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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

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: December 31, 2016

Date of reporting period: June 30, 2016

ITEM 1. REPORTS TO STOCKHOLDERS.

American Beacon
FUNDS
2016 SEMI-ANNUAL REPORT
JUNE 30, 2016
AHL MANAGED FUTURES STRATEGY FUND
IONIC STRATEGIC ARBITRAGE FUND

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
Performance Overview	2
Schedules of Investments
AHL Managed Futures Fund	9
Ionic Strategic Arbitrage Fund	20
Financial Statements	36
Notes to the Financial Statements	40
Financial Highlights	62
Additional Information	Back Cover

AHL MANAGED FUTURES STRATEGY FUND Investing in derivative instruments involves liquidity, credit, interest rate and market risks. The use of quantitative models may lead to high levels of trading and concentration among certain investments, resulting in higher trading costs and return volatility. Investing in foreign and emerging market securities may involve heightened risk due to currency fluctuations and economic and political risks. Because the Fund may invest in fewer issuers than a more diversified portfolio, the fluctuating value of a single holding may have a greater effect on the value of the Fund. IONIC STRATEGIC ARBITRAGE FUND The Fund’s strategy of investing in a variety of arbitrage strategies entails certain risks including that the sub-advisor’s judgments about allocation between such strategies, as well as individual arbitrage opportunities, may not perform to expectations, resulting in the Fund’s underperformance or even losses versus other similar funds. Arbitrage is the simultaneous purchase and sale of an asset or assets to take advantage of a perceived pricing anomaly. Because the Fund may invest in fewer issuers than a more diversified portfolio, the fluctuating value of a single holding may have a greater effect on the value of the Fund. The Fund may have high portfolio turnover, which could increase the Fund’s transaction costs and possibly have a negative impact on performance. Small- or mid-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. The use of fixed-income securities, including convertible securities, entails interest rate and credit risks. In addition, the value of a convertible security could fluctuate based on the value of the underlying stock. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Investing in derivative instruments involves liquidity, credit, interest rate and market risks. Short sales involve special risks, including greater reliance on the sub-advisor’s ability to accurately anticipate the future value of a security or instrument; the Fund’s losses are potentially unlimited in a short sale.

Please see the prospectus for a complete discussion of the Funds’ risks. There can be no assurances that the investment objectives of these Funds 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 June 30, 2016

President’s Message

Dear Shareholders,   During the six-month period ended June 30, 2016, disparate central bank policies, uneven economic growth and volatile oil prices set the stage for mixed returns around the globe. Many central banks around the world decided to continue or expand their economic stimulation policies. In March 2016, the Bank of Japan (“BOJ”) pushed its rates into negative territory and the European Central Bank (“ECB”) cut a key rate to zero. China’s slowing growth also escalated concerns for markets and companies around the globe. In this environment, international stocks fluctuated from one extreme to another; domestic stocks made modest gains thanks to a rally in oil prices and positive economic reports; and emerging-market stocks rebounded and outpaced developed-market stocks. Bonds generally outperformed stocks thanks to declining interest rates. In April 2016, the BOJ and the ECB left their interest rate policies unchanged, and the Federal Reserve’s Federal

Open Market Committee decided to maintain its short-term interest rates in the range of 0.25% to 0.5%. During the period under review, the price of oil was volatile. In June 2016, the price-per-barrel briefly crossed $51 and closed the month at $48.38.

On Friday, June 24, 2016, the global financial markets were roiled following Great Britain’s announcement that 52% of its voters favored leaving the European Union. The “Brexit” referendum fallout was swift and significant: British Prime Minister David Cameron announced his resignation; the British pound sterling plunged approximately 12% against the dollar; the euro tumbled 1.4% against the dollar; and the price of gold surged to a two-year high, up 4.7%. Global markets reacted to the Brexit news with a selling frenzy, which resulted in considerable declines: London, 3.2%; Paris, 8.0%; Frankfurt, 6.8%; Tokyo, 7.9%; Shanghai, 1.3%; and Hong Kong, 2.9%. In the U.S., the Dow Jones Industrial Average declined 611.21 points, or 3.4%, which wiped out year-to-date gains; the S&P 500 Index fell 3.6%; and the NASDAQ Composite Index dropped 4.1%. That same day, Moody’s Investors Service changed the U.K.’s long-term issuer and debt ratings to negative from stable, and affirmed both ratings at Aa1. On Monday, June 27, 2016, Standard & Poor’s Global Ratings stripped the U.K. of its impeccable AAA credit rating, reducing it to AA with a negative outlook. In addition, Fitch’s Ratings, Inc. downgraded the U.K.’s long-term foreign and local currency issuer default ratings to AA with negative outlooks.

Despite all this turmoil, U.S. investors appeared to be opportunistically willing to take on some risk and, by June 30, 2016, the broad market had almost returned to its pre-Brexit level and ended the month in positive territory.

For the six months ended June 30, 2016:

• American Beacon AHL Managed Futures Strategy Fund (Investor Class) returned 1.73%.

• American Beacon Ionic Strategic Arbitrage Fund (Investor Class) returned -0.10%.

Our broad range of mutual funds helps investors navigate the economic storms and market downturns in the U.S. and abroad. Our years of experience evaluating sub-advisors have 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.

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

American Beacon AHL Managed Futures Strategy Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Investor Class of the American Beacon AHL Managed Futures Strategy Fund (the “Fund”) returned 1.73% for the six months ended June 30, 2016.

Total Returns for the Period ended June 30, 2016

	Ticker	6 Months*			1 Year			Since Inception 8/19/2014
Institutional Class (1,5)	AHLIX		1.91	%		2.23	%		7.42	%
Y Class (1,5)	AHLYX		1.92	%		2.14	%		7.32	%
Investor Class (1,5)	AHLPX		1.73	%		1.74	%		6.99	%
A Class with sales Charge (1,2,5)	AHLAX		-4.16	%		-4.15	%		3.64	%
A Class without sales charge (1,2,5)	AHLAX		1.73	%		1.73	%		6.99	%
C Class with sales charge (1,3,5)	AHLCX		0.35	%		-0.03	%		6.19	%
C Class without sales charge (1,3,5)	AHLCX		1.35	%		0.97	%		6.19	%
BofA Merrill Lynch 3-Month Treasury Bill Index (4)			0.15	%		0.19	%		0.11	%

* Not Annualized

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 each Class of the Fund has been waived since Fund inception. Performance prior to waiving fees was lower than actual returns shown.

2. A Class shares have a maximum sales charge of 5.75%.

3. C Class has a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.

4. The BofA Merrill Lynch 3-Month Treasury Bill Index is designed to measure the total return on cash, including price and interest income, based on short-term government Treasury Bills of about 90-day maturity.

5. 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 2.26%, 2.29%, 2.41%, 2.56%, and 3.33%, 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.

For the period, Bonds were the best performing sector over the course of the first half of 2016, returning approximately 3.6%. Within Bonds, long positions in the Japanese ten-year Bond generated the highest return. The second best individual market was the United Kingdom ten-year Bond where the Fund held long positions throughout the first half.

Interest Rates added approximately 1.2% to performance. Long positions in Short Sterling contributed the most while long positions in the Euribor contract were the second largest contributor in this sector.

The third best performing sector was Energy which contributed approximately 0.6%. Both crude oil markets traded by the Fund led the Energy sector over the period: Brent Crude and WTI Crude. Positioning in both markets began the year on the short side before moving to long positions in early March.

Agriculturals posted the final positive sector result adding approximately 0.3% return. Short positions in Soybeans through mid-March followed by long positioning were the top contributors. Long positions in Sugar through the bulk of the first half contributed positively to Fund performance.

On the negative side, Stocks lost the most with a return of approximately -1.4%. The NASDAQ 100 Index detracted the most. The Fund was positioned long at the beginning and end of the half-year period and short during the interim. Posting the second worst performance in the sector was the S&P 500 Index through short positions in the first three months of the year and long positions afterwards.

The attribution of Metals to the Fund was approximately -1.2%. Leading the losses was Gold. It was positioned to be short in January and early February before switching to long for the rest of the period. Base

2

American Beacon AHL Managed Futures Strategy Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

metal Aluminium detracted through short positions in the first quarter and long positions for the bulk of the second quarter.

Lastly, Currencies dragged down returns by approximately -0.6%. The euro / U.S. dollar pair flipped from short to long several times throughout the first half of the year. Indian rupee / U.S. dollar pulled the Fund lower through short positions early in the year followed by long positions from early March onward.

Looking forward, the Fund’s sub-advisor will continue to implement its trading strategy designed to capitalize on price trends (up or down) in a broad range of global stock index, bond, currency, short-term interest rate and commodity futures markets seeking to achieve the Fund’s goal of capital growth.

Asset Class Exposure	% of VaR*
Fixed Income		32.1
Commodities		26.9
Currencies		24.1
Equities		16.9

Holdings Summary

Number of Long Holdings	29
Number of Short Holdings	20
Number of Currency Pairs	18

Top Active Exposures by Asset Class

Commodities		% of VaR*
Gold	Long		4.21
Sugar	Long		3.99
Natural Gas	Long		3.29
Soybeans	Long		3.04
Silver	Long		2.34
Currencies		% of VaR*
BRL/USD	Long		4.34
JPY/USD	Long		4.26
EUR/USD	Short		3.77
GBP/USD	Short		2.91
INR/USD	Short		2.07
Equities		% of VaR*
Nikkei Index	Short		2.17
NASDAQ 100 Index	Short		1.76
Korean Kospi	Short		1.54
Tokyo Stock Exchange Index	Short		1.40
H-Shares Index	Short		1.03
Fixed Income		% of VaR*
U.S. Treasuries	Long		8.12
Australian Bonds	Long		5.56
Japanese Bonds	Long		4.04
Eurodollar	Long		3.30
UK Gilts	Long		3.04

* Value at Risk (“VaR”) is a measure of the potential loss in value of a portfolio over a defined period for a given confidence interval. A one-day VaR at the 95% confidence level represented that there is a 5% probability that the mark-to-market loss on the portfolio over a one-day horizon will exceed this value (assuming normal markets and no trading in the portfolio.

The information shown under Investment Strategy Exposure and Positions by Investment Strategy has been provided by the Fund’s sub-advisor. The Exposure percentages are based on investment valuation methodologies employed by the sub-advisor rather than the Fund, and the exposures may differ using the Fund’s valuation practices. The sub-advisor has discretion to vary the allocations among strategies, and the current allocation may differ from that shown above.

3

American Beacon Ionic Strategic Arbitrage Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Investor Class of the American Beacon Ionic Strategic Arbitrage Fund (the “Fund”) returned -0.10% for the six months ended June 30, 2016.

Total Returns for the Period ended June 30, 2016

	Ticker	6 Months*			1 Year			Since Inception (9/1/13)
Institutional Class (1,7)	IONIX		0.10	%		1.57	%		3.24	%
Y Class (1,2,7)	IONYX		0.00	%		1.56	%		3.24	%
Investor Class (1,3,7)	IONPX		-0.10	%		1.26	%		3.13	%
A Class with sales Charge (1,4,7)	IONAX		-4.82	%		-3.56	%		1.38	%
A Class without sales charge (1,4,7)	IONAX		-0.10	%		1.26	%		3.13	%
C Class with sales charge (1,5,7)	IONCX		-1.51	%		-0.51	%		2.86	%
C Class without sales charge (1,5,7)	IONCX		-0.51	%		0.49	%		2.86	%
Barclays Capital U.S. Aggregate Index (6)			5.31	%		6.00	%		4.45	%
BofA Merrill Lynch 3-Month LIBOR Index (6)			0.31	%		0.41	%		0.31	%

* Not Annualized

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. Simultaneous with the commencement of the Fund’s investment operations on June 30, 2015, the Ionic Absolute Return Fund LLC (“Private Fund”), a privately offered investment fund managed by the Fund’s sub-advisor transferred its assets to the Institutional Class shares of the Fund. A portion of the fees charged to each Class of the Fund has been waived since 6/30/15. Performance prior to waiving fees was lower than actual returns shown.

2. Fund performance for the one-year and since inception periods represents the total returns achieved by the Institutional Class from 9/1/13 up to 6/30/15, 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 9/1/13.

3. Fund performance for the one-year and since inception periods represents the total returns achieved by the Institutional Class from 9/1/13 up to 6/30/15, the inception date of the Investor Class. 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 9/1/13.

4. Fund performance for the one-year and since inception periods represents the total returns achieved by the Institutional Class from 9/1/13 up to 6/30/15, the inception date of the A Class. Expenses of the A 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 A Class been in existence since 9/1/13. A Class shares have a maximum sales charge of 5.75%.

5. Fund performance for the one-year and since inception periods represents the total returns achieved by the Institutional Class from 9/1/13 up to 6/30/15, the inception date of the C Class. Expenses of the C 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 C Class been in existence since 9/1/13. C Class has a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.

6. The BofA Merrill Lynch U.S. Dollar 3-Month LIBOR Index represents the London interbank offered rate (LIBOR) with a constant 3-month average maturity. LIBOR is a composite of the rates of interest at which banks borrow from one another in the London market, and it is a widely used benchmark for short-term interest rates. The Barclays Capital U.S. Aggregate Index is a market 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 ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, A, and C Class shares was 3.26%, 3.22%, 3.93%, 6.94%, and 7.73%, 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.

Within the Volatility Arbitrage strategy, long volatility positions in European and U.S. equity indexes were the largest gainers during the first half of the year. Though much of this exposure was unwound opportunistically prior to the “Brexit” vote, long-dated VIX^* option exposure was retained and sold profitably immediately after the vote (when volatility rose again briefly). Foreign Exchange strategies, including a positive carry calendar spread on the Japanese yen, and a handful of single-name equity option positions were also accretive. While equity volatility related exposure drove gains during the “Brexit” event specifically, volatility during the first six months of the year was rather muted (the VIX Index was -14% for the period) and

4

American Beacon Ionic Strategic Arbitrage Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

positions in the strategy utilized as core hedges for the overall Fund lost value, leading to a loss in the strategy overall. The Fund is well positioned should volatility increase and has added specific exposure to Energy, Utilities and interest rates within the Volatility Arbitrage strategy.

The Convertible Arbitrage strategy led overall attribution for the Fund during the first half of 2016. Gains were driven by: two company specific earnings events that led to increased values in the underlying bonds; a newly-issued bond position in the Health Care sector that performed well; a Biotechnology holding that, due to an attractive change of control feature in the bond, appreciated as a result of renewed takeover speculation; and an Automotive holding that gained in value. The diverse nature of these positively performing positions speaks to the broad opportunities that currently exist in the convertible market. Though the pace of new convertible issuances slowed in the second quarter, the Fund continued to add convertibles with higher convexity and higher yielding European mandatory positions to the strategy.

The second-best performing strategy during the period was Credit/Rates Relative Value Arbitrage, where despite a flattening yield curve and lower interest rates (the ten-year Treasury yield fell below 1.5% during the period following “Brexit”), seasoned agency mortgage positions continued to generate consistent income for the Fund. A number of positions in credit-focused closed-end funds were eliminated from the strategy due to price appreciation and NAV discount narrowing in the second quarter (these positions generated losses in the first quarter), though the Fund did establish new positions in closed-end funds that invest in floating rate loans. With an eye towards higher rates, the Fund is focused on maintaining a duration stance that is +/- one year within the strategy.

Elsewhere in the Fund, the Equity Arbitrage strategy remained positive on a year-to-date basis, but experienced losses during the second quarter. These losses were primarily attributable to warrant positions in the Financial sector (where large gains in the underlying equities negatively impacted valuations), and two merger related positions – one in the consumer space, where a deal did not receive regulatory approval, and another that declined in value due to concerns over potential financing. Exposure to share class arbitrage and equity pair positions was broadly accretive over the course of the year, and exposure in these areas was increased in response to spread widening that occurred after the “Brexit” vote.

Looking forward, the Fund’s sub-advisor will continue to implement its investment process by allocating the Fund’s assets among the following strategies: Convertible Arbitrage, Credit/Rates Relative Value Arbitrage, Equity Arbitrage, Volatility Arbitrage, seeking capital appreciation with low volatility and reduced correlation to equities and interest rates.

Positions By Investment Strategy

Convertible Arbitrage	33
Credit/Rates Relative Value Arbitrage	2
Equity Arbitrage	87
Volatility Arbitrage	28
Total	150

Investment Strategy Exposure (%)	Long Market Value		Short Market Value
Convertible Arbitrage		28		(17	)
Credit/Rates Relative Value Arbitrage		16		0
Equity Arbitrage		19		(22	)
Volatility Arbitrage		13		(13	)

5

American Beacon Ionic Strategic Arbitrage Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

Portfolio Statistics

Since-Inception Risk Summary
Alpha1,2	3.48
Beta1,3	-0.09
Sharpe Ratio4	1.75
Standard Deviation5	1.76
Tracking Error1,6	3.40

¹ Versus Barclays Capital U.S. Aggregate Index

² Alpha is a measure of the Fund’s expected performance versus the benchmark, adjusted for relative risk.

³ Beta is a measure of the Fund’s volatility versus the benchmark.

⁴ Sharpe Ratio is a measure of the Fund’s return per unit of total risk.

⁵ Standard Deviation is a measure of the historical volatility of the Fund’s returns.

⁶ Tracking Error is the difference between a portfolio’s returns and the benchmark or index it was meant to mimic or beat.

The information shown under Investment Strategy Exposure and Positions by Investment Strategy has been provided by the Fund’s sub-advisor. The Exposure percentages are based on investment valuation methodologies employed by the sub-advisor rather than the Fund, and the exposures may differ using the Fund’s valuation practices. The sub-advisor has discretion to vary the allocations among strategies, and the current allocation may differ from that shown above.

* VIX (Volatility Index Option) is a type of non-equity option that uses the CBOE (Chicago Board Options Exchange) Volatility Index as the underlying asset. This is the first exchange-traded option that gives individual investors the ability to trade market volatility.

6

American Beacon Funds^SM

Fund Expenses

June 30, 2016 (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 redemption fees if applicable, and (2) ongoing costs, including management fees, administrative service 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 and held for the entire period from January 1, 2016 through June 30, 2016.

Actual Expenses

The “Actual” line of the table provides 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 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” line of the table provides 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 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 cost 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” line of the table is 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.

7

American Beacon Funds^SM

Fund Expenses

June 30, 2016 (Unaudited)

AHL Managed Futures Fund

	Beginning Account Value 1/1/16		Ending Account Value 6/30/16		Expenses Paid During Period* 1/1/16 - 6/30/16
Institutional Class
Actual	$	1,000.00	$	1,019.12	$	7.63
Hypothetical **	$	1,000.00	$	1,017.30	$	7.62
Y Class
Actual	$	1,000.00	$	1,019.15	$	8.23
Hypothetical **	$	1,000.00	$	1,016.71	$	8.22
Investor Class
Actual	$	1,000.00	$	1,017.29	$	9.58
Hypothetical **	$	1,000.00	$	1,015.37	$	9.57
A Class
Actual	$	1,000.00	$	1,017.25	$	9.68
Hypothetical **	$	1,000.00	$	1,015.27	$	9.67
C Class
Actual	$	1,000.00	$	1,013.54	$	13.42
Hypothetical **	$	1,000.00	$	1,011.54	$	13.40

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.54%, 1.64%, 1.92%, 1.94% and 2.69% 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 (182) by days in the year (366) to reflect the half-year period.

** 5% return before expenses.

Ionic Strategic Arbitrage Fund

	Beginning Account Value 1/1/16		Ending Account Value 6/30/16		Expenses Paid During Period* 1/1/16 - 6/30/16
Institutional Class
Actual	$	1,000.00	$	1,001.01	$	7.66
Hypothetical **	$	1,000.00	$	1,017.21	$	7.72
Y Class
Actual	$	1,000.00	$	1,000.00	$	8.16
Hypothetical **	$	1,000.00	$	1,016.71	$	8.22
Investor Class
Actual	$	1,000.00	$	998.99	$	9.54
Hypothetical **	$	1,000.00	$	1,015.32	$	9.62
A Class
Actual	$	1,000.00	$	998.99	$	9.64
Hypothetical **	$	1,000.00	$	1,015.22	$	9.72
C Class
Actual	$	1,000.00	$	994.93	$	13.34
Hypothetical **	$	1,000.00	$	1,011.49	$	13.45

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.54%, 1.64%, 1.92%, 1.94% and 2.69% 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 (182) by days in the year (366) to reflect the half-year period.

** 5% return before expenses.

8

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
SHORT-TERM INVESTMENTS – 93.89%
Money Market Funds – 2.19%
American Beacon U.S. Government Money Market Select Fund, Select ClassA B		10,498,763	$	10,499
	Par Amount
	(000’s)
U.S. Treasury Bills – 91.70%
0.172%, Due 7/21/2016B	$	92,500		92,491
0.239%, Due 8/18/2016B		10,500		10,497
0.213%, Due 7/7/2016B		118,500		118,499
0.208%, Due 7/14/2016B		61,000		60,997
0.236%, Due 7/28/2016B		81,000		80,989
0.188%, Due 8/4/2016B		32,500		32,493
0.213%, Due 8/11/2016B		44,000		43,990
				439,956
Total Short-Term Investments (Cost $450,449)				450,455
TOTAL INVESTMENTS - 93.89% (Cost $450,449)				450,455
OTHER ASSETS, NET OF LIABILITIES – 6.11%				30,041
TOTAL NET ASSETS - 100.00%			$	480,496

Percentages are stated as a percent of net assets.

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

^B All or a portion represents positions held by the American Beacon Cayman Managed Futures Strategy Fund, Ltd.

See accompanying notes

9

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Purchased Futures Contracts Open on June 30, 2016:

Commodity Futures Contracts

Description	Number of Contracts	Expiration Date	Contract Value		Unrealized Appreciation (Depreciation)
Brent Crude FuturesA	33	July 2016	$	1,640,430	$	(60,042	)
Cocoa FuturesA	86	September 2016		2,548,180		(170,475	)
Coffee FuturesA	57	September 2016		3,113,269		109,396
Corn FuturesA	85	September 2016		1,553,375		(165,929	)
Corn FuturesA	56	December 2016		1,039,500		(89,410	)
Gold 100oz FuturesA	204	August 2016		26,940,240		556,784
LME Copper FuturesA	9	July 2016		1,089,394		(9,199	)
LME Lead FuturesA	17	August 2016		759,794		9,347
LME Nickel FuturesA	9	July 2016		508,140		216
LME Nickel FuturesA	43	August 2016		2,431,908		49,336
LME Primary Aluminum FuturesA	144	July 2016		5,924,700		(23,972	)
LME Primary Aluminum FuturesA	22	August 2016		906,400		17,936
LME Primary Aluminum FuturesA	61	September 2016		2,518,156		26,200
LME Zinc FuturesA	19	July 2016		998,450		92,692
LME Zinc FuturesA	45	August 2016		2,367,562		145,995
LME Zinc FuturesA	10	September 2016		526,562		17,876
Low Sulphur Gasoil FuturesA	23	July 2016		1,017,750		(22,197	)
Natural Gas FuturesA	217	July 2016		6,345,080		327,678
Natural Gas Swap FuturesA	80	October 2016		617,000		8,304
Natural Gas Swap FuturesA	80	November 2016		663,800		55,104
Natural Gas Swap FuturesA	80	December 2016		689,200		80,504
Natural Gas Swap FuturesA	80	January 2017		685,800		77,104
Natural Gas Swap FuturesA	80	February 2017		673,600		64,904
NY Harbor ULSD FuturesA	25	July 2016		1,563,135		(23,430	)
Silver FuturesA	107	September 2016		9,963,305		643,294
Soybean FuturesA	333	November 2016		19,201,613		822,193
Sugar #11 World FuturesA	563	September 2016		12,819,285		462,073
WTI Crude FuturesA	34	July 2016		1,643,220		(18,485	)
			$	110,748,848	$	2,983,797

Currency Futures Contracts

Description	Number of Contracts	Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
Austrailian Dollar Currency Futures	1		September 2016	$	14,105,600	$	(59,878	)
Japanese Yen Currency Futures	3		September 2016		34,823,862		931,953
				$	48,929,462	$	872,075

Equity Futures Contracts

Description	Number of Contracts	Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
ASX SPI 200 Index Futures	45		September 2016	$	4,342,794	$	15,902
FTSE 100 Index Futures	45		September 2016		3,847,477		90,393
Hang Seng Index Futures	4		July 2016		540,003		9,910
Mini MSCI Emerging Markets Index Futures	21		September 2016		876,435		11,461
MSCI Taiwan Stock Index Futures	149		July 2016		4,730,750		81,669
S&P/TSX 60 Index Futures	39		September 2016		4,916,243		14,972
U.S. Dollar Index Futures	75		September 2016		7,215,225		10,945
				$	26,468,927	$	235,252

See accompanying notes

10

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Interest Rate Futures Contracts

Description	Number of Contracts	Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
3-Month Euro Euribor Futures	1,439		September 2017	$	400,749,580	$	165,479
3-Month Euro Euribor Futures	322		June 2018		89,669,866		61,253
3-Month Euro Euribor Futures	878		March 2019		244,393,932		280,060
90-Day Eurodollar Futures	416		September 2017		103,199,200		106,460
90-Day Eurodollar Futures	542		June 2018		134,266,950		150,896
90-Day Eurodollar Futures	684		March 2019		169,178,850		198,766
90-Day Sterling Futures	914		September 2017		151,608,549		271,518
90-Day Sterling Futures	999		June 2018		165,641,316		356,196
Austrailia 10-Year Bond Futures	564		September 2016		57,289,782		317,100
Austrailia 3-Year Bond Futures	1,383		September 2016		116,742,771		62,634
Euro-Bobl Futures	448		September 2016		66,421,634		447,913
Euro-Bund Futures	201		September 2016		37,277,739		545,220
Euro-Buxl 30-Year Bond Futures	32		September 2016		6,966,033		493,581
Japanese 10-Year Government Bond Futures	130		September 2016		192,510,531		608,576
Long GILT Futures	276		September 2016		47,210,420		1,192,886
U.S. Long Bond Futures	85		September 2016		14,649,219		553,269
U.S. Treasury 10-Year Note Futures	285		September 2016		37,900,547		449,639
U.S. Treasury 2-Year Note Futures	593		September 2016		130,061,579		360,164
U.S. Treasury 5-Year Note Futures	485		September 2016		59,249,571		438,814
U.S. Ultra Bond Futures	120		September 2016		22,365,000		1,011,597
				$	2,247,353,069	$	8,072,021

Sold Futures Contracts Open on June 30, 2016:

Commodity Futures Contracts

Description	Number of Contracts	Expiration Date		Contract Value			Unrealized Appreciation (Depreciation)
Copper FuturesA	57		September 2016	$	(3,128,588	)	$	(74,191	)
Gasoline RBOB FuturesA	22		July 2016		(1,387,201	)		10,330
LME Copper FuturesA	10		July 2016		(1,210,437	)		(31,245	)
LME Copper FuturesA	15		August 2016		(1,817,625	)		(89,711	)
LME Lead FuturesA	42		August 2016		(1,877,137	)		(99,042	)
LME Nickel FuturesA	9		July 2016		(508,140	)		(37,100	)
LME Nickel FuturesA	62		August 2016		(3,506,472	)		(345,369	)
LME Primary Aluminum FuturesA	144		July 2016		(5,924,700	)		(370,751	)
LME Primary Aluminum FuturesA	22		August 2016		(906,400	)		(48,923	)
Wheat FuturesA	207		September 2016		(4,610,925	)		191,565
				$	(24,877,625	)	$	(894,437	)

Currency Futures Contracts

Description	Number of Contracts	Expiration Date		Contract Value			Unrealized Appreciation (Depreciation)
British Pound Currency Futures	214		September 2016	$	(17,719,200	)	$	534,840
Canadian Dollar Currency Futures	13		September 2016		(1,002,560	)		(2,078	)
Euro Currency Futures	321		September 2016		(44,568,844	)		6,795
Mexican Peso Futures	216		September 2016		(5,850,360	)		(238,029	)
Swiss Franc Currency Futures	73		September 2016		(9,365,900	)		32,982
				$	(78,506,864	)	$	334,510

See accompanying notes

11

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Equity Futures Contracts

Description	Number of Contracts	Expiration Date	Contract Value			Unrealized Appreciation (Depreciation)
Amsterdam Index Futures	18	July 2016	$	(1,739,067	)	$	(60,769	)
CAC40 Index Futures	55	July 2016		(2,584,274	)		(56,356	)
DAX Index Futures	8	September 2016		(2,145,923	)		(45,825	)
Euro Stoxx 50 Index Futures	94	September 2016		(2,978,236	)		(78,298	)
FTSE/JSE Top 40 Index Futures	92	September 2016		(2,901,298	)		(13,772	)
FTSE/MIB Index Futures	33	September 2016		(2,964,713	)		(10,804	)
H-SHARES Index Futures	70	July 2016		(3,936,209	)		(162,206	)
IBEX 35 Index Futures	31	July 2016		(2,795,974	)		(13,415	)
KOSPI 200 Index Futures	113	September 2016		(11,980,835	)		(223,360	)
Mini MSCI EAFE Index Futures	2	September 2016		(161,520	)		(6,473	)
NASDAQ 100 E-Mini Futures	107	September 2016		(9,430,980	)		(384,547	)
Nikkei 225 (SGX) Futures	98	September 2016		(7,378,589	)		153,478
OMXS30 Index Futures	142	July 2016		(2,212,902	)		(53,490	)
S&P 500 E-Mini Index Futures	34	September 2016		(3,553,340	)		(87,648	)
TOPIX Index Futures	39	September 2016		(4,703,869	)		142,736
			$	(61,467,729	)	$	(900,749	)

Forward Currency Contracts Open on December 31, 2015:

Type	Currency	Principal Amount Covered by Contract		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Buy	PHP		21,304,630		7/5/2016	DUB	$	—	$	(25,158	)	$	(25,158	)
Buy	PHP		5,153,489		7/5/2016	DUB		—		(83,526	)		(83,526	)
Sell	PHP		1,700,120		7/5/2016	DUB		1,103		—			1,103
Sell	PHP		265,644		7/5/2016	DUB		427		—			427
Sell	PHP		53,129		7/5/2016	DUB		114		—			114
Sell	PHP		265,644		7/5/2016	DUB		285		—			285
Sell	PHP		531,288		7/5/2016	DUB		1,307		—			1,307
Sell	PHP		7,331,768		7/5/2016	DUB		—		(2,259	)		(2,259	)
Sell	PHP		3,559,626		7/5/2016	DUB		—		(3,741	)		(3,741	)
Sell	PHP		2,656,437		7/5/2016	DUB		15,645		—			15,645
Sell	PHP		2,497,051		7/5/2016	DUB		6,144		—			6,144
Sell	PHP		743,803		7/5/2016	DUB		—		(2,371	)		(2,371	)
Sell	PHP		789,281		7/5/2016	DUB		—		(2,250	)		(2,250	)
Sell	PHP		4,736,109		7/5/2016	DUB		—		(12,498	)		(12,498	)
Sell	PHP		690,674		7/5/2016	DUB		522		—			522
Sell	PHP		637,545		7/5/2016	DUB		712		—			712
Buy	EUR		40,234		7/14/2016	DUB		—		(957	)		(957	)
Buy	JPY		160,500		7/14/2016	DUB		1,890		—			1,890
Buy	JPY		61,938		7/14/2016	DUB		735		—			735
Sell	CAD		294,829		7/14/2016	DUB		2,075		—			2,075
Sell	ZAR		60,014		7/14/2016	DUB		—		(1,179	)		(1,179	)
Sell	EUR		833,431		7/14/2016	DUB		19,534		—			19,534
Sell	EUR		8,452		7/14/2016	DUB		200		—			200
Sell	ZAR		446,986		7/14/2016	DUB		—		(19,130	)		(19,130	)
Sell	SEK		328,118		7/14/2016	DUB		8,977		—			8,977
Buy	PHP		20,177,777		7/18/2016	DUB		—		(337,259	)		(337,259	)
Sell	PHP		14,389,941		7/18/2016	DUB		—		(8,095	)		(8,095	)
Sell	PHP		5,787,836		7/18/2016	DUB		11,517		—			11,517
Buy	MYR		1,610,672		7/20/2016	DUB		—		(8,540	)		(8,540	)
Buy	MYR		3,179,962		7/20/2016	DUB		—		(13,844	)		(13,844	)
Buy	MYR		41,382		7/20/2016	DUB		—		(175	)		(175	)
Buy	MYR		123,898		7/20/2016	DUB		1,427		—			1,427
Buy	MYR		433,642		7/20/2016	DUB		—		(1,843	)		(1,843	)
Buy	MYR		697,049		7/20/2016	DUB		—		(2,937	)		(2,937	)
Buy	MYR		1,780,907		7/20/2016	DUB		—		(6,970	)		(6,970	)
Buy	MYR		619,489		7/20/2016	DUB		—		(2,092	)		(2,092	)
Buy	MYR		495,591		7/20/2016	DUB		—		(2,169	)		(2,169	)

See accompanying notes

12

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Type	Currency	Principal Amount Covered by Contract		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Buy	MYR		185,847		7/20/2016	DUB	$	2,032	$	—		$	2,032
Buy	MYR		247,796		7/20/2016	DUB		2,457		—			2,457
Buy	INR		2,068,813		7/20/2016	DUB		5,894		—			5,894
Buy	MYR		61,949		7/20/2016	DUB		1,013		—			1,013
Buy	INR		53,345,812		7/20/2016	DUB		—		(171,348	)		(171,348	)
Buy	MYR		2,911,599		7/20/2016	DUB		15,013		—			15,013
Buy	MYR		3,097,446		7/20/2016	DUB		6,905		—			6,905
Buy	MYR		619,489		7/20/2016	DUB		—		(3,331	)		(3,331	)
Buy	MYR		247,796		7/20/2016	DUB		1,987		—			1,987
Buy	MYR		1,090,301		7/20/2016	DUB		6,496		—			6,496
Buy	MYR		1,635,451		7/20/2016	DUB		8,654		—			8,654
Buy	MYR		1,424,825		7/20/2016	DUB		23,206		—			23,206
Buy	INR		3,177,105		7/20/2016	DUB		—		(9,166	)		(9,166	)
Buy	MYR		1,300,927		7/20/2016	DUB		3,670		—			3,670
Buy	MYR		3,159,395		7/20/2016	DUB		—		(6,734	)		(6,734	)
Buy	MYR		185,847		7/20/2016	DUB		—		(32	)		(32	)
Buy	MYR		991,183		7/20/2016	DUB		—		(4,910	)		(4,910	)
Sell	INR		3,398,764		7/20/2016	DUB		—		(569	)		(569	)
Sell	INR		1,810,211		7/20/2016	DUB		—		(6,380	)		(6,380	)
Sell	INR		3,338,325		7/20/2016	DUB		—		(27,706	)		(27,706	)
Sell	INR		3,338,177		7/20/2016	DUB		—		(28,675	)		(28,675	)
Sell	INR		2,559,269		7/20/2016	DUB		—		(22,764	)		(22,764	)
Sell	INR		3,786,666		7/20/2016	DUB		—		(28,486	)		(28,486	)
Sell	MYR		123,898		7/20/2016	DUB		—		(1,917	)		(1,917	)
Sell	MYR		61,949		7/20/2016	DUB		—		(973	)		(973	)
Sell	INR		997,463		7/20/2016	DUB		—		(7,713	)		(7,713	)
Sell	INR		1,071,349		7/20/2016	DUB		—		(8,653	)		(8,653	)
Sell	MYR		812,026		7/20/2016	DUB		—		(20,289	)		(20,289	)
Sell	MYR		812,274		7/20/2016	DUB		—		(21,365	)		(21,365	)
Sell	MYR		2,075,289		7/20/2016	DUB		—		(40,793	)		(40,793	)
Sell	MYR		1,848,060		7/20/2016	DUB		—		(35,886	)		(35,886	)
Sell	MYR		722,820		7/20/2016	DUB		—		(14,501	)		(14,501	)
Sell	MYR		61,949		7/20/2016	DUB		—		(490	)		(490	)
Sell	INR		517,203		7/20/2016	DUB		—		(2,966	)		(2,966	)
Sell	INR		332,488		7/20/2016	DUB		—		(1,693	)		(1,693	)
Sell	INR		1,893,259		7/20/2016	DUB		—		(14,523	)		(14,523	)
Sell	INR		3,694,308		7/20/2016	DUB		—		(27,146	)		(27,146	)
Sell	INR		1,893,407		7/20/2016	DUB		—		(15,001	)		(15,001	)
Sell	MYR		660,871		7/20/2016	DUB		—		(15,749	)		(15,749	)
Sell	MYR		660,623		7/20/2016	DUB		—		(15,774	)		(15,774	)
Sell	MYR		812,274		7/20/2016	DUB		—		(19,702	)		(19,702	)
Sell	MYR		812,274		7/20/2016	DUB		—		(20,142	)		(20,142	)
Sell	MYR		1,624,548		7/20/2016	DUB		—		(40,399	)		(40,399	)
Sell	INR		21,020,614		7/20/2016	DUB		—		(257,222	)		(257,222	)
Sell	INR		738,862		7/20/2016	DUB		—		(5,487	)		(5,487	)
Sell	INR		849,691		7/20/2016	DUB		—		(6,422	)		(6,422	)
Sell	MYR		185,847		7/20/2016	DUB		—		(3,752	)		(3,752	)
Sell	MYR		61,949		7/20/2016	DUB		—		(1,012	)		(1,012	)
Sell	INR		4,563,209		7/20/2016	DUB		—		(25,636	)		(25,636	)
Sell	INR		2,281,605		7/20/2016	DUB		—		(13,751	)		(13,751	)
Sell	INR		1,368,963		7/20/2016	DUB		—		(8,650	)		(8,650	)
Sell	INR		6,600,399		7/20/2016	DUB		—		(39,588	)		(39,588	)
Sell	INR		1,034,406		7/20/2016	DUB		—		(7,366	)		(7,366	)
Sell	INR		4,049,110		7/20/2016	DUB		—		(31,486	)		(31,486	)
Sell	INR		22,239,736		7/20/2016	DUB		—		(220,716	)		(220,716	)
Sell	INR		7,388,617		7/20/2016	DUB		—		(71,186	)		(71,186	)
Sell	MYR		1,321,742		7/20/2016	DUB		—		(21,686	)		(21,686	)
Sell	MYR		8,156,442		7/20/2016	DUB		—		(137,928	)		(137,928	)
Sell	INR		1,669,680		7/20/2016	DUB		—		(11,264	)		(11,264	)
Sell	INR		1,669,827		7/20/2016	DUB		—		(11,070	)		(11,070	)
Buy	KRW		1,899,207		7/22/2016	DUB		4,523		—			4,523
Buy	KRW		1,425,273		7/22/2016	DUB		3,517		—			3,517

See accompanying notes

13

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Type	Currency	Principal Amount Covered by Contract		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Buy	KRW		390,605		7/22/2016	DUB	$	927	$	—		$	927
Buy	KRW		1,145,774		7/22/2016	DUB		2,332		—			2,332
Buy	KRW		1,906,151		7/22/2016	DUB		1,637		—			1,637
Buy	KRW		476,538		7/22/2016	DUB		525		—			525
Buy	KRW		477,406		7/22/2016	DUB		608		—			608
Buy	KRW		24,738,295		7/22/2016	DUB		278,555		—			278,555
Buy	KRW		86,801		7/22/2016	DUB		24		—			24
Buy	KRW		86,801		7/22/2016	DUB		52		—			52
Buy	KRW		260,403		7/22/2016	DUB		—		(239	)		(239	)
Buy	KRW		173,602		7/22/2016	DUB		—		(205	)		(205	)
Buy	KRW		86,801		7/22/2016	DUB		50		—			50
Buy	KRW		173,602		7/22/2016	DUB		—		(174	)		(174	)
Buy	KRW		173,602		7/22/2016	DUB		93		—			93
Buy	KRW		434,005		7/22/2016	DUB		—		(15	)		(15	)
Buy	KRW		434,005		7/22/2016	DUB		—		—			—
Buy	KRW		520,806		7/22/2016	DUB		45		—			45
Buy	KRW		694,408		7/22/2016	DUB		5,970		—			5,970
Buy	KRW		694,408		7/22/2016	DUB		2,415		—			2,415
Buy	KRW		781,209		7/22/2016	DUB		1,970		—			1,970
Buy	KRW		1,128,414		7/22/2016	DUB		2,805		—			2,805
Buy	KRW		434,005		7/22/2016	DUB		1,939		—			1,939
Buy	KRW		607,607		7/22/2016	DUB		2,892		—			2,892
Buy	KRW		173,602		7/22/2016	DUB		749		—			749
Buy	KRW		607,607		7/22/2016	DUB		2,050		—			2,050
Buy	KRW		1,171,814		7/22/2016	DUB		7,890		—			7,890
Buy	KRW		3,602,243		7/22/2016	DUB		24,040		—			24,040
Buy	KRW		434,005		7/22/2016	DUB		1,755		—			1,755
Buy	KRW		520,806		7/22/2016	DUB		2,147		—			2,147
Buy	KRW		347,204		7/22/2016	DUB		1,371		—			1,371
Buy	KRW		173,602		7/22/2016	DUB		696		—			696
Buy	KRW		434,005		7/22/2016	DUB		1,778		—			1,778
Buy	KRW		29,512		7/22/2016	DUB		—		(108	)		(108	)
Buy	KRW		664,896		7/22/2016	DUB		—		(2,381	)		(2,381	)
Buy	KRW		520,806		7/22/2016	DUB		898		—			898
Buy	KRW		520,806		7/22/2016	DUB		2,515		—			2,515
Buy	KRW		954,811		7/22/2016	DUB		7,850		—			7,850
Buy	KRW		3,819,246		7/22/2016	DUB		34,364		—			34,364
Buy	KRW		86,801		7/22/2016	DUB		355		—			355
Buy	KRW		694,408		7/22/2016	DUB		5,740		—			5,740
Buy	KRW		607,607		7/22/2016	DUB		4,538		—			4,538
Buy	KRW		694,408		7/22/2016	DUB		5,733		—			5,733
Buy	KRW		347,204		7/22/2016	DUB		2,579		—			2,579
Buy	KRW		434,005		7/22/2016	DUB		3,372		—			3,372
Buy	KRW		260,403		7/22/2016	DUB		1,885		—			1,885
Buy	KRW		260,403		7/22/2016	DUB		1,860		—			1,860
Buy	KRW		378,453		7/22/2016	DUB		423		—			423
Buy	KRW		1,410,517		7/22/2016	DUB		1,455		—			1,455
Buy	KRW		1,513,810		7/22/2016	DUB		1,759		—			1,759
Buy	KRW		2,821,034		7/22/2016	DUB		—		(1,470	)		(1,470	)
Buy	KRW		3,020,676		7/22/2016	DUB		2,358		—			2,358
Buy	KRW		2,447,789		7/22/2016	DUB		1,508		—			1,508
Buy	KRW		2,734,233		7/22/2016	DUB		—		(1,686	)		(1,686	)
Buy	KRW		694,408		7/22/2016	DUB		163		—			163
Buy	KRW		1,794,177		7/22/2016	DUB		3,296		—			3,296
Buy	KRW		1,880,979		7/22/2016	DUB		2,925		—			2,925
Buy	KRW		1,880,110		7/22/2016	DUB		2,428		—			2,428
Sell	KRW		1,909,623		7/22/2016	DUB		1,012		—			1,012
Sell	KRW		1,388,817		7/22/2016	DUB		—		(36,963	)		(36,963	)
Sell	KRW		2,864,434		7/22/2016	DUB		—		(72,225	)		(72,225	)
Sell	KRW		1,388,817		7/22/2016	DUB		—		(34,675	)		(34,675	)
Sell	KRW		2,864,434		7/22/2016	DUB		—		(75,882	)		(75,882	)
Sell	KRW		3,211,638		7/22/2016	DUB		—		(88,722	)		(88,722	)

See accompanying notes

14

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Type	Currency	Principal Amount Covered by Contract		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Sell	KRW		3,819,246		7/22/2016	DUB	$	—	$	(107,857	)	$	(107,857	)
Sell	KRW		2,256,827		7/22/2016	DUB		—		(62,993	)		(62,993	)
Sell	KRW		2,343,628		7/22/2016	DUB		—		(65,993	)		(65,993	)
Sell	KRW		3,385,240		7/22/2016	DUB		—		(95,600	)		(95,600	)
Sell	KRW		2,857,490		7/22/2016	DUB		—		(74,099	)		(74,099	)
Sell	KRW		2,856,622		7/22/2016	DUB		—		(73,888	)		(73,888	)
Sell	KRW		2,625,731		7/22/2016	DUB		—		(68,241	)		(68,241	)
Sell	KRW		2,857,490		7/22/2016	DUB		—		(74,452	)		(74,452	)
Sell	KRW		3,747,201		7/22/2016	DUB		—		(87,392	)		(87,392	)
Sell	KRW		3,746,333		7/22/2016	DUB		—		(85,510	)		(85,510	)
Sell	KRW		4,311,407		7/22/2016	DUB		—		(102,228	)		(102,228	)
Sell	KRW		1,996,424		7/22/2016	DUB		—		(45,121	)		(45,121	)
Sell	KRW		694,408		7/22/2016	DUB		—		(18,367	)		(18,367	)
Sell	KRW		520,806		7/22/2016	DUB		—		(10,259	)		(10,259	)
Sell	KRW		8,419,700		7/22/2016	DUB		—		(200,058	)		(200,058	)
Sell	KRW		6,423,277		7/22/2016	DUB		—		(155,277	)		(155,277	)
Buy	TWD		310,137		7/25/2016	DUB		—		(206	)		(206	)
Buy	TWD		155,069		7/25/2016	DUB		—		(100	)		(100	)
Buy	TWD		23,570,429		7/25/2016	DUB		—		(10,086	)		(10,086	)
Buy	TWD		77,534		7/25/2016	DUB		—		(437	)		(437	)
Buy	TWD		77,534		7/25/2016	DUB		—		(493	)		(493	)
Buy	TWD		310,137		7/25/2016	DUB		—		(190	)		(190	)
Buy	TWD		310,137		7/25/2016	DUB		—		(790	)		(790	)
Buy	TWD		310,137		7/25/2016	DUB		—		(470	)		(470	)
Buy	TWD		775,343		7/25/2016	DUB		—		(1,778	)		(1,778	)
Buy	TWD		77,534		7/25/2016	DUB		—		(79	)		(79	)
Sell	TWD		232,603		7/25/2016	DUB		1		—			1
Sell	TWD		155,069		7/25/2016	DUB		38		—			38
Sell	TWD		1,395,618		7/25/2016	DUB		8,264		—			8,264
Sell	TWD		2,713,701		7/25/2016	DUB		—		(20,399	)		(20,399	)
Sell	TWD		310,137		7/25/2016	DUB		—		(2,331	)		(2,331	)
Sell	TWD		2,868,769		7/25/2016	DUB		—		(15,592	)		(15,592	)
Sell	TWD		310,137		7/25/2016	DUB		—		(1,783	)		(1,783	)
Sell	TWD		155,069		7/25/2016	DUB		—		(897	)		(897	)
Sell	TWD		3,489,044		7/25/2016	DUB		—		(36,641	)		(36,641	)
Sell	TWD		232,603		7/25/2016	DUB		—		(326	)		(326	)
Sell	TWD		155,069		7/25/2016	DUB		—		(217	)		(217	)
Sell	TWD		232,603		7/25/2016	DUB		—		(95	)		(95	)
Sell	TWD		77,534		7/25/2016	DUB		—		(85	)		(85	)
Sell	TWD		542,740		7/25/2016	DUB		—		(3,033	)		(3,033	)
Sell	TWD		387,672		7/25/2016	DUB		—		(1,452	)		(1,452	)
Sell	TWD		155,069		7/25/2016	DUB		—		(476	)		(476	)
Sell	TWD		620,274		7/25/2016	DUB		—		(1,941	)		(1,941	)
Sell	TWD		930,412		7/25/2016	DUB		—		(5,405	)		(5,405	)
Sell	TWD		155,068		7/25/2016	DUB		—		(159	)		(159	)
Sell	PHP		53,058		8/5/2016	DUB		59		—			59
Sell	PHP		21,276,392		8/5/2016	DUB		23,938		—			23,938
Sell	PHP		265,292		8/5/2016	DUB		270		—			270
Sell	PHP		318,350		8/5/2016	DUB		—		(81	)		(81	)
Buy	KRW		2,734,233		7/22/2016	DUB		—		(1,686	)		(1,686	)
Buy	BRL		653,737		7/5/2016	HUS		54,473		—			54,473
Buy	BRL		653,737		7/5/2016	HUS		51,766		—			51,766
Buy	BRL		965,041		7/5/2016	HUS		53,866		—			53,866
Buy	BRL		155,652		7/5/2016	HUS		10,223		—			10,223
Buy	BRL		280,173		7/5/2016	HUS		16,352		—			16,352
Buy	BRL		93,391		7/5/2016	HUS		9,527		—			9,527
Buy	BRL		1,027,301		7/5/2016	HUS		73,792		—			73,792
Buy	BRL		7,564,673		7/5/2016	HUS		853,356		—			853,356
Buy	BRL		155,652		7/5/2016	HUS		15,807		—			15,807
Buy	BRL		155,652		7/5/2016	HUS		15,799		—			15,799
Buy	BRL		186,782		7/5/2016	HUS		18,847		—			18,847
Buy	BRL		62,261		7/5/2016	HUS		6,230		—			6,230

