<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-K


(Mark One)

[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
    of 1934 [fee required] For the fiscal year ended December 31, 1997
                                                    -----------------

[_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934 [no fee required] For the transition period from
                                                                _______________
    to
       _______________

    Commission file number 2-79192.


                            HAMPSHIRE FUNDING, INC.
            -----------------------------------------------------
            (Exact name of registrant as specified in its charter)


              NEW HAMPSHIRE                               02-0277842
       ---------------------------                     ------------------
       (State or other jurisdiction of                 (I.R.S. Employer
        incorporation or organization)                 Identification No.)


       ONE GRANITE PLACE, CONCORD, NEW HAMPSHIRE                   03301
--------------------------------------------------------------------------------
        (Address of principal executive offices)                 (Zip Code)


Registrant's telephone number, including area code (603) 226-5000
                                                   --------------

Securities registered pursuant to Section 12(b) of the Act:  NONE

Securities registered pursuant to Section 12(g) of the Act:

Programs for coordinating the acquisition of mutual fund shares and insurance
-----------------------------------------------------------------------------

Indicate by check mark whether the registrant has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and has been subject to such filing requirements
for the past 90 days.
                                                    YES  [X]      NO  [_]

State the aggregate market value of the voting stock held by non-affiliates of
the registrant.  The aggregate market value shall be computed by reference to
the price at which the stock was sold, or the average bid and asked prices of
such stock, as of a specified date within 60 days prior to the date of filing.

                                                    NONE

Indicate the number of shares outstanding of each of the Registrant's classes of
Common Stock as of March 27, 1997:  50,000 shares, all of which are owned by
Jefferson-Pilot Corporation.

                      DOCUMENTS INCORPORATED BY REFERENCE

                                                    NONE

The total number of pages, including exhibits, is 84, and the exhibit index
appears on pages 24 through 25.
<PAGE>

                                 PART I

Item 1 - Description of Business
--------------------------------

(a)  General Development of Business
     -------------------------------

     Hampshire Funding, Inc. ("the Company") was incorporated in the State of
     New Hampshire on December 8, 1969, as a wholly-owned subsidiary of Chubb
     Life Insurance Company of America ("Chubb Life"). The Company became a
     wholly-owned subsidiary of The Chubb Corporation on December 21, 1971, when
     Chubb Life sold all the outstanding stock of the Company. On April 1, 1981,
     the Company's common stock was transferred by contribution to Chubb Life
     Insurance Company of New Hampshire ("CLNH"). On July 1, 1991, CLNH and
     Chubb Life merged with and into The Volunteer State Life Insurance Company,
     which on the same date re-domesticated from Tennessee to New Hampshire and
     changed its name to Chubb Life Insurance Company of America. As a result of
     said merger, all of the common stock of the company was owned by Chubb
     Life.

     Chubb Life and its subsidiaries were acquired by Jefferson-Pilot
     Corporation from The Chubb Corporation, effective April 30, 1997. As a
     wholly-owned subsidiary of Chubb Life, the Company was included in the
     acquisition. The fair market value of the Company was determined to be its
     book value.

     On December 30, 1997, the Company sold its investment in its subsidiary,
     Hampshire Syndications, Inc., (wholly owned since October 9, 1986), to
     Jefferson-Pilot Investments, Inc. Hampshire Syndication's net worth at
     December 30, 1997 was $239,811. The transaction has been accounted for as a
     reorganization of entities under common control.

     Effective December 31, 1997, the Company's outstanding stock was sold to
     Jefferson-Pilot Corporation. As a result, the Company became a wholly-owned
     subsidiary of Jefferson-Pilot Corporation.

     The Company, in affiliation with Chubb Life, Chubb Colonial Life Insurance
     Company ("Colonial") (collectively "Insurance Companies") and Jefferson
     Pilot Securities Corporation (the "Broker-Dealer"), a member of the
     National Association of Securities Dealers, Inc. ("NASD"), has primarily
     been engaged in the offering and administration of programs which
     coordinate the acquisition of mutual fund shares and life or health
     insurance (the "Programs").  The Programs were intended, in part, to
     augment the sales activities of the Broker-Dealer and the Insurance
     Companies.

     EFFECTIVE MARCH 31, 1998, THE COMPANY WILL NO LONGER OFFER THE PROGRAMS FOR
     SALE.  THE COMPANY WILL, HOWEVER, CONTINUE TO SERVICE ALL EXISTING PROGRAMS
     UNTIL THEIR STATED MATURITY OR TERMINATION DATES.

(b)  Financial Information About Industry Segments
     ---------------------------------------------

     Revenues, operating profit and loss, and identifiable assets for the three
     years ended December 31, 1997, are included in Item 6 - Selected Financial
     Data and Item 8 - Financial Statements and Supplementary Data.

(c)  Narrative Description of Business
     ---------------------------------

     The Company offers and administers Programs which involve initial and
     periodic cash purchases of mutual fund shares. Under the Programs,
     purchasers of a Program ("Participants") make initial and periodic
     purchases of mutual fund shares for cash with automatic reinvestment of all
     distributions. Participants obtain insurance coverage through a series of
     insurance premium loans offered by the Company. Loans to Participants are
     secured by Participants' initial and periodic purchases of mutual fund
     shares. The mutual fund shares are registered in the Company's name as
     Custodian for Participants.

     The objective of a Program is the utilization of the appreciation, if any,
     in the value of the mutual fund shares and the reinvestment of dividends or
     capital gains distributions thereon to aid in offsetting the principal and
     accumulated interest on the loans.

     The Programs are offered for sale by those agents of the Insurance
     Companies who qualify as registered representatives, through the Broker-
     Dealer, under the regulations of the NASD. Revenues derived from
     Participant Programs include loan interest and fees. For the years ended
     December 31, 1997, 1996 and 1995 such revenues were as follows:

                                    2 of 84
<PAGE>

<TABLE>
<CAPTION>

                        1997        1996        1995
                     ----------  ----------  ----------
<S>                  <C>         <C>         <C>

Interest on Loans    $4,776,636  $4,412,729  $3,899,087
Program Fees            426,758     484,906     456,556

</TABLE>


  Regulation
  ----------

     The Company is authorized to offer Programs using insurance policies
     offered by the Insurance Companies. Insurance available for purchase in
     connection with a Program may vary from state to state, depending on
     whether Chubb Life or Colonial is licensed to sell insurance in a
     particular jurisdiction, and whether a jurisdiction in which one of the
     Insurance Companies is licensed has approved the sale of a particular
     insurance product.

     Historically, each Insurance Company offered several types of policies
     within the Program. The Insurance Companies are subject to the regulations
     of the insurance department of each state in which they are licensed to do
     business. In addition, Chubb Life, through Chubb Separate Account A,
     offered for sale a variable universal life insurance policy, which is
     subject to regulation by the Securities and Exchange Commission. Policies,
     including the variable universal life insurance product, issued under the
     Program may not be identical in each state or jurisdiction. Regulations
     that determine the types of policies and their provisions may differ in
     each state. As a result, the Insurance Companies have internal procedures
     designed to ensure that only approved policies are issued in each state.

