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
GREAT-WEST 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 and Chief Executive Officer
Great-West Funds, Inc.
8515 E. Orchard Road
Great-West 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: June 30, 2022
Item 1. REPORTS TO STOCKHOLDERS
GREAT-WEST FUNDS, INC.
Great-West Small Cap Value Fund
(Institutional Class and Investor Class)
Semi-Annual Report
June 30, 2022
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 Fund. Such offering is made only by the prospectus of the Fund, which includes details as to offering price and other information.
Summary of Investments by Sector as of June 30, 2022 (unaudited)
Sector | Percentage of Fund Investments |
Financial | 28.37% |
Industrial | 16.81 |
Consumer, Non-cyclical | 15.90 |
Consumer, Cyclical | 12.93 |
Energy | 8.20 |
Technology | 5.65 |
Basic Materials | 4.03 |
Communications | 3.01 |
Utilities | 2.21 |
Government Money Market Mutual Funds | 0.06 |
Short Term Investments | 2.83 |
Total | 100.00% |
Shareholder Expense Example (unaudited)
As a shareholder of the 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 the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (January 1, 2022 to June 30, 2022).
Actual Expenses
The first row of the 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 the table below provides information about hypothetical account values and hypothetical expenses based on the 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 the 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 the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the second row of the 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.
Beginning Account Value | Ending Account Value | Expenses Paid During Period* | |||
(01/01/22) | (06/30/22) | (01/01/22 – 06/30/22) | |||
Institutional Class | |||||
Actual | $1,000.00 | $ 830.80 | $3.36 | ||
Hypothetical (5% return before expenses) | $1,000.00 | $1,021.10 | $3.71 | ||
Investor Class | |||||
Actual | $1,000.00 | $ 829.60 | $4.94 | ||
Hypothetical (5% return before expenses) | $1,000.00 | $1,019.40 | $5.46 |
* Expenses are equal to the Fund's annualized expense ratio of 0.74% for the Institutional Class shares and 1.09% for the Investor Class shares, multiplied by the average account value over the period, multiplied by 181/365 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. |
GREAT-WEST FUNDS, INC.
GREAT-WEST SMALL CAP VALUE FUND Schedule of Investments
As of June 30, 2022 (Unaudited)
Shares | Fair Value | |
COMMON STOCK | ||
Basic Materials — 4.01% | ||
11,800 | AdvanSix Inc | $ 394,592 |
14,200 | American Vanguard Corp | 317,370 |
99,066 | Arconic Corp(a) | 2,778,801 |
12,894 | Ashland Global Holdings Inc | 1,328,727 |
46,691 | Cabot Corp | 2,978,419 |
8,100 | Commercial Metals Co | 268,110 |
9,700 | Compass Minerals International Inc | 343,283 |
51,200 | Ecovyst Inc | 504,320 |
44,100 | Glatfelter Corp | 303,408 |
3,800 | Hawkins Inc | 136,914 |
4,500 | HB Fuller Co | 270,945 |
22,056 | Ingevity Corp(a) | 1,392,616 |
2,900 | Innospec Inc | 277,791 |
6,000 | Kaiser Aluminum Corp | 474,540 |
25,200 | Mercer International Inc(a) | 331,380 |
1,100 | NewMarket Corp | 331,056 |
11,600 | Trinseo PLC | 446,136 |
86,020 | Valvoline Inc | 2,479,956 |
15,358,364 | ||
Communications — 3.00% | ||
38,700 | Casa Systems Inc(a) | 152,091 |
44,400 | CommScope Holding Co Inc(a) | 271,728 |
40,300 | Entravision Communications Corp Class A | 183,768 |
6,600 | ePlus Inc(a) | 350,592 |
104,389 | Gray Television Inc | 1,763,130 |
19,500 | NETGEAR Inc(a) | 361,140 |
4,700 | Preformed Line Products Co | 289,050 |
32,524 | Scholastic Corp | 1,169,888 |
45,900 | Stagwell Inc(a) | 249,237 |
5,500 | TEGNA Inc | 115,335 |
45,779 | Thryv Holdings Inc(a) | 1,024,992 |
53,530 | TripAdvisor Inc(a) | 952,834 |
69,573 | United States Cellular Corp(a) | 2,014,834 |
194,805 | Viavi Solutions Inc(a) | 2,577,270 |
11,475,889 | ||
Consumer, Cyclical — 12.86% | ||
16,400 | Adient PLC(a) | 485,932 |
16,900 | Allison Transmission Holdings Inc | 649,805 |
22,000 | American Eagle Outfitters Inc | 245,960 |
3,500 | Asbury Automotive Group Inc(a) | 592,690 |
9,300 | Bassett Furniture Industries Inc(a) | 168,516 |
23,600 | Big 5 Sporting Goods Corp(b) | 264,556 |
5,200 | BlueLinx Holdings Inc(a) | 347,412 |
14,600 | Brinker International Inc(a) | 321,638 |
33,289 | Brunswick Corp | 2,176,435 |
29,700 | Cato Corp Class A(a) | 344,817 |
10,500 | Century Communities Inc | 472,185 |
10,777 | Churchill Downs Inc | 2,064,119 |
31,322 | Crocs Inc(a) | 1,524,442 |
120,907 | Dana Inc | 1,701,161 |
Shares | Fair Value | |
Consumer, Cyclical — (continued) | ||
12,200 | Designer Brands Inc Class A | $ 159,332 |
2,200 | Dine Brands Global Inc | 143,176 |
23,700 | El Pollo Loco Holdings Inc(a) | 233,208 |
26,500 | Ethan Allen Interiors Inc(a) | 535,565 |
16,900 | Foot Locker Inc | 426,725 |
16,600 | Fossil Group Inc(a) | 85,822 |
5,000 | Franchise Group Inc | 175,350 |
18,900 | G-III Apparel Group Ltd(a) | 382,347 |
10,300 | Genesco Inc(a) | 514,073 |
6,400 | Green Brick Partners Inc(a) | 125,248 |
3,700 | Group 1 Automotive Inc | 628,260 |
19,800 | Haverty Furniture Cos Inc(b) | 458,964 |
33,200 | Healthcare Services Group Inc | 578,012 |
11,000 | Hibbett Inc | 480,810 |
20,500 | Hooker Furnishings Corp | 318,775 |
38,774 | IAA Inc(a) | 1,270,624 |
22,300 | Interface Inc | 279,642 |
20,000 | International Game Technology PLC | 371,200 |
6,000 | Jack in the Box Inc | 336,360 |
9,100 | Johnson Outdoors Inc Class A | 556,556 |
66,256 | KB Home | 1,885,646 |
57,300 | Kimball International Inc Class B(a) | 439,491 |
68,400 | Kirkland's Inc(a) | 240,768 |
17,400 | Lakeland Industries Inc(a) | 267,264 |
23,600 | La-Z-Boy Inc | 559,556 |
10,681 | LCI Industries | 1,194,990 |
4,100 | LGI Homes Inc(a) | 356,290 |
52,340 | Liberty Media Corp-Liberty Braves(a) | 1,256,160 |
9,900 | LL Flooring Holdings Inc(a) | 92,763 |
13,300 | M/I Homes Inc(a) | 527,478 |
8,300 | MarineMax Inc(a) | 299,796 |
19,590 | Marriott Vacations Worldwide Corp | 2,276,358 |
6,900 | Meritage Homes Corp(a) | 500,250 |
16,300 | Meritor Inc(a) | 592,179 |
30,400 | Mesa Air Group Inc(a) | 66,576 |
83,625 | Methode Electronics Inc | 3,097,470 |
64,120 | Miller Industries Inc | 1,453,600 |
7,200 | Nu Skin Enterprises Inc Class A | 311,760 |
14,600 | ODP Corp(a) | 441,504 |
15,700 | OneWater Marine Inc Class A(a) | 518,885 |
9,800 | PC Connection Inc | 431,690 |
11,600 | PetMed Express Inc(b) | 230,840 |
21,100 | Potbelly Corp(a) | 119,215 |
26,200 | Resideo Technologies Inc(a) | 508,804 |
3,800 | Rocky Brands Inc | 129,884 |
12,500 | Rush Enterprises Inc Class A | 602,500 |
16,500 | ScanSource Inc(a) | 513,810 |
13,443 | Scotts Miracle-Gro Co | 1,061,863 |
48,299 | Skyline Champion Corp(a) | 2,290,339 |
2,300 | Sleep Number Corp(a) | 71,185 |
13,000 | Sonic Automotive Inc Class A | 476,190 |
14,700 | Spirit Airlines Inc(a)(b) | 350,448 |
35,400 | Steelcase Inc Class A | 379,842 |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
GREAT-WEST SMALL CAP VALUE FUND Schedule of Investments
As of June 30, 2022 (Unaudited)
Shares | Fair Value | |
Consumer, Cyclical — (continued) | ||
18,000 | Taylor Morrison Home Corp(a) | $ 420,480 |
12,100 | Tilly's Inc Class A | 84,942 |
8,800 | Travel + Leisure Co | 341,616 |
