UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-4984
AMERICAN BEACON FUNDS
(Exact name of registrant as specified in charter)
4151 Amon Carter Boulevard, MD 2450
Fort Worth, Texas 76155
(Address of principal executive offices)-(Zip code)
WILLIAM F. QUINN, PRESIDENT
4151 Amon Carter Boulevard, MD 2450
Fort Worth, Texas 76155
(Name and address of agent for service)
Registrant's telephone number, including area code: (817) 967-3509
Date of fiscal year end: October 31, 2007
Date of reporting period: April 30, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
G U I D A N C E | V I S I O N | E X P E R I E N C E
(AMERICAN BEACON FUNDS (SM) LOGO)
Semi-Annual Report
April 30, 2007
INTERNATIONAL EQUITY FUND
ABOUT AMERICAN BEACON
Since 1986, American Beacon Advisors has offered a variety of products and
investment advisory services to numerous institutional and retail clients,
including a variety of mutual funds, corporate cash management, and separate
account management.
Our clients include defined benefit plans, defined contribution plans,
foundations, endowments, corporations, financial planners, and other
institutional investors. With American Beacon Advisors, you can put the
experience of a multi-billion dollar asset management firm to work for your
company.
CONTENTS
President's Message ......................................... 1
Market and Performance Overview ............................. 2
Schedule of Investments ..................................... 6
Additional Information ...................................... Back Cover
Any opinions herein, including forecasts, reflect our judgment as of the end of
the reporting period and are subject to change. Each advisor's strategies and
the Fund's portfolio composition will change depending on economic and market
conditions. This report is not a complete analysis of market conditions and,
therefore, should not be relied upon as investment advice. Although economic and
market information has been compiled from reliable sources, American Beacon
Advisors, Inc. makes no representation as to the completeness or accuracy of the
statements contained herein.
Investing in foreign equities entails additional risk not associated with
domestic equities, such as currency fluctuations, economic and political
instability and differences in accounting standards.
American Beacon Funds April 30, 2007
FELLOW SHAREHOLDERS,
[PHOTO OF DOUGLAS G. HERRING]
I am pleased to present to you the American Beacon International Equity
Fund Semi-Annual Report for the six months ended April 30, 2007.
Developed foreign markets had a positive six months. Strong world
economies, and a weaker U.S. Dollar when compared to the Euro, helped the
developed foreign markets exceed the returns of U.S. equity markets during this
fiscal period. The MSCI EAFE Index reported a return of 15.46% for the last six
months, beating the S&P 500 and Dow Jones Industrial Average indices returns of
8.60% and 9.40%, respectively.
The American Beacon International Equity Fund-Institutional Class reported
a total return of 13.66% for this six-month period.
Please review the enclosed market overview, portfolio listings and
detailed financial data. As always, we welcome the opportunity to serve your
financial needs. To obtain further details about the American Beacon Funds
family or to access your account information, please visit our website at
www.americanbeaconfunds.com. Thank you for your continued confidence in the
American Beacon International Equity Fund.
Sincerely,
/s/ Douglas G. Herring
----------------------------
Douglas G. Herring
President
American Beacon Funds
1
INTERNATIONAL EQUITY MARKET OVERVIEW
April 30, 2007 (Unaudited)
Surplus savings in the large and rapidly growing emerging countries has
added to the global surge in liquidity. The ongoing huge U.S. current account
deficit plays a major role in supporting the growth in investable funds. Asian
central banks have spent the past several years attempting to keep their
domestic currencies highly competitive through accumulating enormous U.S. dollar
reserves, often held in U.S. Treasuries. This intervention by non-U.S. central
banks protracts the liquidity boom, increasing the money base of the intervening
countries, reducing global borrowing costs, and suppressing domestic interest
rates. In this six-month period, in response to a shift in economic growth, the
U.S. dollar and Japanese yen depreciated versus the Euro, the Australian dollar,
and the British pound.
The world economy remains in a low-inflation expansion phase. This benign
inflation environment appears more structural than cyclical, reflecting the
massive supply-side benefits of globalization, and technological and financial
innovation, as well as market deregulation. Crude oil prices remained high but
volatile, declining to around $50 per barrel in January and recovering to end
the period in the mid-to-high $60s. Base metals were up approximately 10% over
the period, having significantly rebounded from a large sell-off in December and
January. Other non-traded commodities also did well, with iron ore and thermal
coal demonstrating significant price appreciation in 2007 annual contracts.
U.S. real gross domestic product growth continued to decelerate while
Europe, Asia, and emerging countries steamed ahead. The Global Purchasing
Managers Index reached a seven-month high in April. Two important developments
drove European economic re-acceleration. First was the emergence of improved
domestic demand. Ongoing improvement in the Euro zone labor market boosted
consumer spending. Second, and related, was the transformation of Germany --
which represents a third of Euro area economic activity -- from regional laggard
to leader. German industrial production turned up markedly in the six-month
period. In March 2007, the country's trade surplus widened by 30.5% from March
2006. Unemployment rates in the Euro area fell, led by jobless rate declines in
France and Germany. In April, Germany's unemployment rate fell to 9.2%, the
lowest since August 2001. In March, France's employment rate fell to 8.3%, its
lowest rate since 1983. In Britain, money supply growth and inflation likely
will lead to further rate increases. Inflation reached 2.8% in February, well
above the Bank of England's target. Minutes from the Bank of England's most
recent meeting revealed the Bank may adopt a more hawkish policy, potentially
hiking rates to 6% by the end of 2007. In the United States, housing activity
continued to wane, but consumers remained remarkably resilient. U.S.
productivity continued to improve while wage compensation growth remained
modest, promoting profit growth in a low inflation environment. Nonetheless,
construction deceleration may push the U.S. unemployment rate higher.
Japan revisited deflation in February (core consumer prices fell 0.1%
year-over-year), a setback in the wake of the Bank of Japan's interest rate hike
to 0.50%. Despite the Consumer Price Index slippage, the Japanese economy
remained on track for continued above-trend growth. The current post-war
economic expansion is the longest on record for Japan. The Japanese economy has
maintained annual growth of between 1.9% and 2.4% for the past four fiscal
years. Currently, the nation's gross domestic product (GDP) is growing at an
annual rate of 2%. At period-end, emerging countries represented 15% of the
international equity markets. That percentage is growing rapidly. According to
ISI Group, total developing countries' GDP equals approximately 29% of World
GDP, approximately the same as the U.S. (28%). Most developing economies are
thriving due to 1) free trade, 2) the shifting of their economies towards
capitalism, 3) plentiful cash available for investment, and 4) booming commodity
prices. This boost to global GDP adds upward pressure on commodity prices and
downward pressure on labor costs and finished goods and service prices. It is
difficult to predict precisely when or what will ultimately curtail this
extraordinary period of economic growth, but it will likely stem from higher
short-term rates draining excess liquidity from the system.
2
PERFORMANCE OVERVIEW
AMERICAN BEACON INTERNATIONAL EQUITY FUND(SM)
April 30, 2007 (Unaudited)
The Institutional Class of the International Equity Fund returned 13.66%
for the six months ended April 30, 2007. The Fund underperformed the MSCI EAFE
Index ("Index") return of 15.46% and the Lipper International Funds Index return
of 15.14% for the period.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
------------------------
6 MONTHS* 1 YEAR 5 YEARS 10 YEARS
--------- -------- ------- --------
Institutional
Class(1,4) ................. 13.66% 18.01% 16.52% 10.81%
PlanAhead
Class(1,4) ................. 13.54% 17.74% 16.34% 10.57%
Service Class(1,2,4) ....... 13.37% 17.43% 16.07% 10.45%
AMR Class(1) ............... 13.85% 18.32% 16.81% 11.10%
Lipper Int'l. Funds
Index(3) ................... 15.14% 18.06% 16.19% 9.29%
MSCI EAFE Index (3) ........ 15.46% 19.81% 16.64% 8.72%
* Not annualized
1. Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and current performance may be lower or
higher than the performance data quoted. To obtain performance as of the
most recent month end, please visit www.americanbeaconfunds.com or call
1-800-967-9009. Fund performance in the table above does not reflect the
deduction of taxes a shareholder would pay on distributions or the
redemption of shares.
2. Fund performance for the five-year and ten-year periods represents the
total returns achieved by the PlanAhead Class from 4/30/97 up to 5/1/03,
the inception date of the Service Class, and the returns of the Service
Class since its inception. Expenses of the Service Class are higher than
those of the PlanAhead Class. As a result, total returns shown may be
higher than they would have been had the Service Class been in existence
since 4/30/97. A portion of the fees changed to the Service Class of the
Fund has been waived. Performance prior to waiving fees was lower than the
actual returns shown.
3. The Lipper International Funds Index tracks the results of the 30 largest
mutual funds in the Lipper International Funds category. Lipper is an
independent mutual fund research and ranking service. One cannot directly
invest in an index. 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.
4. The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional, PlanAhead, Service and AMR Class
shares was 0.72%, 0.97%, 1.20% and 0.46%, 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 by 1.80% over the six-month period due
to stock selection, somewhat offset by value added from country allocation.
Country allocation benefited the Fund, primarily through an underweight
position in Japan, the worst-performing market in the Index for the period, with
a gain of approximately 5%. Relative to the Index, value was also added by
overweighting Germany and the Netherlands (each returning over 25%), and France
(up nearly 20%).
Although stock selection had a significantly positive impact in the United
Kingdom and Denmark, it was more than offset by negative stock selections in
Japan, Singapore, and Norway. Financial stocks in Japan and Singapore detracted
from performance, specifically Sumitomo Mitsui Financial Group (down 19.1%),
Mitsubishi Tokyo Financial Group (down 16.3%), and Mitsui Trust Holdings (down
22.1%) in Japan, and Development Bank of Singapore Group Holdings (up 9.1%) in
Singapore. Investment in the Telecommunications stock, Telenor ASA (up 18.5%),
hurt performance in Norway. In the U.K., five stocks in the Consumer
Discretionary and Consumer Staples sectors each returned over 30%, while Vestas
Wind Systems (up 133.4%) added value in Denmark.
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.
3
PERFORMANCE OVERVIEW
AMERICAN BEACON INTERNATIONAL EQUITY FUND(SM)
April 30, 2007 (Unaudited)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
Sanofi-Aventis 2.5%
Deutsche Post AG 2.2%
Siemens AG 2.0%
GlaxoSmithKline plc 1.9%
BP plc 1.8%
Vodafone Group plc 1.8%
BAE Systems plc 1.8%
France Telecom S.A. 1.7%
Novartis AG 1.7%
BNP Paribas 1.6%
SECTOR ALLOCATION
% OF
EQUITIES
--------
Financials 27.4%
Consumer Discretionary 14.5%
Industrials 12.0%
Health Care 8.3%
Energy 8.1%
Telecommunications Services 8.1%
Consumer Staples 6.3%
Information Technology 5.8%
Materials 5.3%
Utilities 4.2%
REGIONAL ALLOCATION*
[PIE CHART]
FUND EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs, such as redemption fees, and (2) ongoing costs, including
management fees, administrative service fees, distribution (12b-1) fees, and
other Fund expenses. The examples below are intended to help you understand the
ongoing cost (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the
beginning of the period in each Class and held for the entire period from
November 1, 2006 through April 30, 2007.
Investing in foreign equities entails additional risk not associated with
domestic equities, such as currency fluctuations, economic and political
instability and differences in accounting standards.
4
FUND EXPENSES
AMERICAN BEACON INTERNATIONAL EQUITY FUND(SM)
April 30, 2007 (Unaudited)
ACTUAL EXPENSES
The "Actual" lines of the table provide information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading "Expenses Paid During Period" to estimate
the expenses you paid on your account during this period. Shareholders of the
PlanAhead and Institutional Classes that invest in the Fund through an IRA may
be subject to a custodial IRA fee of $12 that is typically deducted each
December. If your account was subject to a custodial IRA fee during the period,
your costs would have been $12 higher.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" lines of the table provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed 5% per year rate of return before expenses (not the
Fund's actual return). You may compare the ongoing costs of investing in the
Fund with other funds by contrasting this 5% hypothetical example and the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. Shareholders
of the PlanAhead and Institutional Classes that invest in the Fund through an
IRA may be subject to a custodial IRA fee of $12 that is typically deducted each
December. If your account was subject to a custodial IRA fee during the period,
your costs would have been $12 higher.
You should also be aware that the expenses shown in the table highlight
only your ongoing costs and do not reflect any transaction costs charged by the
Fund, such as redemption fees. Similarly, the expense examples for other funds
do not reflect any transaction costs charged by those funds, such as sales
charges (loads), redemption fees or exchange fees. Therefore, the "Hypothetical"
lines of the table are useful in comparing ongoing costs only and will not help
you determine the relative total costs of owning different funds. If you were
subject to any transaction costs during the period, your costs would have been
higher.
EXPENSES
BEGINNING ENDING PAID DURING
ACCOUNT ACCOUNT PERIOD*
VALUE VALUE 11/1/06-
11/1/06 4/30/07 4/30/07
--------- --------- -----------
INSTITUTIONAL CLASS
Actual $1,000.00 $1,136.63 $3.57
Hypothetical $1,000.00 $1,021.45 $3.38
(5% return before expenses)
PLANAHEAD CLASS
Actual $1,000.00 $1,135.40 $4.90
Hypothetical $1,000.00 $1,020.21 $4.64
(5% return before expenses)
SERVICE CLASS
Actual $1,000.00 $1,133.71 $5.74
Hypothetical $1,000.00 $1,019.42 $5.43
(5% return before expenses)
AMR CLASS
Actual $1,000.00 $1,138.49 $2.20
Hypothetical $1,000.00 $1,022.74 $2.08
(5% return before expenses)
* Expenses are equal to the Fund's annualized expense ratios for the
six-month period of 0.67%, 0.93%, 1.08%, 0.41%, for the Institutional,
PlanAhead, Service, and AMR Classes, respectively, multiplied by the
average account value over the period, multiplied by the number derived by
dividing the number of days in the most recent fiscal half-year (181) by
days in the year (365) to reflect the half-year period.
5
AMERICAN BEACON INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
----------- ---------
(DOLLARS IN THOUSANDS)
AUSTRALIA - 1.36%
COMMON STOCKS - 1.36%
Alumina Ltd. + ........................... 732,248 $ 4,315
Commonwealth Bank of Australia ........... 208,440 9,096
Macquarie Airports Management Ltd. ....... 576,734 1,897
National Australia Bank Ltd. ............. 342,730 12,185
News Corp. ............................... 182,280 4,081
Suncorp-Metway Ltd. ...................... 744,730 13,198
---------
TOTAL AUSTRALIA ............................ 44,772
---------
AUSTRIA - 0.12%
COMMON STOCKS - 0.12%
Telekom Austria AG ## .................... 135,600 3,824
---------
BERMUDA - 0.01%
COMMON STOCKS - 0.01%
Ship Finance International Ltd. .......... 14,774 439
---------
CANADA - 1.09%
COMMON STOCKS - 1.09%
Alcan, Inc. ## .......................... 78,471 4,620
BCE, Inc. ................................ 40,544 1,366
Celestica, Inc. ## ....................... 556,300 3,724
Husky Energy, Inc. ....................... 69,080 5,269
Jean Coutu Group, Inc. ................... 371,200 5,017
Manulife Financial Corp. ................. 436,196 15,763
---------
TOTAL CANADA ............................... 35,759
---------
DENMARK - 0.28%
COMMON STOCKS - 0.28%
Vestas Wind Systems ## ................... 141,526 9,140
---------
FINLAND - 2.23%
COMMON STOCKS - 2.23%
Fortum Espoo Oyj ## + .................... 440,800 13,616
Nokia Oyj ## + ........................... 1,287,640 32,551
Stora Enso Oyj ## + ...................... 213,542 3,898
Stora Enso Oyj, A Shares ## .............. 68,102 1,247
Stora Enso Oyj, R Shares ................. 650,269 11,894
UPM-Kymmene Oyj .......................... 410,300 10,106
---------
TOTAL FINLAND .............................. 73,312
---------
FRANCE - 12.63%
COMMON STOCKS - 12.63%
Accor S.A. ............................... 202,552 19,031
AXA S.A. ................................. 924,118 42,240
BNP Paribas .............................. 446,825 51,713
Compagnie Generale des Etablissements
Michelin .............................. 116,670 $ 14,808
Electricite de France .................... 117,492 10,183
France Telecom S.A. ...................... 1,912,744 55,759
Lafarge S.A. ............................. 55,862 9,034
L'Air Liquide S.A. ## .................... 25,030 6,204
Publicis Groupe S.A. ## .................. 313,589 14,918
Sanofi-Aventis ........................... 902,365 82,862
Suez S.A. + .............................. 177,280 10,057
Technip + ................................ 257,536 19,006
Thomson S.A. ## .......................... 283,700 5,479
Total S.A. ............................... 661,086 48,809
Vinci S.A. ............................... 157,311 25,236
---------
TOTAL FRANCE .................................. 415,339
---------
GERMANY - 10.99%
COMMON STOCKS - 10.99%
adidas AG ## ............................. 402,800 24,047
Allianz AG ## + .......................... 39,202 8,893
BASF AG + ................................ 39,970 4,743
Bayer AG + ............................... 216,425 14,831
Bayerische Motoren Werke AG + ............ 355,081 21,927
Celesio AG ## + .......................... 260,090 18,650
Commerzbank AG ## ........................ 138,175 6,914
Continental AG ## + ...................... 79,000 11,019
DaimlerChrysler AG ## .................... 322,800 26,293
Deutsche Post AG ......................... 2,136,626 73,752
Deutsche Telekom ## + .................... 616,040 11,227
E.ON AG + ................................ 313,340 47,165
Infineon Technologies AG ## .............. 527,250 8,222
Karstadt Quelle AG ## + .................. 230,102 8,891
Muenchener
Rueckversicherung-Gesellschaft AG + ... 47,997 8,528
Siemens AG ............................... 547,932 66,170
---------
TOTAL GERMANY ................................. 361,272
---------
GREECE - 0.74%
COMMON STOCKS - 0.74%
National Bank of Greece S.A. ## .......... 232,600 12,974
Public Power Corp. S.A. .................. 439,810 11,502
---------
TOTAL GREECE .................................. 24,476
---------
HONG KONG/CHINA - 2.23%
COMMON STOCKS - 2.23%
Cheung Kong Holdings Ltd. ................ 835,500 10,848
CNOOC Ltd. ............................... 14,077,000 12,106
Hang Lung Group Ltd. ..................... 2,451,000 9,408
Henderson Land Development Co. Ltd. ...... 2,078,200 12,445
Hutchison Whampoa Ltd. ................... 199,000 1,916
See accompanying notes
6
AMERICAN BEACON INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
--------- ---------
(DOLLARS IN THOUSANDS)
PetroChina Co. Ltd. ..................... 7,863,905 $ 8,828
Swire Pacific Ltd. ...................... 957,100 10,942
Yue Yuen Industrial (Holdings) Ltd. ..... 1,937,667 6,706
--------
TOTAL HONG KONG/CHINA ................... 73,199
--------
IRELAND - 2.29%
COMMON STOCKS - 2.29%
Allied Irish Banks ...................... 445,132 13,433
Bank of Ireland ......................... 844,910 18,215
CRH plc ................................. 669,148 29,268
Depfa Bank plc .......................... 607,152 11,295
Smurfit Kappa Group plc ## .............. 110,100 3,005
--------
TOTAL IRELAND ........................... 75,216
--------
ITALY - 2.96%
COMMON STOCKS - 2.96%
Banco Popolare di Verona e Novara Scrl .. 314,308 10,476
Eni S.p.A ............................... 677,591 22,484
Mediaset S.p.A. ## ...................... 1,543,214 17,436
Telecom Italia S.p.A. ................... 1,392,689 4,182
UniCredito Italiano S.p.A. .............. 4,171,263 42,756
--------
TOTAL ITALY ............................. 97,334
--------
JAPAN - 12.12%
COMMON STOCKS - 12.12%
Aeon Co. Ltd. ........................... 618,100 11,317
Astellas Pharma, Inc. ................... 334,900 14,615
Daito Trust Construction Co., Ltd. ...... 202,500 9,306
East Japan Railway Co. .................. 934 7,569
FUJIFILM Holdings Corp. ................. 114,400 4,691
Hitachi Ltd. ............................ 685,500 5,207
Honda Motor Co. Ltd. .................... 560,900 19,305
Hoya Corp. .............................. 231,700 7,112
JS Group Corp. .......................... 337,900 7,631
Kao Corp. ............................... 111,600 3,064
Keyence Corp. ........................... 49,500 11,017
Konica Minolta Holdings, Inc. ........... 499,500 6,848
LAWSON, Inc. ............................ 171,000 6,303
Mitsubishi Tokyo Financial Group, Inc. .. 1,833 19,163
Mitsui Trust Holdings, Inc. ............. 1,138,400 10,309
NEC Corp. ............................... 417,300 2,212
Nidec Corp. ............................. 148,800 9,414
Nintendo Co. Ltd. ....................... 20,500 6,378
Nippon Express Co. Ltd. ................. 1,933,700 11,982
Nippon Paper Group, Inc. ................ 3,240 10,969
Nissan Motor Co. Ltd. ................... 1,766,700 17,825
NOK Corp. ............................... 626,600 11,647
Nomura Holdings, Inc. ................... 537,400 10,350
Ricoh Co. Ltd. .......................... 355,500 7,796
ROHM Co. Ltd. ........................... 149,000 $ 13,412
Sankyo Co. Ltd. ......................... 184,300 8,077
Sega Sammy Holdings, Inc. + ............. 306,800 6,930
Sekisui House Ltd. ...................... 860,600 12,721
SFCG Co. Ltd. + ......................... 25,465 4,478
Sompo Japan Insurance, Inc. ............. 376,900 4,610
Sony Corp. .............................. 108,402 5,774
Sumitomo Mitsui Financial Group, Inc. ... 3,397 29,723
Sumitomo Trust and Banking Co. Ltd. ..... 1,280,700 12,505
Takeda Pharmaceutical Co. Ltd. .......... 409,400 26,538
THK Co. Ltd. ............................ 336,000 8,210
Tokyo Gas Co. Ltd. ...................... 2,315,200 11,595
Yamada Denki Co. Ltd. ................... 98,400 9,067
Yamaha Motor Co. Ltd. ................... 487,400 12,875
--------
TOTAL JAPAN ................................. 398,545
--------
MEXICO - 0.22%
COMMON STOCKS - 0.22%
Telefonos de Mexico, S.A. de C.V., ADR... 214,800 7,333
--------
NETHERLANDS - 4.78%
COMMON STOCKS - 4.78%
ABN AMRO Holding N.V. + ................. 244,897 11,942
ING Groep N.V. .......................... 816,512 37,065
Koninklijke (Royal) Philips Electronics
N.V. ## ................................. 831,116 33,989
Reed Elsevier N.V. ...................... 274,156 5,144
SBM Offshore N.V. ## .................... 273,650 9,766
TNT N.V. ................................ 718,625 32,373
Unilever N.V. ## ........................ 702,250 21,369
Vedior N.V. ## .......................... 209,690 5,558
--------
TOTAL NETHERLANDS ........................... 157,206
--------
NEW ZEALAND - 0.28%
COMMON STOCKS - 0.28%
Telecom Corporation of New Zealand Ltd. + 2,577,400 9,165
--------
NORWAY - 1.18%
COMMON STOCKS - 1.18%
Aker Kvaener ASA ## + ................... 178,450 4,211
Frontline Ltd. + ........................ 98,877 3,723
Stolt-Nielsen S.A. ## ................... 277,484 8,429
Telenor ASA + ........................... 1,202,289 22,510
--------
TOTAL NORWAY ................................ 38,873
--------
PORTUGAL - 0.34%
COMMON STOCKS - 0.34%
Portugal Telecom, SGPS, S.A. ............ 792,250 11,297
--------
See accompanying notes
7
AMERICAN BEACON INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
--------- ----------
(DOLLARS IN THOUSANDS)
SINGAPORE - 1.72%
COMMON STOCKS - 1.72%
Development Bank of Singapore Group
Holdings Ltd. ........................... 1,859,455 $ 25,774
Flextronics International Ltd. ## .......... 899,000 10,024
Singapore Telecommunications Ltd. .......... 9,510,000 20,585
---------
TOTAL SINGAPORE ................................ 56,383
---------
SOUTH KOREA - 2.37%
COMMON STOCKS - 2.37%
Kookmin Bank, ADR .......................... 213,510 19,178
Korea Electric Power Corp. ................. 86,860 3,516
LG Electronics, Inc. ....................... 76,760 5,127
LG Telecom Ltd. ## ......................... 868,507 9,076
Samsung Electronics Co. Ltd. ............... 38,723 23,712
Samsung Electronics Co. Ltd., GDR ++ ....... 21,600 6,631
Shinhan Financial Group Co. Ltd. ........... 186,970 10,523
---------
TOTAL SOUTH KOREA .............................. 77,763
---------
SPAIN - 2.78%
COMMON STOCKS - 2.78%
Banco Bilbao Vizcaya Argentaria, S.A. ## ... 691,815 16,478
Banco Popular Espanol S.A .................. 506,100 10,007
Banco Santander Central Hispano S.A ........ 34,750 620
Banco Santander Central Hispano S.A., GDR .. 560,544 9,983
Enagas S.A ................................. 293,628 7,091
Repsol YPF S.A ............................. 273,340 8,970
Telefonica S.A ............................. 1,721,528 38,401
---------
TOTAL SPAIN .................................... 91,550
---------
SWEDEN - 2.15%
COMMON STOCKS - 2.15%
Atlas Copco AB + ........................... 341,820 12,975
Nordea AB ## ............................... 617,020 10,593
Securitas AB ............................... 381,930 5,807
Securitas Direct AB ## + ................... 381,930 1,193
Securitas Systems AB ## .................... 381,930 1,407
Swedbank AB + .............................. 139,000 5,340
Telefonaktiebolaget LM Ericsson ## ......... 8,764,000 33,411
---------
TOTAL SWEDEN ................................... 70,726
---------
SWITZERLAND - 7.37%
COMMON STOCKS - 7.37%
Adecco S.A. ................................ 138,320 9,487
Ciba Specialty Chemicals Holding, Inc. ..... 218,330 14,355
Credit Suisse Group ........................ 517,289 40,650
Lonza Group AG + ........................... 53,670 5,222
Nestle S.A. + .............................. 89,704 35,539
Novartis AG ................................ 947,539 $ 55,160
Swiss Reinsurance + ........................ 301,328 28,409
Syngenta AG + .............................. 78,961 15,706
UBS AG + ................................... 144,340 9,355
Zurich Financial Services AG + ............. 98,462 28,509
---------
TOTAL SWITZERLAND .............................. 242,392
---------
UNITED KINGDOM - 22.57%
COMMON STOCKS - 22.57%
AMVESCAP plc ............................... 339,930 3,984
Aviva plc .................................. 1,004,212 15,755
BAE Systems plc ............................ 6,409,757 58,174
BP plc ..................................... 5,366,421 60,296
British American Tobacco Industries plc .... 1,301,664 40,169
British Sky Broadcasting Group plc ......... 914,390 10,472
Cadbury Schweppes plc ...................... 827,350 10,915
Centrica plc ............................... 1,556,990 11,996
Compass Group plc .......................... 3,307,635 23,932
Debenhams plc ## ........................... 5,038,636 14,445
Diageo plc ................................. 817,743 17,246
Friends Provident plc ## ................... 1,855,200 6,991
GlaxoSmithKline plc ........................ 2,147,447 62,134
HBOS plc ................................... 787,224 16,897
HSBC Holdings plc .......................... 2,454,741 45,170
Imperial Tobacco Group plc ................. 285,740 12,379
Kingfisher plc ............................. 3,605,755 19,487
Lloyds TSB Group plc ## .................... 1,085,400 12,516
Marks and Spencer Group plc ................ 571,079 8,428
National Grid plc .......................... 1,019,178 15,946
Northern Rock plc ## ....................... 518,600 11,096
Old Mutual ................................. 3,488,299 12,385
Pearson plc ## ............................. 512,020 8,754
Reckitt Benckiser plc ## ................... 275,700 15,108
Rio Tinto plc ## ........................... 264,493 16,124
Rolls-Royce Group plc ...................... 65,289,910 10,492
Royal Bank of Scotland Group plc ........... 1,225,942 46,914
Royal Dutch Shell plc, ADR + ............... 31,660 2,196
Royal Dutch Shell plc, A Shares + .......... 512,094 17,911
Royal Dutch Shell plc, B Shares ............ 655,174 23,216
Smiths Group plc ........................... 438,030 9,466
Standard Chartered plc ..................... 177,350 5,498
TI Automotive Ltd. ## # .................... 655,200 --
Unilever plc ............................... 934,080 29,235
Vodafone Group plc ## ...................... 20,565,970 58,543
Yell Group plc ............................. 811,330 7,856
---------
TOTAL UNITED KINGDOM ........................... 742,126
---------
See accompanying notes
8
AMERICAN BEACON INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
SHORT TERM INVESTMENTS - 4.24%
American Beacon Money Market Select
Fund ### ............................. 139,532,346 $ 139,532
-----------
SECURITIES LENDING
COLLATERAL - 12.53%
American Beacon Cash Plus Trust ### .. 117,900,000 117,900
American Beacon Money Market Select
Fund ### .............................. 294,137,929 294,138
-----------
TOTAL SECURITIES LENDING COLLATERAL ......... 412,038
-----------
TOTAL INVESTMENTS 111.58% - (COST $2,784,018) 3,669,011
LIABILITIES, NET OF OTHER ASSETS - (11.58%) (380,668)
-----------
TOTAL NET ASSETS - 100.00% .................. $ 3,288,343
===========
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers. At
the period end, the value of these securities amounted to $6,631 or
0.20% of net assets. The Fund has no right to demand registration of
these securities.
# Valued at fair value pursuant to procedures approved by the Board of
Trustees.
### The Fund/Trust is affiliated by having the same investment advisor.
See accompanying notes
9
AMERICAN BEACON INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
FUTURES CONTRACTS
(DOLLARS IN THOUSANDS)
UNREALIZED
NUMBER OF EXPIRATION MARKET APPRECIATION/
CONTRACTS DATE VALUE (DEPRECIATION)
--------- ---------- ---------- --------------
Australia SPI Index .......... 81 Jun 2007 $ 10,406 $ 303
Canada S&PCDA 60 Index ....... 91 Jun 2007 12,641 140
France CAC 40 Index .......... 224 Jun 2007 17,916 1,040
Germany DAX Index ............ 55 Jun 2007 13,983 965
Hang Seng Index .............. 23 May 2007 2,955 (47)
Italy MIB 30 Index ........... 23 Jun 2007 6,766 419
Netherlands 200 AEX Index .... 44 May 2007 6,369 40
Spain IBEX 35 Index .......... 36 May 2007 7,019 (275)
Sweden OMX Index ............. 250 May 2007 4,750 56
Tokyo FE TOPIX Index ......... 240 Jun 2007 34,141 65
UK FTSE 100 Index ............ 307 Jun 2007 39,707 1,316
---------- ----------
$ 156,653 $ 4,022
========== ==========
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
(DOLLARS IN THOUSANDS)
SETTLEMENT MARKET UNREALIZED
DATE VALUE GAIN/(LOSS)
---------- -------- ----------
CONTRACTS TO DELIVER
5,032 Australian Dollar ........... 6/15/2007 $ 4,174 $ (94)
5,873 Canadian Dollar ............. 6/15/2007 5,299 (212)
14,649 Euro Currency ............... 6/15/2007 20,027 (341)
1,836,800 Japanese Yen ................ 6/15/2007 15,467 255
8,306 Pound Sterling .............. 6/15/2007 16,605 (313)
12,833 Swedish Krona ............... 6/15/2007 1,920 (57)
6,279 Swiss Franc ................. 6/15/2007 5,220 1
TOTAL CONTRACTS TO DELIVER
---------- ----------
(RECEIVABLE AMOUNT $ 67,951) ............. $ 68,712 $ (761)
---------- ----------
CONTRACTS TO RECEIVE
13,206 Australian Dollar ........... 6/15/2007 $ 10,955 $ 493
16,370 Canadian Dollar ............. 6/15/2007 14,734 639
12,943 Euro Currency ............... 6/15/2007 55,346 1,589
5,433,987 Japanese Yen ................ 6/15/2007 45,756 (754)
23,944 Pound Sterling .............. 6/15/2007 47,868 1,276
33,346 Swedish Krona ............... 6/15/2007 4,990 216
18,561 Swiss Franc ................. 6/15/2007 15,429 179
TOTAL CONTRACTS TO RECEIVE
---------- ----------
(PAYABLE AMOUNT $191,440) ............... $ 195,078 $ 3,638
---------- ----------
NET CURRENCY FLUCTUATION ................. $ 2,877
==========
See accompanying notes
10
AMERICAN BEACON INTERNATIONAL EQUITY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SECTOR DIVERSIFICATION
Percent of
Net Assets
----------
Consumer Discretionary ................... 13.72%
Consumer Staples ......................... 5.97%
Energy ................................... 7.68%
Financials ............................... 25.97%
Health Care .............................. 7.91%
Industrials .............................. 11.39%
Information Technology ................... 5.50%
Materials ................................ 5.04%
Telecommunication Services ............... 7.70%
Utilities ................................ 3.93%
Short Term Investments ................... 16.77%
Liabilities, Net of Other Assets ......... (11.58)%
------
100.00%
======
See accompanying notes
11
AMERICAN BEACON INTERNATIONAL EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2007 (Unaudited) (in thousands, except share and per share amounts)
ASSETS:
Investments in unaffiliated securities, at value A C .............................................. $ 3,117,441
Investments in affiliated securities, at value B .................................................. 551,570
Foreign currency, at value D ...................................................................... 3,649
Deposit with brokers for futures contracts ........................................................ 17,647
Receivable for investments sold ................................................................... 14,131
Dividends and interest receivable ................................................................. 19,032
Receivable for fund shares sold ................................................................... 3,420
Receivable for tax reclaims ....................................................................... 1,478
Receivable for variation margin on open futures contracts ......................................... 189
Net unrealized appreciation on foreign currency contracts ......................................... 2,877
Prepaid expenses .................................................................................. 77
-------------
TOTAL ASSETS .................................................................................... 3,731,511
-------------
LIABILITIES:
Payable for investments purchased ................................................................. 18,704
Payable upon return of securities loaned .......................................................... 412,038
Payable for fund shares redeemed .................................................................. 8,523
Payable under excess expense reimbursement plan ................................................... 2
Management and investment advisory fees payable (Note 2) .......................................... 2,793
Administrative service and service fees payable ................................................... 701
Other liabilities ................................................................................. 407
-------------
TOTAL LIABILITIES ............................................................................... 443,168
-------------
NET ASSETS ........................................................................................... $ 3,288,343
=============
ANALYSIS OF NET ASSETS:
Paid-in-capital ................................................................................... 2,208,278
Undistributed net investment income ............................................................... 17,403
Accumulated net realized gain ..................................................................... 169,909
Unrealized appreciation of investments, futures contracts, and foreign currency ................... 892,753
-------------
NET ASSETS ........................................................................................... $ 3,288,343
=============
SHARES OUTSTANDING (NO PAR VALUE):
Institutional Class ............................................................................... 65,057,424
=============
PlanAhead Class ................................................................................... 37,066,730
=============
Service Class ..................................................................................... 195,363
=============
AMR Class ......................................................................................... 26,587,540
=============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE:
Institutional Class ............................................................................... $ 25.55
=============
PlanAhead Class ................................................................................... $ 25.28
=============
Service Class ..................................................................................... $ 25.16
=============
AMR Class ......................................................................................... $ 25.73
=============
- ----------
A Cost of investments in unaffiliated securities ..................................................... $ 2,232,448
B Cost of investments in affiliated securities ....................................................... $ 551,570
C Market value of securities on loan ................................................................. $ 392,240
D Cost of foreign currency ........................................................................... $ 3,633
See accompanying notes
12
AMERICAN BEACON INTERNATIONAL EQUITY FUND
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2007 (Unaudited)(in thousands)
INVESTMENT INCOME:
Dividend income from unaffiliated securities (net of foreign taxes)* .............................. $ 37,254
Dividend income from affiliated securities ........................................................ 3,122
Interest income ................................................................................... 211
Income derived from securities lending, net ....................................................... 553
Other income ...................................................................................... 5
---------
TOTAL INVESTMENT INCOME ...................................................................... 41,145
---------
EXPENSES:
Management and investment advisory fees (Note 2) .................................................. 5,268
Administrative service fees (Note 2):
Institutional Class ............................................................................. 2,001
PlanAhead Class ................................................................................. 1,064
Service Class ................................................................................... 6
Transfer agent fees:
Institutional Class ............................................................................. 82
PlanAhead Class ................................................................................. 52
AMR Class ....................................................................................... 6
Custody and fund accounting fees .................................................................. 768
Professional fees ................................................................................. 33
Registration fees and expenses .................................................................... 38
Service fees:
PlanAhead Class (Note 2) ........................................................................ 1,063
Service Class (Note 2) .......................................................................... 6
Distribution fees - Service Class (Note 2) ........................................................ 6
Prospectus and shareholder reports ................................................................ 89
Other expenses .................................................................................... 146
---------
TOTAL EXPENSES ............................................................................... 10,628
---------
Net fees waived and expenses reimbursed by Manager (Note 2) ....................................... (2)
---------
NET EXPENSES ................................................................................. 10,626
---------
NET INVESTMENT INCOME ................................................................................ 30,519
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments ..................................................................................... 151,312
Commission recapture (Note 1) ................................................................... 52
Foreign currency transactions ................................................................... 21,683
Futures contracts ............................................................................... 8,475
Change in net unrealized appreciation or depreciation of:
Investments 103,585
Foreign currency translations ................................................................... 77,966
Futures contracts ............................................................................... 2,009
---------
NET GAIN ON INVESTMENTS ...................................................................... 365,082
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................. $ 395,601
=========
* Foreign taxes ................................................................................... $ 2,750
See accompanying notes
13
AMERICAN BEACON INTERNATIONAL EQUITY FUND
STATEMENT OF CHANGES OF NET ASSETS (IN THOUSANDS)
Six Months Year Ended
Ended October 31,
April 30, 2007 2006
--------------- ---------------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................................................ $ 30,519 $ 66,358
Net realized gain on investments, futures contracts, and foreign currency
transactions .................................................................... 181,522 206,379
Change in net unrealized appreciation or depreciation of investments, futures
contracts, and foreign currency translations .................................... 183,560 358,875
--------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................ 395,601 631,612
--------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Institutional Class ................................................................ (35,921) (25,841)
PlanAhead Class .................................................................... (17,074) (10,419)
Service Class ...................................................................... (77) (39)
AMR Class .......................................................................... (14,335) (10,085)
Net realized gain on investments:
Institutional Class ................................................................ (109,593) (80,744)
PlanAhead Class .................................................................... (56,999) (36,241)
Service Class ...................................................................... (313) (195)
AMR Class .......................................................................... (39,453) (28,011)
--------------- -------------
NET DISTRIBUTIONS TO SHAREHOLDERS (273,765) (191,575)
--------------- -------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares ........................................................ 355,219 548,466
Reinvestment of dividends and distributions .......................................... 259,288 176,178
Cost of shares redeemed .............................................................. (337,001) (574,493)
Redemption fees ...................................................................... 211 308
--------------- -------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ...................... 277,717 150,459
--------------- -------------
NET INCREASE IN NET ASSETS .............................................................. 399,553 590,496
--------------- -------------
NET ASSETS:
Beginning of period .................................................................. 2,888,790 2,298,294
--------------- -------------
END OF PERIOD * ...................................................................... $ 3,288,343 $ 2,888,790
=============== =============
*Includes undistributed net investment income of ........................................ $ 17,403 $ 49,187
=============== =============
See accompanying notes
14
AMERICAN BEACON INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
American Beacon Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940 (the
"Act"), as amended, as a no load, diversified, open-end management investment
company. These financial statements and notes to the financial statements relate
to the American Beacon International Equity Fund (the "Fund"), a series of the
Trust.
