UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORMN-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number:811-4984
AMERICAN BEACON FUNDS
(Exact name of registrant as specified in charter)
220 East Las Colinas Boulevard, Suite 1200
Irving, Texas 75039
(Address of principal executive offices)-(Zip code)
GENE L. NEEDLES, JR., PRESIDENT
220 East Las Colinas Boulevard, Suite 1200
Irving, Texas 75039
(Name and address of agent for service)
Registrant’s telephone number, including area code: (817)391-6100
Date of fiscal year end: October 31, 2019
Date of reporting period: April 30, 2019
FormN-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule30e-1 under the Investment Company Act of 1940 (17 CFR270.30e-1). The Commission may use the information provided on FormN-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by FormN-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in FormN-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
ITEM 1. | REPORTS TO STOCKHOLDERS. |
About American Beacon Advisors
Since 1986, American Beacon Advisors has offered a variety of products and investment advisory services to numerous institutional and retail clients, including a variety of mutual funds, corporate cash management, and separate account management.
Our clients include defined benefit plans, defined contribution plans, foundations, endowments, corporations, financial planners, and other institutional investors. With American Beacon Advisors, you can put the experience of a multi-billion dollar asset management firm to work for your company.
LARGE CAP VALUE FUND RISKS
Investing invalue stocksmay limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as atrade-off for this potentially lower risk. Investing inforeign securitiesmay involve heightened risk due to currency fluctuations and economic and political risks. The use offutures contractsfor cash management may subject the Fund to losing more money than invested. The Fund participates in asecurities lendingprogram. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.
Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.
American Beacon Funds April 30, 2019 |
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Back Cover |
![]() | Dear Shareholders,
At American Beacon, we take our heritage as a fiduciary very seriously – and we apply that mindset to all aspects of our business as a fund manager. As a result, for more than 30 years, we have endeavored to:
u Identify, engage and oversee the best money managers. As a manager of managers, our goal is to engage the most effective money managers for each asset class, investment style and market strategy we offer. We are committed to partnering with those we judge to be “the best of the best” when it comes to choosing sub-advisors for our mutual funds. Whether our due-diligence process results in the selection of one sub-advisor or multiple sub-advisors, we select those we believe show the greatest potential to help us meet the high standards you’ve come to expect. |
u | Offer a variety of innovative investment solutions. Our mutual funds – which span the domestic, international, global, frontier and emerging markets – aresub-advised by experienced money managers who employ distinctive, proprietary investment processes to manage assets through a variety of economic and market conditions. From offering some of the first multi-manager funds, one of the first retirement income funds and the first open-ended mutual fund in the U.S. to focus primarily on frontier-market debt, our robust history includes applying a disciplined, solutions-based approach to our product development process in an effort to help you grow your assets while mitigating risk. |
u | Provide a solutions-based approach to achieving long-term investment goals.We seek to provide investment solutions that might enable you to benefit from taking a more disciplined approach to investing. Our mutual funds provide access to institutional-quality, research-intensive investment managers with diverse processes and styles. Over the long run, having such access and spending time in the market – rather than trying to time the market – may better position you to reach your long-term investment goals during market upswings and potentially insulate against market downswings. |
Our management approach is more than a concept; it’s the cornerstone of American Beacon’s culture. And we strive to employ it at every turn as we seek to provide a well-diversified line of investment solutions to help our shareholders seek long-term rewards.
Thank you for your continued interest in American Beacon. For additional information about our investment products or to access your account information, please visit our website atwww.americanbeaconfunds.com.
Best Regards,
Gene L. Needles, Jr.
President
American Beacon Funds
1
American Beacon Large Cap Value FundSM
April 30, 2019 (Unaudited)
The Investor Class of the American Beacon Large Cap Value Fund (the “Fund”) returned 7.25% for the six months ended April 30, 2019, underperforming the Russell 1000® Value Index (the “Index”) return of 7.90% for the same period.
Average Annual Total Returns for the Period ended April 30, 2019 |
| |||||||||||||||||||||||||||||||
Ticker | 6 Months* | 1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||||||||||||||||
Institutional Class (1,7) | AADEX | 7.42 | % | 6.59 | % | 11.65 | % | 7.34 | % | 13.36 | % | |||||||||||||||||||||
Y Class (1,2,7) | ABLYX | 7.39 | % | 6.48 | % | 11.58 | % | 7.26 | % | 13.27 | % | |||||||||||||||||||||
Investor Class (1,7) | AAGPX | 7.25 | % | 6.24 | % | 11.28 | % | 6.98 | % | 12.96 | % | |||||||||||||||||||||
Advisor Class (1,7) | AVASX | 7.12 | % | 6.06 | % | 11.11 | % | 6.82 | % | 12.81 | % | |||||||||||||||||||||
A without Sales Charge (1,3,7) | ALVAX | 7.20 | % | 6.22 | % | 11.25 | % | 6.94 | % | 12.88 | % | |||||||||||||||||||||
A with Sales Charge (1,3,7) | ALVAX | 1.02 | % | 0.11 | % | 9.09 | % | 5.69 | % | 12.21 | % | |||||||||||||||||||||
C without Sales Charge (1,4,7) | ALVCX | 6.84 | % | 5.49 | % | 10.48 | % | 6.17 | % | 12.15 | % | |||||||||||||||||||||
C with Sales Charge (1,4,7) | ALVCX | 5.84 | % | 4.49 | % | 10.48 | % | 6.17 | % | 12.15 | % | |||||||||||||||||||||
R6 Class (1,5,7) | AALRX | 7.43 | % | 6.60 | % | 11.67 | % | 7.35 | % | 13.37 | % | |||||||||||||||||||||
Russell 1000 Value Index (6) | 7.90 | % | 9.06 | % | 10.97 | % | 8.27 | % | 13.76 | % |
* | Not Annualized. |
1. | Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visitwww.americanbeaconfunds.com or call1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. |
2. | Fund performance for theten-year period represents the total returns achieved by the Institutional Class from 4/30/09 up to 8/3/09, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 4/30/09. |
3. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 through 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 4/30/09. A Class shares have a maximum sales charge of 5.75%. |
4. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 through 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 4/30/09. A portion of the fees charged to the C Class was waived from 2010 through 2012, partially recovered in 2013, fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown for 2010 through 2012. C Class shares have a maximum contingent deferred sales charge of 1.00% for shares redeemed within one year of the date of purchase. |
5. | Fund performance for the three-year, five-year andten-year periods represents the returns achieved by the Institutional Class from 4/30/09 through 2/28/17, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 4/30/09. A portion of the fees charged to the R6 Class of the Fund was waived in 2017 and 2018 and partially recouped in 2019. Performance prior to waiving fees was lower than the actual returns shown for 2017 and 2018. |
6. | The Russell 1000 Value Index is an unmanaged index of those stocks in the Russell 1000 Index with lowerprice-to-book ratios and lower forecasted growth values. Russell 1000 Value Index and Russell 1000 Index are registered trademarks of Frank Russell Company. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data, and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. One cannot directly invest in an index. |
7. | The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and R6 Class shares were 0.62%, 0.68%, 0.95%, 1.09%, 0.93%, 1.64%, and 0.59%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report. |
2
American Beacon Large Cap Value FundSM
Performance Overview
April 30, 2019 (Unaudited)
The Fund underperformed the Index due to both sector allocation and stock selection hindering the Fund relative to the Index for thesix-month period.
Sector allocation hurt as an overweight to Energy – the worst performing sector in the Index – and an underweight to Real Estate (down 1.1% and up 12.5%, respectively), weighed on relative performance compared to the Index. The Fund’s overweight position in Industrials (up 14.5%) somewhat muted relative outperformance during the period.
The Fund’s investments in the Health Care and Energy sectors contributed most of the stock selection underperformance. In the Health Care sector, CVS Health Corp. (down 24.2%) and Medtronic PLC. (up 0.6%) were the largest negative contributors. Positions in Conocophillips (down 9.2%) and Schlumberger Ltd. (down 14.8%) hurt the Fund’s returns in the Energy sector. Stock selections in the Materials sector partially offset relative performance. In this sector, Air Products & Chemicals, Inc. (up 34.6%) and Crown Holdings, Inc. (up 37.6%) helped the Fund’s returns.
Thesub-advisors continue to invest in a broadly diversified portfolio of companies that they believe have attractive valuations and above-average earnings growth potential. This approach should allow the Fund to benefit over the longer term.
Top Ten Holdings (% Net Assets) |
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Citigroup, Inc. | 2.8 | |||||||
JPMorgan Chase & Co. | 2.8 | |||||||
Wells Fargo & Co. | 2.2 | |||||||
Comcast Corp., Class A | 2.1 | |||||||
American International Group, Inc. | 2.0 | |||||||
BP PLC, Sponsored ADR | 2.0 | |||||||
Microsoft Corp. | 1.9 | |||||||
General Motors Co. | 1.9 | |||||||
Medtronic PLC | 1.8 | |||||||
Bank of America Corp. | 1.7 | |||||||
Total Fund Holdings | 197 | |||||||
Sector Allocation (% Equities) |
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Financials | 25.5 | |||||||
Energy | 12.3 | |||||||
Health Care | 11.6 | |||||||
Industrials | 11.0 | |||||||
Information Technology | 10.4 | |||||||
Consumer Discretionary | 8.1 | |||||||
Communication Services | 6.7 | |||||||
Consumer Staples | 6.0 | |||||||
Materials | 5.1 | |||||||
Utilities | 3.2 | |||||||
Real Estate | 0.1 |
3
American Beacon Large Cap Value FundSM
April 30, 2019 (Unaudited)
Fund Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees, if applicable, and (2) ongoing costs, including management fees, distribution(12b-1) fees,sub-transfer agent fees, and other Fund expenses. The Examples 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 November 1, 2018 through April 30, 2019.
Actual Expenses
The “Actual” lines of the tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Funds through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.
Hypothetical Example for Comparison Purposes
The “Hypothetical” lines of the tables 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 sales charges (loads) or redemption fees, as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.
4
American Beacon Large Cap Value FundSM
Expense Examples
April 30, 2019 (Unaudited)
American Beacon Large Cap Value Fund |
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Beginning Account Value 11/1/2018 | Ending Account Value 4/30/2019 | Expenses Paid During Period 11/1/2018-4/30/2019* | |||||||||||||
Institutional Class | |||||||||||||||
Actual | $1,000.00 | $1,074.20 | $3.09 | ||||||||||||
Hypothetical** | $1,000.00 | $1,021.82 | $3.01 | ||||||||||||
Y Class | |||||||||||||||
Actual | $1,000.00 | $1,073.90 | $3.55 | ||||||||||||
Hypothetical** | $1,000.00 | $1,021.37 | $3.46 | ||||||||||||
Investor Class | |||||||||||||||
Actual | $1,000.00 | $1,072.40 | $4.78 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.18 | $4.66 | ||||||||||||
Advisor Class | |||||||||||||||
Actual | $1,000.00 | $1,071.70 | $5.55 | ||||||||||||
Hypothetical** | $1,000.00 | $1,019.44 | $5.41 | ||||||||||||
A Class | |||||||||||||||
Actual | $1,000.00 | $1,072.40 | $4.98 | ||||||||||||
Hypothetical** | $1,000.00 | $1,019.98 | $4.86 | ||||||||||||
C Class | |||||||||||||||
Actual | $1,000.00 | $1,068.40 | $8.62 | ||||||||||||
Hypothetical** | $1,000.00 | $1,016.46 | $8.40 | ||||||||||||
R6 Class | |||||||||||||||
Actual | $1,000.00 | $1,074.30 | $2.98 | ||||||||||||
Hypothetical** | $1,000.00 | $1,021.92 | $2.91 |
* | Expenses are equal to the Fund’s annualized expense ratios for thesix-month period of 0.60%, 0.69%, 0.93%, 1.08%, 0.97%, 1.68%, and 0.58% for the Institutional, Y, Investor, Advisor, A, C, and R6 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 (181) by days in the year (365) to reflect the half-year period. |
** | 5% return before expenses. |
5
American Beacon Large Cap Value FundSM
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.33% | |||||||||||||||
Communication Services - 6.55% | |||||||||||||||
Diversified Telecommunication Services - 1.30% | |||||||||||||||
AT&T, Inc. | 1,740,100 | $ | 53,873,496 | ||||||||||||
Verizon Communications, Inc. | 408,833 | 23,381,159 | |||||||||||||
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77,254,655 | |||||||||||||||
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Interactive Media & Services - 0.88% | |||||||||||||||
Facebook, Inc., Class AA | 271,200 | 52,450,080 | |||||||||||||
|
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Media - 3.92% | |||||||||||||||
CBS Corp., Class B, NVDR | 314,003 | 16,098,934 | |||||||||||||
Comcast Corp., Class A | 2,907,694 | 126,571,920 | |||||||||||||
Discovery, Inc., Class CA | 1,476,300 | 42,458,388 | |||||||||||||
Interpublic Group of Cos., Inc. | 302,900 | 6,966,700 | |||||||||||||
News Corp., Class A | 1,441,000 | 17,897,220 | |||||||||||||
Omnicom Group, Inc. | 296,304 | 23,713,209 | |||||||||||||
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233,706,371 | |||||||||||||||
|
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Wireless Telecommunication Services - 0.45% | |||||||||||||||
Vodafone Group PLC, Sponsored ADR | 1,455,750 | 26,960,490 | |||||||||||||
|
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Total Communication Services | 390,371,596 | ||||||||||||||
|
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Consumer Discretionary - 7.84% | |||||||||||||||
Auto Components - 1.42% | |||||||||||||||
Adient PLC | 407,298 | 9,408,584 | |||||||||||||
Aptiv PLC | 148,186 | 12,699,540 | |||||||||||||
Garrett Motion, Inc.A | 19,626 | 368,969 | |||||||||||||
Goodyear Tire & Rubber Co. | 682,300 | 13,106,983 | |||||||||||||
Lear Corp. | 20,459 | 2,925,637 | |||||||||||||
Magna International, Inc. | 833,541 | 46,378,221 | |||||||||||||
|
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84,887,934 | |||||||||||||||
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Automobiles - 2.07% | |||||||||||||||
General Motors Co. | 2,852,063 | 111,087,854 | |||||||||||||
Harley-Davidson, Inc. | 322,549 | 12,008,499 | |||||||||||||
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123,096,353 | |||||||||||||||
|
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Hotels, Restaurants & Leisure - 0.98% | |||||||||||||||
Aramark | 1,147,928 | 35,677,602 | |||||||||||||
Norwegian Cruise Line Holdings Ltd.A | 401,500 | 22,640,585 | |||||||||||||
|
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58,318,187 | |||||||||||||||
|
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Household Durables - 1.32% | |||||||||||||||
DR Horton, Inc. | 476,400 | 21,109,284 | |||||||||||||
Mohawk Industries, Inc.A | 212,600 | 28,966,750 | |||||||||||||
PulteGroup, Inc. | 711,800 | 22,393,228 | |||||||||||||
Tupperware Brands Corp. | 257,800 | 6,135,640 | |||||||||||||
|
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78,604,902 | |||||||||||||||
|
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Internet & Direct Marketing Retail - 0.24% | |||||||||||||||
eBay, Inc. | 370,600 | 14,360,750 | |||||||||||||
|
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Multiline Retail - 1.06% | |||||||||||||||
Dollar General Corp. | 502,856 | 63,405,113 | |||||||||||||
|
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Specialty Retail - 0.70% | |||||||||||||||
Lowe’s Cos, Inc. | 370,086 | 41,871,530 | |||||||||||||
|
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See accompanying notes
6
American Beacon Large Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.33% (continued) | |||||||||||||||
Consumer Discretionary - 7.84% (continued) | |||||||||||||||
Textiles, Apparel & Luxury Goods - 0.05% | |||||||||||||||
Hanesbrands, Inc. | 156,491 | $ | 2,827,793 | ||||||||||||
|
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Total Consumer Discretionary | 467,372,562 | ||||||||||||||
|
| ||||||||||||||
Consumer Staples - 5.85% | |||||||||||||||
Beverages - 1.27% | |||||||||||||||
Diageo PLC, Sponsored ADR | 114,758 | 19,352,789 | |||||||||||||
Molson Coors Brewing Co., Class B | 463,250 | 29,736,017 | |||||||||||||
PepsiCo, Inc. | 208,519 | 26,700,858 | |||||||||||||
|
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75,789,664 | |||||||||||||||
|
| ||||||||||||||
Food Products - 1.86% | |||||||||||||||
Archer-Daniels-Midland Co. | 187,670 | 8,370,082 | |||||||||||||
Danone S.A., Sponsored ADR | 414,573 | 6,724,374 | |||||||||||||
General Mills, Inc. | 189,369 | 9,746,823 | |||||||||||||
Ingredion, Inc. | 72,300 | 6,850,425 | |||||||||||||
JM Smucker Co. | 49,562 | 6,077,788 | |||||||||||||
Kellogg Co. | 113,495 | 6,843,749 | |||||||||||||
Mondelez International, Inc., Class A | 301,800 | 15,346,530 | |||||||||||||
Nestle S.A., Sponsored ADR | 243,795 | 23,533,531 | |||||||||||||
Tyson Foods, Inc., Class A | 361,040 | 27,081,610 | |||||||||||||
|
| ||||||||||||||
110,574,912 | |||||||||||||||
|
| ||||||||||||||
Household Products - 0.29% | |||||||||||||||
Colgate-Palmolive Co. | 42,272 | 3,076,979 | |||||||||||||
Kimberly-Clark Corp. | 38,237 | 4,908,866 | |||||||||||||
Procter & Gamble Co. | 27,604 | 2,939,274 | |||||||||||||
Reckitt Benckiser Group PLC, Sponsored ADR | 402,995 | 6,536,579 | |||||||||||||
|
| ||||||||||||||
17,461,698 | |||||||||||||||
|
| ||||||||||||||
Personal Products - 0.41% | |||||||||||||||
Unilever PLC, Sponsored ADR | 404,600 | 24,599,680 | |||||||||||||
|
| ||||||||||||||
Tobacco - 2.02% | |||||||||||||||
Altria Group, Inc. | 704,981 | 38,301,618 | |||||||||||||
Imperial Brands PLC, Sponsored ADR | 722,961 | 23,134,752 | |||||||||||||
Philip Morris International, Inc. | 679,843 | 58,847,210 | |||||||||||||
|
| ||||||||||||||
120,283,580 | |||||||||||||||
|
| ||||||||||||||
Total Consumer Staples | 348,709,534 | ||||||||||||||
|
| ||||||||||||||
Energy - 11.94% | |||||||||||||||
Energy Equipment & Services - 1.79% | |||||||||||||||
Halliburton Co. | 889,000 | 25,185,370 | |||||||||||||
National Oilwell Varco, Inc. | 567,200 | 14,826,608 | |||||||||||||
Schlumberger Ltd. | 1,563,680 | 66,737,863 | |||||||||||||
|
| ||||||||||||||
106,749,841 | |||||||||||||||
|
| ||||||||||||||
Oil, Gas & Consumable Fuels - 10.15% | |||||||||||||||
Apache Corp. | 1,014,100 | 33,374,031 | |||||||||||||
BP PLC, Sponsored ADR | 2,715,452 | 118,746,716 | |||||||||||||
Canadian Natural Resources Ltd. | 2,115,703 | 63,428,776 | |||||||||||||
Chevron Corp. | 707,701 | 84,966,582 | |||||||||||||
ConocoPhillips | 1,431,932 | 90,383,548 | |||||||||||||
EOG Resources, Inc. | 108,555 | 10,426,708 | |||||||||||||
Exxon Mobil Corp. | 136,069 | 10,923,619 | |||||||||||||
Hess Corp. | 486,092 | 31,168,219 |
See accompanying notes
7
American Beacon Large Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.33% (continued) | |||||||||||||||
Energy - 11.94% (continued) | |||||||||||||||
Oil, Gas & Consumable Fuels - 10.15% (continued) | |||||||||||||||
Kosmos Energy Ltd. | 820,845 | $ | 5,491,453 | ||||||||||||
Marathon Oil Corp. | 1,892,286 | 32,244,553 | |||||||||||||
Marathon Petroleum Corp. | 128,780 | 7,838,839 | |||||||||||||
Murphy Oil Corp. | 639,660 | 17,424,338 | |||||||||||||
Occidental Petroleum Corp. | 79,905 | 4,704,806 | |||||||||||||
Phillips 66 | 529,889 | 49,952,636 | |||||||||||||
Pioneer Natural Resources Co. | 23,969 | 3,989,880 | |||||||||||||
Royal Dutch Shell PLC, Class A, Sponsored ADR | 350,022 | 22,236,898 | |||||||||||||
Royal Dutch Shell PLC, Class B, ADR | 272,500 | 17,682,525 | |||||||||||||
|
| ||||||||||||||
604,984,127 | |||||||||||||||
|
| ||||||||||||||
Total Energy | 711,733,968 | ||||||||||||||
|
| ||||||||||||||
Financials - 24.82% | |||||||||||||||
Banks - 11.94% | |||||||||||||||
Banco Santander S.A., ADRB | 4,603,800 | 22,972,962 | |||||||||||||
Bank of America Corp. | 3,362,410 | 102,822,498 | |||||||||||||
BB&T Corp. | 344,015 | 17,613,568 | |||||||||||||
CIT Group, Inc. | 138,900 | 7,399,203 | |||||||||||||
Citigroup, Inc. | 2,402,855 | 169,881,848 | |||||||||||||
Citizens Financial Group, Inc. | 594,953 | 21,537,298 | |||||||||||||
Fifth Third Bancorp | 251,000 | 7,233,820 | |||||||||||||
JPMorgan Chase & Co. | 1,419,198 | 164,697,928 | |||||||||||||
PNC Financial Services Group, Inc. | 251,228 | 34,400,650 | |||||||||||||
US Bancorp | 579,337 | 30,890,249 | |||||||||||||
Wells Fargo & Co. | 2,730,707 | 132,193,526 | |||||||||||||
|
| ||||||||||||||
711,643,550 | |||||||||||||||
|
| ||||||||||||||
Capital Markets - 5.03% | |||||||||||||||
Bank of New York Mellon Corp. | 402,507 | 19,988,498 | |||||||||||||
BlackRock, Inc. | 29,697 | 14,410,172 | |||||||||||||
Blackstone Group LP, MLP | 942,078 | 37,174,398 | |||||||||||||
E*TRADE Financial Corp. | 388,600 | 19,686,476 | |||||||||||||
Goldman Sachs Group, Inc. | 287,747 | 59,252,862 | |||||||||||||
Invesco Ltd. | 878,200 | 19,294,054 | |||||||||||||
KKR & Co., Inc., Class A | 1,862,808 | 45,545,656 | |||||||||||||
Moody’s Corp. | 58,910 | 11,582,884 | |||||||||||||
Morgan Stanley | 334,678 | 16,148,213 | |||||||||||||
Nasdaq, Inc. | 171,949 | 15,853,698 | |||||||||||||
State Street Corp. | 508,622 | 34,413,365 | |||||||||||||
T Rowe Price Group, Inc. | 63,272 | 6,801,740 | |||||||||||||
|
| ||||||||||||||
300,152,016 | |||||||||||||||
|
| ||||||||||||||
Consumer Finance - 2.01% | |||||||||||||||
Ally Financial, Inc. | 244,500 | 7,264,095 | |||||||||||||
American Express Co. | 94,730 | 11,105,198 | |||||||||||||
Capital One Financial Corp. | 332,891 | 30,902,272 | |||||||||||||
Discover Financial Services | 267,000 | 21,757,830 | |||||||||||||
Navient Corp. | 958,499 | 12,949,321 | |||||||||||||
SLM Corp. | 2,773,786 | 28,181,666 | |||||||||||||
Synchrony Financial | 219,100 | 7,596,197 | |||||||||||||
|
| ||||||||||||||
119,756,579 | |||||||||||||||
|
| ||||||||||||||
Diversified Financial Services - 1.31% | |||||||||||||||
AXA Equitable Holdings, Inc. | 990,800 | 22,481,252 | |||||||||||||
Berkshire Hathaway, Inc., Class BA | 257,591 | 55,822,545 | |||||||||||||
|
| ||||||||||||||
78,303,797 | |||||||||||||||
|
| ||||||||||||||
See accompanying notes
8
American Beacon Large Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.33% (continued) | |||||||||||||||
Financials - 24.82% (continued) | |||||||||||||||
Insurance - 4.16% | |||||||||||||||
American International Group, Inc. | 2,531,461 | $ | 120,421,600 | ||||||||||||
Aon PLC | 177,959 | 32,057,534 | |||||||||||||
Chubb Ltd. | 195,198 | 28,342,750 | |||||||||||||
MetLife, Inc. | 242,292 | 11,176,930 | |||||||||||||
Travelers Cos., Inc. | 388,151 | 55,796,706 | |||||||||||||
|
| ||||||||||||||
247,795,520 | |||||||||||||||
|
| ||||||||||||||
Mortgage Real Estate Investment Trusts (REITs) - 0.37% | |||||||||||||||
Annaly Capital Management, Inc. | 1,303,800 | 13,155,342 | |||||||||||||
Two Harbors Investment Corp. | 647,600 | 8,975,736 | |||||||||||||
|
| ||||||||||||||
22,131,078 | |||||||||||||||
|
| ||||||||||||||
Total Financials | 1,479,782,540 | ||||||||||||||
|
| ||||||||||||||
Health Care - 11.33% | |||||||||||||||
Biotechnology - 0.26% | |||||||||||||||
Biogen, Inc.A | 31,100 | 7,129,364 | |||||||||||||
Gilead Sciences, Inc. | 131,340 | 8,542,353 | |||||||||||||
|
| ||||||||||||||
15,671,717 | |||||||||||||||
|
| ||||||||||||||
Health Care Equipment & Supplies - 2.87% | |||||||||||||||
Abbott Laboratories | 229,971 | 18,296,493 | |||||||||||||
Alcon, Inc.A | 7,405 | 430,971 | |||||||||||||
Danaher Corp. | 185,635 | 24,585,499 | |||||||||||||
Medtronic PLC | 1,206,680 | 107,165,251 | |||||||||||||
Zimmer Biomet Holdings, Inc. | 169,517 | 20,877,714 | |||||||||||||
|
| ||||||||||||||
171,355,928 | |||||||||||||||
|
| ||||||||||||||
Health Care Providers & Services - 2.23% | |||||||||||||||
Anthem, Inc. | 223,218 | 58,713,030 | |||||||||||||
Cigna Corp.A | 131,132 | 20,829,007 | |||||||||||||
CVS Health Corp. | 817,327 | 44,446,242 | |||||||||||||
McKesson Corp. | 75,703 | 9,027,583 | |||||||||||||
|
| ||||||||||||||
133,015,862 | |||||||||||||||
|
| ||||||||||||||
Life Sciences Tools & Services - 0.32% | |||||||||||||||
Thermo Fisher Scientific, Inc. | 69,313 | 19,230,892 | |||||||||||||
|
| ||||||||||||||
Pharmaceuticals - 5.65% | |||||||||||||||
Bristol-Myers Squibb Co. | 622,793 | 28,916,279 | |||||||||||||
GlaxoSmithKline PLC, Sponsored ADR | 554,434 | 22,803,870 | |||||||||||||
Horizon Pharma PLCA | 270,922 | 6,916,639 | |||||||||||||
Jazz Pharmaceuticals PLCA | 94,668 | 12,285,066 | |||||||||||||
Johnson & Johnson | 620,744 | 87,649,053 | |||||||||||||
Merck & Co., Inc. | 559,091 | 44,006,053 | |||||||||||||
Mylan N.V.A | 501,085 | 13,524,284 | |||||||||||||
Novartis AG, Sponsored ADR | 37,027 | 3,044,730 | |||||||||||||
Pfizer, Inc. | 1,935,562 | 78,603,173 | |||||||||||||
Roche Holding AG, Sponsored ADR | 176,384 | 5,831,255 | |||||||||||||
Sanofi, ADR | 753,031 | 32,930,046 | |||||||||||||
|
| ||||||||||||||
336,510,448 | |||||||||||||||
|
| ||||||||||||||
Total Health Care | 675,784,847 | ||||||||||||||
|
| ||||||||||||||
Industrials - 10.70% | |||||||||||||||
Aerospace & Defense - 1.97% | |||||||||||||||
Embraer S.A., Sponsored ADR | 235,400 | 4,710,354 | |||||||||||||
General Dynamics Corp. | 74,499 | 13,314,461 |
See accompanying notes
9
American Beacon Large Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.33% (continued) | |||||||||||||||
Industrials - 10.70% (continued) | |||||||||||||||
Aerospace & Defense - 1.97% (continued) | |||||||||||||||
Lockheed Martin Corp. | 39,547 | $ | 13,182,202 | ||||||||||||
Northrop Grumman Corp. | 84,759 | 24,572,482 | |||||||||||||
Raytheon Co. | 143,419 | 25,469,780 | |||||||||||||
United Technologies Corp. | 254,466 | 36,289,396 | |||||||||||||
|
| ||||||||||||||
117,538,675 | |||||||||||||||
|
| ||||||||||||||
Air Freight & Logistics - 0.12% | |||||||||||||||
United Parcel Service, Inc., Class B | 69,111 | 7,340,970 | |||||||||||||
|
| ||||||||||||||
Airlines - 0.96% | |||||||||||||||
American Airlines Group, Inc. | 994,840 | 34,003,631 | |||||||||||||
Delta Air Lines, Inc. | 399,500 | 23,286,855 | |||||||||||||
|
| ||||||||||||||
57,290,486 | |||||||||||||||
|
| ||||||||||||||
Building Products - 1.21% | |||||||||||||||
Johnson Controls International PLC | 1,903,864 | 71,394,900 | |||||||||||||
Resideo Technologies, Inc.A | 32,708 | 742,472 | |||||||||||||
|
| ||||||||||||||
72,137,372 | |||||||||||||||
|
| ||||||||||||||
Construction & Engineering - 0.13% | |||||||||||||||
Fluor Corp. | 189,000 | 7,508,970 | |||||||||||||
|
| ||||||||||||||
Electrical Equipment - 0.46% | |||||||||||||||
Eaton Corp. PLC | 332,459 | 27,534,254 | |||||||||||||
|
| ||||||||||||||
Industrial Conglomerates - 2.63% | |||||||||||||||
3M Co. | 77,091 | 14,609,516 | |||||||||||||
General Electric Co. | 7,644,378 | 77,743,324 | |||||||||||||
Honeywell International, Inc. | 372,392 | 64,658,423 | |||||||||||||
|
| ||||||||||||||
157,011,263 | |||||||||||||||
|
| ||||||||||||||
Machinery - 2.05% | |||||||||||||||
CNH Industrial N.V. | 2,631,839 | 28,687,045 | |||||||||||||
Cummins, Inc. | 199,097 | 33,107,840 | |||||||||||||
Illinois Tool Works, Inc. | 138,304 | 21,524,252 | |||||||||||||
Ingersoll-Rand PLC | 123,158 | 15,100,402 | |||||||||||||
PACCAR, Inc. | 102,351 | 7,335,496 | |||||||||||||
Stanley Black & Decker, Inc. | 109,168 | 16,004,029 | |||||||||||||
Wabtec Corp. | 7,754 | 574,339 | |||||||||||||
|
| ||||||||||||||
122,333,403 | |||||||||||||||
|
| ||||||||||||||
Professional Services - 0.20% | |||||||||||||||
Equifax, Inc. | 94,870 | 11,948,877 | |||||||||||||
|
| ||||||||||||||
Road & Rail - 0.46% | |||||||||||||||
Canadian National Railway Co. | 95,782 | 8,886,654 | |||||||||||||
Union Pacific Corp. | 105,182 | 18,621,421 | |||||||||||||
|
| ||||||||||||||
27,508,075 | |||||||||||||||
|
| ||||||||||||||
Trading Companies & Distributors - 0.51% | |||||||||||||||
AerCap Holdings N.V.A | 544,800 | 27,043,872 | |||||||||||||
HD Supply Holdings, Inc.A | 67,481 | 3,083,207 | |||||||||||||
|
| ||||||||||||||
30,127,079 | |||||||||||||||
|
| ||||||||||||||
Total Industrials | 638,279,424 | ||||||||||||||
|
| ||||||||||||||
See accompanying notes
10
American Beacon Large Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.33% (continued) | |||||||||||||||
Information Technology - 10.10% | |||||||||||||||
Communications Equipment - 0.26% | |||||||||||||||
Telefonaktiebolaget LM Ericsson, Sponsored ADR | 1,539,220 | $ | 15,238,278 | ||||||||||||
|
| ||||||||||||||
Electronic Equipment, Instruments & Components - 0.92% | |||||||||||||||
Corning, Inc. | 713,340 | 22,719,879 | |||||||||||||
IPG Photonics Corp.A | 113,500 | 19,831,855 | |||||||||||||
TE Connectivity Ltd. | 127,600 | 12,204,940 | |||||||||||||
|
| ||||||||||||||
54,756,674 | |||||||||||||||
|
| ||||||||||||||
IT Services - 1.59% | |||||||||||||||
Accenture PLC, Class A | 244,242 | 44,615,686 | |||||||||||||
Amdocs Ltd. | 50,936 | 2,805,555 | |||||||||||||
Cognizant Technology Solutions Corp., Class A | 97,421 | 7,107,836 | |||||||||||||
DXC Technology Co. | 86,094 | 5,659,819 | |||||||||||||
Fidelity National Information Services, Inc. | 147,472 | 17,096,429 | |||||||||||||
Fiserv, Inc.A | 204,566 | 17,846,338 | |||||||||||||
|
| ||||||||||||||
95,131,663 | |||||||||||||||
|
| ||||||||||||||
Semiconductors & Semiconductor Equipment - 2.97% | |||||||||||||||
Analog Devices, Inc. | 100,532 | 11,685,840 | |||||||||||||
Marvell Technology Group Ltd. | 994,000 | 24,869,880 | |||||||||||||
Micron Technology, Inc.A | 494,079 | 20,780,963 | |||||||||||||
NVIDIA Corp. | 91,200 | 16,507,200 | |||||||||||||
QUALCOMM, Inc. | 723,802 | 62,341,066 | |||||||||||||
Texas Instruments, Inc. | 347,153 | 40,905,038 | |||||||||||||
|
| ||||||||||||||
177,089,987 | |||||||||||||||
|
| ||||||||||||||
Software - 3.65% | |||||||||||||||
Microsoft Corp. | 879,611 | 114,877,197 | |||||||||||||
Oracle Corp. | 1,738,159 | 96,172,337 | |||||||||||||
Teradata Corp.A | 146,594 | 6,665,629 | |||||||||||||
|
| ||||||||||||||
217,715,163 | |||||||||||||||
|
| ||||||||||||||
Technology Hardware, Storage & Peripherals - 0.71% | |||||||||||||||
Hewlett Packard Enterprise Co. | 2,671,144 | 42,230,787 | |||||||||||||
|
| ||||||||||||||
Total Information Technology | 602,162,552 | ||||||||||||||
|
| ||||||||||||||
Materials - 5.01% | |||||||||||||||
Chemicals - 3.67% | |||||||||||||||
Air Products & Chemicals, Inc. | 295,433 | 60,797,157 | |||||||||||||
Dow, Inc.A | 361,798 | 20,524,800 | |||||||||||||
DowDuPont, Inc. | 1,635,149 | 62,871,479 | |||||||||||||
Eastman Chemical Co. | 264,226 | 20,842,147 | |||||||||||||
Huntsman Corp. | 597,400 | 13,286,176 | |||||||||||||
PPG Industries, Inc. | 231,570 | 27,209,475 | |||||||||||||
Sherwin-Williams Co. | 29,877 | 13,588,956 | |||||||||||||
|
| ||||||||||||||
219,120,190 | |||||||||||||||
|
| ||||||||||||||
Containers & Packaging - 0.86% | |||||||||||||||
Crown Holdings, Inc.A | 522,500 | 30,372,925 | |||||||||||||
International Paper Co. | 448,286 | 20,984,268 | |||||||||||||
|
| ||||||||||||||
51,357,193 | |||||||||||||||
|
| ||||||||||||||
Metals & Mining - 0.48% | |||||||||||||||
Freeport-McMoRan, Inc. | 752,600 | 9,264,506 | |||||||||||||
Newmont Goldcorp Corp. | 617,300 | 19,173,338 | |||||||||||||
|
| ||||||||||||||
28,437,844 | |||||||||||||||
|
| ||||||||||||||
Total Materials | 298,915,227 | ||||||||||||||
|
| ||||||||||||||
See accompanying notes
11
American Beacon Large Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.33% (continued) | |||||||||||||||
Real Estate - 0.09% | |||||||||||||||
Equity Real Estate Investment Trusts (REITs) - 0.09% | |||||||||||||||
Public Storage | 24,587 | $ | 5,438,153 | ||||||||||||
|
| ||||||||||||||
Utilities - 3.10% | |||||||||||||||
Electric Utilities - 2.58% | |||||||||||||||
Duke Energy Corp. | 303,595 | 27,663,576 | |||||||||||||
Entergy Corp. | 455,815 | 44,168,473 | |||||||||||||
FirstEnergy Corp. | 316,257 | 13,292,282 | |||||||||||||
PPL Corp. | 607,354 | 18,955,518 | |||||||||||||
Southern Co. | 800,590 | 42,607,400 | |||||||||||||
Xcel Energy, Inc. | 118,778 | 6,710,957 | |||||||||||||
|
| ||||||||||||||
153,398,206 | |||||||||||||||
|
| ||||||||||||||
Multi-Utilities - 0.52% | |||||||||||||||
Dominion Energy, Inc. | 400,000 | 31,148,001 | |||||||||||||
|
| ||||||||||||||
Total Utilities | 184,546,207 | ||||||||||||||
|
| ||||||||||||||
Total Common Stocks (Cost $4,459,758,527) | 5,803,096,610 | ||||||||||||||
|
| ||||||||||||||
SHORT-TERM INVESTMENTS - 2.65% (Cost $157,982,760) | |||||||||||||||
Investment Companies - 2.65% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%C D | 157,982,760 | 157,982,760 | |||||||||||||
|
| ||||||||||||||
SECURITIES LENDING COLLATERAL - 0.37% (Cost $22,374,644) | |||||||||||||||
Investment Companies - 0.37% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%C D | 22,374,644 | 22,374,644 | |||||||||||||
|
| ||||||||||||||
TOTAL INVESTMENTS - 100.35% (Cost $4,640,115,931) | 5,983,454,014 | ||||||||||||||
LIABILITIES, NET OF OTHER ASSETS - (0.35%) | (21,136,242 | ) | |||||||||||||
|
| ||||||||||||||
TOTAL NET ASSETS - 100.00% | $ | 5,962,317,772 | |||||||||||||
|
| ||||||||||||||
Percentages are stated as a percent of net assets. |
ANon-income producing security.
B All or a portion of this security is on loan at April 30, 2019.
C The Fund is affiliated by having the same investment advisor.
D7-day yield.
ADR - American Depositary Receipt.
LP - Limited Partnership.
MLP - Master Limited Partnership.
NVDR - Non Voting Depositary Receipt.
PLC - Public Limited Company.
Long Futures Contracts Open on April 30, 2019: |
| |||||||||||||||
Equity Futures Contracts | ||||||||||||||||
Description | Number of Contracts | Expiration Date | Notional Amount | Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||
S&P 500E-Mini Index Futures | 1,008 | June 2019 | $ | 142,369,713 | $ | 148,604,400 | $ | 6,234,687 | ||||||||
|
|
|
|
|
| |||||||||||
$ | 142,369,713 | $ | 148,604,400 | $ | 6,234,687 | |||||||||||
|
|
|
|
|
|
Index Abbreviations: | ||
S&P 500 | Standard & Poor’s U.S. EquityLarge-Cap Index. |
See accompanying notes
12
American Beacon Large Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
The Fund’s investments are summarized by level based on the inputs used to determine their values. As of April 30, 2019, the investments were classified as described below:
Large Cap Value Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Common Stocks | $ | 5,803,096,610 | $ | - | $ | - | $ | 5,803,096,610 | ||||||||||||||||||||
Short-Term Investments | 157,982,760 | - | - | 157,982,760 | ||||||||||||||||||||||||
Securities Lending Collateral | 22,374,644 | - | - | 22,374,644 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Investments in Securities - Assets | $ | 5,983,454,014 | $ | - | $ | - | $ | 5,983,454,014 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||||||||||||||
Futures Contracts | $ | 6,234,687 | $ | - | $ | - | $ | 6,234,687 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Financial Derivative Instruments - Assets | $ | 6,234,687 | $ | - | $ | - | $ | 6,234,687 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
U.S. GAAP requires transfers between all levels to/from level 3 to be disclosed. During the period ended April 30, 2019, there were no transfers into or out of Level 3.
See accompanying notes
13
American Beacon Large Cap Value FundSM
Statement of Assets and Liabilities
April 30, 2019 (Unaudited)
Assets: |
| |||
Investments in unaffiliated securities, at fair value†§ | $ | 5,803,096,610 | ||
Investments in affiliated securities, at fair value‡ | 180,357,404 | |||
Deposits with broker for futures contracts | 510,637 | |||
Dividends and interest receivable | 6,768,895 | |||
Receivable for investments sold | 7,080,388 | |||
Receivable for fund shares sold | 20,894,461 | |||
Receivable for tax reclaims | 362,281 | |||
Receivable for variation margin on open futures contracts (Note 5) | 6,236,966 | |||
Prepaid expenses | 218,302 | |||
|
| |||
Total assets | 6,025,525,944 | |||
|
| |||
Liabilities: | ||||
Payable for investments purchased | 6,663,170 | |||
Payable for fund shares redeemed | 28,707,797 | |||
Payable for expense reimbursement (Note 2) | 24,011 | |||
Management andsub-advisory fees payable (Note 2) | 4,802,103 | |||
Service fees payable (Note 2) | 238,352 | |||
Transfer agent fees payable (Note 2) | 96,228 | |||
Payable upon return of securities loaned (Note 9)§ | 22,374,644 | |||
Custody and fund accounting fees payable | 121,271 | |||
Professional fees payable | 76,719 | |||
Trustee fees payable (Note 2) | 36,438 | |||
Payable for prospectus and shareholder reports | 49,640 | |||
Other liabilities | 17,799 | |||
|
| |||
Total liabilities | 63,208,172 | |||
|
| |||
Net assets | $ | 5,962,317,772 | ||
|
| |||
Analysis of net assets: | ||||
Paid-in-capital | $ | 4,498,354,961 | ||
Total distributable earnings (deficits)A | 1,463,962,811 | |||
|
| |||
Net assets | $ | 5,962,317,772 | ||
|
|
See accompanying notes
14
American Beacon Large Cap Value FundSM
Statement of Assets and Liabilities
April 30, 2019 (Unaudited)
Shares outstanding at no par value (unlimited shares authorized): | ||||
Institutional Class | 127,578,547 | |||
|
| |||
Y Class | 11,261,730 | |||
|
| |||
Investor Class | 51,765,837 | |||
|
| |||
Advisor Class | 2,757,129 | |||
|
| |||
A Class | 2,218,738 | |||
|
| |||
C Class | 280,039 | |||
|
| |||
R6 Class | 24,632,137 | |||
|
| |||
Net assets: | ||||
Institutional Class | $ | 3,523,931,150 | ||
|
| |||
Y Class | $ | 308,767,323 | ||
|
| |||
Investor Class | $ | 1,317,817,984 | ||
|
| |||
Advisor Class | $ | 69,213,245 | ||
|
| |||
A Class | $ | 55,643,805 | ||
|
| |||
C Class | $ | 6,982,915 | ||
|
| |||
R6 Class | $ | 679,961,350 | ||
|
| |||
Net asset value, offering and redemption price per share: | ||||
Institutional Class | $ | 27.62 | ||
|
| |||
Y Class | $ | 27.42 | ||
|
| |||
Investor Class | $ | 25.46 | ||
|
| |||
Advisor Class | $ | 25.10 | ||
|
| |||
A Class | $ | 25.08 | ||
|
| |||
A Class (offering price) | $ | 26.61 | ||
|
| |||
C Class | $ | 24.94 | ||
|
| |||
R6 Class | $ | 27.60 | ||
|
| |||
† Cost of investments in unaffiliated securities | $ | 4,459,758,527 | ||
‡ Cost of investments in affiliated securities | $ | 180,357,404 | ||
§ Fair value of securities on loan | $ | 21,266,567 | ||
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at period end. |
|
See accompanying notes
15
American Beacon Large Cap Value FundSM
Statement of Operations
For the period ended April 30, 2019 (Unaudited)
Investment income: | ||||
Dividend income from unaffiliated securities (net of foreign taxes)† | $ | 78,129,058 | ||
Dividend income from affiliated securities (Note 8) | 2,169,345 | |||
Interest income | 115,455 | |||
Income derived from securities lending (Note 9) | 51,153 | |||
|
| |||
Total investment income | 80,465,011 | |||
|
| |||
Expenses: | ||||
Management andsub-advisory fees (Note 2) | 15,319,266 | |||
Transfer agent fees: | ||||
Institutional Class (Note 2) | 566,400 | |||
Y Class (Note 2) | 176,651 | |||
Investor Class | 24,832 | |||
Advisor Class | 1,552 | |||
A Class | 954 | |||
R6 Class | 6,183 | |||
Custody and fund accounting fees | 310,431 | |||
Professional fees | 137,965 | |||
Registration fees and expenses | 67,292 | |||
Service fees (Note 2): | ||||
Investor Class | 2,390,165 | |||
Advisor Class | 81,627 | |||
A Class | 35,172 | |||
C Class | 3,776 | |||
Distribution fees (Note 2): | ||||
Advisor Class | 79,992 | |||
A Class | 61,663 | |||
C Class | 32,866 | |||
Prospectus and shareholder report expenses | 145,352 | |||
Trustee fees (Note 2) | 197,452 | |||
Other expenses | 247,551 | |||
|
| |||
Total expenses | 19,887,142 | |||
|
| |||
Net fees waived and expenses recouped (Note 2) | 24,011 | |||
|
| |||
Net expenses | 19,911,153 | |||
|
| |||
Net investment income | 60,553,858 | |||
|
| |||
Realized and unrealized gain (loss) from investments: | ||||
Net realized gain (loss) from: | ||||
Investments in unaffiliated securitiesA | 143,666,715 | |||
Commission recapture (Note 1) | 38,477 | |||
Foreign currency transactions | (8,939 | ) | ||
Futures contracts | (1,845,538 | ) | ||
Change in net unrealized appreciation of: | ||||
Investments in unaffiliated securitiesB | 173,158,015 | |||
Futures contracts | 17,852,073 | |||
|
| |||
Net gain from investments | 332,860,803 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 393,414,661 | ||
|
| |||
† Foreign taxes | $ | 649,958 | ||
A The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities. |
| |||
B The Fund’s investments in affiliated securities did not have a change in unrealized appreciation (depreciation) at period end. |
|
See accompanying notes
16
American Beacon Large Cap Value FundSM
Statement of Changes in Net Assets
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||
(unaudited) | ||||||||||||
Increase (decrease) in net assets: | ||||||||||||
Operations: | ||||||||||||
Net investment income | $ | 60,553,858 | $ | 120,020,703 | ||||||||
Net realized gain from investments in unaffiliated securities, commission recapture, foreign currency transactions, and futures contracts | 141,850,715 | 496,658,492 | ||||||||||
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities, and futures contracts | 191,010,088 | (479,861,151 | ) | |||||||||
|
|
|
| |||||||||
Net increase in net assets resulting from operations | 393,414,661 | 136,818,044 | ||||||||||
|
|
|
| |||||||||
Distributions to shareholders: | ||||||||||||
Total retained earnings: | ||||||||||||
Institutional Class | (307,696,338 | ) | (459,420,239 | ) | ||||||||
Y Class | (24,499,396 | ) | (38,692,156 | ) | ||||||||
Investor Class | (128,259,878 | ) | (196,784,505 | ) | ||||||||
Advisor Class | (5,201,321 | ) | (8,664,880 | ) | ||||||||
A Class | (4,356,396 | ) | (4,240,901 | ) | ||||||||
C Class | (544,161 | ) | (808,195 | ) | ||||||||
R6 Class | (48,893,430 | ) | (17,634,896 | ) | ||||||||
|
|
|
| |||||||||
Net distributions to shareholders | (519,450,920 | ) | (726,245,772 | ) | ||||||||
|
|
|
| |||||||||
Capital share transactions (Note 11): | ||||||||||||
Proceeds from sales of shares | 427,488,844 | 1,360,517,349 | ||||||||||
Reinvestment of dividends and distributions | 486,264,603 | 686,933,740 | ||||||||||
Cost of shares redeemed | (1,013,094,501 | ) | (2,588,058,224 | ) | ||||||||
|
|
|
| |||||||||
Net (decrease) in net assets from capital share transactions | (99,341,054 | ) | (540,607,135 | ) | ||||||||
|
|
|
| |||||||||
Net (decrease) in net assets | (225,377,313 | ) | (1,130,034,863 | ) | ||||||||
|
|
|
| |||||||||
Net assets: | ||||||||||||
Beginning of period | 6,187,695,085 | 7,317,729,948 | ||||||||||
|
|
|
| |||||||||
End of period | $ | 5,962,317,772 | $ | 6,187,695,085 | ||||||||
|
|
|
|
See accompanying notes
17
American Beacon Large Cap Value FundSM
April 30, 2019 (Unaudited)
1. Organization and Significant Accounting Policies
American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Fund, a series within the Trust, is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified,open-end management investment company. As of April 30, 2019, the Trust consists of thirty-three active series, one of which is presented in this filing: American Beacon Large Cap Value Fund (the “Fund”). The remainingthirty-two active series are reported in separate filings.
American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily 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”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.
Recent Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2017-08,Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.
In August 2018, the FASB issued ASU2018-13,Fair Value Measurement (“Topic 820”). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the period ended April 30, 2019, the Fund has chosen to adopt the standard. The adoption of this ASU guidance did not have a material impact on the financial statements and other disclosures.
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 | Eligible Investors | Minimum Initial Investments | ||||
Institutional | Large institutional investors - sold directly or through intermediary channels. | $ | 250,000 | |||
Y Class | Large institutional retirement plan investors - sold directly or through intermediary channels. | $ | 100,000 | |||
Investor | All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors. | $ | 2,500 | |||
Advisor Class | All investors who invest through intermediary organizations, such as broker-dealers or third party administrators. | $ | 2,500 |
18
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Class | Eligible Investors | Minimum Initial Investments | ||||
A Class | All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor which may include afront-end sales charge and a contingent deferred sales charge (“CDSC”). | $ | 2,500 | |||
C Class | Retail investors who invest directly through a financial intermediary such as a broker or through employee directed benefit plans with applicable sales charges which may include CDSC. | $ | 1,000 | |||
R6 Class | Large institutional retirement plan investors—sold through retirement plan sponsors. | None |
Each class offered by the Trust has equal rights as to assets and voting privileges. Income andnon-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 service, distribution, transfer agent fees, andsub-transfer agent fees that vary amongst the classes as described more fully in Note 2.
Significant Accounting Policies
The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is considered an investment company and accordingly, follows the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946,Financial Services – Investment Companies,a part of Generally Accepted Accounting Principles (“U.S. GAAP”).
Security Transactions and Investment Income
Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.
Dividend income, net of foreign taxes, is recorded on theex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Fund. Interest income, net of foreign taxes, is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.
Distributions to Shareholders
Distributions, if any, of net investment income are generally paid at least annually and recorded on theex-dividend date. Distributions, if any, of net realized capital gains are generally paid at least annually and recorded on theex-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. To the extent necessary to fully distribute capital gains, the Fund may designate earnings and profits distributed to shareholders on the redemption of shares.
Commission Recapture
The Fund has established brokerage commission recapture arrangements with certain brokers or dealers. If the Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operations, if applicable.
19
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Allocation of Income, Trust Expenses, Gains, and Losses
Investment income, realized and unrealized gains and losses from investments of the Fund is allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Fund. Expenses directly charged or attributable to the Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Fund on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Fund or nature of the services performed and relative applicability to the Fund.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.
Other
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In the normal course of business, the Trust enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.
2. Transactions with Affiliates
Management and InvestmentSub-Advisory Agreements
The Fund and the Manager are parties to a Management Agreement that obligates the Manager to provide the Fund with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of the Fund’s average daily net assets that is calculated and accrued daily according to the following schedule:
First $15 billion | 0.35 | % | ||
Next $15 billion | 0.325 | % | ||
Over $30 billion | 0.30 | % |
The Trust, on behalf of the Fund, and the Manager have entered into Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC; Brandywine Global Investment Management, LLC; Hotchkis and Wiley Capital Management, LLC; and Massachusetts Financial Services Company(“Sub-Advisors”) pursuant to which the Fund has agreed to pay an annualizedsub-advisory fee that is calculated and accrued daily based on the Fund’s average daily net assets.
The Management andSub-Advisory Fees paid by the Fund for the period ended April 30, 2019 were as follows:
Effective Fee Rate | Amount of Fees Paid | |||||||||||
Management Fees | 0.35 | % | $ | 10,107,313 | ||||||||
Sub-Advisor Fees | 0.18 | % | 5,211,953 | |||||||||
|
|
|
| |||||||||
Total | 0.53 | % | $ | 15,319,266 | ||||||||
|
|
|
|
20
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
As compensation for services provided by the Manager in connection with securities lending activities conducted by the Fund, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 10% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 10% of such loan fees. These fees are included in “Income derived from securities lending” and “Management and investment advisory fees” on the Statement of Operations. During the period ended April 30, 2019, the Manager received securities lending fees of $7,065 for the securities lending activities of the Fund. Please see Note 9 for more information on securities lending.
Distribution Plans
The Fund, except for the Advisor, A, and C Classes of the Fund, has adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule12b-1 under the Act, pursuant to which no separate fees may be charged to the Fund for distribution purposes. However, the Plan authorizes the management fee received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Fund does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.
Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule12b-1 under the Act for the Advisor, A, and C Classes of the Fund. Under the Distribution Plans, as compensation for distribution and shareholder servicing assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance.
Service Plans
The Manager and the Trust entered into a Service Plan that obligates the Manager to oversee additional shareholder servicing of the Investor, Advisor, A, and C Classes of the Fund. As compensation for performing the duties required under the Service Plan, the Manager receives an annualized fee up to 0.25% of the average daily net assets of the A and C Classes, up to 0.25% of the average daily net assets of the Advisor Class, and up to 0.375% of the average daily net assets of the Investor Class of the Fund.
Sub-Transfer Agent Fees
The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Fund and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of its customers who hold positions in the Fund. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Fund’s transfer agent. Accordingly, the Fund, pursuant to Board approval, has agreed to reimburse the Manager for certainnon-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts(sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the period ended April 30, 2019, thesub-transfer agent fees, as reflected in “Transfer agent fees” on the Statement of Operations, were as follows:
Fund | Sub-Transfer Agent Fees | |||
Large Cap Value | $ | 688,509 |
21
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
As of April 30, 2019, the Fund owed the Manager the following reimbursement ofsub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statement of Assets and Liabilities:
Fund | Reimbursement Sub-Transfer Agent Fees | |||
Large Cap Value | $ | 46,540 |
Investments 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 investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the period ended April 30, 2019, the Manager earned fees on the Fund’s direct investments and securities lending collateral investments in the USG Select Fund as shown below:
Fund | Direct Investments in USG Select Fund | Securities Lending Collateral in USG Select Fund | Total | |||||||||
Large Cap Value | $ | 95,767 | $ | 22,431 | $ | 118,198 |
Interfund Credit Facility
Pursuant to an exemptive order issued by the SEC, the Fund, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the funds because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the period ended April 30, 2019, the Fund participated as a lender by loaning an average amount of $6,440,147 for 75 days at an average interest rate of 3.03% with interest charges earned of $39,324. This amount is included in “Interest income” on the Statement of Operations.
Expense Reimbursement Plan
The Manager contractually agreed to reduce fees and/or reimburse expenses for the classes of the Fund to the extent that total operating expenses exceed the Fund’s expense cap. During the period ended April 30, 2019, the Manager waived and/or reimbursed expenses as follows:
Expense Cap | Expiration of Reimbursed Expenses | |||||||||||||||||
Fund | Class | 11/1/2018 - 4/30/2019 | Reimbursed Expenses | (Recouped) Expenses | ||||||||||||||
Large Cap Value | R6 | 0.58 | % | $ | - | (24,011 | ) | 2022 |
Of these amounts, $24,011 was disclosed as a payable to the Manager on the Statement of Assets and Liabilities at April 30, 2019.
22
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Fund for any contractual fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Fund’s annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. The carryover of excess expenses potentially reimbursable to the Manager are as follows:
Fund | Recouped Expenses | Excess Expense Carryover | Expired Expense Carryover | Expiration of Reimbursed Expenses | ||||||||||||
Large Cap Value | $ | 1,950 | $ | - | $ | - | 2020 | |||||||||
Large Cap Value | $ | 22,061 | $ | 7,246 | $ | - | 2021 |
Sales Commissions
The Fund’s Distributor, Resolute Investment Distributors, Inc. (“RID” or “Distributor”), may receive a portion of Class A sales charges from broker dealers and it may be used to offset distribution related expenses. During the period ended April 30, 2019, RID collected $374 from the sale of Class A Shares of the Fund.
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 Fund’s 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 April 30, 2019, there were no CDSC fees collected for Class A Shares of the Fund.
A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Fund’s 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 April 30, 2019, CDSC fees of $74 were collected for Class C Shares of the Fund.
Trustee Fees and Expenses
As compensation for their service to the Trust, American Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund, and American Beacon Apollo Total Return Fund, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chair receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for attendance at the committee meetings. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each fund of the Trusts according to its respective net assets.
3. Security Valuation and Fair Value Measurements
The price of the Fund’s shares is based on its net asset value (“NAV”) per share. The Fund’s NAV is computed by adding total assets, subtracting all the Fund’s liabilities, and dividing the result by the total number of shares outstanding.
23
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
The NAV of each class of the Fund’s shares is determined based on a pro rata allocation of the Fund’s investment income, expenses and total capital gains and losses. The Fund’s NAV per share is determined each business day as of the regular close of trading on the New York Stock Exchange (“NYSE” or “Exchange”), which is typically 4:00 p.m. Eastern Time (“ET”). However, if trading on the NYSE closes at a time other than 4:00 p.m. ET, the Fund’s NAV per share typically would still be determined as of the regular close of trading on the NYSE. The Fund does not price its shares on days that the NYSE is closed. Foreign exchanges may permit trading in foreign securities on days when the Fund is not open for business, which may result in the value of the Fund’s portfolio investments being affected at a time when you are unable to buy or sell shares.
Equity securities, including shares ofclosed-end funds and exchange-traded funds (“ETFs”), are valued at the last sale price or official closing price taken from the primary exchange in which each security trades. Investments in other mutual funds are valued at the closing NAV per share on the day of valuation. Debt securities are valued at bid quotes from broker/dealers or evaluated bid prices from pricing services, who may consider a number of inputs and factors, such as prices of comparable securities, yield curves, spreads, credit ratings, coupon rates, maturity, default rates, and underlying collateral. Futures are valued based on their daily settlement prices. Exchange-traded andover-the-counter (“OTC”) options are valued at the last sale price. Options with no last sale for the day are priced at mid quote. Swaps are valued at evaluated mid prices from pricing services.
The valuation of securities traded on foreign markets and certain fixed income securities will generally be based on prices determined as of the earlier closing time of the markets on which they primarily trade unless a significant event has occurred. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. ET.
Securities may be valued at fair value, as determined in good faith and pursuant to procedures approved by the Board, under certain limited circumstances. For example, fair value pricing will be used when market quotations are not readily available or reliable, as determined by the Manager, such as when (i) trading for a security is restricted or stopped; (ii) a security’s trading market is closed (other than customary closings); or (iii) a security has beende-listed from a national exchange. A security with limited market liquidity may require fair value pricing if the Manager determines that the available price does not reflect the security’s true market value. In addition, if a significant event that the Manager determines to affect the value of one or more securities held by the Fund occurs after the close of a related exchange but before the determination of the Fund’s NAV, fair value pricing may be used on the affected security or securities. Securities of small-capitalization companies are also more likely to require a fair value determination using these procedures because they are more thinly traded and less liquid than the securities of larger-capitalization companies. The Fund may fair value securities as a result of significant events occurring after the close of the foreign markets in which the Fund invests as described below. In addition, the Fund may invest in illiquid securities requiring these procedures.
The Fund may use fair value pricing for securities primarily traded innon-U.S. markets because most foreign markets close well before the Fund’s pricing time of 4:00 p.m. ET. 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. If the Manager determines that the last quoted prices ofnon-U.S. securities will, in its judgment, materially affect the value of some or all its portfolio securities, the Manager can 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. These securities are fair valued using a pricing service, using methods approved by the Board, that 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 American Depositary Receipts (“ADRs”) and futures contracts. The Valuation Committee, established by the Board, may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. The Fund uses outside pricing services to provide closing prices and information to evaluate
24
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
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.
Attempts to determine the fair value of securities introduce an element of subjectivity to the pricing of securities. As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes. If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Manager compares the new market quotation to the fair value price to evaluate the effectiveness of the Fund’s fair valuation procedures. If any significant discrepancies are found, the Manager may adjust the Fund’s fair valuation procedures.
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 Board.
Futures contracts are valued based upon their quoted daily settlement prices. Upon entering into a futures contract, the Fund is required to deposit with their futures broker, an amount of cash or U.S. Government and Agency Obligations in accordance with the initial margin requirements of the broker or exchange. Futures contracts are marked-to-market daily and an appropriate payable or receivable for the change in value (“variation margin”) is recorded by the Fund. Gains or losses are recognized, but not considered realized until the contracts expire or are closed. Futures contracts involve, to varying degrees, risk of loss in excess of the variation margin disclosed on the Statement of Assets and Liabilities.
Other investments for which the above valuation procedures are inappropriate or are deemed not to reflect fair value, are stated at fair value as determined in good faith by the Manager’s Valuation Committee, pursuant to procedures established by the Board.
Valuation Inputs
Various inputs may be used to determine the fair value of the Fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1 | - | Quoted prices in active markets for identical securities. | ||
Level 2 | - | Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. | ||
Level 3 | - | Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment. |
Level 1 and Level 2 trading assets and trading liabilities, at fair value
Common stocks, preferred securities and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are generally categorized as Level 2 of the fair value hierarchy.
Investments in registeredopen-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.
25
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
4. Securities and Other Investments
American Depositary Receipts andNon-Voting Depositary Receipts
ADRs are depositary receipts for foreign issuers in registered form traded in U.S. securities markets.Non-Voting Depositary Receipts (“NVDRs”) represent financial interests in an issuer but the holder is not entitled to any voting rights. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers, and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the Fund may invest in unsponsored depositary receipts, the issuers of which are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security.
Common Stock
Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or OTC. OTC stock may be less liquid than exchange-traded stock.
Other Investment Company Securities and Other Exchange-Traded Products
The Fund may invest in shares of other investment companies, includingopen-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 asub-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 the 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.
Publicly Traded Partnerships; Master Limited Partnerships
The Fund may invest in publicly traded partnerships such as master limited partnerships (“MLPs”). MLPs issue units that are registered with the SEC and are freely tradable on a securities exchange or in the OTC market. An MLP may have one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. An MLP also may be an entity similar to a limited partnership, such as a limited liability
26
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
company, which has a manager or managing member andnon-managing members (who are like limited partners). The general partner or partners are jointly and severally responsible for the liabilities of the MLP. The Fund invests as a limited partner and normally would not be liable for the debts of an MLP beyond the amount the Fund has invested therein but it would not be shielded to the same extent that a shareholder of a corporation would be. In certain instances, creditors of an MLP would have the right to seek a return of capital that had been distributed to a limited partner. The right of an MLP’s creditors would continue even after a Fund had sold its investment in the partnership. MLPs typically invest in real estate and oil and gas equipment leasing assets, but they also finance entertainment, research and development, and other projects.
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 Fundre-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, there-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, are-characterization will be made the following year.
5. Financial Derivative Instruments
The Fund may utilize derivative instruments to gain market exposure on cash balances to hedge foreign currency exposure or reduce market exposure in anticipation of liquidity needs. When considering the Fund’s use of derivatives, it is important to note that the Fund does not use derivatives for the purpose of creating financial leverage.
Futures Contracts
Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Fund may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities or that the counterparty will fail to perform its obligations.
Upon entering into a futures contract, the Fund is required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents a portion of the face value of the futures contract. The Fund usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as cash deposited with broker on the Statement of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.
During the period ended April 30, 2019, the Fund entered into futures contracts primarily for exposing cash to markets.
The Fund’s average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For the purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.
Average Futures Contracts Outstanding | ||||
Fund | Period Ended April 30, 2019 | |||
Large Cap Value | 1,434 |
27
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
The following is a summary of the fair valuations of the Fund’s derivative instruments categorized by risk exposure(1):
Fair values of financial instruments on the Statement of Assets and Liabilities as of April 30, 2019: |
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Derivatives not accounted for as hedging instruments |
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Assets: | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Receivable for variation margin from open futures contracts(2) | $ | – | $ | – | $ | – | $ | – | $ | 6,234,687 | 6,234,687 | ||||||||||||||||||||||||||||||||||||||||||||
The effect of financial derivative instruments on the Statement of Operations as of April 30, 2019: |
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Derivatives not accounted for as hedging instruments |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized gain (loss) from derivatives | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | $ | – | $ | – | $ | – | $ | – | $ | (1,845,538 | ) | $ | (1,845,538 | ) | |||||||||||||||||||||||||||||||||||||||||
Net change in unrealized appreciation | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | $ | – | $ | – | $ | – | $ | – | $ | 17,852,073 | $ | 17,852,073 |
(1)See Note 3 in the Notes to Financial Statements for additional information.
(2)Includes cumulative appreciation (depreciation) of futures contracts as reported in the Fund’s Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.
Offsetting Assets and Liabilities
The Fund is a party to enforceable master netting agreements between brokers and counterparties 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, April 30, 2019.
Offsetting of Financial and Derivative Assets as of April 30, 2019: |
| |||||||||||
| Assets | Liabilities | ||||||||||
Futures Contracts(1) | $ | 6,234,687 | $ | - | ||||||||
|
|
|
| |||||||||
Total derivative assets and liabilities in the Statement of Assets and Liabilities | $ | 6,234,687 | $ | - | ||||||||
|
|
|
| |||||||||
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”) | $ | (6,234,687 | ) | $ | - | |||||||
|
|
|
|
Remaining Contractual Maturity of the Agreements As of April 30, 2019 | ||||||||||||||||||||||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||||||||||||||||||||||||||
Securities Lending Transactions | ||||||||||||||||||||||||||||||||||||
Common Stocks | $ | 22,374,644 | $ | - | $ | - | $ | - | $ | 22,374,644 | ||||||||||||||||||||||||||
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|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Total Borrowings | $ | 22,374,644 | $ | - | $ | - | $ | - | $ | 22,374,644 | ||||||||||||||||||||||||||
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|
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Gross amount of recognized liabilities for securities lending transactions |
| $ | 22,374,644 | |||||||||||||||||||||||||||||||||
|
|
(1) Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.
28
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
6. Principal Risks
Investing in the Fund may involve certain risks including, but not limited to, those described below.
Equity Investments Risk
Equity securities are subject to market risk. The Fund’s investments in equity securities may include common stocks, REITs, depositary receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Fund to additional risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Investments in REITs are subject to the risks associated with investing in the real estate industry such as adverse developments affecting the real estate industry and real property values. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency fluctuations and political and financial instability in the home country of a particular depositary receipt or foreign stock.
Foreign Investing Risk
Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity, (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased volatility, (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies, and (7) delays in transaction settlement in some foreign markets.
Futures Contracts Risk
Futures contracts are derivative instruments where one party pays a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. Futures contracts may experience potentially dramatic price changes (losses) and imperfect correlation between the price of the contract and the underlying security or index, which will increase the volatility of the Fund and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract).
Market Risk
Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.
29
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
In response to the financial crisis, the U.S. and other governments, the Federal Reserve, and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced the federal corporate income tax rate, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the market’s expectations for changes in government policies are not borne out.
Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline overtime, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse.
The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.
MultipleSub-Advisor Risk
The Manager may allocate the Fund’s assets among multiplesub-advisors, each of which is responsible for investing its allocated portion of the Fund’s assets. To a significant extent, the Fund’s performance will depend on the success of the Manager in allocating the Fund’s assets tosub-advisors and its selection and oversight of thesub-advisors. Because eachsub-advisor manages its allocated portion of the Fund independently from anothersub-advisor, the same security may be held in different portions of the Fund, or may be acquired for one portion of the Fund at a time when asub-advisor to another portion deems it appropriate to dispose of the security from that other portion, resulting in higher expenses without accomplishing any net result in the Fund’s holdings. Similarly, under some market conditions, onesub-advisor may believe that temporary, defensive investments in short-term instruments or cash are appropriate when anothersub-advisor believes continued exposure to the equity or debt markets is appropriate for its allocated portion of the Fund. Because eachsub-advisor directs the trading for its own portion of the Fund, and does not aggregate its transactions with those of the othersub-advisors, the Fund may incur higher brokerage costs than would be the case if a singlesub-adviser were managing the entire Fund. In
30
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
addition, while the Manager seeks to allocate the Fund’s assets among the Fund’ssub-advisors in a manner that it believes is consistent with achieving the Fund’s investment objective(s), the Manager may be subject to potential conflicts of interest in allocating the Fund’s assets amongsub-advisors, due to factors that could impact the Manager’s revenues and profits.
Other Investment Companies Risk
The Funds may invest in shares of other registered investment companies, including money market funds that are advised by the Manager. To the extent that the Funds invests in shares of other registered investment companies, the Funds will indirectly bear fees and expenses, including for example, advisory and administrative fees, charged by those investment companies in addition to the Funds’ direct fees and expenses and will be subject to the risks associated with investments in those companies. For example, the Funds’ investments in money market funds are subject to interest rate risk, credit risk, and market risk. The Funds must rely on the investment company in which it invests to achieve its investment objective. If the investment company fails to achieve its investment objective, the value of the Funds’ investment will decline, adversely affecting the Funds’ performance. To the extent the Funds invest in other investment companies that invest in equity securities, fixed-income securities and/or foreign securities, or track an index, the Funds are subject to the risks associated with the underlying investments held by the investment company or the index fluctuations to which the investment company is subject.
Sector Risk
Sector risk is the risk associated with a Fund holding a significant amount of investments in similar businesses, which would be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of the equity and debt securities of companies in a particular sector of the market to change. To the extent a Fund has substantial holdings within a particular sector, the risks to a Fund associated with that sector increase.
To the extent a Fund invests in the financial services sector, the value of the Fund’s shares may be particularly vulnerable to factors affecting that sector, such as the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, extensive government regulation and price competition. The value of a Fund’s shares could experience significantly greater volatility than investment companies investing more broadly.
Securities Lending Risk
A Fund may lend its portfolio securities to brokers, dealers and financial institutions to seek income. There is a risk that a borrower may default on its obligations to return loaned securities; however, a Fund’s securities lending agent indemnifies the Fund against that risk. There is a risk that the assets of a Fund’s securities lending agent may be insufficient to satisfy any contractual indemnification requirements to the Fund. Borrowers of a Fund’s securities typically provide collateral in the form of cash that is reinvested in securities. A Fund will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. A Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet obligations to the borrower. In addition, delays may occur in the recovery of securities from borrowers, which could interfere with a Fund’s ability to vote proxies or to settle transactions and there is the risk of possible loss of rights in the collateral should the borrower fail financially.
7. Federal Income and Excise Taxes
It is the policy of the Fund to qualify as a regulated investment company (“RIC”), by complying with all applicable provisions of Subchapter M of the Internal Revenue Code, as amended, and to make distributions 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.
31
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
The Fund does not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.
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.
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.
As of April 30, 2019 the tax cost for the Fund and their respective gross unrealized appreciation (depreciation) were as follows:
Fund | Tax Cost | Unrealized Appreciation | Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||
Large Cap Value | $4,732,367,649 | $ | 1,482,228,421 | $ | (231,142,056 | ) | $ | 1,251,086,365 |
Under the Regulated Investment Company Modernization Act of 2010 (“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.
As of October 31, 2018, the Fund did not have any capital loss carryforwards.
8. Investment Transactions
The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the period ended April 30, 2019 were as follows:
Fund | Purchases (non-U.S. Government Securities) | Sales (non-U.S. Government Securities) | ||||||||||
Large Cap Value | $ | 756,765,284 | $ | 1,167,897,629 |
A summary of the Fund’s transactions in the USG Select Fund for the period ended April 30, 2019 were as follows:
Fund | Type of Transaction | October 31, 2018 Shares/Fair Value | Purchases | Sales | April 30, 2019 Shares/Fair Value | Dividend Income | ||||||||||||||||||||||||||||||||||||
Large Cap Value | Direct | $ | 266,324,811 | $ | 1,246,360,881 | $ | 1,354,702,932 | $ | 157,982,760 | $ | 2,169,345 | |||||||||||||||||||||||||||||||
Large Cap Value | Securities Lending | 17,240,346 | 131,029,187 | 125,894,889 | 22,374,644 | N/A |
9. Securities Lending
The Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored
32
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
andmarked-to-market daily. Dailymark-to-market amounts are required to be paid to the borrower or received from the borrower by the end of the following business day. This one day settlement formark-to-market amounts may result in the collateral being temporarily less than the value of the securities on loan or temporarily more than the required minimum collateral.
To the extent that a loan is collateralized by cash, such cash collateral shall be invested by the securities lending agent (the “Agent”) in money market mutual funds and other short-term investments, provided the investments meet certain quality and diversification requirements. Securities purchased with cash collateral proceeds are listed in the Fund’s Schedule of Investments and the collateral is shown on the Statement of Assets and Liabilities as a payable.
Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured bynon-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Fund, the Agent, and the Manager retained 80%, 10%, and 10%, respectively, of the income generated from securities lending.
While securities are on loan, the Fund continues to receive certain income associated with that security and any gain or loss in the market price that may occur during the term of the loan. In the case of domestic equities, the value of any dividend is received in the form of a substitute payment approximately equal to the dividend. In the case of foreign securities, a negotiated amount is received that is less than the actual dividend, but higher than the dividend amount minus the foreign tax that the Fund would be subject to on the dividend.
Securities lending transactions pose certain risks to the Fund, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, thatnon-cash collateral may be subject to legal constraints in the event of a borrower bankruptcy, and that the cash collateral investments could become illiquid and unable to be used to return collateral to the borrower. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the cash collateral available for return to the borrower and any action which impairs its ability to liquidatenon-cash collateral to satisfy a borrower default.
As of April 30, 2019, the value of outstanding securities on loan and the value of collateral were as follows:
Fund | Market Value of Securities on Loan | Cash Collateral Received | Non-Cash Collateral Received | Total Collateral Received | ||||||||||||||||||||||
Large Cap Value | $21,266,567 | $ | 22,374,644 | $ | - | $ | 22,374,644 |
Cash collateral is listed on the Fund’s Schedule of Investments and is shown on the Statement of Assets and Liabilities. Income earned on these investments is included in “Income derived from securities lending” on the Statement of Operations.
Non-cash collateral received by the Fund may not be sold orre-pledged except to satisfy a borrower default. Therefore,non-cash collateral is not included on the Fund’s Schedule of Investments or Statement of Assets and Liabilities.
10. Borrowing Arrangements
Effective November 15, 2018 (the “Effective Date”), the Fund, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $250 million with interest at a rate equal to the higher of
33
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
(a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a closing fee of $100,000 on the Effective Date and a quarterly commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 14, 2019, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
On the Effective Date, the Fund, along with certain other Participating Funds managed by the Manager, also entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of(a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on each outstanding loan. Each of the Participating Funds will pay a closing fee of $35,000 on the Effective Date. The Uncommitted Line expires November 14, 2019 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statement of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.
During the period ended April 30, 2019, the Fund did not utilize this facility.
11. Capital Share Transactions
The tables below summarize the activity in capital shares for each Class of the Fund:
Institutional Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Large Cap Value Fund | ||||||||||||||||||||||||||||
Shares sold | 7,326,715 | $ | 186,679,111 | 15,590,380 | $ | 461,010,040 | ||||||||||||||||||||||
Reinvestment of dividends | 12,176,926 | 280,069,287 | 14,507,737 | 424,641,445 | ||||||||||||||||||||||||
Shares redeemed | (22,179,950 | ) | (568,604,621 | ) | (53,655,757 | ) | (1,600,135,398 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (2,676,309 | ) | $ | (101,856,223 | ) | (23,557,640 | ) | $ | (714,483,913 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Y Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Large Cap Value Fund | ||||||||||||||||||||||||||||
Shares sold | 1,856,630 | $ | 46,450,536 | 3,099,705 | $ | 91,175,749 | ||||||||||||||||||||||
Reinvestment of dividends | 1,034,674 | 23,631,954 | 1,294,567 | 37,646,020 | ||||||||||||||||||||||||
Shares redeemed | (2,196,326 | ) | (56,370,072 | ) | (6,308,043 | ) | (182,284,089 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 694,978 | $ | 13,712,418 | (1,913,771 | ) | $ | (53,462,320 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Large Cap Value Fund | ||||||||||||||||||||||||||||
Shares sold | 2,415,167 | $ | 57,687,443 | 6,511,604 | $ | 180,144,427 | ||||||||||||||||||||||
Reinvestment of dividends | 5,946,641 | 126,187,719 | 7,135,711 | 194,091,350 | ||||||||||||||||||||||||
Shares redeemed | (13,771,184 | ) | (321,580,388 | ) | (25,281,746 | ) | (699,918,301 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (5,409,376 | ) | $ | (137,705,226 | ) | (11,634,431 | ) | $ | (325,682,524 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
34
American Beacon Large Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Advisor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Large Cap Value Fund | ||||||||||||||||||||||||||||
Shares sold | 496,251 | $ | 10,838,462 | 327,661 | $ | 8,945,251 | ||||||||||||||||||||||
Reinvestment of dividends | 232,028 | 4,858,669 | 297,468 | 7,987,006 | ||||||||||||||||||||||||
Shares redeemed | (391,230 | ) | (9,568,147 | ) | (1,295,285 | ) | (35,519,351 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 337,049 | $ | 6,128,984 | (670,156 | ) | $ | (18,587,094 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Large Cap Value Fund | ||||||||||||||||||||||||||||
Shares sold | 948,322 | $ | 21,504,784 | 652,905 | $ | 17,333,416 | ||||||||||||||||||||||
Reinvestment of dividends | 206,632 | 4,320,676 | 156,140 | 4,195,476 | ||||||||||||||||||||||||
Shares redeemed | (579,127 | ) | (13,677,832 | ) | (567,054 | ) | (15,500,596 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 575,827 | $ | 12,147,628 | 241,991 | $ | 6,028,296 | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Large Cap Value Fund | ||||||||||||||||||||||||||||
Shares sold | 25,272 | $ | 560,380 | 28,678 | $ | 766,750 | ||||||||||||||||||||||
Reinvestment of dividends | 24,011 | 500,403 | 27,603 | 737,547 | ||||||||||||||||||||||||
Shares redeemed | (35,762 | ) | (855,114 | ) | (85,211 | ) | (2,307,165 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 13,521 | $ | 205,669 | (28,930 | ) | $ | (802,868 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
R6 Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Large Cap Value Fund | ||||||||||||||||||||||||||||
Shares sold | 4,117,303 | $ | 103,768,128 | 19,947,926 | $ | 601,141,716 | ||||||||||||||||||||||
Reinvestment of dividends | 2,031,140 | 46,695,895 | 602,696 | 17,634,896 | ||||||||||||||||||||||||
Shares redeemed | (1,622,655 | ) | (42,438,327 | ) | (1,767,061 | ) | (52,393,324 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 4,525,788 | $ | 108,025,696 | 18,783,561 | $ | 566,383,288 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
12. Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Fund’s financial statements through this date.
