PROSPECTUS

SUN LIFE OF CANADA PROSPERITY

PHILIPPINE EQUITY FUND, INC.
(Open-end Investment Company)

The Fund’s shares consisting of Two Hundred Million (200,000,000)

common stock with a par value of P1.00 per share
will be offered at current net asset value. The Offer Shares
will be traded over the counter.

Sun Life Asset Management Company, Inc.

Investment Manager and Principal Distributor
15th Floor, Tower II, The Enterprise Center
6766 Ayala Avenue, Makati City

31 MAY 2006
No dealer, salesperson or other individual has been authorized
to give any information or make any representation other than
those contained in this Prospectus and, if given or made, such
other information or representation must not be relied upon as
having been authorized by the Fund or by the Distributor.

The proceeds from the sale of the securities shall mainly be

invested in equity securities issued by corporations listed on
the Philippine Stock Exchange with the remaining assets invested
in a portfolio of high-quality debt instruments issued by the
Philippine Government and prime Philippine companies. All
proceeds from the sale of the securities shall be held by the
custodian bank.

This prospectus should be read carefully and retained for future

reference.
 TA B L E O F C O N T E N T S ‰

‰ Financial Highlights 1

‰ Glossary 2

‰ The Fund 3
Capitalization 3
Market Price of and Dividend on
Registrant’s Common Equity 4
Board of Directors and Officers 5
Security Ownership of Fund’s Principal Sponsor,
Members of the Board of Directors and Management 5
Executive Compensation 6
Family Relationships 6
Material Pending Legal Proceedings 6
Term of Office 6

‰ Use of Proceeds 7

‰ Risk Factors 7

‰ Investment Objective, Policy, and Legal Limitations 8

Investment Objective 8
Investment Policy 8
Legal Limitations on Investment 9

‰ Sales, Redemption of Shares,

and Computation of Net Asset Value 11
Purchase of Shares 11
Sales Charges 14
Prevention of Money-Laundering 15
 Redemption of Shares 15
Computation of Net Asset Value 16
Transfer from the Fund to Other
SLAMC-Managed Funds 17
Cost and Market-Timing 18
Taxation 19
Shareholder’s Privileges 19
Statement of Account 21
Effects of Existing or Probable Government
Regulations on the Business 21
Competition 22

‰ Management of the Fund 22

The Fund Manager 22
Directors and Officers of the Manager 23

‰ Transfer Agent 24

‰ Custodian Banks 24

‰ Annex A: Board of Directors and Officers of the

Fund and Inverstment Manager 25

ALL REGISTRATION REQUIREMENTS HAVE BEEN MET AND ALL

INFORMATION CONTAINED HEREIN IS TRUE AND CURRENT.
Sun Life of Canada Philippine Equity Fund, Inc
FINANCIAL HIGHLIGHTS
(In Thousand Pesos)

Year Ended December 31 2005 2004 2003

For the Year (Philippine Pesos)

Gross Investment Income 27,464 15,019 2,494

Operating Expenses 6,191 4,175 4,641
Provision for Income Tax 958 913 990
Net Investment Income 20,315 9,931 (3,137)

At Year-End
Total Assets 273,080 184,875 145,277
Liabilities 920 299 2,521
Net Assets 272,160 184,576 142,756

1
 G LOSS A RY
“Back-end Allows all of an investor’s money to be
Purchase Option” invested, with no initial sales commission
deducted
“R.A. 8799” The Securities Regulation Code
“BSP” Bangko Sentral ng Pilipinas
“Business Day” For purposes of subscription, redemption,
and transfer of shares of the Fund, means
a day on which the Philippine Stock
Exchange is open for business
“Dealers” Eligible securities dealers that have entered
into an agreement to sell shares with the
Fund’s Principal Distributor
“DSC” Deferred sales charge
“Front-end Purchase A sales commission will be paid to the
Option” investor’s mutual fund dealer when shares
of the Fund are bought
Front-end with The investor is charged a front-end load.
Redemption Fee A redemption fee is charged should the
Purchase Option investment be redeemed within 2 years
or Option C from date of share purchase.
“Fund” Sun Life of Canada Prosperity Philippine
Equity Fund, Inc.
“NAV” Net Asset Value
“R.A. 2629” Investment Company Act
“Registered Principal Distributor’s registered
Representative” representative legally qualified to sell the
Fund’s shares
“SEC” Securities and Exchange Commission

“SLAMC” Sun Life Asset Management Company,

Inc.
2
 THE FUND

The Sun Life of Canada Prosperity Philippine Equity Fund, Inc. is a

Philippine corporation organized on January 17, 2000 under SEC
Registration No. A199908711. It is a registered open-end investment
company under the Investment Company Act (R.A. 2629) and the
Securities Regulation Code (R.A. 8799). The Company was organized
and incorporated to engage in the sale of its shares of stock in the
investment of the proceeds of these sales into a diversified portfolio
comprising mostly of Philippine equities, designed to generate long term
capital appreciation. For this purpose, the term equity securities includes
common stock, preferred stock and securities convertible into, or
exchangeable for, such equity securities. The fund may also invest in fixed
income securities issued by the Philippine Government and prime
corporations such as, but not limited to, commercial paper, notes, bonds
and non-convertible preferred shares.

Capitalization
The Fund has an authorized capital stock of Two Hundred Million Pesos
(P200,000,000.00) unclassified common shares with a par value of One
Peso (P1.00) per share. Out of the original authorized capital stock, Fifty
Million Pesos (P50,000,000.00) worth of shares have been subscribed
and paid upon incorporation.

