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 Mid Cap Funds (Institutional Class, Investor Class and
Class L)
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 Ariel Mid Cap Value Fund
Management Discussion
The Fund’s sub-adviser is Ariel Investments, LLC
(“Ariel”)
Fund Performance
For the twelve-month period ended December 31, 2023, the Fund
(Investor Class shares) returned 10.45%, relative to a 12.71% return for the Russell Midcap® Value Index, the Fund’s benchmark index.
Ariel
Commentary
Markets worldwide defied
expectations in 2023 led by the dominating performance of mega-cap technology stocks known as the “Magnificent Seven” (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla). Even though gains were concentrated, improving inflation
data and dovish comments from the Federal Reserve drove a fourth quarter rally and strong finish to the year. Investor sentiment shifted from fears of a recession towards optimism for a soft landing. Such turns in market psychology and economic
forecasts continue to highlight the challenges of market timing and the importance of taking a long-term view.
The Fund was significantly overweight consumer
discretionary, financials and health care. By comparison, it lacked exposure to technology, basic materials and telecommunications and was meaningfully underweight real estate, utilities and energy. The Fund’s utilities underweight and
investment choices within real estate and financials were the top contributors to relative performance over the past year. Alternatively, consumer discretionary holdings and avoidance of technology - an industry that generated outsized returns in
2023 - weighed on relative performance over the one-year timeframe.
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 variable insurance contracts, individual retirement accounts (“IRA(s)”), qualified retirement plans or college savings programs. If such fees and expenses were included, returns would be lower.
Note: Performance
for the Institutional 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 | Ten
Year / Since Inception(a) | |
| Institutional Class | 10.92% | 10.80% | 6.29% |
| Investor Class | 10.45% | 10.46% | 6.36% |
| (a) Institutional Class inception date was May 1, 2015. |
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 variable insurance contracts, IRAs, qualified retirement plans or college savings programs. If such fees and expenses were included, returns would be lower.
Empower Mid Cap Value 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
(Investor Class shares) returned 15.15%, relative to a 12.71% return for the Russell Midcap® Value Index, the Fund’s benchmark index.
Goldman Sachs
Commentary
The year started off with investors
battling high interest rates, a regional banking crisis and geopolitical uncertainty. But towards the end, investors had plenty to cheer about as economic resilience, a trend of slowing rate hikes, disinflation, and the excitement around artificial
intelligence helped counter many of the roadblocks faced during the start of the year.
The decline in inflation proved to be one of the biggest
drivers behind the growth in the markets. From its peak in June 2022, the consumer price index has seen a significant drop solidifying disinflation as the biggest theme of 2023. Another growth driver was the resilience of the economy in the form of
a strong labor market and unwavering consumer demand.
Among sectors, holdings within the financials sector
contributed the most to relative performance, with an overall overweight position within the banks industry contributing particularly strongly. On the downside, holdings within the healthcare sector detracted the most from excess returns, where an
overall overweight position within the pharmaceuticals industry hurt relative 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 variable insurance contracts, individual retirement accounts (“IRA(s)”), qualified retirement plans or college savings programs. If such fees and expenses were included, returns would be lower.
Note: Performance
for the Institutional 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 | Ten
Year / Since Inception(a) | |
| Institutional Class | 15.53% | 10.05% | 7.77% |
| Investor Class | 15.15% | 9.70% | 8.12% |
| (a) Institutional Class inception date was May 1, 2015. |
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 variable insurance contracts, IRAs, qualified retirement plans or college savings programs. If such fees and expenses were included, returns would be lower.
Empower S&P Mid Cap 400® Index Fund
Management Discussion
The Fund’s sub-adviser is Irish Life Investment Managers
Limited (“ILIM”)
Fund Performance
For the twelve-month period ended December 31, 2023, the Fund
(Investor Class shares) returned 15.76%, relative to a 16.44% return for the S&P MidCap 400® Index, the Fund’s benchmark index.
ILIM
Commentary
Mid cap companies underperformed
the broader market through most of 2023 as these companies are seen as more sensitive than large caps to interest rates, which rose for most of the period. This outweighed upward revisions to gross domestic product growth forecasts. The significant
outperformance of large cap stocks, particularly among the “Magnificent Seven” stocks (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla) linked to the artificial intelligence theme, also contributed to the underperformance of
mid-caps during the year. Mid cap stocks were supported towards the end of 2023 by expected monetary easing in early 2024.
In 2023, U.S. mid cap stocks were buoyed by resilient
economic activity as well as falling inflation and, towards the end of the year, expectations that the Federal Reserve (the “Fed”) would ease policy in early 2024. Strong U.S. activity in January led to a rally, but this gave way to
concerns over further monetary tightening from the Fed in February before the banking crises in March. The collapse of Silicon Valley Bank in the U.S. in March 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 mid cap equities towards the end of 2023.
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 variable insurance contracts, individual retirement accounts (“IRA(s)”), qualified retirement plans or college savings programs. If such fees and expenses were included, returns would be lower.
Note: Performance
for the Class L and Institutional 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 | Ten
Year / Since Inception(a)(b) | |
| Institutional Class | 16.18% | 12.40% | 8.91% |
| Investor Class | 15.76% | 11.99% | 8.66% |
| Class L | 15.48% | 11.77% | 8.44% |
| (a) Institutional Class inception date was May 1, 2015. |
| (b) Class L inception date was April 7, 2017. |
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 variable insurance contracts, IRAs, qualified retirement plans or college savings programs. If such fees and expenses were included, returns would be lower.
Empower T. Rowe Price Mid Cap Growth Fund
Management Discussion
The Fund’s sub-adviser is T. Rowe Price Investment
Management, Inc. (“T. Rowe Price”)
Fund Performance
For the twelve-month period ended December 31, 2023, the Fund
(Investor Class shares) returned 19.92%, relative to a 25.87% return for the Russell Midcap® Growth Index, the Fund’s benchmark index.
Rowe Price
Commentary
U.S. equities rallied in 2023,
thanks to improving sentiment that monetary policy would create a constructive environment heading into 2024. The market environment supported all market capitalizations across growth and value, particularly in small caps. After a combination of
concerning economic data and uncertainty around the potential spread of conflict in the Middle East after Hamas attacked Israel and sparked a response, equities were pressured in October. However, investors latched on to favorable data releases
throughout November, including falling inflation, that gave hopes of policymakers achieving their goal of a “soft landing” without sparking a recession. At its December meeting, the Federal Reserve not only kept rates flat for the fourth
time in five meetings, but it also set the table for rate cuts in 2024.
The Fund posted positive returns but underperformed the
benchmark index for the period. Broadly speaking, sector allocation and stock selection detracted from relative results. At the sector level, an underweight allocation and unfavorable stock selection within information technology, an overweight
allocation to healthcare, and stock picks in the industrials and business services detracted from relative results. Stock selection in the financials sector as well as favorable stock selection and an underweight allocation to the energy sector
boosted relative 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 variable insurance contracts, individual retirement accounts (“IRA(s)”), qualified retirement plans or college savings programs. If such fees and expenses were included, returns would be lower.
Note: Performance
for the Institutional 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 | Ten
Year / Since Inception(a) | |
| Institutional Class | 20.35% | 12.02% | 10.17% |
| Investor Class | 19.92% | 11.61% | 10.38% |
| (a) Institutional Class inception date was May 1, 2015. |
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 variable insurance contracts, IRAs, qualified retirement plans or college savings programs. If such fees and expenses were included, returns would be lower.
