497 1 c63581_497.htm c63581_497.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

TRANSAMERICA FUNDS

Supplement to the Currently Effective Statement of Additional Information

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Transamerica AllianceBernstein International Value

Effective December 15, 2010, the fund will be renamed Transamerica Hansberger International Value and the following information supplements and amends information in the Statement of Additional Information concerning the fund:

All references to Transamerica AllianceBernstein International Value are revised to mean Transamerica Hansberger International Value. Transamerica Hansberger International Value is sub-advised by Hansberger Global Investors, Inc., located at 401 East Las Olas Blvd., Suite 1700, Ft. Lauderdale, FL 33301. Transamerica Hansberger International Value’s investment adviser, Transamerica Asset Management, Inc. (“TAM”), its advisory and sub-advisory fee structure, and its fundamental investment restrictions will remain the same.

“Appendix A” of the Statement of Additional Information is hereby revised to delete the proxy voting policies of AllianceBernstein L.P., and to include the proxy voting policies of Hansberger Global Investors, Inc. as follows:

Hansberger Global Investors, Inc.

Proxy Voting Policies and Procedures (effective January 1, 2011)
Revised as of January 1, 2011
Reviewed as of December 3, 2010

Proxy Voting Policy

A.   Objective

When Hansberger Global Investors, Inc. (“HGI”) is responsible for voting proxies, we take reasonable steps under circumstances to ensure that proxies are voted in the best interest of our clients, which means voting proxies with view to enhancing the financial value of the securities held in client accounts. The financial interest of our clients the primary consideration in determining how proxies should be voted. In the case of social and political responsibility issues that, in our view, do not primarily involve financial considerations, it is not possible to represent fairly the diverse views of our clients. Thus, HGI generally votes in accordance with the recommendations of proxy voting service on such issues, although, on occasion HGI could abstain from voting.

When making proxy-voting decisions, HGI generally adheres to its Proxy Voting Guidelines (the “Guidelines”), revised from time to time by HGI, that detail HGI’s positions on recurring issues and criteria for addressing recurring issues.

B.   Accounts for Which HGI Has Proxy Voting Responsibility

HGI generally will vote proxies for client accounts only if it has been expressly delegated such power in writing. eliminate ambiguity and to ensure clients who want us to vote proxies understand our policies and procedures, ensures that proxy voting is expressly addressed in our investment management agreements with new clients revised agreements with existing clients. We generally interpret silence in the agreement as not delegating HGI right to vote, except for agreements with U.S. employee benefit plans subject to ERISA. For ERISA accounts, assumes that it has voting power unless a written document expressly prohibits HGI from voting proxies, or assigns voting power to another fiduciary.

C.   Voting and Non-Voting of Proxies

HGI generally endeavors to vote proxies it is eligible to vote and timely receives. We generally will not vote proxies under the following circumstances:

     

 

We will not vote proxies for securities not selected by us or for securities over which we have no discretionary authority held in a client account.

 

 

We will not vote proxies that we do not receive in time to submit a timely vote. The timeliness of notification, distribution of proxy materials, book closure and the actual meeting date will vary by jurisdiction and market practice.

 

 

We ordinarily will not vote on proposals if a security is on loan at the time of the vote under a client’s securities lending arrangement. Absent extraordinary circumstances, we believe that the administrative burden and loss of revenue associated with recalling securities will outweigh the anticipated benefit, particularly since there is no guarantee that loaned securities can be retrieved in time to submit a timely vote. We may ask that a security be recalled to vote under extraordinary circumstances. This decision will be made only when, in our sole judgment, the matter to be voted on has critical significance to the potential value of a long-term holding, and the relative cost and/or administrative inconvenience of retrieving the securities does not outweigh the perceived benefit.




   

 

 

We may not vote on a particular proposal or proxy if the costs or burdens of voting outweigh the expected benefit to clients. These decisions are generally made on a case-by-case basis and will be dependent on numerous factors, including the nature of the proposal, the nature of the holding, the direct cost of voting, and whether voting will hinder our ability to sell a security.