In a private placement, shares of the Fund were offered to and subscribed

for by the following:

No. of Shares Amount

Sun Life of Canada (Philippines), Inc. 49,999,397 P 49,999,397.00
Caesar P. Altarejos, Jr. 100 P 100.00
Henry Joseph M. Herrera 100 P 100.00
Raoul Antonio E. Littaua 100 P 100.00
Rizalina G. Mantaring 100 P 100.00
Esther C. Tan 100 P 100.00
Rolando A. Robles 100 P 100.00
Jose M. Faustino 1 P 1.00
Jose R. Perez 1 P 1.00
Gloria L. Tan Climaco 1 P 1.00

3
 The original proponents of the Fund who have subscribed and paid for
the original capital of Fifty Million (P50,000,000.00) were not allowed to
sell, transfer, convey, encumber or otherwise dispose of their shares within
twelve (12) months from the registration of the Fund

Mark et Pric
Market Pricee of and Dividends on Registr ant’
ant’ss
Registrant’
Common Equity and Related Shareholder matters

The Fund has approximately 1,097 shareholders as of April 30, 2006.

The shares of the Fund are traded over-the-counter. The Fund’s common
stocks are available through the Principal Distributor’s registered
representatives and eligible securities dealers that have entered into an
agreement to sell shares with the Fund’s Principal Distributor, Sun Life
Asset Management Company, Inc. (SLAMC).

2005 2004
High Low High Low
1st Quarter 1.3074 1.1277 1.0156 0.9112
2nd Quarter 1.2170 1.1085 1.0444 0.9365
3rd Quarter 1.2153 1.0730 1.0974 0.9929
4th Quarter 1.2778 1.1721 1.1378 1.0867

NAVPS of the Fund is published daily through Business World and Manila Times.

Each share of stock of the Fund is a voting stock with voting rights equal
to every other outstanding share of stock, and subject to the following:

(1) Distribution of Dividends

Each shareholder has a right to any dividends declared by the

Fund’s Board of Directors.

(2) Denial of Pre-emptive Rights

No stockholder shall, because of his ownership of stock, have

a pre-emptive or other right to purchase, subscribe for, or
take any part of any stock or of any other securities convertible
into or carrying options or warrants to purchase stock of the
registrant
4
 (3) Right of Redemption

The holder of any share of the registrant upon its presentation

to the Fund, or to any of its duly authorized representatives,
is entitled to receive by way of redemption approximately his
proportionate share of the Fund’s current net assets or the
cash equivalent thereof.

The Board of Directors and Officers

The Board is responsible for conducting all businesses of the Fund. It

shall exercise general supervision over the duties performed by the
Investment Adviser, Distributor, Administrator, Transfer Agent and
Custodian of the Fund.

The members of the Board who are not officers and/or employees of Sun
Life of Canada (Philippines), Inc. receive remuneration for their
attendance in regular or special meetings of the Board at the rate of
P20,000.00 to each director for every meeting of the Board of Directors at
which he/she is present. Such remuneration may be adjusted in the future
as may be warranted by existing fund levels and other factors.

Please refer to Annex A for the curriculum vitae of the Directors

and Executive Officers.

Security Ownership of FFund’

und’
und’ss Principal Spons or
or,,
Sponsor
Members of the Board of Directors and
Management (As of December 31, 2005)

Title of Name of Owners Amount and Percent

Class Nature of Ownership of Class

Common Esther C. Tan 719,615 / b 0.3620%

Common Caesar P. Altarejos, Jr. 1/ r 0.0000%
Common Jose M. Faustino 1/r 0.0000%
Common Oscar M. Orbos 1/r 0.0000%
Common Sun Life of Canada 49,999,797 /b 25.1559%
(Philippines), Inc. *

*Esther Tan, Chairperson of Sun Life of Canada (Phils.), Inc. has the power to vote or
dispose of the shares or direct the voting or disposition of the shares held by Company.

5
 Executive Compensation
The directors do not receive any form of compensation from inception
up to present other than Ps20,000.00 per diem for meetings attended. The
members of the Board who are not officers and/or employees of Sun Life
of Canada (Philippines), Inc. receive remuneration for their attendance
in regular or special meetings of the Board of Directors at the rate of
Ps20,000.00 to each director for every meeting of the Board of Directors
at which he/she is present. Their contributed efforts to the Company are
on voluntary basis only. Also, there is no bonus, profit sharing or other
compensation plan, pension or retirement plan, contract or arrangement
in which any director, nominee for election as a director or executive
officer of the Company will participate.

Total per diem received by the Company’s directors for the years 2004
and 2005 were PHP180,000 and PHP200,000, respectively. The Board has
two scheduled regular meetings for 2006, in addition to the organizational
board meeting after the annual shareholders’ meeting. For the three
meetings and with three members of the Board who are not officers and/
or employees of Sun Life of Canada (Philippines), Inc. entitled to receive
per diem, the Company forecasts a total directors’ per diem of PHP180,000
for the year 2006.

Family Relationships

There are no family relationships up to the fourth civil degree either by

consanguinity or affinity among directors and executive officers of the
Fund.

Material Pending Legal Proceedings

None of the directors or executive officers of the Fund was involved during
the past five (5) years in any legal proceeding which is material to an
evaluation of their ability or integrity.

Term of Offic
Officee

All directors of the Fund shall hold office for one (1) year and until their
successors are elected and qualified.

6
 USE OF PR OCEED
PROCEED
OCEEDSS

The Fund will invest mainly in listed equities of Philippine entities. For
this purpose, the term equity security includes common stock, preferred
stock and securities convertible into or exchangeable for such equity
securities. Custodian banks shall hold the proceeds from the sale of the
shares of the Fund’s common stock.

RISK FFA
ACT ORS
CTORS

There are many potential advantages to investing in mutual funds; however,

before deciding to invest, an investor should consider the risks. Below is
a summary of some of the risks and their potential effect on the investor.

