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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-4984

AMERICAN BEACON FUNDS

(Exact name of registrant as specified in charter)

220 East Las Colinas Boulevard, Suite 1200

Irving, Texas 75039

(Address of principal executive offices)-(Zip code)

GENE L. NEEDLES, JR., PRESIDENT

220 East Las Colinas Boulevard, Suite 1200

Irving, Texas 75039

(Name and address of agent for service)

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

Date of fiscal year end: October 31, 2015

Date of reporting period: October 31, 2015

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 Overviews	2
Schedules of Investments:
High Yield Bond Fund	13
Intermediate Bond Fund	16
Short-Term Bond Fund	17
Financial Statements	18
Notes to the Financial Statements	21
Financial Highlights	38
Additional Information	Back Cover

HIGH YIELD BOND FUND RISKS

Investments in high yield securities are subject to greater levels of credit, interest rate, market and liquidity risks than investment-grade securities. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Investing in small- and medium-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

INTERMEDIATE BOND FUND RISKS

The use of fixed-income securities entails interest rate and credit risks. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

SHORT-TERM BOND FUND RISKS

The use of fixed-income securities entails interest rate and credit risks. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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, 2015

Dear Shareholders,   During much of the 12-month period ended October 31, 2015, uneven global economic growth, declining commodity prices and disparate central bank policies set the stage for mixed returns in all markets. The weakening of many currencies against the U.S. dollar also took a toll on total returns for dollar-based investors in many international markets. Uncertainty over the timing of the U.S. Federal Reserve’s first interest rate increase since emergency lending rates were established during the 2008 financial crisis continued to weigh heavily on investors’ minds. At its October 2015 meeting, the Federal Open Market Committee decided against changing interest rates, but kept December on the table as a possibility.

For the period under review, performances of the funds’ benchmarks were modest. The American Beacon High Yield Bond Fund’s standard, the JPMorgan Global High-Yield Index, returned -2.45%. The American Beacon Intermediate Bond Fund’s touchstone, the Barclays Capital U.S. Aggregate Bond Index, gained 1.96%. And the American Beacon Short-Term Bond Fund’s yardstick, the BofA Merrill Lynch 1-3 Year Gov./Corp. Index, returned 0.88%.

We are proud to offer a broad range of funds to help investors navigate the economic storms and market downturns in the U.S. and abroad. Our years of experience evaluating sub-advisors has led us to identify and partner with several asset managers who have adhered to their disciplined processes for many years and through a variety of economic and market conditions.

For the 12-month period ended October 31, 2015:

• American Beacon High Yield Bond Fund (Investor Class) returned -7.38%.

• American Beacon Intermediate Bond Fund (Investor Class) returned 1.36%.

• American Beacon Short-Term Bond Fund (Investor Class) returned 0.03%.

These funds are closed to new investors.

Thank you for your continued investment in the American Beacon Funds and we are grateful you have placed your confidence in us. For additional information about the Funds or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Bond Market Overview

October 31, 2015 (Unaudited)

The 12-month period ended October 31, 2015 concluded on a soft note for the bond market, yet still managed to report attractive returns overall.

Fixed-income markets, as defined by the Barclays Aggregate Index, returned 2.0% for the year, but finished with a -0.1% return for the final six-month period.

The year began well for bonds as winter economic data indicated the U.S. economy was in a soft patch. Longer-term interest rates declined, pushing bond prices up, but credit spreads soon began to widen.

After the spring thaw, economic readings improved and helped strengthen the desire of the U.S. Federal Reserve (“the Fed”) to raise interest rates. Shorter-term yields edged up, but credit sectors then began to fret about the Fed tightening money supply.

As the Fed’s September 2015 meeting approached, market volatility increased across the globe. The U.S. jobs reports weakened, China devalued its currency, and Europe struggled with persistently slow growth. These events were independent of the Fed, but they created unwanted volatility.

To calm the markets, the Fed remained on hold and pushed their rate-hike plans further out into the future.

The period ended with interest rates nearly unchanged but with credit spreads wider. High quality outperformed, as did longer-term maturities.

	Total Returns Periods ended 10/31/15
	6 Month		12 Month
Sector
Treasury		0.31		2.39
Agency		0.53		2.08
Agency Mortgage		0.57		2.50
Commercial Mortgage		0.38		2.61
Asset Backed		0.61		1.64
Credit:		-1.33		0.90
Industrial		-1.91		0.26
Utility		-1.80		1.18
Finance		0.07		2.49
Non-Corporate		-1.61		0.30
Credit Sector Quality
Aaa		0.22		1.71
Aa		-0.25		2.32
A		-0.54		2.07
Baa		-2.64		-0.73
U.S. Treasury
2 Year		0.24		0.66
3 Year		0.41		1.23
5 Year		0.60		2.34
10 Year		-0.01		3.58
30 Year		-2.80		4.54
(Source: Barclays Capital)

2

High Yield Bond Market Overview

October 31, 2015 (Unaudited)

During the 12-month period ended October 31, 2015, the high-yield bond market generated negative returns largely due to weak commodities prices and concern over a slowing global economy. Commodity price weakness was widespread across most types of commodities. That said, weakness in crude oil and natural gas prices had an outsized impact on the high-yield markets, as energy was the largest industry in the benchmark. Accordingly, the high-yield market fell sharply in early December 2014 following OPEC’s decision at its late November 2014 meeting to not cut production as weakness in energy bonds led to fears of contagion across the broader market. A rebound in oil prices helped lead to a rally in the overall high-yield market in the spring of 2015, but the relief proved to be temporary as both oil prices and the overall high-yield market resumed their decline over the summer.

While lower commodity prices arguably are good for a large portion of high-yield issuers, such as those in industrial manufacturing and consumer-related industries, concerns about slowing economic growth in China and the global economy in general were more pervasive and harder to overcome. Continued moderate growth in the U.S. economy was more than offset by signs that Chinese growth was below expectations, and the Chinese government’s often awkward attempts to deal with the problem only fueled the market’s concerns. At the same time, the commodity slump led to concerns over potential weakness in emerging markets economies in general, since many emerging countries are net commodity exporters.

Despite the numerous headwinds, the overall high-yield default rate remained below its historical average. However, valuations cheapened as spreads widened from 5% to 6.7%, which more than offset a slight decline in U.S. Treasury yields over the course of the year. Accordingly, price declines more than offset coupon income and the benchmark returned negative 2.5%.

Note: Spread and return data based on the JPMorgan Global High Yield Index.

3

American Beacon High Yield Bond Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the High Yield Bond Fund (the “Fund”) returned -7.38% for the twelve months ended October 31, 2015. The Fund trailed the JPMorgan Global High-Yield Index (the “Index”) return of -2.45% for the period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker	1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Institutional Class (1,7)	AYBFX		(7.28	)%		4.35	%		5.51	%	$	17,093
Y Class (1,3,7)	ACYYX		(7.13	)%		4.16	%		5.43	%		16,963
Investor Class (1,7)	AHYPX		(7.38	)%		4.10	%		5.27	%		16,706
A Class with sales charge (1,4,7)	ABHAX		(11.65	)%		3.11	%		4.78	%		15,954
A Class without sales charge (1,4,7)	ABHAX		(7.29	)%		4.11	%		5.29	%		16,750
C Class with sales charge (1,5,7)	AHBCX		(9.09	)%		3.34	%		4.85	%		16,059
C Class without sales charge (1,5,7)	AHBCX		(8.09	)%		3.34	%		4.85	%		16,059
AMR Class (1,2,7)	ABMRX		(6.98	)%		4.63	%		5.75	%		17,492
JPMorgan Global High-Yield Index (6)			(2.45	)%		6.33	%		7.71	%		21,015

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 calculated based on the published end of day net assets 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 and since 2013. Performance prior to waiving fees was lower than the actual returns shown for these periods. A portion of the fees charged to the Investor Class of the Fund has been waived since 2013. Performance prior to waiving fees was lower than the actual returns shown since 2013.

2. Fund performance for the ten-year period represents the total return achieved by the Institutional Class from 10/31/05 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 10/31/05.

3. Fund performance for the ten-year period represents the returns achieved by the Institutional Class from 10/31/05 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 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 10/31/05. A portion of the fees charged to the Y Class of the Fund was waived from 2011 to 2013 and recovered in 2014 and 2015. Performance prior to waiving fees was lower than the actual returns shown from 2011 to 2013.

4. Fund performance for the ten-year period represents the returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the A Class of the Fund has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010. The maximum sales charge for A Class is 4.75%.

5. Fund performance for the ten-year period represents the returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class of the Fund has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

4

American Beacon High Yield Bond Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

6. 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. 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 0.88%, 0.94%, 1.11%, 1.24%, 2.00%, and 0.59%, 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.

From a sector standpoint, the Fund’s returns were hampered primarily by the Energy sector, detracting significantly from Fund performance. Additionally, the Manufacturing, Electric, and Finance sectors detracted from Fund returns. Conversely, holdings in the Consumer sector contributed positively to Fund performance, slightly offsetting losses in the aforementioned sectors.

From a credit quality perspective, the Fund’s returns were hindered predominantly by holdings in the B-rated category. In addition, Fund holdings in the CCC-rated and BB-rated categories detracted from Fund performance.

The sub-advisors’ “bottom-up,” research intensive investment process, which focuses on companies with strong cash flow and fundamental credit strength, remains in place.

The Fund ended operations on December 15, 2015 and in advance of this event, the Fund’s investment managers were invested only in cash and cash-equivalent securities.

Top Ten Holdings (% Net Assets)

Rockies Express Pipeline LLC, 6.875%, Due 4/15/2040, 144A	2.8
Park Ohio Industries, Inc., 8.125%, Due 4/1/2021	2.1
NGPL PipeCo LLC, 9.625%, Due 6/1/2019, 144A	2.1
Landry’s, Inc., 9.375%, Due 5/1/2020, 144A	1.8
Select Medical Corp., 6.375%, Due 6/1/2021	1.7
Xerium Technologies, Inc., 8.875%, Due 6/15/2018	1.6
LBI Media, Inc., 4.25%, Due 4/15/2020, 144A	1.5
Cogent Communications Finance, Inc., 5.625%, Due 4/15/2021, 144A	1.4
First Data Corp., 12.625%, Due 1/15/2021	1.3
Cenveo Corp., 8.50%, Due 9/15/2022, 144A	1.3
Total Fund Holdings	100

Sector Allocation (% Investments)

Short-Term Investments	91.7
Service	2.3
Energy	2.1
Manufacturing	1.9
Telecommunications	0.9
Finance	0.8
Transportation	0.2
Currency	0.1
Consumer	0.0

5

American Beacon Intermediate Bond Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the Intermediate Bond Fund (the “Fund”) returned 1.36% for the twelve months ended October 31, 2015, trailing the Barclays Capital Aggregate Index (the “Index”) return of 1.96% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker	1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Institutional Class (1,7)	AABDX		1.80	%		2.80	%		4.74	%	$	15,891
Y Class (1,3,7)	ACTYX		1.44	%		2.53	%		4.59	%		15,663
Investor Class (1,2,7)	ABIPX		1.36	%		2.32	%		4.41	%		15,391
A Class with sales Charge (1,4,7)	AITAX		(3.59	)%		1.17	%		3.80	%		14,524
A Class without sales Charge (1,4,7)	AITAX		1.25	%		2.16	%		4.31	%		15,250
C Class with sales Charge (1,5,7)	AIBCX		(0.51	)%		1.40	%		3.92	%		14,690
C Class without sales Charge (1,5,7)	AIBCX		0.49	%		1.40	%		3.92	%		14,690
Barclays Capital Agg. Index (6)			1.96	%		3.03	%		4.72	%		15,862

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 calculated based on published end of day net asset values 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 ten-year period 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 10/31/05. A portion of the fees charged to the Investor Class of the Fund has been waived since 2009. Performance prior to waiving fees was lower than the actual returns shown since 2009.

3. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/05 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 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 10/31/05. A portion of the fees charged to the Y Class of the Fund has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010.

4. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/05 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 10/31/05. A portion of the fees charged to the A Class of the Fund has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010. The maximum sales charge for A Class is 4.75%.

5. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class of the Fund has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010. The maximum contingent deferred sales charge is 1.00% for shares redeemed within one year of the date of purchase.

6

American Beacon Intermediate Bond Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

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. One cannot directly invest in an index.

7. The total annual Fund operating expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, and C Class shares was 0.33%, 0.71%, 0.91%, 1.00%, and 1.78%, 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 underperformance relative to the Index was largely attributable to its allocation among the various sectors; however, this poor performance was somewhat offset by favorable security selection. Allocation among the various credit quality categories also detracted from performance.

During the period, the Fund’s underweight in U.S. Treasuries detracted value relative to the Index. The Fund’s overweight position in Corporates, specifically within the Telecom and Energy sectors, also hindered performance. The aforementioned poor performance was somewhat offset by good security selection among corporate bonds in the Manufacturing and Energy sectors and within the MBS sector which added relative value.

The Fund’s allocation across the various credit quality categories constrained returns. A significant underweight position among the AA-rated category and the Fund’s overweight among the BBB-rated category detracted from performance, although issuer selection within the AA-rated and BBB-rated categories proved beneficial.

The Fund’s security selection, mostly in the 0 to 1 and 1 to 3 year duration ranges, also detracted value relative to the Index.

The Fund ended operations on November 30, 2015 and in advance of this event, the Fund’s investment managers were invested only in cash and cash-equivalent securities.

Sector Allocation (% Investments)

Short-Term Investments 100.0

7

American Beacon Short-Term Bond Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the Short-Term Bond Fund (the “Fund”), which has a net annual expense ratio of 0.80%, returned 0.03% for the twelve-month period ended October 31, 2015 and underperformed the BofA Merrill Lynch 1-3 Year Gov/Corp Index (the “Index”) return of 0.88%.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker	1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Institutional Class (1,6)	AASBX		0.45	%		0.92	%		2.71	%	$	13,069
Y Class (1,2,6)	ACOYX		0.18	%		0.75	%		2.62	%		12,952
Investor Class (1,6)	AALPX		0.03	%		0.55	%		2.28	%		12,531
A Class with sales Charge (1,3,6)	ANSAX		(2.41	)%		(0.02	)%		2.00	%		12,192
A Class without sales Charge (1,3,6)	ANSAX		0.06	%		0.49	%		2.26	%		12,498
C Class with sales Charge (1,4,6)	ATBCX		(1.65	)%		0.25	%		1.87	%		12,038
C Class without sales Charge (1,4,6)	ATBCX		(0.65	)%		0.25	%		1.87	%		12,038
BofA Merrill Lynch 1-3 Yr. Gov./Corp Index (5)			0.88	%		1.04	%		2.85	%		13,248

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 calculated based on the published end of day net asset values 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 since 2005. Performance prior to waiving fees was lower than the actual returns shown since 2005.

2. Fund performance for the ten-year period represents the total returns achieved by the Institutional Class from 10/31/05 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 10/31/05. A portion of the fees charged to the Y Class of the Fund has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010.

3. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the A Class of the Fund has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010. The maximum sales charge for A Class is 2.50%.

4. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class of the Fund has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010. 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. One cannot directly invest in an index.

8

American Beacon Short-Term Bond Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

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 0.38%, 0.73%, 0.91%, 1.05%, and 1.78%, 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 held overweight positions in the major credit sectors, including investment-grade Corporate, Asset-Backed and Agency Mortgage-Backed securities, which outperformed given their higher yields. These sectors also performed well in an environment of slightly widening credit spreads due to market volatility in the summer of 2015.

The Fund’s duration position, however, led to its underperformance as the portfolio earned less yield than that of the Index. Interest rates at the very shortest end of the yield curve rose during the period, but rates for longer maturities were essentially flat. As a result, the longer-dated securities outperformed. The Fund’s average duration was approximately 1.3 versus 1.9 for the Index.

Given the unusually low levels of interest rates, we have maintained a short duration to protect the Fund from an ultimate rise in rates. Assuming the economy continues to grow at its recent trajectory, the Fed is expected to begin gradually raising interest rates in 4Q’15.

The Fund ended operations on November 30, 2015 and in advance of this event, the Fund’s investment managers were invested only in cash and cash-equivalent securities.

Sector Allocation (% Investments)

Short-Term Investments 100.0

9

American Beacon Funds^SM

Fund Expenses

October 31, 2015 (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 sales charges (loads) on purchase payments 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, 2015 through October 31, 2015.

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 or Roth 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 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 or Roth 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.

10

American Beacon Funds^SM

Fund Expenses

October 31, 2015 (Unaudited)

High Yield Bond Fund

	Beginning Account Value 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 - 10/31/15
Institutional Class
Actual	$	1,000.00	$	931.80	$	4.33
Hypothetical **	$	1,000.00	$	1,020.72	$	4.53
Y Class
Actual	$	1,000.00	$	930.66	$	4.77
Hypothetical **	$	1,000.00	$	1,020.27	$	4.99
Investor Class
Actual	$	1,000.00	$	931.02	$	5.31
Hypothetical **	$	1,000.00	$	1,019.71	$	5.55
A Class
Actual	$	1,000.00	$	931.44	$	4.97
Hypothetical **	$	1,000.00	$	1,020.06	$	5.19
C Class
Actual	$	1,000.00	$	926.76	$	8.60
Hypothetical **	$	1,000.00	$	1,016.28	$	9.00
AMR Class
Actual	$	1,000.00	$	933.15	$	3.02
Hypothetical **	$	1,000.00	$	1,022.08	$	3.16

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.89%, 0.98%, 1.09%, 1.02%, 1.77%, and 0.62% 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.

Intermediate Bond Fund

	Beginning Account Value 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 - 10/31/15
Institutional Class
Actual	$	1,000.00	$	998.16	$	1.61
Hypothetical **	$	1,000.00	$	1,023.59	$	1.63
Y Class
Actual	$	1,000.00	$	995.63	$	3.27
Hypothetical **	$	1,000.00	$	1,021.93	$	3.31
Investor Class
Actual	$	1,000.00	$	994.92	$	3.97
Hypothetical **	$	1,000.00	$	1,021.22	$	4.02
A Class
Actual	$	1,000.00	$	994.39	$	4.42
Hypothetical **	$	1,000.00	$	1,020.77	$	4.48
C Class
Actual	$	1,000.00	$	991.69	$	8.08
Hypothetical **	$	1,000.00	$	1,017.09	$	8.19

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.32%, 0.65%, 0.79%, 0.88%, and 1.61% for the Institutional, Y, Investor, A, and C Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

Short-Term Bond Fund

	Beginning Account Value 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 - 10/31/15
Institutional Class
Actual	$	1,000.00	$	1,001.15	$	1.77
Hypothetical **	$	1,000.00	$	1,023.44	$	1.79
Y Class
Actual	$	1,000.00	$	1,000.94	$	3.13
Hypothetical **	$	1,000.00	$	1,022.08	$	3.16
Investor Class
Actual	$	1,000.00	$	1,000.28	$	3.83
Hypothetical **	$	1,000.00	$	1,021.37	$	3.87
A Class
Actual	$	1,000.00	$	1,000.37	$	3.68
Hypothetical **	$	1,000.00	$	1,021.53	$	3.72
C Class
Actual	$	1,000.00	$	996.76	$	6.29
Hypothetical **	$	1,000.00	$	1,018.90	$	6.36

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.35%, 0.62%, 0.76%, 0.73%, and 1.25% for the Institutional, Y, Investor, A, and C Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

11

American Beacon Funds^SM

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, and American Beacon Short-Term Bond Fund:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of American Beacon High Yield Bond Fund, American Beacon Intermediate Bond Fund and American Beacon Short-Term Bond Fund (three of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2015, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the 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 the Funds’ 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, 2015, 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 American Beacon High Yield Bond Fund, American Beacon Intermediate Bond Fund and American Beacon Short-Term Bond Fund at October 31, 2015, 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 five years in the period then ended in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 29, 2015

12

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
COMMON STOCKS - 0.24% (Cost $111)
SERVICE- 0.12%
Communications - 0.12%
Cengage Learning Holdings II Inc.A		1,154	$	29
TELECOMMUNICATION SERVICES- 0.12%
Wireless Telecommunication Services - 0.12%
NII Holdings, Inc.A		4,161		29
Total Common Stocks (Cost $111)				58
	Par Amount
	(000’s)
CONVERTIBLE OBLIGATIONS - 0.06% (Cost $21)
Energy - 0.06%
Goodrich Petroleum Corp., 5.00%, Due 10/1/2032	$	40		15
CORPORATE OBLIGATIONS - 44.93%
Consumer - 0.32%
Motors Liquidation Co., 8.375%, Due 7/15/2049B H I J		1,570		—
Simmons Foods, Inc., 7.875%, Due 10/1/2021C		50		47
Spectrum Brands, Inc., 5.75%, Due 7/15/2025C		30		32
				79
Energy - 11.52%
Antero Resources Finance Corp., 6.00%, Due 12/1/2020		40		38
California Resources Corp., 6.00%, Due 11/15/2024		20		14
Chesapeake Energy Corp., 6.875%, Due 11/15/2020		70		47
DCP Midstream LLC,
5.35%, Due 3/15/2020C D		55		51
6.75%, Due 9/15/2037C D		90		74
5.85%, Due 5/21/2043C D		170		136
DCP Midstream Operating LP, 3.875%, Due 3/15/2023E		45		38
Energy XXI Gulf Coast, Inc., 11.00%, Due 3/15/2020C		35		19
Genesis Energy LP / Genesis Energy Finance Corp., 5.75%, Due 2/15/2021E		65		61
Goodrich Petroleum Corp., 8.875%, Due 3/15/2018		200		74
Hercules Offshore, Inc., 7.50%, Due 10/1/2021C I		370		70
NGPL PipeCo LLC,
7.119%, Due 12/15/2017C D		165		153
9.625%, Due 6/1/2019C D		545		511
7.768%, Due 12/15/2037C D		135		111
Oasis Petroleum, Inc., 6.875%, Due 3/15/2022		35		30
Regency Energy Partners LP / Regency Energy Finance Corp., 5.875%, Due 3/1/2022E		30		31
Rockies Express Pipeline LLC, 6.875%, Due 4/15/2040C D		730		694
Sabine Pass Liquefaction LLC, 5.75%, Due 5/15/2024D		50		48
Sabine Pass LNG LP, 7.50%, Due 11/30/2016E		45		46
Sanchez Energy Corp., 6.125%, Due 1/15/2023		50		36
SandRidge Energy, Inc., 8.75%, Due 6/1/2020C		30		18
Targa Resources Partners LP / Targa Resources Partners Finance Corp., 5.25%, Due 5/1/2023E		25		23
Ultra Petroleum Corp., 6.125%, Due 10/1/2024C		400		225
Western Refining Logistics LP / WNRL Finance Corp., 7.50%, Due 2/15/2023E		265		270
				2,818
Finance - 4.35%
Cogent Communications Finance, Inc., 5.625%, Due 4/15/2021C		355		336
Communications Sales & Leasing Inc / CSL Capital LLC,
6.00%, Due 4/15/2023C D		45		44
8.25%, Due 10/15/2023D		20		18
ROC Finance LLC / ROC Finance 1 Corp., 12.125%, Due 9/1/2018C D		150		159
Stena AB, 7.00%, Due 2/1/2024C		310		283
Stena International S.A., 5.75%, Due 3/1/2024C		250		223
				1,063
Manufacturing - 10.53%
Advanced Micro Devices, Inc., 7.50%, Due 8/15/2022		125		91

See accompanying notes

13

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
AECOM Company, 5.75%, Due 10/15/2022	$	45	$	47
ArcelorMittal,
7.00%, Due 2/25/2022B		40		38
6.125%, Due 6/1/2025		25		22
Blue Cube Spinco, Inc., 10.00%, Due 10/15/2025C		15		16
Boxer Parent Company, Inc., 9.00%, Due 10/15/2019C F		150		107
Chemours Co., 7.00%, Due 5/15/2025C		45		34
CPG Merger Sub LLC, 8.00%, Due 10/1/2021C D		40		41
Eagle Spinco, Inc., 4.625%, Due 2/15/2021		60		58
First Data Corp., 12.625%, Due 1/15/2021		275		315
Horsehead Holding Corp., 10.50%, Due 6/1/2017C		145		125
Liberty Tire Recycling LLC, 11.00%, Due 3/31/2021C D F		176		109
Norske Skog Holding AS, 8.00%, Due 2/24/2021C		120		55
Nova Chemicals Corp., 5.00%, Due 5/1/2025C		30		30
Orbital ATK, Inc., 5.50%, Due 10/1/2023C		20		21
Park Ohio Industries, Inc., 8.125%, Due 4/1/2021		490		514
Peabody Energy Corp., 10.00%, Due 3/15/2022C		25		7
Pittsburgh Glass Works LLC, 8.00%, Due 11/15/2018C D		10		10
Plastipak Holdings, Inc., 6.50%, Due 10/1/2021C		230		228
Platform Specialty Products Corp., 6.50%, Due 2/1/2022C		95		81
Shea Homes LP / Shea Homes Funding Corp., 5.875%, Due 4/1/2023C E		45		47
Taylor Morrison Communities Inc / Monarch Communities, Inc., 5.875%, Due 4/15/2023C		45		46
TransDigm, Inc., 6.00%, Due 7/15/2022		55		55
Verso Paper Holdings LLC / Verso Paper, Inc., 11.75%, Due 1/15/2019D		695		77
Xerium Technologies, Inc., 8.875%, Due 6/15/2018		395		403
				2,577
Service - 14.45%
Caesars Entertainment Operating Co., Inc., 12.75%, Due 4/15/2018		400		118
Cengage Learning Acquisitions, Inc., Escrow, 11.50%, Due 4/15/2020B C H I J		75		—
Cenveo Corp.,
11.50%, Due 5/15/2017		25		24
6.00%, Due 8/1/2019C		35		31
8.50%, Due 9/15/2022C		430		316
Chinos Intermediate Holdings A, Inc., 7.75%, Due 5/1/2019C F		50		18
CHS/Community Health Systems, Inc., 5.125%, Due 8/1/2021		100		103
Clear Channel Worldwide Holdings, Inc., 6.50%, Due 11/15/2022		525		560
Covanta Holding Corp., 5.875%, Due 3/1/2024		100		99
CST Brands, Inc., 5.00%, Due 5/1/2023		75		76
DISH DBS Corp., 5.875%, Due 7/15/2022		205		201
Dollar Tree, Inc., 5.75%, Due 3/1/2023C D		70		74
DreamWorks Animation SKG, Inc., 6.875%, Due 8/15/2020C		125		124
HealthSouth Corp., 5.75%, Due 9/15/2025C		75		75
Jo-Ann Stores Holdings, Inc., 9.75%, Due 10/15/2019C F		295		223
Landry’s, Inc., 9.375%, Due 5/1/2020C		400		428
LBI Media, Inc., 4.25%, Due 4/15/2020C F		358		357
Nexstar Broadcasting, Inc., 6.125%, Due 2/15/2022C		75		75
Select Medical Corp., 6.375%, Due 6/1/2021		460		406
Tenet Healthcare Corp., 8.125%, Due 4/1/2022		175		185
United Rentals North America, Inc., 6.125%, Due 6/15/2023		40		42
				3,535
Telecommunications - 4.58%
Avaya, Inc., 10.50%, Due 3/1/2021C		400		156
Brightstar Corp., 9.50%, Due 12/1/2016C		35		35
Frontier Communications Corp., 11.00%, Due 9/15/2025C		65		68
Hughes Satellite Systems Corp., 7.625%, Due 6/15/2021		75		82
Intelsat Luxembourg S.A., 7.75%, Due 6/1/2021		125		74
Nokia OYJ, 6.625%, Due 5/15/2039		200		210
Sprint Capital Corp., 8.75%, Due 3/15/2032		75		68
Sprint Corp., 7.875%, Due 9/15/2023		35		32
Sprint Nextel Corp.,
8.375%, Due 8/15/2017		15		15
7.00%, Due 8/15/2020		40		37
Telecom Italia SpA, 5.303%, Due 5/30/2024C		85		85
T-Mobile USA, Inc., 6.633%, Due 4/28/2021		35		36
Virgin Media Secured Finance PLC, 5.25%, Due 1/15/2026C		125		125

See accompanying notes

14

American Beacon High Yield Bond Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
Wind Acquisition Finance S.A., 7.375%, Due 4/23/2021C	$	65	$	65
Windstream Services LLC, 7.50%, Due 6/1/2022D		40		33
				1,121
Transportation - 1.20%
Global Ship Lease, Inc., 10.00%, Due 4/1/2019C		100		100
VistaJet Malta Finance PLC / VistaJet Co. Finance LLC, 7.75%, Due 6/1/2020C D G		225		195
				295
Utilities - 0.26%
AES Corp., 5.50%, Due 4/15/2025		25		23
Dynegy, Inc., 7.625%, Due 11/1/2024I		40		40
				63
Total Corporate Obligations (Cost $13,796)				11,551
	Shares
SHORT-TERM INVESTMENTS - 499.02% (Cost $122,050)
JPMorgan U.S. Government Money Market Fund, Capital Class		122,050,180		122,050
TOTAL INVESTMENTS - 546.55% (Cost $135,981)				133,674
LIABILITIES, NET OF OTHER ASSETS - (446.55%)				(109,216	)
TOTAL NET ASSETS - 100.00%			$	24,458

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  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.

^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 $6,693 or 27.37% of net assets. The Fund has no right to demand registration of these securities.

^D  LLC - Limited Liability Company.

^E  LP - Limited Partnership.

^F  PIK - Payment in Kind.

^G  PLC - Public Limited Company.

^H  Fair valued pursuant to procedures approved by the Board of Trustees. At period end, the value of these securities amounted to $0 or 0.00% of net assets.

^I  In default.

^J  Escrow shares.

See accompanying notes

15

American Beacon Intermediate Bond Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
SHORT-TERM INVESTMENTS – 6,641.96% (Cost $337,146)
JPMorgan U.S. Government Money Market Fund, Capital Class		337,145,787	$	337,146
TOTAL INVESTMENTS - 6,641.96% (Cost $337,146)				337,146
LIABILITIES, NET OF OTHER ASSETS - (6,541.96%)				(332,070	)
TOTAL NET ASSETS - 100.00%			$	5,076

Percentages are stated as a percent of net assets.

See accompanying notes

16

American Beacon Short-Term Bond Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
SHORT-TERM INVESTMENTS - 726.13% (Cost $235,991)
JPMorgan U.S. Government Money Market Fund, Capital Class		235,990,551	$	235,991
TOTAL INVESTMENTS - 726.13% (Cost $235,991)				235,991
LIABILITIES, NET OF OTHER ASSETS - (626.13%)				(203,491	)
TOTAL NET ASSETS - 100.00%			$	32,500

Percentages are stated as a percent of net assets.

See accompanying notes

17

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2015 (in thousands except share and per share amounts)

	High Yield Bond Fund			Intermediate Bond Fund		Short-Term Bond Fund
Assets:
Investments in unaffiliated securities, at fair value A	$	133,659		$	337,146	$	235,991
Cash		131			—		—
Dividends and interest receivable		258			2		—
Receivable for investments sold		4,353			—		—
Receivable for fund shares sold		4			—		4
Receivable for expense reimbursement (Note 2)		1			5		9
Prepaid expenses		15			14		19
Total assets		138,421			337,167		236,023
Liabilities:
Payable for investments purchased		918			—		—
Payable for fund shares redeemed		112,911			331,943		203,403
Dividends payable		4			—		—
Management and investment advisory fees payable		50			58		39
Administrative service and service fees payable		14			15		13
Transfer agent fees payable		3			4		13
Custody and fund accounting fees payable		6			7		3
Professional fees payable		44			44		45
Trustee fees payable		2			6		4
Payable for prospectus and shareholder reports		10			13		3
Other liabilities		1			1		—
Total liabilities		113,963			332,091		203,523
Net Assets	$	24,458		$	5,076	$	32,500
Analysis of Net Assets:
Paid-in-capital		54,417			3,514		39,945
Undistributed (or overdistribution of) net investment income		(332	)		—		459
Accumulated net realized gain (loss)		(27,305	)		1,562		(7,904	)
Unrealized (depreciation) of investments		(2,316	)		—		—
Unrealized (depreciation) of currency transactions		(6	)		—		—
Net assets	$	24,458		$	5,076	$	32,500
Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		2,148,044			304,050		3,132,897
Y Class		96,960			20,541		98,040
Investor Class		505,951			72,486		389,553
A Class		104,835			42,348		51,441
C Class		197,999			35,795		97,685
AMR Class		68,622			N/A		N/A
Net assets (not in thousands):
Institutional Class	$	16,818,629		$	3,247,260	$	27,006,635
Y Class	$	762,100		$	220,295	$	846,833
Investor Class	$	3,964,994		$	773,613	$	3,360,116
A Class	$	822,398		$	451,981	$	443,900
C Class	$	1,552,242		$	382,582	$	842,497
AMR Class	$	537,657		$	N/A	$	N/A
Net asset value, offering and redemption price per share:
Institutional Class	$	7.83		$	10.68	$	8.62
Y Class	$	7.86		$	10.72	$	8.64
Investor Class	$	7.84		$	10.67	$	8.63
A Class	$	7.84		$	10.67	$	8.63
A Class (offering price)	$	8.23		$	11.20	$	8.85
C Class	$	7.84		$	10.69	$	8.62
AMR Class	$	7.84			N/A		N/A
A Cost of investments in unaffiliated securities	$	135,981		$	337,146	$	235,991

See accompanying nortes

18

American Beacon Funds^SM

Statements of Operations

For the year ended October 31, 2015 (in thousands)

	High Yield Bond Fund			Intermediate Bond Fund			Short-Term Bond Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	41		$	2		$	1
Interest income		12,238			10,026			1,768
Other Income		81			—			1
Total investment income		12,360			10,028			1,770
Expenses:
Management and investment advisory fees (Note 2)		767			809			458
Administrative service fees (Note 2):
Institutional Class		157			201			111
Y Class		3			1			3
Investor Class		16			4			15
A Class		4			1			2
C Class		6			1			3
AMR Class		61			—			—
Transfer agent fees:
Institutional Class		26			13			20
Investor Class		2			2			3
AMR Class		5			—			—
Custody and fund accounting fees		50			56			30
Professional fees		48			54			49
Registration fees and expenses		74			72			76
Service fees (Note 2):
Y Class		1			—			1
Investor Class		13			3			13
A Class		2			1			1
C Class		3			1			2
Distribution fees (Note 2):
A Class		3			1			2
C Class		18			4			11
Prospectus and shareholder report expenses		40			33			25
Trustee fees		10			22			12
Other expenses		12			24			10
Total expenses		1,321			1,303			847
Net fees waived and expenses reimbursed (Note 2)		(17	)		(8	)		(20	)
Net expenses		1,304			1,295			827
Net investment income		11,056			8,733			943
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		(27,180	)		8,315			314
Foreign currency transactions		(4	)		—			—
Change in net unrealized appreciation or (depreciation) of:
Investments		3,124			(10,371	)		(387	)
Foreign currency transactions		(6	)		—			—
Net (loss) from investments		(24,066	)		(2,056	)		(73	)
Net increase (decrease) in net assets resulting from operations	$	(13,010	)	$	6,677		$	870
A Foreign taxes		(7	)		—			—

See accompanying notes

19

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)

	High Yield Bond Fund						Intermediate Bond Fund						Short-Term Bond Fund
	Year Ended October 31, 2015			Year Ended October 31, 2014			Year Ended October 31, 2015			Year Ended October 31, 2014			Year Ended October 31, 2015			Year Ended October 31, 2014
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	11,056		$	12,859		$	8,733		$	8,942		$	943		$	889
Net realized gain (loss) from investments and foreign currency transactions		(27,184	)		3,657			8,315			1,625			314			562
Change in net unrealized appreciation or (depreciation) of investments and foreign currency transactions		3,118			(8,008	)		(10,371	)		3,464			(387	)		(234	)
Net increase (decrease) in net assets resulting from operations		(13,010	)		8,508			6,677			14,031			870			1,217
Distributions to Shareholders:
Net investment income:
Institutional Class		(3,014	)		(4,444	)		(9,425	)		(11,444	)		(2,245	)		(1,692	)
Y Class		(55	)		(110	)		(5	)		(4	)		(8	)		(10	)
Investor Class		(287	)		(447	)		(23	)		(42	)		(32	)		(52	)
A Class		(74	)		(81	)		(8	)		(9	)		(6	)		(10	)
C Class		(87	)		(95	)		(4	)		(6	)		—			—
AMR Class		(7,432	)		(8,270	)		—			—			—			—
Net realized gain from investments:
Institutional Class		(1,357	)		(219	)		(1,286	)		(447	)		—			—
Y Class		(19	)		(7	)		(1	)		—			—			—
Investor Class		(100	)		(26	)		(4	)		(2	)		—			—
A Class		(24	)		(4	)		(1	)		(1	)		—			—
C Class		(28	)		(7	)		(1	)		(1	)		—			—
AMR Class		(2,077	)		(464	)		—			—			—			—
Tax return of capital
Institutional Class		(183	)		—			(352	)		—			—			—
Y Class		(3	)		—			—			—			—			—
Investor Class		(13	)		—			(1	)		—			—			—
A Class		(3	)		—			—			—			—			—
C Class		(4	)		—			—			—			—			—
AMR Class		(280	)		—			—			—			—			—
Net distributions to shareholders		(15,040	)		(14,174	)		(11,111	)		(11,956	)		(2,291	)		(1,764	)
Capital Share Transactions:
Proceeds from sales of shares		42,744			85,739			58,701			125,929			137,675			197,178
Reinvestment of dividends		14,916			13,951			11,096			11,935			2,279			1,753
Cost of shares redeemed		(227,791	)		(80,199	)		(476,265	)		(66,463	)		(410,329	)		(56,401	)
Redemption fees		(7	)		31			—			—			—			—
Net increase (decrease) in net assets from capital share transactions		(170,138	)		19,522			(406,468	)		71,401			(270,375	)		142,530
Net increase (decrease) in net assets		(198,188	)		13,856			(410,902	)		73,476			(271,796	)		141,983
Net Assets:
Beginning of period		222,646			208,790			415,978			342,502			304,296			162,313
End of Period *	$	24,458		$	222,646		$	5,076		$	415,978		$	32,500		$	304,296
*Includes undistributed (or overdistribution of) net investment income	$	(332	)	$	(433	)	$	—		$	(23	)	$	459		$	(556	)

See accompanying notes

20

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

1. Organization

American Beacon Funds (the “Trust”), 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. As of October 31, 2015, the Trust consists of thirty-two active series, three of which are presented in this filing (collectively, the “Funds” and each individually a “Fund”): American Beacon High Yield Bond Fund, American Beacon Intermediate Bond Fund, and American Beacon Short-Term Bond Fund. The remaining twenty-nine active series are reported in separate filings.

Effective April 30, 2015, American Beacon Advisors, Inc. (the “Manager”) became a wholly-owned subsidiary of Astro AB Borrower, Inc., which is indirectly owned by investment funds affiliated with Kelso & Company, L.P. and Estancia Capital Management, LLC, two prominent private equity firms. Prior to April 30, the Manager was a wholly-owned subsidiary of Lighthouse Holdings, Inc., which was indirectly owned by investment funds affiliated with Pharos Capital Group, LLC and TPG Capital, L.P., two leading private equity firms.

The Manager has closed the High Yield Bond, Intermediate Bond and Short-Term Bond Funds to new shareholders as of the close of business on August 20, 2015. Existing shareholders as of that date may continue to purchase, redeem, or exchange shares of the Funds on any business day, which is any day the New York Stock Exchange is open for business.

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, which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”)
C Class	General public and investors investing through an intermediary with applicable sales charges, which may include a CDSC
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.

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 and fund management. Investment assets of the High Yield Bond and Intermediate Bond Funds are managed by one or more investment advisors which have entered into separate investment advisory agreements with the Manager and the Trust. As compensation for performing the duties required under the Management Agreement, the Manager receives from the High Yield Bond Fund an annualized fee equal to 0.05% of the average daily net assets. The Funds pay the investment advisors hired by the Manager to direct investment activities of the Funds. The Manager receives an annualized

21

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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 serves as the sole investment advisor to the Short-Term Bond Fund and receives an annualized fee of 0.20% of the average daily net assets of the Fund. Management fees paid during the year ended October 31, 2015 were as follows (dollars in thousands):

	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
High Yield Bond		0.42	%	$	767	$	675	$	92
Intermediate Bond		0.20	%		809		302		507
Short-Term Bond		0.20	%		458		—		458

Administration Agreement

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

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.

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. This program provides an alternative credit facility allowing the Funds to borrow from or lend to other participating Funds. During the year ended October 31, 2015, the Short-Term Bond Fund loaned on average $1,021,041 for 42 days at an average rate of 0.75% with interest earned of $879. The amount is included as interest income on the Statements of Operations. The High Yield Bond and Intermediate Bond Funds did not participate in the Interfund Lending Program during the year ended October 31, 2015.

22

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Expense Reimbursement Plan

The Manager voluntarily and contractually agreed to reimburse the following Funds to the extent that total operating expenses exceeded the Fund’s expense cap. For the year ended October 31, 2015, the Manager reimbursed expenses as follows:

		Expense Caps
Fund	Class	11/1/14 to 2/28/15			3/1/15 to 10/31/15			Reimbursed (Recovered) Expenses			Expiration of Reimbursements
High Yield Bond	Institutional1		N/A			N/A		$	7,556		2018
High Yield Bond	Y		0.98	%		N/A			(100	)	2018
High Yield Bond	Investor		N/A			1.09	%		2,163		2018
High Yield Bond	A		1.02	%		1.02	%		3,211		2018
High Yield Bond	C		1.77	%		1.77	%		4,403		2018
Intermediate Bond	Institutional		N/A			N/A			4,499		2018
Intermediate Bond	Y		0.65	%		0.65	%		94		2018
Intermediate Bond	Investor		0.79	%		0.79	%		2,169		2018
Intermediate Bond	A		0.89	%		0.89	%		477		2018
Intermediate Bond	C		1.64	%		1.64	%		427		2018
Short-Term Bond	Institutional		N/A			N/A			6,856		2018
Short-Term Bond	Y		0.64	%		0.64	%		690		2018
Short-Term Bond	Investor		0.79	%		0.79	%		6,243		2018
Short-Term Bond	A		0.75	%		0.75	%		2,271		2018
Short Term Bond	C		1.50	%		1.50	%		4,272		2018

¹  Voluntary reimbursement.

Of these amounts, $769, $4,948, and $9,088 were disclosed as a receivable from the Manager to the High Yield Bond, Intermediate Bond, and Short-Term Bond Funds, respectively, at October 31, 2015. 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 are as follows:

Fund	Recovered Expenses		Excess Expense Carryover		Expired Carryover Expenses		Expiration of Reimbursed Expenses
High Yield Bond	$	—	$	—	$	7,120	2015
High Yield Bond		100		20,276		—	2016
High Yield Bond		—		22,685		—	2017
Intermediate Bond		—		—		7,592	2015
Intermediate Bond		—		6,148		—	2016
Intermediate Bond		—		2,783		—	2017
Short-Term Bond		—		—		29,140	2015
Short-Term Bond		—		20,687		—	2016
Short-Term Bond		—		15,490		—	2017

The Manager recovered $100 of excess carryover expenses expiring in 2016 from the Y Class of the High Yield Bond Fund. During the year ended October 31, 2015 the Funds did not record a liability for potential reimbursement due to the current assessment that a reimbursement is unlikely.

Sales Commissions

The Funds’ distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2015, Foreside has collected $750 and $355, for the High Yield Bond and Intermediate Bond Funds, respectively, from the sale of Class A Shares.

23

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

A CDSC of 0.50% will be deducted with respect to Class A Shares of the Short-Term Bond Fund on certain purchases of $250,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Prospectus. A CDSC of 0.50% will be deducted with respect to Class A Shares of the High Yield Bond and Intermediate Bond Funds on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2015 there were no CDSC fees collected on Class A Shares.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2015, $706 and $497 in CDSC fees were collected for the High Yield Bond and Short-Term Bond Funds, respectively.

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, including exchange-traded funds (“ETFs”) 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 open-end mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation.

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.

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 include fixed-income securities that are valued using observable inputs as stated above.

24

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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.

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, ETFs 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.

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 may be 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

25

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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. 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, 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, the securities priced using this methodology 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. Generally Accepted Accounting Principles (“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. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included below.

The Funds’ investments are summarized by level based on the inputs used to determine their values. U.S. GAAP also requires all transfers between any levels to be disclosed. The end of the period timing recognition has been adopted for the transfers between levels of each Fund’s assets and liabilities. As of October 31, 2015, the investments were classified as described below (in thousands):

	Level 1		Level 2		Level 3		Total
High Yield Bond Fund*
Common Stocks	$	58	$	—	$	—	$	58
Convertible Obligations		—		15		—		15
Corporate Obligations		—		11,551		—		11,551
Short-Term Investments - Money Market Funds		122,050		—		—		122,050
Total Investments in Securities	$	122,108	$	11,566	$	—	$	133,674

	Level 1		Level 2		Level 3		Total
Intermediate Bond Fund*
Short-Term Investments - Money Market Funds	$	337,146	$	—	$	—	$	337,146
Total Investments in Securities	$	337,146	$	—	$	—	$	337,146

	Level 1		Level 2		Level 3		Total
Short-Term Bond Fund*
Short-Term Investments - Money Market Funds	$	235,991	$	—	$	—	$	235,991
Total Investments in Securities	$	235,991	$	—	$	—	$	235,991

* Refer to the Schedules of Investments for Sector and Industry information.

As of October 31, 2015, there were no transfers between levels for the High Yield Bond, Intermediate Bond, and Short-Term Bond Funds.

26

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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 ending value of any security or instrument where a change in the level has occurred from the beginning to the end of the period (in thousands):

	Common Stocks			Convertible Preferred Stocks			Totals
Balance as of 10/31/2014	$	77		$	45		$	122
Net Purchases		—			—			—
Net Sales		(72	)		(29	)		(101	)
Realized gain (loss)		(85	)		(38	)		(123	)
Change in unrealized appreciation or (depreciation)		80			22			102
Transfer into Level 3		—			—			—
Transfer out of Level 3		—			—			—
Balance as of 10/31/2015		—			—			—
Change in unrealized at period end**	$	—		$	—		$	—

** 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 Statements of Operations.

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. To the extent necessary to fully distribute capital gains, the Funds designate earnings and profits distributed to shareholders on the redemption of shares.

Commission Recapture

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

Allocation of Income, Expenses, Gains, and Losses

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

27

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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.

4. Securities and Other Investments

Pay-In-Kind Securities

Certain Funds may invest in payment in-kind securities (“PIKs”). PIKs 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.

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 year ended October 31, 2015 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.

28

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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.

Other Investment Company Securities and Other Exchange Traded Products

The Funds may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Funds may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, a Fund becomes a shareholder of that investment company. As a result, Fund shareholders indirectly will bear a Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses Fund shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

Mortgage-Related and Other Asset-Backed Securities

The Intermediate Bond and Short-Term Bond Funds may invest in mortgage or other asset-backed securities (“ABS”). These securities may include mortgage instruments issued by U.S. government agencies (“agency mortgages”) or those issued by private entities (“non-agency mortgages”). Specific types of instruments may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. The value of the Fund’s mortgage-backed securities (“MBS”) may be affected by, among other things, changes or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the mortgage, or the quality of the underlying assets. The mortgages underlying the securities may default or decline in quality or value. Through its investments in MBS, a Fund has exposure to subprime loans, Alt-A loans and non-conforming loans as well as to the mortgage and credit markets generally. Underlying collateral related to subprime, Alt-A and non-conforming mortgage loans has become increasingly susceptible to defaults and declines in quality or value, especially in a declining residential real estate market. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole.

Mortgage-Backed Securities

MBS often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of the Fund’s portfolio at the time resulting in reinvestment risk.

29

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Rising or high interest rates may result in slower than expected principal payments which may tend to extend the duration of MBS, making them more volatile and more sensitive to changes in interest rates. This is known as extension risk.

MBS may have less potential for capital appreciation than comparable fixed income securities due to the likelihood of increased prepayments of mortgages resulting from foreclosures or declining interest rates. These foreclosed or refinanced mortgages are paid off at face value (par) or less, causing a loss, particularly for any investor who may have purchased the security at a premium or a price above par. In such an environment, this risk limits the potential price appreciation of these securities.

Agency Mortgage-Backed Securities

Certain MBS may be issued or guaranteed by the U.S. government or a government sponsored entity, such as Fannie Mae (the Federal National Mortgage Association) or Freddie Mac (the Federal Home Loan Mortgage Corporation). Although these instruments may be guaranteed by the U.S. government or a government sponsored entity, many such MBS are not backed by the full faith and credit of the United States and are still exposed to the risk of non-payment.

Privately Issued Mortgage-Backed Securities

MBS held by a Fund may be issued by private issuers including commercial banks, savings associations, mortgage companies, investment banking firms, finance companies and special purpose finance entities (called special purpose vehicles or SPVs) and other entities that acquire and package mortgage loans for resale as MBS. These privately issued non-agency MBS may offer higher yields than those issued by government agencies, but also may be subject to greater price changes than governmental issues. Subprime loans refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their loans. Alt-A loans refer to loans extended to borrowers who have incomplete documentation of income, assets, or other variables that are important to the credit underwriting processes. Non-conforming mortgages are loans that do not meet the standards that allow purchase by government-sponsored enterprises. MBS with exposure to subprime loans, Alt-A loans or non-conforming loans have had in many cases higher default rates than those loans that meet government underwriting requirements. The risk of non-payment is greater for MBS that are backed by mortgage pools that contain subprime, Alt-A and non-conforming loans, but a level of risk exists for all loans.

Unlike agency MBS issued or guaranteed by the U.S. government or a government-sponsored entity (e.g., Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation), MBS issued by private issuers do not have a government or government-sponsored entity guarantee, but may have credit enhancements provided by external entities such as banks or financial institutions or achieved through the structuring of the transaction itself. Examples of such credit support arising out of the structure of the transaction include the issue of senior and subordinated securities (e.g., the issuance of securities by an SPV in multiple classes or “tranches,” with one or more classes being senior to other subordinated classes as to the payment of principal and interest, with the result that defaults on the underlying mortgage loans are borne first by the holders of the subordinated class); creation of “reserve funds” (in which case cash or investments, sometimes funded from a portion of the payments on the underlying mortgage loans, are held in reserve against future losses); and “overcollateralization” (in which case the scheduled payments on, or the principal amount of, the underlying mortgage loans exceeds that required to make payment on the securities and pay any servicing or other fees). However, there can be no guarantee that credit enhancements, if any, will be sufficient to prevent losses in the event of defaults on the underlying mortgage loans. In addition, MBS that are issued by private issuers are not subject to the underwriting requirements for the underlying mortgages that are applicable to those MBS that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying private MBS may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government

30

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

or government-sponsored MBS and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. Privately issued pools more frequently include second mortgages, high loan-to-value mortgages and manufactured housing loans. The coupon rates and maturities of the underlying mortgage loans in a private-label MBS pool may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime mortgage loans.

Privately issued MBS are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, MBS held in the Fund’s portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans.

Asset-Backed Securities

ABS may include MBS, loans, receivables or other assets. The value of the Fund’s ABS may be affected by, among other things, actual or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the receivables, the market’s assessment of the quality of underlying assets or actual or perceived changes in the credit worthiness of the individual borrowers, the originator, the servicing agent or the financial institution providing the credit support.

Payment of principal and interest may be largely dependent upon the cash flows generated by the assets backing the securities.

Rising or high interest rates tend to extend the duration of ABS, making them more volatile and more sensitive to changes in interest rates. The underlying assets are sometimes subject to prepayments which can shorten the security’s weighted average life and may lower its return. Defaults on loans underlying ABS have become an increasing risk for ABS that are secured by home equity loans related to sub-prime, Alt-A or non-conforming mortgage loans, especially in a declining residential real estate market.

ABS (other than MBS) present certain risks that are not presented by MBS. Primarily, these securities may not have the benefit of any security interest in the related assets. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. There is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. ABS are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses results from payment of the insurance obligations on at least a portion of the assets in the pool. This protection may be provided through guarantees, policies or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction or through a combination of such approaches. The Fund will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets.

Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. The availability of ABS may be affected by legislative or regulatory developments. It is possible that such developments may require the Fund to dispose of any then existing holdings of such securities.

31

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

5. Federal Income and Excise Taxes

It is the policy of each Fund to qualify as a regulated investment company (“RIC”), 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, 2015 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 Funds also utilize earnings and profits distributed to shareholders on redemptions of shares as part of the dividends paid deduction.

The tax character of distributions paid were as follows (in thousands):

	High Yield Bond				Intermediate Bond				Short-Term Bond
	Year Ended October 31, 2015		Year Ended October 31, 2014		Year Ended October 31, 2015		Year Ended October 31, 2014		Year Ended October 31, 2015		Year Ended October 31, 2014
Distributions paid from:
Ordinary income*
Institutional Class	$	3,234	$	4,444	$	9,425	$	11,444	$	2,245	$	1,692
Y Class		58		110		5		4		8		10
Investor Class		303		447		23		42		32		52
A Class		78		81		8		9		6		10
C Class		92		95		4		6		—		—
AMR Class		7,767		8,270		—		—		—		—
Long-term capital gains
Institutional Class		1,138		219		1,638		—		—		—
Y Class		16		7		1		447		—		—
Investor Class		84		26		5		—		—		—
A Class		19		4		1		2		—		—
C Class		23		7		1		1		—		—
AMR Class		1,742		464		—		1		—		—
Tax returns of capital
Institutional Class		183		—		—		—		—		—
Y Class		3		—		—		—		—		—
Investor Class		13		—		—		—		—		—
A Class		3		—		—		—		—		—
C Class		4		—		—		—		—		—
AMR Class		280		—		—		—		—		—
Total distributions paid	$	15,040	$	14,174	$	11,111	$	11,956	$	2,291	$	1,764

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

As of October 31, 2015, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):

	High Yield Bond			Intermediate Bond		Short-Term Bond
Cost basis of investments for federal income tax purposes	$	136,438		$	337,146	$	235,991
Unrealized appreciation		87			—		—
Unrealized depreciation		(2,866	)		—		—
Net unrealized appreciation (depreciation)		(2,779	)		—		—
Undistributed ordinary income		—			—		459
Accumulated long-term gain or (loss)		(27,176	)		1,562		(7,904	)
Other temporary differences		(4	)		—		—
Distributable earnings or (deficits)	$	(29,959	)	$	1,562	$	(7,445	)

32

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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, dividend reclasses, and utilization of earnings and profits distributed to shareholders on redemption of shares as of October 31, 2015 (in thousands):

	High Yield Bond			Intermediate Bond			Short-Term Bond
Paid-in-capital	$	(485	)	$	5,061		$	(466	)
Undistributed net investment income		480			1,108			2,363
Accumulated net realized gain (loss)		5			(6,169	)		(1,897	)
Unrealized appreciation or (depreciation) of investments		—			—			—

Under the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”), net capital losses recognized by the Funds in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses. Prior to RIC MOD, net capital losses incurred by the Funds were carried forward for eight years and treated as short-term losses. RIC MOD requires that post-enactment net capital losses be used before pre-enactment net capital losses.

Capital losses incurred that will be carried forward under the provisions of the Act for the year October 31, 2015 were as follows (in thousands):

	Loss Carryforward Character
Fund	Short-Term		Long Term		Total
High Yield Bond	$	6,460	$	20,716	$	27,176
Short-Term Bond		764		1,942		2,706

As of October 31, 2015 the capital loss carryforward positions prior to the provisions of the Act that may be applied against any realized net taxable gains in each succeeding year or until their expiration dates, whichever occurs first, were as follows (in thousands):

Fund	2015		2016		2017		Total
Short-Term Bond	$	—	$	5,198	$	—	$	5,198

The Short-Term Bond Fund had $467 of expired loss carryforward positions occurring prior to the provisions of the Act (in thousands).

6. Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of long-term investments, other than short-term obligations, for the year ended October 31, 2015 were as follows (in thousands):

	High Yield Bond		Intermediate Bond		Short-Term Bond
Purchases (excluding U.S. government securities)	$	102,341	$	405,844	$	175,994
Sales and maturities (excluding U.S. government securities)		280,860		808,518		470,308
Purchases of U.S. government securities		—		227,605		144,120
Sales and maturities of U.S. government securities		—		336,162		304,401

33

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

7. Capital Share Transactions

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

For the Year Ended October 31, 2015

	Institutional Class						Y Class						Investor Class
	Shares			Amount			Shares			Amount			Shares			Amount
High Yield Bond Fund (Closed)
Shares sold		1,476		$	12,721			79		$	680			59		$	500
Redemption fees		—			(3	)		—			—			—			—
Reinvestment of dividends		533			4,528			5			48			43			364
Shares redeemed		(8,959	)		(75,282	)		(114	)		(971	)		(328	)		(2,750	)
Net (decrease) in shares outstanding		(6,950	)	$	(58,036	)		(30	)	$	(243	)		(226	)	$	(1,886	)
	A Class						C Class						AMR Class
	Shares			Amount			Shares			Amount			Shares			Amount
High Yield Bond Fund (Closed)
Shares sold		29		$	248			96		$	829			3,285		$	27,766
Redemption fees		—			—			—			—			—			(4	)
Reinvestment of dividends		11			91			12			97			1,165			9,788
Shares redeemed		(100	)		(821	)		(103	)		(842	)		(18,517	)		(147,125	)
Net increase (decrease) in shares outstanding		(60	)	$	(482	)		5		$	84			(14,067	)	$	(109,575	)
	Institutional Class						Y Class						Investor Class
	Shares			Amount			Shares			Amount			Shares			Amount
Intermediate Bond Fund (Closed)
Shares sold		5,392		$	58,129			6		$	63			15		$	163
Reinvestment of dividends		1,026			11,058			1			4			3			28
Shares redeemed		(44,498	)		(475,143	)		(8	)		(86	)		(85	)		(911	)
Net (decrease) in shares outstanding		(38,080	)	$	(405,956	)		(1	)	$	(19	)		(67	)	$	(720	)
	A Class						C Class
	Shares			Amount			Shares			Amount
Intermediate Bond Fund (Closed)
Shares sold		9		$	99			23		$	247
Reinvestment of dividends		—			3			—			3
Shares redeemed		(7	)		(73	)		(5	)		(52	)
Net increase in shares outstanding		2		$	29			18		$	198
	Institutional Class						Y Class						Investor Class
	Shares			Amount			Shares			Amount			Shares			Amount
Short-Term Bond Fund (Closed)
Shares sold		15,710		$	135,657			58		$	504			63		$	549
Reinvestment of dividends		259			2,238			1			4			4			31
Shares redeemed		(46,693	)		(403,137	)		(91	)		(784	)		(514	)		(4,444	)
Net (decrease) in shares outstanding		(30,724	)	$	(265,242	)		(32	)	$	(276	)		(447	)	$	(3,864	)
	A Class						C Class
	Shares			Amount			Shares			Amount
Short-Term Bond Fund (Closed)
Shares sold		59		$	512			52		$	453
Reinvestment of dividends		1			5			—			1
Shares redeemed		(161	)		(1,390	)		(66	)		(574	)
Net (decrease) in shares outstanding		(101	)	$	(873	)		(14	)	$	(120	)

34

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

For the Year Ended October 31, 2014

	Institutional Class						Y Class						Investor Class
	Shares			Amount			Shares			Amount			Shares			Amount
High Yield Bond Fund
Shares sold		3,639		$	33,965			369		$	3,453			191		$	1,786
Redemption fees		—			11			—			—			—			1
Reinvestment of dividends		490			4,563			8			71			47			441
Shares redeemed		(1,782	)		(16,624	)		(465	)		(4,315	)		(323	)		(3,008	)
Net increase (decrease) in shares outstanding		2,347		$	21,915			(88	)	$	(791	)		(85	)	$	(780	)
	A Class						C Class						AMR Class
	Shares			Amount			Shares			Amount			Shares			Amount
High Yield Bond Fund
Shares sold		127		$	1,188			88		$	821			4,757		$	44,526
Redemption fees		—			—			—			—			—			19
Reinvestment of dividends		8			78			7			64			938			8,734
Shares redeemed		(74	)		(687	)		(102	)		(950	)		(5,899	)		(54,615	)
Net increase (decrease) in shares outstanding		61		$	579			(7	)	$	(65	)		(204	)	$	(1,336	)
	Institutional Class						Y Class						Investor Class
	Shares			Amount			Shares			Amount			Shares			Amount
Intermediate Bond Fund
Shares sold		11,706		$	125,224			12		$	134			48		$	511
Reinvestment of dividends		1,113			11,884			—			1			4			42
Shares redeemed		(6,064	)		(64,974	)		(7	)		(77	)		(75	)		(806	)
Net increase (decrease) in shares outstanding		6,755		$	72,134			5		$	58			(23	)	$	(253	)
	A Class						C Class
	Shares			Amount			Shares			Amount
Intermediate Bond Fund
Shares sold		5		$	51			1		$	9
Reinvestment of dividends		—			3			—			5
Shares redeemed		(5	)		(50	)		(52	)		(556	)
Net increase (decrease) in shares outstanding		—		$	4			(51	)	$	(542	)
	Institutional Class						Y Class						Investor Class
	Shares			Amount			Shares			Amount			Shares			Amount
Short-Term Bond Fund
Shares sold		22,267		$	193,284			113		$	982			234		$	2,029
Reinvestment of dividends		195			1,690			—			4			6			50
Shares redeemed		(5,901	)		(51,348	)		(118	)		(1,025	)		(265	)		(2,302	)
Net increase (decrease) in shares outstanding		16,561		$	143,626			(5	)	$	(39	)		(25	)	$	(223	)
	A Class						C Class
	Shares			Amount			Shares			Amount
Short-Term Bond Fund
Shares sold		49		$	428			53		$	455
Reinvestment of dividends		1			9			—			—
Shares redeemed		(159	)		(1,380	)		(40	)		(346	)
Net increase (decrease) in shares outstanding		(109	)	$	(943	)		13		$	109

35

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

8. Subsequent Events

On August 20, 2015, the Manager announced the Board’s approval of a plan to liquidate and terminate the American Beacon High Yield Bond Fund, the American Beacon Intermediate Bond Fund and the American Beacon Short-Term Bond Fund. On November 30, 2015 the Intermediate Bond and Short-Term Bond Funds liquidated all remaining assets and terminated. On December 15, 2015 the High Yield Bond Fund liquidated all remaining assets and terminated.

36

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37

American Beacon High Yield Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2015			2014			2013			2012			2011A
Net asset value, beginning of period	$	9.11		$	9.31		$	9.10		$	8.68		$	9.05
Income (loss) from investment operations:
Net investment income (loss)		0.38			0.55			0.58			0.67			0.71
Net gains (losses) from investments (both realized and unrealized)		(1.01	)		(0.15	)		0.21			0.42			(0.37	)
Total income (loss) from investment operations		(0.63	)		0.40			0.79			1.09			0.34
Less distributions:
Dividends from net investment income		(0.51	)		(0.57	)		(0.58	)		(0.67	)		(0.71	)
Distributions from net realized gains		(0.14	)		(0.03	)		—			—			—
Tax return of capitalB		(0.00	)		—			—			—			—
Total distributions		(0.65	)		(0.60	)		(0.58	)		(0.67	)		(0.71	)
Redemption fees added to beneficial interests		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B
Net asset value, end of period	$	7.83		$	9.11		$	9.31		$	9.10		$	8.68
Total return C		(7.16	)%		4.30	%		8.94	%		13.12	%		3.79	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	16,819		$	82,846		$	62,836		$	42,026		$	41,093
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.89	%		0.87	%		0.91	%		0.93	%		0.88	%
Expenses, net of reimbursements or recoupments		0.88	%		0.85	%		0.89	%		0.93	%		0.88	%
Net investment income (loss), before reimbursements or recoupments		5.89	%		5.75	%		6.25	%		7.61	%		7.90	%
Net investment income, net of reimbursements or recoupments		5.90	%		5.77	%		6.26	%		7.62	%		7.90	%
Portfolio turnover rate		63	%		74	%		82	%		100	%		149	%

^A PENN Capital Management Company, Inc. was added as an investment manager to the High Yield Bond Fund on September 15, 2011.

^B Amounts represent less than $0.01 per share.

^C Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

38

American Beacon High Yield Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class															Investor Class															A Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012			2011A			2015			2014			2013			2012			2011A			2015			2014			2013			2012			2011A
$	9.12		$	9.32		$	9.12		$	8.69		$	9.06		$	9.11		$	9.31		$	9.10		$	8.68		$	9.06		$	9.12		$	9.32		$	9.11		$	8.69		$	9.08
	0.47			0.51			0.58			0.64			0.68			0.46			0.52			0.56			0.65			0.69			0.47			0.53			0.56			0.66			0.69
	(1.09	)		(0.13	)		0.20			0.43			(0.37	)		(1.10	)		(0.15	)		0.21			0.42			(0.38	)		(1.12	)		(0.16	)		0.21			0.42			(0.39	)
	(0.62	)		0.38			0.78			1.07			0.31			(0.64	)		0.37			0.77			1.07			0.31			(0.65	)		0.37			0.77			1.08			0.30
	(0.50	)		(0.55	)		(0.58	)		(0.64	)		(0.68	)		(0.49	)		(0.54	)		(0.56	)		(0.65	)		(0.69	)		(0.49	)		(0.54	)		(0.56	)		(0.66	)		(0.69	)
	(0.14	)		(0.03	)		—			—			—			(0.14	)		(0.03	)		—			—			—			(0.14	)		(0.03	)		—			—			—
	(0.00	)		—			—			—			—			(0.00	)		—			—			—			—			(0.00	)		—			—			—			—
	(0.64	)		(0.58	)		(0.58	)		(0.64	)		(0.68	)		(0.63	)		(0.57	)		(0.56	)		(0.65	)		(0.69	)		(0.63	)		(0.57	)		(0.56	)		(0.66	)		(0.69	)
	0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B
$	7.86		$	9.12		$	9.32		$	9.12		$	8.69		$	7.84		$	9.11		$	9.31		$	9.10		$	8.68		$	7.84		$	9.12		$	9.32		$	9.11		$	8.69
	(7.01	)%		4.16	%		8.74	%		12.74	%		3.36	%		(7.26	)%		4.03	%		8.73	%		12.86	%		3.41	%		(7.29	)%		4.04	%		8.72	%		12.88	%		3.31	%
$	762		$	1,157		$	2,005		$	437		$	11		$	3,965		$	6,674		$	7,609		$	8,930		$	7,560		$	822		$	1,506		$	972		$	678		$	117
	0.96	%		0.93	%		1.02	%		1.13	%		27.02	%		1.14	%		1.10	%		1.13	%		1.16	%		1.09	%		1.27	%		1.30	%		1.38	%		1.46	%		3.93	%
	0.97	%		0.95	%		0.98	%		1.01	%		1.61	%		1.09	%		1.09	%		1.09	%		1.16	%		1.09	%		1.02	%		1.08	%		1.12	%		1.11	%		1.11	%
	5.76	%		5.70	%		6.06	%		7.08	%		(18.29	)%		5.60	%		5.56	%		6.08	%		7.37	%		7.75	%		5.48	%		5.32	%		5.78	%		6.97	%		4.74	%
	5.75	%		5.67	%		6.10	%		7.20	%		7.11	%		5.64	%		5.57	%		6.12	%		7.37	%		7.75	%		5.73	%		5.54	%		6.04	%		7.32	%		7.56	%
	63	%		74	%		82	%		100	%		149	%		63	%		74	%		82	%		100	%		149	%		63	%		74	%		82	%		100	%		149	%

39

American Beacon High Yield Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class															AMR Class
	Year Ended October 31,															Year Ended October 31,
	2015			2014			2013			2012			2011A			2015			2014			2013			2012			2011A
Net asset value, beginning of period	$	9.11		$	9.30		$	9.09		$	8.67		$	9.05		$	9.11		$	9.31		$	9.10		$	8.68		$	9.06
Income (loss) from investment operations:
Net investment income (loss)		0.42			0.45			0.49			0.59			0.63			(8.64	)		0.57			0.61			0.70			0.74
Net gains (losses) from investments (both realized and unrealized)		(1.13	)		(0.15	)		0.21			0.42			(0.39	)		8.04			(0.15	)		0.21			0.42			(0.38	)
Total income (loss) from investment operations		(0.71	)		0.30			0.70			1.01			0.24			(0.60	)		0.42			0.82			1.12			0.36
Less distributions:
Dividends from net investment income		(0.42	)		(0.46	)		(0.49	)		(0.59	)		(0.62	)		(0.53	)		(0.59	)		(0.61	)		(0.70	)		(0.74	)
Distributions from net realized gains		(0.14	)		(0.03	)		—			—			—			(0.14	)		(0.03	)		—			—			—
Tax return of capital B		(0.00	)		—			—			—			—			(0.00	)		—			—			—			—
Total distributions		(0.56	)		(0.49	)		(0.49	)		(0.59	)		(0.62	)		(0.67	)		(0.62	)		(0.61	)		(0.70	)		(0.74	)
Redemption fees added to beneficial interests		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B
Net asset value, end of period	$	7.84		$	9.11		$	9.30		$	9.09		$	8.67		$	7.84		$	9.11		$	9.31		$	9.10		$	8.68
Total return C		(7.98	)%		3.28	%		7.90	%		12.06	%		2.67	%		(6.75	)%		4.63	%		9.25	%		13.46	%		3.96	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,552		$	1,756		$	1,858		$	2,262		$	403		$	538		$	128,707		$	133,510		$	86,030		$	73,298
Ratios to average net assets:
Expenses, before reimbursements		2.01	%		2.06	%		2.12	%		2.16	%		3.15	%		0.61	%		0.58	%		0.61	%		0.62	%		0.60	%
Expenses, net of reimbursements		1.77	%		1.84	%		1.87	%		1.86	%		1.85	%		0.61	%		0.58	%		0.61	%		0.62	%		0.60	%
Net investment income (loss), before reimbursements		4.69	%		4.59	%		5.11	%		6.29	%		5.53	%		6.16	%		6.07	%		6.55	%		7.91	%		8.18	%
Net investment income, net of reimbursements		4.93	%		4.81	%		5.36	%		6.60	%		6.82	%		6.16	%		6.07	%		6.55	%		7.91	%		8.18	%
Portfolio turnover rate		63	%		74	%		82	%		100	%		149	%		63	%		74	%		82	%		100	%		149	%

^A PENN Capital Management Company, Inc. was added as an investment manager to the High Yield Bond Fund on September 15, 2011.

^B Amounts represent less than $0.01 per share.

