<PAGE>
MFS REGATTA
MFS REGATTA GOLD
MFS REGATTA CLASSIC
DIRECTORS AND OFFICERS OF
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
JOHN D. McNEIL, Chairman and Director
DONALD A. STEWART, President and Director
DAVID D. HORN, Director
RICHARD B. BAILEY, Director
A. KEITH BRODKIN, Director
M. COLYER CRUM, Director
JOHN S. LANE, Director
ANGUS A. MacNAUGHTON, Director
MARGARET SEARS MEAD, Assistant Vice President
and Secretary
L. BROCK THOMSON, Vice President
and Treasurer
SUN LIFE ASSURANCE COMPANY
OF CANADA (U.S.)
ANNUITY SERVICE MAILING ADDRESS:
Sun Life Annuity Service Center
P.O. Box 1024, Boston, Massachusetts 02103-9986
GENERAL DISTRIBUTOR
Clarendon Insurance Agency, Inc.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
LEGAL COUNSEL
Covington & Burling
1201 Pennsylvania Avenue, N.W.
P.O. Box 7566, Washington, D.C. 20044-7566
AUDITORS
Deloitte & Touche LLP
125 Summer Street, Boston, Massachusetts 02110-1616
ACCOUNT INFORMATION
For account information, please call toll free:
1-800-752-7218 anytime from a touch-tone telephone.
To speak with a customer service representative,
please call toll free: 1-800-752-7215 any business
day from 8 a.m. to 6 p.m. Eastern time.
GOLD-2 2/98
LOGO
LOGO
LOGO
ANNUAL REPORT - DECEMBER 31, 1997
PROFESSIONALLY MANAGED ANNUITIES ISSUED BY
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
<PAGE>
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
------------------------------------- Percent Change
December 31, 1996 December 31, 1997 in Unit Value
----------------- ----------------- --------------
MFS REGATTA CONTRACTS:
<S> <C> <C> <C>
Capital Appreciation Series -- Level
1.................................... $24.7064 $29.9999 21.43%
Capital Appreciation Series -- Level
2.................................... 9.9433 12.0916 21.61%
Government Securities Series -- Level
1.................................... 15.5644 16.6923 7.25%
Government Securities Series -- Level
2.................................... 9.9641 10.7020 7.41%
High Yield Series -- Level 1.......... 19.7545 22.0555 11.65%
High Yield Series -- Level 2.......... 10.0000* 11.1721 11.72%
Managed Sectors Series -- Level 1..... 22.0312 27.2960 23.90%
Managed Sectors Series -- Level 2..... 9.8974 12.2808 24.08%
Money Market Series -- Level 1........ 12.7175 13.1780 3.62%
Money Market Series -- Level 2........ 10.0240 10.4025 3.78%
Total Return Series -- Level 1........ 20.0405 24.1056 20.28%
Total Return Series -- Level 2........ 10.0182 12.0683 20.46%
World Governments Series -- Level 1... 16.7734 16.4146 (2.14)%
World Governments Series -- Level 2... 10.0242 9.8243 (1.99)%
MFS REGATTA GOLD CONTRACTS:
Capital Appreciation Series........... $22.5700 $27.4057 21.43%
Conservative Growth Series............ 19.9527 25.9656 30.14%
Emerging Growth Series................ 14.5136 17.4544 20.26%
MFS/Foreign & Colonial Emerging
Markets Equity Series................ 9.9199 10.8010 8.88%
International Growth Series........... 9.7480 9.4566 (2.99)%
International Growth and Income
Series............................... 10.4404 10.9674 5.05%
Government Securities Series.......... 13.1252 14.0763 7.25%
High Yield Series..................... 16.2674 18.1622 11.65%
Managed Sectors Series................ 18.5452 22.9770 23.90%
Money Market Series................... 11.3932 11.8058 3.62%
Research Series....................... 16.3209 19.4490 19.17%
Research Growth & Income Series....... 10.0000* 10.9235 9.24%
Total Return Series................... 16.6932 20.0793 20.28%
Utilities Series...................... 14.5260 19.0140 30.90%
Value Series.......................... 10.9234 13.7450 25.83%
World Asset Allocation Series......... 13.7702 15.0565 9.34%
World Governments Series.............. 13.6780 13.3854 (2.14)%
World Growth Series................... 13.7523 15.6398 13.72%
World Total Return Series............. 13.1290 14.7153 12.08%
*Reflects unit value on date of commencement of operations.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
Unit Value
------------------------------------- Percent Change
December 31, 1996 December 31, 1997 in Unit Value
----------------- ----------------- --------------
MFS REGATTA CLASSIC CONTRACTS:
<S> <C> <C> <C>
Capital Appreciation Series........... $ 9.8765 $11.9926 21.43%
Conservative Growth Series............ 9.8549 12.8247 30.14%
Emerging Growth Series................ 9.5644 11.5023 20.26%
MFS/Foreign & Colonial Emerging
Markets Equity Series................ 10.4127 11.3377 8.88%
International Growth Series........... 10.0270 9.7271 (2.99)%
International Growth and Income
Series............................... 10.0000* 10.5716 5.72%
Government Securities Series.......... 9.9631 10.6850 7.25%
High Yield Series..................... 10.0910 11.2665 11.65%
Managed Sectors Series................ 10.0000* 11.9091 19.09%
Money Market Series................... 10.0239 10.3869 3.62%
Research Series....................... 9.8296 11.7136 19.17%
Research Growth & Income Series....... 10.0000* 10.7281 7.28%
Total Return Series................... 9.9034 11.9123 20.28%
Utilities Series...................... 10.0000* 12.7649 27.65%
Value Series.......................... 10.1034 12.7132 25.83%
World Asset Allocation Series......... 10.0430 10.9812 9.34%
World Governments Series.............. 10.0000* 10.0247 0.25%
World Growth Series................... 10.0000* 11.3725 13.73%
World Total Return Series............. 10.0000* 11.1546 11.55%
</TABLE>
*Reflects unit value on date of commencement of operations.
