<PAGE>
SELECT DIMENSIONS
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
SEPARATE ACCOUNT THREE
HARTFORD LIFE
INSURANCE COMPANY
SEPARATE ACCOUNT THREE
SEMI-ANNUAL REPORT
JUNE 30, 1996
[LOGO] [LOGO]
<PAGE>
SELECT DIMENSIONS
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
SEPARATE ACCOUNT THREE
<PAGE>
Separate Account Three
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF NET ASSETS & LIABILITIES
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Investment Series:
Money Market Fund
Shares 57,489,744
Cost $ 57,489,744
Market Value......... $57,489,744 -- -- --
North American
Government Securities
Fund
Shares 242,722
Cost $ 2,450,982
Market Value......... -- $2,422,361 -- --
Balanced Fund
Shares 1,983,224
Cost $ 22,956,420
Market Value......... -- -- $24,631,643 --
Utilities Fund
Shares 2,162,023
Cost $ 25,472,780
Market Value......... -- -- -- $27,738,756
Dividend Growth Fund
Shares 9,886,316
Cost $132,557,526
Market Value......... -- -- -- --
Value Added Market Fund
Shares 3,292,580
Cost $ 40,154,906
Market Value......... -- -- -- --
Core Equity Fund
Shares 663,160
Cost $ 7,603,172
Market Value......... -- -- -- --
American Value Fund
Shares 5,124,566
Cost $ 68,449,684
Market Value......... -- -- -- --
Global Equity Fund
Shares 3,083,668
Cost $ 34,120,652
Market Value......... -- -- -- --
Developing Growth Fund
Shares 2,298,307
Cost $ 34,972,986
Market Value......... -- -- -- --
Emerging Markets Fund
Shares 1,044,249
Cost $ 10,835,266
Market Value......... -- -- -- --
Diversified Income Fund
Shares 1,885,319
Cost $ 19,152,762
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 316,343 -- 46,523 70,703
Receivable from fund
shares sold........... -- 81 -- --
--------------- ------------ ----------- -------------
Total Assets........... 57,806,087 2,422,442 24,678,166 27,809,459
--------------- ------------ ----------- -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- 92 -- --
Payable for fund shares
purchased............. 316,097 -- 45,205 71,065
--------------- ------------ ----------- -------------
Total Liabilities...... 316,097 92 45,205 71,065
--------------- ------------ ----------- -------------
Net Assets (variable
annuity contract
liabilities).......... $57,489,990 $2,422,350 $24,632,961 $27,738,394
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 5,369,595 230,245 1,924,392 2,083,554
Unit Price............. $ 10.706579 $10.520748 $12.793741 $ 13.313017
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... -- -- 999 --
Unit Price............. -- -- $12.793741 --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE ADDED CORE EQUITY AMERICAN DEVELOPING
GROWTH FUND MARKET FUND FUND VALUE FUND GLOBAL EQUITY FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Investment Series:
Money Market Fund
Shares 57,489,744
Cost $ 57,489,744
Market Value......... -- -- -- -- -- --
North American
Government Securities
Fund
Shares 242,722
Cost $ 2,450,982
Market Value......... -- -- -- -- -- --
Balanced Fund
Shares 1,983,224
Cost $ 22,956,420
Market Value......... -- -- -- -- -- --
Utilities Fund
Shares 2,162,023
Cost $ 25,472,780
Market Value......... -- -- -- -- -- --
Dividend Growth Fund
Shares 9,886,316
Cost $132,557,526
Market Value......... $149,283,376 -- -- -- -- --
Value Added Market Fund
Shares 3,292,580
Cost $ 40,154,906
Market Value......... -- $43,560,837 -- -- -- --
Core Equity Fund
Shares 663,160
Cost $ 7,603,172
Market Value......... -- -- $ 8,236,442 -- -- --
American Value Fund
Shares 5,124,566
Cost $ 68,449,684
Market Value......... -- -- -- $74,869,911 -- --
Global Equity Fund
Shares 3,083,668
Cost $ 34,120,652
Market Value......... -- -- -- -- $36,387,281 --
Developing Growth Fund
Shares 2,298,307
Cost $ 34,972,986
Market Value......... -- -- -- -- -- $39,301,043
Emerging Markets Fund
Shares 1,044,249
Cost $ 10,835,266
Market Value......... -- -- -- -- -- --
Diversified Income Fund
Shares 1,885,319
Cost $ 19,152,762
Market Value......... -- -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 642,999 203,521 30,644 382,211 168,066 238,993
Receivable from fund
shares sold........... -- -- -- -- -- --
--------------- ------------ ------------- ----------- ------------------ ---------------
Total Assets........... 149,926,375 43,764,358 8,267,086 75,252,122 36,555,347 39,540,036
--------------- ------------ ------------- ----------- ------------------ ---------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- -- -- --
Payable for fund shares
purchased............. 642,995 203,526 30,649 382,218 168,055 238,996
--------------- ------------ ------------- ----------- ------------------ ---------------