^C Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

40

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41

American Beacon Intermediate Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,
	2015			2014			2013			2012			2011			2015			2014			2013			2012			2011
Net asset value, beginning of period	$	10.78		$	10.73		$	11.26		$	10.99		$	11.10		$	10.82		$	10.77		$	11.31		$	11.03		$	11.10
Income (loss) from investment operations:
Net investment income (loss)		(24.21	)		0.28			0.24			0.27			0.33			0.17			0.32			(0.04	)		0.26			0.27
Net gains (losses) from investments (both realized and unrealized)		24.40			0.10			(0.36	)		0.34			0.10			(0.02	)		0.02			(0.12	)		0.32			0.17
Total income (loss) from investment operations		0.19			0.38			(0.12	)		0.61			0.43			0.15			0.34			(0.16	)		0.58			0.44
Less distributions:
Dividends from net investment income		(0.26	)		(0.32	)		(0.28	)		(0.29	)		(0.35	)		(0.22	)		(0.28	)		(0.25	)		(0.25	)		(0.32	)
Distributions from net realized gains		(0.03	)		(0.01	)		(0.13	)		(0.05	)		(0.19	)		(0.03	)		(0.01	)		(0.13	)		(0.05	)		(0.19	)
Tax return of capital B		(0.00	)		—			—			—			—			—			—			—			—			—
Total distributions		(0.29	)		(0.33	)		(0.41	)		(0.34	)		(0.54	)		(0.25	)		(0.29	)		(0.38	)		(0.30	)		(0.51	)
Net asset value, end of period	$	10.68		$	10.78		$	10.73		$	11.26		$	10.99		$	10.72		$	10.82		$	10.77		$	11.31		$	11.03
Total return A		1.80	%		3.66	%		(1.04	)%		5.59	%		4.11	%		1.44	%		3.26	%		(1.42	)%		5.34	%		4.19	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,247		$	413,618		$	339,416		$	388,491		$	275,234		$	220		$	241		$	183		$	113		$	60
Ratios to average net assets:
Expenses, before reimbursements		0.32	%		0.32	%		0.33	%		0.33	%		0.35	%		0.68	%		0.70	%		0.67	%		0.99	%		0.73	%
Expenses, net of reimbursements		0.32	%		0.32	%		0.33	%		0.33	%		0.35	%		0.65	%		0.65	%		0.65	%		0.64	%		0.65	%
Net investment income, before reimbursements		2.17	%		2.30	%		2.30	%		2.25	%		3.12	%		1.79	%		1.93	%		1.91	%		1.65	%		2.74	%
Net investment income, net of reimbursements		2.17	%		2.30	%		2.30	%		2.25	%		3.12	%		1.83	%		1.98	%		1.93	%		2.00	%		2.82	%
Portfolio turnover rate		117	%		41	%		50	%		144	%		75	%		117	%		41	%		50	%		144	%		75	%

^A Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

42

American Beacon Intermediate Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class															A Class															C Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012			2011			2015			2014			2013			2012			2011			2015			2014			2013			2012			2011
$	10.76		$	10.71		$	11.25		$	10.97		$	11.08		$	10.76		$	10.71		$	11.24		$	10.96		$	11.07		$	10.78		$	10.71		$	11.25		$	10.97		$	11.08
	(0.24	)		0.14			(0.04	)		0.22			0.29			0.18			0.18			0.14			0.18			0.28			0.34			(0.25	)		0.07			0.13			0.19
	0.38			0.18			(0.14	)		0.35			0.10			(0.05	)		0.12			(0.33	)		0.36			0.09			(0.29	)		0.48			(0.35	)		0.33			0.10
	0.14			0.32			(0.18	)		0.57			0.39			0.13			0.30			(0.19	)		0.54			0.37			0.05			0.23			(0.28	)		0.46			0.29
	(0.20	)		(0.26	)		(0.23	)		(0.24	)		(0.31	)		(0.19	)		(0.24	)		(0.21	)		(0.21	)		(0.29	)		(0.11	)		(0.15	)		(0.13	)		(0.13	)		(0.21	)
	(0.03	)		(0.01	)		(0.13	)		(0.05	)		(0.19	)		(0.03	)		(0.01	)		(0.13	)		(0.05	)		(0.19	)		(0.03	)		(0.01	)		(0.13	)		(0.05	)		(0.19	)
	(0.00	)		—			—			—			—			—			—			—			—			—			—			—			—			—			—
	(0.23	)		(0.27	)		(0.36	)		(0.29	)		(0.50	)		(0.22	)		(0.25	)		(0.34	)		(0.26	)		(0.48	)		(0.14	)		(0.16	)		(0.26	)		(0.18	)		(0.40	)
$	10.67		$	10.76		$	10.71		$	11.25		$	10.97		$	10.67		$	10.76		$	10.71		$	11.24		$	10.96		$	10.69		$	10.78		$	10.71		$	11.25		$	10.97
	1.36	%		3.12	%		(1.58	)%		5.20	%		3.65	%		1.25	%		2.92	%		(1.69	)%		4.99	%		3.45	%		0.49	%		2.24	%		(2.51	)%		4.21	%		2.70	%
$	774		$	1,504		$	1,749		$	11,011		$	3,729		$	452		$	426		$	420		$	734		$	584		$	383		$	189		$	734		$	1,372		$	286
	0.96	%		0.90	%		0.87	%		0.84	%		0.86	%		0.99	%		1.06	%		1.11	%		1.12	%		1.13	%		1.74	%		1.83	%		1.94	%		1.87	%		1.86	%
	0.79	%		0.79	%		0.79	%		0.79	%		0.79	%		0.88	%		0.96	%		0.99	%		0.99	%		0.99	%		1.62	%		1.73	%		1.74	%		1.73	%		1.72	%
	1.54	%		1.72	%		1.74	%		1.80	%		2.59	%		1.46	%		1.56	%		1.52	%		1.48	%		2.31	%		0.71	%		0.83	%		0.69	%		0.75	%		1.61	%
	1.72	%		1.83	%		1.82	%		1.86	%		2.66	%		1.57	%		1.67	%		1.64	%		1.61	%		2.46	%		0.83	%		0.93	%		0.89	%		0.89	%		1.75	%
	117	%		41	%		50	%		144	%		75	%		117	%		41	%		50	%		144	%		75	%		117	%		41	%		50	%		144	%		75	%

43

American Beacon Short-Term Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class															Y Class
	Year Ended October 31,															Year Ended October 31,
	2015			2014			2013			2012			2011			2015			2014			2013			2012			2011
Net asset value, beginning of period	$	8.67		$	8.70		$	8.78		$	8.71		$	8.89		$	8.69		$	8.72		$	8.77		$	8.73		$	8.90
Income (loss) from investment operations:
Net investment income (loss)		(3.56	)		0.37			(0.09	)		0.28			0.26			(0.03	)		0.03			0.13			0.10			0.15
Net gains (losses) from investments (both realized and unrealized)		3.60			(0.30	)		0.13			(0.05	)		(0.25	)		0.05			0.02			(0.08	)		0.11			(0.15	)
Total income (loss) from investment operations		0.04			0.07			0.04			0.23			0.01			0.02			0.05			0.05			0.21			—
Less distributions:
Dividends from net investment income		(0.09	)		(0.10	)		(0.12	)		(0.16	)		(0.19	)		(0.07	)		(0.08	)		(0.10	)		(0.17	)		(0.17	)
Distributions from net realized gains		—			—			—			—			—			—			—			—			—			—
Total distributions		(0.09	)		(0.10	)		(0.12	)		(0.16	)		(0.19	)		(0.07	)		(0.08	)		(0.10	)		(0.17	)		(0.17	)
Net asset value, end of period	$	8.62		$	8.67		$	8.70		$	8.78		$	8.71		$	8.64		$	8.69		$	8.72		$	8.77		$	8.73
Total return A		0.45	%		0.83	%		0.47	%		2.72	%		0.17	%		0.18	%		0.56	%		0.56	%		2.77	%		0.04	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	27,007		$	293,620		$	150,509		$	217,545		$	156,937		$	847		$	1,130		$	1,173		$	272		$	344
Ratios to average net assets:
Expenses, before reimbursements		0.35	%		0.37	%		0.38	%		0.37	%		0.37	%		0.70	%		0.72	%		0.72	%		0.72	%		1.43	%
Expenses, net of reimbursements		0.35	%		0.37	%		0.38	%		0.37	%		0.37	%		0.63	%		0.64	%		0.63	%		0.64	%		0.60	%
Net investment income (loss), before reimbursements		0.43	%		0.60	%		0.90	%		1.50	%		1.73	%		0.10	%		0.26	%		0.58	%		1.16	%		0.57	%
Net investment income (loss), net of reimbursements		0.43	%		0.60	%		0.90	%		1.50	%		1.73	%		0.17	%		0.34	%		0.66	%		1.24	%		1.40	%
Portfolio turnover rate		85	%		53	%		105	%		18	%		65	%		85	%		53	%		105	%		18	%		65	%

^A Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

44

American Beacon Short-Term Bond Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Investor Class															A Class															C Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012			2011			2015			2014			2013			2012			2011			2015			2014			2013			2012			2011
$	8.68		$	8.70		$	8.79		$	8.72		$	8.89		$	8.68		$	8.70		$	8.78		$	8.71		$	8.89		$	8.68		$	8.70		$	8.79		$	8.72		$	8.90
	(1.67	)		(0.02	)		(0.58	)		(0.19	)		0.14			(0.54	)		(0.07	)		0.02			0.08			0.15			(0.07	)		(0.03	)		0.03			0.02			0.12
	1.67			0.07			0.58			0.39			(0.15	)		0.55			0.11			(0.02	)		0.11			(0.18	)		0.01			0.01			(0.10	)		0.11			(0.21	)
	0.00			0.05			0.00			0.20			(0.01	)		0.01			0.04			0.00			0.19			(0.03	)		(0.06	)		(0.02	)		(0.07	)		0.13			(0.09	)
	(0.05	)		(0.07	)		(0.09	)		(0.13	)		(0.16	)		(0.06	)		(0.06	)		(0.08	)		(0.12	)		(0.15	)		0.00			0.00			(0.02	)		(0.06	)		(0.09	)
	—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
	(0.05	)		(0.07	)		(0.09	)		(0.13	)		(0.16	)		(0.06	)		(0.06	)		(0.08	)		(0.12	)		(0.15	)		0.00			0.00			(0.02	)		(0.06	)		(0.09	)
$	8.63		$	8.68		$	8.70		$	8.79		$	8.72		$	8.63		$	8.68		$	8.70		$	8.78		$	8.71		$	8.62		$	8.68		$	8.70		$	8.79		$	8.72
	0.03	%		0.53	%		0.03	%		2.28	%		(0.12	)%		0.06	%		0.52	%		0.00	%		2.22	%		(0.33	)%		(0.65	)%		(0.19	)%		(0.85	)%		1.46	%		(1.00	)%
$	3,360		$	7,255		$	7,497		$	14,203		$	24,557		$	444		$	1,322		$	2,271		$	2,951		$	3,428		$	842		$	969		$	863		$	377		$	371
	0.90	%		0.90	%		0.90	%		0.89	%		0.90	%		1.02	%		1.10	%		1.13	%		1.12	%		1.38	%		1.76	%		1.84	%		1.89	%		1.90	%		2.47	%
	0.78	%		0.79	%		0.79	%		0.79	%		0.78	%		0.74	%		0.82	%		0.85	%		0.85	%		0.84	%		1.35	%		1.50	%		1.60	%		1.59	%		1.55	%
	(0.08	)%		0.07	%		0.39	%		0.99	%		1.18	%		(0.18	)%		(0.10	)%		0.15	%		0.75	%		0.49	%		(0.95	)%		(0.85	)%		(0.65	)%		(0.03	)%		(0.43	)%
	0.04	%		0.19	%		0.50	%		1.09	%		1.30	%		0.10	%		0.18	%		0.43	%		1.03	%		1.03	%		(0.55	)%		(0.52	)%		(0.36	)%		0.28	%		0.49	%
	85	%		53	%		105	%		18	%		65	%		85	%		53	%		105	%		18	%		65	%		85	%		53	%		105	%		18	%		65	%

45

American Beacon Funds^SM

Privacy Policy and Federal Tax Information

October 31, 2015 (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

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended October 31, 2015. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2015.

The Funds designated the following items with regard to distributions paid during the year ended December 31, 2014. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

	High Yield Bond
Corporate Dividends Received Deduction		0.73	%
Qualified Dividend Income		0.81	%

Long-term capital gain distributions for the year ended October 31, 2015 were designated for the following Funds:

High Yield Bond	$	3,021,909
Intermediate Bond		6,707,319

The High Yield Bond Fund paid $581,451 of short-term capital gain distributions for the year ended October 31, 2015.

Shareholders will receive notification in January 2016 of the applicable tax information necessary to prepare their 2015 income tax returns.

46

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

At an in-person meeting held on November 12, 2014, telephonic meetings held on November 26, 2014 and December 6, 2014 and an in-person meeting held on December 10, 2014 (collectively, the “Board Meetings”), the Board of Trustees (“Board”) considered the approval of:

(1) a new Management Agreement (“New Management Agreement”) among American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”) on behalf of the American Beacon High Yield Bond Fund (“ High Yield Bond Fund”), the American Beacon Intermediate Bond Fund (“Intermediate Bond Fund”), and the American Beacon Short-Term Bond Fund (“Short-Term Bond Fund”) (collectively, the “Funds”);

(2) new Investment Advisory Agreements among the Manager, the Trust, on behalf of the High Yield Fund and each of Logan Circle Partners, LP (“Logan”), PENN Capital Management Company, Inc. (“PENN”), Franklin Advisers, Inc. (“Franklin”); and

(3) new Investment Advisory Agreements among the Manager, the Trust, on behalf of the Intermediate Bond Fund, and Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”).

Collectively, the new Investment Advisory Agreements are hereinafter referred to as the “New Advisory Agreements,” and Logan, PENN, Franklin and Barrow are hereinafter referred to as the “Sub-Advisors.”

The Board meetings were held for the Trustees to consider the New Management Agreement and New Advisory Agreements (“New Agreements”) because, on November 20, 2014, Lighthouse Holdings Parent, Inc. (“LPHI”), the indirect parent company of the Manager, entered into an Agreement and Plan of Merger pursuant to which LHPI agreed to be acquired by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) and Estancia Capital Management, LLC (“Estancia”) (collectively, the “Purchasers”), which are private equity firms (the “Transaction”). As required by the Investment Company Act of 1940, as amended (“1940 Act”), the current Management Agreement (“Current Management Agreement”) among the Manager and the Trust on behalf of the High Yield Bond Fund, Intermediate Bond Fund, and Short-Term Bond Fund and the current Investment Advisory Agreements (“Current Advisory Agreements”) among the Manager, Logan, PENN, Franklin and the Trust, on behalf of the High Yield Bond Fund and the Manager, Barrow and the Trust, on behalf of the Intermediate Bond Fund, provided for their automatic termination in the event of an assignment. The Transaction was deemed an “assignment” under the 1940 Act. As a result, the Current Management Agreement and each Current Advisory Agreement (“Current Agreements”) were deemed to have automatically terminated upon the closing of the Transaction. (The Transaction closed on April 30, 2015).

The Board focused on the effect that the Transaction would have on the Manager and the Funds. Additionally, the Board considered that it had requested and evaluated the information relevant to the renewal of the Current Management Agreement and Current Advisory Agreements at in-person meetings held in May and June 2014. The Manager represented to the Board that there had been no material changes or developments relating to the Manager or any of the Sub-Advisors since the May and June 2014 meetings, other than the changes or developments subsequently reported to the Board or discussed in the due diligence materials submitted to the Trustees in connection with the Transaction. In light of the proximity of the Board’s consideration of the renewal or approval of the Current Agreements, and the Board’s ongoing due diligence review in connection with the Transaction, the Board determined that it was not necessary to repeat certain aspects of the review conducted in connection with the approvals in the past year.

In connection with the Board Meetings, the Trustees received and evaluated such information as they deemed necessary to their consideration of the New Agreements. The information requested on behalf of the Board included, among other information, the following:

• a description of the Transaction, the effect of the Transaction on the Manager, the Trust and the Board, and any proposed changes to the Trust, its service providers, the Funds’ fee structures, fee waivers, and other information;

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

• information regarding the financial resources of the Purchasers and the Manager’s capital structure after the Transaction, including confirmation that the Manager’s financial condition would not raise concerns that the Manager would be unable to continue providing the same scope and quality of services to the Funds;

• information regarding the Manager’s due diligence, bidding and selection process with respect to the Purchasers;

• information regarding the structure of the relationship between Kelso and Estancia and the role that each would assume in advance of and after the Closing;

• information regarding each Purchaser’s ownership structure and key personnel, including information regarding affiliations of the Purchasers and the Manager after the Transaction;

• information regarding each Purchaser’s asset management experience, including the experience of the Purchasers’ key personnel relating to the management of investment companies registered under the 1940 Act;

• the Purchasers’ business plans with respect to the Manager after the Transaction;

• information regarding the extent to which the Purchasers expect to be involved in the Manager’s day-to-day operations and the persons to whom the Manager’s key personnel will report;

• information regarding any anticipated impact that the Transaction might have on the Manager’s compliance activities or the resources available to the Funds’ Chief Compliance Officer;

• a discussion of any potential material changes to the Current Agreements;

• a description of any expected changes in distribution or marketing efforts and strategies for the Funds as a result of the Transaction;

47

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

• information regarding whether the Purchasers or the Manager anticipated proposing any changes to the membership of the Board;

• a discussion of the length of the Purchasers’ anticipated ownership of the Manager and the expected duration of the investment funds financing the Transaction;

• information regarding the ownership and investment of management personnel in the Manager;

• information regarding the Manager’s employee equity incentive plan after the Closing;

• a summary of any material past, pending or anticipated litigation or regulatory proceedings involving the Purchasers, or their personnel;

• verification of the continuation of the Manager’s insurance coverage after the Transaction with regard to the services provided to the Funds; and

• in-person presentations by and discussions with the Manager and representatives of the Purchasers regarding the Transaction.

The Board also considered information that had been provided to the Board by the Manager and the Sub-Advisors for the May and June 2014 meetings in connection with the renewal of the Current Agreements.

Provided below is an overview of the primary factors the Trustees considered at the Board Meetings. The Board did not identify any particular information that was most relevant to its consideration to approve the New Agreements, and each Trustee may have afforded different weight to the various factors. In connection with the approval process for the New Agreements, the Trustees received advice from their legal counsel detailing the Board’s responsibilities pertaining thereto. Legal counsel to the non-interested Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of the New Agreements. Based on its evaluation, the Board unanimously concluded that the terms of the New Agreements were reasonable and fair and that the approval of the New Agreements was in the best interests of the Funds and their shareholders.

In determining whether to approve the New Agreements on December 10, 2014, the Trustees considered the best interests of each Fund separately. The Board considered each Fund’s investment management and sub-advisory relationships separately. In each instance, the Board considered its review of the Current Agreements in May and June 2014, and the information received in November and December 2014 with respect to, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each Sub-Advisor for a Fund; (3) the costs incurred by the Manager in rendering services to the Funds and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or a Sub-Advisor or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect these economies of scale for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or a Sub-Advisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager and the Purchasers regarding certain key aspects of the materials submitted in support of the approval of the New Agreements.

Nature, Extent and Quality of the Services Provided. With respect to the approval of the New Agreements, the Board considered that the New Agreements provide for the Manager and each Sub-Advisor to provide the same services to each Fund on substantially the same terms as the Current Agreements. The Board considered representations by the Manager and/or Purchasers that the Transaction will not result in any changes to the manner in which each Fund’s assets are managed. The Board also considered representations by the Manager and/or the Purchasers that the Transaction will not result in any adverse impact or changes to: the personnel involved in the management of the Funds; the Manager’s disciplined investment approach and goal to provide consistent above average long-term performance at a lower than average cost; the Manager’s continuing efforts to enhance distribution of the Funds’ shares and add new series to the Trust and share classes to the Funds’ product line; the adequacy of the Manager’s financial condition; the Manager’s day-to-day operations; the Manager’s compliance activities or the resources available to the Trust’s Chief Compliance Officer; or the Funds’ service providers or Sub-Advisors. The Board also considered the Manager’s representation that there had been no material changes or developments regarding the Manager or the Sub-Advisors since the Board’s consideration of the Current Agreements in May and June 2014 that had not previously been reported to the Board. The Board also considered information regarding the post-closing capitalization of the Purchasers and the Purchasers’ long-term business goals with regard to the Manager and the Manager’s activities with respect to the Trust, which are consistent with the Manager’s current goals. 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 the Sub-Advisors were appropriate for each Fund and, thus, determined to approve the New Agreements for each Fund.

Investment Performance. The Board considered its review of the comparative information regarding each Fund’s investment performance relative to its benchmark index(es) and peer group in connection with the renewal of the Current Agreements. The Board also considered the performance reports and discussions with management at Board and Committee meetings since June 2014. The Manager also noted that it generally was satisfied with the performance of the Sub-Advisors.

Costs of the Services to be Provided to the Funds and the Projected Profits to be Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager by Fund, the Board considered that the Transaction would result in no changes to the fees charged to the Funds or the Manager’s fee waivers currently in place with respect to each Fund. Additionally, the Board noted that there had been no material changes in this regard since its consideration of the Current Agreements in May and June 2014. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager. The Board did not consider the costs of the services to be provided and profits to be realized by each Sub-Advisor from its relationship with its respective Fund, noting instead the substantially arm’s-length nature of the relationship between the Manager and each Sub-Advisor with respect to the negotiation of the advisory fee rate on behalf of the Funds.

48

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

Economies of Scale and Whether Fee Levels Reflect Economies of Scale. In considering the reasonableness of the management fees, the Board considered that the Funds would pay the same fee rates to the Manager under the New Management Agreement as the Funds currently pay under the Current Management Agreement. The Board also considered that each Fund would pay the same investment advisory fee rate to its Sub-Advisor under the New Advisory Agreement as the Fund pays under its Current Advisory Agreement. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the Manager’s fee schedule for each Fund, Logan, PENN and Franklin’s fee schedules for the High Yield Bond Fund and Barrow’s fee schedule for the Intermediate Bond Fund provide for a reasonable sharing of benefits from any economies of scale with each Fund.

Benefits Derived by the Manager from Relationship With the Funds. The Board considered that the “fall-out” or ancillary benefits that accrue to the Manager and/or the Sub-Advisors as a result of the advisory relationships with the Funds would not change as a result of the Transaction. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the potential benefits accruing to the Manager and the Sub-Advisors under the New Management Agreement and the New Advisory Agreements by virtue of the Manager’s relationship with the Funds, Logan, PENN and Franklin’s relationship with the High Yield Bond Fund and Barrow’s relationship with the Intermediate Bond Fund, appear to be fair and reasonable.

Board’s Conclusion. Based on the various considerations described above, the Board, including a majority of Trustees who are not “interested persons” of the Fund, the Manager, Logan, PENN, Franklin, or Barrow, as that term is defined in the 1940 Act, concluded that the management and investment advisory fee rates to be paid by the High Yield Bond Fund and Intermediate Bond Fund, and the management fee rate to be paid by the Short-Term Bond Fund are fair and reasonable and that the approval of the New Agreements is in the best interests of the High Yield Bond Fund, Intermediate Bond Fund and the Short-Term Bond Fund, and approved the New Agreements.

49

American Beacon Funds^SM

Results of Shareholder Meeting (Unaudited)

Special meetings of shareholders of each of the portfolios of the American Beacon Funds (the “Trust”) were held on April 7 and April 28, 2015. The shareholders of the High Yield Bond, Intermediate Bond, and Short-Term Bond Funds (the “Funds”) approved a new investment management agreement between American Beacon Advisors, Inc. and the Funds. Approval of this proposal required a majority of the outstanding voting securities of each Fund. The following are the results of the shareholder votes for this proposal:

Funds	For		Against		Abstain		Non-Voting
High Yield Bond Fund		139,702,324.27		363,481.29		998,635.09		71,804,736.72
Intermediate Bond Fund		423,895,861.18		19,848.56		22,610.48		2,016,351.15
Short-Term Bond Fund		225,614,812.58		148,951.69		103,110.14		10,637,861.15

Special meetings of shareholders of the Trust were held on April 7 and April 28, 2015. The shareholders of the Trust approved the re-election of nine of the current Trustees to the Board of the American Beacon Trust and the election of two additional Trustees to the Board. Approval of this proposal required a plurality vote of the Trust’s shares. The following are the results of the election of each Trustee:

Gilbert G. Alvarado
Affirmative	16,655,574,211.10
Withhold	242,060,281.87
Joseph B. Armes
Affirmative	16,653,130,207.99
Withhold	244,504,284.98
Gerard J. Arpey
Affirmative	16,659,813,172.19
Withhold	237,821,320.78
W. Humphrey Bogart
Affirmative	16,532,151,093.14
Withhold	365,483,399.83
Brenda A. Cline
Affirmative	16,662,050,138.08
Withhold	235,584,354.89
Eugene J. Duffy
Affirmative	16,430,210,258.21
Withhold	467,424,234.76
Thomas M. Dunning
Affirmative	16,651,792,247.83
Withhold	245,842,245.14
Alan D. Feld
Affirmative	14,899,039,186.08
Withhold	1,998,595,306.89
Richard A. Massman
Affirmative	16,651,582,060.07
Withhold	246,052,432.90
Barbara J. McKenna
Affirmative	16,435,773,869.81
Withhold	461,860,623.16
R. Gerald Turner
Affirmative	16,653,429,720.08
Withhold	244,204,772.89

50

Trustees and Officers of the American Beacon Funds^SM

(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 220 East Las Colinas Boulevard, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-four funds in the fund complex that includes the Trust 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** (78)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
NON-INTERESTED TRUSTEES	Term
	Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (45)	Trustee since 2015	Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present) Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-Present); Director, Sacramento Regional Technology Alliance (2011-Present); Director, Women’s Empowerment (2009-2014); Trustee, American Beacon Select Funds (2015-Present).
Joseph B. Armes (53)	Trustee since 2015	Chairman, President & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2013-Present); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Chief Operating Officer, Hicks Holdings, LLC (Hicks Family assets and investments) (2005-2010); Trustee, Baylor University Board of Regents (2001-2010); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present).
Gerard J. Arpey (57)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, AMR Corp. and American Airlines; Inc. (2003-2011); Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
W. Humphrey Bogart (71)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Brenda A. Cline (54)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Director, Tyler Technologies, Inc. (public sector software solutions company) (2014-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (61)	Trustee since 2008	Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).

51

Trustees and Officers of the American Beacon Funds^SM

(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
OFFICERS	Term
	One Year
Thomas M. Dunning (73)	Trustee since 2008	Chairman Emeritus (2008-Present); Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (72)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present) and 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); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Barbara J. McKenna, CFA (52)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (69) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Gene L. Needles, Jr. (60)	President since 2009 Executive Vice President since 2009	President, CEO and Director, American Beacon Advisors, Inc. (2009-Present); President, CEO and Director, Astro AB Borrower, Inc. (2015-Present); President, CEO and Director, Astro AB Acquisition, Inc. (2015-Present); President, CEO and Director, Astro AB Topco, Inc. (2015-Present), President, CEO and Director, Astro AB Holdings, LLC. (2015-Present); President, CEO and Director, Lighthouse Holdings, Inc.; (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President and CEO, American Private Equity Management, L.L.C. (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Rosemary K. Behan (56)	VP, Secretary and Chief Legal Officer since 2006	Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Astro AB Borrower, Inc. (2015-Present); Secretary, Astro AB Acquisition, Inc. (2015-Present); Secretary, Astro AB Topco, Inc. (2015-Present); Secretary, Astro AB Holdings, LLC. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, L.L.C. (2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Brian E. Brett (55)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present).
Erica Duncan (45)	VP Since 2011	Vice President, Marketing and Client Services, American Beacon Advisors, Inc. (2011-Present); Supervisor, Brand Marketing, Invesco (2010-2011);
Michael W. Fields (61)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (54)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present); Treasurer, Astro AB Borrower, Inc. (2015-Present); Treasurer, Astro AB Acquisition, Inc. (2015-Present); Treasurer, Astro AB Topco, Inc. (2015-Presnt); Treasurer, Astro AB Holdings, LLC. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, L.L.C. (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).

52

Trustees and Officers of the American Beacon Funds^SM

(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
OFFICERS	Term
	One Year
Terri L. McKinney (51)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (40)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Manager and Senior Vice President, American Private Equity Management, L.L.C. (2012-Present); Senior Vice President and Director, Astro AB Borrower, Inc. (2015-Present); Senior Vice President and Director, Astro AB Acquisition, Inc. (2015-Present); Senior Vice President and Director, Astro AB Topco, Inc. (2015-Present), Senior Vice President and Director, Astro AB Holdings, LLC. (2015-Present); Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010).
Samuel J. Silver (52)	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 (44)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, L.L.C. (2012-Present).
Sonia L. Bates (58)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer, Astro AB Borrower, Inc. (2015-Present); Asst. Treasurer, Astro AB Acquisition, Inc.(2015-Present); Asst. Treasurer, Astro AB Topco, Inc. (2015-Present); Asst. Treasurer, Astro AB Holdings, LLC.; Asst. Treasurer, Lighthouse Holdings, Inc. (2011-2015); Asst. Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Asst. Treasurer, American Private Equity Management, L.L.C. (2012-Present).

* 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 Trust, 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 years to one or more of the Trust’s sub-advisors.

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 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, and Investor 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 Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of each Fund’s portfolio holdings is also made available on the Funds’ website at 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 High Yield Fund, American Beacon Intermediate Bond Fund, and American Beacon Short-Term Bond Fund are service marks of American Beacon Advisors, Inc.

AR 10/15

OCTOBER 31, 2015 BALANCED FUND MID-CAP VALUE FUND RETIREMENT INCOME AND APPRECIATION FUND ANNUAL REPORT

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
Schedules of Investments:
Balanced Fund	14
Mid-Cap Value Fund	22
Retirement Income and Appreciation Fund	25
Financial Statements	31
Notes to the Financial Statements	35
Financial Highlights	54
Additional Information	Back Cover

BALANCED FUND RISKS

The use of fixed-income securities entails interest rate and credit risks. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. The use of futures contracts for cash management may subject the Fund to losing more money than invested. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

MID-CAP VALUE FUND RISKS

Investing in medium-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund may participate in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

RETIREMENT INCOME AND APPRECIATION FUND RISKS

The use of fixed-income securities entails interest rate and credit risks. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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, 2015

Dear Shareholders,   During much of the 12-month period ended October 31, 2015, uneven global economic growth, declining commodity prices and disparate central bank policies set the stage for mixed returns in all markets. The weakening of many currencies against the U.S. dollar also took a toll on total returns for dollar-based investors in many international markets. Uncertainty over the timing of the U.S. Federal Reserve’s first interest rate increase since emergency lending rates were established during the 2008 financial crisis continued to weigh heavily on investors’ minds. At its October 2015 meeting, the Federal Open Market Committee decided against changing interest rates, but kept December on the table as a possibility.

For the period under review, performances of the funds’ benchmarks were modest. The American Beacon Balanced Fund’s standard, represented by a mix of 60% Russell 1000 Value Index and 40% Barclays Capital U.S. Aggregate Bond Index, gained 1.32%. The American Beacon Mid-Cap Value Fund’s yardstick, the Russell Midcap Value Index, increased 0.47%. And the American Beacon Retirement Income and Appreciation Fund’s benchmark, which is 75% Barclays Capital U.S. Aggregate Bond Index and 25% BofA Merrill Lynch All U.S. Convertibles Index, returned 1.51%.

We are proud to offer a broad range of funds to help investors navigate the economic storms and market downturns in the U.S. and abroad. Our years of experience evaluating sub-advisors has led us to identify and partner with several asset managers who have adhered to their disciplined processes for many years and through a variety of economic and market conditions.

For the 12-month period ended October 31, 2015:

• American Beacon Balanced Fund (Investor Class) returned -0.35%.

• American Beacon Mid-Cap Value Fund (Investor Class) returned 2.52%.

• American Beacon Retirement Income and Appreciation Fund (Investor Class) returned 0.49%.

Thank you for your continued investment in American Beacon Funds. For additional information about the Funds or to access your account information, 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, 2015 (Unaudited)

For the year ended October 31, 2015, the broad U.S. stock market was up as the S&P 500 Total Return Index gained 5.2%. Beneath this gain was a more volatile market, which rose almost 10% through late July and then fell more than 12% in the following month before closing the period in October with a strong rebound. Swayed by weather and port disruptions, the economy grew slowly at 0.6% for first quarter of 2015, but rebounded to 3.9% growth (revised) in the second quarter. U.S. housing starts and sales continued their long climb from their lows following the financial crisis, though they remain well below 2005-2006 levels. The U.S. unemployment rate (currently at 5.0%) is at its lowest level since 2008. U.S. auto sales have continued to climb this last year, returning to pre-2008 averages. All of these positive indicators explain the initial market gains in the recent period.

The sharp decline this summer in U.S. equity markets is best explained by concerns over U.S. Federal Reserve (“the Fed”) changes in short-term interest rates, the dramatic decline in the Chinese stock market and heightened world tensions. Investor speculation focused on if and when the Fed would raise the federal funds rate above the current 0.25%. Many feared that even the expected small and gradual rate increases would be too damaging for the U.S. economy given the general weakness abroad. At the same time, investors worried that a Fed decision to not raise rates would signal that the Fed saw a significant possibility for a U.S. slowdown. Ultimately, the Fed chose not to raise rates during their September meeting, pushing rate-hike expectations further in the future. In China, the stock market peaked in June after an explosive rally over the prior 12 months and then proceeded to drop more than 40% in the next three months. This retreat triggered concerns not only about Chinese economic growth, but for other emerging markets as well.

The other key event in this last year was the plunge in oil prices from more than $100 per barrel in mid-2014 to as low as $40 per barrel in mid-2015. The decline was the result of increased supply, primarily due to the U.S. fracking revolution, and weak demand amid sluggish global growth. With substantially lower oil prices, the stocks of oil producers were the worst performers in the U.S. equity market by a wide margin in the last 12 months.

In October, concerns eased about the possibility of a worsening global slowdown. Broad U.S. markets rebounded strongly, moving away from a global macro-driven environment to more of an earnings-driven environment. U.S. jobs growth in October was very strong, unemployment claims were low and automobile sales were strong. Housing continues to improve as sales of previously owned homes rebounded in September; however, new home sales were below expectations, as land availability and lower inventory is becoming a concern in some areas.

2

American Beacon Balanced Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the Balanced Fund (the “Fund”) returned -0.35% for the twelve months ended October 31, 2015, underperforming the 60% Russell 1000^® Value/40% Barclays Capital Aggregate Index (the “Balanced Composite”) return of 1.32% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker		1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Institutional Class (1,8)		AADBX		(0.07	)%		9.44	%		6.26	%	$	18,358
Y Class (1,3,8)		ACBYX		(0.07	)%		9.33	%		6.20	%		18,249
Investor Class (1,8)		AABPX		(0.35	)%		9.09	%		5.94	%		17,813
Advisor Class (1,2,8)		ABLSX		(0.58	)%		8.89	%		5.73	%		17,463
A Class with sales charge (1,4,8)		ABFAX		(6.19	)%		7.64	%		5.24	%		16,671
A Class without sales charge (1,4,8)		ABFAX		(0.48	)%		8.93	%		5.87	%		17,692
C Class with sales charge (1,5,8)		ABCCX		(2.14	)%		8.14	%		5.45	%		17,006
C Class without sales charge (1,5,8)		ABCCX		(1.14	)%		8.14	%		5.45	%		17,006
AMR Class (1,8)		AABNX		0.28	%		9.73	%		6.55	%		18,858
Balanced Composite Index (6)				1.32	%		9.29	%		6.27	%		18,380
Russell 1000 Value Index (7)				0.53	%		13.26	%		6.75	%		19,227
Barclays Capital Aggregate Index (7)				1.96	%		3.03	%		4.72	%		15,864

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 calculated based on the published end of day net asset values 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. 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 ten-year period represents the total returns achieved by the Institutional Class from 10/31/05 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 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 10/31/05. A portion of the fees charged to the Y Class of the Fund was waived in 2011 and partially recovered in 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown in 2011.

4. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the A Class of the Fund was waived in 2011 and 2012 and partially recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown in 2011 and 2012. A Class has a maximum sales charge of 5.75%.

3

American Beacon Balanced Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

5. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2012 and partially recovered in 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012. 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 values. Russell 1000 Value Index and Russell 1000 Index are registered trademarks 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. 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%, 0.68%, 0.93%, 1.08%, 0.97%, 1.73%, and 0.33%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

During the twelve-month period, the Fund’s assets on average were invested 62% in equities (including equitized cash) and 38% in fixed-income securities, ending the period with approximately 54% in equities (including equitized cash) and 32% in fixed-income securities. At the end of the period, 14% of the Fund’s assets were in unequitized cash due to an announced redemption.

The equity portion of the Fund (excluding equitized cash) returned -1.15%, underperforming the Russell 1000^® Value Index (the “Index”) return of 0.53%. The Fund’s equities trailed the Index due to stock selection as sector allocation added value relative to the Index. Most of the Fund’s poor performance was attributed to holdings in the Industrials, Information Technology and Utilities sectors. In the Industrials sector, the Fund’s smaller allocation to General Electric (up 8.5%) detracted from performance. The Fund’s positioning in Cummins (down 27.2%) and Joy Global (down 38.1%) also detracted relative value. In the Information Technology sector, Micron Technology (down 50.4%), Qualcomm (down 11.8%) and Applied Materials (down 22.4%) were the largest detractors. NRG Energy (down 55.7%), Calpine (down 32.0%) and CenterPoint Energy (down 20.7%) hurt performance in the Utilities sector.

Good stock selection in the Consumer Staples sector added value relative to the Index. The Fund’s absence from Procter & Gamble, which was down 9.6% in the Index, positively impacted performance. The Fund’s allocation in Imperial Tobacco Group (up 28.9%) and Altria Group (up 30.6%) also added relative value.

The Fund’s significant overweight in Consumer Discretionary, one of the better performing sectors in the Index, contributed approximately 60 basis points (0.60%) to performance through sector allocation. An underweight position in Energy, the worst performing sector in the Index, also added relative value.

The fixed-income portion of the Fund returned 1.74% for the twelve-month period, trailing the Barclays Capital Aggregate Index (the “Barclays Index”) return of 1.96%. During the period, an underweight allocation in Mortgage-Backed Securities detracted from performance. Security selection in Corporates, specifically in the Telecom sector, also detracted value relative to the Barclays Index, as did the Fund’s allocation to Commercial Mortgage-Backed Securities and Agency securities. The aforementioned poor performance was somewhat offset by the Fund’s exposure to U.S. Treasuries which added relative value. The Fund’s overweight position among securities in the 10 to 30 year duration range hurt performance.

The sub-advisors continue to focus on the disciplined selection of attractive securities that should allow the Fund to benefit long term.

4

American Beacon Balanced Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

Sector Allocation (% Equities)
Financials	26.7
Consumer Discretionary	14.4
Energy	12.8
Health Care	12.4
Information Technology	10.9
Industrials	9.5
Telecommunication Services	4.5
Consumer Staples	3.3
Materials	2.7
Utilities	2.6
Service	0.2

Sector Allocation (% Fixed Income)
U.S. Treasury Notes/Bonds	32.7
Mortgage-Backed Obligations	21.9
Finance	15.1
Manufacturing	7.7
CMBS	5.2
Service	4.4
Asset-Backed Obligations	3.5
Telecommunications	2.6
Utilities	2.4
Energy	2.1
Transportation	0.9
Municipal Obligations	0.8
Consumer	0.7

5

American Beacon Mid-Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the Mid-Cap Value Fund (the “Fund”) returned 2.52% for the twelve months ended October 31, 2015 outperforming the Russell Midcap^® Value Index (the “Index”) return of 0.47% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker		1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Institutional Class (1,3,9)		AACIX		2.73	%		13.77	%		8.48	%	$	22,565
Y Class (1,4,9)		ACMYX		2.76	%		13.70	%		8.44	%		22,492
Investor Class (1,2,9)		AMPAX		2.52	%		13.65	%		8.28	%		22,159
Advisor Class (1,5,9)		AMCSX		2.25	%		13.20	%		8.04	%		21,673
A Class with sales charge (1,6,9)		ABMAX		(3.53	)%		11.90	%		7.42	%		20,451
A Class without sales charge (1,6,9)		ABMAX		2.35	%		13.23	%		8.06	%		21,707
C Class with sales charge (1,7,9)		AMCCX		0.57	%		12.37	%		7.65	%		20,897
C Class without sales charge (1,7,9)		AMCCX		1.57	%		12.37	%		7.65	%		20,897
AMR Class (1,9)		AMDIX		2.99	%		14.02	%		8.68	%		22,989
Russell Midcap Value Index (8)				0.47	%		13.64	%		8.39	%		22,387

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 calculated based on the published end of day net asset values 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 ten-year period represents the total returns achieved by the AMR Class from 10/31/05 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 10/31/05. A portion of the fees charged to the Investor Class of the Fund has been waived from 2006 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than actual returns shown from 2006 through 2013.

3. Fund performance for the ten-year period represents the total returns achieved by the AMR Class from 10/31/05 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 10/31/05. A portion of the fees charged to the Institutional Class of the Fund has been waived from 2007 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than actual returns shown from 2007 through 2013.

4. Fund performance for the ten-year period represents the total returns achieved by the AMR Class from 10/31/05 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 10/31/05. A portion of the fees charged to the Fund has been waived from 2010 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns from 2010 through 2013.

5. Fund performance for the ten-year period represents the total returns achieved by the AMR Class from 10/31/05 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, the inception date of the Advisor Class, and the returns of the Advisor Class since its inception. Expenses of the AMR, Institutional, and Investor Classes are lower than those of the Advisor Class. As a result, total returns shown may be higher than they would have been had the Advisor Class been in existence since 10/31/05. A portion of the fees charged to the Advisor Class of the Fund has been waived from 2007 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2007 through 2013.

6

American Beacon Mid-Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

6. Fund performance for the ten-year period represents the total returns achieved by the AMR Class from 10/31/05 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, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the AMR, Institutional, and Investor Classes are lower than those of the A Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 10/31/05. A portion of the fees charged to the A Class of the Fund was waived from 2010 through 2012 and partially recovered in 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns from 2010 through 2012. A Class shares have a maximum sales charge of 5.75%.

7. Fund performance for the ten-year period represents the total returns achieved by the AMR Class from 10/31/05 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, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the AMR, Institutional, and Investor Classes are lower than those of the C Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 10/31/05. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2013 and partially recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2013. 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 measures the performance of the 800 smallest companies in the Russell 1000 Index. Russell Midcap Value Index, Russell Midcap Index, and Russell 1000 Index are registered trademarks of Frank Russell Company. 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 0.91%, 1.00%, 1.15%, 1.42%, 1.29%, 2.08%, and 0.67%, 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 primarily due to superior stock selection. Sector allocation also added value relative to the Index.

A significant portion of the Fund’s excess performance was attributed to holdings in the Consumer Discretionary sector which contributed more than 170 basis points (1.70%) to performance. In the Consumer Discretionary sector, Royal Caribbean Cruises (up 48.7%), L Brands (up 40.8%) and Hanesbrands (up 23.2%) were the largest contributors. The Fund’s Health Care and Consumer Staples sectors also added relative value. Companies in the Health Care sector contributing to performance included Cigna (up 37.5%), Omnicare (up 48.9%) and WellCare Health Plans (up 24.4%). In the Consumer Staples sector, Reynolds American (up 62.1%) and Lorillard (up 19.6%) contributed most to the Fund’s returns. The aforementioned good performance was slightly offset by poor stock selection in the Financials sector where Host Hotels & Resorts (down 22.1%) and Genworth Financial (down 63.8%) detracted from performance.

The Fund’s significant overweight in Consumer Discretionary, one of the better performing sectors in the Index, added approximately 55 basis points (0.55%) to performance through sector allocation. A significant underweight position in the Utilities sector also added relative value. An overweight in the Industrials sector detracted from the Fund’s 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 (% Net Assets)
Stanley Black & Decker, Inc.		1.9
Royal Caribbean Cruises Ltd.		1.8
Delphi Automotive plc		1.8
Owens Corning		1.8
Pinnacle West Capital Corp.		1.7
Murphy Oil Corp.		1.7
Dana Holding Corp.		1.7
Lamar Advertising Co.		1.6
Allstate Corp.		1.5
Avnet, Inc.		1.4
Total Fund Holdings	120

7

American Beacon Mid-Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

Sector Allocation (% Equities)
Financials	30.0
Consumer Discretionary	21.1
Industrials	15.4
Information Technology	10.1
Utilities	6.3
Health Care	5.3
Materials	5.2
Energy	5.2
Consumer Staples	1.4

8

American Beacon Retirement Income and Appreciation Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the Retirement Income and Appreciation Fund (the “Fund”) returned 0.49% for the twelve months ended October 31, 2015. Its benchmark, which is a blend of 75% of the Barclays Capital Aggregate Index (the “Aggregate Index”) and 25% of the BofA Merrill Lynch All U.S. Convertibles Index (the “ML Index”) (combined, the “Retirement Income and Appreciation Composite Index”), returned 1.51%.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker		1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Y Class (1,2,7)		ACRYX		0.81	%		3.68	%		4.91	%	$	16,158
Investor Class (1,7)		AANPX		0.49	%		3.38	%		4.75	%		15,912
A Class with sales charge (1,3,7)		AAPAX		(2.40	)%		2.37	%		4.24	%		15,154
A Class without sales charge (1,3,7)		AAPAX		0.54	%		3.37	%		4.76	%		15,914
C Class with sales charge (1,4,7)		ABACX		(1.22	)%		2.54	%		4.31	%		15,253
C Class without sales charge (1,4,7)		ABACX		(0.22	)%		2.54	%		4.31	%		15,253
Retirement Income and Appreciation Composite Index (6)				1.51	%		4.62	%		6.03	%		17,951
Barclays Capital Aggregate Index (5)				1.96	%		3.03	%		4.72	%		15,862
BofA Merrill Lynch All U.S. Convertibles Index (5)				(0.13	)%		9.15	%		7.25	%		20,137

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 calculated based on the published end of day net asset values 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 ten-year period represents the returns achieved by the Investor Class from 10/31/05 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 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 10/31/05. A portion of the fees charged to the Y Class has been waived since 2011. Performance prior to waiving fees was lower than the actual returns shown since 2011.

3. Fund performance for the ten-year period represents the returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the A Class has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010. The maximum sales charge for A Class is 2.50%.

4. Fund performance for the ten-year period represents the returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class has been waived since 2010. Performance prior to waiving fees was lower than the actual returns shown since 2010. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.

5. 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 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. One cannot directly invest in an index.

9

American Beacon Retirement Income and Appreciation Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

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 ratio set forth in the most recent Fund prospectus for the Y, Investor, A and C Class shares was 0.91%, 1.16%, 1.21% and 1.96%, respectively. The expense ratio above may vary from the expense ratio presented in other sections of this report that is based on expenses incurred during the period covered by this report.

Approximately 75% of the Fund’s assets are allocated to American Beacon Advisors, Inc. (the “Manager”) and invested in income-producing, short- and intermediate-term investment grade bonds. The remaining 25% of assets are managed by Calamos Advisors LLC (the “sub-advisor”) and invested in securities including convertible bonds, convertible preferred securities, high yield bonds, and equities in order to try to enhance the return of the overall Fund.

During the twelve-month period, the Manager’s portion of the Fund returned 1.97%, versus the 1.96% return of the Aggregate Index. This segment of the Fund’s performance was primarily in line with the Aggregate Index due to favorable security selection across sectors, credit quality and duration. The Manager’s allocation among the various sectors also proved beneficial. Good security selection in corporate bonds, specifically in the Manufacturing and Energy sectors, added value relative to the Aggregate Index. The Manager’s portion of the Fund also benefited from exposure to U.S. Treasuries and Mortgage-Backed Securities securities. The Manger’s selection among holdings in the AA-rated and BBB-rated categories contributed to the Fund’s returns. The combination of underweighting AA-rated securities and overweighting BBB-rated securities detracted from performance. From a duration perspective, holdings in the 1 to 3 year, 5 to 7 year and 7 to 10 year duration ranges were all additive.

The portion of the Fund managed by the Fund’s sub-advisor returned -0.52%, trailing the ML Index return of -0.13%. Much of the underperformance for this segment of the Fund was attributed to security selection in the Health Care sector as holdings in biotechnology and the life sciences and tools industry lagged the ML Index. Holdings in the Financials sector also detracted value relative to the ML Index in part due to the sub-advisor’s absence from the property and casualty insurance industry. An underweight position in the strong performing pharmaceuticals industry also detracted from the sub-advisor’s returns.

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 (% Net Assets)
Fannie Mae TBA, 3.50%, Due 11/12/2045		3.7
Ginnie Mae REMIC Trust, 3.20%, Due 11/16/2044		2.9
Freddie Mac Gold Pool, 3.50%, Due 6/1/2042		2.2
Ginnie Mae REMIC Trust, 1.45%, Due 4/16/2039		2.0
Ginnie Mae REMIC Trust, 2.17%, Due 4/16/2041		2.0
Fannie Mae Pool, 4.00%, Due 1/1/2041		1.5
Fannie Mae Pool, 3.00%, Due 6/1/2043		1.5
Fannie Mae TBA, 4.50%, Due 11/12/2045		1.3
Fannie Mae TBA, 4.00%, Due 11/12/2045		1.3
Fannie Mae Pool, 3.00%, Due 8/1/2043		1.1
Total Fund Holdings	215

Sector Allocation (% Investments)
Short-Term Investments		9.4
Mortgage Backed Obligations		5.9
Manufacturing		4.0
Finance		3.2
U.S. Treasury Notes/Bonds		2.8
Service		1.0
Telecommunications	��	0.5

10

American Beacon Fund^SM

Fund Expenses

October 31, 2015 (Unaudited)

Fund Expense Example

As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and 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, 2015 through October 31, 2015.

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 or Roth 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 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 or Roth 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 sales charges (loads) or 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.

11

American Beacon Funds^SM

Fund Expenses

October 31, 2015 (Unaudited)

Balanced Fund

	Beginning Account Value 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 -10/31/15
Institutional Class
Actual	$	1,000.00	$	961.45	$	2.92
Hypothetical **	$	1,000.00	$	1,022.23	$	3.01
Y Class
Actual	$	1,000.00	$	961.08	$	3.31
Hypothetical **	$	1,000.00	$	1,021.83	$	3.41
Investor Class
Actual	$	1,000.00	$	960.23	$	4.35
Hypothetical **	$	1,000.00	$	1,020.77	$	4.48
Advisor Class
Actual	$	1,000.00	$	958.86	$	5.23
Hypothetical **	$	1,000.00	$	1,019.86	$	5.40
A Class
Actual	$	1,000.00	$	959.50	$	4.84
Hypothetical **	$	1,000.00	$	1,020.27	$	4.99
C Class
Actual	$	1,000.00	$	955.79	$	8.53
Hypothetical **	$	1,000.00	$	1,016.48	$	8.79
AMR Class
Actual	$	1,000.00	$	962.94	$	1.58
Hypothetical **	$	1,000.00	$	1,023.59	$	1.63

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.59%, 0.67%, 0.88%, 1.06%, 0.98%, 1.73%, and 0.32% for the Institutional, Y, Investor, Advisor, 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.

Mid-Cap Value Fund

	Beginning Account Value 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 -10/31/15
Institutional Class
Actual	$	1,000.00	$	971.43	$	4.27
Hypothetical **	$	1,000.00	$	1,020.87	$	4.38
Y Class
Actual	$	1,000.00	$	971.24	$	4.72
Hypothetical **	$	1,000.00	$	1,020.42	$	4.84
Investor Class
Actual	$	1,000.00	$	970.35	$	5.46
Hypothetical **	$	1,000.00	$	1,019.66	$	5.60
Advisor Class
Actual	$	1,000.00	$	968.77	$	6.90
Hypothetical **	$	1,000.00	$	1,018.20	$	7.07
A Class
Actual	$	1,000.00	$	968.78	$	6.20
Hypothetical **	$	1,000.00	$	1,018.90	$	6.36
C Class
Actual	$	1,000.00	$	965.18	$	9.96
Hypothetical **	$	1,000.00	$	1,015.07	$	10.21
AMR Class
Actual	$	1,000.00	$	972.81	$	2.98
Hypothetical **	$	1,000.00	$	1,022.18	$	3.06

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.86%, 0.95%, 1.10%, 1.39%, 1.25%, 2.01%, and 0.60% for the Institutional, Y, Investor, Advisor, 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.

Retirement Income and Appreciation Fund

	Beginning Account Value 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 -10/31/15
Y Class
Actual	$	1,000.00	$	986.51	$	4.01
Hypothetical **	$	1,000.00	$	1,021.17	$	4.08
Investor Class
Actual	$	1,000.00	$	984.90	$	5.65
Hypothetical **	$	1,000.00	$	1,019.51	$	5.75
A Class
Actual	$	1,000.00	$	985.39	$	5.20
Hypothetical **	$	1,000.00	$	1,019.96	$	5.30
C Class
Actual	$	1,000.00	$	981.41	$	9.29
Hypothetical **	$	1,000.00	$	1,015.83	$	9.45

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.80%, 1.13%, 1.04%, and 1.86% for the Y, Investor, A, and C Classes respectively, multiplied by the average account value over the period, multiplied by the number derived by dividing the number of days in the most recent fiscal half-year (184) by days in the year (365) to reflect the half-year period.

** 5% return before expenses.

12

American Beacon Funds

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of

American Beacon Balanced Fund, American Beacon Mid-Cap Value Fund and American Beacon Retirement Income and Appreciation Fund:

We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of American Beacon Balanced Fund, American Beacon Mid-Cap Value Fund and American Beacon Retirement Income and Appreciation Fund (three of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2015, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the 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 the Funds’ 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, 2015, 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 American Beacon Balanced Fund, American Beacon Mid-Cap Value Fund and American Beacon Retirement Income and Appreciation Fund at October 31, 2015, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 29, 2015

13

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
COMMON STOCK - 58.14%
CONSUMER DISCRETIONARY - 8.39%
Auto Components - 1.56%
Goodyear Tire & Rubber Co.		69,162	$	2,271
Johnson Controls, Inc.		156,985		7,093
Magna International, Inc., Class A		34,474		1,818
				11,182
Automobiles - 3.13%
Ford Motor Co.		253,071		3,748
General Motors Co.		268,726		9,381
Harley-Davidson, Inc.		21,867		1,081
Honda Motor Co., Ltd., Sponsored ADRA		65,102		2,157
Toyota Motor Corp., Sponsored ADRA		50,500		6,192
				22,559
Household Durables - 0.40%
Koninklijke Philips Electronics N.V.		27,388		738
Stanley Black & Decker, Inc.		7,123		755
Tupperware Brands Corp.		22,864		1,346
				2,839
Media - 1.18%
CBS Corp., Class BB		16,596		772
Comcast Corp., Class A		8,619		540
Comcast Corp., Special Class A		26,140		1,639
Discovery Communications, Inc.C		61,184		1,801
Interpublic Group of Cos., Inc.		32,551		746
Omnicom Group, Inc.		9,687		726
Tribune Media Co., Class A		56,412		2,276
				8,500
Multiline Retail - 1.70%
Dillard’s, Inc., Class A		14,530		1,300
Kohl’s Corp.		36,326		1,675
Michael Kors Holdings Ltd.C		110,118		4,255
Nordstrom, Inc.		15,385		1,003
Target Corp.		51,782		3,997
				12,230
Specialty Retail - 0.42%
Bed Bath & Beyond, Inc.C		37,110		2,213
DSW, Inc., Class A		32,551		812
				3,025
Total Consumer Discretionary				60,335
CONSUMER STAPLES - 1.92%
Food & Drug Retailing - 0.18%
Wal-Mart Stores, Inc.		23,006		1,317
Food Products - 0.24%
Bunge Ltd.		8,975		655
Kellogg Co.		14,958		1,055
				1,710
Tobacco - 1.50%
Altria Group, Inc.		47,081		2,847
Imperial Tobacco Group PLC, ADRA D		33,477		3,608
Philip Morris International, Inc.		48,648		4,300
				10,755
Total Consumer Staples				13,782
ENERGY - 7.47%
Energy Equipment & Services - 0.76%
Cobalt International Energy, Inc.C		391,680		3,004
Schlumberger Ltd.		31,411		2,455
				5,459

	Shares		Fair Value
			(000’s)
Oil & Gas - 6.71%
Apache Corp.		32,052	$	1,511
BP PLC, Sponsored ADRA D		247,267		8,828
Canadian Natural Resources Ltd.		138,039		3,205
Cimarex Energy Co.		22,223		2,624
ConocoPhillips		76,634		4,088
Continental Resources, Inc.C		83,763		2,840
Devon Energy Corp.		36,682		1,538
Hess Corp.		61,398		3,451
Kosmos Energy Ltd.C		116,884		797
Marathon Oil Corp.		205,420		3,776
Marathon Petroleum Corp.		39,816		2,062
Murphy Oil Corp.		55,557		1,579
Occidental Petroleum Corp.		63,606		4,742
Phillips 66		44,442		3,958
Royal Dutch Shell PLC, Class A, ADRA D		50,574		2,653
Seadrill Ltd.C		78,350		507
				48,159
Total Energy				53,618
FINANCIALS - 15.48%
Banks - 1.41%
Bank of New York Mellon Corp.		17,237		718
Citizens Financial Group		88,892		2,160
PNC Financial Services Group, Inc.		65,761		5,935
SunTrust Banks, Inc.		30,941		1,285
				10,098
Diversified Financials - 10.61%
American Express Co.		33,477		2,453
Bank of America Corp.		964,769		16,188
Blackstone Group, LPE		60,757		2,009
Capital One Financial Corp.		67,239		5,305
Citigroup, Inc.		293,365		15,597
Goldman Sachs Group, Inc.		7,550		1,416
JPMorgan Chase & Co.		210,572		13,529
KKR & Co., LPE		178,781		3,066
Morgan Stanley		21,439		707
Nomura Holdings, Inc.		377,078		2,372
Santander Consumer USA Holdings, Inc.		121,443		2,187
SLM Corp.C		139,891		988
State Street Corp.		15,314		1,057
Synchrony FinancialC		49,432		1,521
Wells Fargo & Co.		146,085		7,909
				76,304
Insurance - 3.18%
Allstate Corp.		28,420		1,759
American International Group, Inc.		106,912		6,741
Berkshire Hathaway, Inc., Class BC		29,207		3,973
Chubb Corp.		11,111		1,437
MetLife, Inc.		133,338		6,718
Unum Group		63,036		2,184
				22,812
Real Estate - 0.28%
Hatteras Financial Corp.F		88,892		1,272
Two Harbors Investment Corp.F		87,182		738
				2,010
Total Financials				111,224
HEALTH CARE - 7.24%
Biotechnology - 0.06%
PTC Therapeutics, Inc.C		18,519		461

See accompanying notes

14

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Health Care Equipment & Supplies - 1.21%
Medtronic PLCD		97,316	$	7,194
Zimmer Biomet Holdings, Inc.		14,174		1,482
				8,676
Health Care Providers & Services - 1.28%
Anthem, Inc.		43,947		6,116
Express Scripts Holding Co.C		20,086		1,735
Humana, Inc.		7,408		1,323
				9,174
Pharmaceuticals - 4.69%
AbbVie, Inc.		39,104		2,329
Endo International PLCC D		16,240		974
GlaxoSmithKline PLC, Sponsored ADRA D		83,621		3,601
Horizon Pharma PLCC D		51,213		805
Jazz Pharmaceuticals PLCC D		5,342		733
Johnson & Johnson		34,474		3,483
Mallinckrodt PLCC D		15,456		1,015
Merck & Co., Inc.		103,850		5,676
Mylan N.V.C		31,198		1,376
Pfizer, Inc.		169,987		5,749
Sanofi, ADRA		143,808		7,238
ZS Pharma, Inc.C		11,040		718
				33,697
Total Health Care				52,008
INDUSTRIALS - 5.57%
Aerospace & Defense - 1.91%
Boeing Co.		11,753		1,740
General Dynamics Corp.		22,294		3,312
Raytheon Co.		31,839		3,739
Rockwell Collins, Inc.		16,311		1,414
United Technologies Corp.		35,756		3,519
				13,724
Commercial Services & Supplies - 0.10%
Covanta Holding Corp.		44,090		739
Construction & Engineering - 0.51%
AECOM Technology Corp.C		57,338		1,690
Chicago Bridge & Iron Co., N.V.		44,019		1,975
				3,665
Diversified Manufacturing - 0.30%
Eaton Corp., PLCD		39,032		2,182
Industrial Conglomerates - 0.41%
Honeywell International, Inc.		28,633		2,957
Machinery - 2.34%
Caterpillar, Inc.		28,064		2,048
CNH Industrial N.V.		269,240		1,828
Cummins, Inc.		26,497		2,743
Oshkosh Corp.		44,019		1,809
PACCAR, Inc.		21,439		1,129
Parker Hannifin Corp.		17,807		1,864
Reliance Steel & Aluminum Co.		48,577		2,913
Terex Corp.		50,670		1,016
Xylem, Inc.		38,249		1,393
				16,743
Total Industrials				40,010
INFORMATION TECHNOLOGY - 6.35%
Communications Equipment - 1.33%
ARRIS Group, Inc.C		46,312		1,309

	Shares		Fair Value
			(000’s)
Cisco Systems, Inc.		138,822	$	4,005
Corning, Inc.		227,572		4,233
				9,547
Computers & Peripherals - 0.53%
HP, Inc.		103,493		2,790
International Business Machines Corp.		2,351		329
Teradata Corp.C		24,146		679
				3,798
Semiconductor Equipment & Products - 1.91%
Applied Materials, Inc.		98,151		1,646
Intel Corp.		45,443		1,539
Lam Research Corp.		25,428		1,948
Micron Technology, Inc.C		253,214		4,192
Qualcomm, Inc.		61,825		3,674
Texas Instruments, Inc.		12,109		687
				13,686
Software - 2.58%
Microsoft Corp.		177,926		9,365
Navient Corp.		68,663		906
Oracle Corp.		214,465		8,330
				18,601
Total Information Technology				45,632
MATERIALS - 1.59%
Chemicals - 1.10%
Air Products & Chemicals, Inc.		25,072		3,485
Dow Chemical Co.		34,118		1,763
Eastman Chemical Co.		36,611		2,642
				7,890
Containers & Packaging - 0.10%
Packaging Corp of America		10,186		697
Paper & Forest Products - 0.39%
International Paper Co.		16,169		690
Louisiana-Pacific Corp.C		119,520		2,111
				2,801
Total Materials				11,388
TELECOMMUNICATION SERVICES - 2.61%
Diversified Telecommunication Services - 1.60%
AT&T, Inc.		82,323		2,759
Telefonaktiebolaget LM Ericsson, Sponsored ADRA		202,357		1,971
Verizon Communications, Inc.		143,956		6,748
				11,478
Wireless Telecommunication Services - 1.01%
China Mobile Ltd., Sponsored ADRA		71,797		4,330
Vodafone Group PLC, Sponsored ADRA D		88,781		2,927
				7,257
Total Telecommunication Services				18,735
UTILITIES - 1.52%
Calpine Corp.C		173,296		2,688
CenterPoint Energy, Inc.		105,702		1,961
Entergy Corp.		35,186		2,398
NRG Energy, Inc.		93,166		1,201
PPL Corp.		32,622		1,122
Southern Co.		33,548		1,513
Total Utilities				10,883
Total Common Stock (Cost $383,763)				417,615

See accompanying notes

15

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
PREFERRED STOCK - 0.31%
FINANCIALS - 0.17%
Allstate Corp., 1%, Due 1/15/2053		48,648	$	1,251
SERVICE - 0.14%
Comcast Corp., 5%, Due 12/15/2061		37,394		986
Total Preferred Stock (Cost $2,250)				2,237
	Par Amount
	(000’s)
CORPORATE OBLIGATIONS 13.48%
MANUFACTURING- 2.91%
ABB Finance USA, Inc.,
2.875%, Due 5/8/2022	$	135		134
Altera Corp.,
2.50%, Due 11/15/2018		60		61
American Honda Finance Corp.,
3.875%, Due 9/21/2020G		250		266
Apple, Inc.,
2.40%, Due 5/3/2023		565		553
Applied Materials, Inc.,
5.10%, Due 10/1/2035		1,935		1,956
BAE Systems Holdings, Inc.,
3.80%, Due 10/7/2024G		650		657
BHP Billiton Finance USA Ltd.,
1.625%, Due 2/24/2017		215		216
Caterpillar Financial Services Corp.,
1.625%, Due 6/1/2017		365		368
Cummins, Inc.,
3.65%, Due 10/1/2023		165		172
Daimler Finance North America LLC,
2.25%, Due 9/3/2019G H		350		343
2.45%, Due 5/18/2020G H		650		650
Delphi Corp.,
4.15%, Due 3/15/2024		315		316
Dow Chemical Co.,
4.125%, Due 11/15/2021		580		613
3.50%, Due 10/1/2024		400		392
Eaton Corp., PLC,
5.60%, Due 5/15/2018D		160		174
2.75%, Due 11/2/2022D		155		152
Eaton Electric Holdings LLC,
3.875%, Due 12/15/2020H		295		310
Ford Motor Credit Co., LLC,
4.25%, Due 2/3/2017H		300		309
0.956%, Due 3/27/2017H I		400		397
1.237%, Due 6/15/2018H I		980		969
5.875%, Due 8/2/2021H		400		456
General Electric Co.,
5.25%, Due 12/6/2017		215		232
Hewlett Packard Enterprise Co.,
6.35%, Due 10/15/2045G		1,935		1,874
HP, Inc.,
4.05%, Due 9/15/2022		300		299
Ingersoll-Rand Luxembourg Finance S.A.,
2.625%, Due 5/1/2020		300		298
Intel Corp.,
3.30%, Due 10/1/2021		240		252
John Deere Capital Corp.,
1.05%, Due 10/11/2016		290		291
1.30%, Due 3/12/2018		355		353
Johnson Controls, Inc.,

	Par Amount		Fair Value
	(000’s)		(000’s)
5.00%, Due 3/30/2020	$	300	$	325
Koninklijke Philips Electronics N.V.,
5.75%, Due 3/11/2018		205		222
LYB International Finance BV,
4.00%, Due 7/15/2023		305		309
Microsoft Corp.,
3.75%, Due 2/12/2045		375		346
Monsanto Co.,
1.15%, Due 6/30/2017		645		643
4.40%, Due 7/15/2044		295		263
Nissan Motor Acceptance Corp.,
2.35%, Due 3/4/2019G		600		604
Northrop Grumman Corp.,
5.05%, Due 8/1/2019		150		164
3.85%, Due 4/15/2045		400		359
Nucor Corp.,
4.125%, Due 9/15/2022		160		167
4.00%, Due 8/1/2023		165		168
Oracle Corp.,
2.25%, Due 10/8/2019		325		329
3.25%, Due 5/15/2030		800		749
4.30%, Due 7/8/2034		325		324
PACCAR Financial Corp.,
2.20%, Due 9/15/2019		190		191
Pentair Finance S.A.,
3.15%, Due 9/15/2022		200		189
Qualcomm, Inc.,
3.00%, Due 5/20/2022		195		193
Rio Tinto Finance USA Ltd.,
3.75%, Due 6/15/2025		130		128
Toyota Motor Credit Corp.,
2.125%, Due 7/18/2019		840		846
United Technologies Corp.,
6.125%, Due 7/15/2038		450		560
Volkswagen Group of America Finance LLC,
2.45%, Due 11/20/2019G H		650		622
Xerox Corp.,
2.95%, Due 3/15/2017		150		152
				20,916
FINANCE- 5.69%
ABN AMRO Bank N.V.,
1.80%, Due 6/4/2018G		600		598
ACE INA Holdings, Inc.,
3.35%, Due 5/3/2026		265		266
Aetna, Inc.,
4.75%, Due 3/15/2044		225		233
American Express Co.,
4.05%, Due 12/3/2042		295		283
American Express Credit Corp.,
2.375%, Due 3/24/2017		360		366
2.125%, Due 3/18/2019		370		372
American International Group, Inc.,
4.875%, Due 6/1/2022		600		667
4.50%, Due 7/16/2044		210		206
Bank of America Corp.,
7.80%, Due 9/15/2016		700		738
2.60%, Due 1/15/2019		745		754
4.125%, Due 1/22/2024		400		417
6.11%, Due 1/29/2037		365		423
5.00%, Due 1/21/2044		495		525
Bank of New York Mellon Corp.,
1.30%, Due 1/25/2018		490		489
2.20%, Due 3/4/2019		365		369

See accompanying notes

16

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
Barclays Bank PLC,
0.873%, Due 12/9/2016D I	$	895	$	895
3.75%, Due 5/15/2024D		900		920
BB&T Corp.,
1.45%, Due 1/12/2018		445		444
Bear Stearns Cos. LLC,
7.25%, Due 2/1/2018H		720		805
BNP Paribas S.A.,
3.60%, Due 2/23/2016		320		323
Capital One Financial Corp.,
2.45%, Due 4/24/2019		275		275
Citigroup, Inc.,
0.872%, Due 3/10/2017I		135		135
0.985%, Due 4/27/2018I		875		872
8.50%, Due 5/22/2019		800		966
4.40%, Due 6/10/2025		990		1,001
5.875%, Due 1/30/2042		300		351
CNA Financial Corp.,
7.35%, Due 11/15/2019		295		346
Deutsche Bank AG/London,
0.924%, Due 2/13/2017I		1,110		1,109
ERP Operating LP,
3.00%, Due 4/15/2023J		160		157
Fifth Third Bancorp,
0.765%, Due 12/20/2016I		875		870
General Electric Capital Corp.,
5.625%, Due 5/1/2018		375		412
6.00%, Due 8/7/2019		350		401
5.50%, Due 1/8/2020		250		284
Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016		325		328
6.25%, Due 9/1/2017		650		705
5.95%, Due 1/18/2018		450		491
1.421%, Due 11/15/2018I		1,700		1,709
6.00%, Due 6/15/2020		175		200
5.75%, Due 1/24/2022		800		917
3.50%, Due 1/23/2025		190		188
Health Care REIT, Inc.,
4.125%, Due 4/1/2019F		185		195
5.25%, Due 1/15/2022F		215		234
Humana, Inc.,
3.15%, Due 12/1/2022		365		361
ING Bank N.V.,
3.75%, Due 3/7/2017G		400		412
JPMorgan Chase & Co.,
0.666%, Due 6/13/2016I		415		414
3.625%, Due 5/13/2024		900		910
3.875%, Due 9/10/2024		330		330
5.50%, Due 10/15/2040		650		746
KeyCorp,
5.10%, Due 3/24/2021		195		217
Liberty Mutual Group, Inc.,
4.25%, Due 6/15/2023G		235		241
Liberty Mutual Insurance Co.,
7.875%, Due 10/15/2026G		1,215		1,466
Macquarie Bank Ltd.,
0.925%, Due 10/27/2017G I		820		816
Macquarie Group Ltd.,
1.297%, Due 1/31/2017G I		615		616
MetLife, Inc.,
6.375%, Due 6/15/2034		350		438
4.721%, Due 12/15/2044		400		416
Morgan Stanley,

	Par Amount		Fair Value
	(000’s)		(000’s)
1.575%, Due 4/25/2018I	$	1,700	$	1,722
7.30%, Due 5/13/2019		750		875
5.625%, Due 9/23/2019		350		390
3.875%, Due 4/29/2024		560		576
4.35%, Due 9/8/2026		330		335
Nordea Bank AB,
4.875%, Due 1/27/2020G		250		276
PNC Funding Corp.,
3.30%, Due 3/8/2022		325		335
Prudential Financial, Inc.,
7.375%, Due 6/15/2019		300		352
4.60%, Due 5/15/2044		650		660
Simon Property Group LP,
2.20%, Due 2/1/2019J		485		489
3.375%, Due 10/1/2024J		650		656
State Street Corp.,
2.55%, Due 8/18/2020		200		202
SunTrust Banks, Inc.,
3.50%, Due 1/20/2017		320		327
Toronto Dominion Bank,
2.625%, Due 9/10/2018		450		462
UBS AG,
5.875%, Due 12/20/2017		611		662
UnitedHealth Group, Inc.,
1.625%, Due 3/15/2019		250		248
3.95%, Due 10/15/2042		165		155
US Bancorp,
1.95%, Due 11/15/2018		725		732
Ventas Realty LP,
5.70%, Due 9/30/2043J		135		148
Wachovia Corp.,
0.691%, Due 10/15/2016I		400		399
Wells Fargo & Co.,
2.15%, Due 1/15/2019		200		202
2.15%, Due 1/30/2020		245		244
4.30%, Due 7/22/2027		200		206
3.90%, Due 5/1/2045		650		604
				40,879
CONSUMER- 0.26%
Altria Group, Inc.,
4.75%, Due 5/5/2021		300		331
General Mills, Inc.,
2.20%, Due 10/21/2019		600		601
Kraft Heinz Foods Co.,
3.50%, Due 7/15/2022G		235		239
5.00%, Due 7/15/2035G		235		245
Reynolds American, Inc.,
5.85%, Due 8/15/2045		130		144
SABMiller Holdings, Inc.,
4.95%, Due 1/15/2042G		300		303
				1,863
SERVICE- 1.67%
21st Century Fox America, Inc.,
4.95%, Due 10/15/2045		610		624
AbbVie, Inc.,
1.75%, Due 11/6/2017		230		232
2.90%, Due 11/6/2022		170		165
Actavis Funding SCS,
4.55%, Due 3/15/2035		55		52
Alibaba Group Holding Ltd.,
3.60%, Due 11/28/2024G		650		629
Baxalta, Inc.,
4.00%, Due 6/23/2025G		235		236

