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, 1998

         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 30, 1999: 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 33, and the exhibit index
appears on pages 27 through 28.

<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 was
         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 Jefferson Pilot Financial Insurance
         Company (formerly Chubb Life), Jefferson Pilot Life America Insurance
         Company (formerly 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 discontinued offering its
         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, 1998, are included in Item 6 - Selected
         Financial Data and Item 8 - Financial Statements and Supplementary
         Data.

(c)      Narrative Description of Business

         The Company 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 and are pledged
         under a Receivables Purchase Agreement.

         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.

                                    2 of 34
<PAGE>

         As noted, the Company discontinued offering Programs for sale but will
         continue to administer all programs until their stated maturity or
         termination dates.

         Historically, the Programs were 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 interest income on
         securities, loan interest and Program fees. For the years ended
         December 31, 1998, 1997 and 1996 such revenues were as follows:

                                      1998            1997             1996
                                      ----            ----             ----
         Interest income on         
          Securities                $582,261       $   76,139       $   50,807
         Interest on Loans                 0        4,776,636        4,412,729
         Program Fees                413,726          426,758          484,906

         Regulation

         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
         has sold the Programs.

         Although the Company no longer offers its Programs for sale, its
         existing Programs are authorized to use 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
         Jefferson Pilot Financial Insurance Company (Jefferson Pilot Financial)
         or Jefferson Pilot LifeAmerica Insurance Company (Jefferson Pilot
         LifeAmerica) 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, Jefferson Pilot Financial,
         through Jefferson Pilot Financial Separate Account A, offer 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 insurance agents who sold the Company's 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 sold 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

         Given the Company's decision to discontinue the sale of its programs,
         the dependence upon a single or few customers is not applicable.
         Historically, the Company was not dependent upon a single or few
         customers.

         Competition

         Competition is no longer a factor since the Company no longer offers
         Programs for sale. Historically the Company faced limited competition
         in the sale of Programs, as the number of companies offering plans
         similar to the Programs was 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.

                                    3 of 34
<PAGE>

         Employees

         The Company has no paid employees. Jefferson Pilot Service Corporation
         (the "Service Company"), a wholly-owned subsidiary of Jefferson-Pilot
         Corporation, 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 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 Jefferson Pilot Financial 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, Jefferson Pilot
Financial, 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,
1998, the Company was not involved in any material legal proceedings.

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

No matters were submitted during the fourth quarter of 1998 to a vote of
security holders.


                                    4 of 34
<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,         1998               1997               1996              1995               1994
                                         ----               ----               ----              ----               ----

<S>                                   <C>               <C>                <C>               <C>                <C>        
  Total Revenue                       $ 1,335,073       $ 5,279,533        $ 4,948,442       $ 4,423,807        $ 3,586,281
                                      ===========       ===========        ===========       ===========        ===========

  Net Income                          $   780,583       $   597,624        $   308,341       $   224,639        $   494,699
                                      ===========       ===========        ===========       ===========        ===========

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

Selected Balance Sheet Data:
  December 31,                           1998               1997               1996              1995               1994
                                         ----               ----               ----              ----               ----

  Total Assets(1)                     $ 5,861,387       $ 4,978,870        $54,549,392       $47,185,445        $42,069,058
                                      ===========       ===========        ===========       ===========        ===========

  Loans Payable(2)                    $         0       $         0        $50,851,618       $43,899,673        $38,889,535
                                      ===========       ===========        ===========       ===========        ===========
</TABLE>

(1)      On December 31, 1997, 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. As of December 31, 1998 the
         Company's subordinated interest and servicing rights in the assets
         transferred was $4,301,000. (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 34
<PAGE>

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

Liquidity and Capital Resources

The Company administers investment programs (the "Programs") which coordinate
the acquisition of mutual fund shares and insurance over a period of ten years.
Under the Programs, Participants purchase life and health insurance from
affiliated 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, 1998, the Company discontinued the sale of Programs. The
Company, however, will 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. On June 30, 1998, the Agreement was amended
to extend the termination date to June 29, 1999. 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.

As of December 31, 1998, the Company has sold aggregate loans of $55,177,199 and
has retained a subordinated interest and servicing rights in the assets
transferred aggregating $4,301,000. The cash flows related to the repayment of
loans is first used 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 fair value of
the Company's retained interest and servicing rights at December 31, 1997 was
$2,789,198.

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.
During 1998, the Company received $1,028,796 in service fees.

As servicing agent for the loans sold, the Company collected loan prepayments of
$15,810,374 during 1998 which were paid to PREFCO (one month in arrears) to
satisfy principal and variable interest obligation due. The Company originated
new loans of $9,983,843 during 1998 which were sold to PREFCO.

