<PAGE> 1
MFS
VARIABLE
ACCOUNT
ANNUAL REPORT
TO
CONTRACT OWNERS
DECEMBER 31, 1995
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: COLUMBUS, OHIO
[NATIONWIDE LOGO]
APO-719-T (12/95)
<PAGE> 2
[NATIONWIDE LOGO]
NATIONWIDE LIFE INSURANCE COMPANY
ONE NATIONWIDE PLAZA, COLUMBUS, OHIO 43216
[Photo]
PRESIDENT'S MESSAGE
Nationwide Life Insurance Company is pleased to bring you the 1995 annual report
of the MFS Variable Account.
Both equity and fixed income investments turned in a stellar performance during
1995. The major market indices ended the year fully one-third or more higher
than their levels at the beginning of the year. These results equate directly to
the returns enjoyed by our variable annuity participants and contract owners.
Low interest rates and modest inflation should provide a continued favorable
environment for stocks and fixed income investments during 1996. Slowing levels
of economic activity and uncertainty about corporate profits may, however,
dampen a repeat of the strong 1995 market performance. The diverse offering of
investment options within your contract should enable you to take advantage of
changing market conditions.
The year 1995 was a record-setting sales year for our variable investment
products. For this we thank you, our valued customer, for your confidence in the
Nationwide Insurance Enterprise and in our products. Please do not hesitate to
let us know how we can better serve your financial planning and retirement
needs.
/s/ Peter F. Frenzer
Peter F. Frenzer, President
3
<PAGE> 3
- --------------------------------------------------------------------------------
MFS VARIABLE ACCOUNT
STATEMENT OF ASSETS, LIABILITIES AND CONTRACT OWNERS' EQUITY
DECEMBER 31, 1995
<TABLE>
ASSETS:
<S> <C>
Investments at market value:
MFS Series Trust IV - MFS(R) Money Market Fund (MFSMyMkt)
65,633,462 shares (cost $65,633,462) ..................... $ 65,633,462
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
3,329,499 shares (cost $37,167,763) ..................... 35,392,573
Massachusetts Investors Trust - Class A (MFSInvTr)
2,849,980 shares (cost $35,031,547) ..................... 36,223,242
MFS(R) Bond Fund - Class A (MFSBdFd)
2,891,261 shares (cost $39,281,428) ..................... 39,552,444
MFS(R) Emerging Growth Fund - Class A (MFSEmGro)
480,744 shares (cost $9,519,997) ........................ 12,840,673
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
9,079,330 shares (cost $100,744,966) .................... 108,407,206
MFS(R) High Income Fund - Class A (MFSHiInc)
6,799,186 shares (cost $34,673,248) ..................... 35,219,783
MFS(R) Research Fund - Class A (MFSRsrch)
2,321,299 shares (cost $29,802,374) ..................... 36,305,110
MFS(R) Total Return Fund - Class A (MFSTotRe)
4,997,017 shares (cost $62,232,144) ..................... 72,007,022
MFS(R) World Governments Fund - Class A (MFSWdGvt)
998,770 shares (cost $12,165,248) ....................... 11,006,446
Nationwide Separate Account Trust - Money Market Fund (NWMyMkt)
2,135,394 shares (cost $2,135,394) ...................... 2,135,394
------------
Total investments .................................. 454,723,355
Accounts receivable ............................................ 42,788
------------
Total assets ....................................... 454,766,143
ACCOUNTS PAYABLE ................................................ 4,250
------------
CONTRACT OWNERS' EQUITY (NOTE 4) ................................ $454,761,893
============
</TABLE>
See accompanying notes to financial statements.
