As filed with the Securities and Exchange Commission on March 10, 2014
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-07717
TRANSAMERICA ASSET ALLOCATION VARIABLE FUNDS
(Exact Name of Registrant as Specified in Charter)
570 Carillon Parkway
St. Petersburg, Florida 33716
(Address of Principal Executive Offices) (Zip Code)
Registrants Telephone Number, including Area Code: (727) 299-1800
Dennis P. Gallagher, Esq.
P.O. Box 9012
Clearwater, Florida 33758-9771
(Name and Address of Agent for Service)
Date of fiscal year end: December 31
Date of reporting period: January 1, 2013- December 31, 2013
Item 1: Report(s) to Shareholders. The Annual Report is attached.
This report is not to be construed as an offering for sale of any contracts participating in the Subaccounts (Series) of the Transamerica Partners Variable Funds or the Transamerica Asset Allocation Variable Funds, or as a solicitation of an offer to buy contracts unless preceded by or accompanied by a current prospectus which contains complete information about charges and expenses.
This report consists of the annual report of the Transamerica Asset Allocation Variable Funds and the annual reports of the Transamerica Partners Portfolios and the Calvert VP SRI Balanced Portfolio, the underlying portfolios in which the Transamerica Partners Variable Funds invest.
Proxy Voting Policies and Procedures
A description of the proxy voting policies and procedures of the Transamerica Asset Allocation Variable Funds and the Transamerica Partners Portfolios is included in the Statement of Additional Information (SAI), which is available without charge, upon request: (i) by calling 1-888-233-4339; (ii) on the Subaccounts website at www.transamericapartners.com or (iii) on the SECs website at www.sec.gov. In addition, the Transamerica Asset Allocation Variable Funds and the Transamerica Partners Portfolios are required to file Form N-PX, with the complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. Form N-PX for the twelve months ended June 30, 2013, is available without charge, upon request by calling 1-800-851-9777 and on the SECs website at http://www.sec.gov.
Quarterly Portfolios
Transamerica Asset Allocation Variable Funds will file their portfolios of investments on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Subaccounts Form N-Q is available on the SECs website at www.sec.gov. The Subaccounts Form N-Q may be reviewed and copied at the SECs Public Reference Room in Washington, DC. For information on the operation of the SECs Public Reference Room, call 1-800-SEC-0330. You may also obtain a copy of Form N-Q without charge, upon request, by calling 1-888-233-4339. Form N-Q for the corresponding Transamerica Partners Portfolios is also available without charge on the SEC website, at the SECs Public Reference Room, or by calling 1-888-233-4339.
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY
440 Mamaroneck Avenue
Harrison, New York 10528
December 31, 2013
To Contract Holders with Interests in
the Transamerica Partners Variable Funds:
We are pleased to present the most recent annual reports for the Transamerica Partners Portfolios and for the Calvert VP SRI Balanced Portfolio. As required under applicable law, we are sending these annual reports to contract holders of Group Variable Annuity Contracts issued by Transamerica Financial Life Insurance Company with unit interests in one or more of the subaccounts of Transamerica Partners Variable Funds. Each subaccount available within the Transamerica Partners Variable Funds, other than the Calvert Subaccount, invests its assets in a corresponding mutual fund that is a series of Transamerica Partners Portfolios. The Calvert Subaccount invests in the Calvert VP SRI Balanced Portfolio, a series of Calvert Variable Series, Inc.
Please call your retirement plan administrator, Transamerica Retirement Solutions Corporation (formerly, Diversified Retirement Corporation), at (800) 755-5801 if you have any questions regarding these reports.
Dear Fellow Shareholder,
On behalf of Transamerica Asset Allocation Variable Funds, we would like to thank you for your continued support and confidence in our products as we look forward to continuing to serve you and your financial adviser in the future. We value the trust you have placed in us.
This annual report is provided to you with the intent of presenting a comprehensive review of the investments of each of your funds. The Securities and Exchange Commission requires that annual and semi-annual reports be sent to all shareholders, and we believe this report to be an important part of the investment process. In addition to providing a comprehensive review, this report also provides a discussion of accounting policies as well as matters presented to shareholders that may have required their vote.
We believe it is important to understand market conditions over the last year in order to provide a context for reading this report. As 2013 began, fear of the U.S. fiscal cliff had been holding markets down even as earnings were improving. However, in early January, Congress resolved the fiscal cliff and as a result U.S. markets moved up strongly throughout the first quarter of 2013.
Spring brought slower conditions in Europe, which pushed international equities down. However, Japans new quantitative easing program launched in April helped them bounce back. In the U.S., economic conditions continued to improve as summer approached, prompting the Federal Reserve to announce plans to taper purchases of mortgages and Treasury bonds. As a result, equities and bonds sold off in anticipation of higher rates, pushing yields on the 10-year Treasury from 1.70% in April to 2.98% in September.
During the third quarter, the Federal Reserves message that tapering is not tightening seemed to satisfy markets as U.S. equities climbed higher on improving earnings. The market was able to hold onto those gains despite the government shutdown in October and concerns about a possible default. In December, the Federal Reserve announced the first taper and while U.S. equity markets responded favorably to the growth implications, bond markets pushed the 10-year Treasury yield further upward to end the year at 3.04%.
For the year ending December 31, 2013, the S&P 500® gained 32.39%, the MSCI Europe, Australasia, Far East Index gained 23.29% and the Barclays U.S. Aggregate Bond Index lost 2.02%. It is always important to maintain a diversified portfolio as investment returns have historically been difficult to predict.
In addition to your active involvement in the investment process, we firmly believe that a financial adviser is a key resource to help you build a complete picture of your current and future financial needs. Financial advisers are familiar with the markets history, including long-term returns and volatility of various asset classes. With your financial adviser, you can develop an investment program that incorporates factors such as your goals, your investment timeline, and your risk tolerance.
Please contact your financial adviser if you have any questions about the contents of this report, and thanks again for the confidence you have placed in us.
Sincerely,
The views expressed in this report reflect those of the portfolio managers only and may not necessarily represent the views of the Transamerica Asset Allocation Variable Funds. These views are subject to change based upon market conditions. These views should not be relied upon as investment advice and are not indicative of trading intent on behalf of the Transamerica Asset Allocation Variable Funds.
Understanding Your Funds Expenses
(unaudited)
UNIT HOLDER EXPENSES
Transamerica Asset Allocation Variable Funds (each individually, a Subaccount and collectively, the Subaccounts) is a separate investment account established by Transamerica Financial Life Insurance Company, Inc. (TFLIC), and is used as an investment vehicle under certain tax-deferred annuity contracts issued by TFLIC. Each Subaccount invests in underlying subaccounts of Transamerica Partners Variable Funds (TPVF), a unit investment trust. Subaccount contract holders bear the cost of operating the Subaccount (such as the advisory fee). The following examples are intended to help you understand your ongoing costs (in dollars and cents) of investing in the Subaccounts and to compare these costs with the ongoing costs of investing in other funds.
The examples are based on an investment of $1,000 invested at July 1, 2013 and held for the entire period until December 31, 2013.
ACTUAL EXPENSES
The information in the table under the heading Actual Expenses provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the number shown under the heading Expenses paid during Period to estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The information in the table under the heading Hypothetical Expenses provides information about hypothetical account values and hypothetical expenses based on the Subaccounts actual expense ratios and an assumed rates of return of 5% per year before expenses, which are not the Subaccounts actual returns. 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 your Subaccount versus 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.
Actual Expenses |
Hypothetical Expenses(A) |
|||||||||||||||||||||||
Subaccount Name | Beginning Account Value |
Ending Account Value |
Expenses Paid During Period(B) |
Ending Account Value |
Expenses Paid During Period(B) |
Annualized Expense Ratio(C) |
||||||||||||||||||
Transamerica Asset Allocation Variable - |
$ | 1,000.00 | $ | 1,023.70 | $ | 1.03 | $ | 1,024.46 | $ | 1.03 | 0.20 | % | ||||||||||||
Transamerica Asset Allocation Variable - |
1,000.00 | 1,090.60 | 1.07 | 1,024.46 | 1.03 | 0.20 | ||||||||||||||||||
Transamerica Asset Allocation Variable - |
1,000.00 | 1,121.90 | 1.08 | 1,024.46 | 1.03 | 0.20 |
(A) | 5% return per year before expenses. |
(B) | Expenses are equal to each Subaccounts annualized expense ratio (as disclosed in the table), multiplied by the average account value for the period, multiplied by the number of days in the period (186), and divided by the number of days in the year (365 days). |
(C) | Expense ratios do not include expenses of the investment companies in which the Subaccounts invest. |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 1
Schedules of Investments Composition
At December 31, 2013
(The following charts summarize the Schedule of Investments of each Subaccount by asset type)
(unaudited)
Transamerica Asset Allocation Variable - Short Horizon Subaccount |
% of Net Assets |
|||
Fixed Income |
88.7 | % | ||
Domestic Equity |
8.9 | |||
International Equity |
2.2 | |||
Money Market |
0.2 | |||
Other Assets and Liabilities - Net |
(0.0 | )(A) | ||
Total |
100.0 | % | ||
|
|
|||
Transamerica Asset Allocation Variable - Intermediate Horizon Subaccount |
% of Net Assets |
|||
Fixed Income |
45.9 | % | ||
Domestic Equity |
42.8 | |||
International Equity |
11.0 | |||
Money Market |
0.3 | |||
Other Assets and Liabilities - Net |
(0.0 | )(A) | ||
Total |
100.0 | % | ||
|
|
|||
Transamerica Asset Allocation Variable - Intermediate/ Long Horizon Subaccount |
% of Net Assets |
|||
Domestic Equity |
56.2 | % | ||
Fixed Income |
27.6 | |||
International Equity |
15.9 | |||
Money Market |
0.3 | |||
Other Assets and Liabilities - Net |
(0.0 | )(A) | ||
Total |
100.0 | % | ||
|
|
(A) | Percentage rounds to less than 0.1% |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 2
Transamerica Asset Allocation Variable -
Short Horizon Subaccount
SCHEDULE OF INVESTMENTS
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Investment Companies |
$ | 6,833,130 | $ | | $ | | $ | 6,833,130 | ||||||||
Total Investment Securities |
$ | 6,833,130 | $ | | $ | | $ | 6,833,130 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Non-income producing security. |
(B) | Each Subaccount invests substantially all of its assets in an affiliated fund of the Transamerica Partners Variable Funds. |
(C) | Aggregate cost for federal income tax purposes is $5,852,681. Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $980,449. |
(D) | Percentage rounds to less than 0.1%. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
The notes to the financial statements are an integral part of this report.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 3
Transamerica Asset Allocation Variable -
Intermediate Horizon Subaccount
SCHEDULE OF INVESTMENTS
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Investment Companies |
$ | 20,778,075 | $ | | $ | | $ | 20,778,075 | ||||||||
Total Investment Securities |
$ | 20,778,075 | $ | | $ | | $ | 20,778,075 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Non-income producing security. |
(B) | Each Subaccount invests substantially all of its assets in an affiliated fund of the Transamerica Partners Variable Funds. |
(C) | Aggregate cost for federal income tax purposes is $15,693,791. Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $5,084,284. |
(D) | Percentage rounds to less than 0.1%. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
The notes to the financial statements are an integral part of this report.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 4
Transamerica Asset Allocation Variable -
Intermediate/Long Horizon Subaccount
SCHEDULE OF INVESTMENTS
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Investment Companies |
$ | 30,607,058 | $ | | $ | | $ | 30,607,058 | ||||||||
Total Investment Securities |
$ | 30,607,058 | $ | | $ | | $ | 30,607,058 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Non-income producing security. |
(B) | Each Subaccount invests substantially all of its assets in an affiliated fund of the Transamerica Partners Variable Funds. |
(C) | Aggregate cost for federal income tax purposes is $22,043,171. Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $8,563,887. |
(D) | Percentage rounds to less than 0.1%. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
The notes to the financial statements are an integral part of this report.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 5
STATEMENTS OF ASSETS AND LIABILITIES
At December 31, 2013
Short Horizon |
Intermediate Horizon |
Intermediate/ Long Horizon |
||||||||||
Assets: |
||||||||||||
Investments in affiliated investment companies, at value |
$ | 6,833,130 | $ | 20,778,075 | $ | 30,607,058 | ||||||
Receivables: |
||||||||||||
Units sold |
3,349 | 12,751 | 29,874 | |||||||||
Total assets |
6,836,479 | 20,790,826 | 30,636,932 | |||||||||
Liabilities: |
||||||||||||
Accounts payable and accrued liabilities: |
||||||||||||
Units redeemed |
1,347 | 2,698 | 2,801 | |||||||||
Affiliated investment securities purchased |
2,001 | 10,053 | 27,073 | |||||||||
Investment advisory fees |
1,181 | 3,617 | 5,298 | |||||||||
Total liabilities |
4,529 | 16,368 | 35,172 | |||||||||
Net assets |
$ | 6,831,950 | $ | 20,774,458 | $ | 30,601,760 | ||||||
Net assets consist of: |
||||||||||||
Costs of accumulation units |
$ | 2,009,506 | $ | 7,822,799 | $ | 15,156,770 | ||||||
Undistributed (accumulated) net investment income (loss) |
(254,363 | ) | (709,629 | ) | (985,840 | ) | ||||||
Undistributed (accumulated) net realized gain (loss) |
4,096,358 | 8,577,004 | 7,866,943 | |||||||||
Net unrealized appreciation (depreciation) on: |
980,449 | 5,084,284 | 8,563,887 | |||||||||
Net assets |
$ | 6,831,950 | $ | 20,774,458 | $ | 30,601,760 | ||||||
Accumulation units |
332,920 | 913,876 | 1,291,374 | |||||||||
Unit value |
$ | 20.52 | $ | 22.73 | $ | 23.70 | ||||||
Investments in affiliated investment companies, at cost |
$ | 5,852,681 | $ | 15,693,791 | $ | 22,043,171 |
STATEMENTS OF OPERATIONS
For the year ended December 31, 2013
Short Horizon |
Intermediate Horizon |
Intermediate/ Long Horizon |
||||||||||
Expenses: |
||||||||||||
Investment advisory |
$ | 14,851 | $ | 39,711 | $ | 58,474 | ||||||
Net investment income (loss) |
(14,851 | ) | (39,711 | ) | (58,474 | ) | ||||||
Net realized gain (loss) on transactions from: |
||||||||||||
Affiliated investment companies |
740,897 | 921,391 | 1,000,128 | |||||||||
Net realized gain (loss) |
740,897 | 921,391 | 1,000,128 | |||||||||
Net change in unrealized appreciation (depreciation) on: |
||||||||||||
Affiliated investment companies |
(668,118 | ) | 1,566,907 | 4,127,435 | ||||||||
Net change in unrealized appreciation (depreciation) |
(668,118 | ) | 1,566,907 | 4,127,435 | ||||||||
Net realized and change in unrealized gain (loss) |
72,779 | 2,488,298 | 5,127,563 | |||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 57,928 | $ | 2,448,587 | $ | 5,069,089 |
The notes to the financial statements are an integral part of this report.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 6
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended:
Short Horizon | Intermediate Horizon | Intermediate/Long Horizon | ||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | December 31, 2013 | December 31, 2012 | |||||||||||||||||||
From operations: |
||||||||||||||||||||||||
Net investment income (loss) |
$ | (14,851 | ) | $ | (17,693 | ) | $ | (39,711 | ) | $ | (43,224 | ) | $ | (58,474 | ) | $ | (57,139 | ) | ||||||
Net realized gain (loss) |
740,897 | 532,247 | 921,391 | 986,992 | 1,000,128 | 608,260 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) |
(668,118 | ) | 114,594 | 1,566,907 | 1,306,365 | 4,127,435 | 2,906,322 | |||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
57,928 | 629,148 | 2,448,587 | 2,250,133 | 5,069,089 | 3,457,443 | ||||||||||||||||||
From unit transactions: |
||||||||||||||||||||||||
Units sold |
1,408,609 | 1,581,801 | 3,256,968 | 2,061,876 | 2,848,907 | 2,412,732 | ||||||||||||||||||
Units redeemed |
(2,861,136 | ) | (2,868,608 | ) | (4,649,264 | ) | (6,192,904 | ) | (5,110,086 | ) | (6,079,030 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from unit transactions |
(1,452,527 | ) | (1,286,807 | ) | (1,392,296 | ) | (4,131,028 | ) | (2,261,179 | ) | (3,666,298 | ) | ||||||||||||
Net increase (decrease) in net assets |
(1,394,599 | ) | (657,659 | ) | 1,056,291 | (1,880,895 | ) | 2,807,910 | (208,855 | ) | ||||||||||||||
Net assets: |
||||||||||||||||||||||||
Beginning of year |
8,226,549 | 8,884,208 | 19,718,167 | 21,599,062 | 27,793,850 | 28,002,705 | ||||||||||||||||||
End of year |
$ | 6,831,950 | $ | 8,226,549 | $ | 20,774,458 | $ | 19,718,167 | $ | 30,601,760 | $ | 27,793,850 | ||||||||||||
Undistributed (accumulated) net investment income (loss) |
$ | (254,363 | ) | $ | (239,512 | ) | $ | (709,629 | ) | $ | (669,918 | ) | $ | (985,840 | ) | $ | (927,366 | ) | ||||||
Units outstanding beginning of year |
403,808 | 467,918 | 980,782 | 1,189,012 | 1,394,888 | 1,582,502 | ||||||||||||||||||
Units sold |
69,050 | 80,080 | 150,607 | 106,778 | 131,770 | 126,303 | ||||||||||||||||||
Units redeemed |
(139,938 | ) | (144,190 | ) | (217,513 | ) | (315,008 | ) | (235,284 | ) | (313,917 | ) | ||||||||||||
Units outstanding end of year |
332,920 | 403,808 | 913,876 | 980,782 | 1,291,374 | 1,394,888 |
The notes to the financial statements are an integral part of this report.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 7
FINANCIAL HIGHLIGHTS
For the years ended:
For a unit outstanding throughout each year | Short Horizon | |||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Unit value |
||||||||||||||||||||
Beginning of year |
$ | 20.37 | $ | 18.99 | $ | 18.24 | $ | 16.95 | $ | 14.66 | ||||||||||
Investment operations |
||||||||||||||||||||
Net investment income (loss)(A) |
(0.04 | ) | (0.04 | ) | (0.04 | ) | (0.04 | ) | (0.03 | ) | ||||||||||
Net realized and unrealized gain (loss) |
0.19 | 1.42 | 0.79 | 1.33 | 2.32 | |||||||||||||||
Total investment operations |
0.15 | 1.38 | 0.75 | 1.29 | 2.29 | |||||||||||||||
Unit value |
||||||||||||||||||||
End of year |
$ | 20.52 | $ | 20.37 | $ | 18.99 | $ | 18.24 | $ | 16.95 | ||||||||||
Total return |
0.73 | % | 7.30 | % | 4.07 | % | 7.65 | % | 15.62 | % | ||||||||||
Net assets end of year (000s) |
$ | 6,832 | $ | 8,227 | $ | 8,884 | $ | 9,608 | $ | 10,112 | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets(B) |
0.20 | % | 0.20 | % | 0.20 | % | 0.20 | % | 0.20 | % | ||||||||||
Net investment income (loss) to average net assets |
(0.20 | )% | (0.20 | )% | (0.20 | )% | (0.20 | )% | (0.20 | )% | ||||||||||
Portfolio turnover rate(C) |
63 | % | 51 | % | 46 | % | 36 | % | 28 | % |
(A) | Calculated based on average number of units outstanding. |
(B) | Does not include expenses of the investment companies in which the Subaccount invests. |
(C) | Does not include the portfolio activity of the investment companies in which the Subaccount invests. |
Note: | Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm. |
For a unit outstanding throughout each year | Intermediate Horizon | |||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Unit value |
||||||||||||||||||||
Beginning of year |
$ | 20.10 | $ | 18.17 | $ | 18.13 | $ | 16.22 | $ | 13.46 | ||||||||||
Investment operations |
||||||||||||||||||||
Net investment income (loss)(A) |
(0.04 | ) | (0.04 | ) | (0.04 | ) | (0.03 | ) | (0.03 | ) | ||||||||||
Net realized and unrealized gain (loss) |
2.67 | 1.97 | 0.08 | 1.94 | 2.79 | |||||||||||||||
Total investment operations |
2.63 | 1.93 | 0.04 | 1.91 | 2.76 | |||||||||||||||
Unit value |
||||||||||||||||||||
End of year |
$ | 22.73 | $ | 20.10 | $ | 18.17 | $ | 18.13 | $ | 16.22 | ||||||||||
Total return |
13.07 | % | 10.67 | % | 0.19 | % | 11.81 | % | 20.51 | % | ||||||||||
Net assets end of year (000s) |
$ | 20,774 | $ | 19,718 | $ | 21,599 | $ | 24,180 | $ | 24,295 | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets(B) |
0.20 | % | 0.20 | % | 0.20 | % | 0.20 | % | 0.20 | % | ||||||||||
Net investment income (loss) to average net assets |
(0.20 | )% | (0.20 | )% | (0.20 | )% | (0.20 | )% | (0.20 | )% | ||||||||||
Portfolio turnover rate(C) |
54 | % | 37 | % | 42 | % | 25 | % | 34 | % |
(A) | Calculated based on average number of units outstanding. |
(B) | Does not include expenses of the investment companies in which the Subaccount invests. |
(C) | Does not include the portfolio activity of the investment companies in which the Subaccount invests. |
Note: | Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm. |
The notes to the financial statements are an integral part of this report.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 8
FINANCIAL HIGHLIGHTS (continued)
For the years ended:
For a unit outstanding throughout each year | Intermediate/Long Horizon | |||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Unit value |
||||||||||||||||||||
Beginning of year |
$ | 19.93 | $ | 17.70 | $ | 17.99 | $ | 15.78 | $ | 12.89 | ||||||||||
Investment operations |
||||||||||||||||||||
Net investment income (loss)(A) |
(0.04 | ) | (0.04 | ) | (0.04 | ) | (0.03 | ) | (0.03 | ) | ||||||||||
Net realized and unrealized gain (loss) |
3.81 | 2.27 | (0.25 | ) | 2.24 | 2.92 | ||||||||||||||
Total investment operations |
3.77 | 2.23 | (0.29 | ) | 2.21 | 2.89 | ||||||||||||||
Unit value |
||||||||||||||||||||
End of year |
$ | 23.70 | $ | 19.93 | $ | 17.70 | $ | 17.99 | $ | 15.78 | ||||||||||
Total return |
18.93 | % | 12.60 | % | (1.66 | )% | 14.05 | % | 22.42 | % | ||||||||||
Net assets end of year (000s) |
$ | 30,602 | $ | 27,794 | $ | 28,003 | $ | 30,991 | $ | 30,478 | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets(B) |
0.20 | % | 0.20 | % | 0.20 | % | 0.20 | % | 0.20 | % | ||||||||||
Net investment income (loss) to average net assets |
(0.20 | )% | (0.20 | )% | (0.20 | )% | (0.20 | )% | (0.20 | )% | ||||||||||
Portfolio turnover rate(C) |
32 | % | 30 | % | 34 | % | 23 | % | 54 | % |
(A) | Calculated based on average number of units outstanding. |
(B) | Does not include expenses of the investment companies in which the Subaccount invests. |
(C) | Does not include the portfolio activity of the investment companies in which the Subaccount invests. |
Note: | Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm. |
The notes to the financial statements are an integral part of this report.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 9
NOTES TO FINANCIAL STATEMENTS
At December 31, 2013
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Transamerica Asset Allocation Variable Funds (the Separate Account) is a non-diversified separate account of Transamerica Financial Life Insurance Company (TFLIC), and is registered as a management investment company under the Investment Company Act of 1940, as amended (the 1940 Act). The Separate Account is composed of three different subaccounts that are separate investment funds: Transamerica Asset Allocation VariableShort Horizon Subaccount (Short Horizon), Transamerica Asset Allocation VariableIntermediate Horizon Subaccount (Intermediate Horizon), and Transamerica Asset Allocation VariableIntermediate/Long Horizon Subaccount (Intermediate/Long Horizon), (each, a Subaccount and collectively, the Subaccounts). Each Subaccount invests substantially all of its investable assets among certain Transamerica Partners Variable Funds (TPVF). Certain TPVF subaccounts invest substantially all of their investable assets in the Transamerica Partners Portfolios (the Portfolios).
Transamerica Asset Management, Inc. (TAM) provides continuous and regular investment advisory services to the Subaccounts. TAM acts as a manager of managers, providing advisory services that include, without limitation, the design and development of each Subaccount and its investment strategy and the ongoing review and evaluation of that investment strategy including recommending changes in strategy where it believes appropriate or advisable; the selection of one or more sub-advisers for each Subaccount employing a combination of quantitative and qualitative screens, research, analysis and due diligence; oversight and monitoring of sub-advisers and recommending changes to sub-advisers where it believes appropriate or advisable; recommending and implementing fund combinations and liquidations where it believes appropriate or advisable; regular supervision of the Subaccounts investments; regular review of sub-adviser performance and holdings; ongoing trade oversight and analysis; regular monitoring to ensure adherence to investment process; risk management oversight and analysis; design, development, implementation and regular monitoring of the valuation of Subaccount holdings; design, development, implementation and regular monitoring of the compliance process; review of proxies voted by sub-advisers; oversight of preparation, and review, of materials for meetings of the Subaccounts Board of Trustees; oversight of preparation of prospectuses, shareholder reports and other disclosure materials and filings; and oversight of other service providers to the Subaccounts, such as the custodian, the transfer agent, the administrator, the distributor, the Subaccounts independent registered public accounting firm and legal counsel; supervision of the performance of recordkeeping and shareholder relations for the Subaccounts; and ongoing cash management services. TAM uses a variety of quantitative and qualitative tools to carry out its investment advisory services. Where TAM employs sub-advisers, the sub-advisers carry out and effectuate the investment strategy designed for the Subaccounts by TAM and are responsible, subject to TAMs and the Board of Trustees oversight, for the day-to-day management of the Subaccounts and for making decisions to buy, hold or sell a particular security.
In the normal course of business, the Subaccounts enter into contracts that contain a variety of representations that provide general indemnifications. The Subaccounts maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Subaccounts and/or its affiliates that have not yet occurred. However, based on experience, the Subaccounts expect the risk of loss to be remote.
In preparing the Subaccounts financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP), estimates or assumptions (which could differ from actual results) may be used that affect reported amounts and disclosures. The following is a summary of significant accounting policies followed by the Subaccounts.
Operating expenses: The Separate Account accounts separately for the assets, liabilities, and operations of each Subaccount. Each Subaccount will indirectly bear its share of fees and expenses incurred by TPVF. These expenses are not reflected in the expenses in the Statements of Operations and are not included in the ratios to average net assets shown in the Financial Highlights.
Security transactions: Security transactions are recorded on the trade date. Net realized gain (loss) is from investments in units of investment companies.
NOTE 2. SECURITY VALUATIONS
All investments in securities are recorded at their estimated fair value. The value of each Subaccounts investment in a corresponding subaccount of the TPVF is valued at the unit value per share of each Subaccount at the close of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern Time, each day the NYSE is open for business. Certain TPVF subaccounts invest substantially all of their investable assets in the Portfolios. The valuation policies of the Portfolios are discussed in Note 2 of the Portfolios Notes to Financial Statements, which are attached to this report. The Subaccounts utilize various methods to measure the fair value of their investments on a recurring basis.
GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three Levels of inputs of the fair value hierarchy are defined as follows:
Level 1Unadjusted quoted prices in active markets for identical securities.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 10
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 2. (continued)
Level 2Inputs, other than quoted prices included in Level 1, that are observable, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
Level 3Unobservable inputs, which may include TAMs internal valuation committees (the Valuation Committee) own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the sub-adviser, issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuers financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.
The Subaccounts Board of Trustees has delegated the valuation functions on a day-to-day basis to TAM, subject to board oversight. TAM has formed the Valuation Committee to monitor and implement the fair valuation policies and procedures as approved by the Board of Trustees. These policies and procedures are reviewed at least annually by the Board of Trustees. The Valuation Committee, among other tasks, monitors for when market quotations are not readily available or are unreliable and determines in good faith the fair value of the portfolio investments. For instances in which daily market quotes are not readily available, securities may be valued, pursuant to procedures adopted by the Board of Trustees, with reference to other instruments or indices. Depending on the relative significance of valuation inputs, these instruments may be classified in either Level 2 or Level 3 of the fair value hierarchy.
The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the security to determine the fair value of the security. An income-based valuation approach may also be used in which the anticipated future cash flows of the security are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the securities. When the Subaccounts use fair value methods that rely on significant unobservable inputs to determine a securitys value, the Valuation Committee will choose the method that is believed to accurately reflect fair value. These securities are categorized in Level 3 of the fair value hierarchy. The Valuation Committee reviews fair value measurements on a regular and ad hoc basis and may, as deemed appropriate, update the security valuations as well as the fair valuation guidelines.
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, but not limited to, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is generally greatest for instruments categorized in Level 3. Due to the inherent uncertainty of valuation, the Valuation Committees determination of values may differ significantly from values that would have been realized had a ready market for investments existed, and the differences could be material. The Valuation Committee employs various methods for calibrating these valuation approaches, including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing, and reviews of any market related activity.
The inputs used to measure fair value may fall into different Levels of the fair value hierarchy. In such cases, for disclosure purposes, the Level in the fair value hierarchy that is assigned to the fair value measurement of a security is determined based on the lowest Level input that is significant to the fair value measurement in its entirety.
Fair value measurements: Descriptions of the valuation techniques applied to the Subaccounts major categories of assets and liabilities measured at fair value on a recurring basis are as follows:
Each Subaccount invests substantially all of its investable assets among certain TPVF subaccounts and the TPVF subaccounts invest all of their investable assets in the Portfolios. The summary of the inputs used for valuing each Portfolios assets carried at fair value is discussed in Note 2 of the Portfolios Notes to Financial Statements, which are attached to this report.
Investment companies: Investment companies are valued at the net asset value (NAV) of the underlying funds. These securities are actively traded and no valuation adjustments are applied. Exchange-Traded Funds are stated at the last reported sale price or closing price on the day of valuation taken from the primary exchange where the security is principally traded. They are categorized in Level 1 of the fair value hierarchy.
The hierarchy classification of inputs used to value the Subaccounts investments, at December 31, 2013, is disclosed in the Valuation Summary of each Subaccounts Schedule of Investments.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 11
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 3. RELATED PARTY TRANSACTIONS
TAM, the Subaccounts investment adviser, is directly owned by Western Reserve Life Assurance Co. of Ohio and AUSA Holding Company (AUSA), both of which are indirect, wholly-owned subsidiaries of Aegon NV. AUSA is wholly-owned by Aegon USA, LLC (Aegon USA), a financial services holding company whose primary emphasis is on life and health insurance, and annuity and investment products. Aegon USA is owned by Aegon US Holding Corporation, which is owned by Transamerica Corporation (DE). Transamerica Corporation (DE) is owned by The Aegon Trust, which is owned by Aegon International B.V., which is owned by Aegon NV, a Netherlands corporation, and a publicly traded international insurance group.
Pursuant to the Investment Advisory Agreement, and subject to further policies as the Board of Trustees may determine, TAM provides general investment advice to each Subaccount, for which it receives a monthly advisory fee that is accrued daily and payable monthly at an annual rate equal to 0.20% of each Subaccounts average daily net assets.
TFLIC is the legal holder of the assets in the Subaccounts and will at all times maintain assets in the Subaccounts with a total market value of at least equal to the contract liabilities for the Subaccounts.
Certain Managing Board Members and officers of TFLIC are also trustees, officers, or employees of TAM or its affiliates. No interested Managing Board Member receives compensation from the Separate Account. Similarly, none of the Separate Accounts officers receive compensation from the Subaccounts. The independent board members of TFLIC are also trustees of the Transamerica Partners Portfolios for which they receive fees.
Deferred compensation plan: Under a non-qualified deferred compensation plan effective January 1, 2008, as amended and restated (the Deferred Compensation Plan), available to the Trustees, compensation payable from the Subaccounts may be deferred that would otherwise be payable by the Separate Account to an Independent Trustee on a current basis for services rendered as Trustee. Deferred compensation amounts will accumulate based on the value of Class A (or comparable) shares of a series of Transamerica Funds (without imposition of sales charge), as elected by the Trustee.
NOTE 4. PURCHASES AND SALES OF SECURITIES
The cost of affiliated investments purchased and proceeds from affiliated investments sold (excluding short-term securities) for the year ended December 31, 2013 were as follows:
Subaccount Name | Purchases of affiliated investments |
Proceeds from maturities and sales of affiliated investments |
||||||
Short Horizon |
$ | 4,716,050 | $ | 6,183,684 | ||||
Intermediate Horizon |
10,757,879 | 12,189,601 | ||||||
Intermediate/Long Horizon |
9,264,078 | 11,583,088 | ||||||
|
|
|
|
There were no transactions in U.S. Government securities during the year ended December 31, 2013.
NOTE 5. FEDERAL INCOME TAX MATTERS
The operations of the Separate Account form a part of, and are taxed with, the operations of TFLIC, a wholly-owned subsidiary of Aegon USA. TFLIC does not expect, based upon current tax law, to incur any income tax upon the earnings or realized capital gains attributable to the Separate Account. Based upon this expectation, no charges are currently being deducted from the Separate Account for federal income tax purposes. The Subaccounts recognize the tax benefits of uncertain tax positions only where the position is more likely than not to be sustained assuming examination by tax authorities. The Subaccounts federal tax returns remain subject to examination by the Internal revenue Service and state tax authorities for the prior three years. Management has evaluated the Subaccounts tax provisions taken for all open tax years, and has concluded that no provision for income tax is required in the Subaccounts financial statements. If applicable, the Subaccounts recognize interest accrued related to unrecognized tax benefits in interest and penalties expense in Other on the Statements of Operations. The Subaccounts identify their major tax jurisdictions as U.S. Federal, the State of Florida, the State of New York, and foreign jurisdictions where the Subaccounts make significant investments; however, the Subaccounts are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 12
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 6. ACCOUNTING PRONOUNCEMENTS
In June 2013, the Financial Accounting Standards Board issued an update which sets forth a new approach for determining whether a public or private company qualifies as an Investment Company and requires certain additional disclosures. The adoption of this disclosure requirement is effective for financial statements interim and annual reporting periods beginning on or after December 15, 2013. Management is currently evaluating the implication, if any, of the additional disclosure requirements and its impact on the Subaccounts financial statements.
NOTE 7. SUBSEQUENT EVENTS
Management has evaluated subsequent events through the date of issuance of the financial statements, and determined that no material events or transactions would require recognition or disclosure in the Subaccounts financial statements.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 13
Report of Independent Registered Public Accounting Firm
To the Board of Directors of Transamerica Financial Life Insurance Company and the Contractholders of Transamerica Asset Allocation Variable Funds:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Transamerica Asset Allocation Variable Funds (comprising, respectively, Transamerica Asset Allocation Short Horizon Subaccount, Transamerica Asset Allocation Intermediate Horizon Subaccount and Transamerica Asset Allocation Intermediate/Long Horizon Subaccount) (collectively, the Subaccounts) as of December 31, 2013, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Subaccounts management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the period ended prior to January 1, 2010 were audited by another independent registered public accounting firm whose report, dated March 1, 2010, expressed an unqualified opinion on those financial highlights.
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 audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Subaccounts 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 the Subaccounts 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 and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. 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 each of the aforementioned Subaccounts constituting Transamerica Asset Allocation Variable Funds at December 31, 2013, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
February 28, 2014
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 14
Board Members and Officers
The Board Members and executive officers of each Trust are listed below.
Interested Board Member means a board member who may be deemed an interested person (as that term is defined in the 1940 Act) of each Trust because of his current or former service with TAM or an affiliate of TAM. Interested Board Members may also be referred to herein as Interested Trustees. Independent Board Member means a Board Member who is not an interested person (as defined under the 1940 Act) of each Trust and may also be referred to herein as an Independent Trustee.
The Board governs each fund and is responsible for protecting the interests of the shareholders. The Board Members are experienced executives who meet periodically throughout the year to oversee the business affairs of each fund and the operation of each fund by its officers. The Board also reviews the management of each funds assets by the investment adviser and its respective sub-adviser.
The funds are among the funds advised and sponsored by TAM (collectively, Transamerica Mutual Funds). The Transamerica Mutual Funds consist of Transamerica Funds, Transamerica Series Trust (TST), Transamerica Income Shares, Inc. (TIS), Transamerica Partners Funds Group (TPFG), Transamerica Partners Funds Group II (TPFG II), Transamerica Partners Portfolios (TPP) and Transamerica Asset Allocation Variable Funds (TAAVF) and consists of 172 funds as of the date of this Annual Report.
The mailing address of each Board Member is c/o Secretary, 570 Carillon Parkway, St. Petersburg, Florida 33716.
The Board Members of each Trust and each Portfolio Trust, their year of birth, their positions with the Trusts, and their principal occupations for the past five years (their titles may have varied during that period) the number of funds in Transamerica Mutual Funds the Board oversees, and other board memberships they hold are set forth in the table below. The length of time served is provided from the date a Trustee became a Trustee of either of the Trusts or Transamerica Partners Portfolios.
Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INTERESTED BOARD MEMBERS | ||||||||||
Thomas A. Swank (1960) |
Chairman, Board Member, President and Chief Executive Officer | Since 2012 | President and Chief Executive Officer, Transamerica Individual Savings & Retirement (2010 present);
President and Chief Executive Officer, Transamerica Capital Management (2009 present);
Chairman (2013 present), Board Member (2012 present), President and Chief Executive Officer, Transamerica Funds, TST, TIS (2012 present);
Chairman (2013 present), Board Member (2013 present), President and Chief Executive Officer, TPP, TPFG, TPFG II and TAAVF (2012 present);
Director, Chairman of the Board, Chief Executive Officer and President, Transamerica Asset Management, Inc. (TAM) (2012 present);
Director, Chairman of the Board, Chief Executive Officer and President, Transamerica Fund Services, Inc. (TFS) (2012 present); |
172 | N/A |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 15
Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INTERESTED BOARD MEMBERScontinued | ||||||||||
Thomas A. Swank (continued) |
Director and Trust Officer, Massachusetts Fidelity Trust Company (2012 present);
Division President, Monumental Life Insurance Company (2011 present);
Division President, Western Reserve Life Assurance Co. of Ohio (2011 present);
Vice President, Money Services, Inc. (2011 present);
Director and President, Aegon Financial Services Group, Inc. (2010 present);
Director, AFSG Securities Corporation (2010 present);
Director and President, Transamerica Advisors Life Insurance Company (2010 present);
Director, Chairman of the Board and President, Transamerica Advisors Life Insurance Company of New York (2010 present);
Director and President, Transamerica Resources, Inc. (2010 present);
Executive Vice President, Transamerica Life Insurance Company (2010 present);
Executive Vice President, Transamerica Financial Life Insurance Company (2009 present);
Director, Transamerica Capital, Inc. (2009 present); and
President and Chief Operating Officer (2007 2009), Senior Vice President, Chief Marketing Officer (2006 2007), Senior Vice President, Chief Financial Officer (2003 2006), Senior Vice President, Chief Risk Officer (2000 2003), Senior Vice President, Chief Investment Officer (1997 2000), and High Yield Portfolio Manager (1992 1997), Security Benefit Corporation. |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 16
Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INTERESTED BOARD MEMBERScontinued | ||||||||||
Alan F. Warrick (1948) |
Board Member | Since 2012 | Board Member, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2012 present);
Consultant, Aegon USA (2010 2011);
Senior Advisor, Lovell Minnick Equity Partners (2010 present);
Retired (2010 present); and Managing Director for Strategic Business Development, Aegon USA (1994 2010). |
172 | First Allied Holdings Inc. (2013 2014) | |||||
INDEPENDENT BOARD MEMBERS | ||||||||||
Sandra N. Bane (1952) |
Board Member | Since 2008 | Retired (1999 present); Board Member, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2008 present);
Board Member, Transamerica Investors, Inc. (TII) (2003 2010); and
Partner, KPMG (1975 1999). |
172 | Big 5 Sporting Goods (2002 present); AGL Resources, Inc. (energy services holding company) (2008 present) | |||||
Leo J. Hill (1956) |
Lead Independent Board Member |
Since 2007 | Principal, Advisor Network Solutions, LLC (business consulting) (2006 present);
Board Member, TST (2001 present);
Board Member, Transamerica Funds and TIS (2002 present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 present);
Board Member, TII (2008 2010);
Market President, Nations Bank of Sun Coast Florida (1998 1999);
Chairman, President and Chief Executive Officer, Barnett Banks of Treasure Coast Florida (1994 1998);
Executive Vice President and Senior Credit Officer, Barnett Banks of Jacksonville, Florida (1991 1994); and Senior Vice President and Senior Loan Administration Officer, Wachovia Bank of Georgia (1976 1991). |
172 | Ameris Bancorp (2013 present); Ameris Bank (2013 present) |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 17
Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INDEPENDENT BOARD MEMBERScontinued | ||||||||||
David W. Jennings (1946) |
Board Member | Since 2009 | Board Member, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2009 present);
Board Member, TII (2009 2010);
Managing Director, Hilton Capital (2010 present);
Principal, Maxam Capital Management, LLC (2006 2008); and
Principal, Cobble Creek Management LP (2004 2006). |
172 | N/A | |||||
Russell A. Kimball, Jr (1944) |
Board Member | 2007 | General Manager, Sheraton Sand Key Resort (1975 present);
Board Member, TST (1986 present);
Board Member, Transamerica Funds, (1986 1990), (2002 present);
Board Member, TIS (2002 present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 present); and Board Member, TII (2008 2010). |
172 | N/A | |||||
Eugene M. Mannella (1954) |
Board Member | Since 1993 | Chief Executive Officer, HedgeServ Corporation (hedge fund administration) (2008 present);
Self-employed consultant (2006 present);
Managing Member and Chief Compliance Officer, HedgeServ Investment Services, LLC (limited purpose broker-dealer) (2011 present);
President, ARAPAHO Partners LLC (limited purpose broker-dealer) (1998 2008);
Board Member, TPP, TPFG, TPFG II and TAAVF (1993 present);
Board Member, Transamerica Funds, TST and TIS (2007 present);
Board Member, TII (2008 2010); and
President, International Fund Services (alternative asset administration) (1993 2005). |
172 | N/A |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 18
Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INDEPENDENT BOARD MEMBERScontinued | ||||||||||
Norman R. (1939) |
Board Member | Since 2007 | Retired (2005 present);
Board Member, Transamerica Funds, TST and TIS (2006 present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 present);
Board Member, TII (2008 2010);
Interim President, Mt. Mercy University (2013 present);
Director, Aspire Inc. (formerly, Iowa Student Loan Service Corporation) (2006 present);
Director, League for Innovation in the Community Colleges (1985 2005);
Director, Iowa Health Systems (1994 2003);
Director, U.S. Bank (1985 2006); and
President, Kirkwood Community College (1985 2005). |
172 | Buena Vista University Board of Trustees (2004 present); Chairman (2012 present) | |||||
Joyce G. Norden (1939) |
Board Member | Since 1993 | Retired (2004 present);
Board Member, TPFG, TPFG II and TAAVF (1993 present);
Board Member, TPP (2002 present);
Board Member, Transamerica Funds, TST and TIS (2007 present);
Board Member, TII (2008 2010); and
Vice President, Institutional Advancement, Reconstructionist Rabbinical College (1996 2004). |
172 | Board of Governors, Reconstructionist Rabbinical College (2007 2012) | |||||
Patricia L. Sawyer (1950) |
Board Member | Since 1993 | Retired (2007 present); President/Founder, Smith & Sawyer LLC (management consulting) (1989 2007);
Board Member, Transamerica Funds, TST and TIS (2007 present);
Board Member, TII (2008 2010);
Board Member, TPP, TPFG, TPFG II and TAAVF (1993 present);
Trustee, Chair of Finance Committee and Chair of Nominating Committee (1987 1996), Bryant University; |
172 | Honorary Trustee, Bryant University (1996 present) |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 19
Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INDEPENDENT BOARD MEMBERScontinued | ||||||||||
Patricia L. Sawyer (continued) |
Vice President, American Express (1987 1989);
Vice President, The Equitable (1986 1987); and
Strategy Consultant, Booz, Allen & Hamilton (1982 1986). |
|||||||||
John W. Waechter (1952) |
Board Member | Since 2007 | Attorney, Englander Fischer (2008 present);
Retired (2004 2008);
Board Member, TST and TIS (2004 present);
Board Member, Transamerica Funds (2005 present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 present);
Board Member, TII (2008 2010);
Employee, RBC Dain Rauscher (securities dealer) (2004);
Executive Vice President, Chief Financial Officer and Chief Compliance Officer, William R. Hough & Co. (securities dealer) (1979 2004); and
Treasurer, The Hough Group of Funds (1993 2004). |
172 | Operation PAR, Inc. (2008 present); West Central Florida Council Boy Scouts of America (2008 2013); Remember Honor Support, Inc. (non-profit organization) (2013 present) |
* | Each Board Member shall hold office until: 1) his or her successor is elected and qualified or 2) he or she resigns, retires or his or her term as a Board Member is terminated in accordance with the Trusts Declaration of Trust. |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 20
OFFICERS
The mailing address of each officer is c/o Secretary, 570 Carillon Parkway, St. Petersburg, Florida 33716. The following table shows information about the officers, including their year of birth, their positions held with each Trust and their principal occupations during the past five years (their titles may have varied during that period). Each officer will hold office until his or her successor has been duly elected or appointed or until his or her earlier death, resignation or removal.
