##### 



Interim Consolidated Financial Statements Consolidated Statements of Operations For the three months endedMarch 31
    
    
    March 31
    *(unaudited, in millions of Canadian dollars, except for per share amounts)
    
    2005
    
    
    2004RevenuePremium income:Annuities
    
    $
    909
    
    
    $
    1,204Life insurance
    
    
    1,419
    
    
    
    1,461Health insurance
    
    
    612
    
    
    
    5892,940
    
    
    
    3,254Net investment income
    
    
    1,465
    
    
    
    1,508Fee income
    
    
    714
    
    
    
    7765,119
    
    
    
    5,538Policy Benefits and ExpensesPayments to policyholders, beneficiaries and depositors:Maturities and surrenders
    
    
    1,300
    
    
    
    1,807Annuity payments
    
    
    367
    
    
    
    375Death and disability benefits
    
    
    617
    
    
    
    698Health benefits
    
    
    441
    
    
    
    459Policyholder dividends and interest on claims and deposits
    
    
    279
    
    
    
    2813,004
    
    
    
    3,620Net transfers to segregated funds
    
    
    175
    
    
    
    255Increase (decrease) in actuarial liabilities
    
    
    91
    
    
    
    (170
    )Commissions
    
    
    426
    
    
    
    483Operating expenses
    
    
    727
    
    
    
    735Premium taxes
    
    
    44
    
    
    
    46Interest expense
    
    
    65
    
    
    
    674,532
    
    
    
    5,036Income before Income Taxes and Non-controlling Interests
    
    
    587
    
    
    
    502Income taxes
    
    
    117
    
    
    
    128Non-controlling interests in net income of subsidiaries
    
    
    6
    
    
    
    4Total Net Income
    
    
    464
    
    
    
    370Less: Participating policyholders net income
    
    
    4
    
    
    
    5Preferred shareholder dividends
    
    
    2
    
    
    
    Common Shareholders Net Income
    
    $
    458
    
    
    $
    365Average exchange rates:U.S. Dollars
    
    
    1.23
    
    
    
    1.32U.K. Pounds
    
    
    2.32
    
    
    
    2.42
  *
    
    As restated for adoption of Consolidation of Variable Interest Entities, Canadian Institute of Chartered
Accountants (CICA) Handbook Accounting Guideline 15 (AcG 15) (Note 2) Earnings per
share (Note 4)Basic
    
    $
    0.77
    
    
    $
    0.61Diluted
    
    $
    0.77
    
    
    $
    0.61Weighted
average shares outstanding in millions
(Note 4)Basic
    
    
    592
    
    
    
    600Diluted
    
    
    595
    
    
    
    603
 The attached notes form part of these interim consolidated financial statements. 10     Sun Life Financial Inc.  |  First Quarter 2005




---



##### 



Interim Consolidated Financial Statements Consolidated Balance Sheets As atMarch 31
    
    
    December 31
    *
    
    March 31
    *(unaudited, in millions of Canadian dollars)
    
    2005
    
    
    2004
    
    
    2004AssetsBonds
    
    $
    66,080
    
    
    $
    64,496
    
    
    $
    66,820Mortgages
    
    
    13,999
    
    
    
    13,862
    
    
    
    13,516Stocks
    
    
    3,494
    
    
    
    3,463
    
    
    
    3,769Real estate
    
    
    3,155
    
    
    
    3,148
    
    
    
    3,109Cash, cash equivalents and short-term securities
    
    
    5,864
    
    
    
    5,958
    
    
    
    5,161Policy loans and other invested assets
    
    
    6,007
    
    
    
    5,984
    
    
    
    6,171Invested assets
    
    
    98,599
    
    
    
    96,911
    
    
    
    98,546Goodwill
    
    
    5,534
    
    
    
    5,471
    
    
    
    5,611Intangible assets
    
    
    770
    
    
    
    751
    
    
    
    760Other assets
    
    
    5,571
    
    
    
    4,670
    
    
    
    6,443Total general fund assets
    
    $
    110,474
    
    
    $
    107,803
    
    
    $
    111,360Segregated funds net assets
    
    $
    57,565
    
    
    $
    56,564
    
    
    $
    55,682Liabilities and EquityActuarial liabilities and other policy liabilities
    
