<PAGE>
SELECT DIMENSIONS
ITT HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
SEPARATE ACCOUNT THREE
HARTFORD LIFE
INSURANCE COMPANY
SEPARATE ACCOUNT THREE
ANNUAL REPORT
DECEMBER 31, 1995
[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
DECEMBER 31, 1995
<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 40,662,903
Cost $40,662,903
Market Value......... $40,662,903 -- -- --
North American
Government Securities
Fund
Shares 111,335
Cost $ 1,123,236
Market Value......... -- $1,132,276 -- --
Balanced Fund
Shares 1,247,681
Cost $14,010,006
Market Value......... -- -- $14,834,923 --
Utilities Fund
Shares 1,392,853
Cost $15,890,883
Market Value......... -- -- -- $17,201,735
Dividend Growth Fund
Shares 5,490,302
Cost $68,080,167
Market Value......... -- -- -- --
Value Added Market Fund
Shares 1,809,107
Cost $21,014,230
Market Value......... -- -- -- --
Core Equity Fund
Shares 319,915
Cost $ 3,442,937
Market Value......... -- -- -- --
American Value Fund
Shares 2,617,184
Cost $32,908,728
Market Value......... -- -- -- --
Global Equity Fund
Shares 1,446,916
Cost $15,336,722
Market Value......... -- -- -- --
Developing Growth Fund
Shares 1,086,581
Cost $14,920,088
Market Value......... -- -- -- --
Emerging Markets Fund
Shares 395,078
Cost $ 3,876,301
Market Value......... -- -- -- --
Diversified Income Fund
Shares 804,010
Cost $ 8,096,309
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 76,895 922 51,364 54,941
Receivable from fund
shares sold........... -- -- -- --
--------------- ------------ ----------- -------------
Total Assets........... 40,739,798 1,133,198 14,886,287 17,256,676
--------------- ------------ ----------- -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- --
Payable for fund shares
purchased............. 76,894 927 51,355 55,302
--------------- ------------ ----------- -------------
Total Liabilities...... 76,894 927 51,355 55,302
--------------- ------------ ----------- -------------
Net Assets (variable
annuity contract
liabilities).......... $40,662,904 $1,132,271 $14,834,932 $17,201,374
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 3,864,747 107,468 1,219,604 1,356,083
Unit Price............. $ 10.521492 $10.535876 $12.163732 $ 12.684605
</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
Dimensions Investment
Series:
Money Market Fund
Shares 40,662,903
Cost $40,662,903
Market Value......... -- -- -- -- -- --
North American
Government Securities
Fund
Shares 111,335
Cost $ 1,123,236
Market Value......... -- -- -- -- -- --
Balanced Fund
Shares 1,247,681
Cost $14,010,006
Market Value......... -- -- -- -- -- --
Utilities Fund
Shares 1,392,853
Cost $15,890,883
Market Value......... -- -- -- -- -- --
Dividend Growth Fund
Shares 5,490,302
Cost $68,080,167
Market Value......... $74,338,690 -- -- -- -- --
Value Added Market Fund
Shares 1,809,107
Cost $21,014,230
Market Value......... -- $22,143,468 -- -- -- --
Core Equity Fund
Shares 319,915
Cost $ 3,442,937
Market Value......... -- -- $ 3,541,464 -- -- --
American Value Fund
Shares 2,617,184
Cost $32,908,728
Market Value......... -- -- -- $35,881,597 -- --
Global Equity Fund
Shares 1,446,916
Cost $15,336,722
Market Value......... -- -- -- -- $15,901,607 --
Developing Growth Fund
Shares 1,086,581
Cost $14,920,088
Market Value......... -- -- -- -- -- $16,298,711
Emerging Markets Fund
Shares 395,078
Cost $ 3,876,301
Market Value......... -- -- -- -- -- --
Diversified Income Fund
Shares 804,010
Cost $ 8,096,309
Market Value......... -- -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 136,416 54,005 14,340 68,814 61,623 21,510
Receivable from fund
shares sold........... -- -- -- -- -- --
--------------- ------------ ------------- ----------- ------------------ ---------------
Total Assets........... 74,475,106 22,197,473 3,555,804 35,950,411 15,963,230 16,320,221
--------------- ------------ ------------- ----------- ------------------ ---------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- -- -- --
Payable for fund shares
purchased............. 137,214 54,010 14,346 68,866 61,611 21,513
--------------- ------------ ------------- ----------- ------------------ ---------------
Total Liabilities...... 137,214 54,010 14,346 68,866 61,611 21,513
--------------- ------------ ------------- ----------- ------------------ ---------------
Net Assets (variable
