UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

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)

M.T.G. Graye

President and Chief Executive Officer

Great-West Life & Annuity Insurance Company

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, 2012


ITEM 1. REPORTS TO STOCKHOLDERS

GREAT-WEST FUNDS, INC.

Great-West Templeton Global Bond Fund (Initial Class)

Annual Report

December 31, 2012

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.


Management Discussion

For the 12 months ended December 31, 2012, the Great-West Templeton Global Bond Fund (Initial Class shares) returned 14.76%, while its benchmark, the Citigroup World Government Bond Index, returned 1.65%.

The global economic recovery was mixed during the year. Emerging markets continued to lead the recovery with many economies returning to and exceeding pre-crisis activity levels. Although some developed economies, such as those of Australia and some Scandinavian countries, also enjoyed relatively strong recoveries, growth in the G-3 (U.S., eurozone and Japan) continued to be slow by the standards of previous recoveries. Nonetheless, economic reports from the largest economies proved inconsistent with some dire predictions of a severe global economic slowdown.

As part of the Fund’s investment strategy, we used currency forward contracts to hedge or gain exposure to various currencies. Overall, our diversified currency exposure contributed to absolute and relative performance, and exposures in Latin America and Asia ex-Japan were among the largest contributors. As the Japanese yen depreciated against the U.S. dollar during the year, the Fund’s net negative position in the currency, achieved via the use of currency forward contracts, contributed meaningfully to performance. Exposure to peripheral European currencies positioned against the euro also added to performance. However, as the euro appreciated against the U.S. dollar during the year, our net negative position in the monetary union’s currency detracted from performance. We maintained a defensive approach with respect to interest rate risk in developed and emerging markets. Nevertheless, select duration exposures in Asia and Latin America supported absolute and relative performance. The Fund’s sovereign credit exposures also contributed to absolute and relative performance.

The views and opinions in this report were current as of December 31, 2012 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

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.

 

Year   Fund   Citigroup World
Government Bond Index
    10,000.00   10,000.00

2003

  10,736.00   11,491.00

2004

  11,255.62   12,680.32

2005

  11,325.41   11,807.91

2006

  13,007.23   12,530.56


2007

  14,772.31   13,902.65

2008

  15,429.68   15,416.65

2009

  17,699.39   15,809.78

2010

  19,632.07   16,627.14

2011

  19,312.07   17,682.97

2012

  22,162.53   17,974.73

Average Annual Total Returns for the Periods Ended December 31, 2012

 

      One Year   Five Years   Ten Years

Initial Class

  14.76%   8.45%   8.28%

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 Country as of December 31, 2012

 

Country   % of Fund Investments

Australia

  5.90%

Brazil

  5.00%

Hungary

  3.86%

Iceland

  0.35%

Indonesia

  3.96%

Ireland

  10.03%

Israel

  1.63%

Lithuania

  0.87%

Malaysia

  12.44%

Mexico

  7.42%

Peru

  2.02%

Philippines

  0.60%

Poland

  13.24%

Russia

  2.20%

Serbia

  0.65%

Singapore

  2.70%

Slovenia

  0.43%

South Korea

  15.08%

Sweden

  5.18%

Ukraine

  3.73%

United States

  1.72%

Venezuela

  0.23%

Vietnam

  0.76%

Total

  100.00%

Shareholder Expense Example

 


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 (June 30, 2012 to December 31, 2012).

Actual Expenses

The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600 account value divided by $1,000.00 = 8.6), then multiply the result by the number in the first line 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 line 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 line 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
(06/30/12)
     Ending
Account Value
(12/31/12)
     Expenses Paid
During Period*
(06/30/12 – 12/31/12)
 

Actual

     $1,000.00         $1,086.10         $6.88   

Hypothetical

(5% return before expenses)

     $1,000.00         $1,018.67         $6.66   

*Expenses are equal to the Fund’s annualized expense ratio of 1.30% for the Initial Class shares, multiplied by the average account value over the period, multiplied by 185/366 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 TEMPLETON GLOBAL BOND FUND

Schedule of Investments

As of December 31, 2012

 

Principal Amount                 Value  

BONDS AND NOTES

    

Foreign Government Obligations — 73.39%

    

$            1,080,000

   Australia Government Bond     
  

AUD, 6.50%, 05/15/2013

  $      1,136,761   
  

Bank Negara Malaysia Monetary Notes

    

45,000

  

MYR, 2.76%, 01/22/2013

       14,691   

435,000

  

MYR, 2.99%, 05/02/2013

       140,842   

2,500,000

  

MYR, 3.01%, 05/23/2013

       808,013   
  

Brazil Notas do Tesouro Nacional Serie B

    

284,000

  

BRL, 6.00%, 05/15/2015

       3,393,749   

424

  

BRL, 6.00%, 08/15/2016

       527,155   

400

  

BRL, 6.00%, 08/15/2018

       514,261   

100,000

  

BRL, 6.00%, 05/15/2045

       1,495,253   
  

Brazil Notas do Tesouro Nacional Serie F

    

920,000

  

BRL, 10.00%, 01/01/2014

       4,608,591   

140,000

  

BRL, 10.00%, 01/01/2017

       720,274   

3,710,000

  

Export-Import Bank of Korea (a)
SEK, 1.45%, 05/19/2014

       571,406   
  

Financing of Infrastructural Projects State Enterprise (a)

    

100,000

  

8.38%, 11/03/2017

       97,500   

200,000

  

7.40%, 04/20/2018

       184,000   
   Hungary Government Bond     

27,100,000

  

HUF, 6.75%, 02/12/2013

       122,909   

22,100,000

  

HUF, 7.50%, 10/24/2013

       101,563   

53,900,000

  

HUF, 5.50%, 02/12/2014

       244,586   

161,190,000

  

HUF, 6.75%, 08/22/2014

       745,758   

24,500,000

  

HUF, 8.00%, 02/12/2015

       116,671   

41,280,000

  

HUF, 7.75%, 08/24/2015

       196,580   

39,000,000

  

HUF, 5.50%, 02/12/2016

       175,968   

34,500,000

  

HUF, 6.75%, 02/24/2017

       161,303   

153,680,000

  

HUF, 6.75%, 11/24/2017

       721,198   

34,200,000

  

HUF, 6.50%, 06/24/2019

       159,581   

2,500,000

  

HUF, 7.50%, 11/12/2020

       12,378   

22,200,000

  

HUF, 7.00%, 06/24/2022

       106,964   
  

Hungary Government International Bond

    

40,000

  

EUR, 4.38%, 07/04/2017

       52,006   

910,000

  

EUR, 5.75%, 06/11/2018

       1,239,238   

1,195,000

  

6.25%, 01/29/2020

       1,318,981   

1,100,000

  

EUR, 3.88%, 02/24/2020

       1,340,391   

1,310,000

  

6.38%, 03/29/2021

       1,446,240   

710,000

  

Iceland Government International Bond (a)

    
  

5.88%, 05/11/2022

       792,680   
   Indonesia Treasury Bond     

23,750,000,000

  

IDR, 10.75%, 05/15/2016

       2,922,853   

10,000,000,000

  

IDR, 11.50%, 09/15/2019

       1,414,857   

25,300,000,000

  

IDR, 11.00%, 11/15/2020

       3,613,881   

3,510,000,000

  

IDR, 12.90%, 06/15/2022

       564,473   

2,400,000,000

  

IDR, 12.00%, 09/15/2026

       391,716   

42,000,000

  

Inter-American Development Bank MXP, 7.50%, 12/05/2024

       3,705,051   
   Ireland Government Bond     

615,000

  

EUR, 4.60%, 04/18/2016

       859,831   

1,828,000

  

EUR, 5.50%, 10/18/2017

       2,635,464   

717,000

  

EUR, 4.50%, 10/18/2018

       984,190   

1,769,000

  

EUR, 4.40%, 06/18/2019

       2,343,313   
Principal Amount                 Value  

Foreign Government Obligations — (continued)

    

$            3,445,000

  

EUR, 5.90%, 10/18/2019

  $      4,974,242   

1,609,000

  

EUR, 4.50%, 04/18/2020

       2,123,753   

4,305,000

  

EUR, 5.00%, 10/18/2020

       5,826,774   

2,106,000

  

EUR, 5.40%, 03/13/2025

       2,825,412   
   Israel Government Bond - Fixed     

3,872,000

  

ILS, 5.00%, 03/31/2013

       1,083,984   

9,442,000

  

ILS, 3.50%, 09/30/2013

       2,581,905   

9,100,000

  

Kommuninvest I Sverige AB
SEK, 2.25%, 05/05/2014

       1,419,839   
   Korea Monetary Stabilization Bond     

44,080,000

  

KRW, 3.83%, 04/02/2013

       41,281   

441,000,000

  

KRW, 3.38%, 05/09/2013

       412,799   

140,520,000

  