30,200 | Tri Pointe Homes Inc(a) | 509,474 |
46,800 | Tupperware Brands Corp(a) | 296,712 |
91,467 | Urban Outfitters Inc(a) | 1,706,774 |
87,200 | Vera Bradley Inc(a) | 378,448 |
4,400 | Vista Outdoor Inc(a) | 122,760 |
22,985 | VSE Corp | 863,776 |
95,096 | Wabash National Corp(b) | 1,291,404 |
7,200 | World Fuel Services Corp | 147,312 |
5,500 | Zumiez Inc(a) | 143,000 |
49,271,809 | ||
Consumer, Non-Cyclical — 15.81% | ||
31,700 | Aaron's Co Inc | 461,235 |
7,500 | ABM Industries Inc | 325,650 |
76,800 | ACCO Brands Corp(a) | 501,504 |
105,918 | Alta Equipment Group Inc(a) | 950,084 |
15,991 | AMN Healthcare Services Inc(a) | 1,754,373 |
49,253 | Andersons Inc | 1,624,857 |
14,600 | B&G Foods Inc(b) | 347,188 |
53,522 | BellRing Brands Inc(a) | 1,332,163 |
11,600 | BGSF Inc | 143,376 |
6,400 | Brink's Co | 388,544 |
16,500 | Cass Information Systems Inc | 557,700 |
7,100 | CBIZ Inc(a) | 283,716 |
12,500 | Central Garden & Pet Co(a) | 530,250 |
11,289 | Charles River Laboratories International Inc(a) | 2,415,507 |
15,451 | CONMED Corp | 1,479,588 |
103,552 | Custom Truck One Source Inc(a) | 579,891 |
30,202 | Embecta Corp(a) | 764,715 |
98,638 | Emerald Holding Inc(a) | 401,457 |
16,100 | Emergent BioSolutions Inc(a) | 499,744 |
27,900 | Ennis Inc | 564,417 |
16,311 | Euronet Worldwide Inc(a) | 1,640,724 |
2,800 | FTI Consulting Inc(a) | 506,380 |
17,300 | H&R Block Inc | 611,036 |
34,400 | Hanger Inc(a) | 492,608 |
16,900 | Heidrick & Struggles International Inc | 546,884 |
40,959 | Herc Holdings Inc | 3,692,454 |
54,756 | Inmode Ltd(a) | 1,227,082 |
24,562 | Insperity Inc | 2,452,024 |
7,302 | J & J Snack Foods Corp | 1,019,797 |
15,227 | Jazz Pharmaceuticals PLC(a) | 2,375,564 |
32,036 | John Wiley & Sons Inc Class A | 1,530,039 |
19,200 | Kelly Services Inc Class A | 380,736 |
61,707 | Korn Ferry | 3,580,240 |
57,947 | Lantheus Holdings Inc(a) | 3,826,240 |
1,700 | Medifast Inc | 306,867 |
32,500 | MoneyGram International Inc(a) | 325,000 |
15,000 | Natural Grocers by Vitamin Cottage Inc | 239,250 |
67,122 | Nomad Foods Ltd(a) | 1,341,769 |
Shares | Fair Value | |
Consumer, Non-Cyclical — (continued) | ||
82,527 | Option Care Health Inc(a) | $ 2,293,425 |
6,000 | Patterson Cos Inc | 181,800 |
5,600 | Prestige Consumer Healthcare Inc(a) | 329,280 |
92,375 | Quanex Building Products Corp | 2,101,531 |
18,800 | Rent-A-Center Inc | 365,660 |
37,300 | Resources Connection Inc(a) | 759,801 |
30,471 | Spectrum Brands Holdings Inc | 2,499,231 |
76,863 | Supernus Pharmaceuticals Inc(a) | 2,222,878 |
13,200 | Taro Pharmaceutical Industries Ltd(a) | 477,312 |
25,400 | TrueBlue Inc(a) | 454,660 |
13,452 | United Therapeutics Corp(a) | 3,169,829 |
5,700 | USANA Health Sciences Inc(a) | 412,452 |
58,500 | Vanda Pharmaceuticals Inc(a) | 637,650 |
16,200 | Vectrus Inc(a) | 542,052 |
4,708 | WEX Inc(a) | 732,377 |
224,644 | Whole Earth Brands Inc(a) | 1,392,793 |
60,573,384 | ||
Energy — 8.15% | ||
14,400 | Amplify Energy Corp(a) | 94,176 |
109,159 | Antero Resources Corp(a) | 3,345,723 |
49,100 | Berry Corp | 374,142 |
65,845 | California Resources Corp | 2,535,033 |
50,800 | Centennial Resource Development Inc Class A(a) | 303,784 |
188,977 | ChampionX Corp | 3,751,193 |
7,300 | Civitas Resources Inc | 381,717 |
9,400 | Core Laboratories NV | 186,214 |
5,400 | CVR Energy Inc | 180,900 |
18,700 | Dril-Quip Inc(a) | 482,460 |
61,171 | EQT Corp | 2,104,282 |
71,500 | Equitrans Midstream Corp | 454,740 |
42,200 | Expro Group Holdings NV(a) | 486,144 |
22,800 | FutureFuel Corp | 165,984 |
73,000 | Helix Energy Solutions Group Inc(a) | 226,300 |
5,400 | HF Sinclair Corp(a) | 243,864 |
70,300 | Kosmos Energy Ltd(a) | 435,157 |
25,719 | Laredo Petroleum Inc(a) | 1,773,068 |
30,600 | Liberty Energy Inc(a) | 390,456 |
42,900 | Matrix Service Co(a) | 217,074 |
84,784 | MRC Global Inc(a) | 844,449 |
14,300 | Murphy Oil Corp | 431,717 |
76,400 | National Energy Services Reunited Corp(a) | 517,992 |
96,900 | Newpark Resources Inc(a) | 299,421 |
31,378 | NextEra Energy Partners LP(b) | 2,326,993 |
54,900 | NexTier Oilfield Solutions Inc(a) | 522,099 |
138,790 | Northern Oil and Gas Inc | 3,505,835 |
3,800 | Oasis Petroleum Inc(a) | 462,270 |
30,900 | Oil States International Inc(a) | 167,478 |
21,500 | Par Pacific Holdings Inc(a) | 335,185 |
6,700 | PDC Energy Inc(a) | 412,787 |
19,500 | ProPetro Holding Corp(a) | 195,000 |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
GREAT-WEST SMALL CAP VALUE FUND Schedule of Investments
As of June 30, 2022 (Unaudited)
Shares | Fair Value | |
Energy — (continued) | ||
17,200 | Range Resources Corp(a) | $ 425,700 |
10,200 | Ranger Oil Corp Class A(a) | 335,274 |
4,100 | REX American Resources Corp(a) | 347,680 |
48,200 | Select Energy Services Inc Class A(a) | 328,724 |
30,200 | Solaris Oilfield Infrastructure Inc Class A | 328,576 |
17,500 | Talos Energy Inc(a) | 270,725 |
27,400 | TechnipFMC PLC(a) | 184,402 |
9,500 | Vertex Energy Inc(a)(b) | 99,940 |
9,600 | Warrior Met Coal Inc | 293,856 |
6,800 | Whiting Petroleum Corp | 462,604 |
31,231,118 | ||
Financial — 28.22% | ||
10,100 | 1st Source Corp | 458,540 |
34,399 | Agree Realty Corp REIT | 2,481,200 |
2,500 | Alexander's Inc REIT(a) | 555,400 |
11,400 | Amalgamated Financial Corp | 225,492 |
39,100 | Ambac Financial Group Inc(a) | 443,785 |
14,700 | American Equity Investment Life Holding Co | 537,579 |
70,590 | Ameris Bancorp | 2,836,306 |
53,300 | Arlington Asset Investment Corp Class A REIT(a) | 173,225 |
7,900 | Artisan Partners Asset Management Inc Class A | 281,003 |
28,300 | Associated Banc-Corp | 516,758 |
9,400 | Assured Guaranty Ltd | 524,426 |
77,198 | Atlantic Union Bankshares Corp | 2,618,556 |
9,000 | Axis Capital Holdings Ltd | 513,810 |
7,400 | Bank of Marin Bancorp | 235,172 |
13,600 | BankUnited Inc | 483,752 |
7,100 | Banner Corp | 399,091 |
11,800 | BCB Bancorp Inc | 200,954 |
22,300 | Berkshire Hills Bancorp Inc | 552,371 |
21,200 | Blue Foundry Bancorp(a) | 254,188 |
36,500 | Braemar Hotels & Resorts Inc REIT | 156,585 |
12,000 | Bridgewater Bancshares Inc(a) | 193,680 |
5,100 | Brighthouse Financial Inc(a) | 209,202 |
17,000 | Brookline Bancorp Inc | 226,270 |
117,433 | Cadence Bank | 2,757,327 |
7,600 | Camden National Corp | 334,780 |
76,186 | Cannae Holdings Inc(a) | 1,473,437 |
11,800 | Carter Bankshares Inc(a) | 155,760 |
11,000 | Cathay General Bancorp | 430,650 |
15,100 | Central Pacific Financial Corp | 323,895 |
8,400 | Central Valley Community Bancorp | 121,800 |
7,600 | Civista Bancshares Inc | 161,576 |
7,300 | CNB Financial Corp | 176,587 |
28,600 | CNO Financial Group Inc | 517,374 |
14,900 | Columbia Banking System Inc | 426,885 |
4,800 | Community Financial Corp | 177,024 |
8,100 | Community Trust Bancorp Inc(a) | 327,564 |
Shares | Fair Value | |
Financial — (continued) | ||
22,300 | Cowen Inc Class A | $ 528,287 |
12,600 | CrossFirst Bankshares Inc(a) | 166,320 |
47,428 | CubeSmart REIT | 2,026,124 |
125,110 | CVB Financial Corp | 3,103,979 |
2,000 | Diamond Hill Investment Group Inc | 347,280 |
10,900 | Eagle Bancorp Inc | 516,769 |
68,564 | Employers Holdings Inc | 2,872,146 |
2,600 | Enstar Group Ltd(a) | 556,348 |
4,000 | Enterprise Financial Services Corp | 166,000 |
16,100 | Essent Group Ltd | 626,290 |
1,300 | Evercore Inc Class A | 121,693 |