annuity contract
liabilities).......... $74,337,892 $22,143,463 $ 3,541,458 $35,881,545 $15,901,619 $16,298,708
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 5,393,161 1,783,215 315,517 2,605,789 1,424,567 1,077,770
Unit Price............. $13.787374 $ 12.417722 $ 11.224309 $13.769935 $ 11.162419 $ 15.122619
<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......... $ 3,824,355 --
Diversified Income Fund
Shares
Cost
Market Value......... -- $ 8,216,979
Due from ITT Hartford
Life and Annuity
Insurance Company..... 21,948 43,270
Receivable from fund
shares sold........... -- --
------------------ ------------------
Total Assets........... 3,846,303 8,260,249
------------------ ------------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- --
Payable for fund shares
purchased............. 21,959 43,270
------------------ ------------------
Total Liabilities...... 21,959 43,270
------------------ ------------------
Net Assets (variable
annuity contract
liabilities).......... $ 3,824,344 $ 8,216,979
------------------ ------------------
------------------ ------------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 388,600 774,696
Unit Price............. $ 9.841336 $ 10.606720
</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 YEAR ENDED DECEMBER 31, 1995
<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.............. $ 841,146 $ 21,028 $ 167,023 $ 167,844
EXPENSES:
Mortality and expense
undertakings.......... (201,291) (6,048 ) (75,162 ) (69,739 )
--------------- ------------ ----------- -------------
Net investment
income.............. 639,855 14,980 91,861 98,105
--------------- ------------ ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
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 gains (losses) on
investments......... -- 8,982 826,310 1,311,499
--------------- ------------ ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 639,855 $ 23,962 $ 918,171 $ 1,409,604
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
</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.............. $ 564,242 $ 155,397 $ 23,178 $ 142,619 $ 127,609 $ 75,027
EXPENSES:
Mortality and expense
undertakings.......... (298,670) (88,956 ) (18,842) (135,514) (75,989) (61,934)
--------------- ------------ ------------- ----------- -------- ---------------
Net investment
income.............. 265,572 66,441 4,336 7,105 51,620 13,093
--------------- ------------ ------------- ----------- -------- ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
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 gains (losses) on
investments......... 6,235,982 1,128,928 96,382 2,964,083 563,548 1,385,812
--------------- ------------ ------------- ----------- -------- ---------------
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
--------------- ------------ ------------- ----------- -------- ---------------
--------------- ------------ ------------- ----------- -------- ---------------
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 35,634 $ 141,172
EXPENSES:
Mortality and expense
undertakings.......... (22,001) (40,152)
-------- --------
Net investment
income.............. 13,633 101,020
-------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
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 gains (losses) on
investments......... (54,040) 121,041
-------- --------
Net increase
(decrease) in net
assets resulting
from operations..... $ (40,407) $ 222,061
-------- --------
-------- --------
</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 YEAR ENDED DECEMBER 31, 1995
<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................ $ 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
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION (SEPTEMBER 14, 1994) TO DECEMBER 31, 1994
NORTH
AMERICAN
GOVERNMENT
MONEY SECURITIES BALANCED UTILITIES
MARKET FUND FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ----------- -------------
OPERATIONS:
Net investment income
(loss)................ $ 2,873 $ (4 ) $ (152) $ (53)
Net realized gain
(loss) on security
transactions.......... -- 19 2 8
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 79 2,258 857
--------------- ------------ ----------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 2,873 94 2,108 812
UNIT TRANSACTIONS:
Purchases.............. 1,200,999 21,792 704,789 407,086
