UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file
number: 811-03364
EMPOWER FUNDS, INC.
(Exact name of registrant as specified in charter)
8515 E. Orchard Road, Greenwood Village, Colorado 80111
(Address of principal executive offices)
(Address of principal executive offices)
Jonathan D.
Kreider
President & Chief Executive Officer
Empower Funds, Inc.
Empower Funds, Inc.
8515 E. Orchard Road
Greenwood Village, Colorado 80111
(Name and address of agent for service)
Registrant's telephone number, including area code: (866)
831-7129
Date of fiscal year end: December 31
Date of reporting period: December 31, 2023
Item 1. REPORTS TO STOCKHOLDERS
EMPOWER FUNDS, INC.
Empower Core Strategies (Institutional Class and Investor
Class)
Annual Report
December 31, 2023
This report and the financial statements attached are
submitted for general information and are not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. Nothing herein is to be considered an offer of the sale of shares of the Funds. Such
offering is made only by the prospectus of each Fund, which includes details as to offering price and other information.
Empower Core Strategies: Flexible Bond Fund
Management Discussion
For the twelve-month period ended December 31, 2023, the
Fund’s investment portfolio was managed by Empower Capital Management, LLC (“ECM”), the Fund’s investment adviser, and Loomis, Sayles & Company, L.P. (“Loomis Sayles”), the Fund’s sub-adviser
Fund
Performance
For the twelve-month period ended
December 31, 2023, the Fund (Institutional Class shares) returned 6.42%, relative to a 5.53% return for the Bloomberg U.S. Aggregate Bond Index, the Fund’s benchmark index.
ECM
Commentary
U.S. economic growth continued to
be resilient throughout the fourth quarter of 2023. Consumer spending was the primary force, but business fixed investment and government spending were also positive contributors throughout the year. Third quarter gross domestic product grew an
impressive 4.9% while the fourth quarter was tracking close to 2.2%. The economy was able to cope with materially higher interest rates and expectations of a recession came down, which surprised market participants. The probability that the economy
could regain price stability and stay near full employment without enduring a sharp slowdown in growth continued to increase.
The portion of the Fund managed by ECM maintained an
overweight to varying degrees in both agency mortgage-backed securities (“MBS”) and agency commercial mortgage-backed securities (“CMBS”) throughout 2023. Agency MBS and CMBS started out strong in January and February,
turning sharply negative in March following the failures of Silicon Valley Bank and First Republic Bank. Nevertheless, valuations remained attractive throughout and the conviction around these sectors paid off as they rallied in the fourth quarter,
resulting in solid outperformance for the year. Credit sectors also had a strong year as markets rallied in 2023. Out-of-benchmark positions in asset-backed securities, collateralized loan obligations and non-agency CMBS participated heavily in this
rally and these overweights resulted in significant outperformance as well. Duration was managed closely to the benchmark index throughout the year and therefore no significant performance, either positive or negative, was the result of an active
exposure to rates.
Loomis Sayles Commentary
The bond market finished 2023 with positive total returns,
but the favorable end result obscures the elevated volatility that occurred along the way. For most of the year, bonds were under pressure from concerns about persistent inflation and the Federal Reserve’s (the “Fed”) continued
interest rate increases. As late as October, U.S. investment-grade bond indexes were in negative territory on a year-to-date basis amid worries that the Fed would have to keep interest rates “higher for longer.”
This backdrop changed considerably in November and
December, as the concerns that had weighed on the market throughout 2023 dissipated rapidly. Inflation continued to decline unabated, despite concerns about rising oil prices in the third quarter. In November, the headline consumer price index came
in at inflation rates not seen since early 2021. With inflation receding, the markets grew comfortable with the idea that the Fed was finished raising rates. In December, Fed Chairman Jerome
Powell suggested that rate cuts could begin as early as the first half of
2024. Bond prices increased in response, erasing all of the previous losses, and helping the fixed-income market close with solid gains for the full year. Income also made a meaningful contribution to total returns thanks to the increase in yields
over the past two years.
Developed-market government
bonds generated gains in 2023, although weakness in foreign currencies dampened returns somewhat for U.S. dollar investors. Emerging markets debt outperformed U.S. investment-grade bonds thanks to investors’ hearty appetite for risk and the
positive economic growth trends for many countries in the asset class.
Performance for the Loomis Sayles sub-advised portion of
the Fund was driven primarily by security selection, but sector allocation also contributed throughout the year. The top contributors were the investment grade credit, high yield credit and securitized sectors. On an excess basis, investment grade
credit positively contributed to performance as the sector generated the greatest returns within the strategy. The out-of-benchmark allocation to high yield credit positively impacted performance during the year, with security selection contributing
the most in the sector. The underweight exposure to securitized markets also generated positive returns during the year. The overweight exposure within emerging market credit weighed on returns for the period and security selection subtracted most
in this sector.
The views and opinions in this report
were current as of December 31, 2023 and are subject to change at any time. They are not guarantees of performance or investment results and should not be taken as investment advice. Fund holdings are subject to change at any time. Fund returns are
net of fees unless otherwise noted.
Growth of $10,000
(unaudited)
This graph compares the value of a
hypothetical $10,000 investment in the Fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records) with the performance of the Fund’s benchmark index. Results include the reinvestment of all dividends and
capital gains distributions. Past performance is no guarantee of future results. The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance does not include any
fees or expenses of individual retirement accounts ("IRA(s)") or your financial professional brokerage commissions, if applicable. If such fees and expenses were included, returns would be lower.
*For the period
from June 25, 2018 (inception) through December 31, 2018.
Note: Performance for the Investor Class shares may vary due
to their differing fee structure. See returns table below.
Average Annual Total Returns for the Periods Ended December 31,
2023 (unaudited)
| One Year | Five Year | Since Inception(a)(b) | |
| Institutional Class | 6.42% | 1.75% | 1.63% |
| Investor Class | 6.06% | N/A | -2.53% |
| (a) Institutional Class inception date was June 25, 2018. |
| (b) Investor Class inception date was September 3, 2020. |
Results include the reinvestment of all dividends and
capital gains distributions. Past performance is no guarantee of future results. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance does not include any
fees or expenses of IRAs or your financial professional brokerage commissions, if applicable. If such fees or expenses were included, returns would be lower.
Empower Core Strategies: Inflation-Protected Securities
Fund
Management Discussion
The Fund’s sub-adviser is Goldman Sachs Asset
Management, L.P. (“Goldman Sachs”)
Fund Performance
For the twelve-month period ended December 31, 2023, the
Fund (Institutional Class shares) returned 4.65%, relative to a 4.36% return for the Bloomberg 1-10 Year U.S. Treasury Inflation-Protected Securities Index, the Fund’s benchmark index.
Goldman Sachs
Commentary
Overall, 2023 was a period of
heightened rate volatility. U.S. interest rates broadly sold off for the majority of the year in light of policy rate hikes, a higher-for-longer narrative by the Federal Open Market Committee, banking sector crisis, the potential for a government
shutdown, and geopolitical strife. However, by November, a “Santa rally” came early, as growing signs of disinflation and soft-landing optimism led to positive performance in bonds and equities, marking the strongest month for the
Bloomberg Global Aggregate Index since December 2008. The rebound continued in December, with markets closing the year in high spirits as the Federal Reserve signaled 75 basis points of rate cuts in 2024, reflecting more easing than the 50 basis
points previously projected.
The Fund’s
duration and yield curve positioning detracted from returns over the period, due to its curve-specific exposure. The Fund’s sector allocation strategy slightly contributed to returns over the year, driven by a slight overweight to
mortgage-backed securities in December. The Fund’s security selection strategy also contributed to returns over the year, driven by the Treasury inflation-protected securities selection.
The views and opinions in this report were current as of
December 31, 2023 and are subject to change at any time. They are not guarantees of performance or investment results and should not be taken as investment advice. Fund holdings are subject to change at any time. Fund returns are net of fees unless
otherwise noted.
Growth of $10,000
(unaudited)
This graph compares the value of a
hypothetical $10,000 investment in the Fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records) with the performance of the Fund’s benchmark index. Results include the reinvestment of all dividends and
capital gains distributions. Past performance is no guarantee of future results. The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance does not include any
fees or expenses of individual retirement accounts ("IRA(s)") or your financial professional brokerage commissions, if applicable. If such fees and expenses were included, returns would be lower.
*For the period
from June 25, 2018 (inception) through December 31, 2018.
Note: Performance for the Investor Class shares may vary due
to their differing fee structure. See returns table below.
Average Annual Total Returns for the Periods Ended December 31,
2023 (unaudited)
| One Year | Five Year | Since Inception(a)(b) | |
| Institutional Class | 4.65% | 3.21% | 2.82% |
| Investor Class | 4.16% | N/A | 0.70% |
| (a) Institutional Class inception date was June 25, 2018. |
| (b) Investor Class inception date was September 3, 2020. |
Results include the reinvestment of all dividends and
capital gains distributions. Past performance is no guarantee of future results. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance does not include any
fees or expenses of IRAs or your financial professional brokerage commissions, if applicable. If such fees or expenses were included, returns would be lower.
Empower Core Strategies: International Equity Fund
Management Discussion
The Fund’s sub-advisers are Franklin Templeton
Institutional, LLC (“Franklin Templeton”), Irish Life Investment Managers Limited (“ILIM”), and LSV Asset Management (“LSV”)
Fund
Performance
For the twelve-month period ended
December 31, 2023, the Fund (Institutional Class shares) returned 17.55%, relative to an 18.24% return for the MSCI EAFE Index, the Fund’s benchmark index.
Franklin
Commentary
2023 began and ended on an upswing,
but there was substantial turbulence along the way due to a series of bank crises in March followed by indications that major central banks would keep interest rates higher for longer in an effort to tame inflation. Financial markets hit low points
in the fourth quarter as sovereign bond prices plunged - driving yields significantly higher - and some bellwether companies announced disappointing earnings and/or guidance. Amid these challenges, the potential of artificial intelligence
(“AI”) thrilled investors, high interest rates did not trigger widespread recession and inflation continued to moderate. Near year-end, markets surged as indications seemed to point to a soft economic landing in many regions, less
inflationary pressure and a global economy that could continue to provide a backdrop for decent corporate earnings. Due largely to the excitement over AI, the equity market’s rally was heavily concentrated in information technology
(“IT”), which gained 37.5% and was the MSCI EAFE Index’s top-performing sector. International value stocks outperformed their growth counterparts modestly, with both categories notching double-digit percentage returns as measured
by MSCI style indexes.
During the year, the
Franklin sub-advised portion of the Fund underperformed the benchmark index as stock selection in the communication services, industrials and IT sectors held back relative returns. Conversely, stock selection in the consumer discretionary and
healthcare sectors aided relative performance. In terms of sector allocations, an overweight allocation in healthcare and an allocation to communication services that moved from an overweight to an underweight during the year curbed relative
results. Conversely, an overweight in IT and underweight exposure to consumer staples lifted relative returns. On a regional level, stock selection in Europe - and, to a much lesser extent, Asia - hindered relative returns, while off-benchmark
exposure to Canada and Brazil helped relative performance.
ILIM
Commentary
Global equities rallied over the
past twelve months, buoyed by hopes for a soft landing whereby while growth slows, a recession is avoided and inflation continues to fall, enabling central banks to begin cutting interest rates in 2024. The development and implementation of
artificial intelligence was also supportive as it led investors to believe the technology had the potential to boost productivity and company profit margins significantly in the medium term.
ILIM utilizes a passive investment strategy designed to
track the performance of the Fund’s benchmark index. Several key factors affected the performance of the benchmark index throughout 2023. European ex-UK equities rose by 22.7% over the period, aided by a reversal of some severe headwinds
following the outbreak of the war in Ukraine, including the collapse in natural gas prices, which eased
inflation and growth pressures in the Eurozone. UK equities underperformed
and energy and financials acted as headwinds, with the former hampering the fall in oil prices. Brent crude was down by 10.3% over the period, ending 2023 at $77 a barrel. Meanwhile, Japanese equities outperformed, rising by 20.8%. The market was
supported by a weaker yen, relatively loose monetary policy, cheap valuations, and an improved corporate governance backdrop.
LSV
Commentary
Value stocks performed well in 2023
so LSV’s value style was in favor and was the biggest contributor to the excess returns for the LSV sub-advised portion of the Fund for the year. The portfolio’s smaller capitalization bias, however, was a detractor in 2023.
Overweighting in ‘value’ oriented sectors helped results as well for the year with an underweight to healthcare and consumer staples helping as they were the worst performing sectors and an overweight in the financial sector along with
some good stock selection also boosting results. LSV does not take meaningful country exposures relative to the benchmark so country selection was negligible during the year, but stock selection was strong in Japan, the UK and Switzerland.
The views and opinions in this report were current as of
December 31, 2023 and are subject to change at any time. They are not guarantees of performance or investment results and should not be taken as investment advice. Fund holdings are subject to change at any time. Fund returns are net of fees unless
otherwise noted.
Growth of $10,000
(unaudited)
This graph compares the value of a
hypothetical $10,000 investment in the Fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records) with the performance of the Fund’s benchmark index. Results include the reinvestment of all dividends and
capital gains distributions. Past performance is no guarantee of future results. The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance does not include any
fees or expenses of individual retirement accounts ("IRA(s)") or your financial professional brokerage commissions, if applicable. If such fees and expenses were included, returns would be lower.
*For the period
from June 25, 2018 (inception) through December 31, 2018.
Note: Performance for the Investor Class shares may vary due
to their differing fee structure. See returns table below.
Average Annual Total Returns for the Periods Ended December 31,
2023 (unaudited)
| One Year | Five Year | Since Inception(a)(b) | |
| Institutional Class | 17.55% | 8.07% | 4.61% |
| Investor Class | 17.07% | N/A | 7.19% |
| (a) Institutional Class inception date was June 25, 2018. |
| (b) Investor Class inception date was September 3, 2020. |
Results include the reinvestment of all dividends and
capital gains distributions. Past performance is no guarantee of future results. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance does not include any
fees or expenses of IRAs or your financial professional brokerage commissions, if applicable. If such fees or expenses were included, returns would be lower.
Empower Core Strategies: U.S. Equity Fund
Management Discussion
From The Fund’s sub-advisers are Irish Life
Investment Managers Limited (“ILIM”), J.P. Morgan Investment Management Inc. (“JPMorgan”), Loomis, Sayles & Company, L.P. (“Loomis Sayles”), and Putnam Investment Management, LLC (“Putnam”)
Fund
Performance
For the twelve-month period ended
December 31, 2023, the Fund (Institutional Class shares) returned 23.27%, relative to a 25.96% return for the Russell 3000® Index, the Fund’s benchmark index.
ILIM
Commentary
ILIM utilizes a passive investment
strategy designed to track, as closely as possible, the performance of the S&P 500® Index. Several key factors affected the performance of the benchmark index throughout 2023. Growth stocks were supported by technology-related shares,
particularly the “Magnificent Seven” (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla) while value stocks were hampered by financial and healthcare stocks.
Strong U.S. activity in January led to a rally, but this
gave way to concerns over further monetary tightening from the Federal Reserve (the “Fed”) in February before the banking crises in March. The collapse of Silicon Valley Bank in the U.S. raised concerns of contagion in the global banking
sector, and this spread to Credit Suisse, which was taken over by UBS later in the month. The silver lining was the swift and decisive actions of the authorities, with deposit guarantees and funding schemes launched to shore up confidence in the
banking system. This sent a signal to investors that regulators and central banks were willing to aid the sector in times of distress.
Subsequent economic data proved resilient in spite of
severe headwinds, including significant tightening - the Fed has raised its key rate at the fastest pace in 40 years, by 525 basis points to a range of 5.25-5.50%. The Fed also emphasized for most of 2023 that the rate would need to remain
‘higher for longer’ to get inflation down to the 2% target. However, having paused its hiking cycle amid a drop in inflation, the Fed suggested at its December meeting that rate cuts would be forthcoming in early 2024 which helped
support equity markets towards the end of 2023. In addition, enthusiasm for artificial intelligence supported markets during the late spring and most of the summer months. This and better-than-expected earnings enabled U.S. technology shares to
regain all of the losses experienced in 2022.
JPMorgan Commentary
The U.S. equity markets ended the year strong despite
witnessing the second largest bank failure in the history of the U.S. The Fed hiked the Fed target rate to 5.25%-5.50%, the highest level in more than 22 years, to curb record high inflation. The consumer price index peaked at 6.4% in January 2023,
and trended downwards to 3.1% in November 2023. Meanwhile, third quarter gross domestic product was a bright spot, with gross domestic product rising at 4.9% annualized; the increase was primarily driven by an increase in consumer spending and
inventory investment. The labor market experienced some weakness as the unemployment rate went up from 3.4% in January 2023 to 3.7% in November 2023.
Business spending held up better than expected despite tighter lending
standards, supported by increased spending on intellectual property with greater emphasis on building and integrating artificial intelligence capabilities. Finally, earnings forecasts for 2024 witnessed an uptick towards the end of the year as
recession fears subsided.
2023 ended up being a very
different year compared to 2022, practically a mirror image, in terms of sectors that drove the market and the types of companies that were rewarded. A shift in leadership kicked off in the first quarter of 2023 as the market rotated away from
defensive companies that were big contributors in 2022, and into higher growth companies the strategy was less exposed to. Markets which undergo swift changes in leadership can present near-term headwinds for the strategy given its structural bias
to momentum.
JPMorgan invests primarily in
equity securities of large, well-established U.S. companies with market capitalization equal to those within the universe of the Russell 1000® Growth Index. For the JPMorgan sub-advised portion of the Fund, stock selection within healthcare and
financials were the top detractors. Conversely, lack of exposure to real estate and utilities contributed to returns.
Loomis Sayles
Commentary
The U.S. equity market overcame a
number of potential headwinds to post a robust total return in 2023. The interest rate outlook was a key driver of volatility throughout the year, as the Fed continued to raise rates to combat inflation. This issue became more prominent in late
summer and early autumn, when rising energy prices fueled concerns that persistent inflation could compel the Fed to keep rates “higher for longer.” The backdrop changed considerably in the fourth quarter, however, thanks to a series of
cooler-than-expected inflation reports. In addition, Fed Chairman Jerome Powell surprised the markets in December by indicating that the central bank was likely finished raising rates and possibly on track to begin enacting rate cuts in 2024. Not
least, it appeared that gross domestic product growth would remain in positive territory and allow the Fed to achieve the ideal outcome of a “soft landing” for the economy. Stocks surged in response, bringing most major large-cap indexes
to near all-time highs by year-end. The late year rally was broad-based, with strong participation from market segments - including the value style, small caps, and mid-caps - that had underperformed for most of 2023. Despite this shift, larger cap
and growth stocks were the key source of market leadership over the full year. Mega-cap technology-related companies produced particularly impressive gains that were fueled, in part, by excitement about the long-term prospects for artificial
intelligence.
Within the small cap market segment,
overall returns for the year were strong but were not without volatility. For the balance of the year, and particularly within the third quarter, investors took a more defensive posture and “risk-off” leadership drove returns in the
small cap market. To close the year, the market had a strong reversal in leadership and reflected a pivot to a “risk-on” market led by lower quality stocks. In spite of the different tone of the market over the final few months of the
year, quality was a successful theme for the year in total, as higher returning business models with greater revenue and earnings visibility outperformed more speculative and money losing segments.
The Loomis Sayles sub-advised portion of the Fund invests
primarily in equity securities of small companies similar in size to those in the Russell 2000® Index at the time of purchase and two key factors accounted for its performance in 2023: (1) higher quality stocks generally outperformed lower
quality stocks within the index for the year; and (2) successful portfolio changes over recent quarters that provided meaningful support to portfolio returns.
From a sector and stock selection standpoint an overweight
to the industrials and information technology sectors and underweights to utilities and financials were beneficial to relative return. Stock selection was strong overall with particular strength within the consumer staples, energy, information
technology and communication services. Offsetting these positives was an underweight to the consumer discretionary sector, an overweight to healthcare and lagging stock selection in the industrials and consumer discretionary sectors.
Putnam
Commentary
While sticky inflation and concerns
about a potential recession weighed on sentiment during the year, U.S. equities posted solid gains in 2023. Throughout the period, investors closely monitored inflation data, economic growth, and central bank policy. Geopolitical concerns about the
ongoing Russia-Ukraine war contributed to a risk-averse investing environment. By the fourth quarter, the growing conflict between Israel and the militant group Hamas in the Gaza Strip added to investors’ worries about the impact of war around
the world.
While the Fed continued to raise rates
early in the year, they took a pause on tightening at its June meeting, raised rates in July, and held them steady at meetings in September through December. Dovish comments by policymakers fueled a rally in equities.
Putnam invests mainly in common stocks of large and midsize
U.S. companies, which are of a size similar to those in the Russell 1000® Value Index. Security selection drove the Putnam sub-advised portion of the Fund’s performance; sector allocation decisions and a small cash balance detracted
somewhat. Security selection benefited most from positions in communication services, consumer discretionary, healthcare and utilities. Holdings in the industrials sector provided a modest offset. Underweights to the communication services and
financials sectors, which were among top benchmark performers, weighed on relative performance. A slight overweight to consumer staples also detracted from performance.
The views and opinions in this report were current as of
December 31, 2023 and are subject to change at any time. They are not guarantees of performance or investment results and should not be taken as investment advice. Fund holdings are subject to change at any time. Fund returns are net of fees unless
otherwise noted.