35
American Beacon Large Cap Value FundSM
(For a share outstanding throughout the period)
Institutional ClassA | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 28.41 | $ | 30.98 | $ | 25.80 | $ | 28.38 | $ | 31.21 | $ | 27.59 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.31 | 0.63 | 0.59 | 0.61 | 0.55 | 0.73 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 1.31 | (0.07 | ) | 5.41 | (0.29 | ) | (0.70 | ) | 3.33 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 1.62 | 0.56 | 6.00 | 0.32 | (0.15 | ) | 4.06 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.55 | ) | (0.55 | ) | (0.60 | ) | (0.52 | ) | (0.67 | ) | (0.44 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.86 | ) | (2.58 | ) | (0.22 | ) | (2.38 | ) | (2.01 | ) | - | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (2.41 | ) | (3.13 | ) | (0.82 | ) | (2.90 | ) | (2.68 | ) | (0.44 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 27.62 | $ | 28.41 | $ | 30.98 | $ | 25.80 | $ | 28.38 | $ | 31.21 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnB | 7.42 | %C | 1.51 | % | 23.60 | % | 1.69 | % | (0.76 | )% | 14.89 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 3,523,931,150 | $ | 3,700,700,522 | $ | 4,765,771,483 | $ | 5,137,688,375 | $ | 6,198,883,300 | $ | 5,816,013,064 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.60 | %D | 0.62 | % | 0.60 | % | 0.60 | % | 0.58 | % | 0.58 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.60 | %D | 0.62 | % | 0.60 | % | 0.60 | % | 0.58 | % | 0.58 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.19 | %D | 1.83 | % | 1.78 | % | 2.16 | % | 1.88 | % | 2.35 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.19 | %D | 1.83 | % | 1.78 | % | 2.16 | % | 1.88 | % | 2.35 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 13 | %C | 23 | % | 25 | % | 25 | % | 32 | % | 29 | % |
A | On May 31, 2016, the AMR Class closed and the assets were merged into the Institutional Class. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
36
American Beacon Large Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Y Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 28.20 | $ | 30.78 | $ | 25.64 | $ | 28.21 | $ | 31.04 | $ | 27.46 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.29 | 0.57 | 0.48 | 0.59 | 0.56 | 0.64 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 1.31 | (0.04 | ) | 5.46 | (0.29 | ) | (0.72 | ) | 3.37 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 1.60 | 0.53 | 5.94 | 0.30 | (0.16 | ) | 4.01 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.52 | ) | (0.53 | ) | (0.58 | ) | (0.49 | ) | (0.66 | ) | (0.43 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.86 | ) | (2.58 | ) | (0.22 | ) | (2.38 | ) | (2.01 | ) | - | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (2.38 | ) | (3.11 | ) | (0.80 | ) | (2.87 | ) | (2.67 | ) | (0.43 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 27.42 | $ | 28.20 | $ | 30.78 | $ | 25.64 | $ | 28.21 | $ | 31.04 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 7.39 | %B | 1.42 | % | 23.51 | % | 1.61 | % | (0.80 | )% | 14.78 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 308,767,323 | $ | 298,017,629 | $ | 384,155,569 | $ | 349,542,346 | $ | 419,096,844 | $ | 434,880,702 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.69 | %C | 0.68 | % | 0.67 | % | 0.67 | % | 0.67 | % | 0.67 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.69 | %C | 0.68 | % | 0.67 | % | 0.67 | % | 0.67 | % | 0.67 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.09 | %C | 1.77 | % | 1.69 | % | 2.08 | % | 1.80 | % | 2.24 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.09 | %C | 1.77 | % | 1.69 | % | 2.08 | % | 1.80 | % | 2.24 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 13 | %B | 23 | % | 25 | % | 25 | % | 32 | % | 29 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
See accompanying notes
37
American Beacon Large Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 26.33 | $ | 28.92 | $ | 24.13 | $ | 26.70 | $ | 29.51 | $ | 26.11 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.22 | 0.41 | 0.40 | 0.46 | 0.45 | 0.57 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 1.22 | 0.02 | 5.12 | (0.25 | ) | (0.68 | ) | 3.18 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 1.44 | 0.43 | 5.52 | 0.21 | (0.23 | ) | 3.75 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.45 | ) | (0.44 | ) | (0.51 | ) | (0.40 | ) | (0.57 | ) | (0.35 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.86 | ) | (2.58 | ) | (0.22 | ) | (2.38 | ) | (2.01 | ) | - | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (2.31 | ) | (3.02 | ) | (0.73 | ) | (2.78 | ) | (2.58 | ) | (0.35 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 25.46 | $ | 26.33 | $ | 28.92 | $ | 24.13 | $ | 26.70 | $ | 29.51 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 7.25 | %B | 1.18 | % | 23.20 | % | 1.33 | % | (1.07 | )% | 14.50 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
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|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 1,317,817,984 | $ | 1,505,354,807 | $ | 1,990,199,621 | $ | 2,245,534,741 | $ | 3,167,585,961 | $ | 4,158,361,296 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.93 | %C | 0.95 | % | 0.92 | % | 0.93 | % | 0.93 | % | 0.93 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.93 | %C | 0.95 | % | 0.92 | % | 0.93 | % | 0.93 | % | 0.93 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.87 | %C | 1.50 | % | 1.46 | % | 1.84 | % | 1.54 | % | 2.01 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.87 | %C | 1.50 | % | 1.46 | % | 1.84 | % | 1.54 | % | 2.01 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 13 | %B | 23 | % | 25 | % | 25 | % | 32 | % | 29 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
See accompanying notes
38
American Beacon Large Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Advisor ClassA | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 25.95 | $ | 28.54 | $ | 23.82 | $ | 26.40 | $ | 29.24 | $ | 25.89 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.31 | 0.28 | 0.21 | 0.40 | 0.40 | 0.47 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 1.10 | 0.10 | 5.20 | (0.22 | ) | (0.66 | ) | 3.20 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 1.41 | 0.38 | 5.41 | 0.18 | (0.26 | ) | 3.67 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.40 | ) | (0.39 | ) | (0.47 | ) | (0.38 | ) | (0.57 | ) | (0.32 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.86 | ) | (2.58 | ) | (0.22 | ) | (2.38 | ) | (2.01 | ) | - | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (2.26 | ) | (2.97 | ) | (0.69 | ) | (2.76 | ) | (2.58 | ) | (0.32 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 25.10 | $ | 25.95 | $ | 28.54 | $ | 23.82 | $ | 26.40 | $ | 29.24 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnB | 7.17 | %C | 1.00 | % | 23.00 | % | 1.21 | % | (1.19 | )% | 14.31 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 69,213,245 | $ | 62,811,940 | $ | 88,196,090 | $ | 113,168,437 | $ | 140,975,319 | $ | 149,422,940 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.08 | %D | 1.09 | % | 1.07 | % | 1.08 | % | 1.07 | % | 1.07 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.08 | %D | 1.09 | % | 1.07 | % | 1.08 | % | 1.07 | % | 1.07 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.69 | %D | 1.36 | % | 1.31 | % | 1.69 | % | 1.40 | % | 1.83 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.69 | %D | 1.36 | % | 1.31 | % | 1.69 | % | 1.40 | % | 1.83 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 13 | %C | 23 | % | 25 | % | 25 | % | 32 | % | 29 | % |
A | On January 15, 2016, the Retirement Class closed and the assets were merged into the Advisor Class. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
39
American Beacon Large Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
A Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 26.00 | $ | 28.61 | $ | 23.90 | $ | 26.51 | $ | 29.38 | $ | 26.03 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.31 | 0.48 | 0.28 | 0.42 | 0.47 | 0.54 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 1.10 | (0.06 | ) | 5.17 | (0.21 | ) | (0.71 | ) | 3.16 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 1.41 | 0.42 | 5.45 | 0.21 | (0.24 | ) | 3.70 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.47 | ) | (0.45 | ) | (0.52 | ) | (0.44 | ) | (0.62 | ) | (0.35 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.86 | ) | (2.58 | ) | (0.22 | ) | (2.38 | ) | (2.01 | ) | - | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (2.33 | ) | (3.03 | ) | (0.74 | ) | (2.82 | ) | (2.63 | ) | (0.35 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 25.08 | $ | 26.00 | $ | 28.61 | $ | 23.90 | $ | 26.51 | $ | 29.38 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 7.24 | %B | 1.15 | % | 23.13 | % | 1.33 | % | (1.14 | )% | 14.37 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 55,643,805 | $ | 42,722,617 | $ | 40,073,435 | $ | 35,071,001 | $ | 39,401,153 | $ | 22,781,918 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.97 | %C | 0.93 | % | 0.98 | % | 0.98 | % | 0.97 | % | 1.04 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.97 | %C | 0.93 | % | 0.98 | % | 0.98 | % | 0.97 | % | 1.04 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.76 | %C | 1.49 | % | 1.38 | % | 1.78 | % | 1.48 | % | 1.83 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.76 | %C | 1.49 | % | 1.38 | % | 1.78 | % | 1.48 | % | 1.83 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 13 | %B | 23 | % | 25 | % | 25 | % | 32 | % | 29 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
See accompanying notes
40
American Beacon Large Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
C Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 25.71 | $ | 28.27 | $ | 23.57 | $ | 26.17 | $ | 29.03 | $ | 25.81 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.17 | 0.21 | 0.09 | 0.20 | 0.27 | 0.35 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 1.17 | 0.05 | 5.11 | (0.19 | ) | (0.70 | ) | 3.11 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 1.34 | 0.26 | 5.20 | 0.01 | (0.43 | ) | 3.46 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.25 | ) | (0.24 | ) | (0.28 | ) | (0.23 | ) | (0.42 | ) | (0.24 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.86 | ) | (2.58 | ) | (0.22 | ) | (2.38 | ) | (2.01 | ) | - | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (2.11 | ) | (2.82 | ) | (0.50 | ) | (2.61 | ) | (2.43 | ) | (0.24 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 24.94 | $ | 25.71 | $ | 28.27 | $ | 23.57 | $ | 26.17 | $ | 29.03 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 6.84 | %B | 0.57 | % | 22.27 | % | 0.51 | % | (1.83 | )% | 13.48 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 6,982,915 | $ | 6,851,003 | $ | 8,351,349 | $ | 8,950,263 | $ | 12,389,141 | $ | 9,964,292 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.68 | %C | 1.64 | % | 1.72 | % | 1.74 | % | 1.73 | % | 1.79 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.68 | %C D | 1.54 | % | 1.72 | % | 1.74 | % | 1.73 | % | 1.81 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.10 | %C | 0.79 | % | 0.66 | % | 1.02 | % | 0.73 | % | 1.09 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.10 | %C | 0.90 | % | 0.66 | % | 1.02 | % | 0.73 | % | 1.07 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 13 | %B | 23 | % | 25 | % | 25 | % | 32 | % | 29 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
D | This ratio does not include a voluntary reimbursement of service fees as included in the prior year. |
See accompanying notes
41
American Beacon Large Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
R6 Class | ||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | February 28, 2017A to October 31, 2017 | ||||||||||||||||||
|
| |||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Net asset value, beginning of period | $ | 28.41 | $ | 30.98 | $ | 28.64 | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income | 0.34 | 0.59 | 0.12 | |||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 1.27 | (0.02 | ) | 2.22 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total income from investment operations | 1.61 | 0.57 | 2.34 | |||||||||||||||||
|
|
|
|
|
| |||||||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.56 | ) | (0.56 | ) | - | |||||||||||||||
Distributions from net realized gains | (1.86 | ) | (2.58 | ) | - | |||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total distributions | (2.42 | ) | (3.14 | ) | - | |||||||||||||||
|
|
|
|
|
| |||||||||||||||
Net asset value, end of period | $ | 27.60 | $ | 28.41 | $ | 30.98 | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total returnB | 7.39 | %C | 1.54 | % | 8.17 | %C | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||
Net assets, end of period | $ | 679,961,350 | $ | 571,236,567 | $ | 40,982,401 | ||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Expenses, before reimbursements or recoupments | 0.57 | %D | 0.59 | % | 0.60 | %D | ||||||||||||||
Expenses, net of reimbursements or recoupments | 0.58 | %D | 0.58 | % | 0.58 | %D | ||||||||||||||
Net investment income, before expense reimbursements or recoupments | 2.20 | %D | 1.75 | % | 1.38 | %D | ||||||||||||||
Net investment income, net of reimbursements or recoupments | 2.19 | %D | 1.76 | % | 1.40 | %D | ||||||||||||||
Portfolio turnover rate | 13 | %C | 23 | % | 25 | %C |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
42
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43
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44
Delivery of Documents
eDelivery isNOW AVAILABLE - Stop traditional mail delivery and receive your
shareholder reports and summary prospectuson-line. Sign up at
www.americanbeaconfunds.com
If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go towww.icsdelivery.comand search for your financial institution’s name or contact your financial institution directly.
To obtain more information about the Fund:
![]() | ![]() | |
ByE-mail: | On the Internet: | |
american_beacon.funds@ambeacon.com | Visit our website atwww.americanbeaconfunds.com | |
By Telephone: Call (800)658-5811 | By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643 | |
Availability of Quarterly Portfolio Schedules | Availability of Proxy Voting Policy and Records | |
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 atwww.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling (800)-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available atwww.americanbeaconfunds.com approximately twenty days after the end of each month. | 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 websitewww.americanbeaconfunds.com and by calling1-800-967-9009 or by accessing the SEC’s website atwww.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 atwww.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 Company Boston, Massachusetts | TRANSFER AGENT DST Asset Manager Solutions, Inc. Quincy, Massachusetts | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ERNST & YOUNG LLP Dallas, Texas | DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas |
This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus or Summary Prospectus.
American Beacon Funds and American Beacon Large Cap Value Fund are service marks of American Beacon Advisors, Inc.
SAR 04/19
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.
GARCIA HAMILTON QUALITY BOND FUND RISKS
The use offixed-income securitiesentails interest rate and credit risks.Credit riskis the risk that the issuer of a bond will fail to make timely payment of interest or principal; and the decline in an issuer’s credit rating can cause the price of its bonds to go down. 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.
This may contain information obtained from third parties, including ratings from credit rating agencies such as Standard & Poor’s. Reproduction and distribution of third-party content in any form is prohibited except with the prior written permission of the related third party. Third-party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. THIRD-PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. THIRD-PARTY CONTENT PROVIDERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY, COMPENSATORY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, COSTS, EXPENSES, LEGAL FEES OR LOSSES (INCLUDING LOST INCOME OR PROFITS AND OPPORTUNITY COSTS OR LOSSES CAUSED BY NEGLIGENCE) IN CONNECTION WITH ANY USE OF THEIR CONTENT, INCLUDING RATINGS.
Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes and should not be relied on as investment advice.
Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.
American Beacon Funds April 30, 2019 |
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Back Cover |
![]() | Dear Shareholders,
At American Beacon, we take our heritage as a fiduciary very seriously – and we apply that mindset to all aspects of our business as a fund manager. As a result, for more than 30 years, we have endeavored to:
u Identify, engage and oversee the best money managers. As a manager of managers, our goal is to engage the most effective money managers for each asset class, investment style and market strategy we offer. We are committed to partnering with those we judge to be “the best of the best” when it comes to choosing sub-advisors for our mutual funds. Whether our due-diligence process results in the selection of one sub-advisor or multiple sub-advisors, we select those we believe show the greatest potential to help us meet the high standards you’ve come to expect. |
u | Offer a variety of innovative investment solutions. Our mutual funds – which span the domestic, international, global, frontier and emerging markets – aresub-advised by experienced money managers who employ distinctive, proprietary investment processes to manage assets through a variety of economic and market conditions. From offering some of the first multi-manager funds, one of the first retirement income funds and the first open-ended mutual fund in the U.S. to focus primarily on frontier-market debt, our robust history includes applying a disciplined, solutions-based approach to our product development process in an effort to help you grow your assets while mitigating risk. |
u | Provide a solutions-based approach to achieving long-term investment goals.We seek to provide investment solutions that might enable you to benefit from taking a more disciplined approach to investing. Our mutual funds provide access to institutional-quality, research-intensive investment managers with diverse processes and styles. Over the long run, having such access and spending time in the market – rather than trying to time the market – may better position you to reach your long-term investment goals during market upswings and potentially insulate against market downswings. |
Our management approach is more than a concept; it’s the cornerstone of American Beacon’s culture. And we strive to employ it at every turn as we seek to provide a well-diversified line of investment solutions to help our shareholders seek long-term rewards.
Thank you for your continued interest in American Beacon. For additional information about our investment products or to access your account information, please visit our website atwww.americanbeaconfunds.com.
Best Regards,
Gene L. Needles, Jr.
President
American Beacon Funds
1
American Beacon Garcia Hamilton Quality Bond FundSM
April 30, 2019 (Unaudited)
The Investor Class of the American Beacon Garcia Hamilton Quality Bond Fund (the “Fund”) returned 2.31% for the six months ended April 30, 2019, underperforming the Bloomberg Barclays U.S. Aggregate Bond Index (the “Index”) return of 5.49% for the same period.
Average Annual Total Returns for the Period ended April 30, 2019 |
| ||||||||||||||||||||||||||
Ticker | 6 Months* | 1 Year | 3 Year | Since Inception (04/04/2016) | |||||||||||||||||||||||
Institutional Class (1,4) | GHQIX | 2.50 | % | 3.00 | % | 1.67 | % | 1.46 | % | ||||||||||||||||||
Y Class (1,4) | GHQYX | 2.45 | % | 2.90 | % | 1.58 | % | 1.36 | % | ||||||||||||||||||
Investor Class (1,4) | GHQPX | 2.31 | % | 2.51 | % | 1.29 | % | 1.08 | % | ||||||||||||||||||
R6 Class (1,3,4) | GHQRX | 2.51 | % | 3.01 | % | 1.68 | % | 1.46 | % | ||||||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond Index (2) | 5.49 | % | 5.29 | % | 1.90 | % | 1.97 | % |
* | Not Annualized. |
1. | Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of 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 visitwww.americanbeaconfunds.com or call1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. 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. |
2. | The Bloomberg Barclays U.S. Aggregate Bond Index is a market value weighted performance benchmark for government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. |
3. | Fund performance for the periods represent the returns achieved by the Institutional Class from 4/4/16 through 2/28/19, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 4/4/16. |
4. | The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, and R6 Class shares were 0.69%, 0.75%, 0.92%, and 0.66%, 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’s underperformance was primarily due to its duration management. For the period, the Fund maintained a shorter duration than the benchmark, as the subadvisor believed the market overreacted to the Government shutdown and trade tensions with China. The subadvisor disagreed with the market sentiment that a recession was imminent and that the Federal Reserve (the “Fed”) was close to cutting the Fed funds rate as the economy continued to grow, leading economic indicators remained positive, and the labor market continued to strengthen. Thus, the subadvisor felt rates were biased to move higher on positive economic data, which would give the Fed incentive to continue hiking the Fed funds rate.
In addition to active duration management, the Fund maintained a barbell yield-curve position which benefited performance as the treasury yield curve flattened. The Fund was overweight the shortest and longest durations along the curve and was underweight intermediate duration. Floating-rate corporate and agency issues were used to generate yield and protect from rising rates on the short end, and30-year treasury bonds were used to manage overall duration and provide exposure to the long end of the curve.
From a sector-allocation perspective, the Fund was underweight Treasuries relative to the Index, which benefited performance as Treasuries underperformed spread products. The subadvisor viewed the volatility in the corporate sector in late-2018 as a buying opportunity and added to the Fund’s allocation while reducing exposure to Treasuries. The subsequent recovery in the corporates benefited the Fund as spreads tightened. The subadvisor continued to favor floating rate corporate securities as they offered attractive income with minimal interest rate risk relative to their fixed-rate counterparts.
Overall, the Fund continues to emphasize high-quality, active fixed-income investing that seeks to perform well in volatile markets and serves an important role in asset allocation.
2
American Beacon Garcia Hamilton Quality Bond FundSM
Performance Overview
April 30, 2019 (Unaudited)
Top Ten Holdings (% Net Assets) |
| |||||||
U.S. Treasury Notes/Bonds, 2.500%, Due 5/15/2046 | 8.2 | |||||||
Federal Home Loan Bank, 2.480%, Due 12/18/2020,(1-mo. USD LIBOR - 0.135%) | 7.6 | |||||||
Federal Home Loan Bank, 2.563%, Due 5/8/2020,(1-mo. USD LIBOR - 0.175%) | 6.7 | |||||||
Apple, Inc., 3.197%, Due 2/9/2022,(3-mo. USD LIBOR + 0.500%) | 4.4 | |||||||
United Parcel Service, Inc., 3.042%, Due 4/1/2023,(3-mo. USD LIBOR + 0.450%) | 4.4 | |||||||
Intel Corp., 3.047%, Due 5/11/2022,(3-mo. USD LIBOR + 0.350%) | 4.2 | |||||||
Morgan Stanley, 3.981%, Due 10/24/2023,(3-mo. USD LIBOR + 1.400%) | 4.2 | |||||||
Citigroup, Inc., 3.783%, Due 5/17/2024,(3-mo. USD LIBOR + 1.100%) | 4.1 | |||||||
TWDC Enterprises 18 Corp., 3.005%, Due 3/4/2022,(3-mo. USD LIBOR + 0.390%) | 4.1 | |||||||
IBM Credit LLC, 2.852%, Due 1/20/2021,(3-mo. USD LIBOR + 0.260%) | 3.2 | |||||||
Total Fund Holdings | 38 | |||||||
Sector Allocation (% Investments) |
| |||||||
Financial | 28.9 | |||||||
U.S. Government Agency Obligations | 20.9 | |||||||
Technology | 12.1 | |||||||
Communications | 8.5 | |||||||
U.S. Treasury Obligations | 8.4 | |||||||
Industrial | 8.3 | |||||||
Consumer,Non-Cyclical | 6.8 | |||||||
Basic Materials | 2.0 | |||||||
U.S. Agency Mortgage-Backed Obligations | 1.6 | |||||||
Energy | 1.3 | |||||||
Utilities | 1.2 |
3
American Beacon Garcia Hamilton Quality Bond FundSM
April 30, 2019 (Unaudited)
Fund Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees, if applicable, and (2) ongoing costs, including management fees, distribution(12b-1) fees,sub-transfer agent fees, and other Fund expenses. The Examples 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 November 1, 2018 through April 30, 2019.
Actual Expenses
The “Actual” lines of the tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the “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 tables provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the 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 Fund, such as sales charges (loads) or redemption fees, as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.
4
American Beacon Garcia Hamilton Quality Bond FundSM
Expense Examples
April 30, 2019 (Unaudited)
American Beacon Garcia Hamilton Quality Bond Fund |
| ||||||||||||||
Beginning Account Value 11/1/2018 | Ending Account Value 4/30/2019 | Expenses Paid During Period 11/1/2018-4/30/2019* | |||||||||||||
Institutional Class | |||||||||||||||
Actual | $1,000.00 | $1,025.00 | $2.26 | ||||||||||||
Hypothetical** | $1,000.00 | $1,022.56 | $2.26 | ||||||||||||
Y Class | |||||||||||||||
Actual | $1,000.00 | $1,024.50 | $2.76 | ||||||||||||
Hypothetical** | $1,000.00 | $1,022.07 | $2.76 | ||||||||||||
Investor Class | |||||||||||||||
Actual | $1,000.00 | $1,023.10 | $4.16 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.68 | $4.16 | ||||||||||||
R6 Class*** | |||||||||||||||
Actual | $1,000.00 | $1,008.60 | $0.70 | ||||||||||||
Hypothetical** | $1,000.00 | $1,022.71 | $2.11 |
* | Expenses are equal to the Fund’s annualized expense ratios for thesix-month period of 0.45%, 0.55%, 0.83%, and 0.42% for the Institutional, Y, Investor, and R6 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 (181) by days in the year (365) to reflect the half-year period. |
** | 5% return before expenses. |
*** | R6 Class commenced operations on February 28, 2019. Expenses are equal to the fund’s annualized expense ratio for the period, multiplied by the average account value over the period, multiplied by the number of days since inception (61), then divided by the number of days in the year (365) to reflect the period. The Ending Account Value is derived from the fund’s share class actual return since inception. The Hypothetical 5% Annual Return information reflects the (181) day period for the six months ended April 30, 2019 to allow for comparability. |
5
American Beacon Garcia Hamilton Quality Bond FundSM
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
CORPORATE OBLIGATIONS - 67.26% | |||||||||||||||
Basic Materials - 1.99% | |||||||||||||||
EI du Pont de Nemours & Co., 3.109%, Due 5/1/2020,(3-mo. USD LIBOR + 0.530%)A | $ | 6,700,000 | $ | 6,722,043 | |||||||||||
|
| ||||||||||||||
Communications - 8.23% | |||||||||||||||
Comcast Corp., | |||||||||||||||
2.922%, Due 10/1/2020,(3-mo. USD LIBOR + 0.330%)A | 9,645,000 | 9,663,113 | |||||||||||||
3.227%, Due 4/15/2024,(3-mo. USD LIBOR + 0.630%)A | 4,335,000 | 4,346,822 | |||||||||||||
TWDC Enterprises 18 Corp., 3.005%, Due 3/4/2022,(3-mo. USD LIBOR + 0.390%)A | 13,772,000 | 13,801,417 | |||||||||||||
|
| ||||||||||||||
27,811,352 | |||||||||||||||
|
| ||||||||||||||
Consumer,Non-Cyclical - 6.63% | |||||||||||||||
Merck & Co., Inc., 3.072%, Due 2/10/2020,(3-mo. USD LIBOR + 0.375%)A | 4,860,000 | 4,870,836 | |||||||||||||
PepsiCo, Inc., | |||||||||||||||
3.119%, Due 10/6/2021,(3-mo. USD LIBOR + 0.530%)A | 6,460,000 | 6,514,585 | |||||||||||||
2.941%, Due 5/2/2022,(3-mo. USD LIBOR + 0.365%)A | 7,280,000 | 7,297,598 | |||||||||||||
UnitedHealth Group, Inc., 2.667%, Due 10/15/2020,(3-mo. USD LIBOR + 0.070%)A | 3,720,000 | 3,712,351 | |||||||||||||
|
| ||||||||||||||
22,395,370 | |||||||||||||||
|
| ||||||||||||||
Energy - 1.23% | |||||||||||||||
Chevron Corp., 3.214%, Due 11/15/2021,(3-mo. USD LIBOR + 0.530%)A | 4,140,000 | 4,173,956 | |||||||||||||
|
| ||||||||||||||
Financial - 28.12% | |||||||||||||||
American Express Co., 3.189%, Due 8/1/2022,(3-mo. USD LIBOR + 0.610%)A | 6,600,000 | 6,599,993 | |||||||||||||
American Express Credit Corp., 3.315%, Due 3/3/2022,(3-mo. USD LIBOR + 0.700%)A | 7,068,000 | 7,102,106 | |||||||||||||
Bank of America Corp., | |||||||||||||||
3.252%, Due 6/25/2022,(3-mo. USD LIBOR + 0.650%)A | 3,820,000 | 3,828,481 | |||||||||||||
3.752%, Due 1/20/2023,(3-mo. USD LIBOR + 1.160%)A | 3,700,000 | 3,749,143 | |||||||||||||
Citigroup, Inc., 3.783%, Due 5/17/2024,(3-mo. USD LIBOR + 1.100%)A | 13,584,000 | 13,714,607 | |||||||||||||
Fifth Third Bank, 3.219%, Due 2/1/2022,(3-mo. USD LIBOR + 0.640%)A | 5,580,000 | 5,592,017 | |||||||||||||
Goldman Sachs Group, Inc., | |||||||||||||||
3.363%, Due 10/31/2022,(3-mo. USD LIBOR + 0.780%)A | 7,990,000 | 7,994,211 | |||||||||||||
4.229%, Due 11/29/2023,(3-mo. USD LIBOR + 1.600%)A | 4,080,000 | 4,179,913 | |||||||||||||
JPMorgan Chase & Co., | |||||||||||||||
3.480%, Due 4/25/2023,(3-mo. USD LIBOR + 0.900%)A | 6,645,000 | 6,681,347 | |||||||||||||
3.811%, Due 10/24/2023,(3-mo. USD LIBOR + 1.230%)A | 7,000,000 | 7,102,900 | |||||||||||||
Manufacturers & Traders Trust Co., 3.304%, Due 5/18/2022,(3-mo. USD LIBOR + 0.610%)A | 7,390,000 | 7,383,569 | |||||||||||||
Morgan Stanley, 3.981%, Due 10/24/2023,(3-mo. USD LIBOR + 1.400%)A | 13,979,000 | 14,258,669 | |||||||||||||
Wells Fargo & Co., 3.691%, Due 1/24/2023,(3-mo. USD LIBOR + 1.110%)A | 6,795,000 | 6,882,281 | |||||||||||||
|
| ||||||||||||||
95,069,237 | |||||||||||||||
|
| ||||||||||||||
Industrial - 8.12% | |||||||||||||||
John Deere Capital Corp., | |||||||||||||||
2.897%, Due 6/22/2020,(3-mo. USD LIBOR + 0.290%)A | 8,665,000 | 8,694,240 | |||||||||||||
3.157%, Due 6/7/2023,(3-mo. USD LIBOR + 0.550%)A | 3,935,000 | 3,932,335 | |||||||||||||
United Parcel Service, Inc., 3.042%, Due 4/1/2023,(3-mo. USD LIBOR + 0.450%)A | 14,770,000 | 14,807,798 | |||||||||||||
|
| ||||||||||||||
27,434,373 | |||||||||||||||
|
| ||||||||||||||
Technology - 11.73% | |||||||||||||||
Apple, Inc., 3.197%, Due 2/9/2022,(3-mo. USD LIBOR + 0.500%)A | 14,585,000 | 14,723,181 | |||||||||||||
IBM Credit LLC, 2.852%, Due 1/20/2021,(3-mo. USD LIBOR + 0.260%)A | 10,790,000 | 10,792,589 | |||||||||||||
Intel Corp., 3.047%, Due 5/11/2022,(3-mo. USD LIBOR + 0.350%)A | 14,090,000 | 14,141,292 | |||||||||||||
|
| ||||||||||||||
39,657,062 | |||||||||||||||
|
| ||||||||||||||
Utilities - 1.21% | |||||||||||||||
Consolidated Edison Co. of New York, Inc., 3.002%, Due 6/25/2021, Series C,(3-mo. USD LIBOR + 0.400%)A | 4,080,000 | 4,084,637 | |||||||||||||
|
| ||||||||||||||
Total Corporate Obligations (Cost $226,582,183) | 227,348,030 | ||||||||||||||
|
|
See accompanying notes
6
American Beacon Garcia Hamilton Quality Bond FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 1.51% | |||||||||||||||
Federal Home Loan Mortgage Corp., 4.500%, Due 12/1/2034 | $ | 2,553,978 | $ | 2,714,275 | |||||||||||
Federal National Mortgage Association, | |||||||||||||||
5.500%, Due 1/1/2024 | 1,499,102 | 1,557,122 | |||||||||||||
5.000%, Due 7/1/2026 | 827,254 | 843,440 | |||||||||||||
|
| ||||||||||||||
Total U.S. Agency Mortgage-Backed Obligations (Cost $5,194,256) | 5,114,837 | ||||||||||||||
|
| ||||||||||||||
U.S. GOVERNMENT AGENCY OBLIGATIONS - 20.33% | |||||||||||||||
Federal Farm Credit Banks, | |||||||||||||||
2.531%, Due 2/10/2020,(1-mo. USD LIBOR + 0.050%)A | 4,075,000 | 4,077,132 | |||||||||||||
2.404%, Due 5/11/2020,(1-mo. USD LIBOR - 0.080%)A | 7,160,000 | 7,153,923 | |||||||||||||
Federal Home Loan Bank, | |||||||||||||||
2.563%, Due 5/8/2020,(1-mo. USD LIBOR - 0.175%)A | 22,630,000 | 22,616,597 | |||||||||||||
2.480%, Due 12/18/2020,(1-mo. USD LIBOR - 0.135%)A | 25,750,000 | 25,717,312 | |||||||||||||
2.467%, Due 1/4/2021,(1-mo. USD LIBOR - 0.135%)A | 9,165,000 | 9,152,469 | |||||||||||||
|
| ||||||||||||||
Total U.S. Government Agency Obligations (Cost $68,784,073) | 68,717,433 | ||||||||||||||
|
| ||||||||||||||
U.S. TREASURY OBLIGATIONS - 8.16% (Cost $26,269,831) | |||||||||||||||
U.S. Treasury Notes/Bonds, 2.500%, Due 5/15/2046 | 30,040,000 | 27,595,730 | |||||||||||||
|
| ||||||||||||||
Shares | |||||||||||||||
SHORT-TERM INVESTMENTS - 2.26% (Cost $7,637,461) | |||||||||||||||
Investment Companies - 2.26% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%B C | 7,637,461 | 7,637,461 | |||||||||||||
|
| ||||||||||||||
TOTAL INVESTMENTS - 99.52% (Cost $334,467,804) | 336,413,491 | ||||||||||||||
OTHER ASSETS, NET OF LIABILITIES - 0.48% | 1,607,142 | ||||||||||||||
|
| ||||||||||||||
TOTAL NET ASSETS - 100.00% | $ | 338,020,633 | |||||||||||||
|
| ||||||||||||||
Percentages are stated as a percent of net assets. |
|
A Variable, floating, or adjustable rate securities with an interest rate that changes periodically. Rates are periodically reset with rates that are based on a predetermined benchmark such as a widely followed interest rate such asT-bills, LIBOR or PRIME plus a fixed spread. The interest rate disclosed reflects the rate in effect on April 30, 2019.
B The Fund is affiliated by having the same investment advisor.
C7-day yield.
LLC - Limited Liability Company.
LIBOR – London Interbank Offered Rate.
PRIME – A rate, charged by banks, based on the U.S. Federal Funds rate.
The Fund’s investments are summarized by level based on the inputs used to determine their values. As of April 30, 2019, the investments were classified as described below:
Garcia Hamilton Quality Bond Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets |
| |||||||||||||||||||||||||||
Corporate Obligations | $ | - | $ | 227,348,030 | $ | - | $ | 227,348,030 | ||||||||||||||||||||
U.S. Agency Mortgage-Backed Obligations | - | 5,114,837 | - | 5,114,837 | ||||||||||||||||||||||||
U.S. Government Agency Obligations | - | 68,717,433 | - | 68,717,433 | ||||||||||||||||||||||||
U.S. Treasury Obligations | - | 27,595,730 | - | 27,595,730 | ||||||||||||||||||||||||
Short-Term Investments | 7,637,461 | - | - | 7,637,461 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Investments in Securities - Assets | $ | 7,637,461 | $ | 328,776,030 | $ | - | $ | 336,413,491 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
U.S. GAAP requires transfers between all levels to/from level 3 be disclosed. During the period ended April 30, 2019, there were no transfers into or out of Level 3.
See accompanying notes
7
American Beacon Garcia Hamilton Quality Bond FundSM
Statement of Assets and Liabilities
April 30, 2019 (Unaudited)
Assets: |
| |||
Investments in unaffiliated securities, at fair value† | $ | 328,776,030 | ||
Investments in affiliated securities, at fair value‡ | 7,637,461 | |||
Cash | 69,617 | |||
Interest receivable | 1,569,736 | |||
Receivable for fund shares sold | 337,930 | |||
Receivable for expense reimbursement (Note 2) | 55,663 | |||
Prepaid expenses | 56,207 | |||
|
| |||
Total assets | 338,502,644 | |||
|
| |||
Liabilities: |
| |||
Payable for fund shares redeemed | 115,768 | |||
Dividends payable | 157,927 | |||
Management andsub-advisory fees payable (Note 2) | 150,896 | |||
Service fees payable (Note 2) | 2,854 | |||
Transfer agent fees payable (Note 2) | 11,228 | |||
Custody and fund accounting fees payable | 3,361 | |||
Professional fees payable | 32,366 | |||
Payable for prospectus and shareholder reports | 3,304 | |||
Other liabilities | 4,307 | |||
|
| |||
Total liabilities | 482,011 | |||
|
| |||
Net assets | $ | 338,020,633 | ||
|
| |||
Analysis of net assets: |
| |||
Paid-in-capital | $ | 339,366,412 | ||
Total distributable earnings (deficits)A | (1,345,779 | ) | ||
|
| |||
Net assets | $ | 338,020,633 | ||
|
| |||
Shares outstanding at no par value (unlimited shares authorized): |
| |||
Institutional Class | 30,490,534 | |||
|
| |||
Y Class | 2,187,013 | |||
|
| |||
Investor Class | 1,410,528 | |||
|
| |||
R6 ClassB | 10,178 | |||
|
| |||
Net assets: |
| |||
Institutional Class | $ | 302,262,810 | ||
|
| |||
Y Class | $ | 21,672,687 | ||
|
| |||
Investor Class | $ | 13,984,278 | ||
|
| |||
R6 ClassB | $ | 100,858 | ||
|
| |||
Net asset value, offering and redemption price per share: |
| |||
Institutional Class | $ | 9.91 | ||
|
| |||
Y Class | $ | 9.91 | ||
|
| |||
Investor Class | $ | 9.91 | ||
|
| |||
R6 ClassB | $ | 9.91 | ||
|
| |||
† Cost of investments in unaffiliated securities | $ | 326,830,343 | ||
‡ Cost of investments in affiliated securities | $ | 7,637,461 | ||
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at period end. |
| |||
B Class commenced operations February 28, 2019 (Note 1). |
|
See accompanying notes
8
American Beacon Garcia Hamilton Quality Bond FundSM
Statement of Operations
For the period ended April 30, 2019 (Unaudited)
Investment income: |
| |||
Dividend income from affiliated securities (Note 7) | $ | 140,865 | ||
Interest income | 4,249,391 | |||
|
| |||
Total investment income | 4,390,256 | |||
|
| |||
Expenses: |
| |||
Management andsub-advisory fees (Note 2) | 819,564 | |||
Transfer agent fees: | ||||
Institutional Class (Note 2) | 42,008 | |||
Y Class (Note 2) | 7,771 | |||
Investor Class | 659 | |||
R6 ClassA | 61 | |||
Custody and fund accounting fees | 23,688 | |||
Professional fees | 22,635 | |||
Registration fees and expenses | 26,485 | |||
Service fees (Note 2): | ||||
Investor Class | 26,499 | |||
Prospectus and shareholder report expenses | 7,645 | |||
Trustee fees (Note 2) | 7,597 | |||
Other expenses | 9,112 | |||
|
| |||
Total expenses | 993,724 | |||
|
| |||
Net fees waived and expenses (reimbursed) (Note 2) | (291,740 | ) | ||
|
| |||
Net expenses | 701,984 | |||
|
| |||
Net investment income | 3,688,272 | |||
|
| |||
Realized and unrealized gain from investments: |
| |||
Net realized gain from: | ||||
Investments in unaffiliated securitiesB | 153,946 | |||
Change in net unrealized appreciation of: | ||||
Investments in unaffiliated securitiesC | 3,574,790 | |||
|
| |||
Net gain from investments | 3,728,736 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 7,417,008 | ||
|
| |||
A Class commenced operations February 28, 2019. | ||||
B The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities. | ||||
C The Fund’s investments in affiliated securities did not have a change in unrealized appreciation (depreciation) at period end. |
|
See accompanying notes
9
American Beacon Garcia Hamilton Quality Bond FundSM
Statement of Changes in Net Assets
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||
(unaudited) | ||||||||||||
Increase (decrease) in net assets: |
| |||||||||||
Operations: |
| |||||||||||
Net investment income | $ | 3,688,272 | $ | 3,376,947 | ||||||||
Net realized gain (loss) from investments in unaffiliated securities | 153,946 | (780,123 | ) | |||||||||
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities | 3,574,790 | (1,810,001 | ) | |||||||||
|
|
|
| |||||||||
Net increase in net assets resulting from operations | 7,417,008 | 786,823 | ||||||||||
|
|
|
| |||||||||
Distributions to shareholders: |
| |||||||||||
Total retained earnings: | ||||||||||||
Institutional Class | (3,414,058 | ) | (3,305,504 | ) | ||||||||
Y Class | (192,124 | ) | (59,124 | ) | ||||||||
Investor Class | (135,681 | ) | (165,821 | ) | ||||||||
R6 ClassA | (455 | ) | – | |||||||||
|
|
|
| |||||||||
Net distributions to shareholders | (3,742,318 | ) | (3,530,449 | ) | ||||||||
|
|
|
| |||||||||
Capital share transactions (Note 9): |
| |||||||||||
Proceeds from sales of shares | 103,461,905 | 128,042,724 | ||||||||||
Reinvestment of dividends and distributions | 2,982,316 | 3,065,757 | ||||||||||
Cost of shares redeemed | (21,699,352 | ) | (24,196,699 | ) | ||||||||
|
|
|
| |||||||||
Net increase in net assets from capital share transactions | 84,744,869 | 106,911,782 | ||||||||||
|
|
|
| |||||||||
Net increase in net assets | 88,419,559 | 104,168,156 | ||||||||||
|
|
|
| |||||||||
Net assets: |
| |||||||||||
Beginning of period | 249,601,074 | 145,432,918 | ||||||||||
|
|
|
| |||||||||
End of period | $ | 338,020,633 | $ | 249,601,074 | ||||||||
|
|
|
| |||||||||
A Commencement of operations February 28, 2019. |
|
See accompanying notes
10
American Beacon Garcia Hamilton Quality Bond FundSM
April 30, 2019 (Unaudited)
1. Organization and Significant Accounting Policies
American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Fund, a series within the Trust, is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified,open-end management investment company. As of April 30, 2019, the Trust consists of thirty-three active series, one of which is presented in this filing: American Beacon Garcia Hamilton Quality Bond Fund (the “Fund”). The remainingthirty-two active series are reported in separate filings.
American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily 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”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.
Recent Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2017-08,Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.
In August 2018, the FASB issued ASU2018-13,Fair Value Measurement (“Topic 820”). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the period ended April 30, 2019, the Fund has chosen to adopt the standard. The adoption of this ASU guidance did not have a material impact on the financial statements and other disclosures.
Class Disclosure
On February 28, 2019, the Fund created the R6 Class, a new class made available for sale to retirement plans pursuant to an amendment to the Fund’s registrations statement filed with the U.S. Securities and Exchange Commission (“SEC”). Refer to the Fund’s prospectus for more details.
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 | Eligible Investors | Minimum Initial Investments | ||||
Institutional | Large institutional investors - sold directly through intermediary channels. | $ | 250,000 | |||
Y Class | Large institutional retirement plan investors - sold directly or through intermediary channels. | $ | 100,000 | |||
Investor | All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors. | $ | 2,500 | |||
R6 Class | Large institutional retirement plan investors - sold through retirement plan sponsors. | None |
11
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Each class offered by the Trust has equal rights as to assets and voting privileges. Income andnon-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 service, distribution, transfer agent fees, andsub-transfer agent fees that vary amongst the classes as described more fully in Note 2.
Significant Accounting Policies
The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is considered an investment company and accordingly, follows the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946,Financial Services – Investment Companies,a part of Generally Accepted Accounting Principles (“U.S. GAAP”).
Security Transactions and Investment Income
Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.
Dividend income, net of foreign taxes, is recorded on theex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Fund. Interest income, net of foreign taxes, is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.
Distributions to Shareholders
Distributions, if any, of net investment income of the Fund will normally be declared daily and paid monthly. The Funds final distribution (annual) for each taxable year will include any remaining investment company taxable income undistributed during the year, as well as all net capital gains realized during the year. The daily and annual distributions are recorded on the Fund’s books on 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. To the extent necessary to fully distribute capital gains, the Fund may designate earnings and profits distributed to shareholders on the redemption of shares.
Allocation of Income, Trust Expenses, Gains, and Losses
Investment income, realized and unrealized gains and losses from investments of the Fund is allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Fund. Expenses directly charged or attributable to the Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Fund on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Fund or nature of the services performed and relative applicability to the Fund.
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.
12
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Other
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In the normal course of business, the Trust enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.
2. Transactions with Affiliates
Management and InvestmentSub-Advisory Agreements
The Fund and the Manager are parties to a Management Agreement that obligates the Manager to provide the Fund with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of the Fund’s average daily net assets that is calculated and accrued daily according to the following schedule:
First $5 billion | 0.35 | % | ||
Next $5 billion | 0.325 | % | ||
Next $10 billion | 0.30 | % | ||
Over $20 billion | 0.275 | % |
The Trust, on behalf of the Fund, and the Manager have entered into an Investment Advisory Agreement with Garcia Hamilton & Associates, L.P. (the“Sub-Advisor”) pursuant to which the Fund has agreed to pay an annualizedsub-advisory fee that is calculated and accrued daily based on the Fund’s average daily net assets according to the following schedule:
First $1 billion | 0.20 | % | ||
Over $1 billion | 0.15 | % |
The Management andSub-Advisory Fees paid by the Fund for the period ended April 30, 2019 were as follows:
Effective Fee Rate | Amount of Fees Paid | |||||||||||
Management Fees | 0.35 | % | $ | 521,332 | ||||||||
Sub-Advisor Fees | 0.20 | % | 298,232 | |||||||||
|
|
|
| |||||||||
Total | 0.55 | % | $ | 819,564 | ||||||||
|
|
|
|
Distribution Plans
The Fund has adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule12b-1 under the Act, pursuant to which no separate fees may be charged to the Fund for distribution purposes. However, the Plan authorizes the management fee received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Fund does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.
Service Plans
The Manager and the Trust entered into a Service Plan that obligates the Manager to oversee additional shareholder servicing of the Investor Class of the Fund. As compensation for performing the duties required under the Service Plan, the Manager receives an annualized fee up to 0.375% of the average daily net assets of the Investor Class of the Fund.
13
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Sub-Transfer Agent Fees
The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Fund and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of its customers who hold positions in the Fund. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Fund’s transfer agent. Accordingly, the Fund, pursuant to Board approval, has agreed to reimburse the Manager for certainnon-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts(sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the period ended April 30, 2019, thesub-transfer agent fees, as reflected in “Transfer agent fees” on the Statement of Operations, were as follows:
Fund | Sub-Transfer Agent Fees | |||
Garcia Hamilton Quality Bond | $ | 46,948 |
As of April 30, 2019, the Fund owed the Manager the following reimbursement ofsub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statement of Assets and Liabilities:
Fund | Reimbursement Sub-Transfer Agent Fees | |||
Garcia Hamilton Quality Bond | $ | 10,308 |
Investments 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 investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the period ended April 30, 2019, 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 | |||
Garcia Hamilton Quality Bond | $ | 6,388 |
Interfund Credit Facility
Pursuant to an exemptive order issued by the SEC, the Fund, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the Fund because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the period ended April 30, 2019, the Fund did not utilize the credit facility.
14
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Expense Reimbursement Plan
The Manager contractually agreed to reduce fees and/or reimburse expenses for the classes of the Fund to the extent that total operating expenses exceed the Fund’s expense cap. During the period ended April 30, 2019, the Manager waived and/or reimbursed expenses as follows:
Expense Cap | Expiration of Reimbursed Expenses | |||||||||||||||||
Fund | Class | 11/1/2018 - 4/30/2019 | Reimbursed Expenses | (Recouped) Expenses | ||||||||||||||
Garcia Hamilton Quality Bond | Institutional | 0.45 | % | $ | 265,252 | $ | - | 2022 | ||||||||||
Garcia Hamilton Quality Bond | Y | 0.55 | % | 12,740 | - | 2022 | ||||||||||||
Garcia Hamilton Quality Bond | Investor | 0.83 | % | 13,651 | - | 2022 | ||||||||||||
Garcia Hamilton Quality Bond | R6(1) | 0.42 | % | 97 | - | 2022 |
(1) Effective February 28, 2019.
Of these amounts, $55,663 was disclosed as a receivable from the Manager on the Statement of Assets and Liabilities at April 30, 2019.
The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Fund for any contractual fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Fund’s annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. The reimbursed expenses listed above will expire in 2022. 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, but not recorded as a liability are as follows:
Fund | Recouped Expenses | Excess Expense Carryover | Expired Expense Carryover | Expiration of Reimbursed Expenses | ||||||||||||
Garcia Hamilton Quality Bond | $ | - | $ | 248,391 | $ | - | 2019 | |||||||||
Garcia Hamilton Quality Bond | - | 334,782 | - | 2020 | ||||||||||||
Garcia Hamilton Quality Bond | - | 410,947 | - | 2021 |
Trustee Fees and Expenses
As compensation for their service to the Trusts, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chair receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for attendance at the committee meetings. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each fund of the Trusts according to its respective net assets.
3. Security Valuation and Fair Value Measurements
The price of the Fund’s shares is based on the Fund’s Net Asset Value (“NAV”). The NAV of the Fund, or each of its share classes, as applicable, is determined by dividing the total value of portfolio investments and other assets, less any liabilities attributable to the Fund or class, by the total number of shares outstanding of the Fund or class.
15
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Investments are valued at the close of the New York Stock Exchange (the “Exchange”), normally at 4:00 p.m. Eastern Time, each day that the Exchange is open for business.
Debt securities normally are valued on the basis of prices provided by an independent pricing service and may take into account appropriate factors such asinstitution-size trading in similar groups of securities, yield, quality, coupon rate, maturity, type of issue, trading characteristics, and other market data. Prices of debt securities may be determined using quotes obtained from brokers.
Investments inopen-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 Board.
Other investments, including restricted securities and those financial instruments for which the above valuation procedures are inappropriate or are deemed not to reflect fair value, are stated at fair value, as determined in good faith by the Manager’s Valuation Committee, pursuant to procedures established by the Board.
Valuation Inputs
Various inputs may be used to determine the fair value of the Fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1 | - | Quoted prices in active markets for identical securities. | ||
Level 2 | - | Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. | ||
Level 3 | - | Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment. |
Level 1 and Level 2 trading assets and trading liabilities, at fair value
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, andnon-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.
Mortgage-related and asset-backed securities (“ABS”) are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker-dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows, and market-based yield spreads for each tranche, and incorporates deal collateral performance, as available. Mortgage-related and ABS that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.
Investments in registeredopen-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.
16
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
4. Securities and Other Investments
Agency Mortgage-Backed Securities
Certain mortgage-backed securities (“MBS”) may be issued or guaranteed by the U.S. government or a government sponsored entity, such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Although these instruments may be guaranteed by the U.S. government or a government sponsored entity, many such MBS are not backed by the full faith and credit of the United States and are still exposed to the risk ofnon-payment.
Fixed-Income Investments
The Fund may hold debt, including government and corporate debt, and other fixed-income securities. Typically, the values of fixed-income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed-income securities is interest rate risk, which is the risk that their value will generally decline as prevailing interest rates rise, which may cause the Fund’s NAV to likewise decrease, and vice versa. How specific fixed-income securities may react to changes in interest rates will depend on the specific characteristics of each security. For example, while securities with longer maturities tend to produce higher yields, they also tend to be more sensitive to changes in prevailing interest rates and are, therefore, more volatile than shorter-term securities and are subject to greater market fluctuations as a result of changes in interest rates. Fixed-income securities are also subject to credit risk, which is the risk that the credit strength of an issuer of a fixed-income security will weaken and/or that the issuer will be unable to make timely principal and interest payments and that the security may go into default. In addition, there is prepayment risk, which is the risk that during periods of falling interest rates, certain fixed-income securities with higher interest rates, such as MBS and ABS, may be prepaid by their issuers thereby reducing the amount of interest payments. This may result in a Fund having to reinvest its proceeds in lower yielding securities. Securities underlying MBS and ABS, which may include subprime mortgages, also may be subject to a higher degree of credit risk, valuation risk, and liquidity risk.
Mortgage-Backed Securities
MBS often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of the Fund’s portfolio at the time resulting in reinvestment risk.
Rising or high interest rates may result in slower than expected principal payments which may tend to extend the duration of MBS, making them more volatile and more sensitive to changes in interest rates. This is known as extension risk.
MBS may have less potential for capital appreciation than comparable fixed-income securities due to the likelihood of increased prepayments of mortgages resulting from foreclosures or declining interest rates. These foreclosed or refinanced mortgages are paid off at face value (par) or less, causing a loss, particularly for any investor who may have purchased the security at a premium or a price above par. In such an environment, this risk limits the potential price appreciation of these securities.
Mortgage-Related and Other Asset-Backed Securities
The Fund may invest in mortgage or other ABS. These securities may include mortgage instruments issued by U.S. government agencies (“agency mortgages”) or those issued by private entities(“non-agency mortgages”). Specific types of instruments may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed
17
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
securities and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. The value of the Fund’s MBS may be affected by, among other things, changes or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the mortgage, or the quality of the underlying assets. The mortgages underlying the securities may default or decline in quality or value. Through its investments in MBS, a Fund has exposure to subprime loans,Alt-A loans andnon-conforming loans as well as to the mortgage and credit markets generally. Underlying collateral related to subprime,Alt-A andnon-conforming mortgage loans has become increasingly susceptible to defaults and declines in quality or value, especially in a declining residential real estate market. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole.
Other Investment Company Securities and Other Exchange-Traded Products
The Fund may invest in shares of other investment companies, includingopen-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 asub-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 the 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.
U.S. Government Agency Securities
U.S. Government agency securities are issued or guaranteed by the U.S. Government or its agencies or instrumentalities. Some obligations issued by U.S. Government agencies and instrumentalities are supported by the full faith and credit of the U.S. Treasury; others by the right of the issuer to borrow from the U.S. Treasury; others by discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and others only by the credit of the agency or instrumentality. U.S. Government securities bear fixed, floating or variable rates of interest. While the U.S. Government currently provides financial support to certain U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it will always do so, since it is not so obligated by law. U.S. Government securities include U.S. Treasury bills, notes and bonds, Federal Home Loan Bank (“FHLB”) obligations, Federal Farm Credit Bank (“FFCB”) obligations, U.S. Government agency obligations and repurchase agreements secured thereby. U.S. Government agency securities are subject to credit risk and interest rate risk.
U.S. Treasury Obligations
U.S. Treasury obligations include bills (initial maturities of one year or less), notes (initial maturities between two and ten years), and bonds (initial maturities over ten years) issued by the U.S. Treasury, Separately Traded Registered Interest and Principal component parts of such obligations (known as “STRIPS”) and inflation-indexed securities. The prices of these securities (like all debt securities) change between issuance and maturity in response to fluctuating market interest rates. U.S. Treasury obligations are subject to credit risk and interest rate risk.
18
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
5. Principal Risks
Investing in the Fund may involve certain risks including, but not limited to, those described below.
Credit Risk
The Fund is subject to the risk that the issuer or guarantor of a debt security, or the counterparty to a derivatives contract or a loan, will fail to make timely payment of interest or principal or otherwise honor its obligations or default completely. A decline in the credit rating of an individual security held by a Fund may have an adverse impact on its price and make it difficult for a Fund to sell it. Ratings represent a rating agency’s opinion regarding the quality of the security and are not a guarantee of quality. Rating agencies might not always change their credit rating on an issuer or security in a timely manner to reflect events that could affect the issuer’s ability to make timely payments on its obligations. Credit risk is typically greater for securities with ratings that are below investment grade.
Floating Rate Securities Risk
The coupons on certain fixed income securities in which the Fund may invest are not fixed and may fluctuate based upon changes in market rates. The coupon on a floating rate security is generally based on an interest rate such as a money-market index, London Interbank Offered Rate (“LIBOR”) or a Treasury bill rate. Such securities are subject to interest rate risk and may fluctuate in value in response to interest rate changes if there is a delay between changes in market interest rates and the interest reset date for the obligation, or for other reasons. As short-term interest rates decline, the coupons on floating rate securities typically decrease. Alternatively, during periods of rising interest rates, changes in the coupons of floating rate securities may lag behind changes in market rates or may have limits on the maximum increases in the coupon rates. The value of floating rate securities may decline if their coupons do not rise as much, or as quickly, as interest rates in general. Conversely, floating rate securities will not generally increase in value if interest rates decline.
Interest Rate Risk
Investments in investment-grade andnon-investment grade fixed-income securities are subject to interest rate risk. The value of the Fund’s fixed-income investments typically will fall when interest rates rise. The Fund may be particularly sensitive to changes in interest rates if it invests in debt securities with intermediate and long terms to maturity. Debt securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than debt securities with shorter durations. For example, if a bond has a duration of seven years, a 1% increase in interest rates could be expected to result in a 7% decrease in the value of the bond. Yields of debt securities will fluctuate over time. Following the financial crisis that started in 2008, the Federal Reserve attempted to stabilize the economy and support the economic recovery by keeping the federal funds rate (the interest rate at which depository institutions lend reserve balances to each other overnight) at or near zero percent. The Federal Reserve has raised the federal funds rate several times since December 2015 and may continue to increase rates in the future. Interest rates may rise significantly and/or rapidly, potentially resulting insubstantial losses to the Fund. During periods of very low or negative interest rates, the Fund may be unable to maintain positive returns. Certain European countries and Japan have recently experienced negative interest rates on deposits and debt securities have traded at negative yields. Negative interest rates may become more prevalent amongnon-U.S. issuers, and potentially within the United States. Changing interest rates, including rates that fall below zero, may have unpredictable effects on markets, may result in heightened market volatility and may detract from Fund’s performance to the extent the Fund is exposed to such interest rates.
19
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Investment Risk
An investment in the Fund is not a deposit with a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. When you sell your shares of the Fund, they could be worth less than what you paid for them. Therefore, you may lose money by investing in the Fund.
Liquidity Risk
When there is little or no active trading market for a specific security it can become more difficult to purchase or sell the securities at or near their perceived value. During such periods, certain investments held by the Fund may be difficult to sell or other investments may be difficult to purchase at favorable times or prices. As a result, the Fund may have to lower the price on certain securities that it is trying to sell, sell other securities instead or forgo an investment opportunity, any of which could have a negative effect on Fund management or performance. Redemptions by a few large investors in the Fund at such times may have a significant adverse effect on the Fund’s NAV and remaining Fund shareholders. In addition, the market-making capacity of dealers in certain types of securities has been reduced in recent years, in part as a result of structural and regulatory changes, such as fewer proprietary trading desks and increased regulatory capital requirements for broker-dealers. Further, many broker-dealers have reduced their inventory of certain debt securities. This could negatively affect the Fund’s ability to buy or sell debt securities and increase the related volatility and trading costs. The Fund may lose money if it is forced to sell certain investments at unfavorable prices to meet redemption requests or other cash needs.
Market Risk
Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.
In response to the financial crisis, the U.S. and other governments, the Federal Reserve, and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced the federal corporate income tax rate, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the
20
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the market’s expectations for changes in government policies are not borne out.
Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline overtime, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse.
The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.
Mortgage-Backed and Mortgage Related Securities Risk
Investments in mortgage-backed and mortgage-related securities are subject to market risks for fixed-income securities which include, but are not limited to, interest rate risk, credit risk, extension risk and prepayment risk. When mortgages and other obligations are prepaid and when securities are called, a Fund may have to reinvest in securities with a lower yield or fail to recover additional amounts (i.e., premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss and/or a decrease in the amount of dividends and yield.
Other Investment Companies Risk
A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed only as to the timely payment of interest and principal when held to maturity. The market prices for such securities are not guaranteed and will fluctuate. Additionally, circumstances could arise that would prevent the payment of interest or principal. This could result in losses to a Fund. Investments in government-sponsored enterprises, are debt obligations issued by agencies and instrumentalities of the U.S. Government. These obligations vary in the level of support they receive from the U.S. Government. They may be:(i) supported by the full faith and credit of the U.S. Treasury, such as those of the Government National Mortgage Association (“Ginnie Mae”); (ii) supported by the right of the issuer to borrow from the U.S. Treasury, such as those of the Federal Home Loan Bank and the Federal Farm Credit Banks; (iii) supported by the discretionary authority of the U.S. Government to purchase the agency obligations, such as those of Fannie Mae and Freddie Mac or (iv) supported only by the credit of the issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may choose not to provide financial support to U.S.Government-sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case, if the issuer defaulted, to the extent a Fund holds securities of such issuer, it might not be able to recover its investment from the U.S. Government.
21
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Prepayment Risk
When interest rates fall, borrowers will generally repay the loans that underlie certain debt securities, especially mortgage-related and other types of asset-backed securities, more quickly than expected, causing the issuer of the security to repay the principal prior to the security’s expected maturity date. The Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If the Fund buys those securities at a premium, accelerated prepayments on those securities could cause the Fund to lose a portion of its principal investment. The impact of prepayments on the price of a security may be difficult to predict and may increase the security’s price volatility.
Redemption Risk
A Fund may experience periods of heavy redemptions that could cause a Fund to sell assets at inopportune times or at a loss or depressed value. Redemption risk is greater to the extent that one or more investors or intermediaries control a large percentage of investments in a Fund, have short investment horizons,or have unpredictable cash flow needs. A general rise in interest rates has the potential to cause investors to move out of fixed income securities on a large scale, which may increase redemptions from mutual funds that hold large amounts of fixed income securities. This, coupled with a reduction in the ability or willingness of dealers and other institutional investors to buy or hold fixed income securities, may result in decreased liquidity and increased volatility in the fixed income markets, and heightened redemption risk. Heavy redemptions, whether by a few large investors or many smaller investors, could hurt a Fund’s performance. This risk is heightened if a Fund invests in emerging market securities, which are generally less liquid than the securities of U.S. and other developed markets. The sale of assets to meet redemption requests may create net capital gains or losses, which could cause a Fund to have to distribute substantial capital gains.
Sector Risk
Sector risk is the risk associated with the Fund holding a significant amount of investments in similar businesses, which would be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of the equity and debt securities of companies in a particular sector of the market to change. To the extent the Fund has substantial holdings within a particular sector, the risks to the Fund associated with that sector increase. To the extent a Fund invests in the financial services sector, the value of the Fund’s shares may be particularly vulnerable to factors affecting that sector, such as the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults,extensive government regulation and price competition. The value of a Fund’s shares could experience significantly greater volatility than investment companies investing more broadly.
U.S. Government Securities and Government-Sponsored Enterprises Risk
A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed only as to the timely payment of interest and principal when held to maturity. The market prices for such securities are not guaranteed and will fluctuate. Additionally, circumstances could arise that would prevent the payment of interest or principal. This could result in losses to a Fund. Investments in government-sponsored enterprises, are debt obligations issued by agencies and instrumentalities of the U.S. Government. These obligations vary in the level of support they receive from the U.S. Government. They may be:(i) supported by the full faith and credit of the U.S. Treasury, such as those of the Government National Mortgage Association (“Ginnie Mae”); (ii) supported by the right of the issuer to borrow from the U.S. Treasury, such as those of the Federal Home Loan Bank and the Federal Farm Credit Banks; (iii) supported by the discretionary authority of the U.S. Government to purchase the agency obligations, such as those of Fannie Mae and Freddie Mac or (iv) supported only by the credit of the issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may choose not to provide financial support
22
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
to U.S.Government-sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case, if the issuer defaulted, to the extent a Fund holds securities of such issuer, it might not be able to recover its investment from the U.S. Government.
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 distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes, the Fund is treated as a single entity for the purpose of determining such qualification.
The Fund does not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the three year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.
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.
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.
As of April 30, 2019 the tax cost for the Fund and their respective gross unrealized appreciation (depreciation) were as follows:
Fund | Tax Cost | Unrealized Appreciation | Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||||
Garcia Hamilton Quality Bond | $ | 334,767,129 | $ | 1,891,346 | $ | (244,984 | ) | $ | 1,646,362 |
Under the Regulated Investment Company Modernization Act of 2010 (“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.
As of October 31, 2018, the Fund had the following capital loss carryforwards:
Fund | Short-Term Capital Loss Carryforwards | Long-Term Capital Loss Carryforwards | |||||||||||||
Garcia Hamilton Quality Bond | $ | 1,967,308 | $ | 1,124,741 |
7. Investment Transactions
The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the period ended April 30, 2019 were as follows:
Fund | Purchases (non-U.S. Government Securities) | Purchases of U.S. Government Securities | Sales (non-U.S. Government Securities) | Sales of U.S. Government Securities | ||||||||||||||||||||||||
Garcia Hamilton Quality Bond | $ | 159,221,121 | $ | 60,108,750 | $ | 34,873,389 | $ | 71,135,258 |
23
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
A summary of the Fund’s transactions in the USG Select Fund for the period ended April 30, 2019 were as follows:
Fund | Type of Transaction | October 31, 2018 Shares/Fair Value | Purchases | Sales | April 30, 2019 Shares/Fair Value | Dividend Income | ||||||||||||||||||||||||||||||||||||
Garcia Hamilton Quality Bond | Direct | $ | 27,218,440 | $ | 188,937,836 | $ | 208,518,815 | $ | 7,637,461 | $ | 140,865 |
8. Borrowing Arrangements
Effective November 15, 2018 (the “Effective Date”), the Fund, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $250 million with interest at a rate equal to the higher of(a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a closing fee of $100,000 on the Effective Date and a quarterly commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 14, 2019, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
On the Effective Date, the Fund, along with certain other Participating Funds managed by the Manager, also entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of(a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on each outstanding loan. Each of the Participating Funds will pay a closing fee of $35,000 on the Effective Date. The Uncommitted Line expires November 14, 2019 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statement of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.
During the period ended April 30, 2019, the Fund did not utilize this facility.
24
American Beacon Garcia Hamilton Quality Bond FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
9. Capital Share Transactions
The tables below summarize the activity in capital shares for each Class of the Fund:
Institutional Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Garcia Hamilton Quality Bond Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 8,165,715 | $ | 80,414,003 | 12,598,631 | $ | 124,573,816 | ||||||||||||||||||||||
Reinvestment of dividends | 268,919 | 2,655,302 | 287,808 | 2,842,265 | ||||||||||||||||||||||||
Shares redeemed | (1,934,490 | ) | (19,055,891 | ) | (2,278,673 | ) | (22,493,423 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 6,500,144 | $ | 64,013,414 | 10,607,766 | $ | 104,922,658 | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Y Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Garcia Hamilton Quality Bond Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 1,947,136 | $ | 19,148,199 | 77,645 | $ | 766,204 | ||||||||||||||||||||||
Reinvestment of dividends | 19,312 | 190,889 | 5,845 | 57,695 | ||||||||||||||||||||||||
Shares redeemed | (156,067 | ) | (1,541,813 | ) | (23,305 | ) | (230,768 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 1,810,381 | $ | 17,797,275 | 60,185 | $ | 593,131 | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Garcia Hamilton Quality Bond Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 385,928 | $ | 3,799,703 | 273,789 | $ | 2,702,704 | ||||||||||||||||||||||
Reinvestment of dividends | 13,739 | 135,670 | 16,784 | 165,797 | ||||||||||||||||||||||||
Shares redeemed | (111,913 | ) | (1,101,648 | ) | (149,158 | ) | (1,472,508 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 287,754 | $ | 2,833,725 | 141,415 | $ | 1,395,993 | ||||||||||||||||||||||
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| |||||||||||||||||||||
R6 Class | ||||||||||||||||||||||||||||
February 28, 2019A to April 30, 2019 | ||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Garcia Hamilton Quality Bond Fund | Shares | Amount | ||||||||||||||||||||||||||
Shares sold | 10,132 | B | $ | 100,000 | B | |||||||||||||||||||||||
Reinvestment of dividends | 46 | 455 | ||||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Net increase in shares outstanding | 10,178 | $ | 100,455 | |||||||||||||||||||||||||
|
|
|
|
A Commencement of operations.
B Seed capital was received in the amount of $100,000 for the R6 Class. As a result, shares were issued in the amount of 10,132 for R6 Class.
10. Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Fund’s financial statements through this date.
25
American Beacon Garcia Hamilton Quality Bond FundSM
(For a share outstanding throughout the period)
Institutional Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | Year Ended October 31, | April 4, 2016A to October 31, 2016 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.79 | $ | 9.91 | $ | 9.98 | $ | 10.00 | ||||||||||||||||||||
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|
|
| |||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | 0.13 | 0.20 | 0.14 | 0.05 | ||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.11 | (0.13 | ) | (0.05 | ) | (0.02 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total income (loss) from investment operations | 0.24 | 0.07 | 0.09 | 0.03 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.12 | ) | (0.19 | ) | (0.15 | ) | (0.05 | ) | ||||||||||||||||||||
Distributions from net realized gains | - | - | (0.01 | ) | - | |||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total distributions | (0.12 | ) | (0.19 | ) | (0.16 | ) | (0.05 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net asset value, end of period | $ | 9.91 | $ | 9.79 | $ | 9.91 | $ | 9.98 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total returnB | 2.50 | %C | 0.74 | % | 0.91 | % | 0.34 | %C | ||||||||||||||||||||
|
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|
|
|
|
|
| |||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||
Net assets, end of period | $ | 302,262,810 | $ | 234,919,975 | $ | 132,575,412 | $ | 124,032,604 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.65 | %D | 0.69 | % | 0.70 | % | 1.06 | %D | ||||||||||||||||||||
Expenses, net of reimbursements | 0.45 | %D | 0.45 | % | 0.45 | % | 0.45 | %D | ||||||||||||||||||||
Net investment income, before expense reimbursements | 2.29 | %D | 1.68 | % | 1.12 | % | 0.29 | %D | ||||||||||||||||||||
Net investment income, net of reimbursements | 2.49 | %D | 1.92 | % | 1.37 | % | 0.91 | %D | ||||||||||||||||||||
Portfolio turnover rate | 40 | % | 143 | % | 52 | % | 40 | %E |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
E | Portfolio turnover rate is for the period from April 4, 2016 through October 31, 2016 and is not annualized. |
See accompanying notes
26
American Beacon Garcia Hamilton Quality Bond FundSM
Financial Highlights
(For a share outstanding throughout the period)
Y Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | Year Ended October 31, | April 4, 2016A to October 31, | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.79 | $ | 9.90 | $ | 9.98 | $ | 10.00 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | 0.14 | 0.18 | 0.13 | 0.05 | ||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.10 | (0.11 | ) | (0.06 | ) | (0.02 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total income (loss) from investment operations | 0.24 | 0.07 | 0.07 | 0.03 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.12 | ) | (0.18 | ) | (0.14 | ) | (0.05 | ) | ||||||||||||||||||||
Distributions from net realized gains | - | - | (0.01 | ) | - | |||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total distributions | (0.12 | ) | (0.18 | ) | (0.15 | ) | (0.05 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net asset value, end of period | $ | 9.91 | $ | 9.79 | $ | 9.90 | $ | 9.98 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total returnB | 2.45 | %C | 0.74 | % | 0.71 | % | 0.29 | %C | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||
Net assets, end of period | $ | 21,672,687 | $ | 3,685,857 | $ | 3,133,476 | $ | 3,265,315 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.71 | %D | 0.75 | % | 0.77 | % | 1.29 | %D | ||||||||||||||||||||
Expenses, net of reimbursements | 0.55 | %D | 0.55 | % | 0.55 | % | 0.55 | %D | ||||||||||||||||||||
Net investment income, before expense reimbursements | 2.28 | %D | 1.58 | % | 1.05 | % | 0.11 | %D | ||||||||||||||||||||
Net investment income, net of reimbursements | 2.44 | %D | 1.78 | % | 1.27 | % | 0.85 | %D | ||||||||||||||||||||
Portfolio turnover rate | 40 | % | 143 | % | 52 | % | 40 | %E |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
E | Portfolio turnover rate is for the period from April 4, 2016 through October 31, 2016 and is not annualized. |
See accompanying notes
27
American Beacon Garcia Hamilton Quality Bond FundSM
Financial Highlights
(For a share outstanding throughout the period)
Investor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | Year Ended October 31, | April 4, 2016A to October 31, | |||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 9.79 | $ | 9.91 | $ | 9.99 | $ | 10.00 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||
Net investment income | 0.11 | 0.15 | 0.10 | 0.03 | ||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.11 | (0.11 | ) | (0.06 | ) | (0.01 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total income (loss) from investment operations | 0.22 | 0.04 | 0.04 | 0.02 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||
Dividends from net investment income | (0.10 | ) | (0.16 | ) | (0.11 | ) | (0.03 | ) | ||||||||||||||||||||
Distributions from net realized gains | - | - | (0.01 | ) | - | |||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total distributions | (0.10 | ) | (0.16 | ) | (0.12 | ) | (0.03 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net asset value, end of period | $ | 9.91 | $ | 9.79 | $ | 9.91 | $ | 9.99 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total returnB | 2.31 | %C | 0.36 | % | 0.43 | % | 0.24 | %C | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||
Net assets, end of period | $ | 13,984,278 | $ | 10,995,242 | $ | 9,724,030 | $ | 8,594,617 | ||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.05 | %D | 0.92 | % | 0.94 | % | 1.19 | %D | ||||||||||||||||||||
Expenses, net of reimbursements | 0.83 | %D | 0.83 | % | 0.83 | % | 0.83 | %D | ||||||||||||||||||||
Net investment income, before expense reimbursements | 1.90 | %D | 1.41 | % | 0.89 | % | 0.21 | %D | ||||||||||||||||||||
Net investment income, net of reimbursements | 2.12 | %D | 1.50 | % | 0.99 | % | 0.57 | %D | ||||||||||||||||||||
Portfolio turnover rate | 40 | % | 143 | % | 52 | % | 40 | %E |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
E | Portfolio turnover rate is for the period from April 4, 2016 through October 31, 2016 and is not annualized. |
See accompanying notes
28
American Beacon Garcia Hamilton Quality Bond FundSM
Financial Highlights
(For a share outstanding throughout the period)
R6 Class | ||||
February 28, 2019A through April 30, | ||||
2019 | ||||
|
| |||
(unaudited) | ||||
Net asset value, beginning of period | $ | 9.87 | ||
|
| |||
Income from investment operations: | ||||
Net investment income | 0.04 | |||
Net gains on investments (both realized and unrealized) | 0.04 | |||
|
| |||
Total income from investment operations | 0.08 | |||
|
| |||
Less distributions: | ||||
Dividends from net investment income | (0.04 | ) | ||
|
| |||
Total distributions | (0.04 | ) | ||
|
| |||
Net asset value, end of period | $ | 9.91 | ||
|
| |||
Total returnB | 0.86 | %C | ||
|
| |||
Ratios and supplemental data: | ||||
Net assets, end of period | $ | 100,858 | ||
Ratios to average net assets: | ||||
Expenses, before reimbursements | 1.03 | %D | ||
Expenses, net of reimbursements | 0.42 | %D | ||
Net investment income, before expense reimbursements | 2.14 | %D | ||
Net investment income, net of reimbursements | 2.75 | %D | ||
Portfolio turnover rate | 40 | % |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
29
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32
Delivery of Documents
eDelivery isNOW AVAILABLE - Stop traditional mail delivery and receive your
shareholder reports and summary prospectuson-line. Sign up at
www.americanbeaconfunds.com
If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go towww.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.
To obtain more information about the Fund:
![]() | ![]() | |
ByE-mail: | On the Internet: | |
american_beacon.funds@ambeacon.com | Visit our website atwww.americanbeaconfunds.com | |
By Telephone: Call (800)658-5811 | By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643 | |
Availability of Quarterly Portfolio Schedules | Availability of Proxy Voting Policy and Records | |
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 atwww.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 (800)-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available atwww.americanbeaconfunds.com approximately twenty days after the end of each month. | 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 websitewww.americanbeaconfunds.com and by calling1-800-967-9009 or by accessing the SEC’s website atwww.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 atwww.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 Company Boston, Massachusetts | TRANSFER AGENT DST Asset Manager Solutions, Inc. Quincy, Massachusetts | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas | DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas |
This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus or Summary Prospectus.
American Beacon Funds and American Beacon Garcia Hamilton Quality Bond Fund are service marks of American Beacon Advisors, Inc.
SAR 04/19
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.
INTERNATIONAL EQUITY FUND RISKS
Investing inforeign securitiesmay involve heightened risk due to currency fluctuations and economic and political risks. Investing invalue stocksmay limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as atrade-off for this potentially lower risk. The use offutures contractsfor cash management may subject the Fund to losing more money than invested. The Fund participates in asecurities lendingprogram. 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.
TOCQUEVILLE INTERNATIONAL VALUE FUND RISKS
Investing inforeign securitiesincluding emerging markets may involve heightened risk due to currency fluctuations and economic and political risks. Investing invalue stocks may limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as atrade-off for this potentially lower risk. The use offutures contracts for cash management may subject the Fund to losing more money than invested. The Fund participates in asecurities lending program. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.
Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and each Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions, and, therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.
American Beacon Funds April 30, 2019 |
1 | ||||
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7 | ||||
9 | ||||
18 | ||||
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57 | ||||
Disclosures Regarding the Approval of the Management and Investment Advisory Agreements . | 60 |
Back Cover |
![]() | Dear Shareholders,
At American Beacon, we take our heritage as a fiduciary very seriously – and we apply that mindset to all aspects of our business as a fund manager. As a result, for more than 30 years, we have endeavored to:
u Identify, engage and overseethe best money managers. As a manager of managers, our goal is to engage the most effective money managers for each asset class, investment style and market strategy we offer. We are committed to partnering with those we judge to be “the best of the best” when it comes to choosingsub-advisors for our mutual funds. Whether ourdue-diligence process results in the selection of onesub-advisor or multiplesub-advisors, we select those we believe show the greatest potential to help us meet the high standards you’ve come to expect. |
u | Offer a variety of innovative investment solutions. Our mutual funds – which span the domestic, international, global, frontier and emerging markets – aresub-advised by experienced money managers who employ distinctive, proprietary investment processes to manage assets through a variety of economic and market conditions. From offering some of the first multi-manager funds, one of the first retirement income funds and the first open-ended mutual fund in the U.S. to focus primarily on frontier-market debt, our robust history includes applying a disciplined, solutions-based approach to our product development process in an effort to help you grow your assets while mitigating risk. |
u | Provide a solutions-based approach to achieving long-term investment goals.We seek to provide investment solutions that might enable you to benefit from taking a more disciplined approach to investing. Our mutual funds provide access to institutional-quality, research-intensive investment managers with diverse processes and styles. Over the long run, having such access and spending time in the market – rather than trying to time the market – may better position you to reach your long-term investment goals during market upswings and potentially insulate against market downswings. |
Our management approach is more than a concept; it’s the cornerstone of American Beacon’s culture. And we strive to employ it at every turn as we seek to provide a well-diversified line of investment solutions to help our shareholders seek long-term rewards.
Thank you for your continued interest in American Beacon. For additional information about our investment products or to access your account information, please visit our website atwww.americanbeaconfunds.com.
Best Regards,
Gene L. Needles, Jr.
President
American Beacon Funds
1
American Beacon International Equity FundSM
April 30, 2019 (Unaudited)
The Investor Class of the American Beacon International Equity Fund (the “Fund”) returned 4.90% for the six months ended April 30, 2019. The Fund underperformed the MSCI EAFE Index (the “Index”) return of 7.45%.
Average Annual Total Returns for the Period ended April 30, 2019 |
| |||||||||||||||||||||||||||||||
Ticker | 6 Months* | 1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||||||||||||||||
Institutional Class (1,8) | AAIEX | 5.12 | % | (5.67 | )% | 5.79 | % | 1.30 | % | 7.73 | % | |||||||||||||||||||||
Y Class (1,2,8) | ABEYX | 5.04 | % | (5.74 | )% | 5.72 | % | 1.22 | % | 7.64 | % | |||||||||||||||||||||
Investor Class (1,8) | AAIPX | 4.90 | % | (6.01 | )% | 5.41 | % | 0.94 | % | 7.36 | % | |||||||||||||||||||||
Advisor Class (1,3,8) | AAISX | 4.81 | % | (6.15 | )% | 5.30 | % | 0.82 | % | 7.19 | % | |||||||||||||||||||||
R6 Class (1,6,8) | AAERX | 5.10 | % | (5.63 | )% | 5.83 | % | 1.32 | % | 7.75 | % | |||||||||||||||||||||
A without Sales Charge (1,4,8) | AIEAX | 4.86 | % | (6.05 | )% | 5.36 | % | 0.90 | % | 7.27 | % | |||||||||||||||||||||
A with Sales Charge (1,4,8) . | AIEAX | (1.17 | )% | (11.46 | )% | 3.31 | % | (0.29 | )% | 6.64 | % | |||||||||||||||||||||
C without Sales Charge (1,5,8) | AILCX | 4.50 | % | (6.69 | )% | 4.60 | % | 0.16 | % | 6.57 | % | |||||||||||||||||||||
C with Sales Charge (1,5,8) . | AILCX | 3.50 | % | (7.69 | )% | 4.60 | % | 0.16 | % | 6.57 | % | |||||||||||||||||||||
MSCI EAFE Index (7) | 7.45 | % | (3.22 | )% | 7.24 | % | 2.60 | % | 7.95 | % |
* | Not annualized. |
1. | Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visitwww.americanbeaconfunds.com or call1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. A portion of the fees charged to the Institutional Class of the Fund was waived from 2013 through 2015. Performance prior to waiving fees was lower than actual returns shown for 2013 through 2015. |
2. | Fund performance for theten-year period represents the total returns achieved by the Institutional Class from 4/30/09 up to 8/3/09, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 4/30/09. |
3. | A portion of the fees charged to the Advisor Class of the Fund was waived in 2007 and 2009. Performance prior to waiving fees was lower than the actual returns shown for these periods. |
4. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 4/30/09. A portion of the fees charged to the A Class of the Fund was waived from 2010 through 2012 and fully recovered in 2013. Performance prior to waiving fees was lower than the actual returns shown for 2010 through 2012. The maximum sales charge for A Class is 5.75%. |
5. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 4/30/09. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2012, partially recovered in 2013, and fully recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown for 2010 through 2012. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase. |
6. | Fund performance for the three-year, five-year andten-year periods represent the returns achieved by the Institutional Class from 4/30/09 through 2/28/17, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 4/30/09. A portion of the fees charged to the R6 Class of the Fund has been waived since Class inception (February 28, 2017). Performance prior to waiving fees was lower than the actual returns shown since inception. |
7. | The MSCI EAFE Index is a market capitalization weighted index of international stock performance composed of equities from developed markets excluding the U.S. and Canada. One cannot directly invest in an index. |
8. | The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and R6 Class shares were 0.74%, 0.81%, 1.07%, 1.21%, 1.09%, 1.82%, and 0.71%, 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. |
2
American Beacon International Equity FundSM
Performance Overview
April 30, 2019 (Unaudited)
The Fund underperformed the Index over thesix-month period due to both stock selection and country allocation, to a much lesser degree.
Stock selections within Japan and Hong Kong negatively contributed to the Fund’s relative performance over thesix-month period, despite value gained through selections in Denmark. The Fund was hurt by investments in Takeda Pharmaceutical Co., Ltd. (down 6.5%) and KDDI Corp. (down 13.1%) within Japan, and from its investments in China Mobile Ltd. (up 1.7%) and CK Hutchison Holdings Ltd. (up 4.5%) within Hong Kong. Positive contributions came from well-performing investments in Denmark including Vestas Wind Systems A/S (up 46.8%) and Carlsberg AS, Class B (up 19.1%).
Country allocation also weighed on the Fund’s relative performance, particularly by its allocation tooff-index Korea (up 6.8%) and underweight to Australia (up 10.1%). Underweighting Japan (up 1.6%) helped to partially offset the Fund’s relative performance during the period.
Although economic and market conditions vary from period to period, the Fund’s primary strategy of investing in undervalued companies with above-average earnings growth expectations remains consistent.
Top Ten Holdings (% Net Assets) |
| |||||||
Novartis AG | 2.4 | |||||||
Volkswagen AG | 2.2 | |||||||
Prudential PLC | 2.0 | |||||||
SAP SE | 1.9 | |||||||
BNP Paribas S.A. | 1.8 | |||||||
Samsung Electronics Co., Ltd. | 1.8 | |||||||
Takeda Pharmaceutical Co., Ltd. | 1.8 | |||||||
BP PLC | 1.6 | |||||||
Sumitomo Mitsui Financial Group, Inc. | 1.6 | |||||||
UniCredit SpA | 1.6 | |||||||
Total Fund Holdings | 150 | |||||||
Sector Allocation (% Equities) |
| |||||||
Financials | 21.0 | |||||||
Industrials | 16.1 | |||||||
Health Care | 10.7 | |||||||
Communication Services | 9.2 | |||||||
Energy | 9.1 | |||||||
Materials | 7.9 | |||||||
Consumer Discretionary | 7.7 | |||||||
Consumer Staples | 6.7 | |||||||
Information Technology | 6.7 | |||||||
Utilities | 3.1 | |||||||
Real Estate | 1.8 | |||||||
3
American Beacon International Equity FundSM
Performance Overview
April 30, 2019 (Unaudited)
Country Allocation (% Equities) |
| |||||||
United Kingdom | 21.2 | |||||||
Japan | 14.1 | |||||||
France | 11.6 | |||||||
Germany | 11.0 | |||||||
Netherlands | 7.0 | |||||||
Canada | 5.5 | |||||||
Switzerland | 5.5 | |||||||
Republic of Korea | 3.9 | |||||||
Italy | 2.4 | |||||||
Ireland | 2.2 | |||||||
Denmark | 1.8 | |||||||
Singapore | 1.8 | |||||||
United States | 1.8 | |||||||
China | 1.3 | |||||||
Norway | 1.3 | |||||||
Sweden | 1.3 | |||||||
Hong Kong | 1.2 | |||||||
Belgium | 1.0 | |||||||
Australia | 0.9 | |||||||
Finland | 0.9 | |||||||
Israel | 0.9 | |||||||
Spain | 0.8 | |||||||
Luxembourg | 0.6 |
4
American Beacon Tocqueville International Value FundSM
Performance Overview
April 30, 2019 (Unaudited)
The Investor Class returned 7.65% for the six-month period ending April 30, 2019, which outperformed the MSCI EAFE Index (the “Index”) return of 7.45%.
Total Returns for the Period ended April 30, 2019 |
| |||||||||||||||||||||||||||||||
Ticker | 6 Months* | 1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||||||||||||||||
Institutional Class (1,3,5) | TOVIX | 7.78 | % | (6.71 | )% | 4.83 | % | 3.34 | % | 9.21 | % | |||||||||||||||||||||
Y Class (1,2,5) | TOVYX | 7.72 | % | (6.77 | )% | 4.81 | % | 3.33 | % | 9.20 | % | |||||||||||||||||||||
Investor Class (1,5) | TIVFX | 7.65 | % | (6.83 | )% | 4.78 | % | 3.32 | % | 9.20 | % | |||||||||||||||||||||
MSCI EAFE Index (4) | 7.45 | % | (3.22 | )% | 7.24 | % | 2.60 | % | 7.95 | % |
* | Not annualized. |
1. | Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visitwww.americanbeaconfunds.com or call1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. A portion of fees charged to each Class of the Fund has been waived since Fund inception. Performance prior to waiving fees was lower than actual returns shown since inception. |
2. | Fund performance for the three-year, five-year and ten-year period represents the total returns achieved by the Investor Class from 4/30/09 up to 1/18/19, the inception date of the Y Class. Expenses of the Y Class are lower than those of the Investor Class. As a result, total returns shown may be lower than they would have been had the Y Class been in existence since 4/30/09. |
3. | Fund performance for the three-year, five-year and ten-year period represents the total returns achieved by the Investor Class from 4/30/09 up to 1/18/19, the inception date of the Institutional Class. Expenses of the Institutional Class are lower than those of the Investor Class. As a result, total returns shown may be lower than they would have been had the Institutional Class been in existence since 4/30/09. |
4. | The MSCI EAFE Index is a market capitalization weighted index of international stock performance composed of equities from developed markets excluding the U.S. and Canada. One cannot directly invest in an index. |
5. | The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y and Investor Class shares were 0.88%, 0.98% and 1.25%, 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. |
Top Ten Holdings (% Net Assets) |
| |||||||
Amano Corp. | 3.5 | |||||||
Bureau Veritas S.A. | 3.2 | |||||||
Applus Services S.A. | 3.1 | |||||||
CRH PLC | 3.1 | |||||||
Bollore S.A. | 3.0 | |||||||
Hitachi Ltd. | 3.0 | |||||||
Siemens AG, ADR | 3.0 | |||||||
Smiths Group PLC | 3.0 | |||||||
FANUC Corp. | 2.9 | |||||||
Sanofi | 2.9 | |||||||
Total Fund Holdings | 55 | |||||||
Sector Allocation (% Equities) |
| |||||||
Industrials | 30.5 | |||||||
Information Technology | 18.4 | |||||||
Financials | 12.6 | |||||||
Consumer Staples | 10.4 | |||||||
Health Care | 7.2 | |||||||
Materials | 6.7 | |||||||
Communication Services | 5.8 | |||||||
Energy | 4.8 | |||||||
Consumer Discretionary | 3.6 | |||||||
5
American Beacon Tocqueville International Value FundSM
Performance Overview
April 30, 2019 (Unaudited)
Country Allocation (% Equities) |
| |||||||
Japan | 22.3 | |||||||
France | 17.3 | |||||||
United Kingdom | 12.8 | |||||||
Germany | 11.4 | |||||||
United States | 5.7 | |||||||
Switzerland | 5.2 | |||||||
Spain | 4.4 | |||||||
Ireland | 3.2 | |||||||
Netherlands | 2.6 | |||||||
Canada | 2.5 | |||||||
Belgium | 2.4 | |||||||
China | 2.0 | |||||||
Denmark | 2.0 | |||||||
Finland | 1.8 | |||||||
Republic of Korea | 1.7 | |||||||
Bermuda | 1.5 | |||||||
Australia | 1.0 | |||||||
Brazil | 0.2 |
6
American Beacon FundsSM
April 30, 2019 (Unaudited)
Fund Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees, if applicable, and (2) ongoing costs, including management fees, distribution(12b-1) fees,sub-transfer agent fees, and other Fund expenses. The Examples 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 November 1, 2018 through April 30, 2019 for the International Equity Fund and from January 18, 2019 through April 30, 2019 for the Tocqueville International Value Fund.
Actual Expenses
The “Actual” lines of the tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the “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 tables provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the 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 Fund, such as sales charges (loads) or redemption fees, as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.