Name and Year of Birth |
Position | Term of Office and Length of Time Served* |
Principal Occupation(s) or Employment During Past Five Years | |||
Thomas A. Swank (1960) |
Chairman, Board Member, President and Chief Executive Officer | Since 2012 | See Table Above. | |||
Timothy S. Galbraith (1964) |
Vice President and Chief Investment Officer, Alternative Investments | Since 2012 | Vice President and Chief Investment Officer, Alternative Investments, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2012 present);
Senior Vice President and Chief Investment Officer, Alternative Investments (2012 present), TAM;
Head of Alternative Investment Strategies, Morningstar Associates, LLC (2009 2012); and Managing Director, Bear Stearns Asset Management (2001 2009). | |||
Dennis P. Gallagher (1970) |
Vice President, General Counsel and Secretary | Since 2007 | Vice President, General Counsel and Secretary, Transamerica Funds, TST and TIS (2006 present);
Vice President, General Counsel and Secretary, TPP, TPFG, TPFG II and TAAVF (2007 present);
Vice President, General Counsel and Secretary, TII, (2006 2010);
Director, Senior Vice President, General Counsel, Operations and Secretary, TAM (2006 present);
Director, Senior Vice President, General Counsel, Chief Administrative Officer and Secretary, TFS (2006 present);
Assistant Vice President, TCI (2007 present);
Director, Deutsche Asset Management (1998 2006); and Corporate Associate, Ropes & Gray LLP (1995 1998). | |||
Todd R. Porter (1961) |
Vice President and Chief Investment Officer, Asset Allocation | Since 2012 | Vice President and Chief Investment Officer, Asset Allocation, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2012 present);
Senior Vice President and Chief Investment Officer, Asset Allocation (2012 present), TAM;
Chief Investment Officer, Fund Architects, LLC (2007 2012); and
Chief Investment Strategist, Morningstar Associates, LLC (1999 2006). | |||
Christopher A. Staples (1970) |
Vice President and Chief Investment Officer, Advisory Services |
Since 2007 | Vice President and Chief Investment Officer, Advisory Services (2007 present), Senior Vice President Investment Management (2006 2007), Vice President Investment Management (2005 2006), Transamerica Funds, TST and TIS; |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 21
Name and Year of Birth |
Position | Term of Office and Length of Time Served* |
Principal Occupation(s) or Employment During Past Five Years | |||
Christopher A. Staples (continued) |
Vice President and Chief Investment Officer, Advisory Services, TPP, TPFG, TPFG II and TAAVF (2007 present);
Vice President and Chief Investment Officer (2007 2010); Vice President Investment Administration (2005 2007), TII;
Director (2005 present), Senior Vice President (2006 present) and Chief Investment Officer, Advisory Services (2007 present), TAM;
Director, TFS (2005 present); and Assistant Vice President, Raymond James & Associates (1999 2004). | |||||
Erin E. King (1976) |
Vice President, Chief Compliance Officer and Anti-Money Laundering Officer | Since 2013 | Vice President, Chief Compliance Officer and Anti-Money Laundering Officer, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2013 present);
Vice President, Chief Compliance Officer and Chief Risk Officer, TAM (2013 present); Vice President, TFS (2013 present);
Managing Director and Chief Compliance Officer, Guggenheim Partners Investment Management, LLC (2007 2013);
Regulatory Affairs Compliance Officer, Western Asset Management Company (2004 2007);
Compliance Officer, Citigroup Asset Management (2002 2004); and Compliance Examiner, National Association of Securities Dealers (now, FINRA) (1999 2002). | |||
Elizabeth Strouse (1974) |
Vice President, Treasurer and Principal Financial Officer | Since 2010 | Vice President, Treasurer and Principal Financial Officer (2011 present), Assistant Treasurer (2010 2011), Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF;
Vice President and Chief Accounting Officer, TAM and TFS (2009 present);
Director, Fund Administration, TIAA-CREF (2007 2009); and
Manager (2006 2007) and Senior (2003 2006) Accounting and Assurance, PricewaterhouseCoopers, LLC. | |||
Sarah L. Bertrand (1967) |
Assistant Secretary | Since 2009 | Assistant Secretary, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2009 present);
Assistant Secretary, TII (2009 2010);
Assistant Vice President and Director, Legal Administration, TAM and TFS (2007 present);
Assistant Secretary and Chief Compliance Officer, 40|86 Series Trust and 40|86 Strategic Income Fund (2000 2007); and Second Vice President and Assistant Secretary, Legal and Compliance, 40|86 Capital Management, Inc. (1994 2007). |
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
Page 22
Name and Year of Birth |
Position | Term of Office and Length of Time Served* |
Principal Occupation(s) or Employment During Past Five Years | |||
Timothy J. Bresnahan (1968) |
Assistant Secretary | Since 2009 | Assistant Secretary, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2009 present);
Assistant Secretary, TII (2009 2010); and Vice President and Senior Counsel, TAM (2008 present). | |||
Richard J. Wirth (1958) |
Assistant Secretary | Since 2013 | Assistant Secretary, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2013 present);
Director, Senior Vice President, Division General Counsel and Secretary, Transamerica Advisors Life Insurance Company (2012 present);
Senior Vice President and Division General Counsel, Transamerica Advisors Life Insurance Company of New York (2012 present);
Vice President and Division General Counsel, Transamerica Financial Life Insurance Company (2012 present);
Senior Vice President and Division General Counsel, Transamerica Life Insurance Company (2012 present);
Senior Vice President and Division General Counsel, Monumental Life Insurance Company (2012 present);
Senior Vice President and Division General Counsel, Western Reserve Life Assurance Co. of Ohio (2012 present);
Secretary, Aegon Financial Services Group, Inc. (2012 present); and
Assistant General Counsel, The Hartford (2004 2012). | |||
Matthew H. Huckman, Sr. (1968) |
Tax Manager | Since 2014 | Tax Manager, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2014 present);
Tax Manager, TFS (2012 present); and
Assistant Mutual Fund Tax Manager, Invesco (2007 2012). | |||
Maria P. Sell (1978) |
Assistant Treasurer | Since 2013 | Assistant Treasurer, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2013 present);
Director, Fund Administration, TAM (2012 present);
Vice President, Fund Administration, J.P. Morgan (2010 2012); and
Assurance Manager, PricewaterhouseCoopers LLP (2006 2010). |
* | Elected and serves at the pleasure of the Board of each Trust. |
If an officer has held offices for different funds for different periods of time, the earliest applicable date is shown. No officer of the Trust, except for the Chief Compliance Officer, receives any compensation from the Trust.
Transamerica Asset Allocation Variable Funds | Annual Report 2013 |
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Transamerica Partners Portfolios
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Transamerica Partners High Quality Bond Portfolio
(unaudited)
MARKET ENVIRONMENT
While 2013 will certainly be categorized as a challenging year for fixed income investors, returns for most investment grade fixed income indices were positive for the first four months of 2013. The market lacked any real catalysts, so spread movements and interest rate changes were limited. Accommodative monetary policy and strong investor demand were dominant themes as they provided a temporary backstop for fixed income spreads.
As we moved into the spring, however, things became very challenging for fixed income markets. The U.S. economy began strengthening and the housing market showed signs of improvement. U.S. Federal Reserve (Fed) tapering expectations caused spreads to widen, volatility to spike, and U.S. Treasury yields to rise dramatically. In a departure from their usual relationship, the increase in U.S. Treasury yields during the second quarter coincided with a widening of credit spreads, as investors became fearful of bond outflows.
Obsession with Fed tapering was once again the dominant factor impacting fixed income returns during the third quarter, but this time with the opposite effect. Following the dramatic spread widening in May and June, markets normalized in July as market participants appeared less concerned about the effects of reduced Quantitative Easing. The Feds decision not to reduce their monthly bond purchases, based on their desire to see more evidence of improved economic conditions, led to a broad based rally. Fixed income returns ended the quarter in positive territory with the standout performers being high yield and residential home equity.
The euphoria was short-lived as U.S. Treasury yields again moved higher in November and December. With additional signs of economic recovery and a decline in the unemployment rate, markets considered a near-term taper more likely. Outgoing U.S. Federal Reserve Chairman Ben Bernanke and his likely successor, Vice-Chair Janet Yellen, guided the Federal Open Market Committee (FOMC) through their final meeting of the year on December 17-18. Unlike earlier in the year, this time, the Fed did act, announcing it would begin tapering in December with a plan to reduce their monthly bond purchases from $85 billion to $75 billion. This news, together with additional positive economic reports, caused the yield on the 10-year U.S. Treasury note to surpass 3% at year-end.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners High Quality Bond Portfolio returned 0.41%. By comparison, its benchmark, the Bank of America Merrill Lynch U.S. Corporate & Government 1-3 Years Index, returned 0.70%.
STRATEGY REVIEW
We made several shifts during the year to position for higher rates and wider spreads. Holdings of mortgage-backed securities increased from 18.5% to 29.8%, primarily in agency reverse mortgages (+6%) and commercial mortgage-backed securities (CMBS) (+5%). On the other hand, the allocation to the corporate sector fell by approximately 3% to 34%. Within corporates, we added to the real estate investment trust (REIT) holdings in expectation of tighter spreads.
In 2013, duration positioning was important given the volatility in interest rates. Anticipating higher rates, we kept the average portfolio duration shorter than the benchmark throughout the year. At December 31, 2013, Transamerica Partners High Quality Bond Portfolios (the Portfolio) duration was 1.62 years, versus 1.89 years for the Bank of America Merrill Lynch U.S. Corporate & Government 1-3 Years Index. Curve positioning was also critical. Performance was hurt during May and June when interest rates more than doubled in the three to five year part of the U.S. Treasury curve. In response, the strategy emphasized purchases of securities with maturities of three years or less.
The Portfolios yield advantage over the benchmark was more than enough to compensate for higher interest rates and the Portfolios curve exposure. Sector weightings contributed 0.63% of total return during the year, while security selection and duration positioning detracted by 0.35% and 0.21%, respectively. Corporates performed best, followed by residential mortgage-backed securities (RMBS), and CMBS. Several older vintage CMBS holdings were the best performers during 2013. An underweight to Treasuries and Agencies contributed 0.16% of total return.
Douglas A. Kelly, CFA
Peter S. Kaplan, CFA
Co-Portfolio Managers
Merganser Capital Management, Inc.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 1
Transamerica Partners Inflation-Protected Securities Portfolio
(unaudited)
MARKET ENVIRONMENT
As economic data continued its modest improvement from the onset of 2013, global markets were fixated on U.S. tapering. In the U.S., rates were pressured from early January, but resolution of fiscal negotiations in Washington and lower headline risk in Europe caused fixed income to rally from late-February to April. The U.S. 10-year yield reached its lows for the year in early May. European sovereign yields also rallied as early European bank repayment of the European Central Banks (ECBs) three-year long-term refinancing operations loans signaled a significant improvement in Eurozone balance sheets since the height of the crisis. In March, Japanese Prime Minister Shinzo Abe exhibited his commitment to spurring higher inflation by nominating Haruhiko Kuroda as the new governor of the Bank of Japan, whose favor for aggressive stimulus helped to depreciate the Japanese yen (JPY) significantly.
The tone for global fixed income markets changed dramatically in May during the Joint Economic Committee hearings when U.S. Federal Reserve (Fed) Chairman Ben Bernanke first alluded to beginning a taper before year-end, which was later reasserted in the June Federal Open Market Committee meetings. In Europe, the ECB responded to price weakness and struggling growth in May by cutting the benchmark rate 0.25% to 0.50% on the back of ECB President Mario Draghis expressed readiness to move deposit rates negative if warranted. In April, Governor Kuroda announced changes in the monetary policy framework to demonstrate the Bank of Japans commitment to spur reflation by announcing a target inflation rate of 2% within two years.
At the start of the third quarter global inflation markets reversed their sharp underperformance from the second quarter, in part due to support from global central banks. As the quarter progressed, performance of inflation-linked bonds became more mixed. Through mid-September, markets were adjusting to a Fed that was expected to commence winding down its asset purchase program, but decision to not taper and the withdrawal of Larry Summers from consideration for Chairman of the Fed caught investors off-guard. In Europe, despite the ECBs introduction of forward guidance as a new communication tool in a bid to distance itself from the U.S. Fed and rising Treasury yields, economic data continued to push risk-free yields higher.
Not surprisingly, global central bank policy action continued to dominate price action across inflation markets in the fourth quarter. Rates were volatile as investors digested the juxtaposing forces of strong economic data, dovish language from the Fed, and the possibility of tapering. In December, the Fed announced that they would reduce their asset purchase program by $10 billion split equally between Treasuries and mortgages. In Europe, the major news in the Eurozone over the quarter was the rate cut of 0.25% from 0.50% announced by the ECB in November. Markets were taken by surprise on the announcement and this action, combined with improving growth contribution from peripheral economies, contributed to continued peripheral spread compression.
The global inflation-linked market outperformed the U.S. Treasury Inflation-Protected Securities (TIPS) market, as U.S. TIPS showed greater sensitivity to Fed policy. While the U.K. Gilt market also backed up as monetary policy reversed course, European inflation markets were supported by the ECBs accommodative stance. Excluding the U.K., given duration fears, longer duration assets tended to underperform the rest of the curve across global markets.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Inflation-Protected Securities Portfolio returned (8.26)%. By comparison, its benchmark, the Barclays U.S. Treasury Inflation Protected Securities Index, returned (8.60)%.
STRATEGY REVIEW
Throughout most of the year, and particularly in the period leading up to May-June 2013, the fund was underweight real rates in the 5 to 10-year sectors of the TIPS curve. The fund benefited from this positioning in May and June, as Fed tapering fears and weak inflation data pressured the TIPS market tremendously. While being underweight breakeven inflation was the dominant expression through June, the significant re-pricing of real rates afforded the fund attractive entry points to express a more constructive view on TIPS. In the latter half of the year, the fund added longs in forward U.S. real rates (i.e. 20-year real rate, 10-years forward) as an expression of fundamental value. We believe this position offers attractive convexity in a modestly growing domestic economy.
For security selection, the fund was managed to be short off-the-run TIPS versus on-the-run TIPS, favoring the most recently issued TIPS across the curve. It has held this position since the beginning of 2013, as the changing regulatory environment and heightened pressure on dealer inventory caused significant underperformance of off-the-run issues versus their on-the-run counterparts.
In the non-United States dollar (USD) space, the funds allocation to Italian inflation-linked bonds, primarily in the two to five year portion of the curve, has contributed to performance. As the European crisis has mended and tail risk has been largely removed, there has been significant spread compression between peripheral and core issues. Despite headline political risk that had emerged
Transamerica Partners Portfolios | Annual Report 2013 |
Page 2
Transamerica Partners Inflation-Protected Securities Portfolio
(unaudited)
STRATEGY REVIEW (continued)
throughout various points in the year, Italian linkers showed strong overall performance, especially in the latter half of the year. The fund was underweight nominal U.K. Gilts as an expression that safe-haven flows would reverse as the Eurozone mends, and result in reduced institutional sponsorship. Stronger data materialized for the U.K. in the second quarter, boosting investor sentiment and leading markets to price out further Bank of England asset purchases. The strategy implemented four currency trades: short JPY vs. USD, short EU euro (EUR) vs. USD, short Australian dollar (AUD) vs. Norwegian krone (NOK), and short Swiss franc (CHF) vs. EUR. Various derivatives, including futures, forwards, options, and swaps, were utilized to attain desired portfolio positioning and each contributed positively to performance.
Martin Hegarty
Brian Weinstein
Co-Portfolio Managers
BlackRock Financial Management, Inc.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 3
Transamerica Partners Core Bond Portfolio
(unaudited)
MARKET ENVIRONMENT
The year 2013 ended as it began, with the theme of uncertainty driven by global policy agendas. While 2012 ended with contention around a debt ceiling debate, potentially causing default in the worlds largest economy, much of 2013 was dominated by uncertainty around the U.S. Federal Reserve (Fed) policy and its impact around the globe and across asset classes. Despite this uncertainty, both 2012 and 2013 delivered outsized equity returns, bolstering a string of positive domestic equity yearly returns that now stretches into its fifth year in total return terms.
U.S. investors will remember 2013 as a year dominated by Fed policy. It was late 2012 when markets believed the Fed may start to reign in its monthly quantitative easing bond buying program (QE) only to have these expectations sidelined in light of the debt ceiling debate and weakening global data that hinted at an economic slowdown, rather than an acceleration that would justify tapering. With a last minute budget agreement, imminent U.S. default was avoided and despite a less than favorable economic environment, global developed equities, led by the U.S., rallied strongly in the first quarter of 2013 and throughout much of the year, with U.S. large caps returning over 32% for the year while small caps came in even stronger at nearly 39%.
Meanwhile, Europe, Japan, and the broader Europe, Australasia, Far East (EAFE) universe were also benefitting from easy central bank policy. Europe, recovering from the worst economic slowdown in decades driven by debt, banking and competitiveness crises in the peripheral countries, experienced its own bumps and bruises during the year. While not out of the woods, outside of a mid-year threat from Cyprus, Europe ultimately has ended the year on sounder footing and is forecast to contribute positively to global gross domestic product growth in 2014 and is attracting favorable investor attention given relatively attractive valuations and ongoing easy monetary policy.
Japans 2013 revival may be the most dramatic. Continuing reforms started in 2012 aimed at revitalizing the countrys faltering and deflationary domestic economy found traction in 2013. Bank of Japan President Haruhiko Kuroda and Japanese Prime Minister Shinzo Abes three pronged approach of monetary, fiscal and structural reform took hold, sending the domestic equity markets up over 50% in local terms and subsequently weakening the yen and forcing investors out of bonds and into risk assets, while the broader MSCI EAFE Index ended the year up a very respectable return of 23.29%.
Emerging market equities, on the other hand, viewed by economists as a potential bright spot in 2013 after closing out 2012 on a positive trajectory driven by improving economic data and investor sentiment, sold off on inflation concerns, fiscal imbalances, and fear of the effect of tighter global monetary policy. It would be until the third quarter before emerging equities posted another positive quarterly return, with the MSCI Emerging Markets Index returning (2.27)% for the year.
The impact of Fed policy and uncertainty were not confined to the equity markets, as fixed income markets around the globe kept investors on edge throughout the year. In the U.S., the push and pull around tapering expectations was the key driver of fixed income returns. Lackluster economic data along with slow job growth and benign inflation kept tapering expectations off the table for much of the year and drove 10-year interest rates as low as 1.66% in May. Rate volatility increased in early September when the Fed began to speculate that data had improved enough to begin tapering before the end of the year. Ultimately, data improved enough to compel the Fed to begin tapering in December, reducing their purchase program by $10 billion per month.
Extended forward guidance and a commitment to keep the Fed Funds rate at record lows into 2015 helped rates remain relatively orderly despite the taper announcement, with the 10-year U.S. Treasury ending the year at 3.04%. Credit markets, including high yield and loans, outperformed core assets as the search for yield led to tightening credit spreads during the year. Corporations took advantage of the strong demand, issuing record amounts of high yield and loans. Similar to their equity counterparts, emerging market bonds underperformed during the year.
Despite the persistent uncertainty throughout 2013, looking back, markets remained relatively orderly with the exception of some pockets of stress and volatility remained generally subdued. Realized volatilities on nearly all major asset classes were below long-term trends, while sharpe ratios (i.e., risk-adjusted returns) for many equity sectors were the highest theyve been in decades. Loose monetary policy and the low but increasing rate environment outweighed the potential headwinds, forcing investors into risk assets and out of core fixed income.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Core Bond Portfolio (the Portfolio) returned (0.96)%. By comparison, its benchmark, the Barclays U.S. Aggregate Bond Index, returned (2.02)%.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 4
Transamerica Partners Core Bond Portfolio
(unaudited)
STRATEGY REVIEW
For the 12-month period ended December 31, 2013, the Portfolio outperformed its benchmark, the Barclays U.S. Aggregate Bond Index. Throughout the 12-month period, the Portfolio was overweight relative to its benchmark index in non-government spread sectors and underweight in U.S. government-related sectors. The Portfolio benefited from exposure to high quality securitized sectors such as commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS). The shrinking universe of high quality product combined with investor demand for yield was supportive of the continued strong performance in these sectors. The Portfolios positions in non-agency mortgage-backed securities (MBS) also contributed positively towards performance, particularly in light of the recovering U.S. housing market. The Portfolio also benefited from its exposure to corporate credit and non-U.S. dollar-denominated securities, particularly euro-denominated sovereign and credit securities. The Portfolios allocations to U.S. Treasury securities, U.S. agency debentures and U.S. agency MBS detracted from performance.
We actively managed duration (sensitivity to interest rate movements) throughout the 12-month period. Relative to the benchmark index, the Portfolio maintained a short-to-neutral duration bias for most of the year. The overall impact of duration and curve positioning on performance for the 12-month period was neutral. We tactically managed corporate credits, taking advantage of opportunities in the industrials and high yield sectors. We added to positions in CMBS and ABS, while maintaining liquidity in the Portfolio through core allocations to agency MBS and U.S. Treasuries.
At period end, the Portfolio was generally underweight relative to the Barclays U.S. Aggregate Bond Index in government-owned/government-related sectors in favor of non-government spread sectors. Within spread sectors, the Portfolio was most significantly overweight in CMBS and ABS. Within the government sectors, the Portfolio was underweight U.S. Treasuries and agency debentures and held a neutral weighting in agency MBS. The Portfolio also held an out-of-index allocation to non-agency residential MBS and high yield corporate credit. The Portfolio ended the period with a neutral duration relative to the benchmark index.
The Portfolio held derivatives during the period as a part of the investment strategy. Derivatives are used by the Portfolio management team as a means to hedge and/or take outright views on interest rates, credit risk and/or foreign exchange positions in the Portfolio. Options and swaps contributed to performance, while futures and forwards detracted from returns.
Bob Miller
Rick Rieder
Co-Portfolio Managers
BlackRock Financial Management, Inc.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 5
Transamerica Partners High Yield Bond Portfolio
(unaudited)
MARKET ENVIRONMENT
Thanks to the combination of moderate economic growth, the improving health of many high-yield companies balance sheets, a low default rate and favorable market technical factors, high yield bonds posted solid gains for the year ended December 31, 2013.
The fundamental credit backdrop for high-yield issuers remained solid, with most company balance sheets benefiting from solid earnings growth, previous efforts to reduce debt and the ability to refinance in a lower rate environment. Default rates continue to remain benign.
Although increasingly strong economic reports made a near term taper in which the U.S. Federal Reserve (Fed) could curtail its bond buying stimulus programs more likely and renewed the specter of higher interest rates, it also fueled investors appetite for risk. As a result, high-yield bonds outpaced higher quality securities during the fourth quarter. Furthermore, high yield bonds with their lower sensitivity to interest rate risk held growing appeal to investors worried about higher interest rates. At the same time, the supply of high-yield bonds remained steady in the fourth quarter leading to a record yearly volume.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners High Yield Bond Portfolio (the Portfolio) returned 7.48%. By comparison, its benchmark, the Bank of America Merrill Lynch High Yield Master II Index, returned 7.42%.
STRATEGY REVIEW
The Portfolio finished off the year strong. Credit selection was the main driver of returns for the year and this was especially true in the technology, gaming, and healthcare sectors of the market. The Portfolio also saw strong returns from its mid to longer range duration bonds (2-5 year and 5-10 year) as holdings in these categories were the top relative performers versus the Bank of America Merrill Lynch High Yield Master II Index (the Index) on a duration basis. When looking at credit ratings, CCC rated securities led the way for the Portfolio on both an absolute and relative performance standpoint. The Portfolios B rated securities also performed well as they were the second best performing rating class for the Portfolio relative to the Index. In terms of sector positioning, the Portfolios top sectors remained the same quarter over quarter with energy, healthcare and technology being the top three. The Portfolio did experience some performance detractors as well and they were mostly in the building materials and banks & thrifts segments of the market, as holdings in these sectors lagged the Index. The Portfolios BB rated positions also took away from relative performance as they returned less than the Index.
Linda Carter, CFA
Michael W. Weilheimer, CFA
Co-Portfolio Managers
Eaton Vance Management
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 6
Transamerica Partners Balanced Portfolio
(unaudited)
MARKET ENVIRONMENT
BlackRock Financial Management, Inc.
The year 2013 ended as it began, with the theme of uncertainty driven by global policy agendas. While 2012 ended with contention around a debt ceiling debate, potentially causing default in the worlds largest economy, much of 2013 was dominated by uncertainty around the U.S. Federal Reserve (Fed) policy and its impact around the globe and across asset classes. Despite this uncertainty, both 2012 and 2013 delivered outsized equity returns, bolstering a string of positive domestic equity yearly returns that now stretches into its fifth year in total return terms.
U.S. investors will remember 2013 as a year dominated by Fed policy. It was late 2012 when markets believed the Fed may start to reign in its monthly quantitative easing bond buying program (QE) only to have these expectations sidelined in light of the debt ceiling debate and weakening global data that hinted at an economic slowdown, rather than an acceleration that would justify tapering. With a last minute budget agreement, imminent U.S. default was avoided and despite a less than favorable economic environment, global developed equities, led by the U.S., rallied strongly in the first quarter of 2013 and throughout much of the year, with U.S. large caps returning over 32% for the year while small caps came in even stronger at nearly 39%.
Meanwhile, Europe, Japan, and the broader Europe, Australasia, Far East (EAFE) universe were also benefitting from easy central bank policy. Europe, recovering from the worst economic slowdown in decades driven by debt, banking and competitiveness crises in the peripheral countries, experienced its own bumps and bruises during the year. While not out of the woods, outside of a mid-year threat from Cyprus, Europe ultimately has ended the year on sounder footing and is forecast to contribute positively to global gross domestic product growth in 2014 and is attracting favorable investor attention given relatively attractive valuations and ongoing easy monetary policy.
Japans 2013 revival may be the most dramatic. Continuing reforms started in 2012 aimed at revitalizing the countrys faltering and deflationary domestic economy found traction in 2013. Bank of Japan President Haruhiko Kuroda and Japanese Prime Minister Shinzo Abes three pronged approach of monetary, fiscal and structural reform took hold, sending the domestic equity markets up over 50% in local terms and subsequently weakening the yen and forcing investors out of bonds and into risk assets, while the broader MSCI EAFE Index ended the year up a very respectable return of 23.29%.
Emerging market equities, on the other hand, viewed by economists as a potential bright spot in 2013 after closing out 2012 on a positive trajectory driven by improving economic data and investor sentiment sold off on inflation concerns, fiscal imbalances, and fear of the effect of tighter global monetary policy. It would be until the third quarter before emerging equities posted another positive quarterly return, with the MSCI Emerging Markets Index returning (2.27)% for the year.
The impact of Fed policy and uncertainty were not confined to the equity markets, as fixed income markets around the globe kept investors on edge throughout the year. In the U.S., the push and pull around tapering expectations was the key driver of fixed income returns. Lackluster economic data along with slow job growth and benign inflation kept tapering expectations off the table for much of the year and drove 10-year interest rates as low as 1.66% in May. Rate volatility increased in early September when the Fed began to speculate that data had improved enough to begin tapering before the end of the year. Ultimately, in December data improved enough to compel the Fed to announce tapering beginning in January reducing their purchase program by $10 billion per month.
Extended forward guidance and a commitment to keep the Fed Funds rate at record lows into 2015 helped rates remain relatively orderly despite the taper announcement, with the 10-year U.S. Treasury ending the year at 3.04%. Credit markets, including high yield and loans, outperformed core assets as the search for yield led to tightening credit spreads during the year. Corporations took advantage of the strong demand, issuing record amounts of high yield and loan. Similar to their equity counterparts, emerging market bonds underperformed during the year.
Despite the persistent uncertainty throughout 2013, looking back, markets remained relatively orderly with the exception of some pockets of stress and volatility remained generally subdued. Realized volatilities on nearly all major asset classes were below long-term trends, while sharpe ratios (i.e., risk-adjusted returns) for many equity sectors were the highest theyve been in decades. Loose monetary policy and the low but increasing rate environment outweighed the potential headwinds, forcing investors into risk assets and out of core fixed income.
J.P. Morgan Investment Management Inc.
The S&P 500® finished 2013 with a return of 32.39%, posting its best performance in over a decade. In 2013, investors were bracing themselves for the worst-case scenario with every potential crisis. Headlines were dominated by uncertainty over the economic impact
Transamerica Partners Portfolios | Annual Report 2013 |
Page 7
Transamerica Partners Balanced Portfolio
(unaudited)
MARKET ENVIRONMENT (continued)
of the U.S. fiscal cliff, a fragile Italian government, a potential U.S. military attack on Syria, and a U.S. government shutdown. These and other potential headwinds were favorably resolved. Given the reduced uncertainty, U.S. equity markets rallied throughout the year with only June and August posting negative returns.
During 2013s first few months, investors were skeptical about the prospects for global growth. U.S. economic data pointed towards moderation as the March employment report and several of the regional manufacturing surveys for April were below expectations. Headlines from overseas also signaled weakening economic activity. Chinese first-quarter gross domestic product (GDP) grew 7.7% year-over-year, down from the 7.9% year-over-year advance for the fourth quarter of 2012. In Europe, manufacturing Purchasing Managers Indexes (PMIs) remained stuck in contraction.
Chatter about when the Fed would taper the pace of its bond-buying program intensified in May. U.S. Fed Chairman Ben Bernanke, in his address to the Joint Economic Committee of Congress stated that asset purchases could be reduced over the next few meetings if data indicated it would be prudent to do so. The S&P 500® saw its largest correction of the year, from May 21st to June 24th, as the index declined 5.58%. The fixed income markets were even more volatile as the yield on the U.S. 10-year Treasury rose from 1.93% to 2.54%. The back up in bond yields brought about an intense intra-market rotation as bond-proxy equities, such as utilities, telecommunication services and real estate investment trusts sold off significantly while economically sensitive sectors rallied. The cyclical leadership continued throughout the year.
While markets got off to a volatile start for the years final quarter, they rallied into year-end. In December, the Fed announced that it would reduce the pace of asset purchases from $85 billion per month to $75 billion per month, starting in January. Data releases were also supportive of markets giving strong signals that the U.S. and global economy was accelerating going into 2014. The final estimate of third-quarter U.S. GDP increased at an annual rate of 4.1%, the largest quarterly growth rate since the fourth quarter of 2011. Overseas, manufacturing PMI surveys for the Eurozone, United Kingdom, and Japan were in expansion territory for several consecutive months.
Small-cap stocks, measured by the Russell 2000® Index, gained 38.82%, outperforming the 32.39% advance for the S&P 500®. Growth outperformed value across the large-, mid- and small-cap categories. Small-cap growth as measured by the Russell 2000® Growth Index was the top-performing equity style in 2013, returning 43.30%.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Balanced Portfolio (the Portfolio) returned 18.33%. By comparison, its primary and secondary benchmarks, the Barclays U.S. Aggregate Bond Index and the S&P 500®, returned (2.02)% and 32.39%, respectively.
STRATEGY REVIEW
BlackRock Financial Management, Inc.
For the 12-month period ended December 31, 2013, the Portfolio outperformed its benchmark, the Barclays U.S. Aggregate Bond Index. Throughout the 12-month period, the Portfolio was overweight relative to its benchmark index in non-government spread sectors and underweight in U.S. government-related sectors. The Portfolio benefited from exposure to high quality securitized sectors such as commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS). The shrinking universe of high quality product combined with investor demand for yield was supportive of the continued strong performance in these sectors. The Portfolios positions in non-agency mortgage-backed securities (MBS) also contributed positively towards performance, particularly in light of the recovering U.S. housing market. The Portfolio also benefited from its exposure to corporate credit and non-U.S. dollar-denominated securities, particularly euro-denominated sovereign and credit securities. The Portfolios allocations to U.S. Treasury securities, U.S. agency debentures and U.S. agency MBS detracted from performance.
We actively managed duration (sensitivity to interest rate movements) throughout the 12-month period, relative to the benchmark index, the Portfolio maintained a short-to-neutral duration bias for most of the year. The overall impact of duration and curve positioning on performance for the 12-month period was neutral. We tactically managed corporate credits, taking advantage of opportunities in the industrials and high yield sectors. We added to positions in CMBS and ABS, while maintaining liquidity in the Portfolio through core allocations to agency MBS and U.S. Treasuries.
At period end, the Portfolio was generally underweight relative to the Barclays U.S. Aggregate Bond Index in government-owned/government-related sectors in favor of non-government spread sectors. Within spread sectors, the Portfolio was most significantly
Transamerica Partners Portfolios | Annual Report 2013 |
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Transamerica Partners Balanced Portfolio
(unaudited)
STRATEGY REVIEW (continued)
overweight in CMBS and ABS. Within the government sectors, the Portfolio was underweight U.S. Treasuries and agency debentures and held a neutral weighting in agency MBS. The Portfolio also held an out-of-index allocation to non-agency residential MBS and high yield corporate credit. The Portfolio ended the period with a neutral duration relative to the benchmark index.
The Portfolio held derivatives during the period as a part of the investment strategy. Derivatives are used by the Portfolio management team as a means to hedge and/or take outright views on interest rates, credit risk and/or foreign exchange positions in the Portfolio. Derivatives had a positive impact on performance.
J.P. Morgan Investment Management Inc.
Stock selection in the pharmaceutical/medical technology, basic materials and retail sectors contributed to performance, while stock selection in the hardware and semiconductors, health services and systems and media sectors detracted.
Among individual stocks, biotechnology company Celgene remains one of our top long-term positions and continues to contribute to performance as its pipeline of cancer treatment drugs enjoy success in nearly all of their clinical readouts. Additionally, Celgenes existing cancer treatment drugs, Abraxane and Revlimid, continue to be first-line therapies for breast cancer and multiple-myeloma, respectively. Within pharmaceutical/medical technology, an overweight position in Biogen IDEC added value for the year. The company received market exclusivity for multiple sclerosis drug Tecfidera in November, paving the way for its launch in markets that could account for a large proportion of future sales. As we await more clarity on the firms hemophilia business, we believe there is a lot of upside potential largely due to strong pipeline/launches expected in 2014. Within the retail sector, shares of global apparel company VF Corp. helped results during the fourth quarter as it reported a third-quarter earnings beat. The company continued to rally into the latter part of the year on strong growth across most of its brands, including Timberland post-merger, as expectations of a colder-than-normal winter came to fruition.
Within the pharmaceutical/medical technology sector, an underweight position in Gilead Sciences hurt performance. Shares rose after strong drug results, including Gileads phase III trial for its hepatitis C pill. However, we remain negative on the name due to its weak long-term pipeline and looming patent cliff. In industrial cyclicals, an underweight in Boeing weighed on returns. Boeing had an eventful year, announcing several leadership changes and two new aircraft launches, and demonstrated strong operational performance. However, we continue to believe that Boeing is building too many planes in a shifting interest-rate and fuel environment, so our long-term thesis remains intact. Within semiconductors, an overweight in Broadcom detracted from performance in the fourth quarter. The company was hurt by its wireless business, which has underperformed due to design losses in connectivity and no clear progress in developing an LTE modem. We maintain a modestly positive view of Broadcoms broadband and networking businesses (70% of operating income), and believe that the wireless weakness is fully discounted in the current valuation.
Futures are used to hedge cash positions which are less than 5% of the Portfolios market value. The positions had a negligible impact on performance over the period.
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 9
Transamerica Partners Large Value Portfolio
(unaudited)
MARKET ENVIRONMENT
Equity markets ended the year on a high note it was the U.S. stock markets best year since 1997. Size and style mattered: small caps beat large caps and growth edged out value. In the broad market, the best performing sectors this year were consumer discretionary, health care, and industrials, while the worst performers were utilities and telecommunications.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Large Value Portfolio (the Portfolio) returned 38.08%. By comparison, its primary and secondary benchmarks, the Russell 1000® Value Index and the S&P 500®, returned 32.53% and 32.39%, respectively.
STRATEGY REVIEW
The Portfolio invests in a broadly diversified selection of large-cap stocks using our disciplined investment approach we are fully invested in U.S. equities, avoid broad sector bets, and take only modest industry-level and stock-specific bets. Our goal is to outperform the benchmark with incremental gains across many holdings. Using bottom-up stock selection, we evaluate companies relative to their industry peers using three broad categories of measures: value, management, and momentum. Value refers to the somewhat traditional ratios of price to fundamental value; management means we look for evidence that a companys management team has, and will, continue to emphasize earning power; and momentum indicates when stocks might begin to rise toward full valuation. As we search for opportunities, we keep a sharp eye on minimizing transaction costs, helping us maximize profits in our stock-selection effort.
Over the course of 2013, our stock selection model fired on all cylinders, with all three categories of attractiveness contributing to our positive return. Value was aided by our focus on companies that are attractive on the basis of price-to-sales. Management was supported by our efforts to quantify management efficiency and outlook. Momentum was helped by factors measuring sentiment and stability, especially among companies in the health care and consumer staples sectors. A significant portion of our results can be attributed to stock selection in the biotechnology industry, where non-benchmark holdings like United Therapeutics and Biogen Idec outperformed.
Over the course of the year, the combination of valuation, risk, and transaction costs guided the Portfolio toward the mid-cap segment of our large-cap universe, which contributed to our overall bottom-line results.
We remain firm in our conviction that superior results can be achieved through a consistent, systematic approach that focuses on low-priced companies with proven management and earnings power.
Theodore R. Aronson
Stefani Cranston
Gina Marie N. Moore
Martha E. Ortiz
Gregory J. Rogers
R. Brian Wenzinger
Christopher J. W. Whitehead
Co-Portfolio Managers
Aronson Johnson Ortiz, LP
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 10
Transamerica Partners Large Core Portfolio
(unaudited)
MARKET ENVIRONMENT
Equity markets ended the year on a high note it was the U.S. stock markets best year since 1997. Size and style mattered: small caps beat large caps and growth edged out value. In the broad market, the best performing sectors this year were Consumer Discretionary, Health Care, and Industrials, while the worst performers were Utilities and Telecommunications.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Large Core Portfolio (the Portfolio) returned 37.28%. By comparison, its primary and secondary benchmarks, the Russell 1000® Index and the S&P 500®, returned 33.11% and 32.39%, respectively.
STRATEGY REVIEW
The Portfolio invests in a broadly diversified selection of large-cap stocks using our disciplined investment approach we are fully invested in U.S. equities, avoid broad sector bets, and take only modest industry-level and stock-specific bets. Our goal is to outperform the Russell 1000® Index with incremental gains across many holdings. Using bottom-up stock selection, we evaluate companies relative to their industry peers using three broad categories of measures: value, management, and momentum. Value refers to the somewhat traditional ratios of price to fundamental value; management means we look for evidence that a companys management team has, and will, continue to emphasize earning power; and momentum indicates when stocks might begin to rise toward full valuation. As we search for opportunities, we keep a sharp eye on minimizing transaction costs, helping us maximize profits in our stock-selection effort.
Over the course of 2013, our stock selection model fired on all cylinders, with all three categories of attractiveness contributing to alpha. Value led the way, supported by our focus on companies that are attractive on the basis of price-to-sales. Management was aided by our efforts to quantify management efficiency and outlook. Momentum was helped by our focus on earnings estimates revision and sentiment. A significant portion of our results can be attributed to stock selection in the health care sector, where overweight positions in Biogen Idec and Celgene outperformed.
Over the course of the year, the combination of valuation, risk, and transaction costs guided the Portfolio toward the mid-cap segment of our large-cap universe, which contributed to our overall bottom-line results.
We remain firm in our conviction that superior results can be achieved through a consistent, systematic approach that focuses on low-priced companies with proven management and earnings power.
Theodore R. Aronson
Stefani Cranston
Gina Marie N. Moore
Martha E. Ortiz
Gregory J. Rogers
R. Brian Wenzinger
Christopher J. W. Whitehead
Co-Portfolio Managers
Aronson Johnson Ortiz, LP
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 11
Transamerica Partners Large Growth Portfolio
(unaudited)
MARKET ENVIRONMENT
Jennison Associates LLC
The U.S. equity market advanced strongly in the 12 months ended December 31, 2013, reflecting a more optimistic economic outlook. Housing and employment indicators improved, consumer confidence rose, and strength in corporate profits continued. Conditions in Europe appeared to stabilize, relieving earlier worries of sustained deterioration. In China, economic growth slowed, but to levels sufficiently expansionary, to give investors conviction that global gross domestic product, although moderating, remained in an expansionary mode. Concerns that the U.S. Federal Reserve (Fed) would begin scaling back its quantitative easing program took a toll in early summer. However, the market soon refocused on individual company fundamentals and showed renewed appreciation for companies with strong growth.
Wellington Management Company, LLP
Global equities surged in the first quarter of 2013 as solid corporate earnings results and favorable global liquidity dynamics lifted enthusiasm for stocks. Further monetary easing by the Bank of Japan and a steadily improving U.S. economy also fueled the rally, which continued at a more modest pace in the second quarter. Solid gains in April and the first half of May paused following comments by U.S. Fed Chairman Ben Bernanke, which suggested the Fed might begin to slow quantitative easing sooner than investors anticipated. Nonetheless, equities resumed their ascent in the third quarter as the surprising no taper decision by the Federal Open Market Committee eased near-term concerns about rapidly rising interest rates derailing the economic recovery. Additionally, accommodative policy from the European Central Bank, along with encouraging economic data from China, further evidence of a European economic recovery, and solid corporate earnings contributed to a broad-based global equity rally that extended through the end of the year. In December, the year ended with an optimistic tone as investors cheered the elimination of two market overhangs: the timing of Fed tapering, and the threat of another government shutdown in January of the following year.
