<PAGE>
Semi Annual Report
June 30, 1998
[LOGO]
A professionally managed annuity issued by Sun Life Assurance Company of Canada
(U.S.)
<TABLE>
<S> <C>
DIRECTORS AND OFFICERS OF SUN LIFE SUN LIFE ASSURANCE
ASSURANCE COMPANY OF CANADA (U.S.) COMPANY OF CANADA (U.S.)
- --------------------------------------------- ---------------------------------------
Annuity Service Mailing Address
Sun Life of Canada (U.S.)
P.O. Box 9133
DONALD A. STEWART, Chairman and Director Boston, MA 02103-9986
C. JAMES PRIEUR, President and Director General Distributor
S. CAESAR RABOY, Senior Vice President Clarendon Insurance Agency, Inc.
and Director One Sun Life Executive Park
RICHARD B. BAILEY, Director Wellesley Hills, MA 02481
M. COLYER CRUM, Director Legal Counsel
DAVID D. HORN, Director Covington & Burling
JOHN S. LANE, Director 1201 Pennsylvania Avenue, N.W.
ANGUS A. MACNAUGHTON, Director P.O. Box 7566
JOHN D. MCNEIL, Director Washington, D.C. 20044-7566
MARGARET SEARS MEAD, Assistant Vice President Auditors
and Secretary Deloitte & Touche LLP
L. BROCK THOMSON, Vice President 125 Summer Street
and Treasurer Boston, MA 02110-1616
</TABLE>
<PAGE>
Account Information: For account information, please call toll-free:
1-888-717-4387 anytime from a touch-tone telephone. To speak to a
customer service representative, please call toll-free: 1-888-786-2435
any business day from 8 a.m. to 6 p.m. Eastern time.
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
PERFORMANCE SUMMARY
These performance results do not reflect any applicable surrender charges or
contract charges. Past performance is no guarantee of future results.
<TABLE>
<CAPTION>
Unit Value
-------------------------------------
Beginning of Percent Change
Period* June 30, 1998 in Unit Value
----------------- ----------------- --------------
<S> <C> <C> <C>
FUTURITY CONTRACTS:
AIM Variable Insurance Funds, Inc.
V.I. Capital Appreciation Fund........ $10.0000 $10.7269 7.27%
V.I. Growth Fund...................... 10.0000 11.1603 11.60
V.I. Growth and Income Fund........... 10.0000 10.1927 1.93
V.I. International Equity Fund........ 10.0000 11.3916 13.92
The Alger American Fund
Growth Portfolio...................... 10.0000 10.9258 9.26
Income and Growth Portfolio........... 10.0000 10.6612 6.61
Small Capitalization Portfolio........ 10.0000 10.2618 2.62
Goldman Sachs Variable Insurance Trust
CORE Large Cap Growth Fund............ 10.0000 10.6619 6.62
CORE Small Cap Equity Fund............ 10.0000 10.4499 4.50
CORE U.S. Equity Fund................. 10.0000 11.1743 11.74
Growth and Income Fund................ 10.0000 10.0592 0.59
International Equity Fund............. 10.0000 10.5269 5.27
J.P. Morgan Series Trust II
Equity Portfolio...................... 10.0000 10.1472 1.47
International Opportunities
Portfolio............................ 10.0000 9.6368 (3.63)
Small Company Portfolio............... 10.0000 9.3414 (6.59)
Lord Abbett Series Fund, Inc.
Growth and Income Portfolio........... 10.0000 9.8831 (1.17)
MFS/Sun Life Series Trust
Capital Appreciation Series........... 10.0000 10.6690 6.69
Emerging Growth Series................ 10.0000 11.0974 10.97
Government Securities Series.......... 10.0000 10.1828 1.83
High Yield Series..................... 10.0000 10.1866 1.87
Money Market Series................... 10.0000 10.1349 1.35
Utilities Series...................... 10.0000 9.9231 (0.77)
OCC Accumulation Trust
Equity Portfolio...................... 10.0000 10.7343 7.34
Mid Cap Portfolio..................... 10.0000 10.4495 4.50
Small Cap Portfolio................... 10.0000 9.0483 (9.52)
Salomon Brothers Variable Series Funds
Inc.
Variable Capital Fund................. 10.0000 10.1418 1.42
Variable Investors Fund............... 10.0000 9.9941 (0.06)
Variable Strategic Bond Fund.......... 10.0000 10.1420 1.42
Variable Total Return Fund............ 10.0000 9.9082 (0.92)
Warburg Pincus Trust
Emerging Markets Portfolio............ 10.0000 8.5373 (14.63)
International Equity Portfolio........ 10.0000 9.8177 (1.82)
Post-Venture Capital Portfolio........ 10.0000 9.8793 (1.21)
Small Company Growth Portfolio........ 10.0000 9.6100 (3.90)
</TABLE>
*Unit value on the date of commencement of operations of the Sub-Account.
1
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CONDITION -- June 30, 1998
<TABLE>
<CAPTION>
Assets:
Investments in:
AIM Variable Insurance Funds, Inc. Shares Cost Value
----------- -------------- --------------
<S> <C> <C> <C>
V.I. Capital Appreciation Fund ("AIM1")........................................ 13,573 $ 328,026 $ 333,084
V.I. Growth Fund ("AIM2")...................................................... 25,754 583,686 607,030
V.I. Growth and Income Fund ("AIM3")........................................... 17,013 356,605 367,302
V.I. International Equity Fund ("AIM4")........................................ 23,679 474,858 481,868
The Alger American Fund
Growth Portfolio ("AL1")....................................................... 5,120 232,874 233,760
Income and Growth Portfolio ("AL2")............................................ 27,024 313,807 316,993
Small Capitalization Portfolio ("AL3")......................................... 3,023 123,477 130,363
Goldman Sachs Variable Insurance Trust
CORE Large Cap Growth Fund ("GS1")............................................. 43,886 482,906 494,154
CORE Small Cap Equity Fund ("GS2")............................................. 7,304 77,439 76,837
CORE U.S. Equity Fund ("GS3").................................................. 84,169 922,281 947,744
Growth and Income Fund ("GS4")................................................. 79,397 914,046 904,334
International Equity Fund ("GS5").............................................. 10,280 121,803 122,841
J.P. Morgan Series Trust II
Equity Portfolio ("JP1")....................................................... 23,298 377,237 379,048
International Opportunities Portfolio ("JP2").................................. 14,213 162,018 155,210
Small Company Portfolio ("JP3")................................................ 5,548 77,796 75,004
Lord Abbett Series Fund, Inc.