Interest Rate Risk: The bonds of the Fund are bought and sold
continuously. Depending on market conditions and prevailing interest
rates, the Fund may sell its assets for a price lower than for what it purchased
it thus suffering losses. These would be reflected as a lower NAVPS possibly
resulting in a decrease in the value of the investment. The Fund may sell its
assets at a price lower than its acquisition cost because the Fund manager
needs cash to pay redemptions or would like to take advantage of better
investment opportunities.

Credit risk: The Fund does lend to private corporations to increase the
yields either by purchasing bonds or accepting a promissory note.
However, when it does lend to private corporations, it accepts the
possibility that the borrower may not be able to repay the loan
amortizations and / or principal. When this happens, the Fund would
lose money because the loan would not be worth much as an asset, and
this which would result in the drop of the NAVPS.

Liquidity risk: The Fund is usually able to service redemptions of investors

within 7 banking days after receiving the notice of redemption by paying
out redemptions from available cash or near cash assets. When
redemptions exceed these liquid holdings, the Fund will have to sell
securities, and during periods of extreme market volatility, the Fund may
not be able to find a buyer for such assets. As such, the Fund may not be
able to generate from sale of assets enough cash to pay for the redemptions
within the normal 7 day period.

7
 Market risk: The daily fluctuations in price of the Fund’s equity securities
fluctuate in value daily reacting to news, demand and supply of shares on
the market. As such, investors’ shares may be worth less than for what they
were purchased.

Regulatory risk: The Fund’s operations are subject to various regulations

affecting accounting of assets and taxation, for example. These regulations
do change, and as a result, investors may experience lower investment
returns or even losses depending on what such a regulatory change entails.
For example, higher taxes would lower returns, the marking to market of
assets would introduce daily volatility in the valuation of the assets, and a
mandated precautionary loan loss provisions could result in the Fund
experiencing a loss in the value of assets.

The Fund Manager exerts best efforts to anticipate events that would
negatively affect the value of the Fund’s assets and take appropriate actions.
However, there is no guarantee that the strategies will work as intended.
As a result an investment may, at any time, be worth less than when you
purchased it.

INVES TMENT OBJECTIVE , POLICY

INVESTMENT POLICY,,
AND LEGAL LIMIT AT I O N S
TA

The Fund may not change its investment objective without prior approval
of a majority of its shareholders.

Investment Objective
The Fund is designed to generate long-term capital appreciation through
investment in high-quality equity securities diversified across sectors and
issue sizes to provide moderate portfolio volatility.

Investment Policy

The Fund will invest mainly in high-quality listed equities of Philippine

entities.

8
Legal Limitations on Investment

1. The Fund will invest its assets in a variety of industries. With the
exception of Philippine government issues, it shall not invest more
than ten percent (10%) of its net assets in any single enterprise.
Neither shall the total investment of the Fund exceed ten percent
(10%) of the debt securities of any one investee company.

2. For purposes of liquidity, at least ten percent (10%) of the Fund’s

assets shall be invested in liquid or semi-liquid assets, such as:

(a) treasury notes or bills, Certificates of Indebtedness issued by

the Bangko Sentral ng Pilipinas which are short-term, and
other government securities or bonds and such other
evidences of indebtedness or obligations, the servicing and
repayment of which are fully guaranteed by the Republic of
the Philippines; and

(b) savings or time deposits with government-owned banks or

commercial banks, provided that in no case shall any such
savings or time deposit accounts be accepted or allowed under
a “bearer” or “numbered” account or other similar
arrangement.

3. Until the SEC provides otherwise, the Fund shall not short sell
securities or invest in any of the following:

(a) margin purchases of securities (investment in partly paid

shares are excluded),

(b) commodity futures contracts,

(c) precious metals, and

(d) unlimited liability investments.

4. For greater diversification, the Fund shall not invest more than
twenty percent (20%) of its net assets in real estate properties
and developments, subject to investment restrictions and/or
limitations under applicable law, if any.

9
 5. The Fund shall not incur any further debt or borrowings
unless at the time of its incurrence or immediately thereafter
there is an asset coverage of at least three hundred percent
(300%) for all its borrowings. In the event that such asset
coverage shall at any time fall below three hundred percent
(300%), the Fund shall within three (3) days thereafter, reduce
the amount of its borrowings to such an extent that the asset
coverage of such borrowings shall be at least three hundred
percent (300%).

6. The Fund shall not make loans to other persons. However, it

shall engage in legally permissible lending operations
considered by its Board of Directors to be financially solid
and sound.

7. The Fund shall not purchase from or sell to any of its officers
or directors or the officers or directors of its Investment
Adviser, Manager or Distributor or firms of which any of them
are members, any security other than the Fund’s own capital
stock.

8. The Fund shall not participate in any underwriting or selling

group in connection with the public distribution of securities,
except its own capital stock.

9. The total operational expenses of the Fund shall not exceed

ten percent (10%) of its total investment fund or total net
worth as shown in the Fund’s most recent audited financial
statements.

10. For investors purchasing shares of the Fund under sales load
Option A or sales load Option B, the minimum investment is
P10,000.00; investors purchasing shares of the Fund under
sales load Option C, the minimum investment is
P1,000,000.00. Under Options A, B and C subsequent
investments are P5,000.00. Under the Worksite Option, The
minimum initial investment shall be P5,000.00, while the
subsequent investment amount shall be P1,000.00

11. The Fund shall not issue senior securities.

10
 SALES, REDEMPTION OF SHARES,
AND C OMPUT
COMPUT
OMPUTAATION OF NET AS SET V
ASSET ALUE
VALUE

Purchase of Shares

The investor may choose to buy shares of the Fund on a “front-end”

(Option A) or front-end with redemption fee if applicable (Option C), or
under the Worksite Option.

Under the front-end purchase option, a sales commission will be paid to

the investor’s mutual fund dealer when shares of the Fund are bought.
The commission shall not exceed 5% of the investor’s total purchase cost
(5.26% of the net invested amount). For example, the maximum
commission on a P10,000.00 purchase would be P500.00, and the net
invested amount would be P9,500.00 less VAT. Under this purchase option,
the investor may redeem his shares free of charge at any time.