     The Company filed its final Registration Statement under the Securities Act
     of 1933, as amended, with the Securities and Exchange Commission on April
     16, 1997. The Company is also subject to supervision by the Commissioners
     of Securities of the jurisdictions in which the Company is authorized to
     offer the Programs for sale.

     The insurance agents who sell the Programs are subject to the oversight and
     regulation of the insurance department of each jurisdiction where they are
     licensed.  In addition, only those agents who are registered
     representatives of the Broker-Dealer may sell Programs; thus the insurance
     agents are also subject to supervision and regulation of the NASD and
     securities department of each jurisdiction where they are licensed.

     Dependence Upon a Single or a Few Customers
     -------------------------------------------

     The Company is not dependent upon a single or a few customers. The loss of
     one or a few customers would not have a material adverse effect on the
     business of the Company.

     Competition
     -----------

     The Company faces limited competition in the sale of Programs, as the
     number of companies offering plans similar to the Programs is quite small.
     Historically, a large number of companies offered programs combining the
     purchase of insurance and mutual fund shares; however, in recent years the
     number of companies has reduced dramatically. As noted, the Company will no
     longer offer the Programs for sale effective March 31, 1998.

     The business of the Insurance Companies is highly competitive. The
     Insurance Companies compete on a nationwide basis with a large number of
     insurance companies, and also compete with other financial service
     companies in the area of equities, retirement planning and financial
     planning. Finally, there has been a recent trend of greater involvement by
     banks and thrifts in the insurance industry. Competition is based upon cost
     of insurance, client service, performance of the cash value component of
     whole life insurance, and agent loyalty to a company.

     Employees
     ---------

     The Company has no paid employees.  Chubb America Service Corporation (the
     "Service Company"), a wholly-owned subsidiary of Chubb Life, is a
     management service company organized and operated to provide employee and
     office services, as well as certain operating assets, to the Company and
     its affiliates.  The

                                    3 of 84
<PAGE>

     Service Company employs all of the personnel who perform business functions
     for the Company. The Service Company believes that its relationship with
     employees is good.

(d)  Financial Information About Foreign and Domestic Operations and Export
     ----------------------------------------------------------------------
     Sales
     -----

     All sales and operations of the Company are conducted within the United
     States.


Item 2 - Properties
-------------------

The Company does not own or lease any real property.  The Company occupies a
portion of the home office of Chubb Life located at One Granite Place, Concord,
New Hampshire.  The use by the Company of such facilities and the equipment and
furnishings owned by the Service Company, Chubb Life, or any of the other
Insurance Companies is subject to a pro-rata allocation of expenses.


Item 3 - Legal Proceedings
--------------------------

The Company may become involved from time to time with legal proceedings arising
out of the ordinary course of its business.   For the year ended December 31,
1997, the Company was not involved in any material legal proceedings.

Item 4 - Submission of Matters to a Vote of Security Holders
------------------------------------------------------------

On December 29, 1997 the sole shareholder of the Company approved and authorized
a reduction in the number of Directors of the Company to three and authorized
the sale of substantially all of its assets, comprising receivables representing
non-recourse obligations of the Company's customers, to Preferred Receivables
Funding Corporation ("PREFCO") and certain investors as well as the granting of
a security interest for the benefit of PREFCO and the investors in the related
mutual fund shares pledged to secure such receivables.

                                    4 of 84
<PAGE>

                                  PART II

Item 5 - Market for Registrant's Common Equity and Related Stockholder Matters
------------------------------------------------------------------------------

(a)     Holders
        -------

        Not publicly traded.

(b)     Market Information
        ------------------

        1 (See Item 12, Security Ownership of Certain Beneficial Owners and
        Management.)

(c)     Dividends
        ---------

        The Company has not authorized or paid any dividends since inception.
        There are no restrictions presently known on the Company's ability to
        pay dividends except for general New Hampshire corporate laws relating
        to earnings.

Item 6 - Selected Financial Data
--------------------------------
<TABLE>
<CAPTION>

Selected Statement of Operations
 Data:  Year Ended December 31,      1997         1996         1995         1994         1993
                                  -----------  -----------  -----------  -----------  -----------
<S>                               <C>          <C>          <C>          <C>          <C>

  Total Revenue                    $5,279,533  $ 4,948,442  $ 4,423,807  $ 3,586,281  $ 3,000,577
                                   ==========  ===========  ===========  ===========  ===========

  Net Income                       $  597,624  $   308,341  $   224,639  $   494,699  $   514,439
                                   ==========  ===========  ===========  ===========  ===========

  Dividends Per Common Share       $    --     $    --      $     --     $    --      $    --
                                   ==========  ===========  ===========  ===========  ===========

<CAPTION>

Selected Balance Sheet Data:
  December 31,                        1997         1996         1995         1994         1993
                                   ----------  -----------  -----------  -----------  -----------
 <S>                               <C>         <C>          <C>          <C>          <C>
  Total Assets(1)                  $4,978,870  $54,549,392  $47,185,445  $42,069,058  $33,545,651
                                   ==========  ===========  ===========  ===========  ===========

  Loans Payable                    $        0  $50,851,618  $43,899,673  $38,889,535  $30,924,833
                                   ==========  ===========  ===========  ===========  ===========

</TABLE>

(1)  On December 31, 997, the Company sold its aggregate collateral notes
     receivable of $55,783,965.  The Company received proceeds of $52,994,767
     and retained a subordinated interest and servicing rights in the assets
     transferred aggregating $2,789,198.  (See Item 7 - Management's Discussion
     and Analysis of Financial Condition and Results of Operations.)

(2)  Proceeds from the sale of collateral notes receivables were used to
     extinguish the Company's outstanding debt under its Revolving Credit
     Agreement with SunTrust Bank of Atlanta, Georgia (see Item 7 - Management's
     Discussion and Analysis of Financial Condition and Results of Operations.)

                                    5 of 84
<PAGE>

Item 7 - Management's Discussion and Analysis of Financial Condition and Results
--------------------------------------------------------------------------------
of Operations
-------------

Liquidity and Capital Resources
-------------------------------

The Company offers investment programs (the "Programs") which coordinate the
acquisition of mutual fund shares and insurance over a period of ten years.
Under the Programs, purchasers of a Program ("Participants") purchase life and
health insurance from affiliated insurance companies (the "Insurance Companies")
and finance the premiums through a series of loans secured by mutual fund
shares.  Upon issuance of a policy by an Insurance Company, the Company makes a
loan to the Participant in an amount equal to the selected premium mode.  As
each premium becomes due, if not paid in cash, a new loan equal to the next
premium and administrative fee is made and added to the Participant's account
indebtedness ("Account Indebtedness").  Thus, interest, as well as principal, is
borrowed and mutual fund shares are pledged as collateral.  Each loan made by
the Company must initially be secured by mutual fund shares which have a value
of at least 250% of the loan, except for the initial premium loan of Programs
using certain no-load funds, where the collateral requirement is 1800%.  In
addition, the aggregate value of all mutual fund shares pledged as collateral
must be at least 150% of the Participant's total Account Indebtedness.  If the
value of the shares pledged to the Company declines below 130% of the Account
Indebtedness, the Company will terminate the Programs and liquidate shares
sufficient to repay the indebtedness.