2
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CONDITION -- December 31, 1997
<TABLE>
<CAPTION>
Assets:
Investments in MFS/Sun Life Series Trust: Shares Cost Value
----------- -------------- --------------
<S> <C> <C> <C>
Capital Appreciation Series ("CAS").............................................. 28,327,640 $ 971,058,013 $1,137,027,008
Conservative Growth Series ("CGS")............................................... 32,185,770 781,636,519 1,067,020,252
Emerging Growth Series ("EGS")................................................... 24,512,514 371,308,167 441,300,870
MFS/Foreign & Colonial Emerging Markets Equity Series ("FCE").................... 2,158,089 25,489,668 23,816,248
International Growth Series ("FCI").............................................. 2,416,539 23,732,818 23,314,806
International Growth and Income Series ("FCG")................................... 4,416,730 46,918,882 49,344,675
Government Securities Series ("GSS")............................................. 25,395,141 319,875,125 331,168,206
High Yield Series ("HYS")........................................................ 24,483,510 225,092,980 237,752,900
Managed Sectors Series ("MSS")................................................... 10,730,225 272,360,416 312,886,223
Money Market Series ("MMS")...................................................... 294,418,620 294,418,620 294,418,620
Research Series ("RES").......................................................... 33,411,001 537,910,799 649,201,574
Research Growth & Income Series ("RGS").......................................... 535,127 5,634,111 5,897,527
Total Return Series ("TRS")...................................................... 74,122,506 1,282,241,828 1,580,088,581
Utilities Series ("UTS")......................................................... 7,154,185 89,007,969 117,388,621
Value Series ("VAL")............................................................. 6,249,006 75,222,506 87,073,588
World Asset Allocation Series ("WAA")............................................ 8,282,062 110,929,238 120,415,491
World Governments Series ("WGS")................................................. 9,215,733 104,555,220 98,853,956
World Growth Series ("WGR")...................................................... 16,149,857 205,219,774 237,130,808
World Total Return Series ("WTR")................................................ 4,740,158 61,458,713 69,682,180
-------------- --------------
$5,804,071,366 $6,883,782,134
Liability:
Payable to Sponsor.............................................................................................. 379,086
--------------
Net Assets................................................................................................ $6,883,403,048
--------------
--------------
</TABLE>
<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>
MFS Regatta Contracts:
CAS -- Level 1......................... 2,993,020 $29.9999 $ 89,794,911 $ 261,144 $ 90,056,055
CAS -- Level 2......................... 5,390,680 12.0916 65,070,131 150,610 65,220,741
GSS -- Level 1......................... 1,462,222 16.6923 24,418,411 18,136 24,436,547
GSS -- Level 2......................... 1,514,633 10.7020 16,194,876 64,936 16,259,812
HYS -- Level 1......................... 537,033 22.0555 11,850,184 16,775 11,866,959
HYS -- Level 2......................... 975,126 11.1721 10,896,986 12,433 10,909,419
MSS -- Level 1......................... 941,686 27.2960 25,592,815 159,135 25,751,950
MSS -- Level 2......................... 2,022,757 12.2808 24,919,825 -- 24,919,825
MMS -- Level 1......................... 1,518,722 13.1780 20,192,268 28,250 20,220,518
MMS -- Level 2......................... 1,845,809 10.4025 18,979,267 2,900 18,982,167
TRS -- Level 1......................... 5,756,653 24.1056 138,772,465 468,018 139,240,483
TRS -- Level 2......................... 7,838,741 12.0683 94,536,757 813,685 95,350,442
WGS -- Level 1......................... 700,338 16.4146 11,504,956 60,591 11,565,547
WGS -- Level 2......................... 483,253 9.8243 4,735,735 -- 4,735,735
------------ ----------- ------------
$557,459,587 $ 2,056,613 $559,516,200
------------ ----------- ------------
(continued)
</TABLE>
See notes to financial statements
3
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENT OF CONDITION -- continued
<TABLE>
<CAPTION>
Applicable to Owners of Reserve
Deferred Variable Annuity Contracts for
NET ASSETS APPLICABLE TO CONTRACT OWNERS --------------------------------------- Variable
(CONTINUED): Units Unit Value Value Annuities Total
---------- ---------- -------------- ---------- --------------
<S> <C> <C> <C> <C> <C>
MFS Regatta Gold Contracts:
CAS.................................... 35,528,897 $27.4057 $ 973,517,756 $5,128,123 $ 978,645,879
CGS.................................... 40,709,531 25.9656 1,056,959,876 2,935,772 1,059,895,648
EGS.................................... 25,039,986 17.4544 437,038,206 572,103 437,610,309
FCE.................................... 2,159,228 10.8010 23,320,823 31,734 23,352,557
FCI.................................... 2,390,056 9.4566 22,601,714 51,282 22,652,996
FCG.................................... 4,441,911 10.9674 48,715,282 90,715 48,805,997
GSS.................................... 20,508,844 14.0763 288,725,451 670,845 289,396,296
HYS.................................... 11,699,195 18.1622 212,466,548 680,947 213,147,495
MSS.................................... 11,326,719 22.9770 259,980,813 763,493 260,744,306
MMS.................................... 21,463,139 11.8058 253,465,466 756,260 254,221,726
RES.................................... 35,654,917 19.4490 640,927,304 1,856,694 642,783,998
RGS.................................... 533,928 10.9235 5,832,209 -- 5,832,209
TRS.................................... 66,303,467 20.0793 1,331,170,967 2,674,657 1,333,845,624
UTS.................................... 6,101,638 19.0140 116,000,626 325,222 116,325,848
VAL.................................... 6,175,224 13.7450 84,879,388 143,701 85,023,089
WAA.................................... 7,928,833 15.0565 119,370,688 511,208 119,881,896
WGS.................................... 6,127,641 13.3854 82,033,695 365,168 82,398,863
WGR.................................... 15,058,757 15.6398 235,505,032 667,184 236,172,216
WTR.................................... 4,676,853 14.7153 68,817,872 362,558 69,180,430
-------------- ---------- --------------
$6,261,329,716 $18,587,666 $6,279,917,382
-------------- ---------- --------------
MFS Regatta Classic Contracts:
CAS.................................... 265,497 $11.9926 $ 3,187,739 $ -- $ 3,187,739
CGS.................................... 554,216 12.8247 7,115,038 -- 7,115,038
EGS.................................... 318,028 11.5023 3,662,876 -- 3,662,876
FCE.................................... 40,698 11.3377 462,223 -- 462,223
FCI.................................... 67,892 9.7271 661,393 -- 661,393
FCG.................................... 51,038 10.5716 540,221 -- 540,221
GSS.................................... 113,243 10.6850 1,211,587 -- 1,211,587
HYS.................................... 155,306 11.2665 1,751,539 -- 1,751,539
MSS.................................... 118,243 11.9091 1,409,445 -- 1,409,445
MMS.................................... 77,105 10.3869 803,078 -- 803,078
RES.................................... 553,996 11.7136 6,497,188 -- 6,497,188
RGS.................................... 6,085 10.7281 65,318 -- 65,318
TRS.................................... 951,205 11.9123 11,347,435 -- 11,347,435
UTS.................................... 77,009 12.7649 980,227 -- 980,227
VAL.................................... 160,778 12.7132 2,046,243 -- 2,046,243
WAA.................................... 50,531 10.9812 555,886 -- 555,886
WGS.................................... 19,394 10.0247 194,687 -- 194,687
WGR.................................... 85,526 11.3725 973,485 -- 973,485
WTR.................................... 45,122 11.1546 503,858 -- 503,858
-------------- ---------- --------------
$ 43,969,466 $ -- $ 43,969,466
-------------- ---------- --------------
Net Assets................................................. $6,862,758,769 $20,644,279 $6,883,403,048
-------------- ---------- --------------
-------------- ---------- --------------
</TABLE>
See notes to financial statements
4
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF OPERATIONS -- Year Ended December 31, 1997
<TABLE>
<CAPTION>
CAS CGS EGS FCE FCI
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.................... $ 88,676,113 $ 35,535,241 $ 1,301,804 $ 7,806 $ 24,244
Mortality and expense risk charges......... 12,773,766 9,692,978 4,247,913 212,763 194,393
Distribution expense charges............... 187,950 -- -- -- --
Administrative expense charges............. 1,344,902 1,163,157 509,750 25,532 23,327