Summary of Investments by Sector as of December 31, 2023
(unaudited)
Empower Ariel Mid Cap Value Fund
| Sector | Percentage
of Fund Investments |
| Financial | 30.95% |
| Consumer, Cyclical | 20.78 |
| Industrial | 20.36 |
| Consumer, Non-cyclical | 14.30 |
| Communications | 4.91 |
| Energy | 3.86 |
| Basic Materials | 2.98 |
| Short Term Investments | 1.86 |
| Total | 100.00% |
Empower Mid Cap Value Fund
| Sector | Percentage
of Fund Investments |
| Financial | 30.58% |
| Industrial | 15.58 |
| Consumer, Cyclical | 14.11 |
| Consumer, Non-cyclical | 9.08 |
| Technology | 8.11 |
| Communications | 7.67 |
| Utilities | 5.61 |
| Basic Materials | 5.21 |
| Energy | 3.74 |
| Short Term Investments | 0.31 |
| Total | 100.00% |
Empower S&P Mid Cap 400®
Index Fund
| Sector | Percentage
of Fund Investments |
| Financial | 22.95% |
| Industrial | 21.54 |
| Consumer, Cyclical | 16.61 |
| Consumer, Non-cyclical | 14.20 |
| Technology | 8.08 |
| Energy | 5.15 |
| Basic Materials | 4.82 |
| Utilities | 3.20 |
| Communications | 2.24 |
| Short Term Investments | 1.21 |
| Total | 100.00% |
Empower T. Rowe Price Mid Cap Growth Fund
| Sector | Percentage
of Fund Investments |
| Consumer, Non-cyclical | 33.28% |
| Technology | 19.05 |
| Industrial | 16.39 |
| Consumer, Cyclical | 14.86 |
| Financial | 6.37 |
| Communications | 4.64 |
| Energy | 4.43 |
| Basic Materials | 0.52 |
| Short Term Investments | 0.46 |
| 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.
Each
Fund 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 Ariel Mid Cap Value 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 | $1,035.20 | $3.59 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,021.70 | $3.57 | ||
| Investor Class | |||||
| Actual | $1,000.00 | $1,033.30 | $5.38 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,019.90 | $5.35 |
| * Expenses are equal to the Fund's annualized expense ratio of 0.70% for the Institutional Class shares and 1.05% 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 variable insurance contracts, IRAs, qualified retirement plans or college savings programs, if applicable. If such fees or expenses were included, returns would be lower. |
| Empower Mid Cap Value 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 | $1,073.90 | $4.18 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,021.20 | $4.08 | ||
| Investor Class | |||||
| Actual | $1,000.00 | $1,071.00 | $6.00 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,019.40 | $5.85 |
| * Expenses are equal to the Fund's annualized expense ratio of 0.80% for the Institutional Class shares and 1.15% 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 variable insurance contracts, IRAs, qualified retirement plans or college savings programs, if applicable. If such fees or expenses were included, returns would be lower. |
| Empower S&P Mid Cap 400® Index 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 | $1,068.90 | $0.94 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,024.30 | $0.92 | ||
| Investor Class | |||||
| Actual | $1,000.00 | $1,066.50 | $2.86 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,022.40 | $2.80 | ||
| Class L | |||||
| Actual | $1,000.00 | $1,065.20 | $4.16 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,021.20 | $4.08 |
| * Expenses are equal to the Fund's annualized expense ratio of 0.18% for the Institutional Class, 0.55% for the Investor Class and 0.80% for the Class L 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 variable insurance contracts, IRAs, qualified retirement plans or college savings programs, if applicable. If such fees or expenses were included, returns would be lower. |
| Empower T. Rowe Price Mid Cap Growth 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 | $1,065.70 | $3.44 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,021.90 | $3.36 | ||
| Investor Class | |||||
| Actual | $1,000.00 | $1,062.50 | $5.30 | ||
| Hypothetical
(5% return before expenses) |
$1,000.00 | $1,020.10 | $5.19 |
| * Expenses are equal to the Fund's annualized expense ratio of 0.66% for the Institutional Class shares and 1.02% 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 variable insurance contracts, IRAs, qualified retirement plans or college savings programs, if applicable. If such fees or expenses were included, returns would be lower. |
EMPOWER FUNDS, INC.
EMPOWER ARIEL MID CAP VALUE FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER ARIEL MID CAP VALUE 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) | Collateral received for securities on loan. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER MID CAP VALUE FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER MID CAP VALUE FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER MID CAP VALUE FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER MID CAP VALUE 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) | Collateral received for securities on loan. |
| 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 (Depreciation) | |
| Long | |||||
| S&P Mid 400® Emini Futures | 39 | USD | 10,957 | Mar 2024 | $(109,272) |
| Net Depreciation | $(109,272) | ||||
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER S&P MID CAP 400® INDEX FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER S&P MID CAP 400® INDEX FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER S&P MID CAP 400® INDEX FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER S&P MID CAP 400® INDEX FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER S&P MID CAP 400® INDEX FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER S&P MID CAP 400® INDEX FUND
Schedule of Investments
As of December 31, 2023
| Principal Amount | Fair Value | |
| Repurchase Agreements — (continued) | ||
| $2,399,195 | Undivided interest of 30.78% in a repurchase agreement (principal amount/value $7,826,153 with a maturity value of $7,830,805) with TD Securities (USA) LLC, 5.35%, dated 12/31/23 to be repurchased at $2,399,195 on 1/2/24 collateralized by various U.S. Government Agency securities, 2.50% - 7.00%, 7/1/37 - 1/1/54, with a value of $7,982,676.(d) | $ 2,399,195 |
| 9,596,783 | ||
| TOTAL
SHORT TERM INVESTMENTS — 1.22% (Cost $14,234,309) |
$ 14,234,309 | |
| TOTAL
INVESTMENTS — 100.53% (Cost $1,041,600,142) |
$1,173,299,790 | |
| OTHER ASSETS & LIABILITIES, NET — (0.53)% | $ (6,128,479) | |
| TOTAL NET ASSETS — 100.00% | $1,167,171,311 | |
| (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. |
| 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 Mid 400® Emini Futures | 33 | USD | 9,271 | Mar 2024 | $20,962 |
| Net Appreciation | $20,962 | ||||
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER T. ROWE PRICE MID CAP GROWTH FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER T. ROWE PRICE MID CAP GROWTH FUND
Schedule of Investments
As of December 31, 2023
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER T. ROWE PRICE MID CAP GROWTH 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) | Restricted security; further details of these securities are included in a subsequent table. |