Effective March 31, 1988, the Company will discontinue the sale of Programs.
The Company will, however, continue to make premium loans to current
Participants and administer all Programs until their stated maturity or
termination dates.


On December 31, 1997, the Company entered into a Receivables Purchase Agreement
(the Agreement) with Preferred Receivables Funding Corporation (PREFCO), a
wholly-owned subsidiary of First National Bank of Chicago (the Bank).


The Agreement provides for the initial and periodic purchase of the Company's
collateral loans receivable by PREFCO or other investors (for which the Bank
serves as agent) up to $60,000,000 and expires on June 30, 1998.  The Company
anticipates the termination date will be extended under the provisions of the
Agreement.  PREFCO finances purchases of the Company's collateral loans
receivables through the issuance of commercial paper.


The Company sold its aggregate loans of $55,783,965 on December 31, 1997.  The
Company received proceeds of $52,994,767 and retained a subordinated interest
and servicing rights in the assets transferred aggregating $2,789,198.  The cash
flows related to the repayment of loans will be used first to satisfy all
principal and variable interest rate obligations due to PREFCO, investors or the
Bank.  The retained interest represents the fair value of the Company's future
cash flows and obligations that it will receive after all investor obligations
are met.


The Company is responsible for servicing, managing and collecting all
receivables  and loan repayments, monitoring the underlying collateral and
reporting all activity to the Bank for which it receives an annual service fee
(collected monthly in arrears) calculated as 2% of outstanding receivables.


The Agreement includes a Performance Guarantee by Jefferson-Pilot Corporation
that the Company will service the receivables sold and administer all aspects of
the Programs in accordance with the terms and conditions of the Agreement.  The
Performance Guarantee contains restrictions on the debt of the Guarantor and the
collateral value monitored by the Company.


Proceeds from the sale of the receivables were used by the Company to extinguish
its outstanding debt under its Revolving Credit Agreement with SunTrust Bank of
Atlanta, Georgia.  Following the repayment of all principal and interest, on
December 31, 1997 the Company's Revolving Credit Agreement with SunTrust was
terminated.

From October 23, 1996 through December 30, 1997 the Company's funds for
financing the Programs were obtained through this Revolving Credit Agreement
with SunTrust Bank of Atlanta, Georgia ("SunTrust"). The Company entered into
this Revolving Credit Agreement on October 23, 1996 which provided for advances
up to $60,000,000. The Revolving Credit Agreement with SunTrust replaced the
Company's loan agreements with its affiliates, Chubb Life and Colonial, which
provided for advances not to exceed $20,000,000 and $29,000,000, respectively.
As all advances under affiliated loan agreements became due during October and
November of 1996, the Company borrowed amounts under the Revolving Credit
Agreement with SunTrust and paid Chubb Life and Colonial the outstanding
principal and interest. At December 31, 1996 and during the year ended December
31, 1997, the Company had no loans outstanding to affiliates.

                                    6 of 84
<PAGE>

The continuance of the Program is dependent upon the Company's ability to
provide for the financing of insurance premiums for Participants or arrange for
the sale of collateral notes receivable.  Prior to the Company's Agreement with
PREFCO, such financing was provided by its Revolving Credit Agreement with
SunTrust and affiliated loan agreements with Chubb Life and Colonial.  The
Company expects that it will be able to continue to sell its collateral notes
receivables or arrange for other financing for the foreseeable future.

If the Company is unable to sell its collateral notes receivable or borrow funds
in the future for the purpose of financing loans to Participants for the payment
of insurance premiums, the Programs may be subject to termination.

If the Company subsequently defaults on its Agreement with PREFCO for which the
Participant's mutual fund shares have been pledged as security, the mutual fund
shares may be redeemed by PREFCO (or its agent) and the Programs will be
terminated on their renewal dates.

The Company's liabilities include amounts due to affiliates for insurance
premium payments and expense reimbursements to the Service Company.

The Service Company, a wholly-owned subsidiary of Chubb Life, is a management
service company which provides employee services and office facilities to the
Company and its affiliates under a Service Agreement.  The Company pays the
Service Company a monthly fee in accordance with mutually agreed upon cost
allocation methods which the Companies believe reflect a proportional allocation
of common expenses and are commensurate for the performance of the applicable
duties.

Working capital in 1997, 1996 and 1995 was provided by Participants' loan
repayments, administrative fees for the placement and maintenance of Programs
and interest earned on investments.

Results of Operations
---------------------

The Company concluded the year ended December 31, 1997 with net income of
$597,624 as compared to net income of $308,341 in 1996, and $224,639 in 1995.

Total revenues through December 31, 1997 were $5,279,533 versus $4,948,442 in
1996, and $4,423,807 in 1995.  These revenues include interest on collateral
notes receivable,  Program Participant fees and interest on investments. The
largest source of revenue was represented by interest on collateral notes
receivable.  The average interest rate charged to each Participant's outstanding
loan balance was 8.95% for the years 1997 and 1996, and 9.22% for the year 1995.

Interest expense on the Loan Agreements increased each year due to an increase
in amounts borrowed by the Company.  The Company's interest expense for 1997,
1996 and 1995 was $3,046,440, $2,597,224 and $2,730,924, respectively.  The
Company's average cost of borrowings for 1997, 1996 and 1995 was 5.88%, 6.40%
and 6.70%, respectively.

The Company's increase in net income over the past three years resulted from its
declining cost of funds necessary to finance premium loans.  A decline in the
Company's general and administrative expenses during 1997 also contributed to
increases in net income.  General and administrative expenses (including state
taxes), arising from normal operating activities through December 31, 1997, were
$1,313,670 as compared to $1,516,065 in 1996, and $1,347,286 in 1995.

Program fees include placement, administrative and termination fees as well as
charges for special services.  For the years ended December 31, 1997, 1996 and
1995 the number of Programs administered by the Company were 5,545, 6,131 and
6,521, respectively.

In the future the Company will continue to receive servicing fee income equal to
2% of aggregate loan balances as compensation for services provided on behalf of
Programs and Program Participants in accordance with the Agreement with PREFCO.
The Company will continue to earn other related ongoing income. In addition, the
Company may realize a gain or loss on the securitization of future collateral
notes receivable which may impact future earnings.

Year 2000 Conversion
---------------------

Jefferson-Pilot Corporation, the Company's parent, has developed a centralized
oversight and project management process to facilitate the conversion of all
information systems to be ready for the Year 2000 and has been converting
critical data processing systems. The Parent Company currently expects the
project to be completed by early 1999 and does not expect this project to have a
significant effect on operations.

                                    7 of 84
<PAGE>

Item 8 - Financial Statements and Supplementary Data
----------------------------------------------------

The financial statements included herein are listed in the following index.

                         INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                             Page References
                                                                             ---------------
<S>                                                                          <C>
Report of Independent Auditors                                                      9
Statements of Financial Condition at December 31, 1997 and 1996                    10
Statements of Income for each of the three years in the period                     11
 ended December 31, 1997
Statements of Changes in Stockholder's Equity for each of the three years          12
    in the period ended December 31, 1997
Statements of Cash Flows for the each of the three years in the period             13
    ended December 31, 1997
Notes to Financial Statements                                                      14
</TABLE>

All schedules have been omitted since the required information is not present or
is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the financial statements, and
the notes thereto.