In this environment, all ten sectors in the Russell 1000® Growth Index posted positive returns for the period. The health care (+48.2%) and consumer discretionary (+44.5%) sectors posted the largest gains, while the telecom Services (+17.4%) and consumer staples (+24.0%) sectors lagged.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Large Growth Portfolio (the Portfolio) returned 35.32%. By comparison, its primary and secondary benchmarks, the Russell 1000® Growth Index and the S&P 500®, returned 33.48% and 32.39%, respectively.
STRATEGY REVIEW
Jennison Associates LLC
The Portfolio is built from the bottom up, based on the fundamentals of individual companies. Consumer discretionary positions, which hold a major weight in the Portfolio, were strong contributors to return as both an overweight and stock selection were beneficial. Amazon.com accelerated its business investment to drive robust longer-term growth not only in its core retail business but through the proliferation of digital commerce via the mobile market. Substantial revenue growth reflected its efforts. Gross bookings growth increased at online travel company Priceline.com, which we believe is poised to benefit from the long-term shift to online travel spending.
Health care holdings, in particular biopharmaceutical companies, which held a meaningful weight in the Portfolio, were strong contributors to return. The Food and Drug Administration (FDA) approved Biogen Idecs Tecfidera for multiple sclerosis. We believe the drugs ease of use could support broad adoption and potential market leadership. The FDA also approved Gilead Sciences Sovaldi for the treatment of Hepatitis C. Many patients infected with the liver virus now will be treated with pills only, obviating injections of interferon, which often has debilitating side effects. In our opinion, Gileads oncology pipeline also looks promising.
Stock selection was beneficial in information technology as well. MasterCards strong revenue and earnings were driven by strong growth in global dollar volume and processed transactions. We expect MasterCard to continue to benefit from the long-term shift from cash to electronic credit/debit transactions. Google performed well, reflecting its competitive position, strong advertising revenue, and YouTube monetization opportunities. LinkedIns revenue and earnings exceeded consensus expectations significantly. The company is a leading global online professional network that provides what we consider unique access to a database of active and passive job
Transamerica Partners Portfolios | Annual Report 2013 |
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Transamerica Partners Large Growth Portfolio
(unaudited)
STRATEGY REVIEW (continued)
candidates. Facebook, whose ad revenue advanced strongly, driven by gains in mobile, was also one of the top contributors. We view Facebook to be the worlds preeminent Internet-based social network with a dominance no rival can easily match, and a network effect that creates formidable barriers to entry.
Other information technology holdings detracted from performance. Rackspace Hostings difficulties were largely related to changes in its sales force structure and concerns that its business is being commoditized. Rackspace provides Web and cloud-hosting services to more than 180,000 enterprise customers. VMware was hurt by uncertainty about the timing and pace of new product revenue acceleration.
In industrials, Boeing contributed to performance as it reported strong earnings, revenue, cash flow, and margins. Of particular note, the profitability of the companys 787 Dreamliner improved, driven by an accelerated production rate.
Portfolio holdings in energy and materials posted double-digit returns but lagged the returns of the benchmark sectors.
Wellington Management Company, LLP
The strategys investment process leverages the extensive research resources of Wellington Management, and emphasizes a balance of growth, quality, and valuation criteria in selecting stocks. We utilize risk analysis tools to help maintain the Portfolios emphasis on stock selection and minimize other sources of relative risk. With this bottom-up approach incorporating diversified sources of alpha and effective risk analysis, our goal is to generate consistent outperformance over time.
Sector allocation, a residual of the bottom up stock selection process, contributed to performance for the year. During the period, positive relative results, due largely to an underweight position in consumer staples and an overweight position in health care, were able to offset negative relative results from an overweight position in information technology and a fractional cash position in a rising market. Security selection negatively affected the Portfolios relative performance, due largely to weak stock selection within the consumer discretionary and materials sectors.
The largest contributors to relative returns during the period included positions in software manufacturer Yahoo and underweight positions in IBM and Apple. Positions in aerospace firm Boeing and biopharmaceutical company Celgene also contributed positively to relative returns.
The largest relative detractors during the year included Altera and Broadcom, both semiconductor manufacturers, as well as technology hardware provider Cisco Systems. The Portfolios position in Allied Nevada Gold, a mining company, also detracted from relative returns during the period.
As of the end of the year, the Portfolio was most overweight in the information technology and health care sectors, and most underweight in the consumer staples and materials sectors.
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 13
Transamerica Partners Mid Value Portfolio
(unaudited)
MARKET ENVIRONMENT
Cramer Rosenthal McGlynn, LLC
Equities were far and away the best asset class for investors in 2013. The multi-year run in fixed income, gold, and other commodities came to an end. The ten-year U.S. Treasury note sold off post-U.S. Federal Reserve (Fed) Chairman Ben Bernankes May Congressional testimony and then again later in the year as tapering became a reality. Commodities suffered along with weakness in most emerging markets and a relatively stronger U.S. dollar. The combination of increased supply and more tepid demand from emerging countries may likely keep most commodity prices contained. The lower level of inflation has boosted consumer disposable income and corporate profit margins. It also allowed the Fed to maintain quantitative easing longer than expected, and defer a plan for its gradual withdrawal well into 2014.
J.P. Morgan Investment Management Inc.
The S&P 500® finished 2013 with a return of 32.39%, posting its best performance in over a decade. In 2013, investors were bracing themselves for the worst-case scenario with every potential crisis. Headlines were dominated by uncertainty over the economic impact of the U.S. fiscal cliff, a fragile Italian government, a potential U.S. military attack on Syria, and a U.S. government shutdown. These and other potential headwinds were favorably resolved. Given the reduced uncertainty, U.S. equity markets rallied throughout the year with only June and August posting negative returns.
During 2013s first few months, investors were skeptical about the prospects for global growth. U.S. economic data pointed towards moderation as the March employment report and several of the regional manufacturing surveys for April were below expectations. Headlines from overseas also signaled weakening economic activity. Chinese first-quarter gross domestic product (GDP) grew 7.7% year-over-year, down from the 7.9% year-over-year advance for the fourth quarter of 2012. In Europe, manufacturing Purchasing Managers Indexes (PMIs) remained stuck in contraction.
Chatter about when the Fed would taper the pace of its bond-buying program intensified in May. Fed Chairman Ben Bernanke, in his address to the Joint Economic Committee of Congress stated that asset purchases could be reduced over the next few meetings if data indicated it would be prudent to do so. The S&P 500® saw its largest correction of the year, from May 21 to June 24, as the index declined 5.58%. The fixed income markets were even more volatile as the yield on the U.S. 10-year Treasury rose from 1.93% to 2.54%. The back up in bond yields brought about an intense intra-market rotation as bond-proxy equities, such as utilities, telecommunication services and real estate investment trusts sold off significantly while economically sensitive sectors rallied. The cyclical leadership continued throughout the year.
While markets got off to a volatile start for the years final quarter, they rallied into year-end. In December, the Fed announced that it would reduce the pace of asset purchases from $85 billion per month to $75 billion per month, starting in January. Data releases were also supportive of markets giving strong signals that the U.S. and global economy was accelerating going into 2014. The final estimate of third-quarter U.S. GDP increased at an annual rate of 4.1%, the largest quarterly growth rate since the fourth quarter of 2011. Overseas, manufacturing PMI surveys for the Eurozone, United Kingdom, and Japan were in expansion territory for several consecutive months.
Small-cap stocks, measured by the Russell 2000® Index, gained 38.82%, outperforming the 32.39% advance for the S&P 500®. Growth outperformed value across the large-, mid- and small-cap categories. Small-cap growth as measured by the Russell 2000® Growth Index was the top-performing equity style in 2013, returning 43.30%.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Mid Value Portfolio (the Portfolio) returned 32.99%. By comparison, its benchmark, the Russell Midcap® Value Index, returned 33.46%.
STRATEGY REVIEW
Cramer Rosenthal McGlynn, LLC
The combination of better business confidence and activism is very powerful for our style of investing. We seek out companies with multiple business units and overcapitalized balance sheets which are being undervalued by the market. The two sectors that influenced the strategys performance the most were financial services and technology. The financial services sector had the greatest positive
Transamerica Partners Portfolios | Annual Report 2013 |
Page 14
Transamerica Partners Mid Value Portfolio
(unaudited)
STRATEGY REVIEW (continued)
impact on performance for the year as a result of both strong stock selection and our lack of significant exposure to real estate investment trusts (REITs). Conversely, stock selection within the technology sector underperformed the benchmark for the year.
Two of the positions which had the greatest positive impact on performance in 2013 were: Pentair and Tyco International. Pentair benefitted from improved investor confidence regarding the companys 2015 growth plan, which was discussed during the quarter at both its investor day and 2014 earnings guidance call. We continue to believe the stock will experience upside from end-market acceleration, further share repurchases, and additional restructuring efforts. Tyco International posted strong quarterly results and provided 2014 guidance which, in our opinion, positions the company to exceed its long-term targets. The company continues to execute well on restructuring initiatives and deploy its substantial excess capital smartly in accretive security product deals.
Two of the positions which had the greatest negative impact on performance in 2013 were: Teradata and McGraw-Hill. Teradata was a holding which had the greatest negative impact on performance for the year. Teradata Corporations third quarter results missed expectations and management reduced guidance for the fourth quarter. This miss compounded what had already been a challenging year for the company as demand was impacted by weak enterprise IT spending. We believe investors remain fearful that Teradatas core product is losing share to newer technologies. Our research indicates that the company should be a primary beneficiary once IT spending improves. In the first half of 2013, uncertainty developed around McGraw-Hill as the Department of Justice announced a major lawsuit against its S&P business. While S&P successfully defended against similar claims, the magnitude and unique method of the lawsuit increased the risk profile of the investment and we sold our shares during first quarter 2013.
J.P. Morgan Investment Management Inc.
Stock selection in the financial sector and sector allocation in the consumer discretionary sector contributed to performance. Stock selection in the industrials and information technology sectors detracted from performance.
Ameriprise, a financial advisory and asset management firm, was a major contributor to performance as rising equity prices continued to drive the companys top- and bottom-line growth. Shares of HCP, a healthcare REIT, underperformed as fears of near-term earnings slowdown damped investor demand. We believe that HCP is expected to run into a few near-term growth constraints, including a refinancing of debt in February and the potential exercise of a buy option by one of its tenants.
Avoiding higher beta, more volatile names, within the information technology sector negatively impacted relative performance. One of the largest detractors from our relative performance was Micron Technology, which the Portfolio no longer helds as of year end.
The Portfolio continues to have a large overweight position in consumer discretionary names, while the financial sector remains the largest underweight due to an underweight to REITs based on their valuation. In the fourth quarter, we eliminated our position in the Charles Schwab Corporation, an online trading and asset management firm, and initiated a position in American Campus Communities, a student housing provider, and Legg Mason, an investment firm. We are redistributing our allocation within the financials space based on the relative valuation of the subsectors.
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 15
Transamerica Partners Mid Growth Portfolio
(unaudited)
MARKET ENVIRONMENT
The U.S. equity market finished 2013 in very strong fashion with the fourth quarter producing solid gains in stock prices. The gains were largely driven by a strengthening economy and improving corporate earnings. Many key economic data points trended higher throughout the year and point to a positive outlook going forward. The U.S. Institute for Supply Managements (ISM) manufacturing Purchasing Managers Index (PMI), a leading indicator of corporate profit growth, gradually ticked higher in the second half of the year to 57 a figure consistent with an extension of the approximate 4% gross domestic product (GDP) we saw in the third quarter. December was the seventh straight ISM reading above 50, which is the level associated with an expanding economy. The U.S. unemployment rate has also gradually improved throughout 2013 and reached a five-year low of 7% in December.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Mid Growth Portfolio (the Portfolio) returned 30.35%. By comparison, its benchmark, the Russell Midcap® Growth Index, returned 35.74%.
STRATEGY REVIEW
Stock selection in the consumer discretionary, consumer staples, industrials and materials sectors negatively impacted relative performance for the Portfolio, while information technology, financials, energy and health care were top sector contributors during the fourth quarter.
Given tighter discretionary spending, the holiday retail season exhibited intense price competition as retailers battled for market share. While retail sales were challenged overall, Internet sales grew over 10% year-over-year. Under Armour was the best performer in the second half due to its higher-income customer base, continued growth, and product innovation. Carters was the worst performer due to anticipated continued margin compression, driven by low pricing power, lower-to-middle income customer base and rising Chinese labor costs. The Fresh Market underperformed due to negative market reaction to slow growth at some of its new stores and increasing competition among premium grocers.
Software firm PTC, Inc. posted the top performance in the information technology and telecommunications sectors after beating earnings expectations in the past two quarters, driven by a rebound in Europe and solid growth in Japan and the Pacific Rim in the companys most recent quarter. Trimble Navigation was the second-best performer with the company announcing a contract with the U.S. Marine Corps and Army in late August to provide construction grade control and survey systems worth approximately $63M in revenue over the contracts five-year term. Internet company ValueClick was the tech sectors worst performing stock with the company reporting quarterly sales and EPS below consensus expectations due to weaker-than-expected sales in the companys display business as well as lackluster sales execution in the second quarter.
Global commodity prices were roughly flat in aggregate, with metals stronger and agricultural commodities lower continuing their downtrend. Crude oil was down a bit after peaking in October. Rock Tenn was a strong performer as the company began taking some capacity offline in order to better balance supply and demand.
In the health care sector, Aligns penetration outside of the U.S. was under-estimated, and the penetration was done without a substantial hit to margins. United Therapeutics had a surprise FDA approval come at the end of the year. Both health care stocks were top performers in the Portfolio.
Howard Aschwald, CFA
Portfolio Manager
Quantum Capital Management
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 16
Transamerica Partners Small Value Portfolio
(unaudited)
MARKET ENVIRONMENT
Global equities surged in the first quarter as solid corporate earnings results and favorable global liquidity dynamics lifted enthusiasm for stocks. Further monetary easing by the Bank of Japan and a steadily improving U.S. economy also fueled the rally, which continued at a more modest pace in the second quarter. Solid gains in April and the first part of May paused following comments by U.S. Federal Reserve (Fed) Chairman Ben Bernanke that suggested the Fed might begin to slow quantitative easing sooner than investors anticipated. Nonetheless, equities resumed their ascent in the third quarter as the surprising no taper decision by the Federal Open Market Committee eased near-term concerns about rapidly rising interest rates derailing the recovery. Additionally, accommodative rhetoric from the European Central Bank, along with encouraging data in China, further evidence of a European economic recovery, and solid corporate earnings contributed to a broad-based global equity rally that extended through the end of the year. In December, the year ended with an optimistic tone as investors cheered the elimination of two market overhangs: the timing of Fed tapering and the threat of another government shutdown in January.
In this environment, all ten sectors in the Russell 2000® Value Index posted positive returns for the period. The consumer discretionary (+49.4%) and health care (+47.2%) sectors posted the largest gains, while the telecom services (+6.5%) and utilities (+18.5%) sectors lagged.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Small Value Portfolio (the Portfolio) returned 34.10%. By comparison, its benchmark, the Russell 2000® Value Index, returned 34.52%.
STRATEGY REVIEW
The team employs a bottom-up stock selection process that utilizes Wellington Managements proprietary, fundamental research to identify undervalued companies that have the potential for significant outperformance over time. They take a long-term approach, focusing on high-quality companies with a record of above-average rates of profitability that sell at a discount relative to their intrinsic value and the overall small cap market. Companies with a history of above-average profitability are likely to have a strong and sustainable competitive position within a market niche. These companies typically generate strong cash flows that can be used to build the value of the business or otherwise benefit shareholders, such as dividend distributions and share repurchases. The quality of a companys management, its strategic direction, and expectations with regard to the use of current and future cash flows are integral components of their valuation process.
Overweights to the health care and industrials sectors contributed most to relative performance. This was modestly offset by a frictional cash position in a rising market. Weak stock selection in the consumer discretionary and industrials sectors negatively affected the Portfolios relative performance.
The Portfolios largest contributors to relative performance during the period included Belden, a manufacturer of technology hardware, G & K Services, a supplier of uniforms and facility products, and Diamondback Energy, an oil & gas company. The Portfolios position in CorVel, a provider of health care management services, and in Scorpio Tankers, an operator of modern product tankers, also contributed to relative returns during the period.
The Portfolios largest relative detractors during the year included engineered products supplier ESCO Technologies, real estate developer and owner Campus Crest Communities, and ACCO Brands, a leading supplier of branded office products. Our positions in retail company Stage Stores and Deltic Timber, a natural resources company that focuses on the development and management of timber, also detracted from relative results during the period.
The Portfolios investment approach emphasizes individual stock selection; sector weights are a residual of the process. Wellington Management Company, LLP does, however, carefully consider diversification across economic sectors to limit risk. As of the end of the period, the Portfolio was most overweight the health care and industrials sectors, and most underweight financials. Based on the firms 2- to 3-year time horizon we continue to find opportunities created by the inefficiencies frequently found among small cap companies.
Timothy J. McCormack, CFA
Shaun F. Pedersen
Co-Portfolio Managers
Wellington Management Company, LLP
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 17
Transamerica Partners Small Core Portfolio
(unaudited)
MARKET ENVIRONMENT
The second half of 2013 saw the bulls run rampant on Wall Street, whereas the small cap market, as measured by the Russell 2000® Index, was up nearly 20% for the final six months of the year. The period was a roller coaster ride in terms of political events that were eventually resolved to the satisfaction of investors. Early in the time frame, the potential for U.S. military action in Syria weighed heavily on investor sentiment, but as the prospect of conflict faded, so too did investor concern on the issue. We also saw the federal government shut down amid yet another stalemate in Washington over the budget deficit. An eventual compromise in October, however, set the stage for a more material late-year agreement that afforded some budget certainty going forward, averting any further shutdowns in the near future. Investors clearly applauded the turn of events in Washington, as this should prove to remove one hurdle to U.S. economic growth in the quarters ahead. This late-year agreement likely played no small role in the U.S. Federal Reserves (Fed) December decision to taper its asset-purchase program. (The Fed will now buy $75 billion in Treasuries and mortgage-backed securities each month, instead of $85 billion.) Systematic Financial Management (Systematic) views the Feds move as largely symbolic, but by no means insignificant. The Feds policy shift signals its belief that the economy has picked up some steam, a stance Systematic shares based on its research. The housing market remains firm, and we are seeing improved strength among many of the industrial and services firms that address the housing industry. Online retailers, meanwhile, had a better holiday season than expected, a scenario that could pull through demand in parts of the domestic supply chain. We are also seeing this improvement in the financial sector, where banks posted moderately better loan growth in the fourth quarter relative to the July - September period.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Small Core Portfolio (the Portfolio) returned 33.62%. By comparison, its primary and secondary benchmarks, the Russell 2000® Index and the S&P 500®, returned 38.82% and 32.39%, respectively.
STRATEGY REVIEW
The Portfolio posted a strong absolute return in the second half of 2013, although it trailed the Russell 2000® Index during this time frame. Given the strong run up in the market over the period, most of the metrics that Systematic employs showed limited effectiveness in separating winners from losers, as a rising tide lifted all boats. Breaking it down, the six-month period was really a tale of the two calendar quarters from a factor performance perspective. Both quarters saw mixed results at the factor level, but in terms of which factors were effective from a stock selection standpoint, the two quarters were largely a mirror image of one another. While the third quarter saw momentum based metrics generally lead in terms of effectiveness, in the fourth quarter, it was the valuation and capital deployment frameworks that were somewhat additive to results, while momentum based metrics struggled. From a broader perspective, investors generally favored growth-oriented stocks during the latter half of the year, leading the Russell 2000® Growth Index to outperform the Russell 2000® Index by about 2.20%, and the Russell 2000® Value Index by approximately 4.42%. This type of environment serves as a headwind to Systematics disciplined approach, which generally favors more conservative and reasonably valued issues. From an attribution standpoint, stock selection accounted for underperformance for the period, with the Portfolios holdings in the health care and energy sectors detracting the most relative to the index. Conversely, its holdings in the industrials and materials sectors were additive to results. From a sector positioning standpoint, an underweight to the financial sector added value during the period. However, sector weightings in aggregate had little effect on relative results.
Eoin E. Middaugh, CFA
Portfolio Manager
Systematic Financial Management
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 18
Transamerica Partners Small Growth Portfolio
(unaudited)
MARKET ENVIRONMENT
The market has overcome a litany of issues over the past several years, and it has consistently and significantly traded higher. We are now entering year six of this bull market and there appear to be fewer anxieties. To elaborate on why Ranger Investment Management, L.P. (Ranger) believes there are fewer anxieties: bond yields have increased but are not likely to go significantly higher in 2014; the yield curve is steep and theres good availability of credit; tapering has been announced; there is recent political cooperation which lessens fiscal/governmental displacement; industrial production is increasing; unemployment is down; government is less of a drag on the economy; Europe has stabilized; and central banks remain accommodative. Each of these considerations supported better economic and financial results through 2013, and continue to do so as we enter 2014. The market responded with equities broadly stronger from both improved financial results and higher valuations. Obviously, the success of equities combined with the list of considerations above supports the increased bullishness of investors. A significant amount of dry powder remains from potential asset allocation shifts from bonds to equities, which Ranger believes could help add to gains. While Ranger would welcome continued broad gains, they believe that selectivity and quality should be the key attributes for differentiation in 2014. This serves in contrast with the risk on environment of 2013, which rewarded speculative stocks the most (details below).
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners Small Growth Portfolio (the Portfolio) returned 37.97%. By comparison, its benchmark, the Russell 2000® Growth Index, returned 43.30%, respectively.
STRATEGY REVIEW
The positive considerations outlined above helped appreciate the portfolio of quality stocks by 39% over the past year. Ranger remains steadfast in positioning the Portfolio prudently within each sector from both a fundamental and valuation perspective. While the Portfolio lagged the Russell 2000® Growth Index (the benchmark), Ranger attributes part of that relative weakness to the speculative environment which rewarded lower quality stocks. This is evidenced by the outperformance of non-earning stocks in the benchmark, which increased on average by over 46% and represented over 19% of the index weighting. An additional drag on performance was the Portfolios average cash balance of 3% in 2013. Cash cost the Portfolio nearly 170 basis points and was the primary component of the detraction from performance related to allocation effect. It should also be noted that much of the underperformance for 2013 occurred in the month of December, where the Portfolio experienced a reversal in strength from consumer discretionary holdings which had outperformed previously. Additionally, many key holdings across all sectors declined modestly this last month and penalized performance.
Analyzing performance on a sector basis, the Portfolio benefited most significantly from the financial services sector, which is the largest relative overweighting versus the index. This sector averaged a 500 basis point overweight and is primarily comprised of regional banks. While overweight the index, the performance was driven by selection effect as evidenced by the 68.5% return of the Portfolios financial stocks compared to the 37.6% return by the index component. The sectors which underperformed the index most significantly were technology and energy. In each of these sectors the Portfolio had several holdings which penalized performance.
On a stock basis, the top ten contributors to performance were: Medidata Solutions, Private Bancorp, Enersys, Home Bancshares, Akorn, Gulfport Energy, Asbury Automotive, Deckers Outdoor, Prestige Brands and MarketAxess. These represent holdings in the healthcare, financial services, producer durables, energy and consumer discretionary sectors. The bottom ten detractors from performance were: Vocera Communications, Bioscrip, Liveperson, eHealth, IXIA, Impax Laboratories, HMS Holdings, Kraton Performance Polymers, PDC Energy and Ceva. These represent holdings in the technology, healthcare, financial services, materials and processing, and energy sectors.
W. Conrad Doenges
Portfolio Manager
Ranger Investment Management, L.P.
Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell indexes. Russell® is a trademark of Russell Investment Group.
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 19
Transamerica Partners International Equity Portfolio
(unaudited)
MARKET ENVIRONMENT
Equity markets outside the U.S. continued their climb in 2013, but uncertainty about U.S. monetary policy remained high until mid-December, when the U.S. Federal Reserve (Fed) announced it would scale back its stimulus. Although the market stumbled on head fakes from the Fed in May and October, investors viewed the December announcement as a positive indication the worlds largest economy was finally back on its feet, and markets rallied into year-end. All of the 22 MSCI Developed-ex U.S. countries posted positive returns in both U.S. dollar and local currency terms but ranged widely from Singapore up 1.7% to Finland up 46.0%. Resource-heavy markets like the United Kingdom and Australia posted relatively light results. In Japan, where a weak Yen helped export-sensitive business, markets posted a 54.5% return in local terms, but that was reduced to 27.1% when converted to U.S. dollars. The Materials sector, where companies were burdened by low end-market commodity prices, was the only sector in the MSCI All Country World Index ex-U.S. to decline over the last twelve months. Europe was the top performing region for U.S.-dollar-based investors. Renewed faith in cyclical stocks and Financials along with speculation on increased merger and acquisition activity in Telecommunication Services were the winners there. Emerging markets stocks have underperformed as investors anticipated a slowdown in China and worried over unrest in Brazil and Thailand, among other issues.
PERFORMANCE
For the year ended December 31, 2013, Transamerica Partners International Equity Portfolio returned 13.92%. By comparison, its benchmark, the MSCI All Country World Index ex-U.S., returned 15.78%.
STRATEGY REVIEW
2013 was a banner year for stocks in developed markets around the world, and many of the positive trends remain in place. Economic performance is gradually improving in most markets, and equity valuations, while higher, remain reasonable for the most part. Even though the Fed has scaled back on quantitative easing, stimulus remains strong, and interest rates are still very low. Globally, the story is much the same, though we have seen a few central banks raise rates to stem inflation, primarily in the emerging markets. Corporate earnings have been strong but, with better investment sentiment as economies show signs of improved growth, prices have risen faster, and valuation multiples have become more expensive. This presents a more challenging environment to find attractive valuations. On a relative basis, however, non-U.S. stocks are currently trading at a discount to their U.S. peers.
Brandon H. Harrell, CFA
Portfolio Manager
Thompson, Siegel & Walmsley LLC
Please refer to page 21 for index descriptions.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 20
Index Descriptions
(unaudited)
Index | Description | |
Bank of America Merrill Lynch High Yield Master II Index | The Bank of America Merrill Lynch High Yield Master II Index is comprised of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market with remaining maturities of at least one year. | |
Bank of America Merrill Lynch U.S. Corporate & Government 1-3 Years Index | The Bank of America Merrill Lynch U.S. Corporate & Government 1-3 Years Index tracks the performance of U.S. dollar denominated investment grade debt publicly issued in the U.S. domestic market, including U.S. Treasury, U.S. agency, foreign government, supranational and corporate securities that have a remaining maturity of less than 3 years and more than 1 year. | |
Barclays U.S. Aggregate Bond Index | The Barclays U.S. Aggregate Bond Index measures investment grade, U.S. dollar denominated, fixed-rate taxable bonds, including Treasuries, government-related and corporate securities, as well as both mortgage- and asset-backed securities. | |
Barclays U.S. Treasury Inflation Protected Securities Index | The Barclays U.S. Treasury Inflation Protected Securities Index is a market value weighted index that tracks inflation-protected securities issued by the U.S. Treasury. | |
MSCI All Country World Index ex-U.S. | The MSCI All Country World Index ex-U.S. captures large and mid-cap representation across developed and emerging markets countries, excluding the U.S. | |
Russell 1000® Index | The Russell 1000® Index measures the performance of the large-cap segment of the U.S. equity universe, and is comprised of approximately 1,000 of the largest securities of the Russell 3000® Index based on a combination of market cap and current index membership. | |
Russell 1000® Growth Index | The Russell 1000® Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe, and is comprised of Russell 1000® Index companies with higher price-to-book ratios and higher forecasted growth values. | |
Russell 1000® Value Index | The Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe, and is comprised of Russell 1000® Index companies with lower price-to-book ratios and lower expected growth values. | |
Russell 2000® Index | The Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe, and is comprised of approximately 2,000 of the smallest securities of the Russell 3000® Index based on a combination of market cap and current index membership. |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 21
Index Descriptions (continued)
(unaudited)
Index | Description | |
Russell 2000® Growth Index | The Russell 2000® Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe, and is comprised of Russell 2000® Index companies with higher price-to-value ratios and higher forecasted growth values. | |
Russell 2000® Value Index | The Russell 2000® Value Index measures the performance of small-cap value segment of the U.S. equity universe, and is comprised of Russell 2000® Index companies with lower price-to-book ratios and lower forecasted growth values. | |
Russell Midcap® Index | The Russell Midcap® Index measures the performance of the mid-cap segment of the U.S. equity universe, and is comprised of approximately 800 of the smallest securities of the Russell 1000® based on a combination of market cap and current index membership. | |
Russell Midcap® Growth Index | The Russell Midcap® Growth Index measures the performance of the mid-cap growth segment of the U.S. equity universe, and is comprised of Russell Midcap® Index companies with higher price-to-book ratios and higher forecasted growth values. | |
Russell Midcap® Value Index | The Russell Midcap® Value Index measures the performance of the mid-cap value segment of the U.S. equity universe, and is comprised of Russell Midcap® Index companies with lower price-to-book ratios and lower forecasted growth values. | |
S&P 500® | The S&P 500® is market-capitalization weighted index of 500 large U.S. companies with common stock listed on the NYSE or NASDAQ. |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 22
Schedules of Investments Composition
At December 31, 2013
(The following charts summarize the Schedule of Investments of each portfolio by asset type)
(unaudited)
Transamerica Partners Portfolios | Annual Report 2013 |
Page 23
Schedules of Investments Composition (continued)
At December 31, 2013
(The following charts summarize the Schedule of Investments of each portfolio by asset type)
(unaudited)
Transamerica Partners Portfolios | Annual Report 2013 |
Page 24
Transamerica Partners Money Market Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 25
Transamerica Partners Money Market Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Asset-Backed Security |
$ | | $ | 489,159 | $ | | $ | 489,159 | ||||||||
Corporate Debt Securities |
| 12,792,050 | | 12,792,050 | ||||||||||||
Certificates of Deposit |
| 340,003,223 | | 340,003,223 | ||||||||||||
Commercial Paper |
| 468,170,330 | | 468,170,330 | ||||||||||||
Demand Note |
| 20,000,000 | | 20,000,000 | ||||||||||||
Short-Term U.S. Government Agency Obligation |
| 14,998,006 | | 14,998,006 | ||||||||||||
Short-Term U.S. Government Obligation |
| 14,993,657 | | 14,993,657 | ||||||||||||
Repurchase Agreements |
| 115,456,362 | | 115,456,362 | ||||||||||||
Total Investment Securities |
$ | | $ | 986,902,787 | $ | | $ | 986,902,787 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 26
Transamerica Partners Money Market Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Rate shown reflects the yield at December 31, 2013. |
(B) | Illiquid. Total aggregate fair value of illiquid securities $41,000,000, or 4.15% of the portfolios net assets. |
(C) | Aggregate cost for federal income tax purposes is $986,902,787. |
(D) | Percentage rounds to less than 0.01%. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
DEFINITIONS:
144A | 144A Securities are registered pursuant to Rule 144A of the Securities Act of 1933. These securities are deemed to be liquid for purposes of compliance limitations on holdings of illiquid securities and may be resold as transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2013, these securities aggregated $435,539,753, or 44.13% of the portfolios net assets. | |
MTN | Medium Term Note |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 27
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 28
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 29
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 30
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (F)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
U.S. Government Obligations |
$ | | $ | 24,926,706 | $ | | $ | 24,926,706 | ||||||||
U.S. Government Agency Obligations |
| 53,776,237 | | 53,776,237 | ||||||||||||
Foreign Government Obligations |
| 2,053,681 | | 2,053,681 | ||||||||||||
Mortgage-Backed Securities |
| 63,719,806 | | 63,719,806 | ||||||||||||
Asset-Backed Securities |
| 105,717,251 | | 105,717,251 | ||||||||||||
Corporate Debt Securities |
| 127,870,652 | | 127,870,652 | ||||||||||||
Convertible Bond |
| 3,397,137 | | 3,397,137 | ||||||||||||
Securities Lending Collateral |
7,826,473 | | | 7,826,473 | ||||||||||||
Repurchase Agreement |
| 16,903,705 | | 16,903,705 | ||||||||||||
Total Investment Securities |
$ | 7,826,473 | $ | 398,365,175 | $ | | $ | 406,191,648 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $7,665,613. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | Floating or variable rate note. Rate is listed as of December 31, 2013. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 31
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
NOTES TO SCHEDULE OF INVESTMENTS (continued):
(C) | Fair valued as determined in good faith in accordance with procedures established by the Board of Trustees. Total aggregate fair value of securities is $1,999,990, or 0.50% of the portfolios net assets. |
(D) | Rate shown reflects the yield at December 31, 2013. |
(E) | Aggregate cost for federal income tax purposes is $407,064,995. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $2,881,205 and $3,754,552, respectively. Net unrealized depreciation for tax purposes is $873,347. |
(F) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
DEFINITIONS:
144A | 144A Securities are registered pursuant to Rule 144A of the Securities Act of 1933. These securities are deemed to be liquid for purposes of compliance limitations on holdings of illiquid securities and may be resold as transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2013, these securities aggregated $52,910,970, or 13.23% of the portfolios net assets. | |
MTN | Medium Term Note | |
REMIC | Real Estate Mortgage Investment Conduits (consist of a fixed pool of mortgages broken apart and marketed to investors as individual securities) |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 32
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 33
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
WRITTEN INFLATION-CAPPED OPTION: (E) | ||||||||||||||||||||||||||||||||
Description | Counterparty | Initial Index |
Floating Rate |
Expiration Date |
Notional Amount |
Premiums Paid (Received) |
Value | |||||||||||||||||||||||||
Cap - OTC Eurostat Eurozone HICP Ex Tobacco Unrevised Series NSA |
DUB | 2.50 | HICP Index | 04/26/2022 | EUR | 1,070,000 | $ | (74,168 | ) | $ | (20,582 | ) |
WRITTEN SWAPTIONS: (E) | ||||||||||||||||||||||||||||||||
Description | Counterparty | Floating Rate Index |
Pay/Receive Floating Rate |
Exercise Rate |
Expiration Date |
Notional Amount |
Premiums Paid (Received) |
Value | ||||||||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap |
DUB | 3-Month USD LIBOR BBA | Receive | 1.25 | % | 06/27/2014 | $ 4,500,000 | $ | (47,362 | ) | $ | (894 | ) | |||||||||||||||||||
Call - OTC 5-Year Interest Rate Swap |
BCLY | 3-Month USD LIBOR BBA | Receive | 1.25 | 08/18/2014 | 8,000,000 | (55,200 | ) | (2,127 | ) | ||||||||||||||||||||||
Put - OTC 20-Year Interest Rate Swap |
DUB | 6-Month EUR EURIBOR | Pay | 4.50 | 06/08/2022 | EUR 3,200,000 | (150,269 | ) | (260,017 | ) | ||||||||||||||||||||||
Put - OTC 5-Year Interest Rate Swap |
DUB | 3-Month USD LIBOR BBA | Pay | 2.25 | 06/27/2014 | $ 4,500,000 | (47,363 | ) | (42,481 | ) | ||||||||||||||||||||||
Put - OTC 5-Year Interest Rate Swap |
BCLY | 3-Month USD LIBOR BBA | Pay | 2.25 | 08/18/2014 | 8,000,000 | (120,000 | ) | (108,242 | ) | ||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||
$ | (420,194 | ) | $ | (413,761 | ) | |||||||||||||||||||||||||||
|
|
|
|
CENTRALLY CLEARED SWAP AGREEMENTS: (I) | ||||||||||||||||||||||||
INTEREST RATE SWAP AGREEMENTS - FIXED RATE PAYABLE: | ||||||||||||||||||||||||
Floating Rate Index | Fixed Rate | Expiration Date |
Notional Amount |
Fair Value |
Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
||||||||||||||||||
3-Month USD-LIBOR |
0.48 | % | 08/08/2015 | $ | 28,000,000 | $ | (85,211 | ) | $ | 476 | $ | (85,687 | ) | |||||||||||
3-Month USD-LIBOR |
1.54 | 08/01/2018 | 6,200,000 | (18,132 | ) | 115 | (18,247 | ) | ||||||||||||||||