See accompanying notes

15

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Type	Currency	Principal Amount Covered by Contract		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Buy	BRL		93,391		7/5/2016	HUS	$	9,357	$	—		$	9,357
Buy	BRL		62,261		7/5/2016	HUS		6,229		—			6,229
Buy	BRL		31,130		7/5/2016	HUS		3,121		—			3,121
Buy	BRL		93,391		7/5/2016	HUS		9,313		—			9,313
Buy	BRL		124,521		7/5/2016	HUS		12,411		—			12,411
Buy	BRL		93,391		7/5/2016	HUS		9,296		—			9,296
Buy	BRL		124,521		7/5/2016	HUS		12,398		—			12,398
Buy	BRL		155,652		7/5/2016	HUS		16,154		—			16,154
Buy	BRL		466,955		7/5/2016	HUS		53,755		—			53,755
Buy	BRL		466,955		7/5/2016	HUS		53,675		—			53,675
Buy	BRL		124,521		7/5/2016	HUS		12,995		—			12,995
Buy	BRL		155,652		7/5/2016	HUS		16,287		—			16,287
Buy	BRL		217,913		7/5/2016	HUS		22,725		—			22,725
Buy	BRL		93,391		7/5/2016	HUS		9,376		—			9,376
Buy	BRL		155,652		7/5/2016	HUS		15,643		—			15,643
Buy	BRL		186,782		7/5/2016	HUS		18,762		—			18,762
Buy	BRL		249,043		7/5/2016	HUS		25,066		—			25,066
Buy	BRL		31,130		7/5/2016	HUS		3,147		—			3,147
Buy	BRL		124,521		7/5/2016	HUS		12,571		—			12,571
Buy	BRL		217,913		7/5/2016	HUS		18,369		—			18,369
Buy	BRL		155,652		7/5/2016	HUS		11,957		—			11,957
Buy	BRL		155,652		7/5/2016	HUS		11,957		—			11,957
Buy	BRL		342,434		7/5/2016	HUS		24,964		—			24,964
Buy	BRL		871,650		7/5/2016	HUS		82,272		—			82,272
Buy	BRL		4,918,594		7/5/2016	HUS		451,431		—			451,431
Buy	BRL		3,688,946		7/5/2016	HUS		345,228		—			345,228
Buy	BRL		544,781		7/5/2016	HUS		49,548		—			49,548
Buy	BRL		93,391		7/5/2016	HUS		7,826		—			7,826
Buy	BRL		155,652		7/5/2016	HUS		13,055		—			13,055
Buy	BRL		1,867,821		7/5/2016	HUS		170,008		—			170,008
Buy	BRL		2,272,515		7/5/2016	HUS		206,610		—			206,610
Buy	BRL		5,510,071		7/5/2016	HUS		504,698		—			504,698
Sell	BRL		31,130		7/5/2016	HUS		—		(2,086	)		(2,086	)
Sell	BRL		62,261		7/5/2016	HUS		—		(4,199	)		(4,199	)
Sell	BRL		217,912		7/5/2016	HUS		—		(26,258	)		(26,258	)
Sell	BRL		249,043		7/5/2016	HUS		—		(30,057	)		(30,057	)
Sell	BRL		684,868		7/5/2016	HUS		—		(83,791	)		(83,791	)
Sell	BRL		653,737		7/5/2016	HUS		—		(79,292	)		(79,292	)
Sell	BRL		217,912		7/5/2016	HUS		—		(26,121	)		(26,121	)
Sell	BRL		1,961,212		7/5/2016	HUS		—		(84,279	)		(84,279	)
Sell	BRL		404,694		7/5/2016	HUS		—		(46,390	)		(46,390	)
Sell	BRL		498,085		7/5/2016	HUS		—		(41,432	)		(41,432	)
Sell	BRL		155,652		7/5/2016	HUS		—		(11,260	)		(11,260	)
Sell	BRL		529,216		7/5/2016	HUS		—		(36,248	)		(36,248	)
Sell	BRL		31,130		7/5/2016	HUS		—		(2,082	)		(2,082	)
Sell	BRL		31,130		7/5/2016	HUS		—		(2,087	)		(2,087	)
Sell	BRL		30,632,257		7/5/2016	HUS		—		(1,746,304	)		(1,746,304	)
Buy	BRL		466,955		7/5/2016	HUS		35,884		—			35,884
Buy	BRL		93,391		7/5/2016	HUS		9,482		—			9,482
Buy	COP		2,660,025		7/22/2016	HUS		50,893		—			50,893
Sell	COP		204,617		7/22/2016	HUS		—		(5,026	)		(5,026	)
Sell	COP		750,264		7/22/2016	HUS		—		(15,891	)		(15,891	)
Sell	COP		204,617		7/22/2016	HUS		—		(4,157	)		(4,157	)
Sell	COP		68,206		7/22/2016	HUS		—		(1,048	)		(1,048	)
Sell	COP		682,058		7/22/2016	HUS		—		(21,781	)		(21,781	)
Sell	COP		750,264		7/22/2016	HUS		—		(26,412	)		(26,412	)
Buy	BRL		30,366,622		8/2/2016	HUS		1,708,653		—			1,708,653
Sell	BRL		401,185		8/2/2016	HUS		—		(6,120	)		(6,120	)
Sell	BRL		1,049,253		8/2/2016	HUS		—		(14,435	)		(14,435	)
Sell	BRL		1,018,393		8/2/2016	HUS		—		(11,927	)		(11,927	)
Sell	BRL		648,068		8/2/2016	HUS		—		(6,357	)		(6,357	)
Sell	BRL		432,045		8/2/2016	HUS		—		(17,918	)		(17,918	)

See accompanying notes

16

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Type	Currency	Principal Amount Covered by Contract		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Sell	BRL		185,162		8/2/2016	HUS	$	—	$	(1,727	)	$	(1,727	)
Sell	BRL		555,487		8/2/2016	HUS		—		(5,415	)		(5,415	)
Sell	BRL		185,162		8/2/2016	HUS		—		(211	)		(211	)
Sell	BRL		246,883		8/2/2016	HUS		450		—			450
Buy	CLP		6,400,164		8/10/2016	HUS		177,890		—			177,890
Buy	COP		67,925		8/10/2016	HUS		1,164		—			1,164
Buy	COP		475,477		8/10/2016	HUS		—		(2,870	)		(2,870	)
Buy	COP		67,925		8/10/2016	HUS		—		(197	)		(197	)
Buy	CLP		263,536		8/10/2016	HUS		3,192		—			3,192
Buy	CLP		263,536		8/10/2016	HUS		3,200		—			3,200
Buy	CLP		451,776		8/10/2016	HUS		5,996		—			5,996
Buy	COP		67,925		8/10/2016	HUS		—		(1,135	)		(1,135	)
Buy	COP		475,477		8/10/2016	HUS		—		(5,966	)		(5,966	)
Buy	CLP		376,480		8/10/2016	HUS		4,538		—			4,538
Buy	CLP		451,776		8/10/2016	HUS		5,277		—			5,277
Buy	CLP		451,776		8/10/2016	HUS		7,061		—			7,061
Buy	COP		611,327		8/10/2016	HUS		6,432		—			6,432
Buy	COP		135,851		8/10/2016	HUS		2,248		—			2,248
Buy	CLP		376,480		8/10/2016	HUS		5,326		—			5,326
Buy	COP		67,925		8/10/2016	HUS		803		—			803
Buy	CLP		752,961		8/10/2016	HUS		12,179		—			12,179
Buy	CLP		225,888		8/10/2016	HUS		8,322		—			8,322
Buy	COP		67,925		8/10/2016	HUS		1,760		—			1,760
Buy	COP		67,925		8/10/2016	HUS		2,327		—			2,327
Buy	COP		67,925		8/10/2016	HUS		1,908		—			1,908
Buy	CLP		602,368		8/10/2016	HUS		10,985		—			10,985
Buy	CLP		1,355,329		8/10/2016	HUS		25,158		—			25,158
Buy	CLP		752,961		8/10/2016	HUS		16,964		—			16,964
Buy	COP		67,925		8/10/2016	HUS		1,222		—			1,222
Buy	CLP		1,807,105		8/10/2016	HUS		40,204		—			40,204
Buy	COP		67,925		8/10/2016	HUS		1,333		—			1,333
Buy	COP		67,925		8/10/2016	HUS		1,279		—			1,279
Buy	CLP		228,900		8/10/2016	HUS		4,801		—			4,801
Buy	CLP		1,251,420		8/10/2016	HUS		24,457		—			24,457
Buy	CLP		477,377		8/10/2016	HUS		9,996		—			9,996
Buy	COP		67,925		8/10/2016	HUS		1,541		—			1,541
Buy	COP		475,477		8/10/2016	HUS		—		(2,417	)		(2,417	)
Buy	COP		475,477		8/10/2016	HUS		175		—			175
Buy	COP		543,402		8/10/2016	HUS		649		—			649
Buy	COP		67,925		8/10/2016	HUS		—		(343	)		(343	)
Buy	COP		67,925		8/10/2016	HUS		—		(153	)		(153	)
Sell	CLP		75,296		8/10/2016	HUS		—		(2,062	)		(2,062	)
Sell	CLP		602,368		8/10/2016	HUS		—		(16,941	)		(16,941	)
Sell	CLP		451,776		8/10/2016	HUS		—		(7,876	)		(7,876	)
Sell	CLP		75,296	��	8/10/2016	HUS		59		—			59
Sell	CLP		75,296		8/10/2016	HUS		—		(1	)		(1	)
Sell	CLP		451,776		8/10/2016	HUS		1,464		—			1,464
Sell	COP		67,925		8/10/2016	HUS		—		(2,137	)		(2,137	)
Sell	CLP		225,888		8/10/2016	HUS		—		(4,706	)		(4,706	)
Sell	COP		67,925		8/10/2016	HUS		—		(2,035	)		(2,035	)
Sell	COP		67,925		8/10/2016	HUS		—		(2,192	)		(2,192	)
Sell	COP		750,264		7/22/2016	HUS		—		(15,891	)		(15,891	)
Sell	CLP		75,296		8/10/2016	HUS		—		(940	)		(940	)
Sell	CLP		75,296		8/10/2016	HUS		—		(254	)		(254	)
Buy	AUD		2,683,389		7/5/2016	RBS		16,533		—			16,533
Sell	EUR		146,487		7/5/2016	RBS		—		(251	)		(251	)
Sell	JPY		2,615,659		7/5/2016	RBS		25,761		—			25,761
Sell	GBP		2,567,980		7/5/2016	RBS		9,715		—			9,715
Buy	PEN		75,977		7/13/2016	RBS		427		—			427
Buy	PEN		75,977		7/13/2016	RBS		1,249		—			1,249
Buy	PEN		75,977		7/13/2016	RBS		282		—			282
Buy	PEN		303,909		7/13/2016	RBS		2,230		—			2,230

See accompanying notes

17

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Type	Currency	Principal Amount Covered by Contract		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Buy	PEN		151,955		7/13/2016	RBS	$	782	$	—		$	782
Buy	PEN		75,977		7/13/2016	RBS		275		—			275
Buy	PEN		75,977		7/13/2016	RBS		749		—			749
Buy	PEN		75,977		7/13/2016	RBS		794		—			794
Buy	PEN		75,977		7/13/2016	RBS		760		—			760
Buy	PEN		75,977		7/13/2016	RBS		803		—			803
Buy	PEN		75,977		7/13/2016	RBS		1,542		—			1,542
Buy	PEN		75,977		7/13/2016	RBS		1,310		—			1,310
Buy	PEN		75,977		7/13/2016	RBS		1,395		—			1,395
Buy	PEN		75,977		7/13/2016	RBS		1,449		—			1,449
Buy	PEN		75,977		7/13/2016	RBS		1,029		—			1,029
Buy	PEN		75,977		7/13/2016	RBS		1,076		—			1,076
Buy	PEN		75,977		7/13/2016	RBS		925		—			925
Buy	PEN		797,761		7/13/2016	RBS		9,229		—			9,229
Buy	PEN		797,761		7/13/2016	RBS		8,242		—			8,242
Buy	PEN		1,215,636		7/13/2016	RBS		12,553		—			12,553
Buy	PEN		1,253,625		7/13/2016	RBS		12,079		—			12,079
Buy	PEN		1,253,625		7/13/2016	RBS		12,639		—			12,639
Buy	PEN		75,977		7/13/2016	RBS		952		—			952
Buy	PEN		75,977		7/13/2016	RBS		1,149		—			1,149
Buy	PEN		151,955		7/13/2016	RBS		1,998		—			1,998
Buy	PEN		1,215,636		7/13/2016	RBS		12,285		—			12,285
Buy	PEN		1,253,625		7/13/2016	RBS		12,579		—			12,579
Buy	PEN		1,253,625		7/13/2016	RBS		12,672		—			12,672
Buy	PEN		151,955		7/13/2016	RBS		600		—			600
Buy	PEN		151,955		7/13/2016	RBS		715		—			715
Buy	PEN		75,977		7/13/2016	RBS		512		—			512
Sell	PEN		455,864		7/13/2016	RBS		—		(4,608	)		(4,608	)
Sell	PEN		759,773		7/13/2016	RBS		—		(658	)		(658	)
Sell	PEN		75,977		7/13/2016	RBS		—		(871	)		(871	)
Sell	PEN		75,977		7/13/2016	RBS		—		(845	)		(845	)
Sell	PEN		227,932		7/13/2016	RBS		—		(1,736	)		(1,736	)
Sell	PEN		151,955		7/13/2016	RBS		—		(852	)		(852	)
Sell	PEN		75,977		7/13/2016	RBS		—		(376	)		(376	)
Sell	PEN		75,977		7/13/2016	RBS		—		(417	)		(417	)
Sell	PEN		303,909		7/13/2016	RBS		—		(509	)		(509	)
Buy	AUD		208,804		7/14/2016	RBS		85		—			85
Buy	GBP		974,787		7/14/2016	RBS		—		(94,137	)		(94,137	)
Buy	HKD		447,896		7/14/2016	RBS		42		—			42
Sell	EUR		3,442,399		7/14/2016	RBS		41,373		—			41,373
Sell	AUD		5,252,719		7/14/2016	RBS		—		(40,221	)		(40,221	)
Buy	PEN		378,468		8/17/2016	RBS		—		(913	)		(913	)
Buy	PEN		454,162		8/17/2016	RBS		4,852		—			4,852
Buy	PEN		75,694		8/17/2016	RBS		1,280		—			1,280
Buy	PEN		151,387		8/17/2016	RBS		1,931		—			1,931
Buy	PEN		75,694		8/17/2016	RBS		872		—			872
Buy	PEN		75,694		8/17/2016	RBS		784		—			784
							$	6,438,905	$	(6,353,543	)	$	85,362

^A All or a portion represents positions held by the American Beacon Cayman Managed Futures Strategy Fund, Ltd.

See accompanying notes

18

American Beacon AHL Managed Futures Strategy Fund^SM

Consolidated Schedule of Investments

June 30, 2016 (Unaudited)

Glossary

Counterparty Abbreviations:
DUB	Deutsche Bank AG	RBS	Royal Bank Of Scotland
HUS	HSBC Bank Plc
Currency Abbreviations:
AUD	Australian Dollar	GBP	Pound Sterling	PEN	Peruvian Nuevo Sol
BRL	Brazilian Real	HKD	Hong Kong Dollar	PHP	Philippine Peso
CAD	Canadian Dollar	INR	Indian Rupee	SEK	Swedish Krona
CLP	Chilean Peso	JPY	Japanese Yen	TWD	New Taiwan Dollar
COP	Columbian Peso	KRW	South Korean Won	ZAR	South African Rand
EUR	Euro	MYR	Malaysian Ringgit

See accompanying notes

19

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares			Fair Value
				(000’s)
LONG SECURITIES
COMMON STOCKS - 13.18%
CONSUMER DISCRETIONARY - 4.54%
Automobiles - 0.16%
Ford Motor Co.		9,771		$	123
General Motors Co.		4,240			120
					243
Hotels, Restaurants & Leisure - 0.40%
Carnival Corp.		9,050			400
Rezidor Hotel Group ABA		51,172			212
					612
Household Durables - 0.35%
Lennar Corp., Class B		14,781			551
Internet & Catalog Retail - 0.33%
Liberty Tripadvisor Holdings, Inc.B		23,921			523
Media - 2.07%
Discovery Communications, Inc., Class CB		54,600			1,301
Liberty Global PLC, Class AB C		31,300			910
Liberty Media Group, Class AB		22,346			428
News Corp., Class A		23,331			265
RELX N.V.		3,051			53
Viacom, Inc., Class B		6,988			290
					3,247
Textiles & Apparel - 1.23%
Under Armour, Inc.B		52,778			1,921
Total Consumer Discretionary					7,097
CONSUMER STAPLES - 1.08%
Beverages - 0.08%
Coca-Cola Co.		2,844			129
Food Products - 0.10%
Kellogg Co.		1,900			155
Household Products - 0.81%
Central Garden and Pet Co.B		52,234			1,134
Procter & Gamble Co.		1,603			136
					1,270
Tobacco - 0.09%
Reynolds American, Inc.		2,500			135
Total Consumer Staples					1,689
ENERGY - 0.03%
Oil & Gas - 0.03%
Seadrill Ltd. B		13,300			43
FINANCIALS - 2.92%
Banks - 0.25%
Bank of Kyoto Ltd.A		44,695			273
M&T Bank Corp.		1,029			122
					395
Diversified Financials - 2.40%
AR Capital Acquisition Corp.B E		67,331	D		669
Arowana, Inc.B E		2,500	D		26

See accompanying notes

20

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares			Fair Value
				(000’s)
Barington/Hilco Acquisition Corp.B E		2,024	D	$	20
Boulevard Acquisition Corp. IIB E		66,358			647
Boulevard Acquisition Corp. IIB E		9,464	D		94
Capitol Acquisition Corp. IIIB E		9,300	D		92
Double Eagle Acquisition Corp.B E		8,011	D		80
Electrum Special Acquisition Corp.B E		68,228	D		664
Gores Holdings, Inc.B E		9,000	D		89
GP Investments Acquisition Corp.B E		4,510	D		44
Hennessy Capital Acquisition Corp. IIB E		56,686	D		527
Hydra Industries Acquisition Corp.B E		15,534	D		154
Industrivarden AB, C SharesA		14,886			241
Pace Holdings Corp.B K		1			—
Pace Holdings Corp.B E		8,011	D		80
Quinpario Acquisition Corp. 2B E		13,513	D		134
Terrapin 3 Acquisition Corp.B E		18,332	D		182
					3,743
Insurance - 0.27%
Berkshire Hathaway, Inc., Class BB		900			130
Crawford & Company, Class A		38,333			292
					422
Total Financials					4,560
HEALTH CARE - 0.49%
Biotechnology - 0.08%
Gilead Sciences, Inc.		1,551			129
Health Care Providers & Services - 0.17%
Alere, Inc.B		6,300			263
Pharmaceuticals - 0.24%
Abbott Laboratories		3,412			134
Pfizer, Inc.		3,878			137
Valeant Pharmaceuticals International, Inc.		4,778			96
					367
Total Health Care					759
INDUSTRIALS - 1.27%
Aerospace & Defense - 0.57%
Boeing Co.		1,400			182
HEICO Corp., Class A		10,804			580
United Technologies Corp.		1,293			133
					895
Machinery - 0.69%
Volvo AB, A SharesA		109,450			1,079
Trading Companies & Distributors - 0.01%
Nexeo Solutions Inc.B		11,920			8
Total Industrials					1,982
INFORMATION TECHNOLOGY - 1.77%
Communications Equipment - 0.09%
Cisco Systems, Inc.		4,808			138
Computers & Peripherals - 0.31%
Apple, Inc.		1,397			134
Lexmark International, Inc., Class A		9,300			350
					484
Electronic Equipment & Instruments - 0.40%
Ingram Micro, Inc., Class A		9,500			330

See accompanying notes

21

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
Rofin-Sinar Technologies, Inc.B		9,100	$	291
				621
Internet Software & Services - 0.53%
Alphabet, Inc., Class AB		401		282
Global Eagle Entertainment, Inc.B		6,850		45
Qihoo 360 Technology Co., Ltd., ADRB F		4,323		316
Yahoo, Inc.B		5,114		192
				835
Semiconductor Equipment & Products - 0.36%
Fairchild Semiconductor International, Inc.B		14,197		282
Intel Corp.		4,240		139
Qualcomm, Inc.		2,600		139
				560
Software - 0.08%
Microsoft Corp.		2,481		127
Total Information Technology				2,765
MATERIALS - 0.99%
Chemicals - 0.09%
Delta Technology Holdings Ltd.B		17,778		22
Dow Chemical Co.		2,533		126
				148
Metals & Mining - 0.90%
BHP Billiton PLC, ADRC F		32,838		833
Industrias Penoles S.A.B. de C.V.		24,022		574
				1,407
Total Materials				1,555
TELECOMMUNICATION SERVICES - 0.09%
Diversified Telecommunication Services - 0.09%
Verizon Communications, Inc.		2,533		141
Total COMMON STOCKS (Cost $20,293)				20,591
WARRANTS - 6.53%
CONSUMER DISCRETIONARY - 0.50%
Automobiles - 0.04%
Blue Bird Corp., 2/24/2020, Strike Price $11.50		60,432		66
Hotels, Restaurants & Leisure - 0.42%
Chanticleer Holdings, Inc., 6/21/2017, Strike Price $5.00		13,325		1
Del Taco Restaurants, Inc., 6/30/2020, Strike Price $11.50		334,616		649
				650
Media - 0.04%
Hemisphere Media Group, Inc., 4/4/2018, Strike Price $12.00		119,546		60
Retail - 0.00%
KBS Fashion Group Ltd., 1/22/2018, Strike Price $11.50K		40,000		—
Total Consumer Discretionary				776
ENERGY - 0.06%
Energy - 0.05%
FieldPoint Petroleum Corp., 3/23/2018, Strike Price $4.00		42,260		1
Sunworks, Inc., 3/9/2020, Strike Price $4.15		73,040		76
				77

See accompanying notes

22

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
Oil & Gas - 0.01%
Kinder Morgan, Inc., 5/25/2017, Strike Price $40.00F		715,976	$	12
Total Energy				89
FINANCIALS - 3.84%
Banks - 3.83%
Associated Banc-Corp., 11/21/2018, Strike Price $19.77		81,442		98
JPMorgan Chase & Co., 10/28/2018, Strike Price $42.204		76,097		1,541
M&T Bank Corp., 12/23/2018, Strike Price $73.86		3,176		138
PNC Financial Services Group, Inc., 12/31/2018, Strike Price $67.33		64,518		1,124
Signature Bank, 12/12/2018, Strike Price $30.21F		706		67
SunTrust Banks, Inc., 11/14/2018, Strike Price $44.15		299,404		1,272
TCF Financial Corp., 11/14/2018, Strike Price $16.93		101,692		146
Texas Capital Bancshares, Inc., 1/16/2019, Strike Price $14.84		6,348		203
Valley National Bancorp, 11/14/2018, Strike Price $16.11		43,064		3
Washington Federal, Inc., 11/14/2018, Strike Price $17.57		25,057		166
Wells Fargo & Co., 10/28/2018, Strike Price $33.896		15,465		211
Wintrust Financial Corp., 12/19/2018, Strike Price $22.82		10,522		298
Zions Bancorporation, 5/22/2020, Strike Price $36.1976		343,848		743
				6,010
Diversified Financials - 0.01%
Arowana, Inc., 5/1/2020, Strike Price $12.50E		117,141		8
Total Financials				6,018
HEALTH CARE - 0.16%
Biotechnology - 0.08%
BioTime, Inc., 10/1/2018, Strike Price $5.00		175,888		82
Cellectar Biosciences Inc., 4/8/2021, Strike Price $3.04F		45,853		44
ContraFect Corp., 1/31/2017, Strike Price $4.80		48,649		10
				136
Health Care Equipment & Supplies - 0.03%
LabStyle Innovations Corp., 3/8/2021, Strike Price $5.63		35,678		39
Pharmaceuticals - 0.05%
CEL-SCI Corp., 10/11/2018, Strike Price $1.25		20,000		3
EyeGate Pharmaceuticals, Inc., 7/31/2020, Strike Price $10.62		24,172		15
Kitov Pharmaceuticals Holdings, Ltd., ADR, 11/20/2020, Strike Price $4.13F		52,932		41
Oculus Innovative Sciences, Inc., 1/21/2020, Strike Price $1.30		74,513		16
				75
Total Health Care				250
INDUSTRIALS - 0.02%
Chemicals - 0.02%
AgroFresh Solutions, Inc., 2/19/2019, Strike Price $11.50		34,713		33
Commercial Services & Supplies - 0.00%
Tempus Applied Solutions Holdings, Inc., 7/31/2020, Strike Price $11.50K		37,152		—
Total Industrials				33
INFORMATION TECHNOLOGY - 0.16%
Computers & Peripherals - 0.16%
Applied DNA Sciences, Inc., 11/14/2019, Strike Price $3.50		99,617		107
Eastman Kodak Co., 9/3/2018, Strike Price $14.93		5,000		19
Eastman Kodak Co., 9/3/2018, Strike Price $16.12		42,679		132
				258

See accompanying notes

23

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
Software & Services - 0.00%
RMG Networks Holding Corp., 4/8/2018, Strike Price $11.50K		59,907	$	—
Total Information Technology				258
MATERIALS - 1.79%
Chemicals - 0.00%
Delta Technology Holdings Ltd., 12/18/2017, Strike Price $10.00F		9,990		2
Construction Materials - 1.13%
US Concrete, Inc., 8/31/2017, Strike Price $22.69		10,731		405
US Concrete, Inc., 8/31/2017, Strike Price $26.68		40,538		1,365
				1,770
Metals & Mining - 0.66%
Franco-Nevada Corp., 6/16/2017, Strike Price $75.00		46,815		1,026
New Gold, Inc., 6/28/2017, Strike Price $15.00		62,717		4
				1,030
Total Materials				2,802
Total WARRANTS (Cost $10,175)				10,226
CONVERTIBLE PREFERRED STOCKS - 6.35%
ENERGY - 0.31%
Oilfield Mach./Service - 0.31%
McDermott International, Inc., 6.25%, Due 4/1/2017		28,000		482
Power - 0.00%
SunEdison, Inc., 6.75%, Due 12/31/2029		500		4
Total Energy				486
FINANCE - 2.97%
HMO - 1.08%
Anthem, Inc., 5.25%, Due 5/1/2018		37,702		1,687
Insurance - 0.89%
Maiden Holdings Ltd., 7.25%, Due 9/15/2016		29,438		1,398
Real Estate Investment Trusts - 1.00%
Forestar Group, Inc., 6.00%, Due 12/15/2016		102,300		1,568
Total Finance				4,653
MANUFACTURING - 1.75%
William Lyon Homes, Inc., 6.50%, Due 12/01/2017		32,700		2,733
SERVICE - 1.32%
Teva Pharmaceutical Industries Ltd., 7.00%, Due 12/15/2018		2,500		2,068
Total CONVERTIBLE PREFERRED STOCKS (Cost $10,294)				9,940
PREFERRED STOCKS - 1.17% (Cost $1,800)
SERVICE - 1.17%
Mandatory Exchange Trust, 5.75%, Due 6/1/2019 B H		18,000		1,837
	Par Amount
	(000’s)
CONVERTIBLE OBLIGATIONS - 19.73%
Auto Manufacturing - 3.02%
Fiat Chrysler Automobiles N.V., 7.875%, Due 12/15/2016	$	5,617		3,364

See accompanying notes

24

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Par Amount		Fair Value
	(000’s)		(000’s)
Tesla Motors, Inc., 1.50%, Due 6/1/2018	$	810	$	1,369
				4,733
Banks - 1.37%
Immunogen, Inc., 4.50%, Due 7/1/2021G		730		671
Intercept Pharmaceuticals, Inc., 3.25%, Due 7/1/2023		1,465		1,478
				2,149
Convertible Obligations - 1.68%
Cypress Semiconductor Corp., 4.50%, Due 1/15/2022G		1,280		1,368
Medicines Co., 2.75%, Due 7/15/2023G		1,325		1,270
				2,638
Electric - 0.63%
Chugoku Electric Power Co., 0.01%, Due 3/25/2020		100,000		974
Electronics - 0.23%
SunPower Corp., 4.00%, Due 1/15/2023G		417		367
Health Care Supply - 0.85%
Wright Medical Group, N.V., 2.25%, Due 11/15/2021G		1,298		1,335
Information / Data Technology - 2.48%
Cornerstone OnDemand, Inc., 1.50%, Due 7/1/2018		1,305		1,342
Mentor Graphics Corp., 4.00%, Due 4/1/2031		1,400		1,535
Unisys Corp., 5.50%, Due 3/1/2021G		1,000		1,008
				3,885
Internet Tech - 2.01%
j2 Global, Inc., 3.25%, Due 6/15/2029		1,000		1,120
Vipshop Holdings Ltd., 1.50%, Due 3/15/2019		1,038		1,020
Yahoo, Inc., 0.01%, Due 12/1/2018		1,000		993
				3,133
Metals & Mining - 1.18%
Alleghany Technologies, Inc., 4.75%, Due 7/1/2022		1,744		1,840
Pharmaceuticals - 1.69%
Depomed, Inc., 2.50%, Due 9/1/2021		1,606		1,938
Ionis Pharmaceuticals, Inc., 1.00%, Due 11/15/2021		1,000		707
				2,645
REIT - 0.87%
SL Green Operating Partnership LP, 3.00%, Due 10/15/2017 G I		1,000		1,358
Retail - 0.16%
Restoration Hardware Holdings, Inc., 0.01%, Due 7/15/2020 G		337		253
Telecom - 3.28%
America Movil S.A.B. de C.V., 5.50%, Due 9/17/2018		2,100		2,418
Telefonica Participacion Co., 4.90%, Due 9/25/2017		3,000		2,715
				5,133
Utilities - 0.28%
Dynegy, Inc., 7.00%, Due 7/1/2019		4		446
Total CONVERTIBLE OBLIGATIONS (Cost $31,735)				30,889
COLLATERALIZED MORTGAGE OBLIGATIONS - 13.64%
Fannie Mae Interest Strip,
8.50%, Due 3/25/2023, 211 2		299		58
6.804%, Due 2/25/2024, 1996 45 SI		1,597		263
5.00%, Due 4/25/2034, 351 5		326		63
5.50%, Due 8/25/2035, 359 14		1,289		251
5.684%, Due 8/25/2035, 2005 73 ST		2,597		526
5.50%, Due 10/25/2035, 359 12		1,272		273
6.804%, Due 6/25/2036, 2006 46 ES		1,639		383
5.00%, Due 5/25/2039, 2009 50 GI		1,264		157
5.804%, Due 9/25/2045, 2015 66 AS		1,718		357

See accompanying notes

25

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Par Amount		Fair Value
	(000’s)		(000’s)
Fannie Mae REMICS,
6.50%, Due 3/25/2027, 1997 9 CL H	$	995	$	158
7.566%, Due 9/17/2027, 1997 65 SIJ		1,910		430
7.304%, Due 3/25/2032, 2002 8 SCJ		171		37
6.554%, Due 9/25/2032, 2002 90 DSJ		1,031		189
7.554%, Due 12/25/2032, 2002 86 USJ		680		147
4.50%, Due 12/25/2033, 2003 119 GI		146		23
6.154%, Due 2/25/2035, 2005 2 SJ		221		50
6.184%, Due 7/25/2035, 2005 66 LSJ		2,511		576
6.254%, Due 3/25/2036, 2006 8 HLJ		2,169		493
6.124%, Due 6/25/2036, 2006 44 SFJ		3,404		642
5.604%, Due 11/25/2036, 2008 50 SAJ		216		42
6.144%, Due 11/25/2036, 2006 106 CSJ		2,511		543
6.194%, Due 12/25/2036, 2006 117 SAJ		1,742		386
6.054%, Due 2/25/2037, 2007 1 NIJ		1,766		310
7.00%, Due 2/25/2037, 381 17		1,067		256
5.00%, Due 3/25/2039, 2009 11 TI		1,152		193
5.00%, Due 2/25/2040, 2010 16 PI		188		28
6.034%, Due 7/25/2040, 2010 68 SCJ		1,487		345
8.687%, Due 12/25/2041, 2011 130 NYJ		404		464
5.50%, Due 12/25/2043, 2014 38 QI		2,029		378
5.00%, Due 5/25/2045, 2015 30 EI		1,921		354
5.50%, Due 5/25/2045, 2015 30 IO		2,037		400
5.00%, Due 10/25/2045, 2015 70 JI		1,668		311
1.849%, Due 6/25/2055, 2015 42 AI		4,026		267
1.697%, Due 9/25/2055, 2015 64 SK		7,362		494
Freddie Mac REMICS,
7.666%, Due 2/15/2028, 2526 SWJ		128		29
8.50%, Due 1/15/2030, 2206 IO		142		37
7.517%, Due 2/15/2032, 2411 SJ		947		216
7.00%, Due 4/15/2032, 2525 IK		132		45
7.366%, Due 6/15/2032, 3489 SDJ		138		30
12.608%, Due 7/15/2033, 2647 IVJ		629		343
5.616%, Due 3/15/2035, 2950 SNJ		981		166
6.266%, Due 10/15/2036, 3232 STJ		187		35
5.886%, Due 12/15/2036, 3257 SIJ		691		138
6.256%, Due 12/15/2036, 3256 SJ		1,299		273
6.046%, Due 7/15/2037, 3510 CIJ		2,239		501
1.00%, Due 3/15/2038, 3421 IO		14,015		628
8.231%, Due 5/15/2041, 3866 DSJ		361		409
6.322%, Due 9/15/2041, 3997 ESJ		375		408
1.779%, Due 10/15/2041, 4413 WI		1,137		79
0.916%, Due 4/15/2043, 4517 KIJ		7,189		167
6.00%, Due 11/15/2043, 4472 IJ		1,463		320
6.00%, Due 6/15/2045, 4496 ID		1,644		306
Ginnie Mae REMIC Trust,
7.066%, Due 5/16/2031, 2001 22 SDJ		419		100
7.066%, Due 6/16/2032, 2002 41 SYJ		129		24
7.266%, Due 2/16/2033, 2003 11 SKJ		305		53
7.212%, Due 6/20/2033, 2004 56 SJ		459		99
5.996%, Due 10/16/2033, 2003 92 SNJ		195		35
6.162%, Due 11/20/2033, 2003 98 SCJ		1,278		279
6.712%, Due 11/20/2033, 2004 37 SMJ		1,541		117
6.116%, Due 5/16/2034, 2004 40 SBJ		2,674		504
6.662%, Due 6/20/2034, 2004 46 S		2,130		457
5.662%, Due 9/20/2034, 2004 86 SPJ		188		28

See accompanying notes

26

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Par Amount		Fair Value
	(000’s)		(000’s)
5.50%, Due 1/20/2035, 2015 179 IV	$	1,652	$	70
5.662%, Due 1/20/2035, 2009 25 SBJ		3,492		176
5.00%, Due 6/20/2035, 2014 183 IM		1,998		462
6.366%, Due 8/16/2036, 2006 47 SAJ		137		30
6.126%, Due 11/16/2036, 2008 83 SDJ		116		25
6.212%, Due 12/20/2037, 2007 81 SPJ		2,778		562
5.966%, Due 5/16/2038, 2008 40 SAJ		314		62
5.00%, Due 9/20/2038, 2016 12 KI		1,285		312
5.50%, Due 5/16/2039, 2009 776 GI		1,310		189
4.50%, Due 9/20/2039, 2013 88 WI		464		47
4.00%, Due 2/20/2040, 2015 162 LI		2,346		257
5.559%, Due 5/20/2040, J		4,630		669
6.00%, Due 9/20/2040,		2,936		645
5.00%, Due 12/20/2040, 2010 163 IO		2,137		376
5.00%, Due 5/16/2042, 2013 44 IB		485		111
5.00%, Due 6/20/2043, 2013 86 IA		374		78
6.266%, Due 8/16/2043, 2013 113 SDJ		2,044		403
5.712%, Due 11/20/2043, 2013 165 STJ		209		39
0.989%, Due 1/16/2044, 2015 80 HI		3,544		133
5.50%, Due 1/20/2044, 2014 2 TI		529		95
6.00%, Due 5/20/2044, 2016 1 IO		2,934		454
6.361%, Due 11/20/2044, 2014 161 SLJ		203		47
7.00%, Due 8/20/2045, 2015 111 YI		416		84
5.00%, Due 12/16/2045, 2015 180 CI		1,435		351
Total COLLATERALIZED MORTGAGE OBLIGATIONS (Cost $21,253)				21,350
	Shares
EXCHANGE TRADED INSTRUMENTS - 1.62%
EXCHANGE TRADED FUNDS - 1.34%
CurrencyShares British Pound Sterling Trust		1,000		130
CurrencyShares Euro Trust		3,500		379
CurrencyShares Japanese Yen Trust		2,000		187
iShares China Large-Cap Fund		147		5
Vaneck Vectors Gold Miners ETF		4,341		120
VanEck Vectors Russia ETF		73,333		1,277
Total Exchange Traded Funds				2,098
EXCHANGE TRADED NOTES - 0.28%
ETRACS Monthly Pay 2xLeveraged Closed-End Fund ETN		25,735		434
Total EXCHANGE TRADED INSTRUMENTS (Cost $2,459)				2,532
INVESTMENT COMPANIES - 2.41%
CLOSED END FUNDS - 2.41%
Invesco Dynamic Credit Opportunities Fund		112,285		1,238
Invesco Senior Income Trust		208,885		873
Miller/Howard High Dividend Fund		20,084		240
Nuveen Credit Strategies Income Fund		91,786		742
Voya Prime Rate Trust		131,734		674
Total Closed End Funds				3,767
Total INVESTMENT COMPANIES (Cost $3,750)				3,767
SHORT-TERM INVESTMENTS - 33.98% (Cost $53,215)
American Beacon U.S. Government Money Market Select Fund, Select ClassL		53,215,103		53,215
Total SECURITIES HELD LONG (Cost $154,974)				154,347

See accompanying notes

27

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares			Fair Value
				(000’s)
SECURITIES SOLD SHORT
COMMON STOCKS - (38.73%)
CONSUMER DISCRETIONARY - (9.23%)
Automobiles - (2.40%)
Blue Bird Corp.B		(10,987	)	$	(131	)
Fiat Chrysler Automobiles N.V.		(370,945	)		(2,269	)
Tesla Motors, Inc.B		(6,247	)		(1,326	)
					(3,726	)
Homebuilders - (1.42%)
William Lyon Homes, Inc., Class AB		(138,260	)		(2,229	)
Hotels, Restaurants & Leisure - (1.06%)
Carnival PLC, ADRC F		(9,211	)		(413	)
Del Taco Restaurants, Inc.B		(135,751	)		(1,235	)
					(1,648	)
Household Durables - (0.43%)
Lennar Corp., Class A		(14,778	)		(682	)
Internet & Catalog Retail - (0.40%)
TripAdvisor, Inc.B		(9,859	)		(634	)
Media - (2.21%)
Discovery Communications, Inc., Class AB		(54,592	)		(1,378	)
Hemisphere Media Group, Inc.B		(12,147	)		(143	)
Liberty Global PLC, Series CB C		(31,300	)		(897	)
Liberty Media Group, Class CB		(22,300	)		(423	)
News Corp., Class B		(22,747	)		(265	)
RELX PLC, Sponsored ADRF		(3,021	)		(56	)
Viacom, Inc., Class A		(6,582	)		(306	)
					(3,468	)
Textiles & Apparel - (1.31%)
Under Armour, Inc., Class AB		(51,113	)		(2,051	)
Total Consumer Discretionary					(14,438	)
ENERGY - (0.68%)
Energy Equipment & Services - (0.50%)
Dynegy, Inc.B		(19,542	)		(337	)
McDermott International, Inc.B		(90,499	)		(447	)
					(784	)
Oil & Gas - (0.18%)
Columbia Pipeline Group Inc.		(10,900	)		(278	)
Total Energy					(1,062	)
FINANCIALS - (11.39%)
Banks - (6.89%)
Associated Banc-Corp.		(34,427	)		(590	)
M&T Bank Corp.		(1,658	)		(196	)
PNC Financial Services Group, Inc.		(46,802	)		(3,808	)
Signature Bank/New York NYB		(728	)		(91	)
SunTrust Banks, Inc.		(41,771	)		(1,716	)
TCF Financial Corp.		(30,160	)		(382	)
Washington Federal, Inc.		(17,387	)		(422	)
Wintrust Financial Corp.		(9,570	)		(488	)
Zions Bancorporation		(123,112	)		(3,094	)
					(10,787	)

See accompanying notes

28

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares			Fair Value
Diversified Financials - (2.16%)
Industrivarden AB, A SharesA		(14,897	)	$	(260	)
JPMorgan Chase & Co.		(35,777	)		(2,224	)
Texas Capital Bancshares, Inc.B		(5,906	)		(276	)
Wells Fargo & Co.		(12,837	)		(608	)
					(3,368	)
Insurance - (0.61%)
Crawford & Co., Class B		(38,323	)		(325	)
Maiden Capital Financing Trust		(51,206	)		(626	)
					(951	)
Real Estate - (1.73%)
Forestar Group, Inc.B		(129,169	)		(1,536	)
SL Green Realty Corp.J		(11,016	)		(1,173	)
					(2,709	)
Total Financials					(17,815	)
HEALTH CARE - (4.14%)
Biotechnology - (0.84%)
BioTime, Inc.B		(33,616	)		(88	)
ContraFect Corp.B		(13,362	)		(39	)
Immunogen, Inc.B		(125,249	)		(385	)
Intercept Pharmaceuticals, Inc.B		(4,395	)		(619	)
Ionis Pharmaceuticals, Inc.B		(7,800	)		(182	)
					(1,313	)
Health Care Equipment & Supplies - (0.51%)
Wright Medical Group, N.V.B		(45,647	)		(793	)
Health Care Providers & Services - (0.64%)
Anthem, Inc.		(7,605	)		(999	)
Pharmaceuticals - (2.15%)
Depomed, Inc.B		(61,704	)		(1,211	)
Medicines Co.B		(18,625	)		(626	)
Teva Pharmaceutical Industries Ltd., Sponsored ADRF		(30,383	)		(1,526	)
					(3,363	)
Total Health Care					(6,468	)
INDUSTRIALS - (1.99%)
Aerospace & Defense - (0.46%)
HEICO Corp.		(10,752	)		(719	)
Chemicals - (0.79%)
AgroFresh Solutions, Inc.B		(13,193	)		(70	)
Central Garden and Pet Co.B		(51,514	)		(1,177	)
					(1,247	)
Machinery - (0.70%)
Volvo AB, Class BA B		(110,112	)		(1,087	)
Trading Companies & Distributors - (0.04%)
Nexeo Solutions Inc.B		(5,744	)		(51	)
Total Industrials					(3,104	)
INFORMATION TECHNOLOGY - (3.92%)
Computers & Peripherals - (0.14%)
Applied DNA Sciences, Inc.B		(55,531	)		(179	)
Eastman Kodak Co.B		(2,500	)		(40	)
					(219	)
Internet Software & Services - (1.90%)
Alibaba Group Holding Ltd., ADRB G		(20,470	)		(1,628	)
Alphabet, Inc., Class CB		(401	)		(278	)

See accompanying notes

29

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares			Fair Value
Cornerstone OnDemand, Inc.B		(9,448	)	$	(360	)
j2 Global, Inc.		(11,245	)		(710	)
					(2,976	)
IT Consulting & Services - (0.37%)
Unisys Corp.B		(80,164	)		(584	)
Semiconductor Equipment & Products - (0.79%)
Cypress Semiconductor Corp.		(56,820	)		(599	)
Micron Technology, Inc.B		(33,648	)		(463	)
SunPower Corp.B		(11,181	)		(173	)
					(1,235	)
Software - (0.67%)
Mentor Graphics Corp.		(49,168	)		(1,045	)
Specialty Retail - (0.05%)
Vipshop Holdings Ltd., ADRB F		(7,186	)		(80	)
Total Information Technology					(6,139	)
MATERIALS - (4.99%)
Construction Materials - (1.81%)
US Concrete, Inc.B		(46,630	)		(2,840	)
Metals & Mining - (3.18%)
Allegheny Technologies, Inc.		(91,801	)		(1,170	)
BHP Billiton Ltd., Sponsored ADRF		(32,796	)		(937	)
Franco-Nevada Corp.		(30,897	)		(2,350	)
Fresnillo PLCA C		(23,769	)		(525	)
					(4,982	)
Total Materials					(7,822	)
TELECOMMUNICATION SERVICES - (2.26%)
Koninklijke KPN N.V.A B		(417,800	)		(1,515	)
Telefonica S.A.A		(186,838	)		(1,786	)
Telefonica S.A., Sponsored ADRF		(24,666	)		(234	)
Total Telecommunication Services					(3,535	)
UTILITIES - (0.13%)
Chugoku Electric Power Co., A		(15,533	)		(197	)
Total COMMON STOCKS (Proceeds $(60,413))					(60,580	)
	Par Amount
	(000’s)
CORPORATE OBLIGATIONS – (0.27%) (Proceeds $(407))
Metals & Mining – (0.27%)
Alleghany Technologies, Inc., 7.875%, Due 8/15/2023	$	(500	)		(418	)
	Shares
EXCHANGE TRADED INSTRUMENTS – (9.22%)
EXCHANGE TRADED FUNDS – (7.55%)
Direxion Daily Emerging Markets Bear 3X Shares		(3,977	)		(122	)
Direxion Daily Financial Bear 3X Shares		(3,977	)		(150	)
Direxion Daily Financial Bear 3X Shares		(14,700	)		(305	)
Direxion Daily Financial Bull 3X Shares		(7,958	)		(203	)
Direxion Daily FTSE China Bull 3X Shares		(25,000	)		(361	)

See accompanying notes

30

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares			Fair Value
Direxion Daily Gold Miners Index Bull 3X Shares		(10,133	)	$	(1,278	)
Direxion Daily Russia Bull 3x Shares		(7,500	)		(440	)
Direxion Daily Small Cap Bear 3X Shares		(6,000	)		(216	)
iShares MSCI USA Minimum Volatility ETF		(55,858	)		(2,580	)
PowerShares DB US Dollar Index Bullish Fund		(179,938	)		(4,469	)
SPDR EURO STOXX 50 ETF		(33,987	)		(1,059	)
Vanguard FTSE Emerging Markets Fund		(18,399	)		(648	)
Total Exchange Traded Funds					(11,831	)
EXCHANGE TRADED NOTES – (1.67%)
iPATH S&P 500 VIX Short-Term Futures ETN		(188,943	)		(2,608	)
Total EXCHANGE TRADED INSTRUMENTS (Proceeds $(13,555))					(14,439	)
Total SECURITIES SOLD SHORT (Proceeds $(74,375))					(75,437	)
TOTAL INVESTMENTS IN SECURITIES (excludes securities sold short) - 98.60% (Cost $154,974)					154,347
TOTAL PURCHASED OPTIONS - 9.03% (Cost $14,200)					14,163
TOTAL WRITTEN OPTIONS - (3.29)% (Premiums $(5,454))					(5,175	)
TOTAL SECURITIES SOLD SHORT - (48.21)% (Proceeds $(74,375))					(75,437	)
OTHER ASSETS, NET OF LIABILITIES – 43.87%					68,682
TOTAL NET ASSETS - 100.00%				$	156,580

Percentages are stated as a percent of net assets.