Total Liabilities...... 642,995 203,526 30,649 382,218 168,055 238,996
--------------- ------------ ------------- ----------- ------------------ ---------------
Net Assets (variable
annuity contract
liabilities).......... $149,283,380 $43,560,832 $ 8,236,437 $74,869,904 $36,387,292 $39,301,040
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 9,669,376 3,237,856 656,379 5,112,079 3,028,498 2,288,064
Unit Price............. $ 15.434087 $ 13.453603 $ 12.544194 $14.645687 $ 12.014080 $ 17.167774
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 2,941 -- 214 -- 223 1,169
Unit Price............. $ 15.434087 -- $ 12.544194 -- $ 12.014080 $ 17.167774
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Investment Series:
Money Market Fund
Shares
Cost
Market Value......... -- --
North American
Government Securities
Fund
Shares
Cost
Market Value......... --
Balanced Fund
Shares
Cost
Market Value......... -- --
Utilities Fund
Shares
Cost
Market Value......... -- --
Dividend Growth Fund
Shares
Cost
Market Value......... -- --
Value Added Market Fund
Shares
Cost
Market Value......... -- --
Core Equity Fund
Shares
Cost
Market Value......... -- --
American Value Fund
Shares
Cost
Market Value......... -- --
Global Equity Fund
Shares
Cost
Market Value......... -- --
Developing Growth Fund
Shares
Cost
Market Value......... -- --
Emerging Markets Fund
Shares
Cost
Market Value......... $11,518,066 --
Diversified Income Fund
Shares
Cost
Market Value......... -- $19,399,936
Due from ITT Hartford
Life and Annuity
Insurance Company..... 92,078 72,661
Receivable from fund
shares sold........... -- --
------------------ ------------------
Total Assets........... 11,610,144 19,472,597
------------------ ------------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- --
Payable for fund shares
purchased............. 92,090 72,661
------------------ ------------------
Total Liabilities...... 92,090 72,661
------------------ ------------------
Net Assets (variable
annuity contract
liabilities).......... $11,518,054 $19,399,936
------------------ ------------------
------------------ ------------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 1,023,864 1,756,044
Unit Price............. $ 11.249591 $ 11.047524
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... -- --
Unit Price............. -- --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE>
SEPARATE ACCOUNT THREE
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 1,157,500 $ 46,906 $ 265,046 $ 388,508
EXPENSES:
Mortality and expense
undertakings.......... (331,423) (13,917 ) (138,549 ) (162,491 )
--------------- ------------ ----------- -------------
Net Investment income
(loss).............. 826,077 32,989 126,497 226,017
--------------- ------------ ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- 7 4,768 (3,782 )
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- (37,661 ) 850,308 955,125
--------------- ------------ ----------- -------------
Net gains (losses) on
investments......... -- (37,654 ) 855,076 951,343
--------------- ------------ ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 826,077 $ (4,665 ) $ 981,573 $ 1,177,360
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE ADDED CORE EQUITY AMERICAN DEVELOPING
GROWTH FUND MARKET FUND FUND VALUE FUND GLOBAL EQUITY FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 1,174,383 $ 292,017 $ 14,569 $ 226,633 $ 237,181 $ 51,682
EXPENSES:
Mortality and expense
undertakings.......... (776,323) (227,807 ) (36,441) (376,444) (176,798) (180,159)
--------------- ------------ ------------- ----------- ------------------ ---------------
Net Investment income
(loss).............. 398,060 64,210 (21,872) (149,811) 60,383 (128,477)
--------------- ------------ ------------- ----------- ------------------ ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (1,723) (10,125 ) (13,667) (1,855) 12 (6,843)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 10,467,328 2,276,693 534,744 3,447,358 1,701,743 2,949,434
--------------- ------------ ------------- ----------- ------------------ ---------------
Net gains (losses) on
investments......... 10,465,605 2,266,568 521,077 3,445,503 1,701,755 2,942,591
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 10,863,665 $ 2,330,778 $ 499,205 $ 3,295,692 $ 1,762,138 $ 2,814,114
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 71,507 $ 506,962
EXPENSES:
Mortality and expense
undertakings.......... (50,548) (91,608)
-------- --------
Net Investment income
(loss).............. 20,959 415,354
-------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 644 (4,763)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 734,745 126,504