------------- ------------- ------------ ------------ -----------
Net investment income (expense)........ $ 74,369,495 $ 24,679,106 $ (3,455,859) $ (230,489) $ (193,476)
------------- ------------- ------------ ------------ -----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales...................... $ 362,027,612 $ 21,055,175 $ 38,221,566 $ 8,602,108 $4,272,586
Cost of investments sold................. 275,358,831 11,642,272 29,914,344 7,627,967 4,428,832
------------- ------------- ------------ ------------ -----------
Net realized gains (losses)............ $ 86,668,781 $ 9,412,903 $ 8,307,222 $ 974,141 $ (156,246)
------------- ------------- ------------ ------------ -----------
Net unrealized appreciation (depreciation)
on investments:
End of year.............................. $ 165,968,995 $ 285,383,733 $ 69,992,703 $(1,673,420) $ (418,012)
Beginning of year........................ 133,626,673 122,871,165 16,355,150 47,389 (64,127)
------------- ------------- ------------ ------------ -----------
Change in unrealized appreciation
(depreciation)........................ $ 32,342,322 $ 162,512,568 $ 53,637,553 $(1,720,809) $ (353,885)
------------- ------------- ------------ ------------ -----------
Realized and unrealized gains............ $ 119,011,103 $ 171,925,471 $ 61,944,775 $ (746,668) $ (510,131)
------------- ------------- ------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS................................ $ 193,380,598 $ 196,604,577 $ 58,488,916 $ (977,157) $ (703,607)
------------- ------------- ------------ ------------ -----------
------------- ------------- ------------ ------------ -----------
<CAPTION>
FCG GSS HYS
Sub-Account Sub-Account Sub-Account
------------ ------------ -------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.................... $ 506,953 $ 20,574,577 $ 12,574,875
Mortality and expense risk charges......... 530,474 3,854,558 2,392,767
Distribution expense charges............... -- 54,703 26,937
Administrative expense charges............. 63,657 407,844 260,195
------------ ------------ -------------
Net investment income (expense)........ $ (87,178) $ 16,257,472 $ 9,894,976
------------ ------------ -------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales...................... $ 10,589,095 $ 83,661,016 $ 118,787,839
Cost of investments sold................. 10,013,247 83,981,234 112,595,872
------------ ------------ -------------
Net realized gains (losses)............ $ 575,848 $ (320,218) $ 6,191,967
------------ ------------ -------------
Net unrealized appreciation (depreciation)
on investments:
End of year.............................. $ 2,425,793 $ 11,293,081 $ 12,659,920
Beginning of year........................ 801,687 5,399,156 7,187,592
------------ ------------ -------------
Change in unrealized appreciation
(depreciation)........................ $ 1,624,106 $ 5,893,925 $ 5,472,328
------------ ------------ -------------
Realized and unrealized gains............ $ 2,199,954 $ 5,573,707 $ 11,664,295
------------ ------------ -------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS................................ $ 2,112,776 $ 21,831,179 $ 21,559,271
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
See notes to financial statements
5
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF OPERATIONS -- continued
<TABLE>
<CAPTION>
MSS MMS RES RGS TRS
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.................... $ 29,226,909 $ 16,987,640 $ 12,704,276 $ -- $ 136,291,376
Mortality and expense risk charges......... 3,465,231 4,240,349 6,128,811 21,762 17,430,043
Distribution expense charges............... 55,830 50,924 -- -- 295,032
Administrative expense charges............. 359,998 457,918 735,457 20 1,796,573
------------ ------------- ------------- ----------- -------------
Net investment income (expense)........ $ 25,345,850 $ 12,238,449 $ 5,840,008 $ (21,782 ) $ 116,769,728
------------ ------------- ------------- ----------- -------------
REALIZED AND UNREALIZED GAINS:
Realized gains on investment transactions:
Proceeds from sales...................... $ 87,092,003 $ 838,532,223 $ 12,619,108 $ 323,191 $ 244,278,623
Cost of investments sold................. 67,538,913 838,532,223 7,561,117 314,450 177,638,566
------------ ------------- ------------- ----------- -------------
Net realized gains..................... $ 19,553,090 $ -- $ 5,057,991 $ 8,741 $ 66,640,057
------------ ------------- ------------- ----------- -------------
Net unrealized appreciation on investments:
End of year.............................. $ 40,525,807 $ -- $ 111,290,775 $ 263,416 $ 297,846,753
Beginning of year........................ 28,912,535 -- 42,800,056 -- 223,195,771
------------ ------------- ------------- ----------- -------------
Change in unrealized appreciation...... $ 11,613,272 $ -- $ 68,490,719 $ 263,416 $ 74,650,982
------------ ------------- ------------- ----------- -------------
Realized and unrealized gains............ $ 31,166,362 $ -- $ 73,548,710 $ 272,157 $ 141,291,039
------------ ------------- ------------- ----------- -------------
INCREASE IN NET ASSETS FROM OPERATIONS..... $ 56,512,212 $ 12,238,449 $ 79,388,718 $ 250,375 $ 258,060,767
------------ ------------- ------------- ----------- -------------
------------ ------------- ------------- ----------- -------------
<CAPTION>
UTS VAL WAA
Sub-Account Sub-Account Sub-Account
------------ ------------ ------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.................... $ 8,922,718 $ 287,830 $ 4,694,705
Mortality and expense risk charges......... 1,065,516 592,023 1,285,189
Distribution expense charges............... -- -- --
Administrative expense charges............. 127,862 71,043 154,223
------------ ------------ ------------
Net investment income (expense)........ $ 7,729,340 $ (375,236) $ 3,255,293
------------ ------------ ------------
REALIZED AND UNREALIZED GAINS:
Realized gains on investment transactions:
Proceeds from sales...................... $ 6,071,320 $ 1,955,133 $ 11,129,872
Cost of investments sold................. 3,987,579 1,617,454 8,517,555
------------ ------------ ------------
Net realized gains..................... $ 2,083,741 $ 337,679 $ 2,612,317
------------ ------------ ------------
Net unrealized appreciation on investments:
End of year.............................. $ 28,380,652 $ 11,851,082 $ 9,486,253
Beginning of year........................ 13,599,433 744,641 7,002,678
------------ ------------ ------------
Change in unrealized appreciation...... $ 14,781,219 $ 11,106,441 $ 2,483,575
------------ ------------ ------------
Realized and unrealized gains............ $ 16,864,960 $ 11,444,120 $ 5,095,892
------------ ------------ ------------
INCREASE IN NET ASSETS FROM OPERATIONS..... $ 24,594,300 $ 11,068,884 $ 8,351,185
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to financial statements
6
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF OPERATIONS -- continued
<TABLE>
<CAPTION>
WGS WGR WTR
Sub-Account Sub-Account Sub-Account Total
------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Dividend income and capital gain
distributions received.................... $ 4,501,932 $ 4,834,251 $1,265,181 $ 378,918,431
Mortality and expense risk charges......... 1,360,007 2,776,755 666,680 72,931,978
Distribution expense charges............... 26,253 -- -- 697,629
Administrative expense charges............. 136,948 333,211 80,002 8,051,619
------------ ------------ ----------- ---------------
Net investment income.................. $ 2,978,724 $ 1,724,285 $ 518,499 $ 297,237,205
------------ ------------ ----------- ---------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Realized gains (losses) on investment
transactions:
Proceeds from sales...................... $ 40,039,812 $ 44,132,898 $6,760,428 $ 1,940,151,608
Cost of investments sold................. 45,636,831 35,561,253 5,241,601 1,727,710,141
------------ ------------ ----------- ---------------
Net realized gains (losses)............ $ (5,597,019) $ 8,571,645 $1,518,827 $ 212,441,467
------------ ------------ ----------- ---------------
Net unrealized appreciation (depreciation)
on investments:
End of year.............................. $ (5,701,264) $ 31,911,034 $8,223,467 $ 1,079,710,768
Beginning of year........................ (5,431,957) 15,241,453 3,870,720 616,160,015
------------ ------------ ----------- ---------------
Change in unrealized appreciation
(depreciation)........................ $ (269,307) $ 16,669,581 $4,352,747 $ 463,550,753
------------ ------------ ----------- ---------------
Realized and unrealized gains (losses)... $ (5,866,326) $ 25,241,226 $5,871,574 $ 675,992,220
------------ ------------ ----------- ---------------
INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS................................ $ (2,887,602) $ 26,965,511 $6,390,073 $ 973,229,425
------------ ------------ ----------- ---------------
------------ ------------ ----------- ---------------
</TABLE>
See notes to financial statements
7
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CAS CGS
Sub-Account Sub-Account
------------------------------- -------------------------------
Year Ended Year Ended
December 31, December 31,
------------------------------- -------------------------------
1997 1996 1997 1996
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)............ $ 74,369,495 $ 52,941,263 $ 24,679,106 $ 8,788,822
Net realized gains......................... 86,668,781 62,169,749 9,412,903 4,512,770
Net unrealized gains....................... 32,342,322 27,056,227 162,512,568 69,960,621
--------------- ------------- --------------- -------------
Increase in net assets from
operations............................ $ 193,380,598 $ 142,167,239 $ 196,604,577 $ 83,262,213
--------------- ------------- --------------- -------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 191,209,464 $ 148,876,483 $ 211,472,643 $ 153,852,554
Net transfers between Sub-Accounts and
Fixed Account........................... 28,967,751 (5,608,366) 176,163,947 36,048,717
Withdrawals, surrenders, annuitizations
and contract charges.................... (177,738,789) (47,835,347) (42,133,444) (19,835,752)
--------------- ------------- --------------- -------------
Net accumulation activity.............. $ 42,438,426 $ 95,432,770 $ 345,503,146 $ 170,065,519
--------------- ------------- --------------- -------------
Annuitization Activity:
Annuitizations........................... $ 1,367,156 $ 1,193,495 $ 947,612 $ 437,102
Annuity payments and contract charges.... (736,487) (347,090) (271,967) (129,806)
Net transfers between Sub-Accounts and
Fixed Account........................... 40,842 119,425 354,557 116,806
Adjustments to annuity reserves.......... (64,938) (50,462) 52,749 (87,515)
--------------- ------------- --------------- -------------
Net annuitization activity............. $ 606,573 $ 915,368 $ 1,082,951 $ 336,587
--------------- ------------- --------------- -------------
Increase in net assets from contract owner
transactions.............................. $ 43,044,999 $ 96,348,138 $ 346,586,097 $ 170,402,106
--------------- ------------- --------------- -------------
Increase in net assets................... $ 236,425,597 $ 238,515,377 $ 543,190,674 $ 253,664,319
NET ASSETS:
Beginning of year.......................... 900,684,817 662,169,440 523,820,012 270,155,693
--------------- ------------- --------------- -------------
End of year................................ $ 1,137,110,414 $ 900,684,817 $ 1,067,010,686 $ 523,820,012
--------------- ------------- --------------- -------------
--------------- ------------- --------------- -------------
<CAPTION>
EGS
Sub-Account
-----------------------------
Year Ended
December 31,
-----------------------------
1997 1996
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income (expense)............ $ (3,455,859) $ (1,968,496)
Net realized gains......................... 8,307,222 4,277,168
Net unrealized gains....................... 53,637,553 12,802,194
------------- -------------
Increase in net assets from
operations............................ $ 58,488,916 $ 15,110,866
------------- -------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 95,095,489 $ 122,215,402
Net transfers between Sub-Accounts and
Fixed Account........................... 57,336,795 50,369,380
Withdrawals, surrenders, annuitizations
and contract charges.................... (16,909,470) (8,085,001)
------------- -------------
Net accumulation activity.............. $ 135,522,814 $ 164,499,781
------------- -------------
Annuitization Activity:
Annuitizations........................... $ 158,875 $ 286,409
Annuity payments and contract charges.... (58,246) (13,624)
Net transfers between Sub-Accounts and
Fixed Account........................... 21,015 44,347
Adjustments to annuity reserves.......... 7,823 21,044
------------- -------------
Net annuitization activity............. $ 129,467 $ 338,176
------------- -------------
Increase in net assets from contract owner
transactions.............................. $ 135,652,281 $ 164,837,957
------------- -------------
Increase in net assets................... $ 194,141,197 $ 179,948,823
NET ASSETS:
Beginning of year.......................... 247,131,988 67,183,165
------------- -------------
End of year................................ $ 441,273,185 $ 247,131,988
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements
8
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
FCE FCI
Sub-Account Sub-Account
-------------------------- --------------------------
Year Ended Year Ended
December 31, December 31,
-------------------------- --------------------------
1997 1996* 1997 1996
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment expense..................... $ (230,489) $ (13,026) $ (193,476) $ (21,609)
Net realized gains (losses)................ 974,141 (5,712) (156,246) (1,678)
Net unrealized gains (losses).............. (1,720,809) 47,389 (353,885) (64,127)
------------ ----------- ------------ -----------
Increase (decrease) in net assets from
operations............................ $ (977,157) $ 28,651 $ (703,607) $ (87,414)
------------ ----------- ------------ -----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 9,918,873 $ 1,048,658 $ 10,356,882 $ 2,460,672
Net transfers between Sub-Accounts and
Fixed Account........................... 12,522,767 2,213,104 8,764,120 3,215,694
Withdrawals, surrenders, annuitizations
and contract charges.................... (953,005) (18,977) (683,649) (60,665)
------------ ----------- ------------ -----------
Net accumulation activity.............. $ 21,488,635 $ 3,242,785 $ 18,437,353 $ 5,615,701
------------ ----------- ------------ -----------
Annuitization Activity:
Annuitizations........................... $ 39,195 $ -- $ 55,177 $ --
Annuity payments and contract charges.... (5,864) -- (2,405) --
Net transfers between Sub-Accounts and
Fixed Account........................... -- -- -- --
Adjustments to annuity reserves.......... (1,465) -- (416) --
------------ ----------- ------------ -----------
Net annuitization activity............. $ 31,866 $ -- $ 52,356 $ --
------------ ----------- ------------ -----------
Increase in net assets from contract owner
transactions.............................. $ 21,520,501 $ 3,242,785 $ 18,489,709 $ 5,615,701
------------ ----------- ------------ -----------
Increase in net assets................... $ 20,543,344 $ 3,271,436 $ 17,786,102 $ 5,528,287
------------ ----------- ------------ -----------
NET ASSETS:
Beginning of year.......................... 3,271,436 -- 5,528,287 --
------------ ----------- ------------ -----------
End of year................................ $ 23,814,780 $ 3,271,436 $ 23,314,389 $ 5,528,287
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
<CAPTION>
FCG
Sub-Account
---------------------------
Year Ended
December 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment expense..................... $ (87,178) $ (328,431)
Net realized gains (losses)................ 575,848 251,398
Net unrealized gains (losses).............. 1,624,106 690,250
------------ ------------
Increase (decrease) in net assets from
operations............................ $ 2,112,776 $ 613,217
------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 8,465,356 $ 19,437,825
Net transfers between Sub-Accounts and
Fixed Account........................... 5,802,185 8,809,224
Withdrawals, surrenders, annuitizations
and contract charges.................... (2,204,864) (951,163)
------------ ------------
Net accumulation activity.............. $ 12,062,677 $ 27,295,886
------------ ------------
Annuitization Activity:
Annuitizations........................... $ 45,941 $ 43,066
Annuity payments and contract charges.... (6,247) (1,385)
Net transfers between Sub-Accounts and
Fixed Account........................... -- --
Adjustments to annuity reserves.......... 62 1,480
------------ ------------
Net annuitization activity............. $ 39,756 $ 43,161
------------ ------------
Increase in net assets from contract owner
transactions.............................. $ 12,102,433 $ 27,339,047
------------ ------------
Increase in net assets................... $ 14,215,209 $ 27,952,264
------------ ------------
NET ASSETS:
Beginning of year.......................... 35,131,009 7,178,745
------------ ------------
End of year................................ $ 49,346,218 $ 35,131,009
------------ ------------
------------ ------------
</TABLE>
*For the period July 1, 1996 (commencement of operations of the Sub-Account) to
December 31, 1996.
