-ACCOUNTS INVESTED IN MFS/SUN LIFE SERIES TRUST
    PAYMENT             --------------------------------------------------
    ALLOCATION          ___% Money Market Series (0)         ___% World Growth Series (9)          ___% MFS-Registered Trademark-/
                        ___% High Yield Series (1)           ___% Emerging Growth Series (11/12)        Foreign & Colonial Emerging
   (WHOLE %, MUST TOTAL ___% Capital Appreciation Series (2) ___% Research Series (13/16)               Markets Equity Series
    100%, NO FRACTIONS) ___% Utilities Series (3)            ___% World Total Return Series (14/17)     (21/22)
                        ___% World Governments Series (4)    ___% World Asset Allocation Series    ___% MFS-Registered Trademark-/
                        ___% Managed Sectors Series (5)           (15/18)                               Foreign & Colonial
                        ___% Total Return Series (6)         ___% MFS-Registered Trademark-/Foreign     International Growth
                        ___% Government Securities Series (7)     & Colonial International Growth       Series (19/20)
                        ___% Conservative Growth Series (8)       Income Series (09/10)            ___% Value Series (23/24)
                                                                                                   FIXED ACCOUNT GUARANTEE PERIODS
                                                                                                   -------------------------------
                                                                                                   ___% 1 year
                                                                                                   ___% DCA Guarantee Option
- -----------------------------------------------------------------------------------------------------------------------------------
 7. PURCHASE PAYMENT    Initial purchase payment of $____________________________ (minimum $25,000)
- -----------------------------------------------------------------------------------------------------------------------------------
 8. SPECIAL             (Annuity Elections, etc.)
    INSTRUCTIONS
- -----------------------------------------------------------------------------------------------------------------------------------
 9. ANNUITY 
    COMMENCEMENT        Year of annuity commencement _______________________
    DATE                The first day of ________________________________ Month
- -----------------------------------------------------------------------------------------------------------------------------------
10. REPLACEMENT         Will this contract replace or change any existing life insurance or annuity in this or any other company?
    CONTRACT                                                                                                      / / Yes    / / No
                        If yes, please explain under Special Instructions and request replacement information from your agent.
- -----------------------------------------------------------------------------------------------------------------------------------
11.  ACCEPTANCE         I hereby represent my answers to the above questions to be correct and true to the best of my knowledge and
                        belief and agree that this application shall be a part of any Certificate issued by the Company. ALL
                        PAYMENTS AND VALUES PROVIDED BY THE CERTIFICATE WHEN BASED ON THE INVESTMENT EXPERIENCE OF THE VARIABLE
                        ACCOUNT ARE VARIABLE AND NOT GUARANTEED AS TO DOLLAR AMOUNT. PAYMENTS AND VALUES BASED ON THE FIXED ACCOUNT
                        ARE SUBJECT TO A MARKET VALUE ADJUSTMENT FORMULA, THE OPERATION OF WHICH MAY RESULT IN UPWARD AND DOWNWARD
                        ADJUSTMENTS IN AMOUNTS PAYABLE. I acknowledge receipt of current MFS Regatta Classic and MFS/Sun Life
                        Series Trust prospectuses.
                        __________________________________________________  _______________________________________________________
                        Agent Name (Print)                                  Phone Number                Date

                        __________________________________________________  _______________________________________________________
                        Agent Signature                                     Signed at            City       State

                        __________________________________________________  _______________________________________________________
                        Participant Signature                               Annuitant/Co-Annuitant Signature
- -----------------------------------------------------------------------------------------------------------------------------------
12. AGENT               Will this contract replace or change any existing life insurance or annuity in this or any other company?
                        / / Yes     / / No     If yes, please explain under SPECIAL INSTRUCTIONS and complete replacement forms
                                               where applicable.
                        General Agent/Dealer ______________________________________________________________________________________

                        Branch Office Address _____________________________________________________________________________________
                                                     Street                        City             State                Zip
</TABLE>

RC-MVA-APP96


<PAGE>
                                                                    Exhibit 9

                                    Sun Life Assurance Company of
                                    Canada (U.S.)
                                    One Sun Life Executive Park
                                    Wellesley Hills, MA 02181



Board of Directors
Sun Life Assurance Company of 
 Canada (U.S.)
One Sun Life Executive Park
Wellesley Hills, MA 02181


Dear Sirs:


Reference is made to the Registration Statement on Form N-4 ("Registration 
Statement") to be filed with the Securities and Exchange Commission with 
respect to the proposed sale of an indefinite principal amount of Regatta 
Classic flexible premium combination fixed/variable group annuity contracts 
(the "Contracts") to be issued with respect to Sun Life of Canada (U.S.) 
Variable Account F (the "Account"), a separate account of Sun Life Assurance 
Company of Canada (U.S.) ("Sun Life (U.S.)"), a Delaware corporation. I wish 
to advise you that I have reviewed the corporate records of Sun Life (U.S.), 
including the action of the Board of Directors of Sun Life (U.S.) in 
establishing the Account, and have examined the Registration Statement of the 
Account and Pre-effective Amendment No. 1 thereto (with exhibits) and such 
other documents as I deem necessary for the purpose of this opinion.

  Based on the foregoing, I am of the opinion that:

  (1)  Sun Life (U.S.) is duly organized and in good standing under the laws
       of the State of Delaware and has the authority to issue the Contracts
       in any jurisdictions where it is authorized to do an insurance business
       and the Contracts have been approved by the appropriate regulatory
       authorities.

  (2)  The Account is a duly established and validly existing separate account
       of Sun Life (U.S.) under the laws of the State of Delaware.

  (3)  The Contracts, as and when issued pursuant to the terms, provisions and
       conditions as set forth in the Registration Statement and any amendments
       thereto, will be validly issued and will be legal and binding obligations
       of Sun Life (U.S.) in accordance with their terms.

  (4)  The assets held in the Account are not chargeable with liabilities 
       arising out of any other business Sun Life (U.S.) may conduct.

In this opinion, I have not addressed the question of taxation of the 
Contracts.

Very truly yours,

/s/ David D. Horn

David D. Horn, Esq.
Senior Vice President and
General Manager



<PAGE>


                                                            Exhibit 10(a)


                          INDEPENDENT AUDITORS' CONSENT


     We consent to the use in this Pre-effective Amendment to the 
Registration Statement of Sun Life of Canada (U.S.) Variable Account F on 
Form N-4 (File No. 333-05227) of our report dated February 2, 1996 
accompanying the financial statements of Sun Life of Canada (U.S.) Variable 
Account F and to the use of our report dated February 7, 1996 accompanying 
the financial statements of Sun Life Assurance Company of Canada (U.S.) 
appearing in the Prospectus, which is part of such amendment to the 
Registration Statement, and to the incorporation by reference of our reports 
dated February 7, 1996 appearing in the Annual Report on Form 10-K of Sun 
Life Assurance Company of Canada (U.S.) for the year ended Decemeber 31, 1995.


We also consent to the reference to us under the heading "Accountants" in 
such Prospectus.

DELOITTE & TOUCHE LLP
Boston, Massachusetts

September 9, 1996


<PAGE>

                                             Exhibit 10(b)


                               CONSENT OF COUNSEL


     I hereby consent to the reference to me in the Pre-effective Amendment 
No. 1 to the Registration Statement on Form N-4 of Sun Life of Canada (U.S.) 
Variable Account F under the caption "Legal Matters" in the Prospectus 
contained therein.

                                   DAVID D. HORN, ESQ.


September 9, 1996


<PAGE>

                                                                  Exhibit 13


MFS Regatta Classic SEC returns - 1 year
<TABLE>
<CAPTION>
                                            accumulated
     initial    12/31/95    12/31/94   95      value                less          ending      %
     amount    unit value  unit value  fee   less fees  free amt  free amt  cdsc   value   Change
     -------   ----------  ----------  ----  ---------  --------  --------  ----  -------  ------
<S>  <C>       <C>         <C>         <C>   <C>        <C>       <C>       <C>   <C>      <C>
RES  1000.00   13.4040913   9.8652057  2.50   1356.22       0      1356.22  0.00  1356.22  35.62%
WTR  1000.00   11.6846068  10.0233260  2.50   1163.24       0      1163.24  0.00  1163.24  16.32%
WAA  1000.00   12.0734048  10.0405053  2.50   1199.97       0      1199.97  0.00  1199.97  20.00%
MMS  1000.00   15.6968912  15.0564902  2.50   1040.03       0      1040.03  0.00  1040.03   4.00%
HYS  1000.00   23.8336781  20.5981853  2.50   1154.58       0      1154.58  0.00  1154.58  15.46%
CAS  1000.00   41.2225812  31.0091779  2.50   1326.87       0      1326.87  0.00  1326.87  32.69%
UTS  1000.00   12.3045139   9.4001017  2.50   1306.48       0      1306.48  0.00  1306.48  30.65%
WGS  1000.00   18.0579597  15.7933247  2.50   1140.89       0      1140.89  0.00  1140.89  14.09%
MSS  1000.00   29.1157741  22.2740637  2.50   1304.66       0      1304.66  0.00  1304.66  30.47%
TRS  1000.00   21.6885656  17.3094164  2.50   1250.49       0      1250.49  0.00  1250.49  25.05%
GSS  1000.00   22.7817541  19.5872389  2.50   1160.59       0      1160.59  0.00  1160.59  16.06%
CGS  1000.00   16.4973735  12.1421276  2.50   1356.19       0      1356.19  0.00  1356.19  35.62%
WGR  1000.00   12.3967846  10.8103993  2.50   1144.25       0      1144.25  0.00  1144.25  14.42%
                           ----------
                             Incep
EGS            12.5877373  10.0000000  2.50
FCG            10.1004633  10.0002705  2.50


