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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR/A

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, 2011

Date of reporting period: October 31, 2011

EXPLANATORY NOTE: The Registrant is filing this amendment to its Form N-CSR for the period ended October 31, 2011, originally filed with the Securities and Exchange Commission on January 6, 2012 (Accession Number 0001193-12-512005400). The sole purpose of this amendment is to correct the certifications that were filed with the original Form N-CSR filing. Except as set forth above, this Form N-CSR/A does not amend, update or change any other items or disclosure found in the original Form N-CSR filing.

ITEM 1. REPORTS 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	7
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, 2011

Fellow Shareholders,   Some days it seems the best-kept secret of the past twelve months has been the U.S. equity market’s rise. This rise has occurred despite the ongoing waves of investor concern regarding the U.S. economy’s health and the realization that the European sovereign crisis has yet to find resolution.   With headlines focused on geopolitical and economic risks, the strengthening underlying fundamentals at many publicly traded companies—and their relatively attractive market valuations—have drawn less attention. This near-term myopia can create opportunities for fund companies like ours, where our sub-advisors manage with a longer-term perspective.

The market volatility also highlights the key benefit of our multi-manager approach—a strategy we feel can help smooth performance over time. The performance of the American Beacon Large Cap Value Fund reflects the results of manager diversification. It also reflects the American Beacon investment philosophy: that portfolios managed with a longer-term perspective tend to be better positioned for riding out episodes of economic and geopolitical turbulence.

For the twelve-month period ended October 31, 2011:

>> American Beacon Large Cap Value Fund (Institutional Class) returned 3.69%

At American Beacon, we remain focused on seeking opportunities and meeting market challenges to deliver the type of consistency in performance and service our shareholders value. We regard your trust in the American Beacon Funds as recognition that we are achieving these goals, and we appreciate your continued investment.

Recognition of our process has also come in the form of a 2010 Lipper Award. The American Beacon Large Cap Value Fund was cited by Lipper as the best fund in its category based on its 10-year performance.

For further details about the growing number of investment opportunities now available within the American Beacon Funds family, please visit our website at www.americanbeaconfunds.com.

Best Regards,

     

Gene L. Needles, Jr.

President

American Beacon Funds

American Beacon Large Cap Value Fund (AMR Class) received the 2010 Lipper Fund Award as the best fund in its category over the 10 years ended December 31, 2009. It was number one out of 185 funds in the Large-Cap Value Funds category based on risk-adjusted returns. The Lipper Fund Awards are part of the Thomson Reuters Awards for Excellence, a global family of awards that celebrate exceptional performance throughout the professional investment community. The Thomson Reuters Awards for Excellence recognize the world’s top funds, fund management firms, sell-side firms, research analysts, and investor relations teams. The Thomson Reuters Awards for Excellence also include the Extel Survey Awards, the StarMine Analyst Awards, and the StarMine Broker Rankings. For more information, please contact markets.awards@thomsonreuters.com or visit excellence.thomsonreuters.com. Past performance is no guarantee of future results.

1

Domestic Equity Market Overview

October 31, 2011 (Unaudited)

For most of the 12 months ended October 31, 2011, the U.S. equity markets followed an upward path, driven by the strength of corporate balance sheets and robust corporate earnings. This rise occurred despite the volatility that prevailed throughout the world markets, as investors reacted to ongoing political uncertainty about the European sovereign debt crisis and to the inaction of U.S. politicians in addressing the weak domestic economic situation. The overall rise of equities also occurred despite increased correlations among stocks and the actions of worried investors who shifted between risk-seeking and risk-averse strategies.

The relative strength of the equity market lasted until May 2011, when investors turned more risk averse. This shift coincided with the onset of increasingly negative news from Europe and some weaker-than-expected macroeconomic news in the U.S. Meanwhile, policymakers in the U.S. reached an impasse on how to meet the country’s fiscal challenges, which further fed investor worries. A sharp selloff ensued.

Oversold equities rebounded in early October 2011 and received an additional boost late in the month when European policymakers agreed to a framework for addressing the Greek crisis. Consequently, the S&P 500 Index generated its best-performing month in nearly 20 years, pushing its 12-month return into positive territory (+8.1%).

As unsettling as the volatility has been, the S&P 500 Index has outperformed almost all of the major developed and emerging equity markets. Little more than two years ago, the S&P 500 Index bottomed below 700. Since then, it has doubled. That rise has been uneven–investors in small cap stocks have benefited far more than those holding large cap issues. This is especially true for the mega-cap stocks in the Financial, Technology and Health Care sectors. Consider that over the 12-month period ending October 31, 2011, the largest 10% of companies (in terms of market capitalization) in the Russell 1000 Value Index fell 1.4%. The entire universe returned 6.2%.

Overall, the U.S. economy continued to heal. Corporate strength was good, while low interest rates, a depressed dollar and moderately rising employment were supportive of a modest, ongoing recovery. Nevertheless, risk is still part of the equation. Credible action from Washington continues to be elusive and the implementation of Europe’s agreement–and its likelihood of success–remains uncertain. Other geopolitical and economic concerns also remain. Yet, there are a number of positive factors that seem underappreciated by the market at this point:

• A lack of speculation in equities

• Business inventories remain in balance

• Corporate cash levels remain high

• Corporate debt levels are low

• Lackluster economic expectations are already priced into the market

• Dividend payout ratios are low and have significant upside

We believe the dividends and earnings available to owners of equities are generous given current prices. They sufficiently compensate investors for the risks at hand. We remain keenly focused on identifying undervalued franchises with strong balance sheets exhibiting the ability and willingness to return capital to shareholders.

2

Performance Overview

American Beacon Large Cap Value Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the Large Cap Value Fund (“Fund”) returned 3.69% for the twelve months ended October 31, 2011. The Fund underperformed the Russell 1000^® Value Index (the “Index”) return of 6.16% and the Lipper Large-Cap Value Funds Index return of 4.27%.

Comparison of Change in Value of a $10,000 Investment for the Period from 10/31/01 through 10/31/11

	Annualized Total Returns Periods Ended 10/31/11									Value of $10,000
	1 Year			5 Years			10 Years			10/31/01- 10/31/11
Institutional Class(1,8)		3.69	%		-1.51	%		5.62	%	$	17,269
Y Class (1, 2, 8)		3.58	%		-1.57	%		5.59	%		17,223
Investor Class(1,8)		3.30	%		-1.82	%		5.31	%		16,771
Advisor Class(1,3,8)		3.11	%		-2.02	%		5.17	%		16,547
Retirement Class (1,4,8)		2.86	%		-2.16	%		5.09	%		16,423
A Class with sales charge (1,5,8)		-2.79	%		-3.02	%		4.67	%		15,784
A Class without sales charge (1,5,8)		3.12	%		-1.86	%		5.29	%		16,742
C Class with sales charge (1,6,8)		1.36	%		-2.04	%		5.19	%		16,591
C Class without sales charge (1,6,8)		2.36	%		-2.04	%		5.19	%		16,591
AMR Class(1,8)		3.94	%		-1.27	%		5.89	%		17,718
Lipper Large-Cap Value Funds Index(7)		4.27	%		-1.59	%		3.34	%		13,885
Russell 1000 Value Index (7)		6.16	%		-2.05	%		4.57	%		15,636

1. Performance shown is historical and is not 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 10/31/01 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 10/31/01.

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. 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 10/31/01 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 10/31/01.

5. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. A Class shares have a maximum sales charge of 5.75%.

6. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. 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 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.

3

Performance Overview

American Beacon Large Cap Value Fund^SM

October 31, 2011 (Unaudited)

8. The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, Retirement, A, and C Class shares was 0.60%, 0.71%, 0.97%, 1.11%, 1.38%, 1.07%, and 1.88%, 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 primarily through stock selection, and to a lesser extent through sector allocation.

From a stock selection standpoint, the Fund’s holdings in the Financials sector detracted the most value relative to the Index. Companies in the Financials sector that had the greatest impact on the Fund’s underperformance were Banco Santander (down 14.9%), Citigroup (down 29.0%), and Wells Fargo (down 1.5%). The Fund’s holdings in the Industrials and Health Care sectors also hurt performance. PACCAR (down 16.9%) and Northrop Grumman (down 2.5%) were the largest detractors from performance in the Industrials sector. Cardinal Health (up 19.1%) and Hospira (down 5.3%) detracted the most relative value in the Health Care sector. Good stock selection in the Consumer Staples sector, where Diageo (up 16.4%) and Imperial Tobacco Group (up 17.7%) were the largest contributors, generated positive Fund returns.

An overweight in Information Technology, one of the poorer performing sectors in the Index, detracted value relative to the Index through sector allocation. This was somewhat offset by the Fund’s allocation to the Consumer Staples sector which on average, contributed to the Fund’s relative 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
JPMorgan Chase & Co.		3.5	%
Wells Fargo & Co.		2.8	%
ConocoPhillips		2.6	%
Pfizer, Inc.		2.4	%
Vodafone Group plc		2.3	%
Hewlett-Packard Co.		2.1	%
Microsoft Corp.		2.0	%
Johnson & Johnson		2.0	%
Bank of America Corp.		1.9	%
AT&T, Inc.		1.7	%

Sector Allocation

	% of Equities
Financials		25.1	%
Energy		12.1	%
Information Technology		11.7	%
Health Care		11.1	%
Consumer Discretionary		9.7	%
Industrials		9.5	%
Consumer Staples		8.8	%
Telecommunication Services		4.8	%
Utilities		4.8	%
Materials		2.4	%

4

Fund Expenses

American Beacon Large Cap Value Fund^SM

October 31, 2011 (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, 2011 through October 31, 2011.

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 Account Value 5/1/11		Ending Account Value 10/31/11		Expenses Paid During Period* 5/1/11-10/31/11
Institutional Class
Actual	$	1,000.00	$	900.43	$	2.83
Hypothetical **	$	1,000.00	$	1,022.23	$	3.01
Y Class
Actual	$	1,000.00	$	899.66	$	3.30
Hypothetical **	$	1,000.00	$	1,021.73	$	3.52
Investor Class
Actual	$	1,000.00	$	898.60	$	4.55
Hypothetical **	$	1,000.00	$	1,020.42	$	4.84
Advisor Class
Actual	$	1,000.00	$	897.78	$	5.21
Hypothetical **	$	1,000.00	$	1,019.71	$	5.55
Retirement Class
Actual	$	1,000.00	$	896.42	$	6.79
Hypothetical **	$	1,000.00	$	1,018.05	$	7.22
A Class
Actual	$	1,000.00	$	897.37	$	5.83
Hypothetical **	$	1,000.00	$	1,019.06	$	6.21
C Class
Actual	$	1,000.00	$	894.81	$	8.88
Hypothetical **	$	1,000.00	$	1,015.83	$	9.45
AMR Class
Actual	$	1,000.00	$	901.73	$	1.58
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 0.59%, 0.69%, 0.95%, 1.09%, 1.42%, 1.22%, 1.86%, and 0.33% for the Institutional, Y, Investor, Advisor, Retirement, A, C, and AMR 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.

5

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, 2011, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for 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, 2011, 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, 2011, 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 29, 2011

6

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
COMMON STOCK - 94.93%
CONSUMER DISCRETIONARY - 8.78%
Auto Components - 0.84%
Johnson Controls, Inc.		1,215,725	$	40,034
Magna International, Inc.		703,000		26,819
				66,853
Automobiles - 0.67%
General Motors Co.A		2,058,943		53,224
Hotels, Restaurants & Leisure - 0.75%
Carnival Corp.		1,464,500		51,565
McDonald’s Corp.		39,691		3,685
Wyndham Worldwide Corp.		132,880		4,474
				59,724
Household Durables - 0.63%
D.R. Horton, Inc.		1,913,700		21,298
Lennar Corp., Class A		1,101,000		18,211
Pulte Group, Inc.		215,040		1,114
Stanley Black & Decker, Inc.		156,484		9,992
				50,615
Leisure Equipment & Products - 0.10%
Hasbro, Inc.		210,477		8,011
Media - 2.33%
CBS Corp., Class BB		1,024,400		26,440
Comcast Corp., Class A		2,373,640		54,594
Comcast Corp., Class A, SpecialB		1,101,300		25,825
Omnicom Group, Inc.		207,557		9,232
The Interpublic Group of Cos., Inc.		2,918,100		27,664
The Walt Disney Co.		323,615		11,288
Time Warner Cable, Inc.		363,900		23,177
Viacom, Inc., Class B		177,730		7,793
				186,013
Multiline Retail - 1.05%
JC Penney Co. Inc		1,397,400		44,828
Kohl’s Corp.		57,462		3,046
Target Corp.		656,030		35,918
				83,792
Specialty Retail - 2.41%
Advance Auto Parts, Inc.		76,106		4,952
Best Buy Co. Inc		1,071,400		28,103
RadioShack Corp.		1,028,100		12,245
Staples, Inc.		1,838,757		27,508
The Gap, Inc.		5,173,600		97,781
The Home Depot, Inc.		626,367		22,424
				193,013
Total Consumer Discretionary				701,245
CONSUMER STAPLES - 8.40%
Beverages - 2.08%
Diageo plc, ADRC		981,436		81,341
PepsiCo, Inc.		1,339,620		84,329
				165,670
Food & Drug Retailing - 2.52%
CVS Caremark Corp.		1,494,693		54,257
Safeway, Inc.		988,000		19,138
The Kroger Co.		1,057,900		24,522
Wal-Mart Stores, Inc.		1,831,960		103,909
				201,826

	Shares		Fair Value
			(000’s)
Food Products - 0.51%
General Mills, Inc.		326,865	$	12,594
Kellogg Co.		96,109		5,210
Kraft Foods, Inc., Class A		317,200		11,159
Nestle S.A., ADRC		173,372		10,014
The JM Smucker Co.		19,837		1,528
				40,505
Household Products - 0.19%
Kimberly-Clark Corp.		155,100		10,812
The Procter & Gamble Co.		63,249		4,047
				14,859
Tobacco - 3.10%
Altria Group, Inc.		1,598,622		44,042
Imperial Tobacco Group plc, ADRC		985,800		71,964
Philip Morris International, Inc.		1,817,481		126,988
Reynolds American, Inc.		128,445		4,968
				247,962
Total Consumer Staples				670,822
ENERGY - 11.54%
Energy Equipment & Services - 0.24%
Cobalt International Energy, Inc.A		1,400,100		14,449
Transocean Ltd.		81,771		4,673
				19,122
Oil & Gas - 11.30%
Apache Corp.		103,591		10,321
BP plc, ADRC		2,489,400		109,982
Chevron Corp.		845,757		88,847
ConocoPhillips		3,003,596		209,199
EOG Resources, Inc.		44,076		3,942
Exxon Mobil Corp.		677,056		52,871
Hess Corp.		54,829		3,430
Marathon Oil Corp.		1,575,100		41,000
Marathon Petroleum Corp.		363,650		13,055
Occidental Petroleum Corp.		974,948		90,612
Royal Dutch Shell plc, ADRC		1,722,200		122,968
Spectra Energy Corp.		3,266,400		93,517
Total S.A., ADRC		1,190,500		62,263
				902,007
Total Energy				921,129
FINANCIALS - 23.93%
Banks - 8.13%
Bank of America Corp.		22,222,642		151,781
Fifth Third Bancorp		1,790,100		21,499
KeyCorp		3,476,774		24,546
PNC Financial Services Group, Inc.		2,240,053		120,313
SunTrust Banks, Inc.		2,630,590		51,902
The Bank of New York Mellon Corp.		1,795,237		38,203
Wells Fargo & Co.		8,707,001		225,597
Zions Bancorporation		869,100		15,088
				648,929
Diversified Financials - 9.30%
American Express Co.		1,744,200		88,291
BlackRock, Inc.		48,814		7,702
Capital One Financial Corp.		1,581,100		72,193
Citigroup, Inc.		2,980,476		94,153
Franklin Resources, Inc.		18,230		1,944
JPMorgan Chase & Co.		8,024,824		278,943
Mastercard, Inc., Class A		17,094		5,936

See accompanying notes

7

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2011

	Shares			Fair Value
				(000’s)
Moody’s Corp.		85,020		$	3,017
Morgan Stanley		3,993,500			70,445
SLM Corp.		2,583,300			35,314
State Street Corp.		956,424			38,630
The Goldman Sachs Group, Inc.		409,917			44,906
					741,474
Insurance - 5.47%
ACE Ltd.		506,426			36,539
American International Group, Inc.		1,821,900			44,983
Aon Corp.		173,746			8,100
Genworth Financial, Inc., Class A		1,056,800			6,742
Hartford Financial Services Group, Inc.		1,382,950			26,622
Lincoln National Corp.		450,000			8,573
MetLife, Inc.		2,900,300			101,974
Prudential Financial, Inc.		417,588			22,633
The Allstate Corp.		3,100,000			81,653
The Chubb Corp.		93,610			6,277
The Travelers Cos., Inc.		613,829			35,817
XL Group plc		2,608,400			56,707
					436,620
Real Estate - 1.03%
Annaly Capital Management, Inc.D		3,195,400			53,843
Chimera Investment Corp.D		9,369,200			28,201
					82,044
Total Financials					1,909,067
HEALTH CARE - 10.60%
Biotechnology - 0.55%
Amgen, Inc.		771,000			44,155
Health Care Equipment & Supplies - 1.96%
Baxter International, Inc.		1,328,400			73,034
Becton Dickinson and Co.		98,045			7,670
Covidien plc		135,300			6,365
Medtronic, Inc.		1,662,379			57,751
St Jude Medical, Inc.		168,766			6,582
Thermo Fisher Scientific, Inc.		105,720			5,315
					156,717
Health Care Providers & Services - 0.89%
Quest Diagnostics, Inc.		530,202			29,585
WellPoint, Inc.		599,400			41,299
					70,884
Pharmaceuticals - 7.20%
Abbott Laboratories		287,429			15,484
Eli Lilly & Co.		856,800			31,839
Johnson & Johnson		2,496,701			160,763
Merck & Co. Inc		3,233,755			111,565
Novartis AG, ADRC		478,800			27,038
Pfizer, Inc.		10,077,287	��		194,088
Roche Holding AG, ADRC		105,111			4,299
Sanofi, ADRC		828,700			29,626
					574,702
Total Health Care					846,458
INDUSTRIALS - 9.04%
Aerospace & Defense - 3.26%
Huntington Ingalls Industries, Inc.A		135,654			4,002
Lockheed Martin Corp.		1,218,786			92,505
Northrop Grumman Corp.		786,347			45,412
Raytheon Co.		1,419,600			62,732
The Boeing Co.		578,800			38,079

	Shares		Fair Value
			(000’s)
United Technologies Corp.		234,775	$	18,308
				261,038
Air Freight & Couriers - 0.47%
FedEx Corp.		457,600		37,445
Commercial Services & Supplies - 0.05%
The Dun & Bradstreet Corp.		59,871		4,003
Construction & Engineering - 0.02%
Fluor Corp.		29,852		1,697
Industrial Conglomerates - 2.95%
3M Co.		743,304		58,736
General Electric Co.		5,623,500		93,969
Honeywell International, Inc.		1,435,938		75,243
Tyco International Ltd.		157,300		7,165
				235,113
Machinery - 2.23%
Cummins, Inc.		322,800		32,096
Danaher Corp.		191,767		9,272
Eaton Corp.		98,824		4,429
Illinois Tool Works, Inc.		730,700		35,534
ITT Corp.		1,085,200		49,486
PACCAR, Inc.		1,086,200		46,967
				177,784
Road & Rail - 0.06%
Canadian National Railway Co.		60,428		4,739
Total Industrials				721,819
INFORMATION TECHNOLOGY - 11.18%
Communications Equipment - 1.18%
Cisco Systems, Inc.		2,760,914		51,159
Corning, Inc.		3,019,700		43,152
				94,311
Computers & Peripherals - 4.86%
Apple, Inc.		151,770		61,433
Hewlett-Packard Co.		6,180,169		164,455
International Business Machines Corp.		624,616		115,323
Seagate Technology plc		2,949,700		47,638
				388,849
Electronic Equipment & Instruments - 0.74%
Avnet, Inc.		1,101,600		33,390
TE Connectivity Ltd.		719,900		25,592
				58,982
IT Consulting & Services - 0.28%
Accenture plc, Class A		270,778		16,317
Fiserv, Inc.A		21,650		1,275
The Western Union Co.		255,704		4,467
				22,059
Semiconductor Equipment & Products - 0.48%
ASML Holding N.V.		80,580		3,379
Intel Corp.		1,413,587		34,689
				38,068
Software - 3.64%
CA, Inc.		2,912,403		63,083
Microsoft Corp.		6,047,400		161,042
Oracle Corp.		2,023,504		66,310
				290,435
Total Information Technology				892,704

See accompanying notes

8

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
MATERIALS - 2.32%
Chemicals - 1.27%
Air Products & Chemicals, Inc.		359,758	$	30,990
EI du Pont de Nemours & Co.		531,900		25,568
PPG Industries, Inc.		263,629		22,780
The Dow Chemical Co.		554,600		15,462
The Sherwin-Williams Co.		73,116		6,047
				100,847
Metals & Mining - 1.05%
ArcelorMittal		1,136,950		23,569
Newmont Mining Corp.		683,700		45,692
United States Steel Corp.		580,200		14,714
				83,975
Total Materials				184,822
TELECOMMUNICATION SERVICES - 4.61%
Diversified Telecommunication Services - 2.29%
AT&T, Inc.		4,496,689		131,797
Verizon Communications, Inc.		1,377,786		50,951
				182,748
Wireless Telecommunication Services - 2.32%
Vodafone Group plc, ADRC		6,660,384		185,426
Total Telecommunication Services				368,174
UTILITIES - 4.53%
Electric Utilities - 4.31%
CenterPoint Energy, Inc.		2,920,400		60,861
Dominion Resources, Inc.		1,115,600		57,554
Edison International		826,200		33,544
Entergy Corp.		403,800		27,931
Exelon Corp.		1,476,300		65,533
PG&E Corp.		193,654		8,308
PPL Corp.		835,695		24,544
Public Service Enterprise Group, Inc.		1,954,376		65,862
				344,137
Multi-Utilities - 0.22%
Duke Energy Corp.		503,990		10,292
Xcel Energy, Inc.		267,400		6,912
				17,204
Total Utilities				361,341
Total Common Stock (Cost $7,725,891)				7,577,581
PREFERRED STOCK - 0.47%
CONSUMER DISCRETIONARY - 0.46%
General Motors Co.		878,825		36,524
UTILITIES - 0.01%
PPL Corp.		18,398		1,046
Total Preferred Stock (Cost $45,491)				37,570
SHORT-TERM INVESTMENTS- 3.55%
American Beacon U.S. Government Money Market Select FundE		25,000,000		25,000
JPMorgan U.S. Government Money Market Fund		258,181,783		258,182
Total Short-Term Investments (Cost $283,182)				283,182

	Fair Value
	(000’s)
TOTAL INVESTMENTS - 98.95% (Cost $8,054,564)		7,898,333
OTHER ASSETS, NET OF LIABILITIES - 1.05%		84,041
TOTAL NET ASSETS - 100.00%	$	7,982,374

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  Non-voting participating shares.

^C  ADR - American Depositary Receipt.

^D  REIT - Real Estate Investment Trust.

^E This Fund is affiliated by having the same investment advisor.

See accompanying notes

9

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2011

Futures Contracts
(000’s)
	Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation/ (Depreciation)
S&P 500 Mini E Index Future		4,428		December    , 2011	$	276,595	$	13,366
					$	276,595	$	13,366

See accompanying notes

10

American Beacon Large Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2011 (in thousands, except share and per share amounts)

Assets:
Investments in unaffiliated securities, at fair valueA	$	7,873,333
Investments in affiliated securities, at fair valueB		25,000
Deposit with brokers for futures contracts		17,660
Receivable for investments sold		36,570
Dividends and interest receivable		8,470
Receivable for fund shares sold		79,300
Receivable for tax reclaims		584
Receivable for expense reimbursement (Note 2)		4
Prepaid expenses		90
Total assets		8,041,011
Liabilities:
Payable for investments purchased		21,692
Payable for fund shares redeemed		21,053
Payable for variation margin on open futures contracts		6,980
Management and investment advisory fees payable (Note 2)		5,455
Administrative service and service fees payable (Note 2)		2,516
Professional fees payable		47
Other liabilities		894
Total liabilities		58,637
Net assets	$	7,982,374
Analysis of Net Assets:
Paid-in-capital	$	9,448,068
Undistributed net investment income		134,981
Accumulated net realized loss		(1,457,810	)
Unrealized depreciation of investments and futures contracts		(142,865	)
Net assets	$	7,982,374
Shares outstanding (no par value):
Institutional Class		178,078,737
Y Class		7,133,081
Investor Class		209,102,452
Advisor Class		7,274,743
Retirement Class		57,433
A Class		218,885
C Class		74,030
AMR Class		30,244,207
Net asset value, offering and redemption price per share:
Institutional Class	$	18.99
Y Class	$	18.92
Investor Class	$	17.99
Advisor Class	$	17.83
Retirement Class	$	17.74
A Class (net asset value and redemption price)	$	18.01
A Class (offering price)	$	19.11
C Class	$	17.95
AMR Class	$	18.81
A        Cost of investments in unaffiliated securities	$	8,029,564
B        Cost of investments in affiliated securities	$	25,000

See accompanying notes

11

American Beacon Large Cap Value Fund^SM

Statement of Operations

For the Year Ended October 31, 2011 (in thousands)

Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes)*	$	219,124
Dividend income from affiliated securities		29
Interest income		20
Total investment income		219,173
Expenses:
Management and investment advisory fees (Note 2)		20,128
Administrative service fees (Note 2):
Institutional Class		10,866
Y Class		180
Investor Class		12,823
Advisor Class		414
Retirement Class		2
A Class		11
C Class		2
AMR Class		279
Transfer agent fees:
Institutional Class		158
Y Class		9
Investor Class		187
Advisor Class		8
A Class		2
C Class		4
AMR Class		17
Custody and fund accounting fees		989
Professional fees		292
Registration fees and expenses		159
Service fees (Note 2):
Y Class		60
Investor Class		15,656
Advisor Class		345
Retirement Class		1
A Class		4
C Class		1
Distribution fees (Note 2):
Advisor Class		345
Retirement Class		3
A Class		7
C Class		6
Prospectus and shareholder reports		872
Insurance fees		195
Trustee fees		626
Other expenses		591
Total expenses		65,242
Net fees waived and expenses reimbursed by Manager (Note 2)		(4	)
Net expenses		65,238
Net investment income		153,935
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		551,073
Commission recapture (Note 3)		201
Futures contracts		48,025
Change in net unrealized appreciation or depreciation of:
Investments		(472,296	)
Futures contracts		(6,915	)
Net gain on investments		120,088
Net increase in net assets resulting from operations	$	274,023
* Foreign taxes	$	1,100

See accompanying notes

12

American Beacon Large Cap Value Fund^SM

Statement of Changes of Net Assets (in thousands)

	Year Ended October 31, 2011			Year Ended October 31, 2010
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	153,935		$	115,549
Net realized gain (loss) on investments and futures contracts		599,299			(62,309	)
Change in net unrealized appreciation or depreciation of investments and futures contracts		(479,211	)		992,998
Net increase in net assets resulting from operations		274,023			1,046,238
Distributions to Shareholders:
Net investment income:
Institutional Class		(47,237	)		(40,440	)
Y Class		(27	)		(15	)
Investor Class		(48,747	)		(61,616	)
Advisor Class		(1,398	)		(1,747	)
A Class		(13	)		—
C Class		(1	)		—
AMR Class		(8,633	)		(10,649	)
Net distributions to shareholders		(106,056	)		(114,467	)
Capital Share Transactions:
Proceeds from sales of shares		1,902,054			2,598,273
Reinvestment of dividends and distributions		101,485			109,446
Cost of shares redeemed		(2,384,873	)		(2,099,289	)
Net increase (decrease) in net assets from capital share transactions		(381,334	)		608,430
Net increase (decrease) in net assets		(213,367	)		1,540,201
Net Assets:
Beginning of period		8,195,741			6,655,540
End of Period *	$	7,982,374		$	8,195,741
*  Includes undistributed net investment income of	$	134,981		$	86,896

See accompanying notes

13

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 20 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 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
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

Each class offered by the Trust has equal rights as to assets and voting privileges. Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets. Realized and unrealized capital gains and losses of each class are allocated daily based on the relative net assets of each class of the respective Fund. Class specific expenses, where applicable, currently include administrative service fees, service fees, and distribution fees and vary amongst the classes as described more fully in Note 2.

New Accounting Prouncements

In April 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) related to the accounting for repurchase agreements and similar agreements that both entitles and obligates a transferor to repurchase or redeem financial assets before their maturity. The ASU modifies the criteria for determining effective control of transferred assets and as a result certain agreements may now be accounted for as secured borrowings. The ASU is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011.

In May 2011, FASB issued an ASU to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. generally accepted accounting principles, (“U.S. GAAP”) and International Financial Reporting Standards (IFRSs). FASB concluded that the amendments in this ASU will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The ASU is effective prospectively during interim or annual periods beginning on or after December 15, 2011.

At this time, management is evaluating the implications of these changes and their impact on the financial statements has not been determined.

14

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

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, 2011 were as follows (dollars in thousands):

Management Fee Rate	Management Fee	Amounts paid to Investment Advisors	Net Amounts Retained by Manager
0.175%-0.65%	$20,128	$15,811	$4,317

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.

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.

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.

15

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

Investment in Affiliated Funds

The Fund may invest in the American Beacon Money Market Select Fund and the American Beacon U.S. 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, 2011, the Manager earned fees from the Select Funds totaling $41,493 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, 2011, 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’ 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, 2011, the Manager voluntarily reimbursed $4,264 for the C Class which was receivable at October 31, 2011. A liability has not been booked as the Manager does not intend to seek repayment of this reimbursement.

3. Security Valuation and Fair Value Measurements

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.

Investments in mutual funds are valued at the closing net asset value (“NAV”) 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”).

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized, but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities.

16

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

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 NAV. 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.

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. GAAP 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.

Valuation Inputs

Various inputs may be used to determine the fair 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.

17

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

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.

Level 1 and Level 2 trading assets and trading liabilities, at fair value

Common stocks and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

Level 3 trading assets and trading liabilities, at fair value

The valuation techniques and significant inputs used in determining the fair values of financial instruments classified as Level 3 of the fair value hierarchy are as follows:

Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board or persons acting at their direction and are categorized as Level 3 of the fair value hierarchy.

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the Exchange close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade, do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager the responsibility for monitoring significant events that may materially affect the values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events.

The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated the responsibility for applying the valuation methods to the Manager. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelines established by the Board, with reference to other securities or indices. In the event that the security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the fair value of the security or asset will be determined in good faith by the Valuation Committee of the Board, generally based upon recommendations provided by the Manager.

When a Fund uses fair valuation methods applied by the Manager that use significant unobservable inputs to determine its NAV, securities will be priced by another method that the Board or persons acting at their direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. While the Trust’s policy is

18

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

intended to result in a calculation of a Fund’s NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.

For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in and out of the Level 3 category during the period. The end of period timing recognition is used for the significant transfers between Levels of the Fund’s assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for the Fund.

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of October 31, 2011, the investments were classified as described below: (in thousands)

	Level 1		Level 2		Level 3		Total
Common Stock	$	7,577,581	$	—	$	—	$	7,577,581
Preferred Stock		37,570		—		—		37,570
Short-Term Investments		283,182		—		—		283,182
Total Investments in Securities	$	7,898,333	$	—	$	—	$	7,898,333
Futures Contracts	$	13,366		—		—	$	13,366

As of October 31, 2011, there were no significant transfers into or out of any level.

4. Securities and Other Investments

Real Estate Investment Trusts

The Fund may own shares of real estate investment trusts (“REITS”) which report information on the source of their distributions annually. The Fund re-characterizes distributions received from REIT investments based on information provided by the REITs into the following categories: ordinary income, long-term capital gains, and return of capital. If information is not available on a timely basis from the REITs, the re-characterization will be estimated based on available information which may include the previous year allocation. If new or additional information becomes available from the REITs at a later date, a re-characterization will be made the following year. These re-characterizations are not recorded for financial statement purposes, but as an adjustment to the calculation of taxable income.

5. Financial Derivative Instruments

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 usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as Cash deposited with broker on the Statement of Assets and Liabilities. Payments to and

19

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

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.

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2011 (in thousands):

Statement of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation of investments and futures contracts		Equity Contracts	*	$	13,366

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2011 (in thousands):

Statement of Operations	Derivatives		Total
Net realized gain (loss) from futures contracts		Equity Contracts	$	48,025
Change in net unrealized appreciation or depreciation of futures contracts		Equity Contracts	$	(6,915	)

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

6. 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 Subchapter M of the Internal Revenue Code, as amended, 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, 2011 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. GAAP. 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, 2011 and October 31, 2010 were as follows (in thousands):

	Year Ended October  31, 2011		Year Ended October  31, 2010
Distributions paid from:
Ordinary income*
Institutional Class	$	47,237	$	40,440
Y Class		27		15
Investor Class		48,747		61,616
Advisor Class		1,398		1,747
A Class		13		—
C Class		1		—
AMR Class		8,633		10,649
Total distributions paid	$	106,056	$	114,467

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

20

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

As of October 31, 2011, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

Cost basis of investments for federal income tax purposes	$	8,315,861
Unrealized appreciation		648,132
Unrealized depreciation		(1,065,660	)
Net unrealized appreciation or depreciation		(417,528	)
Undistributed ordinary income		134,981
Accumulated long-term gain or loss		(1,196,547	)
Other temporary differences		13,400
Distributable earnings or deficit	$	(1,465,694	)

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 or depreciation are attributable primarily to the tax deferral of losses from wash sales and the realization for tax purposes of unrealized gains or losses on certain derivative instruments.

Due to inherent differences in the recognition of income, expenses and realized gains or losses under U.S. GAAP 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, 2011 (in thousands):

Paid-in-capital	$	(200	)
Undistributed net investment income (loss)		206
Accumulated net realized gain (loss)		(6	)
Unrealized appreciation (depreciation) of investments and futures contracts		—

At October 31, 2011 the capital loss carry forward positions for federal income tax purposes were $456,315, $684,423, and $42,443 expiring in 2016, 2017, and 2018 respectively. The Fund utilized $588,377 of net capital loss carryovers for the year ended October 31, 2011. (in thousands)

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments other than short-term obligations for the year ended October 31, 2011 were (in thousands) $7,438,089 and $7,666,782, respectively.

A summary of the Fund’s direct ownership and transactions in the USG Select Fund for the year ended October 31, 2011 is set forth below (in thousands):

Affiliate	October 31, 2010 Shares/Fair Value		Purchases		Sales		October 31, 2011 Shares/Fair Value
USG Select Fund	$	60,000	$	90,000	$	125,000	$	25,000

21

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

8. 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, 2011

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		39,716		$	774,595			7,497		$	151,632			45,467		$	843,177			1,548		$	28,674
Reinvestment of dividends		2,273			44,274			1			27			2,547			47,168			75			1,372
Shares redeemed		(45,266	)		(866,688	)		(480	)		(9,076	)		(74,020	)		(1,366,606	)		(1,681	)		(30,880	)
Net increase (decrease) in shares outstanding		(3,277	)	$	(47,819	)		7,018		$	142,583			(26,006	)	$	(476,261	)		(58	)	$	(834	)

	Retirement Class						AMR Class						A Class						C Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		63		$	1,138			5,137		$	97,647			210		$	3,855			73		$	1,336
Reinvestment of dividends		—			—			448			8,633			1			11			—			—
Shares redeemed		(6	)		(109	)		(5,724	)		(110,845	)		(38	)		(650	)		(1	)		(19	)
Net increase (decrease) in shares outstanding		57		$	1,029			(139	)	$	(4,565	)		173		$	3,216			72		$	1,317

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

22

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23

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,						August 3 to October 31, 2009
	2011G			2010			2009			2008			2007			2011G			2010
Net asset value, beginning of period	$	18.56		$	16.32		$	15.01		$	26.03		$	23.77		$	18.49		$	16.32		$	15.59
Income from investment operations:
Net investment incomeA		0.39			0.32			0.35			0.51			0.40			0.37			0.29			0.06
Net gains (losses) on securities (both realized and unrealized)		0.30			2.22			1.40			(10.41	)		2.78			0.30			2.22			0.67
Total income (loss) from investment operations		0.69			2.54			1.75			(9.90	)		3.18			0.67			2.51			0.73
Less distributions:
Dividends from net investment income		(0.26	)		(0.30	)		(0.44	)		(0.41	)		(0.31	)		(0.24	)		(0.34	)		—
Distributions from net realized gains on securities		—			—			—			(0.71	)		(0.61	)		—			—			—
Total distributions		(0.26	)		(0.30	)		(0.44	)		(1.12	)		(0.92	)		(0.24	)		(0.34	)		—
Net asset value, end of period	$	18.99		$	18.56		$	16.32		$	15.01		$	26.03		$	18.92		$	18.49		$	16.32
Total return B		3.69	%		15.68	%		12.41	%		(39.59	)%		13.76	%		3.58	%		15.50	%		4.68	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,380,918		$	3,366,011		$	2,221,162		$	2,038,539		$	2,493,451		$	134,968		$	2,123		$	1
Ratios to average net assets (annualized):
Expenses, before waivers		0.58	%		0.59	%		0.61	%		0.58	%		0.59	%		0.69	%		0.70	%		0.68	%E
Expenses, net of waivers		0.58	%		0.59	%		0.61	%		0.58	%		0.59	%		0.69	%		0.70	%		0.68	%E
Net investment income (loss), before waivers		1.96	%		1.73	%		2.36	%		2.19	%		1.82	%		1.88	%		1.51	%		1.58	%E
Net investment income, net of waivers		1.96	%		1.73	%		2.36	%		2.19	%		1.82	%		1.88	%		1.51	%		1.58	%E
Portfolio turnover rate		90	%		28	%		27	%		28	%		20	%		90	%		28	%		27	%C

^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.

^G On December 1, 2010, MFS Institutional Advisors, Inc. assumed management of the Large Cap Value Fund’s assets previously managed by Metropolitan West Capital Management, LLC.

24

American Beacon Large Cap Value Fund

Financial Highlights

(For a share outstanding throughout the period)

Investor Class																				Advisor Class																					Retirement Class													A Class
Year Ended October 31,																				Year Ended October 31,																					Year Ended October 31,									May 1 to October 31, 2009				Year ended October 31, 2011G
2011G				2010				2009				2008				2007					2011G				2010				2009				2008				2007					2011G				2010
	$	17.61			$	15.51			$	14.29			$	24.83			$	22.74				$	17.47			$	15.39			$	14.19			$	24.70			$	22.64				$	17.32			$	15.36			$	12.66			$	17.61
		0.30				0.23				0.28				0.41				0.35					0.27				0.21				0.26				0.32				0.28					0.20				0.18				0.08				0.24
		0.29				2.12				1.34				(9.88	)			2.63					0.28				2.10				1.32				(9.79	)			2.62					0.30				2.07				2.62				0.31
		0.59				2.35				1.62				(9.47	)			2.98					0.55				2.31				1.58				(9.47	)			2.90					0.50				2.25				2.70				0.55
		(0.21	)			(0.25	)			(0.40	)			(0.36	)			(0.28	)				(0.19	)			(0.23	)			(0.38	)			(0.33	)			(0.23	)				(0.08	)			(0.29	)			—				(0.15	)
		—				—				—				(0.71	)			(0.61	)				—				—				—				(0.71	)			(0.61	)				—				—				—				—
		(0.21	)			(0.25	)			(0.40	)			(1.07	)			(0.89	)				(0.19	)			(0.23	)			(0.38	)			(1.04	)			(0.84	)				(0.08	)			(0.29	)			—				(0.15	)
	$	17.99			$	17.61			$	15.51			$	14.29			$	24.83				$	17.83			$	17.47			$	15.39			$	14.19			$	24.70				$	17.74			$	17.32			$	15.36			$	18.01
		3.30	%			15.27	%			11.99	%			(39.72	)%			13.46	%				3.11	%			15.14	%			11.81	%			(39.87	)%			13.16	%				2.86	%			14.78	%			21.33	%D			3.12	%
	$	3,761,691			$	4,140,584			$	3,798,632			$	3,594,565			$	5,198,835				$	129,739			$	128,080			$	114,945			$	99,416			$	99,854				$	1,019			$	2			$	1			$	3,942
		0.95	%			0.96	%			0.93	%			0.83	%			0.83	%				1.08	%			1.10	%			1.12	%			1.08	%			1.08	%				1.39	%			1.37	%			1.37	%E			1.16	%
		0.95	%			0.96	%			0.93	%			0.83	%			0.83	%				1.08	%			1.10	%			1.10	%			1.08	%			1.08	%				1.39	%			1.37	%			1.37	%E			1.16	%
		1.59	%			1.36	%			2.05	%			1.94	%			1.59	%				1.46	%			1.23	%			1.84	%			1.69	%			1.32	%				1.06	%			0.95	%			1.15	%E			1.37	%
		1.59	%			1.36	%			2.05	%			1.94	%			1.59	%				1.46	%			1.23	%			1.86	%			1.69	%			1.32	%				1.06	%			0.95	%			1.15	%E			1.37	%
		90	%			28	%			27	%			28	%			20	%				90	%			28	%			27	%			28	%			20	%				90	%			28	%			27	%C			90	%

25

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class			AMR Class															C Class
	May 17 to October 31, 2010			Year Ended October 31,															Year ended October 31, 2011G			September 1 to October 31, 2010
				2011G			2010			2009			2008			2007
Net asset value, beginning of period	$	16.93		$	18.37		$	16.14		$	14.88		$	25.80		$	23.55		$	17.58		$	16.17
Income from investment operations:
Net investment income (loss)A		0.03			0.41			0.34			0.37			0.51			0.45			0.10			(0.01	)
Net gains (losses) on securities (both realized and unrealized)		0.65			0.32			2.22			1.38			(10.26	)		2.76			0.32			1.42
Total income (loss) from investment operations		0.68			0.73			2.56			1.75			(9.75	)		3.21			0.42			1.41
Less distributions:
Dividends from net investment income		—			(0.29	)		(0.33	)		(0.49	)		(0.46	)		(0.35	)		(0.05	)		—
Distributions from net realized gains on securities		—			—			—			—			(0.71	)		(0.61	)		—			—
Total distributions		—			(0.29	)		(0.33	)		(0.49	)		(1.17	)		(0.96	)		(0.05	)		—
Net asset value, end of period	$	17.61		$	18.81		$	18.37		$	16.14		$	14.88		$	25.80		$	17.95		$	17.58
Total return B		4 02	%D		3.94	%		16.04	%		12.59	%		(39.43	)%		14.03	%		2.36	%		8.72	%D
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	814		$	568,768		$	558,089		$	520,799		$	497,127		$	972,260		$	1,329		$	38
Ratios to average net assets (annualized):
Expenses, before waivers		1.06	%E		0.33	%		0.34	%		0.36	%		0.32	%		0.32	%		2.54	%		2.14	%E
Expenses, net of waivers		1.06	%E		0.33	%		0.34	%		0.36	%		0.32	%		0.32	%		1.84	%		1.87	%E
Net investment income (loss), before waivers		1.09	%E		2.21	%		1.98	%		2.62	%		2.44	%		2.13	%		(0.01	)%		(0.76	)%E
Net investment income, net of waivers		1.09	%E		2.21	%		1.98	%		2.62	%		2.44	%		2.13	%		0.68	%		(0.50	)%E
Portfolio turnover rate		28	%F		90	%		28	%		27	%		28	%		20	%		90	%		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.

^G  On December 1, 2010, MFS Institutional Advisors, Inc. assumed management of the Large Cap Value Fund’s assets previously managed by Metropolitan West Capital Management, LLC.

26

American Beacon Funds

Privacy Policy & Federal Tax Information

October 31, 2011 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect 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 77.92%.

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 2012 of the percentage applicable to the preparation of their 2011 income tax returns.

27

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements (Unaudited)

Disclosure Regarding Renewal and Approval of Management Agreement and Investment Advisory Agreements

At its May 26, 2011 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 American Beacon Mileage Funds, the American Beacon Select Funds and the American Beacon Master Trust (collectively 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 11, 2011 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 2 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 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.

28

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements (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 11, 2011 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 26, 2011 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 26, 2011 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 continued 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; the Manager’s commitment to increasing headcount and training employees in conjunction with product expansion; and efforts made by the Manager to retain key employees.

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.

29

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements (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 the Large Cap Value 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 the Large Cap Value 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 2010, primarily due to market appreciation.

In addition, the Board noted the Manager’s representation that, many of the Funds enjoy the primary benefit of economies of scale because low comparable fee levels are already reflected in the current level of management & administration fees charged by the Manager, the current fee structure already provides an adequate mechanism for the sharing of economies of scale with shareholders and due to the existing low cost structure of the Funds that further breakpoints are not appropriate at this time. 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 will use the Large Cap Value Fund model in managing its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds 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 the Fund did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2010.

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 group of comparable mutual funds included in the analysis provided to the Trustees by Lipper, Inc.

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

In considering the renewal of the Management Agreement, 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, 2011 and (2) the expense ratio of the Institutional Class of Fund shares ranked better than the median of its Lipper universe.

30

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

In considering the renewal of the Investment Advisory Agreements with Barrow, Brandywine, and 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, 2011, but underperformed for the one-year period; (2) Brandywine outperformed the peer universe median for the ten-year period ended March 31, 2011, but underperformed for the one-, three- and five-year periods; (3) Hotchkis outperformed the peer universe median for the one-, three- and ten-year periods ended March 31, 2011, but underperformed for the three- year period; (5) each of the Fund’s subadvisors has informed the Manager that it uses Fund commissions to obtain proprietary research, the application of which benefits the Fund and each of the subadvisor’s clients, but there is little or no impact to the Fund; and (6) the Manager’s recommendation to continue to retain each subadvisor.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Management and Investment Advisory 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.

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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 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.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES
	Term Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (74)	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, Center Point 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 Funds (1996-Present).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (67)	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 (50)	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, Trinity Valley School (2003-2004); Member; Trinity Valley School Endowment Committee (2004-Present); 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 (57)	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 Funds (2008-Present).

32

Trustees and Officers of the American Beacon Funds

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Thomas M. Dunning (69)	Trustee since 2008	Non-Executive Chairman (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); Board Member, Baylor Health Care System Foundation (2007-present); Vice Chair, State Fair of Texas (1987-Present); Board Member, Southwestern Medical Foundation (1994-present); Board Member, John Tower Center for Political Studies/SMU (2008-Present); Board Member, University of Texas Development Board (2008-Present); Board Member, BancTec (2010 - Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-Present); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust Funds (2008-Present).
Richard A. Massman (68)	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 (2007-2011) and Director (2005-2011), The Dallas Opera Foundation; Chairman (2006-2010) and Director (2005-2009), Temple Emanu-El Foundation; Trustee, Presbyterian Healthcare Foundation (2006-Present); Director, The Retina Foundation of the Southwest (2000-Present); Trustee, American Beacon Mileage Funds (2004-Present); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust Funds (2004-Present).
R. Gerald Turner (65) 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 Funds (2001-Present).
Paul J. Zucconi,CPA (71)	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) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community services and products) (2010-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 Funds (2008-Present).
Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
OFFICERS	Term One Year
Gene L. Needles, Jr. (56)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President, CEO and Director (2009-Present), Lighthouse Holdings Inc.; President (2009-Present), American Beacon Mileage Funds; President (2009-Present), American Beacon Select Funds; 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.

33

Trustees and Officers of the American Beacon Funds

(Unaudited)

William F. Quinn** (63)	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), CEO (2006-2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman and Director (2008-Present), Lighthouse Holdings, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009), Director, Hicks Acquisition II, Inc. (2010-Present); 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); the Independent Trustee, National Railroad Retirement Investment Trust (2011-Present); Trustee (1995-2008) and President (1995-2007, 2008-2009), American Beacon Mileage Funds; Trustee (1999-2008) and President (1999-2007, 2008-Present), American Beacon Select Funds; Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds, plc (2007-2009).
Rosemary K. Behan (52)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Secretary (2008-Present), Lighthouse Holdings, Inc.; Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney, U.S. Securities and Exchange Commission, (1995-2004).
Brian E. Brett (51)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment adviser) (1996-2004).
Wyatt Crumpler (45)	VP since 2007	Vice President, Asset Management (2009-Present) and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.; Managing Director of Corporate Accounting (2004-2007) and Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Erica Duncan (41)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (57)	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 (50)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.; Treasurer (2010-Present), Lighthouse Holdings, Inc.
Terri L. McKinney (47)	VP since 2010	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), and Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; President, Board of Trustees (2010-Present), Vice-President, Board of Trustees (2008-2010), and Trustee (2006-2008), Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (36)	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).
Samuel J. Silver (48)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (40)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present) and Senior Compliance Analyst (1998-2004), American Beacon Advisors, Inc.

34

Trustees and Officers of the American Beacon Funds

(Unaudited)

John J. Okray (37)	Asst. Secretary since 2010	Assistant General Counsel, American Beacon Advisors, Inc. (2010-Present); Asst. Secretary (2010-Present), Lighthouse Holdings, Inc.; Vice President, Oppenheimer Funds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), Senior Tax Analyst (1999-2004), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.

* 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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Delivery of Documents

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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, Retirement Classes Call (800) 658-5811 AMR ClassSM 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 State Street Bank and Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data Services Kansas City, Missouri INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Foreside Fund Services, LLC Portland, Maine

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 10/11

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	7
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, 2011

Fellow Shareholders, Some days it seems the best-kept secret of the past twelve months has been the U.S. equity market’s rise. This rise has occurred despite the ongoing waves of investor concern regarding the U.S. economy’s health and the realization that the European sovereign crisis has yet to find resolution. With headlines focused on geopolitical and economic risks, the strengthening underlying fundamentals at many publicly traded companies–and their relatively attractive market valuations–have drawn less attention. This near-term myopia can create opportunities for fund companies like ours, where our sub-advisors manage with a longer-term perspective.

The market volatility also highlights the key benefit of our multi-manager approach–a strategy we feel can help smooth performance over time. The performance of the American Beacon Small Cap Value Fund reflects the results of manager diversification. It also reflects the American Beacon investment philosophy: that portfolios managed with a longer-term perspective tend to be better positioned for riding out episodes of economic and geopolitical turbulence.

For the twelve-month period ended October 31, 2011:

>> American Beacon Small Cap Value Fund (Institutional Class) returned 5.57%

At American Beacon, we remain focused on seeking opportunities and meeting market challenges to deliver the type of consistency in performance and service our shareholders value. We regard your trust in the American Beacon Funds as recognition that we are achieving these goals, and we appreciate your continued investment.

Recognition of our process has also come in the form of a 2011 Lipper Award. The American Beacon Small Cap Value Fund was cited by Lipper as the best fund in its category based on its 10-year performance.

For further details about the growing number of investment opportunities now available within the American Beacon Funds family, please visit our website at www.americanbeaconfunds.com.

	Best Regards,
	Gene L. Needles, Jr.
	President
	American Beacon Funds

American Beacon Small Cap Value Fund (AMR Class) received the 2011 Lipper Fund Award as the best fund in its category over the 10 years ended December 31, 2010. It was number one out of 69 funds in the Small-Cap Value Funds category based on risk-adjusted returns. The Lipper Fund Awards are part of the Thomson Reuters Awards for Excellence, a global family of awards that celebrate exceptional performance throughout the professional investment community. The Thomson Reuters Awards for Excellence recognize the world’s top funds, fund management firms, sell-side firms, research analysts, and investor relations teams. The Thomson Reuters Awards for Excellence also include the Extel Survey Awards, the StarMine Analyst Awards, and the StarMine Broker Rankings. For more information, please contact markets.awards@thomsonreuters.com or visit excellence.thomsonreuters.com. Past performance is no guarantee of future results.

1

Domestic Equity Market Overview

October 31, 2011 (Unaudited)

For most of the 12 months ended October 31, 2011, the U.S. equity markets followed an upward path, driven by the strength of corporate balance sheets and robust corporate earnings. This rise occurred despite the volatility that prevailed throughout the world markets, as investors reacted to ongoing political uncertainty about the European sovereign debt crisis and to the inaction of U.S. politicians in addressing the weak domestic economic situation. The overall rise of equities also occurred despite increased correlations among stocks and the actions of worried investors who shifted between risk-seeking and risk-averse strategies.

The relative strength of the equity market lasted until May 2011, when investors turned more risk averse. This shift coincided with the onset of increasingly negative news from Europe and some weaker-than-expected macroeconomic news in the U.S. Meanwhile, policymakers in the U.S. reached an impasse on how to meet the country’s fiscal challenges, which further fed investor worries. A sharp selloff ensued.

Oversold equities rebounded in early October 2011 and received an additional boost late in the month when European policymakers agreed to a framework for addressing the Greek crisis. Consequently, the S&P 500 Index generated its best-performing month in nearly 20 years, pushing its 12-month return into positive territory (+8.1%).

As unsettling as the volatility has been, the S&P 500 Index has outperformed almost all of the major developed and emerging equity markets. Little more than two years ago, the S&P 500 Index bottomed below 700. Since then, it has doubled. That rise has been uneven–investors in small cap stocks have benefited far more than those holding large cap issues. This is especially true for the mega-cap stocks in the Financial, Technology and Health Care sectors. Consider that over the 12-month period ending October 31, 2011, the largest 10% of companies (in terms of market capitalization) in the Russell 1000 Value Index fell 1.4%. The entire universe returned 6.2%.

Overall, the U.S. economy continued to heal. Corporate strength was good, while low interest rates, a depressed dollar and moderately rising employment were supportive of a modest, ongoing recovery. Nevertheless, risk is still part of the equation. Credible action from Washington continues to be elusive and the implementation of Europe’s agreement–and its likelihood of success–remains uncertain. Other geopolitical and economic concerns also remain. Yet, there are a number of positive factors that seem underappreciated by the market at this point:

• A lack of speculation in equities

• Business inventories remain in balance

• Corporate cash levels remain high

• Corporate debt levels are low

• Lackluster economic expectations are already priced into the market

• Dividend payout ratios are low and have significant upside

We believe the dividends and earnings available to owners of equities are generous given current prices. They sufficiently compensate investors for the risks at hand. We remain keenly focused on identifying undervalued franchises with strong balance sheets exhibiting the ability and willingness to return capital to shareholders.

2

Performance Overview

American Beacon Small Cap Value Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the Small Cap Value Fund (“Fund”) returned 5.57% for the twelve months ended October 31, 2011, outperforming the Russell 2000^® Value Index (the “Index”) return of 3.54% and the Lipper Small-Cap Value Funds Index return of 5.51% for the same period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/01 through 10/31/11

	Annualized Total Returns Periods Ended 10/31/11
	1 Year			5 Years			10 Years			Value of $10,000 10/31/01- 10/31/11
Institutional Class(1,8)		5.57	%		1.26	%		9.77	%	$	25,408
Y Class(1,2,8)		5.49	%		1.17	%		9.73	%		25,301
Investor Class(1,8)		5.20	%		0.94	%		9.47	%		24,713
Advisor Class(1,3,8)		5.07	%		0.75	%		9.25	%		24,227
Retirement Class (1,4,8)		4.79	%		0.63	%		9.19	%		24,084
A Class with sales charge (1,5,8)		-1.11	%		-0.31	%		8.79	%		23,216
A Class without sales charge(1,5,8)		4.92	%		0.88	%		9.43	%		24,633
C Class with sales charge (1,6,8)		3.06	%		0.68	%		9.32	%		24,388
C Class without sales charge (1,6,8)		4.06	%		0.68	%		9.32	%		24,388
AMR Class(1,8)		5.85	%		1.52	%		10.06	%		26,080
Lipper Small-Cap Value Funds Index(7)		5.51	%		1.01	%		8.62	%		22,871
Russell 2000 Value Index(7)		3.54	%		-1.42	%		7.64	%		20,869

1. Performance shown is historical and is not 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 10/31/01 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 10/31/01.

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. 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 10/31/01 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 10/31/01.

5. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. The maximum sales charge for A Class is 5.75%.

6. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. 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 0.82%, 0.92%, 1.19%, 1.33%, 1.55%, 1.29%, 2.11%, and 0.34%, 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.

3

Performance Overview

American Beacon Small Cap Value Fund^SM

October 31, 2011 (Unaudited)

The Fund outperformed the Index due to excess performance through both stock selection and sector allocation.

Superior stock selection in the Information Technology, Energy and Industrials sectors contributed value to performance relative to the Index. The Fund’s Information Technology companies that generated the most excess positive returns were Interdigital (up 33.0%), ON Semiconductor (up 61.3%) and Synaptics (up 14.8%). In the Energy sector, Oil States International (up 41.2%), Frontier Oil (up 116.8%) and Atwood Oceanics (up 32.3%) added the most relative value. For the period the Fund owned the securities, Weight Watchers (up 89.0%), Armstrong World Industries (up 54.9%) and Clean Harbors (up 65.6%) were the largest contributors in the Industrials sector. Poor stock selection in the Materials sector, where Greif (down 22.0%) and Westlake Chemical (down 20.2%) had the largest negative impact, detracted from the Fund’s performance.

A significant underweight in Financials and an overweight in the Health Care sector contributed approximately 40 basis points (0.40%) each to relative performance through sector allocation.

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
LifePoint Hospitals, Inc.		1.0	%
Rent-A-Center, Inc.		0.9	%
Valassis Communications, Inc.		0.8	%
Portland General Electric Co.		0.8	%
Great Plains Energy, Inc.		0.7	%
Cloud Peak Energy, Inc.		0.7	%
HealthSouth Corp.		0.6	%
Iberiabank Corp.		0.6	%
Webster Financial Corp.		0.6	%
ProAssurance Corp.		0.6	%

Sector Allocation

	% of Equities
Financials		26.2	%
Industrials		18.1	%
Consumer Discretionary		15.2	%
Information Technology		14.3	%
Health Care		6.4	%
Materials		6.2	%
Energy		5.7	%
Utilities		5.2	%
Consumer Staples		2.3	%
Telecommunication Services		0.4	%

4

Fund Expenses

American Beacon Small Cap Value Fund^SM

October 31, 2011 (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, 2011 through October 31, 2011.

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 Account Value 5/1/11		Ending Account Value 10/31/11		Expenses Paid During Period* 5/1/11-10/31/11
Institutional Class
Actual	$	1,000.00	$	855.77	$	3.93
Hypothetical **	$	1,000.00	$	1,020.97	$	4.28
Y Class
Actual	$	1,000.00	$	855.58	$	4.21
Hypothetical **	$	1,000.00	$	1,020.67	$	4.58
Investor Class
Actual	$	1,000.00	$	854.73	$	5.61
Hypothetical **	$	1,000.00	$	1,019.16	$	6.11
Advisor Class
Actual	$	1,000.00	$	853.72	$	6.31
Hypothetical **	$	1,000.00	$	1,018.40	$	6.87
Retirement Class
Actual	$	1,000.00	$	852.74	$	7.71
Hypothetical **	$	1,000.00	$	1,016.89	$	8.39
A Class
Actual	$	1,000.00	$	852.78	$	7.52
Hypothetical **	$	1,000.00	$	1,017.09	$	8.19
C Class
Actual	$	1,000.00	$	848.94	$	12.54
Hypothetical **	$	1,000.00	$	1,011.64	$	13.64
AMR Class
Actual	$	1,000.00	$	857.47	$	2.72
Hypothetical **	$	1,000.00	$	1,022.28	$	2.96

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.84%, 0.90%, 1.20%, 1.35%, 1.65%, 1.61%, 2.69%, and 0.58% for the Institutional, Y, Investor, Advisor, Retirement, A, C, and AMR 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.