KRW, 3.76%, 06/02/2013

       131,785   

302,220,000

  

KRW, 3.28%, 06/09/2013

       282,909   

5,232,220,000

  

KRW, 3.90%, 08/02/2013

       4,919,196   

421,310,000

  

KRW, 3.59%, 10/02/2013

       395,914   

211,550,000

  

KRW, 3.48%, 12/02/2013

       198,866   

290,870,000

  

KRW, 3.47%, 02/02/2014

       273,644   

427,490,000

  

KRW, 3.59%, 04/02/2014

       403,161   

506,810,000

  

KRW, 3.28%, 06/02/2014

       476,485   

222,300,000

  

KRW, 2.82%, 08/02/2014

       207,665   

886,200,000

  

KRW, 2.78%, 10/02/2014

       827,215   

313,810,000

  

KRW, 2.84%, 12/02/2014

       293,247   
   Korea Treasury Bond     

673,720,000

  

KRW, 5.25%, 03/10/2013

       632,131   

12,188,630,000

  

KRW, 3.75%, 06/10/2013

       11,433,130   

12,932,270,000

  

KRW, 3.00%, 12/10/2013

       12,104,185   

155,590,000

  

KRW, 3.50%, 06/10/2014

       146,736   

183,000,000

  

KRW, 3.25%, 12/10/2014

       172,317   
  

Lithuania Government International Bond

    

810,000

  

7.38%, 02/11/2020

       1,055,025   

730,000

  

6.13%, 03/09/2021 (a)

       898,849   
   Malaysia Government Bond     

10,988,000

  

MYR, 3.70%, 02/25/2013

       3,596,457   

2,915,000

  

MYR, 3.70%, 05/15/2013

       955,444   

1,935,000

  

MYR, 3.21%, 05/31/2013

       633,149   

2,345,000

  

MYR, 3.46%, 07/31/2013

       768,621   

20,000

  

MYR, 8.00%, 10/30/2013

       6,803   

8,520,000

  

MYR, 5.09%, 04/30/2014

       2,859,889   

4,145,000

  

MYR, 3.43%, 08/15/2014

       1,363,866   
   Malaysia Treasury Bill     

40,000

  

MYR, 2.58%, 01/25/2013

       13,057   

100,000

  

MYR, 2.97%, 03/22/2013

       32,487   

30,000

  

MYR, 2.99%, 05/03/2013

       9,712   

100,000

  

MYR, 3.01%, 05/31/2013

       32,299   
   Mexican Bonos     

52,407,000

  

MXP, 9.00%, 06/20/2013

       4,137,547   

52,430,000

  

MXP, 8.00%, 12/19/2013

       4,186,487   

3,317,000

  

MXP, 7.00%, 06/19/2014

       264,863   

54,300,000

  

MXP, 9.50%, 12/18/2014

       4,572,298   

19,400,000

  

MXP, 8.00%, 12/17/2015

       1,626,795   
   Mexican Udibonos     

395,400

  

MXP, 4.50%, 12/18/2014

       159,018   

1,045,000

  

MXP, 5.00%, 06/16/2016

       444,309   

1,048,000

  

MXP, 3.50%, 12/14/2017

       438,293   

721,000

  

MXP, 4.00%, 06/13/2019

       318,604   

567,000

  

MXP, 2.50%, 12/10/2020

       232,813   
   New South Wales Treasury Corp     

5,540,000

  

AUD, 5.50%, 08/01/2013

       5,838,571   
 

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

GREAT-WEST TEMPLETON GLOBAL BOND FUND

Schedule of Investments

As of December 31, 2012

 

Principal Amount                 Value  

Foreign Government Obligations — (continued)

    

$            1,450,000

  

AUD, 5.50%, 03/01/2017

  $      1,638,873   

9,220,000

  

Peru Government Bond

    
  

PEN, 7.84%, 08/12/2020

       4,552,386   
   Philippine Government Bond     

3,780,000

  

PHP, 5.25%, 01/07/2013

       92,101   

14,640,000

  

PHP, 8.75%, 03/03/2013

       361,413   

3,360,000

  

PHP, 6.25%, 01/27/2014

       86,303   

3,200,000

  

PHP, 7.00%, 01/27/2016

       86,384   

1,710,000

  

PHP, 9.13%, 09/04/2016

       49,638   
   Poland Government Bond     

8,355,000

  

PLN, 5.25%, 04/25/2013

       2,715,203   

4,500,000

  

PLN, 3.07%, 07/25/2013

       1,429,142   

8,395,000

  

PLN, 5.00%, 10/24/2013

       2,753,237   

36,975,000

  

PLN, 3.06%, 01/25/2014

       11,567,418   

9,935,000

  

PLN, 5.75%, 04/25/2014

       3,316,332   

2,490,000

  

PLN, 3.13%, 07/25/2014

       766,947   

1,580,000

  

PLN, 5.50%, 04/25/2015

       537,281   

2,330,000

  

PLN, 6.25%, 10/24/2015

       815,445   

4,072,000

  

PLN, 5.15%, 01/25/2017 (b)

       1,322,777   

4,130,000

  

PLN, 5.15%, 01/25/2021 (b)

       1,328,741   

2,600,000

  

Poland Government International Bond

    
  

6.38%, 07/15/2019

       3,241,472   
   Queensland Treasury Corp     

1,945,000

  

AUD, 6.00%, 08/14/2013

       2,058,706   

2,465,000

  

AUD, 6.00%, 08/21/2013

       2,609,390   
   Republic of Serbia (a)     

410,000

  

5.25%, 11/21/2017

       425,375   

900,000

  

7.25%, 09/28/2021

       1,035,000   

3,844,000

  

Russian Foreign Bond -
Eurobond (c)

    
  

2.53%, 03/31/2030

       4,937,234   
   Singapore Government Bond     

1,070,000

  

SGD, 1.63%, 04/01/2013

       878,764   

6,360,000

  

SGD, 0.25%, 02/01/2014

       5,205,584   

920,000

  

Slovenia Government International
Bond (a)

    
  

5.50%, 10/26/2022

       966,000   
   Sweden Government Bond     

34,460,000

  

SEK, 1.50%, 08/30/2013

       5,329,095   

19,260,000

  

SEK, 6.75%, 05/05/2014

       3,196,198   
  

Ukraine Government International Bond (a)

    

100,000

  

7.65%, 06/11/2013

       101,000   

100,000

  

EUR, 4.95%, 10/13/2015

       128,036   

860,000

  

6.25%, 06/17/2016

       853,550   

855,000

  

6.58%, 11/21/2016

       853,974   

770,000

  

9.25%, 07/24/2017

       835,450   

1,480,000

  

7.75%, 09/23/2020

       1,520,700   

3,280,000

  

7.95%, 02/23/2021

       3,394,800   

420,000

  

7.80%, 11/28/2022

       422,158   

510,000

  

Venezuela Government
International Bond

    
  

10.75%, 09/19/2013

       524,025   

1,505,000

  

Vietnam Government International Bond (a)

    
  

6.75%, 01/29/2020

       1,715,700   
       

 

 

 
          204,988,783   
       

 

 

 
Principal Amount                 Value  

Municipal Bonds and Notes — 0.05%

    

$            140,000

   County of Bexar Texas     
  

5.25%, 08/15/2047

  $      157,313   
       

 

 

 

TOTAL BONDS AND NOTES — 73.44%

(Cost $180,790,443)

  $      205,146,096   
       

 

 

 

SHORT TERM INVESTMENTS

    
  

Bank Negara Malaysia Monetary Notes

    

1,780,000

  

MYR, 2.25%, 01/15/2013

       581,541   

760,000

  

MYR, 3.00%, 06/11/2013

       245,266   

2,290,000

  

MYR, 3.00%, 06/18/2013

       738,593   

3,845,000

  

MYR, 3.00%, 06/20/2013

       1,239,919   

2,182,000

  

MYR, 1.84%, 01/10/2013

       713,178   

4,230,000

  

MYR, 2.35%, 01/17/2013

       1,381,745   

7,280,000

  

MYR, 2.78%, 02/19/2013

       2,371,647   

9,910,000

  

MYR, 2.93%, 02/26/2013

       3,225,922   

340,000

  

MYR, 3.00%, 05/14/2013

       109,971   

30,000

  

MYR, 3.00%, 10/31/2013

       9,570   

1,270,000

  

MYR, 3.01%, 06/04/2013

       410,061   

620,000

  

MYR, 3.01%, 11/19/2013

       197,451   

640,000

  

MYR, 6.42%, 06/27/2013

       202,935   

530,000

  

MYR, 6.17%, 07/04/2013

       168,058   

3,010,000

  

MYR, 3.00%, 12/12/2013

       956,901   

480,000

  

MYR, 5.73%, 07/18/2013

       152,201   

440,000

  

MYR, 3.02%, 07/11/2013

       141,636   

1,335,000

  