    $
    76,683
    
    
    $
    76,056
    
    
    $
    77,997Amounts on deposit
    
    
    3,166
    
    
    
    3,144
    
    
    
    3,123Deferred net realized gains
    
    
    3,553
    
    
    
    3,466
    
    
    
    3,385Other liabilities
    
    
    10,411
    
    
    
    9,072
    
    
    
    10,581Total general fund liabilities
    
    
    93,813
    
    
    
    91,738
    
    
    
    95,086Subordinated debt
    
    
    1,465
    
    
    
    1,462
    
    
    
    1,734Non-controlling interests in subsidiaries
    
    
    171
    
    
    
    188
    
    
    
    174Total equity
    
    
    15,025
    
    
    
    14,415
    
    
    
    14,366Total general fund liabilities and equity
    
    $
    110,474
    
    
    $
    107,803
    
    
    $
    111,360Segregated funds contract liabilities
    
    $
    57,565
    
    
    $
    56,564
    
    
    $
    55,682Exchange rate at balance sheet date:U.S. Dollars
    
    
    1.22
    
    
    
    1.20
    
    
    
    1.31U.K. Pounds
    
    
    2.28
    
    
    
    2.32
    
    
    
    2.39
  *
    
    As restated for adoption of AcG 15 (Note 2) The attached notes form part of these interim consolidated financial statements. Approved on behalf of the Board of Directors -s- Donald A. Stewart
Donald A. Stewart
Chief Executive Officer -s- Ronald W. Osborne
Ronald W. Osborne
Director First Quarter 2005  |  www.sunlife.com     11




---



##### 



Interim Consolidated Financial Statements Consolidated Statements of Equity For the three months endedParticipating
    
    
    
    
    
    
    March 31
    
    
    March 31
    *(unaudited, in millions of Canadian dollars)
    
    Policyholders
    
    
    Shareholders
    
    
    2005
    
    
    2004Preferred SharesBalance, beginning of period
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Preferred shares issued (Note 8)
    
    
    
    
    
    
    400
    
    
    
    400
    
    
    
    Issuance costs, net of taxes (Note 8)
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )
    
    
    Balance, end of period
    
    
    
    
    
    
    394
    
    
    
    394
    
    
    
    Common SharesBalance, beginning of period
    
    
    
    
    
    
    7,238
    
    
    
    7,238
    
    
    
    7,289Stock options exercised
    
    
    
    
    
    
    27
    
    
    
    27
    
    
    
    24Common shares purchased for cancellation (Note 3)
    
    
    
    
    
    
    (50
    )
    
    
    (50
    )
    
    
    (3
    )Balance, end of period
    
    
    
    
    
    
    7,215
    
    
    
    7,215
    
    
    
    7,310Contributed SurplusBalance, beginning of period
    
    
    
    
    
    
    70
    
    
    
    70
    
    
    
    76Stock option compensation
    
    
    
    
    
    
    2
    
    
    
    2
    
    
    
    4Stock options exercised
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )
    
    
    (6
    )Balance, end of period
    
    
    
    
    
    
    66
    
    
    
    66
    
    
    
    74Retained EarningsBalance, beginning of period, as previously reported
    
    
    85
    
    
    
    8,116
    
    
    
    8,201
    
    
    
    7,284Adjustment for change in accounting policy (Note 2)
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    4Balance, beginning of period, as restated
    
    
    85
    
    
    
    8,119
    
    
    
    8,204
    
    
    
    7,288Net income
    
    
    4
    
    
    
    460
    
    
    
    464
    
    
    
    370Dividends on common shares
    
    
    
    
    
    
    (142
    )
    
    
    (142
    )
    
    
    (126
    )Dividends on preferred shares
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )
    
    
    Common shares purchased for cancellation (Note 3)
    
    
    
    
    
    
    (111
    )
    
    
    (111
    )
    
    
    (5
    )Balance, end of period
    
    
    89
    
    
    
    8,324
    
    
    
    8,413
    
    
    
    7,527Currency Translation AccountBalance, beginning of period
    
    
    (8
    )
    
    
    (1,089
    )
    
    
    (1,097
    )
    
    
    (673
    )Adjustment for foreign exchange gain (Note 10)
    