See accompanying notes

17

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
Baxter International, Inc.,
1.85%, Due 6/15/2018	$	270	$	270
Bayer US Finance LLC,
2.375%, Due 10/8/2019G H		300		303
Becton Dickinson and Co.,
3.125%, Due 11/8/2021		270		271
3.875%, Due 5/15/2024		235		242
Cardinal Health, Inc.,
3.20%, Due 3/15/2023		340		336
CBS Corp.,
3.375%, Due 3/1/2022		700		698
Celgene Corp.,
5.25%, Due 8/15/2043		145		149
Comcast Corp.,
5.875%, Due 2/15/2018		410		451
6.55%, Due 7/1/2039		450		571
CVS Health Corp.,
1.90%, Due 7/20/2018		300		302
DIRECTV Holdings LLC,
6.35%, Due 3/15/2040H		120		131
eBay, Inc.,
1.35%, Due 7/15/2017		265		263
Genzyme Corp.,
5.00%, Due 6/15/2020		210		235
GlaxoSmithKline Capital PLC,
1.50%, Due 5/8/2017D		555		560
Home Depot, Inc.,
2.70%, Due 4/1/2023		150		149
3.35%, Due 9/15/2025		210		215
MasterCard, Inc.,
3.375%, Due 4/1/2024		250		257
McKesson Corp.,
3.25%, Due 3/1/2016		160		161
Medtronic, Inc.,
3.50%, Due 3/15/2025		650		666
4.375%, Due 3/15/2035		185		192
Sanofi,
1.25%, Due 4/10/2018		105		105
4.00%, Due 3/29/2021		270		291
Thomson Reuters Corp.,
4.30%, Due 11/23/2023		300		312
3.85%, Due 9/29/2024		400		397
Time Warner, Inc.,
4.875%, Due 3/15/2020		450		497
4.75%, Due 3/29/2021		325		356
Viacom, Inc.,
4.50%, Due 2/27/2042		450		346
Walgreens Boots Alliance, Inc.,
2.70%, Due 11/18/2019		325		326
3.80%, Due 11/18/2024		300		298
Wal-Mart Stores, Inc.,
7.55%, Due 2/15/2030		350		493
Zimmer Biomet Holdings, Inc.,
3.55%, Due 4/1/2025		195		192
				11,973
UTILITIES- 0.89%
Consolidated Edison Co., of New York, Inc.,
5.50%, Due 12/1/2039		350		406
4.625%, Due 12/1/2054		115		116
Delmarva Power & Light Co.,
3.50%, Due 11/15/2023		220		228
Dominion Resources, Inc.,
4.70%, Due 12/1/2044		650		643

		Par Amount		Fair Value
		(000’s)		(000’s)
Duke Energy Corp.,
3.55%, Due 9/15/2021		$	475	$	491
Duke Energy Progress LLC,
4.15%, Due 12/1/2044H			260		261
MidAmerican Energy Holdings Co.,
6.125%, Due 4/1/2036			500		600
National Rural Utilities Cooperative Finance Corp.,
5.45%, Due 4/10/2017			240		255
Pacific Gas & Electric Co.,
4.30%, Due 3/15/2045			650		649
Progress Energy, Inc.,
4.875%, Due 12/1/2019			350		381
Sierra Pacific Power Co.,
3.375%, Due 8/15/2023			160		163
Southern Co.,
2.15%, Due 9/1/2019			220		217
2.75%, Due 6/15/2020			500		497
Southwestern Electric Power Co.,
3.55%, Due 2/15/2022			600		611
Union Electric Co.,
6.70%, Due 2/1/2019			200		230
WEC Energy Group, Inc.,
3.55%, Due 6/15/2025			280		285
Xcel Energy, Inc.,
5.613%, Due 4/1/2017			329		347
					6,380
ENERGY- 0.75%
Apache Corp.,
5.10%, Due 9/1/2040	��		170		163
Buckeye Partners LP,
4.875%, Due 2/1/2021J			165		167
Canadian Natural Resources Ltd.,
3.45%, Due 11/15/2021			330		321
6.25%, Due 3/15/2038			365		382
Columbia Pipeline Group, Inc.,
4.50%, Due 6/1/2025G			315		303
Devon Energy Corp.,
4.75%, Due 5/15/2042			300		268
Energy Transfer Partners LP,
4.65%, Due 6/1/2021J			285		283
Enterprise Products Operating LLC,
6.125%, Due 10/15/2039H			345		365
EOG Resources, Inc.,
2.50%, Due 2/1/2016			325		326
Halliburton Co.,
3.25%, Due 11/15/2021			400		405
Husky Energy, Inc.,
3.95%, Due 4/15/2022			365		357
Marathon Petroleum Corp.,
3.625%, Due 9/15/2024			165		161
Phillips 66,
2.95%, Due 5/1/2017			225		230
4.30%, Due 4/1/2022			170		180
Plains All American Pipeline LP / PAA Finance Corp.,
4.70%, Due 6/15/2044J			140		121
Schlumberger Investment S.A.,
3.65%, Due 12/1/2023			165		171
Shell International Finance BV,
1.125%, Due 8/21/2017			300		300
Spectra Energy Partners LP,
4.60%, Due 6/15/2021J			135		141

See accompanying notes

18

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
Sunoco Logistics Partners Operations LP,
4.25%, Due 4/1/2024J	$	100	$	90
TransCanada PipeLines Ltd.,
3.75%, Due 10/16/2023		300		300
6.10%, Due 6/1/2040		170		190
Williams Partners LP,
3.90%, Due 1/15/2025J		180		153
				5,377
TRANSPORTATION- 0.34%
Burlington Northern Santa Fe LLC,
3.65%, Due 9/1/2025H		205		209
7.95%, Due 8/15/2030H		295		414
5.75%, Due 5/1/2040H		420		480
Canadian National Railway Co.,
5.55%, Due 5/15/2018		350		384
CSX Corp.,
5.50%, Due 4/15/2041		325		364
Norfolk Southern Corp.,
5.75%, Due 4/1/2018		425		464
Union Pacific Corp.,
3.375%, Due 2/1/2035		150	��	138
				2,453
TELECOMMUNICATIONS- 0.97%
America Movil S.A.B. de C.V.,
6.375%, Due 3/1/2035		350		405
AT&T, Inc.,
2.45%, Due 6/30/2020		195		193
3.40%, Due 5/15/2025		350		340
4.50%, Due 5/15/2035		295		276
4.35%, Due 6/15/2045		841		728
Deutsche Telekom International Finance BV,
4.875%, Due 3/6/2042G		300		310
Oi Brasil Holdings Cooperatief UA,
5.75%, Due 2/10/2022G		1,890		1,172
Rogers Communications, Inc.,
5.00%, Due 3/15/2044		345		352
Verizon Communications, Inc.,
4.60%, Due 4/1/2021		360		392
3.50%, Due 11/1/2024		155		155
6.40%, Due 9/15/2033		400		462
6.90%, Due 4/15/2038		475		572
6.55%, Due 9/15/2043		600		718
Vodafone Group PLC,
6.15%, Due 2/27/2037D		815		881
				6,956
Total Corporate Obligations (Cost $95,029)				96,797
FOREIGN GOVERNMENT OBLIGATION - 0.03% (Cost $199)
Oil & Gas - 0.03%
Petroleos Mexicanos,
6.00%, Due 3/5/2020		200		217
ASSET-BACKED OBLIGATIONS - 1.31%
Ally Auto Receivables Trust,
1.39%, Due 9/16/2019, 2015 1 A3		605		603
American Express Credit Account Master Trust,
1.26%, Due 1/15/2020, 2014 2 A		565		567

	Par Amount		Fair Value
	(000’s)		(000’s)
AmeriCredit Automobile Receivables Trust,
1.15%, Due 6/10/2019, 2014 3 A3	$	455	$	454
Capital Auto Receivables Asset Trust,
1.09%, Due 3/20/2018, 2013-4 A3		580		580
Capital One Multi-Asset Execution Trust,
1.48%, Due 7/15/2020, 2014 A5 A		530		532
Ford Credit Auto Owner Trust,
2.03%, Due 8/15/2020, 2015 A B		605		606
Ford Credit Floorplan Master Owner Trust,
1.50%, Due 9/15/2018, 2013-5 A1		1,100		1,105
1.40%, Due 8/15/2019, 2014 4 A1		780		780
GM Financial Automobile Leasing Trust,
1.68%, Due 12/20/2018, 2015 2 A3		1,000		1,000
Hyundai Auto Receivables Trust,
0.79%, Due 7/16/2018, 2014 A A3		305		305
Mercedes Benz Auto Lease Trust,
0.90%, Due 12/16/2019, 2014 A A4		820		820
Nissan Master Owner Trust Receivables,
0.496%, Due 2/15/2018, 2013-A AI		1,500		1,498
Volkswagen Auto Lease Trust,
1.25%, Due 12/20/2017, 2015 A A3		525		523
Total Asset-Backed Obligations (Cost $9,368)				9,373
COMMERCIAL MORTGAGED-BACKED OBLIGATIONS - 1.96%
Bear Stearns Commercial Mortgage Securities,
5.201%, Due 12/11/2038, 2006-PW14 A4		642		660
5.54%, Due 9/11/2041, 2006-PW13 A4		364		370
Ginnie Mae REMIC Trust,
1.147%, Due 12/16/2038, 2013-139 A		1,757		1,739
1.624%, Due 7/16/2039, 2013-78 AB		1,817		1,793
2.586%, Due 9/16/2039, 2014-31 AB		516		521
1.367%, Due 11/16/2041, 2013-125 AB		1,769		1,749
3.20%, Due 11/16/2044, 2011-92 B		1,994		2,034
GS Mortgage Securities Trust,
3.679%, Due 8/10/2043, 2010-C1 A1G		127		131
3.849%, Due 12/10/2043, 2010-C2 A1G		92		95
3.645%, Due 3/10/2044, 2011-GC3 A2G		167		167
3.033%, Due 11/10/2046, 2013-GC16 A2		935		965
JP Morgan Chase Commercial Mortgage Securities Corp.,
3.853%, Due 6/15/2043, 2010-C1 A1G		20		20
4.388%, Due 2/15/2046, 2011-C3 A3G		400		422
5.695%, Due 2/12/2049, 2007-CB19 A4		547		571
JPMBB Commercial Mortgage Securities Trust,
3.157%, Due 7/15/2045, 2013-C12 ASB		665		687
LB-UBS Commercial Mortgage Trust,
5.424%, Due 2/15/2040, 2007-C1 A4		475		489
Wachovia Bank Commercial Mortgage Trust,
5.708%, Due 6/15/2049, 2007-C32 A2		39		40

See accompanying notes

19

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
Wells Fargo Commercial Mortgage Trust,
3.412%, Due 9/15/2058, 2015-C30 ASB	$	1,095	$	1,130
WF-RBS Commercial Mortgage Trust,
3.66%, Due 3/15/2047, 2014-C19 A3		455		477
Total Commercial Mortgage-Backed Obligations (Cost $13,919)				14,060
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 8.27%
Federal Home Loan Mortgage Corporation
4.50%, Due 3/1/2019		63		65
5.00%, Due 10/1/2020		30		32
3.50%, Due 8/1/2026		137		145
3.50%, Due 9/1/2028		756		803
5.00%, Due 8/1/2033		191		211
5.50%, Due 2/1/2034		176		196
5.00%, Due 3/1/2034		141		156
6.00%, Due 6/1/2034		139		159
6.00%, Due 8/1/2034		111		127
5.00%, Due 8/1/2035		107		118
5.00%, Due 9/1/2035		73		80
5.50%, Due 4/1/2037		111		124
5.50%, Due 5/1/2038		56		63
4.00%, Due 1/1/2041		603		642
4.50%, Due 2/1/2041		471		510
3.50%, Due 3/1/2042		366		382
3.50%, Due 6/1/2042		1,798		1,874
3.50%, Due 7/1/2042		478		498
3.00%, Due 8/1/2042		763		770
3.50%, Due 2/1/2043		953		994
				7,949
Federal National Mortgage Association
6.00%, Due 4/1/2016		3		3
5.00%, Due 12/1/2017		40		42
4.50%, Due 9/1/2018		37		38
4.00%, Due 8/1/2020		65		68
3.50%, Due 1/1/2026		122		129
4.00%, Due 5/1/2026		642		683
4.00%, Due 6/1/2026		813		864
3.50%, Due 1/1/2028		401		424
3.00%, Due 7/1/2029		727		758
5.00%, Due 3/1/2034		211		233
4.50%, Due 4/1/2034		310		339
4.50%, Due 9/1/2034		93		101
3.50%, Due 10/1/2034		249		263
5.50%, Due 12/1/2035		54		60
5.00%, Due 2/1/2036		81		89
5.50%, Due 4/1/2036		98		110
6.00%, Due 9/1/2036		72		82
5.50%, Due 2/1/2037		108		121
5.50%, Due 6/1/2038		35		40
4.50%, Due 1/1/2040		514		558
5.00%, Due 5/1/2040		790		873
5.00%, Due 6/1/2040		673		744
4.00%, Due 9/1/2040		427		455
4.00%, Due 1/1/2041		1,295		1,380
4.00%, Due 2/1/2041		627		672
5.00%, Due 3/1/2041		606		670
4.50%, Due 4/1/2041		922		1,002
4.50%, Due 6/1/2041		771		838
4.50%, Due 8/1/2041		420		456
4.50%, Due 10/1/2041		531		581

	Par Amount		Fair Value
	(000’s)		(000’s)
4.00%, Due 11/1/2041	$	209	$	223
3.50%, Due 1/1/2043		1,083		1,129
4.50%, Due 1/1/2043		738		804
3.00%, Due 5/1/2043		1,116		1,131
3.00%, Due 6/1/2043		3,529		3,577
3.50%, Due 7/1/2043		444		463
3.00%, Due 8/1/2043		2,189		2,219
3.50%, Due 8/1/2044		1,188		1,238
4.00%, Due 9/1/2044		1,023		1,100
4.00%, Due 3/1/2045		1,101		1,178
3.50%, Due 4/1/2045		1,108		1,154
4.00%, Due 4/1/2045		1,289		1,376
4.00%, Due 7/1/2045		2,389		2,551
3.50%, Due 11/12/2045K		5,000		5,204
4.00%, Due 11/12/2045 K		3,000		3,194
4.50%, Due 11/12/2045 K		2,000		2,167
				41,384
Government National Mortgage Association
7.00%, Due 12/15/2025		81		94
6.50%, Due 8/15/2027		82		95
6.50%, Due 11/15/2027		85		99
7.50%, Due 12/15/2028		78		93
5.50%, Due 7/15/2033		177		202
6.00%, Due 12/15/2033		209		243
4.50%, Due 5/15/2039		474		515
5.50%, Due 2/15/2040		372		417
4.00%, Due 5/15/2040		365		389
4.50%, Due 6/15/2040		383		420
3.50%, Due 9/15/2041		1,051		1,101
3.50%, Due 3/15/2043		614		646
5.50%, Due 2/20/2034		257		289
4.50%, Due 10/20/2040		640		703
3.50%, Due 3/20/2045		1,113		1,168
5.00%, Due 3/20/2045		689		753
3.50%, Due 6/20/2045		1,627		1,706
5.00%, Due 10/15/2039		343		385
4.00%, Due 7/20/2045		708		756
				10,074
Total U.S. Agency Mortgage-Backed Obligations (Cost $58,418)				59,407
U.S. TREASURY OBLIGATIONS - 12.40%
0.875%, Due 1/31/2017		1,840		1,848
1.375%, Due 9/30/2018		1,550		1,566
1.125%, Due 5/31/2019		2,000		1,992
1.25%, Due 2/29/2020		2,000		1,984
1.75%, Due 10/31/2020		2,000		2,018
2.00%, Due 11/15/2021		4,135		4,189
2.00%, Due 2/15/2022		7,200		7,288
1.625%, Due 11/15/2022		2,000		1,964
2.50%, Due 8/15/2023		2,000		2,075
2.375%, Due 8/15/2024		4,110		4,202
6.875%, Due 8/15/2025		580		826
5.25%, Due 11/15/2028		450		595
4.75%, Due 2/15/2037		630		847
4.50%, Due 8/15/2039		730		947
3.125%, Due 11/15/2041		4,540		4,755
2.875%, Due 5/15/2043		23,670		23,405
2.50%, Due 2/15/2045		31,365		28,566
Total U.S. Treasury Obligations (Cost $89,981)				89,067

See accompanying notes

20

American Beacon Balanced Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
MUNICIPAL OBLIGATIONS - 0.28% (Cost $1,815)
Municipal Electric Authority of Georgia,
6.655%, Due 4/1/2057,	$	1,760	$	2,035
Total Municipal Obligations
	Shares
SHORT-TERM INVESTMENTS - 21.02% (Cost $150,964)
JPMorgan U.S. Government Money Market Fund, Capital Class		150,964,390		150,964
TOTAL INVESTMENTS - 117.20% (Cost $805,706)				841,772
LIABILITIES, NET OF OTHER ASSETS - (17.20%)				(123,553	)
TOTAL NET ASSETS - 100.00%			$	718,219

^A  ADR - American Depositary Receipt.

^B  Non-voting participating shares.

^C  Non-income producing security.

^D  PLC - Public Limited Company.

^E  MLP - Master Limited Partnership.

^F  REIT - Real Estate Investment Trust.

^G  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 $14,016 or 1.95% of net assets. The Fund has no right to demand registration of these securities.

^H  LLC - Limited Liability Company.

^I  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.

^J  LP - Limited Partnership.

^K  To Be Announced.

Futures Contracts Open on October 31, 2015:

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
S&P 500 Mini E Index December Futures		Long		241		December 2015	$	24,988,085	$	63,687
							$	24,988,085	$	63,687

See accompanying notes

21

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
COMMON STOCK - 96.21%
CONSUMER DISCRETIONARY - 20.38%
Auto Components - 3.50%
Dana Holding Corp.		681,008	$	11,441
Delphi Automotive PLCA		141,919		11,806
				23,247
Home Builders - 0.64%
D.R. Horton, Inc.		143,729		4,231
Hotels, Restaurants & Leisure - 4.65%
Norwegian Cruise Line Holdings Ltd.B		105,125		6,688
Royal Caribbean Cruises Ltd.		124,341		12,230
SeaWorld Entertainment, Inc.		193,792		3,862
Wyndham Worldwide Corp.		98,921		8,047
				30,827
Household Durables - 2.78%
Stanley Black & Decker, Inc.		120,075		12,726
Whirlpool Corp.		35,932		5,754
				18,480
Leisure Equipment & Products - 1.35%
Brunswick Corp.		167,166		8,995
Media - 3.81%
Interpublic Group of Cos., Inc.		339,266		7,779
Meredith Corp.		15,855		746
News Corp, Class A		507,207		7,811
News Corp., Class B		65,552		1,015
Omnicom Group, Inc.		106,456		7,976
				25,327
Multiline Retail - 0.70%
Nordstrom, Inc.		71,156		4,640
Specialty Retail - 2.95%
Hanesbrands, Inc.		249,715		7,976
L Brands, Inc.		67,211		6,451
Staples, Inc.		398,571		5,177
				19,604
Total Consumer Discretionary				135,351
CONSUMER STAPLES - 1.38%
Tobacco - 1.38%
Reynolds American, Inc.		189,270		9,146
ENERGY - 4.98%
Energy Equipment & Services - 1.84%
FMC Technologies, Inc.B		63,764		2,157
SEACOR Holdings, Inc.		39,634		2,315
Superior Energy Services, Inc.		216,756		3,069
Weatherford International PLCA B		457,812		4,689
				12,230
Oil & Gas - 3.14%
Apache Corp.		106,439		5,016
Cenovus Energy, Inc.		59,628		889
Murphy Oil Corp.		404,688		11,505
PBF Energy, Inc., Class A		82,064		2,790
Seadrill Ltd.B C		94,526		612
				20,812
Total Energy				33,042

	Shares		Fair Value
			(000’s)
FINANCIALS - 28.82%
Banks - 8.55%
CIT Group, Inc.		146,314	$	6,292
Comerica, Inc.		96,444		4,186
Cullen/Frost Bankers, Inc.		22,339		1,529
Fifth Third Bancorp		478,320		9,112
First Niagara Financial Group, Inc.		218,538		2,262
KeyCorp		323,023		4,012
M&T Bank Corp.		54,803		6,568
New York Community Bancorp, Inc.		337,275		5,572
People’s United Financial, Inc.		328,645		5,242
Regions Financial Corp.		702,831		6,571
TCF Financial Corp.		133,992		2,062
Valley National Bancorp		213,352		2,240
Webster Financial Corp.		30,008		1,113
				56,761
Diversified Financials - 4.77%
Ameriprise Financial, Inc.		46,789		5,398
Capital One Financial Corp.		29,642		2,339
Discover Financial Services		109,261		6,142
Franklin Resources, Inc.		165,938		6,763
Legg Mason, Inc.		123,845		5,542
SLM Corp.B		457,295		3,229
Synovus Financial Corp.		71,110		2,249
				31,662
Insurance - 10.43%
Allstate Corp.		165,530		10,244
Assurant, Inc.		40,714		3,319
Axis Capital Holdings Ltd.		131,967		7,126
Endurance Specialty Holdings Ltd.		69,452		4,385
FNF Group		116,586		4,113
Lincoln National Corp.		134,681		7,207
Progressive Corp.		216,131		7,160
Torchmark Corp.		119,692		6,943
Validus Holdings Ltd.		104,473		4,628
Voya Financial, Inc.		126,129		5,117
Willis Group Holdings PLCA		203,335		9,071
				69,313
Real Estate - 5.07%
AvalonBay Communities, Inc.D		22,748		3,977
CBL & Associates Properties, Inc.D		277,203		4,042
Corporate Office Properties TrustD		78,844		1,813
Duke Realty Corp.D		198,187		4,102
EPR PropertiesD		37,052		2,105
Host Hotels & Resorts LPD E		230,328		3,992
Lamar Advertising Co., Class AD		185,951		10,493
MFA Financial, Inc.D		449,712		3,112
				33,636
Total Financials				191,372
HEALTH CARE - 5.06%
Health Care Equipment & Supplies - 1.85%
St. Jude Medical, Inc.		104,091		6,642
Zimmer Biomet Holdings, Inc.		53,855		5,632
				12,274
Health Care Providers & Services - 3.21%
Cardinal Health, Inc.		77,465		6,368
Cigna Corp.		51,098		6,849
Universal Health Services, Inc., Class B		57,560		7,027
WellCare Health Plans, Inc.B		12,322		1,092
				21,336
Total Health Care				33,610

See accompanying notes

22

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
INDUSTRIALS - 14.82%
Aerospace & Defense - 1.99%
Spirit Aerosystems Holdings, Inc., Class AB		97,715	$	5,153
TransDigm Group, Inc.		36,475		8,020
				13,173
Building Products - 1.79%
Owens Corning		261,004		11,884
Commercial Services & Supplies - 1.86%
Convergys Corp.		87,030		2,234
Genpact Ltd.		176,860		4,383
Republic Services, Inc.		51,615		2,258
Steelcase, Inc., Class A		179,057		3,475
				12,350
Construction & Engineering - 0.98%
AECOM Technology Corp.B		221,249		6,520
Diversified Manufacturing - 0.42%
Eaton Corp., PLCA		50,408		2,818
Electrical Equipment - 0.73%
Brady Corp., Class A		116,672		2,654
Tyco International PLCA		61,007		2,223
				4,877
Industrial Conglomerates - 1.35%
KBR, Inc.		487,475		8,989
Machinery - 4.05%
CNH Industrial N.V.C		601,109		4,082
Dover Corp.		134,121		8,641
Joy Global, Inc.		84,359		1,449
Parker Hannifin Corp.		60,964		6,383
Terex Corp.		243,425		4,883
Xylem, Inc.		37,742		1,374
				26,812
Marine - 0.68%
Golar LNG Ltd.C		155,189		4,502
Road & Rail - 0.97%
Ryder System, Inc.		33,950		2,437
Werner Enterprises, Inc.		151,282		4,003
				6,440
Total Industrials				98,365
INFORMATION TECHNOLOGY - 9.73%
Computers & Peripherals - 1.29%
HP, Inc.		317,896		8,570
Electronic Equipment & Instruments - 3.09%
Avnet, Inc.		209,561		9,521
Flextronics International Ltd.B		601,518		6,852
Keysight Technologies, Inc.B		124,341		4,113
				20,486
IT Consulting & Services - 2.14%
Computer Sciences Corp.		77,438		5,157
Total System Services, Inc.		173,186		9,083
				14,240
Semiconductor Equipment & Products - 2.54%
Marvell Technology Group Ltd.		484,524		3,978
Microchip Technology, Inc.C		128,735		6,217

	Shares		Fair Value
			(000’s)
ON Semiconductor Corp.B		608,067	$	6,688
				16,883
Software - 0.67%
Navient Corp.		337,262		4,448
Total Information Technology				64,627
MATERIALS - 4.96%
Chemicals - 2.17%
Ashland, Inc.		58,853		6,457
Eastman Chemical Co.		57,302		4,135
FMC Corp.		93,406		3,803
				14,395
Construction Materials - 0.94%
CRH PLC, ADRA F		227,398		6,222
Containers & Packaging - 1.33%
Owens-Illinois, Inc.B		214,470		4,622
Packaging Corp of America		61,696		4,223
				8,845
Industrials - 0.52%
SPX FLOW, Inc.B		102,109		3,461
Total Materials				32,923
UTILITIES - 6.08%
Electric - 4.87%
CenterPoint Energy, Inc.		70,486		1,308
Edison International		116,607		7,057
Great Plains Energy, Inc.		187,847		5,166
PG&E Corp.		136,404		7,284
Pinnacle West Capital Corp.		181,556		11,530
				32,345
Gas - 0.62%
Energen Corp.		32,744		1,904
UGI Corp.		60,232		2,209
				4,113
Multi-Utilities - 0.59%
Xcel Energy, Inc.		109,778		3,911
Total Utilities				40,369
Total Common Stock (Cost $643,251)				638,805
SHORT-TERM INVESTMENTS - 3.91% (Cost $25,946)
JPMorgan U.S. Government Money Market Fund, Capital Class		25,945,936		25,946
SECURITIES LENDING COLLATERAL -1.71%
American Beacon U.S. Government Money Market Select Fund, Select Class G		10,587,340		10,587
DWS Government and Agency Securities Portfolio, Institutional Class		737,810		738
Total Securities Lending Collateral (Cost $11,325)				11,325

See accompanying notes

23

American Beacon Mid-Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Fair Value
	(000’s)
TOTAL INVESTMENTS - 101.83% (Cost $680,522)	$	676,076
LIABILITIES, NET OF OTHER ASSETS - (1.83%)		(12,171	)
TOTAL NET ASSETS - 100.00%	$	663,905

Percentages are stated as a percent of net assets.

^A  PLC - Public Limited Company.

^B  Non-income producing security.

^C  All or a portion of this security is on loan at October 31, 2015.

^D  REIT - Real Estate Investment Trust.

^E  LP - Limited Partnership.

^F  ADR - American Depositary Receipt.

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

Futures Contracts Open on October 31, 2015:

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
S&P 400 Midcap E Index December Futures		Long		171		December 2015	$	24,647,940	$	426,661
							$	24,647,940	$	426,661

See accompanying notes

24

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
COMMON STOCKS - 0.25% (Cost $139)
CONSUMER DISCRETIONARY- 0.25%
Household Durables - 0.25%
Lennar Corp., Class A		4,280	$	214
PREFERRED STOCKS - 1.88% (Cost $1,920)
ENERGY- 0.25%
Oil & Gas - 0.25%
Chesapeake Energy Corp., 5.75%, Due 12/31/49A		495		208
FINANCE- 0.65%
Other Finance - 0.38%
AMG Capital Trust II, 5.15%, Due 10/15/2037		5,510		320
Real Estate Investment Trusts - 0.27%
American Tower Corp., 5.25%, Due 5/15/2017		2,120		226
MANUFACTURING- 0.38%
Machinery - 0.38%
Stanley Black & Decker, Inc., 4.75%, Due 11/17/2015		2,225		323
UTILITIES- 0.60%
Electric - 0.60%
Dominion Resources, Inc., 6.38%, Due 7/1/2017		2,320		115
Exelon Corp., 6.50%, Due 6/1/2017		3,305		138
NextEra Energy, Inc., 5.80%, Due 9/1/16		4,620		254
				507
Total Preferred Stocks (Cost $1,920)				1,584
CONVERTIBLE PREFERRED STOCKS - 4.77% (Cost $4,241)
CONSUMER- 0.33%
Consumer Products - 0.33%
Tyson Foods, Inc., 4.75%, Due 7/15/2017		5,280		276
ENERGY- 0.19%
Oil & Gas - 0.16%
Southwestern Energy Co., 6.25%, Due 1/15/2018		4,750		133
Power - 0.03%
SunEdison, Inc., 6.75%, Due 12/31/2029B		43		27
FINANCE- 2.30%
Banks - 1.16%
Bank of America Corp., 7.25%, Due 12/31/2049		395		436
Wells Fargo & Co., 7.50%, Due 12/31/2049		460		546
				982
HMO - 0.65%
Anthem, Inc., 5.25%, Due 5/1/2018		11,705		545
Real Estate Investment Trusts - 0.49%
Crown Castle International Corp., 4.50%, Due 11/1/2016		2,380		253
Welltower, Inc., 6.50%, Due 12/31/2049		2,680		158
				411
MATERIALS- 0.11%
Metals & Mining - 0.11%
Alcoa, Inc., 5.38%, Due 10/1/2017		2,860		90
SERVICE- 1.43%
Other Service - 0.47%

See accompanying notes

25

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Amsurg Corp., 5.25%, Due 7/1/2017	$	1,525	$	205
Stericycle, Inc., 5.25%, Due 9/15/2018B		2,015		188
				393
Pharmaceuticals - 0.96%
Allergan PLC, 5.50%, Due 3/1/2018C		775		812
TELECOMMUNICATIONS- 0.41%
Telecom - 0.41%
Frontier Communications Corp., 11.13%, Due 6/29/2018		2,011		200
T-Mobile US, Inc., 5.50%, Due 12/15/2017		2,200		146
				346
Total Convertible Preferred Stocks (Cost $4,241)				4,015
	Par Amount
	(000’s)
CONVERTIBLE OBLIGATIONS - 16.72%
Consumer - 0.16%
Jarden Corp., 1.125%, Due 3/15/2034	$	120		132
Energy - 0.67%
SEACOR Holdings, Inc., 2.50%, Due 12/15/2027		245		235
Whiting Petroleum Corp., 1.25%, Due 4/1/2020D		370		326
				561
Finance - 1.54%
Ares Capital Corp., 4.75%, Due 1/15/2018		320		329
Extra Space Storage Co., LP, 3.125%, Due 10/1/2035D		100		106
MGIC Investment Corp., 5.00%, Due 5/1/2017		230		243
Molina Healthcare, Inc., 1.625%, Due 8/15/2044		170		208
Spirit Realty Capital, Inc., 2.875%, Due 5/15/2019		220		211
Starwood Waypoint Residential Trust, 3.00%, Due 7/1/2019		202		197
				1,294
Manufacturing - 8.32%
Fiat Chrysler Automobiles N.V., 7.875%, Due 12/15/2016E		246		318
Integrated Device Technology, Inc., 0.875%, Due 11/15/2022D		84		84
Intel Corp., 3.25%, Due 8/1/2039		255		419
Lam Research Corp., 0.50%, Due 5/15/2016		330		417
Medidata Solutions, Inc., 1.00%, Due 8/1/2018		167		175
Micron Technology, Inc.,
1.625%, Due 2/15/2033		75		121
3.00%, Due 11/15/2043		355		321
NVIDIA Corp., 1.00%, Due 12/1/2018		345		505
NXP Semiconductor N.V., 1.00%, Due 12/1/2019D		200		214
ON Semiconductor Corp., 2.625%, Due 12/15/2026		200		239
Proofpoint, Inc., 0.75%, Due 6/15/2020D		130		146
Red Hat, Inc., 0.25%, Due 10/1/2019		180		230
Salesforce.com, Inc., 0.25%, Due 4/1/2018		525		680
SanDisk Corp., 1.50%, Due 8/15/2017		270		431
ServiceNow, Inc., 0.00%, Due 11/1/2018		162		202
Standard Pacific Corp., 1.25%, Due 8/1/2032		305		347
SunEdison, Inc.,
0.25%, Due 1/15/2020D		227		120
2.625%, Due 6/1/2023D		130		61
SunPower Corp., 0.75%, Due 6/1/2018		205		256
Synchronoss Technologies, Inc., 0.75%, Due 8/15/2019		335		341
Take-Two Interactive Software, Inc., 1.75%, Due 12/1/2016		190		333
Tesla Motors, Inc.,
0.25%, Due 3/1/2019		120		108
1.25%, Due 3/1/2021		600		524
Workday, Inc.,
0.75%, Due 7/15/2018		280		322
1.50%, Due 7/15/2020		80		96
				7,010

See accompanying notes

26

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
Service - 5.89%
Acorda Therapeutics, Inc., 1.75%, Due 6/15/2021	$	215	$	228
BioMarin Pharmaceutical, Inc., 0.75%, Due 10/15/2018		91		128
Cepheid, Inc., 1.25%, Due 2/1/2021		200		179
Ctrip.com International Ltd., 1.00%, Due 7/1/2020D		95		106
Emergent BioSolutions, Inc., 2.875%, Due 1/15/2021		180		221
FireEye, Inc.,
1.00%, Due 6/1/2035D		275		238
1.625%, Due 6/1/2035D		285		240
Gilead Sciences, Inc., 1.625%, Due 5/1/2016		43		205
HealthSouth Corp., 2.00%, Due 12/1/2043		130		142
Hologic, Inc., 1.00%, Due 12/15/2043		165		210
Illumina, Inc., 0.25%, Due 3/15/2016		55		94
Impax Laboratories, Inc., 2.00%, Due 6/15/2022D		130		120
Incyte Corp., 0.375%, Due 11/15/2018		75		173
Integra LifeSciences Holdings Corp., 1.625%, Due 12/15/2016		170		202
Isis Pharmaceuticals, Inc., 1.00%, Due 11/15/2021D		120		120
Liberty Interactive LLC, 0.75%, Due 3/30/2043F		130		207
Liberty Media Corp., 1.375%, Due 10/15/2023		250		255
LinkedIn Corp., 0.50%, Due 11/1/2019D		515		558
NuVasive, Inc., 2.75%, Due 7/1/2017		105		132
Priceline Group, Inc., 0.35%, Due 6/15/2020		480		621
Restoration Hardware Holdings, Inc., 0.01%, Due 6/15/2019D		100		106
Twitter, Inc.,
0.25%, Due 9/15/2019		100		89
1.00%, Due 9/15/2021		265		233
Yahoo, Inc., 0.00%, Due 12/1/2018		150		150
				4,957
Transportation - 0.14%
Greenbrier Cos., Inc., 3.50%, Due 4/1/2018		100		120
Total Convertible Obligations (Cost $13,467)				14,074
CORPORATE OBLIGATIONS - 33.50%
Consumer - 0.99%
Altria Group, Inc., 4.75%, Due 5/5/2021		300		330
General Mills, Inc., 2.20%, Due 10/21/2019		400		401
SABMiller Holdings, Inc., 4.95%, Due 1/15/2042D		100		101
				832
Energy - 1.65%
Apache Corp., 5.10%, Due 9/1/2040		130		125
Canadian Natural Resources Ltd., 6.25%, Due 3/15/2038		275		287
Devon Energy Corp., 4.75%, Due 5/15/2042		300		268
EOG Resources, Inc., 2.50%, Due 2/1/2016		250		251
TransCanada PipeLines Ltd.,
3.75%, Due 10/16/2023		300		301
6.10%, Due 6/1/2040		140		156
				1,388
Finance - 14.06%
ABN AMRO Bank N.V., 1.80%, Due 6/4/2018D		400		399
American International Group, Inc., 4.875%, Due 6/1/2022		400		445
Bank of America Corp.,
7.80%, Due 9/15/2016		600		633
4.125%, Due 1/22/2024		600		626
6.11%, Due 1/29/2037		275		319
Barclays Bank PLC, 3.75%, Due 5/15/2024C		600		613
BNP Paribas S.A., 3.60%, Due 2/23/2016		280		282
Citigroup, Inc., 8.50%, Due 5/22/2019		500		604
General Electric Capital Corp.,
5.625%, Due 5/1/2018		250		275
6.00%, Due 8/7/2019		300		344
5.50%, Due 1/8/2020		150		170

See accompanying notes

27

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
Goldman Sachs Group, Inc.,
5.35%, Due 1/15/2016	$	175	$	177
6.25%, Due 9/1/2017		350		380
6.00%, Due 6/15/2020		535		613
ING Bank N.V., 3.75%, Due 3/7/2017D		600		618
JPMorgan Chase & Co.,
0.666%, Due 6/13/2016G		375		374
3.625%, Due 5/13/2024		600		606
5.50%, Due 10/15/2040		350		402
MetLife, Inc., 6.375%, Due 6/15/2034		400		500
Morgan Stanley,
7.30%, Due 5/13/2019		450		525
5.625%, Due 9/23/2019		150		167
Nordea Bank AB, 4.875%, Due 1/27/2020D		250		276
Prudential Financial, Inc.,
7.375%, Due 6/15/2019		250		294
4.60%, Due 5/15/2044		350		355
Simon Property Group LP, 3.375%, Due 10/1/2024H I		350		353
UBS AG, 5.875%, Due 12/20/2017		515		558
Wachovia Corp., 0.691%, Due 10/15/2016G		600		599
Wells Fargo & Co., 3.90%, Due 5/1/2045		350		325
				11,832
Manufacturing - 5.80%
American Honda Finance Corp., 3.875%, Due 9/21/2020D		250		266
BAE Systems Holdings, Inc., 3.80%, Due 10/7/2024D		350		353
Daimler Finance North America LLC,
2.25%, Due 9/3/2019D F		150		147
2.45%, Due 5/18/2020D F		350		350
Dow Chemical Co., 4.125%, Due 11/15/2021		300		317
Ford Motor Credit Co., LLC,
4.25%, Due 2/3/2017F		300		309
5.875%, Due 8/2/2021F		350		400
HP, Inc., 4.05%, Due 9/15/2022		350		348
Ingersoll-Rand Luxembourg Finance S.A., 2.625%, Due 5/1/2020		200		199
Johnson Controls, Inc., 5.00%, Due 3/30/2020		300		325
Nissan Motor Acceptance Corp., 2.35%, Due 3/4/2019D		350		352
Northrop Grumman Corp., 5.05%, Due 8/1/2019		150		164
Oracle Corp., 3.25%, Due 5/15/2030		700		656
United Technologies Corp., 6.125%, Due 7/15/2038		150		187
Volkswagen Group of America Finance LLC, 2.45%, Due 11/20/2019D F		350		335
Xerox Corp., 2.95%, Due 3/15/2017		175		177
				4,885
Service - 3.99%
Alibaba Group Holding Ltd., 3.60%, Due 11/28/2024D		350		339
Bayer US Finance LLC, 2.375%, Due 10/8/2019D F		200		202
CBS Corp., 3.375%, Due 3/1/2022		300		300
Comcast Corp., 6.55%, Due 7/1/2039		400		507
McKesson Corp., 3.25%, Due 3/1/2016		140		141
Medtronic, Inc., 3.50%, Due 3/15/2025		350		358
Thomson Reuters Corp., 4.30%, Due 11/23/2023		300		312
Time Warner, Inc.,
4.875%, Due 3/15/2020		150		166
4.75%, Due 3/29/2021		325		356
Viacom, Inc., 4.50%, Due 2/27/2042		350		269
Walgreens Boots Alliance, Inc., 3.80%, Due 11/18/2024		200		199
Wal-Mart Stores, Inc., 7.55%, Due 2/15/2030		150		210
				3,359
Telecommunications - 3.09%
America Movil S.A.B. de C.V., 6.375%, Due 3/1/2035		275		318
AT&T, Inc.,
3.40%, Due 5/15/2025		150		146
4.35%, Due 6/15/2045		473		410
Deutsche Telekom International Finance BV, 4.875%, Due 3/6/2042D		250		258
Verizon Communications, Inc.,
4.60%, Due 4/1/2021		340		370

See accompanying notes

28

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
6.90%, Due 4/15/2038	$	325	$	391
6.55%, Due 9/15/2043		250		299
Vodafone Group PLC, 6.15%, Due 2/27/2037C		375		405
				2,597
Transportation - 0.85%
Burlington Northern Santa Fe LLC, 5.75%, Due 5/1/2040F		140		160
Canadian National Railway Co., 5.55%, Due 5/15/2018		250		274
CSX Corp., 5.50%, Due 4/15/2041		250		280
				714
Utilities - 3.07%
Consolidated Edison Co., of New York, Inc., 5.50%, Due 12/1/2039		300		348
Dominion Resources, Inc., 4.70%, Due 12/1/2044		350		346
MidAmerican Energy Holdings Co., 6.125%, Due 4/1/2036		300		360
Pacific Gas & Electric Co., 4.30%, Due 3/15/2045		350		349
Progress Energy, Inc., 4.875%, Due 12/1/2019		350		381
Southern Co., 2.75%, Due 6/15/2020		500		497
Southwestern Electric Power Co., 3.55%, Due 2/15/2022		300		305
				2,586
Total Corporate Obligations (Cost $26,835)				28,193
FOREIGN GOVERNMENT OBLIGATIONS - 0.39% (Cost $298)
Energy - 0.39%
Petroleos Mexicanos, 6.00%, Due 3/5/2020		300		326
ASSET-BACKED OBLIGATIONS - 0.59%
GM Financial Automobile Leasing Trust, 1.68%, Due 12/20/2018, 2015 2 A3		500		500
COMMERCIAL MORTGAGE-BACKED OBLIGATIONS - 9.24%
Ginnie Mae REMIC Trust,
1.45%, Due 4/16/2039, 2013-45 AB		1,724		1,708
2.17%, Due 4/16/2041, 2012 44 A		1,693		1,714
3.20%, Due 11/16/2044, 2011-92 B		2,410		2,458
GS Mortgage Securities Trust,
3.849%, Due 12/10/2043, 2010-C2 A1D		108		112
3.645%, Due 3/10/2044, 2011-GC3 A2D		250		250
JP Morgan Chase Commercial Mortgage Securities Corp.,
3.853%, Due 6/15/2043, 2010-C1 A1D		16		16
4.388%, Due 2/15/2046, 2011-C3 A3D		600		634
5.695%, Due 2/12/2049, 2007-CB19 A4		398		415
LB-UBS Commercial Mortgage Trust, 5.424%, Due 2/15/2040, 2007-C1 A4		428		440
Wachovia Bank Commercial Mortgage Trust, 5.708%, Due 6/15/2049, 2007-C32 A2		31		31
Total Commercial Mortgage-Backed Obligations (Cost $7,698)				7,778
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 18.08%
Federal Home Loan Mortgage Corporation - 4.76%
5.00%, Due 2/1/2021		81		85
4.50%, Due 4/1/2021		81		84
5.00%, Due 9/1/2035		218		240
5.50%, Due 4/1/2037		55		62
5.00%, Due 3/1/2038		106		116
5.50%, Due 5/1/2038		80		89
4.00%, Due 1/1/2041		723		771
4.50%, Due 2/1/2041		628		681
3.50%, Due 6/1/2042		1,798		1,875
				4,003
Federal National Mortgage Association - 12.51%
3.50%, Due 1/1/2026		152		161
6.50%, Due 7/1/2032		66		77
5.50%, Due 6/1/2033		95		106
4.50%, Due 9/1/2034		56		61
5.50%, Due 12/1/2035		100		112
5.00%, Due 2/1/2036		81		89

See accompanying notes

29

American Beacon Retirement Income and Appreciation Fund^SM

Schedule of Investments

October 31, 2015

	Par Amount		Fair Value
	(000’s)		(000’s)
5.50%, Due 4/1/2036	$	131	$	147
5.50%, Due 2/1/2037		81		91
6.00%, Due 9/1/2037		49		56
6.00%, Due 1/1/2038		60		68
4.50%, Due 1/1/2040		420		457
4.00%, Due 9/1/2040		342		364
4.00%, Due 1/1/2041		1,205		1,285
3.00%, Due 6/1/2043		1,286		1,304
3.00%, Due 8/1/2043		873		884
3.50%, Due 11/12/2045 J		3,000		3,123
4.00%, Due 11/12/2045 J		1,000		1,064
4.50%, Due 11/12/2045 J		1,000		1,083
				10,532
Government National Mortgage Association - 0.81%
6.00%, Due 2/15/2033		216		251
5.50%, Due 4/15/2033		225		257
5.00%, Due 5/15/2033		157		175
				683
Total U.S. Agency Mortgage-Backed Obligations (Cost $14,710)				15,218
U.S. TREASURY OBLIGATIONS - 10.38%
0.875%, Due 1/31/2017		1,000		1,004
0.75%, Due 12/31/2017		600		599
1.375%, Due 9/30/2018		1,000		1,010
1.125%, Due 5/31/2019		1,000		996
1.50%, Due 1/31/2022		2,000		1,963
2.00%, Due 2/15/2022		1,500		1,518
6.875%, Due 8/15/2025		250		356
5.25%, Due 11/15/2028		550		728
4.75%, Due 2/15/2037		420		565
Total U.S. Treasury Obligations (Cost $8,376)				8,739
	Shares
SHORT-TERM INVESTMENTS - 9.95% (Cost $8,374)
JPMorgan U.S. Government Money Market Fund, Capital Class		8,374,332		8,374
TOTAL INVESTMENTS - 105.75% (Cost $86,558)				89,015
LIABILITIES, NET OF OTHER ASSETS - (5.75%)				(4,845	)
TOTAL NET ASSETS - 100.00%			$	84,170

Percentages are stated as a percent of net assets.

^A  Non-voting participating shares.

^B  Non-income producing security.

^C  PLC - Public Limited Company.

^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 $7,553 or 8.97% of net assets. The Fund has no right to demand registration of these securities.

^E  Par value represents units rather than shares.

^F  LLC - Limited Liability Company.

^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  REIT - Real Estate Investment Trust.

^I  LP - Limited Partnership.

^J  To Be Announced.

See accompanying notes

30

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2015 (in thousands, except share and per share amounts)

	Balanced Fund		Mid-Cap Value Fund			Retirement Income and Appreciation Fund
Assets:
Investments in unaffiliated securities, at fair value A C	$	841,772	$	665,489		$	89,015
Investments in affiliated securities, at fair value B		—		10,587			—
Cash		20		—			—
Deposit with brokers for futures contracts		1,863		1,119			—
Dividends and interest receivable		2,627		564			526
Receivable for investments sold		174,636		107,542			167
Receivable for fund shares sold		720		862			12
Receivable for tax reclaims		1		—			1
Receivable for variation margin on open futures contracts		—		5			—
Prepaid expenses		37		30			21
Total assets		1,021,676		786,198			89,742
Liabilities:
Payable for investments purchased		12,373		3,056			5,435
Payable for fund shares redeemed		290,078		107,301			44
Payable for variation margin from open futures contracts		149		—			—
Payable upon return of securities loaned		—		11,325			—
Dividends payable		—		—			1
Management and investment advisory fees payable		496		288			19
Administrative service and service fees payable		212		247			21
Transfer agent fees payable		13		10			1
Custody and fund accounting fees payable		15		8			3
Professional fees payable		46		39			41
Trustee fees payable		13		1			1
Payable for prospectus and shareholder reports		51		13			6
Other liabilities		11		5			—
Total liabilities		303,457		122,293			5,572
Net Assets	$	718,219	$	663,905		$	84,170
Analysis of Net Assets:
Paid-in-capital		653,816		634,414			79,640
Undistributed (or overdistribution of) net investment income		2,572		4,491			215
Accumulated net realized gain		25,701		29,019			1,859
Unrealized appreciation or (depreciation) of investments		36,066		(4,446	)		2,456
Unrealized appreciation of futures contracts		64		427			—
Net assets	$	718,219	$	663,905		$	84,170
Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		6,279,790		17,678,542			N/A
Y Class		2,472,274		4,822,635			108,476
Investor Class		10,894,593		20,690,303			7,571,573
Advisor Class		899,182		468,368			N/A
A Class		2,036,919		1,150,384			145,062
C Class		3,163,353		449,928			183,650
AMR Class		22,671,968		85,027			N/A
Net assets (not in thousands):
Institutional Class	$	99,173,943	$	258,503,278		$	N/A
Y Class	$	39,151,318	$	70,009,288		$	1,138,033
Investor Class	$	155,757,561	$	304,799,582		$	79,557,919
Advisor Class	$	13,510,138	$	6,684,131		$	N/A
A Class	$	29,074,120	$	16,422,504		$	1,530,766
C Class	$	45,641,648	$	6,238,827		$	1,942,796
AMR Class	$	335,910,256	$	1,247,856		$	N/A

See accompanying notes

31

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2015 (in thousands, except share and per share amounts)

	Balanced Fund		Mid-Cap Value Fund		Retirement Income and Appreciation Fund
Net asset value, offering and redemption price per share:
Institutional Class	$	15.79	$	14.62		N/A
Y Class	$	15.84	$	14.52	$	10.49
Investor Class	$	14.30	$	14.73	$	10.51
Advisor Class	$	15.02	$	14.27		N/A
A Class	$	14.27	$	14.28	$	10.55
A Class (offering price)	$	15.14	$	15.15	$	10.82
C Class	$	14.43	$	13.87	$	10.58
AMR Class	$	14.82	$	14.68		N/A
A        Cost of investments in unaffiliated securities	$	805,706	$	669,935	$	86,558
B        Cost of investments in affiliated securities	$	—	$	10,587	$	—
C        Fair value of securities on loan	$	—	$	11,040	$	—

See accompanying notes

32

American Beacon Funds^SM

Statements of Operations

For the year ended October 31, 2015 (in thousands)

	Balanced Fund			Mid-Cap Value Fund			Retirement Income and Appreciation Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	15,720		$	14,250		$	311
Dividend income from affiliated securities		2			—			—
Interest income		10,142			—			2,182
Income derived from securities lending		—			41			—
Total investment income		25,864			14,291			2,493
Expenses:
Management and investment advisory fees (Note 2)		2,247			3,442			307
Administrative service fees (Note 2):
Institutional Class		262			716			—
Y Class		131			163			3
Investor Class		498			852			283
Advisor Class		46			24			—
A Class		90			56			3
C Class		127			17			6
AMR Class		344			60			—
Transfer agent fees:
Institutional Class		17			40			—
Y Class		2			3			—
Investor Class		13			16			4
Advisor Class		1			3			—
A Class		3			3			—
C Class		5			2			—
AMR Class		20			4			—
Custody and fund accounting fees		133			86			22
Professional fees		67			82			42
Registration fees and expenses		109			107			54
Service fees (Note 2):
Y Class		44			54			1
Investor Class		563			712			353
Advisor Class		38			20			—
A Class		45			28			2
C Class		64			9			3
Distribution fees (Note 2):
Advisor Class		38			20			—
A Class		75			46			3
C Class		423			58			20
Prospectus and shareholder report expenses		67			82			6
Trustee fees		59			40			5
Other expenses		80			41			9
Total expenses		5,611			6,786			1,126
Net fees waived and expenses reimbursed (Note 2)		—			—			(3	)
Net expenses		5,611			6,786			1,123
Net investment income		20,253			7,505			1,370
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		95,141			53,502			3,456
Commission recapture (Note 3)		9			54			—
Foreign currency transactions		(1	)		—			—
Futures contracts		5,159			(602	)		—
Change in net unrealized appreciation or (depreciation) of:
Investments		(120,345	)		(47,310	)		(4,270	)
Futures contracts		(1,707	)		(440	)		—
Net gain (loss) from investments		(21,744	)		5,204			(814	)
Net increase (decrease) in net assets resulting from operations	$	(1,491	)	$	12,709		$	556
A        Foreign taxes		154			1			—

See accompanying notes

33

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)

	Balanced Fund						Mid-Cap Value Fund						Retirement Income and Appreciation Fund
	Year Ended October 31, 2015			Year Ended October 31, 2014			Year Ended October 31, 2015			Year Ended October 31, 2014			Year Ended October 31, 2015			Year Ended October 31, 2014
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	20,253		$	21,346		$	7,505		$	3,293		$	1,370		$	1,468
Net realized gain (loss) from investments, commission recapture, foreign currency transactions, and futures contracts		100,308			59,222			52,954			18,169			3,456			4,727
Change in net unrealized appreciation or (depreciation) of investments and futures contracts		(122,052	)		16,999			(47,750	)		7,304			(4,270	)		(1,361	)
Net increase (decrease) in net assets resulting from operations		(1,491	)		97,567			12,709			28,766			556			4,834
Distributions to Shareholders:
Net investment income:
Institutional Class		(1,222	)		(1,818	)		(1,280	)		(587	)		—			—
Y Class		(577	)		(648	)		(221	)		(23	)		(21	)		(20	)
Investor Class		(2,181	)		(3,347	)		(1,552	)		(182	)		(2,025	)		(2,845	)
Advisor Class		(160	)		(259	)		(46	)		(3	)		—			—
A Class		(392	)		(447	)		(72	)		(26	)		(18	)		(14	)
C Class		(320	)		(383	)		—			(5	)		(26	)		(32	)
AMR Class		(11,500	)		(20,425	)		(1,014	)		(1,182	)		—			—
Net realized gain from investments:
Institutional Class		(3,535	)		(3,141	)		(5,870	)		(4,653	)		—			—
Y Class		(1,914	)		(717	)		(997	)		(177	)		(24	)		(20	)
Investor Class		(8,247	)		(6,218	)		(7,616	)		(1,505	)		(3,365	)		(4,225	)
Advisor Class		(699	)		(315	)		(281	)		(49	)		—			—
A Class		(1,316	)		(397	)		(577	)		(211	)		(16	)		(18	)
C Class		(1,788	)		(784	)		(165	)		(85	)		(64	)		(63	)
AMR Class		(33,411	)		(34,009	)		(3,583	)		(7,608	)		—			—
Net distributions to shareholders		(67,262	)		(72,908	)		(23,274	)		(16,296	)		(5,559	)		(7,237	)
Capital Share Transactions:
Proceeds from sales of shares		236,623			228,070			315,121			492,087			13,334			17,150
Reinvestment of dividends		66,464			72,234			23,009			16,084			5,539			7,203
Cost of shares redeemed		(546,316	)		(137,068	)		(287,702	)		(118,637	)		(32,525	)		(52,515	)
Redemption fees		—			—			37			65			—			—
Net increase (decrease) in net assets from capital share transactions		(243,229	)		163,236			50,465			389,599			(13,652	)		(28,162	)
Net increase (decrease) in net assets		(311,982	)		187,895			39,900			402,069			(18,655	)		(30,565	)
Net Assets:
Beginning of period		1,030,201			842,306			624,005			221,936			102,825			133,390
End of Period *	$	718,219		$	1,030,201		$	663,905		$	624,005		$	84,170		$	102,825
*  Includes undistributed (or overdistribution of) net investment income	$	2,572		$	(455	)	$	4,491		$	2,593		$	215		$	(173	)

See accompanying notes

34

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

1. Organization

American Beacon Funds (the “Trust”), 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. As of October 31, 2015, the Trust consists of thirty-two active series, three of which are presented in this filing (collectively, the “Funds” and each individually a “Fund”): American Beacon Balanced Fund, American Beacon Mid-Cap Value Fund, and American Beacon Retirement Income and Appreciation Fund. The remaining twenty-nine active series are reported in separate filings.

Effective April 30, 2015 American Beacon Advisors, Inc. (the “Manager”) became a wholly-owned subsidiary of Astro AB Borrower, Inc., which is indirectly owned by investment funds affiliated with Kelso & Company, L.P. and Estancia Capital Management, LLC, two prominent private equity firms. Prior to April 30, the Manager was a wholly-owned subsidiary of Lighthouse Holdings, Inc., which was indirectly owned by investment funds affiliated with Pharos Capital Group, LLC and TPG Capital, L.P., two leading private equity firms.

Class Disclosure

On September 22, 2015, the AMR Classes of the Balanced and Mid-Cap Value Funds were closed to new investors.

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, which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”)
C Class	General public and investors investing through an intermediary with applicable sales charges, which may include a CDSC
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.

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 and the Trust. 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. The Manager is one of the investment advisors of the Balanced and Retirement Income and Appreciation Funds and receives an annualized fee of 0.15% on the portion of assets managed by the Manager. The Funds pay the investment advisors hired to direct investment activities of the Funds. Management fees paid by the Funds during the year ended October 31, 2015 were as follows (dollars in thousands):

35

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Fund	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
Balanced		0.21	%	$	2,247	$	1,711	$	536
Mid-Cap Value		0.47	%		3,442		3,073		369
Retirement Income and Appreciation		0.31	%		307		258		49

As compensation for services provided by the Manager in connection with securities lending activities conducted by the Mid-Cap Value Fund, 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 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 included in income derived from securities lending and management and investment advisory fees on the Statements of Operations. During the year ended October 31, 2015, securities lending fees paid to the Manager were $5,078.

Administration Agreement

The Manager and the Trust entered into an Administration Agreement which obligates the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administration Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor, 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 separate 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.

Investment in Affiliated Funds

The Funds may invest in the American Beacon Money Market Select Fund (the “MM 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.

36

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

The Manager serves as investment advisor to the Select Funds and receives management and administration fees totaling 0.10% of the average daily net assets of the Select Fund. During the year ended October 31, 2015, the Manager earned $3,155 from the Balanced and $10,470 from the Mid-Cap Value Funds’ investments 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. This program provides an alternative credit facility allowing the Funds to borrow from other participating funds. During the year ended October 31, 2015, the Balanced Fund loaned on average $2,415,901 for 4 days at an average rate of 0.74% with interest earned of $194. During the year ended October 31, 2015, the Mid-Cap Value and Retirement Income and Appreciation Funds did not utilize the credit facility.

Expense Reimbursement Plan

The Manager agreed to reimburse the following Funds to the extent that total annual fund operating expenses exceeded a Fund’s expense cap. For the period ended October 31, 2015, the Manager waived or reimbursed expenses as follows:

		Expense Cap			Reimbursed or (Recovered)
Fund	Class	11/1/14 to 10/31/15			Expenses		Expiration
Retirement Income and Appreciation	Y		0.80	%	$	587		2018
Retirement Income and Appreciation	A		1.04	%		1,266		2018
Retirement Income and Appreciation	C		1.86	%		1,111		2018

Of these amounts, $123 was receivable from the Manager at October 31, 2015 for the Retirement Income and Appreciation Fund. 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 Funds did not record a liability for potential reimbursements, due to the current assessment that a reimbursement is unlikely. The carryover of excess expenses potentially reimbursable to the Manager are as follows:

Fund	Recovered Expenses		Excess Expense Carryover		Expired Carryover Expenses		Expiration of Reimbursed Expenses
Retirement Income and Appreciation	$	—	$	—	$	3,661		2015
Retirement Income and Appreciation		—		2,999		—		2016
Retirement Income and Appreciation		—		2,785		—		2017

Sales Commissions

The Funds’ distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2015, Foreside collected $38,714, $1,745, and $1,014 for the Balanced, Mid-Cap Value, and Retirement Income and Appreciation Funds, respectively from the sale of Class A Shares.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2015, Foreside collected CDSC fees of $2,320 and $155 for the Balanced and Mid-Cap Value Funds, respectively.

37

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2015, $11,866 and $550 in CDSC fees were collected for the Balanced and Mid-Cap Value Funds, respectively.

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, including exchange-traded funds (“ETFs”) 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 open-end mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation.

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.

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 Board.

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.

38

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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.

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.

The Funds’ investments are summarized by level based on the inputs used to determine their values. U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) also requires all transfers between any levels to be disclosed. The end of the period timing recognition has been adopted for the transfers between levels of each Fund’s assets and liabilities. During the year ended October 31, 2015, there were no transfers between levels. As of October 31, 2015, the investments were classified as described below (in thousands):

Balanced Fund*	Level 1		Level 2		Level 3		Total
Common Stock	$	417,615	$	—	$	—	$	417,615
Preferred Stock		2,237		—		—		2,237
Corporate Obligations		—		96,797		—		96,797
Foreign Government Obligations		—		217		—		217
Asset-Backed Obligations		—		9,373		—		9,373
Commercial Mortgage-Backed Obligations		—		14,060		—		14,060
U.S. Agency Mortgage-Backed Obligations		—		59,407		—		59,407
U.S. Treasury Obligations		—		89,067		—		89,067
Municipal Obligations		—		2,035		—		2,035
Short-Term Investments - Money Market Funds		150,964		—		—		150,964
Total Investments in Securities	$	570,816	$	270,956	$	—	$	841,772
Financial Derivative Instruments-Assets
Futures Contracts	$	64	$	—	$	—	$	64

39

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

	Level 1		Level 2		Level 3		Total
Mid-Cap Value Fund*
Common Stock	$	638,805	$	—	$	—	$	638,805
Short-Term Investments – Money Market Funds		25,946		—		—		25,946
Securities Lending Collateral Invested in Money Market Funds		11,325						11,325
Total Investments in Securities	$	676,076	$	—	$	—	$	676,076
Financial Derivative Instruments-Assets
Futures Contracts	$	427	$	—	$	—	$	427
	Level 1		Level 2		Level 3		Total
Retirement Income and Appreciation Fund*
Common Stock	$	214	$	—	$	—	$	214
Preferred Stock		1,584		—		—		1,584
Convertible Preferred Stock		4,015		—		—		4,015
Convertible Obligations		—		14,074		—		14,074
Corporate Obligations		—		28,193		—		28,193
Foreign Government Obligations		—		326		—		326
Asset-Backed Obligations		—		500		—		500
Commercial Mortgage-Backed Obligations		—		7,778		—		7,778
U.S. Agency Mortgage-Backed Obligations		—		15,218		—		15,218
U.S. Treasury Obligations		—		8,739		—		8,739
Short-Term Investments – Money Market Funds		8,374		—		—		8,374
Total Investments in Securities	$	14,187	$	74,828	$	—	$	89,015

* Refer to the Schedules of Investments for industry information.

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 Mid-Cap Value Fund normally will be declared and paid at least annually. Dividends from net investment income of the Retirement Income and Appreciation Fund 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. To the extent necessary to fully distribute capital gains, the Funds also designate earnings and profits distributed to shareholders on the redemption of shares.

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 Funds. This amount is reported with the net realized gains in the Funds’ Statements of Operations, if applicable.

40

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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 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.

4. Securities and Other Investments

American Depositary Receipts (“ADRs”)

ADRs are depositary receipts for foreign issuers in registered form traded in U.S. securities markets. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Fund may invest in unsponsored depositary receipts, the issuers of which are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security.

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.

41

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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 year ended October 31, 2015 are disclosed in the Notes to the Schedules of Investments.

Other Investment Company Securities and Other Exchange Traded Products

The Funds may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, exchange-traded notes (“ETNs”), unit investment trusts, and other investment companies of the Trust. The Funds may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, a Fund becomes a shareholder of that investment company. As a result, Fund shareholders indirectly will bear a Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses Fund shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

Mortgage-Related and Other Asset-Backed Securities

The Balanced Fund may invest in mortgage or other asset-backed securities (“ABS”). These securities may include mortgage instruments issued by U.S. government agencies (“agency mortgages”) or those issued by private entities (“non-agency mortgages”). Specific types of instruments may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. The value of the Fund’s mortgage-backed securities (“MBS”) may be affected by, among other things, changes or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the mortgage, or the quality of the underlying assets. The mortgages underlying the securities may default or decline in quality or value. Through its investments in MBS, a Fund has exposure to subprime loans, Alt-A loans and non-conforming loans as well as to the mortgage and credit markets generally. Underlying collateral related to subprime, Alt-A and non-conforming mortgage loans has become increasingly susceptible to defaults and declines in quality or value, especially in a declining residential real estate market. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole.

Mortgage-Backed Securities

MBS often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of the Fund’s portfolio at the time resulting in reinvestment risk.

42

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Rising or high interest rates may result in slower than expected principal payments which may tend to extend the duration of MBS, making them more volatile and more sensitive to changes in interest rates. This is known as extension risk.

MBS may have less potential for capital appreciation than comparable fixed income securities due to the likelihood of increased prepayments of mortgages resulting from foreclosures or declining interest rates. These foreclosed or refinanced mortgages are paid off at face value (par) or less, causing a loss, particularly for any investor who may have purchased the security at a premium or a price above par. In such an environment, this risk limits the potential price appreciation of these securities.

Agency Mortgage-Backed Securities

Certain MBS may be issued or guaranteed by the U.S. government or a government sponsored entity, such as Fannie Mae (the Federal National Mortgage Association) or Freddie Mac (the Federal Home Loan Mortgage Corporation). Although these instruments may be guaranteed by the U.S. government or a government sponsored entity, many such MBS are not backed by the full faith and credit of the United States and are still exposed to the risk of non-payment.

Privately Issued Mortgage-Backed Securities

MBS held by a Fund may be issued by private issuers including commercial banks, savings associations, mortgage companies, investment banking firms, finance companies and special purpose finance entities (called special purpose vehicles or SPVs) and other entities that acquire and package mortgage loans for resale as MBS. These privately issued non-agency MBS may offer higher yields than those issued by government agencies, but also may be subject to greater price changes than governmental issues. Subprime loans refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their loans. Alt-A loans refer to loans extended to borrowers who have incomplete documentation of income, assets, or other variables that are important to the credit underwriting processes. Non-conforming mortgages are loans that do not meet the standards that allow purchase by government-sponsored enterprises. MBS with exposure to subprime loans, Alt-A loans or non-conforming loans have had in many cases higher default rates than those loans that meet government underwriting requirements. The risk of non-payment is greater for MBS that are backed by mortgage pools that contain subprime, Alt-A and non-conforming loans, but a level of risk exists for all loans.

Unlike agency MBS issued or guaranteed by the U.S. government or a government-sponsored entity (e.g., Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation), MBS issued by private issuers do not have a government or government-sponsored entity guarantee, but may have credit enhancements provided by external entities such as banks or financial institutions or achieved through the structuring of the transaction itself. Examples of such credit support arising out of the structure of the transaction include the issue of senior and subordinated securities (e.g., the issuance of securities by an SPV in multiple classes or “tranches,” with one or more classes being senior to other subordinated classes as to the payment of principal and interest, with the result that defaults on the underlying mortgage loans are borne first by the holders of the subordinated class); creation of “reserve funds” (in which case cash or investments, sometimes funded from a portion of the payments on the underlying mortgage loans, are held in reserve against future losses); and “overcollateralization” (in which case the scheduled payments on, or the principal amount of, the underlying mortgage loans exceeds that required to make payment on the securities and pay any servicing or other fees). However, there can be no guarantee that credit enhancements, if any, will be sufficient to prevent losses in the event of defaults on the underlying mortgage loans. In addition, MBS that are issued by private issuers are not subject to the underwriting requirements for the underlying mortgages that are applicable to those MBS that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying private MBS may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government

43

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

or government-sponsored MBS and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. Privately issued pools more frequently include second mortgages, high loan-to-value mortgages and manufactured housing loans. The coupon rates and maturities of the underlying mortgage loans in a private-label MBS pool may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime mortgage loans.

Privately issued MBS are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, MBS held in the Fund’s portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans.

Asset-Backed Securities

ABS may include MBS, loans, receivables or other assets. The value of the Fund’s ABS may be affected by, among other things, actual or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the receivables, the market’s assessment of the quality of underlying assets or actual or perceived changes in the credit worthiness of the individual borrowers, the originator, the servicing agent or the financial institution providing the credit support.

Payment of principal and interest may be largely dependent upon the cash flows generated by the assets backing the securities.

Rising or high interest rates tend to extend the duration of ABS, making them more volatile and more sensitive to changes in interest rates. The underlying assets are sometimes subject to prepayments which can shorten the security’s weighted average life and may lower its return. Defaults on loans underlying ABS have become an increasing risk for ABS that are secured by home equity loans related to sub-prime, Alt-A or non-conforming mortgage loans, especially in a declining residential real estate market.

ABS (other than MBS) present certain risks that are not presented by MBS. Primarily, these securities may not have the benefit of any security interest in the related assets. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. There is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. ABS are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses results from payment of the insurance obligations on at least a portion of the assets in the pool. This protection may be provided through guarantees, policies or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction or through a combination of such approaches. The Fund will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets.

Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. The availability of ABS may be affected by legislative or regulatory developments. It is possible that such developments may require the Fund to dispose of any then existing holdings of such securities.

44

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

5. Financial Derivative Instruments

The Balanced and Mid-Cap Value Funds may utilize derivative instruments to enhance return, hedge risk, gain efficient exposure to an asset class or to manage liquidity. When considering the Funds’ use of derivatives, it is important to note that the Fund does not use derivatives for the purpose of creating financial leverage.

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 a portion 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.

For the year ended October 31, 2015, the Funds entered into future contracts primarily for exposing cash to markets.

The Funds’ average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.

Average Futures Contracts Outstanding
Fund	Year ended October 31, 2015
Balanced		433
Mid-Cap Value		247

The following is a summary of the Funds’ derivative financial instruments categorized by risk exposure (in thousands) ⁽¹⁾⁽²⁾:

Fair Values of financial derivative instruments not accounted for as hedging instruments as of October 31, 2015:

		Balanced		Mid-Cap Value
Statements of Assets and Liabilities	Derivative
Receivable for variation margin from open futures contracts (2)	Equity Contracts	$	—	$	427
Payable for variation margin from open futures contracts (2)	Equity Contracts		64		—

45

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

The effect of financial derivative instruments not accounted for as hedging instruments during the year ended October 31, 2015:

		Balanced			Mid-Cap Value
Statements of Operations	Derivative
Net realized gain (loss) from futures contracts	Equity Contracts	$	5,159		$	(602	)
Change in net unrealized appreciation or (depreciation) of futures contracts	Equity Contracts		(1,708	)		(440	)

⁽¹⁾  See Note 3 in the Notes to Financial Statements for additional information.

⁽²⁾  Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedules of Investment footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

6. Principal Risks

In the normal course of business the Funds trade financial instruments and enter into financial transactions where risk of potential loss exists. Security values fluctuate (market risk) and may decline due to factors affecting securities markets in general, particular industries represented in the securities markets or conditions specifically related to a particular company. Failure of the other party to a transaction to perform (credit and counterparty risk), for example by not making principal and interest payments when due, reduces the value of the issuer’s debt and could reduce the Funds’ income. Similar to credit risk, the Funds may be exposed to counterparty risk, or the risk that an institution or other entity with which the Funds have unsettled or open transactions will fail to make required payments or otherwise comply with the terms of the instrument, transaction or contract. The potential loss could exceed the value of the financial assets recorded in the financial statements. Some of the Funds’ investments may be illiquid and the Funds may not be able to vary the portfolio investments in response to changes in economic and other conditions. If a Fund is required to liquidate all or a portion of its investments quickly, the Fund may realize significantly less than the value at which it previously recorded those investments.

Market Risks

The Funds’ investments in financial derivatives and other financial instruments expose the Funds to various risks such as, but not limited to, interest rate, foreign currency and equity risks.

Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Fund is likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income’s market price to interest rate (i.e. yield) movements.

If the Funds invest directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, they will be subject to the risk that those currencies will decline in value relative to the base currency of the Funds, or, in the case of hedging positions, that the Funds’ base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Funds’ investments in foreign currency denominated securities may reduce the returns of the Fund.

The fair values of equities, such as common stocks and preferred securities or equity related investments such as futures, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

46

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Counterparty Credit Risk

A derivative contract may suffer a mark to market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statements of Assets and Liabilities as Deposits with brokers for futures contracts and Payable to brokers for futures contracts, respectively. Non-cash collateral pledged by the Funds, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a party is determined at the close of business of the Fund and additional required collateral is delivered to/pledged by the Fund on the next business day. To the extent amounts due to the Funds from its counterparties are not fully collateralized, contractually or otherwise, the Funds bear the risk of loss from counterparty non-performance. The Funds attempt to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Offsetting Assets and Liabilities

The Funds are parties to enforceable master netting agreements between brokers and counterparties, which provide for the right to offset under certain circumstances. The Funds employ multiple money managers and counterparties and have elected not to offset qualifying financial and derivative instruments on the Statements of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of October 31, 2015 (in thousands).

Balanced

Offsetting of Financial Liabilities and Derivative Liabilities as of October 31, 2015:

Description	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statements of Assets and Liabilities
Futures Contracts (1)	$	149	$	—	$	149

47

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Financial Liabilities, Derivative Liabilities, and Collateral Pledged by Counterparty as of October 31, 2015:

	Net amount of Assets Presented in the Statements of Assets and Liabilities		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty			Financial Instruments		Cash Collateral Received		Net Amount
Goldman Sachs & Co.(1)	$	149	$	—	$	—	$	149

Mid-Cap Value

Offsetting of Financial Assets and Derivative Assets as of October 31, 2015:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statements of Assets and Liabilities
Futures Contracts (1)	$	5	$	—	$	5
Securities on Loan		11,040		—		11,040
	$	11,045	$	—	$	11,045

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of October 31, 2015:

	Net amount of Assets Presented in the Statements of Assets and Liabilities		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty			Financial Instruments		Cash Collateral Received(2)			Net Amount
Barclays Capital, Inc.	$	1,946	$	—	$	(1,946	)	$	—
Credit Suisse Securities (USA)		331		—		(331	)		—
Goldman Sachs & Co.(1)		5		—		—			5
ING Financial Markets LLC		189		—		(189	)		—
JP Morgan Clearing Corp.		2,831		—		(2,831	)		—
Merrill Lynch, Pierce, Fenner		27		—		(27	)		—
Scotia Capital USA Inc.		2,749		—		(2,749	)		—
UBS Securities, LLC		2,967		—		(2,967	)		—
	$	11,045	$	—	$	(11,040	)	$	5

⁽¹⁾  The securities presented here within are not subject to Master Netting Agreements. As such, this is disclosed for informational purposes only.

⁽²⁾ Excess of collateral received from the individual counterparty is not shown for financial reporting purposes. Collateral with a value of $11,325 has been received in connection with securities lending transactions.

7. Federal Income and Excise Taxes

It is the policy of each Fund to qualify as a regulated investment company (“RIC”), 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, 2015 remain 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 Funds also utilize earnings and profits distributed to shareholders on redemptions of shares as part of the dividends paid deduction.

48

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

A Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation or depreciation, as applicable, as the income is earned or capital gains are recorded.

The tax character of distributions paid were as follows (in thousands):

	Balanced				Mid-Cap Value				Retirement Income and Appreciation
	Year Ended October 31, 2015		Year Ended October 31, 2014		Year Ended October 31, 2015		Year Ended October 31, 2014		Year Ended October 31, 2015		Year Ended October 31, 2014
Distributions paid from:
Ordinary income*
Institutional Class	$	1,579	$	2,590	$	2,270	$	2,004	$	—	$	—
Y Class		770		824		389		77		28		26
Investor Class		3,014		4,877		2,836		640		3,037		4,107
Advisor Class		231		337		93		17		—		—
A Class		525		545		169		90		23		19
C Class		501		576		28		31		45		51
AMR Class		14,875		28,795		1,618		3,498		—		—
Long-term capital gains
Institutional Class		3,178		2,368		4,881		3,237		—		—
Y Class		1,721		541		829		123		18		14
Investor Class		7,414		4,688		6,332		1,047		2,352		2,963
Advisor Class		628		238		234		34		—		—
A Class		1,183		299		479		147		11		13
C Class		1,607		591		137		59		45		44
AMR Class		30,036		25,639		2,979		5,292		—		—
Total distributions paid	$	67,262	$	72,908	$	23,274	$	16,296	$	5,559	$	7,237

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

As of October 31, 2015, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):

	Balanced			Mid-Cap Value			Retirement Income and Appreciation
Cost basis of investments for federal income tax purposes	$	815,587		$	682,932		$	87,617
Unrealized appreciation		67,294			47,011			3,533
Unrealized depreciation		(41,109	)		(53,867	)		(2,135	)
Net unrealized appreciation or (depreciation)		26,185			(6,856	)		1,398
Undistributed ordinary income		3,199			10,858			1,271
Accumulated long-term gain or (loss)		35,019			25,489			1,861
Distributable earnings or (deficits)	$	64,403		$	29,491		$	4,530

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 or losses on certain derivative instruments, reclassifications of income from real estate investment securities and publicly traded partnerships, book amortization of 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.

49

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Gains on redemptions in-kind for Balanced Fund and Mid-Cap Value Fund, of approximately $37,483,587 and $13,199,015, were included in net realized gain on investments in the Statement of Operations for the year ended October 31, 2015, and were not recognized for Federal income tax purposes.

Accordingly, the following amounts represent current year permanent differences derived from book amortization of premium, pay down reclasses, Section 732 basis adjustments, reclassifications of income from real estate investment securities and publicly traded partnerships, reclassifications of dividends, income adjustments associated with contingent debt instruments, utilization of earnings and profits distributed to shareholders on redemption of shares, and net realized gains on redemptions in-kind as of October 31, 2015 (in thousands):

	Balanced			Mid-Cap Value			Retirement Income and Appreciation
Paid-in-capital	$	57,800		$	23,454		$	482
Undistributed net investment income		(874	)		(1,422	)		1,108
Accumulated net realized gain (loss)		(56,926	)		(22,032	)		(1,590	)
Unrealized appreciation or (depreciation) of investments and futures contracts		—			—			—

For the year ended October 31, 2015, the Funds did not have capital loss carryforwards.

8. Investment Transactions

The aggregate cost of purchases and proceeds from sales and maturities of long-term investments, other than short-term obligations, for the year ended October 31, 2015 were as follows (in thousands):

	Balanced		Mid-Cap Value		Retirement Income and Appreciation
Purchases (excluding U.S. government securities)	$	611,271	$	576,139	$	52,583
Sales and maturities (excluding U.S. government securities)		825,748		535,275		71,874
Purchases of U.S. government securities		190,255		—		2,947
Sales and maturities of U.S. government securities		224,582		—		14,947

A summary of the Funds’ direct transactions in Select Funds for the year ended October 31, 2015 is set forth below (in thousands):

	Type of Transaction	Affiliate	October 31, 2014 Shares/Fair Value		Purchases		Sales		October 31, 2015 Shares/Fair Value		Dividend Income
Balanced	Direct	USG Select Fund	$	—	$	8,000	$	8,000	$	—	$	—
Mid-Cap Value	Securities Lending	USG Select Fund		11,720		82,784		83,916		10,588		1

9. Securities Lending

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

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

50

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured by non-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Fund, the Agent, and the Manager retain 80%, 10%, 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, 2015, 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
$ 11,040	$ —	$ 11,325

Cash collateral is listed on the Mid-Cap Value Fund’s Schedule of Investments and is shown on the Statements of Assets and Liabilities. Income earned on these investments, grossed up by the securities lending fees paid to the Manager, is included in Income derived from securities lending on 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.

10. Capital Share Transactions

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

51

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

For the Year Ended October 31, 2015

	Institutional Class						Y Class						Investor Class						Advisor Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		2,987		$	48,746			1,308		$	21,588			4,196		$	62,493			232		$	3,610
Reinvestment of dividends		292			4,725			146			2,375			690			10,149			55			859
Shares redeemed		(1,432	)		(23,117	)		(1,127	)		(18,306	)		(4,822	)		(71,369	)		(305	)		(4,682	)
Net increase (decrease) in shares outstanding		1,847		$	30,354			327		$	5,657			64		$	1,273			(18	)	$	(213	)

	A Class						C Class						AMR Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		1,137		$	16,867			1,432		$	21,546			4,030		$	61,773
Reinvestment of dividends		109			1,592			125			1,853			2,952			44,911
Shares redeemed		(882	)		(12,823	)		(465	)		(6,892	)		(27,433	)		(409,127	)
Net increase (decrease) in shares outstanding		364		$	5,636			1,092		$	16,507			(20,451	)	$	(302,443	)

	Institutional Class						Y Class						Investor Class						Advisor Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		8,220		$	122,878			3,400		$	50,233			7,288		$	109,453			278		$	3,989
Redemption Fees		—			12			—			2			—			15			—			1
Reinvestment of dividends		476			6,981			82			1,190			619			9,156			23			327
Shares redeemed		(4,139	)		(61,221	)		(778	)		(11,517	)		(3,765	)		(56,035	)		(327	)		(4,786	)
Net increase (decrease) in shares outstanding		4,557		$	68,650			2,704		$	39,908			4,142		$	62,589			(26	)	$	(469	)

	A Class						C Class						AMR Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		425		$	6,179			140		$	1,987			1,370		$	20,402
Redemption Fees		—			1			—			—			—			6
Reinvestment of dividends		42			607			11			151			313			4,597
Shares redeemed		(588	)		(8,411	)		(64	)		(884	)		(9,863	)		(144,848	)
Net increase (decrease) in shares outstanding		(121	)	$	(1,624	)		87		$	1,254			(8,180	)	$	(119,843	)

	Y Class						Investor Class						A Class
Retirement Income and Appreciation Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		55		$	586			1,021		$	10,877			122		$	1,304
Reinvestment of dividends		4			42			505			5,384			3			31
Shares redeemed		(17	)		(181	)		(2,976	)		(31,622	)		(20	)		(209	)
Net increase (decrease) in shares outstanding		42		$	447			(1,450	)	$	(15,361	)		105		$	1,126

	C Class
Retirement Income and Appreciation Fund	Shares			Amount
Shares sold		53		$	567
Reinvestment of dividends		7			82
Shares redeemed		(47	)		(513	)
Net increase in shares outstanding		13		$	136

52

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

For the Year Ended October 31, 2014

	Institutional Class						Y Class						Investor Class						Advisor Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		1,324		$	21,700			1,870		$	30,865			6,066		$	91,828			708		$	10,930
Reinvestment of dividends		305			4,907			80			1,290			630			9,233			37			574
Shares redeemed		(931	)		(15,382	)		(248	)		(4,136	)		(3,165	)		(47,590	)		(234	)		(3,696	)
Net increase in shares outstanding		698		$	11,225			1,702		$	28,019			3,531		$	53,471			511		$	7,808

	A Class						C Class						AMR Class
Balanced Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		1,403		$	20,947			1,419		$	21,522			1,946		$	30,278
Reinvestment of dividends		51			749			71			1,047			3,595			54,434
Shares redeemed		(200	)		(3,016	)		(184	)		(2,787	)		(3,905	)		(60,461	)
Net increase in shares outstanding		1,254		$	18,680			1,306		$	19,782			1,636		$	24,251

	Institutional Class						Y Class						Investor Class						Advisor Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		9,719		$	141,013			2,278		$	32,808			17,353		$	254,014			533		$	7,626
Redemption Fees		—			22			—			2			—			14			—			—
Reinvestment of dividends		371			5,095			13			178			121			1,684			4			52
Shares redeemed		(2,008	)		(28,892	)		(369	)		(5,306	)		(2,161	)		(31,317	)		(94	)		(1,309	)
Net increase in shares outstanding		8,082		$	117,238			1,922		$	27,682			15,313		$	224,395			443		$	6,369

	A Class						C Class						AMR Class
Mid-Cap Value Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		1,224		$	17,349			296		$	4,083			2,431		$	35,194
Redemption Fees		—			2			—			—			—			25
Reinvestment of dividends		16			214			5			71			640			8,790
Shares redeemed		(87	)		(1,245	)		(4	)		(60	)		(3,570	)		(50,508	)
Net increase (decrease) in shares outstanding		1,153		$	16,320			297		$	4,094			(499	)	$	(6,499	)

	Y Class						Investor Class						A Class						C Class
Retirement Income and Appreciation Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		24		$	261			1,502		$	16,482			1		$	10			36		$	397
Reinvestment of dividends		3			39			655			7,057			2			28			7			79
Shares redeemed		(15	)		(169	)		(4,752	)		(51,433	)		(39	)		(435	)		(43	)		(478	)
Net increase (decrease) in shares outstanding		12		$	131			(2,595	)	$	(27,894	)		(36	)	$	(397	)		—		$	(2	)

11. Subsequent Events

On September 21, 2015 the Manager announced the Board’s approval of a plan to liquidate and terminate the AMR Classes of the Balanced and Mid-Cap Value Funds. On December 15, 2015 the AMR Class of the Mid-Cap Value Fund was closed. The AMR Class of the Balanced Fund is expected to close on or about March 15, 2016.

53

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of period	$	16.79		$	16.31		$	14.27		$	12.89		$	12.62
Income from investment operations:
Net investment income (loss)		0.32			0.38			0.30			0.32			0.32
Net gains (losses) from investments (both realized and unrealized)		(0.32	)		1.35			2.35			1.38			0.29
Total income (loss) from investment operations		0.00			1.73			2.65			1.70			0.61
Less distributions:
Dividends from net investment income		(0.22	)		(0.42	)		(0.30	)		(0.32	)		(0.34	)
Distributions from net realized gains		(0.78	)		(0.83	)		(0.31	)		—			—
Total distributions		(1.00	)		(1.25	)		(0.61	)		(0.32	)		(0.34	)
Net asset value, end of period	$	15.79		$	16.79		$	16.31		$	14.27		$	12.89
Total return A		(0.07	)%		11.15	%		19.04	%		13.23	%		4.87	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	99,174		$	74,422		$	60,916		$	40,938		$	30,962
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.58	%		0.58	%		0.60	%		0.59	%		0.58	%
Expenses, net of reimbursements or recoupments		0.58	%		0.58	%		0.60	%		0.59	%		0.58	%
Net investment income, before reimbursements or recoupments		1.83	%		2.24	%		1.86	%		2.27	%		2.49	%
Net investment income, net of reimbursements or recoupments		1.83	%		2.24	%		1.86	%		2.27	%		2.49	%
Portfolio turnover rate		62	%		34	%		56	%		58	%		47	%

^A Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

54

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class													Investor Class															Advisor Class
Year Ended October 31,													Year Ended October 31,															Year Ended October 31,
2015	2014			2013			2012			2011			2015			2014			2013			2012			2011			2015			2014			2013			2012			2011
$16.83	$	16.37		$	14.32		$	12.93		$	12.78		$	15.31		$	14.98		$	13.16		$	11.93		$	11.66		$	16.04		$	15.65		$	13.73		$	12.36		$	12.11
0.30		0.40			0.39			0.17			0.36			0.22			0.42			0.26			0.23			0.25			0.22			0.18			(0.12	)		0.42			0.41
(0.30)		1.31			2.26			1.51			0.24			(0.26	)		1.11			2.13			1.30			0.28			(0.29	)		1.39			2.60			1.14			0.11
0.00		1.71			2.65			1.68			0.60			(0.04	)		1.53			2.39			1.53			0.53			(0.07	)		1.57			2.48			1.56			0.52
(0.21)		(0.42	)		(0.29	)		(0.29	)		(0.45	)		(0.19	)		(0.37	)		(0.26	)		(0.30	)		(0.26	)		(0.17	)		(0.35	)		(0.25	)		(0.19	)		(0.27	)
(0.78)		(0.83	)		(0.31	)		—			—			(0.78	)		(0.83	)		(0.31	)		—			—			(0.78	)		(0.83	)		(0.31	)		—			—
(0.99)		(1.25	)		(0.60	)		(0.29	)		(0.45	)		(0.97	)		(1.20	)		(0.57	)		(0.30	)		(0.26	)		(0.95	)		(1.18	)		(0.56	)		(0.19	)		(0.27	)
$15.84	$	16.83		$	16.37		$	14.32		$	12.93		$	14.30		$	15.31		$	14.98		$	13.16		$	11.93		$	15.02		$	16.04		$	15.65		$	13.73		$	12.36
(0.07)%		10.98	%		18.97	%		13.04	%		4.73	%		(0.35	)%		10.75	%		18.65	%		12.86	%		4.52	%		(0.58	)%		10.58	%		18.52	%		12.62	%		4.33	%
$39,151	$	36,114		$	7,263		$	2,482		$	401		$	155,758		$	165,808		$	109,337		$	89,272		$	83,657		$	13,510		$	14,706		$	6,353		$	2,507		$	3,536
0.66%		0.67	%		0.68	%		0.69	%		1.48	%		0.91	%		0.92	%		0.92	%		0.92	%		0.92	%		1.06	%		1.07	%		1.07	%		1.09	%		1.09	%
0.66%		0.68	%		0.70	%		0.69	%		0.70	%		0.91	%		0.92	%		0.92	%		0.92	%		0.92	%		1.06	%		1.07	%		1.07	%		1.09	%		1.09	%
1.75%		2.01	%		1.71	%		2.08	%		1.55	%		1.51	%		1.84	%		1.62	%		1.95	%		2.16	%		1.35	%		1.75	%		1.32	%		1.82	%		2.01	%
1.75%		2.01	%		1.69	%		2.08	%		2.34	%		1.51	%		1.84	%		1.62	%		1.95	%		2.16	%		1.35	%		1.75	%		1.32	%		1.82	%		2.01	%
62%		34	%		56	%		58	%		47	%		62	%		34	%		56	%		58	%		47	%		62	%		34	%		56	%		58	%		47	%

55

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class
	Year Ended October 31,
	2015			2014			2013			2012			2011
Net asset value, beginning of period	$	15.29		$	14.97		$	13.16		$	12.06		$	11.94
Income from investment operations:
Net investment income		0.23			0.33			0.22			0.33			0.38
Net gains (losses) from investments (both realized and unrealized)		(0.29	)		1.18			2.14			1.17			0.14
Total income (loss) from investment operations		(0.06	)		1.51			2.36			1.50			0.52
Less distributions:
Dividends from net investment income		(0.18	)		(0.36	)		(0.24	)		(0.40	)		(0.40	)
Distributions from net realized gains		(0.78	)		(0.83	)		(0.31	)		—			—
Total distributions		(0.96	)		(1.19	)		(0.55	)		(0.40	)		(0.40	)
Net asset value, end of period	$	14.27		$	15.29		$	14.97		$	13.16		$	12.06
Total return A		(0.48	)%		10.67	%		18.45	%		12.65	%		4.37	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	29,074		$	25,579		$	6,284		$	3,127		$	588
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.97	%		1.02	%		1.10	%		1.13	%		1.59	%
Expenses, net of reimbursements or recoupments		0.97	%		1.04	%		1.10	%		1.09	%		1.10	%
Net investment income, before reimbursements or recoupments		1.44	%		1.68	%		1 31	%		1.62	%		1.47	%
Net investment income, net of reimbursements or recoupments		1.44	%		1.67	%		1.30	%		1.66	%		1.95	%
Portfolio turnover rate		62	%		34	%		56	%		58	%		47	%

^A Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

56

American Beacon Balanced Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

C Class															AMR Class
Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012			2011			2015			2014			2013			2012			2011
$	15.47		$	15.13		$	13.33		$	12.13		$	11.92		$	15.80		$	15.44		$	13.54		$	12.27		$	12.02
	0.14			0.21			0.17			0.15			0.20			0.01			0.39			0.27			0.31			0.34
	(0.29	)		1.20			2.11			1.29			0.22			0.05			1.28			2.27			1.34			0.27
	(0.15	)		1.41			2.28			1.44			0.42			0.06			1.67			2.54			1.65			0.61
	(0.11	)		(0.24	)		(0.17	)		(0.24	)		(0.21	)		(0.26	)		(0.48	)		(0.33	)		(0.38	)		(0.36	)
	(0.78	)		(0.83	)		(0.31	)		—			—			(0.78	)		(0.83	)		(0.31	)		—			—
	(0.89	)		(1.07	)		(0.48	)		(0.24	)		(0.21	)		(1.04	)		(1.31	)		(0.64	)		(0.38	)		(0.36	)
$	14.43		$	15.47		$	15.13		$	13.33		$	12.13		$	14.82		$	15.80		$	15.44		$	13.54		$	12.27
	(1.14	)%		9.80	%		17.50	%		11.86	%		3.56	%		0.28	%		11.40	%		19.32	%		13.55	%		5.09	%
$	45,642		$	32,045		$	11,574		$	3,579		$	922		$	335,910		$	681,527		$	640,579		$	710,816		$	734,927
	1.72	%		1.78	%		1.84	%		1.85	%		2.34	%		0.31	%		0.32	%		0.33	%		0.32	%		0.33	%
	1.72	%		1.79	%		1.85	%		1.83	%		1.82	%		0.31	%		0.32	%		0.33	%		0.32	%		0.33	%
	0.69	%		0.94	%		0.51	%		0.88	%		0.66	%		2.11	%		2.45	%		2.29	%		2.57	%		2.75	%
	0.69	%		0.93	%		0.50	%		0.90	%		1.18	%		2.11	%		2.45	%		2.29	%		2.57	%		2.75	%
	62	%		34	%		56	%		58	%		47	%		62	%		34	%		56	%		58	%		47	%

57

American Beacon Balanced Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2015E			2014			2013			2012			2011A
Net asset value, beginning of period	$	14.76		$	14.33		$	10.95		$	9.73		$	9.27
Income from investment operations:
Net investment income (loss)		0.16			0.12			0.13			0.14			0.09
Net gains from investments (both realized and unrealized)		0.25			1.27			3.93			1.21			0.48
Total income from investment operations		0.41			1.39			4.06			1.35			0.57
Less distributions:
Dividends from net investment income		(0.10	)		(0.11	)		(0.20	)		(0.13	)		(0.11	)
Distributions from net realized gains		(0.45	)		(0.85	)		(0.48	)		—			—
Total distributions		(0.55	)		(0.96	)		(0.68	)		(0.13	)		(0.11	)
Redemption fees added to beneficial interestsB		—			—			—			—			—
Net asset value, end of period	$	14.62		$	14.76		$	14.33		$	10.95		$	9.73
Total return C		2.73	%		10.20	%		39.18	%		14.07	%		6.08	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	258,503		$	193,635		$	72,207		$	34,208		$	33,441
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.85	%		0.89	%		0.99	%		1.06	%		1.10	%
Expenses, net of reimbursements or recoupments		0.85	%		0.93	%		0.98	%		0.98	%		0.97	%
Net investment income (loss), before reimbursements or recoupments		1.10	%		0.92	%		1.05	%		1.17	%		0.91	%
Net investment income, net of reimbursements or recoupments		1.10	%		0.88	%		1.06	%		1.25	%		1.04	%
Portfolio turnover rate		79	%		24	%		48	%		87	%		107	%

^A LMCG Investments (formerly known as Lee Munder Capital Group, LLC) was added as an investment manager to the Mid-Cap Value Fund on July 1, 2011 and terminated on April 30, 2015.

^B Amounts represent less than $0.01 per share.

^C Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

^D Based on average shares outstanding.

^E WEDGE Capital Management was added as an investment manager to the Mid-Cap Value Fund on May 11, 2015.

58

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class															Investor Class															Advisor Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,
2015E			2014			2013			2012			2011A			2015E			2014			2013			2012			2011A			2015E			2014			2013			2012			2011A
$	14.66		$	14.25		$	10.92		$	9.72		$	9.27		$	14.89		$	14.47		$	10.98		$	9.71		$	9.20		$	14.46		$	14.07		$	10.81		$	9.56		$	9.12
	0.15			0.18			0.17			0.13			0.08			0.13			0.16			0.23			0.34			(0.03	)D		0.08			0.11			0.11			0.05			0.07
	0.26			1.19			3.86			1.21			0.48			0.25			1.21			3.83			1.00			0.63			0.25			1.17			3.83			1.23			0.45
										��
	0.41			1.37			4.03			1.34			0.56			0.38			1.37			4.06			1.34			0.60			0.33			1.28			3.94			1.28			0.52
	(0.10	)		(0.11	)		(0.22	)		(0.14	)		(0.11	)		(0.09	)		(0.10	)		(0.09	)		(0.07	)		(0.09	)		(0.07	)		(0.04	)		(0.20	)		(0.03	)		(0.08	)
	(0.45	)		(0.85	)		(0.48	)		—			—			(0.45	)		(0.85	)		(0.48	)		—			—			(0.45	)		(0.85	)		(0.48	)		—			—
	(0.55	)		(0.96	)		(0.70	)		(0.14	)		(0.11	)		(0.54	)		(0.95	)		(0.57	)		(0.07	)		(0.09	)		(0.52	)		(0.89	)		(0.68	)		(0.03	)		(0.08	)
	—			—			—			—			—			—			—			—			—			—			—			—			—			—			—
$	14.52		$	14.66		$	14.25		$	10.92		$	9.72		$	14.73	��	$	14.89		$	14.47		$	10.98		$	9.71		$	14.27		$	14.46		$	14.07		$	10.81		$	9.56
	2.76	%		10.15	%		38.99	%		13.97	%		5.98	%		2.52	%		9.99	%		38.69	%		13.84	%		6.49	%		2.25	%		9.58	%		38.43	%		13.44	%		5.65	%
$	70,009		$	31,075		$	2,814		$	516		$	52		$	304,800		$	246,405		$	17,871		$	4,157		$	1,812		$	6,684		$	7,149		$	728		$	465		$	37
	0.94	%		0.98	%		1.11	%		1.28	%		11.62	%		1.09	%		1.13	%		1.25	%		1.44	%		1.32	%		1.37	%		1.40	%		1.61	%		1.99	%		1.98	%
	0.94	%		0.98	%		1.08	%		1.06	%		1.06	%		1.09	%		1.14	%		1.23	%		1.23	%		1.23	%		1.37	%		1.46	%		1.49	%		1.48	%		1.49	%
	1.02	%		0.80	%		0.79	%		0.82	%		(9.44	)%		0.87	%		0.61	%		0.68	%		0.75	%		1.33	%		0.58	%		0.35	%		0.46	%		0.10	%		0.21	%
	1.02	%		0.80	%		0.82	%		1.03	%		1.12	%		0.87	%		0.60	%		0.70	%		0.96	%		1.42	%		0.58	%		0.30	%		0.58	%		0.61	%		0.69	%
	79	%		24	%		48	%		87	%		107	%		79	%		24	%		48	%		87	%		107	%		79	%		24	%		48	%		87	%		107	%

59

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	A Class
	Year Ended October 31,
	2015E			2014			2013			2012			2011A
Net asset value, beginning of period	$	14.43		$	14.09		$	10.82		$	9.61		$	9.18
Income from investment operations:
Net investment income		0.11			0.13			0.14			0.09			0.11
Net gains (losses) from investments (both realized and unrealized)		0.25			1.16			3.80			1.20			0.40
Total income from investment operations		0.36			1.29			3.94			1.29			0.51
Less distributions:
Dividends from net investment income		(0.06	)		(0.10	)		(0.19	)		(0.08	)		(0.08	)
Distributions from net realized gains		(0.45	)		(0.85	)		(0.48	)		—			—
Total distributions		(0.51	)		(0.95	)		(0.67	)		(0.08	)		(0.08	)
Redemption fees added to beneficial interestsB		—			—			—			—			—
Net asset value, end of period	$	14.28		$	14.43		$	14.09		$	10.82		$	9.61
Total return C		2.43	%		9.68	%		38.39	%		13.56	%		5.49	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	16,422		$	18,345		$	1,667		$	264		$	101
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.25	%		1.33	%		1.48	%		1.61	%		3.44	%
Expenses, net of reimbursements or recoupments		1.25	%		1.33	%		1.49	%		1.49	%		1.48	%
Net investment income (loss), before reimbursements or recoupments		0.71	%		0.42	%		0.44	%		0.56	%		(1.36	)%
Net investment income (loss), net of reimbursements or recoupments		0.71	%		0.42	%		0.43	%		0.68	%		0.60	%
Portfolio turnover rate		79	%		24	%		48	%		87	%		107	%

^A LMCG Investments (formerly known as Lee Munder Capital Group, LLC) was added as an investment manager to the Mid-Cap Value Fund on July 1, 2011 and terminated on April 30, 2015.

^B Amounts represent less than $0.01 per share.

^C Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

^D Based on average shares outstanding.

^E WEDGE Capital Management was added as an investment manager to the Mid-Cap Value Fund on May 11, 2015.

60

American Beacon Mid-Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

C Class															AMR Class
Year Ended October 31,															Year Ended October 31,
2015E			2014			2013			2012			2011A			2015E			2014			2013			2012			2011A
$	14.08		$	13.81		$	10.70		$	9.56		$	9.18		$	14.80		$	14.35		$	10.96		$	9.73		$	9.27
	0.01			0.08			0.11			0.06			0.05			0.21	D		0.18			0.15			0.24			0.15
	0.23			1.09			3.67			1.15			0.38			0.25	D		1.25			3.94			1.14			0.43
	0.24			1.17			3.78			1.21			0.43			0.46			1.43			4.09			1.38			0.58
	—			(0.05	)		(0.19	)		(0.07	)		(0.05	)		(0.13	)		(0.13	)		(0.22	)		(0.15	)		(0.12	)
	(0.45	)		(0.85	)		(0.48	)		—			—			(0.45	)		(0.85	)		(0.48	)		—			—
	(0.45	)		(0.90	)		(0.67	)		(0.07	)		(0.05	)		(0.58	)		(0.98	)		(0.70	)		(0.15	)		(0.12	)
	—			—			—			—			—			—			—			—			—			—
$	13.87		$	14.08		$	13.81		$	10.70		$	9.56		$	14.68		$	14.80		$	14.35		$	10.96		$	9.73
	1.64	%		8.88	%		37.32	%		12.75	%		4.64	%		3.06	%		10.53	%		39.43	%		14.34	%		6.20	%
$	6,239		$	5,104		$	905		$	254		$	22		$	1,248		$	122,292		$	125,744		$	76,273		$	56,963
	2.01	%		2.12	%		2.25	%		2.46	%		19.14	%		0.59	%		0.65	%		0.73	%		0.78	%		0.83	%
	2.01	%		2.13	%		2.24	%		2.22	%		2.24	%		0.59	%		0.65	%		0.73	%		0.78	%		0.83	%
	(0.05	)%		(0.33	)%		(0.27	)%		(0.40	)%		(16.96	)%		1.39	%		1.21	%		1.32	%		1.46	%		1.34	%
	(0.05	)%		(0.34	)%		(0.26	)%		(0.15	)%		(0.06	)%		1.39	%		1.21	%		1.32	%		1.46	%		1.34	%
	79	%		24	%		48	%		87	%		107	%		79	%		24	%		48	%		87	%		107	%

61

American Beacon Retirement Income and Appreciation Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Y Class															Investor Class
	Year Ended October 31,															Year Ended October 31,
	2015			2014			2013			2012			2011			2015			2014			2013			2012			2011
Net asset value, beginning of period	$	11.05		$	11.19		$	11.14		$	10.83		$	10.80		$	11.06		$	11.19		$	11.14		$	10.84		$	10.81
Income from investment operations:
Net investment income		0.33			0.26			0.06			0.28			0.26			0.02			0.02			0.10			0.24			0.27
Net gains (losses) from investments (both realized and unrealized)		(0.24	)		0.30			0.32			0.37			0.05			0.04			0.50			0.25			0.37			0.02
Total income (loss) from investment operations		0.09			0.56			0.38			0.65			0.31			0.06			0.52			0.35			0.61			0.29
Less distributions:
Dividends from net investment income		(0.27	)		(0.33	)		(0.26	)		(0.28	)		(0.28	)		(0.23	)		(0.28	)		(0.23	)		(0.25	)		(0.26	)
Distributions from net realized gains		(0.38	)		(0.37	)		(0.07	)		(0.06	)		—			(0.38	)		(0.37	)		(0.07	)		(0.06	)		—
Total distributions		(0.65	)		(0.70	)		(0.33	)		(0.34	)		(0.28	)		(0.61	)		(0.65	)		(0.30	)		(0.31	)		(0.26	)
Net asset value, end of period	$	10.49		$	11.05		$	11.19		$	11.14		$	10.83		$	10.51		$	11.06		$	11.19		$	11.14		$	10.84
Total return A		0.81	%		5.19	%		3.43	%		6.10	%		2.96	%		0.49	%		4.86	%		3.14	%		5.75	%		2.71	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,138		$	733		$	608		$	2,287		$	539		$	79,558		$	99,748		$	130,013		$	163,713		$	147,415
Ratios to average net assets:
Expenses, before reimbursements		0.87	%		0.90	%		0.83	%		0.87	%		1.80	%		1.13	%		1.15	%		1.11	%		1.12	%		1.10	%
Expenses, net of reimbursements		0.80	%		0.80	%		0.80	%		0.81	%		0.84	%		1.13	%		1.15	%		1.11	%		1.12	%		1.10	%
Net investment income, before reimbursements		1.68	%		1.71	%		1.95	%		2.20	%		1.45	%		1.41	%		1.42	%		1.61	%		1.98	%		2.15	%
Net investment income, net of reimbursements		1.75	%		1.81	%		1.99	%		2.26	%		2.41	%		1.41	%		1.42	%		1.60	%		1.98	%		2.15	%
Portfolio turnover rate		55	%		50	%		53	%		42	%		54	%		55	%		50	%		53	%		42	%		54	%

^A  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

62

American Beacon Retirement Income and Appreciation Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

A Class															C Class
Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012			2011			2015			2014			2013			2012			2011
$	11.10		$	11.23		$	11.17		$	10.85		$	10.81		$	11.12		$	11.24		$	11.17		$	10.85		$	10.82
	0.48			0.03			0.12			0.22			0.23			0.09			0.07			0.08			0.13			0.15
	(0.42	)		0.49			0.23			0.39			0.05			(0.11	)		0.36			0.18			0.39			0.04
	0.06			0.52			0.35			0 .61			0.28			(0.02	)		0.43			0.26			0.52			19.00
	(0.23	)		(0.28	)		(0.22	)		(0.23	)		(0.24	)		(0.14	)		(0.18	)		(0.12	)		(0.14	)		(0.16	)
	(0.38	)		(0.37	)		(0.07	)		(0.06	)		—			(0.38	)		(0.37	)		(0.07	)		(0.06	)		—
	(0.61	)		(0.65	)		(0.29	)		(0.29	)		(0 .24	)		(0.52	)		(0.55	)		(0.19	)		(0.20	)		(0.16	)
$	10.55		$	11.10		$	11.23		$	11.17		$	10.85		$	10.58		$	11.12		$	11.24		$	11.17		$	10.85
	0.54	%		4.83	%		3.18	%		5.78	%		2.61	%		(0.22	)%		4.01	%		2.28	%		4.87	%		1.75	%
$	1,531		$	447		$	851		$	1,253		$	770		$	1,943		$	1,897		$	1,918		$	1,977		$	1,587
	1.17	%		1.27	%		1.23	%		1.28	%		2.00	%		1.91	%		2.01	%		1.99	%		2.04	%		1.99	%
	1.04	%		1.13	%		1.14	%		1.14	%		1.15	%		1.86	%		1.94	%		1.96	%		1.97	%		1.94	%
	1.37	%		1.30	%		1.48	%		1.82	%		1.21	%		0.63	%		0.58	%		0.71	%		1.06	%		1.25	%
	1.50	%		1.44	%		1.57	%		1.95	%		2.06	%		0.69	%		0.65	%		0.75	%		1.13	%		1.30	%
	55	%		50	%		53	%		42	%		54	%		55	%		50	%		53	%		42	%		54	%

63

American Beacon Funds^SM

Privacy Policy & Federal Tax Information

October 31, 2015 (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

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended October 31, 2015. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2015.

The Funds designated the following items with regard to distributions paid during the year ended December 31, 2014. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

	Balanced			Mid-Cap Value			Retirement Income and Appreciation
Corporate Dividends Received Deduction		38.26	%		78.05	%		6.50	%
Qualified Dividend Income		70.74	%		100.00	%		10.36	%

The Balanced Fund designated $65,725,385 as long-term capital gains distributions and $5,283,231 as short-term capital gain distributions for the year ended October 31, 2015.

The Mid-Cap Value Fund designated $22,863,262 as long-term capital gains distributions and $3,218,438 as short-term capital gain distributions for the year ended October 31, 2015.

The Retirement Income and Appreciation Fund designated $2,437,706 as long-term capital gains and $1,043,367 as short term capital gains distributions for the year ended October 31, 2015.

Shareholders will receive notification in January 2016 of the applicable tax information necessary to prepare their 2015 income tax returns.

64

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

At an in-person meeting held on November 12, 2014, telephonic meetings held on November 26, 2014 and December 6, 2014 and an in-person meeting held on December 10, 2014 (collectively, the “Board Meetings”), the Board of Trustees (“Board”) considered the approval of:

(1) a new Management Agreement (“New Management Agreement”) among American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”), on behalf of the American Beacon Balanced Fund (“Balanced Fund”), the American Beacon Mid-Cap Value Fund (“Mid-Cap Value Fund”), and the American Beacon Retirement Income and Appreciation Fund (“Retirement Income Fund”) (collectively, the “Funds”);

(2) new Investment Advisory Agreements among the Manager, the Trust, on behalf of the Balanced Fund, and each of Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”), and Hotchkis and Wiley Capital Management, LLC (“Hotchkis”);

(3) new Investment Advisory Agreements among the Manager, the Trust, on behalf of the Mid-Cap Value Fund, and each of Pzena Investment Management, LLC (“Pzena”), Lee Munder Capital Group, LLC (“LMCG”),and Barrow; and

(4) a new Investment Advisory Agreement among the Manager, the Trust, on behalf of the Retirement Income Fund, and Calamos Advisors LLC (“Calamos”).

Collectively, the new Investment Advisory Agreements are hereinafter referred to as the “New Advisory Agreements,” and Barrow, Brandywine, Hotchkis, Pzena, LMCG and Calamos are hereinafter referred to as the “Sub-Advisors.”

The Board meetings were held for the Trustees to consider the New Management Agreement and New Advisory Agreements (“New Agreements”) because, on November 20, 2014, Lighthouse Holdings Parent, Inc. (“LPHI”), the indirect parent company of the Manager, entered into an Agreement and Plan of Merger pursuant to which LHPI agreed to be acquired by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) and Estancia Capital Management, LLC (“Estancia”) (collectively, the “Purchasers”), which are private equity firms (the “Transaction”). As required by the Investment Company Act of 1940, as amended (“1940 Act”), the current Management Agreement (“Current Management Agreement”) among the Manager and the Trust on behalf of the Balanced Fund, Mid-Cap Value Fund and Retirement Income Fund and the current Investment Advisory Agreements (“Current Advisory Agreements”) among the Manager, Barrow, Brandywine, Hotchkis and the Trust, on behalf of the Balanced Fund, the Manager, Pzena, LMCG, Barrow and the Trust, on behalf of the Mid-Cap Value Fund, and the Manager, Calamos and the Trust, on behalf of the Retirement Income Fund, provided for their automatic termination in the event of an assignment. The Transaction was deemed an “assignement”, under the 1940 Act. As a result, the Current Management Agreement and each Current Advisory Agreement (“Current Agreements”) were deemed to have automatically terminated upon the closing of the Transaction. (The Transaction closed on April 30, 2015).

The Board focused on the effect that the Transaction would have on the Manager and the Funds. Additionally, the Board considered that it had requested and evaluated the information relevant to the renewal of the Current Management Agreement and Current Advisory Agreements at in-person meetings held in May and June 2014. The Manager represented to the Board that there had been no material changes or developments relating to the Manager or any of the Sub-Advisors since the May and June 2014 meetings, other than the changes or developments subsequently reported to the Board or discussed in the due diligence materials submitted to the Trustees in connection with the Transaction. In light of the proximity of the Board’s consideration of the renewal of the Current Agreements, and the Board’s ongoing due diligence review in connection with the Transaction, the Board determined that it was not necessary to repeat certain aspects of the review conducted in connection with the approvals in the past year.

In connection with the Board Meetings, the Trustees received and evaluated such information as they deemed necessary to their consideration of the New Agreements. The information requested on behalf of the Board included, among other information, the following:

• a description of the Transaction, the effect of the Transaction on the Manager, the Trust and the Board, and any proposed changes to the Trust, its service providers, the Funds’ fee structures, fee waivers, and other information;

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

• information regarding the financial resources of the Purchasers and the Manager’s capital structure after the Transaction, including confirmation that the Manager’s financial condition would not raise concerns that the Manager would be unable to continue providing the same scope and quality of services to the Funds;

• information regarding the Manager’s due diligence, bidding and selection process with respect to the Purchasers;

• information regarding the structure of the relationship between Kelso and Estancia and the role that each would assume in advance of and after the Closing;

• information regarding each Purchaser’s ownership structure and key personnel, including information regarding affiliations of the Purchasers and the Manager after the Transaction;

• information regarding each Purchaser’s asset management experience, including the experience of the Purchasers’ key personnel relating to the management of investment companies registered under the 1940 Act;

• the Purchasers’ business plans with respect to the Manager after the Transaction;

• information regarding the extent to which the Purchasers expect to be involved in the Manager’s day-to-day operations and the persons to whom the Manager’s key personnel will report;

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Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

• information regarding any anticipated impact that the Transaction might have on the Manager’s compliance activities or the resources available to the Funds’ Chief Compliance Officer;

• a discussion of any potential material changes to the Current Agreements;

• a description of any expected changes in distribution or marketing efforts and strategies for the Funds as a result of the Transaction;

• information regarding whether the Purchasers or the Manager anticipated proposing any changes to the membership of the Board;

• a discussion of the length of the Purchasers’ anticipated ownership of the Manager and the expected duration of the investment funds financing the Transaction;

• information regarding the ownership and investment of management personnel in the Manager;

• information regarding the Manager’s employee equity incentive plan after the Closing;

• a summary of any material past, pending or anticipated litigation or regulatory proceedings involving the Purchasers, or their personnel;

• verification of the continuation of the Manager’s insurance coverage after the Transaction with regard to the services provided to the Funds; and

• in-person presentations by and discussions with the Manager and representatives of the Purchasers regarding the Transaction.

The Board also considered information that had been provided to the Board by the Manager and the Sub-Advisors for the May and June 2014 meetings in connection with the renewal of the Current Agreements.

Provided below is an overview of the primary factors the Trustees considered at the Board Meetings. The Board did not identify any particular information that was most relevant to its consideration to approve the New Agreements, and each Trustee may have afforded different weight to the various factors. In connection with the approval process for the New Agreements, the Trustees received advice from their legal counsel detailing the Board’s responsibilities pertaining thereto. Legal counsel to the non-interested Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of the New Agreements. Based on its evaluation, the Board unanimously concluded that the terms of the New Agreements were reasonable and fair and that the approval of the New Agreements was in the best interests of the Funds and their shareholders.

In determining whether to approve the New Agreements, on December 10, 2014, the Trustees considered the best interests of each Fund separately. The Board considered each Fund’s investment management and sub-advisory relationships separately. In each instance, the Board considered its review of the Current Agreements in May and June 2014, and the information received in November and December 2014 with respect to, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each Sub-Advisor for a Fund; (3) the costs incurred by the Manager in rendering services to the Funds and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or a Sub-Advisor or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect these economies of scale for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or a Sub-Advisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager and the Purchasers regarding certain key aspects of the materials submitted in support of the approval of the New Agreements.

Nature, Extent and Quality of the Services Provided. With respect to the approval of the New Agreements, the Board considered that the New Agreements provide for the Manager and each Sub-Advisor to provide the same services to each Fund on substantially the same terms as the Current Agreements. The Board considered representations by the Manager and/or Purchasers that the Transaction will not result in any changes to the manner in which each Fund’s assets are managed. The Board also considered representations by the Manager and/or the Purchasers that the Transaction will not result in any adverse impact or changes to: the personnel involved in the management of the Funds; the Manager’s disciplined investment approach and goal to provide consistent above average long-term performance at a lower than average cost; the Manager’s continuing efforts to enhance distribution of the Funds’ shares and add new series to the Trust and share classes to the Funds’ product line; the adequacy of the Manager’s financial condition; the Manager’s day-to-day operations; the Manager’s compliance activities or the resources available to the Trust’s Chief Compliance Officer; or the Funds’ service providers or Sub-Advisors. The Board also considered the Manager’s representation that there had been no material changes or developments regarding the Manager or the Sub-Advisors since the Board’s consideration of the Current Agreements in May and June 2014 that had not previously been reported to the Board. The Board also considered information regarding the post-closing capitalization of the Purchasers and the Purchasers’ long-term business goals with regard to the Manager and the Manager’s activities with respect to the Trust, which are consistent with the Manager’s current goals. 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 the Sub-Advisors were appropriate for each Fund and, thus, determined to approve the New Agreements for each Fund.

Investment Performance. The Board considered its review of the comparative information regarding each Fund’s investment performance relative to its benchmark index(es) and peer group in connection with the renewal of the Current Agreements. The Board also considered the performance reports and discussions with management at Board and Committee meetings since June 2014. The Manager also noted that it generally was satisfied with the performance of the Sub-Advisors.

Costs of the Services to be Provided to the Funds and the Projected Profits to be Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager by Fund, the Board considered that the Transaction would result in no changes to the fees charged to the Funds or the Manager’s fee waivers currently in place with respect to each Fund. Additionally, the Board noted that there had been no material changes in this regard since its consideration of the Current Agreements in May and June 2014. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current

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Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

Agreements in May and June 2014, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager. The Board did not consider the costs of the services to be provided and profits to be realized by each Sub-Advisor from its relationship with its respective Fund, noting instead the substantially arm’s-length nature of the relationship between the Manager and each Sub-Advisor with respect to the negotiation of the advisory fee rate on behalf of the Funds.

Economies of Scale and Whether Fee Levels Reflect Economies of Scale. In considering the reasonableness of the management fees, the Board considered that the Funds would pay the same fee rates to the Manager under the New Management Agreement as the Funds currently pay under the Current Management Agreement. The Board also considered that each Fund would pay the same investment advisory fee rate to its Sub-Advisor under the New Advisory Agreement as the Fund pays under its Current Advisory Agreement. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the Manager’s fee schedule for each Fund, Barrow, Brandywine and Hotchkis’ fee schedules for the Balanced Fund, Pzena, LMCG and Barrow’s fee schedules for the Mid-Cap Value Fund, and Calamos’ fee schedule for the Retirement Income Fund, provide for a reasonable sharing of benefits from any economies of scale with each Fund.

Benefits Derived by the Manager from Relationship With the Funds. The Board considered that the “fall-out” or ancillary benefits that accrue to the Manager and/or the Sub-Advisors as a result of the advisory relationships with the Funds would not change as a result of the Transaction. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the potential benefits accruing to the Manager and the Sub-Advisors under the New Management Agreement and the New Advisory Agreements by virtue of the Manager’s relationship with the Funds, Barrow, Brandywine and Hotchkis’ relationship with the Balanced Fund, Pzena, LMCG and Barrow’s relationship with the Mid-Cap Value Fund, and Calamos’ relationship with the Retirement Income Fund appear to be fair and reasonable.

Board’s Conclusion. Based on the various considerations described above, the Board, including a majority of Trustees who are not “interested persons” of the Fund, the Manager, Barrow, Brandywine, Hotchkis, Pzena, LMCG, or Calamos, as that term is defined in the 1940 Act, concluded that the management and investment advisory fee rates to be paid by the Balanced Fund, the Mid-Cap Value Fund and the Retirement Income Fund are fair and reasonable and that the approval of the New Agreements is in the best interests of the Balanced Fund, the Mid-Cap Value Fund and the Retirement Income Fund, and approved the New Agreements.

At its March 3-4, 2015 meetings, the Board of Trustees (“Board”) considered the approval of a new investment advisory agreement among the Manager, WEDGE Capital Management L.L.P. (“Wedge”) and the the American Beacon Funds, on behalf of the American Beacon Mid-Cap Value Fund (“Mid-Cap Value Fund”) (“Wedge Agreement”).

Approval of WEDGE Capital Management L.L.P.

Prior to the meeting, the Board requested and reviewed information provided by Wedge in connection with its consideration of the Wedge Agreement, and the Investment Committee of the Board met with representatives of Wedge. The Board considered, among other materials, responses by Wedge to inquiries requesting:

• a description of the advisory and related services proposed to be provided to the Mid-Cap Value Fund;

• identification of the professional personnel to perform services for the Mid-Cap Value Fund and their education, experience and responsibilities;

• a comparison of investment performance of Wedge’s Mid Cap Value Composite (“Mid-Cap Composite”) and three registered investment companies managed by Wedge with investment objectives and strategies similar to those of the Mid-Cap Value Fund (“Similar Funds”) with the performance of the Russell Mid Cap Value Index (“Russell Index”), the Mid-Cap Value Fund’s benchmark index;

• an analysis of the proposed advisory fee;

• a description of the portfolio managers’ compensation, including any incentive arrangement and, if compensation is tied to performance, a description of the oversight mechanism to prevent a manager with lagging performance from taking undue risks;

• a description of Wedge’s compliance program and any material compliance matters, as well as its trading activities;

• a discussion of Wedge’s financial condition and confirmation that Wedge’s financial condition would not impair its ability to provide high-quality services to the Mid-Cap Value Fund; and

• any other information that Wedge believed would be material to the Board’s consideration of the Wedge Agreement.

Provided below is an overview of the primary factors the Board considered at its March 3-4, 2015 meetings at which the Board considered the approval of the Wedge Agreement. In determining whether to approve the Wedge Agreement, the Board considered, among other things, the following factors: (1) the nature and quality of the services to be provided; (2) the investment performance of Wedge; (3) the costs to be incurred by Wedge in rendering its services and the resulting profits or losses; (4) the extent to which economies of scale, if any, have been taken into account in setting the fee schedule; (5) whether fee levels reflect these economies of scale, if any, for the benefit of investors; (6) comparisons of services and fees with contracts entered into by Wedge with other clients; and (7) any other benefits anticipated to be derived by Wedge from its relationship with the Mid-Cap Value Fund.

The Board did not identify any particular information that was most relevant to its consideration of the Wedge Agreement, and each Trustee may have afforded different weight to the various factors. The Trustees posed questions to various management personnel of Wedge regarding certain key aspects of the materials submitted in support of the approval. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of the Wedge Agreement. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of investment advisory contracts. Based on its evaluation, the Board unanimously concluded that the terms of the Wedge Agreement were reasonable and fair and that the approval of the Wedge Agreement was in the best interests of the Mid-Cap Value Fund.

67

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Funds (Unaudited)

Nature, extent and quality of the services to be provided by Wedge. The Board considered information regarding Wedge’s principal business activities, its reputation, financial condition and overall capabilities to perform the services under the Wedge Agreement. In addition, the Board considered the background and experience of the personnel who will be assigned responsibility for managing Wedge’s allocation of the Mid-Cap Value Fund. The Board also considered Wedge’s investment resources, infrastructure and the adequacy of its compliance program. In addition, the Board took into consideration the Manager’s recommendation of Wedge. The Board considered Wedge’s representation regarding the strength of its financial condition and that its current staffing levels were adequate to service the Mid-Cap Value Fund. Based on this information, the Board concluded that the nature, extent and quality of the advisory services to be provided by Wedge were appropriate for the Mid-Cap Value Fund in light of its investment objective, and, thus, supported a decision to approve the Wedge Agreement.

Performance of Wedge. The Board evaluated the performance information provided by Wedge regarding the performance of the Mid-Cap Composite and the Similar Funds relative to the performance of the Russell Index. The Board considered that the Mid-Cap Composite outperformed the Russell Index for the one-year, three-year, five-year and since-inception periods. The Board also considered that the Similar Funds outperformed the Mid-Cap Composite for all applicable periods. Based on the foregoing information, the Board concluded that the historical investment performance record of Wedge supported approval of the Wedge Agreement.

Comparisons of the amounts to be paid under the Wedge Agreement with those under contracts between Wedge and its other clients. In evaluating the Wedge Agreement, the Board reviewed the proposed advisory fee rate for services to be performed by Wedge on behalf of the Mid-Cap Value Fund. The Board noted that Wedge’s investment advisory fee rate under the Wedge Agreement would be paid to Wedge by the Mid-Cap Value Fund. The Board considered that the advisory fee rate proposed for the Mid-Cap Value Fund was comparable to the advisory fee rates charged to two of the Similar Funds, but was higher than the advisory fee rate charged to one of the Similar Funds. The Board also considered that the proposed advisory fee rate was the same as the standard advisory fee rate that Wedge charges to non-investment company clients. The Board also considered that Wedge has agreed to a most favored nation agreement whereby the Mid-Cap Value Fund’s blended fee rate will be the lowest offered to any other client with comparable or lower levels of assets and will be reduced accordingly if Wedge offers a lower fee rate to a client with a comparable or lower level of assets. The Board noted that the proposed advisory fee rate is higher at certain asset levels than the advisory fee rate schedule for the existing subadviser that Wedge would replace, but lower than the advisory fee rate schedule at every asset level for one of the two remaining subadvisers. After evaluating this information, the Board concluded that Wedge’s advisory fee rate under the Wedge Agreement was reasonable in light of the services to be provided to the Mid-Cap Value Fund.

Costs of the services to be provided and profits to be realized by Wedge and its affiliates from its relationship with the Mid-Cap Value Fund. The Board did not consider the costs of the services to be provided and profits to be realized by Wedge from its relationship with the Mid-Cap Value Fund, noting instead the arm’s-length nature of the relationship between the Manager and Wedge with respect to the negotiation of the advisory fee rate on behalf of the Mid-Cap Value Fund.

Economies of Scale. The Board considered Wedge’s representation that the breakpoints included in the proposed advisory fee rate reflect potential economies of scale for the benefit of the Mid-Cap Value Fund’s investors.

Benefits to be derived by Wedge from the relationship with the Mid-Cap Value Fund. The Board considered the “fall-out” or ancillary benefits that might accrue to Wedge as a result of its relationship with the Mid-Cap Value Fund, including greater exposure in the marketplace with respect to Wedge’s investment process and expanding the level of assets under management by Wedge. The Board also noted Wedge’s representation that it intends to receive soft dollar benefits in connection with Mid-Cap Value Fund transactions. Based on the foregoing information, the Board concluded that the potential benefits accruing to Wedge by virtue of its relationship with the Mid-Cap Value Fund appear to be fair and reasonable.

Board’s Conclusion. Based on the various considerations described above, the Board, including a majority of Trustees who are not “interested persons” of the Mid-Cap Value Fund, the Manager or Wedge, as that term is defined in the 1940 Act, concluded that the proposed investment advisory fee rate is fair and reasonable and that the approval of the Wedge Agreement is in the best interests of the Mid-Cap Value Fund and approved the Wedge Agreement.

68

American Beacon Funds^SM

Results of Shareholder Meeting (Unaudited)

Special meetings of shareholders of each of the portfolios of the American Beacon Funds (the “Trust”) were held on April 7 and April 28, 2015. The shareholders of the Balanced, Mid-Cap Value, and Retirement Income and Appreciation Funds (the “Funds”) approved a new investment management agreement between American Beacon Advisors, Inc. and the Funds. Approval of this proposal required a majority of the outstanding voting securities of each Fund. The following are the results of the shareholder votes for this proposal:

Funds	For		Against		Abstain		Non-Voting
Balanced Fund		785,874,263.69		1,269,741.04		1,852,167.45		192,389,890.64
Mid-Cap Value Fund		305,511,000.55		698,760.67		1,370,575.27.		101,028,297.64
Retirement Income and Appreciation Fund		88,356,773.62		122,298.16		110,091.44		15,347,160.00

Special meetings of shareholders of the Trust were held on April 7 and April 28, 2015. The shareholders of the Trust approved the re-election of nine of the current Trustees to the Board of the American Beacon Trust and the election of two additional Trustees to the Board. Approval of this proposal required a plurality vote of the Trust’s shares. The following are the results of the election of each Trustee:

Gilbert G. Alvarado
Affirmative	16,655,574,211.10
Withhold	242,060,281.87
Joseph B. Armes
Affirmative	16,653,130,207.99
Withhold	244,504,284.98
Gerard J. Arpey
Affirmative	16,659,813,172.19
Withhold	237,821,320.78
W. Humphrey Bogart
Affirmative	16,532,151,093.14
Withhold	365,483,399.83
Brenda A. Cline
Affirmative	16,662,050,138.08
Withhold	235,584,354.89
Eugene J. Duffy
Affirmative	16,430,210,258.21
Withhold	467,424,234.76
Thomas M. Dunning
Affirmative	16,651,792,247.83
Withhold	245,842,245.14
Alan D. Feld
Affirmative	14,899,039,186.08
Withhold	1,998,595,306.89
Richard A. Massman
Affirmative	16,651,582,060.07
Withhold	246,052,432.90
Barbara J. McKenna
Affirmative	16,435,773,869.81
Withhold	461,860,623.16
R. Gerald Turner
Affirmative	16,653,429,720.08
Withhold	244,204,772.89

69

Trustees and Officers of the American Beacon Funds ^SM

(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 220 East Las Colinas Boulevard, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-four funds in the fund complex that includes the Trust 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** (78)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
	Term
NON-INTERESTED TRUSTEES	Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (45)	Trustee since 2015	Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present) Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-Present); Director, Sacramento Regional Technology Alliance (2011-Present); Director, Women’s Empowerment (2009-2014); Trustee, American Beacon Select Funds (2015-Present).
Joseph B. Armes (53)	Trustee since 2015	Chairman, President & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2013-Present); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Chief Operating Officer, Hicks Holdings, LLC (Hicks Family assets and investments) (2005-2010); Trustee, Baylor University Board of Regents (2001-2010); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present).
Gerard J. Arpey (57)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, AMR Corp. and American Airlines; Inc. (2003-2011); Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
W. Humphrey Bogart (71)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Brenda A. Cline (54)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Director, Tyler Technologies, Inc.(public sector software solutions company) (2014-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (61)	Trustee since 2008	Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).

70

Trustees and Officers of the American Beacon Funds ^SM

(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
OFFICERS	Term
	One Year
Thomas M. Dunning (73)	Trustee since 2008	Chairman Emeritus (2008-Present); Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (72)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present) and 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); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Barbara J. McKenna, CFA (52)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (69) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Gene L. Needles, Jr. (60)	President since 2009 Executive Vice President since 2009	President, CEO and Director, American Beacon Advisors, Inc. (2009-Present); President, CEO and Director, Astro AB Borrower, Inc. (2015-Present); President, CEO and Director, Astro AB Acquisition, Inc.(2015-Present); President, CEO and Director, Astro AB Topco, Inc. (2015-Present), President, CEO and Director, Astro AB Holdings, LLC. (2015-Present); President, CEO and Director, Lighthouse Holdings, Inc.; (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President and CEO, American Private Equity Management, L.L.C. (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Rosemary K. Behan (56)	VP, Secretary and Chief Legal Officer since 2006	Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Astro AB Borrower, Inc. (2015-Present); Secretary, Astro AB Acquisition, Inc. (2015-Present); Secretary, Astro AB Topco, Inc. (2015-Present); Secretary, Astro AB Holdings, LLC. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, L.L.C.(2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Brian E. Brett (55)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present).
Erica Duncan (45)	VP Since 2011	Vice President, Marketing and Client Services, American Beacon Advisors, Inc. (2011-Present); Supervisor, Brand Marketing, Invesco (2010-2011);
Michael W. Fields (61)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (54)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present); Treasurer, Astro AB Borrower, Inc. (2015-Present); Treasurer, Astro AB Acquisition, Inc. (2015-Present); Treasurer, Astro AB Topco, Inc. (2015-Presnt); Treasurer, Astro AB Holdings, LLC. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, L.L.C. (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).

71

Trustees and Officers of the American Beacon Funds ^SM

(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
OFFICERS	Term
	One Year
Terri L. McKinney (51)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (40)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Manager and Senior Vice President, American Private Equity Management, L.L.C. (2012-Present); Senior Vice President and Director, Astro AB Borrower, Inc. (2015-Present); Senior Vice President and Director, Astro AB Acquisition, Inc. (2015-Present); Senior Vice President and Director, Astro AB Topco, Inc. (2015-Present), Senior Vice President and Director, Astro AB Holdings, LLC.(2015-Present); Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010).
Samuel J. Silver (52)	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 (44)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, L.L.C. (2012-Present).
Sonia L. Bates (58)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer, Astro AB Borrower, Inc. (2015-Present); Asst. Treasurer, Astro AB Acquisition, Inc.(2015-Present); Asst. Treasurer, Astro AB Topco, Inc. (2015-Present); Asst. Treasurer, Astro AB Holdings, LLC.; Asst. Treasurer, Lighthouse Holdings, Inc. (2011-2015); Asst. Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Asst. Treasurer, American Private Equity Management, L.L.C. (2012-Present).

* 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 Trust, 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 years to one or more of the Trust’s sub-advisors.

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73

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 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 Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling (800)-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available at 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:

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 Mid-Cap Value Fund and American Beacon Retirement Income and Appreciation Fund are service marks of American Beacon Advisors, Inc.

AR 10/15

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
Schedules of Investments
Emerging Markets Fund	13
International Equity Fund	17
Financial Statements	21
Notes to the Financial Statements	25
Financial Highlights	44
Additional Information	Back Cover

EMERGING MARKETS FUND RISKS

Investing in foreign and emerging market securities may involve heightened risk due to currency fluctuations and economic and political risks. The use of futures contracts for cash management may subject the Fund to losing more money than invested. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

INTERNATIONAL EQUITY FUND RISKS

Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund may participate in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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, 2015

Dear Shareholders,

During much of the 12-month period ended October 31, 2015, uneven global economic growth, declining commodity prices and disparate central bank policies set the stage for mixed returns in all markets. The weakening of many currencies against the U.S. dollar also took a toll on total returns for dollar-based investors in many international markets. Uncertainty over the timing of the U.S. Federal Reserve’s first interest rate increase since emergency lending rates were established during the 2008 financial crisis continued to weigh heavily on investors’ minds. At its October 2015 meeting, the Federal Open Market Committee decided against changing interest rates, but kept December on the table as a possibility.

For the period under review, benchmarks for international markets posted modest declines; the MSCI EAFE Index declined -0.07% and the Lipper International Funds Index declined -0.67%. Conversely, benchmarks for emerging markets posted sharp declines; the MSCI Emerging Markets Index declined -14.53% and the Lipper Emerging Markets Fund Index declined -15.26%.

We are proud to offer a broad range of funds to help investors navigate the economic storms and market downturns in the U.S. and abroad. Our years of experience evaluating sub-advisors has led us to identify and partner with several asset managers who have adhered to their disciplined processes for many years and through a variety of economic and market conditions.

For the 12-month period ended October 31, 2015:

• American Beacon International Equity Fund (Investor Class) returned -1.35%.

• American Beacon Emerging Markets Fund (Investor Class) returned -19.04%.

Thank you for your continued investment and confidence in the American Beacon Funds. For additional information about the Funds or to access your account information, please visit our website at www.americanbeaconfunds.com.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

Emerging Markets Overview

October 31, 2015 (Unaudited)

Global markets were mixed at the end of 2014, as investors digested a wide range of year-end economic data. U.S. stocks tallied a gain amid better-than-expected growth indicators, while emerging-market stocks struggled. Although factory output and fixed-asset investment in China slowed through the final months of 2014, the People’s Bank of China (“PBOC”) implemented a targeted move of injecting 400 billion yuan into the interbank market to release liquidity, while exploring a change in how loan-to-deposit ratios are calculated at the country’s banks to free up more cash. The PBOC also surprised investors with a rate cut during the period. Stocks in Russia declined further with a tumbling ruble and weak oil prices, raising concerns that the country could face a recession, while markets in Brazil continued their descent when the largest corruption scandal in the country’s history threatened several key public-works projects that were seen as critical to the country’s economic revival.

The opening months of 2015 were more encouraging for equities, bolstered by the easy-money policies of major central banks and signs of stability in some troubled economies. In Europe, the European Central Bank announced its plan to purchase €60 billion a month in assets to stimulate growth and lift inflation from dangerously low levels while protecting the rest of the eurozone from Greece’s political turmoil. Among emerging markets, China lowered its growth forecast and initiated a surprise rate cut during the period, as leaders attempted to stoke the world’s second-largest economy during a slumping property market and the specter of deflationary risks. India’s central bank also surprised markets when it cut its key lending rate for the second time during the year, joining the worldwide trend of monetary easing that drove global interest rates to multiyear lows.

By April, evidence intensified that the global economic recovery was gaining traction, which helped boost markets. However, markets subsequently sold off by the end of the second quarter against a backdrop of Greece’s intensifying debt drama, China’s economic slowdown and the prospect of a rate hike by the U.S. Federal Reserve (“the Fed”). While stocks in the U.S. and developed international markets were mostly flat through the summer months, emerging markets were more encouraging as China posted solid returns.

The Chinese A-share market, however, declined precipitously on mounting concerns about rising valuations. Consequently, the PBOC cut interest rates and loosened bank reserve requirements to curtail the slide. Reserve Bank of India Governor Raghuram Rajan urged banks to pass a sequence of rate cuts to lending rates to spur investment. Russian equities also charged higher in the second quarter, propelled by an interest-rate cut from the country’s central bank.

Markets were challenged through the end of the Fund’s fiscal year-end as China’s economic slowdown, uncertainty about the Fed’s policy, a rout in commodity prices and growing pessimism about corporate earnings rattled investors. Among emerging markets, reports of a slowdown in China dominated headlines and unnerved investors in the Chinese A-share market and, subsequently, many other markets. To stem the decline, the PBOC devalued its currency in a move to boost exports and then cut interest rates and reduced bank-reserve requirements. Overall, Eastern or “emerging” Europe, India, South Korea and Mexico held up better than the markets with more commodity-dependent economies, including Brazil, South Africa, Malaysia, Colombia and Peru.

In a classic reversal of sentiment at the end of the period, investors rewarded many of the stocks that had dropped most precipitously during the preceding months. Many emerging-market stocks climbed despite uneven but modestly positive news from China, and the consensus at period-end was that the Fed was eyeing a December interest-rate hike.

2

American Beacon Emerging Markets Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the Emerging Markets Fund (the “Fund”) returned -19.04% for the twelve months ended October 31, 2015. The Fund underperformed the MSCI Emerging Markets Index (the “Index”) return of -14.53%.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker		1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Institutional Class (1,5,8)		AEMFX		(18.66	)%		(3.83	)%		4.58	%	$	15,656
Y Class (1,2,8)		ACEYX		(18.74	)%		(3.95	)%		4.50	%		15,534
Investor Class (1,6,8)		AAEPX		(19.04	)%		(4.25	)%		4.18	%		15,062
A Class with sales charge (1,3,8)		AEMAX		(23.75	)%		(5.37	)%		3.55	%		14,179
A Class without sales charge (1,3,8)		AEMAX		(19.11	)%		(4.25	)%		4.17	%		15,040
C Class with sales charge (1,4,8)		AEMCX		(20.67	)%		(4.96	)%		3.77	%		14,480
C Class without sales charge (1,4,8)		AEMCX		(19.67	)%		(4.96	)%		3.77	%		14,480
AMR Class (1,8)		AAMRX		(18.54	)%		(3.79	)%		4.72	%		15,860
MSCI Emg Mkts Index (7)				(14.53	)%		(2.80	)%		5.70	%		17,408

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 calculated based on the published end of day net asset values 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 ten-year period represents the returns achieved by the Institutional Class from 10/31/05 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 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 10/31/05. A portion of the fees charged to the Y Class of the Fund was waived from 2010 through 2013 and in 2015. Performance prior to waiving fees was lower than the actual returns shown for these periods.

3. Fund performance for the ten-year period represents the returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the A Class of the Fund was waived from 2010 through 2013. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2013. The maximum sales charge for A Class is 5.75%.

4. Fund performance for the ten-year period represents the returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2013 and 2015. Performance prior to waiving fees was lower than the actual returns shown for these periods. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

5. A portion of the fees charged to the Institutional Class of the Fund has been waived from 2010 through 2013 and in 2015. Performance prior to waiving fees was lower than the actual returns shown for these periods.

3

American Beacon Emerging Markets Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

6. A portion of the fees charged to the Investor Class of the Fund was waived from 2010 through 2013 and partially recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2013.

7. 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. 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 1.44%, 1.55%, 1.89%, 1.76%, 2.50%, and 1.39%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

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

Stock selections in South Korea and Hong Kong/China led to the Fund’s relative underperformance, despite benefit gained from selections in the Czech Republic. Poor stock selections included POSCO (down 41.4%) and Hana Financial Group Inc. (down 27.1%) in South Korea, and First Pacific Co. Ltd. (down 33.9%) and Parkson Retail Group Ltd. (down 45.9%) in Hong Kong/China. Stocks benefiting relative performance within the Czech Republic included O2 Czech Republic A.S. (up 93.9%) and Komercni Banka A.S. (up 4.0%).

Relative contribution from country allocation was positive for the twelve-month period, as the Fund added value through underweighting Malaysia (down 30.0%) and overweighting Hungary (up 13.0%). Overweighting Brazil (down 45.9%) detracted from relative performance during the period.

Top Ten Holdings (% Net Assets)
Samsung Electronics Co. Ltd.	3.2
KB Financial Group, Inc.	1.9
Hyundai Mobis Co., Ltd.	1.8
POSCO	1.7
Cia de Saneamento Basico do Estado de Sao Paulo	1.6
Lukoil PJSC	1.5
COSCO Pacific Ltd.	1.5
China Mobile Ltd.	1.4
Sberbank, Sponsored ADR	1.4
Gazprom OAO Sponsored ADR	1.4
Total Fund Holdings	174

Sector Allocation (% Equities)
Financials	26.2
Consumer Discretionary	16.7
Industrials	12.0
Materials	11.2
Telecommunication Services	10.6
Information Technology	6.9
Energy	6.5
Utilities	5.4
Consumer Staples	4.1
Health Care	0.4

4

American Beacon Emerging Markets Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

Country Allocation (% Equities)
Hong Kong/China	24.9
South Korea	20.3
Brazil	15.0
India	7.4
Russia	5.4
Taiwan	4.4
Mexico	4.1
Turkey	3.2
Chile	1.9
Czech Republic	1.8
Austria	1.3
Poland	1.2
Indonesia	1.2
Luxembourg	1.1
Thailand	1.1
Hungary	1.1
Malaysia	0.9
South Africa	0.9
Greece	0.9
Colombia	0.8
Singapore	0.6
United Arab Emirates	0.3
United Kingdom	0.1
Argentina	0.1

5

American Beacon Emerging Markets Fund^SM

Fund Expenses

October 31, 2015 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as sales charges (loads) on purchase payments and 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, 2015 through October 31, 2015.

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 or Roth 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 or Roth 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 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 - 10/31/15
Institutional Class
Actual	$	1,000.00	$	822.28	$	6.20
Hypothetical **	$	1,000.00	$	1,018.40	$	6.87
Y Class
Actual	$	1,000.00	$	822.34	$	6.66
Hypothetical **	$	1,000.00	$	1,017.90	$	7.38
Investor Class
Actual	$	1,000.00	$	820.40	$	8.21
Hypothetical **	$	1,000.00	$	1,016.18	$	9.10
A Class
Actual	$	1,000.00	$	819.66	$	8.85
Hypothetical **	$	1,000.00	$	1,015.48	$	9.80
C Class
Actual	$	1,000.00	$	817.19	$	12.41
Hypothetical **	$	1,000.00	$	1,011.54	$	13.74
AMR Class
Actual	$	1,000.00	$	823.12	$	5.79
Hypothetical **	$	1,000.00	$	1,018.85	$	6.41

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.35%, 1.45%, 1.79%, 1.93%, 2.71%, and 1.26% 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.

