PROSPECTUS

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DECEMBER 30, 2004

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SUN LIFE FINANCIAL MASTERS^SM REWARD NY

Sun Life Insurance and Annuity Company of New York and Sun Life (N.Y.) Variable Account C offer the flexible payment deferred annuity contracts described in this Prospectus to groups and individuals.

You may choose among a number of variable investment options and fixed interest options. The variable options are Sub-Accounts in the Variable Account, each of which invests in shares of one of the following funds (the "Funds"):

Large-Cap Value Equity Funds	Mid-Cap Value Equity Funds (continued)
Franklin Templeton VIP Trust Templeton Foreign	MFS/ Sun Life Utilities - S Class
Securities Fund, Class 2	Sun Capital Real Estate Fund(R) - S Class
Lord Abbett Series Fund All Value Portfolio	Mid-Cap Growth Equity Funds
Lord Abbett Series Fund Growth & Income Portfolio	Lord Abbett Series Fund Growth Opportunities
MFS/Sun Life Total Return - S Class	Portfolio
MFS/ Sun Life Value - S Class	Small-Cap Value Equity Funds
Large-Cap Blend Equity Funds	Franklin Templeton VIP Trust Franklin Small Cap
Franklin Templeton VIP Trust Templeton Growth	Value Securities Fund, Class 2
Securities Fund - Class 2	Small-Cap Blend Funds
MFS/ Sun Life Capital Opportunities - S Class	Oppenheimer Main Street Small Cap Fund/VA
MFS/ Sun Life Massachusetts Investors Trust	- Service Shares
- S Class	Small-Cap Growth Equity Funds
MFS/ Sun Life Research - S Class	MFS/ Sun Life New Discovery - S Class
MFS/ Sun Life Research International - S Class	High-Quality Short-Term Bond Funds
Oppenheimer Main Street Fund/VA - Service Shares	PIMCO VIT Low Duration Portfolio
Large-Cap Growth Equity Funds	High-Quality Intermediate-Term Bond Funds
MFS/ Sun Life Emerging Growth - S Class	MFS/ Sun Life Government Securities - S Class
MFS/ Sun Life Massachusetts Investors Growth	Sun Capital Investment Grade Bond Fund(R)
Stock - S Class	- S Class
MFS/ Sun Life Strategic Growth - S Class	PIMCO VIT Total Return Portfolio
Oppenheimer Global Securities Fund/VA --	High-Quality Long-Term Bond Funds
Service Shares	PIMCO VIT Real Return Portfolio
Oppenheimer Capital Appreciation Fund/VA -	Medium-Quality Intermediate-Term Bond Funds
Service Shares	Low-Quality Short-Term Bond Fund
Sun CapitalSM All Cap Fund - S Class	MFS/ Sun Life High Yield - S Class
Mid-Cap Value Equity Funds	PIMCO VIT Emerging Markets Bond Portfolio
Franklin Templeton VIP Trust Mutual	Money Market Fund
Shares Securities Fund, Class 2	MFS/ Sun Life Money Market - S Class
Lord Abbett Series Fund Mid Cap Value Portfolio

Franklin^(R) Advisers, Inc. advises Franklin Small Cap Value Securities Fund. Franklin^(R) Mutual Advisers, LLC advises Mutual Shares Securities Fund. Lord, Abbett & Co. LLC advises the Lord Abbett Series Fund Portfolios. Massachusetts Financial Services Company advises the MFS/Sun Life Funds. Pacific Investment Management Company LLC advises the PIMCO VIT Portfolios. OppenheimerFunds, Inc. advises the Oppenheimer Funds. Sun Capital Advisers, Inc. advises the Sun Capital Funds. Templeton^(R) Investment Counsel, LLC advises Templeton Foreign Securities Fund. Templeton^(R) Investment Counsel, LLC advises Templeton Growth Securities Fund.

The fixed account options are available for specified time periods, called Guarantee Periods, and pay interest at a guaranteed rate for each period.

Please read this Prospectus and the Fund prospectuses carefully before investing and keep them for future reference. They contain important information about the Contracts and the Funds.

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We have filed a Statement of Additional Information dated December 30, 2004 (the "SAI") with the Securities and Exchange Commission (the "SEC"), which is incorporated by reference in this Prospectus. The table of contents for the SAI is on page 45 of this Prospectus. You may obtain a copy without charge by writing to us at the address shown below (which we sometimes refer to as our "Annuity Service Address") or by telephoning (800) 447-7569. In addition, the SEC maintains a website (http://www.sec.gov) that contains the SAI, material incorporated by reference, and other information regarding companies that file with the SEC.

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The Contracts are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other agency.

The SEC has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense.

Expenses associated with contracts offering a bonus credit may be higher than those associated with contracts that do not offer a bonus credit. The bonus credit may be more than offset by the charges associated with the credit.

Any reference in this Prospectus to receipt by us means receipt at the following service address:

Sun Life Insurance and Annuity Company New York

P.O. Box 9133

Wellesley Hills, Massachusetts 02481

TABLE OF CONTENTS

Special Terms *

Product Highlights *

Example *

Condensed Financial Information *

The Annuity Contract *

Communicating to Us About Your Contract *

Sun Life Insurance And Annuity Company of New York *

The Variable Account *

Variable Account Options: The Funds *

The Fixed Account *

The Fixed Account Options: The Guarantee Periods *

The Accumulation Phase *

Issuing Your Contract *

Amount and Frequency of Purchase Payments *

Allocation of Net Purchase Payments *

Your Account Value *

Purchase Payment Interest *

Variable Account Value *

Fixed Account Value *

Transfer Privilege *

Waivers; Reduced Charges; Credits; Bonus Guaranteed Interest Rates *

Other Programs *

Withdrawals, Withdrawal Charge and Market Value Adjustment *

Cash Withdrawals *

Withdrawal Charge *

Types of Withdrawals Not Subject to Withdrawal Charge *

Market Value Adjustment *

Contract Charges *

Account Fee *

Administrative Expense Charge and Distribution Fee *

Mortality and Expense Risk Charge *

Charges for Optional Benefit Riders *

Premium Taxes *

Fund Expenses *

Optional Living Benefit Rider: Secured Returns 2 Benefit *

Tax Issues *

Guaranteed Minimum Accumulation Benefit ("AB") Plan *

Guaranteed Minimum Withdrawal Benefit ("WB") Plan *

Availability *

Cost of the Benefit *

Withdrawals Under the Secured Returns 2 Benefit *

Cancellation of the Secured Returns 2 Benefit *

Revocation of the Secured Returns 2 Benefit *

Step-Up of GLB Amount *

Subsequent Purchase Payments After a Step-Up of GLB Amount *

Renewal of the Secured Returns 2 Benefit *

Refund of Rider Charges under the AB Plan *

Participant's Death Under the AB Plan *

Participant's Death Under the WB Plan *

Death Benefit *

Amount of Death Benefit *

The Basic Death Benefit *

Optional Death Benefit Rider *

Spousal Continuance *

Calculating the Death Benefit *

Method of Paying Death Benefit *

Non-Qualified Contracts *

Selection and Change of Beneficiary *

Payment of Death Benefit *

The Income Phase -- Annuity Provisions *

Selection of Annuitant(s) *

Selection of the Annuity Commencement Date *

Annuity Options *

Selection of Annuity Option *

Amount of Annuity Payments *

Exchange of Variable Annuity Units *

Account Fee *

Annuity Payment Rates *

Annuity Options as Method of Payment for Death Benefit *

Other Contract Provisions *

Exercise of Contract Rights *

Change of Ownership *

Voting of Fund Shares *

Periodic Reports *

Substitution of Securities *

Change in Operation of Variable Account *

Splitting Units *

Modification *

Reservation of Rights *

Right to Return *

Tax Considerations *

Deductibility of Purchase Payments *

Pre-Distribution Taxation of Contracts *

Distributions and Withdrawals from Non-Qualified Contracts *

Distributions and Withdrawals from Qualified Contracts *

Withholding *

Investment Diversification and Control *

Tax Treatment of the Company and the Variable Account *

Qualified Retirement Plans *

Pension and Profit-Sharing Plans *

Tax-Sheltered Annuities *

Individual Retirement Accounts *

Roth IRAs *

Impact of Optional Death Benefit and Secured Returns 2 Benefit Riders *

Administration of the Contracts *

Distribution of the Contracts *

Performance Information *

Available Information *

Incorporation of Certain Documents by Reference *

State Regulation *

Legal Proceedings *

Financial Statements *

Table of Contents of Statement of Additional Information *

Appendix A - Glossary *

Appendix B - Calculation of Withdrawal Charges and Market Value Adjustment *

Appendix C - Calculation of Basic Death Benefit *

Appendix D - Calculation for Purchase Payment Interest (Bonus Credit) *

Appendix E - Secured Returns 2 Benefit Examples *

SPECIAL TERMS

Your Contract is a legal document that uses a number of specially defined terms. We explain most of the terms that we use in this Prospectus in the context where they arise, and some are self-explanatory. In addition, for convenient reference, we have compiled a list of these terms in the Glossary included at the back of this Prospectus as Appendix A. If, while you are reading this Prospectus, you come across a term that you do not understand, please refer to the Glossary for an explanation.

PRODUCT HIGHLIGHTS

The headings in this section correspond to headings in the Prospectus under which we discuss these topics in more detail.

The Annuity Contract

The Sun Life Financial Masters^SM Reward NY Fixed and Variable Annuity Contract provides a number of important benefits for your retirement planning. During the Accumulation Phase, you make Payments under the Contract and allocate them to one or more Variable Account or Fixed Account options. During the Income Phase, we make annuity payments to you or someone else based on the amount you have accumulated. The Contract provides tax-deferral so that you do not pay taxes on your earnings until you withdraw them. The Contract provides no additional tax-deferral benefits to Contracts purchased under Qualified Retirement Plans. The Contract also provides a basic death benefit if you die during the Accumulation Phase. You may enhance the basic death benefit by purchasing an optional death benefit rider.

The Accumulation Phase

Under most circumstances, you can buy the Contract with an initial Purchase Payment of $10,000 or more, and you can make additional Purchase Payments at any time during the Accumulation Phase. Currently, there is no minimum amount required for additional Purchase Payments. However, we reserve the right to limit additional Purchase Payments to at least $1,000. We will not normally accept a Purchase Payment if your Account Value is over $2 million or, if the Purchase Payment would cause your Account Value to exceed $2 million. In addition, we will credit your Contract with Purchase Payment Interest at a rate of 2% of each Purchase.

Variable Account Options: The Funds

You can allocate your Purchase Payments among Sub-Accounts investing in a number of Fund options. Each Fund is either a mutual fund registered under the Investment Company Act of 1940 or a separate series of shares of such a mutual fund. The investment returns on the Funds are not guaranteed. You can make or lose money. You can make transfers among the Funds and the Fixed Account Options.

The Fixed Account Options: The Guarantee Periods

You can allocate your Purchase Payments to the Fixed Account and elect to invest in one or more of the Guarantee Periods we make available from time to time. Each Guarantee Period earns interest at a Guaranteed Interest Rate that we publish. We may change the Guaranteed Interest Rate from time to time, but no Guaranteed Interest Rate will ever be less than the minimum guaranteed rate permitted by law. Once we have accepted your allocation to a particular Guarantee Period, we promise that the Guaranteed Interest Rate applicable to that allocation will not change for the duration of the Guarantee Period. We may offer Guarantee Periods of different durations or stop offering some Guarantee Periods. Once we stop offering a Guarantee Period of a particular duration, future allocations, transfers or renewals into that Guarantee Period will not be permitted.

Fees and Expenses

The Contract has insurance features and investment features, and there are costs related to each.

If your Account Value is less than $100,000 on your Contract Anniversary, we deduct a $30 Annual Account Fee. We will waive the Account Fee if your Contract was fully invested in the Fixed Account during the entire Contract Year.

We deduct a mortality and expense risk charge of 1.40% of the average daily value of the Contract invested in the Variable Account, if you are under 76 years of age on the Open Date, or 1.60% if you were 76 years or older on the Open Date. We also deduct an administrative charge of 0.15% of the average daily value and a distribution charge of 0.15% of the average daily value of the Contract invested in the Variable Account.

If you take more than a specified amount of money out of your Contract, we assess a withdrawal charge against each Purchase Payment withdrawn. The withdrawal charge (also known as a "contingent deferred sales charge") starts at 7% in the first Contract Year and declines to 0% after seven complete years.

Currently, you can make 12 free transfers each year; however, we reserve the right to impose a charge of up to $15 per transfer.

If you elect the optional death benefit rider, we will deduct, during the Accumulation Phase, an additional charge from the assets of the Variable Account equal to 0.20% of the average daily value of your Contract.

In addition to the charges we impose under the Contract, there are also charges (which include management fees and operating expenses) imposed by the Funds. The charges vary depending upon which Fund(s) you have selected.

Optional Living Benefit Rider: Secured Returns 2 Benefit

The Secured Returns 2 Benefit ("Secured Returns 2") guarantees a return of your initial Purchase Payment plus portions of your subsequent Purchase Payments (adjusted for withdrawals), regardless of the investment performance of the underlying funds, provided that you comply with certain Benefit requirements. The amount guaranteed is known as the "GLB amount." You may choose to receive your Secured Returns 2 Benefit under one of two plans. Under the terms of the Guaranteed Minimum Accumulation Benefit Plan, on your 10th Contract Anniversary, or some later date if you choose to "step-up" your GLB amount, we will credit your Account Value with any excess of your GLB amount over your Account Value after the application of any other Contract transactions. (A step-up of the GLB amount to your current Account Value may be made any time after your fifth Contract Anniversary.) Under this Plan, if your Account Value is greater than or equal to your GLB amount on the date the Plan matures, we will refund the charges you paid for the Benefit. Under the terms of the Guaranteed Minimum Withdrawal Benefit Plan, you may withdraw up to a set dollar amount from your Account Value each year until your GLB amount equals zero. The Secured Returns 2 Benefit is available only if you are age 79 or younger on the Open Date. If you annuitize, this Benefit terminates.

The Income Phase: Annuity Provisions

If you want to receive regular income from your annuity, you can select one of several Annuity Options. You can choose to receive annuity payments from either the Fixed Account or from the available Variable Account options. If you choose to have any part of your annuity payments come from the Variable Account, the dollar amount of the payments may fluctuate with the performance of the Funds. You decide when your Income Phase will begin but, once it begins, you cannot change your choice of annuity payment options.

Death Benefit

If you die before the Contract reaches the Income Phase, the Beneficiary will receive a death benefit. The amount of the death benefit depends upon whether you choose the basic death benefit or, for a fee, the optional death benefit rider. The basic death benefit pays the greatest of your Account Value, your total Purchase Payments (adjusted for withdrawals), or your Surrender Value, all calculated as of your Death Benefit Date. You may enhance the basic death benefit by electing the optional death benefit rider. The Maximum Anniversary Account Value Rider pays the greater of your basic death benefit or your highest Account Value on any Contract Anniversary before your 81st birthday. You must make your election before the date on which your Contract becomes effective. The rider is only available if you are younger than 80 on the Open Date. The optional death benefit rider election may not be changed after your Contract is issued.

Withdrawals, Withdrawal Charge and Market Value Adjustment

You can withdraw money from your Contract during the Accumulation Phase. You may withdraw a portion of your Account Value each year without the imposition of a withdrawal charge. This "free withdrawal amount" equals the amount of all Purchase Payments made and not withdrawn prior to the last 7 Contract Years plus the greater of (1) your Contract's earnings in the prior Contract Year and (2) 10% of all Purchase Payments made in the last 7 Contract Years. All other Purchase Payments are subject to the withdrawal charge. Withdrawals made from the Fixed Accunt may also be subject to a Market Value Adjustment (see "Market Value Adjustment.") You may also have to pay income taxes and tax penalties on money you withdraw.

Right to Return

Your Contract contains a "free look" provision. If you cancel your Contract within 10 days after receiving it, we will send you the Account Value less any "adjusted" purchase payment interest, (please see "Right to Return" under "Other Contract Provisions" below for the calculation of Adjusted Purchase Payment Interest) as of the day we receive your cancellation request. (This amount may be more or less than the original Purchase Payment). We will not deduct a withdrawal charge or a Market Value Adjustment.

Tax Considerations

Your earnings are not taxed until you take them out. If you withdraw money during the Accumulation Phase, earnings come out first and are taxed as income. If you are younger than 59 1/2 when you take money out, you may be charged a 10% federal tax penalty.

If you have any questions about your Contract or need more information, please contact us at:

          Sun Life Insurance and Annuity Company of New York

          P. O. Box 9133

          Wellesley Hills, Massachusetts 02481

          Toll Free (800) 447-7569

FEES AND EXPENSES

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Contract.

The first table describes the fees and expenses that you will pay at the time that you buy the Contract, surrender the Contract, or transfer cash value between investment options.

Contract Owner Transaction Expenses

Sales Load Imposed on Purchases (as a percentage of purchase payments):	0%
Maximum Withdrawal Charge (as a percentage of purchase payments):	7%*
Maximum Fee Per Transfer (currently $0):	$15**
Premium Taxes
(as a percentage of Certificate Value or total purchase payments):	0% - 3.5%***

*	Number of Complete Contract Years Since Purchase Payment has been in the Account	Surrender Charge
	0-1	7%
	1-2	6%
	2-3	5%
	3-4	4%
	4-5	3%
	5-6	2%
	6-7	1%
	7 or more	0%

	A portion of your Account may be withdrawn each year without imposition of any withdrawal charge and, after a Purchase Payment has been in your Account for 7 Contract Years, it may be withdrawn free of the withdrawal charge. (See "Withdrawal Charges.")
**	Currently, we impose no fee upon transfers; however, we reserve the right to impose a fee of up to $15 per transfer. We do impose certain restrictions upon the number and frequency of transfers. (See "Transfer Privilege.")
***	The premium tax rate and base vary by your state of residence and the type of Certificate you own. Currently, we deduct premium taxes from Certificate Value upon full surrender (including a surrender for the death benefit) or annuitization. See "Contract Charges -- Premium Taxes."

The next table describes the fees and expenses that you will pay periodically during the time that you own the Contract, not including Fund fees and expenses.

Annual Account Fee $ 30*

Variable Account Annual Expenses

(as a percentage of net Variable Account assets)**

Mortality and Expense Risks Charge:	1.60%***
Administrative Expenses Charge:	0.15%
Distribution Fee:	0.15%
Total Variable Account Annual Expenses (without optional benefits):	1.90%

Charges for Optional Features

Maximum Charge for Optional Death Benefit Rider (MAV)      (as a percentage of average daily net assets):	0.20%+
Maximum Charge for Optional Living Benefit Rider (Secured Returns 2)      (assessed at a quarterly rate of 0.125% of Account Value):	0.50%++
Total Variable Account Annual Expenses with Maximum Charge for Optional Death Benefit and Living Benefit Riders:	2.60%++

*	The Annual Account Fee is waived if your Account Value has been allocated only to the Fixed Account during the applicable Contract Year or if your Account Value is $100,000 or more on your Contract Anniversary. (See "Account Fee.")
**	All of the Variable Account Annual Expenses, except for the charges for the Optional Living Benefit Rider, are assessed as a percentage of Average daily net Variable Account assets. The charge for the Optional Living Benefit Rider is assessed on a quarterly basis at a rate of 0.125% of your Account Value (an annual rate of 0.50%).
***	If you are age 75 or younger on the Open Date, the mortality and expense risks charge will be 1.40% of average daily net Variable Account assets. After annuitization, the sum of the mortality and expense risks charge, the administrative expenses charge, and the distribution fee will never be greater than 1.70% of average daily net Variable Account assets, regardless of your age on the Open Date. (See "Mortality and Expense Risks Charge.")
+	The optional death benefit rider, know as the Maximum Account Anniversary Value rider ("MAV"), is described in detail under "Death Benefit."
++	The charge for the Optional Living Benefit can increase at the time of a step-up to an amount equal to the rider fee imposed on newly issued Contracts at that time. If your Optional Living Benefit is cancelled, you will continue to pay the charge for the Benefit until your 7th Contract Anniversary.

The next table shows the minimum and maximum total operating expenses charged by the Funds that you may pay periodically during the time that you own the Contract. More detail concerning each Fund's fees and expenses is contained in the prospectus for each Fund.

Total Annual Fund Operating Expenses		Minimum	Maximum
	(expenses as a percentage of average daily Fund net assets that are deducted from Fund assets, including management fees, distribution and/or service (12b-1) fees, and other expenses)
Prior to any fee waiver or expense reimbursement*		0.65%	23.69%

*

The expenses shown are for the year ended December 31, 2003, and do not reflect any fee waiver or expense reimbursement.

The advisers and/or other service providers of certain Funds have agreed to reduce their fees and/or reimburse the Funds' expenses in order to keep the Funds' expenses below specified limits. The expenses of certain Funds are reduced by contractual fee reduction and expense reimbursement arrangements that will remain in effect at least through May 1, 2005. Other Funds have voluntary fee reduction and/or expense reimbursement arrangements that may be terminated at any time. The minimum and maximum Total Annual Fund Operating Expenses for all Funds after all fee reductions and expense reimbursement arrangements are taken into consideration are 0.65% and 1.50%, respectively. Each fee reduction and/or expense reimbursement arrangement is described in the relevant Fund's prospectus.

THE ABOVE EXPENSES FOR THE FUNDS WERE PROVIDED BY THE FUNDS. WE HAVE NOT INDEPENDENTLY VERIFIED THE ACCURACY OF THE INFORMATION.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include contract owner transaction expenses, contract fees, variable account annual expenses, and Fund fees and expenses, and are based on a sample Contract with the maximum possible fees.

The Example assumes that you invest $10,000 in the Contract for the time periods indicated and that your Contract includes the maximum charges for optional benefits. If these optional benefits were not elected or fewer options were elected, the expense figures shown below would be lower. The Example also assumes that your investment has a 5% return each year and assumes the maximum fees and expenses of any of the Funds. For purposes of converting the annual contract fee to a percentage, the Example assumes an average Contract size of $50,000. In addition, this Example assumes no transfers were made and no premium taxes were deducted. If these arrangements were considered, the expenses shown would be higher. This Example also does not take into consideration any fee waiver or expense reimbursement arrangement of the Funds. If these arrangements were taken into consideration, the expenses shown would be lower.

Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

(1) If you surrender your Contract at the end of the applicable time period:

1 year	3 years	5 years	10 years
$2,895	$5,977	$7,937	$10,283

(2) If you annuitize your Contract or if you do not surrender your Contract at the end of the applicable time period:

1 year	3 years	5 years	10 years
$2,404	$5,779	$7,873	$10,283

The fee table and example should not be considered a representation of past or future expenses and charges of the Sub-accounts. Your actual expenses may be greater or less than those shown. The example does not include the deduction of state premium taxes, which may be assessed upon full surrender, death or annuitization, or any taxes and penalties you may be required to pay if you surrender the Contract. Similarly, the 5% annual rate of return assumed in the example is not intended to be representative of past or future investment performance. For more information about Fund expenses, including a description of any applicable fee waiver or expense reimbursement arrangement, see the prospectuses for the Funds.

CONDENSED FINANCIAL INFORMATION

The Contracts described in this Prospectus have not previously been made available for sale, and may include fees and charges that are different from our other variable annuity contracts. These differences will produce differing Accumulation Unit values. Therefore, no condensed financial information is included in this Prospectus. The financial statements for Sun Life Assurance Company of Canada (U.S.) and those for the Variable Account are in the Statement of Additional Information.

THE ANNUITY CONTRACT

Sun Life Insurance and Annuity Company of New York and Sun Life (N.Y.) Variable Account C (the "Variable Account") offer the Contract on an individual basis in connection with retirement planning. We issue the Contract directly to the individual Owner of the Contract.

In this Prospectus, unless we state otherwise, we address Owners of Contracts as "you." For the purpose of determining benefits under the Contracts, we establish an Account for each Owner, which we will refer to as "your" Account.

Your Contract provides a number of important benefits for your retirement planning. It has an Accumulation Phase, during which you make Payments under the Contract and allocate them to one or more Variable Account or Fixed Account options, and an Income Phase, during which we make annuity payments based on the amount you have accumulated. Your Contract provides tax deferral, so that you do not pay taxes on your earnings under your Contract until you withdraw them. It provides a basic death benefit if you die during the Accumulation Phase; you may enhance the basic death benefit by electing the optional death benefit rider and paying an additional charge for the optional death benefit rider. Finally, if you so elect, during the Income Phase we will make annuity payments to you or someone else for life or for another period that you choose.

You choose these benefits on a variable or fixed basis or a combination of both. When you choose Variable Account investment options or a Variable Annuity option, your benefits will be responsive to changes in the economic environment, including inflationary forces and changes in rates of return available from different types of investments. With these variable options, you assume all investment risk under your Contract. When you choose a Guarantee Period in our Fixed Account or a Fixed Annuity option, we assume the investment risk, except in the case of early withdrawals in the Accumulation Phase, where you bear the risk of unfavorable interest rate changes. You may also bear the risk that the interest rates we will offer in the future and the rates we will use in determining your Fixed Annuity may not exceed our minimum guaranteed rate. Our minimum guaranteed interest rate will never be less than that permitted by law.

The Contract is designed for use in connection with personal retirement and deferred compensation plans, some of which qualify for favorable federal income tax treatment under Sections 401, 403, 408 or 408A of the Internal Revenue Code. The Contract is also designed so that it may be used in connection with certain non-tax-qualified retirement plans, such as payroll savings plans and such other groups (trusteed or non-trusteed) as may be eligible under applicable law. We refer to Contracts used with plans that receive favorable tax treatment as "Qualified Contracts," and all other Contracts as "Non-Qualified Contracts."

COMMUNICATING TO US ABOUT YOUR CONTRACT

All materials sent to us, including Purchase Payments, must be sent to our Annuity Service Address as set forth on the first page of this Prospectus. For all telephone communications, you must call (800) 447-7569.

Unless this Prospectus states differently, we will consider all materials sent to us and all telephone communications to be received on the date we actually receive them at our Annuity Service Address. However, we will consider all financial transactions, including Purchase Payments, withdrawal requests and transfer instructions, to be received on the next Business Day if we receive them (1) on a day that is not a Business Day or (2) after 4:00 p.m., Eastern Time.

When we specify that notice to us must be in writing, we reserve the right, at our sole discretion, to accept notice in another form.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

We are a stock life insurance company incorporated under the laws of New York on May 25, 1983. We do business primarily in New York. Our Home Office is located at 60 East 42nd Street, Suite 1115, New York, New York 10165.

We are an indirect, wholly-owned subsidiary of Sun Life Assurance Company of Canada ("Sun Life (Canada)"). Sun Life (Canada) completed its demutualization on March 22, 2000. As a result of the demutualization, a new holding company, Sun Life Financial, Inc. ("Sun Life Financial"), is now the ultimate parent of Sun Life (Canada) and the Company. Sun Life Financial, a corporation organized in Canada, is a reporting company under the Securities Exchange Act of 1934 with common shares listed on the Toronto, New York, and Philippine stock exchanges.

THE VARIABLE ACCOUNT

We established the Variable Account as a separate account on October 18, 1985, pursuant to a resolution of our Board of Directors. The Variable Account funds the Contract and various other variable annuity and variable life insurance product contracts are offered by the Company and other affiliated and unaffiliated offerors. These other products may have features, benefits and charges that are different from those under the Contract.

Under New York insurance law and the Contract, the income, gains or losses of the Variable Account are credited to or charged against the assets of the Variable Account without regard to the other income, gains, or losses of the Company. These assets are held in relation to the Contracts and other variable annuity and variable life insurance contracts that provide benefits that vary in accordance with the investment performance of the Variable Account. Although the assets maintained in the Variable Account will not be charged with any liabilities arising out of any other business we conduct, all obligations arising under the Contracts, including the promise to make annuity payments, are general corporate obligations of the Company.

The assets of the Variable Account are divided into Sub-Accounts. Each Sub-Account invests exclusively in shares of a specific Fund. All amounts allocated to the Variable Account will be used to purchase Fund shares as designated by you at their net asset value. Any and all distributions made by the Funds with respect to the shares held by the Variable Account will be reinvested to purchase additional Fund shares at their net asset value. Deductions from the Variable Account for cash withdrawals, annuity payments, death benefits, Account Fees, Contract charges against the assets of the Variable Account for the assumption of mortality and expense risks, administrative expenses, optional benefit riders, and any applicable taxes will, in effect, be made by redeeming the number of Fund shares at their net asset value equal in total value to the amount to be deducted. The Variable Account will be fully invested in Fund shares at all times.

VARIABLE ACCOUNT OPTIONS: THE FUNDS

The Contract offers Sub-Accounts that invest in a number of Fund investment options. Each Fund is a mutual fund registered under the Investment Company Act of 1940, or a separate series of shares of such a mutual fund.

More comprehensive information about the Funds, including a discussion of their management, investment objectives, expenses, and potential risks, is found in the current prospectuses for the Funds (the "Fund Prospectuses"). The Fund Prospectuses should be read in conjunction with this Prospectus before you invest. A copy of each Fund Prospectus, as well as a Statement of Additional Information for each Fund, may be obtained without charge from the Company by calling 1-800-447-7569 or by writing to Sun Life Insurance and Annuity Company of New York, P.O. Box 9133, Wellesley Hills, Massachusetts 02481.

The Funds may also be available to registered separate accounts offering variable annuity and variable life products of other affiliated and unaffiliated insurance companies, as well as to the Variable Account and other separate accounts of the Company. Although we do not anticipate any disadvantages to this, there is a possibility that a material conflict may arise between the interests of the Variable Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of the Owners and Payees and those of other companies, or some other reason. In the event of conflict, we will take any steps necessary to protect Owners and Payees, including withdrawal of the Variable Account from participation in the underlying Funds which are involved in the conflict or substitution of shares of other Funds.

Certain of the investment advisers, transfer agents, or underwriters to the Funds may reimburse us for administrative costs in connection with administering the Funds as options under the Contracts. These amounts are not charged to the Funds or Owners, but are paid from assets of the advisers, transfer agents, or underwriters, except for the administrative costs of the Lord Abbett Series Trust Portfolios, which are paid from Fund assets and reflected under "Fees and Examples."

Certain publicly available mutual funds may have similar investment goals and principal investment policies and risks as one or more of the Funds, and may be managed by a Fund's portfolio manager(s). While a Fund may have many similarities to these other funds, its investment performance will differ from their investment performance. This is due to a number of differences between a Fund and these similar products, including differences in sales charges, expense ratios and cash flows.

THE FIXED ACCOUNT

The Fixed Account is made up of all the account assets of the Company other than those allocated to any separate account. Amounts you allocate to Guarantee Periods become part of the Fixed Account and are available to fund the claims of all classes of our customers, including claims for benefits under the Contracts.

We will invest the assets of the Fixed Account in those assets we choose that are allowed by New York State insurance laws. In general, these laws permit investments, within specified limits and subject to certain qualifications, in federal, state and municipal obligations, corporate bonds, preferred and common stocks, real estate mortgages, real estate and certain other investments. We intend to invest primarily in investment-grade fixed income securities (i.e., rated by a nationally recognized rating service within the 4 highest grades) or instruments we believe are of comparable quality.

We are not obligated to invest amounts allocated to the Fixed Account according to any particular strategy, except as may be required by applicable New York State insurance laws. You will not have a direct or indirect interest in the Fixed Account investments.

THE FIXED ACCOUNT OPTIONS: THE GUARANTEE PERIODS

You may elect one or more Guarantee Periods from those we make available from time to time. We may offer Guarantee Periods of different durations or stop offering some Guarantee Periods. Once we stop offering a Guarantee Period of a particular duration, allocations, transfers or renewals into that Guarantee Period will not be permitted. In addition, we reserve the right not to make any Guarantee Periods available. In such event, renewals will be made into the Money Market Sub-Account. We may choose to exercise this right before the Open Date or at some later time. At any time, we can reverse our decision to exercise this right.

We determine Guaranteed Interest Rates at our discretion. We do not have a specific formula for establishing the rates for different Guarantee Periods. Our determination will be influenced by the interest rates on fixed income investments in which we may invest amounts allocated to the Guarantee Periods. We will also consider other factors in determining these rates, including regulatory and tax requirements, sales commissions and administrative expenses borne by us, general economic trends and competitive factors. We cannot predict the level of future interest rates.

We may from time to time at our discretion offer special interest rates for new Purchase Payments that are higher than the rates we are then offering for renewals or transfers.

Early withdrawals from your allocation to a Guarantee Period, including cash withdrawals, transfers and commencement of an annuity option, may be subject to a Market Value Adjustment, which could decrease or increase the value of your Account. See "Withdrawals, Withdrawal Charge and Market Value Adjustment."

THE ACCUMULATION PHASE

During the Accumulation Phase of your Contract, you make payments into your Account, and your earnings accumulate on a tax-deferred basis. The Accumulation Phase begins with our acceptance of your first Purchase Payment and ends the Business Day before your Annuity Commencement Date. The Accumulation Phase will end sooner if you surrender your Contract or if the Covered Person dies before the Annuity Commencement Date.

Issuing Your Contract

When we accept your Application, we "open" the Contract. We refer to this date as the "Open Date." When we receive your initial Purchase Payment, we "issue" your Contract. We refer to this date as the "Issue Date."

We will credit your initial Purchase Payment to your Account within 2 Business Days of receiving your completed Application. If your Application is not complete, we will notify you. If we do not have the necessary information to complete the Application within 5 Business Days, we will send your money back to you or ask your permission to retain your Purchase Payment until the Application is made complete. Then we will apply the Purchase Payment within 2 Business Days of when the Application is complete.

Amount and Frequency of Purchase Payments

The amount of Purchase Payments may vary; however, we will not accept an initial Purchase Payment of less than$10,000 and, although there is currently no minimum amount for additional Purchase Payments, we reserve the right to limit each additional Purchase Payment to at least $1,000. In addition, we will not accept a Purchase Payment if your Account Value is over $2 million, or if the Purchase Payment would cause your Account Value to exceed $2 million, unless we have approved the Payment in advance. We reserve the right to refuse Purchase Payments received more than 5 years after your Issue Date or after your 70th birthday, whichever is later. Within these limits, you may make Purchase Payments at any time during the Accumulation Phase.

Allocation of Net Purchase Payments

You may allocate your Purchase Payments among the different Sub-Accounts and Guarantee Periods currently available, but we reserve the right to limit any allocation to a Guarantee Period to at least $1,000.

In your Application, you may specify the percentage of each Purchase Payment to be allocated to each Sub-Account or Guarantee Period. These percentages are called your allocation factors. You may change the allocation factors for future Payments by sending us notice of the change as required. We will use your new allocation factors for the first Purchase Payment we receive with or after we have received notice of the change, and for all future Purchase Payments, until we receive another change notice.

Although it is currently not our practice, we may deduct applicable premium taxes or similar taxes from your Purchase Payments (see "Contract Charges -- Premium Taxes"). In that case, we will credit your Net Purchase Payment, which is the Purchase Payment minus the amount of those taxes.

Your Account

When we accept your first Purchase Payment, we establish an Account for you, which we maintain throughout the Accumulation Phase of your Contract.

Your Account Value

Your Account Value is the sum of the value of the 2 components of your Contract: the Variable Account portion of your Contract ("Variable Account Value") and the Fixed Account portion of your Contract ("Fixed Account Value"). These 2 components are calculated separately, as described under "Variable Account Value" and "Fixed Account Value."

Purchase Payment Interest

We will credit your Contract with a bonus based upon the amount of each Purchase Payment made during your first Contact Year. This interest, called "Purchase Payment Interest," is credited at 2% of each Purchase Payment received prior to the first Contract Anniversary. Thereafter, at the end of every Fifth Year Anniversary, we will credit your Contract with Purchase Payment Interest at a rate of 2% of the Account Value based upon the amount of Account Value remaining in Contract.

We credit Purchase Payment Interest during the same Valuation Period in which we receive the Purchase Payment. We allocate the Purchase Payment Interest to the Sub-Accounts and/or the Guarantee Periods in the same proportion as the Net Purchase Payment is allocated. For any Fifth-Year Anniversary credit, we allocate the credit on a pro rata basis to all Sub-Accounts and/or Guarantee Periods in which you are invested, excluding any Guarantee Periods established to support a dollar-cost averaging program. Any additional interest adjustments will be credited on your Contract Anniversary.

The Contracts are designed to give the most value to Owners with long-term investment goals. We will deduct the "Adjusted" Purchase Payment Interest if the Contract is returned during the "free look period." For a description of the free look period and Adjusted Purchase Payment Interest, see "Right to Return." For examples of how we calculate Purchase Payment Interest, see Appendix D.

Because the Contracts do not recapture any Purchase Payment Interest credited and because the Purchase Payment Interest more than offsets the additional annual Contract charges, a Contract Owner is usually better off with a bonus annuity than a similar annuity contract which has no bonus feature. In a few circumstances (for example, if the Contract Owner surrenders a Contract with a large Account Value immediately prior to the Fifth Year Anniversary), the net proceeds on a bonus annuity might be lower than on an annuity with no bonus feature. However, the Contracts are designed to give the most value to Contract Owners with long-term goals. You and your agent should decide if this Contract is right for you.

We may credit Purchase Payment Interest at rates other than those described above on Contracts sold to officers, directors and employees of the Company or its affiliates, registered representatives, and employees of broker-dealers with a current selling agreement with the Company and affiliates of such representatives and broker-dealers, employees of affiliated asset management firms, and persons who have retired from such positions ("Eligible Employees") and immediate family members of Eligible Employees. The Company expects to make a profit on Purchase Payment Interest from the mortality and expense risk charge.

See "Tax Considerations -- Qualified Retirement Plans," if this Contract is to be purchased in connection with a tax qualified plan under Section 401(a) of the Code or a tax deferred annuity arrangement under Section 403(b) of the Code.

Variable Account Value

     Variable Accumulation Units

In order to calculate your Variable Account Value, we use a measure called a Variable Accumulation Unit for each Sub-Account. Your Variable Account Value is the sum of your Account Value in each Sub-Account, which is the number of your Variable Accumulation Units for that Sub-Account times the value of each Unit.

     Variable Accumulation Unit Value

The value of each Variable Accumulation Unit in a Sub-Account reflects the net investment performance of that Sub-Account. We determine that value once on each day that the New York Stock Exchange is open for trading, at the close of trading, which is currently 4:00 p.m., Eastern Time. (The close of trading is determined by the New York Stock Exchange.) We also may determine the value of Variable Accumulation Units of a Sub-Account on days the Exchange is closed if there is enough trading in securities held by that Sub-Account to materially affect the value of the Variable Accumulation Units. Each day we make a valuation is called a "Business Day." The period that begins at the time Variable Accumulation Units are valued on a Business Day and ends at that time on the next Business Day is called a "Valuation Period." On days other than Business Days, the value of a Variable Accumulation Unit does not change.

To measure these values, we use a factor -- which we call the "Net Investment Factor" -- which represents the net return on the Sub-Account's assets. At the end of any Valuation Period, the value of a Variable Accumulation Unit for a Sub-Account is equal to the value of that Sub-Account's Variable Accumulation Units at the end of the previous Valuation Period, multiplied by the Net Investment Factor. We calculate the Net Investment Factor by dividing (1) the net asset value of a Fund share held in the Sub-Account at the end of that Valuation Period, plus the per share amount of any dividend or capital gains distribution made by that Fund during the Valuation Period, by (2) the net asset value per share of the Fund share at the end of the previous Valuation Period; then, for each day in the Valuation Period, we deduct a factor representing the asset-based insurance charges (the mortality and expense risk charges and the administrative expense charge) plus any applicable charge for optional benefit riders. See "Contract Charges."

For a hypothetical example of how we calculate the value of a Variable Accumulation Unit, see the Statement of Additional Information.

     Crediting and Canceling Variable Accumulation Units

When we receive an allocation to a Sub-Account, either from a Net Purchase Payment or a transfer of Account Value, we credit that amount to your Account in Variable Accumulation Units. Similarly, we cancel Variable Accumulation Units when you transfer or withdraw amounts from a Sub-Account, or when we deduct certain charges under the Contract. We determine the number of Units credited or canceled by dividing the dollar amount by the Variable Accumulation Unit value for that Sub-Account at the end of the Valuation Period during which the transaction or charge is effective.

Fixed Account Value

Your Fixed Account Value is the sum of all amounts allocated to Guarantee Periods, either from Net Purchase Payments, transfers or renewals, plus interest credited on those amounts, and minus withdrawals, transfers out of Guarantee Periods, and any deductions for charges under the Contract taken from your Fixed Account Value.

A Guarantee Period begins the day we apply your allocation and ends when all calendar years (or months if the Guarantee Period is less than one year) in the Guarantee Period (measured from the end of the calendar month in which the amount was allocated to the Guarantee Period) have elapsed. The last day of the Guarantee Period is its Expiration Date.

Each additional Purchase Payment, transfer or renewal credited to your Fixed Account Value will result in a new Guarantee Period with its own Expiration Date. Amounts allocated at different times to Guarantee Periods of the same duration may have different Expiration Dates.

     Crediting Interest

We credit interest on amounts allocated to a Guarantee Period at the applicable Guaranteed Interest Rate for the duration of the Guarantee Period. During the Guarantee Period, we credit interest daily at a rate that yields the Guaranteed Interest Rate on an annual effective basis.

     Guarantee Amounts

Each separate allocation you make to a Guarantee Period, together with interest credited thereon, is called a Guarantee Amount. Each Guarantee Amount is treated separately for purposes of determining the Market Value Adjustment. We may restrict a Guarantee Period that will extend beyond your Maximum Annuity Commencement Date. Renewals into a Guarantee Period that extends beyond your maximum Annuity Commencement Date will result in an application of a Market Value Adjustment upon annuitization or withdrawals. Each new allocation to a Guarantee Period must be at least $1,000.

     Renewals

We will notify you in writing between 45 and 75 days before the Expiration Date of any Guarantee Amount. If you would like to change your Fixed Account option, we must receive from you prior to the Expiration Date:

o written notice from you electing a different Guarantee Period from among those we then offer, or

o written instructions to transfer the Guarantee Amount to one or more Sub-Accounts, in accordance with the transfer privilege provisions of the Contract (see "Transfer Privilege").

If we receive no instructions from you prior to the Expiration Date, we will automatically renew your Fixed Account allocation into a new Guarantee Period of the same duration as the last Guarantee Period. If we are no longer offering a Guarantee Period of the same duration, we will automatically renew your Fixed Account allocation into the Money Market Sub-Account.

A Guarantee Amount will not renew into a Guarantee Period that will extend beyond your Maximum Annuity Commencement Date. In that case, unless you notify us otherwise, we will automatically renew your Guarantee Amount into the Money Market Sub-Account.

     Early Withdrawals

If you withdraw, transfer, or annuitize an allocation to a Guarantee Period more than 30 days prior to the Renewal Date, we will apply a Market Value Adjustment to the transaction. This could result in an increase or a decrease of your Account Value, depending on interest rates at the time. You bear the risk that you will receive less than your principal if the Market Value Adjustment applies.

Transfer Privilege

     Permitted Transfers

During the Accumulation Phase, you may transfer all or part of your Account Value to one or more Sub-Accounts or Guarantee Periods then available, subject to the following restrictions:

o You may not make more than 12 transfers in any Contract Year;

o The amount transferred from a Guarantee Period must be the entire Guarantee Amount, except for transfers of interest credited during the current Contract Year;

o At least 30 days must elapse between transfers to and from Guarantee Periods;

o At least 6 days must elapse between transfers to and from the Sub-Accounts;

o Transfers to or from Sub-Accounts are subject to terms and conditions that may be imposed by the Funds;

o We impose additional restrictions on market timers, which are further described below.

These restrictions do not apply to transfers made under any approved Optional Program. At our discretion, we may waive some or all of these restrictions. Additional restrictions apply to transfers made under the Secured Returns 2 Benefit. (See "Optional Living Benefit Rider: Secured Returns 2 Benefit.")

There is usually no charge imposed on transfers; however, we reserve the right to impose a transfer charge of $15 for each transfer. Transfers out of a Guarantee Period more than 30 days before the Renewal Date or any time after the Renewal Date will be subject to the Market Value Adjustment described below. Under current law, there is no tax liability for transfers.

     Requests for Transfers

You may request transfers in writing or by telephone. If the request is received before the earlier of (a) 4:00 p.m. Eastern Time on a Business Day, or (b) the close of the New York Stock Exchange on days that the Stock Exchange closes before 4:00 p.m., the transfer will be effective that day. Otherwise, your transfer request will be effective on the next Business Day. The telephone transfer privilege is available automatically, and does not require your written election. We will require personal identifying information to process a request for a transfer made by telephone. We will not be liable for following instructions communicated by telephone that we reasonably believe are genuine.

Your transfer request will be effective as of the close of the Business Day if we receive your transfer request before the earlier of (a) 4:00 p.m. Eastern Time on a Business Day, or (b) the close of the New York Stock Exchange on days that the Stock Exchange closes before 4:00 p.m. Otherwise, your transfer request will be effective on the next Business Day.