    
    
    
    
    
    (53
    )
    
    
    (53
    )
    
    
    Changes for the period
    
    
    
    
    
    
    87
    
    
    
    87
    
    
    
    128Balance, end of period
    
    
    (8
    )
    
    
    (1,055
    )
    
    
    (1,063
    )
    
    
    (545
    )Total equity
    
    $
    81
    
    
    $
    14,944
    
    
    $
    15,025
    
    
    $
    14,366
  *
    
    As restated for adoption of AcG 15 (Note 2) The attached notes form part of these interim consolidated financial statements. 12     Sun Life Financial Inc.  |  First Quarter 2005




---



##### 



Interim Consolidated Financial Statements Condensed Consolidated Statements of Cash Flows For the three months endedMarch 31
    
    
    March 31
    *(unaudited, in millions of Canadian dollars)
    
    2005
    
    
    2004Cash Flows Provided by (Used in) Operating ActivitiesTotal net income
    
    $
    464
    
    
    $
    370New mutual fund business acquisition costs capitalized
    
    
    (27
    )
    
    
    (30
    )Redemption fees of mutual funds
    
    
    13
    
    
    
    18Items not affecting cash
    
    
    341
    
    
    
    (304
    )Net cash provided by operating activities
    
    
    791
    
    
    
    54Cash Flows Provided by (Used in) Financing ActivitiesBorrowed funds
    
    
    39
    
    
    
    126Issuance of preferred shares (Note 8)
    
    
    400
    
    
    
    Payments to underwriters (Note 8)
    
    
    (9
    )
    
    
    Issuance of common shares on exercise of stock options
    
    
    21
    
    
    
    18Common shares purchased for cancellation (Note 3)
    
    
    (161
    )
    
    
    (8
    )Dividends paid on common shares
    
    
    (142
    )
    
    
    (126
    )Net cash provided by financing activities
    
    
    148
    
    
    
    10Cash Flows Provided by (Used in) Investing ActivitiesSales, maturities and repayments of bonds, mortgages, stocks and real estate
    
    
    7,638
    
    
    
    11,317Purchases of bonds, mortgages, stocks and real estate
    
    
    (8,622
    )
    
    
    (11,137
    )Policy loans
    
    
    (14
    )
    
    
    13Short-term securities
    
    
    337
    
    
    
    18Other investments
    
    
    (49
    )
    
    
    (73
    )Net cash provided by (used in) investing activities
    
    
    (710
    )
    
    
    138Changes due to fluctuations in exchange rates
    
    
    (16
    )
    
    
    9Increase in cash and cash equivalents
    
    
    213
    
    
    
    211Cash and cash equivalents, beginning of period
    
    
    3,748
    
    
    
    3,175Cash and cash equivalents, end of period
    
    
    3,961
    
    
    
    3,386Short-term securities, end of period
    
    
    1,903
    
    
    
    1,775Cash, cash equivalents and short-term securities, end of period
    
    $
    5,864
    
    
    $
    5,161Supplementary InformationCash and cash equivalents:Cash
    
    $
    467
    
    
    $
    282Cash equivalents
    
    
    3,494
    
    
    
    3,104$
    3,961
    
    
    $
    3,386Cash disbursements made for:Interest on borrowed funds and subordinated debt
    
    $
    4
    
    
    $
    2Income taxes, net of refunds
    
    $
    89
    
    
    $
    (8
    )
  *
    
    As restated for adoption of AcG 15 (Note 2) The attached notes form part of these interim consolidated financial statements. First Quarter 2005  |  www.sunlife.com     13




---



##### 



Interim Consolidated Financial Statements Consolidated Statements of Changes in Segregated Funds Net Assets For the three months endedMarch 31
    
    
    March 31(unaudited, in millions of Canadian dollars)
    
    2005
    
    
    2004Additions to Segregated FundsDeposits:Annuities
    
    $
    2,188
    
    
    $
    1,761Life insurance
    
    
    77
    
    
    
    912,265
    
    
    
    1,852Net transfers from general funds
    
    
    175
    
    
    
    255Net realized and unrealized gains
    
    
    80
    
    
    
    709Other investment income
    
    
    213
    
    
    
    2092,733
    
    
    