MFS Regatta Classic 5-Year SEC through 12/31/95
Money Market                                             Managed Sectors

1000.00  15.6968912  13.54521717  1158.8512     90       1000.00  29.1157741  13.23017827  2200.7091  --12/31/90  12/31/90
 2.50    15.6968912  14.16814700     2.7698     91        2.50    29.1157741  21.20897060     3.4320  --12/31/91  12/31/91
 2.50    15.6968912  14.47452098     2.7111     92        2.50    29.1157741  22.32915720     3.2598  --12/31/92  12/31/92
 2.50    15.6968912  14.68597518     2.6721     93        2.50    29.1157741  22.97181737     3.1686  --12/31/93  12/31/93
 2.50    15.6968912  15.05649021     2.6063     94        2.50    29.1157741  22.27406371     3.2679  --12/31/94  12/31/94
 2.50    15.6968912  15.69689120     2.5000     95        2.50    29.1157741  29.11577412     2.5000  --12/31/95
                                     ------                                                  ------
    accumulated value less fees:    1145.59                  accumulated value less fees:    2185.08
                       free amt:       0.00                                     free amt:       0.00
                  less free amt:    1145.59                                less free amt:    2185.08
                           cdsc:       0.00                                         cdsc:       0.00
                   ending value:    1145.59     2.76%                       ending value:    2185.08     16.92%


High Yield                                               Total Return

1000.00  23.8336781  11.04171393  2158.5126  --12/31/90  1000.00  21.6885656  12.38543382  1751.1349  --12/31/90
 2.50    23.8336781  16.11030521     3.6985  --12/31/91   2.50    21.6885656  14.88809400     3.6419  --12/31/91
 2.50    23.8336781  18.30908853     3.2544  --12/31/92   2.50    21.6885656  15.98081473     3.3929  --12/31/92
 2.50    23.8336781  21.31059951     2.7960  --12/31/93   2.50    21.6885656  17.91368604     3.0268  --12/31/93
 2.50    23.8336781  20.59818525     2.8927  --12/31/94   2.50    21.6885656  17.30941637     3.1325  --12/31/94
 2.50    23.8336781  23.83367813     2.5000  --12/31/95   2.50    21.6885656  21.68856564     2.5000  --12/31/95
                                     ------                                                   ------
    accumulated value less fees:    2143.37                  accumulated value less fees:    1735.44
                       free amt:       0.00                                     free amt:       0.00
                  less free amt:    2143.37                               less free amt:     1735.44
                           cdsc:       0.00                                        cdsc:        0.00
                   ending value:    2143.37      16.47%                    ending value:     1735.44      11.66%


Capital Appreciation                                     Government Securities

1000.00  41.2225812  17.82219870  2312.9908  --12/31/90  1000.00  22.7817541  15.58731828  1461.5570  --12/31/90
 2.50    41.2225812  24.82741974     4.1509  --12/31/91   2.50    22.7817541  17.84853632     3.1910  --12/31/91
 2.50    41.2225812  27.89100323     3.6950  --12/31/92   2.50    22.7817541  18.84487053     3.0223  --12/31/92
 2.50    41.2225812  32.53670740     3.1674  --12/31/93   2.50    22.7817541  20.24947545     2.8126  --12.31.93
 2.50    41.2225812  31.00917790     3.3234  --12/31/94   2.50    22.7817541  19.58723886     2.9077  --12/31/94
 2.50    41.2225812  41.22258116     2.5000  --12/31/95   2.50    22.7817541  22.78175412     2.5000  --12/31/95
                                     ------                                                   ------
    accumulated value less fees:    2296.15                  accumulated value less fees:    1447.12
                       free amt:          0                                     free amt:          0
                  less free amt:    2296.15                                less free amt:    1447.12
                           cdsc:       0.00                                         cdsc:       0.00
                   ending value:    2296.15     18.09%                      ending value:    1447.12      7.67%