3-Month USD-LIBOR |
2.22 | 08/09/2020 | 7,600,000 | 8,530 | 150 | 8,380 | ||||||||||||||||||
3-Month USD-LIBOR |
3.69 | 11/22/2043 | 1,800,000 | 74,200 | 49 | 74,151 | ||||||||||||||||||
3-Month USD-LIBOR |
3.74 | 11/26/2043 | 900,000 | 28,692 | 25 | 28,667 | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
$ | 8,079 | $ | 815 | $ | 7,264 | |||||||||||||||||||
|
|
|
|
|
|
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 34
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
OVER THE COUNTER SWAP AGREEMENTS: (E) | ||||||||||||||||||||||||||||
INTEREST RATE SWAP AGREEMENTS - FIXED RATE RECEIVABLE: | ||||||||||||||||||||||||||||
Floating Rate Index | Fixed Rate | Expiration Date |
Counterparty | Notional Amount |
Fair Value |
Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||
3-Month USD-LIBOR |
2.50 | % | 03/17/2024 | DUB | $ 2,600,000 | $ | (154,300 | ) | $ | 0 | $ | (154,300 | ) | |||||||||||||||
Eurostat Eurozone HICP Ex Tobacco NSA |
0.00 | 11/19/2015 | DUB | EUR 3,135,000 | 4,853 | 6,156 | (1,303 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
$ | (149,447 | ) | $ | 6,156 | $ | (155,603 | ) | |||||||||||||||||||||
|
|
|
|
|
|
FUTURES CONTRACTS: | ||||||||||||||||
Description | Type | Contracts | Expiration Date |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
10-Year Government of Canada Bond |
Short | (11 | ) | 03/20/2014 | $ | 17,397 | ||||||||||
10-Year U.S. Treasury Note |
Long | 68 | 03/20/2014 | (54,419 | ) | |||||||||||
2-Year U.S. Treasury Note |
Long | 113 | 03/31/2014 | (46,548 | ) | |||||||||||
3-Month EURIBOR |
Long | 97 | 12/15/2014 | 73,346 | ||||||||||||
5-Year U.S. Treasury Note |
Long | 157 | 03/31/2014 | (119,467 | ) | |||||||||||
90-Day Eurodollar |
Short | (127 | ) | 12/15/2014 | (30,225 | ) | ||||||||||
90-Day Eurodollar |
Short | (182 | ) | 09/14/2015 | 35,144 | |||||||||||
90-Day Eurodollar |
Long | 182 | 09/18/2017 | (177,956 | ) | |||||||||||
Long U.S. Treasury Bond |
Short | (101 | ) | 03/20/2014 | 151,978 | |||||||||||
Ultra Long U.S. Treasury Bond |
Short | (33 | ) | 03/20/2014 | 65,336 | |||||||||||
|
|
|||||||||||||||
$ | (85,414 | ) | ||||||||||||||
|
|
FORWARD FOREIGN CURRENCY CONTRACTS: (E) | ||||||||||||||||||
Currency | Counterparty | Contracts Bought (Sold) |
Settlement Date |
Amount in U.S. |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
AUD |
BNP | (643,000 | ) | 01/23/2014 | $ | (581,176 | ) | $ | 7,934 | |||||||||
CAD |
BCLY | (464,000 | ) | 01/23/2014 | (448,021 | ) | 11,468 | |||||||||||
EUR |
DUB | (2,219,000 | ) | 01/15/2014 | (2,998,623 | ) | (54,031 | ) | ||||||||||
EUR |
DUB | (1,870,000 | ) | 01/15/2014 | (2,518,914 | ) | (53,625 | ) | ||||||||||
EUR |
BCLY | (17,429,000 | ) | 01/22/2014 | (23,535,668 | ) | (441,140 | ) | ||||||||||
EUR |
DUB | 545,000 | 01/23/2014 | 736,627 | 13,120 | |||||||||||||
GBP |
CITI | 345,000 | 01/23/2014 | 564,671 | 6,541 | |||||||||||||
JPY |
DUB | (144,682,000 | ) | 01/15/2014 | (1,467,458 | ) | 93,490 | |||||||||||
NOK |
UBS | (1,015,000 | ) | 01/15/2014 | (164,618 | ) | (2,631 | ) | ||||||||||
NZD |
BNP | (449,000 | ) | 01/23/2014 | (375,799 | ) | 7,178 | |||||||||||
NZD |
DUB | 1,245,000 | 01/23/2014 | 1,022,699 | (577 | ) | ||||||||||||
NZD |
DUB | (760,000 | ) | 01/23/2014 | (616,335 | ) | (7,611 | ) | ||||||||||
|
|
|||||||||||||||||
$ | (419,884 | ) | ||||||||||||||||
|
|
FORWARD FOREIGN CROSS CURRENCY CONTRACTS : (E) | ||||||||||||||||||
Currency | Counterparty | Contracts Bought (Sold) |
Settlement Date |
Amount in U.S. Dollars Bought (Sold) |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||
NOK |
CSFB | 8,350,134 | 01/15/2014 | $ | 1,398,858 | $ | (22,951 | ) | ||||||||||
AUD |
CSFB | (1,487,000 | ) | 01/15/2014 | (1,398,858 | ) | 72,463 | |||||||||||
EUR |
CSFB | 2,435,654 | 01/15/2014 | 3,292,154 | 58,549 | |||||||||||||
CHF |
CSFB | (2,997,956 | ) | 01/15/2014 | (3,292,154 | ) | (69,029 | ) | ||||||||||
AUD |
DUB | 739,062 | 01/23/2014 | 675,392 | (16,510 | ) | ||||||||||||
GBP |
DUB | (410,000 | ) | 01/23/2014 | (675,392 | ) | (3,441 | ) | ||||||||||
CHF |
DUB | 478,407 | 01/15/2014 | 528,714 | 7,656 | |||||||||||||
EUR |
DUB | (390,000 | ) | 01/15/2014 | (528,714 | ) | (7,805 | ) | ||||||||||
NOK |
UBS | 5,440,470 | 01/15/2014 | 885,904 | 10,559 | |||||||||||||
AUD |
UBS | (980,000 | ) | 01/15/2014 | (885,904 | ) | 11,750 | |||||||||||
|
|
|||||||||||||||||
$ | 41,241 | |||||||||||||||||
|
|
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 35
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (J)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities | ||||||||||||||||
U.S. Government Obligations |
$ | | $ | 244,697,452 | $ | | $ | 244,697,452 | ||||||||
Foreign Government Obligations |
| 24,672,921 | | 24,672,921 | ||||||||||||
Mortgage-Backed Security |
| 90,368 | | 90,368 | ||||||||||||
Structured Notes Debt |
| 646,339 | | 646,339 | ||||||||||||
Purchased Option |
100,912 | | | 100,912 | ||||||||||||
Purchased Foreign Exchange Options |
| 5,292 | | 5,292 | ||||||||||||
Purchased Swaptions |
| 1,163,443 | | 1,163,443 | ||||||||||||
Short-Term Investment Company |
5,546,763 | | | 5,546,763 | ||||||||||||
Securities Lending Collateral |
3,295,294 | | | 3,295,294 | ||||||||||||
Total Investment Securities |
$ | 8,942,969 | $ | 271,275,815 | $ | | $ | 280,218,784 | ||||||||
Derivative Financial Instruments |
||||||||||||||||
Interest Rate Swap Agreements (K) |
$ | | $ | 111,198 | $ | | $ | 111,198 | ||||||||
Futures Contracts (K) |
343,201 | | | 343,201 | ||||||||||||
Forward Foreign Currency Contracts (K) |
| 139,731 | | 139,731 | ||||||||||||
Forward Foreign Cross Currency Contracts (K) |
| 160,977 | | 160,977 | ||||||||||||
Total Derivative Financial Instruments |
$ | 343,201 | $ | 411,906 | $ | | $ | 755,107 | ||||||||
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
LIABILITIES |
||||||||||||||||
Derivative Financial Instruments |
||||||||||||||||
Written Options |
$ | (23,288 | ) | $ | | $ | | $ | (23,288 | ) | ||||||
Written Foreign Exchange Options |
| (37,546 | ) | | (37,546 | ) | ||||||||||
Written Inflation Capped Option |
| (20,582 | ) | | (20,582 | ) | ||||||||||
Written Swaptions |
| (413,761 | ) | | (413,761 | ) | ||||||||||
Interest Rate Swap Agreements (K) |
| (259,537 | ) | | (259,537 | ) | ||||||||||
Futures Contracts (K) |
(428,615 | ) | | | (428,615 | ) | ||||||||||
Forward Foreign Currency Contracts (K) |
| (559,615 | ) | | (559,615 | ) | ||||||||||
Forward Foreign Cross Currency Contracts (K) |
| (119,736 | ) | | (119,736 | ) | ||||||||||
Total Derivative Financial Instruments |
$ | (451,903 | ) | $ | (1,410,777 | ) | $ | | $ | (1,862,680 | ) |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $3,229,515. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | All or a portion of this security has been segregated by the custodian with the broker as collateral to cover margin requirements for open futures contracts. Total value of securities segregated as collateral to cover margin requirements for open futures contracts is $392,496. |
(C) | Floating or variable rate note. Rate is listed as of December 31, 2013. |
(D) | Percentage rounds to less than 0.1%. |
(E) | Cash in the amount of $500,000 has been segregated by the broker as collateral for open options, swap, swaptions and/or forward foreign currency contracts. |
(F) | The investment issuer is affiliated with the sub-adviser of the portfolio. |
(G) | Rate shown reflects the yield at December 31, 2013. |
(H) | Aggregate cost for federal income tax purposes is $291,983,916. Net unrealized depreciation for tax purposes is $11,765,132. |
(I) | Cash in the amount of $475,000 has been segregated by the custodian with the broker as collateral for centrally cleared swaps. |
(J) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
(K) | Derivative financial instruments valued at unrealized appreciation (depreciation) on the instrument. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 36
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
DEFINITIONS:
BBA | British Bankers Association | |
BCLY | Barclays Bank PLC | |
BNP | BNP Paribas | |
CITI | Citigroup, Inc. | |
CSFB | Credit Suisse First Boston | |
DUB | Deutsche Bank AG | |
EURIBOR | Euro InterBank Offered Rate | |
HICP | Harmonized Index of Consumer Prices | |
LIBOR | London Interbank Offered Rate | |
MTN | Medium Term Note | |
NSA | Not Seasonally Adjusted | |
OTC | Over the Counter | |
UBS | UBS AG |
CURRENCY ABBREVIATIONS:
AUD | Australian Dollar | |
CAD | Canadian Dollar | |
CHF | Swiss Franc | |
EUR | Euro | |
GBP | Pound Sterling | |
JPY | Japanese Yen | |
NOK | Norwegian Krone | |
NZD USD |
New Zealand Dollar United States Dollar |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 37
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 38
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 39
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 40
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 41
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 42
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 43
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 44
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 45
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 46
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 47
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 48
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
WRITTEN SWAPTIONS: (K) (L) | ||||||||||||||||||||||||||
Description | Counterparty | Floating Rate Index |
Pay/Receive Floating Rate |
Exercise Rate |
Expiration Date |
Notional Amount | Premiums Paid (Received) |
Value | ||||||||||||||||||
Put - OTC 10-Year Interest Rate Swap |
BCLY | 6-Month JPY LIBOR BBA |
Pay | 1.40 | % | 06/05/2014 | JPY 1,402,000,000 | $ | (30,217 | ) | $ | (18,030 | ) | |||||||||||||
Put - OTC 10-Year Interest Rate Swap |
BCLY | 6-Month JPY LIBOR BBA |
Pay | 1.40 | 06/06/2014 | 700,000,000 | (17,205 | ) | (9,151 | ) | ||||||||||||||||
Put - OTC 10-Year Interest Rate Swap |
BOA | 6-Month JPY LIBOR BBA |
Pay | 1.40 | 06/09/2014 | 1,458,000,000 | (44,501 | ) | (19,826 | ) | ||||||||||||||||
|
|
|
|
|||||||||||||||||||||||
$ | (91,923 | ) | $ | (47,007 | ) | |||||||||||||||||||||
|
|
|
|
CENTRALLY CLEARED SWAP AGREEMENTS: (O) | ||||||||||||||||||||||||
CREDIT DEFAULT SWAPS ON CREDIT INDICES - BUY PROTECTION: (P) | ||||||||||||||||||||||||
Reference Obligation | Fixed Deal Pay Rate |
Expiration Date |
Notional Amount (Q) |
Fair Value (R) | Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
||||||||||||||||||
North American High Yield Index - Series 21 |
5.00 | % | 12/20/2018 | $ | 14,260,000 | $ | (1,238,792 | ) | $ | (940,361 | ) | $ | (298,431 | ) |
INTEREST RATE SWAP AGREEMENTS - FIXED RATE PAYABLE: | ||||||||||||||||||||||||
Floating Rate Index | Fixed Rate | Expiration Date |
Notional Amount |
Fair Value | Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
||||||||||||||||||
3-Month USD-LIBOR |
0.65 | % | 11/26/2016 | $ | 5,060,000 | $ | 25,267 | $ | 9 | $ | 25,258 | |||||||||||||
6-Month JPY-LIBOR |
0.79 | 11/28/2023 | JP | Y 741,165,000 | 89,117 | 113 | 89,004 | |||||||||||||||||
6-Month JPY-LIBOR |
0.82 | 11/25/2023 | 679,400,000 | 64,587 | 104 | 64,483 | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||
$ | 178,971 | $ | 226 | $ | 178,745 | |||||||||||||||||||
|
|
|
|
|
|
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 49
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
OVER THE COUNTER SWAP AGREEMENTS: (K) (L) | ||||||||||||||||||||||||||||||||
CREDIT DEFAULT SWAPS ON CORPORATE AND SOVEREIGN ISSUES - SELL PROTECTION: (S) | ||||||||||||||||||||||||||||||||
Reference Obligation | Fixed Deal Receive Rate |
Expiration Date |
Counterparty | Implied Credit Spread (BP) at 12/31/13 (T) |
Notional Amount (Q) |
Fair Value (R) |
Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
||||||||||||||||||||||||
Goldman Sachs Group, Inc., 5.95%, 01/18/2018 |
1.00 | % | 12/20/2018 | DUB | 110.74 | $ | 4,880,000 | $ | 27,400 | $ | (41,116 | ) | $ | 68,516 |
CREDIT DEFAULT SWAPS ON CREDIT INDICES - BUY PROTECTION: (P) | ||||||||||||||||||||||||||||
Reference Obligation | Fixed Deal Pay Rate |
Expiration Date |
Counterparty | Notional Amount (Q) |
Fair Value (R) |
Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||
North American CMBS Basket Index - Series AAA6 |
0.50 | % | 05/11/2063 | MSC | $ | 1,425,000 | $ | 35,953 | $ | 53,077 | $ | (17,124 | ) |
CREDIT DEFAULT SWAPS ON CREDIT INDICES - SELL PROTECTION: (S) | ||||||||||||||||||||||||||
Reference Obligation | Fixed Deal Pay Rate |
Expiration Date |
Counterparty | Notional Amount (Q) |
Fair Value (R) |
Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||||||||
Emerging Markets Index - Series 20 |
5.00 | % | 12/20/2018 | BCLY | $ | 1,751,000 | $ | 180,501 | $ | 174,819 | $ | 5,682 | ||||||||||||||
Emerging Markets Index - Series 20 |
5.00 | 12/20/2018 | BCLY | 1,910,000 | 196,892 | 190,694 | 6,198 | |||||||||||||||||||
Emerging Markets Index - Series 20 |
5.00 | 12/20/2018 | BOA | 995,000 | 102,569 | 101,317 | 1,252 | |||||||||||||||||||
Emerging Markets Index - Series 20 |
5.00 | 12/20/2018 | BCLY | 994,000 | 102,467 | 102,866 | (399 | ) | ||||||||||||||||||
North American CMBS Basket Index - Series AM2 |
0.50 | 03/15/2049 | DUB | 2,265,000 | (55,697 | ) | (318,177 | ) | 262,480 | |||||||||||||||||
North American CMBS Basket Index - Series AM4 |
0.50 | 02/17/2051 | DUB | 870,000 | (59,554 | ) | (128,100 | ) | 68,546 | |||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||
$ | 467,178 | $ | 123,419 | $ | 343,759 | |||||||||||||||||||||
|
|
|
|
|
|
INTEREST RATE SWAP AGREEMENTS - FIXED RATE RECEIVABLE: | ||||||||||||||||||||||||||||
Floating Rate Index | Fixed Rate | Expiration Date |
Counterparty | Notional Amount |
Fair Value | Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||
6-Month JPY-LIBOR |
1.75 | % | 01/15/2033 | CITI | JPY | 268,900,000 | $ | 67,417 | $ | 0 | $ | 67,417 | ||||||||||||||||
MXN TIIE Banxico |
6.36 | 10/18/2023 | DUB | MXN | 17,870,000 | (44,395 | ) | 0 | (44,395 | ) | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
$ | 23,022 | $ | 0 | $ | 23,022 | |||||||||||||||||||||||
|
|
|
|
|
|
INTEREST RATE SWAP AGREEMENTS - FIXED RATE PAYABLE: | ||||||||||||||||||||||||||||
Floating Rate Index | Fixed Rate | Expiration Date |
Counterparty | Notional Amount |
Fair Value |
Premiums Paid (Received) |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||||||||||
3-Month USD-LIBOR |
3.27 | % | 05/16/2021 | DUB | $ | 3,650,000 | $ | (190,744 | ) | $ | 0 | $ | (190,744 | ) | ||||||||||||||
6-Month JPY-LIBOR |
1.68 | 01/25/2033 | BCLY | JPY | 268,900,000 | (33,179 | ) | 0 | (33,179 | ) | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||||||||||
$ | (223,923 | ) | $ | 0 | $ | (223,923 | ) | |||||||||||||||||||||
|
|
|
|
|
|
FUTURES CONTRACTS: (U) | ||||||||||||||||
Description | Type | Contracts | Expiration Date | Net Unrealized Appreciation (Depreciation) |
||||||||||||
10-Year U.S. Treasury Note |
Short | (629 | ) | 03/20/2014 | $ | 1,241,126 | ||||||||||
2-Year U.S. Treasury Note |
Long | 415 | 03/31/2014 | (121,177 | ) | |||||||||||
5-Year U.S. Treasury Note |
Short | (233 | ) | 03/31/2014 | 43,705 | |||||||||||
90-Day Eurodollar |
Short | (87 | ) | 12/14/2015 | 38,063 | |||||||||||
German Euro Bund |
Short | (7 | ) | 03/06/2014 | 19,370 | |||||||||||
Long U.S. Treasury Bond |
Long | 272 | 03/20/2014 | (587,833 | ) | |||||||||||
Ultra Long U.S. Treasury Bond |
Long | 373 | 03/20/2014 | (929,970 | ) | |||||||||||
|
|
|||||||||||||||
$ | (296,716 | ) | ||||||||||||||
|
|
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 50
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
FORWARD FOREIGN CURRENCY CONTRACTS: (K) (L) | ||||||||||||||||||||
Currency | Counterparty | Contracts Bought (Sold) |
Settlement Date |
Amount in U.S. Dollars Bought (Sold) |
Net Unrealized Appreciation (Depreciation) |
|||||||||||||||
EUR |
BCLY | (12,831,000 | ) | 01/22/2014 | $ | (17,326,649 | ) | $ | (324,762 | ) | ||||||||||
EUR |
BNP | 5,276,000 | 01/22/2014 | 7,255,711 | 2,402 | |||||||||||||||
GBP |
BCLY | (1,407,000 | ) | 01/23/2014 | (2,270,877 | ) | (58,678 | ) | ||||||||||||
|
|
|||||||||||||||||||
$ | (381,038 | ) | ||||||||||||||||||
|
|
VALUATION SUMMARY: (V)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
U.S. Government Obligations |
$ | | $ | 133,305,996 | $ | | $ | 133,305,996 | ||||||||
U.S. Government Agency Obligations |
| 518,762,097 | | 518,762,097 | ||||||||||||
Foreign Government Obligations |
| 17,022,246 | | 17,022,246 | ||||||||||||
Mortgage-Backed Securities |
| 206,805,358 | | 206,805,358 | ||||||||||||
Asset-Backed Securities |
| 229,286,169 | | 229,286,169 | ||||||||||||
Municipal Government Obligations |
| 3,873,647 | | 3,873,647 | ||||||||||||
Preferred Corporate Debt Securities |
| 1,068,439 | | 1,068,439 | ||||||||||||
Corporate Debt Securities |
||||||||||||||||
Airlines |
| 2,865,958 | | 2,865,958 | ||||||||||||
Auto Components |
| 144,724 | | 144,724 | ||||||||||||
Automobiles |
| 1,586,290 | | 1,586,290 | ||||||||||||
Biotechnology |
| 2,290,270 | | 2,290,270 | ||||||||||||
Building Products |
| 158,137 | | 158,137 | ||||||||||||
Capital Markets |
| 17,125,113 | | 17,125,113 | ||||||||||||
Chemicals |
| 8,080,690 | | 8,080,690 | ||||||||||||
Commercial Banks |
| 15,846,657 | | 15,846,657 | ||||||||||||
Commercial Services & Supplies |
| 4,202,486 | | 4,202,486 | ||||||||||||
Communications Equipment |
| 1,450,960 | | 1,450,960 | ||||||||||||
Construction & Engineering |
| 1,231,456 | | 1,231,456 | ||||||||||||
Construction Materials |
| 154,601 | | 154,601 | ||||||||||||
Consumer Finance |
| 1,228,980 | | 1,228,980 | ||||||||||||
Containers & Packaging |
| 700,372 | | 700,372 | ||||||||||||
Diversified Financial Services |
| 31,482,440 | 0 | 31,482,440 | ||||||||||||
Diversified Telecommunication Services |
| 31,574,401 | | 31,574,401 | ||||||||||||
Electric Utilities |
| 15,151,557 | | 15,151,557 | ||||||||||||
Electronic Equipment & Instruments |
| 286,077 | | 286,077 | ||||||||||||
Energy Equipment & Services |
| 19,362,432 | | 19,362,432 | ||||||||||||
Food & Staples Retailing |
| 1,842,781 | | 1,842,781 | ||||||||||||
Food Products |
| 2,241,317 | | 2,241,317 | ||||||||||||
Health Care Equipment & Supplies |
| 5,737,195 | | 5,737,195 | ||||||||||||
Health Care Providers & Services |
| 13,184,826 | | 13,184,826 | ||||||||||||
Hotels, Restaurants & Leisure |
| 4,398,959 | | 4,398,959 | ||||||||||||
Household Durables |
| 182,171 | | 182,171 | ||||||||||||
Household Products |
| 5,367,275 | | 5,367,275 | ||||||||||||
Insurance |
| 24,173,576 | | 24,173,576 | ||||||||||||
Internet Software & Services |
| 160,028 | | 160,028 | ||||||||||||
IT Services |
| 2,119,111 | | 2,119,111 | ||||||||||||
Life Sciences Tools & Services |
| 4,421,407 | | 4,421,407 | ||||||||||||
Media |
| 34,460,736 | | 34,460,736 | ||||||||||||
Metals & Mining |
| 6,013,795 | | 6,013,795 | ||||||||||||
Multi-Utilities |
| 2,693,850 | | 2,693,850 | ||||||||||||
Oil, Gas & Consumable Fuels |
| 52,329,379 | | 52,329,379 | ||||||||||||
Paper & Forest Products |
| 6,166,812 | | 6,166,812 | ||||||||||||
Personal Products |
| 164,190 | | 164,190 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 51
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY (continued): (V)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
Pharmaceuticals |
$ | | $ | 5,526,024 | $ | | $ | 5,526,024 | ||||||||
Professional Services |
| 322,821 | | 322,821 | ||||||||||||
Real Estate Investment Trusts |
| 521,130 | | 521,130 | ||||||||||||
Real Estate Management & Development |
| 2,380,761 | | 2,380,761 | ||||||||||||
Road & Rail |
| 593,213 | | 593,213 | ||||||||||||
Software |
| 1,244,634 | | 1,244,634 | ||||||||||||
Specialty Retail |
| 1,864,675 | | 1,864,675 | ||||||||||||
Tobacco |
| 3,494,719 | | 3,494,719 | ||||||||||||
Trading Companies & Distributors |
| 144,792 | | 144,792 | ||||||||||||
Transportation Infrastructure |
| 160,331 | | 160,331 | ||||||||||||
Wireless Telecommunication Services |
| 10,793,301 | | 10,793,301 | ||||||||||||
Preferred Stocks |
5,326,246 | | | 5,326,246 | ||||||||||||
Purchased Option |
447,525 | | | 447,525 | ||||||||||||
Purchased Swaptions |
| 329,641 | | 329,641 | ||||||||||||
Short-Term Investment Company |
35,661,273 | | | 35,661,273 | ||||||||||||
Securities Lending Collateral |
80,612,269 | | | 80,612,269 | ||||||||||||
Total Investment Securities |
$ | 122,047,313 | $ | 1,458,081,003 | $ | 0 | $ | 1,580,128,316 | ||||||||
Derivative Financial Instruments |
||||||||||||||||
Credit Default Swap Agreements (W) |
$ | | $ | 412,674 | $ | | $ | 412,674 | ||||||||
Interest Rate Swap Agreements (W) |
| 246,162 | | 246,162 | ||||||||||||
Futures Contracts (W) |
1,342,264 | | | 1,342,264 | ||||||||||||
Forward Foreign Currency Contracts (W) |
| 2,402 | | 2,402 | ||||||||||||
Total Derivative Financial Instruments |
$ | 1,342,264 | $ | 661,238 | $ | | $ | 2,003,502 |
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
LIABILITIES |
||||||||||||||||
TBA Short Commitments |
||||||||||||||||
U.S. Government Agency Obligations |
$ | | $ | (98,292,806 | ) | $ | | $ | (98,292,806 | ) | ||||||
Total TBA Short Commitments |
$ | | $ | (98,292,806 | ) | $ | | $ | (98,292,806 | ) | ||||||
Derivative Financial Instruments |
||||||||||||||||
Written Option |
$ | (107,738 | ) | $ | | $ | | $ | (107,738 | ) | ||||||
Written Swaptions |
| (47,007 | ) | | (47,007 | ) | ||||||||||
Credit Default Swap Agreements (W) |
| (315,954 | ) | | (315,954 | ) | ||||||||||
Interest Rate Swap Agreements (W) |
| (268,318 | ) | | (268,318 | ) | ||||||||||
Futures Contracts (W) |
(1,638,980 | ) | | | (1,638,980 | ) | ||||||||||
Forward Foreign Currency Contracts (W) |
| (383,440 | ) | | (383,440 | ) | ||||||||||
Total Derivative Financial Instruments |
$ | (1,746,718 | ) | $ | (1,014,719 | ) | $ | | $ | (2,761,437 | ) |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 52
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY (continued): (V)
Level 3 Rollforward - Investment Securities
Securities |
Beginning Balance at December 31, 2012 |
Purchases | Sales | Accrued Discounts (Premiums) |
Total Realized Gain (Loss) |
Net Change
in Unrealized Appreciation (Depreciation) (X) |
Transfers into Level 3 |
Transfers out of Level 3 |
Ending Balance at December 31, 2013 (Y) |
Net Change
in Unrealized Appreciation (Depreciation) on Investments Held at December 31, 2013 (X) |
||||||||||||||||||||||||||||||
Corporate Debt Securities | $ | 0 | $ | | $ | | $ | (2,247 | ) | $ | (1,335,397 | ) | $ | 1,337,644 | $ | | $ | | $ | 0 | $ | 1,384 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $78,989,620. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | Floating or variable rate note. Rate is listed as of December 31, 2013. |
(C) | Step bond - Coupon rate changes in increments to maturity. Rate disclosed is as of December 31, 2013. Maturity date disclosed is the ultimate maturity date. |
(D) | Percentage rounds to less than 0.1%. |
(E) | The security has a perpetual maturity. The date shown is the next call date. |
(F) | In default. |
(G) | Fair valued as determined in good faith in accordance with procedures established by the Board of Trustees. Total aggregate fair value of securities is $2,933,846, or 0.22% of the portfolios net assets. |
(H) | Illiquid. Total aggregate fair value of illiquid securities is $28,994, or less than 0.01% of the portfolios net assets. |
(I) | Rate shown reflects the yield at December 31, 2013. |
(J) | Non-income producing security. |
(K) | Cash in the amount of $520,000 has been segregated by the custodian as collateral for open swap, swaptions and/or forward foreign currency contracts. |
(L) | Cash in the amount of $100,000 has been segregated by the broker as collateral for open swap, swaptions and/or forward foreign currency contracts. |
(M) | The investment issuer is affiliated with the sub-adviser of the portfolio. |
(N) | Aggregate cost for federal income tax purposes is $1,586,669,785. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $21,152,981 and $27,694,450, respectively. Net unrealized depreciation for tax purposes is $6,541,469. |
(O) | Cash in the amount of $855,000 has been segregated by the custodian with the broker as collateral for centrally cleared swaps. |
(P) | If the portfolio is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the portfolio will either (a) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced obligation or (b) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced obligation. |
(Q) | The maximum potential amount the portfolio could be required to make as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement. |
(R) | The quoted market prices and resulting values for credit default swap agreements on asset-backed securities and credit indices serve as an indicator of the current status of the payment/performance risk and represent the likelihood of an expected liability (or profit) for the credit derivative had the notional amount of the swap agreement been closed/sold as of the period ended. Increasing market values, in absolute terms when compared to the notional amount of the swap, represent a deterioration of the referenced entitys credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. |
(S) | If the portfolio is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the portfolio will either (a) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced obligation or (b) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced obligation. |
(T) | Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues or sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood of risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include the referenced entitys credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. A credit spread identified as Defaulted indicates a credit event has occurred for the referenced entity or obligation. |
(U) | Cash in the amount of $1,197,000 has been segregated by the custodian as collateral to cover margin requirements for open futures contracts. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 53
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
NOTES TO SCHEDULE OF INVESTMENTS (continued):
(V) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
(W) | Derivative financial instruments valued at unrealized appreciation (depreciation) on the instrument. |
(X) | Any difference between Net Change in Unrealized Appreciation (Depreciation) and Net Change in Unrealized Appreciation (Depreciation) on Investments Held at December 31, 2013 may be due to an investment no longer held or categorized as Level 3 at year end. |
(Y) | Level 3 securities were not considered significant to the portfolio. |
DEFINITIONS:
144A | 144A Securities are registered pursuant to Rule 144A of the Securities Act of 1933. These securities are deemed to be liquid for purposes of compliance limitations on holdings of illiquid securities and may be resold as transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2013, these securities aggregated $250,771,456, or 18.77% of the portfolios net assets. | |
BBA | British Bankers Association | |
BCLY | Barclays Bank PLC | |
BNP | BNP Paribas | |
BOA | Bank of America | |
BP | Basis Point | |
CITI | Citigroup, Inc. | |
CMBS | Commercial Mortgage-Backed Securities | |
DUB | Deutsche Bank AG | |
IO | Interest only portion of a STRIP (Separate Trading of Registered Interest and Principal Security) Security | |
LIBOR | London Interbank Offered Rate | |
MSC | Morgan Stanley | |
MTN | Medium Term Note | |
MXN TIIE Banxico | Tasa de Interés Interbancaria de Equilibrio (Interbank Equilibrium Interest Rate) (TIIE) for MXNde Equilibrio by the Banco de México | |
OJSC | Open Joint Stock Company | |
OTC | Over the Counter | |
REMIC | Real Estate Mortgage Investment Conduits (consist of a fixed pool of mortgages broken apart and marketed to investors as individual securities) | |
Reg S | Security exempt from registration under Regulation S of the Securities Act of 1933, which exempts from registration securities offered and sold outside the United States. Security may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. | |
TBA | To Be Announced |
CURRENCY ABBREVIATIONS:
AUD | Australian Dollar | |
EUR | Euro | |
GBP | Pound Sterling | |
JPY | Japanese Yen | |
MXN | Mexican Peso | |
USD | United States Dollar |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 54
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 55
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 56
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 57
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 58
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 59
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 60
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 61
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 62
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (M)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Corporate Debt Securities |
||||||||||||||||
Aerospace & Defense |
$ | | $ | 10,144,250 | $ | | $ | 10,144,250 | ||||||||
Air Freight & Logistics |
| 2,099,520 | | 2,099,520 | ||||||||||||
Auto Components |
| 3,639,545 | | 3,639,545 | ||||||||||||
Automobiles |
| 3,202,063 | | 3,202,063 | ||||||||||||
Beverages |
| 3,785,500 | | 3,785,500 | ||||||||||||
Biotechnology |
| 1,193,050 | | 1,193,050 | ||||||||||||
Building Products |
| 9,051,237 | | 9,051,237 | ||||||||||||
Capital Markets |
| 2,267,075 | | 2,267,075 | ||||||||||||
Chemicals |
| 15,611,150 | | 15,611,150 | ||||||||||||
Commercial Banks |
| 2,068,025 | | 2,068,025 | ||||||||||||
Commercial Services & Supplies |
| 30,750,474 | | 30,750,474 | ||||||||||||
Communications Equipment |
| 17,876,260 | | 17,876,260 | ||||||||||||
Computers & Peripherals |
| 5,831,075 | | 5,831,075 | ||||||||||||
Consumer Finance |
| 18,257,506 | | 18,257,506 | ||||||||||||
Containers & Packaging |
| 13,288,912 | | 13,288,912 | ||||||||||||
Distributors |
| 4,400,869 | | 4,400,869 | ||||||||||||
Diversified Consumer Services |
| 11,484,600 | | 11,484,600 | ||||||||||||
Diversified Financial Services |
| 16,938,045 | | 16,938,045 | ||||||||||||
Diversified Telecommunication Services |
| 41,236,573 | | 41,236,573 | ||||||||||||
Electric Utilities |
| 662,400 | | 662,400 | ||||||||||||
Energy Equipment & Services |
| 17,165,485 | | 17,165,485 | ||||||||||||
Food & Staples Retailing |
| 3,540,313 | | 3,540,313 | ||||||||||||
Food Products |
| 9,325,046 | | 9,325,046 | ||||||||||||
Gas Utilities |
| 8,350,950 | | 8,350,950 | ||||||||||||
Health Care Equipment & Supplies |
| 31,863,231 | | 31,863,231 | ||||||||||||
Health Care Providers & Services |
| 34,945,481 | | 34,945,481 | ||||||||||||
Health Care Technology |
| 4,019,738 | | 4,019,738 | ||||||||||||
Hotels, Restaurants & Leisure |
| 65,364,261 | 668,348 | 66,032,609 | ||||||||||||
Household Durables |
| 3,918,215 | | 3,918,215 | ||||||||||||
Household Products |
| 16,918,531 | | 16,918,531 | ||||||||||||
Independent Power Producers & Energy Traders |
| 7,198,438 | | 7,198,438 | ||||||||||||
Industrial Conglomerates |
| 8,171,425 | | 8,171,425 | ||||||||||||
Insurance |
| 4,633,238 | | 4,633,238 | ||||||||||||
Internet Software & Services |
| 1,201,750 | | 1,201,750 | ||||||||||||
IT Services |
| 3,131,563 | | 3,131,563 | ||||||||||||
Life Sciences Tools & Services |
| 4,578,750 | | 4,578,750 | ||||||||||||
Machinery |
| 6,851,325 | | 6,851,325 | ||||||||||||
Media |
| 44,579,953 | | 44,579,953 | ||||||||||||
Metals & Mining |
| 19,124,412 | | 19,124,412 | ||||||||||||
Oil, Gas & Consumable Fuels |
| 84,565,926 | | 84,565,926 | ||||||||||||
Paper & Forest Products |
| 1,922,103 | | 1,922,103 | ||||||||||||
Pharmaceuticals |
| 13,484,544 | | 13,484,544 | ||||||||||||
Professional Services |
| 10,265,987 | | 10,265,987 | ||||||||||||
Real Estate Investment Trusts |
| 380,188 | | 380,188 | ||||||||||||
Real Estate Management & Development |
| 4,404,750 | | 4,404,750 | ||||||||||||
Road & Rail |
| 4,079,588 | | 4,079,588 | ||||||||||||
Semiconductors & Semiconductor Equipment |
| 2,441,925 | | 2,441,925 | ||||||||||||
Software |
| 23,351,419 | | 23,351,419 | ||||||||||||
Specialty Retail |
| 50,085,524 | | 50,085,524 | ||||||||||||
Textiles, Apparel & Luxury Goods |
| 5,000,228 | | 5,000,228 | ||||||||||||
Trading Companies & Distributors |
| 12,711,925 | | 12,711,925 | ||||||||||||
Wireless Telecommunication Services |
| 40,303,960 | | 40,303,960 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 63
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY (continued): (M)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
Convertible Bonds |
||||||||||||||||
Independent Power Producers & Energy Traders |
$ | | $ | | $ | 0 | $ | 0 | ||||||||
Media |
| | 5,033 | 5,033 | ||||||||||||
Loan Assignments |
| 44,127,055 | | 44,127,055 | ||||||||||||
Convertible Preferred Stocks |
8,989,675 | | | 8,989,675 | ||||||||||||
Common Stocks |
||||||||||||||||
Building Products |
| | 1,757,168 | 1,757,168 | ||||||||||||
Hotels, Restaurants & Leisure |
1 | | | 1 | ||||||||||||
Independent Power Producers & Energy Traders |
| | 0 | 0 | ||||||||||||
Media |
| | 185,250 | 185,250 | ||||||||||||
Right |
1,381,875 | | | 1,381,875 | ||||||||||||
Warrants |
||||||||||||||||
Food Products |
126,500 | | | 126,500 | ||||||||||||
Media |
| | 0 | 0 | ||||||||||||
Investment Company |
||||||||||||||||
Diversified Financial Services |
| | 0 | 0 | ||||||||||||
Repurchase Agreement |
| 28,643,501 | | 28,643,501 | ||||||||||||
Total Investment Securities |
$ | 10,498,051 | $ | 834,438,857 | $ | 2,615,799 | $ | 847,552,707 |
Level 3 Rollforward - Investment Securities
Securities | Beginning Balance at December 31, 2012 |
Purchases (O) | Sales (P) | Accrued Discounts (Premiums) |
Total Realized Gain (Loss) |
Net Change
in Unrealized Appreciation (Depreciation) (Q) |
Transfers into Level 3 |
Transfers out of Level 3 |
Ending Balance at December 31, 2013 (R) |
Net Change in Unrealized Appreciation (Depreciation) on Investments Held at December 31, 2013 (Q) |
||||||||||||||||||||||||||||||
Convertible Bonds | $ | 7,252 | $ | | $ | | $ | 2,233 | $ | | $ | (4,452 | ) | $ | | $ | | 5,033 | $ | (4,452 | ) | |||||||||||||||||||
Corporate Debt Securities | 1,059,269 | | (366,983 | ) | (2,944 | ) | (2,124,177 | ) | 2,103,183 | | | 668,348 | (24,846 | ) | ||||||||||||||||||||||||||
Common Stocks | 3,182,619 | 185,250 | | | | (1,425,451 | ) | | | 1,942,418 | (1,425,451 | ) | ||||||||||||||||||||||||||||
Investment Company | 0 | | | | | | | | 0 | | ||||||||||||||||||||||||||||||
Preferred Corporate Debt | 0 | | | | (3,758,574 | ) | 3,758,574 | | | | | |||||||||||||||||||||||||||||
Warrants | 0 | | | | | | | | 0 | | ||||||||||||||||||||||||||||||
Total |
$ | 4,249,140 | $ | 185,250 | $ | (366,983 | ) | $ | (711 | ) | $ | (5,882,751 | ) | $ | 4,431,854 | $ | | $ | | $ | 2,615,799 | $ | (1,454,749 | ) |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Payment in-kind. Securities pay interest or dividends in the form of additional bonds or preferred stock. If a security makes cash payment in addition to in-kind, the cash rate is disclosed separately. |
(B) | When-issued security. A conditional transaction in a security authorized for issuance, but not yet issued. |
(C) | Illiquid. Total aggregate fair value of illiquid securities is $10,249,494, or 1.20% of the portfolios net assets. |
(D) | In default. |
(E) | Fair valued as determined in good faith in accordance with procedures established by the Board of Trustees. Total aggregate fair value of securities is $2,615,799, or 0.31% of the portfolios net assets. |
(F) | Step bondCoupon rate changes in increments to maturity. Rate disclosed is as of December 31, 2013. Maturity date disclosed is the ultimate maturity date. |
(G) | Floating or variable rate note. Rate is listed as of December 31, 2013. |
(H) | Percentage rounds to less than 0.1%. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 64
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
NOTES TO SCHEDULE OF INVESTMENTS (continued):
(I) | Restricted security. At December 31, 2013, the portfolio owned the respective securities which were restricted as to public resale: |
Investment Securities | Description | Acquisition Date |
Cost | Value | Value as % of Net Assets |
|||||||||||||
Convertible Bonds |
Mood Media Corp. - Series 1 |
07/30/2012 | $ | 2,913 | $ | 5,033 | 0.00 | %(s) | ||||||||||
Common Stocks |
Panolam Holdings Co. |
11/29/2009 | 3,079,799 | 1,757,168 | 0.21 | |||||||||||||
Right |
BLB Contingent Value Rights |
11/22/2010 | 2,010,000 | 1,381,875 | 0.16 | |||||||||||||
|
|
|
|
|
|
|||||||||||||
$ | 5,092,712 | $ | 3,144,076 | 0.37 | % | |||||||||||||
|
|
|
|
|
|
(J) | All or portion of this security represents unsettled loan commitment at December 31, 2013 where the rate will be determined at time of settlement. |
(K) | Non-income producing security. |
(L) | Rate shown reflects the yield at December 31, 2013. |
(M) | Aggregate cost for federal income tax purposes is $818,178,174. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $41,946,130 and $12,571,597, respectively. Net unrealized appreciation for tax purposes is $29,374,533. |
(N) | Transfers between levels are considered to have occurred at the end of the reporting period. As of the period ended December 31, 2013, securities with fair market value of $1,381,875 transferred from Level 2 to Level 1 due to availability of unadjusted quoted prices. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
(O) | Purchases include all purchases of securities and securities received in corporate actions. |
(P) | Sales include all sales of securities, maturities, paydowns and securities tendered in a corporate action. |
(Q) | Any difference between Net Change in Unrealized Appreciation (Depreciation) and Net Change in Unrealized Appreciation (Depreciation) on Investments Held at December 31, 2013 may be due to an investment no longer held or categorized as Level 3 at year end. |
(R) | Level 3 securities were not considered significant to the portfolio. |
(S) | Percentage rounds to less than 0.01%. |
DEFINITIONS:
144A | 144A Securities are registered pursuant to Rule 144A of the Securities Act of 1933. These securities are deemed to be liquid for purposes of compliance limitations on holdings of illiquid securities and may be resold as transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2013, these securities aggregated $336,706,607, or 39.29% of the portfolios net assets. | |
GDR | Global Depositary Receipt | |
MTN | Medium Term Note |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 65
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 66
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 67
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 68
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 69
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 70
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 71
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 72
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 73
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 74
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 75
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
FUTURES CONTRACTS: (M) | ||||||||||||||||
Description | Type | Contracts | Expiration Date |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
10-Year U.S. Treasury Note |
Short | (25 | ) | 03/20/2014 | $ | 50,434 | ||||||||||
2-Year U.S. Treasury Note |
Long | 15 | 03/31/2014 | (4,563 | ) | |||||||||||
5-Year U.S. Treasury Note |
Short | (7 | ) | 03/31/2014 | 1,106 | |||||||||||
90-Day Eurodollar |
Short | (3 | ) | 12/14/2015 | 1,312 | |||||||||||
Long U.S. Treasury Bond |
Long | 17 | 03/20/2014 | (31,375 | ) | |||||||||||
S&P 500 E-Mini Index |
Long | 6 | 03/21/2014 | 12,068 | ||||||||||||
Ultra Long U.S. Treasury Bond |
Long | 7 | 03/20/2014 | (16,031 | ) | |||||||||||
|
|
|||||||||||||||
$ | 12,951 | |||||||||||||||
|
|
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 76
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
FORWARD FOREIGN CURRENCY CONTRACTS: | ||||||||||||||||||
Currency | Counterparty | Contracts Bought (Sold) |
Settlement Date |
Amount in U.S. Dollars Bought (Sold) |
Net Unrealized |
|||||||||||||
EUR |
BCLY | (331,000 | ) | 01/22/2014 | $ | (446,974 | ) | $ | (8,378 | ) | ||||||||
EUR |
BNP | 179,000 | 01/22/2014 | 246,166 | 82 | |||||||||||||
|
|
|||||||||||||||||
$ | (8,296 | ) | ||||||||||||||||
|
|
VALUATION SUMMARY: (N)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
U.S. Government Obligations |
$ | | $ | 5,481,918 | $ | | $ | 5,481,918 | ||||||||
U.S. Government Agency Obligations |
| 17,434,871 | | 17,434,871 | ||||||||||||
Foreign Government Obligations |
| 501,934 | | 501,934 | ||||||||||||
Mortgage-Backed Securities |
| 7,214,061 | | 7,214,061 | ||||||||||||
Asset-Backed Securities |
| 8,372,377 | | 8,372,377 | ||||||||||||
Municipal Government Obligations |
| 105,553 | | 105,553 | ||||||||||||
Preferred Corporate Debt Securities |
| 7,587 | | 7,587 | ||||||||||||
Corporate Debt Securities |
||||||||||||||||
Airlines |
| 101,303 | | 101,303 | ||||||||||||
Automobiles |
| 51,150 | 0 | 51,150 | ||||||||||||
Biotechnology |
| 82,840 | | 82,840 | ||||||||||||
Capital Markets |
| 720,015 | | 720,015 | ||||||||||||
Chemicals |
| 68,648 | | 68,648 | ||||||||||||
Commercial Banks |
| 590,686 | | 590,686 | ||||||||||||
Commercial Services & Supplies |
| 111,125 | | 111,125 | ||||||||||||
Communications Equipment |
| 48,677 | | 48,677 | ||||||||||||
Containers & Packaging |
| 13,371 | | 13,371 | ||||||||||||
Diversified Financial Services |
| 1,266,228 | 0 | 1,266,228 | ||||||||||||
Diversified Telecommunication Services |
| 1,026,103 | | 1,026,103 | ||||||||||||
Electric Utilities |
| 621,818 | | 621,818 | ||||||||||||
Energy Equipment & Services |
| 721,409 | | 721,409 | ||||||||||||
Food & Staples Retailing |
| 47,119 | | 47,119 | ||||||||||||
Food Products |
| 77,355 | | 77,355 | ||||||||||||
Health Care Equipment & Supplies |
| 189,262 | | 189,262 | ||||||||||||
Health Care Providers & Services |
| 389,541 | | 389,541 | ||||||||||||
Hotels, Restaurants & Leisure |
| 126,365 | | 126,365 | ||||||||||||
Insurance |
| 968,557 | | 968,557 | ||||||||||||
IT Services |
| 102,302 | | 102,302 | ||||||||||||
Life Sciences Tools & Services |
| 159,850 | | 159,850 | ||||||||||||
Media |
| 1,290,253 | | 1,290,253 | ||||||||||||
Metals & Mining |
| 233,237 | | 233,237 | ||||||||||||
Multi-Utilities |
| 192,127 | | 192,127 | ||||||||||||
Oil, Gas & Consumable Fuels |
| 1,671,961 | | 1,671,961 | ||||||||||||
Paper & Forest Products |
| 201,297 | | 201,297 | ||||||||||||
Pharmaceuticals |
| 186,201 | | 186,201 | ||||||||||||
Real Estate Investment Trusts |
| 18,168 | | 18,168 | ||||||||||||
Real Estate Management & Development |
| 60,363 | | 60,363 | ||||||||||||
Road & Rail |
| 14,900 | | 14,900 | ||||||||||||
Specialty Retail |
| 48,503 | | 48,503 | ||||||||||||
Tobacco |
| 118,560 | | 118,560 | ||||||||||||
Wireless Telecommunication Services |
| 393,700 | | 393,700 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 77
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY (continued): (N)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
Short-Term U.S. Government Obligation |
$ | | $ | 54,982 | $ | | $ | 54,982 | ||||||||
Preferred Stocks |
329,329 | | | 329,329 | ||||||||||||
Common Stocks |
73,405,035 | | | 73,405,035 | ||||||||||||
Purchased Option |
15,525 | | | 15,525 | ||||||||||||
Short-Term Investment Company |
4,395,228 | | | 4,395,228 | ||||||||||||
Securities Lending Collateral |
6,288,574 | | | 6,288,574 | ||||||||||||
Repurchase Agreement |
| 628,771 | | 628,771 | ||||||||||||
Total Investment Securities |
$ | 84,433,691 | $ | 51,715,048 | $ | 0 | $ | 136,148,739 | ||||||||
Derivative Financial Instruments |
||||||||||||||||
Futures Contracts (O) |
$ | 64,920 | $ | | $ | | $ | 64,920 | ||||||||
Forward Foreign Currency Contracts (O) |
| 82 | | 82 | ||||||||||||
Total Derivative Financial Instruments |
$ | 64,920 | $ | 82 | $ | | $ | 65,002 | ||||||||
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
LIABILITIES |
||||||||||||||||
TBA Short Commitments |
||||||||||||||||
U.S. Government Agency Obligations |
$ | | $ | (2,106,103 | ) | $ | | $ | (2,106,103 | ) | ||||||
Total TBA Short Commitments |
$ | | $ | (2,106,103 | ) | $ | | $ | (2,106,103 | ) | ||||||
Derivative Financial Instruments |
||||||||||||||||
Written Option |
$ | (3,738 | ) | $ | | $ | | $ | (3,738 | ) | ||||||
Futures Contracts (O) |
(51,969 | ) | | | (51,969 | ) | ||||||||||
Forward Foreign Currency Contracts (O) |
| (8,378 | ) | | (8,378 | ) | ||||||||||
Total Derivative Financial Instruments |
$ | (55,707 | ) | $ | (8,378 | ) | $ | | $ | (64,085 | ) |
Level 3 Rollforward - Investment Securities
Securities | Beginning Balance at December 31, 2012 |
Purchases | Sales (P) | Accrued Discounts (Premiums) |