     Short-Term Trading

The Contracts are not designed for short-term trading. If you wish to employ such strategies, do not purchase a Contract. Transfer limits and other restrictions, described below, are subject to our ability to monitor transfer activity. Some Contract Owners and their third party intermediaries engaging in short-term trading may employ a variety of strategies to avoid detection. Despite our efforts to prevent short-term trading, there is no assurance that we will be able to identify such Contract Owners or intermediaries or curtail their trading. A failure to detect and curtail short-term trading could result in adverse consequences to the Contract Owners. Short-term trading can increase costs for all Contract Owners as a result of excessive portfolio transaction fees. In addition, short-term trading can adversely affect a Fund's performance. If large amounts of money are suddenly transferred out of a Fund, the Fund's investment adviser cannot effectively invest in accordance with the Fund's investment objectives and policies.

The Company has policies and procedures to discourage frequent transfers of contract value. As described above under "Transfer Privilege," such policies include limiting the number and timing of certain transfers, subject to exceptions described in that section and exceptions designed to protect the interests of individual Contract Owners. The Company also reserves the right to charge a fee for transfers.

Short-term trading activities whether by the Contract Owner or a third party authorized to initiate transfer requests on behalf of Contract Owner(s) may be subject to other restrictions as well. For example, we reserve the right to take actions against short-term trading which restrict your transfer privileges more narrowly than the policies described under "Transfer Privilege," such as requiring transfer requests to be submitted in writing through regular first-class U.S mail (e.g., no overnight, priority or courier delivery allowed), and refusing any and all transfer instructions.

If we determine that a third party acting on your behalf is engaging (alone or in combination with transfers effected by you directly) in a pattern of short-term trading, we may refuse to process certain transfers requested by such a third party. In particular, we will treat as short-term trading activity and refuse to process any transfer that is requested by an authorized third party within 6 days of a previous transfer (whether the earlier transfer was requested by you or a third party acting on your behalf). We may also impose special restrictions on third parties that engage in reallocations of contract values by limiting the frequency of the transfer, requiring advance notice of the transfer pursuant to in-force service agreements, and reallocating or exchanging 100% of the values in the redeeming sub-accounts.

We will provide you written notification of any restrictions imposed.

In addition, some of the Funds reserve the right to refuse purchase or transfer requests from the Variable Account if, in the judgment of the Fund's investment adviser, the Fund would be unable to invest effectively in accordance with its investment objective and policies, or the request is considered to be part of a short-term trading strategy. Accordingly, the Variable Account may not be in a position to effectuate some transfers with such Funds and, therefore, will be unable to process such transfer requests. We also reserve the right to refuse requests involving transfers to or from the Fixed Account.

We reserve the right to waive short-term trading restrictions, where permitted by law and not adverse to the interests of the relevant underlying Fund and other shareholders, in the following instances:

o when a new broker of record is designated for the Contract;

o when the Participant changes;

o when control of the Contract passes to the designated beneficiary upon the death of the Participant or Annuitant;

o when necessary in our view to avoid hardship to a Participant;

o when underlying Funds are dissolved or merged or substituted.

If short-term trading results as a consequence of waiving the restrictions against short-term trading, it could expose Contract Owners to certain risks. The short-term trading could increase costs for all Contract Owners as a result of excessive portfolio transaction fees. In addition, the short-term trading could adversely affect a Fund's performance. If large amounts of money are suddenly transferred out of a Fund, the Fund's investment adviser cannot effectively invest in accordance with the Fund's investment objectives and policies. Unless the short-term trading policy and the permitted waivers of that policy are applied uniformly, some Contract Owners may experience a different application of the policy and therefore may experience some of these risks. Too much discretion on our part in allowing the waivers of short-term trading policy could result in an unequal treatment of short-term traders by permitting some short-term traders to engage in short-term trading while prohibiting others from doing the same.

Waivers; Reduced Charges; Credits; Bonus Guaranteed Interest Rates

We may reduce or waive the withdrawal charge or the annual Account Fee; credit additional amounts; grant bonus Guaranteed Interest Rates in certain situations; or offer other options or benefits. These situations may include sales of Contracts (1) where selling and/or maintenance costs associated with the Contracts are reduced, such as the sale of several Contracts to the same Owner, sales of large Contracts, and certain group sales, and (2) to officers, directors and employees of the Company or its affiliates, registered representatives and employees of broker-dealers with a current selling agreement with the Company and affiliates of such representatives and broker-dealers, employees of affiliated asset management firms, and persons who have retired from such positions ("Eligible Employees") and immediate family members of Eligible Employees. Eligible Employees and their immediate family members may also purchase a Contract without regard to minimum Purchase Payment requirements. For other situations in which withdrawal charges may be waived, see "Withdrawals, Withdrawal Charge and Market Value Adjustment."

Other Programs

You may participate in any of the following optional programs free of charge. Transfers made pursuant to the provisions of the following optional programs will not be charged a transfer fee, not will such transfers count as one of the 12 free transfers per year allowed under the section entitled "Transfer Privilege."

     Dollar-Cost Averaging

Dollar-cost averaging allows you to invest gradually, over time, in up to 12 Sub-Accounts. You may select or transfer to a dollar-cost averaging program at no extra charge by allocating a minimum to a designated Sub-Account or to a Guarantee Period we make available in connection with the program. (We reserve the right to limit minimum investments to at least $1,000.) Amounts allocated to the Fixed Account under the program will earn interest at a rate declared by the Company for the Guarantee Period you select. Previously applied amounts may not be transferred to a Guarantee Period made available in connection with this program. At regular intervals, we will transfer the same amount automatically (including a portion of the Purchase Payment Interest) to one or more Sub-Accounts that you choose, up to a maximum of 12 Sub-Accounts. The program continues until your Account Value allocated to the program is depleted or you elect to stop the program. The final amount transferred from the Fixed Account will include all interest earned (excluding Purchase Payment Interest).

No Market Value Adjustment (either positive or negative) will apply to amounts automatically transferred from the Fixed Account under the dollar-cost averaging program. However, if you discontinue or alter the program prior to completion, amounts remaining in the Fixed Account will be transferred to the Money Market Fund investment option under the Contract, unless you instruct us otherwise, and the Market Value Adjustment will be applied. Any new allocation of a Purchase Payment to the program will be treated as commencing a new dollar-cost averaging program and is subject to the $1,000 minimum.

The main objective of a dollar-cost averaging program is to minimize the impact of short-term price fluctuations on Account Value. In general, since you transfer the same dollar amount to the variable investment options at set intervals, dollar-cost averaging allows you to purchase more Variable Accumulation Units (and, indirectly, more Fund shares) when prices are low and fewer Variable Accumulation Units (and, indirectly, fewer Fund shares) when prices are high. Therefore, you may achieve a lower average cost per Variable Accumulation Unit over the long term. A dollar-cost averaging program allows you to take advantage of market fluctuations. However, it is important to understand that a dollar-cost averaging program does not assure a profit or protect against loss in a declining market. We do not allow transfers into any of the Guarantee Periods.

     Asset Allocation

One or more asset allocation programs may be available in connection with the Contracts, at no extra charge. Asset allocation is the process of investing in different asset classes -- such as equity funds, fixed income funds, and money market funds -- depending on your personal investment goals, tolerance for risk, and investment time horizon. By spreading your money among a variety of asset classes, you may be able to reduce the risk and volatility of investing, although there are no guarantees, and asset allocation does not insure a profit or protect against loss in a declining market.

You may select one of the available asset allocation models, each of which represents a combination of Sub-Accounts with a different level of risk. These models, as well as the terms and conditions of the asset allocation program, are fully described in a separate brochure. We may add or delete programs in the future.

If you elect an asset allocation program, we automatically rebalance your Purchase Payments among the Sub-Accounts represented in the model you choose. We rebalance your Purchase Payments on a quarterly basis, without further instruction, until we receive notification that you wish to terminate the program or choose a different model. While the asset allocation models may be reviewed and changed from time to time, we will not change your original percentage allocations among the Sub-Accounts in the model you chose, unless you advise us otherwise. You should consult your financial adviser periodically to consider whether the model you have selected is still appropriate for you or whether you wish to change your percentage allocations.

     Systematic Withdrawal Program

If you select our Systematic Withdrawal Program, you determine the amount and frequency of regular withdrawals you would like to receive from your Fixed Account Value and/or Variable Account Value and we will effect them automatically. The withdrawals under this program are subject to surrender charges or a Market Value Adjustment. They may also be included as income and subject to a 10% federal tax penalty, as well as charges applicable on withdrawal. You should consult a qualified tax professional before choosing these options. We reserve the right to limit a minimum Account Value (of $10,000) prior to the election of this program.

You may change or stop this program at any time, by written notice to us or other means approved by us.

     Portfolio Rebalancing Program

Under the Portfolio Rebalancing Program, we transfer funds among all Sub-Accounts to maintain the percentage allocation you have selected among these Sub-Accounts. At your election, we will make these transfers on a quarterly, semi-annual or annual basis.

Portfolio rebalancing does not permit transfers to or from any Guarantee Period.

     Secured Futures Program

Under the Secured Futures Program, we divide your Purchase Payments and Purchase Payment Interest between the Fixed Account and the Variable Account. For the Fixed Account portion, you choose a Guarantee Period from among those we offer. We then allocate to that Guarantee Period the portion of your Purchase Payment and Purchase Payment Interest necessary so that, at the end of the Guarantee Period, your Fixed Account allocation, including interest, will equal the entire amount of your original Purchase Payment. The remainder of the original Purchase Payment and Purchase Payment Interest will be invested in the Sub-Accounts of your choice. At the end of the Guarantee Period, you will be guaranteed the amount of your original Purchase Payment and Purchase Payment Interest (assuming no withdrawals or transfers), plus you will have the benefit, if any, of the investment performance of the Sub-Accounts you have chosen.

WITHDRAWALS, WITHDRAWAL CHARGE AND MARKET VALUE ADJUSTMENT

Cash Withdrawals

     Requesting a Withdrawal

At any time during the Accumulation Phase you may withdraw in cash all or any portion of your Account Value. To make a withdrawal other than a Systematic Withdrawal, you must send us a written request at our Annuity Service Address. Your request must specify whether you want to withdraw the entire amount of your Account or, if less, the amount you wish to receive.

All withdrawals may be subject to a withdrawal charge (see "Withdrawal Charge"), and withdrawals from your Fixed Account Value also may be subject to a Market Value Adjustment (see "Market Value Adjustment"). Upon request, we will notify you of the amount we would pay in the event of a full withdrawal. Withdrawals also may have adverse income tax consequences, including a 10% penalty tax (see "Tax Considerations"). You should carefully consider these tax consequences before requesting a cash withdrawal.

     Full Withdrawals

If you request a full withdrawal, we calculate the amount we will pay you as follows. We start with the total value of your Account at the end of the Valuation Period during which we receive your withdrawal request; we deduct the Account Fee for the Contract Year in which the withdrawal is made; we calculate and then add or subtract the amount of any Market Value Adjustment applicable to your Fixed Account Value; and finally, we calculate and then deduct any applicable withdrawal charge.

A full withdrawal results in the surrender of your Contract, and cancellation of all rights and privileges under your Contract.

     Partial Withdrawals

Unless you specify otherwise, when you request a partial withdrawal, we will deduct the actual amount specified in your request and then reduce the value of your Account by the total of the amount paid, adding or deducting any Market Value Adjustment applicable to amounts withdrawn from the Fixed Account and any applicable withdrawal charge.

You may specify the amount you want withdrawn from each Sub-Account and/or Guarantee Amount to which your Account is allocated. If you do not so specify, we will deduct the total amount you request pro rata, based on your Account Value at the end of the Valuation Period during which we receive your request.

Partial withdrawals will affect any death benefit or living benefit amount. In calculating the amount payable under the living benefit or death benefit, we will reduce the benefit amount to an amount equal to the benefit amount payable immediately before the withdrawal multiplied by the ratio of the Account Value immediately after the withdrawal to the Account Value immediately before the withdrawal. (See "Withdrawals Under the Secured Returns 2 Benefit" and "Calculating the Death Benefit.")

If you request a partial withdrawal that would result in your Account Value being reduced to an amount less than the Account Fee for the Contract Year in which you make the withdrawal, we will treat it as a request for a full withdrawal.

     Time of Payment

We will pay you the applicable amount of any full or partial withdrawal within 7 days after we receive your withdrawal request, except in cases where we are permitted, and choose, to defer payment under the Investment Company Act of 1940 and New York state insurance law. Currently, we may defer payment of amounts you withdraw from the Variable Account only for the following periods:

o When the New York Stock Exchange is closed (except weekends and holidays) or when trading on the New York Stock Exchange is restricted;

o When it is not reasonably practical to dispose of securities held by a Fund or to determine the value of the net assets of a Fund, because an emergency exists; or

o When an SEC order permits us to defer payment for the protection of Owners.

We also may defer payment of amounts you withdraw from the Fixed Account for up to 6 months from the date we receive your withdrawal request. We do not pay interest on the amount of any payments we defer.

     Withdrawal Restrictions for Qualified Plans

If your Contract is a Qualified Contract, you should carefully check the terms of your retirement plan for limitations and restrictions on cash withdrawals.

Special restrictions apply to withdrawals from Contracts used for Section 403(b) annuities. See "Tax Considerations -- Tax-Sheltered Annuities."

Withdrawal Charge

We do not deduct any sales charge from your Purchase Payments when they are made. However, we may impose a withdrawal charge (known as a "contingent deferred sales charge") on certain amounts you withdraw. We impose this charge to defray some of our expenses related to the sale of the Contracts, such as commissions we pay to agents, the cost of sales literature, and other promotional costs and transaction expenses.

     Free Withdrawal Amount

In each Contract Year you may withdraw a portion of your Account Value -- which we call the "free withdrawal amount" -- before incurring the withdrawal charge. For any year, the free withdrawal amount is equal to the amount of all Purchase Payments made before the last 7 Contract Years that you have not previously withdrawn, PLUS the greater of:

o your Contract's earnings (defined below) during the prior Contract Year; and

o 10% of the amount of all Purchase Payments you have made during the last 7 Contract Years, including the current Contract Year.

Any portion of the "free withdrawal amount" that you do not use in a Contract Year is not cumulative; that is, it will not be carried forward or available for use in future years.

Your Contract's earnings during the prior Contract Year are equal to:

o the difference between your Account Value at the end of the prior Contract Year and your Account Value at the beginning of the prior Contract Year, minus

o any Purchase Payments made during the prior Contract Year, plus

o any partial withdrawals and charges taken during the prior Contract Year.

For an example of how we calculate the "free withdrawal amount," see Appendix B.

     Order of Withdrawal

When you make a withdrawal, we consider the free withdrawal amount to be withdrawn first. We consider Purchase Payments that you have not already withdrawn (beginning with the oldest remaining Purchase Payment) to be withdrawn next. Once all Purchase Payments are withdrawn, the balance withdrawn is considered to be earnings and is not subject to a withdrawal charge.

     Calculation of Withdrawal Charge

We calculate the amount of the withdrawal charge by multiplying the Purchase Payments you withdraw by a percentage. The percentage varies according to the number of Contract Years the Purchase Payment has been held in your Account, including the Contract Year in which you made the Payment, but not the Contract Year in which you withdraw it. Each Payment begins a new 7-year period and moves down a declining surrender charge scale as shown below at each Contract Anniversary. Payments received during the current Contract Year will be charged 7%, if withdrawn. On your next scheduled Contract Anniversary, that Payment, along with any other Payments made during that Contract Year, will be considered to be in their second Contract Year and will have an 6% withdrawal charge. On the next Contract Anniversary, these Payments will move into their third Contract Year and will have a withdrawal charge of 5%, if withdrawn. This withdrawal charge decreases according to the number of Contract Years the Purchase Payment has been held in your Account. The declining scale is as follows:

Number of
Contract Years
Payment has
Been	Withdrawal
In Your Account	Charge
0-1	7%
1-2	6%
2-3	5%
3-4	4%
4-5	3%
5-6	2%
6-7	1%
7+	0%

For example, the percentage applicable to the withdrawals of a Payment that has been in an Account for more than 2 Contract Years but less than 3 will be 5% regardless of the issue date of the Contract.

The withdrawal charge will never be greater than 7% of the excess of Purchase Payments you make under your Contract over the "free withdrawal amount," as defined above.

For additional examples of how we calculate withdrawal charges, see Appendix B.

Types of Withdrawals Not Subject to Withdrawal Charge

     Minimum Distributions

For each Qualified Contract, the free withdrawal amount in any Contract Year will be the greater of the free withdrawal amount described above or any amounts required to be withdrawn to comply with the minimum distribution requirement of the Internal Revenue Code. This waiver of the withdrawal charge applies only to the portion of the required minimum distribution attributable to that Qualified Contract.

     Other Withdrawals

We do not impose the withdrawal charge on amounts you apply to provide an annuity, amounts withdrawn from a Non-Qualified Contract as part of our non-qualified stretch program, amounts we pay as a death benefit, or amounts you transfer among the Sub-Accounts, between the Sub-Accounts and the Fixed Account, or within the Fixed Account.

Market Value Adjustment

We will apply a Market Value Adjustment if you withdraw or transfer amounts from your Fixed Account Value more than 30 days before the end of the applicable Guarantee Period. For this purpose, using Fixed Account Value to provide an annuity is considered a withdrawal, and the Market Value Adjustment will apply. However, we will not apply the Market Value Adjustment to automatic transfers to a Sub-Account from a Guarantee Period as part of our dollar-cost averaging program.

We apply the Market Value Adjustment separately to each Guarantee Amount in the Fixed Account, that is to each separate allocation you have made to a Guarantee Period together with interest credited on that allocation. However, we do not apply the adjustment to the amount of interest credited during your current Contract Year. Any withdrawal from a Guarantee Amount is attributed first to such interest.

A Market Value Adjustment may decrease, increase or have no effect on your Account Value. This will depend on changes in interest rates since you made your allocation to the Guarantee Period and the length of time remaining in the Guarantee Period. In general, if the Guaranteed Interest Rate we currently declare for Guarantee Periods equal to the balance of your Guarantee Period (or your entire Guarantee Period for Guarantee Periods of less than one year) is higher than your Guaranteed Interest Rate, the Market Value Adjustment is likely to decrease your Account Value. If our current Guaranteed Interest Rate is lower, the Market Value Adjustment is likely to increase your Account Value.

We determine the amount of the Market Value Adjustment by multiplying the amount that is subject to the adjustment by the following formula:

[(1 + I) / (1 + J + b)] ^ (N/12)   -1

where:

I	is the Guaranteed Interest Rate applicable to the Guarantee Amount from which you withdraw, transfer or annuitize;
J	is the Guaranteed Interest Rate we declare at the time of your withdrawal, transfer or annuitization for Guarantee Periods equal to the length of time remaining in the Guarantee Period applicable to your Guarantee Amount, for Guarantee Periods of one year or more. If the length of time remaining in the Guarantee Period applicable to your Guarantee Amount is not a complete number of years, J will be determined by straight line interpolation between the Guaranteed Interest Rates of the next highest and next lowest Guarantee Periods. For any Guarantee Periods of less than one year, J is the Guaranteed Interest Rate we declare at the time of your withdrawal, transfer or annuitization for a Guarantee Period of the same length as your Guarantee Period. If, at that time, we do not offer the applicable Guarantee Period we will use an interest rate determined by straight-line interpolation of the Guaranteed Interest Rates for the Guarantee Periods we do offer;
N	is the number of complete months remaining in your Guarantee Period; and
b	is a factor that currently is 0%, but that in the future we may increase to up to 0.25%. Any increase would be applicable only to Participants who purchase their Contracts after the date of that increase. The "b" factor is the amount that will be used to cover market volatility (i.e., credit risk), basis risk, and/or liquidity costs.

We will apply the Market Value Adjustment to the amount being withdrawn after deduction of any Account Fee, if applicable, but before we impose any withdrawal charge on the amount withdrawn.

For examples of how we calculate the Market Value Adjustment, see Appendix B.

CONTRACT CHARGES

Account Fee

During the Accumulation Phase of your Contract, we will deduct from your Account an annual Account Fee of $30 to help cover the administrative expenses we incur related to the issuance of Contracts and the maintenance of Accounts. We deduct the Account Fee on each Contract Anniversary. We deduct the Account Fee pro rata from each Sub-Account and each Guarantee Period, based on the allocation of your Account Value on your Contract Anniversary.

We will not charge the Account Fee if:

o your Account has been allocated only to the Fixed Account during the applicable Contract Year; or

o your Account Value is $100,000 or more on your Contract Anniversary.

If you make a full withdrawal of your Account, we will deduct the full amount of the Account Fee at the time of the withdrawal. In addition, on the Annuity Commencement Date we will deduct a pro rata portion of the Account Fee to reflect the time elapsed between the last Contract Anniversary and the day before the Annuity Commencement Date.

After the Annuity Commencement Date, we will deduct an annual Account Fee of $30 in the aggregate in equal amounts from each Variable Annuity payment we make during the year. We do not deduct any Account Fee from Fixed Annuity payments.

Administrative Expense Charge and Distribution Fee

We deduct an administrative expense charge from the assets of the Variable Account at an annual effective rate equal to 0.15% during both the Accumulation Phase and the Income Phase. This charge is designed to reimburse us for expenses we incur in administering the Contracts, Owner Accounts and the Variable Account that are not covered by the annual Account Fee.

We also deduct a distribution fee from the assets of the Variable Account at an effective annual rate equal to 0.15% during both the Accumulation Phase and the Income Phase. This charge is designed to reimburse us for the expenses associated with distributing and issuing the Contracts.

Mortality and Expense Risk Charge

During the Accumulation Phase, we deduct a mortality and expense risk charge from the assets of the Variable Account at an effective annual rate equal to 1.40%, if you are age 75 or younger on the Open Date (1.60%, if you are age 76 or older on the Open Date). The mortality risk we assume arises from our contractual obligation to continue to make annuity payments to each Annuitant, regardless of how long the Annuitant lives and regardless of how long all Annuitants as a group live. This obligation assures each Annuitant that neither the longevity of fellow Annuitants nor an improvement in life expectancy generally will have an adverse effect on the amount of any annuity payment received under the Contract. The mortality risk also arises from our contractual obligation to pay a death benefit upon the death of the Owner prior to the Annuity Commencement Date. The expense risk we assume is the risk that the annual Account Fee, the administrative expense charge, and the distribution fee we assess under the Contracts may be insufficient to cover the actual total administrative expenses we incur. If the amount of the charge is insufficient to cover the mortality and expense risks, we will bear the loss. If the amount of the charge is more than sufficient to cover the risks, we will make a profit on the charge. We expect to make a profit on the excess expense charge associated with the Purchase Payment Interest. We may use this profit for any proper corporate purpose, including the payment of marketing and distribution expenses for the Contracts.

Charges for Optional Benefit Riders

If you elect the Secured Returns 2 Benefit, we will deduct a specific charge from your Account Value on the last day of the Account Quarter. ("Account Quarters" are defined as three-month periods, with the first Account Quarter beginning on your Issue Date.) The charge per year is equal to 0.50% of your Account Value. See "Cost of the Benefit" under "Optional Living Benefit Rider: Secured Returns 2."

If you elect the optional death benefit rider, we will deduct, during the Accumulation Phase, a charge from the assets of the Variable Account equal to 0.20% of the average daily value of your Contract.

Premium Taxes

In New York, there is no premium tax. However, if an Owner or Payee is not a New York State resident, a premium tax may be imposed, depending on where the Owner or Payee resides. We believe that the amounts of applicable premium taxes currently range from 0% to 3.5%. You should consult a qualified tax professional to find out if you could be subject to a premium tax and the amount of any tax.

In order to reimburse us for the premium tax we may pay on Purchase Payments, our policy is to deduct the amount of such taxes from the amount you apply to provide an annuity at the time of annuitization. However, we reserve the right to deduct the amount of any applicable tax from your Account at any time, including at the time you make a Purchase Payment or make a full or partial withdrawal. We do not make any profit on the deductions we make to reimburse premium taxes.

Fund Expenses

There are fees and charges deducted from each Fund. These fees and expenses are described in the Fund prospectuses and related Statements of Additional Information.

OPTIONAL LIVING BENEFIT RIDER: SECURED RETURNS 2 BENEFIT

The Secured Returns 2 Benefit ("Benefit" or "Secured Returns 2") guarantees a return of your Purchase Payments (adjusted for subsequent Purchase Payments and withdrawals), regardless of the investment performance of the underlying funds, provided that you comply with certain Benefit requirements. The amount guaranteed, known as the "Guaranteed Living Benefit amount" or the "GLB amount," can be greater than or less than your Account Value. All Benefits and charges under Secured Returns 2 terminate upon annuitization.

If you elect Secured Returns 2, you may choose to receive your Benefit under one of two plans: the Guaranteed Minimum Accumulation Benefit ("AB") Plan or the Guaranteed Minimum Withdrawal Benefit ("WB") Plan.

If you elect Secured Returns 2, you are automatically enrolled in the AB Plan. After your first Contract Anniversary, you may elect instead to receive your Benefit under the WB Plan, provided that you make the election prior to the earliest of your 76th birthday, the date you annuitize, and the date your AB Plan matures. Once you elect to participate in the WB Plan, you may not change your election back to the AB Plan. If you do not specifically elect the WB Plan, you will be deemed to have elected to remain in the AB Plan.

Tax Issues

If your Contract is a Qualified Contract, required minimum distributions under the Internal Revenue Code may significantly affect the value of the Secured Returns 2 Benefit to you. If your Contract is a Non-Qualified Contract, it is possible that the election of Secured Returns 2 might increase the taxable portion of any withdrawal you make from the Contract.

Please refer to "Tax Considerations - Impact of Optional Death Benefit and Secured Returns 2 Benefit Riders" for more information regarding these and other tax issues that you should consider before electing to participate in Secured Returns 2.

Guaranteed Minimum Accumulation Benefit ("AB") Plan

Under the terms of the AB Plan, on your 10th Contract Anniversary, we will credit your Account Value with any excess of your GLB amount over your Account Value after the application of any other Contract transactions. Any such amount will be allocated on a pro rata basis to all Designated Funds (defined below under "Availability") in which you are invested at that time. Your GLB amount is equal to the sum of 100% of your initial Purchase Payment plus a specified percentage of any subsequent Purchase Payments, adjusted in amount for partial withdrawals. One or more subsequent Purchase Payments during the 10-year period will not restart the 10-year period. For each subsequent Purchase Payment after the second Contract Anniversary, we will guarantee the return of less than 100% of the Purchase depending upon the Contract Year in which it was made, as follows:

Contract Year in which Purchase Payment was made	Percentage guaranteed
1-2	100%
3-5	85%
6-8	70%
9-10	60%

For examples of how we calculate benefits under the AB Plan, see Examples 1 and 3 in Appendix E. Note that the timing and amount of subsequent Purchase Payments may affect the total Secured Returns 2 Benefit.

If you remain in the AB Plan until it matures, you may also be entitled to a refund of the charges you paid for the Secured Returns 2 Benefit. (See "Refund of Rider Charges under the AB Plan.")

Guaranteed Minimum Withdrawal Benefit ("WB") Plan

Under the terms of the WB Plan, you may withdraw up to a set dollar amount from your Account Value each year until your GLB amount equals zero. This set dollar amount, or "maximum WB amount," is equal to 7% of the GLB amount on the date you elect to participate in the WB Plan. You are not required to make any withdrawals after you have elected the WB Plan; however, if you withdraw more than the maximum WB amount in any Contract Year, your remaining GLB amount may be adversely affected. (See "Withdrawals Under the Secured Returns 2 Benefit.") Any subsequent Purchase Payments made after you have elected the WB Plan, and before your fourth Contract Anniversary, will increase your GLB amount by 100% of such subsequent Purchase Payment. Your maximum WB amount will increase by 7% of such subsequent Purchase Payment. After your fourth Contract Anniversary, you may not make any additional Purchase Payments if you have elected the WB Plan.

For examples of how we calculate benefits under the WB Plan, see Examples 4 and 5 in Appendix E.

Availability

Secured Returns 2 is available only if you are age 79 or younger on the Open Date. If you choose to participate in the Benefit, you must make your election no later than your Issue Date. You may combine the Benefit with the MAV optional death benefit rider. Upon annuitization, Secured Returns 2 and the elected optional death benefit rider automatically terminate.

To participate in Secured Returns 2, all of your Account Value must be invested in one or more of the "Designated Funds" during the entire term of the plan: a 10-year period under the AB Plan or, if you elected the WB Plan, until the GLB amount is exhausted. Your application lists the only Funds and asset allocation models that currently qualify as "Designated Funds." We reserve the right to change the available Designated Funds on new and existing Contracts without prior notice. Any time there is a change, your Account Value will remain in the current Designated Funds, but future transfers or Purchase Payments may be allocated only to the Designated Funds then available.

Cost of the Benefit

Unlike other Contract charges, the charge for Secured Returns 2 will not be calculated as a percentage of average daily net assets as described under "Variable Accumulation Unit Value." Instead, the charge for the Benefit will be made as a specific deduction from the Account Value, taken on the last valuation day of the Account Quarter. ("Account Quarters" are defined as three-month periods, with the first Account Quarter beginning on your Issue Date.) The charge per year is equal to 0.50% of your Account Value. The quarterly charge will be determined by multiplying the Account Value at the end of the Account Quarter by 0.00125. (See Example 12 in Appendix E.) The specific amount of the quarterly charge will be reflected on your quarterly account statement. We will continue to deduct this charge until you annuitize or your Secured Returns 2 Benefit expires or is revoked. Cancellation of the Benefit (caused by a transfer out of the Designated Funds or a Purchase Payment allocation to a non-Designated Fund) will not terminate the charge, until the 7th Contract Anniversary. (See "Cancellation of the Secured Returns 2 Benefit.")

Withdrawals Under the Secured Returns 2 Benefit

All withdrawals under Secured Returns 2 are subject to withdrawal charges if they are in excess of the annual free withdrawal amount. (See "Free Withdrawal Amount" under "Withdrawal Charge.")

In addition, if you have elected Secured Returns 2, but have not yet elected to participate in the WB Plan, any withdrawals you make will reduce the GLB amount proportionally to the amount of Account Value withdrawn. To calculate the GLB amount after a partial withdrawal under the AB Plan, we multiply the GLB amount immediately before the withdrawal by the ratio of the Account Value immediately after the withdrawal to the Account Value immediately before the withdrawal. (See Examples 6 and 9 in Appendix E.)

Once you have elected to participate in the WB Plan, withdrawals of no more than the maximum WB amount will reduce the remaining GLB amount dollar for dollar. If you are participating in the WB Plan and you withdraw, in any one Contract Year, more than the current maximum WB amount, the remaining GLB amount will be reduced to equal the lesser of:

(a)	your previous remaining GLB amount reduced dollar for dollar by the amount of the withdrawal, or
(b)	your Account Value.

If (b), above, is less than (a), then your maximum WB amount will be reduced so that the new GLB amount will expire on the same date it would have had the maximum WB amount been withdrawn every year thereafter. (See Example 7 in Appendix E.)

You should be aware that a withdrawal in excess of the maximum WB amount might significantly reduce your Secured Returns 2 Benefits if your Account Value is less than the GLB amount. In all cases, the value you will receive upon a full withdrawal, or "surrender" of your Contract, will be your Contract's Surrender Value and not the GLB amount.

The maximum WB amount is not cumulative. That is to say, if you withdraw less than the maximum WB amount in any one Contract Year, you cannot add that unused portion to withdrawals made in future years to exceed the maximum WB amount.

Under the WB Plan, your Secured Returns 2 benefits will continue until your GLB amount is reduced to zero, even if your Account Value drops to zero. If your Account Value drops to zero, no subsequent Purchase Payment will be accepted and no death benefit will be payable. We will however, continue to pay the maximum WB amount each Contract Year while you are alive until the remaining GLB amount has been exhausted.

For examples showing how withdrawals affect your benefits under Secured Returns 2, see Examples 6, 7, 9 and 11 in Appendix E.

Cancellation of the Secured Returns 2 Benefit

Transfers among the Designated Funds are permitted as described under "Transfer Privilege." If however you transfer some or all of your Account Value out of the Designated Funds into another investment option offered under your Contract, the Secured Returns 2 Benefit will be automatically cancelled. Likewise, if you allocate one or more subsequent Purchase Payments to an investment option other than one of the Designated Funds, the Secured Returns 2 Benefit will be cancelled. Once the Benefit has been canceled, it cannot be reinstated. After the cancellation of the Benefit, you will continue to pay the charge for the Benefit until your 7th Contract Anniversary.

Revocation of the Secured Returns 2 Benefit

Anytime after your 7th Contract Anniversary, you may revoke Secured Returns 2. Once revoked, Secured Returns 2 may not be reinstated. After Secured Returns 2 has been revoked, all benefits and charges will end.

Step-Up of GLB Amount

After your fifth Contract Anniversary, you may elect to increase the GLB amount to your then current Account Value. Currently, this step-up election may be made on any day after your fifth Contract Anniversary. (We reserve the right to require step-up elections to occur only within 30 days following the fifth or any subsequent Contract Anniversary.) On the day we receive your step-up election notice in good order (the "Step-Up Date"), we will increase your GLB amount to an amount equal to your Account Value on the Step-Up Date. If you elect to step-up your GLB amount, at least 5 full years from the Step-Up Date must pass before you can elect another step-up. You can only elect to step-up the GLB amount if the current Account Value is greater than the current GLB amount. If you are in the AB Plan, you must be less than age 80 on the Step-Up Date. If you are in the WB Plan, you must be less than age 76 on the Step-Up Date.

Following your step-up election, the rider fee may be changed to an amount equal to the Secured Returns 2 fee charged on newly issued Contracts at that time. This fee may be higher than your current Secured Returns 2 fee as set forth above under "Cost of the Benefit." If we are no longer issuing new Contracts with the Secured Returns 2 Rider, then the rider fee after the step-up will be set by us, based upon current market conditions at the time of the step-up.

If you elect to step-up your GLB amount, the term of your benefit under the AB Plan will change. Without a step-up, your benefit under the AB Plan will "mature" on the 10th Contract Anniversary (the date we credit your Account with any excess of your GLB amount over your Account Value or refund your Secured Returns 2 rider charges). After you make a step-up election, your benefit under the AB Plan will mature 10 years from the Step-Up Date. (See Example 2 in Appendix E.)

If you have been receiving benefits under the WB Plan, a step-up may change your "maximum WB amount." After the step up, your "maximum WB amount" will become the greater of the current "maximum WB amount" and 7% of the new GLB amount. Note that, if you step-up in a particular Contract Year, any withdrawals previously made in that Contract Year are applied against your new "maximum WB amount." (See Example 8 in Appendix E.)

At the time of a step-up, if your benefit is under the AB Plan, you can still change to the WB Plan at a later date, subject to the applicable age restrictions described above.

Subsequent Purchase Payments After a Step-Up of GLB Amount

Because Purchase Payments, under the WB Plan, are not allowed after your fourth Contract Anniversary, you must be participating in the AB Plan to make any Purchase Payments after a Step-Up. After your step-up election, any subsequent Purchase Payment will increase the GLB amount under your AB Plan by a specified percentage of the subsequent Purchase Payment. The percentage guaranteed depends upon "Step-Up Year" in which the Payment was made. (A "Step-Up Year" is the 365-day period (366, if a leap year) commencing on your Step-Up Date.) The example below illustrates how we determine the percentage guaranteed after a subsequent Purchase Payment:

Assume you purchased a Contract on July 1, 2005, and elected to step-up your Contract on October 1, 2010. Under the AB Plan that you have elected, your benefit matures on October 1, 2020. For any subsequent Purchase Payments you make, your GLB amount will increase by the following percentages:

Step-Up Year	Payments Made Between	Percentage Guaranteed
1	10/02/10 - 10/01/11	100%
2	10/02/11 - 10/01/12	100%
3	10/02/12 - 10/01/13	85%
4	10/02/13 - 10/01/14	85%
5	10/02/14 - 10/01/15	85%
6	10/02/15 - 10/01/16	70%
7	10/02/16 - 10/01/17	70%
8	10/02/17 - 10/01/18	70%
9	10/02/18 - 10/01/19	60%
10	10/02/19 - 10/01/20	60%

Thus, a subsequent Purchase Payment made on October 2, 2015, will provide only a 70% guarantee whereas a subsequent Purchase Payment made on October 1, 2015, will provide an 85% guarantee. (See Example 10 in Appendix E.)

Renewal of the Secured Returns 2 Benefit

If you elect to participate in the AB Plan and you remain in that Plan until it matures, you may elect to renew your participation in Secured Returns 2, provided that we are still offering the Benefit to new Owners. Upon renewal, the annual charge for participation in the Benefit will be extended under the terms and conditions applicable to new Owners at that time. If renewal in the Secured Returns 2 Benefit is not available, or is available but you make no election to renew your participation in the Benefit, all further benefits under the Benefit will be discontinued. We reserve the right to stop offering the optional Secured Returns 2 Benefit to new Owners. If we do so, renewals will no longer be available.

Once you elect to participate in the WB Plan, you may not renew your participation in Secured Returns 2.

Refund of Rider Charges under the AB Plan

If your Contract remains in the AB Plan until it "matures" on the later of your 10th Contract Anniversary or 10 years from your last Step-Up Date, and the Account Value is greater than or equal to the GLB amount on the "maturity date," then we will refund the charges you have paid for Secured Return 2 ("Refund Amount") by crediting the Refund Amount to your Account Value. The Refund Amount will be allocated on a pro rata basis to the Designated Funds in which you are invested on such "maturity date." No refund of Secured Return 2 charges will be made if you change from the AB Plan to the WB Plan.

Participant's Death Under the AB Plan

If you die while participating in the AB Plan, all benefits and charges under Secured Returns 2 will automatically terminate when we receive Due Proof of Death, unless your surviving spouse is the sole Beneficiary. Your surviving spouse may elect to continue the Contract. If such election is made, the same Secured Returns 2 Benefit will apply. Your surviving spouse can elect the WB Plan at any time prior to the earliest of annuitization, the surviving spouse's 81st birthday, and the date the AB Plan is scheduled to "mature." If your surviving spouse does not elect the WB Plan, the AB Plan will continue on the same terms, for your surviving spouse, even though the Account Value may have been enhanced under the provisions of the death benefit. (See "Spousal Continuance" under "DEATH BENEFIT.) In all cases, the GLB amount will not reset upon your death, but the charges under Secured Returns 2 will be assessed against the enhanced Account Value.

Participant's Death Under the WB Plan

If you die while participating in the WB Plan and your surviving spouse, as the sole Beneficiary, elects to continue the Contract, Secured Returns 2 will continue on the same terms, for your surviving spouse, even though the Account Value may have been enhanced under the provisions of the death benefit. (See "Spousal Continuance" under "DEATH BENEFIT.") In such case, the GLB amount will not reset upon your death, but the charges under Secured Returns 2 will be assessed against the enhanced Account Value. In all other situations, the Beneficiary may elect to exercise any of the available options under the Death Benefit provisions of the Contract, or in the alternative, to receive the maximum WB amount on an annual basis until the remaining GLB amount has been exhausted.

DEATH BENEFIT

If the Covered Person dies during the Accumulation Phase, we may pay a death benefit to your Beneficiary, using the payment method elected (a single cash payment or one of our Annuity Options). If the Beneficiary is not living on the date of death of the Covered Person, we may pay the death benefit to the surviving Owner, if any, or, if there is no Owner, in one sum to your estate. We do not pay a death benefit if the Covered Person dies during the Income Phase. However, the Beneficiary will receive any annuity payments provided under an Annuity Option that is in effect. If your Contract names more than one Covered Person, we will pay the death benefit upon the first death of such Covered Persons.

Amount of Death Benefit

To calculate the amount of the death benefit, we use a "Death Benefit Date." The Death Benefit Date is the date we receive Due Proof of Death of the Covered Person in an acceptable form, if you have elected a death benefit payment method before the death of the Covered Person and it remains in effect. Otherwise, the Death Benefit Date is the later of the date we receive Due Proof of Death or the date we receive the Beneficiary's election of either payment method or, if the Beneficiary is your spouse, Contract continuation. If we do not receive the Beneficiary's election within 60 days after we receive Due Proof of Death, we reserve the right to provide a lump sum to your Beneficiary.

The amount of the death benefit is determined as of the Death Benefit Date.

The Basic Death Benefit

In general the death benefit will be the greater of the following amounts:

(1)	Your Account Value for the Valuation Period during which the Death Benefit Date occurs; and
(2)	The amount we would pay if you had surrendered your entire Account on the Death Benefit Date; and
(3)	Your total Adjusted Purchase Payments (Purchase Payments adjusted for partial withdrawals as described in "Calculating the Death Benefit") as of the Death Benefit Date.

For examples of how to calculate this basic death benefit, see Appendix C.

If you were 86 or older on your Open Date, the death benefit is equal to amount (2) above. Because this amount will reflect any applicable withdrawal charges and Market Value Adjustment, it may be less than your Account Value.

Optional Death Benefit Rider

You may enhance the "Basic Death Benefit" by electing an optional death benefit rider known as the Maximum Anniversary Account Value Rider ("MAV"). You must make your election on or before the date on which your Contract becomes effective. You will pay a charge for the optional death benefit rider. (For a description of the charge, see "Charges for Optional Death Benefit Rider.") The rider is available only if you are younger than 80 on the Open Date. The optional death benefit election may not be changed after your Contract's Issue Date. The death benefit under the optional death benefit rider will be adjusted for all partial withdrawals as described in the Prospectus under the heading "Calculating the Death Benefit."

Under the MAV rider, the death benefit will be the greater of:

o the amount payable under the basic death benefit, above, or

o your Highest Account Value on any Contract Anniversary before the Covered Person's 81st birthday, adjusted for any subsequent Purchase Payments and partial withdrawals made between that Contract Anniversary and the Death Benefit Date.

In determining the Highest Account Value, on the second and each subsequent Contract Anniversary, the current Account Value is compared to the previous Highest Account Value, adjusted for any Purchase Payments and partial withdrawals made during the Contract Year ending on that Contract Anniversary. If the current Account Value exceeds the adjusted Highest Account Value, the current Account Value will become the new Highest Anniversary Account Value.

Spousal Continuance

If your spouse is your sole Beneficiary, upon your death your spouse may elect to continue the Contract as the Owner, rather than receive the death benefit amount. In that case, we will not pay a death benefit, but the Contract's Account Value will be equal to your Contract's death benefit amount, as defined under the "Basic Death Benefit" or any optional death benefit rider you have selected. All Contract provisions, including any optional death benefit rider you have selected, will continue as if your spouse had purchased the Contract on the Death Benefit Date with a deposit equal to the death benefit amount. For purposes of calculating death benefits and expenses from that date forward, your spouse's age on the original effective date of the Contract will be used. Upon surrender or annuitization, this step-up to the spouse will not be treated as premium, but will be treated as income.

Calculating the Death Benefit

In calculating the death benefit amount payable under option (2) of the "Basic Death Benefit" or under the optional death benefit rider, any partial withdrawals will reduce the death benefit amount to an amount equal to the death benefit amount immediately before the withdrawal multiplied by the ratio of the Account Value immediately after the withdrawal to the Account Value immediately before the withdrawal.

If the death benefit is the amount payable under options (2) of the "Basic Death Benefit" or under the optional death benefit rider, your Account Value may be increased by the excess, if any, of that amount over option (1) of the "Basic Death Benefit." Any such increase will be allocated to the Sub-Accounts in proportion to your Account Value in those Sub-Accounts on the Death Benefit Date. Such increase will be made only if the Beneficiary elects to annuitize, elects to defer annuitization, or elects to continue the Contract. Also, any portion of this new Account Value attributed to the Fixed Account will be transferred to the Money Market Sub-Account (without the application of a Market Value Adjustment). If your spouse, as the named Beneficiary, elects to continue the Contract after your death, your spouse may transfer any such Fixed Account portion back to the Fixed Account and begin a new Guarantee Period.

Method of Paying Death Benefit

The death benefit may be paid in a single cash payment or as an annuity (either fixed, variable or a combination), under one or more of our Annuity Options. We describe the Annuity Options in this Prospectus under "The Income Phase -- Annuity Provisions."

During the Accumulation Phase, you may elect the method of payment for the death benefit. These elections are made by sending us at our Annuity Mailing Address an election form, which we will provide. If no such election is in effect on the date of your death, the Beneficiary may elect either a single cash payment or an annuity. If the Beneficiary is your spouse, the Beneficiary may elect to continue the Contract. This election is made by sending us a letter of instruction.. If we do not receive the Beneficiary's election within 60 days after we receive Due Proof of Death, the Beneficiary shall be deemed to have elected to defer receipt of payment under any death benefit option until a written election is submitted to the Company or a distribution is required by law.

If we pay the death benefit in the form of an Annuity Option, the Beneficiary becomes the Annuitant/Payee under the terms of that Annuity Option.

Non-Qualified Contracts

If your Contract is a Non-Qualified Contract, special distribution rules apply to the payment of the death benefit. The amount of the death benefit must be distributed either (1) as a lump sum within 5 years after your death or (2) if in the form of an annuity, over a period not greater than the life or expected life of the "designated beneficiary" within the meaning of Section 72(s) of the Internal Revenue Code, with payments beginning no later than one year after your death.