6

International Equity Market Overview

October 31, 2015 (Unaudited)

Competing forces pressured markets during the fiscal year ended October 31, 2015. Low interest rates, abundant liquidity, competitive currency devaluations and renewed optimism for Europe and Japan could not overcome concerns of weakening global growth, the Greek debt crisis, uncertainty about the strength of the Chinese economy, the timing of a shift in the U.S. Federal Reserve (“the Fed”) monetary policy, and concerns of a U.S. government shutdown. The top performing markets included Ireland, Belgium, Israel, Denmark and Japan. The weakest markets for the period included Norway, Australia, Canada, Singapore and Portugal. Currency provided a headwind to U.S.-based investors, as major currencies declined against the U.S. dollar.

The global economy expanded moderately during the fiscal year despite slowing growth in some countries. Stocks in global developed markets, as measured by the MSCI World Index, rose 1.77%, while international equities including emerging markets declined during the period, with the MSCI All Country World ex-US Index returning -4.68%. Weighing on global/international stocks at times were worries about China’s slowing economy and the tumbling stock market, Greece’s debt crisis, geopolitical turmoil in Russia and Ukraine, and ongoing uncertainty over the Fed’s timing for raising interest rates. Conversely, stocks gained as economic data in the U.S. and certain eurozone countries improved, Greece reached an agreement with its creditors, certain global central banks sought to boost their respective economies and the Fed kept the federal funds target rate unchanged. For the reporting period, oil prices declined sharply largely due to strong global supply, and gold and other commodity prices also fell. The U.S. dollar appreciated against most currencies during the period, which reduced returns of many foreign assets in U.S. dollar terms.

U.S. economic growth expanded in the fourth quarter of 2014, slowed in the first quarter of 2015 and strengthened in the second quarter of 2015. Despite healthy consumer spending, estimates indicated tepid third-quarter growth as businesses cut back on inventories, exports declined and state and local governments reduced their spending. Although global financial markets anticipated an increase, in September and October, the Fed kept its target interest rate at 0% to 0.25%. The Fed said it expected moderate economic expansion, but it would monitor developments domestically and abroad.

The U.K. economy grew at a slower pace in the third quarter of 2015 as the Construction and Manufacturing sectors contracted, while the Services sector grew. British equities also performed well after the surprise victory of the incumbent and traditionally business-friendly Conservative Party.

The eurozone held up relatively well with better-than-expected economic data, and comments from European Central Bank (“ECB”) President Mario Draghi suggesting further quantitative easing in Europe. The eurozone generally benefited from lower oil prices, a weaker euro that helped exports, the ECB’s accommodative policy, an improved 2015 eurozone growth forecast and expectations of further ECB stimulus. The eurozone’s annual inflation rate declined during the period, ending at an estimated 0.0% in October. Although the ECB maintained its benchmark interest rates during the period, it indicated that it could increase stimulus measures based on an assessment of the region’s inflation and economic growth.

In China, a devaluation of approximately 3% of its currency was announced, leading to accelerated capital outflows and fears of further currency declines. At the same time, Chinese economic data continued to be weak, resulting in growth concerns. These concerns spilled over to some developed market indices left vulnerable by strong multiyear performance and associated high valuations.

In contrast, Japanese equities were among the best performers, as data showed the economy expanding at a faster rate than initially expected. Additionally, corporate governance improvements at a number of Japanese companies helped lift share prices. The Bank of Japan (“BOJ”) broadened its stimulus measures amid weak domestic demand and lower inflation. The country exited recession in the fourth quarter of 2014 and its economy continued to grow in the first quarter of 2015. However, growth contracted in the second quarter and Japan once again slipped into recession in the third quarter – mostly due to slower business investment. The BOJ lowered its economic growth and inflation forecasts in its October 2015 meeting.

7

American Beacon International Equity Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the International Equity Fund (the “Fund”) returned -1.35% for the twelve months ended October 31, 2015. The Fund underperformed the MSCI EAFE Index (the “Index”) return of -0.07%.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker		1 Year		5 Years		10 Years		Value of $10,000 10/31/05-10/31/15
Institutional Class (1,8)		AAIEX		(0.99)%		5.21%		4.52%	$	15,565
Y Class (1,2,8)		ABEYX		(1.06)%		5.11%		4.46%		15,474
Investor Class (1,8)		AAIPX		(1.35)%		4.84%		4.19%		15,076
Advisor Class (1,3,8)		AAISX		(1.51)%		4.67%		3.96%		14,741
Retirement Class (1,4,8)		ABIRX		(1.79)%		4.47%		3.84%		14,580
A Class with sales charge (1,5,8)		AIEAX		(7.09)%		3.48%		3.50%		14,103
A Class without sales charge (1,5,8)		AIEAX		(1.42)%		4.71%		4.11%		14,965
C Class with sales charge (1,6,8)		AILCX		(3.12)%		3.93%		3.70%		14,388
C Class without sales charge (1,6,8)		AILCX		(2.12)%		3.93%		3.70%		14,388
AMR Class (1,8)		AAIAX		(0.75)%		5.50%		4.80%		15,983
MSCI EAFE Index (7)				(0.07)%		4.81%		4.05%		14,881

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 calculated based on the published end of day net asset values 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 ten-year period represents the total returns achieved by the Institutional Class from 10/31/05 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 10/31/05.

3. A portion of the fees charged to the Advisor Class of the Fund was waived from 2006 through 2007 and in 2009. Performance prior to waiving fees was lower than the actual returns shown for those periods.

4. Fund performance for the ten-year period represents the total returns achieved by Advisor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the Retirement Class of the Fund was waived from 2010 through 2012 and fully recovered in 2013 through 2015. Performance prior to waiving fees was lower than the actual returns show from 2010 through 2012.

5. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the A Class of the Fund was waived from 2010 through 2012 and fully recovered in 2013 and 2015. Performance prior to waiving fees was lower than the actual returns show from 2010 through 2012. The maximum sales charge for A Class is 5.75%.

8

American Beacon International Equity Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

6. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2012 and fully recovered in 2013 and 2015. Performance prior to waiving fees was lower than the actual returns show from 2010 through 2012. 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 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 0.73%, 0.83%, 1.06%, 1.20%, 1.47%, 1.09%, 1.84%, and 0.43%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

The Fund underperformed the Index over the twelve-month period due to stock selection, as country allocation contributed positively to the Fund’s relative performance.

Stock selections within Canada and Japan contributed to the Fund’s relative underperformance, despite value added from stock selections in the United Kingdom. Lagging securities included Bombardier Inc. (down 66.9%) and Baytex Energy Corp. (down 70.1%) within Canada, and JGC Corp. (down 46.8%) and Hitachi Ltd. (down 25.2%) within Japan. The Fund’s investments in the United Kingdom, including Carnival PLC (up 42.9%) and Provident Financial PLC (up 59.9%) benefited relative performance during the prior twelve months.

From a country allocation perspective, underweighting Australia (down 20.8%) contributed positively to the Fund’s performance relative to the Index, though underweighting Japan and Denmark (up 9.4% and 10.7%, respectively) detracted during the year.

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 (% Net Assets)
Novartis AG Reg	2.6
British American Tobacco PLC	2.2
Bayer AG Reg	2.1
KDDI Corp.	1.7
Lloyds Banking Group PLC	1.7
Samsung Electronics Co. Ltd.	1.7
Total S.A.	1.6
Akzo Nobel	1.5
BNP Paribas	1.5
GlaxoSmithKline PLC	1.4
Total Fund Holdings	158

9

American Beacon International Equity Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

Sector Allocation (% Equities)
Financials	25.0
Consumer Discretionary	13.5
Health Care	13.1
Industrials	9.0
Energy	8.8
Consumer Staples	8.4
Telecommunication Services	8.2
Materials	6.5
Information Technology	5.5
Utilities	2.0

Country Allocation (% Equities)
United Kingdom	24.1
Japan	14.5
France	11.5
Switzerland	9.2
Germany	8.2
South Korea	6.0
Netherlands	5.9
Canada	2.7
Hong Kong/China	2.5
Sweden	2.1
Belgium	1.8
Italy	1.8
Spain	1.7
Israel	1.5
Australia	1.4
Singapore	1.3
Norway	0.9
Finland	0.8
Ireland	0.8
Denmark	0.5
Luxembourg	0.3
Austria	0.3
Portugal	0.2

10

American Beacon International Equity Fund^SM

Fund Expenses

October 31, 2015 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as sales charges (loads) on purchase payments and 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, 2015 through October 31, 2015.

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 or Roth 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 or Roth 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 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 - 10/31/15
Institutional Class
Actual	$	1,000.00	$	928.83	$	3.35
Hypothetical **	$	1,000.00	$	1,021.73	$	3.52
Y Class
Actual	$	1,000.00	$	928.44	$	3.69
Hypothetical **	$	1,000.00	$	1,021.37	$	3.87
Investor Class
Actual	$	1,000.00	$	927.22	$	5.05
Hypothetical **	$	1,000.00	$	1,019.96	$	5.30
Advisor Class
Actual	$	1,000.00	$	926.41	$	5.63
Hypothetical **	$	1,000.00	$	1,019.36	$	5.90
Retirement Class
Actual	$	1,000.00	$	924.86	$	6.94
Hypothetical **	$	1,000.00	$	1,018.00	$	7.27
A Class
Actual	$	1,000.00	$	926.72	$	5.24
Hypothetical **	$	1,000.00	$	1,019.76	$	5.50
AMR Class
Actual	$	1,000.00	$	929.95	$	1.99
Hypothetical **	$	1,000.00	$	1,023.14	$	2.09
C Class
Actual	$	1,000.00	$	923.42	$	8.87
Hypothetical **	$	1,000.00	$	1,015.98	$	9.30

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.69%, 0.76%, 1.04%, 1.16%, 1.43%, 1.08%, 1.83%, and 0.41% 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.

11

American Beacon Funds^SM

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 American Beacon Emerging Markets Fund and American Beacon International Equity Fund (two of the funds constituting the American Beacon Funds) (collectively, the “Funds”), as of October 31, 2015, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the 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 the Funds’ 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, 2015, 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 American Beacon Emerging Markets Fund and American Beacon International Equity Fund at October 31, 2015, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 29, 2015

12

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Argentina—0.12%
Preferred Stocks—(Cost $88)
Nortel Inversora S.A., B Shares, ADRA B		3,010	$	59
Austria—1.18%
Common Stocks—(Cost $939)
Erste Group Bank AG		20,671		606
Brazil—13.27%
Common Stocks—(Cost $10,229)
Banco Bradesco S.A.		19,020		116
Banco do Brasil S.A.		33,000		137
BM&FBovespa S.A.		66,900		197
Centrais Eletricas Brasileiras S.A., Sponsored ADRB C		131,935		166
Cia de Saneamento Basico do Estado de Sao PauloC		139,300		605
Cia de Saneamento Basico do Estado de Sao Paulo, ADRB C		49,302		217
Cia Hering		30,400		119
Duratex S.A.C D		75,400		125
Embraer S.A., Sponsored ADRB		23,770		699
Estacio Participacoes S.A.		66,700		267
Gerdau S.A., Sponsored ADRB		50,370		70
Hypermarcas S.A.		11,300		51
Kroton Educacional S.A.		50,800		130
Magnesita Refratarios S.A.		129,700		87
Marfrig Alimentos S.A.		334,300		552
Mills Estruturas e Servicos de Engenharia S.A.C		98,056		114
Oi S.A., ADRB		18,239		16
Petroleo Brasileiro S.A., Sponsored ADRB C		64,377		314
Telefonica Brasil S.A., ADRB		53,537		555
TIM Participacoes S.A.		121,500		266
Viver Incorporadora e Construtora S.A.C		431,588		4
Total Common Stocks				4,807
Convertible Bonds—(Cost $116)
Viver Incorporadora e Construtora S.A., 2.00%, 8/6/2016E F G		270,118		11
Preferred Stocks—(Cost $4,739)
Alpargatas S.A.A C		119,800		256
Banco Bradesco S.A.A C		21,140		115
Banco Estado Rio Gran, B SharesA		90,200		140
Cia Brasileira de Distribuicao Grupo Pao de AcucarA		26,300		346
Gerdau S.A.A		64,100		90
Itau Unibanco Holding S.A., Sponsored ADRA B		39,879		273
Itausa—Investimentos Itau S.A.A		29,352		55
Marcopolo S.A.A C		116,400		59
Petroleo Brasileiro S.A., Special Preferred ADRB C		91,130		364
Randon Participacoes S.A.A		148,900		109
Telefonica Brasil S.A.A		3,500		36

	Shares		Fair Value
			(000’s)
Vale S.A., Sponsored ADRA B		40,752	$	147
Total Preferred Stocks				1,990
Total Brazil				6,808
Chile—1.65%
Common Stocks—(Cost $769)
Cencosud S.A.		64,328		141
Empresa Nacional de Telecom		17,521		162
Sociedad Quimica y Minera de Chile S.A., ADRB		28,020		543
Total Chile				846
Colombia—0.72%
Common Stocks—(Cost $493)
Grupo Aval Acciones y Valores S.A., ADR B		45,900		368
Czech Republic—1.60%
Common Stocks—(Cost $886)
Ceska telekomunikacni infrastruktura A.S.C		50,350		348
O2 Czech Republic A.S.		50,350		472
Total Czech Republic				820
Greece—0.79%
Common Stocks—(Cost $347)
JUMBO S.A.		41,880		405
Hong Kong/China—22.06%
Common Stocks—(Cost $15,409)
Anhui Conch Cement Co., Ltd. H		76,500		235
Apt. Satellite Holdings Ltd.		463,000		458
Baoxin Auto Group Ltd.		126,500		53
Bosideng International Holdings Ltd.		4,014,000		388
Chaoda Modern Agriculture Holdings Ltd.		1,486,000		68
China Communications Services Corp., Ltd. H		900,000		360
China Construction Bank H		956,665		694
China Life Insurance Co., Ltd. H		67,000		242
China Mengniu Dairy Co., Ltd.		34,000		66
China Mobile Ltd.		60,500		724
China Railway Construction Corp., Ltd. H		29,000		44
China Resources Cement Holdings Ltd.		196,000		79
China Resources Power Holdings Co., Ltd.		146,000		332
China Shenhua Energy Co., Ltd.		116,000		196
China Yuchai International Ltd.		12,237		159
China ZhengTong Auto Services Holdings Ltd.		83,000		37
Chow Tai Fook Jewellery Group Ltd.		257,200		221
CNOOC Ltd.		266,000		298
Cosco International Holdings Ltd. Acquired 1/04/2012 – 9/30/2014, Cost $284E G H		644,000		341
COSCO Pacific Ltd.E G		618,397		752
Dickson Concepts International Ltd.		189,445		71
Dongfeng Motor Group Co., Ltd. H		466,000		676
First Pacific Co., Ltd.		641,874		441

See accompanying notes

13

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Galaxy Entertainment Group Ltd.		52,000	$	179
Guangzhou Automobile Group Co., Ltd. H		243,370		213
Industrial & Commercial Bank of China Ltd. H		910,555		581
Lee & Man Paper Manufacturing Ltd.		110,000		69
Lianhua Supermarket Holdings Co., Ltd. HC		358,000		168
Lifestyle International Holdings Ltd.		321,000		463
Luk Fook Holdings International Ltd.		215,000		556
NWS Holdings Ltd.		53,511		81
Parkson Retail Group Ltd.		1,516,299		225
Ping An Insurance Group Co., H		46,500		263
Shanghai Industrial Holdings Ltd.		176,000		463
Sinotrans Shipping Ltd.		1,885,500		399
Weichai Power Co., Ltd. H		271,000		291
Weiqiao Textile Co., Ltd. H		377,000		171
West China Cement Ltd.		504,000		86
Wumart Stores, Inc. H		238,000		170
Total Hong Kong/China				11,313
Hungary—0.94%
Common Stocks—(Cost $635)
Magyar Telekom Telecommunications PLCC I		159,433		221
OTP Bank PLCI		3,972		77
Richter Gedeon Nyrt		10,957		183
Total Hungary				481
India—6.51%
Common Stocks—(Cost $4,821)
Bank of India		132,263		266
Chennai Super Kings Cricket Ltd.C E G		416,135		18
ICICI Bank Ltd.		35,243		149
IDFC Bank Ltd.C E G		20,806		19
India Cements Ltd.		277,631		332
Infrastructure Development Finance Co., Ltd.		20,806		19
NMDC Ltd.		100,682		155
NTPC Ltd.		95,665		194
Oriental Bank of Commerce		43,643		90
Power Grid Corp. of India Ltd.		61,882		122
Punjab National Bank		65,954		129
Reliance Industries Ltd.		39,567		573
Reliance Infrastructure Ltd.		96,265		583
Rolta India Ltd.		68,122		103
South Indian Bank Ltd.		13,429		4
State Bank of India		100,506		365
Steel Authority of India Ltd.		189,412		155
Vedanta Ltd.		30,066		65
Total India				3,341
Indonesia—1.06%
Common Stocks—(Cost $832)
XL Axiata Tbk PT		2,393,803		545
Luxembourg—0.96%
Common Stocks—(Cost $760)
Ternium S.A., Sponsored ADR B		34,480		495

	Shares		Fair Value
			(000’s)
Malaysia—0.83%
Common Stocks—(Cost $642)
CIMB Group Holdings Bhd		158,377	$	170
Genting Malaysia Bhd		255,900		256
Total Malaysia				426
Mexico—3.65%
Common Stocks—(Cost $3,729)
Alpek S.A. de C.V.		55,800		81
America Movil S.A.B. de C.V., Series L, Sponsored ADR B		7,118		127
Cemex, S.A.B. de C.V., Series L, Sponsored ADR B		76,463		482
Consorcio ARA, S.A.B. de C.V.		143,500		54
Desarrolladora Homex, S.A.B. de C.V. Acquired 1/2/2013 – 5/2/2013, Cost $733C H		45,663		22
Grupo Financiero Banorte, S.A.B. de C.V.		18,100		97
Grupo Financiero Santander Mexico, S.A.B. de C.V., ADRB		24,195		221
Macquarie Mexico Real Estate NPVJ		387,790		536
TF Administradora IndustrialJ		125,423		231
Urbi Desarrollos Urbanos, S.A.B. de C.V. Acquired 1/14/2013 – 3/25/2013, Cost $643C E G H		1,452,850		22
Total Mexico				1,873
Poland—1.04%
Common Stocks—(Cost $733)
PKO Bank Polski S.A.		40,382		299
Powszechny Zaklad Ubezpieczen S.A.		1,190		116
Synthos S.A.C		126,760		121
Total Poland				536
Qatar—0.02%
Common Stocks—(Cost $12)
Commercial Bank of Qatar QSC		713		10
Russia—4.81%
Common Stocks—(Cost $4,333)
Gazprom OAO, Sponsored ADRB		167,841		702
Lukoil PJSC, ADRB C		21,593		783
Megafon, Reg S, GDRL M		10,295		133
Rosneft Oil Co., Reg S, GDRL M		34,431		138
Sberbank, Sponsored ADRB C		116,532		713
Total Russia				2,469
Singapore—0.58%
Common Stocks—(Cost $221)
Haw Par Corp., Ltd.		49,257		295
South Africa—0.79%
Common Stocks—(Cost $452)
Aveng Ltd.C		1,021		0
Barclays Africa Group Ltd.		10,252		132
Imperial Holdings Ltd.		9,897		129
Standard Bank Group Ltd.		13,653		142
Total South Africa				403

See accompanying notes

14

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
South Korea—17.92%
Common Stocks—(Cost $10,910)
E-Mart Co., Ltd.		1,232	$	230
Hana Financial Group, Inc.		22,590		551
Hyundai Engineering & Construction Co., Ltd.		4,520		137
Hyundai Mobis Co., Ltd.		4,480		943
Hyundai Motor Co.		2,927		401
KB Financial Group, Inc.		30,691		973
Kia Motors Corp.		14,030		686
Korea Electric Power Corp.		4,714		212
Korea Electric Power Corp., Sponsored ADRB		3,970		89
KT Corp.		11,509		298
KT Corp., Sponsored ADRB		3,819		50
LG Chem Ltd.		725		194
LG Electronics, Inc.		4,955		213
Lotte Shopping Co., Ltd.		1,095		223
POSCO		5,481		875
Samsung Electronics Co., Ltd.		1,374		1,655
Shinhan Financial Group Co., Ltd.		17,752		678
Shinsegae Co., Ltd.		534		109
Total Common Stocks				8,517
Preferred Stocks—(Cost $495)
Hyundai Motor Co., Ltd.A		6,972		673
Total South Korea				9,190
Taiwan—3.85%
Common Stocks—(Cost $2,471)
Advanced Semiconductor Engineering, Inc.		111,570		130
Casetek Holdings Ltd.		19,000		84
Compal Electronics, Inc.		337,000		211
HON HAI Precision Industry Co., Ltd.		109,864		293
MediaTek, Inc.		31,000		243
Nan Ya Printed Circuit Board Corp.		67,139		68
Radiant Opto-Electronics Corp.		46,970		147
Shin Kong Financial Holding Co., Ltd.		1,002,095		240
Simplo Technology Co., Ltd.		33,000		117
Taiwan Semiconductor Manufacturing Co., Ltd.		66,697		280
United Microelectronics Corp.		448,226		164
Total Taiwan				1,977
Thailand—0.98%
Common Stocks—(Cost $593)
Bangkok Bank PCLN		75,090		354
Thai Oil PCLN		98,300		150
Total Thailand				504
Turkey—2.83%
Common Stocks—(Cost $1,891)
Akbank T.A.S.		72,160		185
Aygaz A.S.		35,330		133
Emlak Konut Gayrimenkul Yatirim Ortakligi A.S.J		387,380		376
Turkiye Garanti Bankasi A.S.		70,140		182

	Shares		Fair Value
			(000’s)
Turkiye Halk Bankasi A.S.		50,565	$	190
Turkiye Vakiflar Bankasi Tao		268,837		384
Total Turkey				1,450
United Arab Emirates—0.26%
Common Stocks—(Cost $153)
Emaar Properties PJSC K		76,855		135
United Kingdom—0.13%
Common Stocks—(Cost $194)
APR Energy PLC I		25,410		67
SHORT-TERM INVESTMENTS—105.17% (Cost $53,948)
JPMorgan U.S. Government Money Market Fund, Capital Class		53,947,779		53,948
TOTAL INVESTMENTS —193.72% (Cost $121,840)				99,370
LIABILITIES, NET OF OTHER ASSETS—(93.72)%				(48,074	)
TOTAL NET ASSETS—100.00%			$	51,296

Percentages are stated as a percent of net assets.

^A  A type of Preferred Stock that has no maturity date.

^B  ADR—American Depositary Receipt.

^C  Non-income producing security.

^D  Step Up/Down—A scheduled increase in the exercise or conversion price at which a warrant, an option, or a convertible security may be used to acquire shares of common stock.

^E  Par value represents units rather than shares.

^F  Variable rate.

^G  Fair valued pursuant to procedures approved by the Board of Trustees. At period end, the value of these securities amounted to $1,163 or 2.27% of net assets.

^H  Illiquid Security. At period end, the amount of illiquid securities was $385 or 0.75% of net assets.

^I  PLC—Public Limited Company.

^J  REIT—Real Estate Investment Trust.

^K  PJSC—Private Joint Stock Company.

^L  Reg S—Security purchased under the Securities Act of 1933, which exempts from registration securities offered and sold outside of the United States. Such a security cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration.

^M  GDR—Global Depositary Receipt.

^N  PCL—Public Company Limited (Thailand).

See accompanying notes

15

American Beacon Emerging Markets Fund^SM

Schedule of Investments

October 31, 2015

Futures Contracts Open on October 31, 2015:

Description	Type	Number of Contracts		Expiration Date	Contract Value		Unrealized Appreciation (Depreciation)
Mini MSCI Emerging Markets December Futures	Long		34	December 2015	$	1,434,290	$	(2,880	)
					$	1,434,290	$	(2,880	)

See accompanying notes

16

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Australia—1.37%
Common Stocks—(Cost $28,209)
Ansell Ltd.		387,428	$	5,559
Caltex Australia Ltd.		484,549		10,918
James Hardie Industries PLC, CDIA B		575,161		7,506
Westfield Corp.C		657,423		4,805
Total Australia				28,788
Austria—0.24%
Common Stocks—(Cost $5,986)
Uniqa Insurance Group AG		543,477		5,051
Belgium—1.66%
Common Stocks—(Cost $25,837)
Anheuser-Busch InBev S.A.		196,497		23,488
KBC Groep N.V.		185,983		11,330
Total Belgium				34,818
Canada—2.54%
Common Stocks—(Cost $77,593)
Baytex Energy Corp.		535,050		2,177
Bombardier, Inc., Class B		3,635,558		3,948
Encana Corp.		621,320		4,728
Home Capital Group, Inc.		156,374		3,809
Imperial Oil Ltd.D		238,753		7,943
MDA Corp.		176,464		10,518
National Bank of Canada		275,002		9,109
Precision Drilling Corp.		893,626		3,554
Suncor Energy, Inc.		255,695		7,609
Total Canada				53,395
Denmark—0.44%
Common Stocks—(Cost $10,894)
Carlsberg A.S., Class B		113,188		9,279
Finland—0.80%
Common Stocks—(Cost $11,819)
Sampo OYJ, Class A		342,503		16,753
France—10.85%
Common Stocks—(Cost $218,663)
AXA S.A.		484,222		12,952
BNP Paribas		519,581		31,574
Cap Gemini S.A.		166,338		14,821
Cie de Saint-Gobain		207,469		8,711
Cie Generale des Etablissements Michelin		79,004		7,871
ENGIE S.A.		863,092		15,143
Iliad S.A.		25,665		5,400
Legrand S.A.		222,687		12,229
Orange S.A.		177,151		3,124
Sanofi		242,512		24,494
Schneider Electric S.A.		196,578		11,906
Technip S.A.		351,933		18,385
Total S.A.		690,449		33,518
Valeo S.A.		95,742		14,813
Vinci S.A.		191,992		12,959
Total France				227,900

	Shares		Fair Value
			(000’s)
Germany—7.76%
Common Stocks—(Cost $116,254)
Bayer AG Reg		324,270	$	43,271
Commerzbank AGD		572,077		6,297
Deutsche Boerse AG		137,605		12,673
Heidelberg Cement AG		148,929		11,100
Infineon Technologies AG		677,990		8,346
Lanxess AG		163,531		8,785
Linde AG		75,392		13,078
Merck KGaA		106,505		10,404
METRO AG		240,892		7,425
Muenchener Rueckversicherungs AG Reg		29,141		5,816
SAP AG		139,531		11,029
Siemens AG Reg		104,730		10,538
Total Common Stocks				148,762
Preferred Stocks—(Cost $27,738)
Volkswagen AG		119,602		14,375
Total Germany				163,137
Hong Kong/China—2.32%
Common Stocks—(Cost $43,721)
AIA Group Ltd.		1,107,662		6,510
Cheung Kong Property Holdings Ltd.		141,582		997
China Merchants Holdings Intl.		1,782,993		5,935
China Mobile Ltd.		1,632,276		19,533
CK Hutchison Holdings Ltd.		141,582		1,953
CNOOC Ltd.		9,614,635		10,755
GCL-Poly Energy Holdings Ltd.D		15,050,317		3,146
Total Hong Kong/China				48,829
Ireland—0.73%
Common Stocks—(Cost $11,113)
CRH PLC B		557,971		15,320
Israel—1.38%
Common Stocks—(Cost $23,276)
Teva Pharmaceutical Industries Ltd., Sponsored ADR E		490,403		29,027
Italy—1.75%
Common Stocks—(Cost $33,965)
Atlantia SpA		268,885		7,451
Azimut Holding SpA		325,766		7,842
ENI SpA		496,764		8,118
Intesa Sanpaolo SpA		1,453,732		5,064
UniCredit SpAF		1,267,675		8,196
Total Italy				36,671
Japan—13.73%
Common Stocks—(Cost $262,495)
Canon, Inc.		252,000		7,601
Daiwa House Industry Co., Ltd.		859,300		22,759
Don Quijote Co., Ltd.		448,100		16,618
East Japan Railway Co.		186,200		17,853
Hitachi Ltd.		2,700,000		15,727
Isuzu Motors Ltd.		584,400		6,884
Japan Tobacco, Inc.		283,700		9,900

See accompanying notes

17

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
KDDI Corp.		1,438,900	$	35,130
Konica Minolta, Inc.		593,300		6,151
Nikon Corp.F		870,500		11,340
Nissan Motor Co., Ltd.		1,202,700		12,623
Seven & I Holdings Co., Ltd.		322,100		14,710
Shin-Etsu Chemical Co., Ltd.		117,100		7,020
Softbank Corp.		373,100		21,016
Sony Corp.		423,600		12,216
Sumitomo Mitsui Financial Group, Inc.		708,000		28,515
Suntory Beverage & Food Ltd.		210,800		8,577
Toshiba Corp.		2,668,000		7,586
Toyota Motor Corp.		296,400		18,346
United Arrows Ltd.		181,100		7,849
Total Japan				288,421
Luxembourg—0.27%
Common Stocks—(Cost $5,739)
RTL Group S.A.		64,358		5,570
Netherlands—5.54%
Common Stocks—(Cost $107,429)
Akzo Nobel		450,109		31,900
ING Groep N.V., CVAG		814,109		11,848
Koninklijke Philips Electronics N.V.		209,276		5,659
PostNL N.V.D		1,100,849		4,547
QIAGEN N.V.D		303,816		7,370
RELX N.V.		1,207,679		20,651
Royal Dutch Shell PLC, Class AB		466,543		12,155
SBM Offshore N.V.D F		602,300		8,256
Wolters Kluwer N.V.		415,684		14,077
Total Netherlands				116,463
Norway—0.85%
Common Stocks—(Cost $15,646)
Telenor ASA		948,728		17,899
Portugal—0.22%
Common Stocks—(Cost $6,964)
Galp Energia SGPS S.A.		428,593		4,636
Singapore—1.19%
Common Stocks—(Cost $19,765)
DBS Group Holdings Ltd.		1,005,681		12,398
Noble Group Ltd.		10,756,996		3,878
Singapore Telecommunications Ltd.		3,066,595		8,711
Total Singapore				24,987
South Korea—5.70%
Common Stocks—(Cost $137,277)
Hana Financial Group, Inc.		462,277		11,273
Hyundai Mobis Co., Ltd.		36,196		7,620
Hyundai Motor Co.		117,712		16,107
KB Financial Group, Inc., ADRE		191,567		6,040
KT&G Corp.		93,876		9,387
LG Electronics, Inc.		199,764		8,603
POSCO		41,106		6,562
Samsung Electronics Co., Ltd.		29,214		35,158
SK Telecom Co., Ltd.		89,438		18,907
Total South Korea				119,657

	Shares		Fair Value
			(000’s)
Spain—1.62%
Common Stocks—(Cost $35,938)
CaixaBank S.A.		2,357,314	$	9,052
Red Electrica Corporation S.A.		90,475		7,979
Repsol S.A.		234,348		2,957
Tecnicas Reunidas S.A.		73,856		3,295
Telefonica S.A.		806,248		10,666
Total Spain				33,949
Sweden—1.95%
Common Stocks—(Cost $37,237)
Assa Abloy AB		756,965		15,062
Getinge AB, Class B		450,388		11,276
Swedbank AB, Class A		641,395		14,722
Total Sweden				41,060
Switzerland—8.74%
Common Stocks—(Cost $164,175)
ABB Ltd.		570,851		10,777
Aryzta AG		185,927		8,389
Cie Financiere Richemont S.A.		109,862		9,425
Clariant AG		378,824		6,975
Credit Suisse Group AG Reg		894,148		22,325
Givaudan S.A. Reg		1,614		2,890
Novartis AG		611,132		55,552
Roche Holding AG Genusschein		100,258		27,214
Swiss Re AG		90,841		8,446
UBS Group AG		893,987		17,890
Zurich Insurance Group AG		51,605		13,642
Total Switzerland				183,525
United Kingdom—22.91%
Common Stocks—(Cost $464,730)
Aon PLCB		112,279		10,477
Aviva PLCB		3,353,871		25,127
BAE Systems PLCB		1,360,490		9,235
Balfour Beatty PLCB		1,579,522		6,068
Barclays PLCB		6,461,588		23,110
BG Group PLCB		534,763		8,450
BHP Billiton PLCB		389,326		6,245
BP PLCB		1,981,163		11,802
British American Tobacco PLCB		761,647		45,316
Carnival PLCB		231,631		12,916
Diageo PLCB		377,844		10,942
Direct Line Insurance Group PLCB		1,099,379		6,684
GlaxoSmithKline PLCB		1,365,566		29,576
HSBC Holdings PLCB		3,204,536		25,233
Informa PLCB		1,204,090		10,543
Kingfisher PLCB		1,471,983		8,013
Lloyds Banking Group PLCB		30,787,381		34,993
Marks & Spencer Group PLCB		1,280,916		10,130
Michael Page International PLCB		807,287		6,158
Petrofac Ltd.		649,264		8,438
Provident Financial Holdings PLCB		199,468		10,670
Prudential PLCB		965,592		22,611
RELX PLCB		733,714		13,144
Rexam PLCB		1,333,843		11,104
Royal Dutch Shell PLC, Class BB		407,647		10,683
Shire PLCB		218,450		16,586
Sky PLCB		594,107		10,038
SSE PLCB		738,055		17,237

See accompanying notes

18

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Standard Chartered PLCB		688,436	$	7,656
Tesco PLCB		3,116,011		8,805
Unilever PLCB		216,884		9,673
Vodafone Group PLCB		6,684,958		22,080
Wolseley PLCB		195,138		11,482
Total United Kingdom				481,225
SHORT-TERM INVESTMENTS—5.79%
American Beacon U.S. Government Money Market Select Fund, Select ClassH		10,000,000		10,000
JPMorgan U.S. Government Money Market Fund, Capital Class		111,686,831		111,687
Total Short-Term Investments (Cost $121,687)				121,687
SECURITIES LENDING COLLATERAL—0.71%
DWS Government and Agency Securities Portfolio, Institutional Class		3,802,167		3,802
American Beacon U.S. Government Money Market Select Fund, Select ClassH		11,032,068		11,032
Total Securities Lending Collateral (Cost $14,834)				14,834
TOTAL INVESTMENTS —101.06% (Cost $2,028,984)				2,122,881
LIABILITIES, NET OF OTHER ASSETS—(1.06)%				(22,241	)
TOTAL NET ASSETS—100.00%			$	2,100,640

Percentages are stated as a percent of net assets.

^A  CDI—Chess Depository Interest.

^B  PLC—Public Limited Company.

^C  REIT—Real Estate Investment Trust.

^D  Non-income producing security.

^E  ADR—American Depositary Receipt.

^F  All or a portion of this security is on loan at October 31, 2015.

^G  CVA—Dutch Certificate.

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

See accompanying notes

19

American Beacon International Equity Fund^SM

Schedule of Investments

October 31, 2015

Futures Contracts Open on October 31, 2015:

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
AEX Index November Futures		Long		38		November 2015	$	3,855,666	$	198,945
CAC 40 Index November Futures		Long		256		November 2015		13,782,691		631,161
DAX Index December Futures		Long		41		December 2015		12,196,766		777,979
FTSE 100 Index December Futures		Long		281		December 2015		27,379,374		846,313
FTSE/MIB Index December Futures		Long		27		December 2015		3,331,783		96,337
Hang Seng Index November Futures		Long		28		November 2015		4,097,224		(100,391	)
IBEX 35 Index November Futures		Long		41		November 2015		4,637,352		94,606
OMX 30 Index November Futures		Long		223		November 2015		3,904,973		84,249
S&P/TSX 60 Index December Futures		Long		98		December 2015		11,877,521		2,273
ASX SPI 200 Index December Futures		Long		94		December 2015		8,774,911		235,342
TOPIX Index December Futures		Long		243		December 2015		31,388,530		1,940,315
							$	125,226,791	$	4,807,129

Foreign Currency Contracts Open on October 31, 2015:

Type	Currency		Principal Amount Covered by Contract		Settlement Date		Counterparty		Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation/ (Depreciation)
Buy		CHF		8,849,286		12/9/2015		CBK	$	—	$	(126,794	)	$	(126,794	)
Buy		CAD		8,335,841		12/9/2015		GLM		77,536		—			77,536
Buy		EUR		3,816,655		12/9/2015		SCB		—		(16,704	)		(16,704	)
Buy		GBP		3,007,092		12/9/2015		SCB		10,908		—			10,908
Buy		CAD		1,288,334		12/9/2015		JPM		7,931		—			7,931
Buy		JPY		3,186,451		12/9/2015		SCB		10,206		—			10,206
Buy		AUD		1,027,106		12/9/2015		SCB		—		(17,235	)		(17,235	)
Buy		SEK		423,945		12/9/2015		JPM		—		(1,690	)		(1,690	)
Buy		CHF		1,927,486		12/9/2015		JPM		—		(9,938	)		(9,938	)
Buy		AUD		614,271		12/9/2015		DUB		13,438		—			13,438
Buy		EUR		24,550,134		12/9/2015		CBK		—		(267,059	)		(267,059	)
Buy		JPY		22,021,297		12/9/2015		UAG		—		(118,028	)		(118,028	)
Buy		GBP		18,953,109		12/9/2015		BRC		214,923		—			214,923
Buy		AUD		5,994,481		12/9/2015		TDB		109,865		—			109,865
Buy		SEK		2,514,047		12/9/2015		CBK		—		(38,389	)		(38,389	)
Buy		CHF		615,823		12/9/2015		DUB		—		(9,569	)		(9,569	)
Buy		JPY		2,542,694		12/9/2015		DUB		—		(21,116	)		(21,116	)
Buy		SEK		325,192		12/9/2015		DUB		—		(3,307	)		(3,307	)
Buy		CAD		899,923		12/9/2015		DUB		20,865		—			20,865
Buy		EUR		3,132,320		12/9/2015		DUB		—		(69,467	)		(69,467	)
Buy		GBP		2,191,740		12/9/2015		DUB		34,265		—			34,265
Sell		EUR		4,930,076		12/9/2015		DUB		136,241		—			136,241
Sell		JPY		3,870,483		12/9/2015		DUB		26,959		—			26,959
Sell		GBP		3,167,388		12/9/2015		DUB		22,180		—			22,180
Sell		SEK		276,460		12/9/2015		DUB		9,689		—			9,689
Sell		AUD		901,832		12/9/2015		DUB		6,290		—			6,290
Sell		CHF		294,744		12/9/2015		DUB		6,345		—			6,345
Sell		CAD		1,311,272		12/9/2015		DUB		—		(13,817	)		(13,817	)
									$	707,641	$	(713,113	)	$	(5,472	)

Glossary:

Counterparty Abbreviations:
BRC	Barclays Bank PLC	GLM	Goldman Sachs Bank USA	TDB	Toronto Dominion Bank
CBK	Citibank, N.A.	JPM	JPMorgan Chase Bank, N.A.	UAG	UBS AG
DUB	Deutsche Bank AG	SCB	Standard Charter Bank
Currency Abbreviations:
AUD	Australian Dollar	EUR	Euro	JPY	Japanese Yen
CAD	Canadian Dollar	GBP	British Pound	SEK	Swedish Krona
CHF	Swiss Franc

See accompanying notes

20

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2015 (in thousands, except share and per share amounts)

	Emerging Markets Fund			International Equity Fund
Assets:
Investments in unaffiliated securities, at fair value A D	$	99,370		$	2,101,849
Investments in affiliated securities, at fair value B		—			21,032
Foreign currency, at fair value C		211			3
Foreign currency deposits with brokers, at fair value E		—			10,827
Deposit with brokers for futures contracts		2,560			3,495
Dividends and interest receivable		105			4,702
Receivable for investments sold		495			283,264
Receivable for fund shares sold		36			4,038
Receivable for tax reclaims		5			1,505
Receivable for expense reimbursement (Note 2)		5			—
Receivable for variation margin on open futures contracts		112			4,907
Unrealized appreciation from foreign currency contracts		—			708
Prepaid expenses		15			50
Total assets		102,914			2,436,380
Liabilities:
Payable for investments purchased		6			842
Payable for fund shares redeemed		51,205			316,118
Payable for variation margin from open futures contracts		—			100
Payable upon return of securities loaned		—			14,834
Management and investment advisory fees payable		238			2,050
Administrative service and service fees payable		7			689
Transfer agent fees payable		2			74
Custody and fund accounting fees payable		44			92
Professional fees payable		77			58
Trustee fees payable		3			26
Payable for prospectus and shareholder reports		11			112
Unrealized depreciation from foreign currency contracts		—			713
Other liabilities		25			32
Total liabilities		51,618			335,740
Net Assets	$	51,296		$	2,100,640
Analysis of Net Assets:
Paid-in-capital		84,759			1,974,259
Undistributed (or overdistribution of) net investment income		1,872			25,245
Accumulated net realized gain (loss)		(12,854	)		2,731
Unrealized appreciation or (depreciation) of investments		(16,503	)		248,055
Unrealized (depreciation) of currency transactions		(5,975	)		(154,457	)
Unrealized appreciation or (depreciation) of futures contracts		(3	)		4,807
Net assets	$	51,296		$	2,100,640
Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		743,704			55,210,996
Y Class		37,816			30,220,737
Investor Class		518,249			18,429,275
Advisor Class		N/A			1,205,255
Retirement Class		N/A			124,659
A Class		40,476			578,056
C Class		10,838			215,594
AMR Class		4,135,350			4,922,234
Net assets (not in thousands):
Institutional Class	$	6,914,642		$	1,037,148,820
Y Class	$	353,326		$	587,949,806
Investor Class	$	4,709,183		$	342,720,411
Advisor Class	$	N/A		$	22,912,069
Retirement Class	$	N/A		$	2,486,139
A Class	$	367,737		$	10,747,749
C Class	$	96,811		$	3,899,081
AMR Class	$	38,854,360		$	92,775,419

See accompanying notes

21

American Beacon Funds^SM

Statements of Assets and Liabilities

October 31, 2015 (in thousands, except share and per share amounts)

	Emerging Markets Fund		International Equity Fund
Net asset value, offering and redemption price per share:
Institutional Class	$	9.30	$	18.79
Y Class	$	9.34	$	19.46
Investor Class	$	9.09	$	18.60
Advisor Class		N/A	$	19.01
Retirement Class		N/A	$	19.94
A Class	$	9.09	$	18.59
A Class (offering price)	$	9.64	$	19.72
C Class	$	8.93	$	18.09
AMR Class	$	9.40	$	18.85
A   Cost of investments in unaffiliated securities	$	121,840	$	2,007,952
B   Cost of investments in affiliated securities	$	—	$	21,032
C   Cost of foreign currency	$	213	$	3
D   Fair value of securities on loan	$	—	$	13,929
E   Cost of foreign currency deposits with brokers	$	—	$	11,021

See accompanying notes

22

American Beacon Funds^SM

Statements of Operations

For the year ended October 31, 2015 (in thousands)

	Emerging Markets Fund			International Equity Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	2,583		$	62,227
Dividend income from affiliated securities		—			1
Interest income		—			8
Income derived from securities lending		—			999
Total investment income		2,583			63,235
Expenses:
Management and investment advisory fees (Note 2)		837			7,019
Administrative service fees (Note 2):
Institutional Class		29			3,018
Y Class		4			1,717
Investor Class		20			1,074
Advisor Class		—			48
Retirement Class		—			5
A Class		2			29
C Class		1			10
AMR Class		51			219
Transfer agent fees:
Institutional Class		1			440
Y Class		—			38
Investor Class		3			18
Advisor Class		—			2
A Class		—			2
AMR Class		4			13
Custody and fund accounting fees		331			664
Professional fees		120			121
Registration fees and expenses		65			157
Service fees (Note 2):
Y Class		1			572
Investor Class		19			1,306
Advisor Class		—			40
Retirement Class		—			4
A Class		1			14
C Class		—			5
Distribution fees (Note 2):
Advisor Class		—			40
Retirement Class		—			9
A Class		2			24
C Class		2			32
Prospectus and shareholder report expenses		18			288
Trustee fees		7			132
Other expenses		17			254
Total expenses		1,535			17,314
Net fees waived and expenses reimbursed (Note 2)		(49	)		(105	)
Net expenses		1,486			17,209
Net investment income		1,097			46,026
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:B
Investments		1,748			183,973
Commission recapture (Note 3)		1			101
Foreign currency transactions		(8,877	)		(84,401	)
Futures contracts		(1,720	)		5,090
Change in net unrealized appreciation or (depreciation) of:
Investments		(14,756	)		(109,027	)
Foreign currency transactions		(1,758	)		(69,073	)
Futures contracts		(41	)		4,141
Net (loss) from investments		(25,403	)		(69,196	)
Net (decrease) in net assets resulting from operations	$	(24,306	)	$	(23,170	)
A   Foreign taxes		316			5,602
B   Net of foreign withholding taxes on capital gains		43			—

See accompanying notes

23

American Beacon Funds^SM

Statements of Changes of Net Assets (in thousands)

	Emerging Markets Fund						International Equity Fund
	Year Ended October 31, 2015			Year Ended October 31, 2014			Year Ended October 31, 2015			Year Ended October 31, 2014
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	1,097		$	1,376		$	46,026		$	61,748
Net realized gain (loss) from investments, commission recapture, foreign currency transactions, and futures contracts		(8,848	)		8,915			104,763			107,117
Change in net unrealized appreciation or (depreciation) of investments, foreign currency transactions, and futures contracts		(16,555	)		(6,943	)		(173,959	)		(202,346	)
Net increase (decrease) in net assets resulting from operations		(24,306	)		3,348			(23,170	)		(33,481	)
Distributions to Shareholders:
Net investment income:
Institutional Class		(36	)		(100	)		(25,911	)		(14,406	)
Y Class		(5	)		(22	)		(14,300	)		(7,149	)
Investor Class		(21	)		(43	)		(8,329	)		(4,093	)
Advisor Class		—			—			(183	)		(73	)
Retirement Class		—			—			(23	)		(7	)
A Class		(2	)		(2	)		(202	)		(79	)
C Class		—			—			(56	)		(15	)
AMR Class		(415	)		(1,154	)		(12,918	)		(8,617	)
Net realized gain from investments:
Institutional Class		(698	)		—			—			—
Y Class		(131	)		—			—			—
Investor Class		(576	)		—			—			—
A Class		(74	)		—			—			—
C Class		(15	)		—			—			—
AMR Class		(7,427	)		—			—			—
Net distributions to shareholders		(9,400	)		(1,321	)		(61,922	)		(34,439	)
Capital Share Transactions:
Proceeds from sales of shares		21,911			29,751			614,047			637,106
Reinvestment of dividends		9,371			1,317			56,546			29,476
Cost of shares redeemed		(78,309	)		(28,746	)		(779,610	)		(432,543	)
Redemption fees		13			22			11			44
Net increase (decrease) in net assets from capital share transactions		(47,014	)		2,344			(109,006	)		234,083
Net increase (decrease) in net assets		(80,720	)		4,371			(194,098	)		166,163
Net Assets:
Beginning of period		132,016			127,645			2,294,738			2,128,575
End of Period *	$	51,296		$	132,016		$	2,100,640		$	2,294,738
*Includes undistributed (or overdistribution of) net investment income	$	1,872		$	(343	)	$	25,245		$	60,882

See accompanying notes

24

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

1. Organization

American Beacon Funds (the “Trust”), 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. As of October 31, 2015, the Trust consists of thirty-two active series, two of which are presented in this filing (collectively, the “Funds” and each individually a “Fund”): American Beacon Emerging Markets Fund and American Beacon International Equity Fund. The remaining thirty active series are reported in separate filings.

Effective April 30, 2015, American Beacon Advisors, Inc. (the “Manager”) became a wholly-owned subsidiary of Astro AB Borrower, Inc., which is indirectly owned by investment funds affiliated with Kelso & Company, L.P. and Estancia Capital Management, LLC, two prominent private equity firms. Prior to April 30, the Manager was a wholly-owned subsidiary of Lighthouse Holdings, Inc., which was indirectly owned by investment funds affiliated with Pharos Capital Group, LLC and TPG Capital, L.P., two leading private equity firms.

Class Disclosure

All classes of the Emerging Markets Fund were closed to new investors on August 20, 2015. The Retirement and AMR Classes of the International Equity Fund were closed to new investors on September 22, 2015.

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, which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”)
C Class	General public and investors investing through an intermediary with applicable sales charges, which may include a CDSC
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.

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 and the Trust. As compensation for performing the duties required under the Management Agreement, the Manager receives from the Funds an annualized fee equal to

25

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

0.05% of the average daily net assets. The Funds pay the unaffiliated investment advisors hired by the Manager to direct investment activities of the Funds. Management fees paid during the year ended October 31, 2015 were as follows (dollars in thousands):

Fund	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
Emerging Markets		0.67	%	$	798	$	738	$	60
International Equity		0.29	%		7,019		5,705		1,314

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 included in income derived from securities lending and management and investment advisory fees on the Statements of Operations. During the year ended October 31, 2015, securities lending fees paid to the Manager on behalf of the International Equity Fund was $115,919.

Administration Agreement

The Manager and the Trust entered into an Administration Agreement which obligates the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administration Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor, Retirement, A, and C Classes and 0.05% of the average daily net assets of the AMR Class of the Funds.

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 separate 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.

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.

26

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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 $3,607 for the year ended October 31, 2015.

Investment in Affiliated Funds

The Funds may invest in the American Beacon Money Market Select Fund (the “MM 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 management and administration fees totaling 0.10% of the average daily net assets of the Select Funds. During the year ended October 31, 2015, fees earned by the Manager from the Select Funds were as follows:

	Fees Earned From Direct Investments in Select Funds		Fees Earned From Securities Lending Collateral Invested in Select Funds		Total
International Equity	$	9,316	$	44,807	$	54,123

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, 2015, the Funds did not utilize the credit facility.

Expense Reimbursement Plan

The Manager voluntary and contractually agreed to reimburse the following Funds to the extent that total operating expenses exceeded a Fund’s expense cap. For the year ended October 31, 2015, the Manager reimbursed expenses as follows:

		Expense Caps						Reimbursed or (Recovered) Expenses			Expiration of Reimbursements
Fund	Class	11/1/14 to 2/28/15			3/1/15 to 10/31/15
Emerging Markets	Institutional		1.35	%		1.35	%	$	14,312			2018
Emerging Markets	Y		1.45	%		1.45	%		1,110			2018
Emerging Markets	Investor		1.79	%		1.79	%		3,202			2018
Emerging Markets	A		1.79	%		N/A			285			2018
Emerging Markets	C		2.54	%		N/A			103			2018
Emerging Markets	AMR		N/A			1.35	%		29,948			2018
International Equity	Institutional*		N/A			N/A			105,558			2018
International Equity	Retirement		N/A			N/A			(209	)		2018
International Equity	A		N/A			N/A			(200	)		2018
International Equity	C		N/A			N/A			(134	)		2018

* Voluntary Reimbursement

Of these amounts, $5,331 was receivable from the Manager to the Emerging Markets Fund and $103 was payable to the Manager from the International Equity Fund at October 31, 2015. 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 are as follows:

27

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Fund	Recovered Expenses		Excess Expense Carryover		Expired Expense Carryover		Expiration of Reimbursed Expenses
Emerging Markets	$	387	$	—	$	28,446		2015
Emerging Markets		—		45,693		—		2016
International Equity		543		—		18,792		2015
International Equity		—		88,916		—		2016
International Equity		—		151,730		—		2017

Sales Commissions

The Funds’ distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2015, Foreside collected $1,031 and $4,759 for Emerging Markets and International Equity Funds, respectively from the sale of Class A Shares.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2015, there were no CDSC fees collected for Class A Shares.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2015, $10 and $1,192 in CDSC fees were collected for the Emerging Markets and International Equity Funds, respectively.

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, including exchange-traded funds (“ETFs”) 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 open-end mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation.

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

28

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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. In addition, the Fund may use fair value pricing for securities primarily traded in non-U.S. markets because most foreign markets close well before the Funds’ pricing time of 4:00 p.m. Eastern Standard Time. The earlier close of these foreign markets gives rise to the possibility that significant events, including broad market moves, may have occurred in the interim and may materially affect the value of those securities. These securities are fair valued using a pricing service and are categorized as Level 2 in the fair value hierarchy. The pricing service, using methods approved by the Board, considers the correlation of the trading patterns of the foreign security to intraday trading in the U.S. markets, based on indices of domestic securities and other appropriate indicators such as prices of relevant ADRs and futures contracts.

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 generally 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.

Over-the-counter (“OTC”) 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.

29

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

The Funds’ investments are summarized by level based on the inputs used to determine their values. As of October 31, 2015, the investments were classified as described below (in thousands):

Emerging Markets*	Level 1			Level 2		Level 3		Total
Foreign Preferred Stocks	$	2,722		$	—	$	—	$	2,722
Foreign Common Stocks		41,537			1,130		22		42,689
Foreign Convertible Bonds		—			11		—		11
Short-Term Investments—Money Market Funds		53,948			—		—		53,948
Total Investments in Securities	$	98,207		$	1,141	$	22	$	99,370
Financial Derivative Instruments—Liabilities
Futures Contracts	$	(3	)	$	—	$	—	$	(3	)
Total Financial Derivative Instruments—Liabilities	$	(3	)	$	—	$	—	$	(3	)
International Equity*	Level 1			Level 2		Level 3		Total
Foreign Preferred Stocks	$	14,375		$	—	$	—	$	14,375
Foreign Common Stocks		1,971,985			—		—		1,971,985
Short-Term Investments – Money Market Funds		121,687			—		—		121,687
Securities Lending Collateral invested in Money Market Funds		14,834			—		—		14,834
Total Investments in Securities	$	2,122,881		$	—	$	—	$	2,122,881
Financial Derivative Instruments—Assets
Futures Contracts	$	4,907		$	—	$	—	$	4,907
Foreign Currency Contracts		708			—		—		708
Total Financial Derivative Instruments—Assets	$	5,615		$	—	$	—	$	5,615
Financial Derivative Instruments—Liabilities
Futures Contracts	$	(100	)	$	—	$	—	$	(100	)
Foreign Currency Contracts		(713	)		—		—		(713	)
Total Financial Derivative Instruments—Liabilities	$	(813	)	$	—	$	—	$	(813	)

* Refer to the Schedules of Investments for country information.

U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) also requires all transfers between any levels to be disclosed. The end of the period timing recognition has been adopted for the transfers between levels of each Fund’s assets and liabilities. During the year ended October 31, 2015, the Emerging Markets Fund transferred securities with a value of $29,216 from Level 2 to Level 1 and $22 from Level 2 to Level 3, and the International Equity Fund transferred securities with a value of $1,627,228 from Level 2 to Level 1 as of the end of period in accordance with fair value procedures established by the Board. These transfers into Level 1 were due to an assessment in the prior year that adjustments should be applied to certain international securities due to significant movement in the market. No such adjustments were required as of 10/31/15. The transfer into Level 3 was the result of a change in valuation methodology for a security.

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

	Foreign Common Stock
Beginning Balance as of 10/31/2014	$	—
Net Purchases		—
Net Sales		—
Accrued Discounts/(Premiums)		—
Realized Gain/(Loss)		—
Net Change in Unrealized Appreciation/(Depreciation)		—
Transfers into Level 3		22
Transfers out of Level 3		—
Ending Balance 10/31/2015	$	22
Net Change in Unrealized Appreciation/(Depreciation) on Investments Held at 10/31/2015(2)	$	(54	)

30

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

The following is a summary of significant unobservable inputs used in the fair valuation of the asset categorized within Level 3 of the fair value hierarchy:

Security   Type	Fair Value At 10/31/2015		Valuation Technique	Unobservable Inputs	Input Assumptions	Fair Value at 10/31/2015 per share
Foreign Common Stock	$	21,989	Analysis of financial statements and the Restructuring Plan	Any unanticipated adjustments to the restructuring plan that may arise before the company emerges from bankruptcy	Initial equity distribution rates under the Restructuring Plan:	$	0.25 MXN/ 0.015
					85% to unsecured creditors
					12.5% to company management
					2.5% to pre-plan common stockholders

⁽²⁾ 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.

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.

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. To the extent necessary to fully distribute capital gains, the Funds designate earnings and profits distributed to shareholders on the redemption of shares.

31

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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

Other

Under the Trust’s organizational documents, its officers and 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.

4. Securities and Other Investments

American Depositary Receipts (“ADRs”), Global Depositary Receipts (“GDRs”), and Non-Voting Depositary Receipts (“NVDRs”)

ADRs are depositary receipts for foreign issuers in registered form traded in U.S. securities markets. GDRs are in bearer form and traded in both the U.S. and European securities markets. NVDRs represent financial interests in an issuer but the holder is not entitled to any voting rights. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Fund may invest in unsponsored depositary receipts, the issuers of which are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security.

32

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Chess Depository Instruments (“CDIs”)

CDIs are financial products in which a unit of beneficial ownership is the underlying financial interests of the issuer. The financial interests of the issuer can be foreign equities, debt or other securities through one or more nominee companies, known as depository nominees. These underlying financial interests are quoted on the Australian Stock Exchange (“ASX”) market. With the exception of voting arrangements and some corporate actions of foreign issuers domiciled in certain jurisdictions, the CDI holder has the same rights as holders of financial interests of the issuer that are legally registered in the holder’s name. All of the economic benefits such as dividends, bonus issues, rights issues, interest payments, and maturity payments or similar corporate actions flow through to the CDI holder as if you were the legal owner of the corresponding financial product. The difference between holding CDIs and holding the foreign shares of the issuer is that the holder has beneficial ownership of the equivalent number of foreign shares of the issuer instead of legal title. Legal title to the foreign shares of the issuer is held by a nominee company on behalf of CDI holders.

Restricted Securities

The 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. Reg S securities cannot be sold in the United States without either an effective registration statement filed pursuant to the Securities Act of 1933, or pursuant to an exemption from registration. 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 year ended October 31, 2015 are disclosed in the Notes to the Schedules of 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.

Master Agreements

The Fund is a party to International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreements”) with counterparties that govern transactions in over-the-counter derivative and foreign exchange contracts entered into by the Fund and those counterparties. The ISDA Master Agreements contain provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements. Since different types of forward and OTC financial derivative transactions have different mechanics and are sometimes traded out of different legal entities of a particular counterparty organization, each type of transaction may be covered by a different Master Agreement, resulting in the need for multiple agreements with a single counterparty. As the Master Agreements are specific to unique operations of different asset types, they allow a Fund to net its total exposure to a counterparty in the event of a default with respect to all the transactions governed under a single agreement with a counterparty.

33

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Master Securities Forward Transaction Agreements (“Master Forward Agreements”) govern the considerations and factors surrounding the settlement of certain forward settling transactions, such as delayed delivery or sale-Buyback financing transactions by and between a Fund and select counterparties. The Master Forward Agreements maintain provisions for, among other things, initiation and confirmation, payment and transfer, events of default, termination, and maintenance of collateral.

Other Investment Company Securities and Other Exchange Traded Products

The Funds may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Funds may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, a Fund becomes a shareholder of that investment company. As a result, Fund shareholders indirectly will bear a Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses Fund shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

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.

For the year ended October 31, 2015, the Funds entered into foreign currency exchange contracts primarily for hedging.

The Funds’ foreign currency contract notional dollar values outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following tables illustrate the average quarterly volume of foreign currency contracts. For the purpose of this disclosure, volume is measured by the amounts bought and sold in USD at each quarter end (in thousands).

	Average Forward Foreign Currency Notional Amount Outstanding during the year ended October  31, 2015
Fund	Purchased Contracts		Sold Contracts
Emerging Markets	$	16	$	691
International Equity		121,409		27,387

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.

34

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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 a portion 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.

For the year ended October 31, 2015, the Funds entered into future contracts primarily for exposing cash to markets.

The Funds’ average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.

Average Futures Contracts Outstanding
Fund	Year ended October 31, 2015
Emerging Markets		108
International Equity		1,167

The following is a summary of the Funds’ derivative financial instruments categorized by risk exposure (in thousands) ^(1) (2):

Fair Values of financial derivative instruments on the Statements of Assets and Liabilities not accounted for as hedging instruments as of October 31, 2015:

Assets	Derivative	Emerging Markets		International Equity
Unrealized appreciation of foreign currency contracts	Foreign Exchange Contracts	$	—	$	708
Receivable for variation margin from open futures contracts(2)	Equity Contracts		3		4,807
		$	3	$	5,515
Liabilities	Derivative	Emerging Markets		International Equity
Unrealized depreciation of foreign currency contracts	Foreign Exchange Contracts	$	—	$	713
Payable for variation margin from open futures contracts(2)	Equity Contracts		—		—
		$	—	$	713

The effect of financial derivative instruments not accounted for as hedging instruments on the Statements of Operations for the year ended October 31, 2015:

Statements of Operations:	Derivative	Emerging Markets			International Equity
Net realized gain (loss) from foreign currency contracts	Foreign Exchange Contracts	$	101		$	(11,476	)
Net realized gain (loss) from futures contracts	Equity Contracts		(1,721	)		5,090
		$	(1,620	)	$	(6,386	)
Statements of Operations:	Derivative	Emerging Markets			International Equity
Change in net unrealized appreciation or (depreciation) of foreign currency contracts	Foreign Exchange Contracts	$	(12	)	$	2,797
Change in net unrealized appreciation or (depreciation) of futures contracts	Equity Contracts		(41	)		4,142
		$	(53	)	$	6,939

(1) See Note 3 in the Notes to Financial Statements for additional information.

(2) Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedules of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.

35

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

6. Principal Risks

In the normal course of business the Funds trade financial instruments and enter into financial transactions where risk of potential loss exists. Security values fluctuate (market risk) and may decline due to factors affecting securities markets in general, particular industries represented in the securities markets or conditions specifically related to a particular company. Failure of the other party to a transaction to perform (credit and counterparty risk), for example by not making principal and interest payments when due, reduces the value of the issuer’s debt and could reduce the Fund’s income. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Funds have unsettled or open transactions will fail to make required payments or otherwise comply with the terms of the instrument, transaction or contract. The potential loss could exceed the value of the financial assets recorded in the financial statements. Some of the Funds’ investments may be illiquid and the Funds may not be able to vary the portfolio investments in response to changes in economic and other conditions. If a Fund is required to liquidate all or a portion of its investments quickly, the Fund may realize significantly less than the value at which it previously recorded those investments.

Market Risks

A Fund’s investments in financial derivatives and other financial instruments expose the Fund to various risks such as, but not limited to, interest rate, foreign currency and equity risks.

Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by a Fund is likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income’s market price to interest rate (i.e. yield) movements.

If a Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, they will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, a Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund.

The fair values of equities, such as common stocks and preferred securities or equity related investments such as futures, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

Counterparty Credit Risk

A derivative contract may suffer a mark to market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

36

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

With exchange traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the Buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Cash collateral that has been pledged to cover obligations of the Funds and cash collateral received from the counterparty, if any, is reported separately on the Statements of Assets and Liabilities as Deposits with brokers for futures contracts and Payable to brokers for futures contracts, respectively. Non-cash collateral pledged by the Funds, if any, is noted in the Schedules of Investments. Generally, the amount of collateral due from or to a party is determined at the close of business of the Funds and additional required collateral is delivered to/pledged by the Funds on the next business day. To the extent amounts due to the Funds from its counterparties are not fully collateralized, contractually or otherwise, the Funds bear the risk of loss from counterparty non-performance. The Funds’ investment advisors attempt to mitigate counterparty risk by only entering into agreements with counterparties that they believe have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Offsetting Assets and Liabilities

The Funds are parties to enforceable master netting agreements between brokers and counterparties, such as ISDA Master Agreements which provide for the right to offset under certain circumstances. The Funds employ multiple investment advisors and counterparties and have elected not to offset qualifying financial and derivative instruments on the Statements of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, October 31, 2015 (in thousands).

Emerging Markets Fund

Offsetting of Financial Assets and Derivative Assets as of October 31, 2015:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities
Futures Contracts (1)	$	112	$	—	$	112
	$	112	$	—	$	112

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of October 31, 2015:

	Net amount of Assets Presented in the Statement of Assets and Liabilities		Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty			Financial Instruments		Cash Collateral Received		Net Amount
Goldman Sachs Bank USA(1)	$	112		—	$	—	$	112
	$	112	$	—	$	—	$	112

37

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

International Equity Fund

Offsetting of Financial Assets and Derivative Assets as of October 31, 2015:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Assets Presented in the Statement of Assets and Liabilities
Futures Contracts(1)	$	4,907	$	—	$	4,907
Foreign Currency Contracts		708		—		708
Securities Lending		13,929		—		13,929
	$	19,544	$	—	$	19,544

Offsetting of Financial Liabilities and Derivative Liabilities as of October 31, 2015:

Description	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities
Futures Contracts(1)	$	100	$	—	$	100
Foreign Currency Contracts		713		—		713
	$	813	$	—	$	813

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of October 31, 2015:

	Net amount of Assets Presented in the Statement of Assets and Liabilities			Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty				Financial Instruments		Cash Collateral Received(2)			Net Amount
Barclays Capital Inc.	$	475		$	—	$	(475	)	$	—
Barclays Bank DLC Wholesale		215			—		—			215
Citigroup Global Markets Inc.		442			—		(442	)		—
CitiBank, N.A		(432	)		—		—			(432	)
Deutsche Bank AG		159			—		—			159
Goldman Sachs Bank USA		78			—		—			78
Goldman Sachs Bank USA(1)		4,807			—		—			4,807
Goldman Sachs & Co.		10,664			—		(10,664	)		—
JPMorgan Clearing Corp		—			—		—			—
JPMorgan Chase Bank N.A.		(4	)		—		—			(4	)
Morgan Stanley & Co LLC.		597			—		(597	)		—
National Financial Service Corp (NFS)		186			—		(186	)		—
Scotia Capital USA Inc.		198			—		(198	)		—
Standard Chartered Bank		(13	)		—		—			(13	)
Toronto Dominion Bank		110			—		—			110
UBS Securities LLC.		1,367			—		(1,367	)		—
UBS AG		(118	)		—		—			(118	)
	$	18,731		$	—	$	13,929		$	4,802

⁽¹⁾  The securities presented here within are not subject to Master Netting Agreements. As such, this is disclosed for informational purposes only.

⁽²⁾  Excess of collateral received from the individual counterparty is not shown for financial reporting purposes. Collateral with a value of $14,834 has been received in connection with securities lending transactions.

7. Federal Income and Excise Taxes

It is the policy of each Fund to qualify as a regulated investment company (“RIC”), 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.

38

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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, 2015 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 Funds also utilize earnings and profits distributed to shareholders on redemptions of shares as part of the dividends paid deduction.

The Funds may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation or depreciation, as applicable, as the income is earned or capital gains are recorded.

The tax character of distributions paid were as follows (in thousands):

	Emerging Markets				International Equity
Distributions paid from:	Year Ended October 31, 2015		Year Ended October 31, 2014		Year Ended October 31, 2015		Year Ended October 31, 2014
Ordinary income*
Institutional Class	$	152	$	100	$	25,911	$	14,406
Y Class		27		22		14,300		7,149
Investor Class		117		43		8,329		4,093
Advisor Class		—		—		183		73
Retirement Class		—		—		23		7
A Class		14		2		202		79
C Class		3		—		56		15
AMR Class		1,653		1,154		12,918		8,617
Long-term capital gain
Institutional Class		582		—		—		—
Y Class		109		—		—		—
Investor Class		480		—		—		—
Advisor Class		—		—		—		—
Retirement Class		—		—		—		—
A Class		62		—		—		—
C Class		12		—		—		—
AMR Class		6,189		—		—		—
Total distributions paid	$	9,400	$	1,321	$	61,922	$	34,439

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

As of October 31, 2015, the components of distributable earnings or (deficit) on a tax basis were as follows (in thousands):

	Emerging Markets			International Equity
Cost basis of investments for federal income tax purposes	$	123,278		$	2,042,508
Unrealized appreciation		1,020			274,673
Unrealized depreciation		(24,928	)		(194,300	)
Net unrealized appreciation or (depreciation)		(23,908	)		80,373
Undistributed ordinary income		2,047			25,724
Accumulated long-term gain or (loss)		(11,595	)		17,496
Other temporary differences		(7	)		2,788
Distributable earnings or (deficits)	$	(33,463	)	$	126,381

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.

39

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

Gains on redemptions in-kind for International Equity Fund, of approximately $68,727,336, were included in net realized gain on investments in the Statement of Operations for the year ended October 31, 2015, and were not recognized for Federal income tax purposes.

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, utilization of earnings and profits distributed to shareholders on redemption of shares, and net realized gains on redemptions in-kind as of October 31, 2015 (in thousands):

	Emerging Markets			International Equity
Paid-in-capital	$	158		$	75,147
Undistributed net investment income (loss)		1,597			(19,741	)
Accumulated net realized gain (loss)		(1,755	)		(55,406	)
Unrealized appreciation or depreciation of investments, futures contracts, and foreign currency contracts		—			—

Under the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”), net capital losses recognized by Funds in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses. Prior to RIC MOD, net capital losses incurred by the Funds were carried forward for eight years and treated as short-term losses. RIC MOD requires that post-enactment net capital losses be used before pre-enactment net capital losses.

Capital losses incurred that will be carried forward under the provisions of the Act for the year October 31, 2015 were as follows (in thousands):

	Loss Carryforward Character
Fund	Short-Term		Long Term		Total
Emerging Markets	$	1,655	$	9,940	$	11,595

The International Equity Fund utilized $32,400 of loss carryforwards positions occurring prior to the provisions of the Act (in thousands).

8. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2015 were as follows (in thousands):

	Emerging Markets		International Equity
Purchases	$	39,669	$	734,220
Sales and Maturities		98,002		876,269

A summary of the International Equity Fund’s transactions in the USG Select Fund for the year ended October 31, 2015 is set forth below (in thousands):

Type of Transaction	Affiliated Fund		October 31, 2014 Shares/Fair Value		Purchases		Sales		October 31, 2015 Shares/Fair Value		Dividend Income
Direct		USG Select Fund	$	—	$	21,000	$	11,000	$	10,000	$	1
Securities Lending		USG Select Fund		12,817		882,204		883,989		11,032		N/A

40

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

9. Securities Lending

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

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. The Fund, the Agent, and the Manager retained 80%, 10% 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.

At October 31, 2015, 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
$ 13,939	$	—	$	14,834

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

41

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

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 Schedules of Investments or Statements of Assets and Liabilities.