Net transfers.......... (60,300) -- -- --
Surrenders............. (10,385) -- (11,879) (10,732)
--------------- ------------ ----------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,130,314 21,792 692,910 396,354
--------------- ------------ ----------- -------------
Total increase
(decrease) in net
assets................ 1,133,187 21,886 695,018 397,166
NET ASSETS:
Beginning of period.... -- -- -- --
--------------- ------------ ----------- -------------
End of period.......... $ 1,133,187 $ 21,886 $ 695,018 $ 397,166
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
</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................ $ 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
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
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
(loss)................ $ 111 $ (119) $ (50) $ (218) $ 156 $ (145)
Net realized gain
(loss) on security
transactions.......... )(2 (25) 10 -- )(25 50
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 6,214 4,101 656 12,167 2,324 2,596
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 6,323 3,957 616 11,949 2,455 2,501
UNIT TRANSACTIONS:
Purchases.............. 953,687 215,625 224,714 545,727 928,611 276,071
Net transfers.......... 327,490 30,000 -- 174,045 173,745 10,000
Surrenders............. (10,216) 21 (9,981) (10,115) (9,996) (10,057)
--------------- ------------ ------------- ----------- ------------------ ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,270,961 245,646 214,733 709,657 1,092,360 276,014
--------------- ------------ ------------- ----------- ------------------ ---------------
Total increase
(decrease) in net
assets................ 1,277,284 249,603 215,349 721,606 1,094,815 278,515
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
--------------- ------------ ------------- ----------- ------------------ ---------------
End of period.......... $ 1,277,284 $ 249,603 $ 215,349 $ 721,606 $ 1,094,815 $ 278,515
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
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
------------------ ------------------
------------------ ------------------
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
OPERATIONS:
Net investment income
(loss)................ $ (149) $ (70)
Net realized gain
(loss) on security
transactions.......... 41 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 837 721
------------------ ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 729 651
UNIT TRANSACTIONS:
Purchases.............. 356,320 300,934
Net transfers.......... -- --
Surrenders............. (10,062) 3
------------------ ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 346,258 300,937
------------------ ------------------
Total increase
(decrease) in net
assets................ 346,987 301,588
NET ASSETS:
Beginning of period.... -- --
------------------ ------------------
End of period.......... $ 346,987 $ 301,588
------------------ ------------------
------------------ ------------------
</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
DECEMBER 31, 1995
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.
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
December 31, 1995.
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>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO ITT HARTFORD LIFE & ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT THREE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of net assets & liabilities of ITT
Hartford Life & Annuity Insurance Company Separate Account Three (the Account)
as of December 31, 1995, and the related statement of operations for the year
ended December 31, 1995 and statements of changes in net assets for the year
ended December 31, 1995 and the period from inception, September 14, 1994, to
December 31, 1994. These financial statements are the responsibility of the
Account'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 ITT Hartford Life & Annuity
Insurance Company Separate Account Three as of December 31, 1995, and the
results of its operations for the year ended December 31, 1995 and changes in
its net assets for the year ended December 31, 1995 and the period from
inception, September 14, 1994, to December 31, 1994, in conformity with
generally accepted accounting principles.