5

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, 2011, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and financial highlights for 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, 2011, 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, 2011, 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 29, 2011

6

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
COMMON STOCK - 92.25%
CONSUMER DISCRETIONARY - 14.05%
Auto Components - 1.24%
American Axle & Manufacturing Holdings, Inc.		1,568,495	$	15,199
Cooper Tire & Rubber Co.		114,539		1,641
Dorman Products, Inc.A		46,180		1,760
Gentex Corp.		374,500		11,280
Sauer-Danfoss, Inc.		53,200		2,060
Superior Industries International, Inc.B		69,420		1,270
The Goodyear Tire & Rubber Co.		361,150		5,186
				38,396
Automobiles - 0.21%
Thor Industries, Inc.		244,080		6,453
Commercial Services & Supplies - 0.10%
Viad Corp.		143,890		3,012
Distributors - 0.48%
Brightpoint, Inc.A		1,447,430		14,691
Hotels, Restaurants & Leisure - 1.46%
Bob Evans Farms, Inc.		76,390		2,513
Brinker International, Inc.		58,815		1,347
CEC Entertainment, Inc.		28,850		912
International Speedway Corp., Class A		138,859		3,313
Jack in the Box, Inc.A		344,530		7,090
Lakes Entertainment, Inc.A		150,800		317
Life Time Fitness, Inc.A		38,330		1,653
Papa John’s International, Inc.A		119,630		4,039
Shuffle Master, Inc.A		885,900		9,399
Sonic Corp.A		163,390		1,211
Speedway Motorsports, Inc.		45,600		593
WMS Industries, Inc.		586,050		12,841
				45,228
Household Durables - 1.28%
Cavco Industries, Inc.A		54,089		2,436
Ethan Allen Interiors, Inc.		280,440		5,552
Furniture Brands International, Inc.		833,900		1,593
Helen of Troy Ltd.A		131,853		3,815
Lancaster Colony Corp.B		64,730		4,306
Meritage Homes Corp.		256,460		4,552
Mohawk Industries, Inc.A		75,600		3,980
Ryland Group, Inc.B		345,610		4,666
Whirlpool Corp.		169,800		8,627
				39,527
Internet & Catalog Retail - 0.10%
Insight Enterprises, Inc.A		120,350		2,034
Systemax, Inc.		75,430		1,141
				3,175
Leisure Equipment & Products - 0.51%
Brunswick Corp.		755,090		13,335
Callaway Golf Co.		124,220		722
Jakks Pacific, Inc.		86,265		1,636
				15,693
Media - 1.75%
Belo Corp., Series A		242,740		1,539
EW Scripps Co.		121,710		1,015
John Wiley & Sons, Inc., Class A		118,500		5,636
Meredith Corp.B		372,430		9,992

	Shares		Fair Value
			(000’s)
Scholastic Corp.		125,970	$	3,382
Sinclair Broadcast Group, Inc., Class A		134,100		1,285
The Washington Post Co., Class BB		17,230		5,861
Valassis Communications, Inc.B		1,307,300		25,532
				54,242
Multiline Retail - 1.11%
99 Cents Only StoresA		484,040		10,552
Big Lots, Inc.		445,900		16,806
Fred’s, Inc., Class A		80,940		987
Saks, Inc.B		571,370		6,039
				34,384
Specialty Retail - 4.84%
Aaron’s, Inc.		246,400		6,594
Aeropostale, Inc.A		763,800		10,434
American Greetings Corp., Class A		104,760		1,677
America’s Car-Mart, Inc.A		310,500		10,364
Asbury Automotive Group, Inc.		84,620		1,578
Ascena Retail Group, Inc.A		179,354		5,183
Big 5 Sporting Goods Corp.		183,450		1,418
Cabela’s, Inc.A		693,990		17,294
Chico’s FAS, Inc.		516,020		6,378
Collective Brands, Inc.A		49,875		729
DG FastChannel, Inc.A		488,500		9,106
Express, Inc.		344,190		7,775
GameStop Corp., Class AA B		194,610		4,976
Group 1 Automotive, Inc.		61,870		2,819
Hanesbrands, Inc.A		186,530		4,919
Pier 1 Imports, Inc.		306,150		3,830
Regis Corp.		63,500		1,039
Rent-A-Center, Inc.		807,218		27,566
Sonic Automotive, Inc., Class AB		105,440		1,547
Stage Stores, Inc.		113,300		1,771
The Buckle, Inc.B		89,950		4,008
The Cato Corp., Class A		42,310		1,084
The Childrens Place Retail Stores, Inc.A		106,390		4,995
The Men’s Wearhouse, Inc.		413,200		12,760
				149,844
Textiles & Apparel - 0.97%
Maidenform Brands, Inc.A		60,220		1,480
Quiksilver, Inc.A		2,670,400		8,946
Skechers U.S.A. Inc, Class AA		684,420		9,760
The Jones Group, Inc.		167,237		1,868
The Warnaco Group, Inc.A		89,110		4,375
Unifirst Corp.		38,630		2,022
Wolverine World Wide, Inc.		36,925		1,401
				29,852
Total Consumer Discretionary				434,497
CONSUMER STAPLES - 2.15%
Food & Drug Retailing - 0.73%
Casey’s General Stores, Inc.		112,746		5,587
Flowers Foods, Inc.		291,020		5,875
Nash Finch Co.		451		12
Spartan Stores, Inc.		288,240		4,935
SUPERVALU, Inc.B		233,400		1,872
The Andersons, Inc.		47,440		1,751
Winn-Dixie Stores, Inc.A		379,900		2,409
				22,441
Food Products - 1.26%
Chiquita Brands International, Inc.		78,480		697
Corn Products International, Inc.		112,745		5,468

See accompanying notes

7

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2011

		Shares		Fair Value
				(000’s)
Darling International, Inc.A			128,700	$	1,804
Fresh Del Monte Produce, Inc.			153,080		3,897
Overhill Farms, Inc.A			316,300		1,224
Sanderson Farms, Inc.B			208,814		10,337
Smithfield Foods, Inc.A			424,080		9,695
Snyders-Lance, Inc.			132,180		2,805
The Hain Celestial Group, Inc.A			101,466		3,405
					39,332
Personal Products - 0.08%
Revlon, Inc., Class AA			126,350		1,861
Steiner Leisure Ltd.A			11,900		573
					2,434
Tobacco - 0.08%
Universal Corp.B			54,294		2,325
Total Consumer Staples					66,532
ENERGY - 5.29%
Energy Equipment & Services - 2.55%
Atwood Oceanics, Inc.A			424,962		18,164
Bristow Group, Inc.			201,240		10,018
Dawson Geophysical Co.A			95,650		2,764
Global Industries Ltd.A			665,190		5,288
Hercules Offshore, Inc.A			281,370		1,066
Matrix Service Co.A			378,627		4,021
Oil States International, Inc.A			84,000		5,847
Parker Drilling Co.			300,730		1,663
SEACOR Holdings, Inc.	��		56,010		4,769
Superior Energy Services, Inc.A			47,960		1,349
Tesco Corp.A			263,454		4,076
Tidewater, Inc.			273,640		13,471
Unit Corp.A			132,395		6,495
					78,991
Oil & Gas - 2.74%
Cloud Peak Energy, Inc.			941,790		21,615
Comstock Resources, Inc.A			123,840		2,259
Contango Oil & Gas Co.A			110,900		7,135
Energy Partners Ltd.A			760,170		10,901
EXCO Resources, Inc.			606,800		7,652
Helix Energy Solutions Group, Inc.A			370,340		6,688
Petroquest Energy, Inc.A B			150,400		1,096
Stone Energy Corp.A			531,100		12,900
Tesoro Corp.			437,015		11,336
W&T Offshore, Inc.			153,409		3,021
					84,603
Total Energy					163,594
FINANCIALS - 24.19%
Banks - 8.48%
1st Source Corp.			51,120		1,229
Associated Banc-Corp.			1,011,060		11,273
Astoria Financial Corp.			253,870		2,107
BancorpSouth, Inc.			82,317		804
Bank of Hawaii Corp.			86,816		3,666
Bank of the Ozarks, Inc.			730,800		18,175
Boston Private Financial Holdings, Inc.			62,400		473
Brookline Bancorp, Inc.			600,650		5,021
Cardinal Financial Corp.			177,030		1,901
Cathay General Bancorp			202,360		2,831
Center Financial Corp.A			406,900		2,673
Chemical Financial Corp.			37,704		759

	Shares		Fair Value
			(000’s)
City Holding Co.B		36,310	$	1,193
City National Corp.		151,378		6,421
Columbia Banking System, Inc.		69,130		1,318
Community Bank System, Inc.		26,630		681
CVB Financial Corp.B		649,723		6,309
Dime Community Bancshares, Inc.		81,055		966
East West Bancorp, Inc.		38,175		743
First Financial Bancorp		621,400		10,191
First Financial Holdings, Inc.		182,800		1,362
First Horizon National Corp.		708,793		4,954
First Interstate Bancsystem, Inc.		296,000		3,741
First Midwest Bancorp, Inc.		439,960		3,964
First Niagara Financial Group, Inc.		221,100		2,032
FirstMerit Corp.		105,825		1,483
FNB Corp.		325,130		3,281
Fulton Financial Corp.		678,300		6,403
Glacier Bancorp, Inc.		12,434		141
Hancock Holding Co.		540,278		16,370
Home Federal Bancorp, Inc.		171,000		1,719
Iberiabank Corp.		372,520		19,268
Independent Bank Corp.		22,750		590
International Bancshares Corp.		52,577		953
Lakeland Financial Corp.		101,865		2,434
MB Financial, Inc.		362,710		6,010
Nara Bancorp, Inc.A		343,600		2,914
National Penn Bancshares, Inc.		995,637		7,766
NBT Bancorp, Inc.		31,725		683
Northwest Bancshares, Inc.		219,690		2,740
Ocwen Financial Corp.A		884,000		12,818
Old National Bancorp		108,440		1,255
PacWest Bancorp		238,900		4,214
Pinnacle Financial Partners, Inc.A		87,920		1,320
Prosperity Bancshares, Inc.		372,054		14,320
Provident Financial Services, Inc.		477,470		6,183
Susquehanna Bancshares, Inc.		228,020		1,655
SVB Financial Group		126,320		5,803
Synovus Financial Corp.B		6,424,200		9,636
TCF Financial Corp.		190,571		2,028
Umpqua Holdings Corp.		136,950		1,568
United Community Banks, Inc.A B		45,700		338
Washington Federal, Inc.		334,405		4,565
Washington Trust Bancorp, Inc.		61,250		1,438
Webster Financial Corp.		970,286		19,057
WesBanco, Inc.		75,638		1,502
Wintrust Financial Corp.		249,695		7,211
				262,453
Diversified Financials - 4.22%
Advance America Cash Advance Centers, Inc.		67,000		565
Apollo Investment Corp.		166,106		1,375
Ares Capital Corp.		879,000		13,598
CapitalSource, Inc.		833,450		5,301
Capitol Federal Financial, Inc.		342,950		3,803
Cash America International, Inc.		280,928		15,381
CoreLogic, Inc.		362,080		4,407
Credit Acceptance Corp.A		94,160		6,490
Duff & Phelps Corp., Class A		239,550		3,040
Encore Capital Group, Inc.A		483,800		13,106
Ezcorp, Inc., Class A		593,704		16,494
Federated Investors, Inc., Class BB		289,900		5,665
Fifth Street Finance Corp.B		1,170,100		11,537
Janus Capital Group, Inc.B		967,700		6,348

See accompanying notes

8

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Kirkland’s, Inc.A		104,250	$	1,172
Knight Capital Group, Inc., Class AA		768,000		9,592
National Financial Partners Corp.		71,940		983
Nelnet, Inc., Class A		39,800		855
NewStar Financial, Inc.A		130,230		1,396
Piper Jaffray CosA		109,457		2,272
Raymond James Financial, Inc.		101,200		3,073
Waddell & Reed Financial, Inc.		52,405		1,453
World Acceptance Corp.A		40,280		2,725
				130,631
Insurance - 7.90%
Alleghany Corp.		18,256		5,793
Allied World Assurance Co. Holdings AG		114,280		6,640
Alterra Capital Holdings Ltd.		272,940		5,917
American Equity Investment Life Holding Co.		183,770		1,992
American Financial Group, Inc.		208,035		7,454
Amtrust Financial Services, Inc.		209,422		5,315
Argo Group International Holdings Ltd.		54,000		1,630
Aspen Insurance Holdings Ltd.		619,890		16,421
Assurant, Inc.		38,500		1,484
CNO Financial Group, Inc.A		2,012,130		12,576
Delphi Financial Group, Inc., Class A		476,880		12,628
Employers Holdings, Inc.		474,760		7,701
Endurance Specialty Holdings Ltd.		502,790		18,703
Enstar Group Ltd.A		35,243		3,241
FBL Financial Group, Inc., Class A		77,170		2,520
Fidelity National Financial, Inc.		457,200		7,059
First American Financial Corp.		448,460		5,382
Global Indemnity plcA		623,771		12,594
HCC Insurance Holdings, Inc.		192,060		5,111
Horace Mann Educators Corp.		456,200		6,136
Infinity Property & Casualty Corp.		44,438		2,576
Kemper Corp.		155,790		4,189
Maiden Holdings Ltd.		168,960		1,377
Meadowbrook Insurance Group, Inc.		124,810		1,293
Montpelier Re Holdings Ltd.		156,278		2,735
National Western Life Insurance Co., Class A		7,730		1,111
OneBeacon Insurance Group Ltd., Class A		42,120		641
Platinum Underwriters Holdings Ltd.		42,277		1,464
ProAssurance Corp.		247,300		18,930
Protective Life Corp.		376,980		7,012
RenaissanceRe Holdings Ltd.		51,900		3,535
RLI Corp.		43,670		3,072
Safety Insurance Group, Inc.		38,630		1,646
Selective Insurance Group, Inc.		125,390		2,010
StanCorp Financial Group, Inc.		185,250		6,287
Symetra Financial Corp.		1,439,970		13,349
The Hanover Insurance Group, Inc.		99,115		3,782
The Navigators Group, Inc.A		111,893		5,105
Tower Group, Inc.		97,310		2,309
Validus Holdings Ltd.		261,130		7,145
White Mountains Insurance Group Ltd.		20,504		8,612
				244,477
Lodging/Resorts - 0.23%
DiamondRock Hospitality Co.C		779,170		7,051
Real Estate - 3.36%
Anworth Mortgage Asset Corp.C		42,151		272
Avis Budget Group, Inc.A		78,700		1,110
BioMed Realty Trust, Inc.C		444,470		8,049

	Shares		Fair Value
			(000’s)
Brandywine Realty TrustC		155,600	$	1,418
CapLease, Inc.C		915,800		3,581
CBL & Associates Properties, Inc.C		422,855		6,504
Colony Financial, Inc.B		414,100		6,075
CommonWealth REITC		68,946		1,334
Corrections Corp. of AmericaA		88,900		1,976
DCT Industrial Trust, Inc.C		1,036,330		5,140
Duke Realty Corp.C		125,663		1,543
Entertainment Properties TrustC		142,220		6,371
Hospitality Properties TrustC		60,148		1,445
LaSalle Hotel PropertiesC		444,990		10,640
Lexington Realty TrustBC		923,090		7,255
MI Developments, Inc., Class A		501,300		15,912
National Health Investors, Inc.C		132,240		5,910
Omega Healthcare Investors, Inc.C		88,425		1,570
Pebblebrook Hotel TrustC		275,364		5,240
Pennsylvania Real Estate Investment TrustC		129,555		1,329
Starwood Property Trust, Inc.C		488,700		9,183
Urstadt Biddle Properties, Inc., Class AC		111,230		1,984
				103,841
Total Financials				748,453
HEALTH CARE - 5.89%
Biotechnology - 0.17%
Charles River Laboratories International, Inc.A		41,430		1,337
Viropharma, Inc.A		201,100		4,071
				5,408
Health Care Equipment & Supplies - 1.08%
CONMED Corp.A		60,220		1,582
Haemonetics Corp.A		92,740		5,653
Hillenbrand, Inc.		155,300		3,278
Invacare Corp.		24,600		552
Kinetic Concepts, Inc.A		69,600		4,760
Medidata Solutions, Inc.A		579,618		10,421
STERIS Corp.		230,950		7,155
				33,401
Health Care Providers & Services - 3.64%
Amedisys, Inc.A		54,100		710
AMERIGROUP Corp.A		210,800		11,727
Health Management Associates, Inc.		203,200		1,780
Health Net, Inc.A		246,320		6,845
HealthSouth Corp.A		1,124,880		19,865
Healthspring, Inc.A		113,708		6,133
Healthways, Inc.A		34,280		245
LifePoint Hospitals, Inc.A		765,995		29,614
Magellan Health Services, Inc.A		94,310		4,854
MAXIMUS, Inc.		47,620		1,921
Mednax, Inc.A		91,270		6,006
Molina Healthcare, Inc.A		34,500		731
Omnicell, Inc.A		324,430		4,850
Owens & Minor, Inc.		49,225		1,473
PAREXEL International Corp.A		234,190		5,159
Select Medical Holdings Corp.A		123,300		1,073
The Ensign Group, Inc.		87,202		1,985
Triple-S Management Corp., Class BA		50,540		960
Universal American Corp.		363,760		4,183
WellCare Health Plans, Inc.A		45,900		2,250
				112,364

See accompanying notes

9

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Pharmaceuticals - 1.00%
Endo Pharmaceuticals Holdings, Inc.A		493,590	$	15,948
Hi-Tech Pharmacal Co. IncA		14,000		497
Medicis Pharmaceutical Corp., Class A		88,020		3,370
Par Pharmaceutical Cos., Inc.		93,240		2,853
PharMerica Corp.A		292,300		4,560
Salix Pharmaceuticals Ltd.A		105,320		3,608
				30,836
Total Health Care				182,009
INDUSTRIALS - 16.62%
Aerospace & Defense - 2.04%
Alliant Techsystems, Inc.		272,105		15,803
Curtiss-Wright Corp.		294,007		9,638
Huntington Ingalls Industries, Inc.A		483,000		14,249
Spirit Aerosystems Holdings, Inc., Class AA		552,840		9,437
Triumph Group, Inc.		242,100		14,066
				63,193
Airlines - 0.12%
Aircastle Ltd.		314,501		3,815
Building Products - 0.96%
Apogee Enterprises, Inc.		256,997		2,806
Crane Co.		129,900		5,730
Drew Industries, Inc.		80,560		1,936
Owens CorningA		98,700		2,801
Simpson Manufacturing Co. Inc		371,625		11,394
Trex Co. IncA B		274,600		5,075
				29,742
Commercial Services & Supplies - 6.01%
Atlas Air Worldwide Holdings, Inc.A		300,600		11,579
Bridgepoint Education, Inc.A B		136,230		2,952
Career Education Corp.A		200,130		3,228
Clean Harbors, Inc.A		122,466		7,136
Convergys Corp.A		314,090		3,361
Con-way, Inc.		472,000		13,910
CSG Systems International, Inc.A		96,240		1,370
Deluxe Corp.		132,160		3,122
DeVry, Inc.		101,240		3,815
Education Management Corp.A B		137,000		2,721
Ennis, Inc.		82,980		1,214
FTI Consulting, Inc.A B		178,310		7,027
G&K Services, Inc., Class A		48,140		1,462
Global Payments, Inc.		44,800		2,057
Heidrick & Struggles International, Inc.		289,800		5,732
Herman Miller, Inc.		458,000		9,458
Hudson Highland Group, Inc.A		630,300		2,918
Huron Consulting Group, Inc.A		142,690		5,138
ITT Educational Services, Inc.B		72,330		4,482
Kelly Services, Inc., Class A		131,100		2,143
Kforce, Inc.A		51,330		655
Korn/Ferry InternationalA		830,780		13,268
Layne Christensen Co.A		40,670		1,024
Manpower, Inc.		120,700		5,207
McGrath Rentcorp		127,548		3,408
Mobile Mini, Inc.A B		623,100		11,303
Navigant Consulting, Inc.A		41,800		474
PHH Corp.A		778,060		14,354
RR Donnelley & Sons Co.		282,440		4,604
Steelcase, Inc., A Shares		574,092		4,254

	Shares		Fair Value
			(000’s)
TAL International Group, Inc.		85,980	$	2,393
Team, Inc.		51,078		1,277
Tetra Tech, Inc.A		293,040		6,397
The Brink’s Co.		376,210		10,455
The Dun & Bradstreet Corp.		39,300		2,628
The Geo Group, Inc.A		166,110		3,028
United Stationers, Inc.		186,870		5,944
				185,498
Construction & Engineering - 1.72%
AECOM Technology Corp.A		304,510		6,370
Aegion Corp.A		500,900		7,408
Comfort Systems USA, Inc.		838,145		9,220
EMCOR Group, Inc.		554,000		13,889
Granite Construction, Inc.		273,410		6,152
Primoris Services Corp.		109,564		1,427
Tutor Perini Corp.		100,751		1,464
URS Corp.		200,910		7,172
				53,102
Diversified Manufacturing - 0.05%
Barnes Group, Inc.		66,980		1,559
Electrical Equipment - 1.01%
EnerSysA		403,845		9,099
General Cable Corp.		69,669		1,954
II-VI, Inc.		194,890		3,705
Regal-Beloit Corp.		189,500		10,067
Thomas & Betts Corp.		130,080		6,464
				31,289
Electronic Equipment & Instruments - 0.05%
PerkinElmer, Inc.		68,150		1,409
Energy Equipment & Services - 0.07%
Hornbeck Offshore Services, Inc.A B		66,710		2,191
Industrial Conglomerates - 0.51%
Carlisle Cos., Inc.		184,946		7,716
Chemed Corp.		95,350		5,660
Teleflex, Inc.		30,195		1,807
Trimas Corp.A		37,100		723
				15,906
Machinery - 2.89%
Astec Industries, Inc.A		158,760		5,279
Briggs & Stratton Corp.		94,030		1,373
Ceradyne, Inc.A		19,900		666
CIRCOR International, Inc.		160,900		5,603
Columbus McKinnon Corp.		180,000		2,698
Esterline Technologies Corp.		73,163		4,090
FreightCar America, Inc.		93,370		1,769
Harsco Corp.		65,425		1,508
John Bean Technologies Corp.		214,490		3,462
Kennametal, Inc.		61,300		2,384
Meritor, Inc.A		289,200		2,753
Miller Industries, Inc.		231,100		4,724
Oshkosh Corp.		637,600		13,300
Reliance Steel & Aluminum Co.		56,090		2,479
RSC Holdings, Inc.A		1,816,311		17,726
SPX Corp.		28,000		1,529
Terex Corp.		961,300		15,995
Watts Water Technologies, Inc.		61,090		1,924
				89,262

See accompanying notes

10

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Marine - 0.37%
Diana Shipping, Inc.		155,005	$	1,276
Gulfmark Offshore, Inc., Class AA		67,452		2,805
Kirby Corp.		121,300		7,465
				11,546
Metals & Mining - 0.05%
Mueller Water Products, Inc.		529,000		1,455
Road & Rail - 0.72%
Amerco, Inc.A		55,190		4,178
Forward Air Corp.		370,309		12,128
RailAmerica, Inc.A		134,870		1,844
Ryder System, Inc.		34,315		1,748
Saia, Inc.A		174,900		2,335
				22,233
Trading Companies & Distributors - 0.05%
WESCO International, Inc.A		34,600		1,677
Total Industrials				513,877
INFORMATION TECHNOLOGY - 13.20%
Communications Equipment - 1.50%
Anixter International, Inc.		38,300		2,248
Arris Group, Inc.A		1,067,282		11,484
Black Box Corp.		295,100		8,260
Comtech Telecommunications Corp.		68,740		2,276
InterDigital, Inc.B		328,700		14,282
IxiaA		424,710		4,812
Plantronics, Inc.		44,325		1,481
Symmetricom, Inc.A		315,000		1,622
				46,465
Computers & Peripherals - 1.18%
Electronics for Imaging, Inc.A		269,170		4,038
Lexmark International, Inc.		231,160		7,328
Mercury Computer Systems, Inc.A		351,300		5,129
NCR Corp.A		83,951		1,598
Synaptics, Inc.A B		544,342		18,393
				36,486
Electronic Equipment & Instruments - 3.02%
Arrow Electronics, Inc.		91,900		3,313
AVX Corp.		438,320		5,878
Diebold, Inc.		120,200		3,880
Ingram Micro, Inc., Class AA		533,780		9,544
Itron, Inc.A		239,100		8,796
Littelfuse, Inc.		223,400		10,938
Methode Electronics, Inc.		754,800		7,012
Multi-Fineline Electronix, Inc.A		19,200		440
Newport Corp.		96,530		1,337
Plexus Corp.A		415,890		10,688
Scansource, Inc.A		21,700		754
Tech Data Corp.A		230,571		11,340
TTM Technologies, Inc.A		209,620		2,341
Vishay Intertechnology, Inc.A		1,600,440		17,206
				93,467
Internet Software & Services - 0.70%
Earthlink, Inc.		86,200		604
Ebix, Inc.B		707,300		12,102
j2 Global Communications, Inc.		117,450		3,615
Netgear, Inc.A		117,690		4,173
RealNetworks, Inc.		33,380		326
United Online, Inc.		95,300		563

	Shares		Fair Value
			(000’s)
Websense, Inc.A		8,116	$	145
				21,528
IT Consulting & Services - 1.32%
CACI International, Inc., Class AA		270,060		14,824
CIBER, Inc.A		399,800		1,391
Mantech International Corp.		138,390		4,862
SYNNEX Corp.A		604,460		17,450
Unisys Corp.		87,530		2,275
				40,802
Semiconductor Equipment & Products - 3.26%
Advanced Energy Industries, Inc.A		42,800		400
Amkor Technology, Inc.A B		247,363		1,197
ATMI, Inc.A		67,970		1,387
Brooks Automation, Inc.		1,416,240		14,799
Cirrus Logic, Inc.A		48,900		814
Cymer, Inc.A		119,030		5,172
Diodes, Inc.A		93,720		2,097
Entegris, Inc.A		343,240		3,075
Entropic Communications, Inc.A B		1,269,600		7,389
Fairchild Semiconductor International, Inc.A		326,000		4,880
FEI Co.A		130,260		5,179
GT Advanced Technologies, Inc.A B		374,120		3,068
Kulicke & Soffa Industries, Inc.		185,610		1,791
Lattice Semiconductor Corp.A		303,730		1,923
Microsemi Corp.		77,510		1,431
MKS Instruments, Inc.		134,780		3,591
Novellus Systems, Inc.A		230,310		7,957
ON Semiconductor Corp.A		1,344,600		10,178
PMC - Sierra, Inc.A		237,700		1,507
QLogic Corp.A		416,073		5,813
Semtech Corp.A		175,900		4,295
Teradyne, Inc.A		477,920		6,844
Tessera Technologies, Inc.A		305,000		4,200
TriQuint Semiconductor, Inc.A		382,720		2,036
				101,023
Software - 2.22%
Aspen Technology, Inc.A		183,280		3,178
Cadence Design Systems, Inc.A		349,200		3,866
Cognex Corp.		463,480		15,708
DST Systems, Inc.		152,420		7,650
FARO Technologies, Inc.A		167,500		6,998
JDA Software Group, Inc.A		123,355		3,931
Mentor Graphics Corp.		1,184,700		13,458
Netscout Systems, Inc.A		269,100		4,411
Parametric Technology Corp.A		174,090		3,626
Take-Two Interactive Software, Inc.		360,480		5,688
				68,514
Total Information Technology				408,285
MATERIALS - 5.68%
Chemicals - 2.51%
A Schulman, Inc.		45,120		952
Cabot Corp.		204,450		6,170
Cytec Industries, Inc.		137,120		6,125
HB Fuller Co.		116,805		2,510
Huntsman Corp.		68,642		806
Innophos Holdings, Inc.		55,870		2,458
Innospec, Inc.		26,100		788
LSB Industries, Inc.A		36,700		1,300
NewMarket Corp.B		36,790		7,142

See accompanying notes

11

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Olin Corp.		539,850	$	10,182
OM Group, Inc.		295,075		8,531
PolyOne Corp.		1,035,700		11,590
Solutia, Inc.A		303,830		4,937
Stepan Co.		25,080		1,938
Westlake Chemical Corp.B		170,120		7,011
WR Grace & Co.A		122,970		5,139
				77,579
Containers & Packaging - 0.88%
Boise, Inc.B		312,930		1,893
Greif, Inc., Class A		195,100		8,737
Jarden Corp.		289,520		9,273
KapStone Paper and Packaging Corp.A		37,000		607
Packaging Corp of America		260,790		6,801
				27,311
Metals & Mining - 1.81%
AMCOL International Corp.		116,538		3,518
AuRico Gold, Inc.A		103,203		1,004
Carpenter Technology Corp.		121,110		6,869
Century Aluminum Co.		237,700		2,653
Coeur d’Alene Mines Corp.		498,819		12,755
Gibraltar Industries, Inc.		456,239		5,092
James River Coal Co.A B		81,673		845
Kaiser Aluminum Corp.		49,570		2,303
Metals USA Holdings Corp.A		26,800		292
Minefinders Corp.A		42,794		606
Noranda Aluminum Holding Corp.		1,050,000		9,723
RTI International Metals, Inc.		70,580		1,863
Thompson Creek Metals Co. Inc.A		141,095		1,006
Worthington Industries, Inc.		425,499		7,353
				55,882
Paper & Forest Products - 0.48%
Clearwater Paper Corp.A		18,400		610
Domtar Corp.		73,680		6,035
Louisiana-Pacific Corp.		948,180		6,305
PH Glatfelter Co.		118,700		1,781
				14,731
Total Materials				175,503
TELECOMMUNICATION SERVICES - 0.41%
Diversified Telecommunication Services - 0.34%
AboveNet, Inc.		49,630		2,946
Cincinnati Bell, Inc.		512,480		1,650
EchoStar Corp., Class AA		99,150		2,614
Loral Space & Communications, Inc.A		54,610		3,303
				10,513
Wireless Telecommunication Services - 0.07%
US Cellular Corp.A		56,600		2,257
Total Telecommunication Services				12,770
UTILITIES - 4.77%
Electric Utilities - 3.26%
Allete, Inc.		38,590		1,525
Black Hills Corp.B		98,570		3,323
El Paso Electric Co.		159,370		5,105
GenOn Energy, Inc.A		617,300		1,883
Great Plains Energy, Inc.B		1,062,810		22,042
Hawaiian Electric Industries, Inc.		291,100		7,374
IDACORP, Inc.		178,560		7,210
NorthWestern Corp.		224,330		7,728

	Shares		Fair Value
			(000’s)
NV Energy, Inc.		562,233	$	9,018
Otter Tail Corp.		74,260		1,441
PNM Resources, Inc.		368,510		6,626
Portland General Electric Co.		955,749		23,453
TECO Energy, Inc.		19,335		359
Unisource Energy Corp.		93,820		3,498
				100,585
Gas Utilities - 0.90%
AGL Resources, Inc.		123,930		5,198
Atmos Energy Corp.		285,870		9,811
Energen Corp.		29,763		1,460
UGI Corp.		164,120		4,705
WGL Holdings, Inc.		158,770		6,797
				27,971
Multi-Utilities - 0.61%
Avista Corp.		148,530		3,780
Vectren Corp.		56,240		1,596
Westar Energy, Inc.		498,290		13,584
				18,960
Total Utilities				147,516
Total Common Stock (Cost $2,655,452)				2,853,036
SHORT-TERM INVESTMENTS - 5.53%
American Beacon U.S. Government Money Market Select FundD		20,000,000		20,000
JPMorgan U.S. Government Money Market Fund		150,866,026		150,866
Total Short-Term Investments (Cost $170,866)				170,866
SECURITIES LENDING COLLATERAL - 6.14%
Wells Fargo Advantage Government Money Market Fund		9,060,950		9,061
American Beacon U.S. Government Money Market Select FundD		180,688,575		180,689
Total Securities Lending Collateral(Cost $189,750)				189,750
TOTAL INVESTMENTS - 103.92% (Cost $3,016,068)				3,213,652
LIABILITIES, NET OF OTHER ASSETS - (3.92%)				(121,233	)
TOTAL NET ASSETS - 100.00%			$	3,092,419

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  All or a portion of this security is on loan at October 31, 2011.

^C  REIT - Real Estate Investment Trust.

^D  The Fund is affiliated by having the same investment advisor.

See accompanying notes

12

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2011

Futures Contracts (000’s)
	Number of Contracts		Expiration Date	Contract Value		Unrealized Appreciation/ (Depreciation)
Russell 2000 Mini Index Future		2,265	December, 2011	$	167,451	$	13,753
				$	167,451	$	13,753

See accompanying notes

13

American Beacon Small Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2011 (in thousands, except share and per share amounts)

Assets:
Investments in unaffiliated securities, at fair value A C	$	3,012,963
Investments in affiliated securities, at fair value B		200,689
Deposit with brokers for futures contracts		15,036
Receivable for investments sold		19,015
Dividends and interest receivable		692
Receivable for fund shares sold		59,993
Prepaid expenses		43
Total assets		3,308,431
Liabilities:
Payable for investments purchased		12,148
Payable upon return of securities loaned		189,750
Payable for fund shares redeemed		4,162
Payable for variation margin on open futures contracts		4,471
Management and investment advisory fees payable (Note 2)		4,284
Administrative service and service fees payable (Note 2)		796
Professional fees payable		34
Other liabilities		367
Total liabilities		216,012
Net assets	$	3,092,419
Analysis of Net Assets:
Paid-in-capital	$	3,054,396
Undistributed net investment income		6,430
Accumulated net realized loss		(179,745	)
Unrealized appreciation of investments and futures contracts		211,338
Net assets	$	3,092,419
Shares outstanding (no par value):
Institutional Class		98,298,579
Y Class		1,566,848
Investor Class		46,252,037
Advisor Class		1,819,945
Retirement Class		100,922
A Class		100,174
C Class		61,293
AMR Class		18,106,686
Net asset value, offering and redemption price per share:
Institutional Class	$	18.75
Y Class	$	18.66
Investor Class	$	18.23
Advisor Class	$	18.15
Retirement Class	$	18.01
A Class (net asset value and redemption price)	$	18.19
A Class (offering price)	$	19.30
C Class	$	18.04
AMR Class	$	18.71

A        Cost of investments in unaffiliated securities	$	2,815,379
B        Cost of investments in affiliated securities	$	200,689
C        Fair value of securities on loan	$	185,342

See accompanying notes

14

American Beacon Small Cap Value Fund^SM

Statement of Operations

For the year ended October 31, 2011 (in thousands)

Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes)*	$	40,562
Dividend income from affiliated securities		8
Interest income		8
Income derived from securities lending, net		853
Total investment income		41,431
Expenses:
Management and investment advisory fees (Note 2)		14,814
Administrative service fees (Note 2):
Institutional Class		5,381
Y Class		28
Investor Class		3,038
Advisor Class		104
Retirement Class		3
A Class		3
C Class		1
AMR Class		186
Transfer agent fees:
Institutional Class		64
Y Class		1
Investor Class		49
Advisor Class		3
A Class		2
C Class		2
AMR Class		13
Custody and fund accounting fees		362
Professional fees		129
Registration fees and expenses		109
Service fees (Note 2):
Y Class		9
Investor Class		3,634
Advisor Class		87
Retirement Class		2
A Class		1
C Class		1
Distribution fees (Note 2):
Advisor Class		87
Retirement Class		4
A Class		2
C Class		4
Prospectus and shareholder reports		542
Insurance fees		68
Trustee fees		233
Other expenses		169
Total expenses		29,135
Net investment income		12,296
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		254,752
Commission recapture (Note 3)		122
Futures contracts		19,122
Change in net unrealized appreciation or depreciation of:
Investments		(141,997	)
Futures contracts		6,228
Net gain on investments		138,227
Net increase in net assets resulting from operations	$	150,523
* Foreign taxes	$	31

See accompanying notes

15

American Beacon Small Cap Value Fund^SM

Statement of Changes in Net Assets (in thousands)

	Year Ended October 31, 2011			Year Ended October 31, 2010
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	12,296		$	11,136
Net realized gain on investments and futures contracts		273,996			179,781
Change in net unrealized appreciation or depreciation of investments and futures contracts		(135,769	)		296,564
Net increase in net assets resulting from operations		150,523			487,481
Distributions to Shareholders:
Net investment income:
Institutional Class		(7,510	)		(6,896	)
Y Class		(4	)		–
Investor Class		(3,709	)		(2,275	)
Advisor Class		(117	)		–
Retirement Class		(1	)		–
AMR Class		(2,000	)		(2,187	)
Net distributions to shareholders		(13,341	)		(11,358	)
Capital Share Transactions:
Proceeds from sales of shares		1,125,906			942,144
Reinvestment of dividends and distributions		13,190			11,249
Cost of shares redeemed		(920,005	)		(752,815	)
Net increase in net assets from capital share transactions		219,091			200,578
Net increase in net assets		356,273			676,701
Net Assets:
Beginning of period		2,736,146			2,059,445
End of Period *	$	3,092,419		$	2,736,146
*Includes undistributed net investment income of	$	6,430		$	8,788

See accompanying notes

16

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 20 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 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
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

Each class offered by the Trust has equal rights as to assets and voting privileges. Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets. Realized and unrealized capital gains and losses of each class are allocated daily based on the relative net assets of each class of the respective Fund. Class specific expenses, where applicable, currently include administrative service fees, service fees, and distribution fees and vary amongst the classes as described more fully in Note 2.

New Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) related to the accounting for repurchase agreements and similar agreements that both entitles and obligates a transferor to repurchase or redeem financial assets before their maturity. The ASU modifies the criteria for determining effective control of transferred assets and as a result certain agreements may now be accounted for as secured borrowings. The ASU is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011.

In May 2011, FASB issued an ASU to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. generally accepted accounting principles, (“U.S. GAAP”) and International Financial Reporting Standards (IFRSs). FASB concluded that the amendments in this ASU will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The ASU is effective prospectively during interim or annual periods beginning on or after December 15, 2011.

At this time, management is evaluating the implications of these changes and their impact on the financial statements has not been determined.

17

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

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, 2011 were as follows (dollars in thousands):

Management Fee Rate	Management Fee	Amounts paid to Investment Advisors	Net Amounts Retained by Manager
0.30%-0.60%	$14,814	$13,206	$1,608

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, 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, 2011, securities lending fees paid to the Manager were $153,996.

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.

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.

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.

18

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

Investment in Affiliated Funds

The Fund may invest in the American Beacon Money Market Select Fund and the American Beacon U.S. 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, 2011, the Manager earned fees from the Select Funds totaling $11,123 on the Fund’s direct investment in the Select Funds and $140,306 from the Fund’s securities lending collateral invested in the Select Funds.

Interfund Lending Program

Pursuant to an exemptive order 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, 2011, 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’ 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, 2011, the Y Class waived $1. A liability has not been booked as the Manager does not intend to seek repayment of this reimbursement.

3. Security Valuation and Fair Value Measurements

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.

Investments in mutual funds are valued at the closing net asset value (“NAV”) 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 Trust’s Board of Trustees (the “Board”).

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized, but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities.

19

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

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 NAV. 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.

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. GAAP 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.

Valuation Inputs

Various inputs may be used to determine the fair 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.

20

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

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.

Level 1 and Level 2 trading assets and trading liabilities, at fair value

Common stocks and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

Level 3 trading assets and trading liabilities, at fair value

The valuation techniques and significant inputs used in determining the fair values of financial instruments classified as Level 3 of the fair value hierarchy are as follows:

Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board or persons acting at their direction and are categorized as Level 3 of the fair value hierarchy.

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the Exchange close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade, do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager the responsibility for monitoring significant events that may materially affect the values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events.

The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated the responsibility for applying the valuation methods to the Manager. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelines established by the Board, with reference to other securities or indices. In the event that the security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the fair value of the security or asset will be determined in good faith by the Valuation Committee of the Board, generally based upon recommendations provided by the Manager.

When a Fund uses fair valuation methods applied by the Manager that use significant unobservable inputs to determine its NAV, securities will be priced by another method that the Board or persons acting at their direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. While the Trust’s policy is intended to result in a calculation of a Fund’s NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.

21

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in and out of the Level 3 category during the period. The end of period timing recognition is used for the significant transfers between Levels of the Fund’s assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for the Fund.

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of October 31, 2011, the Fund’s investments were classified as described below: (in thousands)

	Level 1		Level 2		Level 3		Total
Common Stock	$	2,853,036	$	—	$	—	$	2,853,036
Short-Term Investments		170,866		—		—		170,866
Securities Lending Collateral invested in Money Market Funds		189,750		—		—		189,750
Total Investments in Securities	$	3,213,652	$	—	$	—	$	3,213,652
Futures Contracts	$	13,753		—		—	$	13,753

As of October 31, 2011, there were no significant transfers into or out of any level.

4. Securities and Other Investments

Real Estate Investment Trusts

The Fund may own shares of real estate investment trusts (“REITS”) which report information on the source of their distributions annually. The Fund re-characterizes distributions received from REIT investments based on information provided by the REITs into the following categories: ordinary income, long-term capital gains, and return of capital. If information is not available on a timely basis from the REITs, the re-characterization will be estimated based on available information which may include the previous year allocation. If new or additional information becomes available from the REITs at a later date, a re-characterization will be made the following year. These re-characterizations are not recorded for financial statement purposes, but as an adjustment to the calculation of taxable income.

5. Financial Derivative Instruments

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 usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as Cash deposited with broker 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.

22

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

Fair Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2011 (in thousands):

Statement of Assets and Liabilities	Derivatives	Fair Value
Unrealized appreciation of investments and futures contracts	Equity Contracts*	$	13,753

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2011 (in thousands):

Statement of Operations	Derivatives	Balance
Net realized gain (loss) from futures contracts	Equity Contracts	$	19,122
Change in net unrealized appreciation or depreciation of futures contracts	Equity Contracts		6,228

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

6. 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 Subchapter M of the Internal Revenue Code, as amended, 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, 2011 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. GAAP. 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, 2011 and October 31, 2010 were as follows (in thousands):

	Year Ended October  31, 2011		Year Ended October  31, 2010
Distributions paid from:
Ordinary income*
Institutional Class	$	7,510	$	6,896
Y Class		4
Investor Class		3,709		2,275
Advisor Class		117		—
Retirement Class		1		—
AMR Class		2,000		2,187
Total distributions paid	$	13,341	$	11,358

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

23

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

As of October 31, 2011, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

Cost basis of investments for federal income tax purposes	$	3,060,890
Unrealized appreciation		379,842
Unrealized depreciation		(227,080	)
Net unrealized appreciation or depreciation		152,762
Undistributed ordinary income		3,776
Accumulated long-term gain (loss)		(132,269	)
Other temporary differences		13,754
Distributable earnings (deficit)	$	38,023

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 or 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. GAAP 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, 2011 (in thousands):

Paid-in-capital	$	518
Undistributed net investment income (loss)		(1,313	)
Accumulated net realized gain (loss)		794
Unrealized appreciation or depreciation of investments and futures contracts		1

At October 31, 2011 the capital loss carry forward position for federal income tax purposes was $118,516 expiring in 2017. The Fund utilized $274,780 of net capital loss carryovers for the year ended October 31, 2011. (in thousands)

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2011 were (in thousands) $1,935,115 and $1,805,876, respectively.

A summary of the Fund’s direct transactions and security lending collateral transactions in the USG Select Fund for the year ended October 31, 2011 is set forth below (in thousands):

	Affiliate	October 31, 2010 Shares/Fair Value		Purchases		Sales		October 31, 2011 Shares/Fair Value
Direct	USG Select Fund	$	—	$	40,000	$	20,000	$	20,000
Securities Lending	USG Select Fund		48,791		769,948		638,050		180,689

8. 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

24

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

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 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. Until May 1, 2011, the Fund, the Agent, and the Manager retained 75%, 15%, and 10%, respectively, of the income generated from securities lending. Beginning May 1, 2011, the Fund, the Agent, and the Manager retained 78%, 12% and 10%, respectively, of the income generated from securities lending.

While securities are on loan, the Fund continues to receive certain income associated with that security and any gain or loss in the market price that may occur during the term of the loan. In the case of domestic equities, the value of any dividend is received in the form of a substitute payment approximately equal to the dividend. In the case of foreign securities, a negotiated amount is received that is less than the actual dividend, but higher than the dividend amount minus the foreign tax that the Fund would be subject to on the dividend.

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, 2011, the value of outstanding securities on loan and the value of collateral was as follows (in thousands):

Fair Value of Securities on Loan	Non-Cash Collateral	Cash Collateral Posted by Borrower
$ 185,342	$ —	$ 189,750

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.

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.

25

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2011

9. 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, 2011

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		32,139		$	624,258			1,690		$	33,343			14,401		$	280,691			762		$	14,511
Reinvestment of dividends		372			7,454			—			5			185			3,613			6			117
Shares redeemed		(16,620	)		(326,085	)		(176	)		(3,142	)		(20,730	)		(395,525	)		(811	)		(15,684	)
Net increase (decrease) in shares outstanding		15,891		$	305,627			1,514		$	30,206			(6,144	)	$	(111,221	)		(43	)	$	(1,056	)
	Retirement Class						AMR Class						A Class						C Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		95		$	1,761			8,795		$	167,845			122		$	2,379			61		$	1,118
Reinvestment of dividends		—			1			100			2,000			—			—			—			—
Shares redeemed		(15	)		( 261	)		(8,847	)		(178,901	)		(23	)		(406	)		—			(1	)
Net increase (decrease) in shares outstanding		80		$	1,501			48		$	(9,056	)		99		$	1,973			61		$	1,117
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

26

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27

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class									Investor Class
	Year Ended October 31,															Year Ended October 31,						August 3 to October 31, 2009			Year Ended October 31,
	2011			2010			2009			2008			2007			2011			2010						2011			2010			2009
Net asset value, beginning of period	$	17.84		$	14.39		$	12.53		$	22.10		$	22.53		$	17.76		$	14.37		$	14.03		$	17.40		$	14.05		$	12.22
Income from investment operations:
Net investment income (loss)		0.08			0.08			0.10			0.25			0.22			0.06			0.14			0.00			0.02			0.03			0.08
Net gains (losses) on securities (both realized and unrealized)		0.92			3.46			1.96			(7.13	)		1.10			0.92			3.36			0.34			0.88			3.37			1.91
Total income (loss) from investment operations		1.00			3.54			2.06			(6.88	)		1.32			0.98			3.50			0.34			0.90			3.40			1.99
Less distributions:
Dividends from net investment income		(0.09	)		(0.09	)		(0.20	)		(0.22	)		(0.19	)		(0.08	)		(0.11	)		—			(0.07	)		(0.05	)		(0.16	)
Distributions from net realized gains on securities		—			—			—			(2.47	)		(1.56	)		—			—			—			—			—			—
Total distributions		(0.09	)		(0.09	)		(0.20	)		(2.69	)		(1.75	)		(0.08	)		(0.11	)		—			(0.07	)		(0.05	)		(0.16	)
Net asset value, end of period	$	18.75		$	17.84		$	14.39		$	12.53		$	22.10		$	18.66		$	17.76		$	14.37		$	18.23		$	17.40		$	14.05
Total return A,B		5.57	%		24.71	%		16.97	%		(34.84	)%		6.10	%		5.49	%		24.44	%		2.42	%E		5.14	%		24.21	%		16.59	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,843,285		$	1,470,084		$	1,040,805		$	826,232		$	1,413,734		$	29,234		$	931		$	1		$	843,400		$	911,737		$	719,239
Ratios to average net assets (annualized):
Expenses before reimbursements		0.82	%		0.81	%		0.84	%		0.81	%		0.80	%		0.94	%		0.91	%		1.11	%C		1.17	%		1.18	%		1.15	%
Expenses, net of reimbursements		0.82	%		0.81	%		0.84	%		0.81	%		0.80	%		0.94	%		0.91	%		1.11	%C		1.17	%		1.18	%		1.15	%
Net investment income (loss), before reimbursements		0.47	%		0.52	%		0.87	%		1.36	%		0.94	%		0.30	%		0.39	%		0.03	%C		0.12	%		0.17	%		0.59	%
Net investment income (loss), net of reimbursements		0.47	%		0.52	%		0.87	%		1.36	%		0.94	%		0.30	%		0.39	%		0.03	%C		0.12	%		0.17	%		0.59	%
Portfolio turnover rate		59	%		59	%		61	%		62	%		52	%		59	%		59	%		61	%D		59	%		59	%		61	%

^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   Annualized.

^D   Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

^E   Not annualized.

^F  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

28

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class						Advisor Class															Retirement Class									AMR Class
Year Ended October 31,						Year Ended October 31,															Year Ended October 31,						May 1 to October 31,			Year Ended October 31,
2008			2007			2011			2010			2009			2008			2007			2011			2010			2009			2011			2010			2009			2008			2007
$	21.62		$	22.08		$	17.33		$	13.97		$	12.13		$	21.46		$	21.94		$	17.23		$	13.95		$	11.58		$	17.76		$	14.32		$	12.48		$	22.05		$	22.48
	0.20			0.16			(0.01	)		0.01			0.06			0.16			0.10			0.02			0.04			(0.02	)		0.13			0.18			0.11			0.33			0.30
	(6.97	)		1.07			0.89			3.35			1.90			(6.93	)		1.07			0.81			3.28			2.39			0.92			3.38			1.97			(7.15	)		1.08
	(6.77	)		1.23			0.88			3.36			1.96			(6.77	)		1.17			0.83			3.32			2.37			1.05			3.56			2.08			(6.82	)		1.38
	(0.16	)		(0.13	)		(0.06	)		—			(0.12	)		(0.09	)		(0.09	)		(0.05	)		(0.04	)		—			(0.10	)		(0.12	)		(0.24	)		(0.28	)		(0.25	)
	(2.47	)		(1.56	)		—			—			—			(2.47	)		(1.56	)		—			—			—			—			—			—			(2.47	)		(1.56	)
	(2.63	)		(1.69	)		(0.06	)		—			(0.12	)		(2.56	)		(1.65	)		(0.05	)		(0.04	)		—			(0.10	)		(0.12	)		(0.24	)		(2.75	)		(1.81	)
$	12.22		$	21.62		$	18.15		$	17.33		$	13.97		$	12.13		$	21.46		$	18.01		$	17.23		$	13.95		$	18.71		$	17.76		$	14.32		$	12.48		$	22.05
	(35.04	)%		5.83	%		5.07	%		24.05	%		16.41	%		(35.19	)%		5.55	%		4.79	%		23.82	%		20.47	%E		5.85	%		25.00	%		17.30	%		(34.71	)%		6.39	%
$	699,670		$	1,316,188		$	33,032		$	32,295		$	28,333		$	33,479		$	69,112		$	1,817		$	360		$	1		$	338,723		$	320,715		$	271,066		$	209,927		$	411,406
	1.06	%		1.05	%		1.32	%		1.32	%		1.34	%		1.31	%		1.32	%		1.62	%		1.54	%		1.53	%C		0.56	%		0.57	%		0.59	%		0.56	%		0.54	%
	1.06	%		1.05	%		1.32	%		1.32	%		1.31	%		1.31	%		1.32	%		1.62	%		1.54	%		1.53	%C		0.56	%		0.57	%		0.59	%		0.56	%		0.54	%
	1.12	%		0.70	%		(0.02	)%		0.03	%		0.44	%		0.86	%		0.43	%		(0.35	)%		(0.20	)%		(0.28	)%C		0.72	%		0.76	%		1.11	%		1.62	%		1.21	%
	1.12	%		0.70	%		(0.02	)%		0.03	%		0.48	%		0.86	%		0.43	%		(0.35	)%		(0.20	)%		(0.28	)%C		0.72	%		0.76	%		1.11	%		1.62	%		1.21	%
	62	%		52	%		59	%		59	%		61	%		62	%		52	%		59	%		59	%		61	%D		59	%		59	%		61	%		62	%		52	%

29

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class						C Class
	Year Ended October 31, 2011			May 17 to October  31, 2010			Year Ended October 31, 2011			September 1 to October 31, 2010
Net asset value, beginning of period	$	17.39		$	17.33		$	17.37		$	15.62
Income from investment operations:
Net investment income (loss)		0.03			0.00			(0.04	)		(0.01	)
Net gains (losses) on securities (both realized and unrealized)		0.83			0.06			0.74			1.76
Total income (loss) from investment operations		0.86			0.06			0.70			1.75
Less distributions:
Dividends from net investment income		(0.06	)		—			(0.03	)		—
Distributions from net realized gains on securities		—			—			—			—
Total distributions		(0.06	)		—			(0.03	)		—
Net asset value, end of period	$	18.19		$	17.39		$	18.04		$	17.37
Total return A,B		4.92	%		0.35	%E		4.00	%		11.20	%E
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,822		$	18		$	1,106		$	6
Ratios to average net assets (annualized):
Expenses before reimbursements		1.57	%		1.28	%C		2.60	%		2.69	%C
Expenses, net of reimbursements		1.57	%		1.28	%C		2.60	%		2.10	%C
Net investment income (loss), before reimbursements		(0.32	)%		0.01	%C		(1.36	)%		(1.86	)%C
Net investment income (loss), net of reimbursements		(0.32	)%		0.01	%C		(1.36	)%		(1.28	)%C
Portfolio turnover rate		59	%		59	%F		59	%		59	%F

^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  Annualized.

^D  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

^E  Not annualized.

^F  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

30

American Beacon Small Cap Value Fund^SM

Privacy Policy & Federal Tax Information

October 31, 2011 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect 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 78.52%.

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 2012 of the percentage applicable to the preparation of their 2011 income tax returns.

31

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

Disclosure Regarding Renewal and Approval of Management Agreement and Investment Advisory Agreements

At its May 26, 2011 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 American Beacon Mileage Funds, the American Beacon Select Funds and the American Beacon Master Trust (collectively 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 11, 2011 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 2 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 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.

32

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 11, 2011 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 26, 2011 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 26, 2011 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 continued 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; the Manager’s commitment to increasing headcount and training employees in conjunction with product expansion; and efforts made by the Manager to retain key employees.

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.

33

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 the Small Cap Value 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 the Small Cap Value 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 2010, primarily due to market appreciation.

In addition, the Board noted the Manager’s representation that, many of the Funds enjoy the primary benefit of economies of scale because low comparable fee levels are already reflected in the current level of management & administration fees charged by the Manager, the current fee structure already provides an adequate mechanism for the sharing of economies of scale with shareholders and due to the existing low cost structure of the Funds that further breakpoints are not appropriate at this time. 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 will use the Large Cap Value Fund model in managing its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds 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 the Fund did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2010.

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.

34

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 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 group of comparable mutual funds included in the analysis provided to the Trustees by Lipper, Inc.

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

In considering the renewal of the Management Agreement, 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, 2011 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, Brandywine, Dreman Value Management, LLC (“Dreman”), Hotchkis, The Boston Company Asset Management, LLC (“TBC”), and Opus Capital Group, LLC (“Opus”), the Trustees considered the following additional factors: (1) Hotchkis outperformed the peer universe median for the one- three- and ten-year periods ended March 31, 2011, but underperformed for the five-year period; (2) Brandywine outperformed the peer universe median for the one- and ten-year periods ended March 31, 2011, but underperformed for the three- and five-year periods; (3) Barrow outperformed the peer universe median for the one-, three- and five-year periods ended March 31, 2011; (4) TBC outperformed the peer universe median for the three- and five-year periods ended March 31, 2011, but underperformed for the one-year period; (5) Opus outperformed the peer universe median for the one-, three-, and five-year periods ended March 31, 2011; (6) Dreman was allocated a portion of Fund assets on June 28, 2010 and underperformed it market benchmark index since inception; (7) Barrow, Brandywine, Hotchkis, and TBC informed the Manager that they use Fund commissions to obtain proprietary research, the application of which benefits the Fund and each of those subadvisors’ clients; and (8) the Manager’s recommendation to continue to retain each subadvisor.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Management and Investment Advisory 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.

35

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 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.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES
	Term
	Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (74)	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, Center Point 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 Funds (1996-Present).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (67)	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 (50)	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, Trinity Valley School (2003-2004); Member; Trinity Valley School Endowment Committee (2004-Present); 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 (57)	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 Funds (2008-Present).

36

Trustees and Officers of the American Beacon Funds

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Thomas M. Dunning (69)	Trustee since 2008	Non-Executive Chairman (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); Board Member, Baylor Health Care System Foundation (2007-present); Vice Chair, State Fair of Texas (1987-Present); Board Member, Southwestern Medical Foundation (1994-present); Board Member, John Tower Center for Political Studies/SMU (2008-Present); Board Member, University of Texas Development Board (2008-Present); Board Member, BancTec (2010 – Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-Present); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust Funds (2008-Present).
Richard A. Massman (68)	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 (2007-2011) and Director (2005-2011), The Dallas Opera Foundation; Chairman (2006-2010) and Director (2005-2009), Temple Emanu-El Foundation; Trustee, Presbyterian Healthcare Foundation (2006-Present); Director, The Retina Foundation of the Southwest (2000-Present); Trustee, American Beacon Mileage Funds (2004-Present); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust Funds (2004-Present).
R. Gerald Turner (65) 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 Funds (2001-Present).
Paul J. Zucconi,CPA (71)	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) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community services and products) (2010-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 Funds (2008-Present).

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
OFFICERS	Term
	One Year
Gene L. Needles, Jr. (56)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President (2009-Present), American Beacon Mileage Funds; President (2009-Present), American Beacon Select Funds; 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.

37

Trustees and Officers of the American Beacon Funds

(Unaudited)

William F. Quinn** (63)	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), CEO (2006-2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman and Director (2008-Present), Lighthouse Holdings, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009), Director, Hicks Acquisition II, Inc. (2010-Present); 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); the Independent Trustee, National Railroad Retirement Investment Trust (2011-Present); Trustee (1995-2008) and President (1995-2007, 2008-2009), American Beacon Mileage Funds; Trustee (1999-2008) and President (1999-2007, 2008-Present), American Beacon Select Funds; Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds, plc (2007-2009).
Rosemary K. Behan (52)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Secretary (2008-Present), Lighthouse Holdings, Inc.; Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney, U.S. Securities and Exchange Commission, (1995-2004).
Brian E. Brett (51)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment adviser) (1996-2004).
Wyatt Crumpler (45)	VP since 2007	Vice President, Asset Management (2009-Present) and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.; Managing Director of Corporate Accounting (2004-2007) and Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Erica Duncan (41)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (57)	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 (50)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.; Treasurer (2010-Present), Lighthouse Holdings, Inc.
Terri L. McKinney (47)	VP since 2010	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), and Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; President, Board of Trustees (2010-Present), Vice-President, Board of Trustees (2008-2010), and Trustee (2006-2008), Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (36)	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).
Samuel J. Silver (48)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (40)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present) and Senior Compliance Analyst (1998-2004), American Beacon Advisors, Inc.

38

Trustees and Officers of the American Beacon Funds

(Unaudited)

John J. Okray (37)	Asst. Secretary since 2010	Assistant General Counsel, American Beacon Advisors, Inc. (2010-Present); Asst. Secretary (2010-Present), Lighthouse Holdings, Inc.; Vice President, Oppenheimer Funds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010) Senior Tax Analyst (1999-2004), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.

* 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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41

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 ClassSM 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 PUBLIC ACCOUNTING FIRM	DISTRIBUTOR
State Street Bank and Trust	Boston Financial Data Services	Ernst & Young LLP	Foreside Fund Services, LLC
Boston, Massachusetts	Kansas City, Missouri	Dallas, Texas	Portland, Maine

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 10/11

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:	11
Emerging Markets Fund	11
International Equity Fund	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, 2011

Fellow Shareholders,   Investor concerns regarding the health of the global economy and the ongoing European sovereign crisis have taken a toll on the international and emerging markets.   With the headlines focused on geopolitical and economic risks, the strengthening underlying fundamentals at many publicly traded companies and continued economic growth—though at an admittedly slower pace—have drawn less attention. This near-term myopia can create opportunities for fund companies like ours, where our sub-advisors manage with a longer-term perspective. The market volatility also highlights the key benefit of our multi-manager approach—a strategy we feel can help smooth performance over time.

The performance of our international and emerging markets equity funds over the past year fell short of our goals as our funds were affected along with their underlying asset classes. However, we believe our strategy will serve our investors over time as they navigate through episodes of economic and geopolitical turbulence.

For the twelve-month period ended October 31, 2011:

>>American Beacon Emerging Markets Fund (Institutional Class) returned -12.18%

>>American Beacon International Equity Fund (Institutional Class) returned -5.89%

At American Beacon, we remain focused on seeking opportunities and meeting market challenges to deliver the type of consistency and service our shareholders value. We regard your trust in the American Beacon Funds as recognition that we are achieving these goals, and we appreciate your continued investment.

For further details about the growing number of investment opportunities now available within the American Beacon Funds family, please visit our website at www.americanbeaconfunds.com.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Emerging Markets Overview

October 31, 2011 (Unaudited)

For the 12 months ended October 31, 2011, the MSCI Emerging Markets Index fell by 7.72%. Global stock markets were rocked by an ever-growing list of negative economic factors during the period. The euro-zone debt crisis, well into its second year, was the biggest drag on global markets, followed by growing fears of a double-dip recession in the U.S., and China’s efforts to cool an overheated real estate market.

Developed markets were locked in a deleveraging cycle that caused demand to shrink. Emerging market consumption was strong at upper-income levels, but inflation remained stubbornly high in many markets and middle-class consumers clearly felt the squeeze.

Markets began pricing in a global recession, with cyclical industries taking a big hit. During periods of heightened volatility, market correlation tends to rise. This was evident to a certain degree, although sector concentration minimized the impact. South Africa held up relatively well due to its precious metal exposure. Mexico actually benefitted from the country’s association with the U.S., which turned out to be the best of a troubled lot, and Indonesia actually delivered positive performance.

Emerging markets entered 2011 priced for continued earnings expansion. The MSCI Emerging Markets Index was trading at 12 times 2011 earnings, which were expected to rise approximately 19%. This was exceptionally optimistic considering the precarious situation in Europe, the U.S. employment situation, and an apparent property bubble in the world’s largest commodities buyer, China. In addition, inflation was high in several markets, as were local currency levels, adding another layer of pressure on both consumers and exporters.

Government and monetary policy officials faced a delicate balancing act between hiking interest rates to temper inflation, but risking further currency appreciation and slower demand, or using targeted measures to cools segments of the economy. India opted for the latter, China the former. Brazil acquiesced to higher rates, but not without a tax to discourage currency speculation. The result: Gross domestic product (GDP) growth in emerging markets has slowed from 8% in 2010 to an expected 6.4% for 2011. India’s GDP growth rate slowed from over 10% for 2010 to an estimated 7.1% for 2011, Brazil’s growth slowed from 7.5% to 3.7%, and China’s growth rate fell to 9.0% from 10.1%.

The widespread slowdown caused market multiples to contract to more reasonable levels and earnings estimates have fallen more than 10%. Although 2012 estimates may decline a bit further, valuation multiples are close to the 2008 trough.

There are near-term risks, however. The current global economic malaise will not be solved overnight, and risk aversion does not favor emerging markets. The situation in Europe is complicated and could continue to cause volatility and a flight to safety. U.S. political paralysis preceding the presidential election creates additional stress. In addition, Chinese officials have uncharacteristically sounded the growth alarm and indicated that financial reform would be critical to navigating the current economy.

2

Performance Overview

American Beacon Emerging Markets Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the Emerging Markets Fund (“Fund”) returned -12.18% for the twelve months ended October 31, 2011. The Fund underperformed the MSCI Emerging Markets Index (the “Index”) return of -7.72% and the Lipper Emerging Markets Funds Index return of -9.49% for the period.

Comparison of Change in Value of a $10,000 Investment For The Period From 10/31/01 Through 10/31/11

	Annualized Total Returns									Value of $10,000 10/31/01- 10/31/11
	Periods Ended 10/31/11
	1 Year			5 Years			10 Years
Institutional Class(1,7)		-12.18	%		4.44	%		15.54	%	$	42,405
Y Class (1,2,7)		-12.25	%		4.39	%		15.52	%		42,314
Investor Class(1,3,7)		-12.65	%		4.03	%		15.20	%		41,149
A Class with sales Charge(1,4,7)		-17.60	%		2.79	%		14.50	%		38,733
A Class without sales Charge(1,4,7)		-12.58	%		4.02	%		15.19	%		41,124
C Class with sales Charge(1,5,7)		-14.18	%		3.86	%		15.10			40,810
C Class without sales Charge(1,5,7)		-13.18	%		3.86	%		15.10	%		40,810
AMR Class(1,7)		-12.30	%		4.58	%		15.78	%		43,274
MSCI Emg Mkts Index (6)		-7.72	%		6.52	%		16.82	%		47,327
Lipper Emg Mkts Funds Index(6)		-9.49	%		4.63	%		15.80	%		43,374

1. Performance shown is historical and is not 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 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 five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/01 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 10/31/01.

3. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01. 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 five-year and ten-year periods represents the returns achieved by the Institutional Class from 10/31/01 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 10/31/01. The maximum sales charge for A Class is 5.75%.

5. Fund performance for the five-year and ten-year periods represents the returns achieved by the Institutional Class from 10/31/01 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 10/31/01. 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 Markets 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 1.59%, 1.83%, 1.87%, 2.27%, 3.42%, and 1.35%, 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 by 4.46% as a result of poor stock selection, as country allocation added value for the period.

Stock selections in China and Mexico led to the relative underperformance, more than offsetting positive selections in South Korea and Brazil. In China, investment in Chaoda Modern Agriculture Holdings Ltd. (down 81.0%) and Weiqiao Textile Co. (down 25.0%) contributed to the relative

3

Performance Overview

American Beacon Emerging Markets Fund^SM

October 31, 2011 (Unaudited)

underperformance. Detractors in Mexico included Cemex S.A.B. de C.V. (down 57.6%) and Desarrolladora Homex, S.A.B. de C.V. (down 55.5%). Positive contributors in South Korea, including Hyundai Motor Co. (up 23.2%), Lotte Chilsung Beverage Co. Ltd. (up 65.1%), and Lotte Confectionary Co. Ltd. (up 18.1% for the period it was held by the Fund), added value for the period. In Brazil, Vivo Participacoes S.A. (up 73.1%) and Redecard S.A. (up 41.5%) benefited relative performance.

Relative contribution from country allocation was positive for the twelve-month period, as a result of overweighting South Korea and the Czech Republic (up 6.2% and down 1.2%, respectively), and underweighting China (down 15.8%). Overweighting Turkey (down 34.7%) and underweighting Malaysia (up 3.5%) 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
Petroleo Brasileiro S.A.		3.0	%
Lukoil OAO		2.2	%
Gazprom OAO		1.9	%
Samsung Electronics Co. Ltd.		1.8	%
KB Financial Group, Inc.		1.6	%
First Pacific Co Ltd.		1.6	%
POSCO		1.5	%
Banco Santander Brasil S.A.		1.5	%
China Mobile Ltd.		1.5	%
Itau Unibanco Banco Holding S.A.		1.5	%

Sector Allocation

	% of Equities
Financials		23.0	%
Telecommunication Services		11.4	%
Consumer Staples		10.9	%
Energy		10.3	%
Information Technology		9.6	%
Consumer Discretionary		9.2	%
Materials		9.1	%
Utilities		7.9	%
Industrials		7.0	%
Health Care		1.6	%

Country Allocation

	% of Equities
Hong Kong/China		18.1	%
South Korea		17.2	%
Brazil		16.4	%
India		7.5	%
South Africa		5.9	%
Taiwan		5.7	%
Russia		5.4	%
Mexico		4.0	%
Turkey		3.0	%
Indonesia		2.6	%
Malaysia		2.1	%
Philippines		2.1	%
Czech Republic		1.4	%
Thailand		1.3	%
Poland		1.2	%
United States		1.2	%
Hungary		1.0	%
Chile		0.8	%
Egypt		0.7	%
Austria		0.6	%
Peru		0.5	%
Argentina		0.4	%
Singapore		0.4	%
Luxembourg		0.2	%
Lebanon		0.2	%
United Kingdom		0.1	%

4

Fund Expenses

American Beacon Emerging Markets Fund^SM

October 31, 2011 (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, 2011 through October 31, 2011.