                                    8 of 84
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS



The Board of Directors

Hampshire Funding, Inc. and Subsidiary


We have audited the accompanying statements of financial condition of Hampshire
Funding, Inc. as of December 31, 1997 and 1996, and the related statements of
income, changes in stockholder's equity and cash flows for each of the three
years in the period ended December 31, 1997.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  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 referred to above present fairly, in
all material respects, the financial position of Hampshire Funding, Inc. at
December 31, 1997 and 1996, and the results of its operations, changes in
stockholder's equity and cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.



                                                            Ernst & Young LLP



Boston, Massachusetts
March 20, 1998

                                    9 of 84
<PAGE>

                            HAMPSHIRE FUNDING, INC.


                       STATEMENTS OF FINANCIAL CONDITION





<TABLE>
<CAPTION>

                                                                  DECEMBER 31
                                                               1997            1996
                                                          -----------------------------
ASSETS
<S>                                                       <C>               <C>
Cash and cash equivalents                                 $  297,934        $ 1,557,210
Accounts receivable from customers                            37,715             12,915
                                                          -----------------------------
Total current assets                                         335,649          1,570,125

Collateral notes receivable                                                  51,614,076
Accrued interest receivable                                1,525,023          1,365,191
Due and deferred from the sale of
 collateral notes portfolio                                2,789,198
Deferred asset                                               329,000
                                                          -----------------------------
Total assets                                              $4,978,870        $54,549,392
                                                          =============================

LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
 Due to affiliates                                        $1,694,196        $ 1,388,178
 Accrued expenses and other liabilities                      258,116            120,473
                                                          -----------------------------
  Total current liabilities                                1,952,312          1,508,651

 Loans payable (including accrued interest
  of $351,618 in 1996)                                                       50,851,618
                                                          -----------------------------
Total liabilities                                          1,952,312         52,360,269
                                                          -----------------------------
Stockholder's equity:
 Common stock, par value $1 per share; authorized
   100,000 shares; issued and outstanding
    50,000 shares                                             50,000             50,000
 Additional paid-in capital                                  789,811            550,000
 Retained earnings                                         2,186,747          1,589,123
                                                          -----------------------------
Total stockholder's equity                                 3,026,558          2,189,123
                                                          -----------------------------
Total liabilities and stockholder's equity                $4,978,870        $54,549,392
                                                          =============================
</TABLE>
See accompanying notes.


                                    10 of 84
<PAGE>

                            HAMPSHIRE FUNDING, INC.

                             STATEMENTS OF INCOME


<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31
                                                  1997            1996             1995
                                           ------------------------------------------------
<S>                                        <C>                <C>              <C>
Revenues:
 Interest on collateral notes receivable     $4,776,636         $4,412,729      $3,899,087
 Program participant fees                       426,758            484,906         456,556
 Interest on investments                         76,139             50,807          68,164
                                           ------------------------------------------------
                                              5,279,533          4,948,442       4,423,807
Operating expenses:
 Interest on loan agreements                  3,046,441          2,957,224       2,730,924
 General and administrative                   1,215,059          1,464,569       1,299,523
                                           ------------------------------------------------
                                              4,261,500          4,421,793       4,030,447
                                           ------------------------------------------------
Income before income taxes                    1,018,033            526,649         393,360

Income tax expense                              420,409            218,308         168,721
                                           ------------------------------------------------
Net income                                   $  597,624         $  308,341      $  224,639
                                           ================================================
</TABLE>

See accompanying notes.

                                    11 of 84
<PAGE>

                            HAMPSHIRE FUNDING, INC.

                 STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>

                                                       YEARS ENDED DECEMBER 31
                                                1997            1996           1995
                                           --------------------------------------------
<S>                                         <C>              <C>              <C>
Common stock:
 Balance, beginning and end of year        $   50,000       $   50,000      $   50,000
Additional paid-in capital:
 Balance, beginning of year                   550,000          550,000         550,000
 Contributed paid-in capital                  239,811
                                           --------------------------------------------
 Balance, end of year                         789,811          550,000         550,000
                                           --------------------------------------------
Retained earnings:
 Balance, beginning of year                 1,589,123        1,280,782       1,056,143
 Net income                                   597,624          308,341         224,639
                                           --------------------------------------------
 Balance end of year                        2,186,747        1,589,123       1,280,782
                                           --------------------------------------------
Total stockholder's equity                 $3,026,558       $2,189,123      $1,880,782
                                           ============================================
</TABLE>

See accompanying notes.

                                    12 of 84
<PAGE>

                            HAMPSHIRE FUNDING, INC.

                           STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                             YEARS ENDED DECEMBER 31
                                                                      1997              1996            1995
                                                              ---------------------------------------------------------
<S>                                                              <C>               <C>              <C>
OPERATING ACTIVITIES
Net income                                                       $     597,624     $     308,341    $    224,639
Adjustments to reconcile net income to net
 cash provided (used) by operating
 activities:
  (Increase) decrease in accounts
   receivable from customers                                           (24,800)           13,878          20,422
  Increase (decrease) in accrued expenses and other
   liabilities                                                         137,643          (142,759)        (53,018)
  Increase in due to affiliates                                        306,018           258,677             414
  Net (originations) paydowns of collateral notes
   receivable                                                       (4,169,889)       (5,762,032)     (6,074,562)
  Increase in accrued interest receivable                             (159,832)         (157,338)       (180,176)
  Increase in deferred asset                                          (329,000)
  (Decrease) increase in prepaid interest and
   interest accrued on loan agreements                                (351,618)          651,945         310,138
                                                              ---------------------------------------------------------
Net cash used by operating activities                               (3,993,854)       (4,829,288)     (5,752,143)

FINANCING ACTIVITIES
Contributed paid-in capital                                            239,811
Proceeds from sale of collateral notes receivable                   52,994,767
Proceeds from non-affiliated loan agreement                        128,575,000        50,500,000
Principal payments on non-affiliated
 loan agreements                                                  (179,075,000)
Proceeds from affiliated loan agreements                                              86,500,000      69,025,000
Principal payments on affiliated loan agreements                                    (130,700,000)    (64,325,000)
                                                              ---------------------------------------------------------
Net cash provided by financing activities                            2,734,578         6,300,000       4,700,000
                                                              ---------------------------------------------------------
(Decrease) increase in cash and cash equivalents                    (1,259,276)        1,470,712      (1,052,143)

Cash and cash equivalents at beginning of year                       1,557,210            86,498       1,138,641
                                                              ---------------------------------------------------------
Cash and cash equivalents at end of year                         $     297,934     $   1,557,210    $     86,498
                                                              =========================================================
</TABLE>

See accompanying notes.

                                    13 of 84
<PAGE>

                            HAMPSHIRE FUNDING, INC.