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 original 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. As all advances 



                                    6 of 34
<PAGE>

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 affiliates the outstanding principal and interest. At December 31, 1997
and during the year ended December 31, 1996, the Company had no loans
outstanding to affiliates.

During 1998, the Company entered into an intercompany loan agreement with
Jefferson-Pilot Corporation whereby it may borrow funds for working capital
needs at short-term interest rates. At December 31, 1998, the Company had
borrowed $1,200,000.

The continuance of the Program is dependent upon the Company's ability to
arrange for the sale of collateral notes receivable or provide for the financing
of insurance premiums for Participants. Prior to the Company's Agreement with
PREFCO, such financing was provided by its Revolving Credit Agreement with
SunTrust and affiliated loan agreements. 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 expense
reimbursements to the Service Company and other working capital needs.

The Service Company, a wholly-owned subsidiary of Jefferson-Pilot Corporation,
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 1998 was provided by servicing fees from collateral loans
sold, loans from Jefferson-Pilot Corporation and interest earned on investments.
Working capital in 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, 1998 with net income of
$780,583 as compared to net income of $597,624 in 1997 and $308,341 in 1996.

Total revenues through December 31, 1998 were $995,987 versus $5,279,533 in 1997
and $4,948,442 in 1996. The decline in revenue resulted from the sale of the
Company's collateral loans on December 31, 1997 and throughout 1998. The Company
no longer earns interest on collateral loans sold to investors. Beginning in
1998, the Company's revenues are derived from income on its retained interest in
the loans transferred to investors. ("Securitization Fees"). The average
interest rate charged to each Participant's outstanding loan balance has
remained at 8.95% for the prior three years. Participant's accrued collateral
loan interest is capitalized and therefore, became part of the loans sold to
investors during 1998.

Likewise, the Company's operating expenses declined in 1998 as compared to 1997
and 1996, due to the elimination of collateral loan interest expense. As a
result of the sale of its collateral loans, the Company no longer requires a
loan agreement to finance Participant outstanding loans receivable. Interest
expense for the year ended December 31, 1998 was $19,969 as compared to
$3,046,441 in 1997 and $2,957,224 in 1996. The Company's average cost of
financing Participants' loans in 1997 and 1996 was 5.88% and 6.40%,
respectively.

The Company receives fee income for continuing to service sold receivables. The
Company capitalizes the present value of expected servicing fee income in excess
of the related cost of servicing over the estimated life of the sold
receivables. Prior to it Purchase Receivable Agreement, the Company's cost to
service its collateral loans receivable was included in General and
administrative.

                                    7 of 34
<PAGE>

Program fees include placement, administrative and termination fees as well as
charges for special services. For the years ended December 31, 1998, 1997 and
1996 the number of Programs administered by the Company were 4,819, 5,545 and
6,131, respectively.

In the future, the Company may realize a gain or loss on the securitization of
future collateral notes receivable which may impact future earnings.

Year 2000 Conversion

The Company recognizes the need to ensure that its operations will not be
adversely impacted by the Year 2000 systems failures. Year 2000 issues arise
because some computer software and hardware (systems) were designed to handle
only a two digit year, not a four digit year. By using two digits, they could
fail or make miscalculations due to the inability to distinguish between dates
in the 1900' and in the 2000's.

In order to minimize the impact of the year 2000 on the Company, Jefferson-Pilot
Corporation developed a centralized oversight and project management process to
facilitate the planning and conversion of all information systems on behalf of
the Company and its affiliates. The scope of the project includes an assessment
of the Company's material systems currently in place, modification, testing and
implementation of such systems as required, inquiry to third-party providers
with whom the Company has material business relationships as to the state of
their readiness, and the development of a contingency plan in the event that
material Year 2000 issues arise.

The Company has completed its assessment and modifications of its material
administrative systems to handle the Year 2000. The underlying software, which
includes file structures, on-line access screen formats and the data access
methods for the Company's systems were rewritten, tested, certified and
implemented during 1998. The cost of rewriting, testing, certifying and
implementing these systems was $80,115.

The Company has completed the strategy phase of its PC and Lan Systems and is
executing the assessment, remediation and certification phases concurrently. All
the Company's key business partners have responded to the Company's inquiries,
indication that they are on schedule for Year 2000 compliance. The Company is
currently testing data transmissions from its key business partners and the
results are being analyzed.

The target date for completing all remaining phases is September 30, 1999.
Although management does not anticipate a material effect on its business
operations as a result of the Year 2000 computer systems issues, the Company is
in the process of developing a contingency plan in the event that material Year
2000 issues arise in the Company or third-party computer systems.