7
American Beacon FundsSM
Expense Examples
April 30, 2019 (Unaudited)
American Beacon International Equity Fund |
| ||||||||||||||
Beginning Account Value 11/1/2018 | Ending Account Value 4/30/2019 | Expenses Paid During Period 11/1/2018-4/30/2019* | |||||||||||||
Institutional Class |
| ||||||||||||||
Actual | $1,000.00 | $1,051.20 | $3.66 | ||||||||||||
Hypothetical** | $1,000.00 | $1,021.22 | $3.61 | ||||||||||||
Y Class |
| ||||||||||||||
Actual | $1,000.00 | $1,050.40 | $4.02 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.88 | $3.96 | ||||||||||||
Investor Class |
| ||||||||||||||
Actual | $1,000.00 | $1,049.00 | $5.28 | ||||||||||||
Hypothetical** | $1,000.00 | $1,019.64 | $5.21 | ||||||||||||
Advisor Class |
| ||||||||||||||
Actual | $1,000.00 | $1,048.10 | $6.04 | ||||||||||||
Hypothetical** | $1,000.00 | $1,018.89 | $5.96 | ||||||||||||
A Class |
| ||||||||||||||
Actual | $1,000.00 | $1,048.60 | $5.79 | ||||||||||||
Hypothetical** | $1,000.00 | $1,019.14 | $5.71 | ||||||||||||
C Class |
| ||||||||||||||
Actual | $1,000.00 | $1,045.00 | $9.38 | ||||||||||||
Hypothetical** | $1,000.00 | $1,015.62 | $9.25 | ||||||||||||
R6 Class |
| ||||||||||||||
Actual | $1,000.00 | $1,051.00 | $3.36 | ||||||||||||
Hypothetical** | $1,000.00 | $1,021.52 | $3.31 |
* | Expenses are equal to the Fund’s annualized expense ratios for thesix-month period of 0.72%, 0.79%, 1.04%, 1.19%, 1.14%, 1.85%, and 0.66% for the Institutional, Y, Investor, Advisor, A, C, and R6 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 (181) by days in the year (365) to reflect the half-year period. |
** | 5% return before expenses. |
American Beacon Tocqueville International Value Fund |
| ||||||||||||||
Beginning Account Value 11/1/2018 | Ending Account Value 4/30/2019 | Expenses Paid During Period 11/1/2018-4/30/2019* | |||||||||||||
Institutional Class** |
| ||||||||||||||
Actual | $1,000.00 | $1,083.90 | $2.52 | ||||||||||||
Hypothetical*** | $1,000.00 | $1,020.38 | $4.46 | ||||||||||||
Y Class** |
| ||||||||||||||
Actual | $1,000.00 | $1,083.20 | $2.80 | ||||||||||||
Hypothetical*** | $1,000.00 | $1,019.89 | $4.96 | ||||||||||||
Investor Class |
| ||||||||||||||
Actual | $1,000.00 | $1,076.50 | $6.38 | ||||||||||||
Hypothetical*** | $1,000.00 | $1,018.65 | $6.21 |
* | Expenses are equal to the Fund’s annualized expense ratios for thesix-month period of 0.89%, 0.99% and 1.24% for the Institutional, Y and Investor 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 (181) by days in the year (365) to reflect the half-year period. |
** | American Beacon Tocqueville International Value Fund’s Institutional and Y Classes commenced operations on January 18, 2019. Expenses are equal to the fund’s annualized expense ratio for the period, multiplied by the average account value over the period, multiplied by the number of days since inception (99), then divided by the number of days in the year (365) to reflect the period. The Ending Account Value is derived from the fund’s share class actual return since inception. The Hypothetical 5% Annual Return information reflects the (181) day period for the six months ended April 30, 2019 to allow for comparability. |
*** | 5% return before expenses. |
8
American Beacon International Equity FundSM
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
Australia - 0.90% | |||||||||||||||
Common Stocks - 0.90% | |||||||||||||||
Amcor Ltd. | 1,097,986 | $ | 12,407,627 | ||||||||||||
BHP Group PLC | 601,101 | 14,182,727 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 26,590,354 | ||||||||||||||
|
| ||||||||||||||
Total Australia (Cost $21,008,038) | 26,590,354 | ||||||||||||||
|
| ||||||||||||||
Belgium - 0.93% (Cost $29,262,814) | |||||||||||||||
Common Stocks - 0.93% | |||||||||||||||
Anheuser-Busch InBev S.A.A | 311,840 | 27,721,971 | |||||||||||||
|
| ||||||||||||||
Canada - 5.19% | |||||||||||||||
Common Stocks - 5.19% | |||||||||||||||
Canadian Imperial Bank of Commerce | 87,619 | 7,377,995 | |||||||||||||
Canadian National Railway Co. | 177,600 | 16,496,636 | |||||||||||||
Encana Corp. | 2,827,153 | 19,583,474 | |||||||||||||
Gildan Activewear, Inc. | 484,670 | 17,871,686 | |||||||||||||
Husky Energy, Inc. | 990,800 | 10,753,327 | |||||||||||||
Manulife Financial Corp. | 959,090 | 17,661,230 | |||||||||||||
National Bank of Canada | 322,602 | 15,367,963 | |||||||||||||
Rogers Communications, Inc., Class B | 208,500 | 10,497,369 | |||||||||||||
Suncor Energy, Inc. | 661,100 | 21,801,447 | |||||||||||||
Wheaton Precious Metals Corp. | 763,800 | 16,522,299 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 153,933,426 | ||||||||||||||
|
| ||||||||||||||
Total Canada (Cost $147,772,591) | 153,933,426 | ||||||||||||||
|
| ||||||||||||||
China - 1.20% | |||||||||||||||
Common Stocks - 1.20% | |||||||||||||||
China Merchants Port Holdings Co., Ltd. | 2,777,068 | 5,607,378 | |||||||||||||
China Mobile Ltd. | 3,148,276 | 29,998,678 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 35,606,056 | ||||||||||||||
|
| ||||||||||||||
Total China (Cost $39,322,404) | 35,606,056 | ||||||||||||||
|
| ||||||||||||||
Denmark - 1.70% | |||||||||||||||
Common Stocks - 1.70% | |||||||||||||||
AP Moller - Maersk A/S, Class B | 9,144 | 11,913,040 | |||||||||||||
Carlsberg A/S, Class B | 154,645 | 19,975,628 | |||||||||||||
Drilling Co. of 1972 A/SB | 17,412 | 1,336,708 | |||||||||||||
Vestas Wind Systems A/S | 188,798 | 17,075,011 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 50,300,387 | ||||||||||||||
|
| ||||||||||||||
Total Denmark (Cost $42,641,171) | 50,300,387 | ||||||||||||||
|
| ||||||||||||||
Finland - 0.84% | |||||||||||||||
Common Stocks - 0.84% | |||||||||||||||
Nordea Bank Abp | 1,453,946 | 11,443,692 | |||||||||||||
Sampo OYJ, Class A | 294,523 | 13,464,543 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 24,908,235 | ||||||||||||||
|
| ||||||||||||||
Total Finland (Cost $30,451,070) | 24,908,235 | ||||||||||||||
|
| ||||||||||||||
France - 11.00% | |||||||||||||||
Common Stocks - 11.00% | |||||||||||||||
Air Liquide S.A. | 115,498 | 15,357,278 | |||||||||||||
Atos SEA | 101,011 | 10,398,123 | |||||||||||||
AXA S.A.A | 367,595 | 9,789,939 | |||||||||||||
BNP Paribas S.A. | 985,013 | 52,422,340 |
See accompanying notes
9
American Beacon International Equity FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
France - 11.00% (continued) | |||||||||||||||
Common Stocks - 11.00% (continued) | |||||||||||||||
Capgemini SE | 91,825 | $ | 11,133,324 | ||||||||||||
Carrefour S.A. | 224,138 | 4,366,702 | |||||||||||||
Cie de Saint-Gobain | 357,376 | 14,606,359 | |||||||||||||
Cie Generale des Etablissements Michelin SCA | 181,292 | 23,414,280 | |||||||||||||
Credit Agricole S.A. | 670,507 | 9,197,462 | |||||||||||||
Danone S.A. | 51,667 | 4,177,017 | |||||||||||||
Engie S.A. | 206,983 | 3,065,570 | |||||||||||||
Ingenico Group S.A. | 46,434 | 3,914,363 | |||||||||||||
Safran S.A. | 164,127 | 23,912,633 | |||||||||||||
SanofiA | 491,256 | 42,696,448 | |||||||||||||
Total S.A. | 695,336 | 38,639,613 | |||||||||||||
Veolia Environnement S.A.A | 916,960 | 21,659,428 | |||||||||||||
Vinci S.A.A | 176,310 | 17,801,401 | |||||||||||||
Vivendi S.A.A | 688,636 | 19,981,329 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 326,533,609 | ||||||||||||||
|
| ||||||||||||||
Total France (Cost $295,083,932) | 326,533,609 | ||||||||||||||
|
| ||||||||||||||
Germany - 10.46% | |||||||||||||||
Common Stocks - 8.24% | |||||||||||||||
BASF SE | 402,664 | 32,738,526 | |||||||||||||
Bayer AG | 202,695 | 13,490,523 | |||||||||||||
Deutsche Post AG | 534,094 | 18,510,340 | |||||||||||||
Deutsche Telekom AG | 1,419,588 | 23,746,231 | |||||||||||||
E.ON SE | 2,250,659 | 24,152,889 | |||||||||||||
Fresenius Medical Care AG & Co. KGaA | 134,416 | 11,301,049 | |||||||||||||
Fresenius SE & Co. KGaA | 139,014 | 7,886,342 | |||||||||||||
Infineon Technologies AG | 612,587 | 14,445,814 | |||||||||||||
Merck KGaA | 142,635 | 15,178,855 | |||||||||||||
SAP SE | 443,974 | 57,056,428 | |||||||||||||
Siemens AG | 145,714 | 17,444,828 | |||||||||||||
Telefonica Deutschland Holding AG | 2,630,214 | 8,543,343 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 244,495,168 | ||||||||||||||
|
| ||||||||||||||
Preferred Stocks - 2.22% | |||||||||||||||
Volkswagen AGC | 379,587 | 66,007,504 | |||||||||||||
|
| ||||||||||||||
Total Germany (Cost $296,403,444) | 310,502,672 | ||||||||||||||
|
| ||||||||||||||
Hong Kong - 1.12% | |||||||||||||||
Common Stocks - 1.12% | |||||||||||||||
CK Asset Holdings Ltd. | 1,489,582 | 11,962,531 | |||||||||||||
CK Hutchison Holdings Ltd. | 1,533,582 | 16,108,398 | |||||||||||||
Techtronic Industries Co., Ltd. | 715,500 | 5,171,432 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 33,242,361 | ||||||||||||||
|
| ||||||||||||||
Total Hong Kong (Cost $31,372,574) | 33,242,361 | ||||||||||||||
|
| ||||||||||||||
Ireland - 2.06% | |||||||||||||||
Common Stocks - 2.06% | |||||||||||||||
Bank of Ireland Group PLC | 2,397,731 | 15,302,097 | |||||||||||||
CRH PLC | 767,984 | 25,637,155 | |||||||||||||
Ryanair Holdings PLC, Sponsored ADRB | 258,563 | 20,074,831 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 61,014,083 | ||||||||||||||
|
| ||||||||||||||
Total Ireland (Cost $61,772,642) | 61,014,083 | ||||||||||||||
|
| ||||||||||||||
See accompanying notes
10
American Beacon International Equity FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
Israel - 0.85% | |||||||||||||||
Common Stocks - 0.85% | |||||||||||||||
Bank LeumiLe-Israel BM | 1,401,208 | $ | 9,584,271 | ||||||||||||
Teva Pharmaceutical Industries Ltd., Sponsored ADRB | 1,018,399 | 15,500,033 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 25,084,304 | ||||||||||||||
|
| ||||||||||||||
Total Israel (Cost $36,952,589) | 25,084,304 | ||||||||||||||
|
| ||||||||||||||
Italy - 2.31% | |||||||||||||||
Common Stocks - 2.31% | |||||||||||||||
Eni SpA | 1,247,163 | 21,287,223 | |||||||||||||
UniCredit SpA | 3,418,728 | 47,278,735 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 68,565,958 | ||||||||||||||
|
| ||||||||||||||
Total Italy (Cost $73,557,558) | 68,565,958 | ||||||||||||||
|
| ||||||||||||||
Japan - 13.42% | |||||||||||||||
Common Stocks - 13.42% | |||||||||||||||
Astellas Pharma, Inc.D | 1,070,800 | 14,551,760 | |||||||||||||
Daiwa House Industry Co., Ltd.D | 884,154 | 24,797,059 | |||||||||||||
Digital Garage, Inc.D | 254,200 | 7,408,021 | |||||||||||||
East Japan Railway Co.D | 208,200 | 19,599,557 | |||||||||||||
Ezaki Glico Co., Ltd.D | 160,500 | 8,426,573 | |||||||||||||
FANUC Corp.D | 98,500 | 18,461,585 | |||||||||||||
IHI Corp.D | 212,400 | 5,057,351 | |||||||||||||
Japan Airlines Co., Ltd.D | 273,700 | 9,174,743 | |||||||||||||
Kao Corp.D | 225,660 | 17,397,596 | |||||||||||||
KDDI Corp.D | 936,600 | 21,409,743 | |||||||||||||
Kirin Holdings Co., Ltd.D | 813,900 | 18,349,059 | |||||||||||||
Mitsui Fudosan Co., Ltd.D | 614,300 | 14,201,827 | |||||||||||||
Nexon Co., Ltd.B D | 977,500 | 13,960,071 | |||||||||||||
Pan Pacific International Holdings Corp.D | 213,098 | 13,764,327 | |||||||||||||
Panasonic Corp.D | 1,005,100 | 9,253,828 | |||||||||||||
Ryohin Keikaku Co., Ltd.D | 31,800 | 6,012,743 | |||||||||||||
Seven & i Holdings Co., Ltd.D | 266,900 | 9,260,218 | |||||||||||||
Sompo Holdings, Inc.D | 401,200 | 14,941,470 | |||||||||||||
Sumitomo Metal Mining Co., Ltd.D | 311,000 | 9,812,617 | |||||||||||||
Sumitomo Mitsui Financial Group, Inc.D | 1,300,100 | 47,122,576 | |||||||||||||
Sumitomo Rubber Industries Ltd.D | 413,200 | 5,052,638 | |||||||||||||
Suntory Beverage & Food Ltd.D | 215,300 | 9,484,606 | |||||||||||||
Suzuki Motor Corp.D | 224,700 | 10,191,865 | |||||||||||||
Takeda Pharmaceutical Co., Ltd.D | 1,436,922 | 53,272,077 | |||||||||||||
Yamaha Corp.D | 331,500 | 17,175,026 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 398,138,936 | ||||||||||||||
|
| ||||||||||||||
Total Japan (Cost $394,141,317) | 398,138,936 | ||||||||||||||
|
| ||||||||||||||
Luxembourg - 0.61% | |||||||||||||||
Common Stocks - 0.61% | |||||||||||||||
SES S.A. | 848,759 | 14,441,363 | |||||||||||||
Tenaris S.A. | 270,384 | 3,754,394 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 18,195,757 | ||||||||||||||
|
| ||||||||||||||
Total Luxembourg (Cost $18,065,279) | 18,195,757 | ||||||||||||||
|
| ||||||||||||||
Netherlands - 6.65% | |||||||||||||||
Common Stocks - 6.65% | |||||||||||||||
ABN AMRO Group N.V.E | 447,293 | 10,520,315 | |||||||||||||
Akzo Nobel N.V. | 370,057 | 31,419,750 | |||||||||||||
ING Groep N.V. | 2,906,124 | 37,014,999 |
See accompanying notes
11
American Beacon International Equity FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
Netherlands - 6.65% (continued) | |||||||||||||||
Common Stocks - 6.65% (continued) | |||||||||||||||
NXP Semiconductors N.V. | 162,300 | $ | 17,142,126 | ||||||||||||
Royal Dutch Shell PLC, Class A | 1,034,426 | 33,047,849 | |||||||||||||
Royal Dutch Shell PLC, Class B | 1,404,698 | 45,142,902 | |||||||||||||
Wolters Kluwer N.V. | 331,930 | 23,149,171 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 197,437,112 | ||||||||||||||
|
| ||||||||||||||
Total Netherlands (Cost $178,959,356) | 197,437,112 | ||||||||||||||
|
| ||||||||||||||
Norway - 1.27% | |||||||||||||||
Common Stocks - 1.27% | |||||||||||||||
Equinor ASA | 467,708 | 10,433,025 | |||||||||||||
Telenor ASA | 690,794 | �� | 13,868,005 | ||||||||||||
Yara International ASA | 294,664 | 13,289,415 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 37,590,445 | ||||||||||||||
|
| ||||||||||||||
Total Norway (Cost $32,035,259) | 37,590,445 | ||||||||||||||
|
| ||||||||||||||
Republic of Korea - 3.70% | |||||||||||||||
Common Stocks - 3.70% | |||||||||||||||
Hana Financial Group, Inc. | 495,880 | 15,621,610 | |||||||||||||
KB Financial Group, Inc., ADR | 413,917 | 16,362,139 | |||||||||||||
Samsung Electronics Co., Ltd. | 1,366,700 | 53,643,106 | |||||||||||||
SK Innovation Co., Ltd. | 26,233 | 4,098,380 | |||||||||||||
SK Telecom Co., Ltd. | 94,174 | 19,952,973 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 109,678,208 | ||||||||||||||
|
| ||||||||||||||
Total Republic of Korea (Cost $92,043,804) | 109,678,208 | ||||||||||||||
|
| ||||||||||||||
Singapore - 1.70% | |||||||||||||||
Common Stocks - 1.70% | |||||||||||||||
DBS Group Holdings Ltd. | 1,196,710 | 24,856,303 | |||||||||||||
Singapore Telecommunications Ltd. | 11,039,295 | 25,653,620 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 50,509,923 | ||||||||||||||
|
| ||||||||||||||
Total Singapore (Cost $44,425,098) | 50,509,923 | ||||||||||||||
|
| ||||||||||||||
Spain - 0.76% | |||||||||||||||
Common Stocks - 0.76% | |||||||||||||||
CaixaBank S.A. | 2,368,254 | 7,541,051 | |||||||||||||
Red Electrica Corp. S.A. | 730,544 | 15,146,213 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 22,687,264 | ||||||||||||||
|
| ||||||||||||||
Total Spain (Cost $23,489,536) | 22,687,264 | ||||||||||||||
|
| ||||||||||||||
Sweden - 1.22% | |||||||||||||||
Common Stocks - 1.22% | |||||||||||||||
Assa Abloy AB, Class B | 1,049,243 | 22,383,202 | |||||||||||||
Epiroc AB, Class AB | 1,336,178 | 13,816,006 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 36,199,208 | ||||||||||||||
|
| ||||||||||||||
Total Sweden (Cost $31,304,219) | 36,199,208 | ||||||||||||||
|
| ||||||||||||||
Switzerland - 5.17% | |||||||||||||||
Common Stocks - 5.17% | |||||||||||||||
ABB Ltd. | 1,482,342 | 30,506,612 | |||||||||||||
Aryzta AGB | 3,274,754 | 4,896,303 | |||||||||||||
Cie Financiere Richemont S.A. | 70,564 | 5,159,250 | |||||||||||||
Givaudan S.A. | 787 | 2,038,268 |
See accompanying notes
12
American Beacon International Equity FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
Switzerland - 5.17% (continued) | |||||||||||||||
Common Stocks - 5.17% (continued) | |||||||||||||||
Novartis AG | 880,770 | $ | 71,925,876 | ||||||||||||
Roche Holding AG | 128,152 | 33,781,468 | |||||||||||||
UBS Group AGB | 376,599 | 5,050,518 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 153,358,295 | ||||||||||||||
|
| ||||||||||||||
Total Switzerland (Cost $151,288,857) | 153,358,295 | ||||||||||||||
|
| ||||||||||||||
United Kingdom - 20.09% | |||||||||||||||
Common Stocks - 20.08% | |||||||||||||||
AstraZeneca PLC | 294,053 | 21,956,072 | |||||||||||||
Aviva PLC | 3,476,041 | 19,468,197 | |||||||||||||
BAE Systems PLC | 2,253,644 | 14,517,437 | |||||||||||||
Balfour Beatty PLC | 2,812,579 | 9,213,021 | |||||||||||||
Barclays PLC | 11,437,540 | 24,501,632 | |||||||||||||
BP PLC | 6,339,662 | 46,212,089 | |||||||||||||
British American Tobacco PLC | 750,424 | 29,258,738 | |||||||||||||
Carnival PLC | 179,124 | 9,424,862 | |||||||||||||
Cobham PLCB | 9,942,667 | 14,948,922 | |||||||||||||
Compass Group PLC | 661,589 | 15,037,074 | |||||||||||||
Diageo PLC | 307,419 | 12,962,276 | |||||||||||||
Howden Joinery Group PLC | 1,801,392 | 11,933,000 | |||||||||||||
HSBC Holdings PLC | 1,873,644 | 16,181,113 | |||||||||||||
Informa PLC | 1,670,093 | 16,965,076 | |||||||||||||
Johnson Matthey PLC | 361,273 | 15,720,610 | |||||||||||||
Kingfisher PLC | 3,965,935 | 13,658,144 | |||||||||||||
Linde PLCB | 181,920 | 32,728,269 | |||||||||||||
Lloyds Banking Group PLC | 12,557,179 | 10,245,565 | |||||||||||||
Micro Focus International PLC | 519,320 | 13,122,645 | |||||||||||||
Prudential PLC | 2,677,681 | 60,580,939 | |||||||||||||
RELX PLC | 1,371,394 | 31,456,165 | |||||||||||||
Rolls-Royce Holdings PLCB | 2,079,260 | 24,798,059 | |||||||||||||
RSA Insurance Group PLC | 1,409,526 | 9,962,081 | |||||||||||||
SSE PLC | 1,473,120 | 21,985,260 | |||||||||||||
Standard Chartered PLC | 3,365,304 | 30,718,502 | |||||||||||||
Unilever PLC | 378,732 | 23,001,838 | |||||||||||||
Vodafone Group PLC | 21,711,962 | 40,203,614 | |||||||||||||
Weir Group PLC | 235,141 | 5,088,424 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 595,849,624 | ||||||||||||||
|
| ||||||||||||||
Preferred Stocks - 0.01% | |||||||||||||||
Rolls-Royce Holdings PLC,Non-Cumulative Redeemable SharesB C | 147,266,354 | 192,035 | |||||||||||||
|
| ||||||||||||||
Total United Kingdom (Cost $617,449,290) | 596,041,659 | ||||||||||||||
|
| ||||||||||||||
United States - 1.68% | |||||||||||||||
Common Stocks - 1.68% | |||||||||||||||
Aon PLC | 171,899 | 30,965,886 | |||||||||||||
Ferguson PLC | 265,783 | 18,854,012 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 49,819,898 | ||||||||||||||
|
| ||||||||||||||
Total United States (Cost $34,346,395) | 49,819,898 | ||||||||||||||
|
| ||||||||||||||
SHORT-TERM INVESTMENTS - 4.30% (Cost $127,609,220) | |||||||||||||||
Investment Companies - 4.30% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%F G | 127,609,220 | 127,609,220 | |||||||||||||
|
| ||||||||||||||
See accompanying notes
13
American Beacon International Equity FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
SECURITIES LENDING COLLATERAL - 3.62% (Cost $107,491,572) | |||||||||||||||
Investment Companies - 3.62% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%F G | 107,491,572 | $ | 107,491,572 | ||||||||||||
|
| ||||||||||||||
TOTAL INVESTMENTS - 102.75% (Cost $2,958,250,029) | 3,048,760,913 | ||||||||||||||
LIABILITIES, NET OF OTHER ASSETS - (2.75%) | (81,608,136 | ) | |||||||||||||
|
| ||||||||||||||
TOTAL NET ASSETS - 100.00% | $ | 2,967,152,777 | |||||||||||||
|
| ||||||||||||||
Percentages are stated as a percent of net assets. |
A All or a portion of this security is on loan at April 30, 2019.
BNon-income producing security.
C A type of Preferred Stock that has no maturity date.
D Fair valued pursuant to procedures approved by the Board of Trustees. At period end, the value of these securities amounted to $398,138,936 or 13.42% of net assets.
E 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 $10,520,315 or 0.35% of net assets. The Fund has no right to demand registration of these securities.
F The Fund is affiliated by having the same investment advisor.
G7-day yield.
ADR - American Depositary Receipt.
PLC - Public Limited Company.
Long Futures Contracts Open on April 30, 2019: |
| |||||||||||||||
Equity Futures Contracts | ||||||||||||||||
Description | Number of Contracts | Expiration Date | Notional Amount | Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||
Amsterdam Index Futures | 38 | May 2019 | $ | 4,747,868 | $ | 4,843,686 | $ | 95,818 | ||||||||
CAC40 Index Futures | 249 | May 2019 | 15,223,232 | 15,490,184 | 266,952 | |||||||||||
DAX Index Futures | 35 | June 2019 | 11,446,541 | 12,121,277 | 674,736 | |||||||||||
FTSE 100 Index Futures | 238 | June 2019 | 22,279,115 | 22,877,603 | 598,488 | |||||||||||
FTSE/MIB Index Futures | 26 | June 2019 | 2,975,813 | 3,128,604 | 152,791 | |||||||||||
Hang Seng Index Futures | 29 | May 2019 | 5,452,869 | 5,446,742 | (6,127 | ) | ||||||||||
IBEX 35 Index Futures | 38 | May 2019 | 4,028,951 | 4,074,678 | 45,727 | |||||||||||
OMXS30 Index Futures | 208 | May 2019 | 3,569,549 | 3,655,328 | 85,779 | |||||||||||
S&P/TSX 60 Index Futures | 90 | June 2019 | 12,931,040 | 13,347,167 | 416,127 | |||||||||||
SPI 200 Futures | 83 | June 2019 | 9,064,053 | 9,221,312 | 157,259 | |||||||||||
TOPIX Index Futures | 221 | June 2019 | 31,907,327 | 32,037,306 | 129,979 | |||||||||||
|
|
|
|
|
| |||||||||||
$ | 123,626,358 | $ | 126,243,887 | $ | 2,617,529 | |||||||||||
|
|
|
|
|
|
Forward Foreign Currency Contracts Open on April 30, 2019: |
| |||||||||||||||||||||||||
Currency Purchased* | Currency Sold* | Settlement Date | Counterparty | Unrealized Appreciation | Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | ||||||||||||||||||||
EUR | 3,812,841 | USD | 3,844,254 | 6/11/2019 | BNP | $ | - | $ | (31,413 | ) | $ | (31,413 | ) | |||||||||||||
USD | 4,867,576 | EUR | 4,834,700 | 6/11/2019 | BNP | 32,876 | - | 32,876 | ||||||||||||||||||
SEK | 2,498,872 | USD | 2,565,081 | 6/11/2019 | BOM | - | (66,209 | ) | (66,209 | ) | ||||||||||||||||
CAD | 9,983,149 | USD | 9,962,927 | 6/11/2019 | BOM | 20,222 | - | 20,222 | ||||||||||||||||||
GBP | 17,786,111 | USD | 17,973,610 | 6/11/2019 | BOM | - | (187,499 | ) | (187,499 | ) | ||||||||||||||||
AUD | 975,180 | USD | 977,980 | 6/11/2019 | BRC | - | (2,800 | ) | (2,800 | ) | ||||||||||||||||
CAD | 1,415,209 | USD | 1,421,637 | 6/11/2019 | CBK | - | (6,428 | ) | (6,428 | ) | ||||||||||||||||
JPY | 3,065,393 | USD | 3,049,569 | 6/11/2019 | GSC | 15,824 | - | 15,824 | ||||||||||||||||||
USD | 1,675,920 | CAD | 1,665,523 | 6/11/2019 | GSC | 10,397 | - | 10,397 | ||||||||||||||||||
CAD | 1,311,347 | USD | 1,317,117 | 6/11/2019 | HUS | - | (5,770 | ) | (5,770 | ) | ||||||||||||||||
USD | 1,124,790 | AUD | 1,105,722 | 6/11/2019 | HUS | 19,068 | - | 19,068 | ||||||||||||||||||
GBP | 2,245,038 | USD | 2,245,840 | 6/11/2019 | JPM | - | (802 | ) | (802 | ) | ||||||||||||||||
GBP | 2,254,185 | USD | 2,271,100 | 6/11/2019 | JPM | - | (16,915 | ) | (16,915 | ) |
See accompanying notes
14
American Beacon International Equity FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Currency Purchased* | Currency Sold* | Settlement Date | Counterparty | Unrealized Appreciation | Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | ||||||||||||||||||||
AUD | 6,699,843 | USD | 6,680,286 | 6/11/2019 | JPM | $ | 19,557 | $ | - | $ | 19,557 | |||||||||||||||
CHF | 1,132,918 | USD | 1,143,373 | 6/11/2019 | MYC | - | (10,455 | ) | (10,455 | ) | ||||||||||||||||
CHF | 1,405,803 | USD | 1,438,474 | 6/11/2019 | MYC | - | (32,671 | ) | (32,671 | ) | ||||||||||||||||
USD | 1,378,128 | CHF | 1,353,591 | 6/11/2019 | MYC | 24,537 | - | 24,537 | ||||||||||||||||||
SEK | 334,632 | USD | 341,158 | 6/11/2019 | RBC | - | (6,526 | ) | (6,526 | ) | ||||||||||||||||
SEK | 341,498 | USD | 350,976 | 6/11/2019 | RBC | - | (9,478 | ) | (9,478 | ) | ||||||||||||||||
USD | 473,039 | SEK | 460,753 | 6/11/2019 | RBC | 12,286 | - | 12,286 | ||||||||||||||||||
CHF | 8,751,630 | USD | 8,927,510 | 6/11/2019 | SCB | - | (175,880 | ) | (175,880 | ) | ||||||||||||||||
JPY | 3,407,821 | USD | 3,414,845 | 6/11/2019 | SOG | - | (7,024 | ) | (7,024 | ) | ||||||||||||||||
JPY | 28,142,488 | USD | 28,179,994 | 6/11/2019 | SOG | - | (37,506 | ) | (37,506 | ) | ||||||||||||||||
EUR | 29,774,775 | USD | 30,181,667 | 6/11/2019 | SOG | - | (406,892 | ) | (406,892 | ) | ||||||||||||||||
USD | 2,883,765 | GBP | 2,869,676 | 6/11/2019 | SOG | 14,089 | - | 14,089 | ||||||||||||||||||
JPY | 951,609 | USD | 947,915 | 5/7/2019 | SSB | 3,694 | - | 3,694 | ||||||||||||||||||
JPY | 946,337 | USD | 944,532 | 5/8/2019 | SSB | 1,805 | - | 1,805 | ||||||||||||||||||
JPY | 858,487 | USD | 857,254 | 5/9/2019 | SSB | 1,233 | - | 1,233 | ||||||||||||||||||
AUD | 874,981 | USD | 890,104 | 6/11/2019 | UAG | - | (15,123 | ) | (15,123 | ) | ||||||||||||||||
EUR | 3,963,644 | USD | 3,966,456 | 6/11/2019 | UAG | - | (2,812 | ) | (2,812 | ) | ||||||||||||||||
USD | 3,812,449 | JPY | 3,793,300 | 6/11/2019 | UAG | 19,149 | - | 19,149 | ||||||||||||||||||
|
|
|
|
|
| |||||||||||||||||||||
$ | 194,737 | $ | (1,022,203 | ) | $ | (827,466 | ) | |||||||||||||||||||
|
|
|
|
|
|
* | All values denominated in USD. |
Glossary: | ||
Counterparty Abbreviations: | ||
BNP | BNP Paribas, N.A. | |
BOM | Bank of Montreal. | |
BRC | Barclays Bank PLC. | |
CBK | Citibank, N.A. | |
GSC | Goldman Sachs Capital Markets. | |
HUS | HSBC Bank (USA). | |
JPM | JPMorgan Chase Bank, N.A. | |
MYC | Morgan Stanley Bank, N.A. | |
RBC | Royal Bank of Canada. | |
SCB | Standard and Chartered Bank. | |
SOG | Societe Generale. | |
SSB | State Street Bank & Trust Co. | |
UAG | UBS AG. | |
Currency Abbreviations: | ||
AUD | Australian Dollar. | |
CAD | Canadian Dollar. | |
CHF | Swiss Franc. | |
EUR | Euro. | |
GBP | Pound Sterling. | |
JPY | Japanese Yen. | |
SEK | Swedish Krona. | |
USD | United States Dollar. | |
Index Abbreviations: | ||
CAC40 | Euronet Paris - French Stock Market Index. | |
DAX | Deutsche Boerse AG German Stock Index. | |
FTSE 100 | Financial Times Stock Exchange 100 Index. | |
FTSE/MIB | Borsa Italiana - Italian Stock Market Index. | |
Hang Seng | Hong Kong Stock Market Index. | |
IBEX | Bolsa de Madrid - Spanish Stock Market Index. | |
OMXS30 | Stockholm Stock Exchange’s leading share index. | |
SPI 200 | Australian Equity Market Index Future. | |
S&P/TSX | Canadian Equity Market Index. | |
TOPIX | Tokyo Stock Exchange Tokyo Price Index. |
See accompanying notes
15
American Beacon International Equity FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
The Fund’s investments are summarized by level based on the inputs used to determine their values. As of April 30, 2019, the investments were classified as described below:
International Equity Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Foreign Common Stocks | ||||||||||||||||||||||||||||
Australia | $ | 26,590,354 | $ | - | $ | - | $ | 26,590,354 | ||||||||||||||||||||
Belgium | 27,721,971 | - | - | 27,721,971 | ||||||||||||||||||||||||
Canada | 153,933,426 | - | - | 153,933,426 | ||||||||||||||||||||||||
China | 35,606,056 | - | - | 35,606,056 | ||||||||||||||||||||||||
Denmark | 50,300,387 | - | - | 50,300,387 | ||||||||||||||||||||||||
Finland | 24,908,235 | - | - | 24,908,235 | ||||||||||||||||||||||||
France | 326,533,609 | - | - | 326,533,609 | ||||||||||||||||||||||||
Germany | 244,495,168 | - | - | 244,495,168 | ||||||||||||||||||||||||
Hong Kong | 33,242,361 | - | - | 33,242,361 | ||||||||||||||||||||||||
Ireland | 61,014,083 | - | - | 61,014,083 | ||||||||||||||||||||||||
Israel | 25,084,304 | - | - | 25,084,304 | ||||||||||||||||||||||||
Italy | 68,565,958 | - | - | 68,565,958 | ||||||||||||||||||||||||
Japan | - | 398,138,936 | - | 398,138,936 | ||||||||||||||||||||||||
Luxembourg | 18,195,757 | - | - | 18,195,757 | ||||||||||||||||||||||||
Netherlands | 197,437,112 | - | - | 197,437,112 | ||||||||||||||||||||||||
Norway | 37,590,445 | - | - | 37,590,445 | ||||||||||||||||||||||||
Republic of Korea | 109,678,208 | - | - | 109,678,208 | ||||||||||||||||||||||||
Singapore | 50,509,923 | - | - | 50,509,923 | ||||||||||||||||||||||||
Spain | 22,687,264 | - | - | 22,687,264 | ||||||||||||||||||||||||
Sweden | 36,199,208 | - | - | 36,199,208 | ||||||||||||||||||||||||
Switzerland | 153,358,295 | - | - | 153,358,295 | ||||||||||||||||||||||||
United Kingdom | 595,849,624 | - | - | 595,849,624 | ||||||||||||||||||||||||
Foreign Preferred Stocks | ||||||||||||||||||||||||||||
Germany | 66,007,504 | - | - | 66,007,504 | ||||||||||||||||||||||||
United Kingdom | 192,035 | - | - | 192,035 | ||||||||||||||||||||||||
Common Stocks | ||||||||||||||||||||||||||||
United States | 49,819,898 | - | - | 49,819,898 | ||||||||||||||||||||||||
Short-Term Investments | 127,609,220 | - | - | 127,609,220 | ||||||||||||||||||||||||
Securities Lending Collateral | 107,491,572 | - | - | 107,491,572 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Investments in Securities - Assets | $ | 2,650,621,977 | $ | 398,138,936 | $ | - | $ | 3,048,760,913 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||||||||||||||
Futures Contracts | $ | 2,623,656 | $ | - | $ | - | $ | 2,623,656 | ||||||||||||||||||||
Forward Foreign Currency Contracts | - | 194,737 | - | 194,737 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Financial Derivative Instruments - Assets | $ | 2,623,656 | $ | 194,737 | $ | - | $ | 2,818,393 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Financial Derivative Instruments - Liabilities |
| |||||||||||||||||||||||||||
Futures Contracts | $ | (6,127 | ) | $ | - | $ | - | $ | (6,127 | ) | ||||||||||||||||||
Forward Foreign Currency Contracts | - | (1,022,203 | ) | - | (1,022,203 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Financial Derivative Instruments - Liabilities | $ | (6,127 | ) | $ | (1,022,203 | ) | $ | - | $ | (1,028,330 | ) | |||||||||||||||||
|
|
|
|
|
|
|
|
U.S. GAAP requires transfers between all levels to/from level 3 be disclosed. During the period ended April 30, 2019, there were no transfers into or out of Level 3.
See accompanying notes
16
American Beacon International Equity FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
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:
Security Type | Balance as of 10/31/2018 | Purchases | Sales | Accrued Discounts (Premiums) | Realized Gain (Loss) | Change in Unrealized Appreciation (Depreciation) | Transfer into Level 3 | Transfer out of Level 3 | Balance as of 4/30/2019 | Unrealized Appreciation (Depreciation) at Period end** | ||||||||||||||||||||||||||
Common Stocks | $90,350 | $ | - | $90,024 | $ | - | $ | (1,244 | ) | $ | 918 | $ | - | $ | - | $ | - | $ | - |
** | 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 Statements of Operations. |
The common stock, classified as Level 3, was fair valued using the redemption value during the period, and was redeemed by the Fund on December 3, 2018. The security was included in the Level 3 category due to the use of unobservable inputs that were significant to the valuation.
See accompanying notes
17
American Beacon Tocqueville International Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
Australia - 0.98% (Cost $7,491,534) | |||||||||||||||
Common Stocks - 0.98% | |||||||||||||||
BHP Group Ltd., ADRA | 157,400 | $ | 8,334,330 | ||||||||||||
|
| ||||||||||||||
Belgium - 2.27% (Cost $18,176,508) | |||||||||||||||
Common Stocks - 2.27% | |||||||||||||||
Groupe Bruxelles Lambert S.A. | 201,512 | 19,261,081 | |||||||||||||
|
| ||||||||||||||
Bermuda - 1.42% (Cost $14,222,635) | |||||||||||||||
Common Stocks - 1.42% | |||||||||||||||
Clear Media Ltd. | 14,525,100 | 12,035,125 | |||||||||||||
|
| ||||||||||||||
Brazil - 0.23% (Cost $12,000,000) | |||||||||||||||
Common Stocks - 0.23% | |||||||||||||||
Estre Ambiental, Inc.B | 1,440,000 | 1,944,000 | |||||||||||||
|
| ||||||||||||||
Canada - 2.43% (Cost $17,038,661) | |||||||||||||||
Common Stocks - 2.43% | |||||||||||||||
Nutrien Ltd. | 379,854 | 20,580,490 | |||||||||||||
|
| ||||||||||||||
China - 1.90% | |||||||||||||||
Common Stocks - 1.90% | |||||||||||||||
Baidu, Inc., Sponsored ADRB | 49,465 | 8,222,567 | |||||||||||||
Kerry Logistics Network Ltd. | 4,409,500 | 7,858,047 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 16,080,614 | ||||||||||||||
|
| ||||||||||||||
Total China (Cost $16,684,001) | 16,080,614 | ||||||||||||||
|
| ||||||||||||||
Denmark - 1.94% (Cost $19,810,787) | |||||||||||||||
Common Stocks - 1.94% | |||||||||||||||
ISS A/S | 527,775 | 16,412,936 | |||||||||||||
|
| ||||||||||||||
Finland - 1.71% (Cost $15,452,267) | |||||||||||||||
Common Stocks - 1.71% | |||||||||||||||
Nokia OYJ, ADR | 2,750,000 | 14,520,000 | |||||||||||||
|
| ||||||||||||||
France - 16.56% | |||||||||||||||
Common Stocks - 16.56% | |||||||||||||||
Bollore S.A. | 5,300,529 | 25,183,343 | |||||||||||||
Bureau Veritas S.A. | 1,060,618 | 26,860,937 | |||||||||||||
Danone S.A. | 277,800 | 22,458,733 | |||||||||||||
IPSOS | 163,614 | 4,743,722 | |||||||||||||
Publicis Groupe S.A. | 211,200 | 12,526,322 | |||||||||||||
SanofiA | 286,866 | 24,932,335 | |||||||||||||
Sopra Steria Group | 185,000 | 23,613,057 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 140,318,449 | ||||||||||||||
|
| ||||||||||||||
Total France (Cost $136,239,889) | 140,318,449 | ||||||||||||||
|
| ||||||||||||||
Germany - 10.98% | |||||||||||||||
Common Stocks - 10.98% | |||||||||||||||
Brenntag AG | 80,400 | 4,333,892 | |||||||||||||
Continental AG | 77,775 | 12,854,579 | |||||||||||||
Duerr AG | 103,945 | 4,678,547 | |||||||||||||
GEA Group AG | 221,600 | 6,193,783 | |||||||||||||
Infineon Technologies AG | 909,069 | 21,437,349 | |||||||||||||
Siemens AG, ADR | 429,065 | 25,743,900 | |||||||||||||
Software AG | 159,242 | 6,065,457 |
See accompanying notes
18
American Beacon Tocqueville International Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
Germany - 10.98% (continued) | |||||||||||||||
Common Stocks - 10.98% (continued) | |||||||||||||||
Wacker Neuson SE | 423,383 | $ | 11,729,205 | ||||||||||||
|
| ||||||||||||||
Total Common Stocks | 93,036,712 | ||||||||||||||
|
| ||||||||||||||
Total Germany (Cost $82,031,380) | 93,036,712 | ||||||||||||||
|
| ||||||||||||||
Ireland - 3.08% (Cost $25,726,581) | |||||||||||||||
Common Stocks - 3.08% | |||||||||||||||
CRH PLC | 776,645 | 26,071,588 | |||||||||||||
|
| ||||||||||||||
Japan - 21.43% | |||||||||||||||
Common Stocks - 21.43% | |||||||||||||||
Amano Corp.C | 1,145,200 | 29,624,134 | |||||||||||||
Asics Corp.C | 1,000,000 | 12,318,367 | |||||||||||||
Ebara Corp.C | 248,000 | 7,664,441 | |||||||||||||
FANUC Corp.C | 132,270 | 24,791,004 | |||||||||||||
Hitachi Ltd.C | 757,268 | 25,221,477 | |||||||||||||
Hoya Corp.C | 222,100 | 15,647,877 | |||||||||||||
Kao Corp.C | 187,600 | 14,463,303 | |||||||||||||
Makita Corp.C | 522,200 | 19,071,345 | |||||||||||||
Mitsubishi UFJ Financial Group, Inc.C | 3,672,000 | 18,399,680 | |||||||||||||
Nintendo Co., Ltd.C | 27,600 | 9,464,498 | |||||||||||||
Rohm Co., Ltd.C | 66,600 | 4,876,100 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 181,542,226 | ||||||||||||||
|
| ||||||||||||||
Total Japan (Cost $163,180,106) | 181,542,226 | ||||||||||||||
|
| ||||||||||||||
Netherlands - 2.48% (Cost $19,075,896) | |||||||||||||||
Common Stocks - 2.48% | |||||||||||||||
Royal Dutch Shell PLC, Class B, ADR | 324,000 | 21,024,360 | |||||||||||||
|
| ||||||||||||||
Republic of Korea - 1.65% | |||||||||||||||
Common Stocks - 1.65% | |||||||||||||||
Samsung Electronics Co., Ltd., GDR | 1,617 | 1,277,430 | |||||||||||||
Samsung Electronics Co., Ltd. | 400,600 | 12,757,197 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 14,034,627 | ||||||||||||||
|
| ||||||||||||||
Total Republic of Korea (Cost $14,254,714) | 14,034,627 | ||||||||||||||
|
| ||||||||||||||
Spain - 4.17% | |||||||||||||||
Common Stocks - 4.17% | |||||||||||||||
Applus Services S.A. | 2,083,469 | 26,125,648 | |||||||||||||
Banco Santander S.A. | 1,817,467 | 9,196,566 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 35,322,214 | ||||||||||||||
|
| ||||||||||||||
Total Spain (Cost $35,290,326) | 35,322,214 | ||||||||||||||
|
| ||||||||||||||
Switzerland - 4.98% | |||||||||||||||
Common Stocks - 4.98% | |||||||||||||||
DKSH Holding AG | 71,900 | 4,413,705 | |||||||||||||
Novartis AG, Sponsored ADR | 215,450 | 17,716,454 | |||||||||||||
UBS Group AGB | 1,491,113 | 20,040,559 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 42,170,718 | ||||||||||||||
|
| ||||||||||||||
Total Switzerland (Cost $44,328,582) | 42,170,718 | ||||||||||||||
|
| ||||||||||||||
See accompanying notes
19
American Beacon Tocqueville International Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
United Kingdom - 12.32% | |||||||||||||||
Common Stocks - 12.32% | |||||||||||||||
AVEVA Group PLC | 231,195 | $ | 10,081,436 | ||||||||||||
CNH Industrial N.V. | 869,000 | 9,423,118 | |||||||||||||
Diageo PLC, Sponsored ADR | 126,690 | 21,365,002 | |||||||||||||
Lloyds Banking Group PLC | 17,000,000 | 13,870,521 | |||||||||||||
Playtech PLC | 745,000 | 4,247,311 | |||||||||||||
Reckitt Benckiser Group PLC | 52,200 | 4,205,394 | |||||||||||||
Smiths Group PLC | 1,300,000 | 25,809,426 | |||||||||||||
Unilever N.V. | 254,301 | 15,387,753 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 104,389,961 | ||||||||||||||
|
| ||||||||||||||
Total United Kingdom (Cost $87,488,012) | 104,389,961 | ||||||||||||||
|
| ||||||||||||||
United States - 5.44% | |||||||||||||||
Common Stocks - 5.44% | |||||||||||||||
Aflac, Inc. | 431,035 | 21,715,543 | |||||||||||||
Bunge Ltd. | 125,400 | 6,572,214 | |||||||||||||
Schlumberger Ltd. | 417,000 | 17,797,560 | |||||||||||||
|
| ||||||||||||||
Total Common Stocks | 46,085,317 | ||||||||||||||
|
| ||||||||||||||
Total United States (Cost $47,348,607) | 46,085,317 | ||||||||||||||
|
| ||||||||||||||
SHORT-TERM INVESTMENTS - 3.76% (Cost $31,838,406) | |||||||||||||||
Investment Companies - 3.76% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%D E | 31,838,406 | 31,838,406 | |||||||||||||
|
| ||||||||||||||
SECURITIES LENDING COLLATERAL - 3.89% (Cost $32,948,887) | |||||||||||||||
Investment Companies - 3.89% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%D E | 32,948,887 | 32,948,887 | |||||||||||||
|
| ||||||||||||||
TOTAL INVESTMENTS - 103.64% (Cost $840,627,779) | 877,952,041 | ||||||||||||||
LIABILITIES, NET OF OTHER ASSETS - (3.64%) | (30,838,425 | ) | |||||||||||||
|
| ||||||||||||||
TOTAL NET ASSETS - 100.00% | $ | 847,113,616 | |||||||||||||
|
| ||||||||||||||
Percentages are stated as a percent of net assets. |
A All or a portion of this security is on loan at April 30, 2019.
BNon-income producing security.
C Fair valued pursuant to procedures approved by the Board of Trustees. At period end, the value of these securities amounted to $181,542,226 or 21.43% of net assets.
D The Fund is affiliated by having the same investment advisor.
E7-day yield.
ADR - American Depositary Receipt.
GDR - Global Depositary Receipt.
PLC - Public Limited Company.
See accompanying notes
20
American Beacon Tocqueville International Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
The Fund’s investments are summarized by level based on the inputs used to determine their values. As of April 30, 2019, the investments were classified as described below:
Tocqueville International Value Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Foreign Common Stocks | ||||||||||||||||||||||||||||
Australia | $ | 8,334,330 | $ | - | $ | - | $ | 8,334,330 | ||||||||||||||||||||
Belgium | 19,261,081 | - | - | 19,261,081 | ||||||||||||||||||||||||
Bermuda | 12,035,125 | - | - | 12,035,125 | ||||||||||||||||||||||||
Brazil | 1,944,000 | - | - | 1,944,000 | ||||||||||||||||||||||||
Canada | 20,580,490 | - | - | 20,580,490 | ||||||||||||||||||||||||
China | 16,080,614 | - | - | 16,080,614 | ||||||||||||||||||||||||
Denmark | 16,412,936 | - | - | 16,412,936 | ||||||||||||||||||||||||
Finland | 14,520,000 | - | - | 14,520,000 | ||||||||||||||||||||||||
France | 140,318,449 | - | - | 140,318,449 | ||||||||||||||||||||||||
Germany | 93,036,712 | - | - | 93,036,712 | ||||||||||||||||||||||||
Ireland | 26,071,588 | - | - | 26,071,588 | ||||||||||||||||||||||||
Japan | - | 181,542,226 | - | 181,542,226 | ||||||||||||||||||||||||
Netherlands | 21,024,360 | - | - | 21,024,360 | ||||||||||||||||||||||||
Republic of Korea | 14,034,627 | - | - | 14,034,627 | ||||||||||||||||||||||||
Spain | 35,322,214 | - | - | 35,322,214 | ||||||||||||||||||||||||
Switzerland | 42,170,718 | - | - | 42,170,718 | ||||||||||||||||||||||||
United Kingdom | 104,389,961 | - | - | 104,389,961 | ||||||||||||||||||||||||
Common Stocks | ||||||||||||||||||||||||||||
United States | 46,085,317 | - | - | 46,085,317 | ||||||||||||||||||||||||
Short-Term Investments | 31,838,406 | - | - | 31,838,406 | ||||||||||||||||||||||||
Securities Lending Collateral | 32,948,887 | - | - | 32,948,887 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Investments in Securities - Assets | $ | 696,409,815 | $ | 181,542,226 | $ | - | $ | 877,952,041 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
U.S. GAAP requires transfers between all levels to/from level 3 be disclosed. During the period ended April 30, 2019, there were no transfers into or out of Level 3.
See accompanying notes
21
Statements of Assets and Liabilities
April 30, 2019 (Unaudited)
International Equity Fund | Tocqueville International Value Fund | |||||||||||
Assets: | ||||||||||||
Investments in unaffiliated securities, at fair value†§ | $ | 2,813,660,121 | $ | 813,164,748 | ||||||||
Investments in affiliated securities, at fair value‡ | 235,100,792 | 64,787,293 | ||||||||||
Foreign currency, at fair value^ | 173,809 | 90,153 | ||||||||||
Cash | - | 155,372 | ||||||||||
Deposits with broker for futures contracts | 18,399,843 | – | ||||||||||
Dividends and interest receivable | 17,027,924 | 4,154,496 | ||||||||||
Receivable for investments sold | 11,028,045 | 11,101,794 | ||||||||||
Receivable for fund shares sold | 3,105,149 | 666,790 | ||||||||||
Receivable for tax reclaims | 4,315,599 | 3,104,317 | ||||||||||
Receivable for expense reimbursement (Note 2) | 2,096 | – | ||||||||||
Unrealized appreciation from forward foreign currency contracts | 194,737 | – | ||||||||||
Receivable for variation margin on open futures contracts (Note 5) | 2,616,517 | – | ||||||||||
Prepaid expenses | 150,324 | 24,825 | ||||||||||
|
|
|
| |||||||||
Total assets | 3,105,774,956 | 897,249,788 | ||||||||||
|
|
|
| |||||||||
Liabilities: | ||||||||||||
Payable for investments purchased | 20,402,073 | 13,624,748 | ||||||||||
Payable for fund shares redeemed | 2,839,827 | 2,282,365 | ||||||||||
Payable for foreign currency deposits with broker for futures contracts, at fair value¤ | 2,878,734 | – | ||||||||||
Payable for expense reimbursement (Note 2) | - | 168,285 | ||||||||||
Management andsub-advisory fees payable (Note 2) | 3,447,132 | 536,787 | ||||||||||
Service fees payable (Note 2) | 95,985 | 53,814 | ||||||||||
Transfer agent fees payable (Note 2) | 160,653 | 227,129 | ||||||||||
Payable upon return of securities loaned (Note 9)§ | 107,491,572 | 32,948,887 | ||||||||||
Custody and fund accounting fees payable | 145,960 | 23,271 | ||||||||||
Professional fees payable | 58,903 | 149,706 | ||||||||||
Trustee fees payable (Note 2) | 15,001 | 44,054 | ||||||||||
Payable for prospectus and shareholder reports | 29,135 | 36,789 | ||||||||||
Unrealized depreciation from forward foreign currency contracts | 1,022,203 | – | ||||||||||
Other liabilities | 35,001 | 40,337 | ||||||||||
|
|
|
| |||||||||
Total liabilities | 138,622,179 | 50,136,172 | ||||||||||
|
|
|
| |||||||||
Net assets | $ | 2,967,152,777 | $ | 847,113,616 | ||||||||
|
|
|
| |||||||||
Analysis of net assets: | ||||||||||||
Paid-in-capital | $ | 2,881,311,232 | $ | 803,847,560 | ||||||||
Total distributable earnings (deficits)A | 85,841,545 | 43,266,056 | ||||||||||
|
|
|
| |||||||||
Net assets | $ | 2,967,152,777 | $ | 847,113,616 | ||||||||
|
|
|
|
See accompanying notes
22
American Beacon FundsSM
Statements of Assets and Liabilities
April 30, 2019 (Unaudited)
International Equity Fund | Tocqueville International Value Fund | |||||||||||
Shares outstanding at no par value (unlimited shares authorized): | ||||||||||||
Institutional ClassB | 88,002,300 | 2,235,667 | ||||||||||
|
|
|
| |||||||||
Y ClassB | 50,253,060 | 17,481,307 | ||||||||||
|
|
|
| |||||||||
Investor Class | 13,419,664 | 33,231,241 | ||||||||||
|
|
|
| |||||||||
Advisor Class | 2,412,371 | N/A | ||||||||||
|
|
|
| |||||||||
A Class | 777,368 | N/A | ||||||||||
|
|
|
| |||||||||
C Class | 348,269 | N/A | ||||||||||
|
|
|
| |||||||||
R6 Class | 8,380,465 | N/A | ||||||||||
|
|
|
| |||||||||
Net assets: | ||||||||||||
Institutional ClassB | $ | 1,576,721,743 | $ | 35,807,441 | ||||||||
|
|
|
| |||||||||
Y ClassB | $ | 938,067,652 | $ | 279,909,675 | ||||||||
|
|
|
| |||||||||
Investor Class | $ | 238,367,751 | $ | 531,396,500 | ||||||||
|
|
|
| |||||||||
Advisor Class | $ | 43,934,841 | N/A | |||||||||
|
|
|
| |||||||||
A Class | $ | 13,799,419 | N/A | |||||||||
|
|
|
| |||||||||
C Class | $ | 5,971,439 | N/A | |||||||||
|
|
|
| |||||||||
R6 Class | $ | 150,289,932 | N/A | |||||||||
|
|
|
| |||||||||
Net asset value, offering and redemption price per share: | ||||||||||||
Institutional ClassB | $ | 17.92 | $ | 16.02 | ||||||||
|
|
|
| |||||||||
Y ClassB | $ | 18.67 | $ | 16.01 | ||||||||
|
|
|
| |||||||||
Investor Class | $ | 17.76 | $ | 15.99 | ||||||||
|
|
|
| |||||||||
Advisor Class | $ | 18.21 | N/A | |||||||||
|
|
|
| |||||||||
A Class | $ | 17.75 | N/A | |||||||||
|
|
|
| |||||||||
A Class (offering price) | $ | 18.83 | N/A | |||||||||
|
|
|
| |||||||||
C Class | $ | 17.15 | N/A | |||||||||
|
|
|
| |||||||||
R6 Class | $ | 17.93 | N/A | |||||||||
|
|
|
| |||||||||
† Cost of investments in unaffiliated securities | $ | 2,723,149,237 | $ | 775,840,486 | ||||||||
‡ Cost of investments in affiliated securities | $ | 235,100,792 | $ | 64,787,293 | ||||||||
§ Fair value of securities on loan | $ | 102,882,174 | $ | 31,614,895 | ||||||||
¤ Cost of foreign currency deposits with broker for futures contracts | $ | (2,818,269 | ) | $ | – | |||||||
^ Cost of foreign currency | $ | 165,500 | $ | 81,166 |
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at period end.
B Class commenced operations January 18, 2019 in the Tocqueville International Value Fund (Note 1).
See accompanying notes
23
American Beacon FundsSM
Statements of Operations
For the period ended April 30, 2019 (Unaudited)
International Equity Fund | Tocqueville International Value Fund | |||||||||||
Investment income: | ||||||||||||
Dividend income from unaffiliated securities (net of foreign taxes)† | $ | 48,391,760 | $ | 11,627,271 | ||||||||
Dividend income from affiliated securities (Note 8) | 937,782 | 257,379 | ||||||||||
Interest income | 67,591 | 149,361 | ||||||||||
Income derived from securities lending (Note 9) | 343,716 | 10,408 | ||||||||||
|
|
|
| |||||||||
Total investment income | 49,740,849 | 12,044,419 | ||||||||||
|
|
|
| |||||||||
Expenses: | ||||||||||||
Management andsub-advisory fees (Note 2) | 8,591,687 | 1,734,502 | ||||||||||
Investment advisor’s feesB | - | 2,106,854 | ||||||||||
Transfer agent fees: | ||||||||||||
Institutional Class (Note 2)A | 283,356 | 75 | ||||||||||
Y Class (Note 2)A | 489,492 | 20 | ||||||||||
Investor Class | 5,370 | 305,126 | ||||||||||
Advisor Class | 1,116 | - | ||||||||||
A Class | 1,888 | - | ||||||||||
C Class | 1,687 | - | ||||||||||
R6 Class | 793 | - | ||||||||||
Custody and fund accounting fees | 412,665 | 99,322 | ||||||||||
Professional fees | 85,004 | 145,664 | ||||||||||
Registration fees and expenses | 76,300 | 61,626 | ||||||||||
Service fees (Note 2): | ||||||||||||
Investor Class | 424,522 | 516,710 | ||||||||||
Advisor Class | 56,203 | - | ||||||||||
A Class | 12,141 | - | ||||||||||
C Class | 3,742 | - | ||||||||||
Distribution fees (Note 2): | ||||||||||||
Investor Class | - | 528,972 | ||||||||||
Advisor Class | 55,308 | - | ||||||||||
A Class | 16,861 | - | ||||||||||
C Class | 30,935 | - | ||||||||||
Administration feesE | - | 292,677 | ||||||||||
Prospectus and shareholder report expenses | 112,990 | 104,849 | ||||||||||
Trustee fees (Note 2) | 92,701 | 103,084 | ||||||||||
Other expenses | 170,536 | 110,997 | ||||||||||
|
|
|
| |||||||||
Total expenses | 10,925,297 | 6,110,478 | ||||||||||
|
|
|
| |||||||||
Net fees waived and expenses (reimbursed) (Note 2) | (10,782 | ) | (687,558 | )F | ||||||||
|
|
|
| |||||||||
Net expenses | 10,914,515 | 5,422,920 | ||||||||||
|
|
|
| |||||||||
Net investment income | 38,826,334 | 6,621,499 | ||||||||||
|
|
|
| |||||||||
Realized and unrealized gain (loss) from investments: | ||||||||||||
Net realized gain (loss) from: | ||||||||||||
Investments in unaffiliated securitiesC | (30,131,490 | ) | 10,642,562 | |||||||||
Commission recapture (Note 1) | 10,775 | - | ||||||||||
Foreign currency transactions | (226,053 | ) | (513,234 | ) | ||||||||
Forward foreign currency contracts | (3,164,921 | ) | - | |||||||||
Futures contracts | 1,760,630 | - | ||||||||||
Change in net unrealized appreciation (depreciation) of: | ||||||||||||
Investments in unaffiliated securitiesD | 124,867,247 | 36,633,923 | ||||||||||
Foreign currency transactions | (128,329 | ) | 7,218 | |||||||||
Forward foreign currency contracts | 1,526,754 | - | ||||||||||
Futures contracts | 5,346,457 | - | ||||||||||
|
|
|
| |||||||||
Net gain from investments | 99,861,070 | 46,770,469 | ||||||||||
|
|
|
| |||||||||
Net increase in net assets resulting from operations | $ | 138,687,404 | $ | 53,391,968 | ||||||||
|
|
|
| |||||||||
† Foreign taxes | $ | 4,577,296 | $ | 997,759 | ||||||||
A Class commenced operations January 18, 2019 in the Tocqueville International Value Fund (Note 1). |
| |||||||||||
B This expense represents the Investment Advisory fees paid to previous Advisor prior to the Reorganization. See Note 2. |
| |||||||||||
C The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities. |
| |||||||||||
D The Fund’s investments in affiliated securities did not have a change in unrealized appreciation (depreciation) at period end. |
| |||||||||||
E This expense represents administrative fees paid to the previous Advisor prior to the Reorganization. See Note 2. |
| |||||||||||
F This expense includes $684,461 of fees waived by the Tocqueville International Value Fund prior to the Reorganization. See Note 1. |
|
See accompanying notes
24
American Beacon FundsSM
Statements of Changes in Net Assets
International Equity Fund | Tocqueville International Value Fund | |||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | Six Months Ended April 30, 2019 | Year Ended October 31, 2018B | |||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||
Net investment income | $ | 38,826,334 | $ | 66,429,991 | $ | 6,621,499 | $ | 16,561,256 | ||||||||||||||||||||
Net realized gain (loss) from investments in unaffiliated securities, commission recapture, foreign currency transactions, forward foreign currency contracts, and futures contracts | (31,751,059 | ) | 170,565,282 | 10,129,328 | (9,208,831 | ) | ||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities, foreign currency transactions, forward foreign currency contracts, and futures contracts | 131,612,129 | (482,846,814 | ) | 36,641,141 | (185,661,979 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in net assets resulting from operations | 138,687,404 | (245,851,541 | ) | 53,391,968 | (178,309,554 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Distributions to shareholders: |
| |||||||||||||||||||||||||||
Total retained earnings: | ||||||||||||||||||||||||||||
Institutional ClassA | (127,130,889 | ) | (51,858,343 | ) | - | - | ||||||||||||||||||||||
Y ClassA | (70,121,553 | ) | (30,796,239 | ) | - | - | ||||||||||||||||||||||
Investor Class | (20,019,511 | ) | (8,756,108 | ) | (12,373,617 | ) | (14,880,734 | ) | ||||||||||||||||||||
Advisor Class | (3,580,435 | ) | (1,516,721 | ) | - | - | ||||||||||||||||||||||
A Class | (1,054,868 | ) | (482,751 | ) | - | - | ||||||||||||||||||||||
C Class | (488,926 | ) | (155,808 | ) | - | - | ||||||||||||||||||||||
R6 Class | (7,544,822 | ) | (351,275 | ) | - | - | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net distributions to shareholders | (229,941,004 | ) | (93,917,245 | ) | (12,373,617 | ) | (14,880,734 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Capital share transactions (Note 11): | ||||||||||||||||||||||||||||
Proceeds from sales of shares | 474,092,607 | 802,744,600 | 446,515,670 | 500,256,514 | ||||||||||||||||||||||||
Reinvestment of dividends and distributions | 217,857,544 | 86,428,547 | 11,224,453 | 13,265,360 | ||||||||||||||||||||||||
Cost of shares redeemed | (520,721,791 | ) | (740,146,553 | ) | (711,644,966 | ) | (381,325,273 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in net assets from capital share transactions | 171,228,360 | 149,026,594 | (253,904,843 | ) | 132,196,601 | |||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in net assets | 79,974,760 | (190,742,192 | ) | (212,886,492 | ) | (60,993,687 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net assets: | ||||||||||||||||||||||||||||
Beginning of period | 2,887,178,017 | 3,077,920,209 | 1,060,000,108 | 1,120,993,795 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
End of period | $ | 2,967,152,777 | $ | 2,887,178,017 | $ | 847,113,616 | $ | 1,060,000,108 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
A Class commenced operations January 18, 2019 in the Tocqueville International Value Fund (Note 1). |
| |||||||||||||||||||||||||||
B This Fund was reorganized on January 18, 2019 and became a series within the American Beacon Funds Trust thereafter. |
|
See accompanying notes
25
American Beacon FundsSM
April 30, 2019 (Unaudited)
1. Organization and Significant Accounting Policies
American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Funds, each a series within the Trust, are registered under the Investment Company Act of 1940, as amended (the “Act”), as diversified,open-end management investment companies. As of April 30, 2019, the Trust consists of thirty-three active series, two of which are presented in this filing: American Beacon International Equity Fund and American Beacon Tocqueville International Value Fund (collectively, the “Funds” and each individually a “Fund”). The remainingthirty-one active series are reported in separate filings.
American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily 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”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.
Fund Reorganization
On September 13, 2018, the Trust’s Board of Trustees approved a Plan of Reorganization and Termination (the “Plan”) to reorganize the Tocqueville International Value Fund (the “Target Fund” and “Predecessor Fund”) into the American Beacon Tocqueville International Value Fund (the “Acquiring Fund”), a newly-created series of American Beacon Funds (the “Trust”) (the “Reorganization”). Shareholders for the Target Fund approved the Plan at a special meeting on December 13, 2018. On January 18, 2019, pursuant to the Plan, the Target Fund transferred all its property and assets to the Acquiring Fund in exchange solely for voting shares of the Acquiring Fund and the assumption all the Target Fund’s liabilities. The Target Fund’s shareholders received a pro rata portion of the Acquiring Fund’s shares in exchange for their shares therein and in liquidation and termination of the Target Fund. The accounting and performance history of the shares of the Target Fund was redesignated as that of the Investor Class of the Acquiring Fund.
The Reorganization was structured to qualify as atax-free reorganization under the Internal Revenue Code for federal income tax purposes. As such, the Target Fund’s shareholders recognized no gain or loss for federal income tax purposes. The shares, net assets, net investment income, and net unrealized appreciation (depreciation) of the investments of the Target Fund as of the close of business on January 18, 2019 were as follows:
Investor Class Shares | 58,023,801 | |||
Net Assets | $ | 857,320,479 | ||
Net Investment Income | $ | 283,068 | ||
Unrealized Depreciation | $ | 8,771,740 |
The Reorganization shifted the management oversight responsibility from Tocqueville Asset Management, L.P. (“Tocqueville” and “Advisor”) to the Manager. The Manager engaged Tocqueville as thesub-advisor to the Fund, thus maintaining the continuity of the portfolio management.
For financial reporting purposes, assets received and shares issued by the Acquiring Fund were recorded at fair value; however, the cost basis of the investments received from the Target Fund was carried forward to align ongoing reporting of the Acquiring Fund’s realized jand unrealized gains and losses with the amount distributable to shareholders for tax purposes.
26
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Recent Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2017-08,Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.
In August 2018, the FASB issued ASU2018-13,Fair Value Measurement (“Topic 820”). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the period ended April 30, 2019, the Funds have chosen to adopt the standard. The adoption of this ASU guidance did not have a material impact on the financial statements and other disclosures.
Class Disclosure
On January 18, 2019, the Tocqueville International Value Fund created the Institutional and Y Classes, new classes made available for sale pursuant to the Fund’s registration statement filed with the U.S. Securities and Exchange Commission (“SEC”). Refer to the Fund’s Prospectus for more details.
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 | Eligible Investors | Minimum Initial Investments | ||||
Institutional | Large institutional investors - sold directly or through intermediary channels. | $ | 250,000 | |||
Y Class | Large institutional retirement plan investors - sold directly or through intermediary channels. | $ | 100,000 | |||
Investor | All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors. | $ | 2,500 | |||
Advisor Class | All investors who invest through intermediary organizations, such as broker-dealers or third party administrators. | $ | 2,500 | |||
A Class | All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor which may include afront-end sales charge and a contingent deferred sales charge (“CDSC”). | $ | 2,500 | |||
C Class | Retail investors who invest directly through a financial intermediary such as a broker or through employee directed benefit plans with applicable sales charges which may include CDSC. | $ | 1,000 | |||
R6 Class | Large institutional retirement plan investors—sold through retirement plan sponsors. | None |
Each class offered by the Trust has equal rights as to assets and voting privileges. Income andnon-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 service, distribution, transfer agent fees, andsub-transfer agent fees that vary amongst the classes as described more fully in Note 2.
27
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Significant Accounting Policies
The following is a summary of significant accounting policies, consistently followed by the Funds in preparation of the financial statements. The Funds are considered investment companies and accordingly, follow the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946,Financial Services – Investment Companies,a part of Generally Accepted Accounting Principles (“U.S. GAAP”).
Security Transactions and Investment Income
Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.
Dividend income, net of foreign taxes, is recorded on theex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Funds. Interest income, net of foreign taxes, is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.
Currency Translation
All assets and liabilities initially expressed in foreign currency values are converted into U.S. dollar values at the mean of the bid and ask prices of such currencies against U.S. dollars as last quoted by a recognized dealer. Income, expenses, and purchases and sales of investments are translated into U.S. dollars at the rate of the exchange prevailing on the respective dates of such transactions. The effect of changes in foreign currency exchange rates on investments is separately identified from the fluctuations arising from changes in market values of securities held and is reported with all other foreign currency gains and losses on the Funds’ Statements of Operations.
Distributions to Shareholders
Distributions, if any, of net investment income are generally paid at least annually and recorded on the ex-dividend date. 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. To the extent necessary to fully distribute capital gains, the Funds may designate earnings and profits distributed to shareholders on the redemption of shares.
Commission Recapture
The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If 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, Trust Expenses, Gains, and Losses
Investment income, realized and unrealized gains and losses from investments of the Funds are allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Funds. Expenses directly charged or attributable to the Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Funds on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Funds or nature of the services performed and relative applicability to the Funds.
28
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.
Other
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In the normal course of business, the Trust enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.
2. Transactions with Affiliates
Management and InvestmentSub-Advisory Agreements
Prior to the Reorganization, the Advisor of the Predecessor fund received an investment advisory fee calculated daily and payable monthly, at an annual rate of 1.00% on the first $1 billion of the average daily assets and 0.75% of the average daily net assets in excess of $1 billion of the Predecessor Fund.
The Funds and the Manager are parties to a Management Agreement that obligates the Manager to provide the Funds with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of the Funds’ average daily net assets that is calculated and accrued daily according to the following schedules:
International Equity Fund
First $15 billion | 0.35 | % | ||
Next $15 billion | 0.325 | % | ||
Over $30 billion | 0.30 | % |
Tocqueville International Value Fund
First $5 billion | 0.35 | % | ||
Next $5 billion | 0.325 | % | ||
Next $10 billion | 0.30 | % | ||
Over $20 billion | 0.275 | % |
The Trust, on behalf of the American Beacon International Equity Fund, and the Manager have entered into Investment Advisory Agreements with Causeway Capital Management LLC; Lazard Asset Management LLC; and Templeton Investment Counsel, LLC(“Sub-Advisors”) pursuant to which the Fund has agreed to pay an annualizedsub-advisory fee that is calculated and accrued daily based on the Fund’s average daily net assets.
The Trust, on behalf of the American Beacon Tocqueville International Value Fund, and the Manager have entered into an Investment Advisory Agreement with Tocqueville Asset Management L.P.(“Sub-Advisor”) pursuant to which the Fund has agreed to pay an annualizedsub-advisory fee that is calculated and accrued daily according to the following schedule:
First $1 billion | 0.40 | % | ||
Next $1 billion | 0.35 | % | ||
Over $2 billion | 0.325 | % |
29
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
The Management andSub-Advisory Fees paid by the Funds for the period ended April 30, 2019 were as follows:
International Equity Fund
Effective Fee Rate | Amount of Fees Paid | |||||||||||
Management Fees | 0.35 | % | $ | 4,957,410 | ||||||||
Sub-Advisor Fees | 0.26 | % | 3,634,277 | |||||||||
|
|
|
| |||||||||
Total | 0.61 | % | $ | 8,591,687 | ||||||||
|
|
|
|
Tocqueville International Value Fund
Effective Fee Rate | Amount of Fees Paid* | |||||||||||
Management Fees | 0.35 | % | $ | 810,051 | ||||||||
Sub-Advisor Fees | 0.40 | % | 924,451 | |||||||||
|
|
|
| |||||||||
Total | 0.75 | % | $ | 1,734,502 | ||||||||
|
|
|
|
* This includes fees paid since the reorganization on January 18, 2019.
As compensation for services provided by the Manager in connection with securities lending activities conducted by the Funds, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 10% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 10% of such loan fees. These fees are included in “Income derived from securities lending” and “Management and investment advisory fees” on the Statements of Operations. During the period ended April 30, 2019, the Manager received securities lending fees of $44,149 and $1,717 for the securities lending activities of the International Equity Fund and Tocqueville International Value Fund, respectively. Please see Note 9 for more information on securities lending.
Administration Services Agreement
Prior to the Reorganization, the Predecessor Fund paid the Advisor, pursuant to an Administrative Services Agreement, a fee computed and paid monthly at an annual rate of 0.15% on the first $400 million of the average daily net assets, 0.13% on the next $600 million of the average daily net assets; and 0.12% on all the average daily net assets over $1 billion.
Distribution Plans
Prior to the Reorganization, the Predecessor Shares incurred $528,972 of Distribution Fees. Since the Reorganization, the Shares were redesignated to the Investor Class and Distribution Fees are no longer applicable.
The Funds, except for the Advisor, A, and C Classes of the Funds, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule12b-1 under the Act, pursuant to which no separate fees may be charged to the Funds for distribution purposes. However, the Plan authorizes the management fee received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Funds do not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.
Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule12b-1 under the Act for the Advisor, A, and C Classes of the International Equity Fund. Under the Distribution Plans, as compensation for distribution and shareholder servicing assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance.
30
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Service Plans
The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Investor, Advisor, A, and C Classes of the Funds. As compensation for performing the duties required under the Service Plans, the Manager receives an annualized fee up to 0.25% of the average daily net assets of the A and C Classes, up to 0.25% of the average daily net assets of the Advisor Class, and up to 0.375% of the average daily net assets of the Investor Class of the Funds.
Sub-Transfer Agent Fees
The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Funds and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Funds primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Funds. Certain services would have been provided by the Funds’ transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Funds’ transfer agent. Accordingly, the Funds, pursuant to Board approval, have agreed to reimburse the Manager for certainnon-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts(sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the period ended April 30, 2019, thesub-transfer agent fees, as reflected in “Transfer agent fees” on the Statements of Operations, were as follows:
Fund | Sub-Transfer Agent Fees | |||
International Equity | $ | 732,288 | ||
Tocqueville International Value | 56 |
As of April 30, 2019, the Funds owed the Manager the following reimbursement ofsub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statements of Assets and Liabilities:
Fund | Reimbursement Sub-Transfer Agent Fees | |||
International Equity | $ | 133,546 |
As of April 30, 2019, the Manager owed the Funds the following reimbursement ofsub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statements of Assets and Liabilities:
Fund | Reimbursement Sub-Transfer Agent Fees* | |||
Tocqueville International Value | $ | 32,296 |
* This balance is presented as a contra liability as of April 30, 2019.
Investments in Affiliated Funds
The Funds may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Funds in connection with securities lending may also be invested in the USG Select Fund. The Funds and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the period ended April 30, 2019, the Manager earned fees on the Funds’ direct investments and securities lending collateral investments in the USG Select Fund as shown below:
Fund | Direct Investments in USG Select Fund | Securities Lending Collateral Investments in USG Select Fund | Total | |||||||||
International Equity | $ | 41,050 | $ | 15,130 | $ | 56,180 | ||||||
Tocqueville International Value | 11,023 | 2,324 | 13,347 |
31
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Interfund Credit Facility
Pursuant to an exemptive order issued by the SEC, the Funds, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the funds because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the period ended April 30, 2019, the Funds did not utilize the credit facility.
Expense Reimbursement Plan
The Manager contractually agreed to reduce fees and/or reimburse expenses for the R6 Class of the International Equity Fund and the Institutional and Y Classes of the Tocqueville International Value Fund to the extent that total operating expenses exceed the Funds’ expense cap. During the period ended April 30, 2019, the Manager waived and/or reimbursed expenses as follows:
Expense Cap | Expiration of Reimbursed Expenses | |||||||||||||||||
Fund | Class | 11/1/2018 - 4/30/2019 | Reimbursed Expenses | (Recouped) Expenses | ||||||||||||||
International Equity | R6 | 0.66 | % | $ | 10,782 | $ | - | 2022 | ||||||||||
Tocqueville International Value | Institutional(2) | 0.89 | % | 2,498 | - | 2022 | ||||||||||||
Tocqueville International Value | Y(2) | 0.99 | % | 599 | - | 2022 | ||||||||||||
Tocqueville International Value | Investor | 1.25 | % | 684,461 | (1) | - | 2022 | |||||||||||
(1) Not subject to recoupment by the Manager. |
| |||||||||||||||||
(2) Class commenced operations January 18, 2019. |
|
Of these amounts, $2,096 was disclosed as a receivable from the Manager for the International Equity Fund and $168,285 was disclosed as a payable to the Manager for the Tocqueville International Value Fund on the Statements of Assets and Liabilities at April 30, 2019.
The Funds have adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Funds for any contractual fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Funds’ annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. The reimbursed expenses listed above will expire in 2022. The Funds did not record a liability for potential reimbursements due to the current assessment that reimbursements are unlikely. The carryover of excess expenses potentially reimbursable to the Manager are as follows:
Fund | Recouped Expenses | Excess Expense Carryover | Expired Expense Carryover | Expiration of Reimbursed Expenses | ||||||||||||
International Equity | $ | - | $ | 3,001 | $ | - | 2020 | |||||||||
International Equity | - | 8,383 | - | 2021 |
32
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Sales Commissions
The Funds’ Distributor, Resolute Investment Distributors, Inc. (“RID” or “Distributor”), may receive a portion of Class A sales charges from broker dealers and it may be used to offset distribution related expenses. During the period ended April 30, 2019, RID collected $1,161 for International Equity Fund from the sale of Class A Shares.
A CDSC of 0.50% will be deducted with respect to Class A Shares of the International Equity Fund 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 Funds’ 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 April 30, 2019, there were no CDSC fees collected for Class A Shares of the International Equity Fund. The Tocqueville International Value Fund does not offer Class A Shares.
A CDSC of 1.00% will be deducted with respect to Class C Shares of the International Equity Fund redeemed within 12 months of purchase, unless waived as discussed in the Funds’ 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 April 30, 2019, CDSC fees of $103 were collected for the Class C Shares of International Equity Fund. The Tocqueville International Value Fund does not offer Class C Shares.
Trustee Fees and Expenses
As compensation for their service to the Trusts, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chair receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for attendance at the committee meetings. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each fund of the Trusts according to its respective net assets.
3. Security Valuation and Fair Value Measurements
The price of the Fund’s shares is based on its net asset value (“NAV”) per share. The Fund’s NAV is computed by adding total assets, subtracting all the Fund’s liabilities, and dividing the result by the total number of shares outstanding.
The NAV of each class of the Fund’s shares is determined based on a pro rata allocation of the Fund’s investment income, expenses and total capital gains and losses. The Fund’s NAV per share is determined each business day as of the regular close of trading on the New York Stock Exchange (“NYSE” or “Exchange”), which is typically 4:00 p.m. Eastern Time (“ET”). However, if trading on the NYSE closes at a time other than 4:00 p.m. ET, the Fund’s NAV per share typically would still be determined as of the regular close of trading on the NYSE. The Fund does not price its shares on days that the NYSE is closed. Foreign exchanges may permit trading in foreign securities on days when the Fund is not open for business, which may result in the value of the Fund’s portfolio investments being affected at a time when you are unable to buy or sell shares.
Equity securities, including shares ofclosed-end funds and exchange-traded funds (“ETFs”), are valued at the last sale price or official closing price taken from the primary exchange in which each security trades. Investments in other mutual funds are valued at the closing NAV per share on the day of valuation. Debt securities
33
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
are valued at bid quotes from broker/dealers or evaluated bid prices from pricing services, who may consider a number of inputs and factors, such as prices of comparable securities, yield curves, spreads, credit ratings, coupon rates, maturity, default rates, and underlying collateral. Futures are valued based on their daily settlement prices. Exchange-traded andover-the-counter (“OTC”) options are valued at the last sale price. Options with no last sale for the day are priced at mid quote. Swaps are valued at evaluated mid prices from pricing services.
The valuation of securities traded on foreign markets and certain fixed income securities will generally be based on prices determined as of the earlier closing time of the markets on which they primarily trade unless a significant event has occurred. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. ET.
Securities may be valued at fair value, as determined in good faith and pursuant to procedures approved by the Board, under certain limited circumstances. For example, fair value pricing will be used when market quotations are not readily available or reliable, as determined by the Manager, such as when (i) trading for a security is restricted or stopped; (ii) a security’s trading market is closed (other than customary closings); or (iii) a security has beende-listed from a national exchange. A security with limited market liquidity may require fair value pricing if the Manager determines that the available price does not reflect the security’s true market value. In addition, if a significant event that the Manager determines to affect the value of one or more securities held by the Fund occurs after the close of a related exchange but before the determination of the Fund’s NAV, fair value pricing may be used on the affected security or securities. Securities of small-capitalization companies are also more likely to require a fair value determination using these procedures because they are more thinly traded and less liquid than the securities of larger-capitalization companies. The Fund may fair value securities as a result of significant events occurring after the close of the foreign markets in which the Fund invests as described below. In addition, the Fund may invest in illiquid securities requiring these procedures.
The Fund may use fair value pricing for securities primarily traded innon-U.S. markets because most foreign markets close well before the Fund’s pricing time of 4:00 p.m. ET. 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. If the Manager determines that the last quoted prices ofnon-U.S. securities will, in its judgment, materially affect the value of some or all its portfolio securities, the Manager can 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. These securities are fair valued using a pricing service, using methods approved by the Board, that 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 American Depositary Receipts (“ADRs”) and futures contracts. The Valuation Committee, established by the Board, may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. The Fund uses outside pricing services to provide 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.
Attempts to determine the fair value of securities introduce an element of subjectivity to the pricing of securities. As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes. If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Manager compares the new market quotation to the fair value price to evaluate the effectiveness of the Fund’s fair valuation procedures. If any significant discrepancies are found, the Manager may adjust the Fund’s fair valuation procedures.
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American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Valuation Inputs
Various inputs may be used to determine the fair value of the Funds’ investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1 | - | Quoted prices in active markets for identical securities. | ||
Level 2 | - | Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. | ||
Level 3 | - | Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment. |
Level 1 and Level 2 trading assets and trading liabilities, at fair value
Common stocks, preferred securities, and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are generally categorized as Level 2 of the fair value hierarchy. 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.
Investments in registeredopen-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.
OTC financial derivative instruments, such as forward 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.
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 the 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
35
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
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 bere-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 the 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.
4. Securities and Other Investments
American Depositary Receipts
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 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.
Common Stock
Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or OTC. OTC stock may be less liquid than exchange-traded stock.
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American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Foreign Securities
The Funds may invest in U.S. dollar-denominated andnon-U.S. dollar denominated equity and debt securities of foreign issuers and foreign branches of U.S. banks, including negotiable certificates of deposit (“CDs”), bankers’ acceptances, and commercial paper. Foreign issuers are issuers organized and doing business principally outside the United States and include corporations, banks,non-U.S. governments, and quasi-governmental organizations. While investments in foreign securities may be intended to reduce risk by providing further diversification, such investments involve sovereign and other risks, in addition to the credit and market risks normally associated with domestic securities. These additional risks include the possibility of adverse political and economic developments (including political or social instability, nationalization, expropriation, or confiscatory taxation); the potentially adverse effects of unavailability of public information regarding issuers, different governmental supervision and regulation of financial markets, reduced liquidity of certain financial markets, and the lack of uniform accounting, auditing, and financial reporting standards or the application of standards that are different or less stringent than those applied in the United States; different laws and customs governing securities tracking; and possibly limited access to the courts to enforce the Funds’ rights as an investor.
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. Restricted securities outstanding during the period ended April 30, 2019 are disclosed in the Notes to the Schedules of Investments.
Regulation S under the Securities Act permits the sale abroad of securities that are not registered for sale in the United States and includes a provision for U.S. investors, such as the Funds, to purchase such unregistered securities if certain conditions are met.
Other Investment Company Securities and Other Exchange-Traded Products
The Funds may invest in shares of other investment companies, includingopen-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 asub-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’ 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 their Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.
Preferred Stock
A preferred stock blends the characteristics of a bond and common stock. It can offer the higher yield of a bond and has priority over common stock in equity ownership, but does not have the seniority of a bond and its participation in the issuer’s growth may be limited. Preferred stock generally has preference over common stock in
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American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
the receipt of dividends and in any residual assets after payment to creditors should the issuer be dissolved. Although the dividend is set at a fixed or variable rate, in some circumstances it can be changed or omitted by the issuer. Preferred stocks are subject to the risks associated with other types of equity securities, as well as additional risks, such as credit risk, interest rate risk, potentially greater volatility and risks related to deferral,non-cumulative dividends, subordination, liquidity, limited voting rights, and special redemption rights.
5. Financial Derivative Instruments
The Funds may utilize derivative instruments to gain market exposure on cash balances to hedge foreign currency exposure or reduce market exposure in anticipation of liquidity needs. When considering the Funds’ use of derivatives, it is important to note that the Funds do not use derivatives for the purpose of creating financial leverage.
Forward Foreign Currency Contracts
The Funds may enter into forward foreign currency contracts to hedge the exchange rate risk on investment transactions or to hedge the value of the Funds’ securities denominated in foreign currencies. Forward foreign currency contracts are valued at the forward exchange rate prevailing on the day of valuation. The Funds may also use currency contracts to increase exposure to a foreign currency or to shift exposure to foreign currency fluctuations from one country to another. 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.
During the period ended April 30, 2019, the International Equity Fund entered into forward foreign currency contracts primarily for hedging foreign currency fluctuations.
The Fund’s forward 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 forward foreign currency contracts. For the purpose of this disclosure, volume is measured by the amounts bought and sold in USD at each quarter end.
Average Forward Foreign Currency Notional Amounts Outstanding | ||||||||||||
Fund | Purchased Contracts | Sold Contracts | ||||||||||
International Equity | $ | 155,189,589 | $ | 55,378,651 |
Futures Contracts
Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Funds may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities or that the counterparty will fail to perform its obligations.
Upon entering into a futures contract, the Funds are required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents a portion of the face value of the futures contract. The Funds usually reflects this amount on the Schedules of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as cash deposited with broker on the Statements of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.
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American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
During the period ended April 30, 2019, the International Equity Fund entered into futures 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 average quarterly volume of futures contracts. For the purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.