                         NOTES TO FINANCIAL STATEMENTS

                               DECEMBER 31, 1997


1.  Organization and Nature of Business
    -----------------------------------

Incorporated in 1969, Hampshire Funding, Inc. (the Company) offers and
administers programs that coordinate the acquisition of mutual fund shares and
insurance (Programs).  Under the Programs, insurance premiums are paid by
Participants through a series of loans from the Company and secured by
Participant's ownership of mutual fund shares. The objective of a Program is the
utilization of the appreciation, if any, in the value of the mutual fund shares
and the reinvestment of dividends or capital gain distributions thereon to aid
in offsetting the principal and accumulated interest on the loans.  All Programs
are ten years in length and no payments are due until Programs are terminated or
mature.

Chubb Life Insurance Company of America (Chubb Life) and its subsidiaries were
acquired by Jefferson-Pilot Corporation from The Chubb Corporation, effective
April 30, 1997.  As a wholly owned subsidiary of Chubb Life, the Company was
included in the acquisition.  The fair market value of the Company was
determined to be its book value.

On December 30, 1997, the Company sold its investment in its wholly-owned
subsidiary, Hampshire Syndications, Inc. to Jefferson-Pilot Investments, Inc.
Hampshire Syndication's net worth at December 30, 1997 was $239,811.  The
transaction has been accounted for as a reorganization of entities under common
control.  Accordingly, the prior period consolidated financial statements have
been restated to exclude Hampshire Syndications and conform to the 1997
presentation.

Effective December 31, 1997, the Company's outstanding stock  was sold to
Jefferson-Pilot Corporation.  As a result, the Company became a direct
subsidiary of Jefferson-Pilot Corporation.

Affiliates of the Company include Chubb Life and its wholly-owned subsidiaries,
Chubb Colonial Life Insurance Company (Colonial), Chubb Sovereign Life Insurance
Company (Chubb Sovereign), and Chubb America Service Corporation (CASC). Other
affiliates of the Company include Jefferson Pilot Investment Advisory
Corporation (formerly Chubb Investment Advisory Corporation), and Jefferson
Pilot Securities Corporation (formerly Chubb Securities Corporation), which also
became wholly owned subsidiaries of Jefferson-Pilot Corporation on December 31,
1997.

The fair value of a Participant's pledged mutual fund shares must exceed 150% of
the total loan balance plus accrued interest (Participant's Total Account
Indebtedness).  If the value of the shares pledged declines below 130% of the
Participant's Total Account Indebtedness, the Company will terminate the Program
and liquidate shares sufficient to repay the Indebtedness.

Effective March 31, 1998 the Company will discontinue the sale of Programs.  The
Company will continue, however, to extend premium loans to current Participants
and administer Programs until their stated maturity or termination date.

2.  Summary of Significant Accounting Policies
    ------------------------------------------
General
-------

The preparation of the financial statements in conformity with generally
accepted accounting principles requires the Company's 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.

                                    14 of 84
<PAGE>

2.  Summary of Significant Accounting Policies (continued)
    ------------------------------------------------------
Securitizations
---------------

In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS 125"),
which was effective January 1, 1997. The Company has prospectively adopted the
requirements of SFAS 125 in connection with the sale of its collateral notes
receivable portfolio.

The Company records gains or losses on the securitization of collateral notes
receivable based on the estimated fair value of assets obtained and liabilities
incurred on the sale. Gains represent the present value of estimated cash flows
the Company has retained over the estimated outstanding period of the
receivables. This excess cash flow essentially represents an "interest only"
("I/O") strip, consisting of the excess of interest and fees over the sum of the
return paid to the counter-party, estimated contractual servicing fees and
credit losses. Certain estimates inherent in the determination of the fair value
of the I/O strip are influenced by factors outside the Company's control, and as
a result, such estimates could materially change in the near term. No gain or
loss was recorded on the sale of the collateral notes receivable portfolio as
the fair value of the financial assets received and created in the transaction
approximated the carrying value of the assets relieved.  Such fair value was
determined using a discount rate approximating the return a third party investor
would expect in a purchase of such assets.  Servicing fee income is recovered
over the life of the sale transaction.

Transactions with Affiliates
----------------------------

The Company offers and administers Programs whereby Participants obtain life
insurance coverage solely from Chubb Life and Colonial.  Under the Programs,
insurance premiums are paid by Participants through a series of loans from the
Company which are recorded as "collateral notes receivable".  Loans to
Participants are secured by Participant's ownership in mutual fund shares.
Loans to Participants were partially funded with proceeds from loan agreements
with affiliates during 1996.  On October 23, 1996, the Company entered into a
revolving credit agreement with SunTrust Bank (a non-affiliate), replacing its
loan agreements with affiliates.  On December 31, 1996 and during the year ended
December 31, 1997, the Company had no loans outstanding to affiliates.  Interest
paid to affiliates, on its loan agreements was $2,189,057 and $2,420,786 in 1996
and 1995,  respectively.

The Programs and most mutual fund shares offered in conjunction with the
Programs are sold through Jefferson Pilot Securities, a registered broker-
dealer.

Substantially all general and administrative expenses are allocated to the
Company by CASC in accordance with mutually agreed upon cost allocation methods
that the Company and CASC believe reflect a proportional allocation of common
expenses and which are commensurate for the performance of the applicable
duties.

On December 30, 1997, the Company sold its investment in its wholly-owned
subsidiary, Hampshire Syndications, Inc. to Jefferson-Pilot Investments, Inc.

Recognition of Revenues
-----------------------

Interest on collateral notes receivable and administrative fees charged to
Participants for establishing and maintaining Programs are recognized as revenue
when earned.

Cash Equivalents
----------------

Cash equivalents include short-term corporate notes carried at cost which
approximates market value.

Reclassifications
-----------------

Certain amounts in the financial statements for prior years have been
reclassified to conform with the 1997 presentation.

                                    15 of 84
<PAGE>

3.  Sale of Collateral Notes Receivable Portfolio
    ---------------------------------------------

On December 31, 1997, the Company entered into a Receivables Purchase Agreement
(the Agreement) with Preferred Receivables Funding Corporation (PREFCO), wholly
owned subsidiary of First National Bank of Chicago (the Bank).

The Agreement provides for the initial and periodic purchase of the Company's
collateral loans receivable by PREFCO or other investors (for which the Bank
serves as agent) up to $60,000,000 and expires on June 30, 1998.  The Company
anticipates the termination date will be extended under the provisions of the
Agreement.  PREFCO finances purchases of the Company's collateral loans
receivables through the issuance of commercial paper.

The Company sold its aggregate loans of $55,783,965 on December 31, 1997.  The
Company received proceeds of $52,994,767 and retained a subordinated interest
and servicing rights in the assets transferred aggregating $2,789,198.  The cash
flows related to the repayment of loans will be used first to satisfy all
principal and variable interest rate obligations due to PREFCO, investors or the
Bank.  The retained interest represents the fair value of the Company's
estimated future net cash flows that it will receive after all investor
obligations are met.  The fair value of the Company's retained interest and
servicing rights was determined by discounting estimated cash flows from the
assets. Primary assumptions used to determine fair value included the use of a
17% discount rate and an estimated annual prepayment rate of 11% of the
aggregate annual loan balance.