The person you have named as Beneficiary under your Contract, if any, will be the "designated beneficiary." If the named Beneficiary is not living and no contingent beneficiary has been named, the surviving Owner, if any, or the estate of the deceased Owner automatically becomes the designated beneficiary.

If the designated beneficiary is your surviving spouse, your spouse may continue the Contract in his or her own name as Owner. To make this election, your spouse must give us written notification within 60 days after we receive Due Proof of Death. The special distribution rules will then apply on the death of your spouse. To understand what happens when your spouse continues the Contract, see "Spousal Continuance," above.

During the Income Phase, if the Annuitant dies, the remaining value of the Annuity Option in place must be distributed at least as rapidly as the method of distribution under that option.

If the Owner is not a natural person, these distribution rules apply upon the death or removal of any Annuitant.

Payments made in contravention of these special rules would adversely affect the treatment of the Contracts as annuity contracts under the Internal Revenue Code. Neither you nor the Beneficiary may exercise rights that would have that effect.

Selection and Change of Beneficiary

You select your Beneficiary in your Application. You may change your Beneficiary at any time by sending us written notice on our required form, unless you previously made an irrevocable Beneficiary designation. A new Beneficiary designation is not effective until we record the change.

Payment of Death Benefit

Payment of the death benefit in cash will be made within 7 days of the Death Benefit Date, except if we are permitted to defer payment in accordance with the Investment Company Act of 1940. If an Annuity Option is elected, the Annuity Commencement Date will be the first day of the second calendar month following the Death Benefit Date, and your Account will remain in effect until the Annuity Commencement Date.

THE INCOME PHASE -- ANNUITY PROVISIONS

During the Income Phase, we make regular monthly annuity payments to the Annuitant.

The Income Phase of your Contract begins with the Annuity Commencement Date. On that date, we apply your Account Value, adjusted as described below, under the Annuity Option(s) you have selected, and we make the first annuity payment.

Once the Income Phase begins, no lump sum settlement option or cash withdrawals are permitted, except pursuant to Annuity Option D, Monthly Payments for a Specified Period Certain, as described below under the heading "Annuity Options," and you cannot change the Annuity Option selected. You may request a full withdrawal before the Annuity Commencement Date, which will be subject to all charges applicable on withdrawals. See "Withdrawals, Withdrawal Charge and Market Value Adjustment."

Selection of Annuitant(s)

You select the Annuitant in your Application. The Annuitant is the person who receives annuity payments during the Income Phase and on whose life these payments are based. In your Contract, the Annuity Options refer to the Annuitant as the "Payee." If you name someone other than yourself as Annuitant and the Annuitant dies before the Income Phase, you become the Annuitant.

When an Annuity Option has been selected as the method of paying the death benefit, the Beneficiary is the Payee of the annuity payments.

Selection of the Annuity Commencement Date

You select the Annuity Commencement Date in your Application. The following restrictions apply to the date you may select:

o The earliest possible Annuity Commencement Date is the first day of the first month following your first Contract Anniversary.

o The latest possible Annuity Commencement Date is the first day of the month following the Annuitant's 90th birthday. If there is a Co-Annuitant, the Annuity Commencement Date applies to the younger of the Annuitant and Co-Annuitant.

o The Annuity Commencement Date must always be the first day of a month.

You may change the Annuity Commencement Date from time to time by sending us written notice, with the following additional limitations:

o We must receive your notice at least 30 days before the current Annuity Commencement Date.

o The new Annuity Commencement Date must be at least 30 days after we receive the notice.

There may be other restrictions on your selection of the Annuity Commencement Date imposed by your retirement plan or applicable law. In most situations, current law requires that for a Qualified Contract, certain minimum distributions must commence no later than April 1 following the year the Annuitant reaches age 70 1/2 (or, for Qualified Contracts other than IRAs, no later than April 1 following the year the Annuitant retires, if later than the year the Annuitant reaches age 70 1/2).

Annuity Options

We offer the following Annuity Options for payments during the Income Phase. Each Annuity Option may be selected for a Variable Annuity, a Fixed Annuity, or a combination of both. We may also agree to other settlement options, in our discretion.

     Annuity Option A -- Life Annuity

We provide monthly payments during the lifetime of the Annuitant. Annuity payments stop when the Annuitant dies. There is no provision for continuation of any payments to a Beneficiary.

     Annuity Option B -- Life Annuity with 60, 120, 180 or 240 Monthly Payments Certain

We make monthly payments during the lifetime of the Annuitant. In addition, we guarantee that the Beneficiary will receive monthly payments for the remainder of the period certain, if the Annuitant dies during that period. The election of a longer period results in smaller monthly payments. If no Beneficiary is designated, we pay the discounted value of the remaining payments in one sum to the Annuitant's estate. The Beneficiary may also elect to receive the discounted value of the remaining payments in one sum. The discount rate for a Variable Annuity will be the assumed interest rate in effect; the discount rate for a Fixed Annuity will be based on the interest rate we used to determine the amount of each payment.

     Annuity Option C -- Joint and Survivor Annuity

We make monthly payments during the lifetime of the Annuitant and another person you designate and during the lifetime of the survivor of the two. We stop making payments when the last survivor dies. There is no provision for continuance of any payments to a Beneficiary.

     Annuity Option D -- Monthly Payments for a Specified Period Certain

We make monthly payments for a specified period of time from 10 to 30 years, as you elect. If payments under this option are paid on a variable annuity basis, the Annuitant may elect to receive in one sum, at any time, some or all of the discounted value of the remaining payments, less any applicable withdrawal charge; the discount rate for this purpose will be the assumed interest rate in effect. If the Annuitant dies during the period selected, the remaining income payments are made as described under Annuity Option B. The election of this Annuity Option may result in the imposition of a penalty tax.

Selection of Annuity Option

You select one or more of the Annuity Options, which you may change from time to time during the Accumulation Phase, as long as we receive your selection or change in writing at least 30 days before the Annuity Commencement Date. If we have not received your written selection on the 30th day before the Annuity Commencement Date, you will receive Annuity Option B, for a life annuity with 120 monthly payments certain.

You may specify the proportion of your Adjusted Account Value you wish to provide a Variable Annuity or a Fixed Annuity. Under a Variable Annuity, the dollar amount of payments will vary, while under a Fixed Annuity, the dollar amount of payments will remain the same. If you do not specify a Variable Annuity or a Fixed Annuity, your Adjusted Account Value will be divided between Variable Annuities and Fixed Annuities in the same proportions as your Account Value was divided between the Variable and Fixed Accounts on the Annuity Commencement Date. You may allocate your Adjusted Account Value applied to a Variable Annuity among the Sub-Accounts, or we will use your existing allocations.

There may be additional limitations on the options you may elect under your particular retirement plan or applicable law.

Remember that the Annuity Options may not be changed once annuity payments begin.

Amount of Annuity Payments

     Adjusted Account Value

The Adjusted Account Value is the amount we apply to provide a Variable Annuity and/or a Fixed Annuity. We calculate Adjusted Account Value by taking your Account Value on the Business Day just before the Annuity Commencement Date and making the following adjustments:

o We deduct a proportional amount of the Account Fee, based on the fraction of the current Contract Year that has elapsed.

o If applicable, we apply the Market Value Adjustment to your Account Value in the Fixed Account, which may result in a deduction, an addition, or no change

o We deduct any applicable premium tax or similar tax if not previously deducted.

     Variable Annuity Payments

On the Annuity Commencement Date, we will exchange your Account's Variable Annuity Units for annuitization units which have annual insurance charges of 1.70% of your average daily net assets, regardless of your age on the Issue Date. Variable Annuity payments may vary each month. We determine the dollar amount of the first payment using the portion of your Adjusted Account Value applied to a Variable Annuity and the Annuity Payment Rates in your Contract, which are based on an assumed interest rate of 3% per year, compounded annually. See "Annuity Payment Rates."

To calculate the remaining payments, we convert the amount of the first payment into Annuity Units for each Sub-Account; we determine the number of those Annuity Units by dividing the portion of the first payment attributable to the Sub-Account by the Annuity Unit Value of that Sub-Account for the Valuation Period ending just before the Annuity Commencement Date. This number of Annuity Units for each Sub-Account will remain constant (unless the Annuitant requests an exchange of Annuity Units). However, the dollar amount of the next Variable Annuity payment -- which is the sum of the number of Annuity Units for each Sub-Account times its Annuity Unit Value for the Valuation Period ending just before the date of the payment -- will increase, decrease, or remain the same, depending on the net investment return of the Sub-Accounts.

If the net investment return of the Sub-Accounts selected is the same as the assumed interest rate of 3%, compounded annually, the payments will remain level. If the net investment return exceeds the assumed interest rate, payments will increase and, conversely, if it is less than the assumed interest rate, payments will decrease.

Please refer to the Statement of Additional Information for more information about calculating Variable Annuity Units and Variable Annuity payments, including examples of these calculations.

     Fixed Annuity Payments

Fixed Annuity payments are the same each month. We determine the dollar amount of each Fixed Annuity payment using the fixed portion of your Adjusted Account Value and the applicable Annuity Payment Rates. These will be either (1) the rates in your Contract, or (2) new rates we have published and are using on the Annuity Commencement Date, if they are more favorable. See "Annuity Payment Rates."

     Minimum Payments

If your Adjusted Account Value is less than $2,000, or the first annuity payment for any Annuity Option is less than $20, we will pay the Adjusted Account Value to the Annuitant in one payment.

Exchange of Variable Annuity Units

During the Income Phase, the Annuitant may exchange Annuity Units in one Sub-Account for Annuity Units in another Sub-Account, up to 12 times each Contract Year. To make an exchange, the Annuitant sends us, at our Annuity Service Address, a written request stating the number of Annuity Units in the Sub-Account he or she wishes to exchange and the new Sub-Account for which Annuity Units are requested. The number of new Annuity Units will be calculated so the dollar amount of an annuity payment on the date of the exchange would not be affected. To calculate this number, we use Annuity Unit values for the Valuation Period during which we receive the exchange request.

Before exchanging Annuity Units in one Sub-Account for those in another, the Annuitant should carefully review the relevant Fund prospectuses for the investment objectives and risk disclosure of the Funds in which the Sub-Accounts invest.

During the Income Phase, we permit only exchanges among Sub-Accounts. No exchanges to or from a Fixed Annuity are permitted.

Account Fee

During the Income Phase, we deduct the annual Account Fee of $30 in equal amounts from each Variable Annuity payment. We do not deduct the annual Account Fee from Fixed Annuity payments.

Annuity Payment Rates

The Contracts contain Annuity Payment Rates for each Annuity Option described in this Prospectus. The rates show, for each $1,000 applied, the dollar amount of: (a) the first monthly Variable Annuity payment based on the assumed interest rate specified in the applicable Contract (3% per year, compounded annually); and (b) the monthly Fixed Annuity payment, when this payment is based on the minimum guaranteed interest rate specified in the Contract.

The Annuity Payment Rates may vary according to the Annuity Option elected and the adjusted age of the Annuitant. The Contracts also describe the method of determining the adjusted age of the Annuitant. The mortality table used in determining the Annuity Payment Rates for Annuity Options A, B and C is the Annuity 2000 Table.

Annuity Options as Method of Payment for Death Benefit

You or your Beneficiary may also select one or more Annuity Options to be used in the event of the Covered Person's death before the Income Phase, as described under the "Death Benefit" section of this Prospectus. In that case, your Beneficiary will be the Annuitant. The Annuity Commencement Date will be the first day of the second month beginning after the Death Benefit Date.

OTHER CONTRACT PROVISIONS

Exercise of Contract Rights

A Contract belongs to the individual to whom the Contract is issued. All Contract rights and privileges can be exercised without the consent of the Beneficiary (other than an irrevocably designated Beneficiary) or any other person. Such rights and privileges may be exercised only during the lifetime of the Annuitant before the Annuity Commencement Date, except as the Contract otherwise provides.

The Annuitant becomes the Payee on and after the Annuity Commencement Date. The Beneficiary becomes the Payee on the death of the Owner prior to the Annuity Commencement Date, or on the death of the Annuitant after the Annuity Commencement Date. Such Payee may thereafter exercise such rights and privileges, if any, of ownership which continue.

Change of Ownership

Ownership of a Qualified Contract may not be transferred except to: (1) the Annuitant; (2) a trustee or successor trustee of a pension or profit sharing trust which is qualified under Section 401 of the Internal Revenue Code; (3) the employer of the Annuitant, provided that the Qualified Contract after transfer is maintained under the terms of a retirement plan qualified under Section 403(a) of the Internal Revenue Code for the benefit of the Annuitant; (4) the trustee or custodian of an individual retirement account plan qualified under Section 408 of the Internal Revenue Code for the benefit of the Owner; or (5) as otherwise permitted from time to time by laws and regulations governing the retirement or deferred compensation plans for which a Qualified Contract may be issued. Subject to the foregoing, a Qualified Contract may not be sold, assigned, transferred, discounted or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose to any person other than the Company.

The Owner of a Non-Qualified Contract may change the ownership of the Contract prior to the Annuity Commencement Date. A change of ownership will not be binding on us until we receive written notification. When we receive such notification, the change will be effective as of the date on which the request for change was signed by the Owner, but the change will be without prejudice to us on account of any payment we make or any action we take before receiving the change. If you change the Owner of a Non-Qualified Contract, you will become immediately liable for the payment of taxes on any gain realized under the Contract prior to the change of ownership, including possible liability for a 10% federal excise tax.

Change of ownership will not change the Covered Person named when the Contract is issued. This means that all death benefits and surrender charge waivers will continue to be based on the Covered Person and not the Owner. The amount payable on the death of the new Owner will be the Surrender Value.

Voting of Fund Shares

We will vote Fund shares held by the Sub-Accounts at meetings of shareholders of the Funds or in connection with similar solicitations, according to the voting instructions received from persons having the right to give voting instructions. During the Accumulation Phase, you will have the right to give voting instructions, except in the case of a Group Contract where the Owner has reserved this right. During the Income Phase, the Payee -- that is the Annuitant or Beneficiary entitled to receive benefits -- is the person having such voting rights. We will vote any shares attributable to us and Fund shares for which no timely voting instructions are received in the same proportion as the shares for which we receive instructions from Owners and Payees, as applicable.

Neither the Variable Account nor the Company is under any duty to provide information concerning the voting instruction rights of persons who may have such rights under plans, other than rights afforded by the Investment Company Act of 1940, or any duty to inquire as to the instructions received or the authority of Owners or others, as applicable, to instruct the voting of Fund shares. Except as the Variable Account or the Company has actual knowledge to the contrary, the instructions given by Owners and Payees will be valid as they affect the Variable Account, the Company and any others having voting instruction rights with respect to the Variable Account.

All Fund proxy material, together with an appropriate form to be used to give voting instructions, will be provided to each person having the right to give voting instructions at least 10 days prior to each meeting of the shareholders of the Funds. We will determine the number of Fund shares as to which each such person is entitled to give instructions as of the record date set by the Funds for such meeting, which is expected to be not more than 90 days prior to each such meeting. Prior to the Annuity Commencement Date, the number of Fund shares as to which voting instructions may be given to the Company is determined by dividing the value of all of the Variable Accumulation Units of the particular Sub-Account credited to the Owner Account by the net asset value of one Fund share as of the same date. On or after the Annuity Commencement Date, the number of Fund shares as to which such instructions may be given by a Payee is determined by dividing the reserve held by the Company in the Sub-Account with respect to the particular Payee by the net asset value of a Fund share as of the same date. After the Annuity Commencement Date, the number of Fund shares as to which a Payee is entitled to give voting instructions will generally decrease due to the decrease in the reserve.

Periodic Reports

During the Accumulation Period we will send you, at least once during each Contract Year, a statement showing the number, type and value of Accumulation Units credited to your Account and the Fixed Accumulation Value of your Account, which statement shall be accurate as of a date not more than 2 months previous to the date of mailing. These periodic statements contain important information concerning your transactions with respect to your Contract. It is your obligation to review each such statement carefully and to report to us, at the address or telephone number provided on the statement, any errors or discrepancies in the information presented therein within 60 days of the date of such statement. Unless we receive notice of any such error or discrepancy from you within such period, we may not be responsible for correcting the error or discrepancy.

In addition, every person having voting rights will receive such reports or prospectuses concerning the Variable Account and the Funds as may be required by the Investment Company Act of 1940 and the Securities Act of 1933. We will also send such statements reflecting transactions in your Account as may be required by applicable laws, rules and regulations.

Upon request, we will provide you with information regarding fixed and variable accumulation values.

Substitution of Securities

Shares of any or all Funds may not always be available for investment under the Contracts. We may add or delete Funds or other investment companies as variable investment options under the Contracts. We may also substitute for the shares held in any Sub-Account shares of another Fund or shares of another registered open-end investment company or unit investment trust, provided that the substitution has been approved, if required, by the SEC and the Superintendent of Insurance of the State of New York. In the event of any substitution pursuant to this provision, we may make appropriate endorsement to the Contract to reflect the substitution.

Change in Operation of Variable Account

At our election and subject to any necessary vote by persons having the right to give instructions with respect to the voting of Fund shares held by the Sub-Accounts, the Variable Account may be operated as a management company under the Investment Company Act of 1940 or it may be deregistered under the Investment Company Act of 1940 in the event registration is no longer required. Deregistration of the Variable Account requires an order by the SEC. In the event of any change in the operation of the Variable Account pursuant to this provision, we may make appropriate endorsement to the Contract to reflect the change and take such other action as may be necessary and appropriate to effect the change.

Splitting Units

We reserve the right to split or combine the value of Variable Accumulation Units, Annuity Units or any of them. In effecting any such change of unit values, strict equity will be preserved and no change will have a material effect on the benefits or other provisions of the Contract.

Modification

Upon notice to the Owner (or the Payee(s) during the Income Phase), we may modify the Contract if such modification: (i) is necessary to make the Contract or the Variable Account comply with any law or regulation issued by a governmental agency to which the Company or the Variable Account is subject; (ii) is necessary to assure continued qualification of the Contract under the Internal Revenue Code or other federal or state laws relating to retirement annuities or annuity contracts; (iii) is necessary to reflect a change in the operation of the Variable Account or the Sub-Account(s) (see "Change in Operation of Variable Account"); (iv) provides additional Variable Account and/or fixed accumulation options; or (v) as may otherwise be in the best interests of Owners or Payees, as applicable. In the event of any such modification, we may make appropriate endorsement in the Contract to reflect such modification.

Reservation of Rights

We reserve the right, to the extent permitted by law, to: (1) combine any 2 or more variable accounts; (2) add or delete Funds, sub-series thereof or other investment companies and corresponding Sub-Accounts; (3) add or remove Guarantee Periods available at any time for election by an Owner; and (4) restrict or eliminate any of the voting rights of Owners) or other persons who have voting rights as to the Variable Account. Where required by law, we will obtain approval of changes from Owners or any appropriate regulatory authority. In the event of any change pursuant to this provision, we may make appropriate endorsement to the Contract to reflect the change.

Right to Return

If you are not satisfied with your Contract, you may return it by mailing or delivering it to us at our Annuity Service Address as shown on the cover of this Prospectus within 10 days after it was delivered to you. When we receive the returned Contract, it will be cancelled and we will refund to you your Account Value less the Adjusted Purchase Payment Interest. The Adjusted Purchase Payment Interest that may be deducted is equal to the lesser of:

o the portion of the Account Value that is attributable to any Purchase Payment Interest, and

o all Purchase Payment Interest.

This means you receive any gain on Purchase Payment Interest and we bear any loss. However, if applicable state law requires, we will return the full amount of any Purchase Payment(s) we received. State law may also require us to give you a longer "free look" period or allow you to return the Contract to your sales representative.

If you are establishing an Individual Retirement Annuity ("IRA"), the Internal Revenue Code requires that we give you a disclosure statement containing certain information about the Contract and applicable legal requirements. We must give you this statement on or before the date the IRA is established. If we give you the disclosure statement before the seventh day preceding the date the IRA is established, you will not have any right of revocation under the Code. If we give you the disclosure statement at a later date, then you may give us a notice of revocation at any time within 7 days after your Issue Date. Upon such revocation, we will refund your Purchase Payment(s). This right of revocation with respect to an IRA is in addition to the return privilege set forth in the preceding paragraph. We allow an Owner establishing an IRA a "ten day free-look," notwithstanding the provisions of the Internal Revenue Code.

TAX CONSIDERATIONS

This section provides general information on the federal income tax consequences of ownership of a Contract based upon our understanding of current federal tax laws. Actual federal tax consequences will vary depending on, among other things, the type of retirement plan under which your Contract is issued. Also, legislation altering the current tax treatment of annuity contracts could be enacted in the future and could apply retroactively to Contracts that were purchased before the date of enactment. We make no attempt to consider any applicable federal estate, federal gift, state, or other tax laws. We also make no guarantee regarding the federal, state, or local tax status of any Contract or any transaction involving any Contract. You should consult a qualified tax professional for advice before purchasing a Contract or executing any other transaction (such as a rollover, distribution, withdrawal or payment) involving a Contract.

Deductibility of Purchase Payments

For federal income tax purposes, Purchase Payments made under Non-Qualified Contracts are not deductible. Under certain circumstances, Purchase Payments made under Qualified Contracts may be excludible or deductible from taxable income. Any such amounts will also be excluded from the "investment in the contract" for purposes of determining the taxable portion of any distributions from a Qualified Contract.

Pre-Distribution Taxation of Contracts

Generally, an increase in the value of a Contract will not give rise to a current income tax liability to the Owner of a Contract or to any payee under the Contract until a distribution is received from the Contract. However, certain assignments or pledges of a Contract or loans under a Contract will be treated as distributions to the Owner of the Contract and will accelerate the taxability of any increases in the value of a Contract.

Also, corporate (or other non-natural person) Owners of a Non-Qualified Contract will generally incur a current tax liability on Account Value increases. There are certain exceptions to this current taxation rule, including: (i) any Contract that is an "immediate annuity", which the Internal Revenue Code (the "Code") defines as a single premium contract with an annuity commencement date within one year of the date of purchase which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period, and (ii) any Contract that the non-natural person holds as agent for a natural person (such as where a bank or other entity holds a Contract as trustee under a trust agreement).

You should note that a qualified retirement plan generally provides tax deferral regardless of whether the plan invests in an annuity contract. For that reason, no decision to purchase a Qualified Contract should be based on the assumption that the purchase of a Qualified Contract is necessary to obtain tax deferral under a qualified plan.

Distributions and Withdrawals from Non-Qualified Contracts

The Account Value of a Non-Qualified Contract will generally include both (i) an amount attributable to Purchase Payments, the return of which will not be taxable, and (ii) an amount attributable to investment earnings, the receipt of which will be taxable at ordinary income rates. The relative portions of any particular distribution that derive from nontaxable Purchase Payments and taxable investment earnings depend upon the nature and the timing of that distribution.

Any amounts held under a Non-Qualified Contract that are assigned or pledged as collateral for a loan will also be treated as if withdrawn from the Contract. In addition, upon the transfer of a Non-Qualified Contract by gift (other than to the Owner's spouse), the Owner must treat an amount equal to the Account Value minus the total amount paid for the Contract as income.

Any withdrawal of less than your entire Account Value under a Non-Qualified Contract before the Annuity Commencement Date, must be treated as a receipt of investment earnings. You may not treat such withdrawals as a non-taxable return of Purchase Payments unless you have first withdrawn the entire amount of the Account Value that is attributable to investment earnings. For purposes of determining whether an Owner has withdrawn the entire amount of the investment earnings under a Non-Qualified Contract, the Code provides that all Non-Qualified deferred annuity contracts issued by the same company to the same Owner during any one calendar year must be treated as one annuity contract.

A Payee who receives annuity payments under a Non-Qualified Contract after the Annuity Commencement Date, will generally be able to treat a portion of each payment as a nontaxable return of Purchase Payments and to treat only the remainder of each such payment as taxable investment earnings. Until the Purchase Payments have been fully recovered in this manner, the nontaxable portion of each payment will be determined by the ratio of (i) the total amount of the Purchase Payments made under the Contract, to (ii) the Payee's expected return under the Contract. Once the Payee has received nontaxable payments in an amount equal to total Purchase Payments, no further exclusion is allowed and all future distributions will constitute fully taxable ordinary income. If payments are terminated upon the death of the Annuitant or other Payee before the Purchase Payments have been fully recovered, the unrecovered Purchase Payments may be deducted on the final return of the Annuitant or other Payee.

A penalty tax of 10% may also apply to taxable cash withdrawals, including lump-sum payments from Non-Qualified Contracts. This penalty will generally not apply to distributions made after age 59 1/2, to distributions pursuant to the death or disability of the owner, or to distributions that are a part of a series of substantially equal periodic payments made annually under a lifetime annuity, or to distributions under an immediate annuity (as defined above).

Death benefits paid upon the death of a contract owner are not life insurance benefits and will generally be includible in the income of the recipient to the extent they represent investment earnings under the contract. For this purpose, the amount of the "investment in the contract" is not affected by the owner's or annuitant's death, i.e., the investment in the contract must still be determined by reference to the total Purchase Payments (excluding amounts that were deductible by, or excluded from the gross income of, the Owner of a Contract), less any Purchase Payments that were amounts previously received which were not includible in income. Special mandatory distribution rules also apply after the death of the Owner when the beneficiary is not the surviving spouse of the Owner.

If death benefits are distributed in a lump sum, the taxable amount of those benefits will be determined in the same manner as upon a full surrender of the contract. If death benefits are distributed under an annuity option, the taxable amount of those benefits will be determined in the same manner as annuity payments, as described above.

Any amounts held under a Non-Qualified Contract that are assigned or pledged as collateral for a loan will also be treated as if withdrawn from the Contract. In addition, upon the transfer of a Non-Qualified Contract by gift (other than to the Owner's spouse), the Owner must treat an amount equal to the Account Value minus the total amount paid for the Contract as income.

Distributions and Withdrawals from Qualified Contracts

In most cases, all of the distributions you receive from a Qualified Contract will constitute fully taxable ordinary income. Also, a 10% penalty tax will apply to distributions prior to age 59 1/2, except in certain circumstances.

If you receive a distribution for a Qualified Contract used in connection with a qualified pension plan, from a tax-sheltered annuity or an individual retirement annuity "IRA" and roll over some or all that distribution to another eligible plan, following the rules set out in the Code and IRS regulations, the portion of such distribution that is rolled over will not be includible in your income. An eligible rollover distribution from a qualified plan or tax-sheltered annuity will be subject to 20% mandatory withholding as described below. Because the amount of the cash paid to you as an eligible rollover distribution will be reduced by this withholding, you will not be able to roll over the entire account balance under your Contract, unless you use other funds equal to the tax withholding to complete the rollover. Rollovers of IRA distributions are not subject to the 20% mandatory withholding requirement.

An eligible rollover distribution from a qualified plan or tax-sheltered annuity is any distribution of all or any portion of the balance to the credit of an employee, except that the term does not include:

o A distribution which is one of a series of substantially equal periodic payments made annually under a lifetime annuity or for a specified period of ten years or more;

o Any required minimum distribution, or

o Any hardship distribution.

Only you or your spouse may elect to roll over a distribution to an eligible retirement plan.

Withholding

In the case of an eligible rollover distribution (as defined above) from a Qualified Contract (other than from an IRA), we (or the plan administrator) must withhold and remit to the U.S. Government 20% of the distribution, unless the Owner or Payee elects to make a direct rollover of the distribution to another qualified retirement plan that is eligible to receive the rollover; however, only you or your spouse may elect a direct rollover. In the case of a distribution from (i) a Non-Qualified Contract, (ii) an IRA, or (iii) a Qualified Contract where the distribution is not an eligible rollover distribution, we will withhold and remit to the U.S. Government a part of the taxable portion of each distribution unless, prior to the distribution, the Owner or Payee provides us his or her taxpayer identification number and instructs us (in the manner prescribed) not to withhold. The Owner or Payee may credit against his or her federal income tax liability for the year of distribution any amounts that we (or the plan administrator) withhold.

Investment Diversification and Control

The Treasury Department has issued regulations that prescribe investment diversification requirements for the mutual fund series underlying nonqualified variable contracts. All Non-Qualified Contracts must comply with these regulations to qualify as annuities for federal income tax purposes. The owner of a Non-Qualified Contract that does not meet these guidelines will be subject to current taxation on annual increases in value of the Contract. We believe that each Fund complies with these regulations.

The IRS has stated that satisfaction of the diversification requirements described above by itself does not prevent a contract owner from being treated as the owner of separate account assets under an "owner control" test. If a contract owner is treated as the owner of separate account assets for tax purposes, the contract owner would be subject to taxation on the income and gains from the separate account assets. In published revenue rulings through 1982 and then again in 2003, the IRS has stated that a variable contract owner will be considered the owner of separate account assets if the owner possesses incidents of ownership in those assets, such as the ability to exercise control over the investment of the assets. In Rev. Rul. 2003-91, the IRS considered certain variable annuity and variable life insurance contracts and concluded that the owners of the variable contracts would not be considered the owners of the contracts' underlying assets for federal income tax purposes.

Rev. Rul. 2003-91 states that the determination of whether the owner of a variable contract possesses sufficient incidents of ownership over the assets underlying the variable contract so as to be deemed the owner of those assets for federal income tax purposes will depend on all the facts and circumstances. We do not believe that the differences between the Contract and the contracts described in Rev. Rul. 2003-91 should prevent the holding in Rev. Rul. 2003-91 from applying. Nevertheless, you should consult with a competent tax adviser on the potential impact of the investor control rules of the IRS as they relate to the investment decisions and activities you may undertake with respect to the Contract. In addition, the IRS and/or the Treasury Department may issue new rulings, interpretations or regulations on this subject in the future. Accordingly, we therefore reserve the right to modify the Contracts as necessary to attempt to prevent you from being considered the owner, for tax purposes, of the underlying assets. We also reserve the right to notify you if we determine that it is no longer practicable to maintain the Contract in a manner that was designed to prevent you from being considered the owner of the assets of the Separate Account. You bear the risk that you may be treated as the owner of Separate Account assets and taxed accordingly.

Tax Treatment of the Company and the Variable Account

As a life insurance company under the Code, we will record and report operations of the Variable Account separately from other operations. The Variable Account will not, however, constitute a regulated investment company or any other type of taxable entity distinct from our other operations. Under present law, we will not incur tax on the income of the Variable Account (consisting primarily of interest, dividends, and net capital gains) if we use this income to increase reserves under Contracts participating in the Variable Account.

Qualified Retirement Plans

You may use Qualified Contracts with several types of qualified retirement plans. Because tax consequences will vary with the type of qualified retirement plan and the plan's specific terms and conditions, we provide below only brief, general descriptions of the consequences that follow from using Qualified Contracts in connection with various types of qualified retirement plans. We stress that the rights of any person to any benefits under these plans may be subject to the terms and conditions of the plans themselves, regardless of the terms of the Qualified Contracts that you are using. These terms and conditions may include restrictions on, among other things, ownership, transferability, assignability, contributions and distributions.

Pension and Profit-Sharing Plans

Sections 401(a), 401(k) and 403(a) of the Code permit business employers and certain associations to establish various types of retirement plans for employees. The Tax Equity and Fiscal Responsibility Act of 1982 eliminated most differences between qualified retirement plans of corporations and those of self-employed individuals. Self-employed persons may therefore use Qualified Contracts as a funding vehicle for their retirement plans, as a general rule.

Tax-Sheltered Annuities

Section 403(b) of the Code permits public school employees and employees of certain types of charitable, educational and scientific organizations specified in Section 501(c)(3) of the Code to purchase annuity contracts and, subject to certain limitations, exclude the amount of purchase payments from gross income for tax purposes. The Code imposes restrictions on cash withdrawals from Section 403(b) annuities.

If the Contracts are to receive tax deferred treatment, cash withdrawals of amounts attributable to salary reduction contributions (other than withdrawals of accumulation account value as of December 31, 1988) may be made only when the Owner attains age 59 1/2, has a severance from employmentwith the employer, dies or becomes disabled (within the meaning of Section 72(m)(7) of the Code). These restrictions apply to (i) any post-1988 salary reduction contributions, (ii) any growth or interest on post-1988 salary reduction contributions, (iii) any growth or interest on pre-1989 salary reduction contributions that occurs on or after January 1, 1989, and (iv) any pre-1989 salary reduction contributions since we do not maintain records that separately account for such contributions. It is permissible, however, to withdraw post-1988 salary reduction contributions (but not the earnings attributable to such contributions) in cases of financial hardship. While the Internal Revenue Service has not issued specific rules defining financial hardship, we expect that to qualify for a hardship distribution, the Owner must have an immediate and heavy bona fide financial need and lack other resources reasonably available to satisfy the need. Hardship withdrawals (as well as certain other premature withdrawals) will be subject to a 10% tax penalty, in addition to any withdrawal charge applicable under the Contracts. Under certain circumstances the 10% tax penalty will not apply if the withdrawal is for medical expenses.

Section 403(b) annuities, like IRAs, are subject to required minimum distributions under the Code. Section 403(b) annuities are unique, however, in that any account balance accruing before January 1, 1987 (the "pre-1987 balance") needs to comply with only the minimum distribution incidental benefit (MDIB) rule and not also with the minimum distribution rules set forth in Section 401(a)(9) of the Code. This special treatment for any pre-1987 balance is, however, conditioned upon the issuer identifying the pre-1987 balance and maintaining accurate records of changes to the balance. Since we do not maintain such records, your pre-1987 balance, if any, will not be eligible for special distribution treatment.

Under the terms of a particular Section 403(b) plan, the Owner may be entitled to transfer all or a portion of the Account Value to one or more alternative funding options. Owners should consult the documents governing their plan and the person who administers the plan for information as to such investment alternatives.

Individual Retirement Accounts

Sections 219 and 408 of the Code permit eligible individuals to contribute to an individual retirement program, including Simplified Employee Pension Plans, Employer/Association of Employees Established Individual Retirement Account Trusts, and Simple Retirement Accounts. Such IRAs are subject to limitations on contribution levels, the persons who may be eligible, and on the time when distributions may commence. In addition, certain distributions from some other types of retirement plans may be placed in an IRA on a tax-deferred basis. If we sell Contracts for use with IRAs, the Internal Revenue Service or other agency may impose supplementary information requirements. We will provide purchasers of the Contracts for such purposes with any necessary information. You will have the right to revoke the Contract under certain circumstances, as described in the section of this Prospectus entitled "Right to Return."

Roth IRAs

Section 408A of the Code permits an individual to contribute to an individual retirement program called a Roth IRA. Unlike contributions to a traditional IRA under Section 408 of the Code, contributions to a Roth IRA are not tax-deductible. Provided certain conditions are satisfied, distributions are generally tax-free. Like traditional IRAs, Roth IRAs are subject to limitations on contribution amounts and the timing of distributions. If an individual converts a traditional IRA into a Roth IRA the full amount of the IRA is included in taxable income. The Internal Revenue Service and other agencies may impose special information requirements with respect to Roth IRAs. If we make Contracts available for use with Roth IRAs, we will provide any necessary information for Contracts issued in connection with Roth IRAs.

Impact of Optional Death Benefit and Secured Returns 2 Benefit Riders

      Qualified Contracts

If your Contract is an IRA annuity or a 403(b) TSA annuity, it is subject to certain required minimum distribution (RMD) requirements imposed by the Internal Revenue Code and IRS regulations. Under the RMD rules, distributions must begin no later than April 1 of the calendar year following the year in which you attain age 70 1/2 or, for non-IRAs, the date of retirement instead of age 70 1/2 if it is later. The RMD amount for a distribution calendar year is generally calculated by dividing the account balance as of 12/31 of the prior calendar year by the applicable distribution factor set forth in a Uniform Lifetime Table in the IRS regulations.

In April 2002, the IRS issued regulations that would define your entire interest in your IRA annuity or 403(b) annuity prior to the date annuity benefits begin as the dollar amount credited to you under your Contract plus the actuarial value of any other benefits (such as minimum survivior benefits) that are provided under your Contract. This regulation was issued in both temporary (effective immediately) and proposed (subject to public comment and possible change) form. After the regulation was issued, however, the IRS issued IRS Notice 2003-2, stating that, at least until the end of the calendar year in which final regulations are published, your entire interest in your Contract can be determined without taking into account the actuarial value of any other benefits provided under your Contract. It is possible that the final regulations will require that the dollar amount credited under the annuity be increased by the actuarial value of contractual benefits such as the optional riders. If this occurs, your election of an optional rider could cause your RMD amount to be higher than it would be without such an election.

You may take an RMD amount calculated for a particular IRA annuity from that annuity or from another IRA account or IRA annuity of yours. Similarly, you may take an RMD amount calculated for a particular TSA annuity from that annuity or from another TSA account or TSA annuity of yours. If your Qualified Contract is an asset of a qualified retirement plan, the qualified plan is subject to the RMD requirements and the Contract, as an asset of the qualified plan may need to be used as a source of funds for the RMDs.

If you are subject to the RMD requirements while you are enrolled in the AB Plan under the Secured Returns 2 Benefit, any RMD amount that you take from the Contract will reduce the amount of the benefit under the AB Plan. This reduction could significantly reduce the value of the Secured Returns 2 Benefit to you.

If you are subject to the RMD requirements while you are enrolled in the WB Plan under the Secured Returns 2 Benefit, and any RMD amount that you take from the Contract ever exceeds the maximum amount that you may withdraw under the terms of the WB Plan, the additional withdrawal amount will reduce the amount of the benefit available under the WB Plan. (See Withdrawals under the Secured Returns 2 Benefit.) This reduction could significantly reduce the value of the Secured Returns 2 Benefit to you.

Participants in 403(b) plans who are under age 59 1/2, are subject to withdrawal restrictions under the Internal Revenue Code that may prevent them from being able to make any withdrawals under the WB Plan while they remain under age 59 1/2.

Prior to electing to participate in (or, if applicable, prior to renewing your participation in) the Secured Returns 2 Benefit, you should consult with a qualified tax professional as to the possible effect of RMD distributions on the benefits that might otherwise be available under the Secured Returns 2 Benefit.

      Non-Qualified Contracts

We are required to make a determination as to the taxability of any withdrawal you make in order to be able to annually report to the IRS and you information about your withdrawal. Under the Internal Revenue Code, any withdrawal from a Non-Qualified Contract is taxable to the extent the annuity's cash value (determined without regard to surrender charges) exceeds the investment in the contract. There is no definition of "cash value" in the Code and, for tax reporting purposes, we are currently treating it as the Account Value of the Contract. However, there can be no assurance that the IRS will agree that this is the correct cash value. The IRS could, for example, determine that the cash value is the Account Value plus an additional amount representing the value of an optional rider. If this were to occur, election of an optional rider could cause any withdrawal, including a withdrawal under the WB Plan of the Secured Returns 2 Benefit, to have a higher proportion of the withdrawal derived from taxable investment earnings. Prior to electing to participate in an optional rider (or, if applicable, prior to renewing your participation in the Secured Returns 2 Benefit), you should consult with a qualified tax professional as to the meaning of "cash value."

ADMINISTRATION OF THE CONTRACTS

We perform certain administrative functions relating to the Contracts, Owner Accounts, and the Variable Account. These functions include, but are not limited to, maintaining the books and records of the Variable Account and the Sub-Accounts; maintaining records of the name, address, taxpayer identification number, Contract number, Owner Account number and type, the status of each Owner Account and other pertinent information necessary to the administration and operation of the Contracts; processing Applications, Purchase Payments, transfers and full and partial withdrawals; issuing Contracts; administering annuity payments; furnishing accounting and valuation services; reconciling and depositing cash receipts; providing confirmations; providing toll-free customer service lines; and furnishing telephonic transfer services.

DISTRIBUTION OF THE CONTRACTS

We offer the Contract on a continuous basis. Contracts are sold by licensed insurance agents ("the Selling Agents") in those states where the Contract may be lawfully sold. Such Selling Agents will be registered representatives of affiliated and unaffiliated broker-dealer firms ("the Selling Broker-Dealers") registered under the Securities Exchange Act of 1934 who are members of the National Association of Securities Dealers, Inc. and who have entered into selling agreements with the Company and the general distributor, Clarendon Insurance Agency, Inc. ("Clarendon"), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481. Clarendon is a wholly-owned subsidiary of the Company, is registered with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the National Association of Securities Dealers, Inc.

The Company (or its affiliates, for purposes of this section only, collectively, "the Company"), pays the Selling Broker-Dealers compensation for the promotion and sale of the Contract. The Selling Agents who solicit sales of the Contract typically receive a portion of the compensation paid by the Company to the Selling Broker-Dealers in the form of commissions or other compensation, depending on the agreement between the Selling Broker-Dealer and their Selling Agent. This compensation is not paid directly by the Contract Owner or the separate account. The Company intends to recoup this compensation through fees and charges imposed under the Contract, and from profits on payments received by the Company for providing administrative, marketing, and other support and services to the Funds.

The amount and timing of commissions the Company may pay to Selling Broker-Dealers may vary depending on the selling agreement but is not expected to be more than 7.00% of Purchase Payments, and 1.25% annually of the Participant's Account Value. The Company may pay or allow other promotional incentives or payments in the form of cash or other compensation to the extent permitted by NASD rules and other applicable laws and regulations.

The Company also pays compensation to wholesaling broker-dealers, including payments to affiliates of the Company, in return for wholesaling services such as providing marketing and sales support and product training to the Selling Agents of the Selling Broker-Dealers. These payments may be based on a percentage of Purchase Payments and/or a percentage of Contract Value.

In addition to the compensation described above, the Company may make additional cash payments or reimbursements to Selling Broker-Dealers in recognition of their marketing and distribution, transaction processing and/or administrative services support. These payments are not offered to all Selling Broker-Dealers, and the terms of any particular agreement governing the payments may vary among Selling Broker-Dealers depending on, among other things, the level and type of marketing and distribution support provided. Marketing and distribution support services may include, among other services, placement of the Company's products on the Selling Broker-Dealers' preferred or recommended list, access to the Selling Broker-Dealers' registered representatives for purposes of promoting sales of the Company's products, assistance in training and education of the Selling Agents, and opportunities for the Company to participate in sales conferences and educational seminars. The payments or reimbursements may be calculated as a percentage of the particular Selling Broker-Dealer's actual or expected aggregate sales of our variable contracts (including the Contract) or assets held within those contracts (in most cases not to exceed 0.25% of aggregate sales and 0.10% of assets attributable to the Selling-Broker-Dealer, and/or may be a fixed dollar amount.

You should ask your Selling Agent for further information about what commissions or other compensation he or she, or the Selling Broker-Dealer for which he or she works, may receive in connection with your purchase of a Contract.

Commissions may be waived or reduced in connection with certain transactions described in this Prospectus under the heading "Waivers; Reduced Charges; Credits; Special Guaranteed Interest Rates." During 2003, approximately $6,926 was paid to but not retained by Clarendon in connection with the distribution of the Contracts.

PERFORMANCE INFORMATION

From time to time the Variable Account may publish reports to shareholders, sales literature and advertisements containing performance information relating to the Sub-Accounts. This information may include standardized and non-standardized "Average Annual Total Return," "Cumulative Growth Rate" and "Compound Growth Rate." We may also advertise "yield" and "effective yield" for some variable options.

Average Annual Total Return measures the net income of the Sub-Account and any realized or unrealized gains or losses of the Funds in which it invests, over the period stated. Average Annual Total Return figures are annualized and represent the average annual percentage change in the value of an investment in a Sub-Account over that period. Standardized Average Annual Total Return information covers the period after the Variable Account was established or, if shorter, the life of the Series. Non-standardized Average Annual Total Return covers the life of each Fund, which may predate the Variable Account. Cumulative Growth Rate represents the cumulative change in the value of an investment in the Sub-Account for the period stated, and is arrived at by calculating the change in the Accumulation Unit Value of a Sub-Account between the first and the last day of the period being measured. The difference is expressed as a percentage of the Accumulation Unit Value at the beginning of the base period. "Compound Growth Rate" is an annualized measure, calculated by applying a formula that determines the level of return which, if earned over the entire period, would produce the cumulative return.

Average Annual Total Return figures assume an initial Purchase Payment of $1,000 and reflect all applicable withdrawal and Contract charges. The Cumulative Growth Rate and Compound Growth Rate figures that we advertise do not reflect withdrawal charges, the annual Account Fee, or any Purchase Payment Interest, although such figures do reflect all recurring charges. If such figures were calculated to reflect Purchase Payment Interest credited, the calculation would also reflect any withdrawal charges made. Results calculated without withdrawal and/or certain Contract charges will be higher. We may also use other types of rates of return that do not reflect withdrawal and Contract charges.

The performance figures used by the Variable Account are based on the actual historical performance of the underlying Funds for the specified periods, and the figures are not intended to indicate future performance. For periods before the date the Contracts became available, we calculate the performance information for the Sub-Accounts on a hypothetical basis. To do this, we reflect deductions of the current Contract fees and charges from the historical performance of the corresponding Fund.