| (d) | Security is fair valued using significant unobservable inputs. |
| (e) | Collateral received for securities on loan. |
| ADR | American Depositary Receipt |
| At December 31, 2023, the Fund held the following restricted securities: | |||||||||||
| Security | Acquisition
Dates |
Cost | Fair Value | Fair
Value as a Percentage of Net Assets | |||||||
| Common Stock | |||||||||||
| Maplebear Inc DBA Instacart Series I 0.00% | 02/26/2021 | $480,375 | $90,195 | 0.00% | |||||||
| Convertible Preferred Stock | |||||||||||
| Databricks Inc Series G 0.00%(d) | 02/01/2021 | 340,724 | 423,580 | 0.02 | |||||||
| Sila Nanotechnologies Inc Series F 0.00%(d) | 01/07/2021 | 1,968,217 | 967,113 | 0.06 | |||||||
| $2,789,316 | $1,480,888 | 0.08% | |||||||||
| (d) | Security is fair valued using significant unobservable inputs. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Assets and Liabilities
As of December 31, 2023
| Empower
Ariel Mid Cap Value Fund |
Empower
Mid Cap Value Fund |
Empower
S&P Mid Cap 400® Index Fund | |||
| ASSETS: | |||||
| Investments in securities, fair value(a)(b) | $114,981,223 | $599,147,860 | $1,163,703,007 | ||
| Repurchase agreements, fair value(c) | 2,173,689 | 1,881,544 | 9,596,783 | ||
| Cash | 3,514,316 | 13,760,063 | 2,934,429 | ||
| Cash pledged on futures contracts | - | 588,972 | 651,234 | ||
| Dividends receivable | 77,136 | 1,569,833 | 1,447,624 | ||
| Subscriptions receivable | 73,843 | 227,404 | 1,322,047 | ||
| Receivable for investments sold | - | - | 1,051,540 | ||
| Total Assets | 120,820,207 | 617,175,676 | 1,180,706,664 | ||
| LIABILITIES: | |||||
| Payable for director fees | 7,018 | 7,018 | 7,018 | ||
| Payable for distribution fees | - | - | 9,182 | ||
| Payable for investments purchased | - | - | 1,506,688 | ||
| Payable for other accrued fees | 37,717 | 53,194 | 67,889 | ||
| Payable for shareholder services fees | 24,436 | 10,856 | 197,908 | ||
| Payable to investment adviser | 80,264 | 439,165 | 196,356 | ||
| Payable upon return of securities loaned | 2,173,689 | 1,881,544 | 9,596,783 | ||
| Redemptions payable | 90,656 | 596,404 | 1,867,069 | ||
| Variation margin on futures contracts | - | 102,180 | 86,460 | ||
| Total Liabilities | 2,413,780 | 3,090,361 | 13,535,353 | ||
| NET ASSETS | $118,406,427 | $614,085,315 | $1,167,171,311 | ||
| NET ASSETS REPRESENTED BY: | |||||
| Capital stock, $0.10 par value | $1,285,324 | $7,272,881 | $10,019,883 | ||
| Paid-in capital in excess of par | 122,471,162 | 555,691,161 | 1,014,288,081 | ||
| Undistributed/accumulated earnings (deficit) | (5,350,059) | 51,121,273 | 142,863,347 | ||
| NET ASSETS | $118,406,427 | $614,085,315 | $1,167,171,311 | ||
| NET ASSETS BY CLASS | |||||
| Investor Class | $84,022,510 | $37,326,701 | $637,219,811 | ||
| Class L | N/A | N/A | $45,571,910 | ||
| Institutional Class | $34,383,917 | $576,758,614 | $484,379,590 | ||
| CAPITAL STOCK: | |||||
| Authorized | |||||
| Investor Class | 400,000,000 | 120,000,000 | 250,000,000 | ||
| Class L | N/A | N/A | 60,000,000 | ||
| Institutional Class | 30,000,000 | 350,000,000 | 300,000,000 | ||
| Issued and Outstanding | |||||
| Investor Class | 9,524,830 | 2,877,396 | 33,339,454 | ||
| Class L | N/A | N/A | 5,282,358 | ||
| Institutional Class | 3,328,412 | 69,851,414 | 61,577,021 | ||
| NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE: | |||||
| Investor Class | $8.82 | $12.97 | $19.11 | ||
| Class L | N/A | N/A | $8.63 | ||
| Institutional Class | $10.33 | $8.26 | $7.87 | ||
| (a) Cost of investments | $117,665,295 | $544,334,597 | $1,032,003,359 | ||
| (b) Including fair value of securities on loan | $2,112,061 | $1,814,840 | $9,170,124 | ||
| (c) Cost of repurchase agreements | $2,173,689 | $1,881,544 | $9,596,783 |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
Statement of Assets and Liabilities
As of December 31, 2023
| Empower
T. Rowe Price Mid Cap Growth Fund | |
| ASSETS: | |
| Investments in securities, fair value(a)(b) | $1,748,462,042 |
| Repurchase agreements, fair value(c) | 8,017,332 |
| Cash | 53,063,609 |
| Dividends receivable | 402,188 |
| Subscriptions receivable | 13,353,368 |
| Receivable for investments sold | 182,090 |
| Total Assets | 1,823,480,629 |
| LIABILITIES: | |
| Payable for director fees | 7,018 |
| Payable for investments purchased | 770,499 |
| Payable for other accrued fees | 71,181 |
| Payable for shareholder services fees | 263,059 |
| Payable to investment adviser | 1,010,459 |
| Payable upon return of securities loaned | 8,017,332 |
| Redemptions payable | 4,606,539 |
| Total Liabilities | 14,746,087 |
| NET ASSETS | $1,808,734,542 |
| NET ASSETS REPRESENTED BY: | |
| Capital stock, $0.10 par value | $17,307,253 |
| Paid-in capital in excess of par | 1,435,699,135 |
| Undistributed/accumulated earnings | 355,728,154 |
| NET ASSETS | $1,808,734,542 |
| NET ASSETS BY CLASS | |
| Investor Class | $908,373,978 |
| Institutional Class | $900,360,564 |
| CAPITAL STOCK: | |
| Authorized | |
| Investor Class | 125,000,000 |
| Institutional Class | 690,000,000 |
| Issued and Outstanding | |
| Investor Class | 25,384,702 |
| Institutional Class | 147,687,831 |
| NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE: | |
| Investor Class | $35.78 |
| Institutional Class | $6.10 |
| (a) Cost of investments | $1,399,072,536 |
| (b) Including fair value of securities on loan | $7,712,013 |
| (c) Cost of repurchase agreements | $8,017,332 |
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
Ariel Mid Cap Value Fund |
Empower
Mid Cap Value Fund |
Empower
S&P Mid Cap 400® Index Fund | |||
| INVESTMENT INCOME: | |||||
| Income from securities lending | $7,459 | $110,564 | $186,599 | ||
| Dividends | 1,921,187 | 12,281,401 | 21,851,092 | ||
| Foreign withholding tax | (3,001) | (12,484) | - | ||
| Total Income | 1,925,645 | 12,379,481 | 22,037,691 | ||
| EXPENSES: | |||||
| Management fees | 778,451 | 4,250,054 | 2,094,257 | ||
| Shareholder services fees – Investor Class | 292,773 | 144,964 | 2,510,897 | ||
| Shareholder services fees – Class L | - | - | 152,530 | ||
| Audit and tax fees | 32,722 | 33,183 | 33,481 | ||
| Custodian fees | 2,328 | 38,204 | 29,578 | ||
| Directors fees | 31,396 | 31,396 | 31,396 | ||
| Distribution fees – Class L | - | - | 108,639 | ||
| Legal fees | 9,915 | 9,915 | 9,915 | ||
| Pricing fees | 106 | 487 | 1,379 | ||
| Registration fees | 28,318 | 48,651 | 82,331 | ||
| Shareholder report fees | 1,534 | 1,282 | 48,246 | ||
| Transfer agent fees | 9,339 | 11,210 | 18,454 | ||
| Other fees | 16,568 | 17,559 | 18,785 | ||
| Total Expenses | 1,203,450 | 4,586,905 | 5,139,888 | ||
| Less amount waived by investment adviser | 97,890 | 83,119 | 15,559 | ||
| Net Expenses | 1,105,560 | 4,503,786 | 5,124,329 | ||
| NET INVESTMENT INCOME | 820,085 | 7,875,695 | 16,913,362 | ||
| NET REALIZED AND UNREALIZED GAIN (LOSS): | |||||
| Net realized gain (loss) on investments | (195,770) | 13,135,759 | 82,861,943 | ||
| Net realized gain on futures contracts | - | 972 | 1,216,504 | ||