-------- --------
Net gains (losses) on
investments......... 735,389 121,741
-------- --------
Net increase
(decrease) in net
assets resulting
from operations..... $ 756,348 $ 537,095
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5
<PAGE>
Separate Account Three
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 826,077 $ 32,989 $ 126,497 $ 226,017
Net realized gain
(loss) on security
transactions.......... -- 7 4,768 (3,782)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- (37,661 ) 850,308 955,125
--------------- ------------ ----------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 826,077 (4,665 ) 981,573 1,177,360
--------------- ------------ ----------- -------------
UNIT TRANSACTIONS:
Purchases.............. 44,704,458 1,353,685 8,336,945 9,701,131
Net transfers.......... (26,875,247) (48,667 ) 738,166 (112,681)
Surrenders............. (1,828,202) (10,274 ) (271,437) (228,790)
Net annuity
transactions.......... -- -- 12,782 --
--------------- ------------ ----------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 16,001,009 1,294,744 8,816,456 9,359,660
--------------- ------------ ----------- -------------
Total increase in net
assets................ 16,827,086 1,290,079 9,798,029 10,537,020
NET ASSETS:
Beginning of period.... 40,662,904 1,132,271 14,834,932 17,201,374
--------------- ------------ ----------- -------------
End of period.......... $ 57,489,990 $ 2,422,350 $24,632,961 $ 27,738,394
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
OPERATIONS:
Net investment
income................ $ 639,855 $ 14,980 $ 91,861 $ 98,105
Net realized gain
(loss) on security
transactions.......... -- 21 3,651 1,504
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 8,961 822,659 1,309,995
--------------- ------------ ----------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 639,855 23,962 918,171 1,409,604
--------------- ------------ ----------- -------------
UNIT TRANSACTIONS:
Purchases.............. 56,967,713 1,274,912 12,856,387 14,264,648
Net transfers.......... (17,794,789) (178,952 ) 697,577 1,290,090
Surrenders............. (283,062) (9,537 ) (332,221) (160,134)
--------------- ------------ ----------- -------------
Net increase in net
assets resulting from
unit transactions..... 38,889,862 1,086,423 13,221,743 15,394,604
--------------- ------------ ----------- -------------
Total increase in net
assets................ 39,529,717 1,110,385 14,139,914 16,804,208
NET ASSETS:
Beginning of period.... 1,133,187 21,886 695,018 397,166
--------------- ------------ ----------- -------------
End of period.......... $ 40,662,904 $ 1,132,271 $14,834,932 $ 17,201,374
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
6
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE ADDED CORE EQUITY AMERICAN DEVELOPING
GROWTH FUND MARKET FUND FUND VALUE FUND GLOBAL EQUITY FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 398,060 $ 64,210 $ (21,872) $ (149,811) $ 60,383 $ (128,477)
Net realized gain
(loss) on security
transactions.......... (1,723) (10,125) (13,667) (1,855) 12 (6,843)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 10,467,328 2,276,693 534,744 3,447,358 1,701,743 2,949,434
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 10,863,665 2,330,778 499,205 3,295,692 1,762,138 2,814,114
--------------- ------------ ------------- ----------- ------------------ ---------------
UNIT TRANSACTIONS:
Purchases.............. 56,155,534 14,783,972 3,668,235 30,985,968 15,602,901 17,031,143
Net transfers.......... 9,148,822 4,755,063 597,288 5,309,757 3,557,765 3,503,298
Surrenders............. (1,268,190) (452,444) (72,319) (603,058) (439,669) (366,942)
Net annuity
transactions.......... 45,657 -- 2,570 -- 2,538 20,719
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 64,081,823 19,086,591 4,195,774 35,692,667 18,723,535 20,188,218
--------------- ------------ ------------- ----------- ------------------ ---------------
Total increase in net
assets................ 74,945,488 21,417,369 4,694,979 38,988,359 20,485,673 23,002,332
NET ASSETS:
Beginning of period.... 74,337,892 22,143,463 3,541,458 35,881,545 15,901,619 16,298,708
--------------- ------------ ------------- ----------- ------------------ ---------------
End of period.......... $ 149,283,380 $ 43,560,832 $ 8,236,437 $74,869,904 $ 36,387,292 $ 39,301,040
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
DIVIDEND VALUE ADDED CORE EQUITY AMERICAN DEVELOPING
GROWTH FUND MARKET FUND FUND VALUE FUND GLOBAL EQUITY FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------- ----------- ------------------ ---------------
OPERATIONS:
Net investment