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 Account Value 5/1/11		Ending Account Value 10/31/11		Expenses Paid During Period* 5/1/11-10/31/11
Institutional Class
Actual	$	1,000.00	$	816.90	$	5.08
Hypothetical **	$	1,000.00	$	1,019.61	$	5.65
Y Class
Actual	$	1,000.00	$	816.26	$	5.54
Hypothetical **	$	1,000.00	$	1,019.11	$	6.16
Investor Class
Actual	$	1,000.00	$	814.67	$	7.27
Hypothetical **	$	1,000.00	$	1,017.19	$	8.08
A Class
Actual	$	1,000.00	$	814.50	$	6.59
Hypothetical **	$	1,000.00	$	1,017.95	$	7.32
C Class
Actual	$	1,000.00	$	812.34	$	10.69
Hypothetical **	$	1,000.00	$	1,013.41	$	11.88
AMR Class
Actual	$	1,000.00	$	816.14	$	6.04
Hypothetical **	$	1,000.00	$	1,018.55	$	6.72

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.11%, 1.21%, 1.59%, 1.44%, 2.34%, and 1.32% for the Institutional, Y, Investor, A, C, and AMR 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.

5

International Equity Market Overview

October 31, 2011 (Unaudited)

For the 12 months ended October 31, 2011, the MSCI EAFE Index declined by 4.08%. Equity markets were volatile during this period, generally finishing with negative returns.

Events throughout the year led to alternating intervals of investor confidence and investor fear. Positive developments included strong corporate earnings, low interest rates, and abundant liquidity provisions due to the quantitative easing efforts of various central banks. Among the negative developments were the deepening sovereign debt crisis in Europe; armed uprisings in the Middle East and Northern Africa; and the earthquake, tsunami, and nuclear crises in Japan.

In March, Japan’s fledgling recovery was derailed by a horrific three-pronged natural disaster – an earthquake, followed by a tsunami and a nuclear meltdown. While the human tragedy was considerable, the strength and resiliency of the Japanese people has been astounding. The aftermath sparked a severe retrenchment of gross domestic product (GDP) in the spring and early summer, impairing a variety of businesses. Parts of the global technology supply chain were particularly strongly affected. In more recent months, the Japanese economy has shown signs of recovery, which should continue to build despite the global GDP slowdown.

The most significant macro issue in 2011 has been the resumption of the European sovereign credit crisis, which reached a more dangerous level as fears over sovereign default in Portugal, Ireland, Greece and Spain spilled into the much larger and systemically important markets of Italy and France. The Greek government struggled to further extend austerity measures to qualify for their next tranche of bailout funds. However, austerity has triggered a severe recession, and debt-to-GDP levels continue to surge instead of fall. Investor sentiment then targeted European banks with any semblance of exposure to peripheral Europe, taking down shares dramatically with the thesis that sovereign defaults would drive a wave of equity capital raisings to repair balance sheets.

By the end of October, however, Germany and France, along with the other euro-zone nations, agreed to a more comprehensive rescue package. The package included the voluntary restructuring of Greek debt by bondholders (50% haircut), plus an

expansion of the European Financial Stability Facility (EFSF) up to $1.4 trillion and a plan to recapitalize Europe’s undercapitalized banks by up to $150 billion in aggregate. While the package appears more credible, its implementation will be the key to its ultimate success.

This backdrop has driven developed market economies to retain an extremely loose monetary policy, with the U.S. Federal Reserve indicating near-zero interest rates for the foreseeable future. The European Central Bank (ECB), with its incoming chief Mario Draghi from Italy, has recently cut rates 25 basis points (0.25%) to 1.25%, with an easing bias, and Japan continues their near-zero rate environment. However, the loose policy and quantitative easing in the U.S. has done little to extend the global recovery, as the U.S. continues to experience sluggish, below-trend growth. Europe, including its strong core in Germany, is at risk of a regional contraction due to widespread austerity. That said, valuations have become inexpensive during the year, and investor expectations have declined. As inflationary pressures in emerging markets abate and Europe figures out a way to navigate the near-term turbulence, there could be room for positive surprises from international equities over the next 12 months given just a hint of relative improvements in economic conditions.

6

Performance Overview

American Beacon International Equity Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the International Equity Fund (“Fund”) returned -5.89% for the twelve months ended October 31, 2011. The Fund underperformed the MSCI EAFE Index (the “Index”) return of -4.08% but outperformed the Lipper International Funds Index return of -6.38% for the period.

Comparison of Change in Value of a $10,000 Investment

For The Period From 10/31/01 Through 10/31/11

	Annualized Total Returns									Value of
	Periods Ended 10/31/11									$10,000
										10/31/01-
	1 Year			5 Years			10 Years			10/31/11
Institutional Class(1,8)		-5.89	%		-2.27	%		6.55	%	$	18,861
Y Class(1,2,8)		-6.00	%		-2.32	%		6.53	%		18,821
Investor Class(1,8)		-6.21	%		-2.58	%		6.30	%		18,417
Advisor Class(1,3,8)		-6.35	%		-2.84	%		6.05	%		17,995
Retirement Class(1,4,8)		-6.37	%		-2.87	%		6.03	%		17,960
A Class with sales charge(1,5,8)		-11.65	%		-3.76	%		5.65	%		17,325
A Class without sales charge(1,5,8)		-6.26	%		-2.61	%		6.28	%		18,384
C Class with sales charge(1,6,8)		-8.09	%		-2.82	%		6.16	%		18,188
C Class without sales charge(1,6,8)		-7.09	%		-2.82	%		6.16	%		18,188
AMR Class(1,8)		-5.62	%		-2.02	%		6.82	%		19,339
Lipper Int’l. Funds Index(7)		-6.38	%		-1.39	%		6.44	%		18,674
MSCI EAFE Index (7)		-4.08	%		-2.41	%		5.73	%		17,465

1. Performance shown is historical and is not 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 10/31/01 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 10/31/01.

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. 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 10/31/01 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 10/31/01.

5. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. The maximum sales charge for A Class is 5.75%.

6. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. 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. 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. 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 0.72%, 0.82%, 1.08%, 1.27%, 1.67%, 1.27%, 2.17%, and 0.47%, 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, 2011 (Unaudited)

The Fund underperformed the Index by 1.81% over the twelve-month period due to country allocation, as stock selection added value.

Stock selections within Japan and France benefited the Fund’s relative performance. In Japan, the Fund added value through investments in Daito Trust Construction Co. Ltd. (up 56.2%), JGC Corp (up 52.5%), and KDDI Corp. (up 41.6%). In France, Sanofi (up 8.7%), EADS N.V. (up 28.8%), and Technip S.A. (up 16.5%) benefited relative performance for the period. Stock selections in Hong Kong and the Netherlands detracted from relative performance, including Esprit Holdings Ltd. (down 72.0%) in Hong Kong and Koninklijke Philips Electronics N.V. and PostNL N.V. (down 27.9% and 54.7%, respectively) in the Netherlands.

Country allocation contributed negatively to relative performance, specifically through underweighting Australia (up 3.5%) and overweighting France (down 11.5%). Investing in South Korea (up 6.2%) added value 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		2.6	%
Novartis AG		2.5	%
Siemens AG		1.7	%
HSBC Holdings plc		1.7	%
Royal Dutch Shell plc		1.7	%
Vodafone Group plc		1.7	%
Total S.A.		1.6	%
DBS Group Holdings Ltd.		1.6	%
Unilever plc		1.5	%
GlaxoSmithKline plc		1.5	%

Sector Allocation

	% of Equities
Financials		20.5	%
Industrials		14.4	%
Health Care		11.9	%
Consumer Discretionary		11.0	%
Energy		9.5	%
Materials		9.3	%
Consumer Staples		7.4	%
Information Technology		6.8	%
Telecommunication Services		6.7	%
Utilities		2.6	%

Regional Allocation*

* shown as a percentage of equities

Region

Europe	72.5	%
Asia	25.2	%
North America	1.6	%
Middle East	0.7	%

8

Fund Expenses

American Beacon International Equity Fund^SM

October 31, 2011 (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, 2011 through October 31, 2011.

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 Account Value 5/1/11		Ending Account Value 10/31/11		Expenses Paid During Period* 5/1/11-10/31/11
Institutional Class
Actual	$	1,000.00	$	828.53	$	3.18
Hypothetical **	$	1,000.00	$	1,021.73	$	3.52
Y Class
Actual	$	1,000.00	$	828.27	$	3.64
Hypothetical **	$	1,000.00	$	1,021.22	$	4.02
Investor Class
Actual	$	1,000.00	$	827.49	$	4.88
Hypothetical **	$	1,000.00	$	1,019.86	$	5.40
Advisor Class
Actual	$	1,000.00	$	826.41	$	5.75
Hypothetical **	$	1,000.00	$	1,018.90	$	6.36
Retirement Class
Actual	$	1,000.00	$	826.55	$	6.08
Hypothetical **	$	1,000.00	$	1,018.55	$	6.72
A Class
Actual	$	1,000.00	$	827.31	$	5.62
Hypothetical **	$	1,000.00	$	1,019.06	$	6.21
C Class
Actual	$	1,000.00	$	823.50	$	8.96
Hypothetical **	$	1,000.00	$	1,015.38	$	9.91
AMR Class
Actual	$	1,000.00	$	829.82	$	1.98
Hypothetical **	$	1,000.00	$	1,023.04	$	2.19

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.69%, 0.79%, 1.06%, 1.25%, 1.32%, 1.22%, 1.95%, and 0.43% for the Institutional, Y, Investor, Advisor, Retirement, A, C, and AMR 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.

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 schedules 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, 2011, 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 financial highlights for 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, 2011, 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, 2011, 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 29, 2011

10

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
ARGENTINA - 0.38%
COMMON STOCKS - (Cost $688)
Banco Macro S.A., ADRA		4,192	$	84
Nortel Inversora S.A., ADRA		18,400		439
Total Argentina				523
AUSTRIA - 0.60%
COMMON STOCKS - (Cost $1,750)
Erste Group Bank AG		38,472		820
BRAZIL - 15.39%
COMMON STOCKS - 13.69% (Cost $20,659)
Banco do Brasil S.A.		41,790		630
Banco Santander Brasil S.A., ADRA		220,250		2,005
Brasil Insurance Participacoes e Administracao S.A.		8,500		82
BRF - Brasil Foods S.A.B		30,210		629
Centrais Eletricas Brasileiras S.A., ADRA		100,100		996
Centrais Eletricas Brasileiras S.A.B		51,766		518
Cia de Bebidas das Americas, ADRA		20,480		691
Cielo S.A.		9,600		254
Embraer S.A., ADRA		44,640		1,242
Fibria Celulose S.A., ADRA		25,500		226
Gerdau S.A., ADRA		54,460		491
Grendene S.A.		31,840		146
Itau Unibanco Holding S.A., ADRA		65,289		1,249
Itau Unibanco Holding S.A.		17,400		284
JBS S.A.		175,100		526
Magnesita Refratarios S.A.B		53,700		195
Marfrig Alimentos S.A.		166,000		721
MRV Engenharia e Participacoes S.A.		18,900		133
PDG Realty S.A. Empreendimentos e Participacoes		55,100		243
Petroleo Brasileiro S.A., A Shares, ADRA B		101,479		2,566
Petroleo Brasileiro S.A., ADRA B		58,990		1,593
Porto Seguro S.A.		20,960		224
Redecard S.A.		19,900		334
Telefonica Brasil S.A., ADRA		32,805		952
Ultrapar Participacoes S.A.		11,600		207
Vale S.A., ADRA		27,570		701
Viver Incorporadora e Construtora S.A.B		679,880		939
Total Common Stocks				18,777
PREFERRED STOCKS - 1.70% (Cost $1,873)
Cia de Tecidos do Norte de Minas - Coteminas		40,262		84
Cia Energetica de Minas Gerais		200		3
Cia Energetica do Ceara		31,800		642
Gerdau S.A.		5,800		52
Itau Unibanco Holding S.A.		28,055		535
Tele Norte Leste, ADRA		40,110		435
Vale S.A., A Shares		10,704		254
Vale S.A., ADRA		14,086		333
Total Preferred Stocks				2,338
Total Brazil				21,115

	Shares		Fair Value
			(000’s)
CHILE - 0.76%
COMMON STOCKS - (Cost $1,095)
Banco Santander-Chile, ADRA		2,800	$	229
Cencosud S.A.		38,924		244
Empresa Nacional de Electricidad S.A., ADRA		400		19
Empresa Nacional de Electricidad S.A.		109,000		176
Enersis S.A., ADRA		13,666		268
Enersis S.A.		18,595		7
SACI Falabella		10,276		95
Total Chile				1,038
CZECH REPUBLIC - 1.33%
COMMON STOCKS - (Cost $1,785)
CEZ AS		9,900		419
Komercni Banka AS		1,524		294
Telefonica Czech Republic AS		52,608		1,106
Total Czech Republic				1,819
EGYPT - 0.63%
COMMON STOCKS - (Cost $1,001)
Commercial International Bank Egypt SAE		120,292		536
Juhayna Food IndustriesB		142,046		116
Telecom Egypt		84,912		212
Total Egypt				864
HONG KONG/CHINA - 16.98%
COMMON STOCKS - (Cost $27,244)
Asia Cement China Holdings Corp.		89,000		42
Bank of Communications Co Ltd.		328,900		226
Beijing Capital International Airport Co Ltd.		780,000		347
Belle International Holdings Ltd.		169,000		324
BYD Electronic International Co Ltd.		851,000		310
Chaoda Modern Agriculture Holdings Ltd.		2,200,000		312
China Coal Energy Co Ltd.		342,000		419
China Construction Bank Corp.		1,527,325		1,110
China Dongxiang Group Co.		1,711,000		301
China Life Insurance Co Ltd.		238,000		612
China Mengniu Dairy Co Ltd.		98,000		311
China Minsheng Banking Corp Ltd.		235,000		188
China Mobile Ltd.		210,000		2,001
China Pacific Insurance Group Co Ltd.		117,400		358
China Petroleum & Chemical Corp.		46,370		44
China Petroleum & Chemical Corp., ADRA		870		82
China Power International Development Ltd.		1,067,800		228
China Railway Construction Corp Ltd.		402,500		239
China Railway Group Ltd.		703,000		234
China Resources Power Holdings Co Ltd.		1,120,000		1,992
China Telecom Corp Ltd.		480,000		298
China Yuchai International Ltd.		25,420		387
China ZhengTong Auto Services Holdings Ltd.B		140,000		148
COSCO Pacific Ltd.		140,000		195
Dickson Concepts International Ltd.		687,945		389
First Pacific Co Ltd.		2,147,074		2,221
GCL-Poly Energy Holdings Ltd.		483,000		152

See accompanying notes

11

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Global Bio-Chem Technology Group Co Ltd.		946,520	$	213
Guangzhou Automobile Group Co Ltd.		359,370		359
Hengan International Group Co Ltd.		32,500		281
Huaneng Power International, Inc.		1,147,900		513
Huaneng Power International, Inc., ADRA		370		7
Industrial & Commercial Bank of China		1,237,555		758
Maanshan Iron & Steel		376,000		110
Mindray Medical International Ltd., ADRA		6,410		175
NWS Holdings Ltd.		166,817		253
People’s Food Holdings Ltd.		1,313,911		685
PetroChina Co. Ltd.		872,000		1,135
Ping An Insurance Group Co.		37,500		272
Renhe Commercial Holdings Co Ltd.		1,834,000		252
Shanghai Industrial Holdings Ltd.		115,000		376
Shanghai Pharmaceuticals Holding Co Ltd.B		83,000		159
Sinotrans Ltd.		6,639,058		1,352
Sohu.com, Inc.B		5,700		344
Tencent Holdings Ltd.		25,100		572
TPV Technology Ltd.		264,970		76
Want Want China Holdings Ltd.		296,000		271
Weiqiao Textile Co.		1,741,100		952
Xinhua Winshare Publishing and Media Co Ltd.		477,000		210
Yanzhou Coal Mining Co Ltd.		112,000		278
Zhejiang Expressway Co. Ltd.		362,000		240
Total Hong Kong/China				23,313
HUNGARY - 0.96%
COMMON STOCKS - (Cost $1,391)
Magyar Telekom Telecommunications plc		421,763		973
Richter Gedeon Nyrt		2,141		343
Total Hungary				1,316
INDIA - 7.02%
COMMON STOCKS - (Cost $10,051)
Asian Paints Ltd.		3,162		205
Bank of India		25,470		173
Dr Reddy’s Laboratories Ltd.		9,012		306
Engineers India Ltd.		2,041		10
GAIL India Ltd.		16,460		142
Glenmark Pharmaceuticals Ltd.		49,859		321
HDFC Bank Ltd.		48,217		482
Hindustan Petroleum Corp Ltd.		31,430		215
ICICI Bank Ltd.		11,508		217
India Cements Ltd.		223,410		367
IndusInd Bank Ltd.		37,662		221
ITC Ltd.		88,417		385
Jindal Steel & Power Ltd.		16,299		186
Jubilant Life Sciences Ltd.		63,090		253
Larsen & Toubro Ltd.		7,117		205
Mahanagar Telephone Nigam		186,640		119
Mahindra & Mahindra Ltd.		16,031		285
NMDC Ltd.		60,420		290
Oriental Bank of Commerce		39,890		236
Reliance Energy Ltd.		158,850		1,505
Reliance Industries Ltd.		82,936		1,476
Rolta India Ltd.		139,370		237

	Shares		Fair Value
			(000’s)
State Bank of India		7,590	$	295
State Bank of India, GDRD E		5,090		401
Steel Authority of India Ltd.		74,910		171
Sterlite Industries India Ltd., ADRA		40		0
Sterlite Industries India Ltd.		76,060		195
Tata Consultancy Services Ltd.		18,999		431
Tata Steel Ltd.		30,387		298
Total India				9,627
INDONESIA - 2.41%
COMMON STOCKS - (Cost $2,682)
Aneka Tambang Tbk PT		407,500		81
Astra Agro Lestari Tbk PT		32,000		77
Astra International Tbk PT		55,400		424
Bank Central Asia Tbk PT		381,500		345
Bank Mandiri Tbk PT		411,500		325
Indofood Sukses Makmur Tbk PT		417,500		244
Indosat Tbk PT		899,000		540
Kalbe Farma Tbk PT		407,000		158
Lippo Karawaci Tbk PT		4,578,500		325
Medco Energi Internasional Tbk PT		1,118,000		289
Telekomunikasi Indonesia Tbk PT		595,800		495
Total Indonesia				3,303
LEBANON - 0.20%
COMMON STOCKS - (Cost $365)
Banque Audi sal- Audi Saradar Group, GDRE		21,549		139
BLOM Bank SAL, GDRE		17,692		136
Total Lebanon				275
LUXEMBOURG - 0.17%
COMMON STOCKS - (Cost $268)
Samsonite International S.A.B		141,300		231
MALAYSIA - 1.94%
COMMON STOCKS - (Cost $2,994)
Axiata Group Bhd		424,700		673
CIMB Group Holdings Bhd		131,400		322
Genting Malaysia Bhd		72,410		90
Malayan Banking Bhd		43,472		118
Proton Holdings Bhd		928,700		805
Sime Darby Bhd		103,200		296
Tenaga Nasional Bhd		187,250		363
Total Malaysia				2,667
MEXICO - 3.73%
COMMON STOCKS - (Cost $5,812)
America Movil SAB de CV, ADRA		68,182		1,734
Cemex SAB de CV, ADRA		153,000		669
Consorcio ARA SAB de CV		299,700		82
Desarrolladora Homex SAB de CV, ADRA B		15,630		234
Fomento Economico Mexicano SAB de CV, ADRA		9,880		662
Gruma SAB de CV		431,540		844
Grupo Financiero Banorte SAB de CV		89,200		304
Grupo Televisa S.A., ADRA		21,000		448
Industrias CH SAB de CVB		7,800		25

See accompanying notes

12

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Telefonos de Mexico SAB de CV, ADRA		7,224	$	113
Total Mexico				5,115
PERU - 0.51%
COMMON STOCKS - (Cost $672)
Cia de Minas Buenaventura S.A., ADRA		8,130		333
Credicorp Ltd.		3,310		360
Total Peru				693
PHILIPPINES - 1.97%
COMMON STOCKS - (Cost $2,636)
Ayala Corp.		37,872		268
Bank of the Philippine Islands		11,123		15
First Philippine Holdings Corp.		544,870		663
Metro Pacific Investments Corp.		4,546,000		341
Metropolitan Bank & Trust		269,649		447
Pepsi-Cola Products Philippines, Inc.		5,274,000		253
Philippine Long Distance Telephone Co.		6,580		367
SM Investments Corp.		26,490		342
Total Philippines				2,696
POLAND - 1.11%
COMMON STOCKS - (Cost $1,641)
Asseco Poland S.A.		23,111		359
Bank Pekao S.A.		2,960		137
Eurocash S.A.		69,319		549
Telekomunikacja Polska S.A.		88,979		473
Total Poland				1,518
RUSSIA - 5.06%
COMMON STOCKS - (Cost $6,400)
Eurasia Drilling Co Ltd., GDRE		2,986		70
Eurasia Drilling Co. Ltd, GDRE		3,279		77
Gazprom OAO, ADRA		229,980		2,670
Lukoil OAO, ADRA		52,936		3,055
Rosneft Oil Co., GDRB E		61,005		434
Tatneft, ADRA		5,799		171
VimpelCom Ltd., ADRA		42,230		464
Total Russia				6,941
SINGAPORE - 0.35%
COMMON STOCKS - (Cost $526)
Haw Par Corp Ltd.		108,325		483
SOUTH AFRICA - 5.60%
COMMON STOCKS - (Cost $7,966)
Anglo Platinum Ltd.		8,972		646
ArcelorMittal South Africa Ltd.		10,584		89
AVI Ltd.		78,242		350
Clicks Group Ltd.		52,280		274
JD Group Ltd.		151,460		845
MTN Group Ltd.		43,145		748
Murray & Roberts Holdings Ltd.		94,940		288
Naspers Ltd., N Shares		15,939		756
Nedbank Group Ltd.		7,970		141
Pick n Pay Stores Ltd.		46,835		234
SABMiller plc		21,875		806
Sappi Ltd.		71,024		208
Sasol Ltd.		3,890		175

	Shares		Fair Value
			(000’s)
Standard Bank Group Ltd.		153,184	$	1,881
Telkom SA Ltd.		62,620		241
Total South Africa				7,682
SOUTH KOREA - 16.17%
COMMON STOCKS - 15.30% (Cost $20,131)
Cheil Industries, Inc.		2,425		214
Cheil Worldwide, Inc.		7,110		117
Doosan Heavy Industries and Construction Co. Ltd.		2,080		111
Grand Korea Leisure Co Ltd.		7,600		136
Hyundai Development Co.		16,220		333
Hyundai Engineering & Construction Co Ltd.		4,119		263
Hyundai Heavy Industries Co Ltd.		728		196
Hyundai Mobis		1,343		387
Hyundai Motor Co.		4,086		829
Hyundai Steel Co.		2,420		220
Jinro Ltd.		16,457		376
KB Financial Group, Inc.		55,818		2,186
KB Financial Group, Inc., ADRA		1,650		64
Korea Aerospace Industries Ltd.B		7,570		250
Korea Electric Power Corp.		76,915		1,735
Korea Exchange Bank		84,120		623
Korea Life Insurance Co. Ltd.		1,220		7
KT Corp., ADRA		10,920		182
KT Corp.		4,570		153
KT&G Corp.		465		29
LG Chem Ltd.		1,354		436
LG Electronics, Inc.		7,160		477
LG Household & Health Care Ltd.		305		138
Lotte Chilsung Beverage Co Ltd.		1,119		1,258
Lotte Confectionery Co Ltd.		41		64
Mando Corp.		1,123		193
Mirae Asset Securities Co. Ltd.		9,050		288
NCSoft Corp.		911		287
NHN Corp.		1,154		241
NongShim Co Ltd.		1,758		346
POSCO, ADRA		1,140		98
POSCO		5,680		1,969
Samsung Electronics Co. Ltd.		2,575		2,234
Samsung Fire & Marine Insurance Co Ltd.		1,655		350
Samsung Heavy Industries Co. Ltd.		2,610		80
Shinhan Financial Group Co Ltd.		34,012		1,334
Shinsegae Co Ltd.		1,066		267
SK Chemicals Co Ltd.		924		59
SK Innovation Co. Ltd.		865		129
SK Telecom Co Ltd., ADRA		16,620		246
SK Telecom Co Ltd.		8,620		1,143
SSCP Co Ltd.		10,075		34
Tong Yang Life Insurance		24,730		297
Woongjin Coway Co Ltd.		7,346		253
Yuhan Corp.		3,388		370
Total Common Stocks				21,002
PREFERRED STOCKS - 0.87% (Cost $954)
Hyundai Motor Co.		15,412		973
Samsung Electronics Co. Ltd.		385		220
Total Preferred Stocks				1,193
Total South Korea				22,195

See accompanying notes

13

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
TAIWAN - 5.32%
COMMON STOCKS - (Cost $7,697)
Asustek Computer, Inc.		31,648	$	220
AU Optronics Corp., ADRA		54,760		234
AU Optronics Corp.		244,000		105
Catcher Technology Co. Ltd.		22,000		123
China Steel Corp.		2,744		3
Chinatrust Financial Holding Co Ltd.		153,198		100
First Financial Holding Co Ltd.		48,463		32
Formosa Plastics Corp.		80,000		232
Foxconn Technology Co. Ltd.		1,000		3
Fubon Financial Holding Co Ltd.		148,527		175
Hon Hai Precision Industry Co Ltd.		405,509		1,116
HTC Corp.		14,458		321
KGI Securities Co Ltd.		372,227		155
Largan Precision Co. Ltd.		6,000		133
Lung Yen Life Service Corp.		18,000		55
Nan Ya Printed Circuit Board Corp.		131,099		384
Novatek Microelectronics Corp.		192,000		471
Powertech Technology, Inc.		110,400		270
Siliconware Precision Industries Co.		242,000		247
Siliconware Precision Industries Co., ADRA		9,260		48
SinoPac Financial Holdings Co Ltd.		1,463,315		470
Taiwan Cement Corp.		138,000		170
Taiwan Semiconductor Manufacturing Co Ltd.		288,385		702
Tatung Co Ltd.		397,298		140
TPK Holding Co Ltd.B		2,200		37
Transcend Information, Inc.		120,520		281
Uni-President Enterprises Corp.		203,244		281
United Microelectronics Corp., ADRA		19,450		43
United Microelectronics Corp.		1,008,226		445
Young Fast Optoelectronics Co Ltd.		88,541		257
Yuanta Financial Holding Co. Ltd.		85,000		48
Total Taiwan				7,301
THAILAND - 1.23%
COMMON STOCKS - (Cost $1,395)
Bangkok Bank PCL		50,090		252
Banpu PCL		450		9
Banpu PCL, NVDRC		8,400		170
Kasikornbank PCL, NVDRC		93,200		371
Kasikornbank PCL		19,500		78
Land and Houses PCL, NVDRC		1,908,900		350
PTT PCL, NVDRC		20,400		200
Siam Cement PCL, NVDRC		25,400		256
Total Thailand				1,686
TURKEY - 2.84%
COMMON STOCKS - (Cost $4,423)
Anadolu Efes Biracilik Ve Malt Sanayii A.S.		35,964		437
Asya Katilim Bankasi A.S.		137,080		145
Coca-Cola icecek A.S.		13,811		187
Dogus Otomotiv Servis ve Ticaret A.S.		289,214		623
Turk Telekomunikasyon A.S.		66,174		280
Turkcell Iletisim Hizmetleri A.S.		31,130		154
Turkcell Iletisim Hizmetleri A.S., ADRA		7,420		91
Turkiye Garanti Bankasi A.S.		288,311		1,012
Turkiye Is Bankasi		147,232		342

	Shares		Fair Value
			(000’s)
Turkiye Vakiflar Bankasi Tao		367,547	$	625
Total Turkey				3,896
UNITED KINGDOM - 0.08%
COMMON STOCKS - (Cost $155)
JKX Oil & Gas plc		44,300		112
UNITED STATES - 1.16%
COMMON STOCKS - (Cost $2,127)
Central European Distribution Corp.B		14,190		77
Flextronics International Ltd.B		230,410		1,512
Total United States				1,589
SHORT-TERM INVESTMENTS - 4.41% (Cost $6,046)
JPMorgan U.S. Government Money Market Fund		6,046,019		6,046
TOTAL INVESTMENTS - 98.31% (Cost $142,427)				134,864
OTHER ASSETS, NET OF LIABILITIES - 1.69%				2,320
TOTAL NET ASSETS - 100.00%			$	137,184

Percentages are stated as a percent of net assets.

^A  ADR - American Depositary Receipt.

^B  Non-income producing security.

^C  NVDR - Non Voting Depositary Receipt.

^D  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 $401 or 0.29% of net assets. The Fund has no right to demand registration of these securities.

^E GDR - Global Depositary Receipt.

See accompanying notes

14

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2011

Futures Contracts

    (000’s)

	Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation/ (Depreciation)
MSCI Emerging Market EMini Future		136		December    , 2011	$	6,641	$	551
					$	6,641	$	551

See accompanying notes

15

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
AUSTRALIA - 2.32%
COMMON STOCKS - (Cost $28,429)
James Hardie Industries SE, CDI		616,150	$	3,982
National Australia Bank Ltd.		208,160		5,556
Primary Health Care Ltd.		1,054,498		3,668
QBE Insurance Group Ltd.		608,126		9,334
Telstra Corp Ltd.		2,250,000		7,318
Total Australia				29,858
AUSTRIA - 0.18%
COMMON STOCKS - (Cost $5,477)
Telekom Austria AG		202,700		2,305
BELGIUM - 0.66%
COMMON STOCKS - (Cost $3,878)
Anheuser-Busch InBev N.V.		154,200		8,561
CANADA - 0.81%
COMMON STOCKS - (Cost $10,005)
Potash Corp of Saskatchewan, Inc.		60,100		2,845
Rogers Communications, Inc., Class B		83,000		3,027
Talisman Energy, Inc.		319,100		4,526
Total Canada				10,398
FINLAND - 1.10%
COMMON STOCKS - (Cost $18,087)
Nokia OYJ		1,387,253		9,348
Sampo OYJ, A Shares		176,120		4,832
Total Finland				14,180
FRANCE - 11.64%
COMMON STOCKS - (Cost $151,505)
Air Liquide S.A.		39,587		5,113
Alstom S.A.		143,644		5,340
AXA S.A.		727,656		11,691
BNP Paribas S.A.		175,832		7,796
Carrefour S.A.		352,830		9,360
Cie Generale des Etablissements Michelin		90,220		6,517
Danone		42,550		2,941
EDF S.A.		145,570		4,359
France Telecom S.A.		561,980		10,111
Gemalto N.V.		103,177		4,674
Legrand S.A.		184,985		6,525
Sanofi		461,085		33,006
Societe Generale S.A.		137,400		3,940
Technip S.A.		69,550		6,576
Total S.A.		395,727		20,706
Valeo S.A.		110,396		5,529
Vinci S.A.		52,228		2,563
Vivendi S.A.		148,750		3,332
Total France				150,079
GERMANY - 8.88%
COMMON STOCKS - (Cost $108,256)
Bayer AG		68,921		4,396
Bayerische Motoren Werke AG		76,620		6,244

	Shares		Fair Value
			(000’s)
Celesio AG		245,480	$	3,879
Deutsche Post AG		986,027		14,967
E.ON AG		523,957		12,667
GEA Group AG		77,600		2,134
Linde AG		54,673		8,696
Merck KGaA		104,250		9,718
Muenchener Rueckversicherungs AG		92,550		12,407
SAP AG		282,113		17,000
Siemens AG		213,899		22,419
Total Germany				114,527
GREECE - 0.27%
COMMON STOCKS - (Cost $6,453)
OPAP S.A.		299,602		3,485
HONG KONG/CHINA - 3.17%
COMMON STOCKS - (Cost $51,477)
AIA Group Ltd.		1,302,600		3,929
Cheung Kong Holdings Ltd.		472,500		5,849
Esprit Holdings Ltd.		3,487,323		5,040
Hang Seng Bank Ltd.		400,600		5,159
HSBC Holdings plc		1,128,796		10,023
Hutchison Whampoa Ltd.		187,000		1,707
Swire Pacific Ltd.		237,100		2,746
Yue Yuen Industrial Holdings Ltd.		2,281,667		6,463
Total Hong Kong/China				40,916
IRELAND - 0.58%
COMMON STOCKS - (Cost $14,308)
CRH plc		243,030		4,356
Smurfit Kappa Group plc		465,636		3,177
Total Ireland				7,533
ISRAEL - 0.69%
COMMON STOCKS - (Cost $10,413)
Teva Pharmaceutical Industries Ltd., ADRA		217,350		8,879
ITALY - 2.14%
COMMON STOCKS - (Cost $39,213)
Atlantia SpA		219,537		3,342
ENI SpA		233,856		5,150
Finmeccanica SpA		566,485		3,873
Intesa Sanpaolo SpA		1,379,241		2,433
Saras SpA		4,787,605		7,846
Snam Rete Gas SpAB		657,911		3,190
UniCredit SpA		1,477,593		1,723
Total Italy				27,557
JAPAN - 14.04%
COMMON STOCKS - (Cost $186,552)
Asics Corp.		158,580		2,104
Canon, Inc.		146,000		6,667
Daito Trust Construction Co Ltd.		77,600		6,892
Don Quijote Co. Ltd.		149,400		5,491
eAccess Ltd.B		4,490		1,207
East Japan Railway Co.		96,900		5,884
FANUC Corp.		30,000		4,844
Haseko Corp.		2,306,018		1,461
Honda Motor Co Ltd.		309,500		9,329

See accompanying notes

16

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
ITOCHU Corp.		221,700	$	2,187
JGC Corp.		321,000		9,012
JS Group Corp.		184,600		3,863
Kao Corp.		110,300		2,892
KDDI Corp.		465		3,402
Konica Minolta Holdings, Inc.		347,500		2,531
Medipal Holdings Corp.		580,800		5,416
Mitsubishi Corp.		218,500		4,497
Mitsubishi UFJ Financial Group, Inc.		2,099,400		9,095
Nintendo Co. Ltd.		11,400		1,724
Ricoh Co Ltd.		600,000		4,922
Sankyo Co Ltd.		54,300		2,838
Shin-Etsu Chemical Co Ltd.		191,900		9,857
SMC Corp.		37,400		5,827
Sony Financial Holdings, Inc.		544,100		8,992
Sumitomo Mitsui Financial Group, Inc.		326,400		9,100
Taiyo Nippon Sanso Corp.		786,000		5,634
Tokyo Electron Ltd.		62,200		3,321
Tokyo Steel Manufacturing Co. Ltd.		773,200		6,503
Toyoda Gosei Co Ltd.		291,900		5,188
Toyota Motor Corp.		511,800		17,113
Yahoo Japan Corp.		16,481		5,317
Yamada Denki Co. Ltd.		109,080		7,862
Total Japan				180,972
NETHERLANDS - 5.33%
COMMON STOCKS - (Cost $82,342)
Aegon N.V.		747,320		3,551
Akzo Nobel N.V.		232,293		12,215
ING Groep N.V.		1,329,060		11,512
Koninklijke Philips Electronics N.V.		695,840		14,412
Randstad Holding N.V.		83,910		2,967
Reed Elsevier N.V.		934,678		11,477
SBM Offshore N.V.		265,765		5,842
TNT Express N.V.		308,309		2,604
TNT N.V.		803,663		4,071
Total Netherlands				68,651
NEW ZEALAND - 0.22%
COMMON STOCKS - (Cost $2,551)
Telecom Corp. of New Zealand Ltd.		1,397,700		2,866
NORWAY - 1.58%
COMMON STOCKS - (Cost $13,615)
Aker Solutions ASA		192,300		2,224
Statoil ASA		266,630		6,782
Telenor ASA		640,840		11,410
Total Norway				20,416
PORTUGAL - 0.42%
COMMON STOCKS - (Cost $5,853)
Portugal Telecom SGPS S.A.		747,760		5,352
SINGAPORE - 2.63%
COMMON STOCKS - (Cost $25,197)
DBS Group Holdings Ltd.		2,115,060		20,633
SembCorp Industries Ltd.		256,000		843
SembCorp Marine Ltd.		1,124,000		3,718
Singapore Telecommunications Ltd.		3,428,000		8,683
Total Singapore				33,877

	Shares			Fair Value
				(000’s)
SOUTH KOREA - 2.42%
COMMON STOCKS - (Cost $26,361)
Hyundai Heavy Industries Co Ltd.		18,159		$	4,883
Hyundai Mobis		9,600			2,770
KB Financial Group, Inc., ADRA		143,018			5,585
KT&G Corp.		148,595			9,319
LG Electronics, Inc.		33,975			2,266
POSCO		4,910			1,703
Samsung Electronics Co Ltd., GDRD E		820			353
Samsung Electronics Co. Ltd., GDRE		10,114	��		4,334
Total South Korea					31,213
SPAIN - 3.18%
COMMON STOCKS - (Cost $39,771)
Amadeus IT Holding S.A., A Shares		231,300			4,341
Banco Santander S.A., Rights, expiring 11/18/2011F G		451,700			78
Banco Santander S.A.-EUR G		450,966			3,854
Banco Santander S.A.-GBP		400,828			3,433
Enagas S.A.		300,284			5,913
Gamesa Corp Tecnologica S.A.		541,541			2,610
Iberdrola S.A.		226,058			1,640
Mediaset Espana Comunicacion S.A.		235,800			1,553
Repsol YPF S.A.		257,990			7,773
Tecnicas Reunidas S.A.		105,422			4,242
Telefonica S.A.		259,268			5,531
Total Spain					40,968
SWEDEN - 2.22%
COMMON STOCKS - (Cost $29,064)
Assa Abloy AB, B Shares		184,200			4,471
Skandinaviska Enskilda Banken AB, A Shares		724,910			4,520
Svenska Cellulosa AB, B Shares		316,950			4,605
Swedbank AB, A Shares		328,000			4,578
Telefonaktiebolaget LM Ericsson, B Shares		1,007,580			10,489
Total Sweden					28,663
SWITZERLAND - 7.19%
COMMON STOCKS - (Cost $91,162)
Adecco S.A.		69,120			3,306
Givaudan S.A.		6,198			5,634
Julius Baer Group Ltd.		121,450			4,568
Nestle S.A.		67,550			3,909
Novartis AG		564,345			31,895
Roche Holding AG		113,570			18,671
Swiss Re AG		100,960			5,522
UBS AG		1,043,824			13,168
Zurich Financial Services AG		26,423			6,073
Total Switzerland					92,746
UNITED KINGDOM - 21.48%
COMMON STOCKS - (Cost $259,197)
Aviva plc		1,667,651			9,053
BAE Systems plc		1,267,054			5,597
Balfour Beatty plc		994,454			4,009
Barclays plc		1,465,316			4,530
BG Group plc		213,342			4,623
BHP Billiton plc		215,192			6,774
BP plc		2,194,553			16,175

See accompanying notes

17

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
British American Tobacco plc		414,441	$	18,966
British Sky Broadcasting Group plc		201,000		2,257
Eurasian Natural Resources Corp plc		326,135		3,425
GlaxoSmithKline plc		851,290		19,081
Home Retail Group plc		2,424,703		3,890
HSBC Holdings plc		1,357,665		11,848
Informa plc		908,043		5,276
International Power plc		623,800		3,382
Kingfisher plc		1,370,800		5,669
Lonmin plc		296,110		5,156
Marks & Spencer Group plc		646,520		3,322
Michael Page International plc		505,512		3,247
Pearson plc		132,713		2,443
Petrofac Ltd.		181,922		4,178
Prudential plc		605,480		6,263
Rexam plc		1,822,523		10,076
Rio Tinto plc		76,043		4,112
Rolls-Royce Holdings plc		103,160,050		16,722
Royal Dutch Shell plc, A Shares		307,738		10,869
Royal Dutch Shell plc, B Shares		299,206		10,755
Standard Chartered plc		429,744		10,011
Tesco plc		1,508,138		9,720
Unilever plc		598,459		19,977
Vodafone Group plc		7,696,643		21,345
WM Morrison Supermarkets plc		712,360		3,447
WPP plc		367,900		3,813
Xstrata plc		412,420		6,871
Total United Kingdom				276,882
UNITED STATES - 0.43%
COMMON STOCKS - (Cost $8,673)
Flextronics International Ltd.G		848,510		5,570
SHORT-TERM INVESTMENTS- 4.90%
American Beacon U.S. Government Money Market Select FundC		10,000,000		10,000
JPMorgan U.S. Government Money Market Fund		53,146,703		53,147
Total Short-Term Investments (Cost $63,147)				63,147
SECURITIES LENDING COLLATERAL - 0.28% (Cost $3,567)
American Beacon U.S. Government Money Market Select FundC		3,077,700		3,078
Wells Fargo Advantage Government Money Market Fund		489,320		489
Total Securities Lending Collateral				3,567
TOTAL INVESTMENTS - 98.76% (Cost $1,284,553)				1,273,168
OTHER ASSETS, NET OF LIABILITIES - 1.24%				15,943
TOTAL NET ASSETS - 100.00%			$	1,289,111

Percentages are stated as a percent of net assets.

^A  ADR - American Depositary Receipt.

^B  All or a portion of this security is on loan at October 31, 2011.

^C  The Fund is affiliated by having the same investment advisor.

^D  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 $353 or 0.03% of net assets. The Fund has no right to demand registration of these securities.

^E  GDR - Global Depositary Receipt.

^F  Right.

^G  Non-income producing security.

See accompanying notes

18

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2011

Futures Contracts

    (000’s)

	Number of Contracts	Expiration Date	Contract Value		Unrealized Appreciation/ (Depreciation)
France CAC 40 Index	146	December, 2011	$	6,585	$	504
Germany DAX Index	27	December, 2011		5,811		646
UK FTSE 100 Index	178	December, 2011		15,913		934
Hang Seng Index	15	November, 2011		1,911		95
Italy MIB 30 Index	15	December, 2011		1,669		147
Tokyo FE TOPIX Index	151	December, 2011		14,698		265
Spain IBEX 35 Index	20	November, 2011		2,468		(9	)
Sweden OMX Index	139	November, 2011		2,134		89
Canada S&PCDA 60 Index	60	December, 2011		8,417		159
Australia SPI Index	55	December, 2011		6,250		289
Netherlands 200 AEX Index	21	November, 2011		1,793		31
			$	67,649	$	3,150

Forward Foreign Currency Exchange Contracts

    (000’s)

Contracts To Deliver			Settlement Date	Contract Value		Unrealized Appreciation/ (Depreciation)
	1,225	Canadian Dollar	12/16/2011	$	1,228	$	(40	)
	598	Swiss Franc	12/16/2011		682		(21	)
	14,809	Euro Currency	12/21/2011		20,484		(79	)
	1,474	Pound Sterling	12/16/2011		2,369		(73	)
	1,987	Swedish Krona	12/16/2011		304		(7	)
	852	Australian Dollar	12/16/2011		893		(49	)
	172,489	Japanese Yen	12/16/2011		2,208		43
	Total contracts to deliver			$	28,168	$	(226	)
	(Receivable amount $27,942)
Contracts To Receive			Settlement Date	Contract Value		Unrealized Appreciation/ (Depreciation)
	8,756	Canadian Dollar	12/16/2011	$	8,775	$	132
	5,388	Swiss Franc	12/16/2011		6,142		116
	12,490	Euro Currency	12/16/2011		17,276		326
	9,758	Pound Sterling	12/16/2011		15,683		397
	13,148	Swedish Krona	12/16/2011		2,013		72
	5,984	Australian Dollar	12/16/2011		6,273		291
	1,164,423	Japanese Yen	12/16/2011		14,907		(243	)
	Total contracts to receive			$	71,069	$	1,091
	(Payable amount $69,978)
	Net Currency Fluctuation					$	865

See accompanying notes

19

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2011 (in thousands, except share and per share amounts)

	Emerging Markets Fund			International Equity Fund
Assets:
Investments in unaffiliated securities, at fair value A D	$	134,864		$	1,260,090
Investments in affiliated securities, at fair value B		—			13,078
Foreign currency, at fair value C		585			2,974
Deposit with brokers for futures contracts		762			10,449
Receivable for investments sold		961			5,236
Dividends and interest receivable		257			2,711
Receivable for fund shares sold		1,096			6,199
Receivable for tax reclaims		8			1,558
Receivable for expense reimbursement (Note 2)		6			—
Unrealized appreciation of foreign currency contracts		—			1,377
Prepaid expenses		18			45
Total assets		138,557			1,303,717
Liabilities:
Payable for investments purchased		587			6,267
Payable upon return of securities loaned		—			3,567
Payable for fund shares redeemed		71			658
Payable for variation margin on open futures contracts		299			1,681
Management and investment advisory fees payable (Note 2)		332			1,259
Administrative service and service fees payable (Note 2)		11			368
Unrealized depreciation of foreign currency contracts		—			512
Professional fees payable		28			41
Trustee fees payable		2			24
Prospectus and shareholder reports		12			123
Other liabilities		31			106
Total liabilities		1,373			14,606
Net Assets	$	137,184		$	1,289,111
Analysis of Net Assets:
Paid-in-capital	$	134,035		$	1,414,325
Undistributed net investment income		1,256			44,439
Accumulated net realized gain (loss)		8,912			(162,477	)
Unrealized appreciation or depreciation of investments, futures contracts, and foreign currency translations		(7,019	)		(7,176	)
Net assets	$	137,184		$	1,289,111
Shares outstanding (no par value):
Institutional Class		672,880			33,533,723
Y Class		415,344			45,520
Investor Class		725,678			25,584,611
Advisor Class		N/A			65,389
Retirement Class		N/A			86
A Class		34,725			30,083
C Class		671			4,999
AMR Class		8,938,641			25,358,917
Net asset value, offering and redemption price per share:
Institutional Class	$	12.67		$	15.27
Y Class	$	12.75		$	15.82
Investor Class	$	12.44		$	15.11
Advisor Class		N/A		$	15.52
Retirement Class		N/A		$	15.44
A Class (net asset value and redemption price)	$	12.47		$	15.33
A Class (offering price)	$	13.23		$	16.27
C Class	$	12.38		$	15.21
AMR Class	$	12.74		$	15.31
A Cost of investments in unaffiliated securities	$	142,427		$	1,271,475
B Cost of investments in affiliated securities	$	—		$	13,078
C Cost of foreign currency	$	583		$	2,917
D Fair value of securities on loan	$	—		$	3,388

See accompanying notes

20

American Beacon Funds^SM

Statements of Operations

For the Year Ended October 31, 2011 (in thousands)

	Emerging Markets Fund			International Equity Fund
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	4,041		$	49,272
Interest income		4			17
Income derived from securities lending, net		—			1,871
Total investment income		4,045			51,160
Expenses:
Management and investment advisory fees (Note 2)		1,207			4,554
Administrative service fees (Note 2):
Institutional Class		27			1,617
Y Class		16			2
Investor Class		35			1,343
Advisor Class		—			4
A Class		1			1
AMR Class		65			218
Transfer agent fees:
Institutional Class		1			34
Y Class		2			—
Investor Class		4			69
Advisor Class		—			1
A Class		2			2
C Class		2			2
AMR Class		11			15
Custody and fund accounting fees		520			446
Professional fees		40			76
Registration fees and expenses		54			102
Service fees (Note 2):
Y Class		5			1
Investor Class		29			1,601
Advisor Class		—			3
Distribution fees (Note 2):
Advisor Class		—			3
Prospectus and shareholder reports		48			161
Trustee fees		11			104
Other expenses		63			133
Total expenses		2,143			10,492
Net (fees waived and expenses reimbursed) (Note 2)		(68	)		(3	)
Net expenses		2,075			10,489
Net investment income		1,970			40,671
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from: B
Investments		18,567			30,035
Commission recapture (Note 3)		—			49
Foreign currency transactions		2,959			43,643
Futures contracts		(614	)		(1,700	)
Change in net unrealized appreciation or depreciation of:
Investments		(35,177	)		(167,943	)
Foreign currency translations		(5,421	)		(18,362	)
Futures contracts		159			2,309
Net (loss) on investments		(19,527	)		(111,969	)
Net (decrease) in net assets resulting from operations	$	(17,557	)	$	(71,298	)
A Foreign taxes	$	435		$	4,547
B Net of foreign withholding taxes on capital gains	$	11		$	—

See accompanying notes

21

American Beacon Funds^SM

Statements of Changes of Net Assets (in thousands)

	Emerging Markets Fund						International Equity Fund
	Year Ended October 31, 2011			Year Ended October 31, 2010			Year Ended October 31, 2011			Year Ended October 31, 2010
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	1,970		$	1,026		$	40,671		$	29,764
Net realized gain on investments, futures contracts, and foreign currency transactions		20,912			19,496			72,027			35,831
Change in net unrealized appreciation or depreciation of investments, futures contracts, and foreign currency translations		(40,439	)		8,049			(183,996	)		81,056
Net increase (decrease) in net assets resulting from operations		(17,557	)		28,571			(71,298	)		146,651
Distributions to Shareholders:
Net investment income:
Institutional Class		(85	)		(130	)		(14,155	)		(15,298	)
Y Class		—			—			(7	)		—
Investor Class		(43	)		(131	)		(8,721	)		(12,702	)
Advisor Class		—			—			(13	)		—
AMR Class		(942	)		(1,717	)		(15,008	)		(14,360	)
Net distributions to shareholders		(1,070	)		(1,978	)		(37,904	)		(42,360	)
Capital Share Transactions:
Proceeds from sales of shares		51,671			19,983			286,664			253,975
Reinvestment of dividends and distributions		1,067			1,969			35,604			39,420
Cost of shares redeemed		(47,315	)		(27,910	)		(385,830	)		(304,686	)
Redemption fees		30			36			42			177
Net increase (decrease) in net assets from capital share transactions		5,453			(5,922	)		(63,520	)		(11,114	)
Net increase (decrease) in net assets		(13,174	)		20,671			(172,722	)		93,177
Net Assets:
Beginning of period		150,358			129,687			1,461,833			1,368,656
End of Period *	$	137,184		$	150,358		$	1,289,111		$	1,461,833
*  Includes undistributed net investment income (loss) of	$	1,256		$	408		$	44,439		$	32,347

See accompanying notes

22

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 20 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 Fund and the American Beacon International Equity 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

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	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

Each class offered by the Trust has equal rights as to assets and voting privileges. Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets. Realized and unrealized capital gains and losses of each class are allocated daily based on the relative net assets of each class of the respective Fund. Class specific expenses, where applicable, currently include administrative service fees, service fees, and distribution fees and vary amongst the classes as described more fully in Note 2.

New Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) related to the accounting for repurchase agreements and similar agreements that both entitles and obligates a transferor to repurchase or redeem financial assets before their maturity. The ASU modifies the criteria for determining effective control of transferred assets and as a result certain agreements may now be accounted for as secured borrowings. The ASU is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011.

In May 2011, FASB issued an ASU to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and International Financial Reporting Standards (IFRSs). FASB concluded that the amendments in this ASU will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The ASU is effective prospectively during interim or annual periods beginning on or after December 15, 2011.

At this time, management is evaluating the implications of these changes and their impact on the financial statements has not been determined.

23

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

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 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 of the Funds. Management fees paid during the year ended October 31, 2011 were as follows (dollars in thousands):

	Management Fee Rate	Management Fee		Amounts paid to Investment Advisors		Net Amounts Retained by Manager
Emerging Markets	0.60%-0.95%	$	1,207	$	1,129	$	78
International Equity	0.20%-0.55%	$	4,554	$	3,843	$	711

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, 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, 2011, securities lending fees paid to the Manager on behalf of the International Equity Fund was $248,302.

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, Advisor and Retirement 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 the Funds. Administrative Service fees for the Retirement and C Classes for the period ended October 31, 2011 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, 2011 were less than $500.

24

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

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 Retirement, A, and C Classes for the period ended October 31, 2011 were less than $500.

Brokerage Commissions

Affiliated entities of an investment advisor to the Emerging Markets Fund received net commissions on purchases and sales of the Fund’s portfolio securities totaling $2,819 for the year ended October 31, 2011.

Investment in Affiliated Funds

The Funds may invest in the American Beacon Money Market Select Fund and the U.S. 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 Select Funds and the 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 the average daily net assets of the Select Funds. During the year ended October 31, 2011, fees earned by the Manager from the Select Funds were as follows:

	Direct Investments in Select Funds		Securities Lending Collateral Invested in Select Funds		Total
International Equity	$	1,753	$	29,313	$	31,066

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. During the year ended October 31, 2011, the Emerging Markets Fund borrowed from the USG Select Fund on average $1,121,200 for two days at 0.81% with interest charges of $50.

Reimbursement of Expenses

The Manager contractually agreed to reimburse the Funds to the extent that total operating expenses exceeded a Fund’s expense cap. Of these amounts, approximately $6,000 was receivable to the Emerging Markets Fund from the Manager at October 31, 2011. For the year ended October 31, 2011, the Manager reimbursed expenses as follows:

		Expense Caps
Fund	Class	11/1/10 to 2/28/11			3/1/11 to 10/31/11			Reimbursed Expenses		Expiration of Reimbursements
Emerging Markets	Institutional		1.35	%		1.35	%	$	28,114		2014
Emerging Markets	Y		1.45	%		1.45	%		18,453		2014
Emerging Markets	Investor		1.79	%		1.79	%		16,804		2014
Emerging Markets	A		1.79	%		1.79	%		2,500		2014
Emerging Markets	C		2.54	%		2.54	%		1,710		2014
International Equity	Retirement		N/A			1.47	%		31		2014
International Equity	A		N/A			1.25	%		1,657		2014
International Equity	C		N/A			1.99	%		1,675		2014

25

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

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 Emerging Markets Fund is approximately $29,000 expiring in 2013. For the year ended October 31, 2011, the Funds have not recorded a liability for potential reimbursements, due to the current assessment that a reimbursement is unlikely.

3. Security Valuation and Fair Value Measurements

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.

Investments in mutual funds are valued at the closing net asset value (“NAV”) 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”).

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized, but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statements of Assets and Liabilities

For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted under the circumstances described below. If the Fund determines that developments between the close of a foreign market and the close of the Exchange will, in its judgment, materially affect the value of some or all of its portfolio securities, the Fund will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the Exchange. In deciding whether it is necessary to adjust closing prices to reflect fair value, the Fund reviews a variety of factors, including developments in foreign markets, the performance of U.S. securities markets, and the performance of instruments trading in U.S. markets that represent foreign securities and baskets of foreign securities. A Fund may also fair value securities in other situations, such as when a particular foreign market is closed, but the Fund is open. The Fund uses outside pricing services to provide it with closing prices and information to evaluate and/or adjust those prices. The Fund cannot predict how often it will use closing prices and how often it will determine it necessary to adjust those prices to reflect fair value. As a means of evaluating its security valuation process, the Fund routinely compares closing prices, the next day’s opening prices in the same markets, and adjusted prices.

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 NAV. The value of the security may vary with market fluctuations.

26

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

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 fair values of securities held and is reported with all other foreign currency gains and losses in the Funds’ Statements of Operations.

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 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. 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. GAAP 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.

27

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

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.

Valuation Inputs

Various inputs may be used to determine the fair 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 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.

Level 1 and Level 2 trading assets and trading liabilities, at fair value

Common stocks and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Valuation adjustments may be applied to certain securities that are solely traded on a foreign exchange to account for the market movement between the close of the foreign market and the close of the Exchange. These securities are valued using pricing service providers that consider the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments. Securities using these valuation adjustments are categorized as Level 2 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

Over-the-counter financial derivative instruments, such as foreign currency contracts, derive their value from underlying asset prices, indices, reference rates, and other inputs or a combination of these factors. These contracts are normally valued on the basis of broker dealer quotations or pricing service providers. Depending on the product and the terms of the transaction, the fair value of the financial derivative contracts can be estimated by a pricing service provider using a series of techniques, including simulation pricing models. The pricing models use inputs that are observed from actively quoted markets such as issuer details, indices, spreads, interest rates, curves, dividends, and exchange rates. Financial derivatives that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

28

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

Level 3 trading assets and trading liabilities, at fair value

The valuation techniques and significant inputs used in determining the fair values of financial instruments classified as Level 3 of the fair value hierarchy are as follows:

Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board or persons acting at their direction and are categorized as Level 3 of the fair value hierarchy.

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the Exchange close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager the responsibility for monitoring significant events that may materially affect the values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events.

The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated the responsibility for applying the valuation methods to the Manager. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelines established by the Board, with reference to other securities or indices. In the event that the security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the fair value of the security or asset will be determined in good faith by the Valuation Committee of the Board, generally based upon recommendations provided by the Manager.

When a Fund uses fair valuation methods applied by the Manager that use significant unobservable inputs to determine its NAV, securities will be priced by another method that the Board or persons acting at their direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. While the Trust’s policy is intended to result in a calculation of a Fund’s NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.

For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in and out of the Level 3 category during the period. The end of period timing recognition is used for the significant transfers between Levels of the Funds’ assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for each respective Fund.

29

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

The Funds’ investments are summarized by level based on the inputs used to determine their values. As of October 31, 2011, the Funds’ investments were classified as described below: (in thousands)

Emerging Markets	Level 1			Level 2		Level 3		Total
Foreign Preferred Stocks	$	2,338		$	1,193	$	—	$	3,531
Foreign Common Stocks		41,377			82,321		—		123,698
U.S. Common Stocks		1,589			—		—		1,589
Short-Term Investments		6,046			—		—		6,046
Total Investments in Securities	$	51,350		$	83,514	$	—	$	134,864
Futures Contracts		551			—		—		551
International Equity	Level 1			Level 2		Level 3		Total
Foreign Common Stocks	$	136,774		$	1,064,032	$	—	$	1,200,806
Foreign Rights		78			—		—		78
U.S. Common Stocks		5,570			—		—		5,570
Securities Lending Collateral invested in Money Market Funds		3,567			—		—		3,567
Short-Term Investments		63,147			—		—		63,147
Total Investments in Securities	$	209,136		$	1,064,032	$	—	$	1,273,168
Financial Derivative Instruments-Assets*	Level 1			Level 2		Level 3		Total
Equity Contracts	$	3,150		$	—	$	—	$	3,150
Foreign Exchange Contracts		1,377			—		—		1,377
	$	4,527		$	—	$	—	$	4,527
Financial Derivative Instruments-Liabilities*	Level 1			Level 2		Level 3		Total
Foreign Exchange Contracts	$	(512	)	$	—	$	—	$	(512	)
	$	(512	)	$	—	$	—	$	(512	)

* Financial derivative instruments may include open futures contracts and foreign currency contracts.

During the periods ended October 31, 2010 through October 31, 2011, for the Emerging Markets Fund and International Equity Fund transferred common stock with a value of $62,746 and $908,003, respectively, from Level 1 to Level 2 as of the end of the period in accordance with fair value procedures established by the Board.

4. Securities and Other Investments

Restricted Securities

Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933. Disposal of restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted securities outstanding at the period ended October 31, 2011 are disclosed in the Notes to the Schedules of Investments.

5. Financial Derivative Instruments

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 Fund’s 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.

30

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

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. A Fund usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as Cash deposited with broker 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, 2011 (in thousands):

Statements of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation or depreciation of investments, futures contracts, and foreign currency translations		Equity Contracts	(1)	$	551

Effect of financial derivative instruments not accounted for as hedging instruments during the year ended October 31, 2011 (in thousands):

Statements of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	(614	)
Change in net unrealized appreciation or depreciation of futures contracts		Equity Contracts		159

⁽¹⁾  Includes cumulative appreciation or 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.

International Equity

Values of financial instruments not accounted for as hedging instruments as of October 31, 2011 (in thousands):

Statements of Assets and Liabilities:

Assets	Equity contracts		Foreign exchange contracts			Total
Unrealized appreciation or depreciation of investments, futures contracts, and foreign currency translations (2)	$	3,150	$	—		$	3,150
Unrealized appreciation of foreign currency contracts		—		1,377			1,377
	$	3,150	$	1,377		$	4,527
Liabilities	Equity contracts		Foreign exchange contracts			Total
Unrealized depreciation of foreign currency contracts	$	—	$	(512	)	$	(512	)
	$	—	$	(512	)	$	(512	)

Effect of financial derivative instruments on the Statements of Operations for the period ended October 31, 2011 (in thousands):

Statements of Operations:

	Equity contracts			Foreign exchange contracts		Total
Net realized gain (loss) from futures contracts	$	(1,700	)	$	—	$	(1,700	)
Net realized gain (loss) from foreign currency transactions		—			3,464		3,464
	$	(1,700	)	$	3,464	$	1,764

31

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

	Equity contracts		Foreign exchange contracts			Total
Change in net unrealized appreciation or depreciation of futures contracts	$	2,309	$	—		$	2,309
Change in net unrealized appreciation or depreciation of foreign currency translations		—		(1,806	)		(1,806	)
	$	2,309	$	(1,806	)	$	503

⁽²⁾  Only current day’s variation margin is reported within the Statements of Assets and Liabilities. The variation margin is included in the open futures cumulative appreciation or depreciation as reported in the Notes to the Schedule of Investments.

6. 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 Subchapter M of the Internal Revenue Code, as amended, 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, 2011 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. GAAP. 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, 2011 and October 31, 2010 were as follows (in thousands):

	Emerging Markets				International Equity
	Year Ended October  31, 2011		Year Ended October  31, 2010		Year Ended October  31, 2011		Year Ended October  31, 2010
Distributions paid from: Ordinary Income*
Institutional Class	$	85	$	130	$	14,155	$	15,298
Y Class		—		—		7		—
Investor Class		43		131		8,721		12,702
Advisor Class		—		—		13		—
AMR Class		942		1,717		15,008		14,360
Total distributions paid	$	1,070	$	1,978	$	37,904	$	42,360

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

As of October 31, 2011, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

	Emerging Markets			International Equity
Cost basis of investments for federal income tax purposes	$	147,921		$	1,303,637
Unrealized appreciation		11,259			151,928
Unrealized depreciation		(24,316	)		(182,397	)
Net unrealized appreciation or depreciation		(13,057	)		(30,469	)
Undistributed ordinary income		1,441			45,383
Accumulated long-term gain (loss)		14,221			(146,295	)
Other temporary differences		544			6,166
Distributable earnings (deficit)	$	3,149		$	(125,215	)

32

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

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 or 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. GAAP 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 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, 2011 (in thousands):

	Emerging Markets			International Equity
Paid-in-capital	$	(1	)	$	276
Undistributed net investment income (loss)		(52	)		9,325
Accumulated net realized gain (loss)		52			(9,601	)
Unrealized appreciation or depreciation of investments, futures contracts, and foreign currency translations		1			—

At October 31, 2011, the capital loss carryforward position for federal income tax purposes was $143,145 for International Equity Fund expiring in 2017. The Emerging Markets Fund and the International Equity Fund utilized $3,612 and $52,932, respectively, of net capital loss carryovers for the year ended October 31, 2011 (in thousands).

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2011 were (in thousands):

	Emerging Markets		International Equity
Purchases	$	154,212	$	458,880
Sales and Maturities		148,633		536,540

A summary of the Fund’s direct transactions in the USG Select Fund for the year ended October 31, 2011 is set forth below (in thousands):

	Affiliated Fund		October 31, 2010 Shares/Fair Value		Purchases		Sales		October 31, 2011 Shares/Fair Value
International Equity-Direct		USG Select Fund	$	—	$	10,000	$	—	$	10,000
International Equity-Securities Lending		USG Select Fund	$	4,370	$	644,888	$	646,180	$	3,078

8. 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.

33

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

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 purchased with cash collateral proceeds are listed in the Fund’s Schedule of Investments and the collateral is shown on the Statements 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. Until May 1, 2011, the Fund, the Agent, and the Manager retained 75%, 15%, and 10%, respectively, of the income generated from securities lending. Beginning May 1, 2011, the Fund, the Agent, and the Manager retained 78%, 12% and 10%, respectively, of the income generated from securities lending.

While securities are on loan, the Fund continues to receive certain income associated with that security and any gain or loss in the market price that may occur during the term of the loan. In the case of domestic equities, the value of any dividend is received in the form of a substitute payment approximately equal to the dividend. In the case of foreign securities, a negotiated amount is received that is less than the actual dividend, but higher than the dividend amount minus the foreign tax that the Fund would be subject to on the dividend.