| Net Realized Gain (Loss) | (195,770) | 13,136,731 | 84,078,447 | ||
| Net change in unrealized appreciation on investments | 11,432,710 | 67,453,693 | 77,633,201 | ||
| Net change in unrealized appreciation (depreciation) on futures contracts | - | (110,069) | 40,172 | ||
| Net Change in Unrealized Appreciation | 11,432,710 | 67,343,624 | 77,673,373 | ||
| Net Realized and Unrealized Gain | 11,236,940 | 80,480,355 | 161,751,820 | ||
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $12,057,025 | $88,356,050 | $178,665,182 |
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
T. Rowe Price Mid Cap Growth Fund | |
| INVESTMENT INCOME: | |
| Income from securities lending | $170,151 |
| Dividends | 12,740,968 |
| Foreign withholding tax | (30,921) |
| Total Income | 12,880,198 |
| EXPENSES: | |
| Management fees | 11,247,440 |
| Shareholder services fees – Investor Class | 3,142,471 |
| Audit and tax fees | 33,779 |
| Custodian fees | 44,538 |
| Directors fees | 31,396 |
| Legal fees | 9,915 |
| Pricing fees | 360 |
| Registration fees | 75,224 |
| Shareholder report fees | 50,167 |
| Transfer agent fees | 17,906 |
| Other fees | 19,518 |
| Total Expenses | 14,672,714 |
| Less amount waived by investment adviser | 1,157 |
| Net Expenses | 14,671,557 |
| NET INVESTMENT LOSS | (1,791,359) |
| NET REALIZED AND UNREALIZED GAIN (LOSS): | |
| Net realized gain on investments | 147,017,400 |
| Net Realized Gain | 147,017,400 |
| Net change in unrealized appreciation on investments | 160,050,911 |
| Net Change in Unrealized Appreciation | 160,050,911 |
| Net Realized and Unrealized Gain | 307,068,311 |
| NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS | $305,276,952 |
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 December 31, 2022
| Empower Ariel Mid Cap Value Fund | 2023 | 2022 | |
| OPERATIONS: | |||
| Net investment income | $820,085 | $1,041,463 | |
| Net realized gain (loss) | (195,770) | 24,400,116 | |
| Net change in unrealized appreciation (depreciation) | 11,432,710 | (48,020,977) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 12,057,025 | (22,579,398) | |
| DISTRIBUTIONS TO SHAREHOLDERS: | |||
| From net investment income and net realized gains | |||
| Investor Class | (12,180,257) | (26,407,415) | |
| Institutional Class | (4,352,619) | (8,056,655) | |
| From Net Investment Income and Net Realized Gains | (16,532,876) | (34,464,070) | |
| CAPITAL SHARE TRANSACTIONS: | |||
| Shares sold | |||
| Investor Class | 12,248,623 | 30,808,614 | |
| Institutional Class | 9,187,327 | 6,571,945 | |
| Shares issued in reinvestment of distributions | |||
| Investor Class | 12,180,257 | 26,407,415 | |
| Institutional Class | 4,352,619 | 8,056,655 | |
| Shares redeemed | |||
| Investor Class | (22,617,288) | (152,296,253) | |
| Institutional Class | (10,790,096) | (9,655,815) | |
| Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions | 4,561,442 | (90,107,439) | |
| Total Increase (Decrease) in Net Assets | 85,591 | (147,150,907) | |
| NET ASSETS: | |||
| Beginning of year | 118,320,836 | 265,471,743 | |
| End of year | $118,406,427 | $118,320,836 | |
| CAPITAL SHARE TRANSACTIONS - SHARES: | |||
| Shares sold | |||
| Investor Class | 1,314,537 | 2,449,838 | |
| Institutional Class | 883,882 | 501,455 | |
| Shares issued in reinvestment of distributions | |||
| Investor Class | 1,429,531 | 2,752,258 | |
| Institutional Class | 436,067 | 738,555 | |
| Shares redeemed | |||
| Investor Class | (2,467,146) | (11,274,300) | |
| Institutional Class | (1,010,854) | (744,905) | |
| Net Increase (Decrease) | 586,017 | (5,577,099) |
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 December 31, 2022
| Empower Mid Cap Value Fund | 2023 | 2022 | |
| OPERATIONS: | |||
| Net investment income | $7,875,695 | $7,799,152 | |
| Net realized gain (loss) | 13,136,731 | (243,661) | |
| Net change in unrealized appreciation (depreciation) | 67,343,624 | (81,871,282) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 88,356,050 | (74,315,791) | |
| DISTRIBUTIONS TO SHAREHOLDERS: | |||
| From net investment income and net realized gains | |||
| Investor Class | (189,786) | (3,329,863) | |
| Institutional Class | (14,422,383) | (23,419,151) | |
| From Net Investment Income and Net Realized Gains | (14,612,169) | (26,749,014) | |
| CAPITAL SHARE TRANSACTIONS: | |||
| Shares sold | |||
| Investor Class | 16,088,034 | 141,260,399 | |
| Institutional Class | 133,701,665 | 75,361,251 | |
| Shares issued in reinvestment of distributions | |||
| Investor Class | 189,786 | 3,329,863 | |
| Institutional Class | 14,422,383 | 23,419,151 | |
| Shares redeemed | |||
| Investor Class | (66,523,578) | (157,795,333) | |
| Institutional Class | (119,100,428) | (162,585,453) | |
| Net Decrease in Net Assets Resulting from Capital Share Transactions | (21,222,138) | (77,010,122) | |
| Total Increase (Decrease) in Net Assets | 52,521,743 | (178,074,927) | |
| NET ASSETS: | |||
| Beginning of year | 561,563,572 | 739,638,499 | |
| End of year | $614,085,315 | $561,563,572 | |
| CAPITAL SHARE TRANSACTIONS - SHARES: | |||
| Shares sold | |||
| Investor Class | 1,351,993 | 12,209,066 | |
| Institutional Class | 17,858,526 | 9,746,899 | |
| Shares issued in reinvestment of distributions | |||
| Investor Class | 14,949 | 294,840 | |
| Institutional Class | 1,779,997 | 3,196,365 | |
| Shares redeemed | |||
| Investor Class | (5,669,888) | (13,449,688) | |
| Institutional Class | (15,236,513) | (20,150,145) | |
| Net Increase (Decrease) | 99,064 | (8,152,663) |
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 December 31, 2022
| Empower S&P Mid Cap 400® Index Fund | 2023 | 2022 | |
| OPERATIONS: | |||
| Net investment income | $16,913,362 | $15,674,695 | |
| Net realized gain | 84,078,447 | 60,751,413 | |
| Net change in unrealized appreciation (depreciation) | 77,673,373 | (223,554,878) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 178,665,182 | (147,128,770) | |
| DISTRIBUTIONS TO SHAREHOLDERS: | |||
| From net investment income and net realized gains | |||
| Investor Class | (29,833,250) | (31,464,559) | |
| Class L | (4,766,175) | (4,074,233) | |
| Institutional Class | (59,432,803) | (47,181,419) | |
| From Net Investment Income and Net Realized Gains | (94,032,228) | (82,720,211) | |
| CAPITAL SHARE TRANSACTIONS: | |||
| Shares sold | |||
| Investor Class | 273,866,407 | 534,134,629 | |
| Class L | 9,243,699 | 51,644,434 | |
| Institutional Class | 91,814,644 | 116,411,462 | |
| Shares issued in reinvestment of distributions | |||
| Investor Class | 29,833,250 | 31,464,559 | |
| Class L | 4,766,175 | 4,074,233 | |
| Institutional Class | 59,432,803 | 47,181,419 | |
| Shares redeemed | |||
| Investor Class | (515,643,686) | (289,326,127) | |
| Class L | (14,386,927) | (6,414,693) | |
| Institutional Class | (132,168,616) | (116,736,577) | |
| Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions | (193,242,251) | 372,433,339 | |
| Total Increase (Decrease) in Net Assets | (108,609,297) | 142,584,358 | |
| NET ASSETS: | |||
