Statement of Additional Information (2011)Full Document 

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Statement of Additional Information dated March 1, 2011, as amended and restated October, 31 2011


TRANSAMERICA FUNDS

STATEMENT OF ADDITIONAL INFORMATION

March 1, 2011,

as amended and restated October 31, 2011

570 Carillon Parkway

St. Petersburg, Florida 33716

Customer Service (888) 233-4339 (toll free)

TICKER SYMBOLS
Classes
FUNDS A B C I P I2

TRANSAMERICA AEGON FLEXIBLE INCOME

IDITX IFLBX IFLLX TFXIX None None

TRANSAMERICA AEGON HIGH YIELD BOND

IHIYX INCBX INCLX THDIX THYPX None

TRANSAMERICA AEGON MONEY MARKET

IATXX IBTXX IMLXX TAMXX TAPXX None

TRANSAMERICA AEGON SHORT-TERM BOND

ITAAX None ITACX TSTIX None None

TRANSAMERICA AQR MANAGED FUTURES STRATEGY

None None None None None None

TRANSAMERICA ASSET ALLOCATION - CONSERVATIVE PORTFOLIO1

ICLAX ICLBX ICLLX TACIX None None

TRANSAMERICA ASSET ALLOCATION - GROWTH PORTFOLIO2

IAAAX IAABX IAALX TAGIX None None

TRANSAMERICA ASSET ALLOCATION – MODERATE GROWTH PORTFOLIO3

IMLAX IMLBX IMLLX TMGIX None None

TRANSAMERICA ASSET ALLOCATION - MODERATE PORTFOLIO4

IMOAX IMOBX IMOLX TMMIX None None

TRANSAMERICA BLACKROCK GLOBAL ALLOCATION

None None None None None None

TRANSAMERICA BLACKROCK LARGE CAP VALUE

None None None None None None

TRANSAMERICA CLARION GLOBAL REAL ESTATE SECURITIES

None None None None None TRSIX

TRANSAMERICA FIRST QUADRANT GLOBAL MACRO

None None None None None None

TRANSAMERICA GOLDMAN SACHS COMMODITY STRATEGY

None None None None None None

TRANSAMERICA HANSBERGER INTERNATIONAL VALUE

None None None None None None

TRANSAMERICA ICAP SELECT EQUITY

None None None None None None

TRANSAMERICA JENNISON GROWTH

None None None None None TJNIX

TRANSAMERICA JPMORGAN CORE BOND

None None None None None None

TRANSAMERICA JPMORGAN INTERNATIONAL BOND

None None None None None None

TRANSAMERICA JPMORGAN LONG/SHORT STRATEGY

None None None None None None

TRANSAMERICA JPMORGAN MID CAP VALUE

None None None None None None

TRANSAMERICA LOGAN CIRCLE EMERGING MARKETS DEBT

EMTAX None EMTCX EMTIX None None

TRANSAMERICA LOOMIS SAYLES BOND

None None None None None None

TRANSAMERICA MFS INTERNATIONAL EQUITY

None None None None None None

TRANSAMERICA MORGAN STANLEY CAPITAL GROWTH

IALAX IACBX ILLLX TFOIX TAFPX None

TRANSAMERICA MORGAN STANLEY EMERGING MARKETS DEBT

None None None None None None

TRANSAMERICA MORGAN STANLEY GROWTH OPPORTUNITIES

ITSAX ITCBX ITSLX TGPIX TGOPX None

TRANSAMERICA MORGAN STANLEY MID-CAP GROWTH

None None None None None None

TRANSAMERICA MORGAN STANLEY SMALL COMPANY GROWTH

None None None None None None

TRANSAMERICA MULTI-MANAGED BALANCED

IBALX IBABX IBLLX TBLIX TABPX None

TRANSAMERICA MULTI-MANAGER ALTERNATIVE STRATEGIES PORTFOLIO

IMUAX None IMUCX TASIX None None

TRANSAMERICA MULTI-MANAGER INTERNATIONAL PORTFOLIO

IMNAX IMNBX IMNCX TMUIX None None

TRANSAMERICA NEUBERGER BERMAN INTERNATIONAL

None None None None None None

TRANSAMERICA OPPENHEIMER DEVELOPING MARKETS

None None None None None None

TRANSAMERICA OPPENHEIMER SMALL- & MID-CAP VALUE

None None None None None None

TRANSAMERICA PIMCO REAL RETURN TIPS

None None None None None None

TRANSAMERICA PIMCO TOTAL RETURN

None None None None None None

TRANSAMERICA SCHRODERS INTERNATIONAL SMALL CAP

None None None None None None

TRANSAMERICA SYSTEMATIC SMALL/MID CAP VALUE

IIVAX IIVBX IIVLX TSVIX None TSMVX

TRANSAMERICA TACTICAL INCOME