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, 2011, the value of outstanding securities on loan and the value of collateral was as follows (in thousands):

Fair Value of Securities on Loan	Non-Cash Collateral	Cash Collateral Posted by Borrower
$ 3,388	$ —	$ 3,567

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

34

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

9. Capital Share Transactions

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

Year ended October 31, 2011

	Institutional Class						Y Class						Investor Class						AMR Class
Emerging Markets Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		234		$	3,361			447		$	6,562			178		$	2,540			2,808		$	38,701
Reinvestment of dividends		6			84			—			—			3			41			63			942
Shares redeemed		(187	)		(2,712	)*		(33	)		(458	)*		(329	)		(4,588	)*		(2,747	)		(39,516	)*
Net increase (decrease) in shares outstanding		53		$	733			414		$	6,104			(148	)	$	(2,007	)		124		$	127

	A Class						C Class
Emerging Markets Fund	Shares			Amount			Shares		Amount
Shares sold		36		$	498			1	$	9
Reinvestment of dividends		—			—			—		—
Shares redeemed		(1	)		(11	)*		—		—	*
Net increase in shares outstanding		35		$	487			1	$	9

	Institutional Class						Y Class						Investor Class						Advisor Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		8,441		$	139,313			32		$	548			5,946		$	98,128			84		$	1,395
Reinvestment of dividends		732			11,984			—			7			529			8,593			1			13
Shares redeemed		(7,305	)		(122,646	)*		(1	)		(21	)*		(9,134	)		(152,000	)*		(64	)		(1,074	)*
Net increase (decrease) in shares outstanding		1,868		$	28,651			31		$	534			(2,659	)	$	(45,279	)		21		$	334
	Retirement Class						AMR Class						A Class						C Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		—		$	—			3,041		$	46,659			32		$	536			5		$	85
Reinvestment of dividends		—			—			917			15,007			—			—			—			—
Shares redeemed		—			—			(6,578	)		(110,019	)*		(2	)		(28	)*		—			—	*
Net increase (decrease) in shares outstanding		—		$	—			(2,620	)	$	(48,353	)		30		$	508			5		$	85

Year Ended October 31, 2010

	Institutional Class						Y Class					Investor Class						AMR Class
Emerging Markets Fund	Shares			Amount			Shares		Amount			Shares			Amount			Shares			Amount
Shares sold		76		$	969			1	$	11			344		$	4,388			1,102		$	14,612
Reinvestment of dividends		10			125			—		—			10			127			137			1,717
Shares redeemed		(260	)		(3,540	)*		—		—	*		(348	)		(4,368	)*		(1,572	)		(19,966	)*
Net increase (decrease) in shares outstanding		(174	)	$	(2,446	)		1	$	11			6		$	147			(333	)	$	(3,637	)

	A Class					C Class
Emerging Markets Fund	Shares		Amount			Shares		Amount
Shares sold		—	$	2			—	$	1
Reinvestment of dividends		—		—			—		—
Shares redeemed		—		—	*		—		—	*
Net increase in shares outstanding		—	$	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	)

35

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2011

	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 in shares outstanding		—	$	—			337		$	4,619			—	$	4			—	$	1

* Net of Redemption Fees

36

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37

American Beacon Emerging Markets Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class						Investor Class
	Year Ended October 31,															Year Ended October 31,			March 1 to October 31,			Year Ended October 31,
	2011G			2010			2009			2008			2007			2011G			2010			2011G			2010
Net asset value, beginning of period	$	14.55		$	11.95		$	9.00		$	24.20		$	17.42		$	14.53		$	12.29		$	14.29		$	11.77
Income from investment operations:
Net investment income (loss)		0.16			0.13			0.05			0.23			0.26			0.13			0.04			0.13			0.04
Net gains (losses) on securities (both realized and unrealized)		(1.91	)		2.63			4.42			(11.78	)		9.11			(1.91	)		2.20			(1.93	)		2.63
Total income (loss) from investment operations		(1.75	)		2.76			4.47			(11.55	)		9.37			(1.78	)		2.24			(1.80	)		2.67
Less distributions:
Dividends from net investment income		(0.13	)		(0.16	)		(0.21	)		(0.10	)		(0.10	)		—			—			(0.05	)		(0.15	)
Distributions from net realized gains on securities		—			—			(1.31	)		(3.55	)		(2.49	)		—			—			—			—
Total distributions		(0.13	)		(0.16	)		(1.52	)		(3.65	)		(2.59	)		—			—			(0.05	)		(0.15	)
Redemption fees added to beneficial interests		0.00	A		0.00	A		—			—			—			0.00	A		0.00	A		0.00	A		0.00	A
Net asset value, end of period	$	12.67		$	14.55		$	11.95		$	9.00		$	24.20		$	12.75		$	14.53		$	12.44		$	14.29
Total return B,C		(12.18	)%		23.36	%		60.56	%		(55.59	)%		60.83	%		(12.25	)%		18.23	%D		(12.65	)%		22.85	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	8,523		$	9,023		$	9,494		$	5,478		$	13,773		$	5,296		$	13		$	9,030		$	12,478
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.55	%		1.58	%		1.66	%		1.38	%		1.60	%		1.68	%		1.82	%E		1.84	%		1.86	%
Expenses, net of reimbursements		1.24	%		1.39	%		1.66	%		1.38	%		1.60	%		1.33	%		1.42	%E		1.70	%		1.77	%
Net investment income (loss), before reimbursements		0.99	%		0.58	%		0.95	%		1.35	%		0.93	%		0.99	%		0.40	%E		0.77	%		0.29	%
Net investment income (loss), net of reimbursements		1.30	%		0.77	%		0.95	%		1.35	%		0.93	%		1.35	%		0.79	%E		0.91	%		0.37	%
Portfolio turnover rate		101	%		64	%		70	%		82	%		81	%		101	%		64	%F		101	%		64	%

^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.

^G  Brandes Investment Partners, LP was added as an investment manager to the Emerging Markets Fund on December 31, 2010.

38

American Beacon Emerging Markets Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class									A Class						AMR Class															C Class
Year Ended October 31,									Year Ended October 31,			May 17 to October 31,			Year Ended October 31,															Year Ended October 31,			September 1 to October 31,
2009			2008			2007			2011G			2010			2011G			2010			2009			2008			2007			2011G			2010
$	8.85		$	23.91		$	17.22		$	14.27		$	12.10		$	14.62		$	12.02		$	9.06		$	24.37		$	17.52		$	14.26		$	12.89
	0.04			0.17			0.11			0.06			0.02			0.18			0.11			0.09			0.33			0.19			0.09			(0.02	)
	4.35			(11.60	)		9.11			(1.85	)		2.15			(1.97	)		2.68			4.43			(11.91	)		9.30			(1.97	)		1.39
	4.39			(11.43	)		9.22			(1.79	)		2.17			(1.79	)		2.79			4.52			(11.58	)		9.49			(1.88	)		1.37
	(0.16	)		(0.08	)		(0.04	)		(0.01	)		—			(0.09	)		(0.19	)		(0.25	)		(0.18	)		(0.15	)		—			—
	(1.31	)		(3.55	)		(2.49	)		—			—			—						(1.31	)		(3.55	)		(2.49	)		—			—
	(1.47	)		(3.63	)		(2.53	)		(0.01	)		—			(0.09	)		(0.19	)		(1.56	)		(3.73	)		(2.64	)		—			—
	—			—			—			0.00	A		0.00	A		0.00	A		0.00	A		—			—			—			0.00	A		0.00	A
	$11.77		$	8.85		$	23.91		$	12.47		$	14.27		$	12.74		$	14.62		$	12.02		$	9.06		$	24.37		$	12.38		$	14.26
	60.24	%		(55.75	)%		60.38	%		(12.58	)%		17.93	%D		(12.30	)%		23.47	%		61.01	%		(55.48	)%		61.28	%		(13.18	)%		10.63	%D
$	10,208		$	5,183		$	11,694		$	433		$	2		$	113,894		$	128,841		$	109,985		$	72,516		$	271,726		$	8		$	1
	1.96	%		1.72	%		1.96	%		2.97	%		2.26	%E		1.31	%		1.34	%		1.42	%		1.17	%		1.37	%		26.96	%		4.49	%E
	1.96	%		1.72	%		1.96	%		1.46	%		1.78	%E		1.31	%		1.34	%		1.42	%		1.17	%		1.37	%		2.41	%		2.54	%E
	0.65	%		1.00	%		0.65	%		(0.10	)%		(0.10	)%E		1.29	%		0.79	%		1.27	%		1.46	%		1.25	%		(23.86	)%		(2.91	)%E
	0.65	%		1.00	%		0.65	%		1.41	%		0.39	%E		1.29	%		0.79	%		1.27	%		1.46	%		1.25	%		0.69	%		(0.96	)%E
	70	%		82	%		81	%		101	%		64	%F		101	%		64	%		70	%		82	%		81	%		101	%		64	%F

39

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,						August 3 to October 31, 2009
	2011			2010			2009			2008			2007			2011			2010
Net asset value, beginning of period	$	16.67		$	15.51		$	13.13		$	27.32		$	24.68		$	17.17		$	15.52		$	14.89
Income from investment operations:
Net investment income		0.46			0.35			0.54			0.77			0.65			0.49			0.04			0.04
Net gains (losses) on securities (both realized and unrealized)		(1.41	)		1.30			2.78			(11.60	)		4.31			(1.50	)		1.61			0.59
Total income (loss) from investment operations		(0.95	)		1.65			3.32			(10.83	)		4.96			(1.01	)		1.65			0.63
Less distributions:
Dividends from net investment income		(0.45	)		(0.49	)		(0.61	)		(0.70	)		(0.50	)		(0.34	)		—			—
Distributions from net realized gains on securities		—			—			(0.33	)		(2.66	)		(1.82	)		—			—			—
Total distributions		(0.45	)		(0.49	)		(0.94	)		(3.36	)		(2.32	)		(0.34	)		—			—
Redemption fees added to beneficial interest		—			—			0.00	F		0.00	F		0.00	F		—			—			0.00	F
Net asset value, end of period	$	15.27		$	16.67		$	15.51		$	13.13		$	27.32		$	15.82		$	17.17		$	15.52
Total return A,B		(5.89	)%		10.81	%		27.44	%		(44.81	)%		21.54	%		(6.00	)%		10.63	%		4.23	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	512,093		$	527,718		$	489,837		$	567,414		$	1,686,668		$	720		$	245		$	1
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.70	%		0.71	%		0.73	%		0.66	%		0.67	%		0.81	%		0.81	%		0.69	%D
Expenses, net of reimbursements		0.70	%		0.71	%		0.73	%		0.66	%		0.67	%		0.81	%		0.81	%		0.69	%D
Net investment income (loss), before reimbursements		2.90	%		2.21	%		2.76	%		2.91	%		2.46	%		3.00	%		1.44	%		1.00	%D
Net investment income, net of reimbursements		2.90	%		2.21	%		2.76	%		2.91	%		2.46	%		3.00	%		1.44	%		1.00	%D
Portfolio turnover rate		33	%		38	%		41	%		31	%		38	%		33	%		38	%		41	%E

^A  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.

^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 Amounts represent less than $0.01 per share.

40

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Year Ended October 31,
	2011			2010			2009			2008			2007
Net asset value, beginning of period	$	16.42		$	15.30		$	12.95		$	26.99		$	24.42
Income from investment operations:
Net investment income		0.44			0.29			0.37			0.66			0.58
Net gains (losses) on securities (both realized and unrealized)		(1.44	)		1.27			2.87			(11.41	)		4.26
Total income (loss) from investment operations		(1.00	)		1.56			3.24			(10.75	)		4.84
Less distributions:
Dividends from net investment income		(0.31	)		(0.44	)		(0.56	)		(0.63	)		(0.45	)
Distributions from net realized gains on securities		—			—			(0.33	)		(2.66	)		(1.82	)
Total distributions		(0.31	)		(0.44	)		(0.89	)		(3.29	)		(2.27	)
Redemption fees added to beneficial interest		—			—			0.00	C		0.00	C		0.00	C
Net asset value, end of period	$	15.11		$	16.42		$	15.30		$	12.95		$	26.99
Total return A,B		(6.21	)%		10.36	%		27.08	%		(44.96	)%		21.22	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	386,560		$	463,704		$	445,596		$	426,473		$	909,385
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.07	%		1.07	%		1.05	%		0.92	%		0.93	%
Expenses, net of reimbursements		1.07	%		1.07	%		1.05	%		0.92	%		0.93	%
Net investment income (loss), before reimbursements		2.55	%		1.83	%		2.45	%		2.82	%		2.26	%
Net investment income, net of reimbursements		2.55	%		1.83	%		2.45	%		2.82	%		2.26	%
Portfolio turnover rate		33	%		38	%		41	%		31	%		38	%

^A  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.

^B  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^C  Amounts represent less than $0.01 per share.

41

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor Class
	Year Ended October 31,
	2011			2010			2009			2008			2007
Net asset value, beginning of period	$	16.74		$	15.20		$	12.86		$	26.83		$	24.24
Income from investment operations:
Net investment income (loss)		0.07			0.89			0.31			0.62			0.56
Net gains (losses) on securities (both realized and unrealized)		(1.12	)		0.65			2.86			(11.35	)		4.20
Total income (loss) from investment operations		(1.05	)		1.54			3.17			(10.73	)		4.76
Less distributions:
Dividends from net investment income		(0.17	)		—			(0.50	)		(0.58	)		(0.35	)
Distributions from net realized gains on securities		—			—			(0.33	)		(2.66	)		(1.82	)
Total distributions		(0.17	)		—			(0.83	)		(3.24	)		(2.17	)
Redemption fees added to beneficial interest		—			—			0.00	H		0.00	H		0.00	H
Net asset value, end of period	$	15.52		$	16.74		$	15.20		$	12.86		$	26.83
Total return A,B		(6.35	)%		10.13	%		26.58	%		(45.10	)%		21.00	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,015		$	746		$	1,722		$	1,546		$	4,932
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.24	%		1.26	%		1.45	%		1.19	%		1.15	%
Expenses, net of reimbursements		1.24	%		1.26	%		1.44	%		1.19	%		1.12	%
Net investment income (loss), before reimbursements		2.52	%		1.64	%		2.25	%		2.36	%		2.01	%
Net investment income, net of reimbursements		2.52	%		1.64	%		2.26	%		2.36	%		2.04	%
Portfolio turnover rate		33	%		38	%		41	%		31	%		38	%

^A  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.

^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  Annualized.

^F  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

^G  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

^H  Amounts represents less than $0.01 per share.

42

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Retirement Class						AMR Class																		A Class						C Class
Year Ended October 31,						May 1 to October 31, 2009			Year Ended October 31,															Year Ended October  31, 2011			May 17 to October 31, 2010			Year Ended October  31, 2011			September 1 to October 31, 2010
2011			2010						2011			2010			2009			2008			2007
$	16.71		$	15.20		$	11.78		$	16.78		$	15.61		$	13.25		$	27.54		$	24.86		$	16.40		$	14.14		$	16.39		$	14.82
	0.39			0.22			0.12			0.53			0.39			0.37			0.72			0.73			0.12			0.03			0.07			(0.01	)
	(1.44	)		1.29			3.30			(1.44	)		1.30			2.99			(11.58	)		4.33			(1.14	)		2.23			(1.25	)		1.58
	(1.05	)		1.51			3.42			(0.91	)		1.69			3.36			(10.86	)		5.06			(1.02	)		2.26			(1.18	)		1.57
	(0.22	)		—			—			(0.56	)		(0.52	)		(0.67	)		(0.77	)		(0.56	)		(0.05	)		—			—			—
	—			—			—			—			—			(0.33	)		(2.66	)		(1.82	)		—			—			—			—
	(0.22	)		—			—			(0.56	)		(0.52	)		(1.00	)		(3.43	)		(2.38	)		(0.05	)		—			—			—
	—			—			0.00	H		—			—			0.00	H		0.00	H		0.00	H		—			—			—			—
$	15.44		$	16.71		$	15.20		$	15.31		$	16.78		$	15.61		$	13.25		$	27.54		$	15.33		$	16.40		$	15.21		$	16.39
	(6.37	)%		9.93	%		29.03	%C		(5.62	)%		11.05	%		27.70	%		(44.65	)%		21.86	%		(6.26	)%		15.98	%C		(7.20	)%		10.59	%C
$	1		$	1		$	1		$	388,185		$	469,414		$	431,499		$	328,083		$	672,680		$	461		$	4		$	76		$	1
	3.43	%		1.66	%		1.48	%D		0.45	%		0.46	%		0.48	%		0.41	%		0.42	%		2.24	%		1.26	%E		7.39	%		2.60	%E
	1.30	%		1.47	%		1.48	%D		0.45	%		0.46	%		0.48	%		0.41	%		0.42	%		1.22	%		1.25	%E		1.95	%		1.99	%E
	0.17	%		1.25	%		1.72	%D		3.15	%		2.45	%		3.00	%		3.24	%		2.77	%		1.03	%		0.96	%E		(4.32	)%		(0.81	)%E
	2.30	%		1.44	%		1.72	%D		3.15	%		2.45	%		3.00	%		3.24	%		2.77	%		2.05	%		0.98	%E		1.11	%		(0.20	)%E
	33	%		38	%		41	%F		33	%		38	%		41	%		31	%		38	%		33	%		38	%G		33	%		38	%G

43

American Beacon Funds

Privacy Policy & Federal Tax Information

October 31, 2011 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect 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 Funds, 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 as follows:

Emerging Markets Fund	100.00	%
International Equity Fund	59.53	%

Shareholders will receive notification in January 2012 of the percentage applicable to the preparation of their 2011 income tax returns.

The International Equity Fund designated a foreign tax credit of $4,546,995 and recognized foreign source income of $53,932,956 for the year ended October 31, 2011.

44

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and Advisor Agreement (Unaudited)

Disclosure Regarding Renewal and Approval of Management Agreement and Investment Advisory Agreements

At its May 26, 2011 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 American Beacon Mileage Funds, the American Beacon Select Funds and the American Beacon Master Trust (collectively 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 11, 2011 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 2 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 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.

45

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and Advisor Agreement (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 11, 2011 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 26, 2011 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 26, 2011 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 continued 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; the Manager’s commitment to increasing headcount and training employees in conjunction with product expansion; and efforts made by the Manager to retain key employees.

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.

46

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and 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 the Emerging Markets Fund” and “Additional Considerations and Conclusions with Respect to the International Equity 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 the Emerging Markets Fund” and “Additional Considerations and Conclusions with Respect to the International Equity 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 2010, primarily due to market appreciation.

In addition, the Board noted the Manager’s representation that, many of the Funds enjoy the primary benefit of economies of scale because low comparable fee levels are already reflected in the current level of management & administration fees charged by the Manager, the current fee structure already provides an adequate mechanism for the sharing of economies of scale with shareholders and due to the existing low cost structure of the Funds that further breakpoints are not appropriate at this time. 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 will use the Large Cap Value Fund model in managing its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds 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 and International Equity Funds, the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2010.

47

Disclosure Regarding the Board of Trustees’ Approval of the Investment

Management Agreement and Advisor Agreement (Unaudited)

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 group of comparable mutual funds included in the analysis provided to the Trustees by Lipper, Inc.

Additional Considerations and Conclusions with Respect to the Emerging Markets Fund

In considering the renewal of the Management Agreement, the Trustees considered the following additional factors: (1) the Emerging Markets Fund outperformed the peer universe median for the one-, three-, five-, and ten-year periods ended March 31, 2011; and (2) the expense ratio of the Institutional Class of the Fund ranked better than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreements with TBC, Morgan Stanley Investment Management Inc. (“MSIM”), the Trustees considered the following additional factors: (1) MSIM outperformed the peer universe median for the five- and ten-year periods ended March 31, 2011, but underperformed for the one- and three-year periods; (2) TBC outperformed the peer universe median for the three-, five- and ten-year periods ended March 31, 2011, but underperformed for the one-year period; (3) each of the Fund’s subadvisors has informed the Manager that it uses Fund commissions to obtain proprietary research, the application of which benefits the Fund and each subadvisor’s other clients; and (4) the Manager’s recommendation to continue to retain each subadvisor.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Management and Investment Advisory 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, the Trustees considered the following additional factors: (1) the Fund outperformed the International Funds peer universe median for the three-, five-, and ten-year periods ended March 31, 2011, but underperformed for the one-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, 2011; (2) Causeway outperformed the peer universe median for the one-, three-, five- and ten-year periods ended March 31, 2011; (3) Lazard outperformed the peer universe median for the three-year period ended March 31, 2011, but underperformed for the one-, five-, and ten-year periods; (4) TBC outperformed the peer universe median for the three-year period ended March 31, 2011, but underperformed for the one- and five-year periods; (5) each of the Fund’s subadvisors has informed the Manager that it uses Fund commissions to obtain proprietary research, the application of which benefits the Fund and each subadvisor’s other clients; and (6) the Manager’s recommendation to continue to retain each subadvisor.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Management and Investment Advisory 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.

48

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 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.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (74)	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, Center Point 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 Funds (1996-Present).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (67)	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 (50)	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, Trinity Valley School (2003-2004); Member; Trinity Valley School Endowment Committee (2004-Present); 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 (57)	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 Funds (2008-Present).

49

Trustees and Officers of the American Beacon Funds

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Thomas M. Dunning (69)	Trustee since 2008	Non-Executive Chairman (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); Board Member, Baylor Health Care System Foundation (2007-present); Vice Chair, State Fair of Texas (1987-Present); Board Member, Southwestern Medical Foundation (1994-present); Board Member, John Tower Center for Political Studies/SMU (2008-Present); Board Member, University of Texas Development Board (2008-Present); Board Member, BancTec (2010 – Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-Present); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust Funds (2008-Present).
Richard A. Massman (68)	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 (2007-2011) and Director (2005-2011), The Dallas Opera Foundation; Chairman (2006-2010) and Director (2005-2009), Temple Emanu-El Foundation; Trustee, Presbyterian Healthcare Foundation (2006-Present); Director, The Retina Foundation of the Southwest (2000-Present); Trustee, American Beacon Mileage Funds (2004-Present); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust Funds (2004-Present).
R. Gerald Turner (65) 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 Funds (2001-Present).
Paul J. Zucconi, CPA (71)	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) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community services and products) (2010-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 Funds (2008-Present).

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
OFFICERS Gene L. Needles, Jr. (56)	Term One Year President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President (2009-Present), American Beacon Mileage Funds; President (2009-Present), American Beacon Select Funds; 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.

50

Trustees and Officers of the American Beacon Funds

(Unaudited)

William F. Quinn** (63)	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), CEO (2006-2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman and Director (2008-Present), Lighthouse Holdings, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009), Director, Hicks Acquisition II, Inc. (2010-Present); 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); the Independent Trustee, National Railroad Retirement Investment Trust (2011-Present); Trustee (1995-2008) and President (1995-2007, 2008-2009), American Beacon Mileage Funds; Trustee (1999-2008) and President (1999-2007, 2008-Present), American Beacon Select Funds; Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds, plc (2007-2009).
Rosemary K. Behan (52)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Secretary (2008-Present), Lighthouse Holdings, Inc.; Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney, U.S. Securities and Exchange Commission, (1995-2004).
Brian E. Brett (51)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment adviser) (1996-2004).
Wyatt Crumpler (45)	VP since 2007	Vice President, Asset Management (2009-Present) and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.; Managing Director of Corporate Accounting (2004-2007) and Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Erica Duncan (41)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (57)	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 (50)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.; Treasurer (2010-Present), Lighthouse Holdings, Inc.
Terri L. McKinney (47)	VP since 2010	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), and Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; President, Board of Trustees (2010-Present), Vice-President, Board of Trustees (2008-2010), and Trustee (2006-2008), Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (36)	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).
Samuel J. Silver (48)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (40)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present) and Senior Compliance Analyst (1998-2004), American Beacon Advisors, Inc.

51

Trustees and Officers of the American Beacon Funds

(Unaudited)

John J. Okray (37)	Asst. Secretary since 2010	Assistant General Counsel, American Beacon Advisors, Inc. (2010-Present); Asst. Secretary (2010-Present), Lighthouse Holdings, Inc.; Vice President, Oppenheimer Funds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), Senior Tax Analyst (1999-2004), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.

* 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.

52

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53

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, Retirement, A, and C Classes Call (800) 658-5811 AMR ClassSM 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 State Street Bank and Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data Services Kansas City, Missouri INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Foreside Fund Services, LLC Portland, Maine

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//11

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	2-11
Schedules of Investments:
Balanced Fund	13
Large Cap Growth Fund	21
Mid-Cap Value Fund	24
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.

American Beacon Funds October 31, 2011

  Fellow Shareholders,   Some days it seems the best-kept secret of the past twelve months has been the U.S. equity market’s rise. This rise has occurred despite the ongoing waves of investor concern regarding the U.S. economy’s health and the realization that the European sovereign crisis has yet to find resolution.   With headlines focused on geopolitical and economic risks, the strengthening underlying fundamentals at many publicly traded companies–and their relatively attractive market valuations–have drawn less attention. This near-term myopia can create opportunities for fund companies like ours, where our sub-advisors manage with a longer-term perspective.

The market volatility also highlights the key benefit of our multi-manager approach–a strategy we feel can help smooth performance over time. The performance of our domestic equity funds reflects the results of manager diversification. It also reflects the American Beacon investment philosophy: that portfolios managed with a longer-term perspective tend to be better positioned for riding out episodes of economic and geopolitical turbulence.

For the twelve-month period ended October 31, 2011:

>>American Beacon Balanced Fund (Institutional Class) returned 4.87%

>>American Beacon Large Cap Growth Fund (Institutional Class) generated 4.75%

>>American Beacon Mid-Cap Value Fund (Institutional Class) returned 6.08%

At American Beacon, we remain focused on seeking opportunities and meeting market challenges to deliver the type of consistency in performance and service our shareholders value. We regard your trust in the American Beacon Funds as recognition that we are achieving these goals, and we appreciate your continued investment.

For further details about the growing number of investment opportunities now available within the American Beacon Funds family, please visit our website at www.americanbeaconfunds.com.

	Best Regards,
	Gene L. Needles, Jr.
	President
	American Beacon Funds

1

Domestic Equity Market Overview

October 31, 2011 (Unaudited)

For most of the 12 months ended October 31, 2011, the U.S. equity markets followed an upward path, driven by the strength of corporate balance sheets and robust corporate earnings. This rise occurred despite the volatility that prevailed throughout the world markets, as investors reacted to ongoing political uncertainty about the European sovereign debt crisis and to the inaction of U.S. politicians in addressing the weak domestic economic situation. The overall rise of equities also occurred despite increased correlations among stocks and the actions of worried investors who shifted between risk-seeking and risk-averse strategies.

The relative strength of the equity market lasted until May 2011, when investors turned more risk averse. This shift coincided with the onset of increasingly negative news from Europe and some weaker-than-expected macroeconomic news in the U.S. Meanwhile, policymakers in the U.S. reached an impasse on how to meet the country’s fiscal challenges, which further fed investor worries. A sharp selloff ensued.

Oversold equities rebounded in early October 2011 and received an additional boost late in the month when European policymakers agreed to a framework for addressing the Greek crisis. Consequently, the S&P 500 Index generated its best-performing month in nearly 20 years, pushing its 12-month return into positive territory (+8.1%).

As unsettling as the volatility has been, the S&P 500 Index has outperformed almost all of the major developed and emerging equity markets. Little more than two years ago, the S&P 500 Index bottomed below 700. Since then, it has doubled. That rise has been uneven–investors in small cap stocks have benefited far more than those holding large cap issues. This is especially true for the mega-cap stocks in the Financial, Technology and Health Care sectors. Consider that over the 12-month period ending October 31, 2011, the largest 10% of companies (in terms of market capitalization) in the Russell 1000 Value Index fell 1.4%. The entire universe returned 6.2%.

Overall, the U.S. economy continued to heal. Corporate strength was good, while low interest rates, a depressed dollar and moderately rising employment were supportive of a modest, ongoing recovery. Nevertheless, risk is still part of the equation. Credible action from Washington continues to be elusive and the implementation of Europe’s agreement–and its likelihood of success–remains uncertain. Other geopolitical and economic concerns also remain. Yet, there are a number of positive factors that seem underappreciated by the market at this point:

• A lack of speculation in equities

• Business inventories remain in balance

• Corporate cash levels remain high

• Corporate debt levels are low

• Lackluster economic expectations are already priced into the market

• Dividend payout ratios are low and have significant upside

We believe the dividends and earnings available to owners of equities are generous given current prices. They sufficiently compensate investors for the risks at hand. We remain keenly focused on identifying undervalued franchises with strong balance sheets exhibiting the ability and willingness to return capital to shareholders.

2

Performance Overview

American Beacon Balanced Fund^SM

October 31, 2011 (Unaudited)

The Balanced Fund’s (“Fund”) Institutional Class returned 4.87% for the twelve months ended October 31, 2011. The Fund lagged the 60% Russell 1000^® Value/40% Barclays Capital Aggregate Index (the “Balanced Composite Index”) benchmark return of 6.18% but outperformed the Lipper Mixed-Asset Target Allocation Growth Funds Index return of 4.50%.

Comparison of Change in Value of a $10,000 Investment

For The Period from 10/31/01 through 10/31/11

	Annualized Total Returns									Value of
	Periods Ended 10/31/11									$10,000
	1 Year			5 Years			10 Years			10/31/01- 10/31/11
Institutional Class(1,8)		4.87	%		1.54	%		5.68	%	$	17,380
Y Class(1,3,8)		4.73	%		1.50	%		5.66	%		17,345
Investor Class(1,8)		4.52	%		1.24	%		5.38	%		16,891
Advisor Class(1,2,8)		4.33	%		1.04	%		5.22	%		16,630
A Class with sales charge (1,4,8)		-1.64	%		0.03	%		4.75	%		15,908
A Class without sales charge(1,4,8)		4.37	%		1.22	%		5.37	%		16,872
C Class with sales charge (1,5,8)		2.65	%		1.02	%		5.27	%		16,706
C Class without sales charge(1,5,8)		3.65	%		1.02	%		5.27	%		16,706
AMR Class(1,8)		5.09	%		1.80	%		5.96	%		17,841
Balanced Composite Index(6)		6.18	%		1.75	%		5.31	%		16,781
Russell 1000 Value Index (7)		6.16	%		-2.05	%		4.57	%		15,636
Barclays Capital Aggregate Index(7)		5.00	%		6.41	%		5.46	%		17,013
Lipper Mixed-Asset Target Allocation Growth Funds Index (7)		4.50	%		2.12	%		5.15	%		16,523

1. Performance shown is historical and is not 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 10/31/01 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 10/31/01. 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 five-year and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01.

4. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. A Class has a maximum sales charge of 5.75%.

5. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. 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 and Russell 1000 Index are a registered trade marks 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 0.59%, 0.69%, 0.94%, 1.10%, 1.09%, 1.87%, and 0.34%, 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.

3

Performance Overview

American Beacon Balanced Fund^SM

October 31, 2011 (Unaudited)

During the twelve-month period, the Fund’s assets on average were invested 65% in equities (including equitized cash) and 35% in fixed-income securities, ending the period with the same allocation.

The equity portion of the Fund (excluding equitized cash) returned 4.3%, underperforming the Russell 1000^® Value Index (the “Index”) return of 6.16%. The Fund’s equities underperformed the Index primarily due to security selection as sector allocation detracted minimal value from relative returns. The Fund’s holdings in the Financials, Information Technology and Industrials sectors detracted the most value relative to the Index. Hartford Financial Services (down 21.8%), ACE (up 21.7%) and Citigroup (down 28.7%) had the greatest negative impact on relative returns in the Financials sector. Hewlett Packard (down 33.9%) and Cisco Systems (down 18.0%) were the largest detractors from performance in the Information Technology sector. In the Industrials sector, PACCAR (down 16.1%) and Raytheon (down 1.3%) hurt performance the most.

A significant overweight in the Information Technology sector detracted value relative to the Index through sector allocation. On average, the Fund’s allocation to the Consumer Staples sector positively impacted the Fund’s returns.

The fixed-income portion of the Fund returned 6.0% for the period, outperforming the Barclays Capital Aggregate Index (the “Barclays Index”) return of 5.0%. An overweight in Corporates, one of the better performing sectors in the Barclays Index, contributed to the Fund’s performance through sector allocation as did an allocation to longer duration U.S. Treasuries that performed well as interest rates declined. 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 Equity Holdings

	% of Net Assets
JPMorgan Chase & Co.		2.1	%
ConocoPhillips		1.7	%
Wells Fargo & Co.		1.7	%
Bank of America Corp.		1.1	%
Hewlett-Packard Co.		1.3	%
Pfizer, Inc.		1.4	%
Vodafone Group plc		1.3	%
Microsoft Corp.		1.3	%
Johnson & Johnson		1.1	%
BP plc		1.0	%

Sector Allocation

	% of Equities
Financials		25.1	%
Energy		12.7	%
Information Technology		12.0	%
Health Care		10.9	%
Consumer Discretionary		9.6	%
Industrials		8.7	%
Consumer Staples		8.4	%
Telecommunication Services		5.2	%
Utilities		5.0	%
Materials		2.4	%

Sector Allocation

	% of Fixed Income
Corporate		45.0	%
Mortgage-Backed		24.5	%
Agency		15.4	%
U.S. Treasury		8.2	%
Commercial Mortgage Backed Securities		3.0	%
Asset-Backed		1.8	%
Municipal Obligations		1.0	%
Industrials		0.8	%
Other Government Obligations		0.3	%

4

Performance Overview

American Beacon Large Cap Growth Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the Large Cap Growth Fund (“Fund”) returned 4.75% for the twelve months ended October 31, 2011, trailing both the Russell 1000^® Growth Index (the “Index”) return of 9.92% and the Lipper Large-Cap Growth Funds Index return of 6.34%.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/01 through 10/31/11

	Annualized Total Returns Periods Ended 10/31/11									Value of $10,000 10/31/01- 10/31/11
	1 Year			5 Years			10 Years
Institutional Class(1,6)		4.75	%		-1.28	%		1.52	%	$	11,633
Y Class(1,2,6)		4.58	%		-1.35	%		1.49	%		11,594
A Class with sales Charge(1,3,6)		-1.78	%		-2.57	%		0.86	%		10,889
A Class without sales charge (1,3,6)		4.29	%		-1.41	%		1.46	%		11,562
C Class with sales Charge(1,4,6)		2.78	%		-1.54	%		1.39	%		11,486
C Class without sales charge (1,4,6)		3.78	%		-1.54	%		1.39	%		11,486
AMR Class(1,6)		5.13	%		-0.98	%		1.77	%		11,914
Russell 1000 Growth Index(5)		9.92	%		3.04	%		3.56	%		14,183
Lipper Large-Cap Growth Funds Index(5)		6.34	%		1.97	%		2.65	%		12,993

1. Performance shown is historical and is not 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 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 five-year, and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/01 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 five-year, and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01. A Class has a maximum sales charge of 5.75%.

4. Fund performance for the five-year, and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01. 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%, 1.07%, 1.50%, 2.54%, and 0.70%, 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 primarily due to the impact of the cash equitization process^A, which detracted from relative returns due to several exceedingly large cash inflows coinciding with days of extreme market downturns. Excluding the impact from the equitization of cash, the Fund slightly outperformed the Index through stock selection as sector allocation detracted value relative to the Index.

Excluding the impact from equitization of cash, most of the Fund’s excess performance was attributed to holdings in the Consumer Discretionary, Industrials and Health Care sectors. Nike (up 4.1%), Cheesecake Factory (up 3.8%) and Coach (up 37.1%) were the largest contributors in the Consumer Discretionary sector. Eaton (down 7.3%) and Norfolk Southern (up 10.1%) added the most relative value to performance in the Industrials sector. In the Health Care sector, UnitedHealth Group (up 37.3%) and Shire (up 40.4%) generated the most positive Fund returns. The

5

Performance Overview

American Beacon Large Cap Growth Fund^SM

October 31, 2011 (Unaudited)

aforementioned good performance was somewhat offset by poor stock selection in the Financials sector where CB Richard Ellis Group (down 63.4%) and Ameriprise Financial (down 4.6%) were the largest detractors.

Underweight positions in Energy and Consumer Staples, two of the better performing sectors in the Index, detracted value relative to the Index through sector allocation. An overweight in the Industrials sector also hurt performance.

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.

^A. The Fund’s excess cash balances are invested in equity index futures contracts on a daily basis to gain market exposure. The Fund may invest cash allocated to securities purchases simultaneously in futures contracts until the cash is delivered to settle the securities transactions. Because the Fund may have market exposure in both the invested securities and futures contracts, the Fund may have more than 100% of its assets exposed to the markets. This can magnify gains and losses in the Fund.

Top Ten Holdings

	% of Net Assets
Apple, Inc.		3.1	%
Union Pacific Corp.		2.6	%
Google, Inc.		2.4	%
Danaher Corp.		2.4	%
UnitedHealth Group, Inc.		2.2	%
EMC Corp.		2.1	%
Oracle Corp.		2.1	%
Monsanto Co.		1.9	%
Intuit, Inc.		1.5	%
Qualcomm, Inc.		1.5	%

Sector Allocation

		% of Equities
Information Technology	��		31.5	%
Consumer Discretionary			19.0	%
Industrials			16.3	%
Health Care			12.8	%
Energy			8.7	%
Materials			4.6	%
Financials			4.5	%
Consumer Staples			1.7	%
Telecommunication Services			0.9	%

6

Performance Overview

American Beacon Mid-Cap Value Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the Mid-Cap Value Fund (“Fund”) returned 6.08% for the twelve months ended October 31, 2011. The Fund outperformed the Russell Midcap^® Value Index (the “Index”) return of 5.83% and the Lipper Mid-Cap Value Funds Index return of 3.66%.

Comparison of Change in Value of a $10,000 Investment

For the Period from 6/30/04* through 10/31/11

* Inception of Fund

	Annualized Total Returns Periods Ended 10/31/11									Value  of $10,000 6/30/04- 10/31/11
	1 Year			5 Years			Since Incep. (6/30/04)
Institutional Class(1,3,9)		6.08	%		1.09	%		5.47	%	$	14,781
Y Class(1,4,9)		5.98	%		1.07	%		5.46	%		14,768
Investor Class (1,2,9)		6.49	%		0.95	%		5.35	%		14,653
Advisor Class (1,5,9)		5.65	%		0.74	%		5.20	%		14,502
A Class with sales charge (1,6,9)		-0.57	%		-0.47	%		4.33	%		13,651
A Class without sales charge (1,6,9)		5.49	%		0.72	%		5.18	%		14,484
C Class with sales charge (1,7,9)		3.64	%		0.55	%		5.06	%		14,367
C Class without sales charge (1,7,9)		4.64	%		0.55	%		5.06	%		14,367
AMR Class (1,9)		6.20	%		1.23	%		5.60	%		14,913
Russell Midcap Value Index(8)		5.83	%		0.73	%		8.76	%		15,546
Lipper Mid-Cap Value Funds Index(8)		3.66	%		1.00	%		4.76	%		14,071

1. Performance shown is historical and is not 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 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 since inception period 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 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. 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

7

Performance Overview

American Beacon Mid-Cap Value Fund^SM

October 31, 2011 (Unaudited)

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 1.07%, 1.06%, 1.28%, 1.56%, 1.52%, 2.43%, and 0.78%, 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 outperformed the Index by generating excess returns through stock selection, as sector allocation detracted value relative to the Index.

Most of the Fund’s excess performance was due to holdings in the Health Care and Financials sectors. Zimmer Holdings (up 36.0%), Aetna (up 46.2%) and Immucor (up 51.6%) were the largest contributors to performance in the Health Care sector. In the Financials sector, Willis Group Holdings (up 14.4%), Capital One Financial (up 19.8%) and Chubb (up 14.2%) generated the most positive returns. The aforementioned good performance was somewhat offset by poor stock selection in the Consumer Staples sector where Avon Products (down 38.2%) and Sysco (down 13.4%) detracted relative value.

An overweight position in Information Technology, the second worst performing sector in the Index, detracted relative value from performance through sector allocation. Significant underweightings in Utilities, the best performing sector in the Index, and in the Energy sector also detracted from the Fund’s returns. An overweight in the Health Care sector generated positive Fund returns.

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
Fifth Third Bancorp		2.1	%
L-3 Communications Holdings, Inc.		1.8	%
Molex, Inc.		1.5	%
International Game Technology		1.4	%
Molson Coors Brewing Co., Class B		1.4	%
Avnet, Inc.		1.4	%
Royal Caribbean Cruises Ltd.		1.3	%
Willis Group Holdings plc		1.3	%
Rent-A-Center, Inc.		1.2	%
Masco Corp.		1.2	%

Sector Allocation

	% of Equities
Financials		27.6	%
Industrials		17.3	%
Consumer Discretionary		13.8	%
Information Technology		9.5	%
Utilities		8.7	%
Health Care		6.6	%
Materials		6.4	%
Consumer Staples		5.2	%
Energy		4.9	%

8

Fund Expenses

October 31, 2011 (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, 2011 through October 31, 2011.

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.

Institutional Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	956.23		$	886.79		$	891.03
Expenses Paid During Period 5/1/11-10/31/11 *	$	2.91		$	5.61		$	4.62
Annualized Expense Ratio		0.59	%		1.18	%		0.97	%

Y Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	954.76		$	885.18		$	890.01
Expenses Paid During Period 5/1/11-10/31/11 *	$	4.53		$	7.89		$	1.05
Annualized Expense Ratio		0.92	%		1.66	%		0.22	%

Investor Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	954.76		$	890.01
Expenses Paid During Period 5/1/11-10/31/11 *	$	4.53		$	1.05
Annualized Expense Ratio		0.92	%		0.22	%
Advisor Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	954.18		$	889.30
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.37		$	7.14
Annualized Expense Ratio		1.09	%		1.50	%

A Class	Balanced Fund			Large  Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	953.95		$	886.30		$	888.17
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.47		$	7.70		$	7.09
Annualized Expense Ratio		1.11	%		1.62	%		1.49	%

9

Fund Expenses

October 31, 2011 (Unaudited)

C Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	950.98		$	883.04		$	885.19
Expenses Paid During Period 5/1/11-10/31/11 *	$	8.95		$	10.77		$	10.64
Annualized Expense Ratio		1.82	%		2.27	%		2.24	%

AMR Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/2011	$	957.51		$	889.05		$	891.03
Expenses Paid During Period 5/1/11-10/31/11 *	$	1.63		$	3.81		$	4.24
Annualized Expense Ratio		0.33	%		0.80	%		0.89	%

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.

Institutional Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,022.23		$	1,019.26		$	1,020.32
Expenses Paid During Period 5/1/11-10/31/11 *	$	3.01		$	6.01		$	4.94
Annualized Expense Ratio		0.59	%		1.18	%		0.97	%

Y Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,020.57		$	1,016.84		$	1,024.10
Expenses Paid During Period 5/1/11-10/31/11 *	$	4.69		$	8.44		$	1.12
Annualized Expense Ratio		0.92	%		1.66	%		0.22	%

Investor Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,020.57		$	1,024.10
Expenses Paid During Period 5/1/11-10/31/11 *	$	4.69		$	1.12
Annualized Expense Ratio		0.92	%		0.22	%

Advisor Class	Balanced Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,019.71		$	1,017.64
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.55		$	7.63
Annualized Expense Ratio		1.09	%		1.50	%

10

Fund Expenses

October 31, 2011 (Unaudited)

A Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,019.61		$	1,017.04		$	1,017.69
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.65		$	8.24		$	7.58
Annualized Expense Ratio		1.11	%		1.62	%		1.49	%

C Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,016.03		$	1,013.76		$	1,013.91
Expenses Paid During Period 5/1/11-10/31/11 *	$	9.25		$	11.52		$	11.37
Annualized Expense Ratio		1.82	%		2.27	%		2.24	%

AMR Class	Balanced Fund			Large Cap Growth Fund			Mid-Cap Value Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,023.54		$	1,021.17		$	1,020.72
Expenses Paid During Period 5/1/11-10/31/11 *	$	1.68		$	4.08		$	4.53
Annualized Expense Ratio		0.33	%		0.80	%		0.89	%

* 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.

11

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 schedules 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, 2011, 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 financial highlights for 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, 2011, 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, 2011, 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 29, 2011

12

American Beacon Balanced Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
COMMON STOCK - 53.98%
CONSUMER DISCRETIONARY - 4.89%
Auto Components - 0.45%
Johnson Controls, Inc.		64,400	$	2,120
Magna International, Inc.		46,200		1,763
				3,883
Automobiles - 0.40%
General Motors Co.A		133,600		3,454
Hotels, Restaurants & Leisure - 0.49%
Carnival Corp.		108,100		3,806
Wyndham Worldwide Corp.		11,700		394
				4,200
Household Durables - 0.32%
D.R. Horton, Inc.		134,500		1,497
Lennar Corp., Class A		77,400		1,280
				2,777
Media - 1.20%
CBS Corp., Class BB		69,700		1,799
Comcast Corp., Class A		144,300		3,319
Comcast Corp. - Class A		76,300		1,789
The Interpublic Group of Cos., Inc.		189,200		1,794
Time Warner Cable, Inc.		23,900		1,522
				10,223
Multiline Retail - 0.52%
JC Penney Co. Inc.		91,200		2,926
Target Corp.		27,950		1,530
				4,456
Specialty Retail - 1.51%
Best Buy Co. Inc.		76,300		2,001
RadioShack Corp.		73,400		874
Staples, Inc.		118,600		1,774
The Gap, Inc.		356,300		6,735
The Home Depot, Inc.		40,650		1,455
				12,839
Total Consumer Discretionary				41,832
CONSUMER STAPLES - 4.56%
Beverages - 1.14%
Diageo plc, ADRC		56,900		4,716
PepsiCo, Inc.		79,600		5,011
				9,727
Food & Drug Retailing - 1.57%
CVS Caremark Corp.		90,200		3,274
Safeway, Inc.		65,700		1,273
The Kroger Co.		75,300		1,745
Wal-Mart Stores, Inc.		126,000		7,147
				13,439
Food Products - 0.08%
Kraft Foods, Inc., Class A		20,500		721
Household Products - 0.08%
Kimberly-Clark Corp.		10,100		704
Tobacco - 1.69%
Altria Group, Inc.		94,400		2,601
Imperial Tobacco Group plc, ADRC		67,400		4,920
Philip Morris International, Inc.		97,800		6,833
				14,354
Total Consumer Staples				38,945

	Shares		Fair Value
			(000’s)
ENERGY - 6.89%
Energy Equipment & Services - 0.12%
Cobalt International Energy, Inc.A		98,900	$	1,021
Oil & Gas - 6.77%
BP plc, ADRC		188,900		8,345
Chevron Corp.		44,628		4,688
ConocoPhillips		207,576		14,457
Exxon Mobil Corp.		35,300		2,757
Marathon Oil Corp.		108,400		2,822
Marathon Petroleum Corp.		24,250		871
Occidental Petroleum Corp.		58,000		5,390
Royal Dutch Shell plc, ADRC		116,500		8,317
Spectra Energy Corp.		216,400		6,195
Total S.A., ADRC		77,200		4,038
				57,880
Total Energy				58,901
FINANCIALS - 13.64%
Banks - 4.79%
Bank of America Corp.		1,428,080		9,753
Fifth Third Bancorp		127,700		1,534
KeyCorp		227,957		1,609
PNC Financial Services Group, Inc.		140,358		7,539
SunTrust Banks, Inc.		171,400		3,382
The Bank of New York Mellon Corp.		83,400		1,775
Wells Fargo & Co.		551,398		14,286
Zions Bancorporation		62,200		1,080
				40,958
Diversified Financials - 5.25%
American Express Co.		111,900		5,664
Capital One Financial Corp.		106,500		4,863
Citigroup, Inc.		187,670		5,928
JPMorgan Chase & Co.		516,334		17,949
Morgan Stanley		274,500		4,842
SLM Corp.		151,300		2,068
State Street Corp.		45,500		1,838
The Goldman Sachs Group, Inc.		16,300		1,786
				44,938
Insurance - 2.93%
ACE Ltd.		26,400		1,905
American International Group, Inc.		118,100		2,916
Genworth Financial, Inc., Class A		69,400		443
Hartford Financial Services Group, Inc.		93,800		1,806
Lincoln National Corp.		28,800		549
MetLife, Inc.		169,388		5,955
Prudential Financial, Inc.		13,400		726
The Allstate Corp.		201,300		5,302
The Travelers Cos., Inc.		32,900		1,920
XL Group plc		162,200		3,526
				25,048
Real Estate - 0.67%
Annaly Capital Management, Inc.D		216,600		3,649
Chimera Investment Corp.D		686,572		2,067
				5,716
Total Financials				116,660
HEALTH CARE - 5.93%
Biotechnology - 0.38%
Amgen, Inc.		57,200		3,276

See accompanying notes

13

American Beacon Balanced Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Health Care Equipment & Supplies - 0.98%
Baxter International, Inc.		86,600	$	4,762
Covidien plc		8,700		409
Medtronic, Inc.		92,200		3,203
				8,374
Health Care Providers & Services - 0.56%
Quest Diagnostics, Inc.		28,800		1,607
WellPoint, Inc.		46,600		3,211
				4,818
Pharmaceuticals - 4.01%
Eli Lilly & Co.		55,500		2,062
Johnson & Johnson		146,900		9,459
Merck & Co. Inc.		203,976		7,037
Novartis AG, ADRC		30,700		1,734
Pfizer, Inc.		625,054		12,038
Sanofi, ADRC		53,700		1,920
				34,250
Total Health Care				50,718
INDUSTRIALS - 4.72%
Aerospace & Defense - 1.60%
Huntington Ingalls Industries, Inc.A		6,550		193
Lockheed Martin Corp.		55,500		4,212
Northrop Grumman Corp.		41,100		2,374
Raytheon Co.		91,600		4,048
The Boeing Co.		42,900		2,822
				13,649
Air Freight & Couriers - 0.28%
FedEx Corp.		29,700		2,430
Industrial Conglomerates - 1.58%
3M Co.		39,700		3,137
General Electric Co.		377,300		6,305
Honeywell International, Inc.		77,900		4,082
				13,524
Machinery - 1.26%
Cummins, Inc.		20,900		2,078
Illinois Tool Works, Inc.		49,600		2,412
ITT Corp.		70,600		3,220
PACCAR, Inc.		70,400		3,044
				10,754
Total Industrials				40,357
INFORMATION TECHNOLOGY - 6.51%
Communications Equipment - 0.73%
Cisco Systems, Inc.		182,000		3,373
Corning, Inc.		198,400		2,835
				6,208
Computers & Peripherals - 2.93%
Apple, Inc.		10,910		4,416
Hewlett-Packard Co.		408,700		10,875
International Business Machines Corp.		35,100		6,481
Seagate Technology plc		208,000		3,359
				25,131
Electronic Equipment & Instruments - 0.51%
Avnet, Inc.		87,400		2,649
TE Connectivity Ltd.		47,225		1,679
				4,328

	Shares		Fair Value
			(000’s)
Semiconductor Equipment & Products - 0.23%
Intel Corp.		79,200	$	1,944
Software - 2.11%
CA, Inc.		188,774		4,089
Microsoft Corp.		404,900		10,782
Oracle Corp.		95,700		3,136
				18,007
Total Information Technology				55,618
MATERIALS - 1.28%
Chemicals - 0.58%
Air Products & Chemicals, Inc.		15,100		1,301
EI du Pont de Nemours & Co.		36,000		1,730
PPG Industries, Inc.		9,400		812
The Dow Chemical Co.		40,800		1,138
				4,981
Metals & Mining - 0.70%
ArcelorMittal		80,230		1,663
Newmont Mining Corp.		48,500		3,241
United States Steel Corp.		40,800		1,035
				5,939
Total Materials				10,920
TELECOMMUNICATION SERVICES - 2.84%
Diversified Telecommunication Services - 1.50%
AT&T, Inc.		283,177		8,299
Verizon Communications, Inc.		121,108		4,479
				12,778
Wireless Telecommunication Services - 1.34%
Vodafone Group plc, ADRC		413,000		11,498
Total Telecommunication Services				24,276
UTILITIES - 2.72%
Electric Utilities - 2.57%
CenterPoint Energy, Inc.		198,000		4,126
Dominion Resources, Inc.		89,900		4,639
Edison International		53,600		2,176
Entergy Corp.		19,500		1,349
Exelon Corp.		95,700		4,248
PPL Corp.		47,700		1,401
Public Service Enterprise Group, Inc.		121,300		4,088
				22,027
Multi-Utilities - 0.15%
Duke Energy Corp.		36,480		745
Xcel Energy, Inc.		19,400		501
				1,246
Total Utilities				23,273
Total Common Stock (Cost $460,376)				461,500
PREFERRED STOCK - 0.30% (Cost $3,130)
CONSUMER DISCRETIONARY - 0.30%
General Motors Co.		62,400		2,593
	Par Amount		Fair Value
	(000’s)		(000’s)
CORPORATE OBLIGATION - 14.77%
Finance - 6.89%
AEGON Funding Co. LLC,
5.75%, Due 12/15/2020E	$	350		379

See accompanying notes

14

American Beacon Balanced Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
Aflac, Inc.,
8.50%, Due 5/15/2019	$	170	$	213
American Express Co.,
8.15%, Due 3/19/2038		200		287
American Express Credit Corp.,
5.125%, Due 8/25/2014		570		619
2.75%, Due 9/15/2015		150		152
American International Group, Inc.,
6.40%, Due 12/15/2020		625		655
ANZ National International Ltd.,
2.375%, Due 12/21/2012F		350		354
Bank of America Corp.,
4.50%, Due 4/1/2015		270		267
6.50%, Due 8/1/2016		2,090		2,174
7.80%, Due 9/15/2016		700		741
7.625%, Due 6/1/2019		925		1,005
Bank One Corp.,
4.90%, Due 4/30/2015		250		266
Barclays Bank plc,
3.90%, Due 4/7/2015		330		336
6.75%, Due 5/22/2019		350		401
BNP Paribas S.A.,
3.60%, Due 2/23/2016		320		319
Canadian Imperial Bank of Commerce,
1.45%, Due 9/13/2013		410		412
Capital One Financial Corp.,
2.125%, Due 7/15/2014		335		335
Citigroup, Inc.,
1.302%, Due 4/1/2014G		300		289
6.375%, Due 8/12/2014		920		993
0.548%, Due 11/5/2014G		320		299
6.01%, Due 1/15/2015		420		452
6.125%, Due 11/21/2017		295		325
8.50%, Due 5/22/2019		1,300		1,609
CME Group, Inc.,
5.40%, Due 8/1/2013		260		278
CNA Financial Corp.,
7.35%, Due 11/15/2019		245		270
Cooperatieve Centrale Raiffeisen- Boerenleenbank BA,
4.20%, Due 5/13/2014F		200		212
2.125%, Due 10/13/2015		340		343
Credit Suisse,
5.30%, Due 8/13/2019		325		349
Danske Bank A/S,
1.451%, Due 4/14/2014F G		620		596
Deutsche Bank AG,
3.875%, Due 8/18/2014		325		336
Fifth Third Bancorp,
3.625%, Due 1/25/2016		325		333
8.25%, Due 3/1/2038		1,900		2,312
General Electric Capital Corp.,
0.957%, Due 6/2/2014G		1,595		1,556
0.591%, Due 1/8/2016G		1,125		1,047
5.40%, Due 2/15/2017		300		334
5.625%, Due 5/1/2018		655		724
6.00%, Due 8/7/2019		350		398
5.50%, Due 1/8/2020		250		279
5.30%, Due 2/11/2021		170		181
5.875%, Due 1/14/2038		505		542
HCP, Inc., 5.375%, Due 2/1/2021		355		365
Health Care REIT, Inc.,
3.625%, Due 3/15/2016D		185		181

	Par Amount		Fair Value
	(000’s)		(000’s)
5.25%, Due 1/15/2022D	$	250	$	239
HSBC Finance Corp.,
0.653%, Due 1/15/2014G		1,050		979
ING Bank N.V., 5.125%, Due 5/1/2015F		450		449
JPMorgan Chase & Co.,
1.216%, Due 1/24/2014G		1,375		1,366
3.70%, Due 1/20/2015		1,080		1,125
5.50%, Due 10/15/2040		325		348
JPMorgan Chase Bank NA,
0.668%, Due 6/13/2016G		415		376
KeyCorp,
5.10%, Due 3/24/2021		140		146
Liberty Mutual Group, Inc.,
5.00%, Due 6/1/2021F		280		264
Liberty Mutual Insurance Co.,
7.875%, Due 10/15/2026F		1,500		1,690
Lincoln National Corp.,
4.75%, Due 2/15/2014		245		258
Lloyds TSB Bank plc,
4.375%, Due 1/12/2015F		325		326
6.375%, Due 1/21/2021		185		198
Merrill Lynch & Co. Inc,
6.40%, Due 8/28/2017		795		806
6.50%, Due 7/15/2018		260		258
6.11%, Due 1/29/2037		365		321
MetLife Institutional Funding II,
1.274%, Due 4/4/2014FG		600		598
MetLife, Inc.,
5.00%, Due 11/24/2013		440		470
6.375%, Due 6/15/2034		350		427
Monumental Global Funding III,
0.603%, Due 1/15/2014F G		325		316
Morgan Stanley,
0.691%, Due 1/9/2014G		2,860		2,636
0.883%, Due 10/15/2015G		920		808
7.30%, Due 5/13/2019		350		376
5.625%, Due 9/23/2019		350		346
5.50%, Due 7/28/2021		805		786
National Australia Bank Ltd.,
4.375%, Due 12/10/2020F		325		336
Nordea Bank AB,
2.50%, Due 11/13/2012F		350		354
4.875%, Due 1/27/2020F		300		322
PNC Funding Corp.,
4.25%, Due 9/21/2015		535		577
4.375%, Due 8/11/2020		330		348
Pricoa Global Funding I,
5.40%, Due 10/18/2012F		175		182
Prudential Financial, Inc.,
7.375%, Due 6/15/2019		300		364
Simon Property Group LP,
5.75%, Due 12/1/2015		445		499
10.35%, Due 4/1/2019H		325		442
Societe Generale S.A.,
2.20%, Due 9/14/2013F		300		288
1.441%, Due 4/11/2014F G		900		819
State Street Corp.,
4.30%, Due 5/30/2014		215		232
2.875%, Due 3/7/2016		505		522
SunTrust Banks, Inc.,
3.60%, Due 4/15/2016		175		179
The Bank of New York Mellon Corp.,
1.50%, Due 1/31/2014		335		338

See accompanying notes

15

American Beacon Balanced Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
4.30%, Due 5/15/2014	$	290	$	314
The Bear Stearns Cos. LLC,
7.25%, Due 2/1/2018E		1,640		1,931
The Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		725		768
6.25%, Due 9/1/2017		650		703
5.95%, Due 1/18/2018		345		363
6.00%, Due 6/15/2020		175		184
6.75%, Due 10/1/2037		2,080		1,998
The Travelers Cos., Inc.,
3.90%, Due 11/1/2020		160		167
Travelers Property Casualty Corp.,
5.00%, Due 3/15/2013		565		593
UBS AG,
5.875%, Due 12/20/2017		325		356
UnitedHealth Group, Inc.,
4.875%, Due 2/15/2013		480		502
3.875%, Due 10/15/2020		325		342
6.625%, Due 11/15/2037		1,590		2,029
US Bancorp,
1.375%, Due 9/13/2013		415		419
2.20%, Due 11/15/2016		340		343
Wachovia Corp.,
0.773%, Due 10/15/2016G		650		567
5.75%, Due 2/1/2018		950		1,079
Wells Fargo & Co.,
4.60%, Due 4/1/2021		335		358
Westpac Banking Corp.,
2.25%, Due 11/19/2012		330		335
Willis North America, Inc.,
6.20%, Due 3/28/2017		255		279
				58,862
Industrials - 6.46%
Air Products & Chemicals, Inc.,
2.00%, Due 8/2/2016		135		138
Altria Group, Inc.,
9.70%, Due 11/10/2018		280		376
4.75%, Due 5/5/2021		310		334
America Movil SAB de CV,
6.375%, Due 3/1/2035		350		417
American Honda Finance Corp.,
4.625%, Due 4/2/2013F		425		444
3.875%, Due 9/21/2020F		150		155
Analog Devices, Inc.,
3.00%, Due 4/15/2016		330		346
Anheuser-Busch InBev Worldwide, Inc.,
5.00%, Due 4/15/2020		330		383
8.00%, Due 11/15/2039		125		191
Apache Corp.,
5.10%, Due 9/1/2040		170		197
Applied Materials, Inc.,
2.65%, Due 6/15/2016		300		309
AT&T, Inc.,
5.10%, Due 9/15/2014		605		672
5.50%, Due 2/1/2018		775		900
6.80%, Due 5/15/2036		150		189
6.40%, Due 5/15/2038		175		213
5.35%, Due 9/1/2040		253		276
Baxter International, Inc.,
1.80%, Due 3/15/2013		205		208
Becton Dickinson and Co.,
3.25%, Due 11/12/2020		330		338
BP Capital Markets plc,

	Par Amount		Fair Value
	(000’s)		(000’s)
3.20%, Due 3/11/2016	$	750	$	788
3.561%, Due 11/1/2021		230		233
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018E		425		493
7.95%, Due 8/15/2030E		205		290
5.75%, Due 5/1/2040E		170		201
Cameron International Corp.,
6.375%, Due 7/15/2018		135		160
Canadian National Railway Co.,
5.55%, Due 5/15/2018		350		415
Canadian Natural Resources Ltd.,
6.25%, Due 3/15/2038		365		458
Caterpillar Financial Services Corp.,
6.125%, Due 2/17/2014		460		512
2.75%, Due 6/24/2015		340		353
Cellco Partnership,
8.50%, Due 11/15/2018		320		433
Cliffs Natural Resources, Inc.,
4.875%, Due 4/1/2021		225		225
Comcast Cable Communications Holdings, Inc.,
8.375%, Due 3/15/2013		128		141
Comcast Corp.,
6.30%, Due 11/15/2017		425		502
5.875%, Due 2/15/2018		270		314
6.45%, Due 3/15/2037		2,630		3,144
6.55%, Due 7/1/2039		350		430
ConocoPhillips,
4.60%, Due 1/15/2015		250		275
5.20%, Due 5/15/2018		425		492
Cooper US, Inc.,
2.375%, Due 1/15/2016		330		336
3.875%, Due 12/15/2020		250		264
Covidien International Finance S.A.,
2.80%, Due 6/15/2015		290		300
CSX Corp.,
5.50%, Due 4/15/2041		325		370
CVS Caremark Corp.,
3.25%, Due 5/18/2015		170		180
Daimler Finance North America LLC,
3.00%, Due 3/28/2016E F		160		161
DIRECTV Holdings LLC,
3.55%, Due 3/15/2015E		380		398
6.35%, Due 3/15/2040E		140		167
Eaton Corp.,
5.60%, Due 5/15/2018		300		350
Ensco plc,
4.70%, Due 3/15/2021		250		263
EOG Resources, Inc.,
2.50%, Due 2/1/2016		325		334
Express Scripts, Inc.,
6.25%, Due 6/15/2014		370		409
France Telecom S.A.,
4.375%, Due 7/8/2014		215		232
2.125%, Due 9/16/2015		150		151
Genzyme Corp.,
5.00%, Due 6/15/2020		190		215
GlaxoSmithKline Capital, Inc.,
5.65%, Due 5/15/2018		250		300
Hewlett-Packard Co.,
2.20%, Due 12/1/2015		325		326
6.00%, Due 9/15/2041		1,885		2,150
Husky Energy, Inc.,