^A Fair valued pursuant to procedures approved by the Board of Trustees. At period end, the value of these securities amounted to $3,565 or 2.28% of net assets.

^B Non-income producing security.

^C PLC - Public Limited Company.

^D Unit - Usually consists of one common stock and/or rights and warrants.

^E SPAC - Special Purpose Acquisition Company.

^F ADR - American Depositary Receipt.

^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 $9,467 or 6.04% of net assets. The Fund has no right to demand registration of these securities.

^H LP - Limited Partnership.

^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 REIT - Real Estate Investment Trust.

^K Amount is less than $500.

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

See accompanying notes

31

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

Futures Contracts Open on June 30,2016:

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
Nikkei 225 (CME) Futures		Long		26		September 2016	$	2,056,600	$	62,900
Russell 2000 Mini Index Futures		Short		9		September 2016		1,032,660		(3,240	)
							$	1,023,940	$	59,660

Purchased Options Outstanding on June 30, 2016:

Equity Options

Description	Exercise Price		Expiration Date		Number of Contracts		Premiums Paid		Fair Value		Net Unrealized Appreciation (Depreciation)
Call - Columbia Pipeline Group Inc.		25.00		7/15/2016		109	$	12,395	$	5,450	$	(6,945	)
Call - SunTrust Banks, Inc.		46.00		7/15/2016		598		27,759		11,960		(15,799	)
Call - Zions Bancorporation		27.00		7/15/2016		406		29,858		4,872		(24,986	)
Put - Crown Castle International Corp.		60.00		7/15/2016		14		708		350		(358	)
Put - Fiat Chrysler Automobiles N.V.		7.00		7/15/2016		78		3,127		7,605		4,478
Put - SunTrust Banks, Inc.		46.00		7/15/2016		569		231,321		293,035		61,714
Put - Zions Bancorporation		20.00		7/15/2016		406		34,527		2,436		(32,091	)
Call - Global Eagle Entertainment Inc.		12.50		8/19/2016		12		787		60		(727	)
Call - McDermott International, Inc.		5.50		8/19/2016		181		4,623		3,620		(1,003	)
Put - Forestar Group Inc.		7.50		8/19/2016		70		3,638		700		(2,938	)
Put - Global Eagle Entertainment Inc.		10.00		8/19/2016		73		12,815		25,185		12,370
Put - JPMorgan Chase & Co.		70.00		8/19/2016		185		120,206		157,250		37,044
Put - Maiden Holdings Ltd.		12.50		8/19/2016		223		20,642		20,070		(572	)
Put - Maiden Holdings Ltd.		10.00		8/19/2016		121		5,267		3,025		(2,242	)
Put - Maiden Holdings Ltd.		7.50		8/19/2016		8		284		100		(184	)
Put - William Lyon Homes		5.00		8/19/2016		54		1,922		1,350		(572	)
Put - William Lyon Homes		7.50		8/19/2016		21		1,271		263		(1,008	)
Put - William Lyon Homes		10.00		8/19/2016		20		1,706		300		(1,406	)
Put - William Lyon Homes		12.50		8/19/2016		30		3,916		1,275		(2,641	)
Call - Del Taco Restaurants Inc.		15.00		9/16/2016		10		284		250		(34	)
Call - Del Taco Restaurants Inc.		12.50		9/16/2016		7		389		193		(196	)
Call - Qihoo 360 Technology Co., Ltd.		72.50		9/16/2016		165		52,554		57,750		5,196
Call - Lending Club Corp.		5.00		10/21/2016		372		23,637		18,600		(5,037	)
Call - Marathon Petroleum Corp.		40.00		10/21/2016		400		82,616		96,000		13,384
Call - Seadrill Ltd.		7.00		10/21/2016		151		27,148		1,133		(26,015	)
Put - Seadrill Ltd.		4.00		10/21/2016		375		59,039		48,750		(10,289	)
Call - McDermott International, Inc.		6.00		11/18/2016		66		2,646		2,310		(336	)
Call - Royal Bank of Scotland Group PLC		5.00		11/18/2016		300		21,462		18,000		(3,462	)
Put - Fiat Chrysler Automobiles N.V.		5.00		11/18/2016		150		6,829		3,375		(3,454	)
Put - Applied DNA Sciences, Inc.		5.00		12/16/2016		21		4,791		4,463		(328	)
Put - Fiat Chrysler Automobiles N.V.		6.00		12/16/2016		112		6,730		7,840		1,110
Call - AgroFresh Solutions, Inc.		7.50		1/20/2017		12		721		510		(211	)
Call - Energy XXI Ltd.		1.50		1/20/2017		169		8,710		423		(8,287	)
Call - Energy XXI Ltd.		2.00		1/20/2017		5		178		13		(165	)
Call - Linn Energy LLC		4.00		1/20/2017		1,653		71,090		4,133		(66,957	)
Call - McDermott International, Inc.		7.00		1/20/2017		5		150		150		—
Call - Micron Technology Inc.		14.00		1/20/2017		1,050		133,392		187,950		54,558
Call - Terex Corp.		25.00		1/20/2017		296		50,340		18,500		(31,840	)
Put - Bunge Ltd.		35.00		1/20/2017		130		7,220		5,850		(1,370	)
Put - Vipshop Holdings Ltd.		6.00		1/20/2017		1,038		35,464		31,140		(4,324	)
Call - Energy XXI Ltd.		2.00		1/19/2018		559		27,341		1,398		(25,943	)
Call - Energy XXI Ltd.		1.00		1/19/2018		27		2,067		68		(1,999	)
Call - Linn Energy LLC		3.00		1/19/2018		345		17,781		863		(16,918	)
Put - Valeant Pharmaceuticals International, Inc.		10.00		1/19/2018		298		84,891		68,838		(16,053	)
							$	1,244,242	$	1,117,406	$	(126,836	)

See accompanying notes

32

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

ETF Options

Description	Exercise Price		Expiration Date		Number of Contracts		Premiums Paid		Fair Value		Net Unrealized Appreciation (Depreciation)
Put - CurrencyShares British Pound ETF		144.00		7/15/2016		32	$	10,007	$	46,048	$	36,041
Put - CurrencyShares British Pound ETF		140.00		7/15/2016		86		24,685		87,892		63,207
Call - SPDR Euro Stoxx 50 ETF		34.00		8/19/2016		894		94,341		13,410		(80,931	)
Call - VanEck Vectors Russia ETF		15.00		8/19/2016		125		34,373		32,875		(1,498	)
Call - Ishares MSCI USA Minimum Volatility ETF		44.00		9/16/2016		939		94,791		225,360		130,569
Call - VanEck Vectors Gold Miners ETF		26.00		9/16/2016		414		82,763		132,480		49,717
Call - VanEck Vectors Gold Miners ETF		20.00		9/16/2016		925		622,752		716,874		94,122
Put - SPDR S&P 500 ETF Trust		180.00		12/30/2016		148		103,828		46,620		(57,208	)
Call - CurrencyShares British Pound ETF		140.00		1/20/2017		542		378,936		81,300		(297,636	)
Call - CurrencyShares British Pound ETF		150.00		1/20/2017		297		77,561		10,098		(67,463	)
Call - CurrencyShares Japanese Yen Trust		90.00		1/20/2017		1,400		394,534		744,799		350,265
Call - CurrencyShares Japanese Yen Trust		94.00		1/20/2017		1,295		413,985		420,875		6,890
Call - SPDR Euro Stoxx 50 ETF		35.00		1/20/2017		1,507		192,561		76,857		(115,704	)
Call - VanEck Vectors Russia ETF		20.00		1/20/2017		100		8,187		6,200		(1,987	)
Put - CurrencyShares British Pound ETF		130.00		1/20/2017		2,080		744,057		1,071,200		327,143
Put - CurrencyShares British Pound ETF		135.00		1/20/2017		675		332,762		533,250		200,488
Put - CurrencyShares Euro Trust		108.00		1/20/2017		1,696		592,829		525,760		(67,069	)
Put - CurrencyShares Euro Trust		103.00		1/20/2017		800		119,882		117,600		(2,282	)
Put - CurrencyShares Japanese Yen Trust		85.00		1/20/2017		3,532		943,088		185,430		(757,658	)
Put - Ishares MSCI Brazil Capped ETF		23.00		1/20/2017		264		71,774		21,384		(50,390	)
Put - Ishares U.S. Real Estate ETF		65.00		1/20/2017		169		62,473		13,520		(48,953	)
Put - VanEck Vectors Russia ETF		16.00		1/20/2017		1,785		370,885		214,200		(156,685	)
Call - CurrencyShares Japanese Yen Trust		95.00		1/19/2018		110		59,019		55,550		(3,469	)
Call - SPDR Euro Stoxx 50 ETF		32.00		1/19/2018		769		174,594		178,793		4,199
Call - Wisdomtree Japan Hedged Equity		50.78		1/19/2018		1,250		202,801		112,500		(90,301	)
Put - SPDR Euro Stoxx 50 ETF		31.00		1/19/2018		769		293,789		319,135		25,346
Put - Wisdomtree Japan Hedged Equity		30.00		1/19/2018		664		113,015		125,164		12,149
Put - Wisdomtree Japan Hedged Equity		39.78		1/19/2018		600		237,646		349,500		111,854
Put - Wisdomtree Japan Hedged Equity		37.78		1/19/2018		2,663		940,386		1,231,637		291,251
Put - Wisdomtree Japan Hedged Equity		35.00		1/19/2018		2,840		828,313		972,700		144,387
Put - Wisdomtree Japan Hedged Equity		40.78		1/19/2018		2,522		1,261,621		1,607,774		346,153
							$	9,882,238	$	10,276,785	$	394,547

ETN Options

Description	Exercise Price		Expiration Date		Number of Contracts		Premiums Paid		Fair Value		Net Unrealized Appreciation (Depreciation)
Call - iPATH S&P 500 VIX Short-Term Futures ETN		10.00		9/16/2016		2,201	$	802,378	$	902,409	$	100,031
Call - iPATH S&P 500 VIX Short-Term Futures ETN		17.00		9/16/2016		811		130,976		89,210		(41,766	)
Put - iPATH S&P 500 VIX Short-Term Futures ETN		10.00		12/16/2016		2,448		146,196		181,152		34,956
							$	1,079,550	$	1,172,771	$	93,221

Index Options

Description	Exercise Price		Expiration Date		Number of Contracts		Premiums Paid		Fair Value		Net Unrealized Appreciation (Depreciation)
Call - CBOE SPX Volatility Index		30.00		7/20/2016		525	$	42,940	$	10,500	$	(32,440	)
Call - PowerShares DB US Dollar Index		26.00		1/20/2017		9,023		445,441		270,690		(174,751	)
Call - PowerShares DB US Dollar Index		23.00		1/20/2017		2,423		412,855		462,793		49,938
Put - PowerShares DB US Dollar Index		22.00		1/20/2017		788		7,490		2,758		(4,732	)
Put - PowerShares DB US Dollar Index		25.00		1/20/2017		8,425		747,350		623,450		(123,900	)
Put - PowerShares DB US Dollar Index		24.00		1/20/2017		4,000		191,274		116,000		(75,274	)
Put - PowerShares DB US Dollar Index		23.00		1/19/2018		2,815		146,508		109,785		(36,723	)
							$	1,993,858	$	1,595,976	$	(397,882	)

See accompanying notes

33

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

Written Options Outstanding on June 30, 2016:

Equity Options

Description	Exercise Price		Expiration Date		Number of Contracts		Premiums Paid			Fair Value			Net Unrealized Appreciation (Depreciation)
Call - Marathon Petroleum Corp.		38.00		7/15/2016		350	$	(36,210	)	$	(36,210	)	$	—
Call - PNC Financial Services Group, Inc.		90.00		7/15/2016		56		(6,634	)		(56	)		6,578
Call - Procter & Gamble Co.		85.00		7/15/2016		17		(960	)		(935	)		25
Call - Abbott Laboratories		42.00		8/19/2016		34		(1,109	)		(544	)		565
Call - Apple, Inc.		105.00		8/19/2016		14		(1,714	)		(504	)		1,210
Call - Boeing Co.		135.00		8/19/2016		14		(4,332	)		(2,800	)		1,532
Call - Cisco Systems, Inc.		30.00		8/19/2016		49		(1,263	)		(1,372	)		(109	)
Call - Coca-Cola Co.		48.00		8/19/2016		28		(1,161	)		(336	)		825
Call - Ford Motor Co.		14.00		8/19/2016		98		(3,279	)		(490	)		2,789
Call - Gilead Sciences, Inc.		92.50		8/19/2016		16		(2,295	)		(816	)		1,479
Call - Intel Corp.		33.00		8/19/2016		42		(1,741	)		(3,864	)		(2,123	)
Call - JPMorgan Chase & Co.		60.00		8/19/2016		204		(106,559	)		(60,996	)		45,563
Call - Microsoft Corp.		57.50		8/19/2016		25		(986	)		(275	)		711
Call - Pfizer, Inc.		35.00		8/19/2016		39		(1,734	)		(3,393	)		(1,659	)
Call - Qualcomm, Inc.		55.00		8/19/2016		26		(3,618	)		(3,354	)		264
Call - Reynolds American, Inc.		52.50		8/19/2016		25		(2,361	)		(5,750	)		(3,389	)
Call - Royal Bank of Scotland Group PLC		5.00		8/19/2016		300		(13,038	)		(10,500	)		2,538
Call - United Technologies Corp.		110.00		8/19/2016		12		(798	)		(240	)		558
Call - Verizon Communications, Inc.		55.00		8/19/2016		26		(636	)		(3,692	)		(3,056	)
Call - Wells Fargo & Co		50.00		8/19/2016		26		(1,130	)		(936	)		194
Call - Berkshire Hathaway, Inc.		145.00		9/16/2016		9		(2,407	)		(3,600	)		(1,193	)
Call - Del Taco Restaurants Inc.		10.00		9/16/2016		931		(146,739	)		(34,913	)		111,826
Call - Dow Chemical Co.		55.00		9/16/2016		26		(3,236	)		(1,430	)		1,806
Call - General Motors Co.		34.00		9/16/2016		42		(1,993	)		(252	)		1,741
Call - Kellogg Co.		80.00		9/16/2016		19		(4,550	)		(7,733	)		(3,183	)
Put - Del Taco Restaurants Inc.		10.00		9/16/2016		60		(5,367	)		(8,250	)		(2,883	)
Call - Eastman Kodak Co.		17.50		10/21/2016		79		(7,877	)		(7,900	)		(23	)
Call - Eastman Kodak Co.		15.00		10/21/2016		245		(19,467	)		(59,413	)		(39,946	)
Call - M&T Bank Corp.		90.00		1/20/2017		25		(72,505	)		(70,875	)		1,630
Call - SunTrust Banks, Inc.		42.00		1/20/2017		600		(107,973	)		(156,600	)		(48,627	)
Call - SunTrust Banks, Inc.		40.00		1/20/2017		10		(2,417	)		(3,650	)		(1,233	)
							$	(566,089	)	$	(491,679	)	$	74,410

ETF Options

Description	Exercise Price		Expiration Date		Number of Contracts		Premiums Paid			Fair Value			Net Unrealized Appreciation (Depreciation)
Call - CurrencyShares British Pound ETF		140.00		7/15/2016		417	$	(198,188	)	$	(2,919	)	$	195,269
Put - CurrencyShares British Pound ETF		135.00		7/15/2016		683		(189,803	)		(361,990	)		(172,187	)
Put - CurrencyShares British Pound ETF		130.00		7/15/2016		529		(70,148	)		(95,749	)		(25,601	)
Put - CurrencyShares British Pound ETF		128.00		7/15/2016		200		(25,691	)		(21,000	)		4,691
Put - CurrencyShares British Pound ETF		131.00		7/15/2016		1,320		(298,260	)		(316,800	)		(18,540	)
Put - VanEck Vectors Russia ETF		16.00		8/19/2016		1,785		(224,727	)		(57,120	)		167,607
Call - CurrencyShares Japanese Yen Trust		94.00		9/16/2016		405		(58,720	)		(82,013	)		(23,293	)
Call - CurrencyShares Japanese Yen Trust		96.00		9/16/2016		1,150		(170,695	)		(158,125	)		12,570
Call - CurrencyShares Japanese Yen Trust		89.00		9/16/2016		1,000		(209,203	)		(525,000	)		(315,797	)
Put - CurrencyShares Euro Trust		108.00		9/16/2016		1,696		(426,487	)		(354,464	)		72,023
Put - CurrencyShares Euro Trust		103.00		9/16/2016		800		(52,417	)		(42,400	)		10,017
Put - CurrencyShares Japanese Yen Trust		85.00		9/16/2016		3,532		(678,731	)		(35,320	)		643,411
Put - Wisdomtree Japan Hedged Equity		37.00		11/18/2016		1,179		(110,105	)		(225,189	)		(115,084	)
Put - Wisdomtree Japan Hedged Equity		38.00		11/18/2016		350		(48,361	)		(79,100	)		(30,739	)
Put - CurrencyShares British Pound ETF		140.00		1/20/2017		153		(73,390	)		(174,420	)		(101,030	)
Put - Wisdomtree Japan Hedged Equity		30.00		1/20/2017		664		(37,953	)		(48,140	)		(10,187	)
Put - Wisdomtree Japan Hedged Equity		35.00		1/20/2017		4,286		(584,872	)		(722,191	)		(137,319	)
Put - Wisdomtree Japan Hedged Equity		37.00		1/20/2017		299		(42,374	)		(70,265	)		(27,891	)
Put - Wisdomtree Japan Hedged Equity		40.00		1/20/2017		2,327		(664,303	)		(872,625	)		(208,322	)
							$	(4,164,428	)	$	(4,244,830	)	$	(80,402	)

See accompanying notes

34

American Beacon Ionic Strategic Arbitrage Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

Index Options

Description	Exercise Price		Expiration Date		Number of Contracts		Premiums Paid			Fair Value			Net Unrealized Appreciation (Depreciation)
Call - PowerShares DB US Dollar Index		26.00		9/16/2016		5,500	$	(117,681	)	$	(60,500	)	$	57,181
Put - PowerShares DB US Dollar Index		24.00		9/16/2016		2,500		(75,552	)		(27,500	)		48,052
Put - PowerShares DB US Dollar Index		25.00		9/16/2016		7,448		(530,488	)		(350,056	)		180,432
							$	(723,721	)	$	(438,056	)	$	(285,665	)

Glossary

Other Abbreviations:
CBOE	Chicago Board Options Exchange	MSCI	Morgan Stanley Composite Index	SPX	S&P 500 Index Options
ETF	Exchange Traded Fund	SPDR	Standard & Poor’s Depositary Receipts
ETN	Exchange Traded Note	VIX	Volatility Index

See accompanying notes

35

American Beacon Funds^SM

Statements of Assets and Liabilities

June 30, 2016 (Unaudited) (in thousands, except share and per share amounts)

	AHL Managed Futures Strategy Fund**			Ionic Strategic Arbitrage Fund
Assets:
Investments in unaffiliated securities, at fair value A E	$	439,956		$	101,132
Investments in affiliated securities, at fair value B		10,499			53,215
Purchased options and swaptions outstanding (Premiums paid $14,200)D		—			14,163
Cash		5,297			73,182
Deposit with brokers for futures contracts		24,925			274
Dividends and interest receivable		2			573
Receivable for investments sold		700			7,480
Receivable for fund shares sold		2,474			676
Receivable for expense reimbursement (Note 2)		135			12
Receivable for variation margin on open futures contracts		222			60
Unrealized appreciation from foreign currency contracts		6,439			—
Prepaid expenses		233			85
Total assets		490,882			250,852
Liabilities:
Payable for investments purchased		—			11,360
Payable for fund shares redeemed		775			1
Payable for Foreign currency, at fair valueC		2,647			1,957
Foreign currency deposits with brokers, at fair valueE		—			134
Payable for Securities sold short, at valueF		—			75,437
Written options, at fair value (premiums received $5,454)		—			5,175
Dividends payable		—			29
Interest Payable		—			15
Management and investment advisory fees payable		552			125
Administrative service and service fees payable		22			21
Transfer agent fees payable		9			—
Custody and fund accounting fees payable		—			1
Professional fees payable		27			7
Payable for prospectus and shareholder reports		—			10
Unrealized depreciation from foreign currency contracts		6,354			—
Total liabilities		10,386			94,272
Net Assets	$	480,496		$	156,580
Analysis of Net Assets:
Paid-in-capital		494,324			158,009
Undistributed (or overdistribution of) net investment income		(1,538	)		3,054
Accumulated net realized gain (loss)		(23,220	)		(3,067	)
Unrealized appreciation (depreciation) of investments		6			(629	)
Unrealized appreciation (depreciation) of currency transactions		206			(9	)
Unrealized appreciation of futures contracts		10,718			60
Unrealized appreciation of options contracts		—			243
Unrealized depreciation of short sales		—			(1,081	)
Net assets	$	480,496		$	156,580
Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		32,836,763			10,544,051
Y Class		6,392,729			5,059,074
Investor Class		3,278,948			191,982
A Class		2,190,270			11,665
C Class		398,856			16,304
Net assets (not in thousands):
Institutional Class	$	350,302,663		$	104,323,349
Y Class	$	68,028,385		$	50,086,823
Investor Class	$	34,740,420		$	1,894,979
A Class	$	23,244,285		$	115,084
C Class	$	4,180,707		$	159,737

See accompanying notes

36

American Beacon Funds^SM

Statements of Assets and Liabilities

June 30, 2016 (Unaudited) (in thousands, except share and per share amounts)

	AHL Managed Futures Strategy Fund**			Ionic Strategic Arbitrage Fund
Net asset value, offering and redemption price per share:
Institutional Class	$	10.67		$	9.89
Y Class	$	10.64		$	9.90
Investor Class	$	10.59		$	9.87
A Class	$	10.61		$	9.87
A Class (offering price)	$	11.26		$	10.47
C Class	$	10.48		$	9.80
A Cost of investments in unaffiliated securities	$	439,950		$	101,759
B Cost of investments in affiliated securities	$	10,499		$	53,215
C Cost of foreign currency	$	(2,768	)	$	(1,927	)
D Cost of purchased options outstanding	$	—		$	14,200
E Cost of foreign currency deposits with brokers	$	—		$	(74,375	)
F Proceeds of securities sold short	$	—		$	(137	)

** Consolidated financial statement. See Note 2 in the Notes to Financial Statements for additional information.

See accompanying notes

37

American Beacon Funds ^SM

Statements of Operations

For the Six Months ended June 30, 2016 (Unaudited) (in thousands)

	AHL Managed Futures Strategy Fund**			Ionic Strategic Arbitrage Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	1		$	789
Dividend income from affiliated securities		6			13
Interest income		331			808
Total investment income		338			1,610
Expenses:
Management and investment advisory fees (Note 2)		2,105			577
Administrative service fees (Note 2):
Institutional Class		259			83
Y Class		66			44
Investor Class		42			3
A Class		22			—
C Class		3			—
Transfer agent fees:
Institutional Class		40			8
Y Class		1			—
Investor Class		1			1
A Class		1			—
Custody and fund accounting fees		376			8
Professional fees		34			36
Registration fees and expenses		43			56
Service fees (Note 2):
Y Class		30			19
Investor Class		45			3
A Class		15			—
C Class		2			—
Distribution fees (Note 2):
A Class		25			—
C Class		16			1
Prospectus and shareholder report expenses		46			13
Trustee fees		12			3
Prime broker fees		—			243
Dividends on securities sold short		—			737
Other expenses		7			13
Total expenses		3,191			1,848
Net fees waived and expenses reimbursed (Note 2)		(160	)		(32	)
Net expenses		3,031			1,816
Net investment income		(2,693	)		(206	)
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		170			2,137
Foreign currency transactions		(1,164	)		1
Futures contracts		(22,429	)		(210	)
Options contracts		—			(801	)
Change in net unrealized appreciation or (depreciation) of:
Investments		6			(953	)
Foreign currency transactions		672			—
Futures contracts		10,302			67
Options contracts		—			746
Short sales		—			(705	)
Net gain (loss) from investments		(12,443	)		282
Net increase (decrease) in net assets resulting from operations	$	(15,136	)	$	76
A Foreign taxes		—			14
** Consolidated

See accompanying notes

38

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)

	AHL Managed Futures Strategy Fund						Ionic Strategic Arbitrage Fund
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			Six Months Ended June 30, 2016			From June 30 to December 31, 2015
	(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss)	$	(2,693	)	$	(1,251	)	$	(206	)	$	62
Net realized gain (loss) from investments, foreign currency transactions, futures contracts, and options contracts		(23,423	)		320			1,127			664
Change in net unrealized appreciation (depreciation) from investments, foreign currency transactions, futures contracts, option contracts and short sales		10,980			(1,739	)		(845	)		(571	)
Net increase (decrease) in net assets resulting from operations		(15,136	)		(2,670	)		76			155
Distributions to Shareholders:
Net investment income:
Institutional Class		—			(314	)		—			(343	)
Y Class		—			(665	)		—			(3	)
Investor Class		—			(702	)		—			(10	)
A Class		—			(182	)		—			(1	)
C Class		—			(31	)		—			(1	)
Net realized gain from investments:
Institutional Class		—			(230	)		—			(1,252	)
Y Class		—			(489	)		—			(9	)
Investor Class		—			(549	)		—			(36	)
A Class		—			(159	)		—			(2	)
C Class		—			(31	)		—			(3	)
Return of Capital:
Institutional Class		—			(2	)		—			—
Y Class		—			(4	)		—			—
Investor Class		—			(4	)		—			—
A Class		—			(1	)		—			—
C Class		—			—			—			—
Net distributions to shareholders		—			(3,363	)		—			(1,660	)
Capital Share Transactions:
Proceeds from sales of shares		446,330			134,235			90,089			90,244
Reinvestment of dividends and distributions		—			3,333			—			1,660
Cost of shares redeemed		(54,675	)		(69,232	)		(25,500	)		(1,484	)
Net increase in net assets from capital share transactions		391,655			68,336			64,589			90,420
Net increase in net assets		376,519			62,303			64,665			88,915
Net Assets:
Beginning of period		103,977			41,674			91,915			3,000
End of Period *	$	480,496		$	103,977		$	156,580		$	91,915
*      Includes undistributed (or overdistribution of) net investment income	$	(1,538	)	$	(126	)	$	(3,054	)	$	118

** Consolidated financial statement. See Note 2 in the Notes to Financial Statements for additional information.

See accompanying notes

39

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

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 June 30, 2016, the Trust consists of twenty-five active series, two of which are presented in this filing (collectively, the “Funds” and each individually a “Fund”): American Beacon AHL Managed Futures Strategy Fund (“AHL Managed Futures”) and American Beacon Ionic Strategic Arbitrage Fund (“Ionic Strategic Arbitrage”). The remaining twenty-three active series are reported in separate filings.

American Beacon Advisors, Inc. (the “Manager”) is 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, and was organized in 1986 to provide business management, advisory, administrative and asset management consulting services to the Trust and other investors.

Class Disclosure

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

Class:	Offered to:
Institutional Class	Investors making an initial investment of $250,000
Y Class	Investors making an initial investment of $100,000
Investor Class	General public and investors investing through an intermediary
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

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

Consolidation of Subsidiaries

The consolidated Schedule of Investments of the AHL Managed Futures Strategy Fund (the “CFC Fund”) includes the accounts of the American Beacon Cayman Managed Futures Strategy Fund, Ltd., a wholly-owned and controlled subsidiary (the “Subsidiary”). All inter-company accounts and transactions have been eliminated in consolidation for the CFC Fund.

For Federal tax purposes, taxable income for the CFC Fund and its Subsidiary are calculated separately. The Subsidiary is classified as a controlled foreign corporation under the Internal Revenue Code of 1986 (the “Code”) and the Subsidiary’s taxable income is included in the calculation of the Fund’s taxable income. Net losses of the Subsidiary are not deductible by the CFC Fund either in the current period or future periods. The Subsidiary has a fiscal year end of December 31st for financial statement consolidation purposes and a nonconforming tax year end of November 30th.

The CFC Fund may invest up to 25% of its total assets in the Subsidiary, which acts as an investment vehicle in order to affect certain investments consistent with the CFC Fund’s investment objectives and policies. The CFC Fund expects to achieve a significant portion of its exposure to commodities and

40

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

commodities-related investments through investment in the Subsidiary. Unlike the CFC Fund, the Subsidiary may invest without limitation in commodities and commodities-related investments.

Fund	Inception Date of Subsidiary	Subsidiary Net Assets at June 30, 2016		% of Total Net Assets of the Fund at June 30, 2016			Net Realized Gain (Loss) from Investments Held in Subsidiary
American Beacon Cayman Managed Futures Strategy Fund, Ltd.	August 19, 2014	$	112,528,142		23.4	%	$	(3,198,628	)

CFTC Regulation

On August 13, 2013, the Commodity Futures Trading Commission (“CFTC”) adopted rules to harmonize conflicting United States Securities and Exchange Commission (the “SEC’’) and CFTC disclosure, reporting and recordkeeping requirements for registered investment companies that do not meet an exemption from the definition of commodity pool. The harmonization rules provide that the CFTC will accept the SEC’s disclosure, reporting, and recordkeeping regime as substituted compliance for substantially all of the otherwise applicable CFTC regulations as long as such investment companies meet the applicable SEC requirements.

The CFC Fund is a commodity pool, as defined in the regulation of the CFTC and operated by the Manager, a commodity pool operator regulated by the CFTC.

The following is a summary of significant accounting policies, consistently followed by the Funds in preparation of the financial statements. The Funds are considered investment companies and accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946, Financial Services - Investment Companies, which is part of the U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).

Security Transactions and Investment Income

Security transactions are recorded on the trade date of the security purchase or sale. The Funds may purchase securities with delivery or payment to occur at a later date. At the time the Funds enter into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the Net Asset Value (“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 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. Dividends to shareholders are determined in accordance with federal income tax regulations, which may differ in amount and character from net investment income and realized gains recognized for purposes of U.S. GAAP.

Commission Recapture

The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If the Funds’ investment advisor chooses to execute a transaction through a participating broker, the

41

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

broker rebates a portion of the commission back to the Funds. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Funds. This amount is reported with the net realized gain in the Funds’ Statements of Operations, if applicable.

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.

2. Transactions with Affiliates

Management Agreement

From January 1, 2016 to May 29, 2016, the Trust and the Manager were parties to a Management Agreement that obligated the Manager to provide or oversee the provision of all investment advisory and fund management services. As compensation for performing the duties required under the Management Agreement, the Manager received from the Funds an annualized fee equal to 0.05% of the average daily net assets. Effective May 29, 2016, the Funds and the Manager entered a Management Agreement that obligates the Manager to provide investment advisory, fund management, and administrative services to the Fund. As compensation for performing the duties under the Management Agreement, the Manager receives from the Fund an annualized fee at the following annual rates as a percentage of average daily net assets: 0.35% of the first $5 billion, 0.325% of the next $5 billion, 0.30% of the next $10 billion, and 0.275% over $20 billion. The Funds pay the unaffiliated investment advisors hired to direct investment activities of the Funds. Management fees paid by the Funds during the six-months ended June 30, 2016 were as follows (in thousands):

Fund	Management Fee Rate			Management Fee		Amounts Paid to Investment Sub-Advisors		Amounts Paid to Manager
AHL Managed Futures		1.05	%	$	2,105	$	1,849	$	256
Ionic Strategic Arbitrage		1.00	%		577		524		53

Administration Agreement

From January 1, 2016 to May 29, 2016, the Manager and the Trust were parties to an Administration Agreement which obligated the Manager to provide or oversee administrative services to the Funds. As compensation for performing the duties required under the Administration Agreement, the Manager received an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, A, and C Classes of the Funds.

42

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

Distribution Plans

The Funds, except for the A and C Classes, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no separate fees will be charged to the Funds for distribution purposes. However, the Plan authorizes the management and administration 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 separately 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 annualized fee of 0.25% of the average daily net assets of the A 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, A, and C Classes. As compensation for performing the duties required under the Service Plans, the Manager receives an annualized fee of 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 the Funds.

Investments in Affiliated Funds

The Funds may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Funds in connection with securities lending may also be invested in the USG Select Fund. The Funds and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the USG Select Fund and receives management and administration fees of 0.10% of the average daily net assets of the USG Select Fund. During the period ended June 30, 2016, the Manager earned fees on the Funds’ direct investments in the USG Select Fund as shown below:

Fund	Direct Investments in USG Select Funds
AHL Managed Futures	$	1,933
Ionic Strategic Arbitrage		4,625

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. For the six-months ended June 30, 2016, the Funds did not utilize the credit facility.

Expense Reimbursement Plan

The Manager contractually agreed to reimburse the Funds to the extent that total annual fund operating expenses exceeded each Fund’s expense cap. Of these amounts $63,682 and $11,505 was receivable from the Manager at June 30, 2016 for the AHL Managed Futures and Ionic Strategic Arbitrage Funds, respectively. For the six months ended June 30, 2016, the Manager reimbursed expenses as follows:

43

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

		Expense Cap and Limits
Fund	Class	1/1/16 to 6/30/16			Reimbursed Expenses			Expiration of Reimbursements
AHL Managed Futures	Institutional		1.54	%	$	100,566		2019
AHL Managed Futures	Y		1.64	%		38,315		2019
AHL Managed Futures	Investor		1.92	%		7,000		2019
AHL Managed Futures	A		1.94	%		12,282		2019
AHL Managed Futures	C		2.69	%		2,556		2019
		Expense Cap and Limits
Fund	Class	1/1/16 to 6/30/16			Reimbursed Expenses			Expiration of Reimbursements
Ionic Strategic Arbitrage	Institutional		1.54	%	$	26,753		2019
Ionic Strategic Arbitrage	Y		1.64	%		5,156		2019
Ionic Strategic Arbitrage	Investor		1.92	%		(400	)	2019
Ionic Strategic Arbitrage	A		1.94	%		123		2019
Ionic Strategic Arbitrage	C		2.69	%		145		2019

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’s average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit.

The carryover of excess expenses potentially reimbursable to the Manager are as follows:

Fund	Excess Expense Carryover		Expiration of Reimbursed Expenses
AHL Managed Futures	$	371,247	2017
AHL Managed Futures		416,132	2018
Bridgeway Large Cap Value		108,786	2018

The Funds have not recorded a liability for these potential reimbursements due to the current assessment that reimbursements are 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 six-months ended June 30, 2016, Foreside collected $8,496 and $1,111 from the AHL Managed Futures and Ionic Strategic Arbitrage 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 six-months ended June 30, 2016, 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 six-months ended June 30, 2016, CDSC fees of $146 were collected from the AHL Managed Futures Fund for Class C Shares.

44

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally at 4 p.m. Eastern time, 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 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.

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Funds are 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.

Investments in open-end mutual funds are valued at the closing 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 in good faith by the Valuation Committee, established by the Board of Trustees (“the Board”), will be priced at fair value following procedures approved by the Board.

For valuation purposes, the last quoted prices of non-U.S. equity securities may be adjusted under the circumstances described below. If the Manager 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 Manager will adjust the previous closing prices to reflect what it believes to be the fair value of the securities as of the close of the Exchange. In deciding whether it is necessary to adjust closing prices to reflect fair value, the Manager 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 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. The Valuation Committee may also fair value securities in other situations, such as when a particular foreign market is closed but a Fund is open. The Funds use outside pricing services to provide closing prices and information to evaluate and/or adjust those prices. As a means of evaluating its security valuation process, the Valuation Committee routinely compares closing prices, the next day’s opening prices in the same markets, and adjusted prices.

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 by the Valuation Committee.

45

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

Valuation Inputs

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

Level 1 –	Quoted prices in active markets for identical securities.
Level 2 –	Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. Level 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.

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

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

Fixed income securities including corporate, U.S. government agencies, and U.S. treasury obligations 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 and are 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. During the six months ended June 30, 2016, there were no transfers between levels.

As of June 30, 2016, the investments were classified as described below (in thousands):

AHL Managed Futures Strategy Fund1	Level 1		Level 2		Level 3		Total
Money Market Funds	$	10,499	$	—	$	—	$	10,499
U.S. Treasury Bills		—		439,956		—		439,956
Total Investments in Securities	$	10,499	$	439,956	$	—	$	450,455

46

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

AHL Managed Futures Strategy Fund1	Level 1			Level 2			Level 3		Total
Financial Derivative Instruments - Assets
Futures Contracts	$	13,894		$	—		$	—	$	13,894
Forward Currency Contracts		—			6,439			—		6,439
	$	13,894		$	6,439		$	—	$	20,333
Financial Derivative Instruments - Liabilities
Futures Contracts	$	(3,176	)	$	—		$	—	$	(3,176	)
Forward Currency Contracts		—			(6,354	)		—		(6,354	)
	$	(3,176	)	$	(6,354	)	$	—	$	(9,530	)
Ionic Strategic Arbitrage Fund1	Level 1			Level 2			Level 3		Total
Assets
Common Stocks	$	18,786		$	1,805		$	—	$	20,591
Warrants		10,226			—			—		10,226
Convertible Preferred Stocks		9,940			—			—		9,940
Preferred Stocks		1,837			—			—		1,837
Convertible Obligations		—			30,889			—		30,889
Collateralized Mortgage Obligations		—			21,350			—		21,350
Exchange Traded Instruments		2,532			—			—		2,532
Investment Companies		3,767			—			—		3,767
Short-Term Investments - Money Market Funds		53,215			—			—		53,215
Total Investments in Securities - Assets	$	100,303		$	54,044		$	—	$	154,347
Liabilities
Common Stocks (Sold Short)	$	(55,209	)	$	(5,371	)	$	—	$	(60,580	)
Corporate Obligations (Sold Short)		—			(418	)		—		(418	)
Exchange Traded Instruments (Sold Short)		(14,439	)		—			—		(14,439	)
Total Investments in Securities - Liabilities		(69,648	)		(5,789	)		—		(75,437	)
Total Investments in Securities	$	30,655		$	48,255		$	—	$	78,910
Financial Derivative Instruments - Assets
Purchased Options	$	14,163		$	—		$	—	$	14,163
Futures Contracts		63			—			—		63
	$	14,266		$	—		$	—	$	14,266
Financial Derivative Instruments - Liabilities
Written Options	$	(5,175	)	$	—		$	—	$	(5,175	)
Futures Contracts		(3	)		—			—		(3	)
	$	(5,178	)	$	—		$	—	$	(5,178	)

¹  Refer to Schedules of Investments for Industry Information.

U.S. GAAP also requires all significant transfers between any levels to be disclosed. The end of period timing recognition has been adopted for the transfers between levels of the Funds’ assets and liabilities. During the six-months ended June 30, 2016, there were no transfers between levels.

4. Securities and Other Investments

Real Estate Investment Trusts

The Funds may own shares of real estate investment trusts (“REITs”) which report information on the source of their distributions annually. The Funds re-characterize distributions received from REIT investments based on information provided by the REITs into the following categories: ordinary income, long-term capital gains, and return of capital. If information is not available on a timely basis from the REITs, the re-characterization will be estimated based on available information which may include the previous year

47

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

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, the Funds become a shareholder of that investment company. As a result, the Funds shareholders indirectly will bear a Funds’ proportionate share of the fees and expenses paid by shareholders of the other investment company, in addition to the fees and expenses the Funds shareholders directly bear in connection with the Funds’ 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.

Convertible Securities

Convertible securities include corporate bonds, notes, preferred stock or other securities that may be converted into or exchanged for a prescribed amount of common stock of the same or a different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive interest paid or accrued on debt or dividends paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. While no securities investment is without some risk, investments in convertible securities generally entail less risk than the issuer’s common stock, although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. The market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. While convertible securities generally offer lower interest or dividend yields than non-convertible debt securities of similar quality, they do enable the investor to benefit from increases in the market price of the underlying common stock. Holders of convertible securities have a claim on the assets of the issuer prior to the common stockholders, but may be subordinated to holders of similar non-convertible securities of the same issuer. Because of the conversion feature, certain convertible securities may be considered equity equivalents.

Illiquid and 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 (the “Securities Act”). Illiquid securities have included securities that have not been registered under the Securities Act, securities that are otherwise not readily marketable, and repurchase agreements having a remaining maturity of longer than seven calendar days. Disposal of both illiquid and restricted securities may involve time-consuming negotiations and expenses, and prompt sale at an acceptable price may be difficult to achieve. Illiquid and restricted securities outstanding at the six-months ended June 30, 2016 are disclosed in the Notes to the Schedules of Investments.

Rights and Warrants

Rights are short-term warrants issued in conjunction with new stock or bond issues. Warrants are options to purchase an issuer’s securities at a stated price during a stated term. If the market price of the

48

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

underlying common stock does not exceed the warrant’s exercise price during the life of the warrant, the warrant will expire worthless. Warrants usually have no voting rights, pay no dividends and have no rights with

respect to the assets of the corporation issuing them. The percentage increase or decrease in the value of a warrant may be greater than the percentage increase or decrease in the value of the underlying common stock. Warrants may be purchased with values that vary depending on the change in value of one or more specified indices (“index warrants”). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of the exercise. The market for warrants or rights may be very limited and it may be difficult to sell them promptly at an acceptable price. There is no specific limit on the percentage of assets the Fund may invest in rights and warrants.

Special Purpose Acquisition Company

A special purpose acquisition company (“SPAC”) is a collective investment structure that allows public stock market investors to invest in private equity type transactions, particularly leveraged buyouts. SPACs are shell or blank-check companies, governed by the SEC, that have no operations but go public with the intention of merging with or acquiring a company with the proceeds of the SPAC’s initial public offering (“IPO”). SPACs outstanding at the six-months ended June 30, 2016 are disclosed in the Notes to the Schedules of Investments.

Mortgage-Related and Other Asset-Backed Securities

The Ionic Strategic Arbitrage 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.

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

49

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

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.

Short Sales

The Funds may enter into short sale transactions. A short sale is a transaction in which a Fund sells a security it does not own in anticipation of a decline in the market price of the security. Securities sold in short sale transactions and the dividends and interest payable on such securities, if any, are reflected as a liability on the Statements of Assets and Liabilities. The Funds are obligated to deliver the security at the market price at the time the short position is closed. The risk of loss on a short sale transaction is theoretically unlimited, because there is no limit to the cost of replacing the security sold short, whereas losses from purchase transactions cannot exceed the total amount invested. As of June 30, 2016 short positions were held by the Ionic Strategic Arbitrage Fund.

Master Agreements

Each 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 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.

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.

5. Financial Derivative Instruments

Options Contracts

The Funds may write (1) call and put options on futures, swaps (“swaptions”), securities, commodities or currencies they own or in which they may invest and (2) inflation-capped options. Writing put options tends to increase the Fund’s exposure to unfavorable movements of the underlying instrument in exchange for an upfront premium. Writing call options tends to decrease the Fund’s exposure to favorable movements of the

50

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

underlying instrument in exchange for an upfront premium. When the Fund writes a call, put, or inflation-capped option, an amount equal to the premium received is recorded as a liability and subsequently marked to market to reflect the current value of the option written. The purpose of inflation-capped options is to protect

the buyer from inflation erosion above a certain rate on a given notional exposure. A floor can be used to give downside protection to investments in inflation-linked products. These liabilities are reflected as written options outstanding on the Statements of Assets and Liabilities. Certain options may be written with premiums to be determined on a future date. Premiums received from writing options which expire are treated as realized gains. Premiums received from writing options which are exercised or closed are added to the proceeds or offset against amounts paid on the underlying futures, swap, security or currency transaction to determine the realized gain or loss when the underlying transaction is sold. The Funds, as a writer of an option has no control over whether the underlying instrument may be sold (call) or purchased (put) and as a result bears the market risk of an unfavorable change in the price of the instrument underlying the written option. There is the risk the Funds may not be able to enter into a closing transaction because of an illiquid market.