Yield is a measure of the net dividend and interest income earned over a specific one-month or 30-day period (7-day period for the Money Market Sub-Account), expressed as a percentage of the value of the Sub-Account's Accumulation Units. Yield is an annualized figure, which means that we assume that the Sub-Account generates the same level of net income over a one-year period and compound that income on a semi-annual basis. We calculate the effective yield for the Money Market Sub-Account similarly, but include the increase due to assumed compounding. The Money Market Sub-Account's effective yield will be slightly higher than its yield as a result of its compounding effect.

The Variable Account may also from time to time compare its investment performance to various unmanaged indices or other variable annuities and may refer to certain rating and other organizations in its marketing materials. More information on performance and our computations is set forth in the Statement of Additional Information.

The Company may also advertise the ratings and other information assigned to it by independent industry ratings organizations. Some of these organizations are A.M. Best, Moody's Investor's Service, Standard and Poor's Insurance Rating Services, and Fitch. Each year A.M. Best reviews the financial status of thousands of insurers, culminating in the assignment of Best's rating. These ratings reflect A.M. Best's current opinion of the relevant financial strength and operating performance of an insurance company in comparison to the norms of the life/health industry. Best's ratings range from A++ to F. Standard and Poor's and Fitch's ratings measure the ability of an insurance company to meet its obligations under insurance policies it issues. These two ratings do not measure the insurance company's ability to meet non-policy obligations. Ratings in general do not relate to the performance of the Sub-Accounts.

We may also advertise endorsements from organizations, individuals or other parties that recommend the Company or the Contracts. We may occasionally include in advertisements (1) comparisons of currently taxable and tax deferred investment programs, based on selected tax brackets; or (2) discussions of alternative investment vehicles and general economic conditions.

AVAILABLE INFORMATION

The Company and the Variable Account have filed with the SEC registration statements under the Securities Act of 1933 relating to the Contracts. This Prospectus does not contain all of the information contained in the registration statements and their exhibits. For further information regarding the Variable Account, the Company and the Contracts, please refer to the registration statements and their exhibits.

In addition, the Company is subject to the informational requirements of the Securities Exchange Act of 1934. We file reports and other information with the SEC to meet these requirements. You can inspect and copy this information and our registration statements at the SEC's public reference facilities at the following locations: Washington, D.C. -- 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549; Chicago, Illinois -- 500 West Madison Street, Chicago, IL 60661. The Washington, D.C. office will also provide copies by mail for a fee. You may also find these materials on the SEC's website (http://www.sec.gov).

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December 31, 2003 filed with the SEC pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") is incorporated herein by reference. All documents or reports we file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this prospectus and prior to the termination of the offering, shall be deemed incorporated by reference into the prospectus.

The Company will furnish, without charge, to each person to whom a copy of this Prospectus is delivered, upon the written or oral request of such person, a copy of the documents referred to above which have been incorporated by reference into this Prospectus, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference in this Prospectus). Requests for such documents should be directed to the Secretary, Sun Life Assurance Company of Canada (U.S.), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481, telephone (800) 225-3950.

STATE REGULATION

The Company is subject to the laws of the State of New York governing life insurance companies and to regulation by the Superintendent of Insurance of New York. An annual statement is filed with the Superintendent of Insurance on or before March lst in each year relating to the operations of the Company for the preceding year and its financial condition on December 31st of such year. Its books and records are subject to review or examination by the Superintendent or his agents at any time and a full examination of its operations is conducted at periodic intervals.

The Superintendent has broad administrative powers with respect to licensing to transact business, overseeing trade practices, licensing agents, approving policy forms, establishing reserve requirements, fixing maximum interest rates on life insurance policy loans and minimum rates for accumulation of surrender values, prescribing the form and content of required financial statements and regulating the type and amounts of investments permitted.

In addition, affiliated groups of insurers, such as the Company, Sun Life (Canada) and its affiliates, are regulated under insurance holding company legislation. Under such laws, inter-company transfers of assets and dividend payments from insurance subsidiaries may be subject to prior notice or approval, depending on the size of such transfers and payments in relation to the financial positions of the companies involved. Under insurance guaranty fund laws in most states, insurers doing business therein can be assessed (up to prescribed limits) for policyholder losses incurred by insolvent companies. The amount of any future assessments of the Company under these laws cannot be reasonably estimated. However, most of these laws do provide that an assessment may be excused or deferred if it would threaten an insurer's own financial strength and many permit the deduction of all or a portion of any such assessment from any future premium or similar taxes payable.

Although the federal government generally does not directly regulate the business of insurance, federal initiatives often have an impact on the business in a variety of ways. Current and proposed federal measures which may significantly affect the insurance business include employee benefit regulation, removal of barriers preventing banks from engaging in the insurance business, tax law changes affecting the taxation of insurance companies, the tax treatment of insurance products and its impact on the relative desirability of various personal investment vehicles.

LEGAL PROCEEDINGS

There are no pending legal proceedings affecting the Variable Account. We are engaged in various kinds of routine litigation which, in management's judgment, is not of material importance to our respective total assets or material with respect to the Variable Account.

FINANCIAL STATEMENTS

The financial statements of the Company which are included in the SAI should be considered only as bearing on the ability of the Company to meet its obligations with respect to amounts allocated to the Fixed Account and with respect to the death benefit and the Company's assumption of the mortality and expense risks. They should not be considered as bearing on the investment performance of the Fund shares held in the Sub-Accounts of the Variable Account.

The financial statements of the Variable Account for the year ended December 31, 2003 are also included in the SAI.

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TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

Calculation of Performance Data

Advertising and Sales Literature

Tax-Deferred Accumulation

Calculations

  Example of Variable Accumulation Unit Value Calculation

  Example of Variable Annuity Unit Calculation

  Example of Variable Annuity Payment Calculation

Distribution of the Contracts

Designation and Change of Beneficiary

Custodian

Independent Registered Public Accounting Firm

Financial Statements

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This Prospectus sets forth information about the Contracts and the Variable Account that a prospective purchaser should know before investing. Additional information about the Contracts and the Variable Account has been filed with the Securities and Exchange Commission in a Statement of Additional Information dated December 30, 2004 which is incorporated herein by reference. The Statement of Additional Information is available upon request and without charge from Sun Life Insurance and Annuity Company of New York. To receive a copy, return this request form to the address shown below or telephone (800) 447-7569.

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To:	Sun Life Insurance and Annuity Company of New York
	P.O. Box 9133
	Wellesley Hills, Massachusetts 02481
	Please send me a Statement of Additional Information for
	Sun Life Financial MastersSM Reward NY Variable and Fixed Annuity
	Sun Life (N.Y.) Variable Account C.

Name                                                                                   

Address                                                                              

City                                       State            Zip          

Telephone                                                        

APPENDIX A

GLOSSARY

The following terms as used in this Prospectus have the indicated meanings:

ACCOUNT: An account established for each Owner to which Net Purchase Payments are credited.

ACCOUNT VALUE: The Variable Accumulation Value, if any, plus the Fixed Accumulation Value, if any, of your Account for any Valuation Period.

ACCUMULATION PHASE: The period before the Annuity Commencement Date and during the lifetime of the Annuitant (and while the Owner is still alive) during which you make Purchase Payments under the Contract. This is called the "Accumulation Period" in the Contract.

ADJUSTED PURCHASE PAYMENTS: Purchase Payments adjusted for partial withdrawals as described in "Calculating the Death Benefit."

*ANNUITANT: The person or persons to whom the first annuity payment is made. If either Annuitant dies prior to the Annuity Commencement Date, the surviving Annuitant will become the sole Annuitant.

ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment under each Contract is to be made.

ANNUITY OPTION: The method you choose for making annuity payments.

ANNUITY UNIT: A unit of measure used in the calculation of the amount of the second and each subsequent Variable Annuity payment from the Variable Account.

APPLICATION: The document signed by you or other evidence acceptable to us that serves as your application for participation under a Group Contract or purchase of an Individual Contract.

*BENEFICIARY: The person or entity having the right to receive the death benefit and, for a Certificate issued under a Non-Qualified Contract, who is the "designated beneficiary" for purposes of Section 72(s) of the Code in the event of the Owner's death. Notwithstanding the foregoing, if there are Co-Owners of a Non-Qualified Contract, the surviving Co-Owners will be deemed the beneficiary under the preceding sentence and any other designated beneficiary will be treated as a contingent beneficiary.

BUSINESS DAY: Any day the New York Stock Exchange is open for trading. Also, any day on which we make a determination of the value of a Variable Accumulation Unit.

COMPANY ("WE," "US," "SUN LIFE(N.Y.)"): Sun Life Insurance and Annuity Company of New York.

CONTRACT: A Contract issued by the Company on an individual basis.

CONTRACT YEAR and CONTRACT ANNIVERSARY: Your first Contract Year is the period 365 days (366, if a leap year) from the date on which we issued your Contract. Your Contract Anniversary is the last day of an Contract Year. Each Contract Year after the first is the 365-day period that begins on your Contract Anniversary. For example, if the Issue Date is on March 12, the first Contract Year is determined from the Issue Date and ends on March 12 of the following year. Your Contract Anniversary is March 12 and all Contract Years after the first are measured from March 12. (If the Contract Anniversary Date falls on a non-Business Day, the previous Business Day will be used.)

COVERED PERSON: The person(s) identified as such in the Contract whose death will trigger the death benefit provisions of the Contract. Unless otherwise noted, the Owner is the Covered Person.

DEATH BENEFIT DATE: If you have elected a death benefit payment option before the Covered Person's death that remains in effect, the date on which we receive Due Proof of Death. If your Beneficiary elects the death benefit payment option, the later of (a) the date on which we receive the Beneficiary's election and (b) the date on which we receive Due Proof of Death. If we do not receive the Beneficiary's election within 60 days after we receive Due Proof of Death, the Beneficiary shall be deemed to have elected to defer receipt of payment under any death benefit option until such time as a written election is received by the Company or a distribution is required by law.

DUE PROOF OF DEATH: An original certified copy of an official death certificate, an original certified copy of a decree of a court of competent jurisdiction as to the finding of death, or any other information or documentation required by the Company that is necessary to make payment (e.g. taxpayer identification numbers, beneficiary names and addresses, state inheritance tax waivers, etc.).

EXPIRATION DATE: The last day of a Guarantee Period.

FIFTH-YEAR ANNIVERSARY: The fifth Contract Anniversary and each succeeding Contract Anniversary occurring at any five year interval thereafter; for example, the 10th, 15th, and 20th Contract Anniversaries.

FIXED ACCOUNT: The general account of the Company, consisting of all assets of the Company other than those allocated to a separate account of the Company.

FIXED ACCOUNT VALUE: The value of that portion of your Account allocated to the Fixed Account.

FIXED ANNUITY: An annuity with payments which do not vary as to dollar amount.

FUND: A registered management investment company, or series thereof, in which assets of a Sub-Account may be invested.

GUARANTEE AMOUNT: Each separate allocation of Account Value to a particular Guarantee Period (including interest earned thereon).

GUARANTEE PERIOD: The period for which a Guaranteed Interest Rate is credited.

GUARANTEED INTEREST RATE: The rate of interest we credit on a compound annual basis during any Guarantee Period.

INCOME PHASE: The period on and after the Annuity Commencement Date and during the lifetime of the Annuitant during which we make annuity payments under the Contract.

ISSUE DATE: The date the Contract becomes effective which is the date we apply your initial Net Purchase Payment to your Account and issue your Contract.

NET INVESTMENT FACTOR: An index applied to measure the investment performance of a Sub-Account from one Valuation Period to the next. The Net Investment Factor may be greater or less than or equal to one.

NET PURCHASE PAYMENT: The portion of a Purchase Payment which remains after the deduction of any applicable premium tax or similar tax. This term is also used to describe the total contribution made to the Contract minus the total withdrawals.

NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement plan that does not receive favorable federal income tax treatment under Sections 401, 403, 408, or 408A of the Internal Revenue Code. The Owner's interest in the Contract must be owned by a natural person or agent for a natural person for the Contract to receive income tax treatment as an annuity.

OPEN DATE: The date your Application is received by the Company in good order.

*OWNER: The person, persons or entity entitled to the ownership rights stated in a Contract and in whose name or names the Contract is issued. The Owner may designate a trustee or custodian of a retirement plan which meets the requirements of Section 401, Section 408(c), Section 408(k), Section 408(p) or Section 408A of the Internal Revenue Code to serve as legal owner of assets of a retirement plan, but the term "Owner," as used herein, shall refer to the organization entering into the Contract.

PAYEE: A recipient of payments under a Contract. The term includes an Annuitant or a Beneficiary who becomes entitled to benefits upon the death of the Owner, or on the Annuity Commencement Date.

PURCHASE PAYMENT (PAYMENT): An amount paid to the Company as consideration for the benefits provided by a Contract.

PURCHASE PAYMENT INTEREST: The amount of extra interest the Company credits to a Contract at a rate of 2% to 5% of each purchase payment based upon the size of the investment or Account Value or the interest rate option chosen at the time of application.

QUALIFIED CONTRACT: A Contract used in connection with a retirement plan which may receive favorable federal income tax treatment under Sections 401, 403, 408 or 408A of the Internal Revenue Code of 1986, as amended.

SUB-ACCOUNT: That portion of the Variable Account which invests in shares of a specific Fund or series of a Fund.

SURRENDER VALUE: The amount payable on full surrender of your Contract.

VALUATION PERIOD: The period of time from one determination of Variable Accumulation Unit or Annuity Unit values to the next subsequent determination of these values. Value determinations are made as of the close of the New York Stock Exchange on each day that the Exchange is open for trading and on other Business Days.

VARIABLE ACCOUNT: Variable Account C of the Company, which is a separate account of the Company consisting of assets set aside by the Company, the investment performance of which is kept separate from that of the general assets of the Company.

VARIABLE ACCUMULATION UNIT: A unit of measure used in the calculation of Variable Account Value.

VARIABLE ACCOUNT VALUE: The value of that portion of your Account allocated to the Variable Account.

VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount in relation to the investment performance of the Variable Account.

YOU and YOUR: The terms "you" and "your" refer to "Owner," and/or "Covered Person" as those terms are identified in the Contract.

*You specify these items on the Application, and may change them, as we describe in this Prospectus.

APPENDIX B

CALCULATION OF WITHDRAWAL CHARGES AND MARKET VALUE ADJUSTMENT

Part 1: Variable Account

Full Withdrawal (the Market Value Adjustment does not apply to the Variable Account):

Assume a Purchase Payment of $40,000 is made on the Issue Date, no additional Purchase Payments are made and there are no partial withdrawals. The table below presents three examples of the withdrawal charge resulting from a full withdrawal of your Account, based on hypothetical Account Values.

											Payment
			Hypothetical				Cumulative		Free		Subject to		Withdrawal		Withdrawal
Contract			Account		Annual		Annual		Withdrawal		Withdrawal		Charge		Charge
Year			Value		Earnings		Earnings		Amount		Charge		Percentage		Amount
(a)	1	$  41,000		$  1,000		$   1,000		$  4,000		$  37,000		7.00%		$  2,590
	2	$  45,100		$  4,100		$   5,100		$  4,000		$  40,000		6.00%		$  2,400
	3	$  49,600		$  4,500		$   9,600		$  4,100		$  40,000		5.00%		$  2,000
(b)	4	$  52,100		$  2,500		$ 12,100		$  4,500		$  40,000		4.00%		$  1,600
	5	$  57,300		$  5,200		$ 17,300		$  4,000		$  40,000		3.00%		$  1,200
	6	$  63,000		$  5,700		$ 23,000		$  5,200		$  40,000		2.00%		$   800
	7	$  63,000		$      0		$ 23,000		$  5,700		$  40,000		1.00%		$   400
(c)	8	$  66,000		$  3,000		$ 26,000		$ 40,000		$        0		0.00%		$      0

(a)	The free withdrawal amount in any year is equal to the amount of any Purchase Payments made prior to the last 7 Contract Years ("Old Payments") that were not previously withdrawn plus the greater of (1) the Contract's earnings during the prior Contract Year, and (2) 10% of any Purchase Payments made in the last 7 Contract Years ("New Payments"). In Contract Year 1, the free withdrawal amount is $4,000, which equals 10% of the Purchase Payment of $40,000. On a full withdrawal of $41,000, the amount subject to a withdrawal charge is $37,000, which equals the Account Value minus the free withdrawal amount, or $41,000 minus $4,000.
(b)	In Contract Year 4, the free withdrawal amount is $4,500, which equals the prior Contract Year's earnings. On a full withdrawal of $52,100, the amount subject to a withdrawal charge is $40,000. The first $4,500 withdrawn is the free amount, then the Purchase Payments are withdrawn and subject to a withdrawal charge. The remaining $7,600 of this withdrawal comes from liquidating earnings and is not subject to a withdrawal charge.
(c)	In Contract Year 8, the free withdrawal amount is $40,000, which equals 100% of the Purchase Payment of $40,000. On a full withdrawal of $66,000, the amount subject to a withdrawal charge is $0, since the New Payments equal $0.

Partial Withdrawal

Assume a single Purchase Payment of $40,000 is made on the Issue Date, no additional Purchase Payments are made, no partial withdrawals have been taken prior to the fourth Contract Year, and there are a series of 4 partial withdrawals made during the fourth Contract Year of $4,100, $9,000, $12,000, and $20,000.

							Remaining
	Hypothetical						Free	Amount of
	Account						Withdrawal	Withdrawal
	Value						Amount	Subject to	Withdrawal	Withdrawal
Contract	Before			Cumulative		Amount of	Before	Withdrawal	Charge	Charge
Year	Withdrawal		Earnings	Earnings		Withdrawal	Withdrawal	Charge	Percentage	Amount
1		$  41,000	$  1,000		$   1,000	$      0	$  4,000	$      0	7.00%	$     0
2		$  45,100	$  4,100		$   5,100	$      0	$  4,000	$      0	6.00%	$     0
3		$  49,600	$  4,500		$   9,600	$      0	$  4,100	$      0	5.00%	$     0
(a)4		$  50,100	$    500		$ 10,100	$   4,100	$  4,500	$      0	4.00%	$     0
(b)4		$  46,800	$    800		$ 10,900	$   9,000	$     400	$   8,600	3.00%	$    344
(c)4		$  38,400	$    600		$ 11,500	$ 12,000	$      0	$ 12,000	2.00%	$    480
(d)4		$  26,800	$    400		$ 11,900	$ 20,000	$      0	$ 19,400	1.00%	$  776

(a)	In Contract Year 4, the free withdrawal amount is $4,500, which equals the prior Contract Year's earnings. The partial withdrawal amount of $4,100 is less than the free withdrawal amount, so there is no withdrawal charge.
(b)	Since a partial withdrawal of $4,100 was taken, the remaining free withdrawal amount in Contract Year 4 is $4,500 - $4,100 = $400. Therefore, $400 of the $9,000 withdrawal is not subject to a withdrawal charge, and $8,600 is subject to a withdrawal charge.
(c)	Since the total of the two prior Contract Year 4 partial withdrawals ($13,100) is greater than the free withdrawal amount of $4,500, there is no remaining free withdrawal amount. The entire withdrawal amount of $12,000 is subject to a withdrawal charge.
(d)	Since the total of the three prior Contract Year 4 partial withdrawals ($25,100) is greater than the free withdrawal amount of $4,500, there is no remaining free withdrawal amount. Since the total amount of New Purchase Payments was $40,000 and $20,600 of New Payments has already been surrendered, only $19,400 of this $20,000 withdrawal comes from liquidating Purchase Payments. The remaining $600 of this withdrawal is considered earnings and is not subject to a withdrawal charge.

Note that since all of the Purchase Payments were liquidated by the final withdrawal of $20,000, the total withdrawal charge for the four Contract Year 4 withdrawals is $1,600, which is the same amount that was assessed for a full liquidation in Contract Year 4 in the example on the previous page. Any additional Contract Year 4 withdrawals in the example shown on this page would come from the liquidating of earnings and would not be subject to a withdrawal charge.

Part 2: Fixed Account - Examples of Market Value Adjustment ("MVA")

The MVA Factor is:

[(1 + I) / (1 + J + b)] ^ (N/12) -1

These examples assume the following:

(1)	The Guarantee Amount was allocated to a 5-year Guarantee Period with a Guaranteed Interest Rate of 6% or .06.
(2)	The date of surrender is 2 years from the Expiration Date (N = 24).
(3)	The value of the Guarantee Amount on the date of surrender is $11,910.16.
(4)	The interest earned in the current Contract Year is $674.16.
(5)	No transfers or partial withdrawals affecting this Guarantee Amount have been made.
(6)	Withdrawal charges, if any, are calculated in the same manner as shown in the examples in Part 1.

Example of a Negative MVA:

Assume that on the date of surrender, the current rate (J) is 8% or .08 and the b factor is zero.

The MVA factor =	[(1 + I) / (1 + J + b)] ^ (N/12) -1
=	[(1 + .06) / (1 + .08)] ^ (24/12) - 1
=	(.981^ 2) -1
=	.963 -1
=	-.037

The value of the Guarantee Amount less interest credited to the Guarantee Amount in the current Contract Year is multiplied by the MVA factor to determine the MVA:

($11,910.16 - $674.16) x (-.037) = -$415.73

-$415.73 represents the MVA that will be deducted from the value of the Guarantee Amount before the deduction of any withdrawal charge.

For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA would be ($2,000.00 - $674.16) x (-.037) = -$49.06. -$49.06 represents the MVA that will be deducted from the partial withdrawal amount before the deduction of any withdrawal charge.

Example of a Positive MVA:

Assume that on the date of surrender, the current rate (J) is 5% or .05 and the b factor is zero.

The MVA factor =	[(1 + I) / (1 + J + b)] ^ (N/12) -1
=	[(1 + .06) / (1 + .05)] ^ (24/12) - 1
=	(1.010^ 2) -1
=	1.019 -1
=	.019

The value of the Guarantee Amount less interested credit to the Guarantee Amount in the current Contract Year is multiplied by the MVA factor to determine the MVA:

($11,910.16 - $674.16) x .019 = $213.48

$213.48 represents the MVA that would be added to the value of the Guarantee Amount before the deduction of any withdrawal charge.

For a partial withdrawal of $2,000 from this Guarantee Amount, the MVA would be ($2,000.00 - $674.16) x .019 = $25.19.

$25.19 represents the MVA that would be added to the value of the partial withdrawal amount before the deduction of any withdrawal charge.

APPENDIX C

CALCULATION OF BASIC DEATH BENEFIT

Example 1:

Assume a Purchase Payment of $60,000.00 is made on the Issue Date and an additional Purchase Payment of $40,000.00 is made one year later. Assume that death occurs in Contract Year 2, that all of the money is invested in the Variable Sub-Accounts, that no Withdrawals have been made, and that the Account Value on the Death Benefit Date is $80,000.00. The calculation of the Death Benefit to be paid is as follows:

The Basic Death Benefit is the greatest of:
	Account Value	=	$ 80,000.00
	Surrender Value*	=	$ 75,700.00
	Purchase Payments	=	$100,000.00
The Basic Death Benefit would therefore be:			$100,000.00

Example 2:

Assume a Purchase Payment of $60,000.00 is made on the Issue Date and an additional Purchase Payment of $40,000.00 is made one year later. Assume that all of the money is invested in the Variable Sub-Accounts and that the Account Value is $80,000.00 just prior to a $20,000.00 withdrawal. The Account Value on the Death Benefit Date is $60,000.00.

The Basic Death Benefit is the greatest of:
	Account Value	=	$ 60,000.00
	Surrender Value*	=	$ 56,300.00
	Adjusted Purchase Payments**	=	$ 75,000.00
The Basic Death Benefit would therefore be:			$ 75,000.00

* Surrender Value is the amount we would pay you if you surrendered your entire Account Value. For a description of how Surrender Value is calculated, see "Full Withdrawals" under the subheading "Cash Withdrawals."

**Adjusted Purchase Payments can be calculated as follows: Payments x (Account Value after withdrawal divided by Account Value before withdrawal) $100,000.00 x ($60,000.00 divided by $80,000.00).

APPENDIX D

CALCULATION FOR PURCHASE PAYMENT INTEREST (BONUS CREDIT)

Under the Bonus Credit, we will credit Purchase Payment Interest on all Purchase Payments made during the first Contract Year. On each fifth Contract Anniversary, we will credit additional Purchase Payment Interest of 2% based on your Account Value, as illustrated below:

Initial Purchase Payment of $50,000.00 receives 2% Purchase Payment Interest of $1,000.00.

Subsequent Purchase Payment in the first Contract Year of $20,000.00 receives 2% Purchase Payment Interest of $400.00.

Suppose the Account had not gained any earnings or interest during the first 5 Contract Years and the Account Value is $71,400.00 (sum of all Purchase Payments and Purchase Payment Interest), we will credit your Account with an additional 2% ($1,428.00).

Using the same Purchase Payments as above, suppose your value on the fifth Contract Anniversary is $74,970.00. We will credit your Account with an additional 2% of Purchase Payment Interest (equal to $1,499.40).

This 2% Purchase Payment Interest will occur on every fifth Contract Anniversary (i.e., 5th, 10th, 15th).

APPENDIX E

SECURED RETURNS 2 BENEFIT EXAMPLES

All of the following examples are based upon the assumption that you purchased a Contract on January 1, 2005 with an initial Purchase Payment of $100,000 and you selected the Secured Returns 2 Program. Your initial GLB amount equals your deposit amount of $100,000.

EXAMPLE 1: Low investment performance; no WB election.

o Assume that you did not elect the WB plan at any time and that your Designated Funds have had low investment performance. Since your Account Value was below the GLB amount of $100,000 from January 1, 2010 through January 1, 2015, the step-up feature is not available.

o Assume that on January 1, 2015, your Account Value is $85,000. Assume that your total rider charges to date are $4,625.

o Since your Account Value is less than your GLB amount by $15,000, an amount equal to $15,000 will be deposited into your Contract ($100,000 - $85,000).

o If Secured Returns 2 is still available to new Owners, you may elect to renew your participation in the Program with a new GLB amount of $100,000 at the cost and terms available to new Owners.

EXAMPLE 2: Low investment performance; no WB election, Step-up elected.

o Assume that you did not elect the WB plan at any time and that your Designated Funds have had low investment performance. However, assume that your Account Value was $150,000 on January 1, 2010. Since this amount is greater than your GLB amount, you may step-up to a new 10 year period, with a new GLB amount of $150,000. Assume that you do elect to step-up.

o Your new GMAB rider maturity date is now January 1, 2020 (ten years after the date of the step-up). Assume that on January 1, 2020, your Account Value is $130,000. Assume that your total rider charges to date are $10,125.

o Since your Account Value is lower than your stepped-up GLB by $20,000, an amount equal to $20,000 will be deposited into your Contract ($150,000 - $130,000).

o If Secured Returns 2 is still available to new Owners, you may elect to renew your participation in the Program with a new GLB amount of $150,000 at the cost and terms available to new Owners.

EXAMPLE 3: High investment performance; no WB election, Refund applies.

o Assume that you did not elect the WB plan at any time and that your Designated Funds have had high investment performance. Assume that your Account Value was $150,000 on January 1, 2010. Since this amount is greater than your GLB amount, you may step-up to a new 10-year period, with a new GLB amount of $150,000. Assume that you do not elect to step-up.

o Assume that on January 1, 2015, your Account Value is $200,000. Assume that your total rider charges to date are $7,500.

o Because your Account Value is greater than the GLB amount of $100,000, your account will be credited with the amount of your rider charges, increasing your Account Value to $207,500.

o If Secured Returns 2 is still available to new Owners, you may elect to renew your participation in the Program with a new GLB amount of $207,500 at the cost and terms available to new Owners.

EXAMPLE 4: Low investment performance; WB election.

o Assume that you elect the WB plan at the beginning of the second Contract Year and then choose to systematically withdraw the maximum WB amount (i.e., 7% of the $100,000 GLB amount, or $7,000).

o On December 31, 2006, your GLB amount will be $93,000. Assume that, on this date, your Account Value is $91,000.

o On December 31, 2007, your GLB amount will be $86,000. Assume that, on this date, your Account Value is $80,000. The $7,000 withdrawals continue for seven more years. Assume that from January 1, 2010 through December 31, 2014, your Account Value is less than your remaining GLB amount. Therefore, the step-up feature is not available.

o On December 31, 2014, your GLB amount will be $37,000. Assume that, on this date, your Account Value is $0.

o These withdrawals of $7,000 continue until the GLB amount runs out in year 2020. At that time, Secured Returns 2 terminates and no renewal is available.

EXAMPLE 5: High investment performance; WB election, Step-up elected.

o Assume that you elect the WB plan at the beginning of the second Contract Year and then choose to systematically withdraw the maximum WB amount (i.e., 7% of the $100,000 GLB amount, or $7,000).

o On December 31, 2006, your GLB amount will be $93,000. Assume that, on this date, your Account Value is $95,000.

o On December 31, 2007, your GLB amount will be $86,000. Assume that, on this date, your Account Value is $90,000. The $7,000 withdrawals continue for two more years. Assume that on January 1, 2010, your Account Value is $80,000 and your remaining GLB amount is $72,000. Since your Account Value is greater than your remaining GLB amount, you may step-up your GLB amount to $80,000. Assume you elect to step-up. Your maximum WB amount is calculated as 7% of $80,000 = $5,600. However, since this is less than your current maximum WB amount of $7,000, your maximum WB amount will remain at $7,000.

o Assume you continue to withdraw $7,000 per year for four more years. On December 31, 2013, your GLB amount will be $52,000. Assume that, on this date, your Account Value is $56,000.

o These $7,000 withdrawals continue. On December 31, 2020, the GLB amount equals $3,000. Assume that, on this date, your Account Value equals $20,000.

o Assume that you withdraw $3,000 on February 12, 2021. At this time, the GLB amount is exhausted and Secured Returns 2 terminates and the annual fee stops. However, because there is a remaining Account Value, the Contract continues. No Secured Returns 2 renewal is available.

EXAMPLE 6: Withdrawals under the AB Plan; low investment performance.

o Assume that you did not elect the WB plan at any time.

o Assume that on January 1, 2006, you withdraw 10% of your Account Value of $110,000 (or $11,000). Your Account Value is now $99,000.

o On January 1, 2006, your GLB amount will be reset to $90,000 (the previous GLB amount reduced proportional to the amount of Account Value withdrawn).

o Assume you make no more withdrawals or deposits and that your Account Value on January 1, 2015 is $87,000. Assume that your total rider charges to date are $4,710.

o Since your Account Value is less than your GLB amount by $3,000, an amount equal to $3,000 will be deposited into your Contract ($90,000 - $87,000).

o If Secured Returns 2 is still available to new Owners, you may elect to renew your participation in Secured Returns 2 with a new GLB amount of $90,000 at the cost and terms available to new Owners.

EXAMPLE 7: Withdrawals under the WB Plan; low investment performance.

o Assume that you elect the WB plan at the beginning of your second Contract Year. The maximum WB amount would be $7,000 (i.e., 7% of the $100,000 GLB amount). However, assume no withdrawals are made. On July 1, 2006, assume that your Account Value is $95,000. The GLB amount is still $100,000, and the maximum WB amount is still $7,000.

o Assume that you make a withdrawal of $5,000 on September 3, 2006. Your GLB amount is now $95,000. Assume that your Account Value is now $88,000.

o Assume that you make another withdrawal of $5,000 on April 5, 2007. This is now a new Contract Year, so the maximum WB amount has not been exceeded yet. Your GLB amount is now $90,000. Assume that your Account Value is now $80,000.

o Assume that you make another withdrawal of $5,000 on September 18, 2007. Your total withdrawals in the current Contract Year are now $10,000 and exceed the WB maximum of $7,000. Assume that your Account is $79,000 just before the withdrawal, and $74,000 just after the withdrawal.

o Because your withdrawals exceeded the maximum WB amount, your GLB amount is reduced to the lesser of your previous remaining GLB amount reduced dollar for dollar for the withdrawal ($90,000 - $5,000), and your current Account Value ($74,000). Therefore, your new GLB amount is $74,000. Your maximum WB amount is reduced so that the date on which the GLB expires will be the same date it would have expired had the maximum WB been withdrawn every year (i.e., ($90,000 - $2,000) / $7,000 = 12.57 years). Thus the new maximum WB amount becomes $5,887 ($74,000 / 12.57).

EXAMPLE 8: Withdrawals under the WB Plan; high investment performance, Step-up elected.

o Assume that you elect the WB plan at the beginning of your second Contract Year. The maximum WB amount would be $7,000 (i.e., 7% of the $100,000 GLB amount). However, assume you make no withdrawals. On February 1, 2010, assume that your Account Value is $124,000. Since your Account Value is greater than your GLB amount, you may step-up your GLB amount to $124,000. Assume that you do not step-up. Your GLB amount is still $100,000, and the maximum WB amount is still $7,000.

o Assume that you make a withdrawal of $5,000 on March 3, 2010. Your GLB amount is now $95,000. Assume that your Account Value is now $120,000. Since your Account Value is greater than your remaining GLB amount, you may step-up your GLB amount to $120,000. Assume that you do step-up. Your maximum WB amount is calculated as 7% of $120,000 = $8,400. Since this is greater than your current maximum WB amount of $7,000, your maximum WB amount increases to $8,400.

o Assume that you wish to make another withdrawal on October 5, 2010. Because you have already withdrawn $5,000 in the current Contract Year, you can withdraw $3,400 ($8,400 - $5,000) without exceeding your WB maximum. Assume that you withdraw this $3,400. Your GLB amount is now $116,600 ($120,000 - $3,400). Assume that your Account Value is now $118,000.

o On January 2, 2011 you begin a new Contract Year. Therefore, you can withdraw $8,400 in this new Contract Year without exceeding your WB maximum. Assume that you do withdraw $8,400 in this Contract Year. On December 31, 2011, the GLB amount equals $108,200. Assume that, on this date, your Account Value equals $110,000.

o Assume that you continue to withdraw $8,400 each Contract Year. On December 31, 2023, the GLB amount equals $7,400. Assume that, on this date, your Account Value equals $30,000.

o Assume that you withdraw $7,400 on March 12, 2024. At that time, the GLB amount is exhausted and Secured Returns 2 terminates and the annual fee stops. However, because there is a remaining Account Value, the Contract continues. No Secured Returns 2 renewal is available.

EXAMPLE 9: Withdrawals with Sub-deposits under the AB Plan; low investment performance.

o Assume that you did not elect the WB Plan at any time.

o On June 1, 2010, you deposit an additional $80,000.

o On June 1, 2010, your GLB amount is $168,000 [$100,000 + ($80,000 x 85%)]

o Assume that, on June 1, 2011, you withdraw $40,000 and that your Account Value is $240,000 at this time. After the withdrawal, your Account Value is $200,000.

o On June 1, 2011, your GLB amount is reset to $140,000. This equals the previous GLB amount reduced proportional to the amount of Account Value withdrawn, or $168,000 x [1 - (40,000/240,000)].

o Assume you make no more withdrawals or deposits and that your Account Value on January 1, 2015, is $125,000. Assume that your total rider charges to date are $6,670.

o Since your Account Value is less than your GLB amount by $15,000, an amount equal to $15,000 will be deposited into your Contract ($140,000 - $125,000).

o If Secured Returns 2 is still available to new Owners, you may elect to renew your participation in Secured Returns 2 with a new GLB amount of $140,000 at the cost and terms available to new Owners.

EXAMPLE 10: Step-up and Sub-deposits under the AB Plan; high investment performance, Step-up elected, Refund applies.

o Assume that you did not elect the WB Plan at any time and that your Designated Funds had high investment performance. Assume that your Account Value is $150,000 on January 1, 2010. Since this amount is greater than your GLB amount, you may step-up to a new 10 year period, with a new GLB amount of $150,000. Assume that you do elect to step-up.

o On June 1, 2011, you deposit an additional $80,000.

o On June 1, 2011, your GLB amount is $230,000 [$150,000 + ($80,000 x 100%)]. Since it has only been one year since the step-up was elected, the GLB amount is increased by 100% of the new deposit amount.

o Your new GMAB rider maturity date is now January 1, 2020 (ten years after the date of the step-up). Assume that on January 1, 2020 your Account Value is $280,000. Assume that your total rider charges to date are $15,130.

o Because your Account Value is greater than the GLB amount of $230,000, your account will be credited with the amount of your rider charges, increasing your Account Value to $295,130.

o If Secured Returns 2 is still available to new Owners, you may elect to renew your participation in the Secured Returns 2 with a new GLB amount of $295,130 at the cost and terms available to new Owners.

EXAMPLE 11: Withdrawals with Sub-deposits under the WB Plan.

o Assume that you elect the WB plan at the beginning of the second Contract Year and then choose to systematically withdraw the maximum WB amount (i.e., 7% of the $100,000 GLB amount, or $7,000).

o On January 1, 2007, your GLB amount will be $93,000. Assume that, on this date, your Account Value is $91,000.

o On January 6, 2007, you make an additional deposit of $50,000.

o Your GLB amount is reset to $143,000 ($93,000 + $50,000).

o Your maximum WB amount is reset to $10,500 [$7,000 + (7% x $50,000)].

o Assume you increase your annual withdrawals to equal the maximum WB amount of $10,500.

o On January 1, 2008, your GLB amount is $132,500 ($143,000 - $10,500). Assume that you make no additional deposits and the maximum WB amount is withdrawn annually.

o Assume that on January 1, 2016, your Account Value is $0. Your GLB amount will be $48,500 [$132,500 - ($10,500 x 8 years)]. Withdrawals of $10,500 will continue until the GLB amount runs out in year 2020. At that time, the Secured Returns 2 terminates and no Secured Returns 2 renewal is available.

EXAMPLE 12: Calculation of Explicit Rider Charges.

o Assume that you did not elect the WB plan at any time. Assume that your Account Value increases at an annual rate of 5% per year throughout the next ten years. Also assume that you do not elect to step-up at any time.

o On March 31, 2005, your Account Value before the charge for Secured Returns 2 is taken is $101,196.79. The charge deducted on March 31, 2005 is $126.50 ($101,196.79 x .00125). Therefore, your ending Account Value on March 31, 2005 is $101,070.29 ($101,196.79 - $126.50).

o On June 30, 2005, your Account Value before the charge for Secured Returns 2 is taken is $102,307.23. The fee deducted on June 30, 2005 is $127.88 ($102,307.23 x .00125). Therefore, your ending Account Value on June 30, 2005 is $102,179.35 ($102,307.23 - $127.88).

o On September 30, 2005, your Account Value before the charge for Secured Returns 2 is taken is $103,443.69. The fee deducted on September 30, 2005 is $129.30 ($103,443.69 x .00125). Therefore, your ending Account Value on September 30, 2005 is $103,314.38 ($103,443.69 - $129.30).

o This pattern continues until the maturity date for your Benefit of January 1, 2015. On that date, your Account will be credited with a payment. If your current Account Value is less than your current GLB amount, then your Account will be credited with the difference between these two amounts. If your current Account Value is greater than your current GLB amount, then your Account will be credited with the sum of all of Secured Returns 2 charges that have been made. Note that if Secured Returns 2 was revoked or cancelled before the maturity date for your Benefit of January 1, 2015, then no Secured Returns 2 credit will be made to your Account.

o If Secured Returns 2 is still available to new Owners, you may elect to renew your participation in Secured Returns 2 with a new GLB amount equal to the ending January 1, 2015 Account Value at the cost and terms available to new Owners.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

P.O. Box 9133

Wellesley Hills, Massachusetts 02481

Telephone:

Toll Free (800) 447-7569

General Distributor

Clarendon Insurance Agency, Inc.

One Sun Life Executive Park

Wellesley Hills, Massachusetts 02481

Auditors

Deloitte & Touche LLP

200 Berkeley Street

Boston, Massachusetts 02116

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DECEMBER 30, 2004

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SUN LIFE FINANCIAL MASTERS^SM REWARD NY

VARIABLE AND FIXED ANNUITY

STATEMENT OF ADDITIONAL INFORMATION

SUN LIFE (N.Y.) VARIABLE ACCOUNT C

TABLE OF CONTENTS

Calculation of Performance Data

Advertising and Sales Literature

Tax Deferred Accumulation

Calculations

     Example of Variable Accumulation Unit Value Calculation

     Example of Variable Annuity Unit Calculation

     Example of Variable Annuity Payment Calculation

Distribution of the Contract

Custodian

Independent Registered Public Accounting Firm

Financial Statements

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The Statement of Additional Information sets forth information which may be of interest to prospective purchasers of the Sun Life Financial Masters^SM Reward NY Variable and Fixed Annuity Contract (the "Contract") issued by Sun Life Insurance and Annuity Company of New York) (the "Company") in connection with Sun Life (N.Y.) Variable Account C (the "Variable Account"). Such information supplements the information included in the corresponding Prospectus dated December 30, 2004. This Statement of Additional Information should be read in conjunction with the corresponding Prospectus, a copy of which may be obtained without charge from the Company by writing to Sun Life Insurance and Annuity Company of New York, P.O. Box 9133, Wellesley Hills, Massachusetts 02481, or by telephoning (800) 447-7469.

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The terms used in this Statement of Additional Information have the same meanings as in the Prospectus.

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THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.

CALCULATION OF PERFORMANCE DATA

AVERAGE ANNUAL TOTAL RETURN

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

The Securities and Exchange Commission defines "standardized" total return information to mean Average Annual Total Return, based on a hypothetical initial purchase payment of $1,000 and calculated in accordance with the formula set forth after the table, but presented only for periods subsequent to the date the sub-account was first offered by the separate account.

The table below shows, for various Sub-Accounts of the Variable Account, the Average Annual Total Return for the stated periods (or shorter period indicated in the table), based upon a hypothetical initial Purchase Payment of $1,000, calculated in accordance with the SEC formula. The calculation assumes that you are age 76 or older on the Open Date and you have selected the optional death benefit rider for total maximum insurance charges of 2.60% of the average daily net assets in you Variable Account. If you are age 75 or younger on the Open Date or if you select the Basic Death Benefit, your insurance charges would be less than 2.60% and the Average Annual Total Return would be more favorable. If the Secured Returns 2 Optional Living Benefit Rider is not available in New York, your insurance charges would be less than 2.60% and the Average Annual Total Return would be more favorable. For purposes of determining these investment results, the actual investment performance of each Sub-Account is reflected from the date the Sub-Account commenced investment operations in the Variable Account (the "Variable Account Inception Date"). No information is shown for Sub-Accounts that had not commenced operations as of December 31, 2003.

SUN LIFE FINANCIAL MASTERS^SM REWARD NY STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

PERIOD ENDING DECEMBER 31, 2003

Fund name	Inception Date	1 YR	5 YR	10 YR	LOF
Capital Opportunities S Class	6/3/1996	18.30	-4.70		3.94
Emerging Growth S Class	5/1/1995	21.36	-7.66		4.88
Franklin Templeton VIP Trust Franklin Small Cap Value Securities	12/19/2002	22.32			19.25
Franklin Templeton VIP Trust Mutual Shares Securities Fund	12/19/2002	15.51			13.56
Franklin Templeton VIP Trust Templeton Foreign Securities	12/19/2002	22.41			16.06
Franklin Templeton VIP Trust Templeton Growth Securities	9/30/2002	22.35			24.04
Government Securities S Class	3/31/1993	-7.20	2.14	3.10	3.08
High Yield S Class	3/31/1993	11.65	1.12	3.17	3.65
Lord Abbett Series Fund Growth & Income	5/2/2000	21.24			0.10
Lord Abbett Series Fund Mid-Cap Value	2/19/2002	15.12			2.20
Mass Investors Trust S Class	3/31/1993	12.87	-6.13	6.14	5.70
Mass Investors Growth Stock S Class	5/5/1998	13.26	-6.66		-2.83
Money Market S Class	3/31/1993	-8.55	-0.38	0.94	0.84
New Discovery S Class	5/5/1998	25.14	2.89		3.44
Oppenheimer Capital Appreciation Fund	12/19/2002	20.92			10.64
Oppenheimer Main St. Fund/VA	12/19/2002	16.77			9.87
Oppenheimer Main St. Small Cap Fund	12/19/2002	34.16			25.08
PIMCO Emerging Markets Bond Portfolio	9/30/2002	21.91			34.61
PIMCO Real Return Bond Portfolio	12/19/2002	-0.42			3.28
PIMCO Total Return Bond Portfolio	12/19/2002	-4.14			-2.10
Research International S Class	5/5/1998	23.57	3.15		1.43
Research S Class	11/7/1994	15.37	-6.05		5.85
Strategic Growth S Class	11/1/1999	17.36			-10.48
Sun Capital All Cap Fund S Class	4/30/2002	42.28			2.60
Sun Capital Investment Grade Bond Fund S Class	5/2/2000	0.10			4.36
Sun Capital Real Estate Fund S Class	5/2/2000	25.72			13.38
Total Return S Class	3/31/1993	7.38	2.27	6.69	6.61
Utilities S class	11/16/1993	26.14	-1.63	6.86	6.74
Value S Class	5/5/1998	15.45	3.29		3.57

* The Life of Fund calculation for any Fund under a year old is not annualized.

