As filed with the Securities and Exchange Commission on March 9, 2015
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-08272
TRANSAMERICA PARTNERS PORTFOLIOS
(Exact Name of Registrant as Specified in Charter)
4600 S. Syracuse St., Suite 1100, Denver, Colorado 80237
(Address of Principal Executive Offices) (Zip Code)
Registrant’s Telephone Number, including Area Code: (720) 493-4256
Tané T. Tyler, Esq., 4600 S. Syracuse St., Suite 1100, Denver, Colorado 80237
(Name and Address of Agent for Service)
Date of fiscal year end: December 31
Date of reporting period: January 1- December 31, 2014
Item 1: Report(s) to Shareholders. The Annual Report is attached.
1
TRANSAMERICA PARTNERS PORTFOLIOS
Annual Report
December 31, 2014
Proxy Voting Policies and Procedures
A description of the Transamerica Partners Portfolios’ (the “Portfolios”) proxy voting policies and procedures 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 Portfolios’ website at www.transamericapartners.com or (iii) on the SEC’s website at www.sec.gov. In addition, the Portfolios are required to file Form N-PX, with their complete proxy voting record for the twelve months ended June 30, no later than August 31 of each year. The Portfolios’ filing for the twelve months ended June 30, 2014 is available without charge, upon request by calling 1-800-851-9777 and on the SEC’s website at http://www.sec.gov.
Quarterly Portfolios
The Portfolios will file their portfolios of investments on Form N-Q with the SEC for the first and third quarters of each fiscal year. The Portfolios’ Form N-Q is available on the SEC’s website at www.sec.gov. The Portfolios’ Form N-Q may be reviewed and copied at the SEC’s Public Reference Room in Washington, DC. For information on the operation of the SEC’s 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.
Transamerica Partners High Quality Bond Portfolio
(unaudited)
MARKET ENVIRONMENT
2014 can best be described as a tale of two halves. At the start of the year, geopolitical concerns, a slowdown in China, and soft economic data sparked a rally in treasuries. Comments late in the quarter from U.S. Federal Reserve (“Fed”) chairwoman Janet Yellen that rate increases could come sooner than expected quickly ended the party. The comment triggered a back-up in rates that erased the January rally on all but the longest treasuries. Sentiment in the fixed income market was “risk-on” and spreads tightened, generating excess returns in most sectors during the quarter. The exception was the agency residential mortgage-backed security sector (“RMBS”) as the Fed tapering weighed heavily on the sector. The bond market posted strong results during the second quarter as credit spreads narrowed and treasury yields continued to fall in response to weaker-than-expected first quarter gross domestic product growth. Foreign central bank buying and shifting global demand from sovereign debt buyers also contributed to the decline in yields on long term treasury securities. All spread sectors had positive excess returns during the quarter with lower quality corporates outperforming their higher quality brethren.
U.S. economic data was somewhat mixed in the third quarter. While the housing sector was somewhat anemic, economic reports in the third quarter indicated an economy growing at a moderate pace, with continued employment gains and the expansion on firmer footing. The stronger third quarter saw a backup in rates between the two-year and seven-year part of the treasury curve. Increased geopolitical tension in the Middle East, concerns about growth prospects in China and Europe, weakness in oil and commodity prices and equity friendly actions by corporations shifted investor sentiment to “risk-off”, causing spreads to widen. The net result was that excess returns were negative. The fourth quarter saw a continuation of economic disparity in the global economy. While the U.S. economy strengthened, Europe, Japan and many emerging markets were stagnating causing a rally in the U.S. dollar and treasury securities between five-year and 30-year maturities. The short-end sold off due to uncertainty regarding the timing of monetary policy changes. The rout in oil prices initially led to a selloff in the energy, basic industries, metals and mining and industrials, but later spread to other corporate sectors. According to Merrill Lynch, the corporate sector was the worst performer during the 4th quarter, generating excess returns of (1.35)%. Spreads in the agency RMBS tightened, while commercial mortgage-backed security (“CMBS”) and asset-backed security (“ABS”) spreads widened modestly during the quarter resulting in positive excess returns for the quarter.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners High Quality Bond Portfolio returned 0.81%. By comparison, its benchmark, the Bank of America Merrill Lynch U.S. Corporate & Government 1-3 Years Index, returned 0.78%.
STRATEGY REVIEW
The Portfolio outperformed the Bank of America Merrill Lynch U.S. Corporate & Government 1-3 Years Index. As of December 31, 2014, the Portfolio’s yield-to-maturity was 1.32% versus the benchmark’s 0.91%, with a duration of 1.68 years versus the benchmark’s 1.89. In anticipation of higher rates, the portfolio managers managed the Portfolio with a short-duration bias throughout 2014. During the year, the Portfolio limited purchases of securities with durations of 3+ years, while also reducing exposure to the 3-5 year part of the curve from 11% to 5% over concerns about rising rates in this part of the curve. In the second quarter, the Portfolio reduced the corporate-sector allocation to 26% (mostly in A-rated financials), and reinvested the proceeds in like-duration AAA-rated credit cards. The purpose of the trade was to take advantage of wide spreads between the subsectors, and it generated a net yield pickup. By year-end the spread differential had narrowed, and we reversed part of the trade.
The allocation to the ABS sector ended the year at 29% (+3%) and the allocation to the mortgage-backed sector increased to 32% (+3%), due primarily to purchases in the agency reverse mortgage segment. In 2014, returns were largely driven by the income/carry advantage in the spread sectors, although curve positioning was also important. That being said, the sector/security weightings contributed approximately 0.33% of excess returns during the year. The RMBS sector led (+0.14%), followed by ABS (+0.09%), and CMBS (+0.09%). The corporate sector lagged at (-0.04%). Within the agency RMBS segment, reverse mortgages and a private label collateralized mortgage obligation (backed by prime jumbo mortgages) were the best performers. Within ABS, a timeshare issue performed best, followed by a retailer credit card issue and several subordinated issues in the heavy-equipment segment. During the year, several older-vintage CMBS deals were top performers due to their strong income/carry advantage, while a subordinated note issued by Federal Home Loan Mortgage Corp. and backed by multi-family housing mortgages also contributed to the performance.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 1
Transamerica Partners High Quality Bond Portfolio
(unaudited)
MARKET ENVIRONMENT (continued)
Turning to the corporate-sector, the overweight to the financial segment and underweight to industrials and utilities detracted modestly from excess returns. The underweight to treasuries contributed 0.05% of excess return. Curve positioning was responsible for 0.10% of excess return. Specifically, the exposure to the 0-1 year and 2-3 year parts of the curve cost the Portfolio 0.09% of return, while the exposure to the 1-2 year and 3-4 year part of the curve provided 0.19% of total return. Interestingly, while we positioned the Portfolio defensively against rising rates, the reduction in our holdings in the 3-5 year maturity bucket hurt performance due to the unexpected decline in interest rates in that part of the curve.
Douglas A. Kelly, CFA
Peter S. Kaplan, CFA
Co-Portfolio Managers
Merganser Capital Management, LLC
Please refer to page 21 for index descriptions.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 2
Transamerica Partners Inflation-Protected Securities Portfolio
(unaudited)
MARKET ENVIRONMENT
2014 was marked by global Central Bank policy divergence, most notably between that of the U.S. and U.K., which were expected to ease off accommodation and quantitative easing (“QE”), and Europe and Japan, which saw greater need to add to or maintain their record levels of easy policy. In the U.S., the inflation market saw some support in the form of a more stable flow dynamic and upside surprises to both headline and core Consumer Price Index in Spring. However, in the latter half of the year, investors focused more on plummeting energy prices and follow through effects on the run rate of inflation. As energy collapsed, breakevens reached multi-year lows, with 10-year U.S. breakevens closing the year at 1.68%. 2014 also saw a Yellen-led committee ultimately cease QE and begin shifting toward the beginning of interest rate normalization.
In the Eurozone, the European Central Bank (“ECB”) was challenged by a persistently low run rate of inflation, such that 5y5y inflation broke below 2% for the first time since 2011. This measure represents an important psychological level, as the ECB has previously relied upon medium term inflation expectations remaining resilient. Indeed, as 2014 drew to a close, and both spot and forward inflation remained dangerously at or close to deflationary territory, consensus expectations drifted toward more unconventional measures of easing (such as full-scale sovereign QE).
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Inflation-Protected Securities Portfolio returned 3.00%. By comparison, its benchmark, the Barclays U.S. Treasury Inflation Protected Securities Index, returned 3.64%.
STRATEGY REVIEW
In early 2014, the Portfolio was generally overweight long forward real rates as an expression of fundamental value. We believed that long forwards were trading too cheap relative to longer-term U.S. growth expectations. As the year evolved and long forward real rates rallied and rate curves flattened, the Portfolio transitioned to an underweight in long forward real rates. Over the year, the Portfolio was generally long inflation expectations (U.S. breakevens), especially further out the curve. As U.S. breakevens collapsed in line with energy prices, this positioning detracted from performance. The Portfolio also held a short duration stance at various points in the year, in part to hedge declining energy prices, the Portfolio’s long U.S. breakeven positioning, and to target the area of the curve most vulnerable to unexpected shifts in U.S. Federal Reserve policy. These shorts were generally concentrated in the front-end of both the real and nominal curve. In the non-U.S. space, the Portfolio benefited from allocations to Italian, New Zealand, and Brazilian inflation-linked bonds, and Australian real rate relative value trades relative to U.S. rates.
From a security selection perspective, the Portfolio was managed to be short off-the-run Treasury inflation protected securities (“TIPS”) versus on-the-run TIPS, favoring the most recently issued TIPS across the curve. The Portfolio continues to hold the position, as the changing regulatory environment and heightened pressure on dealer inventory has made off-the-run issues less attractive versus their on-the-run counterparts. Various derivatives were utilized to attain desired portfolio positioning. According to the Statement of Operations, contribution from derivatives was negative. Purchased options and swaptions, futures, and swaps had a negative impact on the Portfolio, while written options and swaptions and forward foreign currency trades were accretive to performance.
Martin Hegarty
Gargi Chaudhuri
Co-Portfolio Managers
BlackRock Financial Management, Inc.
Please refer to page 21 for index descriptions.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 3
Transamerica Partners Core Bond Portfolio
(unaudited)
MARKET ENVIRONMENT
The year ended December 31, 2014, can be summarized as great expectations that were never met. This was especially true for the economic recovery and an anticipated sell-off in fixed income markets.
In the U.S., the year got off to a poor start, as severe weather led to a freeze in economic activity during the first quarter of the year. Underwhelming economic performance was not just a U.S. event, however. Lending in Europe remained soft, as banks shored up their balance sheets in order to pass the Eurozone’s asset quality review test. The restriction of private credit, especially to small and medium-sized enterprises, is completely contrary to what is required for an economic expansion. The resulting slowdown encompassed most of the region; even the German growth engine lost steam.
Against this backdrop, market volatility rose. Equity markets ended the year with a decent gain, but only after enduring two 5%-7% declines. Commodities experienced a major sell-off that trimmed the price of crude oil by more than half. In fixed income markets, lower-quality securities were hurt by the commodities sell-off, as investors worried about the future financial health of companies and countries heavily dependent on commodities production.
When all was said and done, high-quality, long-duration fixed income, most notably 30-year U.S. Treasuries, was among the best-performing asset classes. To some extent, the relative strength of long-term treasuries was due to a divergence in global monetary policy. While the U.S. and U.K. began winding down quantitative easing (“QE”) and talking about raising interest rates, Japan and Europe moved the other direction – either increasing the pace of QE or seeking alternative ways to implement QE policy. Even China, the largest emerging market country, added stimulus through numerous channels. The result was a large difference in rates on sovereign bonds. Yield-seeking investors in low-yielding countries bought debt instruments from countries offering (relatively) higher interest rates, creating a tailwind for long-term U.S. Treasuries.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Core Bond Portfolio returned 6.32%. By comparison, its benchmark, the Barclays U.S. Aggregate Bond Index, returned 5.97%.
STRATEGY REVIEW
The Portfolio underperformed the benchmark during the year ended December 31, 2014. The biggest driver of performance was our short duration positioning and underweighting of U.S. Treasuries and agency mortgage-backed securities (“MBS”). Our overweighting of various spread products added positively to returns but did not deliver enough positive total return to offset the difference. Interest rates declined in 2014, with the long-term treasury component of the market leading in total returns for the year. While our short duration positioning was a drag on performance, it was somewhat offset by our yield curve positioning. We concentrated our underweight in the front and intermediate parts of the yield curve, believing that these segments of the market were most exposed to potential rate adjustment as the U.S. Federal Reserve (“Fed”) policy normalizes.
2014 was a year of two halves for most spread-based assets. The first part of the year saw mediocre growth and the emergence of geopolitical issues, but the markets did not react much to the broader risks and spreads generally tightened. While investment grade funds saw continued inflows during most of the year and also enjoyed strong issuance of new debt, corporate bonds finished 2014 with five consecutive months of negative excess returns. Many of the positive technicals supporting tight credit spreads unwound in the second half of the year, as the Fed completed ending its QE program and commodity prices fell. Our overweighting of financials was additive during the period, as credit spreads tightened due to the improved environment for asset quality and regulations supporting credit quality. In our emerging market positioning, we continued to be selective given the changing nature of global growth. Avoiding idiosyncratic risks remains paramount, in our opinion, given low all-in yields.
MBS outperformed their duration matched treasuries in the year, and our underweight was a negative contribution to performance. We continued to invest in agency mortgage dollar rolls which were helped by the Fed’s balance sheet policies and non-agency MBS re-REMICs (Real Estate Mortgage Investment Conduit), which have benefited from the extra yield and positive technicals. We remain underweight to agency MBS, reflecting our expectation that the Fed’s reduced role in the market may lead to deteriorating technicals and widening spreads. We liked (and continue to like) other securitized segments, particularly niche sectors in asset-backed securities and select commercial MBS. Both segments generated excess return versus treasuries in 2014 and, in our opinion, continue to offer attractive spreads.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 4
Transamerica Partners Core Bond Portfolio
(unaudited)
STRATEGY REVIEW (continued)
Global divergences have changed the investing landscape, with energy weakness, U.S. dollar strength and the accompanying lack of inflationary pressures creating higher volatility. While the Fed may be less supportive in 2015, many other central banks continue to attempt to reflate their economies. In our opinion, this may still help to foster a decent investing environment for select spread-based assets. With expectations for solid economic growth in the U.S. and a Fed that may start to raise rates, we are cautious around duration risks. We continue to like risk assets, though we remain selective as idiosyncratic risks continue to rise and low all-in yields may limit upside.
Aegon USA Investment Management, LLC took over management responsibilities for the Portfolio as of May 1, 2014. From that date through the end of the period, derivatives were not utilized in the Portfolio. From the beginning of the period through May 1, 2014, the Portfolio was managed by a different sub-adviser who did utilize various derivatives instruments. During that time period, derivatives added to total returns.
Brian W. Westhoff, CFA
Rick Perry, CFA
Doug Weih, CFA
Co-Portfolio Managers
Aegon USA Investment Management, LLC
Please refer to page 21 for index descriptions.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 5
Transamerica Partners High Yield Bond Portfolio
(unaudited)
MARKET ENVIRONMENT
The year ended December 31, 2014, can be summarized as great expectations that were never met. This was especially true for the economic recovery and an anticipated sell-off in fixed income markets.
In the U.S., the year got off to a poor start, as severe weather led to a freeze in economic activity during the first quarter of the year. Underwhelming economic performance was not just a U.S. event, however. Lending in Europe remained soft, as banks shored up their balance sheets in order to pass the Eurozone’s asset quality review test. The restriction of private credit, especially to small and medium-sized enterprises, is completely contrary to what is required for an economic expansion. The resulting slowdown encompassed most of the region; even the German growth engine lost steam.
Against this backdrop, market volatility rose. Equity markets ended the year with a decent gain, but only after enduring two 5%-7% declines. Commodities experienced a major sell-off that trimmed the price of crude oil by more than half. In fixed income markets, lower-quality securities were hurt by the commodities sell-off, as investors worried about the future financial health of companies and countries heavily dependent on commodities production.
When all was said and done, high-quality, long-duration fixed income, most notably 30-year U.S. Treasuries, was among the best-performing asset classes. To some extent, the relative strength of long-term treasuries was due to a divergence in global monetary policy. While the U.S. and U.K. began winding down quantitative easing (“QE”) and talking about raising interest rates, Japan and Europe moved the other direction – either increasing the pace of QE or seeking alternative ways to implement QE policy. Even China, the largest emerging market country, added stimulus through numerous channels. The result was a large difference in rates on sovereign bonds. Yield-seeking investors in low-yielding countries bought debt instruments from countries offering (relatively) higher interest rates, creating a tailwind for long-term U.S. Treasuries.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners High Yield Bond Portfolio returned 3.16%. By comparison, its benchmark, the Bank of America Merrill Lynch High Yield Master II Index, returned 2.50%.
STRATEGY REVIEW
The Portfolio outperformed its benchmark for the year. The most significant drivers of outperformance were our underweighting in the global commodity-related sectors such as oil, and individual selections of B- and CCC-rated securities. The benefit of these decisions was partially offset by an underweighting in the BB sector, the best-performing ratings category within the high-yield universe.
From a sector standpoint, energy, communications, and basic industry were strong contributors, while the sectors contributing the least included capital goods, other industrials, and consumer non-cyclicals. The best-performing securities in the Portfolio were NRG Energy, Inc., Cablevision Systems Corp., CHS/Community Health Systems, Inc., Clear Channel Outdoor Holdings, Inc. (no longer held at year end), and Kinder Morgan, Inc. The biggest individual detractors included Energy XXI Gulf Coast, Inc., Linn Energy LLC/Linn Energy Finance Corp., Associated Materials LLC/AMH New Finance, Inc., BreitBurn Energy Partners, LP/BreitBurn Finance Corp., and PHI, Inc.
As the year came to a close, we remained constructive on the high yield asset class on an absolute basis and relative to other fixed income assets. Fundamentals for the asset class were generally positive, in our view, with the exception of some of the commodity-related sectors. Overall, earnings remained at high levels, default rates were low, and the sharp drop in energy prices was providing a tailwind for the U.S. consumer and many consumer-related sectors. We continued (and will likely continue) to be cautious toward energy and other commodity-related companies; given the magnitude of the declines in price for oil and other commodities, earnings for the segment did not look promising as the year came to a close. The energy and commodities segment notwithstanding, high-yield valuations were relatively attractive and, we believe, well positioned to absorb modestly higher treasury rates while generating coupon-like returns.
Kevin Bakker, CFA
Portfolio Manager
Aegon USA Investment Management, LLC
Please refer to page 21 for index descriptions.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 6
Transamerica Partners Balanced Portfolio
(unaudited)
MARKET ENVIRONMENT
Aegon USA Investment Management, LLC
The year ended December 31, 2014, can be summarized as great expectations that were never met. This was especially true for the economic recovery and an anticipated sell-off in fixed income markets.
In the U.S., the year got off to a poor start, as severe weather led to a freeze in economic activity during the first quarter of the year. Underwhelming economic performance was not just a U.S. event, however. Lending in Europe remained soft, as banks shored up their balance sheets in order to pass the Eurozone’s asset quality review test. The restriction of private credit, especially to small and medium-sized enterprises, is completely contrary to what is required for an economic expansion. The resulting slowdown encompassed most of the region; even the German growth engine lost steam.
Against this backdrop, market volatility rose. Equity markets ended the year with a decent gain, but only after enduring two 5%-7% declines. Commodities experienced a major sell-off that trimmed the price of crude oil by more than half. In fixed income markets, lower-quality securities were hurt by the commodities sell-off, as investors worried about the future financial health of companies and countries heavily dependent on commodities production.
When all was said and done, high-quality, long-duration fixed income, most notably 30-year U.S. Treasuries, was among the best-performing asset classes. To some extent, the relative strength of long-term treasuries was due to a divergence in global monetary policy. While the U.S. and U.K. began winding down quantitative easing (“QE”) and talking about raising interest rates, Japan and Europe moved the other direction – either increasing the pace of QE or seeking alternative ways to implement QE policy. Even China, the largest emerging market country, added stimulus through numerous channels. The result was a large difference in rates on sovereign bonds. Yield-seeking investors in low-yielding countries bought debt instruments from countries offering (relatively) higher interest rates, creating a tailwind for long-term U.S. Treasuries.
J.P. Morgan Investment Management Inc.
While many correctly anticipated a positive 2014 for the U.S. stock market, few could have predicted the way in which it was achieved. Large-cap stocks outperformed small caps, and defensive sectors outperformed cyclical ones. The market experienced three major pullbacks in 2014. Equities rebounded robustly each time on the strength of economic and market fundamentals. By the end of 2014, the S&P 500® made numerous new all-time highs and came very close to finishing the calendar year at a record. Large-cap stocks, as represented by the S&P 500®, returned 13.7%, significantly outpacing small-cap stocks, measured by the Russell 2000® Index, which gained 4.9%.
Equity markets got off to a rough start in January 2014 due to concerns with emerging market central banks’ ability to sustainably fight inflation and deteriorating current account deficits. The Argentinean peso fell dramatically, and the Turkish Central Bank aggressively raised its overnight lending rate in efforts defend its currency. In late February, geopolitical concerns started to heat up as Russia sent troops into the Crimea region of Ukraine. Markets eventually settled down as Crimean citizens voted to join Russia without resistance.
Most of the actions coming from the U.S. Federal Reserve (“Fed”) were in line with expectations. One highlight was Fed Chair Janet Yellen’s remark during her March press conference. While perhaps inadvertent, she stated that rate hikes could commence six months after the end of asset purchases (i.e., QE), which would imply sometime during the second quarter of 2015. Several investors believe these remarks may have sparked the vicious rotation out of equities with higher growth expectations and into stocks with more attractive valuations and higher dividend yields.
Investors were quite perplexed when bond yields continued to fall after an April Employment Report that significantly exceeded expectations. Geopolitical tensions in the Ukraine, unrest in Iraq and concerns over U.S. growth were cited, particularly after the poor showing of U.S. first-quarter gross domestic product (“GDP”), which showed a larger than expected contraction. Looking back, the low-yield environment did not necessarily reflect poor growth prospects for the U.S., but was seemingly more a function of supply and demand. Given the low yields in developed countries such as Japan, Germany and France, yields in the U.S. looked relatively more attractive. At the same time, an improving U.S. fiscal deficit has led to lower levels of treasury issuance, decreasing the overall supply in the market.
The year’s deepest sell-off began in mid-September as the possibility of another recession in Europe rose to the forefront. First, the September Markit German Manufacturing Purchasing Managers’ Index (“PMI”) signaled economic contraction. Subsequent releases showed German industrial orders, industrial production and exports for August falling significantly from July levels. However, equities began to rebound as the October Markit Flash Manufacturing PMI for the broader Eurozone signaled renewed expansion. As expected, the Fed ended its QE program in October.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 7
Transamerica Partners Balanced Portfolio
(unaudited)
MARKET ENVIRONMENT (continued)
The final bout of volatility came in early December amid concerns over the fierce decline in crude oil prices, the collapse of Russian equity markets and its currency, and increasing political uncertainty in Greece. Markets rebounded on the strength of U.S. economic data, as November vehicle sales showed better than expected growth, and nonfarm payrolls achieved the strongest monthly gain since January of 2012. The strength of the U.S. economy was also confirmed with the final estimate of third-quarter GDP posting an annualized growth rate of 5.0%.
The top-performing sector within the S&P 500® in 2014 was utilities, helped by the fall in bond yields and investors’ thirst for income. The worst-performing sector was energy. Energy stocks sold off hard beginning in the late summer as crude oil prices began to fall. By the end of the year, crude oil prices had fallen by over 50% from the high point reached during summer.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Balanced Portfolio returned 10.99%. By comparison, its primary and secondary benchmarks, the Barclays U.S. Aggregate Bond Index and the S&P 500®, returned 5.97% and 13.69%, respectively.