    3,025Deductions from Segregated FundsPayments to policyholders and their beneficiaries
    
    
    1,836
    
    
    
    1,891Management fees
    
    
    161
    
    
    
    154Taxes and other expenses
    
    
    33
    
    
    
    47Effect of changes in currency exchange rates
    
    
    (298
    )
    
    
    (663
    )1,732
    
    
    
    1,429Net additions to segregated funds for the period
    
    
    1,001
    
    
    
    1,596Segregated funds net assets, beginning of period
    
    
    56,564
    
    
    
    54,086Segregated funds net assets, end of period
    
    $
    57,565
    
    
    $
    55,682
 Consolidated Statements of Segregated Funds Net Assets As atMarch 31
    
    
    December 31
    
    
    March 31(unaudited, in millions of Canadian dollars)
    
    2005
    
    
    2004
    
    
    2004AssetsSegregated and mutual fund units
    
    $
    44,274
    
    
    $
    43,589
    
    
    $
    43,272Stocks
    
    
    7,298
    
    
    
    7,082
    
    
    
    6,834Bonds
    
    
    5,693
    
    
    
    5,600
    
    
    
    5,437Cash, cash equivalents and short-term securities
    
    
    1,616
    
    
    
    961
    
    
    
    853Real estate
    
    
    164
    
    
    
    159
    
    
    
    148Mortgages
    
    
    56
    
    
    
    61
    
    
    
    77Other assets
    
    
    2,755
    
    
    
    716
    
    
    
    1,14061,856
    
    
    
    58,168
    
    
    
    57,761Liabilities
    
    
    4,291
    
    
    
    1,604
    
    
    
    2,079Net assets attributable to segregated funds policyholders
    
    $
    57,565
    
    
    $
    56,564
    
    
    $
    55,682
 The attached notes form part of these interim consolidated financial statements. 14     Sun Life Financial Inc.  |  First Quarter 2005




---



##### 



Condensed Notes to the Interim Consolidated Financial Statements  1.   Basis of Presentation Sun Life Financial Inc. together with all its subsidiaries, including its wholly-owned
consolidated subsidiaries Sun Life Assurance Company of Canada (Sun Life Assurance) and Sun Life
Financial Corp., are collectively referred to as Sun Life Financial or the Company. On January
4, 2005, Sun Life Assurance completed a reorganization under which most of its asset management
businesses in Canada and the U.S. were transferred to a newly incorporated subsidiary of
Sun Life Financial Inc., Sun Life Financial Corp. The Company prepares its interim consolidated
financial statements according to Canadian generally accepted accounting principles
(GAAP). The accounting policies and methods of computation applied in these interim
financial statements are the same as those applied in the 2004 annual consolidated financial
statements, except as described in Note 2. The interim consolidated financial statements should be
read in conjunction with the most recent annual consolidated financial statements, as they do not
include all information and notes required by GAAP for annual consolidated financial
statements. 2.   Changes in Accounting Policies Consolidation of Variable Interest Entities:The Company adopted Consolidation of Variable
Interest Entities, CICA Handbook Accounting Guideline 15 (AcG 15), on January
1, 2005. This change in accounting policy was applied retroactively and prior period financial
statements have been restated accordingly. This Guideline provides guidance for application of
consolidation principles to those entities defined as variable interest entities (VIEs).
VIEs are entities in which equity investors do not have a controlling financial interest or where
the equity invested is considered insufficient to finance the entitys activities without
additional subordinated financial support. Under this Guideline, the Company is required to
consolidate those VIEs where the Company is exposed to a majority of expected losses,
benefits from a majority of expected residual returns, or both. The following is a summary of the impact of this Guideline for the major categories of VIEs that
the Company is involved with. Sun Life ExchangEable Capital Securities (SLEECS):  Cumulative Capital Securities (Securities):  Other Variable Interest Entities:  Financial Instruments  Disclosure and Presentation:The Company adopted the amendments to the
accounting requirements in CICA Handbook Section 3860, Financial Instruments  Disclosure
and Presentation, on January 1, 2005. Securities issued by the Company that give the Company an
unrestricted obligation to settle the principal amount in cash or in the equivalent value of its
own shares, must be classified as debt. This change in accounting policy did not have a material
impact on these interim consolidated financial statements. First Quarter 2005  |  www.sunlife.com     15