| Beginning of year | 1,275,780,608 | 1,133,196,250 | |
| End of year | $1,167,171,311 | $1,275,780,608 | |
| CAPITAL SHARE TRANSACTIONS - SHARES: | |||
| Shares sold | |||
| Investor Class | 15,111,002 | 29,456,723 | |
| Class L | 1,063,576 | 5,492,692 | |
| Institutional Class | 11,616,342 | 13,695,891 | |
| Shares issued in reinvestment of distributions | |||
| Investor Class | 1,562,524 | 1,841,259 | |
| Class L | 547,478 | 490,756 | |
| Institutional Class | 7,473,371 | 6,133,956 | |
| Shares redeemed | |||
| Investor Class | (28,399,092) | (15,692,115) | |
| Class L | (1,656,212) | (715,215) | |
| Institutional Class | (16,182,231) | (13,405,353) | |
| Net Increase (Decrease) | (8,863,242) | 27,298,594 |
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 December 31, 2022
| Empower T. Rowe Price Mid Cap Growth Fund | 2023 | 2022 | |
| OPERATIONS: | |||
| Net investment loss | $(1,791,359) | $(3,431,359) | |
| Net realized gain | 147,017,400 | 85,367,289 | |
| Net change in unrealized appreciation (depreciation) | 160,050,911 | (542,391,303) | |
| Net Increase (Decrease) in Net Assets Resulting from Operations | 305,276,952 | (460,455,373) | |
| DISTRIBUTIONS TO SHAREHOLDERS: | |||
| From net investment income and net realized gains | |||
| Investor Class | (24,168,862) | (19,488,766) | |
| Institutional Class | (124,557,649) | (98,884,333) | |
| From Net Investment Income and Net Realized Gains | (148,726,511) | (118,373,099) | |
| CAPITAL SHARE TRANSACTIONS: | |||
| Shares sold | |||
| Investor Class | 393,846,182 | 410,387,652 | |
| Class L(a) | - | 56,055 | |
| Institutional Class | 207,544,832 | 166,447,039 | |
| Shares issued in reinvestment of distributions | |||
| Investor Class | 24,168,862 | 19,488,766 | |
| Institutional Class | 124,557,649 | 98,884,333 | |
| Shares redeemed | |||
| Investor Class | (402,788,634) | (300,120,818) | |
| Class L(a) | - | (3,083,208) | |
| Institutional Class | (249,296,787) | (271,033,395) | |
| Net Increase in Net Assets Resulting from Capital Share Transactions | 98,032,104 | 121,026,424 | |
| Total Increase (Decrease) in Net Assets | 254,582,545 | (457,802,048) | |
| NET ASSETS: | |||
| Beginning of year | 1,554,151,997 | 2,011,954,045 | |
| End of year | $1,808,734,542 | $1,554,151,997 | |
| CAPITAL SHARE TRANSACTIONS - SHARES: | |||
| Shares sold | |||
| Investor Class | 11,828,414 | 12,273,663 | |
| Class L(a) | - | 11,784 | |
| Institutional Class | 33,045,119 | 24,033,416 | |
| Shares issued in reinvestment of distributions | |||
| Investor Class | 676,536 | 639,631 | |
| Institutional Class | 20,188,300 | 16,499,078 | |
| Shares redeemed | |||
| Investor Class | (12,228,685) | (9,128,989) | |
| Class L(a) | - | (686,761) | |
| Institutional Class | (39,122,378) | (38,835,509) | |
| Net Increase | 14,387,306 | 4,806,313 |
| (a) | Class L ceased operations on April 22, 2022. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER ARIEL MID CAP VALUE 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
net investment income |
From
net realized gains |
Total
Distributions |
Net
asset value, end of year |
Total
Return(b)(c) | |
| Investor Class | |||||||||
| 12/31/2023 | $ 9.31 | 0.06 | 0.84 | 0.90 | (0.23) | (1.16) | (1.39) | $ 8.82 | 10.45% |
| 12/31/2022 | $14.70 | 0.08 | (2.11) | (2.03) | (0.66) | (2.70) | (3.36) | $ 9.31 | (12.94%) |
| 12/31/2021 | $11.99 | 0.09 | 3.02 | 3.11 | (0.29) | (0.11) | (0.40) | $14.70 | 26.13% |
| 12/31/2020 (d) | $11.55 | 0.23 | 0.72 | 0.95 | (0.26) | (0.25) | (0.51) | $11.99 | 9.08% |
| 12/31/2019 | $10.29 | 0.14 | 2.24 | 2.38 | (0.14) | (0.98) | (1.12) | $11.55 | 24.32% |
| Institutional Class | |||||||||
| 12/31/2023 | $10.68 | 0.10 | 0.99 | 1.09 | (0.28) | (1.16) | (1.44) | $10.33 | 10.92% |
| 12/31/2022 | $15.92 | 0.14 | (2.28) | (2.14) | (0.40) | (2.70) | (3.10) | $10.68 | (12.69%) |
| 12/31/2021 | $12.97 | 0.15 | 3.26 | 3.41 | (0.35) | (0.11) | (0.46) | $15.92 | 26.53% |
| 12/31/2020 | $12.29 | 0.23 | 0.85 | 1.08 | (0.15) | (0.25) | (0.40) | $12.97 | 9.18% |
| 12/31/2019 | $10.01 | 0.16 | 2.31 | 2.47 | (0.05) | (0.14) | (0.19) | $12.29 | 24.82% |
| 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(e) | ||
| Investor Class | ||||||
| 12/31/2023 | $ 84,023 | 1.14% | 1.05% | 0.61% | 20% | |
| 12/31/2022 | $ 86,066 | 1.14% | 1.05% | 0.62% | 31% | |
| 12/31/2021 | $225,274 | 1.08% | 1.05% | 0.61% | 42% | |
| 12/31/2020 (d) | $102,080 | 1.12% | 1.05% | 2.20% | 65% | |
| 12/31/2019 | $ 95,546 | 1.11% | 1.05% | 1.02% | 33% | |
| Institutional Class | ||||||
| 12/31/2023 | $ 34,384 | 0.78% | 0.70% | 0.97% | 20% | |
| 12/31/2022 | $ 32,255 | 0.76% | 0.70% | 1.05% | 31% | |
| 12/31/2021 | $ 40,197 | 0.72% | 0.70% | 0.96% | 42% | |
| 12/31/2020 | $ 37,478 | 0.72% | 0.70% | 2.16% | 65% | |
| 12/31/2019 | $ 37,963 | 0.73% | 0.70% | 1.36% | 33% | |
| (a) | Per share amounts are based upon average shares outstanding. |
| (b) | Total return does not include any fees or expenses of variable insurance contracts, if applicable. If such fees or expenses were included, the return shown would have been lower. |
| (c) | 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. |
| (d) | On July 17, 2020, the Investor Class underwent a one for seven reverse stock split. The capital activity presented here has been retroactively adjusted to reflect this reverse split. |
| (e) | Portfolio turnover is calculated at the Fund level. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER MID CAP VALUE FUND
EMPOWER MID CAP VALUE 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)(c) | ||
| Investor Class | |||||||||||
| 12/31/2023 | $11.31 | 0.13 | 1.60 | 1.73 | — | (0.06) | (0.01) | (0.07) | $12.97 | 15.15% | |
| 12/31/2022 | $13.16 | 0.11 | (1.67) | (1.56) | — | (0.07) | (0.22) | (0.29) | $11.31 | (11.76%) | |
| 12/31/2021 | $12.44 | 0.13 | 3.63 | 3.76 | — | (2.54) | (0.50) | (3.04) | $13.16 | 30.17% | |
| 12/31/2020 | $12.58 | 0.14 | (0.19) | (0.05) | (0.00) (d) | (0.08) | (0.01) | (0.09) | $12.44 | (0.34%) | |
| 12/31/2019 | $10.46 | 0.12 | 2.02 | 2.14 | — | (0.02) | (0.00) (d) | (0.02) | $12.58 | 20.49% | |
| Institutional Class | |||||||||||
| 12/31/2023 | $ 7.34 | 0.11 | 1.03 | 1.14 | — | (0.21) | (0.01) | (0.22) | $ 8.26 | 15.53% | |
| 12/31/2022 | $ 8.71 | 0.10 | (1.11) | (1.01) | — | (0.14) | (0.22) | (0.36) | $ 7.34 | (11.53%) | |
| 12/31/2021 | $ 9.15 | 0.13 | 2.68 | 2.81 | — | (2.75) | (0.50) | (3.25) | $ 8.71 | 30.73% | |
| 12/31/2020 | $ 9.27 | 0.12 | (0.13) | (0.01) | (0.00) (d) | (0.10) | (0.01) | (0.11) | $ 9.15 | 0.02% | |
| 12/31/2019 | $ 7.78 | 0.13 | 1.48 | 1.61 | — | (0.12) | (0.00) (d) | (0.12) | $ 9.27 | 20.80% | |
| 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(e) | ||
| Investor Class | ||||||
| 12/31/2023 | $ 37,327 | 1.24% | 1.15% | 1.06% | 217% | |
| 12/31/2022 | $ 81,226 | 1.20% | 1.15% | 0.94% | 217% | |
| 12/31/2021 | $106,958 | 1.20% | 1.15% | 0.86% | 227% | |
| 12/31/2020 | $136,065 | 1.21% | 1.15% | 1.27% | 245% | |
| 12/31/2019 | $ 50,712 | 1.21% | 1.15% | 1.06% | 204% | |
| Institutional Class | ||||||