Total Realized Gain (Loss) |
Net Change
in Unrealized Appreciation (Depreciation) (Q) |
Transfers into Level 3 |
Transfers out of Level 3 |
Ending Balance at December 31, 2013 (R) |
Net Change in Unrealized Appreciation (Depreciation) on Investments Held at December 31, 2013 (Q) |
||||||||||||||||||||||||||||||
Corporate Debt Securities | $ | 0 | $ | | $ | 0 | $ | | $ | (379,424 | ) | $ | 379,424 | $ | | $ | | $ | 0 | $ | |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Floating or variable rate note. Rate is listed as of December 31, 2013. |
(B) | Percentage rounds to less than 0.1%. |
(C) | The security has a perpetual maturity. The date shown is the next call date. |
(D) | In default. |
(E) | Fair valued as determined in good faith in accordance with procedures established by the Board of Trustees. Total aggregate fair value of securities is $32, or less than 0.01% of the portfolios net assets. |
(F) | Illiquid. Total aggregate fair value of illiquid securities is $33,882, or 0.03% of the portfolios net assets. |
(G) | All or a portion of this security is on loan. The value of all securities on loan is $6,150,753. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(H) | Rate shown reflects the yield at December 31, 2013. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 78
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
NOTES TO SCHEDULE OF INVESTMENTS (continued):
(I) | All or a portion of this security has been segregated by the custodian with the broker as collateral to cover margin requirements for open futures contracts. Total value of securities segregated as collateral to cover margin requirements for open futures contracts is $54,976. |
(J) | Non-income producing security. |
(K) | The investment issuer is affiliated with the sub-adviser of the portfolio. |
(L) | Aggregate cost for federal income tax purposes is $123,059,319. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $15,816,419 and $2,726,999, respectively. Net unrealized appreciation for tax purposes is $13,089,420. |
(M) | Cash in the amount of $31,000 has been segregated by the custodian with the broker as collateral to cover margin requirements for open futures contracts. |
(N) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
(O) | Derivative financial instruments valued at unrealized appreciation (depreciation) on the instrument. |
(P) | Sales include all sales of securities, maturities, paydowns and securities tendered in a corporate action. |
(Q) | Any difference between Net Change in Unrealized Appreciation (Depreciation) and Net Change in Unrealized Appreciation (Depreciation) on Investments Held at December 31, 2013 may be due to an investment no longer held or categorized as Level 3 at year end. |
(R) | Level 3 securities were not considered significant to the portfolio. |
DEFINITIONS:
144A | 144A Securities are registered pursuant to Rule 144A of the Securities Act of 1933. These securities are deemed to be liquid for purposes of compliance limitations on holdings of illiquid securities and may be resold as transactions exempt from registration, normally to qualified institutional buyers. At December 31, 2013, these securities aggregated $9,489,099, or 7.70% of the portfolios net assets. | |
BCLY | Barclays Bank PLC | |
BNP | BNP Paribas | |
IO | Interest only portion of a STRIP (Separate Trading of Registered Interest and Principal Security) Security | |
MTN | Medium Term Note | |
Reg S | Security exempt from registration under Regulation S of the Securities Act of 1933, which exempts from registration securities offered and sold outside the United States. Security may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. | |
Re-REMIC | Re-Securitized Real Estate Mortgage Investment Conduits (consist of a fixed pool of mortgages broken apart and marketed to investors as individual securities) | |
TBA | To Be Announced |
CURRENCY ABBREVIATION:
EUR | Euro |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 79
Transamerica Partners Large Value Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 80
Transamerica Partners Large Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Common Stocks |
$ | 912,316,707 | $ | | $ | | $ | 912,316,707 | ||||||||
Securities Lending Collateral |
76,167,901 | | | 76,167,901 | ||||||||||||
Repurchase Agreement |
| 10,808,881 | | 10,808,881 | ||||||||||||
Total Investment Securities |
$ | 988,484,608 | $ | 10,808,881 | $ | | $ | 999,293,489 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $74,521,042. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | Non-income producing security. |
(C) | Rate shown reflects the yield at December 31, 2013. |
(D) | Aggregate cost for federal income tax purposes is $819,366,987. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $185,978,783 and $6,052,281, respectively. Net unrealized appreciation for tax purposes is $179,926,502. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 81
Transamerica Partners Large Core Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 82
Transamerica Partners Large Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Common Stocks |
$ | 305,339,430 | $ | | $ | | $ | 305,339,430 | ||||||||
Securities Lending Collateral |
20,759,614 | | | 20,759,614 | ||||||||||||
Repurchase Agreement |
| 3,929,330 | | 3,929,330 | ||||||||||||
Total Investment Securities |
$ | 326,099,044 | $ | 3,929,330 | $ | | $ | 330,028,374 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Non-income producing security. |
(B) | All or a portion of this security is on loan. The value of all securities on loan is $20,310,565. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(C) | Rate shown reflects the yield at December 31, 2013. |
(D) | Aggregate cost for federal income tax purposes is $271,143,282. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $60,762,110 and $1,877,018, respectively. Net unrealized appreciation for tax purposes is $58,885,092. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 83
Transamerica Partners Large Growth Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 84
Transamerica Partners Large Growth Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Common Stocks |
$ | 917,324,029 | $ | 20,599,384 | $ | | $ | 937,923,413 | ||||||||
Securities Lending Collateral |
55,290,020 | | | 55,290,020 | ||||||||||||
Repurchase Agreement |
| 1,844,517 | | 1,844,517 | ||||||||||||
Total Investment Securities |
$ | 972,614,049 | $ | 22,443,901 | $ | | $ | 995,057,950 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 85
Transamerica Partners Large Growth Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Non-income producing security. |
(B) | All or a portion of this security is on loan. The value of all securities on loan is $54,075,659. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(C) | Rate shown reflects the yield at December 31, 2013. |
(D) | Aggregate cost for federal income tax purposes is $723,843,565. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $272,570,382 and $1,355,997, respectively. Net unrealized appreciation for tax purposes is $271,214,385. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
DEFINITION:
ADR | American Depositary Receipt |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 86
Transamerica Partners Mid Value Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 87
Transamerica Partners Mid Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 88
Transamerica Partners Mid Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Common Stocks |
$ | 956,241,096 | $ | | $ | | $ | 956,241,096 | ||||||||
Securities Lending Collateral |
61,362,203 | | | 61,362,203 | ||||||||||||
Repurchase Agreement |
| 22,506,114 | | 22,506,114 | ||||||||||||
Total Investment Securities |
$ | 1,017,603,299 | $ | 22,506,114 | $ | | $ | 1,040,109,413 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $60,010,434. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | Non-income producing security. |
(C) | Rate shown reflects the yield at December 31, 2013. |
(D) | Aggregate cost for federal income tax purposes is $795,380,864. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $249,720,413 and $4,991,864, respectively. Net unrealized appreciation for tax purposes is $244,728,549. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 89
Transamerica Partners Mid Growth Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 90
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Common Stocks |
$ | 148,089,352 | $ | | $ | | $ | 148,089,352 | ||||||||
Securities Lending Collateral |
38,314,340 | | | 38,314,340 | ||||||||||||
Repurchase Agreement |
| 2,076,218 | | 2,076,218 | ||||||||||||
Total Investment Securities |
$ | 186,403,692 | $ | 2,076,218 | $ | | $ | 188,479,910 |
Transamerica Partners Mid Growth Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $37,487,131. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | Non-income producing security. |
(C) | Rate shown reflects the yield at December 31, 2013. |
(D) | Aggregate cost for federal income tax purposes is $167,990,268. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $21,619,008 and $1,129,366, respectively. Net unrealized appreciation for tax purposes is $20,489,642. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 91
Transamerica Partners Small Value Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 92
Transamerica Partners Small Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
Principal | Value | |||||||
REPURCHASE AGREEMENT - 1.3% |
||||||||
State Street Bank & Trust Co. |
$ | 1,094,007 | $ | 1,094,007 | ||||
|
|
|||||||
Total Repurchase Agreement (cost $1,094,007) |
|
1,094,007 | ||||||
|
|
|||||||
Total Investment Securities (cost $75,128,641) (D) |
|
103,402,322 | ||||||
Other Assets and Liabilities - Net - (25.6)% |
|
(21,104,780 | ) | |||||
|
|
|||||||
Net Assets - 100.0% |
$ | 82,297,542 | ||||||
|
|
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Common Stocks |
$ | 81,202,631 | $ | | $ | | $ | 81,202,631 | ||||||||
Securities Lending Collateral |
21,105,684 | | | 21,105,684 | ||||||||||||
Repurchase Agreement |
| 1,094,007 | | 1,094,007 | ||||||||||||
Total Investment Securities |
$ | 102,308,315 | $ | 1,094,007 | $ | | $ | 103,402,322 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $20,590,104. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | Non-income producing security. |
(C) | Rate shown reflects the yield at December 31, 2013. |
(D) | Aggregate cost for federal income tax purposes is $75,300,553. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $28,377,809 and $276,040, respectively. Net unrealized appreciation for tax purposes is $28,101,769. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
DEFINITION:
ADR | American Depositary Receipt |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 93
Transamerica Partners Small Core Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 94
Transamerica Partners Small Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 95
Transamerica Partners Small Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 96
Transamerica Partners Small Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Common Stocks |
$ | 326,602,627 | $ | | $ | | $ | 326,602,627 | ||||||||
Master Limited Partnership |
1,176,175 | | | 1,176,175 | ||||||||||||
Securities Lending Collateral |
85,853,018 | | | 85,853,018 | ||||||||||||
Repurchase Agreement |
| 6,304,834 | | 6,304,834 | ||||||||||||
Total Investment Securities |
$ | 413,631,820 | $ | 6,304,834 | $ | | $ | 419,936,654 |
Level 3 Rollforward - Investment Securities
Securities | Beginning Balance at December 31, 2012 |
Purchases | Sales (F) | Accrued Discounts (Premiums) |
Total Realized Gain (Loss) |
Net Change in Unrealized Appreciation (Depreciation) |
Transfers into Level 3 (G) |
Transfers out of Level 3 |
Ending Balance at December 31, 2013 (H) |
Net Change in Unrealized Appreciation (Depreciation) on Investments Held at December 31, 2013 |
||||||||||||||||||||||||||||||
Common Stocks | $ | | $ | | $ | 0 | $ | | $ | | $ | | $ | 0 | $ | | $ | | $ | |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $83,459,379. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | Non-income producing security. |
(C) | Rate shown reflects the yield at December 31, 2013. |
(D) | Aggregate cost for federal income tax purposes is $386,674,539. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $40,107,147 and $6,845,032, respectively. Net unrealized appreciation for tax purposes is $33,262,115. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
(F) | Sales include all sales of securities, maturities, paydowns and securities tendered in a corporate action. |
(G) | Transferred into Level 3 because of unavailability of observable inputs. |
(H) | Level 3 securities were not considered significant to the portfolio. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 97
Transamerica Partners Small Growth Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 98
Transamerica Partners Small Growth Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
VALUATION SUMMARY: (E)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Common Stocks |
$ | 71,610,229 | $ | | $ | | $ | 71,610,229 | ||||||||
Securities Lending Collateral |
18,728,818 | | | 18,728,818 | ||||||||||||
Repurchase Agreement |
| 1,271,411 | | 1,271,411 | ||||||||||||
Total Investment Securities |
$ | 90,339,047 | $ | 1,271,411 | $ | | $ | 91,610,458 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | All or a portion of this security is on loan. The value of all securities on loan is $18,299,164. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(B) | Non-income producing security. |
(C) | Rate shown reflects the yield at December 31, 2013. |
(D) | Aggregate cost for federal income tax purposes is $74,982,657. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $17,267,488 and $639,687, respectively. Net unrealized appreciation for tax purposes is $16,627,801. |
(E) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 99
Transamerica Partners International Equity Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2013
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 100
Transamerica Partners International Equity Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
INVESTMENTS BY INDUSTRY (unaudited): | Percentage of Total Investment Securities |
Value | ||||||
Oil, Gas & Consumable Fuels |
6.9 | % | $ | 42,546,049 | ||||
Commercial Banks |
6.7 | 41,596,335 | ||||||
Insurance |
5.7 | 35,122,808 | ||||||
Pharmaceuticals |
4.4 | 27,483,115 | ||||||
Electronic Equipment & Instruments |
4.0 | 24,616,686 | ||||||
Chemicals |
3.8 | 23,632,902 | ||||||
Diversified Financial Services |
3.4 | 20,976,557 | ||||||
Beverages |
3.4 | 20,974,779 | ||||||
Wireless Telecommunication Services |
3.2 | 19,710,774 | ||||||
Metals & Mining |
3.1 | 18,919,658 | ||||||
Industrial Conglomerates |
2.8 | 17,587,849 | ||||||
Trading Companies & Distributors |
2.7 | 16,939,320 | ||||||
Hotels, Restaurants & Leisure |
2.5 | 15,666,879 | ||||||
Food Products |
2.5 | 15,229,083 | ||||||
Specialty Retail |
2.4 | 15,197,749 | ||||||
Semiconductors & Semiconductor Equipment |
2.3 | 14,508,332 | ||||||
Auto Components |
2.3 | 14,501,005 | ||||||
Media |
2.3 | 14,152,212 | ||||||
Real Estate Management & Development |
2.2 | 13,716,334 | ||||||
Containers & Packaging |
1.8 | 11,081,063 | ||||||
Capital Markets |
1.7 | 10,739,147 | ||||||
Energy Equipment & Services |
1.7 | 10,704,710 | ||||||
Construction & Engineering |
1.7 | 10,671,560 | ||||||
Multi-Utilities |
1.6 | 10,030,786 | ||||||
Airlines |
1.6 | 9,870,862 | ||||||
Diversified Telecommunication Services |
1.2 | 7,718,195 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 101
Transamerica Partners International Equity Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2013
INVESTMENTS BY INDUSTRY (unaudited) (continued): |
Percentage of Total Investment Securities |
Value | ||||||
Consumer Finance |
1.2 | % | $ | 7,613,887 | ||||
Communications Equipment |
1.2 | 7,556,452 | ||||||
Automobiles |
1.0 | 6,271,679 | ||||||
Distributors |
1.0 | 6,042,275 | ||||||
Transportation Infrastructure |
1.0 | 5,937,799 | ||||||
Household Products |
0.9 | 5,884,207 | ||||||
IT Services |
0.9 | 5,626,477 | ||||||
Food & Staples Retailing |
0.9 | 5,469,687 | ||||||
Road & Rail |
0.9 | 5,457,930 | ||||||
Paper & Forest Products |
0.9 | 5,407,044 | ||||||
Water Utilities |
0.9 | 5,360,731 | ||||||
Commercial Services & Supplies |
0.8 | 5,106,312 | ||||||
Electrical Equipment |
0.8 | 4,882,620 | ||||||
Tobacco |
0.8 | 4,850,896 | ||||||
Gas Utilities |
0.8 | 4,829,060 | ||||||
Textiles, Apparel & Luxury Goods |
0.7 | 4,162,309 | ||||||
Household Durables |
0.6 | 3,732,092 | ||||||
Machinery |
0.5 | 3,061,213 | ||||||
|
|
|
|
|||||
Investment Securities, at Value |
93.7 | 581,147,419 | ||||||
Short-Term Investments |
6.3 | 38,992,714 | ||||||
|
|
|
|
|||||
Total Investments |
100.0 | % | $ | 620,140,133 | ||||
|
|
|
|
VALUATION SUMMARY: (D)
Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2013 |
|||||||||||||
ASSETS |
||||||||||||||||
Investment Securities |
||||||||||||||||
Convertible Preferred Stock |
$ | 9,150,049 | $ | | $ | | $ | 9,150,049 | ||||||||
Preferred Stocks |
10,069,038 | 14,508,332 | | 24,577,370 | ||||||||||||
Common Stocks |
64,481,905 | 482,938,095 | | 547,420,000 | ||||||||||||
Repurchase Agreement |
| 38,992,714 | | 38,992,714 | ||||||||||||
Total Investment Securities |
$ | 83,700,992 | $ | 536,439,141 | $ | | $ | 620,140,133 |
NOTES TO SCHEDULE OF INVESTMENTS:
(A) | Rate shown reflects the yield at December 31, 2013. |
(B) | Non-income producing security. |
(C) | Aggregate cost for federal income tax purposes is $589,005,312. Aggregate gross unrealized appreciation and depreciation for all securities in which there is an excess of value over tax cost were $33,778,732 and $2,643,911, respectively. Net unrealized appreciation for tax purposes is $31,134,821. |
(D) | Transfers between levels are considered to have occurred at the end of the reporting period. There were no transfers between Levels 1 and 2 during the period ended December 31, 2013. See the notes to the financial statements for more information regarding pricing inputs and valuation techniques. |
DEFINITIONS:
ADR | American Depositary Receipt | |
GDR | Global Depositary Receipt | |
OAO | Otkrytoe Aktsionernoe Obschestvo (Open Joint Stock Corporation) | |
Reg S | Security exempt from registration under Regulation S of the Securities Act of 1933, which exempts from registration securities offered and sold outside the United States. Security may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933. |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 102
STATEMENTS OF ASSETS AND LIABILITIES
At December 31, 2013
Money Market | High Quality Bond |
Inflation- Protected Securities |
Core Bond | High Yield Bond |
||||||||||||||||
Assets: |
||||||||||||||||||||
Investment securities, at value |
$ | 871,446,425 | $ | 389,287,943 | $ | 280,218,784 | $ | 1,580,128,316 | $ | 818,909,206 | ||||||||||
Repurchase agreements, at value |
115,456,362 | 16,903,705 | | | 28,643,501 | |||||||||||||||
Cash on deposit with broker |
| | 475,000 | 855,000 | | |||||||||||||||
Foreign currency, at value |
| | 12,646 | 806,219 | | |||||||||||||||
Cash on deposit with custodian |
| | | 1,717,000 | | |||||||||||||||
Cash |
| 1,020 | | | 202,007 | |||||||||||||||
Unrealized appreciation on forward foreign currency contracts |
| | 300,708 | 2,402 | | |||||||||||||||
Unrealized appreciation on OTC swap agreements |
| | | 480,091 | | |||||||||||||||
Premium paid on OTC swap agreements |
| | 6,156 | 622,773 | | |||||||||||||||
Receivables: |
||||||||||||||||||||
Investment securities sold |
| | 2,600,142 | 270,066,333 | 691,635 | |||||||||||||||
Interest |
226,262 | 1,647,576 | 1,250,043 | 7,560,165 | 13,538,885 | |||||||||||||||
Dividends |
| | | | 38,325 | |||||||||||||||
Securities lending income (net) |
| 1,868 | 388 | 25,277 | | |||||||||||||||
Variation margin receivable on derivative financial instruments |
| | 104,540 | | | |||||||||||||||
Other |
| | | | 91,350 | |||||||||||||||
Prepaid expenses |
11,831 | 5,411 | 3,947 | 17,663 | 10,437 | |||||||||||||||
Total assets |
987,140,880 | 407,847,523 | 284,972,354 | 1,862,281,239 | 862,125,346 | |||||||||||||||
Liabilities: |
||||||||||||||||||||
Due to custodian |
| | | 17,737 | | |||||||||||||||
Cash deposit due to broker |
| | 500,000 | 100,000 | | |||||||||||||||
Premium received on OTC swap agreements |
| | | 487,393 | | |||||||||||||||
Accounts payable and accrued liabilities: |
||||||||||||||||||||
Investment securities purchased |
| | 4,929,225 | 344,735,825 | 2,666,750 | |||||||||||||||
When-issued securities purchased |
| | | | 2,076,005 | |||||||||||||||
Advisory fees |
213,644 | 122,797 | 80,680 | 414,563 | 411,118 | |||||||||||||||
Trustees and CCO fees |
173 | 78 | 57 | 245 | 149 | |||||||||||||||
Audit and tax fees |
18,137 | 20,085 | 21,043 | 24,506 | 21,822 | |||||||||||||||
Custody and accounting fees |
26,778 | 10,854 | 19,945 | 57,064 | 25,608 | |||||||||||||||
Legal fees |
9,362 | 4,461 | 4,544 | 19,538 | 8,323 | |||||||||||||||
Printing and shareholder reports fees |
4,156 | 1,940 | 1,481 | 6,537 | 3,523 | |||||||||||||||
Variation margin payable on derivative financial instruments |
| | | 297,853 | | |||||||||||||||
Interest from TBA short commitments |
| | | 170,281 | | |||||||||||||||
Other |
6,668 | 2,953 | 2,230 | 9,732 | 5,747 | |||||||||||||||
Collateral for securities on loan |
| 7,826,473 | 3,295,294 | 80,612,269 | | |||||||||||||||
Written options and swaptions, at value |
| | 495,177 | 154,745 | | |||||||||||||||
TBA short commitments, at value |
| | | 98,292,806 | | |||||||||||||||
Unrealized depreciation on forward foreign currency contracts |
| | 679,351 | 383,440 | | |||||||||||||||
Unrealized depreciation on OTC swap agreements |
| | 155,603 | 285,841 | | |||||||||||||||
Total liabilities |
278,918 | 7,989,641 | 10,184,630 | 526,070,375 | 5,219,045 | |||||||||||||||
Net assets |
$ | 986,861,962 | $ | 399,857,882 | $ | 274,787,724 | $ | 1,336,210,864 | $ | 856,906,301 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Investment securities, at cost |
$ | 871,446,425 | $ | 390,151,496 | $ | 288,737,094 | $ | 1,585,919,133 | $ | 789,482,164 | ||||||||||
Repurchase agreements, at cost |
$ | 115,456,362 | $ | 16,903,705 | $ | | $ | | $ | 28,643,501 | ||||||||||
Foreign currency, at cost |
$ | | $ | | $ | 12,615 | $ | 775,829 | $ | | ||||||||||
Securities loaned, at value |
$ | | $ | 7,665,613 | $ | 3,229,515 | $ | 78,989,620 | $ | | ||||||||||
Premium received on written option and swaptions |
$ | | $ | | $ | 588,150 | $ | 140,355 | $ | | ||||||||||
Proceeds received from TBA short commitments |
$ | | $ | | $ | | $ | 98,595,703 | $ | |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 103
STATEMENTS OF ASSETS AND LIABILITIES (continued)
At December 31, 2013
Balanced |
Large Value | Large Core | Large Growth | Mid Value | ||||||||||||||||
Assets: |
||||||||||||||||||||
Investment securities, at value |
$ | 135,519,968 | $ | 988,484,608 | $ | 326,099,044 | $ | 993,213,433 | $ | 1,017,603,299 | ||||||||||
Repurchase agreements, at value |
628,771 | 10,808,881 | 3,929,330 | 1,844,517 | 22,506,114 | |||||||||||||||
Cash on deposit with broker |
31,000 | | | | | |||||||||||||||
Foreign currency, at value |
4,834 | | | | | |||||||||||||||
Cash |
327 | 50,163 | 5,593 | | 38,632 | |||||||||||||||
Unrealized appreciation on forward foreign currency contracts |
82 | | | | | |||||||||||||||
Receivables: |
||||||||||||||||||||
Investment securities sold |
7,504,214 | 496,159 | 342,019 | 6,514,118 | 319,754 | |||||||||||||||
Interest |
251,517 | 3 | 1 | | 6 | |||||||||||||||
Dividends |
99,617 | 969,459 | 302,057 | 520,655 | 884,619 | |||||||||||||||
Dividend reclaims |
1 | 13,117 | 1,338 | 88,016 | 20,190 | |||||||||||||||
Securities lending income (net) |
1,105 | 26,153 | 7,159 | 20,833 | 14,312 | |||||||||||||||
Prepaid expenses |
1,412 | 10,964 | 3,444 | 10,812 | 11,276 | |||||||||||||||
Total assets |
144,042,848 | 1,000,859,507 | 330,689,985 | 1,002,212,384 | 1,041,398,202 | |||||||||||||||
Liabilities: |
||||||||||||||||||||
Due to custodian |
| | | 38,387 | | |||||||||||||||
Accounts payable and accrued liabilities: |
||||||||||||||||||||
Investment securities purchased |
12,270,144 | | | 4,319,621 | 4,333,195 | |||||||||||||||
Advisory fees |
32,495 | 357,861 | 158,931 | 470,847 | 559,612 | |||||||||||||||
Trustees and CCO fees |
23 | 171 | 79 | 197 | 229 | |||||||||||||||
Audit and tax fees |
22,419 | 19,236 | 20,399 | 24,470 | 17,146 | |||||||||||||||
Custody and accounting fees |
25,617 | 18,718 | 7,995 | 31,568 | 19,258 | |||||||||||||||
Legal fees |
1,120 | 8,837 | 2,706 | 8,705 | 14,758 | |||||||||||||||
Printing and shareholder reports fees |
491 | 3,877 | 1,155 | 4,154 | 3,724 | |||||||||||||||
Variation margin payable on derivative financial instruments |
8,287 | | | | | |||||||||||||||
Interest from TBA short commitments |
3,570 | | | | | |||||||||||||||
Other |
1,574 | 6,382 | 4,027 | 6,182 | 6,913 | |||||||||||||||
Collateral for securities on loan |
6,288,574 | 76,167,901 | 20,759,614 | 55,290,020 | 61,362,203 | |||||||||||||||
Written options and swaptions, at value |
3,738 | | | | | |||||||||||||||
TBA short commitments, at value |
2,106,103 | | | | | |||||||||||||||
Unrealized depreciation on forward foreign currency contracts |
8,378 | | | | | |||||||||||||||
Total liabilities |
20,772,533 | 76,582,983 | 20,954,906 | 60,194,151 | 66,317,038 | |||||||||||||||
Net assets |
$ | 123,270,315 | $ | 924,276,524 | $ | 309,735,079 | $ | 942,018,233 | $ | 975,081,164 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Investment securities, at cost |
$ | 121,300,054 | $ | 803,998,506 | $ | 266,873,762 | $ | 717,544,735 | $ | 770,342,141 | ||||||||||
Repurchase agreements, at cost |
$ | 628,771 | $ | 10,808,881 | $ | 3,929,330 | $ | 1,844,517 | $ | 22,506,114 | ||||||||||
Foreign currency, at cost |
$ | 4,828 | $ | | $ | | $ | | $ | | ||||||||||
Securities loaned, at value |
$ | 6,150,753 | $ | 74,521,042 | $ | 20,310,565 | $ | 54,075,659 | $ | 60,010,434 | ||||||||||
Premium received on written option and swaptions |
$ | 1,680 | $ | | $ | | $ | | $ | | ||||||||||
Proceeds received from TBA short commitments |
$ | 2,113,355 | $ | | $ | | $ | | $ | |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 104
STATEMENTS OF ASSETS AND LIABILITIES (continued)
At December 31, 2013
Mid Growth | Small Value | Small Core | Small Growth | International Equity |
||||||||||||||||
Assets: |
||||||||||||||||||||
Investment securities, at value |
$ | 186,403,692 | $ | 102,308,315 | $ | 413,631,820 | $ | 90,339,047 | $ | 581,147,419 | ||||||||||
Repurchase agreements, at value |
2,076,218 | 1,094,007 | 6,304,834 | 1,271,411 | 38,992,714 | |||||||||||||||
Receivables: |
||||||||||||||||||||
Investment securities sold |
| | | 472,322 | 71,582 | |||||||||||||||
Interest |
1 | | 2 | | 11 | |||||||||||||||
Dividends |
83,884 | 74,016 | 325,025 | 11,864 | 270,230 | |||||||||||||||
Dividend reclaims |
| | | | 2,263,202 | |||||||||||||||
Securities lending income (net) |
5,412 | 2,938 | 36,350 | 4,476 | 6,929 | |||||||||||||||
Prepaid expenses |
2,219 | 978 | 3,878 | 845 | 7,428 | |||||||||||||||
Total assets |
188,571,426 | 103,480,254 | 420,301,909 | 92,099,965 | 622,759,515 | |||||||||||||||
Liabilities: |
||||||||||||||||||||
Due to custodian |
| | | | 9,921,473 | |||||||||||||||
Foreign currency, at value |
| | | | 55,728 | |||||||||||||||
Accounts payable and accrued liabilities: |
||||||||||||||||||||
Investment securities purchased |
| | | 233,232 | 183,356 | |||||||||||||||
Advisory fees |
85,957 | 53,343 | 230,809 | 46,757 | 392,979 | |||||||||||||||
Trustees and CCO fees |
31 | 18 | 60 | 23 | 109 | |||||||||||||||
Audit and tax fees |
18,326 | 18,241 | 18,064 | 18,320 | 23,541 | |||||||||||||||
Custody and accounting fees |
5,313 | 3,179 | 9,633 | 4,563 | 58,661 | |||||||||||||||
Legal fees |
1,877 | 757 | 4,016 | 2,888 | 9,955 | |||||||||||||||
Printing and shareholder reports fees |
949 | 387 | 1,537 | 372 | 2,910 | |||||||||||||||
Other |
1,571 | 1,103 | 3,168 | 611 | 5,489 | |||||||||||||||
Collateral for securities on loan |
38,314,340 | 21,105,684 | 85,853,018 | 18,728,818 | | |||||||||||||||
Total liabilities |
38,428,364 | 21,182,712 | 86,120,305 | 19,035,584 | 10,654,201 | |||||||||||||||
Net assets |
$ | 150,143,062 | $ | 82,297,542 | $ | 334,181,604 | $ | 73,064,381 | $ | 612,105,314 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Investment securities, at cost |
$ | 165,883,619 | $ | 74,034,634 | $ | 380,056,295 | $ | 73,550,564 | $ | 548,815,249 | ||||||||||
Repurchase agreements, at cost |
$ | 2,076,218 | $ | 1,094,007 | $ | 6,304,834 | $ | 1,271,411 | $ | 38,992,714 | ||||||||||
Foreign currency, at cost |
$ | | $ | | $ | | $ | | $ | 54,202 | ||||||||||
Securities loaned, at value |
$ | 37,487,131 | $ | 20,590,104 | $ | 83,459,379 | $ | 18,299,164 | $ | |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 105
STATEMENTS OF OPERATIONS
For the year ended December 31, 2013
Money Market |
High Quality Bond |
Inflation- Protected Securities |
Core Bond | High Yield Bond |
||||||||||||||||
Investment Income: |
||||||||||||||||||||
Dividend income |
$ | | $ | | $ | | $ | 237,909 | $ | 619,470 | ||||||||||
Interest income |
1,995,578 | 9,203,536 | 2,743,904 | 42,092,426 | 57,503,200 | |||||||||||||||
Securities lending income (net) |
| 40,727 | 19,345 | 197,254 | | |||||||||||||||
Withholding taxes on foreign income |
| (1,179 | ) | | (29,882 | ) | (98 | ) | ||||||||||||
Total investment income |
1,995,578 | 9,243,084 | 2,763,249 | 42,497,707 | 58,122,572 | |||||||||||||||
Expenses: |
||||||||||||||||||||
Advisory |
2,320,573 | 1,469,748 | 1,101,940 | 4,900,783 | 4,596,773 | |||||||||||||||
Trustees and CCO |
19,638 | 8,845 | 6,829 | 29,917 | 17,629 | |||||||||||||||
Audit and tax |
16,268 | 19,555 | 21,484 | 25,211 | 21,155 | |||||||||||||||
Custody and accounting |
151,127 | 63,906 | 124,352 | 352,020 | 165,415 | |||||||||||||||
Legal |
60,922 | 26,890 | 14,248 | 93,411 | 51,595 | |||||||||||||||
Printing and shareholder reports |
55,666 | 25,463 | 19,251 | 84,952 | 49,841 | |||||||||||||||
Other |
26,054 | 9,658 | 7,595 | 32,305 | 18,925 | |||||||||||||||
Total expenses |
2,650,248 | 1,624,065 | 1,295,699 | 5,518,599 | 4,921,333 | |||||||||||||||
Expenses (waived/reimbursed) |
| | (36,338 | ) | | | ||||||||||||||
Net expenses |
2,650,248 | 1,624,065 | 1,259,361 | 5,518,599 | 4,921,333 | |||||||||||||||
Net investment income (loss) |
(654,670 | ) | 7,619,019 | 1,503,888 | 36,979,108 | 53,201,239 | ||||||||||||||
Net realized gain (loss) on transactions from: |
||||||||||||||||||||
Investment securities |
20,771 | 578,440 | 1,067,958 | (6,772,905 | ) | 978,231 | ||||||||||||||
Futures contracts |
| | 1,511,362 | (5,754,334 | ) | | ||||||||||||||
Written options and swaptions |
| | 157,952 | (741,605 | ) | | ||||||||||||||
Swap agreements |
| | 589,578 | 15,571,218 | | |||||||||||||||
Foreign currency transactions |
| | 113,751 | (201,645 | ) | | ||||||||||||||
Net realized gain (loss) |
20,771 | 578,440 | 3,440,601 | 2,100,729 | 978,231 | |||||||||||||||
Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||
Investment securities |
| (6,501,402 | ) | (30,912,716 | ) | (51,077,788 | ) | 5,528,464 | ||||||||||||
Futures contracts |
| | (323,022 | ) | (1,362,923 | ) | | |||||||||||||
Written options and swaptions |
| | 48,271 | (47,537 | ) | | ||||||||||||||
Swap agreements |
| | (496,288 | ) | (1,039,438 | ) | | |||||||||||||
Translation of assets and liabilities denominated in foreign currencies |
| | (312,336 | ) | (227,454 | ) | | |||||||||||||
TBA short commitments |
| | | 535,685 | | |||||||||||||||
Net change in unrealized appreciation (depreciation) |
| (6,501,402 | ) | (31,996,091 | ) | (53,219,455 | ) | 5,528,464 | ||||||||||||
Net realized and change in unrealized gain (loss) |
20,771 | (5,922,962 | ) | (28,555,490 | ) | (51,118,726 | ) | 6,506,695 | ||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | (633,899 | ) | $ | 1,696,057 | $ | (27,051,602 | ) | $ | (14,139,618 | ) | $ | 59,707,934 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 106
STATEMENTS OF OPERATIONS (continued)
For the year ended December 31, 2013
Balanced |
Large Value | Large Core | Large Growth | Mid Value | ||||||||||||||||
Investment Income: |
||||||||||||||||||||
Dividend income |
$ | 1,358,387 | $ | 18,881,062 | $ | 5,654,828 | $ | 10,520,768 | $ | 14,447,330 | ||||||||||
Interest income |
853,255 | 2,484 | 836 | 1,056 | 6,551 | |||||||||||||||
Securities lending income (net) |
13,950 | 155,139 | 51,504 | 195,400 | 136,548 | |||||||||||||||
Withholding taxes on foreign income |
(969 | ) | (36,032 | ) | (10,464 | ) | (101,009 | ) | (43,971 | ) | ||||||||||
Total investment income |
2,224,623 | 19,002,653 | 5,696,704 | 10,616,215 | 14,546,458 | |||||||||||||||
Expenses: |
||||||||||||||||||||
Advisory |
515,645 | 3,930,716 | 1,667,213 | 5,413,579 | 5,967,769 | |||||||||||||||
Trustees and CCO |
2,412 | 18,274 | 5,815 | 18,320 | 18,565 | |||||||||||||||
Audit and tax |
23,179 | 18,048 | 19,127 | 23,369 | 16,582 | |||||||||||||||
Custody and accounting |
159,855 | 111,547 | 42,759 | 184,971 | 110,359 | |||||||||||||||
Legal |
7,504 | 54,544 | 17,129 | 54,028 | 55,684 | |||||||||||||||
Printing and shareholder reports |
6,888 | 53,187 | 16,744 | 53,531 | 54,158 | |||||||||||||||
Other |
2,744 | 19,872 | 6,165 | 20,227 | 19,585 | |||||||||||||||
Total expenses |
718,227 | 4,206,188 | 1,774,952 | 5,768,025 | 6,242,702 | |||||||||||||||
Expenses (waived/reimbursed) |
(145,288 | ) | | | (92,499 | ) | (7,720 | ) | ||||||||||||
Net expenses |
572,939 | 4,206,188 | 1,774,952 | 5,675,526 | 6,234,982 | |||||||||||||||
Net investment income (loss) |
1,651,684 | 14,796,465 | 3,921,752 | 4,940,689 | 8,311,476 | |||||||||||||||
Net realized gain (loss) on transactions from: |
||||||||||||||||||||
Investment securities |
8,031,717 | 177,405,771 | 58,081,271 | 96,593,710 | 100,682,194 | |||||||||||||||
Futures contracts |
132,771 | | | | | |||||||||||||||
Written options and swaptions |
(16,285 | ) | | | | | ||||||||||||||
Foreign currency transactions |
4,419 | | | (1,898 | ) | 12,734 | ||||||||||||||
Net realized gain (loss) |
8,152,622 | 177,405,771 | 58,081,271 | 96,591,812 | 100,694,928 | |||||||||||||||
Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||
Investment securities |
9,414,539 | 86,365,970 | 25,059,363 | 163,688,767 | 142,457,537 | |||||||||||||||
Futures contracts |
14,528 | | | | | |||||||||||||||
Written options and swaptions |
(2,057 | ) | | | | | ||||||||||||||
Translation of assets and liabilities denominated in foreign currencies |
(2,456 | ) | | | 1,458 | (37 | ) | |||||||||||||
TBA short commitments |
14,100 | | | | | |||||||||||||||
Net change in unrealized appreciation (depreciation) |
9,438,654 | 86,365,970 | 25,059,363 | 163,690,225 | 142,457,500 | |||||||||||||||
Net realized and change in unrealized gain (loss) |
17,591,276 | 263,771,741 | 83,140,634 | 260,282,037 | 243,152,428 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 19,242,960 | $ | 278,568,206 | $ | 87,062,386 | $ | 265,222,726 | $ | 251,463,904 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 107
STATEMENTS OF OPERATIONS (continued)
For the year ended December 31, 2013
Mid Growth | Small Value | Small Core | Small Growth | International Equity |
||||||||||||||||
Investment Income: |
||||||||||||||||||||
Dividend income |
$ | 1,162,520 | $ | 1,057,430 | $ | 4,625,292 | $ | 200,832 | $ | 14,054,114 | ||||||||||
Interest income |
461 | 492 | 1,410 | 419 | 3,394 | |||||||||||||||
Securities lending income (net) |
107,100 | 36,414 | 395,835 | 93,404 | 309,199 | |||||||||||||||
Withholding taxes on foreign income |
(5,076 | ) | | (20,299 | ) | | (1,180,008 | ) | ||||||||||||
Total investment income |
1,265,005 | 1,094,336 | 5,002,238 | 294,655 | 13,186,699 | |||||||||||||||
Expenses: |
||||||||||||||||||||
Advisory |
1,221,174 | 633,821 | 2,528,790 | 563,801 | 4,578,894 | |||||||||||||||
Trustees and CCO |
3,626 | 1,616 | 6,628 | 1,398 | 12,936 | |||||||||||||||
Audit and tax |
17,105 | 17,200 | 17,099 | 17,206 | 126,750 | |||||||||||||||
Custody and accounting |
31,031 | 17,169 | 65,781 | 24,926 | 367,787 | |||||||||||||||
Legal |
10,905 | 4,824 | 19,827 | 8,668 | 33,668 | |||||||||||||||
Printing and shareholder reports |
10,990 | 4,748 | 19,845 | 4,958 | 37,095 | |||||||||||||||
Other |
4,073 | 1,716 | 7,065 | 1,545 | 14,194 | |||||||||||||||
Total expenses |
1,298,904 | 681,094 | 2,665,035 | 622,502 | 5,171,324 | |||||||||||||||
Expenses (waived/reimbursed) |
(26,847 | ) | (24,086 | ) | | (18,429 | ) | | ||||||||||||
Net expenses |
1,272,057 | 657,008 | 2,665,035 | 604,073 | 5,171,324 | |||||||||||||||
Net investment income (loss) |
(7,052 | ) | 437,328 | 2,337,203 | (309,418 | ) | 8,015,375 | |||||||||||||
Net realized gain (loss) on transactions from: |
||||||||||||||||||||
Investment securities |
41,797,631 | 7,673,016 | 102,679,628 | 4,048,714 | 170,599,027 | |||||||||||||||
Futures contracts |
| | 196,697 | | | |||||||||||||||
Foreign currency transactions |
(693 | ) | | (42 | ) | | 1,720,955 | |||||||||||||
Net realized gain (loss) |
41,796,938 | 7,673,016 | 102,876,283 | 4,048,714 | 172,319,982 | |||||||||||||||
Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||
Investment securities |
2,753,869 | 14,403,424 | (14,136,578 | ) | 17,451,716 | (101,941,351 | ) | |||||||||||||
Futures contracts |
| | (31,262 | ) | | | ||||||||||||||
Translation of assets and liabilities denominated in foreign currencies |
5 | | 36 | | 242,835 | |||||||||||||||
Net change in unrealized appreciation (depreciation) |
2,753,874 | 14,403,424 | (14,167,804 | ) | 17,451,716 | (101,698,516 | ) | |||||||||||||
Net realized and change in unrealized gain (loss) |
44,550,812 | 22,076,440 | 88,708,479 | 21,500,430 | 70,621,466 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
$ | 44,543,760 | $ | 22,513,768 | $ | 91,045,682 | $ | 21,191,012 | $ | 78,636,841 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 108
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended:
Money Market | High Quality Bond | Inflation-Protected Securities | ||||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|||||||||||||||||||
From operations: |
||||||||||||||||||||||||
Net investment income (loss) |
$ | (654,670 | ) | $ | (960,513 | ) | $ | 7,619,019 | $ | 8,515,508 | $ | 1,503,888 | $ | 5,028,483 | ||||||||||
Net realized gain (loss) |
20,771 | 86 | 578,440 | 1,238,247 | 3,440,601 | 15,124,782 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) |
| | (6,501,402 | ) | 2,393,318 | (31,996,091 | ) | 4,052,311 | ||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
(633,899 | ) | (960,427 | ) | 1,696,057 | 12,147,073 | (27,051,602 | ) | 24,205,576 | |||||||||||||||
From transactions in investors beneficial interests: |
||||||||||||||||||||||||
Contributions |
653,764,501 | 607,906,945 | 248,234,781 | 150,407,683 | 52,376,827 | 52,452,782 | ||||||||||||||||||
Withdrawals |
(614,626,579 | ) | (654,217,536 | ) | (236,118,950 | ) | (234,736,980 | ) | (91,673,855 | ) | (94,065,725 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from transactions in investors beneficial interests |
39,137,922 | (46,310,591 | ) | 12,115,831 | (84,329,297 | ) | (39,297,028 | ) | (41,612,943 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net assets |
38,504,023 | (47,271,018 | ) | 13,811,888 | (72,182,224 | ) | (66,348,630 | ) | (17,407,367 | ) | ||||||||||||||
Net assets: |
||||||||||||||||||||||||
Beginning of year |
948,357,939 | 995,628,957 | 386,045,994 | 458,228,218 | 341,136,354 | 358,543,721 | ||||||||||||||||||
End of year |
$ | 986,861,962 | $ | 948,357,939 | $ | 399,857,882 | $ | 386,045,994 | $ | 274,787,724 | $ | 341,136,354 | ||||||||||||
Core Bond | High Yield Bond | Balanced | ||||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|||||||||||||||||||
From operations: |
||||||||||||||||||||||||
Net investment income (loss) |
$ | 36,979,108 | $ | 46,111,919 | $ | 53,201,239 | $ | 56,048,435 | $ | 1,651,684 | $ | 1,985,977 | ||||||||||||
Net realized gain (loss) |
2,100,729 | 29,636,680 | 978,231 | 15,614,503 | 8,152,622 | 4,620,041 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) |
(53,219,455 | ) | 47,071,976 | 5,528,464 | 37,127,582 | 9,438,654 | 7,067,798 | |||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
(14,139,618 | ) | 122,820,575 | 59,707,934 | 108,790,520 | 19,242,960 | 13,673,816 | |||||||||||||||||
From transactions in investors beneficial interests: |
||||||||||||||||||||||||
Contributions |
229,761,560 | 259,905,444 | 116,427,122 | 112,473,979 | 21,426,618 | 9,137,794 | ||||||||||||||||||
Withdrawals |
(349,444,213 | ) | (501,283,416 | ) | (139,221,398 | ) | (130,547,942 | ) | (27,001,328 | ) | (17,320,402 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from transactions in investors beneficial interests |
(119,682,653 | ) | (241,377,972 | ) | (22,794,276 | ) | (18,073,963 | ) | (5,574,710 | ) | (8,182,608 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net assets |
(133,822,271 | ) | (118,557,397 | ) | 36,913,658 | 90,716,557 | 13,668,250 | 5,491,208 | ||||||||||||||||
Net assets: |
||||||||||||||||||||||||
Beginning of year |
1,470,033,135 | 1,588,590,532 | 819,992,643 | 729,276,086 | 109,602,065 | 104,110,857 | ||||||||||||||||||
End of year |
$ | 1,336,210,864 | $ | 1,470,033,135 | $ | 856,906,301 | $ | 819,992,643 | $ | 123,270,315 | $ | 109,602,065 | ||||||||||||
Large Value | Large Core | Large Growth | ||||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|||||||||||||||||||
From operations: |
||||||||||||||||||||||||
Net investment income (loss) |
$ | 14,796,465 | $ | 17,614,276 | $ | 3,921,752 | $ | 4,205,876 | $ | 4,940,689 | $ | 6,849,377 | ||||||||||||
Net realized gain (loss) |
177,405,771 | 94,470,108 | 58,081,271 | 21,814,060 | 96,591,812 | 113,489,403 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) |
86,365,970 | 29,113,417 | 25,059,363 | 13,087,450 | 163,690,225 | 23,287,865 | ||||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
278,568,206 | 141,197,801 | 87,062,386 | 39,107,386 | 265,222,726 | 143,626,645 | ||||||||||||||||||
From transactions in investors beneficial interests: |
||||||||||||||||||||||||
Contributions |
67,473,165 | 62,284,142 | 27,612,712 | 15,282,782 | 50,143,117 | 68,357,724 | ||||||||||||||||||
Withdrawals |
(206,804,126 | ) | (296,208,563 | ) | (49,923,765 | ) | (44,610,616 | ) | (198,361,205 | ) | (403,278,229 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from transactions in investors beneficial interests |
(139,330,961 | ) | (233,924,421 | ) | (22,311,053 | ) | (29,327,834 | ) | (148,218,088 | ) | (334,920,505 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net assets |
139,237,245 | (92,726,620 | ) | 64,751,333 | 9,779,552 | 117,004,638 | (191,293,860 | ) | ||||||||||||||||
Net assets: |
||||||||||||||||||||||||
Beginning of year |
785,039,279 | 877,765,899 | 244,983,746 | 235,204,194 | 825,013,595 | 1,016,307,455 | ||||||||||||||||||
End of year |
$ | 924,276,524 | $ | 785,039,279 | $ | 309,735,079 | $ | 244,983,746 | $ | 942,018,233 | $ | 825,013,595 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 109
STATEMENTS OF CHANGES IN NET ASSETS (continued)
For the years ended:
Mid Value | Mid Growth | Small Value | ||||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|||||||||||||||||||
From operations: |
||||||||||||||||||||||||
Net investment income (loss) |
$ | 8,311,476 | $ | 10,393,561 | $ | (7,052 | ) | $ | 191,875 | $ | 437,328 | $ | 1,151,661 | |||||||||||
Net realized gain (loss) |
100,694,928 | 74,180,247 | 41,796,938 | 25,644,878 | 7,673,016 | 10,989,012 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) |
142,457,500 | 52,088,706 | 2,753,874 | 1,869,722 | 14,403,424 | 1,661,200 | ||||||||||||||||||
Net increase (decrease) in net assets resulting from operations |
251,463,904 | 136,662,514 | 44,543,760 | 27,706,475 | 22,513,768 | 13,801,873 | ||||||||||||||||||
From transactions in investors beneficial interests: |
||||||||||||||||||||||||
Contributions |
71,316,736 | 55,523,930 | 14,172,136 | 15,871,932 | 9,361,371 | 5,249,082 | ||||||||||||||||||
Withdrawals |
(125,663,958 | ) | (163,056,686 | ) | (73,505,761 | ) | (85,247,660 | ) | (19,760,939 | ) | (52,825,641 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from transactions in investors beneficial interests |
(54,347,222 | ) | (107,532,756 | ) | (59,333,625 | ) | (69,375,728 | ) | (10,399,568 | ) | (47,576,559 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net assets |
197,116,682 | 29,129,758 | (14,789,865 | ) | (41,669,253 | ) | 12,114,200 | (33,774,686 | ) | |||||||||||||||
Net assets: |
||||||||||||||||||||||||
Beginning of year |
777,964,482 | 748,834,724 | 164,932,927 | 206,602,180 | 70,183,342 | 103,958,028 | ||||||||||||||||||
End of year |