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4
<PAGE> 4
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MFS VARIABLE ACCOUNT
STATEMENTS OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
------------- ---------- ----------
INVESTMENT ACTIVITY:
<S> <C> <C> <C>
Reinvested capital gains and dividends ............................. $ 41,437,779 29,599,574 44,895,760
------------- ---------- ----------
Gain (loss) on investments:
Proceeds from redemptions of mutual fund shares ............... 103,288,834 115,051,876 135,937,570
Cost of mutual fund shares sold ............................... (99,147,354) (112,843,920) (127,686,637)
------------- ---------- ----------
Realized gain (loss) on investments ........................... 4,141,480 2,207,956 8,250,933
Change in unrealized gain (loss) on investments ............... 51,182,271 (41,633,519) 5,833,974
------------- ---------- ----------
Net gain (loss) on investments ........................... 55,323,751 (39,425,563) 14,084,907
------------- ---------- ----------
Net investment activity ............................. 96,761,530 (9,825,989) 58,980,667
------------- ---------- ----------
EQUITY TRANSACTIONS:
Purchase payments received from contract
owners ........................................................ 16,996,001 15,834,294 23,563,502
Redemptions ........................................................ (69,066,775) (73,513,222) (84,574,552)
Annuity benefits ................................................... (582,314) (569,906) (626,861)
Adjustments to maintain reserves ................................... 42,627 (3,929) 31,765
------------- ---------- ----------
Net equity transactions ............................. (52,610,461) (58,252,763) (61,606,146)
------------- ---------- ----------
EXPENSES (NOTE 2):
Contract charges ................................................... (6,106,575) (6,313,115) (7,015,249)
Contingent deferred sales charges .................................. (185,166) (201,021) (310,571)
------------- ---------- ----------
Total expenses ...................................... (6,291,741) (6,514,136) (7,325,820)
------------- ---------- ----------
NET CHANGE IN CONTRACT OWNERS' EQUITY .............................. 37,859,328 (74,592,888) (9,951,299)
CONTRACT OWNERS' EQUITY BEGINNING OF PERIOD ........................ 416,902,565 491,495,453 501,446,752
------------- ---------- ----------
CONTRACT OWNERS' EQUITY END OF PERIOD .............................. $ 454,761,893 416,902,565 491,495,453
============= =========== ===========
</TABLE>
See accompanying notes to financial statements.
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5
<PAGE> 5
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MFS VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Organization and Nature of Operations
MFS Variable Account (the Account) was established by resolution of the
Board of Directors of Nationwide Life Insurance Company (the Company) on March
3, 1976. The Account has been registered as a unit investment trust under the
Investment Company Act of 1940.
The Company offers tax qualified and non-tax qualified Individual Deferred
Variable Annuity Contracts through the Account. The primary distribution for the
contracts is through Massachusetts Financial Services. Presently, the contracts
are not actively marketed.
(b) The Contracts
Prior to February 12, 1979, the contracts purchased provided for a
front-end sales charge and certain other fees. Beginning February 12, 1979, only
contracts (Spectrum) without a front-end sales charge but with a contingent
deferred sales charge and certain other fees were offered for purchase. See note
2 for a discussion of contract expenses.
With certain exceptions, contract owners in either the accumulation or
payout phase may invest in any of the following funds:
MFS Series Trust IV - MFS(R) Money Market Fund (MFSMyMkt)
(formerly Massachusetts Cash Management Trust - MFS(R) Money Market Fund)
Massachusetts Investors Growth Stock Fund - Class A (MFSGrStk)
Massachusetts Investors Trust - Class A (MFSInvTr)
MFS(R) Bond Fund - Class A (MFSBdFd)
MFS(R) Emerging Growth Fund - Class A (MFSEmGro)
MFS(R) Growth Opportunities Fund - Class A (MFSGrOpp)
(formerly MFS(R) Capital Development Fund)
MFS(R) High Income Fund - Class A (MFSHiInc)
MFS(R) Research Fund - Class A (MFSRsrch)
MFS(R) Total Return Fund - Class A (MFSTotRe)
MFS(R) World Governments Fund - Class A (MFSWdGvt)
Nationwide Separate Account Trust - Money Market Fund (NWMyMkt)
(managed for a fee by an affiliated investment advisor)
At December 31, 1995, contract owners have invested in all of the above
funds. The contract owners' equity is affected by the investment results of each
fund, equity transactions by contract owners and certain contract expenses (see
note 2). The accompanying financial statements include only contract owners'
purchase payments pertaining to the variable portions of their contracts and
exclude any purchase payments for fixed dollar benefits, the latter being
included in the accounts of the Company.
(c) Security Valuation, Transactions and Related Investment Income
The market value of the underlying mutual funds is based on the closing net
asset value per share at December 31, 1995. The cost of investments sold is
determined on a specific identification basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date.
6
<PAGE> 6
(d) Federal Income Taxes
Operations of the Account form a part of, and are taxed with, operations of
the Company which is taxed as a life insurance company under the Internal
Revenue Code.