The back-end purchase option, on the other hand, allows all of an

investor’s money to be invested, with no initial sales commission
deducted. SLAMC pays a commission to the dealer on the investor’s
purchase. In return, the investor agrees to “repay” SLAMC a deferred sales
charge (DSC) plus VAT, but only if the investor sells the investment, or a
portion thereof, within 5 years. As shown in the table in the next section,
the DSC rate declines the longer an investor holds the investment, and
disappears after 5 years.

In order to reduce the DSC payable, the oldest shares of the investor in the
Fund will be redeemed first, unless the investor chooses to have
subsequently purchased shares redeemed first.

Under Option C, the investor is charged a maximum front-end load of

1% depending on the amount of investment, a maximum1% redemption
fee should the investment be redeemed within one (1) year from date of
share purchase; or a maximum 0.5% redemption fee should the investment
be redeemed after 1 year but before 2 years from the date of share purchase.

11
 Under the Worksite Option, qualified investments shall not be charged a
front-end fee but a 7.5% redemption fee should the investment be
redeemed within one (1) year from the date of purchase, or a 5.0%
redemption fee should the investment be redeemed after 1 year but before
2 years from the date of purchase, or a 2.5% redemption fee should the
investment be redeemed after 2 years but before 3 years from the date of
purchase.

Shares of the Fund are offered for sale on a continuous basis at the net
asset value through registered representatives and dealers.

The dealers and registered representatives are required to forward to

SLAMC the prescribed and completed documents to purchase shares of
the Fund on the same business day they are received. For purposes of
facilitating transactions, the completed documents may be
submittedelectronically, through fax or on-line, or any mode of transmittal
which SLAMC may establish and deem acceptable from time to time.

Completed subscriptions received by SL AMC or its authorized

distributors by 12 o’clock noon on a business day will be processed at
the net asset value per share determined at the close of business on that
day. If received after 12 o’clock noon, subscriptions will be processed at
the net asset value per share determined at the close of business on the
next business day.

SLAMC reserves the right to reject any specific subscription or to restrict

purchases by a particular investor, for example, when such purchase is
contrary to the best interests of the other shareholders or would otherwise
disrupt the management of the Fund. This decision will be made within
two (2) business days after receipt of the subscription and, in the event of
a rejection, the subscription amount will be returned immediately to the
investor without interest.

All payments to be forwarded to and received by SLAMC should come

with and must be supported by the appropriate documents. Payments
must also be forwarded and received by SLAMC through mediums
recognized and accredited by SLAMC. The investor’s account will be
credited for the subscription only when the payment is in the form of
cash, cheque or electronic transfer. The subscription will not be processed
into the investor’s account until the funds have become available to the
Fund for investment deployment. Investors should inquire with their

12
banks the clearing time required for each form of payment and when
their investments will be available to the Fund.

In the interest of the investors, SLAMC shall treat and process local cheque
as cleared funds provided that the investor meets and abides with the
criteria set by SLAMC:

1. The value of the local cheque must not be more than the investor’s
total portfolio in the Fund at the time of subscription;

2. The client does not make any redemption from the Fund prior to
the clearing of the local cheque.

In case the cheque investment does not clear the banking system, SLAMC
shall redeem all shares purchased under the said cheque and redeem
from the client’s account enough shares equivalent to the amount of
applicable bank and penalty charges imposed on SLAMC.
SLAMC reserves the right to revise or discontinue this arrangement at any time..

In the interest of economy and convenience, certificates for shares

purchased will only be issued if so requested in writing by the shareholder.
Because the legal requirements for replacing lost certificates entail costly
and lengthy procedures, a fee of P1,000.00 per certificate will be charged to
replace lost certificates. Shares are recorded on a stock register by SLAMC,
and shareholders who do not elect to receive certificates have the same
rights of ownership as if certificates had been issued to them.

13
 Sales Charges

FRONT-END BACK-END
Sales Load Rate
(Excluding VAT)

OPTION A Maximum of 2%

DSC based on
market value at
the time of
redemption
OPTION B Redemption on (Excluding VAT)
Below P5M 1st year 5.00%
2nd year 4.00%
3rd year 3.00%
4th year 2.00%
5th year 1.00%
beyond 5 years none

P5M<P20M 1st year 4.00%

2nd year 3.00%
3rd year 2.00%
4th year 1.00%
beyond 4th year none

P20M and up Not applicable, use option C

Sales Load Rate Redemption within Redemption within

OPTION C (Excluding VAT) the first year the second year
(Excluding VAT) (Excluding VAT)

<P20M Maximum of 1% 1.00% 0.50%

P20M and up NO LOAD 0.50% 0.25%

14
 Prevention of Money-Laundering

As part of the Fund’s responsibility for the prevention of money

laundering under the Anti-Money-Laundering Act (Republic Act No. 9194)
and other relevant rules and regulations, the Fund or an entity acting on
its behalf may require evidence verifying the identity of a prospective
purchaser of shares and the source of the relevant funds. Whether or not
such evidence will be required and, if so, the nature and extent of such
evidence will depend on the particular circumstances. The Fund and any
entity acting on its behalf, reserve the right to request such information as
considered necessary to verify the identity of a proposed purchaser of
shares in each case and the Fund or any entity has absolute discretion to
refuse to accept a subscription for shares in the event of delay or failure in
the provision of any such information required

Redemption of Shares

The minimum redemption amount is P5,000 under all options, unless

the redemption is part of a special arrangement or other services offered
by SLAMC. In addition, SLAMC may redeem without notice to the
investor his shares should the value of the investor’s shares fall below the
minimum amount of P5,000.00. The Fund reserves the right to change
the minimum maintaining balance from time to time as it deems
necessary

Shares are redeemable at any time at their net asset value less any applicable
sales charges and taxes, if any. A shareholder may request redemption of
his shares by delivering an order ticket for redemption with a registered
representative or dealer. The order ticket for redemption must be
accompanied by the appropriate certificate(s), if applicable, representing
the shares to be redeemed.