The Funds may also purchase put and call options. Purchasing call options tends to increase the Fund’s exposure to favorable movements of the underlying instrument in exchange for paying an upfront premium. Purchasing put options tends to decrease the Funds’ exposure to unfavorable movements of the underlying instrument. The Funds pay a premium which is included on the Funds’ Statements of Assets and Liabilities as an investment and subsequently marked to market to reflect the current value of the option. Premiums paid for purchasing options which expire are treated as realized losses. Certain options may be purchased with premiums to be determined on a future date. The premiums for these options are based upon implied volatility parameters at specified terms. The risk associated with purchasing put and call options is limited to the premium paid. Premiums paid for purchasing options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain or loss when the underlying transaction is sold.

Options

For the six-months ended June 30, 2016, the Ionic Strategic Arbitrage Fund purchased/sold options primarily for return enhancement, hedging and exposing cash to markets.

The Fund’s option contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of options contracts. For the purpose of this disclosure, volume is measured by contracts outstanding at each quarter end (in thousands).

Average Purchased Option Notional Amounts Outstanding
Fund	Six months ended June 30, 2016
Ionic Strategic Arbitrage	$	4,075

Average Written Option Notional Amounts Outstanding
Fund	Six months ended June 30, 2016
Ionic Strategic Arbitrage	$	1,947

Straddle Options

The Funds may enter into differing forms of straddle options. A straddle is an investment strategy that uses combinations of options that allow a Fund to profit based on the future price movements of the underlying security, regardless of the direction of those movements. A written straddle involves simultaneously writing a call option and a put option on the same security with the same strike price and expiration date. The written straddle increases in value when the underlying security price has little volatility before the expiration date. A purchased straddle involves simultaneously purchasing a call option and a put option on the same security with the same strike price and expiration date. The purchased straddle increases in value when the underlying security price has high volatility, regardless of direction, before the expiration date.

51

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

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 may also use foreign currency forward contracts to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. The Funds bears 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 six-months ended June 30, 2016, the AHL Managed Futures Fund entered into foreign currency exchange contracts primarily for speculative purposes.

The Fund’s foreign currency contract notional dollar values outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates 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 (in thousands).

	Average Forward Foreign Currency Notional Amount Outstanding during  the six-months ended June 30, 2016
Fund	Purchased Contracts		Sold Contracts
AHL Managed Futures Strategy Fund	$	153,473	$	128,524

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. The Funds usually reflects this amount on the Schedules 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.

During the six-months ended June 30, 2016, the Funds entered into future contracts primarily for speculative purposes.

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

Average Futures Contracts Outstanding
Fund	Six-months ended June 30, 2016
AHL Managed Futures Strategy Fund		9,301
Ionic Strategic Arbitrage Fund		22

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

52

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

AHL Managed Futures Strategy

Fair values of financial instruments on the Statements of Assets and Liabilities as of June 30, 2016 (in thousands):

	Derivatives not accounted for as hedging instruments
	Foreign Exchange Contracts			Commodity Contracts			Currency Contracts			Equity Contracts			Interest Rate Contracts		Total
Assets:
Unrealized appreciation of foreign currency contracts	$	6,439		$	—		$	—		$	—		$	—	$	6,439
Receivable for variation margin from open futures contracts(2)		—			3,773			1,508			532			8,081		13,894
	$	6,439		$	3,773		$	1,508		$	532		$	8,081	$	20,333
Liabilities:
Unrealized depreciation of foreign currency contracts	$	(6,354	)	$	—		$	—		$	—		$	—	$	(6,354	)
Payable for variation margin from open futures contracts(2)		—			(1,679	)		(300	)		(1,197	)		—		(3,176	)
	$	(6,354	)	$	(1,679	)	$	(300	)	$	(1,197	)	$	—	$	(9,530	)

The effect of financial derivative instruments on the Statements of Operations for the six-months ended June 30, 2016 (in thousands):

	Derivatives not accounted for as hedging instruments
	Foreign Exchange Contracts			Commodity Contracts			Currency Contracts			Equity Contracts			Interest Rate Contracts		Total
Realized gain (loss) of derivatives recognized as a result from operations:
Net realized gain (loss) from foreign currency transactions	$	(1,471	)	$	—		$	—		$	—		$	—	$	(1,471	)
Net realized gain (loss) from futures contracts		—			(3,231	)		(6,012	)		(14,425	)		1,239		(22,429	)
	$	(1,471	)	$	(3,231	)	$	(6,012	)	$	(14,425	)	$	1,239	$	23,900
Net change in unrealized appreciation or (depreciation) of derivatives recognized as a result from operations:
Change in net unrealized appreciation or (depreciation) from foreign currency contracts	$	548		$	—		$	—		$	—		$	—	$	548
Change in net unrealized appreciation or (depreciation) from futures contracts		—			1,532			827			(381	)		8,324		10,302
	$	548		$	1,532		$	827		$	(381	)	$	8,324	$	10,850

Ionic Strategic Arbitrage

Fair values of financial instruments on the Statements of Assets and Liabilities as of June 30, 2016 (in thousands):

	Derivatives not accounted for as hedging instruments
	Exchange Traded Contracts			Interest Rate Contracts		Total
Assets:
Purchased options outstanding	$	14,163		$	—	$	14,163
Receivable for variation margin from open futures contracts(2)		63			—		63
	$	14,226		$	—	$	14,226
Liabilities:
Written options outstanding	$	(5,175	)	$	—	$	(5,175	)
Payable for variation margin from open futures contracts(2)		(3	)		—		(3	)
	$	(5,178	)	$	—	$	(5,178	)

53

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

The effect of financial derivative instruments on the Statement of Operations for the six-month ended June 30, 2016 (in thousands):

	Derivatives not accounted for as hedging instruments
	Exchange Traded Contracts			Interest Rate Contracts		Total
Realized gain (loss) of derivatives recognized as a result from operations:
Net realized gain (loss) from options contracts	$	(801	)	$	—	$	(801	)
Net realized gain (loss) from futures contracts		(210	)		—		(210	)
	$	(1,011	)	$	—	$	(1,011	)
Net change in unrealized appreciation or (depreciation) of derivatives recognized as a result from operations:
Change in net unrealized appreciation or (depreciation) from options contracts	$	746		$	—	$	746
Change in net unrealized appreciation or (depreciation) from futures contracts		67			—		67
	$	813		$	—	$	813

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

⁽²⁾  Includes cumulative appreciation (depreciation) of futures contracts as reported in the Schedule 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 Fund’s 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 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 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 Funds 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 Funds are 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 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, it 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 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

54

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

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 Funds.

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 clearinghouse. While offset rights may exist under applicable law, the Funds do 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 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, such as ISDA, Master Repo Agreements and Master Forward Agreements which provide for the right to offset under certain circumstances. The Funds employ multiple money managers and counterparties and has 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

55

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, June 30, 2016 (in thousands).

AHL Managed Futures

Offsetting of Financial Assets and Derivative Assets as of June 30, 2016:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Assets Presented in the Statements of Assets and Liabilities
Futures contracts(1)	$	13,894	$	—	$	13,894
Forward currency contracts		6,439		—		6,439
	$	20,333	$	—	$	20,333

Offsetting of Financial Liabilities and Derivative Liabilities as of June 30, 2016:

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)	$	(3,176	)	$	—	$	(3,176	)
Forward currency contracts		(6,354	)		—		(6,354	)
	$	(9,530	)	$	—	$	(9,530	)

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of June 30, 2016:

				Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty	Net Amount of Liabilities Presented in the Statements of Assets and Liabilities			Financial Instruments		Cash Collateral Received		Net Amount
BofA Merrill Lynch(1)	$	5,330		$	—	$	—	$	5,330
Credit Suisse(1)		1,481			—		—		1,481
Deutsche Bank AG		(3,170	)		—		3,420		250
HSBC Bank PLC		3,183			—		1,578		4,761
JP Morgan(1)		3,907			—		—		3,907
Royal Bank of Scotland PLC		72			—		300		372
	$	10,803		$	—	$	5,298	$	16,101

Ionic Strategic Arbitrage

Offsetting of Financial Assets and Derivative Assets as of June 30, 2016:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Assets Presented in the Statements of Assets and Liabilities
Futures contracts(1)	$	63	$	—	$	63
Purchased options outstanding		14,163		—		14,163
	$	14,226	$	—	$	14,226

56

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

Offsetting of Financial Liabilities and Derivative Liabilities as of June 30, 2016:

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)	$	(3	)	$	—	$	(3	)
Written options outstanding		(5,175	)		—		(5,175	)
	$	(5,178	)	$	—	$	(5,178	)

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of June 30, 2016:

			Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty	Net Amount of Assets Presented in the Statements of Assets and Liabilities		Financial Instruments		Cash Collateral Received		Net Amount
Deutsche Bank AG	$	9,048		—		—	$	9,048

⁽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 Funds 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 Funds are 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 December 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 tax character of distributions paid were as follows (in thousands):

	AHL Managed Futures				Ionic Strategic Arbitrage
	Six-months ended June 30, 2016		Period Ended Dec. 31, 2015		Six-months ended June 30, 2016		Period Ended Dec. 31, 2015
Distributions paid from:
Ordinary income*
Institutional Class	$	—	$	422	$	—	$	1,498
Y Class		—		895		—		11
Investor Class		—		960		—		44
A Class		—		257		—		3
C Class		—		45		—		3
Long-term capital gain
Institutional Class		—		123		—		98
Y Class		—		259		—		1
Investor Class		—		291		—		2
A Class		—		84		—		—
C Class		—		16		—		—

57

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

	AHL Managed Futures				Ionic Strategic Arbitrage
	Six-months ended June 30, 2016		Period Ended Dec. 31, 2015		Six-months ended June 30, 2016		Period Ended Dec. 31, 2015
Return of capital
Institutional Class		—		2		—		—
Y Class		—		4		—		—
Investor Class		—		4		—		—
A Class		—		1		—		—
C Class		—		—		—		—
Total distributions paid	$	—	$	3,363	$	—	$	1,660

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

As of June 30, 2016 the components of distributable earnings (deficits) on a tax basis were as follows (in thousands):

	AHL Managed Futures			Ionic Strategic Arbitrage
Cost basis of investments for federal income tax purposes	$	450,528		$	155,880
Unrealized appreciation		8			4,366
Unrealized depreciation		(2	)		(5,899	)
Net unrealized appreciation (depreciation)		6			(1,533	)
Undistributed ordinary income		71			3,239
Undistributed long-term gain (loss)		—			—
Accumulated capital and other losses		(15,585	)		(367	)
Other temporary differences		1,680			(2,768	)
Distributable earnings (deficits)	$	(13,828	)	$	(1,429	)

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

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 paydown reclasses, foreign currency reclasses, gains (losses) from sales of investment in passive foreign investment companies, reclassifications of income from closed-end funds, reclassification of income from investment subsidiary, non-utilization of net operating losses, and dividends reclasses as of June 30, 2016 (in thousands):

	AHL Managed Futures			Ionic Strategic Arbitrage
Paid-in-capital	$	(5,644	)	$	—
Undistributed net investment income		1,281			3,142
Accumulated net realized gain (loss)		4,363			(3,142	)
Unrealized appreciation or (depreciation) of investments		—			—

58

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

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.

As of June 30, 2016 the AHL Managed Futures Fund has $10,310 of short-term and $5,275 of long-term post enactment capital loss carryforwards and Ionic Strategic Arbitrage has $367 long-term post enactment capital loss carryforwards (in thousands)

8. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments other than short-term obligations for the six-month ended June 30, 2016 were (in thousands):

Fund	Purchases		Sales
AHL Managed Futures	$	—	$	—
Ionic Strategic Arbitrage		466,534		366,339

A summary of the Fund’s transactions in the USG Select Fund for the year ended June 30, 2016 are as follows:

Type of Transaction	January 1, 2016 Shares/Fair Value		Purchases		Sales		June 30, 2016 Shares/Fair Value		Dividend Income
AHL Managed Futures	$	—	$	75,793	$	69,346	$	6,447	$	5
Ionic Strategic Arbitrage		—		109,276		56,061		53,215		13

9. Option Contracts Written

The premium amount and number of option contracts written by the Ionic Strategic Arbitrage Fund during the year ended June 30, 2016 were as follows:

	Number of Contracts			Notional Amount			Amount of Premiums
Outstanding at December 31, 2015		—		$	—		$	—
Options written		(48,790	)		(4,879,000	)		(6,586,583	)
Options expired		2,298			229,800			96,548
Options exercised		4,822			482,200			1,035,794
Options closed		—			—			—
Outstanding at June 30, 2016		(41,670	)	$	(4,167,000	)	$	(5,454,241	)

10. Capital Share Transactions

The tables below summarize the activity in capital shares (dollars and shares in thousands):

For the Periods Ended June 30, 2016

	Institutional Class						Y Class						Investor Class
AHL Managed Futures Strategy Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		32,466		$	361,632			5,095		$	55,753			954		$	10,443
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		(1,630	)		(17,599	)		(1,940	)		(20,820	)		(1,246	)		(13,385	)
Net increase (decrease) in shares outstanding		30,836		$	344,033			3,155		$	34,933			(292	)	$	(2,942	)

59

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (unaudited)

	A Class						C Class
AHL Managed Futures Strategy Fund	Shares			Amount			Shares			Amount
Shares sold		1,491		$	16,252			210		$	2,250
Reinvestment of dividends		—			—			—			—
Shares redeemed		(248	)		(2,671	)		(19	)		(200	)
Net increase in shares outstanding		1,243		$	13,581			191		$	2,050

	Institutional Class						Y Class						Investor Class
Ionic Strategic Arbitrage Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		6,200		$	61,313			2,742		$	27,020			167		$	1,645
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		(2,069	)		(20,380	)		(315	)		(3,107	)		(196	)		(1,931	)
Net increase (decrease) in shares outstanding		4,131		$	40,933			2,427		$	23,913			(29	)	$	(286	)

	A Class		C Class
Ionic Strategic Arbitrage Fund	Shares		Shares			Amount
Shares sold		—		11		$	111
Reinvestment of dividends		—		—			—
Shares redeemed		—		(8	)		(82	)
Net increase in shares outstanding		—		3		$	29

For the Year Ended December 31, 2015

	Institutional Class						Y Class						Investor Class
AHL Managed Futures Strategy Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		2,166		$	23,691			4,162		$	46,683			3,881		$	43,556
Reinvestment of dividends		52			544			110			1,157			120			1,255
Shares redeemed		(2,845	)		(32,558	)		(1,077	)		(11,830	)		(707	)		(7,798	)
Net increase (decrease) in shares outstanding		(627	)	$	(8,323	)		3,195		$	36,010			3,294		$	37,013

	A Class						C Class
AHL Managed Futures Strategy Fund	Shares			Amount			Shares			Amount
Shares sold		1,638		$	18,288			181		$	2,017
Reinvestment of dividends		30			316			6			61
Shares redeemed		(1,546	)		(16,862	)		(16	)		(184	)
Net increase in shares outstanding		122		$	1,742			171		$	1,894

	Institutional Class						Y Class						Investor Class
Ionic Strategic Arbitrage Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		6,369		$	64,480			2,646		$	26,181			231		$	2,339
Reinvestment of dividends		162			1,595			1			12			5			47
Shares redeemed		(118	)		(1,187	)		(15	)		(150	)		(15	)		(146	)
Net increase in shares outstanding		6,413		$	64,888			2,632		$	26,043			221		$	2,240

	A Class					C Class
Ionic Strategic Arbitrage Fund	Shares		Amount			Shares		Amount
Shares sold		12	$	114			13	$	130
Reinvestment of dividends		—		3			—		3
Shares redeemed		—		(1	)		—		—
Net increase in shares outstanding		12	$	116			13	$	133

60

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61

American Beacon AHL Managed Futures Strategy Fund ^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			August 19 to December 31, 2014A
	(unaudited)
Net asset value, beginning of period	$	10.46		$	10.95		$	10.00
Income from investment operations:
Net investment income (loss)		0.27			(0.06	)		0.24
Net gains (losses) from investments (both realized and unrealized)		(0.06	)		(0.07	)		1.10
Total income (loss) from investment operations		0.21			(0.13	)		1.34
Less distributions:
Dividends from net investment income		—			(0.21	)		(0.31	)
Distributions from net realized gains		—			(0.15	)		(0.08	)
Return of Capital		—			(0.00	)F		—
Total distributions		—			(0.36	)		(0.39	)
Net asset value, end of period	$	10.67		$	10.46		$	10.95
Total return A		1.91	%C		(1.15	)%		13.43	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	350,258		$	20,933		$	28,765
Ratios to average net assets:
Expenses, before reimbursements		1.62	%D		2.25	%		4.97	%D
Expenses, net of reimbursements		1.54	%D		1.54	%		1.54	%D
Net investment income (loss), before reimbursements		(1.44	)%D		(2.29	)%		2.73	%D
Net investment income (loss), net of reimbursements		(1.36	)%D		(1.57	)%		6.17	%D
Portfolio turnover rate		—	%E		—	%E		—	%E
	Y Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			August 19 to December 31, 2014A
	(unaudited)
Net asset value, beginning of period	$	10.45		$	10.94		$	10.00
Income from investment operations:
Net investment income (loss)		0.06			(0.05	)		0.30
Net gains (losses) from investments (both realized and unrealized)		0.13			(0.08	)		1.03
Total income (loss) from investment operations		0.19			(0.13	)		1.33
Less distributions:
Dividends from net investment income		—			(0.21	)		(0.31	)
Distributions from net realized gains		—			(0.15	)		(0.08	)
Return of Capital		—			(0.00	)F		—
Total distributions		—			(0.36	)		(0.39	)
Net asset value, end of period	$	10.64		$	10.45		$	10.94
Total return A		1.92	%C		(1.15	)%		13.33	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	68,013		$	33,832		$	465
Ratios to average net assets:
Expenses, before reimbursements		1.77	%D		2.28	%		7.71	%D
Expenses, net of reimbursements		1.64	%D		1.64	%		1.64	%D
Net investment income (loss), before reimbursements		(1.59	)%D		(1.70	)%		12.50	%D
Net investment income (loss), net of reimbursements		(1.46	)%D		(1.06	)%		18.58	%D
Portfolio turnover rate		—	%E		—	%E		—	%E

^A August 19, 2014 is the inception date of the AHL Managed Futures Strategy 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 Not annualized.

^D Annualized.

^E Portfolio turnover rate is based on the lesser of long-term purchases or sales divided by the average long-term fair value during the period. The Fund did not invest in any long-term securities during the reporting period.

^F The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

62

American Beacon AHL Managed Futures Strategy Fund ^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			August 19 to December 31, 2014A
	(unaudited)
Net asset value, beginning of period	$	10.41		$	10.93		$	10.00
Income from investment operations:
Net investment income (loss)		(0.12	)		(0.09	)		0.30
Net gains (losses) from investments (both realized and unrealized)		0.30			(0.08	)		1.02
Total income (loss) from investment operations		0.18			(0.17	)		1.32
Less distributions:
Dividends from net investment income		—			(0.20	)		(0.31	)
Distributions from net realized gains		—			(0.15	)		(0.08	)
Return of Capital		—			(0.00	)F		—
Total distributions		—			(0.35	)		(0.39	)
Net asset value, end of period	$	10.59		$	10.41		$	10.93
Total return A		1.73	%C		(1.54	)%		13.23	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	34,734		$	37,185		$	3,024
Ratios to average net assets:
Expenses, before reimbursements		1.96	%D		2.40	%		5.98	%D
Expenses, net of reimbursements		1.92	%D		1.92	%		1.92	%D
Net investment income (loss), before reimbursements		(1.78	)%D		(2.07	)%		10.41	%D
Net investment income (loss), net of reimbursements		(1.74	)%D		(1.59	)%		14.47	%D
Portfolio turnover rate		—	%E		—	%E		—	%E
	A Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			August 19 to December 31, 2014 A
	(unaudited)
Net asset value, beginning of period	$	10.44		$	10.93		$	10.00
Income from investment operations:
Net investment income (loss)		0.31			(0.52	)		0.32
Net gains (losses) from investments (both realized and unrealized)		(0.14	)		0.36			1.00
Total income (loss) from investment operations		0.17			(0.16	)		1.32
Less distributions:
Dividends from net investment income		—			(0.18	)		(0.31	)
Distributions from net realized gains		—			(0.15	)		(0.08	)
Return of Capital		—			(0.00	)F		—
Total distributions		—			(0.33	)		(0.39	)
Net asset value, end of period	$	10.61		$	10.44		$	10.93
Total return A		1.73	%C		(1.45	)%		13.23	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	23,240		$	9,891		$	9,019
Ratios to average net assets:
Expenses, before reimbursements		2.07	%D		2.55	%		5.31	%D
Expenses, net of reimbursements		1.94	%D		1.94	%		1.94	%D
Net investment income (loss), before reimbursements		(1.89	)%D		(3.59	)%		32.48	%D
Net investment income (loss), net of reimbursements		(1.76	)%D		(2.98	)%		35.85	%D
Portfolio turnover rate		—	%E		—	%E		—	%E

63

American Beacon AHL Managed Futures Strategy Fund ^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			August 19 to December 31, 2014 A
	(unaudited)
Net asset value, beginning of period	$	10.34		$	10.90		$	10.00
Income from investment operations:
Net investment income (loss)		0.03			(0.09	)		0.27
Net gains (losses) from investments (both realized and unrealized)		0.11			(0.16	)		1.02
Total income (loss) from investment operations		0.14			(0.25	)		1.29
Less distributions:
Dividends from net investment income		—			(0.16	)		(0.31	)
Distributions from net realized gains		—			(0.15	)		(0.08	)
Return of Capital		—			(0.00	)F		—
Total distributions		—			(0.31	)		(0.39	)
Net asset value, end of period	$	10.48		$	10.34		$	10.90
Total return A		1.35	%C		(2.30	)%		12.93	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	4,180		$	2,151		$	401
Ratios to average net assets:
Expenses, before reimbursements		2.85	%D		3.32	%		8.75	%
Expenses, net of reimbursements		2.69	%D		2.69	%		2.68	%
Net investment income (loss), before reimbursements		(2.67	)%D		(2.88	)%		7.02	%
Net investment income (loss), net of reimbursements		(2.51	)%D		(2.25	)%		13.09	%
Portfolio turnover rate		—	%E		—	%E		—	%E

64

American Beacon Ionic Strategic Arbitrage Fund ^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Six Months Ended June 30, 2016			June 30 to December 31, 2015D
	(unaudited)
Net asset value, beginning of period	$	9.89		$	10.00
Income from investment operations:
Net investment income		0.05			0.04
Net gains (losses) from investments (both realized and unrealized)		(0.05	)		0.11
Total income from investment operations		0.00			0.15
Less distributions:
Dividends from net investment income		—			(0.06	)
Distributions from net realized gains		—			(0.20	)
Total distributions		—			(0.26	)
Net asset value, end of period	$	9.89		$	9.89
Total return A		0.00	%C		1.60	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	104,323		$	63,422
Ratios to average net assets:
Expenses, before reimbursements		3.44	%B		3.55	%B
Expenses, before reimbursements, excluding non-operating expenses		1.63	%B		2.25	%B
Expenses, net of reimbursements		3.36	%B		2.84	%B
Expenses, net of reimbursements, excluding non-operating expenses		1.54	%B		1.54	%B
Net investment (loss), before reimbursements		(0.46	)%B		(0.31	)%B
Net investment income (loss), net of reimbursements		(0.38	)%B		0.40	%B
Portfolio turnover rate		248	%C		159	%C
	Y Class
	Six Months Ended June 30, 2016			June 30 to December 31, 2015 D
	(unaudited)
Net asset value, beginning of period	$	9.90		$	10.00
Income from investment operations:
Net investment income		0.06			0.06
Net gains (losses) from investments (both realized and unrealized)		(0.06	)		0.10
Total income from investment operations		0.00			0.16
Less distributions:
Dividends from net investment income		—			(0.06	)
Distributions from net realized gains		—			(0.20	)
Total distributions		—			(0.26	)
Net asset value, end of period	$	9.90		$	9.90
Total return A		0.00	%C		1.56	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	50,087		$	26,060
Ratios to average net assets:
Expenses, before reimbursements		3.62	%B		3.83	%B
Expenses, before reimbursements, excluding non-operating expenses		1.67	%B		2.21	%B
Expenses, net of reimbursements		3.59	%B		3.27	%B
Expenses, net of reimbursements, excluding non-operating expenses		1.64	%B		1.64	%B
Net investment income (loss), before reimbursements		(0.41	)%B		0.83	%B
Net investment income (loss), net of reimbursements		(0.38	)%B		1.40	%B
Portfolio turnover rate		248	%C		159	%C

^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.

^B Not annualized.

^C Annualized.

^D Commencement of Operations.

65

American Beacon Ionic Strategic Arbitrage Fund ^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Six Months Ended June 30, 2016			June 30 to December 31, 2015 D
	(unaudited)
Net asset value, beginning of period	$	9.88		$	10.00
Income from investment operations:
Net investment income		0.05			0.02
Net gains (losses) from investments (both realized and unrealized)		(0.06	)		0.12
Total income (loss) from investment operations		(0.01	)		0.14
Less distributions:
Dividends from net investment income		—			(0.06	)
Distributions from net realized gains		—			(0.20	)
Total distributions		—			(0.26	)
Net asset value, end of period	$	9.87		$	9.88
Total return A		(0.10	)%C		1.36	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,895		$	2,187
Ratios to average net assets:
Expenses, before reimbursements		3.64	%B		4.23	%B
Expenses, before reimbursements, excluding non-operating expenses		1.88	%B		2.92	%B
Expenses, net of reimbursements		3.68	%B		3.23	%B
Expenses, net of reimbursements, excluding non-operating expenses		1.92	%B		1.92	%B
Net investment (loss), before reimbursements		(0.75	)%B		(1.52	)%B
Net investment (loss), net of reimbursements		(0.79	)%B		(0.53	)%B
Portfolio turnover rate		248	%C		159	%C
	A Class
	Six Months Ended June 30, 2016			June 30 to December 31, 2015 D
	(unaudited)
Net asset value, beginning of period	$	9.88		$	10.00
Income from investment operations:
Net investment income		0.05			0.08
Net gains (losses) from investments (both realized and unrealized)		(0.06	)		0.06
Total income (loss) from investment operations		(0.01	)		0.14
Less distributions:
Dividends from net investment income		—			(0.06	)
Distributions from net realized gains		—			(0.20	)
Total distributions		—			(0.26	)
Net asset value, end of period	$	9.87		$	9.88
Total return A		(0.10	)%C		1.36	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	115		$	115
Ratios to average net assets:
Expenses, before reimbursements		3.98	%B		7.35	%B
Expenses, before reimbursements, excluding non-operating expenses		2.15	%B		5.93	%B
Expenses, net of reimbursements		3.76	%B		3.37	%B
Expenses, net of reimbursements, excluding non-operating expenses		1.94	%B		1.94	%B
Net investment (loss), before reimbursements		(1.00	)%B		(3.54	)%B
Net investment income (loss), net of reimbursements		(0.79	)%B		0.44	%B
Portfolio turnover rate		248	%C		159	%C

^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.

^B Not annualized.

^C Annualized.

^D Commencement of Operations.

66

American Beacon Ionic Strategic Arbitrage Fund ^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Six Months Ended June 30, 2016			June 30 to December 31, 2015D
	(unaudited)
Net asset value, beginning of period	$	9.85		$	10.00
Income from investment operations:
Net investment income		0.02			0.05
Net gains (losses) from investments (both realized and unrealized)		(0.07	)		0.05
Total income (loss) from investment operations		(0.05	)		0.10
Less distributions:
Dividends from net investment income		—			(0.05	)
Distributions from net realized gains		—			(0.20	)
Total distributions		—			(0.25	)
Net asset value, end of period	$	9.80		$	9.85
Total return A		(0.51	)%C		1.00	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	160		$	131
Ratios to average net assets:
Expenses, before reimbursements		4.72	%B		8.14	%B
Expenses, before reimbursements, excluding non-operating expenses		2.88	%B		6.72	%B
Expenses, net of reimbursements		4.54	%B		4.11	%B
Expenses, net of reimbursements, excluding non-operating expenses		2.69	%B		2.69	%B
Net investment (loss), before reimbursements		(1.70	)%B		(4.30	)%B
Net investment (loss), net of reimbursements		(1.51	)%B		(0.28	)%B
Portfolio turnover rate		248	%C		159	%C

^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.

^B Not annualized.

^C Annualized.

^D Commencement of Operations.

67

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

Disclosure Regarding Board Approval of New Management and Investment Advisory Agreements

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 AHL Managed Futures Strategy Fund (“Fund”); and

(2) a new Investment Advisory Agreement (“New Advisory Agreement”) among the Manager, the Trust, on behalf of the Fund, and AHL Partners LLP (“AHL” or “Sub-Advisor”).

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 Agreement (“Current Advisory Agreement”) among the Manager, the Trust, on behalf of the Fund, and AHL 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 the Current Advisory Agreement (together, the “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 approval of the Current Management Agreement and Current Advisory Agreement at in-person meetings held in June 2014. The Manager represented to the Board that there had been no material changes or developments relating to the Manager or the Sub-Advisor since the 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

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

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.

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

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

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 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 the 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 the 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 the 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-Advisor. The Board also considered the Manager’s representation that there had been no material changes or developments regarding the Manager or the Sub-Advisor since the Board’s consideration of the Current Agreements in 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-Advisor 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-Advisor.

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

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 June 2014. Based on the foregoing information and the Board’s considerations in connection with the approval of the Current Agreements in 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 the Sub-Advisor from its relationship with the Fund, noting instead the substantially arm’s-length nature of the relationship between the Manager and the 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 the Sub-Advisor under the New Advisory Agreement as the Fund pays under the Current Advisory Agreement. Based on the foregoing information and the Board’s considerations in connection with the renewal of the Current Agreements in June 2014, the Board concluded that the Manager’s fee schedule for the Fund, and the Sub-Advisor’s fee schedule 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 the 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 approval of the Current Agreements in June 2014, the Board concluded that the potential benefits accruing to the Manager under the New Management Agreement and the Sub-Advisor under the New Advisory Agreement, by virtue of the Manager’s and the Sub-Advisor’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 or the Sub-Advisor, 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.

Disclosure Regarding Approval of Management Agreement

At its March 3-4, 2016 meetings, the Board considered the approval of a new Management Agreement (“New Agreement”) between the Manager and the Trust, on behalf of the Fund. The New Agreement combines the terms of the Fund’s prior management agreement and administration agreement and establishes a standardized fee schedule for four categories of funds, which include fee schedule breakpoints. The Board considered that, with respect to the Fund, the single management fee rate under the New Agreement does not exceed the former combined investment management and administrative services fee rates, and there is no change to the investment management or administrative services provided or the aggregate fees charged to the Fund.

The Board reviewed information provided by the Manager in response to requests from the Board in connection with the Board’s consideration of the New Agreement. The Board also considered information that had been provided by the Manager to the Board at its November 9-10, 2015 meetings when the Board had met with various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the New Agreement. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of the New Agreement. The

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

memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of investment advisory contracts.

The Board determined that it did not need to consider certain factors that it typically considers during its review of the Fund’s management agreement because the Board had reviewed, among other matters, the nature, extent and quality of services being provided to the Fund by the Manager at in-person meetings held on June 2–3, 2015, when it reviewed the prior management agreement or, in connection with the initial approval of that agreement. The Board noted that it previously had considered and approved the prior management agreement at an in-person meeting held on November 12, 2014, at telephonic meetings held on November 26, 2014 and December 6, 2014 and at an in-person meeting held on December 10, 2014.

In connection with the Board’s review of the New Agreement, the Board considered, among other things, information provided by the Manager regarding the terms of the New Agreement and the relevant differences between the New Agreement and the prior management agreement and administration agreement. The Board considered the Manager’s representations that the New Agreement would not reduce or modify in any way the nature or level of the advisory or administration services provided to the Fund. The Board also considered that the fee rate payable by the Fund under the New Agreement would not exceed the aggregate fee rate payable by the Fund under the prior management agreement and administration agreement. Additionally, the Board considered the Manager’s representation that there would be no change in the professional personnel who primarily perform management and administrative services for the Fund and the Manager’s representations regarding disclosure of the New Agreement to new and existing shareholders. The Board also considered that an independent consultant retained to assist the Board in evaluating the Manager’s proposal to combine the prior management agreement and administration agreement had concluded that the proposal was reasonable and in the best interest of shareholders.

Based on the various considerations described above, the Board, including a majority of Trustees who are not “interested persons” of the Fund or the Manager, as that term is defined in the 1940 Act: (1) concluded that the proposed management fee is fair and reasonable with respect to the Fund; (2) determined that each Fund and its shareholders would benefit from the Manager’s continued management of the Fund; and (3) approved the New Agreement on behalf of the Fund.

Disclosure Regarding the Board of Trustees’ Renewal and Approval of the Management Agreement and Investment Advisory Agreement of the Fund

At in-person meetings held on May 17, 2016 and June 8, 2016 (collectively, the “Meetings”), the Board considered and then, at its June 8, meeting, approved: (1) the renewal of the Management Agreement between the Manager and the Trust on behalf of the Fund; and (2) the renewal of the investment advisory agreement (the “Investment Advisory Agreement”) among the Manager, AHL (“subadvisor”), and the Trust. The Management Agreement and the Investment Advisory Agreement are collectively referred to herein as the “Agreements.” In preparation for the Board to consider the renewal of these Agreements, the Board undertook steps to gather and consider information furnished by the Manager, the subadvisor, Broadridge, Inc. (“Broadridge”) and Morningstar, Inc. (“Morningstar”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and the subadvisor.

In advance of the Meetings, the Board’s Investment Committee and/or the Manager coordinated the production of information from Broadridge and Morningstar regarding the performance, fees and expenses of the Fund as well as information from the Manager and the subadvisor. At the Meetings, the Board considered the information provided. The Board noted that as a result of the acquisition of Lipper, Inc. (“Lipper”) by Broadridge, Lipper expense and performance information was provided by Broadridge. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular meetings of the Board and its committees, as well as information specifically prepared in connection with the renewal process.

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

In connection with the Board’s consideration of the Management Agreement and the Investment Advisory Agreement, the Trustees received and evaluated such information as they deemed necessary. The information requested on behalf of the Board included, among other information, the following materials. References herein to the “firm” refer to the Manager and/or the subadvisor.

• comparisons of the performance of an appropriate share class of the Fund to comparable investment companies and appropriate benchmark indices, including peer group averages and performance analyses provided by Broadridge and Morningstar, and to the performance of any similar accounts managed by the firm;

• comparisons of the Fund’s management and subadvisory fee rates and expense ratio with the management fee rates paid by comparable mutual funds, including peer group averages and fee and expense analyses provided by Broadridge and Morningstar, and the advisory fee rates charged to other clients for which similar services are provided;

• a description of any applicable fee waivers and/or expense reimbursements in place for the Fund during the past year, and any proposed changes to the expense caps;

• the Manager’s profitability with respect to the services that it provided to the Fund;

• any actual or anticipated economies of scale in relation to the services the firm provides or will provide to the Fund and whether the current fee rates charged or to be charged to the Fund reflect these economies of scale for the benefit of the Fund’s investors;

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

• information regarding the securities lending, cash management, administrative and accounting-related services that the Manager provides to the Fund, as applicable, and the fees that the Manager receives for such services; and

• information regarding a firm’s financial condition, the personnel of the Manager who are assigned primary responsibility for managing the Fund, staffing levels, portfolio managers’ compensation, disaster recovery plans, insurance coverage, material pending litigation, code of ethics, compliance matters, trading activities, and actual or potential conflicts of interest that the firm experiences, or anticipates that it will experience, in providing services to the Fund.

The Board noted that the Manager provides management and administrative services to the Fund pursuant to the Management Agreement. The Board considered that prior to May 29, 2016, the Manager provided management and administrative services to the Fund pursuant to separate agreements. The Board noted, in this regard, that many mutual funds have separate contracts governing both types of services, and observed that the actual management fee rates provided by Broadridge for peer group funds reflect the combined advisory and administrative expenses, reduced by any waivers and/or reimbursements.

The firm may not have been able to, or opted not to, provide information in response to certain information requests, in which case the Board conducted its evaluation of the firm based on information that was provided. In such cases, the Board determined that the omission of any such information was not material to its considerations. The class of shares used for comparative performance purposes was the share class with the lowest expenses available for purchase by the general public, which, was the Institutional Class. The Board also considered that the use of Institutional Class performance generally facilitates a meaningful comparison for expense and performance purposes.

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

Provided below is an overview of certain factors the Board considered in connection with its renewal and approval of the Management Agreement and Investment Advisory Agreement. The Board did not identify any particular information that was most relevant to its consideration to renew or approve each Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the renewal and approval of each Agreement. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of the contracts. Based on its evaluation, the Board unanimously concluded that the terms of each Agreement were reasonable and fair and that the renewal and approval of each Agreement was in the best interests of the Fund and its shareholders.

I. Considerations With Respect to the Renewal of the Management Agreement and the Investment Advisory Agreement

In determining whether to renew the Management Agreement and the Investment Advisory Agreement on behalf of the Fund, the Trustees considered the best interests of the Fund. While the Management Agreement and the Investment Advisory Agreements for all series of the Trust and American Beacon Select Funds (together, the “Trusts”) were considered at the Meetings, the Board considered the Fund’s investment management and subadvisory relationships separately.

In each instance, the Board considered, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of the Fund and the subadvisor 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 the subadvisor 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 the subadvisor from their relationship with the Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: the Fund’s long-term performance and the length of service of key investment personnel at the Manager; the cost structure of the Fund; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Fund; the Manager’s commitment to enhance the Fund’s product line and increase assets in the Fund; the Manager’s quality of services; the Manager’s active role in monitoring and, as appropriate, recommending additional or replacement subadvisors; the Manager’s commitment to training employees; and the Manager’s efforts to retain key employees and maintain staffing levels.

With respect to the renewal of the Investment Advisory Agreement, the Trustees considered the level of staffing and the size of the subadvisor. The Board also considered the adequacy of the resources committed to the Fund by the subadvisor, and whether those resources were commensurate with the needs of the Fund and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of the subadvisor. The Board also considered the subadvisor’s representations regarding its compliance program and code of ethics. 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 subadvisor were appropriate for the Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for the Fund.

Investment Performance. The Board evaluated the comparative information provided by Broadridge and the Manager regarding the Fund’s investment performance relative to its Lipper performance universe, Lipper performance group, and/or benchmark index(es) as well as the Fund’s Morningstar rating. The Board

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

considered the information provided by Broadridge regarding its independent peer selection methodology to select all Lipper performance groups and universes. The Board also considered that the performance groups and universes selected by Broadridge may not provide appropriate comparisons for certain series of the Trusts. In addition, the Board considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Board also considered the Manager’s recommendation to continue to retain the subadvisor. A discussion regarding the Board’s considerations with respect to the Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to the Fund.”

Costs of the Services Provided to the Fund and the Profits Realized by the Manager from its Relationship with the Fund. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager, before and after the payment of distribution-related expenses by the Manager. The profits or losses were noted at both an aggregate level for all series of the Trusts and at an individual Fund level, with some series of the Trusts being profitable for the Manager and with the Manager sustaining losses with respect to other series of the Trusts. Although the Board noted that, in certain cases, the fee rates paid by other clients of the Manager are lower than the fee rates paid by the series of the Trusts, the Manager represented that, among other matters, the difference is attributable to the fact that the Manager does not perform administrative services for non-investment company clients and reflects the greater level of responsibility and regulatory requirements associated with managing the series of the Trusts.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain series of the Trusts and share classes that were in place during the last fiscal year. The Board further considered that, with respect to the Fund, the Management Agreement provides for the Manager to receive a management fee comprised of an annualized fee that is retained by the Manager. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of certain series of the Trusts. The Board also noted that certain share classes of the Fund maintain higher expense ratios in order to compensate third-party financial intermediaries.

In analyzing the fee rates charged by the subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest fee rate a subadvisor charges for any comparable client accounts. The Board did not request profitability data from the subadvisor because the Board did not view this data as imperative to its deliberations given the arm’s-length nature of the relationship between the Manager and the subadvisor with respect to the negotiation of subadvisory fee rate. In addition, the Board noted that subadvisors may not account for their profits on an account-by-account basis and those that do likely employ different methodologies in connection with these calculations.

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

Economies of Scale. In considering the reasonableness of the management and investment advisory fees rates, the Board considered whether economies of scale will be realized as the Fund grows and whether fee rate levels reflect these economies of scale for the benefit of Fund shareholders. In this regard, the Board considered that the Manager has negotiated breakpoints in many subadvisory fee rates.

In addition, the Board noted the Manager’s representation that the Management Agreement contains fee schedule breakpoints at higher asset levels with respect to the Fund. The Board also considered the Manager’s representation that many of the series of the Trusts benefit from economies of scale because comparably low fee rate levels are reflected in the current fee rates the Manager charges. The Board further noted the Manager’s representation that many series of the Trusts benefit from these comparably low fee rate

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

levels despite not having yet reached an asset size at which economies of scale would traditionally be considered to exist. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee rate schedules for the Fund provide for a reasonable sharing of benefits from any economies of scale with the Fund.

Benefits Derived from the Relationship with the Fund. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisor as a result of the advisory relationships with the Fund, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisor. In addition, the Board noted that certain subadvisors benefit from soft dollar arrangements for third party and proprietary research.

In addition, the Manager noted that the Fund also derives benefits from its association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most series of the Trusts at a lower than industry average cost. The Board considered that certain subadvisors reimburse the Manager for certain costs relating to distribution activities for the series of the Trusts, as well as representations by all such subadvisors that they would not reduce their fee rates in lieu of providing such reimbursements. Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisor by virtue of their relationships with the Fund appear to be fair and reasonable

Additional Considerations and Conclusions with Respect to the Fund

The performance comparisons below were made versus the Fund’s Lipper performance universe and Lipper performance group, with the 1^st Quintile representing the top twenty percent of the universe or group based on performance and the 5^th Quintile representing the bottom twenty percent of the universe or group based on performance. References below to the Fund’s Lipper performance group and Lipper performance universe are to the respective group or universe of comparable mutual funds included in the analysis provided by Broadridge. A Lipper performance group consists of the Fund and a representative sample of funds with similar investment classifications and objectives as the Fund, as selected by Broadridge. A Lipper performance universe is an expansion of the performance group, providing a broader view of performance across the Fund’s investment classification/objective and allowing for a more extensive comparison. In reviewing the performance, the Trustees viewed longer-term performance over a full market cycle, typically five years or longer, if available, as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events that do not reflect manager skill.

The expense comparisons below were made versus the Fund’s Lipper expense universe and Lipper expense group, with the 1^st Quintile representing the top twenty percent of the universe or group based on lowest total expense and the 5^th Quintile representing the bottom twenty percent of the universe or group based on highest total expense. References below to the Fund’s expense group and expense universe are to the respective group or universe of comparable mutual funds included in the analysis by Broadridge. A Lipper expense group consists of the Fund and a representative sample of funds with similar operating structures and asset sizes, as selected by Broadridge. A Lipper expense universe includes all funds in the investment classification/objective with a similar load type to the share class of the Fund included in the Lipper comparative information and provides a broader view of expenses across the Fund’s investment classification/objective. The Trustees also considered the Fund’s Morningstar fee level category. In reviewing expenses, the Trustees considered the positive impact of fee waivers where applicable and the Manager’s agreement to continue the fee waivers. In addition, information regarding the subadvisor’s use of soft dollars was requested from the Manager and was considered by the Trustees.

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

Additional Considerations and Conclusions with Respect to the American Beacon AHL Managed Futures Strategy Fund

In considering the renewal of the Management Agreement and Investment Advisory Agreement with AHL for the Fund, the Trustees considered the following additional factors:

Lipper Total Expense Analysis and Morningstar Fee Level Ranking

Compared to Lipper Expense Universe	3rd Quintile
Compared to Lipper Expense Group	3rd Quintile
Morningstar Fee Level Ranking - Institutional Class	Average Expense Ratio

Lipper Fund Performance Analysis (one-year period ended March 31, 2016)

Compared to Lipper Performance Universe	2nd Quintile
Compared to Lipper Performance Group	2nd Quintile

(1) Information provided by AHL regarding fee rates charged for managing accounts in the same strategy as the Fund; and (2) the Manager’s recommendation to continue to retain the subadvisor based upon, among other factors, the relatively brief period that the Fund has been in operation.

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

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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	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. 20549-2736. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available at www.americanbeaconfunds.com, approximately sixty days after the end of each quarter.	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 AHL Managed Futures Strategy Fund and American Beacon Ionic Strategic Arbitrage Fund are service marks of American Beacon Advisors, Inc.

SAR 6/16

American Beacon®
FUNDS
2016 SEMI-ANNUAL REPORT
JUNE 30, 2016
BAHL & GAYNOR SMALL CAP GROWTH FUND
BRIDGEWAY LARGE CAP VALUE FUND
HOLLAND LARGE CAP GROWTH FUND
STEPHENS SMALL CAP GROWTH FUND
STEPHENS MID-CAP GROWTH FUND

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
Performance Overviews	2
Schedules of Investments:
Bahl & Gaynor Small Cap Growth Fund	16
Bridgeway Large Cap Value Fund	19
Holland Large Cap Growth Fund	23
Stephens Small Cap Growth Fund	26
Stephens Mid-Cap Growth Fund	30
Financial Statements	34
Notes to the Financial Statements	38
Financial Highlights	57
Additional Information	Back Cover

BAHL & GAYNOR SMALL CAP GROWTH FUND Investing in small-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. 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. BRIDGEWAY LARGE CAP VALUE FUND 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. While the Fund is managed pursuant to a tax management strategy, the Fund’s investments could create capital gains. The use of futures contracts for cash management may subject the Fund to losing more money than invested. HOLLAND LARGE CAP GROWTH FUND Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. 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. STEPHENS SMALL CAP GROWTH FUND Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. Investing in small-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. 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. STEPHENS MID-CAP GROWTH FUND Growth stocks typically are more volatile than value stocks; however, value stocks have a lower expected growth rate in earnings and sales. Investing in medium-capitalization stocks may involve greater volatility and lower liquidity than larger company stocks. 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 Funds’ risks. There can be no assurances that the investment objectives of these Funds will be met.

Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. The 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 June 30, 2016

President’s Message

Dear Shareholders,   During the six-month period ended June 30, 2016, disparate central bank policies, uneven economic growth and volatile oil prices set the stage for mixed returns around the globe. Many central banks around the world decided to continue or expand their economic stimulation policies. In March 2016, the Bank of Japan (“BOJ”) pushed its rates into negative territory and the European Central Bank (“ECB”) cut a key rate to zero. China’s slowing growth also escalated concerns for markets and companies around the globe. In this environment, international stocks fluctuated from one extreme to another; domestic stocks made modest gains thanks to a rally in oil prices and positive economic reports; and emerging-market stocks rebounded and outpaced developed-market stocks. Bonds generally outperformed stocks thanks to declining interest rates. In April 2016, the BOJ and the ECB left their interest rate policies unchanged, and the Federal Reserve’s Federal Open Market Committee decided to maintain its short-term interest rates in the range of 0.25% to 0.5%. During the period under review, the price of oil was volatile. In June 2016, the price-per-barrel briefly crossed $51 and closed the month at $48.38.