10. Capital Share Transactions

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

For the Year ended October 31, 2015

	Institutional Class						Y Class						Investor Class						A Class
Emerging Markets Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		74		$	776			37		$	406			160		$	1,661			24		$	255
Redemption fees		—			1			—			—			—			—			—			—
Reinvestment of dividends		70			731			12			129			57			584			7			73
Shares redeemed		(255	)		(2,474	)		(160	)		(1,571	)		(383	)		(3,811	)		(76	)		(721	)
Net (decrease) in shares outstanding		(111	)	$	(966	)		(111	)	$	(1,036	)		(166	)	$	(1,566	)		(45	)	$	(393	)

	C Class						AMR Class
Emerging Markets Fund	Shares			Amount			Shares			Amount
Shares sold		1		$	11			1,832		$	18,802
Redemption fees		—			—			—			12
Reinvestment of dividends		1			12			738			7,842
Shares redeemed		(9	)		(82	)		(7,242	)		(69,650	)
Net (decrease) in shares outstanding		(7	)	$	(59	)		(4,672	)	$	(42,994	)

	Institutional Class						Y Class						Investor Class						Advisor Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		14,554		$	277,407			7,834		$	156,417			5,498		$	103,983			998		$	19,928
Redemption fees		—			5			—			2			—			2			—			—
Reinvestment of dividends		1,147			21,401			699			13,514			448			8,294			10			183
Shares redeemed		(9,539	)		(185,188	)		(4,577	)		(91,292	)		(5,559	)		(105,616	)		(191	)		(3,717	)
Net increase in shares outstanding		6,162		$	113,625			3,956		$	78,641			387		$	6,663			817		$	16,394

	Retirement Class						A Class						C Class						AMR Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		85		$	1,757			347		$	6,623			102		$	1,903			2,403		$	46,029
Redemption fees		—			—			—			—			—			—			—			2
Reinvestment of dividends		1			23			9			175			2			38			692			12,918
Shares redeemed		(20	)		(405	)		(221	)		(4,163	)		(49	)		(913	)		(20,544	)		(388,316	)
Net increase (decrease) in shares outstanding		66		$	1,375			135		$	2,635			55		$	1,028			(17,449	)	$	(329,367	)

For the Year Ended October 31, 2014

	Institutional Class						Y Class						Investor Class
Emerging Markets Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		99		$	1,222			170		$	2,112			362		$	4,513
Redemption fees		—			2			—			—			—			1
Reinvestment of dividends		9			100			2			21			4			42
Shares redeemed		(72	)		(855	)		(184	)		(2,131	)		(241	)		(2,915	)
Net increase (decrease) in shares outstanding		36		$	469			(12	)	$	2			125		$	1,641

42

American Beacon Funds^SM

Notes to Financial Statements

October 31, 2015

	A Class						C Class						AMR Class
Emerging Markets Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		55		$	690			16		$	195			1,719		$	21,019
Redemption fees		—			—			—			—			—			19
Reinvestment of dividends		—			1			—			—			99			1,153
Shares redeemed		(12	)		(144	)		(4	)		(47	)		(1,869	)		(22,654	)
Net increase (decrease) in shares outstanding		43		$	547			12		$	148			(55	)	$	(463	)

	Institutional Class						Y Class						Investor Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		13,787		$	279,279			8,027		$	167,803			5,651		$	113,559
Redemption fees		—			18			—			10			—			7
Reinvestment of dividends		627			12,437			204			4,201			207			4,066
Shares redeemed		(8,749	)		(177,074	)		(3,206	)		(66,954	)		(4,810	)		(96,602	)
Net increase in shares outstanding		5,665		$	114,660			5,025		$	105,060			1,048		$	21,030

	Advisor Class						Retirement Class						A Class
International Equity Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		205		$	4,180			36		$	777			285		$	5,687
Reinvestment of dividends		4			73			—			7			3			63
Shares redeemed		(77	)		(1,562	)		(13	)		(285	)		(52	)		(1,038	)
Net increase in shares outstanding		132		$	2,691			23		$	499			236		$	4,712

	C Class						AMR Class
International Equity Fund	Shares			Amount			Shares			Amount
Shares sold		103		$	2,040			3,134		$	63,781
Redemption fees		—			—			—			9
Reinvestment of dividends		1			12			434			8,617
Shares redeemed		(6	)		(111	)		(4,414	)		(88,917	)
Net increase (decrease) in shares outstanding		98		$	1,941			(846	)	$	(16,510	)

11. Subsequent Events

On August 20, 2015, the Manager announced the Board’s approval of a plan to liquidate and terminate the Y, Investor, A, and C Classes of the Emerging Markets Fund on November 30, 2015. The AMR Class of the Emerging Markets Fund will terminate on December 17, 2015. On September 21, 2015 the Manager announced the Board’s approval of a plan to liquidate and terminate the AMR Class of the International Equity Fund on or about March 15, 2016. At the same Board meeting, the Board approved a plan to terminate the Retirement Class of the International Equity Fund on or about January 15, 2016. The shares in the Retirement Class will be exchanged for those of the Advisor Class of the International Equity Fund on January 15, 2016.

43

American Beacon Emerging Markets Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2015D			2014			2013			2012			2011A
Net asset value, beginning of period	$	12.38		$	12.15		$	11.33		$	12.67		$	14.55
Income from investment operations:
Net investment income (loss)		0.11			0.13			0.09			0.12			0.16
Net gains (losses) from investments (both realized and unrealized)		(2.31	)		0.23			0.86			0.11			(1.91	)
Total income (loss) from investment operations		(2.20	)		0.36			0.95			0.23			(1.75	)
Less distributions:
Dividends from net investment income		(0.04	)		(0.13	)		(0.13	)		(0.16	)		(0.13	)
Distributions from net realized gains		(0.84	)		—			—			(1.41	)		—
Total distributions		(0.88	)		(0.13	)		(0.13	)		(1.57	)		(0.13	)
Redemption fees added to beneficial interests		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B
Net asset value, end of period	$	9.30		$	12.38		$	12.15		$	11.33		$	12.67
Total return C		(18.60	)%		3.05	%		8.39	%		3.05	%		(12.18	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	6,915		$	10,597		$	9,962		$	8,256		$	8,523
Ratios to average net assets:
Expenses, before reimbursements		1.50	%		1.34	%		1.64	%		1.50	%		1.55	%
Expenses, net of reimbursements		1.35	%		1.34	%		1.35	%		1.33	%		1.24	%
Net investment income (loss), before reimbursements		0.67	%		1.05	%		0.58	%		0.87	%		0.99	%
Net investment income (loss), net of reimbursements		0.82	%		1.05	%		0.87	%		1.04	%		1.30	%
Portfolio turnover rate		36	%		51	%		55	%		44	%		101	%

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

^B Amounts represent less than $0.01 per share.

^C Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

^D Morgan Stanley Investment Management, Inc. was terminated as an investment manager to the Emerging Markets Fund on October 31, 2015.

44

American Beacon Emerging Markets Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class															Investor Class															A Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,
2015D			2014			2013			2012			2011A			2015D			2014			2013			2012			2011A			2015 D			2014			2013			2012			2011A
$	12.44		$	12.22		$	11.41		$	12.75		$	14.53		$	12.16		$	11.93		$	11.13		$	12.44		$	14.29		$	12.16		$	11.91		$	11.11		$	12.47		$	14.27
	0.12			0.06			0.11			0.06			0.13			0.03			0.08			0.04			0.08			0.13			0.06			0.07			0.06			0.10			0.06
	(2.35	)		0.28			0.83			0.16			(1.91	)		(2.23	)		0.23			0.84			0.12			(1.93	)		(2.27	)		0.24			0.82			0.09			(1.85	)
	(2.23	)		0.34			0.94			0.22			(1.78	)		(2.20	)		0.31			0.88			0.20			(1.80	)		(2.21	)		0.31			0.88			0.19			(1.79	)
	(0.03	)		(0.12	)		(0.13	)		(0.15	)		—			(0.03	)		(0.08	)		(0.08	)		(0.10	)		(0.05	)		(0.02	)		(0.06	)		(0.08	)		(0.14	)		(0.01	)
	(0.84	)		—			—			(1.41	)		—			(0.84	)		—			—			(1.41	)		—			(0.84	)		—			—			(1.41	)		—
	(0.87	)		(0.12	)		(0.13	)		(1.56	)		—			(0.87	)		(0.08	)		(0.08	)		(1.51	)		(0.05	)		(0.86	)		(0.06	)		(0.08	)		(1.55	)		(0.01	)
	0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B
$	9.34		$	12.44		$	12.22		$	11.41		$	12.75		$	9.09		$	12.16		$	11.93		$	11.13		$	12.44		$	9.09		$	12.16		$	11.91		$	11.11		$	12.47
	(18.76	)%		2.85	%		8.22	%		2.91	%		(12.25	)%		(18.97	)%		2.61	%		7.89	%		2.72	%		(12.65	)%		(19.05	)%		2.65	%		7.94	%		2.64	%		(12.58	)%
$	353		$	1,848		$	1,962		$	1,837		$	5,296		$	4,709		$	8,321		$	6,675		$	8,427		$	9,030		$	368		$	1,035		$	491		$	685		$	433
	1.53	%		1.45	%		1.75	%		1.72	%		1.68	%		1.84	%		1.79	%		1.95	%		1.84	%		1.84	%		1.89	%		1.73	%		2.19	%		2.01	%		2.97	%
	1.45	%		1.45	%		1.45	%		1.44	%		1.33	%		1.79	%		1.79	%		1.79	%		1.75	%		1.70	%		1.85	%		1.73	%		1.79	%		1.78	%		1.46	%
	0.56	%		0.76	%		0.56	%		(0.05	)%		0.99	%		0.28	%		0.61	%		0.26	%		0.56	%		0.77	%		0.32	%		0.54	%		0.11	%		0.46	%		(0.10	)%
	0.65	%		0.76	%		0.86	%		0.23	%		1.35	%		0.32	%		0.61	%		0.42	%		0.65	%		0.91	%		0.35	%		0.54	%		0.52	%		0.69	%		1.41	%
	36	%		51	%		55	%		44	%		101	%		36	%		51	%		55	%		44	%		101	%		36	%		51	%		55	%		44	%		101	%

45

American Beacon Emerging Markets Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class															AMR Class
	Year Ended October 31,															Year Ended October 31,
	2015 D			2014			2013			2012			2011A			2015 D			2014			2013			2012			2011A
Net asset value, beginning of period	$	12.04		$	11.83		$	11.05		$	12.38		$	14.26		$	12.49		$	12.25		$	11.44		$	12.74		$	14.62
Income from investment operations:
Net investment income (loss)		(0.07	)		0.00			(0.05	)		0.03			0.09			0.40			0.14			0.12			0.14			0.18
Net gains (losses) from investments (both realized and unrealized)		(2.20	)		0.24			0.83			0.07			(1.97	)		(2.60	)		0.23			0.83			0.12			(1.97	)
Total income (loss) from investment operations		(2.27	)		0.24			0.78			0.10			(1.88	)		(2.20	)		0.37			0.95			0.26			(1.79	)
Less distributions:
Dividends from net investment income		—			(0.03	)		—			(0.02	)		—			(0.05	)		(0.13	)		(0.14	)		(0.15	)		(0.09	)
Distributions from net realized gains		(0.84	)		—			—			(1.41	)		—			(0.84	)		—			—			(1.41	)		—
Total distributions		(0.84	)		(0.03	)		—			(1.43	)		—			(0.89	)		(0.13	)		(0.14	)		(1.56	)		(0.09	)
Redemption fees added to beneficial interests		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B		0.00	B
Net asset value, end of period	$	8.93		$	12.04		$	11.83		$	11.05		$	12.38		$	9.40		$	12.49		$	12.25		$	11.44		$	12.74
Total return C		(19.76	)%		2.00	%		7.06	%		1.83	%		(13.18	)%		(18.48	)%		3.08	%		8.34	%		3.26	%		(12.30	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	97		$	213		$	62		$	5		$	8		$	38,854		$	110,002		$	108,493		$	103,363		$	113,894
Ratios to average net assets:
Expenses, before reimbursements		2.68	%		2.47	%		3.26	%		3.74	%		26.96	%		1.22	%		1.29	%		1.39	%		1.24	%		1.31	%
Expenses, net of reimbursements		2.62	%		2.47	%		2.54	%		2.52	%		2.41	%		1.19	%		1.29	%		1.39	%		1.24	%		1.31	%
Net investment income (loss), before reimbursements		(0.50	)%		0.00	%		(0.55	)%		(1.19	)%		(23.86	)%		0.95	%		1.11	%		0.90	%		1.15	%		1.29	%
Net investment income (loss), net of reimbursements		(0.44	)%		0.00	%		0.18	%		0.03	%		0.69	%		0.98	%		1.11	%		0.90	%		1.15	%		1.29	%
Portfolio turnover rate		36	%		51	%		55	%		44	%		101	%		36	%		51	%		55	%		44	%		101	%

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

^B  Amounts represent less than $0.01 per share.

^C  Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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 D and returns for shareholder transactions.

^D  Morgan Stanley Investment Management, Inc. was terminated as an investment manager to the Emerging Markets Fund on October 31, 2015.

46

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47

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2015			2014			2013			2012A			2011
Net asset value, beginning of period	$	19.51		$	20.07		$	16.05		$	15.27		$	16.67
Income from investment operations:
Net investment income		0.35			0.54			0.36			0.41			0.46
Net gains (losses) from investments (both realized and unrealized)		(0.55	)		(0.77	)		4.07			0.92			(1.41	)
Total income (loss) from investment operations		(0.20	)		(0.23	)		4.43			1.33			(0.95	)
Less distributions:
Dividends from net investment income		(0.52	)		(0.33	)		(0.41	)		(0.55	)		(0.45	)
Distributions from net realized gains		—			—			—			—			—
Total distributions		(0.52	)		(0.33	)		(0.41	)		(0.55	)		(0.45	)
Redemption fees added to beneficial interest		—			—			0.00	C		0.00	C		0.00	C
Net asset value, end of period	$	18.79		$	19.51		$	20.07		$	16.05		$	15.27
Total return B		(0.99	)%		(1.18	)%		28.14	%		9.25	%		(5.89	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,037,149		$	956,960		$	870,729		$	608,256		$	512,093
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.70	%		0.72	%		0.72	%		0.72	%		0.70	%
Expenses, net of reimbursements or recoupments		0.69	%		0.70	%		0.71	%		0.72	%		0.70	%
Net investment income (loss), before reimbursements or recoupments		1.93	%		2.74	%		2.16	%		2.85	%		2.90	%
Net investment income, net of reimbursements or recoupments		1.94	%		2.76	%		2.17	%		2.85	%		2.90	%
Portfolio turnover rate		33	%		23	%		27	%		60	%		33	%

^A The Boston Company Asset Management, LLC was terminated as an investment advisor to the International Equity Fund on December 31, 2011.

^B Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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 Amount represents less than $0.01 per share.

48

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class															Investor Class
Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012A			2011			2015			2014			2013			2012A			2011
$	20.21		$	20.81		$	16.65		$	15.82		$	17.17		$	19.32		$	19.86		$	15.88		$	15.11		$	16.42
	0.35			0.50			0.62			0.41			0.49			0.31			0.46			0.25			0.38			0.44
	(0.57	)		(0.77	)		3.97			0.95			(1.50	)		(0.57	)		(0.76	)		4.09			0.87			(1.44	)
	(0.22	)		(0.27	)		4.59			1.36			(1.01	)		(0.26	)		(0.30	)		4.34			1.25			(1.00	)
	(0.53	)		(0.33	)		(0.43	)		(0.53	)		(0.34	)		(0.46	)		(0.24	)		(0.36	)		(0.48	)		(0.31	)
	—			—			—			—			—			—			—			—			—			—
	(0.53	)		(0.33	)		(0.43	)		(0.53	)		(0.34	)		(0.46	)		(0.24	)		(0.36	)		(0.48	)		(0.31	)
	—			—			0.00	C		0.00	C		0.00	C		—			—			0.00	C		0.00	C		0.00	C
$	19.46		$	20.21		$	20.81		$	16.65		$	15.82		$	18.60		$	19.32		$	19.86		$	15.88		$	15.11
	(1.06	)%		(1.31	)%		28.04	%		9.15	%		(6.00	)%		(1.35	)%		(1.54	)%		27.81	%		8.77	%		(6.21	)%
$	587,950		$	530,837		$	441,946		$	1,512		$	720		$	342,720		$	348,542		$	337,424		$	453,142		$	386,560
	0.77	%		0.82	%		0.85	%		0.80	%		0.81	%		1.03	%		1.05	%		1.04	%		1.09	%		1.07	%
	0.77	%		0.82	%		0.85	%		0.80	%		0.81	%		1.03	%		1.05	%		1.04	%		1.09	%		1.07	%
	1.87	%		2.62	%		2.55	%		2.74	%		3.00	%		1.60	%		2.36	%		1.67	%		2.50	%		2.55	%
	1.87	%		2.62	%		2.55	%		2.74	%		3.00	%		1.60	%		2.36	%		1.67	%		2.50	%		2.55	%
	33	%		23	%		27	%		60	%		33	%		33	%		23	%		27	%		60	%		33	%

49

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor Class
	Year Ended October 31,
	2015			2014			2013			2012A			2011
Net asset value, beginning of period	$	19.76		$	20.36		$	16.36		$	15.52		$	16.74
Income from investment operations:
Net investment income (loss)		0.38			0.44			(0.41	)		0.09			0.07
Net gains (losses) from investments (both realized and unrealized)		(0.68	)		(0.77	)		4.83			1.18			(1.12	)
Total income (loss) from investment operations		(0.30	)		(0.33	)		4.42			1.27			(1.05	)
Less distributions:
Dividends from net investment income		(0.45	)		(0.27	)		(0.42	)		(0.43	)		(0.17	)
Distributions from net realized gains		—			—			—			—			—
Total distributions		(0.45	)		(0.27	)		(0.42	)		(0.43	)		(0.17	)
Redemption fees added to beneficial interest		—			—			0.00	C		0.00	C		0.00	C
Net asset value, end of period	$	19.01		$	19.76		$	20.36		$	16.36		$	15.52
Total return B		(1.51	)%		(1.64	)%		27.51	%		8.59	%		(6.35	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	22,912		$	7,677		$	5,232		$	1,397		$	1,015
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.16	%		1.19	%		1.20	%		1.31	%		1.24	%
Expenses, net of reimbursements or recoupments		1.16	%		1.19	%		1.20	%		1.31	%		1.24	%
Net investment income (loss), before reimbursements or recoupments		1.55	%		2.21	%		1.39	%		2.18	%		2.52	%
Net investment income, net of reimbursements or recoupments		1.55	%		2.21	%		1.39	%		2.18	%		2.52	%
Portfolio turnover rate		33	%		23	%		27	%		60	%		33	%

^A The Boston Company Asset Management, LLC was terminated as an investment advisor to the International Equity Fund on December 31, 2011.

^B Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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 Amount represents less than $0.01 per share.

50

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Retirement Class															A Class
Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012A			2011			2015			2014			2013			2012A			2011
$	20.70		$	21.31		$	16.75		$	15.44		$	16.71		$	19.32		$	19.92		$	16.02		$	15.33		$	16.40
	0.17			0.30			0.19			(0.45	)		0.39			0.31			0.46			0.43			0.48			0.12
	(0.54	)		(0.71	)		4.37			1.76			(1.44	)		(0.59	)		(0.78	)		3.89			0.76			(1.14	)
	(0.37	)		(0.41	)		4.56			1.31			(1.05	)		(0.28	)		(0.32	)		4.32			1.24			(1.02	)
	(0.39	)		(0.20	)		—			—			(0.22	)		(0.45	)		(0.28	)		(0.42	)		(0.55	)		(0.05	)
	—			—			—			—			—			—			—			—			—			—
	(0.39)			(0.20	)		—			—			(0.22	)		(0.45	)		(0.28	)		(0.42	)		(0.55	)		(0.05	)
	—			—			0.00	C		0.00	C		0.00	C		—			—			0.00	C		0.00	C		0.00	C
$	19.94		$	20.70		$	21.31		$	16.75		$	15.44		$	18.59		$	19.32		$	19.92		$	16.02		$	15.33
	(1.79	)%		(1.93	)%		27.22	%		8.48	%		(6.37	)%		(1.42	)%		(1.65	)%		27.51	%		8.62	%		(6.26	)%
$	2,486		$	1,212		$	755		$	52		$	1		$	10,748		$	8,540		$	4,113		$	1,255		$	461
	1.43	%		1.46	%		1.46	%		6.40	%		3.43	%		1.08	%		1.15	%		1.21	%		1.29	%		2.24	%
	1.44	%		1.47	%		1.47	%		1.24	%		1.30	%		1.08	%		1.15	%		1.25	%		1.26	%		1.22	%
	1.13	%		1.97	%		1.78	%		(3.06	)%		0.17	%		1.55	%		2.31	%		1.73	%		2.03	%		1.03	%
	1.11	%		1.95	%		1.78	%		2.10	%		2.30	%		1.55	%		2.31	%		1.69	%		2.07	%		2.05	%
	33	%		23	%		27	%		60	%		33	%		33	%		23	%		27	%		60	%		33	%

51

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Year Ended October 31,
	2015			2014			2013			2012A			2011
Net asset value, beginning of period	$	18.83		$	19.47		$	15.70		$	15.21		$	16.39
Income from investment operations:
Net investment income		0.16			0.30			0.52			0.40			0.07
Net gains (losses) from investments (both realized and unrealized)		(0.56	)		(0.75	)		3.59			0.71			(1.25	)
Total income (loss) from investment operations		(0.40	)		(0.45	)		4.11			1.11			(1.18	)
Less distributions:
Dividends from net investment income		(0.34	)		(0.19	)		(0.34	)		(0.62	)		—
Distributions from net realized gains		—			—			—			—			—
Total distributions		(0.34	)		(0.19	)		(0.34	)		(0.62	)		—
Redemption fees added to beneficial interest		—			—			0.00	C		0.00	C		0.00	C
Net asset value, end of period	$	18.09		$	18.83		$	19.47		$	15.70		$	15.21
Total return B		(2.12	)%		(2.36	)%		26.56	%		7.89	%		(7.20	)%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,899		$	3,029		$	1,220		$	115		$	76
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.82	%		1.90	%		1.95	%		2.12	%		7.39	%
Expenses, net of reimbursements or recoupments		1.83	%		1.90	%		1.99	%		1.98	%		1.95	%
Net investment income (loss), before reimbursements or recoupments		0.77	%		1.53	%		1.13	%		1.56	%		(4.32	)%
Net investment income, net of reimbursements or recoupments		0.77	%		1.53	%		1.09	%		1.70	%		1.11	%
Portfolio turnover rate		33	%		23	%		27	%		60	%		33	%

^A The Boston Company Asset Management, LLC was terminated as an investment advisor to the International Equity Fund on December 31, 2011.

^B Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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 Amount represents less than $0.01 per share.

52

American Beacon International Equity Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

AMR Class
Year Ended October 31,
2015			2014			2013			2012A			2011
$	19.58		$	20.12		$	16.08		$	15.31		$	16.78
	0.97			0.60			0.46			0.49			0.53
	(1.12	)		(0.77	)		4.04			0.87			(1.44	)
	(0.15	)		(0.17	)		4.50			1.36			(0.91	)
	(0.58	)		(0.37	)		(0.46	)		(0.59	)		(0.56	)
	—			—			—			—			—
	(0.58	)		(0.37	)		(0.46	)		(0.59	)		(0.56	)
	—			—			0.00	C		0.00	C		0.00	C
$	18.85		$	19.58		$	20.12		$	16.08		$	15.31
	(0.75	)%		(0.88	)%		28.56	%		9.47	%		(5.62	)%
$	92,776		$	437,941		$	467,156		$	387,197		$	388,185
	0.41	%		0.42	%		0.43	%		0.45	%		0.45	%
	0.41	%		0.42	%		0.43	%		0.45	%		0.45	%
	2.22	%		2.99	%		2.47	%		3.16	%		3.15	%
	2.22	%		2.99	%		2.47	%		3.16	%		3.15	%
	33	%		23	%		27	%		60	%		33	%

53

American Beacon Funds^SM

Privacy Policy and Federal Tax Information

October 31, 2015 (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

Certain tax information regarding the Funds is required to be provided to shareholders based upon the Funds’ income and distributions for the taxable year ended October 31, 2015. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 2015.

The Funds designated the following items with regard to distributions paid during the year ended December 31, 2014. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Funds to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

	Emerging Markets			International Equity
Corporate Dividends Received Deduction		0.00	%		0.00	%
Qualified Dividend Income		100.00	%		100.00	%

The International Equity Fund designated a foreign tax credit of $5,436,902 based on foreign sourced income of $67,300,220.

The Emerging Markets Fund designated $7,433,562 as long-term capital gains distributions and $1,487,416 as short-term capital gain distributions for the year ended October 31, 2015.

The International Equity Fund designated $2,379,250 as long-term capital gains distribution for the year ended October 31, 2015.

Shareholders will receive notification in January 2016 of the applicable tax information necessary to prepare their 2015 income tax returns.

54

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisor Agreements of the Funds (Unaudited)

At an in-person meeting held on November 12, 2014, telephonic meetings held on November 26, 2014 and December 6, 2014 and an in-person meeting held on December 10, 2014 (collectively, the “Board Meetings”), the Board of Trustees (“Board”) considered the approval of:

(1) a new Management Agreement (“New Management Agreement”) among American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”) on behalf of the American Beacon International Equity Fund (“International Equity Fund”) and the American Beacon Emerging Markets Fund (“Emerging Markets Fund”) (collectively, the “Funds”);

(2) new Investment Advisory Agreements among the Manager, the Trust, on behalf of the International Equity Fund, and each of Lazard Asset Management LLC (“Lazard”), Causeway Capital Management LLC (“Causeway”), and Templeton Investment Counsel, LLC (“Templeton”); and

(3) new Investment Advisory Agreements among the Manager, the Trust, on behalf of the Emerging Markets Fund, and each of Brandes Investment Partners, LP (“Brandes”), The Boston Company Asset Management, LLC (“TBCAM”), and Morgan Stanley Investment Management Inc. (“MSIM”).

Collectively, the new investment Advisory Agreements are hereinafter referred to as the “New Advisory Agreements,” and Lazard, Causeway, Templeton, Brandes, TBCAM and MSIM are hereinafter referred to as the “Sub-Advisors.”

The Board meetings were held for the Trustees to consider the New Management Agreement and New Advisory Agreements (“New Agreements”) because, on November 20, 2014, Lighthouse Holdings Parent, Inc. (“LPHI”), the indirect parent company of the Manager, entered into an Agreement and Plan of Merger pursuant to which LHPI agreed to be acquired by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) and Estancia Capital Management, LLC (“Estancia”) (collectively, the “Purchasers”), which are private equity firms (the “Transaction”). As required by the Investment Company Act of 1940, as amended (“1940 Act”), the current Management Agreement (“Current Management Agreement”) among the Manager and the Trust on behalf of the International Equity Fund and the Emerging Markets Fund and the current Investment Advisory Agreements (“Current Advisory Agreements”) among the Manager, Lazard, Causeway, Templeton and the Trust, on behalf of the International Equity Fund, and the Manager, Brandes, TBCAM, MSIM and the Trust, on behalf of the Emerging Markets Fund, provided for their automatic termination in the event of an assignment. The Transaction was deemed an “assignment” under the 1940 Act. As a result, the Current Management Agreement and each Current Advisory Agreement (“Current Agreements”) were deemed to have automatically terminated upon the closing of the Transaction. (The Transaction closed on April 30, 2015).

The Board focused on the effect that the Transaction would have on the Manager and the Funds. Additionally, the Board considered that it had requested and evaluated the information relevant to the renewal of the Current Management Agreement and Current Advisory Agreements at in-person meetings held in May and June 2014. The Manager represented to the Board that there had been no material changes or developments relating to the Manager or any of the Sub-Advisors since the May and June 2014 meetings, other than the changes or developments subsequently reported to the Board or discussed in the due diligence materials submitted to the Trustees in connection with the Transaction. In light of the proximity of the Board’s consideration of the renewal of the Current Agreements, and the Board’s ongoing due diligence review in connection with the Transaction, the Board determined that it was not necessary to repeat certain aspects of the review conducted in connection with the approvals in the past year.

In connection with the Board Meetings, the Trustees received and evaluated such information as they deemed necessary to their consideration of the New Agreements. The information requested on behalf of the Board included, among other information, the following:

• a description of the Transaction, the effect of the Transaction on the Manager, the Trust and the Board, and any proposed changes to the Trust, its service providers, the Funds’ fee structures, fee waivers, and other information;

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

• information regarding the financial resources of the Purchasers and the Manager’s capital structure after the Transaction, including confirmation that the Manager’s financial condition would not raise concerns that the Manager would be unable to continue providing the same scope and quality of services to the Funds;

• information regarding the Manager’s due diligence, bidding and selection process with respect to the Purchasers;

• information regarding the structure of the relationship between Kelso and Estancia and the role that each would assume in advance of and after the Closing;

• information regarding each Purchaser’s ownership structure and key personnel, including information regarding affiliations of the Purchasers and the Manager after the Transaction;

• information regarding each Purchaser’s asset management experience, including the experience of the Purchasers’ key personnel relating to the management of investment companies registered under the 1940 Act;

• the Purchasers’ business plans with respect to the Manager after the Transaction;

• information regarding the extent to which the Purchasers expect to be involved in the Manager’s day-to-day operations and the persons to whom the Manager’s key personnel will report;

• information regarding any anticipated impact that the Transaction might have on the Manager’s compliance activities or the resources available to the Funds’ Chief Compliance Officer;

• a discussion of any potential material changes to the Current Agreements;

• a description of any expected changes in distribution or marketing efforts and strategies for the Funds as a result of the Transaction;

55

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisor Agreements of the Funds (Unaudited)

• information regarding whether the Purchasers or the Manager anticipated proposing any changes to the membership of the Board;

• a discussion of the length of the Purchasers’ anticipated ownership of the Manager and the expected duration of the investment funds financing the Transaction;

• information regarding the ownership and investment of management personnel in the Manager;

• information regarding the Manager’s employee equity incentive plan after the Closing;

• a summary of any material past, pending or anticipated litigation or regulatory proceedings involving the Purchasers, or their personnel;

• verification of the continuation of the Manager’s insurance coverage after the Transaction with regard to the services provided to the Funds; and

• in-person presentations by and discussions with the Manager and representatives of the Purchasers regarding the Transaction.

The Board also considered information that had been provided to the Board by the Manager and the Sub-Advisors for the May and June 2014 meetings in connection with the renewal of the Current Agreements.

Provided below is an overview of the primary factors the Trustees considered at the Board Meetings. The Board did not identify any particular information that was most relevant to its consideration to approve the New Agreements, and each Trustee may have afforded different weight to the various factors. In connection with the approval process for the New Agreements, the Trustees received advice from their legal counsel detailing the Board’s responsibilities pertaining thereto. Legal counsel to the non-interested Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of the New Agreements. Based on its evaluation, the Board unanimously concluded that the terms of the New Agreements were reasonable and fair and that the approval of the New Agreements was in the best interests of the Funds and their shareholders.

In determining whether to approve the New Agreements on December 10, 2014, the Trustees considered the best interests of each Fund separately. The Board considered each Fund’s investment management and sub-advisory relationships separately. In each instance, the Board considered its review of the Current Agreements in May and June 2014, and the information received in November and December 2014 with respect to, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each Sub-Advisor for a Fund; (3) the costs incurred by the Manager in rendering services to the Funds and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or a Sub-Advisor or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect these economies of scale for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or a Sub-Advisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager and the Purchasers regarding certain key aspects of the materials submitted in support of the approval of the New Agreements.

Nature, Extent and Quality of the Services Provided. With respect to the approval of the New Agreements, the Board considered that the New Agreements provide for the Manager and each Sub-Advisor to provide the same services to each Fund on substantially the same terms as the Current Agreements. The Board considered representations by the Manager and/or Purchasers that the Transaction will not result in any changes to the manner in which each Fund’s assets are managed. The Board also considered representations by the Manager and/or the Purchasers that the Transaction will not result in any adverse impact or changes to: the personnel involved in the management of the Funds; the Manager’s disciplined investment approach and goal to provide consistent above average long-term performance at a lower than average cost; the Manager’s continuing efforts to enhance distribution of the Funds’ shares and add new series to the Trust and share classes to the Funds’ product line; the adequacy of the Manager’s financial condition; the Manager’s day-to-day operations; the Manager’s compliance activities or the resources available to the Trust’s Chief Compliance Officer; or the Funds’ service providers or Sub-Advisors. The Board also considered the Manager’s representation that there had been no material changes or developments regarding the Manager or the Sub-Advisors since the Board’s consideration of the Current Agreements in May and June 2014 that had not previously been reported to the Board. The Board also considered information regarding the post-closing capitalization of the Purchasers and the Purchasers’ long-term business goals with regard to the Manager and the Manager’s activities with respect to the Trust, which are consistent with the Manager’s current goals. 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 the Sub-Advisors were appropriate for each Fund and, thus, determined to approve the New Agreements for each Fund.

Investment Performance. The Board considered its review of the comparative information regarding each Fund’s investment performance relative to its benchmark index(es) and peer group in connection with the renewal of the Current Agreements. The Board also considered the performance reports and discussions with management at Board and Committee meetings since June 2014. The Manager also noted that it generally was satisfied with the performance of the Sub-Advisors.

Costs of the Services to be Provided to the Funds and the Projected Profits to be Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager by Fund, the Board considered that the Transaction would result in no changes to the fees charged to the Funds or the Manager’s fee waivers currently in place with respect to each Fund. Additionally, the Board noted that there had been no material changes in this regard since its consideration of the Current Agreements in May and June 2014. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager. The Board did not consider the costs of the services to be provided and profits to be realized by each Sub-Advisor from its relationship with its respective Fund, noting instead the substantially arm’s-length nature of the relationship between the Manager and each Sub-Advisor with respect to the negotiation of the advisory fee rate on behalf of the Funds.

56

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisor Agreements of the Funds (Unaudited)

Economies of Scale and Whether Fee Levels Reflect Economies of Scale. In considering the reasonableness of the management fees, the Board considered that the Funds would pay the same fee rates to the Manager under the New Management Agreement as the Funds currently pay under the Current Management Agreement. The Board also considered that each Fund would pay the same investment advisory fee rate to its Sub-Advisor under the New Advisory Agreement as the Fund pays under its Current Advisory Agreement. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the Manager’s fee schedule for each Fund, Lazard, Causeway and Templeton’s fee schedules for the International Equity Fund and Brandes, TBCAM and MSIM’s fee schedules for the Emerging Markets Fund provide for a reasonable sharing of benefits from any economies of scale with each Fund.

Benefits Derived by the Manager from Relationship With the Funds. The Board considered that the “fall-out” or ancillary benefits that accrue to the Manager and/or the Sub-Advisors as a result of the advisory relationships with the Funds would not change as a result of the Transaction. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the potential benefits accruing to the Manager and the Sub-Advisors under the New Management Agreement and the New Advisory Agreements by virtue of the Manager’s relationship with the Funds, Lazard, Causeway and Templeton’s relationship with the International Equity Fund and Brandes, TBCAM and MSIM’s relationship with the Emerging Market Fund, appear to be fair and reasonable.

Board’s Conclusion. Based on the various considerations described above, the Board, including a majority of Trustees who are not “interested persons” of the Fund, the Manager, Lazard, Causeway, Templeton, Brandes, TBCAM, or MSIM, as that term is defined in the 1940 Act, concluded that the management and investment advisory fee rates to be paid by the International Equity Fund and the Emerging Markets Fund are fair and reasonable and that the approval of the New Agreements is in the best interests of the International Equity Fund and the Emerging Markets Fund, and approved the New Agreements.

57

American Beacon Funds^SM

Results of Shareholder Meeting (Unaudited)

Special meetings of shareholders of each of the portfolios of the American Beacon Funds (the “Trust”) were held on April 7 and April 28, 2015. The shareholders of the International Equity and Emerging Markets Funds (the “Funds”) approved a new investment management agreement between American Beacon Advisors, Inc. and the Funds. Approval of this proposal required a majority of the outstanding voting securities of each Fund. The following are the results of the shareholder votes for this proposal:

Funds	For		Against		Abstain		Non-Voting
International Equity Fund		1,428,080,922.51		3,293,065.83		8,377,501.20		432,294,039.33
Emerging Markets Fund		108,631,932.67		54,951.31		5,522.70		5,078,142.87

Special meetings of shareholders of the Trust were held on April 7 and April 28, 2015. The shareholders of the Trust approved the re-election of nine of the current Trustees to the Board of the American Beacon Trust and the election of two additional Trustees to the Board. Approval of this proposal required a plurality vote of the Trust’s shares. The following are the results of the election of each Trustee:

Gilbert G. Alvarado
Affirmative	16,655,574,211.10
Withhold	242,060,281.87
Joseph B. Armes
Affirmative	16,653,130,207.99
Withhold	244,504,284.98
Gerard J. Arpey
Affirmative	16,659,813,172.19
Withhold	237,821,320.78
W. Humphrey Bogart
Affirmative	16,532,151,093.14
Withhold	365,483,399.83
Brenda A. Cline
Affirmative	16,662,050,138.08
Withhold	235,584,354.89
Eugene J. Duffy
Affirmative	16,430,210,258.21
Withhold	467,424,234.76
Thomas M. Dunning
Affirmative	16,651,792,247.83
Withhold	245,842,245.14
Alan D. Feld
Affirmative	14,899,039,186.08
Withhold	1,998,595,306.89
Richard A. Massman
Affirmative	16,651,582,060.07
Withhold	246,052,432.90
Barbara J. McKenna
Affirmative	16,435,773,869.81
Withhold	461,860,623.16
R. Gerald Turner
Affirmative	16,653,429,720.08
Withhold	244,204,772.89

58

Trustees and Officers of the American Beacon Funds^SM

(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 220 East Las Colinas Boulevard, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-four funds in the fund complex that includes the Trust 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** (78)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
	Term
NON-INTERESTED TRUSTEES	Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (45)	Trustee since 2015	Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present) Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-Present); Director, Sacramento Regional Technology Alliance (2011-Present); Director, Women’s Empowerment (2009-2014); Trustee, American Beacon Select Funds (2015-Present).
Joseph B. Armes (53)	Trustee since 2015	Chairman, President & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2013-Present); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Chief Operating Officer, Hicks Holdings, LLC (Hicks Family assets and investments) (2005-2010); Trustee, Baylor University Board of Regents (2001-2010); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present).
Gerard J. Arpey (57)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, AMR Corp. and American Airlines; Inc. (2003-2011); Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
W. Humphrey Bogart (71)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Brenda A. Cline (54)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Director, Tyler Technologies, Inc.(public sector software solutions company) (2014-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (61)	Trustee since 2008	Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).

59

Trustees and Officers of the American Beacon Funds^SM

(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
OFFICERS	Term
	One Year
Thomas M. Dunning (73)	Trustee since 2008	Chairman Emeritus (2008-Present); Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (72)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present) and 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); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Barbara J. McKenna, CFA (52)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (69) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Gene L. Needles, Jr. (60)	President since 2009 Executive Vice President since 2009	President, CEO and Director, American Beacon Advisors, Inc. (2009-Present); President, CEO and Director, Astro AB Borrower, Inc. (2015-Present); President, CEO and Director, Astro AB Acquisition, Inc.(2015-Present); President, CEO and Director, Astro AB Topco, Inc. (2015-Present), President, CEO and Director, Astro AB Holdings, LLC. (2015-Present); President, CEO and Director, Lighthouse Holdings, Inc.; (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President and CEO, American Private Equity Management, L.L.C. (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Rosemary K. Behan (56)	VP, Secretary and Chief Legal Officer since 2006	Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Astro AB Borrower, Inc. (2015-Present); Secretary, Astro AB Acquisition, Inc. (2015-Present); Secretary, Astro AB Topco, Inc. (2015-Present); Secretary, Astro AB Holdings, LLC. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, L.L.C.(2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Brian E. Brett (55)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present).
Erica Duncan (45)	VP Since 2011	Vice President, Marketing and Client Services, American Beacon Advisors, Inc. (2011-Present); Supervisor, Brand Marketing, Invesco (2010-2011);
Michael W. Fields (61)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (54)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present); Treasurer, Astro AB Borrower, Inc. (2015-Present); Treasurer, Astro AB Acquisition, Inc. (2015-Present); Treasurer, Astro AB Topco, Inc. (2015-Presnt); Treasurer, Astro AB Holdings, LLC. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, L.L.C. (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).

60

Trustees and Officers of the American Beacon Funds^SM

(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
OFFICERS	Term
	One Year
Terri L. McKinney (51)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (40)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Manager and Senior Vice President, American Private Equity Management, L.L.C. (2012-Present); Senior Vice President and Director, Astro AB Borrower, Inc. (2015-Present); Senior Vice President and Director, Astro AB Acquisition, Inc. (2015-Present); Senior Vice President and Director, Astro AB Topco, Inc. (2015-Present), Senior Vice President and Director, Astro AB Holdings, LLC.(2015-Present); Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010).
Samuel J. Silver (52)	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 (44)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, L.L.C. (2012-Present).
Sonia L. Bates (58)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer, Astro AB Borrower, Inc. (2015-Present); Asst. Treasurer, Astro AB Acquisition, Inc.(2015-Present); Asst. Treasurer, Astro AB Topco, Inc. (2015-Present); Asst. Treasurer, Astro AB Holdings, LLC.; Asst. Treasurer, Lighthouse Holdings, Inc. (2011-2015); Asst. Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Asst. Treasurer, American Private Equity Management, L.L.C. (2012-Present).

* 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 Trust, 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 years to one or more of the Trust’s sub-advisors.

61

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 Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 202-551-8090. A complete schedule of each Fund’s portfolio holdings is also made available on the Funds’ website at 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 10/15

About American Beacon Advisors

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

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

Contents

President’s Message	1
Market and Performance Overview	2
Schedule of Investments	8
Financial Statements	12
Notes to the Financial Statements	16
Financial Highlights	28
Additional Information	Back Cover

Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. The use of futures contracts for cash management may subject the Fund to losing more money than invested. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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, 2015

Dear Shareholders,   During much of the 12-month period ended October 31, 2015, uneven global economic growth, declining commodity prices and disparate central bank policies set the stage for mixed returns in all markets. The weakening of many currencies against the U.S. dollar also took a toll on total returns for dollar-based investors in many international markets. Uncertainty over the timing of the U.S. Federal Reserve’s first interest rate increase since emergency lending rates were established during the 2008 financial crisis continued to weigh heavily on investors’ minds. At its October 2015 meeting, the Federal Open Market Committee decided against changing interest rates, but kept December on the table as a possibility.

For the period under review, benchmarks for the American Beacon Large Cap Value Fund posted modest gains; the Lipper Large-Cap Value Funds Index increased 0.66%, the Russell 1000 Value Index increased 0.53% and the S&P 500 Index increased 5.20%.

We believe it takes a skillful, active manager to navigate the wide variety of market conditions present. We are proud to provide you access to some of the world’s most respected asset managers and grateful you placed your confidence in us.

For the 12 months ended October 31, 2015, the American Beacon Large Cap Value Fund (Investor Class) returned -1.07%.

Thank you for your continued investment in the American Beacon Funds. For additional information about the Funds or to access your account information, 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, 2015 (Unaudited)

For the year ended October 31, 2015, the broad U.S. stock market was up as the S&P 500 Total Return Index gained 5.2%. Beneath this gain was a more volatile market, which rose almost 10% through late July and then fell more than 12% in the following month before closing the period in October with a strong rebound. Swayed by weather and port disruptions, the economy grew slowly at 0.6% for first quarter of 2015, but rebounded to 3.9% growth (revised) in the second quarter. U.S. housing starts and sales continued their long climb from their lows following the financial crisis, though they remain well below 2005-2006 levels. The U.S. unemployment rate (currently at 5.0%) is at its lowest level since 2008. U.S. auto sales have continued to climb this last year, returning to pre-2008 averages. All of these positive indicators explain the initial market gains in the recent period.

The sharp decline this summer in U.S. equity markets is best explained by concerns over U.S. Federal Reserve (“the Fed”) changes in short-term interest rates, the dramatic decline in the Chinese stock market and heightened world tensions. Investor speculation focused on if and when the Fed would raise the federal funds rate above the current 0.25%. Many feared that even the expected small and gradual rate increases would be too damaging for the U.S. economy given the general weakness abroad. At the same time, investors worried that a Fed decision to not raise rates would signal that the Fed saw a significant possibility for a U.S. slowdown. Ultimately, the Fed chose not to raise rates during their September meeting, pushing rate-hike expectations further in the future. In China, the stock market peaked in June after an explosive rally over the prior 12 months and then proceeded to drop more than 40% in the next three months. This retreat triggered concerns not only about Chinese economic growth, but for other emerging markets as well.

The other key event in this last year was the plunge in oil prices from more than $100 per barrel in mid-2014 to as low as $40 per barrel in mid-2015. The decline was the result of increased supply, primarily due to the U.S. fracking revolution, and weak demand amid sluggish global growth. With substantially lower oil prices, the stocks of oil producers were the worst performers in the U.S. equity market by a wide margin in the last 12 months.

In October, concerns eased about the possibility of a worsening global slowdown. Broad U.S. markets rebounded strongly, moving away from a global macro-driven environment to more of an earnings-driven environment. U.S. jobs growth in October was very strong, unemployment claims were low and automobile sales were strong. Housing continues to improve as sales of previously owned homes rebounded in September; however, new home sales were below expectations, as land availability and lower inventory is becoming a concern in some areas.

2

American Beacon Large Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the Large Cap Value Fund (the “Fund”) returned -1.07% for the twelve months ended October 31, 2015. The Fund underperformed the Russell 1000^® Value Index (the “Index”) return of 0.53% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker		1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Institutional Class (1,7)		AADEX		(0.76	)%		12.47	%		6.68	%	$	19,091
Y Class (1, 2, 7)		ABLYX		(0.80	)%		12.39	%		6.62	%		18,988
Investor Class (1,7)		AAGPX		(1.07	)%		12.08	%		6.34	%		18,498
Advisor Class (1,7)		AVASX		(1.23	)%		11.92	%		6.16	%		18,181
Retirement Class (1,3,7)		ALCRX		(1.44	)%		11.62	%		5.96	%		17,845
A Class with sales charge (1,4,7)		ALVAX		(6.82	)%		10.62	%		5.65	%		17,318
A Class without sales charge (1,4,7)		ALVAX		(1.14	)%		11.93	%		6.27	%		18,374
C Class with sales charge (1,5,7)		ALVCX		(2.83	)%		11.08	%		5.85	%		17,656
C Class without sales charge (1,5,7)		ALVCX		(1.83	)%		11.08	%		5.85	%		17,656
AMR Class (1,7)		AAGAX		(0.47	)%		12.77	%		6.96	%		19,595
Russell 1000 Value Index (6)				0.53	%		13.26	%		6.75	%		19,227

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 calculated based on the published end of day net asset values 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, 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 ten-year period represents the total returns achieved by the Institutional Class from 10/31/05 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 10/31/05.

3. Fund performance for the ten-year period represents the total returns achieved by the Advisor Class from 10/31/05 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 Class. As a result, total returns shown may be higher than they would have been had the Retirement Class been in existence since 10/31/05.

4. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A Class shares have a maximum sales charge of 5.75%.

5. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class was waived from 2010 through 2012 and recovered in 2013 and 2014. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012. C Class has a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.

3

American Beacon Large Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

6. 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 registered trademarks of the Frank Russell Company. 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, Advisor, Retirement, A, C, and AMR Class shares was 0.59%, 0.68%, 0.94%, 1.08%, 1.33%, 0.98%, 1.73%, and 0.33%, 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 due to stock selection as sector allocation added value relative to the Index. From a stock selection standpoint, the Fund’s Utilities, Industrials and Information Technology sectors detracted most from performance. In the Utilities sector, Calpine (down 32.7%), NRG Energy (down 55.6%) and CenterPoint Energy (down 20.7%) were the largest detractors. In the Industrials sector, a smaller allocation to General Electric (up 8.5%) negatively impacted performance. The Fund’s position in Cummins (down 27.3%) also detracted relative value. Companies in the Information Technology sector which detracted from the Fund’s return included Micron Technology (down 50.4%) and Navient (down 30.8%). The Fund’s smaller allocation versus the Index to Intel (up 0.8%) also hurt performance.

The aforementioned poor performance was somewhat offset by good stock selection in the Consumer Staples sector. A smaller allocation to Wal-Mart Stores (down 22.1%) and Procter & Gamble (down 9.5%) positively impacted performance in the Consumer Staples sector. The Fund’s position in Imperial Tobacco (up 28.9%) also contributed to performance.

From a sector allocation standpoint, the Fund’s overweight position in Consumer Discretionary, the second best performing sector in the Index, contributed approximately 55 basis points (0.55%) to performance. An underweight to Energy, the worst performing sector in the Index, also added relative value.

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.

4

American Beacon Large Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

Top Ten Holdings (% Net Assets)
JPMorgan Chase & Co.	3.4
Citigroup	3.2
Bank of America Corp.	3.1
Wells Fargo & Co.	2.3
Microsoft Corp.	2.0
Oracle Corp.	2.0
Medtronic PLC	2.0
General Motors Co.	1.9
Verizon Communications, Inc.	1.8
BP PLC, Sponsored	1.7
Total Fund Holdings	203

Sector Allocation (% Equities)
Financials	26.4
Consumer Discretionary	13.6
Health Care	13.2
Energy	11.6
Information Technology	10.4
Industrials	10.3
Consumer Staples	4.9
Telecommunication Services	4.4
Materials	2.6
Utilities	2.6

5

American Beacon Large Cap Value Fund^SM

Fund Expenses

October 31, 2015 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments 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, 2015 through October 31, 2015.

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 or Roth 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 or Roth 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 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 - 10/31/15
Institutional Class
Actual	$	1,000.00	$	947.89	$	2.90
Hypothetical **	$	1,000.00	$	1,022.23	$	3.01
Y Class
Actual	$	1,000.00	$	947.60	$	3.29
Hypothetical **	$	1,000.00	$	1,021.83	$	3.41
Investor Class
Actual	$	1,000.00	$	946.46	$	4.56
Hypothetical **	$	1,000.00	$	1,020.52	$	4.74
Advisor Class
Actual	$	1,000.00	$	945.89	$	5.25
Hypothetical **	$	1,000.00	$	1,019.81	$	5.45
Retirement Class
Actual	$	1,000.00	$	944.88	$	6.47
Hypothetical **	$	1,000.00	$	1,018.55	$	6.72
A Class
Actual	$	1,000.00	$	946.12	$	4.81
Hypothetical **	$	1,000.00	$	1,020.27	$	4.99
C Class
Actual	$	1,000.00	$	942.72	$	8.47
Hypothetical **	$	1,000.00	$	1,016.48	$	8.79
AMR Class
Actual	$	1,000.00	$	949.27	$	1.57
Hypothetical **	$	1,000.00	$	1,023.59	$	1.63

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.59%, 0.67%, 0.93%, 1.07%, 1.32%, 0.98%, 1.73%, and 0.32% 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.

6

American Beacon Large Cap Value Fund^SM

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Trustees of

American Beacon Large Cap Value Fund:

We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of American Beacon Large Cap Value Fund (one of the funds constituting the American Beacon Funds) (the “Fund”), as of October 31, 2015, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the 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, 2015, 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 American Beacon Large Cap Value Fund at October 31, 2015, 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 five years in the period then ended in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 29, 2015

7

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
COMMON STOCK—98.04%
CONSUMER DISCRETIONARY—13.29%
Auto Components—2.47%
Delphi Automotive PLCA		112,018	$	9,319
Goodyear Tire & Rubber Co.		1,237,009		40,623
Johnson Controls, Inc.		3,648,119		164,822
Magna International, Inc., Class A		611,741		32,257
				247,021
Automobiles—4.81%
Ford Motor Co.		5,513,652		81,657
General Motors Co.		5,325,205		185,903
Harley-Davidson, Inc.		538,597		26,634
Honda Motor Co., Ltd., Sponsored ADRB		1,418,972		47,011
Toyota Motor Corp., Sponsored ADRB		1,145,699		140,486
				481,691
Household Durables—0.64%
Koninklijke Philips Electronics N.V.		585,790		15,781
Newell Rubbermaid, Inc.		59,574		2,528
Stanley Black & Decker, Inc.		205,614		21,791
Tupperware Brands Corp.		401,784		23,653
				63,753
Leisure Equipment & Products—0.02%
Hasbro, Inc.		30,373		2,334
Media—2.25%
CBS Corp., Class BC		460,403		21,418
Comcast Corp., Class A		176,608		11,059
Comcast Corp., Special Class A		743,203		46,605
Discovery Communications, Inc.D		1,374,444		40,464
Interpublic Group of Cos., Inc.		677,875		15,544
McGraw-Hill Cos., Inc.		22,233		2,060
Omnicom Group, Inc.		406,005		30,418
Time Warner, Inc.		132,496		9,982
Time, Inc.		12,317		229
Tribune Media Co., Class A		875,018		35,289
Viacom, Inc., Class B		102,473		5,053
Walt Disney Co.		64,688		7,358
				225,479
Multiline Retail—2.44%
Dillard’s, Inc., Class A		265,100		23,721
Kohl’s Corp.		653,356		30,133
Michael Kors Holdings Ltd.D		1,840,107		71,102
Nordstrom, Inc.		324,377		21,153
Target Corp.		1,277,015		98,559
				244,668
Specialty Retail—0.66%
Advance Auto Parts, Inc.		23,132		4,590
Bed Bath & Beyond, Inc.D		794,894		47,399
DSW, Inc., Class A		585,437		14,601
				66,590
Total Consumer Discretionary				1,331,536
CONSUMER STAPLES—4.84%
Beverages—0.15%
Diageo PLC, Sponsored ADRA B		132,174		15,211
Food & Drug Retailing—0.67%
CVS Caremark Corp.		198,312		19,589
Sysco Corp.		506,524		20,894
Wal-Mart Stores, Inc.		471,582		26,994
				67,477

	Shares		Fair Value
			(000’s)
Food Products—0.85%
Archer Daniels Midland Co.		73,713	$	3,366
Bunge Ltd.		192,014		14,009
Danone S.A., Sponsored ADRB		601,398		8,353
General Mills, Inc.		293,334		17,046
Kellogg Co.		339,595		23,948
Nestle S.A., Sponsored ADRB		242,299		18,468
				85,190
Household Products—0.05%
Procter & Gamble Co.		68,349		5,220
Tobacco—3.12%
Altria Group, Inc.		1,315,185		79,529
Imperial Tobacco Group PLC, ADRA B		844,807		91,045
Philip Morris International, Inc.		1,575,813		139,302
Reynolds American, Inc.		47,995		2,319
				312,195
Total Consumer Staples				485,293
ENERGY—11.41%
Energy Equipment & Services—0.95%
Baker Hughes, Inc.		17,029		897
Cobalt International Energy, Inc.D		3,874,765		29,719
National Oilwell Varco, Inc.		169,065		6,364
Schlumberger Ltd.		738,485		57,720
				94,700
Oil & Gas—10.46%
Apache Corp.		575,668		27,131
BP PLC, Sponsored ADRA B		4,812,324		171,801
Canadian Natural Resources Ltd.		2,460,303		57,128
Chevron Corp.		149,799		13,614
Cimarex Energy Co.		378,768		44,717
ConocoPhillips		1,693,316		90,338
Continental Resources, Inc.D		1,543,255		52,332
Devon Energy Corp.		667,166		27,974
EOG Resources, Inc.		89,225		7,660
Exxon Mobil Corp.		233,666		19,334
Hess Corp.		1,336,492		75,124
Kosmos Energy Ltd.D		2,718,545		18,540
Marathon Oil Corp.		5,030,986		92,470
Marathon Petroleum Corp.		934,239		48,394
Murphy Oil Corp.		1,160,260		32,986
Occidental Petroleum Corp.		1,498,762		111,718
Phillips 66		997,104		88,792
Royal Dutch Shell PLC, Class A, ADRA B		1,079,431		56,627
Seadrill Ltd.D		1,832,686		11,857
				1,048,537
Total Energy				1,143,237
FINANCIALS—25.95%
Banks—2.72%
Bank of New York Mellon Corp.		699,843		29,148
Citizens Financial Group		2,084,353		50,650
PNC Financial Services Group, Inc.		1,620,843		146,298
SunTrust Banks, Inc.		619,705		25,730
U.S. Bancorp		497,153		20,970
				272,796
Diversified Financials—17.46%
American Express Co.		1,043,559		76,451
Bank of America Corp.		18,626,198		312,547
BlackRock, Inc., Class A		31,124		10,955
Blackstone Group, LPE		1,210,048		40,004

See accompanying notes

8

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Capital One Financial Corp.		1,513,664	$	119,428
Citigroup, Inc.		5,942,232		315,947
Franklin Resources, Inc.		280,947		11,451
Goldman Sachs Group, Inc.		270,234		50,669
JPMorgan Chase & Co.		5,241,378		336,758
KKR & Co., LPE		3,171,808		54,397
Morgan Stanley		401,878		13,250
Nasdaq OMX Group		178,313		10,323
Nomura Holdings, Inc.		7,371,984		46,370
Santander Consumer USA Holdings, Inc.		1,887,547		33,995
SLM Corp.D		3,681,530		25,992
State Street Corp.		451,776		31,173
Synchrony FinancialD		893,187		27,474
Wells Fargo & Co.		4,261,541		230,720
				1,747,904
Insurance—5.36%
ACE Ltd.		111,413		12,650
Allstate Corp.		608,547		37,657
American International Group, Inc.		2,293,183		144,607
Aon PLCA		140,147		13,077
Berkshire Hathaway, Inc., Class BD		517,598		70,404
Chubb Corp.		314,229		40,646
MetLife, Inc.		2,746,763		138,381
Prudential Financial, Inc.		127,102		10,486
Travelers Cos., Inc.		210,599		23,775
Unum Group		1,293,937		44,835
				536,518
Real Estate—0.41%
Hatteras Financial Corp.F		889,241		12,725
Two Harbors Investment Corp.F		3,358,054		28,409
				41,134
Total Financials				2,598,352
HEALTH CARE—12.91%
Biotechnology—0.08%
PTC Therapeutics, Inc.D		317,143		7,887
Health Care Equipment & Supplies—2.49%
Medtronic PLCA		2,667,823		197,205
St. Jude Medical, Inc.		119,101		7,600
Thermo Fisher Scientific, Inc.		97,374		12,735
Zimmer Biomet Holdings, Inc.		301,267		31,503
				249,043
Health Care Providers & Services—2.16%
Anthem, Inc.		1,004,131		139,725
Express Scripts Holding Co.D		576,031		49,758
Humana, Inc.		152,653		27,268
				216,751
Pharmaceuticals—8.18%
Abbott Laboratories		282,475		12,655
AbbVie, Inc.		713,384		42,482
Endo International PLCA D		321,840		19,307
GlaxoSmithKline PLC, Sponsored ADRA B		1,788,534		77,014
Horizon Pharma PLCA D		1,080,692		16,988
Jazz Pharmaceuticals PLCA D		135,368		18,583
Johnson & Johnson		1,171,168		118,323
Mallinckrodt PLCA D		336,307		22,085
Merck & Co., Inc.		2,425,463		132,576
Mylan N.V.D		525,785		23,182
Novartis AG, ADRB		38,806		3,509
Pfizer, Inc.		4,633,883		156,718
Roche Holding AG, Sponsored ADRB		88,723		3,009
Sanofi, ADRB		3,174,345		159,798

	Shares		Fair Value
			(000’s)
ZS Pharma, Inc.D		196,899	$	12,800
				819,029
Total Health Care				1,292,710
INDUSTRIALS—10.05%
Aerospace & Defense—3.61%
Boeing Co.		242,085		35,846
General Dynamics Corp.		501,736		74,548
Lockheed Martin Corp.		95,032		20,891
Northrop Grumman Corp.		62,325		11,702
Raytheon Co.		753,967		88,515
Rockwell Collins, Inc.		334,616		29,018
United Technologies Corp.		1,015,390		99,924
				360,444
Air Freight & Couriers—0.16%
United Parcel Service, Inc., Class B		155,699		16,040
Commercial Services & Supplies—0.15%
Covanta Holding Corp.		786,001		13,173
Equifax, Inc.		21,578		2,300
				15,473
Construction & Engineering—0.65%
AECOM Technology Corp.D		1,005,164		29,622
Chicago Bridge & Iron Co., N.V.		798,119		35,812
				65,434
Diversified Manufacturing—0.50%
Eaton Corp., PLCA		901,317		50,393
Electrical Equipment—0.13%
Tyco International PLCA		370,097		13,486
Industrial Conglomerates—1.14%
3M Co.		142,839		22,456
Honeywell International, Inc.		890,215		91,941
				114,397
Machinery—3.60%
Caterpillar, Inc.		637,775		46,551
CNH Industrial N.V.		5,461,139		37,081
Cummins, Inc.		537,997		55,689
Danaher Corp.		179,188		16,720
Deere & Co.		37,785		2,947
Illinois Tool Works, Inc.		83,669		7,693
Oshkosh Corp.		753,309		30,953
PACCAR, Inc.		431,751		22,732
Parker Hannifin Corp.		387,346		40,555
Pentair PLCA		89,528		5,006
Reliance Steel & Aluminum Co.		715,075		42,876
Terex Corp.		944,610		18,949
Xylem, Inc.		896,870		32,655
				360,407
Road & Rail—0.11%
Canadian National Railway Co.		100,381		6,132
Union Pacific Corp.		52,692		4,708
				10,840
Total Industrials				1,006,914
INFORMATION TECHNOLOGY—10.16%
Communications Equipment—1.83%
ARRIS Group, Inc.D		833,074		23,543
Cisco Systems, Inc.		2,496,470		72,023
Corning, Inc.		4,730,940		87,995
				183,561

See accompanying notes

9

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Computers & Peripherals—0.93%
HP, Inc.		2,123,244	$	57,243
International Business Machines Corp.		144,189		20,198
NVIDIA Corp.		55,908		1,586
Teradata Corp.D		499,294		14,035
				93,062
IT Consulting & Services—0.49%
Accenture, PLC, Class AA		301,838		32,357
Fidelity National Information Services, Inc.		111,289		8,115
Fiserv, Inc.D		90,355		8,720
				49,192
Semiconductor Equipment & Products—2.66%
Analog Devices, Inc.		41,247		2,480
Applied Materials, Inc.		1,784,025		29,918
Intel Corp.		1,075,056		36,401
Lam Research Corp.		461,812		35,370
Micron Technology, Inc.D		4,725,679		78,258
Qualcomm, Inc.		916,108		54,435
Texas Instruments, Inc.		519,586		29,471
				266,333
Software—4.25%
Microsoft Corp.		3,875,235		203,993
Navient Corp.		1,830,901		24,150
Oracle Corp.		5,087,364		197,593
				425,736
Total Information Technology				1,017,884
MATERIALS—2.58%
Chemicals—1.98%
Air Products & Chemicals, Inc.		550,492		76,508
Dow Chemical Co.		768,997		39,734
Eastman Chemical Co.		647,626		46,740
EI du Pont de Nemours & Co.		101,010		6,404
Monsanto Co.		45,263		4,219
PPG Industries, Inc.		229,880		23,967
				197,572
Containers & Packaging—0.23%
Crown Holdings, Inc.D		111,510		5,914
Packaging Corp of America		254,015		17,388
				23,302
Paper & Forest Products—0.37%
International Paper Co.		331,986		14,172
Louisiana-Pacific Corp.D		1,313,477		23,196
				37,368
Total Materials				258,242
TELECOMMUNICATION SERVICES—4.33%
Diversified Telecommunication Services—2.87%
AT&T, Inc.		1,838,336		61,603
Telefonaktiebolaget LM Ericsson, Sponsored ADRB		4,628,920		45,086
Verizon Communications, Inc.		3,874,672		181,644
				288,333
Wireless Telecommunication Services—1.46%
China Mobile Ltd., Sponsored ADRB		1,303,143		78,593
Vodafone Group PLC, Sponsored ADRA B		2,037,459		67,175
				145,768
Total Telecommunication Services				434,101

	Shares		Fair Value
			(000’s)
UTILITIES—2.52%
Electric—2.52%
Calpine Corp.D		3,497,876	$	54,252
CenterPoint Energy, Inc.		2,672,702		49,579
Duke Energy Corp.		116,987		8,361
Entergy Corp.		852,229		58,088
NRG Energy, Inc.		2,089,332		26,931
PPL Corp.		685,954		23,597
Southern Co.		692,999		31,254
Total Utilities				252,062
Total Common Stock (Cost $8,887,815)				9,820,331
SHORT-TERM INVESTMENTS- 1.83%
American Beacon U.S. Government Money Market Select Fund, Select Class G		30,000,000		30,000
JPMorgan U.S. Government Money Market Fund, Capital Class		153,276,156		153,276
Total Short-Term Investments (Cost $183,276)				183,276
TOTAL INVESTMENTS —99.87% (Cost $9,071,091)				10,003,607
OTHER ASSETS, NET OF LIABILITIES—0.13%				12,986
TOTAL NET ASSETS—100.00%			$	10,016,593

Percentages are stated as a percent of net assets.

^A PLC - Public Limited Company.

^B ADR - American Depositary Receipt.

^C Non-voting participating shares.

^D Non-income producing security.

^E MLP - Master Limited Partnership.

^F REIT - Real Estate Investment Trust.

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

See accompanying notes

10

American Beacon Large Cap Value Fund^SM

Schedule of Investments

October 31, 2015

Futures Contracts Open on October 31, 2015:

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
S&P 500 Mini E Index December Futures		Long		1,940		December 2015	$	201,148,900	$	8,367,909
							$	201,148,900	$	8,367,909

See accompanying notes

11

American Beacon Large Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2015 (in thousands, except share and per share amounts)

Assets:
Investments in unaffiliated securities, at fair value A	$	9,973,607
Investments in affiliated securities, at fair value B		30,000
Cash		275
Deposit with brokers for futures contracts		8,890
Receivable for investments sold		714,611
Receivable for fund shares sold		6,863
Dividends and interest receivable		14,485
Receivable for tax reclaims		392
Prepaid expenses		83
Total assets		10,749,206
Liabilities:
Payable for investments purchased		37,802
Payable for fund shares redeemed		682,485
Management and investment advisory fees payable		7,101
Administrative service and service fees payable		3,343
Transfer agent fees payable		203
Custody and fund accounting fees payable		180
Professional fees payable		110
Prospectus and shareholder reports fees payable		193
Trustee fees payable		169
Payable for variation margin from open futures contracts		901
Other liabilities		126
Total liabilities		732,613
Net assets	$	10,016,593
Analysis of Net Assets:
Paid-in-capital		8,221,066
Undistributed (or overdistribution of) net investment income		148,696
Accumulated net realized gain		705,947
Unrealized appreciation of investments		932,516
Unrealized appreciation of futures contracts		8,368
Net assets	$	10,016,593

See accompanying notes

12

American Beacon Large Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2015 (in thousands, except share and per share amounts)

Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		218,390,036
Y Class		14,857,205
Investor Class		118,650,789
Advisor Class		5,339,900
Retirement Class		384,684
A Class		1,486,159
C Class		473,464
AMR Class		1,008,306
Net assets (not in thousands):
Institutional Class	$	6,198,883,300
Y Class	$	419,096,844
Investor Class	$	3,167,585,961
Advisor Class	$	140,975,319
Retirement Class	$	9,953,847
A Class	$	39,401,153
C Class	$	12,389,141
AMR Class	$	28,307,573
Net asset value, offering and redemption price per share:
Institutional Class	$	28.38
Y Class	$	28.21
Investor Class	$	26.70
Advisor Class	$	26.40
Retirement Class	$	25.88
A Class	$	26.51
A Class (offering price)	$	28.13
C Class	$	26.17
AMR Class	$	28.07
A Cost of investments in unaffiliated securities	$	9,041,091
B Cost of investments in affiliated securities	$	30,000

See accompanying notes

13

American Beacon Large Cap Value Fund^SM

Statement of Operations

For the year ended October 31, 2015 (in thousands)

Investment income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	279,584
Dividend income from affiliated securities		4
Miscellaneous Income		2
Total investment income		279,590
Expenses:
Management and investment advisory fees (Note 2)		26,249
Administrative service fees (Note 2):
Institutional Class		18,352
Y Class		1,328
Investor Class		11,384
Advisor Class		458
Retirement Class		34
A Class		110
C Class		35
AMR Class		389
Transfer agent fees:
Institutional Class		1,160
Y Class		15
Investor Class		140
Advisor Class		7
Retirement Class		1
A Class		4
C Class		2
AMR Class		22
Custody and fund accounting fees		1,103
Professional fees		310
Registration fees and expenses		232
Service fees (Note 2):
Y Class		443
Investor Class		13,787
Advisor Class		382
Retirement Class		28
A Class		55
C Class		17
Distribution fees (Note 2):
Advisor Class		382
Retirement Class		57
A Class		91
C Class		116
Prospectus and shareholder report expenses		638
Trustee fees		624
Other expenses		601
Total expenses		78,556
Net investment income		201,034
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		1,188,186
Commission recapture (Note 3)		131
Foreign currency transactions		(17	)
Futures contracts		15,696
Change in net unrealized appreciation or (depreciation) of:
Investments		(1,477,369	)
Futures contracts		(6,852	)
Net (loss) from investments		(280,225	)
Net (decrease) in net assets resulting from operations	$	(79,191	)
A Foreign taxes	$	2,590

See accompanying notes

14

American Beacon Large Cap Value Fund^SM

Statement of Changes of Net Assets (in thousands)

	Year Ended October 31, 2015			Year Ended October 31, 2014
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	201,034		$	254,199
Net realized gain (loss) from investments, commission recapture, foreign currency transactions, and futures contracts		1,203,996			1,216,150
Change in net unrealized appreciation or (depreciation) of investments and futures contracts		(1,484,221	)		76,165
Net increase (decrease) in net assets resulting from operations		(79,191	)		1,546,514
Distributions to Shareholders:
Net investment income:
Institutional Class		(124,764	)		(87,830	)
Y Class		(9,070	)		(5,267	)
Investor Class		(80,020	)		(51,957	)
Advisor Class		(3,033	)		(1,591	)
Retirement Class		(254	)		(52	)
A Class		(603	)		(170	)
C Class		(151	)		(54	)
AMR Class		(19,775	)		(13,053	)
Net realized gain from investments:
Institutional Class		(375,074	)		—
Y Class		(27,794	)		—
Investor Class		(281,035	)		—
Advisor Class		(10,665	)		—
Retirement Class		(961	)		—
A Class		(1,967	)		—
C Class		(725	)		—
AMR Class		(52,660	)		—
Net distributions to shareholders		(988,551	)		(159,974	)
Capital Share Transactions:
Proceeds from sales of shares		2,349,907			2,945,941
Reinvestment of dividends		953,937			153,366
Cost of shares redeemed		(3,646,862	)		(3,593,139	)
Net (decrease) in net assets from capital share transactions		(343,018	)		(493,832	)
Net increase (decrease) in net assets		(1,410,760	)		892,708
Net Assets:
Beginning of period		11,427,353			10,534,645
End of Period *	$	10,016,593		$	11,427,353
*Includes undistributed (or overdistribution of) net investment income	$	148,696		$	222,712

See accompanying notes

15

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

1. Organization

American Beacon Funds (the “Trust”), 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. As of October 31, 2015, the Trust consists of thirty-two active series, one of which is presented in this filing (the “Fund”): American Beacon Large Cap Value Fund. The remaining thirty-one active series are reported in separate filings.

Effective April 30, 2015, American Beacon Advisors, Inc. (the “Manager”) became a wholly-owned subsidiary of Astro AB Borrower, Inc., which is indirectly owned by investment funds affiliated with Kelso & Company, L.P. and Estancia Capital Management, LLC, two prominent private equity firms. Prior to April 30, the Manager was a wholly-owned subsidiary of Lighthouse Holdings, Inc. which was indirectly owned by investment funds affiliated with Pharos Capital Group, LLC and TPG Capital, L.P., two leading private equity firms.

Class Disclosure

The Retirement and AMR Classes of the Fund were closed to new investors on September 22, 2015.

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, which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”)
C Class	General public and investors investing through an intermediary with applicable sales charges, which may include a CDSC
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.

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 and the Trust. 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. The Fund pays the unaffiliated investment advisors hired to direct investment activities of the Fund. Management fees paid during the year ended October 31, 2015 were as follows (dollars in thousands):

16

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

Management Fee Rate	Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
0.23%	$	26,249	$	20,576	$	5,673

Administration Agreement

The Manager and the Trust entered into an Administration Agreement which obligates the Manager to provide or oversee administrative services to the Fund. As compensation for performing the duties required under the Administration Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor, Retirement, 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 separate 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.