See notes to financial statements
9
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
GSS HYS
Sub-Account Sub-Account
----------------------------- -----------------------------
Year Ended Year Ended
December 31, December 31,
----------------------------- -----------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................... $ 16,257,472 $ 13,823,215 $ 9,894,976 $ 7,621,505
Net realized gains (losses)................ $ (320,218) (2,504,323) 6,191,967 5,703,568
Net unrealized gains (losses).............. $ 5,893,925 (10,551,635) 5,472,328 840,341
------------- ------------- ------------- -------------
Increase in net assets from
operations............................ $ 21,831,179 $ 767,257 $ 21,559,271 $ 14,165,414
------------- ------------- ------------- -------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 45,924,248 $ 54,669,405 $ 56,445,474 $ 33,898,269
Net transfers between Sub-Accounts and
Fixed Account........................... 9,720,766 (14,448,899) 35,346,824 4,326,619
Withdrawals, surrenders, annuitizations
and contract charges.................... (58,612,247) (21,010,408) (37,189,764) (11,758,613)
------------- ------------- ------------- -------------
Net accumulation activity.............. $ (2,967,233) $ 19,210,098 $ 54,602,534 $ 26,466,275
------------- ------------- ------------- -------------
Annuitization Activity:
Annuitizations........................... $ 142,666 $ 268,329 $ 403,156 $ 137,217
Annuity payments and contract charges.... (181,979) (240,819) (164,426) (79,990)
Net transfers between Sub-Accounts and
Fixed Account........................... (55,523) (309,558) -- 14,805
Adjustments to annuity reserves.......... 111,855 (40,665) 2,369 (42,595)
------------- ------------- ------------- -------------
Net annuitization activity............... $ 17,019 $ (322,713) $ 241,099 $ 29,437
------------- ------------- ------------- -------------
Increase (decrease) in net assets from
contract owner transactions............... $ (2,950,214) $ 18,887,385 $ 54,843,633 $ 26,495,712
------------- ------------- ------------- -------------
Increase in net assets................... $ 18,880,965 $ 19,654,642 $ 76,402,904 $ 40,661,126
NET ASSETS:
Beginning of year.......................... 312,423,277 292,768,635 161,272,508 120,611,382
------------- ------------- ------------- -------------
End of year................................ $ 331,304,242 $ 312,423,277 $ 237,675,412 $ 161,272,508
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
<CAPTION>
MSS
Sub-Account
-----------------------------
Year Ended
December 31,
-----------------------------
1997 1996
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income...................... $ 25,345,850 $ 24,096,088
Net realized gains (losses)................ 19,553,090 2,898,908
Net unrealized gains (losses).............. 11,613,272 4,637,529
------------- -------------
Increase in net assets from
operations............................ $ 56,512,212 $ 31,632,525
------------- -------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 56,177,555 $ 40,598,625
Net transfers between Sub-Accounts and
Fixed Account........................... 12,554,894 7,831,933
Withdrawals, surrenders, annuitizations
and contract charges.................... (57,321,938) (13,315,281)
------------- -------------
Net accumulation activity.............. $ 11,410,511 $ 35,115,277
------------- -------------
Annuitization Activity:
Annuitizations........................... $ 558,077 $ 82,609
Annuity payments and contract charges.... (166,248) (76,110)
Net transfers between Sub-Accounts and
Fixed Account........................... -- 41,877
Adjustments to annuity reserves.......... (43,539) (12,576)
------------- -------------
Net annuitization activity............... $ 348,290 $ 35,800
------------- -------------
Increase (decrease) in net assets from
contract owner transactions............... $ 11,758,801 $ 35,151,077
------------- -------------
Increase in net assets................... $ 68,271,013 $ 66,783,602
NET ASSETS:
Beginning of year.......................... 244,554,513 177,770,911
------------- -------------
End of year................................ $ 312,825,526 $ 244,554,513
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements
10
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
MMS RES RGS
Sub-Account Sub-Account Sub-Account
------------------------------ ----------------------------- ------------------
Year Ended Year Ended Year Ended
December 31, December 31, December 31, 1997*
------------------------------ ----------------------------- ------------------
1997 1996 1997 1996
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)............ $ 12,238,449 $ 9,789,043 $ 5,840,008 $ (428,000) $ (21,782)
Net realized gains......................... -- -- 5,057,991 1,850,763 8,741
Net unrealized gains....................... -- -- 68,490,719 34,176,685 263,416
-------------- ------------- ------------- ------------- ----------
Increase in net assets from
operations............................ $ 12,238,449 $ 9,789,043 $ 79,388,718 $ 35,599,448 $ 250,375
-------------- ------------- ------------- ------------- ----------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 151,523,026 $ 208,990,259 $ 153,316,348 $ 156,881,700 $ 2,950,897
Net transfers between Sub-Accounts and
Fixed Account........................... (1,240,893) (43,233,439) 119,233,197 64,021,188 2,726,224
Withdrawals, surrenders, annuitizations
and contract charges.................... (229,658,956) (46,733,186) (24,008,616) (7,956,041) (29,969)
-------------- ------------- ------------- ------------- ----------
Net accumulation activity.............. $ (79,376,823) $ 119,023,634 $ 248,540,929 $ 212,946,847 $ 5,647,152
-------------- ------------- ------------- ------------- ----------
Annuitization Activity:
Annuitizations........................... $ 79,534 $ 1,121,927 $ 415,748 $ 557,791 $ --
Annuity payments and contract charges.... (200,563) (206,726) (139,282) (62,358) --
Net transfers between Sub-Accounts and
Fixed Account........................... (312,207) (190,340) 12,992 118,346 --
Adjustments to annuity reserves.......... (31,750) (23,831) (40,528) 38,061 --
-------------- ------------- ------------- ------------- ----------
Net annuitization activity............. $ (464,986) $ 701,030 $ 248,930 $ 651,840 $ --
-------------- ------------- ------------- ------------- ----------
Increase (decrease) in net assets from
contract owner transactions............... $ (79,841,809) $ 119,724,664 $ 248,789,859 $ 213,598,687 $ 5,647,152
-------------- ------------- ------------- ------------- ----------
Increase (decrease) in net assets........ $ (67,603,360) $ 129,513,707 $ 328,178,577 $ 249,198,135 $ 5,897,527
NET ASSETS:
Beginning of year.......................... 361,830,849 232,317,142 321,102,609 71,904,474 --
-------------- ------------- ------------- ------------- ----------
End of year................................ $ 294,227,489 $ 361,830,849 $ 649,281,186 $ 321,102,609 $ 5,897,527
-------------- ------------- ------------- ------------- ----------
-------------- ------------- ------------- ------------- ----------
</TABLE>
*For the period June 1, 1997 (commencement of operations of the Sub-Account) to
December 31, 1997.