For redemption of shares, redemption price is the net asset value per
share at the close of business on the day the redemption order ticket is
received by SLAMC if such is received on or before 12 o’clock noon. After
12 o’clock noon, the order ticket is deemed to have been received the
following business day, and the redemption price will be the net asset
value per share determined at the close of business on the next business
day.

15
 The Fund may suspend redemptions or postpone the date of payment
for a redemption (i) when the Philippine banking system is closed, (ii)
for any period when normal trading is restricted or suspended in the
markets where the Fund may be investing, (iii) for any period during
which an emergency exists such as but not limited to debt moratorium
and/or bank holiday, as a result of which (A) disposal by the company of
securities owned by it is not reasonably practicable or (B) it is not reason-
ably practicable for such company fairly to determine the value of its net
assets; (iv) when any breakdown occurs in the means of communica-
tion normally employed in determining the value of any of the invest-
ments of the Fund or when for any other reason the value of any of the
investments or other assets of the Fund cannot reasonably or fairly be
ascertained or (v) when the shareholder fails to surrender to SLAMC the
original share certificate on the redeemed or transferred shares, or (vi)
with the consent of the SEC.

The SEC may, whenever necessary or appropriate in the public interest or

for the protection of investors, suspend the redemption of securities of
open-end companies

No deferred sales charge or redemption fee is imposed on redemptions

of Option B or Option C in case of death of the investors. In order to
qualify for this waiver, redemption must be made within 1 year of a
shareholder’s death. SLAMC must be notified in writing of such death at
the time of the redemption request either by the legal heir or administrator
of the estate to be appointed by the court. SLAMC must be provided with
satisfactory evidence of such.

Computa tion of Net As

omputation Assset V alue
Value

The net asset value of each share of the Fund as of the close of business on
any day, shall be the quotient obtained by dividing the value of the assets
of the Fund less the liabilities (such liabilities being exclusive of capital
stock and surplus) by the total number of shares outstanding at such
close, all determined and computed as follows:

(a) The assets of the Fund shall be deemed to include (i) all cash
on hand, on deposit, or on call, (ii) all bills and notes and
accounts receivables, (iii) all shares of stock and subscription
rights and other securities owned or contracted for the Fund,
other than its own capital stock, (iv) all stock and cash

16
 and not yet received by it but declared to stockholders of
record on a date on or before the date as of which the net
asset is being determined, (v) all interest accrued on any
interest-bearing securities owned by the Fund, (vi) all real
properties or interest therein, and (vii) all other property of
every kind and nature including prepaid expenses.

(b) The liabilities of the Fund shall be deemed to include (i) all
bills and notes and accounts payable, (ii) all administrative
expenses payable and/or accrued (including management
fees), (iii) all contractual obligations for the payment of
money or property, including the amount of any unpaid
dividend declared upon the Fund’s stock and payable to
shareholders of record on or before the day on which the
value of the Fund’s shares are being determined, (iv) all
reserves authorized or approved by the Board of Directors
for taxes or contingencies, and (v) all other liabilities of the
Fund of whatsoever kind and nature except liabilities
represented by outstanding capital stock and surplus of the
Fund.

Transf ers fr
ansfers om the FFund
from und
to Other SLAMC-Managed Funds

At any time, an investor who purchased shares of the Fund may request
through a registered representative that such shares be redeemed and the
proceeds reinvested in shares of one or more other SLAMC-managed
funds. The investor’s original purchase option may not, however, be
changed upon such transfer. If the investor originally purchased on a
front-end basis, then the investor cannot shift to the back-end option
when transferring to another or other funds, and vice-versa.

A transfer of back-end shares does not trigger a deferred sales charge (DSC).
The “new” shares purchased on a transfer are deemed to have the same
date of purchase as the original shares that were redeemed to make the
transfer.

An investor can transfer among SLAMC-managed fund which are

denominated in Philippine Pesos, subject to existing conditions.

The minimum transfer amount is P5,000.00. The order ticket to transfer

must be made through the registered representative or dealer who must

17
 forward the order ticket to transfer to SLAMC on the same day. On
SLAMC’s receipt of an order ticket to transfer, shares will be redeemed by
the Fund, subject to the foregoing provisions on redemption, and the
proceeds of redemption will be applied to the purchase of shares of
another fund, at the applicable net asset value per share, subject to the
provisions governing the purchase of the shares of the other fund.

Co st and Mark et-

Market- Timing
et-T
The Sun Life Prosperity Funds allow investors to switch among the family
of funds to attract more long-term investors to the Funds while allowing
them to recalibrate their funds as their financial objectives approach in
time. For example, an individual reaching retirement age should gradually
reduce the risk of his holdings. This feature attracts new long-term investors
whose participation benefits other shareholders as fixed fund expenses
are reduced on an individual basis. As such, all investors generally benefit
from this feature.

While desirable for long-term investors, some investors may take advantage
of the features and try to profit from a strategy called market timing—
switching money into mutual funds when they expect prices to rise and
redeeming shares out when they expect prices to fall. As money is shifted
in and out, a fund incurs expenses for buying and selling securities. These
costs are borne by all fund shareholders, including the long-term investors
who generally do not generate the costs.

For this reason, all Prosperity Funds have adopted special policies to
discourage short-term trading. Specifically, each Prosperity Fund limits
the number of times that an investor can move into and out of the fund in
accordance with the set administrative guidelines and procedures of the
fund manager in effect at the time.