See accompanying notes

16

American Beacon Balanced Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
5.90%, Due 6/15/2014	$	190	$	208
Intel Corp., 3.30%, Due 10/1/2021		215		222
International Business Machines Corp.,
7.625%, Due 10/15/2018		615		822
John Deere Capital Corp.,
4.90%, Due 9/9/2013		470		504
Johnson Controls, Inc.,
1.75%, Due 3/1/2014		565		570
5.00%, Due 3/30/2020		320		353
Kellogg Co.,
4.25%, Due 3/6/2013		500		522
Koninklijke Philips Electronics N.V.,
5.75%, Due 3/11/2018		305		355
Lorillard Tobacco Co.,
8.125%, Due 6/23/2019		275		331
Marathon Oil Corp.,
6.00%, Due 10/1/2017		365		424
Marathon Petroleum Corp.,
3.50%, Due 3/1/2016F		335		344
McKesson Corp.,
3.25%, Due 3/1/2016		160		170
Medtronic, Inc.,
3.00%, Due 3/15/2015		720		764
Norfolk Southern Corp.,
5.75%, Due 4/1/2018		425		499
Northrop Grumman Corp.,
5.05%, Due 8/1/2019		150		169
Novartis Capital Corp.,
2.90%, Due 4/24/2015		550		584
PepsiCo, Inc.,
2.50%, Due 5/10/2016		425		442
Petrobras International Finance Co.,
3.875%, Due 1/27/2016		340		348
6.875%, Due 1/20/2040		115		133
Petroleos Mexicanos,
6.00%, Due 3/5/2020		325		362
Quest Diagnostics, Inc.,
4.75%, Due 1/30/2020		150		161
Rio Tinto Finance USA Ltd.,
2.50%, Due 5/20/2016		335		344
Rogers Communications, Inc.,
5.50%, Due 3/15/2014		325		353
Sanofi,
1.625%, Due 3/28/2014		485		494
4.00%, Due 3/29/2021		355		389
Shell International Finance BV,
3.10%, Due 6/28/2015		340		362
Teck Resources Ltd.,
6.00%, Due 8/15/2040		145		159
Telecom Italia Capital S.A.,
4.95%, Due 9/30/2014		175		172
Telefonica Emisiones SAU,
3.992%, Due 2/16/2016		180		177
6.421%, Due 6/20/2016		350		375
Teva Pharmaceutical Finance II,
3.00%, Due 6/15/2015		335		351
The Boeing Co.,
1.875%, Due 11/20/2012		350		355
The Coca-Cola Co.,
0.75%, Due 11/15/2013		735		737
1.80%, Due 9/1/2016F		175		175
The Dow Chemical Co.,
7.60%, Due 5/15/2014		170		193

	Par Amount		Fair Value
	(000’s)		(000’s)
4.25%, Due 11/15/2020	$	305	$	314
The Home Depot, Inc.,
4.40%, Due 4/1/2021		300		328
Thomson Reuters Corp.,
4.70%, Due 10/15/2019		150		161
Time Warner Cable, Inc.,
5.40%, Due 7/2/2012		975		1,004
5.85%, Due 5/1/2017		650		740
6.75%, Due 7/1/2018		505		602
7.30%, Due 7/1/2038		1,920		2,478
Time Warner, Inc.,
6.875%, Due 5/1/2012		975		1,002
4.875%, Due 3/15/2020		160		174
4.75%, Due 3/29/2021		325		353
Transocean, Inc.,
6.80%, Due 3/15/2038		3,170		3,512
Tyco Electronics Group S.A.,
6.55%, Due 10/1/2017		255		298
Tyco International Finance S.A.,
3.75%, Due 1/15/2018		325		342
Union Pacific Corp.,
4.163%, Due 7/15/2022		306		324
United Parcel Service, Inc.,
3.125%, Due 1/15/2021		340		354
United Technologies Corp.,
6.125%, Due 7/15/2038		450		552
Valero Energy Corp.,
9.375%, Due 3/15/2019		135		176
6.625%, Due 6/15/2037		165		180
Verizon Communications, Inc.,
5.50%, Due 4/1/2017		350		403
4.60%, Due 4/1/2021		380		417
3.50%, Due 11/1/2021		140		141
6.90%, Due 4/15/2038		275		362
Viacom, Inc.,
6.875%, Due 4/30/2036		2,880		3,677
Vodafone Group plc,
6.15%, Due 2/27/2037		365		460
Wal-Mart Stores, Inc.,
7.55%, Due 2/15/2030		350		501
Xerox Corp.,
5.65%, Due 5/15/2013		75		79
8.25%, Due 5/15/2014		160		182
4.25%, Due 2/15/2015		355		374
				55,264
Utilities - 1.41%
Columbus Southern Power Co.,
5.50%, Due 3/1/2013		510		537
Commonwealth Edison Co.,
4.00%, Due 8/1/2020		175		187
Consolidated Edison Co. of New York, Inc.,
5.50%, Due 12/1/2039		350		423
Duke Energy Carolinas LLC,
5.10%, Due 4/15/2018E		350		402
Duke Energy Indiana, Inc.,
6.05%, Due 6/15/2016		520		599
EDF S.A., 4.60%, Due 1/27/2020F		320		341
Energy Transfer Partners LP,
8.50%, Due 4/15/2014H		535		607
9.00%, Due 4/15/2019H		260		313
Enterprise Products Operating LLC,
5.65%, Due 4/1/2013E		355		375

See accompanying notes

17

American Beacon Balanced Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
6.125%, Due 10/15/2039E	$	310	$	359
Exelon Generation Co. LLC,
5.20%, Due 10/1/2019E		245		263
6.25%, Due 10/1/2039E		275		327
FirstEnergy Solutions Corp.,
4.80%, Due 2/15/2015		175		188
Midamerican Energy Holdings Co.,
5.875%, Due 10/1/2012		510		533
6.125%, Due 4/1/2036		350		435
National Rural Utilities Cooperative Finance Corp.,
1.125%, Due 11/1/2013		335		336
ONEOK Partners LP,
6.125%, Due 2/1/2041H		355		408
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		175		193
3.50%, Due 10/1/2020		300		310
Progress Energy, Inc.,
4.875%, Due 12/1/2019		350		389
Sempra Energy,
6.50%, Due 6/1/2016		265		310
Southern Co.,
1.95%, Due 9/1/2016		310		312
Southern Power Co.,
6.25%, Due 7/15/2012		420		435
Spectra Energy Capital LLC,
5.668%, Due 8/15/2014E		275		301
5.65%, Due 3/1/2020E		275		303
Spectra Energy Partners LP,
4.60%, Due 6/15/2021H		160		164
TransCanada PipeLines Ltd.,
7.625%, Due 1/15/2039		300		429
6.10%, Due 6/1/2040		170		216
Union Electric Co.,
6.70%, Due 2/1/2019		380		469
Virginia Electric and Power Co.,
5.40%, Due 4/30/2018		350		412
Westar Energy, Inc.,
6.00%, Due 7/1/2014		175		193
Xcel Energy, Inc.,
5.613%, Due 4/1/2017		869		980
				12,049
Total Corporate Obligations (Cost $116,806)				126,175
U.S. AGENCY OBLIGATION - 4.96%
U.S. Agency Obligations - 4.96%
Federal Home Loan Mortgage Corp.,
4.50%, Due 1/15/2015		22,140		24,728
Federal National Mortgage Association,
5.125%, Due 1/2/2014		645		702
6.25%, Due 5/15/2029		12,200		16,628
Private Export Funding Corp.,
2.125%, Due 7/15/2016		300		309
Total U.S. Agency Obligations (Cost $35,803)				42,367
OTHER GOVERNMENT OBLIGATIONS - 0.08%
Province of Ontario Canada,
4.10%, Due 6/16/2014		350		380
3.15%, Due 12/15/2017		325		342
Total Other Government Obligations (Cost $674)				722

	Par Amount		Fair Value
	(000’s)		(000’s)
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 1.11%
Banc of America Merrill Lynch Commercial Mortgage, Inc.,
5.317%, Due 9/10/2047, 2006-5 A2	$	299	$	301
5.634%, Due 4/10/2049, 2007-2 A2		340		348
Bear Stearns Commercial Mortgage Securities,
5.201%, Due 12/11/2038, 2006-PWR14 A4		665		716
5.54%, Due 9/11/2041, 2006-PW13 A4		840		924
4.831%, Due 7/11/2042, 2004-PWR5 A4		428		442
Citigroup/Deutsche Bank Commercial Mortgage Trust,
5.886%, Due 11/15/2044, 2007-CD5 A4		930		1,012
GS Mortgage Securities Corp II,
4.607%, Due 7/10/2039, 2005-GG4 A3		350		353
3.679%, Due 8/10/2043, 2010-C1 A1F		375		390
3.849%, Due 12/10/2043, 2010-C2 A1F		539		561
3.645%, Due 3/10/2044, 2011-GC3 A2F		500		520
JP Morgan Chase Commercial Mortgage Securities Corp.,
4.678%, Due 7/15/2042, 2005-LDP2 A3A		298		304
3.853%, Due 6/15/2043, 2010-C1 A1F		681		708
4.388%, Due 2/15/2046, 2011-C3A A3F		550		565
4.625%, Due 3/15/2046, 2005-LDP1 A2		331		335
5.739%, Due 2/12/2049, 2007-CB19 A4		550		595
5.629%, Due 2/12/2051, 2007-CB20 A2		573		584
LB-UBS Commercial Mortgage Trust,
5.424%, Due 2/15/2040, 2007-C1 A4		500		532
Wachovia Bank Commercial Mortgage Trust,
5.737%, Due 6/15/2049, 2007-C32 A2		292		298
Total Non-Agency Mortgage-Backed Obligations (Cost $8,735)				9,488
ASSET-BACKED OBLIGATIONS - 0.59%
Ally Master Owner Trust,
0.894%, Due 6/15/2015, 2011-5 AG		600		600
BMW Floorplan Master Owner Trust,
1.393%, Due 9/15/2014, 2009-1A AF G		350		352
CNH Equipment Trust,
1.17%, Due 5/15/2015, 2010-C A3		520		521
2.04%, Due 10/17/2016, 2011-A A4		380		389
Ford Credit Floorplan Master Owner Trust,
1.793%, Due 9/15/2014, 2009-2 AG		800		808
Harley-Davidson Motorcycle Trust,
1.87%, Due 2/15/2014, 2009-4 A3		190		191
Honda Auto Receivables Owner Trust,
3.30%, Due 9/15/2015, 2009-3 A4		470		481
Hyundai Auto Receivables Trust,

See accompanying notes

18

American Beacon Balanced Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
3.15%, Due 3/15/2016, 2009-A A4	$	270	$	279
John Deere Owner Trust,
2.59%, Due 10/15/2013, 2009-A A3		43		43
3.96%, Due 5/16/2016, 2009-A A4		265		270
Nissan Master Owner Trust Receivables,
1.393%, Due 1/15/2015, 2010-AA AF G		650		655
Volkswagen Auto Loan Enhanced Trust,
6.24%, Due 7/20/2015, 2008-2 A4A		400		413
Total Asset-Backed Obligations (Cost $4,957)				5,002
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 7.80%
Federal Home Loan Mortgage Corporation
4.50%, Due 3/1/2019		339		360
5.00%, Due 10/1/2020		134		145
5.00%, Due 8/1/2033		767		826
5.50%, Due 2/1/2034		645		701
5.00%, Due 3/1/2034		575		618
6.00%, Due 6/1/2034		459		507
6.00%, Due 8/1/2034		355		391
5.00%, Due 8/1/2035		560		601
5.00%, Due 9/1/2035		404		434
6.00%, Due 8/1/2036		256		282
5.50%, Due 11/1/2036		508		550
5.50%, Due 4/1/2037		711		770
6.00%, Due 9/1/2037		209		229
5.50%, Due 12/1/2037		612		666
6.00%, Due 3/1/2038		1,044		1,143
5.50%, Due 5/1/2038		302		327
0.643%, Due 12/15/2040G		1,738		1,734
4.00%, Due 1/1/2041		1,441		1,497
4.50%, Due 2/1/2041		1,418		1,497
				13,278
Federal National Mortgage Association
5.50%, Due 2/1/2014		75		81
6.00%, Due 4/1/2016		104		113
5.00%, Due 12/1/2017		304		328
4.50%, Due 9/1/2018		207		221
4.00%, Due 8/1/2020		354		376
4.50%, Due 3/1/2025		473		509
3.50%, Due 1/1/2026		372		387
4.00%, Due 5/1/2026		1,885		1,985
5.00%, Due 3/1/2034		833		899
4.50%, Due 9/1/2034		404		429
5.50%, Due 12/1/2035		259		282
5.50%, Due 1/1/2036		442		482
5.00%, Due 2/1/2036		385		415
5.50%, Due 4/1/2036		493		538
6.00%, Due 9/1/2036		379		417
6.50%, Due 9/1/2036		838		937
5.50%, Due 12/1/2036		615		669
5.50%, Due 2/1/2037		630		685
5.50%, Due 8/1/2037		511		557
5.50%, Due 3/1/2038		1,038		1,128
5.50%, Due 6/1/2038		1,445		1,571
4.50%, Due 1/1/2040		1,696		1,796
5.00%, Due 7/1/2040		1,876		2,031
4.00%, Due 9/1/2040		1,318		1,371
4.00%, Due 1/1/2041		1,931		2,010
5.00%, Due 1/1/2041		2,035		2,204
4.00%, Due 2/1/2041		1,566		1,640
4.00%, Due 4/1/2041		1,980		2,074

	Par Amount		Fair Value
	(000’s)		(000’s)
4.50%, Due 4/1/2041	$	964	$	1,021
4.50%, Due 5/1/2041		1,901		2,018
4.50%, Due 8/1/2041		1,755		1,858
				31,032
Government National Mortgage Association
7.00%, Due 12/15/2025		174		202
6.50%, Due 8/15/2027		193		218
6.50%, Due 11/15/2027		198		224
7.50%, Due 12/15/2028		162		189
5.50%, Due 7/15/2033		495		553
6.00%, Due 12/15/2033		514		577
5.50%, Due 2/20/2034		702		784
1.692%, Due 11/16/2035, 2009-148 A		342		345
6.00%, Due 10/15/2038		944		1,056
2.989%, Due 3/16/2039, 2010-71 AC		966		1,001
5.00%, Due 10/15/2039		2,899		3,212
6.00%, Due 11/15/2039		941		1,052
5.50%, Due 2/15/2040		1,093		1,214
4.50%, Due 10/20/2040		1,083		1,180
2.70%, Due 4/16/2043, 2011-109 AB		1,994		2,068
2.542%, Due 9/16/2044, 2011-96 AC		1,096		1,132
3.20%, Due 11/16/2044, 2011-92 B		2,400		2,493
				17,500
National Credit Union Administration
0.643%, Due 3/11/2020, 2011 R3 1AG		2,597		2,598
0.691%, Due 10/7/2020, 2010 R1 1AG		2,281		2,284
				4,882
Total U.S. Agency Mortgage-Backed Obligations (Cost $64,226)				66,692
U.S. TREASURY OBLIGATIONS - 2.63%
U.S. Treasury Bonds
6.25%, Due 8/15/2023		800		1,114
6.875%, Due 8/15/2025		580		866
5.25%, Due 11/15/2028		250		330
4.75%, Due 2/15/2037		130		167
4.50%, Due 8/15/2039		930		1,160
4.25%, Due 11/15/2040		3,870		4,649
4.75%, Due 2/15/2041		565		735
4.375%, Due 5/15/2041		180		221
				9,242
U.S. Treasury Notes
0.625%, Due 4/30/2013		1,000		1,006
2.625%, Due 7/31/2014		1,000		1,061
2.00%, Due 1/31/2016		2,530		2,660
2.00%, Due 4/30/2016		2,055		2,160
3.125%, Due 10/31/2016		900		992
3.625%, Due 2/15/2020		975		1,108
3.625%, Due 2/15/2021		3,170		3,590
3.125%, Due 5/15/2021		660		717
				13,294
Total U.S. Treasury Obligations (Cost $20,205)				22,536
MUNICIPAL OBLIGATIONS - 0.31%
Municipal Electric Authority of Georgia,
6.64%, Due 4/1/2057		1,920		1,945
6.66%, Due 4/1/2057		710		712
Total Municipal Obligations (Cost $2,617)				2,657

See accompanying notes

19

American Beacon Balanced Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
SHORT-TERM INVESTMENTS - 6.35%
American Beacon U.S. Government Money Market Select Fund I		5,000,000	$	5,000
JPMorgan U.S. Government Money Market Fund		45,093,994		45,094
	Par Amount
	(000’s)
United States Treasury Bill, 0.01%, Due 3/8/2012	$	2,170		2,170
United States Treasury Bill, 0%, Due 10/18/2012		2,010		2,008
Total Short-Term Investments (Cost $54,270)				54,272
TOTAL INVESTMENTS - 92.87% (Cost $771,782)				794,004
OTHER ASSETS, NET OF LIABILITIES - 7.13%				60,989
TOTAL NET ASSETS - 100.00%			$	854,993

^A  Non-income producing security.

^B  Non-voting participating shares.

^C  ADR - American Depositary Receipt.

^D  REIT - Real Estate Investment Trust.

^E Limited Liability Company.

^F  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 $12,477 or 1.46% of net assets. The Fund has no right to demand registration of these securities.

^G  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.

^H  Limited Partnership.

^I  The Fund is affiliated by having the same investment advisor.

Futures Contracts
(000’s)
	Number of Contracts	Expiration Date	Contract Value		Unrealized Appreciation/ (Depreciation)
S&P 500 Mini E Index Future	729	December, 2011	$	45,537	$	2,695
			$	45,537	$	2,695

See accompanying notes

20

American Beacon Large Cap Growth Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
COMMON STOCK - 95.23%
CONSUMER DISCRETIONARY - 18.09%
Auto Components - 1.53%
BorgWarner, Inc.		7,300	$	558
Lear Corp.		16,087		755
				1,313
Hotels, Restaurants & Leisure - 3.47%
Ctrip.com International Ltd., ADR A		10,200		356
International Game Technology		51,290		903
Las Vegas Sands Corp.B		16,900		793
Starbucks Corp.		12,500		529
Yum! Brands, Inc.		7,600		407
				2,988
Household Durables - 1.03%
Tempur-Pedic International, Inc.B		13,052		888
Internet & Catalog Retail - 2.90%
Amazon.com, Inc.B		4,500		961
Expedia, Inc.		25,562		671
priceline.com, Inc.B		1,700		863
				2,495
Leisure Equipment & Products - 1.00%
Polaris Industries, Inc.		13,548		858
Media - 0.97%
CBS Corp., Class BC		32,352		835
Multiline Retail - 0.86%
Nordstrom, Inc.		14,613		741
Specialty Retail - 4.62%
Abercrombie & Fitch Co., Class A		6,500		484
AutoZone, Inc.B		2,445		791
Dollar Tree, Inc.B		10,157		812
O’Reilly Automotive, Inc.B		5,150		392
PetSmart, Inc.		15,656		735
Ross Stores, Inc.		8,689		762
				3,976
Textiles & Apparel - 1.71%
Coach, Inc.		13,396		872
Ralph Lauren Corp.		3,800		603
				1,475
Total Consumer Discretionary				15,569
CONSUMER STAPLES - 1.60%
Food & Drug Retailing - 0.55%
Costco Wholesale Corp.		5,700		475
Food Products - 0.59%
General Mills, Inc.		9,400		362
Green Mountain Coffee Roasters, Inc.B		2,200		143
				505
Personal Products - 0.46%
The Estee Lauder Cos., Inc., Class A		4,000		394
Total Consumer Staples				1,374
ENERGY - 8.24%
Energy Equipment & Services - 4.95%
FMC Technologies, Inc.B		19,500		874
Helmerich & Payne, Inc.		13,413		713

	Shares		Fair Value
			(000’s)
National Oilwell Varco, Inc.		11,418	$	814
Oceaneering International, Inc.		18,086		757
Schlumberger Ltd.		15,000		1,103
				4,261
Oil & Gas - 3.29%
Concho Resources, Inc.B		7,900		748
Occidental Petroleum Corp.		8,700		809
Peabody Energy Corp.		24,238		1,051
Range Resources Corp.		3,300		227
				2,835
Total Energy				7,096
FINANCIALS - 4.27%
American Express Co.		15,349		777
Ameriprise Financial, Inc.		16,394		765
CME Group, Inc.		1,300		358
Franklin Resources, Inc.		5,600		597
IntercontinentalExchange, Inc.B		3,950		513
JPMorgan Chase & Co.		10,000		348
TD Ameritrade Holding Corp.		19,200		322
Total Financials				3,680
HEALTH CARE - 12.17%
Biotechnology - 1.95%
Biogen Idec, Inc.B		3,000		349
Celgene Corp.B		8,400		545
Gilead Sciences, Inc.B		18,853		785
				1,679
Health Care Equipment & Supplies - 2.49%
Dentsply International, Inc.		21,363		790
Edwards Lifesciences Corp.B		7,300		551
Intuitive Surgical, Inc.B		900		390
Varian Medical Systems, Inc.		7,000		411
				2,142
Health Care Providers & Services - 5.82%
AmerisourceBergen Corp.		19,085		779
Cerner Corp.B		5,300		336
Covance, Inc.B		14,944		758
Express Scripts, Inc.B		10,000		457
McKesson Corp.		9,477		773
UnitedHealth Group, Inc.		39,838		1,911
				5,014
Pharmaceuticals - 1.91%
Endo Pharmaceuticals Holdings, Inc.B		23,436		757
Perrigo Co.		3,750		339
Shire plc, ADRA		5,800		547
				1,643
Total Health Care				10,478
INDUSTRIALS - 15.53%
Aerospace & Defense - 0.85%
United Technologies Corp.		9,400		733
Air Freight & Couriers - 0.50%
CH Robinson Worldwide, Inc.		6,200		430
Construction & Engineering - 0.68%
Fluor Corp.		10,300		586
Industrial Conglomerates - 1.73%
General Electric Co.		46,842		783

See accompanying notes

21

American Beacon Large Cap Growth Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
KBR, Inc.		25,406	$	709
				1,492
Machinery - 9.22%
Caterpillar, Inc.		8,443		798
Cummins, Inc.		8,257		821
Danaher Corp.		42,095		2,034
Deere & Co.		8,400		638
Donaldson Co, Inc.		12,782		819
Dover Corp.		13,341		741
Illinois Tool Works, Inc.		8,400		408
Joy Global, Inc.		9,288		810
Parker Hannifin Corp.		10,613		865
				7,934
Road & Rail - 2.55%
Union Pacific Corp.		22,060		2,197
Total Industrials				13,372
INFORMATION TECHNOLOGY - 30.07%
Communications Equipment - 2.05%
Cisco Systems, Inc.		47,628		883
F5 Networks, Inc.B		8,515		885
				1,768
Computers & Peripherals - 10.11%
Apple, Inc.		6,553		2,653
Dell, Inc.B		50,062		791
EMC Corp.		74,221		1,819
International Business Machines Corp.		4,337		801
NetApp, Inc.B		8,100		332
SanDisk Corp.B		16,074		814
Teradata Corp.B		13,296		793
Western Digital Corp.B		25,899		690
				8,693
Internet Software & Services - 3.87%
Baidu Inc., ADRAB		5,950		834
Google, Inc., Class AB		3,503		2,076
VeriSign, Inc.		13,200		424
				3,334
IT Consulting & Services - 2.76%
Cognizant Technology Solutions Corp.B		15,800		1,149
Visa, Inc., Class A		13,150		1,227
				2,376
Semiconductor Equipment & Products - 5.24%
Altera Corp.		27,192		1,031
Broadcom Corp., Class A		20,688		747
Intel Corp.		31,155		765
QUALCOMM, Inc.		24,300		1,253
Skyworks Solutions, Inc.		36,200		717
				4,513
Software - 6.04%
Citrix Systems, Inc.B		8,100		590
Intuit, Inc.		24,154		1,296
Microsoft Corp.		29,112		775
Oracle Corp.		55,430		1,817
Salesforce.com, Inc.B		5,400		719
				5,197
Total Information Technology				25,881

	Shares		Fair Value
			(000’s)
MATERIALS - 4.38%
Chemicals - 3.18%
Ecolab, Inc.		9,850	$	530
Monsanto Co.		22,124		1,610
The Mosaic Co.		10,335		605
				2,745
Metals & Mining - 1.20%
Cliffs Natural Resources, Inc.		5,400		368
Freeport-McMoRan Copper & Gold, Inc.		16,409		661
				1,029
Total Materials				3,774
TELECOMMUNICATION SERVICES - 0.88%
American Tower Corp., Class A		13,700		755
Total Common Stock (Cost $76,445)				81,979
SHORT-TERM INVESTMENTS - 3.79% (Cost $3,267)
JPMorgan U.S. Government Money Market Fund		3,267,388		3,267
TOTAL INVESTMENTS - 99.02% (Cost $79,712)				85,246
OTHER ASSETS, NET OF LIABILITIES - 0.98%				844
TOTAL NET ASSETS - 100.00%			$	86,090

Percentages are stated as a percent of net assets.

^A  ADR - American Depositary Receipt.

^B  Non-income producing security.

^C  Non-voting participating shares.

See accompanying notes

22

American Beacon Large Cap Growth Fund

Schedule of Investments

October 31, 2011

Futures Contracts
(000’s)
	Number of Contracts	Expiration Date	Value		Unrealized Appreciation/ (Depreciation)
S&P 500 Mini E Index Future	40	December, 2011	$	2,499	$	39
			$	2,499	$	39

See accompanying notes

23

American Beacon Mid-Cap Value Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
COMMON STOCK - 92.66%
CONSUMER DISCRETIONARY - 12.82%
Automobiles - 0.40%
Harley-Davidson, Inc.		9,487	$	369
Hotels, Restaurants & Leisure - 3.26%
International Game Technology		73,006		1,284
Royal Caribbean Cruises Ltd.		41,969		1,247
WMS Industries, Inc.		21,898		480
				3,011
Household Durables - 2.57%
Mohawk Industries, Inc.A		17,700		932
Newell Rubbermaid, Inc.		38,677		572
Stanley Black & Decker, Inc.		13,700		875
				2,379
Leisure Equipment & Products - 0.41%
Hasbro, Inc.		10,055		383
Media - 1.61%
Omnicom Group, Inc.		24,275		1,079
The Interpublic Group of Cos., Inc.		42,778		406
				1,485
Multiline Retail - 0.85%
JC Penney Co. Inc		24,400		783
Specialty Retail - 3.72%
American Eagle Outfitters, Inc.		30,565		401
Hanesbrands, Inc.A		25,100		662
Rent-A-Center, Inc.		33,725		1,152
Staples, Inc.		63,275		947
Urban Outfitters, Inc.A		10,311		281
				3,443
Total Consumer Discretionary				11,853
CONSUMER STAPLES - 4.84%
Beverages - 1.79%
Constellation Brands, Inc.A		18,142		367
Molson Coors Brewing Co., Class B		30,309		1,284
				1,651
Food & Drug Retailing - 0.91%
Sysco Corp.		14,571		404
The Kroger Co.		19,043		441
				845
Personal Products - 0.49%
Avon Products, Inc.		24,775		453
Tobacco - 1.65%
Lorillard, Inc.		7,100		785
Reynolds American, Inc.		19,200		743
				1,528
Total Consumer Staples				4,477
ENERGY - 4.40%
Energy Equipment & Services - 0.35%
Nabors Industries Ltd.A		17,576		322
Oil & Gas - 4.05%
EQT Corp.		5,360		340
Murphy Oil Corp.		17,778		985
Newfield Exploration Co.A		8,422		339
Pioneer Natural Resources Co.		5,160		433

	Shares		Fair Value
			(000’s)
Range Resources Corp.		5,024	$	346
Seadrill Ltd.		25,000		828
Spectra Energy Corp.		16,700		478
				3,749
Total Energy				4,071
FINANCIALS - 25.59%
Banks - 6.67%
Comerica, Inc.		42,127		1,076
Fifth Third Bancorp		162,265		1,950
KeyCorp		84,750		598
New York Community Bancorp, Inc.		41,300		550
PNC Financial Services Group, Inc.		10,000		537
Regions Financial Corp.		95,100		374
Synovus Financial Corp.		90,818		136
TCF Financial Corp.		37,055		394
Zions Bancorporation		31,350		544
				6,159
Diversified Financials - 4.42%
Ameriprise Financial, Inc.		18,798		878
Capital One Financial Corp.		18,800		859
Discover Financial Services		36,300		855
Federated Investors, Inc., Class B		19,705		385
SLM Corp.		48,800		667
Towers Watson & Co., Class A		6,750		443
				4,087
Insurance - 10.35%
Axis Capital Holdings Ltd.		18,875		592
Delphi Financial Group, Inc., Class A		35,200		932
Endurance Specialty Holdings Ltd.		11,355		422
PartnerRe Ltd.		6,040		376
ProAssurance Corp.		4,552		348
Protective Life Corp.		42,725		795
Reinsurance Group of America, Inc.		8,220		429
RenaissanceRe Holdings Ltd.		12,175		829
The Allstate Corp.		31,375		826
The Chubb Corp.		6,100		409
Torchmark Corp.		13,912		569
Unum Group		20,277		483
Validus Holdings Ltd.		24,732		677
Willis Group Holdings plc		32,545		1,183
XL Group plc		31,600		687
				9,557
Real Estate - 4.15%
Annaly Capital Management, Inc. B		21,700		366
Digital Realty Trust, Inc.B		7,079		441
Essex Property Trust, Inc.B		6,200		885
Hospitality Properties TrustB		39,500		950
Host Hotels & Resorts LPB		28,763		410
Liberty Property TrustB		14,851		475
MI Developments, Inc., Class A		9,875		313
				3,840
Total Financials				23,643
HEALTH CARE - 6.15%
Health Care Equipment & Supplies - 1.31%
Hologic, Inc.A		23,437		378
Patterson Cos., Inc.		13,107		412
STERIS Corp.		13,454		417
				1,207

See accompanying notes

24

American Beacon Mid-Cap Value Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Health Care Providers & Services - 4.84%
AmerisourceBergen Corp.		8,246	$	336
Cardinal Health, Inc.		16,200		717
Cigna Corp.		14,900		661
Coventry Health Care, Inc.A		26,900		855
HCA Holdings, Inc.A		15,563		365
HealthSouth Corp.A		20,556		363
Omnicare, Inc.		24,800		740
Quest Diagnostics, Inc.		7,952		444
				4,481
Total Health Care				5,688
INDUSTRIALS - 16.03%
Aerospace & Defense - 4.80%
Curtiss-Wright Corp.		30,700		1,006
Goodrich Corp.		6,300		773
L-3 Communications Holdings, Inc.		24,725		1,676
Spirit Aerosystems Holdings, Inc., Class AA		57,270		978
				4,433
Building Products - 1.87%
Fortune Brands Home & Security, Inc.A		41,050		596
Masco Corp.		118,325		1,136
				1,732
Commercial Services & Supplies - 2.68%
Avery Dennison Corp.		14,002		372
Cintas Corp.		13,513		404
Con-way, Inc.		27,200		801
Republic Services, Inc.		19,589		558
The Dun & Bradstreet Corp.		5,100		341
				2,476
Construction & Engineering - 0.45%
Fluor Corp.		7,239		412
Electrical Equipment - 2.64%
Brady Corp., Class A		35,150		1,080
Molex, Inc.		54,937		1,356
				2,436
Industrial Conglomerates - 0.44%
Teleflex, Inc.		6,821		408
Machinery - 2.35%
Dover Corp.		8,278		460
Eaton Corp.		10,400		466
Flowserve Corp.		4,431		411
ITT Corp.		8,200		374
SPX Corp.		8,500		464
				2,175
Marine - 0.80%
Golar LNG Ltd.		18,400		744
Total Industrials				14,816
INFORMATION TECHNOLOGY - 8.77%
Communications Equipment - 0.42%
Brocade Communications Systems, Inc.A		87,791		385
Electronic Equipment & Instruments - 2.87%
Avnet, Inc.		41,725		1,264
Ingram Micro, Inc., Class AA		43,400		776

	Shares		Fair Value
			(000’s)
TE Connectivity Ltd.		17,200	$	611
				2,651
IT Consulting & Services - 1.17%
Computer Sciences Corp.		17,900		563
The Western Union Co.		29,700		519
				1,082
Office Electronics - 0.66%
Xerox Corp.		74,700		611
Semiconductor Equipment & Products - 1.14%
Analog Devices, Inc.		10,341		378
Microchip Technology, Inc.		18,600		673
				1,051
Software - 2.51%
Adobe Systems, Inc.		17,064		502
CA, Inc.		38,350		831
Symantec Corp.A		25,789		439
Synopsys, Inc.A		20,607		552
				2,324
Total Information Technology				8,104
MATERIALS - 5.96%
Chemicals - 1.96%
Huntsman Corp.		28,537		335
PPG Industries, Inc.		10,700		925
The Sherwin-Williams Co.		6,675		552
				1,812
Containers & Packaging - 2.58%
Bemis Co, Inc.		11,873		334
Jarden Corp.		27,850		892
Owens-Illinois, Inc.A		23,041		463
Packaging Corp of America		14,650		382
Sonoco Products Co.		10,000		314
				2,385
Metals & Mining - 1.42%
Alcoa, Inc.		20,141		217
Allegheny Technologies, Inc.		14,214		659
Nucor Corp.		11,494		434
				1,310
Total Materials				5,507
UTILITIES - 8.10%
Electric Utilities - 5.05%
CenterPoint Energy, Inc.		38,000		792
Edison International		23,274		945
Entergy Corp.		15,275		1,057
Great Plains Energy, Inc.		29,951		621
Pinnacle West Capital Corp.		11,700		533
Portland General Electric Co.		12,242		300
TECO Energy, Inc.		22,943		426
				4,674
Gas Utilities - 1.34%
AGL Resources, Inc.		14,258		598
MDU Resources Group, Inc.		13,250		273
Oneok, Inc.		4,800		365
				1,236
Multi-Utilities - 1.71%
SCANA Corp.		12,232		517

See accompanying notes

25

American Beacon Mid-Cap Value Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
Xcel Energy, Inc.		41,028	$	1,061
				1,578
Total Utilities				7,488
Total Common Stock (Cost $78,239)				85,647
SHORT-TERM INVESTMENTS - 3.70% (Cost $3,416)
JPMorgan U.S. Government Money Market Fund		3,416,488		3,416
TOTAL INVESTMENTS - 96.36% (Cost $81,655)				89,063
OTHER ASSETS, NET OF LIABILITIES - 3.64%				3,365
TOTAL NET ASSETS - 100.00%			$	92,428

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  REIT - Real Estate Investment Trust.

Futures Contracts
(000’s)
	Number of Contracts		Expiration Date		Value		Unrealized Appreciation/ (Depreciation)
S&P 400 Midcap E Index Future		35		December, 2011	$	3,101	$	246
					$	3,101	$	246

See accompanying notes

26

American Beacon Funds

Statements of Assets and Liabilities

October 31, 2011 (in thousands, except share and per share amounts)

	Balanced			Large Cap			Mid-Cap
	Fund			Growth Fund			Value Fund
Assets:
Investments in unaffiliated securities, at fair value A	$	789,004		$	85,246		$	89,063
Investments in affiliated securities, at fair value B		5,000			—			—
Deposit with brokers for futures contracts		2,784			212			216
Receivable for investments sold		2,996			334			14
Dividends and interest receivable		2,962			29			54
Receivable for fund shares sold		57,252			2,732			3,437
Receivable for tax reclaims		38			—			—
Receivable for expense reimbursement (Note 2)		6			—			4
Prepaid expenses		17			28			46
Total assets		860,059			88,581			92,834
Liabilities:
Payable for investments purchased		3,232			713			49
Payable for fund shares redeemed		30			1,483			58
Payable for variation margin on open futures contracts		1,111			79			81
Management and investment advisory fees payable (Note 2)		497			177			170
Administrative service and service fees payable (Note 2)		73			3			12
Professional fees payable		40			28			28
Trustee fees payable		12			1			—
Prospectus and shareholder reports		47			4			7
Other liabilities		24			3			1
Total liabilities		5,066			2,491			406
Net Assets	$	854,993		$	86,090		$	92,428
Analysis of Net Assets:
Paid-in-capital	$	876,545		$	98,819		$	96,176
Undistributed net investment income (loss)		(763	)		105			901
Accumulated net realized (loss)		(45,705	)		(18,407	)		(12,303	)
Unrealized appreciation of investments and futures contracts		24,916			5,573			7,654
Net assets	$	854,993		$	86,090		$	92,428
Shares outstanding (no par value):
Institutional Class		2,401,223			23,329			3,437,338
Y Class		31,034			1,073			5,353
Investor Class		7,010,895			N/A			186,584
Advisor Class		286,099			N/A			3,868
A Class		48,708			28,961			10,478
C Class		75,995			193			2,353
AMR Class		59,886,038			13,905,859			5,853,626
Net asset value, offering and redemption price per share:
Institutional Class	$	12.89		$	6.12		$	9.73
Y Class	$	12.93		$	6.09		$	9.72
Investor Class	$	11.93			N/A		$	9.71
Advisor Class	$	12.36			N/A		$	9.56
A Class (net asset value and redemption price)	$	12.06		$	6.08		$	9.61
A Class (offering price)	$	12.80		$	6.45		$	10.20
C Class	$	12.13		$	6.05		$	9.56
AMR Class	$	12.27		$	6.17		$	9.73
A        Cost of investments in unaffiliated securities	$	766,782		$	79,712		$	81,655
B        Cost of investments in affiliated securities	$	5,000		$	—		$	—

See accompanying notes

27

American Beacon Funds

Statements of Operations

For the year ended October 31, 2011 (in thousands)

				Large Cap
	Balanced			Growth			Mid-Cap
	Fund			Fund			Value Fund
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	13,915		$	917		$	2,263
Dividend income from affiliated securities		1			—			—
Interest income		12,503			—			—
Total investment income		26,419			917			2,263
Expenses:
Management and investment advisory fees (Note 2)		1,922			514			632
Administrative service fees (Note 2):
Institutional Class		101			—			100
Y Class		1			—			—
Investor Class		252			—			30
Advisor Class		16			—			—
A Class		1			1			—
C Class		1			—			—
AMR Class		367			48			31
Transfer agent fees:
Institutional Class		2			—			3
Y Class		3			2			2
Investor Class		13			—			2
A Class		2			1			2
C Class		2			2			2
AMR Class		41			3			3
Custody and fund accounting fees		98			11			12
Professional fees		54			31			36
Registration fees and expenses		74			65			70
Service fees (Note 2):
Investor Class		277			—			25
Advisor Class		13			—			—
A Class		1			—			—
Distribution fees (Note 2):
Advisor Class		13			—			—
A Class		1			1			—
C Class		3			—			—
Prospectus and shareholder reports		72			27			29
Trustee fees		63			8			8
Other expenses		69			11			26
Total expenses		3,462			725			1,013
Net (fees waived and expenses reimbursed) (Note 2)		(6	)		(5	)		(57	)
Net expenses		3,456			720			956
Net investment income		22,963			197			1,307
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		47,922			14,701			7,905
Commission recapture (Note 3)		21			1			14
Futures contracts		1,564			(8,614	)		427
Change in net unrealized appreciation or depreciation of:
Investments		(30,748	)		(10,857	)		(3,654	)
Futures contracts		1,282			(78	)		(171	)
Net gain (loss) on investments		20,041			(4,847	)		4,521
Net increase (decrease) in net assets resulting from operations	$	43,004		$	(4,650	)	$	5,828
A    Foreign taxes	$	51		$	1		$	—

See accompanying notes

28

American Beacon Funds

Statements of Changes in Net Assets (in thousands)

	Balanced Fund						Large Cap Growth Fund						Mid-Cap Value Fund
	Year Ended October 31, 2011			Year Ended October 31, 2010			Year Ended October 31, 2011			Year Ended October 31, 2010			Year Ended October 31, 2011			Year Ended October 31, 2010
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	22,963		$	24,341		$	197		$	143		$	1,307		$	966
Net realized gain on investments and futures contracts		49,507			27,481			6,088			4,153			8,346			1,541
Change in net unrealized appreciation or depreciation of investments and futures contracts		(29,466	)		48,535			(10,935	)		8,876			(3,825	)		15,707
Net increase (decrease) in net assets resulting from operations		43,004			100,357			(4,650	)		13,172			5,828			18,214
Distributions to Shareholders:
Net investment income:
Institutional Class		(876	)		(1,651	)		—			—			(30	)		(15	)
Y Class		(10	)		—			—			—			—			—
Investor Class		(1,759	)		(4,637	)		—			—			(343	)		(161	)
Advisor Class		(104	)		(314	)		—			—			(1	)		—
A Class		(7	)		—			—			—			—			—
C Class		(4	)		—			—			—			—			—
AMR Class		(21,013	)		(42,865	)		(167	)		(342	)		(753	)		(561	)
Net distributions to shareholders		(23,773	)		(49,467	)		(167	)		(342	)		(1,127	)		(737	)
Capital Share Transactions:
Proceeds from sales of shares		120,787			75,404			134,234			46,888			68,649			42,825
Reinvestment of dividends and distributions		23,696			49,350			167			342			1,127			736
Cost of shares redeemed		(181,269	)		(115,828	)		(140,627	)		(34,211	)		(84,216	)		(38,192	)
Redemption fees		—			—			—			—			56			88
Net increase (decrease) in net assets from capital share transactions		(36,786	)		8,926			(6,226	)		13,019			(14,384	)		5,457
Net increase (decrease) in net assets		(17,555	)		59,816			(11,043	)		25,849			(9,683	)		22,934
Net Assets:
Beginning of period		872,548			812,732			97,133			71,284			102,111			79,177
End of Period *	$	854,993		$	872,548		$	86,090		$	97,133		$	92,428		$	102,111
*    Includes undistributed net investment income (loss) of	$	(763	)	$	(724	)	$	105		$	75		$	901		$	722

See accompanying notes

29

American Beacon Funds

Notes to Financial Statements

October 31, 2011

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 20 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

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	General public and investors investing 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

Each class offered by the Trust has equal rights as to assets and voting privileges. Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets. Realized and unrealized capital gains and losses of each class are allocated daily based on the relative net assets of each class of the respective Fund. Class specific expenses, where applicable, currently include administrative service fees, service fees, and distribution fees and vary amongst the classes as described more fully in Note 2.

New Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) related to the accounting for repurchase agreements and similar agreements that both entitles and obligates a transferor to repurchase or redeem financial assets before their maturity. The ASU modifies the criteria for determining effective control of transferred assets and as a result certain agreements may now be accounted for as secured borrowings. The ASU is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011.

In May 2011, FASB issued an ASU to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and International Financial Reporting Standards (IFRSs). FASB concluded that the amendments in this ASU will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The ASU is effective prospectively during interim or annual periods beginning on or after December 15, 2011.

At this time, management is evaluating the implications of these changes and their impact on the financial statements has not been determined.

30

American Beacon Funds

Notes to Financial Statements

October 31, 2011

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 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 by the Funds during the year ended October 31, 2011 were as follows (dollars in thousands):

	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Net Amounts Retained by Manager
Balanced		0.175% - 0.65	%	$	1,922	$	1,493	$	429
Large Cap Growth		0.35% - 0.60	%		514		466		48
Mid-Cap Value		0.35% - 0.90	%		632		580		52

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.

Distribution Plans

The Funds, 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 Funds do 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, 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, 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.

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, 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 of the Funds. Service fees for the Y and C Classes for the period ended October 31, 2011 were less than $500.

31

American Beacon Funds

Notes to Financial Statements

October 31, 2011

Investment in Affiliated Funds

The Funds may invest in the American Beacon Money Market Select Fund or the U.S. Government Money Market Select Fund (the “USG Select Fund”) (collectively, the “Select Funds”). The Select Funds and the 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 the average daily net assets of the Select Fund. During the year ended October 31, 2011, the Manager earned $885 from the Balanced Fund’s investment in the Select Funds.

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. During the year ended October 31, 2011, the Large Cap Growth Fund borrowed from the USG Select Fund on average $12,737,895 for two days at 0.79% with interest charges of $503, and the Balanced Fund borrowed from the USG Select Fund $13,407,649 for one day at 0.81% with interest charges of $298.

Reimbursement of Expenses

The Manager agreed to reimburse the following Funds to the extent that total annual fund operating expenses exceeded a Fund’s expense cap. Of these amounts, approximately $6,000 and $4,000 was receivable from the Manager at October 31, 2011 for the Balanced and Mid-Cap Value Funds, respectively. For the period ended October 31, 2011, the Manager waived or reimbursed expenses as follows:

		Expense Cap
Fund	Class	11/1/10 to 2/28/11			3/1/11 to 10/31/11			Waived or Reimbursed Expenses		Expiration
Balanced	Y*		N/A			N/A		$	2,590	2014
Balanced	A*		N/A			N/A			1,651	2014
Balanced	C*		N/A			N/A			1,619	2014
Large Cap Growth	Y*		N/A			N/A			1,651	2014
Large Cap Growth	A*		N/A			N/A			1,293	2014
Large Cap Growth	C		N/A			2.20	%		1,688	2014
Mid-Cap Value	Institutional		0.98	%		0.98	%		42,532	2014
Mid-Cap Value	Y		1.08	%		1.08	%		1,719	2014
Mid-Cap Value	Investor		1.23	%		1.23	%		8,901	2014
Mid-Cap Value	Advisor		1.49	%		1.49	%		351	2014
Mid-Cap Value	A		1.49	%		1.49	%		1,816	2014
Mid-Cap Value	C		2.24	%		2.24	%		1,705	2014

* Voluntary reimbursement

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 carryovers for the Mid-Cap Value Fund are approximately $25,000 and $17,000, expiring 2012 and 2013, respectively. During the year ended October 31, 2011, the Funds have not recorded a liability for potential reimbursement, due to the current assessment that a reimbursement is unlikely.

32

American Beacon Funds

Notes to Financial Statements

October 31, 2011

3. Security Valuation and Fair Value Measurements

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 (“NAV”) 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 Trust’s Board of Trustees (the “Board”).

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statements of Assets and Liabilities.

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 NAV. 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 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

33

American Beacon Funds

Notes to Financial Statements

October 31, 2011

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 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. GAAP 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 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.

Valuation Inputs

Various inputs may be used to determine the fair 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.

Level 1 and Level 2 trading assets and trading liabilities, at fair value

Fixed income securities including corporate, convertible and municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities, and non-U.S. bonds are normally valued by pricing service providers that use broker dealer quotations,

34

American Beacon Funds

Notes to Financial Statements

October 31, 2011

reported trades or valuation estimates from their internal pricing models. The service providers’ internal models use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates, and quoted prices for similar assets. Securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

Fixed income securities purchased on a delayed-delivery basis are marked to market daily until settlement at the forward settlement date are categorized as Level 2 of the fair value hierarchy.

Mortgage-related and asset-backed securities are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows, and market-based yield spreads for each tranche, and incorporates deal collateral performance, as available. Mortgage-related and asset-backed securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

Common stocks and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Securities using these valuation adjustments are categorized as Level 2 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

Level 3 trading assets and trading liabilities, at fair value

The valuation techniques and significant inputs used in determining the fair values of financial instruments classified as Level 3 of the fair value hierarchy are as follows:

Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board or persons acting at their direction and are categorized as Level 3 of the fair value hierarchy.

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the Exchange close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade, do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager the responsibility for monitoring significant events that may materially affect the fair values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events.

The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated the responsibility for applying the valuation methods to the Manager. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelines established by the Board, with reference to other securities or indices. In the event that the security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the value of the security or asset will be determined in good faith by the Valuation Committee of the Board, generally based upon recommendations provided by the Manager.

35

American Beacon Funds

Notes to Financial Statements

October 31, 2011

When a Fund uses fair valuation methods applied by the Manager that use significant unobservable inputs to determine its NAV, securities will be priced by another method that the Board or persons acting at their direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. While the Trust’s policy is intended to result in a calculation of a Fund’s NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.

For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in and out of the Level 3 category during the period. The end of period timing recognition is used for the significant transfers between Levels of the Funds’ assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for each respective Fund.

The Funds’ investments are summarized by level based on the inputs used to determine their values. As of October 31, 2011, the investments were classified as described below: (in thousands)

Balanced Fund	Level 1		Level 2		Level 3		Total
Common Stock	$	461,500	$	—	$	—	$	461,500
Preferred Stock		2,593		—		—		2,593
Corporate Obligations		—		126,175		—		126,175
U.S. Agency Obligations		—		42,367		—		42,367
Other Government Obligations		—		722		—		722
Non-Agency Mortgage-Backed Obligations		—		9,488		—		9,488
Asset-Backed Obligations		—		5,002		—		5,002
U.S. Agency Mortgage-Backed Obligations		—		66,692		—		66,692
U.S. Treasury Obligations		—		22,536		—		22,536
Municipal Obligations		—		2,657		—		2,657
Short-Term Investments		50,094		4,178		—		54,272
Total Investments in Securities	$	514,187	$	279,817	$	—	$	794,004
Futures Contracts		2,695		—		—		2,695
Large Cap Growth Fund	Level 1		Level 2		Level 3		Total
Common Stock	$	81,979	$	—	$	—	$	81,979
Short-Term Investments		3,267		—		—		3,267
Total Investments in Securities	$	85,246	$	—	$	—	$	85,246
Futures Contracts		39		—		—		39
Mid-Cap Value Fund	Level 1		Level 2		Level 3		Total
Common Stock	$	85,647	$	—	$	—	$	85,647
Short-Term Investments		3,416		—		—		3,416
Total Investments in Securities	$	89,063	$	—	$	—	$	89,063
Futures Contracts		246		—		—		246

As of October 31, 2011, there were no significant transfers into or out of any level.

36

American Beacon Funds

Notes to Financial Statements

October 31, 2011

4. Securities and Other Investments

Real Estate Investment Trusts

The Funds may own shares of real estate investment trusts (“REITS”) which report information on the source of their distributions annually. The Funds re-characterize distributions received from REIT investments based on information provided by the REITs into the following categories: ordinary income, long-term capital gains, and return of capital. If information is not available on a timely basis from the REITs, the re-characterization will be estimated based on available information, which may include the previous year allocation. If new or additional information becomes available from the REITs at a later date, a re-characterization will be made the following year. These re-characterizations are not recorded for financial statement purposes, but as an adjustment to the calculation of taxable income.

Restricted Securities

Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933. Disposal of restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted securities outstanding at the period ended October 31, 2011 are disclosed in the Notes to the Schedules of Investments.

5. Financial Derivative Instruments

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. A Fund usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as cash deposited with broker 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, 2011 (in thousands):

Statements of Assets and Liabilities	Derivatives	Fair Value
Unrealized appreciation of investments and futures contracts	Equity Contracts*	$	2,695

37

American Beacon Funds

Notes to Financial Statements

October 31, 2011

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2011 (in thousands):

Statements of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	1,564
Change in net unrealized appreciation or depreciation of futures contracts		Equity Contracts		1,282

Large Cap Growth

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2011 (in thousands):

Statements of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation of investments and futures contracts		Equity Contracts	*	$	39

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2011 (in thousands):

Statements of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	(8,614	)
Change in net unrealized appreciation or depreciation of futures contracts		Equity Contracts		(78	)

Mid-Cap Value

Values of Derivative Instruments not accounted for as hedging instruments as of October 31, 2011 (in thousands):

Statements of Assets and Liabilities	Derivatives			Fair Value
Unrealized appreciation of investments and futures contracts		Equity Contracts	*	$	246

Effect of derivative instruments not accounted for as hedging instruments during the year ended October 31, 2011 (in thousands):

Statements of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	427
Change in net unrealized appreciation or depreciation of futures contracts		Equity Contracts		(171	)

* Includes cumulative appreciation or 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.

6. 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 Subchapter M of the Internal Revenue Code, as amended, 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, 2011 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. GAAP. 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, 2011 and October 31, 2010 were as follows (in thousands)

38

American Beacon Funds

Notes to Financial Statements

October 31, 2011

	Balanced				Large Cap Growth				Mid-Cap Value
	Year Ended October 31, 2011		Year Ended October 31, 2010		Year Ended October 31, 2011		Year Ended October 31, 2010		Year Ended October 31, 2011		Year Ended October 31, 2010
Distributions paid from:
Ordinary income*
Institutional Class	$	876	$	1,651	$	—	$	—	$	30	$	15
Y Class		10		—		—		—		—		—
Investor Class		1,759		4,637		—		—		343		161
Advisor Class		104		314		—		—		1		—
A Class		7		—		—		—		—		—
C Class		4		—		—		—		—		—
AMR Class		21,013		42,865		167		342		753		561
Total distributions paid	$	23,773	$	49,467	$	167	$	342	$	1,127	$	737

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

As of October 31, 2011, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

	Balanced			Large Cap Growth			Mid-Cap Value
Cost basis of investments for federal income tax purposes	$	800,851		$	83,714		$	82,758
Unrealized appreciation		75,494			5,122			10,855
Unrealized depreciation		(82,341	)		(3,590	)		(4,550	)
Net unrealized appreciation or depreciation		(6,847	)		1,532			6,305
Undistributed ordinary income		41			105			901
Accumulated long-term gain (loss)		(17,445	)		(14,405	)		(11,201	)
Other temporary differences		2,699			39			247
Distributable earnings (deficit)	$	(21,552	)	$	(12,729	)	$	(3,748	)

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 or 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 book amortization of premiums.

Due to inherent differences in the recognition of income, expenses and realized gains (losses) under U.S. GAAP 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-deductible expenses, and dividend reclasses that have been reclassified as of October 31, 2011 (in thousands):

	Balanced			Large Cap Growth			Mid-Cap Value
Paid-in-capital	$	1		$	(1	)	$	—
Undistributed net investment income		771			—			(1	)
Accumulated net realized gain (loss)		(772	)		—			1
Unrealized appreciation or depreciation of investments and futures contracts		—			1			—

At October 31, 2011, capital loss carry forward positions for federal income tax purposes were as follows (in thousands):

Fund	2016		2017		2018		Total
Balanced	$	—	$	14,750	$	—	$	14,750
Large Cap Growth		1,503		12,863		—		14,366
Mid-Cap Value		2,205		8,397		353		10,955

39

American Beacon Funds

Notes to Financial Statements

October 31, 2011

The Balanced, Large Cap Growth, and Mid-Cap Value Funds utilized $48,498, $9,496, and $8,505, respectively, of net capital loss carryovers for the year ended October 31, 2011.

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the year ended October 31, 2011 were as follows (in thousands):

	Balanced		Large Cap Growth		Mid-Cap Value
Purchases (excluding U.S. government securities)	$	378,166	$	152,596	$	106,420
Sales and maturities (excluding U.S. government securities)		478,135		163,314		120,368
Purchases of U.S. government securities		92,344		—		—
Sales and maturities of U.S. government securities		116,041		—		—

A summary of the Funds’ direct transactions in USG Select Fund for the year ended October 31, 2011 is set forth below (in thousands):

	Affiliate		October 31, 2010 Shares/Fair Value		Purchases		Sales		October 31, 2011 Shares/Fair Value
Balanced		USG Select Fund	$	2,900	$	5,000	$	2,900	$	5,000

8. 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, 2011

	Institutional Class						Y Class					Investor Class						Advisor Class
Balanced Fund	Shares			Amount			Shares		Amount			Shares			Amount			Shares			Amount
Shares sold		631		$	8,319			27	$	354			2,294		$	27,260			136		$	1,701
Reinvestment of dividends		67			864			—		10			141			1,696			8			104
Shares redeemed		(943	)		(12,382	)		—		(1	)		(2,669	)		(32,048	)		(364	)		(4,500	)
Net increase (decrease) in shares outstanding		(245	)	$	(3,199	)		27	$	363			(234	)	$	(3,092	)		(220	)	$	(2,695	)

	AMR Class						A Class						C Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares		Amount
Shares sold		6,625		$	81,564			57		$	695			76	$	894
Reinvestment of dividends		1,702			21,013			—			5			—		4
Shares redeemed		(10,718	)		(132,193	)		(12	)		(145	)		—		(1	)
Net increase (decrease) in shares outstanding		(2,391	)	$	(29,616	)		45		$	555			76	$	897

	Institutional Class						Y Class						AMR Class
Large Cap Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		26		$	163			1		$	10			20,858		$	133,547
Reinvestment of dividends		—			—			—			—			26			167
Shares redeemed		(24	)		(146	)		(4	)		(28	)		(23,482	)		(140,139	)
Net increase (decrease) in shares outstanding		2		$	17			(3	)	$	(18	)		(2,598	)	$	(6,425	)

40

American Beacon Funds

Notes to Financial Statements

October 31, 2011

	A Class						C Class
Large Cap Growth Fund	Shares			Amount			Shares		Amount
Shares sold		80		$	514			—	$	—
Reinvestment of dividends		—			—			—		—
Shares redeemed		(52	)		(314	)		—		—
Net increase in shares outstanding		28		$	200			—	$	—

	Institutional Class						Y Class					Investor Class						Advisor Class
Mid-Cap Value Fund	Shares			Amount			Shares		Amount			Shares			Amount			Shares			Amount
Shares sold		4,220		$	42,145			5	$	48			851		$	8,664			3		$	35
Reinvestment of dividends		3			30			—		—			35			343			—			1
Shares redeemed		(1,085	)		(10,940	)*		—		—	*		(4,529	)		(43,908	)*		(8	)		(75	)*
Net increase (decrease) in shares outstanding		3,138		$	31,235			5	$	48			(3,643	)	$	(34,901	)		(5	)	$	(39	)

	AMR Class						A Class						C Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares		Amount
Shares sold		1,804		$	17,611			12		$	122			2	$	24
Reinvestment of dividends		76			753			—			—			—		—
Shares redeemed		(2,930	)		(29,205	)*		(3	)		(32	)*		—		—	*
Net increase (decrease) in shares outstanding		(1,050	)	$	(10,841	)		9		$	90			2	$	24

* Net of Redemption Fees

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 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 in shares outstanding		1	$	6		—	$	1

41

American Beacon Funds

Notes to Financial Statements

October 31, 2011

	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 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

42

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43

American Beacon Balanced Fund

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class						Investor Class
	Year Ended October 31,															Year Ended October 31,			March 1 to October 31,			Year Ended October 31,
	2011			2010			2009			2008			2007			2011			2010			2011			2010
Net asset value, beginning of period	$	12.62		$	11.83		$	10.63		$	16.09		$	15.83		$	12.78		$	12.20		$	11.66		$	10.96
Income from investment operations:
Net investment income		0.32			0.35			0.43			0.47			0.50			0.36			0.16			0.25			0.25
Net gains (losses) on securities (both realized and unrealized)		0.29			1.10			1.25			(4.70	)		0.90			0.24			0.57			0.28			1.04
Total income (loss) from investment operations		0.61			1.45			1.68			(4.23	)		1.40			0.60			0.73			0.53			1.29
Less distributions:
Dividends from net investment income		(0.34	)		(0.66	)		(0.48	)		(0.44	)		(0.42	)		(0.45	)		(0.15	)		(0.26	)		(0.59	)
Distributions from net realized gains on securities		—			—			—			(0.79	)		(0.72	)		—			—			—			—
Total distributions		(0.34	)		(0.66	)		(0.48	)		(1.23	)		(1.14	)		(0.45	)		(0.15	)		(0.26	)		(0.59	)
Net asset value, end of period	$	12.89		$	12.62		$	11.83		$	10.63		$	16.09		$	12.93		$	12.78		$	11.93		$	11.66
Total return A		4.87	%		12.47	%		16.64	%		(28.23	)%		9.31	%		4.73	%		5.99	%B		4.52	%		12.06	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	30,962		$	33,405		$	29,808		$	36,557		$	51,399		$	401		$	46		$	83,657		$	84,500
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.58	%		0.58	%		0.60	%		0.56	%		0.57	%		1.48	%		0.68	%C		0.92	%		0.93	%
Expenses, net of reimbursements		0.58	%		0.58	%		0.60	%		0.56	%		0.57	%		0.70	%		0.68	%C		0.92	%		0.93	%
Net investment income, before reimbursements		2.49	%		2.67	%		3.60	%		3.37	%		2.91	%		1.55	%		2.54	%C		2.16	%		2.34	%
Net investment income, net of reimbursements		2.49	%		2.67	%		3.60	%		3.37	%		2.91	%		2.34	%		2.54	%C		2.16	%		2.34	%
Portfolio turnover rate		47	%		40	%		57	%		53	%		50	%		47	%		40	%D		47	%		40	%

^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.

44

American Beacon Balanced Fund

Financial Highlights

(For a share outstanding throughout the period)

Investor Class									Advisor Class															A Class						C Class
Year Ended October 31,									Year Ended October 31,															Year Ended October 31,			May 17 to October 31,			Year Ended October 31,			September 1 to October 31,
2009			2008			2007			2011			2010			2009			2008			2007			2011			2010			2011			2010
$	9.91		$	15.09		$	14.91		$	12.11		$	11.35		$	9.77		$	14.95		$	14.83		$	11.94		$	11.50		$	11.92		$	11.32
	0.30			0.41			0.41			0.41			0.32			0.37			0.34			0.41			0.38			0.02			0.20			0.01
	1.23			(4.39	)		0.87			0.11			1.01			1.21			(4.31	)		0.83			0.14			0.43			0.22			0.59
	1.53			(3.98	)		1.28			0.52			1.33			1.58			(3.97	)		1.24			0.52			0.45			0.42			0.60
	(0.48	)		(0.41	)		(0.38	)		(0.27	)		(0.57	)		—			(0.42	)		(0.40	)		(0.40	)		(0.01	)		(0.21	)		0.00
	—			(0.79	)		(0.72	)		—			—			—			(0.79	)		(0.72	)		—			—			—			—
	(0.48	)		(1.20	)		(1.10	)		(0.27	)		(0.57	)		—			(1.21	)		(1.12	)		(0.40	)		(0.01	)		(0.21	)		0.00
$	10.96		$	9.91		$	15.09		$	12.36		$	12.11		$	11.35		$	9.77		$	14.95		$	12.06		$	11.94		$	12.13		$	11.92
	16.29	%		(28.39	)%		9.06	%		4.33	%		11.96	%		16.17	%		(28.65	)%		8.83	%		4.37	%		3.90	%B		3.56	%		5.33	%B
$	94,915		$	105,473		$	202,750		$	3,536		$	6,127		$	6,812		$	7,674		$	9,504		$	588		$	47		$	922		$	1
	0.89	%		0.82	%		0.83	%		1.09	%		1.09	%		1.09	%		1.07	%		1.07	%		1.59	%		1.08	%C		2.34	%		2.14	%C
	0.89	%		0.82	%		0.83	%		1.09	%		1.09	%		1.09	%		1.07	%		1.07	%		1.10	%		1.08	%C		1.82	%		1.86	%C
	3.26	%		3.12	%		2.65	%		2.01	%		2.18	%		3.06	%		2.86	%		2.34	%		1.47	%		1.51	%C		0.66	%		0.20	%C
	3.26	%		3.12	%		2.65	%		2.01	%		2.18	%		3.06	%		2.86	%		2.34	%		1.95	%		1.51	%C		1.18	%		0.48	%C
	57	%		53	%		50	%		47	%		40	%		57	%		53	%		50	%		47	%		40	%D		47	%		40	%D

45

American Beacon Balanced Fund

Financial Highlights

(For a share outstanding throughout the period)

	AMR Class
	Year Ended October 31,
	2011			2010			2009			2008			2007
Net asset value, beginning of period	$	12.02		$	11.31		$	10.19		$	15.49		$	15.27
Income from investment operations:
Net investment income		0.34			0.35			0.39			0.49			0.50
Net gains (losses) on securities (both realized and unrealized)		0.27			1.07			1.24			(4.52	)		0.89
Total income (loss) from investment operations		0.61			1.42			1.63			(4.03	)		1.39
Less distributions:
Dividends from net investment income		(0.36	)		(0.71	)		(0.51	)		(0.48	)		(0.45	)
Distributions from net realized gains on securities		—			—			—			(0.79	)		(0.72	)
Total distributions		(0.36	)		(0.71	)		(0.51	)		(1.27	)		(1.17	)
Net asset value, end of period	$	12.27		$	12.02		$	11.31		$	10.19		$	15.49
Total return A		5.09	%		12.84	%		16.95	%		(28.08	)%		9.59	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	734,927		$	748,422		$	681,197		$	604,209		$	898,584
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.33	%		0.33	%		0.35	%		0.31	%		0.31	%
Expenses, net of reimbursements		0.33	%		0.33	%		0.35	%		0.31	%		0.31	%
Net investment income, before reimbursements		2.75	%		2.92	%		3.75	%		3.62	%		3.21	%
Net investment income, net of reimbursements		2.75	%		2.92	%		3.75	%		3.62	%		3.21	%
Portfolio turnover rate		47	%		40	%		57	%		53	%		50	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

46

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47

American Beacon Large Cap Growth Fund

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2011			2010			2009A			2008			2007
Net asset value, beginning of period	$	5.84		$	4.97		$	4.49		$	7.67		$	6.89
Income from investment operations:
Net investment income (loss)		(0.01	)		0.00			0.03			0.05			0.04
Net gains (losses) on securities (both realized and unrealized)		0.30			0.88			0.50			(2.97	)		0.77
Total income (loss) from investment operations		0.29			0.88			0.53			(2.92	)		0.81
Less distributions:
Dividends from net investment income		(0.01	)		(0.01	)		(0.05	)		(0.04	)		(0.03	)
Distributions from net realized gains on securities		—			—			—			(0.22	)		—
Total distributions		(0.01	)		(0.01	)		(0.05	)		(0.26	)		(0.03	)
Net asset value, end of period	$	6.12		$	5.84		$	4.97		$	4.49		$	7.67
Total return B,F		4.92	%		17.70	%		12.09	%		(39.35	)%		11.84	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	143		$	125		$	130		$	83		$	119
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.06	%		0.94	%		0.94	%		0.95	%		1.06	%
Expenses, net of reimbursements		1.06	%		0.94	%		0.93	%		0.89	%		0.90	%
Net investment income (loss), before reimbursements		(0.15	)%		(0.02	)%		0.36	%		0.68	%		0.42	%
Net investment income (loss), net of reimbursements		(0.15	)%		(0.02	)%		0.38	%		0.74	%		0.58	%
Portfolio turnover rate		179	%		92	%		147	%		112	%		128	%

^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  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.