MYR, 3.02%, 07/25/2013

       429,243   

50,000

  

MYR, 2.95%, 03/07/2013

       16,264   

910,000

  

MYR, 2.22%, 08/06/2013

       293,678   

715,000

  

MYR, 2.95%, 03/12/2013

       232,477   

360,000

  

MYR, 2.99%, 03/14/2013

       117,025   

1,130,000

  

MYR, 3.01%, 08/15/2013

       362,703   

490,000

  

MYR, 2.99%, 08/27/2013

       157,146   

1,000,000

  

MYR, 3.01%, 09/05/2013

       320,425   

2,320,000

  

MYR, 3.01%, 09/17/2013

       742,655   

1,320,000

  

MYR, 3.01%, 09/26/2013

       422,234   

2,245,000

  

MYR, 3.00%, 10/10/2013

       717,366   

70,000

  

MYR, 2.80%, 10/22/2013

       22,346   

190,000

  

MYR, 3.01%, 05/28/2013

       61,383   
   Hungary Treasury Bill     

11,700,000

  

HUF, 5.34%, 07/24/2013

       51,457   

12,800,000

  

HUF, 5.37%, 05/29/2013

       56,745   

55,900,000

  

HUF, 5.42%, 09/18/2013

       243,725   

14,310,000

  

HUF, 4.86%, 01/23/2013

       64,631   

4,157,000

   Mexico Cetes     
  

MXP, 4.65%, 09/19/2013

       311,128   
   Philippine Treasury Bill     

690,000

  

PHP, 0.66%, 07/24/2013

       16,741   

8,420,000

  

PHP, 0.57%, 03/06/2013

       204,846   

10,920,000

  

PHP, 1.84%, 11/13/2013

       261,729   

2,880,000

  

PHP, 0.50%, 02/20/2013

       70,088   

5,200,000

  

PHP, 0.77%, 09/04/2013

       125,979   
 

 

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

GREAT-WEST TEMPLETON GLOBAL BOND FUND

Schedule of Investments

As of December 31, 2012

 

 

Principal Amount            Value  
  

Sweden Treasury Bill

    

3,300,000

  

  SEK, 0.88%, 06/19/2013

       505,381   

7,820,000

  

  SEK, 1.28%, 03/20/2013

       1,199,163   
       

 

 

 

TOTAL SHORT TERM INVESTMENTS — 7.11%

(Cost $19,828,740)

  $           19,853,153   
       

 

 

 

TOTAL INVESTMENTS — 80.55%

(Cost $200,619,183)

  $           224,999,249   
       

 

 

 

OTHER ASSETS & LIABILITIES, NET — 19.45%

  $           54,326,297   
       

 

 

 

TOTAL NET ASSETS — 100.00%

  $           279,325,546   
       

 

 

 

 

(a)  

Restricted security; at December 31, 2012, the aggregate cost and fair value of restricted securities was $13,393,178 and $14,796,178, respectively, representing 5.30% of net assets.

(b)  

Adjustable rate security; interest rate is subject to change. Interest rate shown reflects the rate in effect at December 31, 2012.

(c)  

Step bond; a zero coupon bond that converts to a fixed rate or variable interest rate at a designated future date. Rate disclosed represents effective yield at December 31, 2012. Maturity date disclosed represents final maturity date.

At December 31, 2012, the Fund held the following forward foreign currency contracts:

 

Counterparty    Currency
Purchased
   Quantity of
Currency
Purchased
  

Currency

Sold

  

Quantity of
Currency

Sold

  

Settlement

Date

        

Net

Unrealized
Appreciation/
(Depreciation)

BB

   CLP    118,300,000    USD    238,652    February 2013   $    6,742

BB

   CLP    309,000,000    USD    620,652    March 2013      19,133

CIT

   CLP    205,770,000    USD    413,110    February 2013      13,135

CIT

   CLP    137,620,000    USD    260,521    May 2013      20,853

DB

   CLP    119,850,000    USD    235,879    April 2013      11,133

DB

   CLP    196,499,000    USD    372,192    June 2013      29,396

DB

   CLP    808,940,000    USD    1,615,632    February 2013      60,789

DB

   CLP    1,002,960,000    USD    1,994,514    March 2013      78,957

DB

   CLP    940,970,000    USD    1,850,951    January 2013      105,203

JPM

   CLP    60,820,000    USD    119,901    January 2013      6,465

JPM

   CLP    109,000,000    USD    218,437    March 2013      6,620

JPM

   CLP    356,400,000    USD    715,431    February 2013      23,028

MS

   CLP    47,000,000    USD    91,887    March 2013      5,291

MS

   CLP    233,400,000    USD    443,305    January 2013      43,009

MS

   CLP    916,570,000    USD    1,838,528    February 2013      62,163

MS

   CLP    594,930,000    USD    1,142,813    May 2013      75,383

DB

   INR    79,075,000    USD    1,453,829    January 2013      (18,339)

DB

   INR    52,965,000    USD    964,878    April 2013      (15,420)

DB

   INR    44,845,000    USD    810,126    March 2013      (1,669)

HSB

   INR    64,100,000    USD    1,246,523    February 2013      (85,118)

HSB

   INR    42,468,000    USD    779,887    January 2013      (9,468)

HSB

   INR    37,823,000    USD    684,172    March 2013      (2,529)

JPM

   INR    58,459,000    USD    1,063,632    April 2013      (16,236)

JPM

   INR    10,300,000    USD    198,731    February 2013      (12,083)

JPM

   INR    22,077,000    USD    411,812    January 2013      (10,229)

JPM

   INR    8,994,000    USD    162,581    March 2013      (828)

JPM

   KRW    9,272,549,000    USD    8,148,826    February 2013      533,486

HSB

   MXP    25,646,790    USD    1,912,270    March 2013      70,014

DB

   MYR    654,360    USD    210,000    November 2013      1,038

DB

   MYR    120,000    USD    37,377    July 2013      1,539

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

GREAT-WEST TEMPLETON GLOBAL BOND FUND

Schedule of Investments

As of December 31, 2012

 

 

Counterparty   

Currency

Purchased

   Quantity of
Currency
Purchased
  

Currency

Sold

  

Quantity of

Currency

Sold

  

Settlement

Date

  

Net

Unrealized

Appreciation/

(Depreciation)

DB

   MYR    2,960,735    USD    948,208    October 2013    8,090

HSB

   MYR    1,758,089    USD    569,495    October 2013    (1,766)

HSB

   MYR    692,000    USD    224,632    February 2013    1,448

HSB

   MYR    3,223,000    USD    1,033,581    November 2013    5,777

HSB

   MYR    1,300,000    USD    412,738    August 2013    8,474

JPM

   MYR    1,886,213    USD    607,868    December 2013    (344)

JPM

   MYR    1,295,000    USD    417,568    October 2013    580

JPM

   MYR    70,000    USD    21,664    July 2013    1,031

JPM

   MYR    2,220,463    USD    712,720    April 2013    10,644

JPM

   MYR    4,135,000    USD    1,276,905    June 2013    65,695

BB

   NOK    5,165,000    EUR    689,669    August 2013    (9,252)

BB

   NOK    15,438,500    EUR    2,051,601    April 2013    32,368

UBS

   NOK    4,837,700    EUR    648,877    November 2013    (13,712)

UBS

   NOK    5,165,000    EUR    692,452    August 2013    (10,016)

DB

   PHP    13,202,000    USD    315,822    September 2013    8,499

DB

   PHP    25,384,000    USD    611,416    April 2013    9,586

DB

   PHP    19,833,000    USD    474,865    October 2013    12,382

DB

   PHP    29,468,000    USD    690,013    January 2013    29,861

DB

   PHP    35,700,000    USD    829,577    February 2013    43,897

HSB

   PHP    14,143,000    USD    340,688    April 2013    6,281

HSB

   PHP    10,000,000    USD    238,447    September 2013    7,220

HSB

   PHP    12,322,000    USD    284,218    January 2013    17,056

HSB

   PHP    51,205,000    USD    1,229,903    October 2013    28,076

HSB

   PHP    42,300,000    USD    983,190    February 2013    51,844

JPM

   PHP    6,299,000    USD    151,633    October 2013    3,121

JPM

   PHP    13,852,000    USD    333,190    April 2013    6,633

JPM

   PHP    13,900,000    USD    323,557    February 2013    16,618

JPM

   PHP    15,324,000    USD    352,688    January 2013    21,620

DB

   PLN    12,790,000    EUR    3,017,150    August 2013    (91,136)

MS

   PLN    1,341,000    EUR    297,934    May 2013    21,827

BB

   SEK    617,000    EUR    68,540    June 2013    2,982

DB

   SEK    14,090,000    EUR    1,640,413    October 2013    (39,731)

DB

   SEK    50,522,868    EUR    5,783,494    December 2013    (21,944)