Average Futures Contracts Outstanding | ||||
Fund | Period Ended April 30, 2019 | |||
International Equity | 1,024 |
The following is a summary of the fair valuations of the Funds’ derivative instruments categorized by risk exposure(1):
International Equity Fund
Fair values of financial instruments on the Statements of Assets and Liabilities as of April 30, 2019: |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives not accounted for as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized appreciation of forward foreign currency contracts | $ | – | $ | 194,737 | $ | – | $ | – | $ | – | $ | 194,737 | |||||||||||||||||||||||||||||||||||||||||||
Receivable for variation margin from open futures contracts(2) | – | – | – | – | 2,623,656 | 2,623,656 | |||||||||||||||||||||||||||||||||||||||||||||||||
Liabilities: | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized depreciation of forward foreign currency contracts | $ | – | $ | (1,022,203 | ) | $ | – | $ | – | $ | – | $ | (1,022,203 | ) | |||||||||||||||||||||||||||||||||||||||||
Payable for variation margin from open futures contracts(2) | – | – | – | – | (6,127 | ) | (6,127 | ) |
The effect of financial derivative instruments on the Statements of Operations as of April 30, 2019: |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives not accounted for as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized gain (loss) from derivatives | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Forward foreign currency contracts | $ | - | $ | (3,164,921 | ) | $ | - | $ | - | $ | - | $ | (3,164,921 | ) | |||||||||||||||||||||||||||||||||||||||||
Futures contracts | - | - | - | - | 1,760,630 | 1,760,630 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net change in unrealized appreciation | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Forward foreign currency contracts | - | 1,526,754 | - | - | - | 1,526,754 | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | - | - | - | - | 5,346,457 | 5,346,457 |
(1)See Note 3 in the Notes to Financial Statements for additional information.
(2)Includes cumulative appreciation (depreciation) of futures contracts as reported in the Fund’s Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.
Master Agreements
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 the 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.
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American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Offsetting Assets and Liabilities
The Funds are parties to enforceable master netting agreements between brokers and counterparties which provide for the right to offset under certain circumstances. The Funds employ multiple money managers and counterparties and have elected not to offset qualifying financial and derivative instruments on the Statements of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, April 30, 2019.
International Equity Fund
Offsetting of Financial and Derivative Assets as of April 30, 2019: |
| |||||||||||
Assets | Liabilities | |||||||||||
Futures Contracts | $ | 2,623,656 | $ | 6,127 | ||||||||
Forward Foreign Currency Contracts | 194,737 | 1,022,203 | ||||||||||
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|
| |||||||||
Total derivative assets and liabilities in the Statements of Assets and Liabilities | $ | 2,818,393 | $ | 1,028,330 | ||||||||
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|
| |||||||||
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”) | $ | (2,623,656 | ) | $ | (6,127 | ) | ||||||
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| |||||||||
Total derivative assets and liabilities subject to an MNA | $ | 194,737 | $ | 1,022,203 | ||||||||
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|
|
Financial Assets, Derivatives, and Collateral Received/(Pledged) by Counterparty as of April 30, 2019: |
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Gross Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||||||||||||||||||
Counterparty | Gross Amounts of Assets Presented in the Statements of Assets and Liabilities | Derivatives Available for Offset | Non-Cash Collateral Pledged | Cash Collateral Pledged | Net Amount | |||||||||||||||||||||||||||||||
BNP Paribas, N.A. | $ | 32,876 | $ | (31,413 | ) | $ | - | $ | - | $ | 1,463 | |||||||||||||||||||||||||
Bank of Montreal | 20,222 | (20,222 | ) | - | - | - | ||||||||||||||||||||||||||||||
Goldman Sachs Capital Markets | 26,221 | - | - | - | 26,221 | |||||||||||||||||||||||||||||||
HSBC Bank (USA) | 19,068 | (5,770 | ) | - | - | 13,298 | ||||||||||||||||||||||||||||||
JPMorgan Chase Bank, N.A. | 19,557 | (17,717 | ) | - | - | 1,840 | ||||||||||||||||||||||||||||||
Morgan Stanley Bank, N.A. | 24,537 | (24,537 | ) | - | - | - | ||||||||||||||||||||||||||||||
Royal Bank of Canada | 12,286 | (12,286 | ) | - | - | - | ||||||||||||||||||||||||||||||
Societe Generale | 14,089 | (14,089 | ) | - | - | - | ||||||||||||||||||||||||||||||
State Street Bank & Trust Co. | 6,732 | - | - | - | 6,732 | |||||||||||||||||||||||||||||||
UBS AG | 19,149 | (17,935 | ) | - | - | 1,214 | ||||||||||||||||||||||||||||||
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Total | $ | 194,737 | $ | (143,969 | ) | $ | - | $ | - | $ | 50,768 | |||||||||||||||||||||||||
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Gross Amounts Not Offset in the Statements of Assets and Liabilities | ||||||||||||||||||||||||||||||||||||
Counterparty | Gross Amounts of Liabilities Presented in the Statements of Assets and Liabilities | Derivatives Available for Offset | Non-Cash Collateral Received | Cash Collateral Received | Net Amount | |||||||||||||||||||||||||||||||
BNP Paribas, N.A. | $ | 31,413 | $ | (31,413 | ) | $ | - | $ | - | $ | - | |||||||||||||||||||||||||
Bank of Montreal | 253,708 | (20,222 | ) | - | - | 233,486 | ||||||||||||||||||||||||||||||
Barclays Bank PLC | 2,800 | - | - | - | 2,800 | |||||||||||||||||||||||||||||||
Citibank, N.A. | 6,428 | - | - | - | 6,428 | |||||||||||||||||||||||||||||||
HSBC Bank (USA) | 5,770 | (5,770 | ) | - | - | - | ||||||||||||||||||||||||||||||
JPMorgan Chase Bank, N.A. | 17,717 | (17,717 | ) | - | - | - | ||||||||||||||||||||||||||||||
Morgan Stanley Bank, N.A. | 43,126 | (24,537 | ) | - | - | 18,589 | ||||||||||||||||||||||||||||||
Royal Bank of Canada | 16,004 | (12,286 | ) | - | - | 3,718 | ||||||||||||||||||||||||||||||
Societe Generale | 451,422 | (14,089 | ) | - | - | 437,333 | ||||||||||||||||||||||||||||||
Standard and Chartered Bank | 175,880 | - | - | - | 175,880 | |||||||||||||||||||||||||||||||
UBS AG | 17,935 | (17,935 | ) | - | - | - | ||||||||||||||||||||||||||||||
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Total | $ | 1,022,203 | $ | (143,969 | ) | $ | - | $ | - | $ | 878,234 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
40
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Remaining Contractual Maturity of the Agreements As of April 30, 2019 | ||||||||||||||||||||||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||||||||||||||||||||||||||
Securities Lending Transactions | ||||||||||||||||||||||||||||||||||||
Common Stocks | $ | 107,491,572 | $ | - | $ | - | $ | - | $ | 107,491,572 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Total Borrowings | $ | 107,491,572 | $ | - | $ | - | $ | - | $ | 107,491,572 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Gross amount of recognized liabilities for securities lending transactions |
| $ | 107,491,572 | |||||||||||||||||||||||||||||||||
|
|
Tocqueville International Value
Remaining Contractual Maturity of the Agreements As of April 30, 2019 | ||||||||||||||||||||||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||||||||||||||||||||||||||
Securities Lending Transactions | ||||||||||||||||||||||||||||||||||||
Common Stocks | $ | 32,948,887 | $ | - | $ | - | $ | - | $ | 32,948,887 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Total Borrowings | $ | 32,948,887 | $ | - | $ | - | $ | - | $ | 32,948,887 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||
Gross amount of recognized liabilities for securities lending transactions |
| $ | 32,948,887 | |||||||||||||||||||||||||||||||||
|
|
6. Principal Risks
Investing in the Funds may involve certain risks including, but not limited to, those described below.
Counterparty Risk
The Funds are subject to the risk that a party or participant to a transaction, such as a broker or derivative counterparty, will be unwilling or unable to satisfy its obligation to make timely principal, interest or settlement payments or to otherwise honor its obligations to the Funds. As a result the Fund may obtain no recovery of its investment or may only obtain a limited recovery, and any recovery may be delayed. Not all derivative transactions require a counterparty to post collateral, which may expose the Fund to greater losses in the event of a default by a counterparty.
Credit Risk
The Funds are subject to the risk that the issuer or guarantor of a debt security, or the counterparty to a derivatives contract or a loan, will fail to make timely payment of interest or principal or otherwise honor its obligations or default completely. A decline in the credit rating of an individual security held by a Fund may have an adverse impact on its price and make it difficult for a Fund to sell it. Ratings represent a rating agency’s opinion regarding the quality of the security and are not a guarantee of quality. Rating agencies might not always change their credit rating on an issuer or security in a timely manner to reflect events that could affect the issuer’s ability to make timely payments on its obligations. Credit risk is typically greater for securities with ratings that are below investment grade.
Currency Risk
The Funds may have exposure to foreign currencies by making direct investments in non-U.S. currencies or in securities denominated in non-U.S. currencies or by purchasing or selling forward currency exchange contracts in non-U.S. currencies. Foreign currencies may decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar may decline in value relative to the currency being hedged, and thereby affect the Fund’s investments in foreign (non-U.S.) currencies or in securities that trade in, and receive revenues in, or in derivatives that provide exposure to, foreign (non-U.S.) currencies. Currency exchange rates may fluctuate significantly over short periods of time for a number of reasons, including changes in interest rates, intervention
41
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
(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. Currency futures, forwards or options may not always work as intended, and in specific cases the Funds may be worse off than if it had not used such instrument(s). There may not always be suitable hedging instruments available. Even where suitable hedging instruments are available, the Funds may not hedge its currency risks.
Emerging Markets Risk
When investing in emerging markets, the risks of investing in foreign securities are heightened. Emerging markets are generally smaller, less developed, less liquid and more volatile than the securities markets of the U.S. and other developed markets. There are also risks of: greater political uncertainties; an economy’s dependence on revenues from particular commodities or on international aid or development assistance; currency transfer restrictions; a limited number of potential buyers for such securities; and delays and disruptions in securities settlement procedures.
Equity Investments Risk
Equity securities are subject to market risk. The Funds’ investments in equity securities may include common stocks, preferred stocks, securities convertible into or exchangeable for common stocks, REITs, depositary receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Funds to additional risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Preferred stocks and convertible securities are sensitive to movements in interest rates. Preferred stocks may be less liquid than common stocks and, unlike common stocks, participation in the growth of an issuer may be limited. Distributions on preferred stocks generally are payable at the discretion of an issuer and after required payments to bond holders. Convertible securities are subject to the risk that the credit standing of the issuer may have an effect on the convertible securities’ investment value. Investments in REITs are subject to the risks associated with investing in the real estate industry such as adverse developments affecting the real estate industry and real property values. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency fluctuations and political and financial instability in the home country of a particular depositary receipt or foreign stock.
Foreign Investing and Emerging Markets Risk
Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity and greater volatility of foreign investments, (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased price volatility, (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies, and (7) delays in transaction settlement in some foreign markets. To the extent a Fund invests a significant portion of its assets in securities of a single country or region, it is more likely to be affected by events or conditions of that country or region. In addition, the economies and political environments of emerging market countries tend to be more unstable than those of developed countries, resulting in more volatile rates of return than the developed markets and substantially greater risk to investors. There may be very limited oversight of certain foreign banks or securities depositories that hold foreign securities and currency and the laws of certain countries may limit the ability to recover such assets if a foreign bank or depository or their agents goes bankrupt. When investing in emerging markets, the risks of investing in foreign securities are heightened. Emerging markets have unique risks that are greater than or in addition to investing in developed markets because emerging markets are generally smaller, less developed, less liquid and more volatile than the securities markets of the U.S. and other developed markets. There are also risks of: greater political uncertainties; an economy’s dependence on revenues from particular commodities or on international aid or development assistance; currency transfer restrictions; a limited number of potential buyers for subspecialties, resulting in increased volatility and limited liquidity for
42
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
emerging market securities; trading suspensions; and delays and disruptions in securities settlement procedures. In addition, there may be less information available to make investment decisions and more volatile rates of return.
Forward Foreign Currency Contracts Risk
Forward foreign currency contracts, including non-deliverable forwards, are derivative instruments pursuant to a contract with a counterparty to pay a fixed price for an agreed amount of securities or other underlying assets at an agreed date or to buy or sell a specific currency at a future date at a price set at the time of the contract. The use of forward foreign currency contracts may expose the Funds to additional risks that it would not be subject to if it invested directly in the securities or currencies underlying the forward foreign currency contract.
Futures Contracts Risk
Futures contracts are derivative instruments where one party pays a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Funds to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. Futures contracts may experience potentially dramatic price changes (losses) and imperfect correlation between the price of the contract and the underlying security or index, which will increase the volatility of the Funds and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract).
Market Risk
Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.
In response to the financial crisis, the U.S. and other governments and the Federal Reserve and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the United States government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced the federal corporate income tax rates, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the markets’ expectations for changes in government policies are not borne out.
43
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the United States and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Because of the sharp decline in the worldwide price of oil, there is a concern that oil producing nations may withdraw significant assets now held in U.S. Treasuries, which could force a substantial increase in interest rates. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline over time, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse.
The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in Europe.
Market Timing Risk
A Fund that invests in foreign securities is particularly subject to the risk of market timing activities. Frequent trading by Fund shareholders poses risks to others in that Fund, including (i) the dilution of a Fund’s NAV, (ii) an increase in a Fund’s expenses, and (iii) interference with the portfolio manager’s ability to execute efficient investment strategies. Because of specific securities in which a Fund may invest, it could be subject to the risk of market timing activities by shareholders. One example of these types of securities is foreign securities. If a Fund trades foreign securities, it generally prices these foreign securities using their closing prices from the foreign markets in which they trade, which typically is prior to a Fund’s calculation of its NAV. These prices maybe affected by events that occur after the close of a foreign market but before a Fund prices its shares. In such instances, a Fund may fair value foreign securities. However, some investors may engage in frequent short-term trading in a Fund to take advantage of any price differentials that may be reflected in the NAV of a Fund’s shares. While the Manager monitors trading in a Fund, there is no guarantee that it can detect all market timing activities.
MultipleSub-Advisor Risk
The Manager may allocate the Funds’ assets among multiplesub-advisors, each of which is responsible for investing its allocated portion of the Funds’ assets. To a significant extent, the Funds’ performance will depend on the success of the Manager in allocating the Funds’ assets tosub-advisors and its selection and oversight of thesub-advisors. Because eachsub-advisor manages its allocated portion of the Funds independently from anothersub-advisor, the same security may be held in different portions of the Funds, or may be acquired for one portion of the Funds at a time when asub-advisor to another portion deems it appropriate to dispose of the security from that other portion, resulting in higher expenses without accomplishing any net result in the Funds’ holdings. Similarly, under some market conditions, onesub-advisor may believe that temporary, defensive investments in short-term instruments or cash are appropriate when anothersub-advisor believes continued exposure to the equity or debt markets is appropriate for its allocated portion of the Funds. Because eachsub-advisor directs the trading for its own portion of the Funds, and does not aggregate its transactions with those of the othersub-advisors, the Funds may incur higher brokerage costs than would be the case if a singlesub-adviser were managing the entire Fund. In addition, while the Manager seeks to allocate the Funds’ assets among the Funds’sub-advisors in a manner that it believes is consistent with achieving the Funds’ investment objective(s), the Manager may be subject to potential conflicts of interest in allocating the Funds’ assets amongsub-advisors due to factors that could impact the Manager’s revenues and profits.
44
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Other Investment Companies Risk
The Fund may invest in shares of other registered investment companies, including money market funds that are advised by the Manager. To the extent that the Fund invests in shares of other registered investment companies, the Fund will indirectly bear fees and expenses, including for example, advisory and administrative fees, charged by those investment companies in addition to the Fund’s direct fees and expenses and will be subject to the risks associated with investments in those companies. For example, the Fund’s investments in money market funds are subject to interest rate risk, credit risk, and market risk. The Fund must rely on the investment company in which it invests to achieve its investment objective. If the investment company fails to achieve its investment objective, the value of the Fund’s investment will decline, adversely affecting the Fund’s performance. To the extent the Fund invests in other investment companies that invest in equity securities, fixed income securities and/or foreign securities, or track an index, the Fund is subject to the risks associated with the underlying investments held by the investment company or the index fluctuations to which the investment company is subject. For example, money market funds are subject to interest rate risk, credit risk, and market risk.
Securities Lending Risk
A Fund may lend its portfolio securities to brokers, dealers and financial institutions to seek income. There is a risk that a borrower may default on its obligations to return loaned securities; however, a Fund’s securities lending agent indemnifies the Fund against that risk. There is a risk that the assets of a Fund’s securities lending agent may be insufficient to satisfy any contractual indemnification requirements to the Fund. Borrowers of a Fund’s securities typically provide collateral in the form of cash that is reinvested in securities. A Fund will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. A Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet obligations to the borrower. In addition, delays may occur in the recovery of securities from borrowers, which could interfere with a Fund’s ability to vote proxies or to settle transactions and there is the risk of possible loss of rights in the collateral should the borrower fail financially. In any case in which the loaned securities are not returned to a Fund before an ex-dividend date, the payment in lieu of the dividend that the Fund receives from the securities’ borrower would not qualify for treatment as “qualified dividend income”.
Valuation Risk
Investments in value stocks are subject to the risk that their intrinsic value may never be realized by the market or that their prices may go down. This may result in the value stocks’ prices remaining undervalued for extended periods of time. While the Fund’s investments in value stocks seek to limit potential downside price risk over time, value stock prices still may decline substantially. In addition, the Fund may produce more modest gains as a trade-off for this potentially lower risk. The Fund’s performance also may be affected adversely if value stocks become unpopular with or lose favor among investors. Different investment styles tend to shift in and out of favor, depending on market conditions and investor sentiment. The Fund’s value style could cause it to underperform funds that use a growth or non-value approach to investing or have a broader investment style.
7. Federal Income and Excise Taxes
It is the policy of each Fund to qualify as a regulated investment company (“RIC”), by complying with all applicable provisions of Subchapter M of the Internal Revenue Code, as amended, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes, each Fund is treated as a single entity for the purpose of determining such qualification.
The Funds do not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statements of Operations.
45
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
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.
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.
As of April 30, 2019 the tax cost for each Fund and their respective gross unrealized appreciation (depreciation) were as follows:
Fund | Tax Cost | Unrealized Appreciation | Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||||
International Equity | $ | 2,974,999,321 | $ | 264,639,031 | $ | (191,128,352 | ) | $ | 73,510,679 | |||||||||||||||||||
Tocqueville International Value | 842,898,998 | 82,606,767 | (47,640,576 | ) | 34,966,191 |
Under the Regulated Investment Company Modernization Act of 2010 (“RIC MOD”), net capital losses recognized by the Funds in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses.
As of October 31, 2018, the International Equity Fund did not have any capital loss carryforwards. The Tocqueville International Value Fund had non-expiring short-term capital loss carryforwards of $7,258,341.
8. Investment Transactions
The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the period ended April 30, 2019 were as follows:
Fund | Purchases (non-U.S. Government Securities) | Sales (non-U.S. Government Securities) | ||||||||||
International Equity | $ | 524,490,724 | $ | 599,262,793 | ||||||||
Tocqueville International Value | 179,408,038 | 456,004,599 |
A summary of the Funds’ transactions in the USG Select Fund for the period ended April 30, 2019 were as follows:
Fund | Type of Transaction | October 31, 2018 Shares/Fair Value | Purchases | Sales | April 30, 2019 Shares/Fair Value | Dividend Income | ||||||||||||||||||||||||||||||||||||
International Equity | Direct | $ | 78,615,200 | $ | 496,289,030 | $ | 447,295,010 | $ | 127,609,220 | $ | 937,782 | |||||||||||||||||||||||||||||||
International Equity | Securities Lending | 43,093,443 | 503,320,450 | 438,922,321 | 107,491,572 | N/A | ||||||||||||||||||||||||||||||||||||
Tocqueville International Value | Direct | - | 126,316,577 | 94,478,171 | 31,838,406 | 257,379 | ||||||||||||||||||||||||||||||||||||
Tocqueville International Value | Securities Lending | - | 86,229,061 | 53,280,174 | 32,948,887 | N/A |
9. Securities Lending
The Funds may lend their securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored andmarked-to-market daily. Dailymark-to-market amounts are required to be paid to the borrower or received
46
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
from the borrower by the end of the following business day. This one day settlement formark-to-market amounts may result in the collateral being temporarily less than the value of the securities on loan or temporarily more than the required minimum collateral.
To the extent that a loan is collateralized by cash, such cash collateral shall be invested by the securities lending agent (the “Agent”) in money market mutual funds and other short-term investments, provided the investments meet certain quality and diversification requirements. Securities purchased with cash collateral proceeds are listed in the Funds’ Schedule of Investments and the collateral is shown on the Statement of Assets and Liabilities as a payable.
Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured bynon-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Funds, the Agent, and the Manager retained 80%, 10%, and 10%, respectively, of the income generated from securities lending.
While securities are on loan, the Funds continue to receive certain income associated with that security and any gain or loss in the market price that may occur during the term of the loan. In the case of domestic equities, the value of any dividend is received in the form of a substitute payment approximately equal to the dividend. In the case of foreign securities, a negotiated amount is received that is less than the actual dividend, but higher than the dividend amount minus the foreign tax that the Funds would be subject to on the dividend.
Securities lending transactions pose certain risks to the Funds, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, thatnon-cash collateral may be subject to legal constraints in the event of a borrower bankruptcy, and that the cash collateral investments could become illiquid and unable to be used to return collateral to the borrower. The Funds could also experience delays and costs in gaining access to the collateral. The Funds bear the risk of any deficiency in the amount of the cash collateral available for return to the borrower and any action which impairs its ability to liquidatenon-cash collateral to satisfy a borrower default.
As of April 30, 2019, the value of outstanding securities on loan and the value of collateral were as follows:
Fund | Market Value of Securities on Loan | Cash Collateral Received | Non-Cash Collateral Received | Total Collateral Received | ||||||||||||
International Equity | $ | 102,882,174 | $ | 107,491,572 | $ | - | $ | 107,491,572 | ||||||||
Tocqueville International Value | 31,614,895 | 32,948,887 | - | 32,948,887 |
Cash collateral is listed on the Funds’ Schedules of Investments and is shown on the Statements of Assets and Liabilities. Income earned on these investments is included in “Income derived from securities lending” on the Statements of Operations.
Non-cash collateral received by the Funds may not be sold orre-pledged except to satisfy a borrower default. Therefore,non-cash collateral is not included on the Funds’ Schedules of Investments or Statements of Assets and Liabilities.
10. Borrowing Arrangements
Effective November 15, 2018 (the “Effective Date”), the Funds, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $250 million with interest at a rate equal to the higher of(a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus
47
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a closing fee of $100,000 on the Effective Date and a quarterly commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 14, 2019, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
On the Effective Date, the Funds, along with certain other Participating Funds managed by the Manager, also entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of(a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on each outstanding loan. Each of the Participating Funds will pay a closing fee of $35,000 on the Effective Date. The Uncommitted Line expires November 14, 2019 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statements of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.
During the period ended April 30, 2019, the Funds did not utilize this facility.
11. Capital Share Transactions
The tables below summarize the activity in capital shares for each Class of the Funds:
Institutional Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
International Equity Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 14,242,302 | $ | 244,591,687 | 25,895,144 | $ | 534,557,653 | ||||||||||||||||||||||
Reinvestment of dividends | 7,634,480 | 120,930,167 | 2,331,173 | 48,325,212 | ||||||||||||||||||||||||
Shares redeemed | (20,099,393 | ) | (349,544,374 | ) | (20,735,988 | ) | (420,683,891 | ) | ||||||||||||||||||||
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|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 1,777,389 | $ | 15,977,480 | 7,490,329 | $ | 162,198,974 | ||||||||||||||||||||||
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| |||||||||||||||||||||
Y Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
International Equity Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 5,595,426 | $ | 99,495,259 | 7,511,577 | $ | 160,616,651 | ||||||||||||||||||||||
Reinvestment of dividends | 3,927,273 | 64,839,285 | 1,249,691 | 26,893,341 | ||||||||||||||||||||||||
Shares redeemed | (5,874,760 | ) | (105,433,731 | ) | (9,727,486 | ) | (207,013,204 | ) | ||||||||||||||||||||
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|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 3,647,939 | $ | 58,900,813 | (966,218 | ) | $ | (19,503,212 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
International Equity Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 983,536 | $ | 17,036,582 | 1,848,441 | $ | 37,668,754 | ||||||||||||||||||||||
Reinvestment of dividends | 1,262,316 | 19,843,606 | 423,698 | 8,719,712 | ||||||||||||||||||||||||
Shares redeemed | (2,369,456 | ) | (40,566,863 | ) | (4,046,440 | ) | (82,887,269 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (123,604 | ) | $ | (3,686,675 | ) | (1,774,301 | ) | $ | (36,498,803 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
International Equity Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 209,077 | $ | 3,715,866 | 522,085 | $ | 10,866,488 | ||||||||||||||||||||||
Reinvestment of dividends | 221,918 | 3,579,533 | 72,002 | 1,516,353 | ||||||||||||||||||||||||
Shares redeemed | (584,914 | ) | (10,355,874 | ) | (662,602 | ) | (13,941,921 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (153,919 | ) | $ | (3,060,475 | ) | (68,515 | ) | $ | (1,559,080 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
48
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
A Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
International Equity Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 148,088 | $ | 2,579,986 | 341,544 | $ | 6,990,871 | ||||||||||||||||||||||
Reinvestment of dividends | 65,896 | 1,035,879 | 22,967 | 472,205 | ||||||||||||||||||||||||
Shares redeemed | (200,996 | ) | (3,503,617 | ) | (464,462 | ) | (9,545,785 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 12,988 | $ | 112,248 | (99,951 | ) | $ | (2,082,709 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
International Equity Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 35,696 | $ | 589,461 | 98,798 | $ | 1,957,866 | ||||||||||||||||||||||
Reinvestment of dividends | 30,807 | 468,881 | 7,541 | 150,449 | ||||||||||||||||||||||||
Shares redeemed | (89,661 | ) | (1,468,652 | ) | (117,307 | ) | (2,311,646 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (23,158 | ) | $ | (410,310 | ) | (10,968 | ) | $ | (203,331 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
R6 Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
International Equity Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 5,888,552 | $ | 106,083,766 | 2,465,662 | $ | 50,086,317 | ||||||||||||||||||||||
Reinvestment of dividends | 451,747 | 7,160,193 | 16,937 | 351,275 | ||||||||||||||||||||||||
Shares redeemed | (561,079 | ) | (9,848,680 | ) | (186,126 | ) | (3,762,837 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 5,779,220 | $ | 103,395,279 | 2,296,473 | $ | 46,674,755 | ||||||||||||||||||||||
|
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|
|
|
|
| |||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
January 18, 2019A to April 30, 2019 | ||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Tocqueville International Value Fund | Shares | Amount | ||||||||||||||||||||||||||
Shares sold | 2,260,280 | $ | 35,023,876 | |||||||||||||||||||||||||
Shares redeemed | (24,613 | ) | (385,557 | ) | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Net increase in shares outstanding | 2,235,667 | $ | 34,638,319 | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Y Class | ||||||||||||||||||||||||||||
January 18, 2019A to April 30, 2019 | ||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Tocqueville International Value Fund | Shares | Amount | ||||||||||||||||||||||||||
Shares sold | 17,873,802 | $ | 279,650,509 | |||||||||||||||||||||||||
Shares redeemed | (392,495 | ) | (6,158,876 | ) | ||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Net increase in shares outstanding | 17,481,307 | $ | 273,491,633 | |||||||||||||||||||||||||
|
|
|
| |||||||||||||||||||||||||
Investor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Tocqueville International Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 8,967,557 | $ | 131,841,285 | 28,716,655 | $ | 500,256,514 | ||||||||||||||||||||||
Reinvestment of dividends | 783,284 | 11,224,453 | 766,784 | 13,265,360 | ||||||||||||||||||||||||
Shares redeemed | (46,921,478 | ) | (705,100,533 | ) | (22,853,917 | ) | (381,325,273 | ) | ||||||||||||||||||||
|
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|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | (37,170,637 | ) | $ | (562,034,795 | ) | 6,629,522 | $ | 132,196,601 | ||||||||||||||||||||
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| |||||||||||||||||||||
A Commencement of operations. |
|
12. Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Funds’ financial statements through this date.
49
American Beacon International Equity FundSM
(For a share outstanding throughout the period)
Institutional ClassA | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 18.71 | $ | 20.88 | $ | 17.41 | $ | 18.79 | $ | 19.51 | $ | 20.07 | ||||||||||||||||||||||||||||||||
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|
|
|
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|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.26 | 0.44 | 0.39 | 0.29 | 0.35 | 0.54 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.49 | (1.95 | ) | 3.51 | (1.24 | ) | (0.55 | ) | (0.77 | ) | ||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.75 | (1.51 | ) | 3.90 | (0.95 | ) | (0.20 | ) | (0.23 | ) | ||||||||||||||||||||||||||||||||||
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Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.40 | ) | (0.35 | ) | (0.43 | ) | (0.27 | ) | (0.52 | ) | (0.33 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.14 | ) | (0.31 | ) | - | (0.16 | ) | - | - | |||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Total distributions | (1.54 | ) | (0.66 | ) | (0.43 | ) | (0.43 | ) | (0.52 | ) | (0.33 | ) | ||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | - | - | - | - | 0.00 | B | 0.00 | B | ||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 17.92 | $ | 18.71 | $ | 20.88 | $ | 17.41 | $ | 18.79 | $ | 19.51 | ||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Total returnC | 5.12 | %D | (7.55 | )% | 22.94 | % | (5.07 | )% | (0.99 | )% | (1.18 | )% | ||||||||||||||||||||||||||||||||
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Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 1,576,721,743 | $ | 1,613,462,237 | $ | 1,644,165,106 | $ | 1,450,052,040 | $ | 1,037,148,821 | $ | 956,960,452 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.72 | %E | 0.73 | % | 0.73 | % | 0.69 | % | 0.70 | % | 0.72 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.72 | %E | 0.73 | % | 0.73 | % | 0.69 | % | 0.69 | % | 0.70 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.80 | %E | 2.17 | % | 2.01 | % | 2.22 | % | 1.93 | % | 2.74 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.80 | %E | 2.17 | % | 2.01 | % | 2.22 | % | 1.94 | % | 2.76 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 19 | %D | 29 | % | 32 | % | 25 | % | 33 | % | 23 | % |
A | On May 31, 2016, the AMR Class closed and the assets were merged into the Institutional Class. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
50
American Beacon International Equity FundSM
Financial Highlights
(For a share outstanding throughout the period)
Y Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 19.42 | $ | 21.64 | $ | 18.03 | $ | 19.46 | $ | 20.21 | $ | 20.81 | ||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.24 | 0.46 | 0.38 | 0.41 | 0.35 | 0.50 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.53 | (2.04 | ) | 3.65 | (1.40 | ) | (0.57 | ) | (0.77 | ) | ||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.77 | (1.58 | ) | 4.03 | (0.99 | ) | (0.22 | ) | (0.27 | ) | ||||||||||||||||||||||||||||||||||
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Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.38 | ) | (0.33 | ) | (0.42 | ) | (0.28 | ) | (0.53 | ) | (0.33 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.14 | ) | (0.31 | ) | - | (0.16 | ) | - | - | |||||||||||||||||||||||||||||||||||
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Total distributions | (1.52 | ) | (0.64 | ) | (0.42 | ) | (0.44 | ) | (0.53 | ) | (0.33 | ) | ||||||||||||||||||||||||||||||||
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Redemption fees added to beneficial interests | - | - | - | - | 0.00 | A | 0.00 | A | ||||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 18.67 | $ | 19.42 | $ | 21.64 | $ | 18.03 | $ | 19.46 | $ | 20.21 | ||||||||||||||||||||||||||||||||
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Total returnB | 5.04 | %C | (7.58 | )% | 22.84 | % | (5.14 | )% | (1.06 | )% | (1.31 | )% | ||||||||||||||||||||||||||||||||
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| �� |
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Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 938,067,652 | $ | 904,847,058 | $ | 1,029,629,647 | $ | 820,596,038 | $ | 587,949,806 | $ | 530,836,707 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.79 | %D | 0.80 | % | 0.80 | % | 0.77 | % | 0.77 | % | 0.82 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.79 | %D | 0.80 | % | 0.80 | % | 0.77 | % | 0.77 | % | 0.82 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.76 | %D | 2.10 | % | 1.95 | % | 2.43 | % | 1.87 | % | 2.62 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.76 | %D | 2.10 | % | 1.95 | % | 2.43 | % | 1.87 | % | 2.62 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 19 | %C | 29 | % | 32 | % | 25 | % | 33 | % | 23 | % |
A | Amount represents less than $0.01 per share. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
51
American Beacon International Equity FundSM
Financial Highlights
(For a share outstanding throughout the period)
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 18.52 | $ | 20.67 | $ | 17.24 | $ | 18.60 | $ | 19.32 | $ | 19.86 | ||||||||||||||||||||||||||||||||
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Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.22 | 0.41 | 0.35 | 0.34 | 0.31 | 0.46 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.49 | (1.97 | ) | 3.45 | (1.33 | ) | (0.57 | ) | (0.76 | ) | ||||||||||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.71 | (1.56 | ) | 3.80 | (0.99 | ) | (0.26 | ) | (0.30 | ) | ||||||||||||||||||||||||||||||||||
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Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.33 | ) | (0.28 | ) | (0.37 | ) | (0.21 | ) | (0.46 | ) | (0.24 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.14 | ) | (0.31 | ) | - | (0.16 | ) | - | - | |||||||||||||||||||||||||||||||||||
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Total distributions | (1.47 | ) | (0.59 | ) | (0.37 | ) | (0.37 | ) | (0.46 | ) | (0.24 | ) | ||||||||||||||||||||||||||||||||
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Redemption fees added to beneficial interests | - | - | - | - | 0.00 | A | 0.00 | A | ||||||||||||||||||||||||||||||||||||
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Net asset value, end of period | $ | 17.76 | $ | 18.52 | $ | 20.67 | $ | 17.24 | $ | 18.60 | $ | 19.32 | ||||||||||||||||||||||||||||||||
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Total returnB | 4.90 | %C | (7.86 | )% | 22.50 | % | (5.38 | )% | (1.35 | )% | (1.54 | )% | ||||||||||||||||||||||||||||||||
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Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 238,367,751 | $ | 250,804,403 | $ | 316,589,769 | $ | 334,895,337 | $ | 342,720,411 | $ | 348,541,811 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.04 | %D | 1.06 | % | 1.07 | % | 1.06 | % | 1.03 | % | 1.05 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.04 | %D | 1.06 | % | 1.07 | % | 1.06 | % | 1.03 | % | 1.05 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.44 | %D | 1.83 | % | 1.69 | % | 1.95 | % | 1.60 | % | 2.36 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.44 | %D | 1.83 | % | 1.69 | % | 1.95 | % | 1.60 | % | 2.36 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 19 | %C | 29 | % | 32 | % | 25 | % | 33 | % | 23 | % |
A | Amount represents less than $0.01 per share. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
52
American Beacon International Equity FundSM
Financial Highlights
(For a share outstanding throughout the period)
Advisor ClassA | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 18.93 | $ | 21.15 | $ | 17.62 | $ | 19.01 | $ | 19.76 | $ | 20.36 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.21 | 0.36 | 0.23 | 0.35 | 0.38 | 0.44 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.51 | (1.99 | ) | 3.64 | (1.37 | ) | (0.68 | ) | (0.77 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.72 | (1.63 | ) | 3.87 | (1.02 | ) | (0.30 | ) | (0.33 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.30 | ) | (0.28 | ) | (0.34 | ) | (0.21 | ) | (0.45 | ) | (0.27 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.14 | ) | (0.31 | ) | - | (0.16 | ) | - | - | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.44 | ) | (0.59 | ) | (0.34 | ) | (0.37 | ) | (0.45 | ) | (0.27 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | - | - | - | - | 0.00 | B | 0.00 | B | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 18.21 | $ | 18.93 | $ | 21.15 | $ | 17.62 | $ | 19.01 | $ | 19.76 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 4.81 | %D | (7.99 | )% | 22.38 | % | (5.40 | )% | (1.51 | )% | (1.64 | )% | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 43,934,841 | $ | 48,571,916 | $ | 55,715,606 | $ | 23,692,313 | $ | 22,912,069 | $ | 7,677,201 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.19 | %E | 1.20 | % | 1.20 | % | 1.19 | % | 1.16 | % | 1.19 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.19 | %E | 1.20 | % | 1.20 | % | 1.19 | % | 1.16 | % | 1.19 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.27 | %E | 1.70 | % | 1.51 | % | 1.87 | % | 1.55 | % | 2.21 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.27 | %E | 1.70 | % | 1.51 | % | 1.87 | % | 1.55 | % | 2.21 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 19 | %D | 29 | % | 32 | % | 25 | % | 33 | % | 23 | % |
A | On January 15, 2016, the Retirement Class closed and the assets were merged into the Advisor Class. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
53
American Beacon International Equity FundSM
Financial Highlights
(For a share outstanding throughout the period)
A Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 18.50 | $ | 20.63 | $ | 17.23 | $ | 18.59 | $ | 19.32 | $ | 19.92 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.23 | 0.38 | 0.30 | 0.32 | 0.31 | 0.46 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.48 | (1.95 | ) | 3.48 | (1.30 | ) | (0.59 | ) | (0.78 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.71 | (1.57 | ) | 3.78 | (0.98 | ) | (0.28 | ) | (0.32 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.32 | ) | (0.25 | ) | (0.38 | ) | (0.22 | ) | (0.45 | ) | (0.28 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.14 | ) | (0.31 | ) | - | (0.16 | ) | - | - | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.46 | ) | (0.56 | ) | (0.38 | ) | (0.38 | ) | (0.45 | ) | (0.28 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | - | - | - | - | 0.00 | A | 0.00 | A | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 17.75 | $ | 18.50 | $ | 20.63 | $ | 17.23 | $ | 18.59 | $ | 19.32 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnB | 4.86 | %C | (7.89 | )% | 22.43 | % | (5.34 | )% | (1.42 | )% | (1.65 | )% | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 13,799,419 | $ | 14,141,551 | $ | 17,829,657 | $ | 18,673,142 | $ | 10,747,749 | $ | 8,540,234 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.14 | %D | 1.08 | % | 1.12 | % | 1.07 | % | 1.08 | % | 1.15 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.14 | %D | 1.08 | % | 1.12 | % | 1.07 | % | 1.08 | % | 1.15 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.38 | %D | 1.80 | % | 1.65 | % | 1.94 | % | 1.55 | % | 2.31 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.38 | %D | 1.80 | % | 1.65 | % | 1.94 | % | 1.55 | % | 2.31 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 19 | %C | 29 | % | 32 | % | 25 | % | 33 | % | 23 | % |
A | Amount represents less than $0.01 per share. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
54
American Beacon International Equity FundSM
Financial Highlights
(For a share outstanding throughout the period)
C Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 17.84 | $ | 19.93 | $ | 16.73 | $ | 18.09 | $ | 18.83 | $ | 19.47 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.13 | 0.22 | 0.17 | 0.18 | 0.16 | 0.30 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.50 | (1.87 | ) | 3.36 | (1.28 | ) | (0.56 | ) | (0.75 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.63 | (1.65 | ) | 3.53 | (1.10 | ) | (0.40 | ) | (0.45 | ) | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.18 | ) | (0.13 | ) | (0.33 | ) | (0.10 | ) | (0.34 | ) | (0.19 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.14 | ) | (0.31 | ) | - | (0.16 | ) | - | - | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.32 | ) | (0.44 | ) | (0.33 | ) | (0.26 | ) | (0.34 | ) | (0.19 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | - | - | - | - | 0.00 | A | 0.00 | A | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 17.15 | $ | 17.84 | $ | 19.93 | $ | 16.73 | $ | 18.09 | $ | 18.83 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnB | 4.50 | %C | (8.52 | )% | 21.50 | % | (6.12 | )% | (2.12 | )% | (2.36 | )% | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 5,971,439 | $ | 6,625,329 | $ | 7,622,425 | $ | 2,945,246 | $ | 3,899,081 | $ | 3,028,934 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.85 | %D | 1.81 | % | 1.88 | % | 1.85 | % | 1.82 | % | 1.90 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.85 | %D | 1.81 | % | 1.88 | % | 1.85 | % | 1.83 | % | 1.90 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.60 | %D | 1.08 | % | 0.96 | % | 1.12 | % | 0.77 | % | 1.53 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.60 | %D | 1.08 | % | 0.96 | % | 1.12 | % | 0.77 | % | 1.53 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 19 | %C | 29 | % | 32 | % | 25 | % | 33 | % | 23 | % |
A | Amount represents less than $0.01 per share. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
55
American Beacon International Equity FundSM
Financial Highlights
(For a share outstanding throughout the period)
R6 Class | ||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | February 28, October 31, | ||||||||||||||||||
|
| |||||||||||||||||||
(unaudited) | ||||||||||||||||||||
Net asset value, beginning of period | $ | 18.73 | $ | 20.89 | $ | 17.80 | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income | 0.28 | 0.39 | 0.08 | |||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.47 | (1.88 | ) | 3.01 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total income (loss) from investment operations | 0.75 | (1.49 | ) | 3.09 | ||||||||||||||||
|
|
|
|
|
| |||||||||||||||
Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.41 | ) | (0.36 | ) | - | |||||||||||||||
Distributions from net realized gains | (1.14 | ) | (0.31 | ) | - | |||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total distributions | (1.55 | ) | (0.67 | ) | - | |||||||||||||||
|
|
|
|
|
| |||||||||||||||
Net asset value, end of period | $ | 17.93 | $ | 18.73 | $ | 20.89 | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Total returnB | 5.10 | %C | (7.47 | )% | 17.36 | %C | ||||||||||||||
|
|
|
|
|
| |||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||
Net assets, end of period | $ | 150,289,932 | $ | 48,725,523 | $ | 6,367,999 | ||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Expenses, before reimbursements | 0.68 | %D | 0.70 | % | 0.89 | %D | ||||||||||||||
Expenses, net of reimbursements | 0.66 | %D | 0.66 | % | 0.66 | %D | ||||||||||||||
Net investment income, before expense reimbursements | 3.22 | %D | 2.11 | % | 1.63 | %D | ||||||||||||||
Net investment income, net of reimbursements | 3.24 | %D | 2.15 | % | 1.85 | %D | ||||||||||||||
Portfolio turnover rate | 19 | %C | 29 | % | 32 | %E |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
E | Portfolio turnover rate is for the period from February 28, 2017 through October 31, 2017 and is annualized. |
See accompanying notes
56
American Beacon Tocqueville International Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Institutional Class | ||||
January 18, 2019A to April 30, 2019 | ||||
(unaudited) | ||||
Net asset value, beginning of period | $ | 14.78 | ||
|
| |||
Income from investment operations: | ||||
Net investment income | 0.07 | |||
Net gains on investments (both realized and unrealized) | 1.17 | |||
|
| |||
Total income from investment operations | 1.24 | |||
|
| |||
Net asset value, end of period | $ | 16.02 | ||
|
| |||
Total returnB | 8.39 | %C | ||
|
| |||
Ratios and supplemental data: |
| |||
Net assets, end of period | $ | 35,807,441 | ||
Ratios to average net assets: | ||||
Expenses, before reimbursements | 0.96 | %D | ||
Expenses, net of reimbursements | 0.89 | %D | ||
Net investment income, before expense reimbursements | 4.10 | %D | ||
Net investment income, net of reimbursements | 4.17 | %D | ||
Portfolio turnover rate | 21 | %C |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
57
American Beacon Tocqueville International Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Y Class | ||||
January 18, 2019A to April 30, 2019 | ||||
(unaudited) | ||||
Net asset value, beginning of period | $ | 14.78 | ||
|
| |||
Income from investment operations: | ||||
Net investment income | 0.05 | |||
Net gains on investments (both realized and unrealized) | 1.18 | |||
|
| |||
Total income from investment operations | 1.23 | |||
|
| |||
Net asset value, end of period | $ | 16.01 | ||
|
| |||
Total returnB | 8.32 | %C | ||
|
| |||
Ratios and supplemental data: |
| |||
Net assets, end of period | $ | 279,909,675 | ||
Ratios to average net assets: | ||||
Expenses, before reimbursements | 0.99 | %D | ||
Expenses, net of reimbursements | 0.99 | %D | ||
Net investment income, before expense reimbursements | 3.99 | %D | ||
Net investment income, net of reimbursements | 3.99 | %D | ||
Portfolio turnover rate | 21 | %C |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
58
American Beacon Tocqueville International Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months 2019 | Year Ended October 31, | |||||||||||||||||||||||||||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.06 | $ | 17.58 | $ | 14.44 | $ | 14.59 | $ | 14.48 | $ | 14.71 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.17 | 0.24 | E | 0.14 | E | 0.14 | E | 0.15 | E | 0.15 | E | |||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.95 | (2.53 | ) | 3.23 | 0.14 | 0.80 | (0.15 | ) | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
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Total income (loss) from investment operations | 1.12 | (2.29 | ) | 3.37 | 0.28 | 0.95 | – | |||||||||||||||||||||||||||||||||||||
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Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.17 | ) | (0.15 | ) | (0.25 | ) | (0.32 | ) | (0.23 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | – | (0.06 | ) | (0.08 | ) | (0.18 | ) | (0.52 | ) | – | ||||||||||||||||||||||||||||||||||
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Total distributions | (0.19 | ) | (0.23 | ) | (0.23 | ) | (0.43 | ) | (0.84 | ) | (0.23 | ) | ||||||||||||||||||||||||||||||||
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Redemption fees added to beneficial interests | – | – | – | – | 0.00 | A | 0.00 | A | ||||||||||||||||||||||||||||||||||||
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Net asset value, end of period | $ | 15.99 | $ | 15.06 | $ | 17.58 | $ | 14.44 | $ | 14.59 | $ | 14.48 | ||||||||||||||||||||||||||||||||
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Total returnB | 7.58 | %C | (13.20 | )% | 23.70 | % | 2.00 | % | 7.20 | % | (0.00 | )% | ||||||||||||||||||||||||||||||||
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Ratios and supplemental data: |
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Net assets, end of period | $ | 531,396,500 | $ | 1,060,000,108 | $ | 1,120,993,795 | $ | 525,808,058 | $ | 333,761,762 | $ | 237,050,771 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.40 | %D | 1.48 | % | 1.53 | % | 1.58 | % | 1.57 | % | 1.54 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.24 | %D | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | 1.25 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.19 | %D | 1.09 | % | 0.73 | % | 0.90 | % | 0.71 | % | 0.62 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.35 | %D | 1.32 | % | 1.01 | % | 1.23 | % | 1.03 | % | 0.91 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 21 | %C | 25 | % | 22 | % | 26 | % | 42 | % | 31 | % |
A | Amount represents less than $0.01 per share. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
E | Net investment income per share is calculated using the ending balance prior to consideration or adjustment for permanent book-to-tax differences. |
See accompanying notes
59
Disclosures Regarding the Approval of the Management and Investment Advisory Agreements
Approvals Related to American Beacon Tocqueville International Value Fund
At its August21-22, 2018 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 Tocqueville International Value Fund (“Fund”), a newly created series of the Trust, and (2) the approval of a new investment advisory agreement (the “Advisory Agreement”) among the Manager, the Trust, on behalf of the Fund, and Tocqueville Asset Management L.P. (the “Subadviser”), the Fund’s proposed subadviser.
Approval of the Management Agreement
Prior to the meeting, information was provided to the Board by the Manager in response to requests from the Board in connection with the Board’s consideration of the Management Agreement for the Fund. The Investment Committee of the Board also met with representatives of the Manager. The Board also considered information that had been provided by the Manager to the Board at the May 18, 2018 and June5-6, 2018 Board meetings in connection with the review of the current Management Agreement between the Manager and the Trust as it related to the existing series of the Trust (“Existing Funds”).
Provided below is an overview of the primary factors the Board considered at its August21-22, 2018 meetings at which the Board considered the approval of the Management Agreement with respect to the Fund. In determining whether to approve the Management Agreement, the Board considered, among other things, the following factors with respect to the Fund: (1) the nature and quality of the services to be provided; (2) the estimated costs to be incurred by the Manager in rendering its services to the Fund 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 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. Legal counsel to the Independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of investment advisory contracts, such as 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 Agreement was in the best interests of the Fund.
Nature, Extent and Quality of Services.The Board considered that it had reviewed the Management Agreement between the Manager and the Trust as it relates to the Existing Funds at its May 18, 2018 and June5-6, 2018 meetings. At those meetings, the Board received detailed information regarding the Manager, including information with respect to the scope of services provided by the Manager to the Existing Funds and the background and experience of the Manager’s key investment personnel. The Board also considered representations made by the Manager at the Board’s May 18, 2018 and June5-6, 2018 meetings. At those meetings, the Manager described its disciplined investment approach and goal to provide above-average long-term performance on behalf of the Existing Funds and detailed the culture of compliance and support 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 Fund will be consistent with the services provided to the Existing Funds that have a single investment subadviser. In addition, the Board considered the background and experience of key investment personnel who will have primary responsibility for theday-to-day oversight of the 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 Fund.
60
Disclosures Regarding the Approval of the Management and Investment Advisory Agreements
Investment Performance.The Board considered that the 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 historical investment performance record relevant to the Fund’s investment professionals in connection with its consideration of the Advisory 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 Fund. The Board also considered that the Manager will receive certain fees related to securities lending, to the extent the Fund engages in securities lending activities. The Board then considered that, at assumed estimated initial asset levels, the Manager was projected to earn apre-tax profit before and after distribution revenues and expenses from its first year of rendering services to the Fund. The Board also considered the amounts of those projected profits. The Board considered the Manager’s explanation regarding its cost allocation methodology in calculating these projections.
Comparisons of the amounts to be paid to the Manager under the Management Agreement and other funds in the Select Peer Group. 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 the Manager to comparable funds. The Board considered the Manager’s representation that the management fee rate proposed by the Manager for the Fund is lower than the average advisory fee rate paid by peer group funds in the Fund’s potential Morningstar, Inc. (“Morningstar”) category (the “Select Peer Group”), but that when combined with the proposed advisory fee rate to be paid to the Subadviser, the proposed management fee rate is higher than the average advisory fee rate paid by peer group funds in the Select Peer Group. The Board also considered that the Fund’s total expense ratio is expected to be lower than the average and higher than the median of the Select Peer Group with respect to the Fund’s Institutional Class shares, and higher than the average and the median of the Select Peer Group with respect to the Fund’s Y Class and Investor Class shares. The Board considered that the Manager had contractually agreed to limit the Fund’s total expenses through at least February 28, 2020 at competitive market levels. 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 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 Fund contains breakpoints, which the Manager believes properly reflect economies of scale for the benefit of the Fund’s shareholders.
Benefits Derived from the Relationship with the Fund.The Board considered the Manager’s representation that it has not identified any material indirect“fall-out” benefits that may accrue to it or its affiliates because of its proposed relationship with the Fund, except that the Manager will benefit from the Fund’s investment of its cash sweep accounts and securities lending collateral in the American Beacon U.S. Government Money Market Select Fund, a series of the American Beacon Select Funds. Based on the foregoing information, the Board concluded that the potential benefits accruing to the Manager by virtue of its 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 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 Fund; (2) determined that the Fund and its shareholders were expected to benefit from the Manager’s management of the Fund; and (3) approved the Management Agreement on behalf of the Fund.
Approval of the Advisory Agreement
Prior to the August21-22, 2018 meetings, information was provided to the Board by the Subadviser in response to requests from the Board and/or the Manager in connection with the Board’s consideration of the Advisory Agreement. The Investment Committee of the Board also met with representatives of the Subadviser.
61
Disclosures Regarding the Approval of the Management and Investment Advisory Agreements
Provided below is an overview of the primary factors the Board considered at its August21-22, 2018 meetings at which the Board considered the approval of the Advisory Agreement. In determining whether to approve the Advisory 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 a composite of similar accounts managed by the Subadviser (the “Composite”), as well as a registered investment company managed by the Subadviser that the Manager and the Subadviser are proposing be reorganized into the Fund (the “Prior Fund”); (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 these economies of scale, if any, for the benefit of investors; (5) comparisons of services and fees with contracts entered into by the Subadviser with other clients; and (6) any other benefits anticipated to be derived by the Subadviser from its relationship with the Fund.
The Board did not identify any particular information that was most relevant to its consideration of the Advisory Agreement, and each Trustee may have afforded different weight to the various factors. Legal counsel to the Independent Trustees provided the Board with a memorandum regarding its responsibilities pertaining to the approval of investment advisory contracts, such as the Advisory 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 Advisory Agreement were reasonable and fair and that the approval of the Advisory Agreement was in the best interests of the Fund.
Nature, extent and quality of the services to be provided by the Subadviser. The Board considered information regarding the Subadviser’s principal business activities, its reputation, financial condition and overall capabilities to perform the services under the Advisory Agreement. In addition, the Board considered the background and experience of the personnel who will be assigned responsibility for managing the Fund. The Board also considered the Subadviser’s investment resources, infrastructure and the adequacy of its compliance program. The Board also took into consideration the Manager’s recommendation of the Subadviser. The Board considered the Subadviser’s representation regarding the strength of its financial condition and that its current staffing levels were adequate to service the Fund. Based on this information, the Board concluded that the nature, extent and quality of the advisory services to be provided by the Subadviser were appropriate for the Fund in light of its investment objective, and, thus, supported a decision to approve the Advisory Agreement.
Performance of the Subadviser. The Board evaluated the information provided by the Subadviser and the Manager regarding the performance of the Composite and the Prior Fund relative to the performance of an appropriate benchmark index, the funds included in the Select Peer Group and the Fund’s potential Morningstar category. The Board considered representations made by the Subadviser and the Manager that, for various periods ended June 30, 2018, the Composite’s and the Prior Fund’s relative performance was favorable. Based on the foregoing information, the Board concluded that the historical investment performance record of the Subadviser supported approval of the Advisory Agreement.
Comparisons of the amounts to be paid under the Advisory Agreement with those under contracts between the Subadviser and its other clients. In evaluating the Advisory Agreement, the Board reviewed the proposed advisory fee rate for services to be performed by the Subadviser on behalf of the Fund. The Board considered that the Subadviser’s investment advisory fee rate under the Advisory Agreement would be paid to the Subadviser by the Fund. The Board considered the Subadviser’s representation that the advisory fee rate proposed for the Fund is below the standard fee schedule for the Fund’s strategy and the advisory fee rate that the Subadviser currently charges to other accounts managed in the Fund’s strategy. After evaluating this information, the Board concluded that the Subadviser’s advisory fee rate under the Advisory Agreement was reasonable in light of the services to be provided to the Fund.
Costs of the services to be provided and profits to be realized by the Subadviser and its affiliates from its relationship with the Fund. The Board did not consider the costs of the services to be provided and profits to be
62
Disclosures Regarding the Approval of the Management and Investment Advisory Agreements
realized by the Subadviser from its relationship with the Fund, noting instead thearm’s-length nature of the relationship between the Manager and the Subadviser with respect to the negotiation of the advisory fee rate on behalf of the Fund.
Economies of Scale. The Board considered the Subadviser’s representation that it believes that the proposed advisory fee schedule for the Fund, which includes breakpoints, reflects economies of scale for the benefit of the Fund’s investors.
Benefits to be derived by the Subadviser from its relationship with the Fund. The Board considered the Subadviser’s representation that it is not aware of any“fall-out” benefits that may accrue to it or its affiliates because of the Subadviser’s relationship with the Fund. Based on the foregoing information, the Board concluded that the potential benefits accruing to the Subadviser by virtue of its 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 Subadviser, as that term is defined in the 1940 Act, concluded that the proposed investment advisory fee rate is fair and reasonable and the approval of the Advisory Agreement is in the best interests of the Fund and approved the Advisory Agreement.
63
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64
Delivery of Documents
eDelivery isNOW AVAILABLE - Stop traditional mail delivery and receive your
shareholder reports and summary prospectuson-line. Sign up at
www.americanbeaconfunds.com
If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Prospectus, Annual Report and Semi-Annual Report, by e-mail. If you are interested in this option, please go towww.icsdelivery.com and search for your financial institution’s name or contact your financial institution directly.
To obtain more information about the Fund:
![]() | ![]() | |
ByE-mail: | On the Internet: | |
american_beacon.funds@ambeacon.com | Visit our website atwww.americanbeaconfunds.com | |
By Telephone: Call (800)658-5811 | By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643 | |
Availability of Quarterly Portfolio Schedules | Availability of Proxy Voting Policy and Records | |
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 atwww.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 (800)-SEC-0330. A complete schedule of the International Equity Fund’s portfolio holdings is also available atwww.americanbeaconfunds.com approximately twenty days after the end of each month. A complete schedule of Tocqueville International Value Fund’s portfolio holdings is also available atwww.americanbeaconfunds.com approximately sixty days after the end of each quarter. | 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 websitewww.americanbeaconfunds.com and by calling1-800-967-9009 or by accessing the SEC’s website atwww.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 atwww.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 Company Boston, Massachusetts | TRANSFER AGENT DST Asset Manager Solutions, Inc. Quincy, Massachusetts | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas | DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas |
This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus or Summary Prospectus.
American Beacon Funds American Beacon International Equity Fund and American Beacon Tocqueville International Value Fund are service marks of American Beacon Advisors, Inc.
SAR 04/19
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.
SMALL CAP VALUE FUND RISKS
Investing insmall-capitalization stocksmay involve greater volatility and lower liquidity than larger company stocks. Investing invalue stocksmay limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as atrade-off for this potentially lower risk. Investing inforeign securitiesmay involve heightened risk due to currency fluctuations and economic and political risks. The use offutures contractsfor cash management may subject the Fund to losing more money than invested. The Fund participates in asecurities lendingprogram. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.
Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and the Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions and therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.
American Beacon Funds April 30, 2019 |
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Back Cover |
![]() | Dear Shareholders,
At American Beacon, we take our heritage as a fiduciary very seriously – and we apply that mindset to all aspects of our business as a fund manager. As a result, for more than 30 years, we have endeavored to:
u Identify, engage and oversee the best money managers. As a manager of managers, our goal is to engage the most effective money managers for each asset class, investment style and market strategy we offer. We are committed to partnering with those we judge to be “the best of the best” when it comes to choosingsub-advisors for our mutual funds. Whether ourdue-diligence process results in the selection of onesub-advisor or multiplesub-advisors, we select those we believe show the greatest potential to help us meet the high standards you’ve come to expect. |
u | Offer a variety of innovative investment solutions. Our mutual funds – which span the domestic, international, global, frontier and emerging markets – aresub-advised by experienced money managers who employ distinctive, proprietary investment processes to manage assets through a variety of economic and market conditions. From offering some of the first multi-manager funds, one of the first retirement income funds and the first open-ended mutual fund in the U.S. to focus primarily on frontier-market debt, our robust history includes applying a disciplined, solutions-based approach to our product development process in an effort to help you grow your assets while mitigating risk. |
u | Provide a solutions-based approach to achieving long-term investment goals. We seek to provide investment solutions that might enable you to benefit from taking a more disciplined approach to investing. Our mutual funds provide access to institutional-quality, research-intensive investment managers with diverse processes and styles. Over the long run, having such access and spending time in the market – rather than trying to time the market – may better position you to reach your long-term investment goals during market upswings and potentially insulate against market downswings. |
Our management approach is more than a concept; it’s the cornerstone of American Beacon’s culture. And we strive to employ it at every turn as we seek to provide a well-diversified line of investment solutions to help our shareholders seek long-term rewards.
Thank you for your continued interest in American Beacon. For additional information about our investment products or to access your account information, please visit our website atwww.americanbeaconfunds.com.
Best Regards,
Gene L. Needles, Jr.
President
American Beacon Funds
1
American Beacon Small Cap Value FundSM
April 30, 2019 (Unaudited)
The Investor Class of the American Beacon Small Cap Value Fund (the “Fund”) returned 4.56% for the six months ended April 30, 2019, outperforming the Russell 2000® Value Index (the “Index”) return of 3.77% for the same period.
Average Annual Total Returns for the Period ended April 30, 2019 |
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Ticker | 6 Months* | 1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||||||||||||||||
Institutional Class (1,8) | AVFIX | 4.75 | % | 1.00 | % | 10.03 | % | 6.60 | % | 13.73 | % | |||||||||||||||||||||
Y Class (1,2,8) | ABSYX | 4.70 | % | 0.91 | % | 9.93 | % | 6.52 | % | 13.60 | % | |||||||||||||||||||||
Investor Class (1,8) | AVPAX | 4.56 | % | 0.68 | % | 9.67 | % | 6.26 | % | 13.33 | % | |||||||||||||||||||||
Advisor Class (1,3,8) | AASSX | 4.46 | % | 0.48 | % | 9.48 | % | 6.08 | % | 13.17 | % | |||||||||||||||||||||
A without Sales Charge (1,4,8) | ABSAX | 4.52 | % | 0.56 | % | 9.58 | % | 6.17 | % | 13.21 | % | |||||||||||||||||||||
A with Sales Charge (1,4,8) | ABSAX | (1.47 | )% | (5.21 | )% | 7.43 | % | 4.92 | % | 12.54 | % | |||||||||||||||||||||
C without Sales Charge (1,5,8) | ASVCX | 4.15 | % | (0.13 | )% | 8.83 | % | 5.42 | % | 12.48 | % | |||||||||||||||||||||
C with Sales Charge (1,5,8) | ASVCX | 3.15 | % | (1.13 | )% | 8.83 | % | 5.42 | % | 12.48 | % | |||||||||||||||||||||
R6 Class (1,6,8) | AASRX | 4.75 | % | 1.04 | % | 10.04 | % | 6.61 | % | 13.73 | % | |||||||||||||||||||||
Russell 2000® Value Index (7) | 3.77 | % | 2.19 | % | 11.46 | % | 6.94 | % | 12.87 | % |
* | Not Annualized. |
1. | Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visitwww.americanbeaconfunds.com or call1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. |
2. | Fund performance for theten-year period represents the total returns achieved by the Institutional Class from 4/30/09 up to 8/3/09, the inception date of the Y Class. Expenses of the Y Class are higher than those of the Institutional Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 4/30/09. |
3. | A portion of the fees charged to the Advisor Class of the Fund was waived in 2009. Performance prior to waiving fees was lower than the actual returns shown for theten-year period. |
4. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 4/30/09. A portion of the fees charged to the A Class of the Fund was waived in 2010, 2012, 2013, and 2014 and fully recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown for 2010, 2012, 2013, and 2014. The maximum sales charge for A Class is 5.75%. |
5. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 4/30/09. A portion of the fees charged to the C Class of the Fund was waived in 2010, 2012, and 2013, fully recovered in 2015. Performance prior to waiving fees was lower than the actual returns shown in 2010, 2012 and 2013. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase. |
6. | Fund performance for the three-year, five-year andten-year periods represent the returns achieved by the Institutional Class from 4/30/09 through 2/28/17, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 4/30/09. |
7. | The Russell 2000 Value Index is an unmanaged index of those stocks in the Russell 2000 Index with lowerprice-to-book ratios and lower forecasted growth values. Russell 2000 Value Index and Russell 2000 Index are registered trademarks of Frank Russell Company. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data, and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. One cannot directly invest in an index. |
8. | The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and R6 Class shares were 0.81%, 0.88%, 1.14%, 1.29%, 1.21%, 1.87%, and 0.78%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report. |
2
American Beacon Small Cap Value FundSM
Performance Overview
April 30, 2019 (Unaudited)
The Fund outperformed the Index due to security selection. Sector allocation marginally detracted value relative to the Index.
From a stock selection standpoint, the Fund’s investments in the Consumer Discretionary and Financials sectors contributed positively to relative performance. Within the Consumer Discretionary sector, not owning Signet Jewelers Ltd. (down 57.7%) and owning Whirlpool Corp. (up 30.1%), were the largest contributors to relative performance. Investments in the Financials sector that contributed performance included Prosperity Bancshares, Inc. (up 14.7%), First Hawaiian, Inc. (up 13.7%) and Stifel Financial Corp. (up 29.7%). The aforementioned performance was somewhat offset by negative stock selection in the Information Technology sector, which included not owning Cree, Inc. (up 70.2%) and Viasat, Inc. (up 42.4%).
From a sector allocation perspective, the Fund’s underweight positions in both Real Estate and Utilities, which performed well during the period, detracted from relative performance. Offsetting this underperformance was an overweight to the Industrials sector.
Thesub-advisors continue to focus on uncovering investment opportunities through stock selection that should benefit the Fund’s performance over the longer-term.
Top Ten Holdings (% Net Assets) |
| |||||||
Diodes, Inc. | 1.0 | |||||||
Portland General Electric Co. | 1.0 | |||||||
American Axle & Manufacturing Holdings, Inc. | 0.8 | |||||||
Avnet, Inc. | 0.8 | |||||||
Brooks Automation, Inc. | 0.8 | |||||||
MGIC Investment Corp. | 0.8 | |||||||
Stifel Financial Corp. | 0.8 | |||||||
UMB Financial Corp. | 0.8 | |||||||
Enstar Group Ltd. | 0.7 | |||||||
Federal Signal Corp. | 0.7 | |||||||
Total Fund Holdings | 726 | |||||||
Sector Allocation (% Equities) |
| |||||||
Financials | 29.1 | |||||||
Industrials | 19.7 | |||||||
Information Technology | 13.7 | |||||||
Consumer Discretionary | 12.2 | |||||||
Energy | 5.5 | |||||||
Materials | 5.1 | |||||||
Real Estate | 4.5 | |||||||
Health Care | 2.8 | |||||||
Utilities | 2.7 | |||||||
Communication Services | 2.4 | |||||||
Consumer Staples | 2.3 |
3
American Beacon Small Cap Value FundSM
April 30, 2019 (Unaudited)
Fund Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees, if applicable, and (2) ongoing costs, including management fees, distribution(12b-1) fees,sub-transfer agent fees, and other Fund expenses. The Examples 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 November 1, 2018 through April 30, 2019.
Actual Expenses
The “Actual” lines of the tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the “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 tables provide information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed 5% per year rate of return before expenses (not the Fund’s actual return). You may compare the ongoing costs of investing in the Fund with other funds by contrasting this 5% hypothetical example and the 5% hypothetical examples that appear in the shareholder reports of the other funds. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. Shareholders of the Investor and Institutional Classes that invest in the 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 Fund, such as sales charges (loads) or redemption fees, as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.