Voting proxies for securities of companies located outside of the United States raises the same issues as voting proxies related to U.S. companies but could involve significantly greater effort or cost that could result in us deciding not to vote. Additional burdens include, but are not limited to:

     

 

Differing rules and practices regarding shareholder notification and voting in different jurisdictions could result in greater instances of HGI being unable to submit a timely vote.

 

 

Some jurisdictions require that shares to be voted be “blocked” by the custodian or depository (or bearer shares deposited with a specified financial institution) for a specified number of days (usually five or fewer but sometimes longer) before or after the shareholder meeting.

 

 

Offering materials may not be available in English at a reasonable cost or received timely to permit informed voting.

 

 

Some jurisdictions may require that securities be registered in a particular way that differs from ordinary practice (e.g., registered in the company’s share registry or taken out of nominee name).

D.   Conflicts

From time to time, proxy voting proposals may raise conflicts between the interests of HGI’s clients and the interests of HGI and/or its employees. Under these circumstances, HGI will take additional steps that are designed to ensure that the proxies are voted based on our clients’ best interests. Conflicts of interest may arise when:

     

 

Proxy votes regarding non-routine matters are solicited by an issuer that has an institutional separate account relationship with HGI;1

 

 

A proponent of a proxy proposal has a business relationship with HGI or an HGI employee;

 

 

HGI or an HGI employee has a business relationship with a participant in a proxy contests, or a director election.

HGI’s Proxy Voting Committee is responsible for overseeing the proxy voting process, including monitoring and resolving possible material conflicts of interest. Any portfolio manager or research analyst with knowledge of a personal conflict of interest relating to a particular matter shall disclose that conflict to the Chief Compliance Officer or another member of the Proxy Voting Committee, and may be required to recuse him or herself from the proxy voting process. Issues raising possible conflicts of interest are referred to the Proxy Voting Committee for evaluation and resolution. Conflicts of interest may be resolved in different ways by the Proxy Voting Committee. Possible ways that conflicts of interest may be resolved include strict application of our Guidelines, recusal of conflicted personnel, consultation with other unconflicted investment personnel, or voting in accordance with an objective third party recommendation.

E.   Arrangement with Proxy Voting Service

We use an unaffiliated third party proxy administrator to assist in voting proxies. The proxy voting service’s functions may include notifying us of shareholder meeting dates, translating proxy materials received from companies, providing associated research and recommendations for voting on particular proxy proposals, recordkeeping and physically transmitting votes. Although we may consider the recommendations of the proxy voting service and other parties if appropriate, we make the ultimate decision on how to vote client proxies.

F.   Reports

HGI will provide clients with periodic reports on our proxy voting decisions and actions for securities in their accounts, in such forms or intervals as the clients reasonably request. Clients may contact HGI for such information.

1 For this purpose, HGI generally will consider as “non-routine” any matter listed in New York Stock Exchange Rule 452.11, relating to when a member firm may not vote a proxy without instructions from its customer (for example, contested matters are deemed non-routine).

2


Hansberger Global Investors, Inc.
Proxy Voting Guidelines
Revised as of January 1, 2011
Reviewed as of December 3, 2010

General Guidelines

The proxy voting guidelines below summarize HGI’s position on various issues of concern to investors and give a general indication of how portfolio securities held in client accounts will be voted. The guidelines are not exhaustive and do not include all potential voting issues. In addition, because proxy voting issues and circumstances of individual companies are so varied, there may be instances when HGI may not vote in strict adherence to these guidelines as outlined below. The following guidelines are grouped according to the types of proposals generally presented to shareholders.

(i)   Board of Directors Issues

HGI will generally vote for all Board of Directors nominees unless certain actions by the Directors warrant votes to be withheld. These instances include Directors who:

     

 

Attend less than 75% of the board and committee meetings; and

 

 

Are also the CEO of a company where a serious restatement has occurred after the CEO certified the pre- restatement financial statements.

HGI also feels that the following conflicts of interest may hinder a director’s performance and will therefore typically withhold votes from a candidate who is a:

     

 

CFO who presently sits on the board;

 

 

Director who presently sits on an excessive number of boards;

 

 

Director, or a director whose immediate family member, provides material professional services to the company at any time during the past five years;

 

 

Director, or a director whose immediate family member, engages in airplane, real estate or other similar deals with the company, including perquisite type grants from the company; and

 

 

Director with an interlocking directorship.