---



##### 



Condensed Notes to the Interim Consolidated Financial Statements (unaudited) 3.   Normal Course Issuer Bid and Cancellation of Common Shares On January 6, 2005, the Company announced the renewal of its normal course issuer bid to
purchase, for cancellation, through the Toronto Stock Exchange (the Exchange) up to 30 million
common shares, representing approximately 5% of the common shares issued and outstanding at that
time. This normal course issuer bid covers the period from January 12, 2005 to January 11, 2006.
Purchases will be executed on the Exchange at the prevailing market price in amounts and times
determined by the Company. The Company will make no purchases of common shares other than
open-market purchases. In 2004, the Company announced a similar normal course issuer bid that
covered the period from January 12, 2004 to January 11, 2005. In the first quarter of 2005, the
Company purchased under these plans approximately 4 million of its common shares at an average
price of $39.48 per share for a total amount of $161. Of this amount, purchases of approximately $6
were not cancelled until April 2005. An additional $11 were subscribed for, but not settled, at
March 31, 2005. 4.   Earnings Per Share Details of the calculation of the net income and the weighted average number of shares used
in the earnings per share computations are as follows: For the three months endedMarch 31
    
    
    March 31
    *2005
    
    
    2004Common shareholders net income
    
    $
    458
    
    
    $
    365Less: Effect of stock options of subsidiaries(1)
    
    
    1
    
    
    
    Common shareholders net income on a diluted basis
    
    $
    457
    
    
    $
    365Weighted average number of shares outstanding for basic earnings per share (in millions)
    
    
    592
    
    
    
    600Add: Adjustments relating to the dilutive impact of stock options(1)
    
    
    3
    
    
    
    3Weighted average number of shares outstanding on a diluted basis (in millions)
    
    
    595
    
    
    
    603
 (1)
    
    The effect of stock options is calculated based on the treasury stock method
requirements which assume that unrecognized compensation, as well as any proceeds from the exercise
of the options, would be used to purchase common shares at the average market prices during the
period.*
    
    As restated for adoption of AcG 15 (Note 2) 5.   Segmented Information Effective January 1, 2005, the Company realigned certain of its reportable segments whereby
the reinsurance business unit previously included in the SLF Canada segment, and the United Kingdom
business, are now reported as part of the Corporate segment (formerly Corporate Capital). The
change reflects the ongoing evolution of the business of the Company and does not impact the
consolidated results. The prior period results and assets by segment presented in this note reflect
this realignment. The Company has five reportable segments: SLF Canada, SLF United States,
MFS Investment Management (MFS), SLF Asia, and Corporate. These
reportable segments reflect the Companys management structure and internal financial reporting.
Each of these segments operates in the financial services industry and has its own management. They
derive their revenues principally from mutual funds, investment management and annuities, life and
health insurance and life retrocession. Revenues not attributed to the strategic business units are
derived primarily from investments of a corporate nature and earnings on capital. Corporate includes the Companys reinsurance operations, both ongoing and run-off, the United
Kingdom operations, and those other operations for which management responsibility resides in head
office. Total net income (loss) in this category is shown net of certain expenses borne centrally. Inter-segment transactions consist primarily of internal financing agreements. They are measured at
market values prevailing when the arrangements were negotiated. Inter-segment revenue for the three
months ended March 31, 2005, consists of interest of $55 ($98 in 2004) and fee income of $12 ($12
in 2004). The results of the segments operations are discussed in the Managements Discussion and Analysis. Results and assets by segment for the three months ended March 31, 2005United StatesConsolidationCanada
    
    
    Sun Life
    
    
    MFS
    
    
    Asia
    
    
    Corporate
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    2,146
    
    
    $
    1,889
    
    
    $
    407
    
    
    $
    214
    
    
    $
    530
    
    
    $
    (67
    )
    
    $
    5,119Total net income
    
    $
    248
    
    
    $
    82
    
    
    $
    46
    
    
    $
    6
    
    
    $
    82
    
    
    $
    
    
    
    $
    464AssetsGeneral fund assets
    
    $
    51,222
    
    
    $
    41,697
    
    
    $
    816
    
    
    $
    2,523
    
    
    $
    15,073
    
    
    $
    (857
    )
    