income................ $ 265,572 $ 66,441 $ 4,336 $ 7,105 $ 51,620 $ 13,093
Net realized gain
(loss) on security
transactions.......... (16,328) 3,791 (1,489) 3,381 987 9,785
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 6,252,310 1,125,137 97,871 2,960,702 562,561 1,376,027
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 6,501,554 1,195,369 100,718 2,971,188 615,168 1,398,905
--------------- ------------ ------------- ----------- ------------------ ---------------
UNIT TRANSACTIONS:
Purchases.............. 60,696,608 18,013,450 2,831,593 28,794,175 12,926,622 12,424,796
Net transfers.......... 6,571,343 2,886,893 428,776 3,710,153 1,525,052 2,386,662
Surrenders............. (708,897) (201,852) (34,978) (315,577) (260,038) (190,170)
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase in net
assets resulting from
unit transactions..... 66,559,054 20,698,491 3,225,391 32,188,751 14,191,636 14,621,288
--------------- ------------ ------------- ----------- ------------------ ---------------
Total increase in net
assets................ 73,060,608 21,893,860 3,326,109 35,159,939 14,806,804 16,020,193
NET ASSETS:
Beginning of period.... 1,277,284 249,603 215,349 721,606 1,094,815 278,515
--------------- ------------ ------------- ----------- ------------------ ---------------
End of period.......... $ 74,337,892 $ 22,143,463 $ 3,541,458 $35,881,545 $ 15,901,619 $ 16,298,708
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 20,959 $ 415,354
Net realized gain
(loss) on security
transactions.......... 644 (4,763)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 734,745 126,504
------------------ ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 756,348 537,095
------------------ ------------------
UNIT TRANSACTIONS:
Purchases.............. 5,512,487 7,812,106
Net transfers.......... 1,596,388 3,231,789
Surrenders............. (171,513) (398,033)
Net annuity
transactions.......... -- --
------------------ ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 6,937,362 10,645,862
------------------ ------------------
Total increase in net
assets................ 7,693,710 11,182,957
NET ASSETS:
Beginning of period.... 3,824,344 8,216,979
------------------ ------------------
End of period.......... $ 11,518,054 $ 19,399,936
------------------ ------------------
------------------ ------------------
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
OPERATIONS:
Net investment
income................ $ 13,633 $ 101,020
Net realized gain
(loss) on security
transactions.......... (1,257) 1,092
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (52,783) 119,949
------------------ ------------------
Net increase (decrease)
in net assets
resulting from
operations............ (40,407) 222,061
------------------ ------------------
UNIT TRANSACTIONS:
Purchases.............. 3,281,107 7,211,967
Net transfers.......... 285,332 514,813
Surrenders............. (48,675) (33,450)
------------------ ------------------
Net increase in net
assets resulting from
unit transactions..... 3,517,764 7,693,330
------------------ ------------------
Total increase in net
assets................ 3,477,357 7,915,391
NET ASSETS:
Beginning of period.... 346,987 301,588
------------------ ------------------
End of period.......... $ 3,824,344 $ 8,216,979
------------------ ------------------
------------------ ------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
7
<PAGE>
SEPARATE ACCOUNT THREE
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
1. ORGANIZATION:
Separate Account Three (the Account) is a separate investment account within
ITT Hartford Life & Annuity Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. Both
the Company and the Account are subject to supervision and regulation by the
Department of Insurance of the State of Connecticut and the SEC. The Account
invests deposits by variable annuity contractholders of the Company in
various mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividend and capital
gains income are accrued as of the ex-dividend date. Capital gains
income represents dividends from the Funds which are characterized as
capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Dean Witter Select
Dimensions Investment Series Mutual Funds is valued at the closing net
asset value per share as determined by the appropriate Fund as of June
30, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of 1.25% of
the Account's average daily net assets. The Company also provides
administrative services and receives an annual fee of 0.15% of the
Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contract owners' accounts, in accordance with the terms of the
contracts.