| 12/31/2023 | $576,759 | 0.81% | 0.80% | 1.48% | 217% | |
| 12/31/2022 | $480,338 | 0.80% | 0.80% | 1.23% | 217% | |
| 12/31/2021 | $632,681 | 0.80% | 0.80% | 1.22% | 227% | |
| 12/31/2020 | $575,877 | 0.80% | 0.80% | 1.51% | 245% | |
| 12/31/2019 | $624,356 | 0.81% | 0.80% | 1.42% | 204% | |
| (a) | Per share amounts are based upon average shares outstanding. |
| (b) | Total return does not include any fees or expenses of variable insurance contracts, if applicable. If such fees or expenses were included, the return shown would have been lower. |
| (c) | 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. |
| (d) | Amount was less than $0.01 per share. |
| (e) | Portfolio turnover is calculated at the Fund level. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER S&P MID CAP 400® INDEX FUND
EMPOWER S&P MID CAP 400® INDEX 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
net investment income |
From
net realized gains |
Total
Distributions |
Net
asset value, end of year |
Total
Return (b)(c) | |
| Investor Class | |||||||||
| 12/31/2023 | $17.30 | 0.23 | 2.49 | 2.72 | (0.08) | (0.83) | (0.91) | $19.11 | 15.76% |
| 12/31/2022 | $20.90 | 0.22 | (3.07) | (2.85) | (0.08) | (0.67) | (0.75) | $17.30 | (13.55%) |
| 12/31/2021 | $17.74 | 0.18 | 4.07 | 4.25 | (0.29) | (0.80) | (1.09) | $20.90 | 24.01% |
| 12/31/2020 | $16.65 | 0.18 | 1.93 | 2.11 | (0.16) | (0.86) | (1.02) | $17.74 | 13.10% |
| 12/31/2019 | $13.77 | 0.19 | 3.31 | 3.50 | (0.05) | (0.57) | (0.62) | $16.65 | 25.49% |
| Class L | |||||||||
| 12/31/2023 | $ 8.33 | 0.09 | 1.20 | 1.29 | (0.16) | (0.83) | (0.99) | $ 8.63 | 15.48% |
| 12/31/2022 | $10.63 | 0.10 | (1.58) | (1.48) | (0.15) | (0.67) | (0.82) | $ 8.33 | (13.74%) |
| 12/31/2021 | $ 9.48 | 0.07 | 2.17 | 2.24 | (0.29) | (0.80) | (1.09) | $10.63 | 23.71% |
| 12/31/2020 | $ 9.27 | 0.07 | 1.06 | 1.13 | (0.06) | (0.86) | (0.92) | $ 9.48 | 13.12% |
| 12/31/2019 | $ 7.95 | 0.09 | 1.90 | 1.99 | (0.10) | (0.57) | (0.67) | $ 9.27 | 25.14% |
| Institutional Class | |||||||||
| 12/31/2023 | $ 7.70 | 0.13 | 1.11 | 1.24 | (0.24) | (0.83) | (1.07) | $ 7.87 | 16.18% |
| 12/31/2022 | $ 9.89 | 0.13 | (1.46) | (1.33) | (0.19) | (0.67) | (0.86) | $ 7.70 | (13.18%) |
| 12/31/2021 | $ 8.92 | 0.12 | 2.05 | 2.17 | (0.40) | (0.80) | (1.20) | $ 9.89 | 24.45% |
| 12/31/2020 | $ 8.92 | 0.12 | 1.00 | 1.12 | (0.26) | (0.86) | (1.12) | $ 8.92 | 13.49% |
| 12/31/2019 | $ 7.68 | 0.14 | 1.84 | 1.98 | (0.17) | (0.57) | (0.74) | $ 8.92 | 25.96% |
| 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(d) | ||
| Supplemental Data and Ratios | ||||||
| Investor Class | ||||||
| 12/31/2023 | $637,220 | 0.55% | 0.55% | 1.25% | 24% | |
| 12/31/2022 | $779,826 | 0.55% | 0.55% | 1.22% | 27% | |
| 12/31/2021 | $615,786 | 0.56% | 0.55% | 0.88% | 25% | |
| 12/31/2020 | $240,113 | 0.56% | 0.55% | 1.17% | 27% | |
| 12/31/2019 | $252,895 | 0.55% | 0.55% | 1.22% | 16% | |
| Class L | ||||||
| 12/31/2023 | $ 45,572 | 0.84% | 0.80% | 1.00% | 24% | |
| 12/31/2022 | $ 44,374 | 0.87% | 0.80% | 1.11% | 27% | |
| 12/31/2021 | $ 630 | 1.54% | 0.80% | 0.60% | 25% | |
| 12/31/2020 | $ 542 | 0.96% | 0.80% | 0.87% | 27% | |
| 12/31/2019 | $ 13,067 | 1.08% | 0.80% | 1.00% | 16% | |
| Institutional Class | ||||||
| 12/31/2023 | $484,380 | 0.18% | 0.18% | 1.62% | 24% | |
| 12/31/2022 | $451,581 | 0.19% | 0.19% | 1.55% | 27% | |
| 12/31/2021 | $516,781 | 0.19% | 0.19% | 1.20% | 25% | |
| 12/31/2020 | $486,108 | 0.19% | 0.19% | 1.53% | 27% | |
| 12/31/2019 | $502,829 | 0.19% | 0.19% | 1.59% | 16% | |
| (a) | Per share amounts are based upon average shares outstanding. |
| (b) | Total return does not include any fees or expenses of variable insurance contracts, if applicable. If such fees or expenses were included, the return shown would have been lower. |
| (c) | 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. |
| (d) | Portfolio turnover is calculated at the Fund level. |
See Notes to Financial Statements.
Annual Report - December 31, 2023
EMPOWER FUNDS, INC.
EMPOWER T. ROWE PRICE MID CAP GROWTH FUND
EMPOWER T. ROWE PRICE MID CAP GROWTH 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
net investment income |
From
net realized gains |
Total
Distributions |
Net
asset value, end of year |
Total
Return(b)(c) | |
| Investor Class | |||||||||
| 12/31/2023 | $30.63 | (0.09) | 6.19 | 6.10 | — | (0.95) | (0.95) | $35.78 | 19.92% |
| 12/31/2022 | $40.74 | (0.13) | (9.16) | (9.29) | (0.01) | (0.81) | (0.82) | $30.63 | (22.79%) |
| 12/31/2021 | $37.22 | (0.23) | 5.75 | 5.52 | (0.07) | (1.93) | (2.00) | $40.74 | 14.83% |
| 12/31/2020 | $30.83 | (0.11) | 7.52 | 7.41 | — | (1.02) | (1.02) | $37.22 | 24.11% |
| 12/31/2019 | $24.00 | (0.02) | 7.52 | 7.50 | (0.00) (d) | (0.67) | (0.67) | $30.83 | 31.28% |
| Institutional Class | |||||||||
| 12/31/2023 | $ 5.88 | 0.01 | 1.18 | 1.19 | (0.02) | (0.95) | (0.97) | $ 6.10 | 20.35% |
| 12/31/2022 | $ 8.64 | (0.00) | (1.95) | (1.95) | (0.00) (d) | (0.81) | (0.81) | $ 5.88 | (22.46%) |
| 12/31/2021 | $ 9.25 | (0.02) | 1.43 | 1.41 | (0.09) | (1.93) | (2.02) | $ 8.64 | 15.26% |
| 12/31/2020 | $ 8.28 | (0.00) (d) | 2.01 | 2.01 | (0.02) | (1.02) | (1.04) | $ 9.25 | 24.52% |
| 12/31/2019 | $ 6.85 | 0.02 | 2.15 | 2.17 | (0.07) | (0.67) | (0.74) | $ 8.28 | 31.73% |
| 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(e) | ||
| Investor Class | ||||||
| 12/31/2023 | $ 908,374 | 1.02% | 1.02% | (0.28%) | 34% | |
| 12/31/2022 | $ 769,183 | 1.03% | 1.02% | (0.39%) | 39% | |
| 12/31/2021 | $ 868,785 | 1.02% | 1.02% | (0.57%) | 21% | |
| 12/31/2020 | $ 742,366 | 1.02% | 1.02% | (0.36%) | 28% | |
| 12/31/2019 | $ 787,200 | 1.02% | 1.02% | (0.07%) | 30% | |
| Institutional Class | ||||||
| 12/31/2023 | $ 900,361 | 0.66% | 0.66% | 0.08% | 34% | |
| 12/31/2022 | $ 784,969 | 0.67% | 0.67% | (0.05%) | 39% | |
| 12/31/2021 | $1,139,527 | 0.67% | 0.67% | (0.22%) | 21% | |
| 12/31/2020 | $1,222,584 | 0.67% | 0.67% | (0.01%) | 28% | |
| 12/31/2019 | $1,163,973 | 0.67% | 0.67% | 0.28% | 30% | |
| (a) | Per share amounts are based upon average shares outstanding. |
| (b) | Total return does not include any fees or expenses of variable insurance contracts, if applicable. If such fees or expenses were included, the return shown would have been lower. |
| (c) | 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. |
| (d) | Amount was less than $0.01 per share. |
| (e) | Portfolio turnover is calculated at the Fund level. |
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 Ariel Mid Cap Value Fund, Empower
Mid Cap Value Fund, Empower S&P Mid Cap 400® Index Fund, and T. Rowe Price Mid Cap Value Fund (each a Fund, collectively the Funds) are included herein. Each Fund is diversified as defined in the 1940 Act. The Funds are available as an
investment option to insurance company separate accounts for certain variable annuity contracts and variable life insurance policies, to individual retirement account custodians or trustees, to plan sponsors of qualified retirement plans, to college
savings programs, and to asset allocation funds that are a series of Empower Funds.