Growth of $10,000
(unaudited)
This graph compares the value of a
hypothetical $10,000 investment in the Fund over the past 10 fiscal year periods or since inception (for funds lacking 10-year records) with the performance of the Fund’s benchmark index. Results include the reinvestment of all dividends and
capital gains distributions. Past performance is no guarantee of future results. The graph does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance does not include any
fees or expenses of individual retirement accounts ("IRA(s)") or your financial professional brokerage commissions, if applicable. If such fees and expenses were included, returns would be lower.
*For the period
from June 25, 2018 (inception) through December 31, 2018.
Note: Performance for the Investor Class shares may vary due
to their differing fee structure. See returns table below.
Average Annual Total Returns for the Periods Ended December 31,
2023 (unaudited)
| One Year | Five Year | Since Inception(a)(b) | |
| Institutional Class | 23.27% | 15.23% | 11.02% |
| Investor Class | 22.79% | N/A | 12.01% |
| (a) Institutional Class inception date was June 25, 2018. |
| (b) Investor Class inception date was September 3, 2020. |
Results include the reinvestment of all dividends and
capital gains distributions. Past performance is no guarantee of future results. The table does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Performance does not include any
fees or expenses of IRAs or your financial professional brokerage commissions, if applicable. If such fees or expenses were included, returns would be lower.
Summary of Investments by Ratings or Sector as of December
31, 2023 (unaudited)
Empower Core Strategies: Flexible
Bond Fund
| Rating | Percentage
of Fund Investments |
| Aaa | 47.23% |
| Aa1 | 0.64 |
| Aa2 | 1.47 |
| Aa3 | 0.38 |
| A1 | 1.55 |
| A2 | 0.72 |
| A3 | 1.22 |
| Baa1 | 3.58 |
| Baa2 | 7.13 |
| Baa3 | 8.07 |
| Ba1 | 3.37 |
| Ba2 | 2.88 |
| Ba3 | 1.55 |
| B1 | 1.63 |
| B2 | 1.25 |
| B3 | 0.33 |
| CCC, CC, C | 1.30 |
| Equities | 0.44 |
| Not Rated | 5.96 |
| Short Term Investments | 9.30 |
| Total | 100.00% |
Empower Core Strategies:
Inflation-Protected Securities Fund
| Rating | Percentage
of Fund Investments |
| Aaa | 96.13% |
| Aa1 | 0.51 |
| A1 | 1.50 |
| Baa1 | 1.00 |
| Baa2 | 0.75 |
| Not Rated | 0.11 |
| Total | 100.00% |
Empower Core Strategies: International Equity Fund
| Sector | Percentage
of Fund Investments |
| Consumer, Non-cyclical | 23.82% |
| Financial | 19.67 |
| Consumer, Cyclical | 15.32 |
| Industrial | 15.05 |
| Technology | 7.60 |
| Basic Materials | 5.70 |
| Communications | 5.21 |
| Energy | 4.86 |
| Utilities | 2.31 |
| Diversified | 0.03 |
| Short Term Investments | 0.43 |
| Total | 100.00% |
Empower Core Strategies: U.S. Equity
Fund
| Sector | Percentage
of Fund Investments |
| Technology | 21.01% |
| Consumer, Non-cyclical | 19.76 |
| Financial | 15.33 |
| Industrial | 11.44 |
| Communications | 11.30 |
| Consumer, Cyclical | 9.51 |
| Energy | 5.78 |
| Basic Materials | 2.59 |
| Utilities | 2.44 |
| Short Term Investments | 0.84 |
| Total | 100.00% |
Shareholder Expense Example (unaudited)
As a shareholder of a Fund, you incur two types of costs:
(1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. This Example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs
of investing in other mutual funds.
The Example is based
on an investment of $1,000 invested at the beginning of the period and held for the entire period (July 1, 2023 to December 31, 2023).
Actual Expenses
The first row of each Fund's table below provides
information about actual account values and actual expenses. You may use the information in this row, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first row under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this
period.
Hypothetical Example for Comparison Purposes
The second row of each Fund's table below provides
information about hypothetical account values and hypothetical expenses based on such Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical
account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in each Fund and other funds. To do so, compare
this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in each Fund's table
are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second row of each Fund's table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
| Empower Core Strategies: Flexible Bond Fund | Beginning
Account Value |
Ending
Account Value |
Expenses
Paid During Period* | ||
| (07/01/23) | (12/31/23) | (07/01/23 – 12/31/23) | |||
| Institutional Class | |||||
| Actual | $1,000.00 | $1,040.89 | $2.31 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,022.90 | $2.29 | ||
| Investor Class | |||||
| Actual | $1,000.00 | $1,040.36 | $3.86 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,021.42 | $3.82 |
| * Expenses are equal to the Fund's annualized expense ratio of 0.45% for the Institutional Class shares and 0.75% for the Investor Class shares, multiplied by the average account value over the period, multiplied by 184/365 days to reflect the one-half year period. Performance does not include any fees or expenses of IRAs or your financial professional brokerage commissions, if applicable. If such fees or expenses were included, returns would be lower. |
| Empower Core Strategies: Inflation-Protected Securities Fund | Beginning
Account Value |
Ending
Account Value |
Expenses
Paid During Period* | ||
| (07/01/23) | (12/31/23) | (07/01/23 – 12/31/23) | |||
| Institutional Class | |||||
| Actual | $1,000.00 | $1,030.99 | $1.79 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,023.40 | $1.79 | ||
| Investor Class | |||||
| Actual | $1,000.00 | $1,029.34 | $3.58 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,021.70 | $3.57 |
| * Expenses are equal to the Fund's annualized expense ratio of 0.35% for the Institutional Class shares and 0.70% for the Investor Class shares, multiplied by the average account value over the period, multiplied by 184/365 days to reflect the one-half year period. Performance does not include any fees or expenses of IRAs or your financial professional brokerage commissions, if applicable. If such fees or expenses were included, returns would be lower. |
| Empower Core Strategies: International Equity Fund | Beginning
Account Value |
Ending
Account Value |
Expenses
Paid During Period* | ||
| (07/01/23) | (12/31/23) | (07/01/23 – 12/31/23) | |||
| Institutional Class | |||||
| Actual | $1,000.00 | $1,060.18 | $3.38 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,021.90 | $3.31 | ||
| Investor Class | |||||
| Actual | $1,000.00 | $1,057.15 | $5.19 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,020.20 | $5.09 |
| * Expenses are equal to the Fund's annualized expense ratio of 0.65% for the Institutional Class shares and 1.00% for the Investor Class shares, multiplied by the average account value over the period, multiplied by 184/365 days to reflect the one-half year period. Performance does not include any fees or expenses of IRAs or your financial professional brokerage commissions, if applicable. If such fees or expenses were included, returns would be lower. |
| Empower Core Strategies: U.S. Equity Fund | Beginning
Account Value |
Ending
Account Value |
Expenses
Paid During Period* | ||
| (07/01/23) | (12/31/23) | (07/01/23 – 12/31/23) | |||
| Institutional Class | |||||
| Actual | $1,000.00 | $1,082.39 | $2.89 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,022.40 | $2.80 | ||
| Investor Class | |||||
| Actual | $1,000.00 | $1,080.71 | $4.67 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,020.72 | $4.53 |
| * Expenses are equal to the Fund's annualized expense ratio of 0.55% for the Institutional Class shares and 0.89% for the Investor Class shares, multiplied by the average account value over the period, multiplied by 184/365 days to reflect the one-half year period. Performance does not include any fees or expenses of IRAs or your financial professional brokerage commissions, if applicable. If such fees or expenses were included, returns would be lower. |
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
| Principal Amount | Fair Value | |
| Repurchase Agreements — (continued) | ||
| $ 3 | Undivided interest of 30.06% in a repurchase agreement (principal amount/value $10 with a maturity value of $10) with Mizuho Securities (USA) LLC, 5.33%, dated 12/31/23 to be repurchased at $3 on 1/2/24 collateralized by U.S. Treasury securities, 0.38% - 4.75%, 12/31/23 - 2/15/33, with a value of $10.(o) | $ 3 |
| 13,500,434 | Undivided interest of 65.82% in a repurchase agreement (principal amount/value $20,566,451 with a maturity value of $20,578,654) with HSBC Securities (USA) Inc, 5.34%, dated 12/31/23 to be repurchased at $13,500,434 on 1/2/24 collateralized by various U.S. Government Agency securities, 2.00% - 7.00%, 12/1/29 - 12/1/53, with a value of $20,977,780.(o) | 13,500,434 |
| 54,001,736 | ||
| TOTAL
SHORT TERM INVESTMENTS — 9.44% (Cost $162,630,937) |
$ 162,630,937 | |
| TOTAL
INVESTMENTS — 101.43% (Cost $1,843,471,441) |
$1,747,894,409 | |
| OTHER ASSETS & LIABILITIES, NET — (1.43)% | $ (24,620,016) | |
| TOTAL NET ASSETS — 100.00% | $1,723,274,393 | |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Schedule of Investments
As of December 31, 2023
| (a) | Amount is stated in U.S. dollars unless otherwise noted. |
| (b) | Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. |
| (c) | Step bond; a zero coupon bond that converts to a fixed rate or variable interest rate at a designated future date. Rate disclosed represents effective yield at December 31, 2023. Maturity date disclosed represents final maturity date. |
| (d) | Adjustable rate security; interest rate is subject to change. Interest rate shown reflects the rate in effect at December 31, 2023. |
| (e) | Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above. |
| (f) | All or a portion of the security is on loan at December 31, 2023. |
| (g) | Security has no contractual maturity date and pays an indefinite stream of interest. |
| (h) | Security in default. |
| (i) | Security is a payment-in-kind bond (PIK); income may be received in cash or additional securities at the discretion of the issuer. |
| (j) | Zero coupon bond; the interest rate shown is the effective yield on date of purchase. |
| (k) | Principal amount is stated in 100 Mexican Peso Units. |
| (l) | All or a portion of the security has been segregated to cover initial margin requirements on open futures contracts. |
| (m) | Non-income producing security. |
| (n) | Represents less than 0.005% of net assets. |
| (o) | Collateral received for securities on loan. |
| LP | Limited Partnership |
| REIT | Real Estate Investment Trust |
| SOFR | Secured Overnight Financing Rate is the secured interbank overnight interest rate and reference rate. |
| At December 31, 2023 the Fund held the following outstanding exchange traded futures contracts: | |||||
| Description | Number
of Contracts |
Notional
Amount (000) |
Expiration
Date |
Fair
Value and Net Unrealized Appreciation/ (Depreciation) | |
| Long | |||||
| U.S. 10 Year Treasury Note Futures | 1,036 | USD | 116,955 | Mar 2024 | $ 3,478,546 |
| U.S. 2 Year Treasury Note Futures | 696 | USD | 143,316 | Mar 2024 | 1,279,490 |
| U.S. 5 Year Treasury Note Futures | 1,294 | USD | 140,753 | Mar 2024 | 1,924,598 |
| U.S. Long Bond Futures | 1,619 | USD | 202,274 | Mar 2024 | 12,426,312 |
| U.S. Ultra Bond Futures | 35 | USD | 4,676 | Mar 2024 | 370,742 |
| Short | |||||
| U.S. 10 Year Treasury Ultra Futures | 1,904 | USD | 224,702 | Mar 2024 | (5,888,682) |
| U.S. Ultra Bond Futures | 83 | USD | 11,088 | Mar 2024 | (456,302) |
| Net Appreciation | $13,134,704 | ||||
| Currency Abbreviations | ||
| EUR | Euro Dollar | |
| IDR | Indonesian Rupiah | |
| MXN | Mexican Peso | |
| USD | U.S. Dollar | |
| ZAR | South African Rand | |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INFLATION-PROTECTED SECURITIES
FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INFLATION-PROTECTED SECURITIES
FUND
Schedule of Investments
As of December 31, 2023
| (a) | Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. |
| (b) | Adjustable rate security; interest rate is subject to change. Interest rate shown reflects the rate in effect at December 31, 2023. |
| (c) | Certain variable rate securities are not based on a published reference rate and spread but are determined by the issuer or agent and are based on current market conditions. These securities do not indicate a reference rate and spread in their description above. |
| SOFR | Secured Overnight Financing Rate is the secured interbank overnight interest rate and reference rate. |
| TBA | To Be Announced |
| TIPS | Treasury Inflation Protected Securities |
| At December 31, 2023 the Fund held the following outstanding exchange traded futures contracts: | |||||
| Description | Number
of Contracts |
Notional
Amount (000) |
Expiration
Date |
Fair
Value and Net Unrealized Appreciation/ (Depreciation) | |
| Long | |||||
| U.S. 10 Year Treasury Note Futures | 80 | USD | 9,031 | Mar 2024 | $ 76,684 |
| U.S. 2 Year Treasury Note Futures | 40 | USD | 8,237 | Mar 2024 | 1,940 |
| U.S. 5 Year Treasury Note Futures | 17 | USD | 1,849 | Mar 2024 | (1,658) |
| Short | |||||
| U.S. Long Bond Futures | 21 | USD | 2,624 | Mar 2024 | (76,350) |
| U.S. Ultra Bond Futures | 55 | USD | 7,348 | Mar 2024 | (218,429) |
| Net Depreciation | $(217,813) | ||||
| At December 31, 2023, the Fund held the following outstanding centrally cleared interest rate swaps: | |||||||
| Rate
Received by the Fund |
Receive
Frequency |
Rate Paid by the Fund | Pay
Frequency |
Notional
Amount (000) |
Maturity Date | Net
Unrealized Appreciation/ (Depreciation) | |
| 3.73% | Annual | 1-day SOFR | Annual | USD | 7,000 | 11/28/2027 | $ 64,662 |
| 1-day SOFR | Annual | 2.68% | Annual | USD | 7,240 | 07/28/2032 | (73,482) |
| 4.31% | Annual | 1-day SOFR | Annual | USD | 12,520 | 10/05/2033 | 165,237 |
| 2.91% | Annual | 1-day SOFR | Annual | USD | 18,940 | 07/28/2037 | 172,866 |
| 3.39% | Annual | 1-day SOFR | Annual | USD | 24,050 | 05/10/2038 | 208,541 |
| 1-day SOFR | Annual | 2.08% | Annual | USD | 18,040 | 07/28/2047 | (73,339) |
| 1-day SOFR | Annual | 2.56% | Annual | USD | 20,470 | 05/11/2053 | (165,971) |
| 1-day SOFR | Annual | 3.61% | Annual | USD | 6,680 | 11/15/2053 | (229,884) |
| 1-day SOFR | Annual | 3.51% | Annual | USD | 2,210 | 11/29/2053 | (47,073) |
| Net Appreciation | $ 21,557 | ||||||
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
| Shares | Fair Value | |
| Industrial — 0.03% | ||
| 473 | Sartorius AG | $ 173,695 |
| TOTAL
PREFERRED STOCK — 0.48% (Cost $3,106,331) |
$ 2,820,673 | |
| Principal Amount | ||
| SHORT TERM INVESTMENTS | ||
| U.S. Treasury Bonds and Notes — 0.43% | ||
| $2,528,900 | U.S.
Treasury Bills(d) 5.28%, 02/22/2024 |
2,509,021 |
| TOTAL
SHORT TERM INVESTMENTS — 0.43% (Cost $2,509,021) |
$ 2,509,021 | |
| TOTAL
INVESTMENTS — 97.99% (Cost $535,359,800) |
$578,323,092 | |
| OTHER ASSETS & LIABILITIES, NET — 2.01% | $ 11,874,255 | |
| TOTAL NET ASSETS — 100.00% | $590,197,347 | |
| (a) | Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. |
| (b) | Non-income producing security. |
| (c) | Security is fair valued using significant unobservable inputs. |
| (d) | Zero coupon bond; the interest rate shown is the effective yield on date of purchase. |
| ADR | American Depositary Receipt |
| REIT | Real Estate Investment Trust |
| At December 31, 2023 the Fund held the following outstanding exchange traded futures contracts: | |||||
| Description | Number
of Contracts |
Notional
Amount (000) |
Expiration
Date |
Fair
Value and Net Unrealized Appreciation | |
| Long | |||||
| MSCI EAFE Index Futures | 66 | USD | 7,433 | Mar 2024 | $176,060 |
| Net Appreciation | $176,060 | ||||
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
| At December 31, 2023 the Fund held the following over-the-counter (OTC) forward foreign currency contracts: | ||||||
| Counterparty | Currency
Purchased |
Quantity
of Currency Purchased |
Currency
Sold |
Quantity
of Currency Sold |
Settlement Date | Net
Unrealized Appreciation/ (Depreciation) |
| CGM | USD | 9,583 | AUD | 13,983 | 02/13/2024 | $40 |
| CGM | USD | 2,562 | AUD | 3,738 | 02/23/2024 | 11 |
| CGM | USD | 9,710 | AUD | 14,162 | 02/29/2024 | 41 |
| CGM | USD | 3,455 | AUD | 5,037 | 03/14/2024 | 14 |
| CGM | USD | 2,580 | EUR | 2,322 | 01/02/2024 | 16 |
| CGM | USD | 19,116 | EUR | 17,509 | 02/02/2024 | (241) |
| CGM | USD | 2,950 | GBP | 2,328 | 01/10/2024 | (18) |
| CGM | USD | 27,455 | GBP | 22,012 | 01/11/2024 | (606) |
| CGM | USD | 8,904 | GBP | 7,060 | 01/12/2024 | (96) |
| CGM | USD | 30,294 | GBP | 23,908 | 02/01/2024 | (188) |
| CGM | USD | 3,361 | GBP | 2,631 | 02/02/2024 | 7 |
| CGM | USD | 3,357 | JPY | 471,537 | 03/25/2024 | (33) |
| CGM | USD | 21,337 | JPY | 2,996,165 | 03/27/2024 | (210) |
| CGM | USD | 37,414 | JPY | 5,252,787 | 03/28/2024 | (368) |
| MEL | USD | 137,078 | CHF | 123,500 | 01/11/2024 | (9,971) |
| MEL | USD | 147,898 | EUR | 139,900 | 01/11/2024 | (6,631) |
| MEL | USD | 20,216 | JPY | 3,000,000 | 02/21/2024 | (1,238) |
| Net Depreciation | $(19,471) | |||||
| Currency Abbreviations | ||
| AUD | Australian Dollar | |
| CHF | Swiss Franc | |
| EUR | Euro Dollar | |
| GBP | British Pound | |
| JPY | Japanese Yen | |
| USD | U.S. Dollar | |
| Counterparty Abbreviations | ||
| CGM | Citigroup Global Markets | |
| MEL | Mellon Capital | |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Schedule of Investments
As of December 31, 2023
Summary
of Investments by Country as of December 31, 2023.