American Beacon Advisors, Inc. (the "Manager") is a wholly-owned
subsidiary of AMR Corporation, the parent company of American Airlines, Inc.
("American"), and was organized in 1986 to provide business management,
advisory, administrative and asset management consulting services to the Trust
and other investors.
Reorganization
Prior to March 1, 2006, the Fund invested all of its investable assets in
the International Equity Portfolio (the "Portfolio") of the American Beacon
Master Trust.
At the close of business on February 28, 2006, the Portfolio redeemed (in
thousands) $9,583 for cash and $94,585 for securities the investment of the
American Independence International Multi-Manager Stock Fund. Upon completion of
this transaction, the Fund was the sole shareholder in the Portfolio.
Accordingly, on February 28, 2006 the Fund withdrew its interest in the
Portfolio. The Fund received a distribution of cash and securities from the
Portfolio with a market value equal to the Fund's investment in the Portfolio in
the amount of $2,598,672,000 at the close of business. The Portfolio then ceased
operations.
Class Disclosure
The Fund has multiple classes of shares designed to meet the needs of
different groups of investors. The following table sets forth the differences
amongst the classes:
CLASS: OFFERED TO: SERVICE AND DISTRIBUTION FEES:
- ------------------- ------------------------------------------------- -------------------------------------------
INSTITUTIONAL CLASS Investors making an initial investment of Administrative Service Fee - 0.25%
$2 million
PLANAHEAD CLASS General public and investors investing Administrative Service Fee - 0.25%
through an intermediary Service Fee - 0.25%
SERVICE CLASS Investors investing through an intermediary Administrative Service Fee - 0.25%
Service Fee - 0.25%
Distribution Fee - 0.25%
AMR CLASS Investors in the tax-exempt retirement and
benefit plans of AMR Corporation and its affiliates N/A
Investment income, net capital gains (losses) and all expenses incurred by
the Fund are allocated based on the relative net assets of each class, except
for service fees and certain other fees and expenses related solely to one class
of shares.
Security Valuation
Investments are valued at the close of the New York Stock Exchange (the
"Exchange"), normally 4 p.m. ET, each day that the Exchange is open for
business. Equity securities for which market quotations are available are valued
at the last sale price or official closing price (closing bid price or last
evaluated quote if no sale has occurred) on the primary market or exchange on
which they trade.
Debt securities (other than short-term securities) normally are valued on
the basis of prices provided by an independent pricing service and may take into
account appropriate factors such as institution-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. When a price is unavailable from a
pricing service or when the price
15
AMERICAN BEACON INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
provided by the pricing service is deemed not to represent fair value, the
prices of debt securities may be determined using quotes obtained from brokers.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation. Investment grade short-term
obligations with 60 days or less to maturity are valued using the amortized cost
method, which approximates market value.
Securities for which the market prices are not readily available or are
not reflective of the fair value of the security, as determined by the Manager,
will be priced at fair value following procedures approved by the Board of
Trustees (the "Board").
Most foreign markets close before the Exchange. Developments that could
affect the values of securities that occur between the close of a foreign market
and the close of the Exchange normally will not be reflected in security
valuations. If such developments are so significant that they will, in the
judgment of the pricing committee of the Fund, clearly and materially affect the
value of securities, the foreign market closing prices may be adjusted to
reflect the fair value of the securities as of the close of the Exchange, as
determined in good faith and pursuant to procedures approved by the Board.
Adjustments to closing prices to reflect fair value on affected foreign
securities may be provided by an independent pricing service.
Security Transactions and Investment Income
Security transactions are recorded on the trade date of the security
purchase or sale.
The Fund may purchase securities with delivery or payment to occur at a
later date. At the time the Fund enters into a commitment to purchase a
security, the transaction is recorded and the value of the security is reflected
in the net asset value. The value of the security may vary with market
fluctuations.
Dividend income, net of foreign taxes, is recorded on the ex-dividend date
except certain dividends from foreign securities which are recorded as soon as
the information is available to the Fund. Interest income is earned from
settlement date, recorded on the accrual basis, and adjusted, if necessary, for
accretion of discounts and amortization of premiums. For financial and tax
reporting purposes, realized gains and losses are determined on the basis of
specific lot identification.
Currency Translation
All assets and liabilities initially expressed in foreign currency values
are converted into U.S. dollar values at the mean of the bid and ask prices of
such currencies against U.S. dollars as last quoted by a recognized dealer.
Income, expenses and purchases and sales of investments are translated into U.S.
dollars at the rate of exchange prevailing on the respective dates of such
transactions. The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and is reported with all other foreign
currency gains and losses in the Fund's Statement of Operations.
Forward Foreign Currency Contracts
The Fund may enter into forward foreign currency contracts to hedge the
exchange rate risk on investment transactions or to hedge the value of Fund
securities denominated in foreign currencies. Forward foreign currency contracts
are valued at the forward exchange rate prevailing on the day of valuation. The
Fund bears the market risk that arises from changes in foreign exchange rates,
and accordingly, the unrealized gain (loss) on these contracts is reflected in
the accompanying financial statements. The Fund also bears the credit risk if
the counterparty fails to perform under the contract.
16
AMERICAN BEACON INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (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 5% of the face value of the futures contract. The initial margin
amount is reflected as a Deposit with broker for futures contracts 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.
Dividends to Shareholders
Dividends from net investment income of the Fund normally will be declared
and paid annually. Distributions, if any, of net realized capital gains are
generally paid annually and recorded on the ex-dividend date.
Commission Recapture
The Fund has established brokerage commission recapture arrangements with
certain brokers or dealers. If the Fund's investment advisor chooses to execute
a transaction through a participating broker, the broker rebates a portion of
the commission back to the Fund. Any collateral benefit received through
participation in the commission recapture program is directed exclusively to the
Fund. This amount is reported with the net realized gain in the Fund's Statement
of Operations.
Allocation of Income, Expenses, Gains and Losses
Income, expenses (other than those attributable to a specific class),
gains and losses are allocated daily to each class of shares based upon the
relative proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the operations of
that class.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results may differ from those estimated.
Redemption Fees
The Fund imposes a 2% redemption fee on shares held for less than 90 days.
The fee is deducted from the redemption proceeds and is intended to offset the
trading costs, market impact and other costs associated with short-term trading
activity in the Fund. The "first-in, first-out" method is used to determine the
holding period. Through April 30, 2006, the fee was retained by the class that
imposed the fee. Effective May 1, 2006, the fee is allocated to all classes of
the Fund pro-rata based on their respective net assets.
17
AMERICAN BEACON INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
Recently Issued Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and is to
be applied to all open tax years as of the effective date. At this time, the
Manager is evaluating the implications of FIN 48 and its potential impact on the
financial statements has not yet been determined.
In September 2006, the FASB issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting, establishes a
framework for measuring fair value and requires additional disclosures about the
use of fair value measurements. FAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years. The Manager is evaluating the impact of FAS 157;
however, it is not expected to have a material impact on the Fund's net assets
or results of operations.
Other
Under the Trust's organizational documents, its officers and directors are
indemnified against certain liability arising out of the performance of their
duties to the Trust. In the normal course of business, the Trust enters into
contracts that provide indemnification to the other party or parties against
potential costs or liabilities. The Trust's maximum exposure under these
arrangements is dependent on claims that may be made in the future and,
therefore, cannot be estimated. The Trust has had no prior claims or losses
pursuant to any such agreement.
2. TRANSACTIONS WITH AFFILIATES
Management Agreement
The Trust and the Manager are parties to a Management Agreement that
obligates the Manager to provide or oversee the provision of all administrative,
investment advisory, fund management and securities lending services. Investment
assets of the Fund are managed by multiple investment advisors which have
entered into separate investment advisory agreements with the Manager. As
compensation for performing the duties required under the Management Agreement,
the Manager receives from the Fund an annualized fee equal to 0.10% of the
average daily net assets plus amounts paid by the Manager to the investment
advisors hired by the Manager to direct investment activities of the Fund.
Management fees paid during the six months ended April 30, 2007 were as follows
(dollars in thousands):
AMOUNTS PAID TO NET AMOUNTS
MANAGEMENT MANAGEMENT INVESTMENT RETAINED BY
FEE RATE FEE ADVISORS MANAGER
- ------------- ------------ ------------------ -------------
0.25%-0.60% $5,268 $3,732 $1,536
As compensation for services provided by the Manager in connection with
securities lending activities, the lending Fund pays to the Manager, with
respect to cash collateral posted by borrowers, a fee up to 25% of the net
monthly interest income (the gross interest income earned by the investment of
cash collateral, less the amount paid to borrowers and related expenses) from
such activities and, with respect to loan fees paid by borrowers when a borrower
posts collateral other than cash, a fee up to 25% of such loan fees. This fee is
netted against securities lending income in the Statement of Operations. During
the six months ended April 30, 2007 securities lending fees paid to the Manager
were $148,333.
18
AMERICAN BEACON INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
Administrative Services Agreement
The Manager and the Trust entered into an Administrative Services
Agreement which obligates the Manager to provide or oversee administrative and
management services to the Fund. As compensation for performing the duties
required under the Administrative Services Agreement, the Manager receives an
annualized fee of 0.25% of the average daily net assets of the Institutional,
PlanAhead and Service Classes of the Fund.
Distribution Plans
The Trust, except for the Service Class of the Fund, has adopted a
"defensive" Distribution Plan (the "Plan") in accordance with Rule 12b-1 under
the Act, pursuant to which no fees may be charged to the Fund for distribution
purposes. However, the Plan authorizes the management fees received by the
Manager and the investment advisors hired by the Manager to be used for
distribution purposes. Under this Plan, the Trust does not intend to compensate
the Manager or any other party, either directly or indirectly, for the
distribution of Trust shares.
A separate Distribution Plan (the "Distribution Plan") has been
adopted pursuant to Rule 12b-1 under the Act for the Service Class of the Fund.
Under the Distribution Plan, as compensation for distribution assistance, the
Manager receives an annual fee of 0.25% of the average daily net assets of the
Service 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 PlanAhead and
Service Classes. As compensation for performing the duties required under the
Service Plans, the Manager receives 0.25% of the average daily net assets of the
PlanAhead and Service Classes of the Fund.
Investment in Affiliated Funds
The Fund is permitted, pursuant to an exemptive order by the
Securities and Exchange Commission ("SEC") and procedures approved by the Board,
to invest up to 25% of its total assets in the American Beacon Money Market
Select Fund (the "Select Fund"). Cash collateral received by the Fund in
connection with securities lending may be invested in the Select Fund and the
American Beacon Cash Plus Trust (the "Cash Trust") (collectively, the
"Affiliated Funds"). The Fund and the Affiliated Funds have the same investment
advisor and therefore, are considered to be affiliated. The Manager serves as
investment advisor to the Affiliated Funds and receives from each Affiliated
Fund an annualized fee equal to 0.10% of its average daily net assets. During
the six months ended April 30, 2007, the Manager earned fees from the Affiliated
Funds totaling $59,295 on the Fund's direct investment in the Affiliated Funds
and $60,414 from securities lending collateral invested in the Affiliated Funds.
Interfund Lending Program
Pursuant to an exemptive order by the SEC, the Fund, along with
other registered investment companies having management contracts with the
Manager, may participate in an interfund lending program as a borrower. This
program provides an alternative credit facility allowing the Fund to borrow from
other participating Funds. For the six months ended April 30, 2007, the Fund did
not utilize the credit facility.
19
AMERICAN BEACON INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
Expense Reimbursement Plan
The Fund has adopted an Expense Reimbursement Plan whereby the
Manager may seek repayment of fees waived or expenses reimbursed for a period of
up to three years. However, reimbursement will occur only if the Class' average
net assets have grown or expenses have declined sufficiently to allow
reimbursement without causing its expense ratio to exceed the previously agreed
upon contractual expense limit. During the six months ended April 30, 2007,
there were no additional waived fees or reimbursed expenses for the Service
Class. The activity related to repayment of prior year fee waivers and expense
reimbursements during the six months ended April 30, 2007 was as follows:
Expiration Liability at Liability at
Year 10/31/06 Accrued Expired Recouped 4/30/07
- ---------- ------------ ------- ------- -------- ------------
2007 2,934 $-- $1,116 $1,818 $ --
2008 9 -- -- 9 --
2009 1,956 -- -- -- 1,956
------ --- ------ ------ ------
$4,899 $-- $1,116 $1,827 $1,956
====== === ====== ====== ======
Other
At April, 2007, AMR Corporation and subsidiary companies and
employee benefit trusts thereof owned 21% of the Fund.
3. FEDERAL INCOME AND EXCISETAXES
It is the policy of the Fund to comply with the requirements of
Subchapter M of the Internal Revenue Code and to distribute substantially all
net investment income as well as any net realized capital gains on the sale of
investments. Therefore, no federal income or excise tax provision is required.
Dividends are categorized in accordance with income tax regulations
which may treat certain transactions differently than U.S. generally accepted
accounting principles. Accordingly, the character of distributions and
composition of net assets for tax purposes may differ from those reflected in
the accompanying financial statements.
The tax character of distributions paid during the six months ended
April 30, 2007 and the year ended October 31, 2006 were as follows (in
thousands):
SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
2007 2006
----------------- -------------
(unaudited)
DISTRIBUTIONS PAID FROM:
ORDINARY INCOME*
Institutional Class ............................................ $ 59,994 $ 42,005
PlanAhead Class ................................................ 29,594 17,674
Service Class .................................................. 146 78
AMR Class ...................................................... 23,001 15,693
LONG-TERM CAPITAL GAIN
Institutional Class ............................................ 85,520 64,579
PlanAhead Class ................................................ 44,479 28,986
Service Class .................................................. 244 156
AMR Class ...................................................... 30,787 22,404
-------- --------
TOTAL DISTRIBUTIONS PAID ............................................ $273,765 $191,575
======== ========
* For tax purposes, short-term capital gains are considered ordinary income
distributions.
As of April 30, 2007, the components of distributable earnings on a
tax basis were as follows (in thousands):
20
AMERICAN BEACON INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
Cost basis of investments for federal income tax purposes ...................... $2,803,973
Unrealized appreciation ........................................................ 899,608
Unrealized depreciation ........................................................ (34,570)
----------
Net unrealized appreciation/(depreciation) ..................................... 865,038
Undistributed ordinary income .................................................. 49,317
Undistributed long-term gain/(loss) ............................................ 151,358
----------
Distributable earnings ......................................................... $1,065,713
==========
Financial reporting records are adjusted for permanent book/tax
differences to reflect tax character. Financial records are not adjusted for
temporary differences. The temporary differences between financial reporting and
tax-basis reporting of unrealized appreciation/(depreciation) are attributable
primarily to the tax deferral of losses from wash sales, the realization for tax
purposes of unrealized gain/(losses) on certain derivative instruments, the
realization for tax purposes of unrealized gain/(losses) on investments in
passive foreign investment companies, and Section 732 basis adjustments.
Due to inherent differences in the recognition of income, expenses
and realized gains/(losses) under U.S. generally accepted accounting principles
and federal income tax regulations, permanent differences between book and tax
reporting have been identified and appropriately reclassified on the Statement
of Assets and Liabilities.
Accordingly, the following amounts represent current year permanent
differences derived from foreign currency gains/(losses) from sales of
investments in passive foreign investment companies, and Section 732 basis
adjustments that have been reclassified as of April 30, 2007 (in thousands):
Paid-in-capital ................................................................ $(3,242)
Undistributed net investment income ............................................ 5,104
Accumulated net realized loss .................................................. (1,861)
Unrealized depreciation of investments, futures contracts and foreign
currency ....................................................................... (1)
4. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of
investments, other than short-term obligations, for the six months ended April
30, 2007 were (in thousands) $622,300 and $633,383, respectively.
A summary of the Fund's direct transactions in Affiliated Funds for
the six months ended April 30, 2007 is set forth below (in thousands):
OCTOBER 31, 2006 APRIL 30, 2007
AFFILIATE SHARES/MARKET VALUE PURCHASES SALES SHARES/MARKET VALUE
- --------- ------------------- --------- ----- -------------------
Select Fund $87,487 $532,684 $480,639 $139,532
5. 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 and initially
in an amount at least equal to 102% of the fair value of domestic securities
loaned or 105% of the fair value of international securities loaned. Collateral
is marked to market and monitored daily. To the extent that a loan is
collateralized by cash, such collateral shall be invested by the securities
lending agent (the "Agent") in short-term instruments, money market mutual
funds, and such other short-term investments, provided the investments meet
certain quality and diversification requirements.
21
AMERICAN BEACON INTERNATIONAL EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
The Fund, the Agent and the Manager retain 75%, 15% and 10%,
respectively, of the income generated from the investment of cash collateral,
less negotiated rebate fees paid to participating brokers and transaction costs.
To the extent that a loan is secured by non-cash collateral, brokers pay the
Fund negotiated lenders' fees, which are divided between the Fund, the Agent,
and the Manager 75%, 15% and 10%, respectively. The Fund also continues to
receive income on the securities loaned, and any gain or loss in the market
prices of securities loaned that may occur during the term of the loan.
Risks to the Fund in securities lending transactions are that the
borrower may not provide additional collateral when required or return the
securities when due, and that the value of the short-term investments will be
less than the amount of cash collateral required to be returned to the borrower.
At April 30, 2007, securities with a market value of approximately
$392,240,000 were loaned by the Fund. Cash collateral held by the custodian for
the Fund in an investment in the Affiliated Funds totaled $412,038,000.
6. CAPITAL SHARE TRANSACTIONS
The tables below summarize the activity in capital shares for each
Class of the Fund (dollars and shares in thousands):
Six Months ended April 30, 2007
INSTITUTIONAL CLASS PLANAHEAD CLASS SERVICE CLASS AMR CLASS
------------------- --------------- ------------- ---------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------ ------ ------ ------ ------
Shares sold ........................ 5,084 $ 124,530 6,556 $ 159,493 11 $ 277 2,893 $ 70,919
Reinvestment of dividends........... 5,632 133,085 3,079 72,025 17 390 2,264 53,788
Shares redeemed..................... (8,442) (205,216)* (4,154) (100,421)* (28) (688)* (1,224) (30,465)*
------- --------- ------ --------- --- ----- ------ --------
Net increase (decrease) in shares
outstanding...................... 2,274 $ 52,399 5,481 $ 131,097 0 $ (21) 3,933 $ 94,242
====== ========= ====== ========= === ===== ====== ========
Year Ended October 31, 2006
INSTITUTIONAL CLASS PLANAHEAD CLASS SERVICE CLASS AMR CLASS
-------------------- ---------------- ---------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------- ------ ------ ------ ------ ------ ------ ------
Shares sold........................ 12,683 $ 284,628 9,650 $ 216,325 69 $1,512 1,997 $ 46,001
Reinvestment of dividends ......... 4,440 92,342 2,207 45,506 11 234 1,823 38,096
Shares redeemed ................... (15,645) (356,972)* (7,248) (162,210)* (29) (657)* (2,379) (54,346)*
------- --------- ------ --------- --- ------ ------ --------
Net increase in shares
outstanding...................... 1,478 $ 19,998 4,609 $ 99,621 51 $1,089 1,441 $ 29,751
======= ========= ====== ========= === ====== ====== ========
- ---------
* Net of Redemption Fees
22
AMERICAN BEACON INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
Institutional Class
--------------------------------------------------------------------------
Six Months Year Ended October 31
Ended April -----------------------------------------------------------
30, 2007 2006 2005 2004(A) 2003(B) 2002
----------- ---------- ----------- ---------- -------- --------
(unaudited)
Net asset value, beginning of
period .............................. $ 24.68 $ 20.98 $ 18.47 $ 15.46 $ 12.10 $ 13.77
----------- ---------- ----------- ---------- -------- --------
Income from investment operations:
Net investment income(C,D) ....... 0.17 0.60 0.44 0.30 0.25 0.21
Net gains (losses) on
securities (both realized and
unrealized)(C) ................... 3.02 4.86 2.31 3.12 3.47 (1.62)
----------- ---------- ----------- ---------- -------- --------
Total income (loss) from investment
operations ............................ 3.19 5.46 2.75 3.42 3.72 (1.41)
----------- ---------- ----------- ---------- -------- --------
Less distributions:
Dividends from net investment
income .......................... (0.50) (0.43) (0.24) (0.41) (0.36) (0.26)
Distributions from net
realized gains on securities ..... (1.82) (1.33) - - - -
----------- ---------- ----------- ---------- -------- --------
Total distributions ................... (2.32) (1.76) (0.24) (0.41) (0.36) (0.26)
----------- ---------- ----------- ---------- -------- --------
Redemption fees added to beneficial
interest(E) ........................... 0 .00 0.00 0.00 0.00 0.00 -
----------- ---------- ----------- ---------- -------- --------
Net asset value, end of period ........ $ 25.55 $ 24.68 $ 20.98 $ 18.47 $ 15.46 $ 12.10
=========== ========== =========== ========== ======== ========
Total return .......................... 13 .66%(F) 27.49% 15.04% 22.49% 31.61% (10.51)%
=========== ========== =========== ========== ======== ========
Ratios and supplemental data:
Net assets, end of period (in
thousands) ....................... $ 1,662,478 $1,549,521 $ 1,286,441 $1,029,272 $722,333 $537,476
Ratios to average net assets
(annualized):
Expenses, net of waivers(C) .... 0.67% 0.71% 0.70% 0.76% 0.79% 0.75%
Expenses, before waivers(C) .... 0.67% 0.71% 0.70% 0.76% 0.79% 0.75%
Net investment income, net
of waivers(C) .................. 1.98% 2.52% 2.17% 1.69% 1.97% 1.56%
Net investment income
(loss), before
waivers(C) ..................... 1.98% 2.52% 2.17% 1.69% 1.97% 1.56%
Portfolio turnover rate(G) ....... 21%(F) 40% 37% 36% 44% 43%
- -----------
(A) The Boston Company Asset Management, LLC was added as an investment
advisor to the International Equity Fund on September 27, 2004.
(B) Independence Investment LLC was removed as an investment advisor to the
International Equity Fund on October 24, 2003.
(C) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the Portfolio through February 28, 2006.
(D) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment
income per share.
(E) Amounts represent less than $0.01 per share.
(F) Not annualized.
(G) The International Equity Fund invested all of its investable assets in the
Portfolio through February 28, 2006. Portfolio turnover rate through
February 28, 2006 is that of the Portfolio.
23
AMERICAN BEACON INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
PlanAhead Class
--------------------------------------------------------------------------
Six Months
Ended Year Ended October 31
April 30, -----------------------------------------------------------
2007 2006 2005 2004(A) 2003(B) 2002
----------- ---------- ----------- ---------- -------- --------
(unaudited)
Net asset value, beginning
of period ............................. $ 24.42 $ 20.79 $ 18.31 $ 15.34 $ 11 .95 $ 13.58
----------- ---------- ----------- ---------- -------- --------
Income from investment operations:
Net investment income(C,D) ........... 0.14 0.50 0.41 0.26 0 .22 0.15
Net gains (losses) on
securities (both realized and
unrealized)(C) ....................... 2.99 4.84 2.29 3.08 3 .46 (1.56)
----------- ---------- ----------- ---------- -------- --------
Total income (loss) from
investment operations ................. 3.13 5.34 2.70 3.34 3 .68 (1.41)
----------- ---------- ----------- ---------- -------- --------
Less distributions:
Dividends from net investment
income ............................... (0.45) (0.38) (0.22) (0.37) (0.29) (0.22)
Distributions from net realized
gains on securities .................. (1.82) (1.33) - - - -
----------- ---------- ----------- ---------- -------- --------
Total distributions ................... (2.27) (1.71) (0.22) (0.37) (0 .29) (0.22)
----------- ---------- ----------- ---------- -------- --------
Redemption fees added to beneficial
interest(E) ........................... 0.00 0.00 0.00 0.00 0.00 -
----------- ---------- ----------- ---------- -------- --------
Net asset value, end of period ........ $ 25.28 $ 24.42 $ 20.79 $ 18.31 $ 15.34 $ 11.95
=========== ========== =========== ========== ======== ========
Total return .......................... 13.54%(F) 27.20% 14.73% 22.16% 31.62% (10.57)%
=========== ========== =========== ========== ======== ========
Ratios and supplemental data:
Net assets, end of period
(in thousands) ....................... $ 936,946 $ 771,298 $ 560,770 $ 310,540 $177,425 $ 99,636
Ratios to average net assets
(annualized):
Expenses, net of waivers(C) ......... 0.93% 0.96% 0.95% 1.02% 1.10% 1.04%
Expenses, before waivers(C) ......... 0.93% 0.96% 0.95% 1.02% 1.10% 1.04%
Net investment income, net
of waivers(C) ....................... 1.77% 2.25% 1.96% 1.46% 1.68% 1.35%
Net investment income (loss), before
waivers(C) .......................... 1.77% 2.25% 1.96% 1.46% 1.68% 1.35%
Portfolio turnover rate(G) ........... 21%(F) 40% 37% 36% 44% 43%
- ------------
(A) The Boston Company Asset Management, LLC was added as an investment
advisor to the International Equity Fund on September 27, 2004.
(B) Independence Investment LLC was removed as an investment advisor to the
International Equity Fund on October 24, 2003.
(C) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the Portfolio through February 28, 2006.
(D) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment
income per share.
(E) Amounts represent less than $0.01 per share.
(F) Not annualized.
(G) The International Equity Fund invested all of its investable assets in the
Portfolio through February 28, 2006. Portfolio turnover rate through
February 28, 2006 is that of the Portfolio.
24
AMERICAN BEACON INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
Service Class
---------------------------------------------------------
Six
Months
Ended Year Ended October 31 May 1 to
April 30, -------------------------- October 31,
2007 2006 2005 2004(B) 2003(A)
----------- ------ ------- ------- -----------
(unaudited)
Net asset value, beginning of
period ............................................ $ 24.24 $20.61 $ 18.24 $ 15.31 $ 12.18
----------- ------ ------- ------- -----------
Income from investment
operations:
Net investment income(C,D) ..................... 0.15 0.46 0.37 0.30 0.09
Net gains (losses) on securities (both
realized and unrealized)(C) .................... 2.94 4.76 2.26 2.99 3.04
----------- ------ ------- ------- -----------
Total income (loss) from investment
operations ........................................ 3.09 5.22 2.63 3.29 3.13
----------- ------ ------- ------- -----------
Less distributions:
Dividends from net investment
income ........................................ (0.35) (0.26) (0.26) (0.36) -
Distributions from net realized gains on
securities ..................................... (1.82) (1.33) - - -
----------- ------ ------- ------- -----------
Total distributions ............................... (2.17) (1.59) (0.26) (0.36) -
----------- ------ ------- ------- -----------
Redemption fees added to beneficial
interest(E) ....................................... 0.00 0.00 0.00 0.00 0.00
----------- ------ ------- ------- -----------
Net asset value, end of period .................... $ 25.16 $24.24 $ 20.61 $ 18.24 $ 15.31
=========== ====== ======= ======= ===========
Total return ...................................... 13.37%(F) 26.89% 14.45% 21.88% 25.70%
=========== ====== ======= ======= ===========
Ratios and supplemental data:
Net assets, end of period (in
thousands) ..................................... $ 4,915 $4,740 $ 2,987 $ 739 $ 1
Ratios to average net assets (annualized):
Expenses, net of waivers(C) .................. 1.08% 1.16% 1.21% 1.27% 1.50%
Expenses, before waiversC .................... 1.16% 1.19% 1.21% 6.26% 1,139.08%
Net investment income, net of waivers(C) ..... 1.59% 2.09% 1.70% 0.81% 1.33%
Net investment income (loss), before(C) ...... 1.51% 2.05% 1.70% (4.18)% (1,136.25)%
Portfolio turnover rate(G) ..................... 21%(F) 40% 37% 36% 44%(H)
- --------------
(A) Independence Investment LLC was removed as an investment advisor to the
International Equity Fund on October 24, 2003.
(B) The Boston Company Asset Management, LLC was added as an investment
advisor to the International Equity Fund on September 27, 2004.
(C) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the Portfolio through February 28, 2006.
(D) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment
income per share.
(E) Amounts represent less than $0.01 per share.
(F) Not annualized.
(G) The International Equity Fund invested all of its investable assets in the
Portfolio through February 28, 2006. Portfolio turnover rate through
February 28, 2006 is that of the Portfolio.
(H) Portfolio turnover rate is for the period from November 1, 2002 through
October 31, 2003.
25
AMERICAN BEACON INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
AMR Class
-----------------------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, ---------------------------------------------------------
2007 2006 2005 2004(A) 2003(B) 2002
--------- --------- --------- --------- --------- ---------
(unaudited)
Net asset value, beginning of period.................... $ 24.86 $ 21.12 $ 18.58 $ 15.54 $ 12.18 $ 13.86
--------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income(C,D)........................... 0.21 0.63 0.50 0.34 0.29 0.24
Net gains (losses) on securities (both realized and
unrealized)(C)....................................... 3.04 4.92 2.33 3.14 3.46 (1.62)
--------- --------- --------- --------- --------- ---------
Total income (loss) from investment operations.......... 3.25 5.55 2.83 3.48 3.75 (1.38)
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment income................. (0.56) (0.48) (0.29) (44.00) (0.39) (0.30)
Distributions from net realized gains on securities.. (1.82) (1.33) - - - -
--------- --------- --------- --------- --------- ---------
Total distributions..................................... (2.38) (1.81) (0.29) (0.44) (0.39) (0.30)
--------- --------- --------- --------- --------- ---------
Redemption fees added to beneficial interest(E)......... 0.00 0.00 0.00 0.00 0.00 -
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.......................... $ 25.73 $ 24.86 $ 21.12 $ 18.58 $ 15.54 $ 12.18
========= ========= ========= ========= ========= =========
Total return............................................ 13.85%(F) 27.88% 15.32% 22.84% 31.77% (10.26)%
========= ========= ========= ========= ========= =========
Ratios and supplemental data:
Net assets, end of period (in thousands)............. $ 684,004 $ 563,231 $ 448,096 $ 460,114 $ 322,801 $ 264,579
Ratios to average net assets (annualized):
Expenses, net of waivers(C)........................ 0.41% 0.45% 0.44% 0.49% 0.52% 0.49%
Expenses, before waivers(C)........................ 0.41% 0.45% 0.44% 0.49% 0.52% 0.49%
Net investment income, net of waivers(C)........... 2.30% 2.76% 2.49% 1.97% 2.22% 1.81%
Net investment income (loss), before waivers(C).... 2.30% 2.76% 2.49% 1.97% 2.22% 1.81%
Portfolio turnover rate(G)........................... 21%(F) 40% 37% 36% 44% 43%
- ----------
(A) The Boston Company Asset Management, LLC was added as an investment
advisor to the International Equity Fund on September 27, 2004.
(B) Independence Investment LLC was removed as an investment advisor to the
International Equity Fund on October 24, 2003.
(C) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the Portfolio through February 28, 2006.
(D) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment
income per share.
(E) Amounts represent less than $0.01 per share.
(F) Not annualized.
(G) The International Equity Fund invested all of its investable assets in the
Portfolio through February 28, 2006. Portfolio turnover rate through
February 28, 2006 is that of the Portfolio.
26
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT
AGREEMENT AND INVESTMENT ADVISORY AGREEMENTS OF THE FUND
(UNAUDITED)
In prior years, the Board of Trustees ("Board" or "Trustees") typically has
considered the annual renewal of the existing Management Agreement between
American Beacon Advisors, Inc. (the "Manager") and the American Beacon Funds
(the "Trust"), on behalf of the International Equity Fund (the "Fund"), and each
Investment Advisory Agreement between the Manager and a sub-advisor at the Board
meeting held in the first quarter of each year. At the November 15, 2006
meeting, the Board decided to conduct these annual renewals at their second
quarter meeting each year to enable the Trustees to consider more year-end data
in their deliberations. At the March 8, 2007 Board meeting, the Board considered
renewal of the Management and Investment Advisory Agreements on an interim basis
until the Board meeting scheduled for the second quarter, at which meeting the
Board would perform a comprehensive review of factors relevant to an annual
renewal.
In connection with the interim renewal, the Board, with the assistance of
independent legal counsel, requested and received certain relevant information
from the Manager. Further, the Board took into consideration information
furnished for the Board's review and consideration throughout the year at
regular Board and Investment Committee meetings. The Trustees considered, among
other materials, responses by the Manager to inquiries requesting:
- an explanation, if applicable, of any deterioration in longer-term
performance by the Fund or sub-advisor since the last contract
renewal and any remedial measures the Manager has taken or intends
to take;
- the Manager's and each sub-advisor's fee rate schedule for the Fund
and whether the Manager intends to continue any current fee waivers
or reimbursements;
- an explanation of any significant change in the Fund's expense ratio
since the last contract renewal and any actions the Manager has
taken or intends to take;
- a description of any significant changes (actual or anticipated) to
personnel and the reasons for such changes;
- a discussion of any material developments at the Fund's sub-advisors
relevant to the Fund;
- a discussion of any material compliance problems encountered by the
Manager or the sub-advisors and remedial actions;
- a summary of any material past, pending or anticipated litigation or
regulatory proceedings involving the firm or its personnel,
including the results of any recent regulatory examination or
independent audit;
- information regarding material changes to the Manager's and
sub-advisors' codes of ethics and insider trading policies; and
- any material changes to the Manager's or sub-advisors' information
provided in connection with the last annual contract renewal.
The Trustees also received a memorandum from their legal counsel detailing the
Board's responsibilities pertaining to the renewal of the Management and
Investment Advisory Agreements. This memorandum explained the regulatory
requirements surrounding the Trustees' process for evaluating investment
advisors and the terms of the contracts.