4
American Beacon Small Cap Value FundSM
Expense Examples
April 30, 2019 (Unaudited)
American Beacon Small Cap Value Fund |
| ||||||||||||||
Beginning Account Value 11/1/2018 | Ending Account Value 4/30/2019 | Expenses Paid During Period 11/1/2018-4/30/2019* | |||||||||||||
Institutional Class | |||||||||||||||
Actual | $1,000.00 | $1,047.50 | $4.16 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.73 | $4.11 | ||||||||||||
Y Class | |||||||||||||||
Actual | $1,000.00 | $1,047.00 | $4.52 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.38 | $4.46 | ||||||||||||
Investor Class | |||||||||||||||
Actual | $1,000.00 | $1,045.60 | $5.73 | ||||||||||||
Hypothetical** | $1,000.00 | $1,019.19 | $5.66 | ||||||||||||
Advisor Class | |||||||||||||||
Actual | $1,000.00 | $1,044.60 | $6.79 | ||||||||||||
Hypothetical** | $1,000.00 | $1,018.15 | $6.71 | ||||||||||||
A Class | |||||||||||||||
Actual | $1,000.00 | $1,045.20 | $6.29 | ||||||||||||
Hypothetical** | $1,000.00 | $1,018.65 | $6.21 | ||||||||||||
C Class | |||||||||||||||
Actual | $1,000.00 | $1,041.50 | $9.82 | ||||||||||||
Hypothetical** | $1,000.00 | $1,015.17 | $9.69 | ||||||||||||
R6 Class | |||||||||||||||
Actual | $1,000.00 | $1,047.50 | $4.01 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.88 | $3.96 |
* | Expenses are equal to the Fund’s annualized expense ratios for thesix-month period of 0.82%, 0.89%, 1.13%, 1.34%, 1.24%, 1.94%, and 0.79% for the Institutional, Y, Investor, Advisor, A, C, and R6 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 (181) by days in the year (365) to reflect the half-year period. |
** | 5% return before expenses. |
5
American Beacon Small Cap Value FundSM
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% | |||||||||||||||
Communication Services - 2.30% | |||||||||||||||
Media - 2.16% | |||||||||||||||
AMC Networks, Inc., Class AA | 131,481 | $ | 7,679,805 | ||||||||||||
Emerald Expositions Events, Inc. | 98,892 | 1,389,433 | |||||||||||||
Entercom Communications Corp., Class A | 220,539 | 1,517,308 | |||||||||||||
Entravision Communications Corp., Class A | 530,076 | 1,521,318 | |||||||||||||
EW Scripps Co., Class A | 289,503 | 6,597,773 | |||||||||||||
Gannett Co., Inc. | 314,488 | 2,934,173 | |||||||||||||
Gray Television, Inc.A | 1,082,342 | 25,359,273 | |||||||||||||
John Wiley & Sons, Inc., Class A | 205,896 | 9,508,277 | |||||||||||||
MDC Partners, Inc., Class AA | 1,747,872 | 3,670,531 | |||||||||||||
Meredith Corp. | 167,161 | 9,862,499 | |||||||||||||
MSG Networks, Inc., Class AA | 440,620 | 10,147,479 | |||||||||||||
New Media Investment Group, Inc. | 348,662 | 3,727,197 | |||||||||||||
Nexstar Media Group, Inc., Class A | 124,825 | 14,610,766 | |||||||||||||
Scholastic Corp. | 370,885 | 14,790,894 | |||||||||||||
TEGNA, Inc. | 1,778,676 | 28,316,522 | |||||||||||||
|
| ||||||||||||||
141,633,248 | |||||||||||||||
|
| ||||||||||||||
Wireless Telecommunication Services - 0.14% | |||||||||||||||
Telephone & Data Systems, Inc. | 293,759 | 9,365,037 | |||||||||||||
|
| ||||||||||||||
Total Communication Services | 150,998,285 | ||||||||||||||
|
| ||||||||||||||
Consumer Discretionary - 11.78% | |||||||||||||||
Auto Components - 1.61% | |||||||||||||||
Adient PLC | 125,002 | 2,887,546 | |||||||||||||
American Axle & Manufacturing Holdings, Inc.A | 3,424,287 | 50,508,233 | |||||||||||||
Cooper Tire & Rubber Co. | 319,135 | 9,529,371 | |||||||||||||
Cooper-Standard Holdings, Inc.A | 30,852 | 1,563,271 | |||||||||||||
Dana, Inc. | 353,285 | 6,889,057 | |||||||||||||
Delphi Technologies PLC | 27,399 | 606,340 | |||||||||||||
Dorman Products, Inc.A | 41,601 | 3,647,160 | |||||||||||||
Gentherm, Inc.A | 263,255 | 11,151,482 | |||||||||||||
Goodyear Tire & Rubber Co. | 330,100 | 6,341,221 | |||||||||||||
Modine Manufacturing Co.A | 192,677 | 2,849,693 | |||||||||||||
Motorcar Parts of America, Inc.A | 64,825 | 1,339,285 | |||||||||||||
Stoneridge, Inc.A | 156,621 | 4,922,598 | |||||||||||||
Tenneco, Inc., Class A | 59,396 | 1,301,960 | |||||||||||||
Tower International, Inc. | 82,676 | 1,929,658 | |||||||||||||
|
| ||||||||||||||
105,466,875 | |||||||||||||||
|
| ||||||||||||||
Automobiles - 0.26% | |||||||||||||||
Thor Industries, Inc. | 27,694 | 1,824,204 | |||||||||||||
Winnebago Industries, Inc. | 436,120 | 15,425,564 | |||||||||||||
|
| ||||||||||||||
17,249,768 | |||||||||||||||
|
| ||||||||||||||
Diversified Consumer Services - 0.62% | |||||||||||||||
Adtalem Global Education, Inc.A | 290,537 | 14,329,285 | |||||||||||||
American Public Education, Inc.A | 47,662 | 1,525,184 | |||||||||||||
Graham Holdings Co., Class B | 12,023 | 8,938,259 | |||||||||||||
H&R Block, Inc. | 514,092 | 13,988,443 | |||||||||||||
Sotheby’sA | 35,943 | 1,516,076 | |||||||||||||
Weight Watchers International, Inc.A | 22,194 | 453,201 | |||||||||||||
|
| ||||||||||||||
40,750,448 | |||||||||||||||
|
| ||||||||||||||
Hotels, Restaurants & Leisure - 1.20% | |||||||||||||||
Bloomin’ Brands, Inc. | 872,185 | 17,434,978 | |||||||||||||
Brinker International, Inc. | 110,384 | 4,721,124 |
See accompanying notes
6
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Consumer Discretionary - 11.78% (continued) | |||||||||||||||
Hotels, Restaurants & Leisure - 1.20% (continued) | |||||||||||||||
Cheesecake Factory, Inc. | 376,463 | $ | 18,680,094 | ||||||||||||
Dave & Buster’s Entertainment, Inc. | 375,514 | 21,344,216 | |||||||||||||
Hilton Grand Vacations, Inc.A | 180,512 | 5,783,604 | |||||||||||||
International Speedway Corp., Class A | 58,794 | 2,593,991 | |||||||||||||
SeaWorld Entertainment, Inc.A | 29,107 | 774,828 | |||||||||||||
Wyndham Destinations, Inc. | 177,294 | 7,722,927 | |||||||||||||
|
| ||||||||||||||
79,055,762 | |||||||||||||||
|
| ||||||||||||||
Household Durables - 2.55% | |||||||||||||||
Cavco Industries, Inc.A | 29,266 | 3,651,519 | |||||||||||||
Century Communities, Inc.A | 79,533 | 2,022,524 | |||||||||||||
Ethan Allen Interiors, Inc. | 477,149 | 10,544,993 | |||||||||||||
Flexsteel Industries, Inc. | 17,162 | 371,729 | |||||||||||||
Green Brick Partners, Inc.A | 56,501 | 505,119 | |||||||||||||
Helen of Troy Ltd.A | 109,683 | 15,794,352 | |||||||||||||
Hooker Furniture Corp. | 29,547 | 880,796 | |||||||||||||
KB Home | 729,152 | 18,892,328 | |||||||||||||
La-Z-Boy, Inc. | 81,534 | 2,674,315 | |||||||||||||
LGI Homes, Inc.A | 62,064 | 4,301,656 | |||||||||||||
Lifetime Brands, Inc. | 26,105 | 246,953 | |||||||||||||
M/I Homes, Inc.A | 230,634 | 6,496,960 | |||||||||||||
MDC Holdings, Inc. | 334,649 | 10,226,874 | |||||||||||||
Meritage Homes Corp.A | 142,772 | 7,302,788 | |||||||||||||
Taylor Morrison Home Corp., Class AA | 1,031,768 | 19,975,029 | |||||||||||||
Toll Brothers, Inc. | 302,054 | 11,508,257 | |||||||||||||
TRI Pointe Group, Inc.A | 558,648 | 7,290,356 | |||||||||||||
Tupperware Brands Corp. | 49,395 | 1,175,601 | |||||||||||||
Whirlpool Corp. | 251,886 | 34,966,815 | |||||||||||||
William Lyon Homes, Class AA | 450,119 | 7,589,006 | |||||||||||||
ZAGG, Inc.A | 143,562 | 1,182,951 | |||||||||||||
|
| ||||||||||||||
167,600,921 | |||||||||||||||
|
| ||||||||||||||
Internet & Direct Marketing Retail - 0.04% | |||||||||||||||
Lands’ End, Inc.A | 97,744 | 1,711,497 | |||||||||||||
PetMed Express, Inc.B | 18,462 | 403,395 | |||||||||||||
Shutterfly, Inc.A | 9,820 | 430,411 | |||||||||||||
|
| ||||||||||||||
2,545,303 | |||||||||||||||
|
| ||||||||||||||
Leisure Products - 0.39% | |||||||||||||||
Brunswick Corp. | 237,386 | 12,156,537 | |||||||||||||
Johnson Outdoors, Inc., Class A | 13,159 | 1,008,901 | |||||||||||||
Malibu Boats, Inc., Class AA | 255,023 | 10,614,057 | |||||||||||||
Nautilus, Inc.A | 322,044 | 1,722,935 | |||||||||||||
|
| ||||||||||||||
25,502,430 | |||||||||||||||
|
| ||||||||||||||
Multiline Retail - 0.39% | |||||||||||||||
Big Lots, Inc. | 307,935 | 11,442,864 | |||||||||||||
Dillard’s, Inc., Class A | 208,977 | 14,304,476 | |||||||||||||
|
| ||||||||||||||
25,747,340 | |||||||||||||||
|
| ||||||||||||||
Specialty Retail - 4.05% | |||||||||||||||
Aaron’s, Inc. | 375,387 | 20,905,302 | |||||||||||||
Abercrombie & Fitch Co., Class A | 587,713 | 17,566,742 | |||||||||||||
Asbury Automotive Group, Inc.A | 71,979 | 5,771,276 | |||||||||||||
Ascena Retail Group, Inc.A | 302,184 | 359,599 | |||||||||||||
AutoNation, Inc.A | 34,764 | 1,457,654 |
See accompanying notes
7
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Consumer Discretionary - 11.78% (continued) | |||||||||||||||
Specialty Retail - 4.05% (continued) | |||||||||||||||
Bed Bath & Beyond, Inc.B | 754,985 | $ | 12,615,799 | ||||||||||||
Buckle, Inc.B | 318,517 | 5,886,194 | |||||||||||||
Caleres, Inc. | 141,829 | 3,720,175 | |||||||||||||
Camping World Holdings, Inc., Class AB | 96,437 | 1,438,840 | |||||||||||||
Children’s Place, Inc. | 122,560 | 13,827,219 | |||||||||||||
Designer Brands, Inc. | 296,424 | 6,595,434 | |||||||||||||
Dick’s Sporting Goods, Inc. | 798,647 | 29,549,939 | |||||||||||||
Express, Inc.A | 226,263 | 832,648 | |||||||||||||
GameStop Corp., Class AB | 43,277 | 374,346 | |||||||||||||
Genesco, Inc.A | 131,174 | 5,877,907 | |||||||||||||
Group 1 Automotive, Inc. | 302,880 | 23,718,533 | |||||||||||||
Haverty Furniture Cos, Inc. | 22,450 | 534,759 | |||||||||||||
Hibbett Sports, Inc.A | 201,915 | 4,179,640 | |||||||||||||
Kirkland’s, Inc.A | 153,511 | 902,645 | |||||||||||||
Lithia Motors, Inc., Class A | 66,982 | 7,603,797 | |||||||||||||
Lumber Liquidators Holdings, Inc.A B | 222,546 | 2,942,058 | |||||||||||||
Murphy USA, Inc.A | 10,751 | 918,888 | |||||||||||||
Office Depot, Inc. | 7,793,140 | 18,703,536 | |||||||||||||
Party City Holdco, Inc.A | 81,679 | 547,249 | |||||||||||||
Penske Automotive Group, Inc. | 254,799 | 11,700,370 | |||||||||||||
Sally Beauty Holdings, Inc.A | 334,091 | 5,913,411 | |||||||||||||
Sonic Automotive, Inc., Class A | 1,220,094 | 24,682,502 | |||||||||||||
Sportsman’s Warehouse Holdings, Inc.A | 83,820 | 373,837 | |||||||||||||
Urban Outfitters, Inc.A | 304,405 | 9,049,961 | |||||||||||||
Williams-Sonoma, Inc. | 425,187 | 24,307,941 | |||||||||||||
Zumiez, Inc.A | 121,149 | 3,226,198 | |||||||||||||
|
| ||||||||||||||
266,084,399 | |||||||||||||||
|
| ||||||||||||||
Textiles, Apparel & Luxury Goods - 0.67% | |||||||||||||||
Deckers Outdoor Corp.A | 24,982 | 3,952,402 | |||||||||||||
G-III Apparel Group Ltd.A | 329,229 | 14,206,231 | |||||||||||||
Movado Group, Inc. | 125,084 | 4,459,244 | |||||||||||||
Oxford Industries, Inc. | 122,327 | 10,160,481 | |||||||||||||
Unifi, Inc.A | 20,918 | 422,544 | |||||||||||||
Vera Bradley, Inc.A | 223,044 | 2,738,980 | |||||||||||||
Wolverine World Wide, Inc. | 223,065 | 8,211,023 | |||||||||||||
|
| ||||||||||||||
44,150,905 | |||||||||||||||
|
| ||||||||||||||
Total Consumer Discretionary | 774,154,151 | ||||||||||||||
|
| ||||||||||||||
Consumer Staples - 2.25% | |||||||||||||||
Beverages - 0.20% | |||||||||||||||
Boston Beer Co., Inc., Class AA | 41,560 | 12,884,016 | |||||||||||||
|
| ||||||||||||||
Food & Staples Retailing - 0.60% | |||||||||||||||
Andersons, Inc. | 160,483 | 5,247,794 | |||||||||||||
Casey’s General Stores, Inc. | 71,461 | 9,457,863 | |||||||||||||
Performance Food Group Co.A | 327,154 | 13,396,956 | |||||||||||||
Smart & Final Stores, Inc.A | 452,586 | 2,955,387 | |||||||||||||
SpartanNash Co. | 169,699 | 2,744,033 | |||||||||||||
United Natural Foods, Inc.A | 155,773 | 2,012,587 | |||||||||||||
Village Super Market, Inc., Class A | 15,932 | 468,082 | |||||||||||||
Weis Markets, Inc. | 73,578 | 3,093,955 | |||||||||||||
|
| ||||||||||||||
39,376,657 | |||||||||||||||
|
| ||||||||||||||
See accompanying notes
8
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Consumer Staples - 2.25% (continued) | |||||||||||||||
Food Products - 1.12% | |||||||||||||||
Cal-Maine Foods, Inc. | 107,771 | $ | 4,430,466 | ||||||||||||
Darling Ingredients, Inc.A | 1,500,686 | 32,729,962 | |||||||||||||
Flowers Foods, Inc. | 386,452 | 8,401,466 | |||||||||||||
Fresh Del Monte Produce, Inc. | 304,420 | 8,983,434 | |||||||||||||
Hain Celestial Group, Inc.A | 341,021 | 7,441,078 | |||||||||||||
Sanderson Farms, Inc. | 7,455 | 1,130,402 | |||||||||||||
SunOpta, Inc.A B | 2,995,678 | 10,634,657 | |||||||||||||
|
| ||||||||||||||
73,751,465 | |||||||||||||||
|
| ||||||||||||||
Household Products - 0.15% | |||||||||||||||
Energizer Holdings, Inc. | 207,917 | 9,957,145 | |||||||||||||
|
| ||||||||||||||
Metals & Mining - 0.00% | |||||||||||||||
Ferroglobe Representation & Warranty InsuranceC D | 2,123,070 | - | |||||||||||||
|
| ||||||||||||||
Personal Products - 0.11% | |||||||||||||||
Edgewell Personal Care Co.A | 150,292 | 6,196,539 | |||||||||||||
Natural Health Trends Corp.B | 72,469 | 837,742 | |||||||||||||
|
| ||||||||||||||
7,034,281 | |||||||||||||||
|
| ||||||||||||||
Tobacco - 0.07% | |||||||||||||||
Universal Corp. | 84,784 | 4,566,466 | |||||||||||||
|
| ||||||||||||||
Total Consumer Staples | 147,570,030 | ||||||||||||||
|
| ||||||||||||||
Energy - 5.27% | |||||||||||||||
Energy Equipment & Services - 1.98% | |||||||||||||||
Apergy Corp.A | 225,673 | 8,956,961 | |||||||||||||
C&J Energy Services, Inc.A | 1,015,290 | 14,264,824 | |||||||||||||
Cactus, Inc., Class AA | 28,283 | 1,026,673 | |||||||||||||
Dril-Quip, Inc.A | 286,916 | 12,498,061 | |||||||||||||
Frank’s International N.V.A | 4,542,106 | 26,525,899 | |||||||||||||
FTS International, Inc.A | 58,334 | 603,757 | |||||||||||||
Helix Energy Solutions Group, Inc.A | 411,904 | 3,221,089 | |||||||||||||
Hi-Crush Partners LP, MLP | 98,794 | 349,731 | |||||||||||||
Keane Group, Inc.A | 167,635 | 1,758,491 | |||||||||||||
Key Energy Services, Inc.A B | 301,510 | 1,260,312 | |||||||||||||
Liberty Oilfield Services, Inc., Class AB | 88,679 | 1,322,204 | |||||||||||||
Mammoth Energy Services, Inc. | 79,546 | 1,240,122 | |||||||||||||
McDermott International, Inc.A | 156,934 | 1,269,596 | |||||||||||||
Newpark Resources, Inc.A | 1,921,615 | 14,027,790 | |||||||||||||
Nine Energy Service, Inc.A | 227,125 | 4,572,026 | |||||||||||||
Oceaneering International, Inc.A | 54,163 | 1,039,930 | |||||||||||||
Oil States International, Inc.A | 130,891 | 2,528,814 | |||||||||||||
Patterson-UTI Energy, Inc. | 1,143,437 | 15,539,309 | |||||||||||||
ProPetro Holding Corp.A | 430,016 | 9,516,254 | |||||||||||||
Quintana Energy Services, Inc.A | 290,256 | 1,381,619 | |||||||||||||
RPC, Inc. | 75,716 | 779,118 | |||||||||||||
SEACOR Holdings, Inc.A | 37,332 | 1,662,767 | |||||||||||||
Select Energy Services, Inc., Class AA | 111,266 | 1,281,784 | |||||||||||||
Smart Sand, Inc.A B | 226,704 | 890,947 | |||||||||||||
Solaris Oilfield Infrastructure, Inc., Class A | 131,407 | 2,232,605 | |||||||||||||
U.S. Well Services, Inc.A | 56,762 | 408,119 | |||||||||||||
|
| ||||||||||||||
130,158,802 | |||||||||||||||
|
| ||||||||||||||
Oil, Gas & Consumable Fuels - 3.29% | |||||||||||||||
Alliance Resource Partners LP, MLP | 245,461 | 4,730,033 | |||||||||||||
Altus Midstream Co., Class AA B | 518,976 | 2,620,829 |
See accompanying notes
9
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Energy - 5.27% (continued) | |||||||||||||||
Oil, Gas��& Consumable Fuels - 3.29% (continued) | |||||||||||||||
Arch Coal, Inc., Class A | 101,937 | $ | 9,885,850 | ||||||||||||
Berry Petroleum Corp. | 450,566 | 5,118,430 | |||||||||||||
Bonanza Creek Energy, Inc.A | 377,462 | 9,085,510 | |||||||||||||
Callon Petroleum Co.A | 5,514,562 | 41,414,361 | |||||||||||||
CONSOL Energy, Inc.A | 66,006 | 2,237,603 | |||||||||||||
Contango Oil & Gas Co.A | 273,689 | 826,541 | |||||||||||||
Delek US Holdings, Inc. | 26,712 | 989,947 | |||||||||||||
Earthstone Energy, Inc., Class AA | 263,037 | 1,762,348 | |||||||||||||
Enerplus Corp. | 186,918 | 1,710,300 | |||||||||||||
Gran Tierra Energy, Inc.A | 1,747,690 | 4,176,979 | |||||||||||||
Gulfport Energy Corp.A | 98,955 | 648,155 | |||||||||||||
HighPoint Resources Corp.A | 534,327 | 1,464,056 | |||||||||||||
Hoegh LNG Partners LP | 77,091 | 1,514,838 | |||||||||||||
Kosmos Energy Ltd. | 2,449,908 | 16,389,885 | |||||||||||||
Laredo Petroleum, Inc.A | 268,098 | 809,656 | |||||||||||||
Midstates Petroleum Co., Inc.A | 82,356 | 1,051,686 | |||||||||||||
Murphy Oil Corp. | 481,159 | 13,106,771 | |||||||||||||
Noble Midstream Partners LP, MLP | 26,221 | 902,789 | |||||||||||||
Northern Oil and Gas, Inc.A | 342,046 | 906,422 | |||||||||||||
Oasis Midstream Partners LP, MLP | 44,978 | 896,412 | |||||||||||||
Oasis Petroleum, Inc.A | 67,453 | 411,463 | |||||||||||||
Par Pacific Holdings, Inc.A | 192,759 | 3,766,511 | |||||||||||||
PBF Energy, Inc., Class A | 42,276 | 1,419,628 | |||||||||||||
PBF Logistics LP, MLP | 20,141 | 428,802 | |||||||||||||
PDC Energy, Inc.A | 231,179 | 10,053,975 | |||||||||||||
Peabody Energy Corp. | 475,951 | 13,693,110 | |||||||||||||
Penn Virginia Corp.A | 170,720 | 7,665,328 | |||||||||||||
QEP Resources, Inc.A | 97,621 | 734,110 | |||||||||||||
Renewable Energy Group, Inc.A | 94,112 | 2,269,981 | |||||||||||||
REX American Resources Corp.A | 23,301 | 1,969,168 | |||||||||||||
SM Energy Co. | 57,194 | 911,100 | |||||||||||||
Southwestern Energy Co.A | 1,731,394 | 6,839,006 | |||||||||||||
SRC Energy, Inc.A | 1,026,788 | 6,314,746 | |||||||||||||
Talos Energy, Inc.A | 87,857 | 2,609,353 | |||||||||||||
W&T Offshore, Inc.A | 930,099 | 5,934,032 | |||||||||||||
Whiting Petroleum Corp.A | 523,954 | 14,351,100 | |||||||||||||
World Fuel Services Corp. | 476,391 | 14,696,662 | |||||||||||||
|
| ||||||||||||||
216,317,476 | |||||||||||||||
|
| ||||||||||||||
Total Energy | 346,476,278 | ||||||||||||||
|
| ||||||||||||||
Financials - 28.12% | |||||||||||||||
Banks - 16.27% | |||||||||||||||
1st Source Corp. | 29,356 | 1,374,741 | |||||||||||||
Amalgamated Bank, Class A | 58,334 | 988,761 | |||||||||||||
American National Bankshares, Inc. | 14,330 | 541,961 | |||||||||||||
Ameris Bancorp | 58,287 | 2,125,144 | |||||||||||||
Associated Banc-Corp | 1,919,970 | 43,564,119 | |||||||||||||
Banc of California, Inc. | 115,078 | 1,669,782 | |||||||||||||
Bancorp, Inc.A | 273,877 | 2,796,284 | |||||||||||||
BancorpSouth Bank | 168,869 | 5,147,127 | |||||||||||||
Bank of Hawaii Corp. | 11,883 | 978,922 | |||||||||||||
Bank of NT Butterfield & Son Ltd. | 684,733 | 27,403,015 | |||||||||||||
BankUnited, Inc. | 492,343 | 18,009,907 | |||||||||||||
Banner Corp. | 246,734 | 13,081,837 | |||||||||||||
Bar Harbor Bankshares | 17,994 | 472,882 | |||||||||||||
Berkshire Hills Bancorp, Inc. | 587,864 | 17,630,041 |
See accompanying notes
10
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Financials - 28.12% (continued) | |||||||||||||||
Banks - 16.27% (continued) | |||||||||||||||
Boston Private Financial Holdings, Inc. | 900,702 | $ | 10,313,038 | ||||||||||||
Bridge Bancorp, Inc. | 31,190 | 966,578 | |||||||||||||
Brookline Bancorp, Inc. | 216,731 | 3,261,802 | |||||||||||||
Bryn Mawr Bank Corp. | 133,272 | 5,076,330 | |||||||||||||
Cadence Bancorp | 359,840 | 8,186,360 | |||||||||||||
Camden National Corp. | 22,674 | 997,203 | |||||||||||||
Carolina Financial Corp. | 189,181 | 6,827,542 | |||||||||||||
Cathay General Bancorp | 495,340 | 18,223,559 | |||||||||||||
CenterState Bank Corp. | 360,383 | 8,894,252 | |||||||||||||
Central Pacific Financial Corp. | 274,174 | 8,227,962 | |||||||||||||
Chemical Financial Corp. | 196,621 | 8,637,561 | |||||||||||||
CIT Group, Inc. | 144,512 | 7,698,154 | |||||||||||||
City Holding Co. | 12,548 | 996,060 | |||||||||||||
Columbia Banking System, Inc. | 62,700 | 2,353,758 | |||||||||||||
Community Trust Bancorp, Inc. | 20,773 | 877,659 | |||||||||||||
ConnectOne Bancorp, Inc. | 66,092 | 1,442,788 | |||||||||||||
Customers Bancorp, Inc.A | 95,881 | 2,171,705 | |||||||||||||
CVB Financial Corp. | 541,042 | 11,740,611 | |||||||||||||
Eagle Bancorp, Inc.A | 17,086 | 944,172 | |||||||||||||
Enterprise Financial Services Corp. | 52,994 | 2,254,365 | |||||||||||||
Financial Institutions, Inc. | 31,688 | 871,420 | |||||||||||||
First Bancorp | 25,400 | 962,914 | |||||||||||||
First BanCorp | 159,651 | 1,804,056 | |||||||||||||
First Business Financial Services, Inc. | 21,559 | 496,504 | |||||||||||||
First Citizens BancShares, Inc., Class A | 12,341 | 5,531,853 | |||||||||||||
First Commonwealth Financial Corp. | 203,097 | 2,764,150 | |||||||||||||
First Financial Bancorp | 16,989 | 426,424 | |||||||||||||
First Financial Corp. | 89,824 | 3,698,054 | |||||||||||||
First Hawaiian, Inc. | 1,662,647 | 45,972,190 | |||||||||||||
First Horizon National Corp. | 1,683,306 | 25,401,088 | |||||||||||||
First Internet Bancorp | 64,252 | 1,406,476 | |||||||||||||
First Interstate BancSystem, Inc., Class A | 248,372 | 10,496,201 | |||||||||||||
First Merchants Corp. | 66,201 | 2,427,591 | |||||||||||||
First Mid Bancshares, Inc. | 12,252 | 422,571 | |||||||||||||
First Midwest Bancorp, Inc. | 990,092 | 21,257,275 | |||||||||||||
Flushing Financial Corp. | 95,982 | 2,169,193 | |||||||||||||
FNB Corp. | 1,226,554 | 14,878,100 | |||||||||||||
Franklin Financial Network, Inc. | 58,347 | 1,613,295 | |||||||||||||
Fulton Financial Corp. | 2,067,447 | 35,663,461 | |||||||||||||
Glacier Bancorp, Inc. | 38,371 | 1,634,221 | |||||||||||||
Great Southern Bancorp, Inc. | 8,838 | 512,162 | |||||||||||||
Great Western Bancorp, Inc. | 183,700 | 6,460,729 | |||||||||||||
Hancock Whitney Corp. | 891,551 | 38,996,441 | |||||||||||||
Hanmi Financial Corp. | 78,953 | 1,872,765 | |||||||||||||
Heartland Financial USA, Inc. | 43,933 | 1,972,592 | |||||||||||||
Hilltop Holdings, Inc. | 173,338 | 3,645,298 | |||||||||||||
Home BancShares, Inc. | 191,235 | 3,669,800 | |||||||||||||
HomeTrust Bancshares, Inc. | 16,893 | 428,406 | |||||||||||||
Hope Bancorp, Inc. | 597,327 | 8,398,418 | |||||||||||||
Horizon Bancorp, Inc. | 97,962 | 1,593,842 | |||||||||||||
IBERIABANK Corp. | 281,856 | 22,407,552 | |||||||||||||
International Bancshares Corp. | 527,326 | 21,868,209 | |||||||||||||
Investors Bancorp, Inc. | 1,007,043 | 11,832,755 | |||||||||||||
Lakeland Bancorp, Inc. | 55,486 | 918,848 | |||||||||||||
Live Oak Bancshares, Inc. | 119,277 | 2,083,769 | |||||||||||||
Midland States Bancorp, Inc. | 70,070 | 1,879,277 |
See accompanying notes
11
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Financials - 28.12% (continued) | |||||||||||||||
Banks - 16.27% (continued) | |||||||||||||||
MidWestOne Financial Group, Inc. | 15,616 | $ | 440,059 | ||||||||||||
National Bank Holdings Corp., Class A | 505,811 | 19,342,213 | |||||||||||||
Northrim BanCorp, Inc. | 12,286 | 436,030 | |||||||||||||
OFG Bancorp | 300,225 | 6,058,540 | |||||||||||||
Old National Bancorp | 1,989,103 | 33,973,879 | |||||||||||||
Opus Bank | 40,460 | 884,860 | |||||||||||||
Orrstown Financial Services, Inc. | 25,916 | 537,498 | |||||||||||||
Pacific Premier Bancorp, Inc. | 31,720 | 922,100 | |||||||||||||
Park National Corp. | 4,714 | 460,464 | |||||||||||||
Peapack Gladstone Financial Corp. | 48,822 | 1,412,420 | |||||||||||||
Pinnacle Financial Partners, Inc. | 66,095 | 3,838,137 | |||||||||||||
Popular, Inc. | 736,055 | 42,477,734 | |||||||||||||
Preferred Bank | 18,811 | 925,313 | |||||||||||||
Prosperity Bancshares, Inc. | 577,114 | 42,498,675 | |||||||||||||
RBB Bancorp | 23,627 | 457,419 | |||||||||||||
Renasant Corp. | 121,755 | 4,414,836 | |||||||||||||
Republic Bancorp, Inc., Class A | 31,875 | 1,506,413 | |||||||||||||
S&T Bancorp, Inc. | 63,689 | 2,552,655 | |||||||||||||
Sandy Spring Bancorp, Inc. | 25,685 | 896,150 | |||||||||||||
Seacoast Banking Corp. of FloridaA | 688,146 | 19,515,821 | |||||||||||||
Simmons First National Corp., Class A | 220,101 | 5,588,364 | |||||||||||||
South State Corp. | 268,322 | 20,301,243 | |||||||||||||
Southern National Bancorp of Virginia, Inc. | 59,545 | 888,411 | |||||||||||||
Sterling Bancorp | 277,560 | 5,945,335 | |||||||||||||
Synovus Financial Corp. | 260,996 | 9,620,313 | |||||||||||||
TCF Financial Corp. | 937,748 | 20,752,363 | |||||||||||||
Texas Capital Bancshares, Inc.A | 697,660 | 45,159,532 | |||||||||||||
Towne Bank | 180,475 | 4,706,788 | |||||||||||||
TriCo Bancshares | 23,420 | 934,692 | |||||||||||||
Triumph Bancorp, Inc.A | 27,399 | 849,643 | |||||||||||||
Trustmark Corp. | 359,300 | 12,920,428 | |||||||||||||
UMB Financial Corp. | 782,809 | 54,687,037 | |||||||||||||
Umpqua Holdings Corp. | 1,393,667 | 24,194,059 | |||||||||||||
Union Bankshares Corp. | 461,082 | 16,829,493 | |||||||||||||
United Bankshares, Inc. | 191,533 | 7,515,755 | |||||||||||||
United Community Banks, Inc. | 439,002 | 12,327,176 | |||||||||||||
Univest Financial Corp. | 19,052 | 480,491 | |||||||||||||
Valley National Bancorp | 2,246,218 | 23,540,365 | |||||||||||||
Veritex Holdings, Inc. | 378,108 | 10,023,643 | |||||||||||||
Webster Financial Corp. | 418,920 | 22,257,220 | |||||||||||||
WesBanco, Inc. | 255,928 | 10,319,017 | |||||||||||||
West Bancorporation, Inc. | 20,220 | 424,013 | |||||||||||||
Westamerica Bancorp | 113,181 | 7,268,484 | |||||||||||||
Wintrust Financial Corp. | 179,578 | 13,683,844 | |||||||||||||
|
| ||||||||||||||
1,069,082,807 | |||||||||||||||
|
| ||||||||||||||
Capital Markets - 2.76% | |||||||||||||||
AllianceBernstein Holding LP, MLP | 412,833 | 12,182,702 | |||||||||||||
Artisan Partners Asset Management, Inc., Class A | 187,188 | 5,304,908 | |||||||||||||
Blucora, Inc.A | 349,175 | 12,221,125 | |||||||||||||
BrightSphere Investment Group PLC | 490,692 | 7,193,545 | |||||||||||||
Cohen & Steers, Inc. | 129,491 | 6,493,973 | |||||||||||||
Donnelley Financial Solutions, Inc.A | 244,494 | 3,743,203 | |||||||||||||
Evercore, Inc., Class A | 234,067 | 22,805,148 | |||||||||||||
Federated Investors, Inc., Class B | 483,072 | 14,844,802 | |||||||||||||
GAIN Capital Holdings, Inc.B | 66,386 | 349,854 |
See accompanying notes
12
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Financials - 28.12% (continued) | |||||||||||||||
Capital Markets - 2.76% (continued) | |||||||||||||||
GAMCO Investors, Inc., Class A | 24,607 | $ | 533,480 | ||||||||||||
Greenhill & Co., Inc. | 59,052 | 1,222,967 | |||||||||||||
INTL. FCStone, Inc.A | 51,781 | 2,100,237 | |||||||||||||
Legg Mason, Inc. | 61,546 | 2,058,714 | |||||||||||||
Och-Ziff Capital Management Group LLC, Class A, MLP | 36,082 | 529,684 | |||||||||||||
Oppenheimer Holdings, Inc., Class A | 47,588 | 1,249,185 | |||||||||||||
Piper Jaffray Cos | 67,760 | 5,461,456 | |||||||||||||
Stifel Financial Corp. | 836,452 | 49,911,091 | |||||||||||||
Victory Capital Holdings, Inc., Class AA | 87,266 | 1,439,016 | |||||||||||||
Virtus Investment Partners, Inc. | 42,284 | 5,184,441 | |||||||||||||
Waddell & Reed Financial, Inc., Class A | 925,252 | 17,329,970 | |||||||||||||
Westwood Holdings Group, Inc. | 42,768 | 1,338,211 | |||||||||||||
WisdomTree Investments, Inc. | 1,131,859 | 8,149,385 | |||||||||||||
|
| ||||||||||||||
181,647,097 | |||||||||||||||
|
| ||||||||||||||
Consumer Finance - 1.48% | |||||||||||||||
Encore Capital Group, Inc.A | 44,318 | 1,252,427 | |||||||||||||
Enova International, Inc.A | 83,469 | 2,289,555 | |||||||||||||
EZCORP, Inc., Class AA | 227,690 | 2,474,990 | |||||||||||||
Green Dot Corp., Class AA | 120,733 | 7,699,143 | |||||||||||||
Navient Corp. | 842,459 | 11,381,621 | |||||||||||||
Nelnet, Inc., Class A | 158,538 | 9,203,131 | |||||||||||||
OneMain Holdings, Inc. | 371,613 | 12,623,694 | |||||||||||||
PRA Group, Inc.A | 605,370 | 17,023,004 | |||||||||||||
SLM Corp. | 2,873,713 | 29,196,924 | |||||||||||||
World Acceptance Corp.A | 28,894 | 3,755,931 | |||||||||||||
|
| ||||||||||||||
96,900,420 | |||||||||||||||
|
| ||||||||||||||
Diversified Financial Services - 0.03% | |||||||||||||||
FGL Holdings | 234,451 | 1,999,867 | |||||||||||||
|
| ||||||||||||||
Insurance - 4.45% | |||||||||||||||
Ambac Financial Group, Inc.A | 388,148 | 7,258,368 | |||||||||||||
American Equity Investment Life Holding Co. | 672,926 | 19,790,754 | |||||||||||||
Argo Group International Holdings Ltd. | 320,848 | 25,048,603 | |||||||||||||
Assured Guaranty Ltd. | 289,121 | 13,791,072 | |||||||||||||
Axis Capital Holdings Ltd. | 228,671 | 12,999,946 | |||||||||||||
Brighthouse Financial, Inc.A | 99,400 | 4,153,926 | |||||||||||||
CNO Financial Group, Inc. | 2,056,228 | 34,030,573 | |||||||||||||
Employers Holdings, Inc. | 110,449 | 4,740,471 | |||||||||||||
Enstar Group Ltd.A | 273,102 | 48,410,061 | |||||||||||||
FBL Financial Group, Inc., Class A | 32,302 | 2,017,906 | |||||||||||||
First American Financial Corp. | 29,196 | 1,665,924 | |||||||||||||
Global Indemnity Ltd. | 386,928 | 11,917,382 | |||||||||||||
Hanover Insurance Group, Inc. | 120,320 | 14,511,795 | |||||||||||||
Horace Mann Educators Corp. | 534,811 | 20,633,008 | |||||||||||||
Kemper Corp. | 124,320 | 11,173,882 | |||||||||||||
MBIA, Inc.A | 408,195 | 3,947,246 | |||||||||||||
National General Holdings Corp. | 478,733 | 11,800,768 | |||||||||||||
National Western Life Group, Inc., Class A | 14,652 | 3,907,981 | |||||||||||||
ProAssurance Corp. | 51,167 | 1,920,298 | |||||||||||||
Protective Insurance Corp., Class B | 24,257 | 394,176 | |||||||||||||
Safety Insurance Group, Inc. | 71,468 | 6,640,807 | |||||||||||||
Selective Insurance Group, Inc. | 146,082 | 10,417,107 | |||||||||||||
Stewart Information Services Corp. | 39,070 | 1,660,866 | |||||||||||||
Third Point Reinsurance Ltd.A | 131,897 | 1,531,324 | |||||||||||||
United Fire Group, Inc. | 46,252 | 2,017,050 |
See accompanying notes
13
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Financials - 28.12% (continued) | |||||||||||||||
Insurance - 4.45% (continued) | |||||||||||||||
Universal Insurance Holdings, Inc. | 95,613 | $ | 2,848,311 | ||||||||||||
White Mountains Insurance Group Ltd. | 13,849 | 13,004,765 | |||||||||||||
|
| ||||||||||||||
292,234,370 | |||||||||||||||
|
| ||||||||||||||
Mortgage Real Estate Investment Trusts (REITs) - 0.31% | |||||||||||||||
Apollo Commercial Real Estate Finance, Inc. | 554,341 | 10,388,350 | |||||||||||||
Ares Commercial Real Estate Corp. | 90,376 | 1,373,715 | |||||||||||||
Colony Credit Real Estate, Inc. | 112,656 | 1,750,674 | |||||||||||||
Ellington Financial, Inc. | 100,351 | 1,810,332 | |||||||||||||
Exantas Capital Corp. | 118,091 | 1,293,097 | |||||||||||||
Great Ajax Corp. | 34,113 | 488,498 | |||||||||||||
PennyMac Mortgage Investment Trust | 84,645 | 1,777,545 | |||||||||||||
Ready Capital Corp. | 88,922 | 1,343,612 | |||||||||||||
|
| ||||||||||||||
20,225,823 | |||||||||||||||
|
| ||||||||||||||
Thrifts & Mortgage Finance - 2.82% | |||||||||||||||
Capitol Federal Financial, Inc. | 360,397 | 4,973,479 | |||||||||||||
Dime Community Bancshares, Inc. | 154,615 | 3,115,492 | |||||||||||||
Essent Group Ltd.A | 524,128 | 24,869,874 | |||||||||||||
Flagstar Bancorp, Inc. | 157,730 | 5,638,848 | |||||||||||||
FS Bancorp, Inc. | 9,133 | 472,085 | |||||||||||||
HomeStreet, Inc.A | 67,143 | 1,889,404 | |||||||||||||
Kearny Financial Corp. | 249,127 | 3,487,778 | |||||||||||||
Luther Burbank Corp. | 337,513 | 3,554,012 | |||||||||||||
Merchants Bancorp | 39,530 | 955,835 | |||||||||||||
Meridian Bancorp, Inc. | 137,620 | 2,369,817 | |||||||||||||
MGIC Investment Corp.A | 3,374,002 | 49,395,389 | |||||||||||||
New York Community Bancorp, Inc. | 58,814 | 684,007 | |||||||||||||
Northfield Bancorp, Inc. | 215,940 | 3,239,100 | |||||||||||||
Northwest Bancshares, Inc. | 259,211 | 4,518,048 | |||||||||||||
OceanFirst Financial Corp. | 170,172 | 4,284,931 | |||||||||||||
Oritani Financial Corp. | 187,681 | 3,256,265 | |||||||||||||
PennyMac Financial Services, Inc. | 66,081 | 1,473,606 | |||||||||||||
Provident Financial Services, Inc. | 128,531 | 3,408,642 | |||||||||||||
Radian Group, Inc. | 773,462 | 18,114,480 | |||||||||||||
Southern Missouri Bancorp, Inc. | 12,578 | 421,992 | |||||||||||||
Sterling Bancorp, Inc. | 50,877 | 498,086 | |||||||||||||
Territorial Bancorp, Inc. | 15,826 | 458,163 | |||||||||||||
TFS Financial Corp. | 64,980 | 1,081,267 | |||||||||||||
TrustCo Bank Corp. | 171,587 | 1,372,696 | |||||||||||||
United Financial Bancorp, Inc. | 179,807 | 2,371,654 | |||||||||||||
Walker & Dunlop, Inc. | 85,480 | 4,697,126 | |||||||||||||
Washington Federal, Inc. | 924,016 | 30,621,890 | |||||||||||||
Waterstone Financial, Inc. | 25,615 | 424,184 | |||||||||||||
WSFS Financial Corp. | 77,155 | 3,331,553 | |||||||||||||
|
| ||||||||||||||
184,979,703 | |||||||||||||||
|
| ||||||||||||||
Total Financials | 1,847,070,087 | ||||||||||||||
|
| ||||||||||||||
Health Care - 2.72% | |||||||||||||||
Biotechnology - 0.34% | |||||||||||||||
Anika Therapeutics, Inc.A | 44,335 | 1,412,070 | |||||||||||||
Emergent BioSolutions, Inc.A | 166,866 | 8,623,635 | |||||||||||||
United Therapeutics Corp.A | 121,194 | 12,430,868 | |||||||||||||
|
| ||||||||||||||
22,466,573 | |||||||||||||||
|
| ||||||||||||||
See accompanying notes
14
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Health Care - 2.72% (continued) | |||||||||||||||
Health Care Equipment & Supplies - 0.22% | |||||||||||||||
Invacare Corp. | 1,055,934 | $ | 7,813,912 | ||||||||||||
NuVasive, Inc.A | 113,515 | 6,879,009 | |||||||||||||
|
| ||||||||||||||
14,692,921 | |||||||||||||||
|
| ||||||||||||||
Health Care Providers & Services - 1.41% | |||||||||||||||
Amedisys, Inc.A | 59,339 | 7,584,711 | |||||||||||||
AMN Healthcare Services, Inc.A | 382,170 | 19,895,770 | |||||||||||||
Encompass Health Corp. | 360,929 | 23,261,874 | |||||||||||||
Hanger, Inc.A | 769,805 | 15,296,025 | |||||||||||||
LHC Group, Inc.A | 91,816 | 10,201,676 | |||||||||||||
Magellan Health, Inc.A | 28,034 | 1,962,380 | |||||||||||||
Owens & Minor, Inc. | 248,210 | 846,396 | |||||||||||||
R1 RCM, Inc.A | 363,602 | 3,806,913 | |||||||||||||
Select Medical Holdings Corp.A | 434,193 | 6,239,353 | |||||||||||||
Tivity Health, Inc.A | 158,177 | 3,419,787 | |||||||||||||
|
| ||||||||||||||
92,514,885 | |||||||||||||||
|
| ||||||||||||||
Health Care Technology - 0.22% | |||||||||||||||
NextGen Healthcare, Inc.A | 292,218 | 5,490,776 | |||||||||||||
Omnicell, Inc.A | 112,670 | 9,054,161 | |||||||||||||
|
| ||||||||||||||
14,544,937 | |||||||||||||||
|
| ||||||||||||||
Life Sciences Tools & Services - 0.33% | |||||||||||||||
Cambrex Corp.A | 300,518 | 12,928,285 | |||||||||||||
Medpace Holdings, Inc.A | 153,060 | 8,597,380 | |||||||||||||
|
| ||||||||||||||
21,525,665 | |||||||||||||||
|
| ||||||||||||||
Pharmaceuticals - 0.20% | |||||||||||||||
Innoviva, Inc.A | 280,917 | 3,941,266 | |||||||||||||
Prestige Consumer Healthcare, Inc.A | 54,082 | 1,591,092 | |||||||||||||
Supernus Pharmaceuticals, Inc.A | 150,752 | 5,537,121 | |||||||||||||
Taro Pharmaceutical Industries Ltd. | 16,498 | 1,772,050 | |||||||||||||
|
| ||||||||||||||
12,841,529 | |||||||||||||||
|
| ||||||||||||||
Total Health Care | 178,586,510 | ||||||||||||||
|
| ||||||||||||||
Industrials - 19.05% | |||||||||||||||
Aerospace & Defense - 1.12% | |||||||||||||||
AAR Corp. | 180,469 | 6,094,438 | |||||||||||||
Aerojet Rocketdyne Holdings, Inc.A | 392,784 | 13,299,666 | |||||||||||||
Aerovironment, Inc.A | 115,845 | 7,942,333 | |||||||||||||
Astronics Corp.A | 226,130 | 7,539,174 | |||||||||||||
Cubic Corp. | 50,976 | 2,894,417 | |||||||||||||
Embraer S.A., Sponsored ADR | 1,047,308 | 20,956,633 | |||||||||||||
Moog, Inc., Class A | 40,912 | 3,831,000 | |||||||||||||
National Presto Industries, Inc. | 16,488 | 1,755,972 | |||||||||||||
Triumph Group, Inc. | 91,260 | 2,165,600 | |||||||||||||
Vectrus, Inc.A | 149,247 | 6,051,966 | |||||||||||||
Wesco Aircraft Holdings, Inc.A | 150,124 | 1,267,047 | |||||||||||||
|
| ||||||||||||||
73,798,246 | |||||||||||||||
|
| ||||||||||||||
Air Freight & Logistics - 0.54% | |||||||||||||||
Air Transport Services Group, Inc.A | 1,252,796 | 29,478,290 | |||||||||||||
Atlas Air Worldwide Holdings, Inc.A | 70,019 | 3,381,218 | |||||||||||||
Hub Group, Inc., Class AA | 68,057 | 2,829,129 | |||||||||||||
|
| ||||||||||||||
35,688,637 | |||||||||||||||
|
| ||||||||||||||
See accompanying notes
15
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Industrials - 19.05% (continued) | |||||||||||||||
Airlines - 0.64% | |||||||||||||||
Allegiant Travel Co. | 47,886 | $ | 7,033,496 | ||||||||||||
Hawaiian Holdings, Inc. | 297,893 | 8,403,562 | |||||||||||||
JetBlue Airways Corp.A | 490,850 | 9,105,267 | |||||||||||||
SkyWest, Inc. | 142,004 | 8,746,026 | |||||||||||||
Spirit Airlines, Inc.A | 158,689 | 8,629,508 | |||||||||||||
|
| ||||||||||||||
41,917,859 | |||||||||||||||
|
| ||||||||||||||
Building Products - 2.37% | |||||||||||||||
Advanced Drainage Systems, Inc. | 273,070 | 7,659,614 | |||||||||||||
Apogee Enterprises, Inc. | 47,012 | 1,894,584 | |||||||||||||
Armstrong Flooring, Inc.A | 453,670 | 6,573,678 | |||||||||||||
Builders FirstSource, Inc.A | 524,107 | 7,222,194 | |||||||||||||
Caesarstone Ltd.B | 115,248 | 1,743,702 | |||||||||||||
Gibraltar Industries, Inc.A | 692,401 | 27,467,548 | |||||||||||||
Insteel Industries, Inc. | 55,283 | 1,157,626 | |||||||||||||
Masonite International Corp.A | 527,933 | 27,183,270 | |||||||||||||
Patrick Industries, Inc.A | 33,900 | 1,690,593 | |||||||||||||
Resideo Technologies, Inc.A | 569,154 | 12,919,796 | |||||||||||||
Simpson Manufacturing Co., Inc. | 517,759 | 32,970,893 | |||||||||||||
Universal Forest Products, Inc. | 728,396 | 26,914,232 | |||||||||||||
|
| ||||||||||||||
155,397,730 | |||||||||||||||
|
| ||||||||||||||
Commercial Services & Supplies - 1.58% | |||||||||||||||
ACCO Brands Corp. | 517,888 | 4,733,496 | |||||||||||||
Deluxe Corp. | 185,132 | 8,279,103 | |||||||||||||
Ennis, Inc. | 43,695 | 881,765 | |||||||||||||
Herman Miller, Inc. | 435,272 | 16,897,259 | |||||||||||||
Interface, Inc. | 55,780 | 894,711 | |||||||||||||
Knoll, Inc. | 1,042,728 | 22,773,180 | |||||||||||||
Matthews International Corp., Class A | 147,234 | 5,898,194 | |||||||||||||
Mobile Mini, Inc. | 739,725 | 26,644,894 | |||||||||||||
Quad/Graphics, Inc. | 835,631 | 10,203,055 | |||||||||||||
Steelcase, Inc., Class A | 282,300 | 4,880,967 | |||||||||||||
Team, Inc.A B | 42,944 | 725,754 | |||||||||||||
UniFirst Corp. | 4,669 | 738,309 | |||||||||||||
|
| ||||||||||||||
103,550,687 | |||||||||||||||
|
| ||||||||||||||
Construction & Engineering - 1.99% | |||||||||||||||
AECOMA | 427,800 | 14,502,420 | |||||||||||||
Aegion Corp.A | 254,444 | 5,065,980 | |||||||||||||
Construction Partners, Inc., Class AA | 298,513 | 3,910,520 | |||||||||||||
EMCOR Group, Inc. | 300,901 | 25,317,810 | |||||||||||||
Granite Construction, Inc. | 220,386 | 9,893,128 | |||||||||||||
MasTec, Inc.A | 67,506 | 3,419,179 | |||||||||||||
MYR Group, Inc.A | 42,250 | 1,527,337 | |||||||||||||
Primoris Services Corp. | 1,476,629 | 32,367,708 | |||||||||||||
Quanta Services, Inc. | 256,973 | 10,433,104 | |||||||||||||
Tutor Perini Corp.A | 1,152,865 | 23,022,714 | |||||||||||||
Valmont Industries, Inc. | 7,234 | 975,433 | |||||||||||||
|
| ||||||||||||||
130,435,333 | |||||||||||||||
|
| ||||||||||||||
Electrical Equipment - 1.52% | |||||||||||||||
Atkore International Group, Inc.A | 159,873 | 3,958,455 | |||||||||||||
AZZ, Inc. | 33,961 | 1,612,808 | |||||||||||||
Encore Wire Corp. | 388,069 | 23,008,611 | |||||||||||||
EnerSys | 396,414 | 27,427,885 | |||||||||||||
Generac Holdings, Inc.A | 163,943 | 9,015,226 |
See accompanying notes
16
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Industrials - 19.05% (continued) | |||||||||||||||
Electrical Equipment - 1.52% (continued) | |||||||||||||||
Preformed Line Products Co. | 7,297 | $ | 411,478 | ||||||||||||
Regal Beloit Corp. | 273,381 | 23,259,255 | |||||||||||||
Thermon Group Holdings, Inc.A | 56,739 | 1,463,299 | |||||||||||||
TPI Composites, Inc.A | 321,991 | 9,965,621 | |||||||||||||
|
| ||||||||||||||
100,122,638 | |||||||||||||||
|
| ||||||||||||||
Machinery - 5.62% | |||||||||||||||
Actuant Corp., Class A | 1,106,239 | 28,297,594 | |||||||||||||
Alamo Group, Inc. | 5,497 | 569,709 | |||||||||||||
Altra Industrial Motion Corp. | 118,522 | 4,443,390 | |||||||||||||
Astec Industries, Inc. | 186,997 | 6,303,669 | |||||||||||||
Barnes Group, Inc. | 403,735 | 22,455,741 | |||||||||||||
Blue Bird Corp.A | 185,201 | 3,205,829 | |||||||||||||
Briggs & Stratton Corp. | 204,504 | 2,494,949 | |||||||||||||
Chart Industries, Inc.A | 92,737 | 8,185,895 | |||||||||||||
Colfax Corp.A | 855,830 | 25,820,391 | |||||||||||||
Columbus McKinnon Corp. | 71,420 | 2,811,091 | |||||||||||||
Commercial Vehicle Group, Inc.A | 243,965 | 2,176,168 | |||||||||||||
EnPro Industries, Inc. | 111,830 | 8,311,205 | |||||||||||||
Federal Signal Corp. | 1,675,806 | 48,212,939 | |||||||||||||
Global Brass & Copper Holdings, Inc. | 242,178 | 10,508,103 | |||||||||||||
Graham Corp. | 38,692 | 800,924 | |||||||||||||
Greenbrier Cos, Inc. | 370,497 | 13,163,758 | |||||||||||||
Hillenbrand, Inc. | 146,345 | 6,295,762 | |||||||||||||
Hyster-Yale Materials Handling, Inc. | 111,360 | 7,418,803 | |||||||||||||
Kennametal, Inc. | 738,456 | 30,055,159 | |||||||||||||
Lindsay Corp. | 102,431 | 8,706,635 | |||||||||||||
Manitowoc Co., Inc.A | 390,494 | 6,974,223 | |||||||||||||
Meritor, Inc.A | 255,751 | 6,204,519 | |||||||||||||
Miller Industries, Inc. | 221,883 | 7,339,890 | |||||||||||||
Mueller Industries, Inc. | 26,734 | 779,831 | |||||||||||||
Mueller Water Products, Inc., Class A | 135,620 | 1,455,203 | |||||||||||||
Navistar International Corp.A | 363,230 | 12,400,672 | |||||||||||||
Oshkosh Corp. | 199,867 | 16,507,015 | |||||||||||||
Park-Ohio Holdings Corp. | 82,421 | 3,019,081 | |||||||||||||
REV Group, Inc. | 159,907 | 2,029,220 | |||||||||||||
Standex International Corp. | 8,056 | 532,260 | |||||||||||||
Sun Hydraulics Corp. | 75,703 | 3,962,295 | |||||||||||||
Tennant Co. | 34,573 | 2,294,956 | |||||||||||||
Terex Corp. | 929,633 | 30,984,668 | |||||||||||||
Timken Co. | 234,412 | 11,240,055 | |||||||||||||
TriMas Corp.A | 353,876 | 10,945,385 | |||||||||||||
Trinity Industries, Inc. | 343,032 | 7,395,770 | |||||||||||||
Wabash National Corp. | 336,022 | 5,067,212 | |||||||||||||
|
| ||||||||||||||
369,369,969 | |||||||||||||||
|
| ||||||||||||||
Marine - 0.46% | |||||||||||||||
Matson, Inc. | 764,343 | 30,275,626 | |||||||||||||
|
| ||||||||||||||
Professional Services - 1.09% | |||||||||||||||
Barrett Business Services, Inc. | 17,079 | 1,244,376 | |||||||||||||
GP Strategies Corp.A | 111,699 | 1,421,928 | |||||||||||||
Hudson Global, Inc.A | 610,580 | 970,822 | |||||||||||||
Huron Consulting Group, Inc.A | 176,876 | 8,548,417 | |||||||||||||
InnerWorkings, Inc.A | 631,962 | 2,136,032 | |||||||||||||
Kelly Services, Inc., Class A | 346,702 | 7,717,587 | |||||||||||||
Korn Ferry | 394,278 | 18,538,952 |
See accompanying notes
17
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Industrials - 19.05% (continued) | |||||||||||||||
Professional Services - 1.09% (continued) | |||||||||||||||
ManpowerGroup, Inc. | 128,052 | $ | 12,298,114 | ||||||||||||
Navigant Consulting, Inc. | 75,303 | 1,719,167 | |||||||||||||
Resources Connection, Inc. | 105,487 | 1,694,121 | |||||||||||||
TrueBlue, Inc.A | 267,076 | 6,452,556 | |||||||||||||
WageWorks, Inc.A | 184,975 | 9,024,930 | |||||||||||||
|
| ||||||||||||||
71,767,002 | |||||||||||||||
|
| ||||||||||||||
Road & Rail - 0.62% | |||||||||||||||
ArcBest Corp. | 562,335 | 17,184,958 | |||||||||||||
Avis Budget Group, Inc.A | 121,292 | 4,311,931 | |||||||||||||
Covenant Transportation Group, Inc., Class AA | 67,270 | 1,313,783 | |||||||||||||
Marten Transport Ltd. | 257,783 | 5,098,948 | |||||||||||||
Ryder System, Inc. | 109,927 | 6,925,401 | |||||||||||||
Schneider National, Inc. | 43,112 | 901,041 | |||||||||||||
Universal Logistics Holdings, Inc. | 63,617 | 1,553,527 | |||||||||||||
Werner Enterprises, Inc. | 96,915 | 3,246,652 | |||||||||||||
|
| ||||||||||||||
40,536,241 | |||||||||||||||
|
| ||||||||||||||
Trading Companies & Distributors - 1.50% | |||||||||||||||
Air Lease Corp. | 308,483 | 11,895,104 | |||||||||||||
Aircastle Ltd. | 637,143 | 12,691,889 | |||||||||||||
Applied Industrial Technologies, Inc. | 66,969 | 4,014,122 | |||||||||||||
BMC Stock Holdings, Inc.A | 139,515 | 2,871,219 | |||||||||||||
GATX Corp. | 96,295 | 7,427,233 | |||||||||||||
Kaman Corp. | 111,592 | 6,908,661 | |||||||||||||
MRC Global, Inc.A | 195,151 | 3,381,967 | |||||||||||||
NOW, Inc.A | 272,270 | 3,980,587 | |||||||||||||
Rush Enterprises, Inc., Class A | 522,837 | 22,173,517 | |||||||||||||
Textainer Group Holdings Ltd.A | 37,258 | 357,304 | |||||||||||||
Titan Machinery, Inc.A | 49,646 | 853,911 | |||||||||||||
Triton International Ltd. | 267,823 | 8,824,768 | |||||||||||||
WESCO International, Inc.A | 225,552 | 12,910,597 | |||||||||||||
|
| ||||||||||||||
98,290,879 | |||||||||||||||
|
| ||||||||||||||
Total Industrials | 1,251,150,847 | ||||||||||||||
|
| ||||||||||||||
Information Technology - 13.23% | |||||||||||||||
Communications Equipment - 1.27% | |||||||||||||||
Casa Systems, Inc.A | 357,387 | 3,427,341 | |||||||||||||
Ciena Corp.A | 787,785 | 30,219,433 | |||||||||||||
CommScope Holding Co., Inc.A | 523,143 | 12,963,484 | |||||||||||||
Comtech Telecommunications Corp. | 16,285 | 383,186 | |||||||||||||
Digi International, Inc.A | 81,004 | 1,042,522 | |||||||||||||
EchoStar Corp., Class AA | 67,700 | 2,697,845 | |||||||||||||
Extreme Networks, Inc.A | 134,442 | 1,075,536 | |||||||||||||
Lumentum Holdings, Inc.A | 200,418 | 12,419,903 | |||||||||||||
NETGEAR, Inc.A | 323,536 | 10,039,322 | |||||||||||||
Plantronics, Inc. | 117,930 | 6,071,036 | |||||||||||||
Quantenna Communications, Inc.A | 74,542 | 1,815,098 | |||||||||||||
Ribbon Communications, Inc.A | 265,903 | 1,425,240 | |||||||||||||
|
| ||||||||||||||
83,579,946 | |||||||||||||||
|
| ||||||||||||||
Electronic Equipment, Instruments & Components - 5.98% | |||||||||||||||
Anixter International, Inc.A | 173,761 | 10,924,354 | |||||||||||||
Avnet, Inc. | 1,085,038 | 52,743,697 | |||||||||||||
AVX Corp. | 616,174 | 10,049,798 |
See accompanying notes
18
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Information Technology - 13.23% (continued) | |||||||||||||||
Electronic Equipment, Instruments & Components - 5.98% (continued) | |||||||||||||||
Belden, Inc. | 203,123 | $ | 11,283,483 | ||||||||||||
Benchmark Electronics, Inc. | 146,421 | 3,957,760 | |||||||||||||
Celestica, Inc.A | 706,838 | 5,039,755 | |||||||||||||
Coherent, Inc.A | 112,389 | 16,634,696 | |||||||||||||
Daktronics, Inc. | 232,647 | 1,763,464 | |||||||||||||
FabrinetA | 291,682 | 17,652,595 | |||||||||||||
FARO Technologies, Inc.A | 451,419 | 25,392,319 | |||||||||||||
II-VI, Inc.A | 1,025,175 | 40,842,972 | |||||||||||||
Insight Enterprises, Inc.A | 210,932 | 11,934,532 | |||||||||||||
Itron, Inc.A | 171,779 | 9,217,661 | |||||||||||||
Jabil, Inc. | 494,800 | 14,947,908 | |||||||||||||
KEMET Corp. | 560,191 | 10,010,613 | |||||||||||||
Kimball Electronics, Inc.A | 51,459 | 778,575 | |||||||||||||
Methode Electronics, Inc. | 179,262 | 5,290,022 | |||||||||||||
MTS Systems Corp. | 374,293 | 20,578,629 | |||||||||||||
PC Connection, Inc. | 82,605 | 3,069,602 | |||||||||||||
Plexus Corp.A | 33,828 | 2,035,769 | |||||||||||||
Sanmina Corp.A | 638,196 | 21,647,608 | |||||||||||||
ScanSource, Inc.A | 237,792 | 8,952,869 | |||||||||||||
SYNNEX Corp. | 106,106 | 11,446,715 | |||||||||||||
Tech Data Corp.A | 318,328 | 33,936,948 | |||||||||||||
TTM Technologies, Inc.A | 121,010 | 1,602,172 | |||||||||||||
Vishay Intertechnology, Inc. | 2,067,853 | 40,964,168 | |||||||||||||
|
| ||||||||||||||
392,698,684 | |||||||||||||||
|
| ||||||||||||||
IT Services - 1.43% | |||||||||||||||
CSG Systems International, Inc. | 473,802 | 21,155,259 | |||||||||||||
KBR, Inc. | 1,605,577 | 35,675,921 | |||||||||||||
NIC, Inc. | 474,562 | 8,190,940 | |||||||||||||
Science Applications International Corp. | 114,393 | 8,573,756 | |||||||||||||
Sykes Enterprises, Inc.A | 160,676 | 4,458,759 | |||||||||||||
Unisys Corp.A | 139,144 | 1,559,804 | |||||||||||||
Virtusa Corp.A | 253,256 | 14,068,371 | |||||||||||||
|
| ||||||||||||||
93,682,810 | |||||||||||||||
|
| ||||||||||||||
Semiconductors & Semiconductor Equipment - 3.44% | |||||||||||||||
Advanced Energy Industries, Inc.A | 28,194 | 1,628,485 | |||||||||||||
Amkor Technology, Inc.A | 554,141 | 5,020,518 | |||||||||||||
Aquantia Corp.A | 97,059 | 923,031 | |||||||||||||
Brooks Automation, Inc. | 1,471,540 | 55,197,465 | |||||||||||||
Cabot Microelectronics Corp. | 78,406 | 9,898,758 | |||||||||||||
ChipMOS Technologies, Inc., ADR | 137,987 | 2,376,136 | |||||||||||||
Cirrus Logic, Inc.A | 36,118 | 1,718,494 | |||||||||||||
Cohu, Inc. | 1,048,360 | 15,547,179 | |||||||||||||
Diodes, Inc.A | 1,791,914 | 65,261,508 | |||||||||||||
First Solar, Inc.A | 175,933 | 10,825,158 | |||||||||||||
Ichor Holdings Ltd.A | 77,020 | 1,939,364 | |||||||||||||
Kulicke & Soffa Industries, Inc. | 185,209 | 4,309,813 | |||||||||||||
MKS Instruments, Inc. | 164,031 | 14,928,461 | |||||||||||||
Photronics, Inc.A | 1,858,866 | 17,361,808 | |||||||||||||
Rambus, Inc.A | 156,400 | 1,792,344 | |||||||||||||
Semtech Corp.A | 240,424 | 12,951,641 | |||||||||||||
SolarEdge Technologies, Inc.A | 34,961 | 1,548,772 | |||||||||||||
Ultra Clean Holdings, Inc.A | 167,341 | 2,003,072 | |||||||||||||
Veeco Instruments, Inc.A | 67,549 | 822,747 | |||||||||||||
|
| ||||||||||||||
226,054,754 | |||||||||||||||
|
| ||||||||||||||
See accompanying notes
19
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Information Technology - 13.23% (continued) | |||||||||||||||
Software - 0.80% | |||||||||||||||
CommVault Systems, Inc.A | 65,675 | $ | 3,454,505 | ||||||||||||
Ebix, Inc. | 24,846 | 1,254,226 | |||||||||||||
LogMeIn, Inc. | 151,525 | 12,485,660 | |||||||||||||
Verint Systems, Inc.A | 590,604 | 35,666,575 | |||||||||||||
|
| ||||||||||||||
52,860,966 | |||||||||||||||
|
| ||||||||||||||
Technology Hardware, Storage & Peripherals - 0.31% | |||||||||||||||
Cray, Inc.A | 497,642 | 13,068,079 | |||||||||||||
NCR Corp.A | 245,817 | 7,116,402 | |||||||||||||
|
| ||||||||||||||
20,184,481 | |||||||||||||||
|
| ||||||||||||||
Total Information Technology | 869,061,641 | ||||||||||||||
|
| ||||||||||||||
Materials - 4.96% | |||||||||||||||
Chemicals - 1.25% | |||||||||||||||
American Vanguard Corp. | 25,196 | 396,585 | |||||||||||||
Cabot Corp. | 689,497 | 31,289,374 | |||||||||||||
FutureFuel Corp. | 54,243 | 796,830 | |||||||||||||
Innophos Holdings, Inc. | 79,465 | 2,557,978 | |||||||||||||
Innospec, Inc. | 11,256 | 954,734 | |||||||||||||
Koppers Holdings, Inc.A | 20,894 | 558,706 | |||||||||||||
Kraton Corp.A | 240,887 | 7,905,911 | |||||||||||||
LSB Industries, Inc.A | 83,203 | 486,737 | |||||||||||||
Minerals Technologies, Inc. | 105,301 | 6,609,744 | |||||||||||||
PolyOne Corp. | 702,090 | 19,405,768 | |||||||||||||
Rayonier Advanced Materials, Inc. | 202,129 | 2,999,594 | |||||||||||||
Stepan Co. | 80,331 | 7,433,831 | |||||||||||||
Valvoline, Inc. | 41,541 | 768,508 | |||||||||||||
|
| ||||||||||||||
82,164,300 | |||||||||||||||
|
| ||||||||||||||
Construction Materials - 0.02% | |||||||||||||||
Eagle Materials, Inc. | 10,704 | 973,101 | |||||||||||||
|
| ||||||||||||||
Containers & Packaging - 0.36% | |||||||||||||||
Greif, Inc., Class A | 76,202 | 3,011,503 | |||||||||||||
Owens-Illinois, Inc. | 645,185 | 12,748,856 | |||||||||||||
Silgan Holdings, Inc. | 271,878 | 8,140,027 | |||||||||||||
|
| ||||||||||||||
23,900,386 | |||||||||||||||
|
| ||||||||||||||
Metals & Mining - 2.40% | |||||||||||||||
Allegheny Technologies, Inc.A | 1,173,987 | 29,255,756 | |||||||||||||
Carpenter Technology Corp. | 488,667 | 24,272,090 | |||||||||||||
Cleveland-Cliffs, Inc. | 1,269,369 | 12,680,996 | |||||||||||||
Coeur Mining, Inc.A | 1,588,152 | 5,733,229 | |||||||||||||
Commercial Metals Co. | 131,971 | 2,281,779 | |||||||||||||
Compass Minerals International, Inc. | 24,464 | 1,403,989 | |||||||||||||
Elah Holdings, Inc.A | 3,535 | 212,100 | |||||||||||||
Ferroglobe PLC | 2,595,540 | 5,580,411 | |||||||||||||
Haynes International, Inc. | 30,823 | 995,891 | |||||||||||||
Hecla Mining Co. | 1,363,110 | 2,862,531 | |||||||||||||
Kaiser Aluminum Corp. | 13,047 | 1,283,825 | |||||||||||||
Materion Corp. | 308,748 | 17,916,646 | |||||||||||||
Pan American Silver Corp. | 497,923 | 6,328,601 | |||||||||||||
Reliance Steel & Aluminum Co. | 195,850 | 18,010,366 | |||||||||||||
Schnitzer Steel Industries, Inc., Class A | 670,687 | 15,908,696 | |||||||||||||
SunCoke Energy Partners LP, MLP | 70,137 | 879,518 | |||||||||||||
Warrior Met Coal, Inc. | 139,123 | 4,312,813 |
See accompanying notes
20
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Materials - 4.96% (continued) | |||||||||||||||
Metals & Mining - 2.40% (continued) | |||||||||||||||
Worthington Industries, Inc. | 200,262 | $ | 8,036,514 | ||||||||||||
|
| ||||||||||||||
157,955,751 | |||||||||||||||
|
| ||||||||||||||
Paper & Forest Products - 0.93% | |||||||||||||||
Boise Cascade Co. | 71,612 | 1,982,936 | |||||||||||||
Clearwater Paper Corp.A | 65,951 | 1,330,232 | |||||||||||||
Domtar Corp. | 457,499 | 22,371,701 | |||||||||||||
Louisiana-Pacific Corp. | 803,929 | 20,138,421 | |||||||||||||
Mercer International, Inc. | 368,638 | 5,219,914 | |||||||||||||
Schweitzer-Mauduit International, Inc. | 224,494 | 7,985,252 | |||||||||||||
Verso Corp., Class AA | 96,112 | 2,145,220 | |||||||||||||
|
| ||||||||||||||
61,173,676 | |||||||||||||||
|
| ||||||||||||||
Total Materials | 326,167,214 | ||||||||||||||
|
| ||||||||||||||
Real Estate - 4.37% | |||||||||||||||
Equity Real Estate Investment Trusts (REITs) - 4.18% | |||||||||||||||
Agree Realty Corp. | 199,816 | 13,081,954 | |||||||||||||
Americold Realty Trust | 278,300 | 8,908,383 | |||||||||||||
Ashford Hospitality Trust, Inc. | 551,024 | 3,036,142 | |||||||||||||
Brandywine Realty Trust | 667,521 | 10,273,148 | |||||||||||||
Colony Capital, Inc. | 1,806,055 | 9,283,123 | |||||||||||||
CoreCivic, Inc. | 188,545 | 3,923,621 | |||||||||||||
Cousins Properties, Inc. | 781,318 | 7,477,213 | |||||||||||||
Empire State Realty Trust, Inc., Class A | 220,760 | 3,412,950 | |||||||||||||
GEO Group, Inc. | 1,484,622 | 29,722,132 | |||||||||||||
Hersha Hospitality Trust | 506,504 | 9,405,779 | |||||||||||||
Hospitality Properties Trust | 209,522 | 5,447,572 | |||||||||||||
Kite Realty Group Trust | 207,243 | 3,272,367 | |||||||||||||
Lexington Realty Trust | 2,542,461 | 23,060,121 | |||||||||||||
Outfront Media, Inc. | 592,480 | 14,118,798 | |||||||||||||
Pennsylvania Real Estate Investment TrustB | 445,653 | 2,682,831 | |||||||||||||
Physicians Realty Trust | 702,486 | 12,686,897 | |||||||||||||
Piedmont Office Realty Trust, Inc., Class A | 227,869 | 4,744,233 | |||||||||||||
PotlatchDeltic Corp. | 29,775 | 1,151,102 | |||||||||||||
Preferred Apartment Communities, Inc., Class A | 736,991 | 11,526,539 | |||||||||||||
Retail Properties of America, Inc., Class A | 1,014,940 | 12,473,613 | |||||||||||||
Ryman Hospitality Properties, Inc. | 178,137 | 14,179,705 | |||||||||||||
Seritage Growth Properties, Class AB | 1,081,245 | 48,212,715 | |||||||||||||
Sunstone Hotel Investors, Inc. | 855,444 | 12,318,394 | |||||||||||||
Urban Edge Properties | 560,342 | 10,405,551 | |||||||||||||
|
| ||||||||||||||
274,804,883 | |||||||||||||||
|
| ||||||||||||||
Real Estate Management & Development - 0.19% | |||||||||||||||
Five Point Holdings LLC, Class AA B | 112,542 | 957,732 | |||||||||||||
Newmark Group, Inc., Class A | 1,245,669 | 10,613,100 | |||||||||||||
Tejon Ranch Co.A | 33,726 | 581,774 | |||||||||||||
|
| ||||||||||||||
12,152,606 | |||||||||||||||
|
| ||||||||||||||
Total Real Estate | 286,957,489 | ||||||||||||||
|
| ||||||||||||||
Utilities - 2.64% | |||||||||||||||
Electric Utilities - 1.29% | |||||||||||||||
ALLETE, Inc. | 141,436 | 11,519,962 | |||||||||||||
El Paso Electric Co. | 16,205 | 990,288 | |||||||||||||
IDACORP, Inc. | 55,651 | 5,510,562 | |||||||||||||
PNM Resources, Inc. | 31,201 | 1,448,974 |
See accompanying notes
21
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 96.69% (continued) | |||||||||||||||
Utilities - 2.64% (continued) | |||||||||||||||
Electric Utilities - 1.29% (continued) | |||||||||||||||
Portland General Electric Co. | 1,215,506 | $ | 63,583,119 | ||||||||||||
Spark Energy, Inc., Class AB | 152,561 | 1,443,227 | |||||||||||||
|
| ||||||||||||||
84,496,132 | |||||||||||||||
|
| ||||||||||||||
Gas Utilities - 0.53% | |||||||||||||||
Chesapeake Utilities Corp. | 123,062 | 11,400,464 | |||||||||||||
Northwest Natural Holding Co. | 20,269 | 1,355,793 | |||||||||||||
South Jersey Industries, Inc. | 43,094 | 1,384,179 | |||||||||||||
Southwest Gas Holdings, Inc. | 198,966 | 16,551,982 | |||||||||||||
Spire, Inc. | 21,899 | 1,843,677 | |||||||||||||
Star Group LP | 49,719 | 471,833 | |||||||||||||
Suburban Propane Partners LP, MLP | 86,171 | 2,010,369 | |||||||||||||
|
| ||||||||||||||
35,018,297 | |||||||||||||||
|
| ||||||||||||||
Independent Power & Renewable Electricity Producers - 0.18% | |||||||||||||||
Clearway Energy, Inc. | 661,082 | 10,491,371 | |||||||||||||
Clearway Energy, Inc., Class A | 85,326 | 1,311,461 | |||||||||||||
|
| ||||||||||||||
11,802,832 | |||||||||||||||
|
| ||||||||||||||
Multi-Utilities - 0.62% | |||||||||||||||
Avista Corp. | 519,740 | 22,421,584 | |||||||||||||
Black Hills Corp. | 20,138 | 1,465,241 | |||||||||||||
NorthWestern Corp. | 219,033 | 15,299,455 | |||||||||||||
Unitil Corp. | 26,788 | 1,524,505 | |||||||||||||
|
| ||||||||||||||
40,710,785 | |||||||||||||||
|
| ||||||||||||||
Water Utilities - 0.02% | |||||||||||||||
California Water Service Group | 28,087 | 1,415,304 | |||||||||||||
|
| ||||||||||||||
Total Utilities | 173,443,350 | ||||||||||||||
|
| ||||||||||||||
Total Common Stocks (Cost $5,551,284,445) | 6,351,635,882 | ||||||||||||||
|
| ||||||||||||||
SHORT-TERM INVESTMENTS - 3.34% (Cost $219,390,908) | |||||||||||||||
Investment Companies - 3.34% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%E F | 219,390,908 | 219,390,908 | |||||||||||||
|
| ||||||||||||||
SECURITIES LENDING COLLATERAL - 0.98% (Cost $64,245,032) | |||||||||||||||
Investment Companies - 0.98% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37% E F | 64,245,032 | 64,245,032 | |||||||||||||
|
| ||||||||||||||
TOTAL INVESTMENTS - 101.01% (Cost $5,834,920,385) | 6,635,271,822 | ||||||||||||||
LIABILITIES, NET OF OTHER ASSETS - (1.01%) | (66,060,936 | ) | |||||||||||||
|
| ||||||||||||||
TOTAL NET ASSETS - 100.00% | $ | 6,569,210,886 | |||||||||||||
|
| ||||||||||||||
Percentages are stated as a percent of net assets. |
ANon-income producing security.
B All or a portion of this security is on loan at April 30, 2019.
C Fair valued pursuant to procedures approved by the Board of Trustees. At period end, the value of these securities amounted to $0 or 0.00% of net assets.
D Value was determined using significant unobservable inputs.
E The Fund is affiliated by having the same investment advisor.
F7-day yield.
See accompanying notes
22
American Beacon Small Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
ADR - American Depositary Receipt.
LLC - Limited Liability Company.
LP - Limited Partnership.
MLP - Master Limited Partnership.
PLC - Public Limited Company.
Long Futures Contracts Open on April 30, 2019: |
| |||||||||||||||
Equity Futures Contracts | ||||||||||||||||
Description | Number of Contracts | Expiration Date | Notional Amount | Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||
Russell 2000E-Mini Index Futures | 2,550 | June 2019 | $ | 196,642,186 | $ | 203,260,500 | $ | 6,618,314 | ||||||||
|
|
|
|
|
| |||||||||||
$ | 196,642,186 | $ | 203,260,500 | $ | 6,618,314 | |||||||||||
|
|
|
|
|
|
The Fund’s investments are summarized by level based on the inputs used to determine their values. As of April 30, 2019, the investments were classified as described below:
Small Cap Value Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Common Stocks | $ | 6,351,635,882 | $ | - | $ | 0 | (1) | $ | 6,351,635,882 | |||||||||||||||||||
Short-Term Investments | 219,390,908 | - | - | 219,390,908 | ||||||||||||||||||||||||
Securities Lending Collateral | 64,245,032 | - | - | 64,245,032 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Investments in Securities - Assets | $ | 6,635,271,822 | $ | - | $ | - | $ | 6,635,271,822 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Financial Derivative Instruments - Assets | ||||||||||||||||||||||||||||
Futures Contracts | $ | 6,618,314 | $ | - | $ | - | $ | 6,618,314 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Financial Derivative Instruments - Assets | $ | 6,618,314 | $ | - | $ | - | $ | 6,618,314 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
(1) Investment held in the Fund’s Portfolio with $0 fair value.
U.S. GAAP requires transfers between all levels to/from level 3 be disclosed. During the period ended April 30, 2019, there were no transfers into or out of Level 3.
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:
Security Type | Balance as of 10/31/2018 | Purchases | Sales | Accrued Discounts (Premiums) | Realized Gain (Loss) | Change in Unrealized Appreciation (Depreciation) | Transfer into Level 3 | Transfer out of Level 3 | Balance as of 4/30/2019 | Unrealized Appreciation (Depreciation) at Period end** | ||||||||||||||||||||||||
Common Stocks | $ 0(1) | $ - | $ - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 0 | (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. |
(1) | Investment held in the Fund’s Portfolio with $0 fair value. |
The common stock, classified as Level 3, is beneficial interest units in a representation and warranty insurance trust. The shares have been fair valued at $0 due to limited market transparency.
See accompanying notes
23
American Beacon Small Cap Value FundSM
Statement of Assets and Liabilities
April 30, 2019 (Unaudited)
Assets: |
| |||
Investments in unaffiliated securities, at fair value†§ | $ | 6,351,635,882 | ||
Investments in affiliated securities, at fair value‡ | 283,635,940 | |||
Deposits with broker for futures contracts | 1,556,853 | |||
Dividends and interest receivable | 1,861,016 | |||
Receivable for investments sold | 3,319,647 | |||
Receivable for fund shares sold | 5,655,015 | |||
Receivable for variation margin on open futures contracts (Note 5) | 6,624,056 | |||
Prepaid expenses | 211,696 | |||
|
| |||
Total assets | 6,654,500,105 | |||
|
| |||
Liabilities: |
| |||
Payable for investments purchased | 9,388,583 | |||
Payable for fund shares redeemed | 6,769,297 | |||
Management andsub-advisory fees payable (Note 2) | 4,251,113 | |||
Service fees payable (Note 2) | 171,523 | |||
Transfer agent fees payable (Note 2) | 135,326 | |||
Payable upon return of securities loaned (Note 9)§ | 64,245,032 | |||
Custody and fund accounting fees payable | 139,457 | |||
Professional fees payable | 86,417 | |||
Trustee fees payable (Note 2) | 36,472 | |||
Payable for prospectus and shareholder reports | 46,703 | |||
Other liabilities | 19,296 | |||
|
| |||
Total liabilities | 85,289,219 | |||
|
| |||
Net assets | $ | 6,569,210,886 | ||
|
| |||
Analysis of net assets: | ||||
Paid-in-capital | $ | 5,840,506,660 | ||
Total distributable earnings (deficits)A | 728,704,226 | |||
|
| |||
Net assets | $ | 6,569,210,886 | ||
|
| |||
Shares outstanding at no par value (unlimited shares authorized): |
| |||
Institutional Class | 185,859,012 | |||
|
| |||
Y Class | 13,187,654 | |||
|
| |||
Investor Class | 21,450,721 | |||
|
| |||
Advisor Class | 3,277,114 | |||
|
| |||
A Class | 3,138,687 | |||
|
| |||
C Class | 653,785 | |||
|
| |||
R6 Class | 50,605,572 | |||
|
| |||
Net assets: | ||||
Institutional Class | $ | 4,414,121,835 | ||
|
| |||
Y Class | $ | 308,361,484 | ||
|
| |||
Investor Class | $ | 488,035,801 | ||
|
| |||
Advisor Class | $ | 73,510,971 | ||
|
| |||
A Class | $ | 69,908,545 | ||
|
| |||
C Class | $ | 13,848,971 | ||
|
| |||
R6 Class | $ | 1,201,423,279 | ||
|
| |||
Net asset value, offering and redemption price per share: |
| |||
Institutional Class | $ | 23.75 | ||
|
| |||
Y Class | $ | 23.38 | ||
|
| |||
Investor Class | $ | 22.75 | ||
|
| |||
Advisor Class | $ | 22.43 | ||
|
| |||
A Class | $ | 22.27 | ||
|
| |||
A Class (offering price) | $ | 23.63 | ||
|
| |||
C Class | $ | 21.18 | ||
|
| |||
R6 Class | $ | 23.74 | ||
|
| |||
† Cost of investments in unaffiliated securities | $ | 5,551,284,445 | ||
‡ Cost of investments in affiliated securities | $ | 283,635,940 | ||
§ Fair value of securities on loan | $ | 62,303,496 | ||
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at period end. |
|
See accompanying notes
24
American Beacon Small Cap Value FundSM
Statement of Operations
For the period ended April 30, 2019 (Unaudited)
Investment income: | ||||
Dividend income from unaffiliated securities (net of foreign taxes)† | $ | 59,148,707 | ||
Dividend income from affiliated securities (Note 8) | 2,730,752 | |||
Interest income | 63,540 | |||
Income derived from securities lending (Note 9) | 611,139 | |||
|
| |||
Total investment income | 62,554,138 | |||
|
| |||
Expenses: | ||||
Management andsub-advisory fees (Note 2) | 23,586,104 | |||
Transfer agent fees: | ||||
Institutional Class (Note 2) | 680,942 | |||
Y Class (Note 2) | 159,816 | |||
Investor Class | 12,370 | |||
Advisor Class | 3,282 | |||
A Class | 5,546 | |||
C Class | 1,886 | |||
R6 Class | 11,354 | |||
Custody and fund accounting fees | 338,076 | |||
Professional fees | 147,251 | |||
Registration fees and expenses | 72,946 | |||
Service fees (Note 2): | ||||
Investor Class | 825,737 | |||
Advisor Class | 107,491 | |||
A Class | 61,382 | |||
C Class | 7,732 | |||
Distribution fees (Note 2): | ||||
Advisor Class | 90,461 | |||
A Class | 83,040 | |||
C Class | 63,294 | |||
Prospectus and shareholder report expenses | 172,937 | |||
Trustee fees (Note 2) | 214,058 | |||
Other expenses | 179,471 | |||
|
| |||
Total expenses | 26,825,176 | |||
|
| |||
Net investment income | 35,728,962 | |||
|
| |||
Realized and unrealized gain (loss) from investments: | ||||
Net realized gain (loss) from: | ||||
Investments in unaffiliated securitiesA | (50,021,646 | ) | ||
Commission recapture (Note 1) | 13,868 | |||
Foreign currency transactions | 260 | |||
Futures contracts | (7,810,475 | ) | ||
Change in net unrealized appreciation of: | ||||
Investments in unaffiliated securitiesB | 290,974,757 | |||
Foreign currency transactions | 1,284 | |||
Futures contracts | 29,168,456 | |||
|
| |||
Net gain from investments | 262,326,504 | |||
|
| |||
Net increase in net assets resulting from operations | $ | 298,055,466 | ||
|
| |||
† Foreign taxes | $ | 117,536 | ||
A The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities. |
| |||
B The Fund’s investments in affiliated securities did not have a change in unrealized appreciation (depreciation) at period end. |
| |||
See accompanying notes
25
American Beacon Small Cap Value FundSM
Statement of Changes in Net Assets
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||
(unaudited) | ||||||||||||
Increase (decrease) in net assets: | ||||||||||||
Operations: | ||||||||||||
Net investment income | $ | 35,728,962 | $ | 44,003,539 | ||||||||
Net realized gain (loss) from investments in unaffiliated securities, commission recapture, foreign currency transactions, and futures contracts | (57,817,993 | ) | 706,938,150 | |||||||||
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities, foreign currency transactions, and futures contracts | 320,144,497 | (944,177,325 | ) | |||||||||
|
|
|
| |||||||||
Net increase (decrease) in net assets resulting from operations | 298,055,466 | (193,235,636 | ) | |||||||||
|
|
|
| |||||||||
Distributions to shareholders: | ||||||||||||
Total retained earnings: | ||||||||||||
Institutional Class | (510,792,955 | ) | (483,990,858 | ) | ||||||||
Y Class | (37,948,890 | ) | (34,475,891 | ) | ||||||||
Investor Class | (60,820,852 | ) | (58,686,508 | ) | ||||||||
Advisor Class | (8,576,119 | ) | (8,714,846 | ) | ||||||||
A Class | (8,031,569 | ) | (6,415,873 | ) | ||||||||
C Class | (1,576,223 | ) | (1,398,033 | ) | ||||||||
R6 Class | (107,632,048 | ) | (35,513,779 | ) | ||||||||
|
|
|
| |||||||||
Net distributions to shareholders | (735,378,656 | ) | (629,195,788 | ) | ||||||||
|
|
|
| |||||||||
Capital share transactions (Note 11): | ||||||||||||
Proceeds from sales of shares | 1,024,590,783 | 1,841,822,459 | ||||||||||
Reinvestment of dividends and distributions | 708,177,544 | 608,543,857 | ||||||||||
Cost of shares redeemed | (1,271,507,485 | ) | (2,123,030,353 | ) | ||||||||
|
|
|
| |||||||||
Net increase in net assets from capital share transactions | 461,260,842 | 327,335,963 | ||||||||||
|
|
|
| |||||||||
Net increase (decrease) in net assets | 23,937,652 | (495,095,461 | ) | |||||||||
|
|
|
| |||||||||
Net assets: | ||||||||||||
Beginning of period | 6,545,273,234 | 7,040,368,695 | ||||||||||
|
|
|
| |||||||||
End of period | $ | 6,569,210,886 | $ | 6,545,273,234 | ||||||||
|
|
|
|
See accompanying notes
26
American Beacon Small Cap Value FundSM
April 30, 2019 (Unaudited)
1. Organization and Significant Accounting Policies
American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Fund, a series within the Trust, is registered under the Investment Company Act of 1940, as amended (the “Act”), as a diversified,open-end management investment company. As of April 30, 2019, the Trust consists of thirty-three active series, one of which is presented in this filing: American Beacon Small Cap Value Fund (the “Fund”). The remainingthirty-two active series are reported in separate filings.
American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily 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”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.
Recent Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2017-08,Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.
In August 2018, the FASB issued ASU2018-13,Fair Value Measurement (“Topic 820”). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the period ended April 30, 2019, the Fund has chosen to adopt the standard. The adoption of this ASU guidance did not have a material impact on the financial statements and other disclosures.
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 | Eligible Investors | Minimum Initial Investments | ||||
Institutional | Large institutional investors - sold directly or through intermediary channels. | $ | 250,000 | |||
Y Class | Large institutional retirement plan investors - sold directly or through intermediary channels. | $ | 100,000 | |||
Investor | All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors. | $ | 2,500 | |||
Advisor Class | All investors who invest through intermediary organizations, such as broker-dealers or third party administrators. | $ | 2,500 | |||
A Class | All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor which may include afront-end sales charge and a contingent deferred sales charge (“CDSC”). | $ | 2,500 |
27
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Class | Eligible Investors | Minimum Initial Investments | ||||
C Class | Retail investors who invest directly through a financial intermediary, such as a broker or through employee directed benefit plans with applicable sales charges which may include CDSC. | $ | 1,000 | |||
R6 Class | Large institutional retirement plan investors - sold through retirement plan sponsors. | None |
Each class offered by the Trust has equal rights as to assets and voting privileges. Income andnon-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 service, distribution, transfer agent fees, andsub-transfer agent fees that vary amongst the classes as described more fully in Note 2.
Significant Accounting Policies
The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is considered an investment company and accordingly, follows the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946,Financial Services – Investment Companies,a part of Generally Accepted Accounting Principles (“U.S. GAAP”).
Security Transactions and Investment Income
Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.
Dividend income, net of foreign taxes, is recorded on theex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Fund. Interest income, net of foreign taxes, is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.
Distributions to Shareholders
Distributions, if any, of net investment income are generally paid at least annually and recorded on the ex-dividend date. 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. To the extent necessary to fully distribute capital gains, the Fund may designate earnings and profits distributed to shareholders on the redemption of shares.
Commission Recapture
The Fund has established brokerage commission recapture arrangements with certain brokers or dealers. If the Fund’s investment advisor chooses to execute a transaction through a participating broker, the broker rebates a portion of the commission back to the Fund. Any collateral benefit received through participation in the commission recapture program is directed exclusively to the Fund. This amount is reported with the net realized gain in the Fund’s Statement of Operations, if applicable.
Allocation of Income, Trust Expenses, Gains, and Losses
Investment income, realized and unrealized gains and losses from investments of the Fund is allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the
28
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Fund. Expenses directly charged or attributable to the Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Fund on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Fund or nature of the services performed and relative applicability to the Fund.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.
Other
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In the normal course of business, the Trust enters into contracts that provide indemnification to the other party or parties against potential costs or liabilities. The Trust’s maximum exposure under these arrangements is dependent on claims that may be made in the future and, therefore, cannot be estimated. The Trust has had no prior claims or losses pursuant to any such agreement.
2. Transactions with Affiliates
Management and InvestmentSub-Advisory Agreements
The Fund and the Manager are parties to a Management Agreement that obligates the Manager to provide the Fund with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of the Fund’s average daily net assets that is calculated and accrued daily according to the following schedule:
First $15 billion | 0.35 | % | ||
Next $15 billion | 0.325 | % | ||
Over $30 billion | 0.30 | % |
The Trust, on behalf of the Fund, and the Manager have entered into Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC; Brandywine Global Investment Management, LLC; Foundry Partners, LLC; Hillcrest Asset Management, LLC; Hotchkis and Wiley Capital Management, LLC; and Mellon Investments Corporation(“Sub-Advisors”) pursuant to which the Fund has agreed to pay an annualizedsub-advisory fee that is calculated and accrued daily based on the Fund’s average daily net assets.
The Management andSub-Advisory Fees paid by the Fund for the period ended April 30, 2019 were as follows:
Effective Fee Rate | Amount of Fees Paid | |||||||||||
Management Fees | 0.35 | % | $ | 11,082,729 | ||||||||
Sub-Advisor Fees | 0.40 | % | 12,503,375 | |||||||||
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Total | 0.75 | % | $ | 23,586,104 | ||||||||
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As compensation for services provided by the Manager in connection with securities lending activities conducted by the Fund, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 10% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 10% of such loan fees. These fees are included in “Income derived from securities lending” and “Management and investment advisory fees” on the Statement of Operations. During the
29
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
period ended April 30, 2019, the Manager received securities lending fees of $58,790 for the securities lending activities of the Fund. Please see Note 9 for more information on securities lending.
Distribution Plans
The Fund, except for the Advisor, A, and C Classes of the Fund, has adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule12b-1 under the Act, pursuant to which no separate fees may be charged to the Fund for distribution purposes. However, the Plan authorizes the management fee received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Fund does not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.
Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule12b-1 under the Act for the Advisor, A, and C Classes of the Fund. Under the Distribution Plans, as compensation for distribution and shareholder servicing assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance.
Service Plans
The Manager and the Trust entered into a Service Plan that obligates the Manager to oversee additional shareholder servicing of the Investor, Advisor, A, and C Classes of the Fund. As compensation for performing the duties required under the Service Plan, the Manager receives an annualized fee up to 0.25% of the average daily net assets of the A and C Classes, up to 0.25% of the average daily net assets of the Advisor Class, and up to 0.375% of the average daily net assets of the Investor Class of the Fund.
Sub-Transfer Agent Fees
The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Fund and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Fund primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Fund. Certain services would have been provided by the Fund’s transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Fund’s transfer agent. Accordingly, the Fund, pursuant to Board approval, has agreed to reimburse the Manager for certainnon-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts(sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the period ended April 30, 2019, thesub-transfer agent fees, as reflected in “Transfer agent fees” on the Statement of Operations, were as follows:
Fund | Sub-Transfer Agent Fees | |||
Small Cap Value | $ | 761,285 |
As of April 30, 2019, the Fund owed the Manager the following reimbursement ofsub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statement of Assets and Liabilities:
Fund | Reimbursement Sub-Transfer Agent Fees | |||
Small Cap Value | $ | 78,249 |
30
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Brokerage Commissions
Affiliated entities of asub-advisor to the Fund received commissions on purchases and sales of the Fund’s portfolio securities totaling $69,377 for the period ended April 30, 2019.
Investments 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 investment advisor to the USG Select Fund and receives management fees and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the period ended April 30, 2019, the Manager earned fees on the Fund’s direct investments and securities lending collateral investments in the USG Select Fund as shown below:
Fund | Direct Investments in USG Select Fund | Securities Lending Collateral Investments in USG Select Fund | Total | |||||||||
Small Cap Value | $ | 120,017 | $ | 47,598 | $ | 167,615 |
Interfund Credit Facility
Pursuant to an exemptive order issued by the SEC, the Fund, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the Fund because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the period ended April 30, 2019, the Fund did not utilize the credit facility.
Expense Reimbursement Plan
The Fund has adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Fund for any contractual fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Fund’s annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. During the period ended April 30, 2019 there were no waived fees, expenses reimbursed, or recouped expenses.
Sales Commissions
The Fund’s Distributor, Resolute Investment Distributors, Inc. (“RID” or “Distributor”), may receive a portion of Class A sales charges from broker dealers and it may be used to offset distribution related expenses. During the period ended April 30, 2019, RID collected $2,424 from the sale of Class A Shares of the Fund.
31
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
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 Fund’s 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 April 30, 2019, there were no CDSC fees collected for Class A Shares of the Fund.
A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived as discussed in the Fund’s 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 April 30, 2019, CDSC fees of $95 were collected for Class C Shares of the Fund.
Trustee Fees and Expenses
As compensation for their service to the Trusts, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chair receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for attendance at the committee meetings. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each fund of the Trusts according to its respective net assets.
3. Security Valuation and Fair Value Measurements
The price of the Fund’s shares is based on its net asset value (“NAV”) per share. The Fund’s NAV is computed by adding total assets, subtracting all the Fund’s liabilities, and dividing the result by the total number of shares outstanding.
The NAV of each class of the Fund’s shares is determined based on a pro rata allocation of the Fund’s investment income, expenses and total capital gains and losses. The Fund’s NAV per share is determined each business day as of the regular close of trading on the New York Stock Exchange (“NYSE” or “Exchange”), which is typically 4:00 p.m. Eastern Time (“ET”). However, if trading on the NYSE closes at a time other than 4:00 p.m. ET, the Fund’s NAV per share typically would still be determined as of the regular close of trading on the NYSE. The Fund does not price its shares on days that the NYSE is closed. Foreign exchanges may permit trading in foreign securities on days when the Fund is not open for business, which may result in the value of the Fund’s portfolio investments being affected at a time when you are unable to buy or sell shares.
Equity securities, including shares ofclosed-end funds and exchange-traded funds (“ETFs”), are valued at the last sale price or official closing price taken from the primary exchange in which each security trades. Investments in other mutual funds are valued at the closing NAV per share on the day of valuation. Debt securities are valued at bid quotes from broker/dealers or evaluated bid prices from pricing services, who may consider a number of inputs and factors, such as prices of comparable securities, yield curves, spreads, credit ratings, coupon rates, maturity, default rates, and underlying collateral. Futures are valued based on their daily settlement prices. Exchange-traded andover-the-counter (“OTC”) options are valued at the last sale price. Options with no last sale for the day are priced at mid quote. Swaps are valued at evaluated mid prices from pricing services.
The valuation of securities traded on foreign markets and certain fixed income securities will generally be based on prices determined as of the earlier closing time of the markets on which they primarily trade unless a significant event has occurred. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. ET.
32
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Securities may be valued at fair value, as determined in good faith and pursuant to procedures approved by the Board, under certain limited circumstances. For example, fair value pricing will be used when market quotations are not readily available or reliable, as determined by the Manager, such as when (i) trading for a security is restricted or stopped; (ii) a security’s trading market is closed (other than customary closings); or (iii) a security has beende-listed from a national exchange. A security with limited market liquidity may require fair value pricing if the Manager determines that the available price does not reflect the security’s true market value. In addition, if a significant event that the Manager determines to affect the value of one or more securities held by the Fund occurs after the close of a related exchange but before the determination of the Fund’s NAV, fair value pricing may be used on the affected security or securities. Securities of small-capitalization companies are also more likely to require a fair value determination using these procedures because they are more thinly traded and less liquid than the securities of larger-capitalization companies. The Fund may fair value securities as a result of significant events occurring after the close of the foreign markets in which the Fund invests as described below. In addition, the Fund may invest in illiquid securities requiring these procedures.
The Fund may use fair value pricing for securities primarily traded innon-U.S. markets because most foreign markets close well before the Fund’s pricing time of 4:00 p.m. ET. 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. If the Manager determines that the last quoted prices ofnon-U.S. securities will, in its judgment, materially affect the value of some or all its portfolio securities, the Manager can 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. These securities are fair valued using a pricing service, using methods approved by the Board, that 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 American Depositary Receipts (“ADRs”) and futures contracts. The Valuation Committee, established by the Board, may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. The Fund uses outside pricing services to provide 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.
Attempts to determine the fair value of securities introduce an element of subjectivity to the pricing of securities. As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes. If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Manager compares the new market quotation to the fair value price to evaluate the effectiveness of the Fund’s fair valuation procedures. If any significant discrepancies are found, the Manager may adjust the Fund’s fair valuation procedures.
Valuation Inputs
Various inputs may be used to determine the fair value of the Fund’s investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1 | - | Quoted prices in active markets for identical securities. | ||
Level 2 | - | Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. | ||
Level 3 | - | Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment. |
33
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Level 1 and Level 2 trading assets and trading liabilities, at fair value
Common stocks, ETFs, preferred securities, and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are generally categorized as Level 2 of the fair value hierarchy.
Investments in registeredopen-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 the 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 bere-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 the 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.
4. Securities and Other Investments
American Depositary Receipts
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
34
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
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.
Common Stock
Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or OTC. OTC stock may be less liquid than exchange-traded stock.
Other Investment Company Securities and Other Exchange-Traded Products
The Fund may invest in shares of other investment companies, includingopen-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 asub-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 the 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.
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 Fundre-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, there-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, are-characterization will be made the following year.
5. Financial Derivative Instruments
The Fund may utilize derivative instruments to gain market exposure on cash balances or reduce market exposure in anticipation of liquidity needs. When considering the Fund’s use of derivatives, it is important to note that the Fund does not use derivatives for the purpose of creating financial leverage.
35
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Futures Contracts
Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Fund may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities or that the counterparty will fail to perform its obligations.
Upon entering into a futures contract, the Fund is required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents a portion of the face value of the futures contract. The Fund usually reflects this amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as cash deposited with broker on the Statement of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.
During the period ended April 30, 2019, the Fund entered into futures contracts primarily for exposing cash to markets.
The Fund’s average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For the purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.
Average Futures Contracts Outstanding | ||||
Fund | Period Ended April 30, 2019 | |||
Small Cap Value | 2,866 |
The following is a summary of the fair valuations of the Fund’s derivative instruments categorized by risk exposure(1):
Fair values of financial instruments on the Statement of Assets and Liabilities as of April 30, 2019: |
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Derivatives not accounted for as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Receivable for variation margin from open futures contracts(2) | $ | – | $ | – | $ | – | $ | – | $ | 6,618,314 | $ | 6,618,314 |
The effect of financial derivative instruments on the Statement of Operations as of April 30, 2019: |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives not accounted for as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized gain (loss) from derivatives recognized as a result of operations | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | $ | – | $ | – | $ | – | $ | – | $ | (7,810,475 | ) | $ | (7,810,475 | ) | |||||||||||||||||||||||||||||||||||||||||
Net change in unrealized appreciation (depreciation) of derivatives recognized as a result from operations: | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | $ | – | $ | – | $ | – | $ | – | $ | 29,168,456 | $ | 29,168,456 |
(1)See Note 3 in the Notes to Financial Statements for additional information.
(2)Includes cumulative appreciation (depreciation) of futures contracts as reported in the Fund’s Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statement of Assets and Liabilities.
36
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Offsetting Assets and Liabilities
The Fund is a party to enforceable master netting agreements between brokers and counterparties 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, April 30, 2019.
Offsetting of Financial and Derivative Assets as of April 30, 2019: |
| |||||||||||
Assets | Liabilities | |||||||||||
Futures Contracts | $ | 6,618,314 | $ | - | ||||||||
|
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|
| |||||||||
Total derivative assets and liabilities in the Statement of Assets and Liabilities | $ | 6,618,314 | $ | - | ||||||||
|
|
|
| |||||||||
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”) | $ | (6,618,314 | ) | $ | - | |||||||
|
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|
|
Remaining Contractual Maturity of the Agreements As of April 30, 2019 | ||||||||||||||||||||||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||||||||||||||||||||||||||
Securities Lending Transactions | ||||||||||||||||||||||||||||||||||||
Common Stocks | $ | 64,245,032 | $ | - | $ | - | $ | - | $ | 64,245,032 | ||||||||||||||||||||||||||
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| |||||||||||||||||||||||||||
Total Borrowings | $ | 64,245,032 | $ | - | $ | - | $ | - | $ | 64,245,032 | ||||||||||||||||||||||||||
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Gross amount of recognized liabilities for securities lending transactions |
| $ | 64,245,032 | |||||||||||||||||||||||||||||||||
|
|
6. Principal Risks
Investing in the Fund may involve certain risks including, but not limited to, those described below.
Equity Investments Risk
Equity securities are subject to market risk. The Fund’s investments in equity securities may include common stocks, REITs, depositary receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Fund to additional risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Investments in REITs are subject to the risks associated with investing in the real estate industry such as adverse developments affecting the real estate industry and real property values. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency fluctuations and political and financial instability in the home country of a particular depositary receipt or foreign stock.
Foreign Investing Risk
Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity, (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased price volatility, (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies, and (7) delays in transaction settlement in some foreign markets.
37
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Futures Contracts Risk
Futures contracts are derivative instruments where one party pays a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. Futures contracts may experience potentially dramatic price changes (losses) and imperfect correlation between the price of the contract and the underlying security or index, which will increase the volatility of the Fund and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract).
Market Risk
Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.
In response to the financial crisis, the U.S. and other governments, the Federal Reserve, and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on along-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced the federal corporate income tax rate, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the market’s expectations for changes in government policies are not borne out.
Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline
38
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
overtime, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse.
The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.