18
 Tax
axaa tion

Investors are advised to consult their own professional advisers as to the

tax implications of subscribing for, purchasing, holding, and redeeming
shares of the Fund. Tax rulings and other investment factors are subject to
rapid change.

Shar eholder’
eholder’ss Privileg
Shareholder’ es
Privileges
Certain privileges granting reduced sales charge and waivers may be
extended by SLAMC to qualified investors who will apply for them.

The investor must notify SLAMC at the time of transaction about his
qualification and intention to avail and apply for specific privileges. Failure to
notify SLAMC ahead of time about his eligibility and intention to avail will
allow SLAMC to process the transaction subject to normal sales load charges.

SLAMC reserves the right to approve or deny a shareholder’s application

for certain privileges according to the criteria set by the Distributor. These
privileges may be revised or discontinued by SLAMC at any time.

1. Waiver of Front End Sales Load (Option A) for qualified investors

Front-end zero load may be granted by SLAMC to former

participants in a benefit or retirement plan, who will convert his
mutual fund retirement benefit and contribution into an
individual, joint or ITF account with Sun Life Prosperity Funds.
The same benefit may also be granted to participants of a retirement
plan with at least 100 members and PHP5 million or dollar
equivalent in total asset value or any other requirements or
qualifications that may be established by SLAMC.

2. Free 10% Back End Redemption

An Investor may be entitled to redeem up to 10% of his total shares

under Back End without the application of a redemption fee or
deferred sales charge (DSC) subject to certain conditions as
established by SLAMC. An investor’s free redemption entitlement
shall be based on the total number of shares owned under Option
B as of December 31 of the prior calendar year. This privilege may
be extended only to partial redemptions and is not applicable on
full redemptions of back end investments. Redemption in excess
of the allowed 10% will be subjected to normal DSC.

19
 This one-time privilege per year is not automatic and should be exercised
by the investor. Free redemption entitlement is not cumulative.
Unexercised entitlement cannot be carried forward to future redemptions
within the same year or succeeding calendar years.

3. Reduced Sales Charge Plan

3.1. Combination Privilege

Investors may qualify for a reduced sales charge by combining

purchases on one or more Funds, if the resulting AUM totals to at
least PHP5,000,000 or its dollar equivalent. The PHP5,000,000
thresholds can be obtained by adding:

· The amount of the investor’s total current investment

· The aggregate net asset value (at the close of the previous business
day following the date of purchase) of all investments held by
the investor; and
· The aggregate net asset value (at the close of the previous business
day following the date of purchase) of all investments held by
another shareholder eligible to be combined with the investor’s
purchase into a Single Account (defined as Immediate Family)

· Member of the immediate family is defined as:

o Spouse
o Child
o Grandchild
o Parent
o Sibling
o Grand Parents

Initially, the combination privilege is opened only to Individual accounts

and not Institutional accounts. Also, the following accounts do not count
for purposes of determining whether an investor qualifies for a
Combination Privilege:

· Shares or investments held by an investor through a Retirement

Plan / Defined Benefit Plan or other employer-employee sponsored
benefit plan
· Shares held through a Trust Account under Institutional Dealers
(accounts held in the name of the Financial Intermediary on the
investor’s behalf)
· Shares held by Corporations or business establishments of the
investors.

20
This privilege is not automatic and should be exercised by the investor.
Investors should provide all necessary information AT THE TIME OF
PURCHASE regarding accounts eligible to be combined under this plan.
Otherwise, SLAMC will not retroact the privilege given under this Plan.
SLAMC reserves the right to revise or discontinue this privilege at any time.

3.2. Letter of Intent

Investors are given the privilege to purchase “A” and “C” shares of a Fund
over a 12-month period and receive the same sales charge as if all shares
had been purchased at once. An investor can use a Letter of Intention
(LOI) to qualify for reduced sales charges during the next 12 months.

Investors may qualify for this privilege if the resulting total is at least
PHP5,000,000 or its dollar equivalent. The calculation of this amount would
include as well the investments made under the Combination Privilege.

When an investor signs the LOI, SLAMC agrees to charge the investor a
reduced sales charge. The LOI does not obligate the investor to purchase
additional shares. However, upon failure to comply with the LOI at the
end of the 12-month period, SLAMC will redeem enough shares
equivalent to the additional sales charge to reflect the recalculated amount
reflecting the actual purchase level.

SLAMC will notify the client under this program at least 1 month prior
to the expiration of the LOI. SLAMC reserves the right to revise or
discontinue this privilege at any time.

Statements of Account

Statements of account shall be sent to shareholders on a quarterly basis.

Effects of Existing or Probable Government

Regulations on the Business

The Revised Investment Company Act that will replace the current R.A.
2629 “Investment Company Act of 1960” will be of possible benefit to
the mutual fund industry. The Investment Company Act is the main
legislation that regulates the mutual fund industry in term of investor
protection. SLAMC is participating in the crafting of the legislation and
expects the regulatory environment to improve with the passage of the
bill to the benefit of investors.

21
 Competition
The Fund principally competes directly with the common trust funds
offered by commercial banks and other mutual funds. The mutual fund
industry has twenty-four (24) players with aggregate assets of close to
PHP54 billion. Each mutual fund principally competes in terms of return
and the associated risks of the return. The Fund’s market strength is its
wide distribution network that provides strategic distribution of the Fund
shares, and the financial stability and reputation of its Fund Manager.

MANA GEMENT OF THE FUND

MANAGEMENT

The Fund Manage

Managerr

SLAMC, with principal office at 15/F Tower II, The Enterprise Center,
6766 Ayala Avenue, Makati City, is a fund management company
incorporated on 18 January 2000. It serves as the manager, adviser,
administrator, distributor, and transfer agent of the Fund and will provide
management, distribution and all required operations.