| Country | Fair Value | Percentage
of Fund Investments | |
| Japan | $120,207,065 | 20.78% | |
| United Kingdom | 74,817,908 | 12.94 | |
| Switzerland | 68,891,453 | 11.91 | |
| France | 57,581,253 | 9.96 | |
| Germany | 52,204,379 | 9.03 | |
| Australia | 41,613,829 | 7.20 | |
| Netherlands | 24,533,806 | 4.24 | |
| Denmark | 20,935,523 | 3.62 | |
| Sweden | 16,545,669 | 2.86 | |
| Spain | 15,038,920 | 2.60 | |
| Italy | 12,484,233 | 2.16 | |
| Israel | 11,117,194 | 1.92 | |
| Hong Kong | 9,970,979 | 1.72 | |
| Ireland | 9,950,170 | 1.72 | |
| Singapore | 7,105,826 | 1.23 | |
| Finland | 6,548,012 | 1.13 | |
| Norway | 5,651,988 | 0.98 | |
| Canada | 5,298,543 | 0.92 | |
| Belgium | 4,314,012 | 0.75 | |
| Austria | 3,119,484 | 0.54 | |
| United States | 2,509,021 | 0.43 | |
| Uruguay | 1,885,848 | 0.33 | |
| Indonesia | 1,522,381 | 0.26 | |
| Portugal | 1,105,094 | 0.19 | |
| Jordan | 912,025 | 0.16 | |
| New Zealand | 722,528 | 0.12 | |
| South Africa | 640,884 | 0.11 | |
| Luxembourg | 550,105 | 0.09 | |
| Malta | 264,664 | 0.05 | |
| Chile | 162,027 | 0.03 | |
| Macau | 118,249 | 0.02 | |
| United Arab Emirates | 20 | 0.00 | |
| Total | $578,323,092 | 100.00% |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Schedule of Investments
As of December 31, 2023
| (a) | Non-income producing security. |
| (b) | All or a portion of the security is on loan at December 31, 2023. |
| (c) | Zero coupon bond; the interest rate shown is the effective yield on date of purchase. |
| (d) | Collateral received for securities on loan. |
| ADR | American Depositary Receipt |
| REIT | Real Estate Investment Trust |
| At December 31, 2023 the Fund held the following outstanding exchange traded futures contracts: | |||||
| Description | Number
of Contracts |
Notional
Amount (000) |
Expiration
Date |
Fair
Value and Net Unrealized Appreciation | |
| Long | |||||
| S&P 500® Emini Futures | 38 | USD | 9,158 | Mar 2024 | $284,720 |
| Net Appreciation | $284,720 | ||||
| At December 31, 2023 the Fund held the following over-the-counter (OTC) forward foreign currency contracts: | ||||||
| Counterparty | Currency
Purchased |
Quantity
of Currency Purchased |
Currency
Sold |
Quantity
of Currency Sold |
Settlement Date | Net
Unrealized Appreciation/ (Depreciation) |
| BB | USD | 597,210 | GBP | 473,600 | 03/20/2024 | $(6,730) |
| CGM | USD | 108 | EUR | 100 | 03/20/2024 | (2) |
| CGM | USD | 13,364 | GBP | 10,600 | 03/20/2024 | (154) |
| GS | USD | 31,011 | GBP | 24,600 | 03/20/2024 | (359) |
| HSB | USD | 684,212 | EUR | 630,800 | 03/20/2024 | (14,485) |
| HSB | USD | 216,881 | GBP | 172,100 | 03/20/2024 | (2,582) |
| MS | USD | 2,311,342 | EUR | 2,131,300 | 03/20/2024 | (49,363) |
| RBS | USD | 493,382 | EUR | 454,900 | 03/20/2024 | (10,481) |
| RBS | USD | 968,006 | GBP | 767,900 | 03/20/2024 | (11,228) |
| SSB | USD | 92,294 | EUR | 85,100 | 03/20/2024 | (1,966) |
| SSB | USD | 970,123 | GBP | 769,600 | 03/20/2024 | (11,279) |
| TD | USD | 418,212 | EUR | 375,300 | 03/20/2024 | 2,516 |
| TD | USD | 333,311 | GBP | 264,400 | 03/20/2024 | (3,855) |
| UBS | USD | 660,142 | EUR | 608,600 | 03/20/2024 | (13,965) |
| WES | USD | 493,068 | GBP | 391,100 | 03/20/2024 | (5,667) |
| Net Depreciation | $(129,600) | |||||
| Currency Abbreviations | ||
| EUR | Euro Dollar | |
| GBP | British Pound | |
| USD | U.S. Dollar | |
| Counterparty Abbreviations | ||
| BB | Barclays Bank PLC | |
| CGM | Citigroup Global Markets | |
| GS | Goldman Sachs | |
| HSB | HSBC Bank USA | |
| MS | Morgan Stanley & Co LLC | |
| RBS | Royal Bank of Scotland | |
| SSB | State Street Bank | |
| TD | Toronto Dominion Bank | |
| UBS | UBS AG | |
| WES | Westpac Banking | |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Assets and Liabilities
As of December 31, 2023
| Empower
Core Strategies: Flexible Bond Fund |
Empower
Core Strategies: Inflation-Protected Securities Fund |
Empower
Core Strategies: International Equity Fund | |||
| ASSETS: | |||||
| Investments in securities, fair value(a)(b) | $1,693,892,673 | $337,461,867 | $578,323,092 | ||
| Repurchase agreements, fair value(c) | 54,001,736 | - | - | ||
| Cash | 18,285,202 | 13,484,989 | 8,260,469 | ||
| Cash denominated in foreign currencies, fair value(d) | - | - | 778,153 | ||
| Cash pledged on futures contracts | 13,160 | 233,665 | 1,773,470 | ||
| Cash pledged on centrally cleared swaps | - | 738,476 | - | ||
| Dividends and interest receivable | 12,903,089 | 1,016,463 | 1,229,403 | ||
| Subscriptions receivable | 1,505,331 | 1,113,838 | 825,885 | ||
| Receivable for investments sold | 299,145 | - | 12,915 | ||
| Variation margin on futures contracts | 98,644 | - | 3,000 | ||
| Variation margin on centrally cleared swaps | - | 37,955 | - | ||
| Unrealized appreciation on forward foreign currency contracts | - | - | 129 | ||
| Total Assets | 1,780,998,980 | 354,087,253 | 591,206,516 | ||
| LIABILITIES: | |||||
| Payable for TBA investments purchased | - | 6,814,609 | - | ||
| Payable for director fees | 7,018 | 7,018 | 7,018 | ||
| Payable for investments purchased | 1,840,927 | - | 4,591 | ||
| Payable for other accrued fees | 146,164 | 58,233 | 241,841 | ||
| Payable for shareholder services fees | 500,534 | 100,114 | 166,292 | ||
| Payable to investment adviser | 565,081 | 97,848 | 312,174 | ||
| Payable upon return of securities loaned | 54,001,736 | - | - | ||
| Redemptions payable | 663,127 | 117,632 | 257,653 | ||
| Unrealized depreciation on forward foreign currency contracts | - | - | 19,600 | ||
| Variation margin on futures contracts | - | 13,706 | - | ||
| Total Liabilities | 57,724,587 | 7,209,160 | 1,009,169 | ||
| NET ASSETS | $1,723,274,393 | $346,878,093 | $590,197,347 | ||
| NET ASSETS REPRESENTED BY: | |||||
| Capital stock, $0.10 par value | $19,912,438 | $12,820,756 | $5,882,812 | ||
| Paid-in capital in excess of par | 1,954,153,626 | 329,413,207 | 595,187,629 | ||
| Undistributed/accumulated earnings (deficit) | (250,791,671) | 4,644,130 | (10,873,094) | ||
| NET ASSETS | $1,723,274,393 | $346,878,093 | $590,197,347 | ||
| NET ASSETS BY CLASS | |||||
| Investor Class | $1,711,275,915 | $344,472,394 | $581,928,174 | ||
| Institutional Class | $11,998,478 | $2,405,699 | $8,269,173 | ||
| CAPITAL STOCK: | |||||
| Authorized | |||||
| Investor Class | 1,080,000,000 | 200,000,000 | 199,000,000 | ||
| Institutional Class | 15,000,000 | 20,000,000 | 25,000,000 | ||
| Issued and Outstanding | |||||
| Investor Class | 197,908,647 | 127,555,153 | 57,947,967 | ||
| Institutional Class | 1,215,730 | 652,410 | 880,157 |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Assets and Liabilities
Statement of Assets and Liabilities
As of December 31, 2023
| Empower
Core Strategies: Flexible Bond Fund |
Empower
Core Strategies: Inflation-Protected Securities Fund |
Empower
Core Strategies: International Equity Fund | |||
| NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE: | |||||
| Investor Class | $8.65 | $2.70 | $10.04 | ||
| Institutional Class | $9.87 | $3.69 | $9.40 | ||
| (a) Cost of investments | $1,789,469,705 | $330,156,346 | $535,359,800 | ||
| (b) Including fair value of securities on loan | $52,546,255 | $- | $- | ||
| (c) Cost of repurchase agreements | $54,001,736 | $- | $- | ||
| (d) Cost of cash denominated in foreign currencies | $- | $- | $717,234 |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Assets and Liabilities
As of December 31, 2023
| Empower
Core Strategies: U.S. Equity Fund | |
| ASSETS: | |
| Investments in securities, fair value(a)(b) | $679,750,106 |
| Repurchase agreements, fair value(c) | 1,368,691 |
| Cash | 12,231,927 |
| Cash pledged on futures contracts | 2,829,518 |
| Dividends receivable | 607,801 |
| Subscriptions receivable | 606,424 |
| Receivable for investments sold | 20,489 |
| Unrealized appreciation on forward foreign currency contracts | 2,516 |
| Total Assets | 697,417,472 |
| LIABILITIES: | |
| Payable for director fees | 7,018 |
| Payable for other accrued fees | 148,701 |
| Payable for shareholder services fees | 196,945 |
| Payable to investment adviser | 304,999 |
| Payable upon return of securities loaned | 1,368,691 |
| Redemptions payable | 521,918 |
| Unrealized depreciation on forward foreign currency contracts | 132,116 |
| Variation margin on futures contracts | 23,275 |
| Total Liabilities | 2,703,663 |
| NET ASSETS | $694,713,809 |
| NET ASSETS REPRESENTED BY: | |
| Capital stock, $0.10 par value | $6,264,985 |
| Paid-in capital in excess of par | 610,169,124 |
| Undistributed/accumulated earnings | 78,279,700 |
| NET ASSETS | $694,713,809 |
| NET ASSETS BY CLASS | |
| Investor Class | $678,303,206 |
| Institutional Class | $16,410,603 |
| CAPITAL STOCK: | |
| Authorized | |
| Investor Class | 300,000,000 |
| Institutional Class | 25,000,000 |
| Issued and Outstanding | |
| Investor Class | 61,465,436 |
| Institutional Class | 1,184,409 |
| NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE: | |
| Investor Class | $11.04 |
| Institutional Class | $13.86 |
| (a) Cost of investments | $600,455,364 |
| (b) Including fair value of securities on loan | $1,323,399 |
| (c) Cost of repurchase agreements | $1,368,691 |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Operations
For the fiscal year ended December 31, 2023
| Empower
Core Strategies: Flexible Bond Fund |
Empower
Core Strategies: Inflation-Protected Securities Fund |
Empower
Core Strategies: International Equity Fund | |||
| INVESTMENT INCOME: | |||||
| Interest | $75,294,645 | $5,176,680 | $- | ||
| Income from securities lending | 225,868 | 329 | 1,774 | ||
| Dividends | 460,191 | - | 10,825,377 | ||
| Foreign withholding tax | (8,611) | - | (1,218,863) | ||
| Total Income | 75,972,093 | 5,177,009 | 9,608,288 | ||
| EXPENSES: | |||||
| Management fees | 6,770,370 | 372,236 | 1,731,953 | ||
| Shareholder services fees – Investor Class | 6,194,433 | 386,231 | 1,114,742 | ||
| Audit and tax fees | 45,953 | 52,451 | 73,074 | ||
| Custodian fees | 77,295 | 20,166 | 475,305 | ||
| Directors fees | 29,921 | 29,920 | 29,920 | ||
| Legal fees | 9,449 | 9,449 | 9,449 | ||
| Pricing fees | 49,716 | 600 | 40,482 | ||
| Registration fees | 135,657 | 79,943 | 72,780 | ||
| Shareholder report fees | 39,914 | 1,752 | 21,494 | ||
| Transfer agent fees | 8,367 | 8,390 | 8,391 | ||
| Other fees | 20,803 | 16,372 | 16,691 | ||
| Total Expenses | 13,381,878 | 977,510 | 3,594,281 | ||
| Less amount waived by investment adviser | 33,701 | 201,221 | 362,755 | ||
| Net Expenses | 13,348,177 | 776,289 | 3,231,526 | ||
| NET INVESTMENT INCOME | 62,623,916 | 4,400,720 | 6,376,762 | ||
| NET REALIZED AND UNREALIZED GAIN (LOSS): | |||||
| Net realized loss on investments and foreign currency transactions | (57,898,678) | (876,391) | (3,046,944) | ||
| Net realized loss on interest rate swaps | - | (10,893) | - | ||
| Net realized gain (loss) on futures contracts | (25,715,129) | 117,460 | 835,437 | ||
| Net Realized Loss | (83,613,807) | (769,824) | (2,211,507) | ||
| Net change in unrealized appreciation on investments and foreign currency translations | 95,594,224 | 8,347,022 | 54,744,839 | ||
| Net change in unrealized appreciation on interest rate swaps | - | 21,557 | - | ||
| Net change in unrealized appreciation (depreciation) on futures contracts | 14,058,369 | (217,509) | 188,229 | ||
| Net change in unrealized depreciation on forward foreign currency contracts | - | - | (4,848) | ||
| Net Change in Unrealized Appreciation | 109,652,593 | 8,151,070 | 54,928,220 | ||
| Net Realized and Unrealized Gain | 26,038,786 | 7,381,246 | 52,716,713 | ||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $88,662,702 | $11,781,966 | $59,093,475 |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Operations
For the fiscal year ended December 31, 2023
| Empower
Core Strategies: U.S. Equity Fund | |
| INVESTMENT INCOME: | |
| Interest | $604,453 |
| Income from securities lending | 13,994 |
| Dividends | 10,261,168 |
| Foreign withholding tax | (28,046) |
| Total Income | 10,851,569 |
| EXPENSES: | |
| Management fees | 3,186,959 |
| Shareholder services fees – Investor Class | 2,315,188 |
| Audit and tax fees | 35,573 |
| Custodian fees | 212,334 |
| Directors fees | 29,920 |
| Legal fees | 9,449 |
| Pricing fees | 1,166 |
| Registration fees | 102,521 |
| Shareholder report fees | 65,297 |
| Transfer agent fees | 8,391 |
| Other fees | 17,297 |
| Total Expenses | 5,984,095 |
| Less amount waived by investment adviser | 6,980 |
| Net Expenses | 5,977,115 |
| NET INVESTMENT INCOME | 4,874,454 |
| NET REALIZED AND UNREALIZED GAIN (LOSS): | |
| Net realized gain on investments and foreign currency transactions | 31,528,999 |
| Net realized gain on futures contracts | 3,164,242 |
| Net realized gain on forward foreign currency contracts | 178,343 |
| Net Realized Gain | 34,871,584 |
| Net change in unrealized appreciation on investments and foreign currency translations | 76,955,115 |
| Net change in unrealized appreciation on futures contracts | 283,070 |
| Net change in unrealized depreciation on forward foreign currency contracts | (121,095) |
| Net Change in Unrealized Appreciation | 77,117,090 |
| Net Realized and Unrealized Gain | 111,988,674 |
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $116,863,128 |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Changes in Net Assets
For the fiscal years ended December 31, 2023 and April 30, 2022 and for the period ended December 31, 2022
| Empower Core Strategies: Flexible Bond Fund | December
31, 2023 |
December
31, 2022(a) |
April
30, 2022 | ||
| OPERATIONS: | |||||
| Net investment income | $62,623,916 | $25,879,967 | $10,971,714 | ||
| Net realized loss | (83,613,807) | (61,722,002) | (19,972,151) | ||
| Net change in unrealized appreciation (depreciation) | 109,652,593 | (42,343,991) | (143,660,024) | ||
| Net Increase (Decrease) in Net Assets Resulting from Operations | 88,662,702 | (78,186,026) | (152,660,461) | ||
| DISTRIBUTIONS TO SHAREHOLDERS: | |||||
| From return of capital | |||||
| Investor Class | - | (488,703) | - | ||
| Institutional Class | - | (3,137) | - | ||
| From return of capital | 0 | (491,840) | 0 | ||
| From net investment income and net realized gains | |||||
| Investor Class | (61,972,556) | (29,962,499) | (6,953,436) | ||
| Institutional Class | (412,788) | (201,301) | (44,921) | ||
| From net investment income and net realized gains | (62,385,344) | (30,163,800) | (6,998,357) | ||
| Total Distributions | (62,385,344) | (30,655,640) | (6,998,357) | ||
| CAPITAL SHARE TRANSACTIONS: | |||||
| Shares sold | |||||
| Investor Class | 651,270,818 | 430,320,063 | 1,219,321,196 | ||
| Institutional Class | 2,646,554 | 4,053,016 | 9,338,816 | ||
| Shares issued in reinvestment of distributions | |||||
| Investor Class | 61,972,556 | 30,451,202 | 6,953,436 | ||
| Institutional Class | 412,788 | 204,438 | 44,921 | ||
| Shares redeemed | |||||
| Investor Class | (689,978,201) | (464,042,927) | (245,893,151) | ||
| Institutional Class | (2,953,921) | (2,601,047) | (2,127,668) | ||
| Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions | 23,370,594 | (1,615,255) | 987,637,550 | ||
| Total Increase (Decrease) in Net Assets | 49,647,952 | (110,456,921) | 827,978,732 | ||
| NET ASSETS: | |||||
| Beginning of year | 1,673,626,441 | 1,784,083,362 | 956,104,630 | ||
| End of year | $1,723,274,393 | $1,673,626,441 | $1,784,083,362 | ||
| CAPITAL SHARE TRANSACTIONS - SHARES: | |||||
| Shares sold | |||||
| Investor Class | 75,974,615 | 49,224,774 | 124,662,550 | ||
| Institutional Class | 270,675 | 406,895 | 844,488 | ||
| Shares issued in reinvestment of distributions | |||||
| Investor Class | 7,205,472 | 3,607,962 | 709,588 | ||
| Institutional Class | 42,063 | 21,296 | 4,047 | ||
| Shares redeemed | |||||
| Investor Class | (82,077,836) | (52,552,394) | (25,462,666) | ||
| Institutional Class | (305,281) | (260,708) | (193,515) | ||
| Net Increase | 1,109,708 | 447,825 | 100,564,492 |
| (a) | For the period May 1, 2022 to December 31, 2022. The Board of Directors of Empower Funds, Inc. approved a change to the Fund's fiscal year end from April 30 to December 31, beginning December 31, 2022. |
See
Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Changes in Net Assets
For the fiscal years ended December 31, 2023 and April 30, 2022 and for the period ended December 31, 2022
| Empower Core Strategies: Inflation-Protected Securities Fund | December
31, 2023 |
December
31, 2022(a) |
April
30, 2022 | ||
| OPERATIONS: | |||||
| Net investment income | $4,400,720 | $967,650 | $555,530 | ||
| Net realized gain (loss) | (769,824) | (1,643,086) | 37,549 | ||
| Net change in unrealized appreciation (depreciation) | 8,151,070 | (752,675) | (606,257) | ||
| Net Increase (Decrease) in Net Assets Resulting from Operations | 11,781,966 | (1,428,111) | (13,178) | ||
| DISTRIBUTIONS TO SHAREHOLDERS: | |||||
| From return of capital | |||||
| Investor Class | - | - | (2,851,741) | ||
| Institutional Class | - | - | (403,826) | ||
| From return of capital | 0 | 0 | (3,255,567) | ||
| From net investment income and net realized gains | |||||
| Investor Class | (4,350,839) | (940,620) | (3,598,312) | ||
| Institutional Class | (51,011) | (42,808) | (524,344) | ||
| From Net Investment Income and Net Realized Gains | (4,401,850) | (983,428) | (4,122,656) | ||
| Total Distributions | (4,401,850) | (983,428) | (7,378,223) | ||
| CAPITAL SHARE TRANSACTIONS: | |||||
| Shares sold | |||||
| Investor Class | 314,816,463 | 30,554,259 | 11,804,332 | ||
| Institutional Class | 543,287 | 861,485 | 1,987,123 | ||
| Shares issued in reinvestment of distributions | |||||
| Investor Class | 4,350,839 | 940,620 | 6,450,053 | ||
| Institutional Class | 51,011 | 42,808 | 928,170 | ||
| Shares redeemed | |||||
| Investor Class | (21,450,793) | (2,664,437) | (8,022,248) | ||
| Institutional Class | (618,501) | (542,050) | (451,584) | ||
| Net Increase in Net Assets Resulting from Capital Share Transactions | 297,692,306 | 29,192,685 | 12,695,846 | ||
| Total Increase in Net Assets | 305,072,422 | 26,781,146 | 5,304,445 | ||
| NET ASSETS: | |||||
| Beginning of year | 41,805,671 | 15,024,525 | 9,720,080 | ||
| End of year | $346,878,093 | $41,805,671 | $15,024,525 | ||
| CAPITAL SHARE TRANSACTIONS - SHARES: | |||||
| Shares sold | |||||
| Investor Class | 119,201,765 | 10,905,332 | 3,225,110 | ||
| Institutional Class | 148,354 | 228,587 | 351,507 | ||
| Shares issued in reinvestment of distributions | |||||
| Investor Class | 1,606,283 | 352,292 | 1,830,692 | ||
| Institutional Class | 14,008 | 11,858 | 209,941 | ||
| Shares redeemed | |||||
| Investor Class | (7,999,517) | (944,798) | (2,024,022) | ||
| Institutional Class | (169,899) | (143,513) | (88,352) | ||
| Net Increase | 112,800,994 | 10,409,758 | 3,504,876 |
| (a) | For the period May 1, 2022 to December 31, 2022. The Board of Directors of Empower Funds, Inc. approved a change to the Fund's fiscal year end from April 30 to December 31, beginning December 31, 2022. |
See
Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Changes in Net Assets
For the fiscal years ended December 31, 2023 and April 30, 2022 and for the period ended December 31, 2022
| Empower Core Strategies: International Equity Fund | December
31, 2023 |
December
31, 2022(a) |
April
30, 2022 | ||
| OPERATIONS: | |||||
| Net investment income | $6,376,762 | $2,702,385 | $3,689,100 | ||
| Net realized loss | (2,211,507) | (46,511,539) | (2,959,252) | ||
| Net change in unrealized appreciation (depreciation) | 54,928,220 | 29,122,263 | (45,149,449) | ||
| Net Increase (Decrease) in Net Assets Resulting from Operations | 59,093,475 | (14,686,891) | (44,419,601) | ||
| DISTRIBUTIONS TO SHAREHOLDERS: | |||||
| From return of capital | |||||
| Investor Class | - | - | (23,367,161) | ||
| Institutional Class | - | - | (599,069) | ||
| From return of capital | 0 | 0 | (23,966,230) | ||
| From net investment income and net realized gains | |||||
| Investor Class | (6,896,697) | - | (16,863,599) | ||
| Institutional Class | (345,454) | - | (194,462) | ||
| From Net Investment Income and Net Realized Gains | (7,242,151) | 0 | (17,058,061) | ||
| Total Distributions | (7,242,151) | 0 | (41,024,291) | ||
| CAPITAL SHARE TRANSACTIONS: | |||||
| Shares sold | |||||
| Investor Class | 513,718,127 | 24,169,748 | 377,075,218 | ||
| Institutional Class | 1,507,956 | 2,925,868 | 5,947,572 | ||
| Shares issued in reinvestment of distributions | |||||
| Investor Class | 6,896,697 | - | 40,230,760 | ||
| Institutional Class | 345,454 | - | 793,531 | ||
| Shares redeemed | |||||
| Investor Class | (67,251,034) | (205,791,258) | (158,155,516) | ||
| Institutional Class | (2,310,659) | (2,121,363) | (2,053,140) | ||
| Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions | 452,906,541 | (180,817,005) | 263,838,425 | ||
| Total Increase (Decrease) in Net Assets | 504,757,865 | (195,503,896) | 178,394,533 | ||
| NET ASSETS: | |||||
| Beginning of year | 85,439,482 | 280,943,378 | 102,548,845 | ||
| End of year | $590,197,347 | $85,439,482 | $280,943,378 | ||
| CAPITAL SHARE TRANSACTIONS - SHARES: | |||||
| Shares sold | |||||
| Investor Class | 55,515,713 | 2,883,606 | 33,242,823 | ||
| Institutional Class | 168,417 | 368,885 | 569,956 | ||
| Shares issued in reinvestment of distributions | |||||
| Investor Class | 732,645 | - | 3,863,279 | ||
| Institutional Class | 39,216 | - | 80,203 | ||
| Shares redeemed | |||||
| Investor Class | (7,181,565) | (24,490,741) | (15,426,016) | ||
| Institutional Class | (257,960) | (259,401) | (203,930) | ||
| Net Increase (Decrease) | 49,016,466 | (21,497,651) | 22,126,315 |
| (a) | For the period May 1, 2022 to December 31, 2022. The Board of Directors of Empower Funds, Inc. approved a change to the Fund's fiscal year end from April 30 to December 31, beginning December 31, 2022. |
See
Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Changes in Net Assets
For the fiscal years ended December 31, 2023 and April 30, 2022 and for the period ended December 31, 2022
| Empower Core Strategies: U.S. Equity Fund | December
31, 2023 |
December
31, 2022(a) |
April
30, 2022 | ||
| OPERATIONS: | |||||
| Net investment income | $4,874,454 | $556,062 | $52,316 | ||
| Net realized gain (loss) | 34,871,584 | (6,594,601) | 2,684,533 | ||
| Net change in unrealized appreciation (depreciation) | 77,117,090 | 2,668,797 | (3,824,770) | ||
| Net Increase (Decrease) in Net Assets Resulting from Operations | 116,863,128 | (3,369,742) | (1,087,921) | ||
| DISTRIBUTIONS TO SHAREHOLDERS: | |||||
| From return of capital | |||||
| Investor Class | - | - | (235,368) | ||
| Institutional Class | - | - | (887,989) | ||
| From return of capital | 0 | 0 | (1,123,357) | ||
| From net investment income and net realized gains | |||||
| Investor Class | (33,699,919) | - | (1,978,456) | ||
| Institutional Class | (687,188) | - | (3,118,608) | ||
| From Net Investment Income and Net Realized Gains | (34,387,107) | 0 | (5,097,064) | ||
| Total Distributions | (34,387,107) | 0 | (6,220,421) | ||
| CAPITAL SHARE TRANSACTIONS: | |||||
| Shares sold | |||||
| Investor Class | 773,816,924 | 257,792,443 | 20,191,296 | ||
| Institutional Class | 2,678,747 | 5,907,393 | 10,654,509 | ||
| Shares issued in reinvestment of distributions | |||||
| Investor Class | 33,699,919 | - | 2,213,824 | ||
| Institutional Class | 687,188 | - | 4,006,597 | ||
| Shares redeemed | |||||
| Investor Class | (462,422,151) | (8,396,334) | (15,492,381) | ||
| Institutional Class | (5,160,238) | (12,995,721) | (4,288,859) | ||
| Net Increase in Net Assets Resulting from Capital Share Transactions | 343,300,389 | 242,307,781 | 17,284,986 | ||
| Total Increase in Net Assets | 425,776,410 | 238,938,039 | 9,976,644 | ||
| NET ASSETS: | |||||
| Beginning of year | 268,937,399 | 29,999,360 | 20,022,716 | ||
| End of year | $694,713,809 | $268,937,399 | $29,999,360 | ||
| CAPITAL SHARE TRANSACTIONS - SHARES: | |||||
| Shares sold | |||||
| Investor Class | 76,123,940 | 27,066,517 | 1,626,440 | ||
| Institutional Class | 212,550 | 503,118 | 719,456 | ||
| Shares issued in reinvestment of distributions | |||||
| Investor Class | 3,051,670 | - | 188,089 | ||
| Institutional Class | 49,582 | - | 283,172 | ||
| Shares redeemed | |||||
| Investor Class | (44,534,953) | (881,985) | (1,317,660) | ||
| Institutional Class | (395,422) | (1,135,024) | (295,396) | ||
| Net Increase | 34,507,367 | 25,552,626 | 1,204,101 |
| (a) | For the period May 1, 2022 to December 31, 2022. The Board of Directors of Empower Funds, Inc. approved a change to the Fund's fiscal year end from April 30 to December 31, beginning December 31, 2022. |
See Notes to Financial
Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: FLEXIBLE BOND FUND
Financial Highlights
Selected data for a share of capital stock of the Fund throughout the periods
indicated.
