American Beacon Balanced Fund NCSRS 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: January 31, 2016

Date of reporting period: July 31, 2016

ITEM 1.

REPORTS TO STOCKHOLDERS.

LOGO

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.

ACADIAN EMERGING MARKETS MANAGED VOLATILITY FUND Investing in foreign and emerging market securities may involve heightened risk due to currency fluctuations and economic and political risks. Investing in lower volatility securities may produce more modest gains than other stock funds as a trade-off for the potentially lower downside risk. The use of futures contracts for cash management may subject the Fund to losing more money than invested.

SGA GLOBAL GROWTH FUND Investing in foreign and emerging market 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. 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 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 advisors’ strategies and the Funds’ 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		July 31, 2016

Contents


President’s Message			1

Performance Overviews			2

Expense Examples			6

Schedules of Investments:

Acadian Emerging Markets Managed Volatility Fund			7

SGA Global Growth Fund			7

Financial Statements			19

Notes to the Financial Statements			22

Financial Highlights

Acadian Emerging Markets Managed Volatility Fund			38

SGA Global Growth Fund			41

Disclosure Regarding Approval of the Management and Investment Advisory Agreements			44

Additional Fund Information			Back Cover

President’s Message


		Dear Shareholders, During the six-month period ended July 31, 2016, patchy economic growth and the “Brexit” referendum set the stage for volatile markets around the globe. China’s slowing growth escalated concerns for global markets and, as a result, many central banks decided to continue or expand their economic stimulation policies. In March 2016, the Bank of Japan pushed its rates into negative territory and the European Central Bank cut a key rate to zero. Then on Friday, June 24, 2016, Great Britain’s announcement that 52% of its voters favored leaving the European Union shook global financial markets. The Brexit referendum fallout was swift and significant. British Prime Minister David Cameron announced his resignation, the British pound sterling nose-dived approximately 12% against the dollar, the euro fell 1.4% against the dollar and the price of gold climbed 4.7% to a two-year high. Global markets reacted to the Brexit news with a selling frenzy. In the U.S., the Dow Jones industrial average dropped 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 sank 4.1%. That very 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, investors appeared to be opportunistically willing to take on some risk. By June 30, 2016 – barely a week after the historic vote – some markets were nearing their pre-Brexit levels and even ended the month in positive territory. In July, Theresa May succeeded Mr. Cameron as the U.K.’s prime minister and most central banks put Brexit concerns on hold as they discussed taking action to help protect their economies against incurring any potentially damaging blows. This coupled with a mostly positive corporate earnings season caused the markets to continue their rally.

For the period under review, the MSCI Emerging Markets Index returned 19.52% and the MSCI All Country World Index (which represents the equity market performance of both developed and emerging markets) returned 12.37%.

For the six months ended July 31, 2016:

•

American Beacon Acadian Emerging Markets Managed Volatility Fund (Investor Class) returned 12.98%.

•

American Beacon SGA Global Growth Fund (Investor Class) returned 16.98%.

At American Beacon, we pride ourselves on offering a broad range of mutual funds to help 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 our website at www.americanbeaconfunds.com.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

The Investor Class of the American Beacon Acadian Emerging Markets Managed Volatility Fund (the “Fund”) returned 12.98% for the six months ended July 31, 2016. The Fund underperformed the MSCI Emerging Markets Index (the “Index”) return of 19.52% for the period.

Total Returns for the Period ended July 31, 2016


	Ticker		6 Months*			1 Year			Since Inception 9/27/2013
Institutional Class (1,3)		ACDIX		13.16	%		-5.16	%		-1.18	%
Y Class (1,3)		ACDYX		13.19	%		-5.30	%		-1.26	%
Investor Class (1,3)		ACDPX		12.98	%		-5.52	%		-1.52	%
A Class with sales charge (1,3)		ACDAX		6.44	%		-11.03	%		-3.61	%
A Class without sales charge (1,3)		ACDAX		12.95	%		-5.60	%		-1.58	%
C Class with sales charge (1,3)		ACDCX		11.64	%		-7.25	%		-2.32	%
C Class without sales charge (1,3)		ACDCX		12.64	%		-6.25	%		-2.32	%
MSCI Emerging Markets Index (2)				19.52	%		-0.75	%		-2.32	%

*	Not Annualized

Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please 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 inception. Performance prior to waiving fees was lower than the actual returns shown since inception. A Class shares have a maximum sales charge of 5.75%. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.

2.	The MSCI Emerging Markets Index is a market capitalization weighted index composed of companies that are representative of the market structure of developing countries in Latin America, Asia, Eastern Europe, the Middle East and Africa. One cannot directly invest in an index.

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 1.69%, 1.78%, 1.99%, 2.11% and 2.88%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

The Fund underperformed the Index over the six-month period due to poor stock selections and country allocation.

Stock selections in Brazil, Hong Kong, and Taiwan led to the Fund’s relative underperformance for the period. Stock selections in Turkey mitigated some of the impact, adding to the Fund’s relative return. In Brazil, detractors included Telefonica Brasil S.A. Pref (up 23.4%) and Ambev SA (up 25.9%). Within Hong Kong, Want Want China Holdings Ltd (down 5.7%), and Tingyi (Cayman Isln) Hldg Co (down 21.3%) detracted from the Fund’s relative returns. In Taiwan, detractors included The Shanghai Commercial + SA (up 2.1%) and Taichung Commercial Bank (up 4.7%). The Fund benefited from holding Arcelik A.S. (up 34.7%) within Turkey.

Relative contribution from country allocation was negative for the six-month period, primarily due to underweighting Brazil (up 74.0%), and overweighting Malaysia (up 3.0%) as well as Mexico (up 4.2%). Underweighting China (up 13.4%) benefited the Fund’s relative performance during the period.

The Fund’s basic philosophy remains focused on investing in a well-diversified portfolio of low volatility stocks that aims to maximize risk-adjusted returns.

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Performance Overview

July 31, 2016 (Unaudited)


Top Ten Holdings (% Net Assets)
Samsung Electronics Co. Ltd.		1.1
AVI Ltd.		1.0
China Communications Services Corp., Ltd. H		1.0
China Mobile Ltd.		1.0
First Financial Holding Co., Ltd.		1.0
Hindustan Unilever Ltd.		1.0
Industrial & Commercial Bank of China Ltd. H		1.0
SK Hynix, Inc.		1.0
Tata Consultancy Services Ltd.		1.0
Tencent Holdings Ltd.		1.0

Total Fund Holdings	382

Sector Allocation (% Equities)
Consumer Staples		21.2
Consumer Discretionary		15.2
Telecommunication Services		14.9
Financials		14.2
Information Technology		9.5
Industrials		7.3
Utilities		7.1
Health Care		6.4
Materials		2.5
Energy		1.7

Country Allocation (% Equities)
Hong Kong/China		19.5
India		12.0
South Korea		11.4
Mexico		8.7
Malaysia		7.8
Taiwan		7.4
South Africa		5.4
Russia		4.5
Thailand		4.3
Chile		3.7
Brazil		3.4
Poland		2.7
Turkey		2.1
Indonesia		1.8
Philippines		1.8
Hungary		1.5
Netherlands		0.9
Cayman Islands		0.3
Czech Republic		0.3
Colombia		0.2
Egypt		0.2
Peru		0.1

American Beacon SGA Global Growth Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

The Investor Class of the American Beacon SGA Global Growth Fund (the “Fund”) returned 16.98% for the six months ended July 31, 2016. The Fund outperformed the MSCI All Country World Index (the “Index”) return of 12.37% for the period.

Total Returns for the Period ended July 31, 2016


	Ticker		6 Months*			1 Year			3 Years			5 Years			Since Inception (12/31/10)
Institutional Class (1,7)		SGAGX		17.19	%		10.50	%		10.45	%		11.19	%		10.58	%
Y Class (1,2,7)		SGAYX		17.16	%		10.38	%		10.34	%		11.12	%		10.52	%
Investor Class (1,3,7)		SGAPX		16.98	%		10.03	%		10.05	%		10.95	%		10.37	%
A Class with sales Charge (1,4,7)		SGAAX		10.22	%		3.70	%		7.85	%		9.61	%		9.18	%
A Class without sales charge (1,4,7)		SGAAX		16.92	%		10.04	%		10.00	%		10.92	%		10.34	%
C Class with sales charge (1,5,7)		SGACX		15.57	%		8.20	%		9.24	%		10.43	%		9.93	%
C Class without sales charge (1,5,7)		SGACX		16.57	%		9.20	%		9.24	%		10.43	%		9.93	%
MSCI All Country World Index (6)				12.37	%		-0.44	%		5.87	%		8.32	%		6.46	%
MSCI All Country World Growth Index (6)				12.18	%		0.11	%		7.86	%		9.17	%		7.52	%

*	Not Annualized

Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. A portion of the fees charged to each Class of the Fund has been waived since inception. Performance prior to waiving fees was lower than the actual returns shown since inception.

Fund performance for the five-year and since inception periods represent the total returns achieved by the Institutional Class from 12/31/10 up to 10/4/13, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 12/31/10.

Fund performance for the five-year and since inception periods represent the total returns achieved by the Institutional Class from 12/31/10 up to 10/4/13, the inception date of the Investor Class, and the returns of the Investor Class since its inception. Expenses of the Investor Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Investor Class been in existence since 12/31/10.

Fund performance for the five-year and since inception periods represent the total returns achieved by the Institutional Class from 12/31/10 up to 10/4/13, 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 12/31/10. The maximum sales charge for A Class is 5.75%.

Fund performance for the five-year and since inception periods represent the total returns achieved by the Institutional Class from 12/31/10 up to 10/4/13, 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 12/31/10. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase.

The MSCI All Country World Index (“ACWI”) is a free float-adjusted, market capitalization weighted index that is designed to measure the equity market performance of developed and emerging markets. The MSCI All Country World Growth Index is designed to measure equity market performance of companies with higher growth values in developed and emerging markets. One cannot directly invest in an index.

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 2.63%, 2.73%, 3.09%, 3.06% and 3.77%, 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 over the six-month period due to stock selection and country allocation.

Stock selections in the United States were the leading contributor to the Fund’s relative outperformance over the six-month period, including Mercadolibre Inc. (up 57.6%), The Priceline Group Inc. (up 28.7%), and Fleetcor Technologies Inc. (up 34.6%). Stock Selection in the United Kingdom also added value to the Fund’s relative performance, led by Aon PLC (up 30.1%) and Arm Holdings PLC (up 158.6%). Stock selection in South Korea, including Amorepacific Corp (up 3.1%), and LG Household & Health Care (up 8.0%) detracted from relative performance.

American Beacon SGA Global Growth Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

From a country allocation perspective, overweighting Brazil (up 74.0%) and South Africa (up 31.4%) contributed positively to relative performance, though null weighting Canada (up 21.9%) detracted for the period.

The Fund’s basic philosophy remains focused on investing in low-risk companies that offer predictable earnings and cash flow growth over the long term.


Top Ten Holdings (% Net Assets)
SAP AG, Sponsored ADR		4.2
Danone S.A.		3.9
Novo Nordisk A.S.		3.8
Tencent Holdings Ltd.		3.8
AIA Group Ltd.		3.7
Visa, Inc.		3.7
Amgen, Inc.		3.4
Colgate-Palmolive Co.		3.2
Regeneron Pharmaceuticals, Inc.		3.2
Core Laboratories N.V.		3.1

Total Fund Holdings	35

Sector Allocation (% Equities)
Information Technology		35.1
Consumer Staples		21.9
Health Care		14.3
Consumer Discretionary		13.3
Financials		7.0
Energy		6.3
Industrials		2.1

Country Allocation (% Equities)
United States		56.3
Hong Kong/China		8.1
Germany		4.5
France		4.2
Denmark		4.0
Netherlands		3.3
India		3.0
South Korea		2.6
Japan		2.2
South Africa		2.2
Argentina		2.1
Bermuda		2.0
Brazil		2.0
Mexico		2.0
Australia		1.5

American Beacon Funds^SM

Expense Examples

July 31, 2016 (Unaudited)

Fund Expense Example

As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, such as sales charges (loads) on purchase payments and redemption fees, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the 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 February 1, 2016 through July 31, 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 Fund through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

The “Hypothetical” lines of the table provide information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratio and an assumed 5% per year rate of return before expenses (not the Funds’ actual return). You may compare the ongoing costs of investing in the Funds 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 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.

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

American Beacon Funds^SM

Expense Examples

July 31, 2016 (Unaudited)

Acadian Emerging Markets Managed Volatility Fund


	Beginning Account Value 2/1/2016		Ending Account Value 7/31/2016		Expenses Paid During Period 2/1/2016-7/31/2016*
Institutional Class
Actual	$	1,000.00	$	1,131.58	$	7.15
Hypothetical**	$	1,000.00	$	1,018.16	$	6.77
Y Class
Actual	$	1,000.00	$	1,131.89	$	7.69
Hypothetical**	$	1,000.00	$	1,017.65	$	7.27
Investor Class
Actual	$	1,000.00	$	1,129.80	$	9.06
Hypothetical**	$	1,000.00	$	1,016.34	$	8.57
A Class
Actual	$	1,000.00	$	1,129.50	$	9.27
Hypothetical**	$	1,000.00	$	1,016.14	$	8.77
C Class
Actual	$	1,000.00	$	1,126.37	$	13.22
Hypothetical**	$	1,000.00	$	1,012.42	$	12.51

Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.35%, 1.45%, 1.73%, 1.75% and 2.50% 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.

SGA Global Growth Fund


	Beginning Account Value 2/1/2016		Ending Account Value 7/31/2016		Expenses Paid During Period 2/1/2016-7/31/2016*
Institutional Class
Actual	$	1,000.00	$	1,171.86	$	5.29
Hypothetical**	$	1,000.00	$	1,019.99	$	4.92
Y Class
Actual	$	1,000.00	$	1,171.63	$	5.72
Hypothetical**	$	1,000.00	$	1,019.57	$	5.32
Investor Class
Actual	$	1,000.00	$	1,169.83	$	7.07
Hypothetical**	$	1,000.00	$	1,018.35	$	6.57
A Class
Actual	$	1,000.00	$	1,169.23	$	7.44
Hypothetical**	$	1,000.00	$	1,018.02	$	6.92
C Class
Actual	$	1,000.00	$	1,165.67	$	11.42
Hypothetical**	$	1,000.00	$	1,014.32	$	10.62

Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.98%, 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.

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Brazil - 3.29%
Common Stocks - (Cost $2,396)
AmBev S.A.		101,000	$	586
BrasilAgro - Co. Brasileira de Propriedades Agricolas		3,900		15
BRF S.A.		47,600		797
Cyrela Brazil Realty S.A. Empreendimentos e Participacoes		8,100		28
FII BTG Pactual Corp. Office Fund^A		3,490		103
FPC Par Corretora de Seguros S.A.		48,100		193
Hypermarcas S.A.		56,700		480
Mahle-Metal Leve S.A.		25,600		211
Odontoprev S.A.^B		86,400		346
Ouro Fino Saude Animal Participacoes S.A.		3,000		37
Tecnisa S.A.		22,400		19

Total Common Stocks				2,815

Preferred Stocks - (Cost $158)
Centrais Eletricas Santa Catarina^C		1,100		5
Cia de Gas de Sao Paulo, Class A^C		6,262		107

Total Preferred Stocks				112

Total Brazil				2,927

Chile - 3.60%
Common Stocks - (Cost $3,122)
Aguas Andinas S.A., Class A		78,422		47
Banco de Chile		4,513		1
Banco de Chile ADR^D		2,821		187
Cencosud S.A.		11,293		56
Compania Cervecerias Unidas S.A., Sponsored ADR^D		36,454		834
Embotelladora Andina S.A. Series B, ADR^D		12,400		290
Empresa Nacional de Electricidad S.A.		210,481		192
Empresa Nacional de Electricidad S.A., Sponsored ADR^D		7,877		215
Endesa Americas S.A.		218,358		209
Enersis Chile S.A.		380,500		306
Enersis S.A., ADR^D		46,558		404
Engie Energia Chile S.A.		44,541		83
Inversiones Aguas Metropolitanas S.A.		46,911		81
S.A.C.I. Falabella		2,304		17
Sociedad Matriz del Banco de Chile S.A., Class B		202,120		60
Vina Concha y Toro S.A.		111,423		190
Vina Concha y Toro S.A., Sponsored ADR^D		1,112		38

Total Chile				3,210

Colombia - 0.22%
Common Stocks - (Cost $239)
Grupo Aval Acciones y Valores S.A., ADR ^D		25,022		193

Czech Republic - 0.32%
Common Stocks - (Cost $257)
Pegas Nonwovens S.A.		5,825		194
Philip Morris CR A.S.^B		163		89

Total Czech Republic				283

Egypt - 0.16%
Common Stocks - (Cost $165)
Eastern Tobacco		4,282		90
Edita Food Industries SAE		12,822		21
Egyptian International Pharmaceuticals		492		4
Elswedy Electric Co.		1,092		5
Sidi Kerir Petrochemicals Co.		11,855	$	18
Telecom Egypt		5,457		6

Total Egypt				144

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Hong Kong/China - 19.23%
Common Stocks - (Cost $17,879)
Agricultural Bank of China H		2,343,000		861
Bank of China Ltd. H		2,142,000		881
Bank of Chongqing Co., Ltd. H		181,000		135
Bank of Jinzhou Co. Ltd		94,000		81
C.banner International Holdings Ltd.^B		733,000		263
Cabbeen Fashion Ltd.		72,000		23
China Communications Services Corp., Ltd. H		1,682,000		913
China Construction Bank H		1,265,000		848
China Creative Home Group Ltd.		492,000		40
China Dongxiang Group Co., Ltd.		1,715,000		338
China Lilang Ltd.		84,000		54
China Mengniu Dairy Co., Ltd.		66,000		110
China Mobile Ltd.		73,000		901
China Resources Enterprise Ltd.^B		298,000		577
China SCE Property Holdings Ltd.^B		282,000		59
China Shineway Pharmaceutical Group Ltd.		159,000		168
China Telecom Corp., Ltd. H		1,550,000		763
China Unicom Hong Kong Ltd.		808,000		861
China Yuchai International Ltd.		457		5
CITIC Ltd.		408,000		616
Cosco International Holdings Ltd.^E		64,000		31
COSCO Pacific Ltd.^E		74,000		76
CSPC Pharmaceutical Group Ltd.		424,000		367
Dah Chong Hong Holdings Ltd.		72,000		35
Dongfeng Motor Group Co., Ltd. H		270,000		333
Fuguiniao Co., Ltd. H		28,000		14
Goldlion Holdings Ltd.		46,000		18
Haier Electronics Group Co., Ltd.		130,000		218
Hengan International Group Co., Ltd.		100,000		840
Hopewell Highway Infrastructure Ltd.		654,500		334
HOSA International Ltd.		212,000		71
Huishang Bank Corp., Ltd. H		780,000		368
Industrial & Commercial Bank of China Ltd. H		1,568,000		888
Jinmao Hotel and Jinmao China Hotel Investments and Management Ltd.		45,000		24
K Wah International Holdings Ltd.		278,000		140
KFM Kingdom Holdings Ltd.		88,000		12
Kingboard Chemical Holdings Ltd.		206,000		444
Kingboard Laminates Holdings Ltd.		63,500		40
Koradior Holdings Ltd.		179,000		263
Livzon Pharmaceutical Group, Inc. H		8,100		40
Minth Group Ltd.		66,000		214
NVC Lighting Holding Ltd.		1,699,000		184
PetroChina Co., Ltd. H		282,000		191
Powerlong Real Estate Holdings Ltd.		72,000		16
Qinqin Foodstuffs Group Cayman Co., Ltd.^B		16,400		6
Road King Infrastructure Ltd.		140,000		116
Ronshine China Holdings Ltd.^B		315,000		260
Shenzhou International Group Holdings Ltd.		7,000		37
Sinopharm Group Co. H		14,800		72
Spring Real Estate Investment Trust^A		49,000		22
Sun Art Retail Group Ltd.		527,500		366
Tencent Holdings Ltd.		37,000		889
Tianyun International Holdings Ltd.		366,000		28
Tingyi Cayman Islands Holding Corp.		232,000		201
Tong Ren Tang Technologies Co., Ltd. H		69,000		109
Tsingtao Brewery Co., Ltd. H		22,000		78
Uni-President China Holdings Ltd.		165,000		127

See accompanying notes

American Beacon Acadian Emerging Markets Managed Volatility Fund^S^M

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Vinda International Holdings Ltd.		48,000	$	93
Want Want China Holdings Ltd.		1,006,000		615
XTEP International Holdings Ltd.		334,000		172
Yuexiu Property Co., Ltd.		118,000		15
Yuexiu Real Estate Investment Trust^A		247,000		148
Yuexiu Transport Infrastructure Ltd.		104,000		69
Yuzhou Properties Co., Ltd.		225,000		66

Total Hong Kong/China				17,147

Hungary - 1.42%
Common Stocks - (Cost $1,133)
Magyar Telekom Telecommunications PLC^F		290,624		465
Richter Gedeon Nyrt		37,908		801

Total Hungary				1,266

India - 11.72%
Common Stocks - (Cost $9,799)
Bajaj Auto Ltd.		11,021		445
Biocon Ltd.		24,548		304
Cadila Healthcare Ltd.		31,910		175
Cipla Ltd.		44,417		350
Colgate-Palmolive India Ltd.		41,943		585
Dabur India Ltd.		40,704		185
Divi’s Laboratories Ltd.		11,143		200
Dr. Reddy’s Laboratories Ltd., ADR^D		9,385		410
Dr. Reddy’s Laboratories Ltd.		4,694		205
Gillette India Ltd.		231		16
GlaxoSmithKline Consumer Healthcare Ltd.		2,375		224
Hero Honda Motors Ltd.		16,331		779
Hindustan Unilever Ltd.		64,250		884
Infosys Technologies Ltd.		15,322		246
Infosys Technologies Ltd., Reg S, Sponsored ADR ^D ^G		28,373		466
ITC Ltd.		226,882		857
Jamna Auto Industries Ltd.		24,307		70
Marico Ltd.		69,026		294
Maruti Suzuki India Ltd.		9,185		653
Mphasis Ltd.		5,923		48
Nestle India Ltd.		1,567		167
NHPC Ltd.		133,413		50
Omaxe Ltd.		121,587		295
Oracle Financial Services Software Ltd.^B		2,485		137
Power Grid Corp. of India Ltd.		137,129		360
Procter & Gamble Hygiene & Health Care Ltd.		507		50
Raymond Ltd.		4,411		30
Tata Consultancy Services Ltd.		22,547		884
Torrent Pharmaceuticals Ltd.		5,713		123
Videocon Industries Ltd.		40,374		63
Wipro Ltd., ADR^D		9,614		109
Wipro Ltd.		71,033		579
WNS Holdings Ltd., ADR^B ^D		7,261		204

Total India				10,447

Indonesia - 1.77%
Common Stocks - (Cost $1,446)
Bumi Resources Minerals Tbk PT^B		11,407,700		44
Central Proteinaprima Tbk PT^B		11,683,400		46
Dharma Satya Nusantara Tbk PT		626,600		23
Hanjaya Mandala Sampoerna Tbk PT		1,072,500		297
Multipolar Technology Tbk PT		570,100		46
Sarana Meditama Metropolitan Tbk PT		874,000		179
Telekomunikasi Indonesia Persero Tbk PT		2,721,700	$	879
Unilever Indonesia Tbk PT		17,600		61

Total Indonesia				1,575

See accompanying notes

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Malaysia - 7.61%
Common Stocks - (Cost $6,942)
Axiata Group Bhd		523,000		731
Batu Kawan Bhd		1,500		7
Berjaya Sports Toto Bhd		46,700		38
British American Tobacco Bhd		10,400		126
Carlsberg Brewery Malaysia Bhd		5,500		19
DiGi.Com Bhd		28,500		35
Dutch Lady Milk Industries Bhd		300		5
Fraser & Neave Holdings Bhd		64,000		403
Guinness Anchor Bhd		28,100		124
Hong Leong Bank Bhd		133,100		429
IHH Healthcare Bhd		314,000		504
KPJ Healthcare Bhd		128,200		135
Kuala Lumpur Kepong Bhd		6,200		35
Malayan Banking Bhd		116,600		230
Maxis Bhd		203,100		300
Nestle Malaysia Bhd		8,800		171
Oldtown Bhd		38,400		18
Panasonic Manufacturing Malaysia Bhd		1,400		14
Petronas Gas Bhd		140,300		764
PPB Group Bhd		22,500		88
Public Bank Bhd		181,300		869
Star Media Group Bhd		43,100		28
Telekom Malaysia Bhd		519,100		870
Tenaga Nasional Bhd		239,400		846

Total Malaysia				6,789

Mexico - 8.50%
Common Stocks - (Cost $7,845)
America Movil S.A.B. de C.V., Series L		134,285		77
Arca Continental S.A.B. de C.V.		119,824		770
Coca-Cola Femsa S.A.B. de C.V., Series L		101,669		797
Coca-Cola Femsa, S.A. de C.V., ADR^D		499		39
Concentradora Hipotecaria SAPI de C.V.^A		72,874		104
Consorcio ARA, S.A.B. de C.V.		50,515		19
Fomento Economico Mexicano, S.A.B. de C.V., Series B, Sponsored ADR ^D		7,726		691
Gruma S.A.B. de C.V.		13,556		195
Grupo Aeroportuario del Pacific, Series B		9,344		92
Grupo Aeroportuario del Sureste, S.A.B. de C.V., ADR^D		3,345		514
Grupo Bimbo S.A.B. de C.V., Series A		288,979		863
Grupo GICSA S.A. de C.V.^B		44,070		30
Grupo Herdez S.A.B. de C.V.		20,234		42
Grupo Industrial Maseca S.A.B. de C.V., Series B		3,460		4
Grupo Lala S.A.B. de C.V.		383,840		833
Grupo Lamosa S.A.B. de C.V.		10,519		20
Grupo Sanborns S.A. de C.V.		50,408		63
Grupo Sports World S.A.B. de C.V.^B		56,823		51
Industrias Bachoco S.A.B. de C.V., Series B		92,835		402
La Comer S.A.B. de C.V.^B		372,629		332
Megacable Holdings S.A.B. de C.V.^E		120,585		489
Organizacion Cultiba S.A.B. de C.V.		7,071		8
Organizacion Soriana S.A.B. de C.V., Series B		58,070		143
Prologis Property Mexico S.A. de C.V.^A		69,328		110
Rassini SAB de CV		14,765		71
Unifin Financiera SAPI de C.V. SOFOM ENR		59,405		157
Vitro S.A.B. de C.V., Series A		5,968		20
Wal-Mart de Mexico S.A.B. de C.V.		281,770		643

Total Mexico				7,579

See accompanying notes

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Netherlands - 0.85%
Common Stocks - (Cost $591)
Steinhoff International Holdings N.V.		119,510	$	756

Peru - 0.10%
Common Stocks - (Cost $98)
Alicorp SAA		10,384		23
Edegel S.A.		9,258		8
Edelnor S.A.		17,888		32
Enersur S.A.		8,410		21
Luz Del Sur S.A.A.		2,046		7

Total Peru				91

Philippines - 1.72%
Common Stocks - (Cost $1,369)
Aboitiz Power Corp.		274,200		263
ABS-CBN Holdings Corp., ADR^D		56,320		59
Cebu Air, Inc.		6,000		14
Century Pacific Food, Inc.		233,400		83
China Banking Corp.		6,045		5
Globe Telecom, Inc.		5,740		276
Manila Electric Co.		72,040		496
Pepsi-Cola Products Philippines, Inc.		66,900		5
Philippine Long Distance Telephone Co.		6,775		301
Philweb Corp.		54,900		18
San Miguel Pure Foods Co.		2,170		10

Total Philippines				1,530

Poland - 2.65%
Common Stocks - (Cost $2,628)
Agora S.A.		5,777		17
Altus Towarzystwo Funduszy Inwestycyjnych S.A.^{B G}		4,294		17
Alumetal S.A.		1,727		28
Amica Wronki S.A.^B		810		39
AmRest Holdings SE^B		2,497		159
Asseco Poland S.A.		31,491		433
CD Projekt S.A.^B		16,855		151
Ciech S.A.^B		1,826		27
Emperia Holding S.A.		429		6
Enea S.A.		9,389		26
Eurocash S.A.		42,897		576
Netia S.A.		29,180		33
Neuca S.A.		596		55
Orange Polska S.A.		432,110		597
PGE S.A.		35,681		118
Tauron Polska Energia S.A.^B		96,629		76
Zaklady Lentex S.A.		2,609		6

Total Poland				2,364

Russia - 4.37%
Common Stocks - (Cost $3,803)
Cherkizovo Group, PJSC, Reg S, GDR^{G H I}		3,487		30
Gazprom NEFT, Sponsored ADR^D		14,332		175
Gazprom, PJSC, ADR^{D H}		209,921		854
Magnit, PJSC, GDR^{H I}		5,757		221
Magnitogorsk Iron & Steel, OJSC^{C J}		5,492		31
Megafon, Reg S, GDR^{G I}		20,875		206
MMC Norilsk Nickel, PJSC^H		35,878		525
Mobile TeleSystems, OJSC, Sponsored ADR^{C D J}		13,273		118
Novolipetsk Steel, PJSC^H		15,189		219

See accompanying notes

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Rosneft Oil Co., Reg S, GDR^{G I}		44,085	$	213
Rostelecom, Sponsored ADR^D		34,269		263
Sberbank PAO, Sponsored ADR^B ^D		4,998		44
Severstal, Reg S^{B G}		61,919		733
Sistema JSFC, Reg S, Sponsored GDR^{B G I M}		33,004		269

Total Russia				3,901

South Africa - 5.30%
Common Stocks - (Cost $4,244)
Adbee Rf Ltd.^B		701		2
Ascendis Health Ltd.		115,289		197
Astral Foods Ltd.		5,694		50
Aveng Ltd.^B		56,064		16
AVI Ltd.		139,834		903
Blue Label Telecoms Ltd.		218,678		292
City Lodge Hotels Ltd.		1,485		17
Clover Industries Ltd.		133,836		185
Datatec Ltd.		17,728		64
Distell Group Ltd.		12,977		156
Netcare Ltd.		162,791		377
New Europe Property Investments PLCF		16,745		200
Pick n Pay Holdings Ltd.		18,924		52
Pick n Pay Stores Ltd.		49,614		280
Rhodes Food Group Pty. Ltd.		96,474		181
Spar Group Ltd.		49,908		745
Stenprop Ltd.		11,299		17
Super Group Ltd^B		27,667		81
Vodacom Group Pty. Ltd.		73,607		853

Total Common Stocks				4,668

Preferred Stocks - (Cost $87)
Barclays Africa Group Ltd.^C		1,084		62

Total South Africa				4,730

South Korea - 11.12%
Common Stocks - (Cost $9,157)
Amorepacific Corp.		277		96
Binggrae Co. Ltd.		1,538		86
Busan City Gas Co., Ltd.		333		10
BYC Co., Ltd.		37		16
Charm Engineering Co., Ltd^B		54,201		138
Coway Co., Ltd.		953		73
Daeduck Electronics Co.		16,851		118
Daesung Energy Co., Ltd.		8,599		50
Dong-Il Corp.		592		32
e-Credible Co., Ltd.		3,671		40
GMB Korea Corp.		4,370		20
Hana Financial Group, Inc.		9,557		235
Hankook Tire Co., Ltd.		14,663		710
Hanwha Life Insurance Co., Ltd.		5,311		27
Hite Jinro Ltd.		1,593		32
Huvis Corp.		3,332		24
Hyundai Motor Co.		89		10
JB Financial Group Co., Ltd.		15,128		81
Jinro Distillers Co., Ltd.		828		25
Keyang Electric Machinery Co., Ltd.		4,164		23
Kia Motors Corp.		15,231		574
Korea Electric Power Corp.		15,269		835
Korea Gas Corporation		4,503		170
KT Corp.		29,158		826
KT&G Corp.		4,034		436
LG Display Co., Ltd., ADR^D		16,120		225
LG Electronics, Inc.		17,449		833

See accompanying notes

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Lotte Confectionery Co., Ltd.		670	$	114
Mando Corp.		1,630		378
Mirae Asset Life Insurance Co., Ltd.		25,708		98
Namyang Dairy Products Co., Ltd.		161		98
Nexen Corp.		4,802		34
NS Shopping Co., Ltd.^B		702		112
Posco ICT Co. Ltd^B		10,549		58
S-1 Corp.		3,507		318
Sam Young Electronics Co., Ltd.		9,075		99
Sam-A Pharm Co., Ltd.		3,147		63
Samchully Co., Ltd.		345		33
Samsung Electronics Co., Ltd.		690		947
SJM Holdings Ltd.		2,950		19
SK Hynix, Inc.		29,207		897
SK Telecom Co., Ltd.		3,971		815
Uju Electronics Co., Ltd.		2,948		38
Yesco Co., Ltd.		1,500		52

Total South Korea				9,918

Taiwan - 7.24%
Common Stocks - (Cost $6,219)
Ability Enterprise Co., Ltd.		37,000		20
China Chemical & Pharmaceutical Co., Ltd.		43,000		25
China Motor Corp.		199,000		151
China Synthetic Rubber		69,460		50
Chunghwa Telecom Co., Ltd.		240,000		853
Far Eastern International Bank		180,000		52
First Financial Holding Co., Ltd.		1,593,744		884
HON HAI Precision Industry Co., Ltd.		270,262		744
KD Holding Corp.		7,000		40
Keysheen Cayman Holdings Co., Ltd.		6,000		13
Lien Hwa Industrial Corp.		219,440		146
Microlife Corp.		25,000		63
Shanghai Commercial & Savings Bank Ltd.		441,212		392
Shihlin Electric & Engineering Corp.		5,000		6
Shin Kong No.1 REIT^A		51,000		22
Taichung Commercial Bank		867,875		251
Taiwan Business Bank^B		1,125,843		297
Taiwan Cooperative Financial Holding Co., Ltd.		1,547,602		724
Taiwan Mobile Co., Ltd.		191,000		658
Taiwan Sakura Corp.		116,000		120
Taiwan Semiconductor Manufacturing Co., Ltd.		115,105		348
Taiwan Semiconductor Manufacturing Co., Ltd., Sponsored ADR^D		7,555		210
Taiwan Shin Kong Security Co., Ltd.		203,170		265
Trade-Van Information Services Co.		16,000		13
TTet Union Corp.		6,000		15
Uni-President Enterprises Corp.		3,720		8
Wisdom Marine Lines Co., Ltd.		31,000		33
YungShin Global Holding Corp.		40,000		58

Total Taiwan				6,461

Thailand - 4.16%
Common Stocks - (Cost $3,441)
Advanced Information Technology PCL^K		77,800		67
Bangkok Bank PCL NVDR^{K L}		94,300		462
Bangkok Land PCL^K		1,623,900		71
CP ALL PCL^K		129,000		192
CS Loxinfo PCL^K		26,900		5
Electricity Genera PCL^K		52,200		298
Electricity Generating PCL^K		12,300		70
IMPACT Growth Real Estate Investment Trust, Series L^A		50,800		22
IMPACT Growth Real Estate Investment Trust, Series A^A		176,400		77
Kang Yong Electric PCL^K		2,100		20

See accompanying notes

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Kang Yong Electric PCL NVDR^K ^L		100	$	1
Khon Kaen Sugar Industry PCL^K		134,730		15
Krung Thai Bank PCL^K		354,500		177
Malee Group PCL^K		23,300		46
Mega Lifesciences PCL^K		21,300		10
MK Restaurants Group PCL^K		27,700		43
Modernform Group PCL NVDR^{K L}		26,400		6
Modernform Group PCL^K		33,200		7
Platinum Group PCL^K		221,600		41
Ratchaburi Electricity Generating Holding PCL NVDR^{K L}		128,900		192
Siam Makro PCL^K		5,500		5
SPCG PCL^K		74,300		47
Thai Nakarin Hospital PCL^K		43,600		55
Thai Vegetable Oil PCL^K		334,600		293
Thai Vegetable Oil PCL NVDR^K ^L		435,000		381
Thai Wah PCL^K		327,000		77
Thanachart Capital PCL^K		137,000		160
The Siam Cement PCL NVDR^K^L		59,400		870

Total Thailand				3,710

Turkey - 2.06%
Common Stocks - (Cost $1,785)
Adana Cimento Sanayii TAS, Class A		5,580		11
Adana Cimento Sanayii TAS, Class C		98,525		21
Arcelik A.S.		98,453		673
BIM Birlesik Magazalar A.S.		39,107		722
Bursa Cimento Fabrikasi A.S.		11,599		19
NET Holding AS^B		18,821		19
Pinar Entegre Et ve Un Sanayi A.S.		4,048		14
Selcuk Ecza Deposu Ticaret ve Sanayi A.S.		36,522		35
Teknosa Ic Ve Dis Ticaret AS^B		10,944		19
Turkcell Iletisim Hizmetleri A.S.		88,144		306

Total Turkey				1,839

SHORT-TERM INVESTMENTS - 2.34% (Cost $2,091)
American Beacon U.S. Government Money Market Select Fund, Select Class^N		2,090,860		2,091

TOTAL INVESTMENTS - 99.75% (Cost $86,894)				88,951
OTHER ASSETS, NET OF LIABILITIES - 0.25%				219

TOTAL NET ASSETS - 100.00%			$	89,170

Percentages are stated as a percent of net assets.

^A	REIT - Real Estate Investment Trust.

^B	Non-income producing security.

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

^D	ADR - American Depositary Receipt.

^E	Par value represents units rather than shares.

^F	PLC - Public Limited Company.

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

^H	PJSC - Private Joint Stock Company.

^I	GDR - Global Depositary Receipt.

^J	OJSC - Open Joint Stock Company.

^K	PCL - Public Company Limited (Thailand).

^L	NVDR - Non Voting Depositary Receipt.

^M	JSFC – Joint Stock Financial Company.

^N	The fund is affiliated by having the same investment advisor.

See accompanying notes

American Beacon Acadian Emerging Markets Managed Volatility Fund^S^M

Schedule of Investments

July 31, 2016 (Unaudited)


*Futures Contracts Open on July 31, 2016:*

Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
Mini MSCI Emerging Markets Index Futures		Long		55		September 2016	$	2,424,125	$	88,901

							$	2,424,125	$	88,901


*Short Sales on July 31, 2016 ($000’s):*

Type of Investment	Description	Shares			Proceeds			Fair Value
Foreign Common Stock	IMPACT Growth Real Estate Investment Trust		(69,100	)	$	(29	)	$	(31	)
Foreign Common Stock	Advanced Information Technology PCL		(17,300	)		(17	)		(15	)

					$	(46	)	$	(46	)⁽¹⁾

⁽¹⁾	Short sales represent 0.05% of total net assets.

See accompanying notes

American Beacon SGA Global Growth Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Argentina - 1.95%
Common Stocks - (Cost $191)
MercadoLibre, Inc.		1,750	$	268

Australia - 1.41%
Common Stocks - (Cost $183)
MYOB Group Ltd.		67,883		194

Bermuda - 1.90%
Common Stocks - (Cost $246)
IHS Markit Ltd. ^A		7,479		260

Brazil - 1.86%
Common Stocks - (Cost $255)
AMBEV S.A., ADR ^B		44,118		255

Denmark - 3.78%
Common Stocks - (Cost $414)
Novo Nordisk A.S. Class B		9,090		518

France - 3.89%
Common Stocks - (Cost $489)
Danone S.A.		6,929		534

Germany - 4.16%
Common Stocks - (Cost $474)
SAP AG, Sponsored ADR ^B		6,528		570

Hong Kong/China - 7.53%
Common Stocks - (Cost $814)
AIA Group Ltd.		82,641		512
Tencent Holdings Ltd.		21,620		520

Total Hong Kong/China				1,032

India - 2.82%
Common Stocks - (Cost $338)
HDFC Bank, Ltd. ADR ^B		5,590		387

Japan - 2.05%
Common Stocks - (Cost $269)
Fast Retailing Co. Ltd.		858		281

Mexico - 1.83%
Common Stocks - (Cost $262)
Fomento Economico Mexicano, S.A.B. de C.V., Series B, Sponsored ADR ^B		2,810		251

Netherlands - 3.07%
Common Stocks - (Cost $436)
Core Laboratories N.V.		3,601		421

See accompanying notes

American Beacon SGA Global Growth Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
South Africa - 2.01%
Common Stocks - (Cost $197)
Shoprite Holdings Ltd.		18,861	$	276

South Korea - 2.38%
Common Stocks - (Cost $287)
Amorepacific Corp.		510		177
LG Household & Health Care Ltd.		167		150

Total South Korea				327

United States - 52.74%
Common Stocks - (Cost $6,162)
Alphabet, Inc., Class C^A		532		409
Amazon.com, Inc.^A		522		396
Amgen, Inc.		2,728		470
Apple, Inc.		3,920		409
Cerner Corp.^A		6,392		399
Colgate-Palmolive Co.		5,957		443
Equinix, Inc.^C		1,011		377
FleetCor Technologies, Inc.^A		2,628		399
Kansas City Southern		2,761		265
Lowe’s Cos., Inc.		4,665		384
Mondelez International, Inc., Class A		8,375		368
NIKE, Inc., Class B		4,461		248
priceline.com, Inc.^A		290		392
Red Hat, Inc.^A		4,370		329
Regeneron Pharmaceuticals, Inc.^A		1,036		440
Salesforce.com, Inc.^A		3,147		257
Schlumberger Ltd.		4,830		389
Visa, Inc., Class A		6,513		508
Whole Foods Market, Inc.		11,454		349

Total United States				7,231

SHORT-TERM INVESTMENTS - 5.15% (Cost $706)
American Beacon U.S. Government Money Market Select Fund, Select Class^D		705,589		706

TOTAL INVESTMENTS - 98.53% (Cost $11,723)				13,511
OTHER ASSETS, NET OF LIABILITIES - 1.47%				201

TOTAL NET ASSETS - 100.00%			$	13,712

Percentages are stated as a percent of net assets.