Growth and Income Portfolio ("LA1")............................................ 32,277 689,702 692,014
MFS/Sun Life Series Trust
Capital Appreciation Series ("CAS")............................................ 29,005 1,196,869 1,240,778
Emerging Growth Series ("EGS")................................................. 46,877 938,662 987,518
Government Securities Series ("GSS")........................................... 25,749 369,116 369,924
High Yield Series ("HYS")...................................................... 49,913 487,184 478,613
Money Market Series ("MMS").................................................... 373,035 373,035 373,035
Utilities Series ("UTS")....................................................... 21,422 343,760 347,291
OCC Accumulation Trust
Equity Portfolio ("OP1")....................................................... 13,638 530,548 532,575
Mid Cap Portfolio ("OP2")...................................................... 23,634 244,815 248,632
Small Cap Portfolio ("OP3").................................................... 3,000 77,535 75,411
Salomon Brothers Variable Series Funds Inc.
Variable Capital Fund ("SB1").................................................. 6,891 74,019 75,589
Variable Investors Fund ("SB2")................................................ 10,759 114,845 115,445
Variable Strategic Bond Fund ("SB3")........................................... 48,372 492,379 492,912
Variable Total Return Fund ("SB4")............................................. 53,550 553,922 549,424
Warburg Pincus Trust
Emerging Markets Portfolio ("WP1")............................................. 3,558 39,028 33,904
International Equity Portfolio ("WP2")......................................... 18,815 222,311 223,518
Post-Venture Capital Portfolio ("WP3")......................................... 3,205 39,222 40,127
Small Company Growth Portfolio ("WP4")......................................... 9,485 166,236 163,806
-------------- --------------
$ 12,502,047 $ 12,666,088
--------------
--------------
Liability:
Payable to sponsor.............................................................................................. 424
--------------
Net assets................................................................................................ $ 12,665,664
--------------
--------------
</TABLE>
See notes to financial statements
2
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CONDITION -- June 30, 1998 -- continued
<TABLE>
<CAPTION>
Applicable to Owners of
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>
FUTURITY CONTRACTS:
AIM Variable Insurance Funds, Inc.
V.I. Capital Appreciation Fund........... 31,051 $10.7269 $ 333,084 $ -- $ 333,084
V.I. Growth Fund......................... 54,391 11.1603 607,030 -- 607,030
V.I. Growth and Income Fund.............. 36,035 10.1927 367,302 -- 367,302
V.I. International Equity Fund........... 42,299 11.3916 481,868 -- 481,868
The Alger American Fund
Growth Portfolio......................... 21,395 10.9258 233,760 -- 233,760
Income and Growth Portfolio.............. 29,733 10.6612 316,993 -- 316,993
Small Capitalization Portfolio........... 12,704 10.2618 130,363 -- 130,363
Goldman Sachs Variable Insurance Trust
CORE Large Cap Growth Fund............... 46,348 10.6619 494,154 -- 494,154
CORE Small Cap Equity Fund............... 7,353 10.4499 76,837 -- 76,837
CORE U.S. Equity Fund.................... 84,814 11.1743 947,744 -- 947,744
Growth and Income Fund................... 89,901 10.0592 904,334 -- 904,334
International Equity Fund................ 11,667 10.5269 122,841 -- 122,841
J.P. Morgan Series Trust II
Equity Portfolio......................... 37,355 10.1472 379,048 -- 379,048
International Opportunities Portfolio.... 16,106 9.6368 155,210 -- 155,210
Small Company Portfolio.................. 8,029 9.3414 75,004 -- 75,004
Lord Abbett Series Fund, Inc.
Growth and Income Portfolio.............. 70,019 9.8831 692,014 -- 692,014
MFS/Sun Life Series Trust
Capital Appreciation Series.............. 116,292 10.6690 1,240,778 -- 1,240,778
Emerging Growth Series................... 88,989 11.0974 987,518 -- 987,518
Government Securities Series............. 32,368 10.1828 329,541 39,959 369,500
High Yield Series........................ 46,990 10.1866 478,613 -- 478,613
Money Market Series...................... 36,809 10.1349 373,035 -- 373,035
Utilities Series......................... 34,997 9.9231 347,291 -- 347,291
OCC Accumulation Trust
Equity Portfolio......................... 49,614 10.7343 532,575 -- 532,575
Mid Cap Portfolio........................ 23,794 10.4495 248,632 -- 248,632
Small Cap Portfolio...................... 8,334 9.0483 75,411 -- 75,411
Salomon Brothers Variable Series Funds Inc.