Provided below is an overview of the primary factors the Board considered at its
March 2007 meeting. The Board did not identify any particular information that
was most relevant to its consideration to renew the Management and Investment
Advisory Agreements, and each Trustee may have afforded different weight to the
various factors. The Board determined that certain factors typically considered
in connection with an annual renewal were not material with respect to an
interim renewal. As such, the following factors were not considered by the Board
and were deferred to the next regular Board meeting to be considered in
connection with the annual renewal:
- the profits realized by the Manager and the sub-advisors and their
affiliates from their relationship with the Fund;
- the extent to which economies of scale may be realized as the Fund
grows;
- whether the level of fees reflects those economies of scale for the
benefit of the Fund's investors;
27
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT
AGREEMENT AND INVESTMENT ADVISORY AGREEMENTS OF THE FUND
(UNAUDITED)
- comparisons of services and fees with contracts entered into by the
Manager and a sub-advisor or their affiliates with other clients
(such as pension funds and other institutional investors); and
- ancillary benefits to be realized by the Manager and the
sub-advisors as a result of the relationship with the Fund.
In determining whether to renew the Management and Investment Advisory
Agreements on an interim basis, the Trustees considered the best interests of
the Fund. The following considerations and conclusions are applicable to the
Fund.
Cost of Services. The Board considered that the fee rate schedules for the
Manager and each sub-advisor had not changed since the last contract renewal.
The Board considered that, in many cases, the Manager has negotiated the lowest
sub-advisory fee a sub-advisor charges for any comparable client accounts. In
determining whether to renew the Investment Advisory Agreements, the Board
considered that for purposes of determining the fee charged to the Fund, the fee
schedule to each Investment Advisory Agreement specifies that all other assets
managed by a sub-advisor on behalf of AMR Corporation and its pension plans
shall be considered where applicable. Thus, the Fund is able to receive
additional break point benefits resulting from the sub-advisor's management of a
larger pool of assets.
Nature, Extent and Quality of Services. With respect to the renewal of the
Management Agreement, the Trustees considered that the Manager continues to
provide high-quality services to the Fund at a low cost to investors and
provides a comprehensive compliance program for the Fund. Additionally, the
Manager allocates the assets of the Fund among the Fund's sub-advisors, and
monitors and evaluates the performance of the sub-advisors. Based on this
information, the Board concluded that the nature, extent and quality of the
management and advisory services provided by the Manager and each sub-advisor
were appropriate for the Fund and, thus, supported a decision to renew the
Management and each Investment Advisory Agreement on an interim basis.
Investment Performance. The Board considered the performance reports and
discussions with management at Board and Committee meetings throughout the year.
The Board also considered information provided by the Manager regarding
significant deterioration in the Fund's or sub-advisor's longer-term performance
as a result of significant underperformance for the 2006 calendar year.
In considering the renewal of the Management Agreement with the Manager and the
Investment Advisory Agreements with Lazard Asset Management, LLC ("Lazard") and
The Boston Company Asset Management, LLC ("TBCAM"), the Trustees considered that
Lazard and TBCAM underperformed each sub-advisor's respective benchmark index
for the 2006 calendar year, but that the Fund's overall performance exceeded
that of its Lipper Index. The other sub-advisors to the Fund outperformed their
respective benchmark indexes for the 2006 calendar year.
Based on these considerations and those noted above, the Trustees determined
that the Fund and its shareholders would benefit from the Manager's and the
sub-advisors' continued management of the Fund until the next regular Board
meeting and approved the renewal of the Agreements on an interim basis until the
next regular Board meeting.
28
(This page intentionally left blank)
(AMERICAN BEACON FUNDS (SM) LOGO)
DELIVERY OF DOCUMENTS
To reduce expenses, your financial institution may mail only one copy of the
Prospectus, Annual Report and Semi-Annual Report to those addresses shared by
two or more accounts. If you wish to receive individual copies of these
documents, please contact your financial institution. Delivery of individual
copies will commence thirty days after receiving your request.
If you invest in the Fund through a financial institution, you may be able to
receive the Fund's regulatory mailings, such as the Prospectus, Annual Report
and Semi-Annual Report, by e-mail. If you are interested in this option, please
go to www.icsdelivery.com and search for your financial institution's name or
contact your financial institution directly.
TO OBTAIN MORE INFORMATION ABOUT THE FUND:
(E-MAIL LOGO)
BY E-MAIL:
american_beacon.funds@ambeacon.com
(E-MAIL LOGO)
ON THE INTERNET:
Visit our website at www.americanbeaconfunds.com
(E-MAIL LOGO)
BY TELEPHONE:
Institutional Class
Call (800) 658-5811
AMR Class(SM)
Call (800) 345-2345
PlanAhead Class(R) and Service Class
Call (800) 388-3344
(E-MAIL LOGO)
BY MAIL:
American Beacon Funds
P.O. Box 219643
Kansas City, MO
64121-9643
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
In addition to the Schedule of Investments provided in each semi-annual and
annual report, the Fund files a complete schedule of its portfolio holdings with
the Securities and Exchange Commission ("SEC") on Form N-Q as of the first and
third fiscal quarters. The Fund's Forms N-Q are available on the SEC's website
at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC's
Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information
regarding the operation of the SEC's Public Reference Room may be obtained by
calling 1-800-SEC-0330. A complete schedule of the Fund's portfolio holdings is
also available on the Funds' website (www.americanbeaconfunds.com) approximately
thirty days after the end of each month.
AVAILABILITY OF PROXY VOTING POLICY AND RECORDS
A description of the policies and procedures the Fund uses to determine how to
vote proxies relating to portfolio securities is available in the Fund's
Statement of Additional Information, is available free of charge on the Fund's
website (www.americanbeaconfunds.com) and by calling 1-800-967-9009 or by
accessing the SEC's website at www.sec.gov. The Fund's proxy voting record for
the most recent year ended June 30 is filed annually with the SEC on Form N-PX.
The Fund's Forms N-PX are available on the SEC's website at www.sec.gov. The
Fund's proxy voting record may also be obtained by calling 1-800-967-9009.
FUND SERVICE PROVIDERS:
CUSTODIAN TRANSFER AGENT INDEPENDENT REGISTERED DISTRIBUTOR
STATE STREET BANK AND BOSTON FINANCIAL DATA PUBLIC ACCOUNTING FORESIDE FUND SERVICES
TRUST SERVICES FIRM Portland, Maine
Boston, Massachusetts Kansas City, Missouri ERNST & YOUNG LLP
Dallas, 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.
American Airlines, Inc. is not responsible for investments made in the American
Beacon Funds. American Beacon Funds is a service mark of AMR Corporation.
American Beacon International Equity Fund is a service mark of American Beacon
Advisors, Inc.
G U I D A N C E | V I S I O N | E X P E R I E N C E
(AMERICAN BEACON FUNDS (SM) LOGO)
Semi-Annual Report
April 30, 2007
LARGE CAP VALUE FUND
About American Beacon
Since 1986, American Beacon Advisors has offered a variety of products and
investment advisory services to numerous institutional and retail clients,
including a variety of mutual funds, corporate cash management, and separate
account management.
Our clients include defined benefit plans, defined contribution plans,
foundations, endowments, corporations, financial planners, and other
institutional investors. With American Beacon Advisors, you can put the
experience of a multi-billion dollar asset management firm to work for your
company.
Contents
President's Message................................... 1
Market and Performance Overview....................... 2
Schedule of Investments............................... 7
Additional Information................................ Back Cover
Any opinions herein, including forecasts, reflect our judgment as of the end of
the reporting period and are subject to change. Each advisor's strategies and
the Fund's portfolio composition will change depending on economic and market
conditions. This report is not a complete analysis of market conditions and
therefore, should not be relied upon as investment advice. Although economic and
market information has been compiled from reliable sources, American Beacon
Advisors, Inc. makes no representation as to the completeness or accuracy of the
statements contained herein.
American Beacon Funds April 30, 2007
(PHOTO OF DOUGLAS G. HERRING)
FELLOW SHAREHOLDERS,
I am pleased to present to you the American Beacon Large Cap Value Fund
Semi-Annual Report for the six months ended April 30, 2007.
Despite rising oil prices, a slump in housing and a slowing economy, the
U.S. equity markets still finished the last six months with positive returns.
This was helped in large part by stronger than expected corporate profits. The
S&P 500 and Dow Jones Industrial Average indices reported returns of 8.60% and
9.40%, respectively, for this period.
The American Beacon Large Cap Value Fund-Institutional Class reported a
total return of 10.09% for this six-month period. The Fund's performance
continued to exceed that of the Lipper Large Cap Value Funds Index.
Please review the enclosed market overview, portfolio listings and
detailed financial data. As always, we welcome the opportunity to serve your
financial needs. To obtain further details about the American Beacon Funds
family or to access your account information, please visit our website at
www.americanbeaconfunds.com. Thank you for your continued confidence in the
American Beacon Large Cap Value Fund.
Sincerely,
/s/ Douglas G. Herring
-------------------------------------
Douglas G. Herring
President
American Beacon Funds
1
DOMESTIC EQUITY MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
Following strong earnings growth and solid equity returns last year,
equity markets got off to a rocky start in 2007. Investors were suddenly forced
to deal with slower earnings growth, the return of volatility and the sub-prime
mortgage fallout.
There was no shortage of concerns for the market in the first quarter,
though it is often said that the market climbs a "wall of worry."
- - ECONOMIC SLOWDOWN -- After enjoying 4-5% Gross Domestic Product ("GDP")
growth for several years, investors had to come to grips with sub-3%
economic growth forecasts for 2007.
- - SLOWING EARNINGS GROWTH -- After 14 consecutive quarters of double-digit
growth, S&P 500 operating earnings were expected to slow markedly. For
2007, earnings growth estimates of 6-7% are back-end loaded with nearly
one-half the year's growth expected in the fourth quarter.
- - SUB-PRIME MORTGAGE MELTDOWN -- The rapid deterioration in sub-prime
delinquencies and a number of notable bankruptcies raised concerns that
the woes within housing could spread to other areas of the economy.
- - INFLATION CONCERNS OF THE FEDERAL RESERVE BANK ("FED") -- Hopes for
near-term Fed rate cuts waned during 2007 as most inflation measures
remained above the Fed's comfort level.
- - RISING LABOR COSTS -- Hourly earnings grew at nearly their fastest pace in
20 years, while productivity grew at its slowest pace since early 1997.
Very high profit margins were at risk.
- - HIGHER COMMODITY PRICES - After some early moderation, oil, gasoline,
copper and other commodities continued to rise in price.
- - THE RETURN OF MARKET VOLATILITY -- Volatility, an indicator of
uncertainty, returned to the markets after a long hiatus.
While many of these issues weighed on market returns during the period,
none loomed larger than the rapid deterioration in the sub-prime mortgage market
and its spillover effects on the broader housing market and economy in general.
Sub-prime mortgages became a dominant theme for the market because of how
rapidly they have deteriorated. They have also become the central
point of debate between bullish forecasters who argue that the woes of the
sub-prime market are contained versus those who fear a contagion throughout the
credit markets and the broader economy.
The volume of sub-prime issuance reached alarming levels in the past few
years. There were over $1.8 trillion in sub-prime mortgages originated from 2004
- - 2006, more than the previous 10 years combined and equal to approximately a
quarter of all mortgage issuance. Mortgage delinquencies rose rapidly in all
branches of mortgage lending.
Adjustable rate loans, low-documentation (or "liar loans") and other
non-traditional mortgages were also widespread in the prime segment of the
market. Rate resets, reduced investor appetite for these exotic mortgages, and
increased regulatory scrutiny are all combining to tighten the very loose
lending environment of the past several years. A robust housing market has been
the key driver of consumer spending and employment trends for many years.
Consumers, which make up 70% of overall spending, have extracted large amounts
of equity from their homes due to low mortgage rates. If the 'housing ATM via
refinancing' for consumers is coming to an end, there could be a negative growth
surprise coming for investors and the economy. Home equity withdrawal has indeed
been reduced sharply, and it is likely that we may see reduced consumption.
While the problems within the sub-prime market will negatively affect
certain lenders and consumers, the losses incurred are not likely the greatest
threat. The larger concern to equity markets could be a re-pricing of risk and
tightening of credit conditions across the spectrum. Even though there is no
direct connection between sub-prime mortgages and other markets, if sub-prime
woes prompt investors to demand higher risk premiums (wider credit spreads),
weakness in both the bond and stock markets could result.
Looking at the credit markets more broadly, we have not seen substantial
evidence of any contagion from sub-prime as credit spreads and lending
restrictions remained so near historic lows. The enormous liquidity and leverage
injected by
2
DOMESTIC EQUITY MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
foreign buyers, hedge funds, and private equity funds has made the turning point
of this credit cycle difficult to predict, even for the Fed. Also, the
complexity of many new financial "innovations," including collateralized debt
obligations and credit default swaps, has made it difficult to assess credit
risk. The long-standing cycles of the economy and credit, however, are still
intact, and a less benign credit environment appears likely to follow the loose
and liquid conditions of the past several years.
Broadly speaking, the equity market continued to be supported by a fair
level of valuations and strong earnings growth (largely due to extraordinary
profit margins) during the period. The beginnings of a negative credit cycle
appear to have taken hold in the residential mortgage market as lending and
regulatory standards have begun to tighten. How far the mortgage credit cycle
extends to the rest of the economy and the pricing of risk more broadly remains
to be seen.
3
PERFORMANCE OVERVIEW
AMERICAN BEACON LARGE CAP VALUE FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the Large Cap Value Fund returned 10.09% for
the six months ended April 30, 2007, slightly ahead of the S&P 500/Citigroup
Value Index ("Index") return of 10.08% and the Lipper Large Cap Value Funds
Index return of 9.18%.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED
4/30/07
6 MONTHS* 1 YEAR 5 YEARS 10 YEARS
-------- ------ ------- ---------
Institutional Class(1,4) 10.09% 16.56% 13.02% 10.29%
PlanAhead Class(1,4) 9.94% 16.28% 12.72% 9.99%
Service Class(1,2,4) 9.82% 16.02% 12.62% 9.93%
AMR Class(1,4) 10.18% 16.88% 13.32% 10.57%
Lipper Large-Cap
Value Funds Index(3) 9.18% 16.14% 9.28% 8.41%
S&P 500
Index(3) 8.60% 15.24% 8.54% 8.05%
Linked S&P
500/Citigroup Value
Index(3) 10.08% 17.22% 11.17% 9.31%
* Not annualized
1. Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated, and may be lower or higher than the
performance data quoted. To obtain performance as of the most recent month
end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund
performance in the table above does not reflect the deduction of taxes a
shareholder would pay on distributions or the redemption of shares.
2. Fund performance for the five-year and ten-year periods represents the
total returns achieved by the PlanAhead Class from 4/30/97 up to 6/1/05,
the inception date of the Service Class, and the returns of the Service
Class since its inception. Expenses of the Service Class are higher than
those of the PlanAhead Class. Therefore, total returns shown may be higher
than they would have been had the Service Class been in existence since
4/30/97.
3. The S&P 500 Index is an unmanaged index of common stocks publicly traded
in the United States. The Linked S&P 500/Citigroup Value Index represents
returns of the S&P 500/Barra Value Index ("Barra Index") up to 10/31/05
and the S&P 500/Citigroup Value Style Index ("Citigroup Index")
thereafter. The Barra Index is a market value weighted index of stocks
with book-to-price ratios in the top 50% of the S&P 500 Index. The
Citigroup Index is a market value weighted index of stocks in the S&P 500
that score highest based on an average of book-to-price ratio, cash
flow-to-price ratio, sales-to-price ratio, and dividend yield,
representing 50% of the total market value of the S&P 500. The Lipper
Large-Cap Value Funds Index tracks the results of the 30 largest mutual
funds in the Lipper Large-Cap Value Funds category. Lipper is an
independent mutual fund research and ranking service. One cannot directly
invest in an index.
4. The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional, PlanAhead, Service and AMR Class
shares was 0.62%, 0.87%, 1.11% and 0.36%, respectively. The expense ratios
above may vary from the expense ratios presented in other sections of this
report that are based on expenses incurred during the period covered by
this report.
The Fund outperformed the Index primarily through sector allocation and to
a lesser extent, through stock selection. From a stock selection standpoint, the
Fund had good stock selection in the Information Technology, Industrials, and
Utilities sectors. Companies with the greatest positive contribution in the
Information Technology sector were Apple Computer (up 23.1%) and Nokia (up
27.0%). In the Industrials sector, Honeywell International (up 30.0%) and Deere
(up 29.6%) were the largest contributors. Entergy (up 33.4%) in the Utilities
sector also added meaningful value versus the Index. This excess performance
relative to the Index, however, was somewhat offset by poor stock selection in
the Health Care and Consumer Discretionary sectors. In the Health Care sector,
the largest detractors were Pfizer (up 1.3% for the period the Fund held the
security) and Astrazeneca (down 5.5%), while Warner Music Group (down 32.8%)
detracted from the Fund's Consumer Discretionary sector returns.
The Fund's significant underweighting in the Financials sector, one of the
poorer performing sectors of the Index, provided positive relative performance.
The sub-advisors continue to invest in a broadly diversified portfolio of
companies that they believe have attractive valuations and above average
earnings growth potential. This approach should allow the Fund to benefit over
the longer term.
4
PERFORMANCE OVERVIEW
AMERICAN BEACON LARGE CAP VALUE FUND(SM)
APRIL 30, 2007 (UNAUDITED)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
ConocoPhillips 3.0%
AT&T, Inc. 2.6%
JP Morgan Chase & Co. 2.1%
Bank of America Corp. 2.1%
Citigroup, Inc. 2.0%
Wells Fargo & Co. 1.8%
International Business Machines Corp. 1.7%
American International Group, Inc. 1.7%
Baxter International, Inc. 1.5%
The Boeing Co. 1.5%
SECTOR ALLOCATION
% OF
EQUITIES
---------
Financials 26.0%
Industrials 12.0%
Health Care 10.8%
Consumer Discretionary 10.7%
Consumer Staples 10.1%
Information Technology 9.2%
Energy 7.7%
Utilities 5.4%
Telecommunications Services 5.0%
Materials 3.1%
5
FUND EXPENSES
AMERICAN BEACON LARGE CAP VALUE FUND(SM)
APRIL 30, 2007 (UNAUDITED)
FUND EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs and (2) ongoing costs, including management fees,
administrative service fees, distribution (12b-1) fees, and other Fund expenses.
The examples below are intended to help you understand the ongoing cost (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the
beginning of the period in each Class and held for the entire period from
November 1, 2006 through April 30, 2007.
ACTUAL EXPENSES
The "Actual" lines of the table provide information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading "Expenses Paid During Period" to estimate
the expenses you paid on your account during this period. Shareholders of the
PlanAhead and Institutional Classes that invest in the Fund through an IRA may
be subject to a custodial IRA fee of $12 that is typically deducted each
December. If your account was subject to a custodial IRA fee during the period,
your costs would have been $12 higher.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" lines of the table provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed 5% per year rate of return before expenses (not the
Fund's actual return). You may compare the ongoing costs of investing in the
Fund with other funds by contrasting this 5% hypothetical example and the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. Shareholders
of the PlanAhead and Institutional Classes that invest in the Fund through an
IRA may be subject to a custodial IRA fee of $12 that is typically deducted each
December. If your account was subject to a custodial IRA fee during the period,
your costs would have been $12 higher.
You should also be aware that the expenses shown in the table highlight
only your ongoing costs and do not reflect any transaction costs charged by the
Fund. Similarly, the expense examples for other funds do not reflect any
transaction costs charged by those funds, such as sales charges (loads),
redemption fees or exchange fees. Therefore, the "Hypothetical" lines of the
table are useful in comparing ongoing costs only and will not help you determine
the relative total costs of owning different funds. If you were subject to any
transaction costs during the period, your costs would have been higher.
Beginning Ending
Account Account Expenses Paid
Value Value During Period*
11/1/06 4/30/07 11/1/06-4/30/07
---------- ---------- ---------------
INSTITUTIONAL CLASS
Actual $ 1,000.00 $ 1,100.88 $ 2.97
Hypothetical $ 1,000.00 $ 1,021.97 $ 2.86
(5% return before expenses)
PLANAHEAD CLASS
Actual $ 1,000.00 $ 1,099.40 $ 4.27
Hypothetical $ 1,000.00 $ 1,020.73 $ 4.11
(5% return before expenses)
SERVICE CLASS
Actual $ 1,000.00 $ 1,098.19 $ 5.57
Hypothetical $ 1,000.00 $ 1,019.49 $ 5.36
(5% return before expenses)
AMR CLASS
Actual $ 1,000.00 $ 1,101.83 $ 1.67
Hypothetical $ 1,000.00 $ 1,023.21 $ 1.61
(5% return before expenses)
* Expenses are equal to the Fund's annualized expense ratios for the
six-month period of 0.57%, 0.82%, 1.07% and 0.32% for the Institutional,
PlanAhead, Service and AMR classes respectively, multiplied by the average
account value over the period, multiplied by the number derived by
dividing the number of days in the most recent fiscal half-year (181) by
days in the year (365) to reflect the half year period.
6
AMERICAN BEACON LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
--------- -----------
(DOLLARS IN THOUSANDS)
COMMON STOCKS - 92.96%
CONSUMER DISCRETIONARY - 9.98%
AUTO COMPONENTS - 0.10%
Magna International, Inc. ..................... 90,500 $ 7,163
---------
HOTELS, RESTAURANTS & LEISURE - 1.21%
Carnival Corp. ................................ 1,019,300 49,833
McDonald's Corp. .............................. 84,400 4,075
Wyndham Worldwide Corp. ## .................... 857,160 29,658
Yum! Brands, Inc. ............................. 105,700 6,539
---------
90,105
---------
HOUSEHOLD DURABLES - 1.99%
Centex Corp.+ ................................. 592,300 26,517
Fortune Brands, Inc. .......................... 414,400 33,193
Koninklijke (Royal) Philips Electronics NV .... 187,966 7,714
Lennar Corp. + ................................ 338,000 14,436
Matsushita Electric Industrial Co. Ltd., ADR .. 1,980,000 38,471
Newell Rubbermaid, Inc. ....................... 370,000 11,348
Pulte Homes, Inc. + ........................... 605,000 16,275
---------
147,954
---------
MEDIA - 2.93%
CBS Corp. ..................................... 705,100 22,401
Idearc, Inc. + ................................ 193,600 6,728
The Interpublic Group of
Companies, Inc. ##+ .......................... 835,500 10,594
R.H. Donnelley Corp. ##+ ...................... 186,400 14,556
Time Warner, Inc. ............................. 2,719,000 56,093
The Walt Disney Company Ltd. .................. 2,054,600 71,870
Warner Music Group Corp. + .................... 2,050,000 35,260
---------
217,502
---------
MULTILINE RETAIL - 2.08%
Federated Department Stores, Inc. ............. 942,412 41,391
J.C. Penney Company, Inc. + ................... 810,000 64,063
Target Corp. .................................. 527,500 31,317
Wal-Mart Stores, Inc. ......................... 360,700 17,285
---------
154,056
---------
SPECIALTY RETAIL - 1.67%
Gap, Inc. ..................................... 13,100 235
The Home Depot, Inc. .......................... 2,627,000 99,484
Liz Claiborne, Inc. ........................... 550,800 24,632
---------
124,351
---------
TOTAL CONSUMER DISCRETIONARY ................... 741,131
---------
CONSUMER STAPLES - 9.36%
BEVERAGES - 1.51%
Constellation Brands, Inc. ## ................. 234,000 5,244
Diageo plc, ADR ................................ 1,264,600 106,732
---------
111,976
---------
FOOD & DRUG RETAILING - 0.82%
Safeway, Inc. ................................. 185,400 $ 6,730
Sysco Corp. ................................... 1,657,000 54,250
---------
60,980
---------
FOOD PRODUCTS - 2.44%
Archer-Daniels-Midland Co. .................... 1,529,000 59,172
General Mills, Inc. ........................... 354,000 21,205
Kellogg Co. ................................... 900,000 47,619
Kraft Foods, Inc. ............................. 1,379,985 46,188
Unilever plc, ADR + ........................... 225,800 7,070
---------
181,254
---------
PERSONAL PRODUCTS - 0.73%
L'Oreal SA, ADR ................................ 2,260,000 54,127
---------
TOBACCO - 3.86%
Altria Group, Inc. ............................ 1,164,100 80,230
Gallaher Group plc, ADR ....................... 113,100 10,264
Imperial Tobacco Group plc, ADR ............... 1,140,800 99,717
UST, Inc. + ................................... 1,696,600 96,163
---------
286,374
---------
TOTAL CONSUMER STAPLES ......................... 694,711
---------
ENERGY - 7.21%
ENERGY EQUIPMENT & SERVICES - 0.75%
Weatherford International Ltd. ## ............. 1,056,000 55,429
---------
OIL & GAS - 6.46%
Chevron Corp. ................................. 783,562 60,953
ConocoPhillips ................................ 3,187,396 221,046
Devon Energy Corp. ............................ 900,300 65,605
Duke Energy Corp. ............................. 1,964,200 40,305
Occidental Petroleum Corp. .................... 1,268,200 64,298
Petro-Canada .................................. 124,700 5,528
Royal Dutch Shell plc, ADR + .................. 204,100 14,432
Sunoco, Inc. .................................. 96,100 7,259
---------
479,426
---------
TOTAL ENERGY .................................... 534,855
---------
FINANCIALS - 24.15%
BANKS - 6.54%
Bank of New York, Inc. ........................ 202,400 8,193
Bank of America Corp. ......................... 3,093,978 157,483
Comerica, Inc. ................................ 110,100 6,816
First Horizon National Corp. + ................ 359,900 14,112
KeyCorp ....................................... 327,200 11,675
SunTrust Banks, Inc. + ........................ 175,000 14,774
U.S. Bancorp .................................. 1,055,560 36,259
See accompanying notes
7
AMERICAN BEACON LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
--------- -----------
(DOLLARS IN THOUSANDS)
UnionBanCal Corp. + ........................... 56,100 $ 3,449
Wachovia Corp. ................................ 729,500 40,516
Washington Mutual, Inc. + ..................... 1,331,400 55,892
Wells Fargo & Co. ............................. 3,789,800 136,016
---------
485,185
---------
DIVERSIFIED FINANCIALS - 10.22%
The Bear Stearns Cos., Inc. ................... 182,300 28,384
Capital One Financial Corp. ................... 410,600 30,491
The Charles Schwab Corp. ...................... 3,236,000 61,873
Citigroup, Inc. ............................... 2,763,638 148,186
Federal Home Loan Mortgage Corp. .............. 329,100 21,319
Federal National Mortgage Association ......... 352,800 20,787
The Goldman Sachs Group, Inc. ................. 112,700 24,638
JP Morgan Chase & Co. ......................... 3,051,598 158,988
Merrill Lynch & Co., Inc. ..................... 396,500 35,776
Mitsubishi UFJ Financial Group, Inc., ADR + ... 4,045,000 42,270
Morgan Stanley Dean Witter & Co. .............. 1,238,400 104,038
SLM Corp. ..................................... 1,523,500 82,010
---------
758,760
---------
INSURANCE - 7.21%
ACE Ltd. ...................................... 760,100 45,195
Aflac, Inc. ................................... 1,074,000 55,139
The Allstate Corp. ............................ 883,328 55,049
American International Group, Inc. ............ 1,755,100 122,699
AON Corp. + ................................... 266,600 10,331
Assurant, Inc. ................................ 59,500 3,423
Conseco, Inc. ##+ ............................. 332,600 5,884
Genworth Financial, Inc. ...................... 599,800 21,887
The Hartford Financial Services Group, Inc. ... 110,500 11,183
MetLife, Inc. ................................. 710,100 46,654
MGIC Investment Corp. + ....................... 417,400 25,716
Prudential Financial, Inc. .................... 44,600 4,237
The Travelers Companies, Inc. ................. 863,000 46,688
UnumProvident Corp. + ......................... 639,400 15,908
XL Capital Ltd. + ............................. 838,100 65,355
---------
535,348
---------
REAL ESTATE - 0.18%
The St. Joe Co. + ............................. 237,300 13,438
---------
TOTAL FINANCIALS ................................ 1,792,731
---------
HEALTH CARE - 10.04%
HEALTH CARE EQUIPMENT & SUPPLIES - 1.99%
Baxter International, Inc. ..................... 2,030,300 114,976
C.R. Bard, Inc. ............................... 389,000 32,338
---------
147,314
---------
HEALTH CARE PROVIDERS & SERVICES - 2.51%
Cigna Corp. ................................... 302,500 47,066
Community Health Systems, Inc. ## ............. 1,282,000 47,178
Omnicare, Inc. ................................ 45,200 $ 1,499
Tenet Healthcare Corp. ##+ .................... 959,200 7,117
UnitedHealth Group, Inc. ...................... 407,600 21,627
WellPoint, Inc. * ............................. 786,700 62,126
---------
186,613
---------
PHARMACEUTICALS - 5.54%
AstraZeneca plc, ADR .......................... 986,000 53,550
Bristol-Myers Squibb Co. ...................... 2,613,200 75,417
Eli Lilly & Co. ............................... 332,200 19,643
Hospira, Inc. ##+ ............................. 943,000 38,239
Johnson & Johnson ............................. 226,200 14,527
Merck & Co., Inc. ............................. 223,300 11,486
Pfizer, Inc. .................................. 3,794,600 100,405
Schering-Plough Corp. ......................... 545,300 17,302
Wyeth Corp. ................................... 1,454,800 80,741
---------
411,310
---------
TOTAL HEALTH CARE .............................. 745,237
---------
INDUSTRIALS - 11.13%
AEROSPACE & DEFENSE - 3.39%
The Boeing Co. ................................ 1,195,500 111,181
Northrop Grumman Corp. ........................ 923,000 67,970
Raytheon Co. .................................. 770,200 41,237
United Technologies Corp. ..................... 466,600 31,323
---------
251,711
---------
AIR FREIGHT & COURIERS - 0.26%
FedEx Corp. ................................... 182,900 19,285
---------
INDUSTRIAL CONGLOMERATES - 3.57%
3M Co. ........................................ 430,400 35,624
General Electric Co. .......................... 1,815,600 66,923
Honeywell International, Inc. ................. 1,909,800 103,473
Textron, Inc. ................................. 271,000 27,552
Tyco International Ltd. ....................... 962,600 31,410
---------
264,982
---------
MACHINERY - 3.12%
Caterpillar, Inc. ............................. 596,900 43,347
Deere & Co. ................................... 594,000 64,984
Flowserve Corp. + ............................. 245,900 15,002
Illinois Tool Works, Inc. + ................... 1,260,100 64,656
ITT Industries, Inc. .......................... 684,400 43,671
---------
231,660
---------
RENTAL AUTO/EQUIPMENT - 0.03%
Avis Budget Group, Inc. ....................... 86,190 2,425
---------
See accompanying notes
8
AMERICAN BEACON LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ ------------
(DOLLARS IN THOUSANDS)
TRANSPORTATION INFRASTRUCTURE - 0.76%
Burlington Northern Santa Fe Corp. ............................................ 640,600 $ 56,078
------------
TOTAL INDUSTRIALS .............................................................. 826,141
------------
INFORMATION TECHNOLOGY - 8.58%
COMMERCIAL SERVICES & SUPPLIES - 0.19%
First Data Corp. ............................................................. 435,800 14,120
------------
COMMUNICATIONS EQUIPMENT - 0.60%
Nokia Corp., ADR ## ........................................................... 1,762,100 44,493
------------
COMPUTERS & PERIPHERALS - 3.89%
Apple Computer, Inc. ## ....................................................... 780,000 77,844
Hewlett-Packard Co. ........................................................... 1,937,400 81,642
International Business Machines Corp. ......................................... 1,264,300 129,224
------------
288,710
------------
ELECTRICAL EQUIPMENT - 0.64%
Molex, Inc. ................................................................... 139,000 4,153
Molex, Inc., Class A Shares ................................................... 1,628,000 43,614
------------
47,767
------------
IT CONSULTING & SERVICES - 0.52%
Computer Sciences Corp. ##+ ................................................... 184,200 10,230
Electronic Data Systems Corp. ................................................. 973,700 28,471
------------
38,701
------------
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 0.97%
Intel Corp. ................................................................... 933,100 20,062
Texas Instruments, Inc. ....................................................... 1,505,000 51,727
------------
71,789
------------
SOFTWARE - 1.77%
BMC Software, Inc. ## ......................................................... 197,000 6,377
CA, Inc. + .................................................................... 1,321,103 36,013
Microsoft Corp. ............................................................... 977,000 29,252
Oracle Corp. * ................................................................ 3,160,000 59,408
------------
131,050
------------
TOTAL INFORMATION TECHNOLOGY 636,630
------------
MATERIALS - 2.86%
CHEMICALS - 2.42%
Air Products & Chemicals, Inc. ............................................... 986,800 75,490
Dow Chemical Co. ............................................................. 416,500 18,580
E. I. du Pont de Nemours & Co. ............................................... 392,600 19,304
Lyondell Chemical Co. + ...................................................... 1,507,000 46,898
PPG Industries, Inc. ......................................................... 266,100 19,580
------------
179,852
------------
METALS & MINING - 0.29%
Alcoa, Inc. ................................................................... 591,668 20,998
------------
PAPER & FOREST PRODUCTS - 0.15%
Sappi Ltd., ADR + ............................................................. 145,400 $ 2,566
Weyerhaeuser Co. .............................................................. 109,100 8,643
------------
11,209
------------
TOTAL MATERIALS ................................................................ 212,059
------------
TELECOMMUNICATION SERVICES - 4.66%
DIVERSIFIED TELECOMMUNICATION - 4.66%
AT&T, Inc. ................................................................... 5,059,552 195,906
Verizon Communications, Inc. ................................................. 2,871,346 109,628
Vodafone Group plc, ADR ...................................................... 1,402,949 40,307
------------
TOTAL TELECOMMUNICATION SERVICES ............................................... 345,841
------------
UTILITIES - 4.99%
ELECTRIC UTILITIES - 4.66%
CenterPoint Energy, Inc. + ................................................... 1,021,600 19,237
Dominion Resources, Inc. ..................................................... 1,125,900 102,682
DTE Energy Co. ............................................................... 300,000 15,177
Entergy Corp. ................................................................ 692,500 78,349
Exelon Corp. ................................................................. 1,380,900 104,134
FPL Group, Inc. + ............................................................ 220,300 14,181
Public Service Enterprise Group, Inc. ........................................ 138,800 11,999
------------
345,759
------------
GAS UTILITIES - 0.33%
Spectra Energy Corp. .......................................................... 956,300 24,959
------------
TOTAL UTILITIES ................................................................ 370,718
------------
TOTAL COMMON STOCKS ............................................................ 6,900,054
------------
SHORT TERM INVESTMENTS - 6.42%
American Beacon Money Market Select
Fund ++ ..................................................................... 450,004,746 450,005
PAR
AMOUNT
------------
United States Treasury Bill,
5.01%, Due 6/7/2007 # @ ................................................. $ 26,745 26,609
------------
TOTAL SHORT TERM INVESTMENTS ................................................... 476,614
------------
SHARES
------------
SECURITIES LENDING
COLLATERAL - 3.88%
American Beacon Cash Plus Trust ++ ............................................ 169,980,657 169,981
American Beacon Money Market Select
Fund ++ ...................................................................... 118,213,091 118,213
------------
TOTAL SECURITIES LENDING COLLATERAL ........................................... 288,194
------------
TOTAL INVESTMENTS 103.26% - (COST $6,693,574) .................................. 7,664,862
LIABILITIES, NET OF OTHER ASSETS - (3.26%) ..................................... (241,762)
------------
TOTAL NET ASSETS - 100.00% ..................................................... $ 7,423,100
============
See accompanying notes
9
AMERICAN BEACON LARGE CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ The Fund/Trust is affiliated by having the same investment advisor.
# Rates represent discount rate.
@ At April 30, 2007, security pledged as collateral for open futures
contracts.