^A	Non-income producing security.

^B	ADR - American Depositary Receipt.

^C	REIT - Real Estate Investment Trust.

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

Futures Contracts Open on July 31, 2016:


Description	Type		Number of Contracts		Expiration Date		Contract Value		Unrealized Appreciation (Depreciation)
Mini MSCI EAFE Index Futures		Long		3		September 2016	$	252,030	$	15,428
Mini MSCI Emerging Markets Index Futures		Long		2		September 2016		88,150		6,053
S&P 500 E-Mini Index Futures		Long		3		September 2016		325,230		9,123

							$	665,410	$	30,624

See accompanying notes

American Beacon Funds^SM

Statements of Assets and Liabilities

July 31, 2016 (Unaudited) (in thousands, except share and per share amounts)


	Acadian Emerging Markets Managed Volatility Fund			SGA Global Growth Fund
Assets:
Investments in unaffiliated securities, at fair value ^A	$	86,860		$	12,805
Investments in affiliated securities, at fair value ^B		2,091			706
Foreign currency, at fair value^C		478			—
Deposit with brokers for futures contracts		50			30
Dividends and interest receivable		302			9
Receivable for investments sold		40			—
Receivable for fund shares sold		60			106
Receivable for tax reclaims		—			6
Receivable for expense reimbursement (Note 2)		42			9
Receivable for variation margin on open futures contracts		91			31
Prepaid expenses		59			47

Total assets		90,073			13,749

Liabilities:
Payable for investments purchased		687			—
Payable for fund shares redeemed		1			—
Payable for securities sold short, at value^D		46			—
Dividends payable		1			—
Management and investment advisory fees payable		75			9
Administrative service and service fees payable		5			1
Custody and fund accounting fees payable		41			4
Professional fees payable		36			19
Payable for prospectus and shareholder reports		10			2
Other liabilities		1			2

Total liabilities		903			37

Net Assets	$	89,170		$	13,712

Analysis of Net Assets:
Paid-in-capital		90,264			11,360
Undistributed (or overdistribution of) net investment income		813			13
Accumulated net realized gain (loss)		(4,055	)		520
Unrealized appreciation of investments		3,247			1,821
Unrealized (depreciation) of currency transactions		(1,188	)		(33	)
Unrealized appreciation of futures contracts		89			31

Net assets	$	89,170		$	13,712

Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		5,404,428			437,551

Y Class		3,508,361			31,375

Investor Class		383,677			307,570

A Class		65,550			34,312

C Class		74,933			43,009

Net assets (not in thousands):
Institutional Class	$	51,137,866		$	7,070,767

Y Class	$	33,114,100		$	505,574

Investor Class	$	3,606,643		$	4,915,782

A Class	$	617,424		$	547,717

C Class	$	694,307		$	671,701

Net asset value, offering and redemption price per share:
Institutional Class	$	9.46		$	16.16

Y Class	$	9.44		$	16.11

Investor Class	$	9.40		$	15.98

A Class	$	9.42		$	15.96

A Class (offering price)	$	9.99		$	16.94

C Class	$	9.27		$	15.62

^A Cost of investments in unaffiliated securities	$	84,803		$	11,017
^B Cost of investments in affiliated securities	$	2,091		$	706
^C Cost of foreign currency	$	477		$	—
^D Proceeds of securities sold short	$	46		$	—

See accompanying notes

American Beacon Funds^S^M

Statement of Operations

For the Six Months Ended July 31, 2016 (Unaudited) (in thousands)


	Acadian Emerging Markets Managed Volatility Fund			SGA Global Growth Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes)^A	$	1,370		$	65
Dividend income from affiliated securities		2			—

Total investment income		1,372			65

Expenses:
Management and investment advisory fees (Note 2)		296			28
Administrative service fees (Note 2):
Institutional Class		43			6
Y Class		28			—
Investor Class		3			1
A Class		1			—
C Class		1			—
Transfer agent fees:
Institutional Class		5			1
Investor Class		1			1
Custody and fund accounting fees		79			12
Professional fees		41			15
Registration fees and expenses		27			23
Service fees (Note 2):
Y Class		14			—
Investor Class		4			2
A Class		1			—
C Class		1			—
Distribution fees (Note 2):
A Class		1			1
C Class		3			3
Prospectus and shareholder report expenses		10			3
Trustee fees		1			—
Dividends on securities sold short		1			—
Other expenses		37			5

Total expenses		598			101

Net fees waived and expenses reimbursed (Note 2)		(58	)		(51	)

Net expenses		540			50

Net investment income		832			15

Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:^B
Investments		(992	)		367
Foreign currency transactions		(391	)		(60	)
Futures contracts		(10	)		40
Change in net unrealized appreciation (depreciation) of:
Investments		6,984			1,081
Foreign currency transactions		2,830			144
Futures contracts		96			31

Net gain from investments		8,517			1,603

Net increase in net assets resulting from operations	$	9,349		$	1,618

^A Foreign taxes		152			5
^B Net of foreign withholding taxes on capital gains		79			3

See accompanying notes

American Beacon Funds^SM

Statement of Changes in Net Assets (in thousands)


	Acadian Emerging Markets Managed Volatility Fund						SGA Global Growth Fund
	Six Months Ended July 31, 2016			Year Ended January 31, 2016			Six Months Ended July 31, 2016			Year Ended January 31, 2016
	(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	832		$	566		$	15		$	10
Net realized gain (loss) from investments, commission recapture, foreign currency transactions, and futures contracts		(1,393	)		(2,435	)		347			193
Change in net unrealized appreciation or (depreciation) from investments, foreign currency transactions, and futures contracts		9,910			(7,684	)		1,256			42

Net increase (decrease) in net assets resulting from operations		9,349			(9,553	)		1,618			245

Distributions to Shareholders:
Net investment income:
Institutional Class		—			(390	)		—			(7	)
Y Class		—			(218	)		—			—
Investor Class		—			(27	)		—			(1	)
A Class		—			(2	)		—			—
Net realized gain from investments:
Institutional Class		—			—			—			(87	)
Y Class		—			—			—			(2	)
Investor Class		—			—			—			(14	)
A Class		—			—			—			(4	)
C Class		—			—			—			(6	)
Return of Capital:
Institutional Class		—			(16	)		—			—
Y Class		—			(9	)		—			—
Investor Class		—			(1	)		—			—
A Class		—			—			—			—
C Class		—			—			—			—

Net distributions to shareholders		—			(663	)		—			(121	)

Capital Share Transactions:
Proceeds from sales of shares		16,141			79,785			5,407			2,216
Reinvestment of dividends and distributions		—			662			—			121
Cost of shares redeemed		(7,073	)		(25,612	)		(837	)		(1,099	)

Net increase in net assets from capital share transactions		9,068			54,835			4,570			1,238

Net increase in net assets		18,417			44,619			6,188			1,362

Net Assets:
Beginning of period		70,753			26,134			7,524			6,162

End of Period *	$	89,170		$	70,753		$	13,712		$	7,524

^*Includes undistributed (overdistribution) net investment income	$	813		$	(37	)	$	13		$	1

See accompanying notes

American Beacon Funds^SM

Notes to Financial Statements

July 31, 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 July 31, 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 Acadian Emerging Markets Managed Volatility Fund (“Acadian Fund”) and the American Beacon SGA Global Growth Fund (“SGA Fund”). 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

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

The following is a summary of significant accounting policies, consistently followed by the Funds in preparation of the financial statements. The Funds are an investment company, 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.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Currency Translation

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

Dividends to Shareholders

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

Redemption Fees

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

Other

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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

2. Transactions with Affiliates

Management Agreement

From February 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, 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. 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 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 investment activities of the Funds. Management fees paid by the Funds during the six months ended July 31, 2016 were as follows (in thousands):


Fund	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
Acadian Fund		0.78	%	$	296	$	239	$	57
SGA Fund		0.60	%		28		20		8

Administration Agreement

From February 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 each Fund. 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.

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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 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 July 31, 2016, the Manager earned fees on the Funds’ direct investments in the USG Select Fund as shown below:


Fund	Direct Investments in USG Select Fund
Acadian	$	985
SGA		310

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 July 31, 2016, the Acadian Fund borrowed on average $437,262 for 4 days at an average rate of 0.98% with interest charges of $47. This amount is recorded within “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 operating expenses exceeded a Funds’ expense cap. During the six months ended July 31, 2016, the Manager waived or reimbursed expenses as follows:


		Expense Cap	Reimbursed
Fund	Class	2/1/16 -7/31/16	Expenses		Expiration
Acadian	Institutional	1.35%	$	36,203	2020
Acadian	Y	1.45%		18,977	2020
Acadian	Investor	1.73%		1,752	2020
Acadian	A	1.75%		504	2020
Acadian	C	2.50%		582	2020
SGA	Institutional	0.98%		38,005	2020
SGA	Y	1.08%		1,298	2020
SGA	Investor	1.36%		6,492	2020
SGA	A	1.38%		2,581	2020
SGA	C	2.13%		2,919	2020

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Of these amounts, $41,564 and $9,370 were receivable by the Manager at July 31, 2016 for the Acadian Fund and SGA Fund, 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 contractual expense limit. During the six months ended July 31, 2016, the Funds did not record a liability for potential reimbursement, due to the current assessment that a reimbursement is unlikely. The carryover of excess expenses potentially reimbursable to the Manager are as follows:


Fund	Recovered Expenses		Excess Expense Carryover		Expiration of Reimbursed Expenses
Acadian	$	—	$	118,179	2017
Acadian		—		169,517	2018
Acadian		—		120,326	2019
SGA		—		79,392	2017
SGA		—		170,369	2018
SGA		—		118,368	2019

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 July 31, 2016, Foreside collected $29 and $996 for Acadian Fund and SGA Fund, 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 July 31, 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 July 31, 2016, CDSC fees of $54 and $40 were collected for the Acadian and SGA Funds, respectively.

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. 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 NAV per share of the mutual fund on the day of valuation.

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

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the 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 margin disclosed on the Statements of Assets and Liabilities.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 earlier 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 Funds 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 in good faith by the Valuation Committee, established by the Fund’s Board.

Valuation Inputs

Various inputs may be used to determine the fair value of the 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. Fixed-income securities are considered Level 2 securities, as they are valued using observable inputs.

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.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy.

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

The Funds’ investments are summarized by level based on the inputs used to determine their values. As of July 31, 2016, the investments were classified as described below (in thousands):


Acadian Fund⁽¹⁾	Level 1			Level 2		Level 3		Total
Foreign Common Stocks:
Hong Kong/China	$	17,147		$	—	$	—	$	17,147
India		10,447			—		—		10,447
South Korea		9,918			—		—		9,918
Mexico		7,579			—		—		7,579
All other countries		41,595			—		—		41,595
Foreign Preferred Stocks
Brazil		112			—		—		112
South Africa		62			—		—		62
Short-Term Investments – Money Market Funds		2,091			—		—		2,091

Total Investments in Securities	$	88,951		$	—	$	—	$	88,951

*Financial Derivative Instruments - Assets*
Futures Contracts	$	89		$	—	$	—	$	89
*Financial Derivative Instruments - Liabilities*
Short Sales	$	(46	)	$	—	$	—	$	(46	)

SGA Fund⁽¹⁾	Level 1			Level 2		Level 3		Total
Foreign Common Stocks:
Hong Kong/China	$	1,032		$	—	$	—	$	1,032
Germany		570			—		—		570
France		534			—		—		534
Denmark		518			—		—		518
All other countries		2,920			—		—		2,920
Domestic Common Stocks		7,231			—		—		7,231
Short-Term Investments – Money Market Funds		706			—		—		706

Total Investments in Securities	$	13,511		$	—	$	—	$	13,511

*Financial Derivative Instruments - Assets*
Futures Contracts	$	31		$	—	$	—	$	31

⁽¹⁾	Refer to the Schedule of Investments for industry information

U.S. GAAP 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 Funds’ assets and liabilities. During the six months ended July 31, 2016, the Acadian Fund transferred foreign common stock with a value of $63,953 and the SGA Fund transferred foreign common stock with a value of $2,881 from Level 2 to Level 1 as of the end of period, in accordance with fair value procedures established by the Board (in thousands).

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

4. Securities and Other Investments

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

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

Illiquid and Restricted Securities

The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933 (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 year ended July 31, 2016 are disclosed in the Notes to the Schedules of Investments.

Real Estate Investment Trusts

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

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. A Fund is 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 July 31, 2016, short positions were held by the Acadian Fund.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 the 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’ shareholder 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 Funds 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.

During the six months ended July 31, 2016, the Funds entered into future contracts primarily for return enhancement, hedging, and 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 contracts outstanding at period end.


Average Futures Contracts Outstanding
Fund		At July 31, 2016
Acadian		43
SGA		6

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 July 31, 2016:


Statements of Assets and Liabilities	Derivative		Acadian Fund		SGA Fund
Receivable for variation margin from open futures contracts		Equity Contracts	$	89	$	31

The effect of financial derivative instruments not accounted for as hedging instruments for the six months ended July 31, 2016:


Statements of Operations	Derivative		Acadian Fund			SGA Fund
Net realized gain from futures contracts		Equity Contracts	$	(10	)	$	40
Change in net unrealized (depreciation) of futures contracts		Equity Contracts		96			31

⁽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 or country. 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 the Funds are 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 security’s market price to interest rate (i.e. yield) movements. In addition, the value of emerging and frontier market fixed-income securities may be particularly sensitive to interest rate changes.

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, 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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 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 Funds’ investments in foreign currency denominated securities may reduce the returns of the Funds. These risks are heightened when a Fund invests in emerging or frontier market countries, which have less developed capital markets and legal, regulatory, and political systems.

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. The values of equity securities for companies operating in emerging markets may also be affected by political uncertainty, limited liquidity, and other country-specific factors. 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/or “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 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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, July 31, 2016 (in thousands).

Acadian Fund

Offsetting of Financial Assets and Derivative Assets as of July 31, 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⁾	$	89	$	—	$	89

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of July 31, 2016:


	Net Amount of Assets Presented in the Statements of Assets and Liabilities		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty			Financial Instruments		Cash Collateral Received		Net Amount
Goldman Sachs & Co. ⁽¹⁾	$	89	$	—	$	—	$	89

SGA Fund

Offsetting of Financial Assets and Derivative Assets as of July 31, 2016:


Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statements of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statements of Assets and Liabilities
Futures Contracts⁽¹⁾	$	31	$	—	$	31

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of July 31, 2016:


	Net Amount of Assets Presented in the Statements of Assets and Liabilities		Gross Amounts Not Offset in the Statements of Assets and Liabilities
Counterparty			Financial Instruments		Cash Collateral Received		Net Amount
Goldman Sachs & Co. ⁽¹⁾	$	31	$	—	$	—	$	31

⁽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

The Funds do not have any unrecognized tax benefits in the accompanying financial statements. The tax years for the periods ended September 30, 2013 for the SGA Fund and the periods ended January 31, 2014, 2015, and 2016 for Acadian Fund and SGA Fund, respectively 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.

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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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):


	Acadian Fund				SGA Fund
	Six months ended July 31, 2016		Year ended January 31, 2016		Six months ended July 31, 2016		Year ended January 31, 2016
	(unaudited)				(unaudited)
Distributions paid from:
Ordinary income*
Institutional Class	$	—	$	390	$	—	$	6
Y Class		—		218		—		—
Investor Class		—		27		—		1
A Class		—		2		—		—
C Class		—		—		—		—
Long-Term Capital Gain
Institutional Class		—		—		—		88
Y Class		—		—		—		2
Investor Class		—		—		—		14
A Class		—		—		—		4
C Class		—		—		—		6
Tax Return of Capital
Institutional Class		—		16		—		—
Y Class		—		9		—		—
Investor Class		—		1		—		—
A Class		—		—		—		—
C Class		—		—		—		—

Total distributions paid	$	—	$	663	$	—	$	121

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

As of July 31, 2016 the components of distributable earnings (deficits) on a tax basis were as follows (in thousands):


	Acadian Fund			SGA Fund
Cost basis of investments for federal income tax purposes	$	86,950		$	11,757
Unrealized appreciation		6,006			1,856
Unrealized depreciation		(4,005	)		(103	)

Net unrealized appreciation (depreciation)		2,001			1,753

Undistributed ordinary income		847			145
Undistributed long-term capital gains		—			457
Accumulated capital and other losses		(3,929	)		—
Other temporary differences		2			—

Distributable earnings (deficits)	$	(1,079	)	$	2,355

Financial reporting records are adjusted for permanent book/tax differences to reflect tax character. Financial records are not adjusted for temporary differences. The temporary differences between financial reporting and tax-basis reporting of unrealized appreciation (depreciation) are attributable primarily to the tax deferral of losses from wash sales, the realization for tax purposes of unrealized gain (loss) on investments in passive foreign investment companies, reclassifications of income from master limited partnerships, 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, reclassifications of income from master limited partnership, and tax reporting have been identified and appropriately reclassified on the Statements of Assets and Liabilities.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Accordingly, the following amounts represent current year permanent differences derived from the foreign currency and gains (losses) from sales of investments in passive foreign investment companies and reclassifications of income from master limited partnership that have been re-classed as of July 31, 2016 (in thousands):


	Acadian Fund			SGA Fund
Paid-in-capital	$	—		$	—
Undistributed net investment income		18			(3	)
Accumulated net realized gain (loss)		(18	)		3
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 months ended July 31, 2016 Acadian Fund has $2,028 short-term and $1,901 long-term post enactment capital loss carryforwards (in thousands). The SGA Fund does not have any capital loss carryforwards for the period herein.

8. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments other than short-term obligations for the six months ended July 31, 2016 were (in thousands):


	Purchases		Sales
Acadian Fund	$	20,134	$	10,431
SGA Fund		6,613		2,668

A summary of the Funds’ transactions in the USG Select Fund for the six months ended July 31, 2016 are as follows (in thousands):


Fund	Type of Transaction		January 31, 2016 Shares/Fair Value		Purchases		Sales		July 31, 2016 Shares/Fair Value		Dividend Income
Acadian		Direct	$	—	$	17,515	$	15,424	$	2,091	$	2
SGA		Direct		—		7,101		6,395		706		—	⁽¹⁾

⁽¹⁾	The amount is less than $500.

American Beacon FundsSM

Notes to Financial Statements

July 31, 2016 (Unaudited)

9. 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 July 31, 2016


	Institutional Class						A Class						C Class
Acadian Emerging Markets Managed Volatility Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		871		$	8,020			8		$	70			5		$	42
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		(292	)		(2,625	)		(31	)		(260	)		(8	)		(70	)

Net increase (decrease) in shares outstanding		578		$	5,395			(23	)	$	(190	)		(3	)	$	(28	)


	Investor Class						Y Class
Acadian Emerging Markets Managed Volatility Fund	Shares			Amount			Shares			Amount
Shares sold		49		$	430			849		$	7,579
Reinvestment of dividends		—			—			—			—
Shares redeemed		(138	)		(1,161	)		(349	)		(2,957	)

Net increase (decrease) in shares outstanding		(89	)	$	(731	)		500		$	4,622


	Institutional Class						Y Class						Investor Class
SGA Global Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		26		$	383			24		$	353			279		$	4,183
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		(40	)		(595	)		(1	)		(23	)		(2	)		(35	)

Net increase (decrease) in shares outstanding		(14	)	$	(212	)		23		$	330			277		$	4,148


	A Class						C Class
SGA Global Growth Fund	Shares			Amount			Shares			Amount
Shares sold		14		$	204			20		$	284
Reinvestment of dividends		—			—			—			—
Shares redeemed		(6	)		(78	)		(7	)		(106	)

Net increase in shares outstanding		8		$	126			13		$	178

For the Year ended January 31, 2016


	Institutional Class						Y Class
Acadian Emerging Markets Managed Volatility Fund	Shares			Amount			Shares			Amount
Shares sold		4,701		$	41,831			3,551		$	34,027
Reinvestment of dividends		46			406			26			226
Shares redeemed		(1,199	)		(10,600	)		(1,019	)		(9,342	)

Net increase in shares outstanding		3,548		$	31,637			2,558		$	24,911


	Investor Class						A Class
Acadian Emerging Markets Managed Volatility Fund	Shares			Amount			Shares			Amount
Shares sold		329		$	3,168			36		$	352
Reinvestment of dividends		3			28			—			2
Shares redeemed		(312	)		(2,869	)		(263	)		(2,592	)

Net increase (decrease) in shares outstanding		20		$	327			(227	)	$	(2,238	)


	C Class
Acadian Emerging Markets Managed Volatility Fund	Shares			Amount
Shares sold		41		$	407
Reinvestment of dividends		—			—
Shares redeemed		(24	)		(209	)

Net increase in shares outstanding		17		$	198

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)


	Institutional Class						Y Class						Investor Class
SGA Global Growth Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		67		$	917			8		$	118			64		$	937
Reinvestment of dividends		6			93			—			2			1			15
Shares redeemed		(2	)		(33	)		(8	)		(118	)		(42	)		(612	)

Net increase in shares outstanding		71		$	977			—		$	2			23		$	340


	A Class						C Class
SGA Global Growth Fund	Shares			Amount			Shares			Amount
Shares sold		14		$	193			4		$	50
Reinvestment of dividends		—			5			—			6
Shares redeemed		(21	)		(293	)		(3	)		(43	)

Net increase (decrease) in shares outstanding		(7	)	$	(95	)		1		$	13

10. Change in Independent Registered Public Accounting Firm (Unaudited)

The Funds engaged PricewaterhouseCoopers, LLC (“PwC”) as the independent registered public accounting firm for the fiscal year ending January 31, 2017. PwC replaces Ernst & Young LLP (“EY”), the Funds’ previous independent registered public accounting firm. The change in accountants was approved by the Audit Committee of the Board on June 8, 2016. During the periods that EY served as the Funds’ independent registered public accounting firm through January 31, 2016, EY’s audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. There were no disagreements between the Funds and EY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Institutional Class
	Six Months			Year Ended						September
	Ended			January 31,						27^Ato
	July 31,									January 31,
	2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period	$	8.36		$	10.24		$	9.59		$	10.00

Income from investment operations:
Net investment income		0.09			0.04			0.13			0.02
Net gains (losses) on investments (both realized and unrealized)		1.01			(1.84	)		0.64			(0.42	)

Total income (loss) from investment operations		1.10			(1.80	)		0.77			(0.40	)

Less distributions:
Dividends from net investment income		—			(0.08	)		(0.12	)		(0.01	)
Distributions from return of capital		—			—			—			—
Tax return of capital		—			(0.00	)^F		—			—

Total distributions		—			(0.08	)		(0.12	)		(0.01	)

Redemption fees added to beneficial interests^F		—			—			—			—

Net asset value, end of period	$	9.46		$	8.36		$	10.24		$	9.59

Total return ^B		13.16	%^C		(17.58	)%		8.04	%		(4.05	)%^C

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	51,138		$	40,336		$	13,080		$	9,969
Ratios to average net assets:
Expenses, before reimbursements		1.52	%^D		1.68	%		2.26	%		4.20	%^D
Expenses, net of reimbursements		1.35	%^D		1.35	%		1.35	%		1.35	%^D
Net investment income (loss), before expense reimbursements		2.05	%^D		1.16	%		0.44	%		(2.30	)%^D
Net investment income, net of reimbursements		2.22	%^D		1.49	%		1.35	%		0.55	%^D
Portfolio turnover rate		14	%^C		35	%		22	%		9	%^E


	Y Class
	Six Months			Year Ended						September
	Ended			January 31,						27^Ato
	July 31,									January 31,
	2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period	$	8.34		$	10.22		$	9.59		$	10.00

Income from investment operations:
Net investment income		0.09			0.14			0.04			0.01
Net gains (losses) on investments (both realized and unrealized)		1.01			(1.94	)		0.71			(0.41	)

Total income (loss) from investment operations		1.10			(1.80	)		0.75			(0.40	)

Less distributions:
Dividends from net investment income		—			(0.08	)		(0.12	)		(0.01	)
Distributions from return of capital		—			—			—			—
Tax return of capital		—			(0.00	)^F		—			—

Total distributions		—			(0.08	)		(0.12	)		(0.01	)

Redemption fees added to beneficial interests^F		—			—			—			—

Net asset value, end of period	$	9.44		$	8.34		$	10.22		$	9.59

Total return ^B		13.19	%^C		(17.64	)%		7.83	%		(4.05	)%^C

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	33,114		$	25,099		$	4,604		$	489
Ratios to average net assets:
Expenses, before reimbursements		1.58	%^D		1.77	%		2.12	%		6.19	%^D
Expenses, net of reimbursements		1.45	%^D		1.45	%		1.45	%		1.45	%^D
Net investment income (loss), before expense reimbursements		2.08	%^D		1.23	%		0.01	%		(4.30	)%^D
Net investment income, net of reimbursements		2.21	%^D		1.55	%		0.68	%		0.44	%^D
Portfolio turnover rate		14	%^C		35	%		22	%		9	%^E

^A	Commencement of operations.

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 September 27, 2013 through January 31, 2014 and is not annualized.

^F	Amount represents less than $0.01 per share.

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Investor Class
	Six Months			Year Ended						September
	Ended			January 31,						27^Ato
	July 31,									January 31,
	2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period	$	8.32		$	10.19		$	9.58		$	10.00

Income from investment operations:
Net investment income		0.10			0.16			0.07			0.00	^F
Net gains (losses) on investments (both realized and unrealized)		0.98			(1.98	)		0.66			(0.41	)

Total income (loss) from investment operations		1.08			(1.82	)		0.73			(0.41	)

Less distributions:
Dividends from net investment income		—			(0.05	)		(0.12	)		(0.01	)
Distributions from return of capital		—			—			—			—
Tax return of capital		—			(0.00	)^F		—			—

Total distributions		—			(0.05	)		(0.12	)		(0.01	)

Redemption fees added to beneficial interests^F		—			—			—			—

Net asset value, end of period	$	9.40		$	8.32		$	10.19		$	9.58

Total return ^B		12.98	%^C		(17.86	)%		7.63	%		(4.15	)%^C

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,607		$	3,933		$	4,612		$	1,326
Ratios to average net assets:
Expenses, before reimbursements		1.81	%^D		1.98	%		2.42	%		5.46	%^D
Expenses, net of reimbursements		1.73	%^D		1.73	%		1.73	%		1.73	%^D
Net investment income (loss), before expense reimbursements		1.74	%^D		1.30	%		0.12	%		(3.60	)%^D
Net investment income, net of reimbursements		1.84	%^D		1.55	%		0.81	%		0.13	%^D
Portfolio turnover rate		14	%^C		35	%		22	%		9	%^E

	A Class
	Six Months			Year Ended						September
	Ended			January 31,						27^Ato
	July 31,									January 31,
	2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period	$	8.34		$	10.18		$	9.58		$	10.00

Income from investment operations:
Net investment income		0.10			0.12			0.06			0.00	^F
Net gains (losses) on investments (both realized and unrealized)		0.98			(1.94	)		0.66			(0.41	)

Total income (loss) from investment operations		1.08			(1.82	)		0.72			(0.41	)

Less distributions:
Dividends from net investment income		—			(0.02	)		(0.12	)		(0.01	)
Distributions from return of capital		—			—			—			—
Tax return of capital		—			(0.00	)^F		—			—

Total distributions		—			(0.02	)		(0.12	)		(0.01	)

Redemption fees added to beneficial interests^F		—			—			—			—

Net asset value, end of period	$	9.42		$	8.34		$	10.18		$	9.58

Total return ^B		12.95	%^C		(17.90	)%		7.53	%		(4.15	)%^C

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	617		$	740$			3,215		$	554
Ratios to average net assets:
Expenses, before reimbursements		1.92	%^D		2.10	%		2.49	%		7.71	%^D
Expenses, net of reimbursements		1.75	%^D		1.75	%		1.77	%		1.85	%^D
Net investment income (loss), before expense reimbursements		1.61	%^D		1.08	%		0.09	%		(5.92	)%^D
Net investment income (loss), net of reimbursements		1.77	%^D		1.43	%		0.81	%		(0.07	)%^D
Portfolio turnover rate		14	%^C		35	%		22	%		9	%^E

^A	Commencement of operations.

^C	Not annualized.

^D	Annualized.

^E	Portfolio turnover rate is for the period from September 27, 2013 through January 31, 2014 and is not annualized.

^F	Amount represents less than $0.01 per share.

American Beacon Acadian Emerging Markets Managed Volatility Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	C Class
	Six Months			Year Ended						September
	Ended			January 31,						27^Ato
	July 31,									January 31,
	2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period	$	8.23		$	10.10		$	9.55		$	10.00

Income from investment operations:
Net investment income (loss)		0.05			0.10			0.02			(0.01	)
Net gains (losses) on investments (both realized and unrealized)		0.99			(1.97	)		0.62			(0.43	)

Total income (loss) from investment operations		1.04			(1.87	)		0.64			(0.44	)

Less distributions:
Dividends from net investment income		—			(0.00	)		(0.09	)		(0.01	)
Distributions from return of capital		—			—			—			—
Tax return of capital		—			(0.00	)^F		—			—

Total distributions		—			(0.00	)		(0.09	)		(0.01	)

Redemption fees added to beneficial interests^F		—			—			—			—

Net asset value, end of period	$	9.27		$	8.23		$	10.10		$	9.55

Total return ^B		12.64	%^C		(18.50	)%		6.66	%		(4.45	)%^C

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	694		$	645$			623		$	149
Ratios to average net assets:
Expenses, before reimbursements		2.67	%^D		2.87	%		3.26	%		10.04	%^D
Expenses, net of reimbursements		2.50	%^D		2.50	%		2.52	%		2.60	%^D
Net investment income (loss), before expense reimbursements		0.91	%^D		0.40	%		(0.90	)%		(8.13	)%^D
Net investment income (loss), net of reimbursements		1.08	%^D		0.77	%		(0.16	)%		(0.68	)%^D
Portfolio turnover rate		14	%^C		35	%		22	%		9	%^E

^A	Commencement of operations.

^C	Not annualized.

^D	Annualized.

^E	Portfolio turnover rate is for the period from September 27, 2013 through January 31, 2014 and is not annualized.

^F	Amount represents less than $0.01 per share.

American Beacon SGA Global Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Institutional Class
	Six Months Ended July 31,			Year Ended January 31,						Six Months Ended January 31,			Year Ended September 30,						Dec. 31^E to Sept. 30,
	2016			2016			2015			2014			2013			2012			2011
	(unaudited)
Net asset value, beginning of period	$	13.79		$	13.43		$	13.05		$	13.15		$	12.04		$	9.48		$	10.00

Income from investment operations:
Net investment income (loss)		0.04			0.03			0.06			0.01			(0.04	)^F		(0.05	)^F		(0.04	)^F
Net gains (losses) on investments (both realized and unrealized)		2.33			0.56			0.72			0.15			1.36			2.61			(0.48	)

Total income (loss) from investment operations		2.37			0.59			0.78			0.16			1.32			2.56			(0.52	)

Less distributions:
Dividends from net investment income		—			(0.02	)		(0.03	)		—			—			—			—
Distributions from net realized gains		—			(0.21	)		(0.37	)		(0.26	)		(0.21	)		—			—

Total distributions		—			(0.23	)		(0.40	)		(0.26	)		(0.21	)		—			—

Net asset value, end of period	$	16.16		$	13.79		$	13.43		$	13.05		$	13.15		$	12.04		$	9.48

Total return ^A		17.19	%^B		4.26	%		5.98	%		1.13	%^B		11.21	%^H		27.00	%^H		(5.20	)%^BH

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	7,071		$	6,219		$	5,106		$	4,738		$	4		$	2		$	1
Ratios to average net assets:
Expenses, before reimbursements		2.14	%^C		2.62	%		3.82	%		5.28	%^C		8.00	%		12.02	%		28.14	%^C
Expenses, net of reimbursements		0.98	%^C		0.98	%		0.98	%		1.00	%^C		1.75	%		1.75	%		1.74	%^C
Net investment (loss), before expense reimbursements		(0.63	)%^C		(1.37	)%		(2.41	)%		(4.12	)%^C		(6.56	)%		(10.76	)%		(26.92	)%^C
Net investment income (loss), net of reimbursements		0.53	%^C		0.27	%		0.42	%		0.16	%^C		(0.31	)%		(0.49	)%		(0.52	)%^C
Portfolio turnover rate		31	%^B		39	%		38	%		15	%^B		39	%		41	%		48	%^B


	Y Class
	Six Months Ended July 31,			Year Ended January 31,						October 4^D to January 31,
	2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period	$	13.75		$	13.41		$	13.05		$	13.25

Income from investment operations:
Net investment income (loss)		0.00			0.02			0.04			0.00	^I
Net gains (losses) on investments (both realized and unrealized)		2.36			0.55			0.72			0.06

Total income (loss) from investment operations		2.36			0.57			0.76			0.06

Less distributions:
Dividends from net investment income		—			(0.02	)		(0.03	)		—
Distributions from net realized gains		—			(0.21	)		(0.37	)		(0.26	)

Total distributions		—			(0.23	)		(0.40	)		(0.26	)

Net asset value, end of period	$	16.11		$	13.75		$	13.41		$	13.05

Total return ^A		17.16	%^B		4.12	%		5.83	%		0.37	%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	505		$	128		$	120		$	105
Ratios to average net assets:
Expenses, before reimbursements		2.13	%^C		2.72	%		3.84	%		10.23	%^C
Expenses, net of reimbursements		1.08	%^C		1.08	%		1.08	%		1.08	%^C
Net investment (loss), before expense reimbursements		(0.80	)%^C		(1.51	)%		(2.44	)%		(9.09	)%^C
Net investment income (loss), net of reimbursements		0.27	%^C		0.13	%		0.32	%		0.06	%^C
Portfolio turnover rate		31	%^B		39	%		38	%		15	%^G

^B	Not annualized.

^C	Annualized.

^D	Commencement of operations.

^E	Commencement of operations for the Predecessor Fund is December 31, 2010.

^F	The Predecessor Fund calculated the change in undistributed net investment income based on average shares outstanding during the period.

^G	Portfolio turnover rate (not annualized) is for the period from October 1, 2013 through January 31, 2014.

^H	Total returns would have been lower had expenses not been waived or absorbed by the Predecessor Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distribution or the redemption of Fund shares.

^I	Amounts represent less than $0.01 per share.

American Beacon SGA Global Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Investor Class
	Six Months Ended July 31,			Year Ended January 31,						October 4^D to January 31,
	2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period	$	13.66		$	13.36		$	13.03		$	13.25

Income from investment operations:
Net investment income (loss)		0.08			(0.04	)		0.01			(0.01	)
Net gains (losses) on investments (both realized and unrealized)		2.24			0.57			0.72			0.05

Total income (loss) from investment operations		2.32			0.53			0.73			0.04

Less distributions:
Dividends from net investment income		—			(0.02	)		(0.03	)		—
Distributions from net realized gains		—			(0.21	)		(0.37	)		(0.26	)

Total distributions		—			(0.23	)		(0.40	)		(0.26	)

Net asset value, end of period	$	15.98		$	13.66		$	13.36		$	13.03

Total return ^A		16.98	%^B		3.84	%		5.60	%		0.22	%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	4,916		$	422		$	108		$	107
Ratios to average net assets:
Expenses, before reimbursements		2.36	%^C		3.08	%		5.28	%		10.37	%^C
Expenses, net of reimbursements		1.36	%^C		1.36	%		1.36	%		1.36	%^C
Net investment (loss), before expense reimbursements		(1.18	)%^C		(2.04	)%		(3.88	)%		(9.22	)%^C
Net investment income (loss), net of reimbursements		(0.18	)%^C		(0.32	)%		0.05	%		(0.22	)%^C
Portfolio turnover rate		31	%^B		39	%		38	%		15	%^G


	A Class
	Six Months Ended			Year Ended January 31,						October 4^D to January 31,
	July 31, 2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period	$	13.65		$	13.35		$	13.03		$	13.25

Income from investment operations:
Net investment income (loss)		0.03			(0.03	)		0.00	^I		0.00	^I
Net gains (losses) on investments (both realized and unrealized)		2.28			0.56			0.72			0.04

Total income (loss) from investment operations		2.31			0.53			0.72			0.04

Less distributions:
Dividends from net investment income		—			(0.02	)		(0.03	)		—
Distributions from net realized gains		—			(0.21	)		(0.37	)		(0.26	)

Total distributions		—			(0.23	)		(0.40	)		(0.26	)

Net asset value, end of period	$	15.96		$	13.65		$	13.35		$	13.03

Total return ^A		16.92	%^B		3.84	%		5.53	%		0.22	%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	548		$	345		$	435		$	363
Ratios to average net assets:
Expenses, before reimbursements		2.53	%^C		3.05	%		4.19	%		8.22	%^C
Expenses, net of reimbursements		1.38	%^C		1.38	%		1.42	%		1.48	%^C
Net investment (loss), before expense reimbursements		(1.07	)%^C		(1.90	)%		(2.78	)%		(6.91	)%^C
Net investment income (loss), net of reimbursements		0.08	%^C		(0.22	)%		(0.01	)%		(0.17	)%^C
Portfolio turnover rate		31	%^B		39	%		38	%		15	%^G

^B	Not annualized.

^C	Annualized.

^D	Commencement of operations.

^E	Commencement of operations for the Predecessor Fund is December 31, 2010.

^F	The Predecessor Fund calculated the change in undistributed net investment income based on average shares outstanding during the period.

^G	Portfolio turnover rate (not annualized) is for the period from October 1, 2013 through January 31, 2014.

^H	Total returns would have been lower had expenses not been waived or absorbed by the Predecessor Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distribution or the redemption of Fund shares.

^I	Amounts represent less than $0.01 per share.

American Beacon SGA Global Growth Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	C Class
	Six Months Ended July 31,			Year ended January 31,						October 4^D to January 31,
	2016			2016			2015			2014
	(unaudited)
Net asset value, beginning of period
Income from investment operations:	$	13.40		$	13.21		$	13.00		$	13.25

Net investment (loss)
Net gains (losses) on investments (both realized and unrealized)		0.04			(0.12	)		(0.05	)		(0.04	)
Total income (loss) from investment operations		2.18			0.54			0.66			0.05

Less distributions:		2.22			0.42			0.61			0.01

Dividends from net investment income
Distributions from net realized gains		—			(0.02	)		(0.03	)		—
Total distributions		—			(0.21	)		(0.37	)		(0.26	)

Net asset value, end of period		—			(0.23	)		(0.40	)		(0.26	)

Total return ^A	$	15.62		$	13.40		$	13.21		$	13.00

		16.57	%^B		3.04	%		4.69	%		(0.01	)%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	672		$	410		$	393		$	109
Ratios to average net assets:
Expenses, net of reimbursements		3.23	% ^C		3.76	%		4.77	%		11.36	%^C
Net investment (loss), before expense reimbursements		2.13	%^C		2.13	%		2.16	%		2.23	%^C
Net investment (loss), net of reimbursements		(1.76	)%^C		(2.51	)%		(3.41	)%		(10.22	)%^C
Portfolio turnover rate		(0.65	)%^C		(0.89	)%		(0.80	)%		(1.09	)%^C
		31	%^B		39	%		38	%		15	%^G

^B	Not annualized.

^C	Annualized.

^D	Commencement of operations.

^E	Commencement of operations for the Predecessor Fund is December 31, 2010.