DB

   SEK    10,665,890    EUR    1,169,012    June 2013    71,975

MS

   SEK    16,368,194    EUR    1,888,421    July 2013    (23,272)

MS

   SEK    556,700    EUR    63,526    December 2013    347

MS

   SEK    1,917,400    EUR    210,310    June 2013    11,406

UBS

   SEK    13,000,000    EUR    1,534,014    August 2013    (76,461)

UBS

   SEK    13,522,280    EUR    1,552,438    July 2013    (11,024)

UBS

   SEK    9,747,000    EUR    1,088,515    June 2013    29,019

BB

   SGD    2,236,051    USD    1,802,561    February 2013    27,961

DB

   SGD    1,583,700    USD    1,256,907    March 2013    39,581

DB

   SGD    2,921,550    USD    2,345,993    August 2013    46,193

DB

   SGD    3,201,500    USD    2,566,901    February 2013    53,977

HSB

   SGD    698,000    USD    560,622    August 2013    10,907

HSB

   SGD    1,593,300    USD    1,283,502    February 2013    20,838

HSB

   SGD    1,528,000    USD    1,212,996    March 2013    37,893

JPM

   SGD    550,000    USD    450,524    March 2013    (270)

JPM

   SGD    542,000    USD    443,100    September 2013    731

JPM

   SGD    2,636,600    USD    2,113,507    July 2013    45,277

MS

   SGD    2,113,440    USD    1,698,907    August 2013    31,531

BB

   USD    1,807,632    EUR    1,455,583    August 2013    (117,299)

BB

   USD    3,029,495    EUR    2,333,135    February 2013    (50,051)

BB

   USD    646,126    EUR    525,000    July 2013    (47,915)

BB

   USD    1,412,871    EUR    1,105,041    May 2013    (47,107)

BB

   USD    784,508    EUR    628,321    June 2013    (45,762)

BB

   USD    1,227,413    EUR    947,679    September 2013    (26,336)

BB

   USD    902,873    EUR    688,905    April 2013    (7,052)

BB

   USD    180,259    EUR    138,468    November 2013    (3,028)

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

GREAT-WEST TEMPLETON GLOBAL BOND FUND

Schedule of Investments

As of December 31, 2012

 

 

Counterparty    Currency
Purchased
   Quantity of
Currency
Purchased
   Currency Sold    Quantity of
Currency Sold
   Settlement Date   

Net

Unrealized

Appreciation/
<softreturn>
(Depreciation)

BB

   USD    74,222    EUR    56,900    October 2013    (1,086)

BB

   USD    625,728    EUR    472,920    March 2013    1,357

BB

   USD    215,448    JPY    17,921,410    March 2013    8,707

BB

   USD    152,190    JPY    12,300,000    April 2013    10,264

BB

   USD    1,096,065    JPY    85,800,000    February 2013    106,503

BB

   USD    1,964,197    JPY    154,714,000    August 2013    176,793

BB

   USD    1,977,132    JPY    151,970,000    January 2013    224,293

CIT

   USD    2,725,116    EUR    2,104,547    January 2013    (52,514)

CIT

   USD    174,854    EUR    140,049    August 2013    (10,334)

CIT

   USD    2,353,527    EUR    1,789,412    March 2013    (8,923)

CIT

   USD    890,694    EUR    681,000    February 2013    (8,164)

CIT

   USD    739,465    EUR    565,207    May 2013    (7,206)

CIT

   USD    219,404    EUR    169,019    July 2013    (4,058)

CIT

   USD    152,141    JPY    12,300,000    April 2013    10,215

CIT

   USD    324,248    JPY    26,945,000    March 2013    13,428

CIT

   USD    186,525    JPY    14,230,000    January 2013    22,328

CIT

   USD    344,983    JPY    27,274,000    June 2013    30,134

CIT

   USD    1,238,734    JPY    97,662,000    August 2013    110,489

CIT

   USD    2,055,731    JPY    163,191,000    May 2013    172,405

CIT

   USD    3,333,459    JPY    267,955,958    November 2013    234,529

DB

   USD    5,903,111    EUR    4,725,700    June 2013    (341,426)

DB

   USD    2,715,152    EUR    2,114,070    November 2013    (83,440)

DB

   USD    1,172,164    EUR    945,000    July 2013    (77,271)

DB

   USD    4,177,874    EUR    3,212,989    October 2013    (74,003)

DB

   USD    5,714,769    EUR    4,383,018    January 2013    (70,082)

DB

   USD    2,551,353    EUR    1,976,700    September 2013    (63,794)

DB

   USD    742,637    EUR    594,845    August 2013    (43,990)

DB

   USD    1,305,696    EUR    1,005,000    May 2013    (21,990)

DB

   USD    2,919,269    EUR    2,217,133    March 2013    (7,917)

DB

   USD    2,530,508    EUR    1,912,771    December 2013    (2,599)

DB

   USD    2,842,135    EUR    2,151,263    April 2013    972

DB

   USD    3,571,683    EUR    2,702,000    February 2013    5,174

DB

   USD    145,123    JPY    11,207,270    February 2013    15,877

DB

   USD    862,998    JPY    69,943,000    November 2013    54,084

DB

   USD    919,722    JPY    72,750,000    May 2013    80,130

DB

   USD    2,360,083    JPY    184,977,000    August 2013    223,093

DB

   USD    2,046,614    JPY    156,893,441    January 2013    236,729

GS

   USD    693,986    EUR    560,000    August 2013    (46,552)

HSB

   USD    882,231    EUR    713,000    August 2013    (60,510)

HSB

   USD    1,840,800    EUR    1,416,000    October 2013    (33,111)

HSB

   USD    1,060,136    EUR    810,000    February 2013    (8,989)

HSB

   USD    167,242    EUR    130,000    September 2013    (4,763)

HSB

   USD    324,198    EUR    246,482    December 2013    (2,193)

HSB

   USD    2,010,160    EUR    1,522,934    April 2013    (1,155)

HSB

   USD    222,531    EUR    169,000    March 2013    (588)

HSB

   USD    225,965    JPY    18,251,000    November 2013    14,884

HSB

   USD    582,810    JPY    46,600,000    March 2013    45,347

HSB

   USD    1,206,759    JPY    93,958,000    February 2013    123,180

HSB

   USD    1,881,676    JPY    144,999,132    January 2013    209,338

HSB

   USD    3,993,947    JPY    314,252,000    August 2013    363,378

JPM

   USD    1,930,199    EUR    1,550,435    August 2013    (120,145)

JPM

   USD    2,250,331    EUR    1,760,286    November 2013    (80,022)

JPM

   USD    886,502    EUR    714,000    July 2013    (57,538)

JPM

   USD    544,173    EUR    424,212    May 2013    (16,301)

JPM

   USD    1,317,791    EUR    1,003,563    April 2013    (7,593)

JPM

   USD    475,135    EUR    364,000    December 2013    (6,895)

JPM

   USD    61,920    EUR    48,000    September 2013    (1,577)

JPM

   USD    724,570    EUR    549,000    February 2013    (127)

JPM

   USD    181,218    JPY    14,034,000    September 2013    19,008

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

GREAT-WEST TEMPLETON GLOBAL BOND FUND

Schedule of Investments

As of December 31, 2012

 

Counterparty   

Currency

Purchased

  

Quantity of

Currency

Purchased

  

Currency

Sold

  

Quantity of

Currency

Sold

  

Settlement

Date

  

Net

Unrealized

Appreciation/

<softreturn>

(Depreciation)

JPM

   USD    583,229    JPY    46,600,000    March 2013    45,767

JPM

   USD    904,138    JPY    72,212,000    November 2013    69,008

JPM

   USD    981,405    JPY    77,230,000    February 2013    90,714

JPM

   USD    2,404,995    JPY    189,015,000    August 2013    221,220

MS

   USD    759,091    EUR    579,000    March 2013    (5,348)

MS

   USD    78,368    EUR    61,500    August 2013    (2,961)

MS

   USD    78,463    EUR    61,500    November 2013    (2,952)

MS

   USD    458,967    JPY    38,040,000    March 2013    20,162

MS

   USD    360,281    JPY    28,500,000    November 2013    30,685

MS

   USD    1,209,372    JPY    92,549,000    February 2013    142,089

UBS

   USD    2,190,915    EUR    1,762,692    August 2013    (140,121)

UBS

   USD    9,701,665    EUR    7,382,000    February 2013    (41,667)

UBS

   USD    310,534    EUR    240,017    September 2013    (6,990)

UBS

   USD    550,649    EUR    420,000    April 2013    (4,029)

UBS

   USD    648,804    JPY    52,000,000    March 2013    49,044

UBS

   USD    687,667    JPY    54,379,000    May 2013    60,091

UBS

   USD    823,198    JPY    65,703,500    November 2013    63,332

UBS

   USD    1,674,977    JPY    131,995,000    August 2013    150,038

UBS

   USD    1,553,250    JPY    119,640,000    January 2013    173,361
                 

 

               Net Appreciation    $    3,304,452    
                 

 

 

Currency Abbreviations:

AUD

 

Australian Dollar

BRL

 

Brazilian Real

CLP

 

Chilean Peso

EUR

 

Euro Dollar

HUF

 

Hungarian Forint

IDR

 

Indonesian Rupiah

ILS

 

Israeli New Sheqel

INR

 

Indian Rupee

JPY

 

Japanese Yen

KRW

 

Korean Won

MXP

 

Mexican Peso

MYR

 

Malaysian Ringgit

NOK

 

Norwegian Krone

PEN

 

Peruvian Nuevos Soles

PHP

 

Philippine Peso

PLN

 

Polish Zloty

SEK

 

Swedish Krona

SGD

 

Singapore Dollar

USD

 

U.S. Dollar

Counterparty Abbreviations:

BB

 

Barclays Bank PLC

CIT

 

Citigroup Global Markets

DB

 

Deutsche Bank

GS

 

Goldman Sachs

HSB

 

HSBC Bank USA, N.A.