Variable Capital Fund.................... 7,453 10.1418 75,589 -- 75,589
Variable Investors Fund.................. 11,551 9.9941 115,445 -- 115,445
Variable Strategic Bond Fund............. 48,600 10.1420 492,912 -- 492,912
Variable Total Return Fund............... 55,451 9.9082 549,424 -- 549,424
Warburg Pincus Trust
Emerging Markets Portfolio............... 3,971 8.5373 33,904 -- 33,904
International Equity Portfolio........... 22,768 9.8177 223,518 -- 223,518
Post-Venture Capital Portfolio........... 4,062 9.8793 40,127 -- 40,127
Small Company Growth Portfolio........... 17,046 9.6100 163,806 -- 163,806
------------- ----------- --------------
Net assets................................................. $ 12,625,705 $ 39,959 $ 12,665,664
------------- ----------- --------------
------------- ----------- --------------
</TABLE>
See notes to financial statements
3
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF OPERATIONS -- Period Ended June 30, 1998
<TABLE>
<CAPTION>
AIM1 AIM2 AIM3 AIM4 AL1 AL2
Sub-Account* Sub-Account* Sub-Account** Sub-Account* Sub-Account** Sub-Account**
------------ ------------ ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ -- $ -- $ -- $ -- $ 15,307 $ 14,144
Mortality and expense risk charges.... 343 566 490 318 251 311
Administration expense charges........ 41 68 59 38 30 37
------------ ------------ ------------ ------ ----------- -----------
Net investment income (loss)...... $ (384) $ (634) $ (549) $ (356) $ 15,026 $ 13,796
------------ ------------ ------------ ------ ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 11,590 $ 1,638 $ 452 $ 562 $ 987 $ 1,479
Cost of investments sold............ 11,569 1,593 458 521 1,114 1,604
------------ ------------ ------------ ------ ----------- -----------
Net realized gains (losses)....... $ 21 $ 45 $ (6) $ 41 $ (127) $ (125)
------------ ------------ ------------ ------ ----------- -----------
Net unrealized appreciation on
investments:
End of period....................... $ 5,058 $ 23,344 $ 10,697 $ 7,010 $ 886 $ 3,186
Beginning of period................. -- -- -- -- -- --
------------ ------------ ------------ ------ ----------- -----------
Change in unrealized
appreciation..................... $ 5,058 $ 23,344 $ 10,697 $ 7,010 $ 886 $ 3,186
------------ ------------ ------------ ------ ----------- -----------
Realized and unrealized gains....... $ 5,079 $ 23,389 $ 10,691 $ 7,051 $ 759 $ 3,061
------------ ------------ ------------ ------ ----------- -----------
INCREASE IN NET ASSETS FROM
OPERATIONS........................... $ 4,695 $ 22,755 $ 10,142 $ 6,695 $ 15,785 $ 16,857
------------ ------------ ------------ ------ ----------- -----------
------------ ------------ ------------ ------ ----------- -----------
</TABLE>
* For the period February 20, 1998 (commencement of operations) through June
30, 1998.
** For the period March 27, 1998 (commencement of operations) through June 30,
1998.
See notes to financial statements
4
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF OPERATIONS -- Period Ended June 30, 1998 -- continued
<TABLE>
<CAPTION>
AL3 GS1 GS2 GS3 GS4 GS5
Sub-Account** Sub-Account*** Sub-Account* Sub-Account* Sub-Account* Sub-Account+
----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 833 $ -- $ -- $ -- $ -- $ --
Mortality and expense risk charges.... 91 566 127 1,035 1,060 170
Administration expense charges........ 11 68 15 124 127 20
----------- ----------- ----- ------------ ----------- -----------
Net investment income (loss)...... $ 731 $ (634) $ (142) $ (1,159) $ (1,187) $ (190)
----------- ----------- ----- ------------ ----------- -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 1,962 $ 968 $ 140 $ 5,111 $ 6,159 $ 14,794
Cost of investments sold............ 2,026 969 135 4,787 6,044 14,866
----------- ----------- ----- ------------ ----------- -----------
Net realized gains (losses)....... $ (64) $ (1) $ 5 $ 324 $ 115 $ (72)
----------- ----------- ----- ------------ ----------- -----------
Net unrealized appreciation
(depreciation) on investments:
End of period....................... $ 6,886 $ 11,248 $ (602) $ 25,463 $ (9,712) $ 1,038
Beginning of period................. -- -- -- -- -- --
----------- ----------- ----- ------------ ----------- -----------
Change in unrealized appreciation
(depreciation)................... $ 6,886 $ 11,248 $ (602) $ 25,463 $ (9,712) $ 1,038
----------- ----------- ----- ------------ ----------- -----------
Realized and unrealized gains
(losses)........................... $ 6,822 $ 11,247 $ (597) $ 25,787 $ (9,597) $ 966
----------- ----------- ----- ------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS........................... $ 7,553 $ 10,613 $ (739) $ 24,628 $ (10,784) $ 776
----------- ----------- ----- ------------ ----------- -----------
----------- ----------- ----- ------------ ----------- -----------
</TABLE>
* For the period February 20, 1998 (commencement of operations) through June
30, 1998.
** For the period March 27, 1998 (commencement of operations) through June 30,
1998.
*** For the period March 12, 1998 (commencement of operations) through June 30,
1998.
+ For the period March 17, 1998 (commencement of operations) through June 30,
1998.