8
<PAGE>
SELECT DIMENSIONS
HARTFORD LIFE
INSURANCE COMPANY
SEPARATE ACCOUNT THREE
<PAGE>
Separate Account Three
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS & LIABILITIES
JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Investment
Series:
Money Market Fund
Shares 2,585,861
Cost $2,585,861
Market Value......... $ 2,585,861 -- -- --
North American
Government Securities
Fund
Shares 21,397
Cost $ 216,099
Market Value......... -- $ 213,539 -- --
Balanced Fund
Shares 123,881
Cost $1,394,690
Market Value......... -- -- $1,538,608 --
Utilities Fund
Shares 98,332
Cost $1,167,819
Market Value......... -- -- -- $ 1,261,606
Dividend Growth Fund
Shares 586,999
Cost $7,831,296
Market Value......... -- -- -- --
Value Added Market Fund
Shares 232,274
Cost $2,819,994
Market Value......... -- -- -- --
Core Equity Fund
Shares 48,386
Cost $ 550,252
Market Value......... -- -- -- --
American Value Fund
Shares 355,462
Cost $4,726,895
Market Value......... -- -- -- --
Global Equity Fund
Shares 316,425
Cost $3,534,749
Market Value......... -- -- -- --
Developing Growth Fund
Shares 158,044
Cost $2,411,786
Market Value......... -- -- -- --
Emerging Markets Fund
Shares 81,105
Cost $ 848,236
Market Value......... -- -- -- --
Diversified Income Fund
Shares 104,118
Cost $1,055,041
Market Value......... -- -- -- --
Due from Hartford Life
Insurance Co.......... -- -- -- --
Receivable from fund
shares sold........... 192,961 8 117 403
--------------- ------------ ----------- -------------
Total Assets........... 2,778,822 213,547 1,538,725 1,262,009
--------------- ------------ ----------- -------------
LIABILITIES:
Due to Hartford Life
Insurance Co.......... 192,949 9 42 9
Payable for fund shares
purchased............. -- -- -- --
--------------- ------------ ----------- -------------
Total Liabilities...... 192,949 9 42 9
--------------- ------------ ----------- -------------
Net Assets (variable
annuity contract
liabilities).......... $ 2,585,873 $ 213,538 $1,538,683 $ 1,262,000
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 241,521 20,297 120,268 94,794
Unit Price............. $ 10.706579 $10.520748 $12.793741 $ 13.313017
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE ADDED CORE EQUITY AMERICAN DEVELOPING
GROWTH FUND MARKET FUND FUND VALUE FUND GLOBAL EQUITY FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Investment
Series:
Money Market Fund
Shares 2,585,861
Cost $2,585,861
Market Value......... -- -- -- -- -- --
North American
Government Securities
Fund
Shares 21,397
Cost $ 216,099
Market Value......... -- -- -- -- -- --
Balanced Fund
Shares 123,881
Cost $1,394,690
Market Value......... -- -- -- -- -- --
Utilities Fund
Shares 98,332
Cost $1,167,819
Market Value......... -- -- -- -- -- --
Dividend Growth Fund
Shares 586,999
Cost $7,831,296
Market Value......... $8,863,677 -- -- -- -- --
Value Added Market Fund
Shares 232,274
Cost $2,819,994
Market Value......... -- $ 3,072,985 -- -- -- --
Core Equity Fund
Shares 48,386
Cost $ 550,252
Market Value......... -- -- $ 600,950 -- -- --
American Value Fund
Shares 355,462
Cost $4,726,895
Market Value......... -- -- -- $5,193,294 -- --
Global Equity Fund
Shares 316,425
Cost $3,534,749
Market Value......... -- -- -- -- $ 3,733,816 --
Developing Growth Fund
Shares 158,044
Cost $2,411,786
Market Value......... -- -- -- -- -- $ 2,702,549
Emerging Markets Fund
Shares 81,105
Cost $ 848,236
Market Value......... -- -- -- -- -- --
Diversified Income Fund
Shares 104,118
Cost $1,055,041
Market Value......... -- -- -- -- -- --
Due from Hartford Life
Insurance Co.......... 111,343 86,094 6,066 7,002 4,552 332
Receivable from fund
shares sold........... -- -- -- -- -- --
--------------- ------------ ------------- ----------- ------------------ ---------------
Total Assets........... 8,975,020 3,159,079 607,016 5,200,296 3,738,368 2,702,881
--------------- ------------ ------------- ----------- ------------------ ---------------
LIABILITIES:
Due to Hartford Life
Insurance Co.......... -- -- -- -- -- --
Payable for fund shares
purchased............. 111,354 86,121 6,081 7,020 4,557 149
--------------- ------------ ------------- ----------- ------------------ ---------------
Total Liabilities...... 111,354 86,121 6,081 7,020 4,557 149
--------------- ------------ ------------- ----------- ------------------ ---------------
Net Assets (variable