Hartford, Connecticut
February 7, 1996 Arthur Andersen LLP
9
<PAGE>
Separate Account Three
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF NET ASSETS & LIABILITIES
DECEMBER 31, 1995
<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 1,319,202
Cost $1,319,202
Market Value......... $ 1,319,202 -- -- --
North American
Government Securities
Fund
Shares 4,688
Cost $ 47,282
Market Value......... -- $ 47,682 -- --
Balanced Fund
Shares 113,847
Cost $1,270,741
Market Value......... -- -- $1,353,645 --
Utilities Fund
Shares 50,991
Cost $ 576,742
Market Value......... -- -- -- $ 629,741
Dividend Growth Fund
Shares 309,832
Cost $3,783,456
Market Value......... -- -- -- --
Value Added Market Fund
Shares 138,736
Cost $1,604,300
Market Value......... -- -- -- --
Core Equity Fund
Shares 27,162
Cost $ 296,439
Market Value......... -- -- -- --
American Value Fund
Shares 160,497
Cost $1,968,939
Market Value......... -- -- -- --
Global Equity Fund
Shares 96,642
Cost $1,023,961
Market Value......... -- -- -- --
Developing Growth Fund
Shares 63,822
Cost $ 857,404
Market Value......... -- -- -- --
Emerging Markets Fund
Shares 17,121
Cost $ 165,716
Market Value......... -- -- -- --
Diversified Income Fund
Shares 62,987
Cost $ 634,446
Market Value......... -- -- -- --
Due from Hartford Life
Insurance Co.......... -- -- -- 1,221
Receivable from fund
shares sold........... 101 31 52 --
--------------- ------------ ----------- -------------
Total Assets........... 1,319,303 47,713 1,353,697 630,962
--------------- ------------ ----------- -------------
LIABILITIES:
Due to Hartford Life
Insurance Co.......... 103 32 68 --
Payable for fund shares
purchased............. -- -- -- 846
--------------- ------------ ----------- -------------
Total Liabilities...... 103 32 68 846
--------------- ------------ ----------- -------------
Net Assets (variable
annuity contract
liabilities).......... $ 1,319,200 $ 47,681 $1,353,629 $ 630,116
--------------- ------------ ----------- -------------
--------------- ------------ ----------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 125,381 4,526 111,284 49,676
Unit Price............. $ 10.521492 $10.535876 $12.163732 $ 12.684605
</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 1,319,202
Cost $1,319,202
Market Value......... -- -- -- -- -- --
North American
Government Securities
Fund
Shares 4,688
Cost $ 47,282
Market Value......... -- -- -- -- -- --
Balanced Fund
Shares 113,847
Cost $1,270,741
Market Value......... -- -- -- -- -- --
Utilities Fund
Shares 50,991
Cost $ 576,742
Market Value......... -- -- -- -- -- --
Dividend Growth Fund
Shares 309,832
Cost $3,783,456
Market Value......... $4,195,123 -- -- -- -- --
Value Added Market Fund
Shares 138,736
Cost $1,604,300
Market Value......... -- $ 1,698,125 -- -- -- --
Core Equity Fund
Shares 27,162
Cost $ 296,439
Market Value......... -- -- $ 300,681 -- -- --
American Value Fund
Shares 160,497
Cost $1,968,939
Market Value......... -- -- -- $2,200,417 -- --
Global Equity Fund
Shares 96,642
Cost $1,023,961
Market Value......... -- -- -- -- $ 1,062,093 --
Developing Growth Fund
Shares 63,822
Cost $ 857,404
Market Value......... -- -- -- -- -- $ 957,333
Emerging Markets Fund
Shares 17,121
Cost $ 165,716
Market Value......... -- -- -- -- -- --
Diversified Income Fund
Shares 62,987
Cost $ 634,446
Market Value......... -- -- -- -- -- --
Due from Hartford Life
Insurance Co.......... 1,858 1,088 -- 2,015 1,755 462
Receivable from fund
shares sold........... -- -- 28 -- -- --
--------------- ------------ ------------- ----------- ------------------ ---------------
Total Assets........... 4,196,981 1,699,213 300,709 2,202,432 1,063,848 957,795
--------------- ------------ ------------- ----------- ------------------ ---------------
LIABILITIES:
Due to Hartford Life
Insurance Co.......... -- -- 32 -- -- --
Payable for fund shares
purchased............. 1,865 1,095 -- 2,001 1,759 465
--------------- ------------ ------------- ----------- ------------------ ---------------
Total Liabilities...... 1,865 1,095 32 2,001 1,759 465
--------------- ------------ ------------- ----------- ------------------ ---------------
Net Assets (variable
annuity contract
liabilities).......... $4,195,116 $ 1,698,118 $ 300,677 $2,200,431 $ 1,062,089 $ 957,330
--------------- ------------ ------------- ----------- ------------------ ---------------
--------------- ------------ ------------- ----------- ------------------ ---------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 304,353 136,750 26,788 159,800 95,149 63,304
Unit Price............. $13.787374 $ 12.417722 $ 11.224309 $13.769935 $ 11.162419 $ 15.122619
<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......... $ 165,729 --
Diversified Income Fund
Shares
Cost
Market Value......... -- $ 643,725
Due from Hartford Life
Insurance Co.......... 389 2,174
Receivable from fund
shares sold........... -- --
---------- ------------------
Total Assets........... 166,118 645,899