See notes to financial statements
5
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF OPERATIONS -- Period Ended June 30, 1998 -- continued
<TABLE>
<CAPTION>
JP1 JP2 JP3 LA1 CAS EGS
Sub-Account** Sub-Account** Sub-Account** Sub-Account** Sub-Account++ Sub-Account*
------------- ------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 245 $ 3,444 $ 15 $-- $ 9,457 $ 9,770
Mortality and expense risk charges.... 383 237 100 537 1,045 1,211
Administration expense charges........ 46 28 12 64 125 145
------------- ------------- ------------- ------ ------------- ------------
Net investment income (loss)...... $ (184) $ 3,179 $ (97) $ (601) $ 8,287 $ 8,414
------------- ------------- ------------- ------ ------------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $22,078 $ 230 $29,241 $ 442 $31,811 $300,939
Cost of investments sold............ 22,254 250 29,466 450 32,262 318,740
------------- ------------- ------------- ------ ------------- ------------
Net realized gains (losses)....... $ (176) $ (20) $ (225) $ (8) $ (451) $(17,801)
------------- ------------- ------------- ------ ------------- ------------
Net unrealized appreciation
(depreciation) on investments:
End of period....................... $ 1,811 $(6,808) $(2,792) $2,312 $43,909 $ 48,856
Beginning of period................. -- -- -- -- -- --
------------- ------------- ------------- ------ ------------- ------------
Change in unrealized appreciation
(depreciation)................... $ 1,811 $(6,808) $(2,792) $2,312 $43,909 $ 48,856
------------- ------------- ------------- ------ ------------- ------------
Realized and unrealized gains
(losses)........................... $ 1,635 $(6,828) $(3,017) $2,304 $43,458 $ 31,055
------------- ------------- ------------- ------ ------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS........................... $ 1,451 $(3,649) $(3,114) $1,703 $51,745 $ 39,469
------------- ------------- ------------- ------ ------------- ------------
------------- ------------- ------------- ------ ------------- ------------
<CAPTION>
GSS HYS
Sub-Account* Sub-Account++
------------ -------------
<S> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ 1,514 $ 9,226
Mortality and expense risk charges.... 301 610
Administration expense charges........ 36 73
------------ -------------
Net investment income (loss)...... $ 1,177 $ 8,543
------------ -------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $42,144 $30,769
Cost of investments sold............ 41,701 30,860
------------ -------------
Net realized gains (losses)....... $ 443 $ (91)
------------ -------------
Net unrealized appreciation
(depreciation) on investments:
End of period....................... $ 808 $(8,571)
Beginning of period................. -- --
------------ -------------
Change in unrealized appreciation
(depreciation)................... $ 808 $(8,571)
------------ -------------
Realized and unrealized gains
(losses)........................... $ 1,251 $(8,662)
------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS........................... $ 2,428 $ (119)
------------ -------------
------------ -------------
</TABLE>
* For the period February 20, 1998 (commencement of operations) through June
30, 1998.
** For the period March 27, 1998 (commencement of operations) through June 30,
1998.
++ For the period February 26, 1998 (commencement of operations) through June
30, 1998.
See notes to financial statements
6
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF OPERATIONS -- Period Ended June 30, 1998 -- continued --
<TABLE>
<CAPTION>
MMS UTS OP1 OP2 OP3
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............... $ 3,948 $ 2,328 $ 131 $ -- $ --
Mortality and expense risk charges.... 988 393 691 141 84
Administration expense charges........ 119 47 83 17 10
------------- ------ ------ ------ -------
Net investment income (loss)...... $ 2,841 $ 1,888 $ (643) $ (158) $ (94)
------------- ------ ------ ------ -------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 1,012,010 $ 415 $ 9,615 $ 133 $ 78
Cost of investments sold............ 1,012,010 478 9,685 131 84
------------- ------ ------ ------ -------
Net realized gains (losses)....... $ -- $ (63) $ (70) $ 2 $ (6)
------------- ------ ------ ------ -------
Net unrealized appreciation
(depreciation) on investments:
End of period....................... $ -- $ 3,531 $ 2,027 $ 3,817 $ (2,124)
Beginning of period................. -- -- -- -- --
------------- ------ ------ ------ -------
Change in unrealized appreciation
(depreciation)................... $ -- $ 3,531 $ 2,027 $ 3,817 $ (2,124)
------------- ------ ------ ------ -------
Realized and unrealized gains
(losses)........................... $ -- $ 3,468 $ 1,957 $ 3,819 $ (2,130)
------------- ------ ------ ------ -------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS........................... $ 2,841 $ 5,356 $ 1,314 $ 3,661 $ (2,224)
------------- ------ ------ ------ -------
------------- ------ ------ ------ -------
<CAPTION>
SB1 SB2 SB3
Sub-Account** Sub-Account** Sub-Account*
-------------- -------------- -------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ -- $ -- $ --
Mortality and expense risk charges.... 98 187 401
Administration expense charges........ 12 22 48
------ ----- ------
Net investment income (loss)...... $ (110) $ (209) $ (449)
------ ----- ------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 347 $ 195 $ 1,532
Cost of investments sold............ 349 198 1,516
------ ----- ------
Net realized gains (losses)....... $ (2) $ (3) $ 16
------ ----- ------
Net unrealized appreciation
(depreciation) on investments:
End of period....................... $ 1,570 $ 600 $ 533
Beginning of period................. -- -- --
------ ----- ------
Change in unrealized appreciation
(depreciation)................... $ 1,570 $ 600 $ 533
------ ----- ------
Realized and unrealized gains
(losses)........................... $ 1,568 $ 597 $ 549
------ ----- ------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS........................... $ 1,458 $ 388 $ 100
------ ----- ------
------ ----- ------
</TABLE>
* For the period February 20, 1998 (commencement of operations) through June
30, 1998.
** For the period March 27, 1998 (commencement of operations) through June 30,
1998.