On Friday, June 24, 2016, the global financial markets were roiled following Great Britain’s announcement that 52% of its voters favored leaving the European Union. The “Brexit” referendum fallout was swift and significant: British Prime Minister David Cameron announced his resignation; the British pound sterling plunged approximately 12% against the dollar; the euro tumbled 1.4% against the dollar; and the price of gold surged to a two-year high, up 4.7%. Global markets reacted to the Brexit news with a selling frenzy, which resulted in considerable declines: London, 3.2%; Paris, 8.0%; Frankfurt, 6.8%; Tokyo, 7.9%; Shanghai, 1.3%; and Hong Kong, 2.9%. In the U.S., the Dow Jones Industrial Average declined 611.21 points, or 3.4%, which wiped out year-to-date gains; the S&P 500 Index fell 3.6%; and the NASDAQ Composite Index dropped 4.1%. That same day, Moody’s Investors Service changed the U.K.’s long-term issuer and debt ratings to negative from stable, and affirmed both ratings at Aa1. On Monday, June 27, 2016, Standard & Poor’s Global Ratings stripped the U.K. of its impeccable AAA credit rating, reducing it to AA with a negative outlook. In addition, Fitch’s Ratings, Inc. downgraded the U.K.’s long-term foreign and local currency issuer default ratings to AA with negative outlooks.

Despite all this turmoil, U.S. investors appeared to be opportunistically willing to take on some risk and, by June 30, 2016, the broad market had almost returned to its pre-Brexit level and ended the month in positive territory.

For the six months ended June 30, 2016:

• American Beacon Bahl & Gaynor Small Cap Growth Fund (Investor Class) returned 6.72%.

• American Beacon Bridgeway Large Cap Value Fund (Investor Class) returned 4.68%.

• American Beacon Holland Large Cap Growth Fund (Investor Class) returned -1.11%.

• American Beacon Stephens Small Cap Growth Fund (Investor Class) returned 0.92%.

• American Beacon Stephens Mid-Cap Growth Fund (Investor Class) returned -0.95%.

For the period under review, the broad-market S&P 500 Index and the Russell 1000 Value Index – both of which are benchmarks measuring the performance of large-cap domestic stocks – gained 3.84% and 6.30%, respectively. The Russell 2000 Growth Index, a benchmark for small-cap, growth-oriented domestic stocks, declined -1.59% in comparison.

Our broad range of mutual funds helps investors navigate the economic storms and market downturns in the U.S. and abroad. Our years of experience evaluating sub-advisors have 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.

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

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

1

American Beacon Bahl & Gaynor Small Cap Growth Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Investor Class of the Bahl & Gaynor Small Cap Growth Fund (the “Fund”) returned 6.72% for the six-month period ended June 30, 2016. The Fund outperformed the Russell 2000 Growth Index (the “Index”) return of -1.59% for the period.

Total Returns for the Period ended June 30, 2016

	Ticker		6 Months*			1 Year			Since Inception (7/15/14)
Institutional Class (1,5)		GBSIX		6.98	%		1.54	%		5.65	%
Y Class (1,5)		GBSYX		6.89	%		1.45	%		5.55	%
Investor Class (1,5)		GBSPX		6.72	%		1.17	%		5.26	%
A Class with sales charge (1,2,5)		GBSAX		0.56	%		-4.60	%		2.08	%
A Class without sales charge (1,2,5)		GBSAX		6.73	%		1.17	%		5.21	%
C Class with sales charge (1,3,5)		GBSCX		5.30	%		-0.66	%		4.43	%
C Class without sales charge (1,3,5)		GBSCX		6.30	%		0.34	%		4.43	%
Russell 2000 Growth Index (4)				-1.59	%		-10.75	%		2.18	%
S&P 500 Index (4)				3.84	%		3.99	%		5.41	%

* Not Annualized

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 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. A portion of the fees charged to each Class of the Fund has been waived since Fund inception. Performance prior to waiving fees was lower than actual returns shown.

2. A Class shares have a maximum sales charge of 5.75%.

3. C Class has a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.

4. The S&P 500 Index is a market capitalization weighted index of common stocks publicly traded in the United States. The Russell 2000 Growth Index and the Russell 2000 Index are registered trademarks of Frank Russell Company. The Russell 2000 Growth Index is an unmanaged index of those stocks in the Russell 2000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged index of approximately 2000 smaller-capitalization stocks from various industrial sectors. One cannot directly invest in an index.

5. 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 3.05%, 2.77%, 3.20%, 2.89 %, and 3.85%, 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 due primarily to stock selection. Sector allocation relative to the Index added value as well.

Most of the Fund’s excess performance related to security selection was attributable to holdings in the Health Care, Industrials and Information Technology sectors. Investments in the Health Care sector contributed more than 325 basis points (3.25%) to performance. In the Health Care sector, West Pharmaceutical Services (up 26.9%) and Bio Techne Corp (up 25.7%) contributed to the Fund’s returns. Not owning Ultragenyx Pharmaceutical, which was down 56.4% in the Index, also positively impacted performance. Ritchie Bros Auctioneers (up 41.1%), Valmont Industries (up 29.4%), and Watsco (up 22.4%), added relative value in the Industrials sector. In the Information Technology sector, Silicon Motion Technol (up 59.0%), Methode Electronics (up 9.3%) and FEI Company (up 36.6%) were the largest contributors. The aforementioned good performance was slightly offset by the Fund’s poor selection in the Financials sector where Bank of Ozarks (down 23.0%), Evercore Partners (down 16.8%) and S+T Bancorp (down 19.1%) detracted from the Fund’s returns.

From a sector allocation perspective, the Fund benefited from underweighting Health Care, the worst performing sector in the Index, and overweighting Financials. Conversely, underweighting Telecommunication Services, the best performing sector in the Index, and underweighting the Consumer Discretionary sector detracted from relative performance during the period.

2

American Beacon Bahl & Gaynor Small Cap Growth Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

Looking forward, the Fund’s sub-advisor will continue to maintain a disciplined, long-term approach to equity investing in high-quality, smaller capitalization, dividend-paying stocks with above-average growth potential.

Top Ten Holdings (% Net Assets)
MarketAxess Holdings, Inc.		3.5
Texas Roadhouse, Inc.		3.0
Cantel Medical Corp.		2.8
West Pharmaceutical Services, Inc.		2.6
Watsco, Inc.		2.6
Ritchie Bros Auctioneers, Inc.		2.5
Blackbaud, Inc.		2.5
Monolithic Power Systems, Inc.		2.4
Methode Electronics, Inc.		2.3
Thor Industries, Inc.		2.3
Total Fund Holdings	67

Sector Allocation (% Equities)
Information Technology	27.0
Consumer Discretionary	17.0
Industrials	16.4
Health Care	16.2
Financials	14.0
Consumer Staples	4.5
Materials	3.9
Energy	1.0

3

American Beacon Bridgeway Large Cap Value Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Investor Class of the American Beacon Bridgeway Large Cap Value Fund (the “Fund”) returned 4.68% for the six months ended June 30, 2016, compared to the Russell 1000^® Value Index (the “Index”) return of 6.30% for the same period.

Total Returns for Period ended June 30, 2016

	Ticker	6 Months*			1 Year			5 Years			10 Years
Institutional Class (1,7)	BRLVX		4.84	%		1.46	%		12.75	%		7.55	%
Y Class (1,2,7)	BWLYX		4.85	%		1.40	%		12.69	%		7.52	%
Investor Class (1,3,7)	BWLIX		4.68	%		1.15	%		12.45	%		7.40	%
A Class with sales Charge (1,4,7)	BWLAX		-1.34	%		-4.71	%		11.01	%		6.71	%
A Class without sales charge (1,4,7)	BWLAX		4.66	%		1.11	%		12.33	%		7.35	%
C Class with sales charge (1,5,7)	BWLCX		3.26	%		-0.66	%		11.64	%		7.02	%
C Class without sales charge (1,5,7)	BWLCX		4.26	%		0.34	%		11.64	%		7.02	%
Russell 1000 Value Index (6)			6.30	%		2.86	%		11.35	%		6.13	%

* Not Annualized

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 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. A portion of the fees charged to the Institutional Class was waived from 2008 through 2013 and recovered in 2014 and 2015. Performance prior to waiving fees was lower than the actual returns shown from 2008 through 2013.

2. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 6/30/06 up to 2/3/12, 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 6/30/06. A portion of the fees charged to the Y Class was waived in 2012 and recovered in 2013 and 2014. Performance prior to waiving fees was lower than the actual returns shown in 2012.

3. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 6/30/06 up to 2/3/12, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the Institutional Class. Therefore, total returns shown may be higher than they would have been had the Investor Class been in existence since 6/30/06 A portion of the fees charged to the Investor Class was waived in 2012 and fully recovered in 2013. Performance prior to waiving fees was lower than the actual returns shown in 2012.

4. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 6/30/06 through 2/3/12, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 6/30/06. A portion of the fees charged to the A Class was waived in 2012 and 2013 and recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown in 2012 and 2013. A Class shares have a maximum sales charge of 5.75%.

5. Fund performance for the five-year and ten-year periods represent the returns achieved by the Institutional Class from 6/30/06 through 2/3/12, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 6/30/06. A portion of the fees charged to the C Class was waived in 2012 and 2013 and recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown in 2012 and 2013. C Class has a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.

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 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, A, and C Class shares was 0.75%, 0.81%, 1.09% 1.12%, and 1.87%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

4

American Beacon Bridgeway Large Cap Value Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Fund underperformed the Index primarily due to stock selection as sector allocation detracted modest value relative to the Index.

Most of the Fund’s poor performance related to security selection was attributable to holdings in the Energy sector which detracted more than 160 (1.60%) basis points from performance. The Fund’s much smaller allocation versus the Index in Exxon Mobil, which was up 22.4%, negatively impacted performance in the Energy sector. The Fund’s investments in Tesoro (down 26.8%) and Valero Energy (down 26.2%) also detracted value in the Energy sector. The Fund’s Consumer Discretionary holdings also detracted from returns. Goodyear Tire & Rubber (down 20.3%) was the largest detractor in the Consumer Discretionary sector. The Fund’s absence from Mattel, which was up 20.3% in the Index, also hurt performance. The aforementioned poor performance was somewhat offset by good security selection in the Materials sector. In Materials, Newmont Mining (up 109.7%) and Ashland (up 11.9%) were the largest contributors.

The Fund’s overweight position in Consumer Discretionary, one of the poorer performing sectors in the Index, detracted more than 30 (0.30%) basis points from performance through sector allocation. The aforementioned poor performance was mostly offset by the Fund’s underweight in Financials, the worst performing sector, which added relative value.

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

Top Ten Holdings (% Net Assets)
Tyson Foods, Inc.		1.8
Campbell Soup Co.		1.6
AT&T, Inc.		1.5
Johnson & Johnson		1.5
Citigroup		1.4
General Electric Co.		1.4
Quest Diagnostics, Inc.		1.4
Valero Energy Corp.		1.4
Corning, Inc.		1.3
Newmont Mining Corp.		1.3
Total Fund Holdings	106

Sector Allocation (% Equities)
Financials	23.7
Consumer Staples	13.7
Industrials	10.4
Information Technology	10.1
Energy	9.5
Utilities	9.4
Consumer Discretionary	8.1
Health Care	8.1
Telecommunication Services	3.7
Materials	3.3

5

American Beacon Holland Large Cap Growth Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Investor Class of the American Beacon Holland Large Cap Growth Fund (the “Fund”) returned -1.11% for the six months ended June 30, 2016, compared to the Russell 1000^® Growth Index (the “Index”) return of 1.36% for the same period.

Total Returns for the Period ended June 30, 2016

	Ticker	6 Months*			1 Year			5 Years			10 Years
Institutional Class (1,2,7)	LHGIX		-0.93	%		1.40	%		10.30	%		7.92	%
Y Class (1,3,7)	LHGYX		-0.97	%		1.29	%		10.16	%		7.85	%
Investor Class (1,7)	LHGFX		-1.11	%		1.03	%		9.93	%		7.72	%
A Class with sales charge (1,4,7)	LHGAX		-6.79	%		-4.81	%		8.54	%		7.03	%
A Class without sales charge (1,4,7)	LHGAX		-1.12	%		0.99	%		9.84	%		7.67	%
C Class with sales charge (1,5,7)	LHGCX		-2.50	%		-0.76	%		9.13	%		7.32	%
C Class without sales charge (1,5,7)	LHGCX		-1.50	%		0.24	%		9.13	%		7.32	%
Russell 1000 Growth Index (6)			1.36	%		3.02	%		12.35	%		8.78	%

* Not Annualized

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 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. A portion of the fees charged to the Investor Class was waived from 2002 through 2012 and recovered in 2013 and 2014. Performance prior to waiving fees was lower than the actual returns shown from 2002 through 2012.

2. Fund performance for the ten-year period represents the returns achieved by the Investor Class from 6/30/06 up to 3/1/10, the inception date of the Institutional Class, and the returns of the Institutional Class since its inception. Expenses of the Institutional 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 Institutional Class been in existence since 6/30/06. A portion of the fees charged to the Institutional Class was waived from 2010 through 2012 and partially recovered 2013 through 2015. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012.

3. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 6/30/06 up to 3/1/10, the Institutional Class from 3/1/10 to 3/23/12, 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 and higher than those of the Institutional Class. As a result, total returns shown may be different than they would have been had the Y Class been in existence since 6/30/06. A portion of the fees charged to the Y Class was waived in 2012, partially recovered in 2013 and waived in 2014 and 2015. Performance prior to waiving fees was lower than the actual returns shown in 2012, 2014, and 2015.

4. Fund performance for the ten-year period represents the returns achieved by the Investor Class from 6/30/06 through 2/1/10, 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 6/30/06. A portion of the fees charged to the A Class was waived from 2010 through 2014. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2014. A Class shares have a maximum sales charge of 5.75%.

5. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 6/30/06 to 2/1/10 and the returns of the A Class from 2/1/10 through 3/23/12, 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 and A Classes. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 6/30/06. A portion of the fees charged to the C Class has been waived since 2012. Performance prior to waiving fees was lower than the actual returns shown since 2012. C Class has a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase.

6. The Russell 1000 Growth Index is an unmanaged index of those stocks in the Russell 1000 Index with higher price-to-book ratios and higher forecasted growth values. Russell 1000^® Growth Index and Russell 1000 Index are registered trademarks of Frank Russell Company. 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, and C Class shares was 0.89%, 1.09%, 1.25%, 1.30%, and 2.06%, 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.

6

American Beacon Holland Large Cap Growth Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Fund underperformed the Index mostly due to security selection, although sector allocation also detracted value relative to the Index.

Most of the Fund’s poor performance related to security selection was attributable to holdings in the Consumer Staples, Financials and Industrials sectors. In Consumer Staples, the Fund’s absence from Altria Group, Philip Morris International and The Kraft Heinz Co., which were up 20.6%, 18.1% and 23.3%, respectively, in the Index, negatively impacted performance. The Fund’s investments in Ameritrade (down 17.2%) and Greenhill & Company (down 28.3%) detracted from performance in the Financials sector. Southwest Airlines (down 9.7%) and Roper Technologies (down 9.9%) detracted relative value in the Industrials sector. The aforementioned poor performance was somewhat offset by good security selection in the Health Care sector. Medtronic (up 13.5%) was the largest contributor in the Health Care sector. The Fund’s absence from Celgene Corp, which was down 17.6% in the Index, also added relative value.

From a sector allocation perspective, the Fund’s underweight in Telecommunication Services, the best performing sector in the Index, detracted more than 25 (0.25%) basis points from performance. An overweight position in Information Technology, one of the poorer performing sectors, also detracted from the Fund’s returns. The Fund’s underweight in Health Care, the worst performing sector, added relative value.

Looking forward, the Fund’s sub-advisor will continue to maintain a disciplined, long-term approach to equity investing in larger stocks with above-average growth potential.

Top Ten Holdings (% Net Assets)
Amazon.com, Inc.		4.8
Visa, Inc.		4.5
Alphabet, Inc.		4.2
Apple, Inc.		3.4
Adobe Systems, Inc.		3.3
Honeywell International, Inc.		3.0
Priceline.com, Inc.		3.0
Microsoft Corp.		2.9
CVS Caremark Corp.		2.8
Lowe’s Cos., Inc.		2.7
Total Fund Holdings	51

Sector Allocation (% Equities)
Information Technology	29.4
Consumer Discretionary	24.9
Health Care	15.2
Industrials	12.8
Consumer Staples	12.0
Financials	3.3
Materials	1.4
Telecommunication Services	1.0

7

American Beacon Stephens Small Cap Growth Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Investor Class of the American Beacon Stephens Small Cap Growth Fund (the “Fund”) returned 0.92% for the six months ended June 30, 2016, outperforming the Russell 2000^® Growth Index (the “Index”) return of -1.59% for the same period.

Total Returns for the Period ended June 30, 2016

	Ticker	6 Months*			1 Year			5 Years			10 Years
Institutional Class (1,2,7)	STSIX		1.06	%		-8.54	%		6.55	%		7.42	%**
Y Class (1,3,7)	SPWYX		1.07	%		-8.67	%		6.44	%		6.46	%
Investor Class (1,7)	STSGX		0.92	%		-8.85	%		6.24	%		6.37	%
A Class with sales charge (1,4,7)	SPWAX		-4.95	%		-14.20	%		4.84	%		5.67	%
A Class without sales charge (1,4,7)	SPWAX		0.85	%		-8.97	%		6.10	%		6.29	%
C Class with sales charge (1,5,7)	SPWCX		-0.49	%		-10.61	%		5.41	%		5.95	%
C Class without sales charge (1,5,7)	SPWCX		0.51	%		-9.61	%		5.41	%		5.95	%
S&P 500 Index (6)			3.84	%		3.99	%		12.10	%		7.42	%
Russell 2000 Growth Index (6)			-1.59	%		-10.75	%		8.51	%		7.14	%

* Not Annualized

** Since Inception – Investor Class.

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 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. A portion of the fees charged to the Investor Class was waived from 2005 through 2013, and in 2015 and was and partially recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2005 through 2013 and in 2015.

2. Fund performance for the ten-year period represents the returns achieved by the Institutional Class since its inception of 8/31/06. A portion of the fees charged to the Institutional Class was waived from 2006 through 2013 and recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown from 2006 through 2013.

3. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 6/30/06 up to 2/24/12, 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. Therefore, total returns shown may be lower than they would have been had the Y Class been in existence since 6/30/06. A portion of the fees charged to the Y Class was waived in 2012 and 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown in 2012 and 2013.

4. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 6/30/06 up to 2/24/12, 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 6/30/06. A portion of the fees charged to the A Class was waived in 2012 and partially recovered from 2013 through 2015. Performance prior to waiving fees was lower than the actual returns shown in 2012. A Class has a maximum sales charge of 5.75%.

5. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 6/30/06 up to 2/24/12, 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 6/30/06. A portion of the fees charged to the C Class was waived in 2012 and partially recovered from 2013 through 2015. Performance prior to waiving fees was lower than the actual returns shown in 2012. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

6. The S&P 500 Index is a market capitalization weighted index of common stocks publicly traded in the United States. The Russell 2000 Growth Index and the Russell 2000 Index are registered trademarks of Frank Russell Company. The Russell 2000 Growth Index is an unmanaged index of those stocks in the Russell 2000 Index with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index is an unmanaged index of approximately 2000 smaller-capitalization stocks from various industrial sectors. 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, and C Class shares was 1.09%, 1.15%, 1.41%, 1.45%, and 2.20%, 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.

8

American Beacon Stephens Small Cap Growth Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Fund outperformed the Index primarily due to stock selection as sector allocation added minimal value relative to the Index.

Investments in the Health Care sector contributed more than 305 (3.05%) basis points to performance. HMS Holdings (up 44.0%), Health Equity (up 27.0%) and VCA (up 23.4%) were the largest contributors in the Health Care sector. The Fund’s Energy holdings also added relative value, contributing approximately 95 (0.95%) basis points. Companies within the Energy sector contributing to performance included Rice Energy (up 102.9%), Forum Energy Technologies (up 38.6%) and RPC (up 30.8%). The aforementioned good performance was somewhat offset by poor security selection in Consumer Discretionary. Sportsman’s Warehouse (down 36.2%), Motorcar Parts of America (down 18.5%) and Monro Muffler Brake (down 3.4%) detracted relative value in the Consumer Discretionary sector.

The Fund’s underweight position in Health Care, the worst performing sector in the Index, added approximately 20 (0.20%) basis points to performance through sector allocation. This good performance was mostly negated by an underweight in Materials, one of the better performing sectors, which detracted from the Fund’s returns.

Looking forward, the Fund’s sub-advisor will continue to maintain a disciplined, long-term approach to equity investing in smaller capitalization stocks with above-average growth potential.

Top Ten Holdings (% Net Assets)
ICON PLC		1.9
WageWorks, Inc.		1.7
National CineMedia, Inc.		1.7
CoStar Group, Inc.		1.7
PAREXEL International Corp.		1.7
HMS Holdings Corp.		1.5
Guidewire Software, Inc.		1.5
Neogen Corp.		1.5
Ultimate Software Group, Inc.		1.5
Cardtronics, Inc.		1.5
Total Fund Holdings	109

Sector Allocation (% Equities)
Information Technology	27.0
Health Care	25.4
Consumer Discretionary	14.2
Industrials	13.5
Financials	8.3
Energy	6.6
Consumer Staples	3.2
Materials	1.8

9

American Beacon Stephens Mid-Cap Growth Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Investor Class of the American Beacon Stephens Mid-Cap Growth Fund (the “Fund”) returned -0.95% for the six months ended June 30, 2016. The Fund underperformed the Russell Midcap^® Growth Index (the “Index”) return of 2.15% for the same period.

Total Returns for the Period ended June 30, 2016

	Ticker	6 Months*			1 Year			5 Years			10 Years
Institutional Class (1,2,7)	SFMIX		-0.72	%		-8.11	%		7.78	%		7.77	%**
Y Class (1,3,7)	SFMYX		-0.83	%		-8.23	%		7.68	%		6.95	%
Investor Class (1,7)	STMGX		-0.95	%		-8.50	%		7.40	%		6.81	%
A Class with sales charge (1,4,7)	SMFAX		-6.69	%		-13.78	%		6.08	%		6.16	%
A Class without sales charge (1,4,7)	SMFAX		-1.01	%		-8.52	%		7.35	%		6.79	%
C Class with sales charge (1,5,7)	SMFCX		-2.31	%		-10.22	%		6.67	%		6.45	%
C Class without sales charge (1,5,7)	SMFCX		-1.31	%		-9.22	%		6.67	%		6.45	%
S&P 500 Index (6)			3.84	%		3.99	%		12.10	%		7.42	%
Russell Midcap Growth Index (6)			2.15	%		-2.14	%		9.98	%		8.12	%

* Not Annualized

** Since Inception – Investor Class

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 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. A portion of the fees charged to the Investor Class was waived from 2006 through 2013 and partially recovered in 2014 and 2015. Performance prior to waiving fees was lower than the actual returns shown from 2006 through 2013.

2. Fund performance for the ten-year period represents the returns achieved by the Institutional Class since its inception of 8/31/06. A portion of the fees charged to the Institutional Class has been waived since 2006. Performance prior to waiving fees was lower than the actual returns shown since 2006.

3. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 6/30/06 up to 2/24/12, 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. Therefore, total returns shown may be lower than they would have been had the Y Class been in existence since 6/30/06. A portion of the fees charged to the Y Class was waived in 2012 and 2013 and partially recovered in 2014 and 2015. Performance prior to waiving fees was lower than the actual returns shown in 2012 and 2013.

4. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 6/30/06 up to 2/24/12, 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 6/30/06. A portion of the fees charged to the A Class was waived in 2012 through 2013 and partially recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown from 2012 through 2013. A Class has a maximum sales charge of 5.75%.

5. Fund performance for the five-year and ten-year periods represent the returns achieved by the Investor Class from 6/30/06 up to 2/24/12, 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 6/30/06. A portion of the fees charged to the C Class was waived in 2012 through 2013 and partially recovered in 2015. Performance prior to waiving fees was lower than actual returns shown from 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.

6. The S&P 500 Index is a market capitalization weighted index of common stocks publicly traded in the United States. The Russell Midcap Growth Index is an unmanaged index of those stocks in the Russell Midcap Index with higher price-to-book ratios and higher forecasted growth values. Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index. Russell Midcap Index, Russell Midcap Growth Index and Russell 1000 Index are registered trademarks of 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, A, and C Class shares was 1.02%, 1.07%, 1.33%, 1.37%, and 2.12%, 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.

10

American Beacon Stephens Mid-Cap Growth Fund^SM

Performance Overview

June 30, 2016 (Unaudited)

The Fund lagged the Index mostly due to stock selection. Sector allocation detracted minimal value relative to the Index.

Most of the Fund’s poor performance related to security selection was attributable to holdings in the Energy, Financials, Consumer Discretionary and Health Care sectors. In the Energy sector, Oceaneering International (down 19.6%) was the largest detractor. Not owning Oneok, which was up 100.8% in the Index, also negatively impacted performance. Investments in the Financials sector detracting relative value included SVB Financial Group (down 22.0%) and East West Bancorp (down 17.6%). In the Consumer Discretionary sector, Netflix (down 20.1%) and IMAX (down 17.5%) detracted most from the Fund’s returns. Pacira Pharmaceuticals (down 56.9%) and Illumina (down 27.8%) hurt performance in the Health Care sector.

From a sector allocation perspective, the Fund’s significant overweight in Health Care, the worst performing sector in the Index, detracted approximately 55 (0.55%) basis points from performance. Underweight positions in the Materials and Consumer Staples sectors also detracted from the Fund’s returns. The aforementioned poor performance was largely offset by an overweight in Energy, the best performing sector, which added relative value.

Looking forward, the Fund’s sub-advisor will continue to maintain a disciplined, long-term approach to equity investing in medium capitalization stocks with above-average growth potential.

Top Ten Holdings (% Net Assets)
Monster Beverage Corp.		2.0
CoStar Group, Inc.		1.8
MercadoLibre, Inc.		1.7
Ulta Salon Cosmetics & Fragrance, Inc.		1.7
Idexx Laboratories, Inc.		1.6
Ross Stores, Inc.		1.6
Cerner Corp.		1.6
Ultimate Software Group, Inc.		1.5
VCA Antech, Inc.		1.4
Henry Schein, Inc.		1.4
Total Fund Holdings	98

Sector Allocation (% Equities)
Information Technology	25.0
Consumer Discretionary	22.4
Health Care	21.6
Industrials	14.7
Energy	6.3
Financials	5.5
Consumer Staples	4.5

11

American Beacon Funds^SM

Fund Expenses

June 30, 2016 (Unaudited)

Fund Expense Example

As a shareholder of the Funds, 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 Funds 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 January 1, 2016 through June 30, 2016.

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 Funds 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 sales charges (loads). 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.

12

American Beacon Funds^SM

Fund Expenses

June 30, 2016 (Unaudited)

Bahl & Gaynor Small Cap Growth Fund

	Beginning Account Value 1/1/2016		Ending Account Value 6/30/2016		Expenses Paid During Period 1/1/2016 - 6/30/2016*
Institutional Class
Actual	$	1,000.00	$	1,069.81	$	5.04
Hypothetical**	$	1,000.00	$	1,019.98	$	4.92
Y Class
Actual	$	1,000.00	$	1,068.90		5.56
Hypothetical**	$	1,000.00	$	1,019.48		5.42
Investor Class
Actual	$	1,000.00	$	1,067.19		6.99
Hypothetical**	$	1,000.00	$	1,018.08		6.82
A Class
Actual	$	1,000.00	$	1,067.26		7.09
Hypothetical**	$	1,000.00	$	1,017.98		6.92
C Class
Actual	$	1,000.00	$	1,063.00		10.98
Hypothetical**	$	1,000.00	$	1,014.24		10.72

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 98%, 1.08%, 1.36%, 1.38% and 2.13% 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 (182) by days in the year (366) to reflect the half-year period.

** 5% return before expenses.

Bridgeway Large Cap Value Fund

	Beginning Account Value 1/1/2016		Ending Account Value 6/30/2016		Expenses Paid During Period 1/1/2016 - 6/30/2016*
Institutional Class
Actual	$	1,000.00	$	1,048.35	$	3.72
Hypothetical**	$	1,000.00	$	1,021.23	$	3.67
Y Class
Actual	$	1,000.00	$	1,048.47		4.07
Hypothetical**	$	1,000.00	$	1,020.88		4.02
Investor Class
Actual	$	1,000.00	$	1,046.83		5.45
Hypothetical**	$	1,000.00	$	1,019.53		5.37
A Class
Actual	$	1,000.00	$	1,046.60		5.65
Hypothetical**	$	1,000.00	$	1,019.33		5.57
C Class
Actual	$	1,000.00	$	1,042.58		9.45
Hypothetical**	$	1,000.00	$	1,015.64		9.32

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.73%, 0.80%, 1.07%, 1.11% and 1.86% 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 (182) by days in the year (366) to reflect the half-year period.

** 5% return before expenses.

13

American Beacon Funds^SM

Fund Expenses

June 30, 2016 (Unaudited)

Holland Large Cap Growth Fund

	Beginning Account Value 1/1/2016		Ending Account Value 6/30/2016		Expenses Paid During Period 1/1/2016 - 6/30/2016*
Institutional Class
Actual	$	1,000.00	$	990.72	$	4.36
Hypothetical**	$	1,000.00	$	1,020.48	$	4.42
Y Class
Actual	$	1,000.00	$	990.28		4.85
Hypothetical**	$	1,000.00	$	1,019.97		4.92
Investor Class
Actual	$	1,000.00	$	988.92		6.13
Hypothetical**	$	1,000.00	$	1,018.71		6.22
A Class
Actual	$	1,000.00	$	988.84		6.33
Hypothetical**	$	1,000.00	$	1,018.50		6.42
C Class
Actual	$	1,000.00	$	984.97		10.07
Hypothetical**	$	1,000.00	$	1,014.69		10.22

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.88%, 0.98%, 1.24%, 1.28% and 2.04% 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 (182) by days in the year (366) to reflect the half-year period.

** 5% return before expenses.

Stephens Small Cap Growth Fund

	Beginning Account Value 1/1/2016		Ending Account Value 6/30/2016		Expenses Paid During Period 1/1/2016 - 6/30/2016*
Institutional Class
Actual	$	1,000.00	$	1,010.61	$	5.45
Hypothetical**	$	1,000.00	$	1,019.43	$	5.47
Y Class
Actual	$	1,000.00	$	1,010.65		5.70
Hypothetical**	$	1,000.00	$	1,019.18		5.72
Investor Class
Actual	$	1,000.00	$	1,009.16		6.89
Hypothetical**	$	1,000.00	$	1,018.00		6.92
A Class
Actual	$	1,000.00	$	1,008.51		7.24
Hypothetical**	$	1,000.00	$	1,017.66		7.27
C Class
Actual	$	1,000.00	$	1,005.13		10.97
Hypothetical**	$	1,000.00	$	1,013.90		11.02

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.09%, 1.14%, 1.38%, 1.45%, and 2.20% 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 (182) by days in the year (366) to reflect the half-year period.

** 5% return before expenses.

14

American Beacon Funds^SM

Fund Expenses

June 30, 2016 (Unaudited)

Stephens Mid-Cap Growth Fund

	Beginning Account Value 1/1/2016		Ending Account Value 6/30/2016		Expenses Paid During Period 1/1/2016 - 6/30/2016*
Institutional Class
Actual	$	1,000.00	$	992.82	$	4.95
Hypothetical**	$	1,000.00	$	1,019.87	$	5.02
Y Class
Actual	$	1,000.00	$	991.69		5.50
Hypothetical**	$	1,000.00	$	1,019.32		5.57
Investor Class
Actual	$	1,000.00	$	990.50		6.83
Hypothetical**	$	1,000.00	$	1,018.00		6.92
A Class
Actual	$	1,000.00	$	989.86		7.03
Hypothetical**	$	1,000.00	$	1,017.83		7.12
C Class
Actual	$	1,000.00	$	986.90		10.72
Hypothetical**	$	1,000.00	$	1,014.08		10.87

* Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.00%, 1.11%, 1.38%, 1.42% and 2.17% 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 (182) by days in the year (366) to reflect the half-year period.

** 5% return before expenses.

15

American Beacon Bahl & Gaynor Small Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
COMMON STOCK - 97.43%
CONSUMER DISCRETIONARY - 16.53%
Auto Components - 1.97%
Gentex Corp.		12,725	$	197
Automobiles - 3.12%
Hyster-Yale Materials Handling, Inc.		1,415		84
Thor Industries, Inc.		3,510		227
				311
Hotels, Restaurants & Leisure - 5.18%
Brinker International, Inc.		1,140		52
Marriott Vacations Worldwide Corp.		2,385		163
Texas Roadhouse, Inc.		6,600		301
				516
Household Durables - 2.78%
Flexsteel Industries, Inc.		4,240		168
Matthews International Corp., Class A		1,955		109
				277
Multiline Retail - 1.78%
Pricesmart, Inc.		1,900		178
Specialty Retail - 1.70%
Monro Muffler Brake, Inc.		2,680		170
Total Consumer Discretionary				1,649
CONSUMER STAPLES - 4.38%
Food & Drug Retailing - 0.87%
B&G Foods, Inc.		1,810		87
Food Products - 2.05%
J&J Snack Foods Corp.		1,705		204
Personal Products - 1.46%
Inter Parfums, Inc.		5,120		146
Total Consumer Staples				437
ENERGY - 1.01%
Oil & Gas - 1.01%
GasLog Ltd.		7,770		101
FINANCIALS - 13.68%
Banks - 7.37%
Bank of the Ozarks, Inc.		1,995		75
Evercore Partners, Inc., Class A		4,385		195
Glacier Bancorp, Inc.		2,200		58
MainSource Financial Group, Inc.		2,765		61
PacWest Bancorp		3,120		124
S&T Bancorp, Inc.		3,365		82
Virtu Financial, Inc., Class A		7,800		140
				735
Diversified Financials - 3.49%
MarketAxess Holdings, Inc.		2,395		348
Insurance - 1.56%
Horace Mann Educators Corp.		4,630		156
Real Estate - 1.26%
RE/MAX Holdings, Inc., Class A		3,120		126
Total Financials				1,365

See accompanying notes

16

American Beacon Bahl & Gaynor Small Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
HEALTH CARE - 15.76%
Biotechnology - 0.84%
Neogen Corp.A		1,485	$	84
Health Care Equipment & Supplies - 10.18%
Abaxis, Inc.		3,655		173
Atrion Corp.		200		86
Bio-Techne Corp.		925		104
LeMaitre Vascular, Inc.		5,570		79
Mesa Laboratories, Inc.		880		108
Patterson Cos., Inc.		4,240		203
West Pharmaceutical Services, Inc.		3,470		263
				1,016
Health Care Providers & Services - 4.74%
Cantel Medical Corp.		4,045		278
Omnicell, Inc.A		5,705		195
				473
Total Health Care				1,573
INDUSTRIALS - 16.00%
Building Products - 5.78%
Apogee Enterprises, Inc.		3,265		151
Simpson Manufacturing Co., Inc.		1,510		60
Universal Forest Products, Inc.		1,120		104
Watsco, Inc.		1,855		261
				576
Commercial Services & Supplies - 5.69%
G&K Services, Inc., Class A		1,610		123
Healthcare Services Group, Inc.		3,755		155
Monotype Imaging Holdings, Inc.		6,435		159
MSA Safety, Inc.		2,485		131
				568
Electrical Equipment - 0.71%
II-VI, Inc.		3,765		71
Machinery - 3.82%
Applied Industrial Technologies, Inc.		3,415		154
Raven Industries, Inc.		3,320		63
Valmont Industries, Inc.		1,215		164
				381
Total Industrials				1,596
INFORMATION TECHNOLOGY - 26.30%
Electronic Equipment & Instruments - 4.74%
Analogic Corp.		1,220		97
Intersil Corp., Class A		6,530		88
Methode Electronics, Inc.		6,825		234
NVE Corp.		920		54
				473
Internet Software & Services - 3.15%
GrubHub, Inc.A		2,200		68
NIC, Inc.		7,895		174
Reis, Inc.		2,900		72
				314
IT Consulting & Services - 5.36%
Hackett Group, Inc.		10,335		143
Ritchie Bros Auctioneers, Inc.		7,365		249
SYNNEX Corp.		1,510		143
				535

See accompanying notes

17

American Beacon Bahl & Gaynor Small Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
Semiconductor Equipment & Products - 6.82%
Cirrus Logic, Inc.A		2,930	$	114
Monolithic Power Systems, Inc.		3,470		238
Power Integrations, Inc.		2,245		112
Silicon Motion Technology Corp., ADRB		4,535		217
				681
Software - 6.23%
Blackbaud, Inc.		3,655		249
Mentor Graphics Corp.		6,725		143
National Instruments Corp.		4,395		120
Pegasystems, Inc.		4,095		110
				622
Total Information Technology				2,625
MATERIALS - 3.77%
Chemicals - 3.77%
Balchem Corp.		2,290		137
PolyOne Corp.		5,065		178
Stepan Co.		1,025		61
Total Materials				376
Total Common Stock (Cost $8,821)				9,722
SHORT-TERM INVESTMENTS - 3.43% (Cost $342)
American Beacon U.S. Government Money Market Select Fund, Select ClassC		342,445		342
TOTAL INVESTMENTS - 100.86% (Cost $9,163)				10,064
LIABILITIES, NET OF OTHER ASSETS - (0.86%)				(87	)
TOTAL NET ASSETS - 100.00%			$	9,977

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  ADR - American Depositary Receipt.

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

Futures Contracts Open on June 30, 2016:

Description	Type	Number of Contracts	Expiration Date	Contract Value		Unrealized Appreciation (Depreciation)
Russell 2000 Mini Index Futures	Long	2	September 2016	$	229,480	$	36
				$	229,480	$	36

See accompanying notes

18

American Beacon Bridgeway Large Cap Value Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares			Fair Value
				(000’s)
COMMON STOCK - 98.76%
CONSUMER DISCRETIONARY - 8.01%
Auto Components - 1.64%
Goodyear Tire & Rubber Co.		928,600		$	23,828
Lear Corp.		274,300			27,913
					51,741
Automobiles - 2.36%
Ford Motor Co.		2,983,940			37,508
General Motors Co.		1,307,880			37,013
					74,521
Household Durables - 1.60%
Garmin Ltd.		617,500			26,194
Stanley Black & Decker, Inc.		218,000			24,246
					50,440
Leisure Equipment & Products - 0.98%
Mattel, Inc.		985,400			30,833
Media - 0.78%
Twenty-First Century Fox, Inc., Class A		910,300			24,624
Specialty Retail - 0.65%
Foot Locker, Inc.		374,500			20,545
Total Consumer Discretionary					252,704
CONSUMER STAPLES - 13.48%
Food & Drug Retailing - 1.71%
CVS Caremark Corp.		219,600			21,025
Sysco Corp.		646,500			32,803
			��		53,828
Food Products - 9.58%
Aramark		899,300			30,055
Archer Daniels Midland Co.		679,200			29,131
Campbell Soup Co.		747,000			49,698
Ingredion, Inc.		276,800			35,821
JM Smucker Co.		243,600			37,127
Kellogg Co.		462,300			37,747
Pilgrim’s Pride Corp.		1,019,400			25,974
Tyson Foods, Inc., Class A		848,100			56,644
					302,197
Household Products - 2.19%
Clorox Co.		282,000			39,026
Colgate-Palmolive Co.		411,796			30,143
					69,169
Total Consumer Staples					425,194
ENERGY - 9.37%
Energy Equipment & Services - 1.19%
National Oilwell Varco, Inc.		1,115,700			37,543
Oil & Gas - 8.18%
Antero Resources Corp.A		1,325,400			34,434
Continental Resources, Inc.A		576,100			26,080
Exxon Mobil Corp.		221,570			20,770
Kinder Morgan, Inc.		1,585,200			29,675
Marathon Petroleum Corp.		299,740			11,378
Murphy Oil Corp.		674,300			21,409
Noble Energy, Inc.		468,800			16,816
Phillips 66		323,100			25,635
Tesoro Corp.		384,900			28,837
Valero Energy Corp.		840,000			42,840
					257,874
Total Energy					295,417

See accompanying notes

19

American Beacon Bridgeway Large Cap Value Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
FINANCIALS - 23.42%
Banks - 2.00%
CIT Group, Inc.		668,800	$	21,341
Fifth Third Bancorp		1,528,400		26,885
New York Community Bancorp, Inc.		990,100		14,842
				63,068
Diversified Financials - 5.42%
Ally Financial, Inc.A		1,284,400		21,925
Capital One Financial Corp.		363,200		23,067
Citigroup, Inc.		1,041,500		44,148
CME Group, Inc.		311,600		30,350
JPMorgan Chase & Co.		559,400		34,761
Wells Fargo & Co.		351,000		16,613
				170,865
Insurance - 13.72%
Aflac, Inc.		430,600		31,072
Allstate Corp.		476,800		33,352
American International Group, Inc.		658,400		34,823
Arch Capital Group Ltd.A		258,700		18,626
Berkshire Hathaway, Inc., Class BA		201,900		29,233
Chubb Ltd.		267,919		35,020
Cincinnati Financial Corp.		218,100		16,334
Everest Re Group Ltd.		155,000		28,314
Hartford Financial Services Group, Inc.		454,400		20,166
Lincoln National Corp.		711,000		27,565
MetLife, Inc.		557,700		22,213
Prudential Financial, Inc.		476,900		34,022
Travelers Cos., Inc.		261,000		31,069
Voya Financial, Inc.		817,600		20,244
WR Berkley Corp.		424,900		25,460
XL Group PLCB		757,500		25,232
				432,745
Real Estate - 2.28%
Digital Realty Trust, Inc.C		308,400		33,613
Public Storage, Inc.C		150,000		38,338
				71,951
Total Financials				738,629
HEALTH CARE - 8.01%
Health Care Equipment & Supplies - 0.94%
Baxter International, Inc.		655,500		29,642
Health Care Providers & Services - 4.95%
Aetna, Inc.		184,000		22,472
HCA Holdings, Inc.		450,000		34,654
Humana, Inc.		88,000		15,829
Quest Diagnostics, Inc.		546,800		44,515
UnitedHealth Group, Inc.		274,700		38,788
				156,258
Pharmaceuticals - 2.12%
Abbott Laboratories		514,200		20,213
Johnson & Johnson		383,900		46,567
				66,780
Total Health Care				252,680
INDUSTRIALS - 10.31%
Aerospace & Defense - 2.62%
General Dynamics Corp.		161,300		22,459
Northrop Grumman Corp.		164,900		36,655
Spirit Aerosystems Holdings, Inc., Class AA		549,200		23,616
				82,730

See accompanying notes

20

American Beacon Bridgeway Large Cap Value Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares			Fair Value
				(000’s)
Airlines - 0.65%
JetBlue Airways Corp.A		1,240,300		$	20,539
Commercial Services & Supplies - 0.97%
Republic Services, Inc.		598,500			30,709
Construction & Engineering - 0.85%
Fluor Corp.		543,800			26,798
Electrical Equipment - 1.02%
Emerson Electric Co.		615,500			32,104
Industrial Conglomerates - 2.38%
Carlisle Cos., Inc.		290,300			30,679
General Electric Co.		1,405,300			44,240
					74,919
Machinery - 0.89%
Deere & Co.		346,400			28,072
Transportation & Logistics - 0.93%
Norfolk Southern Corp.		344,700			29,344
Total Industrials					325,215
INFORMATION TECHNOLOGY - 10.02%
Communications Equipment - 2.02%
Corning, Inc.		1,964,000			40,223
Juniper Networks, Inc.		1,047,900			23,567
					63,790
Computers & Peripherals - 0.99%
HP, Inc.		2,494,100			31,301
Electronic Equipment & Instruments - 0.97%
NVIDIA Corp.		647,900			30,458
Office Electronics - 0.79%
Xerox Corp.		2,623,000			24,892
Semiconductor Equipment & Products - 2.19%
Lam Research Corp.		288,700			24,268
Micron Technology, Inc.A		896,800			12,340
Qualcomm, Inc.		608,800			32,613
					69,221
			��
Software - 3.06%
Activision Blizzard, Inc.		886,300			35,124
Amdocs Ltd.		254,600			14,696
CA, Inc.		1,012,100			33,227
Navient Corp.		1,100,900			13,156
					96,203
Total Information Technology					315,865
MATERIALS - 3.23%
Chemicals - 0.90%
Dow Chemical Co.		569,700			28,320
Metals & Mining - 2.33%
Freeport-McMoRan Copper & Gold, Inc.		3,006,300			33,490
Newmont Mining Corp.		1,024,200			40,067
					73,557
Total Materials					101,877

See accompanying notes

21

American Beacon Bridgeway Large Cap Value Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
TELECOMMUNICATION SERVICES - 3.64%
Diversified Telecommunication Services - 2.43%
AT&T, Inc.		1,127,049	$	48,700
CenturyLink, Inc.		967,300		28,061
				76,761
Wireless Telecommunication Services - 1.21%
T-Mobile US, Inc.		882,100		38,168
Total Telecommunication Services				114,929
UTILITIES - 9.27%
Electric - 7.27%
American Water Works Co., Inc.		461,400		38,993
CMS Energy Corp.		600,000		27,516
Consolidated Edison, Inc.		295,100		23,738
DTE Energy Co.		273,800		27,139
Edison International		315,300		24,489
Exelon Corp.		937,800		34,098
Public Service Enterprise Group, Inc.		533,300		24,857
Southern Co.		534,300		28,655
				229,485
Electric Utilities - 1.01%
Eversource Energy		529,800		31,735
Multi-Utilities - 0.99%
Xcel Energy, Inc.		697,000		31,212
Total Utilities				292,432
Total Common Stock (Cost $3,001,050)				3,114,942
SHORT-TERM INVESTMENTS - 1.34% (Cost $42,153)
American Beacon U.S. Government Money Market Select Fund, Select ClassD		42,152,800		42,153
TOTAL INVESTMENTS - 100.10% (Cost $3,043,203)				3,157,095
LIABILITIES, NET OF OTHER ASSETS - (0.10%)				(3,213	)
TOTAL NET ASSETS - 100.00%			$	3,153,882

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  PLC - Public Limited Company.

^C  REIT - Real Estate Investment Trust.

^D  The Fund is affiliated with the same investment advisor.