See notes to financial statements
11
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
TRS UTS
Sub-Account Sub-Account
--------------------------------- ----------------------------
Year Ended Year Ended
December 31, December 31,
--------------------------------- ----------------------------
1997 1996 1997 1996
--------------- --------------- ------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (expense)............ $ 116,769,728 $ 64,654,089 $ 7,729,340 $ 1,926,985
Net realized gains......................... 66,640,057 20,511,061 2,083,741 1,617,706
Net unrealized gains....................... 74,650,982 50,461,971 14,781,219 6,572,565
--------------- --------------- ------------- ------------
Increase in net assets from
operations............................ $ 258,060,767 $ 135,627,121 $ 24,594,300 $ 10,117,256
--------------- --------------- ------------- ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 260,379,742 $ 158,550,497 $ 16,090,619 $ 18,235,404
Net transfers between Sub-Accounts and
Fixed Account........................... 90,568,461 7,794,293 13,552,388 835,305
Withdrawals, surrenders, annuitizations
and contract charges.................... (276,158,725) (79,238,642) (5,005,318) (3,059,763)
--------------- --------------- ------------- ------------
Net accumulation activity.............. $ 74,789,478 $ 87,106,148 $ 24,637,689 $ 16,010,946
--------------- --------------- ------------- ------------
Annuitization Activity:
Annuitizations........................... $ 1,271,371 $ 505,447 $ 165,628 $ 116,582
Annuity payments and contract charges.... (935,550) (762,883) (60,528) (18,434)
Net transfers between Sub-Accounts and
Fixed Account........................... 87,811 56,990 28,886 --
Adjustments to annuity reserves.......... (136,590) (87,530) 2,804 (82,561)
--------------- --------------- ------------- ------------
Net annuitization activity............. $ 287,042 $ (287,976) $ 136,790 $ 15,587
--------------- --------------- ------------- ------------
Increase in net assets from contract owner
transactions.............................. $ 75,076,520 $ 86,818,172 $ 24,774,479 $ 16,026,533
--------------- --------------- ------------- ------------
Increase in net assets................... $ 333,137,287 $ 222,445,293 $ 49,368,779 $ 26,143,789
NET ASSETS:
Beginning of year.......................... 1,246,646,697 1,024,201,404 67,937,296 41,793,507
--------------- --------------- ------------- ------------
End of year................................ $ 1,579,783,984 $ 1,246,646,697 $ 117,306,075 $ 67,937,296
--------------- --------------- ------------- ------------
--------------- --------------- ------------- ------------
<CAPTION>
VAL
Sub-Account
---------------------------
Year Ended
December 31,
---------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (expense)............ $ (375,236) $ (53,621)
Net realized gains......................... 337,679 23,298
Net unrealized gains....................... 11,106,441 744,641
------------ ------------
Increase in net assets from
operations............................ $ 11,068,884 $ 714,318
------------ ------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 29,587,412 $ 10,936,155
Net transfers between Sub-Accounts and
Fixed Account........................... 31,786,583 5,122,274
Withdrawals, surrenders, annuitizations
and contract charges.................... (2,199,052) (63,860)
------------ ------------
Net accumulation activity.............. $ 59,174,943 $ 15,994,569
------------ ------------
Annuitization Activity:
Annuitizations........................... $ 136,454 $ --
Annuity payments and contract charges.... (15,580) --
Net transfers between Sub-Accounts and
Fixed Account........................... -- --
Adjustments to annuity reserves.......... (4,256) --
------------ ------------
Net annuitization activity............. $ 116,618 $ --
------------ ------------
Increase in net assets from contract owner
transactions.............................. $ 59,291,561 $ 15,994,569
------------ ------------
Increase in net assets................... $ 70,360,445 $ 16,708,887
NET ASSETS:
Beginning of year.......................... 16,708,887 --
------------ ------------
End of year................................ $ 87,069,332 $ 16,708,887
------------ ------------
------------ ------------
</TABLE>
*For the period June 3, 1996 (commencement of operations of the Sub-Account) to
December 31, 1996.
See notes to financial statements
12
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
WAA WGS
Sub-Account Sub-Account
---------------------------- -----------------------------
Year Ended Year Ended
December 31, December 31,
---------------------------- -----------------------------
1997 1996 1997 1996
------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................... $ 3,255,293 $ 595,575 $ 2,978,724 $ 16,535,862
Net realized gains (losses)................ 2,612,317 1,629,596 (5,597,019) (2,712,091)
Net unrealized gains (losses).............. 2,483,575 4,425,108 (269,307) (9,808,667)
------------- ------------ ------------- -------------
Increase (decrease) in net assets from
operations............................ $ 8,351,185 $ 6,650,279 $ (2,887,602) $ 4,015,104
------------- ------------ ------------- -------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 23,232,543 $ 33,549,719 $ 11,552,959 $ 10,730,732
Net transfers between Sub-Accounts and
Fixed Account........................... 17,783,698 13,363,954 (19,473,409) (13,803,477)
Withdrawals, surrenders, annuitizations
and contract charges.................... (5,742,891) (2,987,226) (17,997,612) (11,401,973)
------------- ------------ ------------- -------------
Net accumulation activity.............. $ 35,273,350 $ 43,926,447 $ (25,918,062) $ (14,474,718)
------------- ------------ ------------- -------------
Annuitization Activity:
Annuitizations........................... $ 167,170 $ 174,043 $ 101,934 $ 55,515
Annuity payments and contract charges.... (51,214) (17,132) (132,080) (171,649)
Net transfers between Sub-Accounts and
Fixed Account........................... 79,307 -- (8,188) (25,947)
Adjustments to annuity reserves.......... 487 16,443 (5,055) (4,679)
------------- ------------ ------------- -------------
Net annuitization activity............. $ 195,750 $ 173,354 $ (43,389) $ (146,760)
------------- ------------ ------------- -------------
Increase (decrease) in net assets from
contract owner transactions............... $ 35,469,100 $ 44,099,801 $ (25,961,451) $ (14,621,478)
------------- ------------ ------------- -------------
Increase (decrease) in net assets........ $ 43,820,285 $ 50,750,080 $ (28,849,053) $ (10,606,374)
NET ASSETS:
Beginning of year.......................... 76,617,497 25,867,417 127,743,885 138,350,259
------------- ------------ ------------- -------------
End of year................................ $ 120,437,782 $ 76,617,497 $ 98,894,832 $ 127,743,885
------------- ------------ ------------- -------------
------------- ------------ ------------- -------------
<CAPTION>
WGR
Sub-Account
-----------------------------
Year Ended
December 31,
-----------------------------
1997 1996
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income...................... $ 1,724,285 $ 9,576,256
Net realized gains (losses)................ 8,571,645 6,018,165
Net unrealized gains (losses).............. 16,669,581 1,415,056
------------- -------------
Increase (decrease) in net assets from
operations............................ $ 26,965,511 $ 17,009,477
------------- -------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 26,811,741 $ 40,398,624
Net transfers between Sub-Accounts and
Fixed Account........................... 3,906,046 3,588,236
Withdrawals, surrenders, annuitizations
and contract charges.................... (13,503,627) (9,375,496)
------------- -------------
Net accumulation activity.............. $ 17,214,160 $ 34,611,364
------------- -------------
Annuitization Activity:
Annuitizations........................... $ 112,909 $ 157,641
Annuity payments and contract charges.... (92,720) (71,968)
Net transfers between Sub-Accounts and
Fixed Account........................... (249,492) 13,731
Adjustments to annuity reserves.......... (31,480) 8,938
------------- -------------
Net annuitization activity............. $ (260,783) $ 108,342
------------- -------------
Increase (decrease) in net assets from
contract owner transactions............... $ 16,953,377 $ 34,719,706
------------- -------------
Increase (decrease) in net assets........ $ 43,918,888 $ 51,729,183
NET ASSETS:
Beginning of year.......................... 193,226,813 141,497,630
------------- -------------
End of year................................ $ 237,145,701 $ 193,226,813
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements
13
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
STATEMENTS OF CHANGES IN NET ASSETS -- continued
<TABLE>
<CAPTION>
WTR
Sub-Account Total
--------------------------------- ---------------------------------
Year Ended Year Ended
December 31, December 31,
--------------------------------- ---------------------------------
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................... $ 518,499 $ 71,547 $ 297,237,205 $ 207,607,067
Net realized gains......................... 1,518,827 545,390 212,441,467 106,785,736
Net unrealized gains....................... 4,352,747 2,845,849 463,550,753 196,251,997
--------------- --------------- --------------- ---------------
Increase in net assets from
operations............................ $ 6,390,073 $ 3,462,786 $ 973,229,425 $ 510,644,800
--------------- --------------- --------------- ---------------
CONTRACT OWNER TRANSACTIONS:
Accumulation Activity:
Purchase payments received............... $ 15,459,554 $ 16,294,987 $ 1,375,970,825 $ 1,231,625,970
Net transfers between Sub-Accounts and
Fixed Account........................... 13,106,711 5,434,372 619,129,055 135,880,112
Withdrawals, surrenders, annuitizations
and contract charges.................... (2,840,427) (1,579,132) (970,892,363) (285,266,526)
--------------- --------------- --------------- ---------------
Net accumulation activity.............. $ 25,725,838 $ 20,150,227 $ 1,024,207,517 $ 1,082,239,556
--------------- --------------- --------------- ---------------
Annuitization Activity:
Annuitizations........................... $ 215,870 $ -- $ 6,384,473 $ 5,137,173
Annuity payments and contract charges.... (28,925) (17,146) (3,250,311) (2,217,120)
Net transfers between Sub-Accounts and
Fixed Account........................... -- -- -- 482
Adjustments to annuity reserves.......... (3,240) (10,126) (185,108) (356,574)
--------------- --------------- --------------- ---------------
Net annuitization activity............. $ 183,705 $ (27,272) $ 2,949,054 $ 2,563,961
--------------- --------------- --------------- ---------------
Increase in net assets from contract owner
transactions.............................. $ 25,909,543 $ 20,122,955 $ 1,027,156,571 $ 1,084,803,517
--------------- --------------- --------------- ---------------
Increase in net assets................... $ 32,299,616 $ 23,585,741 $ 2,000,385,996 $ 1,595,448,317
NET ASSETS:
Beginning of year.......................... 37,384,672 13,798,931 4,883,017,052 3,287,568,735
--------------- --------------- --------------- ---------------
End of year................................ $ 69,684,288 $ 37,384,672 $ 6,883,403,048 $ 4,883,017,052
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
See notes to financial statements
14
<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, an affiliate of the Sponsor, is investment adviser to the Series Trust.