| Income (Loss) from Investment Operations: | Less Distributions: | ||||||||||
| Net
asset value, beginning of year |
Net
investment income(a) |
Net
realized and unrealized gain (loss) |
Total
from investment operations |
From
return of capital |
From
net investment income |
From
net realized gains |
Total
Distributions |
Net
asset value, end of year |
Total
Return(b) | ||
| Investor Class | |||||||||||
| 12/31/2023 | $ 8.44 | 0.30 | 0.22 | 0.52 | — | (0.31) | — | (0.31) | $ 8.65 | 6.06% | |
| 12/31/2022 (c) | $ 9.02 | 0.13 | (0.54) | (0.41) | (0.00) (d) | (0.16) | — | (0.16) | $ 8.44 | (4.58%) (e) | |
| 04/30/2022 | $ 9.85 | 0.07 | (0.86) | (0.79) | — | (0.04) | — | (0.04) | $ 9.02 | (8.04%) | |
| 04/30/2021 (f) | $10.00 | 0.03 | (0.17) | (0.14) | — | (0.01) | — | (0.01) | $ 9.85 | (1.35%) (e) | |
| Institutional Class | |||||||||||
| 12/31/2023 | $ 9.60 | 0.37 | 0.24 | 0.61 | — | (0.34) | — | (0.34) | $ 9.87 | 6.42% | |
| 12/31/2022 (c) | $10.23 | 0.18 | (0.64) | (0.46) | (0.00) (d) | (0.17) | — | (0.17) | $ 9.60 | (4.47%) (e) | |
| 04/30/2022 | $11.14 | 0.12 | (0.98) | (0.86) | — | (0.05) | — | (0.05) | $10.23 | (7.72%) | |
| 04/30/2021 | $10.86 | 0.17 | 0.11 | 0.28 | — | (0.00) (d) | — | (0.00) (d) | $11.14 | 2.60% | |
| 04/30/2020 | $10.13 | 0.28 | 0.65 | 0.93 | — | (0.20) | — | (0.20) | $10.86 | 9.32% | |
| 04/30/2019 (g) | $10.00 | 0.27 | 0.12 | 0.39 | — | (0.26) | (0.00) (d) | (0.26) | $10.13 | 3.93% (e) | |
| Net
assets, end of year (000) |
Ratio
of expenses to average net assets (before reimbursement and/or waiver, if applicable) |
Ratio
of expenses to average net assets (after reimbursement and/or waiver, if applicable) |
Ratio
of net investment income to average net assets (after reimbursement and/or waiver, if applicable) |
Portfolio
turnover rate(h)(i) | ||
| Investor Class | ||||||
| 12/31/2023 | $1,711,276 | 0.75% | 0.75% | 3.52% | 50% | |
| 12/31/2022 (c) | $1,662,026 | 0.77% (j) | 0.77% (j) | 2.27% (j) | 96% (e) | |
| 04/30/2022 | $1,773,436 | 0.76% | 0.76% | 0.76% | 210% | |
| 04/30/2021 (f) | $ 951,807 | 0.79% (j) | 0.79% (j) | 0.42% (j) | 180% | |
| Institutional Class | ||||||
| 12/31/2023 | $ 11,998 | 0.74% | 0.45% | 3.83% | 50% | |
| 12/31/2022 (c) | $ 11,600 | 0.57% (j) | 0.45% (j) | 2.64% (j) | 96% (e) | |
| 04/30/2022 | $ 10,647 | 0.88% | 0.45% | 1.09% | 210% | |
| 04/30/2021 | $ 4,298 | 1.13% | 0.45% | 1.50% | 180% | |
| 04/30/2020 | $ 10,459 | 1.37% | 0.45% | 2.64% | 60% | |
| 04/30/2019 (g) | $ 8,949 | 1.67% (j) | 0.45% (j) | 3.21% (j) | 17% (e) | |
| (a) | Per share amounts are based upon average shares outstanding. |
| (b) | Total return shown net of expenses reimbursed and/or waived, if applicable. Without the expense reimbursement and/or waiver, the return shown would have been lower. |
| (c) | For the period May 1, 2022 to December 31, 2022. The Board of Directors of Empower Funds, Inc. approved a change to the Fund's fiscal year end from April 30 to December 31, beginning December 31, 2022. |
| (d) | Amount was less than $0.01 per share. |
| (e) | Not annualized for periods less than one full year. |
| (f) | Investor Class inception date was September 3, 2020. |
| (g) | Portfolio turnover is calculated at the Fund level. |
| (h) | Portfolio turnover includes purchases and sales related to TBA transactions, including dollar roll transactions, which occurred during the period. Excluding TBA and dollar roll transactions, the portfolio turnover would have been 46% for the year ended December 31, 2023, 52% for the period ended December 31, 2022, and 40%, 51%, 57%, and 17% for the years ended April 30, 2022, 2021, 2020, and 2019, respectively. |
| (i) | Annualized. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INFLATION-PROTECTED SECURITIES FUND
EMPOWER CORE STRATEGIES: INFLATION-PROTECTED SECURITIES FUND
Financial Highlights
Selected data for a share of capital stock of the Fund throughout the periods
indicated.
| Income (Loss) from Investment Operations: | Less Distributions: | ||||||||||
| Net
asset value, beginning of year |
Net
investment income(a) |
Net
realized and unrealized gain (loss) |
Total
from investment operations |
From
return of capital |
From
net investment income |
From
net realized gains |
Total
Distributions |
Net
asset value, end of year |
Total
Return(b) | ||
| Investor Class | |||||||||||
| 12/31/2023 | $ 2.67 | 0.10 | 0.01 | 0.11 | — | (0.08) | — | (0.08) | $ 2.70 | 4.16% | |
| 12/31/2022 (c) | $ 2.90 | 0.10 | (0.26) | (0.16) | — | (0.07) | — | (0.07) | $ 2.67 | (5.66%) (d) | |
| 04/30/2022 | $ 6.46 | 0.24 | (0.13) | 0.11 | (1.64) | (0.21) | (1.82) | (3.67) | $ 2.90 | 0.54% | |
| 04/30/2021 (e) | $10.00 | 0.25 | 0.01 | 0.26 | — | (1.97) | (1.83) | (3.80) | $ 6.46 | 3.22% (d) | |
| Institutional Class | |||||||||||
| 12/31/2023 | $ 3.61 | 0.16 | 0.00 (f) | 0.16 | — | (0.08) | — | (0.08) | $ 3.69 | 4.65% | |
| 12/31/2022 (c) | $ 3.87 | 0.16 | (0.35) | (0.19) | — | (0.07) | — | (0.07) | $ 3.61 | (5.01%) (d) | |
| 04/30/2022 | $ 7.32 | 0.28 | (0.16) | 0.12 | (1.61) | (0.14) | (1.82) | (3.57) | $ 3.87 | 0.73% | |
| 04/30/2021 | $10.39 | 0.15 | 0.66 | 0.81 | — | (2.05) | (1.83) | (3.88) | $ 7.32 | 8.43% | |
| 04/30/2020 | $10.22 | 0.22 | 0.26 | 0.48 | — | (0.27) | (0.04) | (0.31) | $10.39 | 4.68% | |
| 04/30/2019 (g) | $10.00 | 0.19 | 0.07 | 0.26 | — | (0.04) | — | (0.04) | $10.22 | 2.60% (d) | |
| Net
assets, end of year (000) |
Ratio
of expenses to average net assets (before reimbursement and/or waiver, if applicable) |
Ratio
of expenses to average net assets (after reimbursement and/or waiver, if applicable) |
Ratio
of net investment income to average net assets (after reimbursement and/or waiver, if applicable) |
Portfolio
turnover rate(h)(i) | ||
| Investor Class | ||||||
| 12/31/2023 | $344,472 | 0.84% | 0.70% | 3.89% | 75% | |
| 12/31/2022 (c) | $ 39,426 | 1.34% (j) | 0.70% (j) | 5.24% (j) | 106% (d) | |
| 04/30/2022 | $ 12,843 | 1.90% | 0.70% | 5.02% | 50% | |
| 04/30/2021 (e) | $ 9,062 | 0.96% (j) | 0.70% (j) | 4.14% (j) | 147% | |
| Institutional Class | ||||||
| 12/31/2023 | $ 2,406 | 1.97% | 0.35% | 4.47% | 75% | |
| 12/31/2022 (c) | $ 2,380 | 1.67% (j) | 0.35% (j) | 6.30% (j) | 106% (d) | |
| 04/30/2022 | $ 2,181 | 3.43% | 0.35% | 5.18% | 50% | |
| 04/30/2021 | $ 658 | 8.35% | 0.35% | 1.72% | 147% | |
| 04/30/2020 | $ 209 | 22.01% | 0.38% | 2.08% | 59% | |
| 04/30/2019 (g) | $ 88 | 1.72% (j) | 0.40% (j) | 2.26% (j) | 121% (d) | |
| (a) | Per share amounts are based upon average shares outstanding. |
| (b) | Total return shown net of expenses reimbursed and/or waived, if applicable. Without the expense reimbursement and/or waiver, the return shown would have been lower. |
| (c) | For the period May 1, 2022 to December 31, 2022. The Board of Directors of Empower Funds, Inc. approved a change to the Fund's fiscal year end from April 30 to December 31, beginning December 31, 2022. |
| (d) | Not annualized for periods less than one full year. |
| (e) | Investor Class inception date was September 3, 2020. |
| (f) | Amount was less than $0.01 per share. |
| (g) | Portfolio turnover is calculated at the Fund level. |
| (h) | Portfolio turnover includes purchases and sales related to TBA transactions, including dollar roll transactions, which occurred during the period. Excluding TBA and dollar roll transactions, the portfolio turnover would have been 63% for the year ended December 31, 2023, 106% for the period ended December 31, 2022, and 50%, 147%, 59%, and 121% for the years ended April 30, 2022, 2021, 2020, and 2019, respectively. |
| (i) | Annualized. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
EMPOWER CORE STRATEGIES: INTERNATIONAL EQUITY FUND
Financial Highlights
Selected data for a share of capital stock of the Fund throughout the periods
indicated.
| Income (Loss) from Investment Operations: | Less Distributions: | ||||||||||
| Net
asset value, beginning of year |
Net
investment income(a) |
Net
realized and unrealized gain (loss) |
Total
from investment operations |
From
return of capital |
From
net investment income |
From
net realized gains |
Total
Distributions |
Net
asset value, end of year |
Total
Return(b) | ||
| Investor Class | |||||||||||
| 12/31/2023 | $ 8.75 | 0.18 | 1.30 | 1.48 | — | (0.19) | — | (0.19) | $10.04 | 17.07% | |
| 12/31/2022 (c) | $ 8.98 | 0.15 | (0.38) | (0.23) | — | — | — | — | $ 8.75 | (2.56%) (d) | |
| 04/30/2022 | $11.19 | 0.14 | (1.22) | (1.08) | (0.67 ) | (0.13) | (0.33) | (1.13) | $ 8.98 | (10.82%) | |
| 04/30/2021 (e) | $10.00 | 0.24 | 2.06 | 2.30 | — | (0.33) | (0.78) | (1.11) | $11.19 | 23.84% (d) | |
| Institutional Class | |||||||||||
| 12/31/2023 | $ 8.35 | 0.22 | 1.22 | 1.44 | — | (0.39) | — | (0.39) | $ 9.40 | 17.55% | |
| 12/31/2022 (c) | $ 8.55 | 0.13 | (0.33) | (0.20) | — | — | — | — | $ 8.35 | (2.34%) (d) | |
| 04/30/2022 | $10.66 | 0.18 | (1.17) | (0.99) | (0.47 ) | (0.18) | (0.47) | (1.12) | $ 8.55 | (10.51%) | |
| 04/30/2021 | $ 8.25 | 0.11 | 3.47 | 3.58 | — | (0.39) | (0.78) | (1.17) | $10.66 | 44.45% | |
| 04/30/2020 | $ 9.85 | 0.28 | (1.47) | (1.19) | 0.00 (f) | (0.41) | — | (0.41) | $ 8.25 | (12.88%) | |
| 04/30/2019 (g) | $10.00 | 0.11 | (0.19) | (0.08) | — | (0.07) | — | (0.07) | $ 9.85 | (0.83%) (d) | |
| Net
assets, end of year (000) |
Ratio
of expenses to average net assets (before reimbursement and/or waiver, if applicable) |
Ratio
of expenses to average net assets (after reimbursement and/or waiver, if applicable) |
Ratio
of net investment income to average net assets (after reimbursement and/or waiver, if applicable) |
Portfolio
turnover rate(h) | ||
| Investor Class | ||||||
| 12/31/2023 | $581,928 | 1.10% | 1.00% | 1.94% | 16% | |
| 12/31/2022 (c) | $ 77,674 | 1.32% (i) | 1.00% (i) | 2.64% (i) | 15% (d) | |
| 04/30/2022 | $273,921 | 1.06% | 1.00% | 1.32% | 58% | |
| 04/30/2021 (e) | $ 98,555 | 1.41% (i) | 1.00% (i) | 3.42% (i) | 94% (d) | |
| Institutional Class | ||||||
| 12/31/2023 | $ 8,269 | 1.28% | 0.65% | 2.43% | 16% | |
| 12/31/2022 (c) | $ 7,766 | 1.18% (i) | 0.65% (i) | 2.48% (i) | 15% (d) | |
| 04/30/2022 | $ 7,023 | 1.23% | 0.65% | 1.79% | 58% | |
| 04/30/2021 | $ 3,994 | 2.10% | 0.65% | 1.06% | 94% | |
| 04/30/2020 | $ 1,531 | 1.37% | 0.65% | 2.91% | 26% | |
| 04/30/2019 (g) | $ 11,640 | 2.07% (i) | 0.65% (i) | 1.39% (i) | 29% (d) | |
| (a) | Per share amounts are based upon average shares outstanding. |
| (b) | Total return shown net of expenses reimbursed and/or waived, if applicable. Without the expense reimbursement and/or waiver, the return shown would have been lower. |
| (c) | For the period May 1, 2022 to December 31, 2022. The Board of Directors of Empower Funds, Inc. approved a change to the Fund's fiscal year end from April 30 to December 31, beginning December 31, 2022. |
| (d) | Not annualized for periods less than one full year. |
| (e) | Investor Class inception date was September 3, 2020. |
| (f) | Amount was less than $0.01 per share. |
| (g) | Portfolio turnover is calculated at the Fund level. |
| (h) | Annualized. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
EMPOWER CORE STRATEGIES: U.S. EQUITY FUND
Financial Highlights
Selected data for a share of capital stock of the Fund throughout the periods
indicated.