STRATEGY REVIEW
Aegon USA Investment Management, LLC
The fixed income sleeve of the Portfolio underperformed the benchmark during the year ended December 31, 2014. The biggest driver of performance was our short duration positioning and underweighting of U.S. Treasuries and agency mortgage-backed securities (“MBS”). Our overweighting of various spread products added positively to returns but did not deliver enough positive total return to offset the difference. Interest rates declined in 2014, with the long-term treasury component of the market leading in total returns for the year. While our short duration positioning was a drag on performance, it was somewhat offset by our yield curve positioning. We concentrated our underweight in the front and intermediate parts of the yield curve, believing that these segments of the market were most exposed to potential rate adjustment as the Fed policy normalizes.
2014 was a year of two halves for most spread-based assets. The first part of the year saw mediocre growth and the emergence of geopolitical issues, but the markets did not react much to the broader risks and spreads generally tightened. While investment grade funds saw continued inflows during most of the year and also enjoyed strong issuance of new debt, corporate bonds finished 2014 with five consecutive months of negative excess returns. Many of the positive technicals supporting tight credit spreads unwound in the second half of the year, as the Fed completed ending its QE program and commodity prices fell. Our overweighting of financials was additive during the period, as credit spreads tightened due to the improved environment for asset quality and regulations supporting credit quality. In our emerging market positioning, we continued to be selective given the changing nature of global growth. Avoiding idiosyncratic risks remains paramount, in our opinion, given low all-in yields.
MBS outperformed their duration matched treasuries in the year, and our underweight was a negative contribution to performance. We continued to invest in agency mortgage dollar rolls which were helped by the Fed’s balance sheet policies and non-agency MBS re-REMICs (Real Estate Mortgage Investment Conduit), which have benefited from the extra yield and positive technicals. We remain underweight to agency MBS, reflecting our expectation that the Fed’s reduced role in the market may lead to deteriorating technicals and widening spreads. We liked (and continue to like) other securitized segments, particularly niche sectors in asset-backed securities and select commercial MBS. Both segments generated excess return versus treasuries in 2014 and, in our opinion, continue to offer attractive spreads.
Global divergences have changed the investing landscape, with energy weakness, U.S. dollar strength and the accompanying lack of inflationary pressures creating higher volatility. While the Fed may be less supportive in 2015, many other central banks continue to attempt to reflate their economies. In our opinion, this may still help to foster a decent investing environment for select spread-based assets. With expectations for solid economic growth in the U.S. and a Fed that may start to raise rates, we are cautious around duration risks. We continue to like risk assets, though we remain selective as idiosyncratic risks continue to rise and low all-in yields may limit upside.
Aegon USA Investment Management, LLC took over management responsibilities for the Portfolio as of May 1, 2014. From that date through the end of the period, derivatives were not utilized in the Portfolio. From the beginning of the period through May 1, 2014, the Portfolio was managed by a different sub-adviser who did utilize various derivatives instruments. During that time period, derivatives added to total returns.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 8
Transamerica Partners Balanced Portfolio
(unaudited)
STRATEGY REVIEW (continued)
J.P. Morgan Investment Management Inc.
The Portfolio’s equity sleeve outperformed its benchmark for the year ended December 31, 2014. Stock selection in the retail, consumer cyclical and hardware and semi-conductors sectors added value, while stock selection in the pharmaceutical/medical technology, energy and industrial cyclical sectors weighed on returns.
In the consumer cyclical sector, an overweight position in Union Pacific Corp. contributed to performance during 2014. Union Pacific Corp. has seen better pricing after bottoming in the first quarter of 2014 and has not faced the same export coal issues plaguing competitors CSX Corp. and Norfolk Southern Corp. (no longer held at year end). We remain positive, as we believe that Union Pacific Corp. has a diverse, balanced rail franchise and still looks to have ample room for margin improvement. The company has also maintained a disciplined commitment to pricing growth.
In the media sector, Time Warner, Inc. shares rallied on the takeover bid from 21st Century Fox. Time Warner, Inc. rejected the bid, and it was later withdrawn. Time Warner, Inc. had also reported better-than-expected revenues and earnings per share, with gains fairly balanced across divisions. We expect long-term growth to be largely driven by low-risk affiliate fee growth, international pay TV growth, an improving film slate from DC Comics, Lego and J.K. Rowling, flat non-programming expense growth and continued share buybacks. In our opinion, it is very well-positioned to capitalize on the secular industry trends and continues to be our favorite among the traditional media names. It trades at a below average multiple even though it has been one of the fastest growers in the group.
Within the semiconductors space, our overweight position in Avago Technologies, Ltd., Class A contributed to performance during the fourth quarter and year. Continued content gains in the high-end Radio Frequency (“RF”) filter market, robust strength in non-mobile businesses and the accretive acquisition of LSI all benefitted Avago Technologies, Ltd. in 2014. We remain constructive on Avago Technologies, Ltd., Class A as we believe the continued worldwide shift to 4G/LTE handsets can benefit the company’s RF filter business.
On the negative side, Fluor Corp. hurt results in the industrial cyclical space as the declining price of oil fed investor concerns about the potential cancelation or delay of some of the company’s larger projects. However, we do not believe that temporary oil price fluctuations will have a significant impact on capital spending among Fluor Corp.’s customers. Management has been repurchasing shares, profit margins have been increasing and we believe that the company has strong prospects in the pipeline. Also in the space, as oil prices plunged in the fourth quarter, so did Ensco PLC, Class A shares. We expect that the downturn in oil prices may reduce offshore demand growth significantly for the next few years, as many operators have struggled with cost issues even with Brent crude oil prices at $100 per barrel. Within the consumer cyclical sector, an overweight position in General Motors Co. detracted from performance for the year. The stock suffered from negative investor sentiment over numerous recall-related issues. We still like General Motors Co., as we believe the valuation remains attractive, and we believe that General Motors Co. may experience an earnings inflection in 2015.
The Portfolio uses derivatives to hedge cash positions. The derivatives have a negligible impact on performance.
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 2014 |
Page 9
Transamerica Partners Large Value Portfolio
(unaudited)
MARKET ENVIRONMENT
The U.S. equity markets reached a number of milestones last year: It was the sixth consecutive year with positive returns and the third with double-digit advances, capping the fourth longest post-war gain. Despite the strength of the market, low-beta stocks unexpectedly dominated. For much of the year, small-cap stocks trailed large-cap stocks (the fourth quarter was an exception to that trend). Similarly, the market exhibited no style preference over the course of the year; however, more recently, value edged out growth. On a broader level, U.S. equities fared better than their international brethren (developed and emerging) and long-term treasuries and real estate investment trusts were crowned king.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Large Value Portfolio returned 9.82%. By comparison, its primary and secondary benchmarks, the Russell 1000® Value Index and the S&P 500®, returned 13.45% and 13.69%, respectively.
STRATEGY REVIEW
The Portfolio underperformed the Russell 1000® Value Index.
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.
It was the second worst four consecutive quarters of underperformance in our 19-year history of managing the Portfolio. Our work was unable to gain traction in an environment where low risk and large caps reigned supreme. While we don’t explicitly control for volatility and size, we are ultimately exposed to both as a result of our bottom-up stock selection. Management and momentum factors – specifically long-term growth and price-relative strength – proved unkind to our work, particularly among the Portfolio’s holdings in the energy and financials sectors. Our value orientation, however, aided relative return, helping to dampen the negative influence of other factors used in our process.
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, earnings power, and favorable sentiment.
Theodore R. Aronson
Stefani Cranston
Gina Marie N. Moore
Gregory J. Rogers
R. Brian Wenzinger
Christopher J. W. Whitehead
Co-Portfolio Managers
AJO, 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 2014 |
Page 10
Transamerica Partners Large Core Portfolio
(unaudited)
MARKET ENVIRONMENT
The U.S. equity markets reached a number of milestones last year: It was the sixth consecutive year with positive returns and the third with double-digit advances, capping the fourth longest post-war gain. Despite the strength of the market, low-beta stocks unexpectedly dominated. For much of the year, small-cap stocks trailed large-cap stocks (the fourth quarter was an exception to that trend). Similarly, the market exhibited no style preference over the course of the year; however, more recently, value edged out growth. On a broader level, U.S. equities fared better than their international brethren (developed and emerging) and long-term treasuries and real estate investment trusts were crowned king.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Large Core Portfolio returned 15.16%. By comparison, its primary and secondary benchmarks, the Russell 1000® Index and the S&P 500®, returned 13.24% and 13.69%, respectively.
STRATEGY REVIEW
The Portfolio outperformed the S&P 500® for the year.
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.
All four pillars of attractiveness contributed to our relative return this year. Our deeper-than-benchmark value orientation was particularly effective this year, notably in the information technology sector. Nearly all measures of management supported our positive relative return, especially those used to capture long-term growth prospects and efficient asset utilization. Momentum aided performance by leading us to emphasize companies in the industrials sector with robust earnings revisions, like top contributor Southwest Airlines Co. Sentiment in the form of options implied volatility and institutional ownership proved to be a strong indicator of positive returns. And while we don’t make sector bets, we do make some industry bets as a result of our bottom-up stock selection, which resulted in a positive boost to the bottom line.
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, earnings power, and favorable sentiment.
Theodore R. Aronson
Stefani Cranston
Gina Marie N. Moore
Gregory J. Rogers
R. Brian Wenzinger
Christopher J. W. Whitehead
Co-Portfolio Managers
AJO, 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 2014 |
Page 11
Transamerica Partners Large Growth Portfolio
(unaudited)
MARKET ENVIRONMENT
Jennison Associates LLC
The U.S. equity market’s advance in 2014, reflected sustained improvement in the U.S. economic outlook. Corporate profits remained strong; housing and employment indicators improved; and consumer confidence rose to post-recession highs. The U.S. Federal Reserve tapered its quantitative easing program, signaling confidence in the health of U.S. economic activity and labor market conditions. U.S. gross domestic product contracted in early 2014, largely because of severe winter weather, before quickly rebounding. Economic activity in Europe, already anemic, faced new challenges stemming from Ukraine-Russia tensions. China’s expansion moderated as the country sought a better balance between internal and external growth. Energy prices fell, and the U.S. dollar strengthened against most other currencies.
Wellington Management Company, LLP
U.S. stocks began 2014 with their worst month in nearly two years. Worries about a slowdown in China and general angst surrounding emerging markets overshadowed a fairly benign domestic environment. Despite a myriad of adversely weather-influenced economic data, the S&P 500® rebounded from January’s pullback and finished February at a new peak. By the end of the second quarter the Index was up 224.4% from its closing low on March 9, 2009. The second half of the year was also bumpy, with U.S. equities sinking in July, rebounding in August, and falling once again around mid-September before recovering in October. Stocks hit several all-time highs toward the end of the period, pulling back slightly on the final trading day of November and into December, led by weakness in the energy sector after OPEC’s decision to leave production unchanged amid falling oil prices.
Nine of the ten sectors in the Russell 1000® Growth Index posted positive returns during the period, led by health care, utilities, and information technology. Energy posted the lone negative return, and telecommunication services and consumer discretionary also lagged the broader index.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Large Growth Portfolio returned 10.75%. By comparison, its primary and secondary benchmarks, the Russell 1000® Growth Index and the S&P 500®, returned 13.05% and 13.69%, respectively.
STRATEGY REVIEW
Jennison Associates LLC
The Portfolio is built from the bottom up, with stocks selected one at a time based on fundamental analysis of individual companies.
Faced with a challenging consumer environment, the Portfolio’s consumer holdings in aggregate underperformed the benchmark’s consumer names. Amazon.com, Inc.’s earnings were constrained by increased business investment, which is designed to drive unit growth in its core retail business and through digital commerce via the mobile market. Whole Foods Market (no longer held at year end) was hurt by intensifying competition in the organic and natural foods market. Weakness in Spain-based Inditex SA, best known for its Zara brand reflected currency translation issues due to the euro’s strength relative to many other currencies. Underlying growth at the company remains strong.
Helping to offset these declines were strong gains in other consumer holdings, including global athletic apparel companies Under Armour, Inc., Class A and NIKE, Inc., Class B, hotel operator Marriott International, Inc., Class A, media conglomerate Walt Disney Co. and electric car innovator Tesla Motors, Inc.
Health care positions were the most significant contributors to the Portfolio’s return. Meaningful scientific advances over the past decade coupled with increased research and development and clinical trial activity have led to numerous drug introductions and material improvement in the treatment of serious diseases. Biotechnology holdings benefited from their innovative drugs for blood disorders and autoimmune diseases (Alexion Pharmaceuticals, Inc.’s Soliris), cancer (Celgene Corp.’s Revlimid and Abraxane), cystic fibrosis (Vertex Pharmaceuticals, Inc.’s Kalydeco), multiple sclerosis (Biogen Idec, Inc.’s Tecfidera), and hepatitis C (Gilead Sciences, Inc.’s Sovaldi and Harvoni).
The Portfolio’s strength in the health care sector extended beyond biotechnology. In pharmaceuticals, Allergan, Inc. advanced on a takeover bid and the strength of its business, which has been enhanced by efforts to manage spending more efficiently and redeploy cash in ways that benefit shareholders. (Allergan, Inc. was acquired by Actavis PLC in November.) Illumina, Inc.’s gain reflected increasing demand for its next-generation gene-sequencing technology.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 12
Transamerica Partners Large Growth Portfolio
(unaudited)
STRATEGY REVIEW (continued)
Information technology positions were likewise strong absolute contributors to return although the Portfolio’s sector positions lagged the benchmark. Top contributor Apple, Inc.’s strong revenue and earnings reflected expanding global acceptance of its platform. We expect that product updates, especially for iPhone 6, will sustain attractive revenue growth in the medium term.
Internet-based social platform Facebook, Inc., Class A reported strong revenue and earnings as well as healthy measures of growth in users and user engagement. The company successfully implemented its mobile interface, and revenue generation from mobile and desktop applications has improved.
Among information technology detractors, Twitter, Inc.’s revenue and earnings exceeded expectations, but user growth decelerated, in part because of slower-than-expected improvements in new user onboarding and access. Jennison Associates LLC believes that the company’s communication platform complements traditional media outlets and that its income-generation opportunities are substantial.
Next-generation security software vendor FireEye, Inc. declined with a broad sell-off of high-multiple software growth stocks despite its strong billings, new customer and revenue growth. The company’s behavioral analysis technology and real-time threat detection and prevention platform are able to identify highly-sophisticated malware.
Wellington Management Company, LLP
The Portfolio underperformed its benchmark, the Russell 1000® Growth Index for the year. On July 1, 2014, the Portfolio transitioned from Wellington Management Company LLP’s diversified growth approach to Wellington Management Company LLP’s disciplined U.S. growth approach. The Portfolio outperformed its benchmark during the subsequent six-month period.
The Portfolio’s management team adheres to a disciplined portfolio construction process that is focused on uncovering companies with improving quality metrics, business momentum, and attractive relative valuations. Portfolio construction emphasizes stock specific risk while minimizing other sources of active risk.
During the year, security selection within the industrials, energy, and information technology sectors detracted from relative performance. A frictional cash position in an upward trending market also weighed on relative results. More favorable selection within consumer staples and consumer discretionary helped to partially offset weaker results elsewhere in the Portfolio. An underweight allocation to energy also aided benchmark relative performance.
The largest relative detractors during the period included Halliburton Co., a global oilfield services company, and Anadarko Petroleum Corp., Class A, an independent energy exploration and production company. The Portfolio’s underweight position in Apple, Inc. during the early part of the period also weighed on results.
The largest contributors to relative performance during the period included Monster Beverage Corp., a marketer and distributor of energy drinks, Ross Stores, Inc., a chain of off-price department stores, and SanDisk (no longer held at year end), a designer, developer and manufacturer of flash memory storage solutions and software. The Portfolio’s avoidance of benchmark constituent International Business Machines Corp., an information technology products and services provider, also contributed to relative results.
The Portfolio did not utilize derivatives during 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 2014 |
Page 13
Transamerica Partners Mid Value Portfolio
(unaudited)
MARKET ENVIRONMENT
J.P. Morgan Investment Management Inc.
While many correctly anticipated a positive 2014 for the U.S. stock market, few could have predicted the way in which it was achieved. Large-cap stocks outperformed small caps and defensive sectors outperformed cyclical ones. The market experienced three major pullbacks in 2014. Equities rebounded robustly each time on the strength of economic and market fundamentals. The final bout with volatility came in early December amid concerns over the fierce decline in crude oil prices, the collapse of Russian equity markets and its currency and increasing political uncertainty in Greece. Markets rebounded on the strength of U.S. economic data.
Thompson, Siegel & Walmsley LLC
During the year, U.S. equity markets in the U.S. were driven by uncertainty over a fragile economic recovery coupled with investor concerns about the U.S. Federal Reserve’s tapering of its stimulus program. Global issues further exacerbated the situation. Those included turmoil in the Middle East and eastern Europe, political tension in Hong Kong, terrorism, the human tragedy of Ebola, strained sovereign balance sheets and persistent disinflation, to name a few. Mid-cap equity managers have had a difficult time getting ahead of the benchmark amid the volatility. According to Bank of America Merrill Lynch, only 8.3% of mid-cap value fund managers outperformed the Russell Midcap® Value Index for the year, with the average fund trailing by 5.18%.
Despite sudden pullbacks in January, April, July, September and December, the Index marched higher to close the year with double-digit gains. As of December 31, 2014, the Index outperformed large and small cap indices, and was the best performing Russell index since the market bottom on March 6, 2009, having risen an average of 28.2% per annum. Multiples have risen faster than earnings over this period, and the benchmark’s multiples of earnings, book value, sales, and growth are now well above their long-term averages. This suggests the market expects continued earnings and margin growth. However, with profit margins at near-record levels, companies must continue to drive top-line revenue growth, or they may find it difficult to meet investors’ expectations, in our view. We think such an environment favors our value discipline and fundamental stock-picking process, which is designed to uncover opportunities not yet properly reflected in the stock price. We believe remaining disciplined about valuation is very important, as peak valuation multiples and profit margins abound.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Mid Value Portfolio returned 12.97%. By comparison, its benchmark, the Russell Midcap® Value Index, returned 14.75%.
STRATEGY REVIEW
J.P. Morgan Investment Management Inc.
The Portfolio outperformed the Russell Midcap® Value Index for the year.
Energy was the worst-performing sector for the Russell Midcap® Value Index for the year. Our investments in QEP Resources, Inc., Southwestern Energy Co. and EQT Corp. were among the top detractors due to the sharp fourth-quarter decline in global energy prices. We believe that these companies still hold long-term valuable assets that are currently being mispriced by the overall negative sentiment in the space.
A top contributor was Sigma-Aldrich Corp., which spiked in September following the announcement of Merck’s acquisition proposal, which represented a solid premium over the closing share price. This $17 billion transaction will create the third-largest vendor of research supply and bio-production products in the world. The two businesses are complementary and should realize revenue and cost synergies, in our view. Shares of Kroger Co. rose as the company positioned itself well for the shift in consumer eating habits. Kroger Co. has been investing in its omni-channel platform, growing its organic food selection, and gaining market share from its main competitors. We are very impressed with management’s innovative thinking and strong commitment to returning capital to shareholders through steady dividend raises and aggressive share buybacks. We view Kroger Co. as a top supermarket operator that should continue to gain market share.
Stock selection in financials, historically a strong area for the Portfolio, was a main detractor, mostly due to what we didn’t own, rather than being penalized for what we did own. Real estate investment trusts (“REIT”) performed particularly well in the year despite our view that they are overvalued. Our large underweight in the REIT space detracted most from relative performance. The one notable detractor we did own within financials was Loews Corp., which declined largely due to the company’s ownership stakes in energy companies Diamond Offshore and Boardwalk Pipeline Partners.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 14
Transamerica Partners Mid Value Portfolio
(unaudited)
STRATEGY REVIEW (continued)
Financials continue to comprise the largest portion of the Portfolio. In our view, financials remain an area of significant potential earnings-per-share upside and multiple expansion as the interest rate and regulatory environments normalize. If the U.S. Federal Reserve (“Fed”) raises rates in recognition of a strong economy and better unemployment rate, we would expect the most positive direct earnings impact to be realized by our regional bank holdings. Regional banks should be able to price new loans at higher rates, while they could lag paying higher rates on deposits, thereby expanding net interest margins. Additionally, a stronger economy should translate into greater loan demand. Both factors should lead to higher net interest margins and net interest income for regional banks.
Thompson, Siegel & Walmsley LLC
Despite the market fluctuations, the Portfolio outperformed the Index since Thompson, Siegel & Walmsley LLC became the sub-adviser on May 1, 2014 through year end. Strong stock selection and an overweight position in utilities made the sector the top contributor to relative return, with all eight of the Portfolio’s sector holdings outperforming the benchmark’s sector return. In addition to strong earnings, yield-sensitive utilities benefited from the market’s expectations that interest rates could remain low for the foreseeable future as rapidly declining oil prices may hamper the Fed’s ability to raise rates. Among contributors, Windstream Corp. rose when the company announced in July that it plans to convert to a tax-advantaged REIT structure. Relative detractors included the Portfolio’s underweight in REITs, which performed strongly during the year.
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 2014 |
Page 15
Transamerica Partners Mid Growth Portfolio
(unaudited)
MARKET ENVIRONMENT
The U.S. stock market had a stable footing in an environment of low interest rates and a steadily growing economy. Meanwhile, the U.S. Federal Reserve refrained from raising interest rates. Improvements in U.S. manufacturing, strong corporate earnings, falling headline unemployment and steady growth in nonfarm payrolls showed evidence of a healing economy. U.S. gross domestic product recovered steadily from a weather-related slow start to 2014.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Mid Growth Portfolio returned 8.04%. By comparison, its benchmark, the Russell Midcap® Growth Index, returned 11.90%.
STRATEGY REVIEW
During the year, the Portfolio underperformed its benchmark, the Russell Midcap® Growth Index.
The Portfolio’s holdings within consumer discretionary and energy sectors contributed to performance, while financials, industrials, materials, technology, consumer staples and health care detracted.
Under Armour, Inc., Class A, Williams-Sonoma, Inc., Class A, Ross Stores, Inc., Cimarex Energy Co., Cubist Pharmaceuticals, Inc. and Synaptics, Inc. were the biggest individual contributors.
Under Armour, Inc., Class A beat earnings estimates every quarter during the period. The company had multiple avenues of growth outside of its core apparel franchise and most revenue categories grew during the period. Williams-Sonoma, Inc., Class A managed its multi-brand, multi-channel platform well. Ross Stores, Inc. generated strong returns, driven by strong earnings and strong merchandise margin coupled with overhead expense control. The company also announced favorable capital deployment and a share buyback program during the period. Cimarex Energy Co. is an upstream exploration and production company focused in the Permian Basin, and, in our view, well positioned to take advantage of potential industry consolidation in a lower oil price environment. Cubist Pharmaceuticals, Inc. benefited from a takeout offer from Merck at a significant premium. Synaptics, Inc. posted very strong growth during 2014 driven by continued growth in its touch sensors and market share gains in finger print identification products.
Methanex Corp., Designer Shoe Warehouse (no longer held at year end), Solera Holdings, Inc. (no longer held at year end) and Neustar (no longer held at year end) were some of the individual detractors.