The Average Annual Total Return for each period was determined by finding the average annual compounded rate of return over each period that would equate the initial amount invested to the ending redeemable value for that period, in accordance with the following formula:

                              
                          P(l + T) ^ n = ERV

Where:

P =	a hypothetical initial Purchase Payment of $1,000
T =	average annual total return for the period
n =	number of years
ERV =	redeemable value (as of the end of the period) of a hypothetical $1,000 Purchase Payment made at the beginning of the 1-year, 5-year, or 10-year period (or fractional portion thereof)

The formula assumes that: (1) all recurring fees have been deducted from the Participant's Account; (2) all applicable non-recurring Contract charges are deducted at the end of the period, and (3) there will be a full surrender at the end of the period.

The $30 annual Account Fee will be allocated among the Sub-Accounts so that each Sub-Account's allocated portion of the Account Fee is proportional to the percentage of the number of Individual Contracts and Certificates that have amounts allocated to that Sub-Account. Because the impact of the Account Fee on a particular Contract may differ from those assumed in the computation due to differences between actual allocations and the assumed ones, the total return that would have been experienced by an actual Contract over these same time periods may have been different from that shown above.

NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

The tables below show, for various Sub-Accounts of the Variable Account, Non-Standardized Average Annual Total Return for the periods indicated, based upon a hypothetical initial Purchase Payment of $1,000, calculated in accordance with the formula set out under "Standardized Average Annual Total Return," without the deduction of any Contract fees. This calculation assumes that you are age 76 or older on the Open Date and you have selected the optional death benefit rider for total maximum insurance charges of 2.60% of the average daily net assets in your Variable Account. If you are age 75 or younger on the Open Date or if you select the Basic Death Benefit, your insurance charges would be less than 2.60% and the Average Annual Total Return would be more favorable. If the Secured Returns 2 Optional Living Benefit Rider is not available in New York, your insurance charges would be less than 2.60% and the Average Annual Total Return would be more favorable.

Non-standardized performance figures do not reflect Purchase Payment Interest; however, if such figures were calculated to reflect Purchase Payment Interest credited, the calculation would also reflect any withdrawal charge.

For purposes of determining these investment results, the actual investment performance of each Fund is reflected from the date each Fund commenced operations ("Fund Inception Date").

SUN LIFE FINANCIAL MASTERS^SM REWARD NY NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

PERIOD ENDING DECEMBER 31, 2003

Fund name	Inception Date	1 YR	5 YR	10 YR	LOF
Capital Opportunities S Class	6/3/1996	24.76	-4.02		4.06
Emerging Growth S Class	5/1/1995	27.82	-6.99		4.98
Franklin Templeton VIP Trust Franklin Small Cap Value Securities	4/30/1998	28.79	8.49		2.42
Franklin Templeton VIP Trust Mutual Shares Securities Fund	11/8/1996	21.97	5.63		5.92
Franklin Templeton VIP Trust Templeton Foreign Securities	5/1/1992	28.87	-3.75	2.20	4.34
Franklin Templeton VIP Trust Templeton Growth Securities	3/15/1994	28.81	-0.04		4.27
Government Securities S Class	8/12/1985	-0.77	2.79	3.25	4.92
High Yield S Class	8/13/1985	18.12	1.80	3.32	5.26
Lord Abbett Series Fund All Value	4/30/2003				23.09
Lord Abbett Series Fund Growth & Income	12/11/1989	27.70	3.37	7.83	8.28
Lord Abbett Series Fund Growth Opportunities	4/30/2003				17.45
Lord Abbett Series Fund Mid-Cap Value	9/15/1999	21.59			12.14
Mass Investors Trust S Class	12/5/1986	19.34	-5.44	6.24	7.14
Mass Investors Growth Stock S Class	5/5/1998	19.72	-5.99		-2.36
Money Market S Class	8/29/1985	-2.23	0.31	1.10	1.93
New Discovery S Class	5/5/1998	31.61	3.50		3.85
Oppenheimer Capital Appreciation Fund	4/3/1985	27.39	-1.51	7.02	7.89
Oppenheimer Global Securities Fund/VA	11/12/1990	38.89	5.61	6.01	7.84
Oppenheimer Main St. Fund/VA	7/5/1995	23.23	-2.48		7.39
Oppenheimer Main St. Small Cap Fund	5/1/1998	40.63	4.74		3.07
PIMCO Emerging Markets Bond Portfolio	9/30/2002	28.38			37.43
PIMCO Low Duration Portfolio	2/16/1999	-0.65			2.29
PIMCO Real Return Bond Portfolio	9/30/1999	6.05			8.47
PIMCO Total Return Bond Portfolio	12/31/1997	2.33	2.93		3.37
Research International S Class	5/5/1998	30.04	3.77		1.89
Research S Class	11/7/1994	21.84	-5.37		5.96
Strategic Growth S Class	11/1/1999	23.83			-9.67
Sun Capital All Cap Fund S Class	4/30/2002	48.75			5.96
Sun Capital Investment Grade Bond Fund S Class	12/7/1998	6.56	3.21		3.14
Sun Capital Real Estate Fund S Class	12/7/1998	32.18	11.69		11.16
Total Return S Class	5/16/1988	13.85	2.92	6.80	7.60
Utilities S class	11/16/1993	32.60	-0.92	6.97	6.86
Value S Class	5/5/1998	21.91	3.91		3.99

* The Life of Fund calculation for any Fund under a year old is not annualized.

STANDARDIZED NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

The tables below show, for various Sub-Accounts of the Variable Account, Non-Standardized Average Annual Total Return for the periods indicated, based upon a hypothetical initial Purchase Payment of $1,000, calculated in accordance with the formula set out under "Standardized Average Annual Total Return," without the deduction of any Contract fees. This calculation assumes that you are age 76 or older on the Open Date and you have selected the optional death benefit rider for total maximum insurance charges of 2.60% of the average daily net assets in your Variable Account. If you are age 75 or younger on the Open Date or if you select the Basic Death Benefit, your insurance charges would be less than 2.60% and the Average Annual Total Return would be more favorable. If the Secured Returns 2 Optional Living Benefit Rider is not available in New York, your insurance charges would be less than 2.60% and the Average Annual Total Return would be more favorable.

For purposes of determining these investment results, the actual investment performance of each Fund is reflected from the date each Fund commenced operations ("Fund Inception Date").

SUN LIFE FINANCIAL MASTERS^SM REWARD NY STANDARDIZED NON-STANDARDIZED AVERAGE ANNUAL TOTAL RETURN

PERIOD ENDING DECEMBER 31, 2003

Fund name	Inception Date	1 YR	5 YR	10 YR	LOF
Capital Opportunities S Class	6/3/1996	18.30	-4.70		3.94
Emerging Growth S Class	5/1/1995	21.36	-7.66		4.88
Franklin Templeton VIP Trust Franklin Small Cap Value Securities	4/30/1998	22.32	7.95		1.94
Franklin Templeton VIP Trust Mutual Shares Securities Fund	11/8/1996	15.51	5.05		5.77
Franklin Templeton VIP Trust Templeton Foreign Securities	5/1/1992	22.41	-4.45	2.07	4.23
Franklin Templeton VIP Trust Templeton Growth Securities	3/15/1994	22.35	-0.75		4.14
Government Securities S Class	8/12/1985	-7.20	2.14	3.10	4.81
High Yield S Class	8/13/1985	11.65	1.12	3.17	5.15
Lord Abbett Series Fund All Value	4/30/2003				16.62
Lord Abbett Series Fund Growth & Income	12/11/1989	21.24	2.74	7.72	8.18
Lord Abbett Series Fund Growth Opportunities	4/30/2003				10.98
Lord Abbett Series Fund Mid-Cap Value	9/15/1999	15.12			11.60
Mass Investors Trust S Class	12/5/1986	12.87	-6.13	6.14	7.05
Mass Investors Growth Stock S Class	5/5/1998	13.26	-6.66		-2.83
Money Market S Class	8/29/1985	-8.55	-0.38	0.94	1.80
New Discovery S Class	5/5/1998	25.14	2.89		3.44
Oppenheimer Capital Appreciation Fund	4/3/1985	20.92	-2.20	6.92	7.81
Oppenheimer Global Securities Fund/VA	11/12/1990	32.42	5.04	5.88	7.72
Oppenheimer Main St. Fund/VA	7/5/1995	16.77	-3.18		7.29
Oppenheimer Main St. Small Cap Fund	5/1/1998	34.16	4.14		2.61
PIMCO Emerging Markets Bond Portfolio	9/30/2002	21.91			34.61
PIMCO Low Duration Portfolio	2/16/1999	-7.08			1.62
PIMCO Real Return Bond Portfolio	9/30/1999	-0.42			7.81
PIMCO Total Return Bond Portfolio	12/31/1997	-4.14	2.29		2.96
Research International S Class	5/5/1998	23.57	3.15		1.43
Research S Class	11/7/1994	15.37	-6.05		5.85
Strategic Growth S Class	11/1/1999	17.36			-10.48
Sun Capital All Cap Fund S Class	4/30/2002	42.28			2.60
Sun Capital Investment Grade Bond Fund S Class	12/7/1998	0.10	2.57		2.51
Sun Capital Real Estate Fund S Class	12/7/1998	25.72	11.20		10.66
Total Return S Class	5/16/1988	7.38	2.27	6.69	7.51
Utilities S class	11/16/1993	26.14	-1.63	6.86	6.74
Value S Class	5/5/1998	15.45	3.29		3.57

* The Life of Fund calculation for any Fund under a year old is not annualized.

The Variable Account may illustrate its results over various periods and compare its results to indices and other variable annuities in sales materials including advertisements, brochures and sports. Such results may be computed on a "cumulative" and/or "annualized" basis.

"Cumulative" quotations are arrived at by calculating the change in the Accumulation Unit value of a Sub-Account between the first and last day of the base period being measured, and expressing the difference as a percentage of the Accumulation Unit value at the beginning of the base period.

"Annualized" quotations (described in the following table as "Compound Growth Rate") are calculated by applying a formula which determines the level rate of return which, if earned over the entire base period, would produce the cumulative return.

ADVERTISING AND SALES LITERATURE

As set forth in the Prospectus, the Company may refer to the following organizations (and others) in its marketing materials:

A.M. BEST'S RATING SYSTEM is designed to evaluate the various factors affecting the overall performance of an insurance company in order to provide an opinion as to an insurance company's relative financial strength and ability to meet its contractual obligations. The procedure includes both a quantitative and qualitative review of each company.

FITCH CREDIT RATING Company's Insurance Company Claims Paying Ability Rating is an independent evaluation by a nationally accredited rating organization of an insurance company's ability to meet its future obligations under the contracts and products it sells. The rating takes into account both quantitative and qualitative factors.

LIPPER VARIABLE INSURANCE PRODUCTS PERFORMANCE ANALYSIS SERVICE is a publisher of statistical data covering the investment company industry in the United States and overseas. Lipper is recognized as the leading source of data on open-end and closed-end funds. Lipper currently tracks the performance of over 5,000 investment companies and publishes numerous specialized reports, including reports on performance and portfolio analysis, fee and expense analysis.

STANDARD & POOR'S insurance claims-paying ability rating is an opinion of an operating insurance company's financial capacity to meet obligations of its insurance policies in accordance with their terms.

VARDS (Variable Annuity Research Data Service) provides a comprehensive guide to variable annuity contract features and historical fund performance. The service also provides a readily understandable analysis of the comparative characteristics and market performance of funds inclusive in variable contracts.

MOODY'S Investors Services, Inc.'s insurance claims-paying rating is a system of rating an insurance company's financial strength, market leadership, and ability to meet financial obligations. The purpose of Moody's ratings is to provide investors with a simple system of gradation by which the relative quality of insurance companies may be noted.

STANDARD & POOR'S INDEX - broad-based measurement of changes in stock-market conditions based on the average performance of 500 widely held common stocks; commonly known as the Standard & Poor's 500 (S&P 500). The selection of stocks, their relative weightings to reflect differences in the number of outstanding shares, and publication of the index itself are services of Standard & Poor's Corporation, a financial advisory, securities rating, and publishing firm. The index tracks 400 industrial company stocks, 20 transportation stocks, 40 financial company stocks, and 40 public utilities.

NASDAQ-OTC Price Index - this index is based on the National Association of Securities Dealers Automated Quotations (NASDAQ) and represents all domestic over-the-counter stocks except those traded on exchanges and those having only one market maker, a total of some 3,500 stocks. It is market value-weighted and was introduced with a base of 100.00 on February 5, 1971.

DOW JONES INDUSTRIAL AVERAGE (DJIA) - price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but including American Express Company and American Telephone and Telegraph Company. Prepared and Published by Dow Jones & Company, it is the oldest and most widely quoted of all the market indicators. The average is quoted in points, not dollars.

MORNINGSTAR, Inc. is an independent financial publisher offering comprehensive statistical and analytical coverage of open-end and closed-end funds and variable annuities. This coverage for mutual funds includes, among other information, performance analysis rankings, risk rankings (e.g. aggressive, moderate or conservative), and "style box" matrices. Style box matrices display, for equity funds, the investment philosophy and size of the companies in which the fund invests and, for fixed-income funds, interest rate sensitivity and credit quality of the investment instruments.

IBBOTSON ASSOCIATES, Inc. is a consulting firm that provides a variety of historical data, including total return, capital appreciation and income, on the stock market as well as other investment asset classes, and inflation. This information will be used primarily for comparative purposes and to illustrate general financial planning principles.

In its advertisements and other sales literature for the Variable Account and the Funds, the Company intends to illustrate the advantages of the Contracts in a number of ways:

DOLLAR-COST AVERAGING ILLUSTRATIONS. These illustrations will generally discuss the price-leveling effect of making regular investments in the same Sub-Accounts over a period of time, to take advantage of the trends in market prices of the portfolio securities purchased by those Sub-Accounts.

SYSTEMATIC WITHDRAWAL PROGRAM. A service provided by the Company, through which a Participant may take any distribution allowed by Internal Revenue Code Section 401 (a) (9) in the case of Qualified Contracts, or permitted under Internal Revenue Code Section 72 in the case of Non-Qualified Contracts, by way of a series of partial withdrawals. Withdrawals under this program may be fully or partially includable in income and may be subject to a 10% penalty tax. Consult your tax advisor.

THE COMPANY'S AND THE FUNDS' CUSTOMERS. Sales literature for the Variable Account and the Funds may refer to the number of clients which they serve.

THE COMPANY'S ASSETS, SIZE. The Company may discuss its general financial condition (see, for example, the references to Standard & Poor's, Fitch and A.M. Best Company above); it may refer to its assets; and it may discuss its relative size and/or ranking among companies in the industry or among any sub-classification of those companies, based upon recognized evaluation criteria.

COMPOUND INTEREST ILLUSTRATIONS. These will emphasize several advantages of the variable annuity contract. For example, but not by way of limitation, the literature may emphasize the potential savings through tax deferral; the potential advantage of the Variable Account over the Fixed Account; and the compounding effect when a participant makes regular deposits to his or her account.

The Company may use hypothetical illustrations of the benefits of tax deferral, including but not limited to the following chart:

The chart below assumes an initial investment of $10,000 which remains fully invested for the entire time period, an 8% annual return, and a 33% combined federal and state income tax rate. It compares how 3 different investments might fare over 10, 20, and 30 years. The first example illustrates an investment in a non-tax-deferred account and assumes that taxes are paid annually out of that account. The second example illustrates how the same investment would grow in a tax-deferred investment, such as an annuity. The third example illustrates the net value of the tax-deferred investment after paying taxes on the full account value.

	10 YEARS	20 YEARS	30 YEARS
Non-Tax-Deferred Account	$16,856	$28,413	$ 47,893
Tax-Deferred Account	$21,589	$46,610	$100,627
Tax-Deferred Account After Paying Taxes	$17,765	$34,528	$ 70,720

THIS ILLUSTRATION IS HYPOTHETICAL AND DOES NOT REPRESENT THE PROJECTED PERFORMANCE OF THE CONTRACT OR ANY OF ITS INVESTMENT OPTIONS. THE ILLUSTRATION DOES NOT REFLECT THE DEDUCTION OF ANY CHARGES OR FEES RELATED TO PORTFOLIO MANAGEMENT, MORTALITY AND EXPENSE, OR ACCOUNT ADMINISTRATION. TAXES ON EARNINGS WITHIN AN ANNUITY ARE DUE UPON WITHDRAWAL. WITHDRAWALS MAY ALSO BE SUBJECT TO SURRENDER CHARGES AND, IF MADE PRIOR TO AGE 59 1/2, A 10% FEDERAL PENALTY TAX.

TAX-DEFERRED ACCUMULATION

In general, individuals who own annuity contracts are not taxed on increases in the value of their annuity contracts until some form of distribution is made under the contract. As a result, the annuity contract would benefit from tax deferral during the contract's accumulation phase; this would have the effect of permitting an investment in an annuity contract to grow more rapidly that a comparable investment under which increases in value are taxed on a current basis.

In reports or other communications to you or in advertising or sales materials, we may also describe the effects of tax-deferred compounding on the Variable Account's investment returns. We may illustrate these effects in charts or graphs and from time to time may include comparisons of returns under the Contract or in general on a tax-deferred basis, with the returns on a taxable basis. Different tax rates may be assumed. Any such illustrative chart or graph would show accumulations on an initial investment or Purchase Payment, assuming a given amount (including the applicable interest credit), hypothetical gross annual returns compounded annually, and a stated rate of return. The values shown for the taxable investment would not include any deduction for management fees or other expenses, but would assume the annual deduction of federal and state taxes from investment returns. The values shown for the Contract in a chart would reflect the deduction of Contract expenses, such as the mortality and expense risk charge, the 0.15% administrative charge, the 0.15% distribution fee, and the $30 annual Account Fee. In addition, the values shown would assume that the Participant has not surrendered his or her Contract or made any partial surrenders until the end of the period shown. The chart would assume a full surrender at the end of the period shown and the payment of federal and state taxes, at a rate of not more than 33%, on the amount in excess of the Purchase Payments.

In developing illustrative tax deferral charts, we will observe these general principles:

- The assumed rate of earnings will be realistic.

- The illustrative chart will accurately depict the effect of all fees and charges or provide a narrative that prominently discloses all fees and charges under the Contract.

- Charts comparing accumulation values for tax-deferred and non-tax-deferred investments will depict the implications of any surrender.

- A narrative accompanying the chart will prominently disclose that there may be a 10% tax penalty on a surrender by a Participant who has not reached age 59 1/2 at the time of surrender.

The rates of return illustrated in any chart would be hypothetical and are not an estimate or guaranty of performance. Actual tax returns may vary among Participants.

CALCULATIONS

EXAMPLE OF VARIABLE ACCUMULATION UNIT VALUE CALCULATION

Suppose the net asset value of a Series Fund share at the end of the current valuation period is $18.38; at the end of the immediately preceding valuation period was $18.32; the Valuation Period is one day; and no dividends or distributions caused Series Fund shares to go "ex-dividend" during the current Valuation Period. $18.38 divided by $18.32 is 1.00327511. Subtracting the one day risk factor for mortality and expense risks and the administrative expense charge of .00007217 (the daily equivalent of the current maximum charge of 2.60% on an annual basis) gives a net investment factor of 1.00320294. If the value of the variable accumulation unit for the immediately preceding valuation period had been 14.5645672, the value for the current valuation period would be 14.6112116 (14.5645672 X 1.00320294).

EXAMPLE OF VARIABLE ANNUITY UNIT CALCULATION

Suppose the circumstances of the first example exist, and the value of an annuity unit for the immediately preceding valuation period had been 12.3456789. If the first variable annuity payment is determined by using an annuity payment based on an assumed interest rate of 3% per year, the value of the annuity unit for the current valuation period would be 12.3845294 (12.3456789 X 1.00322814 (the Net Investment Factor based on the daily equivalent of the maximum annuity phase charge of 1.70% of an annual basis) X 0.99991902). 0.99991902 is the factor, for a one day Valuation Period, that neutralizes the assumed interest rate of 3% per year used to establish the Annuity Payment Rates found in certain Contracts.

EXAMPLE OF VARIABLE ANNUITY PAYMENT CALCULATION

Suppose that a Participant Account is credited with 8,765.4321 variable accumulation units of a particular Sub-Account but is not credited with any fixed accumulation units; that the variable accumulation unit value and the annuity unit value for the particular Sub-Account for the valuation period which ends immediately preceding the annuity commencement date are 14.5645672 and 12.3456789 respectively; that the annuity payment rate for the age and option elected is $6.78 per $1,000; and that the annuity unit value on the day prior to the second variable annuity payment date is 12.3845294. The first variable annuity payment would be $865.57 (8,765.4321 X 14.5645672 X 6.78 divided by 1,000). The number of annuity units credited would be 70.1112 ($865.57 divided by 12.3456789) and the second variable annuity payment would be $868.29 (70.1112 X 12.3845294).

DISTRIBUTION OF THE CONTRACT

We offer the Contracts on a continuous basis. The Contracts are sold by licensed insurance agents in the State of New York. Such agents will be registered representatives of broker-dealers registered under the Securities Exchange Act of 1934 who are members of the National Association of Securities Dealers, Inc. and who have entered into distribution agreements with the Company and the general distributor and principal underwriter of the Contracts, Clarendon Insurance Agency, Inc. ("Clarendon"), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481. Clarendon is a subsidiary of the Sun Life (U.S.). Clarendon is registered with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. Clarendon also acts as the general distributor of certain other annuity contracts issued by Sun Life (U.S.) and its subsidiary, Sun Life Insurance and Annuity Company of New York ("Sun Life (N.Y.)"), and variable life insurance contracts issued by Sun Life (U.S.).

Commissions and other distribution compensation will be paid by the Company to the selling agents and will not be more than 7.00% of Purchase Payments of the Participant's Account Value. In addition to commissions, the Company may, from time to time, pay or allow additional promotional incentives, in the form of cash or other compensation. In some instances, such other incentives may be offered only to certain broker-dealers that sell or are expected to sell during specified time periods certain minimum amounts of the Contracts or Certificates or other contracts offered by the Company. Commissions will not be paid with respect to Participant Accounts established for the personal account of employees of the Company or any of its affiliates, or of persons engaged in the distribution of the Contracts, or of immediate family members of such employees or persons. In addition, commissions may be waived or reduced in connection with certain transactions described in the Prospectus under the heading "Waivers; Reduced Charges; Credits; Bonus Guaranteed Interest Rates."

CUSTODIAN

We are the Custodian of the assets of the Variable Account. We will purchase Fund shares at net asset value in connection with amounts allocated to the Sub-Accounts in accordance with your instructions, and we will redeem Fund shares at net asset value for the purpose of meeting the contractual obligations of the Variable Account, paying charges relative to the Variable Account or making adjustments for annuity reserves held in the Variable Account.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The financial statements of Sun Life Insurance and Annuity Company of New York that are included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein (which report expresses an unqualified opinion and includes two explanatory paragraphs relating to the merger of Sun Life Insurance and Annuity Company of New York with Keyport Benefit Life Insurance Company ("Keyport") on November 1, 2001 described in Note 1; and have been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. Their office is located at 200 Berkeley St, Boston, Massachusetts.

The financial statements of Sun Life (N.Y.)Variable Account C that are included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein.

FINANCIAL STATEMENTS

The financial statements of the Variable Account and Sun Life Insurance and Annuity Company New York are included herein. The consolidated financial statements of Sun Life Insurance and Annuity Company (N.Y.) are provided as relevant to its ability to meet its financial obligations under the Certificates and should not be considered as bearing on the investment performance of the assets held in the Variable Account.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

STATEMENTS OF OPERATIONS

(in thousands)

For the years ended December 31

	2003	2002	2001 Restated
Revenues
Premiums and annuity considerations	$ 28,457	$         20,285	$         19,187
Net investment income	85,302	74,847	21,276
Net realized investment gains (losses)	10,647	(7,265)	361
Fee and other income	13,988	11,686	8,142
Total revenues	138,394	99,553	48,966
Benefits and Expenses
Interest credited	78,432	62,830	12,682
Policyowner benefits	26,651	16,428	14,563
Operating expenses	16,118	16,979	9,477
Amortization of deferred policy acquisition costs	17,501	8,157	5,137
Total benefits and expenses	138,702	104,394	41,859
(Loss) income before income tax (benefit) expense	(308)	(4,841)	7,107
Income tax (benefit) expense	(390)	(1,710)	2,546
Net income (loss)	$ 82	$           (3,131)	$           4,561

The accompanying notes are an integral part of the financial statements.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

BALANCE SHEETS

(in thousands, except share data)

ASSETS	December 31, 2003	December 31, 2002
Investments
Available-for-sale fixed maturities at fair value (amortized cost of
$1,747,123 and $1,496,857 in 2003 and 2002, respectively)	$ 1,796,351	$     1,539,156
Mortgage loans	107,996	50,921
Policy loans	274	270
Short-term investments	-	6,390
Total investments	1,904,621	1,596,737
Cash and cash equivalents	60,310	157,563
Accrued investment income	22,520	19,800
Deferred policy acquisition costs	49,496	46,567
Deferred federal income taxes	-	1,007
Goodwill	37,788	37,788
Receivable for investments sold	33,640	1,262
Other assets	14,196	17,301
Separate account assets	580,203	514,749
Total assets	$ 2,702,774	$     2,392,774
LIABILITIES
Future contract and policy benefits	$ 48,760	$        40,510
Contractholder deposit funds and other policy liabilities	1,720,732	1,431,353
Deferred federal income taxes	304	-
Payable for investments purchased and loaned	58,682	73,474
Payable to affiliate	-	28,400
Other liabilities and accrued expenses	2,513	12,220
Separate account liabilities	580,203	514,749
Total liabilities	$ 2,411,194	$     2,100,706
Commitments and contingencies - Note 17
STOCKHOLDER'S EQUITY
Common stock, $350 par value - 6,001 shares authorized;
6,001 shares issued and outstanding	$ 2,100	$         2,100
Additional paid-in capital	239,963	239,963
Accumulated other comprehensive income	24,746	25,316
Retained earnings	24,771	24,689
Total stockholder's equity	$ 291,580	$       292,068
Total liabilities and stockholder's equity	$ 2,702,774	$    2,392,774

The accompanying notes are an integral part of the financial statements.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

For the years ended December 31

	2003	2002	2001 Restated
Net income (loss)	$ 82	$     (3,131)	$      4,561
Other comprehensive income (loss)
Net unrealized holding gains (losses) on available-for-sale
Securities, net of tax and policyholder amounts	13,621	25,664	(2,623)
Reclassification adjustments of realized investment (gains)
Losses into net income (loss), net of tax	(14,191)	1,853	(239)
Other comprehensive income (loss)	(570)	27,517	(2,862)
Comprehensive (loss) income	$ (488)	$     24,386	$      1,699

The accompanying notes are an integral part of the financial statements.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

STATEMENTS OF STOCKHOLDER'S EQUITY

(in thousands)

For the years ended December 31

			Accumulated
		Additional	Other		Total
	Common	Paid-In	Comprehensive	Retained	Stockholder's
	Stock	Capital	Income	Earnings	Equity
Balance at December 31, 2000	$ 2,000	$ 29,500	$ 661	$ 23,259	$ 55,420
Acquisition of Keyport Benefit Life (November 1, 2001)	100	99,463			99,563
Net income - Restated				4,561	4,561
Other comprehensive loss - Restated			(2,862)		(2,862)
Capital contribution		66,000			66,000
Balance at December 31, 2001 - Restated	2,100	194,963	(2,201)	27,820	222,682
Net loss				(3,131)	(3,131)
Other comprehensive income			27,517		27,517
Capital contribution		45,000			45,000
Balance at December 31, 2002	2,100	239,963	25,316	24,689	292,068
Net income				82	82
Other comprehensive loss			(570)		(570)
Balance at December 31, 2003	$ 2,100	$ 239,963	$ 24,746	$ 24,771	$ 291,580

The accompanying notes are an integral part of the financial statements.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

STATEMENTS OF CASH FLOWS

(in thousands)

For the years ended December 31

	2003	2002	2001 Restated
Cash Flows From Operating Activities:
Net income (loss)	$ 82	$     (3,131)	$     4,561
Adjustments to reconcile net income (loss) to net cash provided by
Operating activities:
Amortization of discount and premiums	13,252	11,281	47
Amortization of deferred policy acquisition costs	17,501	8,157	5,137
Net realized losses (gains) on investments	(10,647)	7,265	(361)
Interest credited to contractholder deposit funds	78,432	62,830	12,682
Deferred federal income taxes	1,432	(6,261)	(26,726)
Changes in assets and liabilities:
Deferred acquisition costs	(28,231)	(31,994)	(5,614)
Accrued investment income	(2,720)	(5,087)	72
Net change in other assets and liabilities	(34,752)	21,807	11,622
Future contract and policy benefits	8,250	591	2,837
Net cash provided by operating activities	42,599	65,458	4,257
Cash Flows From Investing Activities:
Sales, maturities and repayments of:
Available-for-sale fixed maturities	43,284	995,278	79,710
Mortgage loans	4,285	6,103	7,172
Purchases of:
Available-for-sale fixed maturities	(296,155)	(1,466,958)	(183,328)
Mortgage loans	(61,360)	(32,770)	(4,630)
Net change in payable/receivable of investments purchased and sold	(47,170)	73,474	-
Net change in policy loans	(4)	143	128
Net change in short-term investments	6,390	11,367	(1,756)
Net cash used in investing activities	(350,730)	(413,363)	(102,704)

The accompanying notes are an integral part of the financial statements.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

STATEMENTS OF CASH FLOWS (Continued)

(in thousands)

For the years ended December 31

	2003	2002	2001 Restated
Cash Flows From Financing Activities:
Deposits to contractholder deposit funds	$ 363,764	$     572,888	$      85,705
Withdrawals from contractholder deposit funds	(152,886)	(171,608)	(54,103)
Capital contributions	-	45,000	66,000
Net cash provided by financing activities	210,878	446,280	97,602
(Decrease) increase in cash and cash equivalents	(97,253)	98,375	(845)
Cash and cash equivalents, beginning of year	157,563	59,188	7,292
Cash acquired from acquisition through merger of Keyport Benefit Life Insurance Company	-	-	52,741
Cash and cash equivalents, end of year	$ 60,310	$     157,563	$      59,188

Supplemental schedule of noncash activities:

Sun Life Insurance and Annuity Company of New York ("Sun NY Predecessor") and Keyport Benefit Life Insurance Company ("KBL") were merged on December 31, 2002, with Sun NY Predecessor as the surviving company ("SLNY"). As part of the merger, SLNY issued 4,001 additional shares of common stock in exchange for all the assets and liabilities of KBL. Total book value of assets acquired and liabilities assumed by SLNY were $1,869.3 million and $1,652.8 million, respectively, at December 31, 2002. These financial statements give effect to this transaction as of November 1, 2001.

The accompanying notes are an integral part of the financial statements.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

On October 9, 2002, Sun Life Insurance and Annuity Company of New York ("Sun NY Predecessor"), which was a wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.) ("Sun Life U.S."), and Keyport Benefit Life Insurance Company ("KBL"), which was a wholly-owned subsidiary of Keyport Life Insurance Company ("Keyport"), an affiliate, filed an Agreement and Plan of Merger ("Merger Agreement") with the New York State Insurance Department. On December 31, 2002 at 5:00 p.m., Sun NY Predecessor and KBL completed the merger. Pursuant to the Merger Agreement, KBL merged with and into Sun NY Predecessor, with Sun NY Predecessor as the surviving company ("SLNY"), and SLNY issued 4,001 additional shares of common stock to Keyport in exchange for the assets and liabilities of KBL. As a result of the additional common stock issuance, SLNY became a subsidiary of both Keyport and Sun Life U.S., with Keyport owning 67% of the common stock of SLNY.

The merger was accounted for under Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations." Under SFAS No. 141, transfers of net assets and exchanges of shares between entities under common control are recorded at their carrying amounts at the date of transfer. The financial statements of prior periods have been restated to give effect to the merger as of November 1, 2001, the date on which the predecessor companies came under common control.

SLNY is licensed and authorized to write all the business that was previously being written by KBL and SLNY. The merger had no effect on the existing rights and benefits of policyholders or contract holders of either company. Keyport, KBL, Sun Life U.S., Sun NY Predecessor, and SLNY were at all times relevant to the merger indirect wholly-owned subsidiaries of Sun Life Assurance Company of Canada ("SLOC"). SLOC is an indirect wholly-owned subsidiary of Sun Life Financial Inc. ("SLF"), a reporting company under the Securities Exchange Act of 1934.

SLNY is engaged in the sale of fixed and variable annuity contracts, group life, variable universal life, stop loss and group disability insurance contracts. These contracts are sold by insurance agents, some of whom are registered representatives of national and regional stock brokerage firms and brokers. On October 21, 2003, SLNY announced that it was introducing a portfolio of Variable Universal Life ("VUL") insurance products to customers in New York State.

On December 31, 2003, Keyport was merged into Sun Life U.S. with Sun Life U.S being the surviving company. Consequently, SLNY is a wholly-owned subsidiary of Sun Life U.S.

Basis of Presentation

The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for stock life insurance companies.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant estimates are those used in determining deferred policy acquisition costs ("DAC"), the fair value of financial instruments, other-than-temporary impairments of investment, and the liabilities for future policyholder benefits.

Financial Instruments

In the normal course of business, SLNY may enter into transactions involving various types of financial instruments, including cash and cash equivalents, fixed maturity securities, mortgage loans, equity securities, debt, loan commitments and financial guarantees. These instruments involve credit risk and also may be subject to risk of loss due to interest rate fluctuation. SLNY evaluates and monitors each financial instrument individually and, when appropriate, obtains collateral or other security to minimize losses.

Cash and Cash Equivalents

Cash and cash equivalents include cash, commercial paper, money market investments, and short term bank participations. All such investments have been purchased with maturities of three months or less and are considered cash equivalents for purposes of reporting cash flows.

Investments

SLNY accounts for its investments in accordance with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." At the time of purchase, fixed maturity securities are classified based on intent, as either held-to-maturity or available-for-sale. In order for the securities to be classified as held-to-maturity, SLNY must have positive intent and ability to hold the securities to maturity. Securities held-to-maturity are stated at cost, adjusted for amortization of premiums and accretion of discounts. Securities that do not meet this criteria are classified as available-for-sale. Available-for-sale securities are carried at estimated fair value with changes in unrealized gains or losses reported as a separate component of other comprehensive income. Fair values for publicly traded securities are obtained from external market quotations. For privately placed fixed maturities, fair values are estimated by taking into account prices for publicly traded securities of similar credit risk, maturities, repayment and liquidity characteristics. SLNY does not engage in trading activities. All of SLNY's fixed maturity securities are classified as available-for-sale. All security transactions are recorded on a trade-date basis.

SLNY's accounting policy for impairment requires recognition of an other-than-temporary impairment charge on a security if it is determined that SLNY is unable to recover all amounts due under the contractual obligations of the security. Once an impairment charge has been recorded, SLNY continues to review the other-than-temporarily impaired security for additional impairment, if necessary.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments (continued)

Mortgage loans are stated at unpaid principal balances, net of provisions for estimated losses. Mortgage loans acquired at a premium or discount are carried at amortized values, net of provisions for estimated losses. Loans include commercial first mortgage loans and are diversified by property type and geographic area throughout the United States. Mortgage loans are collateralized by the related properties and generally are no more than 75% of the properties' value at the time that the original loan is made.

A loan is recognized as impaired when it is probable that the principal or interest is not collectible in accordance with the contractual terms of the loan. Measurement of impairment is based on the present value of expected future cash flows discounted at the loan's effective interest rate, or at the loan's observable market price. A specific valuation allowance is established if the fair value of the impaired loan is less than the recorded amount. Loans are also charged against the allowance when determined to be uncollectible. The allowance is based on a continuing review of the loan portfolio, past loss experience and current economic conditions, which may affect the borrower's ability to pay. While management believes that it uses the best information available to establish the allowance, future adjustments to the allowance may become necessary if economic conditions differ from the assumptions used in making the evaluation.

Policy loans are carried at the amount of the outstanding principal balance. The loans are collateralized by the respective insurance policy and do not exceed the excess of the net cash surrender value of the policy.

Realized gains and losses on the sales of investments are recognized in operations at the date of sale and are determined using the specific cost identification method. When an impairment of a specific investment or a group of investments is determined to be other-than-temporary, a realized investment loss is recorded. Changes in the provision for estimated losses on mortgage loans are included in net realized investment gains and losses.

Income on investments is recorded on the accrual basis. Investments are placed in a non-accrual status when management believes that the borrower's financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of principal and interest is doubtful. When an investment is placed in non-accrual status, all interest previously accrued is reversed against current period interest income. Interest accruals are resumed on such investments only when they are brought fully current with respect to principal and interest, have performed on a sustained basis for a reasonable period of time, and when, in the judgement of management, the investments are estimated to be fully collectible as to both principal and interest.

Deferred Policy Acquisition Costs

Acquisition costs consist of commissions, underwriting and other costs that vary with and are primarily related to the production of new business. Acquisition costs related to investment-type contracts, primarily deferred annuity and guaranteed investment contracts, are deferred and amortized with interest in proportion to the present value of estimated gross profits to be realized over the estimated lives of the contracts. Estimated gross profits are composed of net investment income, net realized investment gains and losses, life and variable annuity fees, surrender charges and direct variable administrative expenses. This amortization is reviewed quarterly and adjusted retrospectively by a cumulative charge or credit to current operations when SLNY revises the actual profits and its estimate of future gross profits to be realized from investment-type contracts, including realized and unrealized gains and losses from investments.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred Policy Acquisition Costs (continued)

Although realization of deferred policy acquisition cost ("DAC") is not assured, SLNY believes it is more likely than not that all of these costs will be realized. The amount of DAC considered realizable, however, could be reduced in the near term if the estimates of gross profits discussed above are reduced.

Other Assets

Property, equipment, and leasehold improvements, which are included in other assets, are stated at cost, less accumulated depreciation and amortization. Depreciation is provided using the straight-line or accelerated method over the estimated useful lives of the related assets, which generally range from 3 to 10 years. Amortization of leasehold improvements is provided using the straight-line method over the lesser of the term of the lease or the estimated useful life of the improvements.

Reinsurance receivables from reinsurance ceded are also included in other assets.

Policy liabilities and accruals

Future contract and policy benefits are liabilities for traditional life, disability, stop loss and annuity products. Such liabilities are established in amounts adequate to meet the estimated future obligations of policies in force. The liabilities associated with traditional life insurance, annuity and disability insurance products are computed using the net level premium method based on assumptions about future investment yields, mortality, morbidity and persistency. The assumptions used are based upon SLNY's experience and industry standards.

Contractholder deposit funds consist of policy values that accrue to the holders of investment-related products, such as deferred annuities and guaranteed investment contracts. The liabilities consist of net deposits and interest credited less administrative charges. The liability is before the deduction of any applicable surrender charges.

Other policy liabilities include liabilities for policy and contract claims. These amounts consist of the estimated amount payable for claims reported but not yet settled and an estimate of claims incurred but not reported. The amount reported is based upon historical experience, adjusted for trends and current circumstances. Management believes that the recorded liability is sufficient to provide for the associated claims adjustment expenses. Revisions of these estimates are included in operations in the year such refinements are made.

Revenue and Expenses

Premiums for traditional individual life and annuity products are considered revenue when due. Premiums related to group disability insurance and stop loss are recognized as revenue pro-rata over the contract period. The unexpired portion of these premiums is recorded as unearned premiums. Revenue from investment-related products includes charges for cost of insurance (mortality), initiation and administration of the policy, and surrender charges. Revenue is recognized when the charges are assessed, except that any portion of an assessment that relates to services to be provided in future years is deferred and recognized over the period during which the services are provided.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue and Expenses (continued)

Other than DAC, benefits and expenses related to traditional life, annuity, and disability contracts, including group policies and stop loss, are recognized when incurred in a manner designed to match them with related premium revenue and spread income to be recognized over the expected policy lives. For investment-type contracts, benefits include death benefits in excess of account values, which are recognized as incurred.

Operating Expenses

Operating expenses primarily represent allocated compensation and general and administrative expenses. Management believes intercompany expenses are calculated on a reasonable basis, however, these amounts may not necessarily be indicative of the costs that would be incurred if SLNY operated on a stand-alone basis.

Income Taxes

SLNY will file a stand-alone federal income tax return for 2003. Taxes are computed under SFAS No. 109, "Accounting for Income Taxes." Deferred income taxes are generally recognized when assets and liabilities have different values for financial statement and tax reporting purposes, and for other temporary taxable and deductible differences as defined by SFAS No. 109. These differences result primarily from policy reserves, policy acquisition expenses and unrealized gains or losses on investments.

Separate Accounts

SLNY has established separate accounts applicable to various classes of contracts providing for variable benefits and they are generally not subject to liabilities that arise from any other business of SLNY. Separate account assets are subject to general account claims only to the extent the value of such assets exceeds the separate account liabilities. Contracts for which funds are invested in separate accounts include individual qualified and non-qualified variable annuity contracts. Assets and liabilities of the separate accounts, representing net deposits and accumulated net investment earnings, less fees, held primarily for the benefit of contractholders, are shown as separate captions in the financial statements. Assets held in the separate accounts are carried at market value and the investment risk of such securities is retained by the policyholder.

Reclassification

Certain amounts in the prior years' financial statements have been reclassified to conform to the 2003 presentation.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

New Accounting Pronouncements

In May 2003, the Financial Accounting Standards Board ("FASB") issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 requires certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity to be classified as liabilities. SFAS No. 150 was effective July 1, 2003 for SLNY. The adoption of SFAS No. 150 did not have a material effect on SLNY's financial position or results of operations.

On March 14, 2003, the American Institute of Certified Public Accountants ("AICPA") issued a proposed Statement of Position ("SOP"), "Accounting by Insurance Enterprises for Deferred Acquisition Costs on Internal Replacements Other Than Those Specifically Described in FASB Statement No. 97." This proposed SOP provides guidance on accounting by insurance companies for DAC on internal replacements other than those specifically described in SFAS No. 97. This proposed SOP is effective for fiscal years beginning after December 15, 2004. SLNY is in the process of evaluating the provisions of this proposed SOP and its impact on SLNY's financial position and results of operations.

In March 2003, the Accounting Standards Executive Committee ("AcSEC") approved SOP 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Long Duration Contracts and for Separate Accounts." This SOP provides guidance on accounting and reporting by insurance companies for certain non-traditional, long-duration contracts and for separate accounts. This SOP is effective for fiscal years beginning after December 15, 2003. SLNY is in the process of evaluating the provisions of this SOP and its impact on SLNY's financial position and results of operations.

In January 2003, the FASB issued FASB Interpretation No. 46, "Consolidation of Variable Interest Entities" ("FIN No. 46"). In December 2003, the FASB issued a revised version of FIN 46 ("FIN 46R"), which incorporates a number of modifications and changes made to the original version. FIN 46R replaces the previously issued FIN 46 and, subject to certain special provisions, is effective no later than the first reporting period that ends after December 15, 2003 for entities considered to be special-purpose entities and no later than the end of the first reporting period that ends after March 15, 2004 for all other variable interest entities ("VIEs"). Early adoption is permitted. SLNY adopted FIN No. 46 and FIN 46R in the fourth quarter of 2003. The adoption of FIN No. 46 and FIN 46R did not have a material effect on SLNY's financial position or results of operations.

Effective December 31, 2003, SLNY adopted the disclosure requirements of Emerging Issues Task Force ("EITF") Issue No. 03-01, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments". As such, disclosures are required for unrealized losses on fixed maturity and equity securities accounted for under SFAS No. 115, "Accounting for Certain Investment in Debt and Equity Securities" that are classified as either available-for-sale or held-to-maturity. The disclosure requirements include quantitative information regarding the aggregate amount of unrealized losses and the associated fair value of the investments in an unrealized loss position, segregated into time periods for which the investments have been in an unrealized loss position. The consensus also requires certain qualitative disclosures about the unrealized holdings in order to provide additional information that SLNY considered in concluding that the unrealized losses were not other-than-temporary. For further discussion, see disclosures in Note 4.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

2. GOODWILL

Goodwill represents the difference between the purchase price paid and the fair value of the net assets acquired in connection with the acquisition of KBL (through the acquisition of Keyport) on October 31, 2001 by SLF, a Canadian holding company and parent of SLOC.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed by SLNY as of November 1, 2001 (in thousands):

Assets:
Fixed-maturity securities	$     809,972
Accrued investment income	12,438
Receivable for investments sold	2,041
Goodwill	35,314
Deferred taxes	13,931
Cash and cash equivalents	52,741
Other assets acquired	998
Separate account assets	218,677
Total assets acquired	1,146,112
Liabilities:
Policy liabilities	826,124
Other liabilities	1,748
Separate accounts	218,677
Total liabilities assumed	1,046,549
Net assets acquired	$      99,563

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

2. GOODWILL (continued)

In 2002, SLNY completed its valuation of certain assets acquired and liabilities assumed. The revisions increased goodwill by $2.5 million, increased deferred tax asset by $1.9 million, decreased other liabilities by $47,000 and decreased investments by $4.5 million.

