American Beacon Balanced Fund (AABPX) N-CSR Certified annual shareholder report (management investment company)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-4984

AMERICAN BEACON FUNDS

(Exact name of registrant as specified in charter)

4151 Amon Carter Boulevard, MD 2450
Fort Worth, Texas 76155
(Address of principal executive offices)-(Zip code)

Gene L. Needles, Jr., PRESIDENT
4151 Amon Carter Boulevard, MD 2450
Fort Worth, Texas 76155
(Name and address of agent for service)

Registrant’s telephone number, including area code: (817) 391-6100

Date of fiscal year end: October 31, 2010

Date of reporting period: October 31, 2010

ITEM 1. REPORT TO STOCKHOLDERS.

About American Beacon Advisors

          Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

          Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents

President’s Message	1
Market and Performance Overview	2
Schedule of Investments	8
Additional Information	Back Cover

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

American Beacon Funds October 31, 2010

Fellow Shareholders,

          Throughout the past 12 months, one theme prevailed: investments placed with experienced, forward-thinking managers can still benefit. Opportunity abounds for those with the foresight to know how to capitalize on changing market conditions. It’s no coincidence that this theme also goes to the heart of the American Beacon Funds investment philosophy.

          It’s a philosophy that has served shareholders in the American Beacon Large Cap Value Fund well. For the 12 months ended October 31, 2010, the Fund (Institutional Class) generated a return of 15.68%. Please note that the recent growth rate in the stock market has helped to produce short-term increases that are not typical and may not continue in the future.

          While we keep a watchful eye on your investment in our funds, we also remain focused on seeking out new opportunities to help keep your financial goals on course. This is what guides the composition of American Beacon Funds’ product line-up. It is also what led to the addition of several new funds this past year: the American Beacon Zebra Large Cap and the Zebra Small Cap Equity Funds, which use a proprietary strategy to attempt to capture a unique source of equity return—the liquidity premium. We also recently added the American Beacon Evercore Small Cap Equity Fund, which relies on a fundamental bottom-up investment approach and is managed by the well-regarded Evercore Asset Management, LLC.

          Continuously searching for new ways to serve our fellow shareholders’ needs is our commitment to you, a commitment we summarize as: Oversight 360. Ours is a continuous commitment to cast a thoughtful and analytical eye over all the factors that influence our investments.

          We want to thank you for your continued investment in the American Beacon Funds. As you review the enclosed market overview, portfolio listings, and detailed financial data, please know that we remain dedicated to offering you both the level of superior service and knowledgeable investment management you’ve come to expect from us. To obtain further details about the American Beacon Funds family or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,
 

Gene L. Needles, Jr.
President
American Beacon Funds  

Securities of these Funds may only be sold by offering each Funds’ Prospectus and Summary Prospectus. You should consider the investment objectives, risks, fees and expenses of any mutual fund carefully before investing. This and other information is available in each Funds’ Prospectus and Summary Prospectus which you may obtain at www.americanbeaconfunds.com or by calling 1-800-967-9009. Please read the Prospectus and Summary Prospectus carefully before investing. Distributed by Foreside Fund Services, LLC.

There is no guarantee that the Funds’ investment objective will be met. At times, certain securities held by the American Beacon Zebra Large Cap Equity and Small Cap Equity Funds may have limited marketability and may be difficult to sell. Investing in the securities of small and mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Because the American Beacon Evercore Small Cap Equity Fund is a focused portfolio of fewer companies, the increase or decrease of the value of a single stock may have a greater impact on the Fund’s NAV and total return when compared to other diversified funds.

1

Domestic Equity Market Overview

October 31, 2010 (Unaudited)

Extreme swings in investor sentiment and significant volatility in equity returns characterized the U.S. stock market’s performance during the past 12 months. Market returns were robust for the first several months of the year, only to be followed by a significant correction through the spring and summer months that was triggered by fears of a double-dip recession and concerns over the sovereign debt crisis in Europe. By August, many investors had seemingly grown despondent and sentiment towards equities reached extreme lows as the perceived safety of bonds drew increasing commitment.

          September’s history as the cruelest month combined with recession fears made equities look like dead money. A surprising thing happened on the way to the funeral, however, as equity markets rallied sharply for the month. They posted the best September return in 71 years and the third best return of any month over the past 10 years. An interesting aspect of the rally was the absence of any real catalyst.

          In the end, the S&P 500 returned 16.52% for 12 months ended October 31, 2010. Contributions to this performance were widespread, with most sectors finishing up in double digits.

Sector Results

          Consumer Discretionary, Industrials, Telecommunications and Materials stocks were among the strongest performers, while financials and energy were significant laggards. Continuing sluggishness in loan demand, a persistent stream of negative regulatory pronouncements out of Washington and the seemingly endless flow of mortgage problems tempered enthusiasm for the banking industry. Insurers were pressured by weak fixed income returns given the near zero interest rate environment, volatile returns in the equity market, and the specter of further delays in the recovery in real estate markets.

          The trend of Gross Domestic Product (“GDP”) growth slowed significantly throughout the year—from 5.0% in the fourth quarter of 2009 to 1.7% in the second quarter of 2010. Subpar growth persisted into the third quarter of 2010 as well.

Consumer Spending

          With growth at such a sluggish pace, consumer spending remained weak especially in light of deferred hiring by employers. Given these conditions, there is little reason to expect a resumption of normal economic growth until employment can show meaningful improvement. More and more, the strong GDP growth in the fourth quarter of 2009 and the first quarter of 2010 is looking like an inventory driven anomaly.

          Absent the change in inventories, real final sales grew at less than 1.5% over the past four quarters. This was extraordinarily weak for the first 12 months out of a severe recession. However, profit growth has been exceptional as businesses restrained their spending. Margins at many companies were at or above prior peaks. Corporate balance sheets were also very strong, as cash balances grew due to the reluctance to make large capital expenditures.

          Yet, jobs still hold the key to recovery. Job statistics have not been encouraging. Without significant growth in employment, consumer and business spending is likely to remain sluggish and the recovery in housing will be pushed farther into the future.

Limited Economic Stimulus

          Policymakers in Washington have made a concerted effort to jumpstart the economy, but the results have been limited at best. Now, the government is running out of ammunition as more than two-thirds of the fiscal stimulus budget has been spent and the Federal Reserve has already slashed interest rates to the bone. At the state and local government level, employment was maintained with Federal stimulus money in 2010, but the projected new political mix in Congress next year is not expected to continue that support. Our sub-advisors anticipate retrenchment in state and municipal employment and spending to be a headwind for the economy in the coming year.

          As for the overall market, it is inexpensive but it remains subject to economic uncertainty. The unemployment/underemployment figures are the highest since the 1930s and the Federal Reserve has

2

Domestic Equity Market Overview

October 31, 2010 (Unaudited)

pushed short-term rates to zero without much to show for it. This implies a very fragile economic environment with a minimal cushion.

          Meanwhile, bonds seem to be making a case for stocks. The monetary policies of the Federal Reserve appear to be designed to move investors into riskier alternatives, such as equities, by keeping bond interest rates at record lows. As investor interest returns to domestic stocks, our managers see a number of positives. As mentioned earlier, corporate balance sheets are quite strong and many companies are positioned to return significant amounts of cash to shareholders, both in the form of share repurchases and (most importantly) increased dividends. Many stocks have a dividend yield which exceeds the interest rate of 10-year Treasury bonds and yet still have the potential to grow returns further through both earnings and dividend growth. Also, most financial stocks are not currently paying any dividends. As we mentioned earlier, many of these financial companies are building significant amounts of excess capital which is likely to be used to restore dividend yields.

          Also encouraging is that aggressive cost-cutting during the recession formed lean businesses with tremendous operating leverage. As revenue growth has resurfaced—in fact, some 90% of companies saw revenue gains in the third quarter of 2010—it has created an earnings tailwind. Profit margins on incremental revenue have been more than three times profit margins on base revenue. This is providing the overall market with remarkable operating leverage.

          Our managers continue to find compelling valuation opportunities given that the market remains nearly 20% below its 2007 peak. Though less extraordinary than they were in early 2009, these valuation opportunities remain attractive, particularly relative to fixed income alternatives. There appear to be fewer valuation spreads at the sector level, but many at the stock level, making it more of a stock-picker’s market than a cyclical one. This is a prime environment for active equity managers in search of bottom-up valuation opportunities.

3

Performance Overview
American Beacon Large Cap Value Fund^SM

October 31, 2010 (Unaudited)

          The Institutional Class of the Large Cap Value Fund returned 15.68% for the twelve months ended October 31, 2010. The Fund underperformed the Russell 1000^® Value Index (the “Index”) return of 15.71% but outperformed the Lipper Large-Cap Value Funds Index return of 13.06%.

Comparison of Change in Value of a $10,000 Investment
for the Period from 10/31/00 through 10/31/10

										Value of
	Annualized Total Returns									$10,000
	Periods Ended 10/31/10									10/31/00-
	1 Year			5 Years			10 Years			10/31/10
Institutional Class (1,8)		15.68	%		1.18	%		5.00	%	$	16,285
Y Class (1,2,8)		15.50	%		1.15	%		4.98	%		16,259
Investor Class (1,8)		15.27	%		0.90	%		4.70	%		15,834
Advisor Class (1,3,8)		15.14	%		0.69	%		4.58	%		15,651
Retirement Class (1,4,8)		14.78	%		0.59	%		4.53	%		15,572
A Class with sales charge (1,5,8)		8.62	%		-0.29	%		4.08	%		14,923
A Class without sales charge (1,5,8)		15.27	%		0.90	%		4.70	%		15,834
C Class with sales charge (1,6,8)		14.08	%		0.86	%		4.69	%		15,807
C Class without sales charge (1,6,8)		15.08	%		0.86	%		4.69	%		15,807
AMR Class (1,8)		16.04	%		1.45	%		5.27	%		16,708
Lipper Large-Cap Value Funds Index (7)		13.06	%		0.95	%		1.16	%		11,223
Russell 1000 Value Index (7)		15.71	%		0.62	%		2.64	%		12,982

1.	Please note that the recent growth rate in the stock market has helped to produce short-term returns that are not typical and may not continue in the future. Performance shown is historical and may not be indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.
2.	Fund performance for the five-year and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/00 up to 8/3/09, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/00.
3.	Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/00 up to 5/31/05, the inception date of the Advisor Class, and the returns of the Advisor Class since its inception. Expenses of the Advisor Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/00. A portion of the fees charged to the Advisor Class of the Fund was waived in 2005. Performance prior to waiving fees was lower than the actual returns shown for 2005.
4.	Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 through 5/31/05 and the Advisor Class from 6/1/05 up to 5/1/09, the inception date of the Retirement Class, and the returns of the Retirement Class since its inception. Expenses of the Retirement Class are higher than those of the Advisor and Investor Classes. As a result, total returns shown may be higher than they would have been had the Retirement Class been in existence since 10/31/00.
5.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 through 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/00. A Class shares have a maximum sales charge of 5.75%.
6.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 through 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/00. C Class has a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.
7.	The Russell 1000 Value Index is an unmanaged index of those stocks in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values. Russell 1000 Value Index is a registered trademark of the Frank Russell Company. The Lipper Large-Cap Value Funds Index tracks the results of the 30 largest

4

Performance Overview
American Beacon Large Cap Value Fund^SM

October 31, 2010 (Unaudited)

mutual funds in the Lipper Large-Cap Value Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

8.

The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, Retirement, A, C, and AMR Class shares was 0.62%, 0.69%, 0.94%, 1.13%, 1.34%, 1.12%, 1.87% and 0.37%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

          Prior to the deduction of expenses, the Fund slightly outperformed the Index. However, the Fund did not generate enough excess performance to offset its expenses. Gross of Fund expenses, the Fund added value entirely through sector allocation, as stock selection detracted from performance.

          From a stock selection standpoint, the Fund’s holdings in the Financials and Energy sectors detracted the most value relative to the Index. Companies in the Financials sector that had the greatest impact on the Fund’s underperformance were Mitsubishi UFJ Financial Group (down 10.0%), XL Capital (down 1.1%) and Charles Schwab (down 10.4%). In the Energy sector, BP (down 34.3%) and Weatherford International (down 4.1%) were the largest detractors. Good stock selection in the Industrials sector where Honeywell International (up 36.2%), PACCAR (up 24.1%), and 3M (up 17.1%) were the largest contributors, added value relative to the Index but not enough to offset the negative impact of the aforementioned sectors.

          Underweight positions in Energy and Financials, the two worst performing sectors in the Index, added value through sector allocation. This was somewhat offset by an underweight in the Utilities sector which detracted relative value from the Fund’s performance.

          The sub-advisors continue to invest in a broadly diversified portfolio of companies that they believe have attractive valuations and above-average earnings growth potential. This approach should allow the Fund to benefit over the longer term.

Top Ten Holdings

	% of
	Net Assets
ConocoPhillips		3.2	%
International Business Machines Corp.		3.2	%
JPMorgan Chase & Co.		2.8	%
Vodafone Group plc		2.1	%
Bank of America Corp.		1.9	%
Pfizer, Inc		1.7	%
Hewlett-Packard Co.		1.6	%
Wells Fargo & Co.		1.6	%
Microsoft Corp.		1.5	%
Diageo plc		1.5	%

Sector Allocation

	% of
	Equities
Financials		20.0	%
Information Technology		16.6	%
Industrials		11.5	%
Health Care		11.2	%
Energy		10.4	%
Consumer Staples		9.3	%
Consumer Discretionary		8.9	%
Telecommunication Services		4.2	%
Utilities		4.1	%
Materials		3.8	%

5

Fund Expenses
American Beacon Large Cap Value Fund^SM

October 31, 2010 (Unaudited)

Fund Expense Example

          As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

          The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2010 through October 31, 2010.

Actual Expenses

          The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

          The “Hypothetical” lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return) . You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

          You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by the Fund. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.

	Beginning		Ending
	Account		Account		Expenses Paid
	Value		Value		During Period*
	5/1/10		10/31/10		5/1/10-10/31/10
Institutional Class
Actual	$	1,000.00	$	993.57	$	2.91
Hypothetical#	$	1,000.00	$	1,022.28	$	2.96
Y Class
Actual	$	1,000.00	$	992.49	$	3.52
Hypothetical#	$	1,000.00	$	1,021.68	$	3.57
Investor Class
Actual	$	1,000.00	$	991.55	$	4.82
Hypothetical#	$	1,000.00	$	1,020.37	$	4.89
Advisor Class
Actual	$	1,000.00	$	990.92	$	5.47
Hypothetical#	$	1,000.00	$	1,019.71	$	5.55
Retirement Class
Actual	$	1,000.00	$	989.15	$	6.87
Hypothetical#	$	1,000.00	$	1,018.30	$	6.97
A Class**
Actual	$	1,000.00	$	1,040.17	$	4.95
Hypothetical#	$	1,000.00	$	1,019.86	$	4.93
C Class**
Actual	$	1,000.00	$	1,087.20	$	3.21
Hypothetical#	$	1,000.00	$	1,015.78	$	3.14
AMR Class
Actual	$	1,000.00	$	994.59	$	1.66
Hypothetical#	$	1,000.00	$	1,023.54	$	1.68

*	Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.58%, 0.70%, 0.96%, 1.09%, 1.37%, 0.33%, 1.06% and 1.87% for the Institutional, Y, Investor, Advisor, Retirement, AMR, A and C Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half year period.
#	5% return before expenses.
**	Beginning account value is the inception date of 5/17/10 and 9/1/10, for the A and C Classes, respectively. Expenses are equal to the Fund’s annualized expense ratio for the period multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the period (168) and (61), respectively by days in the year (365).

6

American Beacon Large Cap Value Fund^SM
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of
American Beacon Large Cap Value Fund:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the American Beacon Large Cap Value Fund (one of the funds constituting the American Beacon Funds) (collectively, the “Fund”), as of October 31, 2010, and the related statement of operations for the year then ended, the statement of changes of net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s 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 Fund’s 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 October 31, 2010, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers 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 the American Beacon Large Cap Value Fund at October 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas
December 23, 2010

7

American Beacon Large Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
COMMON STOCK — 94.76%
CONSUMER DISCRETIONARY — 8.39%
Auto Components — 0.14%
Johnson Controls, Inc.		321,500		11,291
Automobiles — 0.34%
Toyota Motor Corp.*		393,300		27,854
Hotels, Restaurants & Leisure — 1.49%
Carnival Corp.		1,159,300		50,047
McDonald’s Corp.		440,900		34,289
Wyndham Worldwide Corp.		1,318,480		37,906
				122,242
Media — 1.66%
CBS Corp.		1,383,700		23,426
Comcast Corp.		897,600		17,351
Interpublic Group of Cos., Inc.†		926,500		9,589
Time Warner Cable, Inc.		173,000		10,012
Time Warner, Inc.		1,944,000		63,199
Warner Music Group Corp.†		2,322,000		12,074
				135,651
Multiline Retail — 1.70%
J.C. Penney Company, Inc.		1,900,700		59,264
Nordstrom, Inc.		243,680		9,384
Target Corp.		539,700		28,032
Wal-Mart Stores, Inc.		786,960		42,630
				139,310
Specialty Retail — 2.26%
Abercrombie & Fitch Co.		865,430		37,092
Gap, Inc.		3,535,200		67,204
Limited Brands, Inc.		130,200		3,827
The Home Depot, Inc.		2,507,467		77,430
				185,553
Textiles & Apparel — 0.80%
Polo Ralph Lauren Corp.		681,000		65,975
Total Consumer Discretionary				687,876
CONSUMER STAPLES — 8.83%
Beverages — 2.15%
Coca-Cola Co.		430,400		26,392
Diageo plc*		1,689,400		125,016
PepsiCo, Inc.		378,300		24,703
				176,111
Food & Drug Retailing — 1.31%
CVS Caremark Corp.		1,206,000		36,325
Safeway, Inc.		2,322,500		53,185
Sysco Corp.		599,140		17,651
				107,161
Food Products — 2.74%
ConAgra Foods, Inc.		2,600,000		58,474
H.J. Heinz Co.		1,166,000		57,262
Hershey Co.		1,200,000		59,388
Kraft Foods, Inc.		152,000		4,905
Unilever N.V.		1,500,000		44,535
				224,564

	Shares		Value
			($000)
Tobacco — 2.63%
Altria Group, Inc.		1,407,600		35,781
Imperial Tobacco Group plc*		1,180,300		75,539
Lorillard, Inc.		58,600		5,001
Philip Morris International, Inc.		1,698,700		99,374
				215,695
Total Consumer Staples				723,531
ENERGY — 9.88%
Energy Equipment & Services — 0.94%
Transocean Ltd.†		611,800		38,764
Weatherford International Ltd.†		2,300,000		38,663
				77,427
Oil & Gas — 8.94%
BP plc		1,230,500		50,241
Chevron Corp.		877,862		72,520
ConocoPhillips		4,400,696		261,402
Exxon Mobil Corp.		903,100		60,029
Hess Corp.		1,020,000		64,291
Marathon Oil Corp.		357,000		12,698
Occidental Petroleum Corp.		830,300		65,286
QEP Resources, Inc.		1,006,000		33,228
Royal Dutch Shell plc*		630,500		40,554
Spectra Energy Corp.		3,016,500		71,702
				731,951
Total Energy				809,378
FINANCIALS — 18.93%
Banks — 7.56%
Allied Irish Banks plc†		96,000		7,164
Banco Santander S.A.*		4,974,000		63,717
Bank of America Corp.		13,558,090		155,106
Bank of New York Mellon Corp.		863,200		21,632
East West Bancorp, Inc.		2,224,982		39,226
KeyCorp.		870,174		7,127
M&T Bank Corp.		590,000		44,103
PNC Financial Services Group, Inc.		2,081,349		112,185
SunTrust Banks, Inc.		201,200		5,034
Wells Fargo & Co.		4,923,058		128,393
Zions Bancorporation		1,728,000		35,700
				619,387
Diversified Financials — 7.52%
American Express Co.		1,802,500		74,732
Capital One Financial Corp.		1,328,500		49,513
Charles Schwab Corp.		1,600,000		24,640
Citigroup, Inc.†		13,709,268		57,168
Goldman Sachs Group, Inc.		213,800		34,411
JPMorgan Chase & Co.		6,076,198		228,647
Mitsubishi UFJ Financial Group, Inc.*		8,256,000		38,473
Morgan Stanley Dean Witter & Co.		1,810,500		45,027
SLM Corp.†		2,611,200		31,073
State Street Corp.		787,500		32,886
				616,570
Insurance — 3.24%
ACE Ltd.		550,200		32,693
Allstate Corp.		727,300		22,175
Genworth Financial, Inc.†		1,180,200		13,383

See accompanying notes

8

American Beacon Large Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Hartford Financial Services Group, Inc.		1,423,550		34,137
Lincoln National Corp.		1,155,200		28,279
MetLife, Inc.		1,411,059		56,909
Prudential Financial, Inc.		154,000		8,097
Travelers Cos., Inc.		495,800		27,368
XL Group plc		2,018,100		42,683
				265,724
Real Estate — 0.61%
Annaly Capital Management, Inc.‡		2,833,200		50,176
Total Financials				1,551,857
HEALTH CARE — 10.66%
Biotechnology — 0.31%
Amgen, Inc.†		440,000		25,164
Health Care Equipment & Supplies — 2.43%
Baxter International, Inc.		2,343,400		119,279
Covidien PLC		304,500		12,140
Hospira, Inc.†		1,143,000		67,986
				199,405
Health Care Providers & Services — 1.49%
Cardinal Health, Inc.		1,413,000		49,016
CIGNA Corp.		1,143,100		40,226
WellPoint, Inc.†		606,800		32,974
				122,216
Pharmaceuticals — 6.43%
Abbott Laboratories		1,106,000		56,760
Bristol-Myers Squibb Co.		3,577,400		96,232
Eli Lilly & Co.		1,789,400		62,987
Johnson & Johnson		1,264,300		80,498
Merck & Co., Inc.		2,610,599		94,713
Pfizer, Inc.		7,785,849		135,473
				526,663
Total Health Care				873,448
INDUSTRIALS — 10.90%
Aerospace & Defense — 3.66%
Boeing Co.		1,384,700		97,816
Lockheed Martin Corp.		374,400		26,691
Northrop Grumman Corp.		1,371,400		86,686
Raytheon Co.		1,917,800		88,372
				299,565
Air Freight & Couriers — 0.20%
FedEx Corp.		186,700		16,377
Commercial Services & Supplies — 0.46%
RR Donnelley & Sons Co.		2,028,910		37,433
Construction & Engineering — 0.31%
Shaw Group, Inc.†		834,715		25,509
Electrical Equipment — 0.01%
Molex, Inc. — Class A		64,490		1,101
Industrial Conglomerates — 2.65%
3M Co.		387,400		32,627
General Electric Co.		5,053,900		80,963
Honeywell International, Inc.		1,917,025		90,311

	Shares		Value
			($000)
Tyco International Ltd.		355,400		13,605
				217,506
Machinery — 3.61%
Cummins, Inc.		104,300		9,189
Deere & Co.		1,039,000		79,795
Eaton Corp.		181,500		16,123
Illinois Tool Works, Inc.		739,400		33,791
ITT Industries, Inc.		997,400		47,067
PACCAR, Inc.		1,052,330		53,942
SPX Corp.		834,000		55,928
				295,835
Total Industrials				893,326
INFORMATION TECHNOLOGY — 15.69%
Communications Equipment — 0.43%
Cisco Systems, Inc.†		1,549,700		35,380
Computers & Peripherals — 7.09%
Apple Computer, Inc.†		349,000		105,004
EMC Corp.†		4,000,000		84,040
Hewlett-Packard Co.		3,134,900		131,854
International Business Machines Corp.		1,806,400		259,399
				580,297
Electronic Equipment & Instruments — 0.41%
Avnet, Inc.†		560,800		16,701
Tyco Electronics Ltd.		544,200		17,240
				33,941
Internet Software & Services — 1.21%
eBay, Inc.†		2,447,000		72,945
Xerox Corp.		2,227,800		26,065
				99,010
IT Consulting & Services — 0.06%
Accenture plc		113,400		5,070
Semiconductor Equipment & Products — 2.54%
ASML Holding N.V.		341,550		11,336
Intel Corp.		5,004,700		100,445
Micron Technology, Inc.†		1,964,600		16,247
Texas Instruments, Inc.		2,720,300		80,439
				208,467
Software — 3.95%
CA, Inc.		1,503,903		34,906
Intuit, Inc.†		1,422,000		68,256
Microsoft Corp.		4,750,400		126,550
Oracle Corp.		3,199,600		94,068
				323,780
Total Information Technology				1,285,945
MATERIALS — 3.63%
Chemicals — 2.48%
Air Products & Chemicals, Inc.		337,700		28,694
Celanese Corp.		10,200		364
Dow Chemical Co.		2,913,000		89,808
E. I. du Pont de Nemours & Co.		1,470,600		69,530
PPG Industries, Inc.		186,700		14,320
				202,716
Metals & Mining — 0.73%
Cliffs Natural Resources, Inc.		551,300		35,945

See accompanying notes

9

American Beacon Large Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Newmont Mining Corp.		389,000		23,678
				59,623
Paper & Forest Products — 0.42%
International Paper Co.		1,376,500		34,798
Total Materials				297,137
TELECOMMUNICATION SERVICES — 3.93%
Diversified Telecommunication Services — 1.78%
AT&T, Inc.		2,781,452		79,272
Nokia Corp.*		4,161,700		44,447
Verizon Communications, Inc.		694,986		22,566
				146,285
Wireless Telecommunication Services — 2.15%
Vodafone Group plc*		6,398,200		176,014
Total Telecommunication Services				322,299
UTILITIES — 3.92%
Electric Utilities — 3.71%
CenterPoint Energy, Inc.		2,553,000		42,278
Dominion Resources, Inc.		2,691,640		116,978
Edison International		405,100		14,948
Entergy Corp.		498,500		37,153
Exelon Corp.		703,400		28,713
NextEra Energy, Inc.		1,160,700		63,885
				303,955
Multi-Utilities — 0.21%
Questar Corp.		1,006,000		17,072
Total Utilities				321,027
Total Common Stock (Cost $7,449,759)				7,765,824
SHORT-TERM INVESTMENTS — 4.41%
American Beacon U.S. Government Money Market Select Fund §		60,000,000		60,000
JPMorgan U.S. Government Money Market Fund		301,599,122		301,599
Total Short-Term Investments (Cost $361,599)				361,599
TOTAL INVESTMENTS — 99.17% (Cost $7,811,358)				8,127,423
OTHER ASSETS, NET OF LIABILITIES — 0.83%				68,318
TOTAL NET ASSETS — 100.00%			$	8,195,741

*	ADR — American Depository Receipt
†	Non-income producing security.
‡	REIT
§	The Fund is affiliated by having the same investment advisor.

Percentages are stated as a percent of net assets.

Futures Contracts
(dollars in thousands)

						Unrealized
	Number of					Appreciation/
	Contracts		Expiration Date	Value		(Depreciation)
S&P 500 Mini E Index Future		6,633	September, 2010	$	391,248	$	20,282
				$	391,248	$	20,282

See accompanying notes

10

American Beacon Large Cap Value Fund^SM
Statement of Assets and Liabilities

October 31, 2010 (in thousands, except share and per share amounts)

Assets:
Investments in unaffiliated securities, at value A	$	8,067,423
Investments in affiliated securities, at value B		60,000
Deposit with brokers for futures contracts		29,506
Receivable for investments sold		69,512
Dividends and interest receivable		10,358
Receivable for fund shares sold		9,952
Receivable for tax reclaims		95
Receivable for variation margin on open futures contracts		134
Prepaid expenses		287
Total assets		8,247,267
Liabilities:
Payable for investments purchased		36,988
Payable for fund shares redeemed		4,971
Management and investment advisory fees payable (Note 2)		5,201
Administrative service and service fees payable (Note 2)		3,114
Other liabilities		1,252
Total liabilities		51,526
Net assets	$	8,195,741
Analysis of Net Assets:
Paid-in-capital		9,829,602
Undistributed net investment income		86,896
Accumulated net realized loss		(2,057,103	)
Unrealized appreciation of investments and futures contracts		336,346
Net assets	$	8,195,741
Shares outstanding (no par value):
Institutional Class		181,355,401
Y Class		114,796
Investor Class		235,108,660
Advisor Class		7,332,543
Retirement Class		124
A Class		46,235
C Class		2,166
AMR Class		30,383,566
Net asset value, offering and redemption price per share:
Institutional Class	$	18 .56
Y Class	$	18 .49
Investor Class	$	17 .61
Advisor Class	$	17 .47
Retirement Class	$	17 .32
A Class (Net asset value only)	$	17 .61
A Class (Offering and redemption price)	$	18 .68
C Class	$	17 .58
AMR Class	$	18 .37

A	Cost of investments in unaffiliated securities	$	7,751,358
B	Cost of investments in affiliated securities	$	60,000

See accompanying notes

11

American Beacon Large Cap Value Fund^SM
Statement of Operations

Year Ended October 31, 2010 (in thousands)

Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes)*	$	174,442
Dividend income from affiliated securities		65
Interest income		28
Total investment income		174,535
Expenses:
Management and investment advisory fees (Note 2)		17,873
Administrative service fees (Note 2):
Institutional Class		8,116
Y Class		4
Investor Class		12,421
Advisor Class		380
AMR Class		274
Transfer agent fees:
Institutional Class		146
Investor Class		268
Advisor Class		15
AMR Class		29
Custody and fund accounting fees		1,025
Professional fees		393
Registration fees and expenses		169
Service fees (Note 2):
Y Class		1
Investor Class		15,279
Advisor Class		316
Distribution fees (Note 2):
Advisor Class		316
Prospectus and shareholder reports		860
Trustee fees		530
Other expenses		571
Total expenses		58,986
Net investment income		115,549
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		(76,879	)
Commission recapture (Note 1)		188
Futures contracts		14,382
Change in net unrealized appreciation or depreciation of:
Investments		967,842
Futures contracts		25,156
Net gain on investments		930,689
Net increase in net assets resulting from operations	$	1,046,238
*   Foreign taxes	$	1,208

See accompanying notes

12

American Beacon Large Cap Value Fund^SM
Statement of Changes of Net Assets (in thousands)

	Year Ended			Year Ended
	October 31,			October 31,
	2010			2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	115,549		$	125,394
Net realized loss on investments and futures contracts		(62,309	)		(825,817	)
Change in net unrealized appreciation of investments and futures contracts		992,998			1,366,171
Net increase in net assets resulting from operations		1,046,238			665,748
Distributions to Shareholders:
Net investment income:
Institutional Class		(40,440	)		(57,494	)
Y Class		(15	)		—
Investor Class		(61,616	)		(96,586	)
Advisor Class		(1,747	)		(2,701	)
AMR Class		(10,649	)		(15,992	)
Net distributions to shareholders		(114,467	)		(172,773	)
Capital Share Transactions:
Proceeds from sales of shares		2,598,273			1,578,918
Reinvestment of dividends and distributions		109,446			164,886
Cost of shares redeemed		(2,099,289	)		(1,810,886	)
Net increase (decrease) in net assets from capital share transactions		608,430			(67,082	)
Net increase in net assets		1,540,201			425,893
Net Assets:
Beginning of period		6,655,540			6,229,647
End of Period *	$	8,195,741		$	6,655,540
*Includes undistributed net investment income of	$	86,896		$	85,814

See accompanying notes

13

American Beacon Large Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

1. Organization and Significant Accounting Policies

          American Beacon Funds (the “Trust”), which is comprised of 19 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon Large Cap Value Fund (the “Fund”), a series of the Trust.

          American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative and asset management consulting services to the Trust and other investors.

Class Disclosure

          The inception dates of the A and C Classes are May 17 and September 1, 2010, respectively.

          The Fund has multiple classes of shares designed to meet the needs of different groups of investors. The following table sets forth the differences amongst the classes:

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	General public and investors investing through an intermediary
Advisor Class	Investors investing through an intermediary
Retirement Class	Investors investing through an intermediary
AMR Class	Investors in the tax-exempt retirement and benefit plans of AMR Corporation and its affiliates
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges

          Administrative service fees, service fees and distribution fees vary amongst the classes as described more fully in footnote 2.

Security Valuation

          Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

          Debt securities (other than short-term securities) normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The prices of debt securities may be determined using quotes obtained from brokers.

          Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

          Securities for which the market prices are not readily available or are not reflective of the fair value of the security, as determined by the Manager, will be priced at fair value following procedures approved by the Trust’s Board of Trustees (the “Board”).

14

American Beacon Large Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

Valuation Inputs

          Various inputs may be used to determine the value of the Fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1	—	Quoted prices in active markets for identical securities.
Level 2	—	Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others.
Level 3	—	Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

          The Fund’s investments are summarized by level based on the inputs used to determine their values. During the period there were no significant transfers between levels. As of October 31, 2010, the Fund’s investments were classified as follows: (in thousands)

	Level 1		Level 2		Level 3		Total
Common Stock	$	7,765,824	$	—	$	—	$	7,765,824
Short Term Investments		361,599		—		—		361,599
Total Investments in Securities	$	8,127,423	$	—	$	—	$	8,127,423
Futures Contracts	$	20,282		—		—	$	20,282

Security Transactions and Investment Income

          Security transactions are recorded on the trade date of the security purchase or sale. The Fund may purchase securities with delivery or payment to occur at a later date. At the time the Fund enters into a commitment to purchase a security, the transaction is recorded and the value of the security is reflected in the net asset value. The value of the security may vary with market fluctuations.

          Dividend income, net of foreign taxes, is recorded on the ex-dividend date except certain dividends from foreign securities which are recorded as soon as the information is available to the Fund. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

Futures Contracts

          Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Fund may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.

          Upon entering into a futures contract, the Fund is required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents 5% of the face value of the futures contract. The Fund reflects this amount on the Statement of Assets and Liabilities as deposit with broker for futures contracts. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and

15

American Beacon Large Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2010 (in thousands)

Statement of Assets and Liabilities	Asset Derivatives	Total
Unrealized appreciation of investments, futures contracts, and foreign currency	Equity Contracts*	$	20,282

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2010 (in thousands)

Statement of Operations	Derivative	Total
Net realized gain (loss) from futures contracts	Equity Contracts	$	14,382
Change in net unrealized appreciation or depreciation of futures contracts	Equity Contracts	$	25,156

* Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

Dividends to Shareholders

          Dividends from net investment income of the Fund normally will be declared and paid at least annually. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date.

Commission Recapture

          The Fund has established brokerage commission recapture arrangements with certain brokers or dealers. If the Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operations.

Allocation of Income, Expenses, Gains, and Losses

          Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Use of Estimates

          The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

Other

          Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Trust. In the normal course of business, the Trust enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.

16

American Beacon Large Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

2. Transactions with Affiliates

Management Agreement

          The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services. Investment assets of the Fund are managed by multiple investment advisors which have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Fund an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to unaffiliated investment advisors hired by the Manager to direct investment activities of the Fund. Management fees paid during the year ended October 31, 2010 were as follows (dollars in thousands):

		Amounts paid to	Net Amounts
Management	Management	Investment	Retained by
Fee Rate	Fee	Advisors	Manager
0.175%-0.65%	$17,873	$14,113	$3,760

Administrative Services Agreement

          The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Fund. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor and Retirement Classes of the Fund, 0.40% of the average daily net assets of the A and C Classes of the Fund, and 0.05% of the average daily net assets of the AMR Class of the Fund. Administrative Service fees for the Retirement, A, and C Classes for the period ended October 31, 2010 were less than $500.

Distribution Plans

          The Fund, except for the Advisor, Retirement, A, and C Classes of the Fund, has adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees may be charged to the Fund for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Fund does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

          Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule 12b-1 under the Act for the Advisor, Retirement, A, and C Classes of the Fund. Under the Distribution Plans, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes, 0.50% of the average daily net assets of the Retirement Class, and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance. Distribution fees for the Retirement, A, and C Classes for the period ended October 31, 2010 were less than $500.

Service Plans

          The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Y, Investor, Advisor, Retirement, A, and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives 0.10% of the average daily net assets of Y Class, 0.15% of the average daily net assets of the A and C Classes, 0.25% of the average daily net assets of the Advisor and Retirement Classes and up to 0.375% of the average daily net assets of the Investor Class of the

17

American Beacon Large Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

Fund. Service fees for the Retirement, A, and C Classes for the period ended October 31, 2010 were less than $500.

Investment in Affiliated Funds

          The Fund may invest in the American Beacon Money Market Select Fund (the “MM Select Fund”) and the American Beacon US Government Money Market Select Fund (the “USG Select Fund”), (collectively the “Select Funds”). The Select Funds and the Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the Select Funds and receives from the Select Funds an annualized fee of 0.09% of its average daily net assets of the Select Funds. During the year ended October 31, 2010, the Manager earned fees from the Select Funds totaling $57,671 on the Fund’s direct investment in the Select Funds.

Interfund Lending Program

          Pursuant to an exemptive order issued by the Securities and Exchange Commission (“SEC”), the Fund, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program as a borrower. This program provides an alternative credit facility allowing the Fund to borrow from other participating Funds. During the year ended October 31, 2010, the Fund did not utilize the credit facility.

Expense Reimbursement Plan

          The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’s average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. During the year ended October 31, 2010, the C Class waived $8. A liability has not been booked as the Manager does not intend to seek repayment of this waiver.

3. Federal Income and Excise Taxes

          It is the policy of the Fund to qualify as a regulated investment company, by complying with all applicable provisions of the Code, and to make distribution of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes each Fund is treated as a single entity for the purpose of determining such qualifications.

          The Fund does not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2010 remains subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

          Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. generally accepted accounting principles. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

          The tax character of distributions paid during the fiscal years ended October 31, 2010 and October 31, 2009 were as follows (in thousands):

18

American Beacon Large Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

	Year Ended		Year Ended
	October 31,		October 31,
	2010		2009
Distributions paid from:
Ordinary income*
Institutional Class	$	40,440	$	57,494
Y Class		15		—
Investor Class		61,616		96,586
Advisor Class		1,747		2,701
AMR Class		10,649		15,992
Total distributions paid	$	114,467	$	172,773

* For tax purposes, short-term capital gains are considered ordinary income distributions.

          As of October 31, 2010, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

Cost basis of investments for federal income tax purposes	$	8,076,661
Unrealized appreciation		1,002,212
Unrealized depreciation		(951,450	)
Net unrealized appreciation/(depreciation)		50,762
Undistributed ordinary income		86,895
Accumulated long-term gain/(loss)		(1,791,840	)
Other temporary differences		20,322
Distributable earnings/(deficit)	$	(1,633,861	)

          Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses from wash sales and the realization for tax purposes of unrealized gains/(losses) on certain derivative instruments.

          Due to inherent differences in the recognition of income, expenses and realized gains/losses under U.S. generally accepted accounting principles and federal income tax regulations, permanent differences between book and tax reporting have been identified and appropriately reclassified on the Statement of Assets and Liabilities.

          Accordingly, the following amounts represent current year permanent differences derived from Section 732 basis adjustments that have been reclassified as of October 31, 2010 (in thousands):

Paid-in-capital	$	6
Undistributed net investment income		—
Accumulated net realized gain (loss)		(5	)
Unrealized appreciation (depreciation) of investments, futures contracts and foreign currency		(1	)

          At October 31, 2010 the capital loss carry forward positions for federal income tax purposes were $1,044,692, $684,423, and $42,443 expiring in 2016, 2017, and 2018 respectively. (in thousands)

4. Investment Transactions

          The aggregate cost of purchases and proceeds from sales of investments other than short-term obligations for the year ended October 31, 2010 were (in thousands) $2,459,149 and $1,998,023, respectively.

          A summary of the Fund’s direct ownership and transactions in the Select Funds for the year ended October 31, 2010 is set forth below (in thousands):

19

American Beacon Large Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

	October 31, 2009						October 31, 2010
Affiliate	Shares/Market Value		Purchases		Sales		Shares/Market Value
USG Select Fund	$	60,000	$	10,000	$	10,000	$	60,000

5. Capital Share Transactions

          The tables below summarize the activity in capital shares for each Class of the Fund (dollars and shares in thousands):

Year Ended October 31, 2010

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		67,332		$	1,191,741			199		$	3,527			80,103		$	1,343,174			1,315		$	21,942
Reinvestment of dividends		2,134			36,957			1			15			3,645			60,109			105			1,716
Shares redeemed		(24,252	)		(425,661	)		(85	)		(1,472	)		(93,570	)		(1,565,806	)		(1,557	)		(26,092	)
Net increase (decrease) in shares outstanding		45,214		$	803,037			115		$	2,070			(9,822	)	$	(162,523	)		(137	)	$	(2,434	)

	Retirement Class				AMR Class						A Class				C Class
	Shares		Amount		Shares			Amount			Shares		Amount		Shares		Amount
Shares sold		—	$	1		2,145		$	37,065			46	$	786		2	$	37
Reinvestment of dividends		—		—		623			10,649			—		—		—		—
Shares redeemed		—		—		(4,647	)		(80,258	)		—		—		—		—
Net increase (decrease) in shares outstanding		—	$	1		(1,879	)	$	(32,544	)		46	$	786		2	$	37

Year Ended October 31, 2009

	Institutional Class						Y Class				Investor Class
	Shares			Amount			Shares		Amount		Shares			Amount
Shares sold		38,693		$	535,949			—	$	1		74,391		$	985,338
Reinvestment of dividends		4,043			53,008			—		—		7,465			93,236
Shares redeemed		(42,400	)		(575,194	)		—		—		(88,535	)		(1,151,477	)
Net increase (decrease) in shares outstanding		336		$	13,763			—	$	1		(6,679	)	$	(72,903	)

	Advisor Class						Retirement Class				AMR Class
	Shares			Amount			Shares		Amount		Shares			Amount
Shares sold		1,726		$	22,607			—	$	1		2,516		$	35,022
Reinvestment of dividends		214			2,650			—		—		1,236			15,992
Shares redeemed		(1,478	)		(19,228	)		—		—		(4,909	)		(64,987	)
Net increase (decrease) in shares outstanding		462		$	6,029			—	$	1		(1,157	)	$	(13,973	)

20

Internationally left blank.

21

American Beacon Large Cap Value Fund^SM
Financial Highlights
(For a share outstanding throughout the period)

	Institutional Class															Y Class						Investor Class
																Year			August
																ended			03 to			Year Ended
	Year Ended October 31,															October			October			October 31,
	2010			2009			2008			2007			2006			31, 2010			31, 2009			2010
Net asset value, beginning of period	$	16.32		$	15.01		$	26.03		$	23.77		$	21.00		$	16.32		$	15.59		$	15.51
Income from investment operations:
Net investment incomeA		0.32			0.35			0.51			0.40			0.31			0.29			0.06			0.23
Net gains (losses) on securities (both realized and unrealized)		2.22			1.40			(10.41	)		2.78			3.48			2.22			0.67			2.12
Total income (loss) from investment operations		2.54			1.75			(9.90	)		3.18			3.79			2.51			0.73			2.35
Less distributions:
Dividends from net investment income		(0.30	)		(0.44	)		(0.41	)		(0.31	)		(0.26	)		(0.34	)		—			(0.25	)
Distributions from net realized gains on securities		—			—			(0.71	)		(0.61	)		(0.76	)		—			—			—
Total distributions		(0.30	)		(0.44	)		(1.12	)		(0.92	)		(1.02	)		(0.34	)		—			(0.25	)
Net asset value, end of period	$	18.56		$	16.32		$	15.01		$	26.03		$	23.77		$	18.49		$	16.32		$	17.61
Total return B		15.68	%		12.41	%		(39.59	)%		13.76	%		18.69	%		15.50	%		4.68	%D		15.27	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,366,011		$	2,221,162		$	2,038,539		$	2,493,451		$	958,830		$	2,123		$	1		$	4,140,584
Ratios to average net assets (annualized):
Expenses, net of waivers		0.59	%		0.61	%		0.58	%		0.59	%		0.60	%		0.70	%		0.68	%E		0.96	%
Expenses, before waivers		0.59	%		0.61	%		0.58	%		0.59	%		0.60	%		0.70	%		0.68	%E		0.96	%
Net investment income, net of waivers		1.73	%		2.36	%		2.19	%		1.82	%		1.86	%		1.51	%		1.58	%E		1.36	%
Net investment income (loss), before waivers		1.73	%		2.36	%		2.19	%		1.82	%		1.86	%		1.51	%		1.58	%E		1.36	%
Portfolio turnover rate		28	%		27	%		28	%		20	%		26	%		28	%		27	%C		28	%

A	For purposes of this calculation, through October 31, 2007, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding.
B	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
C	Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.
D	Not annualized.
E	Annualized.
F	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

22

												Advisor Class															Retirement Class						AMR Class
																											Year			May
																											ended			01 to
												Year Ended October 31,															October			October			Year Ended October 31,
2009			2008			2007			2006			2010			2009			2008			2007			2006			31, 2010			31, 2009			2010			2009			2008
$	14.29		$	24.83		$	22.74		$	20.16		$	15.39		$	14.19		$	24.70		$	22.64		$	20.13		$	15.36		$	12.66		$	16.14		$	14.88		$	25.80
	0.28			0.41			0.35			0.28			0.21			0.26			0.32			0.28			0.26			0.18			0.08			0.34			0.37			0.51
	1.34			(9.88	)		2.63			3.31			2.10			1.32			(9.79	)		2.62			3.27			2.07			2.62			2.22			1.38			(10.26	)
	1.62			(9.47	)		2.98			3.59			2.31			1.58			(9.47	)		2.90			3.53			2.25			2.70			2.56			1.75			(9.75	)
	(0.40	)		(0.36	)		(0.28	)		(0.25	)		(0.23	)		(0.38	)		(0.33	)		(0.23	)		(0.26	)		(0.29	)		—			(0.33	)		(0.49	)		(0.46	)
	—			(0.71	)		(0.61	)		(0.76	)		—			—			(0.71	)		(0.61	)		(0.76	)		—			—			—			—			(0.71	)
	(0.40	)		(1.07	)		(0.89	)		(1.01	)		(0.23	)		(0.38	)		(1.04	)		(0.84	)		(1.02	)		(0.29	)		—			(0.33	)		(0.49	)		(1.17	)
$	15.51		$	14.29		$	24.83		$	22.74		$	17.47		$	15.39		$	14.19		$	24.70		$	22.64		$	17.32		$	15.36		$	18.37		$	16.14		$	14.88
	11.99	%		(39.72	)%		13.46	%		18.44	%		15.14	%		11.81	%		(39.87	)%		13.16	%		18.18	%		14.78	%		21.33	%D		16.04	%		12.59	%		(39.43	)%
$	3,798,632		$	3,594,565		$	5,198,835		$	2,586,410		$	128,080		$	114,945		$	99,416		$	99,854		$	39,077		$	2		$	1		$	558,089		$	520,799		$	497,127
	0.93	%		0.83	%		0.83	%		0.85	%		1.10	%		1.10	%		1.08	%		1.08	%		1.09	%		1.37	%		1.37	%E		0.34	%		0.36	%		0.32	%
	0.93	%		0.83	%		0.83	%		0.85	%		1.10	%		1.12	%		1.08	%		1.08	%		1.09	%		1.37	%		1.37	%E		0.34	%		0.36	%		0.32	%
	2.05	%		1.94	%		1.59	%		1.61	%		1.23	%		1.86	%		1.69	%		1.32	%		1.39	%		0.95	%		1.15	%E		1.98	%		2.62	%		2.44	%
	2.05	%		1.94	%		1.59	%		1.61	%		1.23	%		1.84	%		1.69	%		1.32	%		1.39	%		0.95	%		1.15	%E		1.98	%		2.62	%		2.44	%
	27	%		28	%		20	%		26	%		28	%		27	%		28	%		20	%		26	%		28	%		27	%C		28	%		27	%		28	%

23

American Beacon Large Cap Value Fund^SM
Financial Highlights
(For a share outstanding throughout the period)

	AMR Class						A Class			C Class
							May			September
	Year Ended October						17 to			01 to
	31,						October			October
	2007			2006			31, 2010			31, 2010
Net asset value, beginning of period	$	23.55		$	20.78		$	16.93		$	16.17
Income from investment operations:
Net investment income (loss)A		0.45			0.35			0.03			(0.01	)
Net gains (losses) on securities (both realized and unrealized)		2.76			3.47			0.65			1.42
Total income (loss) from investment operations		3.21			3.82			0.68			1.41
Less distributions:
Dividends from net investment income		(0.35	)		(0.29	)		—			—
Distributions from net realized gains on securities		(0.61	)		(0.76	)		—			—
Total distributions		(0.96	)		(1.05	)		—			—
Net asset value, end of period	$	25.80		$	23.55		$	17.61		$	17.58
Total return B		14.03	%		19.08	%		4.02	%D		8.72	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	972,260		$	1,024,899		$	814		$	38
Ratios to average net assets (annualized):
Expenses, net of waivers		0.32	%		0.34	%		1.06	%E		1 .87	%E
Expenses, before waivers		0.32	%		0.34	%		1.06	%E		2 .14	%E
Net investment income, net of waivers		2.13	%		2.18	%		1.09	%E		(0.50	)%E
Net investment income (loss), before waivers		2.13	%		2.18	%		1.09	%E		(0.76	)%E
Portfolio turnover rate		20	%		26	%		28	%F		28	%F

A	For purposes of this calculation, through October 31, 2007, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding.
B	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
C	Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.
D	Not annualized.
E	Annualized.
F	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

24

American Beacon Funds
Privacy Policy & Federal Tax Information

October 31, 2010 (Unaudited)

Privacy Policy

          The American Beacon Funds recognizes and respects the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

          We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

          We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

          For corporate shareholders in the Fund, the percentage of ordinary dividend income distributed for the year ended October 31, 2010, which is designated as qualifying for the dividends-received deduction, was 83.07%.

          For shareholders in the Fund, the percentage of dividend income distributed for the year ended October 31, 2010, which is designated as qualified dividend income under the Jobs Growth Tax Relief Act of 2003 was 100.00%. Shareholders will receive notification in January 2011 of the percentage applicable to the preparation of their 2010 income tax returns.

25

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisory Agreements

(Unaudited)

          At its May 25, 2010 meeting, the Board of Trustees (“Board”) considered the renewal of each existing Management Agreement between American Beacon Advisors, Inc. (the “Manager”) and the American Beacon Funds (the “Funds”) and each Investment Advisory Agreement between the Manager and a subadvisor (“Investment Advisory Agreements” and collectively with the Management Agreement, the “Agreements”). In preparation for the Board’s consideration to renew these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

          In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 10, 2010 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

          In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees considered, among other materials, responses by the Manager and the subadvisors to inquiries requesting:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and II of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed by each firm with performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• a profit/loss analysis of the firm and any actual or anticipated economies of scale in relation to the services it provides to each Fund;

• an analysis of compensation, including a comparison with fees charged to other clients for which similar services are provided, any proposed changes to the fee schedule and the effect of any fee waivers;

• a description of any payments by the subadvisors to the manager to support the Funds’ marketing efforts;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of any internal actions the firm has taken or anticipates taking in light of the current and projected decrease in revenues from prior years as a result of the current economic environment that may affect or are expected to affect the services performed for the Funds;

• a description of the scope of portfolio management services provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a discussion regarding the firm’s participation in “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions, including the firm’s methodology for obtaining best execution and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm receives, with respect to the Funds, other compensation, including any payment for order flow or ECN liquidity rebates

• a certification by the firm regarding the reasonable design of its compliance program;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

          In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

26

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisory Agreements

(Unaudited)

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fees and expense ratios for comparable mutual funds;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

          In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fees versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

          Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 10, 2010 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 25, 2010 meeting at which the Board considered the renewal of the Agreements. The Board did not identify any particular information that was most relevant to its consideration to renew the Management Agreement and each Investment Advisory Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal of the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to All Funds

          In determining whether to renew the Management Agreement and each Investment Advisory Agreement, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 25, 2010 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately. In each instance, the Board considered, among other things, the following factors: (1) the nature and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager and (to the extent provided) the subadvisors in rendering their services and their resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fees with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

          Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s generally favorable long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to increase assets in the Funds as demonstrated, for example, by the recent substantial increase in sales personnel; the Manager’s continuing efforts to add new series and share classes to enhance the Funds’ product line; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; and efforts made by the Manager to retain key employees and maintain staff levels.

          With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and their ability to continue to attract and retain qualified investment personnel. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

          Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions

27

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisory Agreements (Unaudited)

with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager and a subadvisor by Fund, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an individual Fund level and at an aggregate level for all Funds. The Board also considered that the Management Agreement for the Funds stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients is lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

          The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Funds. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

          In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee a subadvisor charges for any comparable client accounts. The Board gave less weight to profitability considerations or did not view this data as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fees.

          Based on the foregoing information, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager and the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Economies of Scale. In considering the reasonableness of the management and investment advisory fees, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates. The Board also noted the Manager’s representation that assets in the Funds’ complex increased during 2009, primarily due to market appreciation.

          In addition, the Board noted the Manager’s representation that, due to the existing low cost structure of the Funds, further breakpoints in the management fee would not be appropriate at this time. The Board also considered that the management fee for the Money Market Funds is amongst the lowest in the industry. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Fund.

          Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager’s relationship with the Funds and the money market portfolios continues to be a significant factor in attracting separate account assets for the Manager and the Manager’s use of the Large Cap Value Fund model for an actively managed exchange traded fund, managed by the Manager.

          In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted that the benefit plans of AMR Corporation, which are managed by the Manager, remain the largest or one of the largest shareholders in most of the Funds and the Manager’s representation that it provides services to each Trust at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that, with the exception of the Emerging Markets Fund, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal years ended October 31, and December 31, 2009.

          Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

          The performance comparisons below were made versus each Fund’s Lipper peer universe median. References to the Lipper expense universe below are to the universe of comparable mutual funds included in the analysis provided to the Trustees by Lipper.

28

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisory Agreements (Unaudited)

Additional Considerations and Conclusions with Respect to the Large Cap Value Fund

          In considering the renewal of the Management Agreement for the Large Cap Value Fund, the Trustees considered the following additional factors: (1) the Large Cap Value Fund outperformed the peer universe median for the one-, three-, five-, and ten-year periods ended March 31, 2010; and (2) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper universe.

          In considering the renewal of the Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, Inc. (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine’), Hotchkis and Wiley Capital Management, LLC (“Hotchkis”) and Metropolitan West Capital Management, LLC (“MetWest”), the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median for the one- , three-, five- and ten-year periods ended March 31, 2010; (2) Brandywine outperformed the peer universe median for the one-, five- and ten-year periods ended March 31, 2010 but underperformed for the three-year period; (3) Hotchkis outperformed the peer universe median for the one-and ten -year periods ended March 31, 2010, but underperformed for the three- and five-year periods; (4) MetWest outperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2010; (5) management’s explanation that Hotchkis’ underperformance was due, in part, to its over exposure to the financial sector, while its performance was superior in all other sectors; (6) Hochkis’ performance on the behalf of the Fund exceeded the Lipper Large Cap Value index for the twelve-month period ended March 31, 2010; (7) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (8) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (9) the Manager’s recommendation to continue to retain each subadvisor.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the Large Cap Value Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Large Cap Value Fund.

29

Trustees and Officers of the American Beacon Funds
(Unaudited)

          The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-three funds in the fund complex that includes the Trust, the American Beacon Master Trust, the American Beacon Mileage Funds, and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (73)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (1960-Present); Director, Clear Channel Communications (1984-2008); Trustee, CenterPoint Properties (1994- 2006); Member, Board of Trustees, Southern Methodist University; Member, Board of Visitors, M.D. Anderson Hospital; Board of Visitors, Zale/Lipshy Hospital; Trustee, American Beacon Mileage Funds (1996-present); Trustee, American Beacon Select Funds (1999-present); Trustee, American Beacon Master Trust (1996-present).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (66)	Trustee since 2004	Board Member, Baylor University Medical Center Foundation (1992-2004); Consultant, New River Canada Ltd. (mutual fund servicing company) (1998-2003); President and CEO, Allmerica Trust Company, NA (1996-1997); President and CEO, Fidelity Investments Southwest Company (1983-1995); Senior Vice President of Regional Centers, Fidelity Investments (1988-1995); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust Funds (2004-present).
Brenda A. Cline (49)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, Texas Christian University (1998-Present); Trustee, W.I. Cook Foundation, Inc. (d/b/a Cook Children’s Health Foundation) (2001-2006); Director, Christian Church Foundation (1999- 2007); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004-present).
Eugene J. Duffy (56)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994- Present); Director, Sunrise Bank of Atlanta (2008-Present); Chairman, Special Contributions Fund Board of Trustees, National Association for the Advancement of Colored People (2007-Present); Trustee, National Association for the Advancement of Colored People (2000-Present); Board of Visitors, Emory University (2006-Present); Trustee, Atlanta Botanical Garden (2006-Present); Board Member, Willie L. Brown Jr. Institute on Politics and Public Service (2001-Present); Chair, National Association of Securities Professionals (2000-2002); Deputy Chief Administrative Officer, City of Atlanta (1985-1990); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).

30

Trustees and Officers of the American Beacon Funds
(Unaudited)

	Position, Term of
	Office and
	Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
Thomas M. Dunning (68)	Trustee since 2008	Consultant, (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Director, Oncor Electric Delivery Company LLC (2007-present); Director, Baylor Health Care System Foundation (2007-present); State Vice Chair, State Fair of Texas (1987-present); Board Member, Southwestern Medical Foundation (1994-present); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
Richard A. Massman (67)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present), Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities). Chairman (2007-Present) and Director (2005-Present), The Dallas Opera Foundation; Chairman (2006-2009) and Director (2005 -Present), Temple Emanu-El Foundation; Trustee, Presbyterian Hospital Foundation (2006-Present); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004-present).
R. Gerald Turner (64) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas 75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, ChemFirst (1986-2002); Director, J.C. Penney Company, Inc. (1996-Present); Director, California Federal Preferred Capital Corp. (2001-2003); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Member, Salvation Army of Dallas Board of Directors; Member, Methodist Hospital Advisory Board; Co-Chair, Knight Commission on Intercollegiate Athletics; Trustee, American Beacon Mileage Funds (2001-present); Trustee, American Beacon Select Funds (2001-present); Trustee, American Beacon Master Trust (2001-present).
Paul J. Zucconi,CPA (70)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-present); Director, Titanium Metals Corporation (producer of titanium melted and mill products and sponge) (2002-present); Director, Torchmark Corporation (life and health insurance products) (2002-present); Director, National Kidney Foundation of North Texas (2003-Present); Director, Dallas Chapter of National Association of Corporate Directors (2004-Present); Partner, KPMG (1976-2001); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
OFFICERS
William F. Quinn** (62)	Executive Vice President from 2007 to 2008 and 2009 to Present President from 1987 to 2007 and 2008 to 2009 Trustee from 1987 to 2008	Executive Chairman (2009-Present), Chairman (2006-2009) and CEO (2006- 2007), President (1986-2006) and Director (2003- Present), American Beacon Advisors, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009); Director, Crescent Real Estate Equities, Inc.(1994-2007); Director, Pritchard, Hubble & Herr, LLC (investment advisor) (2001-2006); Director of Investment Committee, Southern Methodist University Endowment Fund (1996-Present); Member, Southern Methodist University Cox School of Business Advisory Board (1999-2002); Member, New York Stock Exchange Pension Manager Committee (1997-1998, 2000-2002, 2006-Present); Chairman (2007-Present) and Vice Chairman (2004-2007), Committee for the Investment of Employee Benefits; Director, United Way of Metropolitan Tarrant County (1988-2000, 2004-Present); Trustee, American Beacon Mileage Funds (1995-2008); Trustee, American Beacon Select Funds (1999-2008); Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-present); Director, American Beacon Global Funds plc (2007-2009).

31

Trustees and Officers of the American Beacon Funds
(Unaudited)

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
OFFICERS	Term One Year
Gene L. Needles, Jr. (55)	President 2009 to Present and Executive Vice President 2009 to Present	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2008-2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), Managing Director of Sales (2002-2003), National Sales Manager (1999-2002), and Regional Sales Manager (1993-1999), AIM Distributors.
Rosemary K. Behan (51)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney (1995-2004), Securities and Exchange Commission.
Brian E. Brett (50)	VP since 2004	Vice President, Director of Sales and Marketing, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment advisor) (1996-2004).
Wyatt Crumpler (44)	VP since 2007	Vice President, Asset Management, American Beacon Advisors, Inc. (2007-Present); Managing Director of Corporate Accounting (2004-2007), Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Michael W. Fields (56)	VP since 1989	Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-Present); Director American Beacon Global Funds SPC (2002-present); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (49)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.
Terri L. McKinney (47)	VP since 2009	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; Vice-President, Board of Trustees (2008-Present), Trustee (2006-2008) Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (35)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice-President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).
Christina E. Sears (39)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Senior Compliance Analyst, American Beacon Advisors, Inc. (1998-2004).

*	The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the Board may determine to grant one or more annual exemptions to this requirement.
**	Mr. Feld is deemed to be an “interested person” of the Trusts, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two fiscal years to the Manager and one or more of the Trust’s and Master Trust’s sub-advisors.

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33

Delivery of Documents

eDelivery is NOW AVAILABLE — Stop traditional mail delivery and receive your
shareholder reports and summary prospectus on-line. Sign up at
www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Summary Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go to www.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.

To obtain more information about the Fund:

By E-mail:
american_beacon.funds@ambeacon.com

On the Internet:
Visit our website at www.americanbeaconfunds.com

By Telephone:
Institutional, Y, Investor, Advisor and Retirement Classes
Call (800) 658-5811
AMR Class^SM
Call (800) 345-2345

By Mail:
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643

Availability of Quarterly Portfolio Schedules

In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available on the Funds’ website (www.americanbeaconfunds.com) approximately twenty days after the end of each month.

Availability of Proxy Voting Policy and Records

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website (www.americanbeaconfunds.com) and by calling 1-800-967 -9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967-9009.

Fund Service Providers:

Custodian	Transfer Agent	Independent Registered	Distributor
State Street Bank and	Boston Financial Data	Public Accounting	Foreside Fund Services,
Trust	Services	Firm	LLC
Boston, Massachusetts	Kansas City, Missouri	Ernst & Young LLP	Portland, Maine
		Dallas, Texas

This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus or Summary Prospectus.

American Beacon Funds and American Beacon Large Cap Value Fund are service marks of American Beacon Advisors, Inc.

AR 10/10
LV1010

About American Beacon Advisors

Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents

President’s Message		1
Market and Performance Overview		2
Schedule of Investments		8
Additional Information	Back Cover

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

Investing in the securities of small capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies.

American Beacon Funds October 31, 2010

Fellow Shareholders,

          Throughout the past 12 months, one theme prevailed: investments placed with experienced, forward-thinking managers can still benefit. Opportunity abounds for those with the foresight to know how to capitalize on changing market conditions. It’s no coincidence that this theme also goes to the heart of the American Beacon Funds investment philosophy.

          It’s a philosophy that has served shareholders in the American Beacon Small Cap Value Fund well. For the 12 months ended October 31, 2010 the Fund (Institutional Class) generated a 24.71% return. Please note that the recent growth rate in the stock market has helped to produce short-term increases that are not typical and may not continue in the future.

          While we keep a watchful eye on your investment in our funds, we also remain focused on seeking out new opportunities to help keep your financial goals on course. This is what guides the composition of American Beacon Funds’ product line-up. It is also what led to the addition of several new funds this past year: the American Beacon Zebra Large Cap and the Zebra Small Cap Equity Funds, which use a proprietary strategy to attempt to capture a unique source of equity return—the liquidity premium. We also recently added the American Beacon Evercore Small Cap Equity Fund, which relies on a fundamental bottom-up investment approach and is managed by the well-regarded Evercore Asset Management, LLC.

          Continuously searching for new ways to serve our fellow shareholders’ needs is our commitment to you, a commitment we summarize as: Oversight 360. Ours is a continuous commitment to cast a thoughtful and analytical eye over all the factors that influence our investments.

          We want to thank you for your continued investment in the American Beacon Funds. As you review the enclosed market overview, portfolio listings, and detailed financial data, please know that we remain dedicated to offering you both the level of superior service and knowledgeable investment management you’ve come to expect from us.

          To obtain further details about the American Beacon Funds family or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,
 

 

Gene L. Needles, Jr. 

President
American Beacon Funds 

Securities of these Funds may only be sold by offering each Funds’ Prospectus and Summary Prospectus. You should consider the investment objectives, risks, fees and expenses of any mutual fund carefully before investing. This and other information is available in each Funds’ Prospectus and Summary Prospectus which you may obtain at www.americanbeaconfunds.com or by calling 1-800-967-9009. Please read the Prospectus and Summary Prospectus carefully before investing. Distributed by Foreside Fund Services, LLC.

There is no guarantee that the Funds’ investment objective will be met. At times, certain securities held by the American Beacon Zebra Large Cap Equity and Small Cap Equity Funds may have limited marketability and may be difficult to sell. Investing in the securities of small and mid- capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Because the American Beacon Evercore Small Cap Equity Fund is a focused portfolio of fewer companies, the increase or decrease of the value of a single stock may have a greater impact on the Fund’s NAV and total return when compared to other diversified funds.

1

Domestic Equity Market Overview

October 31, 2010 (Unaudited)

          Extreme swings in investor sentiment and significant volatility in equity returns characterized the U.S. stock market’s performance during the past 12 months. Market returns were robust for the first several months of the year, only to be followed by a significant correction through the spring and summer months that was triggered by fears of a double-dip recession and concerns over the sovereign debt crisis in Europe. By August, many investors had seemingly grown despondent and sentiment towards equities reached extreme lows as the perceived safety of bonds drew increasing commitment.

          September’s history as the cruelest month combined with recession fears made equities look like dead money. A surprising thing happened on the way to the funeral, however, as equity markets rallied sharply for the month. They posted the best September return in 71 years and the third best return of any month over the past 10 years. An interesting aspect of the rally was the absence of any real catalyst.

          In the end, the S&P 500 returned 16.52% for 12 months ended October 31, 2010. Contributions to this performance were widespread, with most sectors finishing up in double digits.

Sector Results

          Consumer Discretionary, Industrials, Telecommunications and Materials stocks were among the strongest performers, while financials and energy were significant laggards. Continuing sluggishness in loan demand, a persistent stream of negative regulatory pronouncements out of Washington and the seemingly endless flow of mortgage problems tempered enthusiasm for the banking industry. Insurers were pressured by weak fixed income returns given the near zero interest rate environment, volatile returns in the equity market, and the specter of further delays in the recovery in real estate markets.

          The trend of Gross Domestic Product (“GDP”) growth slowed significantly throughout the year—from 5.0% in the fourth quarter of 2009 to 1.7% in the second quarter of 2010. Subpar growth persisted into the third quarter of 2010 as well.

Consumer Spending

          With growth at such a sluggish pace, consumer spending remained weak especially in light of deferred hiring by employers. Given these conditions, there is little reason to expect a resumption of normal economic growth until employment can show meaningful improvement. More and more, the strong GDP growth in the fourth quarter of 2009 and the first quarter of 2010 is looking like an inventory driven anomaly.

          Absent the change in inventories, real final sales grew at less than 1.5% over the past four quarters. This was extraordinarily weak for the first 12 months out of a severe recession. However, profit growth has been exceptional as businesses restrained their spending. Margins at many companies were at or above prior peaks. Corporate balance sheets were also very strong, as cash balances grew due to the reluctance to make large capital expenditures.

          Yet, jobs still hold the key to recovery. Job statistics have not been encouraging. Without significant growth in employment, consumer and business spending is likely to remain sluggish and the recovery in housing will be pushed farther into the future.

Limited Economic Stimulus

          Policymakers in Washington have made a concerted effort to jumpstart the economy, but the results have been limited at best. Now, the government is running out of ammunition as more than two-thirds of the fiscal stimulus budget has been spent and the Federal Reserve has already slashed interest rates to the bone. At the state and local government level, employment was maintained with Federal stimulus money in 2010, but the projected new political mix in Congress next year is not expected to continue that support. Our sub-advisors anticipate retrenchment in state and municipal employment and spending to be a headwind for the economy in the coming year.

          As for the overall market, it is inexpensive but it remains subject to economic uncertainty. The unemployment/underemployment figures are the highest since the 1930’s and the Federal Reserve has pushed short-term rates to zero without much to show for it. This implies a very fragile economic environment with a minimal cushion.

2

Domestic Equity Market Overview

October 31, 2010 (Unaudited)

          Meanwhile, bonds seem to be making a case for stocks. The monetary policies of the Federal Reserve appear to be designed to move investors into riskier alternatives, such as equities, by keeping bond interest rates at record lows. As investor interest returns to domestic stocks, our managers see a number of positives. As mentioned earlier, corporate balance sheets are quite strong and many companies are positioned to return significant amounts of cash to shareholders, both in the form of share repurchases and (most importantly) increased dividends. Many stocks have a dividend yield which exceeds the interest rate of 10-year Treasury bonds and yet still have the potential to grow returns further through both earnings and dividend growth. Also, most financial stocks are not currently paying any dividends. As we mentioned earlier, many of these financial companies are building significant amounts of excess capital which is likely to be used to restore dividend yields.

          Also encouraging is that aggressive cost-cutting during the recession formed lean businesses with tremendous operating leverage. As revenue growth has resurfaced—in fact, some 90% of companies saw revenue gains in the third quarter of 2010—it has created an earnings tailwind. Profit margins on incremental revenue have been more than three times profit margins on base revenue. This is providing the overall market with remarkable operating leverage.

          Our managers continue to find compelling valuation opportunities given that the market remains nearly 20% below its 2007 peak. Though less extraordinary than they were in early 2009, these valuation opportunities remain attractive, particularly relative to fixed income alternatives. There appear to be fewer valuation spreads at the sector level, but many at the stock level, making it more of a stock-picker’s market than a cyclical one. This is a prime environment for active equity managers in search of bottom-up valuation opportunities.

3

Performance Overview
American Beacon Small Cap Value Fund^SM

October 31, 2010 (Unaudited)

          The Institutional Class of the Small Cap Value Fund returned 24.71% for the twelve months ended October 31, 2010, outperforming the Russell 2000^® Value Index (the “Index”) return of 24.43% and the Lipper Small-Cap Value Funds Index return of 23.65% for the same period.

Comparison of Change in Value of a $10,000 Investment
For the Period from 10/31/00 through 10/31/10

										Value of
	Annualized Total Returns									$10,000
	Periods Ended 10/31/10									10/31/00-
	1 Year			5 Years			10 Years			10/31/10
Institutional Class(1,8)		24.71	%		3.15	%		11.20	%	$	28,921
Y Class(1,2,8)		24.44	%		3.08	%		11.16	%		28,819
Investor Class(1,8)		24.30	%		2.86	%		10.88	%		28,095
Advisor Class(1,3,8)		24.05	%		2.63	%		10.68	%		27,567
Retirement Class (1,4,8)		23.82	%		2.56	%		10.64	%		27,478
A Class with sales charge (1,5,8)		17.05	%		1.64	%		10.22	%		26,473
A Class without sales charge(1,5,8)		24.22	%		2.85	%		10.87	%		28,075
C Class with sales charge (1,6,8)		23.01	%		2.81	%		10.86	%		28,027
C Class without sales charge (1,6,8)		24.01	%		2.81	%		10.86	%		28,027
AMR Class(1,8)		25.00	%		3.41	%		11.50	%		29,696
Lipper Small-Cap Value Funds Index(7)		23.65	%		3.26	%		8.87	%		23,392
Russell 2000 Value Index(7)		24.43	%		2.02	%		8.17	%		21,919

1.	Please note that the recent growth rate in the stock market has helped to produce short-term returns that are not typical and may not continue in the future. Performance shown is historical and may not be indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800- 967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.
2.	Fund performance for the five-year and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/00 up to 8/3/09, the inception date of the Y Class. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/00.
3.	Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/00 up to 5/1/03, and the returns of the Advisor Class since its inception. Expenses of the Advisor Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/00. A portion of the fees charged to the Advisor Class of the Fund was waived through 2004. Performance prior to waiving fees was lower than the actual returns shown for periods through 2004.
4.	Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 up to 5/1/03 and the Advisor Class from 5/1/03 up to 5/1/09, the inception date of the Retirement Class, and the returns of the Retirement Class since its inception. Expenses of the Retirement Class are higher than those of the Advisor and Investor Classes. As a result, total returns shown may be higher than they would have been had the Retirement Class been in existence since 10/31/00.
5.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/00. The maximum sales charge for A Class is 5.75%.
6.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/00. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.
7.	Russell 2000 Value Index is a registered trademark of Frank Russell Company. The Russell 2000 Value Index is an unmanaged index of those stocks in the Russell 2000 Index with lower price-to-book ratios and lower forecasted growth values. The Lipper Small-Cap Value Funds Index tracks the results of the 30 largest mutual funds in the Lipper Small-Cap Value Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.
8.	The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, Retirement, A, C, and AMR Class shares was 0.85%, 1.12%, 1.16%, 1.35%, 1.54%, 1.35%, 2.10%, and 0.60%, respectively. The expense ratios above may vary

4

Performance Overview
American Beacon Small Cap Value Fund^SM

October 31, 2010 (Unaudited)

from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

          The Fund outperformed the Index by generating excess performance entirely through sector allocation, as stock selection detracted value relative to the Index. The Fund’s underweight in the Financials sector added value through sector allocation. Overweights in the Consumer Discretionary, Health Care, and Information Technology sectors also generated excess returns.

          The Fund’s poor performance in stock selection resulted primarily from its holdings in the Industrials and Financials sectors. For the period the Fund owned the securities, Corinthian Colleges (down 61.7%), FTI Consulting (down 21.7%), and Career Education (down 28.6%) had the largest negative impact to performance in the Industrials sector. In the Financials sector, Synovus Financial (down 9.8%), Wilmington Trust (down 55.8% for the period the Fund owned the security), and Investment Technology Group (down 34.0%) detracted the most relative value. Good stock selection in the Health Care and Materials sectors added value to performance. Endo Pharmaceutical (up 64.9%) and AmeriGroup (up 86.1%) were the largest contributors in the Health Care sector. Individual holdings in the Materials sector that had the largest impact on the Fund’s performance were Carpenter Technology (up 89.5%) and RPM International (up 22.9%).

          The sub-advisors continue to focus on uncovering investment opportunities through stock selection that should benefit the Fund’s performance over the longer term.

Top Ten Holdings

	% of
	Net Assets
Valassis Communications, Inc.		1.0	%
Tidewater, Inc.		0.9	%
Terex Corp.		0.8	%
Rent-A-Center, Inc.		0.8	%
Aspen Insurance Holdings Ltd.		0.8	%
Vishay Intertechnology, Inc.		0.8	%
Portland General Electric Co.		0.7	%
AMERIGROUP Corp.		0.7	%
PolyOne Corp.		0.7	%
Great Plains Energy, Inc.		0.7	%

Sector Allocation

	% of Equities
Financials		25.1	%
Consumer Discretionary		16.9	%
Information Technology		14.7	%
Industrials		14.5	%
Health Care		9.1	%
Materials		6.1	%
Utilities		6.0	%
Energy		5.3	%
Consumer Staples		2.1	%
Telecommunication Services		0.2	%

5

Fund Expenses
American Beacon Small Cap Value Fund^SM

October 31, 2010 (Unaudited)

Fund Expense Example

          As a shareholder of the Fund, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

          The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2010 through October 31, 2010.