Methanex Corp., a chemical company, was added to the portfolio mid-year before oil prices collapsed. The company’s primary product is linked to crude oil and refined products. We favored the company’s strong growth profile, including new facilities on the Gulf Coast, and added to the portfolio’s position as oil prices declined. Designer Shoe Warehouse, which struggled in an industry dominated by strong multi-channel players, was sold in early in 2014. Solera Holdings, Inc. reported disappointing earnings in the second half of 2014, as the company failed to reach forecasted growth rates due largely to weakness in its European operations. Neustar performed poorly due to the loss of a government contract for managing telephone number portability. The contract represented a significant portion of the company’s revenues.
Timothy Chatard, CFA
Howard Aschwald, CFA
Co-Portfolio Managers
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 2014 |
Page 16
Transamerica Partners Small Value Portfolio
(unaudited)
MARKET ENVIRONMENT
U.S. stocks began 2014 with their worst month in nearly two years. Worries about a slowdown in China and general anxiety surrounding emerging markets overshadowed a fairly benign domestic environment. The second half of the year was also bumpy, with U.S. equities dropping in July, rebounding in August, and falling once again around mid-September before recovering in October. U.S. equities hit several all-time highs toward the end of the period, pulling back slightly on the final trading day of November and into December, led by weakness in the energy sector after OPEC’s decision to leave production unchanged despite sharply lower oil prices.
In this environment, six out of 10 sectors in the Russell 2000® Value Index posted positive returns for the period. The utilities and health care sectors had the largest gains, while energy and materials declined the most.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Small Value Portfolio returned 7.38%. By comparison, its benchmark, the Russell 2000® Value Index, returned 4.22%.
STRATEGY REVIEW
Wellington Management Company LLP (“Wellington”) employs a bottom-up stock selection process that utilizes Wellington’s proprietary, fundamental research to identify undervalued companies that have the potential for significant outperformance over time.
During the year, the Portfolio outperformed its benchmark, the Russell 2000® Value Index.
The Portfolio outperformed its benchmark primarily due to strong security selection in energy, industrials, and information technology. This was partially offset by weaker selection within financials and materials. Allocation among sectors, a residual of the bottom-up stock selection process, detracted from relative results. This was due, in part, to underweight positioning relative to the outperforming financials and utililties sectors. An overweight to health care was additive to relative results.
The Portfolio’s largest individual contributors to relative performance during the period included Phibro Animal Health Corp., Class A, a diversified animal health and mineral nutrition company; Helen of Troy, Ltd., a consumer products company; and Cato Corp., Class A, a women’s fashion specialty retailer. The Portfolio’s positions in Diamondback Energy (no longer held at year end), an oil and gas company, and G&K Services, Inc., Class A a provider of branded uniform and facililty services programs, also contributed to relative returns during the period.
The Portfolio’s largest relative detractors during the year included Ascena Retail Group, Inc., Class B, a national specialty retailer of apparel for women and teen girls; Koppers Holdings, Inc., a global provider of carbon compounds and commercial wood treatment products and services; and Scorpio Tankers Inc., a company engaged in seaborne transportation of crude oil and refined petroleum products. Positions in Era Group, Inc., an operator of helicopter transportation to offshore oil rigs, and UTi Worldwide, Inc., a low asset supply chain management services provider, also detracted from relative results during the period.
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 2014 |
Page 17
Transamerica Partners Small Core Portfolio
(unaudited)
MARKET ENVIRONMENT
During the year, the favorable market action mirrored a constructive U.S. economic environment, which saw further expansion after a slow start to 2014 due to severe winter weather conditions. U.S. gross domestic product (“GDP”) turned negative in the first quarter of 2014, as a winter freeze was felt deep into the South. However, domestic industrial activity picked up as the year progressed, with railroad, automobile, and housing data all demonstrating varying degrees of strength. This created a self-reinforcing cycle of solid business sentiment and spending levels that was reflected in the strong third quarter GDP results. Consumer confidence improved as well, aided somewhat by the precipitous drop in oil prices during the fourth quarter of 2014.
While falling oil prices are a positive for consumers, they led to substantial underperformance by energy stocks and some angst around the potential for crisis in countries that are dependent upon oil production. The U.S. economy also faced headwinds from abroad in the last year, as weaker economic conditions in Europe, China and emerging markets became constraints. Aside from the obvious challenges the slowdown in foreign markets has posed for U.S. multinationals and their trading partners, this dynamic also led to lower global interest rates. The domestic yield curve was by no means immune from this trend, which caused investors to focus on stocks with high dividend yields. In fact, stocks within the Russell 2000® Index that yield more than two percent were up over twice that of the index overall.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Small Core Portfolio returned 4.21%. By comparison, its primary and secondary benchmarks, the Russell 2000® Index and the S&P 500®, returned 4.89% and 13.69%, respectively.
STRATEGY REVIEW
The Portfolio’s absolute performance was driven by decent market conditions for the domestic equity markets. During the year, the Portfolio underperformed its benchmark, the Russell 2000® Index.
Systematic Financial Management L.P.’s (“Systematic”) stock selection was additive to relative results, with the stocks in the Portfolio outperforming their counterparts in the benchmark in eight of the 10 economic sectors. Holdings in the industrial and energy sectors added the most value relative to the Index. The only sector where the Portfolio’s holdings meaningfully detracted from results was financials. Unfortunately, the excess return generated by the stock selection was largely offset by sector allocation. The Portfolio’s overweight to the energy sector was the main detractor, as the sector was hit hard by the plummeting price of oil late in 2014.
Systematic’s stock selection model, especially measures of capital deployment and financial position, proved to be the most helpful stock selection tools, as investors generally favored issues with stronger financial positions and more conservative capital use metrics in 2014. The Portfolio, which was underweight non-dividend paying stocks, also benefited somewhat from investor’s preference for companies with higher dividend yields.
Eoin E. Middaugh, CFA
D. Kevin McCreesh, CFA
Co-Portfolio Managers
Systematic Financial 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 2014 |
Page 18
Transamerica Partners Small Growth Portfolio
(unaudited)
MARKET ENVIRONMENT
After a slow start to 2014 caused by severe winter weather, the economic environment strengthened over the course of 2014. Improved gross domestic product, employment and manufacturing data in the second half of 2014 demonstrated that the U.S. economy was on solid footing and differentiated in its strength from the rest of the world. This economic data drove the stock market advance in the fourth quarter with the broad market indices advancing further on top of the significant gains from 2013. Leadership shifted from small to large capitalization stocks in 2014.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners Small Growth Portfolio returned 3.13%. By comparison, its benchmark, the Russell 2000® Growth Index, returned 5.60%.
STRATEGY REVIEW
During 2014, the Portfolio underperformed its benchmark, the Russell 2000® Growth Index.
The Portfolio lagged during the first and fourth quarters of the year, as leadership during these two periods was made by low-quality companies, which fail to meet Ranger Investment Management L.P.’s investment criteria. The heightened level of small-cap volatility and selling pressure during the second and third quarters provided strong relative outperformance for the Portfolio.
The Portfolio’s holdings in financial services, producer durables and consumer discretionary sectors outperformed the Index’s holdings on a relative basis. The Portfolio’s energy sector performed in-line with the Index and meaningfully benefited from our decision to reduce the weighting in late 2013. Despite the headwind of not owning non-earning biotechnology and pharmaceutical companies, our health care holdings performed in-line with the Index. Technology was the most significant detractor from performance for the year, due largely to poor stock selection.
During 2014, on a stock basis, the top five contributors to performance were: Centene Corp., Akorn, Inc., Class A, Saia, Inc., Sonic Corp. and WageWorks, Inc. These represent holdings in the health care, producer durables, and consumer discretionary sectors. The bottom five detractors from performance were: Comstock Resources (no longer held at year end), Imperva (no longer held at year end), Applied Micro Circuits (no longer held at year end), KEYW Holding Corp. and Air Methods Corp. These represent holdings in the energy, technology and health care 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 2014 |
Page 19
Transamerica Partners International Equity Portfolio
(unaudited)
MARKET ENVIRONMENT
During the year, global issues, including turmoil in the Middle East and Eastern Europe, political tension in Hong Kong, terrorism, the human tragedy of Ebola, strained sovereign balance sheets and persistent disinflation have roiled global equity markets. Nevertheless, the MSCI All Country World Index ex-U.S. posted positive returns in local currency-terms. For U.S. dollar based investors, the situation was different. The remarkable strengthening of the U.S. dollar in later months rendered dollar-based investors with a loss.
Low interest rates and a slowly expanding global economy form the fundamental foundation for stocks. Even if a much-anticipated U.S. interest rate hike happens in 2015, rates are likely to remain at historically low levels for some time. Meanwhile, sovereign balance sheet repair is still underway in Europe, and quantitative and qualitative easing should keep Japanese rates low for the foreseeable future. 2014’s decline notwithstanding, the Index has risen 9.00% per annum over the last three years and trades at 8.5x cash flow and 13.8x next 12-month earnings at the time this letter was written. After a year in which many stocks retreated, opportunities for discriminating investors are in greater supply, and we are working diligently to find the stocks that will drive the Portfolio’s returns in coming years. We believe Thompson, Siegel & Walmsley LLC ’s valuation discipline and focus on fundamentals will be rewarded in this environment.
PERFORMANCE
For the year ended December 31, 2014, Transamerica Partners International Equity Portfolio returned (7.74)%. By comparison, its benchmark, the MSCI All Country World Index ex-U.S., returned (3.44)%.
STRATEGY REVIEW
Over this same period, the Portfolio underperformed its MSCI All Country World Index ex-U.S. benchmark due to stock selection. Emerging markets were the primary detractors to relative return for the year. While the Portfolio benefited from strong stock selection in a few countries, it was not enough to overcome poor performance in Russia and Greece. In Russia, Sistema JSFC (no longer held at year end), TMK OAO (no longer held at year end) and Lukoil OAO were all notable laggards as share prices were pressured by a combination of rapidly declining oil prices and concerns of increasing economic sanctions against Russia. In general, sentiment in Greece has been negative for equities as the political and economic environment remains fragile. Piraeus Bank SA was a notable laggard in the region.
Stock selection in Japan helped to offset losses in emerging markets. In general, Japanese equities performed well in local currency terms thanks to Prime Minister Abe’s continued economic stimulus. Japan Airlines Co., Ltd. was the winner in the region as fuel prices fell in synch with oil prices, a large cost savings to the airline. FUJIFILM Holdings Corp. was also a top contributor within Japan. The company continues to post solid earnings growth from cost-cutting efforts and improving sales in both the document and medical systems businesses.
Utilities was the top contributor on a sector basis as stock selection resulted in Portfolio holdings rising 22.9% for the year while benchmark peers only advanced 3.6%. Guangdong Investment, Ltd. (Hong Kong), APA Group (Australia), National Grid PLC, Class B (U.K.) and Veolia Environement SA (France) were the winners in the group.
Energy holdings were the primary detractors. In addition to Russia, positions in the U.K., France, Canada, Italy and Hong Kong traded in agreement with falling oil prices; and the group underperformed the benchmark sector. The consumer discretionary sector was also a detractor, with stock selection in Asian casino operators accounting for the majority of the underperformance. Individual detractors within the sector included Kangwon Land, Inc. in Korea, Macau-based MGM China Holdings, Ltd. and SJM Holdings, Ltd. and OPAP SA in Greece.
Brandon H. Harrell, CFA
Portfolio Manager
Thompson, Siegel & Walmsley LLC
Please refer to page 21 for index descriptions.
| Transamerica Partners Portfolios | Annual Report 2014 |
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 2014 |
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 2014 |
Page 22
Schedules of Investments Composition
At December 31, 2014
(unaudited)
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 23
Schedules of Investments Composition (continued)
At December 31, 2014
(unaudited)
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 24
Transamerica Partners Money Market Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 25
Transamerica Partners Money Market Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Corporate Debt Security |
$ | — | $ | 24,500,000 | $ | — | $ | 24,500,000 | ||||||||
| Certificates of Deposit |
— | 153,751,470 | — | 153,751,470 | ||||||||||||
| Commercial Paper |
— | 563,922,090 | — | 563,922,090 | ||||||||||||
| Demand Note |
— | 20,000,000 | — | 20,000,000 | ||||||||||||
| Short-Term U.S. Government Agency Obligations |
— | 19,999,821 | — | 19,999,821 | ||||||||||||
| Repurchase Agreements |
— | 100,261,567 | — | 100,261,567 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | — | $ | 882,434,948 | $ | — | $ | 882,434,948 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | Floating or variable rate security. Rate is disclosed as of December 31, 2014. |
| (B) | Rate disclosed reflects the yield at December 31, 2014. |
| (C) | Total aggregate value of illiquid securities is $38,900,000, representing 4.51% of the Portfolio’s net assets. |
| (D) | Aggregate cost for federal income tax purposes is $882,434,948. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 26
Transamerica Partners Money Market Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
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, 2014, these securities aggregated $124,691,860, representing 14.46% of the Portfolio’s net assets. | |
| MTN | Medium Term Note |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 27
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 28
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 29
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 30
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| U.S. Government Obligations |
$ | — | $ | 35,373,740 | $ | — | $ | 35,373,740 | ||||||||
| U.S. Government Agency Obligations |
— | 58,943,853 | — | 58,943,853 | ||||||||||||
| Foreign Government Obligation |
— | 2,028,769 | — | 2,028,769 | ||||||||||||
| Mortgage-Backed Securities |
— | 58,508,171 | — | 58,508,171 | ||||||||||||
| Asset-Backed Securities |
— | 106,880,089 | — | 106,880,089 | ||||||||||||
| Corporate Debt Securities |
— | 93,622,704 | — | 93,622,704 | ||||||||||||
| Securities Lending Collateral |
11,686,906 | — | — | 11,686,906 | ||||||||||||
| Repurchase Agreement |
— | 14,470,071 | — | 14,470,071 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 11,686,906 | $ | 369,827,397 | $ | — | $ | 381,514,303 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 31
Transamerica Partners High Quality Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $11,448,152. 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 security. Rate is disclosed as of December 31, 2014. |
| (C) | Rate disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $384,819,741. Aggregate gross unrealized appreciation and depreciation for all securities is $802,681 and $4,108,119, respectively. Net unrealized depreciation for tax purposes is $3,305,438. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
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, 2014, these securities aggregated $47,067,624, representing 12.68% of the Portfolio’s net assets. | |
| MTN | Medium Term Note |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 32
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 33
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
| WRITTEN INFLATION-CAPPED OPTIONS: (D) | ||||||||||||||||||||||||||||
| Description | Counterparty | Initial Index |
Floating Rate |
Expiration Date |
Notional Amount |
Premiums Paid (Received) |
Value | |||||||||||||||||||||
| OTC Eurostat Eurozone |
DUB | 2.50 | HICP Index | 04/26/2022 | EUR 1,070,000 | $ | (74,168 | ) | $ | (1,412 | ) | |||||||||||||||||
| WRITTEN SWAPTIONS ON INTEREST RATE SWAP AGREEMENTS: (D) | ||||||||||||||||||||||||||
| Description | Counterparty | Floating Rate Index |
Pay/Receive Floating |
Exercise Rate |
Expiration Date |
Notional Amount |
Premiums Paid (Received) |
Value | ||||||||||||||||||
| Call - OTC 10-Year |
CITI | 3-Month USD-LIBOR BBA | Receive | 2.80 | % | 02/23/2015 | $ | 8,900,000 | $ | (108,580 | ) | $ | (381,177 | ) | ||||||||||||
| Put - OTC 10-Year |
DUB | 3-Month USD-LIBOR BBA | Pay | 3.20 | 06/30/2015 | 8,200,000 | (150,880 | ) | (22,614 | ) | ||||||||||||||||
| Put - OTC 10-Year |
CITI | 3-Month USD-LIBOR BBA | Pay | 3.80 | 02/23/2015 | 8,900,000 | (108,580 | ) | (1 | ) | ||||||||||||||||
| Put - OTC 20-Year |
DUB | 6-Month EUR-EURIBOR | Pay | 4.50 | 06/08/2022 | EUR | 3,200,000 | (150,269 | ) | (135,132 | ) | |||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||
| Total |
$ | (518,309 | ) | $ | (538,924 | ) | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 34
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
CENTRALLY CLEARED SWAP AGREEMENTS: (H)
| 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 |
2.62 | % | 07/02/2024 | $ | 3,300,000 | $ | (145,908 | ) | $ | 65 | $ | (145,973 | ) | |||||||||||
| 3-Month USD-LIBOR |
3.05 | 02/15/2040 | 800,000 | (56,267 | ) | 0 | (56,267 | ) | ||||||||||||||||
| 3-Month USD-LIBOR |
3.06 | 02/15/2040 | 900,000 | (66,613 | ) | 0 | (66,613 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
| Total |
$ | (268,788 | ) | $ | 65 | $ | (268,853 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|||||||||||||||||||
OVER THE COUNTER SWAP AGREEMENTS: (D)
| 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) |
|||||||||||||||||||
| Eurostat Eurozone HICP Ex Tobacco NSA |
0.00 | % | 11/19/2015 | DUB | EUR 3,135,000 | $ | 9,021 | $ | 2,927 | $ | 6,094 | |||||||||||||||
| FUTURES CONTRACTS: | ||||||||||||||
| Description | Type | Number of Contracts |
Expiration Date |
Net Unrealized Appreciation (Depreciation) |
||||||||||
| 2-Year U.S. Treasury Note |
Short | (10) | 03/31/2015 | $ | 2,917 | |||||||||
| 5-Year U.S. Treasury Note |
Long | 96 | 03/31/2015 | (22,475 | ) | |||||||||
| 10-Year Japan Government Bond |
Short | (11) | 03/11/2015 | (60,643 | ) | |||||||||
| 10-Year U.S. Treasury Note |
Long | 358 | 03/20/2015 | 26,757 | ||||||||||
| 90-Day Eurodollar |
Short | (114) | 06/15/2015 | (13,535 | ) | |||||||||
| 90-Day Eurodollar |
Short | (26) | 12/14/2015 | (365 | ) | |||||||||
| 90-Day Eurodollar |
Short | (174) | 03/14/2016 | (270 | ) | |||||||||
| 90-Day Eurodollar |
Short | (171) | 12/18/2017 | (439 | ) | |||||||||
| Euro-BTP Italian Government Bond |
Short | (16) | 03/06/2015 | (16,582 | ) | |||||||||
| German Euro Bund |
Long | 45 | 02/20/2015 | (2,153 | ) | |||||||||
| German Euro Bund |
Short | (45) | 02/20/2015 | (2,226 | ) | |||||||||
| German Euro Bund |
Short | (6) | 03/06/2015 | (23,166 | ) | |||||||||
| German Euro BUXL |
Short | (2) | 03/06/2015 | (18,346 | ) | |||||||||
| Long U.S. Treasury Bond |
Short | (30) | 03/20/2015 | (14,087 | ) | |||||||||
| Long U.S. Treasury Bond |
Short | (96) | 03/20/2015 | (778,051 | ) | |||||||||
|
|
|
|||||||||||||
| Total |
$ | (922,664 | ) | |||||||||||
|
|
|
|||||||||||||
| FORWARD FOREIGN CURRENCY CONTRACTS: (D) | ||||||||||||||||||||||
| Counterparty | Settlement Date |
Currency Purchased |
Currency Sold |
Unrealized Appreciation |
Unrealized Depreciation |
|||||||||||||||||
| BNP | 01/07/2015 | 17,298,107 | USD | 13,849,000 | EUR | $ | 538,830 | $ | — | |||||||||||||
| BOA | 01/21/2015 | 1,258,089 | USD | 1,603,000 | NZD | 10,589 | — | |||||||||||||||
| CITI | 01/21/2015 | 369,562 | USD | 475,000 | NZD | — | (97 | ) | ||||||||||||||
| HSBC | 01/07/2015 | 691,000 | GBP | 1,083,733 | USD | — | (6,801 | ) | ||||||||||||||
| JPM | 01/07/2015 | 1,534,000 | EUR | 1,890,669 | USD | — | (34,309 | ) | ||||||||||||||
| JPM | 01/21/2015 | 1,795,252 | USD | 2,287,000 | NZD | 15,443 | — | |||||||||||||||
| RBC | 01/07/2015 | 511,000 | EUR | 629,048 | USD | — | (10,664 | ) | ||||||||||||||
| RBC | 03/16/2015 | 535,614 | USD | 650,000 | AUD | 7,893 | — | |||||||||||||||
| RBC | 03/16/2015 | 4,811,269 | USD | 3,885,160 | EUR | 106,744 | — | |||||||||||||||
| RBC | 03/16/2015 | 1,307,964 | USD | 156,162,619 | JPY | 3,316 | — | |||||||||||||||
| SCB | 03/16/2015 | 3,335,000 | EUR | 4,064,358 | USD | — | (26,019 | ) | ||||||||||||||
| UBS | 01/07/2015 | 1,000,266 | USD | 634,000 | GBP | 12,169 | — | |||||||||||||||
|
|
|
|
|
|||||||||||||||||||
| Total | $ | 694,984 | $ | (77,890 | ) | |||||||||||||||||
|
|
|
|
|
|||||||||||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 35
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (I)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| U.S. Government Obligations |
$ | — | $ | 259,764,659 | $ | — | $ | 259,764,659 | ||||||||
| Foreign Government Obligations |
— | 17,553,922 | — | 17,553,922 | ||||||||||||
| Purchased Option |
79,313 | — | — | 79,313 | ||||||||||||
| Purchased Foreign Exchange Options |
— | 364,330 | — | 364,330 | ||||||||||||
| Purchased Swaption |
— | 298,525 | — | 298,525 | ||||||||||||
| Short-Term Investment Company |
4,133,396 | — | — | 4,133,396 | ||||||||||||
| Securities Lending Collateral |
4,795,687 | — | — | 4,795,687 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 9,008,396 | $ | 277,981,436 | $ | — | $ | 286,989,832 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Derivative Financial Instruments |
||||||||||||||||
| Interest Rate Swap Agreements |