                                    8 of 34
<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                                                             10
Statements of Financial Condition at December 31, 1998 and 1997                            11
Statements of Income for each of the three years in the period                             12
 ended December 31, 1998
Statements of Changes in Stockholder's Equity for each of the three years                  13
    in the period ended December 31, 1998
Statements of Cash Flows for the each of the three years in the period                     14
    ended December 31, 1998
Notes to Financial Statements                                                              15

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.
</TABLE>


                                    9 of 34
<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, 1998 and 1997, 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, 1998. 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, 1998 and 1998, 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, 1998, in conformity with generally accepted accounting
principles.

                                                               Ernst & Young LLP

Boston, Massachusetts
March 24, 1999


                                    10 of 34
<PAGE>

                             Hampshire Funding, Inc.

                        Statements of Financial Condition

<TABLE>
<CAPTION>
                                                                                   December 31
                                                                              1998             1997
                                                                       -----------------------------------
<S>                                                                       <C>              <C>       
Assets
Cash and cash equivalents                                                 $ 1,284,375      $  297,934
Accounts receivable from customers                                             13,187          37,715
                                                                       -----------------------------------
Total current assets                                                        1,297,562         335,649

Accrued interest receivable                                                 1,525,023
Interests retained from loan sales                                          4,301,000       2,789,198
Deferred asset                                                                262,825         329,000
                                                                       -----------------------------------

Total assets                                                              $ 5,861,387      $4,978,870
                                                                       ===================================

Liabilities and stockholder's equity
Liabilities:
   Due to affiliates                                                        2,325,058      $1,694,196
   Accrued expenses and other liabilities                                     155,373         258,116
                                                                       -----------------------------------
     Total liabilities                                                      2,480,431       1,952,312
                                                                       -----------------------------------

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         789,811
   Accumulated other comprehensive loss                                      (426,185)
   Retained earnings                                                        2,967,330       2,186,747
                                                                       -----------------------------------
Total stockholder's equity                                                  3,380,956       3,026,558
                                                                       -----------------------------------

Total liabilities and stockholder's equity                                $ 5,861,387      $4,978,870
                                                                       ===================================
</TABLE>

See accompanying notes.


                                    11 of 34
<PAGE>

                             Hampshire Funding, Inc.

                              Statements of Income

<TABLE>
<CAPTION>
                                                                     Years ended December 31
                                                             1998              1997             1996
                                                       -----------------------------------------------------
<S>                                                      <C>                     <C>              <C>   
Revenues:
   Interest income on securities                         $    582,261            76,139           50,807
   Interest on collateral notes receivable                                 $  4,776,636     $  4,412,729
   Realized gain on sale of collateral loans                  339,086
   Program participant fees                                   413,726           426,758          484,906
                                                       -----------------------------------------------------
                                                            1,335,073         5,279,533        4,948,442

Operating expenses:
   Interest on loan agreements                                 19,969         3,046,441        2,957,224
   General and administrative                                                 1,215,059        1,464,569
                                                       -----------------------------------------------------
                                                               19,969         4,261,500        4,421,793
                                                       -----------------------------------------------------

Income before federal income tax                            1,315,104         1,018,033          526,649

Income tax expense                                            534,521           420,409          218,308
                                                       -----------------------------------------------------

Net income                                               $    780,583      $    597,624     $    308,341
                                                       =====================================================
</TABLE>

See accompanying notes.


                                    12 of 34
<PAGE>

                             Hampshire Funding, Inc.

                  Statements of Changes in Stockholder's Equity

                          Year Ended December 31, 1998

<TABLE>
<CAPTION>
                                                                                                  Accumulated
                                                                                                     Other
                                                          Additional                             Comprehensive           Total
                                         Common             Paid-in           Retained              Income           Stockholder's
                                         Stock              Capital           Earnings              (Loss)               Equity
                                     ---------------    ----------------   ----------------    ------------------   ----------------
<S>                                   <C>                 <C>                <C>                 <C>                  <C>       
Balance at January 1, 1996            $  50,000           $   550,000        $1,280,782          $      --            $1,880,782
                                                                                                                      ==========

Comprehensive income
   Net Income                                                                   308,341                                  308,341
                                      ---------           -----------        ----------          -----------          ----------
Balance at December 31, 1996             50,000               550,000         1,589,123                 --             2,189,123
                                                                                                                      ==========

Contributed paid-in capital                                   239,811                                                    239,811
Comprehensive income
   Net Income
Balance at December 31, 1997            597,624               597,624
                                      ---------           -----------        ----------          -----------          ----------
                                         50,000               789,811         2,186,747                 --             3,026,558

Comprehensive income
   Net income                                                                   780,583                                  780,583
   Unrealized loss on securities
   available for sale, net of tax
   of $291,841                                                                                      (426,185)           (426,185)
                                                                                                                      ----------
Comprehensive income                                                                                                     354,398
                                      ---------           -----------        ----------          -----------          ----------

Balance at December 31, 1998          $  50,000           $   789,811        $2,967,330             (426,185)         $3,380,956
                                      =========           ===========        ==========          ===========          ==========
</TABLE>

See accompanying notes.