Futures Contracts Open on June 30, 2016:

Description	Type	Number of Contracts		Expiration Date	Contract Value		Unrealized Appreciation (Depreciation)
S&P 500 E-Mini Index Futures	Long		379	September 2016	$	39,609,290	$	351,525
					$	39,609,290	$	351,525

See accompanying notes

22

American Beacon Holland Large Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
COMMON STOCK - 96.65%
CONSUMER DISCRETIONARY - 22.08%
Auto Components - 1.03%
Delphi Automotive PLCA		15,221	$	953
Hotels, Restaurants & Leisure - 1.11%
Yum! Brands, Inc.		12,379		1,026
Internet & Catalog Retail - 7.83%
Amazon.com, Inc.B		6,197		4,435
priceline.com, Inc.B		2,230		2,784
				7,219
Media - 1.68%
Twenty-First Century Fox, Inc., Class A		57,290		1,550
Multiline Retail - 1.83%
Dollar General Corp.		17,945		1,687
Specialty Retail - 4.70%
Advance Auto Parts, Inc.		11,281		1,823
Lowe’s Cos., Inc.		31,729		2,512
				4,335
Textiles & Apparel - 3.90%
NIKE, Inc., Class B		38,043		2,100
Under Armour, Inc., Class AB		37,308		1,497
				3,597
Total Consumer Discretionary				20,367
CONSUMER STAPLES - 11.58%
Beverages - 3.44%
Monster Beverage Corp.B		13,897		2,234
PepsiCo, Inc.		8,827		935
				3,169
Food & Drug Retailing - 8.14%
Costco Wholesale Corp.		12,266		1,926
CVS Caremark Corp.		26,606		2,547
Mead Johnson Nutrition Co., Class A		15,930		1,446
Whole Foods Market, Inc.		49,699		1,591
				7,510
Total Consumer Staples				10,679
FINANCIALS - 3.18%
Diversified Financials - 3.18%
BlackRock, Inc., Class A		5,023		1,721
TD Ameritrade Holding Corp.		42,711		1,216
Total Financials				2,937
HEALTH CARE - 14.73%
Biotechnology - 5.82%
Biogen Idec, Inc.B		2,136		517
Gilead Sciences, Inc.		26,780		2,233
Medivation, Inc.		12,526		755
Quintiles Transnational Holdings, Inc.B		17,556		1,147
Vertex Pharmaceuticals, Inc.B		8,336		717
				5,369
Health Care Equipment & Supplies - 2.20%
Medtronic PLCA		23,438		2,034

See accompanying notes

23

American Beacon Holland Large Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
Health Care Providers & Services - 4.18%
Cerner Corp.B		33,408	$	1,958
DaVita HealthCare Partners, Inc.B		14,977		1,158
Envision Healthcare Holdings, Inc.B		29,292		743
				3,859
Pharmaceuticals - 2.53%
Bristol-Myers Squibb Co.		16,174		1,189
Zoetis, Inc.		24,052		1,142
				2,331
Total Health Care				13,593
INDUSTRIALS - 11.31%
Aerospace & Defense - 1.50%
Boeing Co.		10,657		1,384
Air Freight & Couriers - 2.72%
United Parcel Service, Inc., Class B		23,277		2,507
Airlines - 2.36%
Southwest Airlines Co.		55,576		2,179
Electrical Equipment - 1.71%
Roper Industries, Inc.		9,268		1,581
Industrial Conglomerates - 3.02%
Honeywell International, Inc.		23,925		2,783
Total Industrials				10,434
INFORMATION TECHNOLOGY - 31.43%
Communications - 1.94%
Facebook, Inc., Class AB		15,699		1,794
Communications Equipment - 1.40%
Cisco Systems, Inc.		44,855		1,287
Computers & Peripherals - 4.52%
Apple, Inc.		33,077		3,163
International Business Machines Corp.		6,637		1,007
				4,170
Internet Software & Services - 4.25%
Alphabet, Inc., Class CB		5,662		3,919
IT Consulting & Services - 8.33%
Automatic Data Processing, Inc.		15,403		1,415
IHS, Inc., Class AB		8,143		941
Tyler Technologies, Inc.		7,217		1,203
Visa, Inc., Class A		55,606		4,125
				7,684
Semiconductor Equipment & Products - 1.51%
NXP Semiconductors N.V.B		17,769		1,392
Software - 9.48%
Adobe Systems, Inc.B		32,036		3,069
Check Point Software Technologies Ltd.B		11,286		899
Citrix Systems, Inc.B		10,660		854
Intuit, Inc.		10,923		1,219
Microsoft Corp.		52,841		2,704
				8,745
Total Information Technology				28,991

See accompanying notes

24

American Beacon Holland Large Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
MATERIALS - 1.33%
Chemicals - 1.33%
Ecolab, Inc.		10,373	$	1,230
TELECOMMUNICATION SERVICES - 1.01%
Wireless Telecommunication Services - 1.01%
SBA Communications Corp., Class AB		8,600		928
Total Common Stock (Cost $64,029)				89,159
SHORT-TERM INVESTMENTS - 3.64% (Cost $3,362)
American Beacon U.S. Government Money Market Select Fund, Select ClassC		3,362,167		3,362
TOTAL INVESTMENTS - 100.29% (Cost $67,391)				92,521
LIABILITIES, NET OF OTHER ASSETS - (0.29%)				(265	)
TOTAL NET ASSETS - 100.00%			$	92,256

Percentages are stated as a percent of net assets.

^A  PLC - Public Limited Company.

^B  Non-income producing security.

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

Futures Contracts Open on June 30, 2016:

Description	Type	Number of Contracts	Expiration Date	Contract Value		Unrealized Appreciation (Depreciation)
S&P 500 E-Mini Index Futures	Long	28	September 2016	$	2,926,280	$	29,406
				$	2,926,280	$	29,406

See accompanying notes

25

American Beacon Stephens Small Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
COMMON STOCK - 99.58%
CONSUMER DISCRETIONARY - 14.19%
Auto Components - 0.84%
Motorcar Parts of America, Inc.A		169,330	$	4,602
Commercial Services - 0.60%
CEB, Inc.		52,900		3,263
Hotels, Restaurants & Leisure - 6.35%
Buffalo Wild Wings, Inc.A		48,824		6,784
Chuy’s Holdings, Inc.A		171,991		5,953
National CineMedia, Inc., Acquired 12/21/2012 – 2/12/2016, Cost $10,108B		613,855		9,503
Papa John’s International, Inc.		91,400		6,215
Potbelly Corp., Acquired 6/8/2014 – 2/12/2016, Cost $4,607A B C		342,771		4,298
Wingstop, Inc.C		68,300		1,861
				34,614
Leisure Equipment & Products - 1.30%
Callaway Golf Co.		255,216		2,606
Sportsman’s Warehouse Holdings, Inc.A C		558,129		4,498
				7,104
Media - 1.69%
IMAX Corp.A		239,978		7,074
TiVo, Inc.A		217,341		2,152
				9,226
Multiline Retail - 0.43%
Ollie’s Bargain Outlet Holdings, Inc.A C		94,000		2,340
Specialty Retail - 2.98%
Aaron’s, Inc.		192,700		4,218
Boot Barn Holdings, Inc.A C		316,266		2,726
Bright Horizons Family Solutions, Inc.A		45,200		2,997
Monro Muffler Brake, Inc.		99,440		6,321
				16,262
Total Consumer Discretionary				77,411
CONSUMER STAPLES - 3.17%
Beverages - 0.57%
MGP Ingredients, Inc.		80,648		3,083
Food Products - 2.60%
Calavo Growers, Inc.		82,842		5,550
Inventure Foods, Inc., Acquired 9/12/2014 – 1/29/2016, Cost $4,176 B		338,566		2,644
TreeHouse Foods, Inc.A		58,700		6,026
				14,220
Total Consumer Staples				17,303
ENERGY - 6.55%
Energy Equipment & Services - 4.59%
Core Laboratories N.V.C		27,200		3,370
Flotek Industries, Inc.A C		319,123		4,212
Forum Energy Technologies, Inc.A		241,300		4,177
Oceaneering International, Inc.		95,300		2,846
PDC Energy, Inc.A		78,000		4,493
RigNet, Inc., Acquired 5/9/2014 – 4/29/2016, Cost $6,988A B		217,606		2,914
RPC, Inc.A C		198,200		3,078
				25,090
Oil & Gas - 1.96%
Carrizo Oil & Gas, Inc.A		100,200		3,592
Rice Energy, Inc.A		321,300		7,082
				10,674
Total Energy				35,764

See accompanying notes

26

American Beacon Stephens Small Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
FINANCIALS - 8.31%
Banks - 1.12%
East West Bancorp, Inc.		89,800	$	3,069
SVB Financial GroupA		32,100		3,055
				6,124
Diversified Financials - 5.50%
Cardtronics, Inc.A		206,553		8,223
Demandware, Inc.A		63,800		4,779
Encore Capital Group, Inc.A C		150,732		3,547
Euronet Worldwide, Inc.A		101,492		7,022
MarketAxess Holdings, Inc.		44,100		6,412
				29,983
Insurance - 1.69%
Hilltop Holdings, Inc.A		249,500		5,237
WEX, Inc.A		44,800		3,972
				9,209
Total Financials				45,316
HEALTH CARE - 25.24%
Biotechnology - 4.33%
Cepheid, Inc.A		189,200		5,818
MiMedx Group, Inc.A C		412,480		3,292
Myriad Genetics, Inc.A		100,529		3,076
Neogen Corp.A		147,950		8,322
Repligen Corp.A		112,979		3,091
				23,599
Health Care Equipment & Supplies - 5.50%
Abaxis, Inc.		93,881		4,434
ABIOMED, Inc.A		48,500		5,301
Bio-Techne Corp.		32,000		3,609
DexCom, Inc.A		27,700		2,197
Medidata Solutions, Inc.A		150,242		7,042
NuVasive, Inc.A		124,480		7,433
				30,016
Health Care Providers & Services - 9.24%
AAC Holdings, Inc.A C		159,000		3,628
Acadia Healthcare Co., Inc.A		134,500		7,451
Advisory Board Co.A		169,625		6,003
HealthEquity, Inc.A		262,472		7,976
MAXIMUS, Inc.		85,300		4,723
Omnicell, Inc.A		111,100		3,803
PAREXEL International Corp.A		146,700		9,225
VCA Antech, Inc.A		113,055		7,644
				50,453
Pharmaceuticals - 6.17%
Akorn, Inc.A		181,800		5,179
ICON PLCA D		145,300		10,172
Ligand Pharmaceuticals, Inc.C		67,250		8,021
Pacira Pharmaceuticals, Inc.A C		114,328		3,856
Proto Labs, Inc.A		111,905		6,441
				33,669
Total Health Care				137,737
INDUSTRIALS - 13.41%
Aerospace & Defense - 2.59%
Aerovironment, Inc.A		123,800		3,442
Astronics Corp.		113,595		3,777
HEICO Corp., Class A		62,900		3,375
Orbital ATK, Inc.		41,400		3,525
				14,119

See accompanying notes

27

American Beacon Stephens Small Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
Air Freight & Couriers - 1.32%
Echo Global Logistics, Inc.A		192,400	$	4,314
HUB Group, Inc., Class AA		75,400		2,893
				7,207
Building Products - 0.95%
Trex Co., Inc.A		115,300		5,179
Commercial Services & Supplies - 5.00%
CoStar Group, Inc.A		42,901		9,381
HMS Holdings Corp.A		475,669		8,377
WageWorks, Inc.A		159,442		9,536
				27,294
Diversified Manufacturing - 0.46%
Acuity Brands, Inc.		10,200		2,529
Electrical Equipment - 1.17%
Cognex Corp.		147,900		6,374
Machinery - 1.38%
Lindsay Corp.C		39,200		2,660
RBC Bearings, Inc.		67,000		4,858
				7,518
Trading Companies & Distributors - 0.54%
MSC Industrial Direct Co., Inc., Class A		41,645		2,938
Total Industrials				73,158
INFORMATION TECHNOLOGY - 26.87%
Communications Equipment - 0.63%
CalAmp Corp.A		232,659		3,446
Electronic Equipment & Instruments - 1.55%
FLIR Systems, Inc.		102,300		3,166
Taser International, Inc.A		211,800		5,270
				8,436
Internet Software & Services - 4.77%
Athenahealth, Inc.A		40,102		5,534
Fortinet, Inc.A		70,900		2,240
HealthStream, Inc., Acquired 9/16/2013 – 2/12/2016, Cost $5,601A B		183,814		4,875
Proofpoint, Inc.A		129,326		8,159
Shopify, Inc., Class AA C		84,200		2,590
Stamps.com, Inc.C		30,000		2,623
				26,021
IT Consulting & Services - 1.44%
Tyler Technologies, Inc.		47,184		7,866
Semiconductor Equipment & Products - 7.00%
8x8, Inc.A		537,000		7,846
Cavium, Inc.A		89,500		3,455
Integrated Device Technology, Inc.A		164,900		3,319
MA COM Technology Solutions Holdings, Inc.A		77,100		2,543
Microsemi Corp.		215,430		7,040
Power Integrations, Inc.		119,500		5,983
Rudolph Technologies, Inc.A		238,900		3,710
Semtech Corp.A		181,086		4,321
				38,217
Software - 11.48%
Aspen Technology, Inc.A		141,148		5,680
CyberArk Software Ltd.A C		97,100		4,718
Envestnet, Inc.A		226,409		7,542
Fleetmatics Group PLCA		68,400		2,964
Guidewire Software, Inc.A		135,200		8,350
Imperva, Inc.A		74,800		3,217
Manhattan Associates, Inc.A		126,417		8,107

See accompanying notes

28

American Beacon Stephens Small Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
National Instruments Corp.		111,767	$	3,062
Qualys, Inc.A		170,300		5,077
SPS Commerce, Inc.A		93,518		5,667
Ultimate Software Group, Inc.A		39,200		8,243
				62,627
Total Information Technology				146,613
MATERIALS - 1.84%
Chemicals - 0.79%
Balchem Corp.		72,366		4,317
Metals & Mining - 1.05%
Mueller Water Products, Inc., Class A		501,100		5,722
Total Materials				10,039
Total Common Stock (Cost $482,600)				543,341
SHORT-TERM INVESTMENTS - 0.57% (Cost $3,135)
American Beacon U.S. Government Money Market Select Fund, Select ClassE		3,134,640		3,135
SECURITIES LENDING COLLATERAL - 7.68%
American Beacon U.S. Government Money Market Select Fund, Select Class E		34,945,405		34,945
DWS Government and Agency Securities Portfolio, Institutional Class		6,932,737		6,933
Total Securities Lending Collateral (Cost $41,878)				41,878
TOTAL INVESTMENTS - 107.83% (Cost $527,613)				588,354
LIABILITIES, NET OF OTHER ASSETS - (7.83%)				(42,706	)
TOTAL NET ASSETS - 100.00%			$	545,648

Percentages are stated as a percent of net assets.

^A  Non-income producing security.

^B  Illiquid Security. At period end, the amount of illiquid securities was $24,234 or 4.4% of net assets.

^C  All or a portion of this security is on loan at June 30, 2016.

^D  PLC - Public Limited Company.

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

See accompanying notes

29

American Beacon Stephens Mid-Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
COMMON STOCK - 96.75%
CONSUMER DISCRETIONARY - 21.53%
Auto Components - 2.26%
LKQ Corp.A B		33,700	$	1,068
Mobileye N.V.A B		17,100		789
				1,857
Automobiles - 0.52%
Tesla Motors, Inc.A B		2,000		425
Hotels, Restaurants & Leisure - 3.53%
Buffalo Wild Wings, Inc.B		6,600		917
National CineMedia, Inc., Acquired 9/18/2015 – 0/21/2015, Cost $854C		62,400		966
Papa John’s International, Inc.		15,000		1,020
				2,903
Household Durables - 0.67%
Harman International Industries, Inc.		7,650		549
Internet & Catalog Retail - 1.79%
Expedia, Inc.		8,268		879
TripAdvisor, Inc.B		9,300		598
				1,477
Media - 3.42%
Cinemark Holdings, Inc.		24,850		906
IMAX Corp.B		33,512		988
Netflix, Inc.B		10,100		924
				2,818
Specialty Retail - 8.62%
Aaron’s, Inc.		22,600		495
Bright Horizons Family Solutions, Inc.B		7,450		494
CarMax, Inc.B		16,300		799
Copart, Inc.B		19,200		941
O’Reilly Automotive, Inc.B		2,600		705
Ross Stores, Inc.		23,050		1,307
Tractor Supply Co.		11,100		1,012
Ulta Salon Cosmetics & Fragrance, Inc.		5,550		1,352
				7,105
Textiles & Apparel - 0.72%
Under Armour, Inc., Class AA B		14,750		592
Total Consumer Discretionary				17,726
CONSUMER STAPLES - 4.34%
Beverages - 3.36%
Brown-Forman Corp., Class B		11,330		1,130
Monster Beverage Corp.B		10,200		1,640
				2,770
Food Products - 0.98%
Whitewaves Food Co.B		17,150		805
Total Consumer Staples				3,575
ENERGY - 6.14%
Energy Equipment & Services - 3.52%
Baker Hughes, Inc.		14,450		652
Core Laboratories N.V.A		7,450		923
Oceaneering International, Inc.		20,450		611
RPC, Inc.A B		45,750		710
				2,896

See accompanying notes

30

American Beacon Stephens Mid-Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
Oil & Gas - 2.62%
Cabot Oil & Gas Corp.		20,600	$	530
Pioneer Natural Resources Co.		5,850		885
Range Resources Corp.		17,250		744
				2,159
Total Energy				5,055
FINANCIALS - 5.33%
Banks - 2.28%
East West Bancorp, Inc.		25,650		877
SVB Financial GroupB		10,500		999
				1,876
Diversified Financials - 2.09%
Affiliated Managers Group, Inc.B		4,230		595
MarketAxess Holdings, Inc.		7,750		1,127
				1,722
Insurance - 0.96%
WEX, Inc.B		8,900		789
Total Financials				4,387
HEALTH CARE - 20.91%
Biotechnology - 3.23%
Alexion Pharmaceuticals, Inc.B		3,450		403
Cepheid, Inc.B		28,050		862
Medivation, Inc.		12,500		754
QIAGEN N.V.B		29,300		639
				2,658
Health Care Equipment & Supplies - 9.14%
ABIOMED, Inc.B		4,000		437
Dentsply Sirona, Inc.		10,916		677
DexCom, Inc.B		5,250		416
Hologic, Inc.B		21,600		747
Idexx Laboratories, Inc.B		14,100		1,310
Illumina, Inc.B		7,050		990
Intuitive Surgical, Inc.B		1,100		728
Medidata Solutions, Inc.B		16,299		764
ResMed, Inc.		16,550		1,046
Varian Medical Systems, Inc.B		4,950		407
				7,522
Health Care Providers & Services - 6.34%
Acadia Healthcare Co., Inc.B		13,400		742
Cerner Corp.B		22,230		1,304
Henry Schein, Inc.B		6,495		1,148
PAREXEL International Corp.B		13,950		877
VCA Antech, Inc.B		17,030		1,151
				5,222
Pharmaceuticals - 2.20%
Akorn, Inc.B		23,400		667
ICON PLCB D		10,250		718
Pacira Pharmaceuticals, Inc.B		12,700		428
				1,813
Total Health Care				17,215
INDUSTRIALS - 13.59%
Aerospace & Defense - 1.21%
Orbital ATK, Inc.		11,700		996
Commercial Services & Supplies - 5.41%
CoStar Group, Inc.B		6,720		1,470
HMS Holdings Corp.B		51,962		915

See accompanying notes

31

American Beacon Stephens Mid-Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
Stericycle, Inc.B		9,100	$	947
Verisk Analytics, Inc.B		13,750		1,115
				4,447
Diversified Manufacturing - 1.28%
Acuity Brands, Inc.		4,250		1,054
Electrical Equipment - 3.09%
Cognex Corp.		23,000		992
IPG Photonics Corp.		7,050		564
Roper Industries, Inc.		3,250		554
Sensata Technologies Holding N.V.B		12,500		436
				2,546
Road & Rail - 0.87%
J.B. Hunt Transport Services, Inc.		8,900		720
Trading Companies & Distributors - 1.73%
Fastenal Co.A		17,360		770
MSC Industrial Direct Co., Inc., Class A		9,280		655
				1,425
Total Industrials				11,188
INFORMATION TECHNOLOGY - 24.91%
Communications Equipment - 0.92%
Palo Alto Networks, Inc.B		6,150		754
Electronic Equipment & Instruments - 2.46%
FLIR Systems, Inc.		36,550		1,131
NVIDIA Corp.		19,000		893
				2,024
Internet Software & Services - 5.66%
Akamai Technologies, Inc.B		13,350		747
Athenahealth, Inc.B		7,777		1,073
Fortinet, Inc.B		26,250		829
LinkedIn Corp., Class AB		3,250		615
MercadoLibre, Inc.		9,900		1,393
				4,657
IT Consulting & Services - 0.68%
IHS, Inc., Class AB		4,850		561
Semiconductor Equipment & Products - 4.86%
FEI Co.		10,687		1,142
Lam Research Corp.		6,868		577
Microchip Technology, Inc.		21,630		1,098
NXP Semiconductors N.V.B		5,650		443
Xilinx, Inc.		16,150		745
				4,005
Software - 10.33%
Ansys, Inc.B		5,450		495
Aspen Technology, Inc.B		20,000		805
Autodesk, Inc.B		12,300		666
Cadence Design Systems, Inc.B		33,700		819
Check Point Software Technologies Ltd.B		7,850		625
Electronic Arts, Inc.B		10,150		769
FireEye, Inc.A B		18,969		312
National Instruments Corp.		20,005		548
Red Hat, Inc.B		10,490		762
Salesforce.com, Inc.B		6,870		546
Splunk, Inc.B		9,900		536
Tableau Software, Inc., Class AB		8,900		435
Ultimate Software Group, Inc.B		5,650		1,188
				8,506
Total Information Technology				20,507
Total Common Stock (Cost $64,930)				79,653

See accompanying notes

32

American Beacon Stephens Mid-Cap Growth Fund^SM

Schedule of Investments

June 30, 2016 (Unaudited)

	Shares		Fair Value
			(000’s)
SHORT-TERM INVESTMENTS - 0.65% (Cost $537)
American Beacon U.S. Government Money Market Select Fund, Select ClassE		536,875	$	537
SECURITIES LENDING COLLATERAL - 4.91%
American Beacon U.S. Government Money Market Select Fund, Select ClassE		3,905,194		3,905
DWS Government and Agency Securities Portfolio, Institutional Class		135,360		136
Total Securities Lending Collateral (Cost $4,041)				4,041
TOTAL INVESTMENTS - 102.31% (Cost $69,508)				84,231
LIABILITIES, NET OF OTHER ASSETS - (2.31%)				(1,898	)
TOTAL NET ASSETS - 100.00%			$	82,333

Percentages are stated as a percent of net assets.

^A  All or a portion of this security is on loan at June 30, 2016.

^B  Non-income producing security.

^C  Illiquid Security. At period end, the amount of illiquid securities was $966 or 1.2% of net assets.

^D  PLC - Public Limited Company.

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

See accompanying notes

33

American Beacon Funds^SM

Statements of Assets and Liabilities

June 30, 2016 (Unaudited) (in thousands, except share and per share amounts)

	Bahl & Gaynor Small Cap Growth Fund			Bridgeway Large Cap Value Fund		Holland Large Cap Growth Fund		Stephens Small Cap Growth Fund			Stephens Mid-Cap Growth Fund
Assets:
Investments in unaffiliated securities, at fair value A	$	9,722		$	3,114,942	$	89,159	$	550,274		$	79,789
Investments in affiliated securities, at fair value B		342			42,153		3,362		38,080			4,442
Deposit with brokers for futures contracts		14			1,484		84		—			—
Dividends and interest receivable		8			3,502		41		11			7
Receivable for investments sold		—			—		1,441		—			—
Receivable for fund shares sold		14			7,760		—		481			2,201
Receivable for tax reclaims		—			100		—		1			—
Receivable for expense reimbursement (Note 2)		11			—		—		11			8
Receivable for variation margin on open futures contracts		—			352		29		—			—
Prepaid expenses		43			149		53		161			46
Total assets		10,154			3,170,442		94,169		589,019			86,493
Liabilities:
Payable for investments purchased		148			10,722		1,675		464			—
Payable for fund shares redeemed		—			3,485		125		446			18
Payable upon return of securities loaned		—			—		—		41,878			4,041
Management and investment advisory fees payable		8			1,993		67		484		��	62
Administrative service and service fees payable		1			208		17		30			10
Transfer agent fees payable		—			43		2		16			5
Custody and fund accounting fees payable		2			39		1		12			3
Professional fees payable		18			18		18		17			15
Trustee fees payable		—			—		1		4			2
Payable for prospectus and shareholder reports		—			45		1		20			4
Other liabilities		—			7		6		—			—
Total liabilities		177			16,560		1,913		43,371			4,160
Net Assets	$	9,977		$	3,153,882	$	92,256	$	545,648		$	82,833
Analysis of Net Assets:
Paid-in-capital		9,578			2,996,380		67,048		502,449			71,594
Undistributed (or overdistribution of) net investment income		21			22,479		—		—			—
Accumulated net realized gain (loss)		(523	)		20,779		49		(17,542	)		(3,984	)
Unrealized appreciation of investments		901			113,892		25,130		60,741			14,723
Unrealized appreciation of futures contracts		—			352		29		—			—
Net assets	$	9,977		$	3,153,882	$	92,256	$	545,648		$	82,333
Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		344,667			43,711,916		675,818		21,662,584			2,897,429
Y Class		405,335			23,663,820		17,281		10,228,365			121,091
Investor Class		56,140			55,179,984		3,017,124		3,634,627			821,575
A Class		84,572			6,270,626		83,398		481,810			877,890
C Class		28,734			4,021,382		21,649		102,464			101,730
Net assets (not in thousands):
Institutional Class	$	3,749,763		$	1,042,712,475	$	16,608,304	$	330,076,235		$	52,063,374
Y Class	$	4,402,863		$	562,968,612	$	422,011	$	155,224,069		$	2,168,995
Investor Class	$	606,326		$	1,307,734,838	$	72,735,542	$	52,090,686		$	12,860,917
A Class	$	912,879		$	147,876,586	$	1,992,837	$	6,851,139		$	13,706,776
C Class	$	305,514		$	92,589,879	$	496,825	$	1,405,548		$	1,533,088
Net asset value, offering and redemption price per share:
Institutional Class	$	10.88		$	23.85	$	24.58	$	15.24		$	17.97
Y Class	$	10.86		$	23.79	$	24.42	$	15.18		$	17.91
Investor Class	$	10.80		$	23.70	$	24.11	$	14.33		$	15.65
A Class	$	10.79		$	23.58	$	23.90	$	14.22		$	15.61
A Class (offering price)	$	11.45		$	25.02	$	25.36	$	15.09		$	16.56
C Class	$	10.63		$	23.02	$	22.95	$	13.72		$	15.07
A Cost of investments in unaffiliated securities	$	8,821		$	3,001,050	$	64,029	$	489,533		$	65,066
B Cost of investments in affiliated securities	$	342		$	42,153	$	3,362	$	38,080		$	4,442
E Fair value of securities on loan	$	—		$	—	$	—	$	40,938		$	3,956

See accompanying notes

34

American Beacon Funds^SM

Statement of Operations

For the Six Months Ended June 30, 2016 (Unaudited) (in thousands)

	Bahl & Gaynor Small Cap Growth Fund			Bridgeway Large Cap Value Fund		Holland Large Cap Growth Fund			Stephens Small Cap Growth Fund			Stephens Mid-Cap Growth Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes) A	$	65		$	35,374	$	533		$	786		$	252
Dividend income from affiliated securities		—			46		3			4			1
Income derived from securities lending		—			—		—			277			23
Total investment income		65			35,420		536			1,067			276
Expenses:
Management and investment advisory fees (Note 2)		24			5,442		233			1,849			276
Administrative service fees (Note 2):
Institutional Class		4			1,033		22			377			79
Y Class		4			579		—			175			3
Investor Class		1			1,412		93			64			16
A Class		1			173		2			8			16
C Class		—			108		1			2			2
Transfer agent fees:
Institutional Class		—			131		1			79			18
Y Class		—			6		—			2			—
Investor Class		1			16		4			3			1
A Class		—			10		—			—			1
C Class		—			3		—			—			—
Custody and fund accounting fees		6			104		8			23			7
Professional fees		15			66		16			22			15
Registration fees and expenses		32			95		22			38			33
Service fees (Note 2):
Y Class		2			231		—			70			1
Investor Class		1			2,102		130			89			23
A Class		—			104		1			5			10
C Class		—			65		—			1			1
Distribution fees (Note 2):
A Class		1			174		2			8			16
C Class		1			431		3			9			8
Prospectus and shareholder report expenses		1			81		2			23			4
Trustee fees		—			86		4			21			5
Other expenses		3			67		7			20			9
Total expenses		97			12,519		551			2,888			544
Net fees waived and expenses reimbursed (Note 2)		(53	)		—		—			(12	)		(26	)
Net expenses		44			12,519		551			2,876			518
Net investment income		21			22,901		(15	)		(1,809	)		(242	)
Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		(290	)		40,605		593			(14,339	)		(3,558	)
Commission recapture (Note 3)		—			—		2			—			—
Futures contracts		(7	)		714		72			—			—
Change in net unrealized appreciation or (depreciation) of:
Investments		903			78,361		(1,788	)		27,005			1,314
Futures contracts		(1	)		358		8			—			—
Net gain (loss) from investments		605			120,038		(1,113	)		12,666			(2,244	)
Net increase (decrease) in net assets resulting from operations	$	626		$	142,939	$	(1,128	)	$	10,857		$	(2,486	)
A Foreign taxes		—			75		—			4			2

See accompanying notes

35

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)

	Bahl & Gaynor Small Cap Growth Fund						Bridgeway Large Cap Value Fund
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			Six Months Ended June 30, 2016			Year Ended December 31, 2015
	(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	21		$	40		$	22,901		$	24,426
Net realized gain (loss) from investments, commission recapture, foreign currency transactions, and futures contracts		(297	)		(123	)		41,319			29,879
Change in net unrealized appreciation or (depreciation) from investments, foreign currency transactions, futures contracts, and swap agreements		902			(233	)		78,719			(85,628	)
Net increase (decrease) in net assets resulting from operations		626			(316	)		142,939			(31,323	)
Distributions to Shareholders:
Net investment income:
Institutional Class		—			(18	)		—			(8,277	)
Y Class		—			(15	)		—			(5,057	)
Investor Class		—			(3	)		—			(9,027	)
A Class		—			(3	)		—			(1,294	)
C Class		—			(2	)		—			(391	)
Net realized gain from investments:
Institutional Class		—			(48	)		—			(15,842	)
Y Class		—			(41	)		—			(9,510	)
Investor Class		—			(7	)		—			(23,035	)
A Class		—			(8	)		—			(3,478	)
C Class		—			(5	)		—			(2,016	)
Return of Capital:
Institutional Class		—			(3	)		—			(76	)
Y Class		—			(3	)		—			(47	)
Investor Class		—			(1	)		—			(83	)
A Class		—			(1	)		—			(12	)
C Class		—			—			—			(4	)
Net distributions to shareholders		—			(158	)		—			(78,149	)
Capital Share Transactions:
Proceeds from sales of shares		2,417			5,716			1,071,308			1,721,211
Reinvestment of dividends and distributions		—			158			—			75,997
Cost of shares redeemed		(270	)		(2,232	)		(367,324	)		(619,512	)
Net increase in net assets from capital share transactions		2,147			3,642			703,984			1,177,696
Net increase in net assets		2,773			3,168			846,923			1,068,224
Net Assets:
Beginning of period		7,204			4,036			2,306,959			1,238,735
End of Period *	$	9,977		$	7,204		$	3,153,882		$	2,306,959
*Includes undistributed (or overdistribution of) net investment income	$	21		$	—		$	22,479		$	—

See accompanying notes

36

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)

	Holland Large Cap Growth Fund						Stephens Small Cap Growth Fund						Stephens Mid-Cap Growth Fund
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			Six Months Ended June 30, 2016			Year Ended December 31, 2015			Six Months Ended June 30, 2016			Year Ended December 31, 2015
	(unaudited)						(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment (loss)	$	(15	)	$	(39	)	$	(1,809	)	$	(4,766	)	$	(242	)	$	(841	)
Net realized gain (loss) from investments, commission recapture, foreign currency transactions, and futures contracts		667			8,294			(14,339	)		27,105			(3,558	)		8,947
Change in net unrealized appreciation or (depreciation) from investments, foreign currency transactions, futures contracts, and swap agreements		(1,780	)		(1,934	)		27,005			(48,149	)		1,314			(9,578	)
Net increase (decrease) in net assets resulting from operations		(1,128	)		6,321			10,857			(25,810	)		(2,486	)		(1,472	)
Distributions to Shareholders:
Net realized gain from investments:
Institutional Class		—			(1,832	)		—			(13,632	)		—			(3,679	)
Y Class		—			(35	)		—			(6,447	)		—			(120	)
Investor Class		—			(8,194	)		—			(2,688	)		—			(795	)
A Class		—			(136	)		—			(397	)		—			(832	)
C Class		—			(84	)		—			(113	)		—			(114	)
Net distributions to shareholders		—			(10,281	)		—			(23,277	)		—			(5,540	)
Capital Share Transactions:
Proceeds from sales of shares		3,421			6,243			105,405			96,070			16,849			24,623
Reinvestment of dividends and distributions		—			10,280			—			22,809			—			5,393
Cost of shares redeemed		(9,922	)		(13,613	)		(80,981	)		(250,985	)		(42,022	)		(41,701	)
Net increase (decrease) in net assets from capital share transactions		(6,501	)		2,910			24,424			(132,106	)		(25,173	)		(11,685	)
Net increase (decrease) in net assets		(7,629	)		(1,050	)		35,281			(181,193	)		(27,659	)		(18,697	)
Net Assets:
Beginning of period		99,885			100,935			510,367			691,560			109,992			128,689
End of Period *	$	92,256		$	99,885		$	545,648		$	510,367		$	82,333		$	109,992
*Includes undistributed (or overdistribution of) net investment income	$	—		$	—		$	—		$	—		$	—		$	—

See accompanying notes

37

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

1. Organization and Significant Accounting Policies

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 June 30, 2016, the Trust consists of twenty-five active series, five of which are presented in this filing (collectively, the “Funds” and each individually a “Fund”): American Beacon Bahl & Gaynor Small Cap Growth Fund, American Beacon Bridgeway Large Cap Value Fund, American Beacon Holland Large Cap Growth Fund, American Beacon Stephens Small Cap Growth Fund, and American Beacon Stephens Mid-Cap Growth Fund. The remaining twenty active series are reported in separate filings.

American Beacon Advisors, Inc. (the “Manager”) is 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, and was organized in 1986 to provide business management, advisory, administrative and asset management consulting services to the Trust and other investors.

Class Disclosure

Each Fund has multiple classes of shares designed to meet the needs of different groups of investors. 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 directly or 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

Each class offered by the Fund 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.

The following is a summary of significant accounting policies, consistently followed by the Fund in the preparation of the financial statements. The Funds are investment companies, and accordingly, follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946, Financial Services - Investment Companies, which is part of the U.S. Generally Accepted Accounting Principles (“U.S. GAAP”).

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.

38

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

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. Dividends to shareholders are determined in accordance with federal income tax regulations, which may differ in amount and character from net investment income and realized gains recognized for purposes of U.S. GAAP.

Commission Recapture

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

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.

2. Transactions with Affiliates

Management Agreement

From January 1, 2016 to May 29, 2016 the Trust and the Manager were parties to an Management Agreement that obligated the Manager to provide or oversee the provision of all investment advisory, fund management, and securities lending services. As compensation for performing the duties required under the Management Agreement, the Manager received from the Funds an annualized fee equal to 0.05% of the average daily net assets plus amounts paid by the Manager to the unaffiliated investment advisors hired by the Manager to direct investment activities of the Funds. Effective May 29, 2016 the Fund and the Manager entered a Management Agreement that obligates the Manager to provide investment advisory, fund management, and administrative services to the Funds. As compensation for performing the duties under the Management Agreement, the Manager receives from the Funds an annualized fee at the following annual rates as a percentage of average daily net assets: 0.35% of the first $5 billion, 0.325% of the next $5 billion, 0.30% of the next $10 billion, and 0.275% over $20 billion. The Funds pay the unaffiliated investment advisor hired to direct

39

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

investment activities of the Funds. Management fees paid by the Funds during the six months ended June 30, 2016 were as follows (in thousands):

Fund	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Net Amounts Retained by Manager
Bahl & Gaynor Small Cap Growth		0.51	%	$	24	$	20	$	4
Bridgeway Large Cap Value		0.32	%		5,442		4,126		1,316
Holland Large Cap Growth		0.40	%		233		186		47
Stephens Small Cap Growth		0.63	%		1,849		1,563		286
Stephens Mid-Cap Growth		0.49	%		276		229		47

As compensation for services provided by the Manager in connection with securities lending activities conducted by the Stephens Small Cap Growth and Stephens Mid-Cap Growth Funds, 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. Currently, the Manager earns 10% of such income. This fee is included in “Management and investment advisory fees” on the Statements of Operations. During the six months ended June 30, 2016, securities lending fees paid to the Manager were $28,671 and $2,620 for the Stephens Small Cap Growth and Stephens Mid-Cap Growth Funds, respectively.

Administrative Agreement

From January 1, 2016 to May 29, 2016, the Manager and the Trust were parties to an Administrative Agreement which obligated the Manager to provide or oversee administrative services to each Fund. As compensation for performing the duties required under the Administrative Agreement, the Manager received an annualized fee of 0.30% of the average daily net assets of the Institutional, Y, Investor, A, and C Classes of the Funds.

Distribution Plans

The Funds, except for the A and C Classes, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule 12b-1 under the Act, pursuant to which no fees will 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 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 A 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 obligates 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 the Funds.

40

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

Investment in Affiliated Funds

The Funds may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Funds in connection with securities lending may also be invested in the USG Select Fund. The Funds and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as the investment advisor to the USG Select Funds and receives management and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the six months ended June 30, 2016, the Manager earned fees on the Fund’s direct investments and securities lending collateral invested in the USG Select Fund, respectively, as shown below:

Fund	Direct Investments in USG Select Fund		Securities Lending Collateral in USG Select Fund
Bahl & Gaynor Small Cap Growth	$	71	$	—
Bridgeway Large Cap Value		17,040		—
Holland Large Cap Growth		1,026		—
Stephens Small Cap Growth		1,453		13,580
Stephens Mid-Cap Growth		281		2,421

Interfund Lending Program

Pursuant to an exemptive order issued 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 six months ended June 30, 2016, the Bridgeway Large Cap Value Fund borrowed on average $2,433,443 for 8 days at an average rate of 0.97% with interest charges of $521, the Stephens Small Cap Growth Fund borrowed on average $464,003 for 3 days at an average rate of 0.97% with interest charges of $37, and the Stephens Mid-Cap Growth Fund borrowed on average $2,668,589 for 24 days at an average rate of 0.97% with interest charges of $1,077. These amounts are recorded as “Other expenses” on the accompanying Statements of Operations.

Expense Reimbursement Plan

The Manager contractually agreed to reimburse the following Funds to the extent that total annual fund operating expenses exceeded a Fund’s expense cap. For the six months ended June 30, 2016, the Manager waived or reimbursed expenses as follows:

Fund	Class	Expense Cap			Reimbursed or (Recovered) Expenses			Expiration
Bahl & Gaynor Small Cap Growth	Institutional		0.98	%	$	22,074		2019
Bahl & Gaynor Small Cap Growth	Y		1.08	%		21,645		2019
Bahl & Gaynor Small Cap Growth	Investor		1.36	%		3,855		2019
Bahl & Gaynor Small Cap Growth	A		1.38	%		3,436		2019
Bahl & Gaynor Small Cap Growth	C		2.13	%		1,953		2019
Bridgeway Large Cap Value	Institutional		N/A			(184,868	)	2019
Holland Large Cap Growth	Y		0.99	%		(6	)	2019
Holland Large Cap Growth	C		2.04	%		23		2019
Stephens Small Cap Growth	Investor		1.35	%		11,421		2019
Stephens Mid-Cap Growth	Institutional		0.99	%		24,955		2019
Stephens Mid-Cap Growth	A		N/A			610		2019
Stephens Mid-Cap Growth	C		N/A			85		2019

Of these amounts, $10,803, $11,421, and $7,654 were disclosed as a receivable from the Manager at June 30, 2016 for the Bahl & Gaynor Small Cap Growth, Stephens Small Cap Growth, and Stephens Mid-Cap Growth Funds, respectively. 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

41

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

contractual expense limit. The Funds did not record a liability for potential reimbursements due to the current assessment that reimbursements are unlikely. The carryover of excess expenses potentially reimbursable to the Manager are as follows:

Fund	Recovered Expenses		Excess Expense Carryover		Expiration of Reimbursed Expenses
Bahl & Gaynor Small Cap Growth	$	—	$	132,904	2018
Bahl & Gaynor Small Cap Growth		—		123,829	2015
Bridgeway Large Cap Value		73,464		2,766	2016
Holland Large Cap Growth		—		104	2016
Holland Large Cap Growth		—		156	2017
Holland Large Cap Growth		299		—	2018
Stephens Small Cap Growth		284		55,746	2016
Stephens Mid-Cap Growth		—		60,289	2016
Stephens Mid-Cap Growth		—		38,647	2017

The Manager recovered expenses from various classes of the Bridgeway Large Cap Value, Holland Large Cap Growth, Stephens Small Cap Growth, and Stephens Mid-Cap Growth Funds during the six months ended June 30, 2016 as follows:

Fund	Class	Recovered Expense		Expiration
Bridgeway Large Cap Value	Institutional		76,230	2016
Holland Large Cap Growth	Institutional		469	2018
Holland Large Cap Growth	Y		6	2019
Stephens Small Cap Growth	Institutional		285	2018
Stephens Small Cap Growth	A		3,867	2018
Stephens Small Cap Growth	C		1,598	2018
Stephens Mid-Cap Growth	Y		931	2018
Stephens Mid-Cap Growth	Investor		6,278	2018
Stephens Mid-Cap Growth	A		5,405	2018
Stephens Mid-Cap Growth	C		656	2018

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. During the six months ended June 30, 2016, Foreside collected $1,570, $23,808, $312, $267, and $547 for Bahl & Gaynor Small Cap Growth, Bridgeway Large Cap Value, Holland Large Cap Growth, Stephens Small Cap Growth, and Stephens Mid-Cap Growth 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 six months ended June 30, 2016, CDSC fees of $974 were collected for the Bridgeway Large Cap Value Fund.

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 six months ended June 30, 2016, CDSC fees of $205, $13,472, $30, and $936 were collected for the Bahl & Gaynor Small Cap Growth, Bridgeway Large Cap Value, Stephens Small Cap Value, and Stephens Mid-Cap Growth Funds, respectively.

42

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally at 4 p.m. Eastern time, 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.

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Funds are 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 Funds. 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.

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”).

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 Manager’s Valuation Committee, pursuant to procedures established by the Trust’s Board.

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.

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.

43

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

The Funds’ investments are summarized by level based on the inputs used to determine their values. As of June 30, 2016, the investments were classified as described below (in thousands):

Bahl & Gaynor Small Cap Growth Fund(1)	Level 1			Level 2		Level 3		Total
Common Stock	$	9,722		$	—	$	—	$	9,722
Short-Term Investments - Money Market Funds		342			—		—		342
Total Investments in Securities	$	10,064		$	—	$	—	$	10,064
Financial Derivatives Instruments
Futures Contracts	$	—	(2)	$	—	$	—	$	—	(2)
Bridgeway Large Cap Value Fund(1)	Level 1			Level 2		Level 3		Total
Common Stock	$	3,114,942		$	—	$	—	$	3,114,942
Short-Term Investments - Money Market Funds		42,153			—		—		42,153
Total Investments in Securities	$	3,157,095		$	—	$	—	$	3,157,095
Financial Derivatives Instruments
Futures Contracts	$	352		$	—	$	—	$	352
Holland Large Cap Growth Fund(1)	Level 1			Level 2		Level 3		Total
Common Stock	$	89,159		$	—	$	—	$	89,159
Short-Term Investments - Money Market Funds		3,362			—		—		3,362
Total Investments in Securities	$	92,521		$	—	$	—	$	92,521
Financial Derivatives Instruments
Futures Contracts	$	29		$	—	$	—	$	29
Stephens Small Cap Growth Fund(1)	Level 1			Level 2		Level 3		Total
Common Stock	$	543,341		$	—	$	—	$	543,341
Short-Term Investments - Money Market Funds		3,135			—		—		3,135
Securities Lending Collateral invested in Money Market Funds		41,878			—		—		41,878
Total Investments in Securities	$	588,354		$	—	$	—	$	588,354
Stephens Mid-Cap Growth Fund(1)	Level 1			Level 2		Level 3		Total
Common Stock	$	79,653		$	—	$	—	$	79,653
Short-Term Investments - Money Market Funds		537			—		—		537
Securities Lending Collateral invested in Money Market Funds		4,041			—		—		4,041
Total Investments in Securities	$	84,231		$	—	$	—	$	84,231

⁽¹⁾ Refer to the Schedule of Investments for Industry Information.

⁽²⁾ Amount is less than $500.

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 six months ended June 30, 2016, there were no transfers between levels.

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

44

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Funds 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 Funds 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.

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, the Funds become a shareholder of that investment company. As a result, the Funds 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 the Fund’s 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 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. The Funds usually reflect this amount on the Schedules 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.

45

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

During the six months ended June 30, 2016, 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 quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by the average number of contracts outstanding at each quarter end.

Average Futures Contracts Outstanding:
Fund	For the period ended June 30, 2016
Bahl & Gaynor Small Cap Growth	4
Bridgeway Large Cap Value	597
Holland Large Cap Growth	31

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

Fair Values of financial derivative instruments not accounted for as hedging instruments as of June 30, 2016:

Statements of Assets and Liabilities	Derivative	Bahl & Gaynor Small Cap Growth		Bridgeway Large Cap Value		Holland Large Cap Growth
Receivable for variation margin from open futures contracts	Equity Contracts	$	—	$	352	$	29

The effect of financial derivative instruments not accounted for as hedging instruments during the six months ended June 30, 2016:

Statements of Operations
Net realized gain (loss) from futures contracts	Equity Contracts	$	(7	)	$	714	$	72
Change in net unrealized appreciation (depreciation) of futures contracts	Equity Contracts		(1	)		358		8

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

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.

46

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

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.

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 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 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.

47

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

Offsetting Assets and Liabilities

The Funds are parties to enforceable master netting agreements between brokers and counterparties such as International Swaps and Derivatives Association (“ISDA”) agreements, Master Repo Agreements and Master Forward Agreements 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 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, June 30, 2016 (in thousands).

Bahl & Gaynor Small Cap Growth Fund

Offsetting of Financial Assets and Derivative Assets as of June 30, 2016:

Description	Gross Amounts of Recognized Assets			Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Assets Presented in the Statements of Assets and Liabilities
Futures Contracts	$	—	*	$	—	$	—	*

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of June 30, 2016:

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

* Amount is less than $500.