annuity contract
liabilities).......... $8,863,666 $ 3,072,958 $ 600,935 $5,193,276 $ 3,733,811 $ 2,702,732
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 574,292 228,412 47,906 354,594 310,786 157,431
Unit Price............. $15.434087 $ 13.453603 $ 12.544194 $14.645687 $ 12.014080 $ 17.167774
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Investment
Series:
Money Market Fund
Shares
Cost
Market Value......... -- --
North American
Government Securities
Fund
Shares
Cost
Market Value......... -- --
Balanced Fund
Shares
Cost
Market Value......... -- --
Utilities Fund
Shares
Cost
Market Value......... -- --
Dividend Growth Fund
Shares
Cost
Market Value......... -- --
Value Added Market Fund
Shares
Cost
Market Value......... -- --
Core Equity Fund
Shares
Cost
Market Value......... -- --
American Value Fund
Shares
Cost
Market Value......... -- --
Global Equity Fund
Shares
Cost
Market Value......... -- --
Developing Growth Fund
Shares
Cost
Market Value......... -- --
Emerging Markets Fund
Shares
Cost
Market Value......... $ 894,587 --
Diversified Income Fund
Shares
Cost
Market Value......... -- $ 1,071,372
Due from Hartford Life
Insurance Co.......... 171 --
Receivable from fund
shares sold........... -- 41
------------------ ------------------
Total Assets........... 894,758 1,071,413
------------------ ------------------
LIABILITIES:
Due to Hartford Life
Insurance Co.......... -- 43
Payable for fund shares
purchased............. 166 --
------------------ ------------------
Total Liabilities...... 166 43
------------------ ------------------
Net Assets (variable
annuity contract
liabilities).......... $ 894,592 $ 1,071,370
------------------ ------------------
------------------ ------------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 79,522 96,978
Unit Price............. $ 11.249591 $ 11.047524
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SEPARATE ACCOUNT THREE
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 42,714 $ 3,603 $ 20,635 $ 16,049
EXPENSES:
Mortality and expense
undertakings.......... (12,266) (1,033 ) (10,464 ) (6,732 )
--------------- ------------ ----------- -------------
Net investment income
(loss).............. 30,448 2,570 10,171 9,317
--------------- ------------ ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- 15 2,365 (166 )
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- (2,960 ) 61,014 40,787
--------------- ------------ ----------- -------------
Net gains (losses) on
investments......... -- (2,945 ) 63,379 40,621
--------------- ------------ ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 30,448 $ (375 ) $ 73,550 $ 49,938
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE ADDED CORE EQUITY AMERICAN DEVELOPING
GROWTH FUND MARKET FUND FUND VALUE FUND GLOBAL EQUITY FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 69,452 $ 21,344 $ 1,239 $ 14,801 $ 22,786 $ 3,259
EXPENSES:
Mortality and expense
undertakings.......... (46,021) (16,474 ) (3,090) (25,332 ) (16,965) (11,673)
--------------- ------------ ------------- ----------- -------- ---------------
Net investment income
(loss).............. 23,431 4,870 (1,851) (10,531 ) 5,821 (8,414)
--------------- ------------ ------------- ----------- -------- ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (1,298) 2,600 124 (2,593 ) 555 (309)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 620,716 159,166 46,456 234,923 160,937 190,835
--------------- ------------ ------------- ----------- -------- ---------------
Net gains (losses) on
investments......... 619,418 161,766 46,580 232,330 161,492 190,526
--------------- ------------ ------------- ----------- -------- ---------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 642,849 $ 166,636 $ 44,729 $ 221,799 $ 167,313 $ 182,112
--------------- ------------ ------------- ----------- -------- ---------------
--------------- ------------ ------------- ----------- -------- ---------------
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 5,227 $ 33,419
EXPENSES:
Mortality and expense
undertakings.......... (3,627) (5,942)
------- -------
Net investment income
(loss).............. 1,600 27,477
------- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (1) 107
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 46,337 7,052
------- -------
Net gains (losses) on
investments......... 46,336 7,159
------- -------