                                    13 of 34
<PAGE>

                                              Hampshire Funding, Inc.

                                             Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                           Years ended December 31
                                                                1998                1997                1996
                                                         ------------------------------------------------------------
<S>                                                      <C>                  <C>                  <C>         
Operating activities
Net income                                               $     780,583        $     597,624        $    308,341
Adjustments to reconcile net income to net
   cash provided (used) by operating activities:
     Gain on sale                                             (339,086)
     Decrease (increase) in accounts receivable from
       customers                                                                    (24,800)             13,878
     Net change in other liabilities and assets                 55,257              137,643            (142,759)
     Change in due to affiliates                              (277,296)             306,018             258,677
     Net originations of collateral
       notes receivable                                                          (4,169,889)         (5,762,032)
     Decrease (increase) in accrued interest receivable                            (159,832)           (157,338)
     Decrease (increase) in deferred asset                      66,175             (329,000)
     (Decrease) increase in prepaid interest and
       interest accrued on loan agreements                                         (351,618)            651,945
                                                         ------------------------------------------------------
Net cash used by operating activities                          285,633           (3,993,854)         (4,829,288)

Financing activities
Contributed paid-in capital                                                         239,811                    
Proceeds from sale of collateral notes receivable            9,484,651           52,994,767                    
Loans originated                                            (9,983,843)
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                     1,200,000                               86,500,000
Principal payments on affiliated loan agreements                                                   (130,700,000)
                                                         ------------------------------------------------------
Net cash used by financing activities                          700,808            2,734,578           6,300,000
                                                         ------------------------------------------------------

Increase (decrease) in cash and cash equivalents               986,441           (1,259,276)          1,470,712

Cash and cash equivalents at beginning of year                 297,934            1,557,210              86,498
                                                         ------------------------------------------------------

Cash and cash equivalents at end of year                 $   1,284,375        $     297,934        $  1,557,210
                                                         ======================================================
</TABLE>

See accompanying notes.

                                    14 of 34
<PAGE>

                             Hampshire Funding, Inc.

                          Notes to Financial Statements

                                December 31, 1998

1.  Organization and Nature of Business

Incorporated in 1969, Hampshire Funding, Inc. (the Company) 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.

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

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.

On December 31, 1997, 100% of the Company's outstanding stock was sold by
Jefferson Pilot Life Insurance Company (formerly Chubb Life Insurance Company)
to Jefferson-Pilot Corporation.

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.

Affiliates of the Company include Jefferson Pilot Financial Insurance Company
(Jefferson Pilot Financial), Jefferson Pilot Life America Insurance Company, and
Jefferson Pilot Service Corporation (JP Service). Other affiliates of the
Company include Jefferson Pilot Investment Advisory Corporation, and Jefferson
Pilot Securities Corporation, are also 100% owned by Jefferson-Pilot
Corporation.

The Company administers Programs whereby Participants obtain life insurance
coverage solely from Jefferson Pilot Financial and Jefferson Pilot LifeAmerica.
Under the Programs, insurance premiums are paid by Participants through a series
of loans from the Company. 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.

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.

                                    15 of 34
<PAGE>

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.

Program Loan Sales

Pursuant to a receivables purchase agreement, the Company sells the
Participants' Total Account indebtedness (Loans Receivable) to a third-party
bank sponsored commercial paper conduit. In connection with these sales, the
Company retains interests in the securitized assets that serve to absorb losses
related to the sold receivables and enhance credit to the third-party conduit.
Such retained interests include: (a) 5% of all Loans Receivable sold, which
includes capitalized interest (residual principal); (b) the excess of the
weighted average interest on the Loans Receivable securitized over the interest
rate on the commercial paper sold (interest-only strips receivable); and (c)
compensation for servicing the securitized assets on behalf of the purchaser.

Interest income on residual principal, interest-only strips receivable and
servicing assets is earned over time based on the outstanding balance of
serviced assets. The Company receives servicing fees monthly. Repayments of
residual principal and interest only strips will be received after full
amortization of the assets sold to third-parties.