JPM

 

JP Morgan Chase & Co.

MS

 

Morgan Stanley

UBS

 

UBS AG

 

Security classes presented herein are not necessarily the same as those used for determining the Fund’s compliance with its investment objectives and restrictions, as the Fund uses additional sub-classifications, which management defines by referring to one or more widely recognized market indexes or ratings group indexes (unaudited).

 

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

GREAT-WEST TEMPLETON GLOBAL BOND FUND

Schedule of Investments

As of December 31, 2012

 

Summary of Investments by Country as of December 31, 2012.

 

Country           Value      Percentage of
Fund Investments
 

Australia

  $          13,282,301         5.90

Brazil

      11,259,283         5.00   

Hungary

      8,678,873         3.86   

Iceland

      792,680         0.35   

Indonesia

      8,907,780         3.96   

Ireland

      22,572,979         10.03   

Israel

      3,665,889         1.63   

Lithuania

      1,953,874         0.87   

Malaysia

      27,976,870         12.44   

Mexico

      16,692,155         7.42   

Peru

      4,552,386         2.02   

Philippines

      1,355,222         0.60   

Poland

      29,793,995         13.24   

Russia

      4,937,234         2.20   

Serbia

      1,460,375         0.65   

Singapore

      6,084,348         2.70   

Slovenia

      966,000         0.43   

South Korea

      33,924,072         15.08   

Sweden

      11,649,676         5.18   

Ukraine

      8,391,168         3.73   

United States

      3,862,364         1.72   

Venezuela

      524,025         0.23   

Vietnam

      1,715,700         0.76   
   

 

 

    

 

 

 

Total

  $          224,999,249         100.00
   

 

 

    

 

 

 

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

Statement of Assets and Liabilities

As of December 31, 2012

 

       Great-West
Templeton Global
Bond Fund
 

ASSETS:

  

Investments in securities, fair value (a)

     $224,999,249   

Cash

     46,880,574   

Cash denominated in foreign currencies (b)

     3,940,866   

Interest receivable

     2,663,844   

Subscriptions receivable

     135,255   

Unrealized appreciation on forward foreign currency contracts

     5,650,773   
  

 

 

 

Total Assets

     284,270,561   
  

 

 

 

LIABILITIES:

  

Payable to investment adviser

     300,601   

Redemptions payable

                     2,298,093   

Unrealized depreciation on forward foreign currency contracts

     2,346,321   
  

 

 

 

Total Liabilities

     4,945,015   
  

 

 

 

NET ASSETS

     $279,325,546   
  

 

 

 

NET ASSETS REPRESENTED BY:

  

Capital stock, $0.10 par value

     $2,864,184   

Paid-in capital in excess of par

     248,410,135   

Net unrealized appreciation on investments, forward foreign currency contracts and foreign currency translations

     27,692,674   

(Overdistributed) net investment income

     (438,069)   

Accumulated net realized gain on investments, forward foreign currency contracts and foreign currency transactions

     796,622   
  

 

 

 

TOTAL NET ASSETS

     $279,325,546   
  

 

 

 

CAPITAL STOCK:

  

Authorized

     100,000,000   

Issued and Outstanding

     28,641,838   

NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE:

     $9.75   
  

 

 

 

(a)     Cost of investments

     $200,619,183   

(b)     Cost of cash denominated in foreign currencies

     $3,932,710   

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

Statement of Operations

For the fiscal year ended December 31, 2012

 

      

Great-West

Templeton Global

Bond Fund

 

INVESTMENT INCOME:

  

Interest

     $10,130,000   

Foreign withholding tax

     (719,231)   
  

 

 

 

Total Income

     9,410,769   
  

 

 

 

EXPENSES:

  

Management fees

     3,274,334   
  

 

 

 

Total Expenses

     3,274,334   
  

 

 

 

NET INVESTMENT INCOME

     6,136,435   
  

 

 

 

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:

  

Net realized gain on investments and foreign currency transactions

     1,232,544   

Net realized gain on forward foreign currency contracts

     6,508,847   
  

 

 

 

Net realized gain

     7,741,391   
  

 

 

 

Net change in unrealized appreciation on investments and foreign currency
translations

     16,733,840   

Net change in unrealized appreciation on forward foreign currency contracts

     3,602,371   
  

 

 

 

Net change in unrealized appreciation

     20,336,211   
  

 

 

 

Net Realized and Unrealized Gain on Investments, Forward Foreign Currency
Contracts and Foreign Currency

     28,077,602   
  

 

 

 

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS

     $34,214,037   
  

 

 

 

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

Statement of Changes in Net Assets

For the fiscal years ended December 31, 2012 and 2011

 

     2012      2011  
Great-West Templeton Global Bond Fund                  

OPERATIONS:

     

Net investment income

     $6,136,435         $5,677,900   

Net realized gain

     7,741,391         6,305,304   

Net change in unrealized appreciation (depreciation)

     20,336,211         (15,089,084)   
  

 

 

    

 

 

 

Net Increase (Decrease) in Net Assets Resulting from Operations

     34,214,037         (3,105,880)   
  

 

 

    

 

 

 

DISTRIBUTIONS TO SHAREHOLDERS:

     

From net investment income

     (13,913,462)         (11,605,259)   

From net realized gains

     (2,527,769)         (743,925)   
  

 

 

    

 

 

 

Total Distributions

     (16,441,231)         (12,349,184)   
  

 

 

    

 

 

 

CAPITAL SHARE TRANSACTIONS:

     

Shares sold

     84,615,331         77,342,180   

Shares issued in reinvestment of distributions

     16,441,231         12,349,184   

Shares redeemed

     (58,505,742)         (74,265,616)   
  

 

 

    

 

 

 

Net Increase in Net Assets Resulting from Capital Share Transactions

     42,550,820         15,425,748   
  

 

 

    

 

 

 

Total Increase (Decrease) in Net Assets

     60,323,626         (29,316)   
  

 

 

    

 

 

 

NET ASSETS:

     

Beginning of year

     219,001,920         219,031,236   
  

 

 

    

 

 

 

End of year (a)

     $279,325,546         $219,001,920   
  

 

 

    

 

 

 

CAPITAL SHARE TRANSACTIONS - SHARES:

     

Shares sold

     8,763,435         7,960,089   

Shares issued in reinvestment of distributions

     1,709,958         1,308,817   

Shares redeemed

     (6,061,006)         (7,532,014)   
  

 

 

    

 

 

 

Net Increase

     4,412,387         1,736,892   
  

 

 

    

 

 

 

(a)   Including undistributed and (overdistributed) net investment income:

     $(438,069)         $1,836,131   

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

Financial Highlights

Selected data for a share of capital stock of the Fund throughout the periods indicated.

 

     Fiscal Years Ended December 31,       
     2012     2011      2010      2009      2008       
Great-West Templeton Global Bond Fund - Initial Class                                                   

NET ASSET VALUE, BEGINNING OF YEAR

     $9.04        $9.74         $9.02         $8.02         $10.47      

INCOME (LOSS) FROM INVESTMENT OPERATIONS:

                

Net investment income

     0.23 (a)       0.47         0.29         1.59         1.22      

Net realized and unrealized gain (loss)

     1.08        (0.62)         0.69         (0.42)         (0.82)      
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

Total From Investment Operations

     1.31        (0.15)         0.98         1.17         0.40      
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

LESS DISTRIBUTIONS:

                

From return of capital

                            (0.17)              

From net investment income

     (0.51)        (0.52)         (0.23)                 (2.59)      

From net realized gains

     (0.09)        (0.03)         (0.03)                 (0.26)      
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

Total Distributions

     (0.60)        (0.55)         (0.26)         (0.17)         (2.85)      
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

NET ASSET VALUE, END OF YEAR

     $9.75        $9.04         $9.74         $9.02         $8.02      
  

 

 

   

 

 

    

 

 

    

 

 

    

 

 

    

TOTAL RETURN (b)

     14.76%        (1.63%)         10.92%         14.71%         4.45%      

SUPPLEMENTAL DATA AND RATIOS:

                

Net assets, end of year ($000)

     $279,326        $219,002         $219,031         $147,080         $106,630      

Ratio of expenses to average net assets

     1.30%        1.30%         1.30%         1.30%         1.30%      

Ratio of net investment income to average net assets

     2.44%        2.69%         2.86%         4.02%         2.77%      

Portfolio turnover rate

     32%        36%         22%         39%         62%      

 

(a)  

Per share amounts are based upon average shares outstanding.

