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SUN GROWTH VARIABLE ANNUITY FUND, INC.
SEMIANNUAL REPORT
JUNE 30, 1995
(Unaudited)
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<PAGE>
SUN GROWTH VARIABLE ANNUITY FUND, INC.
One Sun Life Executive Park
Wellesley Hills, Massachusetts 02181
Telephone: (617) 237-6030
<TABLE>
<S> <C>
DIRECTORS INVESTMENT ADVISER
- --------- ------------------
JOHN D. MCNEIL * Massachusetts Financial Services Company
Chairman, Sun Life Assurance Company of Canada, 500 Boylston Street, Boston, MA 02116-3741
Toronto, Ontario, Canada
PORTFOLIO MANAGER
SAMUEL ADAMS -----------------
Partner, Warner & Stackpole, Geoffrey L. Kurinsky +
Boston, Massachusetts
CUSTODIAN
GEOFFREY CROFTS ---------
Professor Emeritus, University of Hartford, State Street Bank and Trust Company
Hartford, Connecticut 225 Franklin Street, Boston, MA 02110-2875
DAVID D. HORN * LEGAL COUNSEL
Senior Vice President and General Manager, -------------
Sun Life Assurance Company of Canada, Covington & Burling
Wellesley Hills, Massachusetts 1201 Pennsylvania Avenue, N.W.
P.O. Box 7566, Washington, D.C. 20044-7566
GARTH MARSTON
Chairman, Retired, The Provident Institution for Savings,
Boston, Massachusetts
DERWYN F. PHILLIPS
Vice Chairman, Retired, The Gillette Company,
Boston, Massachusetts
OFFICERS
- --------
JOHN D. MCNEIL *
President
DAVID D. HORN *
Vice President
BONNIE S. ANGUS *
Secretary
W. THOMAS LONDON +
Treasurer
JAMES O. YOST +
Assistant Treasurer
* Affiliated with the Sponsor.
+ Affiliated with the Investment Adviser.
</TABLE>
<PAGE>
PORTFOLIO MANAGER PROFILE
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Geoffrey Kurinsky began his career at MFS in 1987 in the Fixed Income
Department. A graduate of the University of Massachusetts and from Boston
University's Graduate School of Management, he was named Assistant Vice
President in 1988, Vice President in 1989 and Senior Vice President in 1993. In
1992, he became Portfolio Manager of Sun Growth Variable Annuity Fund, Inc.
PORTFOLIO OF INVESTMENTS (UNAUDITED) - JUNE 30, 1995
Short-Term Obligations - 98.2%
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Principal Amount
Issuer (000 Omitted) Value
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Federal Farm Credit Bank, due 7/06/95 $ 75 $ 74,939
Federal Home Loan Bank, due 8/07/95 180 178,955
Federal Home Loan Mortgage Corp., due 7/05/95 125 124,918
Federal National Mortgage Assn., due 7/11/95 225 224,633
Student Loan Marketing Assn., due 7/06/95 100 99,918
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Total Investments, at Amortized Cost and Value $703,363
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Other Assets, Less Liabilities - 1.8% $ 12,745
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Net Assets - 100.0% $716,108
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See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS
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STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
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June 30, 1995
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ASSETS:
Investments, at amortized cost and value ........................ $703,363
Cash ............................................................ 2,137
Receivable from investment adviser .............................. 24,485
Other assets .................................................... 9
--------
Total assets .................................................. $729,994
--------
LIABILITIES:
Payable for Fund shares reacquired .............................. $ 5,521
Payable to investment adviser ................................... 10
Other expenses and liabilities .................................. 8,355
--------
Total liabilities ............................................. $ 13,886
--------
Net assets applicable to 180,816 shares of common stock outstanding $716,108
========
NET ASSETS CONSIST OF:
Common stock ($1.00 par value) .................................. $180,816
Paid-in capital ................................................. 520,069
Undistributed net investment income ............................. 15,223
--------
Total ......................................................... $716,108
========
Net asset value per share ....................................... $ 3.96
========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
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STATEMENT OF OPERATIONS (UNAUDITED)
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Six Months Ended June 30, 1995
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Net investment income:
Interest income .................................................... $ 20,582
--------
Expenses -
Investment advisory fees ........................................ $ 1,807
Directors' fees ................................................. 6,300
Printing expenses ............................................... 837
Auditing fees ................................................... 1,450
Legal fees ...................................................... 800
Custodian fees .................................................. 215
Miscellaneous ................................................... 1,076
--------
Total expenses .............................................. $ 12,485
Less: Preliminary reimbursement of expenses ..................... 7,065
--------
Net expenses ................................................ $ 5,420
--------
Net investment income ...................................... $ 15,162
========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
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STATEMENT OF CHANGES IN NET ASSETS
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Six Months Ended
June 30, 1995 Year Ended
(Unaudited) December 31,1994
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Increase (decrease) in net assets:
Operations -
Net investment income ...................... $ 15,162 $ 18,611
-------- --------
Distributions to shareholders from net investment
income ........................................ $(18,550) $(12,785)
-------- --------
Capital share transactions -
Net asset value of shares issued to