IGTAX None IGTCX IGTIX None None

TRANSAMERICA THIRD AVENUE VALUE

None None None None None None

TRANSAMERICA THORNBURG INTERNATIONAL VALUE

None None None None None None

TRANSAMERICA TS&W INTERNATIONAL EQUITY

TRWAX None TRWCX TSWIX None None

TRANSAMERICA WATER ISLAND ARBITRAGE STRATEGY

None None None None None None

TRANSAMERICA WMC DIVERSIFIED EQUITY

TADAX TADBX TADCX TDEIX TADPX None

TRANSAMERICA WMC DIVERSIFIED GROWTH5

ITQAX ITQBX ITQLX TETYX TAEPX None

TRANSAMERICA WMC EMERGING MARKETS

None None None None None TWMCX

TRANSAMERICA WMC QUALITY VALUE

TWQAX None TWQCX TWQIX None TWQZX

Each of the funds listed above is a series of Transamerica Funds ("Transamerica Funds" or the "Trust"), an open-end management investment company that is registered under the Investment Company Act of 1940, as amended (the "1940 Act"). All funds, other than Transamerica AQR Managed Futures Strategy, Transamerica Clarion Global Real Estate Securities, Transamerica First Quadrant Global Macro, Transamerica Goldman Sachs Commodity Strategy, Transamerica JPMorgan International Bond, Transamerica Logan Circle Emerging Markets Debt, Transamerica Morgan Stanley Emerging Markets Debt, Transamerica PIMCO Real Return TIPS and Transamerica Third Avenue Value, are diversified.

1 Class R: ICVRX; 2 Class R: IGWRX; 3 Class R: IMGRX; 4Class R: IMDRX; 5Class T: IEQTX

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This Statement of Additional Information ("SAI") is not a prospectus, and should be read in conjunction with the prospectus of Transamerica Tactical Income dated October 31, 2011, as it may be supplemented or revised from time to time, the prospectuses of Transamerica ICAP Select Equity and Transamerica Logan Circle Emerging Markets Debt dated August 31, 2011, as they may be supplemented or revised from time to time, the Class I2 prospectus of Transamerica Water Island Arbitrage Strategy dated May 1, 2011, as it may be supplemented or revised from time to time, and the Transamerica Funds prospectuses dated March 1, 2011, supplemented as of March 22, 2011, for each of the other funds and share classes, as they may be further supplemented or revised from time to time. This SAI is incorporated by reference into the prospectuses. The prospectuses and this SAI may be obtained free of charge by writing or calling Transamerica Funds at the above address or telephone number. This SAI sets forth information which may be of interest to shareholders, but which is not necessarily included in the funds’ prospectuses. Additional information about the funds’ investments is available in the funds’ Annual and Semi-Annual Reports to shareholders, and may be obtained free of charge by writing or calling Transamerica Funds at the above address or telephone number. The Annual Reports contain financial statements that are incorporated herein by reference.

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INVESTMENT OBJECTIVES

4

INVESTMENT POLICIES

4

ADDITIONAL INFORMATION REGARDING INVESTMENT PRACTICES

7

DERIVATIVES

7

U.S. GOVERNMENT SECURITIES

15

FOREIGN INVESTMENTS

16

SHORT SALES

18

OTHER INVESTMENT COMPANIES

19

COMMODITIES AND NATURAL RESOURCES

19

COMMODITY -LINKED INVESTMENTS

20

INVESTMENTS IN SUBSIDIARY

20

WHEN-ISSUED, DELAYED SETTLEMENT AND FORWARD DELIVERY SECURITIES

20

ZERO-COUPON, PAY-IN-KIND AND STEP-COUPON SECURITIES

21

DOLLAR ROLLS

21

INVESTMENTS IN THE REAL ESTATE INDUSTRY AND REAL ESTATE INVESTMENT TRUSTS ("REITS")