(2) SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
INVESTMENT VALUATIONS
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 participants are recorded in the new
Sub-Account upon receipt of the redemption proceeds.
FEDERAL INCOME TAX STATUS
The operations of the Variable Account are part of the operations of the Sponsor
and are not taxed separately. The Variable Account is not taxed as a regulated
investment company. The Sponsor qualifies for the federal income tax treatment
granted to life insurance companies under Subchapter L of the Internal Revenue
Code. Under existing federal income tax law, investment income and capital gains
earned by the Variable Account on contract owner reserves are not subject to
tax.
(3) CONTRACT CHARGES
A mortality and expense risk charge based on the value of the Variable Account
is deducted from the Variable Account at the end of each valuation period for
the mortality and expense risks assumed by the Sponsor. The deductions are
transferred periodically to the Sponsor. Currently, the deduction is at an
effective annual rate of 1.25% for Regatta and Regatta Gold contracts and 1.00%
for Regatta Classic contracts.
15
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS -- continued
Each year on the account anniversary, an account administration fee ("Account
Fee") equal to the lesser of $30 or 2% of the participant's account value in the
case of Regatta and Regatta Gold and $50 for Regatta Classic 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, in
the case of Regatta and Regatta Gold, 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. In the case of Regatta Classic, a withdrawal charge of 1% is
applied to purchase payments withdrawn which have been credited to a
participant's account for less than one year.
For assuming the risk that withdrawal charges may be insufficient to compensate
it for the costs of distributing the 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. Accounts are transferred from MFS Regatta --
Level 1 to MFS Regatta -- Level 2 in the month following the seventh account
anniversary. No deduction for the distribution expense charge is made after the
seventh account anniversary.
As reimbursement for administrative expenses attributable to Regatta Gold and
Regatta Classic contracts which exceed the revenues received from the Account
Fees described above derived from such contracts, the Sponsor makes a deduction
from the Variable Account at the end of each valuation period at an effective
annual rate of 0.15% of the net assets attributable to such contracts.
(4) ANNUITY RESERVES
Annuity reserves are calculated using the 1983 Individual Annuitant Mortality
Table and an assumed interest rate of 4% or 3%, as stated in each participant's
certificate. Required adjustments to the reserves are accomplished by transfers
to or from the Sponsor.
16
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS
<TABLE>
<CAPTION>
Units
Units Transferred Withdrawn,
Between Sub-Accounts and Surrendered
Units Outstanding and
Beginning of Year Units Purchased Fixed Account Annuitized
---------------------- ---------------------- --------------------------- -----------
Year Ended
Year Ended Year Ended Year Ended December
December 31, December 31, December 31, 31,
---------------------- ---------------------- --------------------------- -----------
1997 1996 1997 1996 1997 1996 1997
---------- ---------- ---------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MFS REGATTA CONTRACTS:
------------------------------
CAS - Level 1................. 6,316,305 6,615,207 860 3,487 (2,421,311) 267,320 (902,834)
CAS - Level 2 *............... 58,968 -- 624,374 62,873 6,542,104 142 (1,834,766)
GSS - Level 1................. 3,362,650 3,535,152 -- 1,574 (1,340,875) 206,595 (559,553)
GSS - Level 2 *............... 55,891 -- 265,628 59,729 2,012,610 3,442 (819,496)
HYS - Level 1................. 1,204,380 1,068,412 -- -- (510,706) 271,328 (156,641)
HYS - Level 2**............... -- -- 64,893 -- 1,416,411 -- (506,178)
MSS - Level 1................. 2,202,213 2,150,361 881 -- (924,959) 253,891 (336,449)
MSS - Level 2 *............... 14,270 -- 240,391 18,662 2,378,532 -- (610,436)
MMS - Level 1................. 3,859,738 3,453,907 1,948 7,940 3,301,197 1,420,458 (5,644,161)
MMS - Level 2 *............... 59,562 -- 310,378 74,316 6,074,695 (3,576) (4,598,826)
TRS - Level 1................. 12,461,003 13,106,997 1,598 2,594 (4,580,966) 580,878 (2,124,982)
TRS - Level 2 *............... 32,548 -- 815,196 61,666 10,202,663 -- (3,211,666)
WGS - Level 1................. 1,460,289 1,730,002 -- -- (584,950) (4,348) (175,001)
WGS - Level 2 *............... 3,325 -- 34,073 4,988 686,256 -- (240,401)
<CAPTION>
Units Outstanding
End of Year
----------------------
Year Ended
December 31,
----------------------
1996 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
MFS REGATTA CONTRACTS:
------------------------------
CAS - Level 1................. (569,709) 2,993,020 6,316,305
CAS - Level 2 *............... (4,047) 5,390,680 58,968
GSS - Level 1................. (380,671) 1,462,222 3,362,650
GSS - Level 2 *............... (7,280) 1,514,633 55,891
HYS - Level 1................. (135,360) 537,033 1,204,380
HYS - Level 2**............... -- 975,126 --
MSS - Level 1................. (202,039) 941,686 2,202,213
MSS - Level 2 *............... (4,392) 2,022,757 14,270
MMS - Level 1................. (1,022,567) 1,518,722 3,859,738
MMS - Level 2 *............... (11,178) 1,845,809 59,562
TRS - Level 1................. (1,229,466) 5,756,653 12,461,003
TRS - Level 2 *............... (29,118) 7,838,741 32,548
WGS - Level 1................. (265,365) 700,338 1,460,289
WGS - Level 2 *............... (1,663) 483,253 3,325
</TABLE>
*For the period December 9, 1996 (commencement of operations) to December 31,
1996.