    $
    110,474Segregated funds net assets
    
    $
    25,414
    
    
    $
    24,994
    
    
    $
    
    
    
    $
    51
    
    
    $
    7,106
    
    
    $
    
    
    
    $
    57,565
 16     Sun Life Financial Inc.  |  First Quarter 2005




---



##### 



Condensed Notes to the Interim Consolidated Financial Statements (unaudited) Results and assets by segment for the three months ended March 31, 2004*United StatesConsolidationCanada
    
    
    Sun Life
    
    
    MFS
    
    
    Asia
    
    
    Corporate
    
    
    Adjustments
    
    
    TotalRevenue
    
    $
    2,141
    
    
    $
    2,349
    
    
    $
    450
    
    
    $
    158
    
    
    $
    550
    
    
    $
    (110
    )
    
    $
    5,538Total net income (loss)
    
    $
    235
    
    
    $
    97
    
    
    $
    (13
    )
    
    $
    7
    
    
    $
    44
    
    
    $
    
    
    
    $
    370AssetsGeneral fund assets
    
    $
    50,496
    
    
    $
    41,672
    
    
    $
    1,094
    
    
    $
    2,150
    
    
    $
    16,416
    
    
    $
    (468
    )
    
    $
    111,360Segregated funds net assets
    
    $
    23,672
    
    
    $
    25,447
    
    
    $
    
    
    
    $
    16
    
    
    $
    6,547
    
    
    $
    
    
    
    $
    55,682
  *
    
    As restated for adoption of AcG 15 (Note 2) 6.   Changes in Actuarial Liabilities Changes in actuarial liabilities for the three months ended March 31, 2005, and March 31,
2004, are as follows: 2005
    
    
    2004Actuarial liabilities, January 1
    
    $
    74,258
    
    
    $
    75,324Increase (decrease) in actuarial liabilities
    
    
    91
    
    
    
    (170
    )Actuarial liabilities before the following:
    
    
    74,349
    
    
    
    75,154Other
    
    
    53
    
    
    
    (99
    )Effect of changes in currency exchange rates
    
    
    441
    
    
    
    818Actuarial liabilities, March 31
    
    
    74,843
    
    
    
    75,873Add: other policy liabilities
    
    
    1,840
    
    
    
    2,124Actuarial liabilities and other policy liabilities, March 31
    
    $
    76,683
    
    
    $
    77,997
 7.   Pension Plans and Other Post-Retirement Benefits For the three months endedMarch 31
    
    
    March 312005
    
    
    2004Pension benefit cost (income)
    
    $
    3
    
    
    $
    3Other post-retirement benefit cost
    
    $
    6
    
    
    $
    6
 8.   Significant Capital Transaction On February 25, 2005, Sun Life Financial Inc. issued $400 million of Class A Non-Cumulative
Preferred Shares, Series 1 (the Preferred Shares) at $25 per share, under a prospectus dated
February 17, 2005. Holders are entitled to receive a non-cumulative quarterly dividend of $0.297 per share, yielding 4.75% annually. The initial dividend,
if declared, will be payable on June 30, 2005, and will be $0.407 per share. Underwriting
commissions of $6 (net of taxes of $3) were deducted from preferred shares in the interim
consolidated statements of equity. Subject to regulatory approval, on or after March 2010, the
Company may redeem the Preferred Shares, in whole or in part at a declining premium. On February 8, 2005, Sun Life Assurance announced that, subject to regulatory approval, its Board
of Directors approved the redemption of its Non-Cumulative Redeemable Class E Preferred Shares,
Series I, included in non-controlling interest, on June 30, 2005. These preferred shares will be
redeemed at a price equal to $25 per share, together with declared but unpaid dividends. 9.   Commitments, Guarantees and Contingencies LEGAL AND REGULATORY PROCEEDINGS  First Quarter 2005  |  www.sunlife.com     17