(b)  

Performance does not include any fees or expenses of variable insurance contracts, if applicable. If such fees or expenses were included, returns would be lower.

 

See Notes to Financial Statements.

 

 

Annual Report - December 31, 2012


GREAT-WEST FUNDS, INC.

GREAT-WEST TEMPLETON GLOBAL BOND FUND

Notes to Financial Statements

 

 

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Great-West Funds, Inc. (the Great-West Funds) is a Maryland corporation 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 changed its name from Maxim Series Fund, Inc. on September 24, 2012 and presently consists of sixty-four funds. Interests in the Great-West Templeton Global Bond Fund (the Fund) are included herein and are represented by a separate class of beneficial interest of the Great-West Funds. Effective May 1, 2011, Maxim Global Bond Portfolio’s name changed to Maxim Templeton Global Bond Portfolio, which subsequently changed to Great-West Templeton Global Bond Fund on September 24, 2012. The investment objective of the Fund is to seek current income with capital appreciation and growth of income. The Fund is non-diversified as defined in the 1940 Act. The Fund is available as an investment option for 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 the Great-West Funds.

The Fund offers two share classes, referred to as the Initial Class and Class L. This report includes information for the Initial Class; Class L has not yet been capitalized.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 following is a summary of the significant accounting policies of the Fund.

Net Asset Value

The net asset value of each class of the Fund’s shares is determined by dividing the net assets attributable to each class of the Fund by the number of issued and outstanding shares of each class of the Fund on each business day.

Security Valuation

The value of assets in the Fund is determined as of the close of trading on each valuation date.

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 approximates 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 model priced or priced on the basis of quotations from brokers or dealers, and will continue to be priced until final maturity.

Fixed income investments are valued using evaluated bid prices from approved pricing services, or in the event a price is not available from a pricing service, may be model priced or priced on the basis of quotations from brokers or dealers.

Foreign exchange rates are determined by utilizing the New York closing rates.

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. Developments that might trigger fair value pricing could be natural disasters, government actions or fluctuations in domestic and foreign markets.

 

 

 

Annual Report - December 31, 2012


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

Fixed Income Investments:

  

  Government and Government Agency

    Obligations (Foreign)

  

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.

  Municipal Bonds and Notes

  

Benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, evaluated bids, offers and reference data including market research publications. Inputs also may include reported trades, benchmark yields and material event notices.

Short Term Investments

  

Maturity date and credit quality.

Derivative Investments:

  

  Forward Foreign Currency Contracts

  

Foreign currency spot and forward rates.

The Fund classifies its valuations into three levels based upon the transparency 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. 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. The fair value for some Level 2 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.

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 reporting entity’s own assumptions and would be based on the best information available under the circumstances. Broker quotes are analyzed through an internal review process, which includes a review of known market conditions and other relevant data.

As of December 31, 2012, 100% of the Fund’s investments are valued using Level 2 inputs. A breakdown of the Fund’s sector and industry classifications is included in the Schedule of Investments. The Fund recognizes transfers between the levels as of the beginning of the reporting period. There were no transfers between Levels 1, 2 and 3 during the year.

Risk Factors

Investing in the Fund may involve certain risks including, but not limited to, the following.

Unforeseen developments in market conditions may result in the decline of prices of, and the income generated by, the securities held by the Fund. These events may have adverse effects on the Fund such as a decline in the value and liquidity of many securities held by the Fund, and a decrease in net asset value. Such unforeseen developments may limit or preclude the Fund’s ability to achieve its investment objective.

The Fund may have elements of risk due to concentrated investments in foreign issuers located in a specific country. Such concentrations may subject the Fund to additional risks resulting from future political or economic conditions and/or possible impositions of adverse foreign governmental laws or currency exchange restrictions. Investments in securities of non-U.S. issuers have unique risks not present in securities of U.S. issuers, such as greater price volatility and less liquidity.

 

 

 

Annual Report - December 31, 2012


Fixed income securities are subject to credit risk, which is the possibility that a security could have its credit rating downgraded or that the issuer of the security could fail to make timely payments or default on payments of interest or principal. Additionally, fixed income securities are subject to interest rate risk, meaning the decline in the price of debt securities that accompanies a rise in interest rates. Bonds with longer maturities are subject to greater price fluctuations than bonds with shorter maturities.

The Fund may hold bonds which are rated below investment grade. These high yield bonds may be more susceptible than higher grade bonds to real or perceived adverse economic or industry conditions. The secondary market, on which high yield bonds are traded, may be less liquid than the market for higher grade bonds.

Restricted Securities

The Fund may own certain investment securities which are restricted as to resale. These securities may be resold in transactions exempt from registration, normally to qualified institutional buyers. These securities are valued after giving due consideration to pertinent factors including recent private sales, market conditions, and the issuer’s financial performance. These securities are deemed illiquid unless it is otherwise determined that such securities are liquid pursuant to the Board-approved guidelines established in the Great-West Funds’ Policy and Procedures regarding Liquidity.

Foreign Currency Translations and Transactions

The accounting records of the Fund are maintained in U.S. dollars. Investment securities, and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current exchange rate. Purchases and sales of securities, income receipts and expense payments are translated into U.S. dollars at the exchange rate on the dates of the transactions.

The Fund does not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.

Net realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions, and the difference between the amounts of dividends, interest, and foreign withholding taxes recorded by the Fund and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in the fair values of assets and liabilities, other than investments in securities at fiscal period end, resulting from changes in exchange rates. These gains and losses are included in net realized gain or loss on investments and foreign currency transactions and in change in net unrealized appreciation or depreciation on investments and foreign currency translations on the Statement of Operations.

Forward Foreign Currency Contracts

A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated rate. Upon closing of such contract there is a gain or loss arising from the difference between the U.S. dollar cost of the original contract and the value of the foreign currency in U.S. dollars. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movement in currency and securities values and interest rates.

Dividends

Dividends from net investment income of the Fund, if any, are declared and paid semi-annually. Income dividends are reinvested in additional shares at net asset value. Dividends from capital gains of the Fund, if any, are declared and reinvested at least annually in additional shares at net asset value.

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.

 

 

 

Annual Report - December 31, 2012


Interest income, including amortization of discounts and premiums, is recorded daily.

Federal Income Taxes

The Fund’s policy complies with the requirements under Subchapter M of the Internal Revenue Code applicable to regulated investment companies and the Fund intends to distribute substantially all of its net taxable income and net capital gains, if any, each year. The Fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income taxes or excise tax provision is required.

As of and during the year ended December 31, 2012, the Fund did not have a liability for any unrecognized tax benefits. The Fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year, the Fund did not incur any interest or penalties.

The Fund files U.S. Federal and Colorado tax returns. The statute of limitations on the Fund’s U.S. Federal tax returns remain open for the fiscal years ended 2009 through 2012. The statute of limitations on the Fund’s Colorado tax returns remain open for an additional year.

Application of Recent Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board issued ASU No. 2011-03 “Transfers and Servicing (Topic 860): Reconsideration of Effective Control for Repurchase Agreements” (ASU No. 2011-03). ASU No. 2011-03 removes from the assessment of effective control the criterion requiring a transferor to have the ability to repurchase or redeem the financial assets transferred in a repurchase arrangement. This requirement was one of the criterions under ASU topic 860 that entities used to determine whether a transferor maintained effective control. Entities are still required to consider all the effective control criterion under ASU topic 860; however, the elimination of this requirement may lead to more conclusions that a repurchase agreement should be accounted for as a secured borrowing rather than a sale. ASU No. 2011-03 is effective for the interim or annual periods beginning on or after December 15, 2011. The Fund adopted ASU No. 2011-03 for its fiscal year beginning January 1, 2012. The adoption of ASU No. 2011-03 did not have an impact on the Fund’s financial position or the results of its operations.