**For the period January 6, 1997 (commencement of operations of the Sub-Account)
to December 31, 1997.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
MFS REGATTA GOLD
CONTRACTS:
------------------------------
CAS........................... 32,796,793 27,782,739 4,171,857 7,263,696 753,855 (496,244) (2,193,608)
CGS........................... 26,199,975 16,712,586 8,951,992 8,644,701 7,405,405 2,000,284 (1,847,841)
EGS........................... 16,998,044 5,346,104 5,826,649 8,728,028 3,279,517 3,530,938 (1,064,224)
FCE *......................... 329,630 -- 815,491 107,088 1,097,883 224,483 (83,776)
FCI *......................... 564,742 -- 997,740 250,279 902,857 323,501 (75,283)
FCG........................... 3,360,596 711,179 760,057 1,891,793 531,069 856,286 (209,811)
GSS........................... 19,714,114 18,082,586 1,627,923 4,278,441 723,328 (1,392,606) (1,556,521)
HYS........................... 8,424,289 6,880,080 2,340,052 2,241,058 1,768,446 (53,191) (833,592)
MSS........................... 10,541,726 8,542,869 1,191,194 2,422,482 289,858 147,148 (696,059)
MMS........................... 27,275,583 17,186,041 7,818,118 18,886,918 (8,894,337) (5,479,056) (4,736,225)
RES........................... 19,577,745 5,341,160 10,988,440 10,525,524 6,437,281 4,302,978 (1,348,549)
RGS........................... -- -- 276,177 -- 260,605 -- (2,854)
TRS........................... 59,508,016 53,091,748 7,069,596 10,291,268 4,111,016 (170,571) (4,385,161)
UTS........................... 4,671,192 3,410,047 966,544 1,448,517 773,360 68,243 (309,458)
VAL **........................ 1,520,787 -- 2,333,873 1,039,259 2,499,269 492,924 (178,705)
WAA........................... 5,539,010 2,141,041 1,565,894 2,590,553 1,218,708 1,048,013 (394,779)
WGS........................... 7,510,766 8,272,858 324,862 818,386 (1,252,245) (1,036,800) (455,742)
WGR........................... 13,989,946 11,421,691 1,725,746 3,069,026 242,250 227,986 (899,185)
WTR........................... 2,836,079 1,170,586 1,085,978 1,353,637 962,291 448,221 (207,495)
<CAPTION>
MFS REGATTA GOLD
------------------------------
CAS........................... (1,753,398) 35,528,897 32,796,793
CGS........................... (1,157,596) 40,709,531 26,199,975
EGS........................... (607,026) 25,039,986 16,998,044
FCE *......................... (1,941) 2,159,228 329,630
FCI *......................... (9,038) 2,390,056 564,742
FCG........................... (98,662) 4,441,911 3,360,596
GSS........................... (1,254,307) 20,508,844 19,714,114
HYS........................... (643,658) 11,699,195 8,424,289
MSS........................... (570,773) 11,326,719 10,541,726
MMS........................... (3,318,320) 21,463,139 27,275,583
RES........................... (591,917) 35,654,917 19,577,745
RGS........................... -- 533,928 --
TRS........................... (3,704,429) 66,303,467 59,508,016
UTS........................... (255,615) 6,101,638 4,671,192
VAL **........................ (11,396) 6,175,224 1,520,787
WAA........................... (240,597) 7,928,833 5,539,010
WGS........................... (543,678) 6,127,641 7,510,766
WGR........................... (728,757) 15,058,757 13,989,946
WTR........................... (136,365) 4,676,853 2,836,079
<CAPTION>
CONTRACTS:
</TABLE>
*For the period July 1, 1996 (commencement of operations) to December 31,
1996.
**For the period June 3, 1996 (commencement of operations of the Sub-Account)
to December 31, 1996.
17
<PAGE>
SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
NOTES TO FINANCIAL STATEMENTS -- continued
(5) UNIT ACTIVITY FROM PARTICIPANT TRANSACTIONS -- continued
<TABLE>
<CAPTION>
Units
Units Transferred Withdrawn,
Between Sub-Accounts and Surrendered
Units Outstanding and
Beginning of Year Units Purchased Fixed Account Annuitized
---------------------- ---------------------- --------------------------- -----------
Year Ended
Year Ended Year Ended Year Ended December
December 31, December 31, December 31, 31,
---------------------- ---------------------- --------------------------- -----------
1997 1996 1997 1996 1997 1996 1997
---------- ---------- ---------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
MFS REGATTA CLASSIC
CONTRACTS:
------------------------------
CAS *......................... 1,892 -- 246,247 1,892 23,978 -- (6,620)
CGS *......................... 3,545 -- 446,522 8,005 122,228 (4,460) (18,079)
EGS *......................... 9,744 -- 289,836 11,935 22,223 (2,191) (3,775)
FCE **........................ 140 -- 44,896 352 (3,278) (212) (1,060)
FCI **........................ 2,249 -- 75,178 2,249 (7,901) -- (1,634)
FCG +......................... -- -- 42,039 -- 9,735 -- (736)
GSS **........................ 6,514 -- 89,817 6,514 21,240 -- (4,328)
HYS *......................... 8,219 -- 120,521 7,097 30,370 1,122 (3,804)
MSS ++........................ -- -- 92,458 -- 28,860 -- (3,075)
MMS **........................ 13,813 -- 366,163 13,813 (259,749) -- (43,122)
RES ***....................... 25,665 -- 497,934 25,659 37,701 6 (7,304)
RGS #......................... -- -- 5,777 -- 320 -- (12)
TRS ***....................... 40,575 -- 859,444 33,797 66,034 6,778 (14,848)
UTS ++........................ -- -- 41,263 -- 36,412 -- (666)
VAL *......................... 9,578 -- 107,548 8,416 46,458 1,162 (2,806)
WAA *......................... 6,448 -- 44,701 7,086 (150) (638) (468)
WGS ++++...................... -- -- 18,266 -- 2,357 -- (1,229)
WGR ****...................... 71 -- 77,864 -- 7,879 71 (288)
WTR +++....................... -- -- 49,398 -- (3,919) -- (357)
<CAPTION>
Units Outstanding
End of Year
----------------------
Year Ended
December 31,
----------------------
1996 1997 1996
----------- ---------- ----------
<S> <C> <C> <C>
MFS REGATTA CLASSIC
CONTRACTS:
------------------------------
CAS *......................... -- 265,497 1,892
CGS *......................... -- 554,216 3,545
EGS *......................... -- 318,028 9,744
FCE **........................ -- 40,698 140
FCI **........................ -- 67,892 2,249
FCG +......................... -- 51,038 --
GSS **........................ -- 113,243 6,514
HYS *......................... -- 155,306 8,219
MSS ++........................ -- 118,243 --
MMS **........................ -- 77,105 13,813
RES ***....................... -- 553,996 25,665
RGS #......................... -- 6,085 --
TRS ***....................... -- 951,205 40,575
UTS ++........................ -- 77,009 --
VAL *......................... -- 160,778 9,578
WAA *......................... -- 50,531 6,448
WGS ++++...................... -- 19,394 --
WGR ****...................... -- 85,526 71
WTR +++....................... -- 45,122 --
</TABLE>
*For the period December 2, 1996 (commencement of operations of the
Sub-Account) to December 31, 1996.
**For the period December 9, 1996 (commencement of operations of the
Sub-Account) to December 31, 1996.
***For the period November 27, 1996 (commencement of operations of the
Sub-Account) to December 31, 1996.
****Operations of the Sub-Account commenced on December 31, 1996.
+For the period January 7, 1997 (commencement of operations of the
Sub-Account) to December 31, 1997.
++For the period January 22, 1997 (commencement of operations of the
Sub-Account) to December 31, 1997.
+++For the period February 11, 1997 (commencement of operations of the
Sub-Account) to December 31, 1997.
++++For the period February 21, 1997 (commencement of operations of the
Sub-Account) to December 31, 1997.
#For the period July 7, 1997 (commencement of operations of the Sub-Account)
to December 31, 1997.
18
<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, 1997, the
related statement of operations for the year then ended and the statements of
changes in net assets for the years ended December 31, 1997 and 1996. 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 December 31, 1997 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 Variable Account as of December 31,
1997, 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 6, 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.
19