World Governments                                        Conservative Growth

1000.00  18.0579597  12.60272522  1432.8615  --12/31/90  1000.00  16.4973735   8.20276450  2011.1968  --12.3190
 2.50    18.0579597  14.31013131     3.1548  --12/31/91   2.50    16.4973735  11.09760910     3.7164  --12/31/91
 2.50    18.0579597  14.23192687     3.1721  --12/31/92   2.50    16.4973735  11.58699380     3.5595  --12/31/92
 2.50    18.0579597  16.72532515     2.6992  --12/31/93   2.50    16.4973735  12.41897180     3.3210  --12/31/93
 2.50    18.0579597  15.79332473     2.8585  --12/31/94   2.50    16.4973735  12.14212760     3.3967  --12/31/94
 2.50    18.0579597  18.05795974     2.5000  --12/31/95   2.50    16.4973735  16.49737350     2.5000  --12/31/95
                                     ------                                                   ------
    accumulated value less fees:    1418.48                  accumulated value less fees:    1994.70
                       free amt:          0                                     free amt:          0
                  less free amt:    1418.48                                less free amt:    1994.70
                           cdsc:       0.00                                         cdsc:       0.00
                   ending value:    1418.48      7.24%                      ending value:    1994.70     14.81%
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
MFS Regatta Classic    Life SEC thru:  12/31/95
Money Market    12/31/85  12/31/85                       Conservative Growth     12/5/86
<S>      <C>         <C>          <C>        <C>         <C>    <C>         <C>          <C>        <C>
1000.00  15.6968912  10.15895059  1545.1292  12/31/85    1000   16.4973735   6.21668000  2653.7273  12/5/86
  2.5    15.6968912  10.61900124     3.6955  12/31/86     2.5   16.4973735   6.01469320     6.8571  12/31/87
  2.5    15.6968912  11.13929308     3.5229  12/31/87     2.5   16.4973735   6.39641310     6.4479  12/31/88
  2.5    15.6968912  11.79871931     3.3260  12/31/88     2.5   16.4973735   8.59145540     4.8005  12/31/89
  2.5    15.6968912  12.70408982     3.0889  12/31/89     2.5   16.4973735   8.20276450     5.0280  12/31/90
  2.5    15.6968912  13.54521717     2.8971  12/31/90     2.5   16.4973735  11.09760910     3.7164  12/31/91
  2.5    15.6968912  14.16814700     2.7698  12/31/91     2.5   16.4973735  11.58699380     3.5595  12/31/92
  2.5    15.6968912  14.47452098     2.7111  12/31/92     2.5   16.4973735  12.41897180     3.3210  12/31/93
  2.5    15.6968912  14.68597518     2.6721  12/31/93     2.5   16.4973735  12.14212760     3.3967  12/31/94
  2.5    15.6968912  15.05649021     2.6063  12/31/94     2.5   16.4973735  16.49737350     2.5000  12/31/95
  2.5    15.6968912  15.69689120     2.5000  12/31/95                                       ------
                                     ------                accumulated value less fees:     2614.10
    accumulated value less fees:    1515.34                                   free amt:        0.00
                       free amt:       0.00               Yrs:           less free amt:        0.00
  Yrs:            less free amt:    1515.34            9.0767123   cdsc %         cdsc:        0.00
   10      cdsc %          cdsc:       0.00                10        0%   ending value:     2614.10    11.17%
   10        0%    ending value:    1515.34     4.24%