The Internal Revenue Service issued Rev. Rul. 81-225 on September 25, 1981
and IR-82-19 on February 3, 1982. The effect of Rev. Rul. 81-225 was to treat
non-tax qualified contract holders, who purchased contracts or made purchase
payments after December 31, 1980, as the owners of the underlying mutual fund
shares for Federal income tax purposes. However, for 1981, IR-82-19 did provide
limited relief from the ruling. Therefore, the Company maintained a capital gain
reserve liability, for all realized and unrealized capital gains existing on or
before December 31, 1981.
During 1982 and most of 1983, the Company continued to maintain contract
values which reflected a capital gain reserve liability for those contracts and
contract values affected by Rev. Rul. 81-225. On December 16, 1983, the Company
adjusted the affected (81-225) contract values in order to treat the respective
contract owners as the owners of the underlying shares for Federal income tax
purposes, as intended by the ruling. As a result of this adjustment, contract
owners equity was restored with amounts previously deducted to maintain the
capital gain reserve liability.
Because of the aforementioned, the Company no longer provides for income
taxes within the Account. Presently, taxes are the responsibility of the
contract owner upon termination or withdrawal.
(e) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles may require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities, if any, at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
(2) EXPENSES
Net purchase payments received on contracts issued before February 12, 1979
represent gross contributions by the contract owners less a charge of 7.75% by
the Company to cover sales expenses.The Company does not deduct a sales charge
from purchase payments made for contracts issued beginning February 12, 1979.
However, if any part of the contract value of such contracts is surrendered the
Company will, with certain exceptions, deduct from the owner's contract value a
contingent deferred sales charge equal to 5% of the lesser of the total of all
purchase payments made within 96 months prior to the date of the request for
surrender, or the amount surrendered; no sales charges are deducted on
redemptions used to purchase units in the fixed investment options of the
Company.
The following administrative charges are deducted by the Company on each
contract issued prior to February 12, 1979: (a) a contract issue charge of $15
assessed against the initial purchase payment and a $15 annual contract
maintenance charge assessed against each contract by surrendering units; and (b)
a charge for mortality and expense risk assessed through the daily unit value
calculation equal to an annual rate of 0.80% and 0.20%, respectively.
Administrative charges on contracts issued beginning February 12, 1979 include:
(a) an annual contract maintenance charge of $30 which is satisfied by
surrendering units; and (b) a charge for mortality and expense risk assessed
through the daily unit value calculation equal to an annual rate of 0.80% and
0.50%, respectively.
7
<PAGE> 7
(3) SCHEDULE I
Schedule I presents the components of the change in the unit values, which
are the basis for contract owners' equity. This schedule is presented for each
series, as applicable, in the following format:
- Beginning unit value - Jan. 1
- Reinvested capital gains and dividends
(This amount reflects the increase in the unit value due to
capital gains and dividend distributions from the underlying
mutual funds.)
- Unrealized gain (loss)
(This amount reflects the increase (decrease) in the unit value
resulting from the market appreciation (depreciation) of the
underlying mutual funds.)
- Contract charges
(This amount reflects the decrease in the unit value due to the
mortality and expense risk fee discussed in note 2.)
- Ending unit value - Dec. 31
- Percentage increase (decrease) in unit value.
For contracts in the payout phase, an assumed investment return of 3.5%,
used in the calculation of the annuity benefit payment amount, results in a
corresponding reduction in the components of the unit values as shown in
Schedule I.
8
<PAGE> 8
(4) COMPONENTS OF CONTRACT OWNERS' EQUITY
The following is a summary of contract owners' equity at December 31, 1995,
for each series, in both the accumulation and payout phases. Due to the nature
of money market funds, an 81-225 adjustment (See note 1(d)) was not required for
either the MFS Series Trust IV - MFS(R) Money Market Fund or the Nationwide
Separate Account Trust-Money Market Fund.