FUTURES CONTRACTS
(DOLLARS IN THOUSANDS)
UNREALIZED
NUMBER OF EXPIRATION MARKET APPRECIATION/
CONTRACTS DATE VALUE (DEPRECIATION)
----------- ----------- ----------- ------------
Emini S&P 500 Index............................... 6,358 Jun 2007 $473,162 $ 13,995
======== ============
See accompanying notes
10
\
AMERICAN BEACON LARGE CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2007 (Unaudited) (in thousands, except share and per share amounts)
ASSETS:
Investments in unaffiliated securities, at value(A)(C) ......... $ 6,926,663
Investments in affiliated securities, at value(B) .............. 738,199
Receivable for investments sold ................................ 2,366
Dividends and interest receivable .............................. 8,622
Receivable for fund shares sold ................................ 60,385
Receivable for tax reclaims .................................... 80
Prepaid expenses ............................................... 145
------------
TOTAL ASSETS ............................................ 7,736,460
------------
LIABILITIES:
Payable for investments purchased .............................. 4,201
Payable upon return of securities loaned ....................... 288,194
Payable for fund shares redeemed ............................... 9,733
Payable for variation margin on open futures contracts ......... 4,321
Management and investment advisory fees payable (Note 2) ....... 4,407
Administrative service and service fees payable ................ 2,145
Other liabilities .............................................. 359
------------
TOTAL LIABILITIES ....................................... 313,360
------------
NET ASSETS .......................................................... $ 7,423,100
============
ANALYSIS OF NET ASSETS:
Paid-in-capital ................................................ 6,337,135
Undistributed net investment income ............................ 27,647
Accumulated net realized gain .................................. 73,036
Unrealized appreciation of investments, futures
contracts, and foreign currency .............................. 985,282
------------
NET ASSETS .......................................................... $ 7,423,100
============
SHARES OUTSTANDING (NO PAR VALUE):
Institutional Class ............................................ 70,550,002
============
PlanAhead Class ................................................ 188,258,777
============
Service Class .................................................. 3,438,085
============
AMR Class ...................................................... 41,471,029
============
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE:
Institutional Class ............................................ $ 25.19
============
PlanAhead Class ................................................ $ 24.06
============
Service Class .................................................. $ 23.97
============
AMR Class ...................................................... $ 24.93
============
- ----------
A Cost of investments in unaffiliated securities .................... $ 5,955,375
B Cost of investments in affiliated securities ...................... $ 738,199
C Market value of securities on loan ................................ $ 309,814
See accompanying notes
11
AMERICAN BEACON LARGE CAP VALUE FUND
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2007 (Unaudited) (in thousands)
INVESTMENT INCOME:
Dividend income from unaffiliated securities (net of foreign taxes)* ..... $ 58,445
Dividend income from affiliated securities ............................... 9,934
Interest income .......................................................... 615
Income derived from securities lending, net .............................. 497
------------
TOTAL INVESTMENT INCOME ............................................... 69,491
------------
EXPENSES:
Management and investment advisory fees (Note 2) ......................... 8,290
Administrative service fees (Note 2):
Institutional Class ..................................................... 1,658
PlanAhead Class ......................................................... 4,372
Service Class ........................................................... 67
Transfer agent fees:
Institutional Class ..................................................... 59
PlanAhead Class ......................................................... 87
Service Class ........................................................... 1
AMR Class ............................................................... 27
Custody and fund accounting fees ......................................... 342
Professional fees ........................................................ 29
Registration fees and expenses ........................................... 60
Service fees:
PlanAhead Class (Note 2) ..................................................... 4,372
Service Class (Note 2) ....................................................... 67
Distribution fees - Service Class (Note 2) ..................................... 67
Prospectus and shareholder reports ............................................. 98
Other expenses ................................................................. 217
------------
TOTAL EXPENSES ........................................................ 19,813
------------
Net fees recouped by Manager (Note 2) .......................................... 2
------------
NET EXPENSES .......................................................... 19,815
------------
NET INVESTMENT INCOME .......................................................... 49,676
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments .................................................................. 87,554
Commission recapture (Note 1) ................................................ 328
Futures contracts ............................................................ 5,281
Change in net unrealized appreciation or depreciation of:
Investments .................................................................. 426,699
Futures contracts ............................................................ 8,376
------------
NET GAIN ON INVESTMENTS ............................................... 528,238
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................... $ 577,914
============
* Foreign taxes .............................................................. $ 162
See accompanying notes
12
AMERICAN BEACON LARGE CAP VALUE FUND
STATEMENT OF CHANGES OF NET ASSETS (IN THOUSANDS)
Six Months Year Ended
Ended October 31,
April 30, 2007 2006
-------------- -----------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ................................................................. $ 49,676 $ 52,939
Net realized gain on investments, futures contracts, and foreign currency
transactions ..................................................................... 93,163 121,664
Change in net unrealized appreciation or depreciation of investments, futures
contracts, and foreign currency translations ..................................... 435,075 339,128
------------ -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................. 577,914 513,731
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Institutional Class ................................................................. (14,678) (2,811)
PlanAhead Class ..................................................................... (35,816) (9,026)
Service Class ....................................................................... (422) (183)
AMR Class ........................................................................... (13,818) (12,219)
Net realized gain on investments:
Institutional Class ................................................................. (28,455) (8,282)
PlanAhead Class ..................................................................... (78,015) (28,149)
Service Class ....................................................................... (1,093) (544)
AMR Class ........................................................................... (23,934) (32,018)
------------ -----------
NET DISTRIBUTIONS TO SHAREHOLDERS ................................................ (196,231) (93,232)
------------ -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares ......................................................... 2,758,566 3,041,055
Reinvestment of dividends and distributions ........................................... 185,535 88,860
Cost of shares redeemed ............................................................... (511,900) (528,489)
------------ -----------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS ....................... 2,432,201 2,601,426
------------ -----------
NET INCREASE IN NET ASSETS ............................................................... 2,813,884 3,021,925
------------ -----------
NET ASSETS:
Beginning of period ................................................................... 4,609,216 1,587,291
------------ -----------
END OF PERIOD * ....................................................................... $ 7,423,100 $ 4,609,216
============ ===========
*Includes undistributed net investment income of ......................................... $ 27,647 $ 42,693
============ ===========
See accompanying notes
13
AMERICAN BEACON LARGE CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
American Beacon Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940 (the
"Act"), as amended, as a no load, diversified, open-end management investment
company. These financial statements and notes to the financial statements relate
to the American Beacon Large Cap Value Fund (the "Fund"), a series of the Trust.
American Beacon Advisors, Inc. (the "Manager") is a wholly-owned
subsidiary of AMR Corporation, the parent company of American Airlines, Inc.
("American"), and was organized in 1986 to provide business management,
advisory, administrative and asset management consulting services to the Trust
and other investors.
Class Disclosure
The Fund has multiple classes of shares designed to meet the needs of
different groups of investors. The following table sets forth the differences
amongst the classes:
CLASS: OFFERED TO: SERVICE AND DISTRIBUTIONS FEES:
- ------------------- --------------------------------------------------------------- ----------------------------------
INSTITUTIONAL CLASS Investors making an initial investment of $2 million Administrative Service Fee - 0.25%
PLANAHEAD CLASS General public and investors investing through an intermediary Administrative Service Fee - 0.25%
Service Fee - 0.25%
SERVICE CLASS Investors investing through an intermediary Administrative Service Fee - 0.25%
Service Fee - 0.25%
Distribution Fee - 0.25%
AMR CLASS Investors in the tax-exempt retirement and benefit plans of AMR
Corporation and its affiliates N/A
Investment income, net capital gains (losses) and all expenses incurred by
the Fund are allocated based on the relative net assets of each class, except
for service fees and certain other fees and expenses related solely to one class
of shares.
Security Valuation
Investments are valued at the close of the New York Stock Exchange (the
"Exchange"), normally 4 p.m. ET, each day that the Exchange is open for
business. Equity securities for which market quotations are available are valued
at the last sale price or official closing price (closing bid price or last
evaluated quote if no sale has occurred) on the primary market or exchange on
which they trade.
Debt securities (other than short-term securities) normally are valued on
the basis of prices provided by an independent pricing service and may take into
account appropriate factors such as institution-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. When a price is unavailable from a
pricing service or when the price provided by the pricing service is deemed not
to represent fair value, the prices of debt securities may be determined using
quotes obtained from brokers.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation. Investment grade short-term
obligations with 60 days or less to maturity are valued using the amortized cost
method, which approximates market value.
Securities for which the market prices are not readily available or are
not reflective of the fair value of the security, as determined by the Manager,
will be priced at fair value following procedures approved by the Board of
Trustees (the "Board").
14
AMERICAN BEACON LARGE CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
Security Transactions and Investment Income
Security transactions are recorded on the trade date of the security
purchase or sale. The Fund may purchase securities with delivery or payment to
occur at a later date. At the time the Fund enters into a commitment to purchase
a security, the transaction is recorded and the value of the security is
reflected in the net asset value. The value of the security may vary with market
fluctuations.
Dividend income, net of foreign taxes, is recorded on the ex-dividend date
except certain dividends from foreign securities which are recorded as soon as
the information is available to the Fund. Interest income is earned from
settlement date, recorded on the accrual basis, and adjusted, if necessary, for
accretion of discounts and amortization of premiums. For financial and tax
reporting purposes, realized gains and losses are determined on the basis of
specific lot identification.
Futures Contracts
Futures contracts are contracts to buy or sell a standard quantity of
securities at a specified price on a future date. The Fund may enter into
financial futures contracts as a method for keeping assets readily convertible
to cash if needed to meet shareholder redemptions or for other needs while
maintaining exposure to the stock or bond market, as applicable. The primary
risks associated with the use of futures contracts are the possibility of
illiquid markets or imperfect correlation between the values of the contracts
and the underlying securities, or that the counterparty will fail to perform its
obligations.
Upon entering into a futures contract, the Fund is required to set aside
or deposit with a broker an amount, termed the initial margin, which typically
represents 5% of the face value of the futures contract. The Fund reflects this
amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral
for futures contracts. 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.
Dividends to Shareholders
Dividends from net investment income of the Fund normally will be declared
and paid annually. Distributions, if any, of net realized capital gains are
generally paid annually and recorded on the ex-dividend date.
Commission Recapture
The Fund has established brokerage commission recapture arrangements with
certain brokers or dealers. If the Fund's investment advisor chooses to execute
a transaction through a participating broker, the broker rebates a portion of
the commission back to the Fund. Any collateral benefit received through
participation in the commission recapture program is directed exclusively to the
Fund. This amount is reported with the net realized gain in the Fund's Statement
of Operations.
Allocation of Income, Expenses, Gains and Losses
Income, expenses (other than those attributable to a specific class),
gains and losses are allocated daily to each class of shares based upon the
relative proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the operations of
that class.
15
AMERICAN BEACON LARGE CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles 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.
Recently Issued Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and is to
be applied to all open tax years as of the effective date. At this time, the
Manager is evaluating the implications of FIN 48 and its potential impact on the
financial statements has not yet been determined.
In September 2006, the FASB issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting, establishes a
framework for measuring fair value and requires additional disclosures about the
use of fair value measurements. FAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years. The Manager is evaluating the impact of FAS 157;
however, it is not expected to have a material impact on the Fund's net assets
of results of operations.
Other
Under the Trust's organizational documents, its officers and directors are
indemnified against certain liability arising out of the performance of their
duties to the Trust. In the normal course of business, the Trust enters into
contracts that provide indemnification to the other party or parties against
potential costs or liabilities. The Trust's maximum exposure under these
arrangements is dependent on claims that may be made in the future and,
therefore, cannot be estimated. The Trust has had no prior claims or losses
pursuant to any such agreement.
2. TRANSACTIONS WITH AFFILIATES
Management Agreement
The Trust and the Manager are parties to a Management Agreement that
obligates the Manager to provide or oversee the provision of all administrative,
investment advisory, fund management and securities lending services. Investment
assets of the Fund are managed by multiple investment advisors which have
entered into separate investment advisory agreements with the Manager. As
compensation for performing the duties required under the Management Agreement,
the Manager receives from the Fund an annualized fee equal to 0.10% of the
average daily net assets plus amounts paid by the Manager to the investment
advisors hired by the Manager to direct investment activities of the Funds.
Management fees paid during the six months ended April 30, 2007 were as follows
(dollars in thousands):
AMOUNTS PAID TO NET AMOUNTS
MANAGEMENT MANAGEMENT INVESTMENT RETAINED BY
FEE RATE FEE ADVISORS MANAGER
- ------------ ---------- --------------- -----------
0.225%-0.70% $ 8,290 $ 5,362 $ 2,928
16
AMERICAN BEACON LARGE CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
As compensation for services provided by the Manager in connection with
securities lending activities, the lending Fund pays to the Manager, with
respect to cash collateral posted by borrowers, a fee up to 25% of the net
monthly interest income (the gross interest income earned by the investment of
cash collateral, less the amount paid to borrowers and related expenses) from
such activities and, with respect to loan fees paid by borrowers when a borrower
posts collateral other than cash, a fee up to 25% of such loan fees. This fee is
netted against securities lending income in the Statement of Operations. During
the six months ended April 30, 2007, securities lending fees paid to the Manager
were $77,504.
Administrative Services Agreement
The Manager and the Trust entered into an Administrative Services
Agreement which obligates the Manager to provide or oversee administrative and
management services to the Fund. As compensation for performing the duties
required under the Administrative Services Agreement, the Manager receives an
annualized fee of 0.25% of the average daily net assets of the Institutional,
PlanAhead and Service Classes of the Fund.
Distribution Plans
The Trust, except for the Service Class of the Fund, has adopted a
"defensive" Distribution Plan (the "Plan") in accordance with Rule 12b-1 under
the Act, pursuant to which no fees may be charged to the Fund for distribution
purposes. However, the Plan authorizes the management fees received by the
Manager and the investment advisors hired by the Manager to be used for
distribution purposes. Under this Plan, the Trust does not intend to compensate
the Manager or any other party, either directly or indirectly, for the
distribution of Trust shares.
A separate Distribution Plan (the "Distribution Plan") has been adopted
pursuant to Rule 12b-1 under the Act for the Service Class of the Fund. Under
the Distribution Plan, as compensation for distribution assistance, the Manager
receives an annual fee of 0.25% of the average daily net assets of the Service
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 PlanAhead and Service
Classes. As compensation for performing the duties required under the Service
Plans, the Manager receives 0.25% of the average daily net assets of the
PlanAhead and Service Classes of the Fund.
Investment in Affiliated Funds
The Fund is permitted, pursuant to an exemptive order by the Securities
and Exchange Commission ("SEC") and procedures approved by the Board, to invest
up to 25% of its total assets in the American Beacon Money Market Select Fund
(the "Select Fund"). Cash collateral received by the Fund in connection with
securities lending may be invested in the Select Fund and the American Beacon
Cash Plus Trust (the "Cash Trust") (collectively, the "Affiliated Funds"). The
Fund and the Affiliated Funds have the same investment advisor and therefore,
are considered to be affiliated. The Manager serves as investment advisor to the
Affiliated Funds and receives from each Affiliated Fund an annualized fee equal
to 0.10% of its average daily net assets. During the six months ended April 30,
2007, the Manager earned fees from the Affiliated Funds totaling $190,786 on the
Fund's direct investment in the Affiliated Funds and $129,870 from securities
lending collateral invested in the Affiliated Funds.
17
AMERICAN BEACON LARGE CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
Interfund Lending Program
Pursuant to an exemptive order by the SEC, the Fund, along with other
registered investment companies having management contracts with the Manager,
may participate in an interfund lending program as a borrower. This program
provides an alternative credit facility allowing the Fund to borrow from other
participating Funds. For the six months ended April 30, 2007, the Fund did not
utilize the credit facility.
Expense Reimbursement Plan
The Fund has adopted an Expense Reimbursement Plan whereby the manager may
seek repayment of fees waived or expenses reimbursed for a period of up to three
years. However, reimbursement will occur only if the Class' average net assets
have grown or expenses have declined sufficiently to allow reimbursement without
causing its expense ratio to exceed the previously agreed upon contractual
expense limit. During the six months ended April 30, 2007, the Manager recouped
prior fee waivers totaling $1,617. There are no further fee waivers or
reimbursed expenses subject to potential recovery.
Other
At April 30, 2007, AMR Corporation and subsidiary companies and employee
benefit trusts thereof owned 13% of the Fund.
3. FEDERAL INCOME AND EXCISE TAXES
It is the policy of the Fund to comply with the requirements of Subchapter
M of the Internal Revenue Code and to distribute substantially all net
investment income as well as any net realized capital gains on the sale of
investments. Therefore, no federal income or excise tax provision is required.
Dividends are categorized in accordance with income tax regulations which
may treat certain transactions differently than U.S. generally accepted
accounting principles. Accordingly, the character of distributions and
composition of net assets for tax purposes may differ from those reflected in
the accompanying financial statements.
The tax character of distributions paid during the six months ended April
30, 2007 and the fiscal year ended October 31, 2006 were as follows (in
thousands):
SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
2007 2006
---------------- -----------
(unaudited)
DISTRIBUTIONS PAID FROM:
ORDINARY INCOME*
Institutional Class .............................. 20,726 $ 3,517
PlanAhead Class .................................. 52,399 11,427
Service Class .................................... 18,906 229
AMR Class ........................................ 654 14,949
LONG-TERM CAPITAL GAIN
Institutional Class ............................. 22,406 7,576
PlanAhead Class ................................. 61,432 25,749
Service Class .................................. 18,847 497
AMR Class ..................................... 861 29,288
------------- --------
TOTAL DISTRIBUTIONS PAID ........................... $ 196,231 $ 93,232
============= ========
* For tax purposes, short-term capital gains are considered ordinary income
distributions.
18
AMERICAN BEACON LARGE CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
As of April 30, 2007, the components of distributable earnings on a tax
basis were as follows (in thousands):
Cost basis of investments for federal income tax purposes .... $ 6,708,015
Unrealized appreciation ...................................... 989,914
Unrealized depreciation ...................................... (33,067)
------------
Net unrealized appreciation/(depreciation) ................... 956,847
Undistributed ordinary income ................................ 71,952
Undistributed long-term gain/(loss) .......................... 57,077
Distributable earnings ....................................... $ 1,085,876
Financial reporting records are adjusted for permanent book/tax
differences to reflect tax character. Financial records are not adjusted for
temporary differences. The temporary differences between financial reporting and
tax-basis reporting of unrealized appreciation/(depreciation) are attributable
primarily to the tax deferral of losses from wash sales, the realization for tax
purposes of unrealized gains/(losses) on certain derivative instruments, and
reclassifications of income from real estate investment securities.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under U.S. generally accepted accounting principles and
federal income tax regulations, permanent differences between book and tax
reporting have been identified and appropriately reclassified on the Statement
of Assets and Liabilities.
Accordingly, the following amounts represent current year permanent
differences derived from reclassifications of income from real estate investment
securities, foreign currency, and dividend reclasses that have been reclassified
as of April 30, 2007 (in thousands):
Paid-in-capital.............................................. $ 6
Undistributed net investment income.......................... 12
Accumulated net realized gain (loss)......................... (18)
Unrealized appreciation (depreciation) of investments........
futures contracts and foreign currency....................... --
4. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of investments
other than short-term obligations for the six months ended April 30, 2007 were
(in thousands) $2,541,442 and $475,117, respectively.
A summary of the Fund's direct and transactions in Affiliated Funds for
the six months ended April 30, 2007 is set forth below (in thousands):
OCTOBER 31, 2006 APRIL 30, 2007
AFFILIATE SHARES/MARKET VALUE PURCHASES SALES SHARES/MARKET VALUE
- ----------- ------------------- ------------- ------------ -------------------
Select Fund $ 293,666 $ 4,256,592 $ 4,100,253 $ 450,005
5. 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 marked to market
and monitored daily. To the extent that a loan is collateralized by cash, such
collateral shall be invested by the securities lending agent (the "Agent") in
short-term instruments, money market mutual funds, and such other short-term
investments, provided the investments meet certain quality and diversification
requirements.
19
AMERICAN BEACON LARGE CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
The Fund, the Agent and the Manager retain 65%, 25% and 10%, respectively
of the income generated from the investment of cash collateral, less negotiated
rebate fees paid to participating brokers and transaction costs. To the extent
that a loan is secured by non-cash collateral, brokers pay the Fund negotiated
lenders' fees, which are divided between the Fund, the Agent and the Manager
65%, 25% and 10%, respectively. The Fund also continues to receive income on the
securities loaned, and any gain or loss in the market price of securities loaned
that may occur during the term of the loan.
Risks to the Fund in securities lending transactions are that the borrower
may not provide additional collateral when required or return the securities
when due, and that the value of the short-term investments will be less than the
amount of cash collateral required to be returned to the borrower.
At April 30, 2007, the value of outstanding securities on loan and the
value of collateral was as follows (in thousands):
MARKET VALUE OF
SECURITIES ON LOAN NON-CASH COLLATERAL CASH COLLATERAL
- ------------------ -------------------- -----------------
$309,814 $ 34,105 $ 288,194
Cash collateral is invested in a joint investment account, which is
comprised of an investment in the Affiliated Funds. The allocated amounts have
been included as investments in the Schedule of Investments and Statement of
Assets and Liabilities. Income earned on these investments is reported as Income
derived from securities lending in the Statement of Operations.
Non-cash collateral received by the Fund may not be sold or repledged;
therefore, non-cash collateral is not included on the Fund's Schedule of
Investments or Statement of Assets and Liabilities.
6. CAPITAL SHARE TRANSACTIONS
The tables below summarize the activity in capital shares for each Class
of the Fund (dollars and shares in thousands):
Six months Ended April 30, 2007
INSTITUTIONAL CLASS PLANAHEAD CLASS SERVICE CLASS AMR CLASS
--------------------- ---------------------- ----------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------- ------- ------- --------- ------- ------ ------- ---------
Shares sold ................... 32,424 $ 784,822 80,225 $ 1,844,387 2,092 $ 48,266 3,328 $ 81,091
Reinvestment of dividends ..... 1,548 36,661 4,843 109,645 65 1,477 1,612 37,752
Shares redeemed ............... (3,754) (90,765) (10,535) (243,845) (445) (10,307) (6,996) (166,983)
------ --------- ------ ----------- ----- -------- ------ ---------
Net increase (decrease) in
shares outstanding ......... 30,218 $ 730,718 74,533 $ 1,710,187 1,712 $ 39,436 (2,056) $ (48,140)
====== ========= ====== =========== ===== ======== ====== =========
Year Ended October 31, 2006
INSTITUTIONAL CLASS PLANAHEAD CLASS SERVICE CLASS AMR CLASS
----------------------- --------------------- -------------------- -----------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ --------- ------- ----------- ---------- ------- ------ --------
Shares sold .................. 34,068 $ 746,193 98,689 $ 2,075,973 1,451 $30,595 8,618 $188,294
Reinvestment of dividends .... 439 9,253 1,715 34,642 36 727 2,125 44,238
Shares redeemed .............. (3,753) (81,987) (12,788) (269,180) (338) (7,086) (8,030) (170,236)
------ --------- ------- ----------- ----- ------- ------ --------
Net increase in shares
outstanding ............... 30,754 $ 673,459 87,616 $ 1,841,435 1,149 $24,236 2,713 $ 62,296
====== ========= ======= =========== ===== ======= ===== ========
20
(This page intentionally left blank)
21
AMERICAN BEACON LARGE CAP VALUE FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGH THE PERIOD)
Institutional Class
-------------------------------------------------------------------------
Six Months Year Ended October 31
Ended April ---------------------------------------------------------
30, 2007 2006 2005 2004 2003 2002
----------- -------- ---------- -------- -------- ----------
(unaudited)
Net asset value, beginning of period... $ 23 .77 $ 21 .00 $ 18.23 $ 15 .62 $ 12.55 $ 14.51
---------- -------- --------- -------- -------- ---------
Income from investment operations:
Net investment income(A,B)........... 0 .19 0 .42 0 .28 0 .26 0 .25(C) 0 .27
Net gains (losses) on securities
(both realized and
unrealized)(A) ..................... 2 .15 3 .48 2 .74 2 .62 3 .11(C) (1 .76)
---------- -------- --------- -------- -------- ---------
Total income (loss) from investment
operations ............................ 2 .34 3 .79 3 .02 2 .88 3 .36 (1 .49)
---------- -------- --------- -------- -------- ---------
Less distributions:
Dividends from net
investment income .................. (0 .31) (0 .26) (0 .25) (0 .27) (0 .29) (0 .30)
Distributions from net realized
gains on securities ................ (0 .61) (0 .76) -- -- -- (0 .17)
---------- -------- --------- -------- -------- ---------
Total distributions ................... (0 .92) (1 .02) (0 .25) (0 .27) (0 .29) (0 .47)
---------- -------- --------- -------- -------- ---------
Net asset value, end of period ........ $ 25 .19 $ 23 .77 $ 21 .00 $ 18.23 $ 15.62 $ 12.55
========== ======== ========= ======== ======== =========
Total return .......................... 10 .09% 18 .69% 16 .64% 18 .59% 27 .30% (10 .83)%
========== ======== ========= ======== ======== =========
Ratios and supplemental data:
Net assets, end of period
(in thousands) ...................... $1,777,117 $958,830 $ 201,111 $ 48,451 $ 23,512 $ 21,589
Ratios to average net assets
(annualized):
Expenses, net of waivers(A) ... 0 .57% 0 .60% 0 .60% 0 .66% 0 .66% 0 .61%
Expenses, before waivers(A) ... 0 .57% 0 .60% 0 .60% 0 .66% 0 .66% 0 .61%
Net investment income, net
of waiversA ................... 1 .80% 1 .86% 1 .58% 1 .49% 1 .88% 1 .82%
Net investment income (loss)
before waivers(A) ............. 1 .80% 1 .86% 1 .58% 1 .49% 1 .88% 1 .82%
Portfolio turnover rateF ............ 9%(D) 26% 25% 29% 27% 34%
PlanAhead Class
----------------------------
Six Months Year Ended
Ended April October 31
30, 2007 2006
------------ ----------
(unaudited)
Net asset value, beginning of period .. $ 22.74 $ 20 .16
----------- ----------
Income from investment operations:
Net investment income(A,B)........... 0 .17 0 .28
Net gains (losses) on securities
(both realized and
unrealized)(A) ..................... 2 .04 3 .31
----------- ----------
Total income (loss) from investment
operations ............................ 2 .21 3 .59
----------- ----------
Less distributions:
Dividends from net
investment income .................. (0 .28) (0 .25)
Distributions from net realized
gains on securities ................ (0 .61) (0 .76)
----------- ----------
Total distributions ................... (0 .89) (1 .01)
----------- ----------
Net asset value, end of period ........ $ 24.06 $ 22.74
=========== ==========
Total return .......................... 9 .94% 18 .44%
=========== ==========
Ratios and supplemental data:
Net assets, end of period
(in thousands) ...................... $ 4,529,671 $2,586,410
Ratios to average net assets (annualized):
Expenses, net of waivers(A) ... 0 .82% 0 .85%
Expenses, before waivers(A) ... 0 .82% 0 .85%
Net investment income, net
of waivers(A) ................. 1 .56% 1 .61%
Net investment income (loss)
before waivers(A) ............. 1 .56% 1 .61%
Portfolio turnover rate(F) .......... 9%(D) 26%
(A) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the AMR Investment Services Large Cap Value Portfolio through February 28,
2002.
(B) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment
income per share.
(C) For the year ended October 31, 2003, the net investment income and net
gains (losses) on securities (both realized and unrealized) has been
restated from 0.20 and 3.16, respectively for Institutional Class and 0.10
and 3.11, respectively for PlanAhead Class.
(D) Not annualized.
(E) Annualized
(F) The Large Cap Value Fund invested all of its investable assets in its
corresponding Portfolio through February 28, 2002. Portfolio turnover rate
through February 28, 2002 was that of the Portfolio.
(G) Portfolio turnover rate is for the period from November 1, 2004 through
October 31, 2005.
23
Service Class
--------------------------------------
Six
Months Year May
Ended ended 31 to
- --------------------------------------------- April 30, October October
2005 2004 2003 2002 2007 31, 2006 31, 2005
- --------- -------- -------- --------- ----------- -------- ---------
(unaudited)
$ 17 .54 $ 15 .05 $ 12 .09 $ 14 .00 $ 22 .64 $ 20 .13 $ 19 .33
- --------- -------- -------- --------- -------- -------- ---------
0 .27 0 .23 0 .22(C) 0 .25 0 .14 0 .26 0 .01
2 .58 2 .49 2 .99(C) (1 .74) 2 .03 3 .27 0 .79
- --------- -------- -------- --------- -------- -------- ---------
2 .85 2 .72 3 .21 (1 .49) 2 .17 3 .53 0 .80
- --------- -------- -------- --------- -------- -------- ---------
(0 .23) (0 .23) (0 .25) (0 .25) (0 .23) (0 .26) --
-- -- -- (0 .17) (0 .61) (0 .76) --
- --------- -------- -------- --------- -------- -------- ---------
(0 .23) (0 .23) (0 .25) (0 .42) (0 .84) (1 .02) --
- --------- -------- -------- --------- -------- -------- ---------
$ 20 .16 $ 17 .54 $ 15 .05 $ 12 .09 $ 23 .97 $ 22 .64 $ 20 .13
========= ======== ======== ========= ======== ======== =========
16 .33% 18 .26% 26 .99% (11 .13)% 9 .82% 18.18% 4 .14%(D)
========= ======== ======== ========= ======== ======== =========
$ 526,357 $ 51,489 $ 21,331 $ 15,941 $ 82,394 $ 39,077 $ 11,604
0 .86% 0 .94% 0 .95% 0 .93% 1 .07% 1 .09% 1 .14%(E)
0 .86% 0 .94% 0 .95% 0 .93% 1 .07% 1 .09% 1 .77%(E)
1 .30% 1 .21% 1 .57% 1 .53% 1 .27% 1 .39% 1 .72%(E)
1 .30% 1 .21% 1 .57% 1 .53% 1 .28% 1 .39% 1 .09%(E)
25% 29% 27% 34% 9%(D) 26% 25%(G)
AMR Class
- ---------------------------------------------------------------------------
Six Months Year Ended October 31
Ended April ----------------------------------------------------------
30, 2007 2006 2005 2004 2003 2002
- ----------- ---------- ---------- ---------- ---------- --------
(unaudited)
$ 23 .55 $ 20 .78 $ 18 .02 $ 15 .44 $ 12 .40 $ 14 .34
---------- ---------- -------- ---------- -------- --------
0 .21 0 .35 0 .31 0 .30 0 .29 0 .31)
2 .13 3 .47 2 .73 2 .58 3 .06 (1 .75)
---------- ---------- -------- -------- -------- --------
2 .34 3 .82 3 .04 2 .88 3 .35 (1 .44)
---------- ---------- -------- -------- -------- --------
(0 .35) (0 .29) (0 .28) (0 .30) (0 .31) (0 .33)
(0 .610) (0 .76) -- -- -- (0 .17)
---------- ---------- -------- -------- -------- --------
(0 .96) (1 .05) (0 .28) (0 .30) (0 .31) (0 .50)
---------- ---------- -------- -------- -------- --------
$ 24 .93 $ 23 .55 $ 20 .78 $ 18 .02 $ 15 .44 $ 12 .40
========== ========== ======== ======== ======== ========
10.18% 19.08% 16.95% 18.89% 27.64% (10.62)%
========== ========== ======== ======== ======== ========
$1,033,918 $1,024,899 $848,219 $696,206 $598,869 $511,287
0 .32% 0 .34% 0 .35% 0 .39% 0 .36% 0 .36%
0 .32% 0 .34% 0 .35% 0 .39% 0 .36% 0 .36%
2 .12% 2 .18% 1 .87% 1 .79% 2 .13% 2 .06%
2 .12% 2 .18% 1 .87% 1 .79% 2 .13% 2 .06%
9%(D) 26% 25% 29% 27% 34%
23
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT
AGREEMENT AND INVESTMENT ADVISORY AGREEMENTS
(UNAUDITED)
In prior years, the Board of Trustees ("Board" or "Trustees") typically
has considered the annual renewal of the existing Management Agreement between
American Beacon Advisors, Inc. (the "Manager") and the American Beacon Funds
(the "Trust"), on behalf of the Large Cap Value Fund (the "Fund"), and each
Investment Advisory Agreement between the Manager and a sub-advisor at the Board
meeting held in the first quarter of each year. At the November 15, 2006
meeting, the Board decided to conduct these annual renewals at their second
quarter meeting each year to enable the Trustees to consider more year-end data
in their deliberations. At the March 8, 2007 Board meeting, the Board considered
renewal of the Management and Investment Advisory Agreements on an interim basis
until the Board meeting scheduled for the second quarter, at which meeting the
Board would perform a comprehensive review of factors relevant to an annual
renewal.
In connection with the interim renewal, the Board, with the assistance of
independent legal counsel, requested and received certain relevant information
from the Manager. Further, the Board took into consideration information
furnished for the Board's review and consideration throughout the year at
regular Board and Investment Committee meetings. The Trustees considered, among
other materials, responses by the Manager to inquiries requesting:
- - an explanation, if applicable, of any deterioration in longer-term
performance by the Fund or sub-advisor since the last contract renewal and
any remedial measures the Manager has taken or intends to take;
- - the Manager's and each sub-advisor's fee rate schedule for the Fund and
whether the Manager intends to continue any current fee waivers or
reimbursements;
- - an explanation of any significant change in the Fund's expense ratio since
the last contract renewal and any actions the Manager has taken or intends
to take;
- - a description of any significant changes (actual or anticipated) to
personnel and the reasons for such changes;
- - a discussion of any material developments at the Fund's sub-advisors
relevant to the Fund;
- - a discussion of any material compliance problems encountered by the
Manager or the sub-advisors and remedial actions;
- - a summary of any material past, pending or anticipated litigation or
regulatory proceedings involving the firm or its personnel, including the
results of any recent regulatory examination or independent audit;
- - information regarding material changes to the Manager's and sub-advisors'
codes of ethics and insider trading policies; and
- - any material changes to the Manager's or sub-advisors' information
provided in connection with the last annual contract renewal.
The Trustees also received a memorandum from their legal counsel detailing
the Board's responsibilities pertaining to the renewal of the Management and
Investment Advisory Agreements. This memorandum explained the regulatory
requirements surrounding the Trustees' process for evaluating investment
advisors and the terms of the contracts.
Provided below is an overview of the primary factors the Board considered
at its March 2007 meeting. The Board did not identify any particular information
that was most relevant to its consideration to renew the Management and
Investment Advisory Agreements, and each Trustee may have afforded different
weight to the various factors. The Board determined that certain factors
typically considered in connection with an annual renewal were not material with
respect to an interim renewal. As such, the following factors were not
considered by the Board and were deferred to the next regular Board meeting to
be considered in connection with the annual renewal:
24
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT
AGREEMENT AND INVESTMENT ADVISORY AGREEMENTS
(UNAUDITED)
- the profits realized by the Manager and the sub-advisors and their
affiliates from their relationship with the Fund;
- the extent to which economies of scale may be realized as the Fund
grows;
- whether the level of fees reflects those economies of scale for the
benefit of the Fund's investors;
- comparisons of services and fees with contracts entered into by the
Manager and a sub-advisor or their affiliates with other clients
(such as pension funds and other institutional investors); and
- ancillary benefits to be realized by the Manager and the
sub-advisors as a result of the relationship with the Fund.
In determining whether to renew the Management and Investment Advisory
Agreements on an interim basis, the Trustees considered the best interests of
the Fund. The following considerations and conclusions are applicable to the
Fund.
Cost of Services. The Board considered that the fee rate schedules for the
Manager and most sub-advisors had not changed since the last contract renewal.
The Trustees also considered that Barrow, Hanley, Mewhinney & Strauss, Inc.
("Barrow") had eliminated the last break point on its fee rate schedule, but
that Barrow's combined fee rate for the Fund under its management was still
among the lowest fees charged by a sub-advisor. The Board considered that, in
many cases, the Manager has negotiated the lowest sub-advisory fee a sub-advisor
charges for any comparable client accounts. In determining whether to renew the
Investment Advisory Agreements, the Board considered that for purposes of
determining the fee charged to the Fund, the fee schedule to each Investment
Advisory Agreement specifies that all other assets managed by a sub-advisor on
behalf of AMR Corporation and its pension plans shall be considered where
applicable. Thus, the Fund is able to receive additional break point benefits
resulting from the sub-advisor's management of a larger pool of assets.
Nature, Extent and Quality of Services. With respect to the renewal of the
Management Agreement, the Trustees considered that the Manager continues to
provide high-quality services to the Fund at a low cost to investors and
provides a comprehensive compliance program for the Fund. Additionally, the
Manager allocates the assets of the Fund among the Fund's sub-advisors, and
monitors and evaluates the performance of the sub-advisors. Based on this
information, the Board concluded that the nature, extent and quality of the
management and advisory services provided by the Manager and each sub-advisor
were appropriate for the Fund and, thus, supported a decision to renew the
Management and each Investment Advisory Agreement on an interim basis.
Investment Performance. The Board considered the performance reports and
discussions with management at Board and Committee meetings throughout the year.
The Board also considered information provided by the Manager regarding
deterioration in the Fund's or sub-advisor's longer-term performance as a result
of underperformance for the 2006 calendar year.
In considering the renewal of the Management Agreement with the Manager
and the Investment Advisory Agreements with Hotchkis and Wiley Capital
Management, LLC ("Hotchkis"), the Trustees considered that Hotchkis
underperformed the sub-advisor's respective benchmark index for the 2006
calendar year, but that the Fund's performance exceeded that of the respective
Lipper Index. The other sub-advisors to the Fund outperformed or only slightly
underperformed their respective benchmark index for the 2006 calendar year.
Based on these considerations and those noted above, the Board determined
that the Fund and its shareholders would benefit from the Manager's and the
sub-advisors' continued management of the Fund until the next regular Board
meeting and approved the renewal of the Agreements on an interim basis until the
next regular Board meeting.