Actual Expense

          The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

          The “Hypothetical” lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

          You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by the Fund. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.

	Beginning		Ending
	Account		Account		Expenses Paid
	Value		Value		During Period*
	5/1/10		10/31/10		5/1/10-10/31/10
Institutional Class
Actual	$	1,000.00	$	970.09	$	3.97
Hypothetical#	$	1,000.00	$	1,021.17	$	4.08
Y Class
Actual	$	1,000.00	$	969.43	$	4.52
Hypothetical#	$	1,000.00	$	1,020.62	$	4.63
Investor Class
Actual	$	1,000.00	$	968.28	$	5.80
Hypothetical#	$	1,000.00	$	1,019.31	$	5.96
Advisor Class
Actual	$	1,000.00	$	967.62	$	6.45
Hypothetical#	$	1,000.00	$	1,018.65	$	6.61
Retirement Class
Actual	$	1,000.00	$	966.34	$	7.63
Hypothetical#	$	1,000.00	$	1,017.44	$	7.83
A Class**
Actual	$	1,000.00	$	1,003.46	$	5.87
Hypothetical#	$	1,000.00	$	1,017.13	$	5.94
C Class**
Actual	$	1,000.00	$	1,111.39	$	3.64
Hypothetical#	$	1,000.00	$	1,004.84	$	3.52
AMR Class
Actual	$	1,000.00	$	971.55	$	2.78
Hypothetical#	$	1,000.00	$	1,022.38	$	2.85

*	Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.80%, 0.91%, 1.17%, 1.30%, 1.54%, 0.56%, 1.28% and 2.10% for the Institutional, Y, Investor, Advisor, Retirement, AMR, A and C Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half year period.
#	5% return before expenses.
**	Beginning account values for A and C Classes are their inception dates of 5/17/10 and 9/1/10, respectively. Expenses are equal to the Classes annualized ratio for the period multiplied by the average account value for the period multiplied by the number derived by dividing the number of days in the period (168 and 61, respectively) by the days in the year (365).

6

American Beacon Small Cap Value Fund^SM
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of
American Beacon Small Cap Value Fund:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of the American Beacon Small Cap Value Fund (one of the funds constituting the American Beacon Funds) (collectively, the “Fund”), as of October 31, 2010, and the related statement of operations for the year then ended, the statement of changes of net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s 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 Fund’s 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 October 31, 2010, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers 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 the American Beacon Small Cap Value Fund at October 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas
December 23, 2010

7

American Beacon Small Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
COMMON STOCK — 95.45%
CONSUMER DISCRETIONARY — 16.10%
Auto Components — 1.51%
American Axle & Manufacturing Holdings, Inc.*		1,101,000		10,151
Cooper Tire & Rubber Co.		125,600		2,463
Gentex Corp.		970,900		19,399
Goodyear Tire & Rubber Co.*		795,900		8,134
Superior Industries International, Inc.		53,500		960
Westinghouse Air Brake Technologies Corp.		5,400		253
				41,360
Automobiles — 0.17%
Thor Industries, Inc.		143,920		4,532
Commercial Services & Supplies — 0.10%
Viad Corp.		140,670		2,808
Distributors — 0.18%
Brightpoint, Inc.*		664,600		4,978
Hotels, Restaurants & Leisure — 1.06%
Ameristar Casinos, Inc.		218,100		3,900
Bob Evans Farms, Inc.		52,400		1,504
Boyd Gaming Corp.*		177,130		1,472
Brinker International, Inc.		8,525		158
CEC Entertainment, Inc.*		36,940		1,226
Cracker Barrel Old Country Store, Inc.		77,311		4,166
Domino’s Pizza, Inc.*		110,500		1,640
Gaylord Entertainment Co.* †		78,339		2,612
International Speedway Corp.		5,950		136
Jack in the Box, Inc.*		249,540		5,779
Lakes Entertainment, Inc.*		150,800		353
Life Time Fitness, Inc.*		2,664		96
Orient-Express Hotels Ltd.*		167,900		2,126
Papa John’s International, Inc.*		9,400		243
Ruby Tuesday, Inc.*		79,844		966
Sonic Corp.*		18,500		164
Speedway Motorsports, Inc.		152,210		2,329
				28,870
Household Durables — 1.62%
American Greetings Corp.		74,500		1,443
Cavco Industries, Inc.*		52,889		1,676
Ethan Allen Interiors, Inc.		284,780		4,320
Furniture Brands International, Inc.*		891,150		4,465
Helen of Troy Ltd.*		71,123		1,824
Lancaster Colony Corp.		98,390		4,908
M.D.C. Holdings, Inc.		144,950		3,732
Mohawk Industries, Inc.*		16,400		940
National Presto Industries, Inc.		14,600		1,634
Ryland Group, Inc.		337,870		5,061
Tupperware Corp.		31,600		1,416
Whirlpool Corp.		169,800		12,877
				44,296
Internet & Catalog Retail — 0.06%
Insight Enterprises, Inc.*		86,700		1,311

	Shares		Value
			($000)
School Specialty, Inc.*		14,500		194
				1,505
Leisure Equipment & Products — 0.59%
Brunswick Corp.		516,200		8,166
Callaway Golf Co.		469,267		3,229
JAKKS Pacific, Inc.*		59,575		1,123
RC2 Corp.*		176,300		3,720
				16,238
Media — 1.97%
Belo Corp.*		172,200		997
Cinemark Holdings, Inc.		192,800		3,384
Gannett Company, Inc.		365,700		4,334
Harte Hanks, Inc.		114,887		1,388
John Wiley & Sons, Inc.		118,500		5,114
Meredith Corp.		178,840		6,072
Scholastic Corp.		134,400		3,958
Sinclair Broadcast Group, Inc.*		92,500		739
Valassis Communications, Inc.*		847,400		27,963
				53,949
Multiline Retail — 1.40%
99 Cents Only Stores*		503,100		7,758
Big Lots, Inc.*		504,700		15,832
BJ’s Wholesale Club, Inc.*		128,730		5,372
Dillards, Inc.†		157,700		4,023
Saks, Inc.* †		487,600		5,432
				38,417
Specialty Retail — 6.19%
Aaron Rents, Inc.†		279,500		5,271
Aéropostale, Inc.*		172,200		4,198
America’s Car-Mart, Inc.*		11,150		297
Bebe Stores, Inc.		537,300		3,525
Big 5 Sporting Goods Corp.		172,180		2,328
Buckle, Inc.†		95,900		2,790
Cabela’s, Inc.* †		925,400		17,156
Cato Corp.		45,100		1,193
Childrens Place Retail Stores, Inc.*		103,990		4,582
Collective Brands, Inc.*		464,900		7,127
Copart, Inc.*		10,500		356
DG FastChannel, Inc.*		394,450		9,289
Dress Barn, Inc.*		147,300		3,379
DSW, Inc.* †		28,200		938
Finish Line, Inc.		96,300		1,473
Foot Locker, Inc.		774,580		12,339
Genesco, Inc.*		43,400		1,422
Group 1 Automotive, Inc.* †		60,100		2,119
Gymboree Corp.*		144,400		9,395
Hanesbrands, Inc.*		5,900		146
Interline Brands, Inc.*		16,200		325
Jos. A. Bank Clothiers, Inc.*		47,950		2,091
Men’s Wearhouse, Inc.		660,100		16,133
OfficeMax, Inc.*		599,933		10,619
Pep Boys, Inc.		98,000		1,146
RadioShack Corp.		627,900		12,640
Regis Corp.		113,575		2,323
Rent-A-Center, Inc.*		888,748		22,342
Sonic Automotive, Inc.		39,600		432

See accompanying notes

8

American Beacon Small Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Stage Stores, Inc.		120,820		1,611
Talbots, Inc.*		438,140		4,285
Williams-Sonoma, Inc.		184,484		5,972
				169,242
Textiles & Apparel — 1.25%
Carter’s, Inc.*		119,200		2,968
Deckers Outdoor Corp.*		31,900		1,853
G-III Apparel Group Ltd.*		25,700		678
Quiksilver, Inc.*		1,559,300		6,502
Skechers U.S.A., Inc.*		423,100		8,226
The Jones Group, Inc.		483,525		6,993
Timberland Co.*		196,630		4,125
True Religion Apparel, Inc.*		47,100		963
Unifirst Corp.		30,800		1,418
Volcom, Inc.*		13,800		237
Wolverine World Wide, Inc.		5,850		170
				34,133
Total Consumer Discretionary				440,328
CONSUMER STAPLES — 2.01%
Food & Drug Retailing — 0.54%
Casey’s General Stores, Inc.		81,776		3,390
Central European Distribution Corp.*		6,375		159
Flowers Foods, Inc.		169,400		4,317
Nash Finch Co.		25,450		1,066
Spartan Stores, Inc.		248,000		3,708
Winn-Dixie Stores, Inc.*		327,800		2,196
				14,836
Food Products — 1.27%
Corn Products International, Inc.		4,200		179
Del Monte Foods Co.		373,475		5,356
Fresh Del Monte Produce, Inc.*		113,400		2,510
Hain Celestial Group, Inc.*		224,660		5,556
Herbalife Ltd.		107,600		6,871
J&J Snack Foods Corp.		3,950		169
Lance, Inc.		185,150		4,210
Overhill Farms, Inc.*		316,300		1,645
Ralcorp Holdings, Inc.*		6,300		391
Sanderson Farms, Inc.		66,245		2,781
Smithfield Foods, Inc.*		307,100		5,144
				34,812
Household Products — 0.03%
Central Garden and Pet Co.*		83,300		870
Tobacco — 0.17%
Universal Corp.		106,939		4,432
Vector Group Ltd.†		9,485		177
				4,609
Total Consumer Staples				55,127
ENERGY — 5.08%
Energy Equipment & Services — 3.47%
Atwood Oceanics, Inc.*		287,975		9,362
Bristow Group, Inc.*		286,000		11,091
Cal Dive International, Inc.*		592,410		2,998
Cobalt International Energy, Inc.*		562,300		5,201
Exterran Holdings, Inc.*		116,900		2,942
Matrix Service Co.*		301,149		2,734

	Shares		Value
			($000)
Oceaneering International, Inc.*		3,900		241
Oil States International, Inc.*		222,100		11,354
Patterson-UTI Energy, Inc.		107,150		2,080
Rowan Companies, Inc.*		193,800		6,376
SEACOR Holdings, Inc.*		59,750		5,661
Superior Energy Services, Inc.*		5,925		164
Tesco Corp.*		183,633		2,325
Tetra Technologies, Inc.*		57,100		557
Tidewater, Inc.		534,360		24,651
Unit Corp.*		188,905		7,411
				95,148
Oil & Gas — 1.61%
Comstock Resources, Inc.*		206,900		4,624
Contango Oil & Gas Co.*		3,600		189
CVR Energy, Inc.*		183,200		1,744
EXCO Resources, Inc.		533,600		7,913
Forest Oil Corp.*		5,225		161
Frontier Oil Corp. *		335,590		4,447
Frontline Ltd.		4,162		120
Holly Corp.		245,500		8,035
Penn Virginia Corp.		281,510		4,172
Petroleum Development Corp.*		36,000		1,124
SM Energy Co.		2,624		109
Stone Energy Corp.*		640,300		10,008
Tesoro Corp. *		12,200		158
W&T Offshore, Inc.		17,025		185
Western Refining, Inc.* †		142,300		946
				43,935
Total Energy				139,083
FINANCIALS — 23.87%
Banks — 6.90%
Associated Banc-Corp.		988,520		12,525
Astoria Financial Corp.		201,300		2,500
BancorpSouth, Inc.		8,250		109
Bank of Hawaii Corp.		3,350		145
Bank of the Ozarks, Inc.		275,350		10,466
Boston Private Financial Holdings, Inc.		140,600		803
Brookline Bancorp, Inc.		348,720		3,397
Cathay General Bancorp.		180,100		2,449
Citizens Republic Bancorp, Inc.*		3,768,090		2,600
City National Corp.		100,383		5,177
Columbia Banking System, Inc.		146,322		2,665
Community Bank System, Inc.†		28,300		661
CVB Financial Corp.†		477,753		3,636
Dime Community Bancshares, Inc.		3,600		53
F.N.B. Corp.		211,800		1,800
First Commonwealth Financial Corp.		191,900		1,117
First Financial Bancorp		579,200		9,754
First Financial Holdings, Inc.		109,600		1,145
First Horizon National Corp.*		574,581		5,798
First Interstate Bancsystem, Inc.		296,000		3,836
First Midwest Bancorp, Inc.		138,800		1,487
First Niagara Financial Group, Inc.		165,700		1,964
FirstMerit Corp.		9,125		157
Fulton Financial Corp.		390,350		3,646
Glacier Bancorp, Inc.		273,670		3,558

See accompanying notes

9

American Beacon Small Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Hancock Holding Co.		217,200		6,824
Home Federal Bancorp, Inc.		171,000		2,059
Iberiabank Corp.		289,700		15,078
International Bancshares Corp.		124,502		2,133
MB Financial, Inc.		96,000		1,429
National Penn Bancshares, Inc.		658,037		4,271
Northwest Bancshares, Inc.		227,600		2,581
Old National Bancorp		334,920		3,168
PacWest Bancorp*		161,100		2,808
Popular, Inc.*		1,315,500		3,591
PrivateBancorp, Inc.		132,000		1,556
Provident Financial Services, Inc.		389,820		4,927
Republic Bancorp, Inc.		25,200		515
Southwest Bancorp, Inc. *		144,780		1,433
Sterling Bancshares, Inc.		406,160		2,189
Susquehanna Bancshares, Inc.		243,200		1,921
SVB Financial Group*		145,740		6,316
Synovus Financial Corp.		6,391,300		13,804
Territorial Bancorp, Inc.		6,700		114
Umpqua Holdings Corp.		183,500		2,019
United Community Banks, Inc.*		755,000		1,480
Washington Federal, Inc.		379,380		5,702
Washington Trust Bancorp, Inc.		29,890		600
Webster Financial Corp.		801,110		13,715
WesBanco, Inc.		35,900		596
Wilmington Trust Corp.		607,547		4,320
Wintrust Financial Corp.		57,500		1,722
Zions Bancorporation		12,000		248
				188,567
Diversified Financials — 4.83%
Apollo Investment Corp.		16,075		177
Ares Capital Corp.		549,200		9,194
CapitalSource, Inc.		598,000		3,654
Cash America International, Inc.		363,575		12,809
CoreLogic, Inc. *		353,960		6,219
Credit Acceptance Corp.* †		111,050		6,531
Duff & Phelps Corp.		193,150		2,693
E*Trade Financial Corp.*		475,829		6,804
Ezcorp, Inc.*		891,174		19,143
Fifth Street Finance Corp.		911,300		10,753
Investment Technology Group, Inc.*		614,924		8,757
Janus Capital Group, Inc.		693,500		7,323
KAR Auction Services, Inc.*		12,300		158
Kirkland’s, Inc.*		289,550		3,894
Knight Capital Group, Inc.*		511,150		6,660
MF Global Holdings Ltd.*		273,700		2,143
National Financial Partners Corp.*		76,700		1,058
Nelnet, Inc.		172,500		3,876
Piper Jaffray Co.*		103,477		3,205
Raymond James Financial, Inc.		18,350		518
Symetra Financial Corp.		1,119,100		12,366
Waddell & Reed Financial, Inc.		6,625		193
Walter Investment Management Corp.‡		138,600		2,539
World Acceptance Corp.* †		37,600	1,622
				132,289

	Shares		Value
			($000)
Insurance — 9.33%
Allied World Assurance Co. Holdings Ltd.		97,175		5,559
Alterra Capital Holdings Ltd.		104,100		2,103
American Equity Investment Life Holding Co.		196,100		2,128
American Financial Group, Inc.		221,965		6,788
AmTrust Financial Services, Inc.		223,392		3,344
Argo Group International Holdings Ltd.		275,300		9,550
Aspen Insurance Holdings Ltd.		760,500		21,574
CNA Surety Corp.*		96,320		1,854
CNO Financial Group, Inc.*		1,785,300		9,712
Delphi Financial Group, Inc.		504,200		13,649
Employers Holdings, Inc.		508,000		8,225
Endurance Specialty Holdings Ltd.		134,500		5,568
Enstar Group Ltd.*		14,003		1,123
FBL Financial Group, Inc.		13,300		348
First American Financial Corp.		438,420		6,155
Flagstone Reinsurance Holdings SA		210,600		2,296
Global Indemnity Plc*		610,421		10,304
Hanover Insurance Group, Inc.		294,755		13,338
HCC Insurance Holdings, Inc.		246,470		6,527
Horace Mann Educators Corp.		107,000		2,000
Infinity Property and Casualty Corp.		47,398		2,453
Maiden Holdings Ltd.		113,700		870
Mercury General Corp.		112,700		4,787
MGIC Investment Corp.*		1,513,839		13,352
Montpelier Re Holdings Ltd.		114,408		2,096
National Western Life Insurance Co.		2,100		336
Navigators Group, Inc.*		198,300		9,116
Old Republic International Corp.		198,530		2,621
OneBeacon Insurance Group Ltd.		44,900		632
Platinum Underwriters Holdings Ltd.		119,400		5,140
Presidential Life Corp.		95,200		911
ProAssurance Corp.*		66,800		3,840
Protective Life Corp.		363,510		8,713
Reinsurance Group of America, Inc.		243,000		12,167
RLI Corp.		38,600		2,216
Safety Insurance Group, Inc.		41,100		1,910
Selective Insurance Group, Inc.		115,700		1,958
StanCorp Financial Group, Inc.		412,650		17,703
Torchmark Corp.		185,700		10,637
Tower Group, Inc.		275,900		6,699
Unitrin, Inc.		114,100		2,773
Universal American Corp. *		387,900		6,237
White Mountains Insurance Group Ltd.		18,074		5,769
				255,081
Real Estate — 2.81%
Alexandria Real Estate Equities, Inc.‡ .		621		46
Anworth Mortgage Asset Corp.‡		22,375		157
BioMed Realty Trust, Inc.‡		334,430		6,137
Brandywine Realty Trust‡		308,090		3,688
CapLease, Inc.‡		943,100		5,527
CBL & Associates Properties, Inc.† ‡		396,025		6,210
CommonWealth REIT‡		6,656		169
DCT Industrial Trust, Inc.‡		901,600		4,517
DiamondRock Hospitality Co.‡		570,590		6,037

See accompanying notes

10

American Beacon Small Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Entertainment Properties Trust‡		160,690		7,429
Getty Realty Corp.‡		62,450		1,780
Hospitality Properties Trust‡		7,425		169
Inland Real Estate Corp.‡		492,870		4,283
LaSalle Hotel Properties‡		241,540		5,722
Lexington Realty Trust‡		929,550		7,232
Medical Properties Trust, Inc.‡		16,010		179
MI Developments, Inc.		448,600		6,509
National Health Investors, Inc.‡		105,970		4,906
Omega Healthcare Investors, Inc.‡		214,340		4,930
Pennsylvania Real Estate Investment Trust*		1,786		25
Urstadt Biddle Properties, Inc.‡		68,700		1,320
				76,972
Total Financials				652,909
HEALTH CARE — 8.67%
Biotechnology — 0.22%
Celera Corp.*		108,900		621
Charles River Laboratories International, Inc.*		14,613		479
Cubist Pharmaceuticals, Inc.*		109,100		2,539
Viropharma, Inc.*		143,800		2,353
				5,992
Health Care Equipment & Supplies — 1.41%
Bio-Rad Laboratories, Inc.*		3,000		272
CONMED Corp.*		25,900		570
Haemonetics Corp.*		129,160		7,059
Hillenbrand, Inc.		115,200		2,476
ICU Medical, Inc.*		3,600		131
Kensey Nash Corp.*		130,270		3,512
Kinetic Concepts, Inc.*		405,700		15,429
STERIS Corp.		268,215		9,178
				38,627
Health Care Providers & Services — 5.75%
Air Methods Corp.*		89,050		3,642
Alere, Inc.*		5,491		162
Almost Family, Inc.*		181,500		6,267
Amedisys, Inc.* †		16,100		410
AMERIGROUP Corp.*		476,230		19,873
AMN Healthcare Services, Inc.*		33,800		179
Amsurg Corp.*		8,525		154
Assisted Living Concepts, Inc.*		57,230		1,846
Centene Corp.*		543,500		12,131
Community Health Systems, Inc.*		67,500		2,030
Covance, Inc.*		9,400		442
Coventry Health Care, Inc.*		46,100		1,080
Gentiva Health Services, Inc.*		627,100		14,599
Hanger Orthopedic Group, Inc.*		55,700		1,043
Health Management Associates, Inc.*		32,000		256
Health Net, Inc.*		206,000		5,539
HealthSouth Corp.*		746,400		13,502
Healthspring, Inc.*		112,450		3,282
LifePoint Hospitals, Inc.*		539,380		18,296
Magellan Health Services, Inc.*		264,700		12,706
MAXIMUS, Inc.		191,000		11,580
Mednax, Inc.*		114,485		6,779

	Shares		Value
			($000)
Molina Healthcare, Inc.*		48,900		1,267
Omnicare, Inc.		195,200		4,708
Omnicell, Inc.*		276,240		3,859
Owens & Minor, Inc.		5,700		162
Parexel International Corp.*		219,200		4,713
RehabCare Group, Inc.*		277,310		6,165
Triple-S Management Corp.*		47,000		793
				157,465
Pharmaceuticals — 1.29%
Endo Pharmaceuticals Holdings, Inc.*		518,150		19,037
Impax Laboratories, Inc.*		117,300		2,210
King Pharmaceuticals, Inc.*		222,700		3,149
Medicis Pharmaceutical Corp.		283,300		8,428
Par Pharmaceutical Cos., Inc.*		72,000		2,341
				35,165
Total Health Care				237,249
INDUSTRIALS — 13.84%
Aerospace & Defense — 0.90%
Alliant Techsystems, Inc.*		2,400		183
Spirit Aerosystems Holdings, Inc.*		483,730		10,468
Triumph Group, Inc.		130,000		10,867
World Fuel Services Corp.		113,600		3,207
				24,725
Airlines — 0.06%
Aircastle Ltd.		164,669		1,517
Building Products — 1.30%
Apogee Enterprises, Inc.		63,457		666
Armstrong World Industries, Inc.*		147,140		6,143
Crane Co.		186,400		7,132
Drew Industries, Inc.*		68,410		1,441
Griffon Corp.*		144,551		1,704
Insituform Technologies, Inc.*		400,300		8,646
Simpson Manufacturing Co., Inc.		371,625		9,878
				35,610
Commercial Services & Supplies — 5.93%
Administaff, Inc.		212,800		5,577
Atlas Air Worldwide Holdings, Inc.*		194,320		10,155
Brink’s Co.		272,815		6,438
Clean Harbors, Inc.*		85,498		6,028
Convergys Corp.*		263,200		2,979
Con-way, Inc.		505,000		16,669
Corinthian Colleges, Inc.* †		716,000		3,738
CSG Systems International, Inc.*		102,600		1,995
Deluxe Corp.		124,600		2,547
Ennis, Inc.		88,500		1,597
FTI Consulting, Inc.*		280,270		9,938
G&K Services, Inc.		35,220		871
Geo Group, Inc.*		6,850		176
Heidrick & Struggles International, Inc.		402,710		8,650
Hudson Highland Group, Inc.*		630,300		2,219
Kelly Services, Inc.*		149,888		2,226
Korn/Ferry International*		550,860		9,712
Layne Christensen Co.*		40,100		1,120
Manpower, Inc.		122,600		6,710
McGrath Rentcorp		123,508		3,126

See accompanying notes

11

American Beacon Small Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Mobile Mini, Inc.*		623,100		10,861
PHH Corp.*		600,500		11,571
Pre-Paid Legal Services, Inc.* †		18,528		1,115
Resources Connection, Inc.		178,327		2,887
Schawk, Inc.		13,300		258
Steelcase, Inc.†		502,142		4,223
Team, Inc.*		120,754		2,396
Tetra Tech, Inc.*		139,540		2,939
United Stationers, Inc.*		114,000		6,407
Waste Connections, Inc.		138,340		5,636
Weight Watchers International, Inc.		224,400		7,515
Wright Express Corp.*		110,400		4,163
				162,442
Construction & Engineering — 0.97%
Comfort Systems USA, Inc.		711,375		8,145
EMCOR Group, Inc.*		492,700		12,736
Granite Construction, Inc.		237,160		5,735
				26,616
Diversified Manufacturing — 0.01%
Barnes Group, Inc.		9,350		170
Electrical Equipment — 1.01%
AMETEK, Inc.		3,700		200
EnerSys*		6,750		178
General Cable Corp.*		6,350		177
GrafTech Int’l Ltd.*		10,350		170
GT Solar International, Inc.* †		277,400		2,283
Hubbell, Inc.		147,000		7,941
Regal-Beloit Corp.		189,500		10,936
Thomas & Betts Corp.*		87,270		3,801
Vishay Precision Group, Inc.*		108,414		1,843
				27,529
Industrial Conglomerates — 0.25%
Chemed Corp.		2,700		159
GATX Corp.		186,650		5,909
Teleflex, Inc.		2,575		144
US Ecology, Inc.		42,160		684
				6,896
Machinery — 2.51%
Astec Industries, Inc.*		155,210		4,574
Briggs & Stratton Corp.		425		7
Ceradyne, Inc.*		52,200		1,243
Columbus McKinnon Corp.*		126,710		2,225
Esterline Technologies Corp.*		165,475		10,000
John Bean Technologies Corp.		64,300		1,100
Miller Industries, Inc.		231,100		3,111
Mueller Industries, Inc.		250,970		7,379
Oshkosh Corp.*		286,400		8,452
Reliance Steel & Aluminum Co.		26,300		1,101
RSC Holdings, Inc.*		353,340		2,855
Terex Corp.*		1,032,100		23,170
Trinity Industries, Inc.		147,500		3,353
				68,570
Marine — 0.72%
Diana Shipping, Inc.*		11,375		155
Genco Shipping & Trading Ltd.* †		619,300		10,250
Gulfmark Offshore, Inc.*		49,062		1,453

	Shares			Value
				($000)
Kirby Corp.*		181,100			7,785
					19,643
Road & Rail — 0.18%
Forward Air Corp.		9,900			266
Landstar System, Inc.		5,400			203
Marten Transport Ltd.		95,270			2,024
Ryder System, Inc.		3,375			148
Saia, Inc.*		165,800			2,400
					5,041
Total Industrials					378,759
INFORMATION TECHNOLOGY — 14.03%
Communications Equipment — 1.88%
Anixter International, Inc.		3,000			161
Arris Group, Inc.*		1,187,711			11,058
Atheros Communications, Inc.*		69,560			2,159
Black Box Corp.		385,000			12,782
Brocade Communications Systems, Inc.*		44,100	��		279
CommScope, Inc.*		5,600			177
InterDigital, Inc.*		512,700			17,211
Plantronics, Inc.		18,725			672
Sonus Networks, Inc.*		1,213,137			3,773
Tekelec, Inc.*		243,880			3,175
					51,447
Computers & Peripherals — 0.96%
Avid Technology, Inc.*		303,030			3,824
Electronics for Imaging, Inc.*		355,300			4,864
Hypercom Corp.*		1,036,300			6,176
Lexmark International, Inc.*		147,575			5,612
Mercury Computer Systems, Inc.*		351,300			5,565
Synaptics, Inc.* †		5,525			149
					26,190
Electronic Equipment & Instruments — 4.14%
Arrow Electronics, Inc.*		225,400			6,674
AVX Corp.		262,000			3,757
Benchmark Electronics, Inc.*		395,500			6,498
Diebold, Inc.		495,670			15,192
Ingram Micro, Inc.*		779,200			13,761
Jabil Circuit, Inc.		30,550			469
Littelfuse, Inc.*		394,200			16,726
Methode Electronics, Inc.		754,800			7,012
Multi-Fineline Electronix, Inc.*		43,250			1,059
Plexus Corp.*		354,700			10,765
Tech Data Corp.*		239,600			10,300
Vishay Intertechnology, Inc.*		1,886,500			21,318
					113,531
Internet Software & Services — 1.07%
DealerTrack Holdings, Inc.*		15,900			307
EarthLink, Inc.		478,850			4,305
Ebix, Inc.* †		322,550			7,967
InterActiveCorp*		427,600			11,930
Websense, Inc.*		238,440			4,797
					29,306
IT Consulting & Services — 1.61%
Broadridge Financial Solutions, Inc.		246,427			5,421
CACI International, Inc.*		226,300			11,342

See accompanying notes

12

American Beacon Small Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
ManTech International Corp.*		218,900		8,583
Ness Technologies, Inc.*		610,800		2,944
SYNNEX Corp.*		539,700		15,674
				43,964
Semiconductor Equipment & Products — 1.87%
Amkor Technology, Inc.* †		334,900		2,415
ATMI, Inc.*		12,300		217
Brooks Automation, Inc.*		1,244,200		8,448
Cymer, Inc.*		136,050		5,027
Entegris, Inc.*		70,800		423
Fairchild Semiconductor International, Inc.*		200,100		2,255
International Rectifier Corp.*		48,500		1,127
Microsemi Corp.*		8,425		169
MKS Instruments, Inc.*		215,700		4,454
ON Semiconductor Corp.*		874,800		6,710
QLogic Corp.*		253,610		4,456
Teradyne, Inc.*		335,400		3,770
Tessera Technologies, Inc.*		577,650		11,397
Varian Semiconductor Equipment Associates, Inc.*		7,500		245
				51,113
Software — 2.50%
Aspen Technology, Inc.*		322,970		3,617
Cadence Design Systems, Inc.*		847,810		7,181
Cognex Corp.		569,900		15,217
DST Systems, Inc.		90,625		3,921
FARO Technologies, Inc.*		167,500		4,043
Jack Henry & Associates, Inc.		6,525		177
JDA Software Group, Inc.*		485,810		12,291
Mentor Graphics Corp.*		1,184,700		12,796
Net 1 UEPS Technologies, Inc.*		5,300		65
Netscout Systems, Inc.*		206,340		4,843
Novell, Inc.*		718,800		4,262
				68,413
Total Information Technology				383,964
MATERIALS — 5.86%
Chemicals — 1.96%
A. Schulman, Inc.		48,200		1,046
Cabot Corp.		122,500		4,167
H.B. Fuller Co.		100,600		2,076
Innophos Holdings, Inc.		39,800		1,461
NewMarket Corp.		30,800		3,650
OM Group, Inc.*		71,375		2,375
PolyOne Corp.*		1,531,400		19,786
RPM International, Inc.		655,975		13,585
Scotts Miracle-Gro Co.		3,075		164
Solutia, Inc.*		225,600		4,086
Stepan Co.		16,800		1,133
				53,529
Construction Materials — 0.39%
Ameron International Corp.		2,594		178
Tutor Perini Corp.*		457,625		10,622
				10,800
Containers & Packaging — 0.94%
Boise, Inc.*		156,800		1,137

	Shares		Value
			($000)
Greif, Inc.		168,000		9,868
Jarden Corp.		199,525		6,397
Rock-Tenn Co.		71,700		4,076
Sealed Air Corp.		80,000		1,852
Silgan Holdings, Inc.		73,200		2,471
				25,801
Metals & Mining — 1.80%
Carpenter Technology Corp.		114,270		4,075
Century Aluminum Co.*		157,600		2,131
Coeur d’Alene Mines Corp.*		359,050		7,400
Gammon Gold, Inc.*		22,453		153
Gibraltar Industries, Inc.*		433,339		3,956
Haynes International, Inc.		175,400		6,360
James River Coal Co.*		2,149		37
Kaiser Aluminum Corp.		189,800		8,539
New Gold, Inc.*		27,189		201
Noranda Aluminum Holding Corp.*		875,000		8,681
Pan American Silver Corp.		7,125		227
RTI International Metals, Inc.*		158,515		4,930
Thompson Creek Metals Co., Inc.*		13,850		167
Universal Stainless & Alloy*		82,300		2,382
				49,239
Paper & Forest Products — 0.77%
Buckeye Technologies, Inc.		52,100		940
Domtar Corp.		139,120		11,041
Louisiana-Pacific Corp.*		808,090		6,255
PH Glatfelter Co.		79,200		985
Wausau Paper Corp.*		202,840		1,712
				20,933
Total Materials				160,302
TELECOMMUNICATION SERVICES — 0.24%
Diversified Telecommunication — 0.01%
General Communication, Inc.*		23,240		243
Diversified Telecommunication Services — 0.23%
Aviat Networks, Inc.*		273,050		1,242
Cincinnati Bell, Inc.*		504,200		1,235
EchoStar Corp.*		80,600		1,709
Loral Space & Communications, Inc.*		37,200		2,070
				6,256
Total Telecommunication Services				6,499
UTILITIES — 5.75%
Electric Utilities — 3.79%
ALLETE, Inc.		4,950		180
Black Hills Corp.		105,100		3,346
El Paso Electric Co.*		362,020		8,906
Empire District Electric Co.		266,200		5,601
Great Plains Energy, Inc.		1,036,700		19,728
Hawaiian Electric Industries, Inc.		135,080		3,045
IDACORP, Inc.		159,700		5,877
NV Energy, Inc.		395,248		5,399
OGE Energy Corp.		331,600		14,643
Pike Electric Corp.*		26,700		202
Pinnacle West Capital Corp.		169,110		6,961
PNM Resources, Inc.		628,740		7,413
Portland General Electric Co.		955,170		19,962

See accompanying notes

13

American Beacon Small Cap Value Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
TECO Energy, Inc.		9,425		166
Unisource Energy Corp.		67,200		2,357
				103,786
Gas Utilities — 1.29%
AGL Resources, Inc.		132,200		5,190
Atmos Energy Corp.		418,390		12,321
Southern Union Co.		174,200		4,378
Southwest Gas Corp.		61,300		2,131
UGI Corp.		175,000		5,266
WGL Holdings, Inc.		155,220		5,984
				35,270
Multi-Utilities — 0.67%
Avista Corp.		123,600		2,699
Vectren Corp.		6,375		175
Westar Energy, Inc.		614,000		15,534
				18,408
Total Utilities				157,464
Total Common Stock (Cost $2,272,103)				2,611,684
SHORT-TERM INVESTMENTS — 4.10% (Cost $112,188)
JPMorgan U.S. Government Money Market Fund		112,187,772		112,188
SECURITIES LENDING COLLATERAL — 2.11%
American Beacon U.S. Government Money Market Select Fund§		48,791,547		48,791
Wells Fargo Advantage Government Money Market Fund		8,952,934		8,953
Total Securities Lending Collateral(Cost $57,744)				57,744
TOTAL INVESTMENTS — 101.66% (Cost $2,442,035)				2,781,616
LIABILITIES, NET OF OTHER ASSETS — (1.66%)				(45,469	)
TOTAL NET ASSETS — 100.00%			$	2,736,146

*	Non-income producing security.
†	All or a portion of this security is on loan at October 31, 2010.
‡	REIT
§	The Fund is affiliated by having the same investment advisor.

Percentages are stated as a percent of net assets.

Futures Contracts
(dollars in thousands)

						Unrealized
	Number of					Appreciation/
	Contracts		Expiration Date	Value		(Depreciation)
Russell 2000 Mini Index Future		1,718	December, 2010	$	120,638	$	7,525
				$	120,638	$	7,525

See accompanying notes

14

American Beacon Small Cap Value Fund^SM
Statement of Assets and Liabilities
October 31, 2010 (in thousands, except share and per share amounts)

Assets:
Investments in unaffiliated securities, at value A C	$	2,732,825
Investments in affiliated securities, at value B		48,791
Deposit with brokers for futures contracts		7,681
Receivable for investments sold		18,323
Dividends and interest receivable		787
Receivable for fund shares sold		2,681
Receivable for tax reclaims		2
Receivable for variation margin on open futures contracts		787
Prepaid expenses		128
Total assets		2,812,005
Liabilities:
Payable for investments purchased		8,501
Payable upon return of securities loaned		57,744
Payable for fund shares redeemed		2,860
Payable for bank overdraft		1,634
Management and investment advisory fees payable (Note 2)		3,700
Administrative service and service fees payable (Note 2)		864
Professional fees payable		26
Other liabilities		530
Total liabilities		75,859
Net assets	$	2,736,146
Analysis of Net Assets:
Paid-in-capital		2,834,787
Undistributed net investment income		8,788
Accumulated net realized loss		(454,535	)
Unrealized appreciation of investments and futures contracts		347,106
Net assets	$	2,736,146
Shares outstanding (no par value):
Institutional Class		82,407,470
Y Class		52,394
Investor Class		52,396,459
Advisor Class		1,863,091
Retirement Class		20,863
A Class		1,041
C Class		373
AMR Class		18,059,152
Net asset value, offering and redemption price per share:
Institutional Class	$	17.84
Y Class	$	17.76
Investor Class	$	17.40
Advisor Class	$	17.33
Retirement Class	$	17.23
A Class (Net asset value only)	$	17.39
A Class (Offering and redemption price)	$	18.45
C Class	$	17.37
AMR Class	$	17.76

A Cost of investments in unaffiliated securities	$	2,393,244
B Cost of investments in affiliated securities	$	48,791
C Market value of securities on loan	$	56,425

See accompanying notes

15

American Beacon Small Cap Value Fund^SM
Statement of Operations
Year Ended October 31, 2010 (in thousands)

Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes)*	$	33,540
Dividend income from affiliated securities		18
Interest income		11
Income derived from securities lending, net		567
Total investment income		34,136
Expenses:
Management and investment advisory fees (Note 2)		11,693
Administrative service fees (Note 2):
Institutional Class		3,959
Y Class		1
Investor Class		2,468
Advisor Class		93
Retirement Class		1
AMR Class		191
Transfer agent fees:
Institutional Class		75
Investor Class		53
Advisor Class		2
AMR Class		35
Custody and fund accounting fees		349
Professional fees		150
Registration fees and expenses		111
Service fees (Note 2):
Y Class		1
Investor Class		2,972
Advisor Class		78
Distribution fees (Note 2):
Advisor Class		78
Retirement Class		1
Prospectus and shareholder reports		313
Trustee fees		178
Other expenses		198
Total expenses		23,000
Net investment income		11,136
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		174,179
Commission recapture (Note 1)		136
Futures contracts		5,466
Change in net unrealized appreciation or depreciation of:
Investments		283,071
Futures contracts		13,493
Net gain on investments		476,345
Net increase in net assets resulting from operations	$	487,481
* Foreign taxes	$	37

See accompanying notes

16

American Beacon Small Cap Value Fund^SM
Statement of Changes of Net Assets (in thousands)

	Year Ended			Year Ended
	October 31,			October 31,
	2010			2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	11,136		$	13,566
Net realized gain (loss) on investments and futures contracts		179,781			(354,995	)
Change in net unrealized appreciation of investments and futures contracts		296,564			625,488
Net increase in net assets resulting from operations		487,481			284,059
Distributions to Shareholders:
Net investment income:
Institutional Class		(6,896	)		(13,600	)
Investor Class		(2,275	)		(8,841	)
Advisor Class		—			(311	)
AMR Class		(2,187	)		(3,927	)
Net distributions to shareholders		(11,358	)		(26,679	)
Capital Share Transactions:
Proceeds from sales of shares		942,144			529,412
Reinvestment of dividends and distributions		11,249			26,349
Cost of shares redeemed		(752,815	)		(523,004	)
Net increase in net assets from capital share transactions		200,578			32,757
Net increase in net assets		676,701			290,137
Net Assets:
Beginning of period		2,059,445			1,769,308
End of Period *	$	2,736,146		$	2,059,445
*Includes undistributed net investment income of	$	8,788		$	9,850

See accompanying notes

17

American Beacon Small Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

1. Organization and Significant Accounting Policies

          American Beacon Funds (the “Trust”), which is comprised of 19 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon Small Cap Value Fund (the “Fund”), a series of the Trust.

          American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative and asset management consulting services to the Trust and other investors.

     Class Disclosure

          The inception dates of the A and C Classes are May 17, 2010 and September 1, 2010, respectively.

          The Fund has multiple classes of shares designed to meet the needs of different groups of investors. The following table sets forth the differences amongst the classes:

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	General public and investors investing through an intermediary
Advisor Class	Investors investing through an intermediary
Retirement Class	Investors investing through an intermediary
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation, and its affiliates
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges

          Administrative service fees, service fees and distribution fees vary amongst the classes as described more fully in footnote 2.

     Security Valuation

          Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

          Debt securities (other than short-term securities) normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The prices of debt securities may be determined using quotes obtained from brokers.

          Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

          Securities for which market prices are not readily available or are not reflective of the fair value of the security, as determined by the Manager, will be priced at fair value following procedures approved by the Board of Trustees (the “Board”).

18

American Beacon Small Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

          Futures are valued based upon the last sale price at the close of market on the principal exchange on which they are traded.

     Valuation Inputs

          Various inputs may be used to determine the value of the Fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 —	Quoted prices in active markets for identical securities.
Level 2 —	Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others.
Level 3 —	Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

          The Fund’s investments are summarized by level based on the inputs used to determine their values. During the period there were no significant transfers between levels. As of October 31, 2010, the Fund’s investments were classified as follows: (in thousands)

	Level 1		Level 2		Level 3		Total
Common Stock	$	2,611,684	$	—	$	—	$	2,611,684
Short Term Investments		112,188		—		—		112,188
Security Lending Collateral		57,744		—		—		57,744
Total Investments in Securities	$	2,781,616	$	—	$	—	$	2,781,616
Futures Contracts	$	7,525		—		—	$	7,525

     Security Transactions and Investment Income

          Security transactions are recorded on the trade date of the security purchase or sale. The Fund may purchase securities with delivery or payment to occur at a later date. At the time the Fund enters into a commitment to purchase a security, the transaction is recorded and the value of the security is reflected in the net asset value. The value of the security may vary with market fluctuations.

          Dividend income, net of foreign taxes, is recorded on the ex-dividend date except certain dividends from foreign securities which are recorded as soon as the information is available to the Fund. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

     Futures Contracts

          Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Fund may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.

          Upon entering into a futures contract, the Fund is required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents 5% of the face value of the futures contract. The Fund reflects this amount on the Statement of Assets and Liabilities as deposit with broker for futures contracts. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures

19

American Beacon Small Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2010 (in thousands)

Statement of Assets and Liabilities	Asset Derivatives	Total
Unrealized appreciation of investments, futures contracts, and foreign currency	Equity Contracts*	$	7,525

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2010 (in thousands)

Statement of Operations	Derivative	Total
Net realized gain (loss) from futures contracts	Equity Contracts	$	5,466
Change in net unrealized appreciation or depreciation of futures contracts	Equity Contracts	$	13,493

* Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

     Dividends to Shareholders

          Dividends from net investment income of the Fund normally will be declared and paid at least annually. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date.

     Commission Recapture

          The Fund has established brokerage commission recapture arrangements with certain brokers or dealers. If the Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operations.

     Allocation of Income, Expenses, Gains, and Losses

          Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

     Use of Estimates

          The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

     Other

          Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Trust. In the normal course of business, the Trust enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.

20

American Beacon Small Cap Value Fund^SM
Notes to Financial Statements
October 31, 2010

2. Transactions with Affiliates

     Management Agreement

          The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services. Investment assets of the Fund are managed by multiple investment advisors which have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Fund an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the unaffiliated investment advisors hired by the Manager to direct investment activities of the Fund. Management fees paid during the year ended October 31, 2010 were as follows (dollars in thousands):

		Amounts paid to
Management Fee Rate	Management Fee	Investment Advisors	Net Amounts Retained by Manager
0.30%-0.60%	$11,693	$10,416	$1,277

          As compensation for services provided by the Manager in connection with securities lending activities, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 25% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers when a borrower posts collateral other than cash, a fee up to 25% of such loan fees. This fee is netted against securities lending income in the Statement of Operations. During the year ended October 31, 2010, securities lending fees paid to the Manager were $94,172.

     Administrative Services Agreement

          The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Fund. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.40% of the average daily net assets of the A and C Classes of the Fund, 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor, and Retirement Classes of the Fund and 0.05% of the average daily net assets of the AMR Class of the Fund. Administrative Service Fees for the A and C Classes for the period ended October 31, 2010 were less than $500.

     Distribution Plans

          The Fund, except for the Advisor, Retirement, A, and C Classes of the Fund, has adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees may be charged to the Fund for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Fund does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

          Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule 12b-1 under the Act for the Advisor, Retirement, A, and C Classes of the Fund. Under the Distribution Plans, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes, 0.50% of the average daily net assets of the Retirement Class, and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance. Distribution expenses for the A and C Classes for the period ended October 31, 2010 were less than $500.

21

American Beacon Small Cap Value Fund^SM
Notes to Financial Statements

October 31, 2010

     Service Plans

          The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Y, Investor, Advisor, Retirement, A and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives 0.10% of the average daily net assets of the Y Class, 0.15% of the average daily net assets of the A and C Classes, 0.25% of the average daily net assets of the Advisor and Retirement Classes, and up to 0.375% of the average daily net assets of the Investor Class of the Fund. Service expenses for the Retirement, A, and C Classes for the period ended October 31, 2010 were less than $500.

     Brokerage Commissions

          Affiliated entities of a sub-advisor to the Fund received net commissions on purchases and sales of the Fund’s portfolio securities totaling $25,348 for the year ended October 31, 2010.

     Investment in Affiliated Funds

          The Fund may invest in the American Beacon Money Market Select Fund (the “MM Select Fund”) and the American Beacon US Government Money Market Select Fund (the “USG Select Fund”), (collectively the “Select Funds”). Cash collateral received by the Fund in connection with securities lending may be invested in the Select Funds. The Select Funds and the Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the Select Funds and receives from the Select Funds an annualized fee of 0.09% of the average daily net assets of the Select Funds. During the year ended October 31, 2010, the Manager earned fees from the Select Funds totaling $16,293 on the Fund’s direct investment in the Select Funds and $76,628 from the Fund’s securities lending collateral invested in the Select Funds.

     Interfund Lending Program

          Pursuant to an exemptive order by the SEC, the Fund, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program as a borrower. This program provides an alternative credit facility allowing the Fund to borrow from other participating Funds. During the year ended October 31, 2010, the Fund did not utilize the credit facility.

     Expense Reimbursement Plan

          The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’s average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. During the year ended October 31, 2010, the C Class waived $2. A liability has not been booked as the Manager does not intend to seek repayment of this reimbursement.

3. Federal Income and Excise Taxes

          It is the policy of the Fund to qualify as a regulated investment company, by complying with all applicable provisions of the Code and to make distribution of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes, the Fund is treated as a single entity for the purpose of determining such qualification.

          The Fund does not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2010 remains subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

22

American Beacon Small Cap Value Fund^SM
Notes to Financial Statements

October 31, 2010

          Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. generally accepted accounting principles. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

          The tax character of distributions paid during the fiscal years ended October 31, 2010 and October 31, 2009 were as follows (in thousands):

	Year Ended		Year Ended
	October 31,		October 31,
	2010		2009
Distributions paid from:
Ordinary income*
Institutional Class	$	6,896	$	13,600
Investor Class		2,275		8,841
Advisor Class		—		311
AMR Class		2,187		3,927
Total distributions paid	$	11,358	$	26,679

* For tax purposes, short-term capital gains are considered ordinary income distributions.

As of October 31, 2010, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

Cost basis of investments for federal income tax purposes	$	2,493,555
Unrealized appreciation		437,144
Unrealized depreciation		(149,083	)
Net unrealized appreciation/(depreciation)		288,061
Undistributed ordinary income		6,755
Accumulated long-term gain/(loss)		(400,983	)
Other temporary differences		7,525
Distributable earnings/(deficit)	$	(98,642	)

          Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses from wash sales, the realization for tax purposes of unrealized gains/(losses) on certain derivative instruments, and reclassifications of income from real estate investment securities.

          Due to inherent differences in the recognition of income, expenses and realized gains/losses under U.S. generally accepted accounting principles and federal income tax regulations, permanent differences between book and tax reporting have been identified and appropriately reclassified on the Statement of Assets and Liabilities.

          Accordingly, the following amounts represent current year permanent differences derived from reclassifications of income from real estate investment securities as of October 31, 2010 (in thousands):

Paid-in-capital	$	—
Undistributed net investment income (loss)		(840	)
Accumulated net realized gain (loss)		840
Unrealized appreciation (depreciation) of investments, futures contracts and foreign currency		—

          At October 31, 2010 the capital loss carry forward positions for federal income tax purposes were $69,851 and $323,607 expiring in 2016 and 2017, respectively. The Fund utilized $190,117 of net capital loss carryovers for the year ended October 31, 2010. (in thousands)

4. Investment Transactions

          The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2010 were (in thousands) $1,603,697 and $1,405,879, respectively.

23

American Beacon Small Cap Value Fund^SM
Notes to Financial Statements

October 31, 2010

          A summary of the Fund’s direct transactions and security lending collateral transactions in the Select Funds for the year ended October 31, 2010 is set forth below (in thousands):

		October 31, 2009						October 31, 2010
	Affiliate	Shares/Market Value		Purchases		Sales		Shares/Market Value
Direct	USG Select Fund	$	20,000	$	5,000	$	25,000	$	—
Security Lending	USG Select Fund	$	50,000	$	409,114	$	410,323	$	48,791

5. Securities Lending

          The Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored and marked to market daily. Daily mark to market amounts are required to be paid to the borrower or received from the borrower by the end of the following business day. This one day settlement for mark to market amounts may result in the collateral being temporarily less than the value of the securities on loan or temporarily more than the required minimum collateral.

          To the extent that a loan is collateralized by cash, such cash collateral shall be invested by the securities lending agent (the “Agent”) in money market mutual funds, and other short-term investments, provided the investments meet certain quality and diversification requirements.

          Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured by non-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Fund, the Agent, and the Manager retain 75%, 15%, and 10%, respectively, of the income generated from securities lending.

          While securities are on loan, the Fund continues to receive any income associated with that security and any gain or loss in the market price that may occur during the term of the loan.

          Securities lending transactions pose certain risks to the Fund, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, that non-cash collateral may be subject to legal constraints in the event of a borrower bankruptcy, and that the cash collateral investments could become illiquid and unable to be used to return collateral to the borrower. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the cash collateral available for return to the borrower and any action which impairs its ability to liquidate non-cash collateral to satisfy a borrower default.

          As of October 31, 2010, the value of outstanding securities on loan and the value of collateral was as follows (in thousands):

Market Value of
Securities on Loan	Non-Cash Collateral		Cash Collateral Posted by Borrower
$56,425	$	—	$	57,744

          Cash collateral is listed in the Fund’s Schedule of Investments and is shown on the Statement of Assets and Liabilities as a payable. Income earned on these investments is included in Income derived from securities lending in the Statement of Operations.

24

American Beacon Small Cap Value Fund^SM
Notes to Financial Statements

October 31, 2010

          Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy a borrower default. Therefore, non-cash collateral is not included on the Fund’s Schedule of Investments or Statement of Assets and Liabilities.

6. Capital Share Transactions

          The tables below summarize the activity in capital shares for each Class of the Fund (dollars and shares in thousands):

Year Ended October 31, 2010

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount				Shares			Amount		Shares			Amount
Shares sold		26,347		$	442,447			98		$	1,732			15,077		$	249,419			937		$	15,835
Reinvestment of dividends		431			6,838			—			—			143			2,224			—			—
Shares redeemed		(16,704	)		(273,902	)		(46	)		(788	)		(14,033	)		(226,469	)		(1,102	)		(17,989	)
Net increase (decrease) in shares outstanding		10,074		$	175,383			52		$	944			1,187		$	25,174			(165	)	$	(2,154	)

	Retirement Class						AMR Class						A Class				C Class
	Shares			Amount			Shares			Amount			Shares		Amount		Shares		Amount
Shares sold		22		$	390			13,750		$	232,298			1	$	17		—	$	6
Reinvestment of dividends		—			—			138			2,187			—		—		—		—
Shares redeemed		(1	)		(25	)		(14,762	)		(233,642	)		—		—		—		—
Net increase (decrease) in shares outstanding		21		$	365			(874	)	$	843			1	$	17		—	$	6

Year Ended October 31, 2009

	Institutional Class						Y Class				Investor Class
	Shares			Amount			Shares		Amount		Shares			Amount
Shares sold		26,973		$	326,038			—	$	1		11,685		$	134,422
Reinvestment of dividends		1,227			13,407			—		—		813			8,704
Shares redeemed		(21,813	)		(257,527	)		—		—		(18,535	)		(216,176	)
Net increase (decrease) in shares outstanding		6,387		$	81,918			—	$	1		(6,037	)	$	(73,050	)

	Advisor Class						Retirement Class				AMR Class
	Shares			Amount			Shares		Amount		Shares			Amount
Shares sold		752		$	8,517			—	$	1		4,659		$	60,433
Reinvestment of dividends		29			311			—		—		361			3,927
Shares redeemed		(1,513	)		(17,313	)		—		—		(2,907	)		(31,988	)
Net increase (decrease) in shares outstanding		(732	)	$	(8,485	)		—	$	1		2,113		$	32,372

25

American Beacon Small Cap Value Fund ^SM
Financial Highlights
(For a share outstanding throughout the period)

																Y Class
																Year
																Ended			August
	Institutional Class															October			3 to			Investor Class
	Year Ended October 31,															31,			October			Year Ended October 31,
	2010			2009			2008			2007			2006			2010			31, 2009			2010			2009			2008			2007
Net asset value, beginning of period	$	14.39		$	12.53		$	22.10		$	22.53		$	20.43		$	14.37		$	14.03		$	14.05		$	12.22		$	21.62		$	22.08
Income from investment operations:
Net investment income (loss)		0.08			0.10			0.25			0.22			0.19			0.14			0.00			0.03			0.08			0.20			0.16
Net gains (losses) on securities (both realized and unrealized)		3.46			1.96			(7.13	)		1.10			2.94			3.36			0.34			3.37			1.91			(6.97	)		1.07
Total income (loss) from investment operations		3.54			2.06			(6.88	)		1.32			3.13			3.50			0.34			3.40			1.99			(6.77	)		1.23
Less distributions:
Dividends from net investment income		(0.09	)		(0.20	)		(0.22	)		(0.19	)		(0.14	)		(0.11	)		—			(0.05	)		(0.16	)		(0.16	)		(0.13	)
Distributions from net realized gains on securities		—			—			(2.47	)		(1.56	)		(0.89	)		—			—			—			—			(2.47	)		(1.56	)
Total distributions		(0.09	)		(0.20	)		(2.69	)		(1.75	)		(1.03	)		(0.11	)		—			(0.05	)		(0.16	)		(2.63	)		(1.69	)
Net asset value, end of period	$	17.84		$	14.39		$	12.53		$	22.10		$	22.53		$	17.76		$	14.37		$	17.40		$	14.05		$	12.22		$	21.62
Total return A,B		24.71	%		16.97	%		(34.84	)%		6.10	%		15.80	%		24.44	%		2 .42	%C		24.21	%		16.59	%		(35.04	)%		5.83	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,470,084		$	1,040,805		$	826,232		$	1,413,734		$	1,319,024		$	931		$	1		$	911,737		$	719,239		$	699,670		$	1,316,188
Ratios to average net assets (annualized):
Expenses, net of waivers		0.81	%		0.84	%		0.81	%		0.80	%		0.82	%		0.91	%		1 .11	%D		1.18	%		1.15	%		1.06	%		1.05	%
Expenses before waivers		0.81	%		0.84	%		0.81	%		0.80	%		0.82	%		0.91	%		1 .11	%D		1.18	%		1.15	%		1.06	%		1.05	%
Net investment income (loss), net of waivers		0.52	%		0.87	%		1.36	%		0.94	%		0.83	%		0.39	%		0 .03	%D		0.17	%		0.59	%		1.12	%		0.70	%
Net investment income (loss), before waivers		0.52	%		0.87	%		1.36	%		0.94	%		0.83	%		0.39	%		0 .03	%D		0.17	%		0.59	%		1.12	%		0.70	%
Portfolio turnover rate		59	%		61	%		62	%		52	%		48	%		59	%		61	% E		59	%		61	%		62	%		52	%

A	May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net assets for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
B	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
C	Not annualized.
D	Annualized.
E	Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.
F	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

26

																		Retirement Class
																		Year																					A Class			C Class
																		Ended																					May			September
			Advisor Class															October			May 1 to			AMR Class															17 to			1 to
			Year Ended October 31,															31,			October			Year Ended October 31,															October			October
2006			2010			2009			2008			2007			2006			2010			31, 2009			2010			2009			2008			2007			2006			31, 2010			31, 2010
$	20.04		$	13.97		$	12.13		$	21.46		$	21.94		$	19.94		$	13.95		$	11.58		$	14.32		$	12.48		$	22.05		$	22.48		$	20.38		$	17.33		$	15.62
	0.13			0.01			0.06			0.16			0.10			0.07			0.04			(0.02	)		0.18			0.11			0.33			0.30			0.27			0.00			(0.01	)
	2.89			3.35			1.90			(6.93	)		1.07			2.88			3.28			2.39			3.38			1.97			(7.15	)		1.08			2.91			0.06			1.76
	3.02			3.36			1.96			(6.77	)		1.17			2.95			3.32			2.37			3.56			2.08			(6.82	)		1.38			3.18			0.06			1.75
	(0.09	)		—			(0.12	)		(0.09	)		(0.09	)		(0.06	)		(0.04	)		—			(0.12	)		(0.24	)		(0.28	)		(0.25	)		(0.19	)		—			—
	(0.89	)		—			—			(2.47	)		(1.56	)		(0.89	)		—			—			—			—			(2.47	)		(1.56	)		(0.89	)		—			—
	(0.98	)		—			(0.12	)		(2.56	)		(1.65	)		(0.95	)		(0.04	)		—			(0.12	)		(0.24	)		(2.75	)		(1.81	)		(1.08	)		—			—
$	22.08		$	17.33		$	13.97		$	12.13		$	21.46		$	21.94		$	17.23		$	13.95		$	17.76		$	14.32		$	12.48		$	22.05		$	22.48		$	17.39		$	17.37
	15.56	%		24.05	%		16.41	%		(35.19	)%		5.55	%		15.23	%		23.82	%		20 .47	%C		25.00	%		17.30	%		(34.71	)%		6.39	%		16.12	%		0.35	%C		11.20	%C
$	1,333,814		$	32,295		$	28,333		$	33,479		$	69,112		$	70,602		$	360		$	1		$	320,715		$	271,066		$	209,927		$	411,406		$	412,857		$	18		$	6
	1.06	%		1.32	%		1.31	%		1.31	%		1.32	%		1.34	%		1.54	%		1.53	%D		0.57	%		0.59	%		0.56	%		0.54	%		0.55	%		1.28	%D		2.10	%D
	1.06	%		1.32	%		1.34	%		1.31	%		1.32	%		1.34	%		1.54	%		1.53	%D		0.57	%		0.59	%		0.56	%		0.54	%		0.55	%		1.28	%D		2.69	%D
	0.59	%		0.03	%		0.48	%		0.86	%		0.43	%		0.31	%		(0.20	)%		(0.28	)%D		0.76	%		1.11	%		1.62	%		1.21	%		1.10	%		0.01	%D		(1.28	)%D
	0.59	%		0.03	%		0.44	%		0.86	%		0.43	%		0.31	%		(0.20	)%		(0.28	)%D		0.76	%		1.11	%		1.62	%		1.21	%		1.10	%		0.01	%D		(1.86	)%D
	48	%		59	%		61	%		62	%		52	%		48	%		59	%		61	% E		59	%		61	%		62	%		52	%		48	%		59	% F		59	% F

27

American Beacon Funds
Privacy Policy & Federal Tax Information
(Unaudited)

Privacy Policy

          The American Beacon Funds recognizes and respects the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

          We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

          We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

          We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

          For corporate shareholders in the Fund, the percentage of ordinary dividend income distributed for the year ended October 31, 2010, which is designated as qualifying for the dividends-received deduction, was 71.29%.

          For shareholders in the Fund, the percentage of dividend income distributed for the year ended October 31, 2010, which is designated as qualified dividend income under the Jobs Growth Tax Relief Act of 2003, was 100%. Shareholders will receive notification in January 2011 of the percentage applicable to the preparation of their 2010 income tax returns.

28

Disclosure Regarding the Board of Trustees’ Approval of the Management
Agreement and Investment Advisory Agreements of the Fund
(Unaudited)

          At its May 25, 2010 meeting, the Board of Trustees (“Board”) considered the renewal of each existing Management Agreement between American Beacon Advisors, Inc. (the “Manager”) and the American Beacon Funds (the “Funds”) and each Investment Advisory Agreement between the Manager and a subadvisor (“Investment Advisory Agreements” and collectively with the Management Agreement, the “Agreements”). In preparation for the Board’s consideration to renew these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

          In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 10, 2010 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

          In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees considered, among other materials, responses by the Manager and the subadvisors to inquiries requesting:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and II of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed by each firm with performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• a profit/loss analysis of the firm and any actual or anticipated economies of scale in relation to the services it provides to each Fund;

• an analysis of compensation, including a comparison with fees charged to other clients for which similar services are provided, any proposed changes to the fee schedule and the effect of any fee waivers;

• a description of any payments by the subadvisors to the manager to support the Funds’ marketing efforts;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of any internal actions the firm has taken or anticipates taking in light of the current and projected decrease in revenues from prior years as a result of the current economic environment that may affect or are expected to affect the services performed for the Funds;

• a description of the scope of portfolio management services provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a discussion regarding the firm’s participation in “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions, including the firm’s methodology for obtaining best execution and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm receives, with respect to the Funds, other compensation, including any payment for order flow or ECN liquidity rebates

• a certification by the firm regarding the reasonable design of its compliance program;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

29

Disclosure Regarding the Board of Trustees’ Approval of the Management
Agreement and Investment Advisory Agreements of the Fund
(Unaudited)

          In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fees and expense ratios for comparable mutual funds;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

          In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fees versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

          Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 10, 2010 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 25, 2010 meeting at which the Board considered the renewal of the Agreements. The Board did not identify any particular information that was most relevant to its consideration to renew the Management Agreement and each Investment Advisory Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal of the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to All Funds

          In determining whether to renew the Management Agreement and each Investment Advisory Agreement, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 25, 2010 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately. In each instance, the Board considered, among other things, the following factors: (1) the nature and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager and (to the extent provided) the subadvisors in rendering their services and their resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fees with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

          Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s generally favorable long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to increase assets in the Funds as demonstrated, for example, by the recent substantial increase in sales personnel; the Manager’s continuing efforts to add new series and share classes to enhance the Funds’ product line; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; and efforts made by the Manager to retain key employees and maintain staff levels.

          With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and their ability to continue to attract and retain qualified investment personnel. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

30

Disclosure Regarding the Board of Trustees’ Approval of the Management
Agreement and Investment Advisory Agreements of the Fund
(Unaudited)

          Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager and a subadvisor by Fund, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an individual Fund level and at an aggregate level for all Funds. The Board also considered that the Management Agreement for the Funds stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients is lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

          The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Funds. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

          In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee a subadvisor charges for any comparable client accounts. The Board gave less weight to profitability considerations or did not view this data as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fees.

          Based on the foregoing information, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager and the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Economies of Scale. In considering the reasonableness of the management and investment advisory fees, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates. The Board also noted the Manager’s representation that assets in the Funds’ complex increased during 2009, primarily due to market appreciation.

          In addition, the Board noted the Manager’s representation that, due to the existing low cost structure of the Funds, further breakpoints in the management fee would not be appropriate at this time. The Board also considered that the management fee for the Money Market Funds is amongst the lowest in the industry. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Fund.

          Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager’s relationship with the Funds and the money market portfolios continues to be a significant factor in attracting separate account assets for the Manager and the Manager’s use of the Large Cap Value Fund model for an actively managed exchange traded fund, managed by the Manager.

          In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted that the benefit plans of AMR Corporation, which are managed by the Manager, remain the largest or one of the largest shareholders in most of the Funds and the Manager’s representation that it provides services to each Trust at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that, with the exception of the Emerging Markets Fund, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal years ended October 31, and December 31, 2009.

          Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

          The performance comparisons below were made versus each Fund’s Lipper peer universe median. References to the Lipper expense universe below are to the universe of comparable mutual funds included in the analysis provided to the Trustees by Lipper.

31

Disclosure Regarding the Board of Trustees’ Approval of the Management
Agreement and Investment Advisory Agreements of the Fund
(Unaudited)

Additional Considerations and Conclusions with Respect to the Small Cap Value Fund

          In considering the renewal of the Management Agreement for the Small Cap Value Fund, the Trustees considered the following additional factors: (1) the Small Cap Value Fund outperformed the peer universe median for the one-, three-, five-and ten-year periods ended March 31, 2010; and (2) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, Inc. (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”), Dreman Value Management, LLC (“Dreman”), Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), Metropolitan West Capital Management, LLC (“MetWest”), Opus Capital Group, LLC (“Opus”) and The Boston Company Asset Management, LLC (“TBC”), the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2010; (2) Brandywine outperformed the peer universe median for the ten-year period ended March 31, 2010, but underperformed for the one-, three- and five-year periods; (3) management’s representation that although Brandywine’s annualized performance for the one-, three- and five-year periods was below the peer universe median due to poor investment results in 2007 and 2009, Brandywine has outperformed the Fund’s benchmark index for the past three out of four years; (4) Hotchkis outperformed the peer universe median for the one- and ten-year periods, but underperformed for the three- and five-year periods; (5) management’s explanation that Hotchkis’ underperformance was due, in part, to large exposure to the homebuilders sector in 2006 and 2007 and poor stock selection in the financials and industrials sectors in 2008; (6) Hotchkis’ performance for the twelve months ended March 31, 2010 outperformed the Lipper Small Cap Value index; (7) Opus outperformed the peer universe median for the three-year period ended March 31, 2010, but underperformed for the one- and five-year periods; (8) TBC outperformed the peer universe median for the three- and five-year periods ended March 31, 2010, but underperformed for the one-year period; (9) management’s explanation of the reasons for Hotchkis’s, Brandywine’s and Barrow’s underperformance; (10) Dreman and MetWest have not been allocated a portion of Fund assets to date; (11) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (12) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (13) the Manager’s recommendation to continue to retain each subadvisor.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the Small Cap Value Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Small Cap Value Fund.

32

Trustees and Officers of the American Beacon Funds
(Unaudited)

          The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-three funds in the fund complex that includes the Trust, the American Beacon Master Trust, the American Beacon Mileage Funds, and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
INTERESTED TRUSTEES
	Term
	Lifetime of Trust
	until removal,
	resignation or
	retirement*
Alan D. Feld** (73)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (1960-Present); Director, Clear Channel Communications (1984-2008); Trustee, CenterPoint Properties (1994- 2006); Member, Board of Trustees, Southern Methodist University; Member, Board of Visitors, M.D. Anderson Hospital; Board of Visitors, Zale/Lipshy Hospital; Trustee, American Beacon Mileage Funds (1996-present); Trustee, American Beacon Select Funds (1999-present); Trustee, American Beacon Master Trust (1996-present).
NON-INTERESTED
TRUSTEES	Term
	Lifetime of Trust
	until removal,
	resignation or
	retirement*
W. Humphrey Bogart (66)	Trustee since 2004	Board Member, Baylor University Medical Center Foundation (1992-2004); Consultant, New River Canada Ltd. (mutual fund servicing company) (1998- 2003); President and CEO, Allmerica Trust Company, NA (1996-1997); President and CEO, Fidelity Investments Southwest Company (1983-1995); Senior Vice President of Regional Centers, Fidelity Investments (1988-1995); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004- present).
Brenda A. Cline (49)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, Texas Christian University (1998-Present); Trustee, W.I. Cook Foundation, Inc. (d/b/a Cook Children’s Health Foundation) (2001-2006); Director, Christian Church Foundation (1999- 2007); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust Funds (2004-present).
Eugene J. Duffy (56)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994- Present); Director, Sunrise Bank of Atlanta (2008-Present); Chairman, Special Contributions Fund Board of Trustees, National Association for the Advancement of Colored People (2007-Present); Trustee, National Association for the Advancement of Colored People (2000-Present); Board of Visitors, Emory University (2006-Present); Trustee, Atlanta Botanical Garden (2006-Present); Board Member, Willie L. Brown Jr. Institute on Politics and Public Service (2001- Present); Chair, National Association of Securities Professionals (2000-2002); Deputy Chief Administrative Officer, City of Atlanta (1985-1990); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008- present).

33

Trustees and Officers of the American Beacon Funds
(Unaudited)

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
Thomas M. Dunning (68)	Trustee since 2008	Consultant, (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Director, Oncor Electric Delivery Company LLC (2007-present); Director, Baylor Health Care System Foundation (2007-present); State Vice Chair, State Fair of Texas (1987-present); Board Member, Southwestern Medical Foundation (1994-present); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
Richard A. Massman (67)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present), Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities). Chairman (2007-Present) and Director (2005-Present), The Dallas Opera Foundation; Chairman (2006-2009) and Director (2005-Present), Temple Emanu-El Foundation; Trustee, Presbyterian Hospital Foundation (2006-Present); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004- present); Trustee, American Beacon Master Trust (2004-present).
R. Gerald Turner (64) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas 75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, ChemFirst (1986-2002); Director, J.C. Penney Company, Inc. (1996-Present); Director, California Federal Preferred Capital Corp. (2001-2003); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Member, Salvation Army of Dallas Board of Directors; Member, Methodist Hospital Advisory Board; Co-Chair, Knight Commission on Intercollegiate Athletics; Trustee, American Beacon Mileage Funds (2001-present); Trustee, American Beacon Select Funds (2001- present); Trustee, American Beacon Master Trust (2001-present).
Paul J. Zucconi,CPA (70)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-present); Director, Titanium Metals Corporation (producer of titanium melted and mill products and sponge) (2002- present); Director, Torchmark Corporation (life and health insurance products) (2002- present); Director, National Kidney Foundation of North Texas (2003-Present); Director, Dallas Chapter of National Association of Corporate Directors (2004- Present); Partner, KPMG (1976-2001); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
OFFICERS
	Term
	One Year
William F. Quinn** (62)	Executive Vice President from 2007 to 2008 and 2009 to Present President from 1987 to 2007 and 2008 to 2009 Trustee from 1987 to 2008	Executive Chairman (2009-Present), Chairman (2006-2009) and CEO (2006- 2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007- 2009); Director, Crescent Real Estate Equities, Inc.(1994-2007); Director, Pritchard, Hubble & Herr, LLC (investment advisor) (2001-2006); Director of Investment Committee, Southern Methodist University Endowment Fund (1996- Present); Member, Southern Methodist University Cox School of Business Advisory Board (1999-2002); Member, New York Stock Exchange Pension Manager Committee (1997-1998, 2000-2002, 2006-Present); Chairman (2007- Present) and Vice Chairman (2004-2007), Committee for the Investment of Employee Benefits; Director, United Way of Metropolitan Tarrant County (1988- 2000, 2004-Present); Trustee, American Beacon Mileage Funds (1995-2008); Trustee, American Beacon Select Funds (1999-2008); Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002- present); Director, American Beacon Global Funds plc (2007-2009).

34

Trustees and Officers of the American Beacon Funds
(Unaudited)

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
Gene L. Needles, Jr. (55)	President 2009 to Present and Executive Vice President 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2008-2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), Managing Director of Sales (2002-2003), National Sales Manager (1999-2002), and Regional Sales Manager (1993-1999), AIM Distributors.
Rosemary K. Behan (51)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006- Present); Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney (1995-2004), Securities and Exchange Commission.
Brian E. Brett (50)	VP since 2004	Vice President, Director of Sales and Marketing, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment advisor) (1996-2004).
Wyatt Crumpler (44)	VP since 2007	Vice President, Asset Management, American Beacon Advisors, Inc. (2007- Present); Managing Director of Corporate Accounting (2004-2007), Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Michael W. Fields (56)	VP since 1989	Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-Present); Director American Beacon Global Funds SPC (2002-present); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (49)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.
Terri L. McKinney (47)	VP since 2009	Vice-President, Enterprise Services (2009-Present), Managing Director (2003- 2009), Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; Vice-President, Board of Trustees (2008-Present), Trustee (2006- 2008) Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (35)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice- President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).
Christina E. Sears (39)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Senior Compliance Analyst, American Beacon Advisors, Inc. (1998-2004).

*	The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the Board may determine to grant one or more annual exemptions to this requirement.
**	Mr. Feld is deemed to be an “interested person” of the Trusts, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two fiscal years to the Manager and one or more of the Trust’s and Master Trust’s sub-advisors.

35

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37

Delivery of Documents

eDelivery is NOW AVAILABLE — Stop traditional mail delivery and receive your
shareholder reports and summary prospectus on-line. Sign up at
www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Summary Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go to www.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.

To obtain more information about the Fund:

By E-mail:
american_beacon.funds@ambeacon.com

On the Internet:
Visit our website at www.americanbeaconfunds.com

By Telephone:
Institutional, Y, Investor, Advisor and Retirement Classes
Call (800) 658-5811
AMR Class^SM
Call (800) 345-2345

By Mail:
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643

Availability of Quarterly Portfolio Schedules

In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available on the Funds’ website (www.americanbeaconfunds.com) approximately twenty days after the end of each month.

Availability of Proxy Voting Policy and Records

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website (www.americanbeaconfunds.com) and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967-9009.

Fund Service Providers:

Custodian	Transfer Agent	Independent Registered	Distributor
State Street Bank and	Boston Financial Data	Public Accounting	Foreside Fund Services,
Trust	Services	Firm	LLC
Boston, Massachusetts	Kansas City, Missouri	Ernst & Young LLP	Portland, Maine
		Dallas, Texas

This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus or Summary Prospectus.

American Beacon Funds and American Beacon Small Cap Value Fund are service marks of American Beacon Advisors, Inc.

AR 10/10
SV1010

About American Beacon Advisors

Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents
President’s Message		1
Market and Performance Overview		2
Schedules of Investments:
Emerging Markets		11
International Equity		16
Additional Information	Back Cover

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and, therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

Investing in foreign equities entails additional risk not associated with domestic equities, such as currency fluctuations, economic and political instability and differences in accounting standards. The risks of investing in foreign equities are heightened when investing in emerging markets.

American Beacon Funds October 31, 2010

Fellow Shareholders,

     As the global economic recovery fluctuated over the past 12 months, one theme prevailed: investments placed with experienced, forward-thinking managers can still benefit. Opportunity abounds for those with the foresight to know how to capitalize on changing market conditions. It’s no coincidence that this theme also goes to the heart of the American Beacon Funds investment philosophy.

It’s a philosophy that has continued to serve our shareholders well. For the 12 months ended October 31, 2010, the American Beacon Emerging Markets Fund (Institutional Class) reported a return of 23.36%, while the American Beacon International Equity Fund (Institutional Class) returned 10.81% over the same period. Please note that the recent growth rate in the stock market has helped to produce short-term increases that are not typical and may not continue in the future.