MultipleSub-Advisor Risk
The Manager may allocate the Fund’s assets among multiplesub-advisors, each of which is responsible for investing its allocated portion of the Fund’s assets. To a significant extent, the Fund’s performance will depend on the success of the Manager in allocating the Fund’s assets tosub-advisors and its selection and oversight of thesub-advisors. Because eachsub-advisor manages its allocated portion of the Fund independently from anothersub-advisor, the same security may be held in different portions of the Fund, or may be acquired for one portion of the Fund at a time when asub-advisor to another portion deems it appropriate to dispose of the security from that other portion, resulting in higher expenses without accomplishing any net result in the Fund’s holdings. Similarly, under some market conditions, onesub-advisor may believe that temporary, defensive investments in short-term instruments or cash are appropriate when anothersub-advisor believes continued exposure to the equity or debt markets is appropriate for its allocated portion of the Fund. Because eachsub-advisor directs the trading for its own portion of the Fund, and does not aggregate its transactions with those of the othersub-advisors, the Fund may incur higher brokerage costs than would be the case if a single sub-advisor were managing the entire Fund. In addition, while the Manager seeks to allocate the Fund’s assets among the Fund’ssub-advisors in a manner that it believes is consistent with achieving the Fund’s investment objective(s), the Manager may be subject to potential conflicts of interest in allocating the Fund’s assets amongsub-advisors, due to factors that could impact the Manager’s revenues and profits.
Other Investment Companies Risk
The Funds may invest in shares of other registered investment companies, including money market funds that are advised by the Manager. To the extent that the Funds invests in shares of other registered investment companies, the Funds will indirectly bear fees and expenses, including for example, advisory and administrative fees, charged by those investment companies in addition to the Funds’ direct fees and expenses and will be subject to the risks associated with investments in those companies. For example, the Funds’ investments in money market funds are subject to interest rate risk, credit risk, and market risk. The Funds must rely on the investment company in which it invests to achieve its investment objective. If the investment company fails to achieve its investment objective, the value of the Funds’ investment will decline, adversely affecting the Funds’ performance. To the extent the Funds invest in other investment companies that invest in equity securities, fixed-income securities and/or foreign securities, or track an index, the Funds are subject to the risks associated with the underlying investments held by the investment company or the index fluctuations to which the investment company is subject.
Sector Risk
Sector risk is the risk associated with a Fund holding a significant amount of investments in similar businesses, which would be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of the equity and debt securities of companies in a particular sector of the market to change. To the extent a Fund has substantial holdings within a particular sector, the risks to a Fund associated with that sector increase.
39
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
To the extent a Fund invests in the financial services sector, the value of the Fund’s shares may be particularly vulnerable to factors affecting that sector, such as the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, extensive government regulation and price competition. The value of a Fund’s shares could experience significantly greater volatility than investment companies investing more broadly.
Securities Lending Risk
A Fund may lend its portfolio securities to brokers, dealers and financial institutions to seek income. There is a risk that a borrower may default on its obligations to return loaned securities; however, a Fund’s securities lending agent indemnifies the Fund against that risk. There is a risk that the assets of a Fund’s securities lending agent may be insufficient to satisfy any contractual indemnification requirements to the Fund. Borrowers of a Fund’s securities typically provide collateral in the form of cash that is reinvested in securities. A Fund will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. A Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet obligations to the borrower. In addition, delays may occur in the recovery of securities from borrowers, which could interfere with a Fund’s ability to vote proxies or to settle transactions and there is the risk of possible loss of rights in the collateral should the borrower fail financially. In any case in which the loaned securities are not returned to a Fund before an ex-dividend date, the payment in lieu of the dividend that the Fund receives from the securities’ borrower would not qualify for treatment as “qualified dividend income”.
7. Federal Income and Excise Taxes
It is the policy of the Fund to qualify as a regulated investment company (“RIC”), by complying with all applicable provisions of Subchapter M of the Internal Revenue Code, as amended, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes, the Fund is treated as a single entity for the purpose of determining such qualification.
The Fund does not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statement of Operations.
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.
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.
As of April 30, 2019 the tax cost for the Fund and their respective gross unrealized appreciation (depreciation) were as follows:
Fund | Tax Cost | Unrealized Appreciation | Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | ||||||||||||
Small Cap Value | $ | 5,930,419,255 | $ | 1,015,697,112 | $ | (310,843,387 | ) | $ | 704,853,725 |
Under the Regulated Investment Company Modernization Act of 2010 (“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.
40
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
As of October 31, 2018, the Fund did not have any capital loss carryforwards.
8. Investment Transactions
The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the period ended April 30, 2019 were as follows:
Fund | Purchases (non-U.S. Government Securities) | Sales (non-U.S. Government Securities) | ||||||||||
Small Cap Value | $ | 1,635,069,349 | $ | 1,714,688,980 |
A summary of the Fund’s transactions in the USG Select Fund for the period ended April 30, 2019 were as follows:
Fund | Type of Transaction | October 31, 2018 Shares/Fair Value | Purchases | Sales | April 30, 2019 Shares/Fair Value | Dividend Income | ||||||||||||||||||||||||||||||||||||
Small Cap Value | Direct | $ | 231,346,704 | $ | 1,350,638,389 | $ | 1,362,594,185 | $ | 219,390,908 | $ | 2,730,752 | |||||||||||||||||||||||||||||||
Small Cap Value | Securities Lending | 131,390,683 | 371,555,660 | 438,701,311 | 64,245,032 | N/A |
9. Securities Lending
The Fund may lend its securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored andmarked-to-market daily. Dailymark-to-market amounts are required to be paid to the borrower or received from the borrower by the end of the following business day. This one day settlement formark-to-market amounts may result in the collateral being temporarily less than the value of the securities on loan or temporarily more than the required minimum collateral.
To the extent that a loan is collateralized by cash, such cash collateral shall be invested by the securities lending agent (the “Agent”) in money market mutual funds and other short-term investments, provided the investments meet certain quality and diversification requirements. Securities purchased with cash collateral proceeds are listed in the Fund’s Schedule of Investments and the collateral is shown on the Statement of Assets and Liabilities as a payable.
Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured bynon-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Fund, the Agent, and the Manager retained 80%, 10%, and 10%, respectively, of the income generated from securities lending.
While securities are on loan, the Fund continues to receive certain income associated with that security and any gain or loss in the market price that may occur during the term of the loan. In the case of domestic equities, the value of any dividend is received in the form of a substitute payment approximately equal to the dividend. In the case of foreign securities, a negotiated amount is received that is less than the actual dividend, but higher than the dividend amount minus the foreign tax that the Fund would be subject to on the dividend.
Securities lending transactions pose certain risks to the Fund, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments
41
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
will be less than the amount of cash collateral required to be returned to the borrower, thatnon-cash collateral may be subject to legal constraints in the event of a borrower bankruptcy, and that the cash collateral investments could become illiquid and unable to be used to return collateral to the borrower. The Fund could also experience delays and costs in gaining access to the collateral. The Fund bears the risk of any deficiency in the amount of the cash collateral available for return to the borrower and any action which impairs its ability to liquidatenon-cash collateral to satisfy a borrower default.
As of April 30, 2019, the value of outstanding securities on loan and the value of collateral were as follows:
Fund | Market Value of Securities on Loan | Cash Collateral Received | Non-Cash Collateral Received | Total Collateral Received | ||||||||||||||||||||||||
Small Cap Value | $ | 62,303,496 | $ | 64,245,032 | $ | - | $ | 64,245,032 |
Cash collateral is listed on the Fund’s Schedule of Investments and is shown on the Statement of Assets and Liabilities. Income earned on these investments is included in “Income derived from securities lending” on the Statement of Operations.
Non-cash collateral received by the Fund may not be sold orre-pledged except to satisfy a borrower default. Therefore,non-cash collateral is not included on the Fund’s Schedule of Investments or Statement of Assets and Liabilities.
10. Borrowing Arrangements
Effective November 15, 2018 (the “Effective Date”), the Fund, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $250 million with interest at a rate equal to the higher of(a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a closing fee of $100,000 on the Effective Date and a quarterly commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 14, 2019, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
On the Effective Date, the Fund, along with certain other Participating Funds managed by the Manager, also entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of(a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on each outstanding loan. Each of the Participating Funds will pay a closing fee of $35,000 on the Effective Date. The Uncommitted Line expires November 14, 2019 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statement of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.
During the period ended April 30, 2019, the Fund did not utilize this facility.
42
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
11. Capital Share Transactions
The tables below summarize the activity in capital shares for each Class of the Fund:
Institutional Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Small Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 26,481,133 | $ | 584,054,772 | 28,795,136 | $ | 813,629,911 | ||||||||||||||||||||||
Reinvestment of dividends | 25,003,927 | 493,827,557 | 16,834,084 | 466,809,134 | ||||||||||||||||||||||||
Shares redeemed | (41,790,040 | ) | (955,719,683 | ) | (56,760,794 | ) | (1,614,754,138 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 9,695,020 | $ | 122,162,646 | (11,131,574 | ) | $ | (334,315,093 | ) | ||||||||||||||||||||
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Y Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Small Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 2,810,865 | $ | 63,194,432 | 4,344,937 | $ | 121,072,021 | ||||||||||||||||||||||
Reinvestment of dividends | 1,746,520 | 33,969,817 | 1,202,236 | 32,893,173 | ||||||||||||||||||||||||
Shares redeemed | (4,644,848 | ) | (101,210,306 | ) | (5,295,216 | ) | (145,505,953 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | (87,463 | ) | $ | (4,046,057 | ) | 251,957 | $ | 8,459,241 | ||||||||||||||||||||
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Investor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Small Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 2,568,820 | $ | 56,145,586 | 3,480,761 | $ | 95,354,068 | ||||||||||||||||||||||
Reinvestment of dividends | 3,117,232 | 59,040,372 | 2,130,538 | 56,927,968 | ||||||||||||||||||||||||
Shares redeemed | (5,679,342 | ) | (123,883,444 | ) | (7,367,883 | ) | (200,093,625 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 6,710 | $ | (8,697,486 | ) | (1,756,584 | ) | $ | (47,811,589 | ) | |||||||||||||||||||
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Advisor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Small Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 401,371 | $ | 8,480,472 | 690,534 | $ | 18,573,884 | ||||||||||||||||||||||
Reinvestment of dividends | 459,107 | 8,576,120 | 330,358 | 8,714,846 | ||||||||||||||||||||||||
Shares redeemed | (715,513 | ) | (15,900,012 | ) | (1,403,591 | ) | (37,945,197 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 144,965 | $ | 1,156,580 | (382,699 | ) | $ | (10,656,467 | ) | ||||||||||||||||||||
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A Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Small Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 541,019 | $ | 12,020,638 | 1,187,223 | $ | 32,064,750 | ||||||||||||||||||||||
Reinvestment of dividends | 428,577 | 7,950,119 | 241,813 | 6,345,165 | ||||||||||||||||||||||||
Shares redeemed | (523,681 | ) | (11,403,161 | ) | (1,004,403 | ) | (26,949,383 | ) | ||||||||||||||||||||
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| |||||||||||||||||||||
Net increase in shares outstanding | 445,915 | $ | 8,567,596 | 424,633 | $ | 11,460,532 | ||||||||||||||||||||||
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C Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Small Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 98,315 | $ | 2,005,781 | 94,040 | $ | 2,432,559 | ||||||||||||||||||||||
Reinvestment of dividends | 85,773 | 1,516,472 | 53,040 | 1,339,793 | ||||||||||||||||||||||||
Shares redeemed | (101,545 | ) | (2,019,936 | ) | (144,241 | ) | (3,717,938 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 82,543 | $ | 1,502,317 | 2,839 | $ | 54,414 | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
43
American Beacon Small Cap Value FundSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
R6 Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||
Small Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 13,447,258 | $ | 298,689,102 | 26,568,807 | $ | 758,695,266 | ||||||||||||||||||||||
Reinvestment of dividends | 5,232,882 | 103,297,087 | 1,281,161 | 35,513,778 | ||||||||||||||||||||||||
Shares redeemed | (2,593,873 | ) | (61,370,943 | ) | (3,354,657 | ) | (94,064,119 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase in shares outstanding | 16,086,267 | $ | 340,615,246 | 24,495,311 | $ | 700,144,925 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
12. Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Fund’s financial statements through this date.
44
American Beacon Small Cap Value FundSM
(For a share outstanding throughout the period)
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | Year Ended October 31, 2017 | Year EndedA October 31, 2016 | Year Ended October 31, 2015 | Year EndedB October 31, 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 26.14 | $ | 29.51 | $ | 24.36 | $ | 24.69 | $ | 27.80 | $ | 28.04 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.14 | 0.21 | 0.17 | 0.23 | 0.24 | 0.17 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.49 | (0.94 | ) | 5.83 | 0.79 | 0.02 | 2.18 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.63 | (0.73 | ) | 6.00 | 1.02 | 0.26 | 2.35 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.18 | ) | (0.15 | ) | (0.23 | ) | (0.20 | ) | (0.19 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (2.84 | ) | (2.49 | ) | (0.62 | ) | (1.15 | ) | (3.18 | ) | (2.45 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (3.02 | ) | (2.64 | ) | (0.85 | ) | (1.35 | ) | (3.37 | ) | (2.59 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 23.75 | $ | 26.14 | $ | 29.51 | $ | 24.36 | $ | 24.69 | $ | 27.80 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 4.75 | %D | (2.96 | )% | 24.80 | % | 4.58 | % | 0.87 | % | 8.78 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 4,414,121,835 | $ | 4,604,864,422 | $ | 5,527,380,111 | $ | 4,717,291,753 | $ | 4,313,522,956 | $ | 4,002,884,144 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.82 | %E | 0.80 | % | 0.82 | % | 0.83 | % | 0.81 | % | 0.80 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.82 | %E | 0.80 | % | 0.82 | % | 0.83 | % | 0.81 | % | 0.80 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.17 | %E | 0.66 | % | 0.58 | % | 1.01 | % | 0.99 | % | 0.67 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.17 | %E | 0.66 | % | 0.58 | % | 1.01 | % | 0.99 | % | 0.67 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 27 | %D | 69 | % | 48 | % | 53 | % | 47 | % | 73 | % |
A | On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC. |
B | On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
45
American Beacon Small Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Y Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | Year Ended October 31, 2017 | Year EndedA October 31, 2016 | Year Ended October 31, 2015 | Year EndedB October 31, 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 25.77 | $ | 29.13 | $ | 24.06 | $ | 24.41 | $ | 27.52 | $ | 27.81 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.13 | 0.17 | 0.12 | 0.23 | 0.23 | 0.18 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.48 | (0.90 | ) | 5.78 | 0.76 | 0.01 | 2.12 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.61 | (0.73 | ) | 5.90 | 0.99 | 0.24 | 2.30 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.16 | ) | (0.14 | ) | (0.21 | ) | (0.19 | ) | (0.17 | ) | (0.14 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (2.84 | ) | (2.49 | ) | �� | (0.62 | ) | (1.15 | ) | (3.18 | ) | (2.45 | ) | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (3.00 | ) | (2.63 | ) | (0.83 | ) | (1.34 | ) | (3.35 | ) | (2.59 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 23.38 | $ | 25.77 | $ | 29.13 | $ | 24.06 | $ | 24.41 | $ | 27.52 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 4.70 | %D | (3.03 | )% | 24.70 | % | 4.49 | % | 0.79 | % | 8.67 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 308,361,484 | $ | 342,125,601 | $ | 379,409,116 | $ | 296,082,333 | $ | 251,360,287 | $ | 190,416,114 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.89 | %E | 0.87 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.89 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.89 | %E | 0.87 | % | 0.90 | % | 0.90 | % | 0.90 | % | 0.89 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.11 | %E | 0.59 | % | 0.50 | % | 0.94 | % | 0.90 | % | 0.58 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.11 | %E | 0.59 | % | 0.50 | % | 0.94 | % | 0.90 | % | 0.58 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 27 | %D | 69 | % | 48 | % | 53 | % | 47 | % | 73 | % |
A | On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC. |
B | On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
46
American Beacon Small Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | Year Ended October 31, | Year EndedA October 31, | Year Ended October 31, | Year EndedB October 31, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 25.12 | $ | 28.46 | $ | 23.52 | $ | 23.86 | $ | 26.96 | $ | 27.27 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.10 | 0.11 | 0.11 | 0.19 | 0.18 | 0.10 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.46 | (0.89 | ) | 5.60 | 0.73 | (0.02 | ) | 2.09 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.56 | (0.78 | ) | 5.71 | 0.92 | 0.16 | 2.19 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.09 | ) | (0.07 | ) | (0.15 | ) | (0.11 | ) | (0.08 | ) | (0.05 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (2.84 | ) | (2.49 | ) | (0.62 | ) | (1.15 | ) | (3.18 | ) | (2.45 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (2.93 | ) | (2.56 | ) | (0.77 | ) | (1.26 | ) | (3.26 | ) | (2.50 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 22.75 | $ | 25.12 | $ | 28.46 | $ | 23.52 | $ | 23.86 | $ | 26.96 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 4.56 | %D | (3.28 | )% | 24.43 | % | 4.27 | % | 0.50 | % | 8.40 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 488,035,801 | $ | 538,602,473 | $ | 660,241,571 | $ | 617,552,712 | $ | 723,044,801 | $ | 851,731,763 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.13 | %E | 1.13 | % | 1.12 | % | 1.14 | % | 1.15 | % | 1.16 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.13 | %E | 1.13 | % | 1.12 | % | 1.14 | % | 1.15 | % | 1.16 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 0.86 | %E | 0.33 | % | 0.27 | % | 0.70 | % | 0.67 | % | 0.33 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 0.86 | %E | 0.33 | % | 0.27 | % | 0.70 | % | 0.67 | % | 0.33 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 27 | %D | 69 | % | 48 | % | 53 | % | 47 | % | 73 | % |
A | On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC. |
B | On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
47
American Beacon Small Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Advisor ClassA | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | Year Ended October 31, | Year EndedB October 31, | Year Ended October 31, | Year EndedC October 31, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 24.77 | $ | 28.09 | $ | 23.22 | $ | 23.60 | $ | 26.69 | $ | 27.06 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.07 | 0.06 | 0.03 | 0.12 | 0.13 | 0.06 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.46 | (0.88 | ) | 5.57 | 0.73 | 0.01 | 2.07 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.53 | (0.82 | ) | 5.60 | 0.85 | 0.14 | 2.13 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.03 | ) | (0.01 | ) | (0.11 | ) | (0.08 | ) | (0.05 | ) | (0.05 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (2.84 | ) | (2.49 | ) | (0.62 | ) | (1.15 | ) | (3.18 | ) | (2.45 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (2.87 | ) | (2.50 | ) | (0.73 | ) | (1.23 | ) | (3.23 | ) | (2.50 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 22.43 | $ | 24.77 | $ | 28.09 | $ | 23.22 | $ | 23.60 | $ | 26.69 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnD | 4.46 | %E | (3.44 | )% | 24.26 | % | 4.01 | % | 0.41 | % | 8.22 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 73,510,971 | $ | 77,578,775 | $ | 98,718,359 | $ | 110,205,158 | $ | 98,224,328 | $ | 102,681,998 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.34 | %F | 1.28 | % | 1.30 | % | 1.31 | % | 1.31 | % | 1.29 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.34 | %F | 1.28 | % | 1.30 | % | 1.31 | % | 1.31 | % | 1.29 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 0.65 | %F | 0.18 | % | 0.11 | % | 0.53 | % | 0.51 | % | 0.18 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 0.65 | %F | 0.18 | % | 0.11 | % | 0.53 | % | 0.51 | % | 0.18 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 27 | %E | 69 | % | 48 | % | 53 | % | 47 | % | 73 | % |
A | On January 15, 2016, the Retirement Class closed and the assets were merged into the Advisor Class. |
B | On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC. |
C | On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund. |
D | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
E | Not annualized. |
F | Annualized. |
See accompanying notes
48
American Beacon Small Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
A Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31, | Year Ended October 31, | Year EndedA October 31, | Year Ended October 31, | Year EndedB October 31, | |||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
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(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 24.65 | $ | 27.99 | $ | 23.14 | $ | 23.54 | $ | 26.63 | $ | 27.03 | ||||||||||||||||||||||||||||||||
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Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.08 | 0.07 | 0.07 | 0.15 | 0.13 | 0.11 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.45 | (0.86 | ) | 5.53 | 0.73 | 0.02 | 2.03 | |||||||||||||||||||||||||||||||||||||
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Total income (loss) from investment operations | 0.53 | (0.79 | ) | 5.60 | 0.88 | 0.15 | 2.14 | |||||||||||||||||||||||||||||||||||||
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Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.07 | ) | (0.06 | ) | (0.13 | ) | (0.13 | ) | (0.06 | ) | (0.09 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (2.84 | ) | (2.49 | ) | (0.62 | ) | (1.15 | ) | (3.18 | ) | (2.45 | ) | ||||||||||||||||||||||||||||||||
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Total distributions | (2.91 | ) | (2.55 | ) | (0.75 | ) | (1.28 | ) | (3.24 | ) | (2.54 | ) | ||||||||||||||||||||||||||||||||
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Net asset value, end of period | $ | 22.27 | $ | 24.65 | $ | 27.99 | $ | 23.14 | $ | 23.54 | $ | 26.63 | ||||||||||||||||||||||||||||||||
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Total returnC | 4.52 | %D | (3.37 | )% | 24.36 | % | 4.17 | % | 0.45 | % | 8.30 | % | ||||||||||||||||||||||||||||||||
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Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 69,908,545 | $ | 66,380,615 | $ | 63,481,305 | $ | 63,277,387 | $ | 54,815,183 | $ | 29,569,753 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 1.24 | %E | 1.20 | % | 1.20 | % | 1.21 | % | 1.21 | % | 1.27 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 1.24 | %E | 1.20 | % | 1.20 | % | 1.21 | % | 1.22 | % | 1.27 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements or recoupments | 0.75 | %E | 0.25 | % | 0.20 | % | 0.64 | % | 0.56 | % | 0.19 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements or recoupments | 0.75 | %E | 0.25 | % | 0.20 | % | 0.64 | % | 0.54 | % | 0.20 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 27 | %D | 69 | % | 48 | % | 53 | % | 47 | % | 73 | % |
A | On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC. |
B | On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
49
American Beacon Small Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
C Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | Year Ended October 31, 2017 | Year EndedA October 31, 2016 | Year Ended October 31, 2015 | Year EndedB October 31, 2014 | |||||||||||||||||||||||||||||||||||||||
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(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 23.60 | $ | 26.98 | $ | 22.39 | $ | 22.84 | $ | 26.05 | $ | 26.60 | ||||||||||||||||||||||||||||||||
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Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.06 | (0.08 | ) | (0.14 | ) | (0.02 | ) | 0.03 | (0.07 | ) | ||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.36 | (0.81 | ) | 5.35 | 0.72 | (0.06 | ) | 1.97 | ||||||||||||||||||||||||||||||||||||
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Total income (loss) from investment operations | 0.42 | (0.89 | ) | 5.21 | 0.70 | (0.03 | ) | 1.90 | ||||||||||||||||||||||||||||||||||||
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Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Distributions from net realized gains | (2.84 | ) | (2.49 | ) | (0.62 | ) | (1.15 | ) | (3.18 | ) | (2.45 | ) | ||||||||||||||||||||||||||||||||
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Total distributions | (2.84 | ) | (2.49 | ) | (0.62 | ) | (1.15 | ) | (3.18 | ) | (2.45 | ) | ||||||||||||||||||||||||||||||||
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Net asset value, end of period | $ | 21.18 | $ | 23.60 | $ | 26.98 | $ | 22.39 | $ | 22.84 | $ | 26.05 | ||||||||||||||||||||||||||||||||
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Total returnC | 4.15 | %D | (3.89 | )% | 23.39 | % | 3.42 | % | (0.31 | )% | 7.46 | % | ||||||||||||||||||||||||||||||||
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Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 13,848,971 | $ | 13,480,297 | $ | 15,335,554 | $ | 11,938,196 | $ | 11,718,580 | $ | 9,676,368 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 1.94 | %E | 1.86 | % | 1.96 | % | 1.96 | % | 1.97 | % | 2.03 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 1.94 | %E F | 1.76 | % | 1.96 | % | 1.96 | % | 1.98 | % | 2.03 | % | ||||||||||||||||||||||||||||||||
Net investment income (loss), before expense reimbursements or recoupments | 0.04 | %E | (0.41 | )% | (0.58 | )% | (0.12 | )% | (0.17 | )% | (0.56 | )% | ||||||||||||||||||||||||||||||||
Net investment income (loss), net of reimbursements or recoupments | 0.04 | %E | (0.31 | )% | (0.58 | )% | (0.12 | )% | (0.17 | )% | (0.56 | )% | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 27 | %D | 69 | % | 48 | % | 53 | % | 47 | % | 73 | % |
A | On June 20, 2016, Dreman Value Management, LLC was terminated and ceased managing assets of the Small Cap Value Fund, and was replaced by Foundry Partners, LLC. |
B | On August 19, 2014, Opus Capital Group, LLC was terminated and ceased managing assets of the Small Cap Value Fund. On March 17, 2014, Barrow Hanley, Mewhinney & Strauss, LLC began managing additional assets of the Small Cap Value Fund. On September 19, 2014, Hillcrest Asset Management, LLC began managing assets of the Small Cap Value Fund. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
F | This ratio does not include a voluntary reimbursement of service fees as included in the prior year. |
See accompanying notes
50
American Beacon Small Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
R6 Class | ||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | February 28, 2017A to October 31, 2017 | ||||||||||||||||||
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(unaudited) | ||||||||||||||||||||
Net asset value, beginning of period | $ | 26.14 | $ | 29.51 | $ | 28.03 | ||||||||||||||
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Income from investment operations: | ||||||||||||||||||||
Net investment income (loss) | 0.15 | 0.22 | (0.00 | )B | ||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.48 | (0.94 | ) | 1.48 | ||||||||||||||||
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Total income (loss) from investment operations | 0.63 | (0.72 | ) | 1.48 | ||||||||||||||||
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Less distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.16 | ) | - | |||||||||||||||
Distributions from net realized gains | (2.84 | ) | (2.49 | ) | - | |||||||||||||||
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Total distributions | (3.03 | ) | (2.65 | ) | - | |||||||||||||||
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Net asset value, end of period | $ | 23.74 | $ | 26.14 | $ | 29.51 | ||||||||||||||
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Total returnC | 4.75 | %D | (2.93 | )% | 5.28 | %D | ||||||||||||||
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Ratios and supplemental data: | ||||||||||||||||||||
Net assets, end of period | $ | 1,201,423,279 | $ | 902,241,051 | $ | 295,802,679 | ||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||
Expenses, before reimbursements | 0.79 | %E | 0.77 | % | 0.80 | %E | ||||||||||||||
Expenses, net of reimbursements | 0.79 | %E | 0.77 | % | 0.80 | %E | ||||||||||||||
Net investment income (loss), before expense reimbursements | 1.17 | %E | 0.66 | % | (0.04 | )%E | ||||||||||||||
Net investment income (loss), net of reimbursements | 1.17 | %E | 0.66 | % | (0.04 | )%E | ||||||||||||||
Portfolio turnover rate | 27 | %D | 69 | % | 48 | %D |
A | Commencement of operations. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
51
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52
Delivery of Documents
eDelivery isNOW AVAILABLE - Stop traditional mail delivery and receive your
shareholder reports and summary prospectuson-line. Sign up at
www.americanbeaconfunds.com
If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Prospectus, Annual Report and Semi-Annual Report, bye-mail. If you are interested in this option, please go towww.icsdelivery.comand search for your financial institution’s name or contact your financial institution directly.
To obtain more information about the Fund:
![]() | ![]() | |
ByE-mail: | On the Internet: | |
american_beacon.funds@ambeacon.com | Visit our website atwww.americanbeaconfunds.com | |
By Telephone: Call (800)658-5811 | By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643 | |
Availability of Quarterly Portfolio Schedules | Availability of Proxy Voting Policy and Records | |
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 atwww.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC’s Public Reference Section, 100 F Street, NE, Washington, D.C. 20549-1520. Information regarding the operation of the SEC’s Public Reference Room may be obtained by calling (800)-SEC-0330. A complete schedule of the Fund’s portfolio holdings is also available atwww.americanbeaconfunds.com approximately twenty days after the end of each month. | 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 websitewww.americanbeaconfunds.com and by calling1-800-967-9009 or by accessing the SEC’s website atwww.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on FormN-PX. The Fund’s FormsN-PX are available on the SEC’s website atwww.sec.gov. The Fund’s proxy voting record may also be obtained by calling1-800-967-9009. |
Fund Service Providers:
CUSTODIAN State Street Bank and Trust Company Boston, Massachusetts | TRANSFER AGENT DST Asset Manager Solutions, Inc. Quincy, Massachusetts | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas | DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, Texas |
This report is prepared for shareholders of the American Beacon Funds and may be distributed to others only if preceded or accompanied by a current Prospectus or Summary Prospectus.
American Beacon Funds and American Beacon Small Cap Value Fund are service marks of American Beacon Advisors, Inc.
SAR 04/19
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.
BALANCED FUND RISKS
The use offixed-income securitiesentails interest rate and credit risks. Investing inforeign securitiesmay involve heightened risk due to currency fluctuations and economic and political risks. Investing invalue stocksmay limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as atrade-off for this potentially lower risk. The use offutures contractsfor cash management may subject the Fund to losing more money than invested. The Fund participates in asecurities lendingprogram. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.
MID-CAP VALUE FUND RISKS
Investing inmedium-capitalization stocksmay involve greater volatility and lower liquidity than larger company stocks. Investing invalue stocksmay limit downside risk over time; however, the Fund may produce more modest gains than riskier stock funds as atrade-off for this potentially lower risk. Investing inforeign securitiesmay involve heightened risk due to currency fluctuations and economic and political risks. The use offutures contractsfor cash management may subject the Fund to losing more money than invested. The Fund participates in asecurities lendingprogram. Please see the prospectus for a complete discussion of the Fund’s risks. There can be no assurances that the investment objectives of this Fund will be met.
Any opinions herein, including forecasts, reflect our judgment as of the end of the reporting period and are subject to change. Each advisor’s strategies and each Fund’s portfolio composition will change depending on economic and market conditions. This report is not a complete analysis of market conditions, and, therefore, should not be relied upon as investment advice. Although economic and market information has been compiled from reliable sources, American Beacon Advisors, Inc. makes no representation as to the completeness or accuracy of the statements contained herein.
American Beacon Funds April 30, 2019 |
1 | ||||
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Schedules of Investments: | ||||
10 | ||||
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31 | ||||
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Financial Highlights: | ||||
62 | ||||
68 |
Back Cover |
![]() | Dear Shareholders,
At American Beacon, we take our heritage as a fiduciary very seriously – and we apply that mindset to all aspects of our business as a fund manager. As a result, for more than 30 years, we have endeavored to:
u Identify, engage and oversee the best money managers. As a manager of managers, our goal is to engage the most effective money managers for each asset class, investment style and market strategy we offer. We are committed to partnering with those we judge to be “the best of the best” when it comes to choosingsub-advisors for our mutual funds. Whether ourdue-diligence process results in the selection of onesub-advisor or multiplesub-advisors, we select those we believe show the greatest potential to help us meet the high standards you’ve come to expect. |
u | Offer a variety of innovative investment solutions. Our mutual funds – which span the domestic, international, global, frontier and emerging markets – aresub-advised by experienced money managers who employ distinctive, proprietary investment processes to manage assets through a variety of economic and market conditions. From offering some of the first multi-manager funds, one of the first retirement income funds and the first open-ended mutual fund in the U.S. to focus primarily on frontier-market debt, our robust history includes applying a disciplined, solutions-based approach to our product development process in an effort to help you grow your assets while mitigating risk. |
u | Provide a solutions-based approach to achieving long-term investment goals.We seek to provide investment solutions that might enable you to benefit from taking a more disciplined approach to investing. Our mutual funds provide access to institutional-quality, research-intensive investment managers with diverse processes and styles. Over the long run, having such access and spending time in the market – rather than trying to time the market – may better position you to reach your long-term investment goals during market upswings and potentially insulate against market downswings. |
Our management approach is more than a concept; it’s the cornerstone of American Beacon’s culture. And we strive to employ it at every turn as we seek to provide a well-diversified line of investment solutions to help our shareholders seek long-term rewards.
Thank you for your continued interest in American Beacon. For additional information about our investment products or to access your account information, please visit our website atwww.americanbeaconfunds.com.
Best Regards,
Gene L. Needles, Jr.
President
American Beacon Funds
1
American Beacon Balanced FundSM
Performance Overview
April 30, 2019 (Unaudited)
The Investor Class of the American Beacon Balanced Fund (the “Fund”) returned 6.53% for the six months ended April 30, 2019, underperforming the 60% Russell 1000® Value Index/40% Bloomberg Barclays U.S. Aggregate Bond Index (“Balanced Composite Index”) return of 7.20% for the same period.
Average Annual Total Returns for the Period ended April 30, 2019 |
| |||||||||||||||||||||||||||||||
Ticker | 6 Months* | 1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||||||||||||||||
Institutional Class (1,7) | AADBX | 6.69 | % | 5.70 | % | 8.65 | % | 5.95 | % | 10.37 | % | |||||||||||||||||||||
Y Class (1,2,7) | ACBYX | 6.69 | % | 5.80 | % | 8.68 | % | 5.95 | % | 10.31 | % | |||||||||||||||||||||
Investor Class (1,7) | AABPX | 6.53 | % | 5.52 | % | 8.34 | % | 5.64 | % | 10.02 | % | |||||||||||||||||||||
Advisor Class (1,7) | ABLSX | 6.44 | % | 5.34 | % | 8.16 | % | 5.46 | % | 9.84 | % | |||||||||||||||||||||
A without Sales Charge (1,3,7) | ABFAX | 6.55 | % | 5.52 | % | 8.32 | % | 5.60 | % | 9.94 | % | |||||||||||||||||||||
A with Sales Charge (1,3,7) | ABFAX | 0.41 | % | (0.52 | )% | 6.20 | % | 4.36 | % | 9.29 | % | |||||||||||||||||||||
C without Sales Charge (1,4,7) | ABCCX | 6.13 | % | 4.78 | % | 7.52 | % | 4.82 | % | 9.22 | % | |||||||||||||||||||||
C with Sales Charge (1,4,7) | ABCCX | 5.13 | % | 3.78 | % | 7.52 | % | 4.82 | % | 9.22 | % | |||||||||||||||||||||
Balanced Composite Index (5) | 7.20 | % | 7.86 | % | 7.43 | % | 6.13 | % | 9.88 | % | ||||||||||||||||||||||
Russell 1000® Value Index (6) | 7.90 | % | 9.06 | % | 10.97 | % | 8.27 | % | 13.76 | % | ||||||||||||||||||||||
Bloomberg Barclays U.S. Aggregate Bond Index (6) | 5.49 | % | 5.29 | % | 1.90 | % | 2.57 | % | 3.72 | % |
* | Not Annualized. |
1. | Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visitwww.americanbeaconfunds.com or call1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. |
2. | Fund performance for theten-year period represents the total returns achieved by the Institutional Class from 4/30/09 up to 3/1/10, the inception date of the Y Class, and the returns of the Y Class since its inception. Expenses of the Y Class are higher than those of the Institutional Class. Therefore, total returns shown may be higher than they would have been had the Y Class been in existence since 4/30/09. A portion of the fees charged to the Y Class of the Fund was waived in 2011, partially recovered in 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown for 2011. |
3. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 up to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the A Class are higher than those of the Investor Class. Therefore, total returns shown may be higher than they would have been had the A Class been in existence since 4/30/09. A portion of the fees charged to the A Class of the Fund was waived in 2011 and 2012, partially recovered in 2013, fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown for 2011, 2012 and 2018. A Class has a maximum sales charge of 5.75%. |
4. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 up to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the C Class are higher than those of the Investor Class. Therefore, total returns shown may be higher than they would have been had the C Class been in existence since 4/30/09. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2012, partially recovered in 2013, fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown for 2010 through 2012 and for 2018. The maximum contingent deferred sales charge for C Class is 1% for shares redeemed within one year of the date of purchase. |
5. | To reflect the Fund’s allocation of its assets between investment-grade fixed-income securities and equity securities, the returns of the Russell 1000 Value Index and the Bloomberg Barclays U.S. Aggregate Bond Index have been combined in a 60% / 40% proportion. |
6. | The Russell 1000 Value Index is an unmanaged index of those stocks in the Russell 1000 Index with lowerprice-to-book ratios and lower forecasted values. Russell 1000 Value Index and Russell 1000 Index are registered trademarks of Frank Russell Company. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data, and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. The Bloomberg Barclays U.S. Aggregate Bond Index is a market value weighted index of government, corporate, mortgage-backed and asset-backed fixed-rate debt securities of all maturities. One cannot directly invest in an index. |
7. | The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, and C Class shares were 0.62%, 0.70%, 0.95%, 1.12%, 0.91%, and 1.66%, 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. |
2
American Beacon Balanced FundSM
Performance Overview
April 30, 2019 (Unaudited)
During thesix-month period, the Fund’s assets on average were invested 64% in equities (including equitized cash) and 36% in fixed-income securities, ending the period with approximately the same allocation.
The equity portion of the Fund (excluding equitized cash) returned 7.46% for the period, underperforming the Russell 1000 Value Index (the “Index”) return of 7.9%. The Fund underperformed the Index due to sector allocation, despite position contributions from stock selection.
Stock selections in the Financials and Materials sectors contributed most to the relative performance during thesix-month period. In the Financials sector, American International Group, Inc. (up 17.3%) was the largest contributor, followed closely by The Blackstone Group LP (up 26.4%). Within the Materials sector, Air Products & Chemicals, Inc. (up 35.0%) was the largest contributor, followed by Crown Holdings, Inc. (up 37.9%). Meanwhile, these positive contributions outweighed negative performance from investments in CVS Health Corp. (down 24.0%) and Sanofi ADR (down 2.8%) within the Health Care sector.
The Fund’s overweight to Energy (down 1.1%) – the worst performing sector in the Index – and underweight to Utilities and Real Estate (up 12.4% and 12.5%, respectively) hurt performance the most. On the other hand, being underweight Health Care (up 3.2%) provided some balance to the Fund’s relative performance.
The fixed-income portion of the Fund returned 5.5% for thesix-month period, performingin-line with the Bloomberg Barclays U.S. Aggregate Bond Index (the “Barclays Index”) return of 5.5%. The Fund’s fixed-income performance relative to the Barclays Index was due to good sector allocation, but offsetting security selection. The Fund’s selections within U.S. Treasuries (up 5.4%) added relative value, which was offset by selections in Finance and Manufacturing, within Corporates. An underweight in the Manufacturing sector within Corporates also added to the Fund. From a duration perspective, the portfolio was hurt by selections in the 10 to 30 and 7 to 10 year range, but buoyed by overweighting the 10 to 30 year range. In terms of quality, weak selections inBBB- andA-rated securities were balanced by overweights to both of those ratings, as well as an underweight toAA-rated securities.
Thesub-advisors continue to focus on the disciplined selection of attractive securities that should allow the Fund to benefit long-term.
Top Ten Holdings (% Net Assets) | ||||||||
U.S. Treasury Notes/Bonds, 3.000%, Due 8/15/2048 | 4.1 | |||||||
U.S. Treasury Notes/Bonds, 2.875%, Due 8/15/2028 | 3.3 | |||||||
U.S. Treasury Notes/Bonds, 2.515%, Due 1/31/2021,(3-mo. Treasury money market yield + 0.115%) | 3.0 | |||||||
Citigroup, Inc. | 1.9 | |||||||
American International Group, Inc. | 1.8 | |||||||
Microsoft Corp. | 1.7 | |||||||
General Motors Co. | 1.6 | |||||||
BP PLC, Sponsored ADR | 1.5 | |||||||
Bank of America Corp. | 1.5 | |||||||
Wells Fargo & Co. | 1.5 | |||||||
Total Fund Holdings | 492 | |||||||
Sector Allocation (% Equities) | ||||||||
Financials | 24.5 | |||||||
Energy | 14.8 | |||||||
Information Technology | 11.0 | |||||||
Consumer Discretionary | 10.4 | |||||||
Health Care | 9.8 | |||||||
Industrials | 9.4 | |||||||
Communication Services | 7.5 | |||||||
Materials | 5.6 | |||||||
Consumer Staples | 4.7 | |||||||
Utilities | 2.3 | |||||||
3
American Beacon Balanced FundSM
Performance Overview
April 30, 2019 (Unaudited)
Sector Allocation (% Fixed Income) | ||||||||
U.S. Treasury Obligations | 44.4 | |||||||
U.S. Agency Mortgage-Backed Obligations | 15.9 | |||||||
Financial | 11.1 | |||||||
Technology | 5.2 | |||||||
Communications | 4.2 | |||||||
Consumer,Non-Cyclical | 3.8 | |||||||
Consumer, Cyclical | 2.7 | |||||||
Industrial | 2.6 | |||||||
Utilities | 2.6 | |||||||
Asset-Backed Obligations | 2.3 | |||||||
Energy | 2.2 | |||||||
Commercial Mortgage-Backed Obligations | 1.6 | |||||||
Basic Materials | 0.7 | |||||||
Foreign Sovereign Obligations | 0.5 | |||||||
Collateralized Mortgage Obligations | 0.2 |
4
American BeaconMid-Cap Value FundSM
Performance Overview
April 30, 2019 (Unaudited)
The Investor Class of the American BeaconMid-Cap Value Fund (the “Fund”) returned 7.33% for the six months ended April 30, 2019. The Fund underperformed the Russell Midcap® Value Index (the “Index”) return of 8.28% for the same period.
Average Annual Total Returns for the Period ended April 30, 2019 |
| |||||||||||||||||||||||||||||||
Ticker | 6 Months* | 1 Year | 3 Years | 5 Years | 10 Years | |||||||||||||||||||||||||||
Institutional Class (1,3,10) | AACIX | 7.56 | % | 0.63 | % | 8.79 | % | 6.28 | % | 14.25 | % | |||||||||||||||||||||
Y Class (1,4,10) | ACMYX | 7.46 | % | 0.47 | % | 8.68 | % | 6.20 | % | 14.17 | % | |||||||||||||||||||||
Investor Class (1,2,10) | AMPAX | 7.33 | % | 0.29 | % | 8.50 | % | 6.03 | % | 14.04 | % | |||||||||||||||||||||
Advisor Class (1,5,10) | AMCSX | 7.21 | % | 0.02 | % | 8.20 | % | 5.72 | % | 13.66 | % | |||||||||||||||||||||
A without Sales Charge (1,6,10) | ABMAX | 7.35 | % | 0.21 | % | 8.34 | % | 5.87 | % | 13.75 | % | |||||||||||||||||||||
A with Sales Charge (1,6,10) | ABMAX | 1.21 | % | (5.55 | )% | 6.23 | % | 4.63 | % | 13.09 | % | |||||||||||||||||||||
C without Sales Charge (1,7,10) | AMCCX | 6.96 | % | (0.47 | )% | 7.58 | % | 5.09 | % | 13.04 | % | |||||||||||||||||||||
C with Sales Charge (1,7,10) | AMCCX | 5.96 | % | (1.47 | )% | 7.58 | % | 5.09 | % | 13.04 | % | |||||||||||||||||||||
R6 Class (1,8,10) | AMDRX | 7.57 | % | 0.63 | % | 8.79 | % | 6.28 | % | 14.25 | % | |||||||||||||||||||||
Russell Midcap® Value Index (9) | 8.28 | % | 5.76 | % | 9.91 | % | 7.83 | % | 14.98 | % |
* | Not Annualized. |
1. | Performance shown is historical and is not indicative of future returns. Investment returns and principal value will vary, and shares may be worth more or less at redemption than at original purchase. Performance shown is calculated based on the published end of day net asset values as of date indicated, and current performance may be lower or higher than the performance data quoted. To obtain performance as of the most recent month end, please visitwww.americanbeaconfunds.com or call1-800-967-9009. Fund performance in the table above does not reflect the deduction of taxes a shareholder would pay on distributions or the redemption of shares. Generally accepted accounting principles require adjustments to be made to the net assets of the Fund at period end for financial reporting purposes only; and as such, the total return based on the unadjusted net asset value per share may differ from the total return reported in the financial highlights. |
2. | A portion of the fees charged to the Investor Class of the Fund was waived from 2006 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than actual returns shown for 2009 to 2013. |
3. | A portion of the fees charged to the Institutional Class of the Fund was waived from 2005 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than actual returns shown for 2009 to 2013. |
4. | Fund performance for theten-year period represents the total returns achieved by the Institutional Class from 4/30/09 up to 3/1/10, the inception date of the Y Class and the returns of the Y Class since its inception. Expenses of the Institutional Class are lower than those of the Y Class. As a result, total returns shown may be higher than they would have been had the Y Class been in existence since 4/30/09. A portion of the fees charged to the Y Class of the Fund was waived from 2010 through 2013. Performance prior to waiving fees was lower than the actual returns shown for 2010 through 2013. |
5. | A portion of the fees charged to the Advisor Class of the Fund was waived from 2007 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown for 2009 to 2013. |
6. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 to 5/17/10, the inception date of the A Class, and the returns of the A Class since its inception. Expenses of the Investor Class are lower than those of the A Class. As a result, total returns shown may be higher than they would have been had the A Class been in existence since 4/30/09. A portion of the fees charged to the A Class of the Fund was waived for 2010 through 2012 and fully recovered in 2013. Performance prior to waiving fees was lower than the actual returns shown from 2010 through 2012. A Class shares have a maximum sales charge of 5.75%. |
7. | Fund performance for theten-year period represents the total returns achieved by the Investor Class from 4/30/09 to 9/1/10, the inception date of the C Class, and the returns of the C Class since its inception. Expenses of the Investor Class are lower than those of the C Class. As a result, total returns shown may be higher than they would have been had the C Class been in existence since 4/30/09. A portion of the fees charged to the C Class of the Fund was waived from 2010 through 2013 and fully recovered in 2014. Performance prior to waiving fees was lower than the actual returns shown for 2010 through 2013. The maximum contingent deferred sales charge for C Class is 1.00% for shares redeemed within one year of the date of purchase. |
8. | Fund performance for the three-year, five-year andten-year periods represents the returns achieved by the Institutional Class from 4/30/09 through 2/28/18, the inception date of the R6 Class, and the returns of the R6 Class since its inception. Expenses of the R6 Class are lower than those of the Institutional Class. As a result, total returns shown may be lower than they would have been had the R6 Class been in existence since 4/30/09. A portion of fees charged to the R6 Class of the Fund has been waived since Class inception (February 28, 2018). Performance prior to waiving fees was lower than actual returns shown since inception. |
5
American BeaconMid-Cap Value FundSM
Performance Overview
April 30, 2019 (Unaudited)
9. | The Russell Midcap Value Index is an unmanaged index of those stocks in the Russell Midcap Index with lowerprice-to-book ratios and lower forecasted growth values. The Russell Midcap Index measures the performance of the 800 smallest companies in the Russell 1000 Index. Russell Midcap Value Index, Russell Midcap Index and Russell 1000 Index are registered trademarks of Frank Russell Company. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or Russell ratings or underlying data, and no party may rely on any Russell Indexes and/or Russell ratings and/or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. One cannot directly invest in an index. |
10. | The Total Annual Fund Operating Expense ratios set forth in the most recent Fund prospectus for the Institutional, Y, Investor, Advisor, A, C, and R6 Class shares were 0.86%, 0.94%, 1.13%, 1.40%, 1.26%, 1.88%, and 3.10%, respectively. The expense ratios above may vary from the expense ratios presented in other sections of this report that are based on expenses incurred during the period covered by this report. |
The Fund underperformed the Index primarily due to stock selection. Sector allocation also detracted from relative performance for the period.
The Fund’s performance related to security selection was mostly attributed to investments in the Utilities, Health Care, and Energy sectors. Holdings in the Utilities sector detracted the most from performance including PG&E Corp. (down 69.9%) and Edison International (down 5.4%). Within the Health Care sector, MEDNAX, Inc. (down 31.9%) was the largest detractor. In Energy, National Oilwell Varco was down 27.1%, while Murphy Oil Corp. was down 14.0%.
The aforementioned performance was slightly offset by the Fund’s investments in the Financials and Communication Services sectors. In Financials, Willis Towers Watson PLC was up 29.3%, Fidelity National Financial, Inc. was up 20.9%, Voya Financial, Inc. was up 26.2%, and Ally Financial, Inc. was up 18.5%. Within Communication Services, the Fund avoided Index position CenturyLink Inc., which was down 41.8% during the period, while the Fund’s investment in Altice USA, Inc. was up 46.2%.
From a sector allocation perspective, a leading detractor was the Fund’s overweight to Energy, which was the worst performing sector in the Index. A significant underweight to Real Estate also dragged on relative performance. In contrast, an overweight to Industrials, the second-best performing sector for the Index, added relative value for the period. Also contributing to performance was an underweight to Consumer Staples.
Thesub-advisors’ philosophy of investing in undervalued companies that exhibit improving profitability and earnings growth potential should allow the Fund to benefit in the longer term.
6
American BeaconMid-Cap Value FundSM
Performance Overview
April 30, 2019 (Unaudited)
Top Ten Holdings (% Net Assets) |
| |||||||
Axis Capital Holdings Ltd. | 2.2 | |||||||
Stanley Black & Decker, Inc. | 2.1 | |||||||
Marvell Technology Group Ltd. | 1.9 | |||||||
Fidelity National Financial, Inc. | 1.9 | |||||||
MGM Growth Properties LLC, Class A | 1.7 | |||||||
Fifth Third Bancorp | 1.6 | |||||||
TransDigm Group, Inc. | 1.5 | |||||||
Avnet, Inc. | 1.5 | |||||||
Ally Financial, Inc. | 1.5 | |||||||
Universal Health Services, Inc., Class B | 1.4 | |||||||
Total Fund Holdings | 118 | |||||||
Sector Allocation (% Equities) |
| |||||||
Financials | 22.6 | |||||||
Industrials | 18.3 | |||||||
Consumer Discretionary | 15.2 | |||||||
Information Technology | 9.5 | |||||||
Energy | 8.7 | |||||||
Real Estate | 7.2 | |||||||
Utilities | 5.6 | |||||||
Health Care | 5.0 | |||||||
Materials | 4.8 | |||||||
Communication Services | 2.2 | |||||||
Consumer Staples | 0.9 |
7
Expense Examples
April 30, 2019 (Unaudited)
Fund Expense Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption fees, if applicable, and (2) ongoing costs, including management fees, distribution(12b-1) fees,sub-transfer agent fees, and other Fund expenses. The Examples 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 November 1, 2018 through April 30, 2019.
Actual Expenses
The “Actual” lines of the tables provide information about actual account values and actual expenses. You may use the information on this page, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = $8.60), then multiply the result by the “Expenses Paid During Period” to estimate the expenses you paid on your account during this period. Shareholders of the Investor and Institutional Classes that invest in the Funds through an IRA or Roth IRA may be subject to a custodial IRA fee of $15 that is typically deducted each December. If your account was subject to a custodial IRA fee during the period, your costs would have been $15 higher.
Hypothetical Example for Comparison Purposes
The “Hypothetical” lines of the tables 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 sales charges (loads) or redemption fees, as applicable. Similarly, the expense examples for other funds do not reflect any transaction costs charged by those funds, such as sales charges (loads), redemption fees or exchange fees. Therefore, the “Hypothetical” lines of the tables are useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. If you were subject to any transaction costs during the period, your costs would have been higher.
8
American Beacon FundsSM
Expense Examples
April 30, 2019 (Unaudited)
American Beacon Balanced Fund |
| ||||||||||||||
Beginning Account Value 11/1/2018 | Ending Account Value 4/30/2019 | Expenses Paid During Period 11/1/2018-4/30/2019* | |||||||||||||
Institutional Class | |||||||||||||||
Actual | $1,000.00 | $1,066.90 | $3.33 | ||||||||||||
Hypothetical** | $1,000.00 | $1,021.57 | $3.26 | ||||||||||||
Y Class | |||||||||||||||
Actual | $1,000.00 | $1,066.90 | $3.69 | ||||||||||||
Hypothetical** | $1,000.00 | $1,021.22 | $3.61 | ||||||||||||
Investor Class | |||||||||||||||
Actual | $1,000.00 | $1,065.30 | $4.81 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.13 | $4.71 | ||||||||||||
Advisor Class | |||||||||||||||
Actual | $1,000.00 | $1,065.10 | $5.68 | ||||||||||||
Hypothetical** | $1,000.00 | $1,019.29 | $5.56 | ||||||||||||
A Class | |||||||||||||||
Actual | $1,000.00 | $1,065.50 | $5.22 | ||||||||||||
Hypothetical** | $1,000.00 | $1,019.74 | $5.11 | ||||||||||||
C Class | |||||||||||||||
Actual | $1,000.00 | $1,061.30 | $9.00 | ||||||||||||
Hypothetical** | $1,000.00 | $1,016.07 | $8.80 |
* | Expenses are equal to the Fund’s annualized expense ratios for thesix-month period of 0.65%, 0.72%, 0.94%, 1.11%, 1.02%, and 1.76% for the Institutional, Y, Investor, Advisor, 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 (181) by days in the year (365) to reflect the half-year period. |
** | 5% return before expenses. |
American BeaconMid-Cap Value Fund |
| ||||||||||||||
Beginning Account Value 11/1/2018 | Ending Account Value 4/30/2019 | Expenses Paid During Period 11/1/2018-4/30/2019* | |||||||||||||
Institutional Class | |||||||||||||||
Actual | $1,000.00 | $1,075.60 | $4.53 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.43 | $4.41 | ||||||||||||
Y Class | |||||||||||||||
Actual | $1,000.00 | $1,074.60 | $4.78 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.18 | $4.66 | ||||||||||||
Investor Class | |||||||||||||||
Actual | $1,000.00 | $1,073.30 | $5.81 | ||||||||||||
Hypothetical** | $1,000.00 | $1,019.19 | $5.66 | ||||||||||||
Advisor Class | |||||||||||||||
Actual | $1,000.00 | $1,072.10 | $7.14 | ||||||||||||
Hypothetical** | $1,000.00 | $1,017.90 | $6.95 | ||||||||||||
A Class | |||||||||||||||
Actual | $1,000.00 | $1,073.50 | $6.63 | ||||||||||||
Hypothetical** | $1,000.00 | $1,018.40 | $6.46 | ||||||||||||
C Class | |||||||||||||||
Actual | $1,000.00 | $1,069.60 | $10.16 | ||||||||||||
Hypothetical** | $1,000.00 | $1,014.98 | $9.89 | ||||||||||||
R6 Class | |||||||||||||||
Actual | $1,000.00 | $1,075.70 | $4.53 | ||||||||||||
Hypothetical** | $1,000.00 | $1,020.43 | $4.41 |
* | Expenses are equal to the Fund’s annualized expense ratios for thesix-month period of 0.88%, 0.93%, 1.13%, 1.39%, 1.29%, 1.98%, and 0.88% for the Institutional, Y, Investor, Advisor, A, C, and R6 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 (181) by days in the year (365) to reflect the half-year period. |
** | 5% return before expenses. |
9
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 61.73% | |||||||||||||||
Communication Services - 4.60% | |||||||||||||||
Diversified Telecommunication Services - 0.98% | |||||||||||||||
AT&T, Inc. | 57,673 | $ | 1,785,556 | ||||||||||||
Verizon Communications, Inc. | 17,409 | 995,621 | |||||||||||||
|
| ||||||||||||||
2,781,177 | |||||||||||||||
|
| ||||||||||||||
Interactive Media & Services - 0.63% | |||||||||||||||
Facebook, Inc., Class AA | 9,300 | 1,798,620 | |||||||||||||
|
| ||||||||||||||
Media - 2.56% | |||||||||||||||
CBS Corp., Class B, NVDR | 13,652 | 699,938 | |||||||||||||
Comcast Corp., Class A | 79,220 | 3,448,447 | |||||||||||||
Discovery, Inc., Class CA | 61,599 | 1,771,587 | |||||||||||||
Interpublic Group of Cos., Inc. | 13,400 | 308,200 | |||||||||||||
News Corp., Class A | 64,100 | 796,122 | |||||||||||||
Omnicom Group, Inc. | 3,186 | 254,975 | |||||||||||||
|
| ||||||||||||||
7,279,269 | |||||||||||||||
|
| ||||||||||||||
Wireless Telecommunication Services - 0.43% | |||||||||||||||
Vodafone Group PLC, Sponsored ADR | 65,732 | 1,217,357 | |||||||||||||
|
| ||||||||||||||
Total Communication Services | 13,076,423 | ||||||||||||||
|
| ||||||||||||||
Consumer Discretionary - 6.42% | |||||||||||||||
Auto Components - 0.99% | |||||||||||||||
Adient PLC | 18,332 | 423,469 | |||||||||||||
Goodyear Tire & Rubber Co. | 29,959 | 575,513 | |||||||||||||
Magna International, Inc. | 32,827 | 1,826,494 | |||||||||||||
|
| ||||||||||||||
2,825,476 | |||||||||||||||
|
| ||||||||||||||
Automobiles - 1.74% | |||||||||||||||
General Motors Co. | 114,872 | 4,474,264 | |||||||||||||
Harley-Davidson, Inc. | 12,341 | 459,456 | |||||||||||||
|
| ||||||||||||||
4,933,720 | |||||||||||||||
|
| ||||||||||||||
Hotels, Restaurants & Leisure - 0.71% | |||||||||||||||
Aramark | 30,790 | 956,953 | |||||||||||||
Carnival Corp. | 3,742 | 205,286 | |||||||||||||
Norwegian Cruise Line Holdings Ltd.A | 15,265 | 860,794 | |||||||||||||
|
| ||||||||||||||
2,023,033 | |||||||||||||||
|
| ||||||||||||||
Household Durables - 0.96% | |||||||||||||||
DR Horton, Inc. | 17,211 | 762,619 | |||||||||||||
Mohawk Industries, Inc.A | 6,800 | 926,500 | |||||||||||||
PulteGroup, Inc. | 25,100 | 789,646 | |||||||||||||
Tupperware Brands Corp. | 10,100 | 240,380 | |||||||||||||
|
| ||||||||||||||
2,719,145 | |||||||||||||||
|
| ||||||||||||||
Internet & Direct Marketing Retail - 0.18% | |||||||||||||||
eBay, Inc. | 13,100 | 507,625 | |||||||||||||
|
| ||||||||||||||
Multiline Retail - 0.94% | |||||||||||||||
Dollar General Corp. | 21,166 | 2,668,821 | |||||||||||||
|
| ||||||||||||||
Specialty Retail - 0.90% | |||||||||||||||
Lowe’s Cos, Inc. | 22,604 | 2,557,416 | |||||||||||||
|
| ||||||||||||||
Total Consumer Discretionary | 18,235,236 | ||||||||||||||
|
| ||||||||||||||
See accompanying notes
10
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 61.73% (continued) | |||||||||||||||
Consumer Staples - 2.92% | |||||||||||||||
Beverages - 0.65% | |||||||||||||||
Molson Coors Brewing Co., Class B | 15,800 | $ | 1,014,202 | ||||||||||||
PepsiCo, Inc. | 6,500 | 832,325 | |||||||||||||
|
| ||||||||||||||
1,846,527 | |||||||||||||||
|
| ||||||||||||||
Food Products - 0.75% | |||||||||||||||
Ingredion, Inc. | 2,700 | 255,825 | |||||||||||||
Kellogg Co. | 4,792 | 288,957 | |||||||||||||
Mondelez International, Inc., Class A | 13,400 | 681,390 | |||||||||||||
Tyson Foods, Inc., Class A | 12,100 | 907,621 | |||||||||||||
|
| ||||||||||||||
2,133,793 | |||||||||||||||
|
| ||||||||||||||
Personal Products - 0.39% | |||||||||||||||
Unilever PLC, Sponsored ADR | 18,100 | 1,100,480 | |||||||||||||
|
| ||||||||||||||
Tobacco - 1.13% | |||||||||||||||
Altria Group, Inc. | 20,841 | 1,132,292 | |||||||||||||
Imperial Brands PLC, Sponsored ADR | 26,189 | 838,048 | |||||||||||||
Philip Morris International, Inc. | 14,263 | 1,234,605 | |||||||||||||
|
| ||||||||||||||
3,204,945 | |||||||||||||||
|
| ||||||||||||||
Total Consumer Staples | 8,285,745 | ||||||||||||||
|
| ||||||||||||||
Energy - 9.15% | |||||||||||||||
Energy Equipment & Services - 1.13% | |||||||||||||||
Halliburton Co. | 33,300 | 943,389 | |||||||||||||
National Oilwell Varco, Inc.B | 25,200 | 658,728 | |||||||||||||
Schlumberger Ltd. | 38,000 | 1,621,840 | |||||||||||||
|
| ||||||||||||||
3,223,957 | |||||||||||||||
|
| ||||||||||||||
Oil, Gas & Consumable Fuels - 8.02% | |||||||||||||||
Apache Corp. | 45,014 | 1,481,411 | |||||||||||||
BP PLC, Sponsored ADR | 96,481 | 4,219,114 | |||||||||||||
Canadian Natural Resources Ltd. | 72,765 | 2,181,495 | |||||||||||||
Chevron Corp. | 25,621 | 3,076,057 | |||||||||||||
ConocoPhillips | 60,367 | 3,810,365 | |||||||||||||
Hess Corp. | 21,632 | 1,387,044 | |||||||||||||
Kosmos Energy Ltd. | 40,369 | 270,069 | |||||||||||||
Marathon Oil Corp. | 84,331 | 1,437,000 | |||||||||||||
Marathon Petroleum Corp. | 5,531 | 336,672 | |||||||||||||
Murphy Oil Corp. | 28,275 | 770,211 | |||||||||||||
Phillips 66 | 22,211 | 2,093,831 | |||||||||||||
Royal Dutch Shell PLC, Class A, Sponsored ADR | 15,735 | 999,644 | |||||||||||||
Royal Dutch Shell PLC, Class B, ADR | 11,000 | 713,790 | |||||||||||||
|
| ||||||||||||||
22,776,703 | |||||||||||||||
|
| ||||||||||||||
Total Energy | 26,000,660 | ||||||||||||||
|
| ||||||||||||||
Financials - 15.10% | |||||||||||||||
Banks - 7.23% | |||||||||||||||
Banco Santander S.A., ADRC | 156,400 | 780,436 | |||||||||||||
Bank of America Corp. | 137,160 | 4,194,353 | |||||||||||||
CIT Group, Inc. | 6,250 | 332,937 | |||||||||||||
Citigroup, Inc. | 77,766 | 5,498,056 | |||||||||||||
Citizens Financial Group, Inc. | 27,268 | 987,102 | |||||||||||||
Fifth Third Bancorp | 11,400 | 328,548 | |||||||||||||
JPMorgan Chase & Co. | 31,835 | 3,694,452 | |||||||||||||
PNC Financial Services Group, Inc. | 4,242 | 580,857 | |||||||||||||
Wells Fargo & Co. | 85,625 | 4,145,106 | |||||||||||||
|
| ||||||||||||||
20,541,847 | |||||||||||||||
|
|
See accompanying notes
11
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 61.73% (continued) | |||||||||||||||
Financials - 15.10% (continued) | |||||||||||||||
Capital Markets - 2.91% | |||||||||||||||
Bank of New York Mellon Corp. | 5,915 | $ | 293,739 | ||||||||||||
Blackstone Group LP, MLP | 34,030 | 1,342,824 | |||||||||||||
E*TRADE Financial Corp. | 17,000 | 861,220 | |||||||||||||
Goldman Sachs Group, Inc. | 7,797 | 1,605,558 | |||||||||||||
Invesco Ltd. | 32,600 | 716,222 | |||||||||||||
KKR & Co., Inc., Class A | 69,284 | 1,693,994 | |||||||||||||
Morgan Stanley | 15,037 | 725,535 | |||||||||||||
State Street Corp. | 15,406 | 1,042,370 | |||||||||||||
|
| ||||||||||||||
8,281,462 | |||||||||||||||
|
| ||||||||||||||
Consumer Finance - 1.62% | |||||||||||||||
Ally Financial, Inc. | 10,900 | 323,839 | |||||||||||||
Capital One Financial Corp. | 14,729 | 1,367,293 | |||||||||||||
Discover Financial Services | 11,900 | 969,731 | |||||||||||||
Navient Corp. | 38,160 | 515,542 | |||||||||||||
SLM Corp. | 106,008 | 1,077,041 | |||||||||||||
Synchrony Financial | 9,700 | 336,299 | |||||||||||||
|
| ||||||||||||||
4,589,745 | |||||||||||||||
|
| ||||||||||||||
Diversified Financial Services - 0.84% | |||||||||||||||
AXA Equitable Holdings, Inc. | 44,000 | 998,360 | |||||||||||||
Berkshire Hathaway, Inc., Class BA | 6,342 | 1,374,375 | |||||||||||||
|
| ||||||||||||||
2,372,735 | |||||||||||||||
|
| ||||||||||||||
Insurance - 2.22% | |||||||||||||||
American International Group, Inc. | 106,923 | 5,086,327 | |||||||||||||
Travelers Cos., Inc. | 8,557 | 1,230,069 | |||||||||||||
|
| ||||||||||||||
6,316,396 | |||||||||||||||
|
| ||||||||||||||
Mortgage Real Estate Investment Trusts (REITs) - 0.28% | |||||||||||||||
Annaly Capital Management, Inc. | 47,100 | 475,239 | |||||||||||||
Two Harbors Investment Corp. | 23,700 | 328,482 | |||||||||||||
|
| ||||||||||||||
803,721 | |||||||||||||||
|
| ||||||||||||||
Total Financials | 42,905,906 | ||||||||||||||
|
| ||||||||||||||
Health Care - 6.04% | |||||||||||||||
Biotechnology - 0.28% | |||||||||||||||
Biogen, Inc.A | 1,372 | 314,517 | |||||||||||||
Gilead Sciences, Inc. | 7,420 | 482,597 | |||||||||||||
|
| ||||||||||||||
797,114 | |||||||||||||||
|
| ||||||||||||||
Health Care Equipment & Supplies - 1.39% | |||||||||||||||
Medtronic PLC | 35,494 | 3,152,222 | |||||||||||||
Zimmer Biomet Holdings, Inc. | 6,532 | 804,481 | |||||||||||||
|
| ||||||||||||||
3,956,703 | |||||||||||||||
|
| ||||||||||||||
Health Care Providers & Services - 1.17% | |||||||||||||||
Anthem, Inc. | 6,235 | 1,639,992 | |||||||||||||
CVS Health Corp. | 30,956 | 1,683,388 | |||||||||||||
|
| ||||||||||||||
3,323,380 | |||||||||||||||
|
| ||||||||||||||
Pharmaceuticals - 3.20% | |||||||||||||||
Bristol-Myers Squibb Co. | 23,162 | 1,075,412 | |||||||||||||
GlaxoSmithKline PLC, Sponsored ADR | 24,643 | 1,013,567 | |||||||||||||
Horizon Pharma PLC | 13,412 | 342,408 | |||||||||||||
Jazz Pharmaceuticals PLCA | 4,793 | 621,988 |
See accompanying notes
12
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 61.73% (continued) | |||||||||||||||
Health Care - 6.04% (continued) | |||||||||||||||
Pharmaceuticals - 3.20% (continued) | |||||||||||||||
Johnson & Johnson | 9,551 | $ | 1,348,601 | ||||||||||||
Merck & Co., Inc. | 14,674 | 1,154,990 | |||||||||||||
Mylan N.V.A | 15,744 | 424,931 | |||||||||||||
Pfizer, Inc. | 42,974 | 1,745,174 | |||||||||||||
Sanofi, ADR | 30,972 | 1,354,405 | |||||||||||||
|
| ||||||||||||||
9,081,476 | |||||||||||||||
|
| ||||||||||||||
Total Health Care | 17,158,673 | ||||||||||||||
|
| ||||||||||||||
Industrials - 5.79% | |||||||||||||||
Aerospace & Defense - 0.89% | |||||||||||||||
Embraer S.A., Sponsored ADR | 10,824 | 216,588 | |||||||||||||
General Dynamics Corp. | 2,997 | 535,624 | |||||||||||||
Raytheon Co. | 5,870 | 1,042,453 | |||||||||||||
United Technologies Corp. | 5,137 | 732,588 | |||||||||||||
|
| ||||||||||||||
2,527,253 | |||||||||||||||
|
| ||||||||||||||
Airlines - 0.73% | |||||||||||||||
American Airlines Group, Inc. | 33,661 | 1,150,533 | |||||||||||||
Delta Air Lines, Inc. | 15,645 | 911,947 | |||||||||||||
|
| ||||||||||||||
2,062,480 | |||||||||||||||
|
| ||||||||||||||
Building Products - 0.77% | |||||||||||||||
Johnson Controls International PLC | 58,343 | 2,187,863 | |||||||||||||
|
| ||||||||||||||
Construction & Engineering - 0.12% | |||||||||||||||
Fluor Corp. | 8,500 | 337,705 | |||||||||||||
|
| ||||||||||||||
Electrical Equipment - 0.17% | |||||||||||||||
Eaton Corp. PLC | 5,983 | 495,512 | |||||||||||||
|
| ||||||||||||||
Industrial Conglomerates - 1.70% | |||||||||||||||
General Electric Co. | 334,546 | 3,402,333 | |||||||||||||
Honeywell International, Inc. | 8,230 | 1,428,975 | |||||||||||||
|
| ||||||||||||||
4,831,308 | |||||||||||||||
|
| ||||||||||||||
Machinery - 1.10% | |||||||||||||||
CNH Industrial N.V. | 117,880 | 1,284,892 | |||||||||||||
Cummins, Inc. | 8,872 | 1,475,325 | |||||||||||||
PACCAR, Inc. | 4,539 | 325,310 | |||||||||||||
Wabtec Corp. | 317 | 23,480 | |||||||||||||
|
| ||||||||||||||
3,109,007 | |||||||||||||||
|
| ||||||||||||||
Trading Companies & Distributors - 0.31% | |||||||||||||||
AerCap Holdings N.V.A | 17,991 | 893,073 | |||||||||||||
|
| ||||||||||||||
Total Industrials | 16,444,201 | ||||||||||||||
|
| ||||||||||||||
Information Technology - 6.83% | |||||||||||||||
Communications Equipment - 0.24% | |||||||||||||||
Telefonaktiebolaget LM Ericsson, Sponsored ADR | 68,620 | 679,338 | |||||||||||||
|
| ||||||||||||||
Electronic Equipment, Instruments & Components - 0.86% | |||||||||||||||
Corning, Inc. | 31,995 | 1,019,041 | |||||||||||||
IPG Photonics Corp.A | 5,000 | 873,650 | |||||||||||||
TE Connectivity Ltd. | 5,758 | 550,752 | |||||||||||||
|
| ||||||||||||||
2,443,443 | |||||||||||||||
|
|
See accompanying notes
13
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 61.73% (continued) | |||||||||||||||
Information Technology - 6.83% (continued) | |||||||||||||||
Semiconductors & Semiconductor Equipment - 1.85% | |||||||||||||||
Marvell Technology Group Ltd. | 36,000 | $ | 900,720 | ||||||||||||
Micron Technology, Inc.A | 18,035 | 758,552 | |||||||||||||
NVIDIA Corp. | 3,300 | 597,300 | |||||||||||||
QUALCOMM, Inc. | 28,688 | 2,470,898 | |||||||||||||
Texas Instruments, Inc. | 4,400 | 518,452 | |||||||||||||
|
| ||||||||||||||
5,245,922 | |||||||||||||||
|
| ||||||||||||||
Software - 3.22% | |||||||||||||||
Microsoft Corp. | 37,523 | 4,900,504 | |||||||||||||
Oracle Corp. | 71,321 | 3,946,191 | |||||||||||||
Teradata Corp.A | 6,518 | 296,373 | |||||||||||||
|
| ||||||||||||||
9,143,068 | |||||||||||||||
|
| ||||||||||||||
Technology Hardware, Storage & Peripherals - 0.66% | |||||||||||||||
Hewlett Packard Enterprise Co. | 118,708 | 1,876,774 | |||||||||||||
|
| ||||||||||||||
Total Information Technology | 19,388,545 | ||||||||||||||
|
| ||||||||||||||
Materials - 3.46% | |||||||||||||||
Chemicals - 2.37% | |||||||||||||||
Air Products & Chemicals, Inc. | 12,418 | 2,555,500 | |||||||||||||
Dow, Inc.A | 13,435 | 762,167 | |||||||||||||
DowDuPont, Inc. | 57,973 | 2,229,062 | |||||||||||||
Eastman Chemical Co. | 9,585 | 756,065 | |||||||||||||
Huntsman Corp. | 19,900 | 442,576 | |||||||||||||
|
| ||||||||||||||
6,745,370 | |||||||||||||||
|
| ||||||||||||||
Containers & Packaging - 0.72% | |||||||||||||||
Crown Holdings, Inc.A | 18,935 | 1,100,692 | |||||||||||||
International Paper Co. | 19,925 | 932,689 | |||||||||||||
|
| ||||||||||||||
2,033,381 | |||||||||||||||
|
| ||||||||||||||
Metals & Mining - 0.37% | |||||||||||||||
Freeport-McMoRan, Inc. | 27,200 | 334,832 | |||||||||||||
Newmont Goldcorp Corp. | 22,600 | 701,956 | |||||||||||||
|
| ||||||||||||||
1,036,788 | |||||||||||||||
|
| ||||||||||||||
Total Materials | 9,815,539 | ||||||||||||||
|
| ||||||||||||||
Utilities - 1.42% | |||||||||||||||
Electric Utilities - 1.23% | |||||||||||||||
Entergy Corp. | 18,309 | 1,774,142 | |||||||||||||
PPL Corp. | 27,047 | 844,137 | |||||||||||||
Southern Co. | 16,443 | 875,096 | |||||||||||||
|
| ||||||||||||||
3,493,375 | |||||||||||||||
|
| ||||||||||||||
Multi-Utilities - 0.19% | |||||||||||||||
Dominion Energy, Inc. | 7,000 | 545,090 | |||||||||||||
|
| ||||||||||||||
Total Utilities | 4,038,465 | ||||||||||||||
|
| ||||||||||||||
Total Common Stocks (Cost $138,803,774) | 175,349,393 | ||||||||||||||
|
|
See accompanying notes
14
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
CORPORATE OBLIGATIONS - 11.24% | |||||||||||||||
Basic Materials - 0.22% | |||||||||||||||
Dow Chemical Co., | |||||||||||||||
4.125%, Due 11/15/2021 | $ | 145,000 | $ | 149,045 | |||||||||||
3.500%, Due 10/1/2024 | 264,000 | 267,809 | |||||||||||||
EI du Pont de Nemours & Co., 2.200%, Due 5/1/2020 | 70,000 | 69,790 | |||||||||||||
Nucor Corp., | |||||||||||||||
4.125%, Due 9/15/2022 | 52,000 | 54,125 | |||||||||||||
4.000%, Due 8/1/2023 | 80,000 | 83,644 | |||||||||||||
|
| ||||||||||||||
624,413 | |||||||||||||||
|
| ||||||||||||||
Communications - 0.92% | |||||||||||||||
Amazon.com, Inc., 3.875%, Due 8/22/2037 | 70,000 | 72,120 | |||||||||||||
AT&T, Inc., | |||||||||||||||
4.450%, Due 4/1/2024 | 80,000 | 84,583 | |||||||||||||
3.400%, Due 5/15/2025 | 169,000 | 169,764 | |||||||||||||
4.500%, Due 5/15/2035 | 61,000 | 61,247 | |||||||||||||
6.350%, Due 3/15/2040 | 40,000 | 46,590 | |||||||||||||
CBS Corp., 3.375%, Due 3/1/2022 | 337,000 | 340,840 | |||||||||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, 3.750%, Due 2/15/2028 | 90,000 | 87,389 | |||||||||||||
Comcast Corp., | |||||||||||||||
3.150%, Due 3/1/2026 | 84,000 | 84,270 | |||||||||||||
4.600%, Due 10/15/2038 | 75,000 | 80,711 | |||||||||||||
6.550%, Due 7/1/2039 | 217,000 | 279,892 | |||||||||||||
eBay, Inc., 2.150%, Due 6/5/2020 | 55,000 | 54,649 | |||||||||||||
Fox Corp., 5.476%, Due 1/25/2039D | 55,000 | 61,244 | |||||||||||||
NBCUniversal Enterprise, Inc., 2.992%, Due 4/1/2021,(3-mo. USD LIBOR + 0.400%)D E | 835,000 | 837,593 | |||||||||||||
Verizon Communications, Inc., | |||||||||||||||
2.625%, Due 8/15/2026 | 115,000 | 110,367 | |||||||||||||
4.329%, Due 9/21/2028 | 180,000 | 192,517 | |||||||||||||
Walt Disney Co., 6.400%, Due 12/15/2035D | 45,000 | 59,229 | |||||||||||||
|
| ||||||||||||||
2,623,005 | |||||||||||||||
|
| ||||||||||||||
Consumer, Cyclical - 0.99% | |||||||||||||||
American Honda Finance Corp., | |||||||||||||||