See notes to financial statements
7
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF OPERATIONS -- Period Ended June 30, 1998 -- continued
<TABLE>
<CAPTION>
SB4 WP1 WP2 WP3 WP4
Sub-Account** Sub-Account* Sub-Account** Sub-Account** Sub-Account** Total
-------------- ------------- -------------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received............... $ -- $ -- $ -- $ -- $ -- $ 70,362
Mortality and expense risk charges.... 720 58 159 54 249 13,975
Administration expense charges........ 86 7 19 6 30 1,673
------- ------------- -------------- --- ------- ----------
Net investment loss............... $ (806) $ (65) $ (178) $ (60) $ (279) $ 54,714
------- ------------- -------------- --- ------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales................. $ 22,860 $ 103 $ 146,775 $ 57 $ 448 $1,698,064
Cost of investments sold............ 22,739 111 151,698 59 474 1,721,201
------- ------------- -------------- --- ------- ----------
Net realized gains (losses)....... $ 121 $ (8) $ (4,923) $ (2) $ (26) $ (23,137)
------- ------------- -------------- --- ------- ----------
Net unrealized appreciation
(depreciation) on investments:
End of period....................... $ (4,498) $ (5,124) $ 1,207 $ 905 $ (2,430) $ 164,041
Beginning of period................. -- -- -- -- -- --
------- ------------- -------------- --- ------- ----------
Change in unrealized appreciation
(depreciation)................... $ (4,498) $ (5,124) $ 1,207 $ 905 $ (2,430) $ 164,041
------- ------------- -------------- --- ------- ----------
Realized and unrealized gains
(losses)........................... $ (4,377) $ (5,132) $ (3,716) $ 903 $ (2,456) $ 140,904
------- ------------- -------------- --- ------- ----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS........................... $ (5,183) $ (5,197) $ (3,894) $ 843 $ (2,735) $ 195,618
------- ------------- -------------- --- ------- ----------
------- ------------- -------------- --- ------- ----------
</TABLE>
* For the period February 20, 1998 (commencement of operations) through June
30, 1998.
** For the period March 27, 1998 (commencement of operations) through June 30,
1998.
See notes to financial statements
8
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AIM1 AIM2 AIM3 AIM4 AL1 AL2
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- ----------- -----------
Period Period Period Period Period Period
Ended Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, June 30, June 30,
1998* 1998* 1998** 1998* 1998** 1998**
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (384) $ (634) $ (549) $ (356) $ 15,026 $ 13,796
Net realized gains (losses)........... 21 45 (6) 41 (127) (125)
Net unrealized gains.................. 5,058 23,344 10,697 7,010 886 3,186
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets from
operations....................... $ 4,695 $ 22,755 $ 10,142 $ 6,695 $ 15,785 $ 16,857
----------- ----------- ----------- ----------- ----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received.......... $ 327,394 $ 584,818 $ 342,757 $ 475,875 $ 214,638 $ 292,175
Net transfers between Sub-Accounts
and Fixed Account.................. 1,389 (246) 14,465 (492) 3,571 8,121
Withdrawals, surrenders,
annuitizations and contract
charges............................ (394) (297) (62) (210) (234) (160)
----------- ----------- ----------- ----------- ----------- -----------
Net accumulation activity......... $ 328,389 $ 584,275 $ 357,160 $ 475,173 $ 217,975 $ 300,136
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets.............. $ 333,084 $ 607,030 $ 367,302 $ 481,868 $ 233,760 $ 316,993
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS:
Beginning of period................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
End of period......................... $ 333,084 $ 607,030 $ 367,302 $ 481,868 $ 233,760 $ 316,993
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
*For the period February 20, 1998 (commencement of operations) through June 30,
1998.
**For the period March 27, 1998 (commencement of operations) through June 30,
1998.
See notes to financial statements
9
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
AL3 GS1 GS2 GS3 GS4 GS5
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- ----------- -----------
Period Period Period Period Period Period
Ended Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, June 30, June 30,
1998** 1998*** 1998* 1998* 1998* 1998+
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 731 $ (634) $ (142) $ (1,159) $ (1,187) $ (190)
Net realized gains (losses)........... (64) (1) 5 324 115 (72)
Net unrealized gains (losses)......... 6,886 11,248 (602) 25,463 (9,712) 1,038
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets
from operations.................. $ 7,553 $ 10,613 $ (739) $ 24,628 $ (10,784) $ 776
----------- ----------- ----------- ----------- ----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received.......... $ 123,073 $ 481,539 $ 77,576 $ 919,656 $ 906,619 $ 120,268
Net transfers between Sub-Accounts
and Fixed Account.................. (263) 3,197 -- 10,546 8,862 1,797
Withdrawals, surrenders,
annuitizations and contract
charges............................ -- (1,195) -- (7,086) (363) --
----------- ----------- ----------- ----------- ----------- -----------
Net accumulation activity......... $ 122,810 $ 483,541 $ 77,576 $ 923,116 $ 915,118 $ 122,065
----------- ----------- ----------- ----------- ----------- -----------
Increase in net assets.............. $ 130,363 $ 494,154 $ 76,837 $ 947,744 $ 904,334 $ 122,841
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS:
Beginning of period................... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
End of period......................... $ 130,363 $ 494,154 $ 76,837 $ 947,744 $ 904,334 $ 122,841
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
*For the period February 20, 1998 (commencement of operations) through June
30, 1998.
**For the period March 27, 1998 (commencement of operations) through June 30,
1998.
***For the period March 12, 1998 (commencement of operations) through June 30,
1998.
+For the period March 17, 1998 (commencement of operations) through June 30,
1998.