10,800 | FB Financial Corp | 423,576 |
24,571 | Federal Agricultural Mortgage Corp Class C(a) | 2,399,358 |
14,700 | Federated Hermes Inc Class B(a) | 467,313 |
6,200 | Financial Institutions Inc | 161,324 |
22,737 | First American Financial Corp | 1,203,242 |
32,700 | First BanCorp | 422,157 |
24,600 | First Busey Corp | 562,110 |
6,400 | First Business Financial Services Inc | 199,616 |
14,900 | First Financial Bancorp | 289,060 |
9,600 | First Financial Corp(a) | 427,200 |
14,900 | First Hawaiian Inc | 338,379 |
8,100 | First Internet Bancorp | 298,242 |
11,289 | First Interstate BancSystem Inc Class A | 430,224 |
3,296 | First Merchants Corp | 117,404 |
6,200 | First Mid Bancshares Inc | 221,154 |
17,100 | First of Long Island Corp | 299,763 |
28,000 | Flushing Financial Corp(a) | 595,280 |
52,500 | FNB Corp | 570,150 |
5,600 | FS Bancorp Inc | 160,776 |
29,400 | Fulton Financial Corp | 424,830 |
15,200 | Granite Point Mortgage Trust Inc REIT(a) | 145,464 |
20,800 | Great Ajax Corp REIT | 199,472 |
5,700 | Great Southern Bancorp Inc | 333,792 |
31,100 | Greenhill & Co Inc | 286,742 |
9,100 | Hancock Whitney Corp(a) | 403,403 |
22,800 | Hanmi Financial Corp(a) | 511,632 |
2,000 | Hanover Insurance Group Inc | 292,500 |
8,600 | Heartland Financial USA Inc | 357,244 |
10,900 | Heritage Financial Corp | 274,244 |
5,100 | Home Bancorp Inc | 174,063 |
129,304 | Home BancShares Inc | 2,685,644 |
9,800 | HomeStreet Inc | 339,766 |
40,400 | Hope Bancorp Inc | 559,136 |
8,500 | Horace Mann Educators Corp | 326,230 |
21,300 | Horizon Bancorp Inc | 371,046 |
23,392 | Independent Bank Corp | 594,877 |
10,000 | International Bancshares Corp | 400,800 |
89,120 | International Money Express Inc(a) | 1,824,286 |
8,300 | Investar Holding Corp | 181,770 |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
GREAT-WEST SMALL CAP VALUE FUND Schedule of Investments
As of June 30, 2022 (Unaudited)
Shares | Fair Value | |
Financial — (continued) | ||
12,400 | James River Group Holdings Ltd | $ 307,272 |
5,000 | Kemper Corp | 239,500 |
29,500 | Lakeland Bancorp Inc | 431,290 |
14,600 | Luther Burbank Corp | 190,530 |
20,300 | Macatawa Bank Corp | 179,452 |
27,872 | McGrath RentCorp | 2,118,272 |
7,400 | Mercantile Bank Corp | 236,430 |
67,364 | Meta Financial Group Inc | 2,604,966 |
9,575 | MFA Financial Inc REIT | 102,931 |
14,900 | Midland States Bancorp Inc | 358,196 |
6,100 | MidWestOne Financial Group Inc | 181,292 |
4,000 | National Bankshares Inc | 125,600 |
2,000 | National Western Life Group Inc Class A | 405,400 |
33,600 | Navient Corp | 470,064 |
91,300 | New York Mortgage Trust Inc REIT | 251,988 |
7,300 | Nicolet Bankshares Inc(a) | 528,082 |
32,100 | NMI Holdings Inc Class A(a) | 534,465 |
4,000 | Northeast Bank | 146,120 |
15,900 | Northeast Community Bancorp Inc | 187,143 |
15,400 | Northfield Bancorp Inc | 200,662 |
4,400 | Northrim BanCorp Inc | 177,144 |
186,606 | OceanFirst Financial Corp | 3,569,773 |
19,509 | Old National Bancorp | 288,538 |
7,600 | Orrstown Financial Services Inc | 183,692 |
9,800 | PacWest Bancorp | 261,268 |
12,100 | PCB Bancorp | 226,028 |
7,500 | Peapack-Gladstone Financial Corp | 222,750 |
24,500 | Pebblebrook Hotel Trust REIT | 405,965 |
3,800 | Peoples Bancorp Inc | 101,080 |
36,400 | Perella Weinberg Partners | 212,212 |
38,385 | Pinnacle Financial Partners Inc | 2,775,619 |
52,713 | Popular Inc | 4,055,211 |
44,611 | PotlatchDeltic Corp REIT | 1,971,360 |
5,600 | Preferred Bank | 380,912 |
15,400 | Premier Financial Corp | 390,390 |
13,800 | Primis Financial Corp | 188,094 |
13,800 | ProAssurance Corp | 326,094 |
28,525 | Prosperity Bancshares Inc | 1,947,402 |
14,900 | Provident Financial Services Inc | 331,674 |
25,500 | Radian Group Inc | 501,075 |
10,800 | RBB Bancorp | 223,236 |
22,800 | RE/MAX Holdings Inc Class A | 559,056 |
14,200 | Renasant Corp | 409,102 |
6,200 | Republic Bancorp Inc Class A | 299,150 |
28,990 | Rexford Industrial Realty Inc REIT | 1,669,534 |
22,000 | RMR Group Inc Class A | 623,700 |
16,000 | S&T Bancorp Inc | 438,880 |
4,000 | Safety Insurance Group Inc | 388,400 |
51,300 | Seritage Growth Properties REIT Class A(a)(b) | 267,273 |
Shares | Fair Value | |
Financial — (continued) | ||
6,500 | Sierra Bancorp | $ 141,245 |
5,500 | Simmons First National Corp Class A | 116,930 |
92,000 | SiriusPoint Ltd(a) | 498,640 |
28,883 | SouthState Corp | 2,228,323 |
72,051 | STAG Industrial Inc REIT | 2,224,935 |
34,178 | Stifel Financial Corp | 1,914,652 |
6,300 | Territorial Bancorp Inc | 131,355 |
10,800 | Texas Capital Bancshares Inc(a) | 568,512 |
11,200 | Towne Bank | 304,080 |
13,800 | TPG RE Finance Trust Inc REIT | 124,338 |
21,000 | Trean Insurance Group Inc(a) | 130,830 |
4,700 | TriCo Bancshares | 214,508 |
46,426 | Triumph Bancorp Inc(a) | 2,904,411 |
13,300 | TrustCo Bank Corp NY | 410,172 |
18,500 | Trustmark Corp | 540,015 |
6,100 | Univest Financial Corp | 155,184 |
15,600 | Victory Capital Holdings Inc Class A | 375,960 |
1,080 | Virtus Investment Partners Inc | 184,702 |
19,000 | Washington Federal Inc | 570,380 |
3,700 | Washington Trust Bancorp Inc | 178,969 |
17,700 | Waterstone Financial Inc | 301,785 |
7,500 | Webster Financial Corp | 316,125 |
360 | White Mountains Insurance Group Ltd | 448,607 |
14,900 | William Penn Bancorp | 174,330 |
47,255 | Wintrust Financial Corp | 3,787,488 |
54,901 | WSFS Financial Corp | 2,200,981 |
108,108,233 | ||
Industrial — 16.72% | ||
12,600 | AAR Corp(a) | 527,184 |
19,602 | Advanced Energy Industries Inc | 1,430,554 |
47,788 | AECOM | 3,116,733 |
30,452 | Albany International Corp Class A | 2,399,313 |
56,859 | Altra Industrial Motion Corp | 2,004,280 |
60,013 | Arcosa Inc | 2,786,404 |
24,698 | Atkore Inc(a) | 2,050,181 |
12,300 | Avnet Inc | 527,424 |
13,600 | AZZ Inc | 555,152 |
7,600 | Barnes Group Inc | 236,664 |
11,300 | Belden Inc | 601,951 |
6,409 | Boise Cascade Co | 381,271 |
7,700 | Cactus Inc Class A | 310,079 |
3,500 | Chase Corp | 272,335 |
29,800 | Clean Harbors Inc(a) | 2,612,566 |
69,760 | Columbus McKinnon Corp | 1,979,091 |
3,700 | Comfort Systems USA Inc | 307,655 |
44,600 | Comtech Telecommunications Corp | 404,522 |
9,000 | DXP Enterprises Inc(a) | 275,670 |
3,100 | Encore Wire Corp | 322,152 |
21,400 | Energizer Holdings Inc | 606,690 |
29,200 | Enerpac Tool Group Corp | 555,384 |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
GREAT-WEST SMALL CAP VALUE FUND Schedule of Investments
As of June 30, 2022 (Unaudited)
Shares | Fair Value | |
Industrial — (continued) | ||
8,600 | EnerSys | $ 507,056 |
6,100 | EnPro Industries Inc | 499,773 |
16,900 | Flowserve Corp | 483,847 |
20,000 | Fluor Corp(a) | 486,800 |
3,900 | Forward Air Corp | 358,644 |
146,839 | Genco Shipping & Trading Ltd | 2,836,930 |
69,600 | GrafTech International Ltd | 492,072 |
6,900 | Graham Corp | 47,748 |
39,500 | Great Lakes Dredge & Dock Corp(a) | 517,845 |
13,200 | Greenbrier Cos Inc | 475,068 |
7,500 | Griffon Corp | 210,225 |
32,000 | Heartland Express Inc | 445,120 |
14,000 | Hillenbrand Inc | 573,440 |
14,600 | Hyster-Yale Materials Handling Inc | 470,412 |
167,347 | Janus International Group Inc(a) | 1,511,143 |
23,900 | JELD-WEN Holding Inc(a) | 348,701 |
19,087 | Kadant Inc | 3,480,514 |
91,886 | Kimball Electronics Inc(a) | 1,846,909 |
2,900 | L B Foster Co Class A(a) | 37,323 |