3.875%, Due 9/21/2020D | 250,000 | 253,830 | |||||||||||||
3.375%, Due 12/10/2021 | 130,000 | 132,344 | |||||||||||||
Aptiv Corp., 4.150%, Due 3/15/2024 | 85,000 | 87,732 | |||||||||||||
Costco Wholesale Corp., 2.150%, Due 5/18/2021 | 90,000 | 89,432 | |||||||||||||
Daimler Finance North America LLC, | |||||||||||||||
2.250%, Due 9/3/2019D | 169,000 | 168,676 | |||||||||||||
2.450%, Due 5/18/2020D | 313,000 | 311,639 | |||||||||||||
3.113%, Due 2/22/2021,(3-mo. USD LIBOR + 0.450%)D E | 200,000 | 199,640 | |||||||||||||
Dollar General Corp., 4.125%, Due 5/1/2028 | 50,000 | 51,401 | |||||||||||||
Dollar Tree, Inc., 3.700%, Due 5/15/2023 | 85,000 | 86,405 | |||||||||||||
Ford Motor Credit Co. LLC, | |||||||||||||||
5.875%, Due 8/2/2021 | 200,000 | 209,285 | |||||||||||||
3.810%, Due 1/9/2024 | 60,000 | 58,720 | |||||||||||||
General Motors Financial Co., Inc., 3.150%, Due 6/30/2022 | 90,000 | 89,372 | |||||||||||||
Home Depot, Inc., 2.700%, Due 4/1/2023 | 72,000 | 72,125 | |||||||||||||
Lowe’s Cos, Inc., 2.500%, Due 4/15/2026 | 70,000 | 66,439 | |||||||||||||
McDonald’s Corp., 3.700%, Due 1/30/2026 | 98,000 | 100,801 | |||||||||||||
O’Reilly Automotive, Inc., 4.350%, Due 6/1/2028 | 70,000 | 73,151 | |||||||||||||
PACCAR Financial Corp., | |||||||||||||||
1.300%, Due 5/10/2019 | 58,000 | 57,983 | |||||||||||||
2.200%, Due 9/15/2019 | 52,000 | 51,878 | |||||||||||||
Starbucks Corp., 4.000%, Due 11/15/2028 | 90,000 | 93,863 | |||||||||||||
Toyota Motor Credit Corp., 3.450%, Due 9/20/2023 | 100,000 | 103,109 | |||||||||||||
Walgreens Boots Alliance, Inc., 3.800%, Due 11/18/2024 | 145,000 | 146,701 |
See accompanying notes
15
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
CORPORATE OBLIGATIONS - 11.24% (continued) | |||||||||||||||
Consumer, Cyclical - 0.99% (continued) | |||||||||||||||
Walmart, Inc., | |||||||||||||||
3.400%, Due 6/26/2023 | $ | 80,000 | $ | 82,195 | |||||||||||
7.550%, Due 2/15/2030 | 169,000 | 233,231 | |||||||||||||
|
| ||||||||||||||
2,819,952 | |||||||||||||||
|
| ||||||||||||||
Consumer,Non-Cyclical - 1.31% | |||||||||||||||
AbbVie, Inc., | |||||||||||||||
3.200%, Due 5/14/2026 | 85,000 | 82,469 | |||||||||||||
4.450%, Due 5/14/2046 | 55,000 | 51,007 | |||||||||||||
Altria Group, Inc., 4.750%, Due 5/5/2021 | 145,000 | 150,387 | |||||||||||||
Amgen, Inc., 4.400%, Due 5/1/2045 | 75,000 | 73,649 | |||||||||||||
Anheuser-Busch InBev Worldwide, Inc., | |||||||||||||||
4.375%, Due 4/15/2038 | 35,000 | 34,103 | |||||||||||||
5.450%, Due 1/23/2039 | 1,605,000 | 1,749,820 | |||||||||||||
5.550%, Due 1/23/2049 | 50,000 | 55,534 | |||||||||||||
Anthem, Inc., 2.500%, Due 11/21/2020 | 65,000 | 64,668 | |||||||||||||
Baxalta, Inc., 4.000%, Due 6/23/2025 | 20,000 | 20,692 | |||||||||||||
Bayer US Finance LLC, 2.375%, Due 10/8/2019D | 300,000 | 299,021 | |||||||||||||
Cigna Corp., 4.125%, Due 11/15/2025D | 75,000 | 77,522 | |||||||||||||
CVS Health Corp., | |||||||||||||||
2.125%, Due 6/1/2021 | 60,000 | 59,042 | |||||||||||||
5.050%, Due 3/25/2048 | 55,000 | 54,269 | |||||||||||||
Genzyme Corp., 5.000%, Due 6/15/2020 | 39,000 | 40,107 | |||||||||||||
Humana, Inc., 3.150%, Due 12/1/2022 | 115,000 | 115,565 | |||||||||||||
Kaiser Foundation Hospitals, 4.150%, Due 5/1/2047 | 45,000 | 47,204 | |||||||||||||
Medtronic, Inc., 3.500%, Due 3/15/2025 | 313,000 | 322,522 | |||||||||||||
Molson Coors Brewing Co., 3.000%, Due 7/15/2026 | 90,000 | 86,401 | |||||||||||||
Moody’s Corp., 4.875%, Due 12/17/2048 | 50,000 | 54,531 | |||||||||||||
RELX Capital, Inc., 3.500%, Due 3/16/2023 | 55,000 | 56,079 | |||||||||||||
S&P Global, Inc., 4.400%, Due 2/15/2026 | 70,000 | 75,311 | |||||||||||||
Zimmer Biomet Holdings, Inc., 3.550%, Due 4/1/2025 | 85,000 | 84,764 | |||||||||||||
Zoetis, Inc., 3.000%, Due 9/12/2027 | 75,000 | 71,948 | |||||||||||||
|
| ||||||||||||||
3,726,615 | |||||||||||||||
|
| ||||||||||||||
Energy - 0.34% | |||||||||||||||
BP Capital Markets America, Inc., 3.796%, Due 9/21/2025 | 50,000 | 51,979 | |||||||||||||
Columbia Pipeline Group, Inc., 4.500%, Due 6/1/2025 | 81,000 | 85,045 | |||||||||||||
Concho Resources, Inc., 4.300%, Due 8/15/2028 | 85,000 | 88,576 | |||||||||||||
Enterprise Products Operating LLC, 6.125%, Due 10/15/2039 | 45,000 | 53,981 | |||||||||||||
EOG Resources, Inc., 4.150%, Due 1/15/2026 | 70,000 | 74,039 | |||||||||||||
Marathon Petroleum Corp., 3.625%, Due 9/15/2024 | 60,000 | 60,679 | |||||||||||||
MPLX LP, | |||||||||||||||
4.125%, Due 3/1/2027 | 55,000 | 55,598 | |||||||||||||
5.200%, Due 3/1/2047 | 46,000 | 47,373 | |||||||||||||
ONEOK, Inc., 4.550%, Due 7/15/2028 | 90,000 | 93,925 | |||||||||||||
Phillips 66, 4.300%, Due 4/1/2022 | 47,000 | 48,970 | |||||||||||||
Phillips 66 Partners LP, | |||||||||||||||
3.550%, Due 10/1/2026 | 53,000 | 52,127 | |||||||||||||
3.750%, Due 3/1/2028 | 50,000 | 49,492 | |||||||||||||
Spectra Energy Partners LP, 3.375%, Due 10/15/2026 | 63,000 | 62,059 | |||||||||||||
Sunoco Logistics Partners Operations LP, 4.250%, Due 4/1/2024 | 48,000 | 49,637 | |||||||||||||
TC PipeLines LP, 3.900%, Due 5/25/2027 | 40,000 | 39,658 | |||||||||||||
Valero Energy Corp., 4.350%, Due 6/1/2028 | 60,000 | 62,377 | |||||||||||||
|
| ||||||||||||||
975,515 | |||||||||||||||
|
| ||||||||||||||
Financial - 3.73% | |||||||||||||||
American Campus Communities Operating Partnership LP, 3.625%, Due 11/15/2027 | 85,000 | 83,446 |
See accompanying notes
16
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
CORPORATE OBLIGATIONS - 11.24% (continued) | |||||||||||||||
Financial - 3.73% (continued) | |||||||||||||||
American Express Co., | |||||||||||||||
3.333%, Due 11/5/2021,(3-mo. USD LIBOR + 0.600%)E | $ | 420,000 | $ | 421,904 | |||||||||||
3.400%, Due 2/27/2023 | 70,000 | 71,215 | |||||||||||||
4.200%, Due 11/6/2025 | 115,000 | 122,179 | |||||||||||||
4.050%, Due 12/3/2042 | 45,000 | 46,184 | |||||||||||||
American International Group, Inc., 4.875%, Due 6/1/2022 | 289,000 | 304,938 | |||||||||||||
Bank of America Corp., | |||||||||||||||
3.124%, Due 1/20/2023,(3-mo. USD LIBOR + 1.160%)E | 180,000 | 180,529 | |||||||||||||
4.125%, Due 1/22/2024 | 193,000 | 202,238 | |||||||||||||
6.110%, Due 1/29/2037 | 176,000 | 211,853 | |||||||||||||
5.000%, Due 1/21/2044 | 190,000 | 215,554 | |||||||||||||
Bank of New York Mellon Corp., 3.250%, Due 5/16/2027 | 140,000 | 140,714 | |||||||||||||
BB&T Corp., 2.750%, Due 4/1/2022 | 150,000 | 150,114 | |||||||||||||
Boston Properties LP, 3.200%, Due 1/15/2025 | 130,000 | 129,810 | |||||||||||||
Capital One Financial Corp., 2.500%, Due 5/12/2020 | 115,000 | 114,661 | |||||||||||||
CBOE Global Markets, Inc., 3.650%, Due 1/12/2027 | 85,000 | 86,455 | |||||||||||||
Chubb INA Holdings, Inc., 3.350%, Due 5/3/2026 | 70,000 | 71,246 | |||||||||||||
Citibank NA, 3.048%, Due 2/12/2021,(3-mo. USD LIBOR + 0.350%)E | 760,000 | 760,448 | |||||||||||||
Citigroup, Inc., | |||||||||||||||
3.887%, Due 1/10/2028,(3-mo. USD LIBOR + 1.563%)E | 240,000 | 244,618 | |||||||||||||
5.875%, Due 1/30/2042 | 145,000 | 180,117 | |||||||||||||
Crown Castle International Corp., 3.400%, Due 2/15/2021 | 84,000 | 84,644 | |||||||||||||
Digital Realty Trust LP, 3.700%, Due 8/15/2027 | 95,000 | 94,661 | |||||||||||||
ERP Operating LP, 3.000%, Due 4/15/2023 | 52,000 | 52,571 | |||||||||||||
Goldman Sachs Group, Inc., | |||||||||||||||
5.750%, Due 1/24/2022 | 385,000 | 412,932 | |||||||||||||
2.908%, Due 6/5/2023,(3-mo. USD LIBOR + 1.053%)E | 155,000 | 153,693 | |||||||||||||
3.500%, Due 1/23/2025 | 95,000 | 95,497 | |||||||||||||
3.272%, Due 9/29/2025,(3-mo. USD LIBOR + 1.201%)E | 85,000 | 83,995 | |||||||||||||
HCP, Inc., 2.625%, Due 2/1/2020 | 85,000 | 84,811 | |||||||||||||
Intercontinental Exchange, Inc., 2.750%, Due 12/1/2020 | 35,000 | 35,022 | |||||||||||||
JPMorgan Chase & Co., | |||||||||||||||
3.625%, Due 5/13/2024 | 434,000 | 446,081 | |||||||||||||
3.797%, Due 7/23/2024,(3-mo. USD LIBOR + 0.890%)E | 85,000 | 87,266 | |||||||||||||
3.782%, Due 2/1/2028,(3-mo. USD LIBOR + 1.337%)E | 115,000 | 116,938 | |||||||||||||
3.882%, Due 7/24/2038,(3-mo. USD LIBOR + 1.360%)E | 95,000 | 93,797 | |||||||||||||
5.500%, Due 10/15/2040 | 313,000 | 374,914 | |||||||||||||
KeyCorp, 5.100%, Due 3/24/2021 | 60,000 | 62,575 | |||||||||||||
Liberty Mutual Group, Inc., | |||||||||||||||
4.250%, Due 6/15/2023D | 25,000 | 25,972 | |||||||||||||
4.569%, Due 2/1/2029D | 88,000 | 91,976 | |||||||||||||
MetLife, Inc., | |||||||||||||||
6.375%, Due 6/15/2034 | 169,000 | �� | 218,945 | ||||||||||||
4.721%, Due 12/15/2044 | 193,000 | 212,489 | |||||||||||||
Metropolitan Life Global Funding I, 2.819%, Due 1/8/2021,(3-mo. USD LIBOR + 0.230%)D E | 675,000 | 674,384 | |||||||||||||
Morgan Stanley, | |||||||||||||||
5.625%, Due 9/23/2019 | 169,000 | 170,833 | |||||||||||||
3.700%, Due 10/23/2024 | 145,000 | 148,889 | |||||||||||||
3.591%, Due 7/22/2028,(3-mo. USD LIBOR + 1.340%)E | 105,000 | 104,875 | |||||||||||||
National Rural Utilities Cooperative Finance Corp., | |||||||||||||||
2.950%, Due 2/7/2024 | 65,000 | 65,447 | |||||||||||||
4.300%, Due 3/15/2049 | 50,000 | 52,673 | |||||||||||||
PNC Financial Services Group, Inc., 3.500%, Due 1/23/2024 | 105,000 | 107,606 | |||||||||||||
Prudential Financial, Inc., | |||||||||||||||
4.600%, Due 5/15/2044 | 313,000 | 337,090 | |||||||||||||
4.350%, Due 2/25/2050 | 70,000 | 73,566 | |||||||||||||
Public Storage, 2.370%, Due 9/15/2022 | 105,000 | 103,921 | |||||||||||||
Raymond James Financial, Inc., 3.625%, Due 9/15/2026 | 105,000 | 104,114 |
See accompanying notes
17
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
CORPORATE OBLIGATIONS - 11.24% (continued) | |||||||||||||||
Financial - 3.73% (continued) | |||||||||||||||
Simon Property Group LP, 3.375%, Due 10/1/2024 | $ | 313,000 | $ | 319,364 | |||||||||||
State Street Corp., 3.300%, Due 12/16/2024 | 120,000 | 122,414 | |||||||||||||
SunTrust Bank, 2.450%, Due 8/1/2022 | 110,000 | 108,739 | |||||||||||||
US Bancorp, 3.375%, Due 2/5/2024 | 70,000 | 71,916 | |||||||||||||
Ventas Realty LP, 5.700%, Due 9/30/2043 | 55,000 | 62,830 | |||||||||||||
Visa, Inc., 3.150%, Due 12/14/2025 | 105,000 | 106,543 | |||||||||||||
Wells Fargo & Co., | |||||||||||||||
3.611%, Due 7/26/2021,(3-mo. USD LIBOR + 1.025%)E | 1,087,000 | 1,100,731 | |||||||||||||
3.584%, Due 5/22/2028,(3-mo. USD LIBOR + 1.310%)E | 95,000 | 95,378 | |||||||||||||
4.750%, Due 12/7/2046 | 90,000 | 94,642 | |||||||||||||
|
| ||||||||||||||
10,592,957 | |||||||||||||||
|
| ||||||||||||||
Industrial - 0.86% | |||||||||||||||
BAE Systems Holdings, Inc., 3.800%, Due 10/7/2024D | 313,000 | 318,918 | |||||||||||||
Burlington Northern Santa Fe LLC, | |||||||||||||||
3.650%, Due 9/1/2025 | 65,000 | 67,650 | |||||||||||||
5.750%, Due 5/1/2040 | 202,000 | 249,344 | |||||||||||||
Caterpillar Financial Services Corp., 1.350%, Due 5/18/2019 | 105,000 | 104,927 | |||||||||||||
CSX Corp., 5.500%, Due 4/15/2041 | 157,000 | 181,244 | |||||||||||||
Eaton Corp., 2.750%, Due 11/2/2022 | 75,000 | 74,911 | |||||||||||||
General Dynamics Corp., 2.875%, Due 5/11/2020 | 135,000 | 135,459 | |||||||||||||
General Electric Co., | |||||||||||||||
5.500%, Due 1/8/2020 | 120,000 | 122,079 | |||||||||||||
3.450%, Due 5/15/2024 | 70,000 | 69,893 | |||||||||||||
John Deere Capital Corp., | |||||||||||||||
1.950%, Due 6/22/2020 | 90,000 | 89,335 | |||||||||||||
2.150%, Due 9/8/2022 | 90,000 | 88,478 | |||||||||||||
Lockheed Martin Corp., 3.550%, Due 1/15/2026 | 90,000 | 92,422 | |||||||||||||
Martin Marietta Materials, Inc., 4.250%, Due 12/15/2047 | 95,000 | 84,049 | |||||||||||||
Northrop Grumman Corp., | |||||||||||||||
5.050%, Due 8/1/2019 | 72,000 | 72,426 | |||||||||||||
3.850%, Due 4/15/2045 | 130,000 | 124,396 | |||||||||||||
Union Pacific Corp., 4.100%, Due 9/15/2067 | 90,000 | 83,366 | |||||||||||||
United Technologies Corp., | |||||||||||||||
1.900%, Due 5/4/2020 | 105,000 | 104,123 | |||||||||||||
4.125%, Due 11/16/2028 | 95,000 | 99,102 | |||||||||||||
6.125%, Due 7/15/2038 | 217,000 | 266,482 | |||||||||||||
|
| ||||||||||||||
2,428,604 | |||||||||||||||
|
| ||||||||||||||
Technology - 1.92% | |||||||||||||||
Analog Devices, Inc., 3.900%, Due 12/15/2025 | 75,000 | 76,991 | |||||||||||||
Apple, Inc., 2.850%, Due 5/11/2024 | 170,000 | 170,435 | |||||||||||||
Autodesk, Inc., 3.500%, Due 6/15/2027 | 55,000 | 53,455 | |||||||||||||
Broadcom Corp. / Broadcom Cayman Finance Ltd., 3.125%, Due 1/15/2025 | 60,000 | 57,173 | |||||||||||||
Broadridge Financial Solutions, Inc., 3.400%, Due 6/27/2026 | 65,000 | 64,198 | |||||||||||||
Dell International LLC / EMC Corp., | |||||||||||||||
4.420%, Due 6/15/2021D | 135,000 | 138,260 | |||||||||||||
5.300%, Due 10/1/2029D | 1,185,000 | 1,221,498 | |||||||||||||
Hewlett Packard Enterprise Co., 6.350%, Due 10/15/2045 | 1,720,000 | 1,829,202 | |||||||||||||
HP, Inc., 4.050%, Due 9/15/2022 | 145,000 | 150,026 | |||||||||||||
Intel Corp., 3.300%, Due 10/1/2021 | 86,000 | 87,525 | |||||||||||||
Micron Technology, Inc., 5.327%, Due 2/6/2029 | 1,210,000 | 1,247,607 | |||||||||||||
Microsoft Corp., 4.450%, Due 11/3/2045 | 50,000 | 55,824 | |||||||||||||
Oracle Corp., | |||||||||||||||
2.500%, Due 5/15/2022 | 115,000 | 114,404 | |||||||||||||
4.300%, Due 7/8/2034 | 112,000 | 119,329 | |||||||||||||
QUALCOMM, Inc., 2.900%, Due 5/20/2024 | 55,000 | 54,821 | |||||||||||||
|
| ||||||||||||||
5,440,748 | |||||||||||||||
|
|
See accompanying notes
18
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
CORPORATE OBLIGATIONS - 11.24% (continued) | |||||||||||||||
Utilities - 0.95% | |||||||||||||||
American Electric Power Co., Inc., 3.650%, Due 12/1/2021, Series I | $ | 80,000 | $ | 81,669 | |||||||||||
Appalachian Power Co., 4.500%, Due 3/1/2049, Series Y | 30,000 | 31,394 | |||||||||||||
Berkshire Hathaway Energy Co., 6.125%, Due 4/1/2036 | 287,000 | 363,940 | |||||||||||||
Consolidated Edison Co. of New York, Inc., | |||||||||||||||
5.500%, Due 12/1/2039, Series09-C | 169,000 | 202,115 | |||||||||||||
4.625%, Due 12/1/2054 | 55,000 | 58,440 | |||||||||||||
Delmarva Power & Light Co., 3.500%, Due 11/15/2023 | 61,000 | 62,941 | |||||||||||||
Dominion Energy, Inc., 2.579%, Due 7/1/2020 | 90,000 | 89,625 | |||||||||||||
DPL, Inc., 7.250%, Due 10/15/2021 | 295,000 | 317,125 | |||||||||||||
Duke Energy Corp., 3.550%, Due 9/15/2021 | 130,000 | 131,923 | |||||||||||||
Duke Energy Progress LLC, 4.150%, Due 12/1/2044 | 125,000 | 129,518 | |||||||||||||
Entergy Louisiana, LLC, 4.000%, Due 3/15/2033 | 67,000 | 69,962 | |||||||||||||
Florida Power & Light Co., 3.950%, Due 3/1/2048 | 50,000 | 51,147 | |||||||||||||
MidAmerican Energy Co., 3.100%, Due 5/1/2027 | 100,000 | 100,190 | |||||||||||||
National Fuel Gas Co., 3.950%, Due 9/15/2027 | 125,000 | 120,183 | |||||||||||||
Nevada Power Co., 2.750%, Due 4/15/2020, Series BB | 50,000 | 50,034 | |||||||||||||
NiSource, Inc., | |||||||||||||||
3.490%, Due 5/15/2027 | 70,000 | 70,087 | |||||||||||||
3.950%, Due 3/30/2048 | 65,000 | 61,972 | |||||||||||||
Southern Co., 2.750%, Due 6/15/2020 | 241,000 | 240,843 | |||||||||||||
Southern Power Co., 4.150%, Due 12/1/2025 | 84,000 | 87,420 | |||||||||||||
Southwestern Electric Power Co., 3.550%, Due 2/15/2022 | 289,000 | 292,953 | |||||||||||||
WEC Energy Group, Inc., 3.550%, Due 6/15/2025 | 94,000 | 96,039 | |||||||||||||
|
| ||||||||||||||
2,709,520 | |||||||||||||||
|
| ||||||||||||||
Total Corporate Obligations (Cost $30,740,213) | 31,941,329 | ||||||||||||||
|
| ||||||||||||||
FOREIGN CORPORATE OBLIGATIONS - 1.62% | |||||||||||||||
Basic Materials - 0.04% | |||||||||||||||
Nutrien Ltd., 4.000%, Due 12/15/2026 | 64,000 | 65,201 | |||||||||||||
Teck Resources Ltd., 6.000%, Due 8/15/2040 | 30,000 | 31,775 | |||||||||||||
|
| ||||||||||||||
96,976 | |||||||||||||||
|
| ||||||||||||||
Communications - 0.59% | |||||||||||||||
Alibaba Group Holding Ltd., 3.600%, Due 11/28/2024 | 313,000 | 320,314 | |||||||||||||
America Movil S.A.B. de C.V., 6.375%, Due 3/1/2035 | 169,000 | 208,631 | |||||||||||||
Bell Canada, Inc., 4.464%, Due 4/1/2048 | 45,000 | 46,148 | |||||||||||||
Deutsche Telekom International Finance B.V., 4.875%, Due 3/6/2042D | 150,000 | 158,980 | |||||||||||||
Rogers Communications, Inc., 3.625%, Due 12/15/2025 | 85,000 | 87,138 | |||||||||||||
TELUS Corp., 2.800%, Due 2/16/2027 | 74,000 | 70,340 | |||||||||||||
Thomson Reuters Corp., | |||||||||||||||
4.300%, Due 11/23/2023 | 145,000 | 151,416 | |||||||||||||
3.850%, Due 9/29/2024 | 193,000 | 194,277 | |||||||||||||
Vodafone Group PLC, 6.150%, Due 2/27/2037 | 393,000 | 446,498 | |||||||||||||
|
| ||||||||||||||
1,683,742 | |||||||||||||||
|
| ||||||||||||||
Consumer,Non-Cyclical - 0.08% | |||||||||||||||
Coca-Cola Femsa S.A.B. de C.V., 3.875%, Due 11/26/2023 | 65,000 | 67,077 | |||||||||||||
Sanofi, 4.000%, Due 3/29/2021 | 75,000 | 76,922 | |||||||||||||
Shire Acquisitions Investments Ireland DAC, 2.875%, Due 9/23/2023 | 85,000 | 83,867 | |||||||||||||
|
| ||||||||||||||
227,866 | |||||||||||||||
|
| ||||||||||||||
Energy - 0.47% | |||||||||||||||
Canadian Natural Resources Ltd., | |||||||||||||||
3.900%, Due 2/1/2025 | 60,000 | 61,791 | |||||||||||||
6.250%, Due 3/15/2038 | 176,000 | 211,376 | |||||||||||||
Saudi Arabian Oil Co., 4.375%, Due 4/16/2049D | 840,000 | 816,110 | |||||||||||||
TransCanada PipeLines Ltd., | |||||||||||||||
3.750%, Due 10/16/2023 | 145,000 | 148,790 |
See accompanying notes
19
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
FOREIGN CORPORATE OBLIGATIONS - 1.62% (continued) | |||||||||||||||
Energy - 0.47% (continued) | |||||||||||||||
TransCanada PipeLines Ltd., (continued) | |||||||||||||||
6.100%, Due 6/1/2040 | $ | 82,000 | $ | 96,860 | |||||||||||
|
| ||||||||||||||
1,334,927 | |||||||||||||||
|
| ||||||||||||||
Financial - 0.34% | |||||||||||||||
Bank of Montreal, 3.300%, Due 2/5/2024 | 140,000 | 141,871 | |||||||||||||
HSBC Holdings PLC, 3.262%, Due 3/13/2023,(3-mo. USD LIBOR + 1.055%)E | 148,000 | 149,047 | |||||||||||||
Nordea Bank Abp, 4.875%, Due 1/27/2020D | 120,000 | 121,834 | |||||||||||||
Royal Bank of Canada, | |||||||||||||||
2.125%, Due 3/2/2020 | 55,000 | 54,759 | |||||||||||||
3.200%, Due 4/30/2021 | 130,000 | 131,450 | |||||||||||||
Toronto-Dominion Bank, 3.250%, Due 3/11/2024 | 210,000 | 213,124 | |||||||||||||
Trinity Acquisition PLC, 4.400%, Due 3/15/2026 | 67,000 | 69,304 | |||||||||||||
Westpac Banking Corp., 2.650%, Due 1/25/2021 | 90,000 | 89,935 | |||||||||||||
|
| ||||||||||||||
971,324 | |||||||||||||||
|
| ||||||||||||||
Industrial - 0.10% | |||||||||||||||
Ingersoll-Rand Luxembourg Finance S.A., 2.625%, Due 5/1/2020 | 145,000 | 144,808 | |||||||||||||
Johnson Controls International PLC, 5.000%, Due 3/30/2020 | 145,000 | 147,642 | |||||||||||||
|
| ||||||||||||||
292,450 | |||||||||||||||
|
| ||||||||||||||
Total Foreign Corporate Obligations (Cost $4,433,590) | 4,607,285 | ||||||||||||||
|
| ||||||||||||||
FOREIGN SOVEREIGN OBLIGATIONS - 0.16% | |||||||||||||||
European Investment Bank, 2.375%, Due 6/15/2022 | 125,000 | 125,127 | |||||||||||||
Kreditanstalt fuer Wiederaufbau, 2.125%, Due 6/15/2022 | 120,000 | 119,262 | |||||||||||||
Province of Ontario Canada, 2.500%, Due 4/27/2026 | 120,000 | 118,045 | |||||||||||||
Province of Quebec Canada, 2.375%, Due 1/31/2022 | 100,000 | 99,869 | |||||||||||||
|
| ||||||||||||||
Total Foreign Sovereign Obligations (Cost $464,348) | 462,303 | ||||||||||||||
|
| ||||||||||||||
ASSET-BACKED OBLIGATIONS - 0.83% | |||||||||||||||
Ally Auto Receivables Trust, 1.750%, Due 12/15/2021, 2017 4 A3 | 269,838 | 268,435 | |||||||||||||
Americredit Automobile Receivables Trust, 1.530%, Due 7/8/2021, 2016 4 A3 | 41,425 | 41,336 | |||||||||||||
AmeriCredit Automobile Receivables Trust, 1.900%, Due 3/18/2022, 2017 3 A3 | 185,000 | 184,141 | |||||||||||||
BMW Vehicle Lease Trust, 2.840%, Due 11/22/2021, 2019 1 A3 | 105,000 | 105,392 | |||||||||||||
Capital One Multi-Asset Execution Trust, 1.340%, Due 4/15/2022, 2016 A3 A3 | 318,000 | 317,453 | |||||||||||||
Chase Issuance Trust, 1.370%, Due 6/15/2021, 2016 A2 A | 265,000 | 264,538 | |||||||||||||
Ford Credit Auto Lease Trust, 2.030%, Due 12/15/2020, 2017 B A3 | 170,000 | 169,580 | |||||||||||||
Ford Credit Auto Owner Trust, 2.030%, Due 8/15/2020, 2015 A B | 181,958 | 181,866 | |||||||||||||
GM Financial Automobile Leasing Trust, 2.980%, Due 12/20/2021, 2019 1 A3 | 75,000 | 75,426 | |||||||||||||
GM Financial Consumer Automobile Receivables Trust, 2.320%, Due 7/18/2022, 2018 1 A3 | 95,000 | 94,696 | |||||||||||||
John Deere Owner Trust, 3.080%, Due 11/15/2022, 2018 B A3 | 190,000 | 191,394 | |||||||||||||
Mercedes-Benz Auto Lease Trust, 3.100%, Due 11/15/2021, 2019 A A3 | 105,000 | 105,695 | |||||||||||||
Nissan Auto Receivables Owner Trust, 2.120%, Due 4/18/2022, 2017 C A3 | 100,000 | 99,479 | |||||||||||||
PSNH Funding LLC, 3.094%, Due 2/1/2026, 2018 1 A1 | 113,067 | 114,269 | |||||||||||||
World Omni Auto Receivables Trust, 1.950%, Due 2/15/2023, 2017 B A3 | 135,000 | 134,012 | |||||||||||||
|
| ||||||||||||||
Total Asset-Backed Obligations (Cost $2,349,157) | 2,347,712 | ||||||||||||||
|
| ||||||||||||||
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.06% (Cost $175,048) | |||||||||||||||
Freddie Mac REMIC Trust, 3.000%, Due 1/15/2047 | 175,000 | 175,048 | |||||||||||||
|
| ||||||||||||||
COMMERCIAL MORTGAGE-BACKED OBLIGATIONS - 0.58% | |||||||||||||||
Ginnie Mae REMIC Trust, | |||||||||||||||
1.368%, Due 11/16/2041,2013-125 AB | 533,922 | 514,312 | |||||||||||||
1.147%, Due 12/16/2038,2013-139 A | 267,602 | 262,284 | |||||||||||||
1.624%, Due 7/16/2039,2013-78 AB | 419,972 | 405,774 | |||||||||||||
GS Mortgage Securities Trust, 3.679%, Due 8/10/2043,2010-C1 A1D | 9,365 | 9,386 | |||||||||||||
JPMBB Commercial Mortgage Securities Trust, 3.157%, Due 7/15/2045,2013-C12 ASB | 250,333 | 251,832 |
See accompanying notes
20
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
COMMERCIAL MORTGAGE-BACKED OBLIGATIONS - 0.58% (continued) | |||||||||||||||
WFRBS Commercial Mortgage Trust, 3.660%, Due 3/15/2047,2014-C19 A3 | $ | 190,471 | $ | 192,842 | |||||||||||
|
| ||||||||||||||
Total Commercial Mortgage-Backed Obligations (Cost $1,674,954) | 1,636,430 | ||||||||||||||
|
| ||||||||||||||
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 5.82% | |||||||||||||||
Federal Home Loan Mortgage Corp., | |||||||||||||||
5.000%, Due 10/1/2020 | 2,970 | 3,044 | |||||||||||||
3.500%, Due 8/1/2026 | 26,748 | 27,399 | |||||||||||||
3.500%, Due 9/1/2028 | 45,738 | 46,871 | |||||||||||||
3.000%, Due 11/1/2032 | 130,305 | 131,306 | |||||||||||||
5.000%, Due 8/1/2033 | 42,251 | 45,414 | |||||||||||||
5.500%, Due 2/1/2034 | 42,254 | 46,331 | |||||||||||||
4.000%, Due 1/1/2041 | 155,385 | 160,938 | |||||||||||||
4.500%, Due 2/1/2041 | 107,831 | 114,681 | |||||||||||||
3.500%, Due 6/1/2042 | 512,555 | 521,669 | |||||||||||||
3.500%, Due 7/1/2042 | 143,590 | 146,143 | |||||||||||||
3.500%, Due 5/1/2046 | 225,513 | 228,822 | |||||||||||||
3.000%, Due 11/1/2046 | 305,348 | 302,132 | |||||||||||||
3.000%, Due 4/1/2047 | 295,941 | 292,870 | |||||||||||||
3.500%, Due 1/1/2048 | 418,649 | 423,889 | |||||||||||||
4.000%, Due 4/1/2048 | 271,554 | 279,618 | |||||||||||||
3.000%, Due 8/1/2048 | 295,296 | 292,232 | |||||||||||||
4.000%, Due 9/1/2048 | 254,483 | 261,905 | |||||||||||||
|
| ||||||||||||||
3,325,264 | |||||||||||||||
|
| ||||||||||||||
Federal National Mortgage Association, | |||||||||||||||
4.000%, Due 8/1/2020 | 6,342 | 6,529 | |||||||||||||
3.500%, Due 1/1/2028B | 47,502 | 48,607 | |||||||||||||
4.000%, Due 10/1/2033 | 238,830 | 245,926 | |||||||||||||
5.000%, Due 3/1/2034B | 45,574 | 49,042 | |||||||||||||
4.500%, Due 4/1/2034 | 84,552 | 88,807 | |||||||||||||
3.500%, Due 6/1/2037 | 291,469 | 297,213 | |||||||||||||
5.500%, Due 6/1/2038 | 8,730 | 9,603 | |||||||||||||
4.500%, Due 1/1/2040 | 119,358 | 126,428 | |||||||||||||
5.000%, Due 5/1/2040 | 189,499 | 203,748 | |||||||||||||
5.000%, Due 6/1/2040 | 150,574 | 161,843 | |||||||||||||
4.000%, Due 9/1/2040 | 104,487 | 108,145 | |||||||||||||
4.000%, Due 1/1/2041 | 202,827 | 209,922 | |||||||||||||
3.000%, Due 6/1/2043 | 811,205 | 805,845 | |||||||||||||
3.500%, Due 7/1/2043 | 144,757 | 147,081 | |||||||||||||
3.000%, Due 8/1/2043 | 710,038 | 705,347 | |||||||||||||
4.000%, Due 11/1/2044B | 117,613 | 122,999 | |||||||||||||
4.000%, Due 7/1/2045 | 491,949 | 507,821 | |||||||||||||
3.500%, Due 8/1/2045 | 129,376 | 131,050 | |||||||||||||
3.500%, Due 11/1/2045 | 1,437,892 | 1,456,498 | |||||||||||||
3.000%, Due 4/1/2046 | 171,594 | 169,822 | |||||||||||||
3.500%, Due 5/1/2046 | 495,181 | 501,208 | |||||||||||||
4.000%, Due 7/1/2046 | 204,938 | 211,516 | |||||||||||||
3.000%, Due 10/1/2046 | 50,754 | 50,215 | |||||||||||||
3.000%, Due 11/1/2046 | 331,958 | 328,787 | |||||||||||||
3.500%, Due 11/1/2046 | 415,153 | 421,148 | |||||||||||||
3.000%, Due 12/1/2046B | 199,760 | 197,851 | |||||||||||||
3.000%, Due 2/1/2047 | 218,910 | 216,599 | |||||||||||||
3.500%, Due 3/1/2047 | 105,832 | 107,252 | |||||||||||||
4.500%, Due 7/1/2047 | 128,767 | 134,813 | |||||||||||||
4.500%, Due 8/1/2047 | 130,436 | 136,470 | |||||||||||||
3.500%, Due 9/1/2047 | 127,441 | 129,326 | |||||||||||||
4.000%, Due 9/1/2047 | 261,820 | 270,005 | |||||||||||||
4.000%, Due 11/1/2047 | 216,668 | 223,386 | |||||||||||||
3.500%, Due 2/1/2048 | 258,647 | 261,272 |
See accompanying notes
21
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 5.82% (continued) | |||||||||||||||
Federal National Mortgage Association, (continued) | |||||||||||||||
4.000%, Due 3/1/2048 | $ | 242,956 | $ | 250,221 | |||||||||||
4.000%, Due 4/1/2048 | 405,860 | 417,988 | |||||||||||||
4.500%, Due 4/1/2048 | 116,463 | 121,708 | |||||||||||||
4.500%, Due 7/1/2048 | 370,899 | 387,435 | |||||||||||||
5.000%, Due 8/1/2048 | 217,496 | 229,440 | |||||||||||||
5.000%, Due 9/1/2048 | 217,919 | 229,886 | |||||||||||||
3.000%, Due 10/1/2048B | 175,051 | 173,731 | |||||||||||||
|
| ||||||||||||||
10,602,533 | |||||||||||||||
|
| ||||||||||||||
Government National Mortgage Association, | |||||||||||||||
6.500%, Due 8/15/2027 | 36,945 | 40,328 | |||||||||||||
6.500%, Due 11/15/2027 | 41,338 | 45,211 | |||||||||||||
7.500%, Due 12/15/2028 | 38,207 | 43,158 | |||||||||||||
5.500%, Due 7/15/2033 | 43,778 | 48,362 | |||||||||||||
6.000%, Due 12/15/2033 | 57,127 | 64,375 | |||||||||||||
5.500%, Due 2/20/2034 | 61,278 | 67,120 | |||||||||||||
5.000%, Due 10/15/2039 | 94,524 | 101,268 | |||||||||||||
3.500%, Due 9/15/2041 | 256,433 | 262,006 | |||||||||||||
3.000%, Due 1/20/2046 | 75,669 | 75,735 | |||||||||||||
3.000%, Due 4/20/2046 | 193,231 | 193,161 | |||||||||||||
3.000%, Due 6/20/2046 | 256,260 | 256,089 | |||||||||||||
3.000%, Due 12/20/2046 | 172,091 | 172,029 | |||||||||||||
3.500%, Due 8/20/2047 | 82,537 | 83,997 | |||||||||||||
3.500%, Due 10/20/2047 | 80,238 | 81,640 | |||||||||||||
4.000%, Due 1/20/2048 | 474,050 | 488,346 | |||||||||||||
4.500%, Due 11/20/2048 | 225,605 | 234,669 | |||||||||||||
4.500%, Due 12/20/2048 | 227,348 | 237,293 | |||||||||||||
5.000%, Due 1/20/2049 | 114,066 | 119,375 | |||||||||||||
|
| ||||||||||||||
2,614,162 | |||||||||||||||
|
| ||||||||||||||
Total U.S. Agency Mortgage-Backed Obligations (Cost $16,384,292) | 16,541,959 | ||||||||||||||
|
| ||||||||||||||
U.S. TREASURY OBLIGATIONS - 16.21% | |||||||||||||||
U.S. Treasury Notes/Bonds, | |||||||||||||||
1.750%, Due 10/31/2020 | 319,000 | 316,321 | |||||||||||||
2.515%, Due 1/31/2021,(3-mo. Treasury money market yield + 0.115%)E | 8,420,000 | 8,419,816 | |||||||||||||
1.250%, Due 3/31/2021 | 964,000 | 945,511 | |||||||||||||
1.375%, Due 4/30/2021 | 964,000 | 947,055 | |||||||||||||
2.000%, Due 5/31/2021 | 1,446,000 | 1,438,149 | |||||||||||||
2.000%, Due 11/15/2021 | 740,000 | 735,606 | |||||||||||||
2.000%, Due 2/15/2022 | 1,996,000 | 1,983,369 | |||||||||||||
1.750%, Due 9/30/2022 | 500,000 | 491,777 | |||||||||||||
1.625%, Due 11/15/2022 | 964,000 | 943,477 | |||||||||||||
2.000%, Due 2/15/2023 | 500,000 | 495,293 | |||||||||||||
2.750%, Due 7/31/2023 | 500,000 | 509,609 | |||||||||||||
2.500%, Due 8/15/2023 | 964,000 | 972,925 | |||||||||||||
2.375%, Due 8/15/2024 | 1,140,000 | 1,143,741 | |||||||||||||
2.875%, Due 7/31/2025 | 500,000 | 514,629 | |||||||||||||
6.875%, Due 8/15/2025 | 279,000 | 351,823 | |||||||||||||
2.000%, Due 11/15/2026 | 500,000 | 485,332 | |||||||||||||
2.875%, Due 5/15/2028 | 200,000 | 206,211 | |||||||||||||
2.875%, Due 8/15/2028 | 9,225,000 | 9,513,642 | |||||||||||||
5.250%, Due 11/15/2028 | 217,000 | 267,325 | |||||||||||||
2.625%, Due 2/15/2029 | 580,000 | 585,913 | |||||||||||||
4.750%, Due 2/15/2037 | 304,000 | 392,647 | |||||||||||||
4.500%, Due 8/15/2039 | 241,000 | 305,853 | |||||||||||||
3.000%, Due 8/15/2048 | 11,380,000 | 11,507,581 |
See accompanying notes
22
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Principal Amount | Fair Value | ||||||||||||||
U.S. TREASURY OBLIGATIONS - 16.21% (continued) | |||||||||||||||
U.S. Treasury Notes/Bonds, (continued) | |||||||||||||||
3.000%, Due 2/15/2049 | $ | 2,544,000 | $ | 2,575,601 | |||||||||||
|
| ||||||||||||||
46,049,206 | |||||||||||||||
|
| ||||||||||||||
Total U.S. Treasury Obligations (Cost $45,655,103) | 46,049,206 | ||||||||||||||
|
| ||||||||||||||
Shares | |||||||||||||||
SHORT-TERM INVESTMENTS - 1.54% (Cost $4,365,141) | |||||||||||||||
Investment Companies - 1.54% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%F G | 4,365,141 | 4,365,141 | |||||||||||||
|
| ||||||||||||||
SECURITIES LENDING COLLATERAL - 0.13% (Cost $364,350) | |||||||||||||||
Investment Companies - 0.13% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%F G | 364,350 | 364,350 | |||||||||||||
|
| ||||||||||||||
TOTAL INVESTMENTS - 99.92% (Cost $245,409,970) | 283,840,156 | ||||||||||||||
OTHER ASSETS, NET OF LIABILITIES - 0.08% | 227,621 | ||||||||||||||
|
| ||||||||||||||
TOTAL NET ASSETS - 100.00% | $ | 284,067,777 | |||||||||||||
|
| ||||||||||||||
Percentages are stated as a percent of net assets. |
ANon-income producing security.
B Coupon rate may change based on changes of the underlying collateral or prepayments of principal. The coupon rate shown represents the rate at period end.
C All or a portion of this security is on loan at April 30, 2019.
D Security exempt from registration under the Securities Act of 1933. These securities may be resold to qualified institutional buyers pursuant to Rule 144A. At the period end, the value of these securities amounted to $5,845,712 or 2.06% of net assets. The Fund has no right to demand registration of these securities.
E Variable, floating, or adjustable rate securities with an interest rate that changes periodically. Rates are periodically reset with rates that are based on a predetermined benchmark such as a widely followed interest rate such asT-bills, LIBOR or PRIME plus a fixed spread. The interest rate disclosed reflects the rate in effect on April 30, 2019.
F The Fund is affiliated by having the same investment advisor.
G7-day yield.
ADR - American Depositary Receipt.
LIBOR - London Interbank Offered Rate.
LLC - Limited Liability Company.
LP - Limited Partnership.
MLP - Master Limited Partnership.
NVDR - Non Voting Depositary Receipt.
PLC - Public Limited Company.
PRIME - A rate, charged by banks, based on the U.S. Federal Funds rate.
REMIC - Real Estate Mortgage Investment Conduit.
Long Futures Contracts Open on April 30, 2019: |
| |||||||||||||||
Equity Futures Contracts | ||||||||||||||||
Description | Number of Contracts | Expiration Date | Notional Amount | Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||
S&P 500E-Mini Index Futures | 25 | June 2019 | $ | 3,645,077 | $ | 3,685,625 | $ | 40,548 | ||||||||
|
|
|
|
|
| |||||||||||
$ | 3,645,077 | $ | 3,685,625 | $ | 40,548 | |||||||||||
|
|
|
|
|
|
Index Abbreviations: | ||
S&P 500 | Standard & Poor’s U.S. EquityLarge-Cap Index. |
See accompanying notes
23
American Beacon Balanced FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
The Fund’s investments are summarized by level based on the inputs used to determine their values. As of April 30, 2019, the investments were classified as described below:
Balanced Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Common Stocks | $ | 175,349,393 | $ | - | $ | - | $ | 175,349,393 | ||||||||||||||||||||
Corporate Obligations | - | 31,941,329 | - | 31,941,329 | ||||||||||||||||||||||||
Foreign Corporate Obligations | - | 4,607,285 | - | 4,607,285 | ||||||||||||||||||||||||
Foreign Sovereign Obligations | - | 462,303 | - | 462,303 | ||||||||||||||||||||||||
Asset-Backed Obligations | - | 2,347,712 | - | 2,347,712 | ||||||||||||||||||||||||
Collateralized Mortgage Obligations | - | 175,048 | - | 175,048 | ||||||||||||||||||||||||
Commercial Mortgage-Backed Obligations | - | 1,636,430 | - | 1,636,430 | ||||||||||||||||||||||||
U.S. Agency Mortgage-Backed Obligations | - | 16,541,959 | - | 16,541,959 | ||||||||||||||||||||||||
U.S. Treasury Obligations | - | 46,049,206 | - | 46,049,206 | ||||||||||||||||||||||||
Short–Term Investments | 4,365,141 | - | - | 4,365,141 | ||||||||||||||||||||||||
Securities Lending Collateral | 364,350 | - | - | 364,350 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Investments in Securities - Assets | $ | 180,078,884 | $ | 103,761,272 | $ | - | $ | 283,840,156 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Financial Derivative Instruments - Assets |
| |||||||||||||||||||||||||||
Futures Contracts | $ | 40,548 | $ | - | $ | - | $ | 40,548 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Financial Derivative Instruments - Assets | $ | 40,548 | $ | - | $ | - | $ | 40,548 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
U.S. GAAP requires transfers between all levels to/from level 3 to be disclosed. During the period ended April 30, 2019, there were no transfers into or out of Level 3.
See accompanying notes
24
American BeaconMid-Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.77% | |||||||||||||||
Communication Services - 2.20% | |||||||||||||||
Media - 2.20% | |||||||||||||||
Altice USA, Inc., Class A | 155,574 | $ | 3,665,324 | ||||||||||||
Interpublic Group of Cos., Inc. | 215,801 | 4,963,423 | |||||||||||||
Meredith Corp. | 51,370 | 3,030,830 | |||||||||||||
Omnicom Group, Inc. | 12,636 | 1,011,259 | |||||||||||||
|
| ||||||||||||||
12,670,836 | |||||||||||||||
|
| ||||||||||||||
Total Communication Services | 12,670,836 | ||||||||||||||
|
| ||||||||||||||
Consumer Discretionary - 14.81% | |||||||||||||||
Auto Components - 1.94% | |||||||||||||||
Dana, Inc. | 246,837 | 4,813,321 | |||||||||||||
Lear Corp. | 44,516 | 6,365,788 | |||||||||||||
|
| ||||||||||||||
11,179,109 | |||||||||||||||
|
| ||||||||||||||
Diversified Consumer Services - 1.00% | |||||||||||||||
Adtalem Global Education, Inc.A | 117,186 | 5,779,614 | |||||||||||||
|
| ||||||||||||||
Hotels, Restaurants & Leisure - 5.08% | |||||||||||||||
Aramark | 141,478 | 4,397,136 | |||||||||||||
Marriott Vacations Worldwide Corp. | 6,313 | 666,842 | |||||||||||||
MGM Resorts International | 160,412 | 4,271,772 | |||||||||||||
Norwegian Cruise Line Holdings Ltd.A | 95,346 | 5,376,561 | |||||||||||||
Royal Caribbean Cruises Ltd. | 48,638 | 5,882,280 | |||||||||||||
Wyndham Destinations, Inc. | 94,445 | 4,114,024 | |||||||||||||
Wyndham Hotels & Resorts, Inc. | 82,352 | 4,588,653 | |||||||||||||
|
| ||||||||||||||
29,297,268 | |||||||||||||||
|
| ||||||||||||||
Household Durables - 2.14% | |||||||||||||||
Lennar Corp., Class A | 89,808 | 4,672,710 | |||||||||||||
Mohawk Industries, Inc.A | 29,255 | 3,985,994 | |||||||||||||
Newell Brands, Inc. | 257,148 | 3,697,788 | |||||||||||||
|
| ||||||||||||||
12,356,492 | |||||||||||||||
|
| ||||||||||||||
Internet & Direct Marketing Retail - 0.50% | |||||||||||||||
Qurate Retail, Inc.A | 168,348 | 2,870,333 | |||||||||||||
|
| ||||||||||||||
Multiline Retail - 1.11% | |||||||||||||||
Dollar General Corp. | 50,718 | 6,395,033 | |||||||||||||
|
| ||||||||||||||
Specialty Retail - 1.81% | |||||||||||||||
Aaron’s, Inc. | 90,837 | 5,058,713 | |||||||||||||
Advance Auto Parts, Inc. | 32,367 | 5,383,279 | |||||||||||||
|
| ||||||||||||||
10,441,992 | |||||||||||||||
|
| ||||||||||||||
Textiles, Apparel & Luxury Goods - 1.23% | |||||||||||||||
Gildan Activewear, Inc. | 51,481 | 1,898,105 | |||||||||||||
PVH Corp. | 40,067 | 5,168,242 | |||||||||||||
|
| ||||||||||||||
7,066,347 | |||||||||||||||
|
| ||||||||||||||
Total Consumer Discretionary | 85,386,188 | ||||||||||||||
|
| ||||||||||||||
Consumer Staples - 0.89% | |||||||||||||||
Beverages - 0.52% | |||||||||||||||
Coca-Cola European Partners PLCA | 56,286 | 3,016,367 | |||||||||||||
|
| ||||||||||||||
Household Products - 0.37% | |||||||||||||||
Spectrum Brands Holdings, Inc. | 34,467 | 2,122,133 | |||||||||||||
|
| ||||||||||||||
Total Consumer Staples | 5,138,500 | ||||||||||||||
|
| ||||||||||||||
See accompanying notes
25
American BeaconMid-Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.77% | |||||||||||||||
Energy - 8.51% | |||||||||||||||
Energy Equipment & Services - 2.39% | |||||||||||||||
Halliburton Co. | 180,688 | $ | 5,118,891 | ||||||||||||
National Oilwell Varco, Inc. | 176,712 | 4,619,252 | |||||||||||||
TechnipFMC PLC | 164,788 | 4,052,137 | |||||||||||||
|
| ||||||||||||||
13,790,280 | |||||||||||||||
|
| ||||||||||||||
Oil, Gas & Consumable Fuels - 6.12% | |||||||||||||||
Cenovus Energy, Inc. | 293,129 | 2,904,908 | |||||||||||||
Chesapeake Energy Corp.A B | 169,425 | 493,027 | |||||||||||||
EQT Corp. | 234,991 | 4,805,566 | |||||||||||||
Equitrans Midstream Corp.A | 228,483 | 4,759,301 | |||||||||||||
Golar LNG Ltd. | 70,689 | 1,381,263 | |||||||||||||
Hess Corp. | 81,350 | 5,216,162 | |||||||||||||
Kosmos Energy Ltd. | 275,310 | 1,841,824 | |||||||||||||
Murphy Oil Corp. | 204,279 | 5,564,560 | |||||||||||||
Parsley Energy, Inc., Class AA | 152,444 | 3,042,782 | |||||||||||||
Vermilion Energy, Inc.B | 205,408 | 5,250,228 | |||||||||||||
|
| ||||||||||||||
35,259,621 | |||||||||||||||
|
| ||||||||||||||
Total Energy | 49,049,901 | ||||||||||||||
|
| ||||||||||||||
Financials - 22.10% | |||||||||||||||
Banks - 5.65% | |||||||||||||||
Fifth Third Bancorp | 318,572 | 9,181,245 | |||||||||||||
FNB Corp. | 339,929 | 4,123,339 | |||||||||||||
KeyCorp | 338,619 | 5,942,763 | |||||||||||||
Pinnacle Financial Partners, Inc. | 33,586 | 1,950,339 | |||||||||||||
Regions Financial Corp. | 301,625 | 4,684,236 | |||||||||||||
Signature Bank | 34,865 | 4,604,621 | |||||||||||||
Valley National Bancorp | 201,226 | 2,108,849 | |||||||||||||
|
| ||||||||||||||
32,595,392 | |||||||||||||||
|
| ||||||||||||||
Capital Markets - 4.00% | |||||||||||||||
Apollo Global Management LLC, Class A, MLP | 133,530 | 4,365,096 | |||||||||||||
Franklin Resources, Inc. | 110,216 | 3,812,371 | |||||||||||||
Invesco Ltd. | 202,373 | 4,446,135 | |||||||||||||
KKR & Co., Inc., Class A | 256,201 | 6,264,114 | |||||||||||||
Northern Trust Corp. | 42,203 | 4,159,106 | |||||||||||||
|
| ||||||||||||||
23,046,822 | |||||||||||||||
|
| ||||||||||||||
Consumer Finance - 2.71% | |||||||||||||||
Ally Financial, Inc. | 281,746 | 8,370,674 | |||||||||||||
Navient Corp. | 230,154 | 3,109,380 | |||||||||||||
SLM Corp. | 408,163 | 4,146,936 | |||||||||||||
|
| ||||||||||||||
15,626,990 | |||||||||||||||
|
| ||||||||||||||
Diversified Financial Services - 2.86% | |||||||||||||||
AXA Equitable Holdings, Inc. | 314,064 | 7,126,112 | |||||||||||||
Jefferies Financial Group, Inc. | 162,322 | 3,338,964 | |||||||||||||
Voya Financial, Inc. | 110,272 | 6,052,830 | |||||||||||||
|
| ||||||||||||||
16,517,906 | |||||||||||||||
|
| ||||||||||||||
Insurance - 5.58% | |||||||||||||||
Assurant, Inc. | 31,613 | 3,003,235 | |||||||||||||
Axis Capital Holdings Ltd. | 221,615 | 12,598,813 | |||||||||||||
Fidelity National Financial, Inc. | 272,893 | 10,902,075 | |||||||||||||
Willis Towers Watson PLC | 30,583 | 5,637,670 | |||||||||||||
|
| ||||||||||||||
32,141,793 | |||||||||||||||
|
| ||||||||||||||
See accompanying notes
26
American BeaconMid-Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.77% (continued) | |||||||||||||||
Financials - 22.10% (continued) | |||||||||||||||
Mortgage Real Estate Investment Trusts (REITs) - 0.48% | |||||||||||||||
MFA Financial, Inc. | 367,152 | $ | 2,757,312 | ||||||||||||
|
| ||||||||||||||
Thrifts & Mortgage Finance - 0.82% | |||||||||||||||
New York Community Bancorp, Inc. | 405,470 | 4,715,616 | |||||||||||||
|
| ||||||||||||||
Total Financials | 127,401,831 | ||||||||||||||
|
| ||||||||||||||
Health Care - 4.91% | |||||||||||||||
Health Care Equipment & Supplies - 1.21% | |||||||||||||||
Zimmer Biomet Holdings, Inc. | 56,603 | 6,971,225 | |||||||||||||
|
| ||||||||||||||
Health Care Providers & Services - 2.97% | |||||||||||||||
Cardinal Health, Inc. | 74,948 | 3,650,717 | |||||||||||||
McKesson Corp. | 32,038 | 3,820,532 | |||||||||||||
MEDNAX, Inc.A | 55,301 | 1,546,769 | |||||||||||||
Universal Health Services, Inc., Class B | 63,828 | 8,097,858 | |||||||||||||
|
| ||||||||||||||
17,115,876 | |||||||||||||||
|
| ||||||||||||||
Pharmaceuticals - 0.73% | |||||||||||||||
Mylan N.V.A | 156,698 | 4,229,279 | |||||||||||||
|
| ||||||||||||||
Total Health Care | 28,316,380 | ||||||||||||||
|
| ||||||||||||||
Industrials - 17.87% | |||||||||||||||
Aerospace & Defense - 3.08% | |||||||||||||||
BWX Technologies, Inc. | 53,233 | 2,720,206 | |||||||||||||
Spirit AeroSystems Holdings, Inc., Class A | 73,470 | 6,384,543 | |||||||||||||
TransDigm Group, Inc.A | 17,938 | 8,655,444 | |||||||||||||
|
| ||||||||||||||
17,760,193 | |||||||||||||||
|
| ||||||||||||||
Airlines - 0.56% | |||||||||||||||
Alaska Air Group, Inc. | 51,620 | 3,195,278 | |||||||||||||
|
| ||||||||||||||
Building Products - 2.18% | |||||||||||||||
JELD-WEN Holding, Inc.A | 338,905 | 6,693,374 | |||||||||||||
Johnson Controls International PLC | 78,677 | 2,950,387 | |||||||||||||
Owens Corning | 57,217 | 2,933,516 | |||||||||||||
|
| ||||||||||||||
12,577,277 | |||||||||||||||
|
| ||||||||||||||
Commercial Services & Supplies - 1.14% | |||||||||||||||
Republic Services, Inc. | 79,602 | 6,592,637 | |||||||||||||
|
| ||||||||||||||
Construction & Engineering - 1.78% | |||||||||||||||
AECOMA | 183,391 | 6,216,955 | |||||||||||||
Jacobs Engineering Group, Inc. | 52,069 | 4,058,258 | |||||||||||||
|
| ||||||||||||||
10,275,213 | |||||||||||||||
|
| ||||||||||||||
Industrial Conglomerates - 1.02% | |||||||||||||||
Carlisle Cos, Inc. | 41,553 | 5,876,425 | |||||||||||||
|
| ||||||||||||||
Machinery - 4.67% | |||||||||||||||
Dover Corp. | 49,448 | 4,847,882 | |||||||||||||
Snap-on, Inc. | 24,999 | 4,206,832 | |||||||||||||
Stanley Black & Decker, Inc. | 82,780 | 12,135,548 | |||||||||||||
Terex Corp. | 101,604 | 3,386,461 | |||||||||||||
Wabtec Corp. | 31,771 | 2,353,278 | |||||||||||||
|
| ||||||||||||||
26,930,001 | |||||||||||||||
|
|
See accompanying notes
27
American BeaconMid-Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.77% (continued) | |||||||||||||||
Industrials - 17.87% (continued) | |||||||||||||||
Professional Services - 0.46% | |||||||||||||||
Nielsen Holdings PLC | 103,930 | $ | 2,653,333 | ||||||||||||
|
| ||||||||||||||
Road & Rail - 2.00% | |||||||||||||||
Avis Budget Group, Inc.A | 119,236 | 4,238,840 | |||||||||||||
Ryder System, Inc. | 115,713 | 7,289,919 | |||||||||||||
|
| ||||||||||||||
11,528,759 | |||||||||||||||
|
| ||||||||||||||
Trading Companies & Distributors - 0.98% | |||||||||||||||
AerCap Holdings N.V.A | 113,409 | 5,629,623 | |||||||||||||
|
| ||||||||||||||
Total Industrials | 103,018,739 | ||||||||||||||
|
| ||||||||||||||
Information Technology - 9.29% | |||||||||||||||
Electronic Equipment, Instruments & Components - 2.50% | |||||||||||||||
Anixter International, Inc.A | 94,381 | 5,933,734 | |||||||||||||
Avnet, Inc. | 174,631 | 8,488,813 | |||||||||||||
|
| ||||||||||||||
14,422,547 | |||||||||||||||
|
| ||||||||||||||
IT Services - 3.07% | |||||||||||||||
Alliance Data Systems Corp. | 20,822 | 3,333,602 | |||||||||||||
Conduent, Inc.A | 5,176 | 66,347 | |||||||||||||
Genpact Ltd. | 117,573 | 4,267,900 | |||||||||||||
KBR, Inc. | 266,506 | 5,921,763 | |||||||||||||
Total System Services, Inc. | 39,876 | 4,076,922 | |||||||||||||
|
| ||||||||||||||
17,666,534 | |||||||||||||||
|
| ||||||||||||||
Semiconductors & Semiconductor Equipment - 2.86% | |||||||||||||||
Marvell Technology Group Ltd. | 443,102 | 11,086,412 | |||||||||||||
Microchip Technology, Inc. | 53,719 | 5,365,991 | |||||||||||||
|
| ||||||||||||||
16,452,403 | |||||||||||||||
|
| ||||||||||||||
Technology Hardware, Storage & Peripherals - 0.86% | |||||||||||||||
Hewlett Packard Enterprise Co. | 315,047 | 4,980,893 | |||||||||||||
|
| ||||||||||||||
Total Information Technology | 53,522,377 | ||||||||||||||
|
| ||||||||||||||
Materials - 4.65% | �� | ||||||||||||||
Chemicals - 3.02% | |||||||||||||||
Ashland Global Holdings, Inc. | 82,771 | 6,665,549 | |||||||||||||
Axalta Coating Systems Ltd.A | 149,218 | 4,025,902 | |||||||||||||
Eastman Chemical Co. | 40,564 | 3,199,688 | |||||||||||||
Element Solutions, Inc. | 323,121 | 3,509,094 | |||||||||||||
|
| ||||||||||||||
17,400,233 | |||||||||||||||
|
| ||||||||||||||
Containers & Packaging - 1.63% | |||||||||||||||
Owens-Illinois, Inc. | 256,057 | 5,059,686 | |||||||||||||
Packaging Corp. of America | 43,870 | 4,350,149 | |||||||||||||
|
| ||||||||||||||
9,409,835 | |||||||||||||||
|
| ||||||||||||||
Total Materials | 26,810,068 | ||||||||||||||
|
| ||||||||||||||
Real Estate - 7.08% | |||||||||||||||
Equity Real Estate Investment Trusts (REITs) - 6.72% | |||||||||||||||
AvalonBay Communities, Inc. | 25,588 | 5,141,397 | |||||||||||||
EPR Properties | 74,343 | 5,862,689 | |||||||||||||
GEO Group, Inc. | 118,329 | 2,368,947 | |||||||||||||
HCP, Inc. | 122,834 | 3,657,996 |
See accompanying notes
28
American BeaconMid-Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
Shares | Fair Value | ||||||||||||||
COMMON STOCKS - 97.77% (continued) | |||||||||||||||
Real Estate - 7.08% (continued) | |||||||||||||||
Equity Real Estate Investment Trusts (REITs) - 6.72% (continued) | |||||||||||||||
Lamar Advertising Co., Class A | 75,496 | $ | 6,241,254 | ||||||||||||
Liberty Property Trust | 113,923 | 5,655,138 | |||||||||||||
MGM Growth Properties LLC, Class A | 303,253 | 9,782,942 | |||||||||||||
| �� | ||||||||||||||
38,710,363 | |||||||||||||||
|
| ||||||||||||||
Real Estate Management & Development - 0.36% | |||||||||||||||
Realogy Holdings Corp. | 161,574 | 2,103,693 | |||||||||||||
|
| ||||||||||||||
Total Real Estate | 40,814,056 | ||||||||||||||
|
| ||||||||||||||
Utilities - 5.46% | |||||||||||||||
Electric Utilities - 4.64% | |||||||||||||||
Edison International | 65,449 | 4,173,683 | |||||||||||||
Evergy, Inc. | 63,103 | 3,648,615 | |||||||||||||
FirstEnergy Corp. | 162,126 | 6,814,156 | |||||||||||||
Pinnacle West Capital Corp. | 56,906 | 5,421,435 | |||||||||||||
Xcel Energy, Inc. | 118,959 | 6,721,183 | |||||||||||||
|
| ||||||||||||||
26,779,072 | |||||||||||||||
|
| ||||||||||||||
Gas Utilities - 0.82% | |||||||||||||||
UGI Corp. | 86,524 | 4,716,423 | |||||||||||||
|
| ||||||||||||||
Total Utilities | 31,495,495 | ||||||||||||||
|
| ||||||||||||||
Total Common Stocks (Cost $494,907,525) | 563,624,371 | ||||||||||||||
|
| ||||||||||||||
SHORT-TERM INVESTMENTS - 2.22% (Cost $12,788,898) | |||||||||||||||
Investment Companies - 2.22% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%C D | 12,788,898 | 12,788,898 | |||||||||||||
|
| ||||||||||||||
SECURITIES LENDING COLLATERAL - 0.98% (Cost $5,641,139) | |||||||||||||||
Investment Companies - 0.98% | |||||||||||||||
American Beacon U.S. Government Money Market Select Fund, Select Class, 2.37%C D | 5,641,139 | 5,641,139 | |||||||||||||
|
| ||||||||||||||
TOTAL INVESTMENTS - 100.97% (Cost $513,337,562) | 582,054,408 | ||||||||||||||
LIABILITIES, NET OF OTHER ASSETS - (0.97%) | (5,605,658 | ) | |||||||||||||
|
| ||||||||||||||
TOTAL NET ASSETS - 100.00% | $ | 576,448,750 | |||||||||||||
|
| ||||||||||||||
Percentages are stated as a percent of net assets. |
ANon-income producing security.
B All or a portion of this security is on loan at April 30, 2019.
C The Fund is affiliated by having the same investment advisor.
D7-day yield.
LLC - Limited Liability Company.
MLP - Master Limited Partnership.
PLC - Public Limited Company.
Long Futures Contracts Open on April 30, 2019: |
| |||||||||||||||
Equity Futures Contracts | ||||||||||||||||
Description | Number of Contracts | Expiration Date | Notional Amount | Contract Value | Unrealized Appreciation (Depreciation) | |||||||||||
S&P MidCap 400E-Mini Index Futures | 68 | June 2019 | $ | 13,082,001 | $ | 13,419,120 | $ | 337,119 | ||||||||
|
|
|
|
|
| |||||||||||
$ | 13,082,001 | $ | 13,419,120 | $ | 337,119 | |||||||||||
|
|
|
|
|
|
Index Abbreviations: | ||
S&P 400 | Standard & Poor’s Midcap Index. |
See accompanying notes
29
American BeaconMid-Cap Value FundSM
Schedule of Investments
April 30, 2019 (Unaudited)
The Fund’s investments are summarized by level based on the inputs used to determine their values. As of April 30, 2019, the investments were classified as described below:
Mid-Cap Value Fund | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||
Common Stocks | $ | 563,624,371 | $ | - | $ | - | $ | 563,624,371 | ||||||||||||||||||||
Short-Term Investments | 12,788,898 | - | - | 12,788,898 | ||||||||||||||||||||||||
Securities Lending Collateral | 5,641,139 | - | - | 5,641,139 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Investments in Securities - Assets | $ | 582,054,408 | $ | - | $ | - | $ | 582,054,408 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Financial Derivative Instruments - Assets | ||||||||||||||||||||||||||||
Futures Contracts | $ | 337,119 | $ | - | $ | - | $ | 337,119 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total Financial Derivative Instruments - Assets | $ | 337,119 | $ | - | $ | - | $ | 337,119 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
U.S. GAAP requires transfers between all levels to/from level 3 to be disclosed. During the period ended April 30, 2019, there were no transfers into or out of Level 3.
See accompanying notes
30
Statements of Assets and Liabilities
April 30, 2019 (Unaudited)
Balanced Fund | Mid-Cap Value Fund | |||||||||||
Assets: | ||||||||||||
Investments in unaffiliated securities, at fair value†§ | $ | 279,110,665 | $ | 563,624,371 | ||||||||
Investments in affiliated securities, at fair value‡ | 4,729,491 | 18,430,037 | ||||||||||
Deposits with broker for futures contracts | 123,900 | 454,564 | ||||||||||
Dividends and interest receivable | 811,453 | 209,582 | ||||||||||
Receivable for investments sold | 221,543 | 2,700,880 | ||||||||||
Receivable for fund shares sold | 190,871 | 218,583 | ||||||||||
Receivable for tax reclaims | 462 | – | ||||||||||
Receivable for variation margin on open futures contracts (Note 5) | 40,617 | 337,274 | ||||||||||
Prepaid expenses | 227,249 | 83,171 | ||||||||||
|
|
|
| |||||||||
Total assets | 285,456,251 | 586,058,462 | ||||||||||
|
|
|
| |||||||||
Liabilities: | ||||||||||||
Payable for investments purchased | 385,607 | 1,567,884 | ||||||||||
Payable for fund shares redeemed | 442,239 | 1,919,427 | ||||||||||
Payable for expense reimbursement (Note 2) | – | 20 | ||||||||||
Management andsub-advisory fees payable (Note 2) | 81,030 | 334,794 | ||||||||||
Service fees payable (Note 2) | 49,746 | 74,758 | ||||||||||
Transfer agent fees payable (Note 2) | 11,304 | 20,358 | ||||||||||
Payable upon return of securities loaned (Note 9)§ | 364,350 | 5,641,139 | ||||||||||
Custody and fund accounting fees payable | 10,028 | 18,266 | ||||||||||
Professional fees payable | 28,624 | 23,560 | ||||||||||
Trustee fees payable (Note 2) | 1,739 | 5,073 | ||||||||||
Payable for prospectus and shareholder reports | 10,227 | – | ||||||||||
Other liabilities | 3,580 | 4,433 | ||||||||||
|
|
|
| |||||||||
Total liabilities | 1,388,474 | 9,609,712 | ||||||||||
|
|
|
| |||||||||
Net assets | $ | 284,067,777 | $ | 576,448,750 | ||||||||
|
|
|
| |||||||||
Analysis of net assets: | ||||||||||||
Paid-in-capital | $ | 236,578,976 | $ | 542,370,510 | ||||||||
Total distributable earnings (deficits)A | 47,488,801 | 34,078,240 | ||||||||||
|
|
|
| |||||||||
Net assets | $ | 284,067,777 | $ | 576,448,750 | ||||||||
|
|
|
|
See accompanying notes
31
American Beacon FundsSM
Statements of Assets and Liabilities
April 30, 2019 (Unaudited)
Balanced Fund | Mid-Cap Value Fund | |||||||||||
Shares outstanding at no par value (unlimited shares authorized): | ||||||||||||
Institutional Class | 3,520,334 | 13,730,091 | ||||||||||
|
|
|
| |||||||||
Y Class | 4,081,802 | 6,321,117 | ||||||||||
|
|
|
| |||||||||
Investor Class | 7,581,616 | 16,235,881 | ||||||||||
|
|
|
| |||||||||
Advisor Class | 442,744 | 222,951 | ||||||||||
|
|
|
| |||||||||
A Class | 1,201,794 | 298,665 | ||||||||||
|
|
|
| |||||||||
C Class | 2,350,493 | 333,182 | ||||||||||
|
|
|
| |||||||||
R6 Class | N/A | 11,831 | ||||||||||
|
|
|
| |||||||||
Net assets: | ||||||||||||
Institutional Class | $ | 56,018,539 | $ | 212,489,691 | ||||||||
|
|
|
| |||||||||
Y Class | $ | 65,413,244 | $ | 96,995,418 | ||||||||
|
|
|
| |||||||||
Investor Class | $ | 106,084,132 | $ | 254,002,999 | ||||||||
|
|
|
| |||||||||
Advisor Class | $ | 6,610,394 | $ | 3,380,978 | ||||||||
|
|
|
| |||||||||
A Class | $ | 16,776,894 | $ | 4,521,696 | ||||||||
|
|
|
| |||||||||
C Class | $ | 33,164,574 | $ | 4,874,843 | ||||||||
|
|
|
| |||||||||
R6 Class | N/A | $ | 183,125 | |||||||||
|
|
|
| |||||||||
Net asset value, offering and redemption price per share: | ||||||||||||
Institutional Class | $ | 15.91 | $ | 15.48 | ||||||||
|
|
|
| |||||||||
Y Class | $ | 16.03 | $ | 15.34 | ||||||||
|
|
|
| |||||||||
Investor Class | $ | 13.99 | $ | 15.64 | ||||||||
|
|
|
| |||||||||
Advisor Class | $ | 14.93 | $ | 15.16 | ||||||||
|
|
|
| |||||||||
A Class | $ | 13.96 | $ | 15.14 | ||||||||
|
|
|
| |||||||||
A Class (offering price) | $ | 14.81 | $ | 16.06 | ||||||||
|
|
|
| |||||||||
C Class | $ | 14.11 | $ | 14.63 | ||||||||
|
|
|
| |||||||||
R6 Class | N/A | $ | 15.48 | |||||||||
|
|
|
| |||||||||
† Cost of investments in unaffiliated securities | $ | 240,680,479 | $ | 494,907,525 | ||||||||
‡ Cost of investments in affiliated securities | $ | 4,729,491 | $ | 18,430,037 | ||||||||
§ Fair value of securities on loan | $ | 346,306 | $ | 5,451,883 | ||||||||
A The Fund’s investments in affiliated securities did not have unrealized appreciation (depreciation) at period end. |
|
See accompanying notes
32
American Beacon FundsSM
Statements of Operations
For the period ended April 30, 2019 (Unaudited)
Balanced Fund | Mid-Cap Value Fund | |||||||||||
Investment income: | ||||||||||||
Dividend income from unaffiliated securities (net of foreign taxes)† | $ | 2,524,442 | $ | 7,348,003 | ||||||||
Dividend income from affiliated securities (Note 8) | 59,395 | 264,044 | ||||||||||
Interest income | 1,581,733 | 5,799 | ||||||||||
Income derived from securities lending (Note 9) | 5,324 | 12,245 | ||||||||||
|
|
|
| |||||||||
Total investment income | 4,170,894 | 7,630,091 | ||||||||||
|
|
|
| |||||||||
Expenses: | ||||||||||||
Management andsub-advisory fees (Note 2) | 737,245 | 2,484,970 | ||||||||||
Transfer agent fees: | ||||||||||||
Institutional Class (Note 2) | 3,790 | 56,769 | ||||||||||
Y Class (Note 2) | 27,552 | 47,903 | ||||||||||
Investor Class | 3,819 | 6,466 | ||||||||||
Advisor Class | 227 | 1,088 | ||||||||||
A Class | 563 | 595 | ||||||||||
C Class | 1,229 | 700 | ||||||||||
R6 Class | - | 285 | ||||||||||
Custody and fund accounting fees | 38,139 | 53,470 | ||||||||||
Professional fees | 29,713 | 32,879 | ||||||||||
Registration fees and expenses | 41,958 | 62,663 | ||||||||||
Service fees (Note 2): | ||||||||||||
Investor Class | 154,743 | 460,371 | ||||||||||
Advisor Class | 6,615 | 3,992 | ||||||||||
A Class | 10,563 | 11,514 | ||||||||||
C Class | 20,057 | 3,264 | ||||||||||
Distribution fees (Note 2): | ||||||||||||
Advisor Class | 7,692 | 4,009 | ||||||||||
A Class | 20,966 | 13,908 | ||||||||||
C Class | 168,030 | 25,716 | ||||||||||
Prospectus and shareholder report expenses | 12,873 | 28,574 | ||||||||||
Trustee fees (Note 2) | 9,494 | 24,469 | ||||||||||
Other expenses | 18,449 | 27,050 | ||||||||||
|
|
|
| |||||||||
Total expenses | 1,313,717 | 3,350,655 | ||||||||||
|
|
|
| |||||||||
Net fees waived and expenses (reimbursed) / recouped (Note 2) | - | (249 | ) | |||||||||
|
|
|
| |||||||||
Net expenses | 1,313,717 | 3,350,406 | ||||||||||
|
|
|
| |||||||||
Net investment income | 2,857,177 | 4,279,685 | ||||||||||
|
|
|
| |||||||||
Realized and unrealized gain (loss) from investments: | ||||||||||||
Net realized gain from: | ||||||||||||
Investments in unaffiliated securitiesA | 7,336,410 | (33,924,664 | ) | |||||||||
Commission recapture (Note 1) | 3,650 | 29,005 | ||||||||||
Foreign currency transactions | (406 | ) | (309 | ) | ||||||||
Futures contracts | (180,661 | ) | 1,035,044 | |||||||||
Change in net unrealized appreciation of: | ||||||||||||
Investments in unaffiliated securitiesB | 6,503,557 | 69,685,756 | ||||||||||
Foreign currency transactions | - | 224 | ||||||||||
Futures contracts | 281,376 | 1,784,664 | ||||||||||
|
|
|
| |||||||||
Net gain from investments | 13,943,926 | 38,609,720 | ||||||||||
|
|
|
| |||||||||
Net increase in net assets resulting from operations | $ | 16,801,103 | $ | 42,889,405 | ||||||||
|
|
|
| |||||||||
† Foreign taxes | $ | 20,351 | $ | 42,102 | ||||||||
A The Fund did not recognize net realized gains (losses) from the sale of investments in affiliated securities. |
| |||||||||||
B The Fund’s investments in affiliated securities did not have a change in unrealized appreciation (depreciation) at period end. |
|
See accompanying notes
33
Statements of Changes in Net Assets
Balanced Fund | Mid-Cap Value Fund | |||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||||||||
Increase (decrease) in net assets: | ||||||||||||||||||||||||||||
Operations: | ||||||||||||||||||||||||||||
Net investment income | $ | 2,857,177 | $ | 5,594,543 | $ | 4,279,685 | $ | 8,243,269 | ||||||||||||||||||||
Net realized gain (loss) from investments in unaffiliated securities, commission recapture, foreign currency transactions, and futures contracts | 7,158,993 | 22,789,700 | (32,860,924 | ) | 39,046,228 | |||||||||||||||||||||||
Change in net unrealized appreciation (depreciation) of investments in unaffiliated securities, foreign currency transactions, and futures contracts | 6,784,933 | (24,223,813 | ) | 71,470,644 | (114,181,076 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in net assets resulting from operations | 16,801,103 | 4,160,430 | 42,889,405 | (66,891,579 | ) | |||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Distributions to shareholders: |
| |||||||||||||||||||||||||||
Total retained earnings: | ||||||||||||||||||||||||||||
Institutional Class | (4,465,337 | ) | (6,261,952 | ) | (16,149,794 | ) | (9,434,653 | ) | ||||||||||||||||||||
Y Class | (5,244,841 | ) | (4,822,027 | ) | (6,006,149 | ) | (3,447,030 | ) | ||||||||||||||||||||
Investor Class | (8,848,654 | ) | (9,640,824 | ) | (22,741,996 | ) | (9,262,634 | ) | ||||||||||||||||||||
Advisor Class | (481,792 | ) | (761,574 | ) | (198,759 | ) | (94,728 | ) | ||||||||||||||||||||
A Class | (1,462,663 | ) | (1,718,656 | ) | (712,238 | ) | (434,137 | ) | ||||||||||||||||||||
C Class | (2,858,368 | ) | (2,976,692 | ) | (313,970 | ) | (184,144 | ) | ||||||||||||||||||||
R6 Class | – | – | (12,536 | ) | – | |||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net distributions to shareholders | (23,361,655 | ) | (26,181,725 | ) | (46,135,442 | ) | (22,857,326 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Capital share transactions (Note 11): | ||||||||||||||||||||||||||||
Proceeds from sales of shares | 21,902,478 | 53,469,502 | 66,908,704 | 405,914,174 | ||||||||||||||||||||||||
Reinvestment of dividends and distributions | 22,646,081 | 25,384,629 | 45,842,063 | 22,545,457 | ||||||||||||||||||||||||
Cost of shares redeemed | (53,428,753 | ) | (109,865,841 | ) | (279,441,373 | ) | (261,376,072 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in net assets from capital share transactions | (8,880,194 | ) | (31,011,710 | ) | (166,690,606 | ) | 167,083,559 | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in net assets | (15,440,746 | ) | (53,033,005 | ) | (169,936,643 | ) | 77,334,654 | |||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net assets: | ||||||||||||||||||||||||||||
Beginning of period | 299,508,523 | 352,541,528 | 746,385,393 | 669,050,739 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
End of period | $ | 284,067,777 | $ | 299,508,523 | $ | 576,448,750 | $ | 746,385,393 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
See accompanying notes
34
Notes to Financial Statements
April 30, 2019 (Unaudited)
1. Organization and Significant Accounting Policies
American Beacon Funds (the “Trust”), is organized as a Massachusetts business trust. The Funds, each a series within the Trust, are registered under the Investment Company Act of 1940, as amended (the “Act”), as diversified,open-end management investment companies. As of April 30, 2019, the Trust consists of thirty-three active series, two of which are presented in this filing: American Beacon Balanced Fund and American BeaconMid-Cap Value Fund (collectively, the “Funds” and each individually a “Fund”). The remainingthirty-one active series are reported in separate filings.
American Beacon Advisors, Inc. (the “Manager”) is a Delaware corporation and a wholly-owned subsidiary of Resolute Investment Managers, Inc. (“RIM”) organized in 1986 to provide business management, advisory, administrative, and asset management consulting services to the Trust and other investors. The Manager is registered as an investment advisor under the Investment Advisers Act of 1940, as amended (the “Advisers Act”). RIM is, in turn, a wholly-owned subsidiary of Resolute Acquisition, Inc., which is a wholly-owned subsidiary of Resolute Topco, Inc., a wholly-owned subsidiary of Resolute Investment Holdings, LLC (“RIH”). RIH is owned primarily 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”) or Estancia Capital Management, LLC (“Estancia”), which are private equity firms.
Recent Accounting Pronouncements
In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2017-08,Premium Amortization of Purchased Callable Debt Securities. The amendments in the ASU shorten the premium amortization period on a purchased callable debt security from the security’s contractual life to the earliest call date. It is anticipated that this change will enhance disclosures by reducing losses recognized when a security is called on an earlier date. This ASU is effective for fiscal years beginning after December 15, 2018. The Manager continues to evaluate the impact this ASU will have on the financial statements and other disclosures.
In August 2018, the FASB issued ASU2018-13,Fair Value Measurement (“Topic 820”). The amendments in the ASU impact disclosure requirements for fair value measurement. It is anticipated that this change will enhance the effectiveness of disclosures in the notes to the financial statements. This ASU is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted and can include the entire standard or certain provisions that exclude or amend disclosures. For the period ended April 30, 2019, the Funds have chosen to adopt the standard. The adoption of this ASU guidance did not have a material impact on the financial statements and other disclosures.
Class Disclosure
Each Fund has multiple classes of shares designed to meet the needs of different groups of investors; however, not all of the Funds offer all classes. The following table sets forth the differences amongst the classes:
Class | Eligible Investors | Minimum Initial Investments | ||||
Institutional | Large institutional investors - sold directly or through intermediary channels. | $ | 250,000 | |||
Y Class | Large institutional retirement plan investors - sold directly or through intermediary channels. | $ | 100,000 | |||
Investor | All investors using intermediary organizations, such as broker-dealers or retirement plan sponsors. | $ | 2,500 | |||
Advisor Class | All investors who invest through intermediary organizations, such as broker-dealers or third party administrators. | $ | 2,500 |
35
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Class | Eligible Investors | Minimum Initial Investments | ||||
A Class | All investors who invest through intermediary organizations, such as broker-dealers or third party administrator. Retail investors who invest directly through a financial intermediary such as a broker, bank, or registered investment advisor which may include afront-end sales charge and a contingent deferred sales charge (“CDSC”). | $ | 2,500 | |||
C Class | Retail investors who invest directly through a financial intermediary such as a broker or through employee directed benefit plans with applicable sales charges which may include CDSC. | $ | 1,000 | |||
R6 Class | Large institutional retirement plan investors - sold through retirement plan sponsors. | None |
Each class offered by the Trust has equal rights as to assets and voting privileges. Income andnon-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 service, distribution, transfer agent fees, andsub-transfer agent fees that vary amongst the classes as described more fully in Note 2.
Significant Accounting Policies
The following is a summary of significant accounting policies, consistently followed by the Funds in preparation of the financial statements. The Funds are considered investment companies and accordingly, follow the investment company accounting and reporting guidance of the FASB Accounting Standards Codification Topic 946,Financial Services – Investment Companies,a part of Generally Accepted Accounting Principles (“U.S. GAAP”).
Security Transactions and Investment Income
Security transactions are recorded as of the trade date for financial reporting purposes. Securities purchased or sold on a when-issued or delayed-delivery basis may be settled beyond a standard settlement period for the security after the trade date.
Dividend income, net of foreign taxes, is recorded on theex-dividend date, except certain dividends from foreign securities which are recorded as soon as the information is available to the Funds. Interest income, net of foreign taxes, is earned from settlement date, recorded on the accrual basis, and adjusted, if necessary, for accretion of discounts and amortization of premiums. For convertible securities, premiums attributable to the conversion feature are not amortized. Realized gains (losses) from securities sold are determined on the basis of specific lot identification. Estimated tax liabilities on certain foreign securities are recorded on an accrual basis and are reflected as components of interest income or net change in unrealized appreciation (depreciation) on investments on the Statements of Operations, as appropriate. Tax liabilities realized as a result of such security sales are reflected as a component of net realized gain (loss) on investments on the Statements of Operations. Paydown gains (losses) on mortgage-related and other asset-backed securities, if any, are recorded as components of interest income on the Statements of Operations. Income or short-term capital gain distributions received from registered investment companies, if any, are recorded as dividend income. Long-term gain distributions received from registered investment companies, if any, are recorded as realized gains.
Debt obligations may be placed on anon-accrual status and related interest income may be reduced by ceasing current accruals and writing off interest receivable when the collection of all or a portion of interest has become doubtful based on consistently applied procedures. A debt obligation is removed fornon-accrual when the issuer resumes interest payments or when collectability of interest is probable. Realized gains (losses) from securities sold are determined on the basis of specific lot identification.
36
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Distributions to Shareholders
Distributions, if any, of net investment income of the Balanced Fund will normally be declared and paid quarterly. Distributions, if any, of net investment income of the Mid-Cap Value Fund will normally be declared and be 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. To the extent necessary to fully distribute capital gains, the Funds may designate earnings and profits distributed to shareholders on the redemption of shares.
Commission Recapture
The Funds have established brokerage commission recapture arrangements with certain brokers or dealers. If 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, Trust Expenses, Gains, and Losses
Investment income, realized and unrealized gains and losses from investments of the Funds are allocated daily to each class of shares based upon the relative proportion of net assets of each class to the total net assets of the Funds. Expenses directly charged or attributable to the Fund will be paid from the assets of the Fund. Generally, expenses of the Trust will be allocated among and charged to the assets of the Funds on a basis that the Trust’s Board of Trustees (the “Board”) deems fair and equitable, which may be based on the relative net assets of the Funds or nature of the services performed and relative applicability to the Funds.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimated.
Other
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities 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.
Concentration of Ownership
From time to time, the Funds may have a concentration of one or more accounts constituting a significant percentage of shares outstanding. Investment activities by holders of accounts that represent a significant ownership of more than 5% of the Funds’ outstanding shares could have a material impact on the Funds. As of April 30, 2019, based on management’s evaluation of the shareholder account base, exclusive of omnibus accounts, one account has been identified as representing anon-affiliated significant ownership of approximately 8% of the Balanced Fund’s outstanding shares.
37
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
2. Transactions with Affiliates
Management and InvestmentSub-Advisory Agreements
The Funds and the Manager are parties to a Management Agreement that obligates the Manager to provide the Funds with investment advisory and administrative services. As compensation for performing the duties under the Management Agreement, the Manager will receive an annualized management fee based on a percentage of each Fund’s average daily net assets that is calculated and accrued daily according to the following schedule:
First $15 billion | 0.35 | % | ||
Next $15 billion | 0.325 | % | ||
Over $30 billion | 0.30 | % |
The Trust, on behalf of the Funds, and the Manager have entered into Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC; Brandywine Global Investment Management, LLC; and Hotchkis and Wiley Capital Management, LLC for the Balanced Fund. In addition, the Manager manages a portion of the Balanced Fund pursuant to the Management Agreement. The Trust, on behalf of the Funds, and the Manager have entered into Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, LLC; Pzena Investment Management, LLC; and WEDGE Capital Management, L.L.P. for theMid-Cap Value Fund. Pursuant to the Investment Advisory Agreements, the Funds have agreed to pay an annualizedsub-advisory fee that is calculated and accrued daily based on the Funds’ average daily net assets.
The Management andSub-Advisory Fees paid by the Funds for the period ended April 30, 2019 were as follows:
Balanced Fund
Effective Fee Rate | Amount of Fees Paid | |||||||||||
Management Fees | 0.35 | % | $ | 490,427 | ||||||||
Sub-Advisor Fees | 0.17 | % | 246,818 | |||||||||
|
|
|
| |||||||||
Total | 0.52 | % | $ | 737,245 | ||||||||
|
|
|
|
Mid-Cap Value Fund
Effective Fee Rate | Amount of Fees Paid | |||||||||||
Management Fees | 0.35 | % | $ | 1,148,896 | ||||||||
Sub-Advisor Fees | 0.41 | % | 1,336,074 | |||||||||
|
|
|
| |||||||||
Total | 0.76 | % | $ | 2,484,970 | ||||||||
|
|
|
|
As compensation for services provided by the Manager in connection with securities lending activities conducted by the Funds, the lending Fund pays to the Manager, with respect to cash collateral posted by borrowers, a fee up to 10% of the net monthly interest income (the gross interest income earned by the investment of cash collateral, less the amount paid to borrowers and related expenses) from such activities and, with respect to loan fees paid by borrowers, a fee up to 10% of such loan fees. These fees are included in “Income derived from securities lending” and “Management and investment advisory fees” on the Statements of Operations. During the period ended April 30, 2019, the Manager received securities lending fees of $430 and $1,064 for the securities lending activities of the Balanced Fund andMid-Cap Value Fund, respectively. Please see Note 9 for more information on securities lending.
Distribution Plans
The Funds, except for the Advisor, A, and C Classes of the Funds, have adopted a “defensive” Distribution Plan (the “Plan”) in accordance with Rule12b-1 under the Act, pursuant to which no separate fees may be charged
38
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
to the Funds for distribution purposes. However, the Plan authorizes the management fee received by the Manager and the investment advisors hired by the Manager to be used for distribution purposes. Under this Plan, the Funds do not intend to compensate the Manager or any other party, either directly or indirectly, for the distribution of Fund shares.
Separate Distribution Plans (the “Distribution Plans”) have been adopted pursuant to Rule12b-1 under the Act for the Advisor, A, and C Classes of the Funds. Under the Distribution Plans, as compensation for distribution and shareholder servicing assistance, the Manager receives an annual fee of 0.25% of the average daily net assets of the Advisor and A Classes, and 1.00% of the average daily net assets of the C Class. The fee will be payable without regard to whether the amount of the fee is more or less than the actual expenses incurred in a particular month by the Manager for distribution assistance.
Service Plans
The Manager and the Trust entered into Service Plans that obligate the Manager to oversee additional shareholder servicing of the Investor, A, and C Classes of the Funds. As compensation for performing the duties required under the Service Plans, the Manager receives an annualized fee up to 0.25% of the average daily net assets of the A and C Classes, up to 0.25% of the average daily net assets of the Advisor Class, and up to 0.375% of the average daily net assets of the Investor Class of the Funds.
Sub-Transfer Agent Fees
The Manager has entered into agreements, which include servicing agreements, with financial intermediaries that provide recordkeeping, processing, shareholder communications and other services to customers of the intermediaries that hold positions in the Institutional and Y Classes of the Funds and has agreed to compensate the intermediaries for providing these services. Intermediaries transact with the Funds primarily through the use of omnibus accounts on behalf of their customers who hold positions in the Funds. Certain services would have been provided by the Funds’ transfer agent and other service providers if the shareholders’ accounts were maintained directly by the Funds’ transfer agent. Accordingly, the Funds, pursuant to Board approval, have agreed to reimburse the Manager for certainnon-distribution shareholder services provided by financial intermediaries for the Institutional and Y Classes. The reimbursement amounts(sub-transfer agent fees) paid to the Manager are subject to a fee limit of up to 0.10% of an intermediary’s average net assets in the Institutional and Y Classes on an annual basis. During the period ended April 30, 2019, thesub-transfer agent fees, as reflected in “Transfer agent fees” on the Statements of Operations, were as follows:
Fund | Sub-Transfer Agent Fees | |||
Balanced | $ | 29,666 | ||
Mid-Cap Value | 92,805 |
As of April 30, 2019, the Funds owed the Manager the following reimbursement ofsub-transfer agent fees, as reflected in “Transfer agent fees payable” on the Statements of Assets and Liabilities:
Fund | Reimbursement Sub-Transfer Agent Fees | |||
Balanced | $ | 6,767 | ||
Mid-Cap Value | 9,589 |
Investments in Affiliated Funds
The Funds may invest in the American Beacon U.S. Government Money Market Select Fund (the “USG Select Fund”). Cash collateral received by the Funds in connection with securities lending may also be invested in the USG Select Fund. The Funds and the USG Select Fund have the same investment advisor and therefore, are considered to be affiliated. The Manager serves as investment advisor to the USG Select Fund and receives management fees
39
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
and administrative fees totaling 0.10% of the average daily net assets of the USG Select Fund. During the period ended April 30, 2019, the Manager earned fees on the Funds’ direct investments and securities lending collateral investments in the USG Select Fund as shown below:
Fund | Direct Investments in USG Select Fund | Securities Lending Collateral Investments in USG Select Fund | Total | |||||||||
Balanced | $ | 2,660 | $ | 691 | $ | 3,351 | ||||||
Mid-Cap Value | 11,708 | 2,971 | 14,679 |
Interfund Credit Facility
Pursuant to an exemptive order issued by the SEC, the Funds, along with other registered investment companies having management contracts with the Manager, may participate in a credit facility whereby each fund, under certain conditions, is permitted to lend money directly to and borrow directly from other participating funds for temporary purposes. The interfund credit facility is advantageous to the funds because it provides added liquidity, and eliminates the need to maintain higher cash balances to meet redemptions. This situation could arise when shareholder redemptions exceed anticipated volumes and certain funds have insufficient cash on hand to satisfy such redemptions or when sales of securities do not settle as expected, resulting in a cash shortfall for a fund. When a fund liquidates portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to two days (or longer for certain foreign transactions). Redemption requests normally are satisfied on the next business day. The credit facility provides a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities. The credit facility is administered by a credit facility team consisting of professionals from the Manager’s asset management, compliance, and accounting areas who report the activities of the credit facility to the Board. During the period ended April 30, 2019, the Balanced Fund borrowed on average $685,888 for 2 days at an average interest rate of 3.11% with interest charges of $114. These amounts are recorded as “Other expenses” in the Statements of Operations. During the period ended April 30, 2019, the Mid-Cap Value Fund did not utilize the credit facility.