See notes to financial statements
10
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
JP1 JP2 JP3 LA1 CAS EGS
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
---------- ---------- ---------- ---------- ----------- -----------
Period Period Period Period Period Period
Ended Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, June 30, June 30,
1998** 1998** 1998** 1998** 1998++ 1998*
---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ (184) $ 3,179 $ (97) $ (601) $ 8,287 $ 8,414
Net realized gains (losses)............................. (176) (20) (225) (8) (451) (17,801)
Net unrealized gains (losses)........................... 1,811 (6,808) (2,792) 2,312 43,909 48,856
---------- ---------- ---------- ---------- ----------- -----------
Increase (decrease) in net assets from operations... $ 1,451 $ (3,649) $ (3,114) $ 1,703 $ 51,745 $ 39,469
---------- ---------- ---------- ---------- ----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received............................ $ 372,244 $ 158,859 $ 76,700 $ 685,307 $ 761,033 $921,162
Net transfers between Sub-Accounts and Fixed
Account.............................................. 5,622 -- 1,418 5,745 428,827 27,329
Withdrawals, surrenders, annuitizations and contract
charges.............................................. (269) -- -- (741) (827) (442)
---------- ---------- ---------- ---------- ----------- -----------
Net accumulation activity........................... $ 377,597 $ 158,859 $ 78,118 $ 690,311 $1,189,033 $948,049
---------- ---------- ---------- ---------- ----------- -----------
ANNUITIZATION ACTIVITY:
Annuity transfers................................... -- -- -- -- -- --
Adjustments to annuity reserve...................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ----------- -----------
Net annuitization activity........................ $ -- $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ----------- -----------
Increase in net assets from participant
transactions......................................... $ -- $ -- $ -- $ -- $1,189,033 $948,049
---------- ---------- ---------- ---------- ----------- -----------
Increase in net assets................................ $ 377,597 $ 158,859 $ 78,118 $ 690,311 $1,240,778 $987,518
---------- ---------- ---------- ---------- ----------- -----------
NET ASSETS:
Beginning of period..................................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ----------- -----------
End of period........................................... $ 379,048 $ 155,210 $ 75,004 $ 692,014 $1,240,778 $987,518
---------- ---------- ---------- ---------- ----------- -----------
---------- ---------- ---------- ---------- ----------- -----------
<CAPTION>
GSS
Sub-Account
-----------
Period
Ended
June 30,
1998*
-----------
<S> <C>
OPERATIONS:
Net investment income (loss)............................ $ 1,177
Net realized gains (losses)............................. 443
Net unrealized gains (losses)........................... 808
-----------
Increase (decrease) in net assets from operations... $ 2,428
-----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received............................ $367,979
Net transfers between Sub-Accounts and Fixed
Account.............................................. (354)
Withdrawals, surrenders, annuitizations and contract
charges.............................................. (40,517)
-----------
Net accumulation activity........................... $327,108
-----------
ANNUITIZATION ACTIVITY:
Annuity transfers................................... 40,388
Adjustments to annuity reserve...................... (424)
-----------
Net annuitization activity........................ $ 39,964
-----------
Increase in net assets from participant
transactions......................................... $367,072
-----------
Increase in net assets................................ $369,500
-----------
NET ASSETS:
Beginning of period..................................... --
-----------
End of period........................................... $369,500
-----------
-----------
</TABLE>
* For the period February 20, 1998 (commencement of operations) through June
30, 1998.
** For the period March 27, 1998 (commencement of operations) through June 30,
1998.
++ For the period February 26, 1998 (commencement of operations) through June
30, 1998.
See notes to financial statements
11
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
HYS MMS UTS OP1 OP2
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
----------- ----------- ----------- ----------- -----------
Period Period Period Period Period
Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, June 30,
1998++ 1998* 1998** 1998* 1998*
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ 8,543 $ 2,841 $ 1,888 $ (643) $ (158)
Net realized gains (losses)............................. (91) -- (63) (70) 2
Net unrealized gains (losses)........................... (8,571) -- 3,531 2,027 3,817
----------- ----------- ----------- ----------- -----------
Increase (decrease) in net assets from operations... $ (119) $ 2,841 $ 5,356 $ 1,314 $ 3,661
----------- ----------- ----------- ----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received............................ $474,550 $ 967,177 $330,679 $528,471 $244,051
Net transfers between Sub-Accounts and Fixed
Account.............................................. 4,423 (596,933) 11,346 2,790 920
Withdrawals, surrenders, annuitizations and contract
charges.............................................. (241) (50) (90) -- --
----------- ----------- ----------- ----------- -----------
Net accumulation activity........................... $478,732 $ 370,194 $341,935 $531,261 $244,971
----------- ----------- ----------- ----------- -----------
Increase in net assets from participant
transactions......................................... $478,732 $ 370,194 $341,935 $532,575 $248,632
----------- ----------- ----------- ----------- -----------
Increase in net assets................................ $478,613 $ 373,035 $347,291 $532,575 $248,632
----------- ----------- ----------- ----------- -----------
NET ASSETS:
Beginning of period..................................... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
End of period........................................... $478,613 $ 373,035 $347,291 $532,575 $248,632
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<CAPTION>
OP3 SB1
Sub-Account Sub-Account
----------- -----------
Period Period
Ended Ended
June 30, June 30,
1998** 1998**
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)............................ $ (94) $ (110)
Net realized gains (losses)............................. (6) (2)
Net unrealized gains (losses)........................... (2,124) 1,570
----------- -----------
Increase (decrease) in net assets from operations... $(2,224) $ 1,458
----------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received............................ $76,216 $74,374
Net transfers between Sub-Accounts and Fixed
Account.............................................. 1,419 --
Withdrawals, surrenders, annuitizations and contract
charges.............................................. -- (243)
----------- -----------
Net accumulation activity........................... $77,635 $74,131
----------- -----------
Increase in net assets from participant
transactions......................................... $75,411 $75,589
----------- -----------
Increase in net assets................................ $75,411 $75,589
----------- -----------
NET ASSETS:
Beginning of period..................................... -- --
----------- -----------
End of period........................................... $75,411 $75,589
----------- -----------
----------- -----------
</TABLE>
* For the period February 20, 1998 (commencement of operations) through June
30, 1998.
** For the period March 27, 1998 (commencement of operations) through June 30,
1998.
++ For the period February 26, 1998 (commencement of operations) through June
30, 1998.