Contract owners' equity represented by:
<TABLE>
<CAPTION>
Contracts in accumulation phase: Units Unit Value
--------- ------------
<S> <C> <C> <C>
MFS Series Trust IV - MFS(R) Money Market Fund:
Non-tax qualified ................................................. 5,703 $ 33.966291 $ 193,710
Tax qualified spectrum ............................................ 1,630,393 29.055232 47,371,447
Non-tax qualified spectrum ........................................ 597,925 29.075421 17,384,921
Massachusetts Investors Growth Stock Fund - Class A:
Non-tax qualified ................................................. 1,043 77.839871 81,187
Tax qualified spectrum ............................................ 333,893 82.628565 27,589,099
Non-tax qualified spectrum ........................................ 102,114 70.114570 7,159,679
Non-tax qualified spectrum (81-225) ............................... 5,945 76.380777 454,084
Massachusetts Investors Trust - Class A:
Tax qualified ..................................................... 16 101.007177 1,616
Tax qualified spectrum ............................................ 350,277 81.308640 28,480,546
Non-tax qualified spectrum ........................................ 100,239 72.953374 7,312,773
Non-tax qualified spectrum (81-225) ............................... 2,696 77.505736 208,955
MFS(R) Bond Fund - Class A:
Non-tax qualified ................................................. 596 50.922705 30,350
Tax qualified spectrum ............................................ 613,426 43.808005 26,872,969
Non-tax qualified spectrum ........................................ 267,129 43.772192 11,692,822
Non-tax qualified spectrum (81-225) ............................... 4,145 43.943375 182,145
MFS(R) Emerging Growth Fund - Class A:
Tax qualified spectrum ............................................ 424,049 30.247061 12,826,236
Non-tax qualified spectrum (81-225) ............................... 474 30.247061 14,337
MFS(R) Growth Opportunities Fund - Class A:
Non-tax qualified ................................................. 2,642 103.553065 273,587
Tax qualified spectrum ............................................ 920,477 96.595726 88,914,144
Non-tax qualified spectrum ........................................ 206,611 82.052560 16,952,961
Non-tax qualified spectrum (81-225) ............................... 15,064 90.535764 1,363,831
MFS(R) High Income Fund - Class A:
Non-tax qualified ................................................. 359 57.870879 20,776
Tax qualified spectrum ............................................ 488,470 50.886631 24,856,593
Non-tax qualified spectrum ........................................ 188,820 50.114634 9,462,645
Non-tax qualified spectrum (81-225) ............................... 6,442 50.886631 327,812
MFS(R) Research Fund - Class A:
Non-tax qualified ................................................. 599 100.977005 60,485
Tax qualified spectrum ............................................ 270,229 100.013750 27,026,616
Non-tax qualified spectrum ........................................ 100,973 87.388917 8,823,921
Non-tax qualified spectrum (81-225) ............................... 1,591 98.846334 157,265
MFS(R) Total Return Fund - Class A:
Tax qualified ..................................................... 131 79.840336 10,459
Non-tax qualified ................................................. 87 78.457598 6,826
Tax qualified spectrum ............................................ 782,272 73.411912 57,428,083
Non-tax qualified spectrum ........................................ 199,257 71.060281 14,159,258
Non-tax qualified spectrum (81-225) ............................... 1,863 72.697711 135,436
MFS(R) World Governments Fund - Class A:
Tax qualified spectrum ............................................ 184,796 48.914346 9,039,175
Non-tax qualified spectrum ........................................ 36,927 47.688325 1,760,987
Non-tax qualified spectrum (81-225) ............................... 2,763 48.838310 134,940
Nationwide Separate Account Trust - Money Market Fund:
Tax qualified spectrum ............................................ 60,928 21.961256 1,338,055
Non-tax qualified spectrum ........................................ 36,289 21.975540 797,470
========= ============
Reserves for annuity contracts in payout phase:
Tax qualified ..................................................... 47,918
Non-tax qualified ................................................. 78,222
Tax qualified spectrum ............................................ 2,637,924
Non-tax qualified spectrum ........................................ 1,081,617
Non-tax qualified spectrum (81-225) ............................... 8,011
------------
$454,761,893
============
</TABLE>
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9
<PAGE> 9
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SCHEDULE I
MFS VARIABLE ACCOUNT
TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
MFSInvTr MFSBdFd MFSTotRe
-------- ------- --------
1995***
<S> <C> <C> <C>
Beginning unit value - Jan. 1 $ 73.217470 ** 63.581031
- -------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 9.389953 6.796396
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 19.267126 10.187101
- -------------------------------------------------------------------------------------------------------
Contract charges (.867372) (.724192)
- -------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $101.007177 79.840336
- -------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 38% 26%
=======================================================================================================
1994***
Beginning unit value - Jan. 1 $ 74.716077 42.399834 65.964662
- -------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 8.586372 2.862666 2.763915
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (9.338645) (4.752106) (4.502426)
- -------------------------------------------------------------------------------------------------------
Contract charges (.746334) (.407003) (.645120)
- -------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $ 73.217470 40.103391 63.581031
- -------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* (2)% (5)% (4)%
=======================================================================================================
1993***
Beginning unit value - Jan. 1 $ 68.591640 37.614804 57.871052
- -------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 11.498973 5.808619 3.732170
- -------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (4.655404) (.614467) 5.026580
- -------------------------------------------------------------------------------------------------------
Contract charges (.719132) (.409122) (.665140)
- -------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $ 74.716077 42.399834 65.964662
- -------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 9% 13% 14%
=======================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as contract charges do
not include the annual contract maintenance charge discussed in note 2.