Net increase
(decrease) in net
assets resulting
from operations..... $ 47,936 $ 34,636
------- -------
------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
Separate Account Three
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 30,448 $ 2,570 $ 10,171 $ 9,317
Net realized gain
(loss) on security
transactions.......... -- 15 2,365 (166 )
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- (2,960 ) 61,014 40,787
--------------- ------------ ----------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 30,448 (375 ) 73,550 49,938
--------------- ------------ ----------- -------------
UNIT TRANSACTIONS:
Purchases.............. 2,610,916 168,532 598,978 509,032
Net transfers.......... (1,326,193) (2,300 ) (343,485) 87,472
Surrenders............. (48,498) -- (143,989) (14,558 )
--------------- ------------ ----------- -------------
Total increase
(decrease) in net
assets resulting from
unit transactions..... 1,236,225 166,232 111,504 581,946
--------------- ------------ ----------- -------------
Total increase
(decrease) in net
assets................ 1,266,673 165,857 185,054 631,884
NET ASSETS:
Beginning of period.... 1,319,200 47,681 1,353,629 630,116
--------------- ------------ ----------- -------------
End of period.......... $ 2,585,873 $ 213,538 $ 1,538,683 $ 1,262,000
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION (FEBRUARY 15, 1995) TO DECEMBER 31, 1995
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
OPERATIONS:
Net investment
income................ $ 26,554 $ 1,090 $ 9,765 $ 3,983
Net realized gain
(loss) on security
transactions.......... -- 93 784 6
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 400 82,904 52,999
--------------- ------------ ----------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 26,554 1,583 93,453 56,988
--------------- ------------ ----------- -------------
UNIT TRANSACTIONS:
Purchases.............. 2,795,148 81,336 1,183,650 466,844
Net transfers.......... (1,478,107) (35,237 ) 169,596 118,572
Surrenders............. (24,395) (1 ) (93,070) (12,288 )
--------------- ------------ ----------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,292,646 46,098 1,260,176 573,128
--------------- ------------ ----------- -------------
Total increase
(decrease) in net
assets................ 1,319,200 47,681 1,353,629 630,116
NET ASSETS:
Beginning of period.... -- -- -- --
--------------- ------------ ----------- -------------
End of period.......... $ 1,319,200 $ 47,681 $ 1,353,629 $ 630,116
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE ADDED CORE EQUITY AMERICAN DEVELOPING
GROWTH FUND MARKET FUND FUND VALUE FUND GLOBAL EQUITY FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 23,431 $ 4,870 $ (1,851) $ (10,531) $ 5,821 $ (8,414)
Net realized gain
(loss) on security
transactions.......... (1,298) 2,600 124 (2,593) 555 (309)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 620,716 159,166 46,456 234,923 160,937 190,835
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 642,849 166,636 44,729 221,799 167,313 182,112
--------------- ------------ ------------- ----------- ------------------ ---------------
UNIT TRANSACTIONS:
Purchases.............. 3,586,149 1,326,513 234,936 2,408,841 1,821,402 1,451,792
Net transfers.......... 813,166 (101,854 ) 30,408 528,036 782,646 159,576
Surrenders............. (373,614) (16,455 ) (9,815) (165,831) (99,639) (48,078)
--------------- ------------ ------------- ----------- ------------------ ---------------
Total increase
(decrease) in net
assets resulting from
unit transactions..... 4,025,701 1,208,204 255,529 2,771,046 2,504,409 1,563,290
--------------- ------------ ------------- ----------- ------------------ ---------------
Total increase
(decrease) in net
assets................ 4,668,550 1,374,840 300,258 2,992,845 2,671,722 1,745,402
NET ASSETS:
Beginning of period.... 4,195,116 1,698,118 300,677 2,200,431 1,062,089 957,330
--------------- ------------ ------------- ----------- ------------------ ---------------
End of period.......... $8,863,666 $ 3,072,958 $ 600,935 $ 5,193,276 $ 3,733,811 $ 2,702,732
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
DIVIDEND VALUE ADDED CORE EQUITY AMERICAN DEVELOPING
GROWTH FUND MARKET FUND FUND VALUE FUND GLOBAL EQUITY FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------- ----------- ------------------ ---------------