In May 2011, the Financial Accounting Standards Board issued ASU No. 2011-04 “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU No. 2011-04). ASU No. 2011-04 does not extend the use of the existing concept or guidance regarding fair value. It results in common fair value measurements and disclosures between accounting principles generally accepted in the United States and those of International Financial Reporting Standards. ASU No. 2011-04 expands disclosure requirements for Level 3 inputs to include a quantitative description of the unobservable inputs used, a description of the valuation process used and a qualitative description about the sensitivity of the fair value measurements. ASU No. 2011-04 is effective for interim or annual periods beginning on or after December 15, 2011. The Fund adopted ASU No. 2011-04 for its fiscal year beginning January 1, 2012. The adoption of ASU No. 2011-04 did not have an impact on the Fund’s financial position or the results of its operations.

In December 2011, the Financial Accounting Standards Board issued ASU No. 2011-11 “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” (ASU No. 2011-11). ASU No. 2011-11 requires an entity to enhance disclosures about financial and derivative instrument offsetting arrangements or similar arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 is effective for interim or annual periods beginning on or after January 1, 2013. The Fund will adopt ASU No. 2011-11 for its fiscal year beginning January 1, 2013. At this time, the Fund is evaluating the impact, if any, of ASU No. 2011-11 on the financial statements and related disclosures.

2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES

Great-West Funds has entered into an investment advisory agreement with Great-West Capital Management, LLC (the Adviser), formerly known as GW Capital Management, LLC, a wholly-owned subsidiary of GWL&A. As compensation for its services to Great-West Funds, the Adviser receives monthly compensation at the annual rate of 1.30% of the average daily net assets of the Fund. The management fee encompasses fund operation expenses. The Adviser and Great-West Funds have entered into a sub-advisory agreement with Franklin Advisers, Inc. The Fund is not responsible for payment of the sub-advisory fees.

 

 

 

Annual Report - December 31, 2012


GWFS Equities, Inc. (the Distributor), is a wholly-owned subsidiary of GWL&A and the principal underwriter to distribute and market the Fund.

The total compensation paid to the independent directors with respect to all sixty-four funds for which they serve as Directors was $238,800 for the year ended December 31, 2012. 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.

3. PURCHASES AND SALES OF INVESTMENT SECURITIES

For the year ended December 31, 2012, the aggregate cost of purchases and proceeds from sales of investment securities (excluding all U.S. Government securities and short-term securities) were $84,068,089 and $59,284,796, respectively. For the same period, the aggregate cost of purchases and proceeds from sales of long-term U.S. Government securities were $0 and $2,366,499, respectively.

4. UNREALIZED APPRECIATION (DEPRECIATION)

At December 31, 2012, the U.S. Federal income tax cost basis was $199,752,080. The Fund had gross appreciation of securities in which there was an excess of value over tax cost of $26,706,520 and gross depreciation of securities in which there was an excess of tax cost over value of $1,459,351 resulting in net appreciation of $25,247,169.

5. DERIVATIVE FINANCIAL INSTRUMENTS

The Fund seeks to capture potential returns from changes in international exchange rates or seeks to reduce the risk of undesired currency exposure by entering into forward foreign currency contracts. The Fund uses forward foreign currency contracts when the manager believes it may be more cost or tax efficient to use derivative instruments or it provides more liquidity than investing directly in the underlying bond or currency market.

Valuation of derivative instruments as of December 31, 2012 is as follows:

 

          Asset Derivatives          Liability Derivatives  

Derivatives Not Accounted for as Hedging Instruments

   

Statement of Assets and Liabilities Location

     Value        

Statement of Assets and Liabilities Location

     Value   

forward foreign currency contracts

   

Unrealized appreciation on forward foreign currency contracts

   $ 5,650,773        

Unrealized depreciation on forward foreign currency contracts

   $ 2,346,321   
The effect of derivative instruments for the year ended December 31, 2012 is as follows:   
          Net Realized Gain/Loss          Net Unrealized Gain/Loss  

Derivatives Not Accounted for as Hedging Instruments

   

Statement of Operations Location

     Value        

Statement of Operations Location

     Value   

forward foreign currency contracts

   

Net realized gain on forward foreign currency contracts

   $ 6,508,847        

Net change in unrealized appreciation on forward foreign currency contracts

   $ 3,602,371   

The Fund held an average notional value of $211,468,211 on forward foreign currency contracts for the reporting period.

6. DISTRIBUTIONS TO SHAREHOLDERS

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 and tax basis differences. The differences may include but are not limited to the following: wash sales, distribution adjustments, market discount adjustments and foreign

 

 

 

Annual Report - December 31, 2012


currency reclassifications. The differences have no impact on net assets or the results of operations. The character of dividends and distributions made during the fiscal year from net investment income and/or realized gains may differ from their ultimate characterization for federal income tax purposes. In addition, due to the timing of dividend distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or realized gain was recorded by the Fund.

For the year ended December 31, 2012, the Fund reclassified permanent book and tax differences of:

 

      

Paid-in Capital

     Overdistributed
  Net Investment  
Income
         Accumulated Net    
Realized Gain on
Investments
 
   $                    –       $         5,502,827       $ (5,502,827

The tax character of distributions paid during the years ended December 31, 2012 and 2011 were as follows:

 

               2012            2011  
 

Distributions paid from:

         
 

Ordinary income

     $        13,913,462         $        11,611,851   
 

Long-term capital gain

       2,527,769           737,333   
      

 

 

      

 

 

 
       $        16,441,231         $        12,349,184   
      

 

 

      

 

 

 

As of December 31, 2012, the components of distributable earnings on a tax basis were as follows:

 

 

Undistributed ordinary income

   $     2,489,171   
 

Undistributed capital gains

       2,329,580   
      

 

 

 
 

Net accumulated earnings

       4,818,751   
      

 

 

 
 

Net unrealized appreciation on investments

       25,247,169   
 

Net unrealized appreciation on futures contracts, forward foreign currency contracts and foreign currency translations

       515,755   
 

Capital loss carryforward

         
 

Post-October losses

       (2,530,448
      

 

 

 
 

Tax composition of capital

   $     28,051,227   
      

 

 

 

The Fund has elected to defer to the next fiscal year the following Post-October losses:

 

     Post-October ordinary
losses
     Post-October capital
losses
 
   $       $ (2,530,448

Under the Regulated Investment Company Modernization Act of 2010, net capital losses realized in taxable years beginning after December 22, 2010 may be carried forward indefinitely, and the character of the losses is retained as short-term and/or long-term.

7. TAX INFORMATION (unaudited)

Dividends paid by the 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, 2012, 0% qualifies for the dividend received deduction available to the Fund’s corporate shareholders.

 

 

 

Annual Report - December 31, 2012


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Great-West Funds, Inc.

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the Great-West Templeton Global Bond Fund (formerly, Maxim Templeton Global Bond Portfolio), one of the funds of Great-West Funds, Inc. (formerly, Maxim Series Fund, Inc.) (the “Great-West Funds”) as of December 31, 2012, and the related statement of operations for the year then ended, the statement of changes in 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. These financial statements and financial highlights are the responsibility of Great-West Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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. Great-West Funds is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Great-West Funds’ internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2012, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Great-West Templeton Global Bond Fund of Great-West Funds, Inc. as of December 31, 2012, the results of its operations for the year then ended, the changes in its 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.

/s/ DELOITTE & TOUCHE LLP

Denver, Colorado

February 22, 2013


Fund Directors and Officers

Great-West Funds, Inc. (“Great-West Funds”) is organized under Maryland law, and is governed by the Board of Directors (the “Board”). The Board is responsible for overall management of Great-West Funds’ business affairs. The Board meets at least four times during the year to, among other things, review a wide variety of matters affecting Great-West Funds, including performance, compliance matters, advisory fees and expenses, service providers, and other business affairs. Each Director oversees 64 funds, each of which is a series of Great-West Funds. The business address of each Director and officer is 8515 East Orchard Road, Greenwood Village, Colorado 80111. The following table provides information about each of the Directors and executive officers of Great-West Funds.