---------- ------------------
LIABILITIES:
Due to Hartford Life
Insurance Co.......... -- --
Payable for fund shares
purchased............. 387 2,175
---------- ------------------
Total Liabilities...... 387 2,175
---------- ------------------
Net Assets (variable
annuity contract
liabilities).......... $ 165,731 $ 643,724
---------- ------------------
---------- ------------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL
SUB-ACCOUNTS:
Units Owned by
Participants.......... 16,840 60,690
Unit Price............. $ 9.841336 $ 10.606720
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SEPARATE ACCOUNT THREE
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FROM INCEPTION FEBRUARY 15, 1995 TO DECEMBER 31, 1995
<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.............. $ 34,896 $ 1,534 $ 17,632 $ 6,819
EXPENSES:
Mortality and expense
undertakings.......... (8,342) (444 ) (7,867 ) (2,836 )
------- ------ ----------- -------------
Net investment income
(loss).............. 26,554 1,090 9,765 3,983
------- ------ ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
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 gains (losses) on
investments......... -- 493 83,688 53,005
------- ------ ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 26,554 $ 1,583 $ 93,453 $ 56,988
------- ------ ----------- -------------
------- ------ ----------- -------------
</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.............. $ 39,009 $ 13,523 $ 1,106 $ 10,842 $ 7,286 $ 4,826
EXPENSES:
Mortality and expense
undertakings.......... (20,420) (7,454 ) (1,053) (10,399 ) (4,552) (4,043)
--------------- ------------ ------ ----------- ------- ---------------
Net investment income
(loss).............. 18,589 6,069 53 443 2,734 783
--------------- ------------ ------ ----------- ------- ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
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 gains (losses) on
investments......... 411,179 93,876 4,241 231,787 38,313 100,036
--------------- ------------ ------ ----------- ------- ---------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 429,768 $ 99,945 $ 4,294 $ 232,230 $ 41,047 $ 100,819
--------------- ------------ ------ ----------- ------- ---------------
--------------- ------------ ------ ----------- ------- ---------------
<CAPTION>
EMERGING MARKETS DIVERSIFIED INCOME
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 758 $ 8,733
EXPENSES:
Mortality and expense
undertakings.......... (538) (2,475)
----- -------
Net investment income
(loss).............. 220 6,258
----- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (63) 35
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 13 9,279
----- -------
Net gains (losses) on
investments......... (50) 9,314
----- -------
Net increase
(decrease) in net
assets resulting
from operations..... $ 170 $ 15,572
----- -------
----- -------
</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
FROM INCEPTION FEBRUARY 15, 1995 TO DECEMBER 31, 1995
<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................ $ 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................ $ 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................ $ 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
DECEMBER 31, 1995
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. The Account
commenced operations on February 15, 1995.
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.
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
December 31, 1995.
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.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT THREE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of net assets & liabilities of
Hartford Life Insurance Company Separate Account Three (the Account) as of
December 31, 1995, and the related statement of operations and statement of
changes in net assets for the period from inception, February 15, 1995, to
December 31, 1995. These financial statements are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 audit provides 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 Hartford Life Insurance
Company Separate Account Three as of December 31, 1995, and the results of its
operations and changes in its net assets for the period from inception,
February 15, 1995, to December 31, 1995, in conformity with generally accepted
accounting principles.
Hartford, Connecticut
February 7, 1996 Arthur Andersen LLP
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>
PRINCIPAL UNDERWRITER FOR THE SEPARATE ACCOUNTS:
HARTFORD EQUITY SALES COMPANY, INC. (HESCO)
HARTFORD PLAZA
HARTFORD, CT 06115 123
HARTFORD SECURITIES DISTRIBUTION COMPANY, INC. (HSD) ITT HARTFORD LIFE AND
HARTFORD PLAZA ANNUITY
HARTFORD, CT 06115 INSURANCE COMPANY
INDEPENDENT PUBLIC ACCOUNTANTS: INDIVIDUAL ANNUITY
ARTHUR ANDERSEN LLP OPERATIONS
ONE FINANCIAL PLAZA P.O. BOX 5085
HARTFORD, CT 06103 HARTFORD, CT 05102-5085
</TABLE>