OPERATIONS:
Net investment
income................ $ 18,589 $ 6,069 $ 53 $ 443 $ 2,734 $ 783
Net realized gain
(loss) on security
transactions.......... (488) 51 (1) 309 181 107
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 411,667 93,825 4,242 231,478 38,132 99,929
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 429,768 99,945 4,294 232,230 41,047 100,819
--------------- ------------ ------------- ----------- ------------------ ---------------
UNIT TRANSACTIONS:
Purchases.............. 3,514,160 1,375,238 272,740 1,678,882 802,365 786,803
Net transfers.......... 352,632 235,521 23,596 358,598 230,961 113,811
Surrenders............. (101,444) (12,586 ) 47 (69,279) (12,284) (44,103)
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,765,348 1,598,173 296,383 1,968,201 1,021,042 856,511
--------------- ------------ ------------- ----------- ------------------ ---------------
Total increase
(decrease) in net
assets................ 4,195,116 1,698,118 300,677 2,200,431 1,062,089 957,330
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
--------------- ------------ ------------- ----------- ------------------ ---------------
End of period.......... $4,195,116 $ 1,698,118 $ 300,677 $ 2,200,431 $ 1,062,089 $ 957,330
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 1,600 $ 27,477
Net realized gain
(loss) on security
transactions.......... (1) 107
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 46,337 7,052
-------- ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 47,936 34,636
-------- ------------------
UNIT TRANSACTIONS:
Purchases.............. 506,711 373,960
Net transfers.......... 175,833 35,007
Surrenders............. (1,619) (15,957)
-------- ------------------
Total increase
(decrease) in net
assets resulting from
unit transactions..... 680,925 393,010
-------- ------------------
Total increase
(decrease) in net
assets................ 728,861 427,646
NET ASSETS:
Beginning of period.... 165,731 643,724
-------- ------------------
End of period.......... $ 894,592 $ 1,071,370
-------- ------------------
-------- ------------------
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
OPERATIONS:
Net investment
income................ $ 220 $ 6,258
Net realized gain
(loss) on security
transactions.......... (63) 35
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 13 9,279
-------- ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 170 15,572
-------- ------------------
UNIT TRANSACTIONS:
Purchases.............. 123,549 587,649
Net transfers.......... 41,980 42,607
Surrenders............. 32 (2,104)
-------- ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 165,561 628,152
-------- ------------------
Total increase
(decrease) in net
assets................ 165,731 643,724
NET ASSETS:
Beginning of period.... -- --
-------- ------------------
End of period.......... $ 165,731 $ 643,724
-------- ------------------
-------- ------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
SEPARATE ACCOUNT THREE
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
1. ORGANIZATION:
Separate Account Three (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividend and capital
gains income are accrued as of the ex-dividend date. Capital gains
income represents dividends from the Funds which are characterized as
capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Dean Witter Select
Dimensions Investment Series Mutual Funds is valued at the closing net
asset value per share as determined by the appropriate Fund as of June
30, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of 1.25% of
the Account's average daily net assets. The Company also provides
administrative services and receives an annual fee of 0.15% of the
Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contract owners' accounts, in accordance with the terms of the
contracts.
16
<PAGE>
17
<PAGE>
HARTFORD LIFE INSURANCE COMPANIES
BULK RATE
P.O. BOX 2999
U.S. POSTAGE
HARTFORD, CT 06104-2999
PAID
PERMIT NO. 1
HARTFORD, CT
<TABLE>
<S> <C>
123
PRINCIPAL UNDERWRITER FOR THE SEPARATE ACCOUNTS: ITT HARTFORD LIFE AND
HARTFORD EQUITY SALES COMPANY, INC. (HESCO) ANNUITY
HARTFORD PLAZA INSURANCE COMPANY
HARTFORD, CT 06115 INDIVIDUAL ANNUITY
HARTFORD SECURITIES DISTRIBUTION COMPANY, INC. (HSD) OPERATIONS
HARTFORD PLAZA P.O. BOX 5085
HARTFORD, CT 06115 HARTFORD, CT 05102-5085
</TABLE>