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Condensed Notes to the Interim Consolidated Financial Statements (unaudited) provision for the estimated losses for such matters has been made in the Corporate segment.
While it is not possible to predict the final resolution of these discussions, management expects
that the ultimate liability with respect to such matters will not be material to the consolidated
financial condition of the Company. Sun Life Financial Inc., MFS and certain of its subsidiaries, MFS Corporation
Retirement Committee, various MFS funds, certain current and/or former Trustees of those
MFS funds, and certain officers of MFS have been named as defendants in
multiple lawsuits filed in the U.S. federal and state courts. The lawsuits variously have
been commenced as class actions or individual actions on behalf of investors who purchased, held or
redeemed shares of the MFS funds during specified periods, as class actions on behalf of
participants in certain retirement plan accounts, or as derivative actions on behalf of MFS
funds. The lawsuits relating to market timing and related matters have been transferred to,
and consolidated before, the United States District Court for the District of Maryland, as part of
a multi-district litigation of market timing and related claims involving several other fund
complexes (In re Mutual Funds Investment Litigation (Alger, Columbia, Janus, MFS, One Group,
Putnam, Allianz Dresdner), No.1:04-md-15863 (transfer began March 19, 2004)). The plaintiffs in
these consolidated lawsuits generally seek injunctive relief including removal of the named
Trustees, adviser and distributor, rescission of contracts and 12b-1 Plans, disgorgement of fees
and profits, monetary damages, punitive damages, attorneys fees and costs, and other equitable and
declaratory relief. The market timing cases related to the MFS funds are Riggs v. MFS et
al., Case No. 04-CV-01162-JFM(direct), Hammerslough v. MFS et al., Case No. 04-MD-01620
(derivative) and Anita Walker v. MFS et al., Case No. 1:04-CV-01758(ERISA). Two lawsuits
alleging improper brokerage allocation practices and excessive compensation are pending in the
United States District Court for the District of Massachusetts (Forsythe v. Sun Life Financial
Inc., et al., No. 04cv10584 (GAO) (a consolidated action); and Marcus Dumond, et al. v.
Massachusetts Financial Servs. Co., et al., No. 04cv11458 (GAO) (May 4, 2004)). The plaintiffs in
these lawsuits generally seek compensatory damages, punitive damages, recovery of fees, rescission
of contracts, an accounting, restitution, declaratory relief, equitable and/or injunctive relief
and attorneys fees and costs. The various lawsuits generally allege that some or all of the
defendants (i) permitted or acquiesced in market timing and/or late trading in some of the MFS
funds and, inadequately disclosed MFS internal policies concerning market timing
and such matters, (ii) received excessive compensation as fiduciaries to the MFS funds,
or (iii) permitted or acquiesced in the improper use of fund assets by MFS to support the
distribution of MFS fund shares and inadequately disclosed MFS use of fund
assets in this manner. The actions assert that some or all of the defendants violated U.S.
federal securities laws, including the Securities Act of 1933and the Securities Exchange Act
of 1934, the Investment Company Act of 1940and the Investment Advisers Act of 1940, the Employee
Retirement Income Security Act of 1974, as well as fiduciary duties and other violations of common
law. Additional lawsuits based upon similar allegations may be filed in the future. These actions
are at an early stage and Sun Life Financial cannot predict their outcome with certainty and is
accordingly unable to determine the potential impact that they may have on Sun Life Financials
results of operations, financial position and cash flows. Additional information concerning these and related matters is provided in Sun Life Financial
Inc.s Managements Discussion and Analysis and Renewal Annual Information Form for the year ended
December 31, 2004, and in its interim Managements Discussion and Analysis. PROVISIONS IN THE UNITED KINGDOM  The Company has provisions for future costs and expenses relating to all reviews of past business
sold in the United Kingdom, as components of both actuarial liabilities and other liabilities. At
March 31, 2005, the combined provision was $95 ($117 in 2004). 10.   Foreign Exchange Gain During the first quarter of 2005, the Company reduced its net investment in its United
Kingdom self-sustaining foreign operation. The reduction was a result of a capital restructuring
whereby the foreign operation repaid capital of 250 U.K. Pounds. A foreign exchange gain
of $53, equivalent to the proportional amount of the foreign exchange gain accumulated in the
currency translation account, was recognized in net investment income. 11.   Comparative Figures Certain comparative figures have been restated to conform with the presentation adopted in
2005. 18     Sun Life Financial Inc.  |  First Quarter 2005