$ | 975,081,164 | $ | 777,964,482 | $ | 150,143,062 | $ | 164,932,927 | $ | 82,297,542 | $ | 70,183,342 | ||||||||||||
Small Core | Small Growth | International Equity | ||||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
December 31, 2013 |
December 31, 2012 |
|||||||||||||||||||
From operations: |
||||||||||||||||||||||||
Net investment income (loss) |
$ | 2,337,203 | $ | 3,212,148 | $ | (309,418 | ) | $ | (159,293 | ) | $ | 8,015,375 | $ | 10,591,032 | ||||||||||
Net realized gain (loss) |
102,876,283 | 28,699,445 | 4,048,714 | 10,769,184 | 172,319,982 | 47,769,505 | ||||||||||||||||||
Net change in unrealized appreciation (depreciation) |
(14,167,804 | ) | 10,199,488 | 17,451,716 | (4,949,469 | ) | (101,698,516 | ) | 49,185,516 | |||||||||||||||
Net increase (decrease) in net assets resulting from operations |
91,045,682 | 42,111,081 | 21,191,012 | 5,660,422 | 78,636,841 | 107,546,053 | ||||||||||||||||||
From transactions in investors beneficial interests: |
||||||||||||||||||||||||
Contributions |
20,969,699 | 21,791,667 | 11,088,755 | 6,048,358 | 56,228,758 | 82,896,113 | ||||||||||||||||||
Withdrawals |
(74,769,828 | ) | (63,026,884 | ) | (17,515,184 | ) | (61,533,273 | ) | (137,192,742 | ) | (256,180,194 | ) | ||||||||||||
Net increase (decrease) in net assets resulting from transactions in investors beneficial interests |
(53,800,129 | ) | (41,235,217 | ) | (6,426,429 | ) | (55,484,915 | ) | (80,963,984 | ) | (173,284,081 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net increase (decrease) in net assets |
37,245,553 | 875,864 | 14,764,583 | (49,824,493 | ) | (2,327,143 | ) | (65,738,028 | ) | |||||||||||||||
Net assets: |
||||||||||||||||||||||||
Beginning of year |
296,936,051 | 296,060,187 | 58,299,798 | 108,124,291 | 614,432,457 | 680,170,485 | ||||||||||||||||||
End of year |
$ | 334,181,604 | $ | 296,936,051 | $ | 73,064,381 | $ | 58,299,798 | $ | 612,105,314 | $ | 614,432,457 |
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 110
FINANCIAL HIGHLIGHTS
For the years ended:
Money Market | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 986,862 | $ | 948,358 | $ | 995,629 | $ | 1,065,396 | $ | 1,132,907 | ||||||||||
Total return |
(0.07 | )% | (0.11 | )% | (0.04 | )% | 0.02 | % | 0.36 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.29 | % | 0.28 | % | 0.28 | % | 0.28 | % | 0.27 | % | ||||||||||
Before (waiver/reimbursement) |
0.29 | % | 0.28 | % | 0.28 | % | 0.28 | % | 0.27 | % | ||||||||||
Net investment income (loss) to average net assets |
(0.07 | )% | (0.11 | )% | (0.04 | )% | 0.02 | % | 0.37 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
High Quality Bond | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 399,858 | $ | 386,046 | $ | 458,228 | $ | 463,701 | $ | 477,088 | ||||||||||
Total return |
0.41 | % | 2.95 | % | 2.16 | % | 4.20 | % | 9.83 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.39 | % | 0.38 | % | 0.38 | % | 0.38 | % | 0.38 | % | ||||||||||
Before (waiver/reimbursement) |
0.39 | % | 0.38 | % | 0.38 | % | 0.38 | % | 0.38 | % | ||||||||||
Net investment income (loss) to average net assets |
1.81 | % | 2.10 | % | 2.43 | % | 2.99 | % | 3.75 | % | ||||||||||
Portfolio turnover rate |
77 | % | 68 | % | 84 | % | 87 | % | 104 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Inflation-Protected Securities | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 274,788 | $ | 341,136 | $ | 358,544 | $ | 328,010 | $ | 370,010 | ||||||||||
Total return |
(8.26 | )% | 7.06 | % | 12.33 | % | 6.23 | % | 10.22 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.40 | % | 0.40 | % | 0.40 | % | 0.38 | % | 0.40 | % | ||||||||||
Before (waiver/reimbursement) |
0.41 | % | 0.40 | % | 0.40 | % | 0.38 | % | 0.40 | % | ||||||||||
Net investment income (loss) to average net assets |
0.48 | % | 1.43 | % | 3.30 | % | 2.04 | % | 1.02 | % | ||||||||||
Portfolio turnover rate |
99 | % | 103 | % | 134 | % | 117 | % | 118 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Core Bond | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 1,336,211 | $ | 1,470,033 | $ | 1,588,591 | $ | 1,622,006 | $ | 1,749,531 | ||||||||||
Total return |
(0.96 | )% | 8.28 | % | 6.20 | % | 8.26 | % | 12.89 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | 0.38 | % | ||||||||||
Before (waiver/reimbursement) |
0.39 | % | 0.39 | % | 0.39 | % | 0.39 | % | 0.38 | % | ||||||||||
Net investment income (loss) to average net assets |
2.64 | % | 3.03 | % | 3.54 | % | 3.65 | % | 4.45 | % | ||||||||||
Portfolio turnover rate |
200 | % | 297 | % | 406 | % | 633 | % | 1,014 | %(A) |
(A) | Excludes investment securities received in kind. |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 111
FINANCIAL HIGHLIGHTS (continued)
For the years ended:
High Yield Bond | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 856,906 | $ | 819,993 | $ | 729,276 | $ | 709,083 | $ | 641,917 | ||||||||||
Total return |
7.48 | % | 15.14 | % | 4.93 | % | 15.81 | % | 57.21 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets(A) |
||||||||||||||||||||
After (waiver/reimbursement) |
0.59 | % | 0.59 | % | 0.59 | % | 0.59 | % | 0.59 | % | ||||||||||
Before (waiver/reimbursement) |
0.59 | % | 0.59 | % | 0.59 | % | 0.59 | % | 0.59 | % | ||||||||||
Net investment income (loss) to average net assets |
6.37 | % | 7.23 | % | 8.04 | % | 8.84 | % | 10.10 | % | ||||||||||
Portfolio turnover rate(B) |
51 | % | 102 | % | 81 | % | 98 | % | 98 | % |
(A) | Does not include expenses of the investment companies in which the portfolio invests. |
(B) | Does not include the portfolio activity of the investment companies in which the portfolio invests. |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Balanced | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 123,270 | $ | 109,602 | $ | 104,111 | $ | 116,337 | $ | 137,734 | ||||||||||
Total return |
18.33 | % | 13.47 | % | 3.60 | % | 13.91 | % | 23.45 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | 0.50 | % | ||||||||||
Before (waiver/reimbursement) |
0.63 | % | 0.61 | % | 0.62 | % | 0.59 | % | 0.55 | % | ||||||||||
Net investment income (loss) to average net assets |
1.44 | % | 1.82 | % | 2.26 | % | 2.42 | % | 3.01 | % | ||||||||||
Portfolio turnover rate |
123 | % | 150 | % | 245 | % | 211 | % | 167 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Large Value | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 924,277 | $ | 785,039 | $ | 877,766 | $ | 1,014,115 | $ | 1,263,463 | ||||||||||
Total return |
38.08 | % | 17.39 | % | 2.32 | % | 14.66 | % | 16.71 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.48 | % | 0.48 | % | 0.47 | % | 0.47 | % | 0.48 | % | ||||||||||
Before (waiver/reimbursement) |
0.48 | % | 0.48 | % | 0.47 | % | 0.47 | % | 0.48 | % | ||||||||||
Net investment income (loss) to average net assets |
1.69 | % | 2.08 | %(A) | 1.70 | % | 1.65 | % | 2.22 | % | ||||||||||
Portfolio turnover rate |
99 | % | 48 | % | 55 | % | 62 | % | 124 | %(B) |
(A) | Includes litigation proceeds received during the year that represented 0.15%. |
(B) | Excludes investment securities received in kind. |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Large Core | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 309,735 | $ | 244,984 | $ | 235,204 | $ | 255,995 | $ | 280,896 | ||||||||||
Total return |
37.28 | % | 17.30 | % | 3.51 | % | 11.79 | % | 23.36 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.64 | % | 0.64 | % | 0.63 | % | 0.63 | % | 0.62 | % | ||||||||||
Before (waiver/reimbursement) |
0.64 | % | 0.64 | % | 0.63 | % | 0.63 | % | 0.62 | % | ||||||||||
Net investment income (loss) to average net assets |
1.41 | % | 1.68 | % | 1.37 | % | 1.47 | % | 1.57 | % | ||||||||||
Portfolio turnover rate |
116 | % | 54 | % | 63 | % | 55 | % | 168 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 112
FINANCIAL HIGHLIGHTS (continued)
For the years ended:
Large Growth | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 942,018 | $ | 825,014 | $ | 1,016,307 | $ | 1,176,583 | $ | 1,341,520 | ||||||||||
Total return |
35.32 | % | 14.91 | % | (1.78 | )% | 16.62 | % | 35.56 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | 0.65 | % | ||||||||||
Before (waiver/reimbursement) |
0.66 | % | 0.66 | % | 0.65 | % | 0.66 | % | 0.65 | % | ||||||||||
Net investment income (loss) to average net assets |
0.57 | % | 0.75 | % | 0.34 | % | 0.56 | % | 0.97 | % | ||||||||||
Portfolio turnover rate |
49 | % | 53 | % | 53 | % | 119 | % | 102 | %(A) |
(A) | Excludes investment securities received in kind. |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Mid Value | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 975,081 | $ | 777,964 | $ | 748,835 | $ | 909,134 | $ | 808,661 | ||||||||||
Total return |
32.99 | % | 19.50 | % | (2.19 | )% | 21.29 | % | 32.53 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.70 | % | 0.70 | % | 0.70 | % | 0.69 | % | 0.70 | % | ||||||||||
Before (waiver/reimbursement) |
0.70 | % | 0.70 | % | 0.70 | % | 0.69 | % | 0.70 | % | ||||||||||
Net investment income (loss) to average net assets |
0.93 | % | 1.36 | % | 1.08 | % | 1.14 | % | 1.44 | % | ||||||||||
Portfolio turnover rate |
53 | % | 71 | % | 69 | % | 76 | % | 122 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Mid Growth | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 150,143 | $ | 164,933 | $ | 206,602 | $ | 269,733 | $ | 251,749 | ||||||||||
Total return |
30.35 | % | 13.93 | % | (6.90) | % | 29.27 | % | 25.24 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | 0.75 | % | ||||||||||
Before (waiver/reimbursement) |
0.77 | % | 0.76 | % | 0.75 | % | 0.75 | % | 0.76 | % | ||||||||||
Net investment income (loss) to average net assets |
() | %(A) | 0.10 | % | (0.33) | % | (0.36) | % | (0.23) | % | ||||||||||
Portfolio turnover rate |
234 | % | 178 | % | 135 | % | 199 | % | 214 | % |
(A) | Rounds to less than 0.01% or (0.01)%. |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Small Value | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 82,298 | $ | 70,183 | $ | 103,958 | $ | 134,427 | $ | 145,727 | ||||||||||
Total return |
34.10 | % | 16.11 | % | 1.35 | % | 23.12 | % | 19.64 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | 0.85 | % | ||||||||||
Before (waiver/reimbursement) |
0.88 | % | 0.88 | % | 0.87 | % | 0.87 | % | 0.88 | % | ||||||||||
Net investment income (loss) to average net assets |
0.57 | % | 1.41 | % | 0.63 | % | 0.84 | % | 1.24 | % | ||||||||||
Portfolio turnover rate |
16 | % | 15 | % | 16 | % | 121 | % | 103 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 113
FINANCIAL HIGHLIGHTS (continued)
For the years ended:
Small Core | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 334,182 | $ | 296,936 | $ | 296,060 | $ | 341,598 | $ | 340,044 | ||||||||||
Total return |
33.62 | % | 15.04 | % | (2.19 | )% | 29.89 | % | 27.64 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.84 | % | 0.84 | % | 0.84 | % | 0.85 | % | 0.85 | % | ||||||||||
Before (waiver/reimbursement) |
0.84 | % | 0.84 | % | 0.84 | % | 0.85 | % | 0.85 | % | ||||||||||
Net investment income (loss) to average net assets |
0.74 | % | 1.07 | % | 0.32 | % | 0.43 | % | 0.67 | % | ||||||||||
Portfolio turnover rate |
195 | % | 59 | % | 59 | % | 55 | % | 88 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
Small Growth | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 73,064 | $ | 58,300 | $ | 108,124 | $ | 142,731 | $ | 152,724 | ||||||||||
Total return |
37.97 | % | 1.30 | % | (6.45 | )% | 25.65 | % | 32.99 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.90 | % | ||||||||||
Before (waiver/reimbursement) |
0.93 | % | 0.94 | % | 0.94 | % | 0.93 | % | 0.93 | % | ||||||||||
Net investment income (loss) to average net assets |
(0.46 | )% | (0.20 | )% | (0.37 | )% | (0.41 | )% | (0.38 | )% | ||||||||||
Portfolio turnover rate |
72 | % | 209 | % | 120 | % | 99 | % | 104 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
International Equity | ||||||||||||||||||||
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
December 31, 2009 |
||||||||||||||||
Net assets end of year (000s) |
$ | 612,105 | $ | 614,432 | $ | 680,170 | $ | 893,260 | $ | 1,044,049 | ||||||||||
Total return |
13.92 | % | 17.35 | % | (13.51 | )% | 14.94 | % | 26.10 | % | ||||||||||
Ratio and supplemental data |
||||||||||||||||||||
Expenses to average net assets |
||||||||||||||||||||
After (waiver/reimbursement) |
0.85 | % | 0.82 | % | 0.82 | % | 0.81 | % | 0.82 | % | ||||||||||
Before (waiver/reimbursement) |
0.85 | % | 0.82 | % | 0.82 | % | 0.81 | % | 0.82 | % | ||||||||||
Net investment income (loss) to average net assets |
1.31 | % | 1.65 | % | 1.70 | % | 1.45 | % | 1.39 | % | ||||||||||
Portfolio turnover rate |
116 | % | 23 | % | 24 | % | 29 | % | 138 | % |
Note: Prior to January 1, 2010, the financial highlights were audited by another independent registered public accounting firm.
The notes to the financial statements are an integral part of this report.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 114
NOTES TO FINANCIAL STATEMENTS
At December 31, 2013
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Transamerica Partners Portfolios (the Series Portfolio) is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the 1940 Act), and was organized as a series trust under the laws of the State of New York. The Series Portfolio is composed of fifteen different series that are, in effect, separate investment funds: Transamerica Partners Money Market Portfolio (Money Market), Transamerica Partners High Quality Bond Portfolio (High Quality Bond), Transamerica Partners Inflation-Protected Securities Portfolio (Inflation-Protected Securities), Transamerica Partners Core Bond Portfolio (Core Bond), Transamerica Partners High Yield Bond Portfolio (High Yield Bond), Transamerica Partners Balanced Portfolio (Balanced), Transamerica Partners Large Value Portfolio (Large Value), Transamerica Partners Large Core Portfolio (Large Core), Transamerica Partners Large Growth Portfolio (Large Growth), Transamerica Partners Mid Value Portfolio (Mid Value), Transamerica Partners Mid Growth Portfolio (Mid Growth), Transamerica Partners Small Value Portfolio (Small Value), Transamerica Partners Small Core Portfolio (Small Core), Transamerica Partners Small Growth Portfolio (Small Growth), and Transamerica Partners International Equity Portfolio (International Equity) (each a Portfolio and collectively, the Portfolios). Each Portfolio issues shares of beneficial interest only in private placement transactions that do not involve a public offering within the meaning of Section 4(2) of the Securities Act of 1933, as amended (Securities Act). Only accredited investors, as defined in Regulation D under the Securities Act, may invest in the Portfolios. Accredited investors include investment companies, insurance company separate accounts, common or commingled trust funds, or other similar organizations or entities.
Transamerica Asset Management, Inc. (TAM) provides continuous and regular investment advisory services to the Portfolios. TAM acts as a manager of managers, providing advisory services that include, without limitation, the design and development of each Portfolio and its investment strategy and the ongoing review and evaluation of that investment strategy including recommending changes in strategy where it believes appropriate or advisable; the selection of one or more sub-advisers for each Portfolio employing a combination of quantitative and qualitative screens, research, analysis and due diligence; oversight and monitoring of sub-advisers and recommending changes to sub-advisers where it believes appropriate or advisable; recommending and implementing fund combinations and liquidations where it believes appropriate or advisable; regular supervision of the Portfolios investments; regular review of sub-adviser performance and holdings; ongoing trade oversight and analysis; regular monitoring to ensure adherence to investment process; risk management oversight and analysis; design, development, implementation and regular monitoring of the valuation of portfolio holdings; design, development, implementation and regular monitoring of the compliance process; review of proxies voted by sub-advisers; oversight of preparation, and review, of materials for meetings of the Portfolios Board of Trustees; oversight of preparation of prospectuses, shareholder reports and other disclosure materials and filings; and oversight of other service providers to the Portfolios, such as the custodian, the transfer agent, the administrator, the distributor, the Portfolios independent registered public accounting firm and legal counsel; supervision of the performance of recordkeeping and shareholder relations for the Portfolios; and ongoing cash management services. TAM uses a variety of quantitative and qualitative tools to carry out its investment advisory services. Where TAM employs sub-advisers, the sub-advisers carry out and effectuate the investment strategy designed for the Portfolios by TAM and are responsible, subject to TAMs and the Board of Trustees oversight, for the day-to-day management of the Portfolios and for making decisions to buy, hold or sell a particular security.
Transamerica Fund Services, Inc. (TFS) provides supervisory and administrative services to each Portfolio. TFSs supervisory and administrative services include performing certain administrative services for the Portfolios and supervising and overseeing the administrative, clerical, recordkeeping and bookkeeping services provided for the Portfolios by State Street Bank and Trust Company (State Street), to whom TFS has outsourced the provision of certain services as described below; to the extent agreed upon by TFS and the Portfolios; from time to time, monitoring and verifying the custodians daily calculation of net asset value; shareholder relations functions; compliance services; valuation services; assisting in due diligence and in oversight and monitoring of certain activities of sub-advisers and certain aspects of each Portfolios investments; recommending and implementing fund combinations and liquidations; oversight of the preparation and filing, and review, of all returns and reports, in connection with federal, state and local taxes; oversight and review of regulatory reporting; supervising and coordinating the Portfolios custodian and their dividend disbursing agent and monitoring their services to the Portfolios; assisting the Portfolios in preparing reports to shareholders; preparation of agendas and supporting documents for and minutes of meetings of the Board of Trustees and committees of Trustees; and preparation of regular communications with the Trustees; and providing personnel and office space, telephones and other office equipment as necessary in order for TFS to perform supervisory and administrative services to the Portfolios. State Street performs back office services to support TFS, including furnishing financial and performance information about the Portfolios for inclusion in regulatory filings and Trustees and shareholder reports; preparing drafts of regulatory filings, Trustees materials, tax returns, expenses and budgeting; tax compliance testing; and maintaining books and records. TFS pays all expenses it incurs in connection with providing these services in the Amended and Restated Services Agreement with the exception of the costs of certain services specifically assumed by the Portfolios, as numerated within the Statements of Operations.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 115
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 1. (continued)
In the normal course of business, the Portfolios enter into contracts that contain a variety of representations that provide general indemnifications. The Portfolios maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Portfolios and/or its affiliates that have not yet occurred. However, based on experience, the Portfolios expect the risk of loss to be remote.
In preparing the Portfolios financial statements in accordance with accounting principles generally accepted in the United States of America (GAAP), estimates or assumptions (which could differ from actual results) may be used that affect reported amounts and disclosures. The following is a summary of significant accounting policies followed by the Portfolios.
Securities lending: Securities are lent to qualified financial institutions and brokers. State Street serves as securities lending agent to the Portfolios pursuant to a Securities Lending Agreement. The lending of securities exposes the Portfolios to risks such as the following: (i) the borrowers may fail to return the loaned securities; (ii) the borrowers may not be able to provide additional collateral; (iii) the Portfolios may experience delays in recovery of the loaned securities or delays in access to collateral; or (iv) the Portfolios may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge cash collateral with a value of at least 102% of the current value of the loaned securities for securities traded on U.S. exchanges and a value of at least 105% for all other securities loaned. The lending agent has agreed to indemnify the Portfolios in the case of default of any securities borrower.
Cash collateral received is invested in the State Street Navigator Securities Lending Trust-Prime Portfolio (Navigator), a money market mutual fund registered under the 1940 Act. The TAM family of mutual funds is a significant shareholder of the Navigator as of December 31, 2013. No individual portfolio has a significant holding in the Navigator.
By lending securities, a Portfolio seeks to increase its net investment income through the receipt of interest and fees.
Such income is reflected separately in the Statements of Operations. Income from loaned securities in the Statements of Operations is net of fees and rebates earned by the lending agent for its services. The value of loaned securities and related collateral outstanding at December 31, 2013 are shown on a gross basis in the Schedules of Investments and Statements of Assets and Liabilities.
Repurchase agreements: In a repurchase agreement, a Portfolio purchases a security and simultaneously commits to resell that security to the seller at an agreed-upon price on an agreed-upon date. Securities purchased subject to a repurchase agreement are held at the Portfolios custodian, or designated sub-custodian related to tri-party repurchase agreements, and, pursuant to the terms of the repurchase agreement, must be collateralized by securities with an aggregate market value greater than or equal to 100% of the resale price. The Portfolios will bear the risk of value fluctuations until the securities can be sold and may encounter delays and incur costs in liquidating the securities. In the event of bankruptcy or insolvency of the seller, delays and costs may be incurred.
The open repurchase agreements and related collateral at December 31, 2013 are shown on a gross basis in the Schedules of Investments.
Foreign currency denominated investments: The accounting records of the Portfolios are maintained in U.S. dollars. Securities and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars based on the closing exchange rate each day. The cost of foreign securities purchased and any realized gains or losses are translated at the prevailing exchange rates in effect on the date of the respective transaction.
Net foreign currency gains and losses resulting from changes in exchange rates include: 1) foreign currency fluctuations between trade date and settlement date of investment security transactions; 2) gains and losses on forward foreign currency contracts; and 3) the difference between the receivable amounts of interest and dividends recorded in the accounting records in U.S. dollars and the amounts actually received.
Foreign currency denominated assets may involve risks not typically associated with domestic transactions. These risks include revaluation of currencies, adverse fluctuations in foreign currency values, and possible adverse political, social, and economic developments, including those particular to a specific industry, country or region.
Foreign taxes: The Portfolios may be subjected to taxes imposed by the countries in which they invest, with respect to their investments in issuers existing or operating in such countries. The Portfolios may also be subject to foreign taxes on income, gains on investments, or currency repatriation, a portion of which may be recoverable. The Portfolios accrue such taxes and recoveries as applicable when the related income or capital gains are earned or unrealized, and based upon the current interpretation of tax rules and regulations that exist in the markets in which the Portfolios invest. Some countries require governmental approval for the repatriation of investment income, capital, or the proceeds of sales earned by foreign investors. In addition, if there is deterioration in a countrys balance of payments or for other reasons, a country may impose temporary restrictions of foreign capital remittances abroad.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 116
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 1. (continued)
Cash overdraft: Throughout the year, the Portfolios may have cash overdraft balances. A fee is incurred on these overdrafts, calculated by multiplying the overdraft by a rate based on the federal funds rate. Payables, if any, are reflected as Due to Custodian in the Statements of Assets and Liabilities. Expenses from cash overdrafts are included in Other in the Statements of Operations.
Forward foreign currency contracts: The Portfolios are subject to foreign currency exchange rate risk exposure in the normal course of pursuing their investment objectives. The Portfolios, with the exception of Money Market, enter into forward foreign currency contracts to hedge against exchange rate risk arising from investments in securities denominated in foreign currencies. Forward foreign currency contracts are marked to market daily, with the change in value recorded as an unrealized gain or loss. When the contracts are settled, a realized gain or loss is incurred. Risks may arise from changes in market value of the underlying currencies and from the possible inability of counterparties to meet the terms of their contracts.
Open forward foreign currency contracts at December 31, 2013 are listed in the Schedules of Investments.
Option contracts: The Portfolios are subject to equity price risk, interest rate risk, and foreign currency exchange rate risk in the normal course of pursuing their investment objectives. The Portfolios, with the exception of Money Market, enter into option contracts to manage exposure to various market fluctuations. Portfolios purchase or write put and call options on U.S. securities, indices, futures, swaps (swaptions), commodities, and currency transactions. Options are valued at the average of the bid and ask (Mean Quote) established each day at the close of the board of trade or exchange on which they are traded. Options are marked-to-market daily to reflect the current value of the option. The primary risks associated with options are an imperfect correlation between the change in value of the securities held and the prices of the option contracts, the possibility of an illiquid market, and an inability of the counterparty to meet the contract terms.
Purchased options: Purchasing call options tends to increase exposure to the underlying instrument. Purchasing put options tends to decrease exposure to the underlying instrument. The Portfolios pay premiums, which are included in the Statements of Assets and Liabilities as an investment and subsequently marked-to-market to reflect the current value of the option. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid from options which expire are treated as realized losses. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying U.S. security, index, future, swaption, commodity, or currency transaction to determine the realized gain or loss.
Written options: Writing call options tends to decrease exposure to the underlying investment. Writing put options tends to increase exposure to the underlying investment. When a Portfolio writes a covered call or put option, the premium received is recorded as a liability in the Statements of Assets and Liabilities and is subsequently marked-to-market to reflect the current market value of the option written. Premiums received from written options which expire unexercised are treated as realized gains. Premiums received from writing options/swaptions which are exercised or closed are added to the proceeds or offset against amounts paid on the underlying U.S. security, index, future, swaption, commodity, or currency transaction to determine the realized gain or loss. In writing an option, a Portfolio bears the market risk of an unfavorable change in the price of the security or currency underlying the written option. Exercise of an option written by a Portfolio could result in the Portfolio selling or buying a security or currency at a price different from the current market value.
Inflation-capped options: A Portfolio purchases or writes inflation-capped options to enhance returns or for hedging opportunities. The purpose of purchasing inflation-capped options is to protect a Portfolio from inflation erosion above a certain rate on a given notional exposure. A floor can be used to give downside protection to the investments in inflation-linked products.
Foreign currency options: The Portfolios may write or purchase foreign currency options. Purchasing foreign currency options gives the Portfolios the right, but not the obligation to buy or sell the currency and will specify the amount of currency and a rate of exchange that may be exercised by a specified date. These options may be used as a short or long hedge against possible variations in foreign exchange rates or to gain exposure to foreign currencies.
The underlying face amounts of open option and swaption contracts at December 31, 2013 are listed in the Schedules of Investments.
Transactions in written options were as follows:
Inflation-Protected Securities | Premiums | Contracts | ||||||
Balance at December 31, 2012 |
$ | 8,848 | 44 | |||||
Sales |
587,388 | 2,222 | ||||||
Closing Buys |
(229,227 | ) | (389 | ) | ||||
Expirations |
(255,292 | ) | (1,476 | ) | ||||
Exercised |
(96,544 | ) | (194 | ) | ||||
|
|
|
|
|||||
Balance at December 31, 2013 |
$ | 15,173 | 207 |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 117
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 1. (continued)
Core Bond | Premiums | Contracts | ||||||
Balance at December 31, 2012 |
$ | | | |||||
Sales |
2,010,139 | 6,200 | ||||||
Closing Buys |
(1,961,707 | ) | (5,537 | ) | ||||
Expirations |
| | ||||||
Exercised |
| | ||||||
|
|
|
|
|||||
Balance at December 31, 2013 |
$ | 48,432 | 663 |
Balanced | Premiums | Contracts | ||||||
Balance at December 31, 2012 |
$ | | | |||||
Sales |
65,196 | 205 | ||||||
Closing Buys |
(63,516 | ) | (182 | ) | ||||
Expirations |
| | ||||||
Exercised |
| | ||||||
|
|
|
|
|||||
Balance at December 31, 2013 |
$ | 1,680 | 23 |
Transactions in written swaptions, inflation cap and foreign exchange options were as follows:
Inflation-Protected Securities | Premiums | Notional Amount |
||||||
Balance at December 31, 2012 |
$ | 399,123 | $ | 38,505,000 | ||||
Sales |
740,404 | 104,110,000 | ||||||
Closing Buys |
(665,649 | ) | (96,400,000 | ) | ||||
Expirations |
(156,595 | ) | (16,400,000 | ) | ||||
Exercised |
(27,194 | ) | (3,400,000 | ) | ||||
|
|
|
|
|||||
Balance at December 31, 2013 |
$ | 290,089 | $ | 26,415,000 |
Inflation-Protected Securities | Premiums | Notional Amount |
||||||
Balance at December 31, 2012 |
$ | | AUD | | ||||
Sales |
34,576 | 3,400,000 | ||||||
Closing Buys |
| | ||||||
Expirations |
(34,576 | ) | (3,400,000 | ) | ||||
Exercised |
| | ||||||
|
|
|
|
|||||
Balance at December 31, 2013 |
$ | | AUD | |
Inflation-Protected Securities | Premiums | Notional Amount |
||||||
Balance at December 31, 2012 |
$ | 224,437 | EUR | 4,270,000 | ||||
Sales |
171,842 | 16,965,000 | ||||||
Closing Buys |
| | ||||||
Expirations |
(113,391 | ) | (12,645,000 | ) | ||||
Exercised |
| | ||||||
|
|
|
|
|||||
Balance at December 31, 2013 |
$ | 282,888 | EUR | 8,590,000 |
Core Bond | Premiums | Notional Amount |
||||||
Balance at December 31, 2012 |
$ | 229,600 | $ | 12,300,000 | ||||
Sales |
| | ||||||
Closing Buys |
(229,600 | ) | (12,300,000 | ) | ||||
Expirations |
| | ||||||
Exercised |
| | ||||||
|
|
|
|
|||||
Balance at December 31, 2013 |
$ | | $ | |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 118
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 1. (continued)
Core Bond | Premiums | Notional Amount |
||||||
Balance at December 31, 2012 |
$ | | JPY | | ||||
Sales |
91,923 | 3,560,000,000 | ||||||
Closing Buys |
| | ||||||
Expirations |
| | ||||||
Exercised |
| | ||||||
|
|
|
|
|||||
Balance at December 31, 2013 |
$ | 91,923 | JPY | 3,560,000,000 |
Futures contracts: The Portfolios are subject to equity and commodity risk, interest rate risks, and foreign currency exchange rate risk in the normal course of pursuing their investment objectives. The Portfolios, with the exception of Money Market, use futures contracts to gain exposure to, or hedge against, changes in the value of equities and commodities, interest rates, or foreign currencies. A futures contract represents a commitment for the future purchase or sale of an asset at a specified price on a specified date. Upon entering into such contracts, the Portfolios are required to deposit with the broker, either in cash or in securities, an initial margin in an amount equal to a certain percentage of the contract amount. Subsequent payments (variation margin) are paid or received by the Portfolios each day, depending on the daily fluctuations in the value of the contract, and are recorded for financial statement purposes as unrealized gains or losses by the Portfolios. Upon entering into such contracts, the Portfolios bear the risk of equity and commodity prices, interest rates, or exchange rates moving unexpectedly, in which case, the Portfolios may not achieve the anticipated benefits of the futures contracts and may realize losses. With futures, there is minimal counterparty credit risk to the Portfolios since futures are exchange traded and the exchanges clearinghouse, as counterparty to all exchange traded futures, guarantees the futures against default.
The open futures contracts at December 31, 2013 are listed in the Schedules of Investments.
Swap agreements: Swap agreements are bilaterally negotiated agreements between a Portfolio and a counterparty to exchange or swap investments, cash flows, assets, foreign currencies, or market-linked returns at specified, future intervals. Swap agreements are privately negotiated in the over-the-counter (OTC) market and may be executed in multilateral or other trade facility platforms, such as a registered exchange (centrally cleared swaps). Centrally cleared swaps listed or traded on a multilateral platform, are valued at the daily settlement price determined by the corresponding exchange. For centrally cleared credit default swaps the clearing exchange requires all members to provide applicable levels across complete term levels. Centrally cleared interest rate swaps are valued using a pricing model that references the underlying rates including but not limited to the overnight index swap rate and London Interbank Offered Rate (LIBOR) forward rate to calculate the daily settlement price. The Portfolios enter into credit default, cross-currency, interest rate, total return, variance, and other forms of swap agreements to manage exposure to credit, currency, interest rate, and commodity risks. In connection with these agreements, securities or cash may be identified as collateral or margin in accordance with the terms of the respective swap agreements to provide assets of value and recourse in the event of default or bankruptcy/insolvency. Swaps are marked to market daily based upon values from third party vendors, which may include a registered exchange, or quotations from market makers to the extent available and the change in value, if any, is recorded as an unrealized gain or loss in the Statements of Assets and Liabilities.
For OTC swap agreements, payments received or made at the beginning of the measurement period are reflected as such in the Statements of Assets and Liabilities and represent payments made or received upon entering into the swap agreements to compensate for differences between the stated terms of the swap agreement and prevailing market conditions (credit spreads, currency exchange rates, interest rates, and other relevant factors). These upfront payments are recorded as realized gains or losses in the Statements of Operations upon termination or maturity of the swap. A liquidation payment received or made at the termination of the swap is recorded as realized gain or loss in the Statements of Operations. Net periodic payments received or paid by the Portfolios are included as part of realized gains or losses in the Statements of Operations.
Specific risks and accounting related to each type of swap agreement are identified and described in the following paragraphs:
Credit default swap agreements: The Portfolios are subject to credit risk in the normal course of pursuing their investment objectives. The Portfolios enter into credit default swaps to manage their exposure to the market or certain sectors of the market to reduce their risk exposure to defaults of corporate and sovereign issuers, or to create exposure to corporate or sovereign issuers to which they are not otherwise exposed. Credit default swaps involve the exchange of a fixed rate premium for protection against the loss in value of an underlying security in the event of a defined credit event, such as payment default or bankruptcy (buy protection).
Under a credit default swap, one party acts as a guarantor by receiving the fixed periodic payment in exchange for the commitment to purchase the underlying security at par if the defined credit event occurs (sell protection). The Portfolios maximum risk of loss from counterparty risk, either as the protection seller or as the protection buyer, is the notional amount of the contract. This risk is mitigated by having a master netting arrangement between the Portfolios and the counterparty, and by the posting of collateral.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 119
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 1. (continued)
Certain Portfolios sell credit default swaps, which exposes them to risk of loss from credit risk related events specified in the contracts. Although contract-specific, credit events are generally defined as bankruptcy, failure to pay, restructuring, obligation acceleration, obligation default, or repudiation/moratorium. The aggregate fair value of the credit default swaps is disclosed in the Schedules of Investments . The aggregate fair value of assets posted as collateral, net of assets received as collateral, for these swaps is included in the footnotes to the Schedules of Investments . If a defined credit event had occurred during the period, the swaps credit-risk-related contingent features would have been triggered, and the Portfolios would have been required to pay the notional amounts for the credit default swaps with a sell protection less the value of the contracts related reference obligations.
Interest rate swap agreements: The Portfolios are subject to interest rate risk exposure in the normal course of pursuing their investment objectives. Because a Portfolio holds fixed rate bonds, the value of these bonds may decrease if interest rates rise. To help hedge against this risk, the Portfolios enter into interest rate swap agreements. Interest rate swaps are agreements between two parties to exchange cash flows based on a notional principal amount. Portfolios with interest rate agreements can elect to pay a fixed rate and receive a floating rate, or receive a fixed rate and pay a floating rate, on a notional principal amount. The risks of interest rate swaps include changes in market conditions which will affect the value of the contract or the cash flows, and the possible inability of the counterparty to fulfill its obligations under the agreement. The Portfolios maximum risk of loss from counterparty credit risk is the discounted net value of the cash flows to be received from/paid to the counterparties over the contracts remaining lives, to the extent that that amount is positive. This risk is mitigated by having a master netting arrangement between the Portfolios and the counterparty, and by the posting of collateral.
The open centrally cleared swap agreements at December 31, 2013 are listed in the Schedules of Investments. The centrally cleared swap agreements are marked to market daily and an appropriate payable or receivable for the change in value (variation margin) is recorded by the Portfolio, if applicable, and is included in the Statements of Assets and Liabilities.
The open OTC swap agreements at December 31, 2013 are listed in the Schedule of Investments. The premiums paid (received), as applicable, are included in the Statements of Assets and Liabilities along with the unrealized appreciation (depreciation).
Loan participations and assignments: The Portfolios may invest in direct debt instruments which are interests in amounts owed to lenders or lending syndicates by corporate, governmental, or other borrowers, either in the form of participations at the time the loan is originated (Participations) or buying an interest in the loan in the secondary market from a financial institution or institutional investor (Assignments). Participations and Assignments in commercial loans may be secured or unsecured. These investments may include standby financing commitments, including revolving credit facilities that obligate the Portfolios to supply additional cash to the borrowers on demand. Loan Participations and Assignments involve risks of insolvency of the lending banks or other financial intermediaries. As such, the Portfolios assume the credit risks associated with the corporate borrowers and may assume the credit risks associated with the interposed banks or other financial intermediaries.
The Portfolios may be contractually obligated to receive approval from the agent banks and/or borrowers prior to the sale of these investments. The Portfolios that participate in such syndications, or that can buy a portion of the loans, become part lenders. Loans are often administered by agent banks acting as agents for all holders.
The agent banks administer the terms of the loans, as specified in the loan agreements. In addition, the agent banks are normally responsible for the collection of principal and interest payments from the corporate borrowers and the apportionment of these payments to the credit of all institutions that are parties to the loan agreements. Unless the Portfolios have direct recourse against the corporate borrowers under the terms of the loans or other indebtedness, the Portfolios may have to rely on the agent banks or other financial intermediaries to apply appropriate credit remedies against corporate borrowers.
The Portfolios held no unsecured loan participations at December 31, 2013.
Open loan participations and assignments at December 31, 2013 are included in the Schedules of Investments.
To be announced (TBA) commitments: TBA commitments are entered into to purchase or sell securities for a fixed price at a future date, typically not to exceed 45 days. They are considered securities in themselves, and involve a risk of loss if the value of the security to be purchased declines, or the value of the security sold increases, prior to settlement date, in addition to the risk of decline in the value of the Portfolios other assets. Unsettled TBA commitments are valued at the current value of the underlying securities, according to the procedures described under Security Valuations.
Open balances, if any, are included in the payable or receivable for investments purchased or sold in the Statements of Assets and Liabilities.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 120
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 1. (continued)
Structured notes: Certain Portfolios invest in structured notes. A structured debt instrument is a hybrid debt security that has an embedded derivative. This type of instrument is used to manage cash flows from the debt security. Investing in structured notes involves the credit risk of the issuer and the normal risks of price changes in response to changes in interest rates. Structured notes may be less liquid than other types of securities and more volatile than their underlying reference instruments. All structured notes are listed within the Schedules of Investments.