^F	The Predecessor Fund calculated the change in undistributed net investment income based on average shares outstanding during the period.

^G	Portfolio turnover rate (not annualized) is for the period from October 1, 2013 through January 31, 2014.

^H	Total returns would have been lower had expenses not been waived or absorbed by the Predecessor Fund. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distribution or the redemption of Fund shares.

^I	Amounts represent less than $0.01 per share.

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (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”) between American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”), on behalf of the American Beacon Acadian Emerging Markets Managed Volatility Fund (“Acadian Fund”) and the American Beacon SGA Global Growth Fund (“SGA Fund”) (collectively, the “Funds”);

(2) a new Investment Advisory Agreement among the Manager, the Trust, on behalf of the Acadian Fund, and Acadian Asset Management LLC (“Acadian”); and

(3) a new Investment Advisory Agreement among the Manager, the Trust, on behalf of the SGA Fund, and Sustainable Growth Advisers, LP (“SGA”);

Collectively, the new Investment Advisory Agreements are hereinafter referred to as the “New Advisory Agreements,” and Acadian and SGA 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 prior Management Agreement (“Prior Management Agreement”) between the Manager and the Trust on behalf of the Funds and the prior Investment Advisory Agreements (“Prior Advisory Agreements”) among the Manager, Acadian and the Trust, on behalf of the Acadian Fund, and the Manager, SGA and the Trust, on behalf of the SGA 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 Prior Management Agreement and each Prior Advisory Agreement (“Prior 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 Prior Management Agreement and Prior Advisory Agreements at in-person meetings held in May and June 2014 and August 2013. 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 and August 2013 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 Prior Agreements, and the Board’s ongoing due diligence review in connection with the Transaction, the Board determined that it was not necessary to repeat certain aspects of the review conducted in connection with the approvals in the past year.

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

•

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

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

•

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 Prior Agreements;

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

The Board also considered information that had been provided to the Board by the Manager and the Sub-Advisors for the May and June 2014 meetings in connection with the renewal of the Prior Management Agreement with respect to certain other series of the Trust and the August 2013 meetings in connection with the initial approval of the Prior Agreements with respect to the Funds.

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 Prior Management Agreement in May and June 2014 with respect to certain other series of the Trust and its review of the Prior Agreements in August 2013 with respect to the Funds, 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 Prior 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 Prior Management Agreement in May and June 2014 with respect to certain other series of the Trust and Prior Agreements in August 2013 with respect to the Funds that had not previously been reported to the Board. The Board also considered information regarding the post-closing capitalization of the Purchasers and the Purchasers’ long-term business goals with regard to the Manager and the Manager’s activities with respect to the Trust, which are consistent with the Manager’s current goals. Based on the foregoing information, the Board concluded that the nature, extent and quality of the management and advisory services provided by the Manager and the Sub-Advisors were appropriate for each Fund and, thus, determined to approve the New Agreements for each Fund.

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

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 Prior Agreements. The Board also considered the performance reports and discussions with management at Board and Committee meetings since August 2013. 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 Prior Agreements with respect to the Funds in August 2013. Based on the foregoing information and the Board’s considerations in connection with the approval of the Prior Agreements with respect to the Funds in August 2013, 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 Prior 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 Prior Advisory Agreement. Based on the foregoing information and the Board’s considerations in connection with the initial approval of the Prior Agreements with respect to the Funds in August 2013, the Board concluded that the Manager’s fee schedule for each Fund, Acadian’s fee schedules for the Acadian Fund and SGA’s fee schedule for the SGA 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 initial approval of the Prior Agreements with respect to the Funds in August 2013, 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, Acadian’s relationship with the Acadian Fund and SGA’s relationship with the SGA 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 Funds, the Manager, Acadian, or SGA, as that term is defined in the 1940 Act, concluded that the management and investment advisory fee rates to be paid by the Acadian Fund and the SGA Fund are fair and reasonable and that the approval of the New Agreements is in the best interests of the Acadian Fund and the SGA Fund, and approved the New Agreements.

Approval of Management Agreement for the Funds in March 2016

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.

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

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 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, and approved the prior management agreement at its 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.

Renewal and Approval of the Management Agreements and Investment Advisory Agreements of the Funds in June 2016

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 Acadian Fund, and Acadian; and

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

Each of the Investment Advisory Agreements are hereinafter referred to as the “Investment Advisory Agreement,” and Acadian and SGA are hereinafter each referred to as a “subadvisor.” The Management

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

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;

•

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

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

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.

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 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.

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

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 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.”

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

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 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

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

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 Acadian Emerging Markets Managed Volatility Fund

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

Lipper Total Expense Analysis and Morningstar Fee Level Ranking


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

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


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

The Trustees also considered: (1) Information provided by Acadian regarding fee rates charged for managing accounts in the same strategy as the subadvisor manages the Fund; and (2) the Manager’s recommendation to continue to retain the subadvisor based upon, among other factors, the relatively brief period that this 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 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 SGA Global Growth Fund

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

Lipper Total Expense Analysis and Morningstar Fee Level Ranking


Compared to Lipper Expense Universe		1^st Quintile
Compared to Lipper Expense Gro up		2^nd 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		1^st Quintile
Compared to Lipper Performance Group		Not Available

Disclosure Regarding the Approval of the Management Agreements and Investment Advisory Agreements (Unaudited)

The Trustees also considered: (1) The Fund acquired all of the assets of the SGA Global Growth Fund (the “Acquired Fund”), a series of the Investment Managers Series Trust, on October 7, 2013, and the Fund’s performance prior to that date is that of the Acquired Fund; (2) Information provided by SGA 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 the 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.

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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 each Fund’s portfolio holdings is also available on www.americanbeaconfunds.com, approximately twenty days after the end of each month for the SGA Fund and sixty days after each quarter for the Acadian Fund.		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

PricewaterhouseCoopers LLP

Boston, MA

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 Acadian Emerging Markets Managed Volatility Fund, and American Beacon SGA Global Growth Fund, are service marks of American Beacon Advisors, Inc.

SAR 7/16

LOGO

About American Beacon Advisors

CRESCENT SHORT DURATION HIGH INCOME FUND The Fund’s investments in high yield securities, including loans, restricted securities and floating rate securities are subject to greater levels of credit, interest rate, market and liquidity risks than investment-grade securities. Investing in foreign securities may involve heightened risk due to currency fluctuations and economic and political risks. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of these Funds will be met.


American Beacon Funds			July 31, 2016

Contents


President’s Message			1

Performance Overview			2

Expense Examples			4

Schedule of Investments:

Crescent Short Duration High Income Fund			5

Financial Statements			12

Notes to Financial Statements			15

Financial Highlights			28

Disclosures Regarding Approval of the Management and Investment

Advisory Agreements			31

Additional Information			Back Cover

President’s Message

Dear Shareholders,

During the six-month period ended July 31, 2016, patchy economic growth and the “Brexit” referendum set the stage for volatile markets around the globe. China’s slowing growth escalated concerns for global markets and, as a result, many central banks decided to continue or expand their economic stimulation policies. In March 2016, the Bank of Japan pushed its rates into negative territory and the European Central Bank cut a key rate to zero.

Then on Friday, June 24, 2016, Great Britain’s announcement that 52% of its voters favored leaving the European Union shook global financial markets. The Brexit referendum fallout was swift and significant. British Prime Minister David Cameron announced his resignation, the British pound sterling nose-dived approximately 12% against the dollar, the euro fell 1.4% against the dollar and

the price of gold climbed 4.7% to a two-year high. Global markets reacted to the Brexit news with a selling frenzy. In the U.S., the Dow Jones industrial average dropped 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 sank 4.1%. That very 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.

For the period under review, the BofA Merrill Lynch U.S. High Yield Cash Pay BB-B 1-5 Year Index, which is the performance benchmark for the American Beacon Crescent Short Duration High Income Fund, gained 9.96%.

For the six months ended July 31, 2016:

•

American Beacon Crescent Short Duration High Income Fund (Investor Class) returned 7.26%.

American Beacon Advisors identifies and partners with experienced asset managers from across all asset classes to help protect our shareholders’ portfolios over the long term. We are proud to offer a variety of funds that allow investors to take advantage of different asset classes.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

American Beacon Crescent Short Duration High Income Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

The Investor Class of the American Beacon Crescent Short Duration High Income Fund (the “Fund”) returned 7.26% for the six-month period ending July 31, 2016. The Fund underperformed the BofA Merrill Lynch U.S. High Yield Cash Pay BB-B 1-5 Year Index (the “Index”) return of 9.96% due primarily to its asset allocation among the available high yield sectors.

Total Returns for the Period ended July 31, 2016


	Ticker		6 Months*			1 Year			Since Inception 10/1/14
Institutional Class (1,3)		ACHIX		7.35	%		2.81	%		1.75	%
Y Class (1,3)		ACHYX		7.41	%		2.87	%		1.67	%
Investor Class (1,3)		ACHPX		7.26	%		2.58	%		1.44	%
A Class with sales charge (1,3)		ACHAX		4.58	%		(0.04	)%		(0.06	)%
A Class without sales charge (1,3)		ACHAX		7.25	%		2.55	%		1.35	%
C Class with sales charge (1,3)		ACHCX		5.73	%		0.70	%		0.61	%
C Class without sales charge (1,3)		ACHXC		6.73	%		1.70	%		0.61	%
BofA Merrill Lynch U.S. High Yield Cash Pay BB-B 1-5 Year Index (2)				9.96	%		3.26	%		2.55	%

*	Not Annualized

Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. 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 the actual returns shown since inception. A Class shares have a maximum sales charge of 2.50%. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.

2.	The BofA Merrill Lynch U.S. High Yield Cash Pay BB-B 1-5 Year Index is an unmanaged index that generally tracks the performance of BB-B rated U.S. dollar-denominated corporate bonds publicly issued in the U.S. domestic market with maturities of 1 to 5 years. One cannot directly invest in an index.

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 1.28%, 1.30%, 1.47%, 1.56%, and 2.37%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report.

The Fund invests primarily in traditional, unsecured high-yield securities; however, it has the added flexibility to invest in high-yield bank loan and private debt securities that are not in the Index. The sectors offer diversification and allow the sub-advisor to seek competitive returns over time with less volatility than that of the Index. During the six-month period ended July 31, 2016, the Fund’s allocation to bank loans was approximately 30% of portfolio assets, private debt was approximately 5%, and the remaining 65% was in traditional high-yield.

Bank loans are typically collateralized by assets and are higher in credit quality than unsecured high-yield bonds. As such, during periods of strong market performance, bank loan returns often lag those of traditional high yield. Conversely, when high-yield markets lag, bank loans generally outperform. The period was characterized by strong high-yield market performance, and the Fund’s underperformance is partially due to its exposure to bank loans.

Additionally during the period, the Fund was underweight in the commodity sectors - primarily energy and mining - which adversely affected performance as these were the highest-returning sectors in the Index. Stabilizing commodity prices drew investors back into these sectors after several quarters of avoidance. The Fund has been underweight since mid-2014 when commodity prices began to decline in general.

While the Fund’s relatively short performance record makes longer-term trends difficult to analyze, the sub-advisor’s consistent approach to short-duration, high-yield investing seeks to add value with less volatility than that of the Index. Diversification among the high-yield asset classes offers a distinct approach to investing in the category, but longer time periods are typically needed to properly assess relative returns.

American Beacon Crescent Short Duration High Income Fund^SM

Performance Overview

July 31, 2016 (Unaudited)


Top Ten Holdings (% Net Assets)
Fly Leasing Ltd., 6.75%, Due 12/15/2020		1.1
Landry’s Holdings II, Inc., 10.25%, Due 1/1/2018, 144A		1.1
T-Mobile USA, Inc., 6.625%, Due 4/1/2023		1.1
Reynolds Group Issuer Inc. / Reynolds Group Issuer LLC, 8.250%, Due 2/15/2021		1.1
Ancestry.com Holdings LLC, 9.625%, Due 10/15/2018, 144A		1.1
ArcelorMittal, 6.50%, Due 3/1/2021		1.0
TPF II Power LLC, Syndicated Term Loan B, 5.50%, Due 10/2/2021		1.0
Capital Automotive LP, Second Lien Term Loan, 6.00%, Due 4/30/2020		1.0
Prime Security Services B. LLC, 1st Lien Term Loan, 5.00%, Due 7/1/2021		1.0
Magic Newco LLC, Term Loan, 5.00%, Due 12/12/2018		1.0

Total Fund Holdings	261

Sector Allocation (% Investments)
Service		33.4
Manufacturing		24.6
Finance		13.2
Energy		9.6
Consumer		4.8
Telecom		4.6
Cash Equivalent		4.1
Electric		3.1
Transportation		2.6

American Beacon Crescent Short Duration High Income Fund^SM

Expense Examples

July 31, 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, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing costs (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 (or the inception date of the Fund) in each Class and held for the entire period from February 1, 2016 through July 31, 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 Institutional and Investor Classes that invest in the Fund through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.

Hypothetical Example for Comparison Purposes

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

American Beacon Crescent Short Duration High Income Fund^SM

Expense Examples

July 31, 2016 (Unaudited)

Crescent Short Duration High Income Fund


	Beginning Account Value 2/1/16		Ending Account Value 7/31/16		Expenses Paid During Period* 2/1/16 - 7/31/16
Institutional Class
Actual	$	1,000.00	$	1,073.47	$	4.38
Hypothetical **	$	1,000.00	$	1,020.64	$	4.27
Y Class
Actual	$	1,000.00	$	1,074.10	$	4.90
Hypothetical **	$	1,000.00	$	1,020.14	$	4.77
Investor Class
Actual	$	1,000.00	$	1,072.60	$	6.34
Hypothetical **	$	1,000.00	$	1,018.75	$	6.17
A Class
Actual	$	1,000.00	$	1,072.54	$	6.44
Hypothetical **	$	1,000.00	$	1,018.65	$	6.27
C Class
Actual	$	1,000.00	$	1,067.34	$	10.28
Hypothetical **	$	1,000.00	$	1,014.92	$	10.02

Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 0.85%, 0.95%, 1.23%, 1.25% and 2.00% 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.

American Beacon Crescent Short Duration High Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
COMMON STOCKS - 0.04% (Cost $26)
ENERGY- 0.00%
Oil & Gas - 0.00%
Energy & Exploration Partners, Inc., Acquired 5/13/2016, Cost $3^A^K		3	$	1

HEALTH CARE- 0.04%
Pharmaceuticals - 0.04%
Millennium Health, LLC, Acquired 1/13/2016, Cost $23 ^A^{B K}		4,651		16

Total Common Stocks (Cost $26)				17


	Par Amount
	(000’s)
BANK LOAN OBLIGATIONS - 30.08%
Consumer - 2.44%
Albertsons LLC, First Lien, Term Loan B4, 4.50%, Due 8/25/2021^C^D	$	211		212
Anchor Glass Container Corp., 2015 1st Lien Term Loan, 4.75%, Due 7/1/2022^C^D		52		52
B & G Foods, Inc., 2015 Term Loan B, 3.75%, Due 11/2/2022^C^D		114		115
Coty, Inc., Term Loan B, 3.75%, Due 10/27/2022^C^D		38		39
Dell, Inc., 2016 Term Loan B, 4.00%, Due 5/24/2023^D		111		112
Maple Holdings Acquisition Corp., Term Loan B, 5.25%, Due 3/3/2023^C^D		95		95
NVA Holdings, Inc., First Lien Term Loan, 4.75%, Due 8/14/2021^C^D		186		186
Pinnacle Foods Finance LLC, Fourth Amendment Tranche I, 2.75%, Due 1/13/2023^C		26		26
Revlon Consumer Products Corp., 2016 Term Loan B, 4.25%, Due 7/22/2023^D		40		40
RSC Acquisition, Inc., Delayed Draw Term Loan, 6.25%, Due 11/30/2022, Acquired 11/30/2015, Cost $30 ^D^K		11		11
RSC Acquisition, Inc., Term Loan, 6.25%, Due 11/30/2022, Acquired 11/30/2015, Cost $217 ^D^K		238		235
Shearers Foods, Inc., Incremental Term Loan, 5.25%, Due 6/30/2021^C^D		10		10
Spectrum Brands, Inc., Term Loan, 3.50%, Due 6/23/2022^C^D		40		40

				1,173

Energy - 0.20%
Energy & Exploration Partners, Inc., 2016 2nd Lien PIK Term Loan, 5.00%, Due 5/13/2022, Acquired 5/13/2016, Cost $6 ^D^K		6		6
Royal Holdings, Inc., 2015 1st Lien Term Loan, 4.50%, Due 6/19/2022^C^D		89		90

				96

Finance - 5.82%
Americold Realty Operating Partnership, L.P., 2016 First Lien Term Loan B, 5.75%, Due 12/1/2022, Acquired 6/17/2016 – 7/21/2016, Cost $78 ^D^{E K}		77		78
Ascensus, Inc., Term Loan, 5.50%, Due 12/3/2022^C^D		30		30
Assuredpartners Capital, Inc., 2015 1st Lien Term Loan, 5.75%, Due 10/21/2022^C^D		174		174
Asurion LLC, Term Loan B4, 5.00%, Due 8/4/2022^B^{C D}		171		171
Capital Automotive LP, Second Lien Term Loan, 6.00%, Due 4/30/2020^D^E		500		501
Cision US Inc., First Lien Term Loan B, 7.00%, Due 6/16/2023^D		100		95
DTZ U. S. Borrower LLC, 2015 First Lien Term Loan, 4.25%, Due 11/4/2021^B^{C D}		248		246
Higginbotham & Associates LLC, First Lien Term Loan, 6.25%, Due 11/25/2021, Acquired 11/25/2015, Cost $58 ^B^{D K}		209		210
IG Investment Holdings LLC, Term Loan B, 6.00%, Due 10/29/2021^B^D		246		247
iStar, Inc., 2016 Term Loan B, 5.50%, Due 7/1/2020^C^D		58		58
Kaufman Hall & Associates LLC, Initial Term Loan, 6.75%, Due 12/31/2020, Acquired 11/29/2015, Cost $238 ^B^{D K}		242		234
MGM Growth Properties Operating Partnership LP, First Lien Term Loan B, 4.00%, Due 4/25/2023^D^E		75		76
MPH Acquisition Holdings LLC, 2016 Cov-Lite First Lien Term Loan, 5.00%, Due 6/7/2023^B^D		98		98
Onex Wizard US Acquisition, Inc., Term Loan, 4.25%, Due 3/13/2022^D		277		277
Realogy Corp., Term Loan B, 3.75%, Due 7/20/2022^C^D		30		30
RPI Finance Trust, Term Loan B4, 3.50%, Due 11/9/2020^D		99		99
Travelport Finance Luxembourg Sarl, Term Loan, 5.75%, Due 9/2/2021^D		168		168

				2,792

Manufacturing - 8.29%
Avago Technologies Cayman Finance Ltd., 2016 Term Loan B1, 4.25%, Due 2/1/2023^C^D		85		85
BE Aerospace, Inc., 2014 Term Loan B, 3.75%, Due 12/16/2021^C^D		25		25

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Par Amount		Fair Value
	(000’s)		(000’s)
BMC Software Finance, Inc., US Borrower Term Loan, 5.00%, Due 9/10/2020^D	$	178	$	163
Builders FirstSource, Inc., Term Loan B, 6.00%, Due 7/31/2022^C^D		199		199
CPI Acquisition, Inc., Term Loan B, 5.50%, Due 8/17/2022^D		36		35
Epicor Software Corp., 1st Lien Bridge Loan, 4.75%, Due 6/1/2022^C^D		238		235
First Data Corp., 2021 Extended Dollar First Lien Term Loan, 4.44%, Due 3/24/2021^C^D		13		13
GCP Applied Technologies Inc., First Lien Term Loan B, 5.25%, Due 2/3/2022^D		40		40
Global Brass & Copper, Inc., 2016 Term Loan B, 5.25%, Due 7/18/2023^D		37		37
Hilex Poly Co., LLC, Term Loan B, 6.00%, Due 12/5/2021^B^D		227		228
Huntsman International LLC, 2016 1st Lien Term Loan B, 4.25%, Due 4/1/2023^B^{C D}		100		100
Informatica Corp., Term Loan, 4.50%, Due 8/5/2022^C^D		347		342
MacDermid, Inc., Term Loan B3, 5.50%, Due 6/7/2020^C^D		25		25
Magic Newco LLC, Term Loan, 5.00%, Due 12/12/2018^B^D		491		493
Mediaocean LLC, 1st Lien Term Loan, 5.75%, Due 8/15/2022, Acquired 6/28/2016, Cost $148 ^D^K		150		149
Murray Energy Corp., 2015 Term Loan B, 7.50%, Due 4/16/2020^C^D		93		68
Owens Illinois, Inc., 2015 Term Loan B, 3.50%, Due 9/1/2022^C^D		120		121
PQ Corp., First Lien Term Loan, 5.75%, Due 11/4/2022^D		143		144
Reynolds Group Holdings, Inc., Term Loan, 4.25%, Due 2/1/2023^D		100		100
Road Infrastructure Investment, 2016 1st Lien Term Loan, 5.00%, Due 6/13/2023^D		68		68
Sensus USA Inc., 2016 Term Loan, 6.50%, Due 3/16/2023^C^D		110		110
Shoes For Crews, LLC, Term Loan, 6.00%, Due 10/27/2022^B^D		249		248
SI Organization Vencore, Inc., 5/14 First Lien Term Loan, 5.75%, Due 11/23/2019^C^D		75		75
Silver II U.S. Holdings LLC, Term Loan, 4.00%, Due 12/13/2019^B^{C D}		10		9
Sophia LP, 2015 First Lien Closing Date Term Loan B, 4.75%, Due 9/30/2022^C^{D E}		248		248
SS&C Technologies, Inc., 2015 First Lien Term Loan B1, 4.00%, Due 7/8/2022^C^D		32		32
SS&C Technologies, Inc., 2015 First Lien Term Loan B2, 4.00%, Due 7/8/2022^C^D		4		4
Strategic Partners, Inc., 2016 First Lien Term Loan, 6.25%, Due 6/9/2023, Acquired 6/24/2016, Cost $119 ^D^K		120		120
Tank Intermediate Holding Corp., Term Loan A, 5.25%, Due 3/16/2022^D		94		88
Univar, Inc., 2015 Term Loan, 4.25%, Due 7/1/2022^C^D		149		149
UTEX Industries, Inc., First Lien Term Loan, 5.00%, Due 5/22/2021^D		48		33
Western Digital Corp., Term Loan B, 6.25%, Due 4/29/2023^D		10		10
Zebra Technologies Corp., Term Loan B, 4.00%, Due 10/27/2021^C^D		186		187

				3,983

Service - 10.38%
Academy Ltd., 2015 Term Loan B, 5.00%, Due 7/1/2022^C^D		239		232
Affordable Care Holdings Corp., 2015 1st Lien Term Loan, 5.75%, Due 10/22/2022, Acquired 10/22/2022, Cost $49 ^C^{D K}		50		50
Amneal Pharmaceuticals LLC, Second Incremental First Lien Term Loan, 4.50%, Due 11/1/2019^B^{C D}		115		115
ATI Holdings Acquisition, Inc., First Lien Initial Term Loan, 5.50%, Due 5/10/2023^D		95		95
BJ’s Wholesale Club, Inc., 2013 1st Lien Term Loan B, 4.50%, Due 9/26/2019^C^D		40		40
Burger King - New Red Finance, Inc. 2015 Term Loan B, 3.75%, Due 12/10/2021^C^D		36		36
Carestream Health, Inc., Term Loan, 5.00%, Due 6/7/2019^D		126		122
Charter Communications Operating LLC, 2016 Term Loan I, 3.50%, Due 1/24/2023^C^D		80		80
CHG Healthcare Services, Inc., Term Loan, 4.75%, Due 6/7/2023^C^D		75		75
CHS/Community Health Systems, Inc., Incremental 2021 First Lien Term Loan H, 4.00%, Due 1/27/2021^C^D		115		113
Computer Sciences Government Services, Inc., Term Loan B, 3.75%, Due 11/28/2022^C^D		34		34
Curo Health Services LLC, Term Loan, 6.50%, Due 2/7/2022^B^{C D}		116		116
DJO Finance LLC, 2015 Term Loan, 4.25%, Due 6/8/2020^B^{C D}		121		118
Dollar Tree, Inc., Term Loan B 1, 3.50%, Due 7/6/2022^C^D		93		93
Doosan Infracore International, Inc., Term Loan B, 4.50%, Due 5/28/2021^D		62		62
ExamWorks Group, Inc., Term Loan, 4.75%, Due 6/8/2023^D		39		39
First Data Corp., 2015 First Lien Term Loan, 4.238%, Due 7/8/2022^C^D		100		100
Hill-Rom Holdings, Inc., Term Loan B, 3.50%, Due 9/8/2022^D		75		75
Hudson S Bay Company, Term Loan B, 4.75%, Due 9/30/2022^C^D		45		45
J.C. Penney Company, Inc., 2016 Term Loan B, 5.25%, Due 6/23/2023		81		81
Jaguar Holding Co., II 2015 Term Loan B, 4.25%, Due 8/18/2022^C^D		109		109
Men’s Wearhouse Inc., Term Loan B, 4.50%, Due 6/18/2021^D		29		28

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Par Amount		Fair Value
	(000’s)		(000’s)
Merrill Communications LLC, 2015 Term Loan, 6.25%, Due 6/1/2022, Acquired 5/29/2015 - 7/15/2015, Cost $304 ^B^{C D K}	$	307	$	276
Midas Intermediate Holdco II LLC, Delayed Draw/Multi Draw Term Loan L, 4.50%, Due 8/18/2021^B^D		3		3
Midas Intermediate Holdco II LLC, Term Loan B, 4.50%, Due 8/18/2021^B^D		32		32
Neiman Marcus Group Ltd., LLC, Term Loan, 4.25%, Due 10/25/2020^B^{C D}		30		28
NMSC Holdings Inc., 1st Lien Term Loan, 6.00%, Due 4/19/2023^D		73		74
Numericable U.S. LLC, Term Loan B7, 5.00%, Due 1/15/2024^B^{C D}		120		121
Ortho Clinical Diagnostics S.A., Term Loan, 4.75%, Due 6/30/2021^D		432		417
Paradigm Acquisition Corp. Term Loan, 6.00%, Due 6/2/2022, Acquired 6/2/2015 - 1/6/2016, Cost $228 ^C^{D K}		231		230
Petco Animal Supplies, Inc., 2016 Term Loan, 5.00%, Due 1/26/2023^C^D		67		67
Playpower, Inc., 2015 First Lien Term Loan, 5.75%, Due 6/23/2021, Acquired 3/4/2016, Cost $246 ^D^K		249		246
Prime Security Services Borrower LLC, 1st Lien Term Loan, 4.75%, Due 7/1/2021^B^{C D}		498		501
Prospect Medical Holdings, Inc., First Lien Term Loan, 7.00%, Due 6/1/2022^D		75		75
Rentpath, Inc., 1st Lien Term Loan, 6.25%, Due 12/17/2021^D		121		113
Scientific Games International, Inc., Term Loan B 2, 6.00%, Due 10/1/2021^D		150		150
Station Casinos LLC, 2016 Term Loan B, 3.75%, Due 6/8/2023^C^D		10		10
Survey Sampling International LLC, First Lien Term Loan B, 6.00%, Due 12/4/2020, Acquired 12/12/2014, Cost $122 ^B^{C D K}		123		123
Survey Sampling International LLC, Second Lien Term Loan, 10.00%, Due 12/4/2021, Acquired 12/12/2014, Cost $123 ^B^{C D K}		125		121
Tribune Media Company, Term Loan, 3.75%, Due 12/27/2020^D		69		69
Univision Communications, Inc., Term Loan, 4.00%, Due 3/1/2020^C^D		81		81
USAGM Holdco LLC, 2015 Term Loan, 4.75%, Due 7/28/2022^B^{C D}		164		160
Valeant Pharmaceuticals International, Term Loan B, 5.00%, Due 4/1/2022^C^D		88		87
WEX Inc., Term Loan B, 4.25%, Due 7/1/2023^C^D		21		22
William Morris Endeavor Entertainment LLC, Term Loan B, 5.25%, Due 5/6/2021^B^D		122		122

				4,986

Telecommunications - 0.25%
LTS Buyer LLC, Term Loan B, 4.00%, Due 4/13/2020^B^{C D}		25		25
Neptune Finco Corp., 2015 Term Loan, 5.00%, Due 10/9/2022^C^D		71		72
T-Mobile USA, Inc., Term Loan B, 3.50%, Due 11/9/2022^C^D		25		25

				122

Transportation - 1.47%
American Airlines, Inc., Term Loan, 3.50%, Due 4/28/2023^C^D		30		30
American Tire Distributors, Inc., 2015 Term Loan, 5.25%, Due 9/1/2021^D		394		385
Delta Air Lines, Inc., 2015 Term Loan B, 3.25%, Due 8/24/2022^D		50		50
HD Supply, Inc., 2015 Term Loan B, 3.75%, Due 8/13/2021^C^D		149		149
XPO Logistics, Inc., First Lien Term Loan, 5.50%, Due 11/1/2021^C^D		93		94

				708

Utilities - 1.23%
Calpine Corp. 1st Lien Term Loan B5, 3.50%, Due 5/27/2022^C^D		60		60
Texas Competitive Electric Holdings Co., LLC, 2016 DIP Term Loan, 5.00%, Due 10/31/2017^D		49		49
Texas Competitive Electric Holdings Co., LLC, 2016 DIP Term Loan C, 5.00%, Due 7/27/2023^D		11		11
TPF II Power LLC, Syndicated Term Loan B, 5.50%, Due 10/2/2021^B^D		469		471
				591

Total Bank Loan Obligations (Cost $14,535)				14,451

CORPORATE OBLIGATIONS - 64.24%
Consumer - 2.25%
Central Garden & Pet Co., 6.125%, Due 11/15/2023		225		239
Cott Beverages, Inc., 5.375%, Due 7/1/2022		250		256
Newell Brands, Inc., 5.00%, Due 11/15/2023^F		50		53
Spectrum Brands, Inc., 5.75%, Due 7/15/2025		250		270
Vector Group Ltd., Co., 7.75%, Due 2/15/2021		250		262

				1,080

Energy - 9.28%
Archrock Partners LP / Archrock Partners Finance Corp., 6.00%, Due 4/1/2021, Acquired 4/19/2016, Cost $194 ^E^K		250		231
Bristow Group, Inc., 6.25%, Due 10/15/2022		200		142

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Par Amount		Fair Value
	(000’s)		(000’s)
Carrizo Oil & Gas, Inc., 7.50%, Due 9/15/2020	$	250	$	249
Cenovus Energy, Inc., 6.75%, Due 11/15/2039		175		188
Cheasapeake Energy Corp., 8.00%, Due 12/15/2022^F		50		44
Chesapeake Energy Corp., 6.625%, Due 8/15/2020		95		70
Continental Resources, Inc., 4.90%, Due 6/1/2044		450		359
CSI Compressco LP / Compressco Finance, Inc., 7.25%, Due 8/15/2022, Acquired 5/10/2016, Cost $115 ^E^K		150		128
DCP Midstream LLC, 5.35%, Due 3/15/2020^B^F		75		75
Devon Energy Corp., 3.25%, Due 5/15/2022		125		122
EnCana Corp., 6.50%, Due 2/1/2038		400		404
Energy Transfer Equity LP, 7.50%, Due 10/15/2020^E		100		108
Enlink Minstream Partner, 4.15%, Due 6/1/2025		200		188
Genesis Energy LP / Genesis Energy Finance Corp., 5.625%, Due 6/15/2024		250		238
Hilcorp Energy, 5.00%, Due 12/1/2024^F		250		233
Lonestar Resources America, Inc., 8.75%, Due 4/15/2019, Acquired 2/2/2015, Cost $106 ^F^K		150		66
QEP Resources, Inc., 6.875%, Due 3/1/2021		250		251
Sabine Pass Liquefaction LLC, 5.625%, Due 2/1/2021^B		175		181
SM Energy Co., 5.625%, Due 6/1/2025		175		145
Southwestern Energy Co., 5.80%, Due 1/23/2020		150		146
Targa Resources Partners LP / Targa Resources Partners Finance Corp., 4.125%, Due 11/15/2019		200		199
Transocean, Inc., 8.125%, Due 12/15/2021		250		209
Weatherford Bermuda Company, 5.125%, Due 9/15/2020		250		235
WPX Energy, Inc., 7.50%, Due 8/1/2020		250		246

				4,457

Finance - 6.36%
Aircastle Ltd., 5.50%, Due 2/15/2022		25		27
American Equity Investment Life Holding Co., 6.625%, Due 7/15/2021		250		260
Argos Merger Sub, Inc., 7.125%, Due 3/15/2023^F		375		391
Centene Corp., 6.125%, Due 2/15/2024		75		81
CIT Group, Inc., 5.00%, Due 8/1/2023		300		316
Fly Leasing Ltd., 6.75%, Due 12/15/2020, Acquired 10/1/2014, Cost $521 ^K		500		509
Icahn Enterprises LP / Icahn Enterprises Finance Corp., 6.00%, Due 8/1/2020^E		125		125
Ladder Capital Finance Holdings LLLP / Ladder Capital Finance Corp., 5.875%, Due 8/1/2021, Acquired 7/10/2015, Cost $88 ^F^{G K}		90		82
OneMain Financial Holdings, Inc., 6.75%, Due 12/15/2019^F		400		404
Oxford Finance LLC / Oxford Finance Co-Issuer, Inc., 7.25%, Due 1/15/2018, Acquired 10/27/2014, Cost $260 ^B^{F K}		250		251
RHP Hotel Properties LP / RHP Finance Corp., 5.00%, Due 4/15/2023^E		350		354
Royal Bank of Scotland Group PLC, 4.70%, Due 7/3/2018^H		250		257

				3,057

Manufacturing - 16.57%
Alcoa Inc., 5.40%, Due 4/15/2021		300		319
Allly Financial, Inc., 3.75%, Due 11/18/2019		450		457
Anglo American Capital Co., 4.875%, Due 5/14/2025^F		200		195
Anixter, Inc., 5.50%, Due 3/1/2023		175		184
ArcelorMittal, 6.50%, Due 3/1/2021^C		450		474
Ardagh Packaging Finance PLC / Ardagh Holdings USA, Inc., 4.625%, Due 5/15/2023^F^H		50		50
CalAtlantic Group, Inc., 5.25%, Due 6/1/2026		35		35
Credit Acceptance Corp., 6.125%, Due 2/15/2021		375		370
Entegris, Inc., 6.00%, Due 4/1/2022^F		250		257
Equinix, Inc.,
5.375%, Due 1/1/2022		250		263
5.375%, Due 4/1/2023		125		131
Fiat Chrysler Automobiles N.V., 5.25%, Due 4/15/2023		150		152
First Data Corp., 7.00%, Due 12/1/2023^F		125		129
First Quantum Minerals Ltd.,
7.25%, Due 10/15/2019^F		50		47
6.75%, Due 2/15/2020^F		100		92
FMG Resources August 2006 Property Ltd.,
9.75%, Due 3/1/2022^F		100		112
6.875%, Due 4/1/2022^F		100		98
Freeport McMoran Inc., 2.30%, Due 11/14/2017		100		100
Freeport-McMoRan Copper & Gold, Inc., 3.55%, Due 3/1/2022		450		385
Gibraltar Industries, Inc., 6.25%, Due 2/1/2021		250		258

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Par Amount		Fair Value
	(000’s)		(000’s)
Goodyear Tire & Rubber Co., 5.00%, Due 5/31/2026	$	150	$	158
Huntsman International Co., 5.125%, Due 11/15/2022		250		254
INEOS Group Holdings S.A., 5.625%, Due 8/1/2024^F		250		247
Lear Corp., 5.25%, Due 1/15/2025		250		267
Lennar Corp., 4.875%, Due 12/15/2023		75		77
NCI Building Systems, Inc., 8.25%, Due 1/15/2023^F		250		273
PaperWorks Industries, Inc., 9.50%, Due 8/15/2019, Acquired 9/11/2015, Cost $247 ^F^K		250		237
Perstorp Holding AB, 8.75%, Due 5/15/2017^F		75		75
Platform Specialty Products Corp., 6.50%, Due 2/1/2022^F		375		325
PQ Corp., 6.75%, Due 11/15/2022^F		75		79
Reynolds Group Issuer Inc. / Reynolds Group Issuer LLC, 8.25%, Due 2/15/2021^B		500		521
Springs Industries, Inc., 6.25%, Due 6/1/2021		375		388
Standard Industries, Inc., 5.375%, Due 11/15/2024^F		250		262
Teck Resources Ltd., 4.50%, Due 1/15/2021		150		136
United States Steel Corp.,
6.875%, Due 4/1/2021, Acquired 4/15/2016, Cost $17 ^K		21		20
8.375%, Due 7/1/2021^F		200		218
7.50%, Due 3/15/2022		50		48
Zebra Technologies Corp., 7.25%, Due 10/15/2022, Acquired 6/24/2015, Cost $272 ^K		250		267

				7,960

Service - 22.67%
Ahern Rentals, Inc., 7.375%, Due 5/15/2023^F		125		88
Ancestry.com Holdings LLC, 9.625%, Due 10/15/2018, Acquired 6/2/2014, Cost $506 ^B^{F I K}		500		510
Ashtead Capital, Inc., 5.625%, Due 10/1/2024^F		375		389
Block Communications, Inc., 7.25%, Due 2/1/2020, Acquired 11/10/2014, Cost $471 ^F^K		450		456
Cable One, Inc., 5.75%, Due 6/15/2022^F		75		78
Cablevision Systems Corp., 7.75%, Due 4/15/2018		250		268
Cardtronics, Inc., 5.125%, Due 8/1/2022		250		252
Community Health Systems, Inc., 8.00%, Due 11/15/2019		350		336
DISH DBS Corp., 5.125%, Due 5/1/2020		250		256
Dollar Tree, Inc., 5.75%, Due 3/1/2023		250		270
Emerald Expositions Holding, Inc., 9.00%, Due 6/15/2021^F		100		103
EMI Music Publishing Group N. America Holdings, Inc., 7.625%, Due 6/15/2024^F		125		134
FelCor Lodging LP, 5.625%, Due 3/1/2023^E		175		179
HealthSouth Corp., 5.75%, Due 11/1/2024		375		389
Herc Rentals, Inc., 7.50%, Due 6/1/2022^F		300		304
Hilton Worldwide Finance LLC / Hilton Worldwide Finance Corp., 5.625%, Due 10/15/2021^B		250		259
Horizon Pharma Financing, Inc., 6.625%, Due 5/1/2023		40		39
IHS Markit, Ltd., 5.00%, Due 11/1/2022^F		325		334
JC Penney Corp, Inc., 5.875%, Due 7/1/2023^F		225		231
Kinetic Concepts Inc / KCI USA, Inc., 10.50%, Due 11/1/2018		150		153
Lamar Media Corp., Co., 5.75%, Due 2/1/2026^F		200		215
Landry’s Holdings II, Inc., 10.25%, Due 1/1/2018^F		500		509
Mallinckrodt International Finance SA / Mallinckrodt CB LLC, 5.625%, Due 10/15/2023^B^F		350		336
Mednax, Inc., 5.25%, Due 12/1/2023^F		225		235
NCL Corp., Ltd.,
5.25%, Due 11/15/2019^F		125		128
4.625%, Due 11/15/2020^F		200		202
Nielsen Finance LLC / Nielsen Finance Co., 5.00%, Due 4/15/2022^B^F		250		258
Numericable Group S.A., 6.00%, Due 5/15/2022^F		250		244
Peninsula Gaming LLC / Peninsula Gaming Corp., 8.375%, Due 2/15/2018^B^F		250		251
Pinnacle Entertainment, Inc., 5.625%, Due 5/1/2024^F		125		128
Rite Aid Corp., 6.75%, Due 6/15/2021		250		263
Sabre GLBL, Inc., 5.25%, Due 11/15/2023^F		75		79
Sinclair Television Group, Inc., 5.375%, Due 4/1/2021		250		260
Sirius XM Radio, Inc.,
5.875%, Due 10/1/2020^F		175		181
6.00%, Due 7/15/2024^F		250		266
TEGNA, Inc., 4.875%, Due 9/15/2021^F		135		140
Tenet Healthcare Corp., 5.00%, Due 3/1/2019		250		241
Tops Holding LLC / Tops Markets II Corp., 8.00%, Due 6/15/2022^B^F		200		174
United Rentals North America, Inc., 6.125%, Due 6/15/2023		375		392

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Par Amount			Fair Value
	(000’s)			(000’s)
Universal Health Services, Inc., 4.75%, Due 8/1/2022^F	$	350		$	361
Univision Communications, Inc., 5.125%, Due 5/15/2023^F		175			180
Valeant Pharmaceuticals International, Inc., 6.125%, Due 4/15/2025^F		350			290
Virgin Media Secured Finance PLC, 5.375%, Due 4/15/2021^F^H		225			234
VTR Finance BV, 6.875%, Due 1/15/2024^F		290			299

					10,894

Telecommunications - 4.23%
Altice Luxembourg S.A., 7.75%, Due 5/15/2022^F		200			203
CenturyLink, Inc., 7.50%, Due 4/1/2024		200			214
CyrusOne LP / CyrusOne Finance Corp., 6.375%, Due 11/15/2022^E		250			262
Frontier Communications Corp.,
7.125%, Due 3/15/2019		250			267
8.875%, Due 9/15/2020		75			81
Hughes Satellite Systems Corp., 5.25%, Due 8/1/2026^F		100			100
Level 3 Financing, Inc., 5.375%, Due 1/15/2024		250			262
Sprint Nextel Corp., 6.00%, Due 11/15/2022		125			107
T-Mobile USA, Inc., 6.625%, Due 4/1/2023		500			536

					2,032

Transportation - 1.09%
Intrepid Aviation Group Holdings LLC / Intrepid Finance Co., 6.875%, Due 2/15/2019, Acquired 7/1/2015, Cost $234 ^B^{F K}		250			226
XPO Logistics, Inc., 6.50%, Due 6/15/2022^F		300			297

					523

Utilities - 1.79%
AES Corp., 5.50%, Due 3/15/2024		250	��		258
Calpine Corp., 5.375%, Due 1/15/2023		300			299
NRG Energy, Inc., 6.625%, Due 3/15/2023		300			303

					860

Total Corporate Obligations (Cost $30,312)					30,863


	Shares
SHORT-TERM INVESTMENTS - 3.06% (Cost $1,469)
American Beacon U.S. Government Money Market Select Fund, Select Class^J		1,469,231			1,469

TOTAL INVESTMENTS - 97.41% (Cost $46,342)					46,800
OTHER ASSETS, NET OF LIABILITIES - 2.59%					1,245

TOTAL NET ASSETS - 100.00%				$	48,045

Percentages are stated as a percent of net assets.