See notes to financial statements
12
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
SB2 SB3 SB4 WP1 WP2 WP3
Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account Sub-Account
---------- ---------- ---------- ---------- ---------- ----------
Period Period Period Period Period Period
Ended Ended Ended Ended Ended Ended
June 30, June 30, June 30, June 30, June 30, June 30,
1998** 1998* 1998** 1998* 1998** 1998**
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ (209) $ (449) $ (806) $ (65) $ (178) $ (60)
Net realized gains (losses)............................... (3) 16 121 (8) (4,923) (2)
Net unrealized gains (losses)............................. 600 533 (4,498) (5,124) 1,207 905
---------- ---------- ---------- ---------- ---------- ----------
Increase (decrease) in net assets from operations..... $ 388 $ 100 $ (5,183) $ (5,197) $ (3,894) $ 843
---------- ---------- ---------- ---------- ---------- ----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received.............................. $ 112,590 $ 489,778 $ 546,675 $ 37,445 $ 31,022 $ 39,284
Net transfers between Sub-Accounts and Fixed Account.... 2,482 3,258 8,178 1,699 196,390 --
Withdrawals, surrenders, annuitizations and contract
charges................................................ (15) (224) (246) (43) -- --
---------- ---------- ---------- ---------- ---------- ----------
Net accumulation activity............................. $ 115,057 $ 492,812 $ 554,607 $ 39,101 $ 227,412 $ 39,284
---------- ---------- ---------- ---------- ---------- ----------
Annuitization activity:
Annuity transfers....................................... $ -- $ -- $ -- $ -- $ -- $ --
Adjustments to annuity reserve.......................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net annuitization activity............................ $ -- $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ---------- ----------
Increase in net assets from participant transactions...... $ 115,445 $ 492,912 $ 549,424 $ 33,904 $ 227,412 $ 39,284
---------- ---------- ---------- ---------- ---------- ----------
Increase in net assets.................................. $ 115,445 $ 492,912 $ 549,424 $ 33,904 $ 223,518 $ 40,127
---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS:
Beginning of period....................................... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
End of period............................................. $ 115,445 $ 492,912 $ 549,424 $ 33,904 $ 223,518 $ 40,127
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
<CAPTION>
WP4
Sub-Account Total
---------- -----------
Period Period
Ended Ended
June 30, June 30,
1998** 1998
---------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).............................. $ (279) $ 54,714
Net realized gains (losses)............................... (26) (23,137)
Net unrealized gains (losses)............................. (2,430) 164,041
---------- -----------
Increase (decrease) in net assets from operations..... $ (2,735) $ 195,618
---------- -----------
PARTICIPANT TRANSACTIONS:
Accumulation activity:
Purchase payments received.............................. $ 165,868 $12,327,852
Net transfers between Sub-Accounts and Fixed Account.... 889 156,395
Withdrawals, surrenders, annuitizations and contract
charges................................................ (216) (54,165)
---------- -----------
Net accumulation activity............................. $ 166,541 $12,430,082
---------- -----------
Annuitization activity:
Annuity transfers....................................... $ -- $ 40,388
Adjustments to annuity reserve.......................... -- (424)
---------- -----------
Net annuitization activity............................ $ -- $ 39,964
---------- -----------
Increase in net assets from participant transactions...... $ 166,541 $12,470,046
---------- -----------
Increase in net assets.................................. $ 163,806 $12,665,664
---------- -----------
NET ASSETS:
Beginning of period....................................... -- --
---------- -----------
End of period............................................. $ 163,806 $12,665,664
---------- -----------
---------- -----------
</TABLE>
* For the period February 20, 1998 (commencement of operations) through June
30, 1998.
** For the period March 27, 1998 (commencement of operations) through June 30,
1998.
See notes to financial statements
13
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN 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") is a
separate account of Sun Life Assurance Company of Canada (U.S.), the Sponsor,
and was established on July 13, 1989 as a funding vehicle for the variable
portion of Futurity contracts and certain other group and individual fixed and
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 single corresponding investment portfolio
of one of the following registered open-end mutual funds: AIM Variable Insurance
Funds, Inc., The Alger American Fund, Goldman Sachs Variable Insurance Trust,
J.P. Morgan Series Trust II, Lord Abbett Series Fund, Inc., MFS/Sun Life Series
Trust, OCC Accumulation Trust, Salomon Brothers Variable Series Funds Inc. and
Warburg Pincus Trust (the "Funds").
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
INVESTMENT VALUATIONS
Investments in shares of the Funds are recorded at their net asset value.
Realized gains and losses on sales of shares of the Funds are determined on the
identified cost basis. Dividend income and capital gain distributions received
by the Sub-Accounts are reinvested in additional Fund shares and are recognized
on the ex-dividend date.
Exchanges between Sub-Accounts requested by participants are recorded in the new
Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately. The Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the Internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not subject to
tax.
(3) CONTRACT CHARGES
A mortality and expense risk charge based on the value of the Futurity
Sub-Accounts included in 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%.
14
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS -- continued
Each year on the account anniversary, an account administration fee ("Account
Fee") equal to the lesser of $30 or 2% of the Participant's Account Value in
Account Years one through five (thereafter, the fee may be changed annually, but
it may not exceed the lesser of $50 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. As reimbursement for administrative expenses attributable to Futurity
Contracts which exceed the revenues received from the Account Fees, 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.
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 Futurity Contracts, including commissions paid to sales
personnel, the costs of preparation of sales literature and other promotional
costs and acquisition expenses.