Gains or losses for each qualifying sale of receivables are determined by
allocating the carrying value of the receivables sold between the portion sold
and the interests retained, based on their relative fair values. The Company
estimates the fair value of retained interests based on the present value of
future cash flows expected from the sold receivables, under management's best
estimates of key assumptions - credit losses, prepayment speeds, forward yield
curves and discount rates commensurate with the risks involved. The Company
estimates that credit losses associated with sold receivables will not be
material, as the loans are more than 100% secured by mutual fund shares. The
interest rate paid to the third party purchaser represents commercial paper
rates plus a margin of 2.25% (6.24% and 7.91% at December 31, 1998 and 1997,
respectively). The Company estimates that 15% of Programs will terminate early
(11% at December 31, 1997). As of December 31, 1998 and 1997, the Company has
estimated that a 17% discount rate is commensurate with the duration and risks
embedded in the particular assets retained from its loan sales.

Comprehensive Income

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 (Statement No. 130), Reporting
Comprehensive Income. Statement No. 130 establishes new rules for the reporting
and display of comprehensive income and its components.

Statement No. 130 requires unrealized gains or losses on the Company's
available-for-sale securities, previously required to be reported as a separate
component of stockholder's equity, to be included in other comprehensive income
and the disclosure of total comprehensive income. Statement No. 130 also
requires that other comprehensive income items and comprehensive income be
displayed separately in the financial statements.

Transactions with Affiliates

On October 23, 1996, the Company entered into a revolving credit agreement with
SunTrust Bank (a non-affiliate), replacing its loan agreements with affiliates.
During the year ended December 31, 1997 and on December 31, 1996, the Company
had no loans outstanding to affiliates.

                                    16 of 34
<PAGE>

Transactions with Affiliates (continued)

In 1998, the Company entered into an intercompany loan agreement with
Jefferson-Pilot Corporation whereby the Company may borrow funds for working
capital needs at short-term interest rates. At December 31, 1998 the Company has
borrowed $1,200,000 which is included in amount due to affiliates. Interest paid
to affiliates, on its loan agreements was $19,969 in 1998.

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 JP Service in accordance with mutually agreed upon cost allocation
methods that the Company and JP Service 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 assets retained from loan sales 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 1998 presentation.

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. On June 30, 1998, the Agreement was amended
to extend the termination date to June 29, 1999. 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 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 are 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.

During 1998, The Company originated additional loans of $9,983,843 which were
sold to PREFCO. The Company received proceeds of $9,484,651 representing a 95%
undivided interest in the loans. At December 31, 1998, the outstanding balance
of loans sold by the Company under the Agreement was $55,177,199.



                                    17 of 34
<PAGE>

3.  Sale of Collateral Notes Receivable Portfolio (continued)

The fair value of the Company's retained interest and servicing rights at
December 31, 1998 was $4,301,000 compared to $2,789,198 at December 31, 1997.

The Company is responsible for servicing, managing and collecting all
receivables, 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 received fees
of $1,028,796 for services provided during 1998 compared to actual servicing
costs of $692,038. In addition to servicing fees, the Company earns other fee
income from transactions affecting the purchase of collateral notes receivable.

Proceeds from the original sale of the receivables on December 31, 1997, 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.

During the years ended December 31, 1998 and 1997, the Company capitalized
$1,507,942 and $1,365,191 respectively, of interest receivable into the balance
of collateral notes receivable prior to the sale of such receivables.

4.  Interest Retained from Receivable Sales, net

The Company has retained the following interests from sales of its loans. All
amounts except capitalized servicing rights are shown at the lower of amortized
initial fair value or fair value at the balance sheet date.

<TABLE>
<CAPTION>
                                                                           December 31
                                                                  1998                     1997
                                                        ------------------------- ------------------------
<S>                                                           <C>                       <C>        
Residual principal (includes capitalized interest)            $ 1,478,335               $   781,449
Interest-only strips receivable                                 2,433,132                 1,689,004
Capitalized servicing rights, net                                 389,533                   318,745
                                                        ========================= ========================
                                                              $ 4,301,000               $ 2,789,198
                                                        ========================= ========================
</TABLE>

Residual principal represents a 5% undivided interest in the receivables and
capitalized interest sold by the Company at the time of each sale. As the sold
principal is fully amortized prior to amortization of the retained principal,
the Company's undivided interest may not represent 5% of the total outstanding
receivables subsequent to the date of each sale.

Interest only strips receivable represent the Company's right to interest in
excess of the sum paid to the counter-party.

The Company receives fee income for continuing to service sold receivables.
Under Statement of Financial Accounting Standards No. 125 (Statement No. 125),
Accounting for Transfer and Servicing of Financial Assets and Extinguishments of
Liabilities, the Company is allowed to capitalize the present value of expected
servicing fee income in excess of the related cost of servicing over the
estimated life of the sold receivables (net servicing income). To the extent
that net servicing income varies from management's estimates, the servicing
asset may amortize faster or slower than anticipated. The Company assesses the
carrying value of its servicing asset annually using anticipated future cash
flows associated with the asset. The asset will be written-down to the extent
that estimated fair value is less than carrying value at the balance sheet date.
No adjustment is recorded for fair values which exceed carrying values at the
balance sheet date.