^A	Non-income producing security.

^B	LLC - Limited Liability Company.

^C	The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due date on these types of securities reflects the final maturity date.

^D	Term Loan.

^E	LP - Limited Partnership.

Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $12,457 or 25.93% of net assets. The Fund has no right to demand registration of these securities.

^G	LLLP - Limited Liability Limited Partnership.

^H	PLC - Public Limited Company.

^I	PIK - Payment in Kind.

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

^K	Illiquid security. At period end, the amount of illiquid securities was $12,177 or 25.34% of net assets.

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Statement of Assets and Liabilities

July 31, 2016 (Unaudited) (in thousands, except share and per share amounts)


Assets:
Investments in unaffiliated securities, at fair value ^A	$	45,331
Investments in affiliated securities, at fair value ^B		1,469
Cash		5
Receivable for investments sold		2,467
Receivable for fund shares sold		10
Dividends and interest receivable		630
Receivable for expense reimbursement (Note 2)		21
Prepaid expenses		45

Total assets		49,978

Liabilities:
Payable for investments purchased		1,791
Payable for fund shares redeemed		70
Dividends payable		8
Management and investment advisory fees payable		32
Transfer agent fees payable		1
Custody and fund accounting fees payable		7
Professional fees payable		20
Prospectus and shareholder reports fees payable		2
Other liabilities		2

Total liabilities		1,933

Net assets	$	48,045

Analysis of Net Assets:
Paid-in-capital		50,645
Accumulated net realized (loss)		(3,058	)
Unrealized appreciation of investments		458

Net assets	$	48,045

Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		3,814,730

Y Class		749,990

Investor Class		354,684

A Class		117,710

C Class		50,325

Net assets (not in thousands):
Institutional Class	$	36,028,109

Y Class	$	7,079,853

Investor Class	$	3,351,019

A Class	$	1,110,929

C Class	$	475,168

Net asset value, offering and redemption price per share:
Institutional Class	$	9.44

Y Class	$	9.44

Investor Class	$	9.45

A Class	$	9.44

A Class (offering price)	$	9.68

C Class	$	9.44

^ACost of investments in unaffiliated securities	$	44,873
^BCost of investments in affiliated securities	$	1,469

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Statement of Operations

For the Six Months Ended July 31, 2016 (in thousands) (Unaudited)


Investment income:
Dividend income from unaffiliated securities (net of foreign taxes)	$	1
Dividend income from affiliated securities		2
Interest income		1,358

Total investment income		1,361

Expenses:
Management and investment advisory fees (Note 2)		132
Administrative service fees (Note 2):
Institutional Class		35
Y Class		6
Investor Class		4
A Class		1
Transfer agent fees:
Institutional Class		2
Investor Class		1
Custody and fund accounting fees		26
Professional fees		37
Registration fees and expenses		26
Service fees (Note 2):
Y Class		3
Investor Class		4
A Class		1
Distribution fees (Note 2):
A Class		1
C Class		2
Prospectus and shareholder report expenses		4
Trustee fees		2
Other expenses		3

Total expenses		290

Net fees waived and expenses reimbursed (Note 2)		(74	)

Net expenses		216

Net investment income		1,145

Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		(1,382	)
Change in net unrealized appreciation (depreciation) of:
Investments		3,638

Net gain from investments		2,256

Net increase in net assets resulting from operations	$	3,401

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Statement of Changes in Net Assets (in thousands)


	Crescent Short Duration High Income Fund
	Six Months Ended July 31, 2016			Year Ended January 31, 2016
	(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	1,145		$	2,170
Net realized gain (loss) from investments,		(1,382	)		(1,364	)
Change in net unrealized appreciation or (depreciation) from investments		3,638			(2,382	)

Net increase (decrease) in net assets resulting from operations		3,401			(1,576	)

Distributions to Shareholders:
Net investment income:
Institutional Class		(876	)		(1,759	)
Y Class		(158	)		(272	)
Investor Class		(80	)		(100	)
A Class		(24	)		(32	)
C Class		(8	)		(7	)

Net distributions to shareholders		(1,146	)		(2,170	)

Capital Share Transactions:
Proceeds from sales of shares		3,275			34,659
Reinvestment of dividends and distributions		1,097			2,131
Cost of shares redeemed		(9,086	)		(16,928	)

Net increase (decrease) in net assets from capital share transactions		(4,714	)		19,862

Net increase (decrease) in net assets		(2,459	)		16,116

Net Assets:
Beginning of period		50,504			34,388

End of Period *	$	48,045		$	50,504

* Includes undistributed (overdistributed) net investment income	$	—		$	—

See accompanying notes

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 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 July 31, 2016, the Trust consists of twenty-five active series, one of which is presented in this filing: American Beacon Crescent Short Duration High Income Fund (“Crescent Fund”). The remaining twenty-four active series are reported in separate filings.

Class Disclosure

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


Class:		Offered to:
Institutional Class		Investors making an initial investment of $250,000

Y Class		Investors making an initial investment of $100,000

Investor Class		General public and investors investing 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

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

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Dividends to Shareholders

Dividends from net investment income of the Fund generally will be declared daily and paid monthly. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date. 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 Fund has established brokerage commission recapture arrangements with certain brokers or dealers. If the Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operation, if applicable.

Allocation of Income, Expenses, Gains, and Losses

Use of Estimates

Other

2. Transactions with Affiliates

Management Agreement

From February 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, fund management, and securities lending services. As compensation for performing the duties required under the Management Agreement, the Manager received from the Fund an annualized fee equal to 0.05% of the average daily net assets. 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 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 Fund pays the unaffiliated investment advisor hired to direct investment activities of the Fund. Management fees paid by the Fund during the six months ended July 31, 2016 were as follows (in thousands):


Fund	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
Crescent		0.55	%	$	132	$	96	$	36

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Administration Agreement

Distribution Plans

The Fund, 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 Fund does 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 Fund. 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 Fund.

Investment in Affiliated Funds

The Fund may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Fund in connection with securities lending may also be invested in the USG Select Fund. The Fund 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 Fund 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 July 31, 2016, the Manager earned fees on the Fund’s direct investments in the USG Select Fund as shown below:


Fund	Direct Investments in USG Select Fund
Crescent	$	1,020

Interfund Lending Program

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating Funds. For the six months ended July 31, 2016, the Fund did not utilize the credit facility.

Expense Reimbursement Plan

The Manager agreed to reimburse the Fund to the extent that total annual fund operating expenses exceeded a Fund’s expense cap. For the six months ended July 31, 2016, the Manager waived or reimbursed expenses as follows:


		Expense Cap			Reimbursed
Fund	Class	2/1/16 to 7/31/16			Expenses		Expiration
Crescent	Institutional		0.85	%	$	57,293	2020
Crescent	Y		0.95	%		10,336	2020
Crescent	Investor		1.23	%		3,965	2020
Crescent	A		1.25	%		1,690	2020
Crescent	C		2.00	%		702	2020

Of these amounts, $20,947 was receivable from the Manager for the Crescent Fund at July 31, 2016. The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. During the six months ended July 31, 2016, the Fund did not record a liability for potential reimbursement, due to the current assessment that a reimbursement is unlikely. The carryover of excess expenses potentially reimbursable to the Manager are as follows:


Fund	Recovered Expenses		Excess Expense Carryover		Expired Expenses		Expiration of Reimbursed Expenses
Crescent	$	—	$	180,253	$	—	2019
Crescent		—		167,017		—	2018

Sales Commissions

The Fund’s distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. During the six months ended July 31, 2016, Foreside collected $118 for the Crescent Fund from the sale of Class A Shares.

3. Security Valuation and Fair Value Measurements

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

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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.

Investments in open-end mutual funds are valued at the closing NAV per share of the mutual fund on the day of valuation.

Valuation Inputs


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. Fixed-income securities are considered Level 2 securities, as they are valued using observable inputs.

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

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

Common stocks 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.

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy.

Level 3 trading assets and trading liabilities, at fair value

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

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

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

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

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

For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that presents changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in and out of the Level 3 category during the period. In accordance with the requirements of U.S. GAAP, a fair value hierarchy and Level 3 reconciliation, if any, have been included below.

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of July 31, 2016, the investments were classified as described below (in thousands):


Crescent Fund*	Level 1		Level 2		Level 3		Total
Common Stock	$	17	$	—	$	—	$	17
Bank Loan Obligations		—		13,984		467		14,451
Corporate Obligations		—		30,863		—		30,863
Short-Term Investments – Money Market Funds		1,469		—		—		1,469

Total Investments in Securities	$	1,486	$	44,847	$	467	$	46,800

*	Refer to the Schedules of Investments for industry information.

U.S. GAAP 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. As of July 31, 2016, there were no transfers between levels for the Crescent Fund.

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


	Bank Loan Obligations
Balance as of 1/31/2016	$	483
Net purchases		6
Net sales		(23	)
Realized gain (loss)		—	⁽²⁾
Change in unrealized appreciation (depreciation)		1
Transfer into Level 3		—
Transfer out of Level 3		—

Balance as of 7/31/2016		467

Change in unrealized at period end⁽¹⁾	$	1

⁽¹⁾	Change in unrealized appreciation (depreciation) attributable to Level 3 securities held at period end. This balance is included in the change in unrealized appreciation (depreciation) on the Statement of Operations.

⁽²⁾	Amount is less than $500.

The bank loan obligations classified as Level 3 were valued using single broker quotes. These securities are included in the Level 3 category due to limited market transparency and/or lack of corroboration to support the quoted prices.

4. Securities and Other Investments

Pay-In-Kind Securities

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

Illiquid and Restricted Securities

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 period ended July 31, 2016 are disclosed in the Notes to the Schedule of Investments.

Floating Rate Loan Interests

The Crescent Fund may invest in floating rate loan interests. The floating rate loan interests held by the Fund are typically issued to companies (the “borrower”) by banks, other financial institutions, and privately and publicly offered corporations (the “lender”). Floating rate loan interests are generally non-investment grade, often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged. The Fund may invest in obligations of borrowers who are in bankruptcy proceedings. Floating rate loan interests may include fully funded term loans or revolving lines of credit. Floating rate loan interests are typically senior in the corporate capital structure of the borrower. Floating rate loan interests generally pay interest at rates that are periodically determined by reference to a base lending rate plus a premium. The base lending rates are generally the lending rate offered by one or more European banks, such as the London Interbank Offered Rate (“LIBOR”), the prime rate offered by one or more U.S. banks or the certificate of deposit rate. Floating rate loan interests may involve foreign borrowers, and investments may be denominated in foreign currencies. The Fund considers these investments to be investments in debt securities for purposes of its investment policies.

When the Fund purchases a floating rate loan interest it may receive a facility fee and when it sells a floating rate loan interest, it may pay a facility fee. On an ongoing basis, the Fund may receive a commitment fee based on the undrawn portion of the underlying line of credit amount of a floating rate loan interest. Facility and commitment fees are typically amortized to income over the term of the loan or term of the commitment, respectively. Consent and amendment fees are recorded to income as earned. Prepayment penalty fees, which may be received by the Fund upon the prepayment of a floating rate loan interest by a borrower, are recorded as realized gains. The Fund may invest in multiple series or tranches of a loan. A different series or tranche may have varying terms and carry different associated risks.

Floating rate loan interests are usually freely callable at the borrower’s option. The Fund may invest in such loans in the form of participations in loans (“Participations”) or assignments (“Assignments”) of all or a portion of loans from third parties. Participations typically will result in the Fund having a contractual relationship only with the lender, not with the borrower. The Fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the Participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing Participations, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement, nor any rights of offset against the borrower, and the Fund may not benefit directly from any collateral supporting the loan in which it has purchased the Participation. As a result, the Fund will assume the credit risk of both the borrower and the lender that is selling the Participation. The Fund’s investment in Participations involves the risk of insolvency of the financial intermediaries who are parties to the transactions. In the event of the insolvency of the lender selling the Participation, the Fund may be treated as a general creditor of the lender and may not benefit from any offset between the lender and the borrower. Assignments typically result in the Fund having a direct contractual relationship with the borrower, and the Fund may enforce compliance by the borrower with the terms of the loan agreement.

In connection with floating rate loan interests, the Fund may also enter into unfunded floating rate loan interests (“commitments”). In connection with these commitments, the Fund earns a commitment fee, typically set as a percentage of the commitment amount. Such fee income, which is included in “Interest income” in the Statement of Operations, is recognized ratably over the commitment period. Unfunded floating rate loan interests are marked-to-market daily, and any unrealized appreciation (depreciation) is included in the Statement of Assets and Liabilities and Statement of Operations.

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Other Investment Company Securities and Other Exchange Traded Products

The Fund may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Fund may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, the Fund becomes a shareholder of that investment company. As a result, the Fund’s shareholders indirectly will bear a 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. Principal Risks

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

Market Risks

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

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

6. Federal Income and Excise Taxes

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

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

The Fund does not have any unrecognized tax benefits in the accompanying financial statements. The tax year ended January 31, 2015 and 2016 are subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

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

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


Crescent Fund	Six months ended July 31, 2016		Year ended January 31, 2016
	(unaudited)
Distributions paid from:
Ordinary income⁽²⁾
Institutional Class	$	876	$	1,759
Y Class		158		272
Investor Class		80		100
A Class		24		32
C Class		8		7

Total distributions paid	$	1,146	$	2,170

As of July 31, 2016, the components of distributable earnings (deficits) on a tax basis were as follows (in thousands):


	Crescent Fund
Cost basis of investments for federal income tax purposes	$	46,394

Unrealized appreciation		1,064
Unrealized depreciation		(658	)

Net unrealized appreciation (depreciation)		406

Undistributed ordinary income		8

Undistributed long-term capital gains		—
Accumulated capital and other losses		(3,006	)
Other temporary differences		(8	)

Distributable earnings (deficits)	$	(2,600	)

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

Accordingly, the following amounts represent current year permanent differences derived from dividends that have been reclassed as of July 31, 2016 (in thousands):


	Crescent Fund
Paid-in-capital	$	(1	)
Undistributed net investment income		1
Accumulated net realized gain (loss)		—
Unrealized appreciation (depreciation) of investments and futures contracts		—

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Under the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”), net capital losses recognized by Fund are carried forward indefinitely and retain their character as short-term and/or long-term losses.

For the six-months ended July 31, 2016, the Crescent Fund has $1,519 of short-term capital loss carryforwards and $1,487 of long-term capital loss carryforwards (in thousands).

7. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments other than short-term obligations, for the six month ended July 31, 2016 were (in thousands):


	Purchases		Sales
Crescent Fund	$	20,718	$	23,127

A summary of the Fund’s transactions in the USG Select Fund for the six months ended July 31, 2016 are as follows:


Type of Transaction	January 31, 2016 Shares/Fair Value		Purchases		Sales		July 31, 2016 Shares/Fair Value		Dividend Income
Direct	$	—	$	13,067	$	11,598	$	1,469	$	2

8. Capital Share Transactions

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

For the Six Months Ended July 31, 2016


	Institutional Class						Y Class						Investor Class
Crescent Short Duration High Income Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		83		$	766			226		$	2,101			24		$	218
Reinvestment of dividends		94			874			15			137			6			59
Shares redeemed		(468	)		(4,299	)		(433	)		(3,943	)		(71	)		(654	)

Net (decrease) in shares outstanding		(291	)	$	(2,659	)		(192	)	$	(1,705	)		(41	)	$	(377	)


	A Class						C Class
Crescent Short Duration High Income Fund	Shares			Amount			Shares			Amount
Shares sold		5		$	42			16		$	148
Reinvestment of dividends		2			21			1			6
Shares redeemed		(4	)		(36	)		(17	)		(154	)

Net increase in shares outstanding		3		$	27			—		$	—

American Beacon Crescent Short Duration High Income Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

For the Year Ended January 31, 2016


	Institutional Class						Y Class						Investor Class
Crescent Short Duration High Income Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		1,754		$	16,841			1,231		$	11,854			412		$	3,981
Reinvestment of dividends		185			1,755			28			268			8			74
Shares redeemed		(1,335	)		(12,827	)		(327	)		(3,065	)		(44	)		(417	)

Net increase in shares outstanding		604		$	5,769			932		$	9,057			376		$	3,638


	A Class						C Class
Crescent Short Duration High Income Fund	Shares			Amount			Shares			Amount
Shares sold		146		$	1,414			61		$	569
Reinvestment of dividends		3			28			1			6
Shares redeemed		(44	)		(424	)		(21	)		(195	)

Net increase in shares outstanding		105		$	1,018			41		$	380

9. Change in Independent Registered Public Accounting Firm (Unaudited)

The Fund engaged PricewaterhouseCoopers, LLP (“PwC”) as the independent registered public accounting firm for the fiscal year ending January 31, 2017. PwC replaces Ernst & Young LLP (“EY”), the Fund’s previous independent registered public accounting firm. The change in accountants was approved by the Audit Committee of the Board on June 8, 2016. During the periods that EY served as the independent registered public accounting firm through January 31, 2016, EY’s audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. There were no disagreements between the Fund and EY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

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American Beacon Crescent Short Duration High Income Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Institutional Class
	Six Months			Year Ended			October 1^Eto
	Ended July 31,			January 31,			January 31,
	2016			2016			2015
	(unaudited)
Net asset value, beginning of period	$	9.01		$	9.68		$	10.00

Income from investment operations:
Net investment income		0.23			0.47			0.16
Net gains (losses) from investments (both realized and unrealized)		0.43			(0.67	)		(0.32	)

Total income (loss) from investment operations		0.66			(0.20	)		(0.16	)

Less distributions:
Dividends from net investment income		(0.23	)		(0.47	)		(0.16	)
Distributions from net realized gains		—			—			—

Total distributions		(0.23	)		(0.47	)		(0.16	)

Net asset value, end of period	$	9.44		$	9.01		$	9.68

Total return ^A		7.35	%^B		(2.23	)%		(1.65	)%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	36,028		$	36,972		$	33,903
Ratios to average net assets:
Expenses, before reimbursements		1.17	%^C		1.27	%		2.24	%^C
Expenses, net of reimbursements		0.85	%^C		0.85	%		0.85	%^C
Net investment income, before reimbursements		4.59	%^C		4.41	%		3.37	%^C
Net investment income, net of reimbursements		4.91	%^C		4.83	%		4.76	%^C
Portfolio turnover rate		46	%^B		72	%		31	%^D


	Y Class
	Six Months			Year Ended			October 1^Eto
	Ended July 31,			January 31,			January 31,
	2016			2016			2015
	(unaudited)
Net asset value, beginning of period	$	9.00		$	9.68		$	10.00

Income from investment operations:
Net investment income		0.22			0.46			0.15
Net gains (losses) from investments (both realized and unrealized)		0.44			(0.68	)		(0.32	)

Total income (loss) from investment operations		0.66			(0.22	)		(0.17	)

Less distributions:
Dividends from net investment income		(0.22	)		(0.46	)		(0.15	)
Distributions from net realized gains		—			—			—

Total distributions		(0.22	)		(0.46	)		(0.15	)

Net asset value, end of period	$	9.44		$	9.00		$	9.68

Total return ^A		7.41	%^B		(2.39	)%		(1.68	)%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	7,080		$	8,482		$	99
Ratios to average net assets:
Expenses, before reimbursements		1.26	%^C		1.29	%		7.71	%^C
Expenses, net of reimbursements		0.95	%^C		0.95	%		0.95	%^C
Net investment income (loss), before reimbursements		4.48	%^C		4.80	%		(2.11	)%^C
Net investment income, net of reimbursements		4.80	%^C		5.14	%		4.64	%^C
Portfolio turnover rate		46	%^B		72	%		31	%^D

^B	Not annualized.

^C	Annualized.

^D	Portfolio turnover rate is for the period from October 1, 2014 to January 31, 2015.

^E	October 1, 2014 is the inception date of the Crescent Short Duration High Income Fund.

American Beacon Crescent Short Duration High Income Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Investor Class
	Six Months			Year Ended			October 1^Eto
	Ended July 31,			January 31,			January 31,
	2016			2016			2015
	(unaudited)
Net asset value, beginning of period	$	9.01		$	9.69		$	10.00

Income from investment operations:
Net investment income		0.21			0.44			0.14
Net gains (losses) from investments (both realized and unrealized)		0.44			(0.68	)		(0.31	)

Total income (loss) from investment operations		0.65			(0.24	)		(0.17	)

Less distributions:
Dividends from net investment income		(0.21	)		(0.44	)		(0.14	)
Distributions from net realized gains		—			—			—

Total distributions		(0.21	)		(0.44	)		(0.14	)

Net asset value, end of period	$	9.45		$	9.01		$	9.69

Total return ^A		7.26	%^B		(2.67	)%		(1.67	)%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	3,351		$	3,560		$	190
Ratios to average net assets:
Expenses, before reimbursements		1.46	%^C		1.46	%		6.21	%^C
Expenses, net of reimbursements		1.23	%^C		1.23	%		1.23	%^C
Net investment income (loss), before reimbursements		4.30	%^C		4.44	%		(0.41	)%^C
Net investment income, net of reimbursements		4.53	%^C		4.68	%		4.57	%^C
Portfolio turnover rate		46	%^B		72	%		31	%^D

	A Class
	Six Months			Year Ended			October 1^Eto
	Ended July 31,			January 31,			January 31,
	2016			2016			2015
	(unaudited)
Net asset value, beginning of period	$	9.00		$	9.68		$	10.00

Income from investment operations:
Net investment income		0.21			0.43			0.14
Net gains (losses) from investments (both realized and unrealized)		0.44			(0.68	)		(0.32	)

Total income (loss) from investment operations		0.65			(0.25	)		(0.18	)

Less distributions:
Dividends from net investment income		(0.21	)		(0.43	)		(0.14	)
Distributions from net realized gains		—			—			—

Total distributions		(0.21	)		(0.43	)		(0.14	)

Net asset value, end of period	$	9.44		$	9.00		$	9.68

Total return ^A		7.25	%^B		(2.71	)%		(1.78	)%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,111		$	1,033		$	98
Ratios to average net assets:
Expenses, before reimbursements		1.57	%^C		1.55	%		7.97	%^C
Expenses, net of reimbursements		1.25	%^C		1.25	%		1.25	%^C
Net investment income (loss), before reimbursements		4.19	%^C		4.28	%		(2.37	)%^C
Net investment income, net of reimbursements		4.51	%^C		4.59	%		4.36	%^C
Portfolio turnover rate		46	%^B		72	%		31	%^D

^B	Not annualized.

^C	Annualized.

^D	Portfolio turnover rate is for the period from October 1, 2014 to January 31, 2015.

^E	October 1, 2014 is the inception date of the Crescent Short Duration High Income Fund.

American Beacon Crescent Short Duration High Income Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	C Class
	Six Months Ended July 31, 2016			Year Ended January 31, 2016			October 1 ^Eto January 31, 2015


	(unaudited)
Net asset value, beginning of period	$	9.00		$	9.68		$	10.00

Income from investment operations:
Net investment income		0.17			0.36			0.12
Net gains (losses) from investments (both realized and unrealized)		0.44			(0.68	)		(0.32	)

Total income (loss) from investment operations		0.61			(0.32	)		(0.20	)

Less distributions:
Dividends from net investment income		(0.17	)		(0.36	)		(0.12	)
Distributions from net realized gains		—			—			—

Total distributions		(0.17	)		(0.36	)		(0.12	)

Net asset value, end of period	$	9.44		$	9.00		$	9.68

Total return ^A		6.73	%^B		(3.40	)%		(2.03	)%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	475		$	457		$	98
Ratios to average net assets:
Expenses, before reimbursements		2.33	%^C		2.36	%		8.70	%^C
Expenses, net of reimbursements		2.00	%^C		2.00	%		2.00	%^C
Net investment income (loss), before reimbursements		3.43	%^C		3.76	%		(3.12	)%^C
Net investment income, net of reimbursements		3.75	%^C		4.12	%		3.59	%^C
Portfolio turnover rate		46	%^B		72	%		31	%^D

^B	Not annualized.

^C	Annualized.

^D	Portfolio turnover rate is for the period from October 1, 2014 to January 31, 2015.

^E	October 1, 2014 is the inception date of the Crescent Short Duration High Income Fund.

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

(1) a new Management Agreement (“New Management Agreement”) between American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”) on behalf of the American Beacon Crescent Short Duration High Income Fund (“Fund”); and

(2) a new Investment Advisory Agreement (“New Advisory Agreement”) among the Manager, the Trust, on behalf of the Fund, and Crescent Capital Group LP (“Crescent” or “Sub-Advisor”.)

The Board meetings were held for the Trustees to consider the New Management Agreement and New Advisory Agreement (“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 prior Management Agreement (“Prior Management Agreement”) between the Manager and the Trust, on behalf of the Fund, and the prior Investment Advisory Agreement (“Prior Advisory Agreement”) among the Manager, the Trust, on behalf of the Fund, and Crescent 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 Prior Management Agreement and the Prior Advisory Agreement (together, the “Prior 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 Prior Management Agreement and Prior 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 Prior 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.

•

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 structure, 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;

•

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

•

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;

•

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 Prior 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 initial approval of the Prior Agreements.

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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 Prior 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 the 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 Prior 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 Prior 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 Prior 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.

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

Agreements in June 2014. Based on the foregoing information and the Board’s considerations in connection with the initial approval of the Prior 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 Prior 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 Prior Advisory Agreement. Based on the foregoing information and the Board’s considerations in connection with the initial approval of the Prior 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 initial approval of the Prior 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.

Approval of Management Agreement for the Fund in March 2016

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

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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 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, and approved the prior management agreement at its 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 the 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.

Renewal and Approval of the Management Agreement and Investment Advisory Agreement of the Fund in June 2016

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 the Fund; and (2) the investment advisory agreement (the “Investment Advisory Agreement”) among the Manager, the Trust, on behalf of the Fund, and Crescent (“subadvisor”). 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.

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.

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

•

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.

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 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.

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.

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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 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.”

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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.

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 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.

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

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.

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

Lipper Total Expense Analysis and Morningstar Fee Level Ranking


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

Disclosure Regarding Approval of the Management and Investment Advisory Agreements (Unaudited)

The Trustees also considered: (1) Information provided by Crescent that, for fee rate comparison purposes, it does not manage other 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 and its performance record since inception relative to its applicable benchmark index.

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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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 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

PricewaterhouseCoopers LLP

Boston, MA

DISTRIBUTOR

Foreside Fund Services, LLC

Portland, Maine

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

American Beacon Funds and American Beacon Crescent Short Duration High Income Fund are service marks of American Beacon Advisors, Inc.

SAR 7/16

LOGO

About American Beacon Advisors

GLG TOTAL RETURN FUND Investing in foreign and emerging market 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. The use of fixed-income securities entails interest rate and credit 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 erect on the value of the Fund. GLOBAL EVOLUTION FRONTIER MARKETS INCOME FUND Investing in foreign, emerging and frontier market 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. The use of fixed-income securities entails interest rate and credit 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.

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.


American Beacon Funds		July 31, 2016


Contents
President’s Message			1

Performance Overviews			2

Expense Examples			7

Schedules of Investments:

GLG Total Return Fund			8

Global Evolution Frontier Markets Income Fund			8

Financial Statements			16

Notes to Financial Statements			22

Financial Highlights:

GLG Total Return Fund			41

Global Evolution Frontier Markets Income Fund			42

Disclosures Regarding Approval of the Management and Investment Advisory Agreements			45

Additional Information			Back Cover

President’s Message


		Dear Shareholders, During the six-month period ended July 31, 2016, patchy economic growth and the “Brexit” referendum set the stage for volatile markets around the globe. China’s slowing growth escalated concerns for global markets and, as a result, many central banks decided to continue or expand their economic stimulation policies. In March 2016, the Bank of Japan pushed its rates into negative territory and the European Central Bank cut a key rate to zero. Then on Friday, June 24, 2016, Great Britain’s announcement that 52% of its voters favored leaving the European Union shook global financial markets. The Brexit referendum fallout was swift and significant. British Prime Minister David Cameron announced his resignation, the British pound sterling nose-dived approximately 12% against the dollar, the euro fell 1.4% against the dollar and

the price of gold climbed 4.7% to a two-year high. Global markets reacted to the Brexit news with a selling frenzy. In the U.S., the Dow Jones industrial average dropped 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 sank 4.1%. That very 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.

•

From its inception on May 20, 2016, through July 31, 2016, the American Beacon GLG Total Return Fund (Investor Class) returned 2.25%. The Fund’s benchmark, the BofA Merrill Lynch 3-Month LIBOR Constant Maturity Index, returned 0.11%.

•

For the six months ended July 31, 2016, the American Beacon Global Evolution Frontier Markets Income Fund (Investor Class) returned 10.40%. The JPMorgan EMBI Global Diversified Index, which is the performance benchmark for the Fund, gained 12.50%.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

American Beacon GLG Total Return Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

The Investor Class of the American Beacon GLG Total Return Fund (the “Fund”) returned 2.25% for the period ending July 31, 2016. The Fund outperformed the BofA Merrill Lynch 3 Month LIBOR Constant Maturity Index (the “Index”) return of 0.11% for the same period. The Fund’s inception was in May 2016, and it does not have a full six months of performance as of this semi-annual period.

Total Returns for the Period ended July 31, 2016


			Since Inception
	Ticker		5/20/2016
Institutional Class (1,3)		GLGIX		2.35	%
Y Class (1,3)		GLGYX		2.35	%
Investor Class (1,3)		GLGPX		2.25	%
Ultra Class (1,3)		GLGUX		2.35	%
A Class with sales charge (1,3)		GLGAX		-2.62	%
A Class without sales charge (1,3)		GLGAX		2.25	%
C Class with sales charge (1,3)		GLRCX		1.15	%
C Class without sales charge (1,3)		GLRCX		2.15	%
BofA Merrill Lynch 3-Month Libor Constant Maturity Index (2)				0.11	%

*	Not Annualized

Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. 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 the actual returns shown since inception. A Class shares have a maximum sales charge of 4.75%. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.

The BofA Merrill Lynch 3-Month LIBOR Constant Maturity Index tracks the performance of a synthetic asset paying LIBOR to a stated maturity. The index is based on the assumed purchase at par of a synthetic instrument having exactly its stated maturity and with a coupon equal to that day’s fixing rate. That issue is assumed to be sold the following business day (at a yield equal to the current day fixing rate) and rolled into a new instrument.

The total annual Fund operating expense ratio set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Ultra, A, and C Class shares was 1.66%, 1.76%, 2.04%, 1.56%, 2.06 and 2.81%, 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.

Given recent headlines, however, note that the Fund did hold a position in very short-dated (2 year) U.S. dollar denominated Turkish government securities. News of an attempted coup in mid-July increased the level of uncertainty in Turkish markets, caused international investors to seek protection, and led to credit rating downgrades. Fortunately, the Fund’s holdings are very short dated, and the volatility was limited.

Given the Fund’s short performance record, relative returns are difficult to analyze. The sub-advisor’s consistent top-down and bottom-up approaches to emerging-market fixed-income investing seek to add value over market cycles with less volatility than that of common indices.

American Beacon GLG Total Return Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

Top Ten Holdings (% Net Assets)


Colombia Government Bond, 7.375%, Due 3/18/2019		10.5
Petroleos Mexicanos, 3.50%, Due 7/18/2018		9.6
Indonesia Government Bond, 11.625%, Due 3/4/2019		9.4
South Africa Government Bond, 6.875%, Due 5/27/2019		5.8
Argentina Government Bonds, 6.25%, Due 4/22/2019, 144A		5.0
Dominican Republic Government Bond, 7.50%, Due 5/6/2021		4.0
U.S. Treasury Note, 1.875%, Due 7/15/2019		3.8
Majapahit Holding BV, 7.25%, Due 6/28/2017		2.7
Islamic Republic of Pakistan, 7.25%, Due 4/15/2019		2.0
Grupo Aval Ltd., 5.25%, Due 2/1/2017		1.9

Total Fund Holdings	19

American Beacon Global Evolution Frontier Markets Income Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

The Investor Class of the American Beacon Global Evolution Frontier Markets Income Fund (the “Fund”) returned 10.40% for the six-month period ending July 31, 2016. The Fund underperformed the JPMorgan Emerging Markets Bond Index Global Diversified Index (the “Index”) return of 12.50% for the same period due primarily to the difference in Fund’s country exposures as compared to the Index.

Total Returns for the Period ended July 31, 2016


									Since Inception
	Ticker		6 Months*			1 Year			2/25/14
Institutional Class (1,3)		AGEIX		10.57	%		2.28	%		2.46	%
Y Class (1,3)		AGEYX		10.52	%		2.16	%		2.39	%
Investor Class (1,3)		AGEPX		10.40	%		1.92	%		2.12	%
A Class with sales charge (1,3)		AGUAX		5.13	%		-2.94	%		0.05	%
A Class without sales charge (1,3)		AGUAX		10.40	%		1.90	%		2.08	%
C Class with sales charge (1,3)		AGECX		8.97	%		0.23	%		1.27	%
C Class without sales charge (1,3)		AGECX		9.97	%		1.23	%		1.27	%
JP Morgan EMBI Global Diversified Index (2)				12.50	%		11.22	%		7.87	%

*	Not Annualized

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; the Institutional, Y, Investor, and A Classes partially recovered reimbursed expenses in 2015. Performance prior to waiving fees was lower than the actual returns shown since inception. A Class shares have a maximum sales charge of 4.75%. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.

2.	The JP Morgan EMBI Global Diversified Index is an emerging market debt benchmark that tracks dollar-denominated bonds issued by frontier and emerging market governments. One cannot directly invest in an index.

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 1.15%, 1.19%, 1.45%, 1.53%, and 2.32%, 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.

Double-digit returns for the Fund and the Index during the period reflect the stabilization in commodity prices and an improvement in investor sentiment towards emerging-market investments after a period of weakness.

The Fund invests in many of the smaller frontier countries within the emerging markets universe. While these countries may broadly exhibit similar characteristics as those of larger emerging economies – sensitivity to commodities, political uncertainty, and dependence on international capital – their total returns typically differ. The eight largest countries in the Index represent approximately 33% of its market value, and the Fund generally has no exposure to these countries.

Importantly, the smaller frontier countries offer higher yields-to-maturity than the Index as compensation for the additional risk, and the Fund’s yield is higher accordingly.

For the six-month period ended July 31, 2016, the three largest contributors to the Fund’s total return were its positions in Zambia, Ecuador and Venezuela which were among the highest returning countries in the Index. The Fund held approximately 10% of assets, in total, in these countries as compared to 3.5% for the Index.

Among the detractors from the Fund’s relative returns, the largest issuers in the Index, Mexico, Indonesia and Brazil (with a cumulative weight of approximately 13%) were the best performers, and the Fund had no exposure to these countries.

American Beacon Global Evolution Frontier Markets Income Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

Additionally, the Fund’s positions in Mozambique, Kazakhstan and Gambia also detracted from returns. The Fund had approximately 8.6% exposure to these countries as compared to approximately 3% in the Index. Mozambique had unique issues related to the country’s disclosure of government obligations outstanding, and the Kazakhstan and Gambian underperformance was primarily due to currency fluctuations.

At period end, the Fund had approximately 46% of assets invested in local-currency-denominated obligations, whereas the Index had no local-currency exposure. Fluctuations in currency exchange rates can meaningfully affect the Fund’s returns relative to the Index.

The Fund’s short performance record makes longer-term trends difficult to analyze, but the sub-advisor’s consistent top-down and bottom-up approaches to frontier-market investing seek to add value with less volatility and higher yield than that of the Index. Diversification within the smaller emerging-market opportunities offers a distinct approach to utilizing the asset class.

Top Ten Holdings (% Net Assets)


Mongolia Ministry of Finance (Issuer ING Bank NV), 13.175%, Due 3/25/2017		4.4
Republic of Congo, 4.00%, Due 6/30/2029		4.3
Uruguay Government International Bond, Inflation Indexed, 5.00%, Due 9/14/2018		3.9
Republic of Mozambique, 10.50%, Due 1/18/2023		3.7
European Bank for Reconstruction & Development, 7.80%, Due 7/24/2017		3.6
Empresa Administradora de Aeropuertos Internacionales (Issuer Zambezi BV), 8.25%, Due 4/8/2024, 144A		3.6
Ivory Coast Government Bond, 5.75%, Due 12/31/32		3.5
Serbia Treasury Bonds, 10.00%, Due 3/20/2021		3.3
Dominican Republic, 11.50%, Due 5/10/2024		3.3
Uganda Government Bond, 16.50%, Due 5/13/2021		3.3

Total Fund Holdings	50

Asset Allocation (%Net Assets)


Fixed Income			97.3
Cash Equivalent			2.7

American Beacon Global Evolution Frontier Markets Income Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

Country Allocation (% Equities)


Sri Lanka			4.8
Ghana			4.8
Uganda			4.7
Nicaragua			4.6
Mongolia			4.6
Zambia			4.5
Congo			4.5
Uruguay			4.1
Mozambique			3.9
Argentina			3.8
Supranational			3.8
Ivory Coast			3.7
Dominican Republic			3.5
Kenya			3.5
Serbia			3.4
Angola			3.3
Cameroon			3.0
Egypt			2.9
Iraq			2.9
Kazakhstan			2.9
Ecuador			2.7
Venezuela			2.6
Gabon			2.6
Senegal			2.4
Georgia			2.4
Malawi			2.1
Gambia			2.1
TUNISIA			1.8
Rwanda			1.5
Seychelles			1.2
Bosnia and Herzegovina			0.8
Pakistan			0.6

American Beacon Funds^SM

Expense Examples

July 31, 2016 (Unaudited)

Fund Expense Example

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

Hypothetical Example for Comparison Purposes

American Beacon Funds^SM

Expense Examples

July 31, 2016 (Unaudited)

GLG Total Return Fund


	Beginning Account Value 2/1/16		Ending Account Value 7/31/16		Expenses Paid During Period* 2/1/16 - 7/31/16
Institutional Class
Actual	$	1,000.00	$	1,023.47	$	2.09
Hypothetical **	$	1,000.00	$	1,019.64	$	5.27
Y Class
Actual	$	1,000.00	$	1,023.47	$	2.29
Hypothetical **	$	1,000.00	$	1,019.14	$	5.77
Investor Class
Actual	$	1,000.00	$	1,022.47	$	2.84
Hypothetical **	$	1,000.00	$	1,017.75	$	7.17
A Class
Actual	$	1,000.00	$	1,022.47	$	2.88
Hypothetical **	$	1,000.00	$	1,017.65	$	7.27
C Class
Actual	$	1,000.00	$	1,021.47	$	4.37
Hypothetical **	$	1,000.00	$	1,013.92	$	11.02
Ultra Class
Actual	$	1,000.00	$	1,023.47	$	1.89
Hypothetical **	$	1,000.00	$	1,020.14	$	4.77

Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.05%, 1.15%, 1.43%, 1.45%, 2.20% and 0.95% for the Institutional, Y, Investor, A, C and Ultra 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.