$ | — | $ | 9,021 | $ | — | $ | 9,021 | ||||||||
| Futures Contracts (J) |
29,674 | — | — | 29,674 | ||||||||||||
| Forward Foreign Currency Contracts (J) |
— | 694,984 | — | 694,984 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Derivative Financial Instruments |
$ | 29,674 | $ | 704,005 | $ | — | $ | 733,679 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| LIABILITIES |
||||||||||||||||
| Derivative Financial Instruments |
||||||||||||||||
| Written Options |
$ | (67,813 | ) | $ | — | $ | — | $ | (67,813 | ) | ||||||
| Written Foreign Exchange Options |
— | (281,680 | ) | — | (281,680 | ) | ||||||||||
| Written Inflation-Capped Options |
— | (1,412 | ) | — | (1,412 | ) | ||||||||||
| Written Swaptions on Interest Rate Swap Agreements |
— | (538,924 | ) | — | (538,924 | ) | ||||||||||
| Interest Rate Swap Agreements |
— | (268,788 | ) | — | (268,788 | ) | ||||||||||
| Futures Contracts (J) |
(952,338 | ) | — | — | (952,338 | ) | ||||||||||
| Forward Foreign Currency Contracts (J) |
— | (77,890 | ) | — | (77,890 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Derivative Financial Instruments |
$ | (1,020,151 | ) | $ | (1,168,694 | ) | $ | — | $ | (2,188,845 | ) | |||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $4,699,528. 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 the security has been segregated by the custodian 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 $806,257. |
| (C) | Percentage rounds to less than 0.1% or (0.1)%. |
| (D) | 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. |
| (E) | The investment issuer is affiliated with the sub-adviser of the Portfolio. |
| (F) | Rate disclosed reflects the yield at December 31, 2014. |
| (G) | Aggregate cost for federal income tax purposes is $291,591,997. Aggregate gross unrealized appreciation and depreciation for all securities is $4,090,560 and $8,692,725, respectively. Net unrealized depreciation for tax purposes is $4,602,165. |
| (H) | Cash in the amount of $235,000 has been segregated by the custodian as collateral for centrally cleared swap agreements. |
| (I) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
| (J) | Derivative financial instrument valued at unrealized appreciation (depreciation). |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 36
Transamerica Partners Inflation-Protected Securities Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
DEFINITIONS:
| BBA | British Bankers’ Association | |
| BNP | BNP Paribas | |
| BOA | Bank of America | |
| BTP | Republic of Italy (“Buoni del Tesoro Poliennali”) Treasury Bonds | |
| BUXL | Bundesanleihen (German long-term debt) | |
| CITI | Citigroup, Inc. | |
| DUB | Deutsche Bank AG | |
| EURIBOR | Euro Interbank Offerred Rate | |
| HICP | Harmonized Indices of Consumer Prices | |
| HSBC | HSBC Bank USA | |
| JPM | JPMorgan Chase Bank | |
| LIBOR | London Interbank Offered Rate | |
| NSA | Not Seasonally Adjusted | |
| OTC | Over the Counter | |
| RBC | Royal Bank of Canada | |
| 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. | |
| SCB | Standard Chartered Bank | |
| UBS | UBS AG |
CURRENCY ABBREVIATIONS:
| AUD | Australian Dollar | |
| EUR | Euro | |
| GBP | Pound Sterling | |
| JPY | Japanese Yen | |
| NOK | Norwegian Krone | |
| NZD | New Zealand Dollar | |
| USD | United States Dollar |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 37
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 38
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 39
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 40
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 41
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 42
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 43
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 44
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 45
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 46
Transamerica Partners Core Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (M)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| U.S. Government Obligations |
$ | — | $ | 320,041,099 | $ | — | $ | 320,041,099 | ||||||||
| U.S. Government Agency Obligations |
— | 223,476,884 | — | 223,476,884 | ||||||||||||
| Foreign Government Obligations |
— | 23,979,402 | — | 23,979,402 | ||||||||||||
| Mortgage-Backed Securities |
— | 172,386,230 | — | 172,386,230 | ||||||||||||
| Asset-Backed Securities |
— | 109,073,019 | — | 109,073,019 | ||||||||||||
| Municipal Government Obligations |
— | 12,203,796 | — | 12,203,796 | ||||||||||||
| Corporate Debt Securities |
— | 461,608,498 | — | 461,608,498 | ||||||||||||
| Short-Term U.S. Government Obligations |
— | 179,281,681 | — | 179,281,681 | ||||||||||||
| Preferred Stocks |
3,105,831 | — | — | 3,105,831 | ||||||||||||
| Securities Lending Collateral |
152,353,970 | — | — | 152,353,970 | ||||||||||||
| Repurchase Agreement |
— | 19,877,009 | — | 19,877,009 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 155,459,801 | $ | 1,521,927,618 | $ | — | $ | 1,677,387,419 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Investments | Transfer from Level 1 to Level 2 |
Transfer from Level 2 to Level 1 |
Transfer from Level 2 to Level 3 |
Transfer from Level 3 to Level 2 (N) |
||||||||||||
| Corporate Debt Securities |
$ | — | $ | — | $ | — | $ | 2 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $149,281,810. 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 security. Rate is disclosed as of December 31, 2014. |
| (C) | Step bond. Coupon rate changes in increments to maturity; the rate disclosed is as of December 31, 2014. Maturity date disclosed is the ultimate maturity date. |
| (D) | The security has a perpetual maturity; the date shown is the next call date. |
| (E) | Security in default. |
| (F) | Total aggregate value of illiquid securities is $85,747, representing 0.01% of the Portfolio’s net assets. |
| (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 $195, representing less than 0.01% of the Portfolio’s net assets. |
| (H) | Percentage rounds to less than 0.1% or (0.1)%. |
| (I) | Rate disclosed reflects the yield at December 31, 2014. |
| (J) | Percentage rounds to less than 0.01% or (0.01)%. |
| (K) | Non-income producing security. |
| (L) | Aggregate cost for federal income tax purposes is $1,664,543,099. Aggregate gross unrealized appreciation and depreciation for all securities is $26,832,579 and $13,988,259, respectively. Net unrealized appreciation for tax purposes is $12,844,320. |
| (M) | The Portfolio recognizes transfers between Levels at the end of the reporting period. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
| (N) | Transferred from Level 3 to 2 due to utilizing significant observable inputs, as of prior reporting period the security utilized significant unobservable inputs. |
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, 2014, these securities aggregated $296,054,456, representing 21.86% of the Portfolio’s net assets. | |
| IO | Interest only portion of STRIPS (Separate Trading of Registered Interest and Principal of Securities) | |
| MTN | Medium Term Note | |
| TBA | To Be Announced |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 47
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 48
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 49
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 50
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 51
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 52
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (J)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Corporate Debt Securities |
||||||||||||||||
| Aerospace & Defense |
$ | — | $ | 12,583,775 | $ | — | $ | 12,583,775 | ||||||||
| Airlines |
— | 15,038,339 | — | 15,038,339 | ||||||||||||
| Auto Components |
— | 5,771,225 | — | 5,771,225 | ||||||||||||
| Automobiles |
— | 10,434,124 | — | 10,434,124 | ||||||||||||
| Banks |
— | 19,829,091 | — | 19,829,091 | ||||||||||||
| Beverages |
— | 5,890,833 | — | 5,890,833 | ||||||||||||
| Building Products |
— | 19,840,539 | — | 19,840,539 | ||||||||||||
| Capital Markets |
— | 2,975,346 | — | 2,975,346 | ||||||||||||
| Chemicals |
— | 10,274,063 | — | 10,274,063 | ||||||||||||
| Commercial Services & Supplies |
— | 14,097,905 | — | 14,097,905 | ||||||||||||
| Construction & Engineering |
— | 17,434,397 | — | 17,434,397 | ||||||||||||
| Consumer Finance |
— | 32,797,447 | — | 32,797,447 | ||||||||||||
| Containers & Packaging |
— | 15,334,763 | — | 15,334,763 | ||||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 53
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION (continued):
Valuation Inputs (continued) (J)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs (K) |
Value at December 31, 2014 |
|||||||||||||
| ASSETS (continued) |
||||||||||||||||
| Investments (continued) |
||||||||||||||||
| Corporate Debt Securities (continued) |
||||||||||||||||
| Diversified Consumer Services |
$ | — | $ | 1,624,625 | $ | — | $ | 1,624,625 | ||||||||
| Diversified Financial Services |
— | 52,346,234 | — | 52,346,234 | ||||||||||||
| Diversified Telecommunication Services |
— | 67,237,753 | — | 67,237,753 | ||||||||||||
| Electric Utilities |
— | 9,247,654 | — | 9,247,654 | ||||||||||||
| Electronic Equipment, Instruments & Components |
— | 7,413,758 | — | 7,413,758 | ||||||||||||
| Energy Equipment & Services |
— | 15,698,110 | — | 15,698,110 | ||||||||||||
| Food & Staples Retailing |
— | 2,199,225 | — | 2,199,225 | ||||||||||||
| Food Products |
— | 10,311,283 | — | 10,311,283 | ||||||||||||
| Health Care Equipment & Supplies |
— | 21,870,740 | — | 21,870,740 | ||||||||||||
| Health Care Providers & Services |
— | 51,031,556 | — | 51,031,556 | ||||||||||||
| Hotels, Restaurants & Leisure |
— | 46,415,857 | 254,185 | 46,670,042 | ||||||||||||
| Household Durables |
— | 29,279,022 | — | 29,279,022 | ||||||||||||
| Household Products |
— | 13,990,659 | — | 13,990,659 | ||||||||||||
| Independent Power and Renewable Electricity Producers |
— | 18,980,487 | — | 18,980,487 | ||||||||||||
| Insurance |
— | 13,268,690 | — | 13,268,690 | ||||||||||||
| IT Services |
— | 12,440,540 | — | 12,440,540 | ||||||||||||
| Media |
— | 78,251,852 | — | 78,251,852 | ||||||||||||
| Metals & Mining |
— | 3,989,803 | — | 3,989,803 | ||||||||||||
| Oil, Gas & Consumable Fuels |
— | 51,922,750 | — | 51,922,750 | ||||||||||||
| Paper & Forest Products |
— | 5,105,500 | — | 5,105,500 | ||||||||||||
| Personal Products |
— | 4,245,705 | — | 4,245,705 | ||||||||||||
| Pharmaceuticals |
— | 12,628,785 | — | 12,628,785 | ||||||||||||
| Professional Services |
— | 3,806,201 | — | 3,806,201 | ||||||||||||
| Real Estate Management & Development |
— | 3,850,350 | — | 3,850,350 | ||||||||||||
| Road & Rail |
— | 9,910,820 | — | 9,910,820 | ||||||||||||
| Semiconductors & Semiconductor Equipment |
— | 7,815,350 | — | 7,815,350 | ||||||||||||
| Software |
— | 14,415,183 | — | 14,415,183 | ||||||||||||
| Specialty Retail |
— | 6,485,240 | — | 6,485,240 | ||||||||||||
| Textiles, Apparel & Luxury Goods |
— | 9,394,755 | — | 9,394,755 | ||||||||||||
| Wireless Telecommunication Services |
— | 28,285,954 | — | 28,285,954 | ||||||||||||
| Convertible Bonds |
||||||||||||||||
| Diversified Telecommunication Services |
— | 3,376,488 | — | 3,376,488 | ||||||||||||
| Independent Power and Renewable Electricity Producers |
— | — | 0 | 0 | ||||||||||||
| Media |
— | — | 5,033 | 5,033 | ||||||||||||
| Loan Assignments |
— | 14,973,309 | — | 14,973,309 | ||||||||||||
| Preferred Stock |
3,567,235 | — | — | 3,567,235 | ||||||||||||
| Common Stocks |
||||||||||||||||
| Building Products |
— | — | 1,757,168 | 1,757,168 | ||||||||||||
| Independent Power and Renewable Electricity Producers |
— | — | 0 | 0 | ||||||||||||
| Media |
— | — | 185,250 | 185,250 | ||||||||||||
| Warrant |
25,300 | — | — | 25,300 | ||||||||||||
| Repurchase Agreement |
— | 37,988,782 | — | 37,988,782 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 3,592,535 | $ | 852,104,867 | $ | 2,201,636 | $ | 857,899,038 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES 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) | Floating or variable rate security. Rate is disclosed as of December 31, 2014. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 54
Transamerica Partners High Yield Bond Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
FOOTNOTES TO SCHEDULE OF INVESTMENTS (continued):
| (C) | The security has a perpetual maturity; the date shown is the next call date. |
| (D) | Total aggregate value of illiquid securities is $4,172,838, representing 0.48% of the Portfolio’s net assets. |
| (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 $2,201,636, representing 0.25% of the Portfolio’s net assets. |
| (F) | Percentage rounds to less than 0.1% or (0.1)%. |
| (G) | Non-income producing security. |
| (H) | Rate disclosed reflects the yield at December 31, 2014. |
| (I) | Aggregate cost for federal income tax purposes is $879,288,307. Aggregate gross unrealized appreciation and depreciation for all securities is $11,547,451 and $32,936,720, respectively. Net unrealized depreciation for tax purposes is $21,389,269. |
| (J) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
| (K) | 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, 2014, these securities aggregated $272,242,088, representing 31.05% of the Portfolio’s net assets. | |
| GDR | Global Depositary Receipt | |
| MTN | Medium Term Note |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 55
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 56
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 57
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 58
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 59
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 60
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 61
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 62
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 63
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 64
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 65
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
| FUTURES CONTRACTS: (M) | ||||||||||||||||
| Description | Type | Number of Contracts |
Expiration Date |
Net Unrealized Appreciation (Depreciation) |
||||||||||||
| S&P 500 E-Mini Index |
Long | 7 | 03/20/2015 | $ | (1,212 | ) | ||||||||||
SECURITY VALUATION:
Valuation Inputs (N)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| U.S. Government Obligations |
$ | — | $ | 15,644,975 | $ | — | $ | 15,644,975 | ||||||||
| U.S. Government Agency Obligations |
— | 9,660,528 | — | 9,660,528 | ||||||||||||
| Foreign Government Obligations |
— | 1,019,224 | — | 1,019,224 | ||||||||||||
| Mortgage-Backed Securities |
— | 7,785,012 | — | 7,785,012 | ||||||||||||
| Asset-Backed Securities |
— | 4,640,388 | — | 4,640,388 | ||||||||||||
| Municipal Government Obligations |
— | 412,879 | — | 412,879 | ||||||||||||
| Corporate Debt Securities |
— | 19,850,219 | — | 19,850,219 | ||||||||||||
| Short-Term U.S. Government Obligations |
— | 8,059,895 | — | 8,059,895 | ||||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 66
Transamerica Partners Balanced Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION (continued):
Valuation Inputs (continued) (N)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS (continued) |
||||||||||||||||
| Investments (continued) |
||||||||||||||||
| Preferred Stocks |
$ | 242,634 | $ | — | $ | — | $ | 242,634 | ||||||||
| Common Stocks |
86,083,338 | — | — | 86,083,338 | ||||||||||||
| Securities Lending Collateral |
8,331,301 | — | — | 8,331,301 | ||||||||||||
| Repurchase Agreement |
— | 2,007,277 | — | 2,007,277 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 94,657,273 | $ | 69,080,397 | $ | — | $ | 163,737,670 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| LIABILITIES |
||||||||||||||||
| Derivative Financial Instruments |
||||||||||||||||
| Futures Contracts (O) |
$ | (1,212 | ) | $ | — | $ | — | $ | (1,212 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Derivative Financial Instruments |
$ | (1,212 | ) | $ | — | $ | — | $ | (1,212 | ) | ||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Investments | Transfers from Level 1 to Level 2 |
Transfers from Level 2 to Level 1 |
Transfers from Level 2 to Level 3 |
Transfers from Level 3 to Level 2 (P) |
||||||||||||
| Corporate Debt Securities |
$ | — | $ | — | $ | — | $ | 6 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | Floating or variable rate security. Rate is disclosed as of December 31, 2014. |
| (B) | All or a portion of the security is on loan. The value of all securities on loan is $8,157,447. 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) | Percentage rounds to less than 0.1% or (0.1)%. |
| (D) | The security has a perpetual maturity; the date shown is the next call date. |
| (E) | Security in default. |
| (F) | Total aggregate value of illiquid securities is $201,663, representing 0.14% of the Portfolio’s net assets. |
| (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 $32, representing less than 0.01% of the Portfolio’s net assets. |
| (H) | Rate disclosed reflects the yield at December 31, 2014. |
| (I) | Percentage rounds to less than 0.01% or (0.01)%. |
| (J) | All or a portion of the security has been segregated by the custodian 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 $69,977. |
| (K) | Non-income producing security. |
| (L) | Aggregate cost for federal income tax purposes is $145,818,565. Aggregate gross unrealized appreciation and depreciation for all securities is $21,612,831 and $3,693,726, respectively. Net unrealized appreciation for tax purposes is $17,919,105. |
| (M) | Cash in the amount of $60,000 has been segregated by the custodian as collateral to cover margin requirements for open futures contracts. |
| (N) | The Portfolio recognizes transfers between Levels at the end of the reporting period. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
| (O) | Derivative financial instrument valued at unrealized appreciation (depreciation). |
| (P) | Transferred from Level 3 to 2 due to utilizing significant observable inputs, as of prior reporting period the security utilized significant unobservable inputs. |
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, 2014, these securities aggregated $13,763,232, representing 9.33% of the Portfolio’s net assets. | |
| IO | Interest only portion of STRIPS (Separate Trading of Registered Interest and Principal of Securities) | |
| MTN | Medium Term Note | |
| TBA | To Be Announced |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 67
Transamerica Partners Large Value Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 68
Transamerica Partners Large Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 69
Transamerica Partners Large Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
$ | 892,851,238 | $ | — | $ | — | $ | 892,851,238 | ||||||||
| Investment Company |
7,882,200 | — | — | 7,882,200 | ||||||||||||
| Securities Lending Collateral |
52,192,022 | — | — | 52,192,022 | ||||||||||||
| Repurchase Agreement |
— | 18,300,336 | — | 18,300,336 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 952,925,460 | $ | 18,300,336 | $ | — | $ | 971,225,796 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $50,901,445. 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 disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $822,264,126. Aggregate gross unrealized appreciation and depreciation for all securities is $173,349,823 and $24,388,153, respectively. Net unrealized appreciation for tax purposes is $148,961,670. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 70
Transamerica Partners Large Core Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 71
Transamerica Partners Large Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
$ | 342,663,912 | $ | — | $ | — | $ | 342,663,912 | ||||||||
| Securities Lending Collateral |
30,184,644 | — | — | 30,184,644 | ||||||||||||
| Repurchase Agreement |
— | 4,637,878 | — | 4,637,878 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 372,848,556 | $ | 4,637,878 | $ | — | $ | 377,486,434 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 72
Transamerica Partners Large Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | Non-income producing security. |
| (B) | All or a portion of the security is on loan. The value of all securities on loan is $29,475,572. 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 disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $308,479,192. Aggregate gross unrealized appreciation and depreciation for all securities is $75,468,279 and $6,461,037, respectively. Net unrealized appreciation for tax purposes is $69,007,242. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 73
Transamerica Partners Large Growth Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 74
Transamerica Partners Large Growth Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 75
Transamerica Partners Large Growth Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
$ | 911,317,730 | $ | 7,997,602 | $ | — | $ | 919,315,332 | ||||||||
| Investment Company |
3,345,394 | — | — | 3,345,394 | ||||||||||||
| Securities Lending Collateral |
55,901,691 | — | — | 55,901,691 | ||||||||||||
| Repurchase Agreement |
— | 4,975,458 | — | 4,975,458 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 970,564,815 | $ | 12,973,060 | $ | — | $ | 983,537,875 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | Non-income producing security. |
| (B) | All or a portion of the security is on loan. The value of all securities on loan is $54,697,566. 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 disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $793,478,355. Aggregate gross unrealized appreciation and depreciation for all securities is $206,230,500 and $16,170,980, respectively. Net unrealized appreciation for tax purposes is $190,059,520. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
DEFINITION:
| ADR | American Depositary Receipt |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 76
Transamerica Partners Mid Value Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 77
Transamerica Partners Mid Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 78
Transamerica Partners Mid Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
$ | 841,291,675 | $ | — | $ | — | $ | 841,291,675 | ||||||||
| Securities Lending Collateral |
118,604,056 | — | — | 118,604,056 | ||||||||||||
| Repurchase Agreement |
— | 20,361,378 | — | 20,361,378 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 959,895,731 | $ | 20,361,378 | $ | — | $ | 980,257,109 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $115,754,709. 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 disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $837,801,253. Aggregate gross unrealized appreciation and depreciation for all securities is $171,446,934 and $28,991,078, respectively. Net unrealized appreciation for tax purposes is $142,455,856. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
DEFINITION:
| ADR | American Depositary Receipt |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 79
Transamerica Partners Mid Growth Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 80
Transamerica Partners Mid Growth Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
$ | 124,837,515 | $ | — | $ | — | $ | 124,837,515 | ||||||||
| Securities Lending Collateral |
30,817,098 | — | — | 30,817,098 | ||||||||||||
| Repurchase Agreement |
— | 1,330,320 | — | 1,330,320 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 155,654,613 | $ | 1,330,320 | $ | — | $ | 156,984,933 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $30,159,655. 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 disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $137,873,319. Aggregate gross unrealized appreciation and depreciation for all securities is $20,911,776 and $1,800,162, respectively. Net unrealized appreciation for tax purposes is $19,111,614. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 81