25
(AMERICAN BEACON FUNDS (SM) LOGO)
DELIVERY OF DOCUMENTS
To reduce expenses, your financial institution may mail only one copy of the
Prospectus, Annual Report and Semi-Annual Report to those addresses shared by
two or more accounts. If you wish to receive individual copies of these
documents, please contact your financial institution. Delivery of individual
copies will commence thirty days after receiving your request.
If you invest in the Fund through a financial institution, you may be able to
receive the Fund's regulatory mailings, such as the Prospectus, Annual Report
and Semi-Annual Report, by e-mail. If you are interested in this option, please
go to www.icsdelivery.com and search for your financial institution's name or
contact your financial institution directly.
TO OBTAIN MORE INFORMATION ABOUT THE FUND:
[KEYBORD]
BY E-MAIL:
american_beacon.funds@ambeacon.com
[MOUSE]
ON THE INTERNET:
Visit our website at www.americanbeaconfunds.com
[TELEPHONE]
BY TELEPHONE:
Institutional Class
Call (800) 658-5811
AMR Class(SM)
Call (800) 345-2345
PlanAhead Class(R) and Service Class
Call (800) 388-3344
[LETTER BOX]
BY MAIL:
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
In addition to the Schedule of Investments provided in each semi-annual and
annual report, the Fund files a complete schedule of its portfolio holdings with
the Securities and Exchange Commission ("SEC") on Form N-Q as of the first and
third fiscal quarters. The Fund's Forms N-Q are available on the SEC's website
at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC's
Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information
regarding the operation of the SEC's Public Reference Room may be obtained by
calling 1-800-SEC-0330. A complete schedule of the Fund's portfolio holdings is
also available on the Funds' website (www.americanbeaconfunds.com) approximately
thirty days after the end of each month.
AVAILABILITY OF PROXY VOTING POLICY AND RECORDS
A description of the policies and procedures the Fund uses to determine how to
vote proxies relating to portfolio securities is available in the Fund's
Statement of Additional Information, is available free of charge on the Fund's
website (www.americanbeaconfunds.com) and by calling 1-800-967-9009 or by
accessing the SEC's website at www.sec.gov. The Fund's proxy voting record for
the most recent year ended June 30 is filed annually with the SEC on Form N-PX.
The Fund's Forms N-PX are available on the SEC's website at www.sec.gov. The
Fund's proxy voting record may also be obtained by calling 1-800-967-9009.
FUND SERVICE PROVIDERS:
CUSTODIAN TRANSFER AGENT INDEPENDENT REGISTERED DISTRIBUTOR
STATE STREET BANK AND BOSTON FINANCIAL DATA PUBLIC ACCOUNTING FORESIDE FUND SERVICES
TRUST SERVICES FIRM Portland, Maine
Boston, Massachusetts Kansas City, Missouri ERNST & YOUNG LLP
Dallas, 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.
- ----------
American Airlines, Inc. is not responsible for investments made in the American
Beacon Funds. American Beacon Funds is a service mark of AMR Corporation.
American Beacon Large Cap Value Fund is a service mark of American Beacon
Advisors, Inc.
G U I D A N C E | V I S I O N | E X P E R I E N C E
(AMERICAN BEACON FUNDS (SM) LOGO)
Semi-Annual Report
April 30, 2007
SMALL CAP VALUE FUND
About American Beacon
Since 1986, American Beacon Advisors has offered a variety of products and
investment advisory services to numerous institutional and retail clients,
including a variety of mutual funds, corporate cash management, and separate
account management.
Our clients include defined benefit plans, defined contribution plans,
foundations, endowments, corporations, financial planners, and other
institutional investors. With American Beacon Advisors, you can put the
experience of a multi-billion dollar asset management firm to work for your
company.
Contents
President's Message ................................. 1
Market and Performance Overview ..................... 2
Schedule of Investments ............................. 7
Additional Information .............................. Back Cover
Any opinions herein, including forecasts, reflect our judgment as of the end of
the reporting period and are subject to change. Each advisor's strategies and
the Fund's portfolio composition will change depending on economic and market
conditions. This report is not a complete analysis of market conditions and
therefore, should not be relied upon as investment advice. Although economic and
market information has been compiled from reliable sources, American Beacon
Advisors, Inc. makes no representation as to the completeness or accuracy of the
statements contained herein.
Investing in the securities of small capitalization companies involves greater
risk and the possibility of greater price volatility than investing in larger
capitalization and more established companies.
American Beacon Funds April 30, 2007
(PHOTO OF DOUGLAS G. HERRING)
FELLOW SHAREHOLDERS,
I am pleased to present to you the American Beacon Small Cap Value Fund
Semi-Annual Report for the six months ended April 30, 2007.
Despite rising oil prices, a slump in housing and a slowing economy, the
U.S. equity markets still finished the last six months with positive returns.
This was helped in large part by strong corporate profits. The S&P 500 and Dow
Jones Industrial Average indices reported returns of 8.60% and 9.40%,
respectively, for this period.
The American Beacon Small Cap Value Fund-Institutional Class reported a
total return of 10.32% for this six-month period. The Fund's performance
exceeded the Lipper Small-Cap Value Funds Index. True to its value style, the
Fund will continue its focus on companies with above-average earnings growth
potential, below-average price-to-earnings ratios and below-average
price-to-book-value ratios, which we believe will benefit our shareholders over
the long term.
Please review the enclosed market overview, portfolio listings and detailed
financial data. As always, we welcome the opportunity to serve your financial
needs. To obtain further details about the American Beacon Funds family or to
access your account information, please visit our website at
www.americanbeaconfunds.com. Thank you for your continued confidence in the
American Beacon Small Cap Value Fund.
Sincerely,
/s/ Douglas G. Herring
----------------------------------------
Douglas G. Herring
President
American Beacon Funds
1
DOMESTIC EQUITY MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
Following strong earnings growth and solid equity returns last year,
equity markets got off to a rocky start in 2007. Investors were suddenly forced
to deal with slower earnings growth, the return of volatility and the sub-prime
mortgage fallout.
There was no shortage of concerns for the market in the first quarter,
though it is often said that the market climbs a "wall of worry."
- ECONOMIC SLOWDOWN - After enjoying 4-5% Gross Domestic Product
("GDP") growth for several years, investors had to come to grips
with sub-3% economic growth forecasts for 2007.
- SLOWING EARNINGS GROWTH - After 14 consecutive quarters of
double-digit growth, S&P 500 operating earnings were expected to
slow markedly. For 2007, earnings growth estimates of 6-7% are
back-end loaded with nearly one-half the year's growth expected in
the fourth quarter.
- SUB-PRIME MORTGAGE MELTDOWN - The rapid deterioration in sub-prime
delinquencies and a number of notable bankruptcies raised concerns
that the woes within housing could spread to other areas of the
economy.
- INFLATION CONCERNS OF THE FEDERAL RESERVE BANK ("FED") - Hopes for
near-term Fed rate cuts waned during 2007 as most inflation measures
remained above the Fed's comfort level.
- RISING LABOR COSTS - Hourly earnings grew at nearly their fastest
pace in 20 years, while productivity grew at its slowest pace since
early 1997. Very high profit margins were at risk.
- HIGHER COMMODITY PRICES - After some early moderation, oil,
gasoline, copper and other commodities continued to rise in price.
- THE RETURN OF MARKET VOLATILITY - Volatility, an indicator of
uncertainty, returned to the markets after a long hiatus.
While many of these issues weighed on market returns during the period,
none loomed larger than the rapid deterioration in the sub-prime mortgage market
and its spillover effects on the broader housing market and economy in general.
Sub-prime mortgages became a dominant theme for the market because of how
rapidly they have deteriorated. They have also become the central point of
debate between bullish forecasters who argue that the woes of the sub-prime
market are contained versus those who fear a contagion throughout the credit
markets and the broader economy.
The volume of sub-prime issuance reached alarming levels in the past few
years. There were over $1.8 trillion in sub-prime mortgages originated from 2004
- - 2006, more than the previous 10 years combined and equal to approximately a
quarter of all mortgage issuance. Mortgage delinquencies rose rapidly in all
branches of mortgage lending.
Adjustable rate loans, low-documentation (or "liar loans") and other
non-traditional mortgages were also widespread in the prime segment of the
market. Rate resets, reduced investor appetite for these exotic mortgages, and
increased regulatory scrutiny are all combining to tighten the very loose
lending environment of the past several years. A robust housing market has been
the key driver of consumer spending and employment trends for many years.
Consumers, which make up 70% of overall spending, have extracted large amounts
of equity from their homes due to low mortgage rates. If the 'housing ATM via
refinancing' for consumers is coming to an end, there could be a negative growth
surprise coming for investors and the economy. Home equity withdrawal has indeed
been reduced sharply, and it is likely that we may see reduced consumption.
While the problems within the sub-prime market will negatively affect
certain lenders and consumers, the losses incurred are not likely the greatest
threat. The larger concern to equity markets could be a re-pricing of risk and
tightening of credit conditions across the spectrum. Even though there is no
direct connection between sub-prime mortgages and other markets, if sub-prime
woes prompt investors to demand higher risk premiums (wider credit spreads),
weakness in both the bond and stock markets could result.
Looking at the credit markets more broadly, we have not seen substantial
evidence of any contagion from sub-prime as credit spreads and lending
restrictions remained near historic lows. The enormous liquidity and leverage
injected by foreign buyers, hedge funds, and private equity funds has made the
turning point of this credit cycle difficult to predict, even for the Fed. Also,
the complexity of many new financial "innovations," including collateralized
debt obligations and credit default swaps, has made it difficult to assess
credit risk. The long-standing cycles
2
DOMESTIC EQUITY MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
of the economy and credit, however, are still intact, and a less benign credit
environment appears likely to follow the loose and liquid conditions of the past
several years.
Broadly speaking, the equity market continued to be supported by a fair
level of valuations and strong earnings growth (largely due to extraordinary
profit margins) during the period. The beginnings of a negative credit cycle
appear to have taken hold in the residential mortgage market as lending and
regulatory standards have begun to tighten. How far the mortgage credit cycle
extends to the rest of the economy and the pricing of risk more broadly remains
to be seen.
3
PERFORMANCE OVERVIEW
AMERICAN BEACON SMALL CAP VALUE FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the Small Cap Value Fund returned 10.32% for
the six months ended April 30, 2007, outperforming the Russell 2000 Value Index
("Index") return of 6.36% and the Lipper Small-Cap Value Funds Index return of
9.54% for the same period.
ANNUALIZED TOTAL
RETURNS
PERIODS ENDED 4/30/07
-------------------------------------------------
SINCE
6 MONTHS* 1 YEAR 5 YEARS INCEPTION
--------- ------ ------- ---------
Institutional Class (1,5) ................ 10.32% 10.27% 14.41% 15.27%
PlanAhead Class (1,2,5) .................. 10.18% 10.03% 14.14% 14.98%
Service Class (1,3,5) .................... 10.02% 9.72% 13.88% 14.82%
AMR Class (1,2,5) ........................ 10.50% 10.60% 14.72% 15.58%
Lipper Small-Cap Value Funds Index (4) ... 9.54% 10.32% 13.77% 13.61%
Russell 2000 Value Index (4) ............. 6.36% 11.23% 13.06% 13.59%
* Not annualized
1. Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated, and current performance may be lower or
higher than the performance data quoted. To obtain performance as of the
most recent month end, please visit www.americanbeaconfunds.com or call
1-800-967-9009. Fund performance in the table above does not reflect the
deduction of taxes a shareholder would pay on distributions or the
redemption of shares.
2. Fund performance for the since inception period represents the total
returns achieved by the Institutional Class from 12/31/98 up to 3/1/99,
the inception date of the PlanAhead and AMR Classes, and the returns of
the PlanAhead and AMR Classes since inception of these Classes. Expenses
of the PlanAhead 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 PlanAhead Class been in existence since 12/31/98. Expenses of the
AMR Class are lower than those of the Institutional Class. As a result,
total returns shown may be lower than they would have been had the AMR
Class been in existence since 12/31/98. A portion of the fees charged to
the Service Class of the Fund was waived through 2004. Performance prior
to waiving fees was lowr than the actual returns shown for periods through
2004.
3. Fund performance for the five-year period represents the total returns
achieved by the PlanAhead Class from 5/1/02 up to 5/1/03 (the inception
date of the Service Class), and the returns of the Service Class since
5/1/03. Fund performance for the since inception period represents the
total returns achieved by the Institutional Class from 12/31/98 up to
3/1/99, the returns of the PlanAhead Class from 3/1/99 up to 5/1/03 and
the returns of the Service Class since its inception. Expenses of the
Service Class are higher than those of the Institutional and PlanAhead
Classes. As a result, total returns shown may be higher than they would
have been had the Service Class been in existence since 12/31/98.
4. Russell 2000(R) Value Index is a registered trademark of Frank Russell
Company. The Russell 2000 Value Index is an unmanaged index of those
stocks in the Russell 2000 Index with below-average price-to-book ratios
and below-average forecasted growth values. The Lipper Small-Cap Value
Funds Index tracks the results of the 30 largest mutual funds in the
Lipper Small-Cap Value Funds category. Lipper is an independent mutual
fund research and ranking service. One cannot directly invest in an index.
5. The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional, PlanAhead, Service and AMR Class
shares was 0.85%, 1.09%, 1.37% and 0.58%, respectively. The expense ratios
above may vary from the expense ratios presented in other sections of this
report that are based on expenses incurred during the period covered by
this report.
The Fund outperformed the Index in eight of ten sectors as both stock
selection and sector allocation added value to the Fund's relative performance.
Holdings in the Financials, Industrials, and Information Technology
sectors were a significant source of excess performance. Top contributors in
Financials included American Financial Group (up 11.2%), 21st Century Insurance
(up 33.5%), and Highland Hospitality (up 41.9%). In the Industrials sector,
positions in AGCO (up 56.0%) and Navistar International (up 63.6%) were the
major contributors. Avnet (up 52.6%) and SABRE Group Holdings (up 29.4%) were
responsible for a large portion of the excess performance in the Information
Technology sector.
The Fund's significant underweighting in the Financials sector, the worst
performing sector of the Index, generated positive relative performance. An
overweight in the Industrials sector also provided positive performance relative
to the Index.
The sub-advisors continue to focus on uncovering investment opportunities
through stock selection that should benefit the Fund's performance over the
longer term.
4
PERFORMANCE OVERVIEW
AMERICAN BEACON SMALL CAP VALUE FUND(SM)
APRIL 30, 2007 (UNAUDITED)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
Valassis Communications, Inc. ........... 0.9%
Con-way, Inc. ........................... 0.9%
Ingram Micro, Inc. ...................... 0.9%
The Men's Wearhouse, Inc. ............... 0.8%
Lubrizol Corp. .......................... 0.7%
Flowserve Corp. ......................... 0.7%
Great Plains Energy, Inc. ............... 0.7%
Plexus Corp. ............................ 0.7%
Brunswick Corp. ......................... 0.6%
Vishay Intertechnology, Inc. ............ 0.6%
SECTOR ALLOCATION
% OF
EQUITIES
--------
Financials .............................. 24.3%
Industrials ............................. 19.5%
Consumer Discretionary .................. 19.4%
Information Technology .................. 12.9%
Materials ............................... 6.7%
Utilities ............................... 5.2%
Energy .................................. 5.2%
Health Care ............................. 3.5%
Consumer Staples ........................ 2.8%
Telecommunication Services .............. 0.5%
5
FUND EXPENSES
AMERICAN BEACON SMALL CAP VALUE FUND(SM)
APRIL 30, 2007 (UNAUDITED)
FUND EXPENSE EXAMPLE
As a shareholder of the Fund, you incur two types of costs: (1)
transaction costs and (2) ongoing costs, including management fees,
administrative service fees, distribution (12b-1) fees, and other Fund expenses.
The examples below are intended to help you understand the ongoing cost (in
dollars) of investing in the Fund and to compare these costs with the ongoing
costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the
beginning of the period in each Class and held for the entire period from
November 1, 2006 through April 30, 2007.
ACTUAL EXPENSES
The "Actual" lines of the table provide information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading "Expenses Paid During Period" to estimate
the expenses you paid on your account during this period. Shareholders of the
PlanAhead and Institutional Classes that invest in the Fund through an IRA may
be subject to a custodial IRA fee of $12 that is typically deducted each
December. If your account was subject to a custodial IRA fee during the period,
your costs would have been $12 higher.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" lines of the table provide information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed 5% per year rate of return before expenses (not the
Fund's actual return). You may compare the ongoing costs of investing in the
Fund with other funds by contrasting this 5% hypothetical example and the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period. Shareholders
of the PlanAhead and Institutional Classes that invest in the Fund through an
IRA may be subject to a custodial IRA fee of $12 that is typically deducted each
December. If your account was subject to a custodial IRA fee during the period,
your costs would have been $12 higher.
You should also be aware that the expenses shown in the table highlight
only your ongoing costs and do not reflect any transaction costs charged by the
Fund. Similarly, the expense examples for other funds do not reflect any
transaction costs charged by those funds, such as sales charges (loads),
redemption fees or exchange fees. Therefore, the "Hypothetical" lines of the
table are useful in comparing ongoing costs only and will not help you determine
the relative total costs of owning different funds. If you were subject to any
transaction costs during the period, your costs would have been higher.
BEGINNING ENDING
ACCOUNT ACCOUNT EXPENSES PAID
VALUE VALUE DURING PERIOD*
11/1/06 4/30/07 11/1/06-4/30/07
---------- ---------- ---------------
INSTITUTIONAL CLASS
Actual $ 1,000.00 $ 1,103.22 $ 4.22
Hypothetical $ 1,000.00 $ 1,020.78 $ 4.06
(5% return before expenses)
PLANAHEAD CLASS
Actual $ 1,000.00 $ 1,101.82 $ 5.47
Hypothetical $ 1,000.00 $ 1,019.59 $ 5.26
(5% return before expenses)
SERVICE CLASS
Actual $ 1,000.00 $ 1,100.20 $ 6.93
Hypothetical $ 1,000.00 $ 1,018.20 $ 6.66
(5% return before expenses)
AMR CLASS
Actual $ 1,000.00 $ 1,104.97 $ 2.82
Hypothetical $ 1,000.00 $ 1,022.12 $ 2.71
(5% return before expenses)
* Expenses are equal to the Fund's annualized expense ratios for the
six-month period of 0.81%, 1.05%, 1.33% and 0.54% for the Institutional,
PlanAhead, Service and AMR classes respectively, multiplied by the average
account value over the period, multiplied by the number derived by
dividing the number of days in the most recent fiscal half-year (181) by
days in the year (365) to reflect the half year period.
6
AMERICAN BEACON SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
--------- ---------
(DOLLARS IN THOUSANDS)
COMMON STOCKS - 93.89%
COMMUNICATIONS - 0.16%
MEDIA - 0.16%
Entravision Communications Corp. ## + .............. 302,700 $ 2,970
McClatchy Co. + .................................... 97,800 2,826
---------
TOTAL COMMUNICATIONS .................................. 5,796
---------
CONSUMER DISCRETIONARY - 18.19%
AUTO COMPONENTS - 2.61%
Aftermarket Technology Corp. ## .................... 148,800 4,111
American Axle & Manufacturing Holdings, Inc. + ..... 712,200 19,906
ArvinMeritor, Inc. + ............................... 499,800 10,321
Bandag, Inc., A Shares ............................. 3,500 176
BorgWarner, Inc. ................................... 43,100 3,358
Gentex Corp. + ..................................... 392,500 6,987
Keystone Automotive Industries, Inc. ## + .......... 99,400 3,306
Lear Corp. ## ...................................... 563,300 20,684
Modine Manufacturing Co. ........................... 254,200 5,880
Tenneco, Inc. ## + ................................. 176,000 5,271
TRW Automotive Holdings Corp. ## ................... 358,900 13,301
---------
93,301
---------
HOTELS, RESTAURANTS & LEISURE - 1.35%
CBRL Group, Inc. + ................................. 193,497 8,626
CEC Entertainment, Inc. ## ......................... 63,800 2,659
JAKKS Pacific, Inc. ## + ........................... 196,500 4,722
Landry's Restaurants, Inc. + ....................... 281,700 8,367
Live Nation, Inc. ## + ............................. 159,900 3,244
Lodgian, Inc. ## ................................... 495,000 6,841
Morton's Restaurant Group, Inc. ## ................. 154,000 2,592
Red Lion Hotels Corp. ## ........................... 79,800 1,017
Ruby Tuesday, Inc. + ............................... 28,400 760
Speedway Motorsports, Inc. ......................... 121,500 4,714
Sunterra Corp. ## + ................................ 285,200 4,560
---------
48,102
---------
HOUSEHOLD DURABLES - 2.93%
Beazer Homes USA, Inc. + ........................... 178,400 5,955
Blyth, Inc. ........................................ 25,600 668
Champion Enterprises, Inc. ## + .................... 1,117,000 11,483
Furniture Brands International, Inc. + ............. 916,550 14,738
Helen of Troy Ltd. ## + ............................ 369,900 8,397
M.D.C. Holdings, Inc. + ............................ 321,173 16,463
Meritage Homes Corp. ## + .......................... 46,800 1,629
Russ Berrie and Company, Inc. ## ................... 76,000 1,142
The Ryland Group, Inc. + ........................... 131,000 5,803
Standard Pacific Corp. + ........................... 19,100 398
Tempur-Pedic International, Inc. + ................. 336,200 8,731
The Toro Co. + ..................................... 161,720 8,127
Tupperware Corp. + ................................. 427,700 $ 12,027
WCI Communities, Inc. ## ........................... 418,300 9,136
---------
104,697
---------
INTERNET & CATALOG RETAIL - 0.17%
School Specialty, Inc. ## + ........................ 183,100 6,039
---------
LEISURE EQUIPMENT & PRODUCTS - 0.86%
Brunswick Corp. + .................................. 708,600 23,214
Polaris Industries, Inc. + ......................... 129,600 6,549
Thor Industries, Inc. .............................. 27,800 1,107
---------
30,870
---------
MEDIA - 1.49%
Belo Corp. + ....................................... 373,100 7,190
Cinemark Holdings, Inc. ## ......................... 540 10
Courier Corp. + .................................... 70,999 2,826
Cox Radio, Inc. ## + ............................... 270,900 3,825
Dow Jones & Co., Inc. + ............................ 92,660 3,366
Entercom Communications Corp. + .................... 234,870 6,515
Getty Images, Inc. ## .............................. 31,380 1,632
Hearst-Argyle Television, Inc. ..................... 75,790 2,018
Journal Communications, Inc. ....................... 336,500 4,539
Lin TV Corp. ## + .................................. 17,675 282
Media General, Inc. + .............................. 87,400 3,211
Meredith Corp. + ................................... 93,210 5,399
Scholastic Corp. ## ................................ 113,400 3,501
Westwood One, Inc. + ............................... 1,318,100 8,976
---------
53,290
---------
MULTILINE RETAIL - 0.99%
BJ's Wholesale Club, Inc. ## ....................... 668,450 23,081
Fred's, Inc. + ..................................... 564,050 8,145
Tuesday Morning Corp. + ............................ 292,700 4,086
---------
35,312
---------
SPECIALTY RETAIL - 6.53%
Aeropostale, Inc. ## ............................... 105,700 4,350
American Greetings Corp. + ......................... 393,800 10,022
Asbury Automotive Group, Inc. ...................... 163,800 4,713
Big 5 Sporting Goods Corp. + ....................... 383,100 9,807
The Buckle, Inc. + ................................. 111,600 3,975
The Cato Corp. ..................................... 216,300 4,674
Charlotte Russe Holding, Inc. ## ................... 41,600 1,137
Charming Shoppes, Inc. ## + ........................ 863,620 10,795
Circuit City Stores, Inc. + ........................ 71,300 1,244
Conn's, Inc. ## + .................................. 86,500 2,245
Dress Barn, Inc. ## + .............................. 506,300 10,080
Ethan Allen Interiors, Inc. + ...................... 338,050 11,933
The Finish Line, Inc., Class A Shares + ............ 392,000 5,171
Foot Locker, Inc. .................................. 118,700 2,824
Genesco, Inc. ## + ................................. 141,800 7,186
See accompanying notes
7
AMERICAN BEACON SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
--------- ---------
(DOLLARS IN THOUSANDS)
Group 1 Automotive, Inc. + .................. 379,900 $ 15,576
HOT Topic, Inc. ## .......................... 211,300 2,386
Insight Enterprises, Inc. ## + .............. 555,300 11,006
Jos. A. Bank Clothiers, Inc. ## + ........... 176,170 6,807
Lithia Motors, Inc. + ....................... 67,400 1,816
MarineMax, Inc. ## + ........................ 378,800 7,512
The Men's Wearhouse, Inc. ................... 670,600 29,017
OfficeMax, Inc. ............................. 67,800 3,337
Pacific Sunwear of California ## ............ 261,100 5,465
Regis Corp. ................................. 243,480 9,308
Rent-A-Center, Inc. ## + .................... 604,450 16,828
Sonic Automotive, Inc., A Shares ............ 593,500 16,968
Stage Stores, Inc. .......................... 96,320 2,124
United Auto Group, Inc. + ................... 22,500 456
Williams-Sonoma, Inc. + ..................... 28,900 1,018
Zale Corp. ## + ............................. 494,750 13,809
---------
233,589
---------
TEXTILES & APPAREL - 1.26%
Columbia Sportswear Co. + ................... 13,056 817
Jones Apparel Group, Inc. + ................. 72,500 2,421
Kenneth Cole Productions, Inc. + ............ 181,100 4,584
K-Swiss, Inc. + ............................. 179,539 5,185
New York & Co., Inc. ## ..................... 392,400 5,482
Steven Madden Ltd. .......................... 36,900 1,098
The Timberland Co. ## + ..................... 450,350 11,623
The Warnaco Group, Inc. ## .................. 488,300 13,809
---------
45,019
---------
TOTAL CONSUMER DISCRETIONARY .................. 650,219
---------
CONSUMER STAPLES - 2.68%
FOOD & DRUG RETAILING - 1.05%
Agrium, Inc. ................................ 199,400 7,723
Casey's General Stores, Inc. ................ 244,900 6,159
Longs Drug Stores Corp. ..................... 264,050 14,454
Pathmark Stores, Inc. ## + .................. 349,400 4,410
Ruddick Corp. + ............................. 63,400 1,904
Winn-Dixie Stores, Inc. ## .................. 168,200 2,918
---------
37,568
---------
FOOD PRODUCTS - 1.57%
Del Monte Foods Co. ......................... 1,416,900 16,436
J&J Snack Foods Corp. ....................... 20,100 783
The JM Smucker Co. + ........................ 39,410 2,200
Lance, Inc. + ............................... 134,510 2,977
Pilgrim's Pride Corp. + ..................... 64,660 2,361
Ralcorp Holdings, Inc. ## + ................. 218,510 14,380
Sanderson Farms, Inc. + ..................... 147,200 5,819
Sensient Technologies Corp. ................. 194,150 5,083
Smithfield Foods, Inc. ## + ................. 200,900 $ 6,141
---------
56,180
---------
TOBACCO - 0.06%
Universal Corp. ............................. 31,200 1,955
---------
TOTAL CONSUMER STAPLES ........................ 95,703
---------
ENERGY - 4.89%
ENERGY EQUIPMENT & SERVICES - 2.08%
CARBO Ceramics, Inc. + ...................... 189,610 8,238
Dril-Quip, Inc. ## + ........................ 73,840 3,729
FMC Technologies, Inc. ## + ................. 19,100 1,354
Gulfmark Offshore, Inc. ## + ................ 20,900 1,001
Helmerich & Payne, Inc. + ................... 313,500 10,123
Oil States International, Inc. ## + ......... 467,130 15,850
Superior Well Services, Inc. ## + ........... 100,570 2,544
Tetra Technologies, Inc. ## + ............... 124,700 3,303
Tidewater, Inc. + ........................... 223,900 14,153
Unit Corp. ## ............................... 134,770 7,702
Universal Compression Holdings, Inc. ## ..... 93,900 6,251
---------
74,248
---------
OIL & GAS - 2.81%
Alon USA Energy, Inc. + ..................... 70,766 2,647
Berry Petroleum Co. + ....................... 263,100 8,961
Bronco Drilling Co., Inc. ## + .............. 348,300 6,297
Cabot Oil & Gas Corp. ....................... 37,120 1,352
Cimarex Energy Co. + ........................ 375,300 14,787
Encore Acquisition Co. ## + ................. 404,949 10,816
EXCO Resources, Inc. ## + ................... 948,800 15,930
Frontier Oil Corp. .......................... 45,000 1,590
The Houston Exploration Co. ## .............. 5,200 288
Penn Virginia Corp. ......................... 58,000 4,643
Pioneer Drilling Co. ## + ................... 460,600 6,315
Pogo Producing Co. + ........................ 129,600 6,255
Stone Energy Corp. ## ....................... 217,000 6,430
Tsakos Energy Navigation Ltd. + ............. 166,900 9,538
W&T Offshore, Inc. + ........................ 151,800 4,607
---------
100,456
---------
TOTAL ENERGY .................................. 174,704
---------
FINANCIALS - 22.79%
BANKS - 6.81%
Anchor BanCorp Wisconsin, Inc. .............. 49,838 1,342
Astoria Financial Corp. ..................... 368,200 9,779
BancorpSouth, Inc. .......................... 154,800 3,803
Bank of Hawaii Corp. ........................ 193,600 10,241
BankAtlantic Bancorp, Inc. + ................ 598,430 5,769
Cathay General Bancorp + .................... 51,800 1,699
Chemical Financial Corp. + .................. 161,431 4,315
See accompanying notes
8
AMERICAN BEACON SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
-------- ----------
(DOLLARS IN THOUSANDS)
Chittenden Corp. + .................................. 208,925 $ 6,071
Citizens Banking Corp. + ............................ 544,600 10,897
City National Corp. + ............................... 50,480 3,696
Columbia Banking System, Inc. ....................... 91,600 2,780
Community Bank System, Inc. + ....................... 211,400 4,334
Community Banks, Inc. + ............................. 84,546 1,998
Community Trust Bancorp, Inc. ## .................... 30,400 1,011
Corus Bankshares, Inc. + ............................ 224,774 3,779
Cullen/Frost Bankers, Inc. .......................... 158,824 8,127
CVB Financial Corp. + ............................... 542,747 6,442
Dime Community Bancshares, Inc. ..................... 45,800 610
Downey Financial Corp. + ............................ 136,100 9,112
F.N.B. Corp. + ...................................... 392,600 6,588
First Charter Corp. ................................. 52,600 1,154
First Indiana Corp. + ............................... 70,300 1,365
First Midwest Bancorp, Inc. ......................... 24,800 891
FirstFed Financial Corp. ## + ....................... 12,700 781
FirstMerit Corp. + .................................. 235,500 4,917
Flagstar Bancorp, Inc. + ............................ 355,700 4,197
Flushing Financial Corp. ............................ 114,900 1,787
Fulton Financial Corp. + ............................ 506,978 7,463
Greater Bay Bancorp ................................. 77,100 1,988
Harleysville National Corp. + ....................... 98,509 1,663
IBERIABANK Corp. .................................... 44,300 2,325
Independent Bank Corp. .............................. 83,500 1,378
International Bancshares Corp. ...................... 268,728 7,726
MAF Bancorp, Inc. ................................... 133,770 5,371
National Penn Bancshares, Inc. + .................... 150,896 2,798
NBT Bancorp, Inc. + ................................. 150,606 3,306
Old National Bancorp + .............................. 64,700 1,157
Pacific Capital Bancorp + ........................... 218,700 5,890
Park National Corp. + ............................... 72,900 6,471
PFF Bancorp, Inc. + ................................. 8,200 231
Provident Bankshares Corp. + ........................ 112,820 3,615
Provident Financial Services, Inc. + ................ 98,300 1,685
S&T Bancorp, Inc. + ................................. 9,164 298
Sky Financial Group, Inc. ........................... 220,889 6,019
The South Financial Group, Inc. + ................... 166,700 3,772
Sterling Bancshares, Inc. ........................... 250,050 2,858
Susquehanna Bancshares, Inc. + ...................... 325,600 7,254
TierOne Corp. ....................................... 71,900 1,747
TrustCo Bank Corp NY + .............................. 128,000 1,174
Trustmark Corp. ..................................... 332,560 8,849
United Bankshares, Inc. ............................. 75,671 2,535
Washington Federal, Inc. + .......................... 693,794 16,450
Webster Financial Corp. ............................. 296,600 13,184
Whitney Holding Corp. + ............................. 214,500 6,600
Wilmington Trust Corp. .............................. 50,380 2,038
--------
243,330
--------
DIVERSIFIED FINANCIALS - 3.68%
Affiliated Managers Group, Inc. ## + ................ 88,000 $ 10,351
AmeriCredit Corp. ## + .............................. 222,675 5,618
Apollo Investment Corp. + ........................... 450,900 9,906
Ares Capital Corp. .................................. 276,700 4,970
Asset Acceptance Capital Corp. ## + ................. 342,922 6,317
Assured Guaranty Ltd. ............................... 197,900 5,583
Asta Funding, Inc. + ................................ 183,800 8,038
CBRE Realty Finance, Inc. + ......................... 220,560 2,856
CompuCredit Corp. ## + .............................. 261,300 9,449
Cowen Group, Inc. ## + .............................. 128,200 2,152
Financial Federal Corp. + ........................... 238,750 6,274
IndyMac Bancorp, Inc. + ............................. 243,306 7,358
Investment Technology Group, Inc. ## + .............. 269,000 10,179
Knight Capital Group, Inc. ## + ..................... 804,230 13,028
MCG Capital Corp. + ................................. 590,200 10,399
Nelnet, Inc. + ...................................... 205,200 5,518
Piper Jaffray Co. ## ................................ 137,253 8,758
Raymond James Financial, Inc. ....................... 58,200 1,786
Texas Capital Bancshares, Inc. ## + ................. 144,400 2,933
--------
131,473
--------
INSURANCE - 8.47%
21st Century Insurance Group + ...................... 84,650 1,762
Alfa Corp. + ........................................ 78,803 1,414
American Equity Investment Life Holding Co. + ....... 379,700 5,183
American Financial Group, Inc. ...................... 230,400 8,126
American National Insurance Co. + ................... 11,600 1,514
Argonaut Group, Inc. ## ............................. 270,457 9,090
Aspen Insurance Holdings Ltd. ....................... 242,340 6,424
The Commerce Group, Inc. ............................ 319,900 10,432
Conseco, Inc. ## + .................................. 924,999 16,363
Delphi Financial Group, Inc. ........................ 518,750 22,151
Employers Holdings, Inc. ## ......................... 299,500 5,939
FBL Financial Group, Inc. ........................... 200,748 7,777
Great American Financial Resources, Inc. ............ 78,800 1,930
The Hanover Insurance Group, Inc. ................... 476,800 21,914
Harleysville Group, Inc. ............................ 167,821 5,125
HCC Insurance Holdings, Inc. ........................ 248,800 7,628
Horace Mann Educators Corp. ......................... 449,000 9,447
Infinity Property and Casualty Corp. ................ 139,998 6,511
KMG America Corp. ## ................................ 329,100 1,576
LandAmerica Financial Group, Inc. + ................. 70,700 5,681
Mercury General Corp. ............................... 259,800 14,068
The Midland Co. ..................................... 90,265 3,962
National Western Life Insurance Co. ................. 2,400 642
The Navigators Group, Inc. ## ....................... 179,700 9,181
Odyssey Re Holdings Corp. + ......................... 384,500 16,111
Ohio Casualty Corp. ................................. 352,040 11,138
See accompanying notes
9
AMERICAN BEACON SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
--------- --------
(DOLLARS IN THOUSANDS)
The Phoenix Companies, Inc. ........................... 240,600 $ 3,585
PMA Capital Corp. ## + ................................ 201,500 1,888
Presidential Life Corp. ............................... 154,800 2,943
ProAssurance Corp. ## ................................. 58,000 3,123
Protective Life Corp. ................................. 289,980 13,600
Quanta Capital Holdings Ltd. ## ....................... 265,200 565
Reinsurance Group of America, Inc. + .................. 253,300 15,783
Safety Insurance Group, Inc. + ........................ 113,100 4,531
Security Capital Assurance Ltd. ....................... 112,560 3,613
StanCorp Financial Group, Inc. + ...................... 394,900 18,797
Stewart Information Services Corp. + .................. 68,676 2,762
Triad Guaranty, Inc. ## + ............................. 196,000 8,665
United America Indemnity Ltd. ## ...................... 265,597 6,635
United Fire & Casualty, Co. ........................... 35,700 1,312
Unitrin, Inc. ......................................... 82,300 3,880
--------
302,771
--------
REAL ESTATE - 3.83%
Alexandria Real Estate Equities, Inc. ................. 19,570 2,072
American Financial Realty Trust + ..................... 769,700 8,159
Annaly Capital Management, Inc. ....................... 130,200 2,071
Anthracite Capital, Inc. .............................. 288,500 3,347
Anworth Mortgage Asset Corp. + ........................ 133,900 1,285
Bluegreen Corp. ## + .................................. 359,900 3,977
Brookfield Homes Corp. + .............................. 76,870 2,611
California Coastal Communities, Inc. + ................ 77,700 1,436
Capital Lease Funding, Inc. + ......................... 555,900 6,209
Corrections Corp of America ## + ...................... 49,939 2,837
Crystal River Capital, Inc. + ......................... 112,700 2,961
DiamondRock Hospitality Co. ........................... 433,500 7,929
Eagle Hospitality Properties Trust, Inc. .............. 196,000 2,597
Education Realty Trust, Inc. + ........................ 267,300 3,806
Equity Inns, Inc. + ................................... 521,300 8,914
Fieldstone Investment Corp. + ......................... 293,400 1,094
First Potomac Realty Trust + .......................... 114,800 2,963
Health Care Real Estate Investment Trust, Inc. ........ 52,520 2,376
Highland Hospitality Corp. + .......................... 509,000 9,696
Innkeepers USA Trust .................................. 230,000 4,041
Jones Lang LaSalle, Inc. .............................. 21,100 2,268
LaSalle Hotel Properties + ............................ 288,100 13,377
Lexington Realty Trust ................................ 441,890 9,231
MI Developments, Inc. ................................. 425,100 16,494
Mission West Properties, Inc. ......................... 183,300 2,680
Redwood Trust, Inc. ................................... 142,190 7,139