6,400 | Littelfuse Inc | 1,625,856 |
6,400 | Masonite International Corp(a) | 491,712 |
3,400 | Matson Inc | 247,792 |
106,093 | MDU Resources Group Inc | 2,863,450 |
6,700 | Moog Inc Class A | 531,913 |
5,700 | Mueller Industries Inc | 303,753 |
21,900 | Mueller Water Products Inc Class A | 256,887 |
3,300 | MYR Group Inc(a) | 290,829 |
8,500 | National Presto Industries Inc | 557,940 |
1,900 | Plexus Corp(a) | 149,150 |
11,200 | Powell Industries Inc | 261,744 |
16,400 | Primoris Services Corp | 356,864 |
9,200 | Proto Labs Inc(a) | 440,128 |
102,384 | Pure Cycle Corp(a) | 1,079,127 |
5,300 | Ryerson Holding Corp | 112,837 |
15,200 | Sanmina Corp(a) | 619,096 |
7,400 | Schneider National Inc Class B | 165,612 |
10,400 | Sterling Infrastructure Inc(a) | 227,968 |
22,989 | TD SYNNEX Corp | 2,094,298 |
33,500 | Thermon Group Holdings Inc(a) | 470,675 |
29,000 | Tredegar Corp | 290,000 |
4,800 | TriMas Corp | 132,912 |
162,597 | TTM Technologies Inc(a) | 2,032,463 |
37,600 | Tutor Perini Corp(a) | 330,128 |
36,478 | UFP Industries Inc | 2,485,611 |
23,428 | UFP Technologies Inc(a) | 1,864,166 |
33,000 | Vishay Intertechnology Inc | 588,060 |
131,008 | Vontier Corp | 3,011,874 |
5,800 | Worthington Industries Inc | 255,780 |
64,031,450 | ||
Technology — 5.62% | ||
164,989 | Allscripts Healthcare Solutions Inc(a) | 2,446,787 |
5,263 | BM Technologies Inc(a) | 30,999 |
Shares | Fair Value | |
Technology — (continued) | ||
17,121 | Concentrix Corp | $ 2,322,292 |
42,676 | CSG Systems International Inc | 2,546,904 |
140,600 | Diebold Nixdorf Inc(a) | 319,162 |
5,300 | Diodes Inc(a) | 342,221 |
7,900 | Ebix Inc(b) | 133,510 |
5,900 | Insight Enterprises Inc(a) | 509,052 |
3,200 | ManTech International Corp Class A | 305,440 |
20,400 | Photronics Inc(a) | 397,392 |
134,910 | Rambus Inc(a) | 2,899,216 |
31,761 | Science Applications International Corp | 2,956,949 |
55,802 | Super Micro Computer Inc(a) | 2,251,611 |
32,800 | Telos Corp(a) | 265,024 |
45,591 | Tower Semiconductor Ltd(a) | 2,105,392 |
104,763 | Unisys Corp(a) | 1,260,299 |
12,000 | Verra Mobility Corp(a) | 188,520 |
17,600 | Xperi Holding Corp | 253,968 |
21,534,738 | ||
Utilities — 2.20% | ||
40,812 | ALLETE Inc | 2,398,930 |
12,900 | Avista Corp | 561,279 |
13,600 | Hawaiian Electric Industries Inc | 556,240 |
25,626 | NorthWestern Corp | 1,510,140 |
10,400 | Otter Tail Corp(a) | 698,152 |
9,300 | PNM Resources Inc | 444,354 |
10,600 | Portland General Electric Co | 512,298 |
17,000 | South Jersey Industries Inc | 580,380 |
6,100 | Southwest Gas Holdings Inc | 531,188 |
8,600 | Spire Inc | 639,582 |
8,432,543 | ||
TOTAL COMMON STOCK — 96.59% (Cost $347,499,494) | $370,017,528 | |
GOVERNMENT MONEY MARKET MUTUAL FUNDS | ||
137,000 | Dreyfus Institutional Preferred Government Plus Money Market Fund Class SL(c), 1.46%(d) | 137,000 |
88,000 | Goldman Sachs Financial Square Government Fund Institutional Class(c), 1.38%(d) | 88,000 |
TOTAL GOVERNMENT MONEY MARKET MUTUAL FUNDS — 0.06% (Cost $225,000) | $ 225,000 |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
GREAT-WEST SMALL CAP VALUE FUND Schedule of Investments
As of June 30, 2022 (Unaudited)
Principal Amount | Fair Value | |
SHORT TERM INVESTMENTS | ||
U.S. Government Agency Bonds and Notes — 1.80% | ||
$6,900,000 | Federal Home Loan Bank(e) 1.01%, 07/01/2022 | $ 6,900,000 |
Repurchase Agreements — 1.01% | ||
971,502 | Undivided interest of 0.89% in a repurchase agreement (principal amount/value $108,943,097 with a maturity value of $108,947,788) with RBC Capital Markets Corp, 1.55%, dated 6/30/22 to be repurchased at $971,502 on 7/1/22 collateralized by U.S. Treasury securities and various U.S. Government Agency securities, 0.00% - 6.88%, 8/16/22 - 5/20/52, with a value of $111,121,960.(c) | 971,502 |
971,502 | Undivided interest of 0.90% in a repurchase agreement (principal amount/value $108,359,862 with a maturity value of $108,364,527) with Bank of America Securities Inc, 1.55%, dated 6/30/22 to be repurchased at $971,502 on 7/1/22 collateralized by Government National Mortgage Association securities, 1.00% - 8.50%, 1/20/24 - 6/20/52, with a value of $110,527,059.(c) | 971,502 |
950,990 | Undivided interest of 2.03% in a repurchase agreement (principal amount/value $46,928,436 with a maturity value of $46,930,457) with Bank of Montreal, 1.55%, dated 6/30/22 to be repurchased at $950,990 on 7/1/22 collateralized by various U.S. Government Agency securities, 2.00% - 5.50%, 5/1/35 - 5/20/72, with a value of $47,867,005.(c) | 950,990 |
Principal Amount | Fair Value | |
Repurchase Agreements — (continued) | ||
$ 971,502 | Undivided interest of 26.84% in a repurchase agreement (principal amount/value $3,622,930 with a maturity value of $3,623,086) with HSBC Securities (USA) Inc, 1.55%, dated 6/30/22 to be repurchased at $971,502 on 7/1/22 collateralized by various U.S. Government Agency securities, 2.50% - 4.50%, 10/1/26 - 6/1/52, with a value of $3,695,389.(c) | $ 971,502 |
3,865,496 | ||
TOTAL SHORT TERM INVESTMENTS — 2.81% (Cost $10,765,496) | $ 10,765,496 | |
TOTAL INVESTMENTS — 99.46% (Cost $358,489,990) | $381,008,024 | |
OTHER ASSETS & LIABILITIES, NET — 0.54% | $ 2,086,617 | |
TOTAL NET ASSETS — 100.00% | $383,094,641 |
(a) | Non-income producing security. |
(b) | All or a portion of the security is on loan at June 30, 2022. |
(c) | Collateral received for securities on loan. |
(d) | Rate shown is the 7-day yield as of June 30, 2022. |
(e) | Zero coupon bond; the interest rate shown is the effective yield on date of purchase. |
LP | Limited Partnership |
REIT | Real Estate Investment Trust |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
Statement of Assets and Liabilities
As of June 30, 2022 (Unaudited)
Great-West Small Cap Value Fund | |
ASSETS: | |
Investments in securities, fair value (including $4,006,791 of securities on loan)(a) | $377,142,528 |
Repurchase agreements, fair value(b) | 3,865,496 |
Cash | 6,590,324 |
Dividends receivable | 388,210 |
Subscriptions receivable | 51,310 |
Total Assets | 388,037,868 |
LIABILITIES: | |
Payable for director fees | 7,369 |
Payable for investments purchased | 272,013 |
Payable for other accrued fees | 44,335 |
Payable for shareholder services fees | 18,135 |
Payable to investment adviser | 229,287 |
Payable upon return of securities loaned | 4,090,496 |
Redemptions payable | 281,592 |
Total Liabilities | 4,943,227 |
NET ASSETS | $383,094,641 |
NET ASSETS REPRESENTED BY: | |
Capital stock, $0.10 par value | $4,853,957 |
Paid-in capital in excess of par | 322,023,397 |
Undistributed/accumulated earnings | 56,217,287 |
NET ASSETS | $383,094,641 |
NET ASSETS BY CLASS | |
Investor Class | $60,212,783 |
Institutional Class | $322,881,858 |
CAPITAL STOCK: | |
Authorized | |
Investor Class | 15,000,000 |
Institutional Class | 250,000,000 |
Issued and Outstanding | |
Investor Class | 2,033,286 |
Institutional Class | 46,506,279 |
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE: | |
Investor Class | $29.61 |
Institutional Class | $6.94 |
(a) Cost of investments | $354,624,494 |
(b) Cost of repurchase agreements | $3,865,496 |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
Statement of Operations
For the period ended June 30, 2022 (Unaudited)
Great-West Small Cap Value Fund | |
INVESTMENT INCOME: | |
Income from securities lending | $22,071 |