While we keep a watchful eye on your investment in our funds, we also remain focused on seeking out new opportunities to help keep your financial goals on course. This is what guides the composition of American Beacon Funds’ product line-up. It is also what led to the addition of several new funds this past year: the American Beacon Zebra Large Cap and the Zebra Small Cap Equity Funds, which use a proprietary strategy to attempt to capture a unique source of equity return—the liquidity premium. We also recently added the American Beacon Evercore Small Cap Equity Fund, which relies on a fundamental bottom-up investment approach and is managed by the well-regarded Evercore Asset Management, LLC.

Continuously searching for new ways to serve our fellow shareholders’ needs is our commitment to you, a commitment we summarize as: Oversight 360. Ours is a continuous commitment to cast a thoughtful and analytical eye over all the factors that influence our investments.

We want to thank you for your continued investment in the American Beacon Funds. As you review the enclosed market overview, portfolio listings, and detailed financial data, please know that we remain dedicated to offering you both the level of superior service and knowledgeable investment management you’ve come to expect from us.

To obtain further details about the American Beacon Funds family or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,
 

 

Gene L. Needles, Jr.  

President
American Beacon Funds 

Securities of these Funds may only be sold by offering each Funds’ Prospectus and Summary Prospectus. You should consider the investment objectives, risks, fees and expenses of any mutual fund carefully before investing. This and other information is available in each Funds’ Prospectus and Summary Prospectus which you may obtain at www.americanbeaconfunds.com or by calling 1-800-967-9009. Please read the Prospectus and Summary Prospectus carefully before investing. Distributed by Foreside Fund Services, LLC.

There is no guarantee that the Funds’ investment objective will be met. At times, certain securities held by the American Beacon Zebra Large Cap Equity and Small Cap Equity Funds may have limited marketability and may be difficult to sell. Investing in the securities of small and mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Because the American Beacon Evercore Small Cap Equity Fund is a focused portfolio of fewer companies, the increase or decrease of the value of a single stock may have a greater impact on the Fund’s NAV and total return when compared to other diversified funds.

1

Emerging Markets Overview

October 31, 2010 (Unaudited)

          For the 12 months ended October 31, 2010, the MSCI Emerging Markets Index produced a return of 23.56% Throughout much of the past year, risk aversion stemming from poor economic data releases and exhilaration resulting from central bank intervention oscillated financial markets back and forth. To this point, global equities bounced sharply off their lows in early July as positive European bank stress test results signaled that the worst of the European debt crisis had passed. Second quarter corporate earnings also surprised on the upside, adding to hopes that the global economy was still on the road to recovery. However, in August, risk aversion reemerged on the back of rapidly deteriorating economic data, particularly in the U.S. At the same time, sovereign debt rating cuts and outlook downgrades within the Eurozone reignited European sovereign debt fears. In response to this weakening backdrop, the U.S. Federal Reserve announced it would reinvest its maturing agency and mortgage-backed securities into Treasuries and would stand by to assist the U.S. economic recovery with further quantitative easing if need be.

          Against this backdrop, Emerging Market equities outperformed developed markets for the year, as investors sought out markets with economies that offered greater growth potential. The Emerging Europe, Middle East and North Africa region led regional gains returning 24.8%. Latin America and Emerging Asia followed returning 23.5% and 23.0%, respectively.

          China tightened lending policies just enough to moderate the pace of loan growth and remove some of the froth from its property market. While the government has indicated a willingness to remove the peg to the U.S. dollar and allow a strengthening of the currency, evidence points to a prolonged and moderate appreciation of the Yuan. China surpassed Japan to become the world’s second largest economy, a reminder of the country’s critical role to the global economic recovery.

          The next six to 12 months will be challenging for EM Central Banks as rising food inflation continues in emerging Asia. An effort to stem inflationary pressures with tightening monetary policy could spark continued foreign investment flows attracted to higher yields, denting export pricing competitiveness. Brazil is contemplating further taxation of foreign inflows on top of its current 4% surcharge to mitigate further currency appreciation.

          All told, emerging markets have performed relatively well compared to the G7. Still, there has been a notable shift in favor of domestic demand versus cyclical sectors that are more exposed to trade. China, for instance, has curbed credit expansion to dampen speculative property investing. Lending has been robust, and many Chinese banks could be forced to raise capital to support future growth and protect balance sheets from loan losses

          Still, the outlook for Emerging Markets remains positive. With a burgeoning middle class, pent up consumer demand, and young populations, emerging markets appear unmatched in their prospective return on investment. The staggering growth of emerging market economies has led to a new dynamic in global consumerism. Increasing wealth and modernization across these markets is creating a new global middle class, which will likely become tomorrow’s most important consumer base.

2

Performance Overview
American Beacon Emerging Markets Fund^SM

October 31, 2010 (Unaudited)

          The Institutional Class of the Emerging Markets Fund returned 23.36% for the twelve months ended October 31, 2010. The Fund underperformed the MSCI Emerging Markets Index (“Index”) return of 23.56% and the Lipper Emerging Markets Funds Index return of 26.39% for the period.

Comparison of Change in Value of a $10,000 Investment
For The Period From 10/31/00 Through 10/31/10

										Value of
	Total Returns									$10,000
	Periods Ended 10/31/10									10/31/00-
	1 Year			5 Years			10 Years			10/31/10
Institutional Class(1,7)		23.36	%		13.73	%		14.68	%	$	39,347
Y Class (1,2,7)		23.19	%		13.70	%		14.67	%		32,103
Investor Class(1,3,7)		22.85	%		13.35	%		14.40	%		38,384
A Class with sales Charge(1,4,7)		15.61	%		11.99	%		13.70	%		29,516
A Class without sales Charge(1,4,7)		22.68	%		13.32	%		14.38	%		31,316
C Class with sales Charge(1,5,7)		21.60	%		13.30	%		14.37	%		31,294
C Class without sales Charge(1,5,7)		22.60	%		13.30	%		14.37	%		31,294
AMR Class(1,7)		23.47	%		13.98	%		14.95	%		40,268
MSCI Emg Mkts Index (6)		23.56	%		14.94	%		14.62	%		39,152
Lipper Emg Mkts Funds Index(6)		26.39	%		13.27	%		14.06	%		37,283

1.	Performance shown is historical and may not be indicative of future returns. Please note that the recent growth rate in the stock market has helped to produce short-term returns that are not typical and may not continue in the future. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of the date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.
2.	Fund performance for the one-year, five-year, and ten-year periods represent the returns achieved by the Institutional Class from 10/31/00 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/00.
3.	Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/00 up to 10/1/02, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the Institutional Class. Therefore, total returns shown may be higher than they would have been had the Investor Class been in existence since 10/31/00. A portion of the fees charged to the Investor Class of the Fund was waived in 2004 and 2005 and recouped in 2006. Performance prior to fee waivers and fee recoupment is different than the actual returns shown.
4.	Fund performance for the one-year, five-year, and ten-year periods represent the returns achieved by the Institutional Class from 10/31/00 through 10/1/02, the Investor Class from 10/1/02 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Institutional and Investor Classes. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/00. The maximum sales charge for A Class is 5.75%.
5.	Fund performance for the one-year, five-year, and ten-year periods represent the returns achieved by the Institutional Class from 10/31/00 through 10/1/02, the Investor Class from 10/1/02 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Institutional and Investor Classes. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/00. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.
6.	The MSCI Emerging Markets Index is a market capitalization weighted index composed of companies that are representative of the market structure of developing countries in Latin America, Asia, Eastern Europe, the Middle East and Africa. The Lipper Emerging Markets Funds Index tracks the results of the 30 largest mutual funds in the Lipper Emerging Market Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.
7.	The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, C, and AMR Class shares was 1.67%, 1.77%, 1.97%, 2.17%, 2.72%, and 1.43%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

          The Fund underperformed the Index over the twelve-month period as a result of poor stock selection and the Fund’s cash balances returning less than the Index. Country allocation added value for the period.

          Stock selections in South Korea, Taiwan, and South Africa led to the relative underperformance, more than offsetting positive selections in India. In

3

Performance Overview
American Beacon Emerging Markets Fund^SM

October 31, 2010 (Unaudited)

South Korea, investment in Tong Yang Life Insurance (down 9.9%) contributed to the relative underperformance. Detractors in Taiwan included Transcend Information, Inc. (down 20.8% during the period it was held by the Fund) and Cathay Financial Holding Co. Ltd. (down 7.7%), and in South Africa, ArcelorMittal South Africa Ltd. (down 13.5%) underperformed. Positive contributors in India, such as State Bank of India (up 54.1%), Glenmark Pharmaceuticals Ltd. (up 59.9% during the period it was held by the Fund), and Bank of India (up 57.1%) added value for the period.

          Relative contribution from country allocation was positive for the twelve-month period, as a result of overweighting Thailand and Turkey (up 61.8% and 54.7%, respectively), and underweighting Russia (up 13.4%). Null weighting Chile and Colombia (up 58.2% and 74.4%, respectively) detracted from performance for the period.

          The Fund’s basic philosophy remains focused on investing in attractively valued companies with above-average earnings growth expectations.

Top Ten Holdings

	% of
	Net Assets
Samsung Electronics Co. Ltd.		2.4	%
Petroleo Brasileiro S.A.		2.4	%
Itau Unibanco Banco Holding S.A.		1.5	%
Vale S.A.		1.5	%
America Movil, S.A.B. de C.V.		1.5	%
Gazprom OAO		1.4	%
China Mobile Ltd.		1.4	%
Reliance Industries Ltd.		1.3	%
China Construction Bank Corp.		1.2	%
LUKOIL Oil Co.		1.2	%

Sector Allocation

	% of Equities
Financials		27.4	%
Information Technology		11.9	%
Materials		11.4	%
Telecommunication Services		11.3	%
Energy		9.2	%
Industrials		9.0	%
Consumer Staples		7.7	%
Consumer Discretionary		7.3	%
Utilities		2.6	%
Health Care		2.2	%

Country Allocation

	% of
	Equities
Hong Kong/China		16.7	%
South Korea		14.8	%
Brazil		14.0	%
India		9.7	%
Taiwan		9.3	%
South Africa		8.1	%
Russia		5.0	%
Mexico		4.3	%
Indonesia		3.0	%
Poland		3.0	%
Thailand		2.5	%
Turkey		2.5	%
Malaysia		1.8	%
Philippines		1.4	%
Peru		1.0	%
Egypt		0.9	%
Hungary		0.7	%
Czech Republic		0.4	%
Lebanon		0.3	%
Singapore		0.3	%
Argentina		0.1	%
United Kingdom		0.1	%
Israel		0.1	%
United States		0.0	%

4

Fund Expenses
American Beacon Emerging Markets Fund^SM

October 31, 2010 (Unaudited)

Fund Expense Example

          As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as redemption fees, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

          The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2010 through October 31, 2010.

Actual Expenses

          The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

          The “Hypothetical” lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

          You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by the Fund, such as redemption fees. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.

	Beginning		Ending
	Account		Account		Expenses Paid
	Value		Value		During Period*
	5/1/10		10/31/10		5/1/10-10/31/10
Institutional Class
Actual	$	1,000.00	$	1,104.78	$	7.16
Hypothetical#	$	1,000.00	$	1,018.40	$	6.87
Y Class
Actual	$	1,000.00	$	1,104.11	$	7.48
Hypothetical#	$	1,000.00	$	1,018.10	$	7.17
Investor Class
Actual	$	1,000.00	$	1,102.62	$	9.49
Hypothetical#	$	1,000.00	$	1,016.18	$	9.10
AMR Class
Actual	$	1,000.00	$	1,105.06	$	7.64
Hypothetical#	$	1,000.00	$	1,017.95	$	7.32
A Class**
Actual	$	1,000.00	$	1,179.34	$	8.87
Hypothetical#	$	1,000.00	$	1,014.84	$	8.24
C Class**
Actual	$	1,000.00	$	1,106.29	$	4.40
Hypothetical#	$	1,000.00	$	1,004.11	$	4.25

*	Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.35%, 1.41%, 1.79%, 1.44%, 1.78% and 2.54% for the Institutional, Y, Investor, AMR, A and C Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half year period.
#	5% return before expenses
**	Beginning account value is the inception date of 5/17/10 and 9/1/10 for the A and C Classes, respectively. Expenses are equal to the Fund’s annualized expense ratio for the period multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the period (168 and 61) for the A and C Classes, respectively by the days in the year (365).

5

International Equity Market Overview

October 31, 2010 (Unaudited)

          For the 12 months ended October 31, 2010, the MSCI EAFE Index produced a return of 8.36% During this time, global equities generally advanced against a backdrop of heightened volatility and an uneven global economic recovery. Developed markets grew at a more subdued pace, with demand recovery and rising asset prices heavily underpinned by government-sponsored, liquidity-enhancing measures. This official intervention took its toll on the balance sheets of developed nations, and growing concerns of potential sovereign defaults in several European countries significantly roiled equity markets.

          Most developed market policymakers kept interest rates at historically low levels and began quantitative easing programs. This flooded the financial system with new money through direct asset purchases. The measures buoyed equities throughout the world markets. Headline growth continued to recover and corporate earnings rebounded sharply. However, critical economic fundamentals such as employment, home prices and credit creation all remained substantially depressed. This led many investors to question the true health of the global economy and the sustainability of the recovery.

          Yet, a handful of economic indicators fueled optimism that the underpinnings of the global economy were sound. During the first quarter, for example, the German IFO survey of business confidence registered 98.1, its highest level since June 2008. In addition, Japan staged the beginnings of a bear market rally. A surge in exports supported a more optimistic growth forecast and the Bank of Japan (BOJ) resumed quantitative easing to keep pressure off the yen.

          Most markets were helped by the U.S. Federal Reserve’s policy of keeping interest rates low. After a strong rally from early February through mid-April, developed-market equities corrected rather sharply during the balance of the second quarter. The MSCI EAFE Index declined in each of the three months of the quarter, with the May reading dropping the most since early 2009 as a result of concerns surrounding Europe and China. Europe’s ongoing debt problem weighed heavily on international equity markets, while U.S. dollar-based losses were compounded by weak currencies, except in Japan where the yen rose against the U.S. dollar. The risk trade remained dormant due to several factors, including Europe’s tenuous financial situation, tension in the Middle East and Korea, the Gulf of Mexico oil disaster, and weak U.S. job creation. Germany introduced a 10-month ban on naked short-selling, and the European and U.S. governments made progress in instituting regulations that would limit hedge fund and banking activity. All of this had a negative, albeit temporary, effect on the global financials sector.

          However, global equities surged during the third quarter, with September setting records not seen since the Depression in many markets. European banks rallied, as the less than strenuous stress test yielded few risks in the sector. With only seven banks found to be short of capital totaling 3.5 billion euros, investors moved to take long positions in the sector. Higher-risk markets that had been heavily sold off (Spain, Italy and Portugal) posted solid returns. However, revelations about Ireland’s continued financial crisis crimped sentiment later in the period. Japan struggled against a resilient yen that has forced the Bank of Japan to announce a quantitative easing program aimed at helping the export sector. A weaker U.S. dollar complemented base currency performance and also helped lift commodity stocks during the period. There were cautionary signs amidst this most recent rally, however. Earnings momentum began to slow and 2011 forecasts had begun to decline due to rising raw material prices, more challenging comparables, and questionable demand.

          Developed market equities continued to grind higher during October as the “risk on” trade continued against the backdrop of expected Fed QE2 (further quantitative easing) in early November. The euro area markets along with the U.K. outperformed Asia, as both Japan and Australia lagged during the period. The quarterly earnings season began during the month with early signs pointing to a mixed picture. While some companies continued to outperform expectations, the outlook statements in a variety of sectors pointed to a slowing trajectory of GDP growth globally in the next 12 months, potentially holding back sequential EPS growth.

6

Performance Overview
American Beacon International Equity Fund^SM

October 31, 2010 (Unaudited)

          The Institutional Class of the International Equity Fund returned 10.81% for the twelve months ended October 31, 2010. The Fund outperformed the MSCI EAFE Index (“Index”) return of 8.36% but underperformed the Lipper International Funds Index return of 12.98% for the period.

Comparison of Change in Value of a $10,000 Investment
For The Period From 10/31/00 Through 10/31/10

										Value of
	Annualized Total Returns									$10,000
	Periods Ended 10/31/10									10/31/00-
	1 Year			5 Years			10 Years			10/31/10
Institutional Class(1,8)		10.81	%		3.84	%		5.28	%	$	16,726
Y Class(1,2,8)		10.70	%		3.82	%		5.27	%		16,710
Investor Class(1,8)		10.36	%		3.54	%		5.03	%		16,338
Advisor Class(1,3,8)		10.13	%		3.25	%		4.81	%		15,989
Retirement Class(1,4,8)		9.93	%		3.21	%		4.79	%		15,961
A Class with sales charge(1,5,8)		3.91	%		2.30	%		4.40	%		15,381
A Class without sales charge(1,5,8)		10.23	%		3.52	%		5.02	%		16,318
C Class with sales charge(1,6,8)		9.03	%		3.48	%		5.00	%		16,289
C Class without sales charge(1,6,8)		10.03	%		3.48	%		5.00	%		16,289
AMR Class(1,8)		11.05	%		4.11	%		5.54	%		17,141
Lipper Int’l. Funds Index(7)		12.98	%		4.85	%		4.24	%		15,139
MSCI EAFE Index (7)		8.36	%		3.31	%		3.17	%		13,669

1.	Performance shown is historical and may not be indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.
2.	Fund performance for the five-year and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/00 up to 8/3/09, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/00.
3.	Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/00 up to 5/1/03, the inception date of the Advisor Class, and the returns of the Advisor Class since its inception. Expenses of the Advisor Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/00. A portion of the fees charged to the Advisor Class of the Fund was waived through 2007. Performance prior to waiving fees was lower than the actual returns shown for periods through 2007.
4.	Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 through 4/30/03 and the Advisor Class from 5/1/03 up to 5/1/09, the inception date of the Retirement Class, and the returns of the Retirement Class since its inception. Expenses of the Retirement Class are higher than those of the Advisor and Investor Classes. As a result, total returns shown may be higher than they would have been had the Retirement Class been in existence since 10/31/00.
5.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/00. The maximum sales charge for A Class is 5.75%.
6.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/00. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.
7.	The Lipper International Funds Index tracks the results of the 30 largest mutual funds in the Lipper International Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index. The MSCI EAFE Index is a market capitalization weighted index of international stock performance composed of equities from developed markets excluding the U.S. and Canada.
8.	The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, Retirement, A, C, and AMR Class shares was 0.74%, 0.70%, 1.06%, 1.46%, 1.49%, 1.24%, 1.99%, and 0.49%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

7

Performance Overview

American Beacon International Equity Fund^SM

October 31, 2010 (Unaudited)

          The Fund outperformed the Index by 2.45% over the twelve-month period due to stock selection and country allocation.

          Stock selections within the United Kingdom, Japan, and South Korea benefited the Fund’s relative performance. In the United Kingdom, the Fund added value through investments in Rolls-Royce Group plc (up 39.0%) and Informa plc (up 49.4%). Fanuc Ltd. (up 71.2%) and Daito Trust Construction Co. Ltd. (up 48.4%) in Japan and Hyundai Heavy Industries Co. Ltd. (up 136.6%) and Hyundai Mobis (up 48.3%) in South Korea also contributed to the Fund’s relative outperformance. Stock selections in Hong Kong and Australia detracted from relative performance, including Esprit Holdings Ltd. (down 16.5%) in Hong Kong and Nufarm Ltd. (down 48.5% for the period the Fund owned the security) and BlueScope Steel Ltd. (down 26.2%) in Australia.

          Country allocation contributed positively to relative performance, specifically underweighting Spain (down 8.6%) and overweighting Singapore (up 30.7%), though the Fund lost value through underweighting Australia (up 12.5%) during the period.

          Although economic and market conditions vary from period to period, the Fund’s primary strategy of investing in undervalued companies with above-average earnings growth expectations remains consistent.

Top Ten Holdings

	% of
	Net Assets
Sanofi-Aventis S.A.		2.4	%
HSBC Holdings plc		2.1	%
Royal Dutch Shell plc		1.9	%
Siemens AG		1.8	%
DBS Group Holdings Ltd.		1.7	%
Novartis AG		1.7	%
Vodafone Group plc		1.6	%
GlaxoSmithKline plc		1.5	%
UBS AG		1.5	%
Roche Holding Ltd.		1.8	%

Sector Allocation

	%
Financials		22.3	%
Industrials		16.3	%
Consumer Discretionary		13.0	%
Materials		9.5	%
Health Care		9.3	%
Energy		8.3	%
Telecommunication Services		6.8	%
Information Technology		5.9	%
Consumer Staples		5.7	%
Utilities		2.9	%

Regional Allocation*

* shown as a percentage of equities

Region
Europe	70.5	%
Asia	26.9	%
North America	1.9	%
Middle East	0.7	%

8

Fund Expenses
American Beacon International Equity Fund^SM

October 31, 2010 (Unaudited)

Fund Expense Example

          As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as redemption fees, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds.

          The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2010 through October 31, 2010.

Actual Expenses

          The “Actual” lines of the table provide information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

          The “Hypothetical” lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period.

          Shareholders of the Investor and Institutional Classes that invest in the Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

          You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by the Fund, such as redemption fees. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the table are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.

	Beginning		Ending
	Account		Account		Expenses Paid
	Value		Value		During Period*
	5/1/10		10/31/10		5/1/10-10/31/10
Institutional Class
Actual	$	1,000.00	$	1,058.41	$	3.68
Hypothetical#	$	1,000.00	$	1,021.63	$	3.62
Y Class
Actual	$	1,000.00	$	1,057.26	$	4.25
Hypothetical#	$	1,000.00	$	1,021.07	$	4.18
Investor Class
Actual	$	1,000.00	$	1,055.95	$	5.60
Hypothetical#	$	1,000.00	$	1,019.76	$	5.50
Advisor Class
Actual	$	1,000.00	$	1,054.82	$	6.53
Hypothetical#	$	1,000.00	$	1,018.85	$	6.41
Retirement Class
Actual	$	1,000.00	$	1,053.60	$	7.51
Hypothetical#	$	1,000.00	$	1,017.90	$	7.38
AMR Class
Actual	$	1,000.00	$	1,059.34	$	2.39
Hypothetical#	$	1,000.00	$	1,022.89	$	2.35
A Class**
Actual	$	1,000.00	$	1,159.83	$	6.18
Hypothetical#	$	1,000.00	$	1,017.28	$	5.78
C Class**
Actual	$	1,000.00	$	1,104.58	$	3.44
Hypothetical#	$	1,000.00	$	1,005.03	$	3.33

*	Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.71%, 0.82%, 1.08%, 1.26%, 1.45%, 0.46%, 1.25% and 1.99% for the Institutional, Y, Investor, Advisor, Retirement, AMR, A and C Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half year period.
#	5% return before expenses.
**	Beginning account value is the inception date of 5/17/10 and 9/1/10 for the A and C Classes, respectively. Expenses are equal to the Fund’s annualized expense ratio for the period multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the period (168 and 61) for the A and C Classes, respectively by the days in the year (365).

9

American Beacon Funds
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of
American Beacon Emerging Markets Fund and American Beacon International Equity Fund:

We have audited the accompanying statements of assets and liabilities, including the schedule of investments, of the American Beacon Emerging Markets Fund and the American Beacon International Equity Fund (two of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2010, and the related statements of operations for the year then ended, the statements of changes of net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ 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 each Fund’s 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 October 31, 2010, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers 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 the American Beacon Emerging Markets Fund and the American Beacon International Equity Fund at October 31, 2010, 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 periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas
December 23, 2010

10

American Beacon Emerging Markets Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
ARGENTINA — 0.13%
COMMON STOCKS — 0.13% (Cost $136)
Banco Macro S.A., ADR*		3,992		199
BRAZIL — 13.17%
COMMON STOCKS — 10.89% (Cost $13,206)
Banco Bradesco S.A., ADR*		22,484		468
Banco do Brasil S.A.		19,900		387
Banco Santander Brasil S.A., ADR*		58,840		847
BM & F Bovespa S.A.		75,800		635
Brasil Telecom Participacoes S.A., ADR* †		1,760		39
BRF — Brasil Foods S.A.		42,110		612
Centrais Eletricas Brasileiras S.A.		15,966		220
Cia de Bebidas das Americas, ADR*		5,200		724
Cia de Saneamento Basico do Estado de Sao Paulo		1,770		40
Cia de Saneamento de Minas Gerais- COPASA		34,300		527
Cielo S.A.		53,100		457
Empresa Brasileira de Aeronautica S.A. (Embraer), ADR*		9,620		278
Gerdau S.A., ADR*		34,770		453
Grendene S.A.		53,640		280
Itau Unibanco Banco Holding S.A., GDR‡		79,519		1,952
JBS S.A.		138,400		532
Light S.A.		19,800		249
MRV Engenharia e Participacoes S.A.		30,100		294
OGX Petroleo e Gas Participacoes S.A.†		24,000		315
PDG Realty S.A. Empreendimentos e Participacoes		40,800		510
Petroleo Brasileiro S.A., A Shares, ADR*		75,649		2,358
Petroleo Brasileiro S.A., ADR*		35,250		1,203
Porto Seguro S.A.		26,160		385
Redecard S.A.		47,400		613
Tele Norte Leste Participacoes S.A., ADR*		26,060		400
TIM Participacoes S.A., ADR*		5,500		177
Vale S.A., ADR*		30,310		975
Vivo Participacoes S.A., GDR‡		15,700		450
Total Common Stock				16,380
PREFERRED STOCKS — 2.28% (Cost $1,550)
Banco Bradesco S.A.		9,680		200
Braskem S.A.		35,800		367
Cia de Tecidos do Norte de Minas — Coteminas		54,862		142
Cia Energetica de Minas Gerais		41,703		734
Gerdau S.A.†		5,800		75
Itau Unibanco Banco Holding S.A.		13,955		340
Ultrapar Participacoes S.A.		4,600		279
Vale S.A., ADR*		34,286		985
Vale S.A., A Shares		10,704		301
Total Preferred Stocks				3,423
Total Brazil				19,803
CZECH REPUBLIC — 0.41%
COMMON STOCKS — 0.41% (Cost $369)
Komercni Banka, a.s.		2,724		618

	Shares		Value
			($000)
EGYPT — 0.83%
COMMON STOCKS — .83% (Cost $1,080)
Commercial International Bank Egypt SAE		79,742		601
Juhayna Food Industries†		202,733		194
National Societe Generale Bank		6,391		45
Telecom Egypt		131,353		403
Total Egypt				1,243
HONG KONG/CHINA — 15.74%
COMMON STOCKS — 15.74% (Cost $19,813)
Agricultural Bank of China†		590,000		311
AIA Group Ltd. †		203,000		604
Asia Cement China Holdings Corp.		599,500		271
Bank of China Ltd.		1,131,900		679
Beijing Capital International Airport Co. Ltd.		1,012,000		557
Beijing Enterprises Holdings Ltd.		52,500		359
Belle International Holdings Ltd.		261,000		469
BYD Electronic International Co. Ltd.		826,000		439
China Citic Bank Corp. Ltd.		319,000		231
China Coal Energy Ltd.		244,000		422
China Communications Services Corp. Ltd.		494,000		287
China Construction Bank Corp.		1,934,360		1,844
China Gas Holdings Ltd.		422,000		242
China High Speed Transmission Equipment Group Co Ltd.		102,000		208
China Life Insurance Co. Ltd.		120,000		526
China Mobile Ltd., ADR*		8,170		420
China Mobile Ltd.		166,500		1,695
China Oilfield Services Ltd.		184,000		297
China Pacific Insurance Group Co Ltd.		91,000		377
China Petroleum & Chemical Corp.		216,000		203
China Petroleum & Chemical Corp., ADR*		3,300		315
China Power International Development Ltd.		1,458,800		331
China Railway Group Ltd.		694,000		560
China Resources Power Holdings Co. Ltd.		202,000		388
China Shenhua Energy Company Ltd.		64,000		286
China Telecom Corp. Ltd.		692,000		359
COSCO Pacific Ltd.		327,578		509
Dongfeng Motor Group Co. Ltd.		208,000		450
Global Bio-chem Technology Group Co. Ltd.		2,402,520		391
Guangzhou Automobile Group Co. Ltd.		149,370		229
Harbin Power Equipment Co. Ltd.		100,000		135
Hengan International Group Co. Ltd.		20,000		189
Huaneng Power International, Inc., ADR*		7,260		166
Huaneng Power International, Inc.		655,900		374
Industrial & Commercial Bank of China		1,565,000		1,260
JA Solar Holdings Co Ltd., ADR* †		26,610		222
Lumena Resources Corp ††		686,000		243
Maanshan Iron & Steel		354,000		204
Netease.com, Inc., ADR* †		4,300		180
NWS Holdings Ltd.		267,526		630
PetroChina Co. Ltd.		948,000		1,154
PetroChina Co. Ltd., ADR*		1,960		241
Ping’an Insurance Co. of China Ltd.		37,500		402
Renhe Commercial Holdings Co. Ltd.		3,764,000		719

See accompanying notes

11

American Beacon Emerging Markets Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Shanghai Industrial Holdings Ltd.		84,000		388
Sinotrans Ltd.		1,461,000		396
Sohu.com, Inc.†		5,100		380
Tencent Holdings Ltd.		21,000		481
Tianjin Development Holdings		44,000		34
TPV Technology Ltd.		206,970		128
Tsingtao Brewery Co. Ltd.		36,000		193
Want Want China Holdings Ltd.		287,000		265
Weiqiao Textile Co.		517,600		407
Xinjiang Goldwind Science and Technology Co. Ltd.† §		116,400		302
Yanzhou Coal Mining Co. Ltd.		106,000		305
Total Hong Kong/China				23,657
HUNGARY — 0.64%
COMMON STOCKS — .64% (Cost $686)
Mol Hungarian Oil and Gas plc		3,984		424
Richter Gedeon Nyrt		2,281		543
Total Hungary				967
INDIA — 9.14%
COMMON STOCKS — 9.14% (Cost $10,060)
Asian Paints Ltd.		4,854		293
Bank of India		40,620		444
Bharti Airtel Ltd.		117,330		861
Dr Reddy’s Laboratories Ltd.		13,235		495
Engineers India Ltd.		25,108		196
Glenmark Pharmaceuticals Ltd.		104,854		804
HDFC Bank Ltd.		17,202		879
Hindalco Industries Ltd.		79,462		379
India Cements Ltd.		304,530		757
IndusInd Bank Ltd.		74,974		450
Infosys Technologies Ltd.		16,309		1,089
Infrastructure Development Finance Co. Ltd.		102,531		462
ITC Ltd.		55,129		211
Jindal Steel & Power Ltd.		15,566		244
KSK Energy Ventures Ltd.†		46,000		173
Larsen & Toubro Ltd.		8,182		372
Mahanagar Telephone Nigam Ltd.†		182,310		276
NMDC Ltd.		60,270		376
Patni Computer Systems Ltd.		6,350		66
Reliance Industries Ltd.		77,117		1,904
Rolta India Ltd.		131,360		493
Rural Electrification Corp. Ltd.		39,656		331
State Bank of India		3,595		255
State Bank of India, GDR‡ **		5,630		777
Sun TV Network Ltd.		17,777		200
Tata Consultancy Services Ltd.		10,315		244
Tata Motors Ltd.		27,377		717
Total India				13,748
INDONESIA — 2.87%
COMMON STOCKS — 2.87% (Cost $2,333)
Astra Agro Lestari Tbk PT		47,500		132
Astra International Tbk PT		112,400		716
Bank Rakyat Indonesia Persero Tbk PT		269,500		344
Lippo Karawaci Tbk PT†		5,881,000		408
PT Bank Central Asia Tbk		675,000		529
PT Indofood Sukses Makmur Tbk		698,500		407
PT Indosat Tbk		968,000		650
PT International Nickel Indonesia Tbk		204,500		109
PT Medco Energi Internasional Tbk		470,000		214
PT Perusahaan Gas Negara Persero Tbk		318,500		144

	Shares		Value
			($000)
PT Telekomunikasi Indonesia Tbk		651,800		664
Total Indonesia				4,317
ISRAEL — 0.11%
COMMON STOCKS — 0.11% (Cost $140)
Teva Pharmaceutical Industries Ltd., ADR*		3,180		165
LEBANON — 0.33%
COMMON STOCKS — .33% (Cost $517)
Banque Audi sal- Audi Saradar Group, GDR‡		31,198		260
BLOM Bank SAL, GDR‡		24,710		231
Total Lebanon				491
MALAYSIA — 1.73%
COMMON STOCKS — 1.73% (Cost $1,691)
Axiata Group Bhd†		477,400		689
Genting Malaysia Bhd		688,610		775
Malayan Banking Bhd		230,970		668
Sime Darby Bhd		123,400		350
Tenaga Nasional Bhd		42,200		119
Total Malaysia				2,601
MEXICO — 4.01%
COMMON STOCKS — 4.01% (Cost $4,327)
America Movil, S.A.B. de C.V., ADR*		38,657		2,213
Consorcio ARA, S.A.B. de C.V.		278,700		177
Desarrolladora Homex, S.A.B. de C.V., ADR* †		16,482		553
Embotelladoras Arca, S.A.B. de C.V.		91,730		379
Empresas ICA, S.A.B. de C.V.†		63,200		167
Fomento Economico Mexicano, S.A.B. de C.V., ADR*		10,200		560
Genomma Lab Internacional SA de C.V.†		104,700		226
Grupo Continential, S.A.B. de C.V.		105,750		298
Grupo Financiero Banorte, S.A.B. de C.V.		114,689		491
Grupo Simec SAB de C.V. STET†		12,400		30
Industrias CH S.A.B de C.V.†		34,100		123
Urbi Desarrollos Urbanos, S.A.B. de C.V.†		51,300		109
Wal-Mart de Mexico, S.A.B. de C.V.		259,400		710
Total Mexico				6,036
PERU — 0.93%
COMMON STOCKS — .93% (Cost $1,059)
Compania de Minas Buenaventura S.A., ADR*		7,030		373
Credicorp Ltd.		5,110		643
Southern Copper Corp.		8,821		378
Total Peru				1,394
PHILIPPINES — 1.33%
COMMON STOCKS — 1.33% (Cost $1,426)
Ayala Corp.		31,220		292
Bank of the Philippine Islands		257,523		351
Metro Pacific Investments Corp.		3,462,000		345
Metropolitan Bank & Trust		208,100		379
Philippine Long Distance Telephone Co.		5,080		316
SM Investments Corp.		25,220		320
Total Philippines				2,003
POLAND — 2.81%
COMMON STOCKS — 2.81% (Cost $3,715)
Asseco Poland S.A.		30,151		558

See accompanying notes

12

American Beacon Emerging Markets Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Bank Pekao S.A.		10,096		660
Central European Distribution Corp.†		12,111		302
Eurocash S.A.		43,301		398
Polski Koncern Naftowy Orlen S.A.		11,594		164
Powszechna Kasa Oszczednosci Bank Polski S.A.		44,487		702
Powszechny Zaklad Ubezpieczen S.A.		2,689		357
Telekomunikacja Polska S.A.		170,652		1,087
Total Poland				4,228
RUSSIA — 4.69%
COMMON STOCKS — 4.69% (Cost $5,618)
Gazprom OAO, ADR*		97,360		2,127
LUKOIL Oil Co., ADR*		31,833		1,778
OJSC MMC Norilsk Nickel, ADR*		14,349		268
Sberbank of Russia, GDR‡		3,700		1,397
VimpelCom Ltd., ADR* †		31,170		478
Wimm-Bill-Dann Foods OJSC, ADR*		24,048		610
X 5 Retail Group NV, GDR †‡		251		11
X 5 Retail Group NV†		9,232		386
Total Russia				7,055
SINGAPORE — 0.26%
COMMON STOCKS — 0.26% (Cost $274)
Golden Agri-Resources Ltd.		760,000		382
SOUTH AFRICA — 7.62%
COMMON STOCKS — 7.62% (Cost $8,864)
Anglo Platinum Ltd.		4,482		443
AngloGold Ashanti Ltd., ADR*		2,734		129
ArcelorMittal South Africa Ltd.		27,784		319
AVI Ltd.		101,542		406
Barloworld Ltd.		47,150		353
Clicks Group Ltd.		65,300		426
Impala Platinum Holdings Ltd.		28,100		795
Imperial Holdings Ltd.		16,200		264
JD Group Ltd.		74,900		527
MTN Group Ltd.		93,266		1,678
Murray & Roberts Holdings Ltd.		113,710		704
Nampak Ltd.		114,140		321
Naspers Ltd.		17,426		915
Nedbank Group Ltd.		23,420		438
Pick n Pay Stores Ltd.		46,795		308
SABMiller plc.		18,104		586
Sappi Ltd.†		63,644		315
Sasol Ltd.		14,610		658
Sasol Ltd., ADR*		4,490		203
Standard Bank Group Ltd.		93,726		1,382
Telkom South Africa Ltd.		56,100		290
Total South Africa				11,460
SOUTH KOREA — 13.97%
PREFERRED STOCKS — 0.16% (Cost $102)
Samsung Electronics Co. Ltd.		484		238
COMMON STOCKS — 13.82% (Cost $16,182)
Amorepacific Corp.		207		191
Cheil Industries, Inc.		3,669		308
Cheil Worldwide, Inc.		22,378		244
CJ CheilJedang Corp.		249		48
GS Engineering & Construction Corp.		2,646		225
Hite Brewery Co. Ltd.		2,167		242
Hyundai Development Co.		20,540		576
Hyundai Engineering & Construction Co. Ltd.		4,302		288

	Shares		Value
			($000)
Hyundai Heavy Industries Co. Ltd.		1,047		341
Hyundai Mobis		2,346		584
Hyundai Motor Co.		6,082		919
Hyundai Steel Co.		2,197		213
Jinro Ltd.		5,100		172
KB Financial Group, Inc.		35,756		1,588
KB Financial Group, Inc., ADR*		1,950		88
Korea Electric Power Corp.		15,465		407
Korea Electric Power Corp., ADR*		780		10
Korea Exchange Bank		9,280		111
Korean Reinsurance Co.		35,733		402
KT Corp., ADR*		7,930		164
KT Corp.		6,482		256
KT&G Corp.		8,693		534
LG Chem Ltd.		2,255		696
LG Display Co. Ltd.		8,060		275
LG Display Co. Ltd., ADR*		2,995		52
LG Electronics, Inc.		9,453		832
Lotte Chilsung Beverage Co. Ltd.		244		167
NHN Corp.†		1,868		331
Nong Shim Co. Ltd.		3,235		595
OCI Co. Ltd.		1,087		320
POSCO, ADR*		660		69
POSCO		1,883		773
Samsung C&T Corp.		3,880		228
Samsung Electronics Co. Ltd.		5,170		3,422
Samsung Fire & Marine Insurance Co. Ltd.		6,068		1,041
Shinhan Financial Group Co. Ltd.		26,626		1,030
Shinsegae Co. Ltd.		866		439
SK Telecom Co. Ltd.		790		120
SK Telecom Co. Ltd., ADR*		40,170		740
S-Oil Corp.		3,539		218
SSCP Co. Ltd.†		10,299		70
Tong Yang Life Insurance		49,300		521
Woongjin Coway Co. Ltd.		12,226		444
Yuhan Corp.		3,370		478
Total Common Stocks				20,772
Total South Korea				21,010
TAIWAN — 8.80%
COMMON STOCKS — 8.80% (Cost $11,152)
Acer, Inc.		115,979		337
Asia Cement Corp.		333,720		344
Asustek Computer, Inc.		81,353		660
AU Optronics Corp., ADR*		44,760		449
AU Optronics Corp.		332,520		332
Catcher Technology Co. Ltd.		149,000		397
Cathay Financial Holding Co. Ltd.		218,920		335
China Steel Corp.		281,890		286
Chinatrust Financial Holding Co. Ltd.		890,914		556
First Financial Holding Co. Ltd.		961,406		635
Formosa Plastics Corp.		102,000		293
Fubon Financial Holding Co. Ltd.		237,034		290
HON HAI Precision Industry Co. Ltd.		319,645		1,210
HTC Corp.		17,818		402
InnoLux Display Corp.		192,000		258
KGI Securities Co. Ltd.		375,000		176
Lite-On Technology Corp.		113,679		150
Nan Ya Printed Circuit Board Corp.		93,989		384
Quanta Computer, Inc.		526,000		965
Siliconware Precision Industries Co., ADR*		7,320		41
Siliconware Precision Industries Co.		154,000		168

See accompanying notes

13

American Beacon Emerging Markets Fund^SM
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
SinoPac Financial Holdings Co. Ltd.		1,576,987		595
Taiwan Fertilizer Co. Ltd.		68,000		232
Taiwan Semiconductor Manufacturing Co. Ltd., ADR*		9,190		100
Taiwan Semiconductor Manufacturing Co. Ltd.		794,385		1,629
Tatung Co. Ltd.†		1,634,000		385
Transcend Information, Inc.		129,520		322
Uni-President Enterprises Corp.		292,400		380
United Microelectronics Corp.		1,382,226		657
United Microelectronics Corp., ADR*		13,250		41
Yuanta Financial Holding Co. Ltd.		349,000		219
Total Taiwan				13,228
THAILAND — 2.33%
COMMON STOCKS — 2.33% (Cost $2,163)
Bangkok Bank PCL		102,990		531
Kasikornbank PCL		282,500		1,140
PTT PCL		44,900		434
Siam Cement PCL		47,300		499
Siam Commercial Bank PCL		157,400		538
Total Access Communication PCL		257,400		361
Total Thailand				3,503
TURKEY — 2.32%
COMMON STOCKS — 2.32% (Cost $2,050)
Akbank T.A.S.		47,033		295
Anadolu Efes Biracilik Ve Malt Sanayii A.S.		40,706		650
Coca-Cola Icecek A.S.		20,496		263
TAV Havalimanlari Holding A.S.†		96,253		503
Tupras-Turkiye Petrol Rafinerileri A.S.		10,915		293
Turk Telekomunikasyon A.S.		87,714		410
Turkcell Iletisim Hizmetleri A.S.		41,370		300
Turkcell Iletisim Hizmetleri A.S., ADR*		400		7
Turkiye Garanti Bankasi A.S.		84,605		519
Turkiye Is Bankasi (Isbank)		48,472		218
Turkiye Sise ve Cam Fabrikalari A.S.†		15,693		29
Total Turkey				3,487
UNITED KINGDOM — 0.13%
COMMON STOCKS — 0.13% (Cost $157)
JKX Oil & Gas plc.		43,010		194
UNITED STATES — 0.04%
COMMON STOCKS — 0.04% (Cost $161)
Fuqi International, Inc.†		8,460		63
SHORT-TERM INVESTMENTS — 3.24% (Cost $4,871)
JPMorgan U.S. Government Money Market Fund		4,870,913		4,871
TOTAL INVESTMENTS — 97.58% (Cost $113,702)				146,723
OTHER ASSETS, NET OF LIABILITIES — 2.42%				3,635
TOTAL NET ASSETS — 100.00%			$	150,358

Percentages are stated as a percent of net assets.
*	ADR — American Depository Receipt
†	Non-income producing security.
‡	GDR — Global Depository Receipt
§	Private Placement
**	Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $777 or 0.52% of net assets. The Fund has no right to demand registration of these securities.
††	Fair valued by the Fair Valuation Committee.

See accompanying notes

14

American Beacon Emerging Markets Fund^SM
Schedule of Investments
October 31, 2010

Futures Contracts
(dollars in thousands)

						Unrealized
	Number of					Appreciation/
	Contracts		Expiration Date	Value		(Depreciation)
MSCI Emerging Market EMini Future		151	December, 2010	$	8,379	$	392
				$	8,379	$	392

See accompanying notes

15

American Beacon International Equity Fund^SM
Schedule of Investments

October 31, 2010

	Shares		Value
			($000)
AUSTRALIA — 1.35%
COMMON STOCKS — 1.35% (Cost $20,868)
BlueScope Steel Ltd.		752,169		1,470
Foster’s Group Ltd.		699,501		4,002
Nufarm Ltd.		817,753		3,645
QBE Insurance Group Ltd.		627,176		10,554
Total Australia				19,671
AUSTRIA — 0.21%
COMMON STOCKS — 0.21% (Cost $5,477)
Telekom Austria AG		202,700		3,103
BELGIUM — 0.55%
COMMON STOCKS — 0.55% (Cost $2,309)
Anheuser-Busch InBev NV		127,200		7,973
CANADA — 1.14%
COMMON STOCKS — 1.14% (Cost $12,984)
Potash Corp of Saskatchewan, Inc.		19,200		2,777
Precision Drilling Corp. †		672,029		5,271
Rogers Communications, Inc., Class B†		79,600		2,900
Talisman Energy, Inc.		319,100		5,785
Total Canada				16,733
DENMARK — 0.30%
COMMON STOCKS — .30% (Cost $2,667)
Novo Nordisk AS		25,525		2,687
Pandora A.S.		35,660		1,730
Total Denmark				4,417
FINLAND — 0.58%
COMMON STOCKS — 0.58% (Cost $8,975)
Nokia Oyj		782,709		8,454
FRANCE — 12.17%
COMMON STOCKS — 12.17% (Cost $146,923)
Alstom S.A.		167,274		8,442
AXA S.A.		617,060		11,233
BNP Paribas		173,588		12,696
Carrefour S.A.		150,880		8,144
Cie Generale des Etablissements Michelin		90,220		7,176
EADS N.V.		359,168		9,440
France Telecom S.A.		266,590		6,406
Gemalto N.V.		79,534		3,622
Groupe Danone		82,250		5,206
Sanofi-Aventis S.A.		498,839		34,838
Societe Generale		177,415		10,624
Technip S.A.		102,961		8,654
Total S.A.		391,987		21,302
Valeo S.A.*		126,896		6,821
VINCI S.A.		195,425		10,439
Vivendi S.A.		452,956		12,921
Total France				177,964
GERMANY — 8.72%
COMMON STOCKS — 8.72% (Cost $106,956)
Allianz SE — REG		44,554		5,583
Bayer AG		76,715		5,725
Bayerische Motoren Werke AG		94,930		6,806
Celesio AG		245,480		5,853
Deutsche Post AG		973,057		18,148
E.ON AG		581,170		18,200
Linde AG		81,803		11,778

	Shares		Value
			($000)
Merck KGaA		57,150		4,761
Muenchener Rueckversicherungs-Gesellschaft AG		89,017		13,920
SAP AG		204,010		10,639
Siemens AG		228,525		26,105
Total Germany				127,518
GREECE — 0.34%
COMMON STOCKS — 0.34% (Cost $6,814)
OPAP S.A.		260,110		4,905
HONG KONG/CHINA — 3.47%
COMMON STOCKS — 3.47% (Cost $43,348)
AIA Group Ltd.*		802,000		2,390
Cheung Kong Holdings Ltd.		472,500		7,211
Esprit Holdings Ltd.		1,827,105		9,782
Hang Seng Bank Ltd.		344,800		5,031
HSBC Holdings plc		1,128,796		11,723
Hutchison Whampoa Ltd.		187,000		1,846
Swire Pacific Ltd.		322,100		4,563
Yue Yuen Industrial Holdings Ltd.		2,281,667		8,183
Total Hong Kong/China				50,729
IRELAND — 0.84%
COMMON STOCKS — .84% (Cost $18,999)
CRH plc		421,062		7,211
Smurfit Kappa Group plc		465,636		5,010
Total Ireland				12,221
ISRAEL — 0.68%
COMMON STOCKS — 0.68% (Cost $10,098)
Teva Pharmaceutical Industries Ltd., ADR‡		191,717		9,950
ITALY — 3.15%
COMMON STOCKS — 3.15% (Cost $45,391)
Atlantia S.p.A.		201,030		4,594
Buzzi Unicem S.p.A.†		217,715		2,500
Eni S.p.A.		233,856		5,269
Finmeccanica S.p.A.		536,770		7,493
Intesa Sanpaolo S.p.A.		1,072,743		3,774
Prysmian S.p.A.		139,442		2,703
Saras S.p.A.*†		2,322,607		5,137
Snam Rete Gas S.p.A.		969,171		5,251
UniCredit S.p.A.		3,573,757		9,316
Total Italy				46,037
JAPAN — 16.28%
COMMON STOCKS — 16.28% (Cost $234,370)
ASICS Corp.		136,980		1,479
Benesse Holdings, Inc.		61,500		2,954
Bridgestone Corp.		342,700		6,146
Canon, Inc.		139,900		6,467
Chuo Mitsui Trust Holdings, Inc.		1,043,400		3,773
Daito Trust Construction Co. Ltd.		104,900		6,335
Daiwa House Industry Co. Ltd.		366,000		3,953
Don Quijote Co. Ltd.		59,800		1,634
eAccess Ltd.		4,290		3,129
East Japan Railway Co.		67,700		4,186
Fanuc Ltd.		62,000		8,976
FUJIFILM Holdings Corp.		107,900		3,600
Haseko Corp.*		3,521,018		3,019
Honda Motor Co. Ltd.		383,900		14,012
Hoya Corp.		185,300		4,334
ITOCHU Corp.		221,700		1,945
JGC Corp.		332,000		6,354

See accompanying notes

16

American Beacon International Equity Fund^SM
Schedule of Investments

October 31, 2010

	Shares		Value
			($000)
KDDI Corp.		2,287		12,320
Keyence Corp.		10,900		2,702
Konica Minolta Holdings, Inc.		347,500		3,368
Kubota Corp.		333,000		2,963
Mitsubishi Corp.		125,000		3,006
Mitsubishi Gas Chemical Co., Inc.		934,000		5,780
Mitsubishi UFJ Financial Group, Inc.		3,165,000		14,750
Nidec Corp.		44,200		4,372
Nintendo Co. Ltd.		11,400		2,954
Nomura Holdings, Inc.		660,300		3,430
Ryohin Keikak Co. Ltd. †		111,100		3,943
Sankyo Co. Ltd.		110,800		5,908
Seven & I Holdings Co. Ltd.		224,200		5,218
Shin-Etsu Chemical Co. Ltd.		312,300		15,815
SMC Corp.		35,700		5,457
Sony Financial Holdings, Inc.		2,609		9,078
Sumitomo Mitsui Financial Group, Inc.		139,400		4,178
Tokyo Electron Ltd.		95,700		5,405
Tokyo Steel Manufacturing Co. Ltd.		773,200		7,668
Toyoda Gosei Co. Ltd.		240,400		5,180
Toyota Motor Corp.		456,600		16,221
Ushio, Inc.		197,000		3,283
Yahoo! Japan Corp.		13,291		4,652
Yamada Denki Co. Ltd.		73,370		4,769
Yamato Holdings Co. Ltd.		254,600		3,208
Total Japan				237,924
NETHERLANDS — 4.77%
COMMON STOCKS — 4.77% (Cost $66,925)
Akzo Nobel N.V.		239,286		14,208
ING Groep N.V.		971,170		10,367
Koninklijke Philips Electronics N.V.		308,897		9,342
Randstad Holding N.V.		83,910		3,994
Reed Elsevier N.V.		976,537		12,724
SBM Offshore N.V.§		265,765		5,423
TNT N.V.		513,554		13,652
Total Netherlands				69,710
NORWAY — 1.90%
COMMON STOCKS — 1.90% (Cost $19,858)
Aker Solutions ASA.		759,890		11,573
StatoilHydro ASA.		266,630		5,823
Telenor ASA.		640,840		10,335
Total Norway				27,731
PORTUGAL — 0.74%
COMMON STOCKS — 0.74% (Cost $5,853)
Portugal Telecom, SGPS, S.A.		747,760		10,792
SINGAPORE — 2.49%
COMMON STOCKS — 2.49% (Cost $23,119)
DBS Group Holdings Ltd.		2,338,060		25,109
Singapore Telecommunications Ltd.		4,703,000		11,228
Total Singapore				36,337
SOUTH KOREA — 2.16%
COMMON STOCKS — 2.16% (Cost $21,087)
Hyundai Heavy Industries Co. Ltd.		30,458		9,920
Hyundai Mobis		20,200		5,026
KB Financial Group, Inc., ADR‡		143,018		6,422
KT&G Corp.		110,987		6,816
Samsung Electronics Co. Ltd., GDR** ††		10,114		3,376
Total South Korea				31,560

	Shares		Value
			($000)
SPAIN — 4.05%
COMMON STOCKS — 4.05% (Cost $46,775)
Amadeus IT Holdings S.A., A Shares*		140,700		2,866
Banco Santander S.A.		1,453,591		18,719
Enagas S.A.		332,547		7,329
Gamesa Corp. Tecnologica S.A.		657,309		4,574
Iberdrola S.A.		700,919		5,912
Repsol YPF S.A.		257,990		7,154
Telefonica S.A.		467,503		12,623
Total Spain				59,177
SWEDEN — 1.81%
COMMON STOCKS — 1.81% (Cost $18,375)
Atlas Copco AB, A Shares		265,000		5,538
Skandinaviska Enskilda Banken, A Shares		890,216		6,897
Telefonaktiebolaget LM Ericsson, B Shares		1,270,230		13,958
Total Sweden				26,393
SWITZERLAND — 7.84%
COMMON STOCKS — 7.84% (Cost $101,484)
Adecco S.A.		130,550		7,297
Compagnie Financiere Richemont S.A.		92,382		4,608
Givaudan S.A.		7,317		7,540
Julius Baer Group Ltd.		53,000		2,237
Nestle S.A.		162,878		8,921
Novartis AG		421,512		24,437
Roche Holding AG		177,780		26,106
Swiss Reinsurance Co. Ltd.		100,960		4,853
UBS AG		1,263,740		21,395
Zurich Financial Services AG		29,291		7,170
Total Switzerland				114,564
UNITED KINGDOM — 19.53%
RIGHTS — 0.03% (Cost $—)
Standard Chartered plc‡‡		44,535		375
COMMON STOCKS — 19.50% (Cost $242,837)
Amec plc		113,560		1,976
Anglo American plc		188,369		8,777
Aviva plc		1,874,344		11,957
BAE Systems plc		1,811,289		10,004
Balfour Beatty plc		261,234		1,158
BG Group plc		137,442		2,677
BHP Billiton plc		180,892		6,416
BP plc		1,558,200		10,632
British American Tobacco plc		280,840		10,710
GlaxoSmithKline plc		1,110,684		21,730
Home Retail Group plc		405,579		1,423
HSBC Holdings plc		1,886,997		19,626
Informa plc		837,593		5,852
International Power plc		597,900		3,998
Kingfisher plc		1,370,800		5,223
Lloyds Banking Group plc		4,600,244		5,082
Marks and Spencer Group plc		646,520		4,428
Michael Page International plc		685,409		5,175
Pearson plc		534,980		8,182
Prudential plc		744,080		7,517
Rexam plc		2,133,889		10,863
Rio Tinto plc		130,610		8,447
Rolls-Royce Group plc		106,179,190		17,116
Royal Dutch Shell plc, A Shares		579,105		18,791
Royal Dutch Shell plc, B Shares		299,206		9,581
Standard Chartered plc		356,290		10,308

See accompanying notes

17

American Beacon International Equity Fund^SM
Schedule of Investments

October 31, 2010

	Shares		Value
			($000)
Unilever plc		646,811		18,645
Vodafone Group plc		8,509,021		23,158
Wm Morrison Supermarkets plc		929,100		4,374
WPP Group plc		352,600		4,102
Xstrata plc		370,100		7,173
Total Common Stock				285,101
Total United Kingdom				285,476
UNITED STATES — 0.62%
COMMON STOCKS — 0.62% (Cost $12,892)
Flextronics International Ltd.		848,510		6,075
Transocean Ltd.*		46,147		2,924
Total United States				8,999
SHORT-TERM INVESTMENTS — 3.98% (Cost $58,222)
JPMorgan U.S. Government Money Market Fund		58,221,767		58,222
SECURITIES LENDING
COLLATERAL — 0.50%
American Beacon U.S. Government Money Market Select Fund ∆		4,369,820		4,370
Wells Fargo Advantage Government Money Market Fund		3,082,260		3,082
Total Securities Lending Collateral(Cost $7,452)				7,452
TOTAL INVESTMENTS — 100.15% (Cost $1,291,058)				1,464,012
LIABILITIES, NET OF OTHER ASSETS — (0.15%)				(2,179	)
TOTAL NET ASSETS — 100.00%			$	1,461,833

Percentages are stated as a percent of net assets.
†	All or a portion of this security is on loan at October 31, 2010.
‡	ADR — American Depository Receipt
§	Private Placement
**	Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $3,376 or 0.23% of net assets. The Fund has no right to demand registration of these securities.
††	GDR — Global Depository Receipt
‡‡	Right

∆ The Fund is affiliated by having the same investment advisor.

See accompanying notes

18

American Beacon International Equity Fund^SM
Schedule of Investments
October 31, 2010

Futures Contracts
(dollars in thousands)

						Unrealized
	Number of					Appreciation/
	Contracts		Expiration Date	Value		(Depreciation)
France CAC 40 Index		140	December, 2010	$	7,421	$	146
Germany DAX Index		26	December, 2010		5,980		305
UK FTSE 100 Index		174	December, 2010		15,748		334
Hang Seng Index		13	November, 2010		1,926		(54	)
Italy MIB 30 Index		14	December, 2010		2,080		56
Tokyo FE TOPIX Index		150	December, 2010		15,009		(290	)
Spain IBEX 35 Index		19	November, 2010		2,830		60
Sweden OMX Index		137	November, 2010		2,224		13
Canada S&PCDA 60 Index		54	December, 2010		7,714		274
Australia SPI Index		54	December, 2010		6,149		(24	)
Netherlands 200 AEX Index		20	November, 2010		1,870		22
				$	68,951	$	841

Forward Foreign Currency Exchange Contracts
(dollars in thousands)

			Settlement					Unrealized Gain/
Contracts To Deliver			Date		Value			(Loss)
	2,225	Australian Dollar		12/17/2010	$	2,168	$	(53	)
	2,770	Canadian Dollar		12/17/2010		2,713		(9	)
	4,968	Euro Currency		12/17/2010		6,911		(209	)
	456,703	Japanese Yen		12/17/2010		5,678		(246	)
	3,491	Pound Sterling		12/17/2010		5,591		(93	)
	5,314	Swedish Krona		12/17/2010		794		(19	)
	2,030	Swiss Franc		12/17/2010		2,064		—
	Total contracts to deliver (Receivable amount $25,290)				$	25,919	$	(629	)

			Settlement					Unrealized Gain/
Contracts To Receive			Date		Value			(Loss)
	7,738	Australian Dollar		12/17/2010	$	7,539	$	311
	9,710	Canadian Dollar		12/17/2010		9,510		57
	17,100	Euro Currency		12/17/2010		23,787		1,531
	1,673,631	Japanese Yen		12/17/2010		20,807		643
	11,660	Pound Sterling		12/17/2010		18,677		542
	17,854	Swedish Krona		12/17/2010		2,699		142
	7,484	Swiss Franc		12/17/2010		7,608		73
	Total contracts to recieve (Payable amount $87,328)				$	90,627	$	3,299
Net Currency Fluctuation							$	2,670

See accompanying notes

19

American Beacon Funds^SM
Statements of Assets and Liabilities
October 31, 2010 (in thousands, except share and per share amounts)

	Emerging
	Markets			International
	Fund			Equity Fund
Assets:
Investments in unaffiliated securities, at value A D	$	146,723		$	1,459,642
Investments in affiliated securities, at value B		—			4,370
Foreign currency, at value C		2,156			1,079
Deposit with brokers for futures contracts		1,305			4,570
Receivable for investments sold		637			2,478
Dividends and interest receivable		182			3,089
Receivable for fund shares sold		295			976
Receivable for tax reclaims		5			831
Receivable for expense reimbursement (Note 2)		17			—
Receivable for variation margin on open futures contracts		30			—
Net unrealized Appreciation on foreign currency contracts		—			2,670
Prepaid expenses		56			113
Total assets		151,406			1,479,818
Liabilities:
Payable for investments purchased		608			7,606
Payable upon return of securities loaned		—			7,452
Payable for fund shares redeemed		8			684
Payable for variation margin on open futures contracts		—			142
Management and investment advisory fees payable (Note 2)		341			1,294
Administrative service and service fees payable (Note 2)		13			416
Professional fees payable		24			32
Trustee fees payable		1			35
Prospectus and shareholder reports		3			175
Other liabilities		50			149
Total liabilities		1,048			17,985
Net Assets	$	150,358		$	1,461,833
Analysis of Net Assets:
Paid-in-capital		128,583			1,477,569
Undistributed net investment income		408			32,347
Accumulated net realized (loss)		(12,052	)		(224,903	)
Unrealized appreciation of investments, futures contracts, and foreign currency		33,419			176,820
Net assets	$	150,358		$	1,461,833
Shares outstanding (no par value):
Institutional Class		620,099			31,665,422
Y Class		877			14,266
Investor Class		873,536			28,243,793
Advisor Class		N/A			44,562
Retirement Class		N/A			85
A Class		123			244
C Class		78			67
AMR Class		8,814,887			27,978,840
Net asset value, offering and redemption price per share:
Institutional Class	$	14.55		$	16.67
Y Class	$	14.53		$	17.17
Investor Class	$	14.29		$	16.42
Advisor Class		N/A		$	16.74
Retirement Class		N/A		$	16.71
A Class (Net asset value only)	$	14.27		$	16.40
A Class (Offering and redemption price)	$	15.14		$	17.40
C Class	$	14.26		$	16.39
AMR Class	$	14.62		$	16.78
A   Cost of investments in unaffiliated securities	$	113,702		$	1,286,688
B   Cost of investments in affiliated securities	$	—		$	4,370
C   Cost of foreign currency	$	2,154		$	1,070
D   Market value of securities on loan	$	—		$	7,078

See accompanying notes

20

American Beacon Funds^SM
Statements of Operations
Year Ended October 31, 2010 (in thousands)

	Emerging
	Markets			International
	Fund			Equity Fund
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes)A	$	2,902		$	38,612
Dividend income from affiliated securities		—			4
Interest income		—			17
Income derived from securities lending, net		—			1,371
Total investment income		2,902			40,004
Expenses:
Management and investment advisory fees (Note 2)		1,047			4,278
Administrative service fees (Note 2):
Institutional Class		30			1,492
Investor Class		34			1,326
Advisor Class		—			2
AMR Class		58			218
Transfer agent fees:
Institutional Class		—			35
Investor Class		3			36
AMR Class		4			27
Custody and fund accounting fees		597			559
Professional fees		35			108
Registration fees and expenses		22			80
Service fees (Note 2):
Investor Class		28			1,607
Advisor Class		—			2
Distribution fees- Advisor Class (Note 2)		—			2
Prospectus and shareholder reports		6			168
Trustee fees		9			109
Other expenses		32			191
Total expenses		1,905			10,240
Net (fees waived and expenses reimbursed) (Note 2)		(29	)		—
Net expenses		1,876			10,240
Net investment income		1,026			29,764
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		17,856			32,044
Commission recapture (Note 1)		—			45
Foreign currency transactions		952			1,199
Futures contracts		688			2,543
Change in net unrealized appreciation or depreciation of:
Investments		4,259			73,250
Foreign currency translations		3,279			5,733
Futures contracts		511			2,073
Net gain on investments		27,545			116,887
Net increase in net assets resulting from operations	$	28,571		$	146,651
A   Foreign taxes	$	352		$	3,791

See accompanying notes

21

American Beacon Funds^SM
Statements of Changes of Net Assets (in thousands)

	Emerging Markets Fund						International Equity Fund
	Year Ended			Year Ended			Year Ended			Year Ended
	October 31,			October 31,			October 31,			October 31,
	2010			2009			2010			2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	1,026		$	1,224		$	29,764		$	32,804
Net realized gain (loss) on investments, futures contracts, and foreign currency transactions		19,496			(19,055	)		35,831			(244,402	)
Change in net unrealized appreciation or depreciation of investments, futures contracts, and foreign currency translations		8,049			67,385			81,056			498,561
Net increase in net assets resulting from operations		28,571			49,554			146,651			286,963
Distributions to Shareholders:
Net investment income:
Institutional Class		(130	)		(129	)		(15,298	)		(22,416	)
Investor Class		(131	)		(93	)		(12,702	)		(17,116	)
Advisor Class		—			—			—			(61	)
AMR Class		(1,717	)		(2,146	)		(14,360	)		(17,313	)
Net realized gain on investments:
Institutional Class		—			(798	)		—			(12,166	)
Investor Class		—			(756	)		—			(10,088	)
Advisor Class		—			—			—			(40	)
AMR Class		—			(11,268	)		—			(8,489	)
Net distributions to shareholders		(1,978	)		(15,190	)		(42,360	)		(87,689	)
Capital Share Transactions:
Proceeds from sales of shares		19,983			21,046			253,975			264,266
Reinvestment of dividends and distributions		1,969			15,153			39,420			81,731
Cost of shares redeemed		(27,910	)		(24,071	)		(304,686	)		(500,348	)
Redemption fees		36			18			177			217
Net increase (decrease) in net assets from capital share transactions		(5,922	)		12,146			(11,114	)		(154,134	)
Net increase in net assets		20,671			46,510			93,177			45,140
Net Assets:
Beginning of period		129,687			83,177			1,368,656			1,323,516
End of Period *	$	150,358		$	129,687		$	1,461,833		$	1,368,656
*   Includes undistributed net investment income (loss) of	$	408		$	1,183		$	32,347		$	41,027

See accompanying notes

22

American Beacon Funds^SM
Notes to Financial Statements

October 31, 2010

1. Organization and Significant Accounting Policies

          American Beacon Funds (the “Trust”) which is comprised of 19 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon Emerging Markets and International Equity Funds (the “Funds”), each a series of the Trust.

          American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative and asset management consulting services to the Trust and other investors.

     Class Disclosure

          March 1, 2010 is the inception date of the Y Class of the Emerging Markets Fund. May 17, 2010 and September 1, 2010 are the inception dates of the A and C Classes, respectively.

          The Funds have multiple classes of shares designed to meet the needs of different groups of investors. The following table sets forth the differences amongst the classes:

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	General public and investors investing through an intermediary
Advisor Class	Investors investing through an intermediary
Retirement Class	Investors investing through an intermediary
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation, and its affiliates

          Administrative service fees, service fees and distribution fees vary amongst the classes as described more fully in footnote 2.

     Security Valuation

          Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

          Debt securities (other than short-term securities) normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. The prices of debt securities may be determined using quotes obtained from brokers.

          Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

          Securities for which the market prices are not readily available or are not reflective of the fair value of the security, as determined by the Manager, will be priced at fair value following procedures approved by the Board of Trustees (the “Board”).

23

American Beacon Funds^SM
Notes to Financial Statements

October 31, 2010

          Futures are valued based upon the last sale price at the close of market on the principal exchange on which they are traded.

          Most foreign markets close before the Exchange. Developments that could affect the values of securities that occur between the close of a foreign market and the close of the Exchange normally will not be reflected in security valuations. If such developments are so significant that they will, in the judgment of the pricing committee of the Fund, clearly and materially affect the value of securities, the foreign market closing prices may be adjusted to reflect the fair value of the securities as of the close of the Exchange, as determined in good faith and pursuant to procedures approved by the Board. Adjustments to closing prices to reflect fair value on affected foreign securities may be provided by an independent pricing service.

     Valuation Inputs

          Various inputs may be used to determine the value of the Funds’ investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 – Quoted prices in active markets for identical securities.

Level 2 – Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. The common stock was fair valued by the Fair Valuation Committee according to procedures established by the Board.

Level 3 – Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

          The Funds’ investments are summarized by level based on the inputs used to determine their values. As of October 31, 2010 the Funds’ investments were classified as follows: (in thousands)

Emerging Markets	Level 1			Level 2		Level 3		Total
Preferred Stocks	$	4,061		$	—	$	—	$	4,061
Common Stocks		137,548			243		—		137,791
Short Term Investments		4,871			—		—		4,871
Total Investments in Securities	$	146,480		$	243	$	—	$	146,723
Futures Contracts		392			—		—		392
International Equity	Level 1			Level 2		Level 3		Total
Common Stocks	$	1,397,963		$	—	$	—	$	1,397,963
Rights		375			—		—		375
Securities Lending Collateral		7,452			—		—		7,452
Short Term Investments		58,222			—		—		58,222
Total Investments in Securities	$	1,464,012		$	—	$	—	$	1,464,012
Forward Exchange Contracts – Assets	$	3,299			—		—	$	3,299
Forward Exchange Contracts – Liabilities		(629	)		—		—		(629	)
Futures Contracts		841			—		—		841

          For the Emerging Markets and International Equity Funds for the period October 31, 2009 through October 31, 2010, common stock with a value of $85,841 and $1,161,110, respectively was transferred from Level 2 to Level 1 as of the end of the period in accordance with fair value procedures established by the Board at October 31, 2010.

24

American Beacon Funds^SM
Notes to Financial Statements

October 31, 2010

     Security Transactions and Investment Income

          Security transactions are recorded on the trade date of the security purchase or sale. The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the net asset value. The value of the security may vary with market fluctuations.

          Dividend income, net of foreign taxes, is recorded on the ex-dividend date except certain dividends from foreign securities which are recorded as soon as the information is available to the Funds. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

     Currency Translation

          All assets and liabilities initially expressed in foreign currency values are converted into U.S. dollar values at the mean of the bid and ask prices of such currencies against U.S. dollars as last quoted by a recognized dealer. Income, expenses and purchases and sales of investments are translated into U.S. dollars at the rate of exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and is reported with all other foreign currency gains and losses in the Funds’ Statements of Operations.

     Forward Foreign Currency Contracts

          The Funds may enter into forward foreign currency contracts to hedge the exchange rate risk on investment transactions or to hedge the value of the Funds securities denominated in foreign currencies. Forward foreign currency contracts are valued at the forward exchange rate prevailing on the day of valuation. The Funds bear the market risk that arises from changes in foreign exchange rates, and accordingly, the unrealized gain (loss) on these contracts is reflected in the accompanying financial statements. The Funds also bear the credit risk if the counterparty fails to perform under the contract.

     Futures Contracts

          Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Funds may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.

          Upon entering into a futures contract, the Funds are required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents 5% of the face value of the futures contract. The initial margin amount is reflected as a Deposit with broker for futures contracts on the Statements of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

Emerging Markets

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2010 (in thousands)

25

American Beacon Funds^SM
Notes to Financial Statements

October 31, 2010

Statement of Assets and Liabilities	Asset Derivatives	Total
Unrealized appreciation of investments, futures contracts, and foreign currency	Equity Contracts*	$	392

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2010 (in thousands)

Statement of Operations	Derivative	Total
Net realized gain (loss) from futures contracts	Equity Contracts	$	688
Change in net unrealized appreciation or depreciation of futures contracts	Equity Contracts		511

International Equity

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2010 (in thousands)

Statement of Assets and Liabilities	Asset Derivatives	Total
	Foreign Exchange
Net unrealized appreciation on foreign currency contracts	Currency Contracts	$	3,299
Unrealized appreciation of investments, futures contracts, and foreign currency	Equity Contracts*		841

	Liability
	Derivatives
	Foreign Exchange
Net unrealized appreciation on foreign currency contracts	Currency Contracts	(629	)

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2010 (in thousands)

Statement of Operations	Derivative	Total
Net realized gain (loss) from futures contracts	Equity Contracts	$	2,543
Change in net unrealized appreciation or depreciation of futures contracts	Equity Contracts		2,073
	Foreign Exchange
Net realized gain (loss) from forwards contracts	Currency Contracts		1,199
	Foreign Exchange
Change in net unrealized appreciation or depreciation of forwards contracts	Currency Contracts		5,733

* Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

     Dividends to Shareholders

          Dividends from net investment income of the Funds normally will be declared and paid at least annually. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date.

     Commission Recapture

          The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If the Funds’ investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Funds. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Funds. This amount is reported with the net realized gain in the Funds’ Statements of Operations.

     Allocation of Income, Expenses, Gains, and Losses

          Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

     Use of Estimates

26

American Beacon Funds^SM
Notes to Financial Statements

October 31, 2010

          The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

     Redemption Fees

          The Funds impose a 2% redemption fee on shares held for less than 90 days. The fee is deducted from the redemption proceeds and is intended to offset the trading costs, market impact and other costs associated with short-term trading activity in the Funds. The “first-in, first-out” method is used to determine the holding period. The fee is allocated to all classes of the Funds pro-rata based on their respective net assets.

     Other

          Under the Trust’s organizational documents, its officers and directors are indemnified against certain liability arising out of the performance of their duties to the Trust. In the normal course of business, the Trust enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.

2. Transactions with Affiliates

     Management Agreement

          The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services. Investment assets of the Funds are managed by multiple investment advisors that have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Funds an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the unaffiliated investment advisors hired by the Manager to direct investment activities of the Funds. Management fees paid during the year ended October 31, 2010 were as follows (dollars in thousands):

						Amounts paid to		Net Amounts
	Management			Management		Investment		Retained by
	Fee Rate			Fee		Advisors		Manager
Emerging Markets		0.60%-0.95	%	$	1,047	$	979	$	68
International Equity		0.20%-0.55	%	$	4,278	$	3,590	$	688

          As compensation for services provided by the Manager in connection with securities lending activities, the lending Funds pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 25% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers when a borrower posts collateral other than cash, a fee up to 25% of such loan fees. This fee is netted against securities lending income in the Statements of Operations. During the year ended October 31, 2010, securities lending fees paid to the Manager on behalf of the International Equity Fund was $179,914.

     Administrative Services Agreement

          The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.40% of the average daily net assets of the A and C Classes, 0.30% of the average daily net assets of the Institutional, Y,

27

American Beacon Funds^SM
Notes to Financial Statements

October 31, 2010

Investor, Advisor and Retirement Classes of the Funds, and 0.05% of the average daily net assets of the AMR Class of the Funds. Administrative Service fees for the Y, Retirement, A, and C Classes for the period ended October 31, 2010 were less than $500.

     Distribution Plans

          The Funds, except for the Advisor, Retirement, A, and C Classes of the Funds, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees may be charged to the Funds for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Funds do not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Funds shares.

          Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule 12b-1 under the Act for the Advisor, Retirement, A, and C Classes of the Funds. Under the Distribution Plans, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes, 0.50% of the average daily net assets of the Retirement Class, and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance. Distribution fees for the Retirement, A, and C Classes for the period ended October 31, 2010 were less than $500.

     Service Plans

          The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Y, Investor, Advisor, Retirement, A, and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives 0.10% of the average daily net assets of the Y Class, 0.15% of the average daily net assets of the A and C Classes, 0.25% of the average daily net assets of the Advisor and Retirement Classes, and up to 0.375% of the average daily net assets of the Investor Class of the Funds. Service fees for the Y, Retirement, A, and C Classes for the period ended October 31, 2010 were less than $500.