Transamerica Partners Small Value Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 82
Transamerica Partners Small Value Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
$ | 72,090,899 | $ | 1,413,994 | $ | — | $ | 73,504,893 | ||||||||
| Securities Lending Collateral |
19,003,279 | — | — | 19,003,279 | ||||||||||||
| Repurchase Agreement |
— | 3,073,891 | — | 3,073,891 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 91,094,178 | $ | 4,487,885 | $ | — | $ | 95,582,063 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $18,491,903. 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 disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $72,577,266. Aggregate gross unrealized appreciation and depreciation for all securities is $24,178,130 and $1,173,333, respectively. Net unrealized appreciation for tax purposes is $23,004,797. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
DEFINITIONS:
| ADR | American Depositary Receipt |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 83
Transamerica Partners Small Core Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 84
Transamerica Partners Small Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 85
Transamerica Partners Small Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 86
Transamerica Partners Small Core Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
$ | 303,322,960 | $ | — | $ | — | $ | 303,322,960 | ||||||||
| Securities Lending Collateral |
70,697,659 | — | — | 70,697,659 | ||||||||||||
| Repurchase Agreement |
— | 2,581,918 | — | 2,581,918 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 374,020,619 | $ | 2,581,918 | $ | — | $ | 376,602,537 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | Non-income producing security. |
| (B) | All or a portion of the security is on loan. The value of all securities on loan is $68,786,058. 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 disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $356,798,636. Aggregate gross unrealized appreciation and depreciation for all securities is $30,737,925 and $10,934,024, respectively. Net unrealized appreciation for tax purposes is $19,803,901. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 87
Transamerica Partners Small Growth Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 88
Transamerica Partners Small Growth Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Common Stocks |
$ | 64,693,449 | $ | — | $ | — | $ | 64,693,449 | ||||||||
| Securities Lending Collateral |
17,033,375 | — | — | 17,033,375 | ||||||||||||
| Repurchase Agreement |
— | 1,843,777 | — | 1,843,777 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 81,726,824 | $ | 1,843,777 | $ | — | $ | 83,570,601 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $16,638,564. 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 disclosed reflects the yield at December 31, 2014. |
| (D) | Aggregate cost for federal income tax purposes is $73,711,227. Aggregate gross unrealized appreciation and depreciation for all securities is $10,954,628 and $1,095,254, respectively. Net unrealized appreciation for tax purposes is $9,859,374. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 89
Transamerica Partners International Equity Portfolio
SCHEDULE OF INVESTMENTS
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 90
Transamerica Partners International Equity Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 91
Transamerica Partners International Equity Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
INVESTMENTS BY INDUSTRY (unaudited):
| Industry | Percentage of Total Investments |
Value | ||||||
| Insurance |
6.5 | % | $ | 32,459,446 | ||||
| Banks |
6.4 | 32,302,742 | ||||||
| Oil, Gas & Consumable Fuels |
5.4 | 27,238,638 | ||||||
| Diversified Financial Services |
4.3 | 21,356,490 | ||||||
| Pharmaceuticals |
4.0 | 19,838,146 | ||||||
| Chemicals |
3.9 | 19,677,086 | ||||||
| Hotels, Restaurants & Leisure |
3.6 | 18,053,364 | ||||||
| Technology Hardware, Storage & Peripherals |
3.3 | 16,795,556 | ||||||
| Industrial Conglomerates |
3.1 | 15,783,879 | ||||||
| Automobiles |
2.9 | 14,453,634 | ||||||
| Airlines |
2.8 | 14,236,284 | ||||||
| Multi-Utilities |
2.7 | 13,633,596 | ||||||
| Wireless Telecommunication Services |
2.6 | 13,011,162 | ||||||
| Metals & Mining |
2.5 | 12,785,203 | ||||||
| Capital Markets |
2.5 | 12,326,689 | ||||||
| Electronic Equipment, Instruments & Components |
2.4 | 11,798,682 | ||||||
| Road & Rail |
2.3 | 11,750,328 | ||||||
| Trading Companies & Distributors |
2.1 | 10,588,342 | ||||||
| Specialty Retail |
2.1 | 10,351,132 | ||||||
| Containers & Packaging |
1.9 | 9,601,717 | ||||||
| Food Products |
1.8 | 9,238,425 | ||||||
| Auto Components |
1.7 | 8,401,102 | ||||||
| Beverages |
1.5 | 7,284,485 | ||||||
| Machinery |
1.4 | 7,200,103 | ||||||
| Food & Staples Retailing |
1.4 | 6,989,680 | ||||||
| Transportation Infrastructure |
1.4 | 6,937,162 | ||||||
| Media |
1.4 | 6,792,407 | ||||||
| Construction & Engineering |
1.3 | 6,605,205 | ||||||
| Real Estate Management & Development |
1.2 | 5,990,509 | ||||||
| Air Freight & Logistics |
1.2 | 5,792,619 | ||||||
| Water Utilities |
1.1 | 5,319,048 | ||||||
| Communications Equipment |
1.0 | 4,998,226 | ||||||
| Tobacco |
0.9 | 4,718,627 | ||||||
| Household Products |
0.9 | 4,663,082 | ||||||
| Diversified Telecommunication Services |
0.9 | 4,617,867 | ||||||
| Distributors |
0.8 | 4,199,532 | ||||||
| Semiconductors & Semiconductor Equipment |
0.8 | 4,106,652 | ||||||
| IT Services |
0.8 | 3,906,543 | ||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 92
Transamerica Partners International Equity Portfolio
SCHEDULE OF INVESTMENTS (continued)
At December 31, 2014
INVESTMENTS BY INDUSTRY (unaudited) (continued):
| Industry | Percentage of Total Investments |
Value | ||||||
| Household Durables |
0.8 | % | $ | 3,865,512 | ||||
| Electrical Equipment |
0.7 | 3,465,028 | ||||||
| Gas Utilities |
0.5 | 2,512,670 | ||||||
| Energy Equipment & Services |
0.5 | 2,289,974 | ||||||
| Commercial Services & Supplies |
0.4 | 2,128,704 | ||||||
| Independent Power and Renewable Electricity Producers |
0.4 | 2,101,796 | ||||||
| Real Estate Investment Trusts |
0.3 | 1,726,134 | ||||||
| Consumer Finance |
0.3 | 1,494,136 | ||||||
|
|
|
|
|
|||||
| Investments, at Value |
92.7 | 465,387,344 | ||||||
| Short-Term Investments |
7.3 | 36,896,760 | ||||||
|
|
|
|
|
|||||
| Total Investments |
100.0 | % | $ | 502,284,104 | ||||
|
|
|
|
|
|||||
SECURITY VALUATION:
Valuation Inputs (E)
| Level 1 Quoted Prices |
Level 2 Other Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
Value at December 31, 2014 |
|||||||||||||
| ASSETS |
||||||||||||||||
| Investments |
||||||||||||||||
| Convertible Preferred Stocks |
$ | 6,393,501 | $ | 2,600,388 | $ | — | $ | 8,993,889 | ||||||||
| Preferred Stocks |
4,174,456 | 17,273,497 | — | 21,447,953 | ||||||||||||
| Common Stocks |
59,091,580 | 375,853,922 | — | 434,945,502 | ||||||||||||
| Securities Lending Collateral |
29,304,924 | — | — | 29,304,924 | ||||||||||||
| Repurchase Agreement |
— | 7,591,836 | — | 7,591,836 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total Investments |
$ | 98,964,461 | $ | 403,319,643 | $ | — | $ | 502,284,104 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
FOOTNOTES TO SCHEDULE OF INVESTMENTS:
| (A) | All or a portion of the security is on loan. The value of all securities on loan is $28,108,134. 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) | Rate disclosed reflects the yield at December 31, 2014. |
| (C) | Non-income producing security. |
| (D) | Aggregate cost for federal income tax purposes is $532,832,855. Aggregate gross unrealized appreciation and depreciation for all securities is $28,517,442 and $59,066,193, respectively. Net unrealized depreciation for tax purposes is $30,548,751. |
| (E) | The Portfolio recognizes transfers between Levels at the end of the reporting period. There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2014. See the Notes to Financial Statements for more information regarding security valuation and pricing inputs. |
DEFINITIONS:
| ADR | American Depositary Receipt | |
| GDR | Global Depositary Receipt | |
| 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. | |
| REIT | Real Estate Investment Trust; includes domestic REITs and Foreign REITs. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 93
STATEMENTS OF ASSETS AND LIABILITIES
At December 31, 2014
| Money Market | High Quality Bond |
Inflation- Protected Securities |
Core Bond | High Yield Bond |
||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (A) (B) |
$ | 782,173,381 | $ | 367,044,232 | $ | 286,989,832 | $ | 1,657,510,410 | $ | 819,910,256 | ||||||||||
| Repurchase agreements, at value (C) |
100,261,567 | 14,470,071 | — | 19,877,009 | 37,988,782 | |||||||||||||||
| Cash on deposit with broker |
— | — | 235,000 | — | — | |||||||||||||||
| Foreign currency, at value (D) |
— | — | 121,643 | — | — | |||||||||||||||
| Cash |
— | — | — | 565,167 | 10,955 | |||||||||||||||
| Unrealized appreciation on forward foreign currency contracts |
— | — | 694,984 | — | — | |||||||||||||||
| OTC swap agreements, at value |
— | — | 9,021 | — | — | |||||||||||||||
| Receivables: |
||||||||||||||||||||
| Investments sold |
— | 83,709 | — | 3,389,237 | 6,697,927 | |||||||||||||||
| Interest |
151,617 | 1,390,966 | 1,264,833 | 7,587,397 | 12,562,586 | |||||||||||||||
| Net income from securities lending |
— | 2,050 | 398 | 22,333 | — | |||||||||||||||
| Variation margin receivable on derivative financial instruments |
— | — | 37,731 | — | — | |||||||||||||||
| Other |
— | — | — | — | 91,350 | |||||||||||||||
| Prepaid expenses |
4,729 | 2,163 | 1,577 | 7,059 | 4,172 | |||||||||||||||
| Total assets |
882,591,294 | 382,993,191 | 289,355,019 | 1,688,958,612 | 877,266,028 | |||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Due to custodian |
75 | — | — | — | — | |||||||||||||||
| Cash deposit due to broker |
— | — | 500,000 | — | — | |||||||||||||||
| Payables and other liabilities: |
||||||||||||||||||||
| Investments purchased |
19,973,000 | — | 33,978 | 181,619,724 | — | |||||||||||||||
| Investment advisory fees |
192,539 | 115,147 | 84,253 | 427,191 | 435,823 | |||||||||||||||
| Trustee and CCO fees |
237 | 102 | 80 | 382 | 250 | |||||||||||||||
| Audit and tax fees |
19,024 | 21,089 | 21,984 | 26,746 | 22,927 | |||||||||||||||
| Custody and accounting fees |
24,134 | 9,963 | 22,535 | 43,977 | 22,803 | |||||||||||||||
| Legal fees |
10,463 | 2,586 | 1,617 | 6,952 | 6,800 | |||||||||||||||
| Printing and shareholder reports fees |
1,224 | 1,851 | 510 | 306 | 220 | |||||||||||||||
| Other |
2,554 | 1,169 | 860 | 3,676 | 2,150 | |||||||||||||||
| Collateral for securities on loan |
— | 11,686,906 | 4,795,687 | 152,353,970 | — | |||||||||||||||
| Written options and swaptions, at value (E) |
— | — | 889,829 | — | — | |||||||||||||||
| Unrealized depreciation on forward foreign currency contracts |
— | — | 77,890 | — | — | |||||||||||||||
| Total liabilities |
20,223,250 | 11,838,813 | 6,429,223 | 334,482,924 | 490,973 | |||||||||||||||
| Net assets |
$ | 862,368,044 | $ | 371,154,378 | $ | 282,925,796 | $ | 1,354,475,688 | $ | 876,775,055 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (A) Investments, at cost |
$ | 782,173,381 | $ | 370,330,630 | $ | 288,889,148 | $ | 1,644,548,917 | $ | 841,220,841 | ||||||||||
| (B) Securities loaned, at value |
$ | — | $ | 11,448,152 | $ | 4,699,528 | $ | 149,281,810 | $ | — | ||||||||||
| (C) Repurchase agreements, at cost |
$ | 100,261,567 | $ | 14,470,071 | $ | — | $ | 19,877,009 | $ | 37,988,782 | ||||||||||
| (D) Foreign currency, at cost |
$ | — | $ | — | $ | 123,080 | $ | — | $ | — | ||||||||||
| (E) Premium received on written options and swaptions |
$ | — | $ | — | $ | 911,230 | $ | — | $ | — | ||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 94
STATEMENTS OF ASSETS AND LIABILITIES (continued)
At December 31, 2014
| Balanced |
Large Value | Large Core | Large Growth | Mid Value | ||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (A) (B) |
$ | 161,730,393 | $ | 952,925,460 | $ | 372,848,556 | $ | 978,562,417 | $ | 959,895,731 | ||||||||||
| Repurchase agreements, at value (C) |
2,007,277 | 18,300,336 | 4,637,878 | 4,975,458 | 20,361,378 | |||||||||||||||
| Cash on deposit with broker |
60,000 | — | — | — | — | |||||||||||||||
| Cash |
23,506 | — | — | — | 40,275 | |||||||||||||||
| Receivables: |
||||||||||||||||||||
| Investments sold |
148,621 | 1,323,678 | — | 1,296,250 | 8,530,762 | |||||||||||||||
| Interest |
336,344 | 5 | 1 | 1 | 6 | |||||||||||||||
| Dividends |
114,061 | 655,444 | 292,753 | 758,526 | 1,984,394 | |||||||||||||||
| Tax reclaims |
— | — | 822 | 83,543 | — | |||||||||||||||
| Net income from securities lending |
1,311 | 13,374 | 7,835 | 9,531 | 29,518 | |||||||||||||||
| Prepaid expenses |
564 | 4,382 | 1,375 | 4,320 | 4,507 | |||||||||||||||
| Total assets |
164,422,077 | 973,222,679 | 377,789,220 | 985,690,046 | 990,846,571 | |||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Payables and other liabilities: |
||||||||||||||||||||
| Investments purchased |
8,413,245 | 360,769 | — | 2,602,265 | 2,678,590 | |||||||||||||||
| Investment advisory fees |
60,944 | 373,249 | 188,344 | 538,950 | 576,195 | |||||||||||||||
| Trustee and CCO fees |
42 | 261 | 99 | 265 | 278 | |||||||||||||||
| Audit and tax fees |
23,267 | 20,211 | 21,152 | 21,808 | 23,259 | |||||||||||||||
| Custody and accounting fees |
17,916 | 16,022 | 6,800 | 35,693 | 18,721 | |||||||||||||||
| Legal fees |
1,316 | 4,778 | 3,011 | 4,701 | 7,395 | |||||||||||||||
| Printing and shareholder reports fees |
30 | 211 | 72 | 500 | 967 | |||||||||||||||
| Variation margin payable on derivative financial instruments |
8,505 | — | — | — | — | |||||||||||||||
| Other |
1,071 | 2,645 | 2,831 | 2,305 | 3,033 | |||||||||||||||
| Collateral for securities on loan |
8,331,301 | 52,192,022 | 30,184,644 | 55,901,691 | 118,604,056 | |||||||||||||||
| Total liabilities |
16,857,637 | 52,970,168 | 30,406,953 | 59,108,178 | 121,912,494 | |||||||||||||||
| Net assets |
$ | 147,564,440 | $ | 920,252,511 | $ | 347,382,267 | $ | 926,581,868 | $ | 868,934,077 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (A) Investments, at cost |
$ | 142,818,222 | $ | 803,781,125 | $ | 303,837,691 | $ | 787,560,641 | $ | 812,782,354 | ||||||||||
| (B) Securities loaned, at value |
$ | 8,157,447 | $ | 50,901,445 | $ | 29,475,572 | $ | 54,697,566 | $ | 115,754,709 | ||||||||||
| (C) Repurchase agreements, at cost |
$ | 2,007,277 | $ | 18,300,336 | $ | 4,637,878 | $ | 4,975,458 | $ | 20,361,378 | ||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 95
STATEMENTS OF ASSETS AND LIABILITIES (continued)
At December 31, 2014
| Mid Growth |
Small Value | Small Core | Small Growth | International Equity |
||||||||||||||||
| Assets: |
||||||||||||||||||||
| Investments, at value (A) (B) |
$ | 155,654,613 | $ | 92,508,172 | $ | 374,020,619 | $ | 81,726,824 | $ | 494,692,268 | ||||||||||
| Repurchase agreements, at value (C) |
1,330,320 | 3,073,891 | 2,581,918 | 1,843,777 | 7,591,836 | |||||||||||||||
| Receivables: |
||||||||||||||||||||
| Investments sold |
— | — | — | 60,171 | 24,729,008 | |||||||||||||||
| Interest |
— | 1 | 1 | 1 | 2 | |||||||||||||||
| Dividends |
62,736 | 87,974 | 583,710 | 24,563 | 394,597 | |||||||||||||||
| Tax reclaims |
— | — | — | — | 2,032,225 | |||||||||||||||
| Net income from securities lending |
4,386 | 2,730 | 53,335 | 25,871 | 36,942 | |||||||||||||||
| Prepaid expenses |
887 | 391 | 1,550 | 338 | 2,969 | |||||||||||||||
| Total assets |
157,052,942 | 95,673,159 | 377,241,133 | 83,681,545 | 529,479,847 | |||||||||||||||
| Liabilities: |
||||||||||||||||||||
| Foreign currency overdraft (D) |
— | — | — | — | 536,889 | |||||||||||||||
| Payables and other liabilities: |
||||||||||||||||||||
| Investments purchased |
— | — | — | 112,365 | — | |||||||||||||||
| Investment advisory fees |
81,477 | 53,081 | 219,482 | 48,885 | 338,970 | |||||||||||||||
| Trustee and CCO fees |
36 | 21 | 86 | 19 | 144 | |||||||||||||||
| Audit and tax fees |
18,892 | 19,134 | 20,245 | 18,892 | 25,765 | |||||||||||||||
| Custody and accounting fees |
3,908 | 3,141 | 8,062 | 3,626 | 83,078 | |||||||||||||||
| Legal fees |
588 | 513 | 1,643 | 2,772 | 7,451 | |||||||||||||||
| Printing and shareholder reports fees |
710 | 131 | 783 | 162 | 360 | |||||||||||||||
| Other |
919 | 790 | 1,868 | 322 | 2,077 | |||||||||||||||
| Collateral for securities on loan |
30,817,098 | 19,003,279 | 70,697,659 | 17,033,375 | 29,304,924 | |||||||||||||||
| Total liabilities |
30,923,628 | 19,080,090 | 70,949,828 | 17,220,418 | 30,299,658 | |||||||||||||||
| Net assets |
$ | 126,129,314 | $ | 76,593,069 | $ | 306,291,305 | $ | 66,461,127 | $ | 499,180,189 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (A) Investments, at cost |
$ | 136,476,200 | $ | 69,358,940 | $ | 354,001,401 | $ | 71,807,240 | $ | 524,145,419 | ||||||||||
| (B) Securities loaned, at value |
$ | 30,159,655 | $ | 18,491,903 | $ | 68,786,058 | $ | 16,638,564 | $ | 28,108,134 | ||||||||||
| (C) Repurchase agreements, at cost |
$ | 1,330,320 | $ | 3,073,891 | $ | 2,581,918 | $ | 1,843,777 | $ | 7,591,836 | ||||||||||
| (D) Foreign currency, at cost |
$ | — | $ | — | $ | — | $ | — | $ | (538,967 | ) | |||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 96
STATEMENTS OF OPERATIONS
For the year ended December 31, 2014
| Money Market | High Quality Bond |
Inflation- Protected Securities |
Core Bond | High Yield Bond |
||||||||||||||||
| Investment Income: |
||||||||||||||||||||
| Dividend income |
$ | — | $ | — | $ | — | $ | 295,533 | $ | 283,582 | ||||||||||
| Interest income |
1,994,106 | 6,979,257 | 4,416,134 | 39,546,605 | 57,096,118 | |||||||||||||||
| Net income from securities lending |
— | 26,027 | 4,335 | 239,736 | — | |||||||||||||||
| Withholding taxes on foreign income |
— | (2,156 | ) | (98 | ) | 3,571 | — | |||||||||||||
| Total investment income |
1,994,106 | 7,003,128 | 4,420,371 | 40,085,445 | 57,379,700 | |||||||||||||||
| Expenses: |
||||||||||||||||||||
| Investment advisory fees |
2,142,204 | 1,322,412 | 983,065 | 4,733,961 | 4,895,757 | |||||||||||||||
| Trustees and CCO fees |
22,790 | 10,057 | 7,452 | 35,940 | 23,709 | |||||||||||||||
| Audit and tax fees |
22,427 | 23,255 | 23,488 | 34,348 | 26,134 | |||||||||||||||
| Custody and accounting fees |
143,448 | 60,439 | 134,200 | 278,947 | 151,194 | |||||||||||||||
| Legal fees |
44,115 | 16,948 | 10,905 | 55,185 | 42,212 | |||||||||||||||
| Printing and shareholder reports fees |
4,483 | 4,414 | 1,488 | 9,983 | 7,327 | |||||||||||||||
| Other |
19,727 | 8,600 | 7,922 | 29,276 | 18,683 | |||||||||||||||
| Total expenses |
2,399,194 | 1,446,125 | 1,168,520 | 5,177,640 | 5,165,016 | |||||||||||||||
| Expenses (waived/reimbursed) |
— | — | (43,164 | ) | — | — | ||||||||||||||
| Net expenses |
2,399,194 | 1,446,125 | 1,125,356 | 5,177,640 | 5,165,016 | |||||||||||||||
| Net investment income (loss) |
(405,088 | ) | 5,557,003 | 3,295,015 | 34,907,805 | 52,214,684 | ||||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||||||
| Investments |
10,182 | 37,515 | (972,341 | ) | 24,782,256 | 25,943,110 | ||||||||||||||
| Futures contracts |
— | — | (2,520,112 | ) | 5,581,819 | — | ||||||||||||||
| Written options and swaptions |
— | — | 719,844 | (36,775 | ) | — | ||||||||||||||
| Swap agreements |
— | — | (988,986 | ) | (1,114,199 | ) | — | |||||||||||||
| Foreign currency transactions |
— | — | 1,735,303 | (332,350 | ) | — | ||||||||||||||
| TBA short commitments |
— | — | — | 16 | — | |||||||||||||||
| Net realized gain (loss) |
10,182 | 37,515 | (2,026,292 | ) | 28,880,767 | 25,943,110 | ||||||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||
| Investments |
— | (2,422,845 | ) | 6,618,994 | 18,752,310 | (50,739,572 | ) | |||||||||||||
| Futures contracts |
— | — | (837,250 | ) | 296,716 | — | ||||||||||||||
| Written options and swaptions |
— | — | (71,572 | ) | 14,390 | — | ||||||||||||||
| Swap agreements |
— | — | (114,420 | ) | (74,564 | ) | — | |||||||||||||
| Translation of assets and liabilities denominated in foreign currencies |
— | — | 1,024,409 | 380,672 | — | |||||||||||||||
| TBA short commitments |
— | — | — | (302,897 | ) | — | ||||||||||||||
| Net change in unrealized appreciation (depreciation) |
— | (2,422,845 | ) | 6,620,161 | 19,066,627 | (50,739,572 | ) | |||||||||||||
| Net realized and change in unrealized gain (loss) |
10,182 | (2,385,330 | ) | 4,593,869 | 47,947,394 | (24,796,462 | ) | |||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | (394,906 | ) | $ | 3,171,673 | $ | 7,888,884 | $ | 82,855,199 | $ | 27,418,222 | |||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 97
STATEMENTS OF OPERATIONS (continued)
For the year ended December 31, 2014
| Balanced | Large Value | Large Core |
Large Growth | Mid Value | ||||||||||||||||
| Investment Income: |
||||||||||||||||||||
| Dividend income |
$ | 1,551,406 | $ | 15,461,243 | $ | 5,326,903 | $ | 9,647,370 | $ | 19,151,563 | ||||||||||
| Interest income |
1,370,477 | 1,314 | 415 | 777 | 2,654 | |||||||||||||||
| Net income from securities lending |
14,538 | 155,363 | 59,622 | 156,900 | 353,986 | |||||||||||||||
| Withholding taxes on foreign income |
(6,569 | ) | (37,209 | ) | (24,514 | ) | (86,413 | ) | (94,895 | ) | ||||||||||
| Total investment income |
2,929,852 | 15,580,711 | 5,362,426 | 9,718,634 | 19,413,308 | |||||||||||||||
| Expenses: |
||||||||||||||||||||
| Investment advisory fees |
601,538 | 4,086,084 | 1,947,608 | 5,646,189 | 6,439,669 | |||||||||||||||
| Trustees and CCO fees |
3,574 | 24,394 | 8,700 | 24,514 | 25,929 | |||||||||||||||
| Audit and tax fees |
23,925 | 23,673 | 22,253 | 22,821 | 43,404 | |||||||||||||||
| Custody and accounting fees |
130,225 | 96,410 | 39,718 | 160,465 | 116,983 | |||||||||||||||
| Legal fees |
6,825 | 40,783 | 16,250 | 41,020 | 46,468 | |||||||||||||||
| Printing and shareholder reports fees |
1,160 | 4,333 | 1,843 | 4,326 | 6,162 | |||||||||||||||
| Other |
2,676 | 19,547 | 6,630 | 19,606 | 20,568 | |||||||||||||||
| Total expenses |
769,923 | 4,295,224 | 2,043,002 | 5,918,941 | 6,699,183 | |||||||||||||||
| Expenses (waived/reimbursed) |
(101,549 | ) | — | — | — | — | ||||||||||||||
| Net expenses |
668,374 | 4,295,224 | 2,043,002 | 5,918,941 | 6,699,183 | |||||||||||||||
| Net investment income (loss) |
2,261,478 | 11,285,487 | 3,319,424 | 3,799,693 | 12,714,125 | |||||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||||||
| Investments |
6,730,856 | 108,717,853 | 33,339,718 | 172,884,116 | 205,834,975 | |||||||||||||||
| Futures contracts |
288,344 | — | — | — | — | |||||||||||||||
| Written options and swaptions |
(4,625 | ) | — | — | — | — | ||||||||||||||
| Swap agreements |
(433 | ) | — | — | — | — | ||||||||||||||
| Foreign currency transactions |
(5,637 | ) | — | 29 | (3,642 | ) | (2,654 | ) | ||||||||||||
| Net realized gain (loss) |
7,008,505 | 108,717,853 | 33,339,747 | 172,880,474 | 205,832,321 | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||
| Investments |
4,692,257 | (35,341,767 | ) | 9,785,583 | (84,666,922 | ) | (100,147,781 | ) | ||||||||||||
| Futures contracts |
(14,163 | ) | — | — | — | — | ||||||||||||||
| Written options and swaptions |
2,058 | — | — | — | — | |||||||||||||||
| Translation of assets and liabilities denominated in foreign currencies |
9,330 | — | (41 | ) | (4,082 | ) | 70 | |||||||||||||
| TBA short commitments |
(7,252 | ) | — | — | — | — | ||||||||||||||
| Net change in unrealized appreciation (depreciation) |