^F  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.

48

American Beacon Large Cap Growth Fund

Financial Highlights

(For a share outstanding throughout the period)

Y Class						A Class						C Class						AMR Class
Year Ended October 31, 2011			March 1 to October  31, 2010			Year Ended October  31, 2011			May 17 to October  31, 2010			Year Ended October  31, 2011			September 1 to October 31, 2010			Year Ended October 31,
																		2011			2010			2009A			2008			2007
$	5.83		$	5.41		$	5.83		$	5.40		$	5.83		$	5.17		$	5.88		$	5.00		$	4.52		$	7.72		$	6.95
	(0.09	)		0.00			(0.06	)		(0.01	)		(0.07	)		(0.02	)		0.02			0.01			0.04			0.07			0.06
	0.36			0.42			0.31			0.44			0.29			0.68			0.28			0.89			0.51			(2.99	)		0.77
	0.27			0.42			0.25			0.43			0.22			0.66			0.30			0.90			0.55			(2.92	)		0.83
	(0.01	)		—			—			—			—			—			(0.01	)		(0.02	)		(0.07	)		(0.06	)		(0.06	)
	—			—			—			—			—			—			—			—			—			(0.22	)		—
	(0.01	)		—			—			—			—			—			(0.01	)		(0.02	)		(0.07	)		(0.28	)		(0.06	)
$	6.09		$	5.83		$	6.08		$	5.83		$	6.05		$	5.83		$	6.17		$	5.88		$	5.00		$	4.52		$	7.72
	4.58	%		7.76	%C		4.29	%		7.96	%C		3.77	%		12.77	%C		5.13	%		18.11	%		12.46	%		(39.17	)%		12.07	%
$	6		$	22		$	176		$	7		$	1		$	1		$	85,764		$	96,978		$	71,154		$	56,976		$	101,698
	9.75	%		1.06	%D		1.98	%		1.49	%D		141.71	%		3.14	%D		0.75	%		0.69	%		0.63	%		0.59	%		0.60	%
	1.28	%		1.06	%D		1.54	%		1.49	%D		2.17	%		2.20	%D		0.75	%		0.69	%		0.63	%		0.59	%		0.60	%
	(8.81	)%		(0.33	)%D		(1.10	)%		(0.90	)%D		(140.73	)%		(2.62	)%D		0.21	%		0.19	%		0.86	%		1.05	%		0.85	%
	(0.34	)%		(0.33	)%D		(0.65	)%		(0.90	)%D		(1.20	)%		(1.68	)%D		0.21	%		0.19	%		0.86	%		1.05	%		0.85	%
	179	%		92	%E		179	%		92	%E		179	%		92	%E		179	%		92	%		147	%		112	%		128	%

49

American Beacon Mid-Cap Value Fund

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class						Investor Class
	Year Ended October 31,															Year Ended October 31, 2011I			March 1 to October 31, 2010			Year Ended October 31,
	2011I			2010			2009			2008			2007									2011I			2010
Net asset value, beginning of period	$	9.27		$	7.57		$	5.94		$	11.01		$	10.81		$	9.27		$	8.48		$	9.20		$	7.54
Income from investment operations:
Net investment income (loss)		0.09			0.08			0.10			0.16			0.12			0.08			0.06			(0.03	)A		0.06
Net gains (losses) on securities (both realized and unrealized)		0.48			1.67			1.65			(4.31	)		0.41			0.48			0.73			0.63			1.65
Total income (loss) from investment operations		0.57			1.75			1.75			(4.15	)		0.53			0.56			0.79			0.60			1.71
Less distributions:
Dividends from net investment income		(0.11	)		(0.05	)		(0.12	)		(0.16	)		(0.07	)		(0.11	)		—			(0.09	)		(0.05	)
Distributions from net realized gains on securities		—			—			—			(0.76	)		(0.26	)		—			—			—			—
Total distributions		(0.11	)		(0.05	)		(0.12	)		(0.92	)		(0.33	)		(0.11	)		—			(0.09	)		(0.05	)
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	$	9.73		$	9.27		$	7.57		$	5.94		$	11.01		$	9.72		$	9.27		$	9.71		$	9.20
Total return C,D		6 08	%		23.19	%		30.24	%		(40.86	)%		4.97	%		5.98	%		9.32	%E		6.49	%		22.77	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	33,441		$	2,778		$	2,197		$	2,256		$	6,047		$	52		$	1		$	1,812		$	35,223
Ratios to average net assets (annualized):
Expenses, before reimbursements		1.10	%		1.06	%		1.13	%		1.16	%		1.09	%		11.62	%		1.05	%F		1.32	%		1.27	%
Expenses, net of reimbursements		0.97	%		0.98	%		0.98	%		0.98	%		0.92	%		1.06	%		1.01	%F		1.23	%		1.23	%
Net investment income (loss), before reimbursements		0.91	%		0.90	%		1.14	%		1.33	%		1.05	%		(9.44	)%		0.93	%F		1.33	%		0.70	%
Net investment income, net of reimbursements		1.04	%		0.99	%		1.29	%		1.51	%		1.22	%		1.12	%		0.97	%F		1.42	%		0.75	%
Portfolio turnover rate		107	%		40	%		42	%		28	%		35	%		107	%		40	%G		107	%		40	%

^A  Based on average shares outstanding.

^B  Amounts represent less than $0.01 per share.

^C  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. 

^D  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^E  Not annualized.

^F  Annualized.

^G  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

^H  Portfolio turnover rate is for the period from November 1, 2006 through October 31, 2007.

^I  Lee Munder Capital Group, LLC was added as an investment manager to the Mid-Cap Value Fund on July 1, 2011.

50

American Beacon Funds Mid-Cap Value Fund

Financial Highlights

(For a share outstanding throughout the period)

Investor Class									Advisor Class															AMR Class															A Class
Year Ended October 31,									Year Ended October 31,												June 29 to October 31, 2007			Year Ended October 31,															Year Ended October 31, 2011I			May 17 to October 31, 2010
2009			2008			2007			2011I			2010			2009			2008						2011I			2010			2009			2008			2007
$	5.92		$	10.96	��	$	10.80		$	9.12		$	7.49		$	5.87		$	10.94		$	11.73		$	9.27		$	7.59		$	5.97		$	11.07		$	10.87		$	9.18		$	9.00
	0.07			0.14			0.10			0.07			0.07			0.15			0.10			0.01			0.15			0.10			0.07			0.18			0.18			0.11			0.01
	1.66			(4.31	)		0.40			0.45			1.61			1.60			(4.27	)		(0.80	)		0.43			1.66			1.70			(4.35	)		0.36			0.40			0.17
	1.73			(4.17	)		0.50			0.52			1.68			1.75			(4.17	)		(0.79	)		0.58			1.76			1.77			(4.17	)		0.54			0.51			0.18
	(0.11	)		(0.11	)		(0.08	)		(0.08	)		(0.05	)		(0.13	)		(0.14	)		—			(0.12	)		(0.08	)		(0.15	)		(0.17	)		(0.08	)		(0.08	)		—
	—			(0.76	)		(0.26	)		—			—			—			(0.76	)		—			—			—			—			(0.76	)		(0.26	)		—			—
	(0.11	)		(0.87	)		(0.34	)		(0.08	)		(0.05	)		(0.13	)		(0.90	)		—			(0.12	)		(0.08	)		(0.15	)		(0.93	)		(0.34	)		(0.08	)		—
	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			0.00			0.00
$	7.54		$	5.92		$	10.96		$	9.56		$	9.12		$	7.49		$	5.87		$	10.94		$	9.73		$	9.27		$	7.59		$	5.97		$	11.07		$	9.61		$	9.18
	29.93%			(41.04	)%		4.68	%		5.65	%		22.53	%		30.64	%		(41.28	)%		(6.73	)%E		6.20	%		23.28	%		30.56	%		(40.82	)%		5.09	%		5.49	%		2.00	%E
$	23,369		$	16,550		$	43,158		$	37		$	78		$	7		$	1		$	1		$	56,963		$	64,012		$	53,604		$	34,253		$	78,794		$	101		$	18
	1.34	%		1.32	%		1.26	%		1.98	%		1.55	%		1.58	%		2.04	%		1.80	%F		0.83	%		0.77	%		0.82	%		0.82	%		0.75	%		3.44	%		1.51	%F
	1.23	%		1.23	%		1.23	%		1.49	%		1.44	%		1.50	%		1.50	%		1.50	%F		0.83	%		0.77	%		0.83	%		0.82	%		0.75	%		1.48	%		1.48	%F
	0.87	%		1.18	%		0.90	%		0.21	%		0.36	%		0.14	%		0.48	%		0.02	%F		1.34	%		1.19	%		1.38	%		1.68	%		1.40	%		(1.36	)%		0.44	%F
	0.98	%		1.27	%		0.93	%		0.69	%		0.47	%		0.22	%		1.02	%		0.32	%F		1.34	%		1.19	%		1.38	%		1.68	%		1.41	%		0.60	%		0.47	%F
	42	%		28	%		35	%		107	%		40	%		42	%		28	%		35	%H		107	%		40	%		42	%		28	%		35	%		107	%		40	%G

51

American Beacon Mid-Cap Value Fund

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Year Ended October  31, 2011I			September 1 to October 31, 2010
Net asset value, beginning of period	$	9.18		$	8.30
Income from investment operations:
Net investment income (loss)		0.05			(0.01	)
Net gains on securities (both realized and unrealized)		0.38			0.89
Total income from investment operations		0.43			0.88
Less distributions:
Dividends from net investment income		(0.05	)		—
Distributions from net realized gains on securities		—			—
Total distributions		(0.05	)		—
Redemption fees added to beneficial interestsB		0.00			0.00
Net asset value, end of period	$	9.56		$	9.18
Total return C,D		4.64	%		10.60	%E
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	22		$	1
Ratios to average net assets (annualized):
Expenses, before reimbursements		19.14	%		3.20	%F
Expenses, net of reimbursements		2.24	%		2.24	%F
Net investment (loss), before reimbursements		(16.96	)%		(1.32	)%F
Net investment (loss), net of reimbursements		(0.06	)%		(0.36	)%F
Portfolio turnover rate		107	%		40	%G

^A  Based on average shares outstanding.

^B  Amounts represent less than $0.01 per share.

^C  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. 

^D  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable.

^E  Not annualized.

^F  Annualized.

^G  Portfolio turnover rate is for the period from November 1, 2009 through October 31, 2010.

^H  Portfolio turnover rate is for the period from November 1, 2006 through October 31, 2007.

^I  Lee Munder Capital Group, LLC was added as an investment manager to the Mid-Cap Value Fund on July 1, 2011.

52

American Beacon Funds

Privacy Policy & Federal Tax Information

October 31, 2011 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect 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, was as follows:

Balanced Fund	37.27	%
Large Cap Growth Fund	95.10	%
Mid-Cap Value Fund	77.62	%

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, was as follows:

Balanced Fund	50.59	%
Large Cap Growth Fund	100.00	%
Mid-Cap Value Fund	100.00	%

Shareholders will receive notification in January 2012 of the percentage applicable to the preparation of their 2011 income tax returns.

53

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

Disclosure Regarding Renewal and Approval of Management Agreement and Investment Advisory Agreements

At its May 26, 2011 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 American Beacon Mileage Funds, the American Beacon Select Funds and the American Beacon Master Trust (collectively 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 11, 2011 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 2 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 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.

54

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements of the Funds (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 11, 2011 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 26, 2011 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 26, 2011 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 continued 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; the Manager’s commitment to increasing headcount and training employees in conjunction with product expansion; and efforts made by the Manager to retain key employees.

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.

55

Disclosure Regarding the Board of Trustees’ Approval of the Management Agreement and Investment Advisory Agreements of the Funds (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 the Balanced Fund, Additional Considerations and Conclusions with Respect to the Large Cap Growth Fund, and Additional Considerations and Conclusions with Respect to the Mid-Cap Value 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 the Balanced Fund, Additional Considerations and Conclusions with Respect to the Large Cap Growth Fund, and Additional Considerations and Conclusions with Respect to the Mid-Cap Value 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 2010, primarily due to market appreciation.

In addition, the Board noted the Manager’s representation that, many of the Funds enjoy the primary benefit of economies of scale because low comparable fee levels are already reflected in the current level of management & administration fees charged by the Manager, the current fee structure already provides an adequate mechanism for the sharing of economies of scale with shareholders and due to the existing low cost structure of the Funds that further breakpoints are not appropriate at this time. 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 will use the Large Cap Value Fund model in managing its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds 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 the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2010.

56

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

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 group of comparable mutual funds included in the analysis provided to the Trustees by Lipper, Inc.

Additional Considerations and Conclusions with Respect to the Balanced Fund

In considering the renewal of the Management Agreement, the Trustees considered the following additional factors: (1) the Balanced Fund outperformed the Mixed Asset Target Allocation Growth Funds (“MTAG”) peer universe median for the three-, five- and ten-year periods ended March 31, 2011, 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, 2011; and (3) the expense ratio of the Institutional Class of Fund ranked better than the median of its Lipper universe.

In considering the renewal of the Investment Advisory Agreements with 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, 2011, but underperformed for the one-year period; (2) Brandywine outperformed the peer universe median for the five- and ten-year periods ended March 31, 2011, but underperformed for the one- and three-year periods; (3) Hotchkis outperformed its market benchmark index with respect to its allocated portion of the Fund’s equity assets for the three- and ten-year periods ended March 31, 2011, but underperformed for the one- and five- year periods; (4) Barrow, Hotchkis and Brandywine have informed the Manager that they use Fund commissions to obtain proprietary research, the application of which benefits the Fund; and (5) the Manager’s recommendation to continue to retain each subadvisor.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Management and Investment Advisory 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.

57

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

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

In considering the renewal of the Management Agreement, the Trustees considered the following additional factors: (1) the Large Cap Growth Fund outperformed the peer universe median for the one-year period, but underperformed for the three-, five-, and ten-year periods ended March 31, 2011 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 Renaissance Group LLC, dba Renaissance Investment Management (“Renaissance”) and Winslow Capital Management (“Winslow”), the Trustees considered the following additional factors: (1) Renaissance outperformed the peer universe median for the one-year but underperformed for the three-year period ended March 31, 2011; (2) Winslow outperformed the peer universe median for the one-year period ended March 31, 2011; (3) Renaissance has informed the Manager that it uses Fund commissions to obtain proprietary research, the application of which benefits the Fund and Renaissance’s other clients; and (4) the Manager’s recommendation to continue to retain each subadvisor.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Management and Investment Advisory 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, the Trustees considered the following additional factors: (1) the Mid-Cap Value Fund outperformed its peer group universe median for the three- and five-year periods ended March 31, 2011, but underperformed for the one-year period; (2) the expense ratio of the Institutional Class of Fund shares was only one basis point higher than the median of its Lipper universe (after consideration of the Manager’s waiver).

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 outperformed the peer universe median for the three- and five-year periods, but underperformed for the one-year period ended March 31, 2011; (2) Pzena underperformed the peer universe median for the one-, three and five-year periods ended March 31, 2011; (3) Barrow has informed the Manager that it uses Fund commissions to obtain proprietary research, the application of which benefits the Fund and Barrow’s other clients; and (4) the Manager’s recommendation to continue to retain each subadvisor.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and the subadvisors under the Management and Investment Advisory 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.

58

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 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.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES
	Term
	Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (74)	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, Center Point 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 Funds (1996-Present).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (67)	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 (50)	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, Trinity Valley School (2003-2004); Member; Trinity Valley School Endowment Committee (2004-Present); 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 (57)	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 Funds (2008-Present).

59

Trustees and Officers of the American Beacon Funds

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Thomas M. Dunning (69)	Trustee since 2008	Non-Executive Chairman (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); Board Member, Baylor Health Care System Foundation (2007-present); Vice Chair, State Fair of Texas (1987-Present); Board Member, Southwestern Medical Foundation (1994-present); Board Member, John Tower Center for Political Studies/SMU (2008-Present); Board Member, University of Texas Development Board (2008-Present); Board Member, BancTec (2010 – Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-Present); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust Funds (2008-Present).
Richard A. Massman (68)	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 (2007-2011) and Director (2005-2011), The Dallas Opera Foundation; Chairman (2006-2010) and Director (2005-2009), Temple Emanu-El Foundation; Trustee, Presbyterian Healthcare Foundation (2006-Present); Director, The Retina Foundation of the Southwest (2000-Present); Trustee, American Beacon Mileage Funds (2004-Present); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust Funds (2004-Present).
R. Gerald Turner (65) 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 Funds (2001-Present).
Paul J. Zucconi,CPA (71)	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) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community services and products) (2010-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 Funds (2008-Present).
Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
OFFICERS	Term
	One Year
Gene L. Needles, Jr. (56)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President (2009-Present), American Beacon Mileage Funds; President (2009-Present), American Beacon Select Funds; 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.

60

Trustees and Officers of the American Beacon Funds

(Unaudited)

William F. Quinn** (63)	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), CEO (2006-2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman and Director (2008-Present), Lighthouse Holdings, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009), Director, Hicks Acquisition II, Inc. (2010-Present); 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); the Independent Trustee, National Railroad Retirement Investment Trust (2011-Present); Trustee (1995-2008) and President (1995-2007, 2008-2009), American Beacon Mileage Funds; Trustee (1999-2008) and President (1999-2007, 2008-Present), American Beacon Select Funds; Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds, plc (2007-2009).
Rosemary K. Behan (52)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Secretary (2008-Present), Lighthouse Holdings, Inc.; Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney, U.S. Securities and Exchange Commission, (1995-2004).
Brian E. Brett (51)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment adviser) (1996-2004).
Wyatt Crumpler (45)	VP since 2007	Vice President, Asset Management (2009-Present) and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.; Managing Director of Corporate Accounting (2004-2007) and Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Erica Duncan (41)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (57)	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 (50)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.; Treasurer (2010- Present), Lighthouse Holdings, Inc.
Terri L. McKinney (47)	VP since 2010	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), and Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; President, Board of Trustees (2010-Present), Vice-President, Board of Trustees (2008-2010), and Trustee (2006-2008), Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (36)	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).
Samuel J. Silver (48)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (40)	Chief Compliance Officer since 2004 and Asst. Secretary since1999	Chief Compliance Officer (2004-Present) and Senior Compliance Analyst (1998-2004), American Beacon Advisors, Inc.

61

Trustees and Officers of the American Beacon Funds

(Unaudited)

John J. Okray (37)	Asst. Secretary since 2010	Assistant General Counsel, American Beacon Advisors, Inc. (2010-Present); Vice President, Oppenheimer Funds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), Senior Tax Analyst (1999-2004), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.

* 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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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, and Advisor Classes Call (800) 658-5811 AMR ClassSM 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 State Street Bank and
Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data
Services Kansas City, Missouri INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Foreside Fund Services,
LLC Portland, Maine

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 10/11

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
Schedules of Investments:
High Yield Bond Fund	16
Retirement Income and Appreciation Fund	24
Intermediate Bond Fund	29
Short-Term Bond Fund	37
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. Following in order of decreasing credit ratings are Ba, B, Caa, Ca, and C.

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.

American Beacon Funds October 31, 2011

Fellow Shareholders, With the headlines focused on geopolitical and global economic risks and their effect on the creditworthiness of the U.S. government bond market, the strengthening underlying fundamentals at many credit-issuing companies—and their relatively attractive market valuations—have drawn less attention. This near-term myopia can create opportunities for fund companies like ours, where our sub-advisors manage with a longer-term perspective.

The market volatility also highlights the key benefit of our multi-manager approach—a strategy we feel can help smooth performance over time. The performance of our bond funds reflects the American Beacon investment philosophy: that portfolios managed with a longer-term perspective tend to be better positioned for riding out episodes of economic and geopolitical turbulence.

For the twelve-month period ended October 31, 2011:

>>American Beacon High Yield Bond Fund (Institutional Class) returned 3.79%

>>American Beacon Retirement Income and Appreciation Fund (Investor Class) returned 2.71%

>>American Beacon Intermediate Bond Fund (Institutional Class) returned 4.11%

>>American Beacon Short-Term Bond Fund (Institutional Class) returned 0.17%

At American Beacon, we remain focused on seeking opportunities and meeting market challenges to deliver the type of consistency in performance and service our shareholders value. We regard your trust in the American Beacon Funds as recognition that we are achieving these goals, and we appreciate your continued investment.

For further details about the growing number of investment opportunities now available within the American Beacon Funds family, please visit our website at www.americanbeaconfunds.com.

Best Regards,

        

Gene L. Needles, Jr.

President

American Beacon Funds

1

Domestic Bond Market Overview

October 31, 2011 (Unaudited)

The Barclays Capital Aggregate Index rose 5.00% for the 12 months ended October 31, 2011. During the period, two themes dominated: the deepening sovereign debt crisis in Europe and the actions taken (or not taken) in response to the uneven U.S. economic recovery. Despite these dual concerns, the U.S. Treasury market still managed to consistently capture investor interest throughout the year.

Support for Treasuries came early. Responding to slowing economic activity and declining inflation, the U.S. Federal Reserve (Fed) announced a second round of quantitative easing (QE2) in November 2010. To implement this easing, the Fed bought $600 billion in U.S. Treasury securities by the end of the second quarter of 2011.

Periodic flights to quality by risk-averse global investors provided additional support for U.S. Treasuries. Throughout the year, investors grew more and more agitated by what they viewed as minimal efforts on the part of the European Union to resolve its sovereign debt crisis. Investors continued to find comfort in U.S. Treasuries and viewed them as the least risky alternative, greatly offsetting the negative impact of Standard & Poor’s downgrade of the U.S. credit rating—from AAA to AA+—in August 2011.

In September 2011, the Fed announced “Operation Twist” in an effort to invigorate the still weak economy and soft housing market. In doing so, the Fed plans to purchase $400 billion of Treasury bonds with maturities between six and 30 years and sell Treasury bonds with maturities of less than three years. In addition, the Fed also announced that it would likely keep the target Federal Funds Rate between 0% and 0.25% percent until at least mid-2013 based on its outlook for economic conditions.

Given intensifying concerns about the spread of the European crisis and what appeared to be the imminent collapse of Greece, credit spreads also widened in the final months of the period, which led Treasuries to significantly outperform the other sectors.

The Financial sector bore the brunt of the impact, as a range of financial institutions held substantial loans made to the European institutions and governments. The sector was further affected by the decline in liquidity throughout the global markets. Meanwhile, the Industrials and Utilities sectors also weakened. This pullback may have been due to concerns regarding an economic slowdown, but these concerns represent a longer-term issue for both sectors. Given the ongoing impact of the Fed’s “Operation Twist,” the still-strong balance sheets of many corporate issuers, and Europe’s ongoing debt woes, the U.S. bond market appears to remain on solid ground.

2

High Yield Bond Market Overview

October 31, 2011 (Unaudited)

The JPMorgan Global High Yield Bond Index gained 6.01% for the 12 months ended October 31, 2011. This performance reflects generally strong credit fundamentals at the majority of companies. The reporting period, however, was characterized by heightened volatility in the market.

The period began with a brief sell-off in November 2010, which was related to renewed concerns about Europe’s sovereign debt problems. This foreshadowed the market reactions that would arise later in the year. However, a favorable U.S. economic outlook and hope that Europe’s problems were contained led to a strong rebound that largely continued into June 2011. This rebound occurred despite weakness in March following the Japanese earthquake and the Libyan uprising. The generally positive trends were also supported by several large mergers and acquisitions involving high-yield companies being purchased by larger investment-grade companies. With expectations for the U.S. economy improving, the belief that high-yield default rates would remain low for a protracted period drove spreads down to 5% in February, while nominal yields reached a record low of 6.75% in May.

Volatility returned in force over the summer, when contentious negotiations over the U.S. debt ceiling soured investors’ risk appetite. Europe’s problems also came back to the forefront with a vengeance. Spreads soared in both August and September amid heightened concerns for a global recession, reaching nearly 9% in early October. After declines in August and September, the high-yield market sharply reversed course and regained some of the lost ground, resulting in a nearly 6% total return in October.

Many investors remain wary of both the U.S and European economic outlooks, and they continue to avoid the equity markets. With few investment options offering attractive yields, the double-digit yield offered by the high-yield market in early October proved a tempting investment choice. Low exposure to Europe and expectations for a below-normal default rate, combined with attractive valuations, led to large inflows into the high-yield asset class during the month.

For all the ups and downs, the high-yield market ended the year much as it began. The new issue market is open and active, particularly for higher-quality companies. Overall for the year, yields rose roughly 80 basis points (0.80%), while high yield spreads widened approximately 100 basis points (1.00%) to 720 basis points (7.20%). This resulted in a solid but below-coupon return of 6% for the market during the period.

3

Performance Overview

American Beacon High Yield Bond Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the High Yield Bond Fund (“Fund”) returned 3.79% for the twelve months ended October 31, 2011. The Fund underperformed the JPMorgan Global High-Yield Index (the “Index”) return of 6.01% and the Lipper High Current Yield Funds Index return of 3.90% for the period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/2001 through 10/31/11

	Annualized Total Returns Periods Ended 10/31/11									Value of $10,000 10/31/01- 10/31/11
	1 Year			5 Years			10 Years
Institutional Class(1,8)		3.79	%		5.69	%		7.59	%	$	20,785
Y Class(1,4,8)		3.36	%		5.63	%		7.56	%		20,730
Investor Class(1,2,8)		3.41	%		5.40	%		7.31	%		20,241
A Class with sales charge (1,5,8)		-1.57	%		4.40	%		6.80	%		19,305
A Class without Sales charge (1,5,8)		3.31	%		5.43	%		7.32	%		20,268
C Class with sales charge (1,6,8)		1.67	%		5.19	%		7.20	%		20,040
C Class without sales charge (1,6,8)		2.67	%		5.19	%		7.20	%		20,040
AMR Class (1,3,8)		3.96	%		5.92	%		7.71	%		21,014
JPMorgan Global High-Yield Index (7)		6.01	%		8.28	%		9.57	%		24,935
Lipper High Current Yield Funds Index (7)		3.90	%		5.70	%		7.39	%		20,401

1. Performance shown is historical and is not 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 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 ten-year period represents the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01.

3. Fund performance for the five-year and ten-year periods represents the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01.

4. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/01 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 10/31/01.

5. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/01 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 10/31/01. The maximum sales charge for A Class is 4.75%.

6. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 10/31/01 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 10/31/01. 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 0.82%, 0.85%, 1.07%, 1.33%, 2.08%, and 0.57%, 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.

4

Performance Overview

American Beacon High Yield Bond Fund^SM

October 31, 2011 (Unaudited)

The underperformance of the Fund during the twelve-month period was primarily driven by weak issue selection across industries and credit quality.

From an industry standpoint, issue selections in the Wireless, Electric, and Paper industries contributed to the Fund’s relative underperformance, despite positive contribution from selections in the Property & Casualty Insurance and Retail industries.

From a industry allocation perspective, the Fund benefited from underweighting the Home Building industry (down 1.9%), however, maintaining an overweight position to the Property & Casualty Insurance industry detracted from the Fund’s relative returns as this industry (down 4.0%) was one of the worst performing in the Index.

From a credit quality perspective, issue selections in the B-rated category detracted from the Fund’s relative returns. The Fund’s BB-rated securities helped offset some of the underperformance as the Fund’s securities outperformed the BB-securities in the Index.

From a credit quality allocation perspective, allocations to the typical credit quality categories - BB, B, and CCC - were mostly neutral during the period. The Fund’s relative returns were not significantly impacted by its over/underweight to these categories. However, overweighting the CC-rated securities (up 35.6%) added value, which was more than offset by overweighting A-rated securities (down 1.5%) and underweighting non-rated securities (up 17.4%).

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
CEDC Finance Corp International, Inc., 9.125%, Due 12/1/2016, 144A		1.0	%
CIT Group, Inc., 7.000%, Due 5/2/2017, 144A		0.9	%
DISH DBS Corp., 7.125%, Due 2/1/2016		0.9	%
Ford Motor Credit Co. LLC, 6.625%, Due 8/15/2017		0.8	%
Nuveen Investments, Inc., 10.50%, Due 11/15/2015		0.8	%
International Lease Finance Corp., 5.65%, Due 6/1/2014		0.8	%
RITE AID Corp., 9.75%, Due 6/12/2016		0.8	%
HUB International Holdings, Inc., 10.250%, Due 6/15/2015, 144A		0.8	%
Synovus Financial Corp., 5.125%, Due 6/15/2017		0.8	%
Cricket Communications, Inc., 7.75%, Due 10/15/2020		0.7	%

Sector Allocation

	% of Equity and Fixed Income
Corporate Obligations - Industrials		81.3	%
Corporate Obligations - Finance		10.3	%
Corporate Obligations - Utilities		5.7	%
Equity		1.7	%
Convertible Obligations		1.0	%

5

Performance Overview

American Beacon Retirement Income and Appreciation Fund^SM

October 31, 2011 (Unaudited)

The Y Class of the Retirement Income and Appreciation Fund (“Fund”) returned 2.96% for the twelve months ended October 31, 2011. 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 4.18%. The Fund’s peer group, the Lipper Intermediate Investment Grade Index, returned 3.90% for the same period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 7/1/03* through 10/31/11

* Inception of Fund

Annualized Total Returns

Periods Ended 10/31/11

	1 Year			5 Years			Since Incep. (7/1/03)			Value of $10,000 7/1/03- 10/31/11
Y Class(1,2,7)		2.96	%		5.48	%		4.80	%	$	14,779
Investor Class(1,7)		2.71	%		5.41	%		4.76	%		14,734
A Class with sales Charge(1,3,7)		-2.27	%		4.38	%		4.14	%		14,023
A Class without sales Charge(1,3,7)		2.61	%		5.40	%		4.75	%		14,724
C Class with sales Charge(1,4,7)		0.84	%		5.20	%		4.63	%		14,583
C Class without sales Charge(1,4,7)		1.84	%		5.20	%		4.63	%		14,583
Retirement Income and Appreciation Composite Index(6)		4.18	%		5.81	%		5.19	%		15,245
Barclays Capital Aggregate Index (5)		5.00	%		6.41	%		4.81	%		14,793
BofA Merrill Lynch All U.S. Convertibles Index (5)		1.02	%		3.03	%		5.64	%		15,799
Lipper Intermediate Investment Grade Index (5)		3.90	%		5.82	%		4.78	%		14,758

1. Performance shown is historical and is not 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 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 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 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 0.81%, 1.09%, 1.21%, and 2.01%, 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, 2011 (Unaudited)

During the twelve-month period, the investment grade bond portion of the Fund returned 4.1% before expenses, compared to a 5.0% return for the Barclays Index. This portion of the Fund underperformed mostly due to a substantial overweight position in Corporates. The Fund’s Financial bond holdings, which underperformed Treasuries the most, were negatively impacted by the European crisis.

The remaining portion of the Fund, managed by the Fund’s sub-advisor, returned 2.6% before expenses. These results exceeded the 1.0% return of the ML Index. The sub-advisor’s underweight to Financials and security selection within this sector added value relative to the ML Index. The Materials sector also added value on an annual basis as commodity related companies posted solid gains. The sub-advisor’s slightly higher quality bias continued to positively impact performance.

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
Government National Mortgage Association, 2.70%, Due 4/16/2043		2.1	%
Government National Mortgage Association, 3.20%, Due 11/16/2044		2.0	%
Fannie Mae Pool, 5.00%, Due 1/1/2041		2.0	%
Government National Mortgage Association, 2.543%, Due 9/16/2044		1.8	%
National Credit Union Administration, 0.674%, Due 10/7/2020		1.7	%
National Credit Union Administration, 0.625%, Due 3/11/2020		1.5	%
Freddie Mac Gold Pool, 4.50%, Due 2/1/2041		1.3	%
Ford Credit Floorplan Master Owner Trust, 1.769%, Due 9/15/2014		1.2	%
Freddie Mac Gold Pool, 4.00%, Due 1/1/2041		1.2	%
Freddie Mac Gold Pool, 0.629%, Due 12/15/2040		1.2	%

Sector Allocation

	% of Fixed Income
Corporate		41.6	%
Mortgage-Backed		30.4	%
Convertibles		13.6	%
U.S. Treasury		7.5	%
Asset-Backed		3.4	%
Commercial Mortgage-Backed Securities		2.9	%
Other Government Obligations		0.4	%
Agency		0.2	%

Sector Allocation

	% of Equities
Information Technology		31.0	%
Energy		26.4	%
Financials		12.9	%
Industrials		11.0	%
Materials		8.9	%
Consumer Staples		6.1	%
Health Care		3.7	%

7

Performance Overview

American Beacon Intermediate Bond Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the Intermediate Bond Fund (“Fund”) returned 4.11% for the twelve months ended October 31, 2011, underperforming the Barclays Capital Aggregate Index (the “Index”) return of 5.00%, but outperforming the Lipper Intermediate Investment Grade Index return of 3.90% for the same period.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/01 through 10/31/11

	Annualized Total Returns Periods Ended 10/31/11									Value of $10,000 10/31/01- 10/31/11
	1 Year			5 Years			10 Years
Institutional Class(1,7)		4.11	%		6.55	%		5.34	%	$	16,821
Y Class(1,3,7)		4.19	%		6.53	%		5.33	%		16,810
Investor Class (1,2,7)		3.65	%		6.27	%		5.20	%		16,603
A Class with sales Charge(1,4,7)		-1.44	%		5.17	%		4.66	%		15,768
A Class without sales Charge(1,4,7)		3.45	%		6.20	%		5.17	%		16,549
C Class with sales Charge(1,5,7)		1.70	%		6.04	%		5.09	%		16,427
C Class without sales Charge(1,5,7)		2.70	%		6.04	%		5.09	%		16,427
Barclays Capital Agg. Index (6)		5.00	%		6.41	%		5.46	%		17,013
Lipper Intermediate Inv. Grade Index (6)		3.90	%		5.82	%		5.10	%		16,442

1. Performance shown is historical and is not 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 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 10/31/01.

3. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01.

4. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01. The maximum sales charge for A Class is 4.75%.

5. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01. 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 0.34%, 0.68%, 0.84%, 1.06%, 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.

The Fund underperformed the Index through both sector allocation and security selection. An underweight in U.S. Treasuries detracted value from the Fund’s performance relative to the Index. U.S. Treasuries were the best performing sector of the Index as interest rates declined during the latter half of the year. For this same reason, the Fund’s slightly shorter duration also detracted modest value. Poor selection in the Corporate sector, across the board, also hurt performance. The Fund’s overweight in Financials was the largest detractor among the Corporate bond holdings as these companies were negatively impacted by the European crisis.

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.

8

Performance Overview

American Beacon Intermediate Bond Fund^SM

October 31, 2011 (Unaudited)

Top Ten Holdings

	% of Net Assets
Freddie Mac Gold Pool, 5.00%, Due 4/1/2040		1.6	%
National Credit Union Administration, 0.625%, Due 3/11/2020		1.3	%
Fannie Mae Pool, 5.00%, Due 5/1/2040		1.3	%
Fannie Mae Pool, 4.50%, Due 1/1/2040		1.2	%
Government National Mortgage Association, 2.70%, Due 4/16/2043		1.1	%
Fannie Mae Pool, 4.50%, Due 3/1/2025		1.1	%
Government National Mortgage Association, 3.20%, Due 11/16/2044		1.0	%
National Credit Union Administration, 0.674%, Due 10/7/2020		1.0	%
Fannie Mae Pool, 5.50%, Due 6/1/2040		0.9	%
The Bear Stearns Cos., Inc., 7.25%, Due 2/1/2018		0.9	%

Sector Allocation

	% of Fixed Income
Corporate		45.3	%
Mortgage-Backed		34.1	%
U.S. Treasury		13.4	%
Commercial Mortgage-Backed Securities		3.8	%
Asset-Backed		2.9	%
Agency		0.3	%
Other Government Obligations		0.2	%

9

Performance Overview

American Beacon Short-Term Bond Fund^SM

October 31, 2011 (Unaudited)

The Institutional Class of the Short-Term Bond Fund (“Fund”) returned 0.17% for the twelve months ended October 31, 2011, which underperformed the BofA Merrill Lynch 1-3 Year Gov/Corp Index (the “Index”) return of 1.20% and the Lipper Short Investment Grade Bond Funds Index (“Lipper”) return of 1.09%.

Comparison of Change in Value of a $10,000 Investment

For the Period from 10/31/01 through 10/31/11

	Annualized Total Returns Periods Ended 10/31/11									Value of $10,000 10/31/01- 10/31/11
	1 Year			5 Years			10 Years
Institutional Class(1,6)		0.17	%		3.64	%		3.35	%	$	13,906
Y Class(1,2,6)		0.04	%		3.61	%		3.34	%		13,884
Investor Class(1,6)		-0.12	%		3.21	%		2.88	%		13,289
A Class with sales Charge(1,3,6)		-2.84	%		2.66	%		2.60	%		12,927
A Class without sales Charge(1,3,6)		-0.33	%		3.17	%		2.86	%		13,263
C Class with sales Charge(1,4,6)		-2.00	%		3.02	%		2.79	%		13,166
C Class without sales Charge(1,4,6)		-1.00	%		3.02	%		2.79	%		13,166
Lipper Short Inv. Grade Bond Funds Index (5)		1.09	%		3.33	%		3.00	%		13,445
BofA Merrill Lynch 1-3Yr. Gov./Corp Index(5)		1.20	%		4.06	%		3.55	%		14,169

1. Performance shown is historical and is not 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.

2. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Institutional Class from 10/31/01 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 10/31/01.

3. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. The maximum sales charge for A Class is 2.50%.

4. Fund performance for the five-year and ten-year periods represent the total returns achieved by the Investor Class from 10/31/01 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 10/31/01. 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 0.35%, 0.65%, 0.86%, 1.02%, and 2.05%, 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 period, the Fund was overweight in the Corporate sector, primarily Financials, which underperformed as the European debt crisis deepened and U.S. Treasury yields declined. Investors sought the safety of U.S. Government obligations, which caused nearly all credit sectors to underperform. The Fund generally remains overweight in the various credit sectors to generate incremental yield-to-maturity compared to the Index, but this position may underperform during periods of heightened market volatility.

Also during the period, the Fund’s duration was shorter than that of the Index, which led to underperformance as interest rates declined. Given the near-record low levels of interest rates, we reduced the Fund’s duration to protect from an ultimate rise in interest rates. While a rise in rates does not appear to be imminent, the absolute low level of yields warrants a more defensive approach towards duration.

10

Performance Overview

American Beacon Short-Term Bond Fund^SM

October 31, 2011 (Unaudited)

In the mean time, we continue to look for opportunity in this low interest rate environment and strive to protect the Fund from an eventual rise in rates. We will also maintain our conservative approach toward credit risk and seek to outperform over the long-term on a risk-adjusted basis.

Top Ten Holdings

	% of Net Assets
National Credit Union Administration, 0.625%, Due 3/11/2020		3.9	%
National Credit Union Administration, 0.691%, Due 1/8/2020		3.6	%
Government National Mortgage Association, 2.25%, Due 5/16/2033		2.2	%
Government National Mortgage Association, 2.45%, Due 7/16/2032		2.2	%
Ally Master Owner Trust, 1.031%, Due 9/15/2016		2.1	%
Government National Mortgage Association, 1.864%, Due 8/16/2031		1.9	%
Ford Credit Floorplan Master Owner Trust, 1.769%, Due 9/15/2014		1.7	%
Government National Mortgage Association, 2.45%, Due 7/16/2038		1.6	%
Government National Mortgage Association, 2.161%, Due 11/16/2036		1.6	%
National Australia Bank Ltd., 1.202%, Due 7/25/2014.		1.6	%

Sector Allocation

	% of Fixed Income
Corporate		47.2	%
Mortgage-Backed		33.5	%
Asset-Backed.		15.8	%
U.S. Treasury Notes		3.7	%
Commercial Mortgage-Backed Securities		0.8	%

11

Fund Expenses

American Beacon Funds

October 31, 2011 (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, 2011 through October 31, 2011.

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.

Institutional Class	High Yield Bond Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	971.73		$	1,041.85		$	999.32
Expenses Paid During Period 5/1/11-10/31/11 *	$	4.62		$	2.01		$	2.12
Annualized Expense Ratio		0.93	%		0.39	%		0.42	%

Y Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	969.56		$	1,005.79		$	1,039.77		$	997.48
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.81		$	5.56		$	4.06		$	3.98
Annualized Expense Ratio		1.17	%		1.10	%		0.79	%		0.79	%

Investor Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	969.56		$	1,005.79		$	1,039.77		$	997.48
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.81		$	5.56		$	4.06		$	3.98
Annualized Expense Ratio		1.17	%		1.10	%		0.79	%		0.79	%

A Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	969.83		$	1,005.61		$	1,038.74		$	997.16
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.46		$	5.71		$	5.09		$	4.23
Annualized Expense Ratio		1.10	%		1.13	%		0.99	%		0.84	%

C Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	966.16		$	1,000.54		$	1,034.83		$	993.71
Expenses Paid During Period 5/1/11-10/31/11 *	$	9.22		$	9.68		$	8.92		$	7.69
Annualized Expense Ratio		1.86	%		1.92	%		1.74	%		1.53	%

12

Fund Expenses

American Beacon Funds

October 31, 2011 (Unaudited)

AMR Class	High Yield Bond Fund
Beginning Account Value 5/1/11	$	1,000.00
Ending Account Value 10/31/2011	$	972.12
Expenses Paid During Period 5/1/11-10/31/11 *	$	3.18
Annualized Expense Ratio		0.64	%

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.

Institutional Class	High Yield Bond Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,020.52		$	1,023.24		$	1,023.09
Expenses Paid During Period 5/1/11-10/31/11 *	$	4.74		$	1.99		$	2.14
Annualized Expense Ratio		0.93	%		0.39	%		0.42	%

Y Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,019.31		$	1,019.66		$	1,021.22		$	1,021.22
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.96		$	5.60		$	4.02		$	4.02
Annualized Expense Ratio		1.17	%		1.10	%		0.79	%		0.79	%

Investor Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,019.31		$	1,019.66		$	1,021.22		$	1,021.22
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.96		$	5.60		$	4.02		$	4.02
Annualized Expense Ratio		1.17	%		1.10	%		0.79	%		0.79	%

A Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,019.66		$	1,019.51		$	1,020.21		$	1,020.97
Expenses Paid During Period 5/1/11-10/31/11 *	$	5.60		$	5.75		$	5.04		$	4.28
Annualized Expense Ratio		1.10	%		1.13	%		0.99	%		0.84	%

13

Fund Expenses

American Beacon Funds

October 31, 2011 (Unaudited)

C Class	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Beginning Account Value 5/1/11	$	1,000.00		$	1,000.00		$	1,000.00		$	1,000.00
Ending Account Value 10/31/11	$	1,015.83		$	1,015.53		$	1,016.43		$	1,017.49
Expenses Paid During Period 5/1/11-10/31/11 *	$	9.45		$	9.75		$	8.84		$	7.78
Annualized Expense Ratio		1.86	%		1.92	%		1.74	%		1.53	%

AMR Class	High Yield Bond Fund
Beginning Account Value 5/1/11	$	1,000.00
Ending Account Value 10/31/11	$	1,021.98
Expenses Paid During Period 5/1/11-10/31/11 *	$	3.26
Annualized Expense Ratio		0.64	%

* 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.

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 schedules of investments, of 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 (four of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2011, 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 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, 2011, 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 Retirement Income and Appreciation Fund, the American Beacon Intermediate Bond Fund, and the American Beacon Short-Term Bond Fund at October 31, 2011, 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 29, 2011

15

American Beacon High Yield Bond Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
	(000’s)		(000’s)
COMMON STOCKS - 0.41%
COMMUNICATIONS - 0.01%
Media - 0.01%
Dex One Corp.A		23,761	$	15
SuperMedia, Inc.A		1,037		2
Total Communications				17
CONSUMER DISCRETIONARY - 0.13%
Automobiles - 0.13%
General Motors Co.A		6,381		165
FINANCIALS - 0.04%
Finance - 0.04%
Marsico Holdings LLCA B		13,199		53
INDUSTRIALS- 0.01%
Marine - 0.01%
Horizon Lines, Inc., Class AA		32,303		9
RIGHTS/WARRANTS - 0.22%
Charter Communications, Inc.,
Due 11/30/2014A C		2,416		27
Due 11/30/2014A D		2,759		30
General Motors Co.,
Due 7/10/2016A D		5,801		97
Due 7/10/2019A D		5,801		68
Horizon Lines, Inc.A		122,999		34
Total Rights/Warrants				256
Total Common Stocks (Cost $2,402)				500
PREFERRED STOCKS - 0.87%
FINANCIALS - 0.87%
Diversified Financials - 0.02%
Federal Home Loan Mortgage Corp.E		10,000		21
Finance - 0.85%
Ally Financial, Inc.F		159		119
GMAC Capital Trust I E		11,600		243
Zions Bancorporation		26,300		681
				1,043
Total Preferred Stocks (Cost $1,212)				1,064
CONVERTIBLE PREFERRED STOCK - 0.22% (Cost $267)
FINANCIALS - 0.22%
Diversified Financials - 0.22%
Wells Fargo & Co		260		275

	Par Amount
	(000’s)
CONVERTIBLE OBLIGATIONS - 0.91%
Convertible Obligations - 0.91%
E*Trade Financial Corp., 0%, Due 8/31/2019	$	240	252
Horizon Lines, Inc.,
6.00%, Due 4/15/2017		870	587
Powerwave Technologies, Inc., 3.875%, Due 10/1/2027		485	279
Total Convertible Obligations (Cost $1,267)			1,118
CORPORATE OBLIGATIONS - 86.88%
Finance - 9.24%
ACE Cash Express, Inc., 11.00%, Due 2/1/2019F		400	373
Alliant Holdings I, Inc., 11.00%, Due 5/1/2015F		300	309
Ally Financial, Inc.,
6.875%, Due 8/28/2012		400	405

See accompanying notes

16

American Beacon High Yield Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
8.00%, Due 12/31/2018	$	300	$	294
7.50%, Due 9/15/2020F		400		404
Amsouth Bank, 4.85%, Due 4/1/2013		150		144
Bank of America Corp., 8.125%, Due 12/29/2049		500		465
Bank One Capital III, 8.75%, Due 9/1/2030		220		268
CIT Group, Inc.,
7.00%, Due 5/2/2017F		1,100		1,096
6.625%, Due 4/1/2018F		100		105
CNL Lifestyle Properties, Inc., 7.25%, Due 4/15/2019		250		225
E*Trade Financial Corp., 12.50%, Due 11/30/2017G		640		738
Fontainebleau Las Vegas Holdings LLC, 10.25%, Due 6/15/2015B F J		1,800		2
Harbinger Group, Inc., 10.625%, Due 11/15/2015F		225		226
HUB International Holdings, Inc.,
9.00%, Due 12/15/2014F		250		249
10.25%, Due 6/15/2015F		1,075		1,039
International Lease Finance Corp.,
5.625%, Due 9/20/2013		160		158
5.65%, Due 6/1/2014		1,000		960
iPayment, Inc., 10.25%, Due 5/15/2018F		200		193
Marsico Holdings LLC, 10.625%, Due 1/15/2020B F G		200		80
MetLife, Inc., 10.75%, Due 8/1/2069		150		198
Nationwide Mutual Insurance Co., 9.375%, Due 8/15/2039F		225		276
Nuveen Investments, Inc.,
5.50%, Due 9/15/2015		250		213
10.50%, Due 11/15/2015		975		975
Oppenheimer Holdings, Inc., 8.75%, Due 4/15/2018		300		293
Regions Bank, 7.50%, Due 5/15/2018		250		244
ROC Finance LLC, 12.125%, Due 9/1/2018B F		175		185
Synovus Financial Corp., 5.125%, Due 6/15/2017		1,200		1,026
WMG Acquisition Corp., 11.50%, Due 10/1/2018F		175		175
				11,318
Industrials - 72.59%
Abengoa Finance SAU, 8.875%, Due 11/1/2017F		400		404
Academy Ltd., 9.25%, Due 8/1/2019F		300		302
Accuride Corp., 9.50%, Due 8/1/2018		670		654
Advanced Micro Devices, Inc., 7.75%, Due 8/1/2020		400		406
AE Escrow Corp., 9.75%, Due 3/15/2020F		385		400
Affinia Group, Inc., 9.00%, Due 11/30/2014		250		248
Alcatel-Lucent USA, Inc., 6.45%, Due 3/15/2029		500		440
Alere, Inc., 8.625%, Due 10/1/2018		205		205
Allison Transmission, Inc., 7.125%, Due 5/15/2019F		595		576
AMC Entertainment, Inc., 9.75%, Due 12/1/2020		160		155
American Petroleum Tankers Parent LLC, 10.25%, Due 5/1/2015B F		275		283
Antero Resources Finance Corp., 7.25%, Due 8/1/2019F		200		206
Appleton Papers, Inc., 10.50%, Due 6/15/2015F		200		200
Arch Coal, Inc.,
7.00%, Due 6/15/2019F		100		104
7.25%, Due 6/15/2021F		200		206
ARD Finance S.A., 11.125%, Due 6/1/2018F		300		270
Atkore International, Inc., 9.875%, Due 1/1/2018F		365		366
Aviv Healthcare Properties LP, 7.75%, Due 2/15/2019F H		200		193
Basic Energy Services, Inc., 7.125%, Due 4/15/2016		350		355
Belden, Inc., 7.00%, Due 3/15/2017		155		156
Berry Petroleum Co., 10.25%, Due 6/1/2014		397		450
Biomet, Inc., 11.625%, Due 10/15/2017		175		191
Boart Longyear Management Property Ltd., 7.00%, Due 4/1/2021F		215		212
Bresnan Broadband Holdings LLC, 8.00%, Due 12/15/2018B F		125		129
Brigham Exploration Co., 6.875%, Due 6/1/2019		75		82
Brightstar Corp., 9.50%, Due 12/1/2016F		270		273
Burlington Coat Factory Warehouse Corp., 10.00%, Due 2/15/2019F		465		460
Cablevision Systems Corp., 8.625%, Due 9/15/2017		400		434
Caesars Entertainment Operating Co. Inc.,

See accompanying notes

17

American Beacon High Yield Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
10.75%, Due 2/1/2016	$	400	$	332
11.25%, Due 6/1/2017		700		748
Calumet Specialty Products Partners LP, 9.375%, Due 5/1/2019F H		200		192
Casella Waste Systems, Inc., 11.00%, Due 7/15/2014		175		189
Catalyst Paper Corp., 11.00%, Due 12/15/2016F		300		174
CCH II LLC, 13.50%, Due 11/30/2016B		200		231
CCO Holdings LLC,
7.25%, Due 10/30/2017B		200		209
6.50%, Due 4/30/2021B		200		200
CDRT Merger Sub, Inc., 8.125%, Due 6/1/2019F		400		400
CDW LLC, 8.50%, Due 4/1/2019B F		500		485
CEDC Finance Corp International, Inc., 9.125%, Due 12/1/2016F		1,700		1,223
Cemex SAB de CV, 9.00%, Due 1/11/2018F		765		638
Cengage Learning Acquisitions, Inc., 10.50%, Due 1/15/2015F		250		198
Central Garden and Pet Co., 8.25%, Due 3/1/2018		154		154
Cenveo Corp.,
7.875%, Due 12/1/2013		515		425
8.875%, Due 2/1/2018		585		507
CEVA Group plc,
11.625%, Due 10/1/2016F		100		101
11.50%, Due 4/1/2018F		200		181
CF Industries Holdings, Inc., 7.125%, Due 5/1/2020		285		332
Chaparral Energy, Inc.,
9.875%, Due 10/1/2020		500		543
8.25%, Due 9/1/2021		500		509
CHC Helicopter S.A., 9.25%, Due 10/15/2020F		400		360
Chesapeake Energy Corp.,
6.625%, Due 8/15/2020		500		542
6.125%, Due 2/15/2021		100		105
Chesapeake Oilfield Operating LLC, 6.625%, Due 11/15/2019B F		300		308
Chrysler Group LLC, 8.25%, Due 6/15/2021B F		200		183
Cie Generale de Geophysique - Veritas, 6.50%, Due 6/1/2021F		400		398
Cincinnati Bell, Inc.,
8.25%, Due 10/15/2017		100		101
8.75%, Due 3/15/2018		300		288
Clayton Williams Energy, Inc., 7.75%, Due 4/1/2019F		400		370
Clear Channel Communications, Inc., 9.00%, Due 3/1/2021		600		534
Clear Channel Worldwide Holdings, Inc., 9.25%, Due 12/15/2017		350		378
Clearwire Communications LLC,
12.00%, Due 12/1/2015B F		115		98
12.00%, Due 12/1/2017B F		375		230
ClubCorp Club Operations, Inc., 10.00%, Due 12/1/2018F		300		284
Coffeyville Resources LLC, 10.875%, Due 4/1/2017B F		350		396
Colt Defense LLC, 8.75%, Due 11/15/2017B		130		98
CommScope, Inc., 8.25%, Due 1/15/2019F		300		296
Community Health Systems, Inc., 8.875%, Due 7/15/2015		400		410
Concho Resources Inc., 6.50%, Due 1/15/2022		200		210
Consol Energy, Inc.,
8.00%, Due 4/1/2017		770		842
8.25%, Due 4/1/2020		412		451
CRC Health Corp., 10.75%, Due 2/1/2016		300		286
Cricket Communications, Inc.,
7.75%, Due 5/15/2016		185		192
7.75%, Due 10/15/2020		1,030		880
7.750%, Due 10/15/2020F		285		241
Crown Media Holdings, Inc., 10.50%, Due 7/15/2019F		200		208
CSC Holdings LLC, 6.75%, Due 11/15/2021B F		200		200
Cumulus Media, Inc., 7.75%, Due 5/1/2019F		300		276
Dave & Buster's, Inc., 11.00%, Due 6/1/2018		375		394
Dean Foods Co., 9.75%, Due 12/15/2018F		600		643
Del Monte Foods Co., 7.625%, Due 2/15/2019F		300		285
Digicel Group Ltd., 9.125%, Due 1/15/2015F		225		227
DineEquity, Inc., 9.50%, Due 10/30/2018		100		106

See accompanying notes

18

American Beacon High Yield Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
DISH DBS Corp., 7.125%, Due 2/1/2016	$	1,000	$	1,062
DJO Finance LLC, 7.75%, Due 4/15/2018B		200		169
DynCorp International, Inc., 10.375%, Due 7/1/2017F		730		665
eAccess Ltd., 8.25%, Due 4/1/2018F		300		291
Eagle Rock Energy Partners LP, 8.375%, Due 6/1/2019F H		200		201
Earthlink, Inc., 8.875%, Due 5/15/2019		320		304
Endo Pharmaceuticals Holdings, Inc., 7.00%, Due 7/15/2019F		200		216
Energy Partners Ltd., 8.25%, Due 2/15/2018		165		155
Energy XXI Gulf Coast, Inc., 9.25%, Due 12/15/2017		805		856
EnergySolutions Inc., 10.75%, Due 8/15/2018B		375		379
Equinix, Inc., 8.125%, Due 3/1/2018		175		191
Equinox Holdings, Inc., 9.50%, Due 2/1/2016F		250		253
Euramax International, Inc., 9.50%, Due 4/1/2016F		200		170
EVERTEC, Inc., 11.00%, Due 10/1/2018F		500		505
ExamWorks Group, Inc., 9.00%, Due 7/15/2019F		100		96
Exide Technologies, 8.625%, Due 2/1/2018		175		175
Exopack Holding Corp., 10.00%, Due 6/1/2018F		300		294
Expro Finance Luxembourg SCA, 8.50%, Due 12/15/2016F		400		386
FAGE Dairy Industry S.A., 9.875%, Due 2/1/2020F		255		217
Felcor Lodging LP, 10.00%, Due 10/1/2014H		165		179
First Data Corp.,
10.55%, Due 9/24/2015		342		332
8.25%, Due 1/15/2021F		324		308
12.625%, Due 1/15/2021F		150		142
FMG Resources August 2006 Property Ltd.,
6.875%, Due 2/1/2018F		400		384
8.25%, Due 11/1/2019F		100		101
Forbes Energy Services Ltd., 9.00%, Due 6/15/2019F		240		227
Ford Motor Credit Co. LLC,
6.625%, Due 8/15/2017B		900		985
8.125%, Due 1/15/2020B		400		485
Freescale Semiconductor, Inc.,
10.125%, Due 3/15/2018F		175		192
9.25%, Due 4/15/2018F		100		108
8.05%, Due 2/1/2020		100		96
10.75%, Due 8/1/2020		200		210
Frontier Communications Corp.,
8.25%, Due 4/15/2017		200		214
8.50%, Due 4/15/2020		300		320
8.75%, Due 4/15/2022		400		424
Gaylord Entertainment Co., 6.75%, Due 11/15/2014		190		188
GCI, Inc., 8.625%, Due 11/15/2019		405		434
General Motors Corp., 8.375%, Due 7/15/2049		1,570		12
Giant Funding Corp., 8.25%, Due 2/1/2018F		300		316
Goodrich Petroleum Corp., 8.875%, Due 3/15/2019F		550		561
Gray Television, Inc., 10.50%, Due 6/29/2015		250		236
GWR Operating Partnership LLP, 10.875%, Due 4/1/2017B		400		426
HCA, Inc.,
9.00%, Due 12/15/2014		225		232
7.19%, Due 11/15/2015		200		196
7.50%, Due 2/15/2022		400		408
Helix Energy Solutions Group, Inc., 9.50%, Due 1/15/2016F		505		530
Hercules Offshore, Inc., 10.50%, Due 10/15/2017F		440		440
Hilcorp Energy I LP, 8.00%, Due 2/15/2020F H		200		215
Horizon Lines LLC,
11.00%, Due 10/15/2016B F		660		666
13.00%, Due 10/15/2016B EF		345		342
Hyva Global BV, 8.625%, Due 3/24/2016F		200		180
Ineos Finance plc, 9.00%, Due 5/15/2015F		100		103
Ineos Group Holdings Ltd., 8.50%, Due 2/15/2016F		300		254
Intelsat Jackson Holdings S.A.,
11.25%, Due 6/15/2016		300		317
7.50%, Due 4/1/2021F		400		402

See accompanying notes

19

American Beacon High Yield Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
Intelsat Luxembourg S.A.,
11.50%, Due 2/4/2017	$	525	$	525
11.50%, Due 2/4/2017F		350		350
International Automotive Components Group SL, 9.125%, Due 6/1/2018F		200		197
inVentiv Health, Inc., 10.00%, Due 8/15/2018F		900		863
Isle of Capri Casinos, Inc.,
7.00%, Due 3/1/2014		200		192
7.75%, Due 3/15/2019		150		147
ITC Deltacom, Inc., 10.50%, Due 4/1/2016		360		364
Jarden Corp., 7.50%, Due 5/1/2017		465		498
JBS USA LLC, 11.625%, Due 5/1/2014B		375		413
Kabel BW Erste Beteiligungs GmbH, 7.50%, Due 3/15/2019F		175		182
Key Energy Services, Inc., 6.75%, Due 3/1/2021		520		532
Kinove German Bondco GmbH, 9.625%, Due 6/15/2018F		200		193
Level 3 Financing, Inc., 9.25%, Due 11/1/2014		425		434
Libbey Glass, Inc., 10.00%, Due 2/15/2015		175		186
Liberty Tire Recycling, 11.00%, Due 10/1/2016F		525		530
Linn Energy LLC,
6.50%, Due 5/15/2019B F		355		357
8.625%, Due 4/15/2020B		700		771
7.75%, Due 2/1/2021B FI		230		246
Lions Gate Entertainment, Inc., 10.25%, Due 11/1/2016F		155		156
M/I Homes, Inc., 8.625%, Due 11/15/2018		400		360
MacDermid, Inc., 9.50%, Due 4/15/2017F		625		593
Mandalay Resort Group, 7.625%, Due 7/15/2013		500		495
Marina District Finance Co. Inc, 9.875%, Due 8/15/2018		450		444
MedAssets, Inc., 8.00%, Due 11/15/2018F		300		294
Media General, Inc., 11.75%, Due 2/15/2017		200		168
MEMC Electronic Materials, Inc., 7.75%, Due 4/1/2019		225		193
MGM Resorts International, 6.625%, Due 7/15/2015		900		854
Michaels Stores, Inc., 7.75%, Due 11/1/2018		400		406
Midwest Gaming Borrower LLC, 11.625%, Due 4/15/2016B F		225		236
Midwest Vanadium Property Ltd., 11.50%, Due 2/15/2018F		200		167
Mirant Mid Atlantic Pass Through Trust C, 10.06%, Due 12/30/2028		244		254
Momentive Performance Materials, Inc., 9.00%, Due 1/15/2021		300		254
Mylan, Inc., 7.875%, Due 7/15/2020F		400		448
Nalco Co., 6.625%, Due 1/15/2019F		245		273
National CineMedia LLC, 7.875%, Due 7/15/2021B		100		101
NBTY, Inc., 9.00%, Due 10/1/2018F		200		215
NCL Corp Ltd.,
11.75%, Due 11/15/2016		350		403
9.50%, Due 11/15/2018F		200		208
NCO Group, Inc., 11.875%, Due 11/15/2014		300		281
Neff Rental LLC, 9.625%, Due 5/15/2016B F		120		115
NewPage Corp., 11.375%, Due 12/31/2014J		500		374
Nexstar Broadcasting Inc., 8.875%, Due 4/15/2017		150		152
NII Capital Corp., 7.625%, Due 4/1/2021		310		319
Norske Skogindustrier ASA, 6.125%, Due 10/15/2015F		750		315
Novelis, Inc., 8.75%, Due 12/15/2020		300		327
NPC International, Inc., 9.50%, Due 5/1/2014		350		356
NXP BV, 9.75%, Due 8/1/2018F		300		330
Oasis Petroleum, Inc., 6.50%, Due 11/1/2021		100		101
Offshore Group Investments Ltd., 11.50%, Due 8/1/2015		170		185
OGX Petroleo e Gas Participacoes S.A., 8.50%, Due 6/1/2018F		350		347
Omnova Solutions, Inc., 7.875%, Due 11/1/2018		100		86
OnCure Holdings, Inc., 11.75%, Due 5/15/2017		285		248
OPTI Canada, Inc., 8.25%, Due 12/15/2014J		645		419
Peabody Energy Corp., 7.375%, Due 11/1/2016		500		548
Petco Animal Supplies, Inc., 9.25%, Due 12/1/2018F		490		521
Petrohawk Energy Corp., 10.50%, Due 8/1/2014		200		224
Petroquest Energy, Inc., 10.00%, Due 9/1/2017		250		259
Pinnacle Entertainment, Inc., 7.50%, Due 6/15/2015		400		393
Pinnacle Foods Finance LLC,

See accompanying notes

20

American Beacon High Yield Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
9.25%, Due 4/1/2015B	$	300	$	311
10.625%, Due 4/1/2017B		225		233
Plains Exploration & Production Co., 10.00%, Due 3/1/2016		500		555
Prestige Brands, Inc., 8.25%, Due 4/1/2018		575		586
Prospect Medical Holdings, Inc., 12.75%, Due 7/15/2014		150		159
Quality Distribution LLC, 9.875%, Due 11/1/2018B		250		248
Quicksilver Resources, Inc.,
8.25%, Due 8/1/2015		300		314
9.125%, Due 8/15/2019		400		426
Quiksilver, Inc., 6.875%, Due 4/15/2015		405		382
QVC, Inc., 7.50%, Due 10/1/2019F		320		348
Qwest Corp., 8.375%, Due 5/1/2016		145		166
Radnet Management, Inc., 10.375%, Due 4/1/2018		350		315
RailAmerica, Inc., 9.25%, Due 7/1/2017		110		120
Reliance Intermediate Holdings LP, 9.50%, Due 12/15/2019F H		450		482
Revlon Consumer Products Corp., 9.75%, Due 11/15/2015		300		322
Reynolds Group Issuer Inc.,
9.00%, Due 5/15/2018E F		900		870
8.25%, Due 2/15/2021F		100		92
Rite Aid Corp., 9.75%, Due 6/12/2016		875		957
Rosetta Resources, Inc., 9.50%, Due 4/15/2018		250		273
Rotech Healthcare, Inc.,
10.75%, Due 10/15/2015		100		97
10.50%, Due 3/15/2018		315		250
RSC Equipment Rental, Inc., 9.50%, Due 12/1/2014		100		102
Ryerson, Inc., 12.00%, Due 11/1/2015		175		179
Sabine Pass LNG LP, 7.50%, Due 11/30/2016H		300		297
Salem Communications Corp., 9.625%, Due 12/15/2016		119		121
SandRidge Energy, Inc.,
9.875%, Due 5/15/2016F		400		424
8.00%, Due 6/1/2018F		700		699
Sealed Air Corp.,
8.125%, Due 9/15/2019F		100		109
8.375%, Due 9/15/2021F		350		379
Select Medical Corp., 7.625%, Due 2/1/2015		200		186
Shea Homes LP, 8.625%, Due 5/15/2019F H		200		181
Shingle Springs Tribal Gaming Authority, 9.375%, Due 6/15/2015F		200		106
Simmons Foods, Inc., 10.50%, Due 11/1/2017F		300		281
Sinclair Television Group, Inc., 9.25%, Due 11/1/2017F		250		273
Sirius XM Radio, Inc., 8.75%, Due 4/1/2015F		175		194
Sitel LLC, 11.50%, Due 4/1/2018B		400		324
Skilled Healthcare Group, Inc., 11.00%, Due 1/15/2014		140		136
Smurfit Kappa Treasury Funding Ltd., 7.50%, Due 11/20/2025		500		470
Solo Cup Co., 8.50%, Due 2/15/2014		200		183
Spectrum Brands Holdings, Inc., 9.50%, Due 6/15/2018		105		117
Sprint Capital Corp., 8.75%, Due 3/15/2032		465		386
Sprint Nextel Corp., 8.375%, Due 8/15/2017		800		735
Station Casinos, Inc., 6.875%, Due 3/1/2016J		500		—
SunGard Data Systems, Inc.,
10.25%, Due 8/15/2015F		100		104
7.625%, Due 11/15/2020F		400		410
Swift Services Holdings, Inc., 10.00%, Due 11/15/2018		60		62
Syniverse Holdings, Inc., 9.125%, Due 1/15/2019		335		348
Telesat Canada, 12.50%, Due 11/1/2017B		575		641
The Bon-Ton Department Stores, Inc., 10.25%, Due 3/15/2014		350		311
The Goodyear Tire & Rubber Co., 8.25%, Due 8/15/2020		500		535
The Hertz Corp., 6.75%, Due 4/15/2019		400		408
The Manitowoc Co. Inc, 8.50%, Due 11/1/2020		150		156
Ticketmaster Entertainment LLC, 10.75%, Due 8/1/2016B		350		366
Titan International, Inc., 7.875%, Due 10/1/2017		440		462
Tower Automotive Holdings USA LLC, 10.625%, Due 9/1/2017B F		250		258
TransUnion LLC, 11.375%, Due 6/15/2018B		300		334
Travelport LLC, 9.875%, Due 9/1/2014B		215		151

See accompanying notes

21

American Beacon High Yield Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
Trimas Corp., 9.75%, Due 12/15/2017	$	170	$	182
tw telecom holdings, Inc., 8.00%, Due 3/1/2018		325		345
UCI International, Inc., 8.625%, Due 2/15/2019		200		197
United Rentals North America, Inc., 8.375%, Due 9/15/2020		400		415
United Surgical Partners International, Inc., 9.25%, Due 5/1/2017G		300		308
Univision Communications, Inc.,
6.875%, Due 5/15/2019F		315		307
7.875%, Due 11/1/2020F		500		505
Vedanta Resources plc, 8.25%, Due 6/7/2021F		240		222
VimpelCom Holdings BV, 7.504%, Due 3/1/2022F		285		267
Virgolino de Oliveira Finance Ltd., 10.50%, Due 1/28/2018F		200		194
Visant Corp., 10.00%, Due 10/1/2017		575		558
Viskase Cos., Inc., 9.875%, Due 1/15/2018F		150		153
Vulcan Materials Co., 7.50%, Due 6/15/2021		100		98
W&T Offshore, Inc., 8.50%, Due 6/15/2019F		395		403
WCA Waste Corp., 7.50%, Due 6/15/2019F		250		243
West Corp., 7.875%, Due 1/15/2019		400		406
Wind Acquisition Finance S.A.,
11.75%, Due 7/15/2017F		400		396
7.25%, Due 2/15/2018F		325		314
Wind Acquisition Holdings Finance S.A., 12.25%, Due 7/15/2017F		241		220
WMG Acquisition Corp., 9.50%, Due 6/15/2016		250		265
XM Satellite Radio, Inc., 13.00%, Due 8/1/2014F		250		284
Yonkers Racing Corp., 11.375%, Due 7/15/2016F		375		385
				88,904
Utilities - 5.05%
Calpine Corp.,
7.875%, Due 7/31/2020F		100		107
7.50%, Due 2/15/2021F		600		630
Copano Energy LLC, 7.125%, Due 4/1/2021B		200		205
Crosstex Energy LP, 8.875%, Due 2/15/2018H		400		424
Elwood Energy LLC, 8.159%, Due 7/5/2026B		611		574
Energy Future Holdings Corp., 5.55%, Due 11/15/2014		225		144
Energy Future Intermediate Holding Co. LLC, 10.00%, Due 12/1/2020B		400		420
Energy Transfer Equity LP, 7.50%, Due 10/15/2020H		300		324
Enterprise Products Operating LLC, 7.034%, Due 1/15/2068B		510		525
Genesis Energy LP, 7.875%, Due 12/15/2018F H		200		194
Inergy LP, 7.00%, Due 10/1/2018H		225		226
Martin Midstream Partners LP, 8.875%, Due 4/1/2018H		500		519
NRG Energy, Inc.,
7.625%, Due 1/15/2018F		185		187
7.875%, Due 5/15/2021F		335		338
Regency Energy Partners LP,
9.375%, Due 6/1/2016H		225		250
6.50%, Due 7/15/2021H		225		234
Targa Resources Partners LP, 6.875%, Due 2/1/2021F H		200		198
Texas Competitive Electric Holdings Co. LLC,
10.25%, Due 11/1/2015B		100		39
11.50%, Due 10/1/2020B F		400		344
15.00%, Due 4/1/2021B		400		252
The AES Corp., 9.75%, Due 4/15/2016		50		57
				6,191
Total Corporate Obligations (Cost $107,337)				106,413
	Shares
SHORT-TERM INVESTMENTS - 5.49% (Cost $6,722)
JPMorgan U.S. Government Money Market Fund		6,721,880		6,722
TOTAL INVESTMENTS - 94.78% (Cost 119,207)				116,092
OTHER ASSETS, NET OF LIABILITIES - 5.22%				6,390
TOTAL NET ASSETS - 100.00%			$	122,482
Percentages are stated as a percent of net assets.