     Brokerage Commissions

          Affiliated entities of an investment advisor to the Funds received net commissions on purchases and sales of the Funds’ portfolio securities totaling $2,073 and $1,420 for the Emerging Markets and International Equity Funds, respectively for the year ended October 31, 2010.

     Investment in Affiliated Funds

          The Funds may invest in the American Beacon Money Market Select Fund (the “MM Select Fund”) or the US Government Money Market Fund (the “USG Select Fund”), (collectively the “Select Funds”). Cash collateral received by the Funds in connection with securities lending may be invested in the Select Funds. The Funds and the Select Funds have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the Select Funds and receives from the Select Funds an annualized fee equal to 0.09% of its average daily net assets. During the year ended October 31, 2010, fees earned by the Manager from the Select Funds were as follows:

	Direct		Securities Lending
	Investments in		Collateral Invested
	Select Funds		in Select Funds		Total
International Equity	$	3,165	$	36,249	$	39,414

28

American Beacon Funds^SM
Notes to Financial Statements

October 31, 2010

     Interfund Lending Program

          Pursuant to an exemptive order by the Securities and Exchange Commission (the “SEC”), the Funds, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program as a borrower. This program provides an alternative credit facility allowing the Funds to borrow from other participating Funds. The Funds did not utilize the credit facility during the year ended October 31, 2010.

     Reimbursement of Expenses

          The Manager contractually agreed to reimburse the Emerging Markets Fund to the extent that total operating expenses exceeded the Fund’s expense cap. Of these amounts $17,000 was receivable from the Manager at October 31, 2010. For the year ended October 31, 2010, the Manager reimbursed expenses as follows:

			Expense Caps
			11/1/09 to		3/1/10 to			Reimbursed
Fund	Class		2/28/10		2/28/11			Expenses
Emerging Markets	Institutional			—		1.35	%	$	19,440
Emerging Markets		Y		—		1.45	%		18
Emerging Markets	Investor			—		1.79	%		9,356
Emerging Markets		A		—		1.79	%		3
Emerging Markets		C		—		2.54	%		4

     Expense Reimbursement Plan

          The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’s average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. For the year ended October 31, 2010, the Emerging Markets Fund has not recorded a liability for potential reimbursements that will be expiring in 2013, due to the current assessment that a reimbursement is unlikely.

3. Federal Income and Excise Taxes

          It is the policy of each Fund to qualify as a regulated investment company, by complying with all applicable provisions of the Code, and to make distribution of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes, each Fund is treaded as a single entity for the purpose of determining such qualification.

          The Funds do not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2010 remains subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

          Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. generally accepted accounting principles. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

          The tax character of distributions paid during the fiscal years ended October 31, 2010 and October 31, 2009 were as follows (in thousands):

29

American Beacon Funds^SM
Notes to Financial Statements
October 31, 2010

	Emerging Markets				International Equity
	Year Ended		Year Ended		Year Ended		Year Ended
	October 31,		October 31,		October 31,		October 31,
	2010		2009		2010		2009
Distributions paid from:
Ordinary income*
Institutional Class	$	130	$	129	$	15,298	$	22,416
Investor Class		131		93		12,702		17,116
Advisor Class		—		—		—		61
AMR Class		1,717		2,146		14,360		17,313
Long-term capital gain
Institutional Class		—		798		—		12,166
Investor Class		—		756		—		10,088
Advisor Class		—		—		—		40
AMR Class		—		11,268		—		8,489
Total distributions paid	$	1,978	$	15,190	$	42,360	$	87,689

* For tax purposes, short-term capital gains are considered ordinary income distributions.

          As of October 31, 2010, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

	Emerging			International
	Markets			Equity
Cost basis of investments for federal income tax purposes	$	122,291		$	1,329,456
Unrealized appreciation		30,441			247,667
Unrealized depreciation		(6,009	)		(113,111	)
Net unrealized appreciation/(depreciation)		24,432			134,556
Undistributed ordinary income		946			42,380
Accumulated long-term gain/(loss)		(4,000	)		(196,918	)
Other temporary differences		397			4,246
Distributable earnings/(deficit)	$	21,775		$	(15,736	)

          Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses from wash sales, the realization for tax purposes of unrealized gain/(losses) on certain derivative instruments, the realization for tax purposes of unrealized gain/(losses) on investments in passive foreign investment companies, and Section 732 basis adjustments.

          Due to inherent differences in the recognition of income, expenses and realized gains/(losses) under U.S. generally accepted accounting principles and federal income tax regulations, permanent differences between book and tax reporting have been identified and appropriately reclassified on the Statement of Assets and Liabilities.

          Accordingly, the following amounts represent current year permanent differences derived from foreign currency, gains/(losses) from sales of investments in passive foreign investment companies and Section 732 basis adjustments that have been reclassified as of October 31, 2010 (in thousands):

	Emerging			International
	Markets			Equity
Paid-in-capital	$	—		$	531
Undistributed net investment income		177			3,916
Accumulated net realized loss		(177	)		(4,447	)
Unrealized depreciation of investments, futures contracts and foreign currency		—			—

          At October 31, 2010 the capital loss carry forward positions for federal income tax purposes were $3,608 for Emerging Markets Fund and $196,077 for International Equity Fund expiring in 2017 (in thousands).

30

American Beacon Funds^SM
Notes to Financial Statements
October 31, 2010

The Emerging Markets Fund and the International Equity Fund utilized $14,398 and $28,739, respectively, of net capital loss carryovers for the year ended October 31, 2010.

4. Investment Transactions

          The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2010 were (in thousands):

	Emerging		International
	Markets		Equity
Purchases	$	81,791	$	489,710
Sales and Maturities		90,205		511,536

          A summary of the Fund’s direct transactions in the Select Funds for the year ended October 31, 2010 is set forth below (in thousands):

		October 31, 2009						October 31, 2010
	Affiliated Fund	Shares/Market Value		Purchases		Sales		Shares/Market Value
International Equity-Direct	USG Select Fund	$	3,956	$	9,044	$	13,000	$	—
International Equity-Security Lending	USG Select Fund	$	31,053	$	653,548	$	680,231	$	4,370

5. Securities Lending

          The International Equity Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored and marked to market daily. Daily mark to market amounts are required to be paid to the borrower or received from the borrower by the end of the following business day. This one day settlement for mark to market amounts may result in the collateral being temporarily less than the value of the securities on loan or temporarily more than the required minimum collateral.

          Securities purchased with cash collateral proceeds are listed in the Fund’s Schedule of Investments and the collateral is shown on the Statement of Assets and Liabilities as a payable.

          Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured by non-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Fund, the Agent, and the Manager retain 75%, 15%, and 10%, respectively, of the income generated from securities lending.

          While securities are on loan, the Fund continues to receive any income associated with that security and any gain or loss in the market price that may occur during the term of the loan.

          Securities lending transactions pose certain risks to the Fund, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, that non-cash collateral may be subject to legal constraints in the event of a borrower bankruptcy, and that the cash collateral investments could become illiquid and unable to be used to return collateral to the borrower. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the cash collateral available for return to the borrower and any action which impairs its ability to liquidate non-cash collateral to satisfy a borrower default.

31

American Beacon Funds^SM
Notes to Financial Statements
October 31, 2010

          As of October 31, 2010, the value of outstanding securities on loan and the value of collateral was as follows (in thousands):

Market Value of
Securities on Loan	Non-Cash Collateral		Cash Collateral Posted by Borrower
$7,078	$	—	$	7,452

          The Fund excludes $654,406 of securities on loan that were sold prior to October 31, 2010.

          Cash collateral is listed in the Fund’s Schedule of Investments and is shown on the Statement of Assets and Liabilities. Income earned on these investments is included in Income derived from securities lending in the Statement of Operations.

          Non-cash collateral received by the Fund may not be sold or re-pledged except to satisfy a borrower default. Therefore, non -cash collateral is not included on the Fund’s Schedule of Investments or Statement of Assets and Liabilities.

6. Capital Share Transactions

          The tables below summarize the activity in capital shares for each Class of the Fund (dollars and shares in thousands):

Year ended October 31, 2010

	Institutional Class						Y Class					Investor Class
Emerging Markets Fund	Shares			Amount			Shares		Amount			Shares			Amount
Shares sold		76		$	969			1	$	11			344		$	4,388
Reinvestment of dividends		10			125			—		—			10			127
Shares redeemed		(260	)		(3,540	)*		—		—	*		(348	)		(4,368	)*
Net increase (decrease) in shares outstanding		(174	)	$	(2,446	)		1	$	11			6		$	147

	AMR Class						A Class					C Class
Emerging Markets Fund	Shares			Amount			Shares		Amount			Shares		Amount
Shares sold		1,102		$	14,612			—	$	2			—	$	1
Reinvestment of dividends		137			1,717			—		—			—		—
Shares redeemed		(1,572	)		(19,966	)*		—		—	*		—		—	*
Net increase (decrease) in shares outstanding		(333	)	$	(3,637	)		—	$	2			—	$	1

	Institutional Class						Y Class						Investor Class						Advisor Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		5,496		$	83,841			15		$	227			7,001		$	105,328			20		$	300
Reinvestment of dividends		802			12,580			—			—			806			12,480			—			—
Shares redeemed		(6,209	)		(96,106	)*		(1	)		(9	)*		(8,688	)		(132,955	)*		(89	)		(1,424	)*
Net increase (decrease) in shares outstanding		89		$	315			14		$	218			(881	)	$	(15,147	)		(69	)	$	(1,124	)

	Retirement Class					AMR Class						A Class					C Class
International Equity Fund	Shares		Amount			Shares			Amount			Shares		Amount			Shares		Amount
Shares sold		—	$	—			4,214		$	64,274			—	$	4			—	$	1
Reinvestment of dividends		—		—			912			14,360			—		—			—		—
Shares redeemed		—		—	*		(4,789	)		(74,015	)*		—		—	*		—		—	*
Net increase (decrease) in shares outstanding		—	$	—			337		$	4,619			—	$	4			—	$	1

32

American Beacon Funds^SM
Notes to Financial Statements
October 31, 2010

Year Ended October 31, 2009

	Institutional Class						Investor Class						AMR Class
Emerging Markets Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		119		$	1,207			355		$	3,717			1,767		$	16,122
Reinvestment of dividends		126			917			114			822			1,832			13,414
Shares redeemed		(59	)		(672	)*		(187	)		(1,654	)*		(2,458	)		(21,727	)*
Net increase in shares outstanding		186		$	1,452			282		$	2,885			1,141		$	7,809

	Institutional Class						Y Class					Investor Class
International Equity Fund	Shares			Amount			Shares		Amount			Shares			Amount
Shares sold		7,840		$	100,116			—	$	1			7,880		$	99,626
Reinvestment of dividends		2,451			29,191			—		—			2,263			26,656
Shares redeemed		(21,920	)		(270,772	)*		—		—	*		(13,941	)		(175,030	)*
Net increase (decrease) in shares outstanding		(11,629	)	$	(141,465	)		—	$	1			(3,798	)	$	(48,748	)

	Advisor Class						Retirement Class					AMR Class
International Equity Fund	Shares			Amount			Shares		Amount			Shares			Amount
Shares sold		21		$	262			—	$	1			4,956		$	64,260
Reinvestment of dividends		7			82			—		—			2,157			25,802
Shares redeemed		(35	)		(464	)*		—		—	*		(4,240	)		(53,865	)*
Net increase (decrease) in shares outstanding		(7	)	$	(120	)		—	$	1			2,873		$	36,197

^* Net of Redemption Fees

33

American Beacon Emerging Markets Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

																Y Class
																March
	Institutional Class															1 to
	Year Ended October 31,															October
	2010			2009			2008			2007			2006			31, 2010
Net asset value, beginning of period	$	11.95		$	9.00		$	24.20		$	17.42		$	15.10		$	12.29
Income from investment operations:
Net investment income (loss)		0.13			0.05			0.23			0.26			0.11			0.04
Net gains (losses) on securities (both realized and unrealized)		2.63			4.42			(11.78	)		9.11			4.63			2.20
Total income (loss) from investment operations		2.76			4.47			(11.55	)		9.37			4.74			2.24
Less distributions:
Dividends from net investment income		(0.16	)		(0.21	)		(0.10	)		(0.10	)		(0.21	)		—
Distributions from net realized gains on securities		—			(1.31	)		(3.55	)		(2.49	)		(2.21	)		—
Total distributions		(0.16	)		(1.52	)		(3.65	)		(2.59	)		(2.42	)		—
Redemption fees added to beneficial interestsA		—			—			—			—			—			—
Net asset value, end of period	$	14.55		$	11.95		$	9.00		$	24.20		$	17.42		$	14.53
Total return B,C		23.36	%		60.56	%		(55.59	)%		60.83	%		34.58	%		18 .23	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	9,023		$	9,494		$	5,478		$	13,773		$	16,552		$	13
Ratios to average net assets (annualized):
Expenses, net of waivers		1.39	%		1.66	%		1.38	%		1.60	%		1.56	%		1 .42	%E
Expenses, before waivers		1.58	%		1.66	%		1.38	%		1.60	%		1.56	%		1 .82	%E
Net investment income (loss), net of waivers		0.77	%		0.95	%		1.35	%		0.93	%		0.80	%		0 .79	%E
Net investment income (loss), before waivers		0.58	%		0.95	%		1.35	%		0.93	%		0.80	%		0 .40	%E
Portfolio turnover rate		64	%		70	%		82	%		81	%		67	%		64	% F

A	Amounts represent less than $0.01 per share.
B	May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
C	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
D	Not annualized.
E	Annualized.
F	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

34

																																	C Class
																														A Class			September
Investor Class															AMR Class															May 17 to			1 to
Year Ended October 31,															Year Ended October 31,															October			October
2010			2009			2008			2007			2006			2010			2009			2008			2007			2006			31, 2010			31, 2010
$	11.77		$	8.85		$	23.91		$	17.22		$	14.98		$	12.02		$	9.06		$	24.37		$	17.52		$	15.17		$	12.10		$	12.89
	0.04			0.04			0.17			0.11			0.09			0.11			0.09			0.33			0.19			0.15			0.02			(0.02	)
	2.63			4.35			(11.60	)		9.11			4.55			2.68			4.43			(11.91	)		9.30			4.65			2.15			1.39
	2.67			4.39			(11.43	)		9.22			4.64			2.79			4.52			(11.58	)		9.49			4.80			2.17			1.37
	(0.15	)		(0.16	)		(0.08	)		(0.04	)		(0.19	)		(0.19	)		(0.25	)		(0.18	)		(0.15	)		(0.24	)		—			—
	—			(1.31	)		(3.55	)		(2.49	)		(2.21	)		—			(1.31	)		(3.55	)		(2.49	)		(2.21	)		—			—
	(0.15	)		(1.47	)		(3.63	)		(2.53	)		(2.40	)		(0.19	)		(1.56	)		(3.73	)		(2.64	)		(2.45	)		—			—
	—			—			—			—			—			—			—			—			—			—			—			—
$	14.29		$	11.77		$	8.85		$	23.91		$	17.22		$	14.62		$	12.02		$	9.06		$	24.37		$	17.52		$	14.27		$	14.26
	22.85	%		60.24	%		(55.75	)%		60.38	%		34.01	%		23.47	%		61.01	%		(55.48	)%		61.28	%		34.88	%		17.93	%D		10.63	%D
$	12,478		$	10,208		$	5,183		$	11,694		$	5,841		$	128,841		$	109,985		$	72,516		$	271,726		$	135,146		$	2		$	1
	1.77	%		1.96	%		1.72	%		1.96	%		2.04	%		1.34	%		1.42	%		1.17	%		1.37	%		1.30	%		1.78	%E		2.54	%E
	1.86	%		1.96	%		1.72	%		1.96	%		1.91	%		1.34	%		1.42	%		1.17	%		1.37	%		1.30	%		2.26	%E		4.49	%E
	0.37	%		0.65	%		1.00	%		0.65	%		0.49	%		0.79	%		1.27	%		1.46	%		1.25	%		1.01	%		0.39	%E		(0.96	)%E
	0.29	%		0.65	%		1.00	%		0.65	%		0.62	%		0.79	%		1.27	%		1.46	%		1.25	%		1.01	%		(0.10	)%E		(2.91	)%E
	64	%		70	%		82	%		81	%		67	%		64	%		70	%		82	%		81	%		67	%		64	% F		64	% F

35

American Beacon International Equity Fund^SM
Financial Highlights

(For a share outstanding throughout the period)

																Y Class
																			August
	Institutional Class																		3 to
	Year Ended October 31,																		October
	2010			2009			2008			2007			2006			2010			31, 2009
Net asset value, beginning of period	$	15.51		$	13.13		$	27.32		$	24.68		$	20.98		$	15.52		$	14 .89
Income from investment operations:
Net investment incomeA		0.35			0.54			0.77			0.65			0.60			0.04			0.04
Net gains (losses) on securities (both realized and unrealized)A		1.30			2.78			(11.60	)		4.31			4.86			1.61			0.59
Total income (loss) from investment operations		1.65			3.32			(10.83	)		4.96			5.46			1.65			0.63
Less distributions:
Dividends from net investment income		(0.49	)		(0.61	)		(0.70	)		(0.50	)		(0.43	)		—			—
Distributions from net realized gains on securities		—			(0.33	)		(2.66	)		(1.82	)		(1.33	)		—			—
Total distributions		(0.49	)		(0.94	)		(3.36	)		(2.32	)		(1.76	)		—			—
Redemption fees added to beneficial interestC		—			0.00			0.00			0.00			0.00			—			0.00
Net asset value, end of period	$	16.67		$	15.51		$	13.13		$	27.32		$	24.68		$	17.17		$	15 .52
Total return D,E		10.81	%		27.44	%		(44.81	)%		21.54	%		27.55	%		10.63	%		4 .23	%H
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	527,718		$	489,837		$	567,414		$	1,686,668		$	1,549,521		$	245		$	1
Ratios to average net assets (annualized):
Expenses, net of waiversA		0.71	%		0.73	%		0.66	%		0.67	%		0.71	%		0.81	%		0 .69	%B
Expenses, before waiversA		0.71	%		0.73	%		0.66	%		0.67	%		0.71	%		0.81	%		0 .69	%B
Net investment income, net of waiversA		2.21	%		2.76	%		2.91	%		2.46	%		2.52	%		1.44	%		1 .00	%B
Net investment income (loss), before waiversA		2.21	%		2.76	%		2.91	%		2.46	%		2.52	%		1.44	%		1 .00	%B
Portfolio turnover rateF		38	%		41	%		31	%		38	%		40	%		38	%		41	%G

A	The per share amounts and ratios reflect income and expenses assuming inclusion of the Fund’s proportionate share of the income and expenses of the American Beacon International Equity Portfolio through February 28, 2006.
B	Annualized.
C	Amounts represent less than $0.01 per share.
D	May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
E	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
F	The International Equity Fund invested all of its investable assets in the American Beacon International Equity Portfolio through February 28, 2006. Portfolio turnover rate through February 28, 2006 is that of the American Beacon International Equity Portfolio.
G	Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.
H	Not annualized.

36

American Beacon International Equity Fund^SM
Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,
	2010			2009			2008			2007			2006
Net asset value, beginning of period	$	15.30		$	12.95		$	26.99		$	24.42		$	20.79
Income from investment operations:
Net investment incomeA		0.29			0.37			0.66			0.58			0.50
Net gains (losses) on securities (both realized and unrealized)A		1.27			2.87			(11.41	)		4.26			4.84
Total income (loss) from investment operations		1.56			3.24			(10.75	)		4.84			5.34
Less distributions:
Dividends from net investment income		(0.44	)		(0.56	)		(0.63	)		(0.45	)		(0.38	)
Distributions from net realized gains on securities		—			(0.33	)		(2.66	)		(1.82	)		(1.33	)
Total distributions		(0.44	)		(0.89	)		(3.29	)		(2.27	)		(1.71	)
Redemption fees added to beneficial interestC		—			0.00			0.00			0.00			0.00
Net asset value, end of period	$	16.42		$	15.30		$	12.95		$	26.99		$	24.42
Total return D,E		10.36	%		27.08	%		(44.96	)%		21.22	%		27.20	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	463,704		$	445,596		$	426,473		$	909,385		$	771,298
Ratios to average net assets (annualized):
Expenses, net of waiversA		1.07	%		1.05	%		0.92	%		0.93	%		0.96	%
Expenses, before waiversA		1.07	%		1.05	%		0.92	%		0.93	%		0.96	%
Net investment income, net of waiversA		1.83	%		2.45	%		2.82	%		2.26	%		2.25	%
Net investment income (loss), before waiversA		1.83	%		2.45	%		2.82	%		2.26	%		2.25	%
Portfolio turnover rateB		38	%		41	%		31	%		38	%		40	%

A	The per share amounts and ratios reflect income and expenses assuming inclusion of the Fund’s proportionate share of the income and expenses of the American Beacon International Equity Portfolio through February 28, 2006.
B	The International Equity Fund invested all of its investable assets in the American Beacon International Equity Portfolio through February 28, 2006. Portfolio turnover rate through February 28, 2006 is that of the American Beacon International Equity Portfolio.
C	Amounts represent less than $0.01 per share.
D	May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
E	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

37

American Beacon International Equity Fund^SM
Financial Highlights

(For a share outstanding throughout the period)

																Retirement Class
	Advisor Class															Year Ended
	Year Ended October 31,															October 31,
	2010			2009			2008			2007			2006			2010
Net asset value, beginning of period	$	15.20		$	12.86		$	26.83		$	24.24		$	20.61		$	15.20
Income from investment operations:
Net investment income (loss)A		0.89			0.31			0.62			0.56			0.46			0.22
Net gains (losses) on securities (both realized and unrealized)A		0.65			2.86			(11.35	)		4.20			4.76			1.29
Total income (loss) from investment operations		1.54			3.17			(10.73	)		4.76			5.22			1.51
Less distributions:
Dividends from net investment income		—			(0.50	)		(0.58	)		(0.35	)		(0.26	)		—
Distributions from net realized gains on securities		—			(0.33	)		(2.66	)		(1.82	)		(1.33	)		—
Total distributions		—			(0.83	)		(3.24	)		(2.17	)		(1.59	)		—
Redemption fees added to beneficial interestC		—			0.00			0.00			0.00			0.00			—
Net asset value, end of period	$	16.74		$	15.20		$	12.86		$	26.83		$	24.24		$	16.71
Total return D,E		10.13	%		26.58	%		(45.10	)%		21.00	%		26.73	%		9.93	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	746		$	1,722		$	1,546		$	4,932		$	4,740		$	1
Ratios to average net assets (annualized):
Expenses, net of waiversA		1.26	%		1.44	%		1.19	%		1.12	%		1.16	%		1.47	%
Expenses, before waiversA		1.26	%		1.45	%		1.19	%		1.15	%		1.19	%		1.66	%
Net investment income, net of waiversA		1.64	%		2.26	%		2.36	%		2.04	%		2.09	%		1.44	%
Net investment income (loss), before waiversA		1.64	%		2.25	%		2.36	%		2.01	%		2.05	%		1.25	%
Portfolio turnover rateH		38	%		41	%		31	%		38	%		40	%		38	%

A	The per share amounts and ratios reflect income and expenses assuming inclusion of the Fund’s proportionate share of the income and expenses of the American Beacon International Equity Portfolio through February 28, 2006.
B	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.
C	Amounts represent less than $0.01 per share.
D	May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
E	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
F	Not annualized.
G	Annualized.
H	The International Equity Fund invested all of its investable assets in the American Beacon International Equity Portfolio through February 28, 2006. Portfolio turnover rate through February 28, 2006 is that of the American Beacon International Equity Portfolio.
I	Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

38

																		A Class			C Class
																		May			September
May 1 to			AMR Class															17 to			1 to
October			Year Ended October 31,															October			October
31, 2009			2010			2009			2008			2007			2006			31, 2010			31, 2010
$	11.78		$	15.61		$	13.25		$	27.54		$	24.86		$	21.12		$	14.14		$	14.82
	0.12			0.39			0.37			0.72			0.73			0.63			0.03			(0.01	)
	3.30			1.30			2.99			(11.58	)		4.33			4.92			2.23			1.58
	3.42			1.69			3.36			(10.86	)		5.06			5.55			2.26			1.57
	—			(0.52	)		(0.67	)		(0.77	)		(0.56	)		(0.48	)		—			—
	—			—			(0.33	)		(2.66	)		(1.82	)		(1.33	)		—			—
	—			(0.52	)		(1.00	)		(3.43	)		(2.38	)		(1.81	)		—			—
	0.00			—			0.00			0.00			0.00			0.00			—			—
$	15.20		$	16.78		$	15.61		$	13.25		$	27.54		$	24.86		$	16.40		$	16.39
	29.03	%F		11.05	%		27.70	%		(44.65	)%		21.86	%		27.88	%		15 .98	%F		10 .59	%F
$	1		$	469,414		$	431,499		$	328,083		$	672,680		$	563,231		$	4		$	1
	1.48	%G		0.46	%		0.48	%		0.41	%		0.42	%		0.45	%		1.25	%G		1.99	%G
	1.48	%G		0.46	%		0.48	%		0.41	%		0.42	%		0.45	%		1.26	%G		2 .60	%G
	1.72	%G		2.45	%		3.00	%		3.24	%		2.77	%		2.76	%		0 .98	%G		(0 .20	)%G
	1.72	%G		2.45	%		3.00	%		3.24	%		2.77	%		2.76	%		0 .96	%G		(0 .81	)%G
	41	%I		38	%		41	%		31	%		38	%		40	%		38	%B		38	%B

39

American Beacon Funds
Privacy Policy & Federal Tax Information

October 31, 2010 (Unaudited)

Privacy Policy

          The American Beacon Funds recognizes and respects the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

          We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

          We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

          We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

          For shareholders in the Fund, the percentage of dividend income distributed for the year ended October 31, 2010, which is designated as qualified dividend income under the Jobs Growth Tax Relief Act of 2003, was 96.75% for Emerging Markets Fund and 60.58% for International Equity Fund. Shareholders will receive notification in January 2011 of the percentage applicable to the preparation of their 2010 income tax returns.

          The International Equity Fund designated a foreign tax credit of $3,776,580 and recognized foreign source income of $41,985,136.

40

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisor Agreement (Unaudited)

          At its May 25, 2010 meeting, the Board of Trustees (“Board”) considered the renewal of each existing Management Agreement between American Beacon Advisors, Inc. (the “Manager”) and the American Beacon Funds (the “Funds”) and each Investment Advisory Agreement between the Manager and a subadvisor (“Investment Advisory Agreements” and collectively with the Management Agreement, the “Agreements”). In preparation for the Board’s consideration to renew these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

          In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 10, 2010 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

          In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees considered, among other materials, responses by the Manager and the subadvisors to inquiries requesting:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and II of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed by each firm with performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• a profit/loss analysis of the firm and any actual or anticipated economies of scale in relation to the services it provides to each Fund;

• an analysis of compensation, including a comparison with fees charged to other clients for which similar services are provided, any proposed changes to the fee schedule and the effect of any fee waivers;

• a description of any payments by the subadvisors to the manager to support the Funds’ marketing efforts;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of any internal actions the firm has taken or anticipates taking in light of the current and projected decrease in revenues from prior years as a result of the current economic environment that may affect or are expected to affect the services performed for the Funds;

• a description of the scope of portfolio management services provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a discussion regarding the firm’s participation in “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions, including the firm’s methodology for obtaining best execution and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm receives, with respect to the Funds, other compensation, including any payment for order flow or ECN liquidity rebates

• a certification by the firm regarding the reasonable design of its compliance program;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

          In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

41

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisor Agreement (Unaudited)

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fees and expense ratios for comparable mutual funds;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

          In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fees versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

          Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 10, 2010 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 25, 2010 meeting at which the Board considered the renewal of the Agreements. The Board did not identify any particular information that was most relevant to its consideration to renew the Management Agreement and each Investment Advisory Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal of the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to All Funds

          In determining whether to renew the Management Agreement and each Investment Advisory Agreement, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 25, 2010 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately. In each instance, the Board considered, among other things, the following factors: (1) the nature and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager and (to the extent provided) the subadvisors in rendering their services and their resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fees with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

          Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s generally favorable long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to increase assets in the Funds as demonstrated, for example, by the recent substantial increase in sales personnel; the Manager’s continuing efforts to add new series and share classes to enhance the Funds’ product line; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; and efforts made by the Manager to retain key employees and maintain staff levels.

          With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and their ability to continue to attract and retain qualified investment personnel. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

42

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisor Agreement (Unaudited)

          Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager and a subadvisor by Fund, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an individual Fund level and at an aggregate level for all Funds. The Board also considered that the Management Agreement for the Funds stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients is lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

          The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Funds. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

          In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee a subadvisor charges for any comparable client accounts. The Board gave less weight to profitability considerations or did not view this data as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fees.

          Based on the foregoing information, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager and the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Economies of Scale. In considering the reasonableness of the management and investment advisory fees, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates. The Board also noted the Manager’s representation that assets in the Funds’ complex increased during 2009, primarily due to market appreciation.

          In addition, the Board noted the Manager’s representation that, due to the existing low cost structure of the Funds, further breakpoints in the management fee would not be appropriate at this time. The Board also considered that the management fee for the Money Market Funds is amongst the lowest in the industry. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Fund.

          Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager’s relationship with the Funds and the money market portfolios continues to be a significant factor in attracting separate account assets for the Manager and the Manager’s use of the Large Cap Value Fund model for an actively managed exchange traded fund, managed by the Manager.

          In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted that the benefit plans of AMR Corporation, which are managed by the Manager, remain the largest or one of the largest shareholders in most of the Funds and the Manager’s representation that it provides services to each Trust at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that, with the exception of the Emerging Markets Fund, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal years ended October 31, and December 31, 2009.

          Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

43

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisor Agreement (Unaudited)

          The performance comparisons below were made versus each Fund’s Lipper peer universe median. References to the Lipper expense universe below are to the universe of comparable mutual funds included in the analysis provided to the Trustees by Lipper.

Additional Considerations and Conclusions with Respect to the Emerging Markets Fund

          In considering the renewal of the Management Agreement for the Emerging Markets Fund, the Trustees considered the following additional factors: (1) the Emerging Markets Fund outperformed the peer universe median for the one-, three-, and five-year periods ended March 31, 2010; and (2) the expense ratio of the Institutional Class of the Fund ranked worse than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreements with The Boston Company Asset Management, LLC (“TBC”) and Morgan Stanley Investment Management Inc. (“MSIM”), the Trustees considered the following additional factors: (1) MSIM outperformed the peer universe median for the five-year period ended March 31, 2010, but underperformed for the one- and three-year periods; (2) TBC outperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2010; (3) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (4) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (5) the Manager’s recommendation to continue to retain each subadvisor.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the Emerging Markets Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund, and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Emerging Markets Fund.

Additional Considerations and Conclusions with Respect to the International Equity Fund

          In considering the renewal of the Management Agreement for the International Equity Fund, the Trustees considered the following additional factors: (1) the Fund outperformed the peer universe median for the one-, three- and ten-year periods ended March 31, 2010, but underperformed for the five-year period; and (2) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreements with Causeway Capital Management LLC (“Causeway”), Lazard Asset Management LLC (“Lazard”), Templeton Investment Counsel, LLC (“Templeton”), and TBC, the Trustees considered the following additional factors: (1) Templeton outperformed the peer universe median for the one-, three-, five- and ten-year periods ended March 31, 2010; (2) Causeway outperformed the peer universe median for the one-, three-, five- and ten-year periods ended March 31, 2010; (3) Lazard outperformed the peer universe median for the three- and ten-year periods ended March 31, 2010, but underperformed for the one- and five-year periods; (4) TBC underperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2010; (5) management’s explanation that TBC’s underperformance was due, in part, to poor stock selection in the financial and materials sectors; (6) TBC significantly outperformed its Lipper peer group for the twelve months ended March 31, 2010; (7) management’s explanation that Lazard’s underperformance was due, in part, to poor stock selection in the financial and industrial sectors; (8) Lazard significantly outperformed its Lipper peer group for the twelve months ended March 31, 2010; (9) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (10) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (11) the Manager’s recommendation to continue to retain each subadvisor.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the International Equity Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the International Equity Fund.

44

Trustees and Officers of the American Beacon Funds
(Unaudited)

          The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees 23 funds in the fund complex that includes the Trust, the American Beacon Master Trust, the American Beacon Mileage Funds, and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
INTERESTED TRUSTEES
	Term Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (73)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (1960-Present); Director, Clear Channel Communications (1984-2008); Trustee, CenterPoint Properties (1994-2006); Member, Board of Trustees, Southern Methodist University ; Member, Board of Visitors, M.D. Anderson Hospital; Board of Visitors, Zale/Lipshy Hospital; Trustee, American Beacon Mileage Funds (1996-present); Trustee, American Beacon Select Funds (1999-present); Trustee, American Beacon Master Trust (1996-present).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (66)	Trustee since 2004	Board Member, Baylor University Medical Center Foundation (1992-2004); Consultant, New River Canada Ltd. (mutual fund servicing company) (1998-2003); President and CEO, Allmerica Trust Company, NA (1996-1997); President and CEO, Fidelity Investments Southwest Company (1983-1995); Senior Vice President of Regional Centers, Fidelity Investments (1988-1995); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004-present).
Brenda A. Cline (49)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, Texas Christian University (1998-Present); Trustee, W.I. Cook Foundation, Inc. (d/b/a Cook Children’s Health Foundation) (2001-2006); Director, Christian Church Foundation (1999-2007); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004-present).
Eugene J. Duffy (56)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994- Present); Director, Sunrise Bank of Atlanta (2008-Present); Chairman, Special Contributions Fund Board of Trustees, National Association for the Advancement of Colored People (2007-Present); Trustee, National Association for the Advancement of Colored People (2000-Present); Board of Visitors, Emory University (2006-Present); Trustee, Atlanta Botanical Garden (2006-Present); Board Member, Willie L. Brown Jr. Institute on Politics and Public Service (2001-Present); Chair, National Association of Securities Professionals (2000-2002); Deputy Chief Administrative Officer, City of Atlanta (1985-1990); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).

45

Trustees and Officers of the American Beacon Funds

(Unaudited)

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
Thomas M. Dunning (68)	Trustee since 2008	Consultant, (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Director, Oncor Electric Delivery Company LLC (2007-present); Director, Baylor Health Care System Foundation (2007-present); State Vice Chair, State Fair of Texas (1987-present); Board Member, Southwestern Medical Foundation (1994-present); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
Richard A. Massman (67)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present), Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities). Chairman (2007-Present) and Director (2005-Present), The Dallas Opera Foundation; Chairman (2006-2009) and Director (2005-Present), Temple Emanu-El Foundation; Trustee, Presbyterian Hospital Foundation (2006-Present); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004-present).
R. Gerald Turner (64) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas 75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, ChemFirst (1986-2002); Director, J.C. Penney Company, Inc. (1996-Present); Director, California Federal Preferred Capital Corp. (2001-2003); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Member, Salvation Army of Dallas Board of Directors; Member, Methodist Hospital Advisory Board; Co-Chair, Knight Commission on Intercollegiate Athletics; Trustee, American Beacon Mileage Funds (2001-present); Trustee, American Beacon Select Funds (2001-present); Trustee, American Beacon Master Trust (2001-present).
Paul J. Zucconi, CPA (70)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-present); Director, Titanium Metals Corporation (producer of titanium melted and mill products and sponge) (2002- present); Director, Torchmark Corporation (life and health insurance products) (2002-present); Director, National Kidney Foundation of North Texas (2003-Present); Director, Dallas Chapter of National Association of Corporate Directors (2004-Present); Partner, KPMG (1976-2001); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
OFFICERS
William F. Quinn** (62)	Term One Year Executive Vice President from 2007 to 2008 and 2009 to Present President from 1987 to 2007 and 2008 to 2009 Trustee from 1987 to 2008	Executive Chairman (2009-Present), Chairman (2006-2009) and CEO (2006- 2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009); Director, Crescent Real Estate Equities, Inc.(1994-2007); Director, Pritchard, Hubble & Herr, LLC (investment advisor) (2001-2006); Director of Investment Committee, Southern Methodist University Endowment Fund (1996-Present); Member, Southern Methodist University Cox School of Business Advisory Board (1999-2002); Member, New York Stock Exchange Pension Manager Committee (1997-1998, 2000-2002, 2006-Present); Chairman (2007-Present) and Vice Chairman (2004-2007), Committee for the Investment of Employee Benefits; Director, United Way of Metropolitan Tarrant County (1988-2000, 2004-Present); Trustee, American Beacon Mileage Funds (1995-2008); Trustee, American Beacon Select Funds (1999-2008); Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-present); Director, American Beacon Global Funds plc (2007-2009).

46

Trustees and Officers of the American Beacon Funds

(Unaudited)

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
Gene L. Needles, Jr. (55)	President 2009 to Present	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2008-2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), Managing Director of Sales (2002-2003), National Sales Manager (1999-2002), and Regional Sales Manager (1993-1999), AIM Distributors.
Rosemary K. Behan (51)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney (1995-2004), Securities and Exchange Commission.
Brian E. Brett (50)	VP since 2004	Vice President, Director of Sales and Marketing, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment advisor) (1996-2004).
Wyatt Crumpler (44)	VP since 2007	Vice President, Asset Management, American Beacon Advisors, Inc. (2007-Present); Managing Director of Corporate Accounting (2004-2007), Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Michael W. Fields (56)	VP since 1989	Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-Present); Director American Beacon Global Funds SPC (2002-present); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (49)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.
Terri L. McKinney (47)	VP since 2009	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; Vice-President, Board of Trustees (2008-Present), Trustee (2006-2008) Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (35)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice-President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).
Christina E. Sears (39)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Senior Compliance Analyst, American Beacon Advisors, Inc. (1998-2004).

*	The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the Board may determine to grant one or more annual exemptions to this requirement.
**	Mr. Feld is deemed to be an “interested person” of the Trusts, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two fiscal years to the Manager and one or more of the Trust’s and Master Trust’s sub-advisors.

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49

Delivery of Documents

eDelivery is NOW AVAILABLE — Stop traditional mail delivery and receive your
shareholder reports and summary prospectus on-line. Sign up at
www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Summary Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go to www.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.

To obtain more information about the Fund:

By E-mail:
american_beacon.funds@ambeacon.com

On the Internet:
Visit our website at www.americanbeaconfunds.com

By Telephone:
Institutional, Y, Investor, Advisor, and Retirement Classes
Call (800) 658-5811
AMR Class^SM
Call (800) 345-2345

By Mail:
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643

Availability of Quarterly Portfolio Schedules

In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available on the Funds’ website (www.americanbeaconfunds.com) approximately twenty days after the end of each month.

Availability of Proxy Voting Policy and Records

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website (www.americanbeaconfunds.com) and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967-9009.

Fund Service Providers:

Custodian	Transfer Agent	Independent Registered	Distributor
State Street Bank and	Boston Financial Data	Public Accounting	Foreside Fund Services,
Trust	Services	Firm	LLC
Boston, Massachusetts	Kansas City, Missouri	Ernst & Young LLP	Portland, Maine
		Dallas, Texas

This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus or summary prospectus.

American Beacon Funds, American Beacon Emerging Markets Fund, and American Beacon International Equity Fund are service marks of American Beacon Advisors, Inc.

AR 10//10
IN1010

About American Beacon Advisors

     Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

     Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents
President’s Message		1
Market and Performance Overviews		2-12
American Beacon Schedules of Investments
Balanced Fund		14
Large Cap Growth Fund		22
Mid-Cap Value Fund		25
Additional Information	Back Cover

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and each Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

Investing in debt securities entails interest rate risk which is the risk that debt securities will decrease in value with increases in market interest rates. Investing in the securities of mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies.

Fellow Shareholders,

          Throughout the past 12 months, one theme prevailed: investments placed with experienced, forward-thinking managers can still benefit. Opportunity abounds for those with the foresight to know how to capitalize on changing market conditions. It’s no coincidence that this theme also goes to the heart of the American Beacon Funds investment philosophy.

          It’s a philosophy that continued serving our domestic equity investors well. For the 12-month period ended October 31, 2010 the American Beacon Balanced Fund (Institutional Class) returned 12.47%. The American Beacon Large Cap Growth Fund (Institutional Class) similarly generated 17.70% and the American Beacon Mid-Cap Value Fund (Institutional Class) rose 23.19% over the same period. Please note that the recent growth rate in the stock market has helped to produce short-term increases that are not typical and may not continue in the future.

          While we keep a watchful eye on your investment in our funds, we also remain focused on seeking out new opportunities to help keep your financial goals on course. This is what guides the composition of American Beacon Funds’ product line-up. It is also what led to the addition of several new funds this past year: the American Beacon Zebra Large Cap and the Zebra Small Cap Equity Funds, which use a proprietary strategy to attempt to capture a unique source of equity return—the liquidity premium. We also recently added the American Beacon Evercore Small Cap Equity Fund, which relies on a fundamental bottom-up investment approach and is managed by the well-regarded Evercore Asset Management, LLC.

          Continuously searching for new ways to serve our fellow shareholders’ needs is our commitment to you, a commitment we summarize as: Oversight 360. Ours is a continuous commitment to cast a thoughtful and analytical eye over all the factors that influence our investments.

          We want to thank you for your continued investment in the American Beacon Funds. As you review the enclosed market overview, portfolio listings, and detailed financial data, please know that we remain dedicated to offering you both the level of superior service and knowledgeable investment management you’ve come to expect from us.

          To obtain further details about the American Beacon Funds family or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,
 

 

Gene L. Needles, Jr. 

President
American Beacon Funds 

Securities of these Funds may only be sold by offering each Funds’ Prospectus and Summary Prospectus. You should consider the investment objectives, risks, fees and expenses of any mutual fund carefully before investing. This and other information is available in each Funds’ Prospectus and Summary Prospectus which you may obtain at www.americanbeaconfunds.com or by calling 1-800-967-9009. Please read the Prospectus and Summary Prospectus carefully before investing. Distributed by Foreside Fund Services, LLC.

There is no guarantee that the Funds’ investment objective will be met. At times, certain securities held by the American Beacon Zebra Large Cap Equity and Small Cap Equity Funds may have limited marketability and may be difficult to sell. Investing in the securities of small and mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Because the American Beacon Evercore Small Cap Equity Fund is a focused portfolio of fewer companies, the increase or decrease of the value of a single stock may have a greater impact on the Fund’s NAV and total return when compared to other diversified funds.

1

Domestic Equity Market Overview

October 31, 2010 (Unaudited)

          Extreme swings in investor sentiment and significant volatility in equity returns characterized the U.S. stock market’s performance during the past 12 months. Market returns were robust for the first several months of the year, only to be followed by a significant correction through the spring and summer months that was triggered by fears of a double-dip recession and concerns over the sovereign debt crisis in Europe. By August, many investors had seemingly grown despondent and sentiment towards equities reached extreme lows as the perceived safety of bonds drew increasing commitment.

          September’s history as the cruelest month combined with recession fears made equities look like dead money. A surprising thing happened on the way to the funeral, however, as equity markets rallied sharply for the month. They posted the best September return in 71 years and the third best return of any month over the past 10 years. An interesting aspect of the rally was the absence of any real catalyst.

          In the end, the S&P 500 returned 16.52% for 12 months ended October 31, 2010. Contributions to this performance were widespread, with most sectors finishing up in double digits.

Sector Results

          Consumer Discretionary, Industrials, Telecommunications and Materials stocks were among the strongest performers, while financials and energy were significant laggards. Continuing sluggishness in loan demand, a persistent stream of negative regulatory pronouncements out of Washington and the seemingly endless flow of mortgage problems tempered enthusiasm for the banking industry. Insurers were pressured by weak fixed income returns given the near zero interest rate environment, volatile returns in the equity market, and the specter of further delays in the recovery in real estate markets.

          The trend of Gross Domestic Product (“GDP”) growth slowed significantly throughout the year—from 5.0% in the fourth quarter of 2009 to 1.7% in the second quarter of 2010. Subpar growth persisted into the third quarter of 2010 as well.

Consumer Spending

          With growth at such a sluggish pace, consumer spending remained weak especially in light of deferred hiring by employers. Given these conditions, there is little reason to expect a resumption of normal economic growth until employment can show meaningful improvement. More and more, the strong GDP growth in the fourth quarter of 2009 and the first quarter of 2010 is looking like an inventory driven anomaly.

          Absent the change in inventories, real final sales grew at less than 1.5% over the past four quarters. This was extraordinarily weak for the first 12 months out of a severe recession. However, profit growth has been exceptional as businesses restrained their spending. Margins at many companies were at or above prior peaks. Corporate balance sheets were also very strong, as cash balances grew due to the reluctance to make large capital expenditures.

          Yet, jobs still hold the key to recovery. Job statistics have not been encouraging. Without significant growth in employment, consumer and business spending is likely to remain sluggish and the recovery in housing will be pushed farther into the future.

Limited Economic Stimulus

          Policymakers in Washington have made a concerted effort to jumpstart the economy, but the results have been limited at best. Now, the government is running out of ammunition as more than two-thirds of the fiscal stimulus budget has been spent and the Federal Reserve has already slashed interest rates to the bone. At the state and local government level, employment was maintained with Federal stimulus money in 2010, but the projected new political mix in Congress next year is not expected to continue that support. Our sub-advisors anticipate retrenchment in state and municipal employment and spending to be a headwind for the economy in the coming year.

          As for the overall market, it is inexpensive but it remains subject to economic uncertainty. The unemployment/underemployment figures are the highest since the 1930’s and the Federal Reserve has pushed short-term rates to zero

2

Domestic Equity Market Overview

October 31, 2010 (Unaudited)

without much to show for it. This implies a very fragile economic environment with a minimal cushion.

          Meanwhile, bonds seem to be making a case for stocks. The monetary policies of the Federal Reserve appear to be designed to move investors into riskier alternatives, such as equities, by keeping bond interest rates at record lows. As investor interest returns to domestic stocks, our managers see a number of positives. As mentioned earlier, corporate balance sheets are quite strong and many companies are positioned to return significant amounts of cash to shareholders, both in the form of share repurchases and (most importantly) increased dividends. Many stocks have a dividend yield which exceeds the interest rate of 10-year Treasury bonds and yet still have the potential to grow returns further through both earnings and dividend growth. Also, most financial stocks are not currently paying any dividends. As we mentioned earlier, many of these financial companies are building significant amounts of excess capital which is likely to be used to restore dividend yields.

          Also encouraging is that aggressive cost-cutting during the recession formed lean businesses with tremendous operating leverage. As revenue growth has resurfaced—in fact, some 90% of companies saw revenue gains in the third quarter of 2010—it has created an earnings tailwind. Profit margins on incremental revenue have been more than three times profit margins on base revenue. This is providing the overall market with remarkable operating leverage.

          Our managers continue to find compelling valuation opportunities given that the market remains nearly 20% below its 2007 peak. Though less extraordinary than they were in early 2009, these valuation opportunities remain attractive, particularly relative to fixed income alternatives. There appear to be fewer valuation spreads at the sector level, but many at the stock level, making it more of a stock-picker’s market than a cyclical one. This is a prime environment for active equity managers in search of bottom-up valuation opportunities.

3

Performance Overview
American Beacon Balanced Fund^SM

October 31, 2010 (Unaudited)

          The Balanced Fund’s Institutional Class returned 12.47% for the twelve months ended October 31, 2010. The Fund underperformed the 60% Russell 1000^® Value/40% Barclays Capital Aggregate Index benchmark return of 13.06% and the Lipper Mixed-Asset Target Allocation Growth Funds Index return of 14.21%.

Comparison of Change in Value of a $10,000 Investment
For The Period from 10/31/00 through 10/31/10

										Value of
	Annualized Total Returns									$10,000
	Periods Ended 10/31/10									10/31/00-
	1 Year			5 Years			10 Years			10/31/10
Institutional Class(1,8)		12.47	%		3.18	%		5.60	%	$	17,246
Y Class(1,3,8)		12.40	%		3.16	%		5.60	%	$	17,237
Investor Class(1,8)		12.06	%		2.89	%		5.31	%	$	16,781
Advisor Class(1,2,8)		11.96	%		2.67	%		5.17	%	$	16,550
A Class with sales charge(1,4,8)		5.64	%		1.68	%		4.69	%	$	15,818
A Class without sales charge(1,4,8)		12.10	%		2.90	%		5.32	%	$	16,787
C Class with sales charge(1,5,8)		10.77	%		2.84	%		5.29	%	$	16,738
C Class without sales charge(1,5,8)		11.77	%		2.84	%		5.29	%	$	16,738
AMR Class(1,8)		12.84	%		3.46	%		5.89	%	$	17,718
Balanced Composite Index(6)		13.06	%		3.34	%		4.49	%	$	15,510
Russell 1000 Value Index(7)		15.71	%		0.62	%		2.64	%	$	12,982
Barclays Capital Aggregate Index(7)		8.01	%		6.45	%		6.38	%	$	18,561
Lipper Mixed-Asset Target Allocation Growth Funds Index(7)		14.21	%		3.84	%		4.03	%	$	14,850

1.	Performance shown is historical and may not be indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit our website at www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.
2.	Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/00 up to 5/31/05, the inception date of the Advisor Class, and the returns of the Advisor Class since its inception. Expenses of the Advisor Class are higher than those of the Investor Class. Therefore, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/00. A portion of the fees charged to the Advisor Class of the Fund was waived in 2005. Performance prior to waiving fees was lower than actual returns shown for 2005.
3.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/00 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. Therefore, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/00.
4.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. Therefore, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/00. A Class has a maximum sales charge of 5.75%.
5.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Investor Class from 10/31/00 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. Therefore, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/00. The maximum contingent deferred sales charge for C Class is 1% for shares redeemed within one year of the date of purchase.
6.	To reflect the Fund’s allocation of its assets between investment grade fixed-income securities and equity securities, the returns of the Russell 1000 Value Index and the Barclays Capital Aggregate Index have been combined in a 60%/40% proportion.
7.	The Russell 1000 Value Index is an unmanaged index of those stocks in the Russell 1000 Index with lower price-to-book ratios and lower forecasted growth values. Russell 1000 Value Index is a registered trade mark of Frank Russell Company. The Barclays Capital Aggregate Index is a market value weighted index of government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. The Lipper Mixed-Asset Target Allocation Growth Funds Index tracks the results of the 30 largest mutual funds in the Lipper Mixed-Asset Target Allocation Growth Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.
8.	The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and AMR Class shares was 0.61%, 0.71%, 0.90%, 1.10%, 1.11%, 1.86%, and 0.36%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

          During the twelve-month period, the Fund’s assets on average were invested 63% in equities (including equitized cash) and 37% in fixed-income securities, ending the period with 64% in

4

Performance Overview
American Beacon Balanced Fund^SM

October 31, 2010 (Unaudited)

equities/equitized cash and 36% in fixed-income securities.

          The equity portion of the Fund (excluding equitized cash) returned 15.0%, underperforming the Russell 1000^® Value Index (the “Index”) return of 15.7%. The Fund’s equities underperformed the Index entirely due to security selection as sector allocation added to relative returns. The Fund’s holdings in the Information Technology, Financials, and Energy sectors detracted the most value relative to the Index. Microsoft (down 2.4%) and Dell (down 13.3% for the period the Fund owned the security) had the largest negative impact on performance in the Information Technology sector. In the Financials sector, XL Capital (down 0.9%), ACE (up 19.0%), and JPMorgan Chase (down 10.0%) were the largest detractors. BP (down 33.6%) and Transocean (down 17.8% for the period the Fund owned the security) hurt performance most in the Energy sector. The aforementioned returns were slightly offset by good security selection in the Consumer Staples and Health Care sectors. In the Consumer Staples sector, Imperial Tobacco Group (up 15.3%) and Diageo (up 17.6%) added the most value to relative returns. For the period the Fund owned the securities, Astrazeneca (up 21.5%), Merck (up 17.6%) and Bristol Myers Squibb (up 30.9%) were the largest contributors in the Health Care sector.

          Underweight positions in Energy and Financials, the two worst performing sectors in the Index, added value to the Fund’s relative returns through sector allocation. An underweight in the Utilities sector detracted from performance.

          The fixed-income portion of the Fund returned 9.8% for the period, outperforming the Barclays Capital Aggregate Index (the “Barclays Index”) return of 8.0%. A significant overweight in Corporates, the second best performing sector in the Barclays Index, and an underweight position in Mortgage Pass-Throughs contributed most to the Fund’s performance through sector allocation. The Fund’s holdings in Agency securities also added value.

          The sub-advisors continue to focus on the disciplined selection of attractive securities that should allow the Fund to benefit long term.

Top Ten Holdings

	% of
	Net Assets
ConocoPhillips		2.3	%
JPMorgan Chase & Co.		2.0	%
Bank of America Corp.		1.4	%
International Business Machines Corp.		1.8	%
Wells Fargo & Co.		1.6	%
Hewlett-Packard Co.		1.4	%
Vodafone Group plc		1.5	%
Pfizer, Inc.		1.5	%
Microsoft Corp.		1.4	%
PNC Financial Services Group, Inc.		1.2	%

Sector Allocation

	% of Equities
Financials		23.0	%
Information Technology		13.7	%
Industrials		11.7	%
Energy		11.4	%
Health Care		11.1	%
Consumer Discretionary		9.3	%
Consumer Staples		7.0	%
Telecommunication Services		4.8	%
Utilities		4.1	%
Materials		3.9	%

Sector Allocation

	% of Fixed
	Income
Corporate		46.9	%
U.S. Agency Mortgage Backed Obligations		16.3	%
Agency		14.3	%
U.S. TIPS		13.9	%
Commercial Mortgage Backed Securities		3.1	%
Asset-Backed		2.9	%
Mortgage-Backed		1.6	%
Municipal Obligations		0.9	%
Other Government		0.1	%

5

Performance Overview
American Beacon Large Cap Growth Fund^SM

October 31, 2010 (Unaudited)

          The Institutional Class of the Large Cap Growth Fund returned 17.70% for the twelve months ended October 31, 2010, trailing both the Russell 1000^® Growth Index (the “Index”) return of 19.65% and the Lipper Large-Cap Growth Funds Index return of 18.26%.

Comparison of Change in Value of a $10,000 Investment
For the Period from 10/31/00 through 10/31/10

										Value of
	Annualized Total Returns									$10,000
	Periods Ended 10/31/10									10/31/00-
	1 Year			5 Years			10 Years			10/31/10
Institutional Class(1,6)		17.70	%		0.05	%		-4.08	%	$	6,596
Y Class(1,2,6)		17.50	%		0.02	%		-4.09	%		6,280
A Class with sales Charge(1,3,6)		10.81	%		-1.17	%		-4.66	%		5,919
A Class without sales charge (1,3,6)		17.50	%		0.02	%		-4.09	%		6,280
C Class with sales Charge(1,4,6)		16.30	%		-0.02	%		-4.11	%		6,270
C Class without sales charge (1,4,6)		17.30	%		-0.02	%		-4.11	%		6,270
AMR Class(1,6)		18.11	%		0.38	%		-3.87	%		6,741
Russell 1000 Growth Index(5)		19.65			3.21			-2.52			7,748
Lipper Large-Cap Growth Funds Index(5)		18.26	%		1.95	%		-3.10	%		7,299

1.	Performance shown is historical and may not be indicative of future returns. Please note that the recent growth rate in the stock market has helped to produce short-term returns that are not typical and may not continue in the future. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. A portion of the fees charged to the Institutional Class of the Fund has been waived since 2004. Performance prior to waiving the fees was lower than actual returns shown for periods since 2004.
2.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/00 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. Therefore, total returns shown may be higher than they would have been had the Y Class been in existence since 3/1/10.
3.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/00 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Institutional Class. Therefore, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/00. A Class has a maximum sales charge of 5.75%.
4.	Fund performance for the one-year, five-year, and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/00 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Institutional Class. Therefore, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/00. The maximum contingent deferred sales charge for C Class is 1% for shares redeemed within one year of the date of purchase.
5.	The Russell 1000 Growth Index is an unmanaged index of those stocks in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values. Russell 1000 Growth Index and Russell 1000 Index are registered trademarks of Frank Russell Company. The Lipper Large-Cap Growth Funds Index tracks the results of the 30 largest mutual funds in the Lipper Large-Cap Growth Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.
6.	The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, A, C, and AMR Class shares was 0.95%, 1.05%, 1.45%, 2.20%, and 0.64%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

          The Fund underperformed the Index entirely due to stock selection, as sector allocation added modest value to the Fund’s relative returns. Most of the Fund’s underperformance was attributed to poor security selection in the Financials and Health Care sectors. In the Financials sector, JPMorgan Chase (down 11.4%) and Knight Capital Group (down 13.3%) were the largest detractors. For the period the Fund owned the securities, Express Scripts (up 3.9%) and Becton Dickinson (up 0.4%) had the largest impact on performance in the Health Care sector. Good stock selection in the Information Technology sector, where Baidu (up 160.0%) and Lexmark International (up 0.2%) were the largest contributors for the period the Fund owned the securities, added to the Fund’s relative returns.

          A neutral position in Consumer Discretionary and an overweight position in Industrials, two of

6

Performance Overview
American Beacon Large Cap Growth Fund^SM

October 31, 2010 (Unaudited)

the better performing sectors in the Index, added value relative to the Index, as did an underweight in the Consumer Staples sector. This was somewhat offset by being underweight in the Materials sector.

          Looking forward, the Fund’s sub-advisors will continue to maintain a disciplined, long-term approach to equity investing in larger stocks with above-average growth potential.

Top Ten Holdings

	% of
	Net Assets
Apple Computer, Inc.		3.1	%
Union Pacific Corp.		2.3	%
Oracle Corp.		2.3	%
Express Scripts, Inc.		2.1	%
Cognizant Technology Solutions Corp.		1.9	%
EMC Corp.		1.9	%
Cisco Systems, Inc.		1.8	%
Deere & Co.		1.7	%
priceline.com, Inc.		1.6	%
Texas Instruments, Inc.		1.4	%

Sector Allocation

	% of Equities
Information Technology		37.5	%
Industrials		18.4	%
Consumer Discretionary		17.3	%
Health Care		10.3	%
Financials		6.3	%
Energy		5.0	%
Materials		2.8	%
Consumer Staples		1.5	%
Telecommunication Services		0.9	%

7

Performance Overview
American Beacon Mid-Cap Value Fund^SM

October 31, 2010 (Unaudited)

          The Institutional Class of the Mid-Cap Value Fund returned 23.19% for the twelve months ended October 31, 2010. The Fund trailed the Russell Midcap^® Value Index (the “Index”) return of 27.49% but outperformed the Lipper Mid-Cap Value Funds Index return of 22.16%.

Comparison of Change in Value of a $10,000 Investment
For the Period from 6/30/04* through 10/31/10

* Inception of Fund

										Value of
	Annualized Total Returns						Since			$10,000
	Periods Ended 10/31/10						Incep.			6/30/04-
	1 Year			5 Years			(6/30/04)			10/31/10
Institutional Class(1,3,9)		23.19	%		3.43	%		5.38	%	$	13,933
Y Class(1,4,9)		23.19	%		3.43	%		5.38	%		13,935
Investor Class (1,2,9)		22.93	%		3.17	%		5.17	%		13,760
Advisor Class (1,5,9)		22.37	%		3.12	%		5.13	%		13,726
A Class with sales charge (1,6,9)		15.60	%		1.90	%		4.15	%		13,730
A Class without sales charge (1,6,9)		22.66	%		3.12	%		5.13	%		12,941
C Class with sales charge (1,7,9)		21.66	%		3.12	%		5.13	%		13,730
C Class without sales charge (1,7,9)		22.66	%		3.12	%		5.13	%		13,730
AMR Class (1,9)		23.28	%		3.59	%		5.50	%		14,044
Russell Midcap Value Index(8)		27.49	%		3.38	%		6.26	%		14,690
Lipper Mid-Cap Value Funds Index(8)		22.16	%		3.48	%		4.94	%		13,574

1.	Performance shown is historical and may not be indicative of future returns. Please note that the recent growth rate in the stock market has helped to produce short-term returns that are not typical and may not continue in the future. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. A portion of the fees charged to the AMR Class of the Fund was waived through 2005. Performance prior to waiving fees was lower than the actual returns shown for periods through 2005.
2.	Fund performance for the five-year and since inception periods represents the total returns achieved by the AMR Class from 6/30/04 up to 3/1/06, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the AMR Class. As a result, total returns shown may be higher than they would have been had the Investor Class been in existence since 6/30/04. A portion of the fees charged to the Investor Class of the Fund has been waived since 2006. Performance prior to waiving fees was lower than actual returns shown since 2006.
3.	Fund performance for the year and since inception periods represents the total returns achieved by the AMR Class from 6/30/04 up to 11/30/05, the inception date of the Institutional Class, and the returns of the Institutional Class since its inception. Expenses of the Institutional Class are higher than those of the AMR Class. As a result, total returns shown may be higher than they would have been had the Institutional Class been in existence since 6/30/04. A portion of the fees charged to the Institutional Class of the Fund has been waived since 2007. Performance prior to waiving fees was lower than actual returns shown since 2007.
4.	Fund performance for the one-year, five-year and since inception periods represents the total returns achieved by the AMR Class from 6/30/04 up to 11/30/05, the inception date of the Institutional Class, and the total returns of the Institutional Class from 11/30/05 up to 3/1/10, the inception date of the Y Class and the returns of the Y Class since its inception. Expenses of the AMR and Institutional Classes are lower than those of the Y Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 6/30/04..
5.	Fund performance for the five-year and since inception periods represents the total returns achieved by the AMR Class from 6/30/04 to 11/30/05, the Institutional Class from 11/30/05 to 3/1/06 and the Investor Class from 3/1/06 to 6/29/07. Because the AMR, Institutional, and Investor Classes had lower expenses, their performance was better than the Advisor Class would have realized during the same period. A portion of the fees charged to the Advisor Class of the Fund has been waived since 2007. Performance prior to waiving fees was lower than the actual returns shown since 2007.
6.	Performance shown prior to the 5/17/10 inception of the A Class is that of the AMR Class from 6/30/04 to 11/30/05, the Institutional Class from 11/30/05 to 3/1/06 and the Investor Class from 3/1/06 to 5/17/10. Because the AMR, Institutional, and Investor Classes had lower expenses, their performance was better than the A Class would have realized during the same period. A Class shares has a maximum sales charge of 5.75%.
7.	Performance shown prior to the 9/1/10 inception of the C Class is that of the AMR Class from 6/30/04 to 11/30/05, the Institutional Class from 11/30/05 to 3/1/06 and the Investor Class from 3/1/06 to 9/1/10. Because the AMR, Institutional, and Investor Classes had lower expenses, their performance was better than the C Class would have realized during the same period. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

8

Performance Overview
American Beacon Mid-Cap Value Fund^SM

October 31, 2010 (Unaudited)

8.

The Russell Midcap Value Index is an unmanaged index of those stocks in the Russell Midcap Index with lower price-to-book ratios and lower forecasted growth values. The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index. Russell Midcap Value Index and Russell 1000 Index are registered trademarks of Frank Russell Company. The Lipper Mid-Cap Value Funds Index tracks the results of the 30 largest mutual funds in the Lipper Mid-Cap Value Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.

9.

The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and AMR Class shares was 1.15%, 1.25%, 1.36%, 1.60%, 1.65%, 2.24%, and 0.84%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

          The Fund underperformed the Index entirely due to stock selection as sector allocation was neutral relative to the Index.

          Most of the Fund’s poor performance in stock selection resulted primarily from its holdings in the Health Care, Industrials, Financials, and Information Technology sectors. In the Health Care sector, Zimmer Holdings (down 9.8%) and Immucor (down 11.3% for the period the Fund owned the security) detracted the most value relative to the Index. Individual holdings that had the largest impact on performance in the Industrials sector were Armstrong World Industries (up 0.7%) and Ryder System (up 9.8%). In the Financials sector, Primerica (up 35.3% for the period the Fund owned the security) and XL Capital (down 5.6%) were the largest detractors, while Motorola (down 23.9%) hurt performance most in the Information Technology sector. Good security selection in the Consumer Discretionary sector, where Magna International (up 86.7%), Gildan Activewear (up 70.6%), and Family Dollar Stores (up 65.4%) were the largest contributors, added relative value.

          A significant overweight in the Consumer Discretionary sector added value through sector allocation. This was negated by an absence from Materials and Telecommunication Services, two of the better performing sectors in the Index, which detracted value relative to the Index.

          The sub-advisors’ philosophy of investing in undervalued companies that exhibit improving profitability and earnings growth potential should allow the Fund to benefit longer term.

Top Ten Holdings

	% of
	Net Assets
L-3 Communications Holdings, Inc.		2.8	%
Willis Group Holdings plc		2.3	%
Avnet, Inc.		2.1	%
J.C. Penney Company, Inc.		1.9	%
Tyco Electronics Ltd.		1.9	%
Fifth Third Bancorp		1.8	%
Brady Corp.		1.8	%
Stanley Black & Decker, Inc.		1.5	%
CA, Inc.		1.5	%
Con-way, Inc.		1.5	%

Sector Allocation

	% of Equities
Financials		25.1	%
Industrials		18.9	%
Consumer Discretionary		17.4	%
Information Technology		10.5	%
Health Care		10.4	%
Utilities		6.2	%
Energy		5.0	%
Consumer Staples		4.1	%
Materials		2.4	%

9

Fund Expenses

October 31, 2010 (Unaudited)

Fund Expense Example

          As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees if applicable, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in a particular Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2010 through October 31, 2010.

Actual Expenses

          The following tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the “Expenses Paid During Period” for the applicable Fund to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in a Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

				Large Cap
	Balanced			Growth			Mid-Cap
Institutional Class	Fund			Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,010.04		$	1,029.98		$	985.12
Expenses Paid During Period 5/1/10-10/31/10*	$	2.94		$	5.01		$	4.90
Annualized Expense Ratio		0.58	%		0.98	%		0.98	%

				Large Cap
	Balanced			Growth			Mid-Cap
Y Class	Fund			Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,007.98		$	1,028.22		$	983.96
Expenses Paid During Period 5/1/10-10/31/10*	$	4.76		$	5.42		$	6.15
Annualized Expense Ratio		0.94	%		1.06	%		1.23	%

	Balanced			Mid-Cap
Investor Class	Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,007.98		$	983.96
Expenses Paid During Period 5/1/10-10/31/10*	$	4.76		$	6.15
Annualized Expense Ratio		0.94	%		1.23	%

	Balanced			Mid-Cap
Advisor Class	Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,007.66		$	982.76
Expenses Paid During Period 5/1/10-10/31/10*	$	5.47		$	7.20
Annualized Expense Ratio		1.08	%		1.44	%

				Large Cap
	Balanced			Growth			Mid-Cap
A Class**	Fund			Fund			Value Fund
Beginning Account Value 5/17/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,039.03		$	1,079.60		$	1,020.00
Expenses Paid During Period 5/17/10-10/31/10*	$	5.04		$	7.13		$	6.84
Annualized Expense Ratio		1.08	%		1.49	%		1.48	%

				Large Cap
	Balanced			Growth			Mid-Cap
C Class**	Fund			Fund			Value Fund
Beginning Account Value 9/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,052.43		$	1,125.73		$	1,106.02
Expenses Paid During Period 9/1/10-10/31/10*	$	3.14		$	3.84		$	3.88
Annualized Expense Ratio		1.83	%		2.20	%		2.24	%

10

Fund Expenses

October 31, 2010 (Unaudited)

	Balanced			Large Cap			Mid-Cap
AMR Class	Fund			Growth Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/2010	$	1,011.74		$	1,031.58		$	986.17
Expenses Paid During Period 5/1/10-10/31/10*	$	1.67		$	3.69		$	3.85
Annualized Expense Ratio		0.33	%		0.72	%		0.77	%

Hypothetical Example for Comparison Purposes

          The following tables provide information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in a particular Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in a Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

          You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by a Fund, such as redemption fees as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the following tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.

				Large Cap
	Balanced			Growth			Mid-Cap
Institutional Class	Fund			Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,022.28		$	1,020.27		$	1,020.27
Expenses Paid During Period 5/1/10-10/31/10*	$	2.96		$	4.99		$	4.99
Annualized Expense Ratio		0.58	%		0.98	%		0.98	%

				Large Cap
	Balanced			Growth			Mid-Cap
Y Class	Fund			Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,020.47		$	1,019.86		$	1,019.00
Expenses Paid During Period 5/1/10-10/31/10*	$	4.79		$	5.40		$	6.26
Annualized Expense Ratio		0.94	%		1.06	%		1.23	%

	Balanced			Mid-Cap
Investor Class	Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,020.47		$	1,019.00
Expenses Paid During Period 5/1/10-10/31/10*	$	4.79		$	6.26
Annualized Expense Ratio		0.94	%		1.23	%

	Balanced			Mid-Cap
Advisor Class	Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,019.76		$	1,017.95
Expenses Paid During Period 5/1/10-10/31/10*	$	5.50		$	7.32
Annualized Expense Ratio		1.08	%		1.44	%

				Large Cap
	Balanced			Growth			Mid-Cap
A Class**	Fund			Fund			Value Fund
Beginning Account Value 5/17/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,018.06		$	1,016.15		$	1,016.21
Expenses Paid During Period 5/17/10-10/31/10*	$	5.00		$	6.92		$	6.86
Annualized Expense Ratio		1.08	%		1.49	%		1.48	%

11

Fund Expenses

October 31, 2010 (Unaudited)

				Large Cap
	Balanced			Growth			Mid-Cap
C Class**	Fund			Fund			Value Fund
Beginning Account Value 9/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,005.30		$	1,004.68		$	1,004.61
Expenses Paid During Period 9/1/10-10/31/10*	$	3.06		$	3.68		$	3.75
Annualized Expense Ratio		1.83	%		2.20	%		2.24	%

				Large Cap
	Balanced			Growth			Mid-Cap
AMR Class	Fund			Fund			Value Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,023.54		$	1,021.58		$	1,021.32
Expenses Paid During Period 5/1/10-10/31/10*	$	1.68		$	3.67		$	3.92
Annualized Expense Ratio		0.33	%		0.72	%		0.77	%

*	Expenses are equal to the Fund’s annualized expense ratios for the six-month period multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year ( 184 ) by days in the year ( 365 ) to reflect the half year period.
**	Beginning account value is the inception date of 5/17/10 and 9/1/10 for the A and C Classes, respectively. Expenses are equal to the Fund’s annualized expense ratios for the period multiplied by the average account value over the period multiplied by the number derived by dividing the number of days in the period (168 and 61 for the A and C Classes, respectively) by days in the year (365).