** This investment option was not being utilized.
*** No other investment options were being utilized.
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10
<PAGE> 10
- --------------------------------------------------------------------------------
SCHEDULE I, CONTINUED
MFS VARIABLE ACCOUNT
NON-TAX QUALIFIED
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
MFSMyMkt MFSGrStk MFSInvTr MFSBdFd
1995
<S> <C> <C> <C> <C>
Beginning unit value - Jan. 1 $32.595660 61.261465 ** 42.342529
- ----------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 1.704937 10.252961 3.454391
- ----------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 7.033136 5.596005
- ----------------------------------------------------------------------------------------------------------
Contract charges (.334306) (.707691) (.470220)
- ----------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $33.966291 77.839871 50.922705
- ----------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 4% 27% 20%
==========================================================================================================
1994
Beginning unit value - Jan. 1 $31.804010 66.343035 ** 44.767184
- ----------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 1.114091 6.245985 3.022499
- ----------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 (10.708702) (5.017439)
- ----------------------------------------------------------------------------------------------------------
Contract charges (.322441) (.618853) (.429715)
- ----------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $32.595660 61.261465 42.342529
- ----------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 2% (8)% (5)%
==========================================================================================================
1993
Beginning unit value - Jan. 1 $31.374016 58.545028 64.725197 39.714988
- ----------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends .743804 9.875063 10.850787 6.132938
- ----------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 (1.468495) (4.392986) (.648781)
- ----------------------------------------------------------------------------------------------------------
Contract charges (.313810) (.608561) (.678600) (.431961)
- ----------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $31.804010 66.343035 70.504398 44.767184
- ----------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 1% 13% 9% 13%
==========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
MFSGrOpp MFSHiInc MFSRsrch MFSTotRe
1995
<S> <C> <C> <C> <C>
Beginning unit value - Jan. 1 77.773322 49.895862 73.593263 62.479885
- ---------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 13.011382 4.720108 6.201200 6.678704
- ---------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 13.690716 3.805299 22.049861 10.010672
- ---------------------------------------------------------------------------------------------------------
Contract charges (.922355) (.550390) (.867319) (.711663)
- ---------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 103.553065 57.870879 100.977005 78.457598
- ---------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 33% 16% 37% 26%
=========================================================================================================
1994
Beginning unit value - Jan. 1 81.961605 51.758789 74.327082 64.822235
- ---------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 6.380267 4.381074 7.237361 2.716055
- ---------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (9.773345) (5.737464) (7.223674) (4.424461)
- ---------------------------------------------------------------------------------------------------------
Contract charges (.795205) (.506537) (.747506) (.633944)
- ---------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 77.773322 49.895862 73.593263 62.479885
- ---------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* (5)% (4)% (1)% (4)%
=========================================================================================================
1993
Beginning unit value - Jan. 1 71.251149 43.789729 61.704356 56.868802
- ---------------------------------------------------------------------------------------------------------
Reinvested capital gains and dividends 8.954754 4.151571 8.244049 3.667543
- ---------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 2.525050 4.305712 5.051213 4.939512
- ---------------------------------------------------------------------------------------------------------
Contract charges (.769348) (.488223) (.672536) (.653622)
- ---------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 81.961605 51.758789 74.327082 64.822235
- ---------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in
unit value* 15% 18% 20% 14%
=========================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as contract charges do
not include the annual contract maintenance charge discussed in note 2.