                                                         World Government Series    5/16/88  3/8/88
High Yield Series    12/31/85
                                                         1000.00  18.0579597  10.00186797  1805.4587   5/16/88
1000.00  23.8336781  10.34073746  2304.8335  12/31/85     2.50    18.0579597  10.37010064     4.3534   5/31/89
 2.50    23.8336781  11.73372375     5.0780  12/31/86     2.50    18.0579597  11.25638274     4.0106   5/31/90
 2.50    23.8336781  11.72367149     5.0824  12/31/87     2.50    18.0579597  12.38666335     3.6446   5/31/91
 2.50    23.8336781  13.31781341     4.4740  12/31/88     2.50    18.0579597  14.18149074     3.1834   5/31/92
 2.50    23.8336781  13.04266547     4.5684  12/31/89     2.50    18.0579597  15.26278542     2.9578   5/31/93
 2.50    23.8336781  11.04171393     5.3963  12/31/90     2.50    18.0579597  15.18528655     2.9729   5/31/94
 2.50    23.8336781  16.11030521     3.6985  12/31/91     2.50    18.0579597  17.58920577     2.5666   5/31/95
 2.50    23.8336781  18.30908853     3.2544  12/31/92     2.50    18.0579597  18.05795974     2.5000  12/31/95
 2.50    23.8336781  21.31059951     2.7960  12/31/93                                         ------
 2.50    23.8336781  20.59818525     2.8927  12/31/94        accumulated value less fees:    1779.27
 2.50    23.8336781  23.83367813     2.5000  12/31/95                           free amt:       0.00
                                     ------               Yrs:             less free amt:    1779.27
    accumulated value less fees:    2265.09            7.630137     cdsc %          cdsc:       0.00
                       free amt:       0.00                8          0%    ending value:    1779.27     7.84%
  Yrs:            less free amt:    2265.09
   10   cdsc %             cdsc:       0.00              Managed Sectors Series    5/27/88
   10     0%       ending value:    2265.09      8.52%
                                                         1000.00  29.1157741  10.00216580  2910.9470   5/27/88
Capital Appreciation Series      12/31/85                 2.50    29.1157741  13.44782510     5.4127   5/31/89
                                                          2.50    29.1157741  14.92093676     4.8783   5/31/90
1000.00  41.2225812  10.66777786  3864.2144  12/31/85     2.50    29.1157741  16.48725066     4.4149   5/31/91
 2.50    41.2225812  12.79697048     8.0532  12/31/86     2.50    29.1157741  19.24961862     3.7813   5/31/92
 2.50    41.2225812  12.95258014     7.9564  12/31/87     2.50    29.1157741  21.56153831     3.3759   5/31/93
 2.50    41.2225812  13.71517486     7.5140  12/31/88     2.50    29.1157741  22.14376186     3.2871   5/31/94
 2.50    41.2225812  19.95796002     5.1637  12/31/89     2.50    29.1157741  26.22129011     2.7760   5/31/95
 2.50    41.2225812  17.82219870     5.7825  12/31/90     2.50    29.1157741  29.11577412     2.5000  12/31/95
 2.50    41.2225812  24.82741974     4.1509  12/31/91                                         ------
 2.50    41.2225812  27.89100323     3.6950  12/31/92        accumulated value less fees:    2880.52
 2.50    41.2225812  32.53670740     3.1674  12/31/93                           free amt:      0.00
 2.50    41.2225812  31.00917790     3.3234  12/31/94     Yrs:             less free amt:    2880.52
 2.50    41.2225812  41.22258116     2.5000  12/31/95     7.6   cdsc %              cdsc:       0.00
                                     ------                8      0%        ending value:    2880.52    14.94%
    accumulated value less fees:    3812.91
                       free amt:       0.00
 Yrs:             less free amt:    3812.91
  10   cdsc %              cdsc:       0.00
  10     0%        ending value:    3812.91    14.32%
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
MFS Regatta Classic            Life SEC through 12/31/95    (continued)
Government Securities Series      12/31/85
<S>      <C>         <C>          <C>        <C>         <C>    <C>         <C>          <C>        <C>
1000.00  22.7817541  10.42679765  2184.9234  12/31/85    Total Return Series    5/16/88    
 2.50    22.7817541  11.99201053     4.7494  12/31/86
 2.50    22.7817541  12.20406395     4.6668  12/31/87    1000.00  21.6885656  10.00186797  2168.4515   5/16/88
 2.50    22.7817541  12.98178959     4.3873  12/31/88     2.50    21.6885656  11.50450694     4.7131   5/31/89
 2.50    22.7817541  14.48232865     3.9327  12/31/89     2.50    21.6885656  12.40758343     4.3700   5/31/90
 2.50    22.7817541  15.58731828     3.6539  12/31/90     2.50    21.6885656  13.73512778     3.9476   5/31/91
 2.50    22.7817541  17.84853632     3.1910  12/31/91     2.50    21.6885656  15.19466997     3.5684   5/31/92
 2.50    22.7817541  18.84487053     3.0223  12/31/92     2.50    21.6885656  17.15363405     3.1609   5/31/93
 2.50    22.7817541  20.24947545     2.8126  12/31/93     2.50    21.6885656  17.43687781     3.1096   5/31/94
 2.50    22.7817541  19.58723886     2.9077  12/31/94     2.50    21.6885656  19.49129538     2.7818   5/31/95
 2.50    22.7817541  22.78175412     2.5000  12/31/95     2.50    21.6885656  21.68856564     2.5000  12/31/95
                                     ------                                                   ------
    accumulated value less fees:    2149.10                  accumulated value less fees:    2140.30
                       free amt:       0.00                                     free amt:       0.00
 Yrs:             less free amt:    2149.10               Yrs:             less free amt:       0.00
  10   cdsc %              cdsc:       0.00            7.630137     cdsc %          cdsc:       0.00
  10     0%        ending value:    2149.10    7.95%       8          0%    ending value:    2140.30    10.49%