Dividends | 3,563,097 |
Foreign withholding tax | (6,098) |
Total Income | 3,579,070 |
EXPENSES: | |
Management fees | 1,504,285 |
Shareholder services fees – Investor Class | 119,413 |
Audit and tax fees | 14,963 |
Custodian fees | 11,958 |
Director's fees | 16,274 |
Legal fees | 2,432 |
Pricing fees | 9,450 |
Registration fees | 15,495 |
Shareholder report fees | 784 |
Transfer agent fees | 4,239 |
Other fees | 5,144 |
Total Expenses | 1,704,437 |
Less amount waived by investment adviser | 19,503 |
Net Expenses | 1,684,934 |
NET INVESTMENT INCOME | 1,894,136 |
NET REALIZED AND UNREALIZED GAIN (LOSS): | |
Net realized gain on investments | 17,468,214 |
Net Realized Gain | 17,468,214 |
Net change in unrealized depreciation on investments | (95,388,093) |
Net Change in Unrealized Depreciation | (95,388,093) |
Net Realized and Unrealized Loss | (77,919,879) |
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS | $(76,025,743) |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
Statement of Changes in Net Assets
For the period ended June 30, 2022 and fiscal year ended December 31, 2021
Great-West Small Cap Value Fund | 2022 (Unaudited) | 2021 | |
OPERATIONS: | |||
Net investment income | $1,894,136 | $3,246,010 | |
Net realized gain | 17,468,214 | 83,376,877 | |
Net change in unrealized appreciation (depreciation) | (95,388,093) | 36,503,589 | |
Net Increase (Decrease) in Net Assets Resulting from Operations | (76,025,743) | 123,126,476 | |
DISTRIBUTIONS TO SHAREHOLDERS: | |||
From net investment income and net realized gains | |||
Investor Class | - | (4,625,741) | |
Institutional Class | (1,765,025) | (83,109,335) | |
From Net Investment Income and Net Realized Gains | (1,765,025) | (87,735,076) | |
CAPITAL SHARE TRANSACTIONS: | |||
Shares sold | |||
Investor Class | 11,290,875 | 28,518,311 | |
Institutional Class | 34,259,951 | 87,766,305 | |
Shares issued in reinvestment of distributions | |||
Investor Class | - | 4,625,741 | |
Institutional Class | 1,765,025 | 83,109,335 | |
Shares redeemed | |||
Investor Class | (13,105,584) | (42,725,598) | |
Institutional Class | (42,373,121) | (148,060,678) | |
Net Increase (Decrease) in Net Assets Resulting from Capital Share Transactions | (8,162,854) | 13,233,416 | |
Total Increase (Decrease) in Net Assets | (85,953,622) | 48,624,816 | |
NET ASSETS: | |||
Beginning of Period | 469,048,263 | 420,423,447 | |
End of Period | $383,094,641 | $469,048,263 | |
CAPITAL SHARE TRANSACTIONS - SHARES: | |||
Shares sold | |||
Investor Class | 337,322 | 815,101 | |
Institutional Class | 4,551,151 | 9,067,349 | |
Shares issued in reinvestment of distributions | |||
Investor Class | - | 130,272 | |
Institutional Class | 257,292 | 9,569,901 | |
Shares redeemed | |||
Investor Class | (391,302) | (1,224,460) | |
Institutional Class | (5,281,546) | (15,603,268) | |
Net Increase (Decrease) | (527,083) | 2,754,895 |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
GREAT-WEST SMALL 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 period | 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 period | Total Return (b)(c) | |
Investor Class | |||||||||
06/30/2022 (Unaudited) | $35.69 | 0.10 | (6.18) | (6.08) | - | - | - | $29.61 | (17.04%) (d) |
12/31/2021 | $29.05 | 0.14 | 8.72 | 8.86 | (1.20) | (1.02) | (2.22) | $35.69 | 30.67% |
12/31/2020 | $28.23 | 0.14 | 0.75 | 0.89 | - | (0.07) | (0.07) | $29.05 | 3.20% |
12/31/2019 | $22.75 | 0.09 | 5.52 | 5.61 | (0.00) (e) | (0.13) | (0.13) | $28.23 | 24.67% |
12/31/2018 | $27.91 | 0.05 | (4.55) | (4.50) | - | (0.66) | (0.66) | $22.75 | (16.20%) |
12/31/2017 | $27.25 | 0.06 | 2.55 | 2.61 | (0.02) | (1.93) | (1.95) | $27.91 | 9.73% |
Institutional Class | |||||||||
06/30/2022 (Unaudited) | $ 8.40 | 0.04 | (1.46) | (1.42) | (0.04) | - | (0.04) | $ 6.94 | (16.92%) (d) |
12/31/2021 | $ 8.00 | 0.07 | 2.40 | 2.47 | (1.05) | (1.02) | (2.07) | $ 8.40 | 31.17% |
12/31/2020 | $ 7.84 | 0.06 | 0.20 | 0.26 | (0.03) | (0.07) | (0.10) | $ 8.00 | 3.54% |
12/31/2019 | $ 6.41 | 0.05 | 1.56 | 1.61 | (0.05) | (0.13) | (0.18) | $ 7.84 | 25.17% |
12/31/2018 | $ 8.43 | 0.05 | (1.37) | (1.32) | (0.04) | (0.66) | (0.70) | $ 6.41 | (15.93%) |
12/31/2017 | $ 9.52 | 0.06 | 0.86 | 0.92 | (0.08) | (1.93) | (2.01) | $ 8.43 | 10.15% |
Net assets, end of period (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(f) | ||
Supplemental Data and Ratios | ||||||
Investor Class | ||||||
06/30/2022 (Unaudited) | $ 60,213 | 1.14% (g) | 1.09% (g) | 0.60% (g) | 20% (d) | |
12/31/2021 | $ 74,488 | 1.12% | 1.09% | 0.41% | 40% | |
12/31/2020 | $ 68,753 | 1.13% | 1.09% | 0.58% | 93% | |
12/31/2019 | $ 65,827 | 1.13% | 1.09% | 0.35% | 25% | |
12/31/2018 | $ 66,129 | 1.12% | 1.09% | 0.18% | 35% | |
12/31/2017 | $ 93,025 | 1.15% | 1.11% | 0.22% | 26% | |
Institutional Class | ||||||
06/30/2022 (Unaudited) | $322,882 | 0.74% (g) | 0.74% (g) | 0.95% (g) | 20% (d) | |
12/31/2021 | $394,560 | 0.73% | 0.73% | 0.77% | 40% | |
12/31/2020 | $351,671 | 0.74% | 0.74% | 0.97% | 93% | |
12/31/2019 | $223,721 | 0.73% | 0.73% | 0.71% | 25% | |
12/31/2018 | $192,501 | 0.74% | 0.74% | 0.58% | 35% | |
12/31/2017 | $130,114 | 0.78% | 0.75% | 0.58% | 26% |
(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) | Not annualized for periods less than one full year. |
(e) | Amount was less than $0.01 per share. |
(f) | Portfolio turnover is calculated at the Fund level. |
(g) | Annualized. |
See Notes to Financial Statements.
Semi-Annual Report - June 30, 2022
GREAT-WEST FUNDS, INC.
GREAT-WEST SMALL CAP VALUE FUND Notes to Financial Statements (Unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Great-West Funds, Inc. (Great-West 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. Great-West Funds presently consists of forty-five funds. Interests in the Great-West Small Cap Value Fund (the Fund) are included herein.
The investment objective of the Fund is to seek long-term capital growth. The Fund is diversified as defined in the 1940 Act. The Fund is 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 Great-West Funds.
The Fund offers two share classes, referred to as Investor Class and Institutional Class shares. All shares of the 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 Great-West Funds, which are not Fund specific, are allocated based on relative net assets or other appropriate allocation methods.
The outbreak of the novel strain of coronavirus, specifically identified as "COVID-19", has affected the worldwide economy, the financial health of individual companies and the market in general. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Fund in future periods.
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. The 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 Fund.
Security Valuation
The Board of Directors of the Fund has adopted policies and procedures for the valuation of the Fund’s securities and assets, and has appointed the Fair Value Pricing Committee of the investment adviser, Great-West Capital Management, LLC, to complete valuation determinations under those policies and procedures.
The Fund generally values its 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 the 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.
Semi-Annual Report - June 30, 2022
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.