shareholders in reinvestment of
distributions ............................. $ 18,550 $ 12,785
Cost of shares reacquired ................... (30,003) (88,185)
-------- --------
Decrease in net assets from capital share
transactions .............................. $(11,453) $(75,400)
-------- --------
Net decrease in net assets ............... $(14,841) $(69,574)
Net assets:
Beginning of period ......................... 730,949 800,523
-------- --------
End of period (including undistributed net
investment income of $15,223 and
$18,611, respectively) .................... $716,108 $730,949
======== ========
See notes to financial statements
<PAGE>
FINANCIAL STATEMENTS - continued
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<TABLE>
FINANCIAL HIGHLIGHTS
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<CAPTION>
Six
Months
Ended
June 30, Year Ended December 31,
1995 ----------------------------------------------------------------
(Unaudited) 1994 1993 1992 1991 1990
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<S> <C> <C> <C> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value -
beginning of period ...... $3.98 $3.95 $3.96 $4.08 $4.04 $4.09
----- ----- ----- ----- ----- -----
Income from investment
operations -
Net investment income . $0.08 $0.10 $0.06 $0.07 $0.18 $0.26
Distributions from net
investment income ........ (0.10) (0.07) (0.07) (0.19) (0.14) (0.31)
----- ----- ----- ----- ----- -----
Net asset value - end of
period ................... $3.96 $3.98 $3.95 $3.96 $4.08 $4.04
===== ===== ===== ===== ===== =====
Total return 2.11%+ 2.40% 1.64% 1.70% 4.54% 6.60%
Ratios (to average net assets)/
Supplemental data#:
Expenses ................ 1.50%* 1.50% 1.50% 1.50% 1.50% 1.50%
Net investment income ... 4.21%* 2.42% 1.51% 1.75% 4.35% 6.68%
Net assets, end of period
(000 omitted) ............ $716 $731 $801 $865 $950 $1,061
# The investment adviser did not impose a portion of its fee for all periods shown. If these fees had been
incurred by the Fund, the net investment income per share and the ratios would have been:
Net investment
income (expense): $0.04 $0.01 $(0.06) $(0.19) $(0.02) $0.09
Ratios (to average
net assets):
Expenses 3.46%* 3.78% 4.30% 7.72% 6.04% 5.51%
Net investment
income (expense) 2.25%* 0.14% (1.29)% (4.47)% (0.19)% 2.67%
* Annualized.
+ Not annualized.
</TABLE>
See notes to financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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(1) SIGNIFICANT ACCOUNTING POLICIES
Sun Growth Variable Annuity Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. Shares of the Fund are sold only to variable
accounts established by Sun Life Assurance Company of Canada (U.S.) (Sun Life
(U.S.)) to fund benefits under variable contracts issued by the company. The
following is a summary of significant accounting policies consistently followed
by the Fund in the preparation of its financial statements.
A. Investment Valuations -- Short-term obligations, which mature in 60 days
or less, are valued at amortized cost, which approximates value.
B. Tax Matters and Distributions -- The Fund's policy is to comply with the
provisions of the Internal Revenue Code applicable to regulated
investment companies and to distribute to shareholders all of its
taxable income. Accordingly, no provision for federal income or excise
tax is necessary.
The Fund distinguishes between distributions on a tax basis and
financial reporting basis and requires that only distributions in excess
of tax basis earnings and profits be reported in the financial
statements as a return of capital. Differences in the recognition or
classification of income between the financial statements and tax
earnings and profits which result in temporary over-distributions for
financial statement purposes, are classified as distributions in excess
of net investment income or accumulated net realized gains.
C. Other -- Security transactions are accounted for on the trade date.
Interest income is recorded on the accrual basis. Distributions to
shareholders are recorded on the ex-dividend date.
(2) TRANSACTIONS WITH AFFILIATE
The Fund has an investment advisory agreement with Massachusetts Financial
Services Company (the Adviser), a wholly owned subsidiary of Sun Life (U.S.), to
provide overall investment advisory and administrative services. The agreement
provides that the Fund will pay the Adviser a fee computed and paid monthly at
an annual rate of 0.5% of the Fund's average daily net assets. For the six
months ended June 30, 1995, the Adviser's fee amounted to $1,807. The agreement
also provides that the Adviser will pay certain Fund expenses in excess of
1 1/2% of the first $30,000,000 of the average daily net assets plus 1% of the
remaining average daily net assets of the Fund for any calendar year. For the
six months ended June 30, 1995, the Adviser will reimburse the Fund $7,065.
The Fund pays no compensation to its officers or directors who are officers
of the Adviser, or Sun Life (U.S.).
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - continued
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(3) PORTFOLIO SECURITIES
Purchases of short-term obligations for the six months ended June 30, 1995
totaled $4,200,204. Sales and maturities of short-term obligations totaled
$4,225,000.
(4) CAPITAL STOCK
Transactions in capital stock for the period ended June 30, 1995 and for the
years ended December 31, 1994 and 1993, were as follows:
Six Months Ended Year Ended December 31,
June 30, 1995 -------------------------
(Unaudited) 1994 1993
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Shares outstanding, beginning of period 183,644 202,731 218,302
------- ------- -------
Shares issued to shareholders in
reinvestment of distributions 4,720 3,269 4,038
Shares reacquired (7,548) (22,356) (19,609)
------- ------- -------
Net decrease (2,828) (19,087) (15,571)
------- ------- -------
Shares outstanding, end of period 180,816 183,644 202,731
======= ======= =======
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This report is prepared for the general information of shareholders. It is
authorized for distribution to prospective investors only when preceded or
accompanied by a current prospectus.