See accompanying notes

22

American Beacon High Yield Bond Fund

Schedule of Investments

October 31, 2011

^A  Non-income producing security.

^B  Limited Liability Company.

^C  Put.

^D  Call.

^E  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.

^F  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 $44,602 or 36.41% of net assets. The Fund has no right to demand registration of these securities.

^G  Is Payment in-Kind.

^H  Limited Partnership.

^I  Non-voting participating shares.

^J  In Default.

See accompanying notes

23

American Beacon Retirement Income and Appreciation Fund

Schedule of Investments

October 31, 2011

	Shares		Fair Value
			(000’s)
COMMON STOCKS - 5.09%
ENERGY - 0.83%
Energy Equipment & Services - 0.27%
Baker Hughes, Inc.		7,000	$	406
Oil & Gas - 0.56%
Occidental Petroleum Corp.		5,300		493
Suncor Energy, Inc.		11,000		351
				844
Total Energy				1,250
FINANCIALS - 0.72%
Diversified Financials - 0.50%
Affiliated Managers Group, Inc.A		3,700		343
T Rowe Price Group, Inc.		7,700		406
				749
Insurance - 0.22%
MetLife, Inc.		4,800		326
Total Financials				1,075
HEALTH CARE - 0.24%
Covidien plc		7,500		353
Illumina, Inc.A		130		4
Total Health Care				357
INDUSTRIALS - 0.71%
Dover Corp.		7,000		389
Eaton Corp.		15,300		685
Total Industrials				1,074
INFORMATION TECHNOLOGY - 2.01%
Computers & Peripherals - 0.26%
Dell, Inc.A		25,000		395
IT Consulting & Services - 0.31%
Accenture plc, Class A		7,770		468
Semiconductor Equipment & Products - 0.52%
QUALCOMM, Inc.		15,100		779
Software - 0.92%
Autodesk, Inc.		14,500		502
Microsoft Corp.		12,000		320
Oracle Corp.		17,000		557
				1,379
Total Information Technology				3,021
MATERIALS - 0.58%
Barrick Gold Corp.		10,700		530
Freeport-McMoRan Copper & Gold, Inc.		8,500		342
Total Materials				872
Total Common Stocks (Cost $7,652)				7,649
CONVERTIBLE PREFERRED STOCK - 0.40% (Cost $486)
CONSUMER STAPLES - 0.40%
Bunge Ltd.		6,058		595
PREFERRED STOCKS - 1.00%
ENERGY - 0.88%
Energy - 0.48%
Apache Corp.		12,850		723

	Shares			Fair Value
					(000’s	)
Oil & Gas - 0.40%
Chesapeake Energy Corp.		150		$	174
NextEra Energy, Inc.		8,000			424
					598
Total Energy					1,321
FINANCIALS - 0.12%
AMG Capital Trust I		4,150			181
Total Preferred Stocks (Cost $1,491)					1,502
	Par Amount
		(000’s	)
CONVERTIBLE OBLIGATIONS - 11.96%
Basic Materials - 1.10%
Allegheny Technologies, Inc.,
4.25%, Due 6/1/2014	$	222			301
Goldcorp, Inc.,
2.00%, Due 8/1/2014		225			291
Newmont Mining Corp.,
3.00%, Due 2/15/2012		50			73
1.25%, Due 7/15/2014		425			648
1.625%, Due 7/15/2017		220			343
					1,656
Communications - 2.06%
Anixter International, Inc.,
1.00%, Due 2/15/2013		610			679
Liberty Interactive LLC,
3.125%, Due 3/30/2023B		375			418
Nuance Communications, Inc.,
2.75%, Due 11/1/2031C		260			285
Omnicom Group, Inc.,
0.000%, Due 7/1/2038		400			423
priceline.com, Inc.,
1.25%, Due 3/15/2015C		300			530
Symantec Corp.,
1.00%, Due 6/15/2013		660			766
					3,101
Consumer Discretionary - 0.28%
International Game Technology,
3.25%, Due 5/1/2014		350			419
Energy - 0.50%
Chesapeake Energy Corp.,
2.75%, Due 11/15/2035		700			759
Finance - 0.47%
FTI Consulting, Inc.,
3.75%, Due 7/15/2012		300			387
Leucadia National Corp.,
3.75%, Due 4/15/2014		250			323
					710
Health Care - 0.49%
Illumina, Inc.,
0.25%, Due 3/15/2016 C		950			734
Industrials - 1.48%
Danaher Corp.,
0.01%, Due 1/22/2021		370			519
Hologic, Inc.,
2.00%, Due 12/15/2037D		660			700
ON Semiconductor Corp.,
2.625%, Due 12/15/2026		300			327

See accompanying notes

24

American Beacon Retirement Income and Appreciation Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
Stanley Black & Decker, Inc.,
0.01%, Due 5/17/2012D	$	275	$	300
Tyson Foods, Inc.,
3.25%, Due 10/15/2013		300		384
				2,230
Pharmaceuticals - 1.62%
Endo Pharmaceuticals Holdings, Inc.,
1.75%, Due 4/15/2015		250		311
Gilead Sciences, Inc.,
1.00%, Due 5/1/2014		350		387
1.625%, Due 5/1/2016		885		1,021
Mylan, Inc.,
1.25%, Due 3/15/2012		705		709
				2,428
Technology - 3.96%
Electronic Arts, Inc.,
0.75%, Due 7/15/2016C		425		432
EMC Corp.,
1.75%, Due 12/1/2013		900		1,431
Intel Corp.,
3.25%, Due 8/1/2039		625		789
Lam Research Corp.,
1.25%, Due 5/15/2018C		400		394
Microsoft Corp.,
6.25%, Due 6/15/2013C		300		305
Navistar International Corp.,
3.00%, Due 10/15/2014		164		184
Rovi Corp.,
2.625%, Due 2/15/2040		267		337
SanDisk Corp.,
1.50%, Due 8/15/2017		1,025		1,223
Xilinx, Inc.,
2.625%, Due 6/15/2017		525		675
3.125%, Due 3/15/2037		150		176
				5,946
Total Convertible Obligations (Cost $16,223)				17,983
CORPORATE OBLIGATIONS - 36.59%
Finance - 17.51%
AEGON Funding Co. LLC,
5.75%, Due 12/15/2020B		250		271
American Express Credit Corp.,
2.75%, Due 9/15/2015		125		127
American International Group, Inc.,
4.25%, Due 9/15/2014		800		787
6.40%, Due 12/15/2020		675		707
ANZ National International Ltd.,
2.375%, Due 12/21/2012C		300		304
Bank of America Corp.,
7.80%, Due 9/15/2016		600		635
7.625%, Due 6/1/2019		1,000		1,087
Bank One Corp.,
4.90%, Due 4/30/2015		250		266
Barclays Bank plc,
3.90%, Due 4/7/2015		290		295
6.75%, Due 5/22/2019		300		344
BNP Paribas S.A.,
3.60%, Due 2/23/2016		280		279
Citigroup, Inc.,
1.302%, Due 4/1/2014D		300		289
0.548%, Due 11/5/2014D		300		281
8.50%, Due 5/22/2019		1,250		1,546

	Par Amount		Fair Value
	(000’s)		(000’s)
CME Group, Inc.,
5.40%, Due 8/1/2013	$	230	$	246
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA,
4.20%, Due 5/13/2014C		200		212
Credit Suisse,
5.30%, Due 8/13/2019		350		376
Credit Suisse USA, Inc.,
7.125%, Due 7/15/2032		500		603
Danske Bank A/S,
1.451%, Due 4/14/2014C D		600		577
Deutsche Bank AG,
3.875%, Due 8/18/2014		275		284
Fifth Third Bancorp,
3.625%, Due 1/25/2016		275		282
General Electric Capital Corp.,
0.591%, Due 1/8/2016D		1,033		961
5.625%, Due 5/1/2018		250		276
6.00%, Due 8/7/2019		300		341
5.50%, Due 1/8/2020		650		725
HSBC Finance Corp.,
0.653%, Due 1/15/2014D		850		793
ING Bank N.V.,
5.125%, Due 5/1/2015C		300		299
JPMorgan Chase & Co.,
3.70%, Due 1/20/2015		500		521
5.50%, Due 10/15/2040		350		375
JPMorgan Chase Bank NA,
0.668%, Due 6/13/2016D		375		340
Lincoln National Corp.,
4.75%, Due 2/15/2014		105		111
Lloyds TSB Bank plc,
4.375%, Due 1/12/2015C		300		301
Merrill Lynch & Co. Inc,
6.11%, Due 1/29/2037		275		242
MetLife Institutional Funding II,
1.274%, Due 4/4/2014C D		800		798
MetLife, Inc.,
6.375%, Due 6/15/2034		400		488
Monumental Global Funding III,
0.603%, Due 1/15/2014C D		300		291
Morgan Stanley,
0.883%, Due 10/15/2015D		900		791
7.30%, Due 5/13/2019		280		300
5.625%, Due 9/23/2019		450		444
National Australia Bank Ltd.,
4.375%, Due 12/10/2020C		250		258
Nordea Bank AB,
2.50%, Due 11/13/2012C		250		253
4.875%, Due 1/27/2020C		250		268
PNC Funding Corp.,
4.375%, Due 8/11/2020		260		274
Pricoa Global Funding I,
5.40%, Due 10/18/2012C		150		156
Prudential Financial, Inc.,
7.375%, Due 6/15/2019		250		304
Simon Property Group LP,
10.35%, Due 4/1/2019E		300		408
Societe Generale S.A.,
2.20%, Due 9/14/2013C		250		240
1.441%, Due 4/11/2014C D		1,200		1,091
The Bear Stearns Cos. LLC,
7.25%, Due 2/1/2018B		925		1,088

See accompanying notes

25

American Beacon Retirement Income and Appreciation Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
The Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016	$	475	$	503
6.25%, Due 9/1/2017		550		595
6.00%, Due 6/15/2020		435		458
The Travelers Cos., Inc.,
3.90%, Due 11/1/2020		130		136
UBS AG,
5.875%, Due 12/20/2017		275		301
UnitedHealth Group, Inc.,
3.875%, Due 10/15/2020		250		263
Wachovia Corp.,
0.773%, Due 10/15/2016D		600		523
5.75%, Due 2/1/2018		900		1,022
				26,336
Industrials - 16.92%
Altria Group, Inc.,
4.75%, Due 5/5/2021		300		323
America Movil SAB de CV,
6.375%, Due 3/1/2035		275		328
American Axle & Manufacturing, Inc.,
7.875%, Due 3/1/2017		400		405
American Honda Finance Corp.,
4.625%, Due 4/2/2013C		325		339
3.875%, Due 9/21/2020C		125		129
Anheuser-Busch InBev Worldwide, Inc.,
5.00%, Due 4/15/2020		290		337
8.00%, Due 11/15/2039		100		153
Apache Corp.,
5.10%, Due 9/1/2040		130		151
AT&T, Inc.,
5.50%, Due 2/1/2018		750		870
6.80%, Due 5/15/2036		125		158
6.40%, Due 5/15/2038		125		152
BP Capital Markets plc,
3.20%, Due 3/11/2016		280		294
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018B		325		377
5.75%, Due 5/1/2040B		140		166
Calfrac Holdings LP,
7.50%, Due 12/1/2020CE		775		744
Canadian National Railway Co.,
5.55%, Due 5/15/2018		250		296
Canadian Natural Resources Ltd.,
6.25%, Due 3/15/2038		275		345
Caterpillar Financial Services Corp.,
1.90%, Due 12/17/2012		100		101
4.25%, Due 2/8/2013		250		261
2.75%, Due 6/24/2015		280		291
Comcast Cable Communications Holdings, Inc.,
8.375%, Due 3/15/2013		109		120
Comcast Corp.,
6.55%, Due 7/1/2039		400		492
Complete Production Services, Inc.,
8.00%, Due 12/15/2016		200		208
Comstock Resources, Inc.,
8.375%, Due 10/15/2017		300		308
Concho Resources, Inc.,
8.625%, Due 10/1/2017		275		300
ConocoPhillips,
4.60%, Due 1/15/2015		200		220
5.20%, Due 5/15/2018		325		376
CSX Corp.,

	Par Amount		Fair Value
	(000’s)		(000’s)
5.50%, Due 4/15/2041	$	250	$	285
CVS Caremark Corp.,
3.25%, Due 5/18/2015		140		148
Daimler Finance North America LLC,
3.00%, Due 3/28/2016BC		150		151
Darling International, Inc.,
8.50%, Due 12/15/2018		202		227
Dean Foods Co.,
9.75%, Due 12/15/2018C		400		429
DISH DBS Corp.,
7.875%, Due 9/1/2019		300		329
EOG Resources, Inc.,
2.50%, Due 2/1/2016		250		257
Equinix, Inc.,
7.00%, Due 7/15/2021		400		426
FMG Resources August 2006 Property Ltd.,
8.25%, Due 11/1/2019C		694		701
France Telecom S.A.,
2.125%, Due 9/16/2015		125		126
GlaxoSmithKline Capital, Inc.,
5.65%, Due 5/15/2018		125		150
Hewlett-Packard Co.,
2.20%, Due 12/1/2015		250		251
HollyFrontier Corp.,
9.875%, Due 6/15/2017		140		153
iGate Corp.,
9.00%, Due 5/1/2016C		300		299
International Business Machines Corp.,
7.625%, Due 10/15/2018		150		200
Jabil Circuit, Inc.,
8.25%, Due 3/15/2018		325		377
Jaguar Land Rover plc,
7.75%, Due 5/15/2018C		400		396
Jarden Corp.,
7.50%, Due 5/1/2017		30		32
7.50%, Due 1/15/2020		120		128
Johnson Controls, Inc.,
5.00%, Due 3/30/2020		300		331
Kellogg Co.,
4.25%, Due 3/6/2013		250		261
Liberty Interactive LLC,
8.25%, Due 2/1/2030B		450		434
3.25%, Due 3/15/2031B		425		341
McKesson Corp.,
3.25%, Due 3/1/2016		140		148
Norfolk Southern Corp.,
5.75%, Due 4/1/2018		325		381
Northrop Grumman Corp.,
5.05%, Due 8/1/2019		150		169
Perry Ellis International, Inc.,
7.875%, Due 4/1/2019		210		213
Petrobras International Finance Co.,
3.875%, Due 1/27/2016		200		205
Petroleos Mexicanos,
6.00%, Due 3/5/2020		300		334
Quest Diagnostics, Inc.,
4.75%, Due 1/30/2020		125		134
Qwest Capital Funding, Inc.,
7.75%, Due 2/15/2031		250		245
Royal Caribbean Cruises Ltd.,
7.50%, Due 10/15/2027		500		484
Seagate HDD Cayman,

See accompanying notes

26

American Beacon Retirement Income and Appreciation Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
6.875%, Due 5/1/2020	$	350	$	343
SESI LLC,
6.875%, Due 6/1/2014B		435		435
Shell International Finance BV,
3.10%, Due 6/28/2015		280		298
Spirit Aerosystems, Inc.,
7.50%, Due 10/1/2017		450		484
Swift Energy Co.,
7.125%, Due 6/1/2017		375		381
Telefonica Emisiones SAU,
6.421%, Due 6/20/2016		300		321
The Boeing Co.,
1.875%, Due 11/20/2012		250		254
The Coca-Cola Co.,
1.80%, Due 9/1/2016C		150		150
The Home Depot, Inc.,
4.40%, Due 4/1/2021		300		328
Thomson Reuters Corp.,
4.70%, Due 10/15/2019		125		134
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017		650		740
Time Warner, Inc.,
4.875%, Due 3/15/2020		150		163
4.75%, Due 3/29/2021		325		353
Triumph Group, Inc.,
8.00%, Due 11/15/2017		300		321
Tyco International Finance S.A.,
3.75%, Due 1/15/2018		275		289
Union Pacific Corp.,
4.163%, Due 7/15/2022		262		277
United Technologies Corp.,
6.125%, Due 7/15/2038		450		552
Verizon Communications, Inc.,
5.50%, Due 4/1/2017		250		288
4.60%, Due 4/1/2021		340		373
6.90%, Due 4/15/2038		325		428
Vodafone Group plc,
6.15%, Due 2/27/2037		275		346
W&T Offshore, Inc.,
8.50%, Due 6/15/2019C		425		434
Wal-Mart Stores, Inc.,
7.55%, Due 2/15/2030		350		501
Xerox Corp.,
5.65%, Due 5/15/2013		75		79
8.25%, Due 5/15/2014		150		171
				25,432
Utilities - 2.16%
Commonwealth Edison Co.,
4.00%, Due 8/1/2020		135		145
Consolidated Edison Co. of New York, Inc.,
5.50%, Due 12/1/2039		300		362
Duke Energy Carolinas LLC,
5.10%, Due 4/15/2018B		250		287
EDF S.A.,
4.60%, Due 1/27/2020C		300		320
FirstEnergy Solutions Corp.,
4.80%, Due 2/15/2015		150		161
Midamerican Energy Holdings Co.,
6.125%, Due 4/1/2036		275		342
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		175		193

	Par Amount		Fair Value
	(000’s)		(000’s)
3.50%, Due 10/1/2020	$	250	$	258
Progress Energy, Inc.,
4.875%, Due 12/1/2019		350		389
Southern Co.,
1.95%, Due 9/1/2016		310		312
TransCanada PipeLines Ltd.,
6.10%, Due 6/1/2040		140		178
Virginia Electric and Power Co.,
5.40%, Due 4/30/2018		250		294
				3,241
Total Corporate Obligations (Cost $52,355)				55,009
OTHER GOVERNMENT OBLIGATIONS - 0.39%
Province of Ontario Canada,
4.10%, Due 6/16/2014		300		325
3.15%, Due 12/15/2017		250		263
Total Other Government Obligations (Cost $549)				588
U.S. AGENCY OBLIGATION - 0.21% (Cost $300)
U.S. Agency Obligations - 0.21%
Private Export Funding Corp.,
2.125%, Due 7/15/2016		300		309
ASSET-BACKED SECURITIES - 2.93%
Ally Master Owner Trust,
0.894%, Due 6/15/2015, 2011-5 AD		650		650
BMW Floorplan Master Owner Trust,
1.393%, Due 9/15/2014, 2009-1A AC D		250		251
Citibank Credit Card Issuance Trust,
1.793%, Due 5/15/2014, 2009-A2 A2D		600		605
Ford Credit Floorplan Master Owner Trust,
1.793%, Due 9/15/2014, 2009-2 AD		1,800		1,817
Harley-Davidson Motorcycle Trust,
1.87%, Due 2/15/2014, 2009-4 A3		163		163
Nissan Master Owner Trust Receivables,
1.393%, Due 1/15/2015, 2010-AA AC D		600		605
Volkswagen Auto Loan Enhanced Trust,
6.24%, Due 7/20/2015, 2008-2 A4A		300		310
Total Asset-Backed Securities (Cost $4,392)				4,401
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 3.55%
Banc of America Merrill Lynch Commercial Mortgage, Inc.,
5.317%, Due 9/10/2047, 2006-5 A2		230		232
5.634%, Due 4/10/2049, 2007-2 A2		316		323
GS Mortgage Securities Corp II,
4.607%, Due 7/10/2039, 2005-GG4 A3		270		273
3.849%, Due 12/10/2043, 2010-C2 A1C		637		664
3.645%, Due 3/10/2044, 2011-GC3 A2C		750		779
JP Morgan Chase Commercial Mortgage Securities Corp.,
4.678%, Due 7/15/2042, 2005-LDP2 A3A		230		234
3.853%, Due 6/15/2043, 2010-C1 A1C		535		556

See accompanying notes

27

American Beacon Retirement Income and Appreciation Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
4.388%, Due 2/15/2046, 2011-C3A A3C	$	650	$	668
5.739%, Due 2/12/2049, 2007-CB19 A4		400		432
5.629%, Due 2/12/2051, 2007-CB20 A2		450		459
LB-UBS Commercial Mortgage Trust,
5.424%, Due 2/15/2040, 2007-C1 A4		450		479
Wachovia Bank Commercial Mortgage Trust,
5.737%, Due 6/15/2049, 2007-C32 A2		230		235
Total Non-Agency Mortgage-Backed Obligations (Cost $5,198)				5,334
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 25.66%
Federal Home Loan Mortgage Corporation
5.00%, Due 2/1/2021		394		425
4.50%, Due 4/1/2021		406		435
5.00%, Due 9/1/2035		1,212		1,303
5.50%, Due 4/1/2037		356		385
5.00%, Due 3/1/2038		675		725
5.50%, Due 5/1/2038		432		467
0.643%, Due 12/15/2040D		1,738		1,735
4.00%, Due 1/1/2041		1,729		1,796
4.50%, Due 2/1/2041		1,891		1,996
				9,267
Federal National Mortgage Association
3.50%, Due 1/1/2026		465		484
6.50%, Due 7/1/2032		201		227
5.50%, Due 6/1/2033		411		448
4.50%, Due 9/1/2034		242		257
5.50%, Due 12/1/2035		481		524
5.00%, Due 2/1/2036		385		415
5.50%, Due 4/1/2036		658		718
5.50%, Due 2/1/2037		473		514
6.00%, Due 9/1/2037		293		322
6.00%, Due 1/1/2038		434		477
4.50%, Due 1/1/2040		1,388		1,469
4.00%, Due 9/1/2040		1,054		1,097
4.00%, Due 1/1/2041		2,897		3,016
				9,968
Government National Mortgage Association
6.00%, Due 2/15/2033		481		540
5.50%, Due 4/15/2033		643		718
5.00%, Due 5/15/2033		457		506
1.692%, Due 11/16/2035, 2009-148 A		306		308
2.989%, Due 3/16/2039, 2010-71 AC		736		763
2.70%, Due 4/16/2043, 2011-109 AB		2,991		3,100
2.542%, Due 9/16/2044, 2011-96 AC		2,690		2,778
2.70%, Due 11/16/2044, 2011-92 AB		1,245		1,291
3.20%, Due 11/16/2044, 2011-92 B		2,900		3,011
2.351%, Due 6/16/2050, 2010-100 A		1,442		1,461
				14,476
National Credit Union Administration
0.643%, Due 3/11/2020, 2011 R3 1AD		2,328		2,329
0.691%, Due 10/7/2020, 2010 R1 1AD		2,526		2,530
				4,859
Total U.S. Agency Mortgage-Backed Obligations (Cost $37,187)				38,570

	Par Amount		Fair Value
	(000’s)		(000’s)
U.S. TREASURY OBLIGATIONS - 6.60%
U.S. Treasury Bonds
6.25%, Due 8/15/2023	$	1,500	$	2,089
6.875%, Due 8/15/2025		250		373
5.25%, Due 11/15/2028		550		727
4.75%, Due 2/15/2037		420		540
4.50%, Due 8/15/2039		910		1,135
				4,864
U.S. Treasury Notes
2.625%, Due 7/31/2014		2,000		2,122
3.125%, Due 10/31/2016		1,300		1,433
3.625%, Due 2/15/2020		1,325		1,505
				5,060
Total U.S. Treasury Obligations (Cost $8,962)				9,924
	Shares
SHORT-TERM INVESTMENTS - 4.81% (Cost $7,235)
JPMorgan U.S. Government Money Market Fund		7,234,725		7,235
TOTAL INVESTMENTS - 99.19% (Cost $142,030)				149,099
OTHER ASSETS, NET OF LIABILITIES - 0.81%				1,212
TOTAL NET ASSETS - 100.00%			$	150,311

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  Limited Liability Company.

^C  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 $15,343 or 10.21% of net assets. The Fund has no right to demand registration of these securities.

^D  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.

^E  Limited Partnership.

See accompanying notes

28

American Beacon Intermediate Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
CORPORATE OBLIGATIONS - 42.62%
Finance - 19.81%
AEGON Funding Co. LLC, 5.75%, Due 12/15/2020A	$	400	$	433
Aflac, Inc., 8.50%, Due 5/15/2019		240		301
American Express Co., 8.15%, Due 3/19/2038		325		466
American Express Credit Corp.,
5.125%, Due 8/25/2014		835		907
2.75%, Due 9/15/2015		225		228
American International Group, Inc.,
4.25%, Due 9/15/2014		600		590
6.40%, Due 12/15/2020		800		838
ANZ National International Ltd., 2.375%, Due 12/21/2012B		350		354
Bank of America Corp.,
4.50%, Due 4/1/2015		415		410
7.80%, Due 9/15/2016		700		741
7.625%, Due 6/1/2019		1,200		1,304
Bank One Corp., 4.90%, Due 4/30/2015		500		532
Barclays Bank plc,
3.90%, Due 4/7/2015		380		387
6.75%, Due 5/22/2019		350		401
BNP Paribas S.A., 3.60%, Due 2/23/2016		400		399
Canadian Imperial Bank of Commerce, 1.45%, Due 9/13/2013		670		674
Capital One Financial Corp., 2.125%, Due 7/15/2014		465		464
Citigroup, Inc.,
1.302%, Due 4/1/2014C		400		385
0.548%, Due 11/5/2014C		380		355
6.01%, Due 1/15/2015		605		650
6.125%, Due 11/21/2017		355		391
8.50%, Due 5/22/2019		1,650		2,043
CME Group, Inc., 5.40%, Due 8/1/2013		260		278
CNA Financial Corp., 7.35%, Due 11/15/2019		210		231
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA,
4.20%, Due 5/13/2014B		600		635
2.125%, Due 10/13/2015		510		514
Credit Suisse, 5.30%, Due 8/13/2019		425		457
Credit Suisse USA, Inc., 7.125%, Due 7/15/2032		500		603
Danske Bank A/S, 1.451%, Due 4/14/2014B C		780		750
Deutsche Bank AG, 3.875%, Due 8/18/2014		400		413
Fifth Third Bancorp, 3.625%, Due 1/25/2016		400		410
General Electric Capital Corp.,
0.591%, Due 1/8/2016C		1,300		1,209
5.40%, Due 2/15/2017		405		451
5.625%, Due 5/1/2018		795		879
6.00%, Due 8/7/2019		350		398
5.50%, Due 1/8/2020		800		892
5.30%, Due 2/11/2021		240		255
5.875%, Due 1/14/2038		745		800
HCP, Inc., 5.375%, Due 2/1/2021		500		514
Health Care REIT, Inc.,
3.625%, Due 3/15/2016E		285		278
5.25%, Due 1/15/2022E		345		330
HSBC Finance Corp., 0.653%, Due 1/15/2014C		1,100		1,026
ING Bank N.V., 5.125%, Due 5/1/2015B		250		249
JPMorgan Chase & Co.,
3.70%, Due 1/20/2015		1,655		1,724
5.50%, Due 10/15/2040		425		455
JPMorgan Chase Bank NA, 0.668%, Due 6/13/2016C		480		435
KeyCorp, 5.10%, Due 3/24/2021		235		244
Liberty Mutual Group, Inc., 5.00%, Due 6/1/2021B		390		368
Lincoln National Corp., 4.75%, Due 2/15/2014		50		53
Lloyds TSB Bank plc,
4.375%, Due 1/12/2015B		375		376

See accompanying notes

29

American Beacon Intermediate Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
6.375%, Due 1/21/2021	$	260	$	278
Merrill Lynch & Co. Inc,
6.40%, Due 8/28/2017		940		953
6.50%, Due 7/15/2018		520		516
6.11%, Due 1/29/2037		360		316
MetLife Institutional Funding II, 1.274%, Due 4/4/2014B C		600		598
MetLife, Inc.,
5.00%, Due 11/24/2013		620		662
6.375%, Due 6/15/2034		500		609
Monumental Global Funding III, 0.603%, Due 1/15/2014B C		375		364
Morgan Stanley,
0.883%, Due 10/15/2015C		1,180		1,037
7.30%, Due 5/13/2019		370		397
5.625%, Due 9/23/2019		600		592
National Australia Bank Ltd., 4.375%, Due 12/10/2020B		425		439
Nordea Bank AB,
2.50%, Due 11/13/2012B		400		404
4.875%, Due 1/27/2020B		450		482
PNC Funding Corp.,
4.25%, Due 9/21/2015		910		982
4.375%, Due 8/11/2020		410		432
Pricoa Global Funding I, 5.40%, Due 10/18/2012B		175		182
Prudential Financial, Inc., 7.375%, Due 6/15/2019		450		546
Simon Property Group LP,
5.75%, Due 12/1/2015D		645		723
10.35%, Due 4/1/2019D		375		510
Societe Generale S.A.,
2.20%, Due 9/14/2013B		450		432
1.441%, Due 4/11/2014B C		900		819
State Street Corp.,
4.30%, Due 5/30/2014		285		308
2.875%, Due 3/7/2016		705		729
SunTrust Banks, Inc., 3.60%, Due 4/15/2016		245		251
The Bank of New York Mellon Corp.,
1.50%, Due 1/31/2014		475		480
4.30%, Due 5/15/2014		395		427
The Bear Stearns Cos. LLC, 7.25%, Due 2/1/2018A		2,145		2,527
The Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		800		847
6.25%, Due 9/1/2017		800		865
5.95%, Due 1/18/2018		660		694
6.00%, Due 6/15/2020		490		516
The Travelers Cos., Inc., 3.90%, Due 11/1/2020		210		219
Travelers Property Casualty Corp., 5.00%, Due 3/15/2013		805		845
UBS AG, 5.875%, Due 12/20/2017		400		438
UnitedHealth Group, Inc.,
4.875%, Due 2/15/2013		650		680
3.875%, Due 10/15/2020		425		448
US Bancorp,
1.375%, Due 9/13/2013		775		783
2.20%, Due 11/15/2016		485		489
Wachovia Corp.,
0.773%, Due 10/15/2016C		750		654
5.75%, Due 2/1/2018		1,150		1,306
Wells Fargo & Co., 4.60%, Due 4/1/2021		470		503
Westpac Banking Corp., 2.25%, Due 11/19/2012		375		381
Willis North America, Inc., 6.20%, Due 3/28/2017		280		307
				55,450
Industrials - 17.58%
Air Products & Chemicals, Inc., 2.00%, Due 8/2/2016		180		184
Altria Group, Inc.,
9.70%, Due 11/10/2018		375		504
4.75%, Due 5/5/2021		390		420

See accompanying notes

30

American Beacon Intermediate Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
America Movil SAB de CV, 6.375%, Due 3/1/2035	$	375	$	447
American Honda Finance Corp.,
4.625%, Due 4/2/2013B		250		261
3.875%, Due 9/21/2020B		225		233
Analog Devices, Inc., 3.00%, Due 4/15/2016		460		482
Anheuser-Busch InBev Worldwide, Inc.,
5.00%, Due 4/15/2020		380		441
8.00%, Due 11/15/2039		175		267
Apache Corp., 5.10%, Due 9/1/2040		200		232
Applied Materials, Inc., 2.65%, Due 6/15/2016		415		428
AT&T, Inc.,
5.10%, Due 9/15/2014		880		978
5.50%, Due 2/1/2018		975		1,132
6.80%, Due 5/15/2036		225		284
6.40%, Due 5/15/2038		200		244
5.35%, Due 9/1/2040		283		309
Baxter International, Inc., 1.80%, Due 3/15/2013		270		274
Becton Dickinson and Co., 3.25%, Due 11/12/2020		475		486
BP Capital Markets plc,
3.20%, Due 3/11/2016		990		1,040
3.561%, Due 11/1/2021		325		330
Burlington Northern Santa Fe LLC,
5.75%, Due 3/15/2018A		600		697
7.95%, Due 8/15/2030A		195		276
5.75%, Due 5/1/2040A		190		225
Cameron International Corp., 6.375%, Due 7/15/2018		225		266
Canadian National Railway Co., 5.55%, Due 5/15/2018		400		474
Canadian Natural Resources Ltd., 6.25%, Due 3/15/2038		360		451
Caterpillar Financial Services Corp.,
1.90%, Due 12/17/2012		100		101
4.25%, Due 2/8/2013		250		261
6.125%, Due 2/17/2014		600		668
2.75%, Due 6/24/2015		380		395
Cellco Partnership, 8.50%, Due 11/15/2018		460		622
Cliffs Natural Resources, Inc., 4.875%, Due 4/1/2021		280		280
Comcast Cable Communications Holdings, Inc., 8.375%, Due 3/15/2013		128		141
Comcast Corp.,
6.30%, Due 11/15/2017		465		549
5.875%, Due 2/15/2018		235		273
6.55%, Due 7/1/2039		500		614
ConocoPhillips,
4.60%, Due 1/15/2015		550		606
5.20%, Due 5/15/2018		600		694
Cooper US, Inc.,
2.375%, Due 1/15/2016		480		489
3.875%, Due 12/15/2020		315		333
Covidien International Finance S.A., 2.80%, Due 6/15/2015		500		517
CSX Corp., 5.50%, Due 4/15/2041		425		484
CVS Caremark Corp., 3.25%, Due 5/18/2015		190		201
Daimler Finance North America LLC, 3.00%, Due 3/28/2016A B		190		191
DIRECTV Holdings LLC,
3.55%, Due 3/15/2015A		525		550
6.35%, Due 3/15/2040A		145		173
Eaton Corp., 5.60%, Due 5/15/2018		380		444
Ensco plc, 4.70%, Due 3/15/2021		350		368
EOG Resources, Inc., 2.50%, Due 2/1/2016		425		437
Express Scripts, Inc., 6.25%, Due 6/15/2014		610		675
France Telecom S.A.,
4.375%, Due 7/8/2014		385		415
2.125%, Due 9/16/2015		225		226
Genzyme Corp., 5.00%, Due 6/15/2020		235		266
GlaxoSmithKline Capital, Inc., 5.65%, Due 5/15/2018		125		150
Hewlett-Packard Co., 2.20%, Due 12/1/2015		425		426

See accompanying notes

31

American Beacon Intermediate Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
Husky Energy, Inc., 5.90%, Due 6/15/2014	$	250	$	274
Intel Corp., 3.30%, Due 10/1/2021		315		325
International Business Machines Corp., 7.625%, Due 10/15/2018		745		995
John Deere Capital Corp., 4.90%, Due 9/9/2013		650		697
Johnson Controls, Inc.,
1.75%, Due 3/1/2014		745		751
5.00%, Due 3/30/2020		480		529
Kellogg Co., 4.25%, Due 3/6/2013		250		261
Koninklijke Philips Electronics N.V., 5.75%, Due 3/11/2018		470		547
Lorillard Tobacco Co., 8.125%, Due 6/23/2019		255		307
Marathon Oil Corp., 6.00%, Due 10/1/2017		475		551
Marathon Petroleum Corp., 3.50%, Due 3/1/2016B		420		431
McKesson Corp., 3.25%, Due 3/1/2016		200		212
Medtronic, Inc., 3.00%, Due 3/15/2015		915		970
Norfolk Southern Corp., 5.75%, Due 4/1/2018		300		352
Northrop Grumman Corp., 5.05%, Due 8/1/2019		200		226
Novartis Capital Corp., 2.90%, Due 4/24/2015		780		828
PepsiCo, Inc., 2.50%, Due 5/10/2016		590		613
Petrobras International Finance Co.,
3.875%, Due 1/27/2016		505		517
6.875%, Due 1/20/2040		110		127
Petroleos Mexicanos, 6.00%, Due 3/5/2020		375		417
Quest Diagnostics, Inc., 4.75%, Due 1/30/2020		225		242
Rio Tinto Finance USA Ltd., 2.50%, Due 5/20/2016		475		488
Rogers Communications, Inc., 5.50%, Due 3/15/2014		430		467
Sanofi,
1.625%, Due 3/28/2014		665		677
4.00%, Due 3/29/2021		495		543
Shell International Finance BV, 3.10%, Due 6/28/2015		380		405
Teck Resources Ltd., 6.00%, Due 8/15/2040		205		225
Telecom Italia Capital S.A., 4.95%, Due 9/30/2014		245		241
Telefonica Emisiones SAU,
3.992%, Due 2/16/2016		255		251
6.421%, Due 6/20/2016		450		482
Teva Pharmaceutical Finance II, 3.00%, Due 6/15/2015		470		493
The Boeing Co., 1.875%, Due 11/20/2012		400		406
The Coca-Cola Co.,
0.75%, Due 11/15/2013		1,115		1,118
1.80%, Due 9/1/2016B		175		175
The Dow Chemical Co.,
7.60%, Due 5/15/2014		220		250
4.25%, Due 11/15/2020		430		442
The Home Depot, Inc., 4.40%, Due 4/1/2021		400		437
Thomson Reuters Corp., 4.70%, Due 10/15/2019		225		242
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017		800		911
6.75%, Due 7/1/2018		615		733
Time Warner, Inc.,
4.875%, Due 3/15/2020		290		316
4.75%, Due 3/29/2021		350		380
Tyco Electronics Group S.A., 6.55%, Due 10/1/2017		225		263
Tyco International Finance S.A., 3.75%, Due 1/15/2018		400		421
Union Pacific Corp., 4.163%, Due 7/15/2022		481		509
United Parcel Service, Inc., 3.125%, Due 1/15/2021		475		494
United Technologies Corp., 6.125%, Due 7/15/2038		600		737
Valero Energy Corp.,
9.375%, Due 3/15/2019		170		222
6.625%, Due 6/15/2037		205		224
Verizon Communications, Inc.,
5.50%, Due 4/1/2017		500		575
4.60%, Due 4/1/2021		280		307
3.50%, Due 11/1/2021		200		202
6.90%, Due 4/15/2038		500		659

See accompanying notes

32

American Beacon Intermediate Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
Vodafone Group plc, 6.15%, Due 2/27/2037	$	360	$	454
Wal-Mart Stores, Inc., 7.55%, Due 2/15/2030		400		573
Xerox Corp.,
5.65%, Due 5/15/2013		50		53
8.25%, Due 5/15/2014		190		216
4.25%, Due 2/15/2015		500		527
				49,204
Utilities - 5.23%
Columbus Southern Power Co., 5.50%, Due 3/1/2013		595		626
Commonwealth Edison Co., 4.00%, Due 8/1/2020		190		203
Consolidated Edison Co. of New York, Inc., 5.50%, Due 12/1/2039		350		423
Duke Energy Carolinas LLC, 5.10%, Due 4/15/2018A		400		460
Duke Energy Indiana, Inc., 6.05%, Due 6/15/2016		450		518
EDF S.A., 4.60%, Due 1/27/2020B		580		618
Energy Transfer Partners LP,
8.50%, Due 4/15/2014D		605		687
9.00%, Due 4/15/2019D		300		361
Enterprise Products Operating LLC,
5.65%, Due 4/1/2013A		555		587
6.125%, Due 10/15/2039A		350		405
Exelon Generation Co. LLC,
5.20%, Due 10/1/2019A		350		376
6.25%, Due 10/1/2039A		365		434
FirstEnergy Solutions Corp., 4.80%, Due 2/15/2015		175		188
Midamerican Energy Holdings Co.,
5.875%, Due 10/1/2012		605		632
6.125%, Due 4/1/2036		375		466
National Rural Utilities Cooperative Finance Corp., 1.125%, Due 11/1/2013		485		486
ONEOK Partners LP, 6.125%, Due 2/1/2041D		500		575
Pacific Gas & Electric Co.,
6.25%, Due 12/1/2013		150		165
3.50%, Due 10/1/2020		450		465
Progress Energy, Inc., 4.875%, Due 12/1/2019		450		501
Sempra Energy, 6.50%, Due 6/1/2016		325		380
Southern Co., 1.95%, Due 9/1/2016		380		383
Southern Power Co., 6.25%, Due 7/15/2012		550		570
Spectra Energy Capital LLC,
5.668%, Due 8/15/2014A		320		350
5.65%, Due 3/1/2020A		265		292
Spectra Energy Partners LP, 4.60%, Due 6/15/2021D		235		241
TransCanada PipeLines Ltd.,
7.625%, Due 1/15/2039		470		672
6.10%, Due 6/1/2040		290		368
Union Electric Co., 6.70%, Due 2/1/2019		510		629
Virginia Electric and Power Co., 5.40%, Due 4/30/2018		400		471
Westar Energy, Inc., 6.00%, Due 7/1/2014		200		220
Xcel Energy, Inc., 5.613%, Due 4/1/2017		781		881
				14,633
Total Corporate Obligations (Cost $112,750)				119,287
OTHER GOVERNMENT OBLIGATIONS - 0.29%
Province of Ontario Canada,
4.10%, Due 6/16/2014		350		379
3.15%, Due 12/15/2017		425		448
Total Other Government Obligations (Cost $774)				827
U.S. AGENCY OBLIGATIONS - 0.30%
Federal National Mortgage Association, 5.125%, Due 1/2/2014		385		419
Private Export Funding Corp., 2.125%, Due 7/15/2016		400		412
Total U.S. Agency Obligations (Cost $784)				831

See accompanying notes

33

American Beacon Intermediate Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
ASSET-BACKED SECURITIES - 2.70%
Ally Master Owner Trust, 0.894%, Due 6/15/2015, 2011-5 AC	$	750	$	750
BMW Floorplan Master Owner Trust, 1.393%, Due 9/15/2014, 2009-1A AB C		400		402
Citibank Credit Card Issuance Trust, 1.793%, Due 5/15/2014, 2009-A2 A2C		400		403
CNH Equipment Trust,
1.17%, Due 5/15/2015, 2010-C A3		665		666
2.04%, Due 10/17/2016, 2011-A A4		470		482
Ford Credit Floorplan Master Owner Trust, 1.793%, Due 9/15/2014, 2009-2 AC		2,400		2,422
Harley-Davidson Motorcycle Trust, 1.87%, Due 2/15/2014, 2009-4 A3		190		191
Honda Auto Receivables Owner Trust, 3.30%, Due 9/15/2015, 2009-3 A4		385		394
Hyundai Auto Receivables Trust, 3.15%, Due 3/15/2016, 2009-A A4		220		228
John Deere Owner Trust,
2.59%, Due 10/15/2013, 2009-A A3		35		35
3.96%, Due 5/16/2016, 2009-A A4		510		519
Nissan Master Owner Trust Receivables, 1.393%, Due 1/15/2015, 2010-AA AB C		750		756
Volkswagen Auto Loan Enhanced Trust, 6.24%, Due 7/20/2015, 2008-2 A4A		300		310
Total Asset-Backed Securities (Cost $7,531)				7,558
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 4.13%
Banc of America Merrill Lynch Commercial Mortgage, Inc.,
5.317%, Due 9/10/2047, 2006-5 A2		324		327
5.634%, Due 4/10/2049, 2007-2 A2		413		423
Bear Stearns Commercial Mortgage Securities,
5.201%, Due 12/11/2038, 2006-PWR14 A4		790		851
5.54%, Due 9/11/2041, 2006-PW13 A4		1,285		1,414
4.831%, Due 7/11/2042, 2004-PWR5 A4		700		723
Citigroup/Deutsche Bank Commercial Mortgage Trust, 5.886%, Due 11/15/2044, 2007-CD5 A4		840		915
GS Mortgage Securities Corp II,
4.607%, Due 7/10/2039, 2005-GG4 A3		380		384
3.679%, Due 8/10/2043, 2010-C1 A1B		562		585
3.849%, Due 12/10/2043, 2010-C2 A1B		784		816
3.645%, Due 3/10/2044, 2011-GC3 A2B		750		780
JP Morgan Chase Commercial Mortgage Securities Corp.,
4.678%, Due 7/15/2042, 2005-LDP2 A3A		323		330
3.853%, Due 6/15/2043, 2010-C1 A1B		729		758
4.388%, Due 2/15/2046, 2011-C3A A3B		800		821
4.625%, Due 3/15/2046, 2005-LDP1 A2		251		254
5.739%, Due 2/12/2049, 2007-CB19 A4		550		595
5.629%, Due 2/12/2051, 2007-CB20 A2		614		625
LB-UBS Commercial Mortgage Trust, 5.424%, Due 2/15/2040, 2007-C1 A4		550		585
Wachovia Bank Commercial Mortgage Trust, 5.737%, Due 6/15/2049, 2007-C32 A2		363		370
Total Non-Agency Mortgage-Backed Obligations (Cost $10,788)				11,556
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 31.54%
Federal Home Loan Mortgage Corporation - 6.44%
4.50%, Due 3/1/2019		226		240
5.00%, Due 10/1/2020		537		579
5.00%, Due 8/1/2033		349		375
5.50%, Due 2/1/2034		430		468
6.00%, Due 8/1/2034		209		230
5.00%, Due 8/1/2035		240		258
5.00%, Due 9/1/2035		606		652
6.00%, Due 8/1/2036		159		174
5.50%, Due 4/1/2037		356		385
5.50%, Due 12/1/2037		1,519		1,653
5.00%, Due 3/1/2038		496		533
6.00%, Due 3/1/2038		859		941
5.50%, Due 5/1/2038		540		584
5.50%, Due 6/1/2038		387		419
5.50%, Due 10/1/2039		597		645

See accompanying notes

34

American Beacon Intermediate Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
5.00%, Due 4/1/2040	$	4,097	$	4,411
0.643%, Due 12/15/2040 C		2,318		2,313
4.00%, Due 1/1/2041		1,633		1,696
4.50%, Due 2/1/2041		1,418		1,497
				18,053
Federal National Mortgage Association - 16.01%
6.50%, Due 2/1/2017		89		98
5.00%, Due 12/1/2017		304		328
4.50%, Due 9/1/2018		620		664
4.00%, Due 8/1/2020		152		161
4.50%, Due 3/1/2025		2,884		3,104
4.50%, Due 5/1/2025		147		157
4.50%, Due 6/1/2025		2,237		2,383
3.50%, Due 1/1/2026		559		581
4.00%, Due 5/1/2026		384		404
5.00%, Due 3/1/2034		460		496
5.50%, Due 6/1/2034		255		279
4.50%, Due 9/1/2034		161		171
5.50%, Due 2/1/2035		506		552
5.00%, Due 11/1/2035		631		681
5.50%, Due 12/1/2035		370		403
5.50%, Due 1/1/2036		440		480
5.00%, Due 2/1/2036		385		415
5.50%, Due 4/1/2036		822		897
6.00%, Due 9/1/2036		163		179
6.50%, Due 9/1/2036		626		699
6.50%, Due 12/1/2036		305		340
5.50%, Due 2/1/2037		473		514
5.50%, Due 8/1/2037		1,270		1,386
6.00%, Due 9/1/2037		439		483
6.00%, Due 1/1/2038		695		763
5.50%, Due 3/1/2038		1,270		1,392
5.00%, Due 4/1/2038		449		484
5.00%, Due 6/1/2038		521		561
5.50%, Due 6/1/2038		955		1,038
4.50%, Due 1/1/2040		3,084		3,265
5.00%, Due 5/1/2040		3,476		3,763
5.50%, Due 6/1/2040		2,336		2,537
4.50%, Due 8/1/2040		2,040		2,160
4.00%, Due 9/1/2040		2,020		2,103
4.00%, Due 1/1/2041		1,931		2,010
5.00%, Due 1/1/2041		2,017		2,183
4.00%, Due 2/1/2041		1,236		1,295
4.50%, Due 4/1/2041		964		1,021
4.50%, Due 5/1/2041		1,949		2,070
4.50%, Due 8/1/2041		2,179		2,307
				44,807
Government National Mortgage Association - 6.82%
6.50%, Due 3/15/2028		215		246
6.00%, Due 4/15/2031		254		286
5.50%, Due 2/20/2034		301		336
2.012%, Due 6/15/2035 2011-144 AB		2,000		2,020
1.692%, Due 11/16/2035 2009-148 A		440		443
6.00%, Due 10/15/2038		1,174		1,312
2.989%, Due 3/16/2039 2010-71 AC		1,058		1,097
6.00%, Due 11/15/2039		1,166		1,304
5.50%, Due 2/15/2040		996		1,107
4.50%, Due 10/20/2040		1,335		1,455
5.00%, Due 2/20/2041		1,190		1,311
2.70%, Due 4/16/2043 2011-109 AB		2,991		3,100
2.542%, Due 9/16/2044 2011-96 AC		2,192		2,264
3.20%, Due 11/16/2044 2011-92 B		2,700		2,804

See accompanying notes

35

American Beacon Intermediate Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
				19,085
National Credit Union Administration - 2.27%
0.643%, Due 3/11/2020 2011 R3 1AC	$	3,640	$	3,641
0.691%, Due 10/7/2020 2010 R1 1AC		2,695		2,699
				6,340
Total U.S. Agency Mortgage-Backed Obligations (Cost $85,737)				88,285
U.S. TREASURY OBLIGATIONS - 12.61%
U.S. Treasury Bonds - 4.91%
6.25%, Due 8/15/2023		1,400		1,949
6.875%, Due 8/15/2025		770		1,150
5.25%, Due 11/15/2028		750		991
4.75%, Due 2/15/2037		800		1,029
4.50%, Due 8/15/2039		1,010		1,260
4.25%, Due 11/15/2040		5,110		6,139
4.75%, Due 2/15/2041		700		910
4.375%, Due 5/15/2041		255		313
				13,741
U.S. Treasury Notes - 7.70%
2.625%, Due 7/31/2014		2,000		2,122
2.00%, Due 1/31/2016		3,805		4,000
2.00%, Due 4/30/2016		4,680		4,918
3.125%, Due 10/31/2016		1,400		1,544
3.625%, Due 2/15/2020		700		795
3.625%, Due 2/15/2021		5,995		6,789
3.125%, Due 5/15/2021		1,285		1,397
				21,565
Total U.S. Treasury Obligations (Cost $32,353)				35,306
	Shares
SHORT-TERM INVESTMENTS - 3.12% (Cost $8,724)
JPMorgan U.S. Government Money Market Fund		8,724,027		8,724
TOTAL INVESTMENTS - 97.31% (Cost 259,337)				272,374
OTHER ASSETS, NET OF LIABILITIES - 2.69%				7,519
TOTAL NET ASSETS - 100.00%			$	279,893

Percentages are stated as a percent of net assets.

^A  Limited Liability Company.

^B  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 $13,279 or 4.74% of net assets. The Fund has no right to demand registration of these securities.

^C  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.

^D  Limited Partnership.

^E  REIT -Real Estate Investment Trust.

See accompanying notes

36

American Beacon Short-Term Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
CORPORATE OBLIGATIONS - 47.13%
Finance - 26.94%
ABN Amro Bank N.V., 2.198%, Due 1/30/2014A B	$	2,000	$	1,962
American Express Co., 7.25%, Due 5/20/2014		1,000		1,132
American International Group, Inc.,
3.65%, Due 1/15/2014		2,000		1,967
4.25%, Due 9/15/2014		600		590
ANZ National International Ltd., 1.351%, Due 12/20/2013A B		2,000		1,989
Bank of America Corp.,
1.848%, Due 1/30/2014A		2,000		1,895
0.677%, Due 9/15/2014A		1,290		1,145
Barclays Bank plc, 5.45%, Due 9/12/2012		1,000		1,028
Citigroup, Inc.,
1.302%, Due 4/1/2014A		1,000		963
0.548%, Due 11/5/2014A		2,573		2,406
CME Group, Inc., 5.40%, Due 8/1/2013		250		268
Credit Suisse, 5.00%, Due 5/15/2013		2,000		2,081
Danske Bank A/S, 1.451%, Due 4/14/2014A B		3,000		2,883
Dexia Credit Local, 0.731%, Due 3/5/2013A B		3,000		2,818
HSBC Finance Corp., 0.653%, Due 1/15/2014A		1,000		933
ING Bank N.V., 1.737%, Due 6/9/2014A B		3,000		2,951
Lloyds TSB Bank plc, 2.766%, Due 1/24/2014A		2,000		1,940
MassMutual Global Funding II, 3.625%, Due 7/16/2012B		500		510
MetLife Institutional Funding II, 1.274%, Due 4/4/2014AB		3,000		2,993
Metropolitan Life Global Funding I, 2.875%, Due 9/17/2012B		1,000		1,015
Monumental Global Funding III, 0.603%, Due 1/15/2014A B		1,000		971
Morgan Stanley, 0.883%, Due 10/15/2015A		3,000		2,635
National Australia Bank Ltd., 1.372%, Due 7/25/2014AB		3,000		3,033
Nationwide Building Society, 5.50%, Due 7/18/2012B		1,000		1,029
Pricoa Global Funding I, 5.40%, Due 10/18/2012B		500		520
Prudential Financial, Inc., 4.50%, Due 7/15/2013		1,000		1,050
Societe Generale S.A., 1.441%, Due 4/11/2014A B		2,000		1,821
Svenska Handelsbanken AB, 4.875%, Due 6/10/2014B		1,500		1,592
The Goldman Sachs Group, Inc.,
4.75%, Due 7/15/2013		2,000		2,060
0.816%, Due 7/22/2015A		1,000		893
Wachovia Bank NA, 0.637%, Due 11/3/2014A		1,000		931
				50,004
Industrials - 16.99%
American Honda Finance Corp., 4.625%, Due 4/2/2013B		1,000		1,044
Anheuser-Busch InBev Worldwide, Inc.,
3.00%, Due 10/15/2012		1,000		1,021
2.50%, Due 3/26/2013		1,000		1,024
BP Capital Markets plc, 0.937%, Due 3/11/2014A		3,000		3,003
Burlington Northern Santa Fe Corp., 4.875%, Due 1/15/2015		1,000		1,108
Caterpillar Financial Services Corp., 4.25%, Due 2/8/2013		500		521
Cellco Partnership, 5.25%, Due 2/1/2012		1,000		1,011
Comcast Cable Communications Holdings, Inc., 8.375%, Due 3/15/2013		1,365		1,498
Daimler Finance North America LLC, 0.973%, Due 3/28/2014AB C		2,000		1,970
EOG Resources Canada, Inc., 4.75%, Due 3/15/2014B		1,000		1,075
France Telecom S.A., 4.375%, Due 7/8/2014		1,000		1,078
General Mills, Inc., 5.25%, Due 8/15/2013		1,000		1,074
Hewlett-Packard Co.,
4.50%, Due 3/1/2013A		1,000		1,041
0.719%, Due 5/30/2014A		1,000		984
John Deere Capital Corp., 5.25%, Due 10/1/2012		1,000		1,041
Johnson Controls, Inc., 1.75%, Due 3/1/2014		500		504
Kraft Foods, Inc., 5.625%, Due 11/1/2011		64		64
Nissan Motor Acceptance Corp., 4.50%, Due 1/30/2015B		1,000		1,050
Quest Diagnostics, Inc., 1.208%, Due 3/24/2014A		1,000		1,005
Telefonica Emisiones SAU, 0.594%, Due 2/4/2013A		1,000		964
Time Warner Cable, Inc., 5.40%, Due 7/2/2012		1,000		1,029

See accompanying notes

37

American Beacon Short-Term Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
Tyco International Finance S.A., 4.125%, Due 10/15/2014	$	500	$	536
Union Pacific Corp.,
6.50%, Due 4/15/2012		500		512
5.45%, Due 1/31/2013		1,000		1,056
Verizon Communications, Inc., 0.973%, Due 3/28/2014A		3,000		3,011
Volkswagen International Finance N.V.,
1.625%, Due 8/12/2013B		1,000		1,003
0.984%, Due 4/1/2014AB		2,000		2,005
Xerox Corp., 5.65%, Due 5/15/2013		300		317
				31,549
Utilities - 3.20%
Dominion Resources, Inc., 5.70%, Due 9/17/2012		1,000		1,039
DTE Energy Co., 1.031%, Due 6/3/2013A		1,000		1,000
EDF S.A., 5.50%, Due 1/26/2014B		1,000		1,085
Midamerican Energy Holdings Co., 3.15%, Due 7/15/2012		1,000		1,016
NextEra Energy Capital Holdings, Inc., 0.672%, Due 11/9/2012A		1,000		1,000
Pacific Gas & Electric Co., 6.25%, Due 12/1/2013		730		804
				5,944
Total Corporate Obligations (Cost $88,291)				87,497
ASSET-BACKED SECURITIES - 15.79%
Ally Master Owner Trust,
0.873%, Due 5/15/2016, 2011-3 A1A		2,000		1,994
1.043%, Due 9/15/2016, 2011-4 A1A		4,000		3,954
Bank of America Auto Trust,
2.67%, Due 7/15/2013, 2009-1A A3B		217		218
2.13%, Due 9/15/2013, 2009-2A A3B		317		318
BMW Floorplan Master Owner Trust, 1.393%, Due 9/15/2014, 2009-1A AA B		2,000		2,011
Capital One Multi-Asset Execution Trust, 4.70%, Due 6/15/2015, 2005-A7 A7		2,300		2,373
CarMax Auto Owner Trust, 0.72%, Due 11/15/2013, 2011-1 A2		995		996
Ford Credit Auto Owner Trust, 2.17%, Due 10/15/2013, 2009-D A3		462		465
Ford Credit Floorplan Master Owner Trust,
1.793%, Due 9/15/2014, 2009-2 AA		3,200		3,228
0.843%, Due 2/15/2016, 2011-1 A2A		2,000		1,998
GE Dealer Floorplan Master Note Trust, 0.845%, Due 7/20/2016, 2011-1 AA		2,500		2,500
GE Equipment Midticket LLC, 2.34%, Due 6/17/2013, 2009-1 A3C		174		175
GE Equipment Small Ticket LLC, 1.45%, Due 1/21/2018, 2011-1 A3B C		1,000		1,007
GE Equipment Transportation LLC, 1.00%, Due 11/20/2013, 2011-1 A3C		2,000		2,002
Harley-Davidson Motorcycle Trust, 5.52%, Due 11/15/2013, 2007-3 A4		509		515
Honda Auto Receivables Owner Trust, 2.31%, Due 5/15/2013, 2009-3 A3		498		501
Nissan Auto Lease Trust, 1.12%, Due 12/15/2013, 2010-B A3		1,000		1,004
Nissan Master Owner Trust Receivables, 1.393%, Due 1/15/2015, 2010-AA AA B		3,000		3,024
Volkswagen Auto Loan Enhanced Trust, 6.24%, Due 7/20/2015, 2008-2 A4A		1,000		1,033
Total Asset-Backed Securities (Cost $29,313)				29,316
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 1.60%
Banc of America Merrill Lynch Commercial Mortgage, Inc.,
4.561%, Due 11/10/2041, 2004-5 A3		70		70
5.634%, Due 4/10/2049, 2007-2 A2		388		398
GS Mortgage Securities Corp II, 2.716%, Due 2/10/2021, 2011-ALF AB		1,500		1,498
JP Morgan Chase Commercial Mortgage Securities Corp., 3.853%, Due 6/15/2043, 2010-C1 A1B		972		1,011
Total Non-Agency Mortgage-Backed Obligations (Cost $2,942)				2,977
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 31.58%
Government National Mortgage Association - 22.11%
1.864%, Due 8/16/2031 2010-141 A		3,488		3,520
2.239%, Due 12/16/2031 2009-115 IO		2,882		2,941
2.45%, Due 7/16/2032 2011-109 A		3,979		4,079
2.25%, Due 5/16/2033 2011-92 A		3,972		4,055
2.25%, Due 8/16/2034 2011-78 A		2,478		2,527
2.21%, Due 11/16/2034 2011-16 A		2,950		3,009
1.692%, Due 11/16/2035 2009-148 A		2,935		2,956

See accompanying notes

38

American Beacon Short-Term Bond Fund

Schedule of Investments

October 31, 2011

	Par Amount		Fair Value
	(000’s)		(000’s)
2.21%, Due 12/16/2035 2011-31 A	$	2,958	$	3,019
2.782%, Due 6/16/2036 2010-13 AD		1,919		1,985
3.069%, Due 6/16/2036 2010-52 A		2,843		2,983
2.161%, Due 11/16/2036 2011-96 AB		2,983		3,044
2.45%, Due 7/16/2038 2011-49 A		2,969		3,050
2.989%, Due 3/16/2039 2010-71 AC		1,839		1,907
3.210%, Due 10/16/2039 2010-22 AB		1,896		1,984
				41,059
National Credit Union Administration - 9.47%
0.691%, Due 1/8/2020 2011 R1 1AA		6,582		6,601
0.641%, Due 2/6/2020 2011 R2 1AA		1,747		1,748
0.643%, Due 3/11/2020 2011 R3 1AA		7,218		7,221
0.621%, Due 4/6/2020 2011 R5 1AA		1,358		1,359
1.84%, Due 10/7/2020 2010-R1 2A		635		643
				17,572
Total U.S. Agency Mortgage-Backed Obligations (Cost $58,125)				58,631
U.S. TREASURY OBLIGATIONS - 3.71%
U.S. Treasury Note,
2.50%, Due 3/31/2015,		4,500		4,801
1.75%, Due 7/31/2015,		2,000		2,083
Total U.S. Treasury Obligations (Cost $6,511)				6,884
	Shares
SHORT-TERM INVESTMENTS - 0.28% (Cost $519)
JPMorgan U.S. Government Money Market Fund		518,927		519
TOTAL INVESTMENTS - 100.09% (Cost 185,701)				185,824
LIABILITIES, NET OF OTHER ASSETS - (0.09%)				(187	)
TOTAL NET ASSETS - 100.00%			$	185,637

Percentages are stated as a percent of net assets.