Investments in shares of the underlying mutual funds are valued at the net asset value as reported by the underlying mutual fund, which may be obtained from pricing services or other pricing sources.
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.
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. |
Government Money Market Mutual Funds | Net asset value of underlying mutual fund. |
Short Term Investments | Maturity date, credit quality and interest rates. |
The Fund classifies its valuations into three levels based upon the observability of inputs to the valuation of the Fund’s investments. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. Classification is based on the lowest level of input significant to the fair value measurement. The three levels are defined as follows:
Level 1 – Unadjusted quoted prices for identical securities in active markets.
Level 2 – Inputs other than quoted prices included in Level 1 that are observable either directly or indirectly. These may include quoted prices for similar assets in active markets.
Level 3 – Unobservable inputs to the extent observable inputs are not available and may include prices obtained from single broker quotes. Unobservable inputs reflect the Fund’s own assumptions and would be based on the best information available under the circumstances.
As of June 30, 2022, all of the Fund’s investments are valued using Level 1 inputs, except for Short Term Investments, which are valued using Level 2 inputs. More information regarding the sector classifications, as applicable, are included in the Schedule of Investments.
Semi-Annual Report - June 30, 2022
Repurchase Agreements
The Fund may engage in repurchase agreement transactions with institutions that the Fund’s investment adviser has determined are creditworthy. The Fund 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 Fund’s 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 the basis of the first-in, first-out method (FIFO). Dividend income for the Fund is accrued as of the ex-dividend date and interest income, including amortization of discounts and premiums, is recorded daily.
Federal Income Taxes and Distributions to Shareholders
The 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 federal income or excise tax provision is required. The Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remains open for the three preceding fiscal reporting period ends. State tax returns may remain open for an additional fiscal year.
Distributions to shareholders from net investment income of the Fund, if any, are declared and paid semi-annually. Capital gain distributions of the Fund, if any, are declared and paid at least annually. Distributions are reinvested in additional shares of the 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.
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 and adjustments for real estate investment trusts.
The aggregate cost of securities and other investments and the composition of unrealized appreciation and depreciation for federal income tax purposes as of June 30, 2022 were as follows:
Federal tax cost of investments | $360,573,608 |
Gross unrealized appreciation on investments | 61,565,929 |
Gross unrealized depreciation on investments | (41,131,513) |
Net unrealized appreciation on investments | $20,434,416 |
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Great-West Funds entered into an investment advisory agreement with Great-West Capital Management, LLC (GWCM) (the Adviser), a wholly-owned subsidiary of Great-West Life & Annuity Insurance Company (GWL&A). As compensation for its services to Great-West Funds, the Adviser receives monthly compensation at the annual rate of 0.71% of the Fund’s average daily net assets. Certain administration and accounting services fees for the Fund are included in the investment advisory agreement.
The Adviser contractually agreed to waive fees or reimburse expenses that exceed an annual rate of 0.74% of the Fund’s average daily net assets attributable to each Class, including management fees and expenses paid directly by the Fund, excluding shareholder service fees and certain extraordinary expenses (the “Expense Limit”). The agreement’s current term ends on April 30, 2023 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.
Semi-Annual Report - June 30, 2022
The Adviser is permitted upon approval by the Board of Directors to recoup amounts waived or reimbursed by the Fund in future periods, not exceeding three years following the particular waiver/reimbursement, provided the total annual operating expenses of each Class of the 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 June 30, 2022, the amounts subject to recoupment were as follows:
Expires December 31, 2022 | Expires December 31, 2023 | Expires December 31, 2024 | Expires June 30, 2025 | Recoupment of Past Reimbursed Fees by the Adviser | ||||
$26,985 | $24,439 | $19,949 | $19,503 | $0 |
The Adviser and Great-West Funds entered into a sub-advisory agreement with Loomis, Sayles & Company, L.P. and Hotchkis & Wiley Capital Management, LLC. The Adviser is responsible for compensating the Sub-Adviser for its services.
Great-West Funds entered into a shareholder services agreement with Empower Retirement, LLC (Empower), an affiliate of GWCM and subsidiary of GWL&A. Pursuant to the shareholder services agreement, Empower provides various recordkeeping, administrative and shareholder services to shareholders and receives from the Investor Class shares of the Fund a fee equal to 0.35% of the average daily net asset value of the share class.
GWFS Equities, Inc. (the Distributor), is a wholly-owned subsidiary of GWL&A and the principal underwriter to distribute and market the Fund.
Certain officers of Great-West Funds are also directors and/or officers of GWL&A or its subsidiaries. No officer or interested director of Great-West Funds receives any compensation directly from Great-West Funds. The total compensation paid to the independent directors with respect to all forty-five funds for which they serve as directors was $690,500 for the fiscal period ended June 30, 2022.
3. PURCHASES AND SALES OF INVESTMENTS
For the period ended June 30, 2022, the aggregate cost of purchases and proceeds from sales of investments (excluding all U.S. Government securities and short-term securities) were $84,955,006 and $99,890,933, respectively. For the same period, there were no purchases or sales of long-term U.S. Government securities.
4. SECURITIES LOANED
The Fund has entered into a securities lending agreement with its custodian as securities lending agent. Under the terms of the agreement the 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 the 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 the Fund and necessary collateral adjustments are made between the Fund and its counterparties on the next business day through the delivery or receipt of additional collateral. The Fund also continues to receive interest or dividends on the securities loaned. Cash collateral is invested in securities approved by the Board of Directors. The 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. As of June 30, 2022, the Fund had securities on loan valued at $4,006,791 and received collateral as reported on the Statement of Assets and Liabilities of $4,090,496 for such loan which was invested in Repurchase Agreements collateralized by U.S. Government or U.S. Government Agency securities and Government Money Market Mutual Funds. 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.
Under the securities lending agreement, the collateral pledged is, by definition, the securities loaned against the cash borrowed. At June 30, 2022, the class of securities loaned consisted entirely of common stock. The remaining contractual maturity of all of the securities lending transactions is overnight and continuous. Additional information regarding the Fund's securities on loan is included in the Schedule of Investments.
Semi-Annual Report - June 30, 2022
5. INDEMNIFICATIONS
The Fund’s 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 Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The 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.
6. SUBSEQUENT EVENT
Management has reviewed all events subsequent to June 30, 2022, including the estimates inherent in the process of preparing these financial statements through the date the financial statements were issued.
Effective August 1, 2022, Empower renamed certain operating companies within its corporate group to include “Empower” in the legal name. In addition, the Great-West Small Cap Value Fund changed its name to the Empower Small Cap Value Fund on August 1, 2022.
Semi-Annual Report - June 30, 2022
Availability of Quarterly Portfolio Schedule
Great-West Funds files its complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form NPORT-EX. Great-West Funds’ Forms NPORT-EX are available on the Commission’s website at http://www.sec.gov, and may be reviewed and copied at the Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330.
Availability of Proxy Voting Policies and Procedures
A description of the policies and procedures that Great-West Funds uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 1-866-831-7129, and on the SEC website at http://www.sec.gov.
Availability of Proxy Voting Record
Information regarding how Great-West 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 1-866-831-7129, and on the SEC website at http://www.sec.gov.
Funds' Liquidity Risk Management Program
The Funds have adopted and implemented a written liquidity risk management program as required by Rule 22e-4 under the Investment Company Act. The program is designed to assess and manage each Fund’s liquidity risk, taking into consideration the Fund’s investment strategy and the liquidity of its portfolio investments during normal and reasonably foreseeable stressed conditions, its short and long-term cash flow projections, and its cash holdings and access to other funding sources. The Funds’ Board of Directors approved the designation of the GWCM Liquidity Risk Management Committee as the administrator of the liquidity risk management program. The Liquidity Risk Management Committee includes representatives from the Adviser’s Risk, Trading, Investment Valuation, and Regulatory Compliance departments and is responsible for the program’s administration and oversight and for reporting to the Board on at least an annual basis regarding, among other things, the program’s operation, adequacy and effectiveness. The Liquidity Risk Management Committee reassessed each Fund’s liquidity risk profile, considering additional data gathered through March 31, 2022 and the adequacy and effectiveness of the liquidity risk management program’s operations since March 31, 2021 (the “covered period”) in order to prepare a written report to the Board of Directors for review at its meeting held on June 16, 2022. The report stated that:
(i) the program performed well during the covered period and meets the needs and profile of the Funds,
(ii) the Funds benefit from the stability of their shareholder base,
(iii) the selection of two vendors to supply liquidity measurement products has proven to be extremely helpful,
(iv) no changes were proposed to the program as of the date of the report, and
(v) no Fund approached the internal triggers set by the Liquidity Risk Management Committee or the regulatory percentage limitation (15%) on holdings in illiquid investments.
The report also stated that it continues to be appropriate to not set a “highly liquid investment minimum” for any Funds because the Funds primarily hold “highly liquid investments” and reviewed the changes to the program since inception.