| Income (Loss) from Investment Operations: | Less Distributions: | ||||||||||
| Net
asset value, beginning of year |
Net
investment income (loss)(a) |
Net
realized and unrealized gain (loss) |
Total
from investment operations |
From
return of capital |
From
net investment income |
From
net realized gains |
Total
Distributions |
Net
asset value, end of year |
Total
Return(b) | ||
| Investor Class | |||||||||||
| 12/31/2023 | $ 9.45 | 0.07 | 2.09 | 2.16 | — | (0.53) | (0.04) | (0.57) | $11.04 | 22.79% | |
| 12/31/2022 (c) | $ 9.82 | 0.05 | (0.42) | (0.37) | — | — | — | — | $ 9.45 | (3.77%) (d) | |
| 04/30/2022 | $12.42 | (0.01) (e) | (0.08) | (0.09) | (0.27) | (0.54) | (1.70) | (2.51) | $ 9.82 | (2.89%) | |
| 04/30/2021 (f) | $10.00 | 0.00 (g) | 2.68 | 2.68 | — | (0.09) | (0.17) | (0.26) | $12.42 | 27.11% (d) | |
| Institutional Class | |||||||||||
| 12/31/2023 | $11.73 | 0.14 | 2.59 | 2.73 | — | (0.56) | (0.04) | (0.60) | $13.86 | 23.27% | |
| 12/31/2022 (c) | $12.16 | 0.09 | (0.52) | (0.43) | — | — | — | — | $11.73 | (3.54%) (d) | |
| 04/30/2022 | $14.68 | 0.04 | (0.16) | (0.12) | (0.53) | (0.17) | (1.70) | (2.40) | $12.16 | (2.59%) | |
| 04/30/2021 | $ 9.78 | 0.05 | 5.12 | 5.17 | — | (0.10) | (0.17) | (0.27) | $14.68 | 53.21% | |
| 04/30/2020 | $10.41 | 0.09 | (0.52) | (0.43) | — | (0.04) | (0.16) | (0.20) | $ 9.78 | (4.34%) | |
| 04/30/2019 (h) | $10.00 | 0.07 | 0.41 | 0.48 | — | (0.07) | — | (0.07) | $10.41 | 4.89% (d) | |
| Net
assets, end of year (000) |
Ratio
of expenses to average net assets (before reimbursement and/or waiver, if applicable) |
Ratio
of expenses to average net assets (after reimbursement and/or waiver, if applicable) |
Ratio
of net investment income (loss) to average net assets (after reimbursement and/or waiver, if applicable) |
Portfolio
turnover rate(i) | ||
| Investor Class | ||||||
| 12/31/2023 | $678,303 | 0.89% | 0.89% | 0.71% | 76% | |
| 12/31/2022 (c) | $253,476 | 1.09% (j) | 0.90% (j) | 0.83% (j) | 62% (d) | |
| 04/30/2022 | $ 6,286 | 1.57% | 0.90% | (0.12%) | 132% | |
| 04/30/2021 (f) | $ 1,781 | 3.36% (j) | 0.90% (j) | 0.01% (j) | 69% (d) | |
| Institutional Class | ||||||
| 12/31/2023 | $ 16,411 | 0.59% | 0.55% | 1.10% | 76% | |
| 12/31/2022 (c) | $ 15,462 | 0.89% (j) | 0.55% (j) | 1.09% (j) | 62% (d) | |
| 04/30/2022 | $ 23,714 | 1.02% | 0.55% | 0.26% | 132% | |
| 04/30/2021 | $ 18,242 | 1.26% | 0.55% | 0.42% | 69% | |
| 04/30/2020 | $ 9,871 | 1.49% | 0.55% | 0.87% | 65% | |
| 04/30/2019 (h) | $ 8,066 | 2.20% (j) | 0.55% (j) | 0.89% (j) | 34% (d) | |
| (a) | Per share amounts are based upon average shares outstanding. |
| (b) | Total return shown net of expenses reimbursed and/or waived, if applicable. Without the expense reimbursement and/or waiver, the return shown would have been lower. |
| (c) | For the period May 1, 2022 to December 31, 2022. The Board of Directors of Empower Funds, Inc. approved a change to the Fund's fiscal year end from April 30 to December 31, beginning December 31, 2022. |
| (d) | Not annualized for periods less than one full year. |
| (e) | The per share amount does not correspond to activity reflected in the Statement of Operations due to class specific expenses during the period. |
| (f) | Investor Class inception date was September 3, 2020. |
| (g) | Amount was less than $0.01 per share. |
| (h) | Portfolio turnover is calculated at the Fund level. |
| (i) | Annualized. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Notes to Financial Statements
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING
POLICIES
Empower Funds, Inc. (Empower Funds), a
Maryland corporation, was organized on December 7, 1981 and is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Empower Funds presently consists of forty-five
funds. Interests in the Empower Core Strategies: Flexible Bond Fund, Empower Core Strategies: Inflation-Protected Securities Fund, Empower Core Strategies: International Equity Fund, and Empower Core Strategies: U.S. Equity Fund (each a Fund,
collectively the Funds) are included herein. Each Fund is diversified as defined in the 1940 Act. The Funds' shares are available through certain broker-dealers, custodians or trustees of individual retirement accounts, or other financial
intermediaries who have entered into agreements with the Funds' distributor to make the shares available. The Board of Directors of Empower Funds, Inc. approved a change to the Funds' fiscal year end from April 30 to December 31, beginning
December 31, 2022.
Investment Objectives
Empower Core Strategies: Flexible Bond Fund - seeks to
provide total return, consisting of two components: (1) changes in the market value of its portfolio holdings (both realized and unrealized appreciation); and (2) income received from its portfolio holdings
Empower Core Strategies: Inflation-Protected Securities Fund -
seeks real return consistent with the preservation of capital
Empower Core Strategies: International Equity Fund - seeks
long-term growth of capital
Empower Core Strategies:
U.S. Equity Fund - seeks long-term growth of capital
The Funds each offer two share classes, referred to as
Investor Class and Institutional Class shares. All shares of each Fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the
same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, expenses (other than those attributable to a specific class) and realized and unrealized gains and
losses are allocated daily to each class of shares based on the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against operations of that class. Expenses incurred
by Empower Funds, which are not Fund specific, are allocated based on relative net assets or other appropriate allocation methods.
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Each Fund is also an investment company and accordingly follows the
investment company accounting and reporting guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 946, Financial Services - Investment Companies. The following is a summary of the significant
accounting policies of the Funds.
Security Valuation
The board of directors of Empower Funds (Board of
Directors) has adopted policies and procedures for the valuation of each Fund's securities and assets, and has appointed the Fair Value Pricing Committee of the investment adviser, Empower Capital Management, LLC (ECM or the Adviser), to
complete valuation determinations under those policies and procedures. Pursuant to Rule 2a-5 under the 1940 Act, the Board of Directors approved the Adviser as the Funds' valuation designee to make all fair value determinations with respect to
the Funds' investments, subject to oversight by the Board of Directors.
Each Fund generally value their securities based on
market prices determined at the close of regular trading on the New York Stock Exchange (NYSE) on each day the NYSE is open for trading. The net asset value (NAV) of each class of a Fund's shares is determined by dividing the net assets attributable
to each class of shares of the Fund by the number of issued and outstanding shares of each class of the Fund on each valuation date.
Annual Report - December 31, 2023
For securities that are traded on only one exchange, the
last sale price as of the close of business of that exchange will be used. If the closing price is not available, the current bid as of the close of business will be used. For securities traded on more than one exchange, or upon one or more
exchanges and in the over-the-counter (OTC) market, the last sale price as of the close of business on the market which the security is traded most extensively will be used. If the closing price is not available, the current bid as of the close of
business will be used. For securities that principally trade on the NASDAQ National Market System, the NASDAQ official closing price will be used.
For private equity securities that are not traded on an
exchange, an appropriate source, which may include the use of an internally developed or approved valuation model, a different external pricing vendor, or sourcing a price from a broker will be used. Valuation of these securities will be reviewed
regularly by the Fair Value Pricing Committee.
Short
term securities purchased with less than 60 days remaining until maturity and all U.S. Treasury Bills are valued on the basis of amortized cost, which has been determined to approximate fair value. Short term securities purchased with more than 60
days remaining until maturity are valued using pricing services, or in the event a price is not available from a pricing service, may be priced using other methodologies approved by the Board of Directors, including model pricing or pricing on the
basis of quotations from brokers or dealers, and will continue to be priced until final maturity.
Fixed income investments, including bank loans, are valued
using evaluated bid prices from approved pricing services when available and appropriate based on the conditions of the market. If a price cannot be located from either the primary or secondary sources, or if the market is determined to be illiquid
or inactive, other appropriate sources, which may include the use of an internally developed valuation model, another external pricing vendor or sourcing a price from a broker, may be used.
Foreign equity securities are generally valued using an
adjusted systematic fair value price from an independent pricing service. Foreign exchange rates are determined at a time that corresponds to the closing of the NYSE.
For derivatives that are traded on an exchange, the last
sale price as of the close of business of the exchange will be used. For derivatives traded OTC, independent pricing services will be utilized when possible. If a price cannot be located from the primary source, other appropriate
sources, which may include the use of an internally developed valuation model, another external pricing vendor or sourcing a price from a broker, may be used.
Independent pricing services are approved by the Board of
Directors and are utilized for all investment types when available. In some instances valuations from independent pricing services are not available or do not reflect events in the market between the time the market closed and the valuation time and
therefore fair valuation procedures are implemented. The fair value for some securities may be obtained from pricing services or other pricing sources. The inputs used by the pricing services are reviewed quarterly or when the pricing vendor issues
updates to its pricing methodologies. Broker quotes are analyzed through an internal review process, which includes a review of known market conditions and other relevant data. Developments that might trigger fair value pricing could be natural
disasters, government actions or fluctuations in domestic and foreign markets.
The following table provides examples of the inputs that are
commonly used for valuing particular classes of securities. These classifications are not exclusive, and any inputs may be used to value any other security class.
| Class | Inputs |
| Asset-Backed Securities | Benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, evaluated bids, offers and reference data including market research publications. Inputs may also include new issue data, collateral performance, and monthly payment information. |
| Bank Loans | Broker quotes, Loan Syndications and Trading Association daily marks, loan analytics and market news |
| Corporate Bonds and Notes | Benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, evaluated bids, offers and reference data including market research publications. Inputs also may include observations of equity and credit default swap curves related to issuer. |
Annual Report - December 31, 2023
| Convertible
Bonds, Convertible Preferred Stock, Preferred Stock |
Benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, evaluated bids, offers and reference data including market research publications. Inputs also may include exchange prices. |
| Foreign Government Bonds and Notes | Benchmark yields, executed trades, broker/dealer quotes, credit information, collateral attributes, issuer spreads, benchmark securities, treasury/swap maturity curves, issuer spread curves, evaluated bids, market corroborated inputs, offers and reference data including market research publications |
| Mortgage-Backed Securities | Benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, evaluated bids, offers and reference data including market research publications. Inputs may also include new issue data, collateral performance, TBA prices, monthly payment information and third party real estate analysis. |
| U.S. Treasury Bonds and Notes | Benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, evaluated bids, offers and reference data including market research publications |
| Common Stock | Exchange traded close price, bids, evaluated bids, open and close price of the local exchange, exchange rates, fair values based on significant market movement and various index data |
| Short Term Investments | Maturity date, credit quality and interest rates |
| Futures Contracts | Exchange traded close price |
| Forward Foreign Currency Contracts | Foreign currency spot and forward rates |
| Interest Rate Swaps | Interest rate curves, LIBOR curves, reported trades and swap curves |
The Funds classify their valuations into three levels based
upon the observability of inputs to the valuation of each Fund’s investments. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. Classification is based on the lowest
level of input significant to the fair value measurement. The three levels are defined as follows:
Level 1 – Unadjusted quoted prices for identical
securities in active markets.
Level 2 – Inputs
other than quoted prices included in Level 1 that are observable either directly or indirectly. These may include quoted prices for similar assets in active markets.
Level 3 – Unobservable inputs to the extent
observable inputs are not available and may include prices obtained from single broker quotes. Unobservable inputs reflect a Fund’s own assumptions and would be based on the best information available under the circumstances.
Annual Report - December 31, 2023
As of December 31, 2023, the inputs used to value the Funds'
investments are detailed in the following tables. More information regarding the sector classifications, as applicable, are included in the Schedule of Investments.
Empower Core Strategies: Flexible Bond Fund
| Level 1 | Level 2 | Level 3 | Total | ||||
| Assets | |||||||
| Investments, at fair value: | |||||||
| Asset-Backed Securities | $ — | $ 186,647,356 | $ — | $ 186,647,356 | |||
| Bank Loans | — | 8,598,377 | — | 8,598,377 | |||
| Corporate Bonds and Notes | — | 528,651,568 | — | 528,651,568 | |||
| Convertible Bonds | — | 24,823,609 | — | 24,823,609 | |||
| Foreign Government Bonds and Notes | — | 13,436,031 | — | 13,436,031 | |||
| Mortgage-Backed Securities | — | 561,222,363 | — | 561,222,363 | |||
| U.S. Treasury Bonds and Notes | — | 254,116,897 | — | 254,116,897 | |||
| Common Stock | 5,333,967 | — | — | 5,333,967 | |||
| Convertible Preferred Stock | |||||||
| Energy | 18,652 | — | — | 18,652 | |||
| Financial | 1,992,223 | — | — | 1,992,223 | |||
| Technology | — | 422,429 | — | 422,429 | |||
| 2,010,875 | 422,429 | — | 2,433,304 | ||||
| Short Term Investments | — | 162,630,937 | — | 162,630,937 | |||
| Total investments, at fair value: | 7,344,842 | 1,740,549,567 | — | 1,747,894,409 | |||
| Other Financial Investments: | |||||||
| Futures Contracts(a) | 19,479,688 | — | — | 19,479,688 | |||
| Total Assets | $ 26,824,530 | $ 1,740,549,567 | $ — | $ 1,767,374,097 | |||
| Liabilities | |||||||
| Other Financial Investments: | |||||||
| Futures Contracts(a) | $ (6,344,984) | $ — | $ — | $ (6,344,984) | |||
| Total Liabilities | $ (6,344,984) | $ 0 | $ — | $ (6,344,984) |
| (a) | Futures Contracts are reported at the security’s unrealized appreciation (depreciation), which represents the change in the contract’s value from trade date. |
Annual Report - December 31, 2023
Empower Core Strategies: Inflation-Protected Securities
Fund
| Level 1 | Level 2 | Level 3 | Total | ||||
| Assets | |||||||
| Investments, at fair value: | |||||||
| Asset-Backed Securities | $ — | $ 360,000 | $ — | $ 360,000 | |||
| Corporate Bonds and Notes | — | 10,979,344 | — | 10,979,344 | |||
| Mortgage-Backed Securities | — | 10,362,662 | — | 10,362,662 | |||
| U.S. Treasury Bonds and Notes | — | 315,759,861 | — | 315,759,861 | |||
| Total investments, at fair value: | 0 | 337,461,867 | — | 337,461,867 | |||
| Other Financial Investments: | |||||||
| Futures Contracts(a) | 78,624 | — | — | 78,624 | |||
| Interest Rate Swaps(a) | — | 611,306 | — | 611,306 | |||
| Total Assets | $ 78,624 | $ 338,073,173 | $ — | $ 338,151,797 | |||
| Liabilities | |||||||
| Other Financial Investments: | |||||||
| Futures Contracts(a) | $ (296,437) | $ — | $ — | $ (296,437) | |||
| Interest Rate Swaps(a) | — | (589,749) | — | (589,749) | |||
| Total Liabilities | $ (296,437) | $ (589,749) | $ — | $ (886,186) |
| (a) | Futures Contracts and Interest Rate Swaps are reported at the security’s unrealized appreciation (depreciation), which represents the change in the contract’s value from trade date. |
Empower Core Strategies: International Equity Fund
| Level 1 | Level 2 | Level 3 | Total | ||||
| Assets | |||||||
| Investments, at fair value: | |||||||
| Common Stock | |||||||
| Basic Materials | $ 632,777 | $ 32,321,914 | $ — | $ 32,954,691 | |||
| Communications | 9,887,991 | 20,266,554 | — | 30,154,545 | |||
| Consumer, Cyclical | 703,262 | 85,465,626 | — | 86,168,888 | |||
| Consumer, Non-cyclical | 4,243,734 | 133,281,464 | 19 | 137,525,217 | |||
| Diversified | 119,000 | 63,522 | — | 182,522 | |||
| Energy | — | 28,131,110 | — | 28,131,110 | |||
| Financial | 368,321 | 113,371,721 | — | 113,740,042 | |||
| Industrial | 1,400,997 | 85,476,288 | — | 86,877,285 | |||
| Technology | 11,919,507 | 32,001,978 | — | 43,921,485 | |||
| Utilities | 692,263 | 12,645,350 | — | 13,337,613 | |||
| 29,967,852 | 543,025,527 | 19 | 572,993,398 | ||||
| Preferred Stock | — | 2,820,673 | — | 2,820,673 | |||
| Short Term Investments | — | 2,509,021 | — | 2,509,021 | |||
| Total investments, at fair value: | 29,967,852 | 548,355,221 | 19 | 578,323,092 | |||
| Other Financial Investments: | |||||||
| Forward Foreign Currency Contracts(a) | — | 129 | — | 129 | |||
| Futures Contracts(a) | 176,060 | — | — | 176,060 | |||
| Total Assets | $ 30,143,912 | $ 548,355,350 | $ 19 | $ 578,499,281 | |||
| Liabilities | |||||||
| Other Financial Investments: | |||||||
| Forward Foreign Currency Contracts(a) | — | (19,600) | — | (19,600) | |||
| Total Liabilities | $ 0 | $ (19,600) | $ — | $ (19,600) |
| (a) | Forward Foreign Currency Contracts and Futures Contracts are reported at the security's unrealized appreciation (depreciation), which represents the change in the contract's value from trade date. |
Annual Report - December 31, 2023
Empower Core Strategies: U.S. Equity Fund
| Level 1 | Level 2 | Level 3 | Total | ||||
| Assets | |||||||
| Investments, at fair value: | |||||||
| Common Stock | |||||||
| Basic Materials | $ 17,675,917 | $ — | $ — | $ 17,675,917 | |||
| Communications | 76,983,582 | — | — | 76,983,582 | |||
| Consumer, Cyclical | 64,747,817 | — | — | 64,747,817 | |||
| Consumer, Non-cyclical | 133,281,011 | 1,303,470 | — | 134,584,481 | |||
| Energy | 37,247,948 | 2,133,714 | — | 39,381,662 | |||
| Financial | 102,679,088 | 1,703,945 | — | 104,383,033 | |||
| Industrial | 77,919,787 | — | — | 77,919,787 | |||
| Technology | 143,082,254 | — | — | 143,082,254 | |||
| Utilities | 16,624,947 | — | — | 16,624,947 | |||
| 670,242,351 | 5,141,129 | — | 675,383,480 | ||||
| Short Term Investments | — | 5,735,317 | — | 5,735,317 | |||
| Total investments, at fair value: | 670,242,351 | 10,876,446 | — | 681,118,797 | |||
| Other Financial Investments: | |||||||
| Forward Foreign Currency Contracts(a) | — | 2,516 | — | 2,516 | |||
| Futures Contracts(a) | 284,720 | — | — | 284,720 | |||
| Total Assets | $ 670,527,071 | $ 10,878,962 | $ — | $ 681,406,033 | |||
| Liabilities | |||||||
| Other Financial Investments: | |||||||
| Forward Foreign Currency Contracts(a) | — | (132,116) | — | (132,116) | |||
| Total Liabilities | $ 0 | $ (132,116) | $ — | $ (132,116) |
| (a) | Forward Foreign Currency Contracts and Futures Contracts are reported at the security's unrealized appreciation (depreciation), which represents the change in the contract's value from trade date. |
Repurchase
Agreements
A Fund may engage in repurchase
agreement transactions with institutions that the Funds’ investment adviser has determined are creditworthy. A Fund that engages in repurchase agreement transactions will purchase securities at a specified price with an agreement to sell the
securities to the same counterparty at a specified time, price and interest rate. The Funds' custodian and/or securities lending agent receives delivery of the underlying securities collateralizing a repurchase agreement. Collateral is at least
equal to the value of the repurchase obligation including interest. A repurchase agreement transaction involves certain risks in the event of default or insolvency of the counterparty. These risks include possible delays or restrictions upon a
Fund's ability to dispose of the underlying securities and a possible decline in the value of the underlying securities during the period while the Fund seeks to assert its rights.
To Be Announced
Transactions
A Fund may invest in securities
known as To Be Announced (TBA) securities. TBAs are Federal National Mortgage Association, Federal Home Loan Mortgage Corporation or Government National Mortgage Association issued mortgage-backed securities for forward settlement, in which the
buyer and seller decide on trade parameters, but the exact pools are unknown until two days before settlement date. The transactions arise when securities are purchased or sold with payment and delivery taking place in the future in order to
secure what is considered to be an advantageous price and yield at the time of entering into the transaction. TBA transactions generally settle monthly on a specified date. TBAs are included in Investments in securities, fair value on the Statement
of Assets and Liabilities. As of December 31, 2023, the Empower Core Strategies: Flexible Bond Fund invested in TBA securities.
Annual Report - December 31, 2023
Dollar
Rolls
A Fund may sell TBA mortgage-backed
securities and simultaneously contract to repurchase TBA mortgage-backed securities on a specific future date at an agreed upon price. During the period between the sale and repurchase, a Fund is not entitled to receive interest and principal
payments on the securities sold. Mortgage dollar roll transactions are treated as purchases and sales and realize gains and losses on these transactions. Mortgage dollar rolls involve the risk that the market value of the securities that a Fund is
required to purchase may decline below the agreed upon repurchase price of those securities. As of December 31, 2023, the Empower Core Strategies: Flexible Bond Fund and Empower Core Strategies: Inflation-Protected Securities Fund engaged in
mortgage dollar roll transactions.
Foreign Currency Translations and Transactions
The accounting records of the Funds are maintained in U.S.
dollars. Investment securities, and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current exchange rate. Purchases and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the exchange rate on the dates of the transactions.
The Fund(s) do not isolate the portion of the results of
operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss.
Net realized foreign exchange gains or losses arise from
sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded by the Fund(s)
and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period
end, resulting from changes in exchange rates. These gains and losses are included in net realized gain or loss and change in net unrealized appreciation or depreciation on the Statement of Operations.
Security
Transactions
Security transactions are
accounted for on the date the security is purchased or sold (trade date). Realized gains and losses from investments sold are determined on a specific lot selection. Dividend income for a Fund is accrued as of the ex-dividend date
and interest income, including amortization of discounts and premiums, is recorded daily.
Treasury
Inflation-Protected Securities
For Treasury
Inflation-Protected Securities (TIPS) the principal amount is adjusted daily to keep pace with inflation. Interest is accrued based on the adjusted principal amount. The adjustments to principal due to inflation are reflected as increases or
decreases to Interest in the accompanying Statement of Operations. Such adjustments may have a significant impact on the a Fund's distributions. As of December 31, 2023, the Empower Core Strategies: Inflation-Protected Securities Fund invested in
TIPS.