Global Evolution Frontier Markets Income Fund


	Beginning Account Value 2/1/16		Ending Account Value 7/31/16		Expenses Paid During Period* 2/1/16 - 7/31/16
Institutional Class
Actual	$	1,000.00	$	1,105.73	$	6.60
Hypothetical **	$	1,000.00	$	1,018.60	$	6.32
Y Class
Actual	$	1,000.00	$	1,105.16	$	7.12
Hypothetical **	$	1,000.00	$	1,018.10	$	6.82
Investor Class
Actual	$	1,000.00	$	1,103.99	$	8.42
Hypothetical **	$	1,000.00	$	1,016.86	$	8.07
A Class
Actual	$	1,000.00	$	1,103.97	$	8.63
Hypothetical **	$	1,000.00	$	1,016.66	$	8.27
C Class
Actual	$	1,000.00	$	1,099.72	$	12.01
Hypothetical **	$	1,000.00	$	1,013.43	$	11.51

Expenses are equal to the Fund’s annualized expense ratios for the six-month period of 1.26%, 1.36%, 1.61%, 1.65% and 2.30% 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.

See accompanying notes

American Beacon GLG Total Return Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Par Amount		Fair Value
	(000’s)		(000’s)
Argentina - 5.02% (Cost $519)
Foreign Government Obligations - 5.02%
Argentina Government Bonds, 6.25%, Due 4/22/2019^A	$	500	$	530

Brazil - 4.01%
Corporate Obligations - 1.89%
Itau Unibanco Holding SA/Cayman Island, 2.85%, Due 5/26/2018 ^B		200		200

Foreign Sovereign - 2.12%
Banco Nacional de Desenvolvimento Economico e Social, 6.369%, Due 6/16/2018 ^B		100		105
Petrobras Global Finance BV, 3.00%, Due 1/15/2019		125		119

				224

Total Brazil (Cost $421)				424

British Virgin Islands - 5.71%
Corporate Obligations - 5.71%
CNOOC Finance 2013 Ltd., 1.75%, Due 5/9/2018		200		200
CNPC General Capital Ltd.,
2.75%, Due 4/19/2017 ^B		200		202
1.95%, Due 11/25/2017 ^B		200		201

Total British Virgin Islands (Cost $603)				603

Colombia – 12.41%
Corporate Obligations - 1.91%
Grupo Aval Ltd., 5.25%, Due 2/1/2017 ^B		200		202

Foreign Government Obligations - 10.50%
Colombia Government Bond, 7.375%, Due 3/18/2019		975		1,108

Total Columbia (Cost $1,304)				1,310

Dominican Republic - 3.98% (Cost $409)
Foreign Government Obligations - 3.98%
Dominican Republic Government Bond, 7.50%, Due 5/6/2021 ^B		375		420

Indonesia - 9.37% (Cost $984)
Foreign Government Obligations - 9.37%
Indonesia Government Bond, 11.625%, Due 3/4/2019 ^B		800		989

Mexico - 9.62% (Cost $1,007)
Foreign Government Obligations - 9.62%
Petroleos Mexicanos, 3.50%, Due 7/18/2018		1,000		1,016

Netherlands - 3.82%
Corporate Obligations - 3.82%
Majapahit Holding BV,
7.25%, Due 6/28/2017 ^B		275		288
7.75%, Due 1/20/2020 ^B		100		115

Total Netherlands (Cost $404)				403

Nigeria - 1.90% (Cost $200)
Foreign Government Obligations - 1.90%
Nigeria Government Bond, 5.125%, Due 7/12/2018 ^B		200		201

Pakistan - 2.03% (Cost $211)
Foreign Government Obligations - 2.03%
Islamic Republic of Pakistan, 7.25%, Due 4/15/2019^B		200		214

South Africa - 5.83% (Cost $604)
Foreign Government Obligations - 5.83%
South Africa Government Bond, 6.875%, Due 5/27/2019		550		616

See accompanying notes

American Beacon GLG Total Return Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Par Amount		Fair Value
	(000’s)		(000’s)
Turkey - 1.00% (Cost $106)
Foreign Government Obligations - 1.00%
Republic of Turkey Government Bond, 6.75%, Due 4/3/2018	$	100	$	106

United States - 3.79% (Cost $399)
U.S. Treasury Obligations - 3.79%
U.S. Treasury Note/Bond, 0.75%, Due 7/15/2019		400		400


	Shares
SHORT-TERM INVESTMENTS - 26.91% (Cost $2,841)

Short-Term Investments - 26.91%
American Beacon U.S. Government Money Market Select Fund, Select Class^C		2,841		2,841

TOTAL INVESTMENTS - 95.40% (Cost $10,012)				10,073
OTHER ASSETS, NET OF LIABILITIES - 4.60%				486

TOTAL NET ASSETS - 100.00%			$	10,559

Percentages are stated as a percent of net assets.

Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $530 or 5.02% of net assets. The Fund has no right to demand registration of these securities.

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

See accompanying notes

American Beacon GLG Total Return Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)

Futures Contracts Open on July 31, 2016:


Description	Type	Number of Contracts	Expiration Date	Contract Value		Unrealized Appreciation (Depreciation)
U.S. Treasury 10-Year Note Futures	Short	5	September 2016	$	665,234	$	(10,635	)

				$	665,234	$	(10,635	)

OTC Swap Agreements Outstanding on July 31, 2016:

Credit Default Swaps on Corporate and Sovereign Securities - Buy Protection ⁽¹⁾


Reference Entity	Counter- party		Fixed Rate (%)		Expiration Date		Implied Credit Spread at 7/31/2016⁽³⁾ (%)		Curr		Notional Amount⁽⁴⁾ (000’s)		Premiums Paid (Received)			Unrealized Appreciation (Depreciation)			Fair Value
Republic of Indonesia		BRC		1.0000		6/20/2021		1.6400		USD		500	$	20,304		$	(6,243	)	$	14,061
Lebanese Republic		BRC		1.0000		6/20/2021		4.9800		USD		200		31,923			119			32,042
Republic of Turkey		CBK		1.0000		6/20/2021		2.7674		USD		100		7,852			(86	)		7,766
Republic of Turkey		CBK		1.0000		6/20/2021		2.7674		USD		300		23,222			77			23,299
Republic of Korea		DUB		1.0000		6/20/2021		0.5084		USD		500		(8,671	)		(3,265	)		(11,936	)

													$	74,630		$	(9,398	)	$	65,232

Credit Default Swaps on Corporate and Sovereign Securities - Sell Protection ⁽²⁾


Reference Entity	Counter- party	Fixed Rate (%)		Expiration Date		Implied Credit Spread at 7/31/2016⁽³⁾ (%)		Curr		Notional Amount⁽⁴⁾ (000’s)		Premiums Paid (Received)		Unrealized Appreciation (Depreciation)			Fair Value		��
Republic of Brazil	CBK		1.0000		9/20/2016		0.6352		USD		500	$	382	$	(102	)	$	280
Republic of Brazil	CBK		1.0000		9/20/2016		0.6352		USD		300		225		—			225
United Mexican States	HUB		1.0000		6/20/2019		0.9177		USD		400		1,135		(772	)		363

												$	1,742	$	(874	)	$	868

⁽¹⁾

If the Fund is a buyer of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) receive from the seller of protection an amount equal to the notional amount of the swap and deliver the referenced obligation or underlying securities comprising the referenced index or (ii) receive a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

⁽²⁾

If the Fund is a seller of protection and a credit event occurs, as defined under the terms of that particular swap agreement, the Fund will either (i) pay to the buyer of protection an amount equal to the notional amount of the swap and take delivery of the referenced obligation or underlying securities comprising the referenced index or (ii) pay a net settlement amount in the form of cash or securities equal to the notional amount of the swap less the recovery value of the referenced obligation or underlying securities comprising the referenced index.

⁽³⁾

Implied credit spreads, represented in absolute terms, utilized in determining the fair value of credit default swaps agreements on corporate issues and sovereign issues of an emerging country as of period end serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of buying/selling protection and may include upfront payments required to be made to enter into the agreement. Wider credit spreads represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement.

⁽⁴⁾	The maximum potential amount the Fund could be required to pay as a seller of credit protection or receive as a buyer of credit protection if a credit event occurs as defined under the terms of that particular swap agreement.

See accompanying notes

American Beacon GLG Total Return Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)

Forward Currency Contracts Open on July 31, 2016:


Type	Currency	Principal Amount Covered by Contract		Settlement Date		Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Buy	ZAR		220,052		8/5/2016	BRC	$	20,052	$	—		$	20,052
Sell	ILS		407,153		8/5/2016	BRC		—		(7,153	)		(7,153	)
Sell	MXN		1,451,942		8/5/2016	BRC		14,541		—			14,541
Sell	RUB		309,490		8/5/2016	BRC		8,627		—			8,627
Buy	RUB		297,933		1/11/2017	BRC		—		(8,498	)		(8,498	)
Buy	MXN		1,427,190		1/12/2017	BRC		—		(14,261	)		(14,261	)
Buy	COP		251,843		8/5/2016	CBK		—		(3,157	)		(3,157	)
Buy	COP		208,357		8/5/2016	CBK		—		(1,643	)		(1,643	)
Sell	SGD		412,967		8/5/2016	CBK		—		(297	)		(297	)
Buy	SGD		412,445		1/13/2017	CBK		243		—			243
Buy	RUB		309,490		8/5/2016	DUB		9,490		—			9,490
Sell	HUF		262,733		8/5/2016	DUB		—		(7,733	)		(7,733	)
Buy	HUF		110,532		8/5/2016	FBF		532		—			532
Sell	BRL		438,225		8/2/2016	HUB		—		(15,023	)		(15,023	)
Buy	ARS		490,158		8/5/2016	HUB		—		(9,842	)		(9,842	)
Buy	COP		301,950		8/5/2016	HUB		1,950		—			1,950
Buy	MXN		1,086,717		8/5/2016	HUB		—		(13,283	)		(13,283	)
Buy	SGD		412,968		8/5/2016	HUB		—		(782	)		(782	)
Buy	ZAR		208,050		8/5/2016	HUB		8,050		—			8,050
Sell	CLP		319,700		8/5/2016	HUB		—		(4,525	)		(4,525	)
Sell	COP		762,150		8/5/2016	HUB		23,538		—			23,538
Sell	ZAR		1,587,818		8/5/2016	HUB		—		(67,354	)		(67,354	)
Sell	KRW		427,765		8/9/2016	HUB		—		(27,765	)		(27,765	)
Buy	BRL		429,547		10/4/2016	HUB		14,322		—			14,322
Buy	CLP		315,008		1/12/2017	HUB		4,507		—			4,507
Buy	COP		739,616		1/12/2017	HUB		—		(22,542	)		(22,542	)
Buy	ZAR		1,539,295		1/12/2017	HUB		65,843		—			65,843
Buy	BRL		223,415		8/2/2016	SCB		23,415		—			23,415
Buy	BRL		214,810		8/2/2016	SCB		14,810		—			14,810
Buy	CLP		319,699		8/5/2016	SCB		19,699		—			19,699
Buy	ILS		407,153		8/5/2016	SCB		6,844		—			6,844
Buy	SGD		412,967		8/5/2016	SCB		3,290		—			3,290
Sell	HUF		254,287		8/5/2016	SCB		—		(4,729	)		(4,729	)
Sell	SGD		412,968		8/5/2016	SCB		—		(12,968	)		(12,968	)
Buy	KRW		427,765		8/9/2016	SCB		14,212		—			14,212
Buy	CLP		99,864		1/12/2017	SCB		—		(136	)		(136	)
Buy	MXN		97,571		1/12/2017	SCB		—		(2,429	)		(2,429	)
Buy	HUF		254,636		1/13/2017	SCB		4,946		—			4,946
Sell	ILS		408,945		1/13/2017	SCB		—		(6,847	)		(6,847	)
Sell	KRW		427,792		1/13/2017	SCB		—		(14,663	)		(14,663	)
Sell	SGD		412,445		1/13/2017	SCB		—		(3,289	)		(3,289	)
Buy	HUF		406,487		8/5/2016	UAG		6,487		—			6,487
Buy	MXN		365,225		8/5/2016	UAG		5,225		—			5,225
Buy	ZAR		245,162		8/5/2016	UAG		25,162		—			25,162
Buy	ZAR		914,548		8/5/2016	UAG		114,548		—			114,548

							$	410,333	$	(248,919	)	$	161,414

Glossary


Counterparty Abbreviations:
BRC	Barclays Bank PLC	DUB	Deutsche Bank AG
CBK	Citibank, N.A.	HUB	HSBC Bank PLC

Currency Abbreviations:

ARS	Argentine Peso	HUF	Hungarian Forint	RUB	Russian Ruble
BRL	Brazilian Real	ILS	Israeli New Sheqel	SGD	Singapore Dollar
CLP	Chilean Peso	KRW	South Korean Won	USD	United States Dollar
COP	Colombian Peso	MXN	Mexican Peso	ZAR	South African Rand

Other Abbreviations:

CDS	Credit Default Swap

See accompanying notes

American Beacon Global Evolution Frontier Markets Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


		Par Amount*		Fair Value
		(000’s)		(000’s)
Angola - 3.11%
Foreign Government Obligations - 0.69%
Angolan Government International Bond, 9.50%, Due 11/12/2025		$	400	$	381

Structured Notes - 2.42%
Republic of Angola (Issuer Aurora Australis BV), 7.016%, Due 12/19/2023			1,406		1,326

Total Angola (Cost $1,794)					1,707

Argentina - 3.60%
Foreign Government Obligations - 3.60%
Republic of Argentina,
29.198%, Due 3/28/2017^A	ARS		3,400		236
30.467%, Due 10/9/2017^A	ARS		24,800		1,739

Total Argentina (Cost $2,059)					1,975

Bosnia and Herzegovina - 0.76%
Foreign Government Obligations - 0.76%
Bosnia & Herzegovina Government Bond,
0.625%, Due 12/11/2017^A^B	EUR		420		219
0.625%, Due 12/11/2021^A^B	EUR		458		196

Total Bosnia and Herzegovina (Cost $540)					415

Cameroon - 2.89% (Cost $1,477)
Foreign Government Obligations - 2.89%
Republic of Cameroon, 9.50%, Due 11/19/2025			1,500		1,583

Congo - 4.27% (Cost $2,879)
Foreign Government Obligations - 4.27%
Republic of Congo, 4.00%, Due 6/30/2029^B^C			3,329		2,349

Dominican Republic - 3.33% (Cost $1,963)
Foreign Government Obligations - 3.33%
Dominican Republic International Bond, 11.50%, Due 5/10/2024^B	DOP		80,000		1,824

Ecuador - 2.56% (Cost $1,342)
Foreign Government Obligations - 2.56%
Ecuador Government International Bond, 10.50%, Due 3/24/2020^B			1,400		1,402

Egypt - 2.71% (Cost $1,585)
Foreign Government Obligations - 2.71%
Arab Republic of Egypt, 5.875%, Due 6/11/2025			1,600		1,488

Gabon - 2.46% (Cost $1,325)
Foreign Government Obligations - 2.46%
Republic of Gabon, 6.375%, Due 12/12/2024			1,500		1,349

Gambia - 1.96% (Cost $1,000)
Structured Notes - 1.96%
Gambia Government (Issuer Frontera Capital BV), 18.55%, Due 8/4/2017^D			1,000		1,076

Georgia - 2.28% (Cost $1,250)
Structured Notes - 2.28%
Georgia Government (Issuer Frontera Capital BV), 10.00%, Due 8/4/2021	GEL		1,250		1,248

Ghana - 4.58%
Foreign Government Obligations - 4.58%
Ghana Government Bond,
21.00%, Due 3/23/2020	GHS		4,600		1,076
24.75%, Due 3/1/2021	GHS		3,900		1,001
Ghana Government International Bond, 8.125%, Due 1/18/2026^B			500		433

Total Ghana (Cost $2,631)					2,510

See accompanying notes

American Beacon Global Evolution Frontier Markets Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


		Par Amount*		Fair Value
		(000’s)		(000’s)
Iraq - 2.73% (Cost $1,486)
Foreign Government Obligations - 2.73%
Republic of Iraq, 5.80%, Due 1/15/2028^B		$	2,000	$	1,500

Ivory Coast - 3.54% (Cost $1,896)
Foreign Government Obligations - 3.54%
Ivory Coast Government Bond, 5.75%, Due 12/31/2032^AB			2,030		1,939

Kazakhstan - 2.76%
Structured Notes - 2.76%
National Bank of Kazakhstan (Issuer Citigroup Global Markets),
12.53%, Due 9/11/2016	KZT		300,000		839
13.50%, Due 12/28/2016	KZT		250,000		676

Total Kazakhstan (Cost $1,594)					1,515

Kenya - 3.30%
Foreign Government Obligations - 3.30%
Kenya Infrastructure Bond,
12.00%, Due 9/18/2023	KES		57,400		544
11.00%, Due 12/2/2024	KES		75,000		667
12.50%, Due 5/12/2025	KES		36,000		344
Kenya Treasury Bond, 22.954%, Due 10/24/2016	KES		25,000		252

Total Kenya (Cost $1,908)					1,807

Malawi - 1.95% (Cost $996)
Structured Notes - 1.95%
Republic of Malawi (Issuer Frontera Capital BV), 24.00%, Due 9/7/2018			1,000		1,070

Mongolia - 4.40% (Cost $2,649)
Structured Notes - 4.40%
Mongolia Ministry of Finance (Issuer ING Bank NV), 13.175%, Due 3/25/2017			2,700		2,414

Mozambique - 3.73% (Cost $2,722)
Foreign Government Obligations - 3.73%
Republic of Mozambique, 10.50%, Due 1/18/2023			2,900		2,045

Nicaragua - 4.35%
Foreign Government Obligations - 0.72%
Republic of Nicaragua, 5.00%, Due 2/1/2019^A			414		393

Structured Notes - 3.63%
Empresa Administradora de Aeropuertos Internacionales (Issuer Zambezi BV), 8.25%, Due 4/8/2024, Acquired 11/20/2014, Cost $2,000^DG			2,000		1,993

Total Nicaragua (Cost $2,402)					2,386

Pakistan - 0.53% (Cost $262)
Foreign Government Obligations - 0.53%
Islamic Republic of Pakistan, 7.875%, Due 3/31/2036^B			300		292

Rwanda - 1.44% (Cost $756)
Foreign Government Obligations - 1.44%
Republic of Rwanda, 6.625%, Due 5/2/2023^B			800		789

Senegal - 2.23% (Cost $1,183)
Foreign Government Obligations - 2.23%
Republic of Senegal, 6.25%, Due 7/30/2024^B			1,250		1,224

Serbia - 3.26% (Cost $1,584)
Foreign Government Obligations - 3.26%
Serbia Treasury Bonds, 10.00%, Due 3/20/2021	RSD		165,000		1,790

Seychelles - 1.18% (Cost $611)
Foreign Government Obligations - 1.18%
Republic of Seychelles, 7.00%, Due 1/1/2026^AB C			665		649

See accompanying notes

American Beacon Global Evolution Frontier Markets Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


		Par Amount*		Fair Value
		(000’s)		(000’s)
Sri Lanka - 4.64%
Foreign Government Obligations - 4.64%
Sri Lanka Government Bond,
11.00%, Due 8/1/2021	LKR		200,000		1,330
11.50%, Due 9/1/2028	LKR		100,000		634
Sri Lanka Government International Bond, 6.85%, Due 11/3/2025		$	550	$	579

Total Sri Lanka (Cost $2,530)					2,543

Supranational - 3.57% (Cost $3,000)
Foreign Government Obligations - 3.57%
European Bank for Reconstruction & Development, 7.80%, Due 7/24/2017			3,000		1,956

Tunisia - 1.73% (Cost $904)
Foreign Government Obligations - 1.73%
BNQ Cen Tunisia, 5.75%, Due 1/30/2025			1,000		948

Uganda - 4.43%
Foreign Government Obligations - 4.43%
Uganda Government Bond,
14.125%, Due 12/1/2016	UGX		1,300,000		383
16.125%, Due 3/22/2018	UGX		800,000		233
16.50%, Due 5/13/2021	UGX		6,400,000		1,818

Total Uganda (Cost $2,686)					2,434

Uruguay - 3.90% (Cost $2,718)
Foreign Government Obligations - 3.90%
Uruguay Government International Bond, Inflation Indexed, 5.00%, Due 9/14/2018^E	UYU		64,424		2,144

Venezuela - 2.43% (Cost $1,038)
Foreign Government Obligations - 2.43%
Republic of Venezuela, 9.00%, Due 5/7/2023^B			3,000		1,331

Zambia - 4.23%
Foreign Government Obligations - 4.23%
Zambia Government Bond,
11.00%, Due 9/1/2019	ZMW		4,800		319
11.00%, Due 2/16/2020	ZMW		500		32
11.00%, Due 5/26/2020	ZMW		23,100		1,407
12.00%, Due 5/23/2023	ZMW		6,100		294
8.97%, Due 7/30/2027			300		263

Total Zambia (Cost $3,065)					2,315


		Shares
SHORT-TERM INVESTMENTS - 2.62% (Cost $1,435)

Short-Term Investments - 2.62%
American Beacon U.S. Government Money Market Select Fund, Select Class^F			1,435,110		1,435

TOTAL INVESTMENTS - 97.46% (Cost $57,270)					53,452

OTHER ASSETS, NET OF LIABILITIES - 2.54%					1,394

TOTAL NET ASSETS - 100.00%				$	54,846

Percentages are stated as a percent of net assets.

*	In U.S. Dollars unless otherwise noted.

See accompanying notes

American Beacon Global Evolution Frontier Markets Income Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)

^A	The coupon rate shown on floating or adjustable rate securities represents the rate at period end. The due date on these types of securities reflects the final maturity date.

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

Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $3,069 or 5.60% of net assets. The Fund has no right to demand registration of these securities.

^E	Inflation-Indexed Note.

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

^G	Illiquid Security. At Period end, the amount of illiquid securities was $1,993 or 3.63% of net assets.

Forward Currency Contracts Open on July 31, 2016:


Type	Currency		Principal Amount Covered by Contract		Settlement Date		Counterparty		Unrealized Appreciation		Unrealized (Depreciation)		Net Unrealized Appreciation (Depreciation)
Sell		EUR		2,237,439		8/19/2016		SSB	$	3,201	$	—	$	3,201

									$	3,201	$	—	$	3,201

Glossary

Counterparty Abbreviations:


SSB	State Street Bank and Trust Co.

Currency Abbreviations:

ARS	Argentine Peso	KZT	Kazakhstani Tenge
DOP	Dominican Peso	LKR	Sri Lankan Rupee
EUR	Euro	RSD	Dinar
GEL	Georgian Lari	UGX	Ugandan Shilling
GHS	Ghanaian Cedi	UYU	Uruguayan Peso
KES	Kenyan Shilling	ZMW	Zambian Kwacha

See accompanying notes

American Beacon Funds^SM

Statements of Assets and Liabilities

July 31, 2016 (in thousands, except share and per share amounts) (Unaudited)


	Global Evolution Frontier Markets Income Fund			GLG Total Return Fund
Assets:
Investments in unaffiliated securities, at fair value ^A	$	52,017		$	7,232
Investments in affiliated securities, at fair value ^B		1,435			2,841
Foreign currency, at fair value ^C		384			—
Cash		—			26
Swap premium paid		—			85
Swap Income receivable		—			1
Deposit with brokers for futures contracts		—			24
Dividends and interest receivable		1,112			108
Receivable for investments sold		—			1,279
Receivable for fund shares sold		33			—
Receivable for expense reimbursement (Note 2)		—			75
Unrealized appreciation from foreign currency contracts		3			410
Prepaid expenses		40			85

Total assets		55,024			12,166

Liabilities:
Swap premium received		—			9
Payable for investments purchased		—			1,301
Payable for fund shares redeemed		45			—
Payable for variation margin from open futures contracts		—			11
Swap income payable		—			4
Management and investment advisory fees payable		48			8
Administrative service and service fees payable		9			—
Transfer agent fees payable		2			—
Custody and fund accounting fees payable		20			4
Professional fees payable		22			11
Trustee fees payable		4			—
Payable for prospectus and shareholder reports		13			—
Unrealized depreciation from swap agreements		—			10
Unrealized depreciation from foreign currency contracts		—			249
Other liabilities		15			—

Total liabilities		178			1,607

Net Assets	$	54,846		$	10,559

Analysis of Net Assets:
Paid-in-capital		73,019			10,325
Undistributed (or overdistribution of) net investment income		(3	)		31
Accumulated net realized gain (loss)		(14,350	)		2
Unrealized appreciation (depreciation) of investments		(1,878	)		61
Unrealized appreciation (depreciation) of currency transactions		(1,942	)		161
Unrealized (depreciation) of futures contracts		—			(11	)
Unrealized (depreciation) of swap agreements		—			(10	)

Net assets	$	54,846		$	10,559

Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		1,182,927			980,455

Y Class		2,411,795			10,005

Investor Class		1,580,991			11,966

Ultra Class		N/A			10,005

A Class		713,796			10,005

C Class		207,967			10,005

Net assets (not in thousands):
Institutional Class	$	10,639,089		$	10,028,083

Y Class	$	21,708,934		$	102,308

Investor Class	$	14,214,637		$	122,300

Ultra Class	$	N/A		$	102,348

A Class	$	6,417,690		$	102,250

C Class	$	1,865,717		$	102,102

See accompanying notes

American Beacon Funds^SM

Statements of Assets and Liabilities

July 31, 2016 (in thousands, except share and per share amounts) (Unaudited)


	Global Evolution Frontier Markets Income Fund		GLG Total Return Fund
Net asset value, offering and redemption price per share:
Institutional Class	$	8.99	$	10.23

Y Class	$	9.00	$	10.23

Investor Class	$	8.99	$	10.22

Ultra Class		N/A	$	10.23

A Class	$	8.99	$	10.22

A Class (offering price)	$	9.44	$	10.73

C Class	$	8.97	$	10.21

^ACost of investments in unaffiliated securities	$	55,835	$	7,171
^BCost of investments in affiliated securities	$	1,435	$	2,841
^CCost of foreign currency	$	387	$	—

See accompanying notes

American Beacon Funds^SM

Statements of Operations

For the Six Months Ended July 31, 2016 (in thousands) (Unaudited)


	Global Evolution Frontier Markets Income Fund			GLG Total Return Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes) ^A	$	1		$	—
Dividend income from affiliated securities		2			2
Interest income		2,960			40

Total investment income		2,963			42

Expenses:
Management and investment advisory fees (Note 2)		180			19
Administrative service fees (Note 2):
Institutional Class		10			—
Y Class		19			—
Investor Class		16			—
A Class		6			—
C Class		2			—
Transfer agent fees:
Institutional Class		1			1
Y Class		2			1
Investor Class		1			1
Custody and fund accounting fees		31			5
Professional fees		41			61
Registration fees and expenses		48			16
Service fees (Note 2):
Y Class		10			—
Investor Class		28			—
A Class		5			—
C Class		1			—
Distribution fees (Note 2):
A Class		8			—
C Class		10			—
Prospectus and shareholder report expenses		14			14
Trustee fees		6			—
Other expenses		8			3

Total expenses		447			121

Net fees waived and expenses reimbursed (Note 2)		(43	)		(99	)

Net expenses		404			22

Net investment income		2,559			20

Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from:
Investments		(1,906	)		9
Foreign currency transactions		(1,138	)		—
Futures contracts		—			(6	)
Swap agreements		—			15
Change in net unrealized appreciation (depreciation) of:
Investments		4,752			61
Foreign currency transactions		1,249			161
Futures contracts		—			(11	)
Swap agreements		—			(10	)

Net gain from investments		2,957			219

Net increase in net assets resulting from operations	$	5,516		$	239

^AForeign taxes		107			—

See accompanying notes

American Beacon Funds^SM

Statements of Changes in Net Assets (in thousands)


	Global Evolution Frontier Markets Income Fund						GLG Total Return Fund
	Six Months Ended July 31, 2016			Year Ended January 31, 2016			From May 20^Ato July 31, 2016
	(unaudited)						(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment income	$	2,559		$	12,194		$	20
Net realized gain (loss) from investments, foreign currency transactions, futures contracts, and swap agreements		(3,044	)		(18,976	)		18
Change in net unrealized appreciation or (depreciation) from investments, foreign currency transactions, futures contracts, and swap agreements		6,001			(2,020	)		201

Net increase (decrease) in net assets resulting from operations		5,516			(8,802	)		239

Distributions to Shareholders:
Net investment income:
Institutional Class		(315	)		(748	)		(5	)
Y Class		(608	)		(9,595	)		—
Investor Class		(454	)		(1,245	)		—
A Class		(176	)		(758	)		—
C Class		(52	)		(111	)		—

Net distributions to shareholders		(1,605	)		(12,457	)		(5	)

Capital Share Transactions:
Proceeds from sales of shares		9,110			60,312			5,320
Reinvestment of dividends and distributions		1,554			12,341			5
Cost of shares redeemed		(25,196	)		(164,282	)		—
Redemption fees		4			28			—

Net increase (decrease) in net assets from capital share transactions		(14,528	)		(91,601	)		5,325

Net increase (decrease) in net assets		(10,617	)		(112,860	)		5,559

Net Assets:
Beginning of period		65,463			178,323			5,000

End of Period *	$	54,846		$	65,463		$	10,559

*Includes undistributed (or overdistribution of) net investment income	$	(3	)	$	(4,432	)	$	31

A	Commencement of Operations.

See accompanying notes

American Beacon Funds^SM

Statement of Cash Flows

For the Six Months Ended July 31, 2016 (in thousands) (Unaudited)


	Global Evolution Frontier Markets Income Fund
Cash flows used in operating activities:
Net increase (decrease) in net assets resulting from operations	$	5,516

Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities:
Purchases of long-term securities		(17,902	)
Proceeds from sales of long-term securities		32,526
Net purchases of short-term portfolio investments		(1,321	)
Net realized loss of investments and foreign currency transactions		3,043
Net change in unrealized depreciation of investments and foreign currency transactions		(6,000	)
Overdistribution of net investment income		(3	)
Net amortization and basis adjustments		(672	)
(Increase) decrease in operating assets:
Decrease in dividend and interest receivable		335
Decrease in receivable for fund shares sold		60
Decrease in receivable for investments sold		3,453
Unrealized appreciation of foreign currency contracts		23
Increase in prepaid expenses		(13	)
Increase (decrease) in operating liabilities:
Decrease in payable for investments purchased		(2,413	)
Decrease in payable for fund shares redeemed		(200	)
Decrease in dividends payable		(11	)
Decrease in payable for excess expense reimbursement		(61	)
Increase in management and investment advisory fees payable		13
Decrease in administrative service and service fees payable		(23	)
Increase in transfer agent fees payable		1
Increase in custody and fund accounting fees payable		13
Decrease in professional fees payable		(49	)
Increase in Trustee fees payable		4
Increase in payable for prospectus and shareholder reports		7
Increase in other liabilities		13

Net cash provided by operating activities		16,339

Cash flows used in financing activities:
Proceeds from shares sold		9,110
Cost of shares redeemed		(25,196	)
Proceeds from redemption fees		4
Cash dividends paid		(62	)

Net cash used in financing activities		(16,144	)

Cash and Foreign Currency:
Net decrease in cash and foreign currency		195
Beginning cash and foreign currency		189

Ending cash and foreign currency		384

Supplemental Disclosure of Cash Flow and Non-Cash Information:
Reinvestment of dividends	$	1,554

See accompanying notes

American Beacon Funds^SM

Notes to Financial Statements

July 31, 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 July 31, 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 GLG Total Return Fund (“GLG Fund”) and American Beacon Global Evolution Frontier Markets Income Fund (“Global Evolution Fund”). The remaining twenty-three active series are reported in separate filings.

Class Disclosure

The inception date for all classes of the GLG Fund is May 20, 2016.

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 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

Security Transactions and Investment Income

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Currency Translation

Dividends to Shareholders

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

Allocation of Income, Expenses, Gains, and Losses

Use of Estimates

Redemption Fees

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

Other

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 February 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, fund management, and securities lending services. As compensation for performing the duties required under the Management Agreement, the Manager received from the Global Evolution Fund an annualized fee equal to 0.05% of its average daily net assets. Effective May 20 and May 29, 2016, respectively, for the GLG and Global Evolution Funds, the Trust 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 investment activities of the Funds. Management fees paid by the Fund during the six months ended July 31, 2016 were as follows (in thousands):


Fund	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
GLG		0.95	%	$	19	$	12	$	7
Global Evolution		0.65	%		180		137		43

Administration Agreement

From February 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 Global Evolution Fund. 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.

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.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Service Plans

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 Fund 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 July 31, 2016, the Manager earned fees on the Funds’ direct investments in the USG Select Fund as shown below:


Fund	Direct Investments in USG Select Fund
GLG	$	350
Global Evolution		1,006

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 July 31, 2016, the Global Evolution Fund borrowed on average $2,852,761 for 6 days at an average interest rate of 0.98% with interest charges of $457. This amount is recorded within “Other expenses” on the accompanying Statements of Operations.

Expense Reimbursement Plan

The Manager agreed to reimburse the following Funds to the extent that total annual fund operating expenses exceeded a Funds’ expense cap. For the six months ended July 31, 2016, the Manager waived or reimbursed expenses as follows:


		Expense Cap	Reimbursed
Fund	Class	*2/1/16 to 7/31/16**	Expenses		Expiration
GLG	Institutional	1.05%	$	92,307	2020
GLG	Y	1.15%		1,273	2020
GLG	Investor	1.43%		1,365	2020
GLG	Ultra	0.95%		1,515	2020
GLG	A	1.45%		1,272	2020
GLG	C	2.20%		1,268	2020
Global Evolution	Institutional	1.15%		8,222	2020
Global Evolution	Y	1.25%		16,047	2020
Global Evolution	Investor	1.53%		11,488	2020
Global Evolution	A	1.55%		4,470	2020
Global Evolution	C	2.30%		2,424	2020

*	May 20, 2016 was the inception date of the GLG Fund.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Of these amounts, $75,238 and $350 were receivable from the Manager at July 31, 2016 for the GLG Fund and the Global Evolution Fund, 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 contractual expense limit. During the six months ended July 31, 2016, the Funds did not record a liability for potential reimbursement, due to the current assessment that a reimbursement is unlikely. The carryover of excess expenses potentially reimbursable to the Manager are as follows:


	Recovered		Excess Expense				Expiration of
Fund	Expenses		Carryover		Expired Expenses		Reimbursed Expenses
Global Evolution	$	4,836	$	101,594	$	—	2018
Global Evolution		—		18,592	$	—	2019

The Manager recovered expenses from various classes of the Global Evolution Fund during the six months ended July 31, 2016 as follows:


Fund	Class	Recovered Expense		Expiration
Global Evolution	Institutional	$	1,045	2018
Global Evolution	Y		1,974	2018
Global Evolution	Investor		1,251	2018
Global Evolution	A		566	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 July 31, 2016, Foreside collected $220 for the Global Evolution Fund from the sale of 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 July 31, 2016, CDSC fees of $1,157 were collected for the Global Evolution Fund.

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. 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 NAV per share of the mutual fund on the day of valuation.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, a Fund is required to deposit with its futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked to market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the 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.

For valuation purposes, the last quoted price 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 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 Funds 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.

Valuation Inputs


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. Fixed-income securities are considered Level 2 as they are valued using observable inputs.

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.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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

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.

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

Level 3 trading assets and trading liabilities, at fair value

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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

The Funds’ investments are summarized by level based on the inputs used to determine their values. As of July 31, 2016, the investments were classified as described below (in thousands):


GLG Total Return Fund*	Level 1			Level 2			Level 3		Total
Corporate Obligations
British Virgin Islands	$	—		$	603		$	—	$	603
Netherlands		—			403			—		403
Colombia		—			202			—		202
Brazil		—			200			—		200
Foreign Government Obligations
Colombia		—			1,108			—		1,108
Mexico		—			1,016			—		1,016
Indonesia		—			989			—		989
South Africa		—			616			—		616
All other countries		—			1,471			—		1,471
Foreign Sovereign Obligations
Brazil		—			224			—		224
U.S. Treasury Obligations		—			400			—		400
Short-Term Investments – Money Market Funds		2,841			—			—		2,841

Total Investments in Securities	$	2,841		$	7,232		$	—	$	10,073

*Financial Derivative Instruments-Assets*
Forward currency contracts	$	—		$	410		$	—	$	410
Swap agreements		—			—	⁽¹⁾		—		—	⁽¹⁾

	$	—		$	410		$	—	$	410

*Financial Derivative Instruments-Liabilities*
Futures contracts	$	(11	)	$	—		$	—	$	(11	)
Forward currency contracts		—			(249	)		—		(249	)
Swap agreements		—			(10	)		—		(10	)

	$	(11	)	$	(259	)	$	—	$	(270	)

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)


Global Evolution Fund*	Level 1		Level 2		Level 3		Total
Foreign Government Obligations:
Sri Lanka	$	—	$	2,543	$	—	$	2,543
Ghana		—		2,510		—		2,510
Uganda		—		2,434		—		2,434
Congo		—		2,349		—		2,349
Zambia		—		2,315		—		2,315
All other countries		—		26,875		2,349		29,224

Structured Notes:
Mongolia		—		—		2,414		2,414
Nicaragua		—		—		1,993		1,993
Kazakhstan		—		—		1,515		1,515
Angola		—		—		1,326		1,326
Georgia		—		—		1,248		1,248
All other countries		—		—		2,146		2,146
Short-Term Investments – Money Market Funds		1,435		—		—		1,435

Total Investments in Securities	$	1,435	$	39,026	$	12,991	$	53,452

*Financial Derivative Instruments-Assets*
Forward currency contracts	$	—	$	3	$	—	$	3

*	Refer to the Schedules of Investments for industry information.

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


	Foreign
	Government			Structured
	Obligations			Notes			Totals
Balance as of 1/31/2016	$	5,179		$	11,669		$	16,848
Net Purchases		—			2,831			2,831
Net Sales		(3,070	)		(3,665	)		(6,735	)
Realized gain (loss)		(162	)		91			(71	)
Change in unrealized appreciation (depreciation)		404			(286	)		118

Transfer into Level 3		—			—			—
Transfer out of Level 3		—			—			—

Balance as of 7/31/2016		2,351			10,640			12,991

Change in unrealized at period end⁽¹⁾	$	404		$	(286	)	$	118

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

The foreign government obligations and structured notes, classified as Level 3 were valued using single broker quotes. These securities are included in the Level 3 category due to limited market transparency and/or lack of corroboration to support the quoted prices.

4. Securities and Other Investments

Pay-In-Kind Securities

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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Illiquid and Restricted Securities

The Funds may invest in securities that are subject to legal or contractual restrictions on resale. These securities may be sold privately, but are required to be registered or exempted from such registration before being sold to the public. Private placement securities are generally considered to be restricted except for those securities traded between qualified institutional investors under the provisions of Rule 144A of the Securities Act of 1933 (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 period ended July 31, 2016 are disclosed in the Notes to the Schedules of Investments.

High-Yield Securities

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

Inflation-Indexed Bonds

The Funds may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted based on the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase or decrease in the principal amount of an inflation-indexed bond will be included as interest income on the Statements of Operations, even though investors do not receive their principal until maturity.

Structured Notes

Structured notes are hybrid securities that combine a debt obligation with an embedded derivative component. The derivative component is linked to changes in the value of an underlying reference asset or index so as to modify the return characteristics of the debt obligation. During the period, the Global Evolution Fund invested in structured notes to obtain a customized exposure and return structure that was not otherwise available.

Fluctuations in the value of structured notes are recorded as unrealized gains and losses. Net payments are recorded as net realized gains and losses. At maturity, or when the note is sold, the Fund records a realized gain or loss. Structured notes may be leveraged, increasing the volatility of each note’s value relative to the change in the underlying reference asset or index. These notes may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of a decline in the value of the underlying reference asset or index in addition to counterparty risk. Structured notes may also be more volatile, less liquid, and more difficult to accurately price than less complex or more traditional debt securities. These notes are subject to prepayment, credit, and interest rate risks similar to those of conventional fixed income securities.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 Funds 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.