Goodwill is accounted for in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets". Effective January 1, 2002, goodwill is no longer amortized and is tested for impairment on an annual basis. SLNY completed the required impairment tests of goodwill and indefinite-lived intangible assets prior to reporting for the second quarter of 2003 and concluded that these assets are not impaired. SLNY used the actuarial appraisal method, with assumptions and discount rates reflective of current market conditions and determined that the fair value of SLNY was at least equal to the carrying value. SLNY also compared the results of that valuation to a range of values based on historical multiples, and found them to be consistent with the results of the actuarial appraisal method. Goodwill is allocated to the Wealth Management Segment.

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES

SLNY has agreements with Sun Life U.S. and certain affiliates, under which SLNY receives, as requested, certain investment and administrative services on a cost reimbursement basis. Expenses under these agreements amounted to approximately $5.2 million, $4.4 million and $3.8 million for the years ended December 31, 2003, 2002 and 2001, respectively. Management believes intercompany expenses are calculated on a reasonable basis, however, these amounts may not necessarily be indicative of the costs that would be incurred if SLNY operated on a stand-alone basis.

In 2002, SLNY received $14.9 million of additional capital contributions from Sun Life U.S. and $30.1 million of additional capital contributions from Keyport.

In 2001, KBL received $66.0 million of additional capital contributions from Keyport.

SLNY had $4.0 million and $30.6 million due to related parties at December 31, 2003 and 2002, respectively, and $4.4 million and $0.6 million due from related parties at December 31, 2003 and 2002, respectively.

During 2003, SLNY paid $0.1 million in commission fees to MFS/Sun Life Financial Distributors, Inc.

During 2003 and 2002, the Company paid $3.1 million and $1.2 million, respectively, in commission fees to Independent Financial Marketing Group, Inc.

As more fully described in Note 8, SLNY has been involved in several reinsurance transactions with SLOC.

As more fully described in Note 9, SLNY participates in a pension plan and other post-retirement benefits sponsored by Sun Life U.S.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

4. INVESTMENTS

Fixed Maturities

The amortized cost and fair value of SLNY's fixed maturities were as follows (in 000's):

		December 31, 2003
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	(Losses)	Value
Available-for-sale fixed maturities:
Non-Corporate Securities
Asset backed and mortgage backed securities	$ 313,303	$ 5,751	$ (5,152)	$ 313,902
Foreign government & agency securities	7,859	393	(2)	8,251
States & political subdivisions	-	-	-	-
U.S. treasury & agency securities	92,543	1,006	(2)	93,548
Total Non-Corporate Securities	413,705	7,150	(5,156)	415,701
Corporate Securities
Basic industry	38,944	1,827	(5)	40,766
Capital goods	68,563	4,540	(119)	72,984
Communications	133,742	4,807	(990)	137,560
Consumer cyclical	166,590	8,824	(50)	175,365
Consumer noncyclical	50,813	1,740	(36)	52,517
Energy	64,584	3,746	(161)	68,170
Finance	405,646	13,246	(1,028)	417,863
Technology	19,426	644	-	20,070
Transportation	50,293	1,380	(1,925)	49,748
Utilities	265,091	11,386	(1,771)	274,707
Other	69,726	1,581	(402)	70,900
Total Corporate Securities	1,333,418	53,721	(6,487)	1,380,650
Total available-for-sale fixed maturities	$ 1,747,123	$ 60,871	$ (11,643)	$ 1,796,351

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

4. INVESTMENTS (continued)

	December 31, 2002
		Gross	Gross	Estimated
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	(Losses)	Value
Available-for-sale fixed maturities:
Non-Corporate Securities
Asset backed and mortgage backed securities	$ 320,944	$ 8,353	$ (2,822)	$ 326,475
Foreign government & agency securities	6,475	434	-	6,909
States & political subdivisions	-	-	-	-
U.S. treasury & agency securities	66,623	1,220	-	67,843
Total Non-Corporate Securities	394,042	10,007	(2,822)	401,227
Corporate Securities
Basic industry	34,613	1,737	(6)	36,344
Capital goods	37,601	2,533	(1)	40,133
Communications	88,324	3,703	(472)	91,555
Consumer cyclical	122,135	6,021	(91)	128,065
Consumer noncyclical	42,335	1,653	(683)	43,305
Energy	65,877	3,553	(346)	69,084
Finance	406,505	17,055	(2,414)	421,146
Technology	8,457	423	(175)	8,705
Transportation	53,816	2,947	(1,593)	55,170
Utilities	220,202	7,397	(7,412)	220,187
Other	22,950	1,300	(15)	24,235
Total Corporate Securities	1,102,815	48,322	(13,208)	1,137,929
Total available-for-sale fixed maturities	$ 1,496,857	$ 58,329	$ (16,030)	$ 1,539,156

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

4. INVESTMENTS (Continued)

The amortized cost and estimated fair value by maturity periods for fixed maturities are shown below (in 000's). Actual maturities may differ from contractual maturities on asset-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or SLNY may have the right to put or sell the obligations back to the issuers.

		December 31, 2003		December 31, 2002
		Amortized Cost	Fair Value	Amortized Cost	Fair Value
Maturities of available-for-sale fixed securities:
	Due in one year or less	$ 92,562	$ 93,375	$ 97,069	$ 97,959
	Due after one year through five years	738,877	762,346	623,403	643,846
	Due after five years through ten years	405,732	426,295	356,199	369,097
	Due after ten years	196,649	200,433	99,242	101,779
Subtotal		1,433,820	1,482,449	1,175,913	1,212,681
Asset-backed securities		313,303	313,902	320,944	326,475
Total		$ 1,747,123	$ 1,796,351	$ 1,496,857	$ 1,539,156

Gross gains of $14.0 million, $5.9 million and $3.3 million, and gross losses of $2.6 million, $8.5 million and $2.9 million were realized on the voluntary sale of fixed maturities for the years ended December 31, 2003, 2002 and 2001, respectively.

Fixed maturities with an amortized cost of approximately $0.4 million and $1.0 million at December 31, 2003 and 2002, respectively, were on deposit with governmental authorities as required by law.

As of December 31, 2003, 96.2% of SLNY's fixed maturities were investment grade. Investment grade securities are those that are rated "BBB" or better by nationally recognized rating agencies. During 2003, 2002 and 2001, SLNY incurred realized losses totaling $0.8 million, $4.6 million and $0.6 million, respectively, for other-than-temporary impairment of certain fixed maturities after determining that not all of the unrealized losses were temporary in nature. During 2003, $0.3 million of the prior years' losses were recovered through disposition and are included in realized gains. During 2002, $0.2 million of the 2001 losses were recovered through disposition and were included in realized gains. During 2001, $0.6 million of the 2000 losses were recovered through disposition and were included in realized gains.

SLNY has discontinued the accrual of income on several of its holdings for issuers that are in default. The termination of accrual accounting on these holdings reduced income by $198,000, $98,000 and $75,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

4. INVESTMENTS (Continued)

The gross unrealized losses and fair value of investments, which have been deemed to be temporarily impaired, aggregated by investment category, number of securities and length of time that securities have been in an unrealized loss position at December 31, 2003 is as follows:

	Less than 12 months				12 months or more			Total
		#	Fair Value	Unrealized Losses	#	Fair Value	Unrealized Losses	#	Fair Value	Unrealized Losses
Non-Corporate Securities
Asset backed and mortgage backed securities		20	$35,744	$(1,637)	7	$ 8,817	$ (3,515)	27	$ 44,561	$ (5,152)
Foreign government & agency securities		1	181	(1)	-	-	-	1	181	(1)
U.S. treasury & agency securities		1	21,240	(2)	-	-	-	1	21,240	(2)
Total Non-Corporate Securities		22	57,165	(1,640)	7	8,817	(3,515)	29	65,982	(5,155)
Corporate Securities
Basic industry		2	211	(5)	-	-	-	2	211	(5)
Capital goods		3	6,469	(119)	-	-	-	3	6,469	(119)
Communications		13	32,287	(990)	-	-	-	13	32,287	(990)
Consumer cyclical		4	11,655	(50)	-	-	-	4	11,655	(50)
Consumer noncyclical		6	4,541	(36)	-	-	-	6	4,541	(36)
Energy		3	5,755	(161)	-	-	-	3	5,755	(161)
Finance		20	38,648	(751)	6	20,658	(278)	26	59,306	(1,029)
Transportation		16	14,608	(805)	3	5,330	(1,119)	19	19,938	(1,924)
Utilities		17	56,334	(1,399)	3	5,775	(372)	20	62,109	(1,771)
Other		5	27,202	(395)	1	246	(8)	6	27,448	(403)
Total Corporate Securities		89	197,710	(4,711)	13	32,009	(1,777)	102	229,719	(6,488)
Total fixed maturities available-for-sale		111	$254,875	$ (6,351)	20	$ 40,826	$ (5,292)	131	$ 295,701	$ (11,643)

SLNY has a comprehensive process in place to identify potential problem securities that could have an impairment that is other-than-temporary. At the end of each quarter, all securities with a market value that has been below 80% of amortized cost for more than six months are reviewed. An analysis is undertaken to determine whether this decline in market value is other-than-temporary. SLNY's process focuses on issuer operating performance as well as overall industry and market conditions. Any deterioration in operating performance is assessed relative to the impact on issuer financial ratios, including leverage and coverage measures specific to an industry and relative to any investment covenants. Additionally, SLNY's analysis assesses each issuer's ability to service its debts in a timely fashion, the length of time the security has been trading below 80% of amortized cost, rating agency actions, and any other key developments. SLNY has a Credit Committee that includes members from its Investment, Finance and Actuarial functions. The Credit Committee meets and reviews the results of SLNY's impairment analysis on a quarterly basis.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

4. INVESTMENTS (Continued)

Mortgage loans

SLNY invests in commercial first mortgage loans throughout the United States. Investments are diversified by property type and geographic area. Mortgage loans are collateralized by the related properties and generally are no more than 75% of the properties' value at the time that the original loan is made.

SLNY monitors the condition of the mortgage loans in its portfolio. In those cases where mortgages have been restructured, appropriate allowances for losses have been made. In those cases where, in management's judgment, the mortgage loan's value has been impaired, appropriate losses are recorded. SLNY had no restructured or impaired mortgage loans at December 31, 2003 and 2002, respectively.

Mortgage loans comprised the following property types and geographic regions (in 000's):

	December 31,
Property Type:		2003	2002
Office building		$ 45,630	$ 22,828
Residential		1,591	-
Retail		37,022	11,967
Industrial/warehouse		15,950	11,258
Other		7,884	4,949
Valuation allowance		(81)	(81)
Total		$ 107,996	$ 50,921

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

4. INVESTMENTS (Continued)

	December 31,
Geographic region:		2003	2002
Arizona		$ 6,727	$ 2,434
California		5,150	5,571
Colorado		6,174	-
Delaware		8,814	8,944
Florida		15,915	3,744
Georgia		790	-
Indiana		6,221	1,834
Maryland		7,830	3,096
Michigan		471	511
Minnesota		2,838	2,911
Missouri		1,294	-
New Jersey		2,800	-
New York		6,657	7,561
Ohio		7,291	1,159
Pennsylvania		16,136	8,830
Texas		4,775	641
Utah		1,869	1,980
Virginia		4,200	1,160
Other		2,125	626
Valuation allowance		(81)	(81)
Total		$ 107,996	$ 50,921

At December 31, 2003, scheduled mortgage loan maturities were as follows (in 000's):

2004	$ 3,468
2005	806
2006	-
2007	18,398
2008	5,174
Thereafter	80,150
Total	$ 107,996

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

4. INVESTMENTS (Continued)

Actual maturities could differ from contractual maturities because borrowers may have the right to prepay obligations, with or without prepayment penalties, and loans may be refinanced.

SLNY has made commitments of mortgage loans on real estate and other loans into the future. The outstanding commitments for these mortgages amounted to $18.6 million and $0.7 million at December 31, 2003 and 2002, respectively.

5. NET REALIZED INVESTMENT GAINS AND LOSSES

Net realized investment gains (losses) consisted of the following for the years ended December 31 (in 000's):

	2003		2002		2001 - Restated
Fixed maturities	$ 11,421		$ (2,641)		$              983
Mortgage loans		-		-		(81)
Short-term investments	1		3		9
Write-down of fixed maturities	(775)		(4,627)		(550)
Total	$ 10,647		$ (7,265)		$                 361

6. NET INVESTMENT INCOME

Net investment income consisted of the following for the years ended December 31 (in 000's):

		2003	2002	2001 - Restated
Fixed maturities		$ 82,165	$ 72,786	$ 19,024
Mortgage loans		4,693	2,640	2,374
Policy loans		20	24	33
Other		18	115	41
	Gross investment income	86,896	75,565	21,472
Less: Investment expenses		1,594	718	196
	Net investment income	$ 85,302	$ 74,847	$ 21,276

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

7. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table presents the carrying amounts and estimated fair values of SLNY's financial instruments at December 31 (in 000's):

		2003		2002
		Carrying	Estimated	Carrying	Estimated
		Amount	Fair Value	Amount	Fair Value
Financial assets:
	Cash and cash equivalents		$ 60,310	$ 60,310	$ 157,563	$ 157,563
	Fixed maturities		1,796,351	1,796,351	1,539,156	1,539,156
	Mortgages		107,996	113,644	50,921	56,717
	Policy loans		274	274	270	270
	Short-term investments		-	-	6,390	6,390
	Separate account assets		580,203	580,203	514,749	514,749
Financial liabilities:
	Contractholder deposit funds		$ 1,720,732	$ 1,623,047	$ 1,431,353	$ 1,374,908
	Separate account liabilities		$ 580,203	$ 580,203	$ 514,749	$ 514,749

The fair values of cash and cash equivalents are estimated to be cost plus accrued interest. The fair values of short-term bonds are estimated to be amortized cost. The fair values of publicly traded fixed maturities are based upon market prices or dealer quotes. For privately placed fixed maturities, fair values are estimated by taking into account prices for publicly traded securities of similar credit risk, maturity, repayment and liquidity characteristics. The fair values of mortgage loans are estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Policy loans are stated at unpaid principal balances, which approximate fair value.

The fair values of SLNY's contractholder deposits under investment-type contracts (insurance, annuity and pension contracts that do not involve mortality or morbidity risks) are estimated using discounted cash flow analyses or surrender values based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for all contracts being valued. Those contracts that are deemed to have short-term guarantees have a carrying amount equal to the estimated market value.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

8. REINSURANCE

SLNY has an agreement with SLOC whereby SLOC reinsures the mortality risks of SLNY's group life insurance contracts.

Under this agreement, certain death benefits are reinsured on a yearly renewable term basis. The agreement provides that SLOC will reinsure the mortality risks in excess of $50,000 per claim for group life contracts ceded by SLNY. The reinsurance block was closed for new business effective December 31, 2003.

SLNY has an agreement with SLOC whereby SLOC reinsured morbidity risks of a block of SLNY's group long-term disability contracts. The block is closed for new business.

SLNY has an agreement with an unrelated company whereby the unrelated company reinsures the morbidity risks of SLNY's group long-term disability contracts. Under this agreement, certain long-term disability benefits are reinsured on a yearly renewable term basis. The agreement provides that the unrelated company will reinsure amounts above $4,000 per claim per month for long-term disability contracts ceded by SLNY.

SLNY has an agreement with an unrelated company whereby the unrelated company reinsures the morbidity risks of SLNY's group stop loss contracts. Under this agreement, certain stop loss benefits are reinsured on a yearly renewable term basis. The agreement provides that the unrelated company will reinsure specific claims for amounts above $1,000,000 per claim for medical stop loss contracts ceded by SLNY.

SLNY has an agreement with an unrelated company whereby the unrelated company reimburses SLNY for benefits, expenses and interest credits for Focus V and Galaxy V fixed annuities issued in 2000 if the asset pools backing the liability are insufficient.

The effects of reinsurance were as follows (in 000's):

		For the Years Ended December 31,
		2003	2002	2001
Insurance premiums:
	Direct	$ 33,418	$        25,900	$       22,158
	Ceded - Affiliated	3,468	4,133	1,842
	Ceded - Non-affiliated	1,493	1,482	1,129
Net Premiums		$ 28,457	$        20,285	$       19,187
Insurance and other individual policy benefits, and claims:
	Direct	$ 31,276	$         19,644	$       19,525
	Ceded - Affiliated	3,775	2,858	4,565
	Ceded - Non-affiliated	850	358	397
Net policy benefits and claims		$ 26,651	$       16,428	$       14,563

SLNY is contingently liable for the portion of the policies reinsured under each of its existing reinsurance agreements in the event the reinsurance companies are unable to pay their portion of any reinsured claim. Management believes that any liability from this contingency is unlikely. However, to limit the possibility of such losses, SLNY periodically evaluates the financial condition of its reinsurers and monitors concentration of credit risk.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

9. RETIREMENT PLANS

Pension Plan

SLNY participates in a non-contributory defined benefit pension plan that is sponsored by Sun Life U.S., which is directly liable for the related obligations. Benefits under all plans are based on years of service and employees' average compensation. SLNY is allocated a portion of the pension plan expenses. The allocated expenses were $41,000, $14,000 and $13,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

SLNY participates in a 401(K) plan sponsored by Sun Life U.S. for which substantially all employees of at least age 21 are eligible at date of hire. Under the plan, employer contributions are matched up to a specified amount of the employee's contributions to the plan. The SLNY portion of this employer contribution was $23,000, $15,700 and $6,200 for the years ended December 31, 2003, 2002 and 2001, respectively.

Other Post-Retirement Benefit Plans

SLNY participates in a plan sponsored by Sun Life U.S. that provides certain health, dental and life insurance benefits ("post-retirement benefits") for retired employees and dependents. Substantially all employees of the participating companies may become eligible for these benefits if they reach normal retirement age, or retire early upon satisfying an alternate age plus service condition. Life insurance benefits are generally set at a fixed amount. SLNY is allocated a portion of these post-retirement benefit plans expenses. The allocated expenses were $4,000, $11,000 and $10,000 for the years ended December 31, 2003, 2002 and 2001, respectively.

10. FEDERAL INCOME TAXES

SLNY will file a stand-alone federal tax return for the year ended December 31, 2003. In 2007 and periods thereafter, SLNY will file a consolidated tax return with Sun Life Assurance Company of Canada - U.S. Operations Holdings, Inc. For periods prior to 2003, SLNY filed federal income tax as part of the consolidated tax return. However, federal income taxes were calculated as if SLNY was filing a separate federal income tax return. A summary of the components of federal income tax expense in the statements of income for the years ended December 31, was as follows (in 000's):

	2003	2002	2001 - Restated
Federal income tax expense (benefit):
Current	$ (1,996)	$    274	$    535
Deferred	1,606	(1,984)	2,011
Total	$ (390)	$     (1,710)	$       2,546

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

10. FEDERAL INCOME TAXES (continued)

Federal income taxes attributable to the operations are different from the amounts determined by multiplying income before federal income taxes by the expected federal income tax rate of 35%. SLNY's effective rate differed from the federal income tax rate as follows (in 000's):

	2003	2002	2001 - Restated
Expected federal income tax (benefit) expense	$ (108)	$    (1,695)	$       2,487
Other	(282)	(15)	59
Federal income tax (benefit) expense	$ (390)	$     (1,710)	$        2,546

The net deferred income tax liability represents the tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes. The components of SLNY's deferred tax assets and liabilities as of December 31 were as follows (in 000's):

	2003		2002
Deferred tax assets:
Actuarial liabilities	$ 21,583	$ 13,479
Net operating loss	4,856	6,532
Other	-	492
Total deferred tax assets	26,439	20,503
Deferred tax liabilities:
Investments, net	(17,033)	(13,131)
Deferred policy acquisition costs	(6,974)	(6,365)
Other	(2,736)	-
Total deferred tax liabilities	(26,743)	(19,496)
Net deferred tax (liabilities) assets	$ (304)	$     1,007

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

10. FEDERAL INCOME TAXES (Continued)

SLNY made no tax payments in 2003. For prior periods, payments were made under certain tax sharing agreements that required each company to calculate its liability as if it filed a separate return. Sun NY Predecessor had cash payments to Sun Life U.S. for federal income taxes of approximately $2.7 million for the year ended December 31, 2002 and had cash received of approximately $2.0 million for the year ended December 31, 2003. Similarly, KBL paid approximately $0.6 million to Keyport for federal income taxes for the year ended December 31, 2002 and received approximately $1.0 million from Keyport for the year ended December 31, 2003. At December 31, 2003, SLNY had $13.9 million of net operating loss carryforwards which will expire, if unused, in 2017.

SLNY's federal income tax returns are routinely audited by the Internal Revenue Service ("IRS"), and provisions are made in the financial statements in anticipation of the results of these audits. Sun NY Predecessor and KBL are currently under audit by the IRS for the years 1998 through 2000 and 1999 through October 31, 2001, respectively. In SLNY's opinion, adequate tax liabilities have been established for all years and any adjustments that might be required for the years under audit will not have a material effect on SLNY's financial statements. However, the amounts of these tax liabilities could be revised in the future if estimates of SLNY's ultimate liability are revised.

11. LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSES

Activity in the liability for unpaid claims and claims adjustment expenses related to the stop loss, group life and group disability products is summarized below (in 000's):

		2003	2002
Balance at January 1		$ 24,294	$ 23,615
Less reinsurance recoverable		(6,621)	(6,078)
Net balance at January 1		17,673	17,537
Incurred related to:
	Current year	15,538	12,062
	Prior years	(160)	(1,946)
Total incurred		15,378	10,116
Paid losses related to:
	Current year	(5,867)	(6,660)
	Prior years	(4,257)	(3,320)
Total paid		(10,124)	(9,980)
Balance at December 31		32,410	24,294
Less reinsurance recoverable		(9,483)	(6,621)
Net balance at December 31		$ 22,927	$ 17,673

SLNY regularly updates its estimates of liabilities for unpaid claims and claims adjustments expenses as new information becomes available and further events occur which may impact the resolution of unsettled claims for its group disability line of business. Changes in prior estimates are recorded in results of operations in the year such changes are determined to be needed.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

12. DEFERRED POLICY ACQUISITION COSTS

The changes in DAC for the years ended December 31, were as follow (in 000's):

	2003	2002
Balance at January 1	$ 46,567	$ 23,248
Acquisition costs deferred	28,231	31,994
Amortized to expense during year	(17,501)	(8,157)
Adjustment for unrealized investment gains
during year	(7,801)	(518)
Balance at December 31	$ 49,496	$ 46,567

13. SEGMENT INFORMATION

SLNY conducts business principally in three operating segments and maintains a corporate segment to provide for the capital needs of the various operating segments and to engage in other financing-related activities. Each segment was defined consistent with the way results are evaluated by the chief operating decision-maker. As a result of the merger at December 31, 2002, KBL's results are included with the Wealth Management Segment. Net investment income is allocated based on segmented assets by line of business. SLNY does not materially depend on one or a few customers, brokers or agents for a significant portion of its operations.

Wealth Management

The Wealth Management Segment markets and administers individual and group fixed and variable annuity products.

Group Protection

The Group Protection Segment markets and administers group life insurance, stop loss insurance, long-term disability and short-term disability products. These products are sold to employers that provide group benefits for their employees.

Individual Protection

The individual insurance products offered by the Individual Protection Segment are conversions from the group life products. On October 21, 2003, SLNY announced that it received approval to sell Variable Universal Life ("VUL") insurance products to customers in New York State.

Corporate

The Corporate segment includes the unallocated capital of SLNY and items not otherwise attributable to the other segments. Management evaluates the results of the operating segments on an after-tax basis.

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

13. SEGMENT INFORMATION (Continued)

The following amounts pertained to the various business segments (in 000's):

	Year ended December 31, 2003
	Wealth	Group	Individual
	Management	Protection	Protection	Corporate	Totals
Total Revenues	$ 108,427	$ 26,609	$ 873	$ 2,485	$ 138,394
Total Expenditures	112,438	25,712	713	(161)	138,702
Pretax Income (Loss)	(4,011)	897	160	2,646	(308)
Net Income (Loss)	(2,484)	608	113	1,845	82
Total Assets	$ 2,619,362	$ 46,535	$ 1,460	$ 35,417	$ 2,702,774
	Year ended December 31, 2002
Total Revenues	$ 77,917	$ 20,181	$ 422	$ 1,033	$ 99,553
Total Expenditures	89,093	15,630	350	(679)	104,394
Pretax Income (Loss)	(11,176)	4,551	72	1,712	(4,841)
Net Income (Loss)	(7,493)	3,195	51	1,116	(3,131)
Total Assets	$ 2,340,358	$ 34,946	$ 1,282	$ 16,188	$ 2,392,774
	Year ended December 31, 2001 - Restated
Total Revenues	$ 27,466	$ 19,407	$ 229	$ 1,864	$ 48,966
Total Expenditures	24,876	15,930	898	155	41,859
Pretax Income (Loss)	2,590	3,477	(669)	1,709	7,107
Net Income (Loss)	1,919	2,641	(489)	490	4,561
Total Assets	$ 1,851,291	$ 37,728	$ 1,267	$ 12,337	$ 1,902,623

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

14. REGULATORY FINANCIAL INFORMATION

SLNY is required to file quarterly and annual statements with the Insurance Department of the State of New York prepared on a statutory accounting basis prescribed or permitted by the State of New York. Statutory net income and capital stock and surplus differ from net income and stockholder's equity reported in accordance with GAAP for stock life insurance companies primarily because, under statutory basis accounting, policy acquisition costs are expensed when incurred, reserves are based on different assumptions, investments are valued differently, post-retirement benefit costs are based on different assumptions and reflect a different method of adoption, and income tax expense reflects only taxes paid or currently payable.

SLNY's statutory surplus and net income (loss) were as follows (in 000's):

	Unaudited for the Years ended December 31,
	2003	2002	2001 - Restated
Statutory surplus and capital	$ 186,480	$162,669	$133,305
Statutory net income (loss)	16,477	(16,547)	(13,073)

15. DIVIDEND RESTRICTIONS

SLNY's ability to pay dividends are subject to certain statutory restrictions. The State of New York has enacted laws governing the payment of dividends to stockholders by domestic insurers. New York law permits a domestic stock life insurance company to distribute a dividend to its shareholders without prior notice to the New York Superintendent of Insurance where the aggregate amount of such dividend in any calendar year does not exceed the lesser of: (i) ten percent of its surplus to policyholders as of the immediately preceding calendar year; or (ii) its net gain from operations for the immediately preceding calendar year, not including realized capital gains. No dividends were paid by SLNY during 2003, 2002 or 2001.

16. COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income as of December 31, were as follows (in 000's):

	2003	2002
Unrealized gains (losses) on available-for-sale and securities	$ 49,228	$ 42,299
DAC unrealized amortization	(11,139)	(3,339)
Tax effect	(13,343)	(13,644)
Accumulated other comprehensive income	$ 24,746	$ 25,316

SUN LIFE INSURANCE AND ANNUITY COMPANY OF NEW YORK

(A Wholly Owned Subsidiary of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2003, 2002 and 2001

17. COMMITMENTS AND CONTINGENCIES

Regulatory and Industry Developments

Unfavorable economic conditions may contribute to an increase in the number of insurance companies that are under regulatory supervision. This may result in an increase in mandatory assessments by state guaranty funds, or voluntary payments by solvent insurance companies to cover losses to policyholders of insolvent or rehabilitated companies. Mandatory assessments, which are subject to statutory limits, can be partially recovered through a reduction in future premium taxes in some states.

SLNY's variable annuity contracts and variable life insurance policies are subject to various levels of regulation under federal securities laws administered by the Securities and Exchange Commission (the "SEC") and under certain state securities laws. On or about October 30, 2003, SLNY received a request from the SEC for information regarding its policies, practices and procedures with respect to subaccount "market timing," its policies, practices and procedures with respect to receiving and processing exchange orders from contract owners, and its oversight of such activities in SLNY's separate accounts. SLNY responded to this request and an additional related request. On March 4, 2004, the Boston District Office of the SEC notified SLNY that it intended to commence an examination of SLNY and certain of its affiliates pursuant to Section 31(b) of the Investment Company Act of 1940 and the Securities Exchange Act of 1934 relating to these and certain other subjects. SLNY is cooperating in the examination.

In addition, the SEC and other regulators have conducted or are conducting investigations and examinations of certain of SLNY's affiliates relating to various issues, including market timing and late trading of mutual funds and variable insurance products, directed brokerage, revenue-sharing and other arrangements with distributors.

Litigation

SLNY is not aware of any contingent liabilities arising from litigation, income taxes and other matters that could have a material effect upon the financial condition or results of operations or cash flow of SLNY.

Indemnities

In the normal course of business, SLNY has entered into agreements that include indemnities in favor of third parties, such as engagement letters with advisors and consultants, outsourcing agreements, underwriting and agency agreements, information technology agreements, distribution agreements and service agreements. SLNY has also agreed to indemnify its directors and certain of its officers and employees in accordance with SLNY's by-laws. Due to the nature of these indemnification agreements, it is not possible to estimate SLNY's potential liability.

Lease Commitments

SLNY leases various facilities and equipment under non-cancelable operating leases with terms of up to 10 years. As of December 31, 2003, minimum future lease payments under such leases are as follows (in 000's):

2004	$ 216
Total	$ 216

Total rental expense for the years ended December 31, 2003, 2002 and 2001 was $1.1 million, $1.1 million and $0.5 million, respectively.

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of Sun Life Insurance and Annuity Company of New York:

We have audited the accompanying balance sheet of Sun Life Insurance and Annuity Company of New York as of December 31, 2003 and 2002, and the related statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2003. Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the financial position of Sun Life Insurance and Annuity Company of New York as of December 31, 2003 and 2002, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

As described in Note 1 to the financial statements, on December 31, 2002, Sun Life Insurance and Annuity Company of New York merged with Keyport Benefit Life Insurance Company. The Companies became affiliates on November 1, 2001 as a result of the acquisition of Keyport Benefit Life Insurance Company's parent by Sun Life Insurance and Annuity Company of New York's ultimate parent. The merger of Sun Life Insurance and Annuity Company of New York and Keyport Benefit Life Insurance Company was accounted for at historical cost as required by Statement of Financial Accounting Standards No. 141 "Business Combinations" for transfers of assets among affiliates. The balance sheet of Sun Life Insurance and Annuity Company of New York as of December 31, 2001 and the related statements of income, stockholders' equity, comprehensive income and cash flows for the year then ended have been restated to give effect to the merger as of November 1, 2001.

The balance sheet of Sun Life Insurance and Annuity Company of New York as of December 31, 2001 presents the combination of the financial statements of Sun Life Insurance and Annuity Company of New York (predecessor basis) and Keyport Benefit Life Insurance Company. Such individual financial statements were audited before the applicable effects of the changes described in the preceding paragraph. Our report on the predecessor balance sheet of Sun Life Insurance and Annuity Company of New York expressed an unqualified opinion as to the conformity with accounting principles generally accepted in the United States of America. The balance sheet of Keyport Benefit Life Insurance Company as of December 31, 2001 was audited by other auditors and their report on the financial statements expressed an adverse opinion as to the conformity with accounting principles generally accepted in the United States of America and an unqualified opinion as to the conformity with statutory accounting principles. We have audited the adjustments that were applied to restate the 2001 balance sheet of Keyport Benefit Life Insurance Company to reflect the effects of the changes for the adoption of accounting principles generally accepted in the United States of America and the adjustments to give effect to the merger as described in Note 1. In our opinion, such adjustments are appropriate and have been properly applied.

Deloitte & Touche LLP

Boston, Massachusetts

March 29, 2004

Independent Auditors' Report

To the Contract Owners in Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts and the Board of Directors of Sun Life Insurance and Annuity Company of New York:

We have audited the accompanying statements of condition of MFS/Sun Life Bond S Sub-Account, MFS/Sun Life Bond Sub-Account, MFS/Sun Life Capital Appreciation S Sub-Account, MFS/Sun Life Capital Appreciation Sub-Account, MFS/Sun Life Capital Opportunities S Sub-Account, MFS/Sun Life Capital Opportunities Sub-Account, MFS/Sun Life Emerging Growth S Sub-Account, MFS/Sun Life Emerging Growth Sub-Account, MFS/Sun Life Emerging Markets Equity S Sub-Account, MFS/Sun Life Emerging Markets Equity Sub-Account, MFS/Sun Life Global Asset Allocation Sub-Account, MFS/Sun Life Global Governments S Sub-Account, MFS/Sun Life Global Governments Series Sub-Account, MFS/Sun Life Global Growth S Sub-Account, MFS/Sun Life Global Growth Sub-Account, MFS/Sun Life Global Total Return S Sub-Account, MFS/Sun Life Global Total Return Sub-Account, MFS/Sun Life Government Securities S Sub-Account, MFS/Sun Life Government Securities Sub-Account, MFS/Sun Life High Yield S Sub-Account, MFS/Sun Life High Yield Sub-Account, MFS/Sun Life International Growth S Sub-Account, MFS/Sun Life International Growth Sub-Account, MFS/Sun Life International Investors Trust Sub-Account, MFS/Sun Life International Value S Sub-Account, MFS/Sun Life Managed Sectors S Sub-Account, MFS/Sun Life Managed Sectors Sub-Account, MFS/Sun Life Massachusetts Investors Growth Stock S Sub-Account, MFS/Sun Life Massachusetts Investors Growth Stock Sub-Account, MFS/Sun Life Massachusetts Investors Trust S Sub-Account, MFS/Sun Life Massachusetts Investors Trust Sub-Account, MFS/Sun Life Mid Cap Growth S Sub-Account, MFS/Sun Life Mid Cap Value S Sub-Account, MFS/Sun Life Money Market S Sub-Account, MFS/Sun Life Money Market Sub-Account, MFS/Sun Life New Discovery S Sub-Account, MFS/Sun Life New Discovery Sub-Account, MFS/Sun Life Research Growth and Income S Sub-Account, MFS/Sun Life Research Growth and Income Sub-Account, MFS/Sun Life Research International S Sub-Account, MFS/Sun Life Research International Sub-Account, MFS/Sun Life Research S Sub-Account, MFS/Sun Life Research Sub-Account, MFS/Sun Life Strategic Growth S Sub-Account, MFS/Sun Life Strategic Growth Sub-Account, MFS/Sun Life Strategic Income S Sub-Account, MFS/Sun Life Strategic Income Sub-Account, MFS/Sun Life Strategic Value S Class Sub-Account , MFS/Sun Life Total Return S Sub-Account, MFS/Sun Life Total Return Sub-Account, MFS/Sun Life Utilities S Sub-Account, MFS/Sun Life Utilities Sub-Account, MFS/Sun Life Value S Sub-Account, MFS/Sun Life Value Sub-Account, Lord Abbett Series Fund Growth and Income Sub-Account, Lord Abbett Series Fund Mid-Cap Value Sub-Account, Templeton Foreign Securities Series Sub-Account, Franklin Mutual Shares Securities Series Sub-Account, Franklin Small Cap Value Securities Series Sub-Account, PIMCO VIT Real Return Bond Sub-Account, PIMCO VIT Total Return Bond Sub-Account, Oppenheimer Main St. Growth and Income Sub-Account, Oppenheimer Capital Appreciation Sub-Account, Oppenheimer Main St. Small Cap Sub-Account and Sun Capital Real Estate Sub-Account of Sun Life (N.Y.) Variable Account C (the ''Sub-Accounts'') as of December 31, 2003, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended. These financial statements and financial highlights are the responsibility of management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 owned as of December 31, 2003 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, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the Sub-Accounts as of December 31, 2003 and the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the three years in the period then ended in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Boston, Massachusetts

April 22, 2004

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in

Sun Life (N.Y.) Variable Account C

Statements of Condition - December 31, 2003

Assets:
Investments in :		Shares	Cost			Value
MFS/Sun Life Series Trust
Bond S Class (MF7)		24,579	$		288,179	$		303,064
Bond Series (BDS)		229,434	2,682,697			2,842,692
Capital Appreciation S Class (MFD)		10,731	165,760			185,103
Capital Appreciation Series (CAS)		1,225,483	31,976,754			21,262,129
Capital Opportunities S Class (CO1)		3,919	38,445			46,280
Capital Opportunities Series (COS)		300,690	4,677,132			3,563,173
Emerging Growth S Class (MFF)		5,989	73,405			82,229
Emerging Growth Series (EGS)		895,635	24,282,049			12,377,681
Emerging Markets Equity S Class (EM1)		4,923	41,595			62,962
Emerging Markets Equity Series (FCE)		42,478	439,756			545,836
Global Asset Allocation Series (GAA)		-	-			-
Global Governments S Class (GG1)		347	4,192			4,462
Global Governments Series (GGS)		150,973	1,641,766			1,950,568
Global Growth S Class (GG2)		1,231	10,118			13,101
Global Growth Series (GGR)		674,881	8,237,803			7,221,226
Global Total Return S Class (GT2)		15,224	205,337			237,958
Global Total Return Series (GTR)		333,631	4,673,566			5,238,013
Government Securities S Class (MFK)		165,366	2,195,133			2,212,594
Government Securities Series (GSS)		905,669	12,142,121			12,172,186
High Yield S Class (MFC)		64,502	438,025			466,350
High Yield Series (HYS)		1,463,677	10,360,580			10,640,933
International Growth S Class (IG1)		4,912	46,007			56,145
International Growth Series (FCG)		125,883	1,304,573			1,442,617
International Investors Trust Series (MII)		193,162	2,174,454			2,370,102
International Value S Class (MI1)		5,859	54,541			71,708
Managed Sectors S Class (MS1)		1,892	28,409			31,123
Managed Sectors Series (MSS)		378,622	9,613,357			6,266,189
Massachusetts Investors Growth Stock S Class (M1B)		40,271	320,301			344,319
Massachusetts Investors Growth Stock Series (MIS)		674,747	7,102,532			5,802,821
Massachusetts Investors Trust S Class (MFL)		9,661	218,297			245,284
Massachusetts Investors Trust Series (MIT)		1,408,041	46,572,774			35,919,134
Mid Cap Growth S Class (MC1)		51,903	245,402			261,591
Mid Cap Value S Class (MCV)		27,179	260,681			284,020
Money Market S Class (MM1)		1,067,194	1,067,194			1,067,194
Money Market Series (MMS)		11,888,078	11,888,078			11,888,078
New Discovery S Class (M1A)		15,321	163,532			193,197
New Discovery Series (NWD)		231,097	2,960,772			2,932,614
Research Growth and Income S Class (RG1)		2,790	29,815			34,963
Research Growth and Income Series (RGS)		207,418	2,710,099			2,609,322
Research International S Class (RI1)		21,397	227,158			255,695
Research International Series (RSS)		85,306	929,386			1,024,519
Research S Class (RE1)	4,644			55,284			63,947
Research Series (RES)	1,149,383			23,959,105			15,907,460
Strategic Growth S Class (SG1)	95,838			649,268			684,286
Strategic Growth Series (SGS)	57,394			406,497			412,092
Strategic Income S Class (SI1)	12,399			125,406			137,129
Strategic Income Series (SIS)	114,954			1,185,250			1,278,288
Strategic Value S Class (SVS)	2,792			25,238			27,977
Total Return S Class (MFJ)	263,300			4,525,533			4,718,337
Total Return Series (TRS)	2,590,495			45,771,118			46,628,911
Utilities S Class (MFE)	8,038			88,878			97,904
Utilities Series (UTS)	677,657			9,893,355			8,287,750
Value S Class (MV1)	40,938			491,878			555,117
Value Series (MVS)	481,290			5,859,935			6,550,362
Lord Abbett Series Fund, Inc.
Lord Abbett Series Fund Growth & Income (LA1)	38,342			869,626			940,155
Lord Abbett Series Fund Mid-Cap Value (LA2)	423			6,395			7,199
Franklin Templeton Variable Insurance Products Trust
Templeton Foreign Securities Series (FTI)	43,779			493,526			535,856
Franklin Mutual Shares Securities Fund (FMS)	3,227			45,218			48,049
Franklin Small Cap Value Securities Series (FVS)	1,189			13,987			15,062

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in

Sun Life (N. Y.) Variable Account C

Statements of Condition - December 31, 2003 - continued

Assets - continued

	Shares	Cost		Value
PIMCO Variable Insurance Trust
Real Return Bond Portfolio (PRR)	6,766	$	82,165	$	83,631
Total Return Bond Portfolio (PTR)	73,022	754,989		756,512
Oppenheimer Variable Account Funds
Main St. Growth & Income Fund (OMG)	3,474	61,550		66,347
Capital Appreciation Fund (OCA)	18,771	605,517		648,175
Main St. Small Cap Fund (OMS)	880	10,929		11,791
Sun Capital Advisers Trust
Real Estate Fund (SC3)	22,007	308,895		332,092
		$	288,781,317	$	243,323,604
Liability:
Payable to sponsor				(357,112)
Net Assets				$	242,966,492

Net Assets Applicable to Contract Owners:

		Applicable to Owners of					Reserve for
		Deferred Variable Annuity Contracts					Variable
		Units			Value		Annuities				Total
Consolidated Regatta Contracts:
MFS/Sun Life Series Trust
MF7	27,267		$	303,064		$		-	$	303,064
BDS	214,107			2,841,670				-		2,841,670
MFD	19,323			185,103				-		185,103
CAS	1,472,691			21,193,538				6,488		21,200,026
CO1	4,851			46,280				-		46,280
COS	298,753			3,563,173				-		3,563,173
MFF	8,002			82,229				-		82,229
EGS	978,305			12,315,148				59,169		12,374,317
EM1	4,623			62,962				-		62,962
FCE	55,647			545,836				-		545,836
GAA	-			-				-		-
GG1	329			4,462				-		4,462
GGS	123,602			1,950,149				-		1,950,149
GG2	1,142			13,101				-		13,101
GGR	424,744			7,174,299				43,237		7,217,536
GT2	19,492			237,958				-		237,958
GTR	311,788			5,201,356				32,759		5,234,115
MFK	216,546			2,212,594				-		2,212,594
GSS	802,266			12,091,876				74,735		12,166,611
MFC	39,343			466,350				-		466,350
HYS	738,644			10,617,986				21,047		10,639,033
IG1	4,502			56,145				-		56,145
FCG	127,528			1,434,631				8,612		1,443,243
MII	158,834			2,343,023				25,814		2,368,837
MI1	5,662			71,708				-		71,708
MS1	3,173			31,123				-		31,123
MSS	436,205			6,241,560				21,987		6,263,547
M1B	34,831			344,319				-		344,319
MIS	768,535			5,719,454				76,476		5,795,930
MFL	24,552			245,283				-		245,283
MIT	2,266,305			35,457,984				357,654		35,815,638
MC1	22,054			261,590				-		261,590

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.).) Sub-Accounts Included in

Sun Life (N. Y.) Variable Account C

Statements of Condition - December 31, 2003 - continued

Net Assets Applicable to Contract Owners: - continued

	Applicable to Owners of					Reserve for
	Deferred Variable Annuity Contracts					Variable
MFS/Sun Life Series Trust - continued	Units			Value		Annuities		Total
MCV	22,736		$	284,020	$	-	$	284,020
MM1	107,976			1,067,194		-		1,067,194
MMS	934,706			11,372,616		488,313		11,860,929
M1A	19,393			193,197		-		193,197
NWD	223,352			2,899,190		31,891		2,931,081
RG1	3,456			34,963		-		34,963
RGS	215,089			2,597,178		13,090		2,610,268
RI1	20,234			255,695		-		255,695
RSS	90,141			1,024,519		-		1,024,519
RE1	6,547			63,947		-		63,947
RES	1,200,316			15,896,437		11,879		15,908,316
SG1	57,155			684,286		-		684,286
SGS	75,193			412,092		-		412,092
SI1	11,880			137,129		-		137,129
SIS	103,290			1,278,288		-		1,278,288
SVS	2,637			27,977		-		27,977
MFJ	420,181			4,718,337		-		4,718,337
TRS	2,392,586			45,746,883		753,977		46,500,860
MFE	8,106			97,904		-		97,904
UTS	443,600			8,205,865		77,203		8,283,068
MV1	49,506			555,117		-		555,117
MVS	536,812			6,548,504		-		6,548,504
Lord Abbett Series Fund, Inc.
LA1	74,789			940,155		-		940,155
LA2	581			7,199		-		7,199
Franklin Templeton Variable Insurance Products Trust
FTI	41,808			535,856		-		535,856
FMS	3,938			48,049		-		48,049
FVS	1,158			15,062		-		15,062
PIMCO Variable Insurance Trust
PRR	7,757			83,631		-		83,631
PTR	72,475			756,512		-		756,512
Oppenheimer Variable Account Funds
OMG	5,592			66,347		-		66,347
OCA	52,771			648,175		-		648,175
OMS	898			11,791		-		11,791
Sun Capital Advisers Trust
SC3	24,813			332,092		-		332,092
Net Assets		$		240,862,161	$	2,104,331	$	242,966,492

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.)Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Operations - Year Ended December 31, 2003