Investment Advisory Contract Approval
The Board of Directors (the “Board”) of Great-West Funds, Inc. (the “Company”), including the Directors who are not interested persons of the Company (the “Independent Directors”), at a meeting held on April 21, 2022 (the “April Board Meeting”), unanimously approved the continuation of (i) the investment advisory agreement (the “Advisory Agreement”) between Great-West Capital Management, LLC (“GWCM”) and the Company, on behalf of Great-West Small Cap Value Fund (the “Fund”), a series of the Company, and (ii) the investment sub-advisory agreements (the “Sub-Advisory Agreements” or each, a “Sub-Advisory Agreement”) by and among the Company, GWCM and each of Hotchkis & Wiley Capital Management, LLC (“HWCM”) and Loomis, Sayles & Company, L.P. (“Loomis Sayles” and together with HWCM, the “Sub-Advisers” or each, a “Sub-Adviser”), with respect to the Fund. (The Fund and the Company’s other series are referred to collectively as the “Great-West Funds.”)
Pursuant to the Advisory Agreement, GWCM acts as investment adviser and, subject to oversight by the Board, directs the investments of the Fund in accordance with its investment objective, policies and limitations. GWCM also provides, subject to oversight by the Board, the management and administrative services necessary for the Fund’s operation. In addition, GWCM is responsible for allocating the Fund’s assets among one or more sub-advisers—including, in this case, each of HWCM and Loomis Sayles. In this connection, the Fund operates under a manager-of-managers structure pursuant to an order issued by the United States Securities and Exchange Commission, which permits GWCM to enter into and materially amend the Sub-Advisory Agreements with Board approval but without shareholder approval, unless the sub-adviser is an affiliated person. Under this structure, GWCM is responsible for monitoring and evaluating the performance of each Sub-Adviser for its sleeve of the Fund and for recommending the hiring, termination and replacement of each Sub-Adviser to the Board.
Pursuant to its respective Sub-Advisory Agreement, each Sub-Adviser, subject to general supervision and oversight by GWCM and the Board, is responsible for the day-to-day management of the investment and reinvestment of its allocated portion of the Fund’s portfolio, which includes making decisions to buy, sell or hold any particular security.
On March 23, 2022 (the “March Meeting”), the Independent Directors met separately with independent legal counsel in advance of the April Board Meeting to evaluate information encompassing a wide variety of topics and furnished by GWCM and each Sub-Adviser in connection with the proposed continuation of the Advisory Agreement and the Sub-Advisory Agreements (collectively, the “Agreements” or each, an “Agreement”), and met with representatives of GWCM to review, among other things, comparative information on the Fund’s investment performance, fees and expenses, including data prepared by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent provider of investment company data. In addition, at the March Meeting, the Independent Directors met separately with representatives of an independent provider of mutual fund advisory contract renewal consulting services (the “Independent Consultant”) to review comparative information regarding the Fund’s investment performance, fees and expenses, as well as the portion of the management fee retained and enterprise profitability data, and further discussed such information with GWCM. The Independent Directors also considered additional information provided in response to their requests made following the March Meeting. The Independent Directors further discussed continuation of the Agreements separately with independent legal counsel, including at a separate meeting of the Independent Directors convened immediately prior to the April Board Meeting and at the April Board Meeting. The Independent Directors weighed and considered the information provided in light of their substantial accumulated experience in governing the Fund and the other Great-West Funds. Although the Board considered the approval of the Agreements for the Fund as part of its multi-faceted annual review process of agreements across the Great-West Funds, the Board’s approvals were made on a fund-by-fund basis.
In approving the continuation of each of the Agreements, the Board considered such information as the Board deemed reasonably necessary to evaluate the terms of the Agreements. The Board noted that performance information is provided to the Board on an ongoing basis at regular Board meetings held throughout the year. Furthermore, at each of its meetings, the Board covers an extensive agenda of topics and materials and considers factors that are relevant to its annual consideration of advisory agreements for the Great-West Funds, including the services and support provided to each of the Great-West Funds, including the Fund and its shareholders.
In its deliberations, the Board did not identify any single factor as being determinative. Rather, the Board’s approvals were based on each Director’s business judgment after a comprehensive consideration of the information as a whole. Individual Directors may have weighed certain factors differently and assigned varying degrees of materiality to information considered by the Board. The Independent Directors were assisted throughout the evaluation process by independent legal counsel.
Based upon its review of the Agreements and the information provided to it, the Board concluded that each Agreement was reasonable in light of the services performed, fees charged and such other matters as the Directors considered relevant in the exercise of their business judgment. The principal factors and conclusions that formed the basis for the Directors’ determinations to approve the continuation of the Agreements are discussed below.
Nature, Extent and Quality of Services
The Board considered the nature, extent and quality of services provided and to be provided to the Fund by GWCM and each Sub-Adviser (each, an “adviser”). Among other things, the Board considered, as applicable, each adviser’s organizational history, personnel, experience, resources and performance track record, its ability to provide or obtain such services as may be necessary in managing, acquiring and disposing of investments on behalf of the Fund, and its ability to provide research and to obtain and evaluate the economic, statistical and financial data relevant to the investment policies of the Fund. With respect to personnel, the Board noted that GWCM’s affiliate, Empower Retirement, LLC (“Empower”) provides employees,
including various management professionals, who provide services on behalf of GWCM—which does not have its own employees—pursuant to an agreement between GWCM and Empower. (Each of Empower and GWCM is a wholly-owned subsidiary of Great-West Life & Annuity Insurance Company (“GWL&A”); references herein to personnel, services, activities and resources of GWCM should be understood generally as including Empower.)
The Board also reviewed, as applicable, the qualifications, education, experience, tenure and responsibilities of the senior personnel serving the Fund and the portfolio management teams responsible for the day-to-day management of the Fund, as well as each adviser’s efforts to attract, retain and motivate capable personnel to serve the Fund. In addition, the Board considered, as applicable, each adviser’s reputation for management of its investment strategies, its investment decision-making process, its disaster recovery procedures, including cybersecurity risk mitigation, its overall financial condition and ability to carry out its obligations to the Fund, its technical resources, operational capabilities and safeguards, and compliance policies and procedures, including for liquidity risk management oversight, as well as each Sub-Adviser’s practices regarding the selection and compensation of brokers and dealers for the execution of portfolio transactions and the procedures it uses for obtaining best execution of portfolio transactions. With respect to GWCM, the Board noted recent strategic initiatives, progress on implementation of an enhanced trade order management system and various other projects and GWCM’s efforts generally to ensure that third-party programs and vendors used to service the Fund—including for purposes of regulatory compliance support—are monitored effectively.
Consideration also was given to the fact that the Board meets with representatives of each Sub-Adviser and GWCM every year to discuss portfolio management strategies and performance. Additionally, the quality of each adviser’s communications with the Board, as well as the adviser’s responsiveness to the Board, were taken into account. Also considered was each adviser’s response to market volatility, changing circumstances in the mutual fund industry and investor sentiment, regulatory developments, economic indicators, monetary and fiscal policy developments and emerging issues. In this regard, the Board received information on the impacts of the COVID-19 pandemic and macroeconomic and geopolitical developments on each adviser generally and the Fund, and considered how monitoring and analysis of such developments informs each adviser’s performance of its respective services to the Fund.
The Board concluded that it was satisfied with the nature, extent and quality of the services provided to the Fund by GWCM and the Sub-Advisers.
Investment Performance
The Board received and considered information regarding the investment performance of the Fund. The Board reviewed performance information for the Fund’s Investor Class and Institutional Class as compared against its benchmark index and a “performance universe” of peer funds compiled by Broadridge, based on Lipper fund classifications. This performance data included, among other things, annualized returns for the one-, three-, five- and ten-year periods ended December 31, 2021 with respect to the Investor Class, and, for the Institutional Class, annualized returns for the one-, three- and five-year periods ended December 31, 2021. In evaluating the performance of the Fund, the Board noted how the Fund performed relative to the returns of the benchmark index and performance universe. In addition, the Board noted that it had also received and discussed at periodic intervals information comparing the Fund’s performance to that of its benchmark index and to a peer group of funds.
The Board observed that the annualized returns of the Fund’s Investor Class were in the first, third, fourth and fourth quintiles of its performance universe (the first quintile being the best performers and the fifth quintile being the worst performers) for the one-, three-, five- and ten-year periods ended December 31, 2021, respectively, with specific rankings in the 20th, 56th, 75th and 64th percentiles, respectively, of its performance universe. Similarly, the annualized returns of the Fund’s Institutional Class were in the first, third and fourth quintiles of its performance universe for the one-, three- and five-year periods ended December 31, 2021, respectively, with specific rankings in the 17th, 50th and 70th percentiles, respectively, of its performance universe. The Board also observed that the Fund outperformed its benchmark for each period reviewed, with the exception of the ten-year period ended December 31, 2021 as to the Fund’s Investor Class.
The Board considered performance results in light of the Fund’s investment objective, strategies and risks, as disclosed in the Fund’s prospectus, and in the context of overall recent market conditions. In addition, the Board considered each Sub-Adviser’s investment decision-making process, the organization, composition and experience of its investment personnel and its portfolio risk controls, among other things, as well as its performance attribution commentary. The Board’s assessment of performance results was also informed by its understanding of GWCM’s processes for overseeing and analyzing each Sub-Adviser’s performance, including GWCM’s systematic approach to performance monitoring.
The Board determined that it was satisfied with the explanations for, oversight of and information provided regarding the Fund’s investment performance.
Costs and Profitability
The Board considered the costs of services provided by GWCM and the Sub-Advisers from their relationships with the Fund. The Board also reviewed an analysis prepared by the Independent Consultant regarding the actual net advisory fee, sub-advisory fee and advisory fee retained by GWCM for the Fund’s Investor Class and Institutional Class as compared to share classes of other sub-advised funds within the same Morningstar peer group and publicly disclosed sub-advisory fees.