4,682,230 | (35,341,767 | ) | 9,785,542 | (84,671,004 | ) | (100,147,711 | ) | ||||||||||||
| Net realized and change in unrealized gain (loss) |
11,690,735 | 73,376,086 | 43,125,289 | 88,209,470 | 105,684,610 | |||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 13,952,213 | $ | 84,661,573 | $ | 46,444,713 | $ | 92,009,163 | $ | 118,398,735 | ||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 98
STATEMENTS OF OPERATIONS (continued)
For the year ended December 31, 2014
| Mid Growth | Small Value | Small Core | Small Growth | International Equity |
||||||||||||||||
| Investment Income: |
||||||||||||||||||||
| Dividend income |
$ | 1,758,552 | $ | 1,367,279 | $ | 5,442,278 | $ | 232,992 | $ | 22,064,775 | ||||||||||
| Interest income |
51 | 224 | 359 | 194 | 3,722 | |||||||||||||||
| Net income from securities lending |
53,564 | 30,076 | 595,009 | 119,774 | 578,291 | |||||||||||||||
| Withholding taxes on foreign income |
(9,674 | ) | (472 | ) | (15,144 | ) | — | (1,767,044 | ) | |||||||||||
| Total investment income |
1,802,493 | 1,397,107 | 6,022,502 | 352,960 | 20,879,744 | |||||||||||||||
| Expenses: |
||||||||||||||||||||
| Investment advisory fees |
963,410 | 621,560 | 2,556,022 | 562,501 | 4,241,103 | |||||||||||||||
| Trustees and CCO fees |
3,601 | 2,038 | 8,624 | 1,799 | 15,333 | |||||||||||||||
| Audit and tax fees |
19,362 | 20,991 | 26,693 | 19,289 | 29,874 | |||||||||||||||
| Custody and accounting fees |
22,291 | 19,130 | 47,983 | 21,282 | 450,118 | |||||||||||||||
| Legal fees |
5,334 | 3,490 | 13,415 | 3,198 | 27,967 | |||||||||||||||
| Printing and shareholder reports fees |
1,577 | 395 | 3,523 | 362 | 4,205 | |||||||||||||||
| Other |
3,321 | 1,731 | 7,032 | 1,518 | 15,989 | |||||||||||||||
| Total expenses |
1,018,896 | 669,335 | 2,663,292 | 609,949 | 4,784,589 | |||||||||||||||
| Expenses (waived/reimbursed) |
(15,343 | ) | (25,034 | ) | — | (7,270 | ) | — | ||||||||||||
| Net expenses |
1,003,553 | 644,301 | 2,663,292 | 602,679 | 4,784,589 | |||||||||||||||
| Net investment income (loss) |
798,940 | 752,806 | 3,359,210 | (249,719 | ) | 16,095,155 | ||||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||||||
| Investments |
10,596,128 | 9,660,625 | 23,330,007 | 8,927,234 | 7,329,849 | |||||||||||||||
| Foreign currency transactions |
— | (865 | ) | (1,147 | ) | — | (148,150 | ) | ||||||||||||
| Net realized gain (loss) |
10,596,128 | 9,659,760 | 23,328,860 | 8,927,234 | 7,181,699 | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||
| Investments |
(1,341,660 | ) | (5,124,449 | ) | (13,556,307 | ) | (6,868,899 | ) | (61,785,321 | ) | ||||||||||
| Translation of assets and liabilities denominated in foreign currencies |
— | (47 | ) | (36 | ) | — | (274,442 | ) | ||||||||||||
| Net change in unrealized appreciation (depreciation) |
(1,341,660 | ) | (5,124,496 | ) | (13,556,343 | ) | (6,868,899 | ) | (62,059,763 | ) | ||||||||||
| Net realized and change in unrealized gain (loss) |
9,254,468 | 4,535,264 | 9,772,517 | 2,058,335 | (54,878,064 | ) | ||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
$ | 10,053,408 | $ | 5,288,070 | $ | 13,131,727 | $ | 1,808,616 | $ | (38,782,909 | ) | |||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 99
STATEMENTS OF CHANGES IN NET ASSETS
For the years ended:
| Money Market | High Quality Bond | Inflation-Protected Securities | ||||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||||||||||||
| From operations: | ||||||||||||||||||||||||
| Net investment income (loss) |
$ | (405,088 | ) | $ | (654,670 | ) | $ | 5,557,003 | $ | 7,619,019 | $ | 3,295,015 | $ | 1,503,888 | ||||||||||
| Net realized gain (loss) |
10,182 | 20,771 | 37,515 | 578,440 | (2,026,292 | ) | 3,440,601 | |||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
— | — | (2,422,845 | ) | (6,501,402 | ) | 6,620,161 | (31,996,091 | ) | |||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
(394,906 | ) | (633,899 | ) | 3,171,673 | 1,696,057 | 7,888,884 | (27,051,602 | ) | |||||||||||||||
| From transactions in investors’ beneficial interests: |
||||||||||||||||||||||||
| Contributions |
604,412,830 | 653,764,501 | 168,879,564 | 248,234,781 | 44,535,342 | 52,376,827 | ||||||||||||||||||
| Withdrawals |
(728,511,842 | ) | (614,626,579 | ) | (200,754,741 | ) | (236,118,950 | ) | (44,286,154 | ) | (91,673,855 | ) | ||||||||||||
| Net increase (decrease) in net assets resulting from transactions in investors’ beneficial interests |
(124,099,012 | ) | 39,137,922 | (31,875,177 | ) | 12,115,831 | 249,188 | (39,297,028 | ) | |||||||||||||||
| Net increase (decrease) in net assets |
(124,493,918 | ) | 38,504,023 | (28,703,504 | ) | 13,811,888 | 8,138,072 | (66,348,630 | ) | |||||||||||||||
| Net assets: |
||||||||||||||||||||||||
| Beginning of year |
986,861,962 | 948,357,939 | 399,857,882 | 386,045,994 | 274,787,724 | 341,136,354 | ||||||||||||||||||
| End of year |
$ | 862,368,044 | $ | 986,861,962 | $ | 371,154,378 | $ | 399,857,882 | $ | 282,925,796 | $ | 274,787,724 | ||||||||||||
| Core Bond | High Yield Bond | Balanced | ||||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||||||||||||
| From operations: | ||||||||||||||||||||||||
| Net investment income (loss) |
$ | 34,907,805 | $ | 36,979,108 | $ | 52,214,684 | $ | 53,201,239 | $ | 2,261,478 | $ | 1,651,684 | ||||||||||||
| Net realized gain (loss) |
28,880,767 | 2,100,729 | 25,943,110 | 978,231 | 7,008,505 | 8,152,622 | ||||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
19,066,627 | (53,219,455 | ) | (50,739,572 | ) | 5,528,464 | 4,682,230 | 9,438,654 | ||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
82,855,199 | (14,139,618 | ) | 27,418,222 | 59,707,934 | 13,952,213 | 19,242,960 | |||||||||||||||||
| From transactions in investors’ beneficial interests: |
||||||||||||||||||||||||
| Contributions |
243,239,709 | 229,761,560 | 112,116,324 | 116,427,122 | 27,672,670 | 21,426,618 | ||||||||||||||||||
| Withdrawals |
(307,830,084 | ) | (349,444,213 | ) | (119,665,792 | ) | (139,221,398 | ) | (17,330,758 | ) | (27,001,328 | ) | ||||||||||||
| Net increase (decrease) in net assets resulting from transactions in investors’ beneficial interests |
(64,590,375 | ) | (119,682,653 | ) | (7,549,468 | ) | (22,794,276 | ) | 10,341,912 | (5,574,710 | ) | |||||||||||||
| Net increase (decrease) in net assets |
18,264,824 | (133,822,271 | ) | 19,868,754 | 36,913,658 | 24,294,125 | 13,668,250 | |||||||||||||||||
| Net assets: |
||||||||||||||||||||||||
| Beginning of year |
1,336,210,864 | 1,470,033,135 | 856,906,301 | 819,992,643 | 123,270,315 | 109,602,065 | ||||||||||||||||||
| End of year |
$ | 1,354,475,688 | $ | 1,336,210,864 | $ | 876,775,055 | $ | 856,906,301 | $ | 147,564,440 | $ | 123,270,315 | ||||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 100
STATEMENTS OF CHANGES IN NET ASSETS (continued)
For the years ended:
| Large Value | Large Core | Large Growth | ||||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||||||||||||
| From operations: | ||||||||||||||||||||||||
| Net investment income (loss) |
$ | 11,285,487 | $ | 14,796,465 | $ | 3,319,424 | $ | 3,921,752 | $ | 3,799,693 | $ | 4,940,689 | ||||||||||||
| Net realized gain (loss) |
108,717,853 | 177,405,771 | 33,339,747 | 58,081,271 | 172,880,474 | 96,591,812 | ||||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
(35,341,767 | ) | 86,365,970 | 9,785,542 | 25,059,363 | (84,671,004 | ) | 163,690,225 | ||||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
84,661,573 | 278,568,206 | 46,444,713 | 87,062,386 | 92,009,163 | 265,222,726 | ||||||||||||||||||
| From transactions in investors’ beneficial interests: |
||||||||||||||||||||||||
| Contributions |
67,987,946 | 67,473,165 | 29,197,760 | 27,612,712 | 62,275,027 | 50,143,117 | ||||||||||||||||||
| Withdrawals |
(156,673,532 | ) | (206,804,126 | ) | (37,995,285 | ) | (49,923,765 | ) | (169,720,555 | ) | (198,361,205 | ) | ||||||||||||
| Net increase (decrease) in net assets resulting from transactions in investors’ beneficial interests |
(88,685,586 | ) | (139,330,961 | ) | (8,797,525 | ) | (22,311,053 | ) | (107,445,528 | ) | (148,218,088 | ) | ||||||||||||
| Net increase (decrease) in net assets |
(4,024,013 | ) | 139,237,245 | 37,647,188 | 64,751,333 | (15,436,365 | ) | 117,004,638 | ||||||||||||||||
| Net assets: |
||||||||||||||||||||||||
| Beginning of year |
924,276,524 | 785,039,279 | 309,735,079 | 244,983,746 | 942,018,233 | 825,013,595 | ||||||||||||||||||
| End of year |
$ | 920,252,511 | $ | 924,276,524 | $ | 347,382,267 | $ | 309,735,079 | $ | 926,581,868 | $ | 942,018,233 | ||||||||||||
| Mid Value | Mid Growth | Small Value | ||||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||||||||||||
| From operations: | ||||||||||||||||||||||||
| Net investment income (loss) |
$ | 12,714,125 | $ | 8,311,476 | $ | 798,940 | $ | (7,052 | ) | $ | 752,806 | $ | 437,328 | |||||||||||
| Net realized gain (loss) |
205,832,321 | 100,694,928 | 10,596,128 | 41,796,938 | 9,659,760 | 7,673,016 | ||||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
(100,147,711 | ) | 142,457,500 | (1,341,660 | ) | 2,753,874 | (5,124,496 | ) | 14,403,424 | |||||||||||||||
| Net increase (decrease) in net assets resulting from operations |
118,398,735 | 251,463,904 | 10,053,408 | 44,543,760 | 5,288,070 | 22,513,768 | ||||||||||||||||||
| From transactions in investors’ beneficial interests: |
||||||||||||||||||||||||
| Contributions |
60,667,605 | 71,316,736 | 16,339,479 | 14,172,136 | 9,733,013 | 9,361,371 | ||||||||||||||||||
| Withdrawals |
(285,213,427 | ) | (125,663,958 | ) | (50,406,635 | ) | (73,505,761 | ) | (20,725,556 | ) | (19,760,939 | ) | ||||||||||||
| Net increase (decrease) in net assets resulting from transactions in investors’ beneficial interests |
(224,545,822 | ) | (54,347,222 | ) | (34,067,156 | ) | (59,333,625 | ) | (10,992,543 | ) | (10,399,568 | ) | ||||||||||||
| Net increase (decrease) in net assets |
(106,147,087 | ) | 197,116,682 | (24,013,748 | ) | (14,789,865 | ) | (5,704,473 | ) | 12,114,200 | ||||||||||||||
| Net assets: |
||||||||||||||||||||||||
| Beginning of year |
975,081,164 | 777,964,482 | 150,143,062 | 164,932,927 | 82,297,542 | 70,183,342 | ||||||||||||||||||
| End of year |
$ | 868,934,077 | $ | 975,081,164 | $ | 126,129,314 | $ | 150,143,062 | $ | 76,593,069 | $ | 82,297,542 | ||||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 101
STATEMENTS OF CHANGES IN NET ASSETS (continued)
For the years ended:
| Small Core | Small Growth | International Equity | ||||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
December 31, 2014 |
December 31, 2013 |
|||||||||||||||||||
| From operations: | ||||||||||||||||||||||||
| Net investment income (loss) |
$ | 3,359,210 | $ | 2,337,203 | $ | (249,719 | ) | $ | (309,418 | ) | $ | 16,095,155 | $ | 8,015,375 | ||||||||||
| Net realized gain (loss) |
23,328,860 | 102,876,283 | 8,927,234 | 4,048,714 | 7,181,699 | 172,319,982 | ||||||||||||||||||
| Net change in unrealized appreciation (depreciation) |
(13,556,343 | ) | (14,167,804 | ) | (6,868,899 | ) | 17,451,716 | (62,059,763 | ) | (101,698,516 | ) | |||||||||||||
| Net increase (decrease) in net assets resulting from operations |
13,131,727 | 91,045,682 | 1,808,616 | 21,191,012 | (38,782,909 | ) | 78,636,841 | |||||||||||||||||
| From transactions in investors’ beneficial interests: |
||||||||||||||||||||||||
| Contributions |
20,707,866 | 20,969,699 | 9,958,737 | 11,088,755 | 81,284,021 | 56,228,758 | ||||||||||||||||||
| Withdrawals |
(61,729,892 | ) | (74,769,828 | ) | (18,370,607 | ) | (17,515,184 | ) | (155,426,237 | ) | (137,192,742 | ) | ||||||||||||
| Net increase (decrease) in net assets resulting from transactions in investors’ beneficial interests |
(41,022,026 | ) | (53,800,129 | ) | (8,411,870 | ) | (6,426,429 | ) | (74,142,216 | ) | (80,963,984 | ) | ||||||||||||
| Net increase (decrease) in net assets |
(27,890,299 | ) | 37,245,553 | (6,603,254 | ) | 14,764,583 | (112,925,125 | ) | (2,327,143 | ) | ||||||||||||||
| Net assets: |
||||||||||||||||||||||||
| Beginning of year |
334,181,604 | 296,936,051 | 73,064,381 | 58,299,798 | 612,105,314 | 614,432,457 | ||||||||||||||||||
| End of year |
$ | 306,291,305 | $ | 334,181,604 | $ | 66,461,127 | $ | 73,064,381 | $ | 499,180,189 | $ | 612,105,314 | ||||||||||||
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 102
FINANCIAL HIGHLIGHTS
For the years ended:
| Money Market | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
(0.05)% | (0.07)% | (0.11)% | (0.04)% | 0.02% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 862,368 | $ 986,862 | $ 948,358 | $ 995,629 | $ 1,065,396 | |||||||||||||||
| Expenses to average net assets |
0.28% | 0.29% | 0.28% | 0.28% | 0.28% | |||||||||||||||
| Net investment income (loss) to average net assets |
(0.05)% | (0.07)% | (0.11)% | (0.04)% | 0.02% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| High Quality Bond | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
0.81% | 0.41% | 2.95% | 2.16% | 4.20% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 371,154 | $ 399,858 | $ 386,046 | $ 458,228 | $ 463,701 | |||||||||||||||
| Expenses to average net assets |
0.38% | 0.39% | 0.38% | 0.38% | 0.38% | |||||||||||||||
| Net investment income (loss) to average net assets |
1.47% | 1.81% | 2.10% | 2.43% | 2.99% | |||||||||||||||
| Portfolio turnover rate |
92% | 77% | 68% | 84% | 87% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| Inflation-Protected Securities | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
3.00% | (8.26)% | 7.06% | 12.33% | 6.23% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 282,926 | $ 274,788 | $ 341,136 | $ 358,544 | $ 328,010 | |||||||||||||||
| Expenses to average net assets |
||||||||||||||||||||
| After (waiver/reimbursement) |
0.40% | 0.40% | 0.40% | 0.40% | 0.38% | |||||||||||||||
| Before (waiver/reimbursement) |
0.42% | 0.41% | 0.40% | 0.40% | 0.38% | |||||||||||||||
| Net investment income (loss) to average net assets |
1.17% | 0.48% | 1.43% | 3.30% | 2.04% | |||||||||||||||
| Portfolio turnover rate |
81% | 99% | 103% | 134% | 117% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| Core Bond | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
6.32% | (0.96)% | 8.28% | 6.20% | 8.26% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 1,354,476 | $ 1,336,211 | $ 1,470,033 | $ 1,588,591 | $ 1,622,006 | |||||||||||||||
| Expenses to average net assets |
0.38% | 0.39% | 0.39% | 0.39% | 0.39% | |||||||||||||||
| Net investment income (loss) to average net assets |
2.58% | 2.64% | 3.03% | 3.54% | 3.65% | |||||||||||||||
| Portfolio turnover rate |
184% | 200% | 297% | 406% | 633% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| High Yield Bond | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
3.16% | 7.48% | 15.14% | 4.93% | 15.81% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 876,775 | $ 856,906 | $ 819,993 | $ 729,276 | $ 709,083 | |||||||||||||||
| Expenses to average net assets (B) |
0.58% | 0.59% | 0.59% | 0.59% | 0.59% | |||||||||||||||
| Net investment income (loss) to average net assets (C) |
5.87% | 6.37% | 7.23% | 8.04% | 8.84% | |||||||||||||||
| Portfolio turnover rate (D) |
97% | 51% | 102% | 81% | 98% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| (B) | Does not include expenses of the investment companies in which the Portfolio invests. |
| (C) | Recognition of net investment income by the Portfolio is affected by the timing of the declaration of dividends by the investment companies in which the Portfolio invests. |
| (D) | Does not include portfolio activity of the investment companies in which the Portfolio invests. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 103
FINANCIAL HIGHLIGHTS (continued)
For the years ended:
| Balanced | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
10.99% | 18.33% | 13.47% | 3.60% | 13.91% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 147,564 | $ 123,270 | $ 109,602 | $ 104,111 | $ 116,337 | |||||||||||||||
| Expenses to average net assets |
||||||||||||||||||||
| After (waiver/reimbursement) |
0.50% | 0.50% | 0.50% | 0.50% | 0.50% | |||||||||||||||
| Before (waiver/reimbursement) |
0.58% | 0.63% | 0.61% | 0.62% | 0.59% | |||||||||||||||
| Net investment income (loss) to average net assets |
1.69% | 1.44% | 1.82% | 2.26% | 2.42% | |||||||||||||||
| Portfolio turnover rate |
92% | 123% | 150% | 245% | 211% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| Large Value | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
9.82% | 38.08% | 17.39% | 2.32% | 14.66% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 920,253 | $ 924,277 | $ 785,039 | $ 877,766 | $ 1,014,115 | |||||||||||||||
| Expenses to average net assets (B) |
0.47% | 0.48% | 0.48% | 0.47% | 0.47% | |||||||||||||||
| Net investment income (loss) to average net assets (C) |
1.24% | 1.69% | 2.08% | (D) | 1.70% | 1.65% | ||||||||||||||
| Portfolio turnover rate (E) |
69% | 99% | 48% | 55% | 62% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| (B) | Does not include expenses of the investment companies in which the Portfolio invests. |
| (C) | Recognition of net investment income by the Portfolio is affected by the timing of the declaration of dividends by the investment companies in which the Portfolio invests. |
| (D) | Includes litigation proceeds received during the year that represented 0.15%. |
| (E) | Does not include portfolio activity of the investment companies in which the Portfolio invests. |
| Large Core | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
15.16% | 37.28% | 17.30% | 3.51% | 11.79% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 347,382 | $ 309,735 | $ 244,984 | $ 235,204 | $ 255,995 | |||||||||||||||
| Expenses to average net assets |
0.63% | 0.64% | 0.64% | 0.63% | 0.63% | |||||||||||||||
| Net investment income (loss) to average net assets |
1.02% | 1.41% | 1.68% | 1.37% | 1.47% | |||||||||||||||
| Portfolio turnover rate |
70% | 116% | 54% | 63% | 55% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| Large Growth | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
10.75% | 35.32% | 14.91% | (1.78)% | 16.62% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 926,582 | $ 942,018 | $ 825,014 | $ 1,016,307 | $ 1,176,583 | |||||||||||||||
| Expenses to average net assets (B) |
||||||||||||||||||||
| After (waiver/reimbursement) |
0.65% | 0.65% | 0.65% | 0.65% | 0.65% | |||||||||||||||
| Before (waiver/reimbursement) |
0.65% | 0.66% | 0.66% | 0.65% | 0.66% | |||||||||||||||
| Net investment income (loss) to average net assets (C) |
0.42% | 0.57% | 0.75% | 0.34% | 0.56% | |||||||||||||||
| Portfolio turnover rate (D) |
73% | 49% | 53% | 53% | 119% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| (B) | Does not include expenses of the investment companies in which the Portfolio invests. |
| (C) | Recognition of net investment income by the Portfolio is affected by the timing of the declaration of dividends by the investment companies in which the Portfolio invests. |
| (D) | Does not include portfolio activity of the investment companies in which the Portfolio invests. |
| Mid Value | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
12.97% | 32.99% | 19.50% | (2.19)% | 21.29% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 868,934 | $ 975,081 | $ 777,964 | $ 748,835 | $ 909,134 | |||||||||||||||
| Expenses to average net assets |
||||||||||||||||||||
| After (waiver/reimbursement) |
0.70% | 0.70% | 0.70% | 0.70% | 0.69% | |||||||||||||||
| Before (waiver/reimbursement) |
0.70% | 0.70% | 0.70% | 0.70% | 0.69% | |||||||||||||||
| Net investment income (loss) to average net assets |
1.32% | 0.93% | 1.36% | 1.08% | 1.14% | |||||||||||||||
| Portfolio turnover rate |
92% | 53% | 71% | 69% | 76% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 104
FINANCIAL HIGHLIGHTS (continued)
For the years ended:
| Mid Growth | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
8.04% | 30.35% | 13.93% | (6.90)% | 29.27% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 126,129 | $ 150,143 | $ 164,933 | $ 206,602 | $ 269,733 | |||||||||||||||
| Expenses to average net assets |
||||||||||||||||||||
| After (waiver/reimbursement) |
0.75% | 0.75% | 0.75% | 0.75% | 0.75% | |||||||||||||||
| Before (waiver/reimbursement) |
0.76% | 0.77% | 0.76% | 0.75% | 0.75% | |||||||||||||||
| Net investment income (loss) to average net assets |
0.60% | (—)% | (B) | 0.10% | (0.33)% | (0.36)% | ||||||||||||||
| Portfolio turnover rate |
60% | 234% | 178% | 135% | 199% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| (B) | Rounds to less than 0.01% or (0.01)%. |
| Small Value | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
7.38% | 34.10% | 16.11% | 1.35% | 23.12% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 76,593 | $ 82,298 | $ 70,183 | $ 103,958 | $ 134,427 | |||||||||||||||
| 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% | 0.88% | 0.87% | 0.87% | |||||||||||||||
| Net investment income (loss) to average net assets |
0.99% | 0.57% | 1.41% | 0.63% | 0.84% | |||||||||||||||
| Portfolio turnover rate |
18% | 16% | 15% | 16% | 121% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| Small Core | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
4.21% | 33.62% | 15.04% | (2.19)% | 29.89% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 306,291 | $ 334,182 | $ 296,936 | $ 296,060 | $ 341,598 | |||||||||||||||
| Expenses to average net assets |
0.83% | 0.84% | 0.84% | 0.84% | 0.85% | |||||||||||||||
| Net investment income (loss) to average net assets |
1.05% | 0.74% | 1.07% | 0.32% | 0.43% | |||||||||||||||
| Portfolio turnover rate |
148% | 195% | 59% | 59% | 55% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| Small Growth | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
3.13% | 37.97% | 1.30% | (6.45)% | 25.65% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 66,461 | $ 73,064 | $ 58,300 | $ 108,124 | $ 142,731 | |||||||||||||||
| Expenses to average net assets |
||||||||||||||||||||
| After (waiver/reimbursement) |
0.90% | 0.90% | 0.90% | 0.90% | 0.90% | |||||||||||||||
| Before (waiver/reimbursement) |
0.91% | 0.93% | 0.94% | 0.94% | 0.93% | |||||||||||||||
| Net investment income (loss) to average net assets |
(0.37)% | (0.46)% | (0.20)% | (0.37)% | (0.41)% | |||||||||||||||
| Portfolio turnover rate |
78% | 72% | 209% | 120% | 99% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
| International Equity | ||||||||||||||||||||
| December 31, 2014 |
December 31, 2013 |
December 31, 2012 |
December 31, 2011 |
December 31, 2010 |
||||||||||||||||
| Total return (A) |
(7.74)% | 13.92% | 17.35% | (13.51)% | 14.94% | |||||||||||||||
| Ratio and supplemental data: |
||||||||||||||||||||
| Net assets end of year (000’s) |
$ 499,180 | $ 612,105 | $ 614,432 | $ 680,170 | $ 893,260 | |||||||||||||||
| Expenses to average net assets |
0.83% | 0.85% | 0.82% | 0.82% | 0.81% | |||||||||||||||
| Net investment income (loss) to average net assets |
2.80% | 1.31% | 1.65% | 1.70% | 1.45% | |||||||||||||||
| Portfolio turnover rate |
28% | 116% | 23% | 24% | 29% | |||||||||||||||
| (A) | Total return reflects all Portfolio expenses. |
The Notes to Financial Statements are an integral part of this report.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 105
NOTES TO FINANCIAL STATEMENTS
At December 31, 2014
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 applies investment company accounting and reporting guidance. 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 (the “Board”), participation in these meetings and preparation of regular communications with the Board; oversight of preparation and review 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 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 TAM’s and the Board’s oversight, among other things, for making decisions to buy, hold or sell a particular security.