^A  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.

^B  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 $44,406 or 23.92% of net assets. The Fund has no right to demand registration of these securities.

^C  Limited Liability Company.

See accompanying notes

39

American Beacon Funds

Statements of Assets and Liabilities

October 31, 2011 (in thousands except share and per share amounts)

	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund		Short-Term Bond Fund
Assets:
Investments in unaffiliated securities, at fair value A	$	116,092		$	149,099		$	272,374	$	185,824
Receivable for investments sold		828			—			763		—
Dividends and interest receivable		2,596			1,016			1,948		620
Receivable for fund shares sold		4,904			413			8,291		79
Receivable for tax reclaims		1			4			5		3
Receivable for expense reimbursement (Note 2)		—			5			1		10
Prepaid expenses		24			38			28		20
Total assets		124,445			150,575			283,410		186,556
Liabilities:
Payable for investments purchased		1,313			—			3,245		—
Payable for fund shares redeemed		378			31			164		818
Dividends payable		48			2			1		5
Management and investment advisory fees payable (Note 2)		151			140			46		32
Administrative service and service fees payable (Note 2)		16			56			13		23
Professional fees payable		29			29			32		28
Trustee fees payable		2			1			4		3
Prospectus and shareholder reports		19			3			6		4
Other liabilities		7			2			6		6
Total liabilities		1,963			264			3,517		919
Net Assets	$	122,482		$	150,311		$	279,893	$	185,637
Analysis of Net Assets:
Paid-in-capital		127,970			142,679			264,088		193,502
Undistributed net investment income		150			(149	)		502		(308	)
Accumulated net realized gain (loss)		(2,523	)		712			2,266		(7,680	)
Unrealized appreciation or depreciation of investments		(3,115	)		7,069			13,037		123
Net assets	$	122,482		$	150,311		$	279,893	$	185,637
Shares outstanding (no par value):
Institutional Class		4,735,428			N/A			25,054,126		18,009,975
Y Class		1,223			49,819			5,428		39,380
Investor Class		870,724			13,604,594			340,013		2,815,982
A Class		13,507			71,018			53,253		393,598
C Class		46,463			146,234			26,058		42,538
AMR Class		8,444,590			N/A			N/A		N/A
Net asset value, offering and redemption price per share:
Institutional Class	$	8.68			N/A		$	10.99	$	8.71
Y Class	$	8.69		$	10.83		$	11.03	$	8.73
Investor Class	$	8.68		$	10.84		$	10.97	$	8.72
A Class (net asset value and redemption price)	$	8.69		$	10.85		$	10.96	$	8.71
A Class (offering price)	$	9.12		$	11.39		$	11.51	$	8.93
C Class	$	8.67		$	10.85		$	10.97	$	8.72
AMR Class	$	8.68			N/A			N/A		N/A
A Cost of investments in unaffiliated securities	$	119,207		$	142,030		$	259,337	$	185,701

See accompanying notes

40

American Beacon Funds

Statements of Operations

For the year ended October 31, 2011 (in thousands)

	High Yield Bond Fund			Retirement Income and Appreciation Fund			Intermediate Bond Fund			Short-Term Bond Fund
Investment Income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	29		$	266		$	2		$	1
Interest income		13,046			4,399			9,726			3,740
Miscellaneous Income		—			2			—			—
Total investment income		13,075			4,667			9,728			3,741
Expenses:
Management and investment advisory fees (Note 2)		623			460			561			356
Administrative service fees (Note 2):
Institutional Class		126			—			143			77
Y Class		—			1			—			1
Investor Class		76			424			11			84
A Class		—			2			2			6
C Class		1			5			1			1
AMR Class		41			—			—			—
Transfer agent fees:
Institutional Class		11			—			12			5
Y Class		2			5			—			2
Investor Class		4			7			1			9
A Class		2			4			—			3
C Class		2			—			—			2
AMR Class		4			—			—			—
Custody and fund accounting fees		19			18			36			22
Professional fees		35			35			41			36
Registration fees and expenses		56			66			78			76
Service fees (Note 2):
Investor Class		63			514			9			70
A Class		—			1			1			2
C Class		—			2			—			1
Distribution fees (Note 2):
A Class		—			1			1			3
C Class		2			12			2			3
Prospectus and shareholder reports		46			18			69			46
Trustee fees		12			10			24			13
Other expenses		15			11			22			15
Total expenses		1,140			1,596			1,014			833
Net (fees waived and expenses reimbursed) (Note 2)		(6	)		(10	)		(4	)		(47	)
Net expenses		1,134			1,586			1,010			786
Net investment income		11,941			3,081			8,718			2,955
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) from:
Investments		8,136			2,521			2,756			1,206
Commission recapture (Note 3)		—			1			—			—
Change in net unrealized appreciation or depreciation of:
Investments		(12,888	)		(1,793	)		(635	)		(3,806	)
Net gain (loss) on investments		(4,752	)		729			2,121			(2,600	)
Net increase in net assets resulting from operations	$	7,189		$	3,810		$	10,839		$	355
A Foreign taxes	$	—		$	3		$	—		$	—

See accompanying notes

41

American Beacon Funds

Statements of Changes in Net Assets (in thousands)

	High Yield Bond Fund						Retirement Income and Appreciation Fund
	Year Ended October 31, 2011			Year Ended October 31, 2010			Year Ended October 31, 2011			Year Ended October 31, 2010
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	11,941		$	19,682		$	3,081		$	3,236
Net realized gain on investments		8,136			17,096			2,522			871
Change in net unrealized appreciation or depreciation of investments		(12,888	)		(1,037	)		(1,793	)		5,410
Net increase in net assets resulting from operations		7,189			35,741			3,810			9,517
Distributions to Shareholders:
Net investment income:
Institutional Class		(3,296	)		(3,870	)		—			—
Y Class		—			—			(13	)		(2	)
Investor Class		(1,941	)		(6,758	)		(3,349	)		(3,375	)
A Class		(5	)		—			(10	)		—
C Class		(11	)		—			(17	)		(1	)
AMR Class		(6,684	)		(9,049	)		—			—
Net distributions to shareholders		(11,937	)		(19,677	)		(3,389	)		(3,378	)
Capital Share Transactions:
Proceeds from sales of shares		37,430			256,394			49,115			41,365
Reinvestment of dividends and distributions		11,132			17,683			3,264			2,727
Cost of shares redeemed		(107,035	)		(335,193	)		(30,079	)		(16,368	)
Redemption fees		32			74			—			—
Net increase (decrease) in net assets from capital share transactions		(58,441	)		(61,042	)		22,300			27,724
Net increase (decrease) in net assets		(63,189	)		(44,978	)		22,721			33,863
Net Assets:
Beginning of period		185,671			230,649			127,590			93,727
End of Period *	$	122,482		$	185,671		$	150,311		$	127,590
*  Includes undistributed net investment income (loss) of	$	150		$	503		$	(149	)	$	(62	)

See accompanying notes

42

American Beacon Funds

Statements of Changes in Net Assets (in thousands)

	Intermediate Bond Fund						Short-Term Bond Fund
	Year Ended October 31, 2011			Year Ended October 31, 2010			Year Ended October 31, 2011			Year Ended October 31, 2010
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	8,718		$	8,674		$	2,955		$	3,569
Net realized gain on investments		2,756			5,763			1,206			1,400
Change in net unrealized appreciation or depreciation of investments		(635	)		5,150			(3,806	)		837
Net increase in net assets resulting from operations		10,839			19,587			355			5,806
Distributions to Shareholders:
Net investment income:
Institutional Class		(9,074	)		(8,812	)		(3,233	)		(3,855	)
Y Class		(3	)		(2	)		(5	)		–
Investor Class		(101	)		(89	)		(489	)		(945	)
A Class		(10	)		–			(20	)		–
C Class		(5	)		(1	)		(3	)		–
Net realized gain on investments:
Institutional Class		(4,838	)		–			–			–
Y Class		(6	)		–			–			–
Investor Class		(63	)		–			–			–
A Class		(2	)		–			–			–
C Class		(6	)		–			–			–
Net distributions to shareholders		(14,108	)		(8,904	)		(3,750	)		(4,800	)
Capital Share Transactions:
Proceeds from sales of shares		64,388			210,797			97,611			84,366
Reinvestment of dividends and distributions		14,072			8,901			3,703			4,725
Cost of shares redeemed		(90,614	)		(148,261	)		(66,867	)		(90,705	)
Net increase (decrease) in net assets from capital share transactions		(12,154	)		71,437			34,447			(1,614	)
Net increase (decrease) in net assets		(15,423	)		82,120			31,052			(608	)
Net Assets:
Beginning of period		295,316			213,196			154,585			155,193
End of Period *	$	279,893		$	295,316		$	185,637		$	154,585
*  Includes undistributed net investment income (loss) of	$	502		$	501		$	(308	)	$	(539	)

See accompanying notes

43

American Beacon Funds

Notes to Financial Statements

October 31, 2011

1. Organization and Significant Accounting Policies

American Beacon Funds (the “Trust”), which is comprised of 20 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

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	General public and 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

Each class offered by the Trust has equal rights as to assets and voting privileges. Income and non-class specific expenses are allocated daily to each class on the basis of the relative net assets. Realized and unrealized capital gains and losses of each class are allocated daily based on the relative net assets of each class of the respective Fund. Class specific expenses, where applicable, currently include administrative service fees, service fees, and distribution fees and vary amongst the classes as described more fully in Note 2.

New Accounting Pronouncements

In April 2011, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) related to the accounting for repurchase agreements and similar agreements that both entitles and obligates a transferor to repurchase or redeem financial assets before their maturity. The ASU modifies the criteria for determining effective control of transferred assets and as a result certain agreements may now be accounted for as secured borrowings. The ASU is effective prospectively for new transfers and existing transactions that are modified in the first interim or annual period beginning on or after December 15, 2011.

In May 2011, FASB issued an ASU to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. generally accepted accounting principles, (“U.S. GAAP”) and International Financial Reporting Standards (IFRSs). FASB concluded that the amendments in this ASU will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The ASU is effective prospectively during interim or annual periods beginning on or after December 15, 2011.

At this time, management is evaluating the implications of these changes and their impact on the financial statements has not been determined.

44

American Beacon Funds

Notes to Financial Statements

October 31, 2011

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 and Retirement Income and Appreciation Funds 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. Management fees paid during the year ended October 31, 2011 were as follows (dollars in thousands):

	Management Fee Rate		Management Fee		Amounts paid to Investment Advisors		Net Amounts Retained by Manager
High Yield Bond		0.30%-0.45%		623		548		75
Retirement Income and Appreciation		0.20%-0.80%		460		388		72
Intermediate Bond		0.20%-0.35%		561		230		331
Short-Term Bond		0.20%		356		—		356

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, and Investor Classes of each Fund, 0.40% of the average daily net assets of the A and C Classes of each Fund, and 0.05% of the average daily net assets of the AMR Class, except for the Institutional Class of the Intermediate and Short-Term Bond Funds from which the Manager receives a fee of 0.05% of average daily net assets.

Distribution Plans

The Funds, except for the 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 Fund shares.

Separate Distribution Plans (the “Distribution Plan”) have 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 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.

45

American Beacon Funds

Notes to Financial Statements

October 31, 2011

Service Plans

The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Y, Investor, 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, and up to 0.375% of the average daily net assets of the Investor Class of each Fund. Service fees for the Y Class for the period ended October 31, 2011 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, 2011, the Funds did not utilize the credit facility.

Reimbursement of Expenses

The Manager voluntarily and contractually agreed to reimburse the following Funds to the extent that total operating expenses exceeded the Fund’s expense cap. Of these amounts, approximately $5,000, $1,000, and $10,000 was receivable from the Manager at October 31, 2011 for the Retirement Income and Appreciation, Intermediate Bond, and Short-Term Bond Funds, respectively. For the period ended October 31, 2011, the Manager reimbursed expenses as follows:

		Expense Caps
Funds	Class	11/1/10 to 2/28/11			3/1/11 to 10/31/11			Reimbursed Expenses		Expiration of Reimbursements
High Yield Bond	Y*		N/A			N/A		$	1,657	2014
High Yield Bond	A		1.12	%		1.12	%		1,864	2014
High Yield Bond	C		1.87	%		1.87	%		2,053	2014
Retirement Income and Appreciation	Y*		N/A			N/A			4,856	2014
Retirement Income and Appreciation	Investor*		N/A			N/A			150	2014
Retirement Income and Appreciation	A		N/A			1.14	%		3,890	2014
Retirement Income and Appreciation	C		N/A			1.96	%		530	2014
Intermediate Bond	Y		0.65	%		0.65	%		87	2014
Intermediate Bond	Investor		0.79	%		0.79	%		2,557	2014
Intermediate Bond	A		0.99	%		0.99	%		547	2014
Intermediate Bond	C		1.74	%		1.74	%		341	2014
Short-Term Bond	Y		0.65	%		0.64	%		2,269	2014
Short-Term Bond*	Investor		0.79	%		0.79	%		34,558	2014
Short-Term Bond	A		0.85	%		0.85	%		7,426	2014
Short Term Bond	C		1.60	%		1.60	%		2,857	2014

* Voluntary reimbursement.

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 High Yield Bond Fund is $11 expiring in 2013; the Intermediate Bond Fund $10,509 and $2,320 expiring in 2012 and 2013, respectively; and for the Short-Term Bond Fund $73,068 and $64,863 expiring in 2012 and 2013, respectively. During the year ended October 31, 2011, the Funds have not recorded a liability for potential reimbursement due to the current assessment that a reimbursement is unlikely.

46

American Beacon Funds

Notes to Financial Statements

October 31, 2011

3. Security Valuation and Fair Value Measurements

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 (“NAV”) 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 Trust’s Board of Trustees (the “Board”).

Other investments, including restricted securities, and those financial instruments for which the above valuation procedures are inappropriate or are deemed not to reflect fair value are stated at fair value as determined in good faith by the Valuation Committee, established by the Fund’s Board.

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 NAV. 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 and paid 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.

47

American Beacon Funds

Notes to Financial Statements

October 31, 2011

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. GAAP 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 High Yield Bond Fund imposes 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 Fund. The “first-in, first-out” method is used to determine the holding period. The fee is allocated to all classes of the 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 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.

Valuation Inputs

Various inputs may be used to determine the fair 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.

Level 1 and Level 2 trading assets and trading liabilities, at fair value

Fixed income securities including corporate, convertible and municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, sovereign issues, bank loans, convertible preferred securities, and non-U.S. bonds are normally valued by pricing service providers that use broker dealer quotations, reported trades or valuation estimates from their internal pricing models. The service providers’ internal models use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates, and quoted prices for similar assets. Securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

48

American Beacon Funds

Notes to Financial Statements

October 31, 2011

Fixed income securities purchased on a delayed-delivery basis are marked to market daily until settlement at the forward settlement date are categorized as Level 2 of the fair value hierarchy.

Mortgage-related and asset-backed securities are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows, and market-based yield spreads for each tranche, and incorporates deal collateral performance, as available. Mortgage-related and asset-backed securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.

Common stocks, exchange-traded funds and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Valuation adjustments may be applied to certain securities that are solely traded on a foreign exchange to account for the market movement between the close of the foreign market and the close of the Exchange. These securities are valued using pricing service providers that consider the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments. Securities using these valuation adjustments are categorized as Level 2 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are also categorized as Level 2 of the fair value hierarchy.

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy. Short-term investments having a maturity of 60 days or less are generally valued at amortized cost which approximates fair value. These investments are categorized as Level 2 of the fair value hierarchy.

Level 3 trading assets and trading liabilities, at fair value

The valuation techniques and significant inputs used in determining the fair values of financial instruments classified as Level 3 of the fair value hierarchy are as follows:

Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board or persons acting at their direction and are categorized as Level 3 of the fair value hierarchy.

Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes), including where events occur after the close of the relevant market, but prior to the Exchange close, that materially affect the values of a Fund’s securities or assets. In addition, market quotes are considered not readily available when, due to extraordinary circumstances, the exchanges or markets on which the securities trade, do not open for trading for the entire day and no other market prices are available. The Board has delegated to the Manager the responsibility for monitoring significant events that may materially affect the fair values of a Fund’s securities or assets and for determining whether the value of the applicable securities or assets should be re-evaluated in light of such significant events.

The Board has adopted methods for valuing securities and other assets in circumstances where market quotes are not readily available, and has delegated the responsibility for applying the valuation methods to the Manager. For instances in which daily market quotes are not readily available, investments may be valued, pursuant to guidelines established by the Board, with reference to other securities or indices. In the event that

49

American Beacon Funds

Notes to Financial Statements

October 31, 2011

the security or asset cannot be valued pursuant to one of the valuation methods established by the Board, the fair value of the security or asset will be determined in good faith by the Valuation Committee of the Board, generally based upon recommendations provided by the Manager.

When a Fund uses fair valuation methods applied by the Manager that use significant unobservable inputs to determine its NAV, securities will be priced by another method that the Board or persons acting at their direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. These methods may require subjective determinations about the value of a security. While the Trust’s policy is intended to result in a calculation of a Fund’s NAV that fairly reflects security values as of the time of pricing, the Trust cannot guarantee that values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.

For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in and out of the Level 3 category during the period. The end of period timing recognition is used for the significant transfers between Levels of the Funds’ assets and liabilities. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included in the Notes to the Schedule of Investments for each respective Fund.

The Funds’ investments are summarized by level based on the inputs used to determine their values. As of October 31, 2011, the investments were classified as described below (in thousands):

High Yield Bond Fund	Level 1		Level 2		Level 3		Total
Common Stocks	$	447	$	—	$	53	$	500
Preferred Stocks		945		119		—		1,064
Convertible Preferred Stock		275		—		—		275
Convertible Obligations		—		1,118		—		1,118
Corporate Obligations		—		106,413		—		106,413
Short-Term Investments		6,722		—		—		6,722
Total Investments in Securities	$	8,389	$	107,650	$	53	$	116,092

Retirement Income and Appreciation Fund	Level 1		Level 2		Level 3		Total
Common Stock	$	7,649	$	—	$	—	$	7,649
Convertible Preferred		595		—		—		595
Preferred Stocks		1,328		174		—		1,502
Convertible Obligations		—		17,983		—		17,983
Corporate Obligations		—		55,009		—		55,009
Other Government Obligations		—		588		—		588
U.S. Agency Obligations		—		309		—		309
Asset-Backed Obligations		—		4,401		—		4,401
Non-Agency Mortgage-Backed Obligations		—		5,334		—		5,334
U.S. Agency Mortgage-Backed Obligations		—		38,570		—		38,570
U.S. Treasury Obligations		—		9,924		—		9,924
Short-Term Investments		7,235		—		—		7,235
Total Investments in Securities	$	16,807	$	132,292	$	—	$	149,099

50

American Beacon Funds

Notes to Financial Statements

October 31, 2011

Intermediate Bond Fund	Level 1		Level 2		Level 3		Total
Corporate Obligations	$	—	$	119,287	$	—	$	119,287
Other Government Obligations		—		827		—		827
U.S. Agency Obligations		—		831		—		831
Asset-Backed Obligations		—		7,558		—		7,558
Non-Agency Mortgage-Backed Obligations		—		11,556		—		11,556
U.S. Agency Mortgage-Backed Obligations		—		88,285		—		88,285
U.S. Treasury Obligations		—		35,306		—		35,306
Short-Term Investments		8,724		—		—		8,724
Total Investments in Securities	$	8,724	$	263,650	$	—	$	272,374

Short-Term Bond Fund	Level 1		Level 2		Level 3		Total
Corporate Obligations	$	—	$	87,497	$	—	$	87,497
Asset-Backed Obligations		—		29,316		—		29,316
Non-Agency Mortgage-Backed Obligations		—		2,977		—		2,977
U.S. Agency Mortgage-Backed Obligations		—		58,631		—		58,631
U.S. Treasury Obligations		—		6,884		—		6,884
Short-Term Investments		519		—		—		519
Total Investments in Securities	$	519	$	185,305	$	—	$	185,824

As of October 31, 2011, there were no significant transfers into or out of any level for the Retirement Income and Appreciation, Intermediate Bond, and Short-Term Bond Funds. For the High Yield Bond Fund, $52,796 was transferred from Common Stock Level 1 to Level 3.

The following is a reconciliation of Level 3 assets of the High Yield Bond Fund for which significant unobservable inputs were used to determine fair value. Transfers in or out of Level 3 represent the beginning value of any security or instrument where a change in the level has occurred from the beginning to the end of the period.

	Common Stocks		Preferred Stocks		Convertible Preferred Stocks		Convertible Obligations		Corporate Obligations		Totals
Balance as of October 31, 2010	$	—	$	—	$	—	$	—	$	—	$	—
Realized gain (loss)		—		—		—		—		—		—
Change in unrealized appreciation or depreciation		53		—		—		—		—		53
Purchases		—		—		—		—		—		—
Sales		—		—		—		—		—		—
Transfer into Level 3		—		—		—		—		—		—
Transfer out of Level 3		—		—		—		—		—		—
Balance as of October 31, 2011		53		—		—		—		—		53
Change in unrealized at period end*	$	53	$	—	$	—	$	—	$	—	$	53

* Change in unrealized appreciation or depreciation attributable to Level 3 securities held at period end. This balance is included in the change in unrealized appreciation or depreciation on the Statement of Operations.

4. Securities and Other Investments

Payment In-Kind Securities

Certain Funds may invest in payment in-kind securities. Payment in-kind securities give the issuer the option at each interest payment date of making interest payments in either cash or additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds. The daily market quotations of the original bonds may include the accrued interest (referred to as a dirty price) and require a pro-rata adjustment from the unrealized appreciation or depreciation on investment to interest receivable in the Statements of Assets and Liabilities.

51

American Beacon Funds

Notes to Financial Statements

October 31, 2011

Restricted Securities

Certain Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933. Disposal of restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Restricted securities outstanding at the period ended October 31, 2011 are disclosed in the Notes to the Schedules of Investments.

High-Yield Securities

Non-investment-grade securities are rated below the four highest credit grades by at least one of the public rating agencies (or are unrated if not publicly rated). Participation in high-yielding securities transactions generally involves greater returns in the form of higher average yields. However, participation in such transactions involves greater risks, including sensitivity to economic changes, solvency, and relative liquidity in the secondary trading market. Lower ratings may reflect a greater possibility that the financial condition of the issuer, or adverse changes in general economic conditions, or both, may impair the ability of the issuer to make payments of interest and principal. The prices and yields of lower-rated securities generally fluctuate more than higher-quality securities, and such prices may decline significantly in periods of general economic difficulty or rising interest rates.

5. 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 Subchapter M of the Internal Revenue Code, as amended, 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, 2011 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. GAAP. 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, 2011 and October 31, 2010 were as follows (in thousands)

	High Yield Bond				Retirement Income and Appreciation
	Year Ended October  31, 2011		Year Ended October 31, 2010		Year Ended October  31, 2011		Year Ended October 31, 2010
Distributions paid from:
Ordinary income*
Institutional Class	$	3,296	$	3,870	$	—	$	—
Y Class		—		—		13		2
Investor Class		1,941		6,758		3,349		3,375
A Class		5		—		10		—
C Class		11		—		17		1
AMR Class		6,684		9,049		—		—
Total distributions paid	$	11,937	$	19,677	$	3,389	$	3,378

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

52

American Beacon Funds

Notes to Financial Statements

October 31, 2011

	Intermediate Bond				Short-Term Bond
	Year Ended October  31, 2011		Year Ended October 31, 2010		Year Ended October  31, 2011		Year Ended October 31, 2010
Distributions paid from:
Ordinary income*
Institutional Class	$	12,384	$	8,812	$	3,233	$	3,855
Y Class		8		2		5		—
Investor Class		144		89		489		945
A Class		11		—		20		—
C Class		9		1		3		—
Capital Gains
Institutional Class		1,528		—		—		—
Y Class		1		—		—		—
Investor Class		20		—		—		—
A Class		1		—		—		—
C Class		2		—		—		—
Total distributions paid	$	14,108	$	8,904	$	3,750	$	4,800

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

As of October 31, 2011, the components of distributable earnings (deficit) on a tax basis were as follows (in thousands):

	High Yield Bond			Retirement Income and Appreciation			Intermediate Bond			Short-Term Bond
Cost basis of investments for federal income tax purposes	$	119,761		$	142,284		$	259,351		$	186,540
Unrealized appreciation		4,272			8,364			13,644			1,422
Unrealized depreciation		(7,941	)		(1,549	)		(621	)		(2,138	)
Net unrealized appreciation or depreciation		(3,669	)		6,815			13,023			(716	)
Undistributed ordinary income		199			55			504			536
Accumulated long-term gain (loss)		(1,970	)		763			2,280			(7,680	)
Other temporary differences		(48	)		(1	)		(2	)		(5	)
Distributable earnings (deficit)	$	(5,488	)	$	7,632		$	15,805		$	(7,865	)

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 or 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. GAAP 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, 2011 (in thousands):

	High Yield Bond			Retirement Income and Appreciation			Intermediate Bond			Short-Term Bond
Paid-in-capital	$	353		$	(165	)	$	(2	)	$	2
Undistributed net investment income		(357	)		221			476			1,026
Accumulated net realized gain (loss)		4			(56	)		(474	)		(1,027	)
Unrealized appreciation or depreciation of investments		—			—			—			(1	)

53

American Beacon Funds

Notes to Financial Statements

October 31, 2011

At October 31, 2011, capital loss carry forward positions for federal income tax purposes were as follows (in thousands):

Fund	2014		2015		2016		2017		Total
High Yield Bond		—		—		—		1,970		1,970
Short-Term Bond		2,015		467		5,198		—		7,680

The High Yield Bond, Retirement Income and Appreciation, and Short-Term Bond Funds utilized $7,732, $1,748, and $179, respectively, of net capital loss carryovers for the year ended October 31, 2011.

6. Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of long-term investments during the year ended October 31, 2011 were as follows (in thousands):

	High Yield Bond		Retirement Income and Appreciation		Intermediate Bond		Short-Term Bond
Purchases (excluding U.S. government securities)	$	211,284	$	93,156	$	204,444	$	147,611
Sales and maturities (excluding U.S. government securities)		275,488		74,121		225,454		111,978
Purchases of U.S. government securities		—		11,888		89,083		4,058
Sales and maturities of U.S. government securities		—		27,966		129,789		15,568

7. 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, 2011

	Institutional Class						Y Class						Investor Class
High Yield Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		1,069		$	9,564			1		$	10			495		$	4,488
Reinvestment of dividends		291			2,618			—			—			201			1,821
Shares redeemed		(1,203	)		(10,767	)*		—			—	*		(5,802	)		(53,202	)*
Net increase (decrease) in shares outstanding		157		$	1,415			1		$	10			(5,106	)	$	(46,893	)
	AMR Class						A Class						C Class
High Yield Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		2,566		$	22,915			9		$	82			43		$	371
Reinvestment of dividends		742			6,684			—			4			—			5
Shares redeemed		(4,800	)		(43,025	)*		—			(1	)*		(1	)		(8	)*
Net increase (decrease) in shares outstanding		(1,492	)	$	(13,426	)		9		$	85			42		$	368
*     Net of Redemption Fees
	Y Class						Investor Class						A Class
Retirement Income and Appreciation Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		25		$	261			4,427		$	47,560			55		$	591
Reinvestment of dividends		1			13			300			3,228			1			9
Shares redeemed		(10	)		(103	)		(2,778	)		(29,805	)		—			(1	)
Net increase in shares outstanding		16		$	171			1,949		$	20,983			56		$	599

54

American Beacon Funds

Notes to Financial Statements

October 31, 2011

	C Class
Retirement Income and Appreciation Fund	Shares			Amount
Shares sold		65		$	704
Reinvestment of dividends		2			14
Shares redeemed		(16	)		(170	)
Net increase in shares outstanding		51		$	548

	Institutional Class						Y Class						Investor Class
Intermediate Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		5,783		$	62,684			5		$	53			93		$	1,002
Reinvestment of dividends		1,295			13,905			1			10			14			153
Shares redeemed		(8,216	)		(88,876	)		(35	)		(369	)		(112	)		(1,210	)
Net (decrease) in shares outstanding		(1,138	)	$	(12,287	)		(29	)	$	(306	)		(5	)	$	(55	)

	A Class						C Class
Intermediate Bond Fund	Shares			Amount			Shares			Amount
Shares sold		55		$	587			6		$	61
Reinvestment of dividends		—			1			—			3
Shares redeemed		(6	)		(61	)		(9	)		(97	)
Net increase (decrease) in shares outstanding		49		$	527			(3	)	$	(33	)

	Institutional Class						Y Class						Investor Class
Short-Term Bond Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		7,973		$	70,089			37		$	323			2,600		$	22,888
Reinvestment of dividends		368			3,231			1			5			52			456
Shares redeemed		(5,105	)		(44,890	)		(4	)		(31	)		(2,442	)		(21,414	)
Net increase in shares outstanding		3,236		$	28,430			34		$	297			210		$	1,930

	A Class						C Class
Short-Term Bond Fund	Shares			Amount			Shares			Amount
Shares sold		422		$	3,711			68		$	600
Reinvestment of dividends		1			9			—			2
Shares redeemed		(34	)		(304	)		(26	)		(228	)
Net increase in shares outstanding		389		$	3,416			42		$	374

Period 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
*     Net of Redemption Fees

55

American Beacon Funds

Notes to Financial Statements

October 31, 2011

	Y Class				Investor Class						A Class
Retirement Income and Appreciation Fund	Shares		Amount		Shares			Amount			Shares		Amount
Shares sold		34	$	357		3,818		$	39,811			15	$	164
Reinvestment of dividends		—		2		262			2,724			—		—
Shares redeemed		—		—		(1,567	)		(16,368	)		—		—
Net increase in shares outstanding		34	$	359		2,513		$	26,167			15	$	164

	C Class
Retirement Income and Appreciation Fund	Shares		Amount
Shares sold		96	$	1,033
Reinvestment of dividends		—		1
Shares redeemed		—		—
Net increase in shares outstanding		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

	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 in shares outstanding		5	$	44		—	$	1

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57

American Beacon High Yield Bond Fund

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,			March 1 to October 31,
	2011H			2010			2009			2008A			2007			2011H			2010
Net asset value, beginning of period	$	9.05		$	8.42		$	6.77		$	10.11		$	10.20		$	9.06		$	8.63
Income from investment operations:
Net investment income		0.71			0.75			0.79			0.78			0.77			0.68			0.50
Net gains (losses) on securities (both realized and unrealized)		(0.37	)		0.63			1.66			(3.34	)		(0.09	)		(0.37	)		0.43
Total income (loss) from investment operations		0.34			1.38			2.45			(2.56	)		0.68			0.31			0.93
Less distributions:
Dividends from net investment income		(0.71	)		(0.75	)		(0.80	)		(0.78	)		(0.77	)		(0.68	)		(0.50	)
Distributions from net realized gains on securities		—			—			—			—			—			—			—
Total distributions		(0.71	)		(0.75	)		(0.80	)		(0.78	)		(0.77	)		(0.68	)		(0.50	)
Redemption fees added to beneficial interests		0.00	G		0.00	G		—			—			—			0.00	G		0.00	G
Net asset value, end of period	$	8.68		$	9.05		$	8.42		$	6.77		$	10.11		$	8.69		$	9.06
Total return B		3.79	%		17.17	%		39.06	%		(27.03	)%		6.85	%		3.36	%		11.17	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	41,093		$	41,459		$	47,254		$	62,138		$	114,911		$	11		$	1
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.88	%		0.79	%		0.79	%		0.85	%		0.86	%		27.02	%		0.82	%D
Expenses, net of reimbursements		0.88	%		0.79	%		0.79	%		0.85	%		0.85	%		1.61	%		0.82	%D
Net investment income (loss), before reimbursements		7.90	%		8.69	%		11.46	%		8.38	%		7.54	%		(18.29	)%		8.53	%D
Net investment income, net of reimbursements		7.90	%		8.69	%		11.46	%		8.38	%		7.55	%		7.11	%		8.53	%D
Portfolio turnover rate		149	%		176	%		212	%		157	%		92	%		149	%		176	%E

^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 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.

^F Portfolio turnover rate is for the period from November 1, 2006 through October 31, 2007.

^G Amounts represent less than $0.01 per share.

^H  PENN Capital Management Company, Inc. was added as an investment manager to the High Yield Bond Fund on September 15, 2011.

58

American Beacon Funds High Yield Bond Fund

Financial Highlights

(For a share outstanding throughout the period)

Investor Class																		AMR Class												A Class						C Class
Year Ended October 31,																		Year Ended October 31,									September 4 to October 31,			Year Ended October 31,			May 17 to October 31,			Year Ended October 31,			September 1 to October 31,
2011H			2010			2009			2008A			2007			2011H			2010			2009			2008A			2007			2011H			2010			2011H			2010
$	9.06		$	8.42		$	6.77		$	10.11		$	10.21		$	9.06		$	8.42		$	6.77		$	10.11		$	9.94		$	9.08		$	8.67		$	9.05		$	8.68
	0.69			0.73			0.78			0.75			0.75			0.74			0.78			0.81			0.80			0.12			0.69			0.32			0.63			0.09
	(0.38	)		0.64			1.65			(3.34	)		(0.10	)		(0.38	)		0.63			1.65			(3.34	)		0.17			(0.39	)		0.41			(0.39	)		0.37
	0.31			1.37			2.43			(2.59	)		0.65			0.36			1.41			2.46			(2.54	)		0.29			0.30			0.73			0.24			0.46
	(0.69	)		(0.73	)		(0.78	)		(0.75	)		(0.75	)		(0.74	)		(0.77	)		(0.81	)		(0.80	)		(0.12	)		(0.69	)		(0.32	)		(0.62	)		(0.09	)
	—			—			—			—			—			—			—			—			—			—			—			—			—			—
	(0.69	)		(0.73	)		(0.78	)		(0.75	)		(0.75	)		(0.74	)		(0.77	)		(0.81	)		(0.80	)		(0.12	)		(0.69	)		(0.32	)		(0.62	)		(0.09	)
	0.00	G		0.00	G		—			—			—			0.00	G		0.00	G		—			—			—			0.00	G		0.00	G		0.00	G		0.00	G
$	8.68		$	9.06		$	8.42		$	6.77		$	10.11		$	8.68		$	9.06		$	8.42		$	6.77		$	10.11		$	8.69		$	9.08		$	8.67		$	9.05
	3.41	%		17.00	%		38.70	%		(27.24	)%		6.52	%		3.96	%		17.59	%		39.41	%		(26.84	)%		2.94	%C		3.31	%		8.66	%C		2.67	%		5.31	%C
$	7,560		$	54,142		$	90,736		$	13,949		$	28,758		$	73,298		$	89,992		$	92,659		$	44,060		$	82,322		$	117		$	40		$	403		$	37
	1.09	%		1.04	%		1.01	%		1.10	%		1.08	%		0.60	%		0.54	%		0.53	%		0.58	%		0.61	%D		3.93	%		1.30	%D		3.15	%		2.29	%D
	1.09	%		1.04	%		1.01	%		1.10	%		1.08	%		0.60	%		0.54	%		0.53	%		0.58	%		0.61	%D		1.11	%		1.12	%D		1.85	%		1.87	%D
	7.75	%		8.48	%		9.36	%		8.06	%		7.32	%		8.18	%		8.91	%		10.34	%		8.64	%		7.54	%D		4.74	%		6.93	%D		5.53	%		4.97	%D
	7.75	%		8.48	%		9.36	%		8.06	%		7.32	%		8.18	%		8.91	%		10.34	%		8.64	%		7.54	%D		7.56	%		7.11	%D		6.82	%		5.40	%D
	149	%		176	%		212	%		157	%		92	%		149	%		176	%		212	%		157	%		92	%F		149	%		176	%E		149	%		176	%E

59

American Beacon Retirement Income and Appreciation Fund

Financial Highlights

(For a share outstanding throughout the period)

	Y Class						Investor Class
	Year Ended October 31,			March 1 to October 31,			Year Ended October 31,
	2011			2010			2011			2010			2009			2008			2007
Net asset value, beginning of period	$	10.80		$	10.31		$	10.81		$	10.25		$	8.80		$	10.50		$	10.25
Income from investment operations:
Net investment income		0.26			0.20			0.27			0.36			0.32			0.41			0.36
Net gains (losses) on securities (both realized and unrealized)		0.05			0.49			0.02			0.51			1.53			(1.39	)		0.32
Total income (loss) from investment operations		0.31			0.69			0.29			0.87			1.85			(0.98	)		0.68
Less distributions:
Dividends from net investment income		(0.28	)		(0.20	)		(0.26	)		(0.31	)		(0.40	)		(0.49	)		(0.42	)
Distributions from net realized gains on securities		—			—			—			—			—			(0.23	)		(0.01	)
Return of capital		—			—			—			—			—	E		—			—
Total distributions		(0.28	)		(0.20	)		(0.26	)		(0.31	)		(0.40	)		(0.72	)		(0.43	)
Net asset value, end of period	$	10.83		$	10.80		$	10.84		$	10.81		$	10.25		$	8.80		$	10.50
Total return A,F		2.96	%		6.78	%B		2.71	%		8.60	%		21.50	%		(10.02	)%		6.75	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	539		$	367		$	147,415		$	126,022		$	93,727		$	100,469		$	99,789
Ratios to average net assets (annualized):
Expenses, before reimbursments		1.80	%		0.80	%C		1.10	%		1.08	%		1.01	%		0.92	%		0.94	%
Expenses, net of reimbursements		0.84	%		0.80	%C		1.10	%		1.08	%		1.01	%		0.92	%		0.94	%
Net investment income, before reimbursements		1.45	%		2.74	%C		2.15	%		2.79	%		3.86	%		3.64	%		3.69	%
Net investment income, net of reimbursements		2.41	%		2.74	%C		2.15	%		2.79	%		3.86	%		3.64	%		3.69	%
Portfolio turnover rate		54	%		51	%D		54	%		51	%		53	%		76	%		103	%

^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 on outstanding shares at the time of the distribution. Amounts are less than $0.01 per share.

^F  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.

60

American Beacon Funds Retirement Income and Appreciation Fund

Financial Highlights

(For a share outstanding throughout the period)

A Class				C Class
Year Ended October 31,	May 17 to October 31,			Year Ended October 31,			September 1 to October 31,
2011	2010			2011			2010
$10.81	$	10.37		$	10.82		$	10.61
0.23		0.13			0.15			0.03
0.05		0.44			0.04			0.20
0.28		0.57			0.19			0.23
(0.24)		(0.13	)		(0.16	)		(0.02	)
—		—			—			—
—		—			—			—
(0.24)		(0.13	)		(0.16	)		(0.02	)
$10.85	$	10.81		$	10.85		$	10.82
2.61%		5.52	%B		1.75	%		2.19	%B
$770	$	166		$	1,587		$	1,035
2.00%		1.20	%C		1.99	%		2.33	%C
1.15%		1.14	%C		1.94	%		1.96	%C
1.21%		2.03	%C		1.25	%		1.40	%C
2.06%		2.10	%C		1.30	%		1.77	%C
54%		51	%D		54	%		51	%D

61

American Beacon Intermediate Bond Fund

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,			March 1 to October 31,
	2011			2010			2009			2008			2007			2011			2010
Net asset value, beginning of period	$	11.10		$	10.69		$	9.61		$	10.10		$	10.02		$	11.10		$	10.69
Income from investment operations:
Net investment income		0.33			0.39			0.46			0.50			0.50			0.27			0.23
Net gains (losses) on securities (both realized and unrealized)		0.10			0.40			1.07			(0.51	)		0.07			0.17			0.41
Total income (loss) from investment operations		0.43			0.79			1.53			(0.01	)		0.57			0.44			0.64
Less distributions:
Dividends from net investment income		(0.35	)		(0.38	)		(0.45	)		(0.48	)		(0.49	)		(0.32	)		(0.23	)
Distributions from net realized gains on securities		(0.19	)		—			—			—			—			(0.19	)		—
Total distributions		(0.54	)		(0.38	)		(0.45	)		(0.48	)		(0.49	)		(0.51	)		(0.23	)
Net asset value, end of period	$	10.99		$	11.10		$	10.69		$	9.61		$	10.10		$	11.03		$	11.10
Total return A		4.11	%		7.56	%		16.17	%		(0.26	)%		5.83	%		4.19	%		6.03	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	275,234		$	290,734		$	210,983		$	147,634		$	109,674		$	60		$	382
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.35	%		0.33	%		0.32	%		0.30	%		0.34	%		0.73	%		0.67	%C
Expenses, net of reimbursements		0.35	%		0.33	%		0.32	%		0.30	%		0.34	%		0.65	%		0.64	%C
Net investment income, before reimbursments		3.12	%		3.39	%		4.31	%		4.70	%		4.86	%		2.74	%		2.58	%C
Net investment income, net of reimbursements		3.12	%		3.39	%		4.32	%		4.70	%		4.86	%		2.82	%		2.60	%C
Portfolio turnover rate		75	%		96	%		157	%		105	%		85	%		75	%		96	%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  Portfolio turnover rate is for the period from November 1, 2008 through October 31, 2009.

62

American Beacon Intermediate Bond Fund

Financial Highlights

(For a share outstanding throughout the period)

Investor Class									A Class						C Class
Year Ended October 31,						March 2 to October 31,			Year Ended October 31,			May 17 to October 31,			Year Ended October 31,			September 1 to October 31,
2011			2010			2009			2011			2010			2011			2010
$	11.08		$	10.68		$	10.14		$	11.07		$	10.74		$	11.08		$	11.05
	0.29			0.33			0.27			0.28			0.13			0.19			0.03
	0.10			0.41			0.54			0.09			0.33			0.10			0.03
	0.39			0.74			0.81			0.37			0.46			0.29			0.06
	(0.31	)		(0.34	)		(0.27	)		(0.29	)		(0.13	)		(0.21	)		(0.03	)
	(0.19	)		—			—			(0.19	)		—			(0.19	)		—
	(0.50	)		(0.34	)		(0.27	)		(0.48	)		(0.13	)		(0.40	)		(0.03	)
$	10.97		$	11.08		$	10.68		$	10.96		$	11.07		$	10.97		$	11.08
	3.65	%		7.01	%		8.05	%B		3.45	%		4.31	%B		2.70	%		0.56	%B
$	3,729		$	3,829		$	2,213		$	584		$	46		$	286		$	325
	0.86	%		0.83	%		1.22	%C		1.13	%		1.05	%C		1.86	%		2.09	%C
	0.79	%		0.76	%		0.81	%C		0.99	%		0.95	%C		1.72	%		1.74	%C
	2.59	%		2.88	%		3.33	%C		2.31	%		2.15	%C		1.61	%		0.88	%C
	2.66	%		2.95	%		3.74	%C		2.46	%		2.25	%C		1.75	%		1.23	%C
	75	%		96	%		157	%E		75	%		96	%D		75	%		96	%D

63

American Beacon Short-Term Bond Fund

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,			March 1 to October 31,
	2011			2010			2009			2008			2007			2011			2010
Net asset value, beginning of period	$	8.89		$	8.83		$	8.58		$	8.79		$	8.74		$	8.90		$	8.84
Income from investment operations:
Net investment income (loss)		0.26			0.23			0.22	A		0.35	A		0.39	A		0.15			0.15
Net gains (losses) on securities (both realized and unrealized)		(0.25	)		0.10			0.33			(0.15	)		0.09			(0.15	)		0.08
Total income (loss) from investment operations		0.01			0.33			0.55			0.20			0.48			0.00			0.23
Less distributions:
Dividends from net investment income		(0.19	)		(0.27	)		(0.30	)		(0.41	)		(0.43	)		(0.17	)		(0.17	)
Distributions from net realized gains on securities		—			—			—			—			—			—			—
Total distributions		(0.19	)		(0.27	)		(0.30	)		(0.41	)		(0.43	)		(0.17	)		(0.17	)
Net asset value, end of period	$	8.71		$	8.89		$	8.83		$	8.58		$	8.79		$	8.73		$	8.90
Total return B		0.17	%		3.78	%		6.56	%		2.21	%		5.61	%		0.04	%		2.55	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	156,937		$	131,314		$	124,791		$	255,725		$	89,427		$	344		$	51
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.37	%		0.35	%		0.33	%		0.31	%		0.37	%		1.43	%		0.65	%D
Expenses, net of reimbursements		0.37	%		0.35	%		0.33	%		0.31	%		0.37	%		0.60	%		0.64	%D
Net investment income (loss), before reimbursments		1.74	%		2.27	%		2.61	%		3.75	%		4.48	%		0.57	%		1.45	%D
Net investment income (loss), net of reimbursements		1.74	%		2.27	%		2.62	%		3.75	%		4.48	%		1.40	%		1.47	%D
Portfolio turnover rate		65	%		60	%		140	%		21	%		40	%		65	%		60	%E

^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.

64

American Beacon Short-Term Bond Fund

Financial Highlights

(For a share outstanding throughout the period)

Investor Class															A Class						C Class
Year Ended October 31,															Year Ended October 31,			May 17 to October 31,			Year Ended October 31,			September 1 to October 31,
2011			2010			2009			2008			2007			2011			2010			2011			2010
$	8.89		$	8.84		$	8.59		$	8.81		$	8.76		$	8.89		$	8.84		$	8.90		$	8.88
	0.14			0.08			0.20	A		0.29	A		0.35	A		0.15			0.09			0.12			(0.04	)
	(0.15	)		0.21			0.34			(0.15	)		0.09			(0.18	)		0.07			(0.21	)		0.08
	(0.01	)		0.29			0.54			0.14			0.44			(0.03	)		0.16			(0.09	)		0.04
	(0.16	)		(0.24	)		(0.29	)		(0.36	)		(0.39	)		(0.15	)		(0.11	)		(0.09	)		(0.02	)
	—			—			—			—			—			—			—			—			—
	(0.16	)		(0.24	)		(0.29	)		(0.36	)		(0.39	)		(0.15	)		(0.11	)		(0.09	)		(0.02	)
$	8.72		$	8.89		$	8.84		$	8.59		$	8.81		$	8.71		$	8.89		$	8.72		$	8.90
	(0.12	)%		3.33	%		6.34	%		1.54	%		5.08	%		(0.33	)%		1.78	%C		(1.00	)%		0.48	%C
$	24,557		$	23,175		$	30,402		$	7,733		$	2,976		$	3,428		$	44		$	371		$	1
	0.90	%		0.86	%		0.85	%		0.88	%		0.98	%		1.38	%		1.02	%D		2.47	%		2.28	%D
	0.78	%		0.67	%		0.54	%		0.85	%		0.87	%	��	0.84	%		0.81	%D		1.55	%		1.60	%D
	1.18	%		1.75	%		1.89	%		3.16	%		3.81	%		0.49	%		0.49	%D		(0.43	)%		(3.57	)%D
	1.30	%		1.94	%		2.20	%		3.19	%		3.91	%		1.03	%		0.69	%D		0.49	%		(2.88	)%D
	65	%		60	%		140	%		21	%		40	%		65	%		60	%E		65	%		60	%E

65

American Beacon Funds

Privacy Policy & Federal Tax Information

October 31, 2011 (Unaudited)

Privacy Policy

The American Beacon Funds recognize and respect 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, was as follows:

High Yield Bond Fund	0.15	%
Retirement Income and Appreciation Fund	3.47	%

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, was as follows:

Retirement Income and Appreciation Fund 5.62 % 

Shareholders will receive notification in January 2012 of the percentage applicable to the preparation of their 2011 income tax returns.

66

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

At its May 26, 2011 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 American Beacon Mileage Funds, the American Beacon Select Funds and the American Beacon Master Trust (collectively 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 11, 2011 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 2 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 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:

• 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;

67

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

• 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 11, 2011 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 26, 2011 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 26, 2011 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 continued 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; the Manager’s commitment to increasing headcount and training employees in conjunction with product expansion; and efforts made by the Manager to retain key employees.

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.

68

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (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 2010, primarily due to market appreciation.

In addition, the Board noted the Manager’s representation that, many of the Funds enjoy the primary benefit of economies of scale because low comparable fee levels are already reflected in the current level of management & administration fees charged by the Manager, the current fee structure already provides an adequate mechanism for the sharing of economies of scale with shareholders and due to the existing low cost structure of the Funds that further breakpoints are not appropriate at this time. 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 will use the Large Cap Value Fund model in managing its collective investment trust.

In addition, the Manager noted that the Trusts also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds 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 the Funds did not pay commissions to any affiliated broker-dealer of the Manager or the relevant subadvisor during the most recent fiscal year ended October 31, 2010.

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 group of comparable mutual funds included in the analysis provided to the Trustees by Lipper, Inc.

69

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

Additional Considerations and Conclusions with Respect to the Retirement Income and Appreciation Fund

In considering the renewal of the Management Agreement, the Trustees considered the following additional factors: (1) the impact of the Retirement Income and Appreciation Fund’s unique investment strategy on peer performance and expense ratio comparisons; (2) the Fund outperformed or performed in-line with the peer universe median for the one-, three- and five-year periods ended March 31, 2011; (3) the Manager underperformed the peer universe median with respect to its allocated portion of the Fund’s assets for the one-year period but outperformed for the three-, and five-year periods; 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 Merrill Lynch All U.S. Convertibles Index for the one-year period but outperformed for the three- and five-year periods ended March 31, 2011; and (2) the Manager’s recommendation to continue to retain Calamos.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and Calamos under the Management and Investment Advisory 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, the Trustees considered the following additional factors: (1) the High Yield Bond Fund outperformed the peer universe median for the one- and ten-year periods ended March 31, 2011, but underperformed for the three- and five-year periods; and (2) the expense ratio of the Institutional Class ranked better than the median of its Lipper expense universe.

In considering the renewal of the Investment Advisory Agreement with Franklin Advisors, Inc. (“Franklin”) and Logan Circle, the Trustees considered the following additional factors: (1) Franklin outperformed the peer universe median for the one-year period ended March 31, 2011, but underperformed for the three-year period; (2) Logan Circle outperformed the peer universe median for the one-year period ended March 31, 2011; and (3) the Manager’s recommendation to continue to retain each subadvisor.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and subadvisors under the Management and Investment Advisory 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, the Trustees considered the following additional factors: (1) the Intermediate Bond Fund outperformed the peer universe median for the five- and ten-year periods ended March 31, 2011, but underperformed for the one- and three-year periods; (2) the Manager outperformed the universe peer median with respect to its allocated portion of the Fund’s assets for the five- and ten-year periods ended March 31, 2011, but underperformed for the one- and three-year periods; and (3) 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 Agreement with Barrow, Hanley, Mewhinney & Strauss, LLC (“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, 2011, but underperformed for the one-year period; and (2) the Manager’s recommendation to continue to retain Barrow.

Based on these considerations and those noted above with respect to all Funds, the Trustees (1) concluded that the fees paid to the Manager and Barrow under the Management and Investment Advisory 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.

Additional Considerations and Conclusions with Respect to the Short-Term Bond Fund

In considering the renewal of the Management Agreement, the Trustees considered the following additional factors: (1) the Short-Term Bond Fund outperformed its benchmark index for the one and three-year periods ended March 31, 2011. Longer-term returns were adversely affected by unusually high cash flow volatility in 2008 and 2009; (2) the Short-Term Bond Fund outperformed the Lipper Index for the five- and ten-year periods ending March 31, 2011; and (3) the expense ratio of the Institutional Class of Fund shares was the lowest of its Lipper expense group average.

70

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

Based on these considerations and those noted above with respect to all Funds, 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.

71

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 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.

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
INTERESTED TRUSTEES
	Term
	Lifetime of Trust until removal, resignation or retirement*
Alan D. Feld** (74)	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, Center Point 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 Funds (1996-Present).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
W. Humphrey Bogart (67)	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 (50)	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, Trinity Valley School (2003-2004); Member; Trinity Valley School Endowment Committee (2004-Present); 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 (57)	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 Funds (2008-Present).

72

Trustees and Officers of the American Beacon Funds

(Unaudited)

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
Thomas M. Dunning (69)	Trustee since 2008	Non-Executive Chairman (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); Board Member, Baylor Health Care System Foundation (2007-present); Vice Chair, State Fair of Texas (1987-Present); Board Member, Southwestern Medical Foundation (1994-present); Board Member, John Tower Center for Political Studies/SMU (2008-Present); Board Member, University of Texas Development Board (2008-Present); Board Member, BancTec (2010 – Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-Present); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust Funds (2008-Present).
Richard A. Massman (68)	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 (2007-2011) and Director (2005-2011), The Dallas Opera Foundation; Chairman (2006-2010) and Director (2005-2009), Temple Emanu-El Foundation; Trustee, Presbyterian Healthcare Foundation (2006-Present); Director, The Retina Foundation of the Southwest (2000-Present); Trustee, American Beacon Mileage Funds (2004-Present); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust Funds (2004-Present).
R. Gerald Turner (65) 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 Funds (2001-Present).
Paul J. Zucconi, CPA (71)	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) (2002-Present); Director, Torchmark Corporation (life and health insurance products) (2002-Present); Director, Charter Bank (community services and products) (2010-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 Funds (2008-Present).

Name, Age and Address	Position, Term of Office and Length of Time Served with the Trust	Principal Occupation(s) During Past 5 Years and Current Directorships
OFFICERS	Term
	One Year
Gene L. Needles, Jr. (56)	President since 2009 Executive Vice President since 2009	President, CEO and Director (2009-Present), American Beacon Advisors, Inc.; President, CEO and Director (2009-Present), Lighthouse Holdings, Inc.; President (2009-Present), American Beacon Mileage Funds; President (2009-Present), American Beacon Select Funds; 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.

73

Trustees and Officers of the American Beacon Funds

(Unaudited)

William F. Quinn** (63)	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), CEO (2006-2007), President (1986-2006) and Director (2003-Present), American Beacon Advisors, Inc.; Chairman and Director (2008-Present), Lighthouse Holdings, Inc.; Chairman (1989-2003) and Director (1979-1989, 2003-Present), American Airlines Federal Credit Union; Director, Hicks Acquisition I, Inc. (2007-2009), Director, Hicks Acquisition II, Inc. (2010-Present); 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); the Independent Trustee, National Railroad Retirement Investment Trust (2011-Present); Trustee (1995-2008) and President (1995-2007, 2008-2009), American Beacon Mileage Funds; Trustee (1999-2008) and President (1999-2007, 2008-Present), American Beacon Select Funds; Trustee, American Beacon Master Trust (1995-2008); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds, plc (2007-2009).
Rosemary K. Behan (52)	VP, Secretary and Chief Legal Officer since 2006	Vice President, Legal and Compliance, American Beacon Advisors, Inc. (2006-Present); Secretary (2008-Present), Lighthouse Holding, Inc.; Assistant General Counsel, First Command Financial Planning, Inc. (2004-2006); Attorney, U.S. Securities and Exchange Commission, (1995-2004).
Brian E. Brett (51)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present); Regional Vice President, Neuberger Berman, LLC (investment adviser) (1996-2004).
Wyatt Crumpler (45)	VP since 2007	Vice President, Asset Management (2009-Present) and Vice President, Trust Investments (2007-2009), American Beacon Advisors, Inc.; Managing Director of Corporate Accounting (2004-2007) and Director of IT Strategy and Finance (2001-2004), American Airlines, Inc.
Erica Duncan (41)	VP Since 2011	Vice President, Marketing and Client Services (2011-Present), American Beacon Advisors, Inc.; Supervisor, Brand Marketing (2010-2011), Invesco; Supervisor, Marketing Communications (2009-2010) and Senior Financial Writer (2004-2009), Invesco AIM.
Michael W. Fields (57)	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 (50)	Treasurer since 2010	Vice President, Finance and Accounting (2010-Present), Controller (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors, Inc.; Treasurer (2010-Present), Lighthouse Holdings, Inc.
Terri L. McKinney (47)	VP since 2010	Vice-President, Enterprise Services (2009-Present), Managing Director (2003-2009), and Director of Marketing & Retail Sales (1996-2003), American Beacon Advisors, Inc.; President, Board of Trustees (2010-Present), Vice-President, Board of Trustees (2008-2010), and Trustee (2006-2008), Down Syndrome Guild of Dallas.
Jeffrey K. Ringdahl (36)	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).
Samuel J. Silver (48)	VP Since 2011	Vice President, Fixed Income Investments (2011-Present) and Senior Portfolio Manager, Fixed Income Investments (1999-2011), American Beacon Advisors, Inc.
Christina E. Sears (40)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer (2004-Present) and Senior Compliance Analyst (1998-2004), American Beacon Advisors, Inc.

74

Trustees and Officers of the American Beacon Funds

(Unaudited)

John J. Okray (37)	Asst. Secretary since 2010	Assistant General Counsel, American Beacon Advisors, Inc. (2010-Present); Vice President, Oppenheimer Funds, Inc. (2004-2010).
Sonia L. Bates (55)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), Senior Tax Analyst (1999-2004), American Beacon Advisors, Inc.; Asst. Treasurer (2011-Present), Lighthouse Holdings, Inc.

* 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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76

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, Retirement Classes Call (800) 658-5811 AMR ClassSM 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 State Street Bank and Trust Boston, Massachusetts TRANSFER AGENT Boston Financial Data Services Kansas City, Missouri INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas DISTRIBUTOR Foreside Fund Services, LLC Portland, Maine

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 10/11

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
$	37,869	8/31/2010
$	318,158	10/31/2010
$	95,455	12/31/2010
$	144,159	8/31/2011
$	328,501	10/31/2011
$	72,527	12/31/2011

(b)

Audit-Related Fees	Fiscal Year Ended
$            0	8/31/2010
$  12,375*	10/31/2010
$    3,875*	12/31/2010
$            0	8/31/2011
$            0	10/31/2011
$            0	12/31/2011

*Review of additional N-1A filings

(c)

	Tax Fees	Fiscal Year Ended
$	3,426	8/31/2010
$	40,277	10/31/2010
$	4,129	12/31/2010
$	3,426	8/31/2011
$	50,971	10/31/2011
$	3,398	12/31/2011

(d)

All Other Fees	Fiscal Year Ended
$0	8/31/2010
$0	10/31/2010
$0	12/31/2010
$0	8/31/2011
$0	10/31/2011
$0	12/31/2011

(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:

Registrant		Adviser	Adviser’s Affiliates Providing Ongoing Services to Registrant	Fiscal Year Ended
$      3,246	$	0	N/A	8/31/2010
$      52,652	$	0	N/A	10/31/2010
$      8,004 (Revised)	$	0	N/A	12/31/2010
$      3,426	$	7,885	N/A	8/31/2011
$      50,971	$	0	N/A	10/31/2011
$      3,398	$	0	N/A	12/31/2011

(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: September 6, 2012

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: September 6, 2012

By	/s/  Melinda G. Heika
	Melinda G. Heika Treasurer

Date: September 6, 2012