Master Agreements

The GLG and Global Evolution Funds are parties 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 Funds and those counterparties. The ISDA Master Agreements contain provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements. Since different types of forward and OTC financial derivative transactions have different mechanics and are sometimes traded out of different legal entities of a particular counterparty organization, each type of transaction may be covered by a different Master Agreement, resulting in the need for multiple agreements with a single counterparty. As the Master Agreements are specific to unique operations of different asset types, they allow a Fund to net its total exposure to a counterparty in the event of a default with respect to all the transactions governed under a single agreement with a counterparty.

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

Forward Foreign Currency Contracts

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

For the six months ended July 31, 2016, the Funds entered into foreign currency exchange contracts primarily for hedging.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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


Average Forward Foreign Currency Notional Amount Outstanding at July 31, 2016
Fund	Purchased Contracts		Sold Contracts
GLG	$	13,150,453	$	8,296,380
Global Evolution		—		3,844,964

The following is a summary of the Fund’s derivative financial instruments categorized by risk exposure (in thousands) ^(1) (3):

Fair Values of financial derivative instruments on the Statement of Assets and Liabilities not accounted for as hedging instruments as of July 31, 2016:


Assets:	Derivative Type	GLG Fund			Global Fund
Unrealized appreciation of foreign currency contracts	Foreign Exchange Contracts	$	410		$	3
Unrealized appreciation of swap agreements	Credit Default Contracts		—	⁽²⁾		—

Liabilities:	Derivative Type	GLG Fund			Global Fund
Unrealized depreciation of foreign currency contracts	Foreign Exchange Contracts	$	(249	)	$	—
Unrealized depreciation of swap agreements	Credit Default Contracts		(10	)		—
Payable for variation margin from open futures contracts	Equity Index		(11	)		—

The effect of financial derivative instruments on the Statements of Operations not accounted for as hedging instruments for the period ended July 31, 2016 (in thousands):


Realized gain (loss) of derivatives recognized as a result from operations:	Derivative Type	GLG Fund			Global Fund
Net realized gain (loss) from futures contracts	Equity Index	$	(6	)	$	—
Net realized gain (loss) from swap agreements	Total Return Contracts		15			—
Net realized gain (loss) from foreign currency transactions	Foreign Exchange Contracts		—			(91	)

Net change in unrealized appreciation or (depreciation) of derivatives recognized as a result from operations:	Derivative Type	GLG Fund			Global Fund
Change in net unrealized appreciation (depreciation) from futures contracts	Equity Index	$	(11	)	$	—
Change in net unrealized appreciation (depreciation) from swap agreements	Total Return Contracts		(10	)		—
Change in net unrealized appreciation (depreciation) from foreign currency transactions	Foreign Exchange Contracts		161			(23	)

⁽¹⁾	See Note 6 in the Notes to Financial Statements for additional information.

⁽²⁾	Amount is less than $500.

⁽³⁾	Includes cumulative appreciation (depreciation) of futures contracts as reported in the Schedules of Investments footnotes. Only the 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 country or 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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 the Funds are 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. In addition, the value of emerging and frontier market fixed-income securities may be particularly sensitive to interest rate changes.

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 Funds. These risks are heightened when a Fund invests in emerging and frontier market countries, which have less developed capital markets and legal, regulatory, and political systems.

Counterparty Credit Risk

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 have elected not to offset qualifying financial and derivative instruments on the Statements of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, July 31, 2016 (in thousands).

GLG Total Return Fund

Offsetting of Financial Assets and Derivative Assets as of July 31, 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
Foreign currency contracts	$	410		$	—	$	410
Swap Agreements		—	⁽¹⁾		—		—	⁽¹⁾

	$	410		$	—	$	410

Offsetting of Financial Liabilities and Derivative Liabilities as of July 31, 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 ⁽²⁾	$	(11	)	$	—	$	(11	)
Foreign currency contracts		(249	)		—		(249	)
Swap Agreements		(10	)		—		(10	)

	$	(270	)	$	—	$	(270	)

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of July 31, 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
Barclay’s Bank PLC	$	7		$	—	$	—	$	7
Citibank N.A.		(5	)		—		—		(5	)
Credit Suisse International		9			—		—		9
Deutsche Bank AG		(10	)		—		—		(10	)
HSBC Bank PLC		(43	)		—		—		(43	)
JPMorgan Securities LLC		(11	)		—		—		(11	)
Standard Charter Bank		42			—		—		42
UBS AG		151			—		—		151

	$	140		$	—	$	—	$	140

⁽¹⁾	Amount is less than $500.

⁽²⁾	The securities presented here within are not subject to Master Netting Agreements. As such, this is disclosed for informational purposes only.

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Global Evolution Fund

Offsetting of Financial Assets and Derivative Assets as of July 31, 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
Foreign currency contracts	$	3	$	—	$	3

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of July 31, 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
State Street Bank & Trust	$	3	$	—	$	—	$	3

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. The tax year ended January 31, 2015 and 2016 are 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.

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

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


	GLG Fund		Global Evolution Fund
	From May 20⁽¹⁾to July 31, 2016		Six months ended July 31, 2016		Year Ended January 31, 2016
	(unaudited)		(unaudited)
Distributions paid from:
Ordinary income⁽²⁾
Institutional Class	$	5	$	315	$	574
Y Class		—		608		7,362
Investor Class		—		454		955
A Class		—		176		582
C Class		—		52		85
Return of Capital
Institutional Class		—		—		174
Y Class		—		—		2,223
Investor Class		—		—		290
A Class		—		—		176
C Class		—		—		26

Total distributions paid	$	5	$	1,605	$	12,457

⁽¹⁾

Commencement of Operations.

⁽²⁾

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

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

As of July 31, 2016, the components of distributable earnings or (deficits) on a tax basis were as follows (in thousands):


				Global Evolution
	GLG Fund			Fund
Cost basis of investments for federal income tax purposes	$	10,165		$	57,293

Unrealized appreciation		64			1,139
Unrealized depreciation		(13	)		(4,980	)

Net unrealized appreciation (depreciation)		51			(3,841	)

Undistributed ordinary income		181			—
Undistributed long-term capital gains		—			—
Accumulated capital and other losses		(11	)		(14,327	)
Other temporary differences		13			(5	)

Distributable earnings (deficits)	$	234		$	(18,173	)

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.

Accordingly, the following amounts represent current year permanent differences derived from foreign currency, net operating loss not utilized, and dividends that have been reclassed as of July 31, 2016 (in thousands):


	GLG Fund			Global Evolution Fund
Paid-in-capital	$	—		$	(4,600	)
Undistributed net investment income		16			3,475
Accumulated net realized gain (loss)		(16	)		1,125
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 are carried forward indefinitely and retain their character as short-term and/or long-term losses.

For the six months ended July 31, 2016, the GLG Fund has $11 of short-term capital loss carryforwards and the Global Evolution Fund has $4,879 of short-term capital loss carryforwards and $19 of long-term 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 months ended July 31, 2016 were (in thousands):


	Purchases		Sales
GLG Fund	$	9,196	$	1,997
Global Evolution Fund		17,902		32,526

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

A summary of the Funds’ transactions in the USG Select Fund for the six months ended July 31, 2016 are as follows (in thousands):


		January 31,
		2016						July 31, 2016
	Type of	Shares/Fair						Shares/Fair		Dividend
Fund	Transaction	Value		Purchases		Sales		Value		Income
GLG Fund	Direct	$	—	$	12,566	$	9,725	$	2,841	$	2
Global Evolution Fund	Direct		—		10,805		9,370		1,435		2

9. 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 Periods Ended July 31, 2016


	Institutional Class						Y Class						Investor Class
GLG Total Return Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		530		$	5,300			—		$	—			2		$	20
Reinvestment of dividends		—			5			—			—			—			—
Shares redeemed		—			—			—			—			—			—

Net increase in shares outstanding		530		$	5,305			—		$	—			2		$	20


	A Class						C Class						Ultra Class
GLG Total Return Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		—		$	—			—		$	—			—		$	—
Reinvestment of dividends		—			—			—			—			—			—
Shares redeemed		—			—			—			—			—			—

Net increase in shares outstanding		—		$	—			—		$	—			—		$	—


	Institutional Class						Y Class						Investor Class
Global Evolution Frontier Markets Income Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		126		$	1,108			521		$	4,589			286		$	2,473
Redemption Fees		—			1			—			1			—			1
Reinvestment of dividends		34			299			67			588			51			444
Shares redeemed		(238	)		(2,055	)		(1,705	)		(14,329	)		(663	)		(5,796	)

Net (decrease) in shares outstanding		(78	)	$	(647	)		(1,117	)	$	(9,151	)		(326	)	$	(2,878	)


	A Class						C Class
Global Evolution Frontier Markets Income Fund	Shares			Amount			Shares			Amount
Shares sold		106		$	939			—		$	1
Redemption Fees		—			1			—			—
Reinvestment of dividends		20			175			5			48
Shares redeemed		(312	)		(2,636	)		(43	)		(380	)

Net (decrease) in shares outstanding		(186	)	$	(1,521	)		(38	)	$	(331	)

American Beacon Funds^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

For the Year Ended January 31, 2016


	Institutional Class						Y Class						Investor Class
Global Evolution Frontier Markets Income Fund	Shares			Amount			Shares			Amount			Shares			Amount
Shares sold		522		$	4,848			4,086		$	38,394			1,222		$	11,594
Redemption Fees		—			2			—			22			—			3
Reinvestment of dividends		79			723			1,027			9,572			132			1,215
Shares redeemed		(293	)		(2,703	)		(15,834	)		(141,405	)		(891	)		(8,158	)

Net increase (decrease) in shares outstanding		308		$	2,870			(10,721	)	$	(93,417	)		463		$	4,654


	A Class						C Class
Global Evolution Frontier Markets Income Fund	Shares			Amount			Shares			Amount
Shares sold		424		$	4,023			155		$	1,453
Redemption Fees		—			1			—			—
Reinvestment of dividends		79			732			11			99
Shares redeemed		(1,233	)		(11,573	)		(49	)		(443	)

Net increase (decrease) in shares outstanding		(730	)	$	(6,817	)		117		$	1,109

10. Change in Independent Registered Public Accounting Firm (Unaudited)

The Funds engaged PricewaterhouseCoopers, LLP (“PwC”) as the independent registered public accounting firm for the fiscal year ending January 31, 2017. PwC replaces Ernst & Young LLP (“EY”), the Funds’ previous independent registered public accounting firm. The change in accountants was approved by the Audit Committee of the Board on June 8, 2016. During the periods that EY served as the Funds’ independent registered public accounting firm through January 31, 2016, EY’s audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. There were no disagreements between the Funds and EY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

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American Beacon GLG Total Return Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Institutional						Investor
	Class			Y Class			Class			A Class			Ultra Class			C Class
	May 20^D			May 20^D			May 20^D			May 20^D			May 20^D			May 20^D
	to			to			to			to			to			to
	July 31,			July 31,			July 31,			July 31,			July 31,			July 31,
	2016			2016			2016			2016			2016			2016
	(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)			(unaudited)
Net asset value, beginning of period	$	10.00		$	10.00		$	10.00		$	10.00		$	10.00		$	10.00

Income from investment operations:
Net investment income		0.02			0.02			0.01			0.01			0.02			0.00
Net gains (losses) on investments (both realized and unrealized)		0.21			0.21			0.21			0.21			0.21			0.21

Total income (loss) from investment operations		0.23			0.23			0.22			0.22			0.23			0.21

Less distributions:
Dividends from net investment income		0.00			0.00			0.00			0.00			0.00			0.00
Distributions from net realized gains		—			—			—			—			—			—

Total distributions		0.00			0.00			0.00			0.00			0.00			0.00

Redemption fees added to beneficial interests		—			—			—			—			—			—

Net asset value, end of period	$	10.23		$	10.23		$	10.22		$	10.22		$	10.23		$	10.21

Total return ^A	$	2.35	%^B	$	2.35	%	$	2.25	%^B	$	2.25		$	2.35		$	2.15

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	10,028		$	102		$	122		$	102		$	103		$	102
Ratios to average net assets:

Expenses, before reimbursements		5.91	%^C		7.72	%^C		8.29	%^C		8.02	%^C		8.77	%^C		8.76	%^C
Expenses, net of reimbursements		1.05	%^C		1.15	%^C		1.43	%^C		1.45	%^C		0.95	%^C		2.20	%^C

Net investment (loss), before expense reimbursements		(3.82	)%^C		(5.63	)%^C		(6.20	)%^C		(5.93	)%^C		(6.68	)%^C		(6.67	)%^C

Net investment income (loss), net of reimbursements		1.04	%^C		0.94	%^C		0.64	%^C		0.64	%^C		1.14	%^C		(0.11	)%^C
Portfolio turnover rate		28	%^B		28	%^B		28	% ^B		28	%^B		28	%^B		28	%^B

American Beacon Global Evolution Frontier Markets Income Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Institutional Class
	Six Months			Year Ended			February 25 ^Dto
	Ended July 31,			January 31,			January 31,
	2016			2016			2015
	(unaudited)
Net asset value, beginning of period	$	8.35		$	9.68		$	10.00

Income from investment operations:
Net investment income		0.40			0.67			0.59
Net gains (losses) from investments (both realized and unrealized)		0.51			(1.30	)		(0.30	)

Total income (loss) from investment operations		0.91			(0.63	)		0.29

Less distributions:
Dividends from net investment income		(0.27	)		(0.50	)		(0.59	)
Distributions from net realized gains		—			—			(0.02	)
Distributions from return of capital		—			(0.20	)		—

Total distributions		(0.27	)		(0.70	)		(0.61	)
Redemption fees added to beneficial interests ^F		—			—			—

Net asset value, end of period	$	8.99		$	8.35		$	9.68

Total return ^A		10.97	%^B		(6.98	)%		2.76	%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	10,639		$	10,531		$	9,226
Ratios to average net assets:
Expenses, before reimbursements		1.42	%^C		1.14	%		1.95	%^C
Expenses, net of reimbursements		1.26	%^C		1.15	%		1.15	%^C
Net investment income, before reimbursements		8.95	%^C		7.14	%		5.43	%^C
Net investment income, net of reimbursements		9.10	%^C		7.13	%		6.22	%^C
Portfolio turnover rate		34	%^B		68	%		23	%^B E

	Y Class
	Six Months			Year Ended			February 25 ^Dto
	Ended July 31,			January 31,			January 31,
	2016			2016			2015
	(unaudited)
Net asset value, beginning of period	$	8.34		$	9.69		$	10.00

Income from investment operations:
Net investment income		0.41			0.61			0.58
Net gains (losses) from investments (both realized and unrealized)		0.51			(1.28	)		(0.28	)

Total income (loss) from investment operations		0.92			(0.67	)		0.30

Less distributions:
Dividends from net investment income		(0.26	)		(0.50	)		(0.59	)
Distributions from net realized gains		—			—			(0.02	)
Distributions from return of capital		—			(0.18	)		—

Total distributions		(0.26	)		(0.68	)		(0.61	)

Redemption fees added to beneficial interests ^F		—			—			—

Net asset value, end of period	$	9.00		$	8.34		$	9.69

Total return ^A		11.18	%^B		(7.40	)%		2.87	%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	21,709		$	29,435		$	138,082
Ratios to average net assets:
Expenses, before reimbursements		1.52	%^C		1.18	%		1.50	%^C
Expenses, net of reimbursements		1.36	%^C		1.25	%		1.25	%^C
Net investment income, before reimbursements		10.08	%^C		7.35	%		6.33	%^C
Net investment income, net of reimbursements		10.23	%^C		7.28	%		6.59	%^C
Portfolio turnover rate		34	%^B		68	%		23	%^{B E}

^B	Not annualized.

^C	Annualized.

^D	February 25, 2014 is the inception date of the Global Evolution Frontier Markets Income Fund.

^E	Portfolio turnover rate is for the period from February 25, 2014 to January 31, 2015.

^F	Amount represents less than $0.01 per share.

American Beacon Global Evolution Frontier Markets Income Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Investor Class
	Six Months			Year Ended			February 25 ^Dto
	Ended July 31,			January 31,			January 31,
	2016			2016			2015 ^D
	(unaudited)
Net asset value, beginning of period	$	8.35		$	9.68		$	10.00

Income from investment operations:
Net investment income		0.39			0.63			0.55
Net gains (losses) from investments (both realized and unrealized)		0.50			(1.30	)		(0.29	)

Total income (loss) from investment operations		0.89			(0.67	)		0.26

Less distributions:
Dividends from net investment income		(0.25	)		(0.47	)		(0.56	)
Distributions from net realized gains		—			—			(0.02	)
Distributions from return of capital		—			(0.19	)		—

Total distributions		(0.25	)		(0.66	)		(0.58	)

Redemption fees added to beneficial interests ^F		—			—			—

Net asset value, end of period	$	8.99		$	8.35		$	9.68

Total return ^A		10.80	%^B		(7.33	)%		2.47	%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	14,214		$	15,934		$	13,988
Ratios to average net assets:
Expenses, before reimbursements		1.76	%^C		1.44	%		1.78	%^C
Expenses, net of reimbursements		1.61	%^C		1.53	%		1.53	%^C
Net investment income, before reimbursements		8.62	%^C		6.84	%		5.86	%^C
Net investment income, net of reimbursements		8.77	%^C		6.76	%		6.12	%^C
Portfolio turnover rate		34	%^B		68	%		23	%^{B E}

	A Class
	Six Months			Year Ended			February 25 ^Dto
	Ended July 31,			January 31,			January 31,
	2016			2016			2015
	(unaudited)
Net asset value, beginning of period	$	8.35		$	9.68		$	10.00

Income from investment operations:
Net investment income		0.38			0.62			0.54
Net gains (losses) from investments (both realized and unrealized)		0.51			(1.29	)		(0.29	)

Total income (loss) from investment operations		0.89			(0.67	)		0.25

Less distributions:
Dividends from net investment income		(0.25	)		(0.47	)		(0.55	)
Distributions from net realized gains		—			—			(0.02	)
Distributions from return of capital		—			(0.19	)		—

Total distributions		(0.25	)		(0.66	)		(0.57	)

Redemption fees added to beneficial interests ^F		—			—			—

Net asset value, end of period	$	8.99		$	8.35		$	9.68

Total return ^A		10.79	%^B		(7.36	)%		2.42	%^B

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	6,418		$	7,514		$	15,782
Ratios to average net assets:
Expenses, before reimbursements		1.80	%^C		1.52	%		1.88	%^C
Expenses, net of reimbursements		1.65	%^C		1.55	%		1.55	%^C
Net investment income, before reimbursements		8.77	%^C		6.89	%		5.82	%^C
Net investment income, net of reimbursements		8.91	%^C		6.86	%		6.15	%^C
Portfolio turnover rate		34	%^B		68	%		23	%^{B E}

^B	Not annualized.

^C	Annualized.

^D	February 25, 2014 is the inception date of the Global Evolution Frontier Markets Income Fund.

^E	Portfolio turnover rate is for the period from February 25, 2014 to January 31, 2015.

^F	Amount represents less than $0.01 per share.

American Beacon Global Evolution Frontier Markets Income Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	C Class
	Six Months Ended July 31, 2016			Year Ended January 31, 2016			February 25 ^Dto January 31, 2015
	(unaudited)
Net asset value, beginning of period	$	8.34		$	9.67		$	10.00

Income from investment operations:
Net investment income		0.35			0.56			0.47
Net gains (losses) from investments (both realized and unrealized)		0.51			(1.30	)		(0.30	)

Total income (loss) from investment operations		0.86			(0.74	)		0.17

Less distributions:
Dividends from net investment income		(0.23	)		(0.42	)		(0.48	)
Distributions from net realized gains		—			—			(0.02	)
Distributions from return of capital		—			(0.17	)		—

Total distributions		(0.23	)		(0.59	)		(0.50	)

Redemption fees added to beneficial interests ^F		—			—			—

Net asset value, end of period	$	8.97		$	8.34		$	9.67

Total return ^A		10.39	%^B		(8.06	)%		1.60	%^B^E

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	1,866		$	2,049		$	1,245
Ratios to average net assets:
Expenses, before reimbursements		2.55	%^C		2.31	%		3.01	%^C
Expenses, net of reimbursements		2.30	%^C		2.30	%		2.31	%^C
Net investment income, before reimbursements		7.74	%^C		5.89	%		4.62	%^C
Net investment income, net of reimbursements		7.99	%^C		5.90	%		5.33	%^C
Portfolio turnover rate		34	%^B		68	%		23	%^B E

^B	Not annualized.

^C	Annualized.

^D	February 25, 2014 is the inception date of the Global Evolution Frontier Markets Income Fund.

^E	Portfolio turnover rate is for the period from February 25, 2014 to January 31, 2015.

^F	Amount represents less than $0.01 per share.

Disclosure Regarding Approval of the Management Agreement

and Investment Advisory Agreements (Unaudited)

At its March 3–4, 2016 meetings, the Board of Trustees (“Board”) considered: (1) the approval of the Management Agreement between American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”), on behalf of the American Beacon GLG Total Return Fund, a new series of the Trust (the “GLG Fund”), and (2) the approval of a new investment advisory agreement among the Manager, GLG LLC, and the Trust, on behalf of the GLG Fund (the “GLG Agreement”).

Approval of American Beacon Advisors, Inc.

Prior to the meeting, the Board reviewed information provided by the Manager in response to requests from the Board and/or the Manager in connection with the Board’s consideration of the Management Agreement for the GLG Fund, and the Investment Committee of the Board met with representatives of the Manager. The Board also considered information that had been provided by the Manager to the Board at its May 14, 2015 and June 2-3, 2015 meetings in connection with the review of the current Management Agreement and Administration Services Agreement between the Manager and the Trust as they related to the existing series of the Trust (“Existing Funds”).

Provided below is an overview of the primary factors the Board considered at its March 3–4, 2016 meetings at which the Board considered the approval of the Management Agreement with respect to the GLG Fund. In determining whether to approve the Management Agreement, the Board considered, among other things, the following factors with respect to the GLG Fund: (1) the nature and quality of the services to be provided; (2) the potential materiality of the estimated costs to be incurred by the Manager in rendering its services and the resulting profits or losses; (3) the extent to which economies of scale, if any, have been taken into account in setting the fee schedule; (4) whether fee levels reflect economies of scale, if any, for the benefit of investors; (5) comparisons of services and fees with contracts entered into by the Manager with the Existing Funds; and (6) any other benefits derived or anticipated to be derived by the Manager from its relationship with the GLG Fund.

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

Nature, Extent and Quality of Services. The Board considered that it had reviewed the current Management Agreement between the Manager and the Trust as it relates to the Existing Funds at its May 14, 2015 and June 2-3, 2015 meetings and the current Administrative Services Agreement at its June 2-3, 2015 meetings. At those meetings, the Board received detailed information regarding the Manager, including information with respect to the scope of management and administration services provided by the Manager to the Existing Funds and the background and experience of the Manager’s key investment personnel. At its May 14, 2015 and June 2-3, 2015 meetings, the Board also considered the Manager’s disciplined investment approach and goal to provide consistent above average long-term performance at a low cost on behalf of the Existing Funds and the Manager’s culture of compliance and support for compliance operations that reduces risks to the Existing Funds. The Board considered the Manager’s representation that the advisory, administrative and related services proposed to be provided to the GLG Fund will be consistent with the services provided to the Existing Funds, except that the GLG Fund is a single-manager fund and, therefore, the Manager will not allocate assets among multiple investment advisors, which it does for many of the Existing Funds. The Board also considered the background and experience of key investment personnel who will have primary responsibility for the day-to-day oversight of the GLG Fund. Based on the foregoing information, the Board concluded that the nature, extent and quality of the services to be provided by the Manager were appropriate for the GLG Fund.

Disclosure Regarding the Approval of the Management

and Investment Advisory Agreements of the Funds (Unaudited)

Investment Performance. The Board considered that the GLG Fund is new and, therefore, had no historical performance for the Board to review with respect to the Manager. The Board also considered that it would review the performance of GLG LLC in connection with its consideration of the GLG Agreement.

Costs of the Services Provided to the Fund and the Profits or Losses to be 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 estimated revenues to be earned and the expenses to be incurred by the Manager with respect to the GLG Fund. The Board also considered that the Manager will receive any fees payable by the GLG Fund pursuant to any future securities lending arrangement. The Board considered the Manager’s representation that its accounting system does not provide for cost allocation. Accordingly, the Manager created an allocation of expenses based upon the estimated percentage of time spent by its employees on non-distribution related business. The Board then considered that, at assumed asset levels, the Manager was projected to incur a pre-tax loss with respect to the GLG Fund, before and after distribution revenues and expenses, from its first year of rendering services to the GLG Fund.

Comparisons of the amounts to be paid to the Manager under the Management Agreement and other funds in the relevant Morningstar category. In evaluating the Management Agreement, the Board reviewed the Manager’s proposed management fee schedule. The Board considered a comparison of the management fee rate to be charged by the Manager under the Management Agreement versus the fee rates charged by comparable funds. The Board considered that the Manager provides comparable services to the Existing Funds at the same rate as proposed for the GLG Fund. The Board also considered that, the management fee rate proposed by the Manager for the GLG Fund, both on a stand-alone basis and combined with the proposed advisory fee rate to be paid to GLG LLC, is higher than the average advisory fee rates paid by peer group funds in the Morningstar, Inc. (“Morningstar”) category for the GLG Fund. In addition, the Board considered that the Manager has agreed to limit the expenses of the GLG Fund at competitive market levels through February 28, 2018, which, for the GLG Fund, are competitive when compared with the Morningstar GLG Select Peer Group. This information assisted the Board in concluding that the management fee rate appeared to be within a reasonable range for the services to be provided to the GLG Fund, in light of all the factors considered.

Economies of Scale. The Board considered the Manager’s representation that the proposed management fee rate for the GLG Fund contain breakpoints, which the Manager believes properly reflect economies of scale for the benefit of the GLG Fund’s shareholders.

Benefits Derived from the Relationship with the Fund. The Board considered the Manager’s representation that it does not anticipate any material “fall-out” benefits resulting from its proposed relationship with the GLG Fund, except that AmBeacon’s overall relationship with the Trust has been and will continue to be a factor in helping AmBeacon attract separate account business. Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager by virtue of its relationship with the GLG 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 GLG Fund or the Manager, as that term is defined in the Investment Company Act of 1940, as amended (“1940 Act”): (1) concluded that the proposed management fee is fair and reasonable with respect to the GLG Fund; (2) determined that the GLG Fund and its shareholders would benefit from the Manager’s management of the GLG Fund; and (3) approved the Management Agreement on behalf of the GLG Fund.

Approval of GLG LLC

Prior to the meeting, the Board reviewed information provided by GLG LLC in response to requests from the Board and/or the Manager in connection with the Board’s consideration of the GLG Agreement, and the Investment Committee of the Board met with representatives of GLG LLC.

Provided below is an overview of the primary factors the Board considered at its March 3–4, 2016 meetings at which the Board considered the approval of the GLG Agreement. In determining whether to

Disclosure Regarding Approval of the Management Agreement

and Investment Advisory Agreements (Unaudited)

approve the GLG Agreement, the Board considered, among other things, the following factors: (1) the nature and quality of the services to be provided; (2) the investment performance of the proposed portfolio manager for the GLG Fund; (3) the potential materiality of the costs to be incurred by GLG LLC in rendering its services and the resulting profits or losses; (4) the extent to which economies of scale, if any, have been taken into account in setting the fee schedule; (5) whether fee levels reflect these economies of scale, if any, for the benefit of investors; (6) comparisons of services and fees with contracts entered into by GLG LLC with other clients; and (7) any other benefits anticipated to be derived by GLG LLC from its relationship with the GLG Fund.

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

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

Performance of Portfolio Manager. The Board evaluated the information provided by GLG LLC regarding the performance of the two registered investment companies that were managed by the GLG Fund’s proposed portfolio manager relative to the performance of the a blended index comprised of the J.P. Morgan Emerging Markets Bond Index and the J.P. Morgan Emerging Markets Bond Global Diversified Index (“Blended Index”) and three registered investment companies with similar investment objectives and strategies (“Peer Funds”). The Board considered GLG LLC’s representation that, for the periods ended October 31, 2015, the two registered investment companies that were managed by the GLG Fund’s proposed portfolio manager outperformed the Blended Index and the Peer Funds for the for the one-year, three-year and since-inception periods. Based on the foregoing information, the Board concluded that the historical investment performance record of the GLG Fund’s proposed portfolio manager supported approval of the GLG Agreement.

Comparisons of the amounts to be paid under the GLG Agreement with those under contracts between GLG LLC and its other clients. In evaluating the GLG Agreement, the Board reviewed the proposed advisory fee rate for services to be performed by GLG LLC on behalf of the GLG Fund. The Board considered that GLG LLC’s investment advisory fee rate under the GLG Agreement would be paid to GLG LLC by the GLG Fund. The Board considered GLG LLC’s representation that it does not currently charge a lower advisory fee rate to other clients for which GLG LLC provides comparable services. The Board also considered the Manager’s representation that, although the combined management and advisory fee rate to be paid to the Manager and GLG LLC was higher than the average advisory fee rate paid by peer group funds in the GLG Fund’s Morningstar category, the Manager had agreed to cap the GLG Fund’s expenses at competitive market levels through February 28, 2018. After evaluating this information, the Board concluded that GLG LLC’s advisory fee rate under the GLG Agreement was reasonable in light of the services to be provided to the GLG Fund.

Disclosure Regarding the Approval of the Management

and Investment Advisory Agreements of the Funds (Unaudited)

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

Economies of Scale. The Board considered GLG LLC’s representation that the fee schedule proposed for the GLG Fund, which includes breakpoints, reflects economies of scale as asset growth occurs.

Benefits to be derived by GLG LLC from the relationship with the GLG Fund. The Board considered GLG LLC’s representation that neither GLG LLC nor its affiliates will receive any “fall-out” benefits from GLG LLC’s relationship with the GLG Fund. Based on the foregoing information, the Board concluded that the potential benefits accruing to GLG LLC by virtue of its relationship with the GLG 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 GLG Fund, the Manager or GLG LLC, as that term is defined in the 1940 Act, concluded that the proposed investment advisory fee rate is fair and reasonable and that the approval of the GLG Agreement is in the best interests of the GLG Fund and approved the GLG Agreement.

Approval of New Management Agreement and New Investment Advisory Agreement for American Beacon Global Evolution Frontier Markets Income Fund in December 2014

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”) between American Beacon Advisors, Inc. (“Manager”) and the American Beacon Funds (“Trust”) on behalf of the American Beacon Global Evolution Frontier Markets Income Fund (“Global Evolution Fund”); and

(2) a new Investment Advisory Agreement (“New Advisory Agreement”) among the Manager, the Trust, on behalf of the Fund, and Global Evolution USA, LLC (“Global Evolution” 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 prior Management Agreement (“Prior Management Agreement”) between the Manager and the Trust, on behalf of the Global Evolution Fund, and the prior Investment Advisory Agreement (“Prior Advisory Agreement”) among the Manager, the Trust, on behalf of the Global Evolution Fund, and Global Evolution 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 Prior Management Agreement and the Prior Advisory Agreement (together, the “Prior 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 Global Evolution Fund. Additionally, the Board considered that it had requested and evaluated the information relevant to the approval of the Prior Management Agreement and Prior Advisory Agreement at in-person

Disclosure Regarding Approval of the Management Agreement

and Investment Advisory Agreements (Unaudited)

meetings held in May and June 2014 and November 2013. 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 May and June 2014 and November 2013 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 Prior 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.

•

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 Global Evolution Fund’s fee structure, fee waivers, and other information;

•

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

•

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 Prior Agreements;

•

a description of any expected changes in distribution or marketing efforts and strategies for the Global Evolution Fund as a result of the Transaction;

Disclosure Regarding the Approval of the Management

and Investment Advisory Agreements of the Funds (Unaudited)

•

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

•

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

•

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

•

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

•

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

•

verification of the continuation of the Manager’s insurance coverage after the Transaction with regard to the services provided to the Global Evolution 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 May and June 2014 meetings in connection with the renewal of the Prior Management Agreement with respect to certain other series of the Trust and the November 2013 meetings in connection with the initial approval of the Prior Agreements with respect to the Global Evolution Fund.

In determining whether to approve the New Agreements on December 10, 2014, the Trustees considered the best interests of the Global Evolution Fund. The Board considered the Global Evolution Fund’s investment management and sub-advisory relationships separately. In each instance, the Board considered its review of the Prior Management Agreement in May and June 2014 with respect to certain other series of the Trust and its review of the Prior Agreements in November 2013 with respect to the Global Evolution Fund, 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 Global Evolution Fund and the Sub-Advisor for the Global Evolution Fund; (3) the costs incurred by the Manager in rendering services to the Global Evolution Fund and its resulting profits or losses; (4) comparisons of services and fee rates with contracts entered into by the Manager or the 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 Global Evolution 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 Global Evolution 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

Disclosure Regarding Approval of the Management Agreement

and Investment Advisory Agreements (Unaudited)

provide the same services to the Global Evolution Fund on substantially the same terms as the Prior 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 Global Evolution 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 Global Evolution 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 Global Evolution Fund’s shares and add new series to the Trust and share classes to the Global Evolution 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 Prior Management Agreement in May and June 2014 with respect to certain other series of the Trust and Prior Agreements in November 2013 with respect to the Global Evolution Fund 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 Global Evolution Fund and, thus, determined to approve the New Agreements for the Global Evolution Fund.

Investment Performance. The Board considered its review of the comparative information regarding the Global Evolution Fund’s investment performance relative to its benchmark index(es) and peer group in connection with the renewal of the Prior Agreements. The Board also considered the performance reports and discussions with management at Board and Committee meetings since November 2013. The Manager also noted that it generally was satisfied with the performance of the Sub-Advisor.

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 Global Evolution 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 Global Evolution Fund. Additionally, the Board noted that there had been no material changes in this regard since its consideration of the Prior Agreements with respect to the Global Evolution Fund in November 2013. Based on the foregoing information and the Board’s considerations in connection with the approval of the Prior Agreements with respect to the Global Evolution Fund in November 2013, 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 Global Evolution 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 Global Evolution 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 Global Evolution Fund would pay the same fee rates to the Manager under the New Management Agreement as the Fund currently pays under the Prior Management Agreement. The Board also considered that the Global Evolution Fund would pay the same investment advisory fee rate to the Sub-Advisor under the New Advisory Agreement as the Fund pays under the Prior Advisory Agreement. Based on the foregoing information and the Board’s considerations in connection with the initial approval of the Prior Agreements with respect to the Global Evolution Fund in November 2013, the Board concluded that the Manager’s fee schedule for the Global Evolution Fund, and the Sub-Advisor’s fee schedule for the Global Evolution Fund, provide for a reasonable sharing of benefits from any economies of scale with the Global Evolution Fund.

Disclosure Regarding the Approval of the Management

and Investment Advisory Agreements of the Funds (Unaudited)

Benefits Derived by the Manager from Relationship With the Fund. The Board considered that the “fall-out” or ancillary benefits that accrue to the Manager and/or the Sub-Advisor as a result of its advisory relationship with the Global Evolution Fund would not change as a result of the Transaction. Based on the foregoing information and the Board’s considerations in connection with the initial approval of the Prior Agreements with respect to the Global Evolution Fund in November 2013, 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 Global Evolution 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 Global Evolution 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 Global Evolution Fund are fair and reasonable and that the approval of the New Agreements is in the best interests of the Global Evolution Fund, and approved the New Agreements.

Approval of Management Agreement for American Beacon Global Evolution Frontier Markets Income Fund in March 2016

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 Global Evolution Fund. The New Agreement combines the terms of the Global Evolution 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 Global Evolution 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 Global Evolution 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 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 Global Evolution 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 Global Evolution Fund. The Board also considered that the fee rate payable by the Global Evolution Fund under the New Agreement would not exceed the aggregate fee rate payable by the Global Evolution 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 Global Evolution Fund and the Manager’s representations regarding disclosure of the New Agreement to new and existing shareholders. The Board also considered that an independent

Disclosure Regarding Approval of the Management Agreement

and Investment Advisory Agreements (Unaudited)

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 Global Evolution 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 Global Evolution Fund; (2) determined that the Global Evolution Fund and its shareholders would benefit from the Manager’s continued management of the Global Evolution Fund; and (3) approved the New Agreement on behalf of the Global Evolution Fund.

Renewal and Approval of the Management Agreement and Investment Advisory Agreement of the American Beacon Global Evolution Frontier Markets Income Fund in June 2016

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 the Global Evolution Fund; and (2) the investment advisory agreement (the “Investment Advisory Agreement”) among the Manager, the Trust, on behalf of the Global Evolution Fund, and Global Evolution (“subadvisor”). 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.

•

comparisons of the performance of an appropriate share class of the Global Evolution 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;

•

a description of any applicable fee waivers and/or expense reimbursements in place for the Global Evolution 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 Global Evolution Fund;

Disclosure Regarding the Approval of the Management

and Investment Advisory Agreements of the Funds (Unaudited)

•

any actual or anticipated economies of scale in relation to the services the firm provides or will provide to the Global Evolution 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 Global Evolution Fund’s investors;

•

an evaluation of any other benefits to the firm or Global Evolution 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 Global Evolution 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 Global Evolution 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 Global Evolution Fund.

The Board noted that the Manager provides management and administrative services to the Global Evolution Fund pursuant to the Management Agreement. The Board considered that prior to May 29, 2016, the Manager provided management and administrative services to the Global Evolution 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.

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 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.

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 Global Evolution Fund and its shareholders.

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 Global Evolution Fund, the Trustees considered the best interests of the Global Evolution 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 Global Evolution Fund’s investment management and subadvisory relationships separately.

Disclosure Regarding Approval of the Management Agreement

and Investment Advisory Agreements (Unaudited)

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 Global Evolution Fund and the subadvisor for the Global Evolution Fund; (3) the costs incurred by the Manager in rendering services to the Global Evolution 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 Global Evolution Fund investors; and (7) any other benefits derived or anticipated to be derived by the Manager or the subadvisor from their relationship with the Global Evolution 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 Global Evolution Fund’s long-term performance and the length of service of key investment personnel at the Manager; the cost structure of the Global Evolution Fund; the Manager’s culture of compliance and support for compliance operations that reduce risks to the Global Evolution Fund; the Manager’s commitment to enhance the Global Evolution Fund’s product line and increase assets in the Global Evolution 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 Global Evolution 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 Global Evolution Fund and, thus, determined to renew the Management Agreement and the Investment Advisory Agreement for the Global Evolution Fund.

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

Disclosure Regarding the Approval of the Management

and Investment Advisory Agreements of the Funds (Unaudited)

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 Global Evolution 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 Global Evolution 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 Global Evolution 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 Global Evolution 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 Global Evolution Fund grows and whether fee rate levels reflect these economies of scale for the benefit of Global Evolution 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 Global Evolution 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 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 Global Evolution 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 Global Evolution 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.

Disclosure Regarding Approval of the Management Agreement

and Investment Advisory Agreements (Unaudited)

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 Global Evolution Fund appear to be fair and reasonable

Additional Considerations and Conclusions with Respect to the Fund

The performance comparisons below were made versus the Global Evolution Fund’s Lipper performance universe and Lipper performance group, with the 1st Quintile representing the top twenty percent of the universe or group based on performance and the 5th Quintile representing the bottom twenty percent of the universe or group based on performance. References below to the Global Evolution Fund’s Lipper performance group and Lipper performance universe are to the group or universe of comparable mutual funds included in the analysis provided by Broadridge. A Lipper performance group consists of the Global Evolution Fund and a representative sample of funds with similar investment classifications and objectives as the Global Evolution Fund, as selected by Broadridge. A Lipper performance universe is an expansion of the performance group, providing a broader view of performance across the Global Evolution 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 Global Evolution Fund’s Lipper expense universe and Lipper expense group, with the 1st Quintile representing the top twenty percent of the universe or group based on lowest total expense and the 5th Quintile representing the bottom twenty percent of the universe or group based on highest total expense. References below to the Global Evolution Fund’s expense group and expense universe are to the group or universe of comparable mutual funds included in the analysis by Broadridge. A Lipper expense group consists of the Global Evolution 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 Global Evolution Fund included in the Lipper comparative information and provides a broader view of expenses across the Global Evolution Fund’s investment classification/objective. The Trustees also considered the Global Evolution 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.