21

MORTGAGE-RELATED SECURITIES

22

ASSET-BACKED SECURITIES

24

INCOME-PRODUCING SECURITIES

24

HIGH-YIELD/HIGH-RISK BONDS

26

SUBORDINATED SECURITIES

27

STRUCTURED NOTES AND RELATED INSTRUMENTS

27

LENDING OF FUND SECURITIES

27

ILLIQUID AND RESTRICTED/144A SECURITIES

27

MUNICIPAL OBLIGATIONS

28

LOANS

30

COMMON STOCKS

31

EQUITY EQUIVALENTS

31

EVENT-LINKED BONDS

32

COLLATERALIZED DEBT OBLIGATIONS

32

REPURCHASE AGREEMENTS

32

BORROWINGS

33

REVERSE REPURCHASE AGREEMENTS

33

PASS-THROUGH SECURITIES

34

WARRANTS AND RIGHTS

34

TEMPORARY INVESTMENTS

34

CERTAIN OTHER SECURITIES IN WHICH THE FUNDS MAY INVEST

34

RECENT MARKET EVENTS

35

PORTFOLIO TURNOVER RATE

36

DISCLOSURE OF PORTFOLIO HOLDINGS

36

INVESTMENT ADVISORY AND OTHER SERVICES

37

SUB-ADVISERS

45

DISTRIBUTOR

50

ADMINISTRATIVE SERVICES

53

CUSTODIAN, TRANSFER AGENT AND OTHER AFFILIATES

55

FUND TRANSACTIONS AND BROKERAGE

57

DIRECTED BROKERAGE

58

MANAGEMENT OF THE TRUST

60

SHAREHOLDER COMMUNICATION PROCEDURES WITH BOARD OF TRUSTEES

78

DEALER REALLOWANCES

78

DISTRIBUTION PLANS

80

DISTRIBUTION FEES

81

NET ASSET VALUE DETERMINATION

84

DIVIDENDS AND OTHER DISTRIBUTIONS

86

SHAREHOLDER ACCOUNTS

86

PURCHASE OF SHARES

86

RETIREMENT PLANS

87

REDEMPTION OF SHARES

88

SHARE CONVERSION

89

TAXES

89

PRINCIPAL SHAREHOLDERS

94

MISCELLANEOUS

116

FINANCIAL STATEMENTS

118

APPENDIX A

A-1

APPENDIX B

B-1

APPENDIX C

C-1

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INVESTMENT OBJECTIVES

The prospectuses discuss the investment objective of each of the funds and the policies each fund employs to achieve its objective. There can be no assurance that a fund will, in fact, achieve its objective. A fund’s investment objective may be changed by the Board of Trustees without shareholder approval. A change in the investment objective of a fund may result in the fund having an investment objective different from that which the shareholder deemed appropriate at the time of investment.

INVESTMENT POLICIES

FUNDAMENTAL INVESTMENT POLICIES

As indicated in each prospectus, each fund is subject to certain fundamental policies which as such may not be changed without shareholder approval. Shareholder approval would be the approval by the lesser of (i) more than 50% of the outstanding voting securities of a fund, or (ii) 67% or more of the voting securities present at a meeting if the holders of more than 50% of the outstanding voting securities of a fund are present or represented by proxy. Unless expressly designated as fundamental, all policies of each fund may be changed by Transamerica Funds’ Board of Trustees without shareholder approval. Each fund has adopted, as applicable, the following fundamental policies:

1.

Diversification

Each fund shall be a "diversified company" as that term is defined in the Investment Company Act of 1940, as amended (the "1940 Act") (except Transamerica AQR Managed Futures Strategy, Transamerica Clarion Global Real Estate Securities, Transamerica First Quadrant Global Macro, Transamerica Goldman Sachs Commodity Strategy, Transamerica JPMorgan International Bond, Transamerica Logan Circle Emerging Markets Debt, Transamerica Morgan Stanley Emerging Markets Debt, Transamerica PIMCO Real Return TIPS and Transamerica Third Avenue Value), and as interpreted or modified by regulatory authority having jurisdiction, from time to time. Transamerica AQR Managed Futures Strategy, Transamerica Clarion Global Real Estate Securities, Transamerica First Quadrant Global Macro, Transamerica Goldman Sachs Commodity Strategy, Transamerica JPMorgan International Bond, Transamerica Logan Circle Emerging Markets Debt, Transamerica Morgan Stanley Emerging Markets Debt, Transamerica PIMCO Real Return TIPS and Transamerica Third Avenue Value are each currently a "non-diversified company" as that term is defined in the 1940 Act.