12

American Beacon Funds
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of
American Beacon Balanced Fund, American Beacon Large Cap Growth Fund, and American Beacon Mid-Cap Value Fund:

We have audited the accompanying statements of assets and liabilities, including the schedule of investments, of the American Beacon Balanced Fund, the American Beacon Large Cap Growth Fund, and the American Beacon Mid-Cap Value Fund (three of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2010, 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 periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ 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 each Fund’s 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 October 31, 2010, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers 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 the American Beacon Balanced Fund, the American Beacon Large Cap Growth Fund, and the American Beacon Mid-Cap Value Fund at October 31, 2010, 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 periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas
December 23, 2010

13

American Beacon Balanced Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
COMMON STOCK — 59.26%
CONSUMER DISCRETIONARY — 5.52%
Auto Components — 0.24%
Johnson Controls, Inc.		60,300		2,118
Automobiles — 0.26%
Toyota Motor Corp.*		32,600		2,309
Hotels, Restaurants & Leisure — 1.16%
Carnival Corp.		105,300		4,545
McDonald’s Corp.		35,200		2,738
Wyndham Worldwide Corp.		100,100		2,878
				10,161
Media — 0.96%
CBS Corp.		103,400		1,751
Comcast Corp.		160,200		3,096
Interpublic Group of Cos., Inc.†		161,500		1,672
Time Warner Cable, Inc.		32,400		1,875
				8,394
Multiline Retail — 1.28%
J.C. Penney Company, Inc.		115,400		3,598
Target Corp.		46,450		2,413
Wal-Mart Stores, Inc.		94,900		5,141
				11,152
Specialty Retail — 1.61%
Abercrombie & Fitch Co.		73,900		3,167
Gap, Inc.		391,200		7,436
Limited Brands, Inc.		23,700		697
The Home Depot, Inc.		89,750		2,771
				14,071
Total Consumer Discretionary				48,205
CONSUMER STAPLES — 4.14%
Beverages — 1.03%
Coca-Cola Co.		35,300		2,165
Diageo plc*		68,200		5,046
PepsiCo, Inc.		27,300		1,783
				8,994
Food & Drug Retailing — 0.90%
CVS Caremark Corp.		140,700		4,237
Safeway, Inc.		99,500		2,279
Sysco Corp.		45,100		1,329
				7,845
Food Products — 0.10%
Kraft Foods, Inc.		28,100		907
Tobacco — 2.11%
Altria Group, Inc.		103,000		2,618
Imperial Tobacco Group plc*		86,800		5,555
Lorillard, Inc.		10,500		896
Philip Morris International, Inc.		159,100		9,308
				18,377
Total Consumer Staples				36,123

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
ENERGY — 6.77%
Energy Equipment & Services — 0.38%
Transocean Ltd.†		53,000		3,358
Oil & Gas — 6.39%
BP plc*		103,100		4,210
Chevron Corp.		71,428		5,901
ConocoPhillips		330,676		19,641
Exxon Mobil Corp.		85,100		5,657
Marathon Oil Corp.		64,800		2,305
Occidental Petroleum Corp.		63,200		4,969
Royal Dutch Shell plc*		115,400		7,423
Spectra Energy Corp.		236,100		5,612
				55,718
Total Energy				59,076
FINANCIALS — 13.65%
Banks — 4.59%
Bank of America Corp.		1,032,480		11,812
Bank of New York Mellon Corp.		71,300		1,787
KeyCorp.		149,257		1,222
PNC Financial Services Group, Inc.		190,458		10,266
SunTrust Banks, Inc.		35,000		876
Wells Fargo & Co.		538,598		14,046
				40,009
Diversified Financials — 5.14%
American Express Co.		135,100		5,601
Capital One Financial Corp.		130,900		4,879
Citigroup, Inc.†		1,555,303		6,486
Goldman Sachs Group, Inc.		17,100		2,752
JPMorgan Chase & Co.		459,134		17,276
Morgan Stanley Dean Witter & Co.		155,000		3,855
SLM Corp.†		165,200		1,966
State Street Corp.		49,700		2,075
				44,890
Insurance — 3.42%
ACE Ltd.		45,300		2,692
Allstate Corp.		131,200		4,000
Genworth Financial, Inc.†		218,000		2,472
Hartford Financial Services Group, Inc.		138,200		3,314
Lincoln National Corp.		82,600		2,022
MetLife, Inc.		157,288		6,344
Prudential Financial, Inc.		24,800		1,304
Travelers Cos., Inc.		49,200		2,716
XL Group plc.		235,100		4,972
				29,836
Real Estate — 0.50%
Annaly Capital Management, Inc.‡		244,900		4,337
Total Financials				119,072
HEALTH CARE — 6.58%
Biotechnology — 0.24%
Amgen, Inc.†		36,400		2,082
Health Care Equipment & Supplies — 0.80%
Baxter International, Inc.		94,500		4,810
Covidien PLC.		54,500		2,173
				6,983

See accompanying notes

14

American Beacon Balanced Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Health Care Providers & Services — 0.98%
Cardinal Health, Inc.		69,100		2,397
CIGNA Corp.		96,800		3,406
WellPoint, Inc.†		50,900		2,766
				8,569
Pharmaceuticals — 4.56%
Bristol-Myers Squibb Co.		254,500		6,846
Eli Lilly & Co.		106,500		3,749
Johnson & Johnson		119,000		7,577
Merck & Co., Inc.		240,176		8,714
Pfizer, Inc.		741,254		12,897
				39,783
Total Health Care				57,417
INDUSTRIALS — 6.93%
Aerospace & Defense — 2.02%
Boeing Co.		39,600		2,797
Lockheed Martin Corp.		67,100		4,784
Northrop Grumman Corp.		48,800		3,085
Raytheon Co.		150,600		6,940
				17,606
Air Freight & Couriers — 0.34%
FedEx Corp.		34,000		2,982
Commercial Services & Supplies — 0.36%
RR Donnelley & Sons Co.		168,960		3,117
Construction & Engineering — 0.25%
Shaw Group, Inc.†		72,200		2,206
Industrial Conglomerates — 2.19%
3M Co.		32,000		2,695
General Electric Co.		363,000		5,815
Honeywell International, Inc.		172,900		8,146
Tyco International Ltd.		64,125		2,455
				19,111
Machinery — 1.77%
Cummins, Inc.		18,400		1,621
Eaton Corp.		21,100		1,874
Illinois Tool Works, Inc.		54,100		2,472
ITT Industries, Inc.		77,000		3,634
PACCAR, Inc.		114,000		5,844
				15,445
Total Industrials				60,467
INFORMATION TECHNOLOGY — 8.12%
Communications Equipment — 0.35%
Cisco Systems, Inc.†		133,400		3,046
Computers & Peripherals — 3.20%
Hewlett-Packard Co.		297,100		12,496
International Business Machines Corp.		107,500		15,436
				27,932
Electronic Equipment & Instruments — 0.51%
Avnet, Inc.†		46,400		1,382
Tyco Electronics Ltd.		97,225		3,080
				4,462

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Internet Software & Services — 0.22%
Xerox Corp.		163,900		1,918
IT Consulting & Services — 0.10%
Accenture plc.		20,400		912
Semiconductor Equipment & Products — 1.41%
ASML Holding N.V		28,330		940
Intel Corp.		398,900		8,006
Micron Technology, Inc.†		162,600		1,345
Texas Instruments, Inc.		69,400		2,052
				12,343
Software — 2.32%
CA, Inc.		277,474		6,440
Microsoft Corp.		450,600		12,004
Oracle Corp		61,400		1,805
				20,249
Total Information Technology				70,862
MATERIALS — 2.30%
Chemicals — 1.43%
Air Products & Chemicals, Inc.		27,000		2,294
Celanese Corp.		1,800		64
Dow Chemical Co.		79,200		2,442
E. I. du Pont de Nemours & Co.		107,000		5,059
PPG Industries, Inc.		34,000		2,608
				12,467
Metals & Mining — 0.57%
Cliffs Natural Resources, Inc.		45,900		2,992
Newmont Mining Corp.		32,800		1,997
				4,989
Paper & Forest Products — 0.30%
International Paper Co.		103,600		2,619
Total Materials				20,075
TELECOMMUNICATION SERVICES — 2.84%
Diversified Telecommunication Services — 1.35%
AT&T, Inc.		233,477		6,654
Nokia Corp.*		316,200		3,377
Verizon Communications, Inc.		52,808		1,715
				11,746
Wireless Telecommunication Services — 1.50%
Vodafone Group plc*		474,800		13,062
Total Telecommunication Services				24,808
UTILITIES — 2.41%
CenterPoint Energy, Inc.		190,100		3,148
Dominion Resources, Inc.		107,400		4,668
Edison International		74,200		2,738
Entergy Corp.		46,900		3,495
Exelon Corp.		122,600		5,005
NextEra Energy, Inc.		35,100		1,932
Total Utilities				20,986
Total Common Stock (Cost $490,911)				517,091
CORPORATE OBLIGATION — 16.51%					��
Energy — 0.02%

See accompanying notes

15

American Beacon Balanced Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Petrobras International Finance Co., 6.875%, Due 1/20/2040		125		145
Finance — 6.14%
Aegon Funding Corp., 5.75%, Due 12/15/2020		350		377
American Express Co.,
2.75%, Due 9/15/2015		150		151
8.15%, Due 3/19/2038		225		307
American Express Credit Corp., 5.875%, Due 5/2/2013		605		666
ANZ National Int’l Ltd., 2.375%, Due 12/21/2012§		350		357
Bank of America Corp.,
6.50%, Due 8/1/2016		2,090		2,331
7.80%, Due 9/15/2016		700		803
6.00%, Due 9/1/2017		400		430
7.625%, Due 6/1/2019		400		468
Bank of New York Mellon Corp., 4.95%, Due 11/1/2012		355		384
Bank One Corp., 4.90%, Due 4/30/2015		250		271
Barclays Bank plc,
3.90%, Due 4/7/2015		330		354
6.75%, Due 5/22/2019		350		416
Bear Stearns Cos., Inc.,
6.40%, Due 10/2/2017		555		647
7.25%, Due 2/1/2018		840		1,025
Berkshire Hathaway Finance Corp., 5.75%, Due 1/15/2040		360		377
Berkshire Hathaway, Inc., 1.40%, Due 2/10/2012		1,435		1,451
BNP Paribas, 0.690%, Due 4/8/2013**		800		797
Canadian Imperial Bank of Commerce, 1.45%, Due 9/13/2013		515		521
Citigroup, Inc.,
6.375%, Due 8/12/2014		1,170		1,313
0.715%, Due 11/5/2014**		320		302
6.01%, Due 1/15/2015		540		598
6.125%, Due 11/21/2017		660		735
8.50%, Due 5/22/2019		1,000		1,256
CME Group, Inc.,
5.40%, Due 8/1/2013		260		291
5.75%, Due 2/15/2014		465		529
CNA Financial Corp., 7.35%, Due 11/15/2019		245		276
Countrywide Financial Corp., 5.80%, Due 6/7/2012		235		248
Credit Suisse N.Y.,
3.45%, Due 7/2/2012		700		729
5.30%, Due 8/13/2019		325		361
Deutsche Bank AG, 3.875%, Due 8/18/2014		325		349
Fifth Third Bancorp, 8.25%, Due 3/1/2038		1,500		1,758
General Electric Capital Corp.,
5.90%, Due 5/13/2014		350		398
0.490%, Due 1/8/2016**		1,125		1,056
5.625%, Due 5/1/2018		765		855
6.00%, Due 8/7/2019		350		395
5.50%, Due 1/8/2020		250		275
5.875%, Due 1/14/2038		625		636
Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		725		799
6.25%, Due 9/1/2017		650		735

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
5.95%, Due 1/18/2018		565		628
6.00%, Due 6/15/2020		175		194
6.75%, Due 10/1/2037		1,902		1,994
HSBC Finance Corp., 0.539%, Due 1/15/2014**		1,050		998
ING Bank, NV, 5.125%, Due 5/1/2015§		450		480
JPMorgan Chase & Co.,
3.70%, Due 1/20/2015		1,240		1,311
6.00%, Due 1/15/2018		375		428
5.50%, Due 10/15/2040		325		327
JPMorgan Chase Bank, NA, 0.623%, Due 6/13/2016§ **		415		390
Liberty Mutual Insurance Co., 7.875%, Due 10/15/2026§		1,500		1,587
Lincoln National Corp., 4.75%, Due 2/15/2014		245		261
Lloyds TSB Bank plc, 4.375%, Due 1/12/2015§		325		341
MassMutual Global Funding II, 0.453%, Due 12/6/2013§ **		400		395
Mellon Funding Corp., 0.526%, Due 5/15/2014**		250		248
Merrill Lynch & Co., Inc.,
6.40%, Due 8/28/2017		1,000		1,090
6.50%, Due 7/15/2018		260		283
6.11%, Due 1/29/2037		365		347
MetLife, Inc.,
5.375%, Due 12/15/2012		535		579
6.375%, Due 6/15/2034		350		387
Metropolitan Life Global Funding I, 0.542%, Due 3/15/2012§ **		320		320
Monumental Global Funding III, 0.489%, Due 1/15/2014§ **		325		312
Morgan Stanley,
2.876%, Due 5/14/2013**		700		717
0.769%, Due 10/15/2015**		320		294
7.30%, Due 5/13/2019		350		404
5.625%, Due 9/23/2019		350		368
Nasdaq OMX Group,
4.00%, Due 1/15/2015		185		193
5.55%, Due 1/15/2020		185		195
Nationwide Building Society, 5.50%, Due 7/18/2012§		500		535
Nordea Bank AB,
2.50%, Due 11/13/2012§		350		359
4.875%, Due 1/27/2020§		300		323
PNC Funding Corp.,
4.25%, Due 9/21/2015		730		789
4.375%, Due 8/11/2020		330		334
Pricoa Global Funding I, 5.40%, Due 10/18/2012§		175		188
ProLogis, 5.625%, Due 11/15/2016		175		184
Prudential Financial, Inc.,
4.50%, Due 7/15/2013		550		587
5.10%, Due 9/20/2014		445		488
7.375%, Due 6/15/2019		300		364
Rabobank Nederland NV,
4.20%, Due 5/13/2014§		200		218
2.125%, Due 10/13/2015		385		388
Simon Property Group LP, 10.35%, Due 4/1/2019		325		459
Societe Generale N.Y., 2.20%, Due 9/14/2013§		300		304

See accompanying notes

16

American Beacon Balanced Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
State Street Corp., 4.30%, Due 5/30/2014		290		320
Travelers Cos., Inc., 3.90%, Due 11/1/2020		160		162
Travelers Property Casualty Corp., 5.00%, Due 3/15/2013		400		437
U.S. Bancorp, 1.375%, Due 9/13/2013		570		575
UBS AG, 5.875%, Due 12/20/2017		325		373
UnitedHealth Group, Inc.,
3.875%, Due 10/15/2020		325		324
6.625%, Due 11/15/2037		2,000		2,242
Wachovia Corp.,
0.659%, Due 10/15/2016**		650		595
5.75%, Due 2/1/2018		775		879
Wells Fargo & Co., 5.625%, Due 12/11/2017		250		283
Westpac Banking Corp., 2.25%, Due 11/19/2012		330		338
Willis North America, Inc., 6.20%, Due 3/28/2017		360		386
				53,532
Industrials — 8.72%
Alltel Corp., 7.00%, Due 7/1/2012		300		329
Altria Group, Inc., 9.70%, Due 11/10/2018		365		503
America Movil, S.A.B. de C.V., 6.375%, Due 3/1/2035		350		396
American Honda Finance Corp.,
4.625%, Due 4/2/2013§		425		458
3.875%, Due 9/21/2020§		150		152
Amgen, Inc., 6.90%, Due 6/1/2038		1,480		1,834
Anheuser-Busch InBev Worldwide, Inc.,
3.00%, Due 10/15/2012		470		489
5.00%, Due 4/15/2020		330		366
8.00%, Due 11/15/2039§		125		174
Apache Corp., 5.10%, Due 9/1/2040		170		170
AT&T, Inc.,
5.10%, Due 9/15/2014		860		965
5.625%, Due 6/15/2016		400		468
5.50%, Due 2/1/2018		300		349
6.80%, Due 5/15/2036		150		173
6.40%, Due 5/15/2038		1,840		2,041
5.35%, Due 9/1/2040§		283		278
Baxter International, Inc., 1.80%, Due 3/15/2013		230		235
Best Buy Co., Inc., 6.75%, Due 7/15/2013		415		465
Biogen Idec, Inc., 6.875%, Due 3/1/2018		1,500		1,766
Boeing Co., 1.875%, Due 11/20/2012		350		358
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018		425		493
7.95%, Due 8/15/2030		205		268
5.75%, Due 5/1/2040		170		180
CA, Inc., 5.375%, Due 12/1/2019		305		330
Cameron International Corp., 6.375%, Due 7/15/2018		215		249
Canadian National Railway Co., 5.55%, Due 5/15/2018		350		410
Canadian Natural Resources Ltd., 6.25%, Due 3/15/2038		365		418
Caterpillar Financial Services Corp.,
1.90%, Due 12/17/2012		300		307

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
6.125%, Due 2/17/2014		620		715
2.75%, Due 6/24/2015		340		358
Coca-Cola Enterprises, Inc., 7.375%, Due 3/3/2014		175		211
Comcast Cable Communications
Holdings, Inc., 8.375%, Due 3/15/2013		128		148
Comcast Corp.,
6.30%, Due 11/15/2017		480		569
5.875%, Due 2/15/2018		305		352
6.45%, Due 3/15/2037		2,630		2,891
6.55%, Due 7/1/2039		350		392
ConocoPhillips,
4.60%, Due 1/15/2015		900		1,011
5.20%, Due 5/15/2018		425		491
5.75%, Due 2/1/2019		310		371
Costco Wholesale Corp., 5.30%, Due 3/15/2012		725		771
Covidien International Finance SA,
5.45%, Due 10/15/2012		395		430
6.55%, Due 10/15/2037		1,500		1,820
CRH America, Inc., 6.00%, Due 9/30/2016		635		714
CSX Corp., 5.50%, Due 4/15/2041		325		321
CVS Caremark Corp., 3.25%, Due 5/18/2015		170		179
Daimler Finance NA LLC,
7.75%, Due 1/18/2011		1,000		1,014
5.875%, Due 3/15/2011		450		459
5.75%, Due 9/8/2011		550		573
Dell, Inc., 3.375%, Due 6/15/2012		190		197
DIRECTV Holdings LLC,
3.55%, Due 3/15/2015		505		530
6.35%, Due 3/15/2040		160		171
E. I. du Pont de Nemours & Co., 5.875%, Due 1/15/2014		95		109
Eaton Corp., 5.60%, Due 5/15/2018		340		393
eBay, Inc., 0.875%, Due 10/15/2013		265		265
EI Du Pont de Nemours & Co., 3.25%, Due 1/15/2015		545		585
EOG Resources Canada, Inc., 4.75%, Due 3/15/2014§		350		379
Equity Residential, 5.125%, Due 3/15/2016		470		517
Express Scripts, Inc., 6.25%, Due 6/15/2014		570		657
France Telecom S.A.,
4.375%, Due 7/8/2014		295		326
2.125%, Due 9/16/2015		150		152
GlaxoSmithKline Capital, Inc., 5.65%, Due 5/15/2018		250		296
Hewlett-Packard Co.,
4.50%, Due 3/1/2013		425		460
6.125%, Due 3/1/2014		460		533
Honeywell International, Inc., 4.25%, Due 3/1/2013		580		628
Hospira, Inc., 6.05%, Due 3/30/2017		260		301
International Business Machines Corp.,
4.75%, Due 11/29/2012		480		521
7.625%, Due 10/15/2018		770		1,022
ITT Corp., 4.90%, Due 5/1/2014		695		769
John Deere Capital Corp., 4.90%, Due 9/9/2013		620		686

See accompanying notes

17

American Beacon Balanced Fund
Schedule of Investments
October 31, 2010

		Shares/Par
		Amount		Value
		(par and dollars in 000’s)
Johnson Controls, Inc., 5.00%, Due 3/30/2020			320		351
Kellogg Co., 4.25%, Due 3/6/2013			500		537
Koninklijke Philips Electronics NV, 5.75%, Due 3/11/2018			335		391
Kraft Foods, Inc.,
7.00%, Due 8/11/2037			1,580		1,900
6.50%, Due 2/9/2040			245		281
L-3 Communications Corp., 4.75%, Due 7/15/2020			400		418
Lorillard Tobacco Co., 8.125%, Due 6/23/2019			310		358
Marathon Oil Corp., 6.00%, Due 10/1/2017			415		487
Medtronic, Inc., 3.00%, Due 3/15/2015			1,065		1,132
Norfolk Southern Corp., 5.75%, Due 4/1/2018			425		492
Northrop Grumman Corp., 5.05%, Due 8/1/2019			150		168
Novartis Capital Corp.,
4.125%, Due 2/10/2014			560		613
2.90%, Due 4/24/2015			695		736
Novartis Securities Investment Ltd., 5.125%, Due 2/10/2019			1,164		1,336
Oracle Corp., 6.50%, Due 4/15/2038			1,055		1,270
Petroleos Mexicanos, 6.00%, Due 3/5/2020			325		367
Quest Diagnostics, Inc., 4.75%, Due 1/30/2020			150		154
Rogers Communications, Inc., 6.80%, Due 8/15/2018			350		437
Shell International Finance BV, 3.10%, Due 6/28/2015			340		361
Simon Property Group LP, 5.75%, Due 12/1/2015			460		525
Teck Resources Ltd., 6.00%, Due 8/15/2040			165		172
Telecom Italia Capital SA, 4.95%, Due 9/30/2014			475		513
Telefonica Emisiones SAU,
4.949%, Due 1/15/2015			425		469
6.421%, Due 6/20/2016			350		417
Thermo Fisher Scientific, Inc., 3.20%, Due 5/1/2015			240		253
Thomson Reuters Corp., 4.70%, Due 10/15/2019			150		163
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017			350		399
6.75%, Due 7/1/2018			755		906
7.30%, Due 7/1/2038			1,920		2,315
Time Warner, Inc., 4.875%, Due 3/15/2020			160		176
Transocean, Inc., 6.80%, Due 3/15/2038			3,170		3,329
Tyco Electronics Group SA,
6.55%, Due 10/1/2017			455		531
7.125%, Due 10/1/2037			1,750		2,065
Tyco International Finance SA,	��
4.125%, Due 10/15/2014			175		191
8.50%, Due 1/15/2019			385		509
Unilever Capital Corp., 7.125%, Due 11/1/2010			2,000		2,000
Union Pacific Corp., 7.875%, Due 1/15/2019			350		459

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
United Technologies Corp., 6.125%, Due 7/15/2038		210		247
Valero Energy Corp.,
9.375%, Due 3/15/2019		155		199
6.625%, Due 6/15/2037		185		187
Verizon Communications, Inc.,
5.50%, Due 4/1/2017		350		403
6.90%, Due 4/15/2038		275		328
Verizon Wireless Capital, LLC,
3.75%, Due 5/20/2011		360		366
8.50%, Due 11/15/2018		415		568
Viacom, Inc., 6.875%, Due 4/30/2036		2,880		3,360
Vodafone Group plc, 6.15%, Due 2/27/2037		365		416
Wal-Mart Stores, Inc.,
7.55%, Due 2/15/2030		350		459
6.50%, Due 8/15/2037		1,340		1,606
5.00%, Due 10/25/2040		185		184
Waste Management, Inc., 7.375%, Due 3/11/2019		255		321
Wyeth Corp., 5.50%, Due 2/1/2014		1,465		1,666
Xerox Corp.,
5.50%, Due 5/15/2012		400		425
5.65%, Due 5/15/2013		75		82
8.25%, Due 5/15/2014		160		192
				76,101
Other Government — 0.04%
Province of Ontario Canada, 4.10%, Due 6/16/2014		350		386
Utilities — 1.59%
Columbus Southern Power Co., 5.50%, Due 3/1/2013		660		725
Commonwealth Edison Co., 4.00%, Due 8/1/2020		175		182
Consolidated Edison Co. of New York, Inc., 5.50%, Due 12/1/2039		350		369
Dominion Resources, Inc.,
5.60%, Due 11/15/2016		400		470
8.875%, Due 1/15/2019		120		162
Duke Energy Carolinas LLC, 5.10%, Due 4/15/2018		350		398
Duke Energy Indiana, Inc., 6.05%, Due 6/15/2016		520		618
EDF SA, 4.60%, Due 1/27/2020§		320		353
Energy Transfer Partners LP,
8.50%, Due 4/15/2014		605		720
9.00%, Due 4/15/2019		260		332
Enterprise Products Operating LLC,
5.65%, Due 4/1/2013		400		437
6.125%, Due 10/15/2039		310		328
Exelon Generation Co. LLC, 6.25%, Due 10/1/2039		310		323
FirstEnergy Solutions Corp., 4.80%, Due 2/15/2015		175		189
MidAmerican Energy Holdings Co.,
5.875%, Due 10/1/2012		760		827
6.125%, Due 4/1/2036		350		390
National Rural Utilities Cooperative Finance Corp., 1.125%, Due 11/1/2013		380		381
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		175		200
3.50%, Due 10/1/2020		300		302

See accompanying notes

18

American Beacon Balanced Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Progress Energy, Inc., 4.875%, Due 12/1/2019		350		385
Public Service Enterprise Group, Inc., 6.95%, Due 6/1/2012		745		815
Sempra Energy, 6.50%, Due 6/1/2016		315		380
Southern Power Co., 6.25%, Due 7/15/2012		525		571
Spectra Energy Capital Corp., 5.65%, Due 3/1/2020		310		344
Spectra Energy Capital LLC, 5.668%, Due 8/15/2014		310		348
TransCanada PipeLines Ltd.,
7.625%, Due 1/15/2039		340		445
6.10%, Due 6/1/2040		170		190
Union Electric Co., 6.70%, Due 2/1/2019		430		519
Virginia Electric and Power Co., 5.40%, Due 4/30/2018		350		406
Westar Energy, Inc., 6.00%, Due 7/1/2014		175		201
Wisconsin Electric Power Co., 6.25%, Due 12/1/2015		480		584
Xcel Energy, Inc., 5.613%, Due 4/1/2017		869		967
				13,861
Total Corporate Obligations (Cost $130,125)				144,025
NON-AGENCY MORTGAGE-BACKED
OBLIGATIONS — 1.25%
Banc of America Commercial Mortgage, Inc.,
5.317%, Due 9/10/2047		350		362
5.634%, Due 4/10/2049		700		727
Bear Stearns Commercial Mortgage Securities, Inc.,
5.201%, Due 12/11/2038		665		721
5.54%, Due 9/11/2041		1,070		1,170
4.831%, Due 7/11/2042		510		529
Citigroup Commercial Mortgage Trust, 4.38%, Due 10/15/2041		995		1,006
Citigroup/Deutsche Bank Commercial Mortgage Trust, 5.886%, Due 11/15/2044		930		1,005
GS Mortgage Securities Corp II, 4.607%, Due 7/10/2039		350		356
GS Mortgage Securities Trust, 3.679%, Due 8/10/2043§		397		418
JPMorgan Chase Commercial Mortgage Securities Corp.,
4.678%, Due 7/15/2042		337		350
3.853%, Due 6/15/2043§		696		730
4.625%, Due 3/15/2046		430		441
5.742%, Due 2/12/2049		550		585
5.629%, Due 2/12/2051		700		734
LB-UBS Commercial Mortgage Trust, 5.424%, Due 2/15/2040		500		536
Prime Mortgage Trust, 5.25%, Due 7/25/2020		914		932

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Wachovia Bank Commercial Mortgage
Trust, 5.739%, Due 6/15/2049		330		343
Total Non-Agency Mortgage-Backed Obligations (Cost $10,085)				10,945
ASSET-BACKED SECURITIES — 0.98%
American Express Credit Account Master Trust, 5.35%, Due 1/15/2014		1,400		1,443
Bank of America Auto Trust, 0.75%, Due 6/15/2012§		561		562
BMW Floorplan Master Owner Trust, 1.406%, Due 9/15/2014§ **		350		354
Capital One Multi-Asset Execution Trust, 5.15%, Due 6/15/2014		1,050		1,088
Citibank Credit Card Issuance Trust, 1.806%, Due 5/15/2014**		650		663
Discover Card Master Trust, 1.556%, Due 2/17/2015**		200		203
Ford Credit Auto Lease Trust, 1.04%, Due 3/15/2013§		711		712
Ford Credit Floorplan Master Owner Trust, 1.806%, Due 9/15/2014**		350		356
Harley-Davidson Motorcycle Trust, 1.87%, Due 2/15/2014		350		353
Honda Auto Receivables Owner Trust, 3.30%, Due 9/15/2015		470		492
Hyundai Auto Receivables Trust, 3.15%, Due 3/15/2016		270		284
John Deere Owner Trust,
2.59%, Due 10/15/2013		316		320
3.96%, Due 5/16/2016		265		279
Nissan Master Owner Trust Receivables, 1.406%, Due 1/15/2015§ **		650		658
Volkswagen Auto Loan Enhanced Trust,
0.66%, Due 5/21/2012		319		319
6.24%, Due 7/20/2015		400		438
Total Asset-Backed Securities (Cost $8,327)				8,524
U.S. AGENCY MORTGAGE-BACKED
OBLIGATIONS — 6.14%
Federal Home Loan Mortgage Corporation
4.50%, Due 3/1/2019		479		507
5.00%, Due 10/1/2020		189		202
5.00%, Due 4/1/2023		655		697
4.50%, Due 5/1/2025		2,187		2,333
5.00%, Due 8/1/2033		1,047		1,119
5.50%, Due 2/1/2034		871		941
5.00%, Due 3/1/2034		787		841
6.00%, Due 6/1/2034		574		636
6.00%, Due 8/1/2034		459		505
5.00%, Due 8/1/2035		736		786
5.00%, Due 9/1/2035		920		984
5.00%, Due 9/1/2035		528		563
6.00%, Due 8/1/2036		470		513
5.50%, Due 11/1/2036		715		768
5.50%, Due 4/1/2037		935		1,004
5.50%, Due 5/1/2037		504		541
6.00%, Due 9/1/2037		312		339
5.50%, Due 12/1/2037		767		828
5.00%, Due 3/1/2038		1,012		1,074
6.00%, Due 3/1/2038		1,383		1,500

See accompanying notes

19

American Beacon Balanced Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
5.50%, Due 5/1/2038		399		428
5.50%, Due 10/1/2039		817		876
				17,985
Federal National Mortgage Association
5.50%, Due 2/1/2014		130		140
6.00%, Due 4/1/2016		150		163
5.00%, Due 12/1/2017		437		470	��
4.50%, Due 9/1/2018		284		304
4.00%, Due 8/1/2020		567		598
5.00%, Due 12/1/2023		374		398
5.00%, Due 3/1/2024		421		449
4.50%, Due 4/1/2024		592		635
5.00%, Due 3/1/2034		1,109		1,188
4.50%, Due 9/1/2034		534		565
5.50%, Due 12/1/2035		212		229
5.50%, Due 12/1/2035		344		372
5.50%, Due 1/1/2036		613		662
5.50%, Due 2/1/2036		504		544
5.00%, Due 2/1/2036		517		552
5.00%, Due 3/1/2036		937		1,002
5.50%, Due 4/1/2036		665		718
6.50%, Due 9/1/2036		1,138		1,268
6.00%, Due 9/1/2036		531		578
5.50%, Due 12/1/2036		879		947
5.50%, Due 2/1/2037		869		936
5.50%, Due 8/1/2037		669		724
5.50%, Due 3/1/2038		1,404		1,508
5.00%, Due 4/1/2038		1,010		1,075
5.00%, Due 6/1/2038		1,395		1,483
5.50%, Due 6/1/2038		1,773		1,905
6.00%, Due 9/1/2038		304		331
4.50%, Due 1/1/2040		2,029		2,132
5.00%, Due 7/1/2040		2,109		2,244
4.00%, Due 9/1/2040		1,487		1,534
				25,654
Government National Mortgage Association
7.00%, Due 12/15/2025		209		241
4.201%, Due 8/16/2026		477		489
2.989%, Due 3/16/2039		1,044		1,096
6.50%, Due 8/15/2027		234		262
6.50%, Due 11/15/2027		241		270
7.50%, Due 12/15/2028		189		219
5.50%, Due 7/15/2033		614		669
6.00%, Due 12/15/2033		627		696
5.50%, Due 2/20/2034		843		917
5.00%, Due 10/15/2039		2,032		2,208
5.00%, Due 10/15/2039		1,149		1,249
5.50%, Due 2/15/2040		1,517		1,647
				9,963
Total U.S. Agency Mortgage-Backed Obligations (Cost $50,697)				53,602
U.S. AGENCY OBLIGATIONS — 4.99%
Federal Farm Credit Bank
3.00%, Due 9/22/2014		600		647
Federal Home Loan Mortgage Corporation
4.50%, Due 1/15/2015		22,140		25,244
Federal National Mortgage Association
5.125%, Due 1/2/2014		645		718
4.625%, Due 10/15/2014		1,000		1,140
6.25%, Due 5/15/2029		12,200		15,760
				17,618

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Total U.S. Agency Obligations (Cost $37,059)				43,509
U.S. TREASURY OBLIGATIONS — 4.88%
U.S. Treasury Bonds
7.875%, Due 2/15/2021		1,200		1,764
6.25%, Due 8/15/2023		800		1,070
6.875%, Due 8/15/2025		580		826
5.25%, Due 11/15/2028		750		919
4.75%, Due 2/15/2037		130		148
4.50%, Due 8/15/2039		1,630		1,772
4.375%, Due 5/15/2040		3,080		3,280
				9,779
U.S. Treasury Notes
1.375%, Due 2/15/2012		1,955		1,983
2.625%, Due 7/31/2014		2,000		2,138
2.50%, Due 4/30/2015		1,000		1,065
2.125%, Due 5/31/2015		4,620		4,842
4.25%, Due 8/15/2015		1,200		1,377
1.25%, Due 9/30/2015		590		593
3.00%, Due 9/30/2016		1,000		1,083
3.125%, Due 10/31/2016		6,000		6,537
3.75%, Due 11/15/2018		4,000		4,461
3.625%, Due 2/15/2020		2,700		2,948
3.50%, Due 5/15/2020		5,100		5,500
2.625%, Due 8/15/2020		310		310
				32,837
Total U.S. Treasury Obligations (Cost $40,218)				42,616
MUNICIPAL OBLIGATIONS — 0.33%
Municipal Electric Authority of Georgia,
6.64%, Due 4/1/2057		1,920		1,973
6.66%, Due 4/1/2057		710		724
State of Illinois, 1.823%, Due 1/1/2011		200		200
Total Municipal Obligations (Cost $2,817)				2,897
SHORT-TERM INVESTMENTS — 4.48%
American Beacon U.S. Government Money Market Select Fund ††		2,900,000		2,900
JPMorgan U.S. Government Money Market Fund		30,368,277		30,368
U.S. Treasury , 0.00%, Due 8/25/2011		5,800		5,791
Total Short-Term Investments (Cost $39,059)				39,059
TOTAL INVESTMENTS — 98.82% (Cost $809,298)				862,268
OTHER ASSETS, NET OF LIABILITIES — 1.18%				10,280
TOTAL NET ASSETS — 100.00%			$	872,548

*	ADR — American Depository Receipt
†	Non-income producing security.
‡	REIT

See accompanying notes

20

American Beacon Balanced Fund
Schedule of Investments
October 31, 2010

§	Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $11,337 or 1.30% of net assets. The Fund has no right to demand registration of these securities
**	The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due date on these types of securities reflects the final maturity date.
††	The Fund is affiliated by having the same investment advisor.

Futures Contracts
(dollars in thousands)

						Unrealized
	Number of					Appreciation/
	Contracts		Expiration Date	Value		(Depreciation)
S&P 500 Mini E Index Future		570	December, 2010	$	33,621	$	1,413
				$	33,621	$	1,413

See accompanying notes

21

American Beacon Large Cap Growth Fund
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
COMMON STOCK — 91.51%
CONSUMER DISCRETIONARY — 15.84%
Auto Components — 1.19%
BorgWarner, Inc.*		4,400		247
Johnson Controls, Inc.		25,883		909
				1,156
Hotels, Restaurants & Leisure — 3.08%
Cheesecake Factory, Inc.*		29,736		866
Ctrip.com International Ltd.* †		9,200		479
Dick’s Sporting Goods, Inc.*		8,000		231
Starbucks Corp.		30,694		874
Yum! Brands, Inc.		10,700		530
				2,980
Internet & Catalog Retail — 2.70%
Amazon.com, Inc.*		6,550		1,082
priceline.com, Inc.*		4,100		1,545
				2,627
Leisure Equipment & Products — 0.81%
Mattel, Inc.		33,822		789
Media — 1.41%
NetFlix, Inc.*		1,500		260
Omnicom Group, Inc.		20,078		883
Scripps Networks Interactive, Inc., Class A		4,500		229
				1,372
Multiline Retail — 1.93%
Costco Wholesale Corp.		6,900		433
Kohl’s Corp.*		13,400		686
Target Corp.		14,631		760
				1,879
Specialty Retail — 2.52%
Dollar Tree, Inc.*		15,993		821
O’Reilly Automotive, Inc.*		10,150		594
Ross Stores, Inc.		14,233		839
Urban Outfitters, Inc.*		6,200		191
				2,445
Textiles & Apparel — 2.20%
Coach, Inc.		18,276		914
NIKE, Inc., Class B		15,059		1,226
				2,140
Total Consumer Discretionary				15,388
CONSUMER STAPLES — 1.36%
Beverages — 0.46%
PepsiCo, Inc.		6,900		451
Food Products — 0.40%
Green Mountain Coffee Roasters, Inc.*		11,800		389
Personal Products — 0.50%
The Esteé Lauder Companies, Inc., Class A		6,800		484
Total Consumer Staples				1,324

	Shares		Value
			($000)
ENERGY — 4.60%
Energy Equipment & Services — 2.82%
FMC Technologies, Inc.*		11,700		844
Helmerich & Payne, Inc.		19,722		844
Schlumberger Ltd		15,100		1,054
				2,742
Oil & Gas — 1.77%
Occidental Petroleum Corp.		10,480		824
Peabody Energy Corp.		8,600		455
Petroleo Brasileiro S.A.†		14,200		443
				1,722
Total Energy				4,464
FINANCIALS — 5.78%
American Express Co.		18,154		753
Ameriprise Financial, Inc.		16,591		858
CME Group, Inc.		1,700		492
Franklin Resources, Inc.		6,000		688
Goldman Sachs Group, Inc.		8,200		1,319
IntercontinentalExchange, Inc.*		3,550		408
JPMorgan Chase & Co.		18,300		689
TD Ameritrade Holding Corp.		23,700		405
Total Financials				5,612
HEALTH CARE — 9.44%
Biotechnology — 2.25%
Amgen, Inc.*		14,497		829
Celgene Corp.*		7,600		472
Gilead Sciences, Inc.*		22,193		880
				2,181
Health Care Equipment & Supplies — 0.38%
Varian Medical Systems, Inc.*		5,900		373
Health Care Providers & Services — 4.64%
AmerisourceBergen Corp.		25,519		838
Express Scripts, Inc.*		41,773		2,027
McKesson Corp.		12,539		827
UnitedHealth Group, Inc.		22,690		818
				4,510
Pharmaceuticals — 2.17%
Johnson & Johnson		12,686		807
Shire plc†		9,700		680
Teva Pharmaceutical Industries Ltd.†		12,000		623
				2,110
Total Health Care				9,174
INDUSTRIALS — 16.82%
Aerospace & Defense — 1.36%
Goodrich Corp.		5,400		443
United Technologies Corp.		11,800		882
				1,325
Air Freight & Couriers — 1.36%
CH Robinson Worldwide, Inc.		7,400		522
United Parcel Service, Inc., Class B		11,911		802
				1,324
Construction & Engineering — 0.64%
Fluor Corp.		13,000		626

See accompanying notes

22

American Beacon Large Cap Growth Fund
Schedule of Investments
October 31, 2010

	Shares		Value
			($000)
Electronic Equipment & Instruments — 0.85%
Emerson Electric Co.		14,961		821
Industrial Conglomerates — 0.79%
3M Co.		9,093		766
Machinery — 7.84%
Caterpillar, Inc.		9,756		767
Cummins, Inc.		9,131		804
Danaher Corp.		27,200		1,179
Deere & Co.		21,353		1,641
Eaton Corp.		9,567		850
Illinois Tool Works, Inc.		15,900		727
Joy Global, Inc.		11,004		781
Parker Hannifin Corp.		11,292		864
				7,613
Road & Rail — 3.13%
Norfolk Southern Corp.		13,348		821
Union Pacific Corp.		25,327		2,221
				3,042
Trading Companies & Distributors — 0.84%
WW Grainger, Inc.		6,596		818
Total Industrials				16,335
INFORMATION TECHNOLOGY — 34.27%
Communications Equipment — 4.32%
Cisco Systems, Inc.*		77,834		1,777
Corning, Inc.		42,707		781
Juniper Networks, Inc.*		9,900		321
QUALCOMM, Inc.		29,100		1,313
				4,192
Computers & Peripherals — 12.43%
Apple Computer, Inc.*		10,144		3,053
Dell, Inc.*		56,570		813
EMC Corp.*		88,097		1,851
Hewlett-Packard Co.		18,678		786
International Business Machines Corp.		5,852		840
Lexmark International, Inc.*		17,883		680
NetApp, Inc.*		25,871		1,378
SanDisk Corp.*		21,539		809
Seagate Technology plc*		67,012		982
Western Digital Corp.*		27,829		891
				12,083
Electronic Equipment & Instruments — 0.91%
Agilent Technologies, Inc.*		11,900		414
Amphenol Corp., Class A		9,300		466
				880
Internet Software & Services — 2.24%
Baidu, Inc.* †		7,500		825
Google, Inc., Class A*		2,205		1,352
				2,177
IT Consulting & Services — 4.10%
AutoZone, Inc.*		3,443		818
Cognizant Technology Solutions Corp.* .		28,500		1,858
Visa, Inc., A Shares		16,650		1,302
				3,978

	Shares		Value
			($000)
Semiconductor Equipment & Products — 4.87%
Altera Corp.		25,989		811
Broadcom Corp., Class A		22,651		923
Intel Corp.		40,642		816
QLogic Corp.*		45,225		795
Texas Instruments, Inc.		46,904		1,386
				4,731
Software — 5.40%
Autodesk, Inc.*		17,800		644
Cerner Corp.*		5,400		474
Citrix Systems, Inc.*		12,200		782
Intuit, Inc.*		5,900		283
Microsoft Corp.		32,327		861
Oracle Corp.		74,800		2,199
				5,243
Total Information Technology				33,284
MATERIALS — 2.59%
Chemicals — 0.42%
Ecolab, Inc.		8,350		412
Metals & Mining — 2.17%
Cliffs Natural Resources, Inc.		12,300		802
Walter Energy, Inc.		14,854		1,306
				2,108
Total Materials				2,520
TELECOMMUNICATION SERVICES — 0.81%
American Tower Corp., Class A*		15,200		784
Total Common Stock (Cost $72,494)				88,885
SHORT-TERM INVESTMENTS - 6.69% (Cost $6,502)
JPMorgan U.S. Government Money Market Fund		6,502,142		6,502
TOTAL INVESTMENTS — 98.20% (Cost $78,996)				95,387
OTHER ASSETS, NET OF LIABILITIES — 1.80%				1,746
TOTAL NET ASSETS — 100.00%			$	97,133

*	Non-income producing security.
†	ADR — American Depository Receipt

See accompanying notes

23

American Beacon Large Cap Growth Fund
Schedule of Investments
October 31, 2010

Futures Contracts
(dollars in thousands)

						Unrealized
	Number of					Appreciation/
	Contracts		Expiration Date	Value		(Depreciation)
S&P 500 Mini E Index Future		119	December   , 2010	$	7,019	$	117
				$	7,019	$	117

See accompanying notes

24

American Beacon Mid-Cap Value Fund
Schedule of Investments

October 31, 2010

	Shares		Value
			($000)
COMMON STOCK — 92.67%
CONSUMER DISCRETIONARY — 15.53%
Hotels, Restaurants & Leisure — 2.26%
International Game Technology		67,500		1,052
Royal Caribbean Cruises Ltd.*		31,800		1,258
				2,310
Household Durables — 3.62%
Fortune Brands, Inc.		25,775		1,393
Newell Rubbermaid, Inc.		28,000		494
Sealy Corp.*		93,775		247
Stanley Black & Decker, Inc.		25,200		1,561
				3,695
Media — 1.49%
Omnicom Group, Inc.		34,525		1,518
Multiline Retail — 3.29%
Family Dollar Stores, Inc.		31,200		1,441
J.C. Penney Company, Inc.		61,675		1,923
				3,364
Specialty Retail — 4.87%
Advance Auto Parts, Inc.		15,900		1,033
Hanesbrands, Inc.*		41,900		1,039
Limited Brands, Inc.		42,200		1,240
Rent-A-Center, Inc.		29,200		734
Sherwin-Williams Co.		12,675		925
				4,971
Total Consumer Discretionary				15,858
CONSUMER STAPLES — 3.87%
Food & Drug Retailing — 0.93%
Sysco Corp.		32,100		946
Personal Products — 1.01%
Avon Products, Inc.		33,875		1,031
Tobacco — 1.93%
Lorillard, Inc.		12,000		1,024
Reynolds American, Inc.		14,700		954
				1,978
Total Consumer Staples				3,955
ENERGY — 4.69%
El Paso Corp.		81,700		1,083
Murphy Oil Corp.		19,800		1,289
Seadrill Ltd.		31,900		971
Spectra Energy Corp.		32,500		773
Valero Energy Corp.		37,475		673
Total Energy				4,789
FINANCIALS — 23.46%
Banks — 5.85%
Comerica, Inc.		22,675		811
Fifth Third Bancorp		146,550		1,841
KeyCorp		85,500		700
New York Community Bancorp, Inc.		64,400		1,090
PNC Financial Services Group, Inc.		16,600		895

	Shares		Value
			($000)
Regions Financial Corp.		101,250		638
				5,975
Diversified Financials — 3.72%
Ameriprise Financial, Inc.		20,900		1,080
Capital One Financial Corp.		34,000		1,268
Marshall & Ilsley Corp.		98,450		582
SLM Corp.*		73,400		873
				3,803
Insurance — 11.67%
Axis Capital Holdings Ltd.		22,400		762
Delphi Financial Group, Inc.		52,775		1,429
Fidelity National Financial, Inc.		6,300		84
Hartford Financial Services Group, Inc.		15,400		369
Protective Life Corp.		57,425		1,376
RenaissanceRe Holdings Ltd.		24,425		1,472
The Chubb Corp.		12,900		748
Torchmark Corp.		25,650		1,469
Validus Holdings Ltd.		37,607		1,067
Willis Group Holdings plc		73,645		2,342
XL Group plc		38,000		804
				11,922
Real Estate — 2.22%
Annaly Capital Management, Inc.†		44,400		786
Hospitality Properties Trust†		64,675		1,476
				2,262
Total Financials				23,962
HEALTH CARE — 9.68%
Health Care Equipment & Supplies — 2.07%
Immucor, Inc.*		56,225		978
Zimmer Holdings, Inc.*		24,025		1,140
				2,118
Health Care Providers & Services — 6.42%
Aetna, Inc.		41,100		1,227
Cardinal Health, Inc.		31,500		1,093
CIGNA Corp.		28,900		1,017
Coventry Health Care, Inc.*		59,200		1,387
Omnicare, Inc.		43,800		1,056
Quest Diagnostics, Inc.		15,700		771
				6,551
Pharmaceuticals — 1.19%
Forest Laboratories, Inc.*		36,750		1,215
Total Health Care				9,884
INDUSTRIALS — 17.65%
Aerospace & Defense — 6.57%
Curtiss-Wright Corp.		38,900		1,201
Goodrich Corp.		16,100		1,321
L-3 Communications Holdings, Inc.		40,075		2,893
Spirit Aerosystems Holdings, Inc.*		59,650		1,291
				6,706
Building Products — 1.33%
Masco Corp.		127,650		1,361
Commercial Services & Supplies — 2.92%
Apollo Group, Inc.*		19,575		734

See accompanying notes

25

American Beacon Mid-Cap Value Fund
Schedule of Investments

October 31, 2010

	Shares		Value
			($000)
Con-way, Inc.		46,625		1,539
Dun & Bradstreet Corp.		9,500		707
				2,980
Electrical Equipment — 3.13%
Brady Corp.		58,350		1,794
Molex, Inc.		68,900		1,399
				3,193
Machinery — 2.89%
Eaton Corp.		14,100		1,252
ITT Industries, Inc.		16,100		760
SPX Corp.		14,000		939
				2,951
Road & Rail — 0.81%
Ryder System, Inc.		19,000		831
Total Industrials				18,022
INFORMATION TECHNOLOGY — 9.80%
Communications Equipment — 0.70%
Alcatel-Lucent * ‡		207,023		718
Electronic Equipment & Instruments — 4.00%
Avnet, Inc.*		73,125		2,178
Tyco Electronics Ltd.		60,000		1,901
				4,079
Internet Software & Services — 0.72%
Xerox Corp.		62,600		732
IT Consulting & Services — 1.72%
Alliance Data Systems Corp.*		17,100		1,039
Computer Sciences Corp.		14,700		721
				1,760
Semiconductor Equipment & Products — 1.14%
Microchip Technology, Inc.		36,200		1,165
Software — 1.52%
CA, Inc.		66,800		1,550
Total Information Technology				10,004
MATERIALS — 2.24%
Chemicals — 1.02%
PPG Industries, Inc.		13,525		1,037
Containers & Packaging — 1.22%
Jarden Corp.		39,025		1,252
Total Materials				2,289
UTILITIES — 5.75%
Electric Utilities — 4.88%
CenterPoint Energy, Inc.		66,100		1,095
Edison International		23,900		882
Pinnacle West Capital Corp.		22,700		934
PNM Resources, Inc.		84,500		996
Xcel Energy, Inc.		45,300		1,081
				4,988

	Shares		Value
			($000)
Gas Utilities — 0.87%
MDU Resources Group, Inc.		44,450		886
Total Utilities				5,874
Total Common Stock (Cost $83,355)				94,637
PREFERRED STOCK — 0.71% (Cost $940)
CONSUMER DISCRETIONARY — 0.71%
Sealy Corp.		9,571		720
SHORT-TERM INVESTMENTS - 5.89% (Cost $6,011)
JPMorgan U.S. Government Money Market Fund		6,010,842		6,011
TOTAL INVESTMENTS — 99.27% (Cost $90,306)				101,368
OTHER ASSETS, NET OF LIABILITIES — 0.73%				743
TOTAL NET ASSETS — 100.00%			$	102,111

*	Non-income producing security.
†	REIT
‡	ADR — American Depository Receipt

See accompanying notes

26

American Beacon Mid-Cap Value Fund
Schedule of Investments

October 31, 2010

Futures Contracts
(dollars in thousands)

						Unrealized
	Number of					Appreciation/
	Contracts		Expiration Date	Value		(Depreciation)
S&P 400 Midcap E Index Future		79	December, 2010	$	6,537	$	417
				$	6,537	$	417

See accompanying notes

27

American Beacon Funds
Statements of Assets and Liabilities
October 31, 2010 (in thousands except share and per share amounts)

	Balanced			Large Cap			Mid-Cap
	Fund			Growth Fund			Value Fund
Assets:
Investments in unaffiliated securities, at value A	$	859,368		$	95,387		$	101,368
Investments in affiliated securities, at value B		2,900			—			—
Cash		2,093			—			50
Deposit with brokers for futures contracts		2,547			536			486
Receivable for investments sold		5,314			1,542			389
Dividends and interest receivable		3,912			30			89
Receivable for fund shares sold		554			268			174
Receivable for tax reclaims		11			—			—
Receivable for expense reimbursement (Note 2)		—			—			2
Receivable for variation margin on open futures contracts		11			2			31
Prepaid expenses		74			51			91
Total assets		876,784			97,816			102,680
Liabilities:
Payable for investments purchased		3,272			515			344
Payable for fund shares redeemed		191			—			—
Management and investment advisory fees payable (Note 2)		548			129			179
Administrative service and service fees payable (Note 2)		84			4			18
Professional fees payable		20			26			23
Trustee fees payable		12			1			1
Prospectus and shareholder reports		59			5			—
Other liabilities		50			3			4
Total liabilities		4,236			683			569
Net Assets	$	872,548		$	97,133		$	102,111
Analysis of Net Assets:
Paid-in-capital		913,330			105,046			110,560
Undistributed (distributions in excess of) net investment income		(724	)		75			722
Accumulated net realized (loss)		(94,440	)		(24,495	)		(20,650	)
Unrealized appreciation of investments and futures contracts		54,382			16,507			11,479
Net assets	$	872,548		$	97,133		$	102,111
Shares outstanding (no par value):
Institutional Class		2,646,180			21,456			299,718
Y Class		3,604			3,763			118
Investor Class		7,245,388			N/A			3,829,846
Advisor Class		506,038			N/A			8,487
A Class		3,952			1,134			1,962
C Class		88			193			120
AMR Class		62,276,866			16,503,496			6,904,080
Net asset value, offering and redemption price per share:
Institutional Class	$	12.62		$	5.84		$	9.27
Y Class	$	12.78		$	5.83		$	9.27
Investor Class	$	11.66			N/A		$	9.20
Advisor Class	$	12.11			N/A		$	9.12
A Class (Net asset value only)	$	11.94		$	5.83		$	9.18
A Class (Offering and redemption price)	$	12.67		$	6.19		$	9.74
C Class	$	11.92		$	5.83		$	9.18
AMR Class	$	12.02		$	5.88		$	9.27
A Cost of investments in unaffiliated securities	$	806,398		$	78,996		$	90,306
B Cost of investments in affiliated securities	$	2,900		$	—		$	—

See accompanying notes

28

American Beacon Funds
Statements of Operations
For the year ended October 31, 2010 (in thousands except share and per share amounts)

			Large Cap
	Balanced		Growth		Mid-Cap
	Fund		Fund		Value Fund
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	13,061	$	669	$	1,817
Dividend income from affiliated securities		4		—		—
Interest income		14,784		—		—
Total investment income		27,849		669		1,817
Expenses:
Management and investment advisory fees (Note 2)		1,946		407		551
Administrative service fees (Note 2):
Institutional Class		97		—		8
Investor Class		273		—		88
Advisor Class		20		—		—
AMR Class		363		38		30
Transfer agent fees:						��
Institutional Class		2		—		1
Investor Class		8		—		3
Advisor Class		1		—		—
AMR Class		40		5		3
Custody and fund accounting fees		117		11		14
Professional fees		66		32		31
Registration fees and expenses		48		12		36
Service fees (Note 2):
Investor Class		314		—		73
Advisor Class		17		—		—
Distribution fees- Advisor Class (Note 2)		17		—		—
Prospectus and shareholder reports		46		5		7
Trustee fees		58		5		9
Other expenses		75		11		14
Total expenses		3,508		526		868
Net (fees waived and expenses reimbursed) (Note 2)		—		—		(17	)
Net expenses		3,508		526		851
Net investment income		24,341		143		966
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		24,885		3,359		345
Commission recapture (Note 1)		9		6		15
Futures contracts		2,587		788		1,181
Change in net unrealized appreciation or depreciation of:
Investments		46,291		8,663		15,028
Futures contracts		2,244		213		679
Net gain on investments		76,016		13,029		17,248
Net increase in net assets resulting from operations	$	100,357	$	13,172	$	18,214
A Foreign taxes	$	28	$	2	$	—

See accompanying notes

29

American Beacon Funds
Statements of Changes in Net Assets (in thousands)

	Balanced Fund						Large Cap Growth Fund						Mid-Cap Value Fund
	Year Ended			Year Ended			Year Ended			Year Ended			Year Ended			Year Ended
	October 31,			October 31,			October			October			October 31,			October
	2010			2009			31, 2010			31, 2009			2010			31, 2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	24,341		$	26,761		$	143		$	501		$	966		$	731
Net realized gain (loss) on investments and futures contracts		27,481			(52,176	)		4,153			(13,613	)		1,541			(9,782	)
Change in net unrealized appreciation or depreciation of investments and futures contracts		48,535			140,003			8,876			20,450			15,707			24,803
Net increase in net assets resulting from operations		100,357			114,588			13,172			7,338			18,214			15,752
Distributions to Shareholders:
Net investment income:
Institutional Class		(1,651	)		(1,697	)		—			(1	)		(15	)		(42	)
Investor Class		(4,637	)		(4,916	)		—			—			(161	)		(285	)
Advisor Class		(314	)		—			—			—			—			—
AMR Class		(42,865	)		(28,892	)		(342	)		(836	)		(561	)		(838	)
Net distributions to shareholders		(49,467	)		(35,505	)		(342	)		(837	)		(737	)		(1,165	)
Capital Share Transactions:
Proceeds from sales of shares		75,404			88,318			46,888			20,562			42,825			26,852
Reinvestment of dividends and distributions		49,350			35,347			342			837			736			1,163
Cost of shares redeemed		(115,828	)		(143,929	)		(34,211	)		(13,675	)		(38,192	)		(16,512	)
Redemption fees		—			—			—			—			88			27
Net increase (decrease) in net assets from capital share transactions		8,926			(20,264	)		13,019			7,724			5,457			11,530
Net increase in net assets		59,816			58,819			25,849			14,225			22,934			26,117
Net Assets:
Beginning of period		812,732			753,913			71,284			57,059			79,177			53,060
End of Period *	$	872,548		$	812,732		$	97,133		$	71,284		$	102,111		$	79,177
*Includes undistributed (distributions in excess of) net investment income (loss) of	$	(724	)	$	19,001		$	75		$	274		$	722		$	492

See accompanying notes

30

American Beacon Funds
Notes to Financial Statements
October 31, 2010

1. Organization and Significant Accounting Policies

          American Beacon Funds (the “Trust”), which is comprised of 19 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon Balanced Fund, the American Beacon Large Cap Growth Fund, and the American Beacon Mid-Cap Value Fund (each a “Fund” and collectively, the “Funds”), each a series of the Trust.

          American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative and asset management consulting services to the Trust and other investors.

Class Disclosure

          The inception date of the Y Class is March 1, 2010, the inception date of the A Class is May 17, 2010 and the inception date of the C Class is September 1, 2010.

          Each Fund has multiple classes of shares designed to meet the needs of different groups of investors; however, not all Funds offer all classes. The following table sets forth the differences amongst the classes:

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	Individual investors investing directly or through an intermediary
Advisor Class	Investors investing through an intermediary
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation and its affiliates

          Administrative service fees, service fees and distribution fees vary amongst the classes as described more fully in footnote 2.

Security Valuation

          Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

          Debt securities (other than short-term securities) normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. Prices of debt securities may be determined using quotes obtained from brokers.

          Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

          Securities for which market prices are not readily available or are not reflective of the fair value of the security, as determined by the Manager, will be priced at fair value following procedures approved by the Board of Trustees (the “Board”).

31

American Beacon Funds
Notes to Financial Statements
October 31, 2010

          Futures are valued based upon the last sale price at the close of market on the principal exchange on which they are traded.

Valuation Inputs

          Various inputs may be used to determine the value of the Funds’ investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 —	Quoted prices in active markets for identical securities.
Level 2 —	Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. Level 2 securities are fixed-income securities that are valued using observable inputs as stated above.
Level 3 —	Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

          The Funds’ investments are summarized by level based on the inputs used to determine their values. During the period, there were no significant transfers between levels for the Funds. As of October 31, 2010, the investments were classified as described below: (in thousands)

Balanced Fund	Level 1		Level 2		Level 3		Total
Common Stock	$	517,091	$	—	$	—	$	517,091
Corporate Obligations		—		144,025		—		144,025
Non-Agency Mortgage Backed Obligations		—		10,945		—		10,945
Asset-Backed Obligations		—		8,524		—		8,524
U.S. Agency Mortgage Backed Obligations		—		53,602		—		53,602
U.S. Agency Obligations		—		43,509		—		43,509
U.S. Treasury Obligations		—		42,616		—		42,616
Municipal Obligations		—		2,897		—		2,897
Short Term Investments		33,268		5,791		—		39,059
Total Investments in Securities	$	550,359	$	311,909	$	—	$	862,268
Futures Contracts		1,413		—		—		1,413

Large Cap Growth Fund	Level 1		Level 2		Level 3		Total
Common Stock	$	88,885	$	—	$	—	$	88,885
Short Term Investments		6,502		—		—		6,502
Total Investments in Securities	$	95,387	$	—	$	—	$	95,387
Futures Contracts		117		—		—		117

Mid-Cap Value Fund	Level 1		Level 2		Level 3		Total
Common Stock	$	94,637	$	—	$	—	$	94,637
Preferred Stock		720		—		—		720
Short Term Investments		6,011		—		—		6,011
Total Investments in Securities	$	101,368	$	—	$	—	$	101,368
Futures Contracts		417		—		—		417

32

American Beacon Funds
Notes to Financial Statements
October 31, 2010

Security Transactions and Investment Income

          Security transactions are recorded on the trade date of the security purchase or sale. The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the net asset value. The value of the security may vary with market fluctuations.

          Dividend income, net of foreign taxes, is recorded on the ex-dividend date except certain dividends from foreign securities which are recorded as soon as the information is available to the Funds. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

Futures Contracts

          Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Funds may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.

          Upon entering into a futures contract, the Fund is required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents 5% of the face value of the futures contract. The Funds reflect this amount on the Schedules of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as a Deposit with broker for futures contracts on the Statement of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.

Balanced
Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2010 (in thousands)

Statement of Assets and Liabilities	Asset Derivatives	Total
Unrealized appreciation of investments and futures contracts	Equity Contracts*	$1,413

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2010 (in thousands)

Statement of Operations	Derivative	Total
Net realized gain (loss) from futures contracts	Equity Contracts	$2,587
Change in net unrealized appreciation or depreciation of futures contracts	Equity Contracts	2,244

Large Cap Growth
Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2010 (in thousands)

Statement of Assets and Liabilities	Asset Derivatives	Total
Unrealized appreciation of investments and futures contracts	Equity Contracts*	$117

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2010 (in thousands)

Statement of Operations	Derivative	Total
Net realized gain (loss) from futures contracts	Equity Contracts	$788
Change in net unrealized appreciation or depreciation of futures contracts	Equity Contracts	213

33

American Beacon Funds
Notes to Financial Statements
October 31, 2010

Mid-Cap Value
Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2010 (in thousands)

Statement of Assets and Liabilities	Asset Derivatives	Total
Unrealized appreciation of investments and futures contracts	Equity Contracts*	$417

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2010 (in thousands)

Statement of Operations	Derivative	Total
Net realized gain (loss) from futures contracts	Equity Contracts	$1,181
Change in net unrealized appreciation or depreciation of futures contracts	Equity Contracts	679

* Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

Dividends to Shareholders

          Dividends from net investment income of the Balanced Fund normally will be declared and paid quarterly. Dividends from net investment income of the Large Cap Growth and Mid-Cap Value Funds normally will be declared and paid at least annually. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date.

Commission Recapture

          The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If a Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. These amounts are reported with the net realized gains in the Fund’s Statement of Operations.

Allocation of Income, Expenses, Gains, and Losses

          Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Use of Estimates

          The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

Redemption Fees

          The AMR Class of the Mid-Cap Value Fund imposes a 2% redemption fee on certain shares held for less than 180 days. The fee is deducted from the redemption proceeds and is intended to offset the trading costs, market impact and other costs associated with short-term trading activity in the Funds. The “first-in, first-out” method is used to determine the holding period. The fee is allocated to all classes of each Fund pro-rata based on their respective net assets.

Other

          Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Trust. In the normal course of business, the Trust

34

American Beacon Funds
Notes to Financial Statements
October 31, 2010

enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.

2. Transactions with Affiliates

Management Agreement

          The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management and securities lending services. Investment assets of Funds are managed multiple investment advisors which have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Funds an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the unaffiliated investment advisors hired by the Manager to direct investment activities for the Funds. Management fees paid during the year ended October 31, 2010 were as follows (dollars in thousands):

						Amounts paid		Net Amounts
	Management			Management		to Investment		Retained by
	Fee Rate			Fee		Advisors		Manager
Balanced		0.175%-0.65	%	$	1,946	$	1,518	$	428
Large Cap Growth		0.35%-0.60	%		407		369		38
Mid-Cap Value		0.35%-0.90	%		551		505		46

Administrative Services Agreement

          The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, and Advisor Classes, 0.40% of the average daily net assets of the A and C Classes, and 0.05% of the average daily net assets of the AMR Class of each of the Funds. Administrative Service fees for the Y, A, and C Classes for the period ended October 31, 2010 were less than $500.

Distribution Plans

          The Trust, except for the Advisor, A, and C Classes of the Funds, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees may be charged to the Funds for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Trust does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Trust shares.

          A separate Distribution Plan (the “Distribution Plan”) has been adopted pursuant to Rule 12b-1 under the Act for the Advisor, A, and C Classes of the Funds. Under the Distribution Plan, as compensation for distribution assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance. Distribution fees for the A and C Classes for the period ended October 31, 2010 were less than $500.

35

American Beacon Funds
Notes to Financial Statements
October 31, 2010

Service Plans

          The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Investor, Y, Advisor, A, and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives 0.10% of the average daily net assets of the Y Class, 0.15% of the average daily net assets of the A and C Classes, 0.25% of the average daily net assets of the Advisor Class and up to 0.375% of the average daily net assets of the Investor Class. Service fees for the Y, A, and C Classes for the period ended October 31, 2010 were less than $500.

Investment in Affiliated Funds

          The Funds may invest in the American Beacon Money Market Select Fund (the “MM Select Fund”) or the US Government Money Market Select Fund (the “USG Select Fund”) (collectively, the “Select Funds”). The Funds and the Select Funds have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the Select Funds and receives from the Select Funds an annualized fee up to 0.09% of its average daily net assets. During the year ended October 31, 2010, the Manager earned $4,274 from the Balanced Fund’s investment in the Select Funds.

Interfund Lending Program

          Pursuant to an exemptive order by the SEC, the Funds, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program as a borrower. This program provides an alternative credit facility allowing the Funds to borrow from other participating Funds. For the year ended October 31, 2010, the Large Cap Growth Fund borrowed from the USG Select Fund on average $1,547,218 for two days at 0.77% with interest charges of $65, and the Mid-Cap Value Fund borrowed from the USG Select Fund $174,735 for one day at 0.89% with interest charges of $4.

Reimbursement of Expenses

          The Manager agreed to reimburse the following Funds to the extent that total annual fund operating expenses exceeded the Fund’s expense cap. Of these amounts, approximately $2,000 was receivable from the Manager at October 31, 2010 for the Mid-Cap Value Fund. For the period ended October 31, 2010, the Manager waived or reimbursed expenses as follows:

			Expense Cap
			11/1/09			3/1/10			Waived or
			to			to			Reimbursed
Fund	Class		2/28/10			10/31/10			Expenses
Mid-Cap Value	Institutional			0.98	%		0.98	%		2,299
Mid-Cap Value		Y		—			1.08	%		0
Mid-Cap Value	Investor			1.23	%		1.23	%		14,296
Mid-Cap Value	Advisor			1.50	%		1.49	%		33
Mid-Cap Value		A		—			1.49	%		1
Mid-Cap Value		C		—			2.24	%		2

Expense Reimbursement Plan

          The Funds have adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. The carryover of excess expenses potentially reimbursable to the Manager but not recorded as a liability for the Mid-Cap Value Fund are $26,000, $25,000, and $17,000, expiring 2011, 2012, and 2013, respectively. During the year ended October 31, 2010, the Funds have not recorded a liability for potential reimbursement, due to the current assessment that a reimbursement is unlikely.

36

American Beacon Funds
Notes to Financial Statements
October 31, 2010

3. Federal Income and Excise Taxes

          It is the policy of each Fund to qualify as a regulated investment company, by complying with all applicable provisions of the Code, and to make distribution of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes, each Fund is treated as a single entity for the purpose of determining such qualification.

          The Funds do not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2010 remains subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statements of Operations.

          Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. generally accepted accounting principles. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

          The tax character of distributions paid during the fiscal years ended October 31, 2010 and October 31, 2009 were as follows (in thousands)

	Balanced				Large Cap Growth				Mid-Cap Value
	Year Ended		Year Ended		Year Ended		Year Ended		Year Ended		Year Ended
	October 31,		October 31,		October 31,		October 31,		October 31,		October 31,
	2010		2009		2010		2009		2010		2009
Distributions paid from:
Ordinary income*
Institutional Class	$	1,651	$	1,697	$	—	$	1	$	15	$	42
Investor Class		4,637		4,916		—		—		161		285
Advisor Class		314		—		—		—		—		—
AMR Class		42,865		28,892		342		836		561		838
Total distributions paid	$	49,467	$	35,505	$	342	$	837	$	737	$	1,165

* For tax purposes, short-term capital gains are considered ordinary income distributions.

As of October 31, 2010, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

				Large Cap			Mid-Cap
	Balanced			Growth			Value
Cost basis of investments for federal income tax purposes	$	839,809		$	79,512		$	91,079
Unrealized appreciation		96,366			16,221			13,823
Unrealized depreciation		(73,907	)		(346	)		(3,534	)
Net unrealized appreciation/(depreciation)		22,459			15,875			10,289
Undistributed ordinary income		(1	)		74			722
Accumulated long-term gain/(loss)		(64,660	)		(23,979	)		(19,877	)
Other temporary differences		1,420			117			417
Distributable earnings/(deficit)	$	(40,782	)	$	(7,913	)	$	(8,449	)

          Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses from wash sales, the realization for tax purposes of unrealized gains/(losses) on certain

37

American Beacon Funds
Notes to Financial Statements
October 31, 2010

derivative instruments, book amortization for premiums, and reclassifications of income from real estate investment securities.

          Due to inherent differences in the recognition of income, expenses and realized gains/losses under U.S. generally accepted accounting principles and federal income tax regulations, permanent differences between book and tax reporting have been identified and appropriately reclassified on the Statements of Assets and Liabilities.

          Accordingly, the following amounts represent current year permanent differences derived from book amortization of premium, pay down reclasses, Section 732 basis adjustments, non-deductable expenses, and dividend reclasses that have been reclassified as of October 31, 2010 (in thousands):

				Large Cap		Mid-Cap
	Balanced			Growth		Value
Paid-in-capital	$	(9,905	)	$	—	$	(1	)
Undistributed net investment income		5,401			—		1
Accumulated net realized gain (loss)		4,504			—		—
Unrealized appreciation (depreciation) of investments, futures contracts and foreign currency		—			—		—

          At October 31, 2010, capital loss carry forward positions for federal income tax purposes were as follows (in thousands):

Fund	2016		2017		Total
Balanced	$	38,821	$	24,427	$	63,248
Large Cap Growth		10,999		12,863		23,862
Mid-Cap Value		11,063		8,397		19,460

          The Balanced Fund, Large Cap Growth Fund, and Mid-Cap Value Fund utilized $29,720, $4,053, and $2,315, respectively, of net capital loss carryovers for the year ended October 31, 2010.

4. Investment Transactions

          The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the year ended October 31, 2010 were as follows (in thousands):

			Large Cap		Mid-Cap
	Balanced		Growth		Value
Purchases (excluding U.S. government securities)	$	326,787	$	75,860	$	41,182
Sales and maturities (excluding U.S. government securities)		342,349		65,690		34,581
Purchases of U.S. government securities		77,797		—		—
Sales and maturities of U.S. government securities		71,111		—		—

          A summary of the Funds’ direct transactions in Select Funds for the year ended October 31, 2010 is set forth below (in thousands):

		October 31, 2009						October 31, 2010
	Affiliate	Shares/Market Value		Purchases		Sales		Shares/Market Value
Balanced	USG Select Fund	$	5,000	$	—	$	2,100	$	2,900

5. Capital Share Transactions

          The tables below summarize the activity in capital shares for each Class of the Funds (shares and dollars in thousands):

38

American Beacon Funds
Notes to Financial Statements

October 31, 2010

Year Ended October 31, 2010

	Institutional Class						Y Class				Investor Class						Advisor Class
Balanced Fund	Shares			Amount			Shares		Amount		Shares			Amount			Shares			Amount
Shares sold		938		$	11,665			4	$	46		2,259		$	25,989			97		$	1,140
Reinvestment of dividends		133			1,630			—		1		402			4,540			27			314
Shares redeemed		(944	)		(11,665	)		—		—		(4,078	)		(46,277	)		(218	)		(2,568	)
Net increase (decrease) in shares outstanding		127		$	1,630			4	$	47		(1,417	)	$	(15,748	)		(94	)	$	(1,114	)

	AMR Class						A Class				C Class
Balanced Fund	Shares			Amount			Shares		Amount		Shares		Amount
Shares sold		3,103		$	36,517			4	$	46		—	$	1
Reinvestment of dividends		3,684			42,865			—		—		—		—
Shares redeemed		(4,724	)		(55,318	)		—		—		—		—
Net increase (decrease) in shares outstanding		2,063		$	24,064			4	$	46		—	$	1

	Institutional Class						Y Class				AMR Class
Large Cap Growth Fund	Shares			Amount			Shares		Amount		Shares			Amount
Shares sold		7		$	38			4	$	20		8,548		$	46,823
Reinvestment of dividends		—			—			—		—		63			342
Shares redeemed		(12	)		(66	)		—		—		(6,328	)		(34,145	)
Net increase (decrease) in shares outstanding		(5	)	$	(28	)		4	$	20		2,283		$	13,020

	A Class				C Class
Large Cap Growth Fund	Shares		Amount		Shares		Amount
Shares sold		1	$	6		—	$	1
Reinvestment of dividends		—		—		—		—
Shares redeemed		—		—		—		—
Net increase (decrease) in shares outstanding		1	$	6		—	$	1

	Institutional Class						Y Class					Investor Class						Advisor Class
Mid-Cap Value Fund	Shares			Amount			Shares		Amount			Shares			Amount			Shares		Amount
Shares sold		59		$	507			—	$	1			1,672		$	14,465			8	$	64
Reinvestment of dividends		2			14			—		—			20			161			—		—
Shares redeemed		(51	)		(439	)*		—		—	*		(963	)		(8,239	)*		—		—	*
Net increase (decrease) in shares outstanding		10		$	82			—	$	1			729		$	6,387			8	$	64

	AMR Class						A Class					C Class
Mid-Cap Value Fund	Shares			Amount			Shares		Amount			Shares		Amount
Shares sold		3,214		$	27,770			2	$	17			—	$	1
Reinvestment of dividends		68			561			—		—			—		—
Shares redeemed		(3,444	)		(29,426	)*		—		—	*		—		--	*
Net increase (decrease) in shares outstanding		(162	)	$	(1,095	)		2	$	17			—	$	1

^* Net of Redemption Fees

39

American Beacon Funds
Notes to Financial Statements

October 31, 2010

Year Ended October 31, 2009

	Institutional Class						Investor Class						Advisor Class						AMR Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		1,198		$	12,097			2,427		$	24,255			76		$	744			5,034		$	51,222
Reinvestment of dividends		170			1,684			517			4,771			—			—			3,047			28,892
Shares redeemed		(2,288	)		(23,603	)		(4,930	)		(47,789	)		(261	)		(2,590	)		(7,155	)		(69,947	)
Net increase (decrease) in shares outstanding		(920	)	$	(9,822	)		(1,986	)	$	(18,763	)		(185	)	$	(1,846	)		926		$	10,167

	Institutional Class						AMR Class
Large Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		27		$	121			4,528		$	20,441
Reinvestment of dividends		—			1			205			836
Shares redeemed		(19	)		(93	)		(3,124	)		(13,582	)
Net increase in shares outstanding		8		$	29			1,609		$	7,695

	Institutional Class						Investor Class						Advisor Class					AMR Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares		Amount			Shares			Amount
Shares sold		39		$	255			1,083		$	6,831			1	$	5			3,018		$	19,761
Reinvestment of dividends		7			41			52			284			—		—			153			838
Shares redeemed		(136	)		(792	)*		(834	)		(4,607	)*		—		—	*		(1,846	)		(11,086	)*
Net increase (decrease) in shares outstanding		(90	)	$	(496	)		301		$	2,508			1	$	5			1,325		$	9,513

^* Net of Redemption Fees

40

Intentionally left blank.