** This investment option was not being utilized.
- --------------------------------------------------------------------------------
11
<PAGE> 11
- --------------------------------------------------------------------------------
SCHEDULE I, CONTINUED
MFS VARIABLE ACCOUNT
TAX QUALIFIED SPECTRUM
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
MFSMyMkt MFSGrStk MFSInvTr MFSBdFd MFSEmGro MFSGrOpp
<S> <C> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan.1 $27.967294 65.227303 59.116939 36.536936 21.706658 72.767772
- -------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 1.460813 10.883902 7.560531 2.976527 .000000 12.137397
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 7.496845 15.541527 4.821993 8.878016 12.812372
- -------------------------------------------------------------------------------------------------------------------------------
Contract charges (.372875) (.979485) (.910357) (.527451) (.337613) (1.121815)
- -------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $29.055232 82.628565 81.308640 43.808005 30.247061 96.595726
- -------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* 4% 27% 38% 20% 39% 33%
===============================================================================================================================
1994
Beginning unit value - Jan.1 $27.370768 70.852048 60.509797 38.746280 20.977490 76.918993
- -------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .957264 6.650437 6.934388 2.612018 .436556 5.969728
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 (11.415978) (7.541473) (4.337835) .566606 (9.150770)
- -------------------------------------------------------------------------------------------------------------------------------
Contract charges (.360738) (.859204) (.785773) (.483527) (.273994) (.970179)
- -------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $27.967294 65.227303 59.116939 36.536936 21.706658 72.767772
- -------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* 2% (8)% (2)% (6)% 3% (5)%
===============================================================================================================================
1993
Beginning unit value - Jan.1 $27.082782 62.713932 55.718475 34.477915 16.755110 67.070484
- -------------------------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends .641181 10.546573 9.314340 5.312013 1.987303 8.404559
- -------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 (1.561022) (3.763614) (.556158) 2.468986 2.385396
- -------------------------------------------------------------------------------------------------------------------------------
Contract charges (.353195) (.847435) (.759404) (.487490) (.233909) (.941446)
- -------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $27.370768 70.852048 60.509797 38.746280 20.977490 76.918993
- -------------------------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* 1% 13% 9% 12% 25% 15%
===============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
MFSHiInc MFSRsrch MFSTotRe MFSWdGvt NWMyMkt
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan.1 44.007083 73.111959 58.638949 42.911877 21.058716
- ------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 4.157163 6.142147 6.254848 6.115071 1.183897
- ------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.353463 21.879706 9.386344 .495697 .000000
- ------------------------------------------------------------------------------------------------------------
Contract charges (.631078) (1.120062) (.868229) (.608299) (.281357)
- ------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 50.886631 100.013750 73.411912 48.914346 21.961256
- ------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* 16% 37% 25% 14% 4%
============================================================================================================
1994
Beginning unit value - Jan.1 45.788518 74.064821 61.021714 46.532702 20.538004
- ------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 3.870377 7.195425 2.553354 2.288468 .791945
- ------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (5.069261) (7.179946) (4.160311) (5.345421) .000000
- ------------------------------------------------------------------------------------------------------------
Contract charges (.582551) (.968341) (.775808) (.563872) (.271233)
- ------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 44.007083 73.111959 58.638949 42.911877 21.058716
- ------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* (4)% (1)% (4)% (8)% 3%
============================================================================================================
1993
Beginning unit value - Jan.1 38.856280 61.673295 53.697197 39.821939 20.250996
- ------------------------------------------------------------------------------------------------------------
Reinvested capital
gains and
dividends 3.678274 8.215232 3.457510 4.402242 .554187
- ------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.817129 5.050110 4.662688 2.874170 .000000
- ------------------------------------------------------------------------------------------------------------
Contract charges (.563165) (.873816) (.795681) (.565649) (.267179)
- ------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 45.788518 74.064821 61.021714 46.532702 20.538004
- ------------------------------------------------------------------------------------------------------------
Percentage increase
(decrease) in
unit value* 18% 20% 14% 17% 1%
============================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as contract charges do not
include the annual contract maintenance charge discussed in note 2.