(ii)   Auditors

HGI will generally vote for proposals to ratify auditors. However, HGI will generally vote against ratification of the auditor and/or authorizing the board to set auditor fees for the following reasons:

     

 

When audit fees added to audit-related fees total less than one-third of the total fees paid to the auditor by a company; When there have been any recent restatements or late filings by the company where the auditor bears some responsibility for the restatement or late filing (e.g., a restatement due to a reporting error);

 

 

When the company has aggressive accounting policies;

 

 

When the company has poor disclosure or lack of transparency in financial statements;

 

 

When there are other relationships or issues of concern with the auditor that might suggest a conflict between the interest of the auditor and the interests of shareholders; or

 

 

When the company is changing auditors as a result of a disagreement between the company and the auditor on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures.

(iii)   Executive and Director Compensation

HGI will generally support executive compensation plans that motivate participants to focus on long-term shareholder value and returns, encourage employee stock ownership, and more closely align employee interests with those of shareholders. HGI will also support resolutions regarding director’s fees.

In order to allow for meaningful shareholder review, we believe that incentive programs should generally include: (i) specific and appropriate performance goals; (ii) a maximum award pool; and (iii) a maximum award amount per employee. In addition, the payments made should be reasonable relative to the performance of the business, and total compensation to those covered by the plan should be in line with compensation paid by the Company's peers.

In general, HGI will determine votes for the following on a case-by-case basis:

     

 

Stock-based incentive plans;

 

 

Performance-based stock option proposals;

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Stock plans in lieu of cash;

 

 

Proposals to ratify or cancel executive severance agreements; and

 

 

Management proposals seeking approval to re-price options.

HGI will generally vote against:

     

 

Retirement plans for non-employee directors;

 

 

Shareholder proposals seeking to set absolute levels on compensation or otherwise dictate the amount or forms of compensation; and

 

 

Shareholder proposals requiring director fees to be paid in stock only.

(iv)   Takeover/Tender Offer Defenses

Anti-takeover proposals are analyzed on a case-by-case basis. However, since investors customarily, in our view, suffer a diminution of power as a result of the adoption of such proposals, they are generally opposed by HGI unless structured in such a way that they give shareholders the ultimate decision on any proposal or offer. Specifically, HGI will under normal circumstances oppose:

     

 

Dual class exchange offers and dual class recapitalizations (unequal voting rights);

 

 

Proposals to require a supermajority shareholder vote to approve charter and by-law amendments;

 

 

Proposals to require a supermajority shareholder vote to approve mergers and other significant business combinations; and

 

 

Fair price provisions with shareholder vote requirements greater than a majority of disinterested shares.

(v)   Capital Structure and Shareholder Rights

This category consists of broad issues concerning capital structure and shareholder rights. These types of issues generally call for revisions to the corporate by-laws, which will impact shareholder ownership rights. All items are reviewed and voted on a case-by-case basis; however, HGI endeavors to balance the ownership rights of shareholders and their best interests with providing management of each corporation the greatest operational latitude.

(vi)   Social and Political Responsibility Issues

In the case of social and political responsibility issues that in HGI’s view do not primarily involve financial considerations, it is not possible to represent fairly the diverse views of HGI’s clients. HGI generally votes in accordance with the recommendations of its proxy voting service on these social and political issues, although HGI sometimes may abstain from voting on these issues.

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“Appendix B - Portfolio Managers” is hereby revised to delete all information for Transamerica AllianceBernstein International Value and to include information for Transamerica Hansberger International Value as follows:

Transamerica Hansberger International Value

                                     

 

 

 

Registered Investment
Companies

 

 

Other Pooled Investment
Vehicles

 

 

Other Accounts

Portfolio Manager*

 

 

Number

 

 

Assets
Managed

 

 

Number

 

 

Assets
Managed

 

 

Number

 

 

Assets
Managed

Ronald W. Holt

 

 

4

 

 

$1.5 billion

 

 

1

 

 

$29 million

 

 

11

 

 

$413 million

Moira McLachlan

 

 

0

 

 

$0

 

 

0

 

 

$0

 

 

4

 

 

$173 million

Lauretta (Retz) Reeves

 

 

2

 

 

$177 million

 

 

1

 

 

$20 million

 

 

6

 

 

$181 million

 

Fee Based Accounts
(The number of accounts and the total assets in the accounts managed by each portfolio manager with respect to which
the advisory fee is based on the performance of the account.)