Federal
Income Taxes and Distributions to Shareholders
The Funds intend to comply with provisions under Subchapter
M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its net taxable income, including any net realized gain on investments not offset by capital loss carryforwards, if any, to
shareholders. Therefore, no provision of federal income or excise tax is required. The Funds file income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on each Fund's tax return filings
generally remains open for the three preceding fiscal reporting period ends. State tax returns may remain open for an additional fiscal year.
Distributions to shareholders from net investment income of
the Funds, if any, are declared and paid twice annually. Capital gain distributions of the Funds, if any, are declared and paid at least annually. Distributions are reinvested in additional shares of the Funds at net asset value and are
declared separately for each class. Distributions are determined in accordance with income tax regulations, which may differ from U.S. generally accepted accounting principles.
Annual Report - December 31, 2023
The tax character of distributions paid during the years ended
December 31, 2023 and 2022 were as follows:
| Empower Core Strategies: Flexible Bond Fund | |||
| 2023 | 2022 | ||
| Ordinary income | $62,385,344 | $30,163,800 | |
| Return of capital | - | 491,840 | |
| $62,385,344 | $30,655,640 |
| Empower Core Strategies: Inflation-Protected Securities Fund | |||
| 2023 | 2022 | ||
| Ordinary income | $4,401,850 | $983,428 | |
| $4,401,850 | $983,428 |
| Empower Core Strategies: International Equity Fund | |||
| 2023 | 2022 | ||
| Ordinary income | $7,242,151 | $- | |
| $7,242,151 | $0 |
| Empower Core Strategies: U.S. Equity Fund | |||
| 2023 | 2022 | ||
| Ordinary income | $33,254,944 | $- | |
| Long-term capital gain | 1,132,163 | - | |
| $34,387,107 | $0 |
Net investment income (loss) and
net realized gain (loss) for federal income tax purposes may differ from those reported on the financial statements because of temporary and permanent book-tax basis differences. Book-tax differences may include but are not limited to the following:
wash sales, distribution adjustments, market discount adjustments, adjustments for passive foreign investment corporations, adjustments for real estate investment trusts and foreign currency reclassifications.
The tax components of capital shown in the following tables
represent distribution requirements each Fund must satisfy under the income tax regulations, losses each Fund may be able to offset against income and gains realized in future years and unrealized appreciation or depreciation for federal income
tax purposes. At December 31, 2023, the components of distributable earnings on a tax basis were as follows:
| Empower Core Strategies: Flexible Bond Fund | |
| Undistributed net investment income | $31,197 |
| Undistributed long-term capital gains | — |
| Capital loss carryforwards | (151,008,009) |
| Post-October losses | — |
| Net unrealized depreciation | (99,814,859) |
| Tax composition of capital | $(250,791,671) |
| Empower Core Strategies: Inflation-Protected Securities Fund | |
| Undistributed net investment income | $17,726 |
| Undistributed long-term capital gains | — |
| Capital loss carryforwards | (1,932,322) |
| Post-October losses | (45,527) |
| Net unrealized appreciation | 6,604,253 |
| Tax composition of capital | $4,644,130 |
Annual Report - December 31, 2023
| Empower Core Strategies: International Equity Fund | |
| Undistributed net investment income | $4,801,339 |
| Undistributed long-term capital gains | — |
| Capital loss carryforwards | (52,336,467) |
| Post-October losses | — |
| Net unrealized appreciation | 36,662,034 |
| Tax composition of capital | $(10,873,094) |
| Empower Core Strategies: U.S. Equity Fund | |
| Undistributed net investment income | $1,391,309 |
| Undistributed long-term capital gains | — |
| Capital loss carryforwards | — |
| Post-October losses | — |
| Net unrealized appreciation | 76,888,391 |
| Tax composition of capital | $78,279,700 |
At December 31, 2023, the Funds
had capital loss carryforwards available to offset future realized capital gains, if any, and thereby reduce future taxable gain distributions. Capital loss carryforwards with no expiration, if any, must be utilized prior to those with
expiration dates. During the year ended December 31, 2023, the Empower Core Strategies: U.S. Equity Fund utilized $6,095,544 of capital loss carryforwards to offset capital gains realized in that fiscal year. Details of the capital loss
carryforwards as of December 31, 2023, were as follows:
| No Expiration | |
| Empower Core Strategies: Flexible Bond Fund | $(151,008,009) |
| Empower Core Strategies: Inflation-Protected Securities Fund | $(1,932,322) |
| Empower Core Strategies: International Equity Fund | $(52,336,467) |
The following Funds have
elected to defer to the next fiscal year the following Post-October losses:
| Post-October Ordinary Losses | |
| Empower Core Strategies: Inflation-Protected Securities Fund | $(45,527) |
The aggregate cost of securities
and other investments and the composition of unrealized appreciation and depreciation for federal income tax purposes as of December 31, 2023 were as follows:
| Federal
Tax Cost of Investments |
Gross
Unrealized Appreciation on Investments |
Gross
Unrealized Depreciation on Investments |
Net
Unrealized Appreciation (Depreciation) on Investments | ||||
| Empower Core Strategies: Flexible Bond Fund | $1,860,843,972 | $29,623,479 | $(129,438,338) | $(99,814,859) | |||
| Empower Core Strategies: Inflation-Protected Securities Fund | 330,661,358 | 6,936,847 | (332,594) | 6,604,253 | |||
| Empower Core Strategies: International Equity Fund | 541,817,647 | 57,506,720 | (20,844,686) | 36,662,034 | |||
| Empower Core Strategies: U.S. Equity Fund | 604,385,526 | 89,867,705 | (12,979,314) | 76,888,391 |
2. DERIVATIVE FINANCIAL
INSTRUMENTS
The Funds' investment objectives allow each
Fund to enter into various types of derivative contracts as outlined in each Fund's prospectus.
In pursuit of the Funds' investment objectives, each Fund may
seek to use derivatives to increase or decrease their exposure to the following market risks:
Annual Report - December 31, 2023
Equity Risk - The risk that relates to the change in value of
equity securities as they relate to increases or decreases in the general market.
Foreign Exchange Risk - The risk that adverse fluctuations in
exchange rates between the U.S. dollar and other currencies may cause a Fund to lose money on investments denominated in foreign currencies.
Interest Rate Risk - The risk that market value of a fixed
income security is affected significantly by changes in interest rates. When interest rates rise, the security’s market value declines and when interest rates decline, market values rise. The longer a security’s maturity, the greater the
risk and the higher its yield. Conversely, the shorter a security’s maturity, the lower the risk and the lower its yield.
These Funds may be exposed to additional risks from
investing in derivatives, such as liquidity and counterparty credit risk. Liquidity risk is the risk that each Fund may be unable to sell or close out the derivative in the open market in a timely manner. Counterparty credit risk is the risk that
the counterparty will not be able to fulfill its obligations to each Fund, if applicable. Investing in derivatives may also involve greater risks than investing directly in the underlying assets, such as losses in excess of any initial investment
and collateral received. In addition, there may be the risk that the change in value of the derivative contract does not correspond to the change in value of the underlying instrument.
A Fund may be subject to enforceable master netting
agreements, or netting arrangements, with certain counterparties. These agreements govern the terms of certain transactions, and reduce the counterparty risk associated with relevant transactions by specifying offsetting mechanisms and
collateral posting arrangements, if any, at pre-arranged exposure levels. Collateral or margin requirements, if any, are set by the broker or exchange clearing house for exchanged traded derivatives while collateral terms are contract specific
for OTC traded derivatives.
Derivative counterparty
credit risk is managed through an evaluation of the creditworthiness of all potential counterparties. A Fund will attempt to reduce its exposure to counterparty credit risk on OTC derivatives, whenever possible, by entering into International Swaps
and Derivatives Association (ISDA) master agreements with certain counterparties. These agreements contain various provisions, including but not limited to collateral requirements (if any), events of default, or early termination. OTC derivative
assets and liabilities are presented gross and not offset in the Statement of Assets and Liabilities. Early termination by the counterparty may result in an immediate payment by these Funds of any net liability owed to that counterparty under the
ISDA agreement. As of December 31, 2023, the Empower Core Strategies: International Equity Fund and Empower Core Strategies: U.S. Equity Fund were subject to enforceable master netting arrangements and entered into ISDA master agreements with
certain counterparties.
Futures Contracts
The Funds may use futures to equitize cash. A futures
contract is an agreement between two parties to buy or sell a specified underlying investment for a fixed price at a specified future date. Futures contracts are generally entered into on a regulated futures exchange and cleared through a
clearinghouse associated with the exchange. The use of futures contracts may involve risks such as the possibility of illiquid markets or imperfect correlation between the value of the contracts and the underlying securities that comprise the
index, or that the clearinghouse will fail to perform its obligations.
Futures contracts are reported in a table following the
Schedule of Investments. Upon entering into a futures contract, the Funds are required to pledge to the broker an amount of cash and/or other assets equal to a certain percentage of the contract amount (initial margin deposit). Receipts
or payments, known as variation margin, are made or received by the Funds each day, depending on the daily fluctuations in the fair value of the underlying security. This is recorded as variation margin on futures contracts on the Statement of
Assets and Liabilities. When the Funds enter into a closing transaction, it will realize, for book purposes, a gain or loss equal to the difference between the value of the futures contract at the time it was opened or purchased and its value
at the time it was closed, and is reflected in net realized gain or loss on the Statement of Operations.
Forward Foreign
Currency Contracts
A Fund may enter into OTC
forward foreign currency contracts (forward contracts) primarily to capture potential returns from changes in currency exchange rates or to reduce the risk of undesired currency exposure. A forward contract is a commitment to purchase or sell
a foreign currency at a future date at a negotiated rate.
Annual Report - December 31, 2023
Forward contracts are reported in a table following the
Schedule of Investments. The unrealized appreciation or depreciation is reported on the Statement of Assets and Liabilities and on the Statement of Operations within the net change in unrealized appreciation or depreciation. Upon the
closing of such contract the difference between the U.S. dollar cost of the original contract and the value of the foreign currency in U.S. dollars is recorded as net realized gain or loss on the Statement of Operations. As of Empower Core
Strategies: International Equity Fund and Empower Core Strategies: U.S. Equity Fund utilized OTC forward foreign currency contracts.
Interest Rate
Swaps
A Fund may enter into interest rate swap
contracts primarily to manage interest rate risk. An interest rate swap is an agreement between two parties to exchange interest rate payment obligations. Typically, one is based on an interest rate fixed to maturity while the other is based on an
interest rate that changes in accordance with changes in a designated benchmark (for example, the Secured Overnight Financing Rate (SOFR), prime rate, commercial paper rate, or other benchmarks). Each party’s payment obligation under an
interest rate swap is determined by reference to a specified notional amount of money. Therefore, interest rate swaps generally do not involve the delivery of securities, other underlying instruments, or principal amounts; rather they entail the
exchange of cash payments based on the application of the designated interest rates to the notional amount. These agreements may be privately negotiated in the OTC market (OTC interest rate swaps) or may be executed on a registered exchange
(centrally cleared interest rate swaps).
For
centrally cleared interest rate swaps, required initial margin deposits of cash or securities are pledged by a Fund. Subsequent payments, known as variation margin, are made or received by a Fund, depending on fluctuations in the value of the
centrally cleared interest rate swaps. Such variation margin is accounted for as a payable or receivable on the Statement of Assets and Liabilities and settled daily until the contract is closed, at which time the gains or losses are realized. Over
the term of the contract, contractually required payments to be paid and to be received are accrued daily and recorded as realized gain or loss on the Statement of Operations.
A Fund may enter into interest rate swaps in which it
either pays or receives a fixed interest rate and pays or receives a floating interest rate. Barring swap counterparty default, the risk of loss in an interest rate swap is limited to the net amount of interest payments that a Fund is
obligated to make or receive (as applicable), as well as any early termination payment payable by or to the Fund upon early termination of the swap. As of December 31, 2023, the Empower Core Strategies: Inflation-Protected Securities Fund had
entered into interest rate swap contracts.
The following
tables represent the average month-end volume of each Fund’s derivative transactions, if any, during the reporting period:
| Empower Core Strategies: Flexible Bond Fund | |
| Futures Contracts: | |
| Average long contracts | 3,145 |
| Average short contracts | 796 |
| Average notional long | $399,554,124 |
| Average notional short | $92,993,423 |
| Empower Core Strategies: Inflation-Protected Securities Fund | |
| Futures Contracts: | |
| Average long contracts | 22 |
| Average short contracts | 12 |
| Average notional long | $2,760,678 |
| Average notional short | $1,801,582 |
| Centrally Cleared Interest Rate Swaps: | |
| Average notional amount | $9,011,538 |
| Empower Core Strategies: International Equity Fund | |
| Futures Contracts: |
Annual Report - December 31, 2023
| Empower Core Strategies: International Equity Fund | |
| Average long contracts | 77 |
| Average notional long | $8,070,788 |
| Forward Currency Exchange Contracts: | |
| Average notional amount | $512,622 |
| Empower Core Strategies: U.S. Equity Fund | |
| Futures Contracts: | |
| Average long contracts | 63 |
| Average notional long | $13,590,101 |
| Forward Currency Exchange Contracts: | |
| Average notional amount | $10,362,701 |
Derivative Financial Instruments Categorized by Risk Exposure
Valuation of derivative investments as of December 31, 2023 is
as follows:
Empower Core
Strategies: Flexible Bond Fund
| Asset Derivatives | Liability Derivatives | |||||||
| Risk Exposure | Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | ||||
| Equity contracts (futures contracts) | Net unrealized appreciation on futures contracts | $19,479,688 (a) | Net unrealized depreciation on futures contracts | $ (6,344,984)(a) | ||||
| (a)Includes cumulative appreciation of futures contracts as reported in the Fund’s Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
Empower Core
Strategies: Inflation-Protected Securities Fund
| Asset Derivatives | Liability Derivatives | |||||||
| Risk Exposure | Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | ||||
| Interest rate contracts (swaps) | Net unrealized appreciation on interest rate swaps | $611,306 (a) | Net unrealized depreciation on interest rate swaps | $(589,749) (a) | ||||
| Interest rate contracts (futures contracts) | Net unrealized appreciation on futures contracts | $ 78,624(a) | Net unrealized depreciation on futures contracts | $(296,437) (a) | ||||
| (a) Includes cumulative appreciation (depreciation) of interest rate contracts and futures contracts as reported in the Fund’s Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
Annual Report - December 31, 2023
Empower Core
Strategies: International Equity Fund
| Asset Derivatives | Liability Derivatives | |||||||
| Risk Exposure | Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | ||||
| Equity contracts (futures contracts) | Net unrealized appreciation on futures contracts | $176,060 (a) | ||||||
| Foreign exchange contracts (forwards) | Unrealized appreciation on forward foreign currency contracts | $ 129 | Unrealized depreciation on forward foreign currency contracts | $(19,600) | ||||
| (a)Includes cumulative appreciation of futures contracts as reported in the Fund’s Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
Empower Core
Strategies: U.S. Equity Fund
| Asset Derivatives | Liability Derivatives | |||||||
| Risk Exposure | Statement of Assets and Liabilities Location | Fair Value | Statement of Assets and Liabilities Location | Fair Value | ||||
| Equity contracts (futures contracts) | Net unrealized appreciation on futures contracts | $284,720 (a) | ||||||
| Foreign exchange contracts (forwards) | Unrealized appreciation on forward foreign currency contracts | $ 2,516 | Unrealized depreciation on forward foreign currency contracts | $(132,116) | ||||
| (a)Includes cumulative appreciation of futures contracts as reported in the Fund’s Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
The effect of derivative investments for the year ended
December 31, 2023 is as follows:
Empower Core Strategies: Flexible Bond Fund
| Realized Gain or (Loss) | Change in Unrealized Appreciation or (Depreciation) | |||||
| Risk Exposure | Statement of Operations Location | Statement of Operations Location | ||||
| Equity contracts (futures contracts) | Net realized loss on futures contracts | $(25,715,129) | Net change in unrealized appreciation on futures contracts | $14,058,369 | ||
Empower Core Strategies: Inflation-Protected Securities Fund
| Realized Gain or (Loss) | Change in Unrealized Appreciation or (Depreciation) | |||||
| Risk Exposure | Statement of Operations Location | Statement of Operations Location | ||||
| Interest rate contracts (swaps) | Net realized loss on interest rate swaps | $ (10,893) | Net change in unrealized appreciation on interest rate swaps | $21,557 | ||
| Interest rate contracts (futures contracts) | Net realized gain on futures contracts | $117,460 | Net change in unrealized depreciation on futures contracts | $(217,509) | ||
Empower Core Strategies: International Equity Fund
| Realized Gain or (Loss) | Change in Unrealized Appreciation or (Depreciation) | |||||
| Risk Exposure | Statement of Operations Location | Statement of Operations Location | ||||
| Equity contracts (futures contracts) | Net realized gain on futures contracts | $835,437 | Net change in unrealized appreciation on futures contracts | $188,229 | ||
| Foreign exchange contracts (forwards) | Net change in unrealized depreciation on forward foreign currency contracts | $ (4,848) | ||||
Annual Report - December 31, 2023
Empower Core
Strategies: U.S. Equity Fund
| Realized Gain or (Loss) | Change in Unrealized Appreciation or (Depreciation) | |||||
| Risk Exposure | Statement of Operations Location | Statement of Operations Location | ||||
| Equity contracts (futures contracts) | Net realized gain on futures contracts | $3,164,242 | Net change in unrealized appreciation on futures contracts | $283,070 | ||
| Foreign exchange contracts (forwards) | Net realized gain on forward foreign currency contracts | $ 178,343 | Net change in unrealized depreciation on forward foreign currency contracts | $(121,095) | ||
Concentration Risk
A Fund may have elements of risk due to concentrated
investments in foreign issuers located in a specific country. Such concentrations may subject a Fund to additional risks resulting from future political or economic conditions and/or possible impositions of adverse foreign governmental laws or
currency exchange restrictions. Investments in securities of non-U.S. issuers have unique risks not present in securities of U.S. issuers, such as greater price volatility and less liquidity.
3. OFFSETTING ASSETS AND LIABILITIES
The Empower Core Strategies: International Equity Fund
and the Empower Core Strategies: U.S. Equity Fund may enter into derivative transactions with several approved counterparties. Certain transactions are effected under agreements which include master netting arrangements which provide for the netting
of payment obligations and/or netting in situations of counterparty default. The following tables summarize these Funds' financial investments that, if applicable, were subject to an enforceable master netting arrangement at December 31,
2023.
Empower
Core Strategies: International Equity Fund
| Investments: | Gross
Amount Presented in the Statement of Assets and Liabilities (a) |
Financial
Instruments Available for Offset |
Financial
Instruments Collateral Received |
Cash
Collateral Pledged (Received) |
Net Amount |
| Derivative Assets (forward contracts) | $ 129 | $(129) | $— | $— | $ — |
| Derivative Liabilities (forward contracts) | $(19,600) | $ 129 | $— | $— | $(19,471) |
| (a) OTC derivatives are reported gross on the Statement of Assets and Liabilities. | |||||
Empower Core
Strategies: U.S. Equity Fund
| Investments: | Gross
Amount Presented in the Statement of Assets and Liabilities (a) |
Financial
Instruments Available for Offset |
Financial
Instruments Collateral Received |
Cash
Collateral Pledged (Received) |
Net Amount |
| Derivative Assets (forward contracts) | $ 2,516 | $(2,516) | $— | $— | $ — |
| Derivative Liabilities (forward contracts) | $(132,116) | $ 2,516 | $— | $— | $(129,600) |
| (a) OTC derivatives are reported gross on the Statement of Assets and Liabilities. | |||||
Annual Report - December 31, 2023
4. INVESTMENT ADVISORY AGREEMENT AND OTHER
TRANSACTIONS WITH AFFILIATES
Empower Funds entered
into an investment advisory agreement with ECM, a wholly-owned subsidiary of Empower Annuity Insurance Company of America (Empower of America) as of December 31, 2023. As compensation for its services to Empower Funds, the Adviser receives
the below monthly compensation at the described annual rate of each Fund’s average daily net assets. Certain administration and accounting services fees for each Fund are included in the investment advisory agreement.
| Fund Name | Annual Advisory Rate |
| Empower Core Strategies: Flexible Bond Fund | 0.38% |
| Empower Core Strategies: Inflation-Protected Securities Fund | 0.33% up to $1 billion dollars |
| 0.28% over $1 billion dollars | |
| 0.23% over $2 billion dollars | |
| Empower Core Strategies: International Equity Fund | 0.53% up to $1 billion dollars |
| 0.48% over $1 billion dollars | |
| 0.43% over $2 billion dollars | |
| Empower Core Strategies: U.S. Equity Fund | 0.47% up to $1 billion dollars |
| 0.42% over $1 billion dollars | |
| 0.37% over $2 billion dollars |
The
Adviser contractually agreed to waive fees or reimburse expenses that exceed the annual rate, shown in the table below, of each Fund’s average daily net assets attributable to each Class, including management fees and expenses paid directly by
each Fund, excluding shareholder service fees, distribution fees and certain extraordinary expenses (the “Expense Limit”). The agreements current term ends on April 30, 2024 and automatically renews for one-year unless terminated
upon written notice within 90 days of the end of the current term or upon termination of the investment advisory agreement. The amount waived or reimbursed, if any, is reflected in the Statement of Operations.
| Fund Name | Expense Limit Annual Rate |
| Empower Core Strategies: Flexible Bond Fund | 0.45% |
| Empower Core Strategies: Inflation-Protected Securities Fund | 0.35% |
| Empower Core Strategies: International Equity Fund | 0.65% |
| Empower Core Strategies: U.S. Equity Fund | 0.55% |
The Adviser is permitted upon
approval by the Board of Directors to recoup amounts waived or reimbursed by each Fund in future periods, not exceeding three years following the particular waiver/reimbursement, provided the total annual operating expenses of each Class of each
Fund plus such recoupment do not exceed the lesser of the Expense Limit that was in place at the time of the waiver/reimbursement or the Expense Limit in place at the time of recoupment. At December 31, 2023, the amounts subject to recoupment were
as follows:
Empower Core
Strategies: Flexible Bond Fund
| Expires December 31, 2024 | Expires December 31, 2025 | Expires December 31, 2026 | Recoupment
of Past Reimbursed Fees by the Adviser | |||
| $812 | $18,521 | $33,701 | $0 |
Annual Report - December 31, 2023
Empower Core
Strategies: Inflation-Protected Securities Fund
| Expires December 31, 2024 | Expires December 31, 2025 | Expires December 31, 2026 | Recoupment
of Past Reimbursed Fees by the Adviser | |||
| $131,400 | $180,222 | $201,221 | $0 |
Empower Core Strategies: International Equity Fund
| Expires December 31, 2024 | Expires December 31, 2025 | Expires December 31, 2026 | Recoupment
of Past Reimbursed Fees by the Adviser | |||
| $147,231 | $454,669 | $362,755 | $0 |
Empower Core Strategies: U.S. Equity Fund
| Expires December 31, 2024 | Expires December 31, 2025 | Expires December 31, 2026 | Recoupment
of Past Reimbursed Fees by the Adviser | |||
| $116,842 | $215,587 | $6,980 | $0 |
The Adviser and Empower Funds
entered into a sub-advisory agreement with and is responsible for compensating the Sub-Adviser’s below for their services:
Empower Core Strategies: Flexible Bond Fund - Loomis, Sayles
& Company, L.P.