41

American Beacon Balanced Fund
Financial Highlights
(For a share outstanding throughout the period)

																Y Class
																March
	Institutional Class															01 to			Investor Class
	Year Ended October 31,															October			Year Ended October 31,
	2010			2009			2008			2007			2006			31, 2010			2010			2009			2008
Net asset value, beginning of period	$	11.83		$	10.63		$	16.09		$	15.83		$	15.00		$	12.20		$	10.96		$	9.91		$	15.09
Income from investment operations:
Net investment income		0.35			0.43			0.47			0.50			0.39			0.16			0.25			0.30			0.41
Net gains (losses) on securities (both realized and unrealized)		1.10			1.25			(4.70	)		0.90			1.54			0.57			1.04			1.23			(4.39	)
Total income (loss) from investment operations		1.45			1.68			(4.23	)		1.40			1.93			0.73			1.29			1.53			(3.98	)
Less distributions:
Dividends from net investment income		(0.66	)		(0.48	)		(0.44	)		(0.42	)		(0.38	)		(0.15	)		(0.59	)		(0.48	)		(0.41	)
Distributions from net realized gains on securities		—			—			(0.79	)		(0.72	)		(0.72	)		—			—			—			(0.79	)
Total distributions		(0.66	)		(0.48	)		(1.23	)		(1.14	)		(1.10	)		(0.15	)		(0.59	)		(0.48	)		(1.20	)
Net asset value, end of period	$	12.62		$	11.83		$	10.63		$	16.09		$	15.83		$	12.78		$	11.66		$	10.96		$	9.91
Total return A		12.47	%		16.64	%		(28.23	)%		9.31	%		13.60	%		5.99	%B		12.06	%		16.29	%		(28.39	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	33,405		$	29,808		$	36,557		$	51,399		$	22,587		$	46		$	84,500		$	94,915		$	105,473
Ratios to average net assets (annualized):
Expenses, net of waivers		0.58	%		0.60	%		0.56	%		0.57	%		0.59	%		0.68	%C		0.93	%		0.89	%		0.82	%
Expenses, before waivers		0.58	%		0.60	%		0.56	%		0.57	%		0.59	%		0.68	%C		0.93	%		0.89	%		0.82	%
Net investment income, net of waivers		2.67	%		3.60	%		3.37	%		2.91	%		2.81	%		2.54	%C		2.34	%		3.26	%		3.12	%
Net investment income, before waivers		2.67	%		3.60	%		3.37	%		2.91	%		2.81	%		2.54	%C		2.34	%		3.26	%		3.12	%
Portfolio turnover rate		40	%		57	%		53	%		50	%		59	%		40	%D		40	%		57	%		53	%

A	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
B	Not annualized.
C	Annualized.
D	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

42

																																				A Class			C Class
																																				May			September
						Advisor Class															AMR Class															17 to			01 to
						Year Ended October 31,															Year Ended October 31,															October			October
2007			2006			2010			2009			2008			2007			2006			2010			2009			2008			2007			2006			31, 2010			31, 2010
$	14.91		$	14.20		$	11.35		$	9.77		$	14.95		$	14.83		$	14.16		$	11.31		$	10.19		$	15.49		$	15.27		$	14.49		$	11.50		$	11.32
	0.41			0.35			0.32			0.37			0.34			0.41			0.38			0.35			0.39			0.49			0.50			0.45			0.02			0.01
																	��
	0.87			1.44			1.01			1.21			(4.31	)		0.83			1.35			1.07			1.24			(4.52	)		0.89			1.46			0.43			0.59
	1.28			1.79			1.33			1.58			(3.97	)		1.24			1.73			1.42			1.63			(4.03	)		1.39			1.91			0.45			0.60
	(0.38	)		(0.36	)		(0.57	)		—			(0.42	)		(0.40	)		(0.34	)		(0.71	)		(0.51	)		(0.48	)		(0.45	)		(0.41	)		(0.01	)		0.00
	(0.72	)		(0.72	)		—			—			(0.79	)		(0.72	)		(0.72	)		—			—			(0.79	)		(0.72	)		(0.72	)		—			—
	(1.10	)		(1.08	)		(0.57	)					(1.21	)		(1.12	)		(1.06	)		(0.71	)		(0.51	)		(1.27	)		(1.17	)		(1.13	)		(0.01	)		0.00
$	15.09		$	14.91		$	12.11		$	11.35		$	9.77		$	14.95		$	14.83		$	12.02		$	11.31		$	10.19		$	15.49		$	15.27		$	11.94		$	11.92
	9.06	%		13.31	%		11.96	%		16.17	%		(28.65	)%		8.83	%		12.94	%		12.84	%		16.95	%		(28.08	)%		9.59	%		13.98	%		3.90	%B		5.33	%B
$	202,750		$	111,837		$	6,127		$	6,812		$	7,674		$	9,504		$	1,562		$	748,422		$	681,197		$	604,209		$	898,584		$	817,333		$	47		$	1
	0.83	%		0.85	%		1.09	%		1.09	%		1.07	%		1.07	%		1.22	%		0.33	%		0.35	%		0.31	%		0.31	%		0.33	%		1.08	%C		1.86	%C
	0.83	%		0.85	%		1.09	%		1.09	%		1.07	%		1.07	%		1.22	%		0.33	%		0.35	%		0.31	%		0.31	%		0.33	%		1.08	%C		2.14	%C
	2.65	%		2.55	%		2.18	%		3.06	%		2.86	%		2.34	%		2.18	%		2.92	%		3.75	%		3.62	%		3.21	%		3.08	%		1.51	%C		0.48	%C
	2.65	%		2.55	%		2.18	%		3.06	%		2.86	%		2.34	%		2.17	%		2.92	%		3.75	%		3.62	%		3.21	%		3.08	%		1.51	%C		0.20	%C
	50	%		59	%		40	%		57	%		53	%		50	%		59	%		40	%		57	%		53	%		50	%		59	%		40	%D		40	%D

43

American Beacon Large Cap Growth Fund
Financial Highlights
(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2010			2009A			2008			2007			2006B
Net asset value, beginning of period	$	4.97		$	4.49		$	7.67		$	6.89		$	6.18
Income from investment operations:
Net investment income (loss)		0.00			0.03			0.05			0.04			0.04
Net gains (losses) on securities (both realized and unrealized)		0.88			0.50			(2.97	)		0.77			0.70
Total income (loss) from investment operations		0.88			0.53			(2.92	)		0.81			0.74
Less distributions:
Dividends from net investment income		(0.01	)		(0.05	)		(0.04	)		(0.03	)		(0.03	)
Distributions from net realized gains on securities		—			—			(0.22	)		—			—
Total distributions		(0.01	)		(0.05	)		(0.26	)		(0.03	)		(0.03	)
Net asset value, end of period	$	5.84		$	4.97		$	4.49		$	7.67		$	6.89
Total return C		17.70	%		12.09	%		(39.35	)%		11.84	%		12.04	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	125		$	130		$	83		$	119		$	110
Ratios to average net assets (annualized):
Expenses, net of waivers		0.94	%		0.93	%		0.89	%		0.90	%		0.90	%
Expenses, before waivers		0.94	%		0.94	%		0.95	%		1.06	%		0.99	%
Net investment income (loss), net of waivers		(0.02	)%		0.38	%		0.74	%		0.58	%		0.56	%
Net investment income (loss), before waivers		(0.02	)%		0.36	%		0.68	%		0.42	%		0.48	%
Portfolio turnover rate		92	%		147	%		112	%		128	%		181	%

A	On March 17, 2009, Winslow Capital Management, Inc. assumed management of the Large Cap Growth Fund’s assets previously managed by Goldman Sachs Asset Management, L.P.
B	On September 12, 2006, The Renaissance Group, LLC assumed management of the Large Cap Growth Fund’s assets previously managed by J.P. Morgan Investment Management, Inc.
C	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
D	Not annualized.
E	Annualized.
F	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

44

Y Class																					C Class
March																		A Class			September
01 to			AMR Class															May 17 to			01 to
October			Year Ended October 31,															October			October
31, 2010			2010			2009A			2008			2007			2006B			31, 2010			31, 2010
$	5.41		$	5.00		$	4.52		$	7.72		$	6.95		$	6.21		$	5.40		$	5.17
	0.00			0.01			0.04			0.07			0.06			0.05			(0.01	)		(0.02	)
	0.42			0.89			0.51			(2.99	)		0.77			0.73			0.44			0.68
	0.42			0.90			0.55			(2.92	)		0.83			0.78			0.43			0.66
	—			(0.02	)		(0.07	)		(0.06	)		(0.06	)		(0.04	)		—			—
	—			—			—			(0.22	)		—			—			—			—
	—			(0.02	)		(0.07	)		(0.28	)		(0.06	)		(0.04	)		—			—
$	5.83		$	5.88		$	5.00		$	4.52		$	7.72		$	6.95		$	5.83		$	5.83
	7.76	%D		18.11	%		12.46	%		(39.17	)%		12.07	%		12.52	%		7.96	%D		12.77	%D
$	22		$	96,978		$	71,154		$	56,976		$	101,698		$	82,042		$	7		$	1
	1.06	%E		0.69	%		0.63	%		0.59	%		0.60	%		0.59	%		1.49	%E		2.20	%E
	1.06	%E		0.69	%		0.63	%		0.59	%		0.60	%		0.59	%		1.49	%E		3.14	%E
	(0.33	)%E		0.19	%		0.86	%		1.05	%		0.85	%		0.88	%		(0.90	)%E		(1.68	)%E
	(0.33	)%E		0.19	%		0.86	%		1.05	%		0.85	%		0.88	%		(0.90	)%E		(2.62	)%E
	92	%F		92	%		147	%		112	%		128	%		181	%		92	%F		92	%F

45

American Beacon Mid-Cap Value Fund
Financial Highlights
(For a share outstanding throughout the period)

																Y Class
	Institutional Class															March
													November			01 to
													30 to			October			Investor Class
	Year Ended October 31,												October			31,			Year Ended October 31,
	2010			2009			2008			2007			31, 2006			2010			2010			2009			2008
Net asset value, beginning of period	$	7.57		$	5.94		$	11.01		$	10.81		$	12.09		$	8.48		$	7.54		$	5.92		$	10.96
Income from investment operations:
Net investment income (loss)		0.08			0.10			0.16			0.12			0.21			0.06			0.06			0.07			0.14
Net gains (losses) on securities (both realized and unrealized)		1.67			1.65			(4.31	)		0.41			1.25			0.73			1.65			1.66			(4.31	)
Total income (loss) from investment operations		1.75			1.75			(4.15	)		0.53			1.46			0.79			1.71			1.73			(4.17	)
Less distributions:
Dividends from net investment income		(0.05	)		(0.12	)		(0.16	)		(0.07	)		(0.16	)		—			(0.05	)		(0.11	)		(0.11	)
Distributions from net realized gains on securities		—			—			(0.76	)		(0.26	)		(2.58	)		—			—			—			(0.76	)
Total distributions		(0.05	)		(0.12	)		(0.92	)		(0.33	)		(2.74	)		—			(0.05	)		(0.11	)		(0.87	)
Redemption fees added to beneficial interestsB		0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00
Net asset value, end of period	$	9.27		$	7.57		$	5.94		$	11.01		$	10.81		$	9.27		$	9.20		$	7.54		$	5.92
Total return C,D		23.19	%		30.24	%		(40.86	)%		4.97	%		15.19	%E		9.32	%E		22.77	%		29.93	%		(41.04	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	2,778		$	2,197		$	2,256		$	6,047		$	3,396		$	1		$	35,223		$	23,369		$	16,550
Ratios to average net assets (annualized):
Expenses, net of waivers		0.98	%		0.98	%		0.98	%		0.92	%		1.19	%F		1.01	%F		1.23	%		1.23	%		1.23	%
Expenses, before waivers		1.06	%		1.13	%		1.16	%		1.09	%		1.19	%F		1.05	%F		1.27	%		1.34	%		1.32	%
Net investment income (loss), net of waivers		0.99	%		1.29	%		1.51	%		1.22	%		1.11	%F		0.97	%F		0.75	%		0.98	%		1.27	%
Net investment income (loss), before waivers		0.90	%		1.14	%		1.33	%		1.05	%		1.11	%F		0.93	%F		0.70	%		0.87	%		1.18	%
Portfolio turnover rate		40	%		42	%		28	%		35	%		42	%H		40	%I		40	%		42	%		28	%

A	On November 30, 2005, the Mid-Cap Value Fund’s Institutional Class of shares was renamed the AMR Class and the Fund began offering a new class of shares known as the Institutional Class.
B	Amounts represent less than $0.01 per share.
C	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
D	May include adjustments in accordance with accounting principles generally accepted in the United States of America and as such, the net asset value for financial reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
E	Not annualized.
F	Annualized.
G	Portfolio turnover rate is for the period from November 1, 2006 through October 31, 2007.
H	Portfolio turnover rate is for the period from November 1, 2005 through October 31, 2006.
I	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

46

						Advisor Class																											A Class			C Class
			February												June			AMR Class (formerly Institutional Class prior to															May			September
			28 to												29 to			December 1, 2005)A															17 to			01 to
			October			Year Ended October 31,									October			Year Ended October 31,															October			October
2007			31, 2006			2010			2009			2008			31, 2007			2010			2009			2008			2007			2006			31, 2010			31, 2010
$	10.80		$	9.80		$	7.49		$	5.87		$	10.94		$	11.73		$	7.59		$	5.97		$	11.07		$	10.87		$	11.72		$	9.00		$	8.30
	0.10			0.01			0.07			0.15			0.10			0.01			0.10			0.07			0.18			0.18			0.12			0.01			(0.01	)
	0.40			0.99			1.61			1.60			(4.27	)		(0.80	)		1.66			1.70			(4.35	)		0.36			1.75			0.17			0.89
	0.50			1.00			1.68			1.75			(4.17	)		(0.79	)		1.76			1.77			(4.17	)		0.54			1.87			0.18			0.88
	(0.08	)		—			(0.05	)		(0.13	)		(0.14	)		—			(0.08	)		(0.15	)		(0.17	)		(0.08	)		(0.14	)		—			—
	(0.26	)		—			—			—			(0.76	)		—			—			—			(0.76	)		(0.26	)		(2.58	)		—			—
	(0.34	)		—			(0.05	)		(0.13	)		(0.90	)		—			(0.08	)		(0.15	)		(0.93	)		(0.34	)		(2.72	)		—			—
	0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00			0.00
$	10.96		$	10.80		$	9.12		$	7.49		$	5.87		$	10.94		$	9.27		$	7.59		$	5.97		$	11.07		$	10.87		$	9.18		$	9.18
	4.68	%		10.20	%E		22.53	%		30.64	%		(41.28	)%		(6.73	)%E		23.28	%		30.56	%		(40.82	)%		5.09	%		19.16	%		2.00	%E		10.60	%E
$	43,158		$	27,240		$	78		$	7		$	1		$	1		$	64,012		$	53,604		$	34,253		$	78,794		$	66,290		$	18		$	1
	1.23	%		1.49	%F		1.44	%		1.50	%		1.50	%		1.50	%F		0.77	%		0.83	%		0.82	%		0.75	%		0.97	%		1.48	%F		2.24	%F
	1.26	%		1.61	%F		1.55	%		1.58	%		2.04	%		1.80	%F		0.77	%		0.82	%		0.82	%		0.75	%		0.92	%		1.51	%F		3.20	%F
	0.93	%		0.57	%F		0.47	%		0.22	%		1.02	%		0.32	%F		1.19	%		1.38	%		1.68	%		1.41	%		1.38	%		0.47	%F		(0.36	)%F
	0.90	%		0.44	%F		0.36	%		0.14	%		0.48	%		0.02	%F		1.19	%		1.38	%		1.68	%		1.40	%		1.42	%		0.44	%F		(1.32	)%F
	35	%		42	%H		40	%		42	%		28	%		35	%G		40	%		42	%		28	%		35	%		42	%		40	%I		40	%I

47

American Beacon Funds
Privacy Policy & Federal Tax Information
(Unaudited)

Privacy Policy

          The American Beacon Funds recognizes and respects the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

          We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

          We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

          We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

          For corporate shareholders in the Funds, the percentage of ordinary dividend income distributed for the year ended October 31, 2010, which is designated as qualifying for the dividends-received deduction, is as follows:

Balanced Fund	35.83	%
Large Cap Growth Fund	83.07	%
Mid-Cap Value Fund	66.74	%

          For shareholders in the Funds, the percentage of dividend income distributed for the year ended October 31, 2010, which is designated as qualified dividends income under the Jobs and Growth Tax Relief Act of 2003, is as follows:

Balanced Fund	44.70	%
Large Cap Growth Fund	100.00	%
Mid-Cap Value Fund	100.00	%

          Shareholders will receive notification in January 2011 of the percentage applicable to the preparation of their 2010 income tax returns.

48

Disclosure Regarding the Board of Trustees’ Approval of Investment
Advisory Agreement
(Unaudited)

          At its May 25, 2010 meeting, the Board of Trustees (“Board”) considered the renewal of each existing Management Agreement between American Beacon Advisors, Inc. (the “Manager”) and the American Beacon Funds (the “Funds”) and each Investment Advisory Agreement between the Manager and a subadvisor (“Investment Advisory Agreements” and collectively with the Management Agreement, the “Agreements”). In preparation for the Board’s consideration to renew these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

          In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 10, 2010 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

          In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees considered, among other materials, responses by the Manager and the subadvisors to inquiries requesting:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and II of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed by each firm with performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• a profit/loss analysis of the firm and any actual or anticipated economies of scale in relation to the services it provides to each Fund;

• an analysis of compensation, including a comparison with fees charged to other clients for which similar services are provided, any proposed changes to the fee schedule and the effect of any fee waivers;

• a description of any payments by the subadvisers to the manager to support the Funds’ marketing efforts;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of any internal actions the firm has taken or anticipates taking in light of the current and projected decrease in revenues from prior years as a result of the current economic environment that may affect or are expected to affect the services performed for the Funds;

• a description of the scope of portfolio management services provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a discussion regarding the firm’s participation in “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions, including the firm’s methodology for obtaining best execution and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm receives, with respect to the Funds, other compensation, including any payment for order flow or ECN liquidity rebates

• a certification by the firm regarding the reasonable design of its compliance program;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

49

Disclosure Regarding the Board of Trustees’ Approval of Investment
Advisory Agreements

          In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fees and expense ratios for comparable mutual funds;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

          In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fees versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

          Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 10, 2010 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 25, 2010 meeting at which the Board considered the renewal of the Agreements. The Board did not identify any particular information that was most relevant to its consideration to renew the Management Agreement and each Investment Advisory Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal of the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to All Funds

          In determining whether to renew the Management Agreement and each Investment Advisory Agreement, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 25, 2010 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately. In each instance, the Board considered, among other things, the following factors: (1) the nature and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager and (to the extent provided) the subadvisors in rendering their services and their resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fees with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

          Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s generally favorable long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to increase assets in the Funds as demonstrated, for example, by the recent substantial increase in sales personnel; the Manager’s continuing efforts to add new series and share classes to enhance the Funds’ product line; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; and efforts made by the Manager to retain key employees and maintain staff levels.

          With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and their ability to continue to attract and retain qualified investment personnel. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

50

Disclosure Regarding the Board of Trustees’ Approval of Investment
Advisory Agreements

          Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager and a subadvisor by Fund, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an individual Fund level and at an aggregate level for all Funds. The Board also considered that the Management Agreement for the Funds stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients is lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

          The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Funds. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

          In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee a subadvisor charges for any comparable client accounts. The Board gave less weight to profitability considerations or did not view this data as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fees.

          Based on the foregoing information, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager and the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Economies of Scale. In considering the reasonableness of the management and investment advisory fees, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates. The Board also noted the Manager’s representation that assets in the Funds’ complex increased during 2009, primarily due to market appreciation.

          In addition, the Board noted the Manager’s representation that, due to the existing low cost structure of the Funds, further breakpoints in the management fee would not be appropriate at this time. The Board also considered that the management fee for the Money Market Funds is amongst the lowest in the industry. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Fund.

          Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager’s relationship with the Funds and the money market portfolios continues to be a significant factor in attracting separate account assets for the Manager and the Manager’s use of the Large Cap Value Fund model for an actively managed exchange traded fund, managed by the Manager.

          In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted that the benefit plans of AMR Corporation, which are managed by the Manager, remain the largest or one of the largest shareholders in most of the Funds and the Manager’s representation that it provides services to each Trust at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that, with the exception of the Emerging Markets Fund, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal years ended October 31, and December 31, 2009.

          Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

          The performance comparisons below were made versus each Fund’s Lipper peer universe median. References to the Lipper expense universe below are to the universe of comparable mutual funds included in the analysis provided to the Trustees by Lipper.

51

Disclosure Regarding the Board of Trustees’ Approval of Investment
Advisory Agreements

Additional Considerations and Conclusions with Respect to the Balanced Fund

          In considering the renewal of the Management Agreement with respect to the Balanced Fund, the Trustees considered the following additional factors: (1) the Balanced Fund outperformed the peer universe median for the three-, five- and ten-year periods ended March 31, 2010, but underperformed for the one-year period; (2) the Manager outperformed its market index with respect to its portion of the Fund’s fixed income assets for the one-, three- and five-year periods ended March 31, 2010; (3) management’s explanation that the Fund’s recent underperformance was due, in part, to the temporary reclassification of the Fund’s Lipper universe from the Lipper Mixed-Asset Target Allocation Growth Funds (MTAG) universe to the Lipper Mixed-Asset Target Allocation Moderate Funds (MTAM) universe; and (4) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, Inc. (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”) and Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median for the three-, five- and ten-year periods ended March 31, 2010, but underperformed for the one-year period; (2) Brandywine outperformed the peer universe median for the three-, five- and ten-year periods ended March 31, 2010, but underperformed for the one-year period; (3) Hotchkis outperformed its market benchmark index with respect to its allocated portion of the Fund’s equity assets for the one-year period ended March 31, 2010 and since inception, but underperformed for the three- and five-year periods and underperformed its Lipper equity peer group for the five year period ended March 31, 2010; (4) management’s explanation of the reasons for Hotchkis’ under performance; (5) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (6) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (7) the Manager’s recommendation to continue to retain each subadvisor.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the Balanced Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Balanced Fund.

Additional Considerations and Conclusions with Respect to the Large Cap Growth Fund

          In considering the renewal of the Management Agreement for the Large Cap Growth Fund, the Trustees considered the following additional factors: (1) the Large Cap Growth Fund underperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2010; (2) management’s explanation that the underperformance of the Fund was due, in part, to the underperformance of the Fund’s previous subadvisors and a discussion of the steps taken by the Manager to address the Fund’s underperformance, including replacing the Fund’s subadvisors with Renaissance Group LLC, dba Renaissance Investment Management (“Renaissance”) and Winslow Capital Management, Inc. (“Winslow”); and (3) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreements with Renaissance and Winslow, the Trustees considered the following additional factors: (1) Renaissance underperformed the peer universe median for the one- and three- year periods ended March 31, 2010; (2) Winslow underperformed the peer universe median for the one-year period ended March 31, 2010; (3) management’s explanation that Renaissance’s underperformance was due, in part, to the underperformance of high quality growth stocks in 2007 and 2009; (4) management’s representation that Renaissance has substantially outperformed following similar market conditions in the past; (5) management’s explanation that Winslow’s underperformance was due, in part, to stock selection in the industrials, financials and health care sectors; (6) the relatively short tenure of Winslow (Winslow was hired in March 2009); (7) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (8) whether the subadvisors use Fund commissions to obtain proprietary or third-party research (9) the Manager’s recommendation to continue to retain each subadvisor.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisor under the Agreements are fair and reasonable, (2) determined that the Large Cap Growth Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Large Cap Growth Fund.

Additional Considerations and Conclusions with Respect to the Mid-Cap Value Fund

          In considering the renewal of the Management Agreement for the Mid-Cap Value Fund, the Trustees considered the following additional factors: (1) the Mid-Cap Value Fund outperformed its peer group universe median for the one-, three- and five-year periods ended March 31, 2010; and (2) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreements with Barrow and Pzena Investment Management, LLC (“Pzena”), the Trustees considered the following additional factors: (1) Barrow matched the peer universe median for the three-year period ended March 31, 2010, but underperformed for the one- and five-year periods; (2) Pzena outperformed the peer universe median for the one-year period ended March 31, 2010, but underperformed for the three- and five year periods; (3) management’s explanation that Pzena’s underperformance was due, in part, to poor stock selection and an overweighting in the financials sector during 2007 and 2008, while its stock selection in all other sectors exceeded that of the benchmark index in 2008; (4) Pzena’s performance for the twelve months period ended March 31, 2010 ranked better than the performance of its Lipper peer group; (5) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (6) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (7) the Manager’s recommendation to continue to retain each subadvisor.

52

Disclosure Regarding the Board of Trustees’ Approval of Investment
Advisory Agreements

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the Mid-Cap Value Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Mid-Cap Value Fund.

53

Trustees and Officers of the American Beacon Funds

(Unaudited)

          The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees twenty-three funds in the fund complex that includes the Trust, the American Beacon Master Trust, the American Beacon Mileage Funds, and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
INTERESTED TRUSTEES
	Term
	Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (73)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (1960-Present); Director, Clear Channel Communications (1984-2008); Trustee, CenterPoint Properties (1994- 2006); Member, Board of Trustees, Southern Methodist University ; Member, Board of Visitors, M.D. Anderson Hospital; Board of Visitors, Zale/Lipshy Hospital; Trustee, American Beacon Mileage Funds (1996-present); Trustee, American Beacon Select Funds (1999-present); Trustee, American Beacon Master Trust (1996-present).
NON-INTERESTED
TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (66)	Trustee since 2004	Board Member, Baylor University Medical Center Foundation (1992-2004); Consultant, New River Canada Ltd. (mutual fund servicing company) (1998- 2003); President and CEO, Allmerica Trust Company, NA (1996-1997); President and CEO, Fidelity Investments Southwest Company (1983-1995); Senior Vice President of Regional Centers, Fidelity Investments (1988-1995); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004- present).
Brenda A. Cline (49)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, Texas Christian University (1998-Present); Trustee, W.I. Cook Foundation, Inc. (d/b/a Cook Children’s Health Foundation) (2001-2006); Director, Christian Church Foundation (1999- 2007); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004-present).
Eugene J. Duffy (56)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994-Present); Director, Sunrise Bank of Atlanta (2008-Present); Chairman, Special Contributions Fund Board of Trustees, National Association for the Advancement of Colored People (2007-Present); Trustee, National Association for the Advancement of Colored People (2000-Present); Board of Visitors, Emory University (2006-Present); Trustee, Atlanta Botanical Garden (2006-Present); Board Member, Willie L. Brown Jr. Institute on Politics and Public Service (2001- Present); Chair, National Association of Securities Professionals (2000-2002); Deputy Chief Administrative Officer, City of Atlanta (1985-1990); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008- present).

54

Trustees and Officers of the American Beacon Funds

(Unaudited)

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
Thomas M. Dunning (68)	Trustee since 2008	Consultant, (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Director, Oncor Electric Delivery Company LLC (2007-present); Director, Baylor Health Care System Foundation (2007-present); State Vice Chair, State Fair of Texas (1987-present); Board Member, Southwestern Medical Foundation (1994-present); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
Richard A. Massman (67)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present), Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities). Chairman (2007-Present) and Director (2005-Present), The Dallas Opera Foundation; Chairman (2006-2009) and Director (2005-Present), Temple Emanu-El Foundation; Trustee, Presbyterian Hospital Foundation (2006-Present); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004- present); Trustee, American Beacon Master Trust (2004-present).
R. Gerald Turner (64) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas 75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, ChemFirst (1986-2002); Director, J.C. Penney Company, Inc. (1996-Present); Director, California Federal Preferred Capital Corp. (2001-2003); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Member, Salvation Army of Dallas Board of Directors; Member, Methodist Hospital Advisory Board; Co-Chair, Knight Commission on Intercollegiate Athletics; Trustee, American Beacon Mileage Funds (2001-present); Trustee, American Beacon Select Funds (2001-present); Trustee, American Beacon Master Trust (2001-present).
Paul J. Zucconi,CPA (70)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-present); Director, Titanium Metals Corporation (producer of titanium melted and mill products and sponge) (2002- present); Director, Torchmark Corporation (life and health insurance products) (2002-present); Director, National Kidney Foundation of North Texas (2003-Present); Director, Dallas Chapter of National Association of Corporate Directors (2004-Present); Partner, KPMG (1976-2001); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
OFFICERS
	Term
	One Year
William F. Quinn** (62)	Executive Vice President from 2007 to 2008 and 2009 to Present President from 1987 to 2007 and 2008 to 2009 Trustee from 1987 to 2008	Executive Chairman (2009-Present), Chairman (2006-2009) and CEO (2006-2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009); Director, Crescent Real Estate Equities, Inc.(1994-2007); Director, Pritchard, Hubble & Herr, LLC (investment advisor) (2001-2006); Director of Investment Committee, Southern Methodist University Endowment Fund (1996-Present); Member, Southern Methodist University Cox School of Business Advisory Board (1999-2002); Member, New York Stock Exchange Pension Manager Committee (1997-1998, 2000-2002, 2006-Present); Chairman (2007-Present) and Vice Chairman (2004-2007), Committee for the Investment of Employee Benefits; Director, United Way of Metropolitan Tarrant County (1988-2000, 2004-Present); Trustee, American Beacon Mileage Funds (1995-2008); Trustee, American Beacon Select Funds (1999-2008); Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-present); Director, American Beacon Global Funds plc (2007-2009).

55

Trustees and Officers of the American Beacon Funds

(Unaudited)

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
Gene L. Needles, Jr. (55)	President 2009 to Present Executive Vice President 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2008-2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), Managing Director of Sales (2002-2003), National Sales Manager (1999-2002), and Regional Sales Manager (1993-1999), AIM Distributors.
Rosemary K. Behan (51)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney (1995-2004), Securities and Exchange Commission.
Brian E. Brett (50)	VP since 2004	Vice President, Director of Sales and Marketing, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment advisor) (1996-2004).
Wyatt Crumpler (44)	VP since 2007	Vice President, Asset Management, American Beacon Advisors, Inc. (2007-Present); Managing Director of Corporate Accounting (2004-2007), Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Michael W. Fields (56)	VP since 1989	Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-Present); Director American Beacon Global Funds SPC (2002-present); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (49)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.
Terri L. McKinney (46)	VP since 2009	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; Vice-President, Board of Trustees (2008-Present), Trustee (2006-2008) Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (35)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice-President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).
Christina E. Sears (39)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Senior Compliance Analyst, American Beacon Advisors, Inc. (1998-2004).

*	The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the Board may determine to grant one or more annual exemptions to this requirement.
**	Mr. Feld is deemed to be an “interested person” of the Trusts, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two fiscal years to the Manager and one or more of the Trust’s and Master Trust’s sub-advisors.

56

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57

Delivery of Documents

eDelivery is NOW AVAILABLE — Stop traditional mail delivery and receive your
shareholder reports and summary prospectus on-line. Sign up at
www.americanbeaconfunds.com

To reduce expenses, your financial institution may mail only one copy of the Summary Prospectus, Annual Report and Semi-Annual Report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution. Delivery of individual copies will commence thirty days after receiving your request.

To obtain more information about the Fund:

By E-mail:
american_beacon.funds@ambeacon.com

On the Internet:
Visit our website at www.americanbeaconfunds.com

By Telephone:
Institutional, Y, Investor, and Advisor Classes
Call (800) 658-5811
AMR Class^SM
Call (800) 345-2345

By Mail:
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643

Availability of Quarterly Portfolio Schedules

In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available on the Funds’ website (www.americanbeaconfunds.com) approximately twenty days after the end of each month.

Availability of Proxy Voting Policy and Records

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website (www.americanbeaconfunds.com) and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967-9009.

Fund Service Providers:

Custodian	Transfer Agent	Independent Registered	Distributor
State Street Bank and	Boston Financial Data	Public Accounting	Foreside Fund Services,
Trust	Services	Firm	LLC
Boston, Massachusetts	Kansas City, Missouri	Ernst & Young LLP	Portland, Maine
		Dallas, Texas

This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus of Summary Prospectus.

American Beacon Funds, American Beacon Balanced Fund, American Beacon Large Cap Growth Fund, and American Beacon Mid-Cap Value Fund are service marks of American Beacon Advisors, Inc.

AR 10//10
VF1010

About American Beacon Advisors

     Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.

     Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.

Contents
President’s Message		1
Market and Performance Overviews		2-14
American Beacon Schedules of Investments
High Yield Bond Fund		16
Retirement Income & Appreciation Fund		21
Intermediate Bond Fund		26
Short-Term Bond Fund		34
Additional Information	Back Cover

Investing in debt securities entails interest rate risk which is the risk that debt securities will decrease in value with increases in market interest rates. Investing in high yield securities involves additional risks when compared to investing in investment grade securities. These include a greater risk of default or bankruptcy and an increased sensitivity to financial difficulties or changes in interest rates. The four highest Moody’s ratings for long-term obligations (or issuers thereof) are Aaa, Aa, A and Baa. Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk. Obligations rated Aa are judged to be of high quality and are subject to very low credit risk. Obligations rated A are considered upper-medium grade and are subject to low credit risk. Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics. Moody’s appends numerical modifiers 1, 2, and 3 to each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and each Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.

Fellow Shareholders,

          Throughout the past 12 months, one theme prevailed: investments placed with experienced, forward-thinking managers can still benefit. Opportunity abounds for those with the foresight to know how to capitalize on changing market conditions. It’s no coincidence that this theme also goes to the heart of the American Beacon Funds investment philosophy.

          It’s a philosophy that has served our shareholders well. For the 12 months ended October 31, 2010, the American Beacon High Yield Bond Fund (Institutional Class) returned 17.17%. The American Beacon Intermediate Bond Fund (Institutional Class) returned 7.56%, the American Beacon Short-Term Bond Fund (Institutional Class) generated a 3.78% return, and the American Beacon Retirement and Income Appreciation Fund (Investor Class) generated an increase of 8.60% over the same period. Please note that the recent market performance has helped to produce short-term returns that are not typical and may not continue in the future.

          While we keep a watchful eye on your investment in our funds, we also remain focused on seeking out new opportunities to help keep your financial goals on course. This is what guides the composition of American Beacon Funds’ product line-up. It is also what led to the addition of several new funds this past year: the American Beacon Zebra Large Cap and the Zebra Small Cap Equity Funds, which use a proprietary strategy to attempt to capture a unique source of equity return—the liquidity premium. We also recently added the American Beacon Evercore Small Cap Equity Fund, which relies on a fundamental bottom-up investment approach and is managed by the well-regarded Evercore Asset Management, LLC.

          Continuously searching for new ways to serve our fellow shareholders’ needs is our commitment to you, a commitment we summarize as: Oversight 360. Ours is a continuous commitment to cast a thoughtful and analytical eye over all the factors that influence our investments.

          We want to thank you for your continued investment in the American Beacon Funds. As you review the enclosed market overview, portfolio listings, and detailed financial data, please know that we remain dedicated to offering you both the level of superior service and knowledgeable investment management you’ve come to expect from us. To obtain further details about the American Beacon Funds family or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,
 

 

Gene L. Needles, Jr. 

President
American Beacon Funds 

Securities of these Funds may only be sold by offering each Funds’ Prospectus and Summary Prospectus. You should consider the investment objectives, risks, fees and expenses of any mutual fund carefully before investing. This and other information is available in each Funds’ Prospectus and Summary Prospectus which you may obtain at www.americanbeaconfunds.com or by calling 1-800-967-9009. Please read the Prospectus and Summary Prospectus carefully before investing. Distributed by Foreside Fund Services, LLC.

There is no guarantee that the Funds’ investment objective will be met. At times, certain securities held by the American Beacon Zebra Large Cap Equity and Small Cap Equity Funds may have limited marketability and may be difficult to sell. Investing in the securities of small and mid-capitalization companies involves greater risk and the possibility of greater price volatility than investing in larger capitalization and more established companies. Because the American Beacon Evercore Small Cap Equity Fund is a focused portfolio of fewer companies, the increase or decrease of the value of a single stock may have a greater impact on the Fund’s NAV and total return when compared to other diversified funds.

1

Domestic Bond Market Overview
October 31, 2010 (Unaudited)

          The investment-grade fixed income markets had another year of attractive returns as interest rates declined and credit markets improved. The Barclay’s Aggregate Index produced an 8.01% total return led primarily by the Corporate sector, which reported over 11% returns. U.S. fixed income markets were buoyed by the moderate levels of inflation and economic growth and strong investor demand for yield.

          The period began in late 2009 as the U.S. economy was pulling out of the subprime crisis and was exhibiting signs of a typical post-recession recovery. Government stimulus programs were working their way through the system, and the inventory rebuilding cycle was in full swing. Interest rates rose from their crisis lows, and investors were even beginning to contemplate the Federal Reserve Bank’s (“the Fed”) exit from its extraordinarily accommodative monetary policy measures.

          Unfortunately, a critical component of other recent recoveries was missing this time — the housing market. Given the problems with the banking system, the agency underwriters (Freddie and Fannie), and the consumer in general, the housing market could not contribute to the recovery as it had in the past. As such, by mid-2010 when the stimulus programs faded and the inventory cycle was complete, economic growth began to roll over.

          At that same time, a fiscal crisis in Europe erupted as several smaller Eurozone countries were not able to sustain their budget deficits and debt balances. Volatility and uncertainty in Europe led many investors to reduce their appetite for risk and caused companies to delay capital spending programs until the markets calmed.

          The confluence of events led investors to anticipate that the Fed would engage in a second round of quantitative easing in an effort to prevent a double-dip U.S. recession. Investors expected the Fed to purchase Treasury notes along the yield curve to inject more money into the system. In addition, investors also began to anticipate additional stimulus from Congress in the form of tax relief and extended unemployment benefits. As such, by October 2010, glimmers of hope were beginning to emerge among investors and in the economic data that the nascent recovery would regain strength.

          While the influences during this period caused investors to pause and interest rates to decline, the impact was likely temporary. By period end the government’s commitment to the U.S. recovery appeared to restore investor confidence and led to strong investor demand for yield in an otherwise very low-yielding environment.

2

High Yield Bond Market Overview

October 31, 2010 (Unaudited)

          For the 12 months ended October 31, 2010, JPMorgan Global High Yield Bond Index produced a return of 19.10%.

          The fiscal year started with optimism that the U.S. economy and financial markets would continue their recovery from recession. In this environment many high yield issuers were able to come to market to refinance bank debt and extend their debt maturities.

          Improving fundamentals that resulted from better financial results and healthier balance sheets not to mention a strong technical backdrop from investor demand for the asset class in general— tightened high yield spreads dramatically from the beginning of the fiscal year until mid-January of 2010. At that point, concerns about increasing government debt problems particularly in Europe caused a temporary correction. The market shrugged off the sovereign debt concerns and resumed its rebound until late April. At that time the European sovereign debt problems, which centered on Greece, resurfaced. This time the market suffered a more severe correction, one that lasted through June.

          Supportive actions by both the U.S. and European Union ultimately helped calm the sovereign debt concerns.

          The Federal Reserve made it clear that it would hold short-term interest rates low indefinitely. This ignited a search for yield, driving more money into the high yield asset class. It provided an extremely strong level of technical support. Investors began to emerge from their risk adverse stances and returned their focus to investing in growth opportunities.

          Throughout the year, fundamental factors also continued to improve, with favorable earnings reports and with the default rate remaining below 1% for each of the first three quarters of 2010. This combination of favorable fundamentals, coupled with improving market technicals led to a strong performance for high yield bonds as spreads fell to 6.25% from nearly 7.5% at the beginning of the period.

          Most high yield issuers now have lower leverage than a year ago. The $245 billion in new high yield issues (through October 31, 2010) already exceeded the record set in the marketplace for the calendar year 2009. Almost 70% of this debt was issued to improve liquidity by retiring other debt on the issuing company’s balance sheet. Many of these companies have used their proceeds to retire outstanding bank loans. Those repaid loans greatly diminish the threat of an impending “maturity cliff” in 2013-2015, which had concerned the market and cast a pall over the market.

          As the period drew to a close, we have also seen lower-rated entities access the market and even a return of “dividend” deals involving private equity sponsors.

3

Performance Overview
American Beacon High Yield Bond Fund^SM
October 31, 2010 (Unaudited)

          The Institutional Class of the High Yield Bond Fund returned 17.17% for the twelve months ended October 31, 2010. The Fund underperformed the JPMorgan Global High-Yield Index (“Index”) return of 19.10% and the Lipper High Current Yield Funds Index return of 18.67% for the period.

Comparison of Change in Value of a $10,000 Investment
For the Period from 12/29/00* through 10/31/10

* Inception of Fund

										Value of
	Annualized Total Returns						Since			$10,000
	Periods Ended 10/31/10						Incep.			12/29/00-
	1 Year			5 Years			(12/29/00)			10/31/10
Institutional Class(1,8)		17.17	%		6.68	%		7.88	%	$	21,093
Y Class(1,4,8)		17.34	%		6.71	%		7.90	%		21,124
Investor Class(1,2,8)		17.00	%		6.44	%		7.63	%		20,617
A Class with sales charge (1,5,8)		11.69	%		5.46	%		7.12	%		19,680
A Class without Sales charge (1,5,8)		17.26	%		6.49	%		7.66	%		20,664
C Class with sales charge (1,6,8)		15.66	%		6.38	%		7.60	%		20,558
C Class without sales charge (1,6,8)		16.66	%		6.38	%		7.60	%		20,558
AMR Class (1,3,8)		17.59	%		6.88	%		7.98	%		21,291
JPMorgan Global High-Yield Index (7)		19.10	%		9.10	%		9.33	%		24,027
Lipper High Current Yield Funds Index (7)		18.67	%		6.76	%		6.68	%		18,885

1.	Performance shown is historical and may not be indicative of future returns. Please note that recent market performance has helped to produce short-term returns that are not typical and may not continue in the future. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. A portion of the fees charged to the Institutional Class of the Fund was waived through 2004. Performance prior to waiving fees was lower than the actual returns shown for periods through 2004.
2.	Fund performance for the since inception period represents the total returns achieved by the Institutional Class from 12/29/00 up to 3/1/02, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Investor Class been in existence since 12/29/00.
3.	Fund performance for the five-year and since inception periods represents the total returns achieved by the Institutional Class from 12/29/00 up to 9/4/07, the inception date of the AMR Class, and the returns of the AMR Class since its inception. Expenses of the AMR Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the AMR Class been in existence since 12/29/00.
4.	Fund performance for the one-year, five-year, and since inception periods represent the returns achieved by the Institutional Class from 12/29/00 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 12/29/00.
5.	Fund performance for the one-year, five-year, and since inception periods represent the returns achieved by the Institutional Class from 12/29/00 through 3/1/02, and the returns of the Investor Class from 3/1/02 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Institutional and Investor Classes. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 12/29/00. The maximum sales charge for A Class is 4.75%.
6.	Fund performance for the one-year, five-year, and since inception periods represent the returns achieved by the Institutional Class from 12/29/00 through 3/1/02, and the returns of the Investor Class from 3/1/02 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Institutional and Investor Classes. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 12/29/00. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.
7.	The JPMorgan Global High-Yield Index (“JPMorgan Index”) is an unmanaged index of fixed income securities with a maximum credit rating of BB+ or Ba1. Issues must be publicly registered or issued under Rule 144A under the Securities Act of 1933, with a minimum issue size of $75 million (par amount). A maximum of two issues per issuer are included in the JPMorgan Index. Convertible bonds, preferred stock, and floating-rate bonds are excluded from the JPMorgan Index. The Lipper High Current Yield Funds Index tracks the results of the 30 largest mutual funds in the Lipper High Current Yield Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.
8.	The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, C, and AMR Class shares was 0.80%, 0.90%, 1.02%, 1.12%, 2.05%, and

4

Performance Overview
American Beacon High Yield Bond Fund^SM
October 31, 2010 (Unaudited)

0.54%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

          The Fund underperformed the Index over the twelve-month period due to issue selection and allocation from a sector and credit quality perspective, as well as the Fund’s cash balances returning less than the Index.

          From a sector standpoint, issue selections in the Finance, Cable/Media, and Other Corporate sectors contributed to the Fund’s relative underperformance, despite positive contribution from selections in the Manufacturing and Utility sectors.

          From a sector allocation perspective, the Fund benefited from overweighting the Cable/Media sector (up 21.6%), but not enough to compensate for value lost through underweighting the Finance sector (up 26.1%) and overweighting the Other Corporate sector (up 12.7%).

          From a credit quality perspective, issue selections in the Below-C, B, and BBB-rated credit groups added value, but not enough to compensate for poor selections in the CCC-rated credit group.

          From a credit quality allocation perspective, underweighting the top-performing CC-rated credit group (up 51.2%) and overweighting the B-rated credit group (up 15.8%) contributed to the Fund’s relative underperformance, while overweighting the CCC-rated group (up 23.4%) contributed positively for the period.

          The sub-advisors’ “bottom-up”, research intensive investment process, which focuses on companies with strong cash flow and fundamental credit strength, remains in place.

Top Ten Holdings

	% of
	Net Assets
HCA, Inc., 9.625%, Due 11/15/2016		1.2	%
MacDermid, Inc., 9.500%, Due 4/15/2017		1.1	%
NewPage Corp., 11.375%, Due 12/31/2014		1.0	%
US Oncology, Inc., 6.428%, Due 3/15/2012		1.0	%
Ford Motor Credit Co. LLC, 6.625%, Due 8/15/2017		1.0	%
JBS USA LLC, 11.625%, Due 5/1/2014		0.9	%
Intelsat Jackson Holdings Ltd., 11.250%, Due 6/15/2016		0.9	%
CIT Group, Inc., 7.000%, Due 5/1/2017		0.9	%
Chesapeake Energy Corp., 6.625%, Due 8/15/2020		0.9	%
Enterprise Products Operating LLC, 7.034%, Due 1/15/2068		0.8	%

Sector Allocation

	% of Fixed
	Income
Corporate		99.4	%
Convertibles		0.6	%

5

Performance Overview
American Beacon Retirement Income and Appreciation Fund^SM
October 31, 2010 (Unaudited)

          The Y Class of the Retirement Income and Appreciation Fund returned 8.67% for the twelve months ended October 31, 2010. Its benchmark, a blend of 75% Barclays Capital Aggregate Index (“Barclays Index”) and 25% BofA Merrill Lynch All U.S. Convertibles Index (“ML Index”), returned 11.26%. The Fund’s peer group, the Lipper Intermediate Investment Grade Index, returned 10.99% for the same period.

Comparison of Change in Value of a $10,000 Investment
For the Period from 7/1/03* through 10/31/10

* Inception of Fund

										Value of
	Annualized Total Returns						Since			$10,000
	Periods Ended 10/31/10						Incep.			7/1/03-
	1 Year			5 Years			(7/1/03)			10/31/10
Investor Class(1,7)		8.60	%		6.15	%		5.04	%	$	14,345
Y Class(1,2,7)		8.67	%		6.17	%		5.05	%		14,355
A Class with sales Charge(1,3,7)		3.48	%		5.13	%		4.35	%		13,667
A Class without sales Charge(1,3,7)		8.63	%		6.16	%		5.04	%		14,350
C Class with sales Charge(1,4,7)		7.40	%		6.11	%		5.02	%		14,320
C Class without sales Charge(1,4,7)		8.40	%		6.11	%		5.02	%		14,320
Retirement Income and Appreciation Composite Index(6)		11.26	%		6.33	%		5.33	%		14,634
Barclays Capital Aggregate Index (5)		8.01	%		6.45	%		6.37	%		14,088
BofA Merrill Lynch All U.S. Convertibles Index (5)		3.18	%		4.70	%		N/A			15,639
Lipper Intermediate Investment Grade Index (5)		10.99	%		6.06	%		5.93	%		14,204

1.	Performance shown is historical and may not be indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares.
2.	Fund performance for the one-year, five-year, and since inception periods represent the returns achieved by the Investor Class from 7/1/03 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are lower than those of the Investor Class. As a result, total returns shown may be lower than they would have been had the Y Class been in existence since 7/1/03.
3.	Fund performance for the one-year, five-year, and since inception periods represent the returns achieved by the Investor Class from 7/1/03 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 7/1/03. The maximum sales charge for A Class is 4.75%.
4.	Fund performance for the one-year, five-year, and since inception periods represent the returns achieved by the Investor Class from 7/1/03 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 7/1/03. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.
5.	The Barclays Capital Aggregate Index represents returns of the Barclays Capital Gov./Credit Intermediate Index (“Intermediate Index”) up to October 31, 2006 and the Barclays Capital Aggregate Index (“Aggregate Index”) thereafter. The Intermediate Index is an unmanaged index of investment grade corporate and government debt issues with maturities between one and ten years. The Aggregate Index is a market value weighted index of government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. The BofA Merrill Lynch All U.S. Convertibles Index is an unmanaged index of domestic securities of all quality grades that are convertible into U.S. dollar-denominated common stock, ADRs or cash equivalents. The Lipper Intermediate Investment Grade Index tracks the results of the 30 largest mutual funds in the Lipper Intermediate Investment Grade Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.
6.	To reflect the Fund’s allocation of its assets between investment grade fixed-income securities and convertible securities, the returns of the Barclays Capital Aggregate Index and the BofA Merrill Lynch All U.S. Convertibles Index have been combined in a 75%/25% proportion.
7.	The total annual Fund operating expense ratios set forth in the most recent Fund prospectus for the Y, Investor, A, and C Class shares was 0.77%, 1.02%, 1.15%, and 1.90%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that is based on expenses incurred during the period covered by this report.

          The Fund’s assets have been allocated approximately 75% to American Beacon Advisors, Inc. (the “Manager”) which invests primarily in income producing, short- and intermediate-term investment grade bonds and 25% to a sub-advisor which invests in convertible bonds, convertible preferreds, high yield bonds, and equities in order to enhance the potential return of the Fund.

6

Performance Overview
American Beacon Retirement Income and Appreciation Fund^SM
October 31, 2010 (Unaudited)

          During the twelve-month period, the investment grade bond portion of the Fund returned 8.4% before expenses, compared to an 8.0% return for the Barclays Index. This portion of the Fund outperformed largely due to a substantial overweight position in Corporates, the second best performing sector in the Barclays Index.

          The remaining portion of the Fund, managed by the Fund’s sub-advisor, returned 12.7% before expenses. These results trailed the 20.8% return of the ML Index due to the sub-advisor’s high quality bias. Strong performance in the most speculative segment of the convertible market continued to define the most recent annual period, as the speculative grade portion of the ML Index posted a gain of 26.4%, dramatically outperforming the 10.1% return from the investment grade segment of the ML Index. The sub-advisor’s portion of the portfolio was invested in names with better balance sheets, lower debt levels, and higher cash flows. This portion of the portfolio was also hurt by stock selection in the Consumer Discretionary sector and underweighting this sector which was the best performing sector in the ML Index.

          The Manager and the Fund’s sub-advisor remain focused on the Fund’s investment objectives of generating income and capital appreciation.

Top Ten Holdings

	% of
	Net Assets
Federal National Mortgage Association, 4.500%, Due 1/1/2040		1.4	%
Federal Home Loan Mortgage Corporation, Pool # G08079, 5.000%, Due 9/1/2035		1.3	%
Federal National Mortgage Association, 4.000%, Due 9/1/2040		1.0	%
EMC Corp., 1.750%, Due 12/1/2013		1.0	%
General Electric Capital Corp., 0.450%, Due 1/8/2016		0.8	%
Federal National Mortgage Association, Pool # 745418, 5.500%, Due 4/1/2036		0.8	%
American Express Credit Account Master Trust, 5.350%, Due 1/15/2014		0.8	%
Federal Home Loan Mortgage Corporation, Pool # A73703, 5.000%, Due 3/1/2038		0.8	%
Citigroup, Inc., 8.500%, Due 5/22/2019		0.7	%
NetApp, Inc., 1.750%, Due 6/1/2013		0.7	%

Sector Allocation

	% of Fixed
	Income
Corporate		39.7	%
U.S. TIPS		22.1	%
Convertibles		14.2	%
U.S. Agency Mortgage-Backed Obligations		12.0	%
Asset-Backed		5.4	%
Mortgage-Backed		3.1	%
Commercial Mortgage-Backed Securities		2.6	%
Agency		0.4	%
Other Government		0.3	%
Municipal Obligations		0.2	%

Sector Allocation

	% of
	Equities
Information Technology		22.1	%
Financials		19.1	%
Energy		16.2	%
Consumer Discretionary		12.5	%
Industrials		10.4	%
Materials		7.9	%
Health Care		6.8	%
Consumer Staples		5.0	%

7

Performance Overview
American Beacon Intermediate Bond Fund^SM
October 31, 2010 (Unaudited)

          The Institutional Class of the Intermediate Bond Fund returned 7.56% for the twelve months ended October 31, 2010, underperforming the Barclays Capital Aggregate Index (the “Index”) return of 8.01% and the Lipper Intermediate Investment Grade Index return of 10.99% for the same period.

Comparison of Change in Value of a $10,000 Investment
For the Period from 10/31/00 through 10/31/10

										Value of
	Annualized Total Returns									$10,000
	Periods Ended 10/31/10									10/31/00-
	1 Year			5 Years			10 Years			10/31/10
Institutional Class(1,7)		7.56	%		6.72	%		6.35	%	$	18,513
Y Class(1,3,7)		7.41	%		6.69	%		6.34	%		18,488
Investor Class (1,2,7)		7.01	%		6.53	%		6.26	%		18,353
A Class with sales Charge(1,4,7)		1.82	%		5.47	%		5.73	%		17,451
A Class without sales Charge(1,4,7)		6.87	%		6.51	%		6.25	%		18,330
C Class with sales Charge(1,5,7)		5.87	%		6.50	%		6.25	%		18,329
C Class without sales Charge(1,5,7)		6.87	%		6.50	%		6.25	%		18,329
Barclays Capital Agg. Index (6)		8.01	%		6.45	%		6.38	%		18,561
Lipper Intermediate Inv. Grade Index (6)		10.99	%		6.06	%		6.11	%		18,093

1.	Performance shown is historical and may not be indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Performance shown reflects the Fund’s receipt in December 2006 and March 2008 of class action proceeds that were related to investment activity in 2002. The Fund’s performance was higher than it would have been absent receipt of the settlement proceeds.
2.	Fund performance represents the total returns achieved by the Institutional Class up to 3/2/09, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Investor Class been in existence since 10/31/00.
3.	Fund performance for the one-year, five-year, and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/00 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/00.
4.	Fund performance for the one-year, five-year, and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/00 through 3/2/09, the Investor Class from 3/2/09 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Institutional and Investor Classes. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/00. The maximum sales charge for A Class is 4.75%.
5.	Fund performance for the one-year, five-year, and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/00 through 3/2/09, the Investor Class from 3/2/09 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Institutional and Investor Classes. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/00. The maximum contingent deferred sales charge is 1.00% for shares redeemed within one year of the date of purchase.
6.	The Barclays Capital Aggregate Index is a market value weighted index of government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. The Lipper Intermediate Investment Grade Index tracks the results of the 30 largest mutual funds in the Lipper Intermediate Investment Grade Funds category. Lipper is an independent research and ranking service. One cannot directly invest in an index.
7.	The total annual Fund operating expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, and C Class shares was 0.33%, 0.71%, 1.23%, 1.08%, and 1.83%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that is based on expenses incurred during the period covered by this report.

          Prior to the deduction of expenses, the Fund outperformed the Index. However, the Fund did not generate enough excess performance to offset expenses. Gross of Fund expenses, the Fund added value relative to the Index entirely through sector allocation as security selection detracted from performance. An overweight in Corporates, the second best performing sector in the Index, accounted for the majority of the excess performance. Among the Fund’s corporate bond holdings, the lower rated issuers (A1 to Baa3) were the largest contributors. Underweight positions in Mortgage Pass-Throughs, Agencies and U.S. Treasuries also generated positive returns relative to the Index.

8

Performance Overview
American Beacon Intermediate Bond Fund^SM
October 31, 2010 (Unaudited)

          The Fund’s investment managers remain focused on a conservative approach toward investing in the bond market, focusing on issuer-specific opportunities to add value.

Top Ten Holdings

	% of
	Net Assets
Federal Home Loan Mortgage Corporation, 5.000%, Due 4/1/2040		1.7	%
Federal National Mortgage Association, 5.000%, Due 4/1/2025		1.4	%
Federal National Mortgage Association, 4.500%, Due 6/1/2025		1.4	%
Federal National Mortgage Association, 4.500%, Due 1/1/2040		1.3	%
Federal National Mortgage Association, 5.500%, Due 6/1/2040		1.2	%
Federal National Mortgage Association, 5.000%, Due 5/1/2040		1.2	%
Federal Home Loan Mortgage Corporation, Pool # A73703, 5.000%, Due 3/1/2038		1.1	%
Federal Home Loan Mortgage Corporation, 5.500%, Due 5/1/2038		0.9	%
Federal National Mortgage Association, 4.000%, Due 9/1/2040		0.8	%

Sector Allocation

	% of Fixed
	Income
Corporate		39.4	%
U.S. TIPS		26.3	%
U.S. Agency Mortgage-Backed Obligations		21.2	%
Mortgage-Backed		5.6	%
Asset-Backed		3.5	%
Commercial Mortgage-Backed Securities		3.4	%
Agency		0.4	%
Municipal Obligations		0.1	%
Other Government		0.1	%

9

Performance Overview
American Beacon Short-Term Bond Fund^SM

October 31, 2010 (Unaudited)

          The Institutional Class of the Short-Term Bond Fund returned 3.78% for the twelve months ended October 31, 2010, which outperformed the BofA Merrill Lynch 1-3 Year Gov/Corp Index (“Index”) return of 3.18% but underperformed the Lipper Short Investment Grade Bond Funds Index (“Lipper”) return of 5.43%.

Comparison of Change in Value of a $10,000 Investment
For the Period from 10/31/00 through 10/31/10

										Value of
	Annualized Total Returns									$10,000
	Periods Ended 10/31/10									10/31/00-
	1 Year			5 Years			10 Years			10/31/10
Institutional Class(1,6)		3.78	%		4.53	%		4.43	%	$	15,419
Y Class(1,2,6)		3.75	%		4.53	%		4.42	%		15,414
Investor Class(1,6)		3.33	%		4.05	%		3.95	%		14,727
A Class with sales Charge(1,3,6)		0.73	%		3.54	%		3.68	%		14,356
A Class without sales Charge(1,3,6)		3.35	%		4.05	%		3.95	%		14,730
C Class with sales Charge(1,4,6)		2.28	%		4.04	%		3.94	%		14,720
C Class without sales Charge(1,4,6)		3.28	%		4.04	%		3.94	%		14,720
Lipper Short Inv. Grade Index (2)		5.43	%		3.99	%		3.89	%		14,643
BofA Merrill Lynch 1-3Yr. Gov./Corp Index(2)		3.18	%		4.70	%		4.54	%		15,585

1.	Performance shown is historical and may not be indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. A portion of the fees charged to the Investor Class of the Fund has been waived. Performance prior to waiving fees was lower than the actual returns shown. Performance shown reflects the Fund’s receipt in December 2006 and March 2008 of class action proceeds that were related to investment activity in 2002. The Fund’s performance was higher than it would have been absent receipt of the settlement proceeds.
2.	Fund performance for the one-year, five-year, and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/00 through 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 10/31/00.
3.	Fund performance for the one-year, five-year, and ten-year periods represent the total returns achieved by the Investor Class from 10/31/00 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/00. The maximum sales charge for A Class is 2.50%.
4.	Fund performance for the one-year, five-year, and ten-year periods represent the total returns achieved by the Investor Class from 10/31/00 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/00. The maximum contingent deferred sales charge is 1.00% for shares redeemed within one year of the date of purchase.
5.	The BofA Merrill Lynch 1-3 Yr. Gov./Corp. Index is a market value weighted performance benchmark for government and corporate fixed-rate debt securities with maturities between one and three years. The Lipper Short Investment Grade Bond Funds Index tracks the results of the 30 largest mutual funds in the Lipper Short Investment Grade Bond Funds category. Lipper is an independent mutual fund research and ranking service. One cannot directly invest in an index.
6.	The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, and C Class shares was 0.33%, 0.73%, 0.85%, 1.08%, and 1.83%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

          As compared to the Index, the Fund outperformed due to its overweight positions in the Corporate and Asset-Backed sectors. These sectors outperformed Treasuries and Agencies during the period as the credit markets continued to recover following the gradually improving economy. The Fund generally maintains overweight positions in these sectors to generate incremental yield-to-maturity compared to the Index.

          The Fund’s duration was shorter than that of the Index during the period in response to the ultra-low interest rate environment. The Fund’s short duration resulted in a slightly lower total return than would have been the case with a neutral duration. While we do not expect the Federal Reserve Bank to raise interest rates soon, we do want to protect the Fund from an ultimate rise in rates that will inevitably accompany an

10

Performance Overview
American Beacon Short-Term Bond Fund^SM

October 31, 2010 (Unaudited)

economic recovery. In the mean time, we intend to opportunistically add duration to the Fund to keep it within approximately 20% of Index duration until the Fed rate hikes become more imminent.

          Despite the recent volatility in Europe and the sluggish U.S. recovery, the credit markets performed well during the period as corporate profitability improved and as investors sought higher yields. The backdrop for the improvement, however, is fragile given the weak state of the U.S. housing market and uncertainty in international capital markets. Although the Fund does not invest in obligations of the affected countries, investor sentiment in general is difficult to anticipate, and a broader tilt towards risk aversion may adversely affect the U.S. credit markets.

          As such, while we look for opportunity to generate attractive results in this environment, we will maintain our conservative approach towards credit risk and seek to outperform over the long term on a risk-adjusted basis.

Top Ten Holdings

	% of
	Net Assets
Government National Mortgage Association, 3.069%, Due 6/16/2036		2.0	%
Dexia Credit Local N.Y., 0.693%, Due 3/5/2013		1.9	%
John Deere Owner Trust, 0.720%, Due 7/16/2012		1.9	%
JPMorgan Chase & Co., 0.902%, Due 2/26/2013		1.9	%
Chrysler Financial Lease Trust, 1.780%, Due 6/15/2011		1.7	%
Citigroup, Inc., 0.558%, Due 11/5/2014		1.6	%
Goldman Sachs Group, Inc., 4.750%, Due 7/15/2013		1.4	%
MBNA Corp., 7.500%, Due 3/15/2012		1.4	%
Progress Energy, Inc., 7.100%, Due 3/1/2011		1.4	%
Credit Suisse First Boston, 5.000%, Due 5/15/2013		1.4	%

Sector Allocation

	% of Fixed
	Income
Corporate		52.8	%
Asset-Backed		23.9	%
U.S. TIPS		12.1	%
U.S. Agency Mortgage-Backed Obligations		7.0	%
Commercial Mortgage-Backed Securities		4.0	%
Municipal Obligations		0.2	%

11

Fund Expenses
American Beacon Funds

October 31, 2010 (Unaudited)

Fund Expense Example

          As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees if applicable, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in a particular Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from May 1, 2010 through October 31, 2010.

Actual Expenses

          The following tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the “Expenses Paid During Period” for the applicable Fund to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in a Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

	High Yield			Intermediate			Short-Term
Institutional Class	Bond Fund			Bond Fund			Bond Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,060.58		$	1,051.29		$	1,021.11
Expenses Paid During Period 5/1/10-10/31/10 *	$	4.16		$	1.65		$	1.58
Annualized Expense Ratio		0.80	%		0.32	%		0.31	%

				Retirement
				Income and
	High Yield			Appreciation			Intermediate			Short-Term
Y Class	Bond Fund			Fund			Bond Fund			Bond Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,060.36		$	1,051.20		$	1,048.87		$	1,017.73
Expenses Paid During Period 5/1/10-10/31/10 *	$	5.50		$	5.53		$	4.08		$	3.76
Annualized Expense Ratio		1.06	%		1.07	%		0.79	%		0.74	%

				Retirement
				Income and
	High Yield			Appreciation			Intermediate			Short-Term
Investor Class	Bond Fund			Fund			Bond Fund			Bond Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,060.36		$	1,051.20		$	1,048.87		$	1,017.73
Expenses Paid During Period 5/1/10-10/31/10 *	$	5.50		$	5.53		$	4.08		$	3.76
Annualized Expense Ratio		1.06	%		1.07	%		0.79	%		0.74	%

										Retirement
										Income and
	High Yield			Intermediate			Short-Term			Appreciation
A Class**	Bond Fund			Bond Fund			Bond Fund			Fund
Beginning Account Value 5/17/10	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,086.59		$	1,043.07		$	1,017.79		$	1,055.15
Expenses Paid During Period 5/17/10-10/31/10 *	$	5.35		$	4.44		$	3.74		$	5.36
Annualized Expense Ratio		1.12	%		0.95	%		0.81	%		1.14	%

										Retirement
										Income and
	High Yield			Intermediate			Short-Term			Appreciation
C Class**	Bond Fund			Bond Fund			Bond Fund			Fund
Beginning Account Value 9/1/10	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,053.27		$	1,005.57		$	1,004.78		$	1,021.02
Expenses Paid During Period 9/1/10-10/31/10 *	$	3.16		$	2.87		$	2.64		$	3.87
Annualized Expense Ratio		1.87	%		1.74	%		1.60	%		2.33	%

12

Fund Expenses
American Beacon Funds

October 31, 2010 (Unaudited)

	High Yield
AMR Class	Bond Fund
Beginning Account Value 5/1/10	$	1,000.00
Ending Account Value 10/31/2010	$	1,063.10
Expenses Paid During Period 5/1/10-10/31/10 *	$	2.86
Annualized Expense Ratio		0.55	%

Hypothetical Example for Comparison Purposes

          The following tables provide information about hypothetical account values and hypothetical expenses based on a Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in a particular Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in a Fund through an IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

          You should also be aware that the expenses shown in the table highlight only your ongoing costs and do not reflect any transaction costs charged by a Fund, such as redemption fees as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the following tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.

	High Yield			Intermediate			Short-Term
Institutional Class	Bond Fund			Bond Fund			Bond Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,021.17		$	1,023.59		$	1,023.64
Expenses Paid During Period 5/1/10-10/31/10 *	$	4.08		$	1.63		$	1.58
Annualized Expense Ratio		0.80	%		0.32	%		0.31	%

				Retirement
				Income and
	High Yield			Appreciation			Intermediate			Short-Term
Y Class	Bond Fund			Fund			Bond Fund			Bond Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,019.86		$	1,019.81		$	1,021.22		$	1,021.48
Expenses Paid During Period 5/1/10-10/31/10 *	$	5.40		$	5.45		$	4.02		$	3.77
Annualized Expense Ratio		1.06	%		1.07	%		0.79	%		0.74	%

				Retirement
				Income and
	High Yield			Appreciation			Intermediate			Short-Term
Investor Class	Bond Fund			Fund			Bond Fund			Bond Fund
Beginning Account Value 5/1/10	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,019.86		$	1,019.81		$	1,021.22		$	1,021.48
Expenses Paid During Period 5/1/10-10/31/10 *	$	5.40		$	5.45		$	4.02		$	3.77
Annualized Expense Ratio		1.06	%		1.07	%		0.79	%		0.74	%

										Retirement
										Income and
	High Yield			Intermediate			Short-Term			Appreciation
A Class**	Bond Fund			Bond Fund			Bond Fund			Fund
Beginning Account Value 5/17/10	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,019.56		$	1,020.42		$	1,021.12		$	1,019.46
Expenses Paid During Period 5/17/10-10/31/10 *	$	5.70		$	4.84		$	4.13		$	5.80
Annualized Expense Ratio		1.12	%		0.95	%		0.81	%		1.14	%

13

Fund Expenses
American Beacon Funds

October 31, 2010 (Unaudited)

										Retirement
										Income and
	High Yield			Intermediate			Short-Term			Appreciation
C Class**	Bond Fund			Bond Fund			Bond Fund			Fund
Beginning Account Value 9/1/10	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/10	$	1,015.78		$	1,016.43		$	1,017.14		$	1,013.46
Expenses Paid During Period 9/1/10-10/31/10 *	$	9.50		$	8.84		$	8.13		$	11.82
Annualized Expense Ratio		1.87	%		1.74	%		1.60	%		2.33	%

	High Yield
AMR Class	Bond Fund
Beginning Account Value 5/1/10	$	1,000.00
Ending Account Value 10/31/10	$	1,022.43
Expenses Paid During Period 5/1/10-10/31/10 *	$	2.80
Annualized Expense Ratio		0.55	%

*	Expenses are equal to the Fund’s annualized expense ratios for the six-month period multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half year period.
**	Beginning account value is the Fund inception. Expenses are equal to the Fund’s expense ratio, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the period (168 and 61) for the A and C Classes, respectively, by the days in the year (365).

14

American Beacon Funds
Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of American Beacon High Yield Bond Fund, American Beacon Intermediate Bond Fund, American Beacon Retirement Income and Appreciation Fund, and American Beacon Short-Term Bond Fund:

We have audited the accompanying statements of assets and liabilities, including the schedule of investments, of the American Beacon High Yield Bond Fund, the American Beacon Intermediate Bond Fund, the American Beacon Retirement Income and Appreciation Fund, and the American Beacon Short-Term Bond Fund (four of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2010, 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 periods indicated therein. These financial statements and financial highlights are the responsibility of the Funds’ management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Funds’ 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 each Fund’s 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 October 31, 2010, by correspondence with the custodian and brokers or by other appropriate auditing procedures where replies from brokers 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 the American Beacon High Yield Bond Fund, the American Beacon Intermediate Bond Fund, the American Beacon Retirement Income and Appreciation Fund, and the American Beacon Short-Term Bond Fund at October 31, 2010, 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 periods indicated therein, in conformity with U.S. generally accepted accounting principles.