- --------------------------------------------------------------------------------
12
<PAGE> 12
- --------------------------------------------------------------------------------
SCHEDULE I, CONTINUED
MFS VARIABLE ACCOUNT
NON-TAX QUALIFIED SPECTRUM
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
MFSMyMkt MFSGrStk MFSInvTr MFSBdFd MFSGrOpp
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $27.986728 55.348697 53.042089 36.507070 61.812074
- ------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 1.461834 9.235549 6.783611 2.974097 10.310027
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 6.361465 13.944489 4.818039 10.883379
- ------------------------------------------------------------------------------------------------------------------------
Contract charges (.373141) (.831141) (.816815) (.527014) (.952920)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $29.075421 70.114570 72.953374 43.772192 82.052560
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 4% 27% 38% 20% 33%
========================================================================================================================
1994
Beginning unit value - Jan. 1 $27.389788 60.121583 54.291825 38.714601 65.338300
- ------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .957927 5.643236 6.221811 2.609884 5.070943
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 (9.687046) (6.766521) (4.334289) (7.773057)
- ------------------------------------------------------------------------------------------------------------------------
Contract charges (.360987) (.729076) (.705026) (.483126) (.824112)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $27.986728 55.348697 53.042089 36.507070 61.812074
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 2% (8)% (2)% (6)% (5)%
========================================================================================================================
1993
Beginning unit value - Jan. 1 $27.101602 53.215976 49.992851 34.449725 56.972537
- ------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends .641629 8.949306 8.357200 5.307666 7.139194
- ------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) .000000 (1.324606) (3.376852) (.555693) 2.026262
- ------------------------------------------------------------------------------------------------------------------------
Contract charges (.353443) (.719093) (.681374) (.487097) (.799693)
- ------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $27.389788 60.121583 54.291825 38.714601 65.338300
- ------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 1% 13% 9% 12% 15%
========================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
MFSHiInc MFSRsrch MFSTotRe MFSWdGvt NWMyMkt
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 43.339456 63.882963 56.760546 41.836304 21.072414
- -----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 4.094062 5.366818 6.054479 5.961799 1.184666
- -----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.302603 19.117811 9.085680 .483276 .000000
- -----------------------------------------------------------------------------------------------------------------------
Contract charges (.621487) (.978675) (.840424) (.593054) (.281540)
- -----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 50.114634 87.388917 71.060281 47.688325 21.975540
- -----------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 16% 37% 25% 14% 4%
=======================================================================================================================
1994
Beginning unit value - Jan. 1 45.093866 64.715547 59.066983 45.366368 20.551361
- -----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 3.811643 6.287139 2.471571 2.231109 .792462
- -----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (4.992348) (6.273621) (4.027043) (5.211428) .000000
- -----------------------------------------------------------------------------------------------------------------------
Contract charges (.573705) (.846102) (.750965) (.549745) (.271409)
- -----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 43.339456 63.882963 56.760546 41.836304 21.072414
- -----------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* (4)% (1)% (4)% (8)% 3%
=======================================================================================================================
1993
Beginning unit value - Jan. 1 38.266802 53.888228 51.977095 38.823817 20.264167
- -----------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 3.622473 7.178215 3.346744 4.291901 .554548
- -----------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.759218 4.412613 4.513320 2.802117 .000000
- -----------------------------------------------------------------------------------------------------------------------
Contract charges (.554627) (.763509) (.770176) (.551467) (.267354)
- -----------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 45.093866 64.715547 59.066983 45.366368 20.551361
- -----------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease)
in unit value* 18% 20% 14% 17% 1%
=======================================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as contract charges do not
include the annual contract maintenance charge discussed in note 2.