The services provided by SLAMC are subject to the supervision of its

officers and directors. They include marketing the Fund and administering
investments, investor communications, fund accounting, shareholder
record-keeping and other day-to-day administration of matters related to
the corporate existence of the Fund, maintenance of its records and
preparation of shareholder reports, Board of Directors’ Meetings, and
Annual Shareholders’ Meetings.

As Investment Adviser, SLAMC is also primarily responsible for the

execution of the Fund’s portfolio transactions and the allocation of
brokerage commissions. The Adviser makes investment decisions,
prepares and makes available research and statistical data, and invests
with respect to the purchase and sale of securities on behalf of the Fund,
including the selection of brokers and dealers to carry out the transactions,
all in accordance with the Fund’s investment objective and policies.
SLAMC maintains records and furnishes or causes to be furnished all
required reports.

SLAMC may, at its expense, engage the services of consultants and other
persons or firms to furnish to its statistical and other information, advice
regarding economic factors and trends, information with respect to

22
technical and scientific developments, and such other information, advice
and assistance as SLAMC may desire, including investment management
and other related duties.

SLAMC, as Distributor, will continuously offer for sale shares of the Fund
through its registered representatives legally qualified to sell the Fund’s
shares and dealers with whom it has entered into distribution agreements.

Any order for shares may be rejected by the Distributor of the Fund. The
SEC, the Fund, or the Distributor may suspend the continuous offering
of shares to the general public at any time in response to conditions in the
securities markets or otherwise and may thereafter resume such offering
from time to time. Neither the Distributor nor the eligible agents are
permitted to withhold placing orders to benefit themselves by a price
change

SLAMC will pay gross sales commissions, as per the chart below, to all
registered dealers, including SLAMC as the dealer of its registered
representatives. Under the front-end purchase option, the dealer receives
a commission at the time of purchase. If the investor chooses the back-
end purchase option, SLAMC pays the commission on the investor’s
purchase. In return, the investor agrees to “repay” SLAMC with a deferred
sales charge, but only if the investor sells his investment within 7 years.

Front-end shares: Sales Back-end shares: Sales Sales Load Option C

Commission paid by Commission paid by Sales commission paid by the
the investor as % of SLAMC as % of amount investor as % of total
total purchase cost invested purchase cost and redemption
fee as % of market value
redeemed.
0% to 5% 4% Front end: not to exceed 1%
of investment amount.
Redemption fee: Not to
exceed 1% over two years.

The Fund agrees to pay to SLAMC, as compensation for the services and
facilities provided by SLAMC an annual fee equivalent to two percent
(2%) of the assets managed.

Directors and Officers of the Manager

Please refer to Annex A for the curriculum vitae of the Directors and
Executive Officers.
23
 TRANSFER A GENT
AGENT
SLAMC also serves as the Fund’s Transfer Agent. Transfer Agent services
include, but are not limited to: account/certificate registration,
processing of dividend and capital gains cheques, periodic preparation
and mailing of shareholder statements, and management reports, as
required.

In consideration of the services to be rendered by the Transfer Agent, the

Fund shall pay the Transfer Agent such amount as may be agreed upon
in the Transfer Agent Agreement between the Fund and SLAMC. Fees
will begin to accrue on the first day of the Fund’s operation of the initial
sales period.

CUS
CUSTT ODIAN B ANK S
BANK
Citibank, N.A. and Deutsche Bank, A.G. serve as custodians for the assets
of the Fund. All proceeds from the sale of shares/securities, including
the original subscription/payments at the time of incorporation
constituting the paid-in capital of the investment company shall be held
by the custodians.

In consideration of the services to be rendered by the custodians, the

Fund shall pay the custodians all fees, charges and obligations incurred
from time to time for any services pursuant to the Direct Custodial
Services Agreements between the registrant and Citibank, N.A. and
between the registrant and Deutsche Bank, A.G. with the terms of the
fees schedule specified from time to time by the custodians upon prior
notice to the registrant.

24
 ANNEX A: BOARD OF DIRECTORS AND OFFICERS
OF THE FUND AND INVESTMENT MANAGER

Esther C. Tan
Chairperson of the Fund (Since inception to present)
Chairperson of SLAMC (Since inception to present)

Mrs. Tan, 59 years old, Filipino, is the Chairman of the Fund and other
Sun Life Prosperity Funds. She is also the Chairman of the Board of Sun
Life Asset Management Company, Inc. and Sun Life of Canada
(Philippines), Inc. She was appointed in May 1995 as Vice-President for
Philippine Operations and in 1997 as Vice-President and General Manager
(Philippines) of Sun Life Assurance Company of Canada.

Caesar P. Altarejos, Jr.

President of the Fund (Since 2004 to present)
Treasurer of SLAMC (Since inception to present)

Mr. Altarejos, 54 years old, Filipino, is the President of the Fund and
other Sun Life Prosperity Funds. He is also the Director and Treasurer of
Sun Life Asset Management Company, Inc. He is the Senior Vice-President
for Finance, Sun Life of Canada (Philippines), Inc. A Certified Public
Accountant, Mr. Altarejos obtained his B.S.B.A. in Accounting at the
University of the East in 1972, graduating Magna Cum Laude, landed in
the Top 30 in the board exams, and went on to complete his Master in
Business Administration at the De La Salle University.

Jose M. Faustino
Independent Director of the Fund (Since inception to present)

Professor Faustino, 66 years old, is the Goodyear Professor of Business

Management, and the Program Director of AIM’s Marketing Strategy
Course. He teaches and provides management consultancy in the fields
of marketing management, strategic planning and strategy formulation,
and organizational behavior in development. In 1991, he received the
Agora Award for excellence in Marketing Education, bestowed by the
Philippine Marketing Association. His twenty years of work experience as
professional manager and entrepreneur were in the areas of marketing,
operation, and general management. As visiting professor, he has taught
in 2002-2003 for USW in Germany and the Leiden School of Management
in Holland.