	MF7 Sub-Account				BDS Sub-Account				MFD Sub-Account					CAS Sub-Account					CO1 Sub-Account			COS Sub-Account			MFF Sub-Account
Income and Expenses:
Dividend income	$	6,195				$	131,250			$	-		$			-			$	58		$	11,240			$	-
Mortality and expense risk charges		(2,623	)				(33,998	)			(1,384	)				(249,483		)		(593	)		(40,079	)			(599	)
Administrative charges		(315	)				(4,080	)			(166	)				(29,938		)		(71	)		(4,810	)			(72	)
Net investment income (loss)	$	3,257				$	93,172			$	(1,550	)	$			(279,421		)	$	(606	)	$	(33,649	)		$	(671	)
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	596				$	87,745			$	5,318		$			(8,809,180		)	$	(1,922	)	$	(1,073,386	)		$	3,799
Realized gain distribution		-					-				-					-				-			-				-
Net realized gains (losses)	$	596				$	87,745			$	5,318		$			(8,809,180		)	$	(1,922	)	$	(1,073,386	)		$	3,799
Net unrealized appreciation (depreciation) on investments:
End of year	$	14,885				$	159,995			$	19,343		$			(10,714,625		)	$	7,835		$	(1,113,959	)		$	8,824
Beginning of year	$	6,171				$	122,479			$	(575	)	$			(24,599,133		)	$	(3,933	)	$	(2,959,030	)		$	(238	)
Change in unrealized appreciation (depreciation)	$	8,714				$	37,516			$	19,918		$			13,884,508			$	11,768		$	1,845,071			$	9,062
Realized and unrealized gains (losses)	$	9,310				$	125,261			$	25,236		$			5,075,328			$	9,846		$	771,685			$	12,861
Increase (Decrease) in net assets from operations	$	12,567				$	218,433			$	23,686		$			4,795,907			$	9,240		$	738,036			$	12,190
	EGS Sub- Account					EM1 Sub- Account			FCE Sub- Account						GAA Sub- Account				GGI Sub- Account			GGS Sub- Account			GG2 Sub- Account
Income and Expenses:
Dividend income	$	-				$	237			$	1,383		$			74,642			$	-		$	107,400			$	31
Mortality and expense risk charges		(145,541		)			(717	)			(3,832	)				(16,983	)			(31	)		(25,594	)			(151	)
Administrative charges		(17,465		)			(86	)			(460	)				(2,038	)			(4	)		( 3,071	)			(18	)
Net investment income (loss)		(163,006		)			(566	)			(2,909	)				55,621				(35	)		78,735				(138	)
	$					$				$			$						$			$				$
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	(3,745,957		)		$	1,430			$	(11,342	)	$			(450,960	)		$	(4	)	$	119,094			$	216
Realized gain distribution		-					-				-					-				-			-				-
Net realized gains (losses)	$	(3,745,957		)		$	1,430			$	(11,342	)	$			(450,960	)		$	(4	)	$	119,094			$	216
Net unrealized appreciation (depreciation) on investments:
End of year	$	(11,904,368		)		$	21,367			$	106,080		$			-			$	270		$	308,802			$	2,983
Beginning of year	$	(18,847,308		)		$	(1,246	)		$	(35,802	)	$			(602,202	)		$	-		$	245,253			$	(45	)
Change in unrealized appreciation (depreciation)	$	6,942,940				$	22,613			$	141,882		$			602,202			$	270		$	63,549			$	3,028
Realized and unrealized gains (losses)	$	3,196,983				$	24,043			$	130,540		$			151,242			$	266		$	182,643			$	3,244
Increase (Decrease) in net assets from operations	$	3,033,977				$	23,477			$	127,631		$			206,863			$	231		$	261,378			$	3,106

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Operations - Year Ended December 31, 2003 - continued

	GGR Sub-Account			GT2 Sub-Account			GTR Sub-Account					MFK Sub-Account			GSS Sub-Account			MFC Sub-Account					HYS Sub-Account
Income and Expenses:
Dividend income	$	31,041		$	4,018		$		79,370			$	15,176		$	677,924		$		6,207			$			918,573
Mortality and expense risk charges		(79,502	)		(2,328	)			(44,918		)		(12,204	)		(185,809	)			(2,558	)					(125,722		)
Administrative charges		(9,540	)		(279	)			(5,390		)		(1,464	)		(22,297	)			(307	)					(15,087		)
Net investment income (loss)	$	(58,001	)	$	1,411		$		29,062			$	1,508		$	469,818		$		3,342			$			777,764
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	(2,715,237	)	$	425		$		(120,260		)	$	394		$	266,306		$		981			$			(617,343		)
Realized gain distribution		-			-				-				3,039			131,646				-						-
Net realized gains (losses)	$	(2,715,237	)	$	425		$		(120,260		)	$	3,433		$	397,952		$		981			$			(617,343		)
Net unrealized appreciation (depreciation) on investments:
End of year	$	(1,016,577	)	$	32,621		$		564,447			$	17,461		$	30,065		$		28,325			$			280,353
Beginning of year	$	(5,678,275	)	$	(2,029	)	$		(326,594		)	$	12,508		$	788,810		$		1,629			$			(1,386,261		)
Change in unrealized appreciation (depreciation)	$	4,661,698		$	34,650		$		891,041			$	4,953		$	(758,745	)	$		26,696			$			1,666,614
Realized and unrealized gains (losses)	$	1,946,461		$	35,075		$		770,781			$	8,386		$	(360,793	)	$		27,677			$			1,049,271
Increase (Decrease) in net assets from operations	$	1,888,460		$	36,486		$		799,843			$	9,894		$	109,025		$		31,019			$			1,827,035
	IG1 Sub-Account			FCG Sub-Account			MII Sub-Account					MI1 Sub-Account(a)			MS1 Sub-Account			MSS Sub-Account						M1B Sub-Account
Income and Expenses:
Dividend income	$	210		$	8,712		$	22,454				$	437		$	-		$	-						$		-
Mortality and expense risk charges		(433	)		(14,675	)		(25,739		)			(816	)		(403	)		(74,606			)					(2,904		)
Administrative charges		(52	)		(1,761	)		(3,089		)			(98	)		(48	)		(8,953			)					(348		)
Net investment income (loss)	$	(275	)	$	(7,724	)	$	(6,374		)		$	(477	)	$	(451	)	$	(83,559			)			$		(3,252		)
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	2,484		$	(99,280	)	$	(140,473		)		$	438		$	(4	)	$	(3,831,671			)			$		(1,532		)
Realized gain distribution		-			-			-					-			-			-								-
Net realized gains (losses)	$	2,484		$	(99,280	)	$	(140,473		)		$	438		$	(4	)	$	(3,831,671			)			$		(1,532		)
Net unrealized appreciation (depreciation) on investments:
End of year	$	10,138		$	138,044		$	195,648				$	17,167		$	2,714		$	(3,347,168			)			$		24,018
Beginning of year	$	241		$	(348,897	)	$	(539,942		)		$	217		$	(3,551	)	$	(8,531,410			)			$		(16,627		)
Change in unrealized appreciation (depreciation)	$	9,897		$	486,941		$	735,590				$	16,950		$	6,265		$	5,184,242						$		40,645
Realized and unrealized gains (losses)	$	12,381		$	387,661		$	595,117				$	17,388		$	6,261		$	1,352,571						$		39,113
Increase (Decrease) in net assets from operations	$	12,106		$	379,937		$	588,743				$	16,911		$	5,810		$	1,269,012						$		35,861

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Operations - Year Ended December 31, 2003 - continued

	MIS			MFL			MIT			MC1			MCV			MM1			MMS
	Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account
Income and Expenses:
Dividend income	$	-		$	1,318		$	388,958		$	-		$	4		$	1,372		$	94,552
Mortality and expense risk charges		(65,986	)		(1,993	)		(420,185	)		(1,138	)		(915	)		(7,199	)		(178,751	)
Administrative charges		(7,918	)		(239	)		(50,422	)		(137	)		(110	)		(864	)		(21,450	)
Net investment income (loss)	$	(73,904	)	$	(914	)	$	(81,649	)	$	(1,275	)	$	(1,021	)	$	(6,691	)	$	(105,649	)
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	(1,135,426	)	$	1,221		$	(4,355,402	)	$	518		$	654		$	-		$	-
Realized gain distribution		-			-			-			-			-			-			-
Net realized gains (losses)	$	(1,135,426	)	$	1,221		$	(4,355,402	)	$	518		$	654		$	-		$	-
Net unrealized appreciation (depreciation) on investments:
End of year	$	(1,299,711	)	$	26,987		$	(10,653,640	)	$	16,189		$	23,339		$	-		$	-
Beginning of year	$	(3,567,603	)	$	(4,189	)	$	(21,640,821	)	$	(2,967	)	$	(29	)	$	-		$	-
Change in unrealized appreciation (depreciation)	$	2,267,892		$	31,176		$	10,987,181		$	19,156		$	23,368		$	-		$	-
Realized and unrealized gains (losses)	$	1,132,466		$	32,397		$	6,631,779		$	19,674		$	24,022		$	-		$	-
Increase (Decrease) in net assets from operations	$	1,058,562		$	31,483		$	6,550,130		$	18,399		$	23,001		$	(6,691	)	$	(105,649	)
	M1A			NWD			RG1			RGS			RI1			RSS			RE1
	Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account
Income and Expenses:
Dividend income	$	-		$	-		$	169		$	19,111		$	169		$	5,362		$	118
Mortality and expense risk charges		(2,230	)		(30,654	)		(395	)		(29,429	)		(1,127	)		(10,651	)		(518	)
Administrative charges		(268	)		(3,678	)		(47	)		(3,531	)		(135	)		(1,278	)		(62	)
Net investment income (loss)	$	(2,498	)	$	(34,332	)	$	(273	)	$	(13,849	)	$	(1,093	)	$	(6,567	)	$	(462	)
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	448		$	(268,715	)	$	33		$	(165,856	)	$	324		$	(64,220	)	$	(1,252	)
Realized gain distribution		-			-			-			-			-			-			-
Net realized gains (losses)	$	448		$	(268,715	)	$	33		$	(165,856	)	$	324		$	(64,220	)	$	(1,252	)
Net unrealized appreciation (depreciation) on investments:
End of year	$	29,665		$	(28,158	)	$	5,148		$	(100,777	)	$	28,537		$	95,133		$	8,663
Beginning of year	$	(18,749	)	$	(1,044,086	)	$	(1,989	)	$	(835,161	)	$	(2,294	)	$	(228,677	)	$	(1,323	)
Change in unrealized appreciation (depreciation)	$	48,414		$	1,015,928		$	7,137		$	734,384		$	30,831		$	323,810		$	9,986
Realized and unrealized gains (losses)	$	48,862		$	747,213		$	7,170		$	568,528		$	31,155		$	259,590		$	8,734
Increase (Decrease) in net assets from operations	$	46,364		$	712,881		$	6,897		$	554,679		$	30,062		$	253,023		$	8,272

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Operations - Year Ended December 31, 2003 - continued

	RES			SG1			SGS			SI1			SIS			SVS			MFJ
	Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account
Income and Expenses:
Dividend income	$	128,844		$	-		$	-		$	3,656		$	51,534		$	-		$	32,772
Mortality and expense risk charges		(188,096	)		(2,386	)		(3,819	)		(1,383	)		(14,829	)		(146	)		(21,822	)
Administrative charges		(22,572	)		(286	)		(458	)		(166	)		(1,780	)		(18	)		(2,619	)
Net investment income (loss)	$	(81,824	)	$	(2,672	)	$	(4,277	)	$	2,107		$	34,925		$	(164	)	$	8,331
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	(2,324,745	)	$	748		$	(25,769	)	$	136		$	25,188		$	2		$	(7,309	)
Realized gain distribution		-			-			-			-			-			-			-
Net realized gains (losses)	$	(2,324,745	)	$	748		$	(25,769	)	$	136		$	25,188		$	2		$	(7,309
Net unrealized appreciation (depreciation) on investments:
End of year	$	(8,051,645		$	35,018		$	5,595		$	11,723		$	93,038		$	2,739		$	192,804
Beginning of year	$	(13,662,880	)	$	(28	)	$	(95,744	)	$	4,059		$	21,922		$	-		$	(70,285	)
Change in unrealized appreciation (depreciation)	$	5,611,235		$	35,046		$	101,339		$	7,664		$	71,116		$	2,739		$	263,089
Realized and unrealized gains (losses)	$	3,286,490		$	35,794		$	75,570		$	7,800		$	96,304		$	2,741		$	255,780
Increase (Decrease) in net assets from operations	$	3,204,666		$	33,122		$	71,293		$	9,907		$	131,229		$	2,577		$	264,111
	TRS			MFE			UTS			MV1			MVS			LA1			LA2
	Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account
Income and Expenses:
Dividend income	$	1,525,368		$	-		$	222,236		$	4,185		$	91,649		$	5,252		$	33
Mortality and expense risk charges		(553,978	)		(421	)		(87,108	)		(4,425	)		(69,507	)		(3,188	)		(41	)
Administrative charges		(66,477	)		(51	)		(10,453	)		(531	)		(8,341	)		(383	)		(5	)
Net investment income (loss)	$	904,913		$	(472	)	$	124,675		$	(771	)	$	13,801		$	1,681		$	(13	)
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	(1,953,853	)	$	(1,317	)	$	(1,412,159	)	$	(1,458	)	$	(249,275	)	$	1,805		$	(3	)
Realized gain distribution		-			-			-			-			-			-			68
Net realized gains (losses)	$	(1,953,853	)	$	(1,317	)	$	(1,412,159	)	$	(1,458	)	$	(249,275	)	$	1,805		$	65
Net unrealized appreciation (depreciation) on investments:
End of year	$	857,793		$	9,026		$	(1,605,605	)	$	63,239		$	690,427		$	70,529		$	804
Beginning of year	$	(6,729,023	)	$	(1,225	)	$	(4,996,076	)	$	(18,568	)	$	(773,564	)	$	-		$	-
Change in unrealized appreciation (depreciation)	$	7,586,816		$	10,251		$	3,390,471		$	81,807		$	1,463,991		$	70,529		$	804
Realized and unrealized gains (losses)	$	5,632,963		$	8,934		$	1,978,312		$	80,349		$	1,214,716		$	72,334		$	869
Increase (Decrease) in net assets from operations	$	6,537,876		$	8,462		$	2,102,987		$	79,578		$	1,228,517		$	74,015		$	856

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Operations - Year Ended December 31, 2003 - continued

	FTI			FMS			FVS			PRR			PTR			OMG			OCA
	Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account
Income and Expenses:
Dividend income	$	100		$	-		$	5		$	188		$	4,025		$	-		$	-
Mortality and expense risk charges		(1,695	)		(114	)		(54	)		(444	)		(2,749	)		(255	)		(2,118	)
Administrative charges		(203	)		(14	)		(6	)		(53	)		(330	)		(31	)		(254	)
Net investment income (loss)	$	(1,798	)	$	(128	)	$	(55	)	$	(309	)	$	946		$	(286	)	$	(2,372	)
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	1,772		$	30		$	416		$	(90	)	$	(380	)	$	10		$	989
Realized gain distribution		-			-			-			1,634			5,039			-			-
Net realized gains (losses)	$	1,772		$	30		$	416		$	1,544		$	4,659		$	10		$	989
Net unrealized appreciation (depreciation) on investments:
End of year	$	42,330		$	2,831		$	1,075		$	1,466		$	1,523		$	4,797		$	42,658
Beginning of year	$	-		$	-		$	-		$	-		$	-		$	-		$	-
Change in unrealized appreciation (depreciation)	$	42,330		$	2,831		$	1,075		$	1,466		$	1,523		$	4,797		$	42,658
Realized and unrealized gains (losses)	$	44,102		$	2,861		$	1,491		$	3,010		$	6,182		$	4,807		$	43,647
Increase (Decrease) in net assets from operations	$	42,304		$	2,733		$	1,436		$	2,701		$	7,128		$	4,521		$	41,275
	OMS			SC3
	Sub-Account			Sub-Account
Income and Expenses:
Dividend income	$	-		$	-
Mortality and expense risk charges		(35	)		(1,043	)
Administrative charges		(4	)		(125	)
Net investment income (loss)	$	(39	)	$	(1,168	)
Realized and Unrealized Gains (Losses):
Realized gains (losses) on investment transactions:
Realized gains (losses) on sale of fund share	$	4		$	759
Realized gain distribution		-			-
Net realized gains (losses)	$	4		$	759
Net unrealized appreciation (depreciation) on investments:
End of year	$	862		$	23,197
Beginning of year	$	-		$	-
Change in unrealized appreciation (depreciation)	$	862		$	23,197
Realized and unrealized gains (losses)	$	866		$	23,956
Increase (Decrease) in net assets from operations	$	827		$	22,788

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets

	MF7						BDS						MFD						CAS
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002
Operations:
Net investment income (loss)	$	3,257		$	2,827		$	93,172		$	37,205		$	(1,550	)	$	(118	)	$	(279,421	)	$	(323,324	)
Net realized gains (losses)		596			(769	)		87,745			22,577			5,318			(2	)		(8,809,180	)		(13,506,177	)
Net unrealized gains (losses)		8,714			6,171			37,516			100,304			19,918			(575	)		13,884,508			2,144,920
Increase (Decrease) in net assets from operations	$	12,567		$	8,229		$	218,433		$	160,086		$	23,686		$	(695	)	$	4,795,907		$	(11,684,581	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	100,400		$	136,358		$	16,098		$	16,501		$	18,196		$	12,863		$	101,060		$	363,478
Net transfers between Sub-Accounts and Fixed Account		72,886			(23,237	)		741,240			1,182,618			93,873			37,200			(392,926	)		(1,687,284	)
Withdrawals, surrenders, annuitizations and contract charges		(2,361	)		(1,778	)		(461,829	)		(217,701	)		(20	)		-			(2,880,121	)		(4,480,808	)
Net accumulation activity	$	170,925		$	111,343		$	295,509		$	981,418		$	112,049		$	50,063		$	(3,171,987	)	$	(5,804,614	)
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	17,052		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			(17,527	)		(1,171	)		-			-			(393	)		(446	)
Adjustments to annuity reserve		-			-			(816	)		(206	)		-			-			(13,884	)		24,876
Net annuitization activity	$	-		$	-		$	(18,343	)	$	15,675		$	-		$	-		$	(14,277	)	$	24,430
Increase (Decrease) in net assets from contract owner	$	170,925		$	111,343		$	277,166		$	997,093		$	112,049		$	50,063		$	(3,186,264	)	$	(5,780,184	)
Increase (Decrease) in net assets	$	183,492		$	119,572		$	495,599		$	1,157,179		$	135,735		$	49,368		$	1,609,643		$	(17,464,765	)
Net Assets:
Beginning of year		119,572			-			2,346,071			1,188,892			49,368			-			19,590,383			37,055,148
End of year	$	303,064		$	119,572		$	2,841,670		$	2,346,071		$	185,103		$	49,368		$	21,200,026		$	19,590,383
Unit Transactions:
Units outstanding, beginning of year		11,203			-			189,891			104,737			6,547			-			1,718,560			2,149,799
Purchased		9,125			13,658			1,235			1,393			2,213			1,671			7,023			30,580
Transferred between Sub-Accounts and
Fixed Accumulation Account		7,150			(2,283			58,774			102,419			10,565			4,876			(39,086	)		(143,355	)
Withdrawn, surrendered and annuitized		(210	)		(172	)		(35,793	)		(18,658	)		(2	)		-			(213,805	)		(318,464	)
Units outstanding, end of year		27,267			11,203			214,107			189,891			19,323			6,547			1,472,691			1,718,560

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	CO1						COS						MFF						EGS
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002
Operations:
Net investment income (loss)	$	(606	)	$	(266	)	$	(33,649	)	$	(63,514	)	$	(671	)	$	(66	)	$	(163,006	)	$	(225,217	)
Net realized gains (losses)		(1,922	)		(2,938	)		(1,073,386	)		(2,518,388	)		3,799			-			(3,745,957	)		(3,340,951	)
Net unrealized gains (losses)		11,768			(3,933	)		1,845,071			629,165			9,062			(238	)		6,942,940			(4,032,601	)
Increase (Decrease) in net assets from operations	$	9,240		$	(7,137	)	$	738,036		$	(1,952,737	)	$	12,190		$	(304	)	$	3,033,977		$	(7,598,769	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	-		$	38,766		$	18,444		$	60,458		$	56,947		$	6,432		$	62,211		$	299,465
Net transfers between Sub-Accounts and Fixed Account		-			9,411			(143,549	)		(968,451	)		(11,301	)		18,267			(682,562	)		(2,182,530	)
Withdrawals, surrenders, annuitizations and contract charges		(4,000	)		-			(347,192	)		(792,359	)		(2	)		-			(1,531,875	)		(2,063,965	)
Net accumulation activity	$	(4,000	)	$	48,177		$	(472,297	)	$	(1,700,352	)	$	45,644		$	24,699		$	(2,152,226	)	$	(3,947,030	)
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			-			-			-			-			(6,937	)		(7,781	)
Adjustments to annuity reserve		-			-			-			-			-			-			(1,456	)		5,005
Net annuitization activity	$	-		$	-		$	-		$	-		$	-		$	-		$	(8,393	)	$	(2,776	)
Increase (Decrease) in net assets from contract owner	$	(4,000	)	$	48,177		$	(472,297	)	$	(1,700,352	)	$	45,644		$	24,699		$	(2,160,619	)	$	(3,949,806	)
Increase (Decrease) in net assets	$	5,240		$	41,040		$	265,739		$	(3,653,089	)	$	57,834		$	24,395		$	873,358		$	(11,548,575	)
Net Assets:
Beginning of year		41,040			-			3,297,434			6,950,523			24,395			-			11,500,959			23,049,534
End of year	$	46,280		$	41,040		$	3,563,173		$	3,297,434		$	82,229		$	24,395		$	12,374,317		$	11,500,959
Unit Transactions:
Units outstanding, beginning of year		5,419			-			349,823			506,229			3,308			-			1,179,567			1,536,602
Purchased		-			4,064			1,812			5,628			5,923			855			5,813			26,182
Transferred between Sub-Accounts and
Fixed Accumulation Account		-			1,355			(19,160	)		(92,986	)		(1,229	)		2,453			(66,665	)		(207,342	)
Withdrawn, surrendered and annuitized		(568	)		-			(33,722	)		(69,048	)		-			-			(140,410	)		(175,875	)
Units outstanding, end of year		4,851			5,419			298,753			349,823			8,002			3,308			978,305			1,179,567

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	EM1						FCE						GAA						GG1			GGS
	Sub-Account						Sub-Account						Sub-Account						Sub-Account			Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002			2003 (c)			2003			2002
Operations:
Net investment income (loss)	$	(566	)	$	(172	)	$	(2,909	)	$	(1,457	)	$	55,621		$	46,066		$	(35	)	$	78,735		$	(28,703	)
Net realized gains (losses)		1,430			(532	)		(11,342	)		(20,029	)		(450,960	)		(247,939	)		(4	)		119,094			(88,105	)
Net unrealized gains (losses)		22,613			(1,246	)		141,882			(6,571	)		602,202			(13,259	)		270			63,549			446,598
Increase (Decrease) in net assets from operations	$	23,477		$	(1,950	)	$	127,631		$	(28,057	)	$	206,863		$	(215,132	)	$	231		$	261,378		$	329,790
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	15,607		$	70		$	-		$	2,000		$	640		$	28,195		$	-		$	(4,660	)	$	7,512
Net transfers between Sub-Accounts and Fixed Account		(5,844	)		31,610			164,664			199,574			(1,981,402	)		(169,365	)		4,231			(69,865	)		336,838
Withdrawals, surrenders, annuitizations and contract charges		(8	)		-			(25,195	)		(97,460	)		(251,486	)		(329,889	)		-			(358,065	)		(846,268	)
Net accumulation activity	$	9,755		$	31,680		$	139,469		$	104,114		$	(2,232,248	)	$	(471,059	)	$	4,231		$	(432,590	)	$	(501,918	)
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			-			-			-			-			-			-			-
Adjustments to annuity reserve		-			-			-			-			-			-			-			(57	)		(62	)
Net annuitization activity	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	(57	)	$	(62	)
Increase (Decrease) in net assets from contract owner	$	9,755		$	31,680		$	139,469		$	104,114		$	(2,232,248	)	$	(471,059	)	$	4,231		$	(432,647	)	$	(501,980	)
Increase (Decrease) in net assets	$	33,232		$	29,730		$	267,100		$	76,057		$	(2,025,385	)	$	(686,191	)	$	4,462		$	(171,269	)	$	(172,190	)
Net Assets:
Beginning of year		29,730			-			278,376			202,679			2,025,385			2,711,576			-			2,121,418			2,293,608
End of year	$	62,962		$	29,730		$	545,836		$	278,736		$	-		$	2,025,385		$	4,462		$	1,950,149		$	2,121,418
Unit Transactions:
Units outstanding, beginning of year		3,271			-			42,762			30,074			178,055			218,881			-			155,972			194,789
Purchased		1,794			-			-			299			57			2,451			-			(339	)		647
Transferred between Sub-Accounts and
Fixed Accumulation Account		(441	)		3,271			16,656			26,907			(157,431	)		(15,502	)		329			(7,221	)		28,057
Withdrawn, surrendered and annuitized		(1	)		-			(3,771	)		(14,518	)		(20,681	)		(27,775	)		-			(24,810	)		(67,521	)
Units outstanding, end of year		4,623			3,271			55,647			42,762			-			178,055			329			123,602			155,972

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

(c) for the period June 1, 2003 (Commencement of operations) through December 31, 2003.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	GG2						GGR						GT2						GTR
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002
Operations:
Net investment income (loss)	$	(138	)	$	(3	)	$	(58,001	)	$	(97,438	)	$	1,411		$	(1,454	)	$	29,062		$	21,763
Net realized gains (losses)		216			-			(2,715,237	)		(3,018,384	)		425			(40	)		(120,260	)		(328,400	)
Net unrealized gains (losses)		3,028			(45	)		4,661,698			985,484			34,650			(2,029	)		891,041			259,842
Increase (Decrease) in net assets from operations	$	3,106		$	(48	)	$	1,888,460		$	(2,130,338	)	$	36,486		$	(3,523	)	$	799,843		$	(46,795	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	-		$	9,004		$	94,659		$	131,679		$	-		$	159,600		$	20,149		$	79,030
Net transfers between Sub-Accounts and Fixed Account		1,041			-			60,580			(1,140,834	)		52,374			-			1,832,977			135,241
Withdrawals, surrenders, annuitizations and contract charges		(2	)		-			(1,296,235	)		(1,606,642	)		(6,979	)		-			(500,985	)		(1,055,887	)
Net accumulation activity	$	1,039		$	9,004		$	(1,140,996	)	$	(2,615,797	)	$	45,395		$	159,600		$	1,352,141		$	(841,616	)
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	15,848		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			(17,120	)		(4,236	)		-			-			(6,322	)		(6,163	)
Adjustments to annuity reserve		-			-			(1,751	)		(3,590	)		-			-			(1,159	)		728	)
Net annuitization activity	$	-		$	-		$	(18,871	)	$	8,022		$	-		$	-		$	(7,481	)	$	(5,435	)
Increase (Decrease) in net assets from contract owner	$	1,039		$	9,004		$	(1,159,867	)	$	(2,607,775	)	$	45,395		$	159,600		$	1,344,660		$	(847,051	)
Increase (Decrease) in net assets	$	4,145		$	8,956		$	728,593		$	(4,738,113	)	$	81,881		$	156,077		$	2,144,503		$	(893,846	)
Net Assets:
Beginning of year		8,956			-			6,488,943			11,227,056			156,077			-			3,089,612			3,983,458
End of year	$	13,101		$	8,956		$	7,217,536		$	6,488,943		$	237,958		$	156,077		$	5,234,115		$	3,089,612
Unit Transactions:
Units outstanding, beginning of year		1,059			-			506,440			701,394			15,432			-			222,222			284,489
Purchased		-			1,059			6,107			8,825			-			15,432			1,379			5,734
Transferred between Sub-Accounts and
Fixed Accumulation Account		83			-			1,285			(89,555	)		4,702			-			121,479			9,437
Withdrawn, surrendered and annuitized		-			-			(89,088	)		(114,224	)		(642	)		-			(33,292	)		(77,438	)
Units outstanding, end of year		1,142			1,059			424,744			506,440			19,492			15,432			311,788			222,222

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	MFK						GSS						MFC						HYS
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Period Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended			Period Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002
Operations:
Net investment income (loss)	$	1,508		$	792		$	469,818		$	404,953		$	3,342		$	2,469		$	777,764		$	930,974
Net realized gains (losses)		3,433			515			397,952			386,604			981			(3,533	)		(617,343	)		(1,694,517	)
Net unrealized gains (losses)		4,953			12,508			(758,745	)		288,901			26,696			1,629			1,666,614			836,536
Increase (Decrease) in net assets from operations	$	9,894		$	13,815		$	109,025		$	1,080,458		$	31,019		$	565		$	1,827,035		$	72,993
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	1,374,869		$	119,570		$	81,543		$	625,141		$	232,250		$	35,552		$	39,929		$	454,791
Net transfers between Sub-Accounts and Fixed Account		519,681			207,443			(1,007,956	)		5,562,462			157,252			13,692			685,571			(854,646	)
Withdrawals, surrenders, annuitizations and contract charges		(28,125	)		(4,553	)		(2,997,228	)		(2,950,277	)		(3,980	)		-			(1,614,172	)		(1,789,579	)
Net accumulation activity	$	1,866,425		$	322,460		$	(3,923,641	)	$	3,237,326		$	385,522		$	49,244		$	(888,672	)	$	(2,189,434	)
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	34,247		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			(39,768	)		(8,843	)		-			-			(10,328	)		(12,569	)
Adjustments to annuity reserve		-			-			(2,254	)		(8,400	)		-			-			(510	)		1,265
Net annuitization activity	$	-		$	-		$	(42,022	)	$	17,004		$	-		$	-		$	(10,838	)	$	(11,304	)
Increase (Decrease) in net assets from contract owner	$	1,866,425		$	322,460		$	(3,965,663	)	$	3,254,330		$	385,522		$	49,244		$	(899,510	)	$	(2,200,738	)
Increase (Decrease) in net assets	$	1,876,319		$	336,275		$	(3,856,638	)	$	4,334,788		$	416,541		$	49,809		$	927,525		$	(2,127,745	)
Net Assets:
Beginning of year		336,275			-			16,023,249			11,688,461			49,809			-			9,711,508			11,839,253
End of year	$	2,212,594		$	336,275		$	12,166,611		$	16,023,249		$	466,350		$	49,809		$	10,639,033		$	9,711,508
Unit Transactions:
Units outstanding, beginning of year		31,653			-			1,064,704			826,525			4,918			-			800,400			984,957
Purchased		136,056			11,909			5,566			43,617			20,783			3,492			3,140			39,726
Transferred between Sub-Accounts and
Fixed Accumulation Account		51,693			20,179			(69,742	)		393,218			14,023			1,426			53,446			(75,274	)
Withdrawn, surrendered and annuitized		(2,856	)		(435	)		(198,262	)		(198,656	)		(381	)		-			(118,342	)		(149,009	)
Units outstanding, end of year		216,546			31,653			802,266			1,064,704			39,343			4,918			738,644			800,400

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	IG1						FCG						MII						MI1
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Period Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002			2003			2002 (a)
Operations:
Net investment income (loss)	$	(275	)	$	(63	)	$	(7,724	)	$	(10,714	)	$	(6,374	)	$	(12,702	)	$	(477	)	$	(166	)
Net realized gains (losses)		2,484			-			(99,280	)		(101,872	)		(140,473	)		(186,174	)		438			(14	)
Net unrealized gains (losses)		9,897			241			486,941			(70,178	)		735,590			46,346			16,950			217
Increase (Decrease) in net assets from operations	$	12,106		$	178		$	379,937		$	(182,764	)	$	588,743		$	(152,530	)	$	16,911		$	37
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	9,035		$	-		$	197		$	92,813		$	15,395		$	24,276		$	18		$	14,149
Net transfers between Sub-Accounts and Fixed Account		16,408			18,418			(74,051	)		148,992			(78,454	)		65,584			6,439			34,156
Withdrawals, surrenders, annuitizations and contract charges		-			-			(98,537	)		(177,075	)		(336,826	)		(345,479	)		(2	)		-
Net accumulation activity	$	25,443		$	18,418		$	(172,391	)	$	64,730		$	(399,885	)	$	(255,619	)	$	6,455		$	48,305
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			(491	)		(510	)		(4,609	)		(4,700	)		-			-
Adjustments to annuity reserve		-			-			138			646			(642	)		601			-			-
Net annuitization activity	$	-		$	-		$	(353	)	$	136		$	(5,251	)	$	(4,099	)	$	-		$	-
Increase (Decrease) in net assets from contract owner	$	25,443		$	18,418		$	(172,744	)	$	64,866		$	(405,136	)	$	(259,718	)	$	6,455		$	48,305
Increase (Decrease) in net assets	$	37,549		$	18,596		$	207,193		$	(117,898	)	$	183,607		$	(412,248	)	$	23,366		$	48,342
Net Assets:
Beginning of year		18,596			-			1,236,050			1,353,948			2,185,230			2,597,478			48,342			-
End of year	$	56,145		$	18,596		$	1,443,243		$	1,236,050		$	2,368,837		$	2,185,230		$	71,708		$	48,342
Unit Transactions:
Units outstanding, beginning of year		2,033			-			149,436			142,195			193,097			212,897			5,003			-
Purchased		1,041			-			22			11,082			1,332			2,153			2			1,486
Transferred between Sub-Accounts and
Fixed Accumulation Account		1,428			2,033			(10,572	)		16,259			(7,951	)		7,563			657			3,517
Withdrawn, surrendered and annuitized		-			-			(11,358	)		(20,100	)		(27,644	)		(29,516	)		-			-
Units outstanding, end of year		4,502			2,033			127,528			149,436			158,834			193,097			5,662			5,003

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	MS1						MSS						M1B						MIS
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002
Operations:
Net investment income (loss)	$	(451	)	$	(212	)	$	(83,559	)	$	(112,636	)	$	(3,252	)	$	(1,028	)	$	(73,904	)	$	(79,635	)
Net realized gains (losses)		(4	)		(30	)		(3,831,671	)		(3,954,619	)		(1,532	)		(14,807	)		(1,135,426	)		(1,985,490	)
Net unrealized gains (losses)		6,265			(3,551	)		5,184,242			1,333,282			40,645			(16,627	)		2,267,892			(288,815	)
Increase (Decrease) in net assets from operations	$	5,810		$	(3,793	)	$	1,269,012		$	(2,733,973	)	$	35,861		$	(32,462	)	$	1,058,562		$	(2,353,940	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	-		$	17,166		$	121,632		$	73,768		$	135,701		$	159,785		$	77,581		$	327,053
Net transfers between Sub-Accounts and Fixed Account		-			11,940			(215,987	)		(838,474	)		46,583			5,332			118,693			(65,145	)
Withdrawals, surrenders, annuitizations and contract charges		-			-			(985,103	)		(1,264,458	)		(6,481	)		-			(473,831	)		(595,344	)
Net accumulation activity	$	-		$	29,106		$	(1,079,458	)	$	(2,029,164	)	$	175,803		$	165,117		$	(277,557	)	$	(333,436	)
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	38,363
Annuity payments and account fees		-			-			(4,306	)		(4,768	)		-			-			(39,561	)		(12,735	)
Adjustments to annuity reserve		-			-			(833	)		1,312			-			-			(2,979	)		6,796
Net annuitization activity	$	-		$	-		$	(5,139	)	$	(3,456	)	$	-		$	-		$	(42,540	)	$	32,424
Increase (Decrease) in net assets from contract owner	$	-		$	29,106		$	(1,084,597	)	$	(2,032,620	)	$	175,803		$	165,117		$	(320,097	)	$	(301,012	)
Increase (Decrease) in net assets	$	5,810		$	25,313		$	184,415		$	(4,766,593	)	$	211,664		$	132,655		$	738,465		$	(2,654,952	)
Net Assets:
Beginning of year		25,313			-			6,079,132			10,845,725			132,655			-			5,057,465			7,712,417
End of year	$	31,123		$	25,313		$	6,263,547		$	6,079,132		$	344,319		$	132,655		$	5,795,930		$	5,057,465
Unit Transactions:
Units outstanding, beginning of year		3,173			-			518,515			675,147			17,191			-			810,817			882,693
Purchased		-			1,855			8,868			6,454			13,479			16,474			11,719			44,445
Transferred between Sub-Accounts and
Fixed Accumulation Account		-			1,318			(18,395	)		(71,675	)		4,999			717			15,736			(30,104	)
Withdrawn, surrendered and annuitized		-			-			(72,783	)		(91,411	)		(838	)		-			(69,737	)		(86,217	)
Units outstanding, end of year		3,173			3,173			436,205			518,515			34,831			17,191			768,535			810,817

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	MFL						MIT						MC1						MCV
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Period Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002 (b)
Operations:
Net investment income (loss)	$	(914	)	$	(481	)	$	(81,649	)	$	(152,261	)	$	(1,275	)	$	(260	)	$	(1,021	)	$	(1	)
Net realized gains (losses)		1,221			(67	)		(4,355,402	)		(5,714,993	)		518			(13,802	)		654			-
Net unrealized gains (losses)		31,176			(4,189	)		10,987,181			(6,266,994	)		19,156			(2,967	)		23,368			(29	)
Increase (Decrease) in net assets from operations	$	31,483		$	(4,737	)	$	6,550,130		$	(12,134,248	)	$	18,399		$	(17,029	)	$	23,001		$	(30	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	44,322		$	30,815		$	277,379		$	536,781		$	148,395		$	54,431		$	175,795		$	3,859
Net transfers between Sub-Accounts and Fixed Account		71,774			71,650			(1,450,409	)		(3,797,159	)		73,778			(12,244	)		85,892			-
Withdrawals, surrenders, annuitizations and contract charges		(24	)		-			(5,010,375	)		(6,593,275	)		(4,140	)		-			(4,497	)		-
Net accumulation activity	$	116,072		$	102,465		$	(6,183,405	)	$	(9,853,653	)	$	218,033		$	42,187		$	257,190		$	3,859
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			(39,534	)		(49,956	)		-			-			-			-
Adjustments to annuity reserve		-			-			(22,147	)		68,545			-			-			-			-
Net annuitization activity	$	-		$	-		$	(61,681	)	$	18,589		$	-		$	-		$	-		$	-
Increase (Decrease) in net assets from contract owner	$	116,072		$	102,465		$	(6,245,086	)	$	(9,835,064	)	$	218,033		$	42,187		$	257,190		$	3,859
Increase (Decrease) in net assets	$	147,555		$	97,728		$	305,044		$	(21,969,312	)	$	236,432		$	25,158		$	280,191		$	3,829
Net Assets:
Beginning of year		97,728			-			35,510,594			57,479,906			25,158			-			3,829			-
End of year	$	245,283		$	97,728		$	35,815,638		$	35,510,594		$	261,590		$	25,158		$	284,020		$	3,829
Unit Transactions:
Units outstanding, beginning of year		11,990			-			2,710,773			3,411,049			4,031			-			488			-
Purchased		4,767			3,341			19,177			36,801			12,481			5,974			15,282			488
Transferred between Sub-Accounts and
Fixed Accumulation Account		7,797			8,649			(119,472	)		(290,324	)		5,890			(1,943	)		7,357			-
Withdrawn, surrendered and annuitized		(2	)		-			(344,173	)		(446,753	)		(348	)		-			(391	)		-
Units outstanding, end of year		24,552			11,990			2,266,305			2,710,773			22,054			4,031			22,736			488

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

(b) for the period May 1, 2002 (Commencement of operations) through August 2, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	MM1						MMS						M1A						NWD
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002
Operations:
Net investment income (loss)	$	(6,691	)	$	(135	)	$	(105,649	)	$	(15,351	)	$	(2,498	)	$	(920	)	$	(34,332	)	$	(42,781	)
Net realized gains (losses)		-			-			-			-			448			(3,479	)		(268,715	)		(641,179	)
Net unrealized gains (losses)		-			-			-			-			48,414			(18,749	)		1,015,928			(744,346	)
Increase (Decrease) in net assets from operations	$	(6,691	)	$	(135	)	$	(105,649	)	$	(15,351	)	$	46,364		$	(23,148	)	$	712,881		$	(1,428,306	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	954,734		$	138,688		$	2,101,745		$	1,102,940		$	28,675		$	73,267		$	14,213		$	235,163
Net transfers between Sub-Accounts and Fixed Account		325,572			(136,592	)		1,152,394			13,128,423			(16,370	)		86,786			33,046			127,793
Withdrawals, surrenders, annuitizations and contract charges		(208,382	)		-			(9,521,028	)		(12,906,949	)		(2,377	)		-			(159,271	)		(413,298	)
Net accumulation activity	$	1,071,924		$	2,096		$	(6,266,889	)	$	1,324,414		$	9,928		$	160,053		$	(112,012	)	$	(50,342	)
Annuitization Activity:
Annuitizations	$	-		$	-		$	118,021		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			(25,999	)		(15,233	)		-			-			(1,326	)		(1,515	)
Adjustments to annuity reserve		-			-			(19,753	)		(8,893	)		-			-			(719	)		3,913
Net annuitization activity	$	-		$	-		$	72,269		$	(24,126	)	$	-		$	-		$	(2,045	)	$	2,398
Increase (Decrease) in net assets from contract owner	$	1,071,924		$	2,096		$	(6,194,620	)	$	1,300,288		$	9,928		$	160,053		$	(114,057	)	$	(47,944	)
Increase (Decrease) in net assets	$	1,065,233		$	1,961		$	(6,300,269	)	$	1,284,937		$	56,292		$	136,905		$	598,824		$	(1,476,250	)
Net Assets:
Beginning of year		1,961			-			18,161,198			16,876,261			136,905			-			2,332,257			3,808,507
End of year	$	1,067,194		$	1,961		$	11,860,929		$	18,161,198		$	193,917		$	136,905		$	2,931,081		$	2,332,257
Unit Transactions:
Units outstanding, beginning of year		197			-			1,431,492			1,324,378			18,776			-			237,152			254,495
Purchased		208,379			13,909			174,469			90,009			2,806			7,921			1,349			18,886
Transferred between Sub-Accounts and
Fixed Accumulation Account		32,847			(13,712	)		88,719			1,023,058			(1,915	)		10,855			(783	)		123
Withdrawn, surrendered and annuitized		(133,447	)		-			(759,974	)		(1,005,953	)		(274	)		-			(14,366	)		(36,352	)
Units outstanding, end of year		107,976			197			934,706			1,431,492			19,393			18,776			223,352			237,152

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	RG1						RGS						RI1						RSS
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002
Operations:
Net investment income (loss)	$	(273	)	$	(134	)	$	(13,849	)	$	(19,672	)	$	(1,093	)	$	(248	)	$	(6,567	)	$	(10,074	)
Net realized gains (losses)		33			(14	)		(165,856	)		(151,222	)		324			(1,688	)		(64,220	)		(87,690	)
Net unrealized gains (losses)		7,137			(1,989	)		734,384			(579,246	)		30,831			(2,294	)		323,810			(19,108	)
Increase (Decrease) in net assets from operations	$	6,897		$	(2,137	)	$	554,679		$	(750,140	)	$	30,062		$	(4,230		$	253,023		$	(116,872	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	2,677		$	27,702		$	14,708		$	2,456		$	148,485		$	11,942		$	1,368		$	10,634
Net transfers between Sub-Accounts and Fixed Account		(173	)		-			(31,677	)		68,372			47,096			23,232			33,864			94,729
Withdrawals, surrenders, annuitizations and contract charges		(3	)		-			(291,322	)		(255,455	)		(892	)		-			(52,523	)		(40,717	)
Net accumulation activity	$	2,501		$	27,702		$	(308,291	)	$	(184,627	)	$	194,689		$	35,174		$	(17,291	)	$	64,646
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			(811	)		(891	)		-			-			-			-
Adjustments to annuity reserve		-			-			148			1,096			-			-			-			-
Net annuitization activity	$	-		$	-		$	(663	)	$	205		$	-		$	-		$	-		$	-
Increase (Decrease) in net assets from contract owner	$	2,501		$	27,702		$	(308,954	)	$	(184,422	)	$	194,689		$	35,174		$	(17,291	)	$	64,646
Increase (Decrease) in net assets	$	9,398		$	25,565		$	245,725		$	(934,562	)	$	224,751		$	30,944		$	235,732		$	(52,226	)
Net Assets:
Beginning of year		25,565			-			2,364,543			3,299,105			30,944			-			788,787			841,013
End of year	$	34,963		$	25,565		$	2,610,268		$	2,364,543		$	255,695		$	30,944		$	1,024,519		$	788,787
Unit Transactions:
Units outstanding, beginning of year		3,173			-			245,892			266,116			3,371			-			91,617			85,319
Purchased		300			3,173			1,363			221			12,897			1,115			168			1,108
Transferred between Sub-Accounts and
Fixed Accumulation Account		(17	)		-			(3,837	)		2,582			4,039			2,256			3,822			9,410
Withdrawn, surrendered and annuitized		-			-			(28,329	)		(23,027	)		(73	)		-			(5,466	)		(4,220	)
Units outstanding, end of year		3,456			3,173			215,089			245,892			20,234			3,371			90,141			91,617