Expense Reimbursement Plan
The Manager contractually agreed to reduce fees and/or reimburse expenses for the classes of the Funds to the extent that total operating expenses exceed the Funds’ expense cap. During the period ended April 30, 2019, the Manager waived and/or reimbursed expenses as follows:
Expense Cap | Expiration of Reimbursed Expenses | |||||||||||||||||||||
Fund | Class | 11/1/2018 - 2/28/19 | 3/1/2019 - 4/30/2019 | Reimbursed Expenses | (Recouped) Expenses | |||||||||||||||||
Mid-Cap Value | R6 | 0.88 | %(1) | 0.83 | % | $ | 249 | $ | - | 2022 |
(1) | Voluntary expense cap. |
Of these amounts, $20 was disclosed as a payable to the Manager on the Statements of Assets and Liabilities at April 30, 2019 for theMid-Cap Value Fund.
The Funds have adopted an Expense Reimbursement Plan whereby the Manager may seek repayment of such fee reductions and expense reimbursements. Under the policy, the Manager can be reimbursed by the Funds for any contractual fee reductions or expense reimbursements if reimbursement to the Manager (a) occurs within three years after the Manager’s own waiver or reimbursement and (b) does not cause the Funds’ annual operating expenses to exceed the lesser of the contractual percentage limit in effect at the time of the waiver/reimbursement or time of recoupment. The reimbursed expenses listed above will expire in 2022. The Fund did not record a liability for potential reimbursement due to the current assessment that a reimbursement is unlikely.
40
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Sales Commissions
The Funds’ Distributor, Resolute Investment Distributors, Inc. (“RID” or “Distributor”), may receive a portion of Class A sales charges from broker dealers and it may be used to offset distribution related expenses. During the period ended April 30, 2019, RID collected $3,435 for Balanced Fund from the sale of Class A Shares. During the period ended April 30, 2019, there were no sales charges collected by RID for Mid-Cap Value 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 Funds’ 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 April 30, 2019, there were no CDSC fees collected for Class A Shares of the Funds.
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 Funds’ 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 April 30, 2019, CDSC fees of $2,422 and $168 were collected for Class C Shares of the Balanced Fund andMid-Cap Value Fund, respectively.
Trustee Fees and Expenses
As compensation for their service to the Trusts, each Trustee receives an annual retainer of $120,000, plus $10,000 for each Board meeting attended in person or via teleconference, $2,500 for attendance by Committee members at meetings of the Audit Committee and the Investment Committee, and $1,500 for attendance by Committee members at meetings of the Nominating and Governance Committee, plus reimbursement of reasonable expenses incurred in attending Board meetings, Committee meetings, and relevant educational seminars. The Trustees also may be compensated for attendance at special Board and/or Committee meetings from time to time. The Board Chair receives an additional annual retainer of $50,000 as well as a $2,500 fee each quarter for attendance at the committee meetings. The Chairpersons of the Audit Committee and the Investment Committee each receive an additional annual retainer of $25,000 and the Chairman of the Nominating and Governance Committee receives an additional annual retainer of $10,000. These expenses are allocated on a prorated basis to each fund of the Trusts according to its respective net assets.
3. Security Valuation and Fair Value Measurements
The price of the Fund’s shares is based on its net asset value (“NAV”) per share. The Fund’s NAV is computed by adding total assets, subtracting all the Fund’s liabilities, and dividing the result by the total number of shares outstanding.
The NAV of each class of the Fund’s shares is determined based on a pro rata allocation of the Fund’s investment income, expenses and total capital gains and losses. The Fund’s NAV per share is determined each business day as of the regular close of trading on the New York Stock Exchange (“NYSE” or “Exchange”), which is typically 4:00 p.m. Eastern Time (“ET”). However, if trading on the NYSE closes at a time other than 4:00 p.m. ET, the Fund’s NAV per share typically would still be determined as of the regular close of trading on the NYSE. The Fund does not price its shares on days that the NYSE is closed. Foreign exchanges may permit trading in foreign securities on days when the Fund is not open for business, which may result in the value of the Fund’s portfolio investments being affected at a time when you are unable to buy or sell shares.
Equity securities, including shares ofclosed-end funds and exchange-traded funds (“ETFs”), are valued at the last sale price or official closing price taken from the primary exchange in which each security trades. Investments in other mutual funds are valued at the closing NAV per share on the day of valuation. Debt securities are valued at bid quotes from broker/dealers or evaluated bid prices from pricing services, who may consider a
41
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
number of inputs and factors, such as prices of comparable securities, yield curves, spreads, credit ratings, coupon rates, maturity, default rates, and underlying collateral. Futures are valued based on their daily settlement prices. Exchange-traded andover-the-counter (“OTC”) options are valued at the last sale price. Options with no last sale for the day are priced at mid quote. Swaps are valued at evaluated mid prices from pricing services.
The valuation of securities traded on foreign markets and certain fixed income securities will generally be based on prices determined as of the earlier closing time of the markets on which they primarily trade unless a significant event has occurred. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. ET.
Securities may be valued at fair value, as determined in good faith and pursuant to procedures approved by the Board, under certain limited circumstances. For example, fair value pricing will be used when market quotations are not readily available or reliable, as determined by the Manager, such as when (i) trading for a security is restricted or stopped; (ii) a security’s trading market is closed (other than customary closings); or (iii) a security has beende-listed from a national exchange. A security with limited market liquidity may require fair value pricing if the Manager determines that the available price does not reflect the security’s true market value. In addition, if a significant event that the Manager determines to affect the value of one or more securities held by the Fund occurs after the close of a related exchange but before the determination of the Fund’s NAV, fair value pricing may be used on the affected security or securities. Securities of small-capitalization companies are also more likely to require a fair value determination using these procedures because they are more thinly traded and less liquid than the securities of larger-capitalization companies. The Fund may fair value securities as a result of significant events occurring after the close of the foreign markets in which the Fund invests as described below. In addition, the Fund may invest in illiquid securities requiring these procedures.
The Fund may use fair value pricing for securities primarily traded innon-U.S. markets because most foreign markets close well before the Fund’s pricing time of 4:00 p.m. ET. 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. If the Manager determines that the last quoted prices ofnon-U.S. securities will, in its judgment, materially affect the value of some or all its portfolio securities, the Manager can 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. These securities are fair valued using a pricing service, using methods approved by the Board, that 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 American Depositary Receipts (“ADRs”) and futures contracts. The Valuation Committee, established by the Board, may also fair value securities in other situations, such as when a particular foreign market is closed but the Fund is open. The Fund uses outside pricing services to provide 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.
Attempts to determine the fair value of securities introduce an element of subjectivity to the pricing of securities. As a result, the price of a security determined through fair valuation techniques may differ from the price quoted or published by other sources and may not accurately reflect the market value of the security when trading resumes. If a reliable market quotation becomes available for a security formerly valued through fair valuation techniques, the Manager compares the new market quotation to the fair value price to evaluate the effectiveness of the Fund’s fair valuation procedures. If any significant discrepancies are found, the Manager may adjust the Fund’s fair valuation procedures.
42
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Valuation Inputs
Various inputs may be used to determine the fair value of the Funds’ investments. These inputs are summarized in three broad levels for financial statement purposes. The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.
Level 1 | - | Quoted prices in active markets for identical securities. | ||
Level 2 | - | Prices determined using other significant observable inputs. These may include quoted prices for similar securities, interest rates, prepayment speeds, credit risk, and others. | ||
Level 3 | - | Prices determined using other significant unobservable inputs. Unobservable inputs reflect the Fund’s own assumptions about the factors market participants would use in pricing an investment. |
Level 1 and Level 2 trading assets and trading liabilities, at fair value
Common stocks, preferred securities, and financial derivative instruments, such as futures contracts that are traded on a national securities exchange, are stated at the last reported sale or settlement price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Preferred securities and other equities traded on inactive markets or valued by reference to similar instruments are generally categorized as Level 2 of the fair value hierarchy.
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, andnon-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 aremarked-to-market daily until settlement at the forward settlement date and are categorized as Level 2 of the fair value hierarchy.
Mortgage-related and asset-backed securities (“ABS”) are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker-dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, current market data, estimated cash flows, and market-based yield spreads for each tranche, and incorporates deal collateral performance, as available. Mortgage-related and ABS that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.
Investments in registeredopen-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.
4. Securities and Other Investments
Agency Mortgage-Backed Securities
Certain mortgage-backed securities (“MBS”) may be issued or guaranteed by the U.S. government or a government sponsored entity, such as the Federal National Mortgage Association (“Fannie Mae”) or the Federal Home Loan Mortgage Corporation (“Freddie Mac”). Although these instruments may be guaranteed by the U.S. government or a government sponsored entity, many such MBS are not backed by the full faith and credit of the United States and are still exposed to the risk ofnon-payment.
43
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
American Depositary Receipts andNon-Voting Depositary Receipts
ADRs are depositary receipts for foreign issuers in registered form traded in U.S. securities markets.Non-Voting Depositary Receipts (“NVDRs”) represent financial interests in an issuer but the holder is not entitled to any voting rights. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers, and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the 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.
Asset-Backed Securities
ABS are securities issued by trusts and special purpose entities that are backed by pools of assets, such as automobile and credit-card receivables and home equity loans, which pass through the payments on the underlying obligations to the security holders (less servicing fees paid to the originator or fees for any credit enhancement). Typically, loans or accounts receivable paper are transferred from the originator to a specially created trust, which repackages the trust’s interests as securities with a minimum denomination and a specific term. The securities are then privately placed or publicly offered. Examples include certificates for automobile receivables andso-called plastic bonds, backed by credit card receivables. The Balanced Fund is permitted to invest in ABS, subject to the Fund’s rating and quality requirements.
The value of an ABS is affected by, among other things, changes in the market’s perception of the asset backing the security, the creditworthiness of the servicing agent for the loan pool, the originator of the loans and the financial institution providing any credit enhancement. Payments of principal and interest passed through to holders of ABS are frequently supported by some form of credit enhancement, such as a letter of credit, surety bond, limited guarantee by another entity or by having a priority to certain of the borrower’s other assets. The degree of credit enhancement varies, and generally applies to only a portion of the ABS’s par value. Value is also affected if any credit enhancement has been exhausted.
Common Stock
Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or OTC. OTC stock may be less liquid than exchange-traded stock.
44
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Fixed-Income Investments
The Funds may hold debt, including government and corporate debt, and other fixed-income securities. Typically, the values of fixed-income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed-income securities is interest rate risk, which is the risk that their value will generally decline as prevailing interest rates rise, which may cause the Funds’ NAV to likewise decrease, and vice versa. How specific fixed-income securities may react to changes in interest rates will depend on the specific characteristics of each security. For example, while securities with longer maturities tend to produce higher yields, they also tend to be more sensitive to changes in prevailing interest rates and are, therefore, more volatile than shorter-term securities and are subject to greater market fluctuations as a result of changes in interest rates. Fixed-income securities are also subject to credit risk, which is the risk that the credit strength of an issuer of a fixed-income security will weaken and/or that the issuer will be unable to make timely principal and interest payments and that the security may go into default. In addition, there is prepayment risk, which is the risk that during periods of falling interest rates, certain fixed-income securities with higher interest rates, such as mortgage-backed securities (“MBS”) and ABS, may be prepaid by their issuers thereby reducing the amount of interest payments. This may result in a Fund having to reinvest its proceeds in lower yielding securities. Securities underlying MBS and ABS, which may include subprime mortgages, also may be subject to a higher degree of credit risk, valuation risk, and liquidity risk.
Foreign Debt Securities
The Balanced Fund may invest in foreign fixed and floating rate income securities (including emerging market securities) all or a portion of which may benon-U.S. dollar denominated and which include: (a) debt obligations issued or guaranteed by foreign national, provincial, state, municipal or other governments with taxing authority or by their agencies or instrumentalities, including Brady Bonds; (b) debt obligations of supranational entities; (c) debt obligations of the U.S. Government issued innon-dollar securities; (d) debt obligations and other fixed income securities of foreign corporate issuers (both dollar andnon-dollar denominated); and (e) U.S. corporate issuers (both Eurodollar andnon-dollar denominated). There is no minimum rating criteria for the Funds’ investments in such securities. Investing in the securities of foreign issuers involves special considerations that are not typically associated with investing in the securities of U.S. issuers. In addition, emerging markets are markets that have risks that are different and higher than those in more developed markets.
Foreign Securities
The Funds may invest in U.S. dollar-denominated andnon-U.S. dollar denominated equity and debt securities of foreign issuers and foreign branches of U.S. banks, including negotiable certificates of deposit (“CDs”), bankers’ acceptances, and commercial paper. Foreign issuers are issuers organized and doing business principally outside the United States and include corporations, banks,non-U.S. governments, and quasi-governmental organizations. While investments in foreign securities may be intended to reduce risk by providing further diversification, such investments involve sovereign and other risks, in addition to the credit and market risks normally associated with domestic securities. These additional risks include the possibility of adverse political and economic developments (including political or social instability, nationalization, expropriation, or confiscatory taxation); the potentially adverse effects of unavailability of public information regarding issuers, different governmental supervision and regulation of financial markets, reduced liquidity of certain financial markets, and the lack of uniform accounting, auditing, and financial reporting standards or the application of standards that are different or less stringent than those applied in the United States; different laws and customs governing securities tracking; and possibly limited access to the courts to enforce the Funds’ rights as an investor.
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
45
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
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.
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. Restricted securities outstanding during the period ended April 30, 2019 are disclosed in the Notes to the Schedules of Investments.
Regulation S under the Securities Act permits the sale abroad of securities that are not registered for sale in the United States and includes a provision for U.S. investors, such as the Funds, to purchase such unregistered securities if certain conditions are met.
Mortgage-Backed Securities
MBS often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of the Funds’ portfolio at the time resulting in reinvestment risk.
Rising or high interest rates may result in slower than expected principal payments which may tend to extend the duration of MBS, making them more volatile and more sensitive to changes in interest rates. This is known as extension risk.
MBS may have less potential for capital appreciation than comparable fixed-income securities due to the likelihood of increased prepayments of mortgages resulting from foreclosures or declining interest rates. These foreclosed or refinanced mortgages are paid off at face value (par) or less, causing a loss, particularly for any investor who may have purchased the security at a premium or a price above par. In such an environment, this risk limits the potential price appreciation of these securities.
Mortgage-Related and Other Asset-Backed Securities
The Balanced Fund may invest in mortgage or other ABS. These securities may include mortgage instruments issued by U.S. government agencies (“agency mortgages”) or those issued by private entities(“non-agency mortgages”). Specific types of instruments may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. The value of the Fund’s MBS may be affected by, among other things, changes or perceived changes in interest rates, factors concerning the interests in and
46
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
structure of the issuer or the originator of the mortgage, or the quality of the underlying assets. The mortgages underlying the securities may default or decline in quality or value. Through its investments in MBS, a Fund has exposure to subprime loans,Alt-A loans andnon-conforming loans as well as to the mortgage and credit markets generally. Underlying collateral related to subprime,Alt-A andnon-conforming mortgage loans has become increasingly susceptible to defaults and declines in quality or value, especially in a declining residential real estate market. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole.
Other Investment Company Securities and Other Exchange-Traded Products
The Funds may invest in shares of other investment companies, includingopen-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 asub-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’ 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 their Prospectus, if applicable. Investments in other investment companies may involve the payment of substantial premiums above the value of such issuer’s portfolio securities.
Privately Issued Mortgage-Backed Securities
Pools created bynon-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government guarantees of payments in such pools. However, timely payment of interest and principal of these pools is often partially supported by various enhancements such as over-collateralization and senior/subordination structures and by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance. The insurance and guarantees are issued by government entities, private insurers or the mortgage poolers. Although the market for such securities is becoming increasingly liquid, securities issued by certain private organizations may not be readily marketable.
Publicly Traded Partnerships; Master Limited Partnerships
The Funds may invest in publicly traded partnerships such as master limited partnerships (“MLPs”). MLPs issue units that are registered with the SEC and are freely tradable on a securities exchange or in the OTC market. An MLP may have one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. An MLP also may be an entity similar to a limited partnership, such as a limited liability company, which has a manager or managing member andnon-managing members (who are like limited partners). The general partner or partners are jointly and severally responsible for the liabilities of the MLP. A Fund invests as a limited partner and normally would not be liable for the debts of an MLP beyond the amount the Fund has invested therein but it would not be shielded to the same extent that a shareholder of a corporation would be. In certain instances, creditors of an MLP would have the right to seek a return of capital that had been distributed to a limited partner. The right of an MLP’s creditors would continue even after a Fund had sold its investment in the partnership. MLPs typically invest in real estate and oil and gas equipment leasing assets, but they also finance entertainment, research and development, and other projects.
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 Fundsre-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, there-characterization will be
47
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
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, are-characterization will be made the following year.
U.S. Government Agency Securities
U.S. Government agency securities are issued or guaranteed by the U.S. Government or its agencies or instrumentalities. Some obligations issued by U.S. Government agencies and instrumentalities are supported by the full faith and credit of the U.S. Treasury; others by the right of the issuer to borrow from the U.S. Treasury; others by discretionary authority of the U.S. Government to purchase certain obligations of the agency or instrumentality; and others only by the credit of the agency or instrumentality. U.S. Government securities bear fixed, floating or variable rates of interest. While the U.S. Government currently provides financial support to certain U.S. Government-sponsored agencies or instrumentalities, no assurance can be given that it will always do so, since it is not so obligated by law. U.S. Government securities include U.S. Treasury bills, notes and bonds, Federal Home Loan Bank (“FHLB”) obligations, Federal Farm Credit Bank (“FFCB”) obligations, U.S. Government agency obligations and repurchase agreements secured thereby. U.S. Government agency securities are subject to credit risk and interest rate risk.
U.S. Treasury Obligations
U.S. Treasury obligations include bills (initial maturities of one year or less), notes (initial maturities between two and ten years), and bonds (initial maturities over ten years) issued by the U.S. Treasury, Separately Traded Registered Interest and Principal component parts of such obligations (known as “STRIPS”) and inflation-indexed securities. The prices of these securities (like all debt securities) change between issuance and maturity in response to fluctuating market interest rates. U.S. Treasury obligations are subject to credit risk and interest rate risk.
Variable or Floating Rate Obligations
The interest rates payable on certainfixed-income securities in which the Balanced Fund may invest are not fixed and may fluctuate based upon changes in market rates. A variable rate obligation has an interest rate which is adjusted at predesignated periods in response to changes in the market rate of interest on which the interest rate is based. Variable and floating rate obligations are less effective than fixed rate instruments at locking in a particular yield. Nevertheless, such obligations may fluctuate in value in response to interest rate changes if there is a delay between changes in market interest rates and the interest reset date for the obligation, or for other reasons.
5. Financial Derivative Instruments
The Funds may utilize derivative instruments to gain market exposure on cash balances or reduce market exposure in anticipation of liquidity needs. When considering the Funds’ use of derivatives, it is important to note that the Funds do not use derivatives for the purpose of creating financial leverage.
Futures Contracts
Futures contracts are contracts to buy or sell a standard quantity of securities at a specified price on a future date. The Funds may enter into financial futures contracts as a method for keeping assets readily convertible to cash if needed to meet shareholder redemptions or for other needs while maintaining exposure to the stock or bond market, as applicable. The primary risks associated with the use of futures contracts are the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities or that the counterparty will fail to perform its obligations.
48
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Upon entering into a futures contract, the Funds are required to set aside or deposit with a broker an amount, termed the initial margin, which typically represents a portion of the face value of the futures contract. The Funds usually reflects this amount on the Schedules of Investments as a U.S. Treasury Bill held as collateral for futures contracts or as cash deposited with broker on the Statements of Assets and Liabilities. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement values are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. Futures contracts are valued at the most recent settlement price established each day by the exchange on which they are traded.
During the period ended April 30, 2019, the Funds entered into futures contracts primarily for exposing cash to markets.
The Funds’ average futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the average quarterly volume of futures contracts. For the purpose of this disclosure, volume is measured by contracts outstanding at each quarter end.
Average Futures Contracts Outstanding | ||||
Fund | Period Ended April 30, 2019 | |||
Balanced | 54 | |||
Mid-Cap Value | 107 |
The following is a summary of the fair valuations of the Funds’ derivative instruments categorized by risk exposure(1):
Balanced Fund
Fair values of financial instruments on the Statements of Assets and Liabilities as of April 30, 2019: |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives not accounted for as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Receivable for variation margin from open futures contracts(2) | $ | - | $ | - | $ | - | $ | - | $ | 40,548 | $ | 40,548 |
The effect of financial derivative instruments on the Statements of Operations as of April 30, 2019: |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives not accounted for as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized gain (loss) from derivatives | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | $ | – | $ | – | $ | – | $ | – | $ | (180,661 | ) | $ | (180,661 | ) | |||||||||||||||||||||||||||||||||||||||||
Net change in unrealized appreciation | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | $ | – | $ | – | $ | – | $ | – | $ | 281,376 | $ | 281,376 |
49
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Mid-Cap Value Fund
Fair values of financial instruments on the Statements of Assets and Liabilities as of April 30, 2019: |
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Derivatives not accounted for as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets: | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Receivable for variation margin from open futures contracts(2) | $ | – | $ | – | $ | – | $ | – | $ | 337,119 | $ | 337,119 | |||||||||||||||||||||||||||||||||||||||||||
The effect of financial derivative instruments on the Statements of Operations as of April 30, 2019: |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives not accounted for as hedging instruments | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Realized gain (loss) from derivatives | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | $ | – | $ | – | $ | – | $ | – | $ | 1,035,044 | $ | 1,035,044 | |||||||||||||||||||||||||||||||||||||||||||
Net change in unrealized appreciation | Credit contracts | Foreign exchange contracts | Commodity contracts | Interest rate contracts | Equity contracts | Total | |||||||||||||||||||||||||||||||||||||||||||||||||
Futures contracts | $ | – | $ | – | $ | – | $ | – | $ | 1,784,664 | $ | 1,784,664 |
(1)See Note 3 in the Notes to Financial Statements for additional information.
(2)Includes cumulative appreciation (depreciation) of futures contracts as reported in the Fund’s Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.
Offsetting Assets and Liabilities
The Funds are parties to enforceable master netting agreements between brokers and counterparties which provide for the right to offset under certain circumstances. The Funds employ multiple money managers and counterparties and have elected not to offset qualifying financial and derivative instruments on the Statements of Assets and Liabilities, as such all financial and derivative instruments are presented on a gross basis. The impacts of netting arrangements that provide the right to offset are detailed below. The net amount represents the net receivable or payable that would be due from or to the counterparty in the event of default. Exposure from borrowings and other financing agreements such as repurchase agreements can only be netted across transactions governed by the same Master Agreement with the same legal entity. All amounts reported below represent the balance as of the report date, April 30, 2019.
Balanced Fund
Offsetting of Financial and Derivative Assets as of April 30, 2019: |
| |||||||||||
| Assets | Liabilities | ||||||||||
Futures Contracts(1) | $ | 40,548 | $ | - | ||||||||
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| |||||||||
Total derivative assets and liabilities in the Statement of Assets and Liabilities | $ | 40,548 | $ | - | ||||||||
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Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”) | $ | (40,548 | ) | $ | - | |||||||
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Remaining Contractual Maturity of the Agreements as of April 30, 2019 | ||||||||||||||||||||||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||||||||||||||||||||||||||
Securities Lending Transactions | ||||||||||||||||||||||||||||||||||||
Common Stocks | $ | 364,350 | $ | - | $ | - | $ | - | $ | 364,350 | ||||||||||||||||||||||||||
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Total Borrowings | $ | 364,350 | $ | - | $ | - | $ | - | $ | 364,350 | ||||||||||||||||||||||||||
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Gross amount of recognized liabilities for securities lending transactions |
| $ | 364,350 | |||||||||||||||||||||||||||||||||
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|
(1) Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.
50
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Mid-Cap Value Fund
Offsetting of Financial and Derivative Assets as of April 30, 2019: |
| |||||||||||
| Assets | Liabilities | ||||||||||
Futures Contracts(1) | $ | 337,119 | $ | - | ||||||||
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|
| |||||||||
Total derivative assets and liabilities in the Statement of Assets and Liabilities | $ | 337,119 | $ | - | ||||||||
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|
| |||||||||
Derivatives not subject to a Master Netting Agreement or similar agreement (“MNA”) | $ | (337,119 | ) | $ | - | |||||||
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(1) Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.
Remaining Contractual Maturity of the Agreements as of April 30, 2019 | ||||||||||||||||||||||||||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||||||||||||||||||||||||||
Securities Lending Transactions | ||||||||||||||||||||||||||||||||||||
Common Stocks | $ | 5,641,139 | $ | - | $ | - | $ | - | $ | 5,641,139 | ||||||||||||||||||||||||||
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Total Borrowings | $ | 5,641,139 | $ | - | $ | - | $ | - | $ | 5,641,139 | ||||||||||||||||||||||||||
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Gross amount of recognized liabilities for securities lending transactions |
| $ | 5,641,139 | |||||||||||||||||||||||||||||||||
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(1) Includes cumulative appreciation or (depreciation) of futures contracts as reported in the Schedule of Investments footnotes. Only current day’s variation margin is reported within the Statements of Assets and Liabilities.
6. Principal Risks
Investing in the Funds may involve certain risks including, but not limited to, those described below.
Asset-Backed and Mortgage Related Securities Risk
Investments in asset-backed and mortgage related securities are subject to market risks for fixed-income securities which include, but are not limited to, interest rate risk, prepayment risk and extension risk. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of certain MBS and ABS securities. If interest rates fall, the rate of prepayments tends to increase as borrowers are motivated to pay off debt and refinance at new lower rates. When mortgages and other obligations are prepaid and when securities are called, a Fund may have to reinvest in securities with a lower yield or fail to recover additional amounts (i.e., premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss and/or a decrease in the amount of dividends and yield. Because prepayments increase when interest rates fall, the prices of MBS and ABS do not increase as much as other fixed income securities when interest rates fall. When interest rates rise, borrowers are less likely to prepay their mortgage and other loans. A decreased rate of prepayments lengthens the expected maturity of MBS and ABS. Therefore, the prices of MBS and ABS may decrease more than prices of other fixed-income securities when interest rates rise. Rising interest rates tend to extend the duration of these securities, making them more sensitive to changes in interest rates. Rising interest rates also may increase the risk of default by borrowers. As a result, in a period of rising interest rates, a Fund that holds these types of securities, may experience additional volatility and losses. A decline in the credit quality of and defaults by the issuers of asset-backed and mortgage related securities or instability in the markets for such securities may affect the value and liquidity of such securities, which could result in losses to a Fund. In addition, certain asset-backed and mortgage related securities may include securities backed by pools of loans made to “subprime” borrowers or borrowers with blemished credit histories; the risk of defaults is generally higher in the case of mortgage pools that include such subprime mortgages.
Credit Risk
The Funds are subject to the risk that the issuer or guarantor of a debt security, or the counterparty to a derivatives contract or a loan, will fail to make timely payment of interest or principal or otherwise honor its
51
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
obligations or default completely. A decline in the credit rating of an individual security held by a Fund may have an adverse impact on its price and make it difficult for a Fund to sell it. Ratings represent a rating agency’s opinion regarding the quality of the security and are not a guarantee of quality. Rating agencies might not always change their credit rating on an issuer or security in a timely manner to reflect events that could affect the issuer’s ability to make timely payments on its obligations. Credit risk is typically greater for securities with ratings that are below investment grade.
Equity Investments Risk
Equity securities are subject to market risk. The Funds’ investments in equity securities may include common stocks, REITs, depositary receipts, and U.S. dollar-denominated foreign stocks traded on U.S. exchanges. Such investments may expose the Funds to additional risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. Investments in REITs are subject to the risks associated with investing in the real estate industry such as adverse developments affecting the real estate industry and real property values. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency fluctuations and political and financial instability in the home country of a particular depositary receipt or foreign stock.
Foreign Investing Risk
Non-U.S. investments carry potential risks not associated with U.S. investments. Such risks include, but are not limited to: (1) currency exchange rate fluctuations, (2) political and financial instability, (3) less liquidity (4) lack of uniform accounting, auditing and financial reporting standards, (5) increased volatility, (6) less government regulation and supervision of foreign stock exchanges, brokers and listed companies, and (7) delays in transaction settlement in some foreign markets.
Futures Contracts Risk
Futures contracts are derivative instruments where one party pays a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Funds to additional risks that they would not be subject to if they invested directly in the securities underlying those derivatives. Futures contracts may experience potentially dramatic price changes (losses) and imperfect correlation between the price of the contract and the underlying security or index, which will increase the volatility of the Funds and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract).
Illiquid and Restricted Securities Risk
Securities not registered in the U.S. under the Securities Act, including Rule 144A securities, are restricted as to their resale. Such securities may not be listed on an exchange and may have no active trading market. They may be more difficult to purchase or sell at an advantageous time or price because such securities may not be readily marketable in broad public markets. The Funds may not be able to sell a restricted security when thesub-advisor considers it desirable to do so and/or may have to sell the security at a lower price than the Funds believe is its fair market value. In addition, transaction costs may be higher for restricted securities and the Funds may receive only limited information regarding the issuer of a restricted security. The Funds may have to bear the expense of registering restricted securities for resale and the risk of substantial delays in effecting the registration.
52
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Interest Rate Risk
Investments in investment-grade and non-investment grade fixed-income securities are subject to interest rate risk. The value of a Fund’s fixed-income investments typically will fall when interest rates rise. A Fund may be particularly sensitive to changes in interest rates if it invests in debt securities with intermediate and long terms to maturity. Debt securities with longer durations tend to be more sensitive to changes in interest rates, usually making them more volatile than debt securities with shorter durations. For example, if a bond has a duration of seven years, a 1% increase in interest rates could be expected to result in a 7% decrease in the value of the bond. Yields of debt securities will fluctuate over time. Following the financial crisis that started in 2008, the Federal Reserve attempted to stabilize the economy and support the economic recovery by keeping the federal funds rate (the interest rate at which depository institutions lend reserve balances to each other overnight) at or near zero percent. The Federal Reserve has raised the federal funds rate several times since December 2015 and may continue to increase rates in the future. Interest rates may rise significantly and/or rapidly, potentially resulting insubstantial losses to a Fund. During periods of very low or negative interest rates, a Fund may be unable to maintain positive returns. Certain European countries and Japan have recently experienced negative interest rates on deposits and debt securities have traded at negative yields. Negative interest rates may become more prevalent among non-U.S. issuers, and potentially within the United States. Changing interest rates, including rates that fall below zero, may have unpredictable effects on markets, may result in heightened market volatility and may detract from Fund performance to the extent a Fund is exposed to such interest rates.
Liquidity Risk
When there is little or no active trading market for a specific security it can become more difficult to purchase or sell the securities at or near their perceived value. During such periods, certain investments held by the Fund may be difficult to sell or other investments may be difficult to purchase at favorable times or prices. As a result, the Fund may have to lower the price on certain securities that it is trying to sell, sell other securities instead or forgo an investment opportunity, any of which could have a negative effect on Fund management or performance. Redemptions by a few large investors in the Fund at such times may have a significant adverse effect on the Fund’s NAV and remaining Fund shareholders. In addition, the market-making capacity of dealers in certain types of securities has been reduced in recent years, in part as a result of structural and regulatory changes, such as fewer proprietary trading desks and increased regulatory capital requirements for broker-dealers. Further, many broker-dealers have reduced their inventory of certain debt securities. This could negatively affect the Fund’s ability to buy or sell debt securities and increase the related volatility and trading costs. The Fund may lose money if it is forced to sell certain investments at unfavorable prices to meet redemption requests or other cash needs.
Market Risk
Conditions in the U.S. and many foreign economies have resulted, and may continue to result, in certain instruments experiencing unusual liquidity issues, increased price volatility and, in some cases, credit downgrades and increased likelihood of default. These events have reduced the willingness and ability of some lenders to extend credit, and have made it more difficult for some borrowers to obtain financing on attractive terms, if at all. In some cases, traditional market participants have been less willing to make a market in some types of debt instruments, which has affected the liquidity of those instruments. During times of market turmoil, investors tend to look to the safety of securities issued or backed by the U.S. Treasury, causing the prices of these securities to rise and the yields to decline. Reduced liquidity in fixed income and credit markets may negatively affect many issuers worldwide. In addition, global economies and financial markets are becoming increasingly interconnected, which increases the possibilities that conditions in one country or region might adversely impact issuers in a different country or region. A rise in protectionist trade policies, and the possibility of changes to some international trade agreements, could affect the economies of many nations in ways that cannot necessarily be foreseen at the present time.
53
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
In response to the financial crisis, the U.S. and other governments, the Federal Reserve, and certain foreign central banks have taken steps to support financial markets. In some countries where economic conditions are recovering, they are nevertheless perceived as still fragile. Withdrawal of government support, failure of efforts in response to the crisis, or investor perception that such efforts are not succeeding, could adversely impact the value and liquidity of certain securities. The severity or duration of adverse economic conditions may also be affected by policy changes made by governments or quasi-governmental organizations, including changes in tax laws. The impact of new financial regulation legislation on the markets and the practical implications for market participants may not be fully known for some time. Regulatory changes are causing some financial services companies to exit long-standing lines of business, resulting in dislocations for other market participants. In addition, political and diplomatic events within the U.S. and abroad, such as the U.S. government’s inability at times to agree on a long-term budget and deficit reduction plan, the threat of a federal government shutdown and threats not to increase the federal government’s debt limit, may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree. The U.S. government has recently reduced the federal corporate income tax rate, and future legislative, regulatory and policy changes may result in more restrictions on international trade, less stringent prudential regulation of certain players in the financial markets, and significant new investments in infrastructure and national defense. Markets may react strongly to expectations about the changes in these policies, which could increase volatility, especially if the market’s expectations for changes in government policies are not borne out.
Changes in market conditions will not have the same impact on all types of securities. Interest rates have been unusually low in recent years in the U.S. and abroad. Because there is little precedent for this situation, it is difficult to predict the impact of a significant rate increase on various markets. For example, because investors may buy securities or other investments with borrowed money, a significant increase in interest rates may cause a decline in the markets for those investments. Regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. In addition, there is a risk that the prices of goods and services in the U.S. and many foreign economies may decline overtime, known as deflation (the opposite of inflation). Deflation may have an adverse effect on stock prices and creditworthiness and may make defaults on debt more likely. If a country’s economy slips into a deflationary pattern, it could last for a prolonged period and may be difficult to reverse.
The precise details and the resulting impact of the United Kingdom’s vote to leave the European Union (the “EU”), commonly referred to as “Brexit,” are not yet known. The effect on the United Kingdom’s economy will likely depend on the nature of trade relations with the EU and other major economies following its exit, which are matters to be negotiated. The outcomes may cause increased volatility and have a significant adverse impact on world financial markets, other international trade agreements, and the United Kingdom and European economies, as well as the broader global economy for some time, which could significantly adversely affect the value of the Fund’s investments in the United Kingdom and Europe.
Mortgage-Backed and Mortgage Related Securities Risk
Investments in mortgage-backed and mortgage-related securities are subject to market risks for fixed-income securities which include, but are not limited to, interest rate risk, credit risk, extension risk and prepayment risk. When mortgages and other obligations are prepaid and when securities are called, a Fund may have to reinvest in securities with a lower yield or fail to recover additional amounts (i.e., premiums) paid for securities with higher interest rates, resulting in an unexpected capital loss and/or a decrease in the amount of dividends and yield.
MultipleSub-Advisor Risk
The Manager may allocate the Funds’ assets among multiplesub-advisors, each of which is responsible for investing its allocated portion of the Funds’ assets. To a significant extent, the Funds’ performance will depend on the success of the Manager in allocating the Funds’ assets tosub-advisors and its selection and oversight of the
54
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
sub-advisors. Because eachsub-advisor manages its allocated portion of the Funds independently from anothersub-advisor, the same security may be held in different portions of a Fund, or may be acquired for one portion of a Fund at a time when asub-advisor to another portion deems it appropriate to dispose of the security from that other portion, resulting in higher expenses without accomplishing any net result in the Fund’s holdings. Similarly, under some market conditions, onesub-advisor may believe that temporary, defensive investments in short-term instruments or cash are appropriate when anothersub-advisor believes continued exposure to the equity or debt markets is appropriate for its allocated portion of a Fund. Because eachsub-advisor directs the trading for its own portion a Fund, and does not aggregate its transactions with those of the othersub-advisors, a Fund may incur higher brokerage costs than would be the case if a singlesub-adviser were managing the entire Fund. In addition, while the Manager seeks to allocate the each Fund’s assets among the Fund’ssub-advisors in a manner that it believes is consistent with achieving the Fund’s investment objective(s), the Manager may be subject to potential conflicts of interest in allocating the Fund’s assets amongsub-advisors, due to factors that could impact the Manager’s revenues and profits.
Other Investment Companies Risk
The Funds may invest in shares of other registered investment companies, including money market funds that are advised by the Manager. To the extent that the Funds invests in shares of other registered investment companies, the Funds will indirectly bear fees and expenses, including for example, advisory and administrative fees, charged by those investment companies in addition to the Funds’ direct fees and expenses and will be subject to the risks associated with investments in those companies. For example, the Funds’ investments in money market funds are subject to interest rate risk, credit risk, and market risk. The Funds must rely on the investment company in which it invests to achieve its investment objective. If the investment company fails to achieve its investment objective, the value of the Funds’ investment will decline, adversely affecting the Funds’ performance. To the extent the Funds invest in other investment companies that invest in equity securities, fixed-income securities and/or foreign securities, or track an index, the Funds are subject to the risks associated with the underlying investments held by the investment company or the index fluctuations to which the investment company is subject.
Prepayment and Extension Risk
When interest rates fall, borrowers will generally repay the loans that underlie certain debt securities, especially mortgage-related and other types of asset-backed securities, more quickly than expected, causing the issuer of the security to repay the principal prior to the security’s expected maturity date. A Fund may need to reinvest the proceeds at a lower interest rate, reducing its income. Securities subject to prepayment risk generally offer less potential for gains when prevailing interest rates fall. If a Fund buys those securities at a premium, accelerated prepayments on those securities could cause a Fund to lose a portion of its principal investment. The impact of prepayments on the price of a security may be difficult to predict and may increase the security’s price volatility.
Redemption Risk
A Fund may experience periods of heavy redemptions that could cause a Fund to sell assets at inopportune times or at a loss or depressed value. Redemption risk is greater to the extent that one or more investors or intermediaries control a large percentage of investments in a Fund, have short investment horizons, or have unpredictable cash flow needs. A general rise in interest rates has the potential to cause investors to move out of fixed income securities on a large scale, which may increase redemptions from mutual funds that hold large amounts of fixed income securities. This, coupled with a reduction in the ability or willingness of dealers and other institutional investors to buy or hold fixed income securities, may result in decreased liquidity and increased volatility in the fixed income markets, and heightened redemption risk. Heavy redemptions, whether by a few large investors or many smaller investors, could hurt a Fund’s performance. This risk is heightened if a Fund invests in emerging market securities, which are generally less liquid than the securities of U.S. and other developed markets. The sale of assets to meet redemption requests may create net capital gains or losses, which could cause a Fund to have to distribute substantial capital gains.
55
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Sector Risk
Sector risk is the risk associated with a Fund holding a significant amount of investments in similar businesses, which would be similarly affected by particular economic or market events, which may, in certain circumstances, cause the value of the equity and debt securities of companies in a particular sector of the market to change. To the extent a Fund has substantial holdings within a particular sector, the risks to a Fund associated with that sector increase.
To the extent a Fund invests in the financial services sector, the value of the Fund’s shares may be particularly vulnerable to factors affecting that sector, such as the availability and cost of capital funds, changes in interest rates, the rate of corporate and consumer debt defaults, extensive government regulation and price competition. The value of a Fund’s shares could experience significantly greater volatility than investment companies investing more broadly.
Securities Lending Risk
A Fund may lend its portfolio securities to brokers, dealers and financial institutions to seek income. There is a risk that a borrower may default on its obligations to return loaned securities; however, a Fund’s securities lending agent indemnifies the Fund against that risk. There is a risk that the assets of a Fund’s securities lending agent may be insufficient to satisfy any contractual indemnification requirements to the Fund. Borrowers of a Fund’s securities typically provide collateral in the form of cash that is reinvested in securities. A Fund will be responsible for the risks associated with the investment of cash collateral, including any collateral invested in an affiliated money market fund. A Fund may lose money on its investment of cash collateral or may fail to earn sufficient income on its investment to meet obligations to the borrower. In addition, delays may occur in the recovery of securities from borrowers, which could interfere with a Fund’s ability to vote proxies or to settle transactions and there is the risk of possible loss of rights in the collateral should the borrower fail financially. In any case in which the loaned securities are not returned to a Fund before an ex-dividend date, the payment in lieu of the dividend that the Fund receives from the securities’ borrower would not qualify for treatment as “qualified dividend income”.
U.S. Government Securities and Government-Sponsored Enterprises Risk
A security backed by the U.S. Treasury or the full faith and credit of the United States is guaranteed only as to the timely payment of interest and principal when held to maturity. The market prices for such securities are not guaranteed and will fluctuate. Additionally, circumstances could arise that would prevent the payment of interest or principal. This could result in losses to a Fund. Investments in government-sponsored enterprises, are debt obligations issued by agencies and instrumentalities of the U.S. Government. These obligations vary in the level of support they receive from the U.S. Government. They may be: (i) supported by the full faith and credit of the U.S. Treasury, such as those of the Government National Mortgage Association (“Ginnie Mae”); (ii) supported by the right of the issuer to borrow from the U.S. Treasury, such as those of the Federal Home Loan Bank and the Federal Farm Credit Banks; (iii) supported by the discretionary authority of the U.S. Government to purchase the agency obligations, such as those of Fannie Mae and Freddie Mac or (iv) supported only by the credit of the issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may choose not to provide financial support to U.S.Government-sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case, if the issuer defaulted, to the extent a Fund holds securities of such issuer, it might not be able to recover its investment from the U.S. Government.
7. Federal Income and Excise Taxes
It is the policy of each Fund to qualify as a regulated investment company (“RIC”), by complying with all applicable provisions of Subchapter M of the Internal Revenue Code, as amended, and to make distributions of taxable income sufficient to relieve it from substantially all federal income and excise taxes. For federal income tax purposes, each Fund is treated as a single entity for the purpose of determining such qualification.
56
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
The Funds do not have any unrecorded tax liabilities in the accompanying financial statements. Each of the tax years in the four year period ended October 31, 2018 remain subject to examination by the Internal Revenue Service. If applicable, the Funds recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in “Other expenses” on the Statements of Operations.
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.
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.
As of April 30, 2019 the tax cost for each Fund and their respective gross unrealized appreciation (depreciation) were as follows:
Fund | Tax Cost | Unrealized Appreciation | Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) | ||||||||||||||||||||||||
Balanced | $ | 246,858,732 | $ | 44,855,366 | $ | (7,873,942 | ) | $ | 36,981,424 | |||||||||||||||||||
Mid-Cap Value | 522,589,187 | 90,779,780 | (31,314,417 | ) | 59,465,363 |
Under the Regulated Investment Company Modernization Act of 2010 (“RIC MOD”), net capital losses recognized by the Funds in taxable years beginning after December 22, 2010 are carried forward indefinitely and retain their character as short-term and/or long-term losses.
As of October 31, 2018, the Funds did not have any capital loss carryforwards.
8. Investment Transactions
The aggregate cost of purchases and proceeds from sales and maturities of investments, other than short-term obligations, for the period ended April 30, 2019 were as follows:
Fund | Purchases (non-U.S. Government Securities) | Purchases of U.S. Government Securities | Sales (non-U.S. Government Securities) | Sales of U.S. Government Securities | ||||||||||||||||||||||||
Balanced | $ | 33,491,043 | $ | 11,888,927 | $ | 56,989,665 | $ | 16,749,372 | ||||||||||||||||||||
Mid-Cap Value | 107,533,208 | – | 300,132,577 | – |
A summary of the Funds’ transactions in the USG Select Fund for the period ended April 30, 2019 were as follows:
Fund | Type of Transaction | October 31, 2018 Shares/Fair Value | Purchases | Sales | April 30, 2019 Shares/Fair Value | Dividend Income | ||||||||||||||||||||||||||||||||||||
Balanced | Direct | $ | 7,833,723 | $ | 63,433,821 | $ | 66,902,403 | $ | 4,365,141 | $ | 59,395 | |||||||||||||||||||||||||||||||
Balanced | Securities Lending | 2,690,067 | 6,690,772 | 9,016,489 | 364,350 | N/A | ||||||||||||||||||||||||||||||||||||
Mid-Cap Value | Direct | 22,792,845 | 250,538,947 | 260,542,894 | 12,788,898 | 264,044 | ||||||||||||||||||||||||||||||||||||
Mid-Cap Value | Securities Lending | 12,169,943 | 58,584,438 | 65,113,242 | 5,641,139 | N/A |
57
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
9. Securities Lending
The Funds may lend their securities to qualified financial institutions, such as certain broker-dealers, to earn additional income. The borrowers are required to secure their loans continuously with collateral in an amount at least equal to the fair value of the securities loaned, initially in an amount at least equal to 102% of the fair value of domestic securities loaned and 105% of the fair value of international securities loaned. Collateral is monitored andmarked-to-market daily. Dailymark-to-market amounts are required to be paid to the borrower or received from the borrower by the end of the following business day. This one day settlement formark-to-market amounts may result in the collateral being temporarily less than the value of the securities on loan or temporarily more than the required minimum collateral.
To the extent that a loan is collateralized by cash, such cash collateral shall be invested by the securities lending agent (the “Agent”) in money market mutual funds and other short-term investments, provided the investments meet certain quality and diversification requirements. Securities purchased with cash collateral proceeds are listed in the Funds’ Schedule of Investments and the collateral is shown on the Statement of Assets and Liabilities as a payable.
Securities lending income is generated from the demand premium (if any) paid by the borrower to borrow a specific security and from the return on investment of cash collateral, reduced by negotiated rebate fees paid to the borrower and transaction costs. To the extent that a loan is secured bynon-cash collateral, securities lending income is generated as a demand premium reduced by transaction costs. The Funds, the Agent, and the Manager retained 80%, 10%, and 10%, respectively, of the income generated from securities lending.
While securities are on loan, the Funds continue to receive certain income associated with that security and any gain or loss in the market price that may occur during the term of the loan. In the case of domestic equities, the value of any dividend is received in the form of a substitute payment approximately equal to the dividend. In the case of foreign securities, a negotiated amount is received that is less than the actual dividend, but higher than the dividend amount minus the foreign tax that the Funds would be subject to on the dividend.
Securities lending transactions pose certain risks to the Funds, including that the borrower may not provide additional collateral when required or return the securities when due, that the value of the short-term investments will be less than the amount of cash collateral required to be returned to the borrower, thatnon-cash collateral may be subject to legal constraints in the event of a borrower bankruptcy, and that the cash collateral investments could become illiquid and unable to be used to return collateral to the borrower. The Funds could also experience delays and costs in gaining access to the collateral. The Funds bear the risk of any deficiency in the amount of the cash collateral available for return to the borrower and any action which impairs its ability to liquidatenon-cash collateral to satisfy a borrower default.
As of April 30, 2019, the value of outstanding securities on loan and the value of collateral were as follows:
Fund | Market Value of Securities on Loan | Cash Collateral Received | Non-Cash Collateral Received | Total Collateral Received | ||||||||||||||||||||||||
Balanced | $ | 346,306 | $ | 364,350 | $ | – | $ | 364,350 | ||||||||||||||||||||
Mid-Cap Value | 5,451,883 | 5,641,139 | – | 5,641,139 |
Cash collateral is listed on the Funds’ Schedules of Investments and is shown on the Statements of Assets and Liabilities. Income earned on these investments is included in “Income derived from securities lending” on the Statements of Operations.
Non-cash collateral received by the Funds may not be sold orre-pledged except to satisfy a borrower default. Therefore,non-cash collateral is not included on the Funds’ Schedules of Investments or Statements of Assets and Liabilities.
58
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
10. Borrowing Arrangements
Effective November 15, 2018 (the “Effective Date”), the Funds, along with certain other funds managed by the Manager (“Participating Funds”), entered into a committed revolving line of credit (the “Committed Line”) agreement with State Street Bank and Trust Company (the “Bank”) to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Committed Line is $250 million with interest at a rate equal to the higher of(a) one-month London Inter-Bank Offered Rate (“LIBOR”) plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on amounts borrowed. Each of the Participating Funds will pay a closing fee of $100,000 on the Effective Date and a quarterly commitment fee at a rate of 0.25% per annum on the unused portion of the Committed Line amount. The Committed Line expires November 14, 2019, unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
On the Effective Date, the Funds, along with certain other Participating Funds managed by the Manager, also entered into an uncommitted discretionary demand revolving line of credit (the “Uncommitted Line”) agreement with the Bank to be used to facilitate portfolio liquidity. The maximum borrowing amount under the Uncommitted Line is $50 million with interest at a rate equal to the higher of(a) one-month LIBOR plus 1.25% per annum or (b) the Federal Funds rate plus 1.25% per annum on each outstanding loan. Each of the Participating Funds will pay a closing fee of $35,000 on the Effective Date. The Uncommitted Line expires November 14, 2019 unless extended by the Bank or terminated by the Participating Funds in accordance with the agreement.
The Participating Funds paid administration, legal and arrangement fees, which are recognized as a component of “Other expenses” on the Statements of Operations, along with commitment fees, that have been allocated among the Participating Funds based on average daily net assets.
During the period ended April 30, 2019, the Funds did not utilize this facility.
11. Capital Share Transactions
The tables below summarize the activity in capital shares for each Class of the Funds:
Institutional Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Balanced Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 370,582 | $ | 5,764,360 | 531,898 | $ | 8,911,974 | ||||||||||||||||||||||
Reinvestment of dividends | 316,676 | 4,461,352 | 371,350 | 6,232,774 | ||||||||||||||||||||||||
Shares redeemed | (882,668 | ) | (13,246,956 | ) | (2,279,037 | ) | (38,703,020 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (195,410 | ) | $ | (3,021,244 | ) | (1,375,789 | ) | $ | (23,558,272 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Y Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Balanced Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 598,111 | $ | 9,163,344 | 1,548,487 | $ | 26,278,299 | ||||||||||||||||||||||
Reinvestment of dividends | 343,178 | 4,866,324 | 262,445 | 4,429,699 | ||||||||||||||||||||||||
Shares redeemed | (1,231,643 | ) | (18,492,334 | ) | (1,172,305 | ) | (19,896,265 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | (290,354 | ) | $ | (4,462,666 | ) | 638,627 | $ | 10,811,733 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
59
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Investor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Balanced Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 300,116 | $ | 4,028,901 | 693,194 | $ | 10,443,570 | ||||||||||||||||||||||
Reinvestment of dividends | 700,277 | 8,683,551 | 632,578 | 9,450,425 | ||||||||||||||||||||||||
Shares redeemed | (892,275 | ) | (11,873,498 | ) | (1,856,761 | ) | (27,850,950 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 108,118 | $ | 838,954 | (530,989 | ) | $ | (7,956,955 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Balanced Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 18,362 | $ | 263,157 | 60,001 | $ | 958,063 | ||||||||||||||||||||||
Reinvestment of dividends | 36,432 | 481,792 | 48,037 | 761,574 | ||||||||||||||||||||||||
Shares redeemed | (15,740 | ) | (229,203 | ) | (372,487 | ) | (5,908,441 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 39,054 | $ | 515,746 | (264,449 | ) | $ | (4,188,804 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Balanced Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 80,925 | $ | 1,092,087 | 160,555 | $ | 2,416,192 | ||||||||||||||||||||||
Reinvestment of dividends | 113,940 | 1,409,341 | 111,181 | 1,658,485 | ||||||||||||||||||||||||
Shares redeemed | (252,949 | ) | (3,355,161 | ) | (428,548 | ) | (6,460,378 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (58,084 | ) | $ | (853,733 | ) | (156,812 | ) | $ | (2,385,701 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Balanced Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 115,759 | $ | 1,590,629 | 293,469 | $ | 4,461,404 | ||||||||||||||||||||||
Reinvestment of dividends | 219,845 | 2,743,721 | 188,746 | 2,851,672 | ||||||||||||||||||||||||
Shares redeemed | (462,732 | ) | (6,231,601 | ) | (726,271 | ) | (11,046,787 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (127,128 | ) | $ | (1,897,251 | ) | (244,056 | ) | $ | (3,733,711 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Institutional Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Mid-Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 1,997,901 | $ | 29,336,631 | 6,269,618 | $ | 106,947,861 | ||||||||||||||||||||||
Reinvestment of dividends | 1,242,979 | 15,910,136 | 526,390 | 9,164,443 | ||||||||||||||||||||||||
Shares redeemed | (5,537,933 | ) | (81,870,255 | ) | (6,183,734 | ) | (105,856,767 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | (2,297,053 | ) | $ | (36,623,488 | ) | 612,274 | $ | 10,255,537 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Y Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Mid-Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 715,784 | $ | 10,273,236 | 1,857,922 | $ | 31,620,714 | ||||||||||||||||||||||
Reinvestment of dividends | 470,384 | 5,973,877 | 197,830 | 3,416,518 | ||||||||||||||||||||||||
Shares redeemed | (1,155,672 | ) | (16,595,791 | ) | (1,620,549 | ) | (27,617,833 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | 30,496 | $ | (348,678 | ) | 435,203 | $ | 7,419,399 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
60
American Beacon FundsSM
Notes to Financial Statements
April 30, 2019 (Unaudited)
Investor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Mid-Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 1,763,679 | $ | 25,604,007 | 14,508,017 | $ | 258,034,860 | ||||||||||||||||||||||
Reinvestment of dividends | 1,753,702 | 22,727,979 | 526,115 | 9,254,355 | ||||||||||||||||||||||||
Shares redeemed | (11,513,754 | ) | (169,287,645 | ) | (6,582,101 | ) | (113,606,798 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | (7,996,373 | ) | $ | (120,955,659 | ) | 8,452,031 | $ | 153,682,417 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Advisor Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Mid-Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 49,002 | $ | 692,483 | 113,873 | $ | 1,888,435 | ||||||||||||||||||||||
Reinvestment of dividends | 15,812 | 198,759 | 5,543 | 94,728 | ||||||||||||||||||||||||
Shares redeemed | (79,037 | ) | (1,147,566 | ) | (101,012 | ) | (1,693,636 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | (14,223 | ) | $ | (256,324 | ) | 18,404 | $ | 289,527 | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
A Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Mid-Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 49,921 | $ | 733,934 | 343,780 | $ | 5,748,823 | ||||||||||||||||||||||
Reinvestment of dividends | 56,527 | 708,842 | 25,397 | 433,278 | ||||||||||||||||||||||||
Shares redeemed | (604,967 | ) | (8,999,561 | ) | (651,244 | ) | (10,958,448 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (498,519 | ) | $ | (7,556,785 | ) | (282,067 | ) | $ | (4,776,347 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
C Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | Year Ended October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Mid-Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 10,742 | $ | 144,737 | 83,507 | $ | 1,358,250 | ||||||||||||||||||||||
Reinvestment of dividends | 25,509 | 309,934 | 11,018 | 182,135 | ||||||||||||||||||||||||
Shares redeemed | (103,010 | ) | (1,398,476 | ) | (95,319 | ) | (1,541,599 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net (decrease) in shares outstanding | (66,759 | ) | $ | (943,805 | ) | (794 | ) | $ | (1,214 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
R6 Class | ||||||||||||||||||||||||||||
Six Months Ended April 30, 2019 | February 28, 2018A to October 31, 2018 | |||||||||||||||||||||||||||
(unaudited) |
| |||||||||||||||||||||||||||
Mid-Cap Value Fund | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||
Shares sold | 8,751 | $ | 123,676 | 18,266 | $ | 315,231 | ||||||||||||||||||||||
Reinvestment of dividends | 979 | 12,536 | - | - | ||||||||||||||||||||||||
Shares redeemed | (10,256 | ) | (142,079 | ) | (5,909 | ) | (100,991 | ) | ||||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||||
Net increase (decrease) in shares outstanding | (526 | ) | $ | (5,867 | ) | 12,357 | $ | 214,240 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
A Commencement of operations.
12. Subsequent Events
Management has evaluated subsequent events for possible recognition or disclosure in the financial statements through the date the financial statements are issued. Management has determined that there are no material events that would require disclosure in the Funds’ financial statements through this date.
61
American Beacon Balanced FundSM
Financial Highlights
(For a share outstanding throughout the period)
Institutional ClassA | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.20 | $ | 17.30 | $ | 15.26 | $ | 15.79 | $ | 16.79 | $ | 16.31 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.17 | 0.28 | 0.36 | 0.27 | 0.32 | 0.38 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.75 | (0.10 | ) | 2.04 | 0.20 | (0.32 | ) | 1.35 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.92 | 0.18 | 2.40 | 0.47 | - | 1.73 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.09 | ) | (0.48 | ) | (0.36 | ) | (0.25 | ) | (0.22 | ) | (0.42 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.12 | ) | (0.80 | ) | - | (0.75 | ) | (0.78 | ) | (0.83 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.21 | ) | (1.28 | ) | (0.36 | ) | (1.00 | ) | (1.00 | ) | (1.25 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 15.91 | $ | 16.20 | $ | 17.30 | $ | 15.26 | $ | 15.79 | $ | 16.79 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnB | 6.69 | %C | 0.84 | % | 15.82 | % | 3.30 | % | (0.07 | )% | 11.15 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 56,018,539 | $ | 60,191,704 | $ | 88,015,702 | $ | 485,231,068 | $ | 99,173,943 | $ | 74,422,347 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.65 | %D | 0.62 | % | 0.59 | % | 0.62 | % | 0.58 | % | 0.58 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.65 | %D | 0.62 | % | 0.59 | % | 0.62 | % | 0.58 | % | 0.58 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.33 | %D | 1.95 | % | 1.80 | % | 1.90 | % | 1.83 | % | 2.24 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.33 | %D | 1.95 | % | 1.80 | % | 1.90 | % | 1.83 | % | 2.24 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 18 | %C | 28 | % | 32 | % | 16 | % | 62 | % | 34 | % |
A | On May 31, 2016, the AMR Class closed and the assets were merged into the Institutional Class. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
62
American Beacon Balanced FundSM
Financial Highlights
(For a share outstanding throughout the period)
Y Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 16.31 | $ | 17.39 | $ | 15.30 | $ | 15.84 | $ | 16.83 | $ | 16.37 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.17 | 0.35 | 0.24 | 0.30 | 0.30 | 0.40 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.75 | (0.16 | ) | 2.20 | 0.13 | (0.30 | ) | 1.31 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.92 | 0.19 | 2.44 | 0.43 | - | 1.71 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.08 | ) | (0.47 | ) | (0.35 | ) | (0.22 | ) | (0.21 | ) | (0.42 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.12 | ) | (0.80 | ) | - | (0.75 | ) | (0.78 | ) | (0.83 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.20 | ) | (1.27 | ) | (0.35 | ) | (0.97 | ) | (0.99 | ) | (1.25 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 16.03 | $ | 16.31 | $ | 17.39 | $ | 15.30 | $ | 15.84 | $ | 16.83 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 6.69 | %B | 0.88 | % | 16.05 | % | 3.06 | % | (0.07 | )% | 10.98 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 65,413,244 | $ | 71,296,735 | $ | 64,926,394 | $ | 28,843,268 | $ | 39,151,318 | $ | 36,113,608 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 0.72 | %C | 0.70 | % | 0.68 | % | 0.72 | % | 0.66 | % | 0.67 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 0.72 | %C | 0.70 | % | 0.68 | % | 0.72 | % | 0.66 | % | 0.68 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements or recoupments | 2.25 | %C | 1.86 | % | 1.67 | % | 1.95 | % | 1.75 | % | 2.01 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements or recoupments | 2.25 | %C | 1.86 | % | 1.67 | % | 1.95 | % | 1.75 | % | 2.01 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 18 | %B | 28 | % | 32 | % | 16 | % | 62 | % | 34 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
See accompanying notes
63
American Beacon Balanced FundSM
Financial Highlights
(For a share outstanding throughout the period)
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.41 | $ | 15.51 | $ | 13.71 | $ | 14.30 | $ | 15.31 | $ | 14.98 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.15 | 0.20 | 0.15 | 0.18 | 0.22 | 0.42 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.63 | (0.07 | ) | 1.96 | 0.18 | (0.26 | ) | 1.11 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| �� |
|
|
|
| ||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.78 | 0.13 | 2.11 | 0.36 | (0.04 | ) | 1.53 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.08 | ) | (0.43 | ) | (0.31 | ) | (0.20 | ) | (0.19 | ) | (0.37 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.12 | ) | (0.80 | ) | - | (0.75 | ) | (0.78 | ) | (0.83 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.20 | ) | (1.23 | ) | (0.31 | ) | (0.95 | ) | (0.97 | ) | (1.20 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 13.99 | $ | 14.41 | $ | 15.51 | $ | 13.71 | $ | 14.30 | $ | 15.31 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 6.53 | %B | 0.62 | % | 15.52 | % | 2.85 | % | (0.35 | )% | 10.75 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 106,084,132 | $ | 107,677,984 | $ | 124,143,894 | $ | 127,235,433 | $ | 155,757,561 | $ | 165,808,020 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.94 | %C | 0.95 | % | 0.89 | % | 0.95 | % | 0.91 | % | 0.92 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.94 | %C | 0.95 | % | 0.89 | % | 0.95 | % | 0.91 | % | 0.92 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 2.04 | %C | 1.62 | % | 1.48 | % | 1.72 | % | 1.51 | % | 1.84 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 2.04 | %C | 1.62 | % | 1.48 | % | 1.72 | % | 1.51 | % | 1.84 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 18 | %B | 28 | % | 32 | % | 16 | % | 62 | % | 34 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
See accompanying notes
64
American Beacon Balanced FundSM
Financial Highlights
(For a share outstanding throughout the period)
Advisor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.29 | $ | 16.38 | $ | 14.46 | $ | 15.02 | $ | 16.04 | $ | 15.65 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.15 | 0.16 | 0.21 | 0.24 | 0.22 | 0.18 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.68 | (0.06 | ) | 1.99 | 0.12 | (0.29 | ) | 1.39 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.83 | 0.10 | 2.20 | 0.36 | (0.07 | ) | 1.57 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.07 | ) | (0.39 | ) | (0.28 | ) | (0.17 | ) | (0.17 | ) | (0.35 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.12 | ) | (0.80 | ) | - | (0.75 | ) | (0.78 | ) | (0.83 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.19 | ) | (1.19 | ) | (0.28 | ) | (0.92 | ) | (0.95 | ) | (1.18 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 14.93 | $ | 15.29 | $ | 16.38 | $ | 14.46 | $ | 15.02 | $ | 16.04 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 6.51 | %B | 0.42 | % | 15.31 | % | 2.71 | % | (0.58 | )% | 10.58 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 6,610,394 | $ | 6,174,284 | $ | 10,944,675 | $ | 10,603,004 | $ | 13,510,138 | $ | 14,705,747 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.11 | %C | 1.12 | % | 1.08 | % | 1.12 | % | 1.06 | % | 1.07 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.11 | %C | 1.12 | % | 1.08 | % | 1.12 | % | 1.06 | % | 1.07 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.87 | %C | 1.45 | % | 1.29 | % | 1.55 | % | 1.35 | % | 1.75 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.87 | %C | 1.45 | % | 1.29 | % | 1.55 | % | 1.35 | % | 1.75 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 18 | %B | 28 | % | 32 | % | 16 | % | 62 | % | 34 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
See accompanying notes
65
American Beacon Balanced FundSM
Financial Highlights
(For a share outstanding throughout the period)
A Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.38 | $ | 15.48 | $ | 13.69 | $ | 14.27 | $ | 15.29 | $ | 14.97 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.11 | 0.22 | 0.16 | 0.21 | 0.23 | 0.33 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.67 | (0.07 | ) | 1.93 | 0.15 | (0.29 | ) | 1.18 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.78 | 0.15 | 2.09 | 0.36 | (0.06 | ) | 1.51 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.08 | ) | (0.45 | ) | (0.30 | ) | (0.19 | ) | (0.18 | ) | (0.36 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.12 | ) | (0.80 | ) | - | (0.75 | ) | (0.78 | ) | (0.83 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.20 | ) | (1.25 | ) | (0.30 | ) | (0.94 | ) | (0.96 | ) | (1.19 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 13.96 | $ | 14.38 | $ | 15.48 | $ | 13.69 | $ | 14.27 | $ | 15.29 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 6.55 | %B | 0.73 | % | 15.36 | % | 2.84 | % | (0.48 | )% | 10.67 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 16,776,894 | $ | 18,121,273 | $ | 21,934,880 | $ | 24,892,096 | $ | 29,074,120 | $ | 25,578,944 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 1.02 | %C | 0.91 | % | 0.99 | % | 1.02 | % | 0.97 | % | 1.02 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 1.02 | %C D | 0.83 | % | 0.99 | % | 1.02 | % | 0.97 | % | 1.04 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements or recoupments | 1.97 | %C | 1.66 | % | 1.39 | % | 1.64 | % | 1.44 | % | 1.68 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements or recoupments | 1.97 | %C | 1.74 | % | 1.39 | % | 1.64 | % | 1.44 | % | 1.67 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 18 | %B | 28 | % | 32 | % | 16 | % | 62 | % | 34 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
D | This ratio does not include a voluntary reimbursement of service fees as included in the prior year. |
See accompanying notes
66
American Beacon Balanced FundSM
Financial Highlights
(For a share outstanding throughout the period)
C Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.55 | $ | 15.64 | $ | 13.83 | $ | 14.43 | $ | 15.47 | $ | 15.13 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.07 | 0.13 | 0.08 | 0.12 | 0.14 | 0.21 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.66 | (0.09 | ) | 1.92 | 0.13 | (0.29 | ) | 1.20 | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.73 | 0.04 | 2.00 | 0.25 | (0.15 | ) | 1.41 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.05 | ) | (0.33 | ) | (0.19 | ) | (0.10 | ) | (0.11 | ) | (0.24 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (1.12 | ) | (0.80 | ) | - | (0.75 | ) | (0.78 | ) | (0.83 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.17 | ) | (1.13 | ) | (0.19 | ) | (0.85 | ) | (0.89 | ) | (1.07 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 14.11 | $ | 14.55 | $ | 15.64 | $ | 13.83 | $ | 14.43 | $ | 15.47 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnA | 6.13 | %B | 0.04 | % | 14.50 | % | 2.03 | % | (1.14 | )% | 9.80 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 33,164,574 | $ | 36,046,543 | $ | 42,575,983 | $ | 40,827,570 | $ | 45,641,648 | $ | 32,045,404 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 1.76 | %C | 1.66 | % | 1.73 | % | 1.77 | % | 1.72 | % | 1.78 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 1.76 | %C D | 1.54 | % | 1.73 | % | 1.77 | % | 1.72 | % | 1.79 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements or recoupments | 1.22 | %C | 0.91 | % | 0.63 | % | 0.89 | % | 0.69 | % | 0.94 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements or recoupments | 1.22 | %C | 1.02 | % | 0.63 | % | 0.89 | % | 0.69 | % | 0.93 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 18 | %B | 28 | % | 32 | % | 16 | % | 62 | % | 34 | % |
A | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
B | Not annualized. |
C | Annualized. |
D | This ratio does not include a voluntary reimbursement of service fees as included in the prior year. |
See accompanying notes
67
American BeaconMid-Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Institutional Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015A | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.52 | $ | 17.25 | $ | 14.03 | $ | 14.62 | $ | 14.76 | $ | 14.33 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.12 | 0.21 | 0.16 | 0.26 | 0.16 | 0.12 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.85 | (1.34 | ) | 3.28 | 0.03 | 0.25 | 1.27 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.97 | (1.13 | ) | 3.44 | 0.29 | 0.41 | 1.39 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.22 | ) | (0.16 | ) | (0.22 | ) | (0.17 | ) | (0.10 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.79 | ) | (0.44 | ) | – | (0.71 | ) | (0.45 | ) | (0.85 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (1.01 | ) | (0.60 | ) | (0.22 | ) | (0.88 | ) | (0.55 | ) | (0.96 | ) | ||||||||||||||||||||||||||||||||
|
|
|
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|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | – | – | – | – | 0.00 | B | 0.00 | B | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 15.48 | $ | 15.52 | $ | 17.25 | $ | 14.03 | $ | 14.62 | $ | 14.76 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 7.56 | %D | (6.89 | )% | 24.71 | % | 2.39 | % | 2.73 | % | 10.20 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 212,489,691 | $ | 248,752,034 | $ | 265,934,589 | $ | 195,472,135 | $ | 258,503,278 | $ | 193,634,639 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 0.88 | %E | 0.85 | % | 0.89 | % | 0.89 | % | 0.85 | % | 0.89 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 0.88 | %E | 0.85 | % | 0.89 | % | 0.89 | % | 0.85 | % | 0.93 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements or recoupments | 1.47 | %E | 1.19 | % | 1.06 | % | 1.65 | % | 1.10 | % | 0.92 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements or recoupments | 1.47 | %E | 1.19 | % | 1.06 | % | 1.65 | % | 1.10 | % | 0.88 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 17 | %D | 34 | % | 28 | % | 27 | % | 79 | % | 24 | % |
A | WEDGE Capital Management was added as an investment manager to theMid-Cap Value Fund on May 11, 2015. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
68
American BeaconMid-Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Y Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015A | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.39 | $ | 17.11 | $ | 13.92 | $ | 14.52 | $ | 14.66 | $ | 14.25 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.11 | 0.19 | 0.15 | 0.23 | 0.15 | 0.18 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.83 | (1.32 | ) | 3.25 | 0.05 | 0.26 | 1.19 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.94 | (1.13 | ) | 3.40 | 0.28 | 0.41 | 1.37 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.20 | ) | (0.15 | ) | (0.21 | ) | (0.17 | ) | (0.10 | ) | (0.11 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.79 | ) | (0.44 | ) | – | (0.71 | ) | (0.45 | ) | (0.85 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (0.99 | ) | (0.59 | ) | (0.21 | ) | (0.88 | ) | (0.55 | ) | (0.96 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | – | – | – | – | 0.00 | B | 0.00 | B | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 15.34 | $ | 15.39 | $ | 17.11 | $ | 13.92 | $ | 14.52 | $ | 14.66 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 7.46 | %D | (6.96 | )% | 24.60 | % | 2.29 | % | 2.76 | % | 10.15 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 96,995,418 | $ | 96,799,413 | $ | 100,190,167 | $ | 68,994,531 | $ | 70,009,288 | $ | 31,074,584 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 0.93 | %E | 0.93 | % | 0.97 | % | 0.96 | % | 0.94 | % | 0.98 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 0.93 | %E | 0.93 | % | 0.97 | % | 0.96 | % | 0.94 | % | 0.98 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.42 | %E | 1.11 | % | 0.98 | % | 1.59 | % | 1.02 | % | 0.80 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.42 | %E | 1.11 | % | 0.98 | % | 1.59 | % | 1.02 | % | 0.80 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 17 | %D | 34 | % | 28 | % | 27 | % | 79 | % | 24 | % |
A | WEDGE Capital Management was added as an investment manager to theMid-Cap Value Fund on May 11, 2015. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
69
American BeaconMid-Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Investor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015A | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.65 | $ | 17.40 | $ | 14.14 | $ | 14.73 | $ | 14.89 | $ | 14.47 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.09 | 0.16 | 0.14 | 0.21 | 0.13 | 0.16 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.86 | (1.34 | ) | 3.31 | 0.05 | 0.25 | 1.21 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.95 | (1.18 | ) | 3.45 | 0.26 | 0.38 | 1.37 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.17 | ) | (0.13 | ) | (0.19 | ) | (0.14 | ) | (0.09 | ) | (0.10 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.79 | ) | (0.44 | ) | - | (0.71 | ) | (0.45 | ) | (0.85 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (0.96 | ) | (0.57 | ) | (0.19 | ) | (0.85 | ) | (0.54 | ) | (0.95 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | - | - | - | - | 0.00 | B | 0.00 | B | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 15.64 | $ | 15.65 | $ | 17.40 | $ | 14.14 | $ | 14.73 | $ | 14.89 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 7.33 | %D | (7.13 | )% | 24.52 | % | 2.12 | % | 2.52 | % | 9.99 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 254,002,999 | $ | 379,123,913 | $ | 274,552,551 | $ | 243,421,035 | $ | 304,799,582 | $ | 246,404,670 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 1.13 | %E | 1.12 | % | 1.09 | % | 1.12 | % | 1.09 | % | 1.13 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 1.13 | %E | 1.12 | % | 1.09 | % | 1.12 | % | 1.09 | % | 1.14 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements or recoupments | 1.17 | %E | 0.92 | % | 0.86 | % | 1.44 | % | 0.87 | % | 0.61 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements or recoupments | 1.17 | %E | 0.92 | % | 0.86 | % | 1.44 | % | 0.87 | % | 0.60 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 17 | %D | 34 | % | 28 | % | 27 | % | 79 | % | 24 | % |
A | WEDGE Capital Management was added as an investment manager to theMid-Cap Value Fund on May 11, 2015. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
70
American BeaconMid-Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
Advisor Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015A | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.17 | $ | 16.83 | $ | 13.69 | $ | 14.27 | $ | 14.46 | $ | 14.07 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.08 | 0.10 | 0.10 | 0.16 | 0.08 | 0.11 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.83 | (1.29 | ) | 3.18 | 0.05 | 0.25 | 1.17 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.91 | (1.19 | ) | 3.28 | 0.21 | 0.33 | 1.28 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.13 | ) | (0.03 | ) | (0.14 | ) | (0.08 | ) | (0.07 | ) | (0.04 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.79 | ) | (0.44 | ) | - | (0.71 | ) | (0.45 | ) | (0.85 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (0.92 | ) | (0.47 | ) | (0.14 | ) | (0.79 | ) | (0.52 | ) | (0.89 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | - | - | - | - | 0.00 | B | 0.00 | B | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 15.16 | $ | 15.17 | $ | 16.83 | $ | 13.69 | $ | 14.27 | $ | 14.46 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 7.21 | %D | (7.38 | )% | 24.10 | % | 1.82 | % | 2.25 | % | 9.58 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: | ||||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 3,380,978 | $ | 3,597,339 | $ | 3,682,231 | $ | 6,622,356 | $ | 6,684,131 | $ | 7,149,083 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 1.39 | %E | 1.39 | % | 1.40 | % | 1.40 | % | 1.37 | % | 1.40 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 1.39 | %E | 1.39 | % | 1.40 | % | 1.40 | % | 1.37 | % | 1.46 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements or recoupments | 0.98 | %E | 0.64 | % | 0.55 | % | 1.16 | % | 0.58 | % | 0.35 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements or recoupments | 0.98 | %E | 0.64 | % | 0.55 | % | 1.16 | % | 0.58 | % | 0.30 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 17 | %D | 34 | % | 28 | % | 27 | % | 79 | % | 24 | % |
A | WEDGE Capital Management was added as an investment manager to theMid-Cap Value Fund on May 11, 2015. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
71
American BeaconMid-Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
A Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015A | 2014 | |||||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 15.15 | $ | 16.84 | $ | 13.70 | $ | 14.28 | $ | 14.43 | $ | 14.09 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income | 0.35 | 0.18 | 0.13 | 0.18 | 0.11 | 0.13 | ||||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.57 | (1.36 | ) | 3.18 | 0.05 | 0.25 | 1.16 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total income (loss) from investment operations | 0.92 | (1.18 | ) | 3.31 | 0.23 | 0.36 | 1.29 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.14 | ) | (0.07 | ) | (0.17 | ) | (0.10 | ) | (0.06 | ) | (0.10 | ) | ||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.79 | ) | (0.44 | ) | - | (0.71 | ) | (0.45 | ) | (0.85 | ) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total distributions | (0.93 | ) | (0.51 | ) | (0.17 | ) | (0.81 | ) | (0.51 | ) | (0.95 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Redemption fees added to beneficial interests | - | - | - | - | 0.00 | B | 0.00 | B | ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Net asset value, end of period | $ | 15.14 | $ | 15.15 | $ | 16.84 | $ | 13.70 | $ | 14.28 | $ | 14.43 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Total returnC | 7.35 | %D | (7.32 | )% | 24.26 | % | 1.98 | % | 2.35 | % | 9.68 | % | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||||||||||||
Ratios and supplemental data: |
| |||||||||||||||||||||||||||||||||||||||||||
Net assets, end of period | $ | 4,521,696 | $ | 12,080,510 | $ | 18,170,218 | $ | 19,486,655 | $ | 16,422,504 | $ | 18,345,497 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements | 1.29 | %E | 1.25 | % | 1.27 | % | 1.26 | % | 1.25 | % | 1.33 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements | 1.29 | %E | 1.25 | % | 1.27 | % | 1.26 | % | 1.25 | % | 1.33 | % | ||||||||||||||||||||||||||||||||
Net investment income, before expense reimbursements | 1.04 | %E | 0.78 | % | 0.69 | % | 1.30 | % | 0.71 | % | 0.42 | % | ||||||||||||||||||||||||||||||||
Net investment income, net of reimbursements | 1.04 | %E | 0.78 | % | 0.69 | % | 1.30 | % | 0.71 | % | 0.42 | % | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 17 | %D | 34 | % | 28 | % | 27 | % | 79 | % | 24 | % |
A | WEDGE Capital Management was added as an investment manager to theMid-Cap Value Fund on May 11, 2015. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
72
American BeaconMid-Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
C Class | ||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended April 30, | Year Ended October 31 | |||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2017 | 2016 | 2015A | 2014 | |||||||||||||||||||||||||||||||||||||||
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(unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | $ | 14.60 | $ | 16.27 | $ | 13.26 | $ | 13.87 | $ | 14.08 | $ | 13.81 | ||||||||||||||||||||||||||||||||
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Income (loss) from investment operations: | ||||||||||||||||||||||||||||||||||||||||||||
Net investment income (loss) | 0.01 | 0.03 | (0.03 | ) | 0.07 | 0.01 | 0.08 | |||||||||||||||||||||||||||||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.84 | (1.26 | ) | 3.11 | 0.06 | 0.23 | 1.09 | |||||||||||||||||||||||||||||||||||||
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Total income (loss) from investment operations | 0.85 | (1.23 | ) | 3.08 | 0.13 | 0.24 | 1.17 | |||||||||||||||||||||||||||||||||||||
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Less distributions: | ||||||||||||||||||||||||||||||||||||||||||||
Dividends from net investment income | (0.03 | ) | - | (0.07 | ) | (0.03 | ) | - | (0.05 | ) | ||||||||||||||||||||||||||||||||||
Distributions from net realized gains | (0.79 | ) | (0.44 | ) | - | (0.71 | ) | (0.45 | ) | (0.85 | ) | |||||||||||||||||||||||||||||||||
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Total distributions | (0.82 | ) | (0.44 | ) | (0.07 | ) | (0.74 | ) | (0.45 | ) | (0.90 | ) | ||||||||||||||||||||||||||||||||
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Redemption fees added to beneficial interests | - | - | - | - | 0.00 | B | 0.00 | B | ||||||||||||||||||||||||||||||||||||
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Net asset value, end of period | $ | 14.63 | $ | 14.60 | $ | 16.27 | $ | 13.26 | $ | 13.87 | $ | 14.08 | ||||||||||||||||||||||||||||||||
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Total returnC | 6.96 | %D | (7.85 | )% | 23.27 | % | 1.19 | % | 1.57 | % | 8.88 | % | ||||||||||||||||||||||||||||||||
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Ratios and supplemental data: |
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Net assets, end of period | $ | 4,874,843 | $ | 5,840,412 | $ | 6,520,983 | $ | 6,030,130 | $ | 6,238,827 | $ | 5,104,394 | ||||||||||||||||||||||||||||||||
Ratios to average net assets: | ||||||||||||||||||||||||||||||||||||||||||||
Expenses, before reimbursements or recoupments | 1.98 | %E | 1.87 | % | 2.04 | % | 2.04 | % | 2.01 | % | 2.12 | % | ||||||||||||||||||||||||||||||||
Expenses, net of reimbursements or recoupments | 1.98 | %E | 1.87 | % | 2.04 | % | 2.04 | % | 2.01 | % | 2.13 | % | ||||||||||||||||||||||||||||||||
Net investment income (loss), before expense reimbursements or recoupments | 0.38 | %E | 0.17 | % | (0.09 | )% | 0.53 | % | (0.05 | )% | (0.33 | )% | ||||||||||||||||||||||||||||||||
Net investment income (loss), net of reimbursements or recoupments | 0.38 | %E | 0.17 | % | (0.09 | )% | 0.53 | % | (0.05 | )% | (0.34 | )% | ||||||||||||||||||||||||||||||||
Portfolio turnover rate | 17 | %D | 34 | % | 28 | % | 27 | % | 79 | % | 24 | % |
A | WEDGE Capital Management was added as an investment manager to theMid-Cap Value Fund on May 11, 2015. |
B | Amount represents less than $0.01 per share. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | Not annualized. |
E | Annualized. |
See accompanying notes
73
American BeaconMid-Cap Value FundSM
Financial Highlights
(For a share outstanding throughout the period)
R6 Class | ||||||||||||
Six Months Ended April 30, 2019 | February 28, 2018A to October 31, 2018 | |||||||||||
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(unaudited) | ||||||||||||
Net asset value, beginning of period | $ | 15.52 | $ | 16.94 | ||||||||
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Income from investment operations: | ||||||||||||
Net investment income | 0.11 | 0.10 | ||||||||||
Net gains (losses) on investments (both realized and unrealized) | 0.86 | (1.52 | ) | |||||||||
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Total income (loss) from investment operations | 0.97 | (1.42 | ) | |||||||||
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Less distributions: | ||||||||||||
Dividends from net investment income | (0.22 | ) | - | |||||||||
Distributions from net realized gains | (0.79 | ) | - | |||||||||
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Total distributions | (1.01 | ) | - | |||||||||
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Net asset value, end of period | $ | 15.48 | $ | 15.52 | ||||||||
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Total returnB C | 7.57 | % | (8.38 | )% | ||||||||
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Ratios and supplemental data: |
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Net assets, end of period | $ | 183,125 | $ | 191,772 | ||||||||
Ratios to average net assets: | ||||||||||||
Expenses, before reimbursementsD | 1.16 | % | 3.09 | % | ||||||||
Expenses, net of reimbursementsD | 0.88 | % | 0.88 | % | ||||||||
Net investment income (loss), before expense reimbursementsD | 1.25 | % | (0.88 | )% | ||||||||
Net investment income, net of reimbursementsD | 1.53 | % | 1.32 | % | ||||||||
Portfolio turnover rateC | 17 | % | 34 | % |
A | Commencement of operations. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | Not annualized. |
D | Annualized. |
See accompanying notes
74
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76
Delivery of Documents
eDelivery isNOW AVAILABLE – Stop traditional mail delivery and receive your
shareholder reports and summary prospectuson-line. Sign up at
www.americanbeaconfunds.com
If you invest in the Fund through a financial institution, you may be able to receive the Fund’s regulatory mailings, such as the Prospectus, Annual Report and Semi-Annual Report, bye-mail. If you are interested in this option, please go towww.icsdelivery.comand search for your financial institution’s name or contact your financial institution directly.
To obtain more information about the Fund:
![]() | ![]() | |
ByE-mail: | On the Internet: | |
american_beacon.funds@ambeacon.com | Visit our website atwww.americanbeaconfunds.com | |
By Telephone: Call (800)658-5811 | By Mail: American Beacon Funds P.O. Box 219643 Kansas City, MO 64121-9643 | |
Availability of Quarterly Portfolio Schedules | Availability of Proxy Voting Policy and Records | |
In addition to the Schedule of Investments provided in each semi-annual and annual report, the Funds file a complete schedule of portfolio holdings with the Securities and Exchange Commission (“SEC”) on FormsN-Q as of the first and third fiscal quarters. The Funds’ FormsN-Q are available on the SEC’s website atwww.sec.gov. The FormsN-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(800)-SEC-0330. Complete schedules of the Funds’ portfolio holdings are also available atwww.americanbeaconfunds.com approximately twenty days after the end of each month. | 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 websitewww.americanbeaconfunds.com and by calling1-800-967-9009 or by accessing the SEC’s website atwww.sec.gov. The Fund’s proxy voting record for the most recent year ended June 30 is filed annually with the SEC on FormN-PX. The Fund’s FormsN-PX are available on the SEC’s website atwww.sec.gov. The Fund’s proxy voting record may also be obtained by calling1-800-967-9009. |
Fund Service Providers:
CUSTODIAN State Street Bank and Trust Company Boston, Massachusetts | TRANSFER AGENT DST Asset Manager Solutions, Inc. Quincy, Massachusetts | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Ernst & Young LLP Dallas, Texas | DISTRIBUTOR Resolute Investment Distributors, Inc. Irving, TX |
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 Balanced Fund and American BeaconMid-Cap Value Fund are service marks of American Beacon Advisors, Inc.
SAR 04/19
ITEM 2. | CODE OF ETHICS. |
Not Applicable.
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 FORCLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not Applicable.
ITEM 8. | PORTFOLIO MANAGERS OFCLOSED-END MANAGEMENT INVESTMENT COMPANIES. |
Not Applicable.
ITEM 9. | PURCHASES OF EQUITY SECURITIES BYCLOSED-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 Rule30a-2(a) under the Act (17 CFR270.30a-2(a)) is attached hereto asEX-99.CERT.
(a)(3) Not Applicable.
(b) The certifications required by Rule30a-2(b) under the Investment Company Act of 1940 are attached hereto asEX-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: July 8, 2019
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: July 8, 2019
By /s/ Melinda G. Heika |
Melinda G. Heika |
Treasurer |
American Beacon Funds |
Date: July 8, 2019