World Growth Series    11/16/93                          Utilities Series    11/16/93

1000.00  12.3967846  10.00027052  1239.6449  11/16/93    1000.00  12.3045139  10.00027052  1230.4181  11/16/93
 2.50    12.3967846  10.97422396     2.8241  11/30/94     2.50    12.3045139   9.23747567     3.3301  11/30/94
 2.50    12.3967846  12.07628839     2.5663  11/30/95     2.50    12.3045139  11.81511022     2.6036  11/30/95
 2.50    12.3967846  12.39678460     2.5000  12/31/95     2.50    12.3045139  12.30451391     2.5000  12/31/95
                                     ------                                                   ------
    accumulated value less fees:    1231.75                  accumulated value less fees:    1221.98
                       free amt:       0.00                                     free amt:       0.00
   Yrs:           less free amt:    1231.75               Yrs:             less free amt:    1221.98
2.1232877    cdsc %        cdsc:       0.00            2.1232877    cdsc %          cdsc:       0.00
    3          0%  ending value:    1231.75    10.31%      3          0%    ending value:    1221.98     9.90%


Research Series     11/7/94                              World Asset Allocation     11/7/94

1000.00  13.4040913  10.00020289  1340.3819  11/7/94     1000.00  12.0734048  10.00020289  1207.3160   11/7/94
 2.50    13.4040913  13.07721659     2.5625  11/30/95     2.50    12.0734048  11.74527141     2.5698  11/30/95
 2.50    13.4040913  13.40409127     2.5000  12/31/95     2.50    12.0734048  12.07340480     2.5000  12/31/95
                                     ------                                                   ------
    accumulated value less fees:    1337.88                  accumulated value less fees:    1204.82
                       free amt:       0.00                                     free amt:       0.00
   Yrs:           less free amt:       0.00               Yrs:             less free amt:    1204.82
1.1479452    cdsc %        cdsc:       0.00            1.1479452    cdsc %          cdsc:       0.00
     2         0%  ending value:    1337.88    28.86%       2         0%    ending value:    1204.82    17.62%


Emerging Growth    5/1/95                                World Total Return     11/7/94    
                  
1000.00  12.5877373  10.00000000  1258.7737    5/1/95    1000.00  11.6846068  10.00020289  1168.4370   11/7/94
 2.50    12.5877373  12.58773730     2.5000  12/31/95     2.50    11.6846068  11.43845872     2.5538  11/30/95
                                     ------               2.50    11.6846068  11.68460677     2.5000  12/31/95
    accumulated value less fees:  1256.27                                                     ------
                       free amt:     0.00                    accumulated value less fees:     1163.38
   Yrs:           less free amt:  1256.27                                       free amt:        0.00
0.6684932    cdsc %        cdsc:     0.00                 Yrs:             less free amt:     1163.38
     1         0%  ending value:  1256.27      25.63%  1.1479452    cdsc %          cdsc:        0.00
                                                            2         0%    ending value:     1163.38    14.09%


F&C Growth & Income    10/2/95

1000.00  10.1004633  10.00027052  1010.0190   10/2/95
 2.50    10.1004633  10.10046334     2.5000  12/31/95
                                     ------
    accumulated value less fees:     1007.52
                       free amt:        0.00
   Yrs:           less free amt:     1007.52
0.2465753    cdsc %        cdsc:        0.00
     1         0%  ending value:     1007.52    0.75%
</TABLE>



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