Bridgeway Large Cap Value Fund

Offsetting of Financial Assets and Derivative Assets as of June 30, 2016:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Assets Presented in the Statements of Assets and Liabilities
Futures Contracts	$	352	$	—	$	352

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of June 30, 2016:

	Net amount of Assets		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty	Presented in the Statements of Assets and Liabilities		Financial Instruments		Cash Collateral Received		Net Amount
Goldman Sachs & Co.	$	352	$	—	$	—	$	352

Holland Large Cap Growth Fund

Offsetting of Financial Assets and Derivative Assets as of June 30, 2016:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Assets Presented in the Statements of Assets and Liabilities
Futures Contracts	$	29	$	—	$	29

48

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of June 30, 2016:

	Net amount of Assets		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty	Presented in the Statements of Assets and Liabilities		Financial Instruments		Cash Collateral Received		Net Amount
Goldman Sachs & Co.	$	29	$	—	$	—	$	29

Stephens Small Cap Growth Fund

Offsetting of Financial Assets and Derivative Assets as of June 30, 2016:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Assets Presented in the Statements of Assets and Liabilities
Securities on Loan	$	40,938	$	—	$	40,938

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of June 30, 2016:

	Net amount of Assets		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty	Presented in the Statements of Assets and Liabilities		Financial Instruments		Cash Collateral Received1			Net Amount
Barclays Capital, Inc.	$	2,206	$	—	$	(2,206	)	$	—
BNP Paribas Prime Brokerage		29		—		(29	)		—
Citigroup Global Markets Inc.		7,157		—		(7,157	)		—
Goldman, Sachs & Co.		759		—		(759	)		—
JPMorgan Clearing Corp.		7,370		—		(7,370	)		—
Merrill Lynch, Pierce, Fenner		245		—		(245	)		—
MS Securities Services Inc.		3,162		—		(3,162	)		—
National Financial Services Corp (NFS)		9,970		—		(9,970	)		—
Scotia Capital USA Inc.		7,651		—		(7,651	)		—
SG Americas Securities, LLC		1,390		—		(1,390	)		—
UBS Securities LLC		999		—		(999	)		—
Total	$	40,938	$	—	$	(40,938	)	$	—

¹  Excess of collateral received from the individual counterparty is not shown for financial reporting purposes. Collateral with a value of $41,878 has been received in connection with securities lending transactions.

Stephens Mid-Cap Growth Fund

Offsetting of Financial Assets and Derivative Assets as of June 30, 2016:

Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Assets Presented in the Statements of Assets and Liabilities
Securities on Loan	$	3,956	$	—	$	3,956

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of June 30, 2016:

	Net amount of Assets		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty	Presented in the Statements of Assets and Liabilities		Financial Instruments		Cash Collateral Received1			Net Amount
Barclays Capital, Inc.	$	955	$	—	$	(1,503	)	$	—
Goldman, Sachs & Co.		1,474		—		(1,414	)		—
JP Morgan Clearing Corp.		426		—		(426	)		—
MS Securities Services Inc.		430		—		(430	)		—
National Financial Services Corp (NFS)		671		—		(671	)		—
Total:	$	3,956	$	—	$	(3,956	)	$	—

¹  Excess of collateral received from the individual counterparty is not shown for financial reporting purposes. Collateral with a value of $4,041 has been received in connection with securities lending transactions.

49

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

7. Federal Income and Excise Taxes

It is the policy of the Funds 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 Funds are 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 December 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 tax character of distributions paid were as follows (in thousands):

	Bahl & Gaynor Small Cap Growth Fund				Bridgeway Large Cap Value Fund				Holland Large Cap Growth Fund
	Six months ended June 30, 2016		Year Ended December 31, 2015		Six months ended June 30, 2016		Year Ended December 31, 2015		Six months ended June 30, 2016		Year Ended December 31, 2015
	(unaudited)				(unaudited)				(unaudited)
Distributions paid from:
Ordinary income*
Institutional Class	$	—	$	21	$	—	$	8,277	$	—	$	—
Y Class		—		18		—		5,057		—		—
Investor Class		—		4		—		9,027		—		—
A Class		—		4		—		1,294		—		—
C Class		—		2		—		391		—		—
Long-Term Capital Gain
Institutional Class		—		45		—		15,842		—		1,832
Y Class		—		38		—		9,510		—		35
Investor Class		—		6		—		23,035		—		8,194
A Class		—		7		—		3,478		—		136
C Class		—		5		—		2,016		—		84
Return of Capital
Institutional Class		—		3		—		76		—		—
Y Class		—		3		—		47		—		—
Investor Class		—		1		—		83		—		—
A Class		—		1		—		12		—		—
C Class		—		—		—		4		—		—
Total distributions paid	$	—	$	158	$	—	$	78,149	$	—	$	10,281

50

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

	Stephens Small Cap Growth Fund				Stephens Mid-Cap Growth Fund
	Six months ended June 30, 2016		Year Ended December 31, 2015		Six months ended June 30, 2016		Year Ended December 31, 2015
	(unaudited)				(unaudited)
Distributions paid from:
Ordinary income*
Institutional Class	$	—	$	—	$	—	$	—
Y Class		—		—		—		—
Investor Class		—		—		—		—
A Class		—		—		—		—
C Class		—		—		—		—
Long-Term Capital Gain
Institutional Class		—		13,632		—		3,679
Y Class		—		6,447		—		120
Investor Class		—		2,688		—		795
A Class		—		397		—		832
C Class		—		113		—		114
Total distributions paid	$	—	$	23,277	$	—	$	5,540

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

As of June 30, 2016 the components of distributable earnings (deficits) on a tax basis were as follows (in thousands):

	Bahl & Gaynor Small Cap Growth Fund			Bridgeway Large Cap Value Fund			Holland Large Cap Growth Fund			Stephens Small Cap Growth Fund			Stephens Mid-Cap Growth Fund
Cost basis of investments for federal income tax purposes	$	9,307		$	3,043,203		$	67,557		$	531,001		$	71,441
Unrealized appreciation		1,023			254,582			26,227			92,427			17,681
Unrealized depreciation		(266	)		(140,690	)		(1,263	)		(35,074	)		(4,891	)
Net unrealized appreciation or (depreciation)		757			113,892			24,864			57,353			12,790
Undistributed ordinary income		22			24,182			—			—			—
Undistributed long-term capital		—			19,428			244			—			—
Accumulated long-term gain or (loss)		(381	)		—			—			(14,154	)		(2,051	)
Other temporary differences		1			—			—			—			—
Distributable earnings or (deficits)	$	399		$	157,502		$	25,208		$	43,199		$	10,739

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

Due to inherent differences in the recognition of income, expenses and realized gains (losses) under U.S. 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 the reclassifications of income from foreign currency reclasses, income from real estate investment securities, non-utilization of net operating losses, and tax return of capital as of June 30, 2016 (in thousands):

51

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

	Bahl & Gaynor Small Cap Growth Fund		Bridgeway Large Cap Value Fund			Holland Large Cap Growth Fund			Stephens Small Cap Growth Fund			Stephens Mid-Cap Growth Fund
Paid-in-capital	$	—	$	—		$	(15	)	$	3,005		$	4,396
Undistributed net investment income		—		(422	)		15			1,809			242
Accumulated net realized gain (loss)		—		422			—			(4,814	)		(4,638	)
Unrealized appreciation (depreciation) of investments and futures 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.

For the six month period ending June 30, 2016 the Funds have the following capital loss carryforwards (in thousands):

Fund	Short-term		Long-term
Bahl & Gaynor Small Cap Growth	$	237	$	143
Stephens Small Cap Growth		1,911		12,250
Stephens Mid-Cap Growth		921		1,134

8. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the six months ended June 30, 2016 were as follows (in thousands):

	Bahl & Gaynor Small Cap Growth Fund		Bridgeway Large Cap Value Fund		Holland Large Cap Growth Fund		Stephens Small Cap Growth Fund		Stephens Mid-Cap Growth Fund
Purchases (excluding U.S. government securities)	$	3,397	$	1,457,294	$	16,064	$	89,963	$	11,837
Sales and maturities (excluding U.S. government securities)		1,306		700,833		21,103		66,584		40,270

The Funds’ direct transactions and security lending collateral transactions in the USG Select Fund for the six months ended June 30, 2016 were as follows (in thousands):

Fund	Type of Transaction	December 31, 2015 Shares/Fair Value		Purchases		Sales		June 30, 2016 Shares/Fair Value		Dividend Income
Bahl & Gaynor Small Cap Growth	Direct	$	—	$	2,486	$	2,144	$	342	$	—	*
Bridgeway Large Cap Value	Direct		—		766,462		724,309		42,153		47
Holland Large Cap Growth	Direct		—		13,517		10,155		3,362		3
Stephens Small Cap Growth	Direct		—		40,735		37,601		3,134		4
Stephens Small Cap Growth	Securities Lending		33,025		98,286		96,366		34,945		28
Stephens Mid-Cap Growth	Direct		—		9,878		9,342		536		1
Stephens Mid-Cap Growth	Securities Lending		3,611		31,204		30,910		3,905		5

* Amount is less than $500.

9. Securities Lending

The Stephens Small Cap Growth and Stephens Mid-Cap Growth Funds may lend their 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

52

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

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.

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 Funds, the Agent, and the Manager retain 80%, 10%, and 10%, respectively, of the income generated from securities lending.

While securities are on loan, the Funds continue 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 Funds would be subject to on the dividend.

Securities lending transactions pose certain risks to the Funds, 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 Funds could also experience delays and costs in gaining access to the collateral. The Funds bear 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 June 30, 2016, the value of outstanding securities on loan and the value of collateral was as follows (in thousands):

Fund	Fair Value of Securities on Loan		Non-Cash Collateral		Cash Collateral Posted by Borrower
Stephens Small Cap Growth	$	40,938	$	—	$	41,878
Stephens Mid-Cap Growth		3,956		—		4,041

Cash collateral is listed on the Stephens Small Cap Growth and Stephens Mid-Cap Growth Funds’ Schedules 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 Funds may not be sold or re-pledged except to satisfy a borrower default. Therefore, non-cash collateral is not included on the Funds’ Schedules of Investments or Statements of Assets and Liabilities.

53

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

10. Capital Share Transactions

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

For the Six Months Ended June 30, 2016

	Institutional Class				Y Class						Investor Class
Bahl & Gaynor Small Cap Growth Fund	Shares		Amount		Shares			Amount			Shares			Amount
Shares sold		27	$	280		156		$	1,579			10		$	99
Reinvestment of dividends		—		—		—			—			—			—
Shares redeemed		—		—		(17	)		(175	)		(3	)		(32	)
Net increase in shares outstanding		27	$	280		139		$	1,404			7		$	67

	A Class						C Class
Bahl & Gaynor Small Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		44		$	459			—		$	—
Reinvestment of dividends		—			—			—			—
Shares redeemed		(4	)		(41	)		(2	)		(22	)
Net increase (decrease) in shares outstanding		40		$	418			(2	)	$	(22	)

	Institutional Class						Y Class						Investor Class
Bridgeway Large Cap Value Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		18,409		$	417,121			8,515		$	192,760			18,725		$	420,904
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		(4,715	)		(105,596	)		(3,119	)		(69,683	)		(6,732	)		(150,548	)
Net increase in shares outstanding		13,694		$	311,525			5,396		$	123,077			11,993		$	270,356

	A Class						C Class
Bridgeway Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		1,209		$	27,164			619		$	13,359
Reinvestment of dividends		—			—			—			—
Shares redeemed		(1,480	)		(32,396	)		(421	)		(9,101	)
Net increase (decrease) in shares outstanding		(271	)	$	(5,232	)		198		$	4,258

	Institutional Class						Y Class						Investor Class
Holland Large Cap Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		12		$	283			6		$	142			93		$	2,124
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		(86	)		(2,088	)		(2	)		(47	)		(313	)		(7,375	)
Net increase (decrease) in shares outstanding		(74	)	$	(1,805	)		4		$	95			(220	)	$	(5,251	)

	A Class						C Class
Holland Large Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		37		$	847			1		$	25
Reinvestment of dividends		—			—			—			—
Shares redeemed		(6	)		(149	)		(12	)		(263	)
Net increase (decrease) in shares outstanding		31		$	698			(11	)	$	(238	)

	Institutional Class						Y Class						Investor Class
Stephens Small Cap Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		5,390		$	72,386			1,803		$	25,458			585		$	7,457
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		(3,686	)		(51,490	)		(1,094	)		(15,542	)		(889	)		(11,636	)
Net increase (decrease) in shares outstanding		1,704		$	20,896			709		$	9,916			(304	)	$	(4,179	)

54

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

	A Class						C Class
Stephens Small Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		6		$	78			2		$	26
Reinvestment of dividends		—			—			—			—
Shares redeemed		(106	)		(1,391	)		(72	)		(922	)
Net (decrease) in shares outstanding		(100	)	$	(1,313	)		(70	)	$	(896	)

	Institutional Class						Y Class						Investor Class
Stephens Mid-Cap Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		921		$	15,575			6		$	102			5		$	76
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		(2,258	)		(38,147	)		(22	)		(372	)		(121	)		(1,806	)
Net (decrease) in shares outstanding		(1,337	)	$	(22,572	)		(16	)	$	(270	)		(116	)	$	(1,730	)

	A Class						C Class
Stephens Mid-Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		72		$	1,070			2		$	26
Reinvestment of dividends		—			—			—			—
Shares redeemed		(76	)		(1,138	)		(39	)		(559	)
Net (decrease) in shares outstanding		(4	)	$	(68	)		(37	)	$	(533	)

For the Year Ended December 31, 2015

	Institutional Class						Y Class						Investor Class
Bahl & Gaynor Small Cap Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		27		$	291			255		$	2,733			176		$	1,814
Reinvestment of dividends		7			69			6			58			1			11
Shares redeemed		(6	)		(59	)		(30	)		(314	)		(150	)		(1,482	)
Net increase in shares outstanding		28		$	301			231		$	2,477			27		$	343

	A Class						C Class
Bahl & Gaynor Small Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		64		$	686			18		$	192
Reinvestment of dividends		1			13			1			7
Shares redeemed		(35	)		(365	)		(1	)		(12	)
Net increase in shares outstanding		30		$	334			18		$	187

	Institutional Class						Y Class						Investor Class
Bridgeway Large Cap Value Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		20,824		$	493,978			16,261		$	385,881			28,445		$	676,887
Reinvestment of dividends		1,050			23,860			608			13,790			1,418			32,070
Shares redeemed		(4,986	)		(118,434	)		(3,599	)		(85,147	)		(14,804	)		(351,506	)
Net increase in shares outstanding		16,888		$	399,404			13,270		$	314,524			15,059		$	357,451
	��

	A Class						C Class
Bridgeway Large Cap Value Fund	Shares			Amount			Shares			Amount
Shares sold		4,373		$	103,916			2,607		$	60,549
Reinvestment of dividends		193			4,339			88			1,938
Shares redeemed		(2,408	)		(57,244	)		(313	)		(7,181	)
Net increase in shares outstanding		2,158		$	51,011			2,382		$	55,306

	Institutional Class						Y Class						Investor Class
Holland Large Cap Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		41		$	1,045			10		$	282			157		$	4,211
Reinvestment of dividends		74			1,832			2			35			336			8,193
Shares redeemed		(64	)		(1,774	)		(1	)		(24	)		(429	)		(11,433	)
Net increase in shares outstanding		51		$	1,103			11		$	293			64		$	971

55

American Beacon Funds^SM

Notes to Financial Statements

June 30, 2016 (Unaudited)

	A Class						C Class
Holland Large Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		17		$	455			10		$	250
Reinvestment of dividends		6			136			4			84
Shares redeemed		(10	)		(261	)		(5	)		(121	)
Net increase in shares outstanding		13		$	330			9		$	213

	Institutional Class						Y Class						Investor Class
Stephens Small Cap Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		3,369		$	56,084			1,841		$	30,029			530		$	8,403
Reinvestment of dividends		887			13,334			420			6,299			189			2,679
Shares redeemed		(6,014	)		(100,387	)		(3,132	)		(51,053	)		(6,153	)		(96,717	)
Net (decrease) in shares outstanding		(1,758	)	$	(30,969	)		(871	)	$	(14,725	)		(5,434	)	$	(85,635	)

	A Class						C Class
Stephens Small Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		87		$	1,393			11		$	161
Reinvestment of dividends		27			388			8			109
Shares redeemed		(154	)		(2,402	)		(29	)		(426	)
Net (decrease) in shares outstanding		(40	)	$	(621	)		(10	)	$	(156	)

	Institutional Class						Y Class						Investor Class
Stephens Mid-Cap Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		919		$	18,187			32		$	653			29		$	512
Reinvestment of dividends		203			3,650			6			114			49			777
Shares redeemed		(1,441	)		(28,147	)		(63	)		(1,225	)		(293	)		(5,071	)
Net (decrease) in shares outstanding		(319	)	$	(6,310	)		(25	)	$	(458	)		(215	)	$	(3,782	)

	A Class						C Class
Stephens Mid-Cap Growth Fund	Shares			Amount			Shares			Amount
Shares sold		267		$	4,587			40		$	684
Reinvestment of dividends		48			745			7			107
Shares redeemed		(407	)		(6,870	)		(23	)		(388	)
Net increase (decrease) in shares outstanding		(92	)	$	(1,538	)		24		$	403

56

American Beacon Bahl & Gaynor Small Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			July 15A to December 31, 2014
	(unaudited)
Net asset value, beginning of period	$	10.17		$	10.71		$	10.00
Income from investment operations:
Net investment income		0.03			0.08			0.02
Net gains (losses) on investments (both realized and unrealized)		0.68			(0.39	)		0.71
Total income (loss) from investment operations		0.71			(0.31	)		0.73
Less distributions:
Dividends from net investment income		—			(0.06	)		(0.02	)
Distributions from net realized gains		—			(0.16	)		—
Distributions from return of capital		—			(0.01	)F		—
Total distributions		—			(0.23	)		(0.02	)
Net asset value, end of period	$	10.88		$	10.17		$	10.71
Total return B		6.98	%C		(2.96	)%		7.28	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,749		$	3,231		$	3,103
Ratios to average net assets:
Expenses, before reimbursements		2.34	%D		3.04	%		8.98	%D
Expenses, net of reimbursements		0.98	%D		0.98	%		0.98	%D
Net investment (loss), before expense reimbursements		(0.68	)%D		(1.33	)%		(7.51	)%D
Net investment income, net of reimbursements		0.68	%D		0.72	%		0.49	%D
Portfolio turnover rate		17	%C		54	%		12	%E
	Y Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			July 15A to December 31, 2014
	(unaudited)
Net asset value, beginning of period	$	10.16		$	10.71		$	10.00
Income from investment operations:
Net investment income		0.03			0.06			0.01
Net gains (losses) on investments (both realized and unrealized)		0.67			(0.38	)		0.72
Total income (loss) from investment operations		0.70			(0.32	)		0.73
Less distributions:
Dividends from net investment income		—			(0.06	)		(0.02	)
Distributions from return of capital		—			(0.16	)		—
Distributions from net realized gains		—			(0.01	)F		—
Total distributions		—			(0.23	)		(0.02	)
Net asset value, end of period	$	10.86		$	10.16		$	10.71
Total return B		6.89	%C		(3.05	)%		7.28	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	4,403		$	2,711		$	388
Ratios to average net assets:
Expenses, before reimbursements		2.43	%D		2.76	%		11.71	%D
Expenses, net of reimbursements		1.07	%D		1.08	%		1.08	%D
Net investment (loss), before expense reimbursements		(0.74	)%D		(0.98	)%		(10.06	)%D
Net investment income, net of reimbursements		0.62	%D		0.70	%		0.57	%D
Portfolio turnover rate		17	%C		54	%		12	%E

^A Commencement of operations.

^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 Not annualized.

^D Annualized.

^E Portfolio turnover rate is for the period from July 15, 2014 to December 31, 2014, and is not annualized.

^F Amount represents less than $0.01 per share.

57

American Beacon Bahl & Gaynor Small Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			July 15A to December 31, 2014
	(unaudited)
Net asset value, beginning of period	$	10.12		$	10.69		$	10.00
Income from investment operations:
Net investment income		0.02			0.05			0.01
Net gains (losses) on investments (both realized and unrealized)		0.66			(0.39	)		0.70
Total income (loss) from investment operations		0.68			(0.34	)		0.71
Less distributions:
Dividends from net investment income		—			(0.06	)		(0.02	)
Distributions from net realized gains		—			(0.16	)		—
Distributions from return of capital		—			(0.01	)F		—
Total distributions		—			(0.23	)		(0.02	)
Net asset value, end of period	$	10.80		$	10.12		$	10.69
Total return B		6.72	%C		(3.25	)%		7.08	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	606		$	498		$	239
Ratios to average net assets:
Expenses, before reimbursements		2.82	%D		3.19	%		12.62	%D
Expenses, net of reimbursements		1.36	%D		1.36	%		1.36	%D
Net investment (loss), before expense reimbursements		(1.17	)%D		(1.47	)%		(11.12	)%D
Net investment income, net of reimbursements		0.30	%D		0.35	%		0.14	%D
Portfolio turnover rate		17	%C		54	%		12	%E

	A Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			July 15A to December 31, 2014
	(unaudited)
Net asset value, beginning of period	$	10.11		$	10.69		$	10.00
Income from investment operations:
Net investment income		0.03			0.03			0.00	F
Net gains (losses) on investments (both realized and unrealized)		0.65			(0.38	)		0.71
Total income (loss) from investment operations		0.68			(0.35	)		0.71
Less distributions:
Dividends from net investment income		—			(0.06	)		(0.02	)
Distributions from net realized gains		—			(0.16	)		—
Distributions from return of capital		—			(0.01	)F		—
Total distributions		—			(0.23	)		(0.02	)
Net asset value, end of period	$	10.79		$	10.11		$	10.69
Total return B		6.73	%C		(3.34	)%		7.08	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	913		$	455		$	164
Ratios to average net assets:
Expenses, before reimbursements		2.74	%D		2.88	%		13.84	%D
Expenses, net of reimbursements		1.39	%D		1.38	%		1.38	%D
Net investment (loss), before expense reimbursements		(1.06	)%D		(1.08	)%		(12.35	)%D
Net investment income, net of reimbursements		0.28	%D		0.41	%		0.10	%D
Portfolio turnover rate		17	%C		54	%		12	%E

^A Commencement of operations.

^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 Not annualized.

^D Annualized.

^E Portfolio turnover rate is for the period from July 15, 2014 to December 31, 2014, and is not annualized.

^F Amount represents less than $0.01 per share.

58

American Beacon Bahl & Gaynor Small Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Six Months Ended June 30, 2016			Year Ended December 31, 2015			July 15A to December 31, 2014
	(unaudited)
Net asset value, beginning of period	$	10.00		$	10.65		$	10.00
Income from investment operations:
Net investment (loss)		(0.03	)		(0.01	)		(0.02	)
Net gains (losses) on investments (both realized and unrealized)		0.66			(0.41	)		0.69
Total income (loss) from investment operations		0.63			(0.42	)		0.67
Less distributions:
Dividends from net investment income		—			(0.06	)		(0.02	)
Distributions from net realized gains		—			(0.16	)		—
Distributions from return of capital		—			(0.01	)F		—
Total distributions		—			(0.23	)		(0.02	)
Net asset value, end of period	$	10.63		$	10.00		$	10.65
Total return B		6.30	%C		(4.01	)%		6.68	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	306		$	309		$	142
Ratios to average net assets:
Expenses, before reimbursements		3.47	%D		3.84	%		13.72	%D
Expenses, net of reimbursements		2.13	%D		2.13	%		2.13	%D
Net investment (loss), before expense reimbursements		(1.82	)%D		(2.09	)%		(12.23	)%D
Net investment (loss), net of reimbursements		(0.48	)%D		(0.38	)%		(0.64	)%D
Portfolio turnover rate		17	%C		54	%		12	%E

^A Commencement of operations.

^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 Not annualized.

^D Annualized.

^E Portfolio turnover rate is for the period from July 15, 2014 to December 31, 2014, and is not annualized.

^F Amount represents less than $0.01 per share.

59

American Beacon Bridgeway Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Six Months			Year Ended December 31,									Six Months			Year Ended June 30,
	Ended June 30, 2016			2015			2014			2013			Ended Dec. 31, 2012			2012			2011
	(unaudited)
Net asset value, beginning of period	$	22.75		$	23.89		$	21.39		$	15.85		$	14.80		$	14.62		$	11.44
Income from investment operations:
Net investment income		0.19			0.28			0.10			0.11			0.20			0.24			0.20	G
Net gains (losses) on investments (both realized and unrealized)		0.91			(0.58	)		2.94			5.87			1.14			0.12			3.21
Total income (loss) from investment operations		1.10			(0.30	)		3.04			5.98			1.34			0.36			3.41
Less distributions:
Dividends from net investment income		—			(0.29	)		(0.17	)		(0.11	)		(0.29	)		(0.18	)		(0.23	)
Distributions from net realized gains		—			(0.55	)		(0.37	)		(0.33	)		—			—			—
Distributions from return of capital		—			(0.00	)G		—			—			—			—			—
Total distributions		—			(0.84	)		(0.54	)		(0.44	)		(0.29	)		(0.18	)		(0.23	)
Net asset value, end of period	$	23.85		$	22.75		$	23.89		$	21.39		$	15.85		$	14.80		$	14.62
Total return A		4.84	%B		(1.23	)%		14.18	%		37.77	%		9.04	%B		2.60	%		30.02	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,042,712		$	682,849		$	313,661		$	79,889		$	26,669		$	26,950		$	29,647
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.73	%C		0.75	%		0.79	%		1.01	%		1.73	%C		1.30	%		1.17	%
Expenses, net of reimbursements or recoupments		0.73	%C		0.79	%		0.84	%		0.84	%		0.84	%C		0.82	%		0.84	%
Net investment income, before reimbursements or recoupments		1.95	%C		1.61	%		1.08	%		0.98	%		1.38	%C		1.17	%		1.17	%
Net investment income, net of reimbursements or recoupments		1.95	%C		1.57	%		1.04	%		1.16	%		2.27	%C		1.66	%		1.50	%
Portfolio turnover rate		27	%B		43	%		31	%		38	%		21	%		36	%		43	%

	Y Class
	Six Months			Year Ended December 31,									Six Months			February 3D
	Ended June 30, 2016			2015			2014			2013			Ended December 31, 2012			to June 30, 2012
	(unaudited)
Net asset value, beginning of period	$	22.69		$	23.84		$	21.35		$	15.84		$	14.80		$	14.46
Income from investment operations:
Net investment income		0.20			0.27			0.13			0.22			0.07			0.09
Net gains (losses) on investments (both realized and unrealized)		0.90			(0.57	)		2.90			5.72			1.26			0.25
Total income (loss) from investment operations		1.10			(0.30	)		3.03			5.94			1.33			0.34
Less distributions:
Dividends from net investment income		—			(0.30	)		(0.17	)		(0.10	)		(0.29	)		—
Distributions from net realized gains		—			(0.55	)		(0.37	)		(0.33	)		—			—
Distributions from return of capital		—			(0.00	)G		—			—			—			—
Total distributions		—			(0.85	)		(0.54	)		(0.43	)		(0.29	)		—
Net asset value, end of period	$	23.79		$	22.69		$	23.84		$	21.35		$	15.84		$	14.80
Total return A		4.85	%B		(1.26	)%		14.15	%		37.55	%		8.98	%B		2.35	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	562,969		$	414,585		$	119,162		$	19,914		$	36		$	5
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.80	%C		0.81	%		0.84	%		0.93	%		3.75	%C		144.38	%C
Expenses, net of reimbursements or recoupments		0.80	%C		0.81	%		0.85	%		0.94	%		0.93	%C		0.94	%C
Net investment income (loss), before reimbursements or recoupments		1.88	%C		1.55	%		1.03	%		1.07	%		(0.51	)%C		(141.90	)%C
Net investment income, net of reimbursements or recoupments		1.88	%C		1.55	%		1.03	%		1.06	%		2.31	%C		1.54	%C
Portfolio turnover rate		27	%B		43	%		31	%		38	%		21	%B		36	%E

^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.

^B Not annualized.

^C Annualized.

^D Commencement of operations.

^E Portfolio turnover rate is for the period from July 1, 2011 to June 30, 2012.

^F The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

^G  Per share amounts calculated based on average daily shares outstanding during the period.

60

American Beacon Bridgeway Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Six Months			Year Ended December 31,									Six Months			February 3D
	Ended June 30, 2016			2015			2014			2013			Ended December 31, 2012			to June 30, 2012
	(unaudited)
Net asset value, beginning of period	$	22.64		$	23.77		$	21.28		$	15.81		$	14.78		$	14.46
Income from investment operations:
Net investment income		0.15			0.25			0.14			0.21			0.12			0.03
Net gains (losses) on investments (both realized and unrealized)		0.91			(0.61	)		2.82			5.68			1.19			0.29
Total income (loss) from investment operations		1.06			(0.36	)		2.96			5.89			1.31			0.32
Less distributions:
Dividends from net investment income		—			(0.22	)		(0.10	)		(0.09	)		(0.28	)		—
Distributions from net realized gains		—			(0.55	)		(0.37	)		(0.33	)		—			—
Distributions from return of capital		—			(0.00	)F		—			—			—			—
Total distributions		—			(0.77	)		(0.47	)		(0.42	)		(0.28	)		—
Net asset value, end of period	$	23.70		$	22.64		$	23.77		$	21.28		$	15.81		$	14.78
Total return A		4.68	%B		(1.51	)%		13.89	%		37.28	%		8.84	%B		2.21	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,307,735		$	977,719		$	668,659		$	274,114		$	489		$	215
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.07	%C		1.09	%		1.11	%		1.08	%		2.26	%C		18.30	%C
Expenses, net of reimbursements or recoupments		1.07	%C		1.09	%		1.11	%		1.09	%		1.21	%C		1.22	%C
Net investment income (loss), before reimbursements or recoupments		1.60	%C		1.28	%		0.76	%		0.95	%		1.00	%C		(15.48	)%C
Net investment income, net of reimbursements or recoupments		1.60	%C		1.28	%		0.76	%		0.94	%		2.05	%C		1.59	%C
Portfolio turnover rate		27	%B		43	%		31	%		38	%		21	%B		36	%E
	A Class
	Six Months			Year Ended December 31,									Six Months			February 3D
	Ended June 30, 2016			2015			2014			2013			Ended December 31, 2012			to June 30, 2012
	(unaudited)
Net asset value, beginning of period	$	22.53		$	23.66		$	21.22		$	15.78		$	14.77		$	14.46
Income from investment operations:
Net investment income		0.17			0.27			0.09			0.19			0.15			0.01
Net gains (losses) on investments (both realized and unrealized)		0.88			(0.64	)		2.84			5.64			1.15			0.30
Total income (loss) from investment operations		1.05			(0.37	)		2.93			5.83			1.30			0.31
Less distributions:
Dividends from net investment income		—			(0.21	)		(0.12	)		(0.06	)		(0.29	)		—
Dividends from net investment income		—			(0.55	)		(0.37	)		(0.33	)		—			—
Distributions from net realized gains		—			(0.00	)F		—			—			—			—
Total distributions		—			(0.76	)		(0.49	)		(0.39	)		(0.29	)		—
Net asset value, end of period	$	23.58		$	22.53		$	23.66		$	21.22		$	15.78		$	14.77
Total return A		4.66	%B		(1.56	)%		13.76	%		37.01	%		8.78	%B		2.14	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	147,876		$	147,395		$	103,717		$	31,300		$	311		$	276
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.11	%C		1.12	%		1.19	%		1.38	%		2.21	%C		15.39	%C
Expenses, net of reimbursements or recoupments		1.11	%C		1.12	%		1.21	%		1.34	%		1.33	%C		1.34	%C
Net investment income (loss), before reimbursements or recoupments		1.54	%C		1.25	%		0.69	%		0.61	%		0.90	%C		(13.13	)%C
Net investment income, net of reimbursements or recoupments		1.54	%C		1.25	%		0.67	%		0.66	%		1.78	%C		0.92	%C
Portfolio turnover rate		27	%B		43	%		31	%		38	%		21	%B		36	%E

^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.

^B Not annualized.

^C Annualized.

^D Commencement of operations.

^E Portfolio turnover rate is for the period from July 1, 2011 to June 30, 2012.

^F The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

61

American Beacon Bridgeway Large Cap Value Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Six Months			Year Ended December 31,									Six Months			February 3D
	Ended June 30, 2016			2015			2014			2013			Ended December 31, 2012			to June 30, 2012
	(unaudited)
Net asset value, beginning of period	$	22.08		$	23.27		$	21.00		$	15.70		$	14.73		$	14.46
Income from investment operations:
Net investment income		0.09			0.13			0.02			0.18			0.09			0.02
Net gains (losses) on investments (both realized and unrealized)		0.85			(0.66	)		2.69			5.47			1.17			0.25
Total income (loss) from investment operations		0.94			(0.53	)		2.71			5.65			1.26			0.27
Less distributions:
Dividends from net investment income		—			(0.11	)		(0.07	)		(0.02	)		(0.29	)		—
Distributions from net realized gains		—			(0.55	)		(0.37	)		(0.33	)		—			—
Distributions from return of capital		—			(0.00	)F		—			—			—			—
Total distributions		—			(0.66	)		(0.44	)		(0.35	)		(0.29	)		—
Net asset value, end of period	$	23.02		$	22.08		$	23.27		$	21.00		$	15.70		$	14.73
Total return A		4.26	%B		(2.27	)%		12.88	%		36.02	%		8.54	%B		1.87	%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	92,590		$	84,411		$	33,536		$	2,346		$	20		$	14
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.86	%C		1.87	%		1.92	%		2.13	%		6.81	%C		64.88	%C
Expenses, net of reimbursements or recoupments		1.86	%C		1.87	%		1.94	%		2.09	%		1.77	%C		2.09	%C
Net investment income (loss), before reimbursements or recoupments		0.81	%C		0.48	%		(0.05	)%		(0.13	)%		(3.55	)%C		(62.47	)%C
Net investment income (loss), net of reimbursements or recoupments		0.81	%C		0.48	%		(0.08	)%		(0.08	)%		1.49	%C		0.32	%C
Portfolio turnover rate		27	%B		43	%		31	%		38	%		21	%		36	%E

^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.

^B Not annualized.

^C Annualized.

^D Commencement of operations.

^E Portfolio turnover rate is for the period from July 1, 2011 to June 30, 2012.

^F The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

62

American Beacon Holland Large Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Six Months			Year Ended December 31,
	Ended June 30, 2016			2015			2014			2013			2012			2011
	(unaudited)
Net asset value, beginning of period	$	24.80		$	25.88		$	26.57		$	21.60		$	20.30		$	20.00
Income from investment operations:
Net investment income (loss)		0.05			0.06			0.03			0.02			0.09			(0.02	)
Net gains (losses) on securities (both realized and unrealized)		(0.27	)		1.67			1.94			7.02			2.47			0.71
Total income (loss) from investment operations		(0.22	)		1.73			1.97			7.04			2.56			0.69
Less distributions:
Dividends from net investment income		—			—			—			(0.01	)		(0.08	)		—
Distributions from net realized gains		—			(2.81	)		(2.66	)		(2.06	)		(1.18	)		(0.39	)
Total distributions		—			(2.81	)		(2.66	)		(2.07	)		(1.26	)		(0.39	)
Net asset value, end of period	$	24.58		$	24.80		$	25.88		$	26.57		$	21.60		$	20.30
Total return A		(0.93	)%B		6.70	%		7.31	%		32.73	%		12.57	%		3.47	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	16,608		$	18,601		$	18,103		$	16,292		$	1,619		$	1,193
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.88	%D		0.88	%		0.89	%		0.86	%		1.32	%		1.49	%
Expenses, net of reimbursements or recoupments		0.88	%D		0.89	%		0.89	%		0.89	%		0.96	%		1.20	%
Net investment income (loss), before expense reimbursements or recoupments		0.26	%D		0.26	%		0.14	%		0.24	%		0.07	%		(0.38	)%
Net investment income (loss), net of reimbursements or recoupments		0.26	%D		0.25	%		0.13	%		0.21	%		0.43	%		(0.09	)%
Portfolio turnover rate		18	%B		24	%		27	%		29	%		18	%		12	%

	Y Class
	Six Months			Year Ended December 31,									March 23C to
	Ended June 30, 2016			2015			2014			2013			December 31, 2012
	(unaudited)
Net asset value, beginning of period	$	24.66		$	25.79		$	26.53		$	21.59		$	23.00
Income from investment operations:
Net investment income (loss)		0.01			(0.02	)		(0.02	)		0.02			0.09
Net gains (losses) on securities (both realized and unrealized)		(0.25	)		1.70			1.94			6.98			(0.26	)
Total income (loss) from investment operations		(0.24	)		1.68			1.92			7.00			(0.17	)
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)F		(0.06	)
Distributions from net realized gains		—			(2.81	)		(2.66	)		(2.06	)		(1.18	)
Total distributions		—			(2.81	)		(2.66	)		(2.06	)		(1.24	)
Net asset value, end of period	$	24.42		$	24.66		$	25.79		$	26.53		$	21.59
Total return A		(0.97	)%B		6.53	%		7.13	%		32.59	%		(0.79	)%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	422		$	334		$	74		$	79		$	23
Ratios to average net assets:
Expenses, before reimbursements or recoupments		0.99	%D		1.08	%		1.11	%		0.97	%		10.18	%D
Expenses, net of reimbursements or recoupments		0.98	%D		1.02	%		1.08	%		0.99	%		0.98	%D
Net investment income (loss), before expense reimbursements or recoupments		0.15	%D		0.00	%		(0.10	)%		0.15	%		(8.77	)%D
Net investment income (loss), net of reimbursements or recoupments		0.15	%D		0.06	%		(0.06	)%		0.12	%		0.43	%D
Portfolio turnover rate		18	%B		24	%		27	%		29	%		18	%E

^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.

^B Not annualized.

^C Commencement of operations.

^D Annualized.

^E Portfolio turnover rate is for the period from January 1, 2012 to December 31, 2012.

^F Amount represents less than $0.01 per share.

63

American Beacon Holland Large Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Six Months			Year Ended December 31,
	Ended June 30, 2016			2015			2014			2013			2012			2011
	(unaudited)
Net asset value, beginning of period	$	24.38		$	25.57		$	26.36		$	21.52		$	20.24		$	19.97
Income from investment operations:
Net investment income (loss)		(0.02	)		(0.02	)		(0.04	)		(0.05	)		0.02			(0.05	)
Net gains (losses) on securities (both realized and unrealized)		(0.25	)		1.64			1.91			6.95			2.45			0.71
Total income (loss) from investment operations		(0.27	)		1.62			1.87			6.90			2.47			0.66
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)F		(0.01	)		—
Distributions from net realized gains		—			(2.81	)		(2.66	)		(2.06	)		(1.18	)		(0.39	)
Total distributions		—			(2.81	)		(2.66	)		(2.06	)		(1.19	)		(0.39	)
Net asset value, end of period	$	24.11		$	24.38		$	25.57		$	26.36		$	21.52		$	20.24
Total return A		(1.11	)%B		6.35	%		6.99	%		32.21	%		12.18	%		3.33	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	72,736		$	78,922		$	81,154		$	77,426		$	66,568		$	58,682
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.24	%D		1.24	%		1.15	%		1.26	%		1.44	%		1.64	%
Expenses, net of reimbursements or recoupments		1.24	%D		1.24	%		1.21	%		1.27	%		1.29	%		1.35	%
Net investment (loss), before expense reimbursements or recoupments		(0.09	)%D		(0.10	)%		(0.13	)%		(0.17	)%		(0.08	)%		(0.53	)%
Net investment income (loss), net of reimbursements or recoupments		(0.09	)%D		(0.10	)%		(0.19	)%		(0.18	)%		0.07	%		(0.24	)%
Portfolio turnover rate		18	%B		24	%		27	%		29	%		18	%		12	%
	A Class
	Six Months			Year Ended December 31,
	Ended June 30, 2016			2015			2014			2013			2012			2011
	(unaudited)
Net asset value, beginning of period	$	24.17		$	25.39		$	26.22		$	21.43		$	20.23		$	19.96
Income from investment operations:
Net investment income (loss)		0.04			0.00	F		(0.08	)		(0.03	)		0.03			(0.05	)
Net gains (losses) on securities (both realized and unrealized)		(0.31	)		1.59			1.91			6.88			2.41			0.71
Total income (loss) from investment operations		(0.27	)		1.59			1.83			6.85			2.44			0.66
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)F		(0.06	)		—
Distributions from net realized gains		—			(2.81	)		(2.66	)		(2.06	)		(1.18	)		(0.39	)
Total distributions		—			(2.81	)		(2.66	)		(2.06	)		(1.24	)		(0.39	)
Net asset value, end of period	$	23.90		$	24.17		$	25.39		$	26.22		$	21.43		$	20.23
Total return A		(1.12	)%B		6.28	%		6.88	%		32.11	%		11.99	%		3.33	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,993		$	1,271		$	1,012		$	1,028		$	467		$	13
Ratios to average net assets:
Expenses, before reimbursements or recoupments		1.28	%D		1.29	%		1.35	%		1.40	%		2.73	%		10.06	%
Expenses, net of reimbursements or recoupments		1.28	%D		1.29	%		1.34	%		1.39	%		1.38	%		1.40	%
Net investment (loss), before expense reimbursements or recoupments		(0.12	)%D		(0.15	)%		(0.32	)%		(0.28	)%		(0.97	)%		(8.94	)%
Net investment income (loss), net of reimbursements or recoupments		(0.12	)%D		(0.15	)%		(0.31	)%		(0.27	)%		0.37	%		(0.28	)%
Portfolio turnover rate		18	%B		24	%		27	%		29	%		18	%		12	%

^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.

^B Not annualized.

^C Commencement of operations.

^D Annualized.

^E Portfolio turnover rate is for the period from January 1, 2012 to December 31, 2012.

^F Amount represents less than $0.01 per share.

64

American Beacon Holland Large Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Six Months Ended June 30, 2016			Year Ended December 31,									March 23C to December 31, 2012
				2015			2014			2013
	(unaudited)
Net asset value, beginning of period	$	23.30		$	24.75		$	25.82		$	21.29		$	22.90
Income from investment operations:
Net investment income (loss)		(0.43	)		(0.04	)		(0.36	)		(0.17	)		0.01
Net gains (losses) on securities (both realized and unrealized)		0.08			1.40			1.95			6.76			(0.38	)
Total income (loss) from investment operations		(0.35	)		1.36			1.59			6.59			(0.37	)
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)F		(0.06	)
Distributions from net realized gains		—			(2.81	)		(2.66	)		(2.06	)		(1.18	)
Total distributions		—			(2.81	)		(2.66	)		(2.06	)		(1.24	)
Net asset value, end of period	$	22.95		$	23.30		$	24.75		$	25.82		$	21.29
Total return A		(1.50	)%B		5.51	%		6.05	%		31.10	%		(1.65	)%B
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	497		$	757		$	592		$	703		$	281
Ratios to average net assets:
Expenses, before reimbursements or recoupments		2.05	%D		2.05	%		2.10	%		2.15	%		6.17	%D
Expenses, net of reimbursements or recoupments		2.04	%D		2.04	%		2.09	%		2.14	%		2.12	%D
Net investment (loss), before expense reimbursements or recoupments		(0.90	)%D		(0.91	)%		(1.07	)%		(1.04	)%		(3.85	)%D
Net investment income (loss), net of reimbursements or recoupments		(0.90	)%D		(0.90	)%		(1.07	)%		(1.03	)%		0.20	%D
Portfolio turnover rate		18	%B		24	%		27	%		29	%		18	%E

^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.

^B Not annualized.

^C Commencement of operations.

^D Annualized.

^E Portfolio turnover rate is for the period from January 1, 2012 to December 31, 2012.

^F Amount represents less than $0.01 per share. 

65

American Beacon Stephens Small Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Six Months Ended June 30, 2016												Six Months Ended Dec. 31, 2012			Year Ended
				Year Ended December 31,												November 30,
				2015			2014			2013						2012 I			2011 I
	(unaudited)
Net asset value, beginning of period	$	15.08		$	16.57		$	17.83		$	12.99		$	13.54		$	13.14		$	12.03
Income from investment operations:
Net investment income (loss)		(0.02	)		(0.13	)		(0.07	)		(0.05	)		0.06			(0.04	)J		(0.11	)A
Net gains (losses) from investments (both realized and unrealized)		0.17			(0.65	)		(0.49	)		5.60			0.23			1.43			1.37
Total income (loss) from investment operations		0.15			(0.78	)		(0.56	)		5.55			0.29			1.39			1.26
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)E		—			—			—
Distributions from net realized gains		—			(0.71	)		(0.70	)		(0.67	)		(0.84	)		(0.99	)		(0.15	)
Return of capital K		—			—			—			(0.04	)		—			—			—
Total distributions		—			(0.71	)		(0.70	)		(0.71	)		(0.84	)		(0.99	)		(0.15	)
Redemption fees added to beneficial interests H		—			—			—			—			—			—			—
Net asset value, end of period	$	15.23		$	15.08		$	16.57		$	17.83		$	12.99		$	13.54		$	13.14
Total returnB		1.06	%C		(4.69	)%		(3.14	)%		42.93	%		2.15	%C		11.74	%		10.49	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	330,076		$	300,919		$	359,959		$	317,341		$	130,342		$	88,815		$	52,336
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsD		1.09	%F		1.08	%		1.08	%		1.11	%		1.20	% F		1.20	%		1.15	%
Expenses, net of reimbursements or recoupmentsD		1.09	%F		1.08	%		1.10	%		1.09	%		1.06	%F		1.10	%		1.10	%
Net investment income (loss), before reimbursements or recoupments		(0.67	)%F		(0.67	)%		(0.59	)%		(0.73	)%		0.54	%F		(0.84	)%		(0.91	)%
Net investment income (loss), net of reimbursements or recoupments		(0.67	)%F		(0.67	)%		(0.61	)%		(0.71	)%		(0.68	)%F		(0.74	)%		(0.86	)%
Portfolio turnover rate		13	%C		25	%		46	%		39	%		6	%C		45	%		36	%

	Y Class
	Six Months Ended June 30, 2016			Year Ended December 31,									Six Months Ended Dec. 31, 2012			February 24E to November 30, 2012
				2015			2014			2013
	(unaudited)
Net asset value, beginning of period	$	15.02		$	16.54		$	17.81		$	12.98		$	13.54		$	13.59
Income from investment operations:
Net investment income (loss)		(0.03	)		(0.14	)		(0.12	)		(0.04	)		0.01			(0.02	)
Net gains (losses) from investments (both realized and unrealized)		0.18			(0.67	)		(0.45	)		5.58			0.27			(0.03	)
Total income (loss) from investment operations		0.15			(0.81	)		(0.57	)		5.54			0.28			(0.05	)
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)E		—			—
Distributions from net realized gains		—			(0.71	)		(0.70	)		(0.68	)		(0.84	)		—
Return of capital K		—			—			—			(0.03	)		—			—
Total distributions		—			(0.71	)		(0.70	)		(0.71	)		(0.84	)		—
Redemption fees added to beneficial interests H		—			—			—			—			—			—
Net asset value, end of period	$	15.17		$	15.02		$	16.54		$	17.81		$	12.98		$	13.54
Total return B		1.07	%C		(4.88	)%		(3.20	)%		42.88	%		2.07	%C		(0.37	)%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	155,224		$	142,980		$	171,901		$	208,196		$	4,563		$	2,699
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsD		1.14	% F		1.14	%		1.16	%		1.19	%		1.36	% F		2.05	%F
Expenses, net of reimbursements or recoupmentsD		1.14	% F		1.14	%		1.16	%		1.19	%		1.16	% F		1.21	%F
Net investment income (loss), before reimbursements or recoupments		(0.72	)% F		(0.74	)%		(0.67	)%		(0.79	)%		0.19	% F		(1.57	)%F
Net investment income (loss), net of reimbursements or recoupments		(0.72	)% F		(0.74	)%		(0.68	)%		(0.78	)%		0.38	% F		(0.73	)%F
Portfolio turnover rate		13	%C		25	%		46	%		39	%		6	%C		45	%G

^A  The Predecessor Fund calculated the change in undistributed net investment income per share by dividing the change in undistributed net investment income by average shares outstanding for the period.