All of the above interests retained are subordinated to the payment of principal
and interest to the bank-sponsored commercial paper conduit, and are initially
recorded at their respective fair values. In accordance with the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities, the Company classifies interests
retained (other than capitalized servicing rights) as available-for-sale
securities. As a result, unrealized gain and unrealized losses deemed to be
other-than-temporary are included in comprehensive income as a separate part of
stockholders equity.



                                    18 of 34
<PAGE>

4.  Interest Retained from Receivable Sales, net (continued)

Subsequent to initial recognition, capitalized servicing rights are carried at
the lower of amortized initial fair value or current fair value, as the Company
is required to assess the carrying value only for impairment or additional
obligation.

No adjustment for impairment or additional obligation was recorded by the
Company during the fiscal years ended December 31, 1998 and 1997.

The amortized cost and estimated fair value of the Company's interests retained
at December 31, 1998 and 1997 other than capitalized servicing rights, are shown
below. Expected maturities may differ from contractual maturities as the
Programs underlying the securities may be terminated prior to contractual
maturity.

<TABLE>
<CAPTION>
                                                                        December 31, 1998
                                         ---------------------------------------------------------------------------------
                                                                  Unrealized
                                                                    Losses,              Unrealized           Fair Market
                                               Cost                  gross              Gains, gross             Value
                                       -------------------- --------------------- -------------------- --------------------
<S>                                         <C>                      <C>                <C>                 <C>        
Residual principal certificates due
   five years through ten years             $ 1,206,957              271,378                                $ 1,478,335

Interest only strip receivables due
   five years through ten years             $ 1,986,483              446,649                                $ 2,433,132
                                       ==================== ===================== ==================== ====================
                                              3,193,440              718,027                                $ 3,911,467
                                       ==================== ===================== ==================== ====================
</TABLE>

<TABLE>
<CAPTION>
                                                                        December 31, 1997
                                         ---------------------------------------------------------------------------------
                                                                  Unrealized
                                                                    Losses,              Unrealized           Fair Market
                                               Cost                  gross              Gains, gross             Value
                                       -------------------- --------------------- -------------------- --------------------
<S>                                         <C>                      <C>                <C>                 <C>        
Residual principal certificates due
   five years through ten years             $   781,449                                                     $    781,449

Interest only strip receivables due
   five years through ten years             $ 1,689,000                                                     $  1,689,004
                                       ==================== ===================== ==================== ====================
                                            $ 2,470,453                                                     $  2,470,453
                                       ==================== ===================== ==================== ====================
</TABLE>

5.  Income Taxes

The operations of the Company are included in the consolidated federal income
tax return of Jefferson-Pilot Corporation. Federal income tax is allocated by
Jefferson-Pilot Corporation 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 1998, 1997 and 1996.

The Company made income tax payments of $561,956, $328,106, and $134,982, in
1998, 1997 and 1996, 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 1998, 1997
and 1996 were $113,100, $98,611, and $51,496, respectively.



                                    19 of 34
<PAGE>

5.  Income Taxes (continued)

Significant components of income tax expense for the years ended December 31,
1998, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
                                       1998              1997             1996
                                       ----              ----             ----
<S>                                     <C>               <C>               <C>    
  Current:
     Federal                            421,421           295,813           166,812
     State                              113,100            90,710            41,496
                                      --------------------------------------------
           Total                        534,521           386,523           218,308

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

  Income tax expense from 
     continuing operations           $  534,521        $  420,409        $  218,308
</TABLE>

Included in due to affiliates are deferred tax assets of $291,841 as of December
31, 1998 and deferred tax liabilities of $27,011 as of December 31, 1997 and
deferred tax asset of $6,875 as of December 31, 1996.

6.  Deferred Compensation and other Postretirement Benefits

Substantially all employees of the Company participated in a noncontributory
defined benefit pension plan, a contributory defined contribution retirement
plan, and postretirement life insurance and health care plans of Jefferson-Pilot
Corporation. The Pension and Retirement Plans for the Employees' of
Jefferson-Pilot Corporation are funded through group annuity contracts with
Jefferson Pilot Life Insurance Company and provide benefits based on annual
compensation and years of service. Accumulated plan benefits, plan net assets
and net periodic pension costs by component for the Company is not determinable.