When-Issued, forward delivery securities and delayed delivery settlements: The Portfolios may purchase or sell securities on a when-issued, forward (delayed) delivery basis or delayed settlement. When-issued and forward delivery transactions are made conditionally because a security, although authorized, has not yet been issued in the market. Settlement of such transactions normally occurs within a month or more after the purchase or sale commitment is made. The Portfolios engage in when-issued transactions to obtain an advantageous price and yield at the time of the transaction. The Portfolios engage in when-issued and forward delivery transactions for the purpose of acquiring securities, but may enter into a separate agreement to sell the securities before the settlement date. Since the value of securities purchased may fluctuate prior to settlement, the Portfolios may be required to pay more at settlement than the security is worth. In addition, the Portfolios are not entitled to any of the interest earned prior to settlement.
Delayed delivery transactions involve a commitment by the Portfolios to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed-delivery transactions are outstanding, the Portfolios will segregate with its custodian either cash, U.S. Government securities, or other liquid assets at least equal to the value or purchase commitments until payment is made. When purchasing a security on a delayed delivery basis, the Portfolios assume the rights and risks of ownership of the security, including the risk of price and yield fluctuations. These transactions also involve a risk to the Portfolios if the other party to the transaction defaults on its obligation to make payment or delivery, and the Portfolios are delayed or prevented from completing the transaction. The Portfolios may dispose of or renegotiate a delayed delivery transaction after it is entered into, which may result in a realized gain or loss. When the Portfolios sell a security on a delayed delivery basis, the Portfolios do not participate in future gains and losses on the security.
Treasury inflation-protected securities (TIPS): Certain Portfolios invest in TIPS. TIPS are fixed income securities whose principal value is periodically adjusted according to the rate of inflation/deflation. If the index measuring inflation/deflation rises or falls, the principal value of TIPS will be adjusted upward or downward, and consequently the interest payable on these securities (calculated with respect to a larger or smaller principal amount) will be increased or reduced, respectively. Any upward or downward adjustment in the principal amount of a TIPS will be included as interest income in the Statements of Operations, even though investors do not receive their principal until maturity. Repayment of the original bond principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-indexed bonds. For bonds that do not provide a similar guarantee, the adjusted principal value of the bond repaid at maturity may be less than the original principal.
The adjustments to principal due to inflation/deflation are reflected as increases/decreases to Interest income in the Statements of Operations with a corresponding adjustment to cost.
Payment in-kind securities (PIKs): PIKs give the issuer the option of making interest payments in either cash or additional debt securities at each interest payment date. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the accrued interest (referred to as a dirty price) and require a pro-rata adjustment from unrealized appreciation or depreciation on investments to interest receivable on the Statements of Assets and Liabilities.
The PIKs at December 31, 2013 are listed in the Schedules of Investments.
Restricted and illiquid securities: The Portfolios may invest in unregulated restricted securities. Restricted and illiquid securities are subject to legal or contractual restrictions on resale or are illiquid. Restricted securities generally may be resold in transactions exempt from registration under the Securities Act of 1933. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. Disposal of these securities may involve time-consuming negotiations and expense, and prompt sale at the current valuation may be difficult.
The restricted and illiquid securities at December 31, 2013 are listed in the Schedules of Investments.
Commission recapture: The sub-adviser, to the extent consistent with the best execution and usual commission rate policies and practices, has elected to place security transactions of the Portfolios with broker/dealers with which other funds or portfolios advised by TAM has established a Commission Recapture Program. A Commission Recapture Program is any arrangement under which a broker/dealer applies a portion of the commissions received by such broker/dealer on the security transactions to the Portfolios. In no event will
Transamerica Partners Portfolios | Annual Report 2013 |
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NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 1. (continued)
commissions paid by the Portfolios be used to pay expenses that would otherwise be borne by any other funds or portfolios advised by TAM, or by any other party.
Commissions recaptured for the year ended December 31, 2013, are included in net realized gain (loss) in the Statements of Operations and are summarized as follows:
Portfolio Name | Commissions | |||
Large Growth |
$ | 30,115 | ||
Mid Value |
160,057 | |||
Mid Growth |
18,530 | |||
Small Value |
318 | |||
Small Core |
44,658 | |||
Small Growth |
3,896 | |||
International Equity |
7,952 |
Portfolios not listed in the above table did not have any commissions recaptured during the year ended December 31, 2013.
Security transactions and investment income: Security transactions are recorded on the trade date. Security gains and losses are calculated on the specific identification basis. Dividend income, if any, is recorded on the ex-dividend date or, in the case of foreign securities, as soon as the Portfolios are informed of the ex-dividend dates, net of foreign taxes. Interest income, including accretion of discounts and amortization of premiums, is recorded on the accrual basis commencing on the settlement date.
Real estate investment trusts (REITs): Dividend income related to a REIT is recorded at managements estimate of the income included in distributions from the REIT investments. Distributions received in excess of the estimated amount are recorded as a reduction of the cost of investments. The actual amounts of income, return of capital, and capital gains are only determined by each REIT after the fiscal year end and may differ from the estimated amounts.
There are certain additional risks involved in investing in REITs. These include, but are not limited to, economic conditions, changes in zoning laws, real estate values, property taxes, and interest rates.
NOTE 2. SECURITY VALUATIONS
All investments in securities are recorded at their estimated fair value. The Portfolios value their investments at the close of the New York Stock Exchange (NYSE), normally 4:00 p.m. Eastern Time, each day the NYSE is open for business. The Portfolios utilize various methods to measure the fair value of their investments on a recurring basis.
GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three Levels of inputs of the fair value hierarchy are defined as follows:
Level 1Unadjusted quoted prices in active markets for identical securities.
Level 2Inputs, other than quoted prices included in Level 1, that are observable, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates, and similar data.
Level 3Unobservable inputs, which may include TAMs internal valuation committees (the Valuation Committee) own assumptions in determining the fair value of investments. Factors considered in making this determination may include, but are not limited to, information obtained by contacting the sub-adviser, issuer, analysts, or the appropriate stock exchange (for exchange-traded securities), analysis of the issuers financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.
The Portfolios Board of Trustees has delegated the valuation functions on a day-to-day basis to TAM, subject to board oversight. TAM has formed the Valuation Committee to monitor and implement the fair valuation policies and procedures as approved by the Board of Trustees. These policies and procedures are reviewed at least annually by the Board of Trustees. The Valuation Committee, among other tasks, monitors for when market quotations are not readily available or are unreliable and determines in good faith the fair value of the portfolio investments. For instances in which daily market quotes are not readily available, securities may be valued, pursuant to
Transamerica Partners Portfolios | Annual Report 2013 |
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NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 2. (continued)
procedures adopted by the Board of Trustees, with reference to other instruments or indices. Depending on the relative significance of valuation inputs, these instruments may be classified in either Level 2 or Level 3 of the fair value hierarchy.
The Valuation Committee may employ a market-based approach which may use related or comparable assets or liabilities, recent transactions, market multiples, book values, and other relevant information for the security to determine the fair value of the security. An income-based valuation approach may also be used in which the anticipated future cash flows of the security are discounted to calculate fair value. Discounts may also be applied due to the nature or duration of any restrictions on the disposition of the securities. When the Portfolios use fair value methods that rely on significant unobservable inputs to determine a securitys value, the Valuation Committee will choose the method that is believed to accurately reflect fair value. These securities are categorized in Level 3 of the fair value hierarchy. The Valuation Committee reviews fair value measurements on a regular and ad hoc basis and may, as deemed appropriate, update the security valuations as well as the fair valuation guidelines.
The availability of observable inputs may vary from security to security and is affected by a wide variety of factors, including, but not limited to, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is generally greatest for instruments categorized in Level 3. Due to the inherent uncertainty of valuation, the Valuation Committees determination of values may differ significantly from values that would have been realized had a ready market for investments existed, and the differences could be material. The Valuation Committee employs various methods for calibrating these valuation approaches, including a regular review of valuation methodologies, key inputs and assumptions, transactional back-testing, and reviews of any market related activity.
The inputs used to measure fair value may fall into different Levels of the fair value hierarchy. In such cases, for disclosure purposes, the Level in the fair value hierarchy that is assigned to the fair value measurement of a security is determined based on the lowest Level input that is significant to the fair value measurement in its entirety.
For assets and liabilities for which significant unobservable inputs (Level 3), GAAP requires a reconciliation of the beginning to the ending balances for reported market values that presents changes attributed to the total realized and unrealized gains or losses, purchases and sales, and transfers in or out of the Level 3 category during the period. The Level 3 reconciliation, if any, is disclosed in the Valuation Summary of each respective Portfolios Schedule of Investments.
Fair value measurements: Descriptions of the valuation techniques applied to the Portfolios major categories of assets and liabilities measured at fair value on a recurring basis are as follows:
Investment companies: Investment companies are valued at the net asset value (NAV) of the underlying portfolios. These securities are actively traded and no valuation adjustments are applied. Exchange-Traded Funds are stated at the last reported sale price or closing price on the day of valuation taken from the primary exchange where the security is principally traded. They are categorized in Level 1 of the fair value hierarchy. Investments in privately held investment funds with significant restrictions on redemptions where the inputs of NAVs are unobservable will be valued based upon the NAVs of such investments and are categorized in Level 3 of the fair value hierarchy.
Equity securities (common and preferred stocks): Securities are stated at the last reported sales price or closing price on the day of valuation taken from the primary exchange where the security is principally traded. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized in Level 1 of the fair value hierarchy.
Foreign securities, in which the primary trading market closes at the same time or after the NYSE, are valued based on quotations from the primary market in which they are traded and are categorized in Level 1. Because many foreign securities markets and exchanges close prior to the close of the NYSE, closing prices for foreign securities in those markets or on those exchanges do not reflect the events that occur after that close. Certain foreign securities may be fair valued using a pricing service that considers the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments such as American Depositary Receipts, financial futures, Exchange Traded Funds, and the movement of the certain indices of securities based on a statistical analysis of their historical relationship; such valuations generally are categorized in Level 2.
Preferred stock and other equities traded on inactive markets or valued by reference to similar instruments are also generally categorized in Level 2 or Level 3 if inputs are unobservable.
Transamerica Partners Portfolios | Annual Report 2013 |
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NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 2. (continued)
Securities lending collateral: Securities lending collateral is invested in a money market fund which is valued at the net asset value of the underlying securities and no valuation adjustments are applied. It is categorized in Level 1 of the fair value hierarchy.
Repurchase agreements: Repurchase agreements are traded on inactive markets or valued by reference to similar instruments and are generally categorized in Level 2.
Corporate bonds: The fair value of corporate bonds is estimated using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads, fundamental data relating to the issuer, and credit default swap spreads adjusted for any basis difference between cash and derivative instruments. While most corporate bonds are categorized in Level 2 of the fair value hierarchy, in instances where lower relative weight is placed on transaction prices, quotations, or similar observable inputs, they are categorized in Level 3.
Asset-backed securities: The fair value of asset-backed securities is estimated based on models that consider the estimated cash flows of each tranche of the entity, establish a benchmark yield, and develop an estimated tranche specific spread to the benchmark yield based on the unique attributes of the tranche. To the extent the inputs are observable and timely, the values would generally be categorized in Level 2 of the fair value hierarchy; otherwise they would be categorized in Level 3.
Short-term notes: Short-term notes are valued using amortized cost, which approximates fair value. To the extent the inputs are observable and timely, the values would be generally categorized in Level 2 of the fair value hierarchy; otherwise they would be categorized in Level 3.
Government securities: Government securities are normally valued using a model that incorporates market observable data such as reported sales of similar securities, broker quotes, yields, bids, offers, and reference data. Certain securities are valued by principally using dealer quotations. Government securities generally are categorized in Level 2 of the fair value hierarchy, or Level 3 if inputs are unobservable.
U.S. government agency securities: U.S. government agency securities are comprised of two main categories consisting of agency issued debt and mortgage passthroughs. Generally, agency issued debt securities are valued in a manner similar to U.S. government securities. Mortgage passthroughs include TBA securities and mortgage passthrough certificates. Generally, TBA securities and mortgage passthroughs are valued using dealer quotations. Depending on market activity levels and whether quotations or other observable data are used, these securities are typically categorized in Level 2 of the fair value hierarchy; otherwise they would be categorized in Level 3.
Restricted securities (equity and debt): Restricted securities for which quotations are not readily available are valued at fair value as determined in good faith by the Valuation Committee under the supervision of the Portfolios Board of Trustees. Restricted securities issued by publicly traded companies are generally valued at a discount to similar publicly traded securities. Restricted securities issued by nonpublic entities may be valued by reference to comparable public entities and/or fundamental data relating to the issuer. Depending on the relative significance of observable valuation inputs, these instruments may be classified in either Level 2 or Level 3 of the fair value hierarchy.
Derivative instruments: Listed derivatives that are actively traded are valued based on quoted prices from the exchange and are categorized in Level 1 of the fair value hierarchy. OTC derivative contracts include forward, swap, swaption, and option contracts related to interest rates, foreign currencies, credit standing of reference entities, equity prices, or commodity prices. Depending on the product and the terms of the transaction, the fair value of the OTC derivative products are modeled taking into account the counterparties creditworthiness and using a series of techniques, including simulation models. Many pricing models do not entail material subjectivity because the methodologies employed do not necessitate significant judgments and the pricing inputs are observed from actively quoted markets, as is the case of interest rate swap and option contracts. A substantial majority of OTC derivative products valued by the Portfolios using pricing models fall into this category and are categorized within Level 2 of the fair value hierarchy or Level 3 if inputs are unobservable.
The hierarchy classification of inputs used to value the Portfolios investments, at December 31, 2013, is disclosed in the Valuation Summary of each Portfolios Schedule of Investments.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 124
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 3. RELATED PARTY TRANSACTIONS
TAM, the Portfolios investment adviser, is directly owned by Western Reserve Life Assurance Co. of Ohio and AUSA Holding Company (AUSA), both of which are indirect, wholly-owned subsidiaries of Aegon NV. AUSA is wholly-owned by Aegon USA, LLC (Aegon USA), a financial services holding company whose primary emphasis is on life and health insurance, and annuity and investment products. Aegon USA is owned by Aegon US Holding Corporation, which is owned by Transamerica Corporation (DE). Transamerica Corporation (DE) is owned by The Aegon Trust, which is owned by Aegon International B.V., which is owned by Aegon NV, a Netherlands corporation, and a publicly traded international insurance group.
Transamerica Partners Funds Group (TPFG) is a an open-end management investment company. The percentage of each Portfolio that is owned by TPFG is as follows:
Transamerica Partners Funds Group | Investments in Portfolio |
|||
Money Market |
48.09 | % | ||
High Quality Bond |
20.86 | |||
Inflation-Protected Securities |
35.29 | |||
Core Bond |
23.67 | |||
High Yield Bond |
14.14 | |||
Balanced |
42.75 | |||
Large Value |
27.58 | |||
Stock Index |
7.09 | |||
Large Core |
26.14 | |||
Large Growth |
26.42 | |||
Mid Value |
16.06 | |||
Mid Growth |
38.50 | |||
Small Value |
43.49 | |||
Small Core |
26.67 | |||
Small Growth |
48.46 | |||
International Equity |
25.74 |
Transamerica Partners Funds Group II (TPFG II) is a an open-end management investment company. The percentage of each Portfolio that is owned by TPFG II is as follows:
Transamerica Partners Funds Group II | Investments in Portfolio |
|||
Money Market |
32.09 | % | ||
High Quality Bond |
16.09 | |||
Inflation-Protected Securities |
31.64 | |||
Core Bond |
29.98 | |||
High Yield Bond |
36.99 | |||
Balanced |
4.67 | |||
Large Value |
13.01 | |||
Stock Index |
19.14 | |||
Large Core |
2.42 | |||
Large Growth |
13.86 | |||
Mid Value |
48.21 | |||
Mid Growth |
22.58 | |||
Small Value |
14.57 | |||
Small Core |
9.20 | |||
Small Growth |
18.75 | |||
International Equity |
13.23 |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 125
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 3. (continued)
Transamerica Financial Life Insurance Company (TFLIC) is a wholly-owned subsidiary of Aegon USA. The percentage of each Portfolio that is owned by TFLIC sub-accounts is as follows:
TFLIC Sub-accounts | Investments in Portfolio |
|||
Money Market |
3.31 | % | ||
High Quality Bond |
14.50 | |||
Inflation-Protected Securities |
12.44 | |||
Core Bond |
12.15 | |||
High Yield Bond |
5.79 | |||
Balanced |
48.25 | |||
Large Value |
38.40 | |||
Large Core |
55.23 | |||
Large Growth |
40.39 | |||
Mid Value |
5.64 | |||
Mid Growth |
0.86 | |||
Small Value |
0.95 | |||
Small Core |
51.65 | |||
Small Growth |
1.02 | |||
International Equity |
23.71 |
Diversified Investment Advisors Collective Investment Trust (CIT) is managed by Massachusetts Fidelity Trust Company, which is a wholly-owned subsidiary of Aegon USA. The percentage of each Portfolio that is owned by CIT sub-accounts is as follows:
CIT Sub-accounts | Investments in Portfolio |
|||
Money Market |
16.47 | % | ||
High Quality Bond |
39.48 | |||
Inflation-Protected Securities |
15.34 | |||
Core Bond |
28.94 | |||
High Yield Bond |
24.98 | |||
Balanced |
3.96 | |||
Large Value |
16.03 | |||
Large Core |
12.93 | |||
Large Growth |
16.48 | |||
Mid Value |
6.72 | |||
Mid Growth |
23.46 | |||
Small Value |
33.12 | |||
Small Core |
10.68 | |||
Small Growth |
24.08 | |||
International Equity |
32.44 |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 126
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 3. (continued)
TAM Collective Trust Funds (CTF) is managed by Massachusetts Fidelity Trust Company, which is a wholly-owned subsidiary of Aegon USA. The percentage of each Portfolio that is owned by CTF sub-accounts is as follows:
CTF Sub-accounts | Investments in Portfolio |
|||
Money Market |
0.03 | % | ||
High Quality Bond |
9.06 | |||
Inflation-Protected Securities |
5.28 | |||
Core Bond |
5.26 | |||
High Yield Bond |
18.09 | |||
Balanced |
| |||
Large Value |
4.82 | |||
Large Core |
3.28 | |||
Large Growth |
2.77 | |||
Mid Value |
23.37 | |||
Mid Growth |
14.60 | |||
Small Value |
7.88 | |||
Small Core |
1.80 | |||
Small Growth |
7.68 | |||
International Equity |
4.89 |
TFS is the Portfolios administrator and receives no separate compensation for providing transfer agency services. TAM and TFS are affiliates of Aegon NV.
Certain officers and trustees of the Series Portfolio and of the entities that invest in the Series Portfolio are also officers and/or trustees of TAM or its affiliates. No interested trustee receives compensation from the Series Portfolio or from the entities that invest in the Series Portfolio.
Investment advisory fees: TAM manages the assets of each Portfolio of the Series Portfolio pursuant to the Investment Advisory Agreement with the Series Portfolio. For its services, TAM receives fees from each Portfolio, accrued daily and payable monthly, at an annual rate equal to the percentages specified in the table below corresponding to the Portfolios average daily net assets (ANA).
For each Portfolio, TAM has entered into Investment Sub-Advisory Agreements with the Portfolios sub-advisers. It is the responsibility of each sub-adviser to make the day-to-day investment decisions of the Portfolios, and to place the purchase and sales orders for securities transactions of the Portfolios, subject in all cases to the general supervision of TAM.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 127
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 3. (continued)
Payment of fees to the sub-advisers is the responsibility of TAM, and is not an additional expense of a Portfolio.
Portfolio Name | Advisory Fee |
|||
Money Market |
0.250 | % | ||
High Quality Bond |
0.350 | |||
Inflation-Protected Securities |
0.350 | |||
Core Bond |
0.350 | |||
High Yield Bond |
0.550 | |||
Balanced |
0.450 | |||
Large Value |
0.450 | |||
Large Core |
0.600 | |||
Large Growth |
0.620 | |||
Mid Value |
0.670 | |||
Mid Growth |
0.720 | |||
Small Value |
0.820 | |||
Small Core (Effective June 28, 2013) |
||||
First $300 million |
0.800 | |||
Over $300 million |
0.770 | |||
Small Core (Prior to June 28, 2013) |
0.800 | |||
Small Growth |
||||
First $300 million |
0.840 | |||
Over $300 million |
0.800 | |||
International Equity (Effective December 15, 2013) |
||||
First $500 million |
0.740 | |||
Over $500 million to $1 billion |
0.720 | |||
Over $1 billion to $2 billion |
0.690 | |||
Over $2 billion |
0.660 | |||
International Equity (Prior to December 15, 2013) |
0.750 |
TAM has voluntarily elected to waive fees to the extent that the total operating expenses of a Portfolio exceed the following expense caps (as a percentage of ANA):
Portfolio Name | Expense Cap |
|||
Money Market |
0.30 | % | ||
High Quality Bond |
0.40 | |||
Inflation-Protected Securities |
0.40 | |||
Core Bond |
0.40 | |||
High Yield Bond |
0.60 | |||
Balanced |
0.50 | |||
Large Value |
0.50 | |||
Large Core |
0.65 | |||
Large Growth |
0.65 | |||
Mid Value |
0.70 | |||
Mid Growth |
0.75 | |||
Small Value |
0.85 | |||
Small Core |
0.85 | |||
Small Growth |
0.90 | |||
International Equity |
0.90 |
The expenses reimbursed are included in the Statements of Operations. Such fee waivers are not subject to recoupment by TAM in future years.
TAM also may waive additional fees from time to time to help maintain competitive expense ratios. These arrangements are voluntary and may be terminated at any time. Expenses reimbursed that are unsettled at year end are included in Due from advisor in the Statements of Assets and Liabilities.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 128
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 3. (continued)
Deferred compensation plan: Under a non-qualified deferred compensation plan effective January 1, 2008, as amended and restated (the Deferred Compensation Plan), available to the Trustees, compensation payable from the Portfolios may be deferred that would otherwise be payable by the Separate Account to an Independent Trustee on a current basis for services rendered as Trustee. Deferred compensation amounts will accumulate based on the value of Class A (or comparable) shares of a series of Transamerica Funds (without imposition of sales charge), as elected by the Trustee.
Brokerage commissions: There were no brokerage commissions incurred on security transactions placed with affiliates of the adviser or sub-advisers for the year ended December 31, 2013.
NOTE 4. PURCHASES AND SALES OF SECURITIES
The cost of securities purchased and proceeds from securities sold (excluding short-term securities) for the year ended December 31, 2013 were as follows:
Purchases of securities |
Proceeds from maturities and |
|||||||||||||||
Portfolio Name | Long-term | U.S. Government | Long-term | U.S. Government | ||||||||||||
Money Market |
$ | | $ | | $ | | $ | | ||||||||
High Quality Bond |
130,156,992 | 201,111,402 | 117,567,058 | 198,345,781 | ||||||||||||
Inflation-Protected Securities |
28,545,873 | 270,929,672 | 19,051,184 | 288,318,310 | ||||||||||||
Core Bond |
754,326,935 | 1,875,232,289 | 819,308,650 | 1,899,710,033 | ||||||||||||
High Yield Bond |
436,821,072 | | 407,292,028 | | ||||||||||||
Balanced |
75,384,689 | 58,614,540 | 80,319,335 | 60,332,844 | ||||||||||||
Large Value |
844,425,449 | | 964,545,834 | | ||||||||||||
Large Core |
316,581,000 | | 335,146,265 | | ||||||||||||
Large Growth |
426,454,218 | | 550,421,160 | | ||||||||||||
Mid Value |
452,737,541 | | 478,949,608 | | ||||||||||||
Mid Growth |
387,427,630 | | 448,343,966 | | ||||||||||||
Small Value |
11,663,624 | | 19,749,690 | | ||||||||||||
Small Core |
602,541,353 | | 654,037,450 | | ||||||||||||
Small Growth |
47,063,707 | | 53,916,630 | | ||||||||||||
International Equity |
682,227,090 | | 768,960,004 | |
NOTE 5. DERIVATIVE FINANCIAL INSTRUMENTS
Inflation-Protected Securities:
The Portfolio is subject to various risks in the normal course of pursuing its investment objective. The following table details the volume of derivative positions held during the year:
Beginning number of positions at December 31, 2012 |
Ending number of positions at December 31, 2013 |
Average number of positions (A) |
||||||||||
Futures contracts |
7 | 10 | 8 | |||||||||
Purchased options and swaptions |
9 | 10 | 8 | |||||||||
Written options and swaptions |
10 | 10 | 14 | |||||||||
Swap agreements |
12 | 7 | 7 | |||||||||
Forward foreign currency contracts |
12 | 22 | 14 |
(A) | Calculated based on positions held at each month end during the current year. |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 129
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 5. (continued)
The tables below highlight the types of risk associated with the derivative instruments:
Fair Value of Derivative Instruments in the Statements of Assets and Liabilities as of December 31, 2013:
Derivatives not accounted for as hedging instruments
Location | Interest rate contracts |
Foreign exchange contracts |
Total | |||||||||
Asset derivatives |
||||||||||||
Purchased options and swaptions, at value (B) (C) |
$ | 1,264,355 | $ | 5,292 | $ | 1,269,647 | ||||||
Premium paid on swap agreements (C) (D) |
6,971 | | 6,971 | |||||||||
Unrealized appreciation on futures contracts (C) (E) |
343,201 | | 343,201 | |||||||||
Unrealized appreciation on swap agreements (C) (F) |
111,198 | | 111,198 | |||||||||
Unrealized appreciation on forward foreign currency contracts |
| 300,708 | 300,708 | |||||||||
Total gross amount of assets (G) |
$ | 1,725,725 | $ | 306,000 | $ | 2,031,725 | ||||||
Liability derivatives |
||||||||||||
Written options and swaptions, at value (C) |
$ | (457,631 | ) | $ | (37,546 | ) | $ | (495,177 | ) | |||
Unrealized depreciation on futures contracts (C) (E) |
(428,615 | ) | | (428,615 | ) | |||||||
Unrealized depreciation on swap agreements (C) (F) |
(259,537 | ) | | (259,537 | ) | |||||||
Unrealized depreciation on forward foreign currency contracts |
| (679,351 | ) | (679,351 | ) | |||||||
Total gross amount of liabilities (G) |
$ | (1,145,783 | ) | $ | (716,897 | ) | $ | (1,862,680 | ) |
(B) | Included within Investment securities, at value. |
(C) | May include exchange-traded derivatives which are not subject to a master netting arrangement, or another similar arrangement. |
(D) | Includes premium paid on OTC swap agreements as reported on the Statements of Assets and Liabilities, as well as the premium paid on centrally cleared swap agreements included in the variation margin receivable/payable on derivative financial instruments. |
(E) | Includes cumulative appreciation (depreciation) on futures contracts as reported in the Schedule of Investments. Only current days variation margin is reported within the Statements of Assets and Liabilities. |
(F) | Includes unrealized appreciation (depreciation) on OTC swap agreements as reported on the Statements of Assets and Liabilities, as well as the unrealized appreciation (depreciation) on centrally cleared swap agreements included in the variation margin receivable/payable on derivative financial instruments. |
(G) | The Portfolio does not offset assets and liabilities that are subject to a master netting agreement or similar arrangement on the Statements of Assets and Liabilities. |
The following tables present the Portfolios derivative assets and liabilities by counterparty net of amounts available for offset under a master netting agreement and net of the related collateral received/pledged by the Portfolio as of December 31, 2013:
Gross Amounts Not Offset in the Statements of Assets and Liabilities
Financial Assets and Derivative Assets, and Collateral Received as of December 31, 2013:
Counterparty | Gross Amounts of Assets Presented in Statements of Assets and Liabilities (G) |
Value Eligible for Offset |
Collateral Received (H) |
Net Amount (not less than $0) |
||||||||||||
BNP Paribas SA |
$ | 15,112 | $ | | $ | | $ | 15,112 | ||||||||
Barclays Bank PLC |
11,468 | (11,468 | ) | | | |||||||||||
Citibank, N.A. |
6,541 | | | 6,541 | ||||||||||||
Credit Suisse International |
131,012 | (91,980 | ) | | 39,032 | |||||||||||
Deutsche Bank AG |
1,289,157 | (660,723 | ) | | 628,434 | |||||||||||
UBS AG |
22,309 | (2,631 | ) | | 19,678 | |||||||||||
Other Derivatives (I) |
556,126 | | | 556,126 | ||||||||||||
Total |
$ | 2,031,725 | $ | (766,802 | ) | $ | | $ | 1,264,923 |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 130
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 5. (continued)
Financial Liabilities and Derivative Liabilities, and Collateral Pledged as of December 31, 2013:
Counterparty | Gross Amounts of Liabilities Presented in Statements of Assets and Liabilities (G) |
Value Eligible for Offset |
Collateral Pledged (H) |
Net Amount (not less than $0) |
||||||||||||
Barclays Bank PLC |
$ | 551,509 | $ | (11,468 | ) | $ | | $ | 540,041 | |||||||
Credit Suisse International |
91,980 | (91,980 | ) | | | |||||||||||
Deutsche Bank AG |
660,723 | (660,723 | ) | | | |||||||||||
UBS AG |
2,631 | (2,631 | ) | | | |||||||||||
Other Derivatives (I) |
555,837 | | | 555,837 | ||||||||||||
Total |
$ | 1,862,680 | $ | (766,802 | ) | $ | | $ | 1,095,878 |
(G) | Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. |
(H) | In some instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization. |
(I) | Other Derivatives are not subject to a master netting arrangement or another similar arrangement. |
Effect of Derivative Instruments in the Statements of Operations for the year ended December 31, 2013:
Derivatives not accounted for as hedging instruments
Location | Interest rate contracts |
Foreign exchange contracts |
Total | |||||||||
Net realized gain (loss) on derivatives recognized in income |
||||||||||||
Net realized gain (loss) on purchased options and swaptions (J) |
$ | 457,809 | $ | (164,407 | ) | $ | 293,402 | |||||
Net realized gain (loss) on futures contracts |
1,511,362 | | 1,511,362 | |||||||||
Net realized gain (loss) on written options and swaptions |
(109,914 | ) | 267,866 | 157,952 | ||||||||
Net realized gain (loss) on swap agreements |
589,578 | | 589,578 | |||||||||
Net realized gain (loss) on forward foreign currency contracts (K) |
| 349,783 | 349,783 | |||||||||
Net change in unrealized appreciation (depreciation) on derivatives recognized in income |
||||||||||||
Net change in unrealized appreciation (depreciation) on purchased options and swaptions (L) |
270,536 | 23,327 | 293,863 | |||||||||
Net change in unrealized appreciation (depreciation) on futures contracts |
(323,022 | ) | | (323,022 | ) | |||||||
Net change in unrealized appreciation (depreciation) on written options and swaptions |
(5,442 | ) | 53,713 | 48,271 | ||||||||
Net change in unrealized appreciation (depreciation) on swap agreements |
(496,288 | ) | | (496,288 | ) | |||||||
Net change in unrealized appreciation (depreciation) on forward foreign currency transactions (M) |
| (307,000 | ) | (307,000 | ) | |||||||
Total |
$ | 1,894,619 | $ | 223,282 | $ | 2,117,901 |
(J) | Included within Net realized gain (loss) on transactions from Investment securities. |
(K) | Included within Net realized gain (loss) on transactions from Foreign currency transactions. |
(L) | Included within Net change in unrealized appreciation (depreciation) on Investment securities. |
(M) | Included within Net change in unrealized appreciation (depreciation) on Translation of assets and liabilities denominated in foreign currencies. |
For non-exchange traded derivatives, under standard derivatives agreements, the Portfolio may be required to post collateral on derivatives if the Portfolio is in a net liability position with the counterparty exceeding certain amounts. Additionally, counterparties may immediately terminate derivatives contracts if the Portfolio fails to maintain sufficient asset coverage for its contracts or its net assets decline by stated percentages.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 131
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 5. (continued)
Core Bond:
The Portfolio is subject to various risks in the normal course of pursuing its investment objective. The following table details the volume of derivative positions held during the year:
Beginning number of positions at December 31, 2012 |
Ending number of positions at December 31, 2013 |
Average number of positions (A) |
||||||||||
Futures contracts |
11 | 7 | 8 | |||||||||
Purchased options and swaptions |
3 | 5 | 3 | |||||||||
Written options and swaptions |
1 | 4 | 2 | |||||||||
Swap agreements |
10 | 16 | 18 | |||||||||
Forward foreign currency contracts |
4 | 3 | 5 |
(A) | Calculated based on positions held at each month end during the current year. |
The tables below highlight the types of risk associated with the derivative instruments:
Fair Value of Derivative Instruments in the Statements of Assets and Liabilities as of December 31, 2013:
Derivatives not accounted for as hedging instruments
Location | Interest rate contracts |
Foreign exchange contracts |
Credit contracts |
Total | ||||||||||||
Asset derivatives |
||||||||||||||||
Purchased options and swaptions, at value (B) (C) |
$ | 777,166 | $ | | $ | | $ | 777,166 | ||||||||
Premium paid on swap agreements (C) (D) |
226 | | 622,773 | 622,999 | ||||||||||||
Unrealized appreciation on futures contracts (C) (E) |
1,342,264 | | | 1,342,264 | ||||||||||||
Unrealized appreciation on swap agreements (C) (F) |
246,162 | | 412,674 | 658,836 | ||||||||||||
Unrealized appreciation on forward foreign currency contracts |
| 2,402 | | 2,402 | ||||||||||||
Total gross amount of assets (G) |
$ | 2,365,818 | $ | 2,402 | $ | 1,035,447 | $ | 3,403,667 | ||||||||
Liability derivatives |
||||||||||||||||
Written options and swaptions, at value (C) |
$ | (154,745 | ) | $ | | $ | | $ | (154,745 | ) | ||||||
Premium received on swap agreements (C) (H) |
| | (1,427,754 | ) | (1,427,754 | ) | ||||||||||
Unrealized depreciation on futures contracts (C) (E) |
(1,638,980 | ) | | | (1,638,980 | ) | ||||||||||
Unrealized depreciation on swap agreements (C) (F) |
(268,318 | ) | | (315,954 | ) | (584,272 | ) | |||||||||
Unrealized depreciation on forward foreign currency contracts |
| (383,440 | ) | | (383,440 | ) | ||||||||||
Total gross amount of liabilities (G) |
$ | (2,062,043 | ) | $ | (383,440 | ) | $ | (1,743,708 | ) | $ | (4,189,191 | ) |
(B) | Included within Investment securities, at value. |
(C) | May include exchange-traded derivatives which are not subject to a master netting arrangement, or another similar arrangement. |
(D) | Includes premium paid on OTC swap agreements as reported on the Statements of Assets and Liabilities, as well as the premium paid on centrally cleared swap agreements included in the variation margin receivable/payable on derivative financial instruments. |
(E) | Includes cumulative appreciation (depreciation) on futures contracts as reported in the Schedule of Investments. Only current days variation margin is reported within the Statements of Assets and Liabilities. |
(F) | Includes unrealized appreciation (depreciation) on OTC swap agreements as reported on the Statements of Assets and Liabilities, as well as the unrealized appreciation (depreciation) on centrally cleared swap agreements included in the variation margin receivable/payable on derivative financial instruments. |
(G) | The Portfolio does not offset assets and liabilities that are subject to a master netting agreement or similar arrangement on the Statements of Assets and Liabilities. |
(H) | Includes premium received on OTC swap agreements as reported on the Statements of Assets and Liabilities, as well as premiums received on centrally cleared swap agreements included in the variation margin receivable/payable on derivative financial instruments. |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 132
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 5. (continued)
The following tables present the Portfolios derivative assets and liabilities by counterparty net of amounts available for offset under a master netting agreement and net of the related collateral received/pledged by the Portfolio as of December 31, 2013:
Gross Amounts Not Offset in the Statements of Assets and Liabilities
Financial Assets and Derivative Assets, and Collateral Received as of December 31, 2013:
Counterparty | Gross Amounts of Assets Presented in Statements of Assets and Liabilities (H) |
Value Eligible for Offset |
Collateral Received (I) |
Net Amount (not less than $0) |
||||||||||||
BNP Paribas SA |
$ | 2,402 | $ | | $ | | $ | 2,402 | ||||||||
Bank of America, N.A. |
192,696 | (19,826 | ) | | 172,870 | |||||||||||
Barclays Bank PLC |
719,773 | (444,199 | ) | | 275,574 | |||||||||||
Citibank, N.A. |
67,417 | | (67,417 | ) | | |||||||||||
Deutsche Bank AG |
399,542 | (399,542 | ) | | | |||||||||||
Morgan Stanley Capital Services, Inc. |
53,077 | (17,124 | ) | | 35,953 | |||||||||||
Other Derivatives (J) |
1,968,760 | | | 1,968,760 | ||||||||||||
Total |
$ | 3,403,667 | $ | (880,691 | ) | $ | (67,417 | ) | $ | 2,455,559 |
Financial Liabilities and Derivative Liabilities, and Collateral Pledged as of December 31, 2013:
Counterparty | Gross Amounts of Liabilities Presented in Statements of Assets and Liabilities (H) |
Value Eligible for Offset |
Collateral Pledged (I) |
Net Amount (not less than $0) |
||||||||||||
Bank of America, N.A. |
$ | 19,826 | $ | (19,826 | ) | $ | | $ | | |||||||
Barclays Bank PLC |
444,199 | (444,199 | ) | | | |||||||||||
Deutsche Bank AG |
722,532 | (399,542 | ) | (322,990 | ) | | ||||||||||
Morgan Stanley Capital Services, Inc. |
17,124 | (17,124 | ) | | | |||||||||||
Other Derivatives (J) |
2,985,510 | | | 2,985,510 | ||||||||||||
Total |
$ | 4,189,191 | $ | (880,691 | ) | $ | (322,990 | ) | $ | 2,985,510 |
(H) | Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. |
(I) | In some instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization. |
(J) | Other Derivatives are not subject to a master netting arrangement or another similar arrangement. |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 133
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 5. (continued)
Effect of Derivative Instruments in the Statements of Operations for the year ended December 31, 2013:
Derivatives not accounted for as hedging instruments
Location | Interest rate contracts |
Foreign exchange contracts |
Credit contracts |
Total | ||||||||||||
Net realized gain (loss) on derivatives recognized in income |
||||||||||||||||
Net realized gain (loss) on purchased options and swaptions (K) |
$ | 1,266,475 | $ | | $ | | $ | 1,266,475 | ||||||||
Net realized gain (loss) on futures contracts |
(5,754,334 | ) | | | (5,754,334 | ) | ||||||||||
Net realized gain (loss) on written options and swaptions |
(741,605 | ) | | | (741,605 | ) | ||||||||||
Net realized gain (loss) on swap agreements |
13,599,591 | | 1,971,627 | 15,571,218 | ||||||||||||
Net realized gain (loss) on forward foreign currency contracts (L) |
| (579,327 | ) | | (579,327 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on derivatives recognized in income |
||||||||||||||||
Net change in unrealized appreciation (depreciation) on purchased options and swaptions (M) |
163,113 | | | 163,113 | ||||||||||||
Net change in unrealized appreciation (depreciation) on futures contracts |
(1,362,923 | ) | | | (1,362,923 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on written options and swaptions |
(47,537 | ) | | | (47,537 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on swap agreements |
786,360 | | (1,825,798 | ) | (1,039,438 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on forward foreign currency transactions (N) |
| (284,369 | ) | | (284,369 | ) | ||||||||||
Total |
$ | 7,909,140 | $ | (863,696 | ) | $ | 145,829 | $ | 7,191,273 |
(K) | Included within Net realized gain (loss) on transactions from Investment securities. |
(L) | Included within Net realized gain (loss) on transactions from Foreign currency transactions. |
(M) | Included within Net change in unrealized appreciation (depreciation) on Investment securities. |
(N) | Included within Net change in unrealized appreciation (depreciation) on Translation of assets and liabilities denominated in foreign currencies. |
For non-exchange traded derivatives, under standard derivatives agreements, the Portfolio may be required to post collateral on derivatives if the Portfolio is in a net liability position with the counterparty exceeding certain amounts. Additionally, counterparties may immediately terminate derivatives contracts if the Portfolio fails to maintain sufficient asset coverage for its contracts or its net assets decline by stated percentages.