The financial assets recorded in connection with the sale consist of the
following as of December 31, 1997:

<TABLE>
<CAPTION>

<S>                                            <C>

   Interest Only Strip                          $1,535,316

   Retained Interest                               781,449
   Servicing Rights Receivable and Other           472,433
                                                ----------
   Due and Deferred from the sale of
      collateral notes receivable portfolio     $2,789,198

</TABLE>

The Company is responsible for servicing, managing and collecting all
receivables  and loan repayments, monitoring the underlying collateral and
reporting all activity to the Bank for which it receives an annual service fee
(collected monthly in arrears) calculated as 2% of outstanding receivables.  The
Company estimates that the 2% service fee is adequate to compensate the Company
for services provided.  In addition to the service fee, the Company earns other
related ongoing income.

Proceeds from the sale of the receivables were used by the Company to extinguish
its outstanding debt with SunTrust Bank of Atlanta, Georgia.  Following the
repayment of all principal and interest, on December 31, 1997 the Company's
Revolving Credit Agreement with SunTrust was terminated.

4.  Federal Income Taxes
    --------------------

The operations of the Company are included in the consolidated federal income
tax return of Chubb Life.  Federal income tax is allocated by Chubb Life as if
the Company filed a separate income tax return.  Deferred tax assets and
liabilities are recognized for the expected future tax effects attributable to
temporary differences between the financial reporting and tax bases of assets
and liabilities, based on enacted tax rates and other provisions of tax law.
Federal income taxes have been provided at the statutory rate of 35% in 1997,
1996 and 1995.

The Company made income tax payments to Chubb Life of $328,106, $134,982, and
$59,326 in 1997, 1996 and 1995, respectively.

The Company independently files state income tax returns and pays state income
taxes to the states in which it operates.  State income taxes paid for 1997,
1996 and 1995 were $98,611, $51,496 and $47,763, respectively.

                                    16 of 84
<PAGE>

4.  Federal Income Taxes (continued)
    --------------------------------

Significant components of income tax expense for the years ended December 31,
1997, 1996 and 1995 are as follows:

<TABLE>
<CAPTION>
                                                            1997               1996               1995
                                                      -----------------  -----------------  -----------------
<S>                                                   <C>                <C>                <C>
Current:
   Federal                                                     $295,813           $166,812           $120,958
   State                                                         90,710             51,496             47,763
                                                               --------           --------           --------
Total                                                           386,523            218,308            168,721

Deferred:
   Federal                                                       27,654                  0                  0
   State                                                          6,232                  0                  0
                                                               --------           --------           --------
Total                                                            33,886                  0                  0

Income tax expense from continuing operations                  $420,409           $218,308           $168,721
                                                               ========           ========           ========
</TABLE>

Included in due to affiliates are deferred tax liabilities of $27,011 as of
December 31, 1997 (deferred tax asset of $6,875 as of December 31, 1996).


5.  Retirement Benefits
    -------------------

In prior years, and during 1997, the Company participated in the Pension Plan
for the Employees of Chubb Life and Participating Affiliates, a defined benefit
plan, which covered substantially all of its employees.  Accumulated plan
benefits, plan net assets and net periodic pension costs by component for the
Company were not determinable.  Costs allocated by Chubb Life to the Company
during 1997, 1996 and 1995 relative to the Pension Plan were $29,490, $18,022,
and $24,218, respectively.

Certain health and life insurance benefits for all eligible retired employees
were also provided by Chubb Life.  Benefits were paid as covered expenses are
incurred, as amounts can not be reasonably estimated.  Health care coverage is
contributory.  Retiree contributions vary based upon a retireeOs age, type of
coverage and years of service with the Company.  Life insurance is
noncontributory.  The expected cost of providing these postretirement benefits
to employees and their beneficiaries and covered dependents are being accrued
during the years that the employees render the necessary service.


6.  Option and Incentive Plans
    --------------------------

Substantially all of the Company's employees are eligible to participate in a
contributory defined contribution retirement plan and stock ownership and
incentive plans.  The Company's proportionate share of costs related to these
savings and incentive plans were $20,215 , $41,182, and $36,247 for the years
ended December 31, 1997, 1996 and 1995, respectively.

Total costs allocated to the Company, during the year presented relative to the
above benefits, have been included in General and Administrative expenses in the
accompanying financial statements.


7.  Loan Agreements
    ---------------

On December 31, 1997, the Company terminated its Revolving Loan Agreement with a
non-affiliate, SunTrust Bank of Atlanta, Georgia ("SunTrust"). This revolving
loan agreement, effective October 23, 1996, provided loan arrangements for
advances up to $60,000,000.  Prior to October 23, 1996, the Company had loan
agreements with its affiliates, Chubb Life and Colonial, which provided for
advances not to exceed $20,000,000 and $29,000,000, respectively. These Loan
Agreements with affiliates were terminated in 1996.  The Company had no loans
outstanding to affiliates at the year ended December 31, 1996 or during the year
ended December 31, 1997.

                                    17 of 84
<PAGE>

The interest rate on advances made under the SunTrust loan agreement were
variable and based on short-term interest rates.  During 1997, the Company had
borrowed $52,200,000 under the agreement at rates that ranged from 5.65% to
6.15%. At December 31, 1996, the Company had borrowed $50,500,000 under the same
agreement at rates ranging from 5.65% to 5.78%.  The interest rates on amounts
borrowed from affiliates during 1996 ranged from 5.05% to 8.95%.

Interest paid, including prepayments, on affiliated and non-affiliated loan
agreements was $3,398,059 $2,305,279 and $2,420,786 in 1997, 1996 and 1995,
respectively.

8.  Year 2000 Conversion (unaudited)
    --------------------------------

Jefferson-Pilot Corporation, the Company's parent, has developed a centralized
oversight and project management process to facilitate the conversion of all
information systems to be ready for the Year 2000 and has been converting
critical data processing systems. The Parent Company currently expects the
project to be completed by early 1999. Although some projects may be delayed due
to resource constraints, the Company does not expect this project to have a
significant effect on operations.

                                    18 of 84
<PAGE>

Item 9 - Changes in and Disagreements With Accountants on Accounting and
------------------------------------------------------------------------
Financial Disclosure
--------------------

Not Applicable
                                   PART III

Item 10 - Directors and Executive Officers of the Registrant
------------------------------------------------------------

The following sets forth information relating to Directors and Executive
Officers of the Company as of December 31, 1997.

<TABLE>
<CAPTION>

     Name(1)                       Age            Position(2)
     -------                       ---            -----------
<S>                                <C>            <C>
     Ronald J. Angarella           39             President, Chairman and Director
     Dennis R. Glass               48             Director
     E. J. Yelton                  58             Director
     John A. Weston                38             Treasurer
     Russell C. Simpson            42             Vice President and Chief Financial Officer
     Charles C. Cornelio           38             Vice President
     Carol R. Hardiman             43             Vice President, Administration
     Shari J. Lease                43             Secretary
     Robert A. Reed                55             Vice President and Assistant Secretary

</TABLE>

Ronald R. Angarella was elected President and Chairman of the Broker Dealer in
October 1995.  Mr. Angarella was elected Senior Vice President of Chubb Life and
Vice Chairman of the Broker-Dealer in November 1994.  Mr. Angarella served as
Vice President, Staff Management of Chubb Life from September 1992 to November
1994, and Assistant Vice President, Staff Management of Chubb Life from February
1992 to September 1992.  From March 1990 to February 1992 he served as Assistant
Vice President, Marketing of the Broker-Dealer.