2.

Borrowing

Each fund may not borrow money, except as permitted under the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.

3.

Senior Securities

Each fund may not issue any senior security, except as permitted under the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.

4.

Underwriting Securities

Each fund may not act as an underwriter of securities within the meaning of the Securities Act of 1933, as amended ("1933 Act"), except as permitted under the 1933 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time. Among other things, to the extent that the fund may be deemed to be an underwriter within the meaning of the 1933 Act, each fund may act as an underwriter of securities in connection with the purchase and sale of its portfolio securities in the ordinary course of pursuing its investment objective, investment policies and investment program.

5.

Real Estate

Each fund may not purchase or sell real estate or any interests therein, except as permitted under the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time. Notwithstanding this limitation, a fund may, among other things, (i) acquire or lease office space for its own use; (ii) invest in securities of issuers that invest in real estate or interests therein; (iii) invest in mortgage-related securities and other securities that are secured by real estate or interests therein; or (iv) hold and sell real estate acquired by the fund as a result of the ownership of securities.

6.

Making Loans

Each fund may not make loans, except as permitted under the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.

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7.

Concentration of Investments

Each fund may not "concentrate" its investments in a particular industry or group of industries (except those funds listed below), except as permitted under the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction from time to time, provided that, without limiting the generality of the foregoing, this limitation will not apply to securities issued or guaranteed as to principal and/or interest by the U.S. Government, its agencies or instrumentalities.

In addition, with respect to Transamerica AQR Managed Futures Strategy, this limitation will not apply to (i) securities of other investment companies; or (ii) repurchase agreements collaterialized by securities issued or guaranteed as to principal and/or interest by the U.S. Government, its agencies or instrumentalities.

This restriction shall not apply to Transamerica Goldman Sachs Commodity Strategy’s counterparties in foreign currency transactions. Transamerica Goldman Sachs Commodity Strategy concentrates in the natural resources related industries.

Transamerica Clarion Global Real Estate Securities may concentrate in securities of issuers in the real estate industry.

Transamerica Water Island Arbitrage Strategy generally will not exceed 25% exposure to any industry as defined by the Global Industry Classification Standard ("GICS"). Industry exposure is calculated by summing the net long and/or short exposure of securities of companies by GICS industry within the fund.

8.

Commodities

Each fund may not purchase physical commodities or contracts relating to physical commodities, except as permitted under the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction, from time to time.

With respect to the fundamental policy relating to concentration set forth in (7) above, the 1940 Act does not define what constitutes "concentration" in an industry. The SEC staff has taken the position that investment of 25% or more of a fund’s total assets in one or more issuers conducting their principal activities in the same industry or group of industries constitutes concentration. It is possible that interpretations of concentration could change in the future. A fund that invests a significant percentage of its total assets in a single industry may be particularly susceptible to adverse events affecting that industry and may be more risky than a fund that does not concentrate in an industry. The policy in (7) above will be interpreted to refer to concentration as that term may be interpreted from time to time. For the avoidance of doubt, the policy also will be interpreted to permit investment without limit in the following: securities of the U.S. government and its agencies or instrumentalities; securities of state, territory, possession or municipal governments and their authorities, agencies, instrumentalities or political subdivisions; securities of foreign governments; and repurchase agreements collateralized by any such obligations. Accordingly, issuers of the foregoing securities will not be considered to be members of any industry. There also will be no limit on investment in issuers domiciled in a single jurisdiction or country. The policy also will be interpreted to give broad authority to a fund as to how to classify issuers within or among industries.

The funds’ fundamental policies are written and will be interpreted broadly. For example, the policies will be interpreted to refer to the 1940 Act and the related rules as they are in effect from time to time, and to interpretations and modifications of or relating to the 1940 Act by the SEC and others as they are given from time to time.

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