Investment
Objectives
Empower Ariel Mid Cap Value Fund -
seeks current long-term capital appreciation
Empower Mid
Cap Value Fund - seeks long-term growth of capital
Empower S&P Mid Cap 400® Index Fund -
seeks investment results, before fees and expenses, that track the total return of the common stocks that comprise the S&P MidCap 400® Index
Empower T. Rowe Price Mid Cap Growth Fund -
seeks long-term capital appreciation
The Funds
each offer two share classes referred to as Investor Class and Institutional Class shares except Empower S&P Mid Cap 400® Index Fund. Empower S&P Mid Cap 400® Index Fund offers three share classes, referred to as Investor
Class, Class L 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.
Annual Report - December 31, 2023
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.
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.
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 |
| 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 |
| Convertible 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 |
| Short Term Investments | Maturity date, credit quality and interest rates |
| Futures Contracts | Exchange traded close price |
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.
Annual Report - December 31, 2023
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.
As of December 31, 2023, all the investments in the Funds,
except the Empower T. Rowe Price Mid Cap Growth Fund, are valued using Level 1 inputs, except for Short Term Investments, which are valued using Level 2 inputs . The inputs used to value the Empower T. Rowe Price Mid Cap Growth Fund investments are
detailed in the following table. More information regarding the sector classifications, as applicable, are included in the Schedule of Investments.
Empower T. Rowe Price
Mid Cap Growth Fund
| Level 1 | Level 2 | Level 3 | Total | ||||
| Assets | |||||||
| Investments, at fair value: | |||||||
| Common Stock | |||||||
| Basic Materials | $ 9,209,475 | $ — | $ — | $ 9,209,475 | |||
| Communications | 81,433,844 | — | — | 81,433,844 | |||
| Consumer, Cyclical | 259,900,794 | 90,195 | — | 259,990,989 | |||
| Consumer, Non-cyclical | 584,524,944 | — | — | 584,524,944 | |||
| Energy | 77,897,190 | — | — | 77,897,190 | |||
| Financial | 111,896,316 | — | — | 111,896,316 | |||
| Industrial | 287,825,701 | — | — | 287,825,701 | |||
| Technology | 334,292,890 | — | — | 334,292,890 | |||
| 1,746,981,154 | 90,195 | — | 1,747,071,349 | ||||
| Convertible Preferred Stock | — | — | 1,390,693 | 1,390,693 | |||
| Short Term Investments | — | 8,017,332 | — | 8,017,332 | |||
| Total Assets | $ 1,746,981,154 | $ 8,107,527 | $ 1,390,693 | $ 1,756,479,374 |
Restricted
Securities
A Fund may invest in restricted
securities. A restricted security may have contractual restrictions on resale and is valued under methods approved by the Board of Directors reflecting fair value. Restricted securities are marked with an applicable footnote on the Schedule of
Investments and are reported in a table following the Schedule of Investments. As of December 31, 2023, the Empower T. Rowe Price Mid Cap Growth Fund invested in restricted securities.
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.
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.
Annual Report - December 31, 2023
Federal Income Taxes
and Distributions to Shareholders
Each Fund
intends 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. Each Fund files 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
a Fund, if any, are declared and paid semi-annually. Capital gain distributions of a Fund, if any, are declared and paid at least annually. Distributions are reinvested in additional shares of a Fund 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.
The tax character of distributions paid during the years ended
December 31, 2023 and 2022 were as follows:
| Empower Ariel Mid Cap Value Fund | |||
| 2023 | 2022 | ||
| Ordinary income | $2,909,691 | $6,069,755 | |
| Long-term capital gain | 13,623,185 | 28,394,315 | |
| $16,532,876 | $34,464,070 |
| Empower Mid Cap Value Fund | |||
| 2023 | 2022 | ||
| Ordinary income | $14,265,988 | $14,820,436 | |
| Long-term capital gain | 346,181 | 11,928,578 | |
| $14,612,169 | $26,749,014 |
| Empower S&P Mid Cap 400® Index Fund | |||
| 2023 | 2022 | ||
| Ordinary income | $20,105,323 | $16,353,492 | |
| Long-term capital gain | 73,926,905 | 66,366,719 | |
| $94,032,228 | $82,720,211 |
| Empower T. Rowe Price Mid Cap Growth Fund | |||
| 2023 | 2022 | ||
| Ordinary income | $1,799,208 | $372,969 | |
| Long-term capital gain | 146,927,303 | 118,000,130 | |
| $148,726,511 | $118,373,099 |
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, adjustments to the accounting treatment of partnerships, adjustments for real estate investment trusts and foreign currency reclassifications.
Annual Report - December 31, 2023
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 Ariel Mid Cap Value Fund | |
| Undistributed net investment income | $36,614 |
| Undistributed long-term capital gains | 10,762 |
| Capital loss carryforwards | — |
| Post-October losses | (979,955) |
| Net unrealized depreciation | (4,417,480) |
| Tax composition of capital | $(5,350,059) |
| Empower Mid Cap Value Fund | |
| Undistributed net investment income | $338,536 |
| Undistributed long-term capital gains | — |
| Capital loss carryforwards | — |
| Post-October losses | (3,050,799) |
| Net unrealized appreciation | 53,833,536 |
| Tax composition of capital | $51,121,273 |
| Empower S&P Mid Cap 400® Index Fund | |
| Undistributed net investment income | $— |
| Undistributed long-term capital gains | 17,597,299 |
| Capital loss carryforwards | — |
| Post-October losses | — |
| Net unrealized appreciation | 125,266,048 |
| Tax composition of capital | $142,863,347 |
| Empower T. Rowe Price Mid Cap Growth Fund | |
| Undistributed net investment income | $— |
| Undistributed long-term capital gains | 17,121,748 |
| Capital loss carryforwards | — |
| Post-October losses | — |
| Net unrealized appreciation | 338,606,406 |
| Tax composition of capital | $355,728,154 |
The following Funds have
elected to defer to the next fiscal year the following Post-October losses:
| Post-October Ordinary Losses | Post-October Capital Losses | ||
| Empower Ariel Mid Cap Value Fund | $— | $(979,955) | |
| Empower Mid Cap Value Fund | (2,164) | (3,048,635) | |
| Empower S&P Mid Cap 400® Index Fund | — | — | |
| Empower T. Rowe Price Mid Cap Growth Fund | — | — |
Annual Report - December 31, 2023
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 Ariel Mid Cap Value Fund | $121,572,392 | $10,092,831 | $(14,510,311) | $(4,417,480) | |||
| Empower Mid Cap Value Fund | 547,086,596 | 65,126,103 | (11,292,567) | 53,833,536 | |||
| Empower S&P Mid Cap 400® Index Fund | 1,048,054,704 | 208,944,956 | (83,678,908) | 125,266,048 | |||
| Empower T. Rowe Price Mid Cap Growth Fund | 1,417,872,968 | 407,880,887 | (69,274,481) | 338,606,406 |
2. DERIVATIVE FINANCIAL
INSTRUMENTS
Each Fund's investment objective allows it
to enter into various types of derivative contracts as outlined in the Fund's prospectus.
In pursuit of its investment objective, each Fund may seek to
use derivatives to increase or decrease its exposure to the following market risks:
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.
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 the Fund will 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 the Fund. 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.
Futures
Contracts
The Empower Mid Cap Value and the
Empower S&P Mid Cap 400 Index Fund 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 Fund(s) is/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 Fund(s) 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 Fund(s) enters 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.