With respect to the costs of services, the Board considered the structure and the level of the investment management fees and other expenses payable by the Fund. In this regard, the Board noted that, effective May 1, 2017, the structure of the investment management fee payable by the Fund changed to a structure in which GWCM absorbs the costs associated with fund accounting, which were previously paid directly by the Fund in its investment management fee and noted that GWCM’s investment management fee increased commensurate with the costs of these services as of December 31, 2015. The Board further noted that GWCM has contractually agreed for a one-year renewable term, through April 30, 2023, to limit the fees and expenses of the Fund to the total expense ratio of the Fund as of December 31, 2015, and that in the future GWCM may increase the expense limit only with the approval of the Board.
The Board noted that GWCM, not the Fund, pays the sub-advisory fees to the Sub-Advisers and that such fees were negotiated at arm’s length between GWCM and each of the Sub-Advisers. In evaluating the management fee and total expense ratio of the Fund’s Investor and Institutional Classes, the Board considered the fees payable by and the total expense ratios of peer groups of funds managed by other investment advisers, as determined by Broadridge, based on Lipper fund classifications. Specifically, the Board considered for each class (i) the Fund’s management fee as provided in the Advisory Agreement (the “Contractual Management Fee”) in comparison to the contractual management fees of the peer group of funds and (ii) the Fund’s total expense ratio in comparison to the peer group funds’ total expense ratios (in all cases, net of any waivers, if applicable). In addition, the Board considered the Fund’s total expense ratio in comparison to the median expense ratios for all funds in the peer groups. As part of its comprehensive evaluation, the Board also reviewed a report from the Independent Consultant assessing expenses in the context of performance.
The Board observed that the Fund’s Contractual Management Fee for each class was lower than the median contractual management fees of its respective peer group of funds, with the Investor Class Contractual Management Fee the lowest in its peer group. The Board also observed that the Fund’s total annual operating expense ratio for each class was lower than the median total operating expense ratio of its respective peer group of funds, ranking in the first quintile of its respective peer group (with the first quintile being the lowest expenses and the fifth quintile being the highest expenses), and the lowest of the peer group as to the Fund’s Institutional Class. In addition, the Board considered the Independent Consultant’s opinion that the Fund’s Contractual Management Fee and total annual operating expense ratio are reasonable.
The Board received information regarding the fees charged by GWCM to separate accounts and other products managed by GWCM and noted that GWCM does not manage other client accounts in the same investment style as the Fund. As to the fees charged by the Sub-Advisers to other clients with similar objectives and policies as the Fund, the Board received information from HWCM regarding its standard fee schedule for the small cap diversified value strategy, as well as the fees charged by HWCM for its own retail mutual fund and other sub-advised registered funds managed in the same investment style as the Fund. For Loomis Sayles, the Board similarly received information regarding the fees charged by the Sub-Adviser for its own retail mutual fund and its standard Form ADV fee schedule for small cap value. The Board assessed the foregoing information and, where applicable, noted factors contributing to certain differences in sub-advisory fee schedules between the Fund and other representative accounts, such as historical relationship discounts and consideration of other assets under management in the case of certain funds sub-advised by HWCM and other client-specific circumstances. Taking into account the foregoing, the Board determined that the fees charged by the Sub-Advisers to other similar accounts and clients identified as comparable appeared to be competitive with the fees charged to GWCM for the Fund.
The Board further considered the overall financial soundness of GWCM and the Sub-Advisers and the profits estimated to have been realized by GWCM and its affiliates and by the Sub-Advisers. The Board reviewed the financial statements and profitability information from GWCM and the Sub-Advisers.
With respect to GWCM’s profitability information, the Board considered the review undertaken by management in 2020 of the organization’s expense allocation methodology following an internal corporate restructuring and, following such review, GWCM’s determination to adjust the methodology used in determining profitability. In this connection, the Board took into
account its prior discussions with management regarding the methodology as well as the analysis performed by an independent auditor, including the auditor’s conclusion that the methodology was reasonable. The Board also considered that there is no recognized standard or uniform methodology for determining profitability for this purpose. Furthermore, the Board noted that there are limitations inherent in allocating costs and calculating profitability for an organization such as GWCM, and that it is difficult to make comparisons of profitability between advisers because comparative information is not generally publicly available. The Board also noted its discussion with GWCM representatives at the March Meeting regarding the impact of the methodology adjustment to GWCM’s 2021 profitability and GWCM’s confirmation that no further methodology adjustments were made in 2021.
The Board also reviewed a report from the Independent Consultant comparing pre-tax investment management profitability margins for the latest fiscal year for certain publicly-traded advisers to fund complexes as compared to GWCM’s estimated complex-level profits. The Board considered that, while GWCM’s overall profitability is not unreasonable, profitability information is affected by numerous factors, including the adviser’s organization, capital structure and cost of capital, the types of funds it manages, its mix of business and the adviser’s assumptions regarding allocations of revenue and expenses.
Based on the information provided, the Board concluded that the costs of the services provided and the profits estimated to have been realized by GWCM and its affiliates and each Sub-Adviser were not unreasonable in relation to the nature, extent and quality of the services provided.
Economies of Scale
The Board received and considered information about the potential for GWCM to experience economies of scale in the provision of services to the Fund and the extent to which potential scale benefits are shared with shareholders. In evaluating economies of scale, the Board considered, among other things, the current level of management and sub-advisory fees payable by the Fund and GWCM, respectively, and whether those fees include breakpoints, as well as comparative fee information, the profitability and financial condition of GWCM, and the current level of Fund assets. Although there are no contractual breakpoints in the Fund’s management fee schedule, the Board noted that GWCM shares potential economies of scale from its business in a variety of ways, including through fee waiver arrangements, services that benefit shareholders, competitive management fee rates set at the outset without regard to breakpoints (i.e., pre-assuming future asset growth), and investments in the business intended to enhance services available to the Fund and shareholders. In its evaluation, the Board also noted that both sub-advisory fee schedules contained breakpoints that would reduce the relevant sub-advisory fee rate on assets above specified levels as the Fund’s assets increased. In this connection, the Board considered that the sub-advisory fee under each Sub-Advisory Agreement is paid by GWCM out of the management fee that it receives under the Advisory Agreement and the sub-advisory fees are negotiated at arm’s length. The Board also considered the data provided by the Independent Consultant, reflecting metrics it developed, regarding the portion of the management fee retained by GWCM, which indicated that such portion was below the Fund’s peer group.
Based on the information provided, the Board concluded that GWCM’s arrangements with respect to the Fund constituted a reasonable approach to sharing potential economies of scale with the Fund and its shareholders.
Other Factors
The Board received and considered information regarding ancillary benefits derived or to be derived by GWCM or the Sub-Advisers from their relationships with the Fund as part of the total mix of information evaluated by the Board. In this regard, the Board noted that each Sub-Adviser received ancillary benefits from soft-dollar arrangements by which brokers provide research to the Sub-Adviser in return for allocating Fund brokerage to such brokers. The Board also noted the statement by Loomis Sayles that it may from time to time use the performance of various funds in marketing its separate account investment advisory services, an ancillary benefit that the Sub-Adviser does not believe is material.
In addition, the Board noted where services were provided to the Fund by affiliates of GWCM, including, in particular, the various recordkeeping, administrative and shareholder services provided by Empower pursuant to a shareholder services agreement, effective April 29, 2020 (the “Shareholder Services Agreement”). The Board considered its assessment, as part of the Board’s annual contract review process, of the services provided by and fees paid under the Shareholder Services Agreement—an assessment that included, among other things, reviews of: service metrics data; the nature and quality of shareholder services; fees retained by Empower and those paid to third-party providers; and Empower’s estimated profitability on shareholder services fees from the Fund.
In addition to the foregoing arrangements, the Board took into account the fact that the Fund is used as a funding vehicle under variable life and annuity contracts offered by insurance companies affiliated with GWCM and as a funding vehicle under retirement plans for which affiliates of GWCM may provide various retirement plan services. Additionally, the Board considered the extent to which GWL&A and/or its affiliated insurance companies may receive benefits under the federal income tax laws with respect to tax deductions and credits, and evaluated information provided by GWCM in this regard.
The Board concluded that the Fund’s management and sub-advisory fees were reasonable, taking into account any ancillary benefits derived by GWCM, its affiliates or the Sub-Advisers.
Conclusion
Based upon all the information considered and the conclusions reached, the Board determined that the terms of each Agreement continue to be reasonable and that the continuation of the Agreements is in the best interests of the Fund.
ITEM 2. | CODE OF ETHICS. |
Not required in filing.
ITEM 3. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not required in filing.
ITEM 4. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not required in filing.
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 since the registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K.
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 ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not applicable.
ITEM 13. | EXHIBITS. |
(a) (1) Not required in filing.
(3) Not applicable.
(4) Not applicable.
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.
GREAT-WEST FUNDS, INC.
By: | /s/ Jonathan D. Kreider |
Jonathan D. Kreider
President & Chief Executive Officer
President & Chief Executive Officer
Date:August 23, 2022
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
President & Chief Executive Officer
President & Chief Executive Officer
Date:August 23, 2022
By: | /s/ Kelly B. New |
Kelly B. New
Treasurer
Treasurer
Date:August 23, 2022