Balanced:
The Portfolio is subject to various risks in the normal course of pursuing its investment objective. The following table details the volume of derivative positions held during the year:
Beginning number of positions at December 31, 2012 |
Ending number of positions at December 31, 2013 |
Average number of positions (A) |
||||||||||
Futures contracts |
11 | 7 | 8 | |||||||||
Purchased options and swaptions |
1 | 1 | 2 | |||||||||
Written options and swaptions |
| 1 | 2 | (B) | ||||||||
Forward foreign currency contracts |
4 | 2 | 3 |
(A) | Calculated based on positions held at each month end during the current year. |
(B) | Although there were no open positions at the beginning and/or the end of the year the Portfolio periodically invested in this derivative during the year. |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 134
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 5. (continued)
The tables below highlight the types of risk associated with the derivative instruments:
Fair Value of Derivative Instruments in the Statements of Assets and Liabilities as of December 31, 2013:
Derivatives not accounted for as hedging instruments
Location | Interest rate contracts |
Foreign exchange contracts |
Equity contracts |
Total | ||||||||||||
Asset derivatives |
||||||||||||||||
Purchased options and swaptions, at value (C) (D) |
$ | 15,525 | $ | | $ | | $ | 15,525 | ||||||||
Unrealized appreciation on futures contracts (D) (E) |
52,852 | | 12,068 | 64,920 | ||||||||||||
Unrealized appreciation on forward foreign currency contracts |
| 82 | | 82 | ||||||||||||
Total gross amount of assets (F) |
$ | 68,377 | $ | 82 | $ | 12,068 | $ | 80,527 | ||||||||
Liability derivatives |
||||||||||||||||
Written options and swaptions, at value (D) |
$ | (3,738 | ) | $ | | $ | | $ | (3,738 | ) | ||||||
Unrealized depreciation on futures contracts (D) (E) |
(51,969 | ) | | | (51,969 | ) | ||||||||||
Unrealized depreciation on forward foreign currency contracts |
| (8,378 | ) | | (8,378 | ) | ||||||||||
Total gross amount of liabilities (F) |
$ | (55,707 | ) | $ | (8,378 | ) | $ | | $ | (64,085 | ) |
(C) | Included within Investment securities, at value. |
(D) | May include exchange-traded derivatives which are not subject to a master netting arrangement, or another similar arrangement. |
(E) | Includes cumulative appreciation (depreciation) on futures contracts as reported in the Schedule of Investments. Only current days variation margin is reported within the Statements of Assets and Liabilities. |
(F) | The Portfolio does not offset assets and liabilities that are subject to a master netting agreement or similar arrangement on the Statements of Assets and Liabilities. |
The following tables present the Portfolios derivative assets and liabilities by counterparty net of amounts available for offset under a master netting agreement and net of the related collateral received/pledged by the Portfolio as of December 31, 2013:
Gross Amounts Not Offset in the Statements of Assets and Liabilities
Financial Assets and Derivative Assets, and Collateral Received as of December 31, 2013:
Counterparty | Gross Amounts of Assets Presented in Statements of Assets and Liabilities (G) |
Value Eligible for Offset |
Collateral Received (H) |
Net Amount (not less than $0) |
||||||||||||
BNP Paribas SA |
$ | 82 | $ | | $ | | $ | 82 | ||||||||
Other Derivatives (I) |
80,445 | | | 80,445 | ||||||||||||
Total |
$ | 80,527 | $ | | $ | | $ | 80,527 |
Financial Liabilities and Derivative Liabilities, and Collateral Pledged as of December 31, 2013:
Counterparty | Gross Amounts of Liabilities Presented in Statements of Assets and Liabilities (G) |
Value Eligible for Offset |
Collateral Pledged (H) |
Net Amount (not less than $0) |
||||||||||||
Barclays Bank PLC |
$ | 8,378 | $ | | $ | | $ | 8,378 | ||||||||
Other Derivatives (I) |
55,707 | | | 55,707 | ||||||||||||
Total |
$ | 64,085 | $ | | $ | | $ | 64,085 |
(G) | Absent an event of default or early termination, OTC derivative assets and liabilities are presented gross and not offset in the Statements of Assets and Liabilities. |
(H) | In some instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization. |
(I) | Other Derivatives are not subject to a master netting arrangement or another similar arrangement. |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 135
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 5. (continued)
Effect of Derivative Instruments in the Statement of Operations for the year ended December 31, 2013:
Derivatives not accounted for as hedging instruments
Location | Interest rate contracts |
Foreign exchange contracts |
Equity contracts |
Total | ||||||||||||
Net realized gain (loss) on derivatives recognized in income |
||||||||||||||||
Net realized gain (loss) on purchased options and swaptions (J) |
$ | 44,425 | $ | | $ | | $ | 44,425 | ||||||||
Net realized gain (loss) on futures contracts |
(53,852 | ) | | 186,623 | 132,771 | |||||||||||
Net realized gain (loss) on written options and swaptions |
(16,285 | ) | | | (16,285 | ) | ||||||||||
Net realized gain (loss) on forward foreign currency contracts (K) |
| (16,125 | ) | | (16,125 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on derivatives recognized in income |
||||||||||||||||
Net change in unrealized appreciation (depreciation) on purchased options and swaptions (L) |
7,675 | | | 7,675 | ||||||||||||
Net change in unrealized appreciation (depreciation) on futures contracts |
4,824 | | 9,704 | 14,528 | ||||||||||||
Net change in unrealized appreciation (depreciation) on written options and swaptions |
(2,057 | ) | | | (2,057 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) on forward foreign currency transactions (M) |
| (1,796 | ) | | (1,796 | ) | ||||||||||
Total |
$ | (15,270 | ) | $ | (17,921 | ) | $ | 196,327 | $ | 163,136 |
(J) | Included within Net realized gain (loss) on transactions from Investment securities. |
(K) | Included within Net realized gain (loss) on transactions from Foreign currency transactions. |
(L) | Included within Net change in unrealized appreciation (depreciation) on Investment securities. |
(M) | Included within Net change in unrealized appreciation (depreciation) on Translation of assets and liabilities denominated in foreign currencies. |
For non-exchange traded derivatives, under standard derivatives agreements, the Portfolio may be required to post collateral on derivatives if the Portfolio is in a net liability position with the counterparty exceeding certain amounts. Additionally, counterparties may immediately terminate derivatives contracts if the Portfolio fails to maintain sufficient asset coverage for its contracts or its net assets decline by stated percentages.
Small Core:
The Portfolio is subject to various risks in the normal course of pursuing its investment objective. The following table details the volume of derivative positions held during the year:
Beginning number of positions at December 31, 2012 |
Ending number of positions at December 31, 2013 |
Average number of positions (A) |
||||||||||
Futures contracts |
1 | | 1 | (B) |
(A) | Calculated based on positions held at each month end during the current year. |
(B) | Although there were no open positions at the beginning and/or the end of the year the Portfolio periodically invested in this derivative during the year. |
Transamerica Partners Portfolios | Annual Report 2013 |
Page 136
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 5. (continued)
The table below highlights the types of risk associated with the derivative instruments:
Effect of Derivative Instruments in the Statements of Operations for the year ended December 31, 2013:
Derivatives not accounted for as hedging instruments
Location | Equity contracts |
Total | ||||||
Net realized gain (loss) on derivatives recognized in income |
||||||||
Net realized gain (loss) on futures contracts |
$ | 196,697 | $ | 196,697 | ||||
Net change in unrealized appreciation (depreciation) on derivatives recognized in income |
||||||||
Net change in unrealized appreciation (depreciation) on futures contracts |
(31,262 | ) | (31,262 | ) | ||||
Total |
$ | 165,435 | $ | 165,435 |
International Equity:
The Portfolio is subject to various risks in the normal course of pursuing its investment objective. The following table details the volume of derivative positions held during the year:
Beginning number of positions at December 31, 2012 |
Ending number of positions at December 31, 2013 |
Average number of positions (A) |
||||||||||
Forward foreign currency contracts |
1 | | 7 | (B) |
(A) | Calculated based on positions held at each month end during the current year. |
(B) | Although there were no open positions at the beginning and/or the end of the year the Portfolio periodically invested in this derivative during the year. |
The table below highlights the types of risk associated with the derivative instruments:
Effect of Derivative Instruments in the Statements of Operations for the year ended December 31, 2013:
Derivatives not accounted for as hedging instruments
Location | Foreign exchange contracts |
Total | ||||||
Net realized gain (loss) on derivatives recognized in income |
||||||||
Net realized gain (loss) on forward foreign currency contracts (C) |
$ | 1,750,709 | $ | 1,750,709 | ||||
Net change in unrealized appreciation (depreciation) on derivatives recognized in income |
||||||||
Net change in unrealized appreciation (depreciation) on forward foreign currency transactions (D) |
367,901 | 367,901 | ||||||
Total |
$ | 2,118,610 | $ | 2,118,610 |
(C) | Included within Net realized gain (loss) on transactions from Foreign currency transactions. |
(D) | Included within Net change in unrealized appreciation (depreciation) on Translation of assets and liabilities denominated in foreign currencies. |
NOTE 6. FEDERAL INCOME TAX MATTERS
The Series Portfolio has received rulings from the Internal Revenue Service that each Portfolio will be treated as a separate partnership for federal income tax purposes. Income taxes are not provided for by the Portfolios because taxable income/(loss) of each Portfolio is included in the income tax returns of the investors. It is intended that the Portfolios assets will be managed so an investor in the Portfolio can satisfy the requirements of Subchapter M of the Internal Revenue Code. The Portfolios recognize the tax benefits of uncertain tax positions only where the position is more likely than not to be sustained assuming examination by tax authorities. The Portfolios federal tax returns remain subject to examination by the Internal Revenue Service and state tax authorities for the prior three years. Management has evaluated the Portfolios tax provisions taken for all open tax years, and has concluded that no provision for income tax is required in the Portfolios financial statements. If applicable, the Portfolios recognize interest accrued related to unrecognized tax benefits in interest and penalties expense in Other on the Statements of Operations. The Portfolios identify their major tax jurisdictions as U.S. Federal, the State of Florida, the state of New York, and foreign jurisdictions where the Portfolios make significant investments; however, the Portfolios are not aware of any tax positions for which it is reasonably possible that the total
Transamerica Partners Portfolios | Annual Report 2013 |
Page 137
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2013
NOTE 6. (continued)
amounts of unrecognized tax benefits will change materially in the next twelve months. For tax purposes, each component of the Portfolios net assets are reported at the investor level; therefore, the Statements of Assets and Liabilities do not present the components of net assets. Each investor in the Portfolio will be subject to taxation on its share of the Portfolios ordinary income and capital gains; which may differ from GAAP. These differences are primarily due to different treatment for items including, but not limited to, wash sales, structured notes, foreign bonds, swaps, net operating losses, distribution reclasses for REITs, passive foreign investment companies, foreign currency transactions, capital loss carryforwards, post-October loss deferrals, paydown gain/loss, foreign capital gains tax, and return of capital distributions from underlying investments.
NOTE 7. ACCOUNTING PRONOUNCEMENTS
In June 2013, the Financial Accounting Standards Board issued an update which sets forth a new approach for determining whether a public or private company qualifies as an Investment Company and requires certain additional disclosures. The adoption of this disclosure requirement is effective for financial statements interim and annual reporting periods beginning on or after December 15, 2013. Management is currently evaluating the implication, if any, of the additional disclosure requirements and its impact on the Portfolios financial statements.
NOTE 8. SUBSEQUENT EVENTS
Effective on or about May 1, 2014, TAM will terminate its investment sub-advisory agreements with BlackRock Financial Management, Inc. with respect to Transamerica Partners Balanced Portfolio and Transamerica Partners Core Bond Portfolio and will enter into new sub advisory agreements with AUIM, subject to shareholder approval. Upon the effective date of this change, TAMs advisory fee is subject to change. AUIM is an affiliated sub-adviser.
Effective on or about May 1, 2014, TAM will terminate its investment sub-advisory agreement with Eaton Vance Management with respect to Transamerica Partners High Yield Bond Portfolio and will enter into a new sub advisory agreement with AUIM, subject to shareholder approval. Upon the effective date of this change, TAMs advisory fee is subject to change. AUIM is an affiliated sub-adviser.
Management has evaluated subsequent events through the date of issuance of the financial statements, and determined that no other material events or transactions would require recognition or disclosure in the Portfolios financial statements.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 138
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Owners of Beneficial Interests of the Transamerica Partners Portfolios:
We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Transamerica Partners Portfolios (comprising, respectively, Money Market Portfolio, High Quality Bond Portfolio, Inflation-Protected Securities Portfolio, Core Bond Portfolio, High Yield Bond Portfolio, Balanced Portfolio, Large Value Portfolio, Large Core Portfolio, Large Growth Portfolio, Mid Value Portfolio, Mid Growth Portfolio, Small Value Portfolio, Small Core Portfolio, Small Growth Portfolio and International Equity Portfolio) (collectively, the Portfolios) as of December 31, 2013, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended. These financial statements and financial highlights are the responsibility of the Portfolios management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The financial highlights for the period ended prior to January 1, 2010 were audited by another independent registered public accounting firm whose report, dated March 1, 2010, expressed an unqualified opinion on those financial highlights.
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 audits to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Portfolios 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 the Portfolios 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 and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013, by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. 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 each of the aforementioned portfolios comprising Transamerica Partners Portfolios at December 31, 2013, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the four years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
February 28, 2014
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Board Members and Officers
The Board Members and executive officers of each Trust are listed below.
Interested Board Member means a board member who may be deemed an interested person (as that term is defined in the 1940 Act) of each Trust because of his current or former service with TAM or an affiliate of TAM. Interested Board Members may also be referred to herein as Interested Trustees. Independent Board Member means a Board Member who is not an interested person (as defined under the 1940 Act) of each Trust and may also be referred to herein as an Independent Trustee.
The Board governs each fund and is responsible for protecting the interests of the shareholders. The Board Members are experienced executives who meet periodically throughout the year to oversee the business affairs of each fund and the operation of each fund by its officers. The Board also reviews the management of each funds assets by the investment adviser and its respective sub-adviser.
The funds are among the funds advised and sponsored by TAM (collectively, Transamerica Mutual Funds). The Transamerica Mutual Funds consist of Transamerica Funds, Transamerica Series Trust (TST), Transamerica Income Shares, Inc. (TIS), Transamerica Partners Funds Group (TPFG), Transamerica Partners Funds Group II (TPFG II), Transamerica Partners Portfolios (TPP) and Transamerica Asset Allocation Variable Funds (TAAVF) and consists of 172 funds as of the date of this Annual Report.
The mailing address of each Board Member is c/o Secretary, 570 Carillon Parkway, St. Petersburg, Florida 33716.
The Board Members of each Trust and each Portfolio Trust, their year of birth, their positions with the Trusts, and their principal occupations for the past five years (their titles may have varied during that period) the number of funds in Transamerica Mutual Funds the Board oversees, and other board memberships they hold are set forth in the table below. The length of time served is provided from the date a Trustee became a Trustee of either of the Trusts or Transamerica Partners Portfolios.
Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INTERESTED BOARD MEMBERS | ||||||||||
Thomas A. Swank (1960) |
Chairman, Board Member, President and Chief Executive Officer | Since 2012 | President and Chief Executive Officer, Transamerica Individual Savings & Retirement (2010 present);
President and Chief Executive Officer, Transamerica Capital Management (2009 present);
Chairman (2013 present), Board Member (2012 present), President and Chief Executive Officer, Transamerica Funds, TST, TIS (2012 present);
Chairman (2013 present), Board Member (2013 present), President and Chief Executive Officer, TPP, TPFG, TPFG II and TAAVF (2012 present);
Director, Chairman of the Board, Chief Executive Officer and President, Transamerica Asset Management, Inc. (TAM) (2012 present);
Director, Chairman of the Board, Chief Executive Officer and President, Transamerica Fund Services, Inc. (TFS) (2012 present); |
172 | N/A |
Transamerica Partners Portfolios | Annual Report 2013 |
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Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INTERESTED BOARD MEMBERScontinued | ||||||||||
Thomas A. Swank (continued) |
Director and Trust Officer, Massachusetts Fidelity Trust Company (2012 present);
Division President, Monumental Life Insurance Company (2011 present);
Division President, Western Reserve Life Assurance Co. of Ohio (2011 present);
Vice President, Money Services, Inc. (2011 present);
Director and President, Aegon Financial Services Group, Inc. (2010 present);
Director, AFSG Securities Corporation (2010 present);
Director and President, Transamerica Advisors Life Insurance Company (2010 present);
Director, Chairman of the Board and President, Transamerica Advisors Life Insurance Company of New York (2010 present);
Director and President, Transamerica Resources, Inc. (2010 present);
Executive Vice President, Transamerica Life Insurance Company (2010 present);
Executive Vice President, Transamerica Financial Life Insurance Company (2009 present);
Director, Transamerica Capital, Inc. (2009 present); and
President and Chief Operating Officer (2007 2009), Senior Vice President, Chief Marketing Officer (2006 2007), Senior Vice President, Chief Financial Officer (2003 2006), Senior Vice President, Chief Risk Officer (2000 2003), Senior Vice President, Chief Investment Officer (1997 2000), and High Yield Portfolio Manager (1992 1997), Security Benefit Corporation. |
Transamerica Partners Portfolios | Annual Report 2013 |
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Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INTERESTED BOARD MEMBERScontinued | ||||||||||
Alan F. Warrick (1948) |
Board Member | Since 2012 | Board Member, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2012 present);
Consultant, Aegon USA (2010 2011);
Senior Advisor, Lovell Minnick Equity Partners (2010 present);
Retired (2010 present); and Managing Director for Strategic Business Development, Aegon USA (1994 2010). |
172 | First Allied Holdings Inc. (2013 2014) | |||||
INDEPENDENT BOARD MEMBERS | ||||||||||
Sandra N. Bane (1952) |
Board Member | Since 2008 | Retired (1999 present); Board Member, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2008 present);
Board Member, Transamerica Investors, Inc. (TII) (2003 2010); and
Partner, KPMG (1975 1999). |
172 | Big 5 Sporting Goods (2002 present); AGL Resources, Inc. (energy services holding company) (2008 present) | |||||
Leo J. Hill (1956) |
Lead Independent Board Member | Since 2007 | Principal, Advisor Network Solutions, LLC (business consulting) (2006 present);
Board Member, TST (2001 present);
Board Member, Transamerica Funds and TIS (2002 present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 present);
Board Member, TII (2008 2010);
Market President, Nations Bank of Sun Coast Florida (1998 1999);
Chairman, President and Chief Executive Officer, Barnett Banks of Treasure Coast Florida (1994 1998);
Executive Vice President and Senior Credit Officer, Barnett Banks of Jacksonville, Florida (1991 1994); and Senior Vice President and Senior Loan Administration Officer, Wachovia Bank of Georgia (1976 1991). |
172 | Ameris Bancorp (2013 present); Ameris Bank (2013 present) |
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Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INDEPENDENT BOARD MEMBERScontinued | ||||||||||
David W. Jennings (1946) |
Board Member | Since 2009 | Board Member, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2009 present);
Board Member, TII (2009 2010);
Managing Director, Hilton Capital (2010 present);
Principal, Maxam Capital Management, LLC (2006 2008); and
Principal, Cobble Creek Management LP (2004 2006). |
172 | N/A | |||||
Russell A. Kimball, Jr (1944) |
Board Member | 2007 | General Manager, Sheraton Sand Key Resort (1975 present);
Board Member, TST (1986 present);
Board Member, Transamerica Funds, (1986 1990), (2002 present);
Board Member, TIS (2002 present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 present); and Board Member, TII (2008 2010). |
172 | N/A | |||||
Eugene M. Mannella (1954) |
Board Member | Since 1993 | Chief Executive Officer, HedgeServ Corporation (hedge fund administration) (2008 present);
Self-employed consultant (2006 present);
Managing Member and Chief Compliance Officer, HedgeServ Investment Services, LLC (limited purpose broker-dealer) (2011 present);
President, ARAPAHO Partners LLC (limited purpose broker-dealer) (1998 2008);
Board Member, TPP, TPFG, TPFG II and TAAVF (1993 present);
Board Member, Transamerica Funds, TST and TIS (2007 present);
Board Member, TII (2008 2010); and
President, International Fund Services (alternative asset administration) (1993 2005).
|
172 | N/A |
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Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INDEPENDENT BOARD MEMBERScontinued | ||||||||||
Norman R. Nielsen, Ph.D. (1939) |
Board Member | Since 2007 | Retired (2005 present);
Board Member, Transamerica Funds, TST and TIS (2006 present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 present);
Board Member, TII (2008 2010);
Interim President, Mt. Mercy University (2013 present);
Director, Aspire Inc. (formerly, Iowa Student Loan Service Corporation) (2006 present);
Director, League for Innovation in the Community Colleges (1985 2005);
Director, Iowa Health Systems (1994 2003);
Director, U.S. Bank (1985 2006); and
President, Kirkwood Community College (1985 2005). |
172 | Buena Vista University Board of Trustees (2004 present); Chairman (2012 present) | |||||
Joyce G. Norden (1939) |
Board Member | Since 2002 | Retired (2004 present);
Board Member, TPFG, TPFG II and TAAVF (1993 present);
Board Member, TPP (2002 present);
Board Member, Transamerica Funds, TST and TIS (2007 present);
Board Member, TII (2008 2010); and
Vice President, Institutional Advancement, Reconstructionist Rabbinical College (1996 2004). |
172 | Board of Governors, Reconstructionist Rabbinical College (2007 2012) | |||||
Patricia L. Sawyer (1950) |
Board Member | Since 1993 | Retired (2007 present); President/Founder, Smith & Sawyer LLC (management consulting) (1989 2007);
Board Member, Transamerica Funds, TST and TIS (2007 present);
Board Member, TII (2008 2010);
Board Member, TPP, TPFG, TPFG II and TAAVF (1993 present);
Trustee, Chair of Finance Committee and Chair of Nominating Committee (1987 1996), Bryant University; |
172 | Honorary Trustee, Bryant University (1996 present) |
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Name and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served* |
Principal Occupation(s) During Past Five Years |
Number of Funds in Complex Overseen by Board Member |
Other Directorships During the Past Five Years | |||||
INDEPENDENT BOARD MEMBERScontinued | ||||||||||
Patricia L. Sawyer (continued) |
Vice President, American Express (1987 1989);
Vice President, The Equitable (1986 1987); and
Strategy Consultant, Booz, Allen & Hamilton (1982 1986). |
|||||||||
John W. Waechter (1952) |
Board Member | Since 2007 | Attorney, Englander Fischer (2008 present);
Retired (2004 2008);
Board Member, TST and TIS (2004 present);
Board Member, Transamerica Funds (2005 present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 present);
Board Member, TII (2008 2010);
Employee, RBC Dain Rauscher (securities dealer) (2004);
Executive Vice President, Chief Financial Officer and Chief Compliance Officer, William R. Hough & Co. (securities dealer) (1979 2004); and
Treasurer, The Hough Group of Funds (1993 2004). |
172 | Operation PAR, Inc. (2008 present); West Central (2008 2013); |
* | Each Board Member shall hold office until: 1) his or her successor is elected and qualified or 2) he or she resigns, retires or his or her term as a Board Member is terminated in accordance with the Trusts Declaration of Trust. |
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OFFICERS
The mailing address of each officer is c/o Secretary, 570 Carillon Parkway, St. Petersburg, Florida 33716. The following table shows information about the officers, including their year of birth, their positions held with each Trust and their principal occupations during the past five years (their titles may have varied during that period). Each officer will hold office until his or her successor has been duly elected or appointed or until his or her earlier death, resignation or removal.
Name and Year of Birth |
Position | Term of Office and Length of Time Served* |
Principal Occupation(s) or Employment During Past Five Years | |||
Thomas A. Swank (1960) |
Chairman, Board Member, President and Chief Executive Officer | Since 2012 | See Table Above. | |||
Timothy S. Galbraith (1964) |
Vice President and Chief Investment Officer, Alternative Investments | Since 2012 | Vice President and Chief Investment Officer, Alternative Investments, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2012 present);
Senior Vice President and Chief Investment Officer, Alternative Investments (2012 present), TAM;
Head of Alternative Investment Strategies, Morningstar Associates, LLC (2009 2012); and Managing Director, Bear Stearns Asset Management (2001 2009). | |||
Dennis P. Gallagher (1970) |
Vice President, General Counsel and Secretary | Since 2007 | Vice President, General Counsel and Secretary, Transamerica Funds, TST and TIS (2006 present);
Vice President, General Counsel and Secretary, TPP, TPFG, TPFG II and TAAVF (2007 present);
Vice President, General Counsel and Secretary, TII, (2006 2010);
Director, Senior Vice President, General Counsel, Operations and Secretary, TAM (2006 present);
Director, Senior Vice President, General Counsel, Chief Administrative Officer and Secretary, TFS (2006 present);
Assistant Vice President, TCI (2007 present);
Director, Deutsche Asset Management (1998 2006); and Corporate Associate, Ropes & Gray LLP (1995 1998). | |||
Todd R. Porter (1961) |
Vice President and Chief Investment Officer, Asset Allocation | Since 2012 | Vice President and Chief Investment Officer, Asset Allocation, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2012 present);
Senior Vice President and Chief Investment Officer, Asset Allocation (2012 present), TAM;
Chief Investment Officer, Fund Architects, LLC (2007 2012); and
Chief Investment Strategist, Morningstar Associates, LLC (1999 2006). | |||
Christopher A. Staples (1970) |
Vice President and Chief Investment Officer, Advisory Services | Since 2007 | Vice President and Chief Investment Officer, Advisory Services (2007 present), Senior Vice President Investment Management (2006 2007), Vice President Investment Management (2005 2006), Transamerica Funds, TST and TIS; |
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Name and Year of Birth |
Position | Term of Office and Length of Time Served* |
Principal Occupation(s) or Employment During Past Five Years | |||
Christopher A. Staples (continued) |
Vice President and Chief Investment Officer, Advisory Services, TPP, TPFG, TPFG II and TAAVF (2007 present);
Vice President and Chief Investment Officer (2007 2010); Vice President Investment Administration (2005 2007), TII;
Director (2005 present), Senior Vice President (2006 present) and Chief Investment Officer, Advisory Services (2007 present), TAM;
Director, TFS (2005 present); and Assistant Vice President, Raymond James & Associates (1999 2004). | |||||
Erin E. King (1976) |
Vice President, Chief Compliance Officer and Anti-Money Laundering Officer | Since 2013 | Vice President, Chief Compliance Officer and Anti-Money Laundering Officer, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2013 present);
Vice President, Chief Compliance Officer and Chief Risk Officer, TAM (2013 present); Vice President, TFS (2013 present);
Managing Director and Chief Compliance Officer, Guggenheim Partners Investment Management, LLC (2007 2013);
Regulatory Affairs Compliance Officer, Western Asset Management Company (2004 2007);
Compliance Officer, Citigroup Asset Management (2002 2004); and Compliance Examiner, National Association of Securities Dealers (now, FINRA) (1999 2002). | |||
Elizabeth Strouse (1974) |
Vice President, Treasurer and Principal Financial Officer | Since 2010 | Vice President, Treasurer and Principal Financial Officer (2011 present), Assistant Treasurer (2010 2011), Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF;
Vice President and Chief Accounting Officer, TAM and TFS (2009 present);
Director, Fund Administration, TIAA-CREF (2007 2009); and
Manager (2006 2007) and Senior (2003 2006) Accounting and Assurance, PricewaterhouseCoopers, LLC. | |||
Sarah L. Bertrand (1967) |
Assistant Secretary | Since 2009 | Assistant Secretary, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2009 present);
Assistant Secretary, TII (2009 2010);
Assistant Vice President and Director, Legal Administration, TAM and TFS (2007 present);
Assistant Secretary and Chief Compliance Officer, 40|86 Series Trust and 40|86 Strategic Income Fund (2000 2007); and Second Vice President and Assistant Secretary, Legal and Compliance, 40|86 Capital Management, Inc. (1994 2007). |
Transamerica Partners Portfolios | Annual Report 2013 |
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Name and Year of Birth |
Position | Term of Office and Length of Time Served* |
Principal Occupation(s) or Employment During Past Five Years | |||
Timothy J. Bresnahan (1968) | Assistant Secretary | Since 2009 | Assistant Secretary, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2009 present);
Assistant Secretary, TII (2009 2010); and Vice President and Senior Counsel, TAM (2008 present). | |||
Richard J. Wirth (1958) |
Assistant Secretary | Since 2013 | Assistant Secretary, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2013 present);
Director, Senior Vice President, Division General Counsel and Secretary, Transamerica Advisors Life Insurance Company (2012 present);
Senior Vice President and Division General Counsel, Transamerica Advisors Life Insurance Company of New York (2012 present);
Vice President and Division General Counsel, Transamerica Financial Life Insurance Company (2012 present);
Senior Vice President and Division General Counsel, Transamerica Life Insurance Company (2012 present);
Senior Vice President and Division General Counsel, Monumental Life Insurance Company (2012 present);
Senior Vice President and Division General Counsel, Western Reserve Life Assurance Co. of Ohio (2012 present);
Secretary, Aegon Financial Services Group, Inc. (2012 present); and
Assistant General Counsel, The Hartford (2004 2012). | |||
Matthew H. Huckman, Sr. (1968) |
Tax Manager | Since 2014 | Tax Manager, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2014 present);
Tax Manager, TFS (2012 present); and
Assistant Mutual Fund Tax Manager, Invesco (2007 2012). | |||
Maria P. Sell (1978) |
Assistant Treasurer | Since 2013 | Assistant Treasurer, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2013 present);
Director, Fund Administration, TAM (2012 present);
Vice President, Fund Administration, J.P. Morgan (2010 2012); and
Assurance Manager, PricewaterhouseCoopers LLP (2006 2010). |
* | Elected and serves at the pleasure of the Board of each Trust. |
If an officer has held offices for different funds for different periods of time, the earliest applicable date is shown. No officer of the Trust, except for the Chief Compliance Officer, receives any compensation from the Trust.
Transamerica Partners Portfolios | Annual Report 2013 |
Page 148
TRANSAMERICA FINANCIAL LIFE INSURANCE COMPANY
c/o Transamerica Retirement Solutions
440 Mamaroneck Avenue
Harrison, NY 10528
Item 2: Code of Ethics.
(a) | The Registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and any other officers who serve a similar function. |
(b) | The Registrants code of ethics is reasonably designed as described in this Form N-CSR. |
(c) | During the period covered by the report no amendments were made to the provisions of this code of ethics. |
(d) | During the period covered by the report, the Registrant did not grant any waivers, including implicit waivers, from the provisions of this code of ethics. |
(e) | Not Applicable. |
(f) | The Registrant has filed this code of ethics as an exhibit pursuant to Item 12(a)(1) of Form N-CSR. |
Item 3: Audit Committee Financial Experts.
The Registrants Board of Trustees has determined that Sandra N. Bane, John W. Waechter and Eugene M. Mannella are audit committee financial experts, as such term is defined in Item 3 of Form N-CSR. Ms. Bane, Mr. Waechter and Mr. Mannella are independent under the standards set forth in Item 3 of Form N-CSR. The designation of Ms. Bane, Mr. Waechter and Mr. Mannella as audit committee financial experts pursuant to Item 3 of Form N-CSR does not (i) impose upon them any duties, obligations, or liabilities that are greater than the duties, obligations and liabilities imposed upon them as a member of the Registrants audit committee or Board of Trustees in the absence of such designation; or (ii) affect the duties, obligations or liabilities of any other member of the Registrants audit committee or Board of Trustees.
Item 4: Principal Accountant Fees and Services.
(in thousands) | Fiscal Year Ended 12/31 | |||||||||
2013 | 2012 | |||||||||
(a) |
Audit Fees | 14 | 13 | |||||||
(b) |
Audit-related Fees (1) | | | |||||||
(c) |
Tax Fees (2) | | | |||||||
(d) |
All Other Fees (3) | | | |||||||
(e) (1) |
Pre-approval policy (4) | | | |||||||
(e) (2) |
% of above that were pre-approved | 0 | % | 0 | % | |||||
(f) |
If greater than 50%, disclose hours | N/A | N/A | |||||||
(g) |
Non-audit fees rendered to Adviser (or affiliate that provided services to the Registrant) | N/A | N/A | |||||||
(h) |
Disclose whether the Audit Committee has considered whether the provisions of non-audit services rendered to the Adviser that were NOT pre-approved is compatible with maintaining the auditors independence. | Yes | Yes |
(1) | Audit-Related Fees represent assurance and related services provided that are reasonably related to the performance of the audit of the financial statements of the Registrant, specifically data verification and agreed-upon procedures related to asset securitizations and agreed-upon procedures engagements. |
(2) | Tax Fees represent tax compliance, tax planning and tax advice services provided in connection with the preparation and review of the Registrants tax returns. |
(3) | All Other Fees represent permissible non-audit services for the Registrant that it believes are routine and recurring services, and would not impair the independence of the accountant. |
(4) | Audit Committee Preapproval Policy (Procedures). Generally, the Registrants Audit Committee must preapprove (i) all audit and non-audit services performed for the Registrant by the independent accountant and (ii) all non-audit services performed by the Registrants independent accountant for the Registrants investment adviser, and certain of the advisers affiliates that provide ongoing services to the Registrant, if the services to be provided by the accountant relate directly to the operations and financial reporting of the Registrant. |
The Audit Committee may delegate preapproval authority to one or more of its members. The member or members to whom such authority is delegated shall report any preapproval decisions to the Audit Committee at its next scheduled meeting.
In accordance with the Procedures, the annual audit services engagement terms and fees for the Registrant will be subject to the preapproval of the Audit Committee. In addition to the annual audit services engagement approved by the Audit Committee, the Audit Committee may grant preapproval for other audit services, which are those services that only the independent accountant reasonably can provide.
Requests or applications to provide services that require separate approval by the Audit Committee will be submitted to the Audit Committee by both the independent accountant and the Registrants treasurer, and must include a joint statement as to whether, in their view, the request or application is consistent with the Securities and Exchange Commissions rules on auditor independence.
Management will promptly report to the Chair of the Audit Committee any violation of this Procedure of which it becomes aware.
Item 5: Audit Committee of Listed Registrants.
The following individuals comprise the standing Audit Committee: Sandra N. Bane, Leo J. Hill, David W. Jennings, Russell A. Kimball, Jr., Eugene M. Mannella, Norman R. Nielsen, Joyce G. Norden, Patricia L. Sawyer and John W. Waechter.
Item 6: Schedule of Investments.
(a) | The schedules of investments are included in the Annual Report to shareholders filed under Item 1 of this Form N-CSR. |
(b) | Not applicable. |
Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8: Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9: Purchases 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 Registrants Board of Trustees that have been implemented since the Registrant last provided disclosure in response to the requirements of this Item.
Item 11: Controls and Procedures.
(a) | The Registrants principal executive officer and principal financial officer evaluated the Registrants disclosure controls and procedures within 90 days of this filing and have concluded that the Registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the 1940 Act)) are appropriately designed to ensure that information required to be disclosed by the Registrant in the reports that it files on Form N-CSR (a) is accumulated and communicated to the Registrants management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. |
(b) | The Registrants principal executive officer and principal financial officer are aware of no change in the Registrants internal control over financial reporting that occurred during the Registrants most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting. |
Item 12: Exhibits.
(a) | (1) | The Registrants code of ethics (that is the subject of the disclosure required by Item 2(a)) is attached. | ||
(2) | Separate certifications for the Registrants principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the 1940 Act, are attached. | |||
(3) | Not applicable. | |||
(b) | A certification for the Registrants principal executive officer and principal financial officer, as required by Rule 30a-2(b) under the 1940 Act, is attached. The certification furnished pursuant to this paragraph is not deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Registrant specifically incorporates it by reference. |
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.
Transamerica Asset Allocation Variable Funds (Registrant) | ||
By: | /s/ Thomas A. Swank | |
Thomas A. Swank Chief Executive Officer Date: February 28, 2014 |
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/ Thomas A. Swank | |
Thomas A. Swank Chief Executive Officer (Principal Executive Officer) Date: February 28, 2014 |
By: | /s/ Elizabeth Strouse | |
Elizabeth Strouse Principal Financial Officer Date: February 28, 2014 |
EXHIBIT INDEX
Exhibit No. |
Description of Exhibit | |
12(a)(1) | Code of Ethics for Principal Executive and Principal Financial Officers | |
12(a)(2)(i) | Section 302 N-CSR Certification of Principal Executive Officer | |
12(a)(2)(ii) | Section 302 N-CSR Certification of Principal Financial Officer | |
12(b) | Section 906 N-CSR Certification of Principal Executive Officer and Principal Financial Officer |
Exhibit 12(a)(1) Code of Ethics for Principal Executive and Principal Financial Officers
TRANSAMERICA SERIES TRUST
TRANSAMERICA PARTNERS PORTFOLIOS
TRANSAMERICA ASSET ALLOCATION VARIABLE FUNDS
THE TRANSAMERICA PARTNERS FUNDS GROUP
THE TRANSAMERICA PARTNERS FUNDS GROUP II
TRANSAMERICA FUNDS
TRANSAMERICA INCOME SHARES
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS
Approved by the Board of Trustees/Directors
Last Revised November 13, 2009
In accordance with the Sarbanes-Oxley Act of 2002 (Act) and the rules promulgated thereunder by the U.S. Securities and Exchange Commission (SEC), Transamerica Funds, Transamerica Series Trust, Transamerica Partners Portfolios, The Transamerica Partners Funds Group, The Transamerica Partners Funds Group II, Transamerica Asset Allocation Variable Funds, Transamerica Income Shares, Inc., (each a Fund and collectively the Funds) are required to file reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and must disclose whether it has adopted a code of ethics that is applicable to certain specified senior officers and that addresses certain matters specified in the Act and related SEC Rules (a Sarbanes-Oxley Code). The Funds Board of Trustees/Directors (Board), including a majority of the Trustees/Directors that are not interested persons of the Funds, as defined in Section 2(a)(19) of the Investment Company Act of 1940 (Investment Company Act), has approved the Funds Sarbanes-Oxley Code.
I. | Covered Officers/Purpose of the Code |
This Code of Ethics (Code) of the Funds applies to the Funds Principal Executive Officer, Chief Financial Officer and Chief Accounting Officer, or persons performing similar functions (Covered Officers, each of whom is set forth in Exhibit A), for the purpose of promoting:
| honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by the Funds; |
| compliance with applicable laws and governmental rules and regulations; |
| the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and |
| accountability for adherence to the Code. |
II. | Covered Officers Should Handle Ethically Actual and Apparent Conflicts of Interest |
General policy: Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. Each Covered Officer has a duty to exercise his or her authority and responsibility for the benefit of the Funds and its shareholders, to
place the interests of the Funds and its shareholders first, and to refrain from having outside interests that conflict with the interests of the Funds and its shareholders. Each Covered Officer must avoid any circumstances that might adversely affect, or appear to affect, his or her duty of loyalty to the Funds and its shareholders in discharging his or her responsibilities, including the protection of confidential information and corporate integrity.
A conflict of interest occurs when a Covered Officers private interest interferes with the interests of, or his or her service to, the Funds. For example, a conflict of interest would arise if a Covered Officer receives improper personal benefits as a result of his or her position with the Funds.
Certain conflicts of interest may arise out of the relationships between Covered Officers and the Funds and already are subject to conflict of interest provisions in the Investment Company Act and the Investment Advisers Act of 1940 (Investment Advisers Act). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Funds because of their status as affiliated persons of the Funds. The Funds and certain of its service providers compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside the parameters of this Code.
Although typically not presenting an opportunity for improper personal benefit, conflicts may arise from, or as a result of, the contractual relationship between the Funds and its investment adviser, Transamerica Asset Management, Inc. (TAM), of which the Covered Officers may be officers or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether for the Funds or TAM), be involved in establishing policies and implementing decisions that will have different effects on TAM and the Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationships between the Funds and TAM and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities normally will be deemed to have been handled ethically. In addition, it is recognized by the Board that the Covered Officers may also be officers or employees of one or more other investment companies covered by this or other codes of ethics.
Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Funds.
Each Covered Officer must:
| not use his or her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Funds whereby the Covered Officer would benefit personally to the detriment of the Funds; |
| not cause the Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit of the Funds; |
| not use material non-public knowledge of portfolio transactions made or contemplated for the Funds to trade personally or cause others to trade personally in contemplation of the market effect of such transactions; and |
| report at least annually the information elicited in the Funds Trustee/Director and Officer Questionnaire relating to potential conflicts of interest. |
There are some conflict of interest situations that must be discussed with the Funds Audit Committee if material. Some examples of such situations include:
| service as a director on the board of any Trust (public or private), other than a management investment company; |
| the receipt of any non-nominal gifts from someone or a company that has current or prospective business dealings with the Funds; |
| the receipt of any entertainment from any company with which the Funds have current or prospective business dealings unless such entertainment is business related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; |
| any ownership interest in, or any consulting or employment relationship with, any of the Funds service providers, other than TAM or any affiliated person thereof; and |
| a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officers employment, such as compensation or equity ownership. |
III. | Disclosure and Compliance |
Each Covered Officer:
| should familiarize himself or herself with the disclosure requirements generally applicable to the Funds; |
| should not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Trustees/Directors and auditors, governmental regulators or self-regulatory organizations; |
| should, to the extent appropriate within his or her area of responsibility, consult with other officers and employees of the Funds, TAM, and other service providers, with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submits to, the SEC and in other public communications made by the Funds; and |
| has the responsibility to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. |
IV. | Reporting and Accountability by Covered Officers |
Each Covered Officer must:
| upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing (in the form attached hereto as Exhibit B) to the Board that he or she has received, read, and understands the Code; |
| annually thereafter affirm (in the form attached hereto as Exhibit B) to the Board that he or she has complied with the requirements of the Code; |
| not retaliate against any other Covered Officer or any employee or agent of an affiliated person of the Trust for reports of potential violations that are made in good faith; and |
| notify the Funds Audit Committee promptly if he or she knows of any violation of this Code. Failure to do so is itself a violation of this Code. |
V. | Enforcement |
The Audit Committee is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. The Audit Committee is authorized to consult, as appropriate, with counsel to the Funds. Any approvals or waivers sought by a Covered Officer will be considered by the Audit Committee.
The Funds will follow these procedures in investigating and enforcing this Code:
| The Audit Committee will take all appropriate action to investigate any potential violations reported to the Audit Committee; |
| if, after such investigation, the Audit Committee believes that no violation has occurred, the Audit Committee is not required to take any further action; |
| any matter that the Audit Committee believes is a material violation will be promptly reported to the Board. The Directors shall take such actions as they consider appropriate, including imposition of any sanctions that they consider appropriate; |
| no person shall participate in a determination of whether he or she has committed a violation of this Code or in the imposition of any sanction against himself or herself. |
| the Audit Committee will be responsible for granting waivers, as appropriate; and |
| any amendments to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. |
VI. | Other Policies and Procedures |
This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, TAM or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds and TAMs codes of ethics under Rule 17j-1 under the Investment Company Act are separate requirements applying to the Covered Officers and others, and are not part of this Code.
VII. | Amendment; Interpretation of Provisions |
The Directors may from time to time amend this Code of Ethics or adopt such interpretations of this Code of Ethics as they deem appropriate. In connection with any amendment to the Code, a brief description of the amendment will be prepared so that the necessary disclosure may be made with the next Form N-CSR to be filed, or otherwise disclosed in accordance with applicable law.
VIII. | Confidentiality |
All reports and records prepared or maintained pursuant to this Code shall be treated as confidential and shall not be disclosed to anyone other than the Board, the Covered Officers and Funds counsel, except as otherwise requested by applicable law.
IX. | Internal Use |
The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of the Funds, as to any fact, circumstance, or legal conclusion.
X. | Sanctions |
Compliance by Covered Officers with the provisions of the Code is required. Covered Officers should be aware that in response to any violation, the Funds will take whatever action is deemed necessary under the circumstances, including, but not limited to, the imposition of appropriate sanctions. These sanctions may include, among others, the reversal of trades, reallocation of trades to client accounts, fines, disgorgement of profits, suspension or termination.
Exhibit 12(a)(2)(i) Section 302 N-CSR Certification of Principal Executive Officer
TRANSAMERICA ASSET ALLOCATION VARIABLE FUNDS
FOR THE PERIOD ENDED DECEMBER 31, 2013
FORM N-CSR CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Thomas A. Swank, certify that:
1. | I have reviewed this report on Form N-CSR of Transamerica Asset Allocation Variable Funds; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
d. | Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer and I have disclosed to the Registrants auditors and the audit committee of the Registrants Board of Trustees (or persons performing equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
Date: February 28, 2014 | By: | /s/ Thomas A. Swank | ||||
Thomas A. Swank | ||||||
Title: | Chief Executive Officer (Principal Executive Officer) |
Exhibit 12(a)(2)(ii) Section 302 N-CSR Certification of Principal Financial Officer
TRANSAMERICA ASSET ALLOCATION VARIABLE FUNDS
FOR THE PERIOD ENDED DECEMBER 31, 2013
FORM N-CSR CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Elizabeth Strouse, certify that:
1. | I have reviewed this report on Form N-CSR of Transamerica Asset Allocation Variable Funds; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; |
4. | The Registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the Registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
d. | Disclosed in this report any change in the Registrants internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrants internal control over financial reporting; and |
5. | The Registrants other certifying officer and I have disclosed to the Registrants auditors and the audit committee of the Registrants Board of Trustees (or persons performing equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrants ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrants internal control over financial reporting. |
Date: February 28, 2014 | By: | /s/ Elizabeth Strouse | ||||
Elizabeth Strouse | ||||||
Title: | Principal Financial Officer |
Exhibit 12(b)
Section 906 N-CSR Certification of Principal Executive Officer and Principal Financial Officer
TRANSAMERICA ASSET ALLOCATION VARIABLE FUNDS
FOR THE PERIOD ENDED DECEMBER 31, 2013
FORM N-CSR CERTIFICATION
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Certified Shareholder Report of Transamerica Asset Allocation Variable Funds (the Fund) on Form N-CSR for the period ended December 31, 2013, as filed with the Securities and Exchange Commission on the date hereof (the Report), each of the undersigned hereby certifies that, to his or her knowledge:
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Fund. |
/s/ Thomas A. Swank | Date: February 28, 2014 | |||||
Thomas A. Swank | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
/s/ Elizabeth Strouse | Date: February 28, 2014 | |||||
Elizabeth Strouse | ||||||
Principal Financial Officer |
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
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