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

^D  Expense ratios may exceed stated expense caps in Note 2 due in part to security lending expenses.

^E  Commencement of operations.

^F  Annualized.

^G  Portfolio turnover rate is for the period from December 1, 2011 through November 30, 2012.

^H  Amount represents less than $0.01 per share.

^I  Prior to the reorganization on February 24, 2012, the Institutional and Investor Classes were known as Class I and Class A, respectively.

^J  For purposes of this calculation, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding for the period.

^K  The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

66

American Beacon Stephens Small Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Six Months Ended June 30, 2016												Six Months Ended Dec. 31, 2012			Year Ended
				Year Ended December 31,												November 30,
				2015			2014			2013						2012I			2011I
	(unaudited)
Net asset value, beginning of period	$	14.20		$	15.71		$	16.98		$	12.42		$	12.99		$	12.67		$	11.64
Income from investment operations:
Net investment income (loss)		(0.17	)		(0.82	)		(0.16	)		(0.04	)		0.02			(0.06	)J		(0.14	)A
Net gains (losses) from investments (both realized and unrealized)		0.33			0.02			(0.41	)		5.31			0.25			1.37			1.32
Total income (loss) from investment operations		0.16			(0.80	)		(0.57	)		5.27			0.27			1.31			1.18
Less distributions:
Dividends from net investment income		—			—			—			(0.00	) H		—			—			—
Distributions from net realized gains		—			(0.71	)		(0.70	)		(0.69	)		(0.84	)		(0.99	)		(0.15	)
Return of capital K		—			—			—			(0.02	)		—			—			—
Total distributions		—			(0.71	)		(0.70	)		(0.71	)		(0.84	)		(0.99	)		(0.15	)
Redemption fees added to beneficial interests H		—			—			—			—			—			—			0.00	H
Net asset value, end of period	$	14.36		$	14.20		$	15.71		$	16.98		$	12.42		$	12.99		$	12.67
Total return B		0.92	%C		(5.08	)%		(3.35	)%		42.62	%		2.08	%C		11.44	%		10.15	%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	52,091		$	55,922		$	147,227		$	169,799		$	69,786		$	67,506		$	47,101
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsD		1.40	% F		1.40	%		1.31	%		1.39	% F		1.62	%F		1.56	%		1.40	%
Expenses, net of reimbursements or recoupmentsD		1.38	%F		1.39	%		1.37	%		1.35	%F		1.34	%F		1.36	%		1.35	%
Net investment income (loss), before reimbursements or recoupments		(0.98	)%F		(1.01	)%		(0.81	)%		(1.01	)%F		0.23	%F		(1.20	)%		(1.16	)%
Net investment income (loss), net of reimbursements or recoupments		(0.96	)%F		(1.00	)%		(0.88	)%		(0.96	)%F		0.50	%F		(1.00	)%		(1.11	)%
Portfolio turnover rate		13	%C		25	%		46	%		39	%		6	%C		45	%		36	%

	A Class
	Six Months Ended June 30, 2016			Year Ended December 31,									Six Months Ended Dec. 31, 2012			February 24E to November 30, 2012
				2015			2014			2013
	(unaudited)
Net asset value, beginning of period	$	14.10		$	15.61		$	16.91		$	12.40		$	12.98		$	13.07
Income from investment operations:
Net investment income (loss)		(0.18	)		(0.19	)		(0.18	)		(0.10	)		0.01			(0.07	)
Net gains (losses) from investments (both realized and unrealized)		0.30			(0.61	)		(0.42	)		5.32			0.25			(0.02	)
Total income (loss) from investment operations		0.12			(0.80	)		(0.60	)		5.22			0.26			(0.09	)
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)H		—			—
Distributions from net realized gains		—			(0.71	)		(0.70	)		(0.71	)		(0.84	)		—
Return of capital K		—			—			—			(0.00	)		—			—
Total distributions		—			(0.71	)		(0.70	)		(0.71	)		(0.84	)		—
Redemption fees added to beneficial interests H		—			—			—			—			—			—
Net asset value, end of period	$	14.22		$	14.10		$	15.61		$	16.91		$	12.40		$	12.98
Total return B		0.85	%C		(5.11	)%		(3.54	)%		42.28	%		2.01	%C		(0.69	)%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	6,851		$	8,197		$	9,702		$	10,942		$	3,131		$	2,941
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsD		1.45	%F		1.44	%		1.51	%		1.57	%		1.79	%F		2.08	%F
Expenses, net of reimbursements or recoupmentsD		1.45	%F		1.48	%		1.52	%		1.59	%		1.58	%F		1.61	%F
Net investment income (loss), before reimbursements or recoupments		(1.03	)%F		(1.03	)%		(1.02	)%		(1.18	)%		0.04	%F		(1.68	)%F
Net investment income (loss), net of reimbursements or recoupments		(1.03	)%F		(1.08	)%		(1.03	)%		(1.20	)%		0.25	%F		(1.21	)%F
Portfolio turnover rate		13	%C		25	%		46	%		39	%		6	%C		45	%G

^A The Predecessor Fund calculated the change in undistributed net investment income per share by dividing the change in undistributed net investment income by average shares outstanding for the period.

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

^D Expense ratios may exceed stated expense caps in Note 2 due in part to security lending expenses.

^E Commencement of operations.

^F Annualized.

^G Portfolio turnover rate is for the period from December 1, 2011 through November 30, 2012.

^H Amount represents less than $0.01 per share.

^I  Prior to the reorganization on February 24, 2012, the Institutional and Investor Classes were known as Class I and Class A, respectively.

^J  For purposes of this calculation, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding for the period.

^K  The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

67

American Beacon Stephens Small Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Six Months Ended June 30, 2016			Year Ended December 31,									Six Months Ended Dec. 31, 2012			February 24E to November 30, 2012
				2015			2014			2013
	(unaudited)
Net asset value, beginning of period	$	13.65		$	15.26		$	16.66		$	12.32		$	12.91		$	13.07
Income from investment operations:
Net investment (loss)		(0.66	)		(0.31	)		(0.24	)		(0.13	)		0.00			(0.06	)
Net gains (losses) from investments (both realized and unrealized)		0.74			(0.59	)		(0.46	)		5.18			0.25			(0.10	)
Total income (loss) from investment operations		0.08			(0.90	)		(0.70	)		5.05			0.25			(0.16	)
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)H		—			—
Distributions from net realized gains		—			(0.71	)		(0.70	)		(0.71	)		(0.84	)		—
Return of capital I		—			—			—			—			—			—
Total distributions		—			(0.71	)		(0.70	)		(0.71	)		(0.84	)		—
Redemption fees added to beneficial interests H		—			—			—			—			—			—
Net asset value, end of period	$	13.73		$	13.65		$	15.26		$	16.66		$	12.32		$	12.91
Total return B		0.51	%C		(5.89	)%		(4.20	)%		41.17	%		1.94	%		(1.22	)%C
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,406		$	2,349		$	2,771		$	2,447		$	349		$	343
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsD		2.20	%F		2.19	%		2.26	%		2.33	%		3.21	%		6.15	%F
Expenses, net of reimbursements or recoupmentsD		2.20	%F		2.26	%		2.27	%		2.34	%		2.33	%		2.35	%F
Net investment (loss), before reimbursements or recoupments		(1.79	)%F		(1.79	)%		(1.76	)%		(1.93	)%		(1.36	)%		(5.71	)%F
Net investment (loss), net of reimbursements or recoupments		(1.79	)%F		(1.85	)%		(1.77	)%		(1.94	)%		(0.48	)%		(1.91	)%F
Portfolio turnover rate		13	%C		25	%		46	%		39	%		6	%		45	%G

^A The Predecessor Fund calculated the change in undistributed net investment income per share by dividing the change in undistributed net investment income by average shares outstanding for the period.

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

^D Expense ratios may exceed stated expense caps in Note 2 due in part to security lending expenses.

^E Commencement of operations.

^F Annualized.

^G Portfolio turnover rate is for the period from December 1, 2011 through November 30, 2012.

^H Amount represents less than $0.01 per share.

^I  The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

68

American Beacon Stephens Mid Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Institutional Class
	Six Months Ended June 30, 2016												Six Months Ended Dec. 31, 2012			Year Ended
				Year Ended December 31,												November 30,
				2015			2014			2013						2012A			2011A
	(unaudited)
Net asset value, beginning of period	$	18.11		$	19.24		$	19.76		$	15.38		$	15.24		$	13.69		$	12.44
Income from investment operations:
Net investment income (loss)		(0.18	)		(0.13	)		(0.04	)		(0.05	)		0.02			—	B		(0.10	)C
Net gains (losses) from investments (both realized and unrealized)		7.83			(0.11	)		0.72			5.12			0.20			1.55			1.35
Total income (loss) from investment operations		7.65			(0.24	)		0.68			5.07			0.22			1.55			1.25
Less distributions:
Dividends from net investment income		—			—			—			(0.01	)		—			—			—
Distributions from net realized gains		—			(0.89	)		(1.20	)		(0.66	)		(0.08	)		—			—
Return of capitalK		—			—			—			(0.02	)		—			—			—
Total distributions		—			(0.89	)		(1.20	)		(0.69	)		(0.08	)		—			—
Redemption fees added to beneficial interestsJ		—			—			—			—			—			—			—
Net asset value, end of period	$	25.76		$	18.11		$	19.24		$	19.76		$	15.38		$	15.24		$	13.69
Total return D		(0.72	)%E		(1.28	)%		3.41	%		33.14	%		1.43	%E		11.32	%		10.05	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	52,063		$	76,666		$	87,620		$	63,236		$	31,005		$	30,503		$	13,208
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsF		1.07	%G		1.01	%		1.05	%		1.12	%		1.31	%G		1.28	%		1.65	%
Expenses, net of reimbursements or recoupmentsF		1.00	%G		0.99	%		1.00	%		0.99	%		0.99	%G		1.03	%		1.25	%
Net investment income (loss), before reimbursements or recoupments		(0.47	)%G		(0.54	)%		(0.53	)%		(0.70	)%		1.37	%G		(0.62	)%		(1.12	)%
Net investment income (loss), net of reimbursements or recoupments		(0.41	)%G		(0.53	)%		(0.48	)%		(0.58	)%		1.69	%G		(0.37	)%		(0.72	)%
Portfolio turnover rate		13	%E		19	%		37	%		25	%		1	%E		27	%		30	%

	Y Class
	Six Months Ended June 30, 2016			Year Ended December 31,									Six Months Ended Dec. 31, 2012			February 24H to November 30, 2012
				2015			2014			2013
	(unaudited)
Net asset value, beginning of period	$	18.06		$	19.22		$	19.76		$	15.38		$	15.23		$	15.09
Income from investment operations:
Net investment income (loss)		(0.09	)		(0.15	)		(0.06	)		(0.08	)		0.02			(0.03	)
Net gains (losses) from investments (both realized and unrealized)		2.18			(0.12	)		0.72			5.15			0.21			0.17
Total income (loss) from investment operations		2.09			(0.27	)		0.66			5.07			0.23			0.14
Less distributions:
Dividends from net investment income		—			—			—			(0.01	)		—			—
Distributions from net realized gains		—			(0.89	)		(1.20	)		(0.68	)		(0.08	)		—
Return of capitalK		—			—			—			0.00			—			—
Total distributions		—			(0.89	)		(1.20	)		(0.69	)		(0.08	)		—
Redemption fees added to beneficial interestsJ		—			—			—			—			—			—
Net asset value, end of period	$	20.15		$	18.06		$	19.22		$	19.76		$	15.38		$	15.23
Total return D		(0.83	)%E		(1.39	)%		3.31	%		33.14	%		1.50	%		0.93	%E
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	2,169		$	2,480		$	3,109		$	1,672		$	374		$	222
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsF		1.11	%G		1.06	%		1.10	%		1.14	%		1.53	%G		3.85	%G
Expenses, net of reimbursements or recoupmentsF		1.11	%G		1.09	%		1.10	%		1.09	%		1.09	%G		1.09	%G
Net investment income (loss), before reimbursements or recoupments		(0.51	)%G		(0.60	)%		(0.57	)%		(0.73	)%		0.69	%G		(3.09	)%G
Net investment income (loss), net of reimbursements or recoupments		(0.51	)%G		(0.63	)%		(0.58	)%		(0.68	)%		1.13	%G		(0.33	)%G
Portfolio turnover rate		13	%E		19	%		37	%		25	%		1	%E		27	%I

^A Prior to the reorganization on February 24, 2012, the Institutional and Investor Classes were known as Class I and Class A, respectively.

^B For purposes of this calculation, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding for the period.

^C The Predecessor Fund calculated the change in undistributed net investment income per share by dividing the change in undistributed net investment income by average shares outstanding for the period.

^D 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.

^E Not annualized.

^F Expense ratios may exceed stated expense caps in Note 2 due in part to security lending expenses.

^G Annualized.

^H Commencement of operations.

^I Portfolio turnover rate is for the period from December 1, 2011 through November 30, 2012.

^J Amount represents less than $0.01 per share.

^K The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

69

American Beacon Stephens Mid Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	Investor Class
	Six Months			Year Ended December 31,									Six Months			Year Ended November 30,
	Ended June 30, 2016			2015			2014			2013			Ended Dec. 31, 2012			2012A			2011A
	(unaudited)
Net asset value, beginning of period	$	15.80		$	16.97		$	17.64		$	13.83		$	13.72		$	12.36		$	11.26
Income from investment operations:
Net investment income (loss)		(0.20	)		(0.32	)		(0.36	)		(0.08	)		0.02			(0.14	)B		(0.11	)C
Net gains from investments (both realized and unrealized)		2.16			0.04			0.89			4.58			0.17			1.50			1.21
Total income (loss) from investment operations		1.96			(0.28	)		0.53			4.50			0.19			1.36			1.10
Less distributions:
Dividends from net investment income		—			—			—			(0.01	)		—			—			—
Distributions from net realized gains		—			(0.89	)		(1.20	)		(0.68	)		(0.08	)		—			—
Return of capitalK		—			—			—			(0.00	)J		—			—			—
Total distributions		—			(0.89	)		(1.20	)		(0.69	)		(0.08	)		—			—
Redemption fees added to beneficial interestsJ		—			—			—			—			—			—			—
Net asset value, end of period	$	17.76		$	15.80		$	16.97		$	17.64		$	13.83		$	13.72		$	12.36
Total return D		(0.95	)%E		(1.63	)%		2.97	%		32.71	%		1.37	%E		11.00	%		9.77	%
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	12,861		$	14,815		$	19,552		$	31,912		$	18,585		$	18,092		$	20,034
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsF		1.38	%G		1.32	%		1.27	%		1.38	%		1.68	%G		1.67	%		1.91	%
Expenses, net of reimbursements or recoupmentsF		1.38	%G		1.35	%		1.38	%		1.37	%		1.37	%G		1.40	%		1.50	%
Net investment income (loss), before reimbursements or recoupments		(0.77	)%G		(0.85	)%		(0.77	)%		(0.98	)%		0.94	%G		(1.04	)%		(1.35	)%
Net investment income (loss), net of reimbursements or recoupments		(0.77	)%G		(0.89	)%		(0.88	)%		(0.97	)%		1.26	%G		(0.76	)%		(0.94	)%
Portfolio turnover rate		13	%E		19	%		37	%		25	%		1	%E		27	%		30	%

	A Class
				Year Ended December 31,									Six Months Ended Dec. 31, 2012
	Six Months Ended June 30, 2016			2015			2014			2013						February 24H to November 30, 2012
	(unaudited)
Net asset value, beginning of period	$	15.77		$	16.94		$	17.61		$	13.83		$	13.72		$	13.62
Income from investment operations:
Net investment income (loss)		(0.06	)		(0.20	)		(0.19	)		(0.10	)		0.02			(0.05	)
Net gains (losses) from investments (both realized and unrealized)		(0.02	)		(0.08	)		0.72			4.57			0.17			0.15
Total income (loss) from investment operations		(0.08	)		(0.28	)		0.53			4.47			0.19			0.10
Less distributions:
Dividends from net investment income		—			—			—			(0.01	)		—			—
Distributions from net realized gains		—			(0.89	)		(1.20	)		(0.68	)		(0.08	)		—
Return of capitalK		—			—			—			0.00			—			—
Total distributions		—			(0.89	)		(1.20	)		(0.69	)		(0.08	)		—
Redemption fees added to beneficial interestsJ		—			—			—			—			—			—
Net asset value, end of period	$	15.69		$	15.77		$	16.94		$	17.61		$	13.83		$	13.72
Total return D		(1.01	)%E		(1.63	)%		2.97	%		32.49	%		1.37	%E		0.73	%E
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	13,707		$	13,908		$	16,506		$	18,396		$	7,302		$	7,063
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsF		1.42	%G		1.36	%		1.45	%		1.57	%		1.81	%G		1.83	%G
Expenses, net of reimbursements or recoupmentsF		1.42	%G		1.39	%		1.45	%		1.49	%		1.49	%G		1.49	%G
Net investment income (loss), before reimbursements or recoupments		(0.81	)%G		(0.90	)%		(0.94	)%		(1.16	)%		0.86	%G		(1.04	)%G
Net investment income (loss), net of reimbursements or recoupments		(0.80	)%G		(0.93	)%		(0.94	)%		(1.09	)%		1.18	%G		(0.70	)%G
Portfolio turnover rate		13	%E		19	%		37	%		25	%		1	%E		27	%I

^A  Prior to the reorganization on February 24, 2012, the Institutional and Investor Classes were known as Class I and Class A, respectively.

^B  For purposes of this calculation, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding for the period.

^C  The Predecessor Fund calculated the change in undistributed net investment income per share by dividing the change in undistributed net investment income by average shares outstanding for the period.

^D  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.

^E  Not annualized.

^F  Expense ratios may exceed stated expense caps in Note 2 due in part to security lending expenses.

^G  Annualized.

^H  Commencement of operations.

^I  Portfolio turnover rate is for the period from December 1, 2011 through November 30, 2012.

^J  Amount represents less than $0.01 per share.

^K  The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

70

American Beacon Stephens Mid Cap Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)

	C Class
	Six			Year Ended December 31,									Six
	Months Ended June 30, 2016			2015			2014			2013			Months Ended Dec. 31, 2012			February 24H to November 30, 2012
	(unaudited)
Net asset value, beginning of period	$	15.28		$	16.57		$	17.38		$	13.75		$	13.63		$	13.62
Income from investment operations:
Net investment income (loss)		(0.35	)		(0.17	)		(0.27	)		(0.16	)		0.02			(0.04	)
Net gains (losses) from investments (both realized and unrealized)		5.38			(0.23	)		0.66			4.47			0.18			0.05
Total income (loss) from investment operations		5.03			(0.40	)		0.39			4.31			0.20			0.01
Less distributions:
Dividends from net investment income		—			—			—			(0.00	)J		—			—
Distributions from net realized gains		—			(0.89	)		(1.20	)		(0.68	)		(0.08	)		—
Return of capitalK		—			—			—			(0.00	)J		—			—
Total distributions		—			(0.89	)		(1.20	)		(0.68	)		(0.08	)		—
Redemption fees added to beneficial interestsJ		—			—			—			—			—			—
Net asset value, end of period	$	20.31		$	15.28		$	16.57		$	17.38		$	13.75		$	13.63
Total return D		(1.31	)%E		(2.46	)%		2.21	%		31.35	%		1.45	%E		0.07	%E
Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,533		$	2,123		$	1,902		$	1,626		$	302		$	147
Ratios to average net assets:
Expenses, before reimbursements or recoupmentsF		2.18	% G		2.11	%		2.22	%		2.28	%		2.68	%G		14.54	%G
Expenses, net of reimbursements or recoupmentsF		2.17	%G		2.14	%		2.20	%		2.24	%		2.24	%G		2.24	%G
Net investment income (loss), before reimbursements or recoupments		(1.57	)%G		(1.65	)%		(1.69	)%		(1.87	)%		0.15	%G		(13.65	)%G
Net investment income (loss), net of reimbursements or recoupments		(1.56	)%G		(1.68	)%		(1.68	)%		(1.84	)%		0.59	%G		(1.36	)%G
Portfolio turnover rate		13	%E		19	%		37	%		25	%		1	%E		27	%I

^A  Prior to the reorganization on February 24, 2012, the Institutional and Investor Classes were known as Class I and Class A, respectively.

^B  For purposes of this calculation, the change in undistributed net investment income per share was derived by dividing the change in undistributed net investment income by average shares outstanding for the period.

^C  The Predecessor Fund calculated the change in undistributed net investment income per share by dividing the change in undistributed net investment income by average shares outstanding for the period.

^D  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.

^E  Not annualized.

^F  Expense ratios may exceed stated expense caps in Note 2 due in part to security lending expenses.

^G  Annualized.

^H  Commencement of operations.

^I  Portfolio turnover rate is for the period from December 1, 2011 through November 30, 2012.

^J  Amount represents less than $0.01 per share.

^K  The return of capital is calculated based on outstanding shares at the time of distribution. Amounts are less than $0.01 per share.

71

Disclosure Regarding the Board of Trustees’ Approval of the Management 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 Bahl & Gaynor Small Cap Growth Fund (“Bahl & Gaynor Fund”), the American Beacon Bridgeway Large Cap Value Fund (“Bridgeway Fund”), the American Beacon Holland Large Cap Growth Fund (“Holland Fund”), the American Beacon Stephens Mid-Cap Growth Fund (“Stephens Mid-Cap Fund”) and the American Beacon Stephens Small Cap Growth Fund (“Stephens Small Cap Fund”) (collectively, the “Funds”);

(2) a new Investment Advisory Agreement among the Manager, the Trust, on behalf of the Bahl & Gaynor Fund, and Bahl & Gaynor Investment Counsel, Inc. (“Bahl & Gaynor”);

(3) a new Investment Advisory Agreement among the Manager, the Trust, on behalf of the Bridgeway Fund, and Bridgeway Capital Management, Inc. (“Bridgeway”);

(4) a new Investment Advisory Agreement among the Manager, the Trust, on behalf of the Holland Fund, and Holland Capital Management LLC (“Holland”); and

(5) a new Investment Advisory Agreement among the Manager, the Trust, on behalf of the Stephens Mid-Cap Fund and the Stephens Small Cap Fund, and Stephens Investment Management Group, LLC (“Stephens”).

Collectively, the new Investment Advisory Agreements are hereinafter referred to as the “New Advisory Agreements,” and Bahl & Gaynor, Bridgeway, Holland and Stephens 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 Funds and the current Investment Advisory Agreements (“Current Advisory Agreements”) among the Manager, Bahl & Gaynor and the Trust, on behalf of the Bahl & Gaynor Fund, the Manager, Bridgeway and the Trust, on behalf of the Bridgeway Fund, the Manager, Holland and the Trust, on behalf of the Holland Fund, and the Manager, Stephens and the Trust, on behalf of the Stephens Mid-Cap Fund and the Stephens Small-Cap 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

72

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

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;

• 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;

73

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

74

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

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.

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, Bahl & Gaynor’s fee schedules for the Bahl & Gaynor Fund, Bridgeway’s fee schedules for the Bridgeway Fund, Holland’s fee schedule for the Holland Fund, and Stephens’ fee schedule for the Stephens Mid-Cap Fund and the Stephens Small Cap 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, Bahl & Gaynor’s relationship with the Bahl & Gaynor Fund, Bridgeway’s relationship with the Bridgeway Fund, Holland’s relationship with the Holland Fund, and Stephens’ relationship with the Stephens Mid-Cap Fund and the Stephens Small Cap 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, Bahl & Gaynor, Bridgeway, Holland, or Stephens, as that term is defined in the 1940 Act, concluded that the management and investment advisory fee rates to be paid by the Bahl & Gaynor Fund, the Bridgeway Fund, the Holland Fund, the Stephens Mid-Cap Fund and the Stephens Small Cap Fund are fair and reasonable and that the approval of the New

75

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

Agreements is in the best interests of the Bahl & Gaynor Fund, the Bridgeway Fund, the Holland Fund, the Stephens Mid-Cap Fund and the Stephens Small Cap Fund, and approved the New Agreements.

Disclosure Regarding Approval of Management Agreement

At its March 3-4, 2016 meetings, the Board considered the approval of a new Management Agreement (“New Agreement”) between the Manager and the Trust on behalf of each Fund. The New Agreement combines the terms of each Fund’s prior management agreement and administration agreement and establishes separate standardized fee schedules for four categories of Funds, which include fee schedule breakpoints. The Board considered that, with respect to each Fund, the single management fee rate under the New Agreement does not exceed the former combined investment management and administrative services fee rates, and there is no change to the investment management or administrative services provided or the aggregate fees charged to the Fund.

The Board reviewed information provided by the Manager in response to requests from the Board in connection with the Board’s consideration of the New Agreement. The Board also considered information that had been provided by the Manager to the Board at its November 9-10, 2015 meetings when the Board had met with various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the New Agreement. Legal counsel to the independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of the Management Agreement. The memorandum explained the regulatory requirements surrounding the Trustees’ process for evaluating investment advisors and the terms of investment advisory contracts.

The Board determined that it did not need to consider certain factors that it typically considers during its review of the Funds’ management agreements because the Board had reviewed, among other matters, the nature, extent and quality of services being provided to the Funds by the Manager at in-person meetings held on June 2-3, 2015, when it reviewed the prior management agreement or, in connection with the initial approval of that agreement. The Board noted that it previously had considered and approved the prior management agreement at an in-person meeting held on November 12, 2014, at telephonic meetings held on November 26, 2014 and December 6, 2014 and at an in-person meeting held on December 10, 2014.

In connection with the Board’s review of the New Agreement, the Board considered, among other things, information provided by the Manager regarding the terms of the New Agreement and the relevant differences between the New Agreement and the prior management agreement and administration agreement. The Board considered the Manager’s representations that the New Agreement would not reduce or modify in any way the nature or level of the advisory or administration services provided to the Funds. The Board also considered that the fee rate payable by a Fund under the New Agreement would not exceed the aggregate fee rate payable by the Fund under the prior management agreement and administration agreement. Additionally, the Board considered the Manager’s representation that there would be no change in the professional personnel who primarily perform management and administrative services for the Funds and the Manager’s representations regarding disclosure of the New Agreement to new and existing shareholders. The Board also considered that an independent consultant retained to assist the Board in evaluating the Manager’s proposal to combine the prior management agreement and administration agreement had concluded that the proposal was reasonable and in the best interest of shareholders.

Based on the various considerations described above, the Board, including a majority of Trustees who are not “interested persons” of the Funds or the Manager, as that term is defined in the 1940 Act: (1) concluded that the proposed management fee is fair and reasonable with respect to each Fund; (2) determined that each Fund and its shareholders would benefit from the Manager’s continued management of the Fund; and (3) approved the New Agreement on behalf of each Fund.

76

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

Disclosure Regarding the Board of Trustees’ Renewal and Approval of the Management Agreements and Investment Advisory Agreements of the Funds

At in-person meetings held on May 17, 2016 and June 8, 2016 (collectively, the “Meetings”), the Board considered and then, at its June 8, meeting, approved the renewal of:

(1) the Management Agreement between the Manager and the Trust on behalf of each Fund;

(2) the Investment Advisory Agreement among the Manager, the Trust, on behalf of the Bahl & Gaynor Fund, and Bahl & Gaynor;

(3) the Investment Advisory Agreement among the Manager, the Trust, on behalf of the Bridgeway Fund, and Bridgeway;

(4) the Investment Advisory Agreement among the Manager, the Trust, on behalf of the Holland Fund, and Holland; and

(5) the Investment Advisory Agreement among the Manager, the Trust, on behalf of the Stephens Mid-Cap Fund and the Stephens Small Cap Fund, and Stephens (“Stephens”).

Each of the Investment Advisory Agreements are hereinafter referred to as the “Investment Advisory Agreement,” and Bahl & Gaynor, Bridgeway, Holland and Stephens are hereinafter each referred to as a “subadvisor.” The Management Agreement and the Investment Advisory Agreements are collectively referred to herein as the “Agreements.” In preparation for the Board to consider the renewal of these Agreements, the Board undertook steps to gather and consider information furnished by the Manager, the subadvisors, Broadridge, Inc. (“Broadridge”) and Morningstar, Inc. (“Morningstar”). The Board, with the assistance of independent legal counsel, requested and received certain relevant information from the Manager and each subadvisor.

In advance of the Meetings, the Board’s Investment Committee and/or the Manager coordinated the production of information from Broadridge and Morningstar regarding the performance, fees and expenses of the Funds as well as information from the Manager and the subadvisors. At the Meetings, the Board considered the information provided. The Board noted that as a result of the acquisition of Lipper, Inc. (“Lipper”) by Broadridge, Lipper expense and performance information was provided by Broadridge. Further, the Board took into consideration information furnished for the Board’s review and consideration throughout the year at regular meetings of the Board and its committees, as well as information specifically prepared in connection with the renewal process.

In connection with the Board’s consideration of the Management Agreement and each Investment Advisory Agreement, the Trustees received and evaluated such information as they deemed necessary. The information requested on behalf of the Board included, among other information, the following materials. References herein to the “firm” refer to the Manager and/or each applicable subadvisor.

• comparisons of the performance of an appropriate share class of each Fund to comparable investment companies and appropriate benchmark indices, including peer group averages and performance analyses provided by Broadridge and Morningstar, and to the performance of any similar accounts managed by the firm;

• comparisons of each Fund’s management and subadvisory fee rates and expense ratio with the management fee rates paid by comparable mutual funds, including peer group averages and fee and expense analyses provided by Broadridge and Morningstar, and the advisory fee rates charged to other clients for which similar services are provided;

77

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

• a description of any applicable fee waivers and/or expense reimbursements in place for each Fund during the past year, and any proposed changes to the expense caps;

• the Manager’s profitability with respect to the services that it provided to each Fund;

• any actual or anticipated economies of scale in relation to the services the firm provides or will provide to each Fund and whether the current fee rates charged or to be charged to each Fund reflect these economies of scale for the benefit of the Fund’s investors;

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

• information regarding the securities lending, cash management, administrative and accounting-related services that the Manager provides to certain Funds and the fees that the Manager receives for such services; and

• information regarding a firm’s financial condition, the personnel of the Manager who are assigned primary responsibility for managing the Funds, staffing levels, portfolio managers’ compensation, disaster recovery plans, insurance coverage, material pending litigation, code of ethics, compliance matters, trading activities, and actual or potential conflicts of interest that the firm experiences, or anticipates that it will experience, in providing services to the Funds.

The Board noted that the Manager provides management and administrative services to the Funds pursuant to the Management Agreement. The Board considered that prior to May 29, 2016, the Manager provided management and administrative services to the Funds pursuant to separate agreements. The Board noted, in this regard, that many mutual funds have separate contracts governing both types of services, and observed that the actual management fee rates provided by Broadridge for peer group funds reflect the combined advisory and administrative expenses, reduced by any waivers and/or reimbursements.

Certain firms may not have been able to, or opted not to, provide information in response to certain information requests, in which case the Board conducted its evaluation of those firms based on information that was provided. In such cases, the Board determined that the omission of any such information was not material to its considerations. For each Fund with more than one class of shares, the class of shares used for comparative performance purposes was the share class with the lowest expenses available for purchase by the general public, which, in most cases, was the Institutional Class. The Board also considered that the use of Institutional Class performance generally facilitates a meaningful comparison for expense and performance purposes.

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

I. Considerations With Respect to the Renewal of the Management Agreement and Each Investment Advisory Agreement

In determining whether to renew the Management Agreement and each Investment Advisory Agreement on behalf of the Funds, the Trustees considered the best interests of each Fund separately. While the

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

Management Agreement and the Investment Advisory Agreements for all of the Funds were considered at the Meetings, the Board considered each Fund’s investment management and subadvisory relationships separately.

In each instance, the Board considered, among other things, the following factors: (1) the nature, extent and quality of the services provided; (2) the investment performance of a Fund and, as applicable, each subadvisor for a Fund; (3) the costs incurred by the Manager 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 subadvisor 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 subadvisor from their relationship with a Fund. The Trustees posed questions to various management personnel of the Manager regarding certain key aspects of the materials submitted in support of the renewal.

Nature, Extent and Quality of Services. With respect to the renewal of the Management Agreement, the Board considered, among other factors: each Fund’s long-term performance and the length of service of key investment personnel at the Manager; the cost structure of the Funds; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Funds; the Manager’s commitment to enhance the Funds’ product line and increase assets in the Funds; the Manager’s quality of services; the Manager’s active role in monitoring and, as appropriate, recommending additional or replacement subadvisors; the Manager’s commitment to training employees; and the Manager’s efforts to retain key employees and maintain staffing levels.

With respect to the renewal of each Investment Advisory Agreement, the Trustees considered the level of staffing and the size of the subadvisor. The Board also considered the adequacy of the resources committed to the Funds by each subadvisor, and whether those resources were commensurate with the needs of the Funds and are sufficient to sustain appropriate levels of performance and compliance needs. In this regard, the Board considered the financial stability of each subadvisor. The Board also considered the subadvisors’ representations regarding their compliance programs and codes of ethics. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and each subadvisor were appropriate for each Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for each Fund.

Investment Performance. The Board evaluated the comparative information provided by Broadridge and the Manager regarding each Fund’s investment performance relative to its Lipper performance universe, Lipper performance group, and/or benchmark index(es) as well as the Fund’s Morningstar rating. The Board considered the information provided by Broadridge regarding its independent peer selection methodology to select all Lipper performance groups and universes. The Board also considered that the performance groups and universes selected by Broadridge may not provide appropriate comparisons for certain Funds. In addition, the Board considered the performance reports and discussions with management at Board and Committee meetings throughout the year. The Board also considered in each instance the Manager’s recommendation to continue to retain each subadvisor. A discussion regarding the Board’s considerations with respect to each Fund’s performance appears below under “Additional Considerations and Conclusions with Respect to Each Fund.”

Costs of the Services Provided to the Funds and the Profits Realized by the Manager from its Relationship with the Funds. In analyzing the cost of services and profitability of the Manager, the Board considered the revenues earned and the expenses incurred by the Manager, before and after the payment of distribution-related expenses by the Manager. The profits or losses were noted at both an aggregate level for all Funds and at an individual Fund level, with some Funds being profitable for the Manager and with the Manager sustaining losses with respect to other Funds. Although the Board noted that, in certain cases, the fee rates paid by other clients of the Manager are lower than the fee rates paid by the Funds, the Manager represented that, among other matters, the difference is attributable to the fact that the Manager does not

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

perform administrative services for non-investment company clients and reflects the greater level of responsibility and regulatory requirements associated with managing the Funds.

The Board also noted that the Manager proposed to continue the expense waivers and reimbursements for certain Funds and share classes that were in place during the last fiscal year. The Board further considered that, with respect to each Fund, the Management Agreement provides for the Manager to receive a management fee comprised of an annualized fee that is retained by the Manager. In addition, the Board considered that the Manager receives management fees for overseeing the securities lending program on behalf of certain Funds. The Board also noted that certain share classes of the Funds maintain higher expense ratios in order to compensate third-party financial intermediaries.

In analyzing the fee rates charged by each subadvisor in connection with its investment advisory services to the Fund, the Board considered that, in many cases, the Manager has negotiated the lowest fee rate a subadvisor charges for any comparable client accounts. The Board did not request profitability data from the subadvisors because the Board did not view this data as imperative to its deliberations given the arm’s-length nature of the relationship between the Manager and the subadvisors with respect to the negotiation of subadvisory fee rates. In addition, the Board noted that subadvisors may not account for their profits on an account-by-account basis and those that do likely employ different methodologies in connection with these calculations.

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

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

In addition, the Board noted the Manager’s representation that the Management Agreement contains fee schedule breakpoints at higher asset levels with respect to each Fund. The Board also considered the Manager’s representation that many of the Funds benefit from economies of scale because comparably low fee rate levels are reflected in the current fee rates the Manager charges. The Board further noted the Manager’s representation that many of the Funds benefit from these comparably low fee rate levels despite not having yet reached an asset size at which economies of scale would traditionally be considered to exist. Based on the foregoing information, the Board concluded that the Manager and subadvisor fee rate schedules for each Fund provide for a reasonable sharing of benefits from any economies of scale with the Funds.

Benefits Derived from the Relationship with the Funds. The Board considered the “fall-out” or ancillary benefits that accrue to the Manager and/or the subadvisors as a result of the advisory relationships with the Funds, including greater exposure in the marketplace with respect to the Manager’s or subadvisor’s investment process and expanding the level of assets under management by the Manager and the subadvisors. In addition, the Board noted that certain subadvisors benefit from soft dollar arrangements for third party and proprietary research.

In addition, the Manager noted that the Funds also derive benefits from their association with the Manager. Specifically, the Board noted the Manager’s representation that it provides services to most Funds at a lower than industry average cost. The Board considered that certain subadvisors reimburse the Manager for certain costs relating to distribution activities for the Funds, as well as representations by all such subadvisors

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

that they would not reduce their fee rates in lieu of providing such reimbursements. Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager and the subadvisors by virtue of their relationships with the Funds appear to be fair and reasonable

Additional Considerations and Conclusions with Respect to Each Fund

The performance comparisons below were made versus each Fund’s Lipper performance universe and Lipper performance group, with the 1^st Quintile representing the top twenty percent of the universe or group based on performance and the 5^th Quintile representing the bottom twenty percent of the universe or group based on performance. References below to each Fund’s Lipper performance group and Lipper performance universe are to the respective group or universe of comparable mutual funds included in the analysis provided by Broadridge. A Lipper performance group consists of the Fund and a representative sample of funds with similar investment classifications and objectives as the Fund, as selected by Broadridge. A Lipper performance universe is an expansion of the performance group, providing a broader view of performance across the Fund’s investment classification/objective and allowing for a more extensive comparison. In reviewing the performance, the Trustees viewed longer-term performance over a full market cycle, typically five years or longer, if available, as the most important consideration, because relative performance over shorter periods may be significantly impacted by market or economic events that do not reflect manager skill.

The expense comparisons below were made versus each Fund’s Lipper expense universe and Lipper expense group, with the 1^st Quintile representing the top twenty percent of the universe or group based on lowest total expense and the 5^th Quintile representing the bottom twenty percent of the universe or group based on highest total expense. References below to each Fund’s expense group and expense universe are to the respective group or universe of comparable mutual funds included in the analysis by Broadridge. A Lipper expense group consists of the Fund and a representative sample of funds with similar operating structures and asset sizes, as selected by Broadridge. A Lipper expense universe includes all funds in the investment classification/objective with a similar load type to the share class of the Fund included in the Lipper comparative information and provides a broader view of expenses across the Fund’s investment classification/objective. The Trustees also considered a Fund’s Morningstar fee level category. In reviewing expenses, the Trustees considered the positive impact of fee waivers where applicable and the Manager’s agreement to continue the fee waivers. In addition, information regarding the subadvisors’ use of soft dollars was requested from the Manager and was considered by the Trustees.

Additional Considerations and Conclusions with Respect to the American Beacon Bahl & Gaynor Small Cap Growth Fund

In considering the renewal of the Management Agreement and the Investment Advisory Agreement with Bahl & Gaynor for the Bahl & Gaynor Fund, the Trustees considered the following additional factors:

Lipper Total Expense Analysis and Morningstar Fee Level Ranking

Compared to Lipper Expense Universe	2nd Quintile
Compared to Lipper Expense Group	1st Quintile
Morningstar Fee Level Ranking - Institutional Class	Average Expense Ratio

Lipper Fund Performance Analysis (one-year period ended March 31, 2016)

Compared to Lipper Performance Universe	1st Quintile
Compared to Lipper Performance Group	1st Quintile

(1) Information provided by Bahl & Gaynor regarding fee rates charged for managing accounts in the same strategy as the Fund; and (2) the Manager’s recommendation to continue to retain the subadvisor based upon, among other factors, the relatively brief period that the Fund has been in operation.

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

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

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

In considering the renewal of the Management Agreement and Investment Advisory Agreement with Bridgeway for the Bridgeway Fund, the Trustees considered the following additional factors:

Lipper Total Expense Analysis and Morningstar Fee Level Ranking

Compared to Lipper Expense Universe	2nd Quintile
Compared to Lipper Expense Group	4th Quintile
Morningstar Fee Level Ranking - Institutional Class	Average Expense Ratio

Lipper Fund Performance Analysis (five-year period ended March 31, 2016)

Compared to Lipper Performance Universe	1st Quintile
Compared to Lipper Performance Group	1st Quintile

(1) The Fund acquired all of the assets of the Bridgeway Large Cap Value Fund, a series of Bridgeway Funds, Inc. (“Acquired Fund”), on February 3, 2012, and the Fund’s performance prior to that date is that of the Acquired Fund; (2) representations by Bridgeway that, for fee rate comparison purposes, other than another account managed for the Manager in the same strategy and at the same fee as charged to the Fund, it does not manage other accounts in the same strategy as the Fund; and (3) the Manager’s recommendation to continue to retain the subadvisor.

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

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

In considering the renewal of the Management Agreement and Investment Advisory Agreement with Holland for the Holland Fund, the Trustees considered the following additional factors:

Lipper Total Expense Analysis and Morningstar Fee Level Ranking

Compared to Lipper Expense Universe	3rd Quintile
Compared to Lipper Expense Group	2nd Quintile
Morningstar Fee Level Ranking - Institutional Class	Above Average Expense Ratio

Lipper Fund Performance Analysis (five-year period ended March 31, 2016)

Compared to Lipper Performance Universe	2nd Quintile
Compared to Lipper Performance Group	3rd Quintile

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

(1) The Fund acquired all of the assets of the Lou Holland Growth Fund, a series of the Forum Funds (“Acquired Fund”), on March 23, 2012, and the Fund’s performance prior to that date is that of the Acquired Fund; (2) information provided by Holland regarding fee rates charged for managing accounts in the same strategy as the Fund; and (3) the Manager’s recommendation to continue to retain the subadvisor.

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

Additional Considerations and Conclusions with Respect to the American Beacon Stephens Mid-Cap Growth Fund

In considering the renewal of the Management Agreement and the Investment Advisory Agreement with Stephens for the Stephens Mid-Cap Fund, the Trustees considered the following additional factors:

Lipper Total Expense Analysis and Morningstar Fee Level Ranking

Compared to Lipper Expense Universe	3rd Quintile
Compared to Lipper Expense Group	3rd Quintile
Morningstar Fee Level Ranking - Institutional Class	Above Average Expense Ratio

Lipper Fund Performance Analysis (five-year period ended March 31, 2016)

Compared to Lipper Performance Universe	3rd Quintile
Compared to Lipper Performance Group	4th Quintile

(1) The American Beacon Stephens Mid-Cap Growth Fund acquired all of the assets of the Stephens Mid-Cap Growth Fund, a series of Professionally Managed Portfolios (“Acquired Fund”), on February 24, 2012, and the Fund’s performance prior to that date is that of the Acquired Fund; (2) information provided by Stephens regarding fee rates charged for managing accounts in the same strategy as the Fund; (3) explanations from the Manager and the subadvisor regarding the subadvisor’s underperformance relative to its benchmark; and (4) the Manager’s recommendation to continue to retain the subadvisor.

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

Additional Considerations and Conclusions with Respect to the American Beacon Stephens Small Cap Growth Fund

In considering the renewal of the Management Agreement and the Investment Advisory Agreement with Stephens for the Stephens Small Cap Fund, the Trustees considered the following additional factors:

Lipper Total Expense Analysis and Morningstar Fee Level Ranking

Compared to Lipper Expense Universe	3rd Quintile
Compared to Lipper Expense Group	4th Quintile
Morningstar Fee Level Ranking - Institutional Class	Above Average Expense Ratio

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

Lipper Fund Performance Analysis (five-year period ended March 31, 2016)

Compared to Lipper Performance Universe	3rd Quintile
Compared to Lipper Performance Group	4th Quintile

(1) The Fund acquired all of the assets of Stephens Small Cap Growth Fund, a series of Professionally Managed Portfolios (“Acquired Fund”), on February 24, 2012, and the Fund’s performance prior to that date is that of the Acquired Fund; (2) information provided by Stephens regarding fee rates charged for managing accounts in the same strategy as the Fund; (3) explanations from the Manager and the subadvisor regarding the subadvisor’s underperformance relative to its benchmark, including that, while the subadvisor’s process is predicated on earnings and earnings growth, slower growth stocks and stocks with no earnings outperformed during the period; and (4) the Manager’s recommendation to continue to retain the subadvisor.

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

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Delivery of Documents

eDelivery is NOW AVAILABLE- Stop traditional mail delivery and receive your

shareholder reports and summary prospectus on-line. Sign up at

www.americanbeaconfunds.com

If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the 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	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. 20549-2736. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling 1-800-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available on 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 Bahl & Gaynor Small Cap Growth Fund, American Beacon Bridgeway Large Cap Value Fund, American Beacon Holland Large Cap Growth Fund, American Beacon Stephens Small Cap Growth Fund, and American Beacon Stephens Mid-Cap Growth Fund are service marks of American Beacon Advisors, Inc.

SAR 6/16

ITEM 2. CODE OF ETHICS.

The Trust did not amend the code of ethics that applies to its principal executive and financial officers (the “Code”) nor did it grant any waivers to the provisions of the Code during the period covered by the shareholder reports presented in Item 1.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not Applicable.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

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) Not applicable.

(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: September 9, 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: September 9, 2016

By /s/ Melinda G. Heika

Melinda G. Heika

Treasurer

American Beacon Funds

Date: September 9, 2016