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	RE1						RES						SG1						SGS
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003			2002 (a)			2003			2002
Operations:
Net investment income (loss)	$	(462	)	$	(44	)	$	(81,824	)	$	(200,222	)	$	(2,672	)	$	(21	)	$	(4,277	)	$	(6,129	)
Net realized gains (losses)		(1,252	)		(7,570	)		(2,324,745	)		(4,424,503	)		748			-			(25,769	)		(140,401	)
Net unrealized gains (losses)		9,986			(1,323	)		5,611,235			(1,931,270	)		35,046			(28	)		101,339			(52,126	)
Increase (Decrease) in net assets from operations	$	8,272		$	(8,937	)	$	3,204,666		$	(6,555,995	)	$	33,122		$	(49	)	$	71,293		$	(198,656	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	10,636		$	55,759		$	53,942		$	152,698		$	478,872		$	-		$	10,139		$	19,852
Net transfers between Sub-Accounts and Fixed Account		39,153			(36,698	)		(699,820	)		(3,009,424	)		176,706			3,931			79,632			(63,265	)
Withdrawals, surrenders, annuitizations and contract charges		(4,238	)		-			(1,982,175	)		(2,935,794	)		(8,296	)		-			(28,315	)		(54,436	)
Net accumulation activity	$	45,551		$	19,061		$	(2,628,053	)	$	(5,792,520	)	$	647,282		$	3,931		$	61,456		$	(97,849	)
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			(746	)		(843	)		-			-			-			-
Adjustments to annuity reserve		-			-			118			1,026			-			-			-			-
Net annuitization activity	$	-		$	-		$	(628	)	$	183		$	-		$	-		$	-		$	-
Increase (Decrease) in net assets from contract owner	$	45,551		$	19,061		$	(2,628,681	)	$	(5,792,337	)	$	647,282		$	3,931		$	61,456		$	(97,849	)
Increase (Decrease) in net assets	$	53,823		$	10,124		$	575,985		$	(12,348,332	)	$	680,404		$	3,882		$	132,749		$	(296,505	)
Net Assets:
Beginning of year		10,124			-			15,332,331			27,680,663			3,882			-			279,343			575,848
End of year	$	63,947		$	10,124		$	15,908,316		$	15,332,331		$	684,286		$	3,882		$	412,092		$	279,343
Unit Transactions:
Units outstanding, beginning of year		1,276			-			1,429,972			1,906,941			501			-			64,100			91,155
Purchased		1,406			5,288			4,712			11,755			41,994			-			1,973			3,287
Transferred between Sub-Accounts and
Fixed Accumulation Account		4,434			(4,012	)		(64,604	)		(249,414	)		15,420			501			15,160			(17,420	)
Withdrawn, surrendered and annuitized		(569	)		-			(169,764	)		(239,310	)		(760	)		-			(6,040	)		(12,922	)
Units outstanding, end of year		6,547			1,276			1,200,316			1,429,972			57,155			501			75,193			64,100

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	SI1						SIS						SVS			MFJ
	Sub-Account						Sub-Account						Sub-Account			Sub-Account
	Year Ended			Period Ended			Year Ended			Year Ended			Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002 (a)			2003			2002			2003 (c)			2003			2002 (a)
Operations:
Net investment income (loss)	$	2,107		$	(523	)	$	34,925		$	17,970		$	(164	)	$	8,331		$	(5,378	)
Net realized gains (losses)		136			79			25,188			(1,863	)		2			(7,309	)		(15,698	)
Net unrealized gains (losses)		7,664			4,059			71,116			21,212			2,739			263,089			(70,285	)
Increase (Decrease) in net assets from operations	$	9,907		$	3,615		$	131,229		$	37,319		$	2,577		$	264,111		$	(91,361	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	31,613		$	53,912		$	3,512		$	3,317		$	24,061		$	3,082,297		$	1,188,687
Net transfers between Sub-Accounts and Fixed Account		17,621			20,489			530,389			241,929			1,339			457,307			(94,067	)
Withdrawals, surrenders, annuitizations and contract charges		(28	)		-			(151,453	)		(26,038	)		-			(87,668	)		(969	)
Net accumulation activity	$	49,206		$	74,401		$	382,448		$	219,208		$	25,400		$	3,451,936		$	1,093,651
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			-			-			-			-			-
Adjustments to annuity reserve		-			-			-			-			-			-			-
Net annuitization activity	$	-		$	-		$	-		$	-		$	-		$	-		$	-
Increase (Decrease) in net assets from contract owner transactions	$	49,206		$	74,401		$	382,448		$	219,208		$	25,400		$	3,451,936		$	1,093,651
Increase (Decrease) in net assets	$	59,113		$	78,016		$	513,677		$	256,527		$	27,977		$	3,716,047		$	1,002,290
Net Assets:
Beginning of year	$	78,016		$	-		$	764,611		$	508,084		$	-		$	1,002,290		$	-
End of year	$	137,129		$	78,016		$	1,278,288		$	764,611		$	27,977		$	4,718,337		$	1,002,290
Unit Transactions:
Units outstanding, beginning of year		7,443			-			68,782			48,448			-			106,131			0
Purchased		2,845			5,413			312			312			2,524			279,629			116,473
Transferred between Sub-Accounts and
Fixed Accumulation Account		1,595			2,030			47,024			22,424			113			43,573			(10,237	)
Withdrawn, surrendered and annuitized		(3	)		-			(12,828	)		(2,402	)		-			(9,152	)		(105	)
Units outstanding, end of year		11,880			7,443			103,290			68,782			2,637			420,181			106,131

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

(c) for the period June 1, 2003 (Commencement of operations) through December 31, 2003.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	TRS						MFE						UTS						MV1
	Sub-Account						Sub-Account						Sub-Account						Sub-Account
	Year Ended			Year Ended			Year Ended			Period Ended			Year Ended			Year Ended			Year Ended			Period Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002			2003			2002 (a)			2003			2002			2003			2002 (a)
Operations:
Net investment income (loss)	$	904,913		$	912,955		$	(472	)	$	499		$	124,675		$	231,151		$	(771	)	$	(1,129	)
Net realized gains (losses)		(1,953,853	)		(373,877	)		(1,317	)		(2,755	)		(1,412,159	)		(3,224,968	)		(1,458	)		(13,593	)
Net unrealized gains (losses)		7,586,816			(4,222,798	)		10,251			(1,225	)		3,390,471			(242,969	)		81,807			(18,568	)
Increase (Decrease) in net assets from operations	$	6,537,876		$	(3,683,720	)	$	8,462		$	(3,481	)	$	2,102,987		$	(3,236,786	)	$	79,578		$	(33,290	)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	617,614		$	1,304,904		$	86,415		$	19,359		$	122,146		$	255,792		$	229,761		$	236,213
Net transfers between Sub-Accounts and Fixed Account		397,093			3,579,177			2,906			(11,005	)		359,360			(2,200,275	)		27,043			23,750
Withdrawals, surrenders, annuitizations and contract charges		(7,190,751	)		(7,810,252	)		(4,752	)		-			(906,055	)		(1,764,759	)		(7,938	)		-
Net accumulation activity	$	(6,176,044	)	$	(2,926,171	)	$	84,569		$	8,354		$	(424,549	)	$	(3,709,242	)	$	248,866		$	259,963
Annuitization Activity:
Annuitizations	$	-		$	16,836		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		(152,733	)		(143,826	)		-			-			(11,684	)		(12,816	)		-			-
Adjustments to annuity reserve		(29,180	)		13,816			-			-			(2,004	)		(4,239	)		-			-
Net annuitization activity	$	(181,913	)	$	(113,174	)	$	-		$	-		$	(13,688	)	$	(17,055	)	$	-		$	-
Increase (Decrease) in net assets from contract owner	$	(6,357,957	)	$	(3,039,345	)	$	84,569		$	8,354		$	(438,237	)	$	(3,726,297	)	$	248,866		$	259,963
Increase (Decrease) in net assets	$	179,919		$	(6,723,065	)	$	93,031		$	4,873		$	1,664,750		$	(6,963,083	)	$	328,444		$	226,673
Net Assets:
Beginning of year		46,320,941			53,044,006			4,873			-			6,618,318			13,581,401			226,673			-
End of year	$	46,500,860		$	46,320,941		$	97,904		$	4,873		$	8,283,068		$	6,618,318		$	555,117		$	226,673
Unit Transactions:
Units outstanding, beginning of year		2,734,379			2,874,669			566			-			478,770			746,582			25,856			-
Purchased		37,527			80,731			7,841			1,801			7,581			18,995			21,689			23,133
Transferred between Sub-Accounts and
Fixed Accumulation Account		29,447			221,026			265			(1,235	)		15,712			(163,474	)		2,889			2,723
Withdrawn, surrendered and annuitized		(408,767	)		(442,047	)		(566	)		-			(58,463	)		(123,333	)		(928	)		-
Units outstanding, end of year		2,392,586			2,734,379			8,106			566			443,600			478,770			49,506			25,856

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	MVS						LA1			LA2			FTI			FMS			FVS			PRR
	Sub-Account						Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account
	Year Ended			Year Ended			Period Ended			Period Ended			Period Ended			Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,			December 31,
	2003			2002			2003 (c)			2003 (d)			2003 (c)			2003 (e)			2003 (c)			2003 (c)
Operations:
Net investment income (loss)	$	13,801		$	(32,987	)	$	1,681		$	(13	)	$	(1,798	)	$	(128	)	$	(55	)	$	(309	)
Net realized gains (losses)		(249,275	)		(224,459	)		1,805			65			1,772			30			416			1,544
Net unrealized gains (losses)		1,463,991			(680,029	)		70,529			804			42,330			2,831			1,075			1,466
Increase (Decrease) in net assets from operations	$	1,228,517		$	(937,475	)	$	74,015		$	856		$	42,304		$	2,733		$	1,436		$	2,701
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	36,312		$	129,728		$	606,564		$	5,504		$	350,754		$	39,455		$	13,859		$	63,464
Net transfers between Sub-Accounts and Fixed Account		272,634			2,461,185			270,787			839			150,286			5,935			123			17,669
Withdrawals, surrenders, annuitizations and contract charges		(647,028	)		(425,705	)		(11,211	)		-			(7,488	)		(74	)		(356	)		(203	)
Net accumulation activity	$	(338,082	)	$	2,165,208		$	866,140		$	6,343		$	493,552		$	45,316		$	13,626		$	80,930
Annuitization Activity:
Annuitizations	$	-		$	41,703		$	-		$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		(35,041	)		(2,637	)		-			-			-			-			-			-
Adjustments to annuity reserve		(1,460	)		(398	)		-			-			-			-			-			-
Net annuitization activity	$	(36,501	)	$	38,668		$	-		$	-		$	-		$	-		$	-		$	-
Increase (Decrease) in net assets from contract owner transactions	$	(374,583	)	$	2,203,876		$	866,140		$	6,343		$	493,552		$	45,316		$	13,626		$	80,930
Increase (Decrease) in net assets	$	853,934		$	1,266,401		$	940,155		$	7,199		$	535,856		$	48,049		$	15,062		$	83,631
Net Assets:
Beginning of year	$	5,694,570		$	4,428,169		$	-		$	-		$	-		$	-		$	-		$	-
End of year	$	6,548,504		$	5,694,570		$	940,155		$	7,199		$	535,856		$	48,049		$	15,062		$	83,631
Unit Transactions:
Units outstanding, beginning of year		573,552			382,352			-			-			-			-			-			-
Purchased		3,664			12,237			52,707			507			29,864			3,404			1,168			5,985
Transferred between Sub-Accounts and
Fixed Accumulation Account		21,172			219,590			23,114			74			12,593			541			19			1,790
Withdrawn, surrendered and annuitized		(61,576	)		(40,627	)		(1,032	)		-			(649	)		(7	)		(29	)		(18	)
Units outstanding, end of year		536,812			573,552			74,789			581			41,808			3,938			1,158			7,757

(c) for the period June 1, 2003 (Commencement of operations) through December 31, 2003.

(d) for the period July 1, 2003 (Commencement of operations) through December 31, 2003.

(e) for the period September 1, 2003 (Commencement of operations) through December 31, 2003.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Statements of Changes in Net Assets - continued

	PTR			OMG			OCA			OMS			SC3
	Sub-Account			Sub-Account			Sub-Account			Sub-Account			Sub-Account
	Year Ended			Year Ended			Period Ended			Period Ended			Period Ended
	December 31,			December 31,			December 31,			December 31,			December 31,
	2003 (c)			2003 (c)			2003 (c)			2003 (f)			2003 (c)
Operations:
Net investment income (loss)	$	946		$	(286	)	$	(2,372	)	$	(39	)	$	(1,168	)
Net realized gains (losses)		4,659			10			989			4			759
Net unrealized gains (losses)		1,523			4,797			42,658			862			23,197
Increase (Decrease) in net assets from operations	$	7,128		$	4,521		$	41,275		$	827		$	22,788
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	$	574,463		$	57,933		$	414,479		$	8,520		$	203,760
Net transfers between Sub-Accounts and Fixed Account		183,879			3,893			200,186			2,474			109,395
Withdrawals, surrenders, annuitizations and contract charges		(8,958	)		-			(7,765	)		(30	)		(3,851	)
Net accumulation activity	$	749,384		$	61,826		$	606,900		$	10,964		$	309,304
Annuitization Activity:
Annuitizations	$	-		$	-		$	-		$	-		$	-
Annuity payments and account fees		-			-			-			-			-
Adjustments to annuity reserve		-			-			-			-			-
Net annuitization activity	$	-		$	-		$	-		$	-		$	-
Increase (Decrease) in net assets from contract owner transactions	$	749,384		$	61,826		$	606,900		$	10,964		$	309,304
Increase (Decrease) in net assets	$	756,512		$	66,347		$	648,175		$	11,791		$	332,092
Net Assets:
Beginning of year	$	-		$	-		$	-		$	-		$	-
End of year	$	756,512		$	66,347		$	648,175		$	11,791		$	332,092
Unit Transactions:
Units outstanding, beginning of year		-			-			-			-			-
Purchased		55,851			5,238			36,239			702			16,598
Transferred between Sub-Accounts and
Fixed Accumulation Account		17,555			354			17,241			199			8,553
Withdrawn, surrendered and annuitized		(931	)		-			(709	)		(3	)		(338	)
Units outstanding, end of year		72,475			5,592			52,771			898			24,813

(c) for the period June 1, 2003 (Commencement of operations) through December 31, 2003.

(f) for the period October 1, 2003 (Commencement of operations) through December 31, 2003.

See notes to financial statements

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements

(1) Organization

Sun Life (N.Y.) Variable Account C (the ''Variable Account''), a separate account of Sun Life Insurance and Annuity Company of New York, the (''Sponsor'') (a wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.)), was established on October 18, 1985 as a funding vehicle for the variable portion of Regatta (N.Y.) contracts, Regatta Gold (N.Y.) contracts, Regatta Extra (N.Y.) contracts, Regatta Masters Flex (N.Y.) contracts, Regatta Masters Extra (N.Y.) contracts, Regatta Masters Access (N.Y.) contracts, and Regatta Masters Choice (N.Y.) contracts (collectively, the "contracts") and certain other fixed and variable annuity contracts issued by the Sponsor. The Variable Account is registered with the Securities and Exchange Commission under the Investment Company Act of 1940 as a unit investment trust and exists in accordance with the regulations of the New York State Insurance Department.

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 certain open-end mutual funds registered under the Investment Act of 1940. With respect to the Regatta (N.Y.) contracts, Regatta Gold (N.Y.) contracts, and Regatta Extra (N.Y.) contracts, the funds are: MFS/Sun Life Series Trust (the "Series Trust"). With respect to the Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.) contracts, Regatta Masters Access (N.Y.) contracts, and Regatta Masters Choice (N.Y.) contracts, the funds are: Franklin Templeton Variable Insurance Products Trust, Lord Abbett Series Fund, Inc., MFS/Sun Life Series Trust, Oppenheimer Variable Account Funds, PIMCO Variable Insurance Funds and Sun Capital Advisers Trust (collectively with the Series Trust, the "Funds").

Under applicable insurance law, the assets and liabilities of the Variable Account are clearly identified and distinguished from the Sponsor's other assets and liabilities. The portion of the Variable Account's assets applicable to the variable annuity contracts is not chargeable with liabilities arising out of any other business the Sponsor may conduct.

(2) Significant Accounting Policies

General

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues 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. The Funds value their investment securities at fair value. Transactions are recorded on a trade date basis. 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 Funds shares and are recognized on the ex-dividend date.

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(2) Significant Accounting Policies - continued

Exchanges between Sub-Accounts requested by contract owners are recorded in the new Sub-Account upon receipt of the redemption proceeds.

Federal Income Tax Status

The operations of the Variable Account are part of the operations of the Sponsor and are not taxed separately. The 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 taxable, and therefore, no provision has been made for federal income taxes.

(3) Contract Charges and Related Party Transactions

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. These deductions are transferred periodically to the Sponsor. Currently, the deduction is at an effective annual rate as follows:

	Level 1		Level 2		Level 3		Level 4		Level 5
Regatta (N.Y.) contracts	1.25	%	-		-		-		-
Regatta Gold (N.Y.) contracts	1.25	%	-		-		-		-
Regatta Extra (N.Y.) contracts	1.30	%	1.45	%	1.60	%	-		-
Regatta Masters Flex (N.Y.) contracts	1.30	%	1.50	%	1.70	%	1.90	%	2.10	%
Regatta Masters Extra (N.Y.) contracts	1.40	%	1.60	%	1.80	%	2.00	%	2.20	%
Regatta Masters Access (N.Y.) contracts	1.35	%	1.55	%	1.75	%	1.95	%	2.15	%
Regatta Masters Choice (N.Y.) contracts	1.05	%	1.25	%	1.45	%	1.65	%	1.85	%

Each year on the contract anniversary, an account administration fee (''Account Fee'') of $30 is deducted from each contract's accumulation account. After the annuity commencement date the Account Fee is deducted pro rata from each variable annuity payment made during the year. In addition, a deduction is made from the Variable Account at the end of each valuation period (during both the accumulation period and after annuity payments begin) at an effective annual rate of 0.15% of the daily net assets of the Variable Account. These charges are paid to the Sponsor to reimburse it for administrative expenses which exceed the revenues received from the Account Fee.

Massachusetts Financial Services Company is the investment adviser to the Series Trust. Sun Capital Advisers, Inc. is the investment adviser to Sun Capital Advisers Trust. Both are affiliates of the Sponsor and charge management fees at an effective annual rate ranging from .57% to 1.74% and 1.25% of the funds net assets, respectively.

The Sponsor does not deduct a sales charge from the purchase payments. However, a withdrawal charge (contingent deferred sales charge) of up to 6% of certain amounts withdrawn, when applicable, will be deducted to cover certain expenses relating to the sale of Regatta (N.Y.) and Regatta Gold (N.Y.) contracts; and 8% for Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.) and Regatta Masters Choice (N.Y.).

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(3) Contract Charges and Related Party Transactions - continued

For the year ended December 31, 2003, the Sponsor received the following amounts related to the above mentioned contract and surrender charges. These charges are reflected in the ''Withdrawals, surrenders, annuitizations and contract charges'' line of the Statement of Changes in Net Assets.

	Contract Charges		Surrender Charges
MFS/Sun Life Series Trust:
Bond S Class	$	22	$	-
Bond Series		1,055		2,405
Capital Appreciation S Class		20		-
Capital Appreciation Series		13,505		12,812
Capital Opportunities S Class		27		318
Capital Opportunities Series		2,318		1,609
Emerging Growth S Class		3		-
Emerging Growth Series		8,295		6,901
Emerging Markets Equity S Class		7		-
Emerging Markets Equity Series		288		205
Global Asset Allocation Series		821		758
Global Governments S Class		-		-
Global Governments Series		1,398		3,228
Global Growth S Class		3		-
Global Growth Series		3,934		8,158
Global Total Return S Class		-		-
Global Total Return Series		1,827		1,182
Government Securities S Class		114		729
Government Securities Series		6,019		32,947
High Yield S Class		19		28
High Yield Series		4,025		14,861
International Growth S Class		-		-
International Growth Series		617		688
International Investors Trust Series		1,157		1,496
International Value S Class		-		-
Managed Sectors S Class		-		-
Managed Sectors Series		4,512		4,569
Massachusetts Investors Growth Stock S Class		43		349
Massachusetts Investors Growth Stock Series		2,951		5,498
Massachusetts Investors Trust S Class		23		-
Massachusetts Investors Trust Series		16,667		51,478
Mid Cap Growth S Class		37		82
Mid Cap Value S Class		5		109
Money Market S Class		19		53
Money Market Series		6,643		36,445
New Discovery S Class		16		26
New Discovery Series		1,411		2,029
Research Growth and Income S Class		3		-
Research Growth and Income Series		1,206		1,363
Research International S Class		27		53
Research International Series		385		1,501
Research S Class		7		338
Research Series		10,164		3,145

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(3) Contract Charges and Related Party Transactions - continued

	Contract Charges		Surrender Charges
Strategic Growth S Class	$	8	$	174
Strategic Growth Series		125		-
Strategic Income S Class		12		-
Strategic Income Series		502		117
Strategic Value S Class		-		-
Total Return S Class		116		1,191
Total Return Series		17,123		45,920
Utilities S Class		3		380
Utilities Series		3,333		8,671
Value S Class		38		366
Value Series		2,030		1,187
Lord Abbett Series Fund, Inc.
Lord Abbett Series Fund Growth & Income		7		14
Lord Abbett Series Fund Mid-Cap Value		-		-
Franklin Templeton Variable Insurance Products Trust
Templeton Foreign Securities Series		4		12
Franklin Mutual Shares Securities Fund		-		-
Franklin Small Cap Value Securities Series		1		-
PIMCO Variable Insurance Trust
Real Return Bond Portfolio		-		-
Total Return Bond Portfolio		4		62
Oppenheimer Variable Account Funds
Main St. Growth & Income Fund		-		-
Capital Appreciation Fund		5		119
Main St. Small Cap Fund		-		-
Sun Capital Advisors Trust
Real Estate Fund		2		67

(4) Annuity Reserves

Annuity reserves are calculated using the 1983 Individual Annuitant Mortality Table and an assumed interest rate of 4% for Regatta (N.Y.) contracts and 3% for Regatta Gold (N.Y.) contracts with an annuity commencement date prior to January 1, 2000. Annuity reserves are calculated using the 2000 Individual Annuitant Mortality Table and an assumed interst rate of 4% for Regatta (N.Y.) contracts and 3% for Regatta Gold (N.Y.) contracts with an annuity commencement date on or after January 1, 2000. Due to the demographic of Regatta Extra (N.Y.), no reserves were required at year end for that contract type. Required adjustments to the reserves are accomplished by transfers to or from the Sponsor.

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(5) Investment Purchases and Sales

The following table shows the aggregate cost of shares purchased and proceeds from the sales of shares for each Sub-Account for the year ended December 31, 2003:

	Purchases		Sales
MFS/Sun Life Series Trust:
Bond S Class	$	194,298	$	20,116
Bond Series	1,527,387		1,156,234
Capital Appreciation S Class	149,296		38,797
Capital Appreciation Series	968,651		4,420,452
Capital Opportunities S Class	58		4,664
Capital Opportunities Series	377,452		883,398
Emerging Growth S Class	71,575		26,602
Emerging Growth Series	544,122		2,866,289
Emerging Markets Equity S Class	15,840		6,651
Emerging Markets Equity Series	262,120		125,560
Global Asset Allocation Series	101,945		2,278,573
Global Governments S Class	4,231		35
Global Governments Series	451,995		805,853
Global Growth S Class	1,991		1,090
Global Growth Series	596,787		1,812,905
Global Total Return S Class	56,392		9,586
Global Total Return Series	2,221,338		846,456
Government Securities S Class	2,050,208		179,237
Government Securities Series	2,922,799		6,284,744
High Yield S Class	405,922		17,058
High Yield Series	2,562,856		2,684,091
International Growth S Class	51,202		26,034
International Growth Series	65,805		246,411
International Investors Trust Series	119,481		530,349
International Value S Class	10,243		4,265
Managed Sectors S Class	1		452
Managed Sectors Series	500,578		1,667,902
Massachusetts Investors Growth Stock S Class	197,244		24,693
Massachusetts Investors Growth Stock Series	774,903		1,165,925
Massachusetts Investors Trust S Class	165,063		49,903
Massachusetts Investors Trust Series	1,585,550		7,890,137
Mid Cap Growth S Class	225,640		8,881
Mid Cap Value S Class	263,631		7,462
Money Market S Class	2,590,935		1,525,702
Money Market Series	9,901,933		16,182,448
New Discovery S Class	43,361		35,931
New Discovery Series	422,942		570,613
Research Growth and Income S Class	2,842		614
Research Growth and Income Series	209,224		532,175
Research International S Class	201,900		8,303
Research International Series	115,835		139,693
Research S Class	49,903		4,814
Research Series	441,999		3,152,623
Strategic Growth S Class	658,088		13,478
Strategic Growth Series	149,823		92,644

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(5) Investment Purchases and Sales - continued

MFS/Sun Life Series Trust - continued:	Purchases		Sales
Strategic Income S Class	$	53,268	$	1,955
Strategic Income Series	792,252		374,879
Strategic Value S Class	25,395		159
Total Return S Class	3,572,636		112,369
Total Return Series	4,453,620		9,877,485
Utilities S Class	89,320		5,223
Utilities Series	1,360,494		1,672,053
Value S Class	278,775		30,680
Value Series	922,020		1,281,341
Lord Abbett Series Fund, Inc.
Series Fund Growth & Income	894,074		26,253
Series Fund Mid-Cap Value	6,575		177
Franklin Templeton Variable Insurance Products Trust
Foreign Securities Series	508,766		17,012
Mutual Shares Securities Fund	45,785		597
Small Cap Value Securities Series	16,973		3,402
PIMCO Variable Insurance Trust
Real Return Bond Portfolio	88,038		5,783
Total Return Bond Portfolio	790,073		34,704
Oppenheimer Variable Account Funds
Main St. Growth & Income Fund	61,882		342
Capital Appreciation Fund	619,395		14,867
Main St. Small Cap Fund	10,993		68
Sun Capital Advisors Trust
Real estate Fund	316,587		8,451

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(6) Financial Highlights

The summary of unit values and units outstanding for variable annuity contracts and the expense ratios, excluding expenses of the underlying funds, for the year ended December 31, 2003, 2002, and 2001 is as follows:

		At December 31					For year ended December 31
				Unit Fair Value
		Units		lowest to highest (if applicable)		Net Assets	Investment Income Ratio*		Expense Ratio lowest to highest**	Total Return lowest to highest***
MF7
	December 31, 2003	27,267	$	10.1485 to $ 11.5220	$	303,064	3.43	%	1.45% to 2.10%	1.48% to 14.38%
	December 31, 2002 (a)	11,203		10.6700 to 10.6840		119,572	5.38		1.45 to 1.60	6.70 to 6.84
BDS
	December 31, 2003	214,107		13.2754		2,841,670	4.84		1.40	8.21
	December 31, 2002	189,891		12.2687		2,346,071	3.47		1.40	8.08
	December 31, 2001	104,737		11.3517		1,188,892	2.59		1.30 to 1.45	6.30
MFD
	December 31, 2003	19,323		9.5185 to 11.9862		185,103	-		1.45 to 1.90	12.92 to 26.49
	December 31, 2002 (a)	6,547		7.5366 to 7.5465		49,368	-		1.45 to 1.60	(24.63) to (24.53)
CAS
	December 31, 2003	1,472,691		12.3185 to 18.5303		21,200,026	-		1.40	26.93
	December 31, 2002	1,718,560		9.7046 to 14.5983		19,590,383	0.18		1.40	(33.32)
	December 31, 2001	2,149,799		14.5540 to 21.8936		37,055,148	0.36		1.25 to 1.45	(26.35)
CO1
	December 31, 2003	4,851		9.5373 to 9.5644		46,280	0.14		1.45 to 1.60	25.96 to 26.15
	December 31, 2002 (a)	5,419		7.5719 to 7.5819		41,040	0.05		1.45 to 1.60	(24.28) to (24.18)
COS
	December 31, 2003	298,753		11.9276		3,563,173	0.35		1.40	26.53
	December 31, 2002	349,823		9.4264		3,297,434	0.09		1.40	(31.36)
	December 31, 2001	506,229		13.7322		6,950,523	-		1.30 to 1.45	(26.00)
MFF
	December 31, 2003	8,002		9.5100 to 12.3073		82,229	-		1.45 to 1.85	15.47 to 29.24
	December 31, 2002 (a)	3,308		7.3697 to 7.3794		24,395	-		1.45 to 1.60	(26.30) to (26.21)
EGS
	December 31, 2003	978,305		12.5815		12,374,317	-		1.40	29.68
	December 31, 2002	1,179,567		9.7019		11,550,959	-		1.40	(35.09)
	December 31, 2001	1,536,602		14.9457		23,049,534	-		1.30 to 1.45	(35.49)
EM1
	December 31, 2003	4,623		13.6074 to 13.6461		62,962	0.47		1.45 to 1.60	49.70 to 49.92
	December 31, 2002 (a)	3,271		9.0901 to 9.1020		29,730	-		1.45 to 1.60	(9.10) to (8.98)
FCE
	December 31, 2003	55,647		9.8055		545,836	0.44		1.40	50.50
	December 31, 2002	42,762		6.5154		278,736	0.99		1.40	(3.29)
	December 31, 2001	30,074		6.7371		202,679	-		1.30 to 1.45	(2.41)
GAA
	December 31, 2003	-		-		-	3.73		-	10.79
	December 31, 2002	178,055		11.3568		2,025,385	3.34		1.40	(8.20)
	December 31, 2001	218,881		12.3712		2,711,576	4.89		1.30 to 1.45	(10.18)
GG1
	December 31, 2003 (c)	329		13.5776		4,462	-		1.60	35.78
GGS
	December 31, 2003	123,602		13.951 to 17.0411		1,950,149	5.23		1.40	14.00
	December 31, 2002	155,972		12.2376 to 14.9481		2,121,418	-		1.40	18.96
	December 31, 2001	194,789		10.2875 to 12.5661		2,293,608	-		1.25 to 1.45	(3.50)
GG2
	December 31, 2003	1,142		11.2486 to 13.0899		13,101	0.30		1.60 to 1.70	24.40 to 32.97
	December 31, 2002 (a)	1,059		8.4597		8,956	-		1.60	(15.40)
GGR
	December 31, 2003	424,744		15.9174 to 18.6909		7,217,536	0.49		1.40	33.57
	December 31, 2002	506,440		11.9165 to 13.9928		6,488,943	0.29		1.40	(20.48)
	December 31, 2001	701,394		14.9862 to 17.5974		11,227,056	0.70		1.30 to 1.45	(20.80)
GT2
	December 31, 2003	19,492		12.1786 to 12.2132		237,958	2.28		1.45 to 1.60	20.76 to 21.79
	December 31, 2002 (a)	15,432		10.1138		156,077	-		1.45	1.14
GTR
	December 31, 2003	311,788		16.6854		5,234,115	2.21		1.40	21.28
	December 31, 2002	222,222		13.7581		3,089,612	1.99		1.40	(0.79)
	December 31, 2001	284,489		13.8673		3,983,458	4.12		1.30 to 1.45	(7.49)

1. for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

(c) for the period June 1, 2003 (Commencement of operations) through December 31, 2003.

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(6) Financial Highlights - continued

								At December 31													For year ended December 31
													Unit Fair Value
													lowest to highest (if								Investment				Expense R atio			Total Return
								Units					applicable)					Net Assets			Income Ratio				lowest to highest**			lowest to highest***
MFK				December 31, 2003				216,546	$				9.8525 to $ 10.6753	$				2,212,594			1.78	%			1.45% to 2.30%			(1.48)% to 2.40%
				December 31, 2002 (a)				31,653					10.6196 to 10.6336					336,275			2.07				1.45 to 1.60			6.20 to 6.34
GSS
				December 31, 2003				802,266					14.5427 to 16.5211					12,166,611			4.55				1.40			0.74
				December 31, 2002				1,064,704					14.4361 to 16.3999					16,023,249			4.33				1.40			8.29
				December 31, 2001				826,525					13.3313 to 15.1449					11,688,461			5.48				1.25 to 1.45			5.96
MFC
				December 31, 2003				39,343					10.3852 to 12.6501					466,350			3.45				1.45 to 2.30			3.85 to 26.50
				December 31, 2002 (a)				4,918					10.1246 to 10.1379					49,809			15.55				1.45 to 1.60			1.25 to 1.38
HYS
				December 31, 2003				738,644					13.8321 to 17.4943					10,639,033			9.07				1.40			19.76
				December 31, 2002				800,400					11.5494 to 14.6072					9,711,508			10.18				1.40			1.28
	December 31, 2001				984,957					11.4032 to 14.4223					11,839,253				9.68				1.25 to 1.45			0.34
IG1
				December 31, 2003				4,502					12.4432 to 12.4785					56,145			0.64				1.45 to 1.60			36.14 to 36.35
				December 31, 2002 (a)				2,033					9.1398 to 9.1518					18,596			-				1.45 to 1.60			(8.60) to (8.48)
FCG
				December 31, 2003				127,528					11.2527					1,443,243			0.74				1.40			36.75
				December 31, 2002				149,436					8.2285					1,236,050			0.53				1.40			(13.10)
				December 31, 2001				142,195					9.4694					1,353,948			0.70				1.30 to 1.45			(17.06)
MII
				December 31, 2003				158,834					14.7437					2,368,837			1.08				1.40			31.78
				December 31, 2002				193,097					11.1880					2,185,230			0.82				1.40			(7.24)
				December 31, 2001				212,897					12.0613					2,597,478			0.31				1.30 to 1.45			(15.77)
MI1
				December 31, 2003				5,662					12.6638					71,708			0.78				1.60			31.07
				December 31, 2002 (a)				5,003					9.6620					48,342			-				1.60			(3.88)
MS1
			December 31, 2003				3,173					9.8052					31,123			-				1.60%			22.91
			December 31, 2002 (a)				3,173					7.9776					25,313			-				1.60%			(20.22)
MSS
		December 31, 2003				436,205					12.761 to 17.8468					6,263,547				-				1.40			23.56
		December 31, 2002				518,515					10.3281 to 14.4442					6,079,132				-				1.40			(27.01)
		December 31, 2001				675,147					14.1506 to 19.7902					10,845,725				-				1.25 to 1.45			(36.41)
M1B
		December 31, 2003				34,831					9.3224 to 11.2591					344,319				-				1.45 to 2.10			11.02 to 21.07
		December 31, 2002 (a)				17,191					7.7120 to 7.7222					132,655				0.12				1.45 to 1.60			(22.78) to (22.77)
MIS
		December 31, 2003				768,535					7.4405					5,795,930				-				1.40			21.68
		December 31, 2002				810,817					6.1146					5,057,465				0.15				1.40			(29.05)
		December 31, 2001				882,693					8.6184					7,712,417				0.11				1.30 to 1.45			(25.94)
MFL
	December 31, 2003				24,552					9.8178 to 11.5607					245,283				0.91				1.45 to 1.90			13.94 to 20.68
	December 31, 2002 (a)				11,990					8.1481 to 8.1588					97,728				-				1.45 to 1.60			(18.52) to (18.41)
MIT
	December 31, 2003				2,266,305					14.5644 to 21.5267					35,815,638				1.15				1.40			21.14
	December 31, 2002				2,710,773					12.0229 to 17.7703					35,510,594				1.04				1.40			(22.32)
	December 31, 2001				3,411,049					15.4765 to 22.8749					57,479,906				0.81				1.25 to 1.45			(16.90)
MC1
	December 31, 2003				22,054					8.4323 to 13.382					261,590				-				1.45 to 2.30			5.11 to 35.34
	December 31, 2002 (a)				4,031					6.2399 to 6.2481					25,158				-				1.45 to 1.60			(37.60) to (37.52)
MCV
	December 31, 2003				22,736					10.1817 to 13.0549					284,020				0.01				1.45 to 2.30			2.08 to 30.55
	December 31, 2002 (b)				488					7.8444					3,829				-				1.60			(21.56)
MM1
	December 31, 2003				107,976					9.8014 to 9.9746					1,067,194				0.28				1.60 to 2.30			(1.99) to (0.25)
	December 31, 2002 (a)				197					9.9468					1,961				1.33				1.60			(0.53)
MMS
	December 31, 2003				934,706					11.8852 to 13.042					11,860,929				0.65				1.40			(0.76)
	December 31, 2002				1,431,492					11.9762 to 13.1419					18,161,198				1.24				1.40			(0.12)
	December 31, 2001				1,324,378					11.9911 to 13.1582					16,876,261				3.55				1.25 to 1.45			2.34

1. for the period March 1, 2002 (Commencement of operations) through December 31, 2002.
2. for the period May 1, 2002 (Commencement of operations) through August 2, 2002.

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(6) Financial Highlights - continued

		At December 31					For year ended December 31
				Unit Fair Value
				lowest to highest (if			Investment		Expense Ratio	Total Return
		Units		applicable)		Net Assets	Income Ratio*		lowest to highest**	lowest to highest***
M1A	December 31, 2003	19,393	$	9.6809 to $ 12.8427	$	193,197	-	%	1.45% to 1.90%	23.66% to 33.06%
	December 31, 2002 (a)	18,776		7.2869 to 7.2965		136,905	-		1.45 to 1.60	(27.13) to (27.04)
NWD
	December 31, 2003	223,352		12.9781		2,931,081	-		1.40	33.42
	December 31, 2002	237,152		9.7270		2,332,257	-		1.40	(34.38)
	December 31, 2001	254,495		14.8233		3,808,507	-		1.30 to 1.45	(6.43)
RG1
	December 31, 2003	3,456		10.0987 to 10.1274		34,963	0.58		1.45 to 1.60	25.46 to 25.65
	December 31, 2002 (a)	3,173		8.0601 to 8.0495		25,565	-		1.45 to 1.60	(19.50) to (19.40)
RGS
	December 31, 2003	215,089		12.0342		2,610,268	0.81		1.40	26.10
	December 31, 2002	245,892		9.5433		2,364,543	0.69		1.40	(22.49)
	December 31, 2001	266,116		12.3124		3,299,105	0.45		1.30 to 1.45	(12.13)
RI1
	December 31, 2003	20,234		12.0499 to 13.0994		255,695	0.21		1.45 to 2.10	26.13 to 31.47
	December 31, 2002 (a)	3,371		9.1793 to 9.1914		30,944	-		1.40	(8.21) to (8.09)
RSS
	December 31, 2003	90,141		11.3603		1,024,519	0.63		1.40	32.01
	December 31, 2002	91,617		8.6056		788,787	0.25		1.40	(12.70)
	December 31, 2001	85,319		9.8579		841,013	0.81		1.30 to 1.45	(18.90)
RE1
	December 31, 2003	6,547		9.7622 to 9.7900		63,947	0.33		1.45 to 1.60	(2.10) to 23.01
	December 31, 2002 (a)	1,276		7.9359		10,124	1.36		1.60	(20.64)
RES
	December 31, 2003	1,200,316		13.2370		15,908,316	0.85		1.40	23.59
	December 31, 2002	1,429,972		10.7105		15,332,331	0.42		1.40	(26.18)
	December 31, 2001	1,906,941		14.5082		27,680,663	0.03		1.30 to 1.45	(22.48)
SG1
	December 31, 2003	57,155		9.6768 to 12.2726		684,286	-		1.60 to 2.30	5.92 to 25.02
	December 31, 2002 (a)	501		7.7404		3,882	-		1.60	(22.60)
SGS
	December 31, 2003	75,193		5.477		412,092	-		1.40	25.77
	December 31, 2002	64,100		4.3547		279,343	-		1.40	(31.07)
	December 31, 2001	91,155		6.3172		575,848	-		1.30 to 1.45	(25.68)
SI1
	December 31, 2003	11,880		10.4214 to 11.6298		137,129	3.74		1.45 to 2.10	4.21 to 15.24
	December 31, 2002 (a)	7,443		10.4780 to 10.4918		78,016	-		1.45 to 1.60	4.78 to 4.92
SIS
	December 31, 2003	103,290		12.3757		1,278,288	4.36		1.40	11.33
	December 31, 2002	68,782		11.1163		764,611	4.41		1.40	6.00
	December 31, 2001	48,448		10.4868		508,084	3.11		1.30 to 1.45	1.92
SVS
	December 31, 2003 (c)	2,637		9.792 to 12.7343		27,977	-		1.45 to 1.90	(2.08) to 27.34
MFJ
	December 31, 2003	420,181		10.5516 to 11.6673		4,718,337	1.98		1.35 to 2.30	5.52 to 16.67
	December 31, 2002 (a)	106,131		9.4345 to 9.4469		1,002,290	0.69		1.45 to 1.60	(5.66) to (5.53)
TRS
	December 31, 2003	2,392,586		17.7421 to 23.5321		46,500,860	3.43		1.40	15.53
	December 31, 2002	2,734,379		15.3567 to 20.3682		46,320,941	3.17		1.40	(7.02)
	December 31, 2001	2,874,669		16.5156 to 21.9054		53,044,006	3.48		1.25 to 1.45	(0.88)
MFE
	December 31, 2003	8,106		12.0079 to 14.6081		97,904	-		1.65 to 1.90	(2.37) to 46.08
	December 31, 2002 (a)	566		8.6075		4,873	8.53		1.60	(13.92)
UTS
	December 31, 2003	443,600		17.4725 to 23.4295		8,283,068	3.17		1.40	34.38
	December 31, 2002	478,770		13.0025 to 17.4356		6,618,318	3.82		1.40	(24.90)
	December 31, 2001	746,582		17.3147 to 23.2179		13,581,401	3.86		1.25 to 1.45	(25.36)
MV1
	December 31, 2003	49,506		10.7850 to 12.1013		555,117	1.31		1.45 to 2.10	19.27 to 23.27
	December 31, 2002 (a)	25,856		8.7622 to 8.7737		226,673	0.64		1.45 to 1.60	(12.38) to (12.26)
MVS
	December 31, 2003	536,812		12.1988		6,548,504	1.63		1.40	23.59
	December 31, 2002	573,552		9.8707		5,694,570	0.77		1.40	(14.77)
	December 31, 2001	382,352		11.5813		4,428,169	0.44		1.30 to 1.45	(8.77)

(a) for the period March 1, 2002 (Commencement of operations) through December 31, 2002.

(c) for the period June 1, 2003 (Commencement of operations) through December 31, 2003.

Regatta (N.Y.), Regatta Gold (N.Y.), Regatta Extra (N.Y.), Regatta Masters Flex (N.Y.), Regatta Masters Extra (N.Y.), Regatta Masters Access (N.Y.), and Regatta Masters Choice (N.Y.) Sub-Accounts Included in Sun Life (N.Y.) Variable Account C

Notes to Financial Statements - continued

(6) Financial Highlights - continued

		At December 31					For year ended December 31`
				Unit Fair Value
				lowest to highest (if			Investment		Expense Ratio	Total Return
		Units		applicable)		Net Assets	Income Ratio*		lowest to highest**	lowest to highest***
LA1
	December 31, 2003 (c)	74,789	$	10.9299 to $ 12.9263	$	940,155	2.54	%	1.65% to 2.30%	9.30% to 29.26%
LA2
	December 31, 2003 (d)	581		12.1352 to 12.5454		7,199	1.43		1.70 to 1.90	21.35 to 25.45
FTI
	December 31, 2003 (d)	41,808		10.7884 to 12.9673		535,856	0.10		1.35 to 2.30	7.88 to 29.67
FMS
	December 31, 2003 (c)	3,938		11.7224 to 12.3538		48,049	-		1.65 to 2.10	17.22 to 23.54
FVS
	December 31, 2003 (c)	1,158		12.5895 to 13.4342		15,062	0.15		1.35 to 1.90	25.89 to 34.34
PRR
	December 31, 2003 (c)	7,757		10.0967 to 11.1879		83,631	0.70		1.65 to 2.30	0.97 to 11.88
PTR
	December 31, 2003 (c)	72,475		9.9695 to 10.7591		756,512	2.29		1.65 to 2.30	(0.30) to 7.59
OMG
	December 31, 2003 (c)	5,592		11.7085 to 11.8889		66,347	-		1.65 to 1.90	17.08 to 18.89
OCA
	December 31, 2003 (c)	52,771		10.7535 to 12.5533		648,175	-		1.35 to 2.30	7.53 to 25.53
OMS
	December 31, 2003 (f)	898		13.1022 to 13.1405		11,791	-		1.65 to 2.10	31.02 to 31.41
SC3
	December 31, 2003 (c)	24,813		10.8848 to 14.1883		332,092	-		1.35 to 2.30	8.85 to 41.88

(c) for the period June 1, 2003 (Commencement of operations) through December 31, 2003.

(d) for the period July 1, 2003 (Commencement of operations) through December 31, 2003.

(e) for the period September 1, 2003 (Commencement of operations) through December 31, 2003.

(f) for the period October 1, 2003 (Commencement of operations) through December 31, 2003.

• Represents the dividends, excluding distributions of capital gains, received by the Sub-Account from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. The ratio excludes those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the underlying fund in which the Sub-Accounts invest.

** Ratio represents the annualized contract expenses of the separate account. The ratio includes only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expense of the underlying fund are excluded.

*** Represents the total return for the periods indicated, including changes in the value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expense assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for the period indicated or from the effective date through the end of the reporting period.