Additional Considerations and Conclusions with Respect to the American Beacon Global Evolution Frontier Markets Income Fund

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

Lipper Total Expense Analysis and Morningstar Fee Level Ranking


Compared to Lipper Expense Universe		5th Quintile
Compared to Lipper Expense Group		5th Quintile
Morningstar Fee Level Ranking – Institutional Class		High Expense Ratio

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


Compared to Lipper Performance Universe		5th Quintile
Compared to Lipper Performance Group		4th Quintile

Disclosure Regarding the Approval of the Management

and Investment Advisory Agreements of the Funds (Unaudited)

(1) Information provided by Global Evolution that, for fee rate comparison purposes, it does not manage other accounts in the same strategy as the Global Evolution Fund; (2) the Manager’s representation that the Global Evolution Fund underperformed primarily due to its profile as a frontier market fund within an emerging market fund universe; and (3) the Manager’s recommendation to continue to retain the subadvisor based upon, among other factors, the relatively brief period that this Global Evolution 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; and (2) determined that the Global Evolution Fund and its shareholders would benefit from the Manager’s and subadvisor’s continued management of the Global Evolution Fund; and (3) approved the renewal of the Management and Investment Advisory Agreements with respect to the Global Evolution Fund.

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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 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

PricewaterhouseCoopers LLP

Boston, MA

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 GLG Total Return Fund and American Beacon Global Evolution Frontier Markets Income Fund are service marks of American Beacon Advisors, Inc.

SAR 7/16

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About American Beacon Advisors

GROSVENOR LONG/SHORT FUND All investing involves risk including the possible loss of principal. The Fund’s strategy of investing in a variety of long/short strategies entails certain risks including that the lead sub-advisor’s judgments about allocation between such strategies, as well as the selection of the sub-advisors and their subsequent individual investment decisions, may not perform to expectations resulting in the Fund’s underperformance or even losses versus other similar funds. 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 risk, which could increase the Fund’s transaction costs and possibly have a negative impact on performance. Investing in small- or mid-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. Investing in derivative instruments involves liquidity, credit, interest rate and market risks and in some cases the addition of financial leverage, which can magnify these 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 Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.


American Beacon Funds		July 31, 2016

Contents


President’s Message			1

Performance Overview			2

Expense Examples			4

Schedule of Investments:

Grosvenor Long/Short Fund			5

Financial Statements			22

Notes to Financial Statements			26

Financial Highlights			42

Disclosure Regarding the Approval of the Management and Investment

Advisory Agreements			45

Additional Information			Back Cover

President’s Message


		Dear Shareholders, During the six-month period ended July 31, 2016, patchy economic growth and the “Brexit” referendum set the stage for volatile markets around the globe. China’s slowing growth escalated concerns for global markets and, as a result, many central banks decided to continue or expand their economic stimulation policies. In March 2016, the Bank of Japan pushed its rates into negative territory and the European Central Bank cut a key rate to zero. Then on Friday, June 24, 2016, Great Britain’s announcement that 52% of its voters favored leaving the European Union shook global financial markets. The Brexit referendum fallout was swift and significant. British Prime Minister David Cameron announced his resignation, the British pound sterling nose-dived approximately 12% against the dollar, the euro fell 1.4% against the dollar and the price of gold climbed 4.7% to a two-year high. Global markets reacted to the Brexit

news with a selling frenzy. In the U.S., the Dow Jones industrial average dropped 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 sank 4.1%. That very 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.

For the period under review, the MSCI World Index (which measures the equity market performance of developed markets) returned 11.58%.

For the six months ended July 31, 2016:

•

American Beacon Grosvenor Long/Short Fund (Investor Class) returned 4.19%.

Best Regards,

Gene L. Needles, Jr.

President

American Beacon Funds

American Beacon Grosvenor Long/Short Fund^SM

Performance Overview

July 31, 2016 (Unaudited)

The Investor Class of the American Beacon Grosvenor Long/Short Fund (the “Fund”) returned 4.19% for the six-month period ended July 31, 2016. The Fund underperformed the MSCI World Index (the “Index”) return of 11.58% for the period.

Total Returns for the Period ended July 31, 2016


	Ticker		6 Months*			Since Inception 10/1/2015
Institutional Class		GVRIX		4.29	%		2.20	%
Y Class		GVRYX		4.29	%		2.10	%
Investor Class		GVRPX		4.19	%		1.90	%
A Class with sales Charge		GSVAX		-0.78	%		-2.95	%
A Class without sales charge		GSVAX		4.19	%		1.90	%
C Class with sales charge		GSRCV		2.79	%		0.30	%
C Class without sales charge		GSRCV		3.79	%		1.30	%
MSCI World Index				11.58	%		12.43	%

*	Not Annualized

Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of the date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. A portion of the fees charged to each Class of the Fund has been waived since inception. Performance prior to waiving fees was lower than the actual returns shown since inception. A Class shares have a maximum sales charge of 5.75%. The maximum contingent deferred sales charge for the C Class is 1.00% for shares redeemed within one year of the date of purchase.

2.	The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. One cannot directly invest in an index.

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 10.00%, 13.10%, 13.33%, 12.81%, and 14.24%, 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 typically lags the Index during periods of strong market performance given the Fund’s short positions and hedges. This six-month period began with weak equity markets and ended near record highs. During periods of weak market performance, however, the Fund is more likely to outperform as the short positions and hedges add value. January 2016 provided the most recent example of the Fund’s outperformance in down markets.

During the six-month period ended July 31, 2016, six out of seven sub-advisors in the Fund generated positive returns. A leading source of gains came from exposure to the commodity sectors – energy and mining. The sub-advisors increased Fund exposure early in the period and benefitted from the recovery in commodity prices. The Fund’s exposure to mid-sized U.S. banks also contributed to performance during the period as the outlook for the economy and interest rates became more supportive.

The Fund’s investment strategy typically produces returns that are less volatile than those of the Index. As such, risk-adjusted returns generally provide an appropriate method of analyzing performance.

The Fund’s lead sub-advisor, Grosvenor Capital Management, continues to implement its thorough due-diligence process that addresses Investment Research, Risk Management, and Operational Effectiveness among the Fund’s sub-advisors. These efforts, and the Fund’s investment process, have remained consistent since its inception.

American Beacon Grosvenor Long/Short Fund^SM

Performance Overview

July 31, 2016 (Unaudited)


Top Ten Long Exposures (% Net Assets)
Yahoo, Inc.	2.6
NVR, Inc.	1.6
Regions Financial Corp.	1.6
Facebook, Inc.	1.4
Alphabet, Inc.	1.3
Charter Communications, Inc.	1.4
Autozone, Inc.	1.1
Constellation Brands, Inc.	1.1
Monster Beverage Corp.	1.1
Williams Cos., Inc.	1.0

Top 10 Short Exposures (% Net Assets)
SPDR S&P 500 ETF Trust	(2.9	)
Consumer Staples Select Sector SPDR Fund	(1.1	)
Consumer Discretionary Select Sector	(1.0	)
Energy Select Sector SPDR Fund	(0.8	)
International Business Machines Corp.	(0.7	)
Ford Motor Co.	(0.6	)
Electronic Arts, Inc.	(0.6	)
IShares MSCI Brazil Capped ETF	(0.6	)
SPDR S&P Biotech ETF	(0.6	)
Corning, Inc.	(0.5	)

Net Sector Exposures (% Investments)
Financials	9.3
Information Technology	9.0
Consumer Discretionary	6.0
Energy	6.0
Consumer Staples	5.0
Materials	4.7
Industrials	3.3
Health Care	1.9
Telecommunications	1.5
Utilities	0.8
Broad Market Indices	(5.7	)

Fund Level Exposure (% Net Assets)
Net Exposure	51.3
Gross Exposure	121.7
Long Exposure	86.5
Short Exposure	35.2

American Beacon Grosvenor Long/Short Fund^SM

Expense Examples

July 31, 2016 (Unaudited)

Fund Expense Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as sales charges (loads) on purchase payments and redemption fees, and (2) ongoing costs, including management fees, administrative service fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand the ongoing cost (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000 invested at the beginning of the period in each Class and held for the entire period from February 1, 2016 through July 31, 2016.

Actual Expenses

Hypothetical Example for Comparison Purposes

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

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

American Beacon Grosvenor Long/Short Fund^SM

Expense Examples

July 31, 2016 (Unaudited)

Grosvenor Long/Short Fund


	Beginning Account Value 2/1/2016		Ending Account Value 7/31/2016		Expenses Paid During Period 2/1/2016-7/31/2016*
Institutional Class
Actual	$	1,000.00	$	1,042.86	$	23.16
Hypothetical**	$	1,000.00	$	1,002.18	$	22.70
Y Class
Actual	$	1,000.00	$	1,042.90	$	23.67
Hypothetical**	$	1,000.00	$	1,001.71	$	23.19
Investor Class
Actual	$	1,000.00	$	1,041.92	$	25.13
Hypothetical**	$	1,000.00	$	1,000.27	$	24.62
A Class
Actual	$	1,000.00	$	1,041.92	$	25.49
Hypothetical**	$	1,000.00	$	999.90	$	24.96
C Class
Actual	$	1,000.00	$	1,037.91	$	28.68
Hypothetical**	$	1,000.00	$	996.73	$	28.10

Expenses are equal to the Fund’s annualized expense ratios (including non-operating expenses) for the six-month period of 4.56%, 4.66%, 4.95%, 5.02% and 5.66% 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.

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
SECURITIES SOLD LONG
COMMON STOCKS - 81.60%
CONSUMER DISCRETIONARY - 20.14%
Auto Components - 1.77%
Delphi Automotive PLC^A		832	$	56
LKQ Corp.^B		4,906		168
Magna International, Inc., Class A		1,595		62

				286

Automobiles - 0.75%
Avis Budget Group, Inc.^B		2,406		88
Harley-Davidson, Inc.		130		7
Peugeot S.A.^B		1,736		26

				121

Automotive Retailers - 0.01%
Europcar Groupe S.A.^B^C		216		2

Hotels, Restaurants & Leisure - 2.91%
Buffalo Wild Wings, Inc.^B		99		17
Caesars Entertainment Corp.^B		802		6
Carnival Corp.		1,112		52
Chipotle Mexican Grill, Inc.^B		67		28
Dunkin’ Brands Group, Inc.		417		19
Melco Crown Entertainment Ltd., ADR^D		3,433		48
MGM Resorts International^B		6,623		158
Norwegian Cruise Line Holdings Ltd.^B		731		31
Royal Caribbean Cruises Ltd.		605		44
Sands China Ltd.		2,898		11
Wyndham Worldwide Corp.		776		55

				469

Household Durables - 0.80%
NVR, Inc.^B		70		119
Sodastream International Ltd.^B		397		10

				129

Household Products - 0.37%
CalAtlantic Group, Inc.		1,642		59

Internet & Catalog Retail - 2.37%
Amazon.com, Inc.^B		166		126
JD.com, Inc., ADR^B^D		611		13
SS&C Technologies Holdings, Inc.		4,852		157
TripAdvisor, Inc.^B		867		61
Wayfair, Inc., Class A^B		608		26

				383

Media - 5.44%
Banner Corp.		1,544		64
CBS Corp., Class B^E		2,072		108
Charter Communications, Inc., Class A^B		869		205
Comcast Corp., Class A		1,090		73
CTS Eventim AG & Co., KGaA		1,575		55
DISH Network Corp., Class A		597		32
ITV PLC^A		52,673		137
Liberty Global PLC, Series C^A^B		2,362		73
Twenty-First Century Fox, Inc., Class A		1,509		40
Viacom, Inc., Class B		2,084		95

				882

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Multiline Retail - 0.82%
Dollar General Corp.		1,395	$	132

Retail - 0.04%
Barnes and Noble, Inc.		536		7

Specialty Retail - 4.22%
Abercrombie & Fitch Co., Class A		279		6
AutoZone, Inc.^B		225		183
Copart, Inc.^B		54		3
Dollar Tree, Inc.^B		431		42
Dollarama, Inc.		1,725		128
MarineMax, Inc.^B		833		17
Ocado Group PLC^A^B		32,450		114
O’Reilly Automotive, Inc.^B		459		133
Tile Shop Holdings, Inc.^B		2,486		42
TJX Cos., Inc.		162		13

				681

Textiles & Apparel - 0.64%
Coach, Inc.		1,226		52
Industria de Diseno Textil S.A.		1,171		41
Moncler SpA		667		12

				105

Total Consumer Discretionary				3,256

CONSUMER STAPLES - 6.24%
Beverages - 2.77%
Constellation Brands, Inc., Class A		747		123
Molson Coors Brewing Co., Class B		1,448		148
Monster Beverage Corp.^B		1,094		175

				446

Food & Drug Retailing - 1.93%
Alimentation Couche-Tard, Inc., Class B		3,105		141
Casey’s General Stores, Inc.		755		101
Costco Wholesale Corp.		262		44
Vitamin Shoppe, Inc.^B		932		27

				313

Food Products - 0.63%
ConAgra Foods, Inc.		445		21
Kraft Heinz Co.		683		59
Mondelez International, Inc., Class A		500		22

				102

Household Products - 0.25%
Procter & Gamble Co.		469		41

Tobacco - 0.66%
British American Tobacco PLC^A		1,678		107

Total Consumer Staples				1,009

ENERGY - 9.22%
Energy Equipment & Services - 1.22%
Halliburton Co.		3,362		147
Schlumberger Ltd.		630		51

				198

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Oil & Gas - 8.00%
Anadarko Petroleum Corp.		252	$	14
Concho Resources, Inc.^B		530		66
Continental Resources, Inc.^B		1,818		80
Energy Transfer Partners LP^F		3,279		130
Enterprise Products Partners Ltd.		4,793		136
EQT Corp.		699		51
Exxon Mobil Corp.		196		17
Hess Corp.		501		27
Kinder Morgan, Inc.		572		12
Newfield Exploration Co.^B		1,218		53
Noble Energy, Inc.		1,983		71
Occidental Petroleum Corp.		497		37
Pioneer Natural Resources Co.		297		48
Sunoco LP^F		5,088		158
Tesoro Corp.		1,989		151
Valero Energy Corp.		1,382		72
Williams Cos., Inc.^B		7,074		170

				1,293

Total Energy				1,491

FINANCIALS - 16.80%
Banks - 12.81%
American Business Bank^B		1,428		40
American Riviera Bank^B		2,244		25
Bank of Marin Bancorp		1,120		56
Bank of the James Financial Group, Inc.		4,233		54
Barclays PLC, ADR^A^D		1,235		10
BofI Holding, Inc.^B		2,760		46
Bryn Mawr Bank Corp.		881		26
Cambridge Bancorp		668		32
Citizens Financial Group		5,284		117
Comerica, Inc.		851		38
Commerce West Bank^B		1,922		31
Community Financial Corp		2,259		51
CU Bancorp^B		2,146		51
Equity Bancshares, Inc., Class A^B		1,380		31
Farmers & Merchants Bank of Long Beach		6		36
Farmers Capital Bank Corp		1,438		42
Fifth Third Bancorp		3,195		61
First of Long Island Corp		2,227		67
First South Bancorp, Inc.		2,258		22
Guaranty Bancorp		2,785		47
Heritage Financial Corp.		101		2
Horizon Bancorp		77		2
Huntington Bancshares, Inc.		3,968		38
Intesa Sanpaolo SpA		4,131		9
KeyCorp		5,229		61
MBT Financial Corp.		2,945		26
Mediobanca SpA		1,293		9
Old Line Bancshares, Inc.		2,406		46
Opus Bank		2,043		65
Orrstown Financial Services, Inc.		1,594		31
Peapack Gladstone Financial Corp.		2,229		45
PNC Financial Services Group, Inc.		598		49
Preferred Bank		1,250		41
Premier Financial Bancorp, Inc.		1,153		21
Provident Bancorp, Inc.^B		1,853		30
Puget Sound Bancorp, Inc.^B		980		18
Regions Financial Corp.		27,545		252
Republic First Bancorp, Inc.^B		6,971		31
Riverview Bancorp, Inc.		4,177		20

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Seacoast Banking Corp. of Florida^B		2,559	$	41
Shore Bancshares, Inc.		2,191		26
Sunshine Bancorp, Inc.^B		3,508		50
Sussex Bancorp		2,342		35
SVB Financial Group^B		791		78
Triumph Bancorp, Inc.^B		1,424		25
Veritex Holdings, Inc.^B		2,995		52
WashingtonFirst Bankshares, Inc.		3,190		76

				2,062

Diversified Financials - 1.63%
Ally Financial, Inc.		3,892		70
Caesars Acquisition Company, Class A^B		210		2
Capital One Financial Corp.		1,101		74
Cascade Bancorp^B		6,752		38
NorthStar Asset Management Group Inc.		5,200		62
Santander Consumer USA Holdings, Inc.		1,529		17

				263

Insurance - 0.61%
First American Financial Corp.		887		37
Stewart Information Services Corp.		1,423		61

				98

Real Estate - 1.75%
Brookdale Senior Living, Inc.^B		2,377		44
Colony Financial, Inc.^H		1,690		30
Heritage Oaks Bancorp		6,017		49
National Retail Properties, Inc.^H		579		31
Public Storage, Inc.^H		97		23
Realogy Holdings Corp.		2,270		70
Regional Management Corp.^B		1,924		36

				283

Total Financials				2,706

HEALTH CARE - 3.29%
Biotechnology - 0.61%
Gilead Sciences, Inc.		1,018		81
Vertex Pharmaceuticals, Inc.^B		180		17

				98

Health Care Equipment & Supplies - 0.66%
St. Jude Medical, Inc.		1,272		106

Health Care Providers & Services - 0.53%
Cigna Corp.		146		19
Express Scripts Holding Co.^B		27		2
HCA Holdings, Inc.		460		35
Service Corp International		1,049		29

				85

Pharmaceuticals - 1.49%
Allergan PLC^A^B		534		136
Pfizer, Inc.		2,853		105

				241

Total Health Care				530

INDUSTRIALS - 5.23%
Aerospace & Defense - 1.63%
AerCap Holdings N.V.^B		334		12
Lockheed Martin Corp.		229		58
Meggitt PLC^A		8,111		47

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Northrop Grumman Corp.		192	$	42
Raytheon Co.		427		59
TransDigm Group, Inc.		164		46

				264

Air Freight & Couriers - 0.08%
FedEx Corp.		81		13

Airlines - 0.59%
Delta Air Lines, Inc.		1,753		68
Latam Airlines Group SP, ADR^D		852		7
Southwest Airlines Co.		502		19

				94

Construction & Engineering - 0.20%
Fluor Corp.		606		32

Electrical Equipment - 0.43%
A.O. Smith Corp.		118		11
Tyco International PLC^A		1,271		58

				69

Industrial Conglomerates - 0.72%
General Electric Co.		3,714		116

Machinery - 0.11%
Parker Hannifin Corp.		153		17

Marine - 0.04%
Kirby Corp.^B		104		6

Road & Rail - 1.31%
Canadian Pacific Railway Ltd.		201		30
CSX Corp.		1,023		29
Kansas City Southern		877		84
Swift Transportation Co.^B		2,754		53
Union Pacific Corp.		176		16

				212

Trading Companies & Distributors - 0.08%
Air Lease Corp.		422		12

Transportation & Logistics - 0.04%
Norfolk Southern Corp.		73		7

Total Industrials				842

INFORMATION TECHNOLOGY - 12.83%
Communications - 1.41%
Facebook, Inc., Class A^B		1,842		228

Communications Equipment - 0.68%
Cisco Systems, Inc.		1,203		37
CommScope Holding Co., Inc.^B		472		14
Palo Alto Networks, Inc.^B		440		58

				109

Computers & Peripherals - 0.40%
EMC Corp.		326		9
Hewlett Packard Enterprise Co.		738		16
HP, Inc.		2,750	$	39

				64

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares		Fair Value
			(000’s)
Electronic Equipment & Instruments - 0.64%
Flextronics International Ltd.^B		2,193		28
NVIDIA Corp.		384		22
OSI Systems, Inc.^B		891		52

				102

Internet Software & Services - 5.88%
Alphabet, Inc., Class A^B		153		121
Alphabet, Inc., Class C^B		161		123
Baidu, Inc., Sponsored ADR^B^D		37		6
comScore, Inc.^B		1,734		45
LinkedIn Corp., Class A^B		461		89
Tencent Holdings Ltd.		4,891		118
Yahoo, Inc.^B		11,707		446

				948

IT Consulting & Services - 0.35%
Cognizant Technology Solutions Corp., Class A^B		976		56

Semiconductor Equipment & Products - 0.09%
Advanced Micro Devices, Inc.		2,150		15

Software - 3.38%
Activision Blizzard, Inc.		1,046		42
Ellie Mae, Inc.^B		281		26
Microsoft Corp.		1,587		90
Navient Corp.		1,805		26
Nimble Storage, Inc.^B		6,389		48
PayPal Holdings, Inc.^B		4,061		150
Red Hat, Inc.^B		872		66
Square Enix Holdings Co., Ltd.		719		23
Take-Two Interactive Software, Inc.		1,897		76

				547

Total Information Technology				2,069

MATERIALS - 5.03%
Chemicals - 0.54%
Air Products & Chemicals, Inc.		131		20
CF Industries Holdings, Inc.		2,246		56
Monsanto Co.		124		13

				89

Construction Materials - 0.09%
Buzzi Unicem SpA		716		15

Containers & Packaging - 0.38%
Berry Plastics Group, Inc.^B		1,495		61

Metals & Mining - 3.31%
AngloGold Ashanti Ltd., ADR^B^D		1,620		35
Boliden AB		1,434		32
First Quantum Minerals Ltd.		1,169		10
Freeport-McMoRan Copper & Gold, Inc.		1,231		16
Impala Platinum Holdings Ltd.^B		3,233		14
Newmont Mining Corp.		1,460		64
Rio Tinto PLC, Sponsored ADR^A^D		1,354		44
Silver Wheaton Corp.		2,544		71
Teck Resources Ltd.		9,691		155
United States Steel Corp.		3,359	$	92

				533

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares			Fair Value
				(000’s)
Paper & Forest Products - 0.71%
Canfor Corp.^B		5,461			65
West Fraser Timber Co., Ltd.		1,461			50

					115

Total Materials					813

TELECOMMUNICATION SERVICES - 1.93%
Diversified Telecommunication Services - 1.08%
Telefonica Deutschland Holding AG		20,115			82
Verizon Communications, Inc.		1,663			92

					174

Wireless Telecommunication Services - 0.85%
Central Valley Community Bancorp		1,631			24
China Mobile Ltd.		3,588			46
Tim Participacoes S.A., ADR^D		5,370			71

					141

Total Telecommunication Services					315

UTILITIES - 0.89%
Sempra Energy,		1,286			144

Total COMMON STOCKS (Cost $12,378)					13,175

WARRANTS - 0.43% (Cost $69)
ENERGY - 0.00%
Kinder Morgan, Inc., 5/25/2017, Strike Price $40.00^G^I		307			—

FINANCE - 0.42%
Deutsche Bank AG London, 9/27/2016, Strike Price $0.00 ^C^I		19,549			69

Total WARRANTS (Cost $69)					69

SHORT-TERM INVESTMENTS - 12.99% (Cost $2,167)
American Beacon U.S. Government Money Market Select Fund, Select Class^J		2,098,222			2,098

Total SECURITIES HELD LONG (Cost: $14,545)					15,342

SECURITIES SOLD SHORT
COMMON STOCKS - (23.13%)
CONSUMER DISCRETIONARY - (3.87%)
Auto Components - (0.18%)
Delphi Automotive PLC^A		(432	)		(29	)

Automobiles - (0.76%)
Ford Motor Co.		(7,761	)		(98	)
Tesla Motors, Inc.^B		(20	)		(5	)
Toyota Motor Corp., Sponsored ADR^D		(181	)		(20	)

					(123	)

Hotels, Restaurants & Leisure - (0.70%)
Carnival Corp.		(90	)		(4	)
China Lodging Group Ltd., Sponsored ADR^D^G		(11	)		—
Hilton Worldwide Holdings, Inc.		(1,838	)		(43	)
Intercontinental Hotels Group		(354	)	$	(14	)
Marriott International, Inc., Class A		(510	)		(37	)
Six Flags Entertainment Corp.		(148	)		(8	)
Wynn Resorts Ltd.		(59	)		(6	)

					(112	)

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares			Fair Value
				(000’s)
Household Durables - (0.36%)
GoPro, Inc., Class A^B		(152	)		(2	)
Leggett & Platt, Inc.		(34	)		(2	)
Lennar Corp., Class A		(587	)		(27	)
Newell Rubbermaid, Inc.		(490	)		(26	)
Tempur Sealy International, Inc.^B		(23	)		(2	)

					(59	)

Media - (0.72%)
Discovery Communications, Inc., Class A^B		(530	)		(13	)
Nielsen Holdings PLC^A		(398	)		(21	)
Rocket Internet SE^B^C		(38	)		(1	)
Scripps Networks Interactive, Inc., Class A		(156	)		(10	)
Sinclair Broadcast Group, Inc., Class A		(272	)		(8	)
Walt Disney Co.		(680	)		(65	)

					(118	)

Multiline Retail - (0.28%)
Target Corp.		(604	)		(45	)

Specialty Retail - (0.31%)
CarMax, Inc.^B		(154	)		(9	)
Dollar Tree, Inc.^B		(420	)		(40	)

					(49	)

Textiles & Apparel - (0.56%)
Cie Financiere Richemont S.A. Reg.		(698	)		(42	)
Five Below, Inc.^B		(64	)		(3	)
Hugo Boss AG		(13	)		(1	)
Swatch Groug AG		(92	)		(24	)
Under Armour, Inc., Class A^B^G		(5	)		—
VF Corp.		(347	)		(22	)

					(92	)

Total Consumer Discretionary					(627	)

CONSUMER STAPLES - (0.84%)
Beverages - (0.01%)
PepsiCo, Inc.		(19	)		(2	)

Food & Drug Retailing - (0.80%)
Costco Wholesale Corp.		(241	)		(40	)
Kroger Co.		(959	)		(33	)
Tesco PLC^A^B		(2,863	)		(6	)
Wal-Mart Stores, Inc.		(48	)		(4	)
Whole Foods Market, Inc.		(845	)		(26	)
Woolworths Holdings Ltd.		(1,189	)		(21	)

					(130	)

Food Products - (0.02%)
Whitewaves Food Co.^B		(47	)		(3	)

Household Products - (0.01%)
Church & Dwight Co., Inc.		(16	)	$	(2	)

Total Consumer Staples					(137	)

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares			Fair Value
				(000’s)
ENERGY - (2.47%)
Energy Equipment & Services - (1.02%)
Helmerich & Payne, Inc.		(403	)		(25	)
National Oilwell Varco, Inc.		(1,966	)		(64	)
Schlumberger Ltd.		(957	)		(77	)

					(166	)

Oil & Gas - (1.45%)
Apache Corp.		(605	)		(32	)
Chevron Corp.		(178	)		(18	)
ConocoPhillips		(1,311	)		(54	)
EOG Resources, Inc.		(558	)		(46	)
Exxon Mobil Corp.		(50	)		(4	)
Occidental Petroleum Corp.		(1,091	)		(82	)

					(236	)

Total Energy					(402	)

FINANCIALS - (7.36%)
Banks - (6.19%)
Bank of Hawaii Corp.		(178	)		(12	)
BNC Bancorp		(1,051	)		(25	)
CIT Group, Inc.		(392	)		(14	)
Clifton Bancorp, Inc.		(405	)		(6	)
Community Bank System, Inc.		(1,198	)		(53	)
CVB Financial Corp.		(3,004	)		(49	)
DBS Group Holdings Ltd.		(2,301	)		(26	)
FCB Financial Holdings, Inc., Class A^B		(1,075	)		(38	)
First Financial Bankshares, Inc.		(1,734	)		(59	)
First Republic Bank		(487	)		(35	)
Frost Bankers, Inc.		(88	)		(6	)
Glacier Bancorp, Inc.		(1,672	)		(46	)
Home Bancshares, Inc.		(1,167	)		(24	)
Iberiabank Corp.		(605	)		(38	)
Independent Bank Corp.		(806	)		(40	)
Investors Bancorp, Inc		(2,915	)		(33	)
MB Financial, Inc.		(681	)		(26	)
NBT Bancorp, Inc.		(215	)		(6	)
New York Community Bancorp, Inc.		(1,607	)		(23	)
Northwest Bancshares, Inc.		(853	)		(13	)
PacWest Bancorp		(313	)		(13	)
Prosperity Bancshares, Inc.		(954	)		(49	)
Renasant Corp.		(1,249	)		(40	)
ServisFirst Bancshares, Inc.		(125	)		(6	)
Simmons First National Corp., Class A		(401	)		(18	)
South State Corp.		(699	)		(51	)
Southside Bancshares, Inc.		(872	)		(27	)
State Bank Financial Corp.		(769	)		(17	)
Stock Yards Bancorp, Inc.		(217	)		(6	)
Tompkins Financial Corp.		(183	)		(13	)
Trustmark Corp.		(1,005	)		(26	)
Washington Trust Bancorp, Inc.		(325	)		(12	)
WesBanco, Inc.		(397	)		(12	)
Westamerica Bancorporation		(947	)		(45	)
Western Alliance Bancorp^B		(1,376	)		(47	)
WSFS Financial Corp.		(1,084	)		(38	)

					(992	)

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares			Fair Value
				(000’s)
Diversified Financials - (0.32%)
Capitol Federal Financial, Inc.		(440	)	$	(6	)
Credit Acceptance Corp.^B		(39	)		(7	)
Discover Financial Services		(172	)		(10	)
Goldman Sachs Group, Inc.		(137	)		(22	)
Synchrony Financial		(262	)		(7	)

					(52	)

Insurance - (0.31%)
CNP Assurances		(3,242	)		(50	)

Real Estate - (0.54%)
Acadia Realty Trust^H		(171	)		(6	)
Camden Property Trust^H		(36	)		(3	)
Crown Castle International Corp.^H		(408	)		(40	)
Empire State Realty Trust, Inc.^H		(155	)		(3	)
Essex Property Trust, Inc.^H		(42	)		(10	)
Federal Realty Investment Trust^H		(37	)		(6	)
Highwoods Properties, Inc.^H		(115	)		(6	)
Mid-America Apartment Communities, Inc.^H		(36	)		(4	)
Public Storage, Inc.^H		(10	)		(2	)
Realty Income Corp.^H		(51	)		(4	)
UDR, Inc.^H		(98	)		(4	)

					(88	)

Total Financials					(1,182	)

HEALTH CARE - (0.72%)
Health Care Equipment & Supplies - (0.41%)
Illumina, Inc.^B		(395	)		(66	)

Pharmaceuticals - (0.31%)
Abbott Laboratories		(1,108	)		(50	)

Total Health Care					(116	)

INDUSTRIALS - (2.29%)
Aerospace & Defense - (0.36%)
Aircastle Ltd.		(846	)		(19	)
Boeing Co.		(296	)		(40	)

					(59	)

Air Freight & Couriers - (0.17%)
C.H. Robinson Worldwide, Inc.		(307	)		(21	)
United Parcel Service, Inc., Class B		(55	)		(6	)

					(27	)

Airlines - (0.24%)
Air Canada^B		(1,405	)		(10	)
American Airlines Group, Inc.		(301	)		(11	)
United Continental Holdings, Inc.		(92	)		(4	)
Westjet Airlines Ltd.		(703	)		(12	)

					(37	)

Commercial Services & Supplies - (0.04%)
Republic Services, Inc.		(66	)		(3	)
Waste Management, Inc.		(54	)		(4	)

					(7	)

Industrial Conglomerates - (0.03%)
General Electric Co.		(146	)		(5	)

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares			Fair Value
				(000’s)
Machinery - (0.97%)
Caterpillar, Inc.		(399	)	$	(33	)
Cummins, Inc.		(224	)		(28	)
Hitachi Construction Machinery Co., Ltd.		(150	)		(2	)
Kone Oyj, Class B		(126	)		(6	)
PACCAR, Inc.		(458	)		(27	)
Parker Hannifin Corp.		(525	)		(60	)

					(156	)

Road & Rail - (0.15%)
Hertz Global Holdings, Inc.^B		(71	)		(3	)
Landstar System, Inc.		(122	)		(9	)
Saia, Inc.^B		(286	)		(8	)
Werner Enterprises, Inc.		(216	)		(5	)

					(25	)

Trading Companies & Distributors - (0.33%)
Fastenal Co.		(610	)		(26	)
WW Grainger, Inc.		(119	)		(26	)

					(52	)

Total Industrials					(368	)

INFORMATION TECHNOLOGY - (4.20%)
Communications Equipment - (0.53%)
Cisco Systems, Inc.		(71	)		(2	)
Corning, Inc.		(3,686	)		(83	)

					(85	)

Computers & Peripherals - (0.63%)
International Business Machines Corp.		(607	)		(99	)
Logitech International S.A.		(41	)		(1	)
NetApp, Inc.		(37	)		(1	)
Pure Storage Inc., Class A^B^G		(31	)		—

					(101	)

Electronic Equipment & Instruments - (0.05%)
Amphenol Corp., Class A		(75	)		(4	)
NVIDIA Corp.		(58	)		(3	)

					(7	)

Internet Software & Services - (1.07%)
Alibaba Group Holding Ltd., ADR^B^D		(859	)		(71	)
Equinix, Inc.^H		(175	)		(65	)
GrubHub, Inc.^B		(27	)		(1	)
United Internet AG, Reg S^K		(257	)		(11	)
Yahoo Japan Corp.		(758	)		(3	)
Zillow Group, Inc., Class C^B		(554	)		(22	)

					(173	)

IT Consulting & Services - (0.57%)
Accenture PLC, Class A^A		(211	)		(24	)
Infosys Technologies Ltd., Reg S, Sponsored ADR^D^K		(3,943	)		(65	)
Ritchie Bros Auctioneers, Inc.		(48	)		(2	)
Tyler Technologies, Inc.		(6	)		(1	)

					(92	)

Office Electronics - (0.05%)
Canon, Inc.		(291	)		(8	)

Software - (1.30%)
Activision Blizzard, Inc.		(396	)		(16	)
Adobe Systems, Inc.^B		(189	)		(18	)
Check Point Software Technologies Ltd.^B		(47	)		(4	)
CommVault Systems, Inc.^B		(17	)		(1	)
Electronic Arts, Inc.^B		(1,204	)		(92	)

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares			Fair Value
				(000’s)
PayPal Holdings, Inc.^B		(344	)	$	(13	)
SAP AG, Sponsored ADR^D		(25	)		(2	)
Square, Inc., Class A^B		(313	)		(3	)
Symantec Corp.		(37	)		(1	)
Ultimate Software Group, Inc.^B		(14	)		(3	)
VMware, Inc., Class A^B		(47	)		(3	)
Workday, Inc., Class A^B		(660	)		(55	)

					(211	)

Total Information Technology					(677	)

MATERIALS - (1.32%)
Chemicals - (1.18%)
EI du Pont de Nemours & Co.		(300	)		(21	)
LyondellBasell Industries N.V., Class A		(523	)		(39	)
Mosaic Co.		(1,988	)		(54	)
Potash Corp of Saskatchewan, Inc.		(2,505	)		(39	)
Praxair, Inc.		(333	)		(39	)

					(192	)

Construction Materials - (0.07%)
LafargeHolcim Ltd.		(226	)		(11	)

Paper & Forest Products - (0.07%)
Domtar Corp.		(292	)		(11	)

Total Materials					(214	)

TELECOMMUNICATION SERVICES - (0.06%)
Freenet AG		(59	)		(2	)
Millicom International Cellular S.A.		(161	)		(9	)

Total Telecommunication Services					(11	)

Total COMMON STOCKS (Proceeds $(3,546))					(3,734	)

EXCHANGE TRADED INSTRUMENTS - (9.43%)
EXCHANGE TRADED FUNDS - (9.43%)
Consumer Discretionary Select Sector SPDR Fund		(1,913	)		(156	)
Consumer Staples Select Sector SPDR Fund		(3,248	)		(179	)
Energy Select Sector SPDR Fund		(1,833	)		(124	)
Financial Select Sector SPDR Fund		(707	)		(17	)
Health Care Select Sector SPDR Fund		(407	)		(31	)
Industrial Select Sector SPDR Fund		(896	)		(52	)
iShares China Large-Cap Fund		(522	)		(18	)
iShares MSCI Australia Fund		(3,496	)		(73	)
iShares MSCI Brazil Capped Fund		(2,798	)		(93	)
iShares MSCI Chile Capped Fund		(630	)		(24	)
iShares MSCI EAFE Fund		(366	)		(21	)
iShares Russell 2000 Growth Fund		(112	)		(16	)
iShares Russell 2000 Index Fund		(532	)		(64	)
iShares Russell 2000 Value Index Fund		(591	)		(60	)
iShares STOXX Europe 600 UCITS ETF DE		(457	)		(18	)
Materials Select Sector SPDR Fund		(192	)		(9	)
PowerShares Emerging Markets Sovereign Debt ETF		(166	)		(5	)
SPDR S&P Biotech ETF		(1,469	)		(91	)
SPDR S&P Emerging Markets SmallCap ETF		(836	)		(35	)
SPDR S&P Telecom Fund		(345	)		(21	)
SPDR S&P500 ETF Trust		(1,334	)		(292	)
Technology Select Sector SPDR Fund		(1,166	)		(54	)
Utilities Select Sector SPDR Fund		(276	)		(14	)
Vaneck Vectors Agribusiness		(454	)		(22	)
Vanguard FTSE Emerging Markets Fund		(958	)		(35	)

Total Exchange Traded Funds					(1,524	)

Total EXCHANGE TRADED INSTRUMENTS (Proceeds $(1,403))					(1,524	)

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


	Shares	Fair Value
		(000’s)
Total SECURITIES SOLD SHORT - (Proceeds $(4,949))		$	(5,258	)

Total Investments in Securites (excludes securities sold short) - 95.00% (Cost $14,545)			15,342
Total Securities Sold Short - (32.56)% (Proceeds $(4,949))			(5,258	)
Purchased Options- 0.11% (Cost $21)			17
Written Options - (0.03)% (Proceeds $(1))			(4	)
OTHER ASSETS, NET OF LIABILITIES - 37.48%			6,052

TOTAL NET ASSETS - 100.00%		$	16,149

Percentages are stated as a percent of net assets.

^A	PLC - Public Limited Company.

^B	Non-income producing security.

Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $70 or 0.43% of net assets. The Fund has no right to demand registration of these securities.

^D	ADR - American Depositary Receipt.

^E	Non-voting participating shares.

^F	LP - Limited Partnership.

^G	Amount is less than $500.

^H	REIT - Real Estate Investment Trust.

Warrant.