Transamerica Fund Services, Inc. (“TFS”) provides supervisory and administrative services to each Portfolio. TFS’s 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 custodian’s daily calculation of Net Asset Value (“NAV”); 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 Portfolio’s investments; assisting with 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; acting as liaison with the Portfolios’ independent public accountants and providing, upon request, analyses, fiscal year summaries and other audit related services; assisting in the preparation of agendas and supporting documents for and minutes of meetings of the Board and committees of trustees; assisting in the 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 Administrative 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 2014 |
Page 106
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
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 Generally Accepted Accounting Principles (“GAAP”) in the United States of America, 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, the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the Portfolios may experience delays in recovery of the loaned securities or delays in access to collateral, or 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, a money market mutual fund registered under the 1940 Act. By lending securities, the Portfolios seek to increase their 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, 2014, if any, are shown on a gross basis in the Schedule of Investments and Statements of Assets and Liabilities.
Repurchase agreements: In a repurchase agreement, the Portfolios purchase a security and simultaneously commit 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.
Repurchase agreements are subject to netting agreements, which are agreements between the Portfolios and its counterparties that provide for the net settlement of all transactions and collateral with the Portfolios, through a single payment, in the event of default or termination. Amounts presented on the Schedule of Investments, and as part of Repurchase agreements, at value on the Statements of Assets and Liabilities are shown on a gross basis. The value of the related collateral for each repurchase agreement, as reflected in the Schedule of Investments, exceeds the value of each repurchase agreement at December 31, 2014.
Open repurchase agreements at December 31, 2014, if any, are included within the Schedule 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. Each Portfolio combines fluctuations from currency exchange rates and fluctuations in value when computing net realized and unrealized gains or losses from investments.
Net foreign currency gains and losses resulting from changes in exchange rates include, foreign currency fluctuations between trade date and settlement date of investment security transactions, gains and losses on forward foreign currency contracts, and 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
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 107
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 1. (continued)
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 country’s balance of payments or for other reasons, a country may impose temporary restrictions of foreign capital remittances abroad.
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.
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, 2014, if any, are listed in the Schedule 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. The 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 price (“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 the Portfolios write 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, the Portfolios bear 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 the Portfolios could result in the Portfolios selling or buying a security or currency at a price different from the current market value.
Inflation-capped options: The Portfolios purchase or write inflation-capped options to enhance returns or for hedging opportunities. The purpose of purchasing inflation-capped options is to protect the Portfolios 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 purchase or write 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.
Open option contracts at December 31, 2014, if any, are listed in the Schedule of Investments.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 108
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 1. (continued)
Transactions in written options were as follows:
| Inflation-Protected Securities | Premiums | Contracts | ||||||
| Balance at December 31, 2013 |
$ | 15,173 | 207 | |||||
| Sales |
415,290 | 1,381 | ||||||
| Closing Buys |
(148,909 | ) | (817 | ) | ||||
| Expirations |
(167,327 | ) | (631 | ) | ||||
| Exercised |
— | — | ||||||
|
|
|
|
|
|||||
| Balance at December 31, 2014 |
$ | 114,227 | 140 | |||||
| Core Bond | Premiums | Contracts | ||||||
| Balance at December 31, 2013 |
$ | 48,432 | 663 | |||||
| Sales |
573,727 | 1,534 | ||||||
| Closing Buys |
(622,159 | ) | (2,197 | ) | ||||
| Expirations |
— | — | ||||||
| Exercised |
— | — | ||||||
|
|
|
|
|
|||||
| Balance at December 31, 2014 |
$ | — | — | |||||
| Balanced | Premiums | Contracts | ||||||
| Balance at December 31, 2013 |
$ | 1,680 | 23 | |||||
| Sales |
21,346 | 57 | ||||||
| Closing Buys |
(23,026 | ) | (80 | ) | ||||
| Expirations |
— | — | ||||||
| Exercised |
— | — | ||||||
|
|
|
|
|
|||||
| Balance at December 31, 2014 |
$ | — | — | |||||
Transactions in written swaptions, inflation cap and foreign exchange options were as follows:
| Inflation-Protected Securities | Premiums | Notional Amount |
Notional Amount |
Notional Amount |
Notional Amount |
Notional Amount |
||||||||||||||||||
| Balance at December 31, 2013 |
$ | 572,977 | $ | 26,415,000 | AUD | — | EUR | 8,590,000 | JPY | — | NZD | — | ||||||||||||
| Sales |
1,323,601 | 53,375,000 | 26,255,000 | 9,315,000 | 1,000,000 | 1,340,000 | ||||||||||||||||||
| Closing Buys |
(912,134 | ) | (39,420,000 | ) | — | — | — | — | ||||||||||||||||
| Expirations |
(187,441 | ) | (8,710,000 | ) | — | (13,635,000 | ) | (1,000,000 | ) | (1,340,000 | ) | |||||||||||||
| Exercised |
— | — | — | — | — | — | ||||||||||||||||||
| Balance at December 31, 2014 |
$ | 797,003 | $ | 31,660,000 | AUD | 26,255,000 | EUR | 4,270,000 | JPY | — | NZD | — | ||||||||||||
| Core Bond | Premiums | Notional Amount |
||||||
| Balance at December 31, 2013 |
$ | 91,923 | JPY | 3,560,000,000 | ||||
| Sales |
— | — | ||||||
| Closing Buys |
(91,923 | ) | (3,560,000,000 | ) | ||||
| Expirations |
— | — | ||||||
| Exercised |
— | — | ||||||
|
|
|
|
|
|||||
| Balance at December 31, 2014 |
$ | — | JPY | — | ||||
Futures contracts: The Portfolios are subject to equity and commodity 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, 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, 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 exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 109
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 1. (continued)
Open futures contracts at December 31, 2014, if any, are listed in the Schedule of Investments. The variation margin receivable or payable, as applicable, is shown on the Statements of Assets and Liabilities.
Swap agreements: Swap agreements are bilaterally negotiated agreements between the Portfolios 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, with the exception of Money Market, 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.
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 Schedule 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 Schedule 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 the Portfolios hold 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.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 110
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 1. (continued)
Open centrally cleared swap agreements at December 31, 2014, if any, are listed in the Schedule of Investments. The centrally cleared swap agreements are marked-to-market daily and an appropriate payable or receivable for the variation margin is recorded by the Portfolios, if applicable, and is shown on the Statements of Assets and Liabilities.
Open OTC swap agreements at December 31, 2014, if any, are listed in the Schedule of Investments. The value, as applicable, is shown on the Statements of Assets and Liabilities.
Short sales: A short sale is a transaction in which the Portfolios sell securities it does not own, but has borrowed, in anticipation of a decline in the fair market value of the securities. The Portfolios are obligated to replace the borrowed securities at the market price at the time of replacement. The Portfolios’ obligation to replace the securities borrowed in connection with a short sale is fully secured by collateral deposited with the custodian. In addition, the Portfolios consider the short sale to be a borrowing by the Portfolios that is subject to the asset coverage requirements of the 1940 Act. Short sales represent an aggressive trading practice with a high risk/return potential, and short sales involve special considerations. Risks of short sales include that possible losses from short sales may be unlimited (e.g., if the price of stocks sold short rises), whereas losses from direct purchases of securities are limited to the total amount invested, and the Portfolio may be unable to replace borrowed securities sold short.
The Portfolios investing in short sales are liable for any dividends and/or interest payable on securities in a short position and these payables, if any, are reflected as dividends and/or interest from securities sold short in the Statements of Operations. The Portfolios also bear other costs, such as charges for the prime brokerage accounts, in connection with short positions. These costs are reported as dividends and/or interest from securities sold short in the Statements of Operations.
Open short sale transactions at December 31, 2014, if any, are identified in the Schedule of Investments.
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, with the exception of Money Market, 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, 2014.
Open loan participations and assignments at December 31, 2014, if any, are identified in the Schedule 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 Valuation.
TBA commitments held at December 31, 2014, if any, are identified in the Schedule of Investments. Open balances at December 31, 2014, if any, are included in the payable or receivable for investments purchased or sold in the Statements of Assets and Liabilities.
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.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 111
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 1. (continued)
Open structured notes at December 31, 2014, if any, are included within the Schedule 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.
Open when-issued securities at December 31, 2014, if any, are identified in the Schedule of Investments. Open trades, if any, are reflected as When-issued securities purchased in the Statements of Assets and Liabilities.
Treasury inflation-protected securities (“TIPS”): Certain Portfolios may 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.
TIPS held at December, 31, 2014, if any, are listed in the Schedule of Investments. The adjustments, if any, 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 in the Statements of Assets and Liabilities.
PIKs owned at December 31, 2014, if any, are identified in the Schedule 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.
Restricted and illiquid securities at December 31, 2014, if any, are identified in the Schedule 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 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.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 112
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 1. (continued)
Commissions recaptured for the year ended December 31, 2014, are included in Net realized gain (loss) in the Statements of Operations and are summarized in the below table. Portfolios not listed in the below table did not have any commissions recaptured during the year ended December 31, 2014.
| Portfolio | Commissions | |||
| Large Growth |
$ | 22,094 | ||
| Mid Value |
126,898 | |||
| Small Value |
468 | |||
| Small Growth |
2,659 | |||
| International Equity |
3,323 | |||
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 (“REIT”): Dividend income related to a REIT is recorded at management’s estimate of the income and capital gains 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.
REITs owned at December 31, 2014, if any, are identified in the Schedule of Investments.
NOTE 2. SECURITY VALUATION
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 1—Unadjusted quoted prices in active markets for identical securities.
Level 2—Inputs, 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 3—Unobservable inputs, which may include TAM’s internal valuation committee’s (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 issuer’s financial statements or other available documents and, if necessary, available information concerning other securities in similar circumstances.
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. The hierarchy classification of inputs used to value the Portfolios’ investments, at December 31, 2014, is disclosed in the Security Valuation section of each Portfolio’s Schedule of Investments.
Under supervision of the Board, TAM provides day-to-day valuation functions. TAM formed the Valuation Committee to monitor and implement the fair valuation policies and procedures as approved by the Board. These policies and procedures are reviewed at least annually by the Board. 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, 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.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 113
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 2. (continued)
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 security’s 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 Board reviews Valuation Committee determinations at its regularly scheduled meetings.
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 Committee’s 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.
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 NAV of the underlying portfolios. These securities are actively traded and no valuation adjustments are applied. Exchange-Traded Funds (“ETF”) 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, ETF, 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.
Securities lending collateral: Securities lending collateral is invested in a money market fund which is valued at the NAV 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.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 114
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 2. (continued)
Mortgage-backed securities: The fair value of mortgage-backed securities is estimated based on models based that consider issuer type, coupon, cash flows, mortgage prepayment projection tables and adjustable rate mortgage evaluations that incorporate index data, periodic life caps and the next coupon reset date. 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 are categorized in Level 3.
Municipal bonds & notes and variable rate notes: The fair value of municipal bonds & notes and variable rate notes is estimated based on models that consider, among other factors, information received from market makers and broker-dealers, current trades, bid-want lists, offerings, market movements, the liquidity of the bond, state of issuance, benchmark yield curves, and bond or note insurance. 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 are 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 pass-throughs. Generally, agency issued debt securities are valued in a manner similar to U.S. government securities. Mortgage pass-throughs include TBA securities and mortgage pass-through certificates. Generally, TBA securities and mortgage pass-throughs 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.
Derivative instruments: Centrally cleared or 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.
NOTE 3. RELATED PARTY TRANSACTIONS
TAM, the Portfolios’ investment adviser, is directly owned by Transamerica Premier Life Insurance Company (“TPLIC”) and AUSA Holding Company (“AUSA”), both of which are indirect, wholly owned subsidiaries of Aegon NV. TPLIC is owned by Commonwealth General Corporation (“Commonwealth”) and Aegon USA, LLC (“Aegon USA”). Commonwealth and AUSA are wholly owned by Aegon USA. Aegon USA is wholly owned by Aegon US Holding Corporation, which is wholly owned by Transamerica Corporation (DE). Transamerica Corporation (DE) is wholly owned by The Aegon Trust, which is wholly owned by Aegon International B.V., which is wholly owned by Aegon NV, a Netherlands corporation, and a publicly traded international insurance group.
Aegon USA Investment Management LLC (“AUIM”) is both an affiliate and a sub-adviser of Money Market, Core Bond, High Yield Bond and Balanced.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 115
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 3. (continued)
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:
| TPFG |
Investments in |
|||
| Money Market |
57.65 | % | ||
| High Quality Bond |
27.76 | |||
| Inflation-Protected Securities |
41.04 | |||
| Core Bond |
27.01 | |||
| High Yield Bond |
14.52 | |||
| Balanced |
52.53 | |||
| Large Value |
31.05 | |||
| Stock Index |
6.93 | |||
| Large Core |
27.45 | |||
| Large Growth |
28.78 | |||
| Mid Value |
18.51 | |||
| Mid Growth |
47.19 | |||
| Small Value |
53.42 | |||
| Small Core |
26.85 | |||
| Small Growth |
58.68 | |||
| International Equity |
32.49 | |||
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:
| TPFG II |
Investments in |
|||
| Money Market |
29.83 | % | ||
| High Quality Bond |
15.64 | |||
| Inflation-Protected Securities |
30.22 | |||
| Core Bond |
30.27 | |||
| High Yield Bond |
38.72 | |||
| Balanced |
3.85 | |||
| Large Value |
11.18 | |||
| Stock Index |
15.45 | |||
| Large Core |
2.26 | |||
| Large Growth |
11.91 | |||
| Mid Value |
42.82 | |||
| Mid Growth |
18.05 | |||
| Small Value |
11.17 | |||
| Small Core |
9.02 | |||
| Small Growth |
16.66 | |||
| International Equity |
10.68 | |||
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 |
3.47 | % | ||
| High Quality Bond |
15.72 | |||
| Inflation-Protected Securities |
11.63 | |||
| Core Bond |
12.53 | |||
| High Yield Bond |
5.03 | |||
| Balanced |
40.97 | |||
| Large Value |
39.60 | |||
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 116
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 3. (continued)
| TFLIC Sub-accounts | Investments in Portfolio |
|||
| Large Core |
54.40 | % | ||
| Large Growth |
42.77 | |||
| Mid Value |
7.28 | |||
| Mid Growth |
1.05 | |||
| Small Value |
0.92 | |||
| Small Core |
53.29 | |||
| Small Growth |
1.01 | |||
| International Equity |
26.74 | |||
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 |
9.02 | % | ||
| High Quality Bond |
32.00 | |||
| Inflation-Protected Securities |
12.49 | |||
| Core Bond |
25.47 | |||
| High Yield Bond |
24.27 | |||
| Balanced |
2.33 | |||
| Large Value |
13.41 | |||
| Large Core |
12.44 | |||
| Large Growth |
13.86 | |||
| Mid Value |
6.04 | |||
| Mid Growth |
17.67 | |||
| Small Value |
26.54 | |||
| Small Core |
9.20 | |||
| Small Growth |
15.59 | |||
| International Equity |
24.85 | |||
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 |
8.88 | |||
| Inflation-Protected Securities |
4.61 | |||
| Core Bond |
4.72 | |||
| High Yield Bond |
17.46 | |||
| Large Value |
4.59 | |||
| Large Core |
3.46 | |||
| Large Growth |
2.60 | |||
| Mid Value |
25.35 | |||
| Mid Growth |
16.04 | |||
| Small Value |
7.95 | |||
| Small Core |
1.64 | |||
| Small Growth |
8.05 | |||
| International Equity |
5.24 | |||
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, who is deemed an interested person due to current or former service with TAM or an affiliate of TAM, receives compensation from the Series Portfolio or from the entities that invest in the Series Portfolio.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 117
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 3. (continued)
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’ daily Average 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. Payment of fees to the sub-advisers is the responsibility of TAM, and is not an additional expense of a Portfolio.
TAM has voluntarily elected to waive and/or reimburse Portfolio expenses to the extent that the total operating expenses exceed the below expense limit percentages corresponding to the Portfolios’ daily ANA.
| Portfolio | Expense Limit | Maximum Operating Expense Limit Effective Through | ||||
| Money Market |
0.30 | % | May 1, 2017 | |||
| High Quality Bond |
0.40 | May 1, 2017 | ||||
| Inflation-Protected Securities |
0.40 | May 1, 2017 | ||||
| Core Bond |
0.40 | May 1, 2017 | ||||
| High Yield Bond |
0.60 | May 1, 2017 | ||||
| Balanced |
0.50 | May 1, 2017 | ||||
| Large Value |
0.50 | May 1, 2017 | ||||
| Large Core |
0.65 | May 1, 2017 | ||||
| Large Growth |
0.65 | May 1, 2017 | ||||
| Mid Value |
0.70 | May 1, 2017 | ||||
| Mid Growth |
0.75 | May 1, 2017 | ||||
| Small Value |
0.85 | May 1, 2017 | ||||
| Small Core |
0.85 | May 1, 2017 | ||||
| Small Growth |
0.90 | May 1, 2017 | ||||
| International Equity |
0.90 | May 1, 2017 | ||||
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 118
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 3. (continued)
The expenses waived and/or reimbursed are included in the Statements of Operations. Such fee waivers/reimbursements are not subject to recapture by TAM in future years.
TAM also may waive/reimburse additional fees from time to time to help maintain competitive expense ratios. These arrangements are voluntary and may be terminated at any time. Expenses waived and/or reimbursed that are unsettled at year end are included in Due from adviser in the Statements of Assets and Liabilities.
Deferred compensation plan: Under a non-qualified deferred compensation plan effective January 1, 2008, as amended and restated, available to the trustees, compensation may be deferred that would otherwise be payable by the Series Portfolio to an independent trustee on a current basis for services rendered as trustee. Deferred compensation amounts will accumulate based on the value of the investment option, 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, 2014.
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, 2014 were as follows:
| Purchases of securities | Sales/maturities of securities | |||||||||||||||
| Portfolio | Long-term | U.S. government | Long-term | U.S. government | ||||||||||||
| High Quality Bond |
$ | 150,396,426 | $ | 188,076,578 | $ | 188,614,243 | $ | 170,318,364 | ||||||||
| Inflation-Protected Securities |
23,331,193 | 201,648,019 | 30,621,693 | 196,647,088 | ||||||||||||
| Core Bond |
620,715,585 | 1,633,750,396 | 681,536,468 | 1,739,240,545 | ||||||||||||
| High Yield Bond |
848,133,323 | — | 822,374,096 | — | ||||||||||||
| Balanced |
63,252,551 | 62,095,316 | 55,626,181 | 60,741,883 | ||||||||||||
| Large Value |
616,106,106 | — | 699,950,581 | — | ||||||||||||
| Large Core |
240,184,016 | — | 244,950,441 | — | ||||||||||||
| Large Growth |
666,553,678 | — | 769,402,420 | — | ||||||||||||
| Mid Value |
860,372,129 | — | 1,075,905,487 | — | ||||||||||||
| Mid Growth |
80,535,837 | — | 113,029,188 | — | ||||||||||||
| Small Value |
13,201,651 | — | 23,549,146 | — | ||||||||||||
| Small Core |
470,861,272 | — | 503,325,343 | — | ||||||||||||
| Small Growth |
51,028,194 | — | 58,995,346 | — | ||||||||||||
| International Equity |
159,510,016 | — | 221,891,881 | — | ||||||||||||
NOTE 5. RISK EXPOSURES AND THE USE OF DERIVATIVE 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, 2013 |
Ending number of positions at December 31, 2014 |
Average number of positions (A) |
||||||||||
| Futures contracts |
10 | 15 | 10 | |||||||||
| Purchased options and swaptions |
9 | 10 | 11 | |||||||||
| Written options and swaptions |
10 | 15 | 10 | |||||||||
| Swap agreements |
7 | 4 | 6 | |||||||||
| Forward foreign currency contracts |
22 | 12 | 16 | |||||||||
| (A) | Calculated based on positions held at each month end during the current year. |
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 119
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 5. (continued)
Inflation-Protected Securities (continued):
Fair Value of Derivative Instruments in the Statements of Assets and Liabilities as of December 31, 2014:
| Derivatives not accounted for as hedging instruments | Interest Rate Contracts |
Foreign Exchange Contracts |
Total | |||||||||
| Asset derivatives |
||||||||||||
| Purchased options and swaptions (A) (B) |
$ | 377,838 | $ | 364,330 | $ | 742,168 | ||||||
| Unrealized appreciation on futures contracts (B) (C) |
29,674 | — | 29,674 | |||||||||
| OTC swap agreements, at value (B) |
9,021 | — | 9,021 | |||||||||
| Unrealized appreciation on forward foreign currency contracts |
— | 694,984 | 694,984 | |||||||||
| Total gross amount of assets (D) |
$ | 416,533 | $ | 1,059,314 | $ | 1,475,847 | ||||||
| Liability derivatives |
||||||||||||
| Written options and swaptions (B) |
$ | (608,149 | ) | $ | (281,680 | ) | $ | (889,829 | ) | |||
| Unrealized depreciation on futures contracts (B) (C) |
(952,338 | ) | — | (952,338 | ) | |||||||
| Centrally cleared swap agreements, at value (B) (E) |
(268,788 | ) | — | (268,788 | ) | |||||||
| Unrealized depreciation on forward foreign currency contracts |
— | (77,890 | ) | (77,890 | ) | |||||||
| Total gross amount of liabilities (D) |
$ | (1,829,275 | ) | $ | (359,570 | ) | $ | (2,188,845 | ) | |||
| (A) | Included within Investments, at value on the Statements of Assets and Liabilities. |
| (B) | May include exchange-traded derivatives which are not subject to a master netting arrangement, or another similar arrangement. |
| (C) | Included within cumulative appreciation (depreciation) on futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
| (D) | 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. |
| (E) | Included within fair value of centrally cleared swap agreements as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
Gross Amounts Not Offset in the Statements of Assets and Liabilities as of December 31, 2014:
The following table presents the Portfolio’s 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 for forward foreign currency transactions, option contracts and swap agreements as of December 31, 2014. See Repurchase agreement note for offsetting and collateral information pertaining to repurchase agreements that are subject to master netting agreements.
| Counterparty | Gross Amounts of Assets Presented in Statements of Assets and Liabilities (A) |
Value Available for Offset |
Collateral Received (B) |
Net Amount | ||||||||||||
| Bank of America, N.A. |
$ | 10,589 | $ | — | $ | — | $ | 10,589 | ||||||||
| BNP Paribas |
538,830 | (6,560 | ) | — | 532,270 | |||||||||||
| Deutsche Bank AG |
431,736 | $ | (267,639 | ) | $ | (164,097 | ) | $ | — | |||||||
| JPMorgan Chase Bank, N.A. |
15,443 | (15,443 | ) | — | — | |||||||||||
| Royal Bank of Canada |
117,953 | (10,664 | ) | — | 107,289 | |||||||||||
| UBS AG |
252,309 | (166,639 | ) | — | 85,670 | |||||||||||
| Other Derivatives (C) |
108,987 | — | — | 108,987 | ||||||||||||
| Total Assets |
$ | 1,475,847 | $ | (466,945 | ) | $ | (164,097 | ) | $ | 844,805 | ||||||
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 120
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 5. (continued)
Inflation-Protected Securities (continued):
Gross Amounts Not Offset in the Statements of Assets and Liabilities as of December 31, 2014 (continued):
| Counterparty | Gross Amounts of Liabilities Presented in Statements of Assets and Liabilities (A) |
Value Available for Offset |
Collateral Pledged (B) |
Net Amount | ||||||||||||
| BNP Paribas |
$ | 6,560 | $ | (6,560 | ) | $ | — | $ | — | |||||||
| Citibank, N.A. |
381,275 | — | — | 381,275 | ||||||||||||
| Deutsche Bank AG |
267,639 | (267,639 | ) | — | — | |||||||||||
| HSBC Bank USA |
6,801 | — | — | 6,801 | ||||||||||||
| JPMorgan Chase Bank, N.A. |
34,309 | (15,443 | ) | — | 18,866 | |||||||||||
| Royal Bank of Canada |
10,664 | (10,664 | ) | — | — | |||||||||||
| Standard Chartered Bank |
26,019 | — | — | 26,019 | ||||||||||||
| UBS AG |
166,639 | (166,639 | ) | — | — | |||||||||||
| Other Derivatives (C) |
1,288,939 | — | — | 1,288,939 | ||||||||||||
| Total Liabilities |
$ | 2,188,845 | $ | (466,945 | ) | $ | — | $ | 1,721,900 | |||||||
| (A) | 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. |
| (B) | In some instances, the actual collateral received and/or pledged may be more than the amount shown due to overcollateralization. |
| (C) | Other Derivatives are not subject to a master netting arrangement or another similar arrangement. |
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.