The following tables represent the average month-end volume of
each Fund’s derivative transactions, if any, during the reporting period:
| Empower Mid Cap Value Fund | |
| Futures Contracts: | |
| Average long contracts | 4 |
| Average notional long | $1,070,532 |
Annual Report - December 31, 2023
| Empower S&P Mid Cap 400® Index Fund | |
| Futures Contracts: | |
| Average long contracts | 75 |
| Average notional long | $19,311,576 |
Derivative Financial Instruments Categorized by Risk Exposure
Valuation of derivative investments as of December 31, 2023 is
as follows:
Empower Mid Cap Value
Fund
| Liability Derivatives | ||||
| Risk Exposure | Statement of Assets and Liabilities Location | Fair Value | ||
| Equity contracts (futures contracts) | Net unrealized depreciation on futures contracts | $(109,272) (a) | ||
| (a)Includes cumulative depreciation 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 S&P Mid Cap
400® Index Fund
| Asset Derivatives | ||||
| Risk Exposure | Statement of Assets and Liabilities Location | Fair Value | ||
| Equity contracts (futures contracts) | Net unrealized appreciation on futures contracts | $20,962 (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. |
The effect of derivative investments for the year ended
December 31, 2023 is as follows:
Empower Mid Cap Value 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 | $972 | Net change in unrealized depreciation on futures contracts | $(110,069) | ||
Empower S&P Mid Cap 400® Index 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 | $1,216,504 | Net change in unrealized appreciation on futures contracts | $40,172 | ||
Annual Report - December 31, 2023
3. 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 Ariel Mid Cap Value Fund | 0.67% |
| Empower Mid Cap Value Fund | 0.78% up to $1 billion dollars |
| 0.73% over $1 billion dollars | |
| 0.68% over $2 billion dollars | |
| Empower S&P Mid Cap 400® Index Fund | 0.18% up to $1 billion dollars |
| 0.13% over $1 billion dollars | |
| 0.08% over $2 billion dollars | |
| Empower T. Rowe Price Mid Cap Growth Fund | 0.65% |
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 (if applicable) and certain extraordinary expenses (the “Expense Limit”). The agreement's 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 Ariel Mid Cap Value Fund | 0.70% |
| Empower Mid Cap Value Fund | 0.80% |
| Empower S&P Mid Cap 400® Index Fund | 0.20% |
| Empower T. Rowe Price Mid Cap Growth Fund | 0.67% |
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 Ariel Mid Cap
Value Fund
| Expires December 31, 2024 | Expires December 31, 2025 | Expires December 31, 2026 | Recoupment
of Past Reimbursed Fees by the Adviser | |||
| $52,011 | $122,678 | $97,890 | $0 |
Empower Mid Cap Value Fund
| Expires December 31, 2024 | Expires December 31, 2025 | Expires December 31, 2026 | Recoupment
of Past Reimbursed Fees by the Adviser | |||
| $80,764 | $83,564 | $83,119 | $0 |
Annual Report - December 31, 2023
Empower S&P Mid Cap
400® Index Fund
| Expires December 31, 2024 | Expires December 31, 2025 | Expires December 31, 2026 | Recoupment
of Past Reimbursed Fees by the Adviser | |||
| $33,593 | $49,011 | $15,559 | $0 |
Empower T. Rowe Price Mid Cap Growth Fund
| Expires December 31, 2024 | Expires December 31, 2025 | Expires December 31, 2026 | Recoupment
of Past Reimbursed Fees by the Adviser | |||
| $24,073 | $68,704 | $1,157 | $0 |
The Adviser and Empower Funds
entered into a sub-advisory agreement with and is responsible for compensating the Sub-Advisers below for their services:
Empower Ariel Mid Cap Value Fund - Ariel Investments,
LLC
Empower Mid Cap Value Fund - Goldman Sachs Asset
Management, L.P.
Empower S&P Mid Cap 400®
Index Fund - Irish Life Investment Managers Limited (ILIM), an affiliate of the Adviser and Empower of America and Empower of America and receives a monthly compensation for its services at the annual rate of 0.015% of the Fund's net assets.
Empower T. Rowe Price Mid Cap Growth Fund - T. Rowe Price
Investment Management, Inc.
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 each Fund and Class L shares of the Empower S&P Mid Cap 400® Index 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 the Funds. The Empower S&P Mid Cap 400® Index Fund has entered into a plan of distribution which provides for
compensation for distribution of Class L shares and for providing or arranging for the provision of services to Class L shareholders. The distribution plan provides for a maximum fee equal to an annual rate of 0.25% of the average daily net
assets of the Class L shares. Class L shares of the Empower T. Rowe Price Mid Cap Growth Fund ceased operations on April 22, 2022.
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.
4. 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 Ariel Mid Cap Value Fund | $23,190,428 | $36,153,773 | |
| Empower Mid Cap Value Fund | 1,177,132,030 | 1,221,094,928 | |
| Empower S&P Mid Cap 400® Index Fund | 295,280,208 | 559,314,781 | |
| Empower T. Rowe Price Mid Cap Growth Fund | 573,551,491 | 628,086,347 |
Annual Report - December 31, 2023
5. 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 Ariel Mid Cap Value Fund | $2,112,061 | $2,173,689 | |
| Empower Mid Cap Value Fund | 1,814,840 | 1,881,544 | |
| Empower S&P Mid Cap 400® Index Fund | 9,170,124 | 9,596,783 | |
| Empower T. Rowe Price Mid Cap Growth Fund | 7,712,013 | 8,017,332 | |
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.
| Empower Ariel Mid Cap Value Fund | Total (a) |
| Common Stocks | $2,173,689 |
| Total secured borrowings | $2,173,689 |
| Empower Mid Cap Value Fund | Total (a) |
| Common Stocks | $1,881,544 |
| Total secured borrowings | $1,881,544 |
| Empower S&P Mid Cap 400® Index Fund | Total (a) |
| Common Stocks | $9,596,783 |
| Total secured borrowings | $9,596,783 |
| Empower T. Rowe Price Mid Cap Growth Fund | Total (a) |
| Common Stocks | $8,017,332 |
| Total secured borrowings | $8,017,332 |
| (a) | The remaining contractual maturity of the secured borrowing related to each class of collateral is overnight and continuous. |
6. 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.
Annual Report - December 31, 2023
7. SUBSEQUENT EVENTS
Effective January 4, 2024, ECM and Empower became wholly-owned
subsidiaries of Empower Services Holdings US, LLC, which is a whole-owned subsidiary of Empower of America.
Effective January 12, 2024, the Federal Income Taxes and
Distributions to Shareholders section was amended and distributions to shareholders from net investment income of each Fund, if any, are declared and paid annually.
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 Ariel Mid Cap Value Fund, Empower Mid Cap Value Fund, Empower S&P Mid Cap 400® Index Fund, and Empower T. Rowe Price Mid Cap Growth 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 each of the two years in the period then
ended, the financial highlights for each of the five years in the period then ended, 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 each of the two years in the period then ended, and the financial highlights for each of the five years in the period
then ended 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 and brokers; when replies were not received from 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)
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 Ariel Mid Cap Value Fund | 90% |
| Empower Mid Cap Value Fund | 57% |
| Empower S&P Mid Cap 400® Index Fund | 74% |
| Empower T. Rowe Price Mid Cap Growth Fund | 100% |
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 Inflation-Protected Securities Fund, Empower Mid Cap Value Fund and other series of Empower Funds; and a Sub-Adviser of the Empower Core Bond Fund. Mr. Hillary has personal banking
accounts with an affiliate of J.P. Morgan Investment Management Inc., a Sub-Adviser of the Empower International Growth Fund, Empower Large Cap Growth 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 International Growth Fund, Empower Large Cap Growth 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 the Empower Emerging Markets Equity Fund, (2) a mutual fund advised by Massachusetts Financial Services Company, a Sub-Adviser of the Empower International
Value Fund, and (3) a mutual fund advised by Virtus Investment Advisers, Inc., an affiliate of Virtus Fixed Income Advisers, LLC, a Sub-Adviser of the Empower Multi-Sector Bond Fund. 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.empower.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