7.  Option and Incentive Plans

Substantially all of the Company's employees are eligible to participate in
stock ownership and incentive plans of Jefferson-Pilot Corporation. The
Company's proportionate share of costs related to these stock ownership and
incentive plans has been included in General and Administrative.

8.  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. These loan agreements with affiliates were
terminated in 1996.

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%. Maturities on
affiliated borrowings during 1996 ranged from 30 to 180 days.

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



                                    20 of 34
<PAGE>

9.  Year 2000 Assessment (unaudited)

The Company recognizes the need to ensure that its operations will not be
adversely impacted by the Year 2000 systems failures. Year 2000 issues arise
because some computer software and hardware (systems) were designed to handle
only a two digit year, not a four digit year. By using two digits, they could
fail or make miscalculations due to the inability to distinguish between dates
in the 1900' and in the 2000's.

In order to minimize the impact of the year 2000 on the Company, Jefferson-Pilot
Corporation developed a centralized oversight and project management process to
facilitate the planning and conversion of all information systems on behalf of
the Company and its affiliates. The scope of the project includes an assessment
of the Company's material systems currently in place, modification, testing and
implementation of such systems as required, inquiry to third-party providers
with whom the Company has material business relationships as to the state of
their readiness, and the development of a contingency plan in the event that
material Year 2000 issues arise.

The Company has completed its assessment and modifications of its material
administrative systems to handle the Year 2000. The underlying software, which
includes file structures, on-line access screen formats and the data access
methods for the Company's systems were rewritten, tested, certified and
implemented during 1998. The cost of rewriting, testing, certifying and
implementing these systems was $80,115.

The Company has completed the strategy phase of its PC and Lan Systems and is
executing the assessment, remediation and certification phases concurrently. All
the Company's key business partners have responded to the Company's inquiries,
indicating that they are on schedule for Year 2000 compliance. The Company is
currently testing data transmissions from its key business partners and the
results are being analyzed.

The target date for completing all remaining phases is September 30, 1999.
Although management does not anticipate a material effect on its business
operations as a result of the Year 2000 computer systems issues, the Company is
in the process of developing a contingency plan in the event that material Year
2000 issues arise in the Company or third-party computer systems.


                                    21 of 34
<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, 1998.

<TABLE>
<CAPTION>
         Name(1)                               Age           Position(2)
         -------                               ---           -----------
         <S>                                    <C>          <C>                                          
         Ronald R. Angarella                    40           President, Chairman and Director
         Dennis R. Glass                        49           Director
         E. J. Yelton                           59           Director
         John A. Weston                         39           Treasurer
         Russell C. Simpson                     43           Vice President and Chief Financial Officer
         Charles C. Cornelio                    39           Vice President
         Carol R. Hardiman                      44           Vice President, Administration
         Shari J. Lease                         44           Secretary
         Robert A. Reed                         56           Vice President and Assistant Secretary
</TABLE>

Ronald R. Angarella was elected President and Chairman of the Company and Broker
Dealer in October 1995. Mr. Angarella was elected Senior Vice President of
Jefferson Pilot Financial and Vice Chairman of the Broker-Dealer in November
1994. Mr. Angarella served as Vice President, Staff Management of Jefferson
Pilot Financial from September 1992 to November 1994, and Assistant Vice
President, Staff Management of Jefferson Pilot Financial 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 Jefferson Pilot Financial until his election as Vice President
of Jefferson Pilot Financial in February 1999. He was elected Treasurer of
Jefferson Pilot Variable Fund, Inc. in April 1992, and Treasurer of Jefferson
Pilot Investment Advisory Corporation in May 1992. From July 1989 to April 1995
Mr. Weston was Mutual Fund Accounting Officer for Jefferson Pilot Financial.

Russell C. Simpson was elected Chief Financial Officer of the Company in
December 1997. Mr. Simpson serves as Vice President and Treasurer of Jefferson
Pilot Financial. 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
Jefferson Pilot Financial.


                                    22 of 34
<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 Jefferson Pilot Financial 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 Jefferson Pilot Financial.
From March 1992 to December 1994 he served as Vice President, Counsel and
Assistant Secretary for Jefferson Pilot Financial. He also serves as Executive
Vice President - Operations of Jefferson Pilot LifeAmerica and as Vice
President, General Counsel to Jefferson Pilot Variable 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 February 1998
has been as Vice President and Counsel of Jefferson Pilot Financial. Ms. Lease
served as Assistant Vice President and Counsel of Jefferson Pilot Financial from
April 1995 to February 1998. Ms. Lease was elected Secretary of Jefferson Pilot
Variable Fund, Inc. in April 1992. She served as Associate Counsel of Jefferson
Pilot Financial from April 1994 to April 1995, Assistant Counsel of Jefferson
Pilot Financial from October 1990 to April 1994 and Assistant Secretary of
Jefferson Pilot Variable 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.