 

 

Independent Directors*

 

Name,
Address,
and Age
   Position(s)
Held with
Great-West
        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

 

1943

 

   Independent Director    Since 2007    Managing Attorney, Klapper Law Firm; Member, The Colorado Forum; President, Ward Lake, Inc.; Manager, 6K Ranch, LLC    64    Director, Guaranty Bancorp

Stephen G. McConahey

 

8515 East Orchard Road, Greenwood Village, CO 80111

 

1943

 

   Independent Director    Since 2011    Chairman, SGM Capital, LLC; Partner, Iron Gate Capital, LLC; Director, The IMA Financial Group, Inc.    64    Director, Guaranty Bancorp


Sanford Zisman

 

8515 East Orchard Road, Greenwood Village,

CO 80111

 

1939

 

   Lead Independent Director    Since 1982    Attorney, Law Firm of Zisman, Ingraham & Mong, P.C.    64
   N/A
 

Interested Directors**

 

Name,
Address,
and Age
   Position(s)
Held with
Great-West
        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

Mitchell T.G. Graye

 

8515 East Orchard Road, Greenwood Village,
CO 80111

 

1955

   Chairman, President & Chief Executive Officer   

Since 2000 (as Director)

 

Since 2008 (as Chairman)

 

Since 2008 (as President and Chief Executive Officer)

  

President and Chief Executive Officer, Great-West Life & Annuity Insurance Company, Great-West Life & Annuity Insurance Company of New York, and GWL&A Financial, Inc.; President and Chief Executive Officer, U.S. Operations, The Great-West Life Assurance Company, The Canada Life Assurance Company, Crown Life Insurance Company, and London Life Insurance Company

 

   64    N/A

Charles P. Nelson

 

8515 East Orchard Road, Greenwood Village,
CO 80111

 

1961

   Director    Since 2008   

President, Retirement Services, Great-West Life & Annuity Insurance Company and Great-West Life & Annuity Insurance Company of New York; Chairman and President, Advised Assets Group, LLC, EMJAY Corporation, and FASCore, LLC; Chairman, President and Chief Executive Officer, GWFS Equities, Inc.; Manager, Great-West Capital Management, LLC

 

   64    N/A


 

Officers

 

Name,
Address,
and Age
   Position(s)
Held with
Great-West
        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

Beverly A. Byrne

 

8515 East Orchard Road, Greenwood Village,
CO 80111

 

1955

   Chief Legal Counsel & Chief Compliance Officer   

Since 2004 (as Chief Compliance Officer)

 

Since 2011 (as Chief Legal Counsel)

  

Chief Compliance Officer, Chief Legal Counsel, Financial Services, Great-West Life & Annuity Insurance Company and Great-West Life & Annuity Insurance Company of New York; Chief Compliance Officer, U.S. Operations, The Great-West Life Assurance Company, The Canada Life Assurance Company, Crown Life Insurance Company, and London Life Insurance Company; Secretary and Chief Compliance Officer, GWFS Equities, Inc.; Chief Compliance Officer, Advised Assets Group, LLC; Chief Legal Officer and Secretary, FASCore, LLC; Chief Legal Counsel & Chief Compliance Officer, Great-West Capital Management, LLC; formerly, Secretary, Great-West Capital Management, LLC and Great-West Funds

 

   N/A    N/A


John A. Clouthier

 

8515 East Orchard Road, Greenwood Village,

CO 80111

 

1967

 

   Assistant Treasurer    Since 2007    Director, Fund Administration, Great-West Life & Annuity Insurance Company; Assistant Treasurer, Great-West Capital Management, LLC    N/A    N/A

Jill A. Kerschen

 

8515 East Orchard Road, Greenwood Village,

CO 80111

 

1975

 

   Assistant Treasurer    Since 2008    Senior Manager, Fund Financial & Tax Reporting, Great-West Life & Annuity Insurance Company; Assistant Treasurer, Great-West Capital Management, LLC    N/A    N/A

Ryan L. Logsdon

 

8515 East Orchard Road, Greenwood Village,

CO 80111

 

1974

   Assistant Vice President, Counsel & Secretary    Since 2010   

Assistant Vice President & Counsel, Great-West Life & Annuity Insurance Company; Assistant Vice President, Counsel & Secretary, Great-West Capital Management, LLC; formerly, Assistant Secretary, Great-West Capital Management, LLC and Great-West Funds

 

   N/A    N/A


Mary C. Maiers

 

8515 East Orchard Road, Greenwood Village,

CO 80111

 

1967

   Chief Financial Officer & Treasurer   

Since 2008
(as Treasurer)

 

Since 2011
(as Chief Financial Officer)

  

Vice President, Investment Operations, Great-West Life & Annuity Insurance Company and Great-West Life & Annuity Insurance Company of New York; Vice President and Treasurer, GWFS Equities, Inc. and Great-West Trust Company, LLC; Chief Financial Officer & Treasurer, Great-West Capital Management, LLC; formerly Investment Operations Compliance Officer, Great-West Capital Management, LLC and Great-West Funds

 

   N/A    N/A

David G. McLeod

 

8515 East Orchard Road, Greenwood Village,

CO 80111

 

1962

   Managing Director    Since 2012   

Senior Vice President, Product Management, Great-West Life & Annuity Insurance Company; Manager, Vice President and Managing Director, Advised Assets Group, LLC; Managing Director, Great-West Capital Management, LLC

 

   N/A    N/A

Joel L. Terwilliger

 

8515 East Orchard Road, Greenwood Village,

CO 80111

 

1968

   Assistant Chief Compliance Officer    Since 2011   

Managing Counsel, Great-West Life & Annuity Insurance Company; Secretary, Advised Assets Group, LLC; Assistant Chief Compliance Officer, Great-West Capital Management, LLC

 

   N/A    N/A

*A Director who is not an “interested person” of Great-West Funds (as defined in the Investment Company Act of 1940, as amended) is referred to as an “Independent Director.”

**An “Interested Director” refers to a Director who is an “interested person” of Great-West Funds (as defined in the Investment Company Act of 1940, as amended) by virtue of their affiliation with either Great-West Funds or Great-West Capital Management, LLC.

Additional information about Great-West Funds and its Directors is available in the Great-West Funds’ Statement of Additional Information (“SAI”), which can be obtained free of charge upon request to: Secretary, Great-West 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 http://www.greatwestfunds.com .

Availability of Quarterly Fund 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 N-Q. Great-West Funds’ Forms N-Q 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 Securities and Exchange Commission’s 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 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 substantive amendments made 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.


(f)

A copy of the Code of Ethics is filed as an exhibit to this Form N-CSR.

ITEM 3.  AUDIT COMMITTEE FINANCIAL EXPERT.

Mr. Sanford Zisman 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: $610,000 for fiscal year 2011 and $638,600 for fiscal year 2012.

 

(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: $79,500 for fiscal year 2011 and $79,500 for fiscal year 2012. 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: $263,400 for fiscal year 2011 and $0 for fiscal year 2012. The nature of the services comprising the fees disclosed under this category involved tax return preparation, spillover dividend assistance, reconciliation of book capital accounts, and dividend assistance.

 

(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 Great-West Funds by its independent auditors. The Audit Committee will not grant


such approval to any auditors that are proposed to perform an audit for Great-West Funds if a chief executive officer, controller, chief financial officer, chief accounting officer or any person serving in an equivalent position for Great-West Funds that is responsible for the financial reporting or operations of Great-West Funds was employed by those auditors and participated in any capacity in an audit of Great-West Funds during the year period (or such other period proscribed under SEC 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 Great-West Funds by its independent auditors (except those within applicable de minimis statutory or regulatory exceptions) 1 provided that Great-West Funds’ auditors will not provide the following non-audit services to Great-West Funds: (a) bookkeeping or other services related to the accounting records or financial statements of Great-West 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-Fund Entities .    The Audit Committee must pre-approve any non-audit services that relate directly to the operations and financial reporting of Great-West Funds (except those within applicable de minimis statutory or regulatory exceptions) 3 to be provided by Great-West Funds’ auditors to (a) Great-West 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 Great-West

 

 

1 No pre-approval is required as to non-audit services provided to Great-West Funds if: (a) the aggregate amount of all non-audit services provided to Great-West Funds constitute not more than 5% of the total amount of revenues paid by Great-West Funds to the independent auditors during the fiscal year in which the services are provided; (b) these services were not recognized by Great-West 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.

2 With 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.

3 For 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 Great-West Funds, Great-West Funds’ investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser if that entity provides ongoing services to Great-West Funds; (b) these services were not recognized by Great-West 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.


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.

 

(e) (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.

 

(f)

Not Applicable.

 

(g)

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 2011 equaled $2,329,700 and for fiscal year 2012 equaled $1,680,600.

 

(h)

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.

 

 

4 No pre-approval is required by the Audit Committee as to non-audit services provided to any Great-West Funds sub-adviser that primarily provides portfolio management services and is under the direction of another investment adviser and is not affiliated with Great-West Funds’ primary investment adviser.


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 as described in general instructions on Form N-CSR, Item 10.

 

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. EXHIBITS.

(a)            (1) Code of Ethics required by Item 2 of Form N-CSR is filed herewith.

(2) A separate certification for each principal executive and principal financial officer as required by Rule 30a-2(a) under the Investment Company Act of 1940 is attached hereto.


(3) Not applicable.

(b) A separate certification for each principal executive and principal financial officer as required by Rule 30a-2(b) under the Investment Company Act of 1940 is attached hereto.


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/ M.T.G. Graye                                 
  M.T.G. Graye
  President and Chief Executive Officer
Date:   February 26, 2013

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/ M.T.G. Graye                                 
  M.T.G. Graye
  President and Chief Executive Officer
Date:   February 26, 2013
By:   /s/ M.C. Maiers                                 
  M.C. Maiers
  Chief Financial Officer & Treasurer
Date:   February 26, 2013
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