Strategic Hotel Capital, Inc. + ....................... 202,680 4,388
Thomas Properties Group, Inc. ......................... 49,400 $ 848
--------
136,806
--------
TOTAL FINANCIALS ........................................ 814,380
--------
HEALTH CARE - 3.28%
BIOTECHNOLOGY - 0.20%
Charles River Laboratories International, Inc. ## + ... 58,930 2,791
Invitrogen Corp. ## ................................... 65,110 4,263
--------
7,054
--------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.09%
Kinetic Concepts, Inc. ## ............................. 15,200 760
Medical Action Industries, Inc. ## .................... 112,800 2,570
--------
3,330
--------
HEALTH CARE PROVIDERS & SERVICES - 2.40%
Air Methods Corp. ## + ................................ 107,100 2,946
Apria Healthcare Group, Inc. ## + ..................... 185,700 5,894
Kindred Healthcare, Inc. ## + ......................... 196,800 6,872
LifePoint Hospitals, Inc. ## + ........................ 598,870 21,865
Magellan Health Services, Inc. ## ..................... 150,560 6,459
MAXIMUS, Inc. ......................................... 376,900 13,169
MDS, Inc. ............................................. 61,400 1,166
Option Care, Inc. + ................................... 460,763 6,294
Pediatrix Medical Group, Inc. ## + .................... 178,420 10,179
RehabCare Group, Inc. ## .............................. 234,400 3,839
Res-Care, Inc. ## ..................................... 230,900 4,133
Universal Health Services, Inc. ....................... 45,100 2,739
--------
85,555
--------
PHARMACEUTICALS - 0.59%
Aspreva Pharmaceuticals Corp. ## + .................... 350,300 7,920
Endo Pharmaceuticals Holdings, Inc. ## + .............. 30,800 953
KV Pharmaceutical Co. ## + ............................ 101,300 2,635
Sciele Pharma, Inc. ## + .............................. 389,000 9,616
--------
21,124
--------
TOTAL HEALTH CARE ....................................... 117,063
--------
INDUSTRIALS - 18.27%
AEROSPACE & DEFENSE - 1.25%
Alliant Techsystems, Inc. ## + ........................ 31,710 2,953
Armor Holdings, Inc. ## + ............................. 180,000 12,870
BE Aerospace, Inc. ## ................................. 267,100 9,789
Curtiss-Wright Corp. .................................. 106,500 4,589
Esterline Technologies Corp. ## + ..................... 150,400 6,276
Ladish Co., Inc. ## + ................................. 91,000 3,700
Moog, Inc. ## + ....................................... 68,200 2,900
United Industrial Corp. + ............................. 32,500 1,590
--------
44,667
--------
See accompanying notes
10
AMERICAN BEACON SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
--------- ---------
(DOLLARS IN THOUSANDS)
AIR FREIGHT & COURIERS - 0.47%
Ryder System, Inc. + ...................... 319,200 $ 16,803
---------
BUILDING PRODUCTS - 1.25%
Builders FirstSource, Inc. ## + ........... 159,300 2,570
Crane Co. ................................. 82,700 3,516
Drew Industries, Inc. ## + ................ 88,500 2,546
Griffon Corp. ## + ........................ 201,100 4,824
Insituform Technologies, Inc. ## + ........ 547,600 11,171
Lennox International, Inc. ................ 283,300 9,578
NCI Building Systems, Inc. ## + ........... 30,300 1,514
Simpson Manufacturing Co., Inc. + ......... 171,100 5,504
Universal Forest Products, Inc. + ......... 75,392 3,503
---------
44,726
---------
CHEMICALS - 0.13%
Pioneer Companies, Inc. ## + .............. 160,400 4,668
---------
COMMERCIAL SERVICES & SUPPLIES - 6.59%
American Ecology Corp. + .................. 128,100 2,863
Bowne & Co., Inc. ......................... 462,700 7,718
The Brink's Co. + ......................... 99,650 6,328
Career Education Corp. ## ................. 168,800 4,986
Casella Waste Systems, Inc. ## ............ 272,900 2,538
Central Parking Corp. + ................... 162,090 3,628
CheckFree Corp. ## + ...................... 25,190 848
Clean Harbors, Inc. ## + .................. 189,910 8,835
Con-way, Inc. ............................. 572,000 31,248
CSG Systems International, Inc. ## + ...... 291,370 7,803
Deluxe Corp. .............................. 364,100 13,781
Electro Rent Corp. ## + ................... 22,506 292
Ennis, Inc. + ............................. 89,300 2,183
Headwaters, Inc. ## + ..................... 274,900 5,957
Hudson Highland Group, Inc. ## ............ 30,500 497
John H. Harland Co. + ..................... 160,000 8,416
Kelly Services, Inc. + .................... 397,300 11,403
Kforce, Inc. ## + ......................... 427,700 5,872
Labor Ready, Inc. ## ...................... 325,700 7,068
LECG Corp. ## + ........................... 774,300 11,343
McGrath Rentcorp + ........................ 133,338 4,020
Navigant Consulting, Inc. ## + ............ 369,600 7,089
PeopleSupport, Inc. ## + .................. 92,800 1,167
PHH Corp. ## .............................. 216,700 6,609
Pre-Paid Legal Services, Inc. ## + ........ 100,400 5,728
The Providence Service Corp. ## + ......... 175,100 4,199
Spherion Corp. ## ......................... 649,300 5,552
Steelcase, Inc., A Shares + ............... 107,170 2,092
Tetra Tech, Inc. ## ....................... 55,300 1,151
United Stationers, Inc. ## + .............. 245,050 14,585
Valassis Communications, Inc. ## + ........ 1,707,100 $ 32,708
Waste Connections, Inc. ## + .............. 227,770 7,100
---------
235,607
---------
CONSTRUCTION & ENGINEERING - 0.56%
Comfort Systems USA, Inc. ................ 99,822 1,247
Granite Construction, Inc. ............... 19,910 1,200
Infrasource Services, Inc. ## ............ 96,800 3,231
KBR, Inc. ## ............................. 106,440 2,199
The Shaw Group, Inc. ## + ................ 372,350 12,075
---------
19,952
---------
DIVERSIFIED MANUFACTURING - 0.88%
Barnes Group, Inc. + ..................... 629,500 15,297
Kennametal, Inc. ......................... 231,250 16,317
---------
31,614
---------
ELECTRICAL EQUIPMENT - 1.04%
AO Smith Corp. ........................... 135,000 5,144
Brady Corp. + ............................ 203,200 6,677
II-VI, Inc. ## + ......................... 120,300 3,259
Regal-Beloit Corp. + ..................... 445,000 20,523
Thomas & Betts Corp. ## .................. 26,090 1,421
---------
37,024
---------
INDUSTRIAL CONGLOMERATES - 0.09%
Chemed Corp. ............................. 64,500 3,244
---------
MACHINERY - 3.13%
Actuant Corp. + .......................... 27,400 1,452
AGCO Corp. ## + .......................... 309,110 12,899
Albany International Corp. ............... 23,500 900
Blount International, Inc. ## + .......... 169,900 2,316
Briggs & Stratton Corp. + ................ 78,100 2,317
Flanders Corp. ## + ...................... 235,200 1,607
Flowserve Corp. .......................... 393,100 23,983
Harsco Corp. + ........................... 299,800 15,290
Kaydon Corp. + ........................... 388,300 18,456
Lincoln Electric Holdings, Inc. ## ....... 10,700 682
Miller Industries, Inc. ## ............... 29,100 678
Mueller Industries, Inc. ................. 231,210 7,584
Reliance Steel & Aluminum Co. + .......... 40,000 2,376
The Timken Co. + ......................... 596,400 19,669
Wabash National Corp. + .................. 110,100 1,713
---------
111,922
---------
MARINE - 0.76%
Alexander & Baldwin, Inc. + .............. 202,800 10,840
Hornbeck Offshore Services, Inc. ## + .... 42,700 1,351
Kirby Corp. ## ........................... 293,400 11,090
Overseas Shipholding Group, Inc. + ....... 54,000 3,823
---------
27,104
---------
See accompanying notes
11
AMERICAN BEACON SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
---------- ----------
(DOLLARS IN THOUSANDS)
RENTAL AUTO/EQUIPMENT - 0.45%
Avis Budget Group, Inc. ............................ 178,150 $ 5,011
United Rentals, Inc. ## + .......................... 324,800 10,881
----------
15,892
----------
ROAD & RAIL - 1.41%
Arkansas Best Corp. + .............................. 163,800 6,454
Covenant Transport, Inc. ## + ...................... 182,300 1,942
GATX Corp. ......................................... 17,000 833
Swift Transportation Co., Inc. ## .................. 486,153 15,207
Werner Enterprises, Inc. + ......................... 378,500 7,157
YRC Worldwide, Inc. ## + ........................... 474,100 18,864
----------
50,457
----------
TRADING COMPANIES & DISTRIBUTORS - 0.07%
MSC Industrial Direct Co., Inc. .................... 52,970 2,582
----------
TRANSPORT-SERVICES - 0.19%
Bristow Group, Inc. ## + ........................... 182,100 6,847
----------
TOTAL INDUSTRIALS ..................................... 653,109
----------
INFORMATION TECHNOLOGY - 12.10%
COMMUNICATIONS EQUIPMENT - 1.69%
Andrew Corp. ## .................................... 196,690 2,148
Avocent Corp. ## + ................................. 245,800 6,885
CommScope, Inc. ## + ............................... 240,000 11,196
Comtech Telecommunications Corp. ## + .............. 186,950 7,076
DSP Group, Inc. ## ................................. 73,400 1,355
Emulex Corp. ## + .................................. 398,470 8,360
Foundry Networks, Inc. ## + ........................ 510,920 7,725
Plantronics, Inc. + ................................ 166,700 4,186
Powerwave Technologies, Inc. ## + .................. 923,080 5,751
Symmetricom, Inc. ## + ............................. 11,900 97
Tekelec, Inc. ## + ................................. 387,850 5,562
----------
60,341
----------
COMPUTERS & PERIPHERALS - 0.56%
Avid Technology, Inc. ## + ......................... 139,230 4,629
Electronics for Imaging, Inc. ## + ................. 292,730 7,807
Mercury Computer Systems, Inc. ## + ................ 554,300 7,522
----------
19,958
----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 5.09%
Anixter International, Inc. ## ..................... 63,959 4,579
Arrow Electronics, Inc. ## ......................... 256,900 10,153
Benchmark Electronics, Inc. ## + ................... 760,100 16,099
Cree, Inc. ## + .................................... 70,500 1,438
Diebold, Inc. ...................................... 310,000 14,778
Global Imaging Systems, Inc. ## .................... 226,300 6,538
IKON Office Solutions, Inc. ........................ 685,200 10,250
Ingram Micro, Inc. ## .............................. 1,566,450 30,734
Littelfuse, Inc. ## + .............................. 337,200 $ 13,525
Methode Electronics, Inc. + ........................ 746,000 11,250
Mettler-Toledo International, Inc. ## .............. 16,100 1,572
MTS Systems Corp. .................................. 92,400 3,928
Multi-Fineline Electronix, Inc. ## + ............... 75,600 1,212
Park Electrochemical Corp. ......................... 60,500 1,667
PerkinElmer, Inc. .................................. 89,740 2,172
Plexus Corp. ## + .................................. 1,110,300 23,272
TTM Technologies, Inc. ## + ........................ 598,000 5,489
Vishay Intertechnology, Inc. ## .................... 1,392,800 23,190
----------
181,846
----------
INTERNET SOFTWARE & SERVICES - 0.50%
EarthLink, Inc. ## + ............................... 378,600 2,900
Netgear, Inc. ## + ................................. 177,595 5,969
NIC, Inc. + ........................................ 435,700 2,475
United Online, Inc. ................................ 463,080 6,682
----------
18,026
----------
IT CONSULTING & SERVICES - 0.68%
BearingPoint, Inc. ## + ............................ 429,000 3,149
Lionbridge Technologies ## + ....................... 364,500 1,852
Perot Systems Corp. ## ............................. 360,700 6,456
Phase Forward, Inc. ## ............................. 234,500 3,724
SI International, Inc. ## + ........................ 88,800 2,350
SRA International, Inc. ## + ....................... 46,890 1,145
SYNNEX Corp. ## + .................................. 129,700 2,536
Unisys Corp. ## + .................................. 384,600 3,015
----------
24,227
----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 2.38%
Actel Corp. ## ..................................... 222,300 3,254
Advanced Energy Industries, Inc. ## ................ 121,916 2,987
Brooks Automation, Inc. ## + ....................... 706,700 12,346
Cirrus Logic, Inc. ## .............................. 371,100 3,073
Cymer, Inc. ## ..................................... 52,000 2,106
Fairchild Semiconductor International, Inc. ## ..... 94,350 1,661
FEI Co. ## + ....................................... 163,900 6,097
Integrated Device Technology, Inc. ## .............. 117,850 1,765
Kulicke and Soffa Industries, Inc. ## .............. 373,700 3,729
Micrel, Inc. ## .................................... 227,100 2,850
Microsemi Corp. ## + ............................... 222,490 5,142
MKS Instruments, Inc. ## + ......................... 719,400 19,388
Omnivision Technologies, Inc. ## + ................. 230,485 3,116
Photronics, Inc. ## + .............................. 121,200 1,824
Rudolph Technologies, Inc. ## + .................... 176,900 3,055
Semtech Corp. ## ................................... 296,640 4,278
Teradyne, Inc. ## .................................. 482,960 8,428
----------
85,099
----------
SOFTWARE - 1.20%
Agile Software Corp. ## + .......................... 262,700 1,889
See accompanying notes
12
AMERICAN BEACON SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
----------- -----------
(DOLLARS IN THOUSANDS)
Computer Programs and Systems, Inc. + .............. 90,400 $ 2,879
Epicor Software Corp. ## + ......................... 257,900 3,740
EPIQ Systems, Inc. ## + ............................ 147,100 3,476
Fair Isaac Corp. ................................... 25,410 907
Mentor Graphics Corp. ## + ......................... 1,185,500 19,181
Novell, Inc. ## + .................................. 618,000 4,512
Sybase, Inc. ## + .................................. 263,620 6,377
-----------
42,961
-----------
TOTAL INFORMATION TECHNOLOGY .......................... 432,458
-----------
MATERIALS - 6.29%
CHEMICALS - 2.98%
Cytec Industries, Inc. ............................. 120,300 6,605
FMC Corp. .......................................... 233,920 17,996
Georgia Gulf Corp. + ............................... 815,500 13,024
H.B. Fuller Co. .................................... 213,000 5,446
International Flavors & Fragrances, Inc. ........... 55,500 2,701
Lubrizol Corp. + ................................... 411,100 24,641
Olin Corp. ......................................... 570,400 9,777
PolyOne Corp. ## ................................... 1,879,500 12,330
RPM International, Inc. ............................ 30,200 642
Tronox, Inc. + ..................................... 397,900 5,562
UAP Holding Corp. .................................. 37,800 1,046
Westlake Chemical Corp. + .......................... 229,200 6,690
-----------
106,460
-----------
CONSTRUCTION MATERIALS - 0.24%
Ameron International Corp. + ....................... 62,900 4,349
Florida Rock Industries, Inc. ...................... 19,500 1,348
U.S. Concrete, Inc. ## + ........................... 348,500 2,966
-----------
8,663
-----------
CONTAINERS & PACKAGING - 0.14%
AptarGroup, Inc. + ................................. 36,400 2,666
Silgan Holdings, Inc. .............................. 37,958 2,178
-----------
4,844
-----------
METALS & MINING - 2.51%
AMCOL International Corp. + ........................ 97,700 2,348
Century Aluminum Co. ## + .......................... 420,200 19,880
Compass Minerals International, Inc. + ............. 103,200 3,544
Foundation Coal Holdings, Inc. + ................... 212,600 8,374
Gibraltar Industries, Inc. ......................... 530,000 11,819
GrafTech Int'l, Ltd. ## ............................ 716,200 7,148
Metal Management, Inc. ............................. 153,700 7,388
Quanex Corp. + ..................................... 90,150 3,879
RTI International Metals, Inc. ## .................. 52,200 4,921
USEC, Inc. ## + .................................... 329,000 6,636
Worthington Industries, Inc. + ..................... 627,800 13,968
-----------
89,905
-----------
PAPER & FOREST PRODUCTS - 0.42%
Glatfelter + ........................................ 198,700 $ 2,970
Louisiana-Pacific Corp. ............................. 286,500 5,647
Neenah Paper, Inc. + ................................ 99,500 3,801
Wausau Paper Corp. + ................................ 189,800 2,555
-----------
14,973
-----------
TOTAL MATERIALS ....................................... 224,845
-----------
TELECOMMUNICATION SERVICES - 0.31%
DIVERSIFIED TELECOMMUNICATION - 0.31%
Cincinnati Bell, Inc. ## ............................ 1,663,740 8,435
Iowa Telecommunications Services, Inc. + ............ 84,600 1,718
Premiere Global Services, Inc. ## ................... 79,000 962
-----------
TOTAL TELECOMMUNICATION SERVICES ...................... 11,115
-----------
UTILITIES - 4.93%
ELECTRIC UTILITIES - 2.77%
Black Hills Corp. + ................................. 174,400 6,943
El Paso Electric Co. ## ............................. 164,400 4,340
Great Plains Energy, Inc. + ......................... 713,800 23,298
Hawaiian Electric Industries, Inc. + ................ 71,070 1,871
Idacorp, Inc. ## .................................... 43,600 1,502
NSTAR ............................................... 471,300 16,920
OGE Energy Corp. .................................... 389,200 14,961
PNM Resources, Inc. + ............................... 232,540 7,569
Puget Energy, Inc. .................................. 402,800 10,400
TECO Energy, Inc. ................................... 97,600 1,752
Westar Energy, Inc. + ............................... 350,000 9,527
-----------
99,083
-----------
GAS UTILITIES - 2.16%
AGL Resources, Inc. + ............................... 486,540 21,184
Atmos Energy Corp. .................................. 335,930 10,656
Energen Corp. ....................................... 70,900 3,974
Integrys Energy Group, Inc. + ....................... 194,200 10,895
The Laclede Group, Inc. ............................. 145,400 4,564
National Fuel Gas Co. + ............................. 158,000 7,428
New Jersey Resources Corp. .......................... 35,800 1,922
Southern Union Co. .................................. 160,348 4,884
UGI Corp. + ......................................... 46,330 1,314
Vectren Corp. + ..................................... 111,500 3,241
WGL Holdings, Inc. + ................................ 212,500 7,191
-----------
77,253
-----------
TOTAL UTILITIES ....................................... 176,336
-----------
TOTAL COMMON STOCKS ................................... 3,355,728
-----------
SHORT TERM INVESTMENTS - 7.52%
American Beacon Money Market Select Fund ++ ......... 254,691,069 254,691
See accompanying notes
13
AMERICAN BEACON SMALL CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------- -------------
(DOLLARS IN THOUSANDS)
United States Treasury Bill,
5.01%, Due 6/7/2007 # @ .................... $ 14,055 $ 13,984
-------------
TOTAL SHORT TERM INVESTMENTS .......................... 268,675
-------------
SHARES
-------------
SECURITIES LENDING
COLLATERAL - 24.71%
American Beacon Cash Plus Trust ++ ................. 520,933,885 520,934
American Beacon Money Market Select Fund ++ ........ 362,283,601 362,283
-------------
TOTAL SECURITIES LENDING COLLATERAL ................... 883,217
-------------
TOTAL INVESTMENTS 126.12% - (COST $3,985,211) 4,507,620
LIABILITIES, NET OF OTHER ASSETS - (26.12%) ................ (933,499)
-------------
TOTAL NET ASSETS - 100.00% ................................. $ 3,574,121
=============
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ The Fund/Trust is affiliated by having the same investment advisor.
# Rates represent discount rate.
@ At April 30, 2007, security pledged as collateral for open futures
contracts.
FUTURES CONTRACTS
(DOLLARS IN THOUSANDS)
UNREALIZED
NUMBER OF EXPIRATION MARKET APPRECIATION/
CONTRACTS DATE VALUE (DEPRECIATION)
--------- --------- -------- --------------
Emini Mini Russell ...... 3,228 Jun 2007 $264,341 $7,300
======== ======
See accompanying notes
14
AMERICAN BEACON SMALL CAP VALUE FUND
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2007 (Unaudited) (in thousands, except share and per share amounts)
ASSETS:
Investments in unaffiliated securities, at value A C ............... $ 3,369,712
Investments in affiliated securities, at value B ................... 1,137,908
Receivable for investments sold .................................... 13,614
Dividends and interest receivable .................................. 2,847
Receivable for fund shares sold .................................... 3,100
Prepaid expenses ................................................... 79
-----------
TOTAL ASSETS ..................................................... 4,527,260
-----------
LIABILITIES:
Payable for investments purchased .................................. 13,715
Payable upon return of securities loaned ........................... 883,217
Payable for fund shares redeemed ................................... 44,830
Payable for variation margin on open futures contracts ............. 5,133
Management and investment advisory fees payable (Note 2) ........... 4,805
Administrative service and service fees payable .................... 922
Other liabilities .................................................. 517
-----------
TOTAL LIABILITIES ................................................ 953,139
-----------
NET ASSETS ............................................................ $ 3,574,121
===========
ANALYSIS OF NET ASSETS:
Paid-in-capital .................................................... 2,873,581
Undistributed net investment income ................................ 7,808
Accumulated net realized gain ...................................... 163,023
Unrealized appreciation of investments, futures contracts,
and foreign currency ............................................. 529,709
-----------
NET ASSETS ............................................................ $ 3,574,121
===========
SHARES OUTSTANDING (NO PAR VALUE):
Institutional Class ................................................ 65,912,259
===========
PlanAhead Class .................................................... 64,838,943
===========
Service Class ...................................................... 3,379,737
===========
AMR Class .......................................................... 22,899,513
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE:
Institutional Class ................................................ $ 22.98
===========
PlanAhead Class .................................................... $ 22.51
===========
Service Class ...................................................... $ 22.37
===========
AMR Class .......................................................... $ 22.90
===========
- ---------
A Cost of investments in unaffiliated securities ...................... $ 2,847,303
B Cost of investments in affiliated securities ........................ $ 1,137,908
C Market value of securities on loan .................................. $ 865,499
See accompanying notes
15
AMERICAN BEACON SMALL CAP VALUE FUND
STATEMENT OF OPERATIONS
Six Months Ended April 30, 2007 (in thousands) (Unaudited)
INVESTMENT INCOME:
Dividend income from unaffiliated securities (net of foreign taxes)* ..... $ 23,233
Dividend income from affiliated securities ............................... 4,592
Interest income .......................................................... 592
Income derived from securities lending, net .............................. 966
---------
TOTAL INVESTMENT INCOME ............................................. 29,383
---------
EXPENSES:
Management and investment advisory fees (Note 2) ......................... 8,437
Administrative service fees (Note 2):
Institutional Class .................................................... 1,758
PlanAhead Class ........................................................ 1,728
Service Class .......................................................... 92
Transfer agent fees:
Institutional Class .................................................... 112
PlanAhead Class ........................................................ 82
Service Class .......................................................... 11
AMR Class .............................................................. 4
Custody and fund accounting fees ......................................... 228
Professional fees ........................................................ 32
Registration fees and expenses ........................................... 32
Service fees:
PlanAhead Class (Note 2) ............................................... 1,729
Service Class (Note 2) ................................................. 92
Distribution fees - Service Class (Note 2) ............................... 92
Prospectus and shareholder reports ....................................... 145
Other expenses ........................................................... 126
---------
TOTAL EXPENSES ...................................................... 14,700
---------
Net fees recouped by Manager (Note 2) .................................... 2
---------
NET EXPENSES ........................................................ 14,702
---------
NET INVESTMENT INCOME ....................................................... 14,681
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from:
Investments ............................................................ 170,318
Commission recapture (Note 1) .......................................... 129
Futures contracts ...................................................... 5,476
Change in net unrealized appreciation or depreciation of:
Investments ............................................................ 133,416
Futures contracts ...................................................... 3,033
---------
NET GAIN ON INVESTMENTS ............................................. 312,372
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ $ 327,053
=========
* Foreign taxes .......................................................... $ 21
See accompanying notes
16
AMERICAN BEACON SMALL CAP VALUE FUND
STATEMENT OF CHANGES OF NET ASSETS (in thousands)
Six Months Year Ended
Ended October 31,
April 30, 2007 2006
-------------- -----------
(unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............................................ $ 14,681 $ 23,105
Net realized gain on investments, futures contracts, and foreign
currency transactions .......................................... 175,923 202,671
Change in net unrealized appreciation or depreciation of
investments, futures contracts, and foreign currency
translations ................................................. 136,449 212,133
-------------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ 327,053 437,909
-------------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Institutional Class ............................................ (10,903) (7,101)
PlanAhead Class ................................................ (8,142) (6,167)
Service Class .................................................. (295) (139)
AMR Class ...................................................... (4,490) (3,772)
Net realized gain on investments:
Institutional Class ............................................ (90,742) (46,081)
PlanAhead Class ................................................ (94,401) (59,088)
Service Class .................................................. (5,063) (2,120)
AMR Class ...................................................... (28,623) (17,954)
-------------- -----------
NET DISTRIBUTIONS TO SHAREHOLDERS ........................... (242,659) (142,422)
-------------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares .................................... 504,929 721,048
Reinvestment of dividends and distributions ...................... 237,930 138,617
Cost of shares redeemed .......................................... (389,429) (886,291)
-------------- -----------
NET INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL SHARE
TRANSACTIONS .............................................. 353,430 (26,626)
-------------- -----------
NET INCREASE IN NET ASSETS .......................................... 437,824 268,861
-------------- -----------
NET ASSETS:
Beginning of period .............................................. 3,136,297 2,867,436
-------------- -----------
END OF PERIOD * .................................................. $ 3,574,121 $ 3,136,297
============== ===========
*Includes undistributed net investment income of .................... $ 7,808 $ 17,578
============== ===========
See accompanying notes
17
AMERICAN BEACON SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
American Beacon Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940 (the
"Act"), as amended, as a no load, diversified, open-end management investment
company. These financial statements and notes to the financial statements relate
to the American Beacon Small Cap Value Fund (the "Fund"), a series of the Trust.
American Beacon Advisors, Inc. (the "Manager") is a wholly-owned
subsidiary of AMR Corporation, the parent company of American Airlines, Inc.
("American"), and was organized in 1986 to provide business management,
advisory, administrative and asset management consulting services to the Trust
and other investors.
Class Disclosure
The Fund has multiple classes of shares designed to meet the needs of
different groups of investors. The following table sets forth the differences
amongst the classes:
CLASS: OFFERED TO: SERVICE AND DISTRIBUTIONS FEES:
- ------ ----------- ----------------------------------
INSTITUTIONAL CLASS Investors making an initial investment of $2 million Administrative Service Fee - 0.25%
PLANAHEAD CLASS General public and investors investing through an intermediary Administrative Service Fee - 0.25%
Service Fee - 0.25%
SERVICE CLASS Investors investing through an intermediary Administrative Service Fee - 0.25%
Service Fee - 0.25%
Distribution Fee - 0.25%
AMR CLASS Investors in the tax-exempt retirement and benefit plans of AMR
Corporation and its affiliates N/A
Investment income, net capital gains (losses) and all expenses incurred by
the Fund are allocated based on the relative net assets of each class, except
for service fees and certain other fees and expenses related solely to one class
of shares.
Security Valuation
Investments are valued at the close of the New York Stock Exchange (the
"Exchange"), normally 4 p.m. ET, each day that the Exchange is open for
business. Equity securities for which market quotations are available are valued
at the last sale price or official closing price (closing bid price or last
evaluated quote if no sale has occurred) on the primary market or exchange on
which they trade.
Debt securities (other than short-term securities) normally are valued on
the basis of prices provided by an independent pricing service and may take into
account appropriate factors such as institution-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. When a price is unavailable from a
pricing service or when the price provided by the pricing service is deemed not
to represent fair value, the prices of debt securities may be determined using
quotes obtained from brokers.
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation. Investment grade short-term
obligations with 60 days or less to maturity are valued using the amortized cost
method, which approximates market value.
Securities for which the market prices are not readily available or are
not reflective of the fair value of the security, as determined by the Manager,
will be priced at fair value following procedures approved by the Board of
Trustees (the "Board").
18
AMERICAN BEACON SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
Security Transactions and Investment Income
Security transactions are recorded on the trade date of the security
purchase or sale.
The Fund may purchase securities with delivery or payment to occur at a
later date. At the time the Fund enters into a commitment to purchase a
security, the transaction is recorded and the value of the security is reflected
in the net asset value. The value of the security may vary with market
fluctuations.
Dividend income, net of foreign taxes, is recorded on the ex-dividend date
except certain dividends from foreign securities which are recorded as soon as
the information is available to the Fund. Interest income is earned from
settlement date, recorded on the accrual basis, and adjusted, if necessary, for
accretion of discounts and amortization of premiums. For financial and tax
reporting purposes, realized gains and losses are determined on the basis of
specific lot identification.
Futures Contracts
Futures contracts are contracts to buy or sell a standard quantity of
securities at a specified price on a future date. The Fund may enter into
financial futures contracts as a method for keeping assets readily convertible
to cash if needed to meet shareholder redemptions or for other needs while
maintaining exposure to the stock or bond market, as applicable. The primary
risks associated with the use of futures contracts are the possibility of
illiquid markets or imperfect correlation between the values of the contracts
and the underlying securities, or that the counterparty will fail to perform its
obligations.
Upon entering into a futures contract, the Fund is required to set aside
or deposit with a broker an amount, termed the initial margin, which typically
represents 5% of the face value of the futures contract. The Fund reflects this
amount on the Schedule of Investments as a U.S. Treasury Bill held as collateral
for futures contracts. 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.
Dividends to Shareholders
Dividends from net investment income of the Fund normally will be declared
and paid annually. Distributions, if any, of net realized capital gains are
generally paid annually and recorded on the ex-dividend date.
Commission Recapture
The Fund has established brokerage commission recapture arrangements with
certain brokers or dealers. If the Fund's investment advisor chooses to execute
a transaction through a participating broker, the broker rebates a portion of
the commission back to the Fund. Any collateral benefit received through
participation in the commission recapture program is directed exclusively to the
Fund. This amount is reported with the net realized gain in the Fund's Statement
of Operations.
Allocation of Income, Expenses, Gains and Losses
Income, expenses (other than those attributable to a specific class),
gains and losses are allocated daily to each class of shares based upon the
relative proportion of net assets represented by such class. Operating expenses
directly attributable to a specific class are charged against the operations of
that class.
19
AMERICAN BEACON SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles 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.
Recently Issued Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing the Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and is to
be applied to all open tax years as of the effective date. At this time, the
Manager is evaluating the implications of FIN 48 and its potential impact on the
financial statements has not yet been determined.
In September 2006, the FASB issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting, establishes a
framework for measuring fair value and requires additional disclosures about the
use of fair value measurements. FAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years. The Manager is evaluating the impact of FAS 157;
however, it is not expected to have a material impact on the Fund's net assets
or results of operations.
Other
Under the Trust's organizational documents, its officers and directors are
indemnified against certain liability arising out of the performance of their
duties to the Trust. In the normal course of business, the Trust enters into
contracts that provide indemnification to the other party or parties against
potential costs or liabilities. The Trust's maximum exposure under these
arrangements is dependent on claims that may be made in the future and,
therefore, cannot be estimated. The Trust has had no prior claims or losses
pursuant to any such agreement.
2. TRANSACTIONS WITH AFFILIATES
Management Agreement
The Trust and the Manager are parties to a Management Agreement that
obligates the Manager to provide or oversee the provision of all administrative,
investment advisory, fund management and securities lending services. Investment
assets of the Fund are managed by multiple investment advisors which have
entered into separate investment advisory agreements with the Manager. As
compensation for performing the duties required under the Management Agreement,
the Manager receives from the Fund an annualized fee equal to 0.10% of the
average daily net assets plus amounts paid by the Manager to the investment
advisors hired by the Manager to direct investment activities of the Funds.
Management fees paid during the six months ended April 30, 2007 were as follows
(dollars in thousands):
AMOUNTS PAID TO
MANAGEMENT FEE RATE MANAGEMENT FEE INVESTMENT ADVISORS NET AMOUNTS RETAINED BY MANAGER
- ------------------- -------------- ------------------- -------------------------------
0.35%-0.60% $ 8,437 $ 6,773 $ 1,664
As compensation for services provided by the Manager in connection with
securities lending activities, the lending Fund pays to the Manager, with
respect to cash collateral posted by borrowers, a fee up to 25% of the net
monthly interest income (the gross interest income earned by the investment of
cash collateral, less the amount paid
20
AMERICAN BEACON SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
to borrowers and related expenses) from such activities and, with respect to
loan fees paid by borrowers when a borrower posts collateral other than cash, a
fee up to 25% of such loan fees. This fee is netted against securities lending
income in the Statement of Operations. During the six months ended April 30,
2007, securities lending fees paid to the Manager were $152,718.
Administrative Services Agreement
The Manager and the Trust entered into an Administrative Services
Agreement which obligates the Manager to provide or oversee administrative and
management services to the Fund. As compensation for performing the duties
required under the Administrative Services Agreement, the Manager receives an
annualized fee of 0.25% of the average daily net assets of the Institutional,
PlanAhead and Service Classes of the Fund.
Distribution Plans
The Trust, except for the Service Class of the Fund, has adopted a
"defensive" Distribution Plan (the "Plan") in accordance with Rule 12b-1 under
the Act, pursuant to which no fees may be charged to the Fund for distribution
purposes. However, the Plan authorizes the management fees received by the
Manager and the investment advisors hired by the Manager to be used for
distribution purposes. Under this Plan, the Trust does not intend to compensate
the Manager or any other party, either directly or indirectly, for the
distribution of Trust shares.
A separate Distribution Plan (the "Distribution Plan") has been adopted
pursuant to Rule 12b-1 under the Act for the Service Class of the Fund. Under
the Distribution Plan, as compensation for distribution assistance, the Manager
receives an annual fee of 0.25% of the average daily net assets of the Service
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 PlanAhead and Service
Classes. As compensation for performing the duties required under the Service
Plans, the Manager receives 0.25% of the average daily net assets of the
PlanAhead and Service Classes of the Fund.
Investment in Affiliated Funds
The Fund is permitted, pursuant to an exemptive order by the Securities
and Exchange Commission ("SEC") and procedures approved by the Board, to invest
up to 25% of its total assets in the American Beacon Money Market Select Fund
(the "Select Fund"). Cash collateral received by the Fund in connection with
securities lending may be invested in the Select Fund and the American Beacon
Cash Plus Trust (the "Cash Trust") (collectively, the "Affiliated Funds"). The
Fund and the Affiliated Funds have the same investment advisor and therefore,
are considered to be affiliated. The Manager serves as investment advisor to the
Affiliated Funds and receives from each Affiliated Fund an annualized fee equal
to 0.10% of its average daily net assets. During the six months ended April 30,
2007, the Manager earned fees from the Affiliated Funds totaling $91,922 on the
Fund's direct investment in the Affiliated Funds and $415,739 from securities
lending collateral invested in the Affiliated Funds.
21
AMERICAN BEACON SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
Interfund Lending Program
Pursuant to an exemptive order by the SEC, the Fund, along with other
registered investment companies having management contracts with the Manager,
may participate in an interfund lending program as a borrower. This program
provides an alternative credit facility allowing the Fund to borrow from other
participating Funds. For the six months ended April 30, 2007, the Fund did not
utilize the credit facility.