Dennis R. Glass was elected Director of the Company in May 1997.  Since October
1993 Mr. Glass has served as Executive Vice President, Chief Financial Officer
and Treasurer of Jefferson-Pilot Corporation.  From 1991 to October 1993, he was
associated with Protective Life Corporation, having last served as Executive
Vice President and CFO of the Company.  From 1983 to 1991 he was associated with
the Portman Companies, having served as Executive Vice President and CFO.

E. J. Yelton was elected Director of the Company in May, 1997.  Since October
1993, Mr. Yelton has served as Executive Vice President of Investments and for
more than five years prior thereto was President of the Investment Centre.

John A. Weston was elected Treasurer of the Company and the Broker-Dealer in
August 1988. His principal occupation since April of 1995 has been as Assistant
Vice President of Chubb Life.  He was elected Treasurer of Jefferson Pilot
Variable Fund (formerly Chubb America Fund, Inc.) in April 1992, and Treasurer
of Jefferson Pilot Investment Advisory Corporation (formerly Chubb Investment
Advisory Corporation) in May 1992.  From July 1989 to April 1995 Mr. Weston was
Mutual Fund Accounting Officer for Chubb Life.

Russell C. Simpson was elected Chief Financial Officer of the Company in
December 1997.  Mr. Simpson serves as Vice President and Treasurer of Chubb
Life.  He has served as Vice President since September 1990 and was elected
Treasurer in December 1994.  From April 1988 to September 1990 Mr. Simpson
served as Assistant Vice President of Tax and Financial Reporting for Chubb
Life.

                                    19 of 84
<PAGE>

Charles C. Cornelio was elected Vice President of the Company in May 1997.  From
May 1993 to May 1997 he was Vice President, General Counsel and Secretary.  Mr.
Cornelio's principal occupation since May 1997 has been Executive Vice President
of Chubb Life and Senior Vice President of Jefferson Pilot Corporation.  From
September 1996 to May 1997 he was Executive Vice President and Chief
Administrative Officer.  From December 1994 to September 1996 he served as
Senior Vice President and Chief Administrator for Chubb Life.  From March 1992
to December 1994 he served as Vice President, Counsel and Assistant Secretary
for Chubb Life.  He also serves as Executive Vice President  Operations of Chubb
Colonial and the Service Company and as Vice President, General Counsel to
Jefferson Pilot Variable Fund (formerly Chubb America Fund, Inc.)

Carol R. Hardiman was elected Vice President, Administration of the Company and
the Broker-Dealer in June 1989.  From October 1987 to May 1989, she was
Assistant Vice President of the Company and the Broker-Dealer.

Shari J. Lease was elected Secretary of the Company and Assistant Secretary of
the Broker-Dealer in December 1994.  Her principal occupation since April 1995
has been as Assistant Vice President and Counsel of Chubb Life until her
election as Vice President of Chubb Life in February 1998.  Ms. Lease was
elected Secretary of Jefferson Pilot Variable Fund (formerly Chubb America Fund,
Inc.), in April 1992. She served as Associate Counsel of Chubb Life from April
1994 to April 1995, Assistant Counsel of Chubb Life from October 1990 to April
1994 and Assistant Secretary of Jefferson Pilot Variable Fund (formerly Chubb
America Fund, Inc.) from July 1991 to April 1992.

Robert A Reed was elected Vice President and Assistant Secretary of the Company
in December 1997.  Mr. Reed serves as Vice President, Secretary and Assistant
General Counsel of Jefferson-Pilot Corporation and has held similar positions
with its principal life insurance subsidiaries since June 1994.  Mr. Reed was
secretary and Assistant General Counsel of Aluminum Company of America for many
years prior thereto.



-----------------------

(1) There are no family relationships existing between or among any of the
    above-listed Directors or Executive Officers.

(2) The term of office of each of the foregoing Directors and Executive Officers
    extends until  the annual meetings of the shareholders and Board of
    Directors or until removed by the Board of Directors.

                                    20 of 84
<PAGE>

                            HAMPSHIRE FUNDING, INC.
                               One Granite Place
                         Concord, New Hampshire  03301

                              BOARD OF DIRECTORS
                               December 31, 1997

--------------------------------------------------------------------------------
Ronald R. Angarella
22 Pepin Drive
Bow, NH  03304

Dennis R. Glass
100 N. Greene Street
Greensboro, NC  27401

E. J. Yelton
304 St. Lauren Drive
Greensboro, NC  27401

                                    21 of 84
<PAGE>

                            HAMPSHIRE FUNDING, INC.
                               One Granite Place
                         Concord, New Hampshire  03301

                                   OFFICERS
                               December 31, 1997

--------------------------------------------------------------------------------
President                                      Ronald R. Angarella
                                               22 Pepin Drive
                                               Bow, NH  03304

Vice President, Assistant Secretary            Robert A. Reed
                                               100 Greene Street
                                               Greensboro, NC  27401

Vice President, Administration                 Carol R. Hardiman
                                               Lane Road
                                               Chichester, NH  03263

Vice President                                 Charles C. Cornelio
                                               14 Lesnyk Road
                                               Goffstown, NH  03045

Vice President and Chief Financial Officer     Russell C. Simpson
                                               100 N. Greene Street
                                               Greensboro, NC  27401

Assistant Vice President, Compliance           W. Thomas Boulter
                                               3 Middlebury Street
                                               Concord, NH  03301

Secretary                                      Shari J. Lease
                                               37 N. Curtisville Road
                                               Concord, NH  03301

Assistant Secretary                            Thomas H. Elwood
                                               28 Christmas Tree Circle
                                               Bedford, NH  03110

Assistant Secretary                            J. Gregory Poole
                                               100 N. Greene Street
                                               Greensboro, NC  27401

Treasurer                                      John A. Weston
                                               15 Merrimack Street
                                               Concord, NH  03301

Vice President, Marketing                      David K. Booth
                                               281 Main Street
                                               Hopkinton, NH  03229

                                    22 of 84
<PAGE>

Item 11 - Executive Compensation
--------------------------------

(a)  General
     -------

     The Company pays no remuneration to its Directors and Officers, nor does it
     have any agreement, commitment, or plan to pay salaries or compensation to
     any Director or Officer on other than a nominal basis. The Service Company
     employs all of the personnel who perform business functions for the
     Company, which personnel also perform functions for affiliates of the
     Company.

Item 12 - Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------

(a)  Security Ownership of Certain Beneficial Owners
     -----------------------------------------------

     The table below sets forth ownership of the Company's issued and
     outstanding common stock as of March 27, 1997.