Dallas, Texas
December 23, 2010

15

American Beacon High Yield Bond Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
COMMON STOCK — 0.17%
COMMUNICATIONS — 0.17%
Communications — 0.08%
Charter Communications, Inc.* †		9,435		151
				151
Media — 0.09%
Dex One Corp.*		23,761		166
SuperMedia, Inc.*		1,037		7
				173
Total Communications				324
Total Common Stock (Cost $1,828)				324
PREFERRED STOCK — 0.17%
FINANCIALS — 0.17%
Diversified Financials — 0.00%
Federal Home Loan Mortgage Corp.*		10,000		5
Finance — 0.17%
Ally Financial, Inc.‡		359		319
Total Financials				324
Total Preferred Stock (Cost $253)				324
CORPORATE OBLIGATION — 94.80%
Casino/Gaming — 0.00%
Fontainebleau Las Vegas Holdings LLC, 10.25%, Due 6/15/2015‡ #		1,800		5
Station Casinos, Inc.,
6.875%, Due 3/1/2016 #		500		0
7.75%, Due 8/15/2016 #		500		0
				5
Consumer — 6.56%
Alliance One International, Inc., 10.00%, Due 7/15/2016		400		440
Central Garden and Pet Co., 8.25%, Due 3/1/2018		445		467
Diversey Holdings, Inc., 10.50%, Due 5/15/2020		800		930
Dole Food Co, Inc., 13.875%, Due 3/15/2014		115		142
Easton-Bell Sports, Inc., 9.75%, Due 12/1/2016		705		772
Fage Dairy Industries, 9.875%, Due 2/1/2020‡		815		780
Jarden Corp., 7.50%, Due 5/1/2017		800		851
JBS Finance II Ltd., 8.25%, Due 1/29/2018‡		265		280
JBS USA LLC, 11.625%, Due 5/1/2014		1,400		1,654
Michael Foods, Inc., 9.75%, Due 7/15/2018‡		525		572
NBTY, Inc., 9.00%, Due 10/1/2018‡		425		452
Pinnacle Foods Finance LLC,
9.25%, Due 4/1/2015‡		800		843
10.625%, Due 4/1/2017		175		190
Pinnacle Foods Finance LLC / Pinnacle Foods Finance Corp., 8.25%, Due 9/1/2017‡		400		418
Prestige Brands, Inc., 8.25%, Due 4/1/2018		630		657

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Simmons Foods, Inc., 10.50%, Due 11/1/2017‡		750		750
Spectrum Brands Holdings, Inc., 9.50%, Due 6/15/2018‡		525		583
Visant Corp., 10.00%, Due 10/1/2017‡		1,320		1,406
				12,187
Energy — 15.38%
Antero Resources Finance Corp., 9.375%, Due 12/1/2017		700		744
Berry Petroleum Co.,
10.25%, Due 6/1/2014		397		458
6.75%, Due 11/1/2020		415		428
BreitBurn Energy Partners LP, 8.625%, Due 10/15/2020‡		400		404
Brigham Exploration Co., 8.75%, Due 10/1/2018‡		700		756
Carrizo Oil & Gas, Inc., 8.625%, Due 10/15/2018‡		705		714
Chaparral Energy, Inc., 9.875%, Due 10/1/2020‡		600		632
CHC Helicopter SA, 9.25%, Due 10/15/2020‡		1,360		1,420
Chesapeake Energy Corp., 6.625%, Due 8/15/2020		1,575		1,667
Cie Generale de Geophysique-Veritas,
7.50%, Due 5/15/2015		500		516
9.50%, Due 5/15/2016		400		442
Coffeyville Resources LLC,
9.00%, Due 4/1/2015‡		485		520
10.875%, Due 4/1/2017‡		385		410
Compton Petroleum Finance Corp., 10.00%, Due 9/15/2017		522		446
Copano Energy LLC, 8.125%, Due 3/1/2016		800		826
Crosstex Energy LP, 8.875%, Due 2/15/2018		500		540
El Paso Corp., 7.00%, Due 6/15/2017		1,000		1,090
Energy Transfer Equity LP, 7.50%, Due 10/15/2020		975		1,063
Enterprise Products Operating LLC, 7.034%, Due 1/15/2068		1,510		1,558
Harvest Operations Corp., 6.875%, Due 10/1/2017‡		295		310
Helix Energy Solutions Group, Inc., 9.50%, Due 1/15/2016‡		480		497
Hilcorp Energy, 8.00%, Due 2/15/2020‡		500		528
Holly Corp., 9.875%, Due 6/15/2017		300		329
Inergy LP/Inergy Finance Corp., 7.00%, Due 10/1/2018‡		535		559
Linn Energy LLC, 8.625%, Due 4/15/2020‡		900		972
Linn Energy LLC/Linn Energy Finance Corp., 7.75%, Due 2/1/2021‡		970		1,002
MarkWest Energy Partners LP, 8.75%, Due 4/15/2018		560		615
MarkWest Energy Partners LP / MarkWest Energy Finance Corp., 6.75%, Due 11/1/2020		500		511
Martin Midstream Partners & Finance, 8.875%, Due 4/1/2018‡		945		983
Offshore Group Investments Ltd., 11.50%, Due 8/1/2015‡		500		530
OPTI Canada, Inc.,
9.75%, Due 8/15/2013‡		1,000		1,020

See accompanying notes

16

American Beacon High Yield Bond Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
8.25%, Due 12/15/2014		800		606
Petrohawk Energy Corp.,
10.50%, Due 8/1/2014		900		1,028
7.25%, Due 8/15/2018		565		586
Plains Exploration & Production Co., 10.00%, Due 3/1/2016		900		1,027
Quicksilver Resources, Inc.,
8.25%, Due 8/1/2015		400		407
9.125%, Due 8/15/2019		500		534
Regency Energy Partners LP/Regency
Energy Finance Corp.,
9.375%, Due 6/1/2016		635		711
6.875%, Due 12/1/2018		145		152
SandRidge Energy, Inc.,
9.875%, Due 5/15/2016‡		100		107
8.00%, Due 6/1/2018‡		900		900
				28,548
Finance — 9.56%
Alliant Holdings I, Inc., 11.00%, Due 5/1/2015‡		850		894
Ally Financial, Inc.,
6.875%, Due 8/28/2012		1,000		1,050
8.00%, Due 12/31/2018		400		414
7.50%, Due 9/15/2020‡		550		594
8.00%, Due 11/1/2031		725		792
Bank of America Corp., 8.125%, Due 12/29/2049		1,000		1,009
Bank One Capital III, 8.75%, Due 9/1/2030		420		493
CEDC Finance Corp International, Inc., 9.125%, Due 12/1/2016‡		1,175		1,269
CIT Group, Inc., 7.00%, Due 5/1/2017		1,700		1,691
Columbus International, Inc., 11.50%, Due 11/20/2014‡		460		516
E*Trade Financial Corp., 12.50%, Due 11/30/2017		650		752
Expro Finance Luxembourg SCA, 8.50%, Due 12/15/2016‡		900		887
HUB International Holdings, Inc., 10.25%, Due 6/15/2015‡		825		827
International Lease Finance Corp.,
5.65%, Due 6/1/2014		1,100		1,100
6.75%, Due 9/1/2016‡		400		436
Liberty Mutual Group, Inc., 10.75%, Due 6/15/2058‡ §		735		911
Marsico Parent Co. LLC,
10.625%, Due 1/15/2016‡		800		480
12.50%, Due 7/15/2016‡		658		33
MBNA Capital A, 8.278%, Due 12/1/2026		625		638
Midwest Gaming Borrower LLC, 11.625%, Due 4/15/2016‡		800		820
Nationwide Mutual Insurance Co., 9.375%, Due 8/15/2039‡		500		586
Navios Maritime Acquisition Corp/Navios Acquisition Finance US, Inc., 8.625%, Due 11/1/2017‡		350		354
Pinafore LLC/Pinafore, Inc., 9.00%, Due 10/1/2018‡		100		107
Reliance Intermediate Holdings LP, 9.50%, Due 12/15/2019‡		820		871
Sabra Health Care LP/Sabra Capital Corp., 8.125%, Due 11/1/2018‡		225		233

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
				17,757
Manufacturing — 21.37%
Accuride Corp., 9.50%, Due 8/1/2018‡		900		981
Advanced Micro Devices, Inc.,
8.125%, Due 12/15/2017		200		216
7.75%, Due 8/1/2020‡		100		106
Allison Transmission, Inc., 11.00%, Due 11/1/2015‡		800		868
American Axle & Manufacturing Holdings, Inc., 5.25%, Due 2/11/2014		485		472
ArvinMeritor, Inc., 10.625%, Due 3/15/2018		500		568
Building Materials Corp. of America,
6.875%, Due 8/15/2018‡		300		300
7.50%, Due 3/15/2020‡		400		409
Case New Holland, Inc., 7.875%, Due 12/1/2017‡		420		469
Catalyst Paper Corp., 11.00%, Due 12/15/2016‡		375		337
Cleaver-Brooks, Inc., 12.25%, Due 5/1/2016‡		390		410
Colt Defense LLC, 8.75%, Due 11/15/2017‡		730		548
Consol Energy, Inc.,
8.00%, Due 4/1/2017‡		770		843
8.25%, Due 4/1/2020‡		365		407
CPG International I, Inc., 7.501%, Due 7/1/2012§		460		460
DynCorp International, Inc., 10.375%, Due 7/1/2017‡		445		455
EVERTEC, Inc., 11.00%, Due 10/1/2018‡		650		654
First Data Corp.,
9.875%, Due 9/24/2015		500		423
10.55%, Due 9/24/2015		1,020		862
FMG Resources August 2006 Pty Ltd., 7.00%, Due 11/1/2015‡		300		308
Ford Motor Credit Co. LLC,
6.625%, Due 8/15/2017		1,705		1,906
8.125%, Due 1/15/2020		900		1,101
Freescale Semiconductor, Inc.,
8.875%, Due 12/15/2014		500		509
10.75%, Due 8/1/2020‡		1,000		1,038
Goodman Global Group, Inc., %, Due 12/15/2014		285		183
Goodyear Tire & Rubber Co., 8.25%, Due 8/15/2020		800		852
Grupo Papelero Scribe SA, 8.875%, Due 4/7/2020‡		315		317
Hillman Group, Inc., 10.875%, Due 6/1/2018‡		315		337
Huntsman International LLC,
7.875%, Due 11/15/2014		800		836
8.625%, Due 3/15/2021‡		100		110
Idearc, Inc., Due 11/15/2016#		1,314		0
Ineos Finance PLC, 9.00%, Due 5/15/2015‡		200		212
Ineos Group Holdings plc, 8.50%, Due 2/15/2016‡		600		546
International Coal Group, Inc., 9.125%, Due 4/1/2018		430		469
KB Home,
6.25%, Due 6/15/2015		400		386
9.10%, Due 9/15/2017		400		416

See accompanying notes

17

American Beacon High Yield Bond Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
M/I Homes, Inc., 8.625%, Due 11/15/2018‡		500		500
MacDermid, Inc., 9.50%, Due 4/15/2017‡		1,825		1,947
Manitowoc Co., Inc., 9.50%, Due 2/15/2018		700		753
Meritage Homes Corp., 6.25%, Due 3/15/2015		425		427
Momentive Performance Materials, Inc.,
9.75%, Due 12/1/2014		405		426
9.00%, Due 1/15/2021‡		715		742
Motors Liquidation Co., 8.375%, Due 7/15/2033 #		1,570		565
Mueller Water Products, Inc., 8.75%, Due 9/1/2020‡		450		488
NewPage Corp., 11.375%, Due 12/31/2014		1,950		1,871
Norske Skogindustrier ASA, 6.125%, Due 10/15/2015‡		1,450		1,110
Novelis, Inc., 7.25%, Due 2/15/2015		500		516
NXP BV / NXP Funding LLC, 9.75%, Due 8/1/2018‡		200		218
Omnova Solutions, Inc., 7.875%, Due 11/1/2018‡		200		205
Oshkosh Corp., 8.50%, Due 3/1/2020		410		454
Peabody Energy Corp., 7.375%, Due 11/1/2016		800		906
Quiksilver, Inc., 6.875%, Due 4/15/2015		605		590
RBS Global, Inc. / Rexnord LLC, 8.50%, Due 5/1/2018		900		945
Reynolds Group, 8.50%, Due 5/15/2018‡		900		920
Reynolds Group Issuer Inc / Reynolds Group Issuer LLC / Reynolds Group Issuer Lu, 9.00%, Due 4/15/2019‡		1,100		1,143
Ryerson, Inc., 12.00%, Due 11/1/2015		420		437
Sanmina-SCI Corp., 8.125%, Due 3/1/2016		900		925
Solo Cup Co., 8.50%, Due 2/15/2014		1,700		1,529
Standard Pacific Corp., 8.375%, Due 5/15/2018		200		207
Stratus Technologies, Inc., 12.00%, Due 3/29/2015‡		425		357
SunGard Data Systems, Inc., 10.25%, Due 8/15/2015		100		105
The Manitowoc Co Inc, 8.50%, Due 11/1/2020		100		104
Titan International, Inc., 7.875%, Due 10/1/2017‡		440		458
TriMas Corp., 9.75%, Due 12/15/2017‡		200		218
TRW Automotive, Inc., 8.875%, Due 12/1/2017‡		325		361
Tutor Perini Corp., 7.625%, Due 11/1/2018‡		440		447
USG Corp., 9.75%, Due 8/1/2014‡		460		481
				39,669
Service — 20.92%
Aquilex Holdings LLC/Aquilex Finance Corp., 11.125%, Due 12/15/2016		220		210
Brickman Group Holdings, Inc., 9.125%, Due 11/1/2018‡		435		448
Casella Waste Systems, Inc., 9.75%, Due 2/1/2013		900		906

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
CEVA Group plc,
11.625%, Due 10/1/2016‡		100		108
11.50%, Due 4/1/2018‡		700		746
CKE Restaurants, Inc., 11.375%, Due 7/15/2018‡		800		863
Clean Harbors, Inc., 7.625%, Due 8/15/2016		325		343
CRC Health Corp., 10.75%, Due 2/1/2016		925		919
DaVita, Inc.,
6.375%, Due 11/1/2018		300		307
6.625%, Due 11/1/2020		200		206
DineEquity, Inc., 9.50%, Due 10/30/2018‡		375		399
DJO Finance LLC / DJO Finance Corp., 9.75%, Due 10/15/2017‡		475		494
Energy Solutions, Inc., 10.75%, Due 8/15/2018‡		505		552
Games Merger Corp., 11.00%, Due 6/1/2018‡		600		666
Harrah’s Operating Co., Inc.,
5.625%, Due 6/1/2015		1,000		745
11.25%, Due 6/1/2017		1,200		1,326
HCA, Inc., 9.625%, Due 11/15/2016**		2,000		2,174
Hertz Corp., 7.50%, Due 10/15/2018‡		400		412
Interactive Data Corp., 10.25%, Due 8/1/2018‡		650		709
inVentiv Health, Inc., 10.00%, Due 8/15/2018‡		300		302
Liberty Tire Recycling, 11.00%, Due 10/1/2016‡		455		474
Live Nation Entertainment, Inc., 8.125%, Due 5/15/2018‡		830		855
Mandalay Resort Group, 7.625%, Due 7/15/2013		350		326
Marina District Finance Co., Inc.,
9.50%, Due 10/15/2015‡		200		197
9.875%, Due 8/15/2018‡		1,350		1,333
MGM Resorts International,
6.75%, Due 9/1/2012		325		321
6.625%, Due 7/15/2015		1,500		1,314
10.00%, Due 11/1/2016‡		600		588
Michaels Stores, Inc., 7.75%, Due 11/1/2018‡		800		792
MultiPlan, Inc., 9.875%, Due 9/1/2018‡		250		268
Mylan, Inc., 7.875%, Due 7/15/2020‡		975		1,087
NCL Corp Ltd., 11.75%, Due 11/15/2016		600		694
Neiman Marcus Group, Inc., 10.375%, Due 10/15/2015		435		459
Nielsen Finance LLC, Zero Coupon%, Due 8/1/2016§		680		693
NPC International, Inc., 9.50%, Due 5/1/2014		625		647
OnCure Holdings, Inc., 11.75%, Due 5/15/2017‡		850		782
PharmaNet Development Group, Inc., 10.875%, Due 4/15/2017‡		400		416
Pinnacle Entertainment, Inc., 7.50%, Due 6/15/2015		800		796
Pokagon Gaming Authority, 10.375%, Due 6/15/2014‡		800		832
QVC, Inc., 7.50%, Due 10/1/2019‡		640		688
Regal Entertainment Group, 9.125%, Due 8/15/2018		190		202

See accompanying notes

18

American Beacon High Yield Bond Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Rite Aid Corp., 9.75%, Due 6/12/2016		1,355		1,469
RITE AID Corp., 8.00%, Due 8/15/2020‡		100		103
Sally Holdings LLC, 10.50%, Due 11/15/2016		350		384
Shingle Springs Tribal Gaming Authority, 9.375%, Due 6/15/2015‡		600		408
Sitel LLC, 11.50%, Due 4/1/2018‡		500		404
Speedway Motorsports, Inc., 8.75%, Due 6/1/2016		225		245
Starwood Hotels & Resorts Worldwide, Inc.,
6.75%, Due 5/15/2018		800		886
7.15%, Due 12/1/2019		250		282
Tenet Healthcare Corp., 10.00%, Due 5/1/2018		900		1,044
Ticketmaster Entertainment, Inc., 10.75%, Due 8/1/2016		700		775
Trans Union LLC, 11.375%, Due 6/15/2018‡		300		346
UHS Escrow Corp., 7.00%, Due 10/1/2018‡		1,100		1,161
United Rentals North America, Inc., 8.375%, Due 9/15/2020		570		579
United Surgical Partners International, Inc., 9.25%, Due 5/1/2017**		800		846
US Oncology, Inc., 6.428%, Due 3/15/2012§ **		1,923		1,874
WCA Waste Corp., 9.25%, Due 6/15/2014		650		673
Yonkers Racing Corp., 11.375%, Due 7/15/2016‡		700		767
				38,845
Telecommunications — 15.81%
Abengoa Finance SAU, 8.875%, Due 11/1/2017‡		1,295		1,276
AES Corp., 9.75%, Due 4/15/2016		50		58
Cablevision Systems Corp., 8.625%, Due 9/15/2017		500		564
Calpine Corp.,
7.875%, Due 7/31/2020‡		300		314
7.50%, Due 2/15/2021‡		600		614
CCH II Holdings LLC, 13.50%, Due 11/30/2016		1,057		1,265
CCO Holdings LLC / CCO Holdings Capital Corp., 7.25%, Due 10/30/2017‡		300		310
Cengage Learning Acquisitions, Inc., 10.50%, Due 1/15/2015‡		525		543
Clear Channel Worldwide, 9.25%, Due 12/15/2017		110		119
Clear Channel Worldwide Holdings, Inc., 9.25%, Due 12/15/2017		700		765
Clearwire Communications LLC, 12.00%, Due 12/1/2015‡		35		39
Clearwire Communications LLC/Clearwire Finance, Inc., 12.00%, Due 12/1/2015‡		390		433
Cricket Communications, Inc., 7.75%, Due 5/15/2016		615		663
Crown Castle International Corp., 9.00%, Due 1/15/2015		800		894
Digicel Group Ltd.,
8.875%, Due 1/15/2015‡		800		812
9.125%, Due 1/15/2015‡		650		661
DISH DBS Corp., 7.125%, Due 2/1/2016		1,300		1,378

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Dynegy Holdings, Inc.,
7.50%, Due 6/1/2015‡		850		659
8.375%, Due 5/1/2016		600		461
Forest City Enterprises, Inc., 7.625%, Due 6/1/2015		800		750
GCI, Inc., 8.625%, Due 11/15/2019		370		407
GeoEye, Inc., 8.625%, Due 10/1/2016		1,000		1,048
HSN, Inc., 11.25%, Due 8/1/2016		650		751
Intelsat Jackson Holdings Ltd., 7.25%, Due 10/15/2020‡		100		102
Intelsat Jackson Holdings SA, 11.25%, Due 6/15/2016		1,500		1,632	��
Intelsat Luxembourg SA, 11.50%, Due 2/4/2017		1,000		1,081
Intergen NV, 9.00%, Due 6/30/2017‡		900		972
Level 3 Financing, Inc., 10.00%, Due 2/1/2018		500		479
Media General, Inc., 11.75%, Due 2/15/2017		800		856
Mediacom LLC / Mediacom Capital Corp., 9.125%, Due 8/15/2019		400		423
MetroPCS Wireless, Inc.,
9.25%, Due 11/1/2014		221		231
7.875%, Due 9/1/2018		645		692
NII Capital Corp., 10.00%, Due 8/15/2016		380		431
Novasep Holding SAS, 9.75%, Due 12/15/2016‡		605		505
NRG Energy, Inc., 7.375%, Due 2/1/2016		1,400		1,457
Radio One, Inc., 6.375%, Due 2/15/2013		900		758
Rainbow National Services LLC, 8.75%, Due 9/1/2012‡		250		252
RRI Energy, Inc., 7.625%, Due 6/15/2014		475		479
Telesat Canada, 12.50%, Due 11/1/2017		797		940
TW Telecom Holdings, Inc., 8.00%, Due 3/1/2018		450		486
Univision Communications, Inc.,
12.00%, Due 7/1/2014‡		555		614
9.75%, Due 3/15/2015‡		636		675
7.875%, Due 11/1/2020‡		680		714
WMG Holdings Corp., 9.50%, Due 12/15/2014§		830		789
				29,352
Transportation — 0.69%
American Petroleum Tankers LLC, 10.25%, Due 5/1/2015‡		850		884
General Maritime Corp., 12.00%, Due 11/15/2017		200		206
Greenbrier Cos., Inc., 8.375%, Due 5/15/2015		200		199
				1,289
Utility — 4.50%
Cincinnati Bell, Inc., 8.75%, Due 3/15/2018		430		416
CMS Energy Corp., 8.75%, Due 6/15/2019		500		600
Elwood Energy LLC, 8.159%, Due 7/5/2026		676		636

See accompanying notes

19

American Beacon High Yield Bond Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Energy Future Intermediate Holding Co. LLC, 10.00%, Due 12/1/2020		568		595
Frontier Communications Corp.,
8.25%, Due 4/15/2017		200		228
8.50%, Due 4/15/2020		200		231
8.75%, Due 4/15/2022		400		465
Integra Telecom Holdings, Inc., 10.75%, Due 4/15/2016‡		500		529
Sprint Capital Corp., 8.75%, Due 3/15/2032		935		1,025
Sprint Nextel Corp., 8.375%, Due 8/15/2017		900		992
Texas Competitive Electric Holdings Co. LLC, 10.25%, Due 11/1/2015		1,500		930
Wind Acquisition Finance S.A.,
12.00%, Due 12/1/2015‡ ††		700		742
11.75%, Due 7/15/2017‡		625		713
12.25%, Due 7/15/2017‡		214		249
				8,351
Total Corporate Obligations (Cost $165,005)				176,003
CONVERTIBLE OBLIGATION — 0.57%
Finance — 0.18%
E*Trade Financial Corp., %, Due 8/31/2019		240		332
Hotels, Restaurants & Leisure — 0.39%
Horizon Lines, Inc., 4.25%, Due 8/15/2012		800		732
Total Convertible Obligations (Cost $856)				1,064
SHORT-TERM INVESTMENTS — 2.72% (Cost $5,042)
JPMorgan U.S. Government Money Market Fund		5,042,317		5,042
TOTAL INVESTMENTS — 98.43% (Cost $172,984)				182,757
OTHER ASSETS, NET OF LIABILITIES — 1.57%				2,914
TOTAL NET ASSETS — 100.00%			$	185,671

Percentages are stated as a percent of net assets.

*	Non-income producing security.
†	Warrant.
‡	Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $77,703 or 41.85% of net assets. The Fund has no right to demand registration of these securities.
§	The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due date on these types of securities reflects the final maturity date.
**	Is Payment in Kind.
††	Step Up/Down.
#	Non-income producing, issuer is in default.

See accompanying notes

20

American Beacon Retirement Income and Appreciation Fund
Schedule of Investments
October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
COMMON STOCK — 4.41%
CONSUMER DISCRETIONARY — 0.28%
Hotels, Restaurants & Leisure — 0.14%
Carnival Corp.		4,200		181
Media — 0.14%
Omnicom Group, Inc.		4,000		176
Total Consumer Discretionary				357
ENERGY — 0.76%
Ensco plc*		7,300		338
Halliburton Co.†		9,000		287
Noble Corp.		10,150		351
Total Energy				976
FINANCIALS — 0.55%
Affiliated Managers Group, Inc.†		3,700		317
JPMorgan Chase & Co.		3,300		124
T Rowe Price Group, Inc.		4,800		265
Total Financials				706
HEALTH CARE — 0.23%
St. Jude Medical, Inc. †		7,500		287
INDUSTRIALS — 0.67%
Aerospace & Defense — 0.13%
United Technologies Corp.		2,150		161
Machinery — 0.54%
Eaton Corp.		3,900		347
Parker Hannifin Corp.		4,500		344
				691
Total Industrials				852
INFORMATION TECHNOLOGY — 1.42%
Communications Equipment — 0.62%
Cisco Systems, Inc.†		20,500		468
QUALCOMM, Inc.		7,200		325
				793
IT Consulting & Services — 0.27%
Accenture plc		7,770		347
Semiconductor Equipment & Products — 0.27%
Applied Materials, Inc.†		28,000		346
Software — 0.25%
Microsoft Corp.		12,000		320
Total Information Technology				1,806
MATERIALS — 0.50%
Barrick Gold Corp.†		6,700		322
Freeport-McMoRan Copper & Gold, Inc.		3,400		322
Total Materials				644
Total Common Stock (Cost $5,504)				5,628
PREFERRED STOCK — 1.55%
CONSUMER DISCRETIONARY — 0.52%
Archer-Daniels-Midland Co.		15,350		664

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
CONSUMER STAPLES — 0.32%
Bunge Ltd.		4,500		407
ENERGY — 0.27%
Apache Corp.		6,000		349
FINANCIALS — 0.44%
AMG Capital Trust I		4,150		195
Vale Capital II		4,000		361
Total Financials				556
Total Preferred Stock (Cost $1,570)				1,976
CONVERTIBLE PREFERRED STOCK — 0.44%
FINANCIALS — 0.23%
Wells Fargo & Co.		300		300
HEALTH CARE — 0.21%
Mylan, Inc.		225		268
Total Convertible Preferred Stock (Cost $561)				568
CORPORATE OBLIGATION — 35.85%
Finance — 17.56%
Aegon Funding Corp., 5.75%, Due 12/15/2020		250		269
American Express Co., 2.75%, Due 9/15/2015		125		126
ANZ National Int’l Ltd., 2.375%, Due 12/21/2012‡		300		306
Bank of America Corp.,
7.80%, Due 9/15/2016		600		688
6.00%, Due 9/1/2017		400		430
7.625%, Due 6/1/2019		200		234
Bank One Corp., 4.90%, Due 4/30/2015		250		271
Barclays Bank plc,
3.90%, Due 4/7/2015		290		311
6.75%, Due 5/22/2019		300		356
Bear Stearns Cos., Inc., 7.25%, Due 2/1/2018		500		610
BNP Paribas, 0.690%, Due 4/8/2013§		750		747
Citigroup, Inc.,
0.715%, Due 11/5/2014§		300		283
6.125%, Due 11/21/2017		275		306
8.50%, Due 5/22/2019		750		942
CME Group, Inc., 5.40%, Due 8/1/2013		230		257
Credit Suisse N.Y.,
3.45%, Due 7/2/2012		600		625
5.30%, Due 8/13/2019		250		277
Deutsche Bank AG, 3.875%, Due 8/18/2014		275		296
FTI Consulting, Inc., 7.75%, Due 10/1/2016		150		159
General Electric Capital Corp.,
0.490%, Due 1/8/2016§		1,033		969
5.625%, Due 5/1/2018		250		279
6.00%, Due 8/7/2019		300		339
5.50%, Due 1/8/2020		350		385
Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		475		523
6.25%, Due 9/1/2017		550		622
6.00%, Due 6/15/2020		135		150

See accompanying notes

21

American Beacon Retirement Income and Appreciation Fund
Schedule of Investments

October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000's)
HSBC Finance Corp., 0.539%, Due 1/15/2014§		850		808
ING Bank, NV, 5.125%, Due 5/1/2015‡		300		320
Janus Capital Group, Inc., 6.95%, Due 6/15/2017		125		131
JPMorgan Chase & Co.,
3.70%, Due 1/20/2015		500		529
6.00%, Due 1/15/2018		175		200
5.50%, Due 10/15/2040		250		252
JPMorgan Chase Bank, NA, 0.623%, Due 6/13/2016‡ §		375		353
Leucadia National Corp.,
8.125%, Due 9/15/2015		100		109
7.125%, Due 3/15/2017		192		198
Lincoln National Corp., 4.75%, Due 2/15/2014		105		112
Lloyds TSB Bank plc, 4.375%, Due 1/12/2015‡		300		315
MassMutual Global Funding II, 0.453%, Due 12/6/2013‡ §		400		395
Mellon Funding Corp., 0.526%, Due 5/15/2014§		250		248
Merrill Lynch & Co., Inc., 6.11%, Due 1/29/2037		275		262
MetLife, Inc., 6.375%, Due 6/15/2034		250		277
Metropolitan Life Global Funding I, 0.542%, Due 3/15/2012‡ §		300		300
Monumental Global Funding III, 0.489%, Due 1/15/2014‡ §		300		288
Morgan Stanley,
2.876%, Due 5/14/2013§		550		563
0.769%, Due 10/15/2015§		300		276
7.30%, Due 5/13/2019		280		323
5.625%, Due 9/23/2019		250		263
Nationwide Building Society, 5.50%, Due 7/18/2012‡		450		481
Nordea Bank AB,
2.50%, Due 11/13/2012‡		250		257
4.875%, Due 1/27/2020‡		250		269
PNC Funding Corp., 4.375%, Due 8/11/2020		260		263
Pricoa Global Funding I, 5.40%, Due 10/18/2012‡		150		161
ProLogis, 5.625%, Due 11/15/2016		125		132
Prudential Financial, Inc.,
4.50%, Due 7/15/2013		250		267
7.375%, Due 6/15/2019		250		303
Rabobank Nederland NV, 4.20%, Due 5/13/2014‡		200		218
Simon Property Group LP, 10.35%, Due 4/1/2019		300		424
Societe Generale N.Y., 2.20%, Due 9/14/2013‡		250		253
Travelers Cos., Inc., 3.90%, Due 11/1/2020		130		132
UBS AG, 5.875%, Due 12/20/2017		275		315
UnitedHealth Group, Inc., 3.875%, Due 10/15/2020		250		249
Wachovia Corp.,
0.659%, Due 10/15/2016§		600		549
5.75%, Due 2/1/2018		475		539
Wells Fargo & Co., 5.625%, Due 12/11/2017		275		311
				22,405

	Shares/Par
	Amount		Value
	(par and dollars in 000's)
Industrials — 15.46%
America Movil, S.A.B. de C.V., 6.375%, Due 3/1/2035		275		311
American Honda Finance Corp.,
4.625%, Due 4/2/2013‡		325		350
3.875%, Due 9/21/2020‡		125		126
Anheuser-Busch InBev Worldwide, Inc.,
5.00%, Due 4/15/2020		290		322
8.00%, Due 11/15/2039‡		100		139
Apache Corp., 5.10%, Due 9/1/2040		130		130
AT&T, Inc.,
5.625%, Due 6/15/2016		200		234
5.50%, Due 2/1/2018		400		466
6.80%, Due 5/15/2036		125		144
6.40%, Due 5/15/2038		125		139
ATP Oil & Gas Corp., 11.875%, Due 5/1/2015‡		150		137
Bio Rad Labs, 8.00%, Due 9/15/2016		275		300
Boeing Co., 1.875%, Due 11/20/2012		250		256
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018		325		377
5.75%, Due 5/1/2040		140		148
Canadian National Railway Co., 5.55%, Due 5/15/2018		250		293
Canadian Natural Resources Ltd., 6.25%, Due 3/15/2038		275		315
Caterpillar Financial Services Corp.,
1.90%, Due 12/17/2012		100		102
4.25%, Due 2/8/2013		250		268
2.75%, Due 6/24/2015		280		295
Coca-Cola Enterprises, Inc., 7.375%, Due 3/3/2014		150		181
Comcast Cable Communications
Holdings, Inc., 8.375%, Due 3/15/2013		109		126
Comcast Corp., 6.55%, Due 7/1/2039		300		336
Comstock Resources, Inc., 8.375%, Due 10/15/2017		300		311
Concho Resources, Inc., 8.625%, Due 10/1/2017		275		298
ConocoPhillips,
4.60%, Due 1/15/2015		200		225
5.20%, Due 5/15/2018		325		376
CSX Corp., 5.50%, Due 4/15/2041		250		247
CVS Caremark Corp., 3.25%, Due 5/18/2015		140		147
Daimler Finance NA LLC,
5.875%, Due 3/15/2011		250		255
5.75%, Due 9/8/2011		250		260
EOG Resources Canada, Inc., 4.75%, Due 3/15/2014‡		250		271
France Telecom S.A., 2.125%, Due 9/16/2015		125		127
Frontier Oil Corp., 8.50%, Due 9/15/2016		300		316
GlaxoSmithKline Capital, Inc., 5.65%, Due 5/15/2018		125		148
Hanesbrands, Inc., 8.00%, Due 12/15/2016		300		325
Hewlett-Packard Co., 4.50%, Due 3/1/2013		325		352
Holly Corp., 9.875%, Due 6/15/2017		140		153
International Business Machines Corp., 7.625%, Due 10/15/2018		150		199

See accompanying notes

22

American Beacon Retirement Income and Appreciation Fund
Schedule of Investments

October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Jabil Circuit, Inc., 8.25%, Due 3/15/2018		325		381
Jarden Corp.,
7.50%, Due 5/1/2017		30		32
7.50%, Due 1/15/2020		120		127
Johnson Controls, Inc., 5.00%, Due 3/30/2020		300		329
Kellogg Co., 4.25%, Due 3/6/2013		250		268
NetFlix, Inc., 8.50%, Due 11/15/2017		275		308
Norfolk Southern Corp., 5.75%, Due 4/1/2018		325		376
Northrop Grumman Corp., 5.05%, Due 8/1/2019		150		168
Oshkosh Corp., 8.25%, Due 3/1/2017		50		55
Petroleos Mexicanos, 6.00%, Due 3/5/2020		300		339
Petroplus Finance Ltd., 9.375%, Due 9/15/2019‡		225		216
Quest Diagnostics, Inc., 4.75%, Due 1/30/2020		125		128
Royal Caribbean Cruises Ltd., 7.50%, Due 10/15/2027		500		500
Seagate HDD Cayman, 6.875%, Due 5/1/2020‡		350		357
Service Corp International, 8.00%, Due 11/15/2021		225		245
SESI LLC, 6.875%, Due 6/1/2014		435		439
Shell International Finance BV, 3.10%, Due 6/28/2015		280		297
Spirit Aerosystems, Inc., 7.50%, Due 10/1/2017		450		473
Swift Energy Co., 7.125%, Due 6/1/2017		375		379
Syniverse Technologies, Inc., 7.75%, Due 8/15/2013		325		332
Telefonica Emisiones SAU, 6.421%, Due 6/20/2016		300		357
Terex Corp., 8.00%, Due 11/15/2017		125		125
Thomson Reuters Corp., 4.70%, Due 10/15/2019		125		136
Time Warner Cable, Inc., 5.85%, Due 5/1/2017		300		342
Time Warner, Inc., 4.875%, Due 3/15/2020		150		165
Triumph Group, Inc., 8.00%, Due 11/15/2017		300		310
Tyco International Finance SA, 4.125%, Due 10/15/2014		125		136
Union Pacific Corp., 7.875%, Due 1/15/2019		300		393
United Technologies Corp., 6.125%, Due 7/15/2038		165		194
Verizon Communications, Inc.,
5.50%, Due 4/1/2017		250		288
6.90%, Due 4/15/2038		325		388
Verizon Wireless Capital, LLC, 3.75%, Due 5/20/2011		270		275
Vodafone Group plc, 6.15%, Due 2/27/2037		275		313
Wal-Mart Stores, Inc., 7.55%, Due 2/15/2030		250		328
WESCO Distribution, Inc., 7.50%, Due 10/15/2017		450		459

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
Xerox Corp.,
5.65%, Due 5/15/2013		75		82
8.25%, Due 5/15/2014		150		180
				19,725
Manufacturing — 0.36%
Advanced Micro Devices, Inc.,
8.125%, Due 12/15/2017		130		140
7.75%, Due 8/1/2020‡		175		186
Oshkosh Corp., 8.50%, Due 3/1/2020		125		138
				464
Media — 0.08%
Interpublic Group of Cos., Inc., 4.75%, Due 3/15/2023		90		104
Other Government — 0.26%
Province of Ontario Canada, 4.10%, Due 6/16/2014		300		331
Utilities — 2.13%
Commonwealth Edison Co., 4.00%, Due 8/1/2020		135		141
Consolidated Edison Co. of New York, Inc., 5.50%, Due 12/1/2039		300		316
Duke Energy Carolinas LLC, 5.10%, Due 4/15/2018		250		285
EDF SA, 4.60%, Due 1/27/2020‡		300		331
FirstEnergy Solutions Corp., 4.80%, Due 2/15/2015		150		162
MidAmerican Energy Holdings Co., 6.125%, Due 4/1/2036		275		307
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		175		200
3.50%, Due 10/1/2020		250		251
Progress Energy, Inc., 4.875%, Due 12/1/2019		250		275
TransCanada PipeLines Ltd., 6.10%, Due 6/1/2040		140		156
Virginia Electric and Power Co., 5.40%, Due 4/30/2018		250		290
				2,714
Total Corporate Obligations (Cost $42,411)				45,743
CONVERTIBLE OBLIGATION — 12.75%
Basic Materials — 1.30%
Allegheny Technologies, Inc., 4.25%, Due 6/1/2014		260		383
Goldcorp, Inc., 2.00%, Due 8/1/2014		225		278
Newmont Mining Corp.,
3.00%, Due 2/15/2012		50		69
1.25%, Due 7/15/2014		425		605
1.625%, Due 7/15/2017		220		317
				1,652
Communications — 1.20%
Anixter International, Inc., 1.00%, Due 2/15/2013		610		654
priceline.com, Inc., 1.25%, Due 3/15/2015‡		300		431
Symantec Corp., 1.00%, Due 6/15/2013		400		449
				1,534
Consumer Discretionary — 0.51%
Best Buy Co., Inc., 2.25%, Due 1/15/2022		200		222

See accompanying notes

23

American Beacon Retirement Income and Appreciation Fund
Schedule of Investments

October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
International Game Technology, 3.25%, Due 5/1/2014		110		122
RadioShack Corp., 2.50%, Due 8/1/2013‡		275		302
				646
Convertible Obligations — 1.70%
Alpha Natural Resources, Inc., 2.375%, Due 4/15/2015		300		351
American Medical Systems Holdings, Inc., 4.00%, Due 9/15/2041		250		323
Gilead Sciences, Inc., 1.625%, Due 5/1/2016‡		157		174
Microsoft Corp., %, Due 6/15/2013‡		300		314
Omnicom Group, Inc., 0.000%, Due 7/1/2038		150		153
Salix Pharmaceuticals Ltd., 2.75%, Due 5/15/2015		71		79
SanDisk Corp., 1.50%, Due 8/15/2017		464		452
SYNNEX Corp., 4.00%, Due 5/15/2018‡		275		328
				2,174
Energy — 0.38%
Chesapeake Energy Corp., 2.50%, Due 5/15/2037		570		491
				491
Finance — 0.41%
Janus Capital Group, Inc., 3.25%, Due 7/15/2014		190		210
Leucadia National Corp., 3.75%, Due 4/15/2014		250		315
				525
Health Care — 1.08%
Biovail Corp., 5.375%, Due 8/1/2014‡		250		490
LifePoint Hospitals, Inc., 3.50%, Due 5/15/2014		325		323
Medtronic, Inc., 1.625%, Due 4/15/2013		560		564
				1,377
Industrials — 1.34%
Danaher Corp., 0.01%, Due 1/22/2021		370		465
Fisher Scientific International, Inc., 3.25%, Due 3/1/2024		230		305
Itron, Inc., 2.50%, Due 8/1/2026		275		304
ON Semiconductor Corp., 2.625%, Due 12/15/2026		300		314
Stanley Black & Decker, Inc., 0.01%, Due 5/17/2012§		275		316
				1,704
Pharmaceuticals — 1.12%
Endo Pharmaceuticals Holdings, Inc., 1.75%, Due 4/15/2015		250		343
Life Technologies Corp., 1.50%, Due 2/15/2024		246		286
Mylan, Inc., 1.25%, Due 3/15/2012		430		456
Teva Pharmaceutical Finance Co. LLC, 0.25%, Due 2/1/2026		295		347
				1,432
Technology — 3.71%
CACI International, Inc., 2.125%, Due 5/1/2014		230		259
EMC Corp., 1.75%, Due 12/1/2013		900		1,285
Intel Corp., 3.25%, Due 8/1/2039‡		500		593
Linear Technology Corp., 3.00%, Due 5/1/2027		295		305

	Shares/Par
	Amount		Value
	(par and dollars in 000's)
Navistar International Corp., 3.00%, Due 10/15/2014		300		360
NetApp, Inc., 1.75%, Due 6/1/2013		545		949
Rovi Corp., 2.625%, Due 2/15/2040‡		300		376
Xilinx, Inc., 2.625%, Due 6/15/2017‡		525		602
				4,729
Total Convertible Obligations (Cost $13,908)				16,264
ASSET-BACKED SECURITIES — 4.67%
American Express Credit Account
Master Trust, 5.35%, Due 1/15/2014		1,050		1,083
Bank of America Auto Trust, 0.75%, Due 6/15/2012‡		518		518
BMW Floorplan Master Owner Trust, 1.406%, Due 9/15/2014‡ §		250		253
Capital One Multi-Asset Execution Trust, 5.15%, Due 6/15/2014		800		829
Citibank Credit Card Issuance Trust, 1.806%, Due 5/15/2014§		600		612
Discover Card Master Trust, 1.556%, Due 2/17/2015§		200		203
Ford Credit Auto Lease Trust, 1.04%, Due 3/15/2013‡		674		675
Ford Credit Floorplan Master Owner Trust, 1.806%, Due 9/15/2014§		250		254
Harley-Davidson Motorcycle Trust, 1.87%, Due 2/15/2014		300		303
Nissan Master Owner Trust Receivables, 1.406%, Due 1/15/2015‡ §		600		607
Volkswagen Auto Loan Enhanced Trust,
0.66%, Due 5/21/2012		294		294
6.24%, Due 7/20/2015		300		329
Total Asset-Backed Securities (Cost $5,850)				5,960
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS — 3.00%
Banc of America Commercial Mortgage, Inc.,
5.317%, Due 9/10/2047		270		279
5.634%, Due 4/10/2049		650		674
GS Mortgage Securities Corp II, 4.607%, Due 7/10/2039		270		275
JPMorgan Chase Commercial Mortgage
Securities Corp.,
4.678%, Due 7/15/2042		260		270
3.853%, Due 6/15/2043‡		547		573
5.742%, Due 2/12/2049		400		426
5.629%, Due 2/12/2051		550		577
LB-UBS Commercial Mortgage Trust, 5.424%, Due 2/15/2040		450		482
Wachovia Bank Commercial Mortgage Trust, 5.739%, Due 6/15/2049		260		271
Total Non-Agency Mortgage-Backed Obligations (Cost $3,692)				3,827
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS — 13.09%
Federal Home Loan Mortgage Corporation
5.00%, Due 2/1/2021		602		645

See accompanying notes

24

American Beacon Retirement Income and Appreciation Fund
Schedule of Investments

October 31, 2010

	Shares/Par
	Amount		Value
	(par and dollars in 000’s)
4.50%, Due 4/1/2021		617		657
5.00%, Due 9/1/2035		1,584		1,689
5.50%, Due 4/1/2037		467		502
5.00%, Due 3/1/2038		991		1,052
5.50%, Due 5/1/2038		570		612
				5,157
Federal National Mortgage Association
6.50%, Due 7/1/2032		261		295
5.50%, Due 6/1/2033		575		623
4.50%, Due 9/1/2034		321		339
5.50%, Due 12/1/2035		639		690
5.00%, Due 2/1/2036		517		552
5.50%, Due 4/1/2036		887		959
5.50%, Due 2/1/2037		652		702
6.00%, Due 9/1/2037		412		449
6.00%, Due 1/1/2038		581		631
4.50%, Due 1/1/2040		1,660		1,744
4.00%, Due 9/1/2040		1,190		1,228
				8,212
Government National Mortgage Association
4.201%, Due 8/16/2026		371		381
2.989%, Due 3/16/2039		796		835
6.00%, Due 2/15/2033		577		640
5.50%, Due 4/15/2033		788		858
5.00%, Due 5/15/2033		575		622
				3,336
Total U.S. Agency Mortgage-Backed Obligations (Cost $15,558)				16,705
U.S. AGENCY OBLIGATIONS — 0.34%
Federal Farm Credit Bank, 3.00%, Due 9/22/2014		400		431
U.S. TREASURY OBLIGATIONS — 19.80%
U.S. Treasury Bonds
7.875%, Due 2/15/2021		300		441
6.25%, Due 8/15/2023		1,500		2,004
6.875%, Due 8/15/2025		250		356
5.25%, Due 11/15/2028		1,050		1,287
4.75%, Due 2/15/2037		420		478
4.50%, Due 8/15/2039		1,210		1,316
				5,882
U.S. Treasury Notes
2.625%, Due 7/31/2014		6,000		6,413
2.50%, Due 4/30/2015		1,000		1,065
4.25%, Due 8/15/2015		1,200		1,377
3.00%, Due 9/30/2016		1,000		1,083
3.125%, Due 10/31/2016		3,800		4,140
3.75%, Due 11/15/2018		2,550		2,844
3.625%, Due 2/15/2020		2,250		2,457
				19,379
Total U.S. Treasury Obligations (Cost $24,047)				25,261
MUNICIPAL OBLIGATIONS — 0.16% (Cost $200)
State of Illinois, 1.823%, Due 1/1/2011		200		200
Total Municipal Obligations				200
SHORT-TERM INVESTMENTS — 3.16% (Cost $4,036)
JPMorgan U.S. Government Money Market Fund		4,036,211		4,036

	Shares/Par
	Amount	Value
	(par and dollars in 000’s)
TOTAL INVESTMENTS — 99.22% (Cost $117,737)			126,599
OTHER ASSETS, NET OF LIABILITIES — 0.78%			991
TOTAL NET ASSETS — 100.00%		$	127,590

Percentages are stated as a percent of net assets.

*	ADR — American Depository Receipt
†	Non-income producing security.
‡	Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $12,267 or 9.61% of net assets. The Fund has no right to demand registration of these securities.
§	The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due date on these types of securities reflects the final maturity date.

See accompanying notes

25

American Beacon Intermediate Bond Fund
Schedule of Investments

October 31, 2010

	Par Amount		Value
	($000)		($000)
CORPORATE OBLIGATIONS — 38.05%
Energy — 0.04%
Petrobras International Finance Co., 6.875%, Due 1/20/2040		110		127
Finance — 17.48%
Aegon Funding Corp., 5.75%, Due 12/15/2020		400		430
American Express Co.,
2.75%, Due 9/15/2015		225		227
8.15%, Due 3/19/2038		325		444
American Express Credit Corp., 5.875%, Due 5/2/2013		700		770
ANZ National Int’l Ltd., 2.375%, Due 12/21/2012*		350		357
Bank of America Corp.,
7.80%, Due 9/15/2016		700		803
6.00%, Due 9/1/2017		500		538
7.625%, Due 6/1/2019		1,100		1,288
Bank of New York Mellon Corp., 4.95%, Due 11/1/2012		290		314
Bank One Corp., 4.90%, Due 4/30/2015		500		542
Barclays Bank plc,
3.90%, Due 4/7/2015		380		407
6.75%, Due 5/22/2019		350		416
Bear Stearns Cos., Inc.,
6.40%, Due 10/2/2017		605		706
7.25%, Due 2/1/2018		1,170		1,428
Berkshire Hathaway Finance Corp., 5.75%, Due 1/15/2040		325		340
Berkshire Hathaway, Inc., 1.40%, Due 2/10/2012		1,900		1,922
BNP Paribas, 0.690%, Due 4/8/2013†		950		947
Canadian Imperial Bank of Commerce, 1.45%, Due 9/13/2013		645		652
Citigroup, Inc.,
0.715%, Due 11/5/2014†		380		359
6.01%, Due 1/15/2015		520		576
6.125%, Due 11/21/2017		755		840
8.50%, Due 5/22/2019		1,450		1,821
CME Group, Inc.,
5.40%, Due 8/1/2013		260		291
5.75%, Due 2/15/2014		510		580
CNA Financial Corp., 7.35%, Due 11/15/2019		210		237
Countrywide Financial Corp., 5.80%, Due 6/7/2012		455		480
Credit Suisse N.Y.,
3.45%, Due 7/2/2012		700		729
5.30%, Due 8/13/2019		425		472
Deutsche Bank AG, 3.875%, Due 8/18/2014		400		430
General Electric Capital Corp.,
5.90%, Due 5/13/2014		440		500
0.490%, Due 1/8/2016†		1,300		1,220
5.625%, Due 5/1/2018		695		777
6.00%, Due 8/7/2019		350		395
5.50%, Due 1/8/2020		800		881
5.875%, Due 1/14/2038		645		656
Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		800		881
6.25%, Due 9/1/2017		800		904
5.95%, Due 1/18/2018		460		511
6.00%, Due 6/15/2020		490		545
6.75%, Due 10/1/2037		345		362
HSBC Finance Corp., 0.539%, Due 1/15/2014†		1,100		1,046
ING Bank, NV, 5.125%, Due 5/1/2015*		250		267
JPMorgan Chase & Co.,
3.70%, Due 1/20/2015		1,630		1,724
6.00%, Due 1/15/2018		450		514
5.50%, Due 10/15/2040		425		428
JPMorgan Chase Bank, NA, 0.623%, Due 6/13/2016 †		480		452
Lincoln National Corp., 4.75%, Due 2/15/2014		50		53
Lloyds TSB Bank plc, 4.375%, Due 1/12/2015*		375		393

See accompanying notes

26

American Beacon Intermediate Bond Fund
Schedule of Investments

October 31, 2010

	Par Amount		Value
	($000)		($000)
MassMutual Global Funding II, 0.453%, Due 12/6/2013* †		500		494
Mellon Funding Corp., 0.526%, Due 5/15/2014†		500		495
Merrill Lynch & Co., Inc.,
6.40%, Due 8/28/2017		905		986
6.50%, Due 7/15/2018		520		566
6.11%, Due 1/29/2037		360		343
MetLife, Inc.,
5.375%, Due 12/15/2012		735		796
6.375%, Due 6/15/2034		500		553
Metropolitan Life Global Funding I, 0.542%, Due 3/15/2012* †		380		380
Monumental Global Funding III, 0.489%, Due 1/15/2014* †		375		359
Morgan Stanley,
2.876%, Due 5/14/2013†		750		768
0.769%, Due 10/15/2015†		380		349
7.30%, Due 5/13/2019		370		427
5.625%, Due 9/23/2019		600		630
Nasdaq OMX Group,
4.00%, Due 1/15/2015		165		172
5.55%, Due 1/15/2020		165		174
Nationwide Building Society, 5.50%, Due 7/18/2012*		550		588
Nordea Bank AB,
2.50%, Due 11/13/2012*		400		411
4.875%, Due 1/27/2020*		450		484
PNC Funding Corp.,
4.25%, Due 9/21/2015		1,010		1,092
4.375%, Due 8/11/2020		410		415
Pricoa Global Funding I, 5.40%, Due 10/18/2012*		175		188
ProLogis, 5.625%, Due 11/15/2016		200		211
Prudential Financial, Inc.,
4.50%, Due 7/15/2013		200		214
5.10%, Due 9/20/2014		375		411
7.375%, Due 6/15/2019		450		545
Rabobank Nederland NV,
4.20%, Due 5/13/2014*		600		653
2.125%, Due 10/13/2015		510		514
Simon Property Group LP, 10.35%, Due 4/1/2019		375		530
Societe Generale N.Y., 2.20%, Due 9/14/2013*		450		456
State Street Corp., 4.30%, Due 5/30/2014		260		287
Travelers Cos., Inc., 3.90%, Due 11/1/2020		210		213
Travelers Property Casualty Corp., 5.00%, Due 3/15/2013		510		557
U.S. Bancorp, 1.375%, Due 9/13/2013		850		858
UBS AG, 5.875%, Due 12/20/2017		400		458
UnitedHealth Group, Inc., 3.875%, Due 10/15/2020		425		424
Wachovia Corp.,
0.659%, Due 10/15/2016†		750		686
5.75%, Due 2/1/2018		750		851
Wells Fargo & Co., 5.625%, Due 12/11/2017		475		537
Westpac Banking Corp., 2.25%, Due 11/19/2012		375		384
Willis North America, Inc., 6.20%, Due 3/28/2017		280		300
				51,614
Industrials — 15.57%
Alltel Corp., 7.00%, Due 7/1/2012		215		235
Altria Group, Inc., 9.70%, Due 11/10/2018		275		379
America Movil, S.A.B. de C.V., 6.375%, Due 3/1/2035		375		424
American Honda Finance Corp.,
4.625%, Due 4/2/2013*		250		270
3.875%, Due 9/21/2020*		225		227
Anheuser-Busch InBev Worldwide, Inc.,
3.00%, Due 10/15/2012		390		405
5.00%, Due 4/15/2020		380		421
8.00%, Due 11/15/2039*		175		244
Apache Corp., 5.10%, Due 9/1/2040		200		200
AT&T, Inc.,
5.10%, Due 9/15/2014		755		848

See accompanying notes

27

American Beacon Intermediate Bond Fund
Schedule of Investments
October 31, 2010

	Par Amount		Value
	($000)		($000)
5.625%, Due 6/15/2016		400		468
5.50%, Due 2/1/2018		600		699
6.80%, Due 5/15/2036		225		260
6.40%, Due 5/15/2038		200		222
5.35%, Due 9/1/2040*		283		278
Baxter International, Inc., 1.80%, Due 3/15/2013		270		276
Best Buy Co., Inc., 6.75%, Due 7/15/2013		345		386
Boeing Co., 1.875%, Due 11/20/2012		400		409
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018		600		696
7.95%, Due 8/15/2030		180		235
5.75%, Due 5/1/2040		190		202
CA, Inc., 5.375%, Due 12/1/2019		370		401
Cameron International Corp., 6.375%, Due 7/15/2018		225		260
Canadian National Railway Co., 5.55%, Due 5/15/2018		400		468
Canadian Natural Resources Ltd., 6.25%, Due 3/15/2038		360		413
Caterpillar Financial Services Corp.,
1.90%, Due 12/17/2012		100		102
4.25%, Due 2/8/2013		250		268
6.125%, Due 2/17/2014		750		865
2.75%, Due 6/24/2015		380		400
Coca-Cola Enterprises, Inc., 7.375%, Due 3/3/2014		175		211
Comcast Cable Communications Holdings, Inc., 8.375%, Due 3/15/2013		128		148
Comcast Corp.,
6.30%, Due 11/15/2017		465		551
5.875%, Due 2/15/2018		235		272
6.55%, Due 7/1/2039		500		560
ConocoPhillips,
4.60%, Due 1/15/2015		1,060		1,191
5.20%, Due 5/15/2018		600		693
5.75%, Due 2/1/2019		380		455
Costco Wholesale Corp., 5.30%, Due 3/15/2012		645		686
Covidien International Finance SA, 5.45%, Due 10/15/2012		500		544
CRH America, Inc., 6.00%, Due 9/30/2016		370		416
CSX Corp., 5.50%, Due 4/15/2041		425		420
CVS Caremark Corp., 3.25%, Due 5/18/2015		190		200
Daimler Finance NA LLC,
5.875%, Due 3/15/2011		300		306
5.75%, Due 9/8/2011		200		208
Dell, Inc., 3.375%, Due 6/15/2012		235		244
DIRECTV Holdings LLC,
3.55%, Due 3/15/2015		625		656
6.35%, Due 3/15/2040		145		155
E. I. du Pont de Nemours & Co., 5.875%, Due 1/15/2014		67		77
Eaton Corp., 5.60%, Due 5/15/2018		280		324
eBay, Inc., 0.875%, Due 10/15/2013		335		336
EI Du Pont de Nemours & Co., 3.25%, Due 1/15/2015		660		708
EOG Resources Canada, Inc., 4.75%, Due 3/15/2014*		400		434
Equity Residential, 5.125%, Due 3/15/2016		425		467
Express Scripts, Inc., 6.25%, Due 6/15/2014		685		790
France Telecom S.A.,
4.375%, Due 7/8/2014		235		260
2.125%, Due 9/16/2015		225		228
GlaxoSmithKline Capital, Inc., 5.65%, Due 5/15/2018		125		148
Hewlett-Packard Co.,
4.50%, Due 3/1/2013		250		271
6.125%, Due 3/1/2014		310		359
Honeywell International, Inc., 4.25%, Due 3/1/2013		520		563
Hospira, Inc., 6.05%, Due 3/30/2017		205		237
International Business Machines Corp.,
4.75%, Due 11/29/2012		325		353
7.625%, Due 10/15/2018		695		922
ITT Corp., 4.90%, Due 5/1/2014		640		708
John Deere Capital Corp., 4.90%, Due 9/9/2013		650		720
Johnson Controls, Inc., 5.00%, Due 3/30/2020		480		526

See accompanying notes

28

American Beacon Intermediate Bond Fund
Schedule of Investments
October 31, 2010

	Par Amount		Value
	($000)		($000)
Kellogg Co., 4.25%, Due 3/6/2013		250		268
Koninklijke Philips Electronics NV, 5.75%, Due 3/11/2018		165		193
Kraft Foods, Inc., 6.50%, Due 2/9/2040		220		252
L-3 Communications Corp., 4.75%, Due 7/15/2020		395		412
Lorillard Tobacco Co., 8.125%, Due 6/23/2019		255		295
Marathon Oil Corp., 6.00%, Due 10/1/2017		275		323
Medtronic, Inc., 3.00%, Due 3/15/2015		965		1,026
Norfolk Southern Corp., 5.75%, Due 4/1/2018		300		347
Northrop Grumman Corp., 5.05%, Due 8/1/2019		200		225
Novartis Capital Corp.,
4.125%, Due 2/10/2014		395		432
2.90%, Due 4/24/2015		630		667
Petroleos Mexicanos, 6.00%, Due 3/5/2020		375		423
Quest Diagnostics, Inc., 4.75%, Due 1/30/2020		225		231
Rogers Communications, Inc., 6.80%, Due 8/15/2018		250		312
Shell International Finance BV, 3.10%, Due 6/28/2015		380		403
Simon Property Group LP, 5.75%, Due 12/1/2015		370		423
Teck Resources Ltd., 6.00%, Due 8/15/2040		205		214
Telecom Italia Capital SA, 4.95%, Due 9/30/2014		395		427
Telefonica Emisiones SAU,
4.949%, Due 1/15/2015		425		469
6.421%, Due 6/20/2016		450		536
Thermo Fisher Scientific, Inc., 3.20%, Due 5/1/2015		230		243
Thomson Reuters Corp., 4.70%, Due 10/15/2019		225		244
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017		450		513
6.75%, Due 7/1/2018		825		990
Time Warner, Inc., 4.875%, Due 3/15/2020		290		318
Tyco Electronics Group SA, 6.55%, Due 10/1/2017		225		263
Tyco International Finance SA,
4.125%, Due 10/15/2014		200		218
8.50%, Due 1/15/2019		320		423
Union Pacific Corp., 7.875%, Due 1/15/2019		550		721
United Technologies Corp., 6.125%, Due 7/15/2038		125		147
Valero Energy Corp.,
9.375%, Due 3/15/2019		170		218
6.625%, Due 6/15/2037		205		207
Verizon Communications, Inc.,
5.50%, Due 4/1/2017		500		576
6.90%, Due 4/15/2038		500		597
Verizon Wireless Capital, LLC,
3.75%, Due 5/20/2011		370		376
8.50%, Due 11/15/2018		435		596
Vodafone Group plc, 6.15%, Due 2/27/2037		360		410
Wal-Mart Stores, Inc.,
7.55%, Due 2/15/2030		400		525
5.00%, Due 10/25/2040		235		233
Waste Management, Inc., 7.375%, Due 3/11/2019		270		340
Wyeth Corp., 5.50%, Due 2/1/2014		1,605		1,825
Xerox Corp.,
5.50%, Due 5/15/2012		510		542
5.65%, Due 5/15/2013		50		55
8.25%, Due 5/15/2014		190		228
				45,994
Other Government — 0.13%
Province of Ontario Canada, 4.10%, Due 6/16/2014		350		386
Utilities — 4.83%
Columbus Southern Power Co., 5.50%, Due 3/1/2013		495		544
Commonwealth Edison Co., 4.00%, Due 8/1/2020		190		198
Consolidated Edison Co. of New York, Inc., 5.50%, Due 12/1/2039		350		369
Dominion Resources, Inc.,
5.60%, Due 11/15/2016		475		558
8.875%, Due 1/15/2019		80		108
Duke Energy Carolinas LLC, 5.10%, Due 4/15/2018		400		455

See accompanying notes

29

American Beacon Intermediate Bond Fund
Schedule of Investments
October 31, 2010

	Par Amount		Value
	($000)		($000)
Duke Energy Indiana, Inc., 6.05%, Due 6/15/2016		355		422
EDF SA, 4.60%, Due 1/27/2020*		580		640
Energy Transfer Partners LP,
8.50%, Due 4/15/2014		520		619
9.00%, Due 4/15/2019		300		383
Enterprise Products Operating LLC,
5.65%, Due 4/1/2013		490		535
6.125%, Due 10/15/2039		255		270
Exelon Generation Co. LLC, 6.25%, Due 10/1/2039		365		380
FirstEnergy Solutions Corp., 4.80%, Due 2/15/2015		175		189
MidAmerican Energy Holdings Co.,
5.875%, Due 10/1/2012		505		550
6.125%, Due 4/1/2036		375		418
National Rural Utilities Cooperative Finance Corp., 1.125%, Due 11/1/2013		485		486
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		150		171
3.50%, Due 10/1/2020		450		452
Progress Energy, Inc., 4.875%, Due 12/1/2019		600		661
Public Service Enterprise Group, Inc., 6.95%, Due 6/1/2012		690		754
Sempra Energy, 6.50%, Due 6/1/2016		285		344
Southern Power Co., 6.25%, Due 7/15/2012		550		598
Spectra Energy Capital Corp., 5.65%, Due 3/1/2020		265		294
Spectra Energy Capital LLC, 5.668%, Due 8/15/2014		255		286
TransCanada PipeLines Ltd.,
7.625%, Due 1/15/2039		520		680
6.10%, Due 6/1/2040		290		324
Union Electric Co., 6.70%, Due 2/1/2019		510		615
Virginia Electric and Power Co., 5.40%, Due 4/30/2018		400		464
Westar Energy, Inc., 6.00%, Due 7/1/2014		200		230
Wisconsin Electric Power Co., 6.25%, Due 12/1/2015		500		609
Xcel Energy, Inc., 5.613%, Due 4/1/2017		581		647
				14,253
Total Corporate Obligations (Cost $103,864)				112,374
ASSET-BACKED SECURITIES — 3.19%
American Express Credit Account Master Trust, 5.35%, Due 1/15/2014		1,550		1,599
Bank of America Auto Trust, 0.75%, Due 6/15/2012*		648		648
BMW Floorplan Master Owner Trust, 1.406%, Due 9/15/2014* †		400		405
Capital One Multi-Asset Execution Trust, 5.15%, Due 6/15/2014		1,150		1,191
Citibank Credit Card Issuance Trust, 1.806%, Due 5/15/2014†		750		765
Discover Card Master Trust, 1.556%, Due 2/17/2015†		600		610
Ford Credit Auto Lease Trust, 1.04%, Due 3/15/2013*		861		862
Ford Credit Floorplan Master Owner Trust, 1.806%, Due 9/15/2014†		400		406
Harley-Davidson Motorcycle Trust, 1.87%, Due 2/15/2014		350		353
Honda Auto Receivables Owner Trust, 3.30%, Due 9/15/2015		385		403
Hyundai Auto Receivables Trust, 3.15%, Due 3/15/2016		220		232
John Deere Owner Trust,
2.59%, Due 10/15/2013		260		263
3.96%, Due 5/16/2016		215		226
Nissan Master Owner Trust Receivables, 1.406%, Due 1/15/2015* †		750		759
Volkswagen Auto Loan Enhanced Trust,
0.66%, Due 5/21/2012		368		368
6.24%, Due 7/20/2015		300		329
Total Asset-Backed Securities (Cost $9,246)				9,419
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS — 3.83%
Banc of America Commercial Mortgage, Inc.,
5.317%, Due 9/10/2047		380		392
5.634%, Due 4/10/2049		850		883
Bear Stearns Commercial Mortgage Securities, Inc.,
5.201%, Due 12/11/2038		790		857

See accompanying notes

30

American Beacon Intermediate Bond Fund
Schedule of Investments

October 31, 2010

	Par Amount		Value
	($000)		($000)
5.54%, Due 9/11/2041		1,285		1,403
4.831%, Due 7/11/2042		835		867
Citigroup Commercial Mortgage Trust, 4.38%, Due 10/15/2041		770		778
Citigroup/Deutsche Bank Commercial Mortgage Trust, 5.886%, Due 11/15/2044		840		908
GS Mortgage Securities Corp II, 4.607%, Due 7/10/2039		380		387
GS Mortgage Securities Trust, 3.679%, Due 8/10/2043*		595		627
JPMorgan Chase Commercial Mortgage Securities Corp.,
4.678%, Due 7/15/2042		366		380
3.853%, Due 6/15/2043*		745		782
4.625%, Due 3/15/2046		326		335
5.742%, Due 2/12/2049		550		585
5.629%, Due 2/12/2051		750		787
LB-UBS Commercial Mortgage Trust, 5.424%, Due 2/15/2040		550		589
Prime Mortgage Trust, 5.25%, Due 7/25/2020		313		319
Wachovia Bank Commercial Mortgage Trust, 5.739%, Due 6/15/2049		410		427
Total Non-Agency Mortgage-Backed Obligations (Cost $10,477)				11,306
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS — 25.36%
Federal Home Loan Mortgage Corporation — 7.24%
4.50%, Due 3/1/2019		319		338
5.00%, Due 10/1/2020		755		809
5.00%, Due 4/1/2023		189		201
5.00%, Due 8/1/2033		476		509
5.50%, Due 2/1/2034		580		628
6.00%, Due 8/1/2034		270		297
5.00%, Due 8/1/2035		315		337
5.00%, Due 9/1/2035		792		845
6.00%, Due 8/1/2036		291		318
5.50%, Due 4/1/2037		467		502
5.50%, Due 12/1/2037		1,905		2,056
5.00%, Due 3/1/2038		729		773
5.00%, Due 3/1/2038		1,306		1,386
6.00%, Due 3/1/2038		1,516		1,644
5.50%, Due 5/1/2038		713		765
5.50%, Due 6/1/2038		558		598
5.50%, Due 10/1/2039		736		788
5.00%, Due 4/1/2040		4,775		5,066
5.00%, Due 5/1/2040		3,292		3,524
				21,384
Federal National Mortgage Association — 16.77%
6.50%, Due 2/1/2017		124		136
5.00%, Due 12/1/2017		437		470
4.50%, Due 9/1/2018		851		911
4.00%, Due 8/1/2020		243		256
5.00%, Due 11/1/2023		87		93
5.00%, Due 3/1/2024		1,137		1,213
4.50%, Due 4/1/2024		530		568
5.00%, Due 4/1/2025		3,898		4,157
4.50%, Due 5/1/2025		176		187
4.50%, Due 6/1/2025		3,982		4,217
5.00%, Due 3/1/2034		612		655
5.50%, Due 6/1/2034		324		350
4.50%, Due 9/1/2034		214		226
5.50%, Due 2/1/2035		678		735
5.00%, Due 11/1/2035		948		1,013
5.50%, Due 12/1/2035		492		531
5.50%, Due 1/1/2036		606		655
5.00%, Due 2/1/2036		517		552
5.50%, Due 4/1/2036		1,108		1,197
6.00%, Due 9/1/2036		227		248
6.50%, Due 9/1/2036		849		946
6.50%, Due 12/1/2036		388		432
5.50%, Due 2/1/2037		652		702

See accompanying notes

31

American Beacon Intermediate Bond Fund
Schedule of Investments

October 31, 2010

	Par Amount		Value
	($000)		($000)
5.50%, Due 8/1/2037		1,664		1,801
6.00%, Due 9/1/2037		619		673
6.00%, Due 1/1/2038		929		1,010
5.50%, Due 3/1/2038		2,895		3,133
5.00%, Due 4/1/2038		616		655
5.00%, Due 4/1/2038		733		779
5.00%, Due 5/1/2038		2,372		2,523
5.50%, Due 6/1/2038		496		533
5.00%, Due 6/1/2038		837		890
5.50%, Due 6/1/2038		745		801
4.50%, Due 1/1/2040		3,689		3,876
5.00%, Due 5/1/2040		6,221		6,617
5.50%, Due 6/1/2040		3,205		3,443
4.00%, Due 9/1/2040		2,280		2,353
				49,537
Government National Mortgage Association — 1.35%
4.201%, Due 8/16/2026		212		217
2.989%, Due 3/16/2039		1,144		1,201
6.50%, Due 3/15/2028		271		307
6.00%, Due 4/15/2031		319		354
5.50%, Due 2/20/2034		361		393
5.50%, Due 2/15/2040		1,383		1,502
				3,974
Total U.S. Agency Mortgage-Backed Obligations (Cost $72,524)				74,895
U.S. AGENCY OBLIGATIONS — 0.34%
5.125%, Due 1/2/2014		385		429
4.625%, Due 10/15/2014		500		570
Total U.S. Agency Obligations (Cost $890)				999
U.S. TREASURY OBLIGATIONS — 25.29%
U.S. Treasury Bonds — 5.48%
7.875%, Due 2/15/2021		1,050		1,543
6.25%, Due 8/15/2023		1,400		1,872
6.875%, Due 8/15/2025		770		1,096
5.25%, Due 11/15/2028		750		919
4.75%, Due 2/15/2037		1,300		1,478
4.50%, Due 8/15/2039		2,810		3,056
4.375%, Due 5/15/2040		5,845		6,226
				16,190
U.S. Treasury Notes — 19.81%
1.375%, Due 2/15/2012		3,625		3,677
0.75%, Due 8/15/2013		9,000		9,073
2.625%, Due 7/31/2014		4,000		4,275
2.50%, Due 4/30/2015		5,000		5,327
2.125%, Due 5/31/2015		7,130		7,473
4.25%, Due 8/15/2015		2,000		2,296
1.25%, Due 9/30/2015		540		543
3.00%, Due 9/30/2016		3,050		3,303
3.125%, Due 10/31/2016		3,300		3,595
3.75%, Due 11/15/2018		2,600		2,900
3.625%, Due 2/15/2020		3,050		3,330
3.50%, Due 5/15/2020		11,535		12,440
2.625%, Due 8/15/2020		265		265
				58,497
Total U.S. Treasury Obligations (Cost $73,007)				74,687
MUNICIPAL OBLIGATIONS — 0.08%
State of Illinois, 1.823%, Due 1/1/2011		250		250

	Shares
SHORT-TERM INVESTMENTS — 3.26% (Cost $9,620)
JPMorgan U.S. Government Money Market Fund		9,620,319	9,620
TOTAL INVESTMENTS — 99.40% (Cost $279,878)			293,550

See accompanying notes

32

American Beacon Intermediate Bond Fund
Schedule of Investments

October 31, 2010

	Par Amount	Value
	($000)	($000)
OTHER ASSETS, NET OF LIABILITIES — 0.60%			1,766
TOTAL NET ASSETS — 100.00%		$	295,316

Percentages are stated as a percent of net assets.
*	Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $11,206 or 3.79% of net assets. The Fund has no right to demand registration of these securities.
†	The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due date on these types of securities reflects the final maturity date.

See accompanying notes

33

American Beacon Short-Term Bond Fund
Schedule of Investments

October 31, 2010

	Par Amount		Value
	($000)		($000)
CORPORATE OBLIGATIONS — 50.50%
Finance — 27.57%
Barclays Bank plc, 5.45%, Due 9/12/2012		1,000		1,084
Berkshire Hathaway Finance Corp., 4.00%, Due 4/15/2012		1,000		1,049
Berkshire Hathaway, Inc., 0.834%, Due 2/11/2013*		2,000		2,010
BNP Paribas, 0.690%, Due 4/8/2013*		1,500		1,495
Citigroup, Inc., 0.715%, Due 11/5/2014*		2,573		2,428
CME Group, Inc., 5.40%, Due 8/1/2013		250		280
Credit Suisse First Boston, 5.00%, Due 5/15/2013		2,000		2,188
Dexia Credit Local N.Y., 0.693%, Due 3/5/2013* †		3,000		2,988
General Electric Capital Corp.,
0.421%, Due 3/20/2014*		1,446		1,390
0.552%, Due 9/15/2014*		1,218		1,170
Goldman Sachs Group, Inc., 4.75%, Due 7/15/2013		2,000		2,152
HSBC Finance Corp., 6.75%, Due 5/15/2011		1,000		1,031
JPMorgan Chase & Co., 0.958%, Due 2/26/2013*		3,000		3,010
MassMutual Global Funding II,
3.625%, Due 7/16/2012†		500		521
0.453%, Due 12/6/2013* †		700		692
MBNA Corp., 7.50%, Due 3/15/2012		2,000		2,145
Mellon Funding Corp., 0.526%, Due 5/15/2014*		2,000		1,981
Metropolitan Life Global Funding I,
0.542%, Due 3/15/2012* †		1,000		1,001
2.875%, Due 9/17/2012†		1,000		1,031
Monumental Global Funding III, 0.489%, Due 1/15/2014* †		1,000		959
Morgan Stanley, 0.589%, Due 1/9/2014*		2,000		1,905
Nationwide Building Society, 5.50%, Due 7/18/2012†		1,000		1,070
Pricoa Global Funding I,
0.388%, Due 1/30/2012* †		800		795
5.40%, Due 10/18/2012†		500		536
Rabobank Nederland NV, 2.65%, Due 8/17/2012†		2,000		2,066
Svenska Handelsbanken AB, 4.875%, Due 6/10/2014†		1,500		1,652
UBS AG, 1.439%, Due 2/23/2012*		1,000		1,008
UnitedHealth Group, Inc., 5.125%, Due 11/15/2010		1,000		1,001
Wachovia Bank NA, 0.834%, Due 11/3/2014*		1,000		957
Wachovia Corp., 2.236%, Due 5/1/2013*		1,000		1,029
				42,624
Industrials — 19.46%
American Honda Finance Corp., 4.625%, Due 4/2/2013†		1,000		1,078
Anheuser-Busch InBev Worldwide, Inc.,
3.00%, Due 10/15/2012		1,000		1,039
2.50%, Due 3/26/2013		1,000		1,029
AT&T Wireless Services, Inc., 7.875%, Due 3/1/2011		1,500		1,537
Burlington Northern Santa Fe LLC, 4.875%, Due 1/15/2015		1,000		1,115
Canadian Natural Resources Ltd., 6.70%, Due 7/15/2011		1,000		1,041
Caterpillar Financial Services Corp., 4.25%, Due 2/8/2013		500		536
Cellco Partnership / Verizon Wireless Capital LLC, 5.25%, Due 2/1/2012		1,000		1,058
Comcast Cable Communications Holdings, Inc., 8.375%, Due 3/15/2013		1,365		1,580
Daimler Finance NA LLC, 5.75%, Due 9/8/2011		1,000		1,041
Devon Financing Corp. U.L.C., 6.875%, Due 9/30/2011		1,000		1,054
France Telecom S.A., 4.375%, Due 7/8/2014		1,000		1,104
General Mills, Inc., 5.25%, Due 8/15/2013		1,000		1,118
John Deere Capital Corp., 5.25%, Due 10/1/2012		1,000		1,087
Kraft Foods, Inc., 5.625%, Due 11/1/2011		500		523
Marathon Oil Canada Corp., 8.375%, Due 5/1/2012		1,000		1,098
Nissan Motor Acceptance Corp., 5.625%, Due 3/14/2011†		2,000		2,036
Northrop Grumman Corp., 7.125%, Due 2/15/2011		1,000		1,018
Telefonica Emisiones SAU, 0.775%, Due 2/4/2013*		1,000		985
Time Warner Cable, Inc., 5.40%, Due 7/2/2012		1,000		1,070
Tyco International Finance SA, 6.75%, Due 2/15/2011		2,000		2,035
Union Pacific Corp., 6.50%, Due 4/15/2012		500		538

See accompanying notes

34

American Beacon Short-Term Bond Fund
Schedule of Investments

October 31, 2010

	Par Amount		Value
	($000)		($000)
5.45%, Due 1/31/2013		1,000		1,093
Vodafone Group plc, 5.50%, Due 6/15/2011		1,000		1,031
Volkswagen International Finance N.V., 1.625%, Due 8/12/2013†		1,000		1,009
Xerox Corp., 5.65%, Due 5/15/2013		300		329
XTO Energy, Inc.,
5.90%, Due 8/1/2012		1,000		1,093
6.25%, Due 4/15/2013		719		813
				30,088
Utilities — 3.47%
Dominion Resources, Inc., 5.70%, Due 9/17/2012		1,000		1,088
FPL Group Capital, Inc., 0.818%, Due 11/9/2012*		1,000		1,005
Midamerican Energy Holdings Co., 3.15%, Due 7/15/2012		1,000		1,037
Progress Energy, Inc., 7.10%, Due 3/1/2011		2,181		2,227
				5,357
Total Corporate Obligations (Cost $76,240)				78,069
ASSET-BACKED SECURITIES — 25.29%
Bank of America Auto Trust,
0.75%, Due 6/15/2012†		863		864
2.67%, Due 7/15/2013†		986		999
2.13%, Due 9/15/2013†		1,000		1,011
BMW Floorplan Master Owner Trust, 1.406%, Due 9/15/2014* †		2,000		2,024
Capital One Multi-Asset Execution Trust, 3.20%, Due 4/15/2014		2,000		2,033
CarMax Auto Owner Trust, 0.83%, Due 11/15/2012		974		975
Chase Issuance Trust, 1.806%, Due 4/15/2014*		2,000		2,038
Chrysler Financial Lease Trust, 1.78%, Due 6/15/2011†		2,599		2,605
Citibank Credit Card Issuance Trust, 2.70%, Due 6/24/2013		2,000		2,029
CitiFinancial Auto Issuance Trust, 2.59%, Due 10/15/2013†		2,000		2,033
Discover Card Master Trust, 1.556%, Due 2/17/2015*		2,000		2,032
Ford Credit Auto Owner Trust, 2.17%, Due 10/15/2013		1,000		1,015
Ford Credit Floorplan Master Owner Trust, 1.806%, Due 9/15/2014*		2,000		2,032
GE Capital Credit Card Master Note Trust, 3.69%, Due 7/15/2015		2,000		2,088
GE Equipment Midticket LLC, 2.34%, Due 6/17/2013		958		969
Harley-Davidson Motorcycle Trust, 5.52%, Due 11/15/2013		1,677		1,732
Honda Auto Receivables Owner Trust, 2.31%, Due 5/15/2013		1,500		1,521
John Deere Owner Trust, 0.72%, Due 7/16/2012		3,000		3,004
Mercedes-Benz Auto Receivables Trust, 0.70%, Due 8/15/2012		1,000		1,001
Nissan Auto Lease Trust, 2.07%, Due 1/15/2015		2,000		2,019
Nissan Master Owner Trust Receivables, 1.406%, Due 1/15/2015* †		1,000		1,012
USAA Auto Owner Trust, 5.55%, Due 2/15/2013		1,960		1,991
Volkswagen Auto Loan Enhanced Trust,
0.66%, Due 5/21/2012		981		981
6.24%, Due 7/20/2015		1,000		1,095
Total Asset-Backed Securities (Cost $38,536)				39,103
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS — 3.93%
Banc of America Commercial Mortgage, Inc.,
4.561%, Due 11/10/2041		1,170		1,195
5.634%, Due 4/10/2049		800		831
GMAC Mortgage Servicer Advance Funding Co. Ltd., 4.25%, Due 1/15/2022†		2,000		2,013
JPMorgan Chase Commercial Mortgage Securities Corp., 3.853%, Due 6/15/2043†		994		1,042
NCUA Guaranteed Notes, 1.84%, Due 10/7/2020		1,000		1,000
Total Non-Agency Mortgage-Backed Obligations (Cost $5,999)				6,081
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS — 6.97%
4.968%, Due 12/16/2021		344		349
4.201%, Due 8/16/2026		1,061		1,087
2.782%, Due 6/16/2036		1,975		2,052
3.069%, Due 6/16/2036		2,943		3,114
2.989%, Due 3/16/2039		1,989		2,088
3.210%, Due 10/16/2039		1,980		2,085
Total U.S. Agency Mortgage-Backed Obligations (Cost $10,328)				10,775

See accompanying notes

35

American Beacon Short-Term Bond Fund
Schedule of Investments

October 31, 2010

	Par Amount		Value
	($000)		($000)
U.S. TREASURY OBLIGATIONS — 11.97%
2.50%, Due 3/31/2015		13,500		14,386
1.75%, Due 7/31/2015		4,000		4,119
Total U.S. Treasury Obligations (Cost $17,500)				18,505
MUNICIPAL OBLIGATIONS — 0.23% (Cost $350)
State of Illinois, 1.823%, Due 1/1/2011		350		350

	Shares
SHORT-TERM INVESTMENTS — 0.54% (Cost $836)
JPMorgan U.S. Government Money Market Fund		836,463		836
TOTAL INVESTMENTS — 99.44% (Cost $149,789)				153,719
OTHER ASSETS, NET OF LIABILITIES — 0.56%				866
TOTAL NET ASSETS — 100.00%			$	154,585

Percentages are stated as a percent of net assets.

*	The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due date on these types of securities reflects the final maturity date.
†	Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $31,038 or 20.08% of net assets. The Fund has no right to demand registration of these securities.