Empower Core Strategies:
Inflation-Protected Securities Fund - Goldman Sachs Asset Management, L.P.
Empower Core Strategies: International Equity Fund - Irish
Life Investment Managers Limited (ILIM), an affiliate of the Adviser and Empower of America, Franklin Templeton Institutional, LLC, and LSV Asset Management. ILIM receives monthly compensation for its services at the annual rate of 0.020% of the
average net value of assets on the portion of the Fund managed by ILIM, subject to an annual $20,000 minimum.
Empower Core Strategies: U.S. Equity Fund - Irish Life
Investment Managers Limited (ILIM), an affiliate of the Adviser and Empower of America, Putnam Investment Management, LLC (Putnam), was an affiliate of the Advisor and Empower of America through December 31, 2023, J.P. Morgan Investment Management
Inc., and Loomis, Sayles & Company L.P. ILIM receives monthly compensation for its services at the annual rate of 0.0075% of the average net value of assets on the portion of the Fund managed by ILIM, subject to an annual $20,000 minimum.
Putnam receives monthly compensation for its services at the annual rate of 0.40% of the average daily net asset value on the first $250 million of assets, 0.35% on the next $250 million of assets, and 0.25% over $500 million of assets on the
portion of the Fund managed by Putnam.
Empower Funds
entered into a shareholder services agreement with Empower Retirement, LLC (Empower), an affiliate of ECM and subsidiary of Empower of America. Pursuant to the shareholder services agreement, Empower provides various recordkeeping, administrative
and shareholder services to shareholders and receives from the Investor Class shares of the Fund a fee equal to 0.35% of the average daily net asset value of the applicable share class.
Empower Financial Services, Inc. (the Distributor), is a
wholly-owned subsidiary of Empower of America and the principal underwriter to distribute and market each Fund.
Certain officers of Empower Funds are also directors and/or
officers of Empower of America or its subsidiaries. No officer or interested director of Empower Funds receives any compensation directly from Empower Funds. The total compensation paid to the independent directors with respect to all
forty-five funds for which they serve as directors was $1,223,500 for the fiscal year ended December 31, 2023.
Annual Report - December 31, 2023
5. PURCHASES & SALES OF INVESTMENTS
For the year ended December 31, 2023, the aggregate cost of
purchases and proceeds from sales of investments, excluding all U.S. Government securities and short-term securities, were as follows:
| Purchases | Sales | ||
| Empower Core Strategies: Flexible Bond Fund | $344,543,456 | $283,291,831 | |
| Empower Core Strategies: Inflation-Protected Securities Fund | 12,896,050 | - | |
| Empower Core Strategies: International Equity Fund | 492,372,980 | 49,140,360 | |
| Empower Core Strategies: U.S. Equity Fund | 799,662,858 | 485,032,634 |
For the same period, the aggregate
cost of purchases and proceeds from sales of long-term U.S. Government securities were as follows:
| Purchases | Sales | ||
| Empower Core Strategies: Flexible Bond Fund | $452,639,473 | $548,178,686 | |
| Empower Core Strategies: Inflation-Protected Securities Fund | 356,752,563 | 84,579,819 | |
| Empower Core Strategies: International Equity Fund | - | - | |
| Empower Core Strategies: U.S. Equity Fund | - | - | |
6. SECURITIES LOANED
Each Fund has entered into a securities lending agreement
with its custodian as securities lending agent. Under the terms of the agreement each Fund receives income after deductions of other amounts payable to the securities lending agent or to the borrower from lending transactions. In exchange for such
fees, the securities lending agent is authorized to loan securities on behalf of each Fund against receipt of cash collateral at least equal in value at all times to the value of the securities loaned plus accrued interest. The fair value of the
loaned securities is determined daily at the close of business of each Fund and necessary collateral adjustments are made between such Fund and its counterparties on the next business day through the delivery or receipt of additional collateral.
Each Fund also continues to receive interest or dividends on the securities loaned. Cash collateral is invested in securities approved by the Board of Directors. Each Fund bears the risk of any deficiency in the amount of collateral available for
return to a borrower due to a loss in an approved investment.
Collateral was invested in Repurchase Agreements
collateralized by U.S. Government or U.S. Government Agency securities. The Repurchase Agreements can be jointly purchased with other lending agent clients and in the event of a default by the counterparty, all lending agent clients would share
ratably in the collateral. As of December 31, 2023, each Fund's securities on loan value and collateral received, as reported on the Statement of Assets and Liabilities, were as follows:
| Market Value | Collateral Received | ||
| Empower Core Strategies: Flexible Bond Fund | $52,546,255 | $54,001,736 | |
| Empower Core Strategies: Inflation-Protected Securities Fund | - | - | |
| Empower Core Strategies: International Equity Fund | - | - | |
| Empower Core Strategies: U.S. Equity Fund | 1,323,399 | 1,368,691 | |
Under the securities lending agreement, the collateral
pledged is, by definition, the securities loaned against the cash borrowed. The following tables summarizes the cash collateral liability under the securities lending agreement by class of securities loaned as of December 31, 2023.
Additional information regarding each Fund's securities on loan is included in the Schedule of Investments.
Annual Report - December 31, 2023
| Empower Core Strategies: Flexible Bond Fund | Total (a) |
| Corporate Bonds and Notes | $21,535,854 |
| Convertible Bonds | 3,264,800 |
| U.S. Treasury Bonds and Notes | 29,196,119 |
| Common Stocks | 4,963 |
| Total secured borrowings | $54,001,736 |
| Empower Core Strategies: U.S. Equity Fund | Total (a) |
| Common Stocks | $1,368,691 |
| Total secured borrowings | $1,368,691 |
| (a) | The remaining contractual maturity of the secured borrowing related to each class of collateral is overnight and continuous. |
7. INDEMNIFICATIONS
The Funds' organizational documents provide current and
former officers and directors with a limited indemnification against liabilities arising in connection with the performance of their duties to the Funds. In the normal course of business, a Fund may also enter into contracts that provide
general indemnifications. A Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote.
8. SUBSEQUENT EVENTS
Effective January 1, 2024, Putnam is no longer an affiliate of
ECM or Empower of America
Effective February 26,
2024, for the Empower Core Strategies: Flexible Bond Fund, ECM's annual advisory rate will be 0.38% of the Fund's average daily net assets up to $2 billion dollars and 0.35% of the Fund's average daily net assets over $2 billion dollars.
Effective February 26, 2024, the Board of Directors of Empower
Funds, Inc., approved the appointment of the following sub-adviser:
Empower Core Strategies: Flexible Bond Fund - Western Asset
Management Company, LLC as a sub-adviser of the Fund to manage the portion of the Fund's investment portfolio currently managed by ECM.
Management has reviewed all events subsequent to December
31, 2023, including the estimates inherent in the process of preparing these financial statements, through the date the financial statements were issued. No subsequent events requiring adjustment or disclosure have occurred other than what is
disclosed above.
Annual Report - December 31, 2023
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Empower
Funds, Inc.
Opinion on the Financial Statements and
Financial Highlights
We have audited the accompanying
statements of assets and liabilities, including the schedules of investments, of Empower Core Strategies: Flexible Bond Fund, Empower Core Strategies: Inflation-Protected Securities Fund, Empower Core Strategies: International Equity Fund, and
Empower Core Strategies: U.S. Equity Fund (the “Funds”) four of the funds comprising Empower Funds, Inc., as of December 31, 2023, the related statements of operations for the year then ended; the statements of changes in net assets for
the year ended December 31, 2023, for the period from May 1, 2022 to December 31, 2022, and for the year ended April 30, 2022; the financial highlights for the year ended December 31, 2023, for the period from May 1, 2022 to December 31, 2022, for
each of the three years in the period ended April 30, 2022, and for the period from June 25, 2018 (commencement of operations) to April 30, 2019; and the related notes. In our opinion, the financial statements and financial highlights present
fairly, in all material respects, the financial position of each of the Funds as of December 31, 2023, and the results of their operations for the year then ended; the changes in their net assets for the year ended December 31, 2023, for the period
from May 1, 2022 to December 31, 2022, and for the year ended April 30, 2022; the financial highlights for the year ended December 31, 2023, for the period from May 1, 2022 to December 31, 2022, for each of the three years in the period ended April
30, 2022, and for the period from June 25, 2018 (commencement of operations) to April 30, 2019 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the
responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement, whether due to error or
fraud. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting
but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the
risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements and financial highlights. Our procedures included confirmation of securities owned as of December 31, 2023, by correspondence with the custodian, agent banks and brokers; when replies were not received from agent banks
or brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 23, 2024
February 23, 2024
We have served as the auditor of one or more Empower
investment companies since 1982.
TAX INFORMATION (unaudited)
Each Fund intends to pass through foreign tax credits and have
derived gross income from sources within foreign countries amounting to the following:
| Foreign
Tax Credits |
Gross
Income from Foreign Countries | ||
| Empower Core Strategies: Flexible Bond Fund | $ 0 | $0 | |
| Empower Core Strategies: Inflation-Protected Securities Fund | 0 | 0 | |
| Empower Core Strategies: International Equity Fund | 963,053 | 10,209,275 | |
| Empower Core Strategies: U.S. Equity Fund | 0 | 0 |
Dividends paid by each Fund from
net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders. Of the ordinary income distributions declared for the year ended December 31, 2023,
the following are the percentages that qualify for the dividend received deduction available to each Fund's corporate shareholders.
| Percent
of Ordinary Income Distributions Qualifying for Dividends Received | |
| Empower Core Strategies: Flexible Bond Fund | 1% |
| Empower Core Strategies: Inflation-Protected Securities Fund | 0% |
| Empower Core Strategies: International Equity Fund | 0% |
| Empower Core Strategies: U.S. Equity Fund | 26% |
Empower Core Strategies: Flexible Bond Fund
Investment Sub-Advisory Contract Approval
The Board of Directors (the “Board”) of Empower
Funds, Inc. (the “Company”), including the Directors who are not interested persons of the Company (the “Independent Directors”), at a meeting held on October 5–6, 2023 (the “Meeting”), unanimously approved
the investment sub-advisory agreement between the Company, Empower Capital Management, LLC (“ECM”) and Western Asset Management Company, LLC (“Western Asset” or the “Sub-Adviser”) with respect to the Fund (the
“Agreement”).
Pursuant to the Agreement,
the Sub-Adviser, subject to general supervision and oversight by ECM and the Board, will be responsible for the day-to-day management of the investment and reinvestment of the assets of its allocated portion of the Fund’s portfolio, which
includes making decisions to buy, sell or hold any particular security.
In approving the Agreement, the Board considered such
information as the Board deemed reasonably necessary to evaluate the terms of the Agreement. In its deliberations, the Board did not identify any single factor as being determinative. Rather, the Board’s approval was based on each
Director’s business judgment after a comprehensive consideration of the information as a whole. Individual Directors may have weighed certain factors differently and assigned varying degrees of materiality to information considered by
the Board. The Independent Directors were assisted in their deliberations by independent legal counsel.
The Board considered that ECM’s indirect parent
corporation, Great-West Lifeco Inc. (“Lifeco”), entered into an agreement with Franklin Resources, Inc. (“Franklin”), the ultimate parent corporation of the Sub-Adviser, which includes, among other things, potential future
cash payments to Lifeco from Franklin based on the amount of Lifeco-affiliated assets (“qualifying assets”) to be managed by Franklin’s affiliated investment adviser entities including Western Asset (the
“Transaction”). The Board further considered that the Fund’s assets to be allocated to the Sub-Adviser will be considered qualifying assets for such calculation. The Board also considered that, as a result of the
Transaction, ECM has the opportunity to secure high quality sub-advisory services from a well-recognized firm such as the Sub-Adviser at below market rates, and this allows ECM the opportunity to convert the Company’s non-cash core funds to an
all sub-advised model. The Board noted ECM’s belief that a sub-advised model is in the best interests of the Fund and its shareholders because ECM can replace the Sub-Adviser based on performance or other concerns. The Board also
noted that, in conjunction with the proposal to engage the Sub-Adviser for the portion of the Fund currently allocated to ECM, ECM agreed to implement a breakpoint in its advisory fee which will reduce fees paid by the Fund when assets reach $2
billion.Based upon its review of the Agreement and the information provided to it, the Board concluded that the Agreement was reasonable in light of the services to be performed, fees to be charged and such other matters as the Directors considered
relevant in the exercise of their business judgment. The principal factors and conclusions that formed the basis for the Directors’ determinations to approve the Agreement are discussed below.
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of
services to be provided to the Fund by the Sub-Adviser. Among other things, the Board considered the Sub-Adviser’s personnel, experience, resources and performance track record of managing a strategy similar to its allocated portion of
the Fund’s portfolio, its ability to provide or obtain such services as may be necessary in managing, acquiring and disposing of investments on behalf of the Fund, and its ability to provide research and obtain and evaluate the economic,
statistical and financial data relevant to the investment policies of the Fund. The Board also reviewed the qualifications, education, experience and tenure of the portfolio managers to be responsible for the day-to-day management of the
Fund. In addition, the Board considered the Sub-Adviser’s reputation for management of its investment strategies, its investment-decision making process, its disaster recovery procedures, including cybersecurity risk mitigation, its
overall financial condition and ability to carry out its obligations to the Fund, its technical resources, operational capabilities and safeguards, and compliance policies and procedures, as well as the Sub-Adviser’s practices regarding the
selection and compensation of brokers and dealers for the execution of portfolio transactions and the procedures it uses for obtaining best execution of portfolio transactions. As part of its assessment of the nature, extent and quality of
services, the Board evaluated information regarding the Sub-Adviser’s regulatory and compliance environment and compliance policies and procedures. The Board noted the Chief Compliance Officer’s assessment that the
Sub-Adviser’s compliance program appears to be reasonably designed to comply with the requirements of Rule 38a‑1 under the Investment Company Act of 1940, as amended. The Board concluded that it was satisfied with the nature,
extent and quality of the services to be provided to the Fund by the Sub-Adviser.
Investment Performance
The Board considered the investment performance of Western
Asset as provided by ECM. The Board reviewed performance information of an investment strategy managed by Western Asset similar to the investment strategy to be employed for its allocated portion of the Fund’s portfolio for the
three-month, one-year, three-year, five-year and ten-year periods ended June 30, 2023 as compared against the Bloomberg U.S. Government/Mortgage Index and the Morningstar U.S. intermediate government category. The Board noted that the
Sub-Adviser outperformed the Bloomberg U.S. Government/Mortgage Index and the Morningstar U.S. intermediate government category for all periods reviewed. The Board considered information provided by ECM concluding that it was satisfied with
the investment performance of the Sub-Adviser.
Costs and
Profitability
The Board considered the costs of
services to be provided by the Sub-Adviser. With respect to the costs of services, the Board considered the structure and level of the sub-advisory fees payable by ECM to the Sub-Adviser. In evaluating the sub-advisory fees payable to
Western Asset, the Board considered information regarding the Sub-Adviser’s fee schedules for other funds managed by the Sub-Adviser in the same investment style as the Fund and noted that, based on the information provided by the Sub-Adviser,
the fee proposed to be charged to ECM for the Fund was lower than such fee schedules.The Board also considered the overall financial soundness of the Sub-Adviser. The Board reviewed the statement of financial condition of the
Sub-Adviser. The Board noted that Western Asset did not provide an estimate of profits to be realized related to the Fund since it had not yet provided services to the Fund.
Economies of Scale
In evaluating economies of scale, the Board considered,
among other things, the level of sub-advisory fees payable by ECM and whether those fees include breakpoints and the current level of applicable Fund assets that will be allocated to the Sub-Adviser. Based on the information provided, the
Board concluded that the sub-advisory fee schedule reflects an appropriate recognition of economies of scale.
Other Factors
The Board considered ancillary benefits to be derived by
the Sub-Adviser from its relationship with the Fund as part of the total mix of information evaluated by the Board. The Board noted Western Asset’s statement that potential benefits to be derived from its relationship with the Fund
would be indirect and incremental. The Board concluded that the proposed sub-advisory fee was reasonable, taking into account any ancillary benefits to be derived by the Sub-Adviser.
Conclusion
Based upon all of the information considered and the
conclusions reached, the Board determined that the terms of the Agreement are reasonable and that the approval of the Agreement is in the best interests of the Fund.
Approval of Amendment to Investment Advisory Agreement
The Board of the Company, including the Independent
Directors, approved an amendment to the investment advisory agreement (the “Amendment”) with ECM for the Fund at the Meeting. As part of its consideration, the Board reviewed materials received from ECM. In connection with
the review process, the Board considered that, at its meeting held on April 20, 2023 (the “April Meeting”) as part of a multi-faceted annual review process, the Board considered information regarding, among other things, the nature,
extent and quality of services provided by ECM and the advisory fee rate and total expense ratio of the Fund, along with performance information for the Fund. The Board also compared the advisory fee rate and expense ratio of the Fund to fees
and expense ratios of a peer group of funds based on data compiled by Broadridge Financial Solutions, Inc., an independent provider of investment company data. The Board noted that, pursuant to the Amendment, a breakpoint would be added to the
advisory fee schedule, which would take effect when Fund assets reach $2 billion (with Fund assets as of June 30, 2023 at approximately $1.86 billion). The Board further considered the Fund’s asset size and ECM’s representation
that the change in the advisory fee schedule would not diminish the quality or quantity of services ECM provides to the Fund.
Based on all of the information considered, in particular
the information received and considered at the April Meeting, as supplemented at the Meeting, the Board determined that the terms of the Amendment are reasonable and that the approval of the Amendment is in the best interests of the Fund. No
single factor was determinative in the Board’s analysis.
Empower Core Strategies: U.S. Equity Fund
Investment Sub-Advisory Contract Approval
The Board of Directors (the “Board”) of Empower
Funds, Inc. (the “Company”), including the Directors who are not interested persons of the Company (the “Independent Directors”), at a meeting held on October 5–6, 2023 (the “Meeting”), unanimously approved
the investment sub-advisory agreement between the Company, Empower Capital Management, LLC (“ECM”) and Putnam Investment Management, LLC (“Putnam” or the “Sub-Adviser”) with respect to the Fund (the
“Agreement.”)
Pursuant to the Agreement,
the Sub-Adviser, subject to general supervision and oversight by ECM and the Board, will be responsible for the day-to-day management of the investment and reinvestment of the assets of its allocated portion of the Fund’s portfolio, which
includes making decisions to buy, sell or hold any particular security.
In approving the Agreement, the Board considered such
information as the Board deemed reasonably necessary to evaluate the terms of the Agreement. In its deliberations, the Board did not identify any single factor as being determinative. Rather, the Board’s approval was based on each
Director’s business judgment after a comprehensive consideration of the information as a whole. Individual Directors may have weighed certain factors differently and assigned varying degrees of materiality to information considered by
the Board. The Independent Directors were assisted in their deliberations by independent legal counsel.
The Board considered that Putnam is a current sub-adviser
of the Fund, and that its parent corporation, Great-West Lifeco Inc., intends to sell Putnam to Franklin Resources, Inc. on or about January 1, 2024 (the “Transaction”). The Board further considered that Putnam commenced management
of its allocated portion of the Fund’s portfolio in June 2018 and that the Board most recently approved the continuation of the investment sub-advisory agreement between the Company, ECM and Putnam at its meeting held on April 20, 2023 (the
“April Meeting”) as part of a multi-faceted annual review process.