Expense Reimbursement Plan
The Fund has adopted an Expense Reimbursement Plan whereby the Manager may
seek repayment of fees waived or expenses reimbursed for a period of up to three
years. However, reimbursement will occur only if the Class' average net assets
have grown or expenses have declined sufficiently to allow reimbursement without
causing its expense ratio to exceed the previously agreed upon contractual
expense limit.
During the six months ended April 30, 2007 the Manager recouped prior fee
waivers totaling $1,801. There are no further fee waivers or reimbursed expenses
subject to potential recovery.
Other
At April 30, 2007, AMR Corporation and subsidiary companies and employee
benefit trusts thereof owned 16% of the Fund.
3. FEDERAL INCOME AND EXCISE TAXES
It is the policy of the Fund to comply with the requirements of Subchapter
M of the Internal Revenue Code and to distribute substantially all net
investment income as well as any net realized capital gains on the sale of
investments. Therefore, no federal income or excise tax provision is required.
Dividends are categorized in accordance with income tax regulations which
may treat certain transactions differently than U.S. generally accepted
accounting principles. Accordingly, the character of distributions and
composition of net assets for tax purposes may differ from those reflected in
the accompanying financial statements.
The tax character of distributions paid during the six months ended April
30, 2007 and the fiscal year ended October 31, 2006 were as follows (in
thousands):
SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31,
2007 2006
---------------- -----------
(unaudited)
DISTRIBUTIONS PAID FROM:
ORDINARY INCOME*
Institutional Class .......... $ 36,984 $ 20,806
PlanAhead Class .............. 35,274 23,742
Service Class ................ 1,750 770
AMR Class .................... 12,717 9,112
LONG-TERM CAPITAL GAIN
Institutional Class .......... 64,662 32,376
PlanAhead Class .............. 67,268 41,513
Service Class ................ 3,608 1,489
AMR Class .................... 20,396 12,614
---------------- -----------
TOTAL DISTRIBUTIONS PAID ............. $ 242,659 $ 142,422
================ ===========
* For tax purposes, short-term capital gains are considered ordinary income
distributions.
22
AMERICAN BEACON SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
As of April 30, 2007, the components of distributable earnings on a tax
basis were as follows (in thousands):
Cost basis of investments for federal income tax purposes ...................... $3,994,150
Unrealized appreciation ........................................................ 600,119
Unrealized depreciation ........................................................ (86,649)
----------
Net unrealized appreciation/(depreciation) ..................................... 513,470
Undistributed ordinary income .................................................. 42,250
Undistributed long-term gain/(loss) ............................................ 144,820
----------
Distributable earnings ......................................................... $ 700,540
==========
Financial reporting records are adjusted for permanent book/tax
differences to reflect tax character. Financial records are not adjusted for
temporary differences. The temporary differences between financial reporting and
tax-basis reporting of unrealized appreciation/(depreciation) are attributable
primarily to the tax deferral of losses from wash sales, the realization for tax
purposes of unrealized gains/(losses) on certain derivative instruments, and
reclassifications of income from real estate investment securities.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under U.S. generally accepted accounting principles and
federal income tax regulations, permanent differences between book and tax
reporting have been identified and appropriately reclassified on the Statement
of Assets and Liabilities.
Accordingly, the following amounts represent current year permanent
differences derived from reclassifications of income from real estate investment
securities, foreign currency, and dividend reclasses that have been reclassified
as of April 30, 2007 (in thousands):
Paid-in-capital ................................................................ $ (131)
Undistributed net investment income ............................................ (621)
Accumulated net realized gain (loss) ........................................... 752
Unrealized appreciation (depreciation) of investments, futures
contracts and foreign currency ............................................... --
4. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales of investments,
other than short-term obligations, for the six months ended April 30, 2007 were
(in thousands) $836,020 and $779,595, respectively.
A summary of the Fund's direct transactions in Affiliated Funds for the
six months ended April 30, 2007 is set forth below (in thousands):
OCTOBER 31, 2006 APRIL 30, 2007
AFFILIATE SHARES/MARKET VALUE SALES SHARES/MARKET VALUE PURCHASES
- --------- ------------------- --------- ------------------- ---------
Select Fund $ 114,617 $ 724,636 $ 584,562 $ 254,691
5. 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 marked to market
and monitored daily. To the extent that a loan is collateralized by cash, such
collateral shall be invested by the securities lending agent (the "Agent") in
short-term instruments, money market mutual funds, and such other short-term
investments, provided the investments meet certain quality and diversification
requirements.
The Fund, the Agent and the Manager retain 65%, 25% and 10%, respectively
of the income generated from the investment of cash collateral, less negotiated
rebate fees paid to participating brokers and transaction costs. To the
23
AMERICAN BEACON SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
April 30, 2007 (Unaudited)
extent that a loan is secured by non-cash collateral, brokers pay the Fund
negotiated lenders' fees, which are divided between the Fund, the Agent and the
Manager 65%, 25% and 10%, respectively. The Fund also continues to receive
income on the securities loaned, and any gain or loss in the market price of
securities loaned that may occur during the term of the loan.
Risks to the Fund in securities lending transactions are that the borrower
may not provide additional collateral when required or return the securities
when due, and that the value of the short-term investments will be less than the
amount of cash collateral required to be returned to the borrower.
At April 30, 2007, the value of outstanding securities on loan and the
value of collateral was as follows (in thousands):
MARKET VALUE OF
SECURITIES ON LOAN NON-CASH COLLATERAL CASH COLLATERAL
- ------------------ ------------------- ---------------
$ 865,499 $17,988 $ 883,217
Cash collateral is invested in a joint investment account, which is
comprised of an investment in the Affiliated Funds. The allocated amounts have
been included as investments in the Schedule of Investments and Statement of
Assets and Liabilities. Income earned on these investments is reported as Income
derived from securities lending in the Statement of Operations.
Non-cash collateral received by the Fund may not be sold or repledged;
therefore, non-cash collateral is not included on the Fund's Schedule of
Investments or Statement of Assets and Liabilities.
6. CAPITAL SHARE TRANSACTIONS
The tables below summarize the activity in capital shares for each Class
of the Fund (dollars and shares in thousands):
Six Months Ended April 30, 2007
INSTITUTIONAL CLASS PLANAHEAD CLASS SERVICE CLASS AMR CLASS
------------------- ------------------ ---------------- ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------ --------- ------ --------- ------ -------- ------ ---------
Shares sold .......................... 9,350 $ 207,469 6,862 $ 150,942 652 $ 14,242 5,964 $ 132,276
Reinvestment of dividends ............ 4,613 98,950 4,782 100,509 256 5,358 1,551 33,113
Shares redeemed ...................... (6,584) (147,506) (7,221) (157,799) (747) (16,297) (2,979) (67,827)
------ --------- ------ --------- ---- -------- ------ ---------
Net increase in shares outstanding ... 7,379 $ 158,913 4,423 $ 93,652 161 $ 3,303 4,536 $ 97,562
====== ========= ====== ========= ==== ======== ====== =========
Year Ended October 31, 2006
INSTITUTIONAL CLASS PLANAHEAD CLASS SERVICE CLASS AMR CLASS
------------------- ------------------- ----------------- ------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------- --------- ------- ---------- ------ --------- ------ ---------
Shares sold .......................... 18,285 $ 389,424 12,755 $ 269,509 1,941 $ 40,521 1,002 $ 21,594
Reinvestment of dividends ............ 2,467 50,759 3,162 63,873 112 2,259 1,061 21,726
Shares redeemed ...................... (14,930) (320,285) (21,412) (446,771) (1,078) (22,608) (4,550) (96,627)
------- --------- ------- ---------- ------ --------- ------ ---------
Net increase (decrease) in shares
outstanding ....................... 5,822 $ 119,898 (5,495) $ (113,389) 975 $ 20,172 (2,487) $ (53,307)
======= ========= ======= ========== ====== ========= ====== =========
24
(This Page intentionally left blank)
25
AMERICAN BEACON SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class
------------------------------------------------------------------
Six Months Year Ended October 31
Ended April --------------------------------------------------
30, 2007 2006 2005(B) 2004(C) 2003(A) 2002
----------- ---------- ---------- -------- ------- -------
(unaudited)
Net asset value, beginning
of period ........................... $ 22.53 $ 20.43 $ 18.85 $ 16.21 $11.28 $ 11.69
----------- ---------- ---------- -------- ------- -------
Income from investment
operations:
Net investment income
(loss)(D) ........................ 0.11 0.18 0.11 0.07 (0.01) (0.01)
Net gains (losses) on
securities (both realized
and unrealized)(D) ............... 2.09 2.95 2.31 3.09 5.24 0.47
----------- ---------- ---------- -------- ------- -------
Total income (loss) from
investment operations ............... 2.20 3.13 2.42 3.16 5.23 0.46
----------- ---------- ---------- -------- ------- -------
Less distributions:
Dividends from net
Investment income ................ (0.19) (0.14) (0.07) (0.08) (0.02) (0.11)
Distributions from net
realized gains on
securities ........................ (1.56) (0.89) (0.77) (0.44) (0.28) (0.76)
----------- ---------- ---------- -------- ------- -------
Total distributions ................... (1.75) (1.03) (0.84) (0.52) (0.30) (0.87)
----------- ---------- ---------- -------- ------- -------
Net asset value, end of
period .............................. $ 22.98 $ 22.53 $ 20.43 $ 18.85 $ 16.21 $ 11.28
=========== ========== ========== ======== ======= =======
Total return .......................... 10 .32%(E) 15.80% 12.90% 19.86% 47.45% 3.29%
=========== ========== ========== ======== ======= =======
Ratios and supplemental
data:
Net assets, end
of period
(in thousands) ................. $ 1,514,877 $1,319,024 $1,076,909 $429,540 $89,579 $21,936
Ratios to average net
assets (annualized):
Expenses, net of
waivers(D) .................... 0.81% 0.82% 0.87% 0.89% 0.89% 0.82%
Expenses before
waivers(D) .................... 0.81% 0.82% 0.87% 0.89% 0.89% 0.82%
Net investment income,
net of waivers(D) ............ 0.96% 0.83% 0.66% 0.57% 0.60% 0.81%
Net investment income
(loss), before
waivers(D) ................... 0.96% 0.83% 0.66% 0.57% 0.60% 0.81%
Portfolio turnover rate(G) ........ 25%(E) 48% 47% 35% 75% 81%
PlanAhead Class
-------------------------------------------
Six Months Year Ended October 31
Ended April ----------------------------
30, 2007 2006 2005(B)
----------- ---------- -------------
(unaudited)
Net asset value, beginning
of period ........................... $ 22 .08 $ 20.04 $ 18.54
---------- ---------- -----------
Income from investment
operations:
Net investment income
(loss)(D) ........................ 0.08 0.13 0.09
Net gains (losses) on
securities (both realized
and unrealized)(D) ............... 2.04 2.89 2.24
---------- ---------- -----------
Total income (loss) from
investment operations ............... 2.12 3.02 2.33
---------- ---------- -----------
Less distributions:
Dividends from net
Investment income ................ (0.13) (0.09) (0.06)
Distributions from net
realized gains on
securities ........................ (1.56) (0.89) (0.77)
---------- ---------- -----------
Total distributions ................... (1.69) (0.98) (0.83)
---------- ---------- -----------
Net asset value, end of
period .............................. $ 22.51 $ 22.08 $ 20.04
========== ========== ===========
Total return .......................... 10.18%(E) 15.56% 12.63%
========== ========== ===========
Ratios and supplemental
data:
Net assets, end
of period
(in thousands) ................. $1,459,342 $1,333,814 $ 1,320,853
Ratios to average net
assets (annualized):
Expenses, net of
waivers(D) .................... 1.05% 1.06% 1.10%
Expenses before ................
waivers(D) .................... 1.05% 1.06% 1.10%
Net investment income,
net of waivers(D) ............ 0.72% 0.59% 0.42%
Net investment income
(loss), before
waivers(D) ................... 0.72% 0.59% 0.42%
Portfolio turnover rate(G) ........ 25%(E) 48% 47%
(A) Barrow, Hanley, Mewhinney & Strauss, Inc. was added as an investment advisor
to the Small Cap Value Fund on September 18, 2003.
(B) Opus Capital Group, LLC was added as an investment advisor on February 1,
2005 and Metropolitan West Capital Management, LLC, SSgA Funds Management, Inc.
and Dreman Value Management, LLC were added as investment advisors on August 12,
2005.
(C) The Boston Company Asset Management, LLC was added as an investment advisor
to the Small Cap Value Fund on September 27, 2004.
(D) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of the
AMR Investment Services Small Cap Value Portfolio through February 28, 2002.
(E) Not annualized.
(F) Annualized
(G) The Small Cap Value Fund invested all of its investable assets in its
corresponding Portfolio through February 28, 2002. Portfolio turnover rate
through February 28, 2002 was that of the Portfolio.
(H) Portfolio turnover rate is for the period from November 1, 2002 through
October 31, 2003.
26
Service Class
------------------------------------------------------------------
Six
Months
Ended Year Ended October 31 May 1 to
April 30, ---------------------------------- October 31,
2004(C) 2003(A) 2002 2007 2006 2005(B) 2004(C) 2003(A)
- --------- -------- -------- ----------- -------- -------- -------- ------------
(unaudited)
$ 15.95 $ 11.22 $ 11.64 $ 21.94 $ 19.94 $ 18.49 $ 15.92 $ 11.88
- --------- -------- -------- -------- -------- -------- -------- --------
0.08 0.05 0.06 0.05 0.07 0.04 0.01 --
2.98 5.08 0.36 2.03 2.88 2.23 3.00 4.04
- --------- -------- -------- -------- -------- -------- -------- --------
3.06 5.13 0.42 2.08 2.95 2.27 3.01 4.04
- --------- -------- -------- -------- -------- -------- -------- --------
(0.03) (0.12) (0.08) (0.09) (0.06) (0.05) -- --
(0.44) (0.28) (0.76) (1.56) (0.89) (0.77) (0.44) --
- --------- -------- -------- -------- -------- -------- -------- --------
(0.47) (0.40) (0.84) (1.65) (0.95) (0.82) (0.44) --
- --------- -------- -------- -------- -------- -------- -------- --------
$ 18.54 $ 15.95 $ 11.22 $ 22.37 $ 21.94 $ 19.94 $ 18.49 $ 15.92
========= ======== ======== ======== ======== ======== ======== ========
19.56% 47.12% 2.99% 10.02%(E) 15.23% 12.32% 19.24% 34.01%(E)
========= ======== ======== ======== ======== ======== ======== ========
$ 466,364 $ 66,906 $ 16,190 $ 75,606 $ 70,602 $ 44,709 $ 11,828 $ 1
1.15% 1.16% 1.11% 1.33% 1.34% 1.40% 1.38% 1.49%(F)
1.15% 1.16% 1.11% 1.32% 1.34% 1.40% 1.69% 1089.04%
0.33% 0.39% 0.52% 0.45% 0.31% 0.12% 0.17% (0.05)%
0.33% 0.39% 0.52% 0.45% 0.31% 0.12% (0.14)% (1087.60)%
35% 75% 81% 25%(E) 48% 47% 35% 75%(H)
AMR Class
------------------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, ------------------------------------------------------------------
2007 2006 2005(B) 2004(C) 2003(A) 2002
- ---------- --------- --------- --------- --------- ---------
(unaudited)
$ 22.48 $ 20.38 $ 18.78 $ 16.13 $ 11.30 $ 11.71
- --------- --------- --------- --------- --------- ---------
0.11 0.27 0.21 0.14 0.10 0.15
2.12 2.91 2.26 3.04 5.15 0.34
- --------- --------- --------- --------- --------- ---------
2.23 3.18 2.47 3.18 5.25 0.49
- --------- --------- --------- --------- --------- ---------
(0.25) (0.19) (0.10) (0.09) (0.14) (0.14)
(1.56) (0.89) (0.77) (0.44) (0.28) (0.76)
- --------- --------- --------- --------- --------- ---------
(1.81) (1.08) (0.87) (0.53) (0.42) (0.90)
- --------- --------- --------- --------- --------- ---------
$ 22.90 $ 22.48 $ 20.38 $ 18.78 $ 16.13 $ 11.30
========= ========= ========= ========= ========= =========
10.50%(E) 16.12% 13.23% 20.12% 47.93% 3.54%
========= ========= ========= ========= ========= =========
$ 524,296 $ 412,857 $ 424,965 $ 438,353 $ 327,542 $ 181,180
0.54% 0.55% 0.58% 0.60% 0.61% 0.56%
0.54% 0.55% 0.58% 0.60% 0.61% 0.56%
1.22% 1.10% 0.94% 0.84% 0.95% 1.09%
1.22% 1.10% 0.94% 0.84% 0.95% 1.09%
25%(E) 48% 47% 35% 75% 81%
27
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT
AGREEMENT AND INVESTMENT ADVISORY AGREEMENTS OF THE FUND
(UNAUDITED)
In prior years, the Board of Trustees ("Board" or "Trustees") typically has
considered the annual renewal of the existing Management Agreement between
American Beacon Advisors, Inc. (the "Manager") and the American Beacon Funds
(the "Trust"), on behalf of the Small Cap Value Fund (the "Fund"), and each
Investment Advisory Agreement between the Manager and a sub-advisor at the Board
meeting held in the first quarter of each year. At the November 15, 2006
meeting, the Board decided to conduct these annual renewals at their second
quarter meeting each year to enable the Trustees to consider more year-end data
in their deliberations. At the March 8, 2007 Board meeting, the Board considered
renewal of the Management and Investment Advisory Agreements on an interim basis
until the Board meeting scheduled for the second quarter, at which meeting the
Board would perform a comprehensive review of factors relevant to an annual
renewal.
In connection with the interim renewal, the Board, with the assistance of
independent legal counsel, requested and received certain relevant information
from the Manager. Further, the Board took into consideration information
furnished for the Board's review and consideration throughout the year at
regular Board and Investment Committee meetings. The Trustees considered, among
other materials, responses by the Manager to inquiries requesting:
- an explanation, if applicable, of any deterioration in longer-term
performance by the Fund or sub-advisor since the last contract
renewal and any remedial measures the Manager has taken or intends
to take;
- the Manager's and each sub-advisor's fee rate schedule for the Fund
and whether the Manager intends to continue any current fee waivers
or reimbursements;
- an explanation of any significant change in the Fund's expense ratio
since the last contract renewal and any actions the Manager has
taken or intends to take;
- a description of any significant changes (actual or anticipated) to
personnel and the reasons for such changes;
- a discussion of any material developments at the Fund's sub-advisors
relevant to the Fund;
- a discussion of any material compliance problems encountered by the
Manager or the sub-advisors and remedial actions;
- a summary of any material past, pending or anticipated litigation or
regulatory proceedings involving the firm or its personnel,
including the results of any recent regulatory examination or
independent audit;
- information regarding material changes to the Manager's and
sub-advisors' codes of ethics and insider trading policies; and
- any material changes to the Manager's or sub-advisors' information
provided in connection with the last annual contract renewal.
The Trustees also received a memorandum from their legal counsel detailing the
Board's responsibilities pertaining to the renewal of the Management and
Investment Advisory Agreements. This memorandum explained the regulatory
requirements surrounding the Trustees' process for evaluating investment
advisors and the terms of the contracts.
Provided below is an overview of the primary factors the Board considered at its
March 2007 meeting. The Board did not identify any particular information that
was most relevant to its consideration to renew the Management and Investment
Advisory Agreements, and each Trustee may have afforded different weight to the
various factors. The Board determined that certain factors typically considered
in connection with an annual renewal were not material with respect to an
interim renewal. As such, the following factors were not considered by the Board
and were deferred to the next regular Board meeting to be considered in
connection with the annual renewal:
- the profits realized by the Manager and the sub-advisors and their
affiliates from their relationship with the Fund;
- the extent to which economies of scale may be realized as the Fund
grows;
- whether the level of fees reflects those economies of scale for the
benefit of the Fund's investors;
- comparisons of services and fees with contracts entered into by the
Manager and a sub-advisor or their affiliates with other clients
(such as pension funds and other institutional investors); and
28
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT
AGREEMENT AND INVESTMENT ADVISORY AGREEMENTS OF THE FUND
(UNAUDITED)
- ancillary benefits to be realized by the Manager and the
sub-advisors as a result of the relationship with the Fund.
In determining whether to renew the Management and Investment Advisory
Agreements on an interim basis, the Trustees considered the best interests of
the Fund. The following considerations and conclusions are applicable to the
Fund.
Cost of Services. The Board considered that the fee rate schedules for the
Manager and most sub-advisors had not changed since the last contract renewal.
The Board also considered that Barrow, Hanley, Mewhinney & Strauss, Inc.
("Barrow") had eliminated the last break point on its fee rate schedule, but
that Barrow's combined fee rate for the Fund under its management was still
among the lowest fees charged by a sub-advisor. The Board considered that, in
many cases, the Manager has negotiated the lowest sub-advisory fee a sub-advisor
charges for any comparable client accounts. In determining whether to renew the
Investment Advisory Agreements, the Board considered that for purposes of
determining the fee charged to the Fund, the fee schedule to each Investment
Advisory Agreement specifies that all other assets managed by a sub-advisor on
behalf of AMR Corporation and its pension plans shall be considered where
applicable. Thus, the Fund is able to receive additional break point benefits
resulting from the sub-advisor's management of a larger pool of assets.
Nature, Extent and Quality of Services. With respect to the renewal of the
Management Agreement, the Trustees considered that the Manager continues to
provide high-quality services to the Fund at a low cost to investors and
provides a comprehensive compliance program for the Fund. Additionally, the
Manager allocates the assets of the Fund among the Fund's sub-advisors, and
monitors and evaluates the performance of the sub-advisors. Based on this
information, the Board concluded that the nature, extent and quality of the
management and advisory services provided by the Manager and each sub-advisor
were appropriate for the Fund and, thus, supported a decision to renew the
Management and each Investment Advisory Agreement on an interim basis.
Investment Performance. The Board considered the performance reports and
discussions with management at Board and Committee meetings throughout the year.
The Board also considered information provided by the Manager regarding
significant deterioration in the Fund's or sub-advisor's longer-term performance
as a result of significant underperformance for the 2006 calendar year.
In considering the renewal of the Management Agreement with the Manager and the
Investment Advisory Agreements with Barrow, Brandywine Global Investment
Management, LLC ("Brandywine"), Hotchkis and Wiley Capital Management, LLC
("Hotchkis"), Opus Capital Group, LLC ("Opus"), and The Boston Company Asset
Management, LLC ("TBCAM"), the Trustees considered that Barrow, Brandywine,
Hotchkis, Opus, and TBCAM underperformed their benchmark index for the 2006
calendar year, and the Fund's overall performance trailed that of its Lipper
Index. However, the Fund's performance exceeded that of its Lipper Index for the
five-year and since inception periods.
Based on these considerations and those noted above, the Trustees determined
that the Fund and its shareholders would benefit from the Manager's and the
sub-advisors' continued management of the Fund until the next regular Board
meeting and approved the renewal of the Agreements on an interim basis until the
next regular Board meeting.
29
(AMERICAN BEACON FUNDS(SM) LOGO)
DELIVERY OF DOCUMENTS
To reduce expenses, your financial institution may mail only one copy of the
Prospectus, Annual Report and Semi-Annual Report to those addresses shared by
two or more accounts. If you wish to receive individual copies of these
documents, please contact your financial institution. Delivery of individual
copies will commence thirty days after receiving your request.
If you invest in the Fund through a financial institution, you may be able to
receive the Fund's regulatory mailings, such as the Prospectus, Annual Report
and Semi-Annual Report, by e-mail. If you are interested in this option, please
go to www.icsdelivery.com and search for your financial institution's name or
contact your financial institution directly.
TO OBTAIN MORE INFORMATION ABOUT THE FUND:
(E-MAIL)
BY E-MAIL:
american_beacon.funds@ambeacon.com
(INTERNET)
ON THE INTERNET:
Visit our website at
www.americanbeaconfunds.com
(TELEPHONE)
BY TELEPHONE:
Institutional Class
Call (800) 658-5811
AMR ClassSM
Call (800) 345-2345
PlanAhead Class(R) and Service Class
Call (800) 388-3344
(MAIL)
BY MAIL:
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
AVAILABILITY OF QUARTERLY PORTFOLIO SCHEDULES
In addition to the Schedule of Investments provided in each semi-annual and
annual report, the Fund files a complete schedule of its portfolio holdings with
the Securities and Exchange Commission ("SEC") on Form N-Q as of the first and
third fiscal quarters. The Fund's Forms N-Q are available on the SEC's website
at www.sec.gov. The Forms N-Q may also be reviewed and copied at the SEC's
Public Reference Room, 450 Fifth Street, NW, Washington, DC 20549. Information
regarding the operation of the SEC's Public Reference Room may be obtained by
calling 1-800-SEC-0330. A complete schedule of the Fund's portfolio holdings is
also available on the Funds' website (www.americanbeaconfunds.com) approximately
thirty days after the end of each month.
AVAILABILITY OF PROXY VOTING POLICY AND RECORDS
A description of the policies and procedures the Fund uses to determine how to
vote proxies relating to portfolio securities is available in the Fund's
Statement of Additional Information, is available free of charge on the Fund's
website (www.americanbeaconfunds.com) and by calling 1-800-967-9009 or by
accessing the SEC's website at www.sec.gov. The Fund's proxy voting record for
the most recent year ended June 30 is filed annually with the SEC on Form N-PX.
The Fund's Forms N-PX are available on the SEC's website at www.sec.gov. The
Fund's proxy voting record may also be obtained by calling 1-800-967-9009.
FUND SERVICE PROVIDERS:
CUSTODIAN TRANSFER AGENT INDEPENDENT REGISTERED DISTRIBUTOR
STATE STREET BANK AND BOSTON FINANCIAL DATA PUBLIC ACCOUNTING FORESIDE FUND SERVICES
TRUST SERVICES FIRM Portland, Maine
Boston, Massachusetts Kansas City, Missouri ERNST & YOUNG LLP
Dallas, 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.
American Airlines, Inc. is not responsible for investments made in the American
Beacon Funds. American Beacon Funds is a service mark of AMR Corporation.
American Beacon Small Cap Value Fund is a service mark of American Beacon
Advisors, Inc.
GUIDANCE | VISION | EXPERIENCE
(AMERICAN BEACON FUNDS(SM) LOGO)
Semi-Annual Report
APRIL 30, 2007
EQUITY FUNDS
BALANCED FUND
LARGE CAP GROWTH FUND
MID-CAP VALUE FUND
SMALL CAP VALUE OPPORTUNITY FUND
EMERGING MARKETS FUND
BOND FUNDS
HIGH YIELD BOND FUND
ENHANCED INCOME FUND
INTERMEDIATE BOND FUND
SHORT-TERM BOND FUND
About American Beacon
Since 1986, American Beacon Advisors has offered a variety of products and
investment advisory services to numerous institutional and retail clients,
including a variety of mutual funds, corporate cash management, and separate
account management.
Our clients include defined benefit plans, defined contribution plans,
foundations, endowments, corporations, financial planners, and other
institutional investors. With American Beacon Advisors, you can put the
experience of a multi-billion dollar asset management firm to work for your
company.
Contents
President's Message ............................................... 1
American Beacon Funds' Performance ................................ 2
Market and Performance Overviews .................................. 3-23
American Beacon Schedules of Investments
Balanced Fund .................................................. 28
Large Cap Growth Fund .......................................... 36
Mid-Cap Value Fund ............................................. 41
Small Cap Value Opportunity Fund ............................... 44
Emerging Markets Fund .......................................... 48
High Yield Bond Fund ........................................... 54
Enhanced Income Fund ........................................... 63
Intermediate Bond Fund ......................................... 69
Short-Term Bond Fund ........................................... 76
Additional Information ............................................ Back Cover
Any opinions herein, including forecasts, reflect our judgment as of the end of
the reporting period and are subject to change. Each advisor's strategies and
each Fund's portfolio composition will change depending on economic and market
conditions. This report is not a complete analysis of market conditions and
therefore, should not be relied upon as investment advice. Although economic and
market information has been compiled from reliable sources, American Beacon
Advisors, Inc. makes no representation as to the completeness or accuracy of the
statements contained herein.
(PHOTO OF DOUGLAS G. HERRING)
FELLOW SHAREHOLDERS,
I am pleased to present to you the American Beacon Semi-Annual Report for
the six months ended April 30, 2007.
Most markets finished the last six months with positive returns. This was
helped in large part by strong world economies and, here in the U.S., better
than expected corporate profitability. The S&P 500 and Dow Jones Industrial
Average indices reported returns of 8.60% and 9.40%, respectively, with the MSCI
Emerging Markets Index reporting a return of 20.12% for the six-month period.
Our domestic equity funds, the Balanced, Large Cap Growth, the Mid-Cap
Value and Small Cap Value Opportunity Funds, all Institutional Class, reported
returns of 7.75%, 6.00%, 10.39% and 7.64%, respectively. Our foreign equity
market fund, the Emerging Markets Fund-Institutional Class, reported a total
return of 18.76%. (These returns are for the six-month period ended April 30,
2007.)
During this fiscal period, the Federal Reserve Bank held interest rates
steady at 5.25%. Against that backdrop, the Lehman Brothers Aggregate Index
posted a 2.64% return and the JP Morgan Global High-Yield Index reported a
return of 7.41%. The American Beacon Enhanced Income Fund - PlanAhead Class and
Intermediate Bond and Short-Term Bond Funds - Institutional Class all reported
returns above 3% for the period. The American Beacon High Yield Bond Fund -
Institutional Class gained 6.32%.
Please review the enclosed market overviews, portfolio listings and
detailed financial data. As always, we welcome the opportunity to serve your
financial needs. To obtain further details about the American Beacon Funds
family or to access your account information, please visit our website at
www.americanbeaconfunds.com. Thank you for your continued confidence in the
American Beacon Funds.
Sincerely,
/s/ Douglas G. Herring
----------------------------------------
Douglas G. Herring
President
American Beacon Funds
1
(This page intentionally left blank)
2
DOMESTIC EQUITY MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
Following strong earnings growth and solid equity returns last year,
equity markets got off to a rocky start in 2007. Investors were suddenly forced
to deal with slower earnings growth, the return of volatility and the sub-prime
mortgage fallout.
There was no shortage of concerns for the market in the first quarter,
though it is often said that the market climbs a "wall of worry."
- - ECONOMIC SLOWDOWN - After enjoying 4-5% Gross Domestic Product ("GDP")
growth for several years, investors had to come to grips with sub-3%
economic growth forecasts for 2007.
- - SLOWING EARNINGS GROWTH - After 14 consecutive quarters of double-digit
growth, S&P 500 operating earnings were expected to slow markedly. For
2007, earnings growth estimates of 6-7% are back-end loaded with nearly
one-half the year's growth expected in the fourth quarter.
- - SUB-PRIME MORTGAGE MELTDOWN - The rapid deterioration in sub-prime
delinquencies and a number of notable bankruptcies raised concerns that the
woes within housing could spread to other areas of the economy.
- - INFLATION CONCERNS OF THE FEDERAL RESERVE BANK ("FED") - Hopes for
near-term Fed rate cuts waned during 2007 as most inflation measures
remained above the Fed's comfort level.
- - RISING LABOR COSTS - Hourly earnings grew at nearly their fastest pace in
20 years, while productivity grew at its slowest pace since early 1997.
Very high profit margins were at risk.
- - HIGHER COMMODITY PRICES - After some early moderation, oil, gasoline,
copper and other commodities continued to rise in price.
- - THE RETURN OF MARKET VOLATILITY - Volatility, an indicator of uncertainty,
returned to the markets after a long hiatus.
While many of these issues weighed on market returns during the period,
none loomed larger than the rapid deterioration in the sub-prime mortgage market
and its spillover effects on the broader housing market and economy in general.
Sub-prime mortgages became a dominant theme for the market because of how
rapidly they have deteriorated. They have also become the central point of
debate between bullish forecasters who argue that the woes of the sub-prime
market are contained versus those who fear a contagion throughout the credit
markets and the broader economy.
The volume of sub-prime issuance reached alarming levels in the past few
years. There were over $1.8 trillion in sub-prime mortgages originated from 2004
- - 2006, more than the previous 10 years combined and equal to approximately a
quarter of all mortgage issuance. Mortgage delinquencies rose rapidly in all
branches of mortgage lending.
Adjustable rate loans, low-documentation (or "liar loans") and other
non-traditional mortgages were also widespread in the prime segment of the
market. Rate resets, reduced investor appetite for these exotic mortgages, and
increased regulatory scrutiny are all combining to tighten the very loose
lending environment of the past several years. A robust housing market has been
the key driver of consumer spending and employment trends for many years.
Consumers, which make up 70% of overall spending, have extracted large amounts
of equity from their homes due to low mortgage rates. If the 'housing ATM via
refinancing' for consumers is coming to an end, there could be a negative growth
surprise coming for investors and the economy. Home equity withdrawal has indeed
been reduced sharply, and it is likely that we may see reduced consumption.
While the problems within the sub-prime market will negatively affect
certain lenders and consumers, the losses incurred are not likely the greatest
threat. The larger concern to equity markets could be a re-pricing of risk and
tightening of credit conditions across the spectrum. Even though there is no
direct connection between sub-prime mortgages and other markets, if sub-prime
woes prompt investors to demand higher risk premiums (wider credit spreads),
weakness in both the bond and stock markets could result.
Looking at the credit markets more broadly, we have not seen substantial
evidence of any contagion from sub-prime as credit spreads and lending
restrictions remain so near historic lows. The enormous liquidity and leverage
injected by foreign buyers, hedge funds, and private equity funds has made the
turning point of this credit cycle difficult to predict, even for the Fed. Also,
3
DOMESTIC EQUITY MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
the complexity of many new financial "innovations," including collateralized
debt obligations and credit default swaps, has made it difficult to assess
credit risk. The long-standing cycles of the economy and credit, however, are
still intact, and a less benign credit environment appears likely to follow the
loose and liquid conditions of the past several years.
Broadly speaking, the equity market continued to be supported by a fair
level of valuations and strong earnings growth (largely due to extraordinary
profit margins) during the period. The beginnings of a negative credit cycle
appear to have taken hold in the residential mortgage market as lending and
regulatory standards have begun to tighten. How far the mortgage credit cycle
extends to the rest of the economy and the pricing of risk more broadly remains
to be seen.
4
PERFORMANCE OVERVIEW
AMERICAN BEACON BALANCED FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Balanced Fund's Institutional Class returned 7.75% for the six months
ended April 30, 2007, outperforming the 60% S&P 500 Citigroup Value/40% Lehman
Brothers Aggregate Index benchmark return of 7.09%, but lagging the Lipper Mixed
Asset Target Allocation Growth Funds Index return of 8.18%.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
---------------------------------------
6 MONTHS* 1 YEAR 5 YEARS 10 YEARS
--------- ------ ------- --------
Institutional Class(1,5) ............... 7.75% 14.17% 10.10% 8.93%
PlanAhead Class(1,5) ................... 7.61% 13.80% 9.81% 8.64%
Service Class(1,2,5) ................... 7.45% 13.57% 9.66% 8.56%
AMR Class(1,5) ......................... 7.83% 14.42% 10.41% 9.22%
Lipper Mixed-Asset
Target Allocation
Growth Funds Index (3) .............. 8.18% 13.78% 8.70% 8.12%
S&P 500 Index(3) ....................... 8.60% 15.24% 8.54% 8.05%
Linked S&P 500/
Citigroup Value Index (3) ........... 10.08% 17.22% 15.84% 11.17%
Lehman Bros. Aggregate Index(3) ........ 2.64% 7.36% 5.06% 6.35%
Balanced Composite Index(4) ............ 7.09% 13.24% 8.96% 8.47%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and current performance may be lower or
higher than the performance data quoted. To obtain performance as of the
most recent month end, please visit www.americanbeaconfunds.com or call
1-800-967-9009. Fund performance in the table above does not reflect the
deduction of taxes a shareholder would pay on distributions or the
redemption of shares.
(2.) Fund performance for the five-year and ten-year periods represents the
total returns achieved by the PlanAhead Class from 4/30/97 up to 5/31/05,
the inception date of the Service Class, and the returns of the Service
Class since its inception. Expenses of the Service Class are higher than
those of the PlanAhead Class. Therefore, total returns shown may be higher
than they would have been had the Service Class been in existence since
4/30/97. A portion of the fees charged to the Service Class of the Fund was
waived through 2005. Performance prior to waiving fees was lower than
actual returns shown for periods through 2005.
(3.) The S&P 500 Index is an unmanaged index of common stocks publicly traded in
the United States. The Linked S&P 500/Citigroup Value Index represents
returns of the S&P 500/Barra Value Index ("Barra Value") up to October 31,
2005 and the S&P 500/Citigroup Value Style Index ("Citigroup Index")
thereafter. The Barra Index is a market value weighted index of stocks with
book-to-price ratios in the top 50% of the S&P 500 Index. The Citigroup
Index is a market value weighted index of stocks in the S&P 500 that score
highest based on an average book-to-price ratio, cash flow-to-price ratio,
sales to price ratio, and dividend yield, representing 50% of the total
market value of the S&P 500. The Lehman Brothers Aggregate Index is a
market value weighted index of government, corporate, mortgage-backed and
asset-backed fixed-rate debt securities of all maturities. The Lipper
Mixed-Asset Target Allocation Growth Funds index tracks the results of the
30 largest mutual funds in the Lipper Mixed-Asset Target Allocation Growth
Funds category. Lipper is an independent mutual fund research and ranking
service. One cannot directly invest in an index.