- --------------------------------------------------------------------------------
13
<PAGE> 13
- --------------------------------------------------------------------------------
SCHEDULE I, CONTINUED
MFS VARIABLE ACCOUNT
NON-TAX QUALIFIED SPECTRUM (81-225)
SCHEDULES OF CHANGES IN UNIT VALUE
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
MFSGrStk MFSInvTr MFSBdFd MFSEmGro MFSGrOpp
-------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 $60.295273 56.351973 36.649839 21.706658 68.202665
- ---------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 10.060939 7.206917 2.985727 .000000 11.375954
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 6.929991 14.814629 4.836885 8.878016 12.008582
- ---------------------------------------------------------------------------------------------------------------------------------
Contract charges (.905426) (.867783) (.529076) (.337613) (1.051437)
- ---------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $76.380777 77.505736 43.943375 30.247061 90.535764
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 27% 38% 20% 39% 33%
=================================================================================================================================
1994
Beginning unit value - Jan. 1 $65.494712 57.679687 38.865999 20.977490 72.093454
- ---------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 6.147578 6.610058 2.620091 .436556 5.595215
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (10.552777) (7.188748) (4.351232) .566606 (8.576687)
- ---------------------------------------------------------------------------------------------------------------------------------
Contract charges (.794240) (.749024) (.485019) (.273994) (.909317)
- ---------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $60.295273 56.351973 36.649839 21.706658 68.202665
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* (8)% (2)% (6)% 3% (5)%
=================================================================================================================================
1993
Beginning unit value - Jan. 1 $57.971950 53.112457 34.584435 16.755110 62.862782
- ---------------------------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 9.749115 8.878698 5.328424 1.987303 7.877296
- ---------------------------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (1.442991) (3.587588) (.557863) 2.468986 2.235756
- ---------------------------------------------------------------------------------------------------------------------------------
Contract charges (.783362) (.723880) (.488997) (.233909) (.882380)
- ---------------------------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 $65.494712 57.679687 38.865999 20.977490 72.093454
- ---------------------------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 13% 9% 12% 25% 15%
=================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
MFSHiInc MFSRsrch MFSTotRe MFSWdGvt
-------- -------- -------- --------
<S> <C> <C> <C> <C>
1995
Beginning unit value - Jan. 1 44.007083 72.258548 58.068470 42.845163
- ---------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 4.157163 6.070452 6.194025 6.105566
- ---------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.353463 21.624321 9.294998 .494930
- ---------------------------------------------------------------------------------------------------------------
Contract charges (.631078) (1.106987) (.859782) (.607349)
- ---------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 50.886631 98.846334 72.697711 48.838310
- ---------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 16% 37% 25% 14%
===============================================================================================================
1994
Beginning unit value - Jan. 1 45.788518 73.200301 60.428053 46.460353
- ---------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 3.870377 7.111436 2.528526 2.284911
- ---------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) (5.069261) (7.096145) (4.119853) (5.337099)
- ---------------------------------------------------------------------------------------------------------------
Contract charges (.582551) (.957044) (.768256) (.563002)
- ---------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 44.007083 72.258548 58.068470 42.845163
- ---------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* (4)% (1)% (4)% (8)%
===============================================================================================================
1993
Beginning unit value - Jan. 1 38.856280 60.953415 53.174791 39.760030
- ---------------------------------------------------------------------------------------------------------------
Reinvested capital gains
and dividends 3.678274 8.119340 3.423916 4.395398
- ---------------------------------------------------------------------------------------------------------------
Unrealized gain (loss) 3.817130 4.991162 4.617284 2.869703
- ---------------------------------------------------------------------------------------------------------------
Contract charges (.563166) (.863616) (.787938) (.564778)
- ---------------------------------------------------------------------------------------------------------------
Ending unit value - Dec. 31 45.788518 73.200301 60.428053 46.460353
- ---------------------------------------------------------------------------------------------------------------
Percentage increase (decrease) in unit value* 18% 20% 14% 17%
===============================================================================================================
</TABLE>
* An annualized rate of return cannot be determined as contract charges do not
include the annual contract maintenance charge discussed in note 2.
See note 3.
- --------------------------------------------------------------------------------
14
<PAGE> 14
- --------------------------------------------------------------------------------
Independent Auditors' Report
The Board of Directors and Contract Owners of
MFS Variable Account
Nationwide Life Insurance Company:
We have audited the accompanying statement of assets, liabilities and
contract owners' equity of MFS Variable Account as of December 31, 1995, and the
related statements of operations and changes in contract owners' equity and
schedules of changes in unit value for each of the years in the three year
period then ended. These financial statements and schedules of changes in unit
value are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedules of changes in
unit value 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 and schedules of
changes in unit value are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and the
transfer agents of the underlying mutual funds. 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 and schedules of changes in
unit value referred to above present fairly, in all material respects, the
financial position of MFS Variable Account as of December 31, 1995, and the
results of its operations and its changes in contract owners' equity and the
schedules of changes in unit value for each of the years in the three year
period then ended in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Columbus, Ohio
February 6, 1996
- --------------------------------------------------------------------------------
15
<PAGE> 15
NATIONWIDE LIFE INSURANCE COMPANY Bulk Rate
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43215-2220 U.S. Postage
P A I D
Columbus, Ohio
Permit No. 521
Nationwide(R) is a registered federal service mark of Nationwide Mutual
Insurance Company.