(4) ANNUITY RESERVES
Annuity reserves are calculated using the 1983 Individual Annuitant Mortality
Table and an assumed interest rate of 3% per year. 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
Units Outstanding Sub-Accounts Units Withdrawn, Units
Beginning of and Fixed Surrendered, Outstanding End
Period Units Purchased Account and Annuitized of Period
----------------- ----------------- ------------------- ----------------- ---------------
Period Period Period Period Period
Ended June 30, Ended June 30, Ended June 30, Ended June 30, Ended June 30,
1998 1998 1998 1998 1998
----------------- ----------------- ------------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
FUTURITY CONTRACTS:
------------------------------
AIM1 *........................ -- 30,956 132 (37) 31,051
AIM2 *........................ -- 54,440 (23) (26) 54,391
AIM3 **....................... -- 34,581 1,461 (7) 36,035
AIM4 *........................ -- 42,318 -- (19) 42,299
AL1 **........................ -- 21,074 343 (22) 21,395
AL2 **........................ -- 28,954 795 (16) 29,733
AL3 **........................ -- 12,731 (27) -- 12,704
GS1 ***....................... -- 46,154 309 (115) 46,348
GS2 *......................... -- 7,353 -- -- 7,353
GS3 *......................... -- 84,515 962 (663) 84,814
GS4 *......................... -- 89,061 877 (37) 89,901
GS5 +......................... -- 11,496 171 -- 11,667
JP1 **........................ -- 36,830 551 (26) 37,355
</TABLE>
15
<PAGE>
FUTURITY SUB-ACCOUNTS INCLUDED IN SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS -- continued
<TABLE>
<CAPTION>
Units Transferred
Between
Units Outstanding Sub-Accounts Units Withdrawn, Units
Beginning of and Fixed Surrendered, Outstanding End
Period Units Purchased Account and Annuitized of Period
----------------- ----------------- ------------------- ----------------- ---------------
Period Period Period Period Period
Ended June 30, Ended June 30, Ended June 30, Ended June 30, Ended June 30,
1998 1998 1998 1998 1998
----------------- ----------------- ------------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
JP2 **........................ -- 16,106 -- -- 16,106
JP3 **........................ -- 7,875 154 -- 8,029
LA1 **........................ -- 69,515 580 (76) 70,019
CAS ++........................ -- 74,284 42,086 (78) 116,292
EGS *......................... -- 87,030 1,999 (40) 88,989
GSS *......................... -- 36,382 (35) (3,979) 32,368
HYS ++........................ -- 46,580 433 (23) 46,990
MMS *......................... -- 95,833 (59,018) (6) 36,809
UTS **........................ -- 33,848 1,158 (9) 34,997
OP1 *......................... -- 49,351 263 -- 49,614
OP2 *......................... -- 23,706 88 -- 23,794
OP3 **........................ -- 8,176 158 -- 8,334
SB1 **........................ -- 7,478 -- (25) 7,453
SB2 **........................ -- 11,301 252 (2) 11,551
SB3 *......................... -- 48,300 322 (22) 48,600
SB4 **........................ -- 54,660 816 (25) 55,451
WP1 *......................... -- 3,795 181 (5) 3,971
WP2 **........................ -- 3,015 19,753 -- 22,768
WP3 **........................ -- 4,062 -- -- 4,062
WP4 **........................ -- 16,972 97 (23) 17,046
</TABLE>
*For the period February 20, 1998 (commencement of operations) through June
30, 1998.
**For the period March 27, 1998 (commencement of operations) through June 30,
1998.
***For the period March 12, 1998 (commencement of operations) through June 30,
1998.
+For the period March 17, 1998 (commencement of operations) through June 30,
1998.
++For the period February 26, 1998 (commencement of operations) through June
30, 1998.
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants in Futurity
and the Board of Directors of Sun Life Assurance Company of Canada (U.S.):
We have audited the accompanying statement of condition of AIM V.I. Capital
Appreciation Sub-Account, AIM V.I. Growth Sub-Account, AIM V.I. Growth and
Income Sub-Account, AIM V.I. International Equity Sub-Account, The Alger
American Growth Sub-Account, The Alger American Income and Growth Sub-Account,
The Alger American Small Capitalization Sub-Account, Goldman Sachs CORE Large
Cap Growth Sub-Account, Goldman Sachs CORE Small Cap Equity Sub-Account, Goldman
Sachs CORE U.S. Equity Sub-Account, Goldman Sachs Growth and Income Sub-Account,
Goldman Sachs International Equity Sub-Account, J.P. Morgan Equity Sub-Account,
J.P. Morgan International Opportunities Sub-Account, J.P. Morgan Small Company
Sub-Account, Lord Abbett Growth and Income Sub-Account, MFS/Sun Life Capital
Appreciation Sub-Account, MFS/Sun Life Emerging Growth Sub-Account, MFS/Sun Life
Government Securities Sub-Account, MFS/Sun Life High Yield Sub-Account, MFS/Sun
Life Money Market Sub-Account, MFS/Sun Life Utilities Sub-Account, OCC
Accumulation Equity Sub-Account, OCC Accumulation Mid Cap Sub-Account, OCC
Accumulation Small Cap Sub-Account, Salomon Brothers Variable Capital
Sub-Account, Salomon Brothers Variable Investors Sub-Account, Salomon Brothers
Variable Strategic Bond Sub-Account, Salomon Brothers Variable Total Return
Sub-Account, Warburg Pincus Emerging Markets Sub-Account, Warburg Pincus
International Equity Sub-Account, Warburg Pincus Post-Venture Capital Sub-
Account and Warburg Pincus Small Company Growth Sub-Account of Sun Life of
Canada (U.S.) Variable Account F, (the "Sub-Accounts") as of June 30, 1998, the
related statement of operations for the period then ended and the statement of
changes in net assets for the period ended June 30, 1998. These financial
statements are the responsibility of management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities held at June 30, 1998 by correspondence with the
custodian. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Sub-Accounts as of June 30, 1998, the
results of their operations and the changes in their net assets for the
respective stated periods in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 14, 1998
----------------------------------------
This report is prepared for the general information of contract owners and
participants. It is authorized for distribution to prospective purchasers only
when preceded or accompanied by an effective prospectus.
17