<TABLE>
<CAPTION>

Title of            Name and Address         Amount and Nature of    Percent of
Class              of Beneficial Owner       Beneficial Ownership      Class
-------------  ---------------------------  -----------------------  ----------
<S>            <C>                          <C>                      <C>
Common         Jefferson-Pilot Corporation  50,000 shares of record     100
               100 N. Greene Street
               Greensboro, NC  27401
<CAPTION>
<S>  <C>
(b)  Security Ownership of Management
     --------------------------------
     None.

</TABLE>

Item 13 - Certain Relationships and Related Transactions
--------------------------------------------------------

(a)  Transactions With Management and Others
     ---------------------------------------

     The Company, Chubb Life and Colonial all have agreements with the Service
     Company whereby the Service Company provides service and joint operations.
     In addition, the Company utilizes furniture, equipment and fixtures owned
     by one or more of the Insurance Companies.  The Company pays the Service
     Company a fee, determined in accordance with mutually agreed upon cost
     allocation methods, which the Companies believe reflect a proportional
     allocation of common costs and are commensurate for the performance of the
     applicable duties.

     Prior to October 23, 1996, the Company's funds for financing the Programs
     were obtained through Loan Agreements and Company-Lender Agreements
     (together the "Agreements") with Colonial and Chubb Life. The Agreements
     provided for revolving credit arrangements under which Colonial made
     advances to the Company in an amount not to exceed $29,000,000, and Chubb
     Life made advances to the Company in an amount not to exceed $20,000,000.
     The loans were made at short-term lending rates agreed upon by the Company.

     On October 23, 1996, the Company entered into a Revolving Credit Agreement
     with SunTrust Bank. As all advances under affiliated loan agreements became
     due during October and November of 1996, the Company borrowed amounts under
     the new Revolving Credit Agreement with SunTrust Bank and paid Chubb Life
     and Colonial the outstanding principal and interest. At December 31, 1996
     and during 1997, the Company had no loans outstanding to affiliates.

     On December 30, 1997, the Company sold its investment in its wholly-
     owned subsidiary, Hampshire Syndications, Inc. to Jefferson-Pilot
     Investments, Inc.

(b)  Certain Business Relationships
     ------------------------------

     See Item 10, Directors and Executive Officers of the Registrant.

                                    23 of 84
<PAGE>

                                 PART IV

Item 14 - Exhibits, Financial Statement Schedules, and Reports on Form 8K
-------------------------------------------------------------------------

(a)  Documents filed as a part of this Report.

     1.   The following consolidated financial statements of Hampshire Funding,
          Inc. are included in Item 8:

          (i)      Report of Independent Auditors

          (ii)     Statements of Financial Condition as of December 31, 1997 and
                   1996

          (iii)    Statements of Income for each of the three years in the
                   period ended December 31, 1997.

          (iv)     Statements of Changes in Stockholder's Equity for each of the
                   three years in the period ended December 31, 1997.

          (v)      Statements of Cash Flows for each of the three years in the
                   period ended December 31, 1997.

          (vi)     Notes to Financial Statements

     2.   Financial Statement Schedules

          All Schedules have been omitted since the required information is not
          present or is not present in amounts sufficient to require submission
          of the schedule, or because the information required is included in
          the financial statements and the notes thereto.

     3.   Exhibits

          (i)      Pursuant to Rule 12b-23 and General Instruction G, the
                   following exhibits required to be filed with this Report
                   pursuant to the Instructions for Item 14 above are
                   incorporated by reference from the reference source cited in
                   the table below.

<TABLE>
<CAPTION>

Reg S-K
Item 601
<S>                    <C>   <C>                              <C>
           Exhibit
          Table No.          Document                         Reference Source
          ---------          --------                         ----------------

            (1)              Distribution Agreement           Form 10-K, filed
                             between the Company and          March 15, 1990, for the
                             Chubb Securities Corporation     year ended December 31,
                             dated March 1, 1990              1989, pp. 23-24

            (3)         (i)  Articles of Incorporation        Form 10-K, filed
                             of Company                       March 15, 1990, for the
                                                              year ended December 31,
                                                              1989, pp. 25-27

                       (ii)  By-Laws of Company               Form 10-K, filed
                                                              March 15, 1990, for the
                                                              year ended December 31,
                                                              1989, pp. 28-46
</TABLE>

                                    24 of 84
<PAGE>

<TABLE>
<CAPTION>


Exhibit
Table No.          Document                                   Reference Source
-----------        --------                                   ----------------
<S>                <C>                                        C>
   (22)            Subsidiaries of the Registrant             Form 10-K, filed
                                                              March 15, 1990, for
                                                              the year ended December 31,
                                                              1989, pp. 66

    (4)              (i) Agency Agreement and                 Form 10-K, filed
                         Limited Power of Attorney            March 19, 1997, for the
                                                              Year ended December 31,
                                                              1996, pp. 24-26

                    (ii) Change in Participant in             Form 10-K, filed
                         Program                              March 19, 1997, for the
                                                              year ended December 31,
                                                              1996, pp. 27-28

                   (iii) Disclosure Statement                 Form 10-K, filed
                                                              March 19, 1997, for the
                                                              year ended December 31,
                                                              1996, p. 29

   (10)              (a) Revolving Credit Agreement           Form 10-K, filed
                         between the Company and              March 19, 1997, for the year
                         SunTrust Bank, dated                 ended December 31, 1996, pp.
                         October 23, 1996                     30-44

                     (b) Revolving Credit Note                Form 10-K, filed
                         between the Company and              March 19, 1997, for the year
                         SunTrust Bank dated                  ended December 31, 1996, pp.
                         October 23, 1996                     45-46

                     (c) Guaranty between Chubb Life          Form 10-K, filed
                         and SunTrust Bank dated              March 19, 1997, for the year
                         October 23, 1996                     ended December 31, 1996, pp.
                                                              47-53
            (ii)         Filed by enclosure.

Reg S-K
Item 601

   (10)              (a) Receivables Purchase Agreement       pp.
                         among the Company, Investors,
                         Preferred Receivables Funding
                         Corporation and First National
                         Bank of Chicago dated
                         December 31, 1997

                     (b) Performance Guarantee by             pp.
                         Jefferson-Pilot Corporation

   (27)                  Financial Data Schedule              pp. 54

                     (b) Reports on Form 8-K

            The Company filed Form 8-K on January 15, 1998 regarding the
            change in its method of financing Programs.
</TABLE>

                                    25 of 84
<PAGE>

                                 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

DATE:    March 30, 1998                 HAMPSHIRE FUNDING, INC.


                                   By:  /s/  RONALD R. ANGARELLA
                                        ---------------------------------------

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>

        Name                            Title                      Date
        ----                            -----                      ----
<S>                              <C>                           <C>
/s/ RONALD R. ANGARELLA          President and Director        March 30, 1998
-------------------------
Ronald R. Angarella


/s/ DENNIS R. GLASS              Director                      March 30, 1998
-------------------------
Dennis R. Glass


/s/ E. JAY YELTON                Director                      March 30, 1998
-------------------------
E. Jay Yelton


/s/ JOHN A. WESTON               Treasurer                     March 30, 1998
-------------------------
John A. Weston


/s/ RUSSELL C. SIMPSON           Vice President and            March 30, 1998
-------------------------        Chief Financial Officer
Russell C. Simpson

</TABLE>

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