(4.) To reflect the Fund's allocation of its assets between investment grade
fixed-income securities and equity securities, the returns of the Linked
S&P 500/Citigroup Value Index and the Lehman Brothers Aggregate Index have
been combined in a 60%/40% proportion.
(5.) The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional, PlanAhead, Service and AMR Class
shares was 0.62%, 0.88%, 1.25% and 0.36%, respectively. After expense
reimbursements, the net expense ratio disclosed in the most recent
prospectus for the Service Class was 1.10%. The expense ratios above may
vary from the expense ratios presented in other sections of this report
that are based on expenses incurred during the period covered by this
report.
During the six-month period, the Fund's assets on average were invested 65%
in equities (including equitized cash) and 35% in fixed-income securities,
ending the period with the same investment allocation.
The equity portion of the Fund (excluding equitized cash) returned 11.5%,
outperforming the S&P 500/Citigroup Value Index ("S&P Value Index") return of
10.1%. The Fund's excess performance versus the S&P Value Index was entirely due
to stock selection, as sector allocation detracted modest relative value. Good
stock selection in the Information Technology, Industrials, and Consumer Staples
sectors added most to the Fund's performance. In the Information Technology
sector, Nokia (up 27.0%) and Mastercard (up 37.3%) generated positive Fund
performance. Honeywell International (up 30.0%) and Caterpillar (up 20.7%)
provided excess performance in the Industrials sector, while Imperial Tobacco
Group (up 25.0%) added value in Consumer Staples.
Equity sector allocation had a negative impact on the Fund's relative
returns during the six-month period, as the Fund was underweight in the Energy
sector (one of the better performing sectors of the Index), and overweight in
the Consumer Discretionary sector (one of the poorer performing sectors of the
Index). This negative performance was somewhat offset by positive performance
generated by an underweighting in Financials.
The fixed-income portion of the Fund returned 2.5% for the six-month
period, slightly underperforming the Lehman Brothers Aggregate Index ("Lehman
Index") return of 2.6%. The Fund's fixed-income underperformance was due mostly
to
5
PERFORMANCE OVERVIEW
AMERICAN BEACON BALANCED FUND(SM)
APRIL 30, 2007 (UNAUDITED)
an overweight in longer dated U.S. Treasuries and Agencies, which underperformed
as long rates increased during the period while short rates declined.
The sub-advisors continue to focus on the disciplined selection of
attractive securities with a goal of long term added value.
TOP TEN EQUITY HOLDINGS
% OF EQUITIES
-------------
Bank of America Corporation 1.9%
Exelon Corporation 1.5%
ConocoPhillips 1.5%
Citigroup, Incorporated 1.5%
JP Morgan Chase & Co. 1.4%
AT&T, Inc. 1.3%
Verizon Communications, Inc. 1.0%
Honeywell International, Inc. 1.0%
Pfizer, Incorporated 1.0%
CA, Incorporated 0.9%
EQUITY SECTOR ALLOCATION
% OF EQUITIES
-------------
Financials 29.3%
Industrials 12.8%
Consumer Discretionary 12.0%
Information Technology 9.1%
Health Care 8.6%
Energy 7.7%
Consumer Staples 6.4%
Utilities 6.4%
Telecommunication Services 3.9%
Materials 3.8%
FIXED-INCOME SECTOR ALLOCATION
% OF
FIXED INCOME
------------
U.S. Treasury 35.8%
Mortgage-Backed 24.9%
Corporate Bonds 20.6%
Agency 17.1%
Asset-Backed 1.6%
Investing in debt securities entails interest rate risk which is the risk
that debt securities will decrease in value with increases in market interest
rates.
6
PERFORMANCE OVERVIEW
AMERICAN BEACON LARGE CAP GROWTH FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the Large Cap Growth Fund returned 6.00% for the
six months ended April 30, 2007, compared to the Russell 1000 Growth Index
("Index") return of 8.42% and the Lipper Large-Cap Growth Funds Index return of
8.09%.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
-------------------------------------------
SINCE INCEP.
6 MONTHS* 1 YEAR 5 YEARS (7/31/00)
--------- ------ ------- ------------
Institutional Class(1,3) ......... 6.00% 9.67% 5.90% -4.26%
AMR Class(1,3) ................... 6.12% 10.08% 6.08% -4.09%
Lipper Large-Cap Growth Funds
Index(2) ..................... 8.09% 7.75% 5.01% -4.69%
Russell 1000 Growth Index(2)...... 8.42% 12.25% 6.22% -4.21%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and may differ from current performance. To
obtain performance as of the most recent month end, please visit
www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the
table above does not reflect the deduction of taxes a shareholder would pay
on distributions or the redemption of shares. A portion of the fees charged
to the Fund has been waived since 2004. Performance prior to waiving the
fees was lower than the actual returns shown for periods since 2004.
(2.) Russell 1000(R) Growth Index is a service mark of the Frank Russell
Company. The Russell 1000 Growth Index is an unmanaged index of those
stocks in the Russell 1000 Index with above-average price-to-book ratios
and above-average forecasted growth values. The Lipper Large Cap Growth
Funds index tracks the results of the 30 largest mutual funds in the Lipper
Large Cap Growth Funds category. Lipper is an independent mutual fund
research and ranking service. One cannot directly invest in an index.
(3.) The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional and AMR Class shares was 1.00% and
0.59%, respectively. After expense reimbursements, the net expense ratio
disclosed in the most recent prospectus for the Institutional Class was
0.90%. 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 entirely due to stock selection, as
sector allocation added modest value to the Fund's performance. From a stock
selection standpoint, the Fund had poor stock selection in the Consumer
Discretionary, Information Technology, Health Care, and Utilities sectors.
Positions in Circuit City Stores (down 24.2%) and Ann Taylor Stores (down 25.4%)
detracted most from the Consumer Discretionary sector's relative performance. In
the Information Technology sector, the largest detractors were Motorola (down
24.5%) and Symantec (down 15.6%), while Amgen (down 15.5%) hurt the Fund's
Health Care sector returns. TXU (up 5.4%) detracted value from relative
performance in the Fund's Utilities sector. This was slightly offset by good
stock selection in the Industrials sector where AGCO (up 56.0%) was the largest
contributor.
The Fund's overweighting in the Materials sector, the best performing
sector of the Index, provided positive relative performance.
Looking forward, the Fund's sub-advisors will continue to maintain a
disciplined, long-term approach to equity investing in larger stocks with
above-average growth potential.
TOP TEN HOLDINGS
% OF NET ASSETS
---------------
Cisco Systems, Incorporated 2.8%
Microsoft Corporation 2.6%
Hewlett-Packard Co. 2.3%
The Coca-Cola Co. 2.0%
Merck & Company, Incorporated 2.0%
Manpower, Inc. 1.9%
The Boeing Company 1.8%
Gilead Sciences, Inc. 1.7%
Pfizer, Inc. 1.7%
Johnson & Johnson 1.6%
SECTOR ALLOCATION
% OF EQUITIES
-------------
Information Technology 22.8%
Health Care 18.2%
Industrials 17.9%
Consumer Discretionary 15.7%
Financials 9.3%
Consumer Staples 7.7%
Materials 3.5%
Energy 3.3%
Telecommunication Services 1.3%
Utilities 0.3%
7
PERFORMANCE OVERVIEW
AMERICAN BEACON MID-CAP VALUE FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the Mid-Cap Value Fund returned 10.39% for the
six months ended April 30, 2007. The Fund trailed the Russell Midcap Value Index
("Index") return of 12.78% and the Lipper Mid-Cap Value Funds Index return of
13.07%.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
---------------------------------
SINCE INCEP.
6 MONTHS* 1 YEAR (6/30/04)
--------- ------ ------------
Institutional Class(1,3,5)........ 10.39% 18.15% 16.62%
PlanAhead Class (1,2,5)........... 10.22% 17.74% 16.48%
AMR Class (1,5)................... 10.41% 18.24% 16.70%
Lipper Mid-Cap Value Funds
Index(4)....................... 13.07% 16.33% 15.76%
Russell Midcap(R) Value Index(4).. 12.78% 19.66% 20.36%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and may differ from current performance. To
obtain performance as of the most recent month end, please visit
www.americanbeaconfunds.com or call 1-800-967-9009. Fund performance in the
table above does not reflect the deduction of taxes a shareholder would pay
on distributions or the redemption of shares. A portion of the fees charged
to the PlanAhead and AMR Classes of the Fund has been waived. Performance
of each class prior to waiving fees was lower than the actual returns
shown.
(2.) Fund performance represents the total returns achieved by the AMR class
from 6/30/04 up to 3/1/06, the inception date of the PlanAhead Class, and
the returns of the PlanAhead Class since its inception. Expenses of the
PlanAhead Class are higher than those of the AMR Class. As a result, total
returns shown may be higher than they would have been had the PlanAhead
Class been in existence since 6/30/04.
(3.) Fund performance represents the total returns achieved by the AMR Class
from 6/30/04 up to 11/30/05, the inception date of the Institutional Class,
and the returns of the Institutional Class since its inception. Expenses of
the Institutional Class are higher than those of the AMR Class. As a
result, total returns shown may be higher than they would have been had the
Institutional Class been in existence since 6/30/04.
(4.) Russell Midcap Value Index and Russell 1000 Index are registered trademarks
of the Frank Russell Company. The Russell Midcap Value Index is an
unmanaged index of those stocks in the Russell Midcap Index with
below-average price-to-book ratios and below-average forecasted growth
values. The Russell Midcap Index measures the performance of the 800
smallest companies in the Russell 1000(R) Index. The Lipper Mid-Cap Value
Funds Index tracks the results of the 30 largest mutual funds in the Lipper
Mid-Cap Value Funds category. Lipper is an independent mutual fund research
and ranking service. One cannot invest in an index.
(5.) The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional, PlanAhead and AMR Class shares was
1.22%, 1.64% and 0.95%, respectively. After expense reimbursements, the net
expense ratio disclosed in the most recent prospectus for the Institutional
and PlanAhead Classes was 0.90% and 1.23%, 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 through both stock selection and sector
allocation. The Fund's investments in the Health Care sector hurt performance
most. In the Health Care sector, the largest detractors were Omnicare (down
12.3%) and HealthSouth (down 13.4%). Stock selection in the Utilities,
Financials, and Industrials sectors also hurt the Fund's performance. In the
Utilities sector, holdings in Pinnacle West Capital (up 3.2%) and Wisconsin
Energy (up 7.3%) were responsible for most of the underperformance. American
Home Mortgage (down 21.9%) and First Marblehead (down 19.0%) detracted from the
Fund's performance in the Financials sector as did Ryder Systems (up 0.7%) in
the Industrials sector. The Fund's holdings in the Consumer Discretionary sector
added value relative to the Index, but not enough to offset the shortfall of the
aforementioned sectors. Whirlpool (up 23.2%) and Stanley Works (up 23.7%) were
the top contributors in the Consumer Discretionary sector.
Sector weightings also detracted from the Fund's performance relative to
the Index. Underweightings in Utilities and Materials, two of the better
performing sectors in the Index, and a significant overweight in Consumer
Discretionary, one of the poorer performing sectors in the Index, detracted
relative value. Partially offsetting these was an overweight in the Industrials
sector, which was a positive contributor to relative performance.
The sub-advisors' philosophy of investing in undervalued companies that
exhibit improving profitability and earnings growth potential should allow the
Fund to benefit longer term.
8
PERFORMANCE OVERVIEW
AMERICAN BEACON MID-CAP VALUE FUND(SM)
APRIL 30, 2007 (UNAUDITED)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
Whirlpool Corporation 2.6%
Black & Decker Corp. 2.0%
Affiliated Computer Services, Inc. 1.8%
XL Capital Limited 1.8%
Torchmark Corp. 1.6%
Loews Corp. - Carolina Group 1.6%
Goodrich Corp. 1.6%
L-3 Communications Holdings, Inc. 1.5%
Wisconsin Energy Corp. 1.5%
Coventry Health Care, Inc. 1.5%
SECTOR ALLOCATION
% OF
EQUITIES
----------
Financials 26.7%
Consumer Discretionary 24.9%
Industrials 11.7%
Health Care 13.3%
Utilities 8.1%
Information Technology 7.9%
Consumer Staples 5.4%
Energy 2.0%
Investing in the securities of mid-capitalization companies involves
greater risk and the possibility of greater price volatility than investing in
larger capitalization and more established companies.
9
PERFORMANCE OVERVIEW
AMERICAN BEACON SMALL CAP VALUE OPPORTUNITY FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the Small Cap Value Opportunity Fund returned
7.64% for the six months ended April 30, 2007. The Fund was ahead of the Russell
2000 Value Index ("Index") return of 6.36% but lagged the Lipper Small-Cap Value
Funds Index return of 9.54%.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
---------------------------------
SINCE INCEP.
6 MONTHS* 1 YEAR (3/31/06)
--------- ------ ------------
Institutional Class(1,3) ... 7.64% 8.27% 9.61%
PlanAhead Class(1,3) ....... 7.44% 8.17% 9.42%
Lipper Small-Cap
Value Funds Index (2) ... 9.54% 9.91% 9.98%
Russell 2000 Value
Index (2) ............... 6.36% 11.23% 10.59%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and current performance may be lower or
higher than the performance data quoted. To obtain performance as of the
most recent month end, please visit www.americanbeaconfunds.com or call
1-800-967-9009. Fund performance in the table above does not reflect the
deduction of taxes a shareholder would pay on distributions or the
redemption of shares. A portion of the fees charged to the Institutional
and PlanAhead Classes of the Fund has been waived. Performance prior to
waiving fees was lower than the actual returns shown.
(2.) Russell 2000(R) Value Index is a registered trademark of Frank Russell
Company. The Russell 2000 Value Index is an unmanaged index of those stocks
in the Russell 2000 Index with below-average price-to-book ratios and
below-average forecasted growth values. The Lipper Small-Cap Value Funds
Index tracks the results of the 30 largest mutual funds in the Lipper
Small-Cap Value Funds category. Lipper is an independent mutual fund
research and ranking service. One cannot directly invest in an index.
(3.) The total annual Fund operating expense ratio, gross of fee waivers, set
forth in the most recent Fund prospectus for the Institutional and
PlanAhead Class shares was 6.14% and 20.07%, respectively. After expense
reimbursement, the net expense ratio set forth in the most recent Fund
prospectus was 1.05% and 1.30%, 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 exceeded the Index due to good stock selection, as sector
allocation detracted modest value relative to the Index. Most of the excess
performance came from the Fund's holdings in the Financials sector, where
Highland Hospitality (up 41.9%), Felcor Lodging (up 25.6%), and FPIC Insurance
Group (up 28.9%) were the largest contributors. Holdings in the Information
Technology and Telecommunication Services sectors also were a source of excess
performance. Among the Fund's Information Technology sector holdings, ON
Semiconductor (up 72.2%), CommScope (up 46.2%), and Paxar (up 49.9%) added the
most value. In the Telecommunication Services sector, Golden Telecom (up 59.2%)
and Premiere Global Services (up 46.3%) were responsible for a large portion of
the excess return. Poor stock selection in the Materials, Health Care, and
Industrials sectors detracted value relative to the Index, but not enough to
offset the excess performance of the sectors mentioned above. In the Materials
sector, Amcol International (down 7.8%) and H.B. Fuller (up 3.7%) detracted the
most relative to the Index. Res-Care (down 7.4%) and Centene (down 11.8%) in the
Health Care sector hurt performance, as did NCI Building Systems (down 16.5%)
and The Greenbrier Companies (down 23.6%) in the Industrials sector.
An underweight in the Materials sector, the best performing sector of the
Index, detracted from the Fund's performance relative to the Index.
The sub-advisor's disciplined approach of investing in a diversified
portfolio of small cap value companies should allow the Fund to generate
competitive performance over longer periods of time.
10
PERFORMANCE OVERVIEW
AMERICAN BEACON SMALL CAP VALUE OPPORTUNITY FUND(SM)
APRIL 30, 2007 (UNAUDITED)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
CommScope, Inc. 1.2%
Highland Hospitality Corp. 1.2%
Parker Drilling Co. 1.1%
ON Semiconductor Corp. 1.1%
Greif, Inc. 1.1%
Kennametal, Inc. 1.1%
FelCor Lodging Trust, Inc. 1.1%
FirstFed Financial Corp. 1.0%
Delphi Financial Group, Inc. 1.0%
Golden Telecom, Inc. 1.0%
SECTOR ALLOCATION
% OF
EQUITIES
----------
Financials 31.9%
Consumer Discretionary 16.0%
Information Technology 13.4%
Industrials 12.9%
Materials 6.8%
Health Care 5.4%
Utilities 5.0%
Energy 3.7%
Consumer Staples 2.8%
Telecommunication Services 2.1%
Investing in the securities of small capitalization companies involves
greater risk and the possibility of greater price volatility than investing in
larger capitalization and more established companies.
11
EMERGING MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
Emerging markets weathered a material correction at the beginning of the
period after experiencing a remarkable three-year rally, largely due to concerns
in the United States about the slowdown in the housing market, currency
weaknesses and rising consumer prices. This correction was not an indication of
a secular bear market in the making, but instead a healthy contraction in some
overpriced countries and sectors. The Chinese market held up relatively well
versus the broader MSCI Emerging Markets Index, while India, Taiwan and South
Korea fared much worse.
Concerns surrounding the U.S. economy seemed to have abated, greatly
benefiting investment flows to emerging markets. The markets rebounded at the
end of 2006, turning in the highest quarterly return of 2006 in the fourth
quarter. Abundant liquidity continued to hunt for high beta (measure of market
risk compared to a benchmark) assets while the global economic picture remained
decidedly upbeat. Many emerging market stock exchanges reached record highs in
2006 including Mexico IPC and India BSE. After eight years of lackluster
performance, China surged ahead in the fourth quarter of 2006 to finish the year
up 70%. Tighter monetary policy did not diminish economic expansion. China's
local A share equity made headlines on February 27th as the market recorded its
largest single day drop in history, falling nearly 9%. This event, in
conjunction with the deteriorating news with regard to sub-prime mortgage
lending in the U.S., sparked a short-lived and relatively shallow sell off in
global equity markets. China's A share market is restricted to local investors,
the government and a selection of qualified foreign institutional investors
(QFII) subject to a quota. It's essentially a meaningless stock market for
global investors outside of China, but illustrates the power that China's
prospects could have on the rest of the world. China's economy doesn't appear to
be slowing in any significant manner, and local policymakers are projecting
another 10%+ growth a year.
China and India were the main drivers of performance in Asia the past year.
Although multiples expanded, value remained most compelling in South Korea,
Taiwan, and Thailand. Thailand struggled with political turmoil, high oil
prices, and weak consumer demand. However, repeal of the previously announced
restriction on foreign equity investment, coupled with a cut in interest rates,
led to a rebound in the Thai market. A weak U.S. dollar hit South Korean
exporters while unnecessary interest rate hikes sidelined a more robust domestic
recovery. The signing of a free trade agreement with the United States was
received well by the market. Taiwan also faced political issues while dealing
with a credit glut and sluggish performance in the tech sector. Technology
stocks posted higher profits that were not reflected in the stock price at the
end of the six-month period.
Turkey could remain volatile in the midst of political uncertainty.
However, exports remained robust, and the country could move to popular
elections for the office of president. Such an event could be a strong catalyst
for the market. South African consumption remained resilient, shored up by low
inflation and a strong Rand which alleviated pressure on interest rates. That
said, the currency is vulnerable to the high current account deficit and the
mining sector could face headwinds if commodity prices drop. Nationalization of
oil assets increased Russia's corporate governance risk. Highly dependent on oil
prices, the earnings growth profile was less robust than more diversified
emerging markets. President Putin seems to realize this, and has recently called
on business leaders to take the country's economic development into a new phase,
stating that Russia's priority is to maximize profit from commodities and other
raw materials and use the proceeds to modernize and diversify the economy.
12
EMERGING MARKETS OVERVIEW
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the Emerging Markets Fund returned 18.76% for
the six months ended April 30, 2007. The Fund underperformed the MSCI Emerging
Markets Index ("Index") return of 20.12% and the Lipper Emerging Market Funds
Index return of 19.44% for the period.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
----------------------------------------
SINCE
INCEP.
6 MONTHS* 1 YEAR 5 YEARS (7/31/00)
--------- ------ ------- ---------
Institutional Class(1,4) ...... 18.76% 17.48% 24.38% 15.85%
PlanAhead Class(1,2,4) ........ 18.52% 17.10% 24.07% 15.63%
AMR Class(1,4) ................ 18.86% 17.78% 24.68% 16.14%
Lipper Emg Mkt Funds
Index(3) ................... 19.44% 17.66% 25.51% 15.96%
MSCI Emg Mkts
Index(3) ................... 20.12% 17.85% 25.43% 15.79%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and may be lower or higher than the
performance data quoted.. To obtain performance as of the most recent month
end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund
performance in the table above does not reflect the deduction of taxes a
shareholder would pay on distributions or the redemption of shares.
(2.) Fund performance for the five-year and since inception periods represents
the total returns achieved by the Institutional Class from 7/31/00 up to
10/1/02, the inception date of the PlanAhead Class, and the returns of the
PlanAhead Class since its inception. Expenses of the PlanAhead Class are
higher than those of the Institutional Class. Therefore, total returns
shown may be higher than they would have been had the PlanAhead Class been
in existence since 7/31/00. A portion of the fees charged to the PlanAhead
Class of the Fund has been waived and recouped. Performance prior to fee
waivers and fee recoupment is different than the actual returns shown.
(3.) The MSCI Emerging Markets Index is a market capitalization weighted index
composed of companies that are representative of the market structure of
developing countries in Latin America, Asia, Eastern Europe, the Middle
East and Africa. The Lipper Emerging Market Funds Index tracks the results
of the 30 largest mutual funds in the Lipper Emerging Market Funds
category. Lipper is an independent research and ranking service. One cannot
directly invest in an index.
(4.) The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional, PlanAhead and AMR Class shares was
1.57%, 1.92% and 1.31%, 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
Although both country allocation and stock selection added value, the Fund
underperformed the Index over the six-month period primarily due to Fund
expenses and lower returns than the Index on the Fund's cash balances. Although
the average cash balance was a fairly modest 5.5%, it created a drag on Fund
performance, given the strength of the emerging markets asset class during the
period.
Country allocation was slightly positive for the six month period.
Underweighting Russia and Taiwan (each up over 8%), and overweighting Brazil (up
nearly 30%) benefited the Fund, while underweighting Chile and China detracted
from performance (each up approximately 30%).
Stock selection was positive during the six-month period, as strong
selections in Russia, China, and Poland more than offset poor selections in
India and Taiwan. In Russia, Sberbank and Unified Energy System each gained over
70%. In China, the Fund benefited from investments in China Coal Energy (up 53%)
and GOME Electrical Appliances Holdings (up 80.5%). Bank Millennium (up 72.1%),
a Polish financial institution, also added value. Positions that lagged their
home markets included Hindalco Industries (down 14.5%) and Hindustan Petroleum
(down 7.1%) in India, and SinoPac Financial Holdings (down 14.1%), High Tech
Computer (down 39.5%), and Benq Corp. (down 22.9%) in Taiwan.
The Fund's basic philosophy remains focused on investing in attractively
valued companies with above-average earnings growth expectations.
13
PERFORMANCE OVERVIEW
AMERICAN BEACON EMERGING MARKETS FUND(SM)
APRIL 30, 2007 (UNAUDITED)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
Petroleo Brasileiro S.A. 2.3%
Samsung Electronics Company Ltd. 2.0%
America Movil, S.A.B. de C.V. 1.8%
RAO Gazprom 1.8%
Companhia Vale do Rio Doce 1.5%
LUKOIL Oil Company 1.4%
Kookmin Bank 1.4%
United Microelectronics Corporation 1.3%
Unibanco - Uniao de Bancos Brasileiros S.A. 1.1%
MTN Group Ltd. 1.1%
SECTOR ALLOCATION
% OF
EQUITIES
----------
Financials 22.7%
Telecommunication Services 14.9%
Industrials 11.4%
Consumer Discretionary 11.3%
Information Technology 10.2%
Energy 9.8%
Materials 8.2%
Utilities 5.0%
Consumer Staples 4.5%
Health Care 2.0%
COUNTRY ALLOCATION
(PIE CHART)
% OF
EQUITIES
----------
South Korea 15.9%
Brazil 12.6%
China 11.9%
Other Europe, Middle East, Africa 11.1%
Taiwan 10.4%
Russia 8.4%
South Africa 7.8%
Other Asia 7.1%
Mexico 7.0%
India 6.9%
Other Latin America 0.9%
Investing in foreign equities entails additional risk not associated with
domestic equities, such as currency fluctuations, economic and political
instability and differences in accounting standards. The risks of investing in
foreign equities are heightened when investing in emerging markets.
14
DOMESTIC BOND MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
For the six-month period ended April 30, 2007, the investment grade fixed
income market, as defined by the Lehman Brothers Aggregate Index (the "Index"),
produced a 2.64% total return. Interest rates were essentially unchanged by
period end, as were credit spreads, which left income as the primary attribute
of total return during the period.
TOTAL RETURNS
PERIODS ENDED 4/30/07
---------------------
6 MONTH 12 MONTH
------- --------
Lehman Aggregate 2.64% 7.36%
Lehman Gov/Credit 2.47% 7.34%
SECTOR
U.S. Treasury 2.19% 6.86%
U.S. Agency 2.50% 4.93%
Mortgage-Backed 2.95% 7.46%
Commercial MBS 2.40% 7.25%
Asset-Backed 2.44% 6.08%
U.S. Credit 2.79% 8.25%
CREDIT RATING
Aaa 2.59% 7.10%
Aa 2.52% 7.78%
A 2.55% 8.22%
Baa 5.46% 5.60%
U.S.TREASURY YIELD
6 MONTH 12 MONTH
------- --------
2 Year 2.32% 4.97%
3 Year 2.38% 5.49%
5 Year 2.38% 6.20%
10 Year 1.84% 7.70%
30 Year 0.47% 10.43%
The interest rate markets reflected a period of mixed economic data that
was briefly interrupted by a mini equity market correction originating in China.
The labor market was in fairly healthy shape during the period, which left the
Federal Reserve Bank (the "Fed") to ponder the odds of inflation accelerating
from its elevated state. While the overall inflation rate moderated during the
period as oil prices leveled off, the core inflation rate, which excludes food
and energy prices, remained persistently high. The Fed vowed to remain diligent
against further inflation pressures but appeared satisfied that the moderating
rate of economic growth would reduce this pressure. As such, the Federal Funds
rate remained 5.25% during the period, and the yield curve remained inverted.
(PERFORMANCE GRAPH)
The primary dilemma during the period was whether the housing sector
correction would spread throughout the economy indicating a decline in the
overall health of the consumer. Unfortunately, making such a determination
during this period was complicated by the fact that the winter's heavily
seasonally-adjusted and weatheraffected data is inherently difficult to
interpret - especially given the unusually warm weather throughout the country
in late 2006. Not until Spring 2007 will investors get a clear picture of the
health of the underlying economic situation. As such, interest rates remained in
a fairly narrow range during the period as they reacted to the mixed economic
data as it was reported.
Further complicating matters, the markets were suddenly interrupted in
early 2007 by a brief correction in the Chinese stock market that rippled
throughout the world. Several theories exist as to why their market dropped
nearly 9% in one day, but no confirming explanation has surfaced. In subsequent
days, the Chinese market bottomed at a 10% decline, and the US and Europe
suffered a 5% decline. Fortunately, it was only a mini correction, but it was a
swift reminder of the interconnectedness of world markets and potential for
unexpected volatility in emerging economies. In a classic flight to quality, US
interest rates declined, equity markets dropped and credit spreads widened. Much
of the volatility, however, moderated by period end as investors regained
composure and as markets returned to their pre-correction levels. Investment
grade credit spreads ended the period essentially unchanged.
15
DOMESTIC BOND MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
(PERFORMANCE GRAPH)
Among the major asset classes in the fixed income markets, Mortgages
produced the highest total returns during the six-month period ended April 30,
2007, followed by US Credit and US Agencies. Mortgages benefited from a
combination of their incremental yield to maturity and their position along the
yield curve. The Mortgage sector had very little exposure to the 30-year part of
the yield curve and was not significantly affected by the slight rise in
longer-term interest rates, unlike Credit, Treasuries, and Agencies. Spreads in
the Credit and Mortgage sectors were essentially unchanged by period end, thus
these sectors primarily benefited from their incremental yield to maturity.
In general, the credit market continues to enjoy significant investor
demand for yield and has maintained strong credit fundamentals, but the
persistence of shareholder friendly initiatives, including leveraged buyouts,
share buybacks and increased dividends, has unnerved investment grade investors.
Notable investment grade companies taken private recently include TXU, Equity
Office Properties, First Data, and Sallie Mae, which resulted in significant
credit downgrades for these issuers. Industries, such as finance and utilities,
which were not historically attractive to private equity investors, are becoming
viable sectors from which they seek opportunity. Therefore, while the broader
credit market maintains high quality and low credit spreads, issuer-specific
event risk has increased dramatically.
The remaining sectors performed in line with market events. Agencies
outperformed Treasuries as spreads improved during the period, and the
Commercial Mortgage-Backed and Asset-Backed sectors benefited from their
position in the short end of the yield curve.
Overall, interest rates have been in a fairly narrow range as participants
search for signs of the economy's fate and investor demand for risk. The
inverted yield curve has not created any of its own problems, so the Fed can
remain comfortably on hold until the evidence is overwhelmingly indicative of a
need to adjust interest rates - either up or down.
16
HIGH YIELD BOND MARKET OVERVIEW
APRIL, 31 2007 (UNAUDITED)
Beginning the semi-annual period (November 2006), it was clear that the
high yield market had performed better than just about anyone had anticipated
throughout the year. The Lehman Brothers U.S. Corporate High-Yield Index
("Lehman High Yield Index") and the 2% issuer-capped version of that index (the
"Lehman 2% Issuer-Capped Index") were on track to return over 11 1/2% and
10 1/2%, respectively, versus Wall Street's consensus estimate of around 3-5%.
How did the market do it? First, it shrugged off almost all of the
"negatives", including a worsening geopolitical situation, higher energy prices
and a weakening dollar. Second, interest rates cooperated as it became apparent
that the Federal Reserve Bank (the "Fed") would stop raising the Fed Funds rate
and might even ease. At the beginning of December, the 10-year Treasury yield
was at 4.43%. It started 2006 at virtually the same level (4.39%) but peaked at
5.25% at mid-year. Likewise, the 5-year Treasury began at 4.35%, topped out at
5.23% and then moved back to 4.39% by December, essentially unchanged.
The high yield market finished out 2006 strong. The Lehman High Yield Index
returned +11.85%. The Lehman 2% Issuer-Capped Index was +10.76%. These results
easily beat the returns of the 10-year Treasury (+1.44%), investment grade
corporates (Lehman Aggregate Index, +4.33%) and emerging market dollar -
denominated bonds (J.P. Morgan Emerging Market Bond Index +9.96%).
Even more impressive was the depth and resiliency of the market. It
digested a near-record $148 billion of new issues, including $29 billion in
November alone. In January, NRG Energy's $3.6 billion new issue was one of the
largest ever. By the end of the year, three others had come to market that were
larger: Freescale Semiconductor ($6 billion), HCA ($5.7 billion) and NXP
(Philips) ($3.8 billion).
While Treasury yields were a neutral factor, strong equity markets created
a bullish environment, defaults dropped to a mere 17 companies (out of 1,033)
and a rock-bottom .84% default rate. Also, with a boost from a new rating
methodology at Moody's, upgrades led downgrades by 1.17 to 1, the best ratio
since 1997 and a far cry from 2002, when it was a mere .32 to 1.
If one were looking for trends in 2006, they could probably be summed up by
two acronyms: Leveraged Buy-Out (LBO) and Credit Default Swap (CDS). (A CDS is
an agreement whereby two parties exchange credit risk without explicitly buying
or selling a debt instrument.) A tremendous amount of money poured into private
equity funds, which formed syndicates to acquire ever larger companies. HCA, at
$33 billion, set the record. LBOs created 24% of new issuance in 2006, up from
13% in 2005.
The LBO situation turned credit analysis upside down. While defaults
normally account for the greatest risk to principal, in 2006 a greater risk was
the re-levering of companies whose bonds had "investment grade" covenants (no
pledge by the bond issuer to buy back the bond at face value in the event of a
takeover). The name of the game in the investment grade world was "who will be
next?" and companies with better balance sheets and depressed stock prices
became the best targets for LBOs. In high yield, about 25% of all bonds, mostly
former investment grade, had no re-levering protection.
The second major trend was the further development of the CDS market. This
enabled participants to insure or issue insurance on the probability of default
without having to deal with individual bonds and their covenants and interest
rate-related movements. In the high-grade world, CDS accounted for 70% of all
trading. In high yield, it was about 25% last year and could exceed 50% in 2007.
February was rolling right along as previous months until near month-end
when the Chinese market began clamping down on illegal equity investing. That
sparked a one-day decline of 8.8% in the Chinese equity market, reverberations
in other equity markets and a flight to quality. A "modest breather" began to
unfold in March. The Lehman High Yield Index rose .11%, breaking a seven-month
string of 1%+ gains. The high yield market returned to its winning ways in
April, logging a +1.30% return (Lehman High Yield Index). The more widely
followed Lehman 2% Issuer-Capped Index was also +1.30%. Investors who took more
risk were again rewarded as the Caa subsegment returned 1.89%. It outperformed
17
HIGH YIELD BOND MARKET OVERVIEW
APRIL 30, 2007 (UNAUDITED)
the overall Index by over 2 percentage points for the 6-month period ending
April 30, 2007.
All of the four key variables that determine market performance were
neutral to positive. Equities hit record highs, seemingly day-after-day.
Treasury yields in the 5-10 year range inched lower as signs of economic slowing
continued to emerge and market sentiment on the Fed's next move rose to 75% for
easing. Defaults continued to be virtually non-existent with only two out of
over 800 companies in the Lehman High Yield Index having that dubious
distinction so far this year. The trailing 12 months default rate was a mere
0.64% through April (source JP Morgan). Finally, new issue supply stayed very
tame at $11.8 billion for April, making March's outsized $20.8 billion look like
an aberration ($6 billion of that was Freeport-McMoran Copper & Gold).
The long-anticipated "credit correction" seems to be getting pushed further
into the future. However, the seeds of a return to a more normal 3-4% default
rate seem to have been planted. First, an astounding 60% of April's issuance was
rated Caa by Moody's, the highest percentage since 1999. This has helped bring
the CCC segment of the Lehman High Yield Index to 17.6%, its highest level ever.
Since the rating agencies have been fairly predictive in the past, at some
point the higher CCC mix can be expected to cause some problems.
18
PERFORMANCE OVERVIEW
AMERICAN BEACON HIGH YIELD BOND FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the High Yield Bond Fund returned 6.32% for the
six months ended April 30, 2007. The Fund underperformed the JP Morgan Global
High-Yield Index ("Index") return of 7.41% and the Lipper High Current Yield
Funds Index, which gained 6.99% for the period.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
--------------------------------------
SINCE
1 5 INCEP.
6 MONTHS* YEAR YEARS (12/29/00)
--------- ----- ----- ----------
Institutional Class(1,4) ............ 6.32% 10.11% 9.04% 9.39%
PlanAhead Class(1,2,4) .............. 6.20% 9.87% 8.73% 9.03%
Lipper High Current
Yield Funds Index (3) ............ 6.99% 11.21% 9.64% 7.61%
JP MorganGlobal
High Yield Index (3) ............. 7.41% 12.43% 10.92% 10.19%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and current performance may be lower or
higher than the performance data quoted. To obtain performance as of the
most recent month end, please visit www.americanbeaconfunds.com or call
1-800-967-9009. Fund performance in the table above does not reflect the
deduction of taxes a shareholder would pay on distributions or the
redemption of shares. A portion of the fees charged to the Institutional
Class of the Fund was waived through 2004. Performance prior to waiving
fees was lower than the actual returns shown for periods through 2004.
(2.) Fund performance for the since inception period represents the total
returns achieved by the Institutional Class from 12/29/00 up to 3/1/02, the
inception date of the PlanAhead Class, and the returns of the PlanAhead
Class since its inception. Expenses of the PlanAhead 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 PlanAhead Class been in existence
since 12/29/00.
(3.) The JPMorgan Global High-Yield Index ("JPMorgan Index") is an unmanaged
index of fixed income securities with a maximum credit rating of BB+ or