Based upon its review of the Agreement and the information
provided to it, the Board concluded that the Agreement was reasonable in light of the services to be performed, fees to be charged and such other matters as the Directors considered relevant in the exercise of their business judgment. The
principal factors and conclusions that formed the basis for the Directors’ determinations to approve the Agreement are discussed below.
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of
services to be provided to the Fund by the Sub-Adviser. Among other things, the Board considered the Sub-Adviser’s personnel, experience, resources and performance track record in managing its allocated portion of the Fund’s
portfolio, its ability to provide or obtain such services as may be necessary in managing, acquiring and disposing of investments on behalf of the Fund, and its ability to provide research and obtain and evaluate the economic, statistical and
financial data relevant to the investment policies of the Fund. The Board also reviewed the qualifications, education, experience and tenure of the portfolio managers to be responsible for the day-to-day management of the Fund. In
addition, the Board considered the Sub-Adviser’s reputation for management of its investment strategies, its investment-decision making process, its disaster recovery procedures, including cybersecurity risk mitigation, its overall financial
condition and ability to carry out its obligations to the Fund, its technical resources, operational capabilities and safeguards, and compliance policies and procedures, as well as the Sub-Adviser’s practices regarding the selection and
compensation of brokers and dealers for the execution of portfolio transactions and the procedures it uses for obtaining best execution of portfolio transactions. As part of its assessment of the nature, extent and quality of services, the
Board evaluated information regarding the Sub-Adviser’s regulatory and compliance environment and compliance policies and procedures. The Board noted the Chief Compliance Officer’s assessment that the Sub-Adviser’s compliance
program appears to be reasonably designed to comply with the requirements of Rule 38a‑1 under the Investment Company Act of 1940, as amended.
The Board also considered Putnam’s representations
that the Sub-Adviser personnel providing services to the Fund would remain the same after the Transaction, that the Transaction would not impact the nature or quality of services provided by the Sub-Adviser to the Fund and that the Transaction would
not impact the resources, focus, culture or operations of the Sub-Adviser.
The Board concluded that it was satisfied with the nature,
extent and quality of the services to be provided to the Fund by the Sub-Adviser.
Investment Performance
The Board noted the performance information regarding the
Fund it considered at the April Meeting and at subsequent meetings. The Board considered information provided by ECM concluding that it was satisfied with the investment performance of the Sub-Adviser.
Costs and Profitability
The Board considered the costs of services to be provided
by the Sub-Adviser. With respect to the costs of services, the Board considered the structure and level of the sub-advisory fees payable by ECM to the Sub-Adviser. The Board noted the information it received at the April Meeting
regarding the standard institutional fee schedule for its U.S. large cap value strategy, as well as the fees for its own retail mutual fund managed in the same investment style as its allocated portion of the Fund. The Board noted explanations
for any differences in fee schedules, such as applicable legal, governance and capital structures, historical pricing arrangements, account size, and the totality of the client relationship, anticipated flows and projected growth, as well as
differences in risks assumed and services provided as between the Fund and other types of accounts.
The Board also considered the overall financial soundness
of the Sub-Adviser. The Board reviewed the statement of financial condition of the Sub-Adviser and the profits estimated to have been realized by Putnam as provided at the April Meeting. Based on the information provided, the Board
concluded that the costs of the services provided and the profits estimated to have been realized by Putnam were not unreasonable in relation to the nature, extent and quality of the services provided.
Economies of Scale
In evaluating economies of scale, the Board considered,
among other things, the level of sub-advisory fees payable by ECM and whether those fees include breakpoints and the current level of Fund assets that will be allocated to the Sub-Adviser. Based on the information provided, the Board concluded
that the sub-advisory fee schedule reflects an appropriate recognition of economies of scale.
Other Factors
The Board considered ancillary benefits to be derived by
the Sub-Adviser from its relationship with the Fund as part of the total mix of information evaluated by the Board. The Board noted that Putnam may receive ancillary benefits from soft-dollar arrangements by which brokers provide research to
Putnam in return for allocating Fund brokerage to such brokers. The Board also noted Putnam’s previous statement considered at the April Meeting that the Fund’s performance record forms part of the overall performance record of the
Fund and, as a result, prospective advisory clients may consider Fund performance records in selecting the Sub-Adviser to manage a portion of their assets, a benefit that the Sub-Adviser believes does not result in a material economic value.
The Board concluded that the proposed sub-advisory fees were reasonable, taking into account any ancillary benefits to be derived by the Sub-Adviser.
Conclusion
Based upon all of the information considered and the
conclusions reached, the Board determined that the terms of the Agreement are reasonable and that the approval of the Agreement is in the best interests of the Fund.
Fund Directors and Officers
Empower Funds is organized under Maryland law, and is governed
by the Board of Directors. The following table provides information about each of the Directors and executive officers of Empower Funds.
| Independent Directors* | |||||
| Name,
Address, and Age |
Positions(s)
Held with Empower Funds |
Term
of Office and Length of Time Served** |
Principal
Occupation(s) During Past 5 Years |
Number
of Funds in Fund Complex Overseen by Director |
Other
Directorships Held by Director |
| Gail
H. Klapper 8515 East Orchard Road, Greenwood Village, CO 80111 80 |
Chair
& Independent Director |
Since
2016 (as Chair) Since 2007 (as Independent Director) |
Managing Attorney, Klapper Law Firm; Member/Director, The Colorado Forum; Manager, 6K Ranch, LLC; and former Director, Guaranty Bancorp | 45 | Director, Gold, Inc. |
| James
A. Hillary*** 8515 East Orchard Road, Greenwood Village, CO 80111 60 |
Independent Director | Since 2017 | Principal and Founding Partner, Fios Capital, LLC; Member, Fios Partners LLC, Fios Holdings LLC; Sole Member, Fios Companies LLC, Resolute Capital Asset Partners; Manager, Applejack Holdings, LLC; and Manager and Member, Prestige Land Holdings, LLC | 45 | N/A |
| R.
Timothy Hudner**** 8515 East Orchard Road, Greenwood Village, CO 80111 64 |
Independent Director | Since 2017 | Director, Colorado State Housing Board; and former Director, Grand Junction Housing Authority; Counseling and Education Center | 45 | N/A |
| Steven
A. Lake 8515 East Orchard Road, Greenwood Village, CO 80111 69 |
Independent Director | Since 2017 | Managing Member, Lake Advisors, LLC; Member, Gart Capital Partners, LLC; and Executive Member, Sage Enterprise Holdings, LLC | 45 | N/A |
| Stephen
G. McConahey 8515 East Orchard Road, Greenwood Village, CO 80111 80 |
Independent Director & Audit Committee Chair | Since
2011 (as Independent Director) Since 2015 (as Audit Committee Chair) |
Chairman, SGM Capital, LLC; Partner, Iron Gate Capital, LLC; Director, The IMA Financial Group, Inc.; and former Director, Guaranty Bancorp | 45 | N/A |
| Interested Director***** | |||||
| Name,
Address, and Age |
Positions(s)
Held with Empower Funds |
Term
of Office and Length of Time Served |
Principal
Occupation(s) During Past 5 Years |
Number
of Funds in Fund Complex Overseen by Director |
Other
Directorships Held by Director |
| Jonathan
D. Kreider 8515 East Orchard Road, Greenwood Village, CO 80111 40 |
Director,
President & Chief Executive Officer |
Since 2020 | Executive Vice President & Head of Empower Investments, Empower, Empower of America and Empower Life & Annuity Insurance Company of New York (“Empower of NY”); President, Chief Executive Officer & Manager, ECM; formerly, Vice President, Empower Funds Investment Products and Empower Advisory Group, LLC (“EAG”) | 45 | N/A |
| Officers | |||||
| Name,
Address, and Age |
Positions(s)
Held with Empower Funds |
Term
of Office and Length of Time Served |
Principal
Occupation(s) During Past 5 Years |
Number
of Fund in Fund Complex Overseen by Director |
Other
Directorships Held by Director |
| Jonathan
D. Kreider 8515 East Orchard Road, Greenwood Village, CO 80111 40 |
Director,
President & Chief Executive Officer |
Since 2020 | Executive Vice President & Head of Empower Investments, Empower, Empower of America and Empower of NY; President, Chief Executive Officer & Manager, ECM; formerly, Vice President, Empower Funds Investment Products and EAG | 45 | N/A |
| Katherine
Stoner 8515 East Orchard Road, Greenwood Village, CO 80111 67 |
Chief Compliance Officer | Since 2016 | Vice President, Compliance Empower Investments, Empower; Chief Compliance Officer, ECM and EAG | N/A | N/A |
| Ryan
L. Logsdon 8515 East Orchard Road, Greenwood Village, CO 80111 49 |
Chief
Legal Officer & Secretary |
Since
2010 (as Secretary) Since 2021 (as Chief Legal Officer) |
Vice President, Deputy General Counsel & Corporate Secretary, Empower, Empower of America & Empower of NY; Vice President & Counsel, ECM; formerly, Vice President & Counsel, Empower Funds; Vice President, Counsel & Secretary, EAG & EFSI | N/A | N/A |
| Kelly
B. New 8515 East Orchard Road, Greenwood Village, CO 80111 48 |
Chief
Financial Officer & Treasurer |
Since 2021 | Vice President, Fund Administration, Empower; Chief Financial Officer & Treasurer, ECM; Vice President & Treasurer, CITs, Empower Trust Company, LLC (“ETC”); formerly, Assistant Treasurer Empower Funds, ECM & ETC | N/A | N/A |
| Officers | |||||
| Name,
Address, and Age |
Positions(s)
Held with Empower Funds |
Term
of Office and Length of Time Served |
Principal
Occupation(s) During Past 5 Years |
Number
of Fund in Fund Complex Overseen by Director |
Other
Directorships Held by Director |
| John
A. Clouthier 8515 East Orchard Road, Greenwood Village, CO 80111 56 |
Assistant
Treasurer |
Since 2007 | Vice President, Fund Administration, Empower; Assistant Treasurer, ECM; Assistant Vice President and Assistant Treasurer, ETC | N/A | N/A |
| Abhijit
Dande 8515 East Orchard Road, Greenwood Village, CO 80111 43 |
Derivatives
Risk Manager |
Since 2022 | Vice President, Financial Risk Management, Empower; Derivatives Risk Manager, ECM | N/A | N/A |
* A Director who is not an
“interested person” of Empower Funds (as defined in Section 2(a)(19) of the 1940 Act, as amended) is referred to as an “Independent Director.”
** Each Director serves until the
next shareholders’ meeting (and until the election and qualification of a successor), or until death, resignation, removal or retirement which takes effect no later than May 1 following his or her 75th birthday unless otherwise determined by
the remaining directors. The remaining Independent Directors determined that Ms. Klapper and Mr. McConahey should continue on the Board until at least May 1, 2024. Officers are elected by the Board on an annual basis to serve until their successors
have been elected and qualified.
*** Mr. Hillary is
the sole member of Resolute Capital Asset Partners LLC, which is the general partner for Resolute Capital Asset Partners Fund I LP. Goldman Sachs & Co. LLC, the clearing agent and custodian for Resolute Capital Asset Partners Fund I LP, is the
parent company of Goldman Sachs Asset Management, LP, the Sub-Adviser of the Empower Core Strategies: Inflation-Protected Securities Fund and other series of Empower Funds. Mr. Hillary has personal banking accounts with an affiliate of J.P. Morgan
Investment Management Inc., a Sub-Adviser of the Empower Core Strategies: U.S. Equity Fund and other series of Empower Funds. Mr. Hillary receives no special treatment due to the relationship.
**** Mr. Hudner’s daughter is employed by JP Morgan
Chase, N.A., an affiliate of J.P. Morgan Investment Management Inc., a Sub-Adviser of the Empower Core Strategies: U.S. Equity Fund and other series of Empower Funds. Mr. Hudner has personal investments in the following: (1) a mutual fund advised by
Lazard Asset Management LLC, a Sub-Adviser of other series of Empower Funds, (2) a mutual fund advised by Massachusetts Financial Services Company, a Sub-Adviser of other series of Empower Funds, and (3) a mutual fund advised by Virtus Investment
Advisers, Inc., an affiliate of Virtus Fixed Income Advisers, LLC, a Sub-Adviser of other series of Empower Funds. Mr. Hudner receives no special treatment due to his ownership of such mutual funds.
***** An “Interested Director” refers to a
Director who is an “interested person” of Empower Funds (as defined in Section 2(a)(19) of the 1940 Act, as amended) by virtue of their affiliation with ECM.
There are no arrangements or understandings between any
Director or officer and any other person(s) pursuant to which s/he was elected as Director or officer.
Additional information about Empower Funds and its
Directors is available in the Empower Funds’ Statement of Additional Information (“SAI”), which can be obtained free of charge upon request to: Secretary, Empower Funds, Inc., 8525 East Orchard Road, Greenwood Village, Colorado
80111; (866) 831-7129. The SAI is also available on the Fund’s web site at https://www.greatwestinvestments.com.
Availability of Quarterly Portfolio Schedule
Empower Funds files its complete schedule of portfolio
holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year as an exhibit to its reports on Form N-PORT. Empower Funds’ Form N-PORT reports are available on the Commission’s website at
http://www.sec.gov.
Availability of Proxy Voting Policies
and Procedures
A description of the policies and
procedures that Empower Funds uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling (866) 831-7129, and on the Securities and Exchange Commission’s website at
http://www.sec.gov.
Availability of Proxy Voting
Record
Information regarding how Empower Funds voted
proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available without charge, upon request, by calling (866) 831-7129, and on the Securities and Exchange Commission’s website
at http://www.sec.gov.
ITEM 2. CODE OF ETHICS.
(a) As of the end of the period covered by this report, the registrant has adopted a Code of Ethics (the “Code of Ethics”) that applies to the registrant's principal executive officer, principal
financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party.
(b) For purposes of this Item, "code of ethics" means written standards that are reasonably designed to deter wrongdoing and to promote:
(1) Honest and
ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(2) Full, fair,
accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the Commission and in other public communications made by the registrant;
(3) Compliance with applicable
governmental laws, rules, and regulations;
(4) The prompt
internal reporting of violations of the code to an appropriate person or persons identified in the code; and
(5) Accountability for adherence to the
code.
(c) During the period covered by this report, there have been no amendments to the registrant’s Code of Ethics.
(d) During the period covered by this report, the registrant has not granted any express or implicit waivers from the provisions of the Code of Ethics.
(e)
Registrant’s Code of Ethics is attached hereto.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Mr. Stephen A.
Lake is the audit committee financial expert and is "independent," pursuant to general instructions on Form N-CSR, Item 3.
An “audit committee financial expert” is not an
“expert” for any purpose, including for purposes of Section 11 of the Securities Act of 1933, as a result of being designated as an “audit committee financial expert.” Further, the designation of a person as an
“audit committee financial expert” does not mean that the person has any greater duties, obligations, or liability than those imposed on the person without the “audit committee financial expert” designation. Similarly,
the designation of a person as an “audit committee financial expert” does not affect the duties, obligations, or liability of any other member of the Audit Committee or Board of Directors.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were: $1,031,500 for
fiscal year 2022 and $1,050,700 for fiscal year 2023.
(b) Audit-Related Fees. The aggregate fees billed in each of the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were: $42,000 for fiscal year 2022 and $44,680 for fiscal year
2023. The nature of the services comprising the fees disclosed under this category involved performance of 17f-2 (self-custody) audits and administrative services related to the audit.
(c) Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning were: $0 for fiscal year 2022 and $0 for fiscal year 2023.
(d) All Other Fees. There were no fees billed in each of the last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs ((a) through (c) of this Item).
(e)
(1) Audit Committee’s Pre-Approval Policies and
Procedures.
Pre-Approval
of Audit Services. The Audit Committee must approve prior to retention all audit, review or attest engagements required under the securities laws that are provided to Empower Funds by its independent auditors. The Audit Committee will
not grant such approval to any auditors that are proposed to perform an audit for Empower Funds if a chief executive officer, controller, chief financial officer, chief accounting officer or any person serving in an equivalent position for Empower
Funds that is responsible for the financial reporting or operations of Empower Funds was employed by those auditors and participated in any capacity in an audit of Empower Funds during the year period (or such other period proscribed under
Securities Exchange Commission rules) preceding the date of initiation of such audit.
Pre-Approval
of Non-Audit Services. The Audit Committee must pre-approve any non-audit services, including tax services, to be provided to Empower Funds by its independent auditors (except those within applicable de minimis statutory or regulatory
exceptions)1 provided that Empower Funds’ auditors will not provide the following non-audit services to Empower Funds: (a) bookkeeping or other services related to the accounting records or financial statements of Empower Funds; (b) financial
information systems design and implementation; (c) appraisal or valuation services, fairness opinions, or contribution-in-kind reports; (d) actuarial services; (e) internal audit outsourcing services; (f) management functions or human resources; (g)
broker-dealer, investment adviser, or investment banking services; (h) legal services; (i) expert services unrelated to the audit; and (j) any other service that the Public Company Accounting Oversight Board determines, by regulation, is
impermissible. 2
Pre-approval with respect to Non-Empower Funds Entities. The Audit Committee must pre-approve any non-audit services that relate directly to the operations and financial reporting of Empower Funds (except
those within applicable de minimis statutory or regulatory exceptions)3 to be provided by Empower Funds’ auditors to (a) Empower Funds’ investment adviser; and (b) any entity controlling, controlled by, or under common control with the
investment adviser if that entity provides ongoing services to Empower Funds.4 The Audit Committee may approve audit and non-audit services on a case-by-case basis or adopt pre-approval policies and procedures that are detailed as to a
particular service, provided that the Audit Committee is informed promptly of each service, or use a combination of these approaches.
Delegation
. The Audit Committee may delegate pre-approval authority to one or more of the Audit Committee's members. Any member or members to whom such pre-approval authority is delegated
must report any pre-approval decisions to the Audit
Committee at its next scheduled meeting.
(f) (2) 100% of the services described pursuant to paragraphs (b) through (d) of this Item 4 of Form N-CSR were approved by the Audit Committee, and no such services were approved by the Audit Committee
pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(g)
Not Applicable.
(h) The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant
for fiscal year 2022 equaled $1,022,840 and for fiscal year 2023 equaled $1,795,449.
(i) The registrant’s Audit Committee of the Board of Directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any
subadviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing
services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a)
The schedule is included as part of the report to shareholders filed under Item 1 of this Form.
(b)
Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES
FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not
applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASE OF EQUITY SECURITIES BY CLOSED-END
MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
There have been no material changes to
the procedures by which shareholders may recommend nominees to the registrant’s board of directors that were implemented after the registrant last provided disclosure in response to this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer have concluded, based upon their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of
the filing date of this report, that these disclosure controls and procedures provide reasonable assurance that material information required to be disclosed by the registrant in the report it files or submits on Form N-CSR is recorded, processed,
summarized and reported, within the time periods specified in the commission's rules and forms and that such material information is accumulated and communicated to the registrant's management, including its principal executive officer and principal
financial officer, as appropriate, in order to allow timely decisions regarding required disclosure.
(b) The registrant's principal executive officer and principal financial officer are aware of no changes in the registrant's internal control over financial reporting that occurred during the registrant's most
recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.
ITEM 12. DISCLOSURE OF
LENDING ACTIVITES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
(a)
Not applicable.
ITEM 13. EXHIBITS.
(3) Not applicable.
(4) Not applicable.
1No pre-approval is required as to non-audit services
provided to Empower Funds if: (a) the aggregate amount of all non-audit services provided to Empower Funds constitute not more than 5% of the total amount of revenues paid by Empower Funds to the independent auditors during the fiscal year in which
the services are provided; (b) these services were not recognized by Empower Funds at the time of the engagement to be non-audit services; and (c) the services are promptly brought to the attention of the Audit Committee and approved by the Audit
Committee prior to the completion of the audit.
2With respect to the prohibitions on (a) bookkeeping;
(b) financial information systems design and implementation; (c) appraisal, valuation, fairness opinions, or contribution-in-kind reports; (d) actuarial; and (e) internal audit outsourcing, such services are permitted to be provided if it is
reasonable to conclude that the results of these services will not be subject to audit procedures during an audit of the audit client's financial statements.
3For non-audit services provided to the adviser and
entities in a control relationship with the adviser, no pre-approval is required if: (a) the aggregate amount of all non-audit services provided constitute not more than 5% of the total amount of revenues paid to the independent auditors during the
fiscal year in which the services are provided to Empower Funds, Empower Funds’ investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser if that entity provides ongoing services to
Empower Funds; (b) these services were not recognized by Empower Funds at the time of the engagement to be non-audit services; and (c) the services are promptly brought to the attention of the Audit Committee and approved by the Audit Committee
prior to the completion of the audit.
4No pre-approval is required by the Audit Committee as to
non-audit services provided to any Empower Funds sub-adviser that primarily provides portfolio management services and is under the direction of another investment adviser and is not affiliated with Empower Funds’ primary investment
adviser.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EMPOWER FUNDS, INC.
| By: | /s/ Jonathan D. Kreider |
Jonathan D. Kreider
Director, President & Chief Executive Officer
Director, President & Chief Executive Officer
Date:February 23,
2024
Pursuant to the requirements of the Securities
Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By: | /s/ Jonathan D. Kreider |
Jonathan D. Kreider
Director, President & Chief Executive Officer
Director, President & Chief Executive Officer
Date:February 23,
2024
| By: | /s/ Kelly B. New |
Kelly B. New
Chief Financial Officer & Treasurer
Chief Financial Officer & Treasurer
Date:February 23,
2024