Ronald W. Holt

 

 

1

 

 

$1.3 billion

 

 

0

 

 

$0

 

 

1

 

 

$97 million

Moira McLachlan

 

 

0

 

 

$0

 

 

0

 

 

$0

 

 

0

 

 

$0

Lauretta (Retz) Reeves

 

 

0

 

 

$0

 

 

0

 

 

$0

 

 

0

 

 

$0

*Information as of October 31, 2010

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Conflicts of Interest

Potential conflicts of interest may arise from a portfolio manager’s management of, or the firm’s management of, other clients. Such conflicts could arise based on differing fee arrangements with other clients. Differing fee arrangements could cause an incentive to favor one client over another in the allocation of investment opportunities, particularly if one client has a performance fee that could be significantly higher (or lower) than a straight base fee. Also, conflicts could arise for a portfolio manager to favor one client over another depending how a portfolio manager is compensated. Finally, material conflicts could arise from the portfolio manager’s knowledge of the size, timing and possible market impact of Fund trades, whereby a portfolio manager could try to use this information to the advantage of other accounts or personally in his or her personal securities transaction.

HGI has implemented policies and procedures, including brokerage and trade allocation policies and procedures, that it believes address the conflicts associated with managing accounts for multiple clients. HGI also monitors for compliance with account guidelines and allocation of IPOs. HGI also has implemented and monitors compliance with our Code of Ethics that is designed to prevent employees from trading to the detriment of our clients. Finally, HGI periodically monitors investment returns of client accounts within the same style or approach, including dispersion of client account returns, to ensure that material dispersions are based upon something other than preferential treatment being accorded to other accounts in the same style or approach (such as investment policies or restrictions or cash inflows or outflows).

Compensation

HGI’s compensation practices are designed to maintain a competitive compensation structure to attract, retain and motivate investment professionals of the highest caliber. HGI seeks to reward performance in a manner which aligns the interests of its investment professionals with those of the company and its clients. To accomplish these ends, portfolio managers are compensated by a combination of base salary and participation in HGI’s incentive bonus program. Senior investment professionals also may participate in a deferred bonus program that is intended to encourage long-term retention of investment professionals. A portfolio manager’s base salary is a fixed amount that may change as a result of an annual review, assumption of new duties or based on a market adjustment.

HGI portfolio managers also have the opportunity to participate in a bonus pool linked to the direct profits of their respective investment teams. A portfolio manager’s allocation in the pool is determined through a subjective process that evaluates numerous qualitative and quantitative factors, including, but not limited to, pre-tax performance of the Fund and other accounts managed by the portfolio manager relative to the account’s benchmark, given the account’s objectives, investment policies and restrictions and market environment over the preceding calendar year. This performance factor is not based on the value of the assets held in any client portfolio.

Additional factors include the portfolio manager’s contributions to the investment management functions within HGI, contributions to the development of other investment professionals and supporting staff, and overall contributions to client development and service and strategic planning for the firm. The target bonus is expressed as a percentage of the total bonus pool and that can vary (higher or lower) based on an evaluation of the above-mentioned factors.

Finally, many senior portfolio managers have an additional opportunity to participate in an annual bonus linked to the overall profitability of HGI. All or a portion of payments from this pool may be deferred, and invested in an HGI-managed product for a specified period of time. This plan is designed to retain qualified investment professionals and further align their interests with those of our clients and the firm. Participation in this bonus program is discretionary, and is determined annually by the Compensation Committee of the Board of Directors of HGI’s parent company.

Ownership of Securities

As of December 15, 2010, none of the portfolio managers beneficially owned any securities in the fund.

Investors Should Retain this Supplement for Future Reference

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December 15, 2010

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