Effect of Derivative Instruments in the Statements of Operations for the year ended December 31, 2014:
| Derivatives not accounted for as hedging instruments | Interest Rate Contracts |
Foreign Exchange Contracts |
Total | |||||||||
| Net realized gain (loss) on: |
||||||||||||
| Purchased options and swaptions (A) |
$ | (1,258,488 | ) | $ | (87,134 | ) | $ | (1,345,622 | ) | |||
| Futures contracts |
(2,520,112 | ) | — | (2,520,112 | ) | |||||||
| Written options and swaptions |
534,732 | 185,112 | 719,844 | |||||||||
| Swap agreements |
(988,986 | ) | — | (988,986 | ) | |||||||
| Forward foreign currency contracts (B) |
— | 2,335,402 | 2,335,402 | |||||||||
| Total Net realized gain (loss) |
(4,232,854 | ) | 2,433,380 | (1,799,474 | ) | |||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||
| Purchased options and swaptions (C) |
(311,713 | ) | 180,032 | (131,681 | ) | |||||||
| Futures contracts |
(837,250 | ) | — | (837,250 | ) | |||||||
| Written options and swaptions |
46,652 | (118,224 | ) | (71,572 | ) | |||||||
| Swap agreements |
(114,420 | ) | — | (114,420 | ) | |||||||
| Forward foreign currency transactions (D) |
— | 995,737 | 995,737 | |||||||||
| Total Net change in unrealized appreciation (depreciation) |
(1,216,731 | ) | 1,057,545 | (159,186 | ) | |||||||
| Total |
$ | (5,449,585 | ) | $ | 3,490,925 | $ | (1,958,660 | ) | ||||
| (A) | Included within Net realized gain (loss) on transactions from Investments on the Statements of Operations. |
| (B) | Included within Net realized gain (loss) on transactions from Foreign currency transactions on the Statements of Operations. |
| (C) | Included within Net change in unrealized appreciation (depreciation) on Investments on the Statements of Operations. |
| (D) | Included within Net change in unrealized appreciation (depreciation) on Translation of assets and liabilities denominated in foreign currencies on the Statements of Operations. |
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 121
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
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, 2013 |
Ending number of positions at December 31, 2014 |
Average number of positions (A) |
||||||||||
| Futures contracts |
7 | — | 8 | (B) | ||||||||
| Purchased options and swaptions |
5 | — | 4 | (B) | ||||||||
| Written options and swaptions |
4 | — | 4 | (B) | ||||||||
| Swap agreements |
16 | — | 17 | (B) | ||||||||
| Forward foreign currency contracts |
3 | — | 4 | (B) | ||||||||
| (A) | Calculated based on positions held at each month end during the current year. |
| (B) | There were no open positions at the beginning and/or the end of the year, however the Portfolio periodically invested in this type of derivative instrument during the year. |
Effect of Derivative Instruments in the Statements of Operations for the year ended December 31, 2014:
| Derivatives not accounted for as hedging instruments | Interest Rate Contracts |
Foreign Exchange Contracts |
Credit Contracts |
Total | ||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||
| Purchased options and swaptions (A) |
$ | (190,046 | ) | $ | — | $ | — | $ | (190,046 | ) | ||||||
| Futures contracts |
5,581,819 | — | — | 5,581,819 | ||||||||||||
| Written options and swaptions |
(36,775 | ) | — | — | (36,775 | ) | ||||||||||
| Swap agreements |
(1,442,247 | ) | — | 328,048 | (1,114,199 | ) | ||||||||||
| Forward foreign currency contracts (B) |
— | (247,013 | ) | — | (247,013 | ) | ||||||||||
| Total Net realized gain (loss) |
3,912,751 | (247,013 | ) | 328,048 | 3,993,786 | |||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||
| Purchased options and swaptions (C) |
(179,780 | ) | — | — | (179,780 | ) | ||||||||||
| Futures contracts |
296,716 | — | — | 296,716 | ||||||||||||
| Written options and swaptions |
14,390 | — | — | 14,390 | ||||||||||||
| Swap agreements |
22,157 | — | (96,721 | ) | (74,564 | ) | ||||||||||
| Forward foreign currency transactions (D) |
— | 381,038 | — | 381,038 | ||||||||||||
| Total Net change in unrealized appreciation (depreciation) |
153,483 | 381,038 | (96,721 | ) | 437,800 | |||||||||||
| Total |
$ | 4,066,234 | $ | 134,025 | $ | 231,327 | $ | 4,431,586 | ||||||||
| (A) | Included within Net realized gain (loss) on transactions from Investments on the Statements of Operations. |
| (B) | Included within Net realized gain (loss) on transactions from Foreign currency transactions on the Statements of Operations. |
| (C) | Included within Net change in unrealized appreciation (depreciation) on Investments on the Statements of Operations. |
| (D) | Included within Net change in unrealized appreciation (depreciation) on Translation of assets and liabilities denominated in foreign currencies on the Statements of Operations. |
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 122
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 5. (continued)
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, 2013 |
Ending number of positions at December 31, 2014 |
Average number of positions (A) |
||||||||||
| Futures contracts |
7 | 1 | 3 | |||||||||
| Purchased options and swaptions |
1 | — | 1 | (B) | ||||||||
| Written options and swaptions |
1 | — | 2 | (B) | ||||||||
| Swap agreements |
— | — | 4 | (B) | ||||||||
| Forward foreign currency contracts |
2 | — | 2 | (B) | ||||||||
| (A) | Calculated based on positions held at each month end during the current year. |
| (B) | There were no open positions at the beginning and/or the end of the year, however the Portfolio periodically invested in this type of derivative instrument during the year. |
Fair Value of Derivative Instruments in the Statements of Assets and Liabilities as of December 31, 2014:
| Derivatives not accounted for as hedging instruments | Equity Contracts |
Total | ||||||
| Liability derivatives |
||||||||
| Unrealized depreciation on futures contracts (A) |
$ | (1,212 | ) | $ | (1,212 | ) | ||
| Total gross amount of liabilities (B) |
$ | (1,212 | ) | $ | (1,212 | ) | ||
| (A) | Includes cumulative appreciation (depreciation) on futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statements of Assets and Liabilities. |
| (B) | 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 Portfolio’s 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, 2014:
| Derivatives not accounted for as hedging instruments | Interest Rate Contracts |
Foreign Exchange Contracts |
Credit Contracts |
Equity Contracts |
Total | |||||||||||||||
| Net realized gain (loss) on: |
||||||||||||||||||||
| Purchased options and swaptions (A) |
$ | 3,965 | $ | — | $ | — | $ | — | $ | 3,965 | ||||||||||
| Futures contracts |
185,823 | — | — | 102,521 | 288,344 | |||||||||||||||
| Written options and swaptions |
(4,625 | ) | — | — | — | (4,625 | ) | |||||||||||||
| Swap agreements |
(2,586 | ) | — | 2,153 | — | (433 | ) | |||||||||||||
| Forward foreign currency contracts (B) |
— | (9,341 | ) | — | — | (9,341 | ) | |||||||||||||
| Total Net realized gain (loss) |
182,577 | (9,341 | ) | 2,153 | 102,521 | 277,910 | ||||||||||||||
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 123
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 5. (continued)
Balanced (continued):
Effect of Derivative Instruments in the Statements of Operations for the year ended December 31, 2014 (continued):
| Derivatives not accounted for as hedging instruments | Interest Rate Contracts |
Foreign Exchange Contracts |
Credit Contracts |
Equity Contracts |
Total | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on: |
||||||||||||||||||||
| Purchased options and swaptions (C) |
$ | (8,868 | ) | $ | — | $ | — | $ | — | $ | (8,868 | ) | ||||||||
| Futures contracts |
(883 | ) | — | — | (13,280 | ) | (14,163 | ) | ||||||||||||
| Written options and swaptions |
2,058 | — | — | — | 2,058 | |||||||||||||||
| Forward foreign currency transactions (D) |
— | 8,296 | — | — | 8,296 | |||||||||||||||
| Total Net change in unrealized appreciation (depreciation) |
(7,693 | ) | 8,296 | — | (13,280 | ) | (12,677 | ) | ||||||||||||
| Total |
$ | 174,884 | $ | (1,045 | ) | $ | 2,153 | $ | 89,241 | $ | 265,233 | |||||||||
| (A) | Included within Net realized gain (loss) on transactions from Investments on the Statements of Operations. |
| (B) | Included within Net realized gain (loss) on transactions from Foreign currency transactions on the Statements of Operations. |
| (C) | Included within Net change in unrealized appreciation (depreciation) on Investments on the Statements of Operations. |
| (D) | Included within Net change in unrealized appreciation (depreciation) on Translation of assets and liabilities denominated in foreign currencies on the Statements of Operations. |
NOTE 6. FEDERAL INCOME TAXES
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 states of Colorado, Florida and 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 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 Portfolio’s 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 real estate investment trusts, passive foreign investment companies, foreign currency transactions, capital loss carryforwards, Late Year Ordinary Loss Deferrals, paydown gain/loss, foreign capital gains tax, and return of capital distributions from underlying investments.
NOTE 7. ACCOUNTING PRONOUNCEMENTS
In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-11, “Transfers and Servicing, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures”. The guidance changes the accounting for certain repurchase agreements and expands disclosure requirements related to repurchase agreements, securities lending, repurchase-to-maturity and similar transactions. The guidance is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. Management is currently evaluating the implication, if any, of the additional disclosure requirements and its impact on the Portfolios’ financial statements.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 124
NOTES TO FINANCIAL STATEMENTS (continued)
At December 31, 2014
NOTE 7. (continued)
In July 2014, the Securities and Exchange Commission voted to amend Rule 2a-7, which governs money market funds. A significant change resulting from these amendments is a requirement that institutional prime and institutional municipal money market funds transact fund shares based on a market-based NAV. Government, treasury, retail prime and retail municipal money market funds may continue to transact fund shares at an NAV calculated using the amortized cost valuation method. Among additional disclosure and other requirements, the amendments also will permit a money market fund, or, in certain circumstances, require a money market fund (other than a government money market fund which satisfies the requirements of the amended rules) to impose liquidity fees on redemptions, and permit a money market fund to limit (or gate) redemptions for up to 10 business days in any 90-day period. The degree to which a money market fund will be impacted by the rule amendments will depend upon the type of fund and type of investors (retail or institutional). The amendments have staggered compliance dates; however, the majority of these amendments will be effective on October 14, 2016, two years after the effective date for the rule amendments. Management is currently evaluating the implication, if any, of the additional disclosure requirements and its impact to the Portfolios’ financial statements.
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 125
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, 2014, 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 five 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.
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, 2014, 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, 2014, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
February 26, 2015
| Transamerica Partners Portfolios | Annual Report 2014 |
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Management of the Trust
Board Members and Officers
(unaudited)
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 Portfolio 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 Portfolio and the operation of each Portfolio by its officers. The Board also reviews the management of each Portfolio’s assets by the investment adviser and its respective sub-adviser.
The Portfolios are among the Portfolios 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, 4600 South Syracuse St., Suite 1100, Denver, CO 80237.
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 | ||||||||||
| Marijn P. Smit (1973) |
Chairman of the Board, President and Chief Executive Officer | Since 2014 | Chairman of the Board, President and Chief Executive Officer, Transamerica Funds, TST, TPP, TPFG, TPFG II, TAAVF and TIS (2014 – present);
Director, Chairman of the Board, President and Chief Executive Officer, Transamerica Asset Management, Inc. (“TAM”) and Transamerica Fund Services, Inc. (“TFS”) (2014 – present);
President, Investment Solutions, Transamerica Investments & Retirement (2014 – present);
Vice President, Transamerica Premier Life Insurance Company (2010 – present);
Vice President, Transamerica Life Insurance Company (2010 – present); |
172 | N/A | |||||
| Transamerica Partners Portfolios | Annual Report 2014 |
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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 MEMBERS — continued | ||||||||||
| Marijn P. Smit (continued) |
Senior Vice President, Transamerica Financial Life Insurance Company (2013 – present);
Senior Vice President, Transamerica Retirement Advisors, Inc. (2013 – present);
Senior Vice President, Transamerica Retirement Solutions Corporation (2012 – present); and
President and Director, Transamerica Stable Value Solutions, Inc. (2010 – present) |
|||||||||
| Alan F. Warrick (1948) |
Board Member | Since 2012 | Board Member, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II
and TAAVF
Consultant, Aegon USA
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
Board Member, Transamerica Investors,
Inc. (“TII”)
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
Board Member, Transamerica Funds and TIS (2002 – present);
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 – present);
Board Member, TII (2008 – 2010); |
172 | Ameris Bancorp (2013 – present); Ameris Bank (2013 – present) | |||||
| Transamerica Partners Portfolios | Annual Report 2014 |
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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 MEMBERS — continued | ||||||||||
| Leo J. Hill (continued) |
Market President, Nations Bank of Sun Coast Florida (1998 – 1999);
Chairman, President and Chief Executive Officer, Barnett Banks
of Treasure Coast Florida
Executive Vice
President and Senior Credit Officer, Barnett Banks of Jacksonville, Florida
Senior Vice President and Senior Loan Administration Officer, Wachovia Bank of Georgia |
|||||||||
| David W. Jennings (1946) | Board Member | Since 2009 | Board Member, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II
and TAAVF
Board Member, TII (2009 – 2010);
Managing Director, Hilton Capital (2010 – present);
Principal, Maxam Capital Management, LLC
Principal, Cobble Creek Management LP (2004 – 2006). |
172 | N/A | |||||
| Russell A. Kimball, Jr. (1944) | Board Member | Since 2007 | General Manager, Sheraton Sand Key Resort (1975 – present);
Board Member, TST
Board Member, Transamerica Funds, (1986 – 1990),
Board Member, TIS
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
Managing Member and Chief
Compliance Officer, HedgeServ Investment Services, LLC (limited purpose broker-dealer) |
172 | N/A | |||||
| Transamerica Partners Portfolios | Annual Report 2014 |
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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 MEMBERS — continued | ||||||||||
| Eugene M. Mannella (continued) | 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
Board Member, TII
President, International Fund Services (alternative asset administration) (1993 – 2005). |
|||||||||
| Norman R. Nielsen, Ph.D. (1939) | Board Member** | Since 2007 | Retired (2005 – present);
Board Member, Transamerica Funds, TST and TIS
Board Member, TPP, TPFG, TPFG II and TAAVF (2007 – 2014);
Board Member, TII (2008 – 2010);
Interim President, Mt. Mercy University (2013 – 2014);
Director, Aspire Inc. (formerly, Iowa Student Loan Service Corporation) (2006 – present);
Director, League for Innovation in the
Community Colleges
Director, Iowa Health Systems (1994 – 2003);
Director, U.S. Bank
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 – 2014);
Board Member, TPP
Board Member, Transamerica Funds, TST and TIS
Board Member, TII
Vice President, Institutional Advancement, Reconstructionist Rabbinical College (1996 – 2004). |
172 | Board of Governors, Reconstructionist Rabbinical College (2007 – 2012) | |||||
| Transamerica Partners Portfolios | Annual Report 2014 |
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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 MEMBERS — continued | ||||||||||
| 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
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) | |||||
| John W. Waechter (1952) | Board Member | Since 2007 | Attorney, Englander Fischer
Retired (2004 – 2008);
Board Member, TST and TIS
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 | |||||
| * | 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 Trust’s Declaration of Trust. |
| ** | Ms. Norden & Mr. Nielsen served as Board members through December 31, 2014, at which time they retired. |
| Transamerica Partners Portfolios | Annual Report 2014 |
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Officers
The mailing address of each officer is c/o Secretary, 4600 South Syracuse St., Suite 1100, Denver, CO 80237. The following table shows information about the officers, including their year of birth, their positions held with the 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 | |||
| Marijn P. Smit (1973) |
Board Member, President and Chief Executive Officer | Since 2014 | See Table Above. | |||
| Tané T. Tyler (1965) |
Vice President, Associate General Counsel, Chief Legal Officer and Secretary | Since 2014 | Vice President, Associate General Counsel,
Chief Legal Officer and Secretary, Transamerica Funds, TST, TPP, TPFG, TPFG II, TAAVF and TIS
Director, Vice President, Associate General Counsel, Chief Legal Officer and Secretary, TAM and TFS (2014 – present);
Senior Vice President, Secretary and General Counsel, ALPS, Inc., ALPS Fund Services, Inc. and ALPS Distributors, Inc. (2004 – 2013); and
Secretary, Liberty All-Star Funds (2005 – 2013) | |||
| 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
Vice President and Chief Investment Officer, Advisory Services, TPP, TPFG, TPFG II and TAAVF (2007 – present);
Vice President and
Chief Investment Officer
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). | |||
| Thomas R. Wald (1960) |
Chief Investment Officer | Since 2014 | Chief Investment Officer, Transamerica Funds,
TST, TPP, TPFG, TPFG II, TAAVF and TIS
Senior Vice President and Chief Investment Officer, TAM (2014 – present);
Chief Investment Officer, Transamerica Investments & Retirement (2014 – present);
Vice President and Client Portfolio Manager, Curian Capital, LLC (2012 – 2014);
Portfolio Manager, Tactical Allocation Group, LLC (2010 – 2011);
Mutual Fund Manager, Munder Capital Management (2005 – 2008); and
Mutual Fund Manager, Invesco Ltd. (1997 – 2004). |
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 132
| Name and Year of Birth |
Position | Term of Office and Length of Time Served* |
Principal Occupation(s) or Employment During Past Five Years | |||
| Vincent J. Toner (1970) |
Vice President and Treasurer | Since 2014 | Vice President and Treasurer (2014 –
present) Transamerica Funds, TST, TIS, TPP, TPFG,
Vice President and Treasurer, TAM and TFS
Senior Vice President and Vice President, Fund Administration, Brown Brothers Harriman
Vice President Fund Administration & Fund Accounting, OppenheimerFunds (2007 – 2010) | |||
| 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 | |||
| Scott M. Lenhart (1961) |
Chief Compliance Officer and Anti-Money Laundering Officer | Since 2014 | Chief Compliance Officer and Anti-Money Laundering Officer, Transamerica Funds, TST, TIS, TPP, TPFG, TPFG II and TAAVF (2014 – present);
Chief Compliance Officer and Anti-Money Laundering Officer (2014 – present), Senior Compliance Officer (2008 – 2014), TAM;
Vice President and Chief Compliance Officer, TFS (2014 – present);
Director of Compliance, Transamerica Investments & Retirement (2014 – present);
Vice President and Chief Compliance
Officer, Transamerica Financial Advisors, Inc.
Assistant Chief Compliance Officer, |
| * | Elected and serves at the pleasure of the Board of the Trust. |
| Transamerica Partners Portfolios | Annual Report 2014 |
Page 133
TRANSAMERICA PARTNERS FUNDS
4600 South Syracuse Street, Suite 1100
Denver, Colorado 80237
Customer Service: 1-800-851-9777
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 Registrant’s 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 Registrant’s 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 Registrant’s 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 Registrant’s audit committee or Board of Trustees.
Item 4: Principal Accountant Fees and Services.
| Fiscal Year Ended December 31: |
| 2014 (in thousands) |
2013 (in thousands) |
|||||||||
| a. |
Audit Fees | $ | 175 | $ | 175 | |||||
| b. |
Audit Related Fees (1) | — | — | |||||||
| c. |
Tax Fees (2) | 121 | 241 | |||||||
| d. |
All Other Fees (3) | — | — | |||||||
| (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 Registrant’s 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. |
(e)(1) Audit Committee Pre-Approval Policies and Procedures
Audit Committee Preapproval Policy (“Procedures”). Generally, the Registrant’s 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 Registrant’s independent accountant for the Registrant’s investment adviser, and certain of the adviser’s 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.
2
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 Registrant’s 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.
(e)(2) The percentage of services described in paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X for fiscal years ended 2013 and 2014 was zero.
(f) Not Applicable.
(g) Not Applicable.
(h) The Registrant’s Audit Committee has considered whether the provision of non-audit services that were rendered to the Registrant’s Adviser, and any entity controlling, controlled by, or under common control with the Adviser that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintain the principal accountant’s independence.
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, 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.
3
Item 10: Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of 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 Registrant’s principal executive officer and principal financial officer evaluated the Registrant’s disclosure controls (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) within 90 days of the date of this filing and concluded that the Registrant’s disclosure control and procedures were effective as of that date. |
| (b) | There was no change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 12: Exhibits.
| (a) | (1) The Registrant’s code of ethics (that is the subject of the disclosure required by Item 2(a)) is attached. |
| (2) Separate certifications for the Registrant’s 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 Registrant’s 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. |
4
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 Partners Portfolio (Registrant) | ||
| By: |
/s/ Marijn P. Smit | |
| Marijn P. Smit | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: |
March 6, 2015 | |
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/ Marijn P. Smit | |
| Marijn P. Smit | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| Date: | March 6, 2015
| |
| By: | /s/ Vincent J. Toner | |
| Vincent J. Toner | ||
| Treasurer | ||
| (Principal Financial Officer) | ||
| Date: | March 6, 2015 | |
5
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 | |
6