25
 Atty. Oscar M. Orbos
Independent Director of the Fund (Since 2002 to present)

Atty. Orbos obtained his Bachelor of Laws and his degree in Economics
from the University of the Philippines. He has also earned some units in
Masters of Laws also from the same university. He has been elected as
Congressman and as Governor of the Province of Pangasinan, and has
also served the Philippine Government as the Secretary of the Department
of Transportation and Communication, and Executive Secretary. Atty.
Orbos, likewise, has been a member of various law firms in his career.

Atty. Nilo B. Pena

Director of the Fund (Since 12 August 2005 to present)

Atty. Pena, 68 years old, Filipino, is also a director of Sun Life of Canada
Prosperity Balanced Fund, Inc. He is a Senior Partner at one of the top
law firms in the country, the Quasha, Ancheta, Pena & Nolasco Law Firm.
He is a member of the Board of Trustees of St. Luke’s Medical Center Inc.;
Chairman, Board of Trustees of Standard Chartered Bank Employees’
Retirement Fund; Trustee – Corporate Secretary of the Philippine-
Australian Business Council and director/officer of several other
corporations.

Ma. Isabel R. Garcia

Treasurer of the Fund (Since 2004 to present)

Ma. Isabel R. Garcia, 37 years old, Filipino, Certified Public Accountant,

is the Treasurer of the Fund and other Sun Life Prosperity Funds. She is
also the Finance & Operations Director for Sun Life Asset Management
Company, Inc. She held the following positions at various times with
Sun Life Financial since 1998: Mgr., Finance-Office of the Comptroller,
Senior Manager, Finance-Asia Pacific, and lastly, as Comptroller for Sun
Life Asset Management Company. She has had many years of experience
in managerial capacity with both multinational and local companies in
all phases of financial management.

26
 Atty. Jemilyn S. Camania
Corporate Secretary of the Fund (since 12 August 2005 to present)
Corporate Secretary of SLAMC (since 08 August 2005 to present)

Atty. Camania, 29 years old, Filipino, is the Corporate Secretary of the

Fund, all the other Sun Life Prosperity Funds, and Sun Life Asset Man-
agement Co., Inc. She is presently Assistant Counsel for Sun Life of Canada
(Philippines), Inc. and Assistant Corporate Secretary of Sun Life Finan-
cial Plans, Inc. She had obtained her Bachelor of Arts in Psychology
from the University of the Philippines, Diliman (1996) and her Bachelor
of Laws from the College of Law, University of the Philippines, Diliman
(2001). She had worked as an Associate at the Cayetano Sebastian Ata
Dado & Cruz Law Offices before joining Sun Life.

Lorenzo V. Tan
President of SLAMC (since 08 August 2005 to present)

Mr. Tan, 44 years old, Filipino, is the President of Sun Life Asset Manage-
ment Company and Sun Life of Canada (Philippines) Inc. Prior to join-
ing Sun Life Financial, he was the President and Chief Executive Officer
of Philippine National Bank, and had been President and Chief Operat-
ing Officer of United Coconut Planters Bank. He started his banking
career with Citibank N.A. in New York and eventually became a Director
of Citibank N.A., Singapore. Mr. Tan holds a degree in Masters in Man-
agement from J.L. Kellogg Graduate School of Management, Northwest-
ern University and Bachelor of Science in Commerce, Major in Account-
ing from De La Salle University.

Patricia McEachern
Director of SLAMC (Since 2003 to present)

Patricia McEachern, 54 years old, American, Chartered Financial Analyst

(CFA), is a Director of Sun Life Asset Management Company, Inc. and
Vice-President – Investments for Asia of Sun Life Financial. Prior to join-
ing Sun Life Financial in 2003, she had over 20 years of distinguished
service with Aetna during which she directed an investment portfolio of
$17 billion, managed country operations, and organized off-shore mu-
tual funds and oversaw the various international asset managers for these
funds.

27
 Henry Joseph M. Herrera
Director of SLAMC (Since inception to present)

Mr. Herrera, 44 years old, Filipino, is a Director of Sun Life Asset Manage-
ment Company, Inc. and the Executive Vice-President and Actuary of
Sun Life of Canada (Philippines) Inc. He studied at the University of the
Philippines where he earned his Bacheolor’s Degree in Statistics graduat-
ing Cum Laude (1980), Master in Mathematics, Actuarial Science and
Master of Business Administration, Major in Finance, graduating in the
top 10 of his class in 1986.

28
 C O R P O R AT E N A M E
Sun Life Prosperity Philippine Equity Fund, Inc.
15th Floor, Tower II, The Enterprise Center
6766 Ayala Avenue, Makati City
E-Mail: phil_prosperity@sunlife.com
Website: www.sunlifefunds.com
« 849-9888
fax 849-9744

INVESTMENT MANAGER, DISTRIBUTOR AND

TRANSFER AGENT
Sun Life Asset Management Company, Inc.
15th Floor, Tower II, The Enterprise Center
6766 Ayala Avenue, Makati City
E-Mail: phil_prosperity@sunlife.com
Website: www.sunlifefunds.com
« 849-9988
Fax 849-9744
CUSTODIAN BANKS
Citibank, N.A.
8741 Paseo de Roxas, Makati City
« 894-7559
Fax 894-7505

Deutsche Bank, A.G

23/F Tower One, Ayala Triangle
Ayala Avenue, Makati City

LEGAL COUNSEL
Abello Concepcion Regala & Cruz Law Office
(ACCRA Law)
122 Gamboa St., Legaspi Village, Makati City
« 817-0966
Fax 812-4897/816-0119

INDEPENDENT AUDITOR
C.L. Manabat & Co.
Deloitte Touche Tohmatsu
Penthouse, Salamin Bldg.
197 Salcedo St., Legaspi Village
« 812-0535
Fax 810-5047
29
30