Investment in Affiliated Funds

The Fund may invest in the American Beacon Money Market Select Fund (the “MM 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 management and administration fees totaling 0.10% of its average daily net assets of the Select Funds. During the year ended October 31, 2015, the Manager earned fees from the Select Funds totaling $37,640 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

17

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

allowing the Fund to borrow from other participating Funds. During the year ended October 31, 2015, the Fund participated as a lender by loaning, $26,999,239 for 1 day at a rate of 0.75% with interest charges of $555. This amount is included as interest income on the Statement of Operations.

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, 2015, there were no waived fees, expenses reimbursed, or recovered expenses.

Sales Commissions

The Fund’s distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2015, Foreside collected $9,807 from the sale of Class A Shares.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2015, there were no CDSC fees collected for Class A Shares.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2015, $2,124 in CDSC fees were collected for Class C Shares of the Fund.

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, including exchange-traded funds (“ETFs”), 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 open-end mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation.

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.

18

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

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.

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 generally 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.

The Fund’s investments are summarized by level based on the inputs used to determine their values. U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) also requires all transfers between any levels to be disclosed. The end of period timing recognition has been adopted for the transfers between levels of the Fund’s assets and liabilities. During the year ended October 31, 2015, there were no transfers between levels. As of October 31, 2015, the investments were classified as described below (in thousands):

	Level 1		Level 2		Level 3		Total
Common Stock*	$	9,820,331	$	—	$	—	$	9,820,331
Short-Term Investments—Money Market Funds		183,276		—		—		183,276
Total Investments in Securities	$	10,003,607	$	—	$	—	$	10,003,607
Financial Derivative Instruments-Assets
Futures Contracts	$	8,368	$	—	$	—	$	8,368

* Refer to the Schedule of Investments for industry information.

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.

19

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

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. To the extent necessary to fully distribute capital gains, the Fund also designates earnings and profits distributed to shareholders on the redemption of shares.

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 on 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.

4. Securities and Other Investments

American Depositary Receipts (“ADRs”)

ADRs are depositary receipts for foreign issuers in registered form traded in U.S. securities markets. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Fund may invest in unsponsored depositary receipts, the issuers of which are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security.

20

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

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.

Other Investment Company Securities and Other Exchange Traded Products

The Fund may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Fund may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, a Fund becomes a shareholder of that investment company. As a result, Fund shareholders indirectly will bear a Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses Fund shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

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 a portion 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.

For the year ended October 31, 2015, the Fund entered into futures contracts primarily for return enhancement and exposing cash to markets.

The Fund’s futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.

21

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

Average Futures Contracts Outstanding
Fund	Year ended October 31, 2015
Large Cap Value Fund		3,586

The following is a summary of the Fund’s derivative financial instruments categorized by risk exposure (in thousands) ^(1) (2):

Fair Values of financial derivative instruments not accounted for as hedging instruments as of October 31, 2015:

Statement of Assets and Liabilities	Derivatives		Fair Value
Payable for variation margin from open future contracts(2)		Equity Contracts	$	8,368

The effect of financial derivative instruments not accounted for as hedging instruments during the year ended October 31, 2015:

Statement of Operations	Derivatives		Total
Net realized gain (loss) from futures contracts		Equity Contracts	$	15,696
Change in net unrealized appreciation or (depreciation) of futures contracts		Equity Contracts		(6,852	)

⁽¹⁾  See Note 3 in the Notes to Financial Statements for additional information.

⁽²⁾  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. Principal Risks

In the normal course of business the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists. Security values fluctuate (market risk) and may decline due to factors affecting securities markets in general, particular industries represented in the securities markets or conditions specifically related to a particular company. Failure of the other party to a transaction to perform (credit and counterparty risk), for example by not making principal and interest payments when due, reduces the value of the issuer’s debt and could reduce the Fund’s income. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will fail to make required payments or otherwise comply with the terms of the instrument, transaction or contract. The potential loss could exceed the value of the financial assets recorded in the financial statements. Some of the Fund’s investments may be illiquid and the Fund may not be able to vary the portfolio investments in response to changes in economic and other conditions. If a Fund is required to liquidate all or a portion of its investments quickly, the Fund may realize significantly less than the value at which it previously recorded those investments.

Market Risks

The Fund’s investments in financial derivatives and other financial instruments expose the Fund to various risks such as, but not limited to, interest rate, foreign currency and equity risks.

Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Fund is likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income’s market price to interest rate (i.e. yield) movements.

If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, they will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign

22

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund.

The fair values of equities, such as common stocks and preferred securities or equity related investments such as futures, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

Counterparty Credit Risk

A derivative contract may suffer a mark to market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange traded futures, there is less counterparty credit risk to the Funds since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Fund.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as Deposits with brokers for futures contracts and Payable to brokers for futures contracts, respectively. Non-cash collateral pledged by the Funds, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a party is determined at the close of business of the Fund and additional required collateral is delivered to/pledged by the Fund on the next business day. To the extent amounts due to the Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Offsetting Assets and Liabilities

The Fund is a party to enforceable master netting agreements between brokers and counterparties such as International Swaps and Derivatives Association (“ISDA”) agreements which provide for the right to offset under certain circumstances. The Fund employs multiple money managers and counterparties and has elected not to offset qualifying financial and derivative instruments on the Statement of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, October 31, 2015 (in thousands):

23

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

Offsetting of Financial Liabilities and Derivative Liabilities as of October 31, 2015:

Description	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities
Futures Contracts (1)	$	901	$	—	$	901

Financial Liabilities, Derivative Liabilities, and Collateral Pledged by Counterparty as of October 31, 2015:

	Net amount of Assets Presented in the Statement of Assets and Liabilities		Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty			Financial Instruments		Cash Collateral Received		Net Amount
Goldman Sachs & Co.(1)	$	901	$	—	$	—	$	901

⁽¹⁾  The securities presented here within are not subject to Master Netting Agreements. As such, this is disclosed for informational purposes only.

7. Federal Income and Excise Taxes

It is the policy of the Fund to qualify as a regulated investment company (“RIC”), 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, 2015 remain 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 Fund also utilizes earnings and profits distributed to shareholders on redemptions of shares as part of the dividends paid deduction.

The Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation or depreciation, as applicable, as the income is earned or capital gains are recorded.

24

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

The tax character of distributions paid were as follows (in thousands):

	Year Ended October 31, 2015		Year Ended October 31,2014
Distributions paid from:
Ordinary income*
Institutional Class	$	124,764	$	87,830
Y Class		9,070		5,267
Investor Class		80,020		51,957
Advisor Class		3,033		1,591
Retirement Class		254		52
A Class		603		170
C Class		151		54
AMR Class		19,775		13,053
Capital gains
Institutional Class		375,074		—
Y Class		27,794		—
Investor Class		281,035		—
Advisor Class		10,665		—
Retirement Class		961		—
A Class		1,967		—
C Class		725		—
AMR Class		52,660		—
Total distributions paid	$	988,551	$	159,974

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

As of October 31, 2015, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):

Cost basis of investments for federal income tax purposes	$	9,183,263
Unrealized appreciation		1,664,094
Unrealized depreciation		(843,750	)
Net unrealized appreciation or (depreciation)		820,344
Undistributed ordinary income		150,429
Accumulated long-term gain or (loss)		824,750
Other temporary differences		4
Distributable earnings or (deficits)	$	1,795,527

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 or losses on certain derivative instruments and reclassifications of income from real estate investment securities and publicly traded partnerships.

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.

Gains on redemptions in-kind for Large Cap Value Fund, of approximately $134,809,179, were included in net realized gain on investments in the Statement of Operations for the year ended October 31, 2015, and were not recognized for Federal income tax purposes.

Accordingly, the following amounts represent current year permanent differences derived from foreign currency, reclassifications of income from real estate investment securities and publicly traded partnerships, Section 732 basis adjustments, utilization of earnings and profits distributed to shareholders on redemption of shares, and net realized gains on redemptions in-kind as of October 31, 2015 (in thousands):

25

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

Paid-in-capital	$	376,206
Undistributed net investment income (loss)		(37,380	)
Accumulated net realized gain (loss)		(338,826	)
Unrealized appreciation or (depreciation) of investments and futures contracts		—

As of October 31, 2015, the Fund did not have any capital loss carryforwards.

8. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2015, were $3,443,993 and $4,284,797, respectively (in thousands).

A summary of the Fund’s transactions in the Select Funds for the year ended October 31, 2015 is set forth below (in thousands):

Affiliate	October 31, 2014 Shares/Fair Value		Purchases		Sales		October 31, 2015 Shares/Fair Value		Dividend Income
USG Select Fund	$	30,000	$	55,000	$	55,000	$	30,000	$	1

9. Capital Share Transactions

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

For the Year Ended October 31, 2015

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		53,940		$	1,563,916			4,072		$	118,729			20,038		$	556,590			1,285		$	35,421
Reinvestment of dividends		16,487			483,582			1,220			35,593			12,465			344,921			477			13,073
Shares redeemed		(38,409	)		(1,127,129	)		(4,445	)		(126,503	)		(54,777	)		(1,503,115	)		(1,531	)		(41,776	)
Net increase (decrease) in shares outstanding		32,018		$	920,369			847		$	27,819			(22,274	)	$	(601,604	)		231		$	6,718
	Retirement Class						A Class						C Class						AMR Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		159		$	4,293			954		$	26,677			177		$	4,792			1,347		$	39,489
Reinvestment of dividends		45			1,215			87			2,384			27			734			2,503			72,435
Shares redeemed		(260	)		(6,873	)		(330	)		(9,158	)		(74	)		(1,966	)		(29,483	)		(830,342	)
Net increase (decrease) in shares outstanding		(56	)	$	(1,365	)		711		$	19,903			130		$	3,560			(25,633	)	$	(718,418	)

26

American Beacon Large Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

For the Year Ended October 31, 2014

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		60,578		$	1,808,998			5,016		$	149,908			28,208		$	787,684			2,431		$	68,583
Reinvestment of dividends		2,973			83,881			182			5,105			1,853			49,552			58			1,534
Shares redeemed		(73,952	)		(2,231,408	)		(3,130	)		(92,555	)		(38,454	)		(1,080,676	)		(2,344	)		(65,255	)
Net increase (decrease) in shares outstanding		(10,401	)	$	(338,529	)		2,068		$	62,458			(8,393	)	$	(243,440	)		145		$	4,862
	Retirement Class						A Class						C Class						AMR Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		333		$	9,025			391		$	10,942			175		$	4,839			3,592		$	105,962
Reinvestment of dividends		2			52			6			146			2			43			468			13,053
Shares redeemed		(56	)		(1,545	)		(79	)		(2,197	)		(35	)		(969	)		(4,114	)		(118,534	)
Net increase (decrease) in shares outstanding		279		$	7,532			318		$	8,891			142		$	3,913			(54	)	$	481

10. Subsequent Events

On September 21, 2015 the Manager announced the Board’s approval of a plan to liquidate and terminate the AMR Class of the Fund on or about March 15, 2016. At the same Board meeting, the Board approved a plan to terminate the Retirement Class on or about January 15, 2016. The shares in the Retirement Class will be exchanged for those of the Advisor Class of the Fund on January 15, 2016.

27

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

		Institutional Class
		Year Ended October 31,
		2015			2014			2013			2012			2011A
Net asset value, beginning of period		$	31.21		$	27.59		$	21.58		$	18.99		$	18.56
Income from investment operations:
Net investment income			0.55			0.73			0.50			0.45			0.39
Net gains (losses) from investments (both realized and unrealized)			(0.70	)		3.33			6.00			2.60			0.30
Total income (loss) from investment operations			(0.15	)		4.06			6.50			3.05			0.69
Less distributions:
Dividends from net investment income			(0.67	)		(0.44	)		(0.49	)		(0.46	)		(0.26	)
Distributions from net realized gains	��		(2.01	)		—			—			—			—
Total distributions			(2.68	)		(0.44	)		(0.49	)		(0.46	)		(0.26	)
Net asset value, end of period		$	28.38		$	31.21		$	27.59		$	21.58		$	18.99
Total return B			(0.76)%			14.89%			30.70%			16.48%			3.69%
Ratios and supplemental data:
Net assets, end of period (in thousands)		$	6,198,883		$	5,816,013		$	5,428,755		$	3,914,173		$	3,380,918
Ratios to average net assets (annualized):
Expenses, before reimbursements or recoupments			0.58%			0.58%			0.58%			0.59%			0.58%
Expenses, net of reimbursements or recoupments			0.58%			0.58%			0.58%			0.59%			0.58%
Net investment income (loss), before reimbursements or recoupments			1.88%			2.35%			1.99%			2.23%			1.96%
Net investment income, net of reimbursements or recoupments			1.88%			2.35%			1.99%			2.23%			1.96%
Portfolio turnover rate			32%			29%			34%			30%			90%

^A 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.

^B Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

28

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class															Investor Class
Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012			2011A			2015			2014			2013			2012			2011A
$	31.04		$	27.46		$	21.47		$	18.92		$	18.49		$	29.51		$	26.11		$	20.43		$	17.99		$	17.61
	0.56			0.64			0.40			0.53			0.37			0.45			0.57			0.39			0.36			0.30
	(0.72	)		3.37			6.05			2.50			0.30			(0.68	)		3.18			5.69			2.47			0.29
	(0.16	)		4.01			6.45			3.03			0.67			(0.23	)		3.75			6.08			2.83			0.59
	(0.66	)		(0.43	)		(0.46	)		(0.48	)		(0.24	)		(0.57	)		(0.35	)		(0.40	)		(0.39	)		(0.21	)
	(2.01	)		—			—			—			—			(2.01	)		—			—			—			—
	(2.67	)		(0.43	)		(0.46	)		(0.48	)		(0.24	)		(2.58	)		(0.35	)		(0.40	)		(0.39	)		(0.21	)
$	28.21		$	31.04		$	27.46		$	21.47		$	18.92		$	26.70		$	29.51		$	26.11		$	20.43		$	17.99
	(0.80	)%		14.78	%		30.59	%		16.43	%		3.58	%		(1.07	)%		14.50	%		30.26	%		16.05	%		3.30	%
$	419,097		$	434,881		$	327,939		$	88,509		$	134,968		$	3,167,586		$	4,158,361		$	3,899,011		$	3,635,333		$	3,761,691
	0.67	%		0.67	%		0.66	%		0.69	%		0.69	%		0.93	%		0.93	%		0.93	%		0.96	%		0.95	%
	0.67	%		0.67	%		0.66	%		0.69	%		0.69	%		0.93	%		0.93	%		0.93	%		0.96	%		0.95	%
	1.80	%		2.24	%		1.78	%		2.12	%		1.88	%		1.54	%		2.01	%		1.67	%		1.89	%		1.59	%
	1.80	%		2.24	%		1.78	%		2.12	%		1.88	%		1.54	%		2.01	%		1.67	%		1.89	%		1.59	%
	32	%		29	%		34	%		30	%		90	%		32	%		29	%		34	%		30	%		90	%

29

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Advisor Class
	Year Ended October 31,
	2015			2014			2013			2012			2011A
Net asset value, beginning of period	$	29.24		$	25.89		$	20.25		$	17.83		$	17.47
Income from investment operations:
Net investment income		0.40			0.47			0.35			0.31			0.27
Net gains (losses) from investments (both realized and unrealized)		(0.66	)		3.20			5.65			2.48			0.28
Total income (loss) from investment operations		(0.26	)		3.67			6.00			2.79			0.55
Less distributions:
Dividends from net investment income		(0.57	)		(0.32	)		(0.36	)		(0.37	)		(0.19	)
Distributions from net realized gains		(2.01	)		—			—			—			—
Total distributions		(2.58	)		(0.32	)		(0.36	)		(0.37	)		(0.19	)
Net asset value, end of period	$	26.40		$	29.24		$	25.89		$	20.25		$	17.83
Total return B		(1.19)%			14.31%			30.05%			15.96%			3.11%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	140,975		$	149,423		$	128,528		$	103,629		$	129,739
Ratios to average net assets (annualized):
Expenses, before reimbursements or recoupments		1.07%			1.07%			1.07%			1.08%			1.08%
Expenses, net of reimbursements or recoupments		1.07%			1.07%			1.07%			1.08%			1.08%
Net investment income (loss), before reimbursements or recoupments		1.40%			1.83%			1.52%			1.78%			1.46%
Net investment income, net of reimbursements or recoupments		1.40%			1.83%			1.52%			1.78%			1.46%
Portfolio turnover rate		32%			29%			34%			30%			90%

^A 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.

^B Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

30

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Retirement Class															A Class															C Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,
2015			2014			2013			2012			2011A			2015			2014			2013			2012			2011A			2015			2014			2013			2012			2011A
$	28.74		$	25.48		$	20.07		$	17.74		$	17.32		$	29.38		$	26.03		$	20.41		$	18.01		$	17.61		$	29.03		$	25.81		$	20.29		$	17.95		$	17.58
	0.24			0.57			0.35			0.28			0.20			0.47			0.54			0.38			0.36			0.24			0.27			0.35			0.23			0.22			0.10
	(0.56	)		2.98			5.50			2.42			0.30			(0.71	)		3.16			5.65			2.44			0.31			(0.70	)		3.11			5.58			2.42			0.32
	(0.32	)		3.55			5.85			2.70			0.50			(0.24	)		3.70			6.03			2.80			0.55			(0.43	)		3.46			5.81			2.64			0.42
	(0.53	)		(0.29	)		(0.44	)		(0.37	)		(0.08	)		(0.62	)		(0.35	)		(0.41	)		(0.40	)		(0.15	)		(0.42	)		(0.24	)		(0.29	)		(0.30	)		(0.05	)
	(2.01	)		—			—			—			—			(2.01	)		—			—			—			—			(2.01	)		—			—			—			—
	(2.54	)		(0.29	)		(0.44	)		(0.37	)		(0.08	)		(2.63	)		(0.35	)		(0.41	)		(0.40	)		(0.15	)		(2.43	)		(0.24	)		(0.29	)		(0.30	)		(0.05	)
$	25.88		$	28.74		$	25.48		$	20.07		$	17.74		$	26.51		$	29.38		$	26.03		$	20.41		$	18.01		$	26.17		$	29.03		$	25.81		$	20.29		$	17.95
	(1.44	)%		14.04	%		29.68	%		15.57	%		2.86	%		(1.14	)%		14.37	%		30.03	%		15.91	%		3.12	%		(1.83	)%		13.48	%		29.00	%		14.97	%		2.36	%
$	9,954		$	12,668		$	4,132		$	2,230		$	1,019		$	39,401		$	22,782		$	11,905		$	6,222		$	3,942		$	12,389		$	9,964		$	5,200		$	2,468		$	1,329
	1.32	%		1.32	%		1.33	%		1.42	%		1.39	%		0.97	%		1.04	%		1.08	%		1.12	%		1.16	%		1.73	%		1.79	%		1.84	%		1.88	%		2.54	%
	1.32	%		1.32	%		1.33	%		1.42	%		1.39	%		0.97	%		1.04	%		1.08	%		1.12	%		1.16	%		1.73	%		1.81	%		1.92	%		1.87	%		1.84	%
	1.14	%		1.58	%		1.18	%		1.19	%		1.06	%		1.48	%		1.83	%		1.44	%		1.66	%		1.37	%		0.73	%		1.09	%		0.68	%		0.89	%		(0.01	)%
	1.14	%		1.58	%		1.18	%		1.19	%		1.06	%		1.48	%		1.83	%		1.44	%		1.66	%		1.37	%		0.73	%		1.07	%		0.60	%		0.89	%		0.68	%
	32	%		29	%		34	%		30	%		90	%		32	%		29	%		34	%		30	%		90	%		32	%		29	%		34	%		30	%		90	%

31

American Beacon Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	AMR Class
	Year Ended October 31,
	2015			2014			2013			2012			2011A
Net asset value, beginning of period	$	30.90		$	27.31		$	21.36		$	18.81		$	18.37
Income from investment operations:
Net investment income		6.57			0.77			0.57			0.52			0.41
Net gains (losses) from investments (both realized and unrealized)		(6.63	)		3.33			5.92			2.54			0.32
Total income (loss) from investment operations		(0.06	)		4.10			6.49			3.06			0.73
Less distributions:
Dividends from net investment income		(0.76	)		(0.51	)		(0.54	)		(0.51	)		(0.29	)
Distributions from net realized gains		(2.01	)		—			—			—			—
Total distributions		(2.77	)		(0.51	)		(0.54	)		(0.51	)		(0.29	)
Net asset value, end of period	$	28.07		$	30.90		$	27.31		$	21.36		$	18.81
Total return B		(0.47)%			15.20%			31.05%			16.75%			3.94%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	28,308		$	823,261		$	729,175		$	602,667		$	568,768
Ratios to average net assets (annualized):
Expenses, before reimbursements		0.32%			0.32%			0.32%			0.33%			0.33%
Expenses, net of reimbursements		0.32%			0.32%			0.32%			0.33%			0.33%
Net investment income (loss), before reimbursements		2.16%			2.59%			2.26%			2.51%			2.21%
Net investment income, net of reimbursements		2.16%			2.59%			2.26%			2.51%			2.21%
Portfolio turnover rate		32%			29%			34%			30%			90%

^A 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.

^B Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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.

32

American Beacon Funds^SM

Privacy Policy & Federal Tax Information

October 31, 2015 (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

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended October 31, 2015. The information and distributions reported herein may differ from information and distribution taxable to the shareholders for the calendar year ended December 31, 2015.

The Fund designated the following items with regard to distributions paid during the year ended December 31, 2014. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

Corporate Dividends Received Deduction	63.34	%
Qualified Dividend Income	100.00	%

The Large Cap Value Fund designated $955,914,196 as long term capital gain distributions and $3,127,115 short term capital gains for the year ended October 31, 2015.

Shareholders will receive notification in January 2016 of the applicable tax information necessary to prepare their 2015 income tax returns.

33

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

At an in-person meeting held on November 12, 2014, telephonic meetings held on November 26, 2014 and December 6, 2014 and an in-person meeting held on December 10, 2014 (collectively, the “Board Meetings”), the Board of Trustees (“Board”) considered the approval of:

(1) a new Management Agreement (“New Management Agreement”) among American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”) on behalf of the American Beacon Large Cap Value Fund (“Fund”); and

(2) new Investment Advisory Agreements among the Manager, the Trust, on behalf of the Fund and each of Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”), Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), and Massachusetts Financial Services Co. (“MFS”)

Collectively, the new Investment Advisory Agreements are hereinafter referred to as the “New Advisory Agreements,” and Barrow, Brandywine, Hotchkis and MFS are hereinafter referred to as the “Sub-Advisors.”

The Board meetings were held for the Trustees to consider the New Management Agreement and New Advisory Agreements (“New Agreements”) because, on November 20, 2014, Lighthouse Holdings Parent, Inc. (“LPHI”), the indirect parent company of the Manager, entered into an Agreement and Plan of Merger pursuant to which LHPI agreed to be acquired by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) and Estancia Capital Management, LLC (“Estancia”) (collectively, the “Purchasers”), which are private equity firms (“Transaction”). As required by the Investment Company Act of 1940, as amended (“1940 Act”), the current Management Agreement (“Current Management Agreement”) among the Manager and the Trust on behalf of the Fund and the current Investment Advisory Agreements (“Current Advisory Agreements”) among the Manager, the Trust, on behalf of the Fund, and each of Barrow, Brandywine, Hotchkis and MFS provided for their automatic termination in the event of an assignment. The Transaction was deemed an “assignment” under the 1940 Act. As a result, the Current Management Agreement and each Current Advisory Agreement (“Current Agreements”) were deemed to have automatically terminated upon the closing of the Transaction. (The Transaction closed on April 30, 2015).

The Board focused on the effect that the Transaction would have on the Manager and the Fund. Additionally, the Board considered that it had requested and evaluated the information relevant to the renewal of the Current Management Agreement and Current Advisory Agreements at in-person meetings held in May and June 2014. The Manager represented to the Board that there had been no material changes or developments relating to the Manager or any of the Sub-Advisors since the May and June 2014 meetings, other than the changes or developments subsequently reported to the Board or discussed in the due diligence materials submitted to the Trustees in connection with the Transaction. In light of the proximity of the Board’s consideration of the renewal of the Current Agreements, and the Board’s ongoing due diligence review in connection with the Transaction, the Board determined that it was not necessary to repeat certain aspects of the review conducted in connection with the approvals in the past year.

In connection with the Board Meetings, the Trustees received and evaluated such information as they deemed necessary to their consideration of the New Agreements. The information requested on behalf of the Board included, among other information, the following:

• a description of the Transaction, the effect of the Transaction on the Manager, the Trust and the Board, and any proposed changes to the Trust, its service providers, the Fund’s fee structures, fee waivers, and other information;

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

• information regarding the financial resources of the Purchasers and the Manager’s capital structure after the Transaction, including confirmation that the Manager’s financial condition would not raise concerns that the Manager would be unable to continue providing the same scope and quality of services to the Fund;

• information regarding the Manager’s due diligence, bidding and selection process with respect to the Purchasers;

• information regarding the structure of the relationship between Kelso and Estancia and the role that each would assume in advance of and after the Closing;

• information regarding each Purchaser’s ownership structure and key personnel, including information regarding affiliations of the Purchaser and the Manager after the Transaction;

• information regarding each Purchaser’s asset management experience, including the experience of the Purchasers’ key personnel relating to the management of investment companies registered under the 1940 Act;

• the Purchasers’ business plans with respect to the Manager after the Transaction;

• information regarding the extent to which the Purchasers expect to be involved in the Manager’s day-to-day operations and the persons to whom the Manager’s key personnel will report;

• information regarding any anticipated impact that the Transaction might have on the Manager’s compliance activities or the resources available to the Fund’s Chief Compliance Officer;

• a discussion of any potential material changes to the Current Agreements;

• a description of any expected changes in distribution or marketing efforts and strategies for the Fund as a result of the Transaction;

• information regarding whether the Purchasers or the Manager anticipated proposing any changes to the membership of the Board;

• a discussion of the length of the Purchasers’ anticipated ownership of the Manager and the expected duration of the investment funds financing the Transaction;

• information regarding the ownership and investment of management personnel in the Manager;

• information regarding the Manager’s employee equity incentive plan after the Closing;

• a summary of any material past, pending or anticipated litigation or regulatory proceedings involving the Purchasers, or their personnel;

• verification of the continuation of the Manager’s insurance coverage after the Transaction with regard to the services provided to the Fund; and

• in-person presentations by and discussions with the Manager and representatives of the Purchasers regarding the Transaction.

34

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

The Board also considered information that had been provided to the Board by the Manager and the Sub-Advisors for the May and June 2014 meetings in connection with the renewal of the Current Agreements.

Provided below is an overview of the primary factors the Trustees considered at the Board Meetings. The Board did not identify any particular information that was most relevant to its consideration to approve the New Agreements, and each Trustee may have afforded different weight to the various factors. In connection with the approval process for the New Agreements, the Trustees received advice from their legal counsel detailing the Board’s responsibilities pertaining thereto. Legal counsel to the non-interested Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of the New Agreements. Based on its evaluation, the Board unanimously concluded that the terms of the New Agreements were reasonable and fair and that the approval of the New Agreements was in the best interests of the Fund and its shareholders.

In determining whether to approve the New Agreements on December 10, 2014, the Trustees considered the best interests of the Fund. The Board considered the Fund’s investment management and sub-advisory relationships separately. In each instance, the Board considered its review of the Current Agreements in May and June 2014, and the information received in November and December 2014 with respect to, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of the Fund and, as applicable, each Sub-Advisor for the Fund; (3) the costs incurred by the Manager in rendering services to the Fund and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or a Sub-Advisor or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect these economies of scale for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or a Sub-Advisor from its relationship with the Fund. The Trustees posed questions to various management personnel of the Manager and the Purchasers regarding certain key aspects of the materials submitted in support of the approval of the New Agreements.

Nature, Extent and Quality of the Services Provided. With respect to the approval of the New Agreements, the Board considered that the New Agreements provide for the Manager and each Sub-Advisor to provide the same services to the Fund on substantially the same terms as the Current Agreements. The Board considered representations by the Manager and/or Purchasers that the Transaction will not result in any changes to the manner in which the Fund’s assets are managed. The Board also considered representations by the Manager and/or Purchasers that the Transaction will not result in any adverse impact or changes to: the personnel involved in the management of the Fund; the Manager’s disciplined investment approach and goal to provide consistent above average long-term performance at a lower than average cost; the Manager’s continuing efforts to enhance distribution of the Fund’s shares and add new series to the Trust and share classes to the Fund’s product line; the adequacy of the Manager’s financial condition; the Manager’s day-to-day operations; the Manager’s compliance activities or the resources available to the Trust’s Chief Compliance Officer; or the Fund’s service providers or Sub-Advisors. The Board also considered the Manager’s representation that there had been no material changes or developments regarding the Manager or the Sub-Advisors since the Board’s consideration of the Current Agreements in May and June 2014 that had not previously been reported to the Board. The Board also considered information regarding the post-closing capitalization of the Purchasers and the Purchasers’ long-term business goals with regard to the Manager and the Manager’s activities with respect to the Trust, which are consistent with the Manager’s current goals. 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 the Sub-Advisors were appropriate for the Fund and, thus, determined to approve the New Agreements for the Fund.

Investment Performance. The Board considered its review of the comparative information regarding the Fund’s investment performance relative to its benchmark index(es) and peer group in connection with the renewal of the Current Agreements. The Board also considered the performance reports and discussions with management at Board and Committee meetings since June 2014. The Manager also noted that it generally was satisfied with the performance of the Sub-Advisors.

Costs of the Services to be Provided to the Fund and the Projected Profits to be Realized by the Manager from its Relationship with the Fund. In analyzing the cost of services and profitability of the Manager with respect to the Fund, the Board considered that the Transaction would result in no changes to the fees charged to the Fund or the Manager’s fee waivers currently in place with respect to the Fund. Additionally, the Board noted that there had been no material changes in this regard since its consideration of the Current Agreements in May and June 2014. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager. The Board did not consider the costs of the services to be provided and profits to be realized by each Sub-Advisor from its relationship with the Fund, noting instead the substantially arm’s-length nature of the relationship between the Manager and each Sub-Advisor with respect to the negotiation of the advisory fee rate on behalf of the Fund.

Economies of Scale and Whether Fee Levels Reflect Economies of Scale. In considering the reasonableness of the management fees, the Board considered that the Fund would pay the same fee rates to the Manager under the New Management Agreement as the Fund currently pays under the Current Management Agreement. The Board also considered that the Fund would pay the same investment advisory fee rate to each Sub-Advisor under the New Advisory Agreements as the Fund pays under the Current Advisory Agreements. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the Manager’s fee schedule for the Fund, and each of Barrow, Brandywine, Hotchkis and MFS’ fee schedules for the Fund, provide for a reasonable sharing of benefits from any economies of scale with the Fund.

35

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

Benefits Derived by the Manager from Relationship With the Fund. The Board considered that the “fall-out” or ancillary benefits that accrue to the Manager and/or a Sub-Advisor as a result of its advisory relationship with the Fund would not change as a result of the Transaction. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May and June 2014, the Board concluded that the potential benefits accruing to the Manager under the New Management Agreement and the Sub-Advisors under the New Advisory Agreements, by virtue of the Manager’s, Barrow, Brandywine, Hotchkis and MFS’ relationship with the Fund, appear to be fair and reasonable.

Board’s Conclusion. Based on the various considerations described above, the Board, including a majority of Trustees who are not “interested persons” of the Fund, the Manager, Barrow, Brandywine, Hotchkis or MFS, as that term is defined in the 1940 Act, concluded that the management and investment advisory fee rates to be paid by the Fund are fair and reasonable and that the approval of the New Agreements is in the best interests of the Fund, and approved the New Agreements.

36

American Beacon Funds^SM

Results of Shareholder Meeting (Unaudited)

Special meetings of shareholders of each of the portfolios of the American Beacon Funds (the “Trust”) were held on April 7 and April 28, 2015. The shareholders of the Large Cap Value Fund (the “Fund”) approved a new investment management agreement between American Beacon Advisors, Inc. and the Fund. Approval of this proposal required a majority of the outstanding voting securities of the Fund. The following are the results of the shareholder votes for this proposal:

Funds	For		Against		Abstain		Non-Voting
Large Cap Value Fund		4,532,511,639.83		68,585,862.71		135,113,682.54		972,548,464.24

Special meetings of shareholders of the Trust were held on April 7 and April 28, 2015. The shareholders of the Trust approved the re-election of nine of the current Trustees to the Board of the American Beacon Trust and the election of two additional Trustees to the Board. Approval of this proposal required a plurality vote of the Trust’s shares. The following are the results of the election of each Trustee:

Gilbert G. Alvarado
Affirmative	16,655,574,211.10
Withhold	242,060,281.87
Joseph B. Armes
Affirmative	16,653,130,207.99
Withhold	244,504,284.98
Gerard J. Arpey
Affirmative	16,659,813,172.19
Withhold	237,821,320.78
W. Humphrey Bogart
Affirmative	16,532,151,093.14
Withhold	365,483,399.83
Brenda A. Cline
Affirmative	16,662,050,138.08
Withhold	235,584,354.89
Eugene J. Duffy
Affirmative	16,430,210,258.21
Withhold	467,424,234.76
Thomas M. Dunning
Affirmative	16,651,792,247.83
Withhold	245,842,245.14
Alan D. Feld
Affirmative	14,899,039,186.08
Withhold	1,998,595,306.89
Richard A. Massman
Affirmative	16,651,582,060.07
Withhold	246,052,432.90
Barbara J. McKenna
Affirmative	16,435,773,869.81
Withhold	461,860,623.16
R. Gerald Turner
Affirmative	16,653,429,720.08
Withhold	244,204,772.89

37

Trustees and Officers of the American Beacon Funds^SM

(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 220 East Las Colinas Boulevard, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-four funds in the fund complex that includes the Trust 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** (78)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (45)	Trustee since 2015	Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present) Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-Present); Director, Sacramento Regional Technology Alliance (2011-Present); Director, Women’s Empowerment (2009-2014); Trustee, American Beacon Select Funds (2015-Present).
Joseph B. Armes (53)	Trustee since 2015	Chairman, President & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2013-Present); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Chief Operating Officer, Hicks Holdings, LLC (Hicks Family assets and investments) (2005-2010); Trustee, Baylor University Board of Regents (2001-2010); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present).
Gerard J. Arpey (57)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, AMR Corp. and American Airlines; Inc. (2003-2011); Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
W. Humphrey Bogart (71)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Brenda A. Cline (54)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Director, Tyler Technologies, Inc.(public sector software solutions company) (2014-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (61)	Trustee since 2008	Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).

38

Trustees and Officers of the American Beacon Funds^SM

(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
OFFICERS	Term One Year
Thomas M. Dunning (73)	Trustee since 2008	Chairman Emeritus (2008-Present); Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (72)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present) and 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); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Barbara J. McKenna, CFA (52)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (69) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Gene L. Needles, Jr. (60)	President since 2009 Executive Vice President since 2009	President, CEO and Director, American Beacon Advisors, Inc. (2009-Present); President, CEO and Director, Astro AB Borrower, Inc. (2015-Present); President, CEO and Director, Astro AB Acquisition, Inc.(2015-Present); President, CEO and Director, Astro AB Topco, Inc. (2015-Present), President, CEO and Director, Astro AB Holdings, LLC. (2015-Present); President, CEO and Director, Lighthouse Holdings, Inc.; (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President and CEO, American Private Equity Management, L.L.C. (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Rosemary K. Behan (56)	VP, Secretary and Chief Legal Officer since 2006	Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Astro AB Borrower, Inc. (2015-Present); Secretary, Astro AB Acquisition, Inc. (2015-Present); Secretary, Astro AB Topco, Inc. (2015-Present); Secretary, Astro AB Holdings, LLC. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, L.L.C.(2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Brian E. Brett (55)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present).
Erica Duncan (45)	VP Since 2011	Vice President, Marketing and Client Services, American Beacon Advisors, Inc. (2011-Present); Supervisor, Brand Marketing, Invesco (2010-2011);
Michael W. Fields (61)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (54)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present); Treasurer, Astro AB Borrower, Inc. (2015-Present); Treasurer, Astro AB Acquisition, Inc. (2015-Present); Treasurer, Astro AB Topco, Inc. (2015-Presnt); Treasurer, Astro AB Holdings, LLC. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, L.L.C. (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).

39

Trustees and Officers of the American Beacon Funds^SM

(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
OFFICERS	Term One Year
Terri L. McKinney (51)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (40)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Manager and Senior Vice President, American Private Equity Management, L.L.C. (2012-Present); Senior Vice President and Director, Astro AB Borrower, Inc. (2015-Present); Senior Vice President and Director, Astro AB Acquisition, Inc. (2015-Present); Senior Vice President and Director, Astro AB Topco, Inc. (2015-Present), Senior Vice President and Director, Astro AB Holdings, LLC.(2015-Present); Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010).
Samuel J. Silver (52)	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 (44)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, L.L.C. (2012-Present).
Sonia L. Bates (58)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer, Astro AB Borrower, Inc. (2015-Present); Asst. Treasurer, Astro AB Acquisition, Inc.(2015-Present); Asst. Treasurer, Astro AB Topco, Inc. (2015-Present); Asst. Treasurer, Astro AB Holdings, LLC.; Asst. Treasurer, Lighthouse Holdings, Inc. (2011-2015); Asst. Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Asst. Treasurer, American Private Equity Management, L.L.C. (2012-Present).

* 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 Trust, 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 years to one or more of the Trust’s sub-advisors.

40

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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, 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 Section, 100 F Street, NE, Washington, DC 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 202-551-8090. A complete schedule of the Fund’s portfolio holdings is also available at 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 Large Cap Value Fund are service marks of American Beacon Advisors, Inc.

AR 10/15

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
Financial Statements	15
Notes to the Financial Statements	19
Financial Highlights	32
Additional Information	Back Cover

Investing in small-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. Investing in value stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as a trade-off for this potentially lower risk. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. The use of futures contracts for cash management may subject the Fund to losing more money than invested. The Fund may participate in a securities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.

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, 2015

Dear Shareholders,   During much of the 12-month period ended October 31, 2015, uneven global economic growth, declining commodity prices and disparate central bank policies set the stage for mixed returns in all markets. The weakening of many currencies against the U.S. dollar also took a toll on total returns for dollar-based investors in many international markets. Uncertainty over the timing of the U.S. Federal Reserve’s first interest rate increase since emergency lending rates were established during the 2008 financial crisis continued to weigh heavily on investors’ minds. At its October 2015 meeting, the Federal Open Market Committee decided against changing interest rates, but kept December on the table as a possibility.

For the period under review, benchmarks for the American Beacon Small Cap Value Fund posted negative returns; the Lipper Small-Cap Value Funds Index declined -2.32% and the Russell 2000 Value Index declined -2.88%.

Given that small-cap stocks tend to be more volatile than many other investments, the American Beacon Small Cap Value Fund strives to navigate difficult markets using a multi-manager approach with six highly regarded sub-advisors, each one chosen to complement the others’ strategies. We believe this approach may help mitigate the inherent volatility of the small-cap space.

For the 12 months ended October 31, 2015, the American Beacon Small Cap Value Fund (Investor Class) returned 0.50%.

Thank you for your continued investment in the American Beacon Funds. For additional information about the Funds or to access your account information, 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, 2015 (Unaudited)

For the year ended October 31, 2015, the broad U.S. stock market was up as the S&P 500 Total Return Index gained 5.2%. Beneath this gain was a more volatile market, which rose almost 10% through late July and then fell more than 12% in the following month before closing the period in October with a strong rebound. Swayed by weather and port disruptions, the economy grew slowly at 0.6% for first quarter of 2015, but rebounded to 3.9% growth (revised) in the second quarter. U.S. housing starts and sales continued their long climb from their lows following the financial crisis, though they remain well below 2005-2006 levels. The U.S. unemployment rate (currently at 5.0%) is at its lowest level since 2008. U.S. auto sales have continued to climb this last year, returning to pre-2008 averages. All of these positive indicators explain the initial market gains in the recent period.

The sharp decline this summer in U.S. equity markets is best explained by concerns over U.S. Federal Reserve (“the Fed”) changes in short-term interest rates, the dramatic decline in the Chinese stock market and heightened world tensions. Investor speculation focused on if and when the Fed would raise the federal funds rate above the current 0.25%. Many feared that even the expected small and gradual rate increases would be too damaging for the U.S. economy given the general weakness abroad. At the same time, investors worried that a Fed decision to not raise rates would signal that the Fed saw a significant possibility for a U.S. slowdown. Ultimately, the Fed chose not to raise rates during their September meeting, pushing rate-hike expectations further in the future. In China, the stock market peaked in June after an explosive rally over the prior 12 months and then proceeded to drop more than 40% in the next three months. This retreat triggered concerns not only about Chinese economic growth, but for other emerging markets as well.

The other key event in this last year was the plunge in oil prices from more than $100 per barrel in mid-2014 to as low as $40 per barrel in mid-2015. The decline was the result of increased supply, primarily due to the U.S. fracking revolution, and weak demand amid sluggish global growth. With substantially lower oil prices, the stocks of oil producers were the worst performers in the U.S. equity market by a wide margin in the last 12 months.

In October, concerns eased about the possibility of a worsening global slowdown. Broad U.S. markets rebounded strongly, moving away from a global macro-driven environment to more of an earnings-driven environment. U.S. jobs growth in October was very strong, unemployment claims were low and automobile sales were strong. Housing continues to improve as sales of previously owned homes rebounded in September; however, new home sales were below expectations, as land availability and lower inventory is becoming a concern in some areas.

2

American Beacon Small Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

The Investor Class of the Small Cap Value Fund (the “Fund”) returned 0.50% for the twelve months ended October 31, 2015, outperforming the Russell 2000^® Value Index (the “Index”) return of -2.88% for the same period.

Comparison of Change in Value of a $10,000 Investment for the period from 10/31/05 through 10/31/15

Total Returns for the Period ended 10/31/15

	Ticker	1 Year			5 Years			10 Years			Value of $10,000 10/31/05- 10/31/15
Institutional Class (1,8)	AVFIX		0.87	%		12.59	%		7.77	%	$	21,131
Y Class (1,2,8)	ABSYX		0.79	%		12.49	%		7.68	%		20,958
Investor Class (1,8)	AVPAX		0.50	%		12.18	%		7.42	%		20,456
Advisor Class (1,3,8)	AASSX		0.41	%		12.04	%		7.23	%		20,099
Retirement Class (1,4,8)	ASCVX		0.10	%		11.72	%		7.04	%		19,747
A Class with sales charge (1,5,8)	ABSAX		(5.32	)%		10.70	%		6.70	%		19,129
A Class without sales Charge (1,5,8)	ABSAX		0.45	%		12.02	%		7.33	%		20,294
C Class with sales charge (1,6,8)	ASVCX		(1.31	)%		11.16	%		6.91	%		19,498
C Class without sales charge (1,6,8)	ASVCX		(0.31	)%		11.16	%		6.91	%		19,498
AMR Class (1,8)	AASVX		1.14	%		12.88	%		8.04	%		21,675
Russell 2000 Value Index (7)			(2.88	)%		10.53	%		6.19	%		18,232

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 calculated based on the published end of day net asset values 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, call 1-800-967-9009 or visit www.americanbeaconfunds.com. 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 Institutional Class from 10/31/05 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 10/31/05.

3. A portion of the fees charged to the Advisor Class of the Fund was waived through 2004 and in 2009. Performance prior to waiving fees was lower than the actual returns shown for these periods.

4. Fund performance for the ten-year period represents the total returns achieved by the Advisor Class from 10/31/05 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 Class. As a result, total returns shown may be higher than they would have been had the Retirement Class been in existence since 10/31/05.

5. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the A Class of the Fund was waived in 2010, 2012, and 2013 and fully recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown in 2010, 2012, and 2013. The maximum sales charge for A Class is 5.75%.

3

American Beacon Small Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

6. Fund performance for the ten-year period represents the total returns achieved by the Investor Class from 10/31/05 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 10/31/05. A portion of the fees charged to the C Class of the Fund was waived in 2010 and 2012 through 2014 and partially recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown in 2010 and 2012 through 2014. 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 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. Russell 2000 Value Index and Russell 2000 Index are registered trademarks of the Frank Russell Company. 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 0.81%, 0.90%, 1.17%, 1.30%, 1.58%, 1.21%, 1.98%, and 0.55%, 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 through stock selection as sector allocation detracted value relative to the Index.

Most of the Fund’s excess performance was attributed to holdings in the Industrials and Financials sectors which contributed approximately 215 (2.15%) and 185 (1.85%) basis points, respectively, to performance. Companies in the Industrials sector contributing to the Fund’s performance included Comfort Systems (up 109.8%) and Matson (up 66.0%). In the Financials sector, Synovus Financial (up 26.3%), First Horizon National (up 12.5%) and First Niagara Financial (up 42.0%) were the largest contributors. The Fund’s Consumer Discretionary and Information Technology sectors also added relative value. Tempur Sealy International (up 47.9%), Helen of Troy (up 62.6%) and American Axle & Manufacturing (up 14.1%) contributed to the Fund’s returns in the Consumer Discretionary sector. Mentor Graphics (up 29.3%) and ON Semiconductor (up 81.0%) contributed most to performance in the Information Technology sector. Not owning Digital Globe, which was down 47.8% in the Index, also positively impacted performance. Poor stock selection in the Health Care sector detracted from the Fund’s returns. In the Health Care sector, Hanger (down 39.7%) was the largest detractor.

The Fund’s significant underweight in the Financials sector detracted more than 70 (0.70%) basis points from performance through sector allocation. A large overweight in Industrials, one of the poorer performing sectors in the Index, also detracted from the Fund’s returns. The Fund’s slight underweight in Energy, the worst performing sector in the Index, added relative value.

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 (% Net Assets)
Mentor Graphics Corp.		1.0
Great Plains Energy, Inc.		0.9
First Horizon National Corp.		0.9
Synovus Financial Corp.		0.9
Portland General Electric Co.		0.8
Diodes, Inc.		0.7
American Axle & Manufacturing Holdings, Inc.		0.7
Vishay Intertechnology, Inc.		0.7
First Niagara Financial Group, Inc.		0.7
Simpson Manufacturing Co., Inc.		0.6
Total Fund Holdings	623

Sector Allocation (% Equities)
Financials	30.9
Industrials	19.8
Consumer Discretionary	15.1
Information Technology	14.0
Utilities	5.5
Health Care	4.5
Materials	4.3
Energy	3.1
Consumer Staples	2.4
Telecommunication Services	0.4

4

American Beacon Small Cap Value Fund^SM

Performance Overview

October 31, 2015 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments 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, 2015 through October 31, 2015.

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 or Roth 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 or Roth 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 5/1/15		Ending Account Value 10/31/15		Expenses Paid During Period* 5/1/15 - 10/31/15
Institutional Class
Actual	$	1,000.00	$	972.44	$	4.03
Hypothetical **	$	1,000.00	$	1,021.12	$	4.13
Y Class
Actual	$	1,000.00	$	972.13	$	4.47
Hypothetical **	$	1,000.00	$	1,020.67	$	4.58
Investor Class
Actual	$	1,000.00	$	970.70	$	5.61
Hypothetical **	$	1,000.00	$	1,019.51	$	5.75
Advisor Class
Actual	$	1,000.00	$	970.39	$	6.46
Hypothetical **	$	1,000.00	$	1,018.65	$	6.61
Retirement Class
Actual	$	1,000.00	$	968.92	$	7.79
Hypothetical **	$	1,000.00	$	1,017.29	$	7.98
A Class
Actual	$	1,000.00	$	970.32	$	6.06
Hypothetical **	$	1,000.00	$	1,019.06	$	6.21
AMR Class
Actual	$	1,000.00	$	973.52	$	2.74
Hypothetical **	$	1,000.00	$	1,022.43	$	2.80
C Class
Actual	$	1,000.00	$	966.57	$	9.81
Hypothetical **	$	1,000.00	$	1,015.22	$	10.06

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.81%, 0.90%, 1.13%, 1.30%, 1.57%, 1.22%, 1.98%, and 0.55% 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 American Beacon Small Cap Value Fund (one of the funds constituting the American Beacon Funds) (the “Fund”), as of October 31, 2015, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the 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, 2015, 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 American Beacon Small Cap Value Fund at October 31, 2015, 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 five years in the period then ended in conformity with U.S. generally accepted accounting principles.

Dallas, Texas

December 29, 2015

6

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
COMMON STOCK - 94.64%
CONSUMER DISCRETIONARY - 14.24%
Auto Components - 1.78%
American Axle & Manufacturing Holdings, Inc.A		1,627,887	$	36,075
Cooper Tire & Rubber Co.		343,074		14,337
Cooper-Standard Holding, Inc.A		51,631		3,358
Dana Holding Corp.		766,131		12,871
Federal Signal Corp.		512,244		7,714
Modine Manufacturing Co.A		107,636		901
Standard Motor Products, Inc.		133,228		5,895
Tenneco, Inc.A		291,549		16,499
				97,650
Automobiles - 0.60%
Federal-Mogul Holdings Corp.A		222,579		1,725
Hyster-Yale Materials Handling, Inc.		109,244		6,393
Thor Industries, Inc.		405,341		21,921
Winnebago Industries, Inc.B		144,972		3,043
				33,082
Commercial Services - 0.07%
Sotheby’s		113,372		3,928
Hotels, Restaurants & Leisure - 0.94%
Belmond Ltd., Class AA		753,368		8,091
Bravo Brio Restaurant Group, Inc.A		185,253		2,175
Brinker International, Inc.		186,595		8,492
Cheesecake Factory, Inc.		268,973		12,964
Cracker Barrel Old Country Store, Inc.B		50,875		6,993
Golden Entertainment, Inc.A		71,300		667
International Speedway Corp., Class A		96,240		3,339
Interval Leisure Group, Inc.		104,586		1,846
Ruby Tuesday, Inc.A		772,574		4,041
Speedway Motorsports, Inc.		149,276		2,757
				51,365
Household Durables - 3.45%
ACCO Brands Corp.A		746,311		6,023
Cavco Industries, Inc.A		84,765		8,358
Ethan Allen Interiors, Inc.		470,803		12,811
Haverty Furniture Companies, Inc.		189,344		4,433
Helen of Troy Ltd.A		113,986		11,309
HNI Corp.		89,077		3,825
KB Home		549,406		7,197
Kimball International, Inc., Class B		72,696		794
Knoll, Inc.		663,389		15,417
La-Z-Boy, Inc.		123,257		3,519
M/I Homes, Inc.A		314,514		7,218
Matthews International Corp., Class A		64,955		3,750
MDC Holdings, Inc.		176,548		4,588
Meritage Homes Corp.		143,167		5,048
Taylor Morrison Home Corp., Class AA		119,527		2,203
Tempur Sealy International, Inc.A		434,703		33,836
TRI Pointe Homes, Inc.A		672,811		8,733
Tupperware Brands Corp.		38,865		2,288
Universal Electronics, Inc.A		127,366		6,059
Whirlpool Corp.		151,257		24,222
William Lyon Homes, Class AA		814,201		17,375
				189,006
Household Products - 0.26%
CalAtlantic Group, Inc.		369,877		14,089

	Shares		Fair Value
			(000’s)
Internet & Catalog Retail - 0.14%
Insight Enterprises, Inc.A		297,980	$	7,569
Media - 1.80%
AMC Networks, Inc., Class AA		109,314		8,077
Banner Corp.		35,073		1,721
Entercom Communications Corp., Class AA		182,784		2,018
EW Scripps Co., Class A		866,548		19,117
John Wiley & Sons, Inc., Class A		56,887		2,977
Meredith Corp.		255,296		12,005
New York Times Co., Class A		897,699		11,921
Saga Communications, Inc., Class A		3,777		162
Scholastic Corp.		116,784		4,773
Sinclair Broadcast Group, Inc., Class A		245,767		7,375
Starz, Class AA		331,914		11,122
Time, Inc.		576,518		10,712
TiVo, Inc.A		630,645		5,726
Travelzoo, Inc.A		98,019		876
				98,582
Multiline Retail - 0.29%
Big Lots, Inc.		69,721		3,214
Dillard’s, Inc., Class A		132,472		11,854
Stein Mart, Inc.		89,750		795
				15,863
Specialty Retail - 4.12%
Aaron’s, Inc.		79,929		1,972
American Eagle Outfitters, Inc.		386,974		5,913
Big 5 Sporting Goods Corp.		306,131		2,801
Buckle, Inc.B		103,496		3,668
Caleres, Inc.		149,881		4,580
Chico’s FAS, Inc.		300,092		4,147
Children’s Place Retail Stores, Inc.		168,094		9,022
Essendant, Inc.		269,284		9,309
Express, Inc.		711,735		13,736
Finish Line, Inc., Class A		385,729		7,186
Francesca’s Holdings Corp.A		201,844		2,868
GameStop Corp., Class AB		389,597		17,949
Genesco, Inc.A		139,384		8,732
GNC Holdings, Inc., Class A		247,738		7,370
Group 1 Automotive, Inc.		136,170		11,840
Hibbett Sports, Inc.A		99,723		3,407
Kirkland’s, Inc.		114,341		2,629
Men’s Wearhouse, Inc.		409,760		16,382
Murphy USA, Inc.A		164,633		10,104
Penske Automotive Group, Inc.		313,775		15,325
Pep Boys, Inc.A		427,683		6,432
Pier 1 Imports, Inc.B		189,242		1,404
Rent-A-Center, Inc.		296,405		5,451
Rush Enterprises, Inc., Class AA		594,608		14,497
Select Comfort Corp.A		115,342		2,445
Shoe Carnival, Inc.		38,597		867
Sonic Automotive, Inc., Class A		1,027,486		25,625
Urban Outfitters, Inc.A		223,262		6,385
Zumiez, Inc.A		241,351		4,219
				226,265
Textiles & Apparel - 0.79%
Deckers Outdoor Corp.A		215,161		11,976
Guess?, Inc.B		613,589		12,916
Oxford Industries, Inc.		92,482		6,735
Tumi Holdings, Inc.A		143,982		2,308
Unifirst Corp.		11,364		1,194

See accompanying notes

7

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Vera Bradley, Inc.A B		630,552	$	7,888
				43,017
Total Consumer Discretionary				780,416
CONSUMER STAPLES - 2.23%
Food & Drug Retailing - 1.39%
Andersons, Inc.		89,929		3,183
Casey’s General Stores, Inc.		217,121		23,064
Fresh Market, Inc.A B		341,531		8,511
Petmed Express, Inc.B		208,345		3,504
SpartanNash Co.		208,354		5,813
SUPERVALU, Inc.A		524,159		3,444
United Natural Foods, Inc.A		235,153		11,863
Vitamin Shoppe, Inc.A		533,460		15,305
Weis Markets, Inc.		34,680		1,427
				76,114
Food Products - 0.65%
Fresh Del Monte Produce, Inc.		341,883		15,600
Herbalife Ltd.A B		246,808		13,831
Sanderson Farms, Inc.B		89,324		6,209
				35,640
Personal Products - 0.04%
Medifast, Inc.A		82,065		2,295
Tobacco - 0.15%
Universal Corp.		155,085		8,376
Total Consumer Staples				122,425
ENERGY - 2.97%
Energy Equipment & Services - 1.50%
Atwood Oceanics, Inc.B		291,237		4,820
Cobalt International Energy, Inc.A		975,599		7,483
Dynegy, Inc.A		122,553		2,381
Flotek Industries, Inc.A B		666,942		12,072
Gulf Island Fabrication, Inc.		183,006		1,850
McDermott International, Inc.A B		1,436,590		6,623
Nabors Industries Ltd.		282,836		2,840
Oil States International, Inc.A		408,911		12,272
Patterson-UTI Energy, Inc.		751,591		11,191
PDC Energy, Inc.A		101,796		6,142
Rowan Cos., PLC, Class AC		224,207		4,412
RPC, Inc.B		828,753		9,141
SEACOR Holdings, Inc.		17,778		1,039
				82,266
Oil & Gas - 1.47%
Abraxas Petroleum Corp.A		1,756,362		2,793
Alon USA Energy, Inc.		68,558		1,148
Bellatrix Exploration Ltd.A B		669,832		1,099
Callon Petroleum Co.A		712,092		6,181
Carrizo Oil & Gas, Inc.A		111,016		4,178
Delek US Holdings, Inc.		207,281		5,638
Denbury Resources, Inc.B		482,315		1,707
Gran Tierra Energy, Inc.A B		775,978		1,862
Green Plains Renewable Energy, Inc.		36,879		756
Helix Energy Solutions Group, Inc.A		130,938		757
Kosmos Energy Ltd.A		1,163,967		7,938
Laredo Petroleum, Inc.A B		207,281		2,380
LinnCo LLCB D		433,768		1,006
Natural Gas Services Group, Inc.A		212,850		4,793
PBF Energy, Inc., Class A		310,826		10,568
SM Energy Co.		52,955		1,766
Synergy Resources Corp.A		840,126		9,401

	Shares		Fair Value
			(000’s)
Ultra Petroleum Corp.A B		359,545	$	1,970
Western Refining, Inc.		345,152		14,366
				80,307
Total Energy				162,573
FINANCIALS - 29.26%
Banks - 13.86%
1st Source Corp.		79,085		2,512
Associated Banc-Corp.		1,550,249		29,982
Astoria Financial Corp.		382,864		6,111
BancorpSouth, Inc.		279,157		6,959
Bank of Hawaii Corp.		220,897		14,464
BBCN Bancorp, Inc.		230,675		3,873
Berkshire Hills Bancorp, Inc.		76,726		2,194
BOK Financial Corp.		150,761		10,128
Boston Private Financial Holdings, Inc.		770,862		8,834
Brookline Bancorp, Inc.		867,626		9,848
Bryn Mawr Bank Corp.		91,839		2,675
Capital Bank Financial Corp., Class A		202,174		6,530
Cardinal Financial Corp.		291,205		6,619
Cathay General Bancorp		235,243		7,363
Central Pacific Financial Corp.		381,039		8,520
Chemical Financial Corp.		208,154		7,063
City Holding Co.		51,793		2,477
City National Corp.		293,218		26,272
Clifton Bancorp, Inc.		322,386		4,700
CoBiz Financial, Inc.		467,419		5,824
Columbia Banking System, Inc.		442,155		14,733
Community Bank System, Inc.		30,979		1,263
Community Trust Bancorp, Inc.		24,332		839
Cullen/Frost Bankers, Inc.		62,695		4,291
Dime Community Bancshares, Inc.		102,028		1,770
FCB Financial Holdings, Inc., Class AA		125,087		4,448
First Citizens BancShares, Inc., Class A		19,953		5,111
First Commonwealth Financial Corp.		335,479		3,083
First Financial Bancorp		149,881		2,890
First Financial Corp.		108,251		3,710
First Horizon National Corp.		3,378,231		47,902
First Interstate Bancsystem, Inc., Class A		313,257		8,884
First Merchants Corp.		98,156		2,575
First Midwest Bancorp, Inc.		966,244		17,218
First Niagara Financial Group, Inc.		3,456,216		35,772
FirstMerit Corp.		1,112,722		20,908
Flushing Financial Corp.		36,539		769
FNB Corp.		454,239		6,119
Fulton Financial Corp.		1,242,742		16,678
Hancock Holding Co.		344,032		9,495
Hanmi Financial Corp.		491,818		12,541
Iberiabank Corp.		113,418		6,877
Independent Bank Corp.		65,749		3,073
International Bancshares Corp.		420,621		11,336
Investors Bancorp, Inc.		1,231,201		15,402
MainSource Financial Group, Inc.		115,215		2,493
MB Financial, Inc.		195,317		6,297
National Bank Holdings Corp., Class A		84,633		1,867
NBT Bancorp, Inc.		119,744		3,366
Northwest Bancshares, Inc.		365,010		4,913
Old National Bancorp		840,687		11,770
Opus Bank		45,121		1,681
People’s United Financial, Inc.		863,354		13,770
Popular, Inc.		683,118		20,200
PrivateBancorp, Inc.		184,207		7,705
Prosperity Bancshares, Inc.		520,389		26,738

See accompanying notes

8

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Provident Financial Services, Inc.		209,758	$	4,262
Real Industry, Inc.A B		722,432		6,863
Renasant Corp.		86,837		3,007
S&T Bancorp, Inc.		114,489		3,650
Sandy Spring Bancorp, Inc.		69,343		1,907
Seacoast Banking Corp. of FloridaA		371,760		5,755
Simmons First National Corp., Class A		122,836		6,331
South State Corp.		82,742		6,413
Sterling Bancorp		653,709		10,061
Stock Yards Bancorp, Inc.		25,553		963
TCF Financial Corp.		731,516		11,258
Tompkins Financial Corp.		32,028		1,738
TowneBank		125,241		2,688
Trustmark Corp.		373,113		8,966
UMB Financial Corp.		245,616		12,055
Umpqua Holdings Corp.		771,045		12,876
Union Bankshares Corp.		117,257		2,937
United Bankshares, Inc.		140,614		5,561
United Community Banks, Inc.		589,851		11,891
United Financial Bancorp, Inc.		112,056		1,454
Valley National Bancorp		2,036,881		21,387
Washington Federal, Inc.		1,090,488		27,197
Washington Trust Bancorp, Inc.		130,305		5,056
Webster Financial Corp.		708,262		26,277
WesBanco, Inc.		187,841		6,133
Wilshire Bancorp, Inc.		258,921		2,768
Wintrust Financial Corp.		310,822		15,693
Zions Bancorporation		80,169		2,306
				758,888
Diversified Financials - 3.96%
Ashford, Inc.A G		1		—
Beneficial Bancorp, Inc.A		215,035		2,983
Calamos Asset Management, Inc., Class A		283,306		2,660
Capitol Federal Financial, Inc.		486,759		6,318
Cash America International, Inc.		71,867		2,482
Cohen & Steers, Inc.		193,679		5,925
Credit Acceptance Corp.A B		81,955		15,497
Customers Bancorp, Inc.A		247,659		6,811
Encore Capital Group, Inc.A B		207,706		8,454
EZCORP, Inc., Class AA		71,826		478
First BanCorp Puerto RicoA		1,149,310		4,356
Flagstar Bancorp, Inc.A		146,761		3,264
GAMCO Investors, Inc., Class A		12,209		704
Greenhill & Co., Inc.		97,168		2,509
Janus Capital Group, Inc.		457,920		7,111
KCG Holdings, Inc., Class AA		306,571		3,829
Meridian Bancorp, Inc.		42,837		601
MGIC Investment Corp.A		963,495		9,057
Nelnet, Inc., Class A		167,988		6,011
Northfield Bancorp, Inc.		202,855		3,108
Oppenheimer Holdings, Inc., Class A		260,274		4,776
Oritani Financial Corp.		132,236		2,105
Outerwall, Inc.B		68,558		4,113
Pacific Continental Corp.		177,872		2,551
Physicians Realty TrustE		358,051		5,722
Piper Jaffray Cos.A		199,690		7,103
PRA Group, Inc.		86,770		4,755
Prospect Capital Corp.B		123,028		902
Retail Opportunity Investments Corp.E		193,172		3,502
Stifel Financial Corp.A		232,428		10,327
Synovus Financial Corp.		1,494,259		47,262
Texas Capital Bancshares, Inc.A		488,036		26,940
Virtus Investment Partners, Inc.		13,677		1,601

	Shares		Fair Value
			(000’s)
Waddell & Reed Financial, Inc., Class A		89,938	$	3,322
				217,139
Insurance - 7.92%
Allied World Assurance Co., Holdings AG		438,178		15,932
American Equity Investment Life Holding Co.		403,677		10,366
American Financial Group, Inc.		243,815		17,601
AMERISAFE, Inc.		40,851		2,236
Amtrust Financial Services, Inc.B		240,785		16,426
Argo Group International Holdings Ltd.		79,181		4,950
Aspen Insurance Holdings Ltd.		361,461		17,571
Assurant, Inc.		192,623		15,705
Assured Guaranty Ltd.		402,779		11,052
Axis Capital Holdings Ltd.		252,198		13,619
CNO Financial Group, Inc.		848,576		16,301
Employers Holdings, Inc.		76,159		2,016
Endurance Specialty Holdings Ltd.		363,352		22,938
Enstar Group Ltd.A		121,554		19,181
FBL Financial Group, Inc., Class A		100,205		6,303
First American Financial Corp.		389,550		14,854
Global Indemnity PLCA C		401,533		11,408
Hanover Insurance Group, Inc.		238,023		20,053
Hilltop Holdings, Inc.A		391,544		8,211
Horace Mann Educators Corp.		924,731		31,664
Infinity Property & Casualty Corp.		51,762		4,168
Kemper Corp.		181,106		6,469
Maiden Capital Financing Trust		208,368		3,240
Mercury General Corp.		111,773		6,037
National Western Life Group, Inc., Class A		10,723		2,766
Navigators Group, Inc.A		46,915		4,004
Old Republic International Corp.		864,356		15,593
Primerica, Inc.		166,836		7,946
ProAssurance Corp.		156,028		8,263
Radian Group, Inc.		580,802		8,404
Renaissancere Holdings Ltd.		130,591		14,317
RLI Corp.		116,888		7,113
Safety Insurance Group, Inc.		162,174		9,398
Selective Insurance Group, Inc.		161,541		5,895
State Auto Financial Corp.		73,323		1,749
Stewart Information Services Corp.		56,870		2,284
Symetra Financial Corp.		225,470		7,154
Third Point Reinsurance Ltd.A B		273,474		3,738
United Fire Group, Inc.		76,841		2,858
Universal Insurance Holdings, Inc.		150,638		4,753
Validus Holdings Ltd.		294,571		13,049
White Mountains Insurance Group Ltd.		20,287		16,027
				433,612
Real Estate - 3.52%
American Assets Trust, Inc.E		199,385		8,406
Apollo Residential Mortgage, Inc.E		239,015		3,076
Ashford Hospitality Prime, Inc.E		149,776		2,202
Ashford Hospitality Trust, Inc.E		473,892		3,260
Brandywine Realty TrustE		532,702		7,191
CBL & Associates Properties, Inc.E		321,938		4,694
Education Realty Trust, Inc.E		156,758		5,629
EPR PropertiesE		306,278		17,400
Equity CommonwealthA E		199,971		5,741
Geo Group, Inc.E		941,845		30,393
Granite Real Estate Investment TrustE		252,860		7,313
Healthcare Trust of America, Inc., Class AE		493,348		12,980
Hersha Hospitality TrustE		173,144		4,157
Hospitality Properties TrustE		121,515		3,261

See accompanying notes

9

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Kite Realty Group TrustE		463,970	$	12,253
Mack-Cali Realty Corp.E		391,557		8,520
Medical Properties Trust, Inc.E		869,365		9,824
New Residential Investment Corp.E		375,393		4,554
Pebblebrook Hotel TrustE		193,404		6,611
Pennsylvania Real Estate Investment TrustE		338,724		7,615
RAIT Financial TrustE		896,289		4,347
Ramco-Gershenson Properties TrustE		298,155		5,009
RLJ Lodging TrustE		200,472		5,030
Ryman Hospitality Properties, Inc.E		88,794		4,671
WCI Communities, Inc.A		376,028		8,983
				193,120
Total Financials				1,602,759
HEALTH CARE - 4.29%
Biotechnology - 0.07%
Charles River Laboratories International, Inc.A		37,781		2,465
PDL BioPharma, Inc.B		259,470		1,188
				3,653
Health Care Equipment & Supplies - 1.39%
Computer Programs and Systems, Inc.B		1,296		49
Globus Medical, Inc., Class AA		409,653		9,156
Haemonetics Corp.A		631,608		21,335
Hillenbrand, Inc.		353,650		10,493
Hill-Rom Holdings, Inc.		119,527		6,298
Integra LifeSciences Holdings Corp.A		52,042		3,100
Invacare Corp.		641,265		11,081
Meridian Bioscience, Inc.		346,911		6,595
STERIS Corp.B		105,721		7,924
				76,031
Health Care Providers & Services - 2.74%
Advisory Board Co.A		205,030		8,986
Air Methods Corp.		273,758		11,205
Hanger Orthopedic Group, Inc.A		667,421		9,624
HealthSouth Corp.		506,580		17,644
LifePoint Hospitals, Inc.A		471,122		32,452
Magellan Health Services, Inc.A		90,610		4,839
Omnicell, Inc.A		271,961		7,397
Owens & Minor, Inc.		321,477		11,525
Select Medical Holdings Corp.		1,051,812		11,885
Triple-S Management Corp., Class BA		219,183		4,513
Universal American Corp.		244,254		1,822
WellCare Health Plans, Inc.A		325,549		28,844
				150,736
Pharmaceuticals - 0.09%
Lannett Co., Inc.A B		109,097		4,884
Total Health Care				235,304
INDUSTRIALS - 18.70%
Aerospace & Defense - 1.32%
AAR Corp.		384,018		8,713
Aerovironment, Inc.A		331,110		7,639
Aircastle Ltd.		671,459		15,214
Curtiss-Wright Corp.		86,903		6,045
Kaman Corp.		44,743		1,740
Moog, Inc., Class AA		51,937		3,208
Orbital ATK, Inc.		169,035		14,473
Triumph Group, Inc.		113,645		5,294
World Fuel Services Corp.		224,538		9,983
				72,309

	Shares		Fair Value
			(000’s)
Air Freight & Couriers - 0.05%
XPO Logistics, Inc.A B		104,870	$	2,911
Building Products - 2.23%
American Woodmark Corp.A		73,238		5,324
Apogee Enterprises, Inc.		115,987		5,745
Crane Co.		271,307		14,282
Masonite International Corp.		339,006		20,296
Owens Corning		427,507		19,464
Simpson Manufacturing Co., Inc.		913,707		34,703
Trex Co., Inc.A		448,036		17,505
Universal Forest Products, Inc.		68,908		5,005
				122,324
Commercial Services & Supplies - 5.06%
ABM Industries, Inc.		459,989		13,064
Aceto Corp.		241,701		7,290
American Public Education, Inc.A		66,945		1,455
Apollo Education Group, Inc.A		115,235		837
Bridgepoint Education, Inc.A		153,930		1,193
Brink’s Co.		348,405		10,794
Capella Education Co.		150,170		6,780
CDI Corp.		90,614		725
Convergys Corp.		365,152		9,373
CSG Systems International, Inc.		399,252		13,383
CyrusOne, Inc.E		315,566		11,133
Deluxe Corp.		262,851		15,652
DeVry, Inc.		178,466		4,205
Dun & Bradstreet Corp.		126,449		14,399
Ennis, Inc.		41,767		837
FTI Consulting, Inc.A		296,160		10,072
Heidrick & Struggles International, Inc.		152,718		4,056
Herman Miller, Inc.		39,590		1,256
Hudson Global, Inc.A		596,026		1,377
Interface, Inc.		466,098		9,112
Kelly Services, Inc., Class A		251,388		3,972
Koppers Holdings, Inc.		20,942		397
Korn/Ferry International		239,993		8,729
McGrath Rentcorp		248,631		7,471
Mobile Mini, Inc.		559,269		19,148
Monotype Imaging Holdings, Inc.		232,137		6,347
Monster Worldwide, Inc.A		350,811		2,200
Morningstar, Inc.		39,280		3,225
Navigant Consulting, Inc.A		373,993		6,433
PHH Corp.A		502,220		7,383
Pitney Bowes, Inc.		692,376		14,298
Resources Connection, Inc.		155,198		2,786
RR Donnelley & Sons Co.		1,130,517		19,071
Steelcase, Inc., Class A		440,965		8,559
Strayer Education, Inc.A		44,421		2,351
Tetra Tech, Inc.		43,971		1,183
TrueBlue, Inc.A		485,594		14,068
Viad Corp.		126,577		3,811
Weight Watchers International, Inc.A B		286,806		4,411
West Corp.		192,907		4,593
				277,429
Construction & Engineering - 2.57%
AECOM Technology Corp.A		391,015		11,523
Aegion Corp.A		152,711		2,946
Chicago Bridge & Iron Co., N.V.B		103,073		4,625
Comfort Systems USA, Inc.		913,573		29,170
EMCOR Group, Inc.		489,610		23,638
Granite Construction, Inc.		262,533		8,622
Jacobs Engineering Group, Inc.A		122,836		4,931