                                    23 of 34
<PAGE>

                             Hampshire Funding, Inc.
                                One Granite Place
                          Concord, New Hampshire 03301

                               Board of Directors
                                December 31, 1998

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

Dennis R. Glass
#3 Lockridge Court.
Greensboro, NC 27408

E. J. Yelton
304 St. Lauren Drive
Greensboro, NC  27410


                                    24 of 34
<PAGE>

                             Hampshire Funding, Inc.
                                One Granite Place
                          Concord, New Hampshire 03301

                                    Officers
                                December 31, 1998

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

Vice President, Assistant Secretary                   Robert A. Reed
                                                      P. O. Box 21008
                                                      Greensboro, NC  27420

Vice President, Administration                        Carol R. Hardiman
                                                      1 Paradise Road
                                                      Chichester, NH  03234

Vice President                                        Charles C. Cornelio
                                                      1802 Regents Park Lane
                                                      Greensboro, NC 27455

Vice President and Chief Financial Officer            Russell C. Simpson
                                                      6002 Early Trail
                                                      Greensboro, NC 27358

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

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

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

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

Assistant Treasurer                                   Donna Wilbur
                                                      21 Dwinell Drive
                                                      Concord, NH 03301

Investment Operations Officer                         Michael F. Murray
                                                      6 Morgan Drive
                                                      Bow, NH 03304


                                    25 of 34
<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 30, 1998.

<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
</TABLE>

(b)      Security Ownership of Management
         None.

Item 13 - Certain Relationships and Related Transactions

(a)      Transactions With Management and Others

         The Company, has an agreement 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 affiliated Insurance
         Companies.

         On October 23, 1996, the Company paid all outstanding principal and
         interest owed to affiliates. At December 31, 1996 and during 1997, and
         1998 the Company had no loans outstanding to affiliates.

         The Company has an intercompany loan agreement with Jefferson-Pilot
         Corporation, whereby it may borrow money at short-term interest rates.
         At December 31, 1998 the Company has $1,200,000 of loans outstanding.

         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.


                                    26 of 34
<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,
                           1998 and 1997

                  (iii)    Statements of Income for each of the three years in
                           the period ended December 31, 1998.

                  (iv)     Statements of Changes in Stockholder's Equity for
                           each of the three years in the period ended December
                           31, 1998.

                  (v)      Statements of Cash Flows for each of the three years
                           in the period ended December 31, 1998.

                  (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.

                  Reg S-K
                  Item 601

<TABLE>
<CAPTION>
                  Exhibit
                  Table No.                       Document                         Reference Source
                  ---------                       --------                         ----------------
                  <S>                      <C>                                     <C>
                      (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


                                    27 of 34
<PAGE>

                  Exhibit
                  Table No.                       Document                         Reference Source
                  ---------                       --------                         ----------------
                      (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

                                      (d)  Receivables Purchase Agreement Form
                                           10-K, filed among the Company,
                                           Investors, March 30, 1998, for the
                                           year Preferred Receivables Funding
                                           ended December 31, 1997, pp
                                           Corporation and First National 27-75
                                           Bank of Chicago dated
                                           December 31, 1997

                                      (e)  Performance Guarantee by                Form 10-K, filed
                                           Jefferson-Pilot Corporation             March 30, 1998, for the year
                                                                                   ended December 31, 1997, pp
                                                                                   76-83

                      (ii)            Filed by enclosure.

                  Reg S-K
                  Item 601

                      (10)            (a)  Amendment No. 1 to the Receivables      pp. 31-33
                                           Receivables Purchase Agreement
                                           among the Company, Investors, Preferred
                                           Receivables Funding Corporation and
                                           First National Bank of Chicago dated
                                           June 29, 1998

                                    28 of 34
<PAGE>

                      (27)                 Financial Data Schedule                 p.  34
</TABLE>

                  (b) Reports on Form 8-K

                      The Company did not file Reports on Form 8-K during the
                      last quarter of the period covered by this report.


                                    29 of 34
<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, 1999                           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, 1999
------------------------------------
    Ronald R. Angarella

/s/ DENNIS R. GLASS                                 Director                                     March 30, 1999
------------------------------------
    Dennis R. Glass

/s/ E. JAY YELTON                                   Director                                     March 30, 1999
------------------------------------
    E. Jay Yelton

/s/ JOHN A. WESTON                                  Treasurer                                    March 30, 1999
------------------------------------
    John A. Weston

/s/ RUSSELL C. SIMPSON                              Vice President and                           March 30, 1999
------------------------------------                Chief Financial Officer
    Russell C. Simpson
</TABLE>


                                    30 of 34