See accompanying notes

36

American Beacon Funds
Statements of Assets and Liabilities
For the year ended October 31, 2010

				Retirement
				Income and
	High Yield			Appreciation			Intermediate		Short-Term
	Bond Fund			Fund			Bond Fund		Bond Fund
Assets:
Investments in unaffiliated securities, at value A	$	182,757		$	126,599		$	293,550	$	153,719
Receivable for investments sold		4,850			251			201		—
Dividends and interest receivable		3,846			1,008			2,446		789
Receivable for fund shares sold		384			154			431		141
Receivable for tax reclaims		2			8			9		4
Receivable for expense reimbursement (Note 2)		—			—			—		2
Prepaid expenses		54			55			53		57
Other assets		45			—			—		—
Total assets		191,938			128,075			296,690		154,712
Liabilities:
Payable for investments purchased		5,774			215			1,253		—
Payable for fund shares redeemed		23			12			7		32
Dividends payable		150			48			—		5
Management and investment advisory fees payable (Note 2)		221			114			50		26
Administrative service and service fees payable (Note 2)		35			63			14		17
Professional fees payable		25			28			25		30
Trustee fees payable		7			1			3		6
Prospectus and shareholder reports		20			3			5		1
Other liabilities		12			1			17		10
Total liabilities		6,267			485			1,374		127
Net Assets	$	185,671		$	127,590		$	295,316	$	154,585
Analysis of Net Assets:
Paid-in-capital		186,058			120,544			276,244		159,053
Undistributed (distributions in excess of) net investment income		503			(62	)		501		(539	)
Accumulated net realized gain (loss)		(10,663	)		(1,754	)		4,899		(7,859	)
Unrealized appreciation of investments		9,773			8,862			13,672		3,930
Net assets	$	185,671		$	127,590		$	295,316	$	154,585
Shares outstanding (no par value):
Institutional Class		4,578,664			N/A			26,192,234		14,773,710
Y Class		123			34,017			34,444		5,762
Investor Class		5,976,348			11,655,630			345,470		2,605,711
A Class		4,375			15,317			4,155		4,940
C Class		4,033			95,659			29,296		113
AMR Class		9,936,936			N/A			N/A		N/A
Net asset value, offering and redemption price per share:
Institutional Class	$	9.05			N/A		$	11.10	$	8.89
Y Class	$	9.06		$	10 .80		$	11.10	$	8.90
Investor Class	$	9.06		$	10 .81		$	11.08	$	8.89
A Class (Net asset value only)	$	9.08		$	10 .81		$	11.07	$	8.89
A Class (Offering and redemption price)	$	9.53		$	11 .35		$	11.62	$	9.12
C Class	$	9.05		$	10 .82		$	11.08	$	8.90
AMR Class	$	9.06			N/A			N/A		N/A
A Cost of investments in unaffiliated securities	$	172,984		$	117,737		$	279,878	$	149,789

See accompanying notes

37

American Beacon Funds
Statements of Operations
Year Ended October 31, 2010 (in thousands)

				Retirement
				Income and
	High Yield			Appreciation		Intermediate			Short-Term
	Bond Fund			Fund		Bond Fund			Bond Fund
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	31		$	265	$	13		$	3
Interest income		21,280			4,227		9,521			4,246
Miscellaneous Income		96			—		—			—
Total investment income		21,407			4,492		9,534			4,249
Expenses:
Management and investment advisory fees (Note 2)		878			369		514			324
Administrative service fees (Note 2):
Institutional Class		134			—		127			63
Investor Class		241			347		9			105
AMR Class		51			—		—			—
Transfer agent fees:
Institutional Class		3			—		15			8
Investor Class		7			8		—			4
AMR Class		8			—		—			—
Custody and fund accounting fees		45			23		49			34
Professional fees		40			38		42			44
Registration fees and expenses		51			20		48			34
Service fees (Note 2):
Investor Class		200			428		7			88
Distribution fees- C Class (Note 2)		—			1		—			—
Prospectus and shareholder reports		25			2		11			11
Trustee fees		18			9		17			11
Other expenses		24			11		23			19
Total expenses		1,725			1,256		862			745
Net (fees waived and expenses reimbursed)/recouped by Manager (Note 2)		—			—		(2	)		(65	)
Net expenses		1,725			1,256		860			680
Net investment income		19,682			3,236		8,674			3,569
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		17,096			871		5,763			1,400
Change in net unrealized appreciation or depreciation of:
Investments		(1,037	)		5,410		5,150			837
Net gain on investments		16,059			6,281		10,913			2,237
Net increase in net assets resulting from operations	$	35,741		$	9,517	$	19,587		$	5,806
A Foreign taxes	$	—		$	1	$	—		$	—

See accompanying notes

38

American Beacon Funds
Statements of Changes in Net Assets (in thousands)

							Retirement Income and
	High Yield Bond Fund						Appreciation Fund
	Year Ended			Year Ended			Year Ended			Year Ended
	October 31,			October 31,			October 31,			October
	2010			2009			2010			31, 2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	19,682		$	19,821		$	3,236		$	3,433
Net realized gain (loss) on investments		17,096			(11,143	)		871			(242	)
Change in net unrealized appreciation or depreciation of investments		(1,037	)		61,933			5,410			14,228
Net increase in net assets resulting from operations		35,741			70,611			9,517			17,419
Distributions to Shareholders:
Net investment income:
Institutional Class		(3,870	)		(6,264	)		—			—
Y Class		—			—			(2	)		—
Investor Class		(6,758	)		(4,848	)		(3,375	)		(3,577	)
C Class		—			—			(1	)		—
AMR Class		(9,049	)		(8,707	)		—			—
Return of Capital:
Investor Class		—			—			—			(173	)
Net distributions to shareholders		(19,677	)		(19,819	)		(3,378	)		(3,750	)
Capital Share Transactions:
Proceeds from sales of shares		256,394			297,510			41,365			24,626
Reinvestment of dividends and distributions		17,683			17,602			2,727			3,745
Cost of shares redeemed		(335,193	)		(255,402	)		(16,368	)		(48,782	)
Redemption fees		74			—			—			—
Net increase (decrease) in net assets from capital share transactions		(61,042	)		59,710			27,724			(20,411	)
Net increase (decrease) in net assets		(44,978	)		110,502			33,863			(6,742	)
Net Assets:
Beginning of period		230,649			120,147			93,727			100,469
End of Period *	$	185,671		$	230,649		$	127,590		$	93,727
*Includes undistributed net investment income (loss) of	$	503		$	503		$	(62	)	$	(117	)

See accompanying notes

39

American Beacon Funds
Statements of Changes in Net Assets (in thousands)

	Intermediate Bond Fund						Short-Term Bond Fund
	Year Ended			Year Ended			Year Ended			Year Ended
	October 31,			October 31,			October 31,			October 31,
	2010			2009			2010			2009
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	8,674		$	8,798		$	3,569		$	5,710
Net realized gain on investments		5,763			1,112			1,400			5,301
Change in net unrealized appreciation or depreciation of investments		5,150			17,269			837			2,645
Net increase in net assets resulting from operations		19,587			27,179			5,806			13,656
Distributions to Shareholders:
Net investment income:
Institutional Class		(8,812	)		(8,775	)		(3,855	)		(7,180	)
Y Class		(2	)		—			—			—
Investor Class		(89	)		(23	)		(945	)		(653	)
C Class		(1	)		—			—			—
Net distributions to shareholders		(8,904	)		(8,798	)		(4,800	)		(7,833	)
Capital Share Transactions:
Proceeds from sales of shares		210,797			154,268			84,366			92,994
Reinvestment of dividends and distributions		8,901			8,797			4,725			7,696
Cost of shares redeemed		(148,261	)		(115,884	)		(90,705	)		(214,778	)
Net increase (decrease) in net assets from capital share transactions		71,437			47,181			(1,614	)		(114,088	)
Net increase (decrease) in net assets		82,120			65,562			(608	)		(108,265	)
Net Assets:
Beginning of period		213,196			147,634			155,193			263,458
End of Period *	$	295,316		$	213,196		$	154,585		$	155,193
*Includes undistributed net investment income (loss) of	$	501		$	501		$	(539	)	$	(137	)

See accompanying notes

40

American Beacon Funds
Notes to Financial Statements
October 31, 2010

1. Organization and Significant Accounting Policies

          American Beacon Funds (the “Trust”) which is comprised of 19 Funds, is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended, (the “Act”) as a diversified, open-end management investment company. These financial statements and notes to the financial statements relate to the American Beacon High Yield Bond Fund, the American Beacon Retirement Income and Appreciation Fund, the American Beacon Intermediate Bond Fund and the American Beacon Short-Term Bond Fund (each a “Fund” and collectively, the “Funds”), each a series of the Trust.

          American Beacon Advisors, Inc. (the “Manager”) is a wholly-owned subsidiary of Lighthouse Holdings, Inc. and was organized in 1986 to provide business management, advisory, administrative and asset management consulting services to the Trust and other investors.

Class Disclosure

          The inception date of the Y Class is March 1, 2010, the inception date of the A Class is May 17, 2010 and the inception date of the C Class is September 1, 2010.

          Each Fund, has multiple classes of shares designed to meet the needs of different groups of investors; however, not all Funds offer all classes. The following table sets forth the differences amongst the classes:

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	Individual investors investing directly or through an intermediary
A Class	General public and investors investing through an intermediary with applicable sales charges
C Class	General public and investors investing through an intermediary with applicable sales charges
AMR Class	Investors in the tax-exempt retirement and benefit plans of the Manager, AMR Corporation and its affiliates

          Administrative service fees, service fees and distribution fees vary amongst the classes as described more fully in footnote 2.

Security Valuation

          Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. ET, each day that the Exchange is open for business. Equity securities for which market quotations are available are valued at the last sale price or official closing price (closing bid price or last evaluated quote if no sale has occurred) on the primary market or exchange on which they trade.

          Debt securities (other than short-term securities) normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such as institution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics and other market data. The prices of debt securities may be determined using quotes obtained from brokers.

          Investments in mutual funds are valued at the closing net asset value per share of the mutual fund on the day of valuation. Investment grade short-term obligations with 60 days or less to maturity are valued using the amortized cost method, which approximates fair value.

          Securities for which market prices are not readily available or are not reflective of the fair value of the security, as determined by the Manager, will be priced at fair value following procedures approved by the Board of Trustees (the “Board”).

41

American Beacon Funds
Notes to Financial Statements
October 31, 2010

Valuation Inputs

          Various inputs may be used to determine the value of the Funds’ investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

Level 1 — Quoted prices in active markets for identical securities.

Level 2 — Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. Level 2 securities are fixed-income securities that are valued using observable inputs as stated above.

Level 3 — Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment, and would be based on the best information available.

          The Funds’ investments are summarized by level based on the inputs used to determine their values. During the period there were no significant transfers between levels for the Funds. As of October 31, 2010, the investments were classified as described below (in thousands):

High Yield Bond Fund	Level 1		Level 2		Level 3		Total
Common Stocks	$	324	$	—	$	—	$	324
Preferred Stocks		324		—		—		324
Corporate Obligations		—		176,003		—		176,003
Convertible Obligations		—		1,064		—		1,064
Short Term Investments		5,042		—		—		5,042
Total Investments in Securities	$	5,690	$	177,067	$	—	$	182,757

Retirement Income and Appreciation Fund	Level 1		Level 2		Level 3		Total
Preferred Stocks	$	1,976	$	—	$	—	$	1,976
Common Stock		5,628		—		—		5,628
Convertible Preferred		568		—		—		568
Convertible Obligations		—		16,264		—		16,264
Corporate Obligations		—		45,743		—		45,743
Non-Agency Mortgage Backed Obligations		—		3,827		—		3,827
Asset-Backed Obligations		—		5,960		—		5,960
U.S. Agency Mortgage Backed Obligations		—		16,705		—		16,705
U.S. Agency Obligations		—		431		—		431
U.S. Treasury Obligations		—		25,261		—		25,261
Municipal Obligations		—		200		—		200
Short Term Investments		4,036		—		—		4,036
Total Investments in Securities	$	12,208	$	114,391	$	—	$	126,599

Intermediate Bond Fund	Level 1		Level 2		Level 3		Total
Corporate Obligations	$	—	$	112,374	$	—	$	112,374
Non-Agency Mortgage Backed Obligations		—		11,306		—		11,306
Asset-Backed Obligations		—		9,419		—		9,419
U.S. Agency Mortgage Backed Obligations		—		74,895		—		74,895
U.S. Agency Obligations		—		999		—		999
U.S. Treasury Obligations		—		74,687		—		74,687
Municipal Obligations		—		250		—		250
Short Term Investments		9,620		—		—		9,620
Total Investments in Securities	$	9,620	$	283,930	$	—	$	293,550

42

American Beacon Funds
Notes to Financial Statements
October 31, 2010

Short-Term Bond Fund	Level 1		Level 2		Level 3		Total
Corporate Obligations	$	—	$	78,069	$	—	$	78,069
Non-Agency Mortgage Backed Obligations		—		6,081		—		6,081
Asset-Backed Obligations		—		39,103		—		39,103
U.S. Agency Mortgage Backed Obligations		—		10,775		—		10,775
U.S. Treasury Obligations		—		18,505		—		18,505
Municipal Obligations		—		350		—		350
Short Term Investments		836		—		—		836
Total Investments in Securities	$	836	$	152,883	$	—	$	153,719

Security Transactions and Investment Income

          Security transactions are recorded on the trade date of the security purchase or sale. The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the net asset value. The value of the security may vary with market fluctuations.

          Dividend income, net of foreign taxes, is recorded on the ex-dividend date except certain dividends from foreign securities which are recorded as soon as the information is available to the Funds. Interest income is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For financial and tax reporting purposes, realized gains and losses are determined on the basis of specific lot identification.

Dividends to Shareholders

          Dividends from net investment income of the Funds generally will be declared daily, payable monthly. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date.

Commission Recapture

          The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If a Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. These amounts are reported with the net realized gains in the Fund’s Statement of Operations.

Allocation of Income, Expenses, Gains, and Losses

          Income, expenses (other than those attributable to a specific class), gains, and losses are allocated daily to each class of shares based upon the relative proportion of net assets represented by such class. Operating expenses directly attributable to a specific class are charged against the operations of that class.

Use of Estimates

          The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.

Other

          Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liability arising out of the performance of their duties to the Trust. In the normal course of business, the Trust

43

American Beacon Funds
Notes to Financial Statements
October 31, 2010

enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.

2. Transactions with Affiliates

Management Agreement

          The Trust and the Manager are parties to a Management Agreement that obligates the Manager to provide or oversee the provision of all investment advisory, fund management and securities lending services. Investment assets of the High Yield Bond, Retirement Income and Appreciation, and Intermediate Bond Funds are managed by one or more investment advisors which have entered into separate investment advisory agreements with the Manager. As compensation for performing the duties required under the Management Agreement, the Manager receives from the High Yield Bond Fund and Retirement Income and Appreciation Fund an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the investment advisors hired by the Manager to direct investment activities of the Funds. The Manager receives an annualized fee of 0.20% of the average daily net assets of the Intermediate Bond Fund and pays a portion of its fee to an investment advisor hired by the Manager to direct investment activities of a portion of the Fund. The Manager is one of the investment advisors of the Retirement Income and Appreciation Fund and receives an annualized fee of 0.15% on the portion of assets managed by the Manager. The Manager serves as the sole investment advisor to the Short-Term Bond Fund. Pursuant to the Management Agreement, the Manager receives from the Fund an annualized fee equal to 0.20% of average daily net assets of the Short-Term Bond Fund. Management fees paid during the year ended October 31, 2010 were as follows (dollars in thousands):

						Amounts paid		Net Amounts
	Management			Management		to Investment		Retained by
	Fee Rate			Fee		Advisors		Manager
High Yield Bond		0.30%-0.45	%		878		765		113
Retirement Income and Appreciation		0.20%-0.80	%		369		310		59
Intermediate Bond		0.20	%		514		213		301

Administrative Services Agreement

          The Manager and the Trust entered into an Administrative Services Agreement which obligates the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administrative Services Agreement, the Manager receives, an annualized fee of 0.05% of the average daily net assets of the AMR Class, 0.30% of the average daily net assets of the Institutional, Y, and Investor Classes and 0.40% of the average daily net assets of the A and C Classes of each Fund except for the Institutional Class of the Intermediate and Short-Term Bond Funds from which the Manager received a fee of 0.05% of average daily net assets. Administrative Service fees for the Y, A, and C Classes for the period ended October 31, 2010 were less than $500.

Distribution Plans

          The Trust, has adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees may be charged to the Funds for distribution purposes. However, the Plan authorizes the management and administrative service fees received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Trust does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Trust shares.

          A separate Distribution Plan (the “Distribution Plan”) has been adopted pursuant to Rule 12b-1 under the Act for the A and C Classes of the Funds. Under the Distribution Plan, as compensation for distribution

44

American Beacon Funds
Notes to Financial Statements

October 31, 2010

assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of each A Class and 1.00% of the average daily net assets of each C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance. Distribution fees for the A and some C Classes for the period ended October 31, 2010 were less than $500.

Service Plans

          The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Investor, Y, A, and C Classes. As compensation for performing the duties required under the Service Plan, the Manager receives 0.10% of the average daily net assets of the Y Class, 0.15% of the average daily net assets of the A and C Classes, and up to 0.375% of the average daily net assets of the Investor Class of each Fund. Service fees for the Y, A, and C Classes for the period ended October 31, 2010 were less than $500.

Interfund Lending Program

          Pursuant to an exemptive order by the Securities and Exchange Commission (“SEC”), the Funds, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program as a borrower. This program provides an alternative credit facility allowing the Funds to borrow from other participating Funds. For the year ended October 31, 2010, the High Yield Bond Fund borrowed from the both the American Beacon Money Market Portfolio and the American Beacon U.S. Government Money Market Select Fund on average $8,070,957 for nine days at 0.78% with interest charges of $1,582. The Retirement Income and Appreciation Fund borrowed from the American Beacon U.S. Government Money Market Select Fund 82,732 for 1 day at 0.85% with an interest charge of $2.

Reimbursement of Expenses

          The Manager voluntarily reimbursed $4 to the A Class of the Retirement Income and Appreciation Fund for operating expenses. The Manager contractually agreed to reimburse the following Funds to the extent that total operating expenses exceeded the Fund’s expense cap. Of these amounts approximately $2,000 was receivable from the Manager at October 31, 2010 for the Short-Term Bond Fund. For the period ended October 31, 2010, the Manager reimbursed expenses as follows:

			Expense Caps
			3/1/10 to			Reimbursed		Expiration of
Fund	Class		2/28/11			Expenses		Reimbursements
High Yield Bond		A		1.12	%	$	4		2013
High Yield Bond		C		1.87	%		7		2013
Intermediate Bond		Y		0.65	%		17		2013
Intermediate Bond	Investor			0.79	%		2,224		2013
Intermediate Bond		A		0.99	%		3		2013
Intermediate Bond		C		1.74	%		76		2013
Short-Term Bond		Y		0.65	%		1		2013
Short-Term Bond*	Investor			0.79	%		64,854		2013
Short-Term Bond		A		0.85	%		7		2013
Short Term Bond		C		1.60	%		1		2013

* The contractual expense cap was changed from 0.74% to 0.79% for the Short-Term Bond Investor Class on July 29, 2010.

Expense Reimbursement Plan

          The Funds have adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. The carryover of excess expenses potentially reimbursable to the Manager but not recorded as a liability for the

45

American Beacon Funds
Notes to Financial Statements

October 31, 2010

Intermediate Bond Fund is $10,509 expiring in 2012 and for the Short-Term Bond Fund $1,657 and $73,068 expiring in 2011 and 2012, respectively. During the year ended October 31, 2010, the Funds have not recorded a liability for potential reimbursement, due to the current assessment that a reimbursement is unlikely.

3. Federal Income and Excise Taxes

          It is the policy of each Fund to qualify as a regulated investment company, by complying with all applicable provisions of the Code, and to make distribution of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes, each Fund is treated as a single entity for the purpose of determining such qualification.

          The Funds do not have any unrecognized tax benefits in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2010 remains subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statements of Operations.

          Dividends are categorized in accordance with income tax regulations which may treat certain transactions differently than U.S. generally accepted accounting principles. Accordingly, the character of distributions and composition of net assets for tax purposes may differ from those reflected in the accompanying financial statements.

          The tax character of distributions paid during the fiscal years ended October 31, 2010 and October 31, 2009 were as follows (in thousands)

					Retirement Income and
	High Yield Bond				Appreciation
	Year Ended		Year Ended		Year Ended		Year Ended
	October 31,		October 31,		October 31,		October 31,
	2010		2009		2010		2009
Distributions paid from:
Ordinary income*
Institutional Class	$	3,870	$	6,264	$	—	$	—
Y Class		—		—		2		—
Investor Class		6,758		4,848		3,375		3,577
AMR Class		9,049		8,707		—		—
C Class		—		—		1		—
Return of Capital
Institutional Class		—		—		—		—
Investor Class		—		—		—		173
AMR Class		—		—		—		—
Total distributions paid	$	19,677	$	19,819	$	3,378	$	3,750

* For tax purposes, short-term capital gains are considered ordinary income distributions.

	Intermediate Bond				Short-Term Bond
	Year Ended		Year Ended		Year Ended		Year Ended
	October 31,		October 31,		October 31,		October 31,
	2010		2009		2010		2009
Distributions paid from:
Ordinary income*
Institutional Class	$	8,812	$	8,775	$	3,855	$	7,180
Y Class		2		—		—		—
Investor Class		89		23		945		653
AMR Class		—		—		—		—
C Class		1		—		—		—
Total distributions paid	$	8,904	$	8,798	$	4,800	$	7,833

* For tax purposes, short-term capital gains are considered ordinary income distributions.

46

American Beacon Funds
Notes to Financial Statements

October 31, 2010

As of October 31, 2010, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

				Retirement
	High Yield			Income and			Intermediate			Short-Term
	Bond			Appreciation			Bond			Bond
Cost basis of investments for federal income tax purposes	$	173,945		$	117,938		$	279,893		$	150,864
Unrealized appreciation		14,097			9,114			14,249			3,455
Unrealized depreciation		(5,285	)		(453	)		(592	)		(600	)
Net unrealized appreciation/(depreciation)		8,812			8,661			13,657			2,855
Undistributed ordinary income		652			181			3,862			540
Accumulated long-term gain/(loss)		(9,702	)		(1,748	)		1,554			(7,859	)
Other temporary differences		(149	)		(48	)		(1	)		(4	)
Distributable earnings/(deficit)	$	(387	)	$	7,046		$	19,072		$	(4,468	)

          Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation/(depreciation) are attributable primarily to the tax deferral of losses from wash sales, book amortization for premiums, and income adjustments associated with contingent payment debt instruments.

          Due to inherent differences in the recognition of income, expenses and realized gains/losses under U.S. generally accepted accounting principles and federal income tax regulations, permanent differences between book and tax reporting have been identified and appropriately reclassified on the Statements of Assets and Liabilities. Accordingly, the following amounts represent current year permanent differences derived from book amortization of premium, pay down reclasses, income adjustments associated with contingent payment debt instruments, and dividend reclasses that have been reclassified as of October 31, 2010 (in thousands):

				Retirement
	High Yield			Income and			Intermediate			Short-Term
	Bond			Appreciation			Bond			Bond
Paid-in-capital	$	—		$	(97	)	$	—		$	—
Undistributed net investment income		(5	)		197			230			829
Accumulated net realized gain (loss)		5			(100	)		(230	)		(829	)
Unrealized appreciation (depreciation) of investments, futures contracts and foreign currency		—			—			—			—

          At October 31, 2010, capital loss carry forward positions for federal income tax purposes were as follows (in thousands):

Fund	2014		2015		2016		2017		Total
High Yield Bond		—		—		—		9,702		9,702
Retirement Income and Appreciation		—		—		1,283		465		1,748
Intermediate Bond		—		—		—		—		—
Short-Term Bond		2,194		467		5,198		—		7,859

          The High Yield Bond Fund, Retirement Income and Appreciation Fund, Intermediate Bond, and Short-Term Bond Funds utilized $15,328, $774, $626, and $571, respectively, of net capital loss carryovers for the year ended October 31, 2010.

47

American Beacon Funds
Notes to Financial Statements

October 31, 2010

4. Investment Transactions

          The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the year ended October 31, 2010 were as follows (in thousands):

			Retirement
	High Yield		Income and		Intermediate		Short-Term
	Bond		Appreciation		Bond		Bond
Purchases (excluding U.S. government securities)	$	376,714	$	82,951	$	304,603	$	99,253
Sales and maturities (excluding U.S. government securities)		441,986		55,427		229,771		94,434
Purchases of U.S. government securities		—		29,112		184,384		18,983
Sales and maturities of U.S. government securities		—		14,243		139,450		1,532

5. Capital Share Transactions

          The tables below summarize the activity in capital shares for each Class of the Funds (shares and dollars in thousands):

Year Ended October 31, 2010

	Institutional Class						Y Class					Investor Class
High Yield Bond Fund	Shares			Amount			Shares		Amount			Shares			Amount
Shares sold		1,192		$	10,318			—	$	1			10,613		$	91,795
Reinvestment of dividends		228			1,978			—		—			767			6,656
Shares redeemed		(2,453	)		(21,256	)*		—		—	*		(16,175	)		(139,538	)*
Net increase (decrease) in shares outstanding		(1,033	)	$	(8,960	)		—	$	1			(4,795	)	$	(41,087	)

	AMR Class						A Class					C Class
High Yield Bond Fund	Shares			Amount			Shares		Amount			Shares		Amount
Shares sold		17,993		$	154,205			4	$	39			4	$	36
Reinvestment of dividends		1,042			9,049			—		—			—		—
Shares redeemed		(20,103	)		(174,325	)*		—		—	*		—		—	*
Net increase (decrease) in shares outstanding		(1,068	)	$	(11,071	)		4	$	39			4	$	36

	Y Class				Investor Class						A Class				C Class
Retirement Income and Appreciation Fund	Shares		Amount		Shares			Amount			Shares		Amount		Shares		Amount
Shares sold		34	$	357		3,818		$	39,811			15	$	164		96	$	1,033
Reinvestment of dividends		—		2		262			2,724			—		—		—		1
Shares redeemed		—		—		(1,567	)		(16,368	)		—		—		—		—
Net increase in shares outstanding		34	$	359		2,513		$	26,167			15	$	164		96	$	1,034

	Institutional Class						Y Class					Investor Class
Intermediate Bond Fund	Shares			Amount			Shares		Amount			Shares			Amount
Shares sold		19,109		$	208,277			34	$	381			163		$	1,767
Reinvestment of dividends		812			8,811			—		2			8			88
Shares redeemed		(13,473	)		(147,900	)		—		(2	)		(33	)		(359	)
Net increase in shares outstanding		6,448		$	69,188			34	$	381			138		$	1,496

	A Class				C Class
Intermediate Bond Fund	Shares		Amount		Shares		Amount
Shares sold		4	$	46		29	$	326
Reinvestment of dividends		—		—		—		—
Shares redeemed		—		—		—		—
Net increase in shares outstanding		4	$	46		29	$	326

48

American Beacon Funds
Notes to Financial Statements

October 31, 2010

	Institutional Class						Y Class				Investor Class
Short-Term Bond Fund	Shares			Amount			Shares		Amount		Shares			Amount
Shares sold		3,254		$	28,766			6	$	51		6,276		$	55,504
Reinvestment of dividends		435			3,852			—		—		99			873
Shares redeemed		(3,048	)		(26,963	)		—		—		(7,209	)		(63,742	)
Net increase (decrease) in shares outstanding		641		$	5,655			6	$	51		(834	)	$	(7,365	)

	A Class				C Class
Short-Term Bond Fund	Shares		Amount		Shares		Amount
Shares sold		5	$	44		—	$	1
Reinvestment of dividends		—		—		—		—
Shares redeemed		—		—		—		—
Net increase (decrease) in shares outstanding		5	$	44		—	$	1

Period Ended October 31, 2009

	Institutional Class						Investor Class						AMR Class
High Yield Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		4,158		$	27,998			16,984		$	119,477			20,142		$	150,035
Reinvestment of dividends		601			4,158			626			4,738			1,177			8,706
Shares redeemed		(8,324	)		(58,240	)		(8,898	)		(65,269	)		(16,820	)		(131,893	)
Net increase (decrease) in shares outstanding		(3,565	)	$	(26,084	)		8,712		$	58,946			4,499		$	26,848

^* Net of Redemption Fees

	Investor Class
Retirement Income and Appreciation Fund	Shares			Amount
Shares sold		2,591		$	24,626
Reinvestment of dividends		393			3,745
Shares redeemed		(5,256	)		(48,782	)
Net (decrease) in shares outstanding		(2,272	)	$	(20,411	)

	Institutional Class						Investor Class
Intermediate Bond Fund	Shares			Amount			Shares			Amount
Shares sold		14,857		$	152,046			213		$	2,222
Reinvestment of dividends		850			8,774			2			23
Shares redeemed		(11,318	)		(115,800	)		(8	)		(84	)
Net increase in shares outstanding		4,389		$	45,020			207		$	2,161

	Institutional Class						Investor Class
Short-Term Bond Fund	Shares			Amount			Shares			Amount
Shares sold		4,547		$	39,495			6,121		$	53,499
Reinvestment of dividends		827			7,178			59			518
Shares redeemed		(21,058	)		(182,876	)		(3,640	)		(31,902	)
Net increase (decrease) in shares outstanding		(15,684	)	$	(136,203	)		2,540		$	22,115

49

American Beacon High Yield Bond Fund
Financial Highlights

(For a share outstanding throughout the period)

																Y Class
																March
	Institutional Class															01 to
	Year Ended October 31,															October
	2010			2009			2008A			2007			2006B			31, 2010
Net asset value, beginning of period	$	8.42		$	6.77		$	10.11		$	10.20		$	10.22		$	8.63
Income from investment operations:
Net investment income		0.75			0.79			0.78			0.77			0.88			0.50
Net gains (losses) on securities (both realized and unrealized)		0.63			1.66			(3.34	)		(0.09	)		0.09			0.43
Total income (loss) from investment operations		1.38			2.45			(2.56	)		0.68			0.97			0.93
Less distributions:
Dividends from net investment income		(0.75	)		(0.80	)		(0.78	)		(0.77	)		(0.88	)		(0.50	)
Distributions from net realized gains on securities		—			—			—			—			(0.11	)		—
Total distributions		(0.75	)		(0.80	)		(0.78	)		(0.77	)		(0.99	)		(0.50	)
Net asset value, end of period	$	9.05		$	8.42		$	6.77		$	10.11		$	10.20		$	9.06
Total return C		17.17	%		39.06	%		(27.03	)%		6.85	%		8.78	%		11 .17	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	41,459		$	47,254		$	62,138		$	114,911		$	231,693		$	1
Ratios to average net assets (annualized):
Expenses, net of waivers		0.79	%		0.79	%		0.85	%		0.85	%		0.85	%		0 .82	%E
Expenses, before waivers		0.79	%		0.79	%		0.85	%		0.86	%		0.85	%		0 .82	%E
Net investment income, net of waivers		8.69	%		11.46	%		8.38	%		7.55	%		7.55	%		8 .53	%E
Net investment income, before waivers		8.69	%		11.46	%		8.38	%		7.54	%		7.55	%		8 .53	%E
Portfolio turnover rate		176	%		212	%		157	%		92	%		88	%		176	%F

A	On May 21, 2008, Post Advisory Group, LLC ceased managing a portion of the High Yield Bond Fund and on May 22, 2008 Logan Circle Partners, L.P. began managing a portion of the High Yield Bond Fund.
B	Franklin Advisers, Inc. was added as an investment advisor to the High Yield Bond Fund on September 12, 2006.
C	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
D	Not annualized.
E	Annualized.
F	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.
G	Portfolio turnover rate is for the period from November 1, 2006 through October 31, 2007.

50

															AMR Class												A Class			C Class
																								September			May			September
Investor Class																								4 to			17 to			1 to
Year Ended October 31,															Year Ended October 31,									October			October			October
2010			2009			2008A			2007			2006B			2010			2009			2008A			31, 2007			31, 2010			31, 2010
$	8.42		$	6.77		$	10.11		$	10.21		$	10.22		$	8.42		$	6.77		$	10.11		$	9.94		$	8.67		$	8.68
	0.73			0.78			0.75			0.75			0.85			0.78			0.81			0.80			0.12			0.32			0.09
	0.64			1.65			(3.34	)		(0.10	)		0.10			0.63			1.65			(3.34	)		0.17			0.41			0.37
	1.37			2.43			(2.59	)		0.65			0.95			1.41			2.46			(2.54	)		0.29			0.73			0.46
	(0.73	)		(0.78	)		(0.75	)		(0.75	)		(0.85	)		(0.77	)		(0.81	)		(0.80	)		(0.12	)		(0.32	)		(0.09	)
	—			—			—			—			(0.11	)		—			—			—			—			—			—
	(0.73	)		(0.78	)		(0.75	)		(0.75	)		(0.96	)		(0.77	)		(0.81	)		(0.80	)		(0.12	)		(0.32	)		(0.09	)
$	9.06		$	8.42		$	6.77		$	10.11		$	10.21		$	9.06		$	8.42		$	6.77		$	10.11		$	9.08		$	9.05
	17.00	%		38.70	%		(27 .24	)%		6.52	%		8.63	%		17.59	%		39.41	%		(26.84	)%		2 .94	%D		8 .66	%D		5 .31	%D
$	54,142		$	90,736		$	13,949		$	28,758		$	80,284		$	89,992		$	92,659		$	44,060		$	82,322		$	40		$	37
	1.04	%		1.01	%		1.10	%		1.08	%		1.08	%		0.54	%		0.53	%		0.58	%		0 .61	%E		1 .12	%E		1 .87	%E
	1.04	%		1.01	%		1.10	%		1.08	%		1.08	%		0.54	%		0.53	%		0.58	%		0 .61	%E		1 .30	%E		2 .29	%E
	8.48	%		9.36	%		8.06	%		7.32	%		7.33	%		8.91	%		10.34	%		8.64	%		7 .54	%E		7 .11	%E		5 .40	%E
	8.48	%		9.36	%		8.06	%		7.32	%		7.33	%		8.91	%		10.34	%		8.64	%		7 .54	%E		6 .93	%E		4 .97	%E
	176	%		212	%		157	%		92	%		88	%		176	%		212	%		157	%		92	%G		176	%F		176	%F

51

American Beacon Retirement Income and Appreciation Fund
Financial Highlights
(For a share outstanding throughout the period)

	Y Class																			A Class
	March												��							May
	1 to			Investor Class																17 to
	October			Year Ended October 31,																October
	31, 2010			2010			2009			2008				2007			2006			31, 2010
Net asset value, beginning of period	$	10.31		$	10.25		$	8.80		$	10.50			$	10.25		$	9.98		$	10.37
Income from investment operations:
Net investment income		0.20			0.36			0.32			0.41				0.36			0.33			0.13
Net gains (losses) on securities (both realized and unrealized)		0.49			0.51			1.53			(1.39	)			0.32			0.29			0.44
Total income (loss) from investment operations		0.69			0.87			1.85			(0.98	)			0.68			0.62			0.57
Less distributions:
Dividends from net investment income		(0.20	)		(0.31	)		(0.40	)		(0.49	)			(0.42	)		(0.35	)		(0.13	)
Distributions from net realized gains on securities		—			—			—			(0.23	)			(0.01	)		—			—
Return of capital		—			—			0.00	E		—				—			—			—
Total distributions		(0.20	)		(0.31	)		(0.40	)		(0.72	)			(0.43	)		(0.35	)		(0.13	)
Net asset value, end of period	$	10.80		$	10.81		$	10.25		$	8.80			$	10.50		$	10.25		$	10.81
Total return A		6.78	%B		8.60	%		21.50	%		(10.02	)%			6.75	%		6.36	%		5.52	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	367		$	126,022		$	93,727		$	100,469			$	99,789		$	125,915		$	166
Ratios to average net assets (annualized):
Expenses		0.80	%C		1.08	%		1.01	%		0.92	%			0.94	%		0.93	%		1.14	%C
Expenses, before waivers		0.80	%C		1.08	%		1.01	%		0.92	%			0.94	%		0.93	%		1.20	%C
Net investment income		2.74	%C		2.79	%		3.86	%		3.64	%			3.69	%		3.21	%		2.10	%C
Net investment income, before waivers		2.74	%C		2.79	%		3.86	%		3.64	%			3.69	%		3.21	%		2.03	%C
Portfolio turnover rate		51	%D		51	%		53	%		76	%			103	%		65	%		51	% D

A	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
B	Not annualized.
C	Annualized.
D	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.
E	The tax return of capital is calculated based upon outstanding shares at the time of the distribution. Amounts are less than $0.01 per share.

52

C Class
September
01 to
October
31, 2010
$	10.61
	0.03
	0.20
	0.23
	(0.02	)
	—
	—
	(0.02	)
$	10.82
	2.19	%B
$	1,035
	1.96	%C
	2.33	%C
	1.77	%C
	1.40	%C
	51	% D

53

American Beacon Intermediate Bond Fund
Financial Highlights
(For a share outstanding throughout the period)

																Y Class			Investor Class
										��						March 1			Year			March 2
	Institutional Class															to			Ended			to
	Year Ended October 31,															October			October			October
	2010			2009			2008			2007			2006			31, 2010			31, 2010			31, 2009
Net asset value, beginning of period	$	10.69		$	9.61		$	10.10		$	10.02		$	10.01		$	10.69		$	10.68		$	10.14
Income from investment operations:
Net investment income		0.39			0.46			0.50			0.50			0.46			0.23			0.33			0.27
Net gains (losses) on securities (both realized and unrealized)		0.40			1.07			(0.51	)		0.07			0.02			0.41			0.41			0.54
Total income (loss) from investment operations		0.79			1.53			(0.01	)		0.57			0.48			0.64			0.74			0.81
Less distributions:
Dividends from net investment income		(0.38	)		(0.45	)		(0.48	)		(0.49	)		(0.47	)		(0.23	)		(0.34	)		(0.27	)
Distributions from net realized gains on securities		—			—			—			—			—			—			—			—
Total distributions		(0.38	)		(0.45	)		(0.48	)		(0.49	)		(0.47	)		(0.23	)		(0.34	)		(0.27	)
Net asset value, end of period	$	11.10		$	10.69		$	9.61		$	10.10		$	10.02		$	11.10		$	11.08		$	10.68
Total return A		7.56	%		16.17	%		(0.26	)%		5.83	%		4.96	%		6.03	%B		7.01	%		8.05	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	290,734		$	210,983		$	147,634		$	109,674		$	97,319		$	382		$	3,829		$	2,213
Ratios to average net assets (annualized):
Expenses, net of waivers		0.33	%		0.32	%		0.30	%		0.34	%		0.35	%		0.64	%C		0.76	%		0.81	%C
Expenses, before waivers		0.33	%		0.32	%		0.30	%		0.34	%		0.35	%		0.67	%C		0.83	%		1.22	%C
Net investment income, net of waivers		3.39	%		4.32	%		4.70	%		4.86	%		4.64	%		2.60	%C		2.95	%		3.74	%C
Net investment income, before waivers		3.39	%		4.31	%		4.70	%		4.86	%		4.64	%		2.58	%C		2.88	%		3.33	%C
Portfolio turnover rate		96	%		157	%		105	%		85	%		122	%		96	% D		96	%		157	% E

A	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
B	Not annualized.
C	Annualized.
D	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.
E	Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

54

A Class			C Class
May			September
17 to			1 to
October			October
31, 2010			31, 2010
$	10.74		$	11.05
	0.13			0.03
	0.33			0.03
	0.46			0.06
	(0.13	)		(0.03	)
	—			—
	(0.13	)		(0.03	)
$	11.07		$	11.08
	4.31	%B		0.56	%B
$	46		$	325
	0.95	%C		1.74	%C
	1.05	%C		2.09	%C
	2.25	%C		1.23	%C
	2.15	%C		0.88	%C
	96	% D		96	% D

55

American Beacon Short-Term Bond Fund
Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class																Y Class			Investor Class
																	March
																	1 to			Year Ended
	Year Ended October 31,																October			October 31,
	2010			2009			2008			2007			2006				31, 2010			2010
Net asset value, beginning of period	$	8.83		$	8.58		$	8.79		$	8.74		$	8.75			$	8.84		$	8.84
Income from investment operations:
Net investment income (loss)		0.23			0.22	A		0.35	A		0.39	A		0.32	A			0.15			0.08
Net gains (losses) on securities (both realized and unrealized)		0.10			0.33			(0.15	)		0.09			0.07				0.08			0.21
Total income from investment operations		0.33			0.55			0.20			0.48			0.39				0.23			0.29
Less distributions:
Dividends from net investment income		(0.27	)		(0.30	)		(0.41	)		(0.43	)		(0.40	)	��		(0.17	)		(0.24	)
Distributions from net realized gains on securities		—			—			—			—			—				—			—
Total distributions		(0.27	)		(0.30	)		(0.41	)		(0.43	)		(0.40	)			(0.17	)		(0.24	)
Net asset value, end of period	$	8.89		$	8.83		$	8.58		$	8.79		$	8.74			$	8.90		$	8.89
Total return B		3.78	%		6.56	%		2.21	%		5.61	%		4.56	%			2.55	%C		3.33	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	131,314		$	124,791		$	255,725		$	89,427		$	73,417			$	51		$	23,175
Ratios to average net assets (annualized):
Expenses, net of waivers		0.35	%		0.33	%		0.31	%		0.37	%		0.35	%			0.64	%D		0.67	%
Expenses, before waivers		0.35	%		0.33	%		0.31	%		0.37	%		0.35	%			0.65	%D		0.86	%
Net investment income (loss), net of waivers		2.27	%		2.62	%		3.75	%		4.48	%		3.64	%			1.47	%D		1.94	%
Net investment income (loss), before waivers		2.27	%		2.61	%		3.75	%		4.48	%		3.64	%			1.45	%D		1.75	%
Portfolio turnover rate		60	%		140	%		21	%		40	%		48	%			60	%E		60	%

A	For purposes of this calculation, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding for the period.
B	Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.
C	Not annualized.
D	Annualized.
E	Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

56

												A Class			C Class
												May			September
												17 to			01 to
												October			October
2009			2008			2007			2006			31, 2010			31, 2010
$	8.59		$	8.81		$	8.76		$	8.77		$	8.84		$	8.88
	0.20	A		0.29	A		0.35	A		0.27	A		0.09			(0.04	)
	0.34			(0.15	)		0.09			0.07			0.07			0.08
	0.54			0.14			0.44			0.34			0.16			0.04
	(0.29	)		(0.36	)		(0.39	)		(0.35	)		(0.11	)		(0.02	)
	—			—			—			—			—			—
	(0.29	)		(0.36	)		(0.39	)		(0.35	)		(0.11	)		(0.02	)
$	8.84		$	8.59		$	8.81		$	8.76		$	8.89		$	8.90
	6.34	%		1.54	%		5.08	%		4.01	%		1.78	%C		0.48	%C
$	30,402		$	7,733		$	2,976		$	7,189		$	44		$	1
	0.54	%		0.85	%		0.87	%		0.88	%		0.81	%D		1.60	%D
	0.85	%		0.88	%		0.98	%		0.90	%		1.02	%D		2.28	%D
	2.20	%		3.19	%		3.91	%		3.10	%		0.69	%D		(2.88	)%D
	1.89	%		3.16	%		3.81	%		3.08	%		0.49	%D		(3.57	)%D
	140	%		21	%		40	%		48	%		60	%E		60	%E

57

American Beacon Funds
Privacy Policy & Federal Tax Information

(Unaudited)

Privacy Policy

          The American Beacon Funds recognizes and respects the privacy of our shareholders. We are providing this notice to you so you will understand how shareholder information may be collected and used.

          We may collect nonpublic personal information about you from one or more of the following sources:

• information we receive from you on applications or other forms;

• information about your transactions with us or our service providers; and

• information we receive from third parties.

          We do not disclose any nonpublic personal information about our customers or former customers to anyone, except as permitted by law.

          We restrict access to your nonpublic personal information to those employees or service providers who need to know that information to provide products or services to you. To ensure the confidentiality of your nonpublic personal information, we maintain safeguards that comply with federal standards.

Federal Tax Information

          For corporate shareholders in the Funds, the percentage of ordinary dividend income distributed for the year ended October 31, 2010, which is designated as qualifying for the dividends-received deduction, is as follows:

High Yield Bond Fund	0.12	%
Retirement Income and Appreciation Fund	4.66	%

          For shareholders in the Funds, the percentage of dividend income distributed for the year ended October 31, 2010, which is designated as qualified dividends income under the Jobs and Growth Tax Relief Act of 2003, is as follows:

Retirement Income and Appreciation Fund 6.41 %

Shareholders will receive notification in January 2011 of the percentage applicable to the preparation of their 2010 income tax returns.

58

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59

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements of the Funds

(Unaudited)

          At its May 25, 2010 meeting, the Board of Trustees (“Board”) considered the renewal of each existing Management Agreement between American Beacon Advisors, Inc. (the “Manager”) and the American Beacon Funds (the “Funds”) and each Investment Advisory Agreement between the Manager and a subadvisor (“Investment Advisory Agreements” and collectively with the Management Agreement, the “Agreements”). In preparation for the Board’s consideration to renew these Agreements, the Board and its Investment Committee undertook steps to gather and consider information furnished by the Manager, the subadvisors and Lipper, Inc. (“Lipper”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

          In addition, the Board’s Investment Committee worked with Lipper to obtain relevant comparative information regarding the performance, fees and expenses of the Funds. The Investment Committee held a separate meeting on May 10, 2010 to consider the information provided by Lipper. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board and Investment Committee meetings, as well as information specifically prepared in connection with the renewal process.

          In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees considered, among other materials, responses by the Manager and the subadvisors to inquiries requesting:

• a description of any significant changes (actual or anticipated) to principal activities, personnel, services provided to the Funds, or any other area, including how these changes might affect the Funds;

• a copy of the firm’s most recent audited or unaudited financial statements, as well as Parts 1 and II of its Form ADV registration statement with the SEC;

• a summary of any material pending or anticipated litigation or regulatory proceedings involving the firm or its personnel, including the results of any recent regulatory examination or independent audit;

• a comparison of the performance of that portion of Fund assets managed by each firm with performance of other similar accounts managed by the firm, including a discussion of relative performance versus a peer group average and any remedial measures if the firm’s performance was materially below that of the peer group;

• a profit/loss analysis of the firm and any actual or anticipated economies of scale in relation to the services it provides to each Fund;

• an analysis of compensation, including a comparison with fees charged to other clients for which similar services are provided, any proposed changes to the fee schedule and the effect of any fee waivers;

• a description of any payments by the subadvisers to the manager to support the Funds’ marketing efforts;

• an evaluation of any other benefits to the firm or Funds as a result of their relationship, if any;

• confirmation that the firm’s financial condition would not impair its ability to provide high-quality advisory services to the Funds;

• a description of any internal actions the firm has taken or anticipates taking in light of the current and projected decrease in revenues from prior years as a result of the current economic environment that may affect or are expected to affect the services performed for the Funds;

• a description of the scope of portfolio management services provided to the Funds, including whether such services differ from the services provided to other clients, including other registered investment companies, and any advantages or disadvantages that might accrue to the Funds due to the firm’s involvement in other activities;

• a description of the personnel who are assigned primary responsibility for managing the Funds, including any changes during the past year, and a discussion of the adequacy of current and projected staffing levels to service the Funds;

• a description of the basis upon which portfolio managers are compensated, including any “incentive” arrangements, and a description of the oversight mechanisms used to prevent a portfolio manager whose compensation is tied to performance of a Fund from taking undue risks;

• a discussion regarding the firm’s participation in “soft dollar” arrangements, if any, or other brokerage allocation policies with respect to Fund transactions, including the firm’s methodology for obtaining best execution and the use of any affiliated broker-dealers;

• a description of any actual or potential conflicts of interest anticipated in managing Fund assets;

• a discussion of whether the firm has identified any investment or operational matters that likely present a high risk in managing Fund assets;

• a description of trade allocation procedures among accounts managed by the firm;

• a discussion of whether the firm receives, with respect to the Funds, other compensation, including any payment for order flow or ECN liquidity rebates

• a certification by the firm regarding the reasonable design of its compliance program;

• information regarding the firm’s code of ethics, insider trading policy and disaster recovery plan, including a description of any material changes thereto and a related certification of compliance by the firm;

• a description of the firm’s affiliation with any broker-dealer;

• a discussion of any anticipated change in the firm’s controlling persons; and

• verification of the firm’s insurance coverage with regards to the services provided to the Funds.

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Disclosure Regarding the Board of Trustees’ Approval of Investment Advisory Agreements

          In addition to the foregoing, the Manager provided the following information specific to the renewal of the Management Agreement:

• a comparison of the performance of each Fund to comparable investment companies and appropriate indices, including comments on the relative performance of, as applicable, each subadvisor and each Fund versus the respective peer group average;

• a discussion, if applicable, of any underperformance by a subadvisor relative to its peer group and what, if any, remedial measures the Manager has or intends to take;

• a comparison of advisory fees and expense ratios for comparable mutual funds;

• an analysis of any material complaints received from Fund shareholders;

• a description of the extent to which the Manager monitors the investment activities and financial conditions of each subadvisor to the Funds;

• a description of the Manager’s distribution activities with respect to promoting sales of Fund shares, including any revenue sharing practices;

• a description of the Manager’s securities lending practices and the fees received from such practices;

• a discussion of any rebate arrangements between the Manager and a service provider to the Funds pursuant to which the Manager receives direct or indirect benefits from the service provider;

• a description of the portfolio turnover rate and average execution costs for each Fund and, as applicable, each subadvisor to a Fund; and

• a description of how expenses that are not readily identifiable to a particular Fund are allocated.

          In connection with the Management Agreement and each Investment Advisory Agreement, the Board also obtained an analysis provided by Lipper that compared: (i) investment performance of each Fund versus comparable investment companies and appropriate indices; (ii) total Fund expenses of each Fund versus comparable mutual funds; and (iii) each Fund’s investment advisory fees versus comparable mutual funds. For each Fund with more than one class of shares, the class of shares used for comparative purposes was the class with the longest performance history, which in most cases was the Institutional Class. References below to each Fund’s Lipper peer group are to the group of comparable mutual funds included in the analysis provided by Lipper.

          Provided below is an overview of the primary factors the Trustees considered at the Investment Committee meeting on May 10, 2010 at which the Trustees reviewed the investment performance of the Manager and each subadvisor and the primary factors considered by the Board at its May 25, 2010 meeting at which the Board considered the renewal of the Agreements. The Board did not identify any particular information that was most relevant to its consideration to renew the Management Agreement and each Investment Advisory Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal of the Agreements. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal of each Agreement was in the best interests of the Funds and their shareholders.

Considerations With Respect to All Funds

          In determining whether to renew the Management Agreement and each Investment Advisory Agreement, the Trustees considered the best interests of each Fund separately. While the Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the May 25, 2010 meeting, the Board considered each Fund’s investment management and subadvisory relationships separately. In each instance, the Board considered, among other things, the following factors: (1) the nature and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager and (to the extent provided) the subadvisors in rendering their services and their resulting profits or losses; (4) the extent to which economies of scale have been taken into account in setting each fee schedule; (5) whether fee levels reflect these economies of scale for the benefit of Fund investors; (6) comparisons of services and fees with contracts entered into by the Manager or a subadvisor or their affiliates with other clients (such as pension funds and other institutional funds); and (7) any other benefits derived or anticipated to be derived by the Manager or a subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

          Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s generally favorable long-term performance and the background and experience of key investment personnel at the Manager; the low cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the manager’s commitment to increase assets in the Funds as demonstrated, for example, by the recent substantial increase in sales personnel; the Manager’s continuing efforts to add new series and share classes to enhance the Funds’ product line; the Manager’s high quality of services; the Manager’s active role in monitoring and, as appropriate recommending additional or replacement subadvisors; and efforts made by the Manager to retain key employees and maintain staff levels.

          With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the background and experience of each subadvisor’s investment personnel responsible for managing the Funds, the size of the subadvisor and their ability to continue to attract and retain qualified investment personnel. Based on the foregoing information, the Board concluded that the nature, extent and

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Disclosure Regarding the Board of Trustees’ Approval of Investment Advisory Agreements

quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

          Investment Performance. The Board evaluated the comparative information provided by Lipper and the Manager regarding each Fund’s investment performance relative to its benchmark index(es) and peer group. The Board considered the information provided by Lipper regarding its independent peer selection methodology to select all peer groups and universes. The Board also considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Manager also noted that it generally was satisfied with the performance of the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager and a subadvisor by Fund, the Board considered the revenues earned and the expenses incurred by the Manager. The profits or losses were noted at both an individual Fund level and at an aggregate level for all Funds. The Board also considered that the Management Agreement for the Funds stipulates that, to the extent that a Fund invests all of its investable assets in another registered investment company (i.e., is a “Feeder Fund”), the Fund will not pay the Manager a management fee. Although the Board noted that, in certain cases, the fee rates paid by other clients is lower than the fee rates paid by the Funds, the difference reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

          The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and classes that were in place during the last fiscal year and to put in place new expense waivers and reimbursements for certain new classes of the Funds and new series of the Funds. The Board further considered that each subadvised Fund pays the Manager the amounts due to its subadvisors, and the Manager remits these amounts directly to the applicable subadvisors. The Board considered that the Manager receives service and administrative fees to compensate the Manager for providing administrative services to the Funds and to compensate third-party administrators and broker-dealers for services to Fund shareholders. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of various Funds. The Board also noted that certain classes of the Funds maintain higher expense ratios in order to compensate third-party distributors.

          In analyzing the cost of services and profitability for each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest subadvisory fee a subadvisor charges for any comparable client accounts. The Board gave less weight to profitability considerations or did not view this data as imperative to its deliberations given the arm’s length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fees.

          Based on the foregoing information, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager and the subadvisors. A discussion regarding the Board’s considerations with respect to each Fund’s fee rates is set forth below under “Additional Considerations and Conclusions with Respect to Each Fund.”

          Economies of Scale. In considering the reasonableness of the management and investment advisory fees, the Board considered whether economies of scale will be realized as the Funds grow and whether fee levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates. The Board also noted that, for purposes of determining the fee rates chargeable to the Funds, many subadvisors have agreed to take into account assets of AMR and its pension plans that are managed by the subadvisors. Thus, the Funds are able to receive lower effective fee rates. The Board also noted the Manager’s representation that assets in the Funds’ complex increased during 2009, primarily due to market appreciation.

          In addition, the Board noted the Manager’s representation that, due to the existing low cost structure of the Funds, further breakpoints in the management fee would not be appropriate at this time. The Board also considered that the management fee for the Money Market Funds is amongst the lowest in the industry. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee schedules for each Fund provides for a reasonable sharing of benefits from any economies of scale with the Fund.

          Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. The Board also considered that the Manager’s relationship with the Funds and the money market portfolios continues to be a significant factor in attracting separate account assets for the Manager and the Manager’s use of the Large Cap Value Fund model for an actively managed exchange traded fund, managed by the Manager.

          In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted that the benefit plans of AMR Corporation, which are managed by the Manager, remain the largest or one of the largest shareholders in most of the Funds and the Manager’s representation that it provides services to each Trust at a lower than industry average cost. The Board considered that certain of the subadvisors reimburse the Manager for certain of its costs relating to distribution activities for the Funds. The Board also considered that, with the exception of the Emerging Markets Fund, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal years ended October 31, and December 31, 2009.

          Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable.

Additional Considerations and Conclusions with Respect to Each Fund

62

Disclosure Regarding the Board of Trustees’ Approval of Investment Advisory Agreements

          The performance comparisons below were made versus each Fund’s Lipper peer universe median. References to the Lipper expense universe below are to the universe of comparable mutual funds included in the analysis provided to the Trustees by Lipper.

Additional Considerations and Conclusions with Respect to the Retirement Income and Appreciation Fund

          In considering the renewal of the Management Agreement for the Retirement Income and Appreciation Fund, the Trustees considered the following additional factors: (1) the Retirement Income and Appreciation Fund’s unique investment strategy as compared to other funds in its peer universe and the impact of such strategy on peer performance and expense ratio comparisons; (2) the Fund outperformed the peer universe median for the one- and five-year periods ended March 31, 2010, but underperformed for the three-year period; (3) the Manager outperformed the peer universe median with respect to its allocated portion of the Fund’s assets for the three- and five-year periods ended March 31, 2010, but underperformed for the one-year period; and (4) the expense ratio of the Fund ranked better than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreement with Calamos Advisors LLC (“Calamos”), the Trustees considered the following additional factors: (1) Calamos underperformed the peer universe median for the one- and five-year periods ended March 31, 2010, but underperformed for the three-year period; (3) representations by Calamos regarding fee rates it charges to other comparable clients; (4) whether Calamos uses Fund commissions to obtain proprietary or third-party research; and (5) the Manager’s recommendation to continue to retain Calamos.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and Calamos under the Agreements are fair and reasonable, (2) determined that the Retirement Income and Appreciation Fund and its shareholders would benefit from the Manager’s and Calamos’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Retirement Income and Appreciation Fund.

Additional Considerations and Conclusions with Respect to the High Yield Bond Fund

          In considering the renewal of the Management Agreement for the High Yield Bond Fund, the Trustees considered the following additional factors: (1) the High Yield Bond Fund outperformed the peer universe median for the one-year period ended March 31, 2010, but underperformed for the three- and five-year periods; (2) management’s explanation that the underperformance of the High Yield Bond Fund was due, in part, to overweighting in the Cable/Media sector and, more recently, large cash in flows and out flows; (3) the steps management has taken to address the Fund’s underperformance, including replacing the previous subadvisors with Franklin Advisors, Inc. (“Franklin”) and Logan Circle Partners, L.P. (“Logan Circle”); and (4) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreements with Franklin and Logan Circle, the Trustees considered the following additional factors: (1) Franklin outperformed the peer universe median for the three-year period ended March 31, 2010, but underperformed for the one-year period; (2) Logan Circle was added as a subadvisor in May 2008 and therefore does not have performance of greater than one year, however, it outperformed the peer universe median for the one-quarter and one-year period ended March 31, 2010; (3) representations by each subadvisor regarding fee rates charged by the subadvisor to other comparable clients; (4) whether the subadvisors use Fund commissions to obtain proprietary or third-party research; and (5) the Manager’s recommendation to continue to retain each subadvisor.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Agreements are fair and reasonable, (2) determined that the High Yield Bond Fund and its shareholders would benefit from the Manager’s and subadvisors’ continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the High Yield Bond Fund.

Additional Considerations and Conclusions with Respect to the Intermediate Bond Fund

          In considering the renewal of the Management Agreement for the Intermediate Bond Fund, the Trustees considered the following additional factors: (1) the Intermediate Bond Fund outperformed the peer universe median for the three-, five- and ten-year periods ended March 31, 2010, but underperformed for the one-year period; (2) the Manager outperformed the universe peer median with respect to its allocated portion of the Fund’s assets for the three-, five- and ten-year periods ended March 31, 2010, but underperformed for the one-year period; and (3) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper expense universe.

          In considering the renewal of the Investment Advisory Agreement with Barrow, the Trustees considered the following additional factors: (1) Barrow outperformed the peer universe median with respect to its allocated portion of the Fund’s assets for the three-, five- and ten-year periods ended March 31, 2010, but underperformed for the one-year period; (2) representations by Barrow regarding fee rates it charges to other comparable clients; (3) whether Barrow uses Fund commissions to obtain proprietary or third-party research; and (4) the Manager’s recommendation to continue to retain Barrow.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager and Barrow under the Agreements are fair and reasonable, (2) determined that the Intermediate Bond Fund and its shareholders would benefit from the Manager’s and Barrow’s continued management of the Fund and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Intermediate Bond Fund.

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Disclosure Regarding the Board of Trustees’ Approval of Investment Advisory Agreements

Additional Considerations and Conclusions with Respect to the Short-Term Bond Fund

          In considering the renewal of the Management Agreement for the Short-Term Bond Fund, the Trustees considered the following additional factors: (1) the Short-Term Bond Fund outperformed its benchmark index for the one-year period ended March 31, 2010, but underperformed for the three-, five- and ten-year periods; (2) the Short-Term Bond Fund outperformed the Lipper Index for the three- and five-year periods ended March 31, 2010; and (3) the expense ratio of the Institutional Class of Fund shares was ranked better than the median of its Lipper expense universe.

          Based on these and other considerations the Trustees (1) concluded that the fees paid to the Manager under the Management Agreement are fair and reasonable, (2) determined that the Short-Term Bond Fund and its shareholders would benefit from the Manager’s continued management of the Fund and (3) approved the renewal of the Management Agreement with respect to the Short-Term Bond Fund.

64

Trustees and Officers of the American Beacon Funds

(Unaudited)

          The Trustees and officers of the American Beacon Funds (the “Trust”) are listed below, together with their principal occupations during the past five years. Unless otherwise indicated, the address of each person listed below is 4151 Amon Carter Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees 23 funds in the fund complex that includes the Trust, the American Beacon Master Trust, the American Beacon Mileage Funds, and the American Beacon Select Funds. The Trust’s Statement of Additional Information contains additional information about the Trustees and is available without charge by calling 1-800-658-5811.

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
INTERESTED TRUSTEES
	Term Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (73)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (1960-Present); Director, Clear Channel Communications (1984-2008); Trustee, CenterPoint Properties (1994- 2006); Member, Board of Trustees, Southern Methodist University ; Member, Board of Visitors, M.D. Anderson Hospital; Board of Visitors, Zale/Lipshy Hospital; Trustee, American Beacon Mileage Funds (1996-present); Trustee, American Beacon Select Funds (1999-present); Trustee, American Beacon Master Trust (1996-present).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (66)	Trustee since 2004	Board Member, Baylor University Medical Center Foundation (1992-2004); Consultant, New River Canada Ltd. (mutual fund servicing company) (1998- 2003); President and CEO, Allmerica Trust Company, NA (1996-1997); President and CEO, Fidelity Investments Southwest Company (1983-1995); Senior Vice President of Regional Centers, Fidelity Investments (1988-1995); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004- present).
Brenda A. Cline (49)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Trustee, Texas Christian University (1998-Present); Trustee, W.I. Cook Foundation, Inc. (d/b/a Cook Children’s Health Foundation) (2001-2006); Director, Christian Church Foundation (1999- 2007); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004-present); Trustee, American Beacon Master Trust (2004-present).
Eugene J. Duffy (56)	Trustee since 2008	Principal and Executive Vice President, Paradigm Asset Management (1994- Present); Director, Sunrise Bank of Atlanta (2008-Present); Chairman, Special Contributions Fund Board of Trustees, National Association for the Advancement of Colored People (2007-Present); Trustee, National Association for the Advancement of Colored People (2000-Present); Board of Visitors, Emory University (2006-Present); Trustee, Atlanta Botanical Garden (2006-Present); Board Member, Willie L. Brown Jr. Institute on Politics and Public Service (2001- Present); Chair, National Association of Securities Professionals (2000-2002); Deputy Chief Administrative Officer, City of Atlanta (1985-1990); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008- present).

65

Trustees and Officers of the American Beacon Funds

(Unaudited)

	Position, Term of
	Office and Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
Thomas M. Dunning (68)	Trustee since 2008	Consultant, (2008-Present); Chairman (1998-2008) and Chief Executive Officer (1998-2007), Lockton Dunning Benefits (consulting firm in employee benefits); Director, Oncor Electric Delivery Company LLC (2007-present); Director, Baylor Health Care System Foundation (2007-present); State Vice Chair, State Fair of Texas (1987-present); Board Member, Southwestern Medical Foundation (1994- present); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
Richard A. Massman (67)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present), Senior Vice President and General Counsel (1994-2009), Hunt Consolidated, Inc. (holding company engaged in oil and gas exploration and production, refining, real estate, farming, ranching and venture capital activities). Chairman (2007-Present) and Director (2005-Present), The Dallas Opera Foundation; Chairman (2006-2009) and Director (2005-Present), Temple Emanu-El Foundation; Trustee, Presbyterian Hospital Foundation (2006-Present); Trustee, American Beacon Mileage Funds (2004-present); Trustee, American Beacon Select Funds (2004- present); Trustee, American Beacon Master Trust (2004-present).
R. Gerald Turner (64) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas 75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, ChemFirst (1986-2002); Director, J.C. Penney Company, Inc. (1996-Present); Director, California Federal Preferred Capital Corp. (2001-2003); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Director, First Broadcasting Investment Partners, LLC (2003-2007); Member, Salvation Army of Dallas Board of Directors; Member, Methodist Hospital Advisory Board; Co-Chair, Knight Commission on Intercollegiate Athletics; Trustee, American Beacon Mileage Funds (2001-present); Trustee, American Beacon Select Funds (2001- present); Trustee, American Beacon Master Trust (2001-present).
Paul J. Zucconi,CPA (70)	Trustee since 2008	Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard automobile insurance) (2004-present); Director, Titanium Metals Corporation (producer of titanium melted and mill products and sponge) (2002- present); Director, Torchmark Corporation (life and health insurance products) (2002- present); Director, National Kidney Foundation of North Texas (2003-Present); Director, Dallas Chapter of National Association of Corporate Directors (2004- Present); Partner, KPMG (1976-2001); Trustee, American Beacon Mileage Funds (2008-present); Trustee, American Beacon Select Funds (2008-present); Trustee, American Beacon Master Trust (2008-present).
OFFICERS
William F. Quinn** (62)	Executive Vice President from 2007 to 2008 and 2009 to Present President from 1987 to 2007 and 2008 to 2009 Trustee from 1987 to 2008	Executive Chairman (2009-Present), Chairman (2006-2009) and CEO (2006- 2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007- 2009); Director, Crescent Real Estate Equities, Inc.(1994-2007); Director, Pritchard, Hubble & Herr, LLC (investment advisor) (2001-2006); Director of Investment Committee, Southern Methodist University Endowment Fund (1996- Present); Member, Southern Methodist University Cox School of Business Advisory Board (1999-2002); Member, New York Stock Exchange Pension Manager Committee (1997-1998, 2000-2002, 2006-Present); Chairman (2007- Present) and Vice Chairman (2004-2007), Committee for the Investment of Employee Benefits; Director, United Way of Metropolitan Tarrant County (1988- 2000, 2004-Present); Trustee, American Beacon Mileage Funds (1995-2008); Trustee, American Beacon Select Funds (1999-2008); Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002- present); Director, American Beacon Global Funds plc (2007-2009).

66

Trustees and Officers of the American Beacon Funds

(Unaudited)

OFFICERS

	Position, Term of
	Office and
	Length
	of Time Served	Principal Occupation(s) During Past 5 Years
Name, Age and Address	with the Trust	and Current Directorships
	Term One Year
Gene L. Needles, Jr. (55)	President 2009 to Present Executive Vice President 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President (2008-2009), Touchstone Investments; President (2003-2007), CEO (2004-2007), Managing Director of Sales (2002-2003), National Sales Manager (1999-2002), and Regional Sales Manager (1993-1999), AIM Distributors
Rosemary K. Behan (51)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006- Present); Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney (1995-2004), Securities and Exchange Commission.
Brian E. Brett (50)	VP since 2004	Vice President, Director of Sales and Marketing, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment advisor) (1996-2004).
Wyatt Crumpler (44)	VP since 2007	Vice President, Asset Management, American Beacon Advisors, Inc. (2007- Present); Managing Director of Corporate Accounting (2004-2007), Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Michael W. Fields (56)	VP since 1989	Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-Present); Director American Beacon Global Funds SPC (2002-present); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (49)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.
Terri L. McKinney (46)	VP since 2009	Vice-President, Enterprise Services (2009-Present), Managing Director (2003- 2009), Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; Vice-President, Board of Trustees (2008-Present), Trustee (2006- 2008) Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (35)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010); Senior Director, Business Integration, Fidelity Investments (2005-2007).
Christina E. Sears (39)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Senior Compliance Analyst, American Beacon Advisors, Inc. (1998-2004).

*	The Board has adopted a retirement plan that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 72, provided, however, that the Board may determine to grant one or more annual exemptions to this requirement.
**	Mr. Feld is deemed to be an “interested person” of the Trusts, as defined by the 1940 Act. Mr. Feld’s law firm of Akin, Gump, Strauss, Hauer & Feld LLP has provided legal services within the past two fiscal years to the Manager and one or more of the Trust’s and Master Trust’s sub-advisors.

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To reduce expenses, your financial institution may mail only one copy of the Summary Prospectus, Annual Report and Semi-Annual Report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution. Delivery of individual copies will commence thirty days after receiving your request.

To obtain more information about the Fund:

By E-mail:
american_beacon.funds@ambeacon.com

On the Internet:
Visit our website at www.americanbeaconfunds.com

By Telephone:
Institutional, Y, and Investor Classes
Call (800) 658-5811
AMR Class^SM
Call (800) 345-2345

By Mail:
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643

Availability of Quarterly Portfolio Schedules

In addition to the Schedule of Investments provided in each semi-annual and annual report, the Fund files a complete schedule of its portfolio holdings with the Securities and Exchange Commission (“SEC”) on Form N-Q as of the first and third fiscal quarters. The Fund’s Forms N-Q are available on the SEC’s website at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available on the Funds’ website (www.americanbeaconfunds.com) approximately twenty days after the end of each month.

Availability of Proxy Voting Policy and Records

A description of the policies and procedures the Fund uses to determine how to vote proxies relating to portfolio securities is available in the Fund’s Statement of Additional Information, is available free of charge on the Fund’s website (www.americanbeaconfunds.com) and by calling 1-800-967-9009 or by accessing the SEC’s website at www.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on Form N-PX. The Fund’s Forms N-PX are available on the SEC’s website at www.sec.gov. The Fund’s proxy voting record may also be obtained by calling 1-800-967-9009.

Fund Service Providers:

Custodian	Transfer Agent	Independent Registered	Distributor
State Street Bank and	Boston Financial Data	Public Accounting	Foreside Fund Services,
Trust	Services	Firm	LLC
Boston, Massachusetts	Kansas City, Missouri	Ernst & Young LLP	Portland, Maine
		Dallas, Texas

This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus or Summary Prospectus.

American Beacon Funds, American Beacon High Yield Fund, American Beacon Retirement Income and Appreciation Fund, American Beacon Intermediate Bond Fund, and American Beacon Short-Term Bond Fund are service marks of American Beacon Advisors, Inc.

AR 10/10
BF1010

ITEM 2. CODE OF ETHICS.

The Trust has adopted a code of ethics that applies to its principal executive and financial officers (the “Code”). The Trust amended its code February 16, 2010 to disclose a change in the Principal Financial Office. The Trust did not grant any waivers to the provisions of the Code during the period covered by the shareholder report presented in Item 1. The Code is filed herewith as Exhibit 99.CODE ETH.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

The Trust’s Board of Trustees has determined that Mr. Paul Zucconi, a member of the Trust’s Audit and Compliance Committee, is an “audit committee financial expert” as defined in Form N-CSR. Mr. Paul Zucconi is “independent” as defined in Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a)

Audit Fees		Fiscal Year Ended
$	294,836	10/31/2008
$	88,878	12/31/2008
$	0	8/31/2009
$	298,018	10/31/2009
$	72,414	12/31/2009
$	37,869	8/31/2010
$	318,158	10/31/2010
$	95,455	12/31/2010

(b)

Audit-Related
Fees			Fiscal Year Ended
$	0		10/31/2008
$	0		12/31/2008
$	0		8/31/2009
$	13,750	*	10/31/2009
$	0		12/31/2009
$	0		8/31/2010
$	12,375	*	10/31/2010
$	3,875	*	12/31/2010

* Review of N-1A filings

(c)

Tax Fees		Fiscal Year Ended
$	10,077	10/31/2008     (Revised)
$	10,257	12/31/2008     (Revised)
$	0	8/31/2009
$	11,628	10/31/2009
$	1,704	12/31/2009
$	3,426	8/31/2010
$	40,277	10/31/2010
$	5,129	12/31/2010

(d)

All Other Fees		Fiscal Year Ended
$	0	10/31/2008
$	0	12/31/2008
$	0	8/31/2009
$	0	10/31/2009
$	0	12/31/2009
$	0	8/31/2010
$	0	10/31/2010
$	0	12/31/2010

(e)(1) Pursuant to its charter, the Trust’s Audit and Compliance Committee shall have the following duties and powers pertaining to pre-approval of audit and non-audit services provided by the Trust’s principal accountant:

• to approve, prior to appointment, the engagement of auditors to annually audit and provide their opinion on the Trusts’ financial statements, and, in connection therewith, reviewing and evaluating matters potentially affecting the independence and capabilities of the auditors;

• to approve, prior to appointment, the engagement of the auditors to provide non-audit services to the Trusts, an investment adviser to any series of the Trusts or any entity controlling, controlled by, or under common control with an investment adviser (“adviser affiliate”) that provides ongoing services to the Trusts, if the engagement relates directly to the operations and financial reporting of the Trusts;

• to consider whether the non-audit services provided by a Trust’s auditor to an investment adviser or any adviser affiliate that provides ongoing services to a series of the Trusts, which services were not pre-approved by the Committee, are compatible with maintaining the auditor’s independence;

• to review the arrangements for and scope of the annual audit and any special audits; and

• to review and approving the fees proposed to be charged to the Trusts by the auditors for each audit and non-audit service.

The Audit and Compliance Committee may delegate any portion of its authority, including the authority to grant pre-approvals of audit and permitted non-audit services, to a subcommittee of one or more members. Any decisions of the subcommittee to grant pre-approvals shall be presented to the full audit committee at its next regularly scheduled meeting.

(e)(2) None of the fees disclosed in paragraphs (b) through (d) above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

(f) Not applicable.

(g) Aggregate Non-Audit Fees for Services Rendered to the:

				Adviser’s Affiliates Providing
Registrant		Adviser		Ongoing Services to Registrant		Fiscal Year Ended
$	10.077	$	0		N/A	10/31/2008
$	10.257	$	0		N/A	12/31/2008
$	0	$	0		N/A	8/31/2009
$	25.378	$	0		N/A	10/31/2009
$	1,704	$	0		N/A	12/31/2009
$	3,426	$	0		N/A	8/31/2010
$	52,652	$	0		N/A	10/31/2010
$	9,004	$	0		N/A	12/31/2010

(h) Not applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

The schedules of investments for each series of the Trust are included in the shareholder report presented in Item 1.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS.

Not applicable.

ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

The Trust has made no material changes to the procedures by which shareholders may recommend nominees to the Trust’s Board of Trustees since the Trust last disclosed such procedures in Schedule 14A.

ITEM 11. CONTROLS AND PROCEDURES.

     (a) Based upon an evaluation within 90 days of the filing date of this report, the principal executive and financial officers concluded that the disclosure controls and procedures of the Trust are effective.

     (b) There were no changes in the Trust’s internal control over financial reporting during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Trust’s internal control over financial reporting.

ITEM 12. EXHIBITS.

     (a)(1) Filed herewith as EX-99.CODE ETH.

     (a)(2) A separate certification for each principal executive officer and principal financial officer of the Trust as required by Rule 30a-2(a) under the Investment Company Act of 1940 is attached hereto as EX-99.CERT.

     (a)(3) Not applicable.

     (b) The certifications required by Rule 30a-2(b) under the Investment Company Act of 1940 are attached hereto as EX-99.906CERT.

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.

(Registrant): American Beacon Funds

By	/s/ Gene L. Needles, Jr.
	Gene L. Needles, Jr.
	President
Date: January 7, 2011

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/ Gene L. Needles, Jr.
	Gene L. Needles, Jr.
	President
Date: January 7, 2011
By	/s/ Melinda G. Heika
	Melinda G. Heika
	Treasurer
Date: January 7, 2011