See accompanying notes

10

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
MYR Group, Inc.A		111,357	$	2,506
Primoris Services Corp.		850,777		16,947
Quanta Services, Inc.A		190,732		3,836
Tutor Perini Corp.		1,905,432		31,973
				140,717
Diversified Manufacturing - 0.60%
Barnes Group, Inc.		869,538		32,686
Electrical Equipment - 1.44%
Brady Corp., Class A		77,176		1,756
Encore Wire Corp.		340,708		14,572
EnerSys, Inc.		307,211		18,737
Geospace Technologies Corp.A		248,161		3,812
II-VI, Inc.		1,644,928		29,805
IPG Photonics Corp.		53,484		4,419
Regal-Beloit Corp.		89,560		5,713
				78,814
Industrial Conglomerates - 0.66%
DHI Group, Inc.A		68,694		622
GATX Corp.		104,019		4,858
ICF International, Inc.A		24,918		764
KBR, Inc.		1,012,195		18,664
Park-Ohio Industries, Inc.		28,682		990
Raven Industries, Inc.		271,365		4,942
Rexnord Corp.A		172,375		3,185
Trimas Corp.A		94,791		1,897
				35,922
Machinery - 3.66%
Actuant Corp., Class A		164,464		3,750
AGCO Corp.		266,382		12,890
Applied Industrial Technologies, Inc.		134,715		5,565
Astec Industries, Inc.		227,271		7,386
Briggs & Stratton Corp.		97,399		1,731
Chart Industries, Inc.A		213,578		3,671
CIRCOR International, Inc.		92,387		4,242
CLARCOR, Inc.		67,924		3,387
Columbus McKinnon Corp.		105,477		1,971
EnPro Industries, Inc.		370,307		18,186
ESCO Technologies, Inc.		58,841		2,182
Esterline Technologies Corp.A		45,137		3,478
FreightCar America, Inc.		227,127		4,129
Greenbrier Cos., Inc.B		29,125		1,108
Harsco Corp.		315,933		3,390
iRobot Corp.A		343,914		10,321
ITT Corp.		37,258		1,475
John Bean Technologies Corp.		70,526		3,164
L.B. Foster Co., Class A		32,665		481
Lindsay Corp.B		119,375		8,091
Meritor, Inc.A		1,557,549		16,931
Miller Industries, Inc.		218,533		4,956
Mueller Industries, Inc.		91,744		2,892
Navistar International Corp.		742,406		9,132
Oshkosh Corp.B		607,184		24,949
Reliance Steel & Aluminum Co.		71,205		4,269
Tennant Co.		21,650		1,254
Terex Corp.		954,039		19,138
TimkenSteel Corp.		446,135		4,747
Valmont Industries, Inc.		65,059		7,055
Wabash National Corp.A		238,234		2,852
Watts Water Technologies, Inc., Class A		36,388		1,981
				200,754
Marine - 0.37%
Great Lakes Dredge & Dock Corp.A		299,016		1,196

	Shares		Fair Value
			(000’s)
Matson, Inc.		416,547	$	19,090
				20,286
Road & Rail - 0.48%
Marten Transport Ltd.		278,492		4,564
Roadrunner Transportation Systems, Inc.A		37,068		394
Ryder System, Inc.		185,616		13,324
Swift Transportation Co.A		152,496		2,384
TravelCenters of America LLCA D		83,394		961
Werner Enterprises, Inc.		169,857		4,494
				26,121
Trading Companies & Distributors - 0.24%
Air Lease Corp.		354,287		11,943
MRC Global, Inc.A		82,080		977
				12,920
Transportation Infrastructure - 0.02%
Wesco Aircraft Holdings, Inc.A		94,562		1,178
Total Industrials				1,024,371
INFORMATION TECHNOLOGY - 13.29%
Communications Equipment - 1.52%
Adtran, Inc.		219,161		3,404
Anixter International, Inc.		70,522		4,836
ARRIS Group, Inc.A		1,074,707		30,370
Bel Fuse, Inc., Class B		36,028		650
Black Box Corp.		24,827		303
Brocade Communications Systems, Inc.		1,549,100		16,142
Extreme NetworksA		1,885,194		6,768
Finisar Corp.A		136,388		1,551
IxiaA		331,709		4,780
Plantronics, Inc.		167,076		8,959
Polycom, Inc.A		278,065		3,832
Ubiquiti Networks, Inc.B		63,996		1,867
				83,462
Computers & Peripherals - 0.99%
Electronics for Imaging, Inc.A		255,933		11,886
Lexmark International, Inc., Class A		393,058		12,769
Mercury Systems, Inc.A		696,147		11,946
NCR Corp.A		440,755		11,724
Synaptics, Inc.A		70,402		5,991
				54,316
Electronic Equipment & Instruments - 3.98%
Analogic Corp.		60,236		5,278
Arrow Electronics, Inc.		329,266		18,106
Avnet, Inc.		244,727		11,118
AVX Corp.		478,457		6,459
Benchmark Electronics, Inc.A		591,469		11,699
Celestica, Inc.A		285,833		3,207
ChipMOS TECHNOLOGIES Bermuda Ltd.		71,797		1,273
Coherent, Inc.		51,954		2,816
DTS, Inc.A		109,931		3,272
Ingram Micro, Inc., Class A		726,343		21,630
Itron, Inc.A		109,291		4,014
Jabil Circuit, Inc.		352,812		8,108
Littelfuse, Inc.		102,666		10,259
Nanometrics, Inc.A		282,917		4,323
Newport Corp.A		127,416		1,925
Plexus Corp.A		543,747		18,825
Rofin-Sinar Technologies, Inc.A		67,768		1,963
Sanmina Corp.A		669,594		13,841
Scansource, Inc.A		388,901		13,421
Tech Data Corp.A		277,692		20,213

See accompanying notes

11

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
Vishay Intertechnology, Inc.		3,384,368	$	35,875
				217,625
Internet Software & Services - 0.28%
Constant Contact, Inc.A		199,999		5,220
Ebix, Inc.B		34,137		947
Engility Holdings, Inc.		45,295		1,458
Netgear, Inc.A		190,814		7,899
				15,524
IT Consulting & Services - 1.18%
Acxiom Corp.A		418,683		9,261
CACI International, Inc., Class AA		90,846		8,816
Leidos Holdings, Inc.		37,494		1,971
Mantech International Corp., Class A		61,902		1,789
MoneyGram International, Inc.A		114,431		1,157
Science Applications International Corp.		73,948		3,391
Sykes Enterprises, Inc.A		294,160		8,531
SYNNEX Corp.		218,864		19,356
Syntel, Inc.A		175,602		8,260
Unisys Corp.A		157,609		2,112
				64,644
Semiconductor Equipment & Products - 3.62%
Advanced Energy Industries, Inc.A		136,170		3,851
Amkor Technology, Inc.A		399,922		2,488
Brooks Automation, Inc.		2,583,120		28,518
Cirrus Logic, Inc.A		115,555		3,563
Diodes, Inc.A		1,615,529		36,995
Fairchild Semiconductor International, Inc.A		1,563,090		26,072
Inphi Corp.A		235,347		7,006
IXYS Corp.		132,675		1,653
Kulicke & Soffa Industries, Inc.A		244,539		2,592
Microsemi Corp.		199,701		7,191
MKS Instruments, Inc.		236,595		8,338
Omnivision Technologies, Inc.A		67,216		1,941
ON Semiconductor Corp.A		855,316		9,408
Photronics, Inc.A		1,156,662		11,092
QLogic Corp.A		1,455,936		18,054
Rovi Corp.A		155,942		1,427
Semtech Corp.A		340,131		5,952
Teradyne, Inc.		603,345		11,777
Tessera Technologies, Inc.		50,496		1,766
Ultra Clean Holdings, Inc.A		59,225		289
Xcerra Corp.A		1,175,440		8,158
				198,131
Software - 1.72%
DST Systems, Inc.		22,695		2,772
FARO Technologies, Inc.A		586,439		19,816
Mentor Graphics Corp.		2,046,196		55,657
Synchronoss Technologies, Inc.A		154,902		5,449
Xura, Inc.A		413,786		10,709
				94,403
Total Information Technology				728,105
MATERIALS - 4.06%
Building Products - 0.05%
TopBuild Corp.A		106,468		2,995
Chemicals - 1.69%
A. Schulman, Inc.		84,794		3,043
American Vanguard Corp.		517,445		6,939
Axiall Corp.		124,583		2,523
Cabot Corp.		314,550		11,305
Calgon Carbon Corp.		252,065		4,336

	Shares		Fair Value
			(000’s)
Chemtura Corp.A		121,691	$	3,887
Innospec, Inc.		166,089		9,175
Intrepid Potash, Inc.		399,913		1,544
Kronos Worldwide, Inc.		280,010		2,212
Olin Corp.		166,940		3,202
PolyOne Corp.		563,780		18,852
Quaker Chemical Corp.		29,536		2,345
Scotts Miracle-Gro Co., Class A		242,152		16,020
Stepan Co.		129,048		6,831
				92,214
Construction Materials - 0.03%
Boise Cascade Co.A		51,365		1,537
Containers & Packaging - 0.10%
Owens-Illinois, Inc.A		265,399		5,719
Metals & Mining - 1.46%
Carpenter Technology Corp.		245,466		8,176
Century Aluminum Co.A B		1,152,027		4,170
Coeur d’Alene Mines Corp.		434,030		1,172
Commercial Metals Co.		440,851		6,335
Gibraltar Industries, Inc.A		466,021		11,800
Global Brass & Copper Holdings, Inc.		133,482		3,002
Haynes International, Inc.		121,929		4,810
Hecla Mining Co.		1,337,773		2,769
Horsehead Holding Corp.A B		1,065,055		3,025
Kaiser Aluminum Corp.		52,388		4,259
Materion Corp.		80,369		2,423
Noranda Aluminum Holding Corp.A		183,396		315
Pan American Silver Corp.		231,794		1,755
Steel Dynamics, Inc.		817,869		15,107
Stillwater Mining Co.A		1,002,069		9,359
Worthington Industries, Inc.		54,636		1,677
				80,154
Paper & Forest Products - 0.73%
Domtar Corp.		230,316		9,498
Glatfelter Co.		135,319		2,625
Louisiana-Pacific Corp.A		1,181,977		20,874
Neenah Paper, Inc.		41,731		2,813
Schweitzer-Mauduit International, Inc.		110,354		4,284
				40,094
Total Materials				222,713
TELECOMMUNICATION SERVICES - 0.40%
Diversified Telecommunication Services - 0.16%
EchoStar Corp., Class AA		159,848		7,166
IDT Corp., Class B		102,572		1,328
				8,494
Wireless Telecommunication Services - 0.24%
Iridium Communications, Inc.A B		341,748		2,806
Telephone & Data Systems, Inc.		364,143		10,429
				13,235
Total Telecommunication Services				21,729
UTILITIES - 5.20%
Electric - 2.85%
Allete, Inc.		279,973		14,057
El Paso Electric Co.		75,716		2,928
Empire District Electric Co.		165,957		3,742
Great Plains Energy, Inc.		1,782,301		49,014
Hawaiian Electric Industries, Inc.		420,812		12,313
IDACORP, Inc.		118,478		7,920
NorthWestern Corp.		206,269		11,178

See accompanying notes

12

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2015

	Shares		Fair Value
			(000’s)
NRG Energy, Inc.		312,339	$	4,026
PNM Resources, Inc.		287,923		8,096
Portland General Electric Co.		1,149,483		42,623
				155,897
Electric Utilities - 0.10%
Black Hills Corp.		123,565		5,657
Gas - 1.36%
Chesapeake Utilities Corp.		151,522		7,911
Energen Corp.		231,356		13,453
Laclede Group, Inc.		131,007		7,673
MDU Resources Group, Inc.		664,130		12,525
New Jersey Resources Corp.		180,141		5,707
One Gas, Inc.		159,054		7,768
Piedmont Natural Gas Co., Inc.		335,138		19,208
				74,245
Multi-Utilities - 0.76%
Avista Corp.		328,311		11,113
NiSource, Inc.		832,810		15,957
Westar Energy, Inc.		367,252		14,580
				41,650
Water - 0.13%
California Water Service Group		322,013		7,200
			��
Total Utilities				284,649
Total Common Stock (Cost $4,659,606)				5,185,044
SHORT-TERM INVESTMENTS - 5.21%
American Beacon U.S. Government Money Market Select Fund, Select Class F		15,000,000		15,000
JPMorgan U.S. Government Money Market Fund, Capital Class		270,555,836		270,556
Total Short-Term Investments (Cost $285,556)				285,556
SECURITIES LENDING COLLATERAL - 3.27%
DWS Government and Agency Securities Portfolio, Institutional Class		44,615,200		44,615
American Beacon U.S. Government Money Market Select Fund, Select ClassF		134,817,316		134,818
Total Securities Lending Collateral (Cost $179,433)				179,433
TOTAL INVESTMENTS - 103.12% (Cost $5,124,595)				5,650,033
LIABILITIES, NET OF OTHER ASSETS - (3.12%)				(171,082	)
TOTAL NET ASSETS - 100.00%			$	5,478,951

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, 2015.

^C  PLC - Public Limited Company.

^D  LLC - Limited Liability Company.

^E  REIT - Real Estate Investment Trust.

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

^G  Amount less than $500.

See accompanying notes

13

American Beacon Small Cap Value Fund^SM

Schedule of Investments

October 31, 2015

Futures Contracts Open on October 31, 2015:

Description	Type	Number of Contracts		Expiration Date	Contract Value		Unrealized Appreciation (Depreciation)
Russell 2000 Mini Index December Futures	Long		2,317	December 2015	$	268,378,110	$	2,605,803
					$	268,378,110	$	2,605,803

See accompanying notes

14

American Beacon Small Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2015 (in thousands, except share and per share amounts)

Assets:
Investments in unaffiliated securities, at fair value A C	$	5,500,215
Investments in affiliated securities, at fair value B		149,818
Deposit with brokers for futures contracts		12,190
Receivable for investments sold		333,885
Receivable for fund shares sold		7,953
Dividends and interest receivable		1,792
Prepaid expenses		58
Total assets		6,005,911
Liabilities:
Payable for investments purchased		25,442
Payable for fund shares redeemed		317,060
Payable under excess expense reimbursement plan (Note 2)		4
Payable upon return of securities loaned		179,433
Management and investment advisory fees payable		2,188
Administrative service and service fees payable		1,606
Transfer agent fees payable		114
Custody and fund accounting fees payable		64
Professional fees payable		58
Prospectus and shareholder reports fees payable		296
Trustee fees payable		40
Payable for variation margin from open futures contracts		590
Other liabilities		65
Total liabilities		526,960
Net assets	$	5,478,951
Analysis of Net Assets:
Paid-in-capital		4,693,597
Undistributed net investment income		34,045
Accumulated net realized gain		223,265
Unrealized appreciation of investments		525,438
Unrealized appreciation of futures contracts		2,606
Net assets	$	5,478,951

See accompanying notes

15

American Beacon Small Cap Value Fund^SM

Statement of Assets and Liabilities

October 31, 2015 (in thousands, except share and per share amounts)

Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		174,712,225
Y Class		10,297,808
Investor Class		30,297,390
Advisor Class		4,162,689
Retirement Class		598,889
A Class		2,328,430
C Class		513,023
AMR Class		505,282
Net assets (not in thousands):
Institutional Class	$	4,313,522,956
Y Class	$	251,360,287
Investor Class	$	723,044,801
Advisor Class	$	98,224,328
Retirement Class	$	13,816,806
A Class	$	54,815,183
C Class	$	11,718,580
AMR Class	$	12,447,638
Net asset value, offering and redemption price per share:
Institutional Class	$	24.69
Y Class	$	24.41
Investor Class	$	23.86
Advisor Class	$	23.60
Retirement Class	$	23.07
A Class	$	23.54
A Class (offering price)	$	24.98
C Class	$	22.84
AMR Class	$	24.64
A Cost of investments in unaffiliated securities	$	4,974,778
B Cost of investments in affiliated securities	$	149,817
C Fair value of securities on loan	$	175,312

See accompanying notes

16

American Beacon Small Cap Value Fund^SM

Statement of Operations

For the year ended October 31, 2015 (in thousands)

Investment income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	99,452
Dividend income from affiliated securities		2
Miscellaneous Income		2
Income derived from securities lending		4,836
Total investment income		104,292
Expenses:
Management and investment advisory fees (Note 2)		26,517
Administrative service fees (Note 2):
Institutional Class		12,611
Y Class		652
Investor Class		2,406
Advisor Class		305
Retirement Class		37
A Class		126
C Class		33
AMR Class		187
Transfer agent fees:
Institutional Class		710
Y Class		10
Investor Class		36
Advisor Class		7
Retirement Class		3
A Class		6
C Class		3
AMR Class		9
Custody and fund accounting fees		575
Professional fees		206
Registration fees and expenses		203
Service fees (Note 2):
Y Class		217
Investor Class		2,809
Advisor Class		254
Retirement Class		31
A Class		63
C Class		16
Distribution fees (Note 2):
Advisor Class		254
Retirement Class		62
A Class		105
C Class		109
Prospectus and shareholder report expenses		567
Trustee fees		312
Other expenses		294
Total expenses		49,735
Net recouped by Manager (Note 2)		7
Net expenses		49,742
Net investment income		54,550
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		394,532
Commission recapture (Note 3)		135
Foreign currency transactions		(1	)
Futures contracts		(1,031	)
Change in net unrealized appreciation or (depreciation) of:
Investments		(405,240	)
Foreign currency transactions		1
Futures contracts		(1,043	)
Net (loss) from investments		(12,647	)
Net increase in net assets resulting from operations	$	41,903
A Foreign taxes	$	114

See accompanying notes

17

American Beacon Small Cap Value Fund^SM

Statement of Changes in Net Assets (in thousands)

	Year Ended October 31, 2015			Year Ended October 31, 2014
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	54,550		$	33,922
Net realized gain (loss) from investments, commission recapture, foreign currency transactions, and futures contracts		393,635			654,969
Change in net unrealized appreciation or (depreciation) of investments, foreign currency transactions, and futures contracts		(406,282	)		(244,164	)
Net increase in net assets resulting from operations		41,903			444,727
Distributions to Shareholders:
Net investment income:
Institutional Class		(28,088	)		(17,234	)
Y Class		(1,184	)		(643	)
Investor Class		(2,646	)		(1,678	)
Advisor Class		(198	)		(160	)
Retirement Class		(2	)		(6	)
A Class		(70	)		(58	)
C Class		—			(1	)
AMR Class		(3,576	)		(3,813	)
Net realized gain from investments:
Institutional Class		(464,691	)		(306,261	)
Y Class		(21,977	)		(11,351	)
Investor Class		(100,257	)		(85,372	)
Advisor Class		(12,392	)		(8,358	)
Retirement Class		(1,430	)		(978	)
A Class		(3,740	)		(1,549	)
C Class		(1,223	)		(645	)
AMR Class		(43,926	)		(46,178	)
Net distributions to shareholders		(685,400	)		(484,285	)
Capital Share Transactions:
Proceeds from sales of shares		1,643,561			1,604,292
Reinvestment of dividends		664,480			472,992
Cost of shares redeemed		(1,780,813	)		(1,549,920	)
Redemption fees		—			1
Net increase in net assets from capital share transactions		527,228			527,365
Net increase (decrease) in net assets		(116,269	)		487,807
Net Assets:
Beginning of period		5,595,220			5,107,413
End of Period *	$	5,478,951		$	5,595,220
*Includes undistributed (or overdistribution of) net investment income	$	34,045		$	24,379

See accompanying notes

18

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

1. Organization

American Beacon Funds (the “Trust”), 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. As of October 31, 2015, the Trust consists of thirty-two active series, one of which is presented in this filing (the “Fund”): American Beacon Small Cap Value Fund. The remaining thirty-one active series are reported in separate filings.

Effective April 30, 2015, American Beacon Advisors, Inc. (the “Manager”) became a wholly-owned subsidiary of Astro AB Borrower, Inc., which is indirectly owned by investment funds affiliated with Kelso & Company, L.P. and Estancia Capital Management, LLC, two prominent private equity firms. Prior to April 30, the Manager was a wholly-owned subsidiary of Lighthouse Holdings, Inc. which was indirectly owned by investment funds affiliated with Pharos Capital Group, LLC and TPG Capital, L.P., two leading private equity firms.

Class Disclosure

The Retirement and AMR Classes of the Fund were closed to new investors on September 22, 2015.

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, which may include a front-end sales charge and a contingent deferred sales charge (“CDSC”)
C Class	General public and investors investing through an intermediary with applicable sales charges, which may include a CDSC
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.

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 and the Trust. 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. The Fund pays the unaffiliated investment advisors hired to direct investment activities of the Fund. Management fees paid during the year ended October 31, 2015 were as follows (dollars in thousands):

Management Fee Rate		Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
	0.46%	$	26,517	$	23,098	$	3,419

19

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

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 included in income derived from securities lending and management and investment advisory fees on the Statement of Operations. During the year ended October 31, 2015, securities lending fees paid to the Manager were $508,123.

Administration Agreement

The Manager and the Trust entered into an Administration Agreement which obligates the Manager to provide or oversee administrative services to the Fund. As compensation for performing the duties required under the Administration Agreement, the Manager receives an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, Advisor, Retirement, 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 separate 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.

Brokerage Commissions

Affiliated entities of an investment advisor to the Fund received net commissions on purchases and sales of the Fund’s portfolio securities totaling $3,048 for the year ended October 31, 2015.

Investment in Affiliated Funds

The Fund may invest in the American Beacon Money Market Select Fund (the “MM 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 management and administration fees totaling 0.10% of the average daily net assets of the Select Funds. During the year ended October 31, 2015, the Manager earned fees from the Select Funds totaling $16,087 on the Fund’s direct investment in the Select Funds and $144,626 from the Fund’s securities lending collateral invested in the Select Funds.

20

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

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. This program provides an alternative credit facility allowing the Fund to borrow from other participating Funds. During the year ended October 31, 2015, the Fund participated as a lender and loaned on average $15,866,412 for 3 days at an average rate of 0.77% with interest charges of $1,013.

Expense Reimbursement Plan

The Manager agreed to reimburse the Fund to the extent that total annual fund operating expenses exceeded a Fund’s expense cap. For the year ended October 31, 2015, the Manager waived or reimbursed expenses as follows:

		Expense Cap				Reimbursed or (Recovered) Expenses
Fund	Class	11/1/14 to 2/27/15			2/28/15 to 10/31/15				Expiration
Small Cap Value	A		1.22	%	N/A	$	(6,035	)		2018
Small Cap Value	C		1.97	%	N/A		(906	)		2018

Of these amounts, $3,955 was receivable from the Manager at October 31, 2015. 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. The carryover of excess expenses potentially reimbursable to the Manager are as follows:

Fund	Recovered Expenses		Excess Expense Carryover		Expired Carryover Expenses		Expiration of Reimbursed Expenses
Small Cap Value	$	4,068	$	—	$	932		2015
Small Cap Value		2,549		672		—		2016
Small Cap Value		324		170		—		2017

Sales Commissions

The Fund’s distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. For the year ended October 31, 2015, Foreside collected $7,698 from the sale of Class A Shares.

A CDSC of 0.50% will be deducted with respect to Class A Shares on certain purchases of $1,000,000 or more that are redeemed in whole or part within 18 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 0.50% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. During the year ended October 31, 2015, there were no CDSC fees collected for Class A Shares.

A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Prospectus. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended October 31, 2015, $797 in CDSC fees were collected for the Fund.

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, including exchange traded funds (“ETFs”) 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.

21

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

Investments in open-end mutual funds are valued at the closing net asset value (“NAV”) per share of the mutual fund on the day of valuation.

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.

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.

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 generally 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.

22

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

The Fund’s investments are summarized by level based on the inputs used to determine their values. U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) also requires all transfers between any levels to be disclosed. The end of period timing recognition has been adopted for the transfers between levels of each Fund’s assets and liabilities. During the year ended October 31, 2015, there were no transfers between levels. As of October 31, 2015, the investments were classified as described below (in thousands):

	Level 1		Level 2		Level 3		Total
Common Stock*	$	5,185,044	$	—	$	—	$	5,185,044
Short-Term Investments – Money Market Funds		285,556		—		—		285,556
Securities Lending Collateral invested in Money Market Funds		179,433		—		—		179,433
Total Investments in Securities	$	5,650,033	$	—	$	—	$	5,650,033
Financial Derivative Instruments
Futures Contracts	$	2,606	$	—	$	—	$	2,606

* Refer to the Schedule of Investments for industry information.

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. To the extent necessary to fully distribute capital gains, the Fund also designates earnings and profits distributed to shareholders on the redemption of shares.

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

23

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

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.

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.

Other Investment Company Securities and Other Exchange Traded Products

The Fund may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Fund may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, a Fund becomes a shareholder of that investment company. As a result, Fund shareholders indirectly will bear a Fund’s proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses Fund shareholders directly bear in connection with the Fund’s own operations. These other fees and expenses are reflected as Acquired Fund Fees and Expenses and are included in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.

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 a portion 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.

For the year ended October 31, 2015, the Fund entered into future contracts primarily for return enhancement, hedging and exposing cash to markets.

24

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

The Fund’s futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.

Average Futures Contracts Outstanding
Fund	Year ended October 31, 2015
Small Cap Value Fund		1,906

The following is a summary of the Fund’s derivative financial instruments categorized by risk exposure (in thousands) ^(1) (2):

Fair Values of financial derivative instruments not accounted for as hedging instruments as of October 31, 2015:

Statement of Assets and Liabilities	Derivatives		Fair Value
Payable for variation margin from open futures contracts(2)		Equity Contracts	$	2,606

The effect of financial derivative instruments not accounted for as hedging instruments during the year ended October 31, 2015:

Statement of Operations	Derivatives		Balance
Net realized gain (loss) from futures contracts		Equity Contracts	$	(1,030	)
Change in net unrealized appreciation or (depreciation) from futures contracts		Equity Contracts		(1,043	)

⁽¹⁾  See Note 3 in the Notes to Financial Statements for additional information.

⁽²⁾  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. Principal Risks

In the normal course of business the Fund trades financial instruments and enters into financial transactions where risk of potential loss exists. Security values fluctuate (market risk) and may decline due to factors affecting securities markets in general, particular industries represented in the securities markets or conditions specifically related to a particular company. Failure of the other party to a transaction to perform (credit and counterparty risk), for example by not making principal and interest payments when due, reduces the value of the issuer’s debt and could reduce the Fund’s income. Similar to credit risk, the Fund may be exposed to counterparty risk, or the risk that an institution or other entity with which the Fund has unsettled or open transactions will fail to make required payments or otherwise comply with the terms of the instrument, transaction or contract. The potential loss could exceed the value of the financial assets recorded in the financial statements. Some of the Fund’s investments may be illiquid and the Fund may not be able to vary the portfolio investments in response to changes in economic and other conditions. If a Fund is required to liquidate all or a portion of its investments quickly, the Fund may realize significantly less than the value at which it previously recorded those investments.

Market Risks

The Fund’s investments in financial derivatives and other financial instruments expose the Fund to various risks such as, but not limited to, interest rate, foreign currency and equity risks.

Interest rate risk is the risk that fixed income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed income securities held by the Fund is likely to decrease. A nominal interest rate can be described as the sum of a real interest rate and an expected inflation rate. Fixed income securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than securities with shorter durations. Duration is useful primarily as a measure of the sensitivity of a fixed income’s market price to interest rate (i.e. yield) movements.

If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, they will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions,

25

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign governments, central banks or supranational entities such as the International Monetary Fund, or by the imposition of currency controls or other political developments in the United States or abroad. As a result, the Fund’s investments in foreign currency denominated securities may reduce the returns of the Fund.

The fair values of equities, such as common stocks and preferred securities or equity related investments such as futures, may decline due to general market conditions which are not specifically related to a particular company, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors which affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Equity securities and equity related investments generally have greater market price volatility than fixed income securities.

Counterparty Credit Risk

A derivative contract may suffer a mark to market loss if the value of the contract decreases due to an unfavorable change in the market rates or values of the underlying instrument. Losses can also occur if the counterparty does not perform under the contract.

With exchange traded futures, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, a Fund does not have a contractual right of offset against a clearing broker or clearinghouse in the event of a default (including the bankruptcy or insolvency) of the clearing broker or clearinghouse. Additionally, credit risk exists in exchange traded futures with respect to initial and variation margin that is held in a clearing broker’s customer accounts. While clearing brokers are required to segregate customer margin from their own assets, in the event that a clearing broker becomes insolvent or goes into bankruptcy and at that time there is a shortfall in the aggregate amount of margin held by the clearing broker for all its clients, typically the shortfall would be allocated on a pro rata basis across all the clearing broker’s customers, potentially resulting in losses to the Funds.

Cash collateral that has been pledged to cover obligations of the Fund and cash collateral received from the counterparty, if any, is reported separately on the Statement of Assets and Liabilities as deposits with brokers for futures contracts and payable to brokers for futures contracts, respectively. Non-cash collateral pledged by the Fund, if any, is noted in the Schedule of Investments. Generally, the amount of collateral due from or to a party is determined at the close of business of the Fund and additional required collateral is delivered to/pledged by the Fund on the next business day. To the extent amounts due to the Fund from its counterparties are not fully collateralized, contractually or otherwise, the Fund bears the risk of loss from counterparty non-performance. The Fund attempts to mitigate counterparty risk by only entering into agreements with counterparties that it believes have the financial resources to honor their obligations and by monitoring the financial stability of those counterparties.

Offsetting Assets and Liabilities

The Fund is a party to enforceable master netting agreements between brokers and counterparties such as International Swaps and Derivatives Association (“ISDA”) agreements which provide for the right to offset under certain circumstances. The Fund employs multiple money managers and counterparties and has elected not to offset qualifying financial and derivative instruments on the Statement of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements can only be netted

26

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, October 31, 2015:

Offsetting of Financial Assets and Derivative Assets as of October 31, 2015:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities
Securities on Loan	$	175,312	$	—	$	175,312
	$	175,312	$	—	$	175,312

Offsetting of Financial Liabilities and Derivative Liabilities as of October 31, 2015:

Description	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities
Futures Contracts (1)	$	590	$	—	$	590
	$	590	$	—	$	590

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of October 31, 2015:

	Net amount of Assets Presented in the Statement of Assets and Liabilities			Gross Amounts Not Offset in the Statement of Assets and Liabilities
Counterparty				Financial Instruments		Cash Collateral Received(2)			Net Amount
Barclays Capital, Inc.	$	14,786		$	—	$	(14,786	)	$	—
BNP Paribas Prime Brokerage		5,201			—		(5,201	)		—
Citigroup Global Markets, Inc.		9,355			—		(9,355	)		—
Credit Suisse Securities LLC		5,714			—		(5,714	)		—
Goldman Sachs & Co.		13,293			—		(13,293	)		—
Goldman Sachs & Co. (1)		(590	)		—		—			(590	)
JPMorgan Clearing Corp.		4,949			—		(4,949	)		—
Merrill Lynch, Pierce, Fenner & Smith, Inc.		5,455			—		(5,455	)		—
MS Securities Services Inc		53,649			—		(53,649	)		—
National Financial Services Corp (NFS)		21,816			—		(21,816	)		—
Scotia Capital USA Inc.		944			—		(944	)		—
SG Americas Securities, LLC		3,210			—		(3,210	)		—
UBS Securities LLC		36,940			—		(36,940	)		—
Total:	$	174,772		$	—	$	(175,312	)	$	(590	)

⁽¹⁾  The securities presented here within are not subject to Master Netting Agreements. As such, this is disclosed for informational purposes only.

⁽²⁾  Excess of collateral received from the individual counterparty is not shown for financial reporting purposes. Collateral with a value of $179,433 has been received in connection with securities lending transactions.

7. Federal Income and Excise Taxes

It is the policy of the Fund to qualify as a regulated investment company (“RIC”), 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, 2015 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 Fund also utilizes earnings and profits distributed to shareholders on redemptions of shares as part of the dividends paid deduction.

27

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

A Fund may be subject to taxes imposed by countries in which it invests. Such taxes are generally based on returns of income earned or gains realized or repatriated. Taxes are accrued and applied to net investment income, net realized capital gains and net unrealized appreciation or depreciation, as applicable, as the income is earned or capital gains are recorded.

The tax character of distributions paid were as follows (in thousands):

	Year Ended October 31, 2015		Year Ended October 31, 2014
Distributions paid from:
Ordinary income*
Institutional Class	$	103,614	$	99,903
Y Class		4,756		3,707
Investor Class		18,940		24,722
Advisor Class		2,212		2,416
Retirement Class		234		270
A Class		678		476
C Class		199		174
AMR Class		10,714		16,278
Long-term capital gain
Institutional Class		389,165		223,593
Y Class		18,406		8,287
Investor Class		83,963		62,328
Advisor Class		10,378		6,102
Retirement Class		1,197		714
A Class		3,132		1,131
C Class		1,024		471
AMR Class		36,788		33,713
Total distributions paid	$	685,400	$	484,285

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

As of October 31, 2015, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):

Cost basis of investments for federal income tax purposes	$	5,151,138
Unrealized appreciation		864,648
Unrealized depreciation		(365,753	)
Net unrealized appreciation or (depreciation)		498,895
Undistributed ordinary income		29,291
Accumulated long-term gain or (loss)		257,168
Other temporary differences		—
Distributable earnings or (deficits)	$	785,354

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 and publicly traded partnerships.

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.

Gains on redemptions in-kind for Small Cap Value Fund, of approximately $68,031,937, were included in net realized gain on investments in the Statement of Operations for the year ended October 31, 2015, and were not recognized for Federal income tax purposes.

28

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

Accordingly, the following amounts represent current year permanent differences derived from reclassifications of foreign currency, reclassifications of dividends, reclassifications of income from real estate investment securities and publicly traded partnerships, utilization of earnings and profits distributed to shareholders on redemption of shares, and net realized gains on redemptions in-kind as of October 31, 2015 (in thousands):

Paid-in-capital	$	140,930
Undistributed net investment income (loss)		(9,120	)
Accumulated net realized gain (loss)		(131,810	)
Unrealized appreciation or (depreciation) of investments and futures contracts		—

For the year ended October 31, 2015 the Fund did not have capital loss carryovers.

8. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the year ended October 31, 2015 were $2,593,669 and $2,790,975, respectively (in thousands).

A summary of the Fund’s transactions in the Select Funds for the year ended October 31, 2015 is set forth below (in thousands):

Type of Investment	Affiliate	October 31, 2014 Shares/Fair Value		Purchases		Sales		October 31, 2015 Shares/Fair Value		Dividend Income
Direct	USG Select Fund	$	20,000	$	—	$	5,000	$	15,000	$	2
Securities Lending	USG Select Fund		180,835		776,495		822,513		134,817		N/A

9. Securities Lending

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

To the extent that a loan is collateralized by cash, such cash collateral shall be invested by the securities lending agent (the “Agent”) in money market mutual funds, and other short-term investments, provided the investments meet certain quality and diversification requirements. Securities 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. The Fund, the Agent, and the Manager retained 80%, 10% 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.

29

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

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, 2015, 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
$	175,312	$	—	$	179,433

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

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

10. Capital Share Transactions

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

For the Year Ended October 31, 2015

	Institutional Class						Y Class						Investor Class						Advisor Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		47,133		$	1,203,810			5,301		$	132,321			7,676		$	189,080			1,480		$	36,026
Reinvestment of dividends		19,188			477,005			841			20,682			4,173			100,562			528			12,590
Shares redeemed		(35,606	)		(908,703	)		(2,763	)		(68,782	)		(13,149	)		(322,523	)		(1,692	)		(40,626	)
Net increase (decrease) in shares outstanding		30,715		$	772,112			3,379		$	84,221			(1,300	)	$	(32,881	)		316		$	7,990

	Retirement Class						A Class						C Class						AMR Class
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		281		$	6,658			1,730		$	42,130			167		$	3,970			1,164		$	29,566
Reinvestment of dividends		61			1,432			154			3,671			45			1,036			1,919			47,502
Shares redeemed		(200	)		(4,788	)		(666	)		(16,043	)		(70	)		(1,656	)		(16,861	)		(417,692	)
Net increase (decrease) in shares outstanding		142		$	3,302			1,218		$	29,758			142		$	3,350			(13,778	)	$	(340,624	)

30

American Beacon Small Cap Value Fund^SM

Notes to Financial Statements

October 31, 2015

For the Year Ended October 31, 2014

	Institutional Class							Y Class						Investor Class						Advisor Class
	Shares			��	Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		39,356			$	1,080,664			4,630		$	125,758			8,267		$	219,191			1,929		$	50,599
Redemption fees		—				1			—			—			—			—			—			—
Reinvestment of dividends		11,848				315,751			397			10,475			3,287			85,208			331			8,518
Shares redeemed		(29,530	)			(805,468	)		(2,525	)		(68,692	)		(14,208	)		(376,828	)		(1,667	)		(43,450	)
Net increase (decrease) in shares outstanding		21,674			$	590,948			2,502		$	67,541			(2,654	)	$	(72,429	)		593		$	15,667
	Retirement Class							A Class						C Class						AMR Class
	Shares				Amount			Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		224			$	5,786			1,516		$	39,512			166		$	4,278			2,830		$	78,504
Redemption fees		—				—			—			—			—			—			—			—
Reinvestment of dividends		39				984			58			1,480			23			585			1,883			49,991
Shares redeemed		(198	)			(5,071	)		(960	)		(25,887	)		(58	)		(1,497	)		(8,372	)		(223,027	)
Net increase (decrease) in shares outstanding		65			$	1,699			614		$	15,105			131		$	3,366			(3,659	)	$	(94,532	)

11. Subsequent Events

On September 21, 2015 the Manager announced the Board’s approval of a plan to liquidate and terminate the AMR Class of the Fund. On December 15, 2015 the AMR Class was closed. At the same Board meeting, the Board approved a plan to terminate the Retirement Class on or about January 15, 2016. The shares in the Retirement Class will be exchanged for those of the Advisor Class of the Fund on January 15, 2016.

31

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Year Ended October 31,
	2015			2014C			2013			2012			2011A
Net asset value, beginning of period	$	27.80		$	28.04		$	21.04		$	18.75		$	17.84
Income from investment operations:
Net investment income (loss)		0.24			0.17			0.25			0.17			0.08
Net gains (losses) from investments (both realized and unrealized)		0.02			2.18			7.60			2.20			0.92
Total income (loss) from investment operations		0.26			2.35			7.85			2.37			1.00
Less distributions:
Dividends from net investment income		(0.19	)		(0.14	)		(0.27	)		(0.08	)		(0.09	)
Distributions from net realized gains		(3.18	)		(2.45	)		(0.58	)		—			—
Total distributions		(3.37	)		(2.59	)		(0.85	)		(0.08	)		(0.09	)
Net asset value, end of period	$	24.69		$	27.80		$	28.04		$	21.04		$	18.75
Total return B		0.87	%		8.78	%		38.59	%		12.71	%		5.57	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	4,313,523		$	4,002,884		$	3,430,107		$	2,189,761		$	1,843,285
Ratios to average net assets:
Expenses before reimbursements		0.81	%		0.80	%		0.82	%		0.82	%		0.82	%
Expenses, net of reimbursements		0.81	%		0.80	%		0.82	%		0.82	%		0.82	%
Net investment income (loss), before reimbursements		0.99	%		0.67	%		1.01	%		0.87	%		0.47	%
Net investment income (loss), net of reimbursements		0.99	%		0.67	%		1.01	%		0.87	%		0.47	%
Portfolio turnover rate		47	%		73	%		48	%		51	%		59	%

^A  On November 30, 2010, Metropolitan West Capital Management LLC was terminated and ceased managing assets of the Small Cap Value Fund.

^B Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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 On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow, Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund.

32

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

Y Class															Investor Class															Advisor Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,
2015			2014C			2013			2012			2011A			2015			2014C			2013			2012			2011A			2015			2014C			2013			2012			2011A
$	27.52		$	27.81		$	20.89		$	18.66		$	17.76		$	26.96		$	27.27		$	20.47		$	18.23		$	17.40		$	26.69		$	27.06		$	20.35		$	18.15		$	17.33
	0.23			0.18			0.22			0.15			0.06			0.18			0.10			0.18			0.11			0.02			0.13			0.06			0.14			0.06			(0.01	)
	0.01			2.12			7.55			2.19			0.92			(0.02	)		2.09			7.38			2.13			0.88			0.01			2.07			7.34			2.14			0.89
	0.24			2.30			7.77			2.34			0.98			0.16			2.19			7.56			2.24			0.90			0.14			2.13			7.48			2.20			0.88
	(0.17	)		(0.14	)		(0.27	)		(0.11	)		(0.08	)		(0.08	)		(0.05	)		(0.18	)		—			(0.07	)		(0.05	)		(0.05	)		(0.19	)		—			(0.06	)
	(3.18	)		(2.45	)		(0.58	)		—			—			(3.18	)		(2.45	)		(0.58	)		—			—			(3.18	)		(2.45	)		(0.58	)		—			—
	(3.35	)		(2.59	)		(0.85	)		(0.11	)		(0.08	)		(3.26	)		(2.50	)		(0.76	)		—			(0.07	)		(3.23	)		(2.50	)		(0.77	)		—			(0.06	)
$	24.41		$	27.52		$	27.81		$	20.89		$	18.66		$	23.86		$	26.96		$	27.27		$	20.47		$	18.23		$	23.60		$	26.69		$	27.06		$	20.35		$	18.15
	0.79	%		8.67	%		38.45	%		12.58	%		5.49	%		0.50	%		8.40	%		38.11	%		12.31	%		5.20	%		0.41	%		8.22	%		37.93	%		12.12	%		5.07	%
$	251,360		$	190,416		$	122,850		$	38,982		$	29,234		$	723,045		$	851,732		$	934,041		$	748,550		$	843,400		$	98,224		$	102,682		$	88,033		$	44,731		$	33,032
	0.90	%		0.89	%		0.91	%		0.91	%		0.94	%		1.15	%		1.16	%		1.18	%		1.18	%		1.17	%		1.31	%		1.29	%		1.31	%		1.32	%		1.32	%
	0.90	%		0.89	%		0.91	%		0.91	%		0.94	%		1.15	%		1.16	%		1.18	%		1.18	%		1.17	%		1.31	%		1.29	%		1.31	%		1.32	%		1.32	%
	0.90	%		0.58	%		0.74	%		0.77	%		0.30	%		0.67	%		0.33	%		0.73	%		0.51	%		0.12	%		0.51	%		0.18	%		0.46	%		0.35	%		(0.02	)%
	0.90	%		0.58	%		0.74	%		0.77	%		0.30	%		0.67	%		0.33	%		0.73	%		0.51	%		0.12	%		0.51	%		0.18	%		0.46	%		0.35	%		(0.02	)%
	47	%		73	%		48	%		51	%		59	%		47	%		73	%		48	%		51	%		59	%		47	%		73	%		48	%		51	%		59	%

33

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Retirement Class
	Year Ended October 31,
	2015			2014C			2013			2012			2011A
Net asset value, beginning of period	$	26.19		$	26.63		$	20.05		$	18.01		$	17.23
Income from investment operations:
Net investment income (loss)		0.08			(0.01	)		0.09			0.06			0.02
Net gains (losses) from investments (both realized and unrealized)		(0.02	)		2.03			7.21			2.05			0.81
Total income (loss) from investment operations		0.06			2.02			7.30			2.11			0.83
Less distributions:
Dividends from net investment income		0.00			(0.01	)		(0.14	)		(0.07	)		(0.05	)
Distributions from net realized gains		(3.18	)		(2.45	)		(0.58	)		—			—
Total distributions		(3.18	)		(2.46	)		(0.72	)		(0.07	)		(0.05	)
Net asset value, end of period	$	23.07		$	26.19		$	26.63		$	20.05		$	18.01
Total return B		0.10	%		7.95	%		37.52	%		11.77	%		4.79	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	13,817		$	11,974		$	10,446		$	6,366		$	1,817
Ratios to average net assets:
Expenses before reimbursements or recoupments		1.57	%		1.57	%		1.60	%		1.63	%		1.62	%
Expenses, net of reimbursements or recoupments		1.57	%		1.57	%		1.60	%		1.63	%		1.62	%
Net investment income (loss), before reimbursements or recoupments		0.24	%		(0.09	)%		0.29	%		0.02	%		(0.35	)%
Net investment income (loss), net of reimbursements or recoupments		0.24	%		(0.09	)%		0.29	%		0.02	%		(0.35	)%
Portfolio turnover rate		47	%		73	%		48	%		51	%		59	%

^A On November 30, 2010, Metropolitan West Capital Management LLC was terminated and ceased managing assets of the Small Cap Value Fund.

^B Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP 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 On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow, Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund.

34

American Beacon Small Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

A Class															C Class															AMR Class
Year Ended October 31,															Year Ended October 31,															Year Ended October 31,
2015			2014C			2013			2012			2011 A			2015			2014C			2013			2012			2011 A			2015			2014C			2013			2012			2011 A
$	26.63		$	27.03		$	20.35		$	18.19		$	17.39		$	26.05		$	26.60		$	20.07		$	18.04		$	17.37		$	27.74		$	27.99		$	21.00		$	18.71		$	17.76
	0.13			0.11			0.16			0.08			0.03			0.03			(0.07	)		0.03			(0.03	)		(0.04	)		21.06			0.37			0.23			0.34			0.13
	0.02			2.03			7.30			2.12			0.83			(0.06	)		1.97			7.17			2.06			0.74			(20.72	)		2.04			7.66			2.08			0.92
	0.15			2.14			7.46			2.20			0.86			(0.03	)		1.90			7.20			2.03			0.70			0.34			2.41			7.89			2.42			1.05
	(0.06	)		(0.09	)		(0.20	)		(0.04	)		(0.06	)		—			0.00			(0.09	)		—			(0.03	)		(0.26	)		(0.20	)		(0.32	)		(0.13	)		(0.10	)
	(3.18	)		(2.45	)		(0.58	)		—			—			(3.18	)		(2.45	)		(0.58	)		—			—			(3.18	)		(2.45	)		(0.58	)		—			—
	(3.24	)		(2.54	)		(0.78	)		(0.04	)		(0.06	)		(3.18	)		(2.45	)		(0.67	)		—			(0.03	)		(3.44	)		(2.65	)		(0.90	)		(0.13	)		(0.10	)
$	23.54		$	26.63		$	27.03		$	20.35		$	18.19		$	22.84		$	26.05		$	26.60		$	20.07		$	18.04		$	24.64		$	27.74		$	27.99		$	21.00		$	18.71
	0.45	%		8.30	%		37.83	%		12.11	%		4.92	%		(0.31	)%		7.46	%		36.88	%		11.25	%		4.06	%		1.18	%		9.02	%		38.95	%		13.00	%		5.85	%
$	54,815		$	29,570		$	13,418		$	4,064		$	1,822		$	11,719		$	9,676		$	6,396		$	2,330		$	1,106		$	12,448		$	396,286		$	502,122		$	306,545		$	338,723
	1.21	%		1.27	%		1.35	%		1.44	%		1.57	%		1.97	%		2.03	%		2.09	%		2.21	%		2.60	%		0.55	%		0.54	%		0.56	%		0.56	%		0.56	%
	1.22	%		1.27	%		1.32	%		1.34	%		1.57	%		1.98	%		2.03	%		2.07	%		2.10	%		2.60	%		0.55	%		0.54	%		0.56	%		0.56	%		0.56	%
	0.56	%		0.19	%		0.30	%		0.21	%		(0.32	)%		(0.17	)%		(0.56	)%		(0.41	)%		(0.54	)%		(1.36	)%		1.28	%		0.94	%		1.26	%		1.14	%		0.72	%
	0.54	%		0.20	%		0.34	%		0.32	%		(0.32	)%		(0.17	)%		(0.56	)%		(0.39	)%		(0.43	)%		(1.36	)%		1.28	%		0.94	%		1.26	%		1.14	%		0.72	%
	47	%		73	%		48	%		51	%		59	%		47	%		73	%		48	%		51	%		59	%		47	%		73	%		48	%		51	%		59	%

35

American Beacon Funds^SM

Privacy Policy and Federal Tax Information

October 31, 2015 (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

Certain tax information regarding the Fund is required to be provided to shareholders based upon the Fund’s income and distribution for the taxable year ended October 31, 2015. The information and distributions reported herein may differ from information and distribution taxable to the shareholders for the calendar year ended December 31, 2015.

The Fund designated the following items with regard to distributions paid during the year ended December 31, 2014. All designations are based on financial information available as of this annual report and, accordingly, are subject to change. For each item, it is the intention of the Fund to designate the maximum amount permitted under the Internal Revenue Code of 1986, as amended, and the regulations there under.

Corporate Dividends Received Deduction	76.98	%
Qualified Dividend Income	100.00	%

The Small Cap Value Fund designated $609,876,788 as long term capital gains distributions and $105,583,994 as short-term capital gain distributions for the year ended October 31, 2015.

Shareholders will receive notification in January 2016 of the applicable tax information necessary to prepare their 2015 income tax returns.

36

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

At an in-person meeting held on November 12, 2014, telephonic meetings held on November 26, 2014 and December 6, 2014 and an in-person meeting held on December 10, 2014 (collectively, the “Board Meetings”), the Board of Trustees (“Board”) considered the approval of:

(1) a new Management Agreement (“New Management Agreement”) among American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”) on behalf of the American Beacon Small Cap Value Fund (“Fund”); and

(2) new Investment Advisory Agreements among the Manager, the Trust, on behalf of the Fund and each of Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”), Brandywine Global Investment Management, LLC (“Brandywine”), The Boston Company Asset Management, LLC (“TBCAM”), Hotchkis and Wiley Capital Management, LLC (“Hotchkis”), Dreman Value Management, LLC (“Dreman”), and Hillcrest Asset Management, LLC (“Hillcrest”).

Collectively, the new Investment Advisory Agreements are hereinafter referred to as the “New Advisory Agreements,” and Barrow, Brandywine, TBCAM, Hotchkis, Dreman and Hillcrest are hereinafter referred to as the “Sub-Advisors.”

The Board meetings were held for the Trustees to consider the New Management Agreement and New Advisory Agreements (“New Agreements”) because, on November 20, 2014, Lighthouse Holdings Parent, Inc. (“LPHI”), the indirect parent company of the Manager, entered into an Agreement and Plan of Merger pursuant to which LHPI agreed to be acquired by Kelso Investment Associates VIII, L.P., KEP VI, LLC and Estancia Capital Partners L.P., investment funds affiliated with Kelso & Company, L.P. (“Kelso”) and Estancia Capital Management, LLC (“Estancia”) (collectively, the “Purchasers”), which are private equity firms (“Transaction”). As required by the Investment Company Act of 1940, as amended (“1940 Act”), the current Management Agreement (“Current Management Agreement”) among the Manager and the Trust on behalf of the Fund and the current Investment Advisory Agreements (“Current Advisory Agreements”) among the Manager, the Trust, on behalf of the Fund, and each of Barrow, Brandywine, TBCAM, Hotchkis, Dreman and Hillcrest provided for their automatic termination in the event of an assignment. The Transaction was deemed an “assignment” under the 1940 Act. As a result, the Current Management Agreement and each Current Advisory Agreement (“Current Agreements”) were deemed to have automatically terminated upon the closing of the Transaction. (The Transaction closed on April 30, 2015).

The Board focused on the effect that the Transaction would have on the Manager and the Fund. Additionally, the Board considered that it had requested and evaluated the information relevant to the renewal of the Current Management Agreement and Current Advisory Agreements with respect to Barrow, Brandywine, TBCAM, Hotchkis and Dreman at in-person meetings held in May and June 2014. The Board also considered that it had requested and evaluated the information relevant to the initial approval of the Current Advisory Agreement with respect to Hillcrest at in-person meetings held in June and August 2014. The Manager represented to the Board that there had been no material changes or developments relating to the Manager or any of the Sub-Advisors since the May, June and August 2014 meetings, other than the changes or developments subsequently reported to the Board or discussed in the due diligence materials submitted to the Trustees in connection with the Transaction. In light of the proximity of the Board’s consideration of the renewal or approval of the Current Agreements, and the Board’s ongoing due diligence review in connection with the Transaction, the Board determined that it was not necessary to repeat certain aspects of the review conducted in connection with the approvals in the past year.

In connection with the Board Meetings, the Trustees received and evaluated such information as they deemed necessary to their consideration of the New Agreements. The information requested on behalf of the Board included, among other information, the following:

• a description of the Transaction, the effect of the Transaction on the Manager, the Trust and the Board, and any proposed changes to the Trust, its service providers, the Fund’s fee structures, fee waivers, and other information;

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

• information regarding the financial resources of the Purchasers and the Manager’s capital structure after the Transaction, including confirmation that the Manager’s financial condition would not raise concerns that the Manager would be unable to continue providing the same scope and quality of services to the Fund;

• information regarding the Manager’s due diligence, bidding and selection process with respect to the Purchasers;

• information regarding the structure of the relationship between Kelso and Estancia and the role that each would assume in advance of and after the Closing;

• information regarding each Purchaser’s ownership structure and key personnel, including information regarding affiliations of the Purchaser and the Manager after the Transaction;

• information regarding each Purchaser’s asset management experience, including the experience of the Purchasers’ key personnel relating to the management of investment companies registered under the 1940 Act;

• the Purchasers’ business plans with respect to the Manager after the Transaction;

• information regarding the extent to which the Purchasers expect to be involved in the Manager’s day-to-day operations and the persons to whom the Manager’s key personnel will report;

• information regarding any anticipated impact that the Transaction might have on the Manager’s compliance activities or the resources available to the Fund’s Chief Compliance Officer;

• a discussion of any potential material changes to the Current Agreements;

• a description of any expected changes in distribution or marketing efforts and strategies for the Fund as a result of the Transaction;

• information regarding whether the Purchasers or the Manager anticipated proposing any changes to the membership of the Board;

• a discussion of the length of the Purchasers’ anticipated ownership of the Manager and the expected duration of the investment funds financing the Transaction;

• information regarding the ownership and investment of management personnel in the Manager;

37

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

• information regarding the Manager’s employee equity incentive plan after the Closing;

• a summary of any material past, pending or anticipated litigation or regulatory proceedings involving the Purchasers, or their personnel;

• verification of the continuation of the Manager’s insurance coverage after the Transaction with regard to the services provided to the Fund; and

• in-person presentations by and discussions with the Manager and representatives of the Purchasers regarding the Transaction.

The Board also considered information that had been provided to the Board by the Manager and the Sub-Advisors for the May, June and August 2014 meetings in connection with the renewal of the Current Agreements.

Provided below is an overview of the primary factors the Trustees considered at the Board Meetings. The Board did not identify any particular information that was most relevant to its consideration to approve the New Agreements, and each Trustee may have afforded different weight to the various factors. In connection with the approval process for the New Agreements, the Trustees received advice from their legal counsel detailing the Board’s responsibilities pertaining thereto. Legal counsel to the non-interested Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of the New Agreements. Based on its evaluation, the Board unanimously concluded that the terms of the New Agreements were reasonable and fair and that the approval of the New Agreements was in the best interests of the Fund and its shareholders.

In determining whether to approve the New Agreements on December 10, 2014, the Trustees considered the best interests of the Fund. The Board considered the Fund’s investment management and sub-advisory relationships separately. In each instance, the Board considered its review of the Current Agreements in May, June and August 2014, and the information received in November and December 2014 with respect to, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of the Fund and, as applicable, each Sub-Advisor for the Fund; (3) the costs incurred by the Manager in rendering services to the Fund and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or a Sub-Advisor or their affiliates with other clients (such as pension funds and other institutional clients); (5) the extent to which economies of scale have been taken into account in setting each fee rate schedule; (6) whether fee rate levels reflect these economies of scale for the benefit of Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or a Sub-Advisor from its relationship with the Fund. The Trustees posed questions to various management personnel of the Manager and the Purchasers regarding certain key aspects of the materials submitted in support of the approval of the New Agreements.

Nature, Extent and Quality of the Services Provided. With respect to the approval of the New Agreements, the Board considered that the New Agreements provide for the Manager and each Sub-Advisor to provide the same services to the Fund on substantially the same terms as the Current Agreements. The Board considered representations by the Manager and/or Purchasers that the Transaction will not result in any changes to the manner in which the Fund’s assets are managed. The Board also considered representations by the Manager and/or Purchasers that the Transaction will not result in any adverse impact or changes to: the personnel involved in the management of the Fund; the Manager’s disciplined investment approach and goal to provide consistent above average long-term performance at a lower than average cost; the Manager’s continuing efforts to enhance distribution of the Fund’s shares and add new series to the Trust and share classes to the Fund’s product line; the adequacy of the Manager’s financial condition; the Manager’s day-to-day operations; the Manager’s compliance activities or the resources available to the Trust’s Chief Compliance Officer; or the Fund’s service providers or Sub-Advisors. The Board also considered the Manager’s representation that there had been no material changes or developments regarding the Manager or the Sub-Advisors since the Board’s consideration of the Current Agreements in May, June and August 2014 that had not previously been reported to the Board. The Board also considered information regarding the post-closing capitalization of the Purchasers and the Purchasers’ long-term business goals with regard to the Manager and the Manager’s activities with respect to the Trust, which are consistent with the Manager’s current goals. 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 the Sub-Advisors were appropriate for the Fund and, thus, determined to approve the New Agreements for the Fund.

Investment Performance. The Board considered its review of the comparative information regarding the Fund’s investment performance relative to its benchmark index(es) and peer group in connection with the renewal of the Current Agreements. The Board also considered the performance reports and discussions with management at Board and Committee meetings since June and August 2014. The Manager also noted that it generally was satisfied with the performance of the Sub-Advisors.

Costs of the Services to be Provided to the Fund and the Projected Profits to be Realized by the Manager from its Relationship with the Fund. In analyzing the cost of services and profitability of the Manager with respect to the Fund, the Board considered that the Transaction would result in no changes to the fees charged to the Fund or the Manager’s fee waivers currently in place with respect to the Fund. Additionally, the Board noted that there had been no material changes in this regard since its consideration of the Current Agreements in May, June and August 2014. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in May, June and August 2014, the Board concluded that the profitability levels were reasonable in light of the services performed by the Manager. The Board did not consider the costs of the services to be provided and profits to be realized by each Sub-Advisor from its relationship with the Fund, noting instead the substantially arm’s-length nature of the relationship between the Manager and each Sub-Advisor with respect to the negotiation of the advisory fee rate on behalf of the Fund.

Economies of Scale and Whether Fee Levels Reflect Economies of Scale. In considering the reasonableness of the management fees, the Board considered that the Fund would pay the same fee rates to the Manager under the New Management Agreement as the Fund currently pays under the Current Management Agreement. The Board also considered that the Fund would pay the same investment advisory fee rate to each Sub-Advisor under the New Advisory Agreements as the Fund pays under the Current Advisory Agreements. Based on the

38

Disclosure Regarding the Board of Trustees’ Approval of the Management

Agreement and Investment Advisory Agreements of the Fund (Unaudited)

foregoing information and the Board’s considerations in connection with the renewal or approval of the Current Agreements in May, June and August 2014, the Board concluded that the Manager’s fee schedule for the Fund, and each of Barrow, Brandywine, TBCAM, Hotchkis, Dreman and Hillcrest’s fee schedules for the Fund, provide for a reasonable sharing of benefits from any economies of scale with the Fund.

Benefits Derived by the Manager from Relationship With the Fund. The Board considered that the “fall-out” or ancillary benefits that accrue to the Manager and/or a Sub-Advisor as a result of its advisory relationship with the Fund would not change as a result of the Transaction. Based on the foregoing information and the Board’s considerations in connection with the renewal or approval of the Current Agreements in May, June and August 2014, the Board concluded that the potential benefits accruing to the Manager under the New Management Agreement and the Sub-Advisors under the New Advisory Agreements, by virtue of the Manager’s, Barrow, Brandywine, TBCAM, Hotchkis, Dreman and Hillcrest’s relationship with the Fund, appear to be fair and reasonable.

Board’s Conclusion. Based on the various considerations described above, the Board, including a majority of Trustees who are not “interested persons” of the Fund, the Manager, Barrow, Brandywine, TBCAM, Hotchkis, Dreman or Hillcrest, as that term is defined in the 1940 Act, concluded that the management and investment advisory fee rates to be paid by the Fund are fair and reasonable and that the approval of the New Agreements is in the best interests of the Fund, and approved the New Agreements.

39

American Beacon Funds^SM

Results of Shareholder Meeting (Unaudited)

Special meetings of shareholders of each of the portfolios of the American Beacon Funds (the “Trust”) were held on April 7 and April 28, 2015. The shareholders of the Small Cap Value Fund (the “Fund”) approved a new investment management agreement between American Beacon Advisors, Inc. and the Fund. Approval of this proposal required a majority of the outstanding voting securities of the Fund. The following are the results of the shareholder votes for this proposal:

Funds	For		Against		Abstain		Non-Voting
Small Cap Value Fund		2,297,119,201.58		29,886,616.9371		51,259,952.3754		422,578,939.48

Special meetings of shareholders of the Trust were held on April 7 and April 28, 2015. The shareholders of the Trust approved the re-election of nine of the current Trustees to the Board of the American Beacon Trust and the election of two additional Trustees to the Board. Approval of this proposal required a plurality vote of the Trust’s shares. The following are the results of the election of each Trustee:

Gilbert G. Alvarado
Affirmative	16,655,574,211.10
Withhold	242,060,281.87
Joseph B. Armes
Affirmative	16,653,130,207.99
Withhold	244,504,284.98
Gerard J. Arpey
Affirmative	16,659,813,172.19
Withhold	237,821,320.78
W. Humphrey Bogart
Affirmative	16,532,151,093.14
Withhold	365,483,399.83
Brenda A. Cline
Affirmative	16,662,050,138.08
Withhold	235,584,354.89
Eugene J. Duffy
Affirmative	16,430,210,258.21
Withhold	467,424,234.76
Thomas M. Dunning
Affirmative	16,651,792,247.83
Withhold	245,842,245.14
Alan D. Feld
Affirmative	14,899,039,186.08
Withhold	1,998,595,306.89
Richard A. Massman
Affirmative	16,651,582,060.07
Withhold	246,052,432.90
Barbara J. McKenna
Affirmative	16,435,773,869.81
Withhold	461,860,623.16
R. Gerald Turner
Affirmative	16,653,429,720.08
Withhold	244,204,772.89

40

Trustees and Officers of the American Beacon Funds^SM

(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 220 East Las Colinas Boulevard, Suite 1200, Irving, Texas 75039. Each Trustee oversees thirty-four funds in the fund complex that includes the Trust 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** (78)	Trustee since 1996	Sole Shareholder of a professional corporation which is a Partner in the law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (law firm) (1960-Present); Trustee, American Beacon Mileage Funds (1996-2012); Trustee, American Beacon Select Funds (1999-Present); Trustee, American Beacon Master Trust (1996-2012).
NON-INTERESTED TRUSTEES	Term Lifetime of Trust until removal, resignation or retirement*
Gilbert G. Alvarado (45)	Trustee since 2015	Vice President & CFO, Sierra Health Foundation (health conversion private foundation) (2006-Present) Vice President & CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-Present); Director, Innovative North State (2012-Present); Director, Sacramento Regional Technology Alliance (2011-Present); Director, Women’s Empowerment (2009-2014); Trustee, American Beacon Select Funds (2015-Present).
Joseph B. Armes (53)	Trustee since 2015	Chairman, President & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2013-Present); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Chief Operating Officer, Hicks Holdings, LLC (Hicks Family assets and investments) (2005-2010); Trustee, Baylor University Board of Regents (2001-2010); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-Present); Trustee, American Beacon Select Funds (2015-Present).
Gerard J. Arpey (57)	Trustee since 2012	Director, The Home Depot, Inc. (2015-Present); Partner, Emerald Creek Group (private equity firm) (2011-Present); Chairman and Chief Executive Officer, AMR Corp. and American Airlines; Inc. (2003-2011); Director, S. C. Johnson & Son, Inc. (privately held company) (2008-present); Trustee, American Beacon Select Funds (2012-Present).
W. Humphrey Bogart (71)	Trustee since 2004	Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Brenda A. Cline (54)	Trustee since 2004	Executive Vice President, Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Director, Tyler Technologies, Inc.(public sector software solutions company) (2014-Present); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Eugene J. Duffy (61)	Trustee since 2008	Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-Present); Principal and Executive Vice President, Paradigm Asset Management (1994-2014); Director, Sunrise Bank of Atlanta (2008-2013); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).

41

Trustees and Officers of the American Beacon Funds^SM

(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
OFFICERS	Term One Year
Thomas M. Dunning (73)	Trustee since 2008	Chairman Emeritus (2008-Present); Lockton Dunning Benefits (consulting firm in employee benefits); Board Director, Oncor Electric Delivery Company LLC (2007-Present); Board Member, BancTec (2010-Present) (software consulting); Trustee, American Beacon Mileage Funds (2008-2012); Trustee, American Beacon Select Funds (2008-Present); Trustee, American Beacon Master Trust (2008-2012).
Richard A. Massman (72)	Trustee since 2004 Chairman since 2008	Consultant and General Counsel Emeritus (2009-Present) and 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); Trustee, American Beacon Mileage Funds (2004-2012); Trustee, American Beacon Select Funds (2004-Present); Trustee, American Beacon Master Trust (2004-2012).
Barbara J. McKenna, CFA (52)	Trustee since 2012	Managing Principal, Longfellow Investment Management Company (2005-Present); Trustee, American Beacon Select Funds (2012-Present).
R. Gerald Turner (69) 225 Perkins Admin. Bldg. Southern Methodist Univ. Dallas, Texas75275	Trustee since 2001	President, Southern Methodist University (1995-Present); Director, J.C. Penney Company, Inc. (1996-Present); Director, Kronus Worldwide Inc. (chemical manufacturing) (2003-Present); Trustee, American Beacon Mileage Funds (2001-2012); Trustee, American Beacon Select Funds (2001-Present); Trustee, American Beacon Master Trust (2001-2012).
Gene L. Needles, Jr. (60)	President since 2009 Executive Vice President since 2009	President, CEO and Director, American Beacon Advisors, Inc. (2009-Present); President, CEO and Director, Astro AB Borrower, Inc. (2015-Present); President, CEO and Director, Astro AB Acquisition, Inc.(2015-Present); President, CEO and Director, Astro AB Topco, Inc. (2015-Present), President, CEO and Director, Astro AB Holdings, LLC. (2015-Present); President, CEO and Director, Lighthouse Holdings, Inc.; (2009-2015); President and CEO, Lighthouse Holdings Parent, Inc. (2009-2015); Manager, President and CEO, American Private Equity Management, L.L.C. (2012-Present); President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Rosemary K. Behan (56)	VP, Secretary and Chief Legal Officer since 2006	Secretary, American Beacon Advisors, Inc. (2006-Present); Secretary, Astro AB Borrower, Inc. (2015-Present); Secretary, Astro AB Acquisition, Inc. (2015-Present); Secretary, Astro AB Topco, Inc. (2015-Present); Secretary, Astro AB Holdings, LLC. (2015-Present); Secretary, Lighthouse Holdings, Inc. (2008-2015); Secretary, Lighthouse Holdings Parent, Inc. (2008-2015); Secretary, American Private Equity Management, L.L.C.(2008-Present); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).
Brian E. Brett (55)	VP since 2004	Vice President, Director of Sales, American Beacon Advisors, Inc. (2004-Present).
Erica Duncan (45)	VP Since 2011	Vice President, Marketing and Client Services, American Beacon Advisors, Inc. (2011-Present); Supervisor, Brand Marketing, Invesco (2010-2011);
Michael W. Fields (61)	VP since 1989	Chief Fixed Income Officer (2011-Present) and Vice President, Fixed Income Investments, American Beacon Advisors, Inc. (1988-2011); Director, American Beacon Global Funds SPC (2002-2011); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (54)	Treasurer since 2010	Treasurer, American Beacon Advisors, Inc. (2010-Present); Treasurer, Astro AB Borrower, Inc. (2015-Present); Treasurer, Astro AB Acquisition, Inc. (2015-Present); Treasurer, Astro AB Topco, Inc. (2015-Presnt); Treasurer, Astro AB Holdings, LLC. (2015-Present); Treasurer, Lighthouse Holdings, Inc. (2010-2015); Treasurer, Lighthouse Holdings Parent Inc., (2010-2015); Treasurer, American Private Equity Management, L.L.C. (2012-Present); Director and Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present).

42

Trustees and Officers of the American Beacon Funds^SM

(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
OFFICERS	Term One Year
Terri L. McKinney (51)	VP since 2010	Vice President, Enterprise Services (2009-Present) and Managing Director (2003-2009), American Beacon Advisors, Inc.
Jeffrey K. Ringdahl (40)	VP since 2010	Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present); Manager and Senior Vice President, American Private Equity Management, L.L.C. (2012-Present); Senior Vice President and Director, Astro AB Borrower, Inc. (2015-Present); Senior Vice President and Director, Astro AB Acquisition, Inc. (2015-Present); Senior Vice President and Director, Astro AB Topco, Inc. (2015-Present), Senior Vice President and Director, Astro AB Holdings, LLC.(2015-Present); Senior Vice President, Lighthouse Holdings, Inc. (2013-2015); Senior Vice President, Lighthouse Holdings Parent, Inc. (2013-2015); Director and Vice President, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Vice President, Product Management, Touchstone Advisors, Inc. (2007-2010).
Samuel J. Silver (52)	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 (44)	Chief Compliance Officer since 2004 and Asst. Secretary since 1999	Chief Compliance Officer, American Beacon Advisors, Inc. (2004-Present); Chief Compliance Officer, American Private Equity Management, L.L.C. (2012-Present).
Sonia L. Bates (58)	Asst. Treasurer since 2011	Director, Tax and Financial Reporting (2011-Present), Manager, Tax and Financial Reporting (2005-2010), American Beacon Advisors, Inc.; Asst. Treasurer, Astro AB Borrower, Inc. (2015-Present); Asst. Treasurer, Astro AB Acquisition, Inc.(2015-Present); Asst. Treasurer, Astro AB Topco, Inc. (2015-Present); Asst. Treasurer, Astro AB Holdings, LLC.; Asst. Treasurer, Lighthouse Holdings, Inc. (2011-2015); Asst. Treasurer, Lighthouse Holdings Parent Inc. (2011-2015); Asst. Treasurer, American Private Equity Management, L.L.C. (2012-Present).

* 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 Trust, 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 years to one or more of the Trust’s sub-advisors.

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45

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 Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 202-551-8090. A complete schedule of the Fund’s portfolio holdings is also available at 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 10/15

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 November 12, 2003 to disclose the removal of terminated Investment Companies. 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 Ms. Brenda A. Cline, a member of the Trust’s Audit and Compliance Committee, is an “audit committee financial expert” as defined in Form N-CSR. Ms. Brenda Cline is “independent” as defined in Form N-CSR.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

(a)

Audit Fees	Fiscal Year Ended
$396,969		10/31/2014
$371,653		10/31/2015

(b)

Audit-Related Fees	Fiscal Year Ended
$0		10/31/2014
$0		10/31/2015

(c)

Tax Fees	Fiscal Year Ended
$22,000		10/31/2014
$56,375		10/31/2015

(d)

All Other Fees	Fiscal Year Ended
$0		10/31/2014
$0		10/31/2015

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
$22,000	$	34,905		N/A		10/31/2014
$56,375	$	46,065		N/A		10/31/2015

(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 reports 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

American Beacon Funds

Date: January 7, 2016

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

American Beacon Funds

Date: January 7, 2016

By /s/ Melinda G. Heika        

Melinda G. Heika

Treasurer

American Beacon Funds

Date: January 7, 2016