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

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)

Total Return Swap Agreements outstanding on July 31, 2016:


Pay/Receive Floating Rate	Description	Reference Entity	Counterparty		Floating Rate			Expiration Date	Reference Quantity		Notional Amount		Unrealized Appreciation/ (Depreciation)
Pay	1-Day EUR-EONIA	Accor S.A.		MSC		0.550	%	11/2/2016		1,416	$	57,386	$	(4,910	)
Pay	1-Day EUR-EONIA	Finecobank Banca Fineco SpA		MSC		0.750	%	11/2/2016		5,607		36,031		(6,996	)
Receive	1-Day EUR-EONIA	Casino Guichard Perrachon S.A.		MSC		1.000	%	11/2/2016		151		6,253		(1,188	)
Receive	1-Day GBP-SONIA	J Sainsbury, PLC		MSC		0.350	%	11/2/2016		1,790		4,245		305
Receive	1-Day EUR-EONIA	Distribuidora Internacional De Alimentacion S.A.		MSC		0.500	%	11/2/2016		689		3,479		(410	)
Receive	1-Day BRL-FEDEF	Cielo S.A.		MSC		1.100	%	11/2/2016		96		2,755		(155	)
Receive	1-Day TWD-FEDEF	China Steel Corp.		MSC		1.920	%	11/5/2016		16,494		317,242		(1,455	)
Receive	1-Day HKD-HONIX	Hong Kong & China Gas Co. Ltd.		MSC		0.460	%	11/5/2016		1,290		17,172		(36	)
Receive	1-Day TWD-FEDEF	Formosa Petrochemical Corp.		MSC		0.590	%	11/5/2016		2,092		161,664		(886	)
Receive	1-Day HKD-HONIX	HK Electric Investments & HK Electric Investments Ltd.		MSC		3.250	%	11/5/2016		2,000		11,031		(494	)
Receive	1-Day GBP-SONIA	Ted Baker, PLC		MSC		0.460	%	12/25/2016		33		1,002		299
Pay	1-Month GBP-LIBOR	Wizz Air Holdings, PLC		MSC		0.980	%	1/16/2017		772		13,903		(2,574	)
Pay	1-Month EUR-LIBOR	Ryanair Holdings, PLC		MSC		0.240	%	2/10/2017		2,890		31,841		2,980
Receive	1-Day EUR-EONIA	SES S.A.		MSC		0.500	%	2/12/2017		365		7,039		(126	)
Receive	1-Day EUR-EONIA	Eutelsat Communications S.A.		MSC		0.420	%	2/12/2017		758		15,203		1,929
Receive	1-Day BRL-FEDEF	Telefonica Brasil S.A.		MSC		1.350	%	3/3/2017		952		36,718		(3,130	)
Pay	1-Day USD-FEDEF	NVR, Inc.		MSC		0.900	%	5/22/2017		78		122,943		10,047
Pay	1-Month GBP-LIBOR	Anglo American, PLC		MSC		0.980	%	7/24/2017		3,506		25,086		5,335
Pay	1-Day USD-FEDEF	Constellation Brands, Inc.		MSC		0.900	%	7/24/2017		341		49,756		6,383
Pay	1-Month EUR-EURIB	Peugeot S.A.		MSC		0.140	%	7/24/2017		706		9,375		182
Pay	1-Month EUR-EURIB	Air France-KLM		MSC		0.140	%	7/24/2017		3,052		20,676		(5,406	)
Pay	1-Month GBP-LIBOR	Antofagasta, PLC		MSC		0.980	%	7/24/2017		6,289		29,938		2,036
Pay	1-Month EUR-EURIB	Moncler SpA		MSC		0.140	%	7/24/2017		277		3,724		692
Pay	1-Day USD-FEDEF	Brunswick Corp./The		MSC		0.900	%	7/24/2017		1,304		61,174		3,531
Pay	1-Day USD-FEDEF	Louisiana-Pacific Corp.		MSC		0.900	%	7/24/2017		1,622		28,359		4,405
Pay	1-Month GBP-LIBOR	Rio Tinto, PLC		MSC		0.980	%	7/24/2017		2,057		40,462		13,461
Receive	1-Day EUR-EONIA	Accor S.A.		MSC		0.400	%	7/24/2017		200		6,918		(635	)
Receive	1-Day USD-FEDEF	SPDR S&P500 ETF Trust		MSC		0.050	%	7/24/2017		676		142,752		(4,021	)
Pay	1-Month GBP-LIBOR	SABMiller, PLC		MSC		1.020	%	8/28/2017		1,300		55,789		—
Pay	1-Month EUR-EURIB	Plastic Omnium S.A.		MSC		0.140	%	7/24/2047		674		19,352		(254	)

											$	1,339,268	$	18,909

Purchased Options outstanding on July 31, 2016:

Exchange Traded Fund Options


Description	Expiration Date	Number of Contracts	Exercise Price		Fair Value		Premiums Paid		Unrealized Appreciation/ (Depreciation)
Put - Financial Select Sector SPDR Fund	9/16/2016	128	$	21.00	$	1,152	$	3,897	$	(2,745	)

					$	1,152	$	3,897	$	(2,745	)

Equity Options


Description	Expiration Date	Number of Contracts	Currency	Exercise Price		Fair Value		Premiums Paid		Unrealized Appreciation/ (Depreciation)
Call - Procter & Gamble Co/The	9/16/2016	17	USD		90.00	$	595	$	529	$	66
Call - Tile Shop Holdings, Inc.	9/16/2016	3	USD		20.00		60		138		(78	)
Put - Accenture, PLC	9/16/2016	9	USD		100.00		387		503		(116	)
Put - Adobe Systems, Inc.	9/16/2016	2	USD		95.00		292		417		(125	)
Put - Delta Air Lines, Inc.	9/16/2016	5	USD		37.00		585		596		(11	)
Put - Hormel Foods, Corp.	9/16/2016	4	USD		37.50		540		674		(134	)
Put - Hormel Foods, Corp.	9/16/2016	4	USD		40.00		1,192		1,028		164
Put - International Business Machines, Corp.	9/16/2016	1	USD		160.00		380		357		23
Put - Tesla Motors, Inc.	9/16/2016	2	USD		150.00		160		370		(210	)
Put - Carnival Corp.	10/21/2016	2	USD		46.00		400		480		(80	)
Call - Koninklijke Ahold Delhaize NV	12/16/2016	5	EUR		22.00		425		310		115

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


Description	Expiration Date	Number of Contracts	Currency	Exercise Price		Fair Value		Premiums Paid		Unrealized Appreciation/ (Depreciation)
Call - Melco Crown Entertainment Ltd.	1/20/2017	14	USD		16.00	$	1,330	$	784	$	546
Call - Procter & Gamble Co/The	1/20/2017	7	USD		97.50		112		197		(85	)
Call - Procter & Gamble Co/The	1/20/2017	6	USD		90.00		738		338		400
Call - Procter & Gamble Co/The	1/20/2017	9	USD		95.00		333		280		53
Put - Tesla Motors, Inc.	1/20/2017	3	USD		100.00		495		448		47
Call - Koninklijke Ahold Delhaize NV	6/16/2017	3	EUR		22.00		413		421		(8	)
Call - Koninklijke Ahold Delhaize NV	12/15/2017	3	EUR		22.00		503		308		195
Call - Procter & Gamble Co/The	1/19/2018	3	USD		90.00		1,005		983		22
Call - Koninklijke Ahold Delhaize NV	12/21/2018	4	EUR		22.00		821		847		(26	)

						$	16,036	$	17,053	$	(1,017	)

Written Options outstanding on July 31, 2016:

Equity Options


Description	Expiration Date	Number of Contracts	Currency	Exercise Price		Fair Value			Premiums Received			Unrealized Appreciation/ (Depreciation)
Call - Avis Budget Group, Inc.	8/19/2016	1	USD		33.00	$	(435	)	$	(99	)	$	(336	)
Put - Check Point Software Technologies Ltd.	8/19/2016	7	USD		77.50		(1,260	)		(476	)		(784	)
Call - Avis Budget Group, Inc.	11/18/2016	1	USD		32.00		(675	)		(142	)		(533	)
Call - Avis Budget Group, Inc.	11/18/2016	1	USD		33.00		(610	)		(122	)		(488	)
Call - Avis Budget Group, Inc.	1/20/2017	1	USD		38.00		(420	)		(342	)		(78	)
Call - Avis Budget Group, Inc.	1/20/2017	1	USD		40.00		(330	)		(147	)		(183	)

						$	(3,730	)	$	(1,328	)	$	(2,402	)

Forward Currency Contracts open on July 31, 2016:


Type	Currency	Principal Amount Covered by Contract		Settlement Date	Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Buy	CHF		8,035	8/31/2016	MSC	$	—	$	(107	)	$	(107	)
Buy	EUR		18,726	8/31/2016	MSC		274		—			274
Buy	EUR		17,711	8/31/2016	MSC		2		—			2
Buy	GBP		8,823	8/31/2016	MSC		—		(338	)		(338	)
Buy	GBP		1,185	8/31/2016	MSC		—		(126	)		(126	)
Buy	GBP		7,603	8/31/2016	MSC		33		—			33
Buy	NOK		6,439	8/31/2016	MSC		107		—			107
Buy	NOK		8,103	8/31/2016	MSC		30		—			30
Buy	NOK		4,175	8/31/2016	MSC		—		(62	)		(62	)
Buy	SGD		8,616	8/31/2016	MSC		60		—			60
Sell	CAD		10,103	8/31/2016	MSC		—		(14	)		(14	)
Sell	CAD		22,361	8/31/2016	MSC		155		—			155
Sell	CAD		4,750	8/31/2016	MSC		1		—			1
Sell	CAD		48,080	8/31/2016	MSC		944		—			944
Sell	CAD		5,437	8/31/2016	MSC		48		—			48
Sell	CAD		21,521	8/31/2016	MSC		151		—			151
Sell	EUR		15,860	8/31/2016	MSC		—		(45	)		(45	)
Sell	EUR		6,210	8/31/2016	MSC		101		—			101
Sell	EUR		54,593	8/31/2016	MSC		520		—			520
Sell	GBP		7,258	8/31/2016	MSC		—		(65	)		(65	)
Sell	GBP		7,094	8/31/2016	MSC		—		(46	)		(46	)
Sell	GBP		10,767	8/31/2016	MSC		—		(14	)		(14	)
Sell	GBP		7,466	8/31/2016	MSC		—		(156	)		(156	)
Sell	JPY		9,888	8/31/2016	MSC		—		(399	)		(399	)
Sell	JPY		12,965	8/31/2016	MSC		88		—			88
Sell	NOK		8,773	8/31/2016	MSC		—		(59	)		(59	)
Sell	NOK		9,943	8/31/2016	MSC		—		(102	)		(102	)
Sell	SEK		7,381	8/31/2016	MSC		66		—			66
Sell	SEK		11,532	8/31/2016	MSC		426		—			426
Sell	SEK		5,354	8/31/2016	MSC		76		—			76
Sell	SEK		7,113	8/31/2016	MSC		—		(43	)		(43	)

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Schedule of Investments

July 31, 2016 (Unaudited)


Type	Currency	Principal Amount Covered by Contract		Settlement Date	Counterparty	Unrealized Appreciation		Unrealized (Depreciation)			Net Unrealized Appreciation (Depreciation)
Sell	SGD		8,616	8/31/2016	MSC	$	—	$	(57	)	$	(57	)
Sell	ZAR		9,999	8/31/2016	MSC		—		(686	)		(686	)
Buy	CHF		696	10/19/2016	MSC		11		—			11
Buy	SEK		9,102	10/19/2016	MSC		43		—			43
Sell	EUR		6,350	10/19/2016	MSC		—		(46	)		(46	)
Sell	EUR		102,777	10/19/2016	MSC		—		(1,542	)		(1,542	)
Sell	GBP		141,980	10/19/2016	MSC		—		(458	)		(458	)
Sell	GBP		4,546	10/19/2016	MSC		—		(35	)		(35	)
Sell	CNH		1,507	1/20/2017	MSC		—		(40	)		(40	)
Sell	CNH		4,227	1/20/2017	MSC		19		—			19
Sell	CNH		27,115	1/20/2017	MSC		—		(941	)		(941	)

						$	3,155	$	(5,381	)	$	(2,226	)

Glossary:


Counterparty Abbreviations:
MSC	Morgan Stanley & Co. Inc.

Currency Abbreviations:
CAD	Canadian Dollar	NOK	Norwegian Krone
CHF	Swiss Franc	SEK	Swedish Krona
EUR	Euro Currency	SGD	Singapore Dollar
GBP	Pound Sterling	USD	United States Dollar
JPY	Japanese Yen	ZAR	South African Rand

Other Abbreviations:
EONIA	Euro OverNight Index Average	HONIX	Hong Kong Dollar OverNight Index Average
ETF	Exchange-Traded Fund	LIBOR	London Interbank Offered Rate
EURIB	Euro Interbank Offered Rate	SONIA	Sterling OverNight Index Average
FEDEF	Effective Federal Funds Rate	SPDR	Standard & Poor’s Depositary Receipt

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Statement of Assets and Liabilities

July 31, 2016 (Unaudited) (in thousands, except share and per share amounts)


	Grosvenor Long/Short Fund
Assets:
Investments in unaffiliated securities, at fair value ^A	$	13,244
Investments in affiliated securities, at fair value ^B		2,098
Purchased options and swaptions outstanding (Premiums paid $21)		17
Cash		1,003
Cash with brokers		5,220
Dividends and interest receivable		7
Receivable for investments sold		327
Receivable for expense reimbursement (Note 2)		153
Unrealized appreciation from swap agreements		52
Unrealized appreciation from foreign currency contracts		3
Prepaid expenses		55

Total assets		22,179

Liabilities:
Payable for investments purchased		431
Overdraft payable		5
Payable for securities sold short, at value ^C		5,258
Written options, at fair value (Premiums received $1)		4
Dividends payable		4
Management and investment advisory fees payable		68
Transfer agent fees payable		4
Custody and fund accounting fees payable		20
Professional fees payable		182
Payable for prospectus and shareholder reports		15
Unrealized depreciation from swap agreements		33
Unrealized depreciation from foreign currency contracts		5
Other liabilities		1

Total liabilities		6,030

Net Assets	$	16,149

Analysis of Net Assets:
Paid-in-capital		15,817
Undistributed (or overdistribution of) net investment income		(10	)
Accumulated net realized (loss)		(158	)
Unrealized appreciation of investments		804
Unrealized (depreciation) of currency transactions		(32	)
Unrealized appreciation of swap agreements		19
Unrealized (depreciation) of options contracts		(6	)
Unrealized depreciation of short sales		(285	)

Net assets	$	16,149

Shares outstanding at no par value (unlimited shares authorized):
Institutional Class		1,482,775

Y Class		18,239

Investor Class		41,818

A Class		16,938

C Class		20,482

Net assets (not in thousands):
Institutional Class	$	15,156,949

Y Class	$	186,282

Investor Class	$	426,161

A Class	$	172,587

C Class	$	207,383

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Statement of Assets and Liabilities

July 31, 2016 (Unaudited) (in thousands, except share and per share amounts)


	Grosvenor Long/Short Fund
Net asset value, offering and redemption price per share:
Institutional Class	$	10.22

Y Class	$	10.21

Investor Class	$	10.19

A Class	$	10.19

A Class (offering price)	$	10.81

C Class	$	10.13

^A Cost of investments in unaffiliated securities	$	12,447
^BCost of investments in affiliated securities	$	2,098
^CProceeds of securities sold short	$	4,949

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Statement of Operations

For the Six Months Ended July 31, 2016 (Unaudited) (in thousands)


	Grosvenor Long/Short Fund
Investment income:
Dividend income from unaffiliated securities (net of foreign taxes)^A	$	125
Dividend income from affiliated securities		3
Other Income		84

Total investment income		212

Expenses:
Management and investment advisory fees (Note 2)		129
Administrative service fees (Note 2):
Institutional Class		15
Transfer agent fees:
Institutional Class		1
Y Class		1
Investor Class		1
A Class		1
C Class		1
Custody and fund accounting fees		68
Professional fees		186
Registration fees and expenses		43
Service fees (Note 2):
Investor Class		1
Distribution fees (Note 2):
C Class		1
Prospectus and shareholder report expenses		15
Prime broker fees		124
Dividends on securities sold short		69
Other expenses		14

Total expenses		670

Net fees waived and expenses reimbursed (Note 2)		(309	)

Net expenses		361

Net investment income		(149	)

Realized and unrealized gain (loss) from investments:
Net realized gain (loss) from^B:
Investments		120
Foreign currency transactions		2
Swap agreements		(19	)
Options contracts		(26	)
Change in net unrealized appreciation (depreciation) of:
Investments		1,268
Foreign currency transactions		(26	)
Swap agreements		6
Options contracts		(7	)
Short sales		(495	)

Net gain from investments		821

Net increase in net assets resulting from operations	$	672

^AForeign taxes		1
^BNet of foreign withholding taxes on capital gains		1

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Statement of Changes of Net Assets (in thousands)


	Grosvenor Long/Short Fund
	Six Months Ended July 31, 2016			From October 01^Ato January 31, 2016
	(unaudited)
Increase (Decrease) in Net Assets:
Operations:
Net investment (loss)	$	(149	)	$	(125	)
Net realized gain (loss) from investments, foreign currency transactions, swap agreements, and options contracts		75			17
Change in net unrealized appreciation or (depreciation) from investments, foreign currency transactions, swap agreements, options contracts, and short sales		746			(246	)

Net increase (decrease) in net assets resulting from operations		672			(354	)

Distributions to Shareholders:
Net Investment Income:
Institutional Class		—			—
Y Class		—			—
Investor Class		—			—
A Class		—			—
C Class		—			—

Net distributions to shareholders		—			—

Capital Share Transactions:
Proceeds from sales of shares		110			6,495
Cost of shares redeemed		(774	)		—

Net increase (decrease) in net assets from capital share transactions		(664	)		6,495

Net increase in net assets		8			6,141

Net Assets:
Beginning of period		16,141			10,000

End of Period *	$	16,149		$	16,141

* Includes undistributed (or overdistribution of) net investment income	$	(10	)	$	(10	)

^ACommencement of Operations.

See accompanying notes

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 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 July 31, 2016, the Trust consists of twenty-five active series, one of which is presented in this filing: American Beacon Grosvenor Long/Short Fund (“Grosvenor Fund”). The remaining twenty-four active series are reported in separate filings.

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

The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is an investment company, 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 Fund may purchase securities with delivery or payment to occur at a later date. At the time the Fund enters into a commitment to purchase a security, the transaction is recorded, and the value of the security is reflected in the net asset value (“NAV”). The value of the security may vary with market fluctuations.

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

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Currency Translation

Dividends to Shareholders

Dividends from net investment income of the Fund normally will be declared and paid at least annually. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on the ex-dividend date. 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 Fund has established brokerage commission recapture arrangements with certain brokers or dealers. If a Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operations, if applicable.

Allocation of Income, Expenses, Gains, and Losses

Use of Estimates

Other

2. Transactions with Affiliates

Management Agreement

From February 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, fund

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

management, and securities lending services. As compensation for performing the duties required under the Management Agreement, the Manager received from the Fund an annualized fee equal to 0.05% of the average daily net assets. 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 Fund. As compensation for performing the duties under the Management Agreement, the Manager receives from the Fund an annualized fee of 1.85% as a percentage of average daily net assets. The Manager pays the unaffiliated investment advisor hired to direct investment activities of the Fund. Management fees paid by the Fund during the six months ended July 31, 2016 were as follows (in thousands):


Fund	Management Fee Rate			Management Fee		Amounts paid to Investment Advisors		Amounts Paid to Manager
Grosvenor		1.85	%	$	129	$	117	$	12

Administration Agreement

Distribution Plans

The Fund, 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 may be charged to the Fund 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 Fund does not intend to separately compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.

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 Fund.

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Investment in Affiliated Funds


Fund	Direct Investments in USG Select Fund
Grosvenor	$	1,234

Interfund Lending Program

Pursuant to an exemptive order issued by the Securities and Exchange Commission (“SEC”), the Fund, along with other registered investment companies having management contracts with the Manager, may participate in an interfund lending program. This program provides an alternative credit facility allowing the Fund to borrow from other participating Funds. For the six months ended July 31, 2016, the Fund did not utilize the credit facility.

Expense Reimbursement Plan

The Manager contractually agreed to reimburse the Fund to the extent that total operating expenses exceeded a Fund’s expense cap. During the six months ended July 31, 2016, the Manager waived or reimbursed expenses as follows:


Fund	Class	Expense Cap 2/1/16 -7/31/16	Reimbursed Expenses		Expiration
Grosvenor	Institutional	2.10%		286,073	2020
Grosvenor	Y	2.20%		4,245	2020
Grosvenor	Investor	2.48%		9,347	2020
Grosvenor	A	2.50%		5,324	2020
Grosvenor	C	3.25%		4,336	2020

Of these amounts, $152,895 was receivable by the Manager at July 31, 2016 for the Grosvenor Fund. The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of fees waived or expenses reimbursed for a period of up to three years. However, reimbursement will occur only if the Class’ average net assets have grown or expenses have declined sufficiently to allow reimbursement without causing its expense ratio to exceed the previously agreed upon contractual expense limit. During the period ended July 31, 2016, the Fund did not record a liability for potential reimbursement, due to the current assessment that a reimbursement is unlikely.

Sales Commissions

The Fund’s distributor, Foreside Fund Services, LLC (“Foreside”), may receive a portion of A Class sales charges from broker dealers and it may be used to offset distribution related expenses. During the period ended July 31, 2016, Foreside collected $77 for the Grosvenor Fund 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 period ended July 31, 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 period ended July 31, 2016, there were no CDSC fees collected for Class C shares.

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

3. Security Valuation and Fair Value Measurements

Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally 4 p.m. 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 NAV per share of the mutual fund on the day of valuation.

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 earlier 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 Fund’s 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 Fund uses 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.

Valuation Inputs


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. Fixed-income securities are considered Level 2 securities, as they are valued using observable inputs.

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.

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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

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

Investments in registered open-end investment management companies will be valued based upon the NAVs of such investments and are categorized as Level 1 of the fair value hierarchy.

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

The Fund’s investments are summarized by level based on the inputs used to determine their values. As of July 31, 2016, the investments were classified as described below (in thousands):


Grosvenor Fund*	Level 1			Level 2			Level 3		Total
*Assets*
Common Stocks	$	13,175		$	—		$	—	$	13,175
Warrants		69			—			—		69
Short-Term Investments – Money Market Funds		2,098			—			—		2,098

Total Investments in Securities - Assets	$	15,342		$	—		$	—	$	15,342

*Liabilities*
Common Stocks (Sold Short)	$	(3,734	)	$	—		$	—	$	(3,734	)
Exchange Traded Instruments		(1,524	)		—			—		(1,524	)

Total Investments in Securities - Liabilities		(5,258	)		—			—		(5,258	)

Total Investments in Securities	$	10,084		$	—		$	—	$	10,084

*Financial Derivative Instruments - Assets*
Forward Currency Contracts	$	—		$	3		$	—	$	3
Purchased Options		17			—			—		17
Total Return Swaps		—			52			—		52

Total Financial Derivative Instruments - Assets	$	17		$	55		$	—	$	72

*Financial Derivative Instruments - Liabilities*
Forward Currency Contracts	$	—		$	(5	)	$	—	$	(5	)
Written Options		(4	)		—			—		(4	)
Total Return Swaps		—			(33	)		—		(33	)

Total Financial Derivative Instruments - Liabilities	$	(4	)	$	(38	)	$	—	$	(42	)

*	Refer to the Schedules of Investments for country information.

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

U.S. GAAP requires all transfers between any levels to be disclosed. The end of the period timing recognition has been adopted for the transfers between levels of each Fund’s assets and liabilities. During the period ended July 31, 2016, Grosvenor transferred common stocks with a value of $522 and common stocks sold short with a value of $(166) from Level 2 to Level 1 as of the end of period, in accordance with fair value procedures established by the Board (in thousands).

4. Securities and Other Investments

American Depositary Receipts (“ADRs”)

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

Illiquid and Restricted Securities

The Fund 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 period ended July 31, 2016 are disclosed in the Notes to the Schedule 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 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.

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Real Estate Investment Trusts

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

Short Sales

The Fund 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. A Fund is 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 July 31, 2016, short positions were held by the Fund.

Other Investment Company Securities and Other Exchange Traded Products

The Fund may invest in shares of other investment companies, including open-end funds, closed-end funds, business development companies, ETFs, unit investment trusts, and other investment companies of the Trust. The Fund may invest in investment company securities advised by the Manager or a sub-advisor. Investments in the securities of other investment companies may involve duplication of advisory fees and certain other expenses. By investing in another investment company, the Fund becomes a shareholder of that investment company. As a result, the Fund’s 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.

Master Agreements

The Fund is a party to International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreements”) with counterparties that govern transactions in over-the-counter derivative and foreign exchange contracts entered into by the Fund and those counterparties. The ISDA Master Agreements contain provisions for general obligations, representations, agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to terminate early could be material to the financial statements. Since different types of forward and OTC financial derivative transactions have different mechanics and are sometimes traded out of different legal entities of 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.

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

5. Financial Derivative Instruments

Options Contracts

The Fund 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 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, at fair value” 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 Fund 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 Fund may not be able to enter into a closing transaction because of an illiquid market.

The Fund 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 Fund’s exposure to unfavorable movements of the underlying instrument. The Fund pays a premium which is included on the Fund’s 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.

For the period ended July 31, 2016, the Fund purchased/sold options primarily for return enhancement and hedging.

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	At July 31, 2016
Grosvenor	$	29

Average Written Option Notional Amounts Outstanding
Fund	At July 31, 2016
Grosvenor	$	1

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Forward Foreign Currency Contracts

The Fund 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 Fund 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 Fund 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 Fund also bears the credit risk if the counterparty fails to perform under the contract.

For the six months ended July 31, 2016, the 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 at July 31, 2016
Fund	Purchased Contracts		Sold Contracts
Grosvenor	$	175	$	548

Total Return Swap Agreements

The Fund may enter into total return swaps in order to take a “long” or “short” position with respect to an underlying referenced asset. The Fund is subject to market price volatility of the underlying referenced asset. A total return swap involves commitments to pay interest in exchange for a market linked return based on a notional amount. To the extent that the total return of the security, group of securities or index underlying the transaction exceeds or falls short of the offsetting interest obligation, the Fund will receive a payment from or make a payment to the counterparty.

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


Average Total Return Swap Notional Amounts Outstanding
Fund	At July 31, 2016
Grosvenor	$	1,606

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

Fair Values of financial derivative instruments on the Statement of Assets and Liabilities not accounted for as hedging instruments as of July 31, 2016:


Assets	Derivative	Grosvenor Fund
Unrealized appreciation from foreign currency contracts	Foreign Exchange Contracts	$	3
Unrealized appreciation from swap agreements	Total Return Contracts		52
Purchased options outstanding	Equity and Exchange Trade Fund Contracts		17

Liabilities	Derivative	Grosvenor Fund
Unrealized depreciation from foreign currency contracts	Foreign Exchange Contracts	$	(5	)
Unrealized depreciation from swap agreements	Total Return Contracts		(33	)
Written options outstanding	Equity and Exchange Trade Fund Contracts		(4	)

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

The effect of financial derivative instruments on the Statements of Operations not accounted for as hedging instruments for the six-months ended July 31, 2016:


Statements of Operations	Derivative	Grosvenor Fund
Net realized gain (loss) from swap agreements	Total Return Contracts	$	(19	)
Net realized gain (loss) from options contracts	Equity and Exchange Trade Fund Contracts		(26	)
Net realized gain (loss) from foreign currency transactions	Foreign Exchange Contracts		(2	)

Statements of Operations	Derivative	Grosvenor Fund
Change in net unrealized appreciation (depreciation) of swap agreements	Total Return Contracts	$	6
Change in net unrealized appreciation (depreciation) of options contracts	Equity and Exchange Trade Fund Contracts		(7	)
Change in net unrealized appreciation (depreciation) of foreign currency transactions	Foreign Exchange Contracts		2

(1)	See Note 6 in the Notes to Financial Statements for additional information.

6. Principal Risks

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

Market Risks

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

Interest rate risk is the risk that fixed-income securities will decline in value because of changes in interest rates. As nominal interest rates rise, the value of certain fixed-income securities held by the Fund 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. In addition, the value of emerging and frontier market fixed-income securities may be particularly sensitive to interest rate changes.

If the Fund invests directly in foreign currencies or in securities that trade in, and receive revenues in, foreign currencies, or in financial derivatives that provide exposure to foreign currencies, they will be subject to the risk that those currencies will decline in value relative to the base currency of the Fund, or, in the case of hedging positions, that the Fund’s base currency will decline in value relative to the currency being hedged. Currency rates in foreign countries may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention (or the failure to intervene) by U.S. or foreign

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

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 investment 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. The values of equity securities for companies operating in emerging markets may also be affected by political uncertainty, limited liquidity, and other volatility than fixed income securities. Equity securities and equity-related investments generally have greater market price volatility than fixed-income securities.

Counterparty Credit Risk

With exchange traded futures, there is less counterparty credit risk to the Fund since the exchange or clearinghouse, as counterparty to such instruments, guarantees against a possible default. The clearinghouse stands between the buyer and the seller of the contract; therefore, the credit risk is limited to failure of the clearinghouse. While offset rights may exist under applicable law, the 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 Fund.

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

Offsetting Assets and Liabilities

The Fund is a party to enforceable master netting agreements between brokers and counterparties, such as ISDA and Master Forward Agreements, which provide for the right to offset under certain circumstances. The Fund employs multiple money managers and counterparties and has elected not to offset qualifying financial and derivative instruments on the Statement of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, July 31, 2016 (in thousands).

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

Grosvenor Long/Short Fund

Offsetting of Financial Assets and Derivative Assets as of July 31, 2016:


Description	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Assets Presented in the Statement of Assets and Liabilities
Foreign currency transactions	$	3	$	—	$	3
Purchased options outstanding		17		—		17
Swap agreements		52		—		52

	$	72	$	—	$	72

Offsetting of Financial Liabilities and Derivative Liabilities as of July 31, 2016:


Description	Gross Amounts of Recognized Liabilities			Gross Amounts Offset in the Statement of Assets and Liabilities		Net Amounts of Liabilities Presented in the Statement of Assets and Liabilities
Foreign currency transactions	$	(5	)	$	—	$	(5	)
Written options outstanding		(4	)		—		(4	)
Swap agreements		(33	)		—		(33	)

	$	(42	)	$	—	$	(42	)

Financial Assets, Derivative Assets, and Collateral Pledged by Counterparty as of July 31, 2016:


	Net Amount of Assets Presented in the Statement of Assets and Liabilities		Gross Amounts Not Offset in the Statement of Assets and Liabilities				Net Amount
Counterparty			Financial Instruments		Cash Collateral Received		Net Amount
Morgan Stanley & Co, Inc.	$	30	$	—	$	—	$	30

7. Federal Income and Excise Taxes

The Fund does not have any unrecognized tax benefits in the accompanying financial statements. The tax period ended January 31, 2016 remains subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.

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

There were no distributions for the six months ended July 31, 2016 or for the prior year ended January 31, 2016.

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

As of July 31, 2016 the components of distributable earnings (deficits) on a tax basis were as follows (in thousands):


	Grosvenor Long/Short Fund
Cost basis of investments for federal income tax purposes	$	12,678
Unrealized appreciation		1,020
Unrealized depreciation		(454	)

Net unrealized appreciation (depreciation)		566

Undistributed ordinary income		225
Undistributed long-term capital gains		—
Accumulated capital and other losses		—
Other temporary differences		(459	)

Distributable earnings (deficits)	$	332

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

Accordingly, the following amounts represent current year permanent differences derived from the foreign currency, reclassifications of income from real estate investment trusts and master limited partnerships, and net operating losses that have been reclassified as of July 31, 2016 (in thousands):


	Grosvenor Long/Short Fund
Paid-in-capital	$	(13	)
Undistributed net investment income		149
Accumulated net realized gain (loss)		(136	)
Unrealized appreciation or (depreciation) of investments and futures contracts		—

Under the Regulated Investment Company Modernization Act of 2010 (the “RIC MOD”), net capital losses recognized by the Fund 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 months ended July 31, 2016, the Grosvenor Fund did not have any capital loss carryforwards.

8. Investment Transactions

The aggregate cost of purchases and proceeds from sales of investments, other than short-term obligations, for the six months ended July 31, 2016 were as follows (in thousands):


	Grosvenor Long/Short Fund
Purchases	$	21,752
Sales and maturities		23,040

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

A summary of the Fund’s transactions in the USG Select Fund for the six months ended July 31, 2016 are as follows:


Type of Transaction	January 31, 2016 Shares/Fair Value		Purchases		Sales		July 31, 2016 Shares/Fair Value		Dividend Income
Direct	$	—	$	9,918	$	7,820	$	2,098	$	3

9. Option Contracts Written

The premium amount and number of option contracts written by the Grosvenor Long/Short Fund during the six months ended July 31, 2016 were as follows:


	Number of Contracts			Notional Amount			Amount of Premiums
Outstanding at January 31, 2016		(1	)	$	(100	)	$	(133	)
Options written		(51	)		(5,100	)		(3,659	)
Options expired		22			2,200			636
Options exercised		—			—			—
Options closed		18			1,800			1,828

Outstanding at July 31, 2016		(12	)	$	(1,200	)	$	(1,328	)

10. Capital Share Transactions

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

For the Six Months ended July 31, 2016


	Institutional Class						Y Class				Investor Class
Grosvenor Long/Short Fund	Shares			Amount			Shares		Amount		Shares			Amount
Shares sold		—		$	—			1	$	13		3		$	33
Reinvestment of dividends		—			—			—		—		—			—
Shares redeemed		(59	)		(573	)		—		—		(10	)		(101	)

Net increase (decrease) in shares outstanding		(59	)	$	(573	)		1	$	13		(7	)	$	(68	)


	A Class						C Class
Grosvenor Long/Short Fund	Shares			Amount			Shares		Amount
Shares sold		1		$	10			6	$	54
Reinvestment of dividends		—			—			—		—
Shares redeemed		(10	)		(100	)		—		—

Net increase (decrease) in shares outstanding		(9	)	$	(90	)		6	$	54

American Beacon Grosvenor Long/Short Fund^SM

Notes to Financial Statements

July 31, 2016 (Unaudited)

For the Period ended January 31, 2016


	Institutional Class				Y Class				Investor Class
Grosvenor Long/Short Fund	Shares		Amount		Shares		Amount		Shares		Amount
Shares sold		602	$	6,027		2	$	20		34	$	338
Reinvestment of dividends		—		—		—		—		—		—
Shares redeemed		—		—		—		—		—		—

Net increase in shares outstanding		602	$	6,027		2	$	20		34	$	338


		A Class				C Class
Grosvenor Long/Short Fund		Shares		Amount		Shares		Amount
Shares sold	��		11	$	110		—	$	—
Reinvestment of dividends			—		—		—		—
Shares redeemed			—		—		—		—

Net increase in shares outstanding			11	$	110		—	$	—

11. Change in Independent Registered Public Accounting Firm (Unaudited)

The Fund engaged PricewaterhouseCoopers, LLP (“PwC”) as the independent registered public accounting firm for the fiscal year ending January 31, 2017. PwC replaces Ernst & Young LLP (“EY”), the Fund’s previous independent registered public accounting firm. The change in accountants was approved by the Audit Committee of the Board on June 8, 2016. During the periods that EY served as the Fund’s independent registered public accounting firm through January 31, 2016, EY’s audit reports contained no adverse opinion or disclaimer of opinion; nor were its reports qualified or modified as to uncertainty, audit scope, or accounting principle. There were no disagreements between the Fund and EY’s on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

American Beacon Grosvenor Long/Short Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Institutional Class
	Six Months Ended July 31, 2016			October 1^Ato January 31, 2016
	(unaudited)
Net asset value, beginning of period	$	9.79		$	10.00

Income from investment operations:
Net investment income (loss)		0.03			(0.02	)
Net gains (losses) from investments (both realized and unrealized)		0.40			(0.19	)

Total income (loss) from investment operations		0.43			(0.21	)

Less distributions:
Dividends from net investment income		—			—
Distributions from net realized gains		—			—

Total distributions		—			—

Net asset value, end of period	$	10.22		$	9.79

Total return^AB		4.39	%^D		(2.10	)%^D

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	15,157		$	15,098
Ratios to average net assets:
Expenses, before reimbursements		8.46	%^C		11.84	%^C
Expenses, before reimbursements, excluding non-operating expenses		6.00	%^C		9.99	%^C
Expenses, net of reimbursements		4.56	%^C		3.95	%^C
Expenses, net of reimbursements and non-operating expenses		2.10	%^C		2.10	%^C
Net investment (loss), before reimbursements		(5.76	)%^C		(10.23	)%^C
Net investment (loss), net of reimbursements		(1.86	)%^C		(2.34	)%^C
Portfolio turnover rate		121	%^D		77	% ^D


	Y Class
	Six Months Ended July 31, 2016			October 1^Ato January 31, 2016
	(unaudited)
Net asset value, beginning of period	$	9.79		$	10.00

Income from investment operations:
Net investment income (loss)		0.02			(0.01	)
Net gains (losses) from investments (both realized and unrealized)		0.40			(0.20	)

Total income (loss) from investment operations		0.42			(0.21	)

Less distributions:
Dividends from net investment income		—			—
Distributions from net realized gains		—			—

Total distributions		—			—

Net asset value, end of period	$	10.21		$	9.79

Total return^AB		4.29	%		(2.10	)%^D

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	186		$	166
Ratios to average net assets:
Expenses, before reimbursements		9.56	%^C		14.92	%^C
Expenses, before reimbursements, excluding non-operating expenses		7.10	^C		13.09	%^C
Expenses, net of reimbursements		4.66	^C		4.03	%^C
Expenses, net of reimbursements and non-operating expenses		2.20	^C		2.20	%^C
Net investment (loss), before reimbursements		(6.86	)%^C		(13.32	)%^C
Net investment (loss), net of reimbursements		(1.96	)%^C		(2.43	)%^C
Portfolio turnover rate		121	%^D		77	% ^D

^A	Commencement of operations.

^C	Annualized.

^D	Not annualized

American Beacon Grosvenor Long/Short Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	Investor Class
	Six Months Ended July 31, 2016			October 1 ^Ato January 31, 2016
	(unaudited)
Net asset value, beginning of period	$	9.78		$	10.00

Income from investment operations:
Net investment income (loss)		0.01			(0.01	)
Net gains (losses) from investments (both realized and unrealized)		0.40			(0.21	)

Total income (loss) from investment operations		0.41			(0.22	)

Less distributions:
Dividends from net investment income		—			—
Distributions from net realized gains		—			—

Total distributions		—			—

Net asset value, end of period	$	10.19		$	9.78

Total return^B		4.19	%^D		(2.20	)%^D

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	426		$	477
Ratios to average net assets:
Expenses, before reimbursements		9.39	%^C		15.21	%^C
Expenses, before reimbursements, excluding non-operating expenses		6.93	%^C		13.32	%^C
Expenses, net of reimbursements		4.95	%^C		4.37	%^C
Expenses, net of reimbursements and non-operating expenses		2.48	%^C		2.48	%^C
Net investment (loss), before reimbursements		(6.68	)%^C		(13.54	)%^C
Net investment (loss), net of reimbursements		(2.23	)%^C		(2.69	)%^C
Portfolio turnover rate		121	%^D		77	%^D


	A Class
	Six Months Ended July 31, 2016			October 1^Ato January 31, 2016
	(unaudited)
Net asset value, beginning of period	$	9.78		$	10.00

Income from investment operations:
Net investment income (loss)		0.01			(0.02	)
Net gains (losses) from investments (both realized and unrealized)		0.40			(0.20	)

Total income (loss) from investment operations		0.41			(0.22	)

Less distributions:
Dividends from net investment income		—			—
Distributions from net realized gains		—			—

Total distributions		—			—

Net asset value, end of period	$	10.19		$	9.78

Total return^B		4.19	%^D		(2.20	)%^D

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	173		$	253
Ratios to average net assets:
Expenses, before reimbursements		9.25	%^C		14.66	%
Expenses, before reimbursements, excluding non-operating expenses		6.73	%^C		12.80	%^C
Expenses, net of reimbursements		5.02	%^C		4.36	%^C
Expenses, net of reimbursements and non-operating expenses		2.50	%^C		2.50	%^C
Net investment (loss), before reimbursements		(6.50	)%^C		(13.03	)%^C
Net investment (loss), net of reimbursements		(2.27	)%^C		(2.74	)%^C
Portfolio turnover rate		121	%^D		77	%^D

^A	Commencement of operations.

^C	Annualized.

^D	Not annualized.

American Beacon Grosvenor Long/Short Fund^SM

Financial Highlights

(For a share outstanding throughout the period)


	C Class
	Six Months Ended July 31, 2016			October 1^Ato January 31, 2016
	(unaudited)
Net asset value, beginning of period	$	9.76		$	10.00

Income from investment operations:
Net investment (loss)		(0.01	)		(0.05	)
Net gains (losses) from investments (both realized and unrealized)		0.38			(0.19	)

Total income (loss) from investment operations		0.37			(0.24	)

Less distributions:
Dividends from net investment income		—			—
Distributions from net realized gains		—			—

Total distributions		—			—

Net asset value, end of period	$	10.13		$	9.76

Total return^AB		3.79	%^D		(2.40	)%^D

Ratios and supplemental data:
Net assets, end of period (in thousands)	$	207		$	147
Ratios to average net assets:
Expenses, before reimbursements		10.53	%^C		16.08	%^C
Expenses, before reimbursements, excluding non-operating expenses		8.12	%^C		14.23	%^C
Expenses, net of reimbursements		5.66	%^C		5.10	%^C
Expenses, net of reimbursements and non-operating expenses		3.25	%^C		3.25	%^C
Net investment (loss), before reimbursements		(7.90	)%^C		(14.48	)%^C
Net investment (loss), net of reimbursements		(3.03	)%^C		(3.49	)%^C
Portfolio turnover rate		121	%^D		77	%^D

^A	Commencement of operations.

^C	Annualized.

^D	Not annualized.

Disclosure Regarding the Approval of the Management

and Investment Advisory Agreements (Unaudited)

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 American Beacon Grosvenor Long/Short Fund (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 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 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, and approved the prior management agreement at its 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.

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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 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

PricewaterhouseCoopers LLP

Boston, MA

DISTRIBUTOR

Foreside Fund Services, LLC

Portland, Maine

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

American Beacon Funds and American Beacon Grosvenor Long/Short Fund are service marks of American Beacon Advisors, Inc.

SAR 7/16

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: October 11, 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: October 11, 2016


By		/s/ Melinda G. Heika
		Melinda G. Heika
		Treasurer
		American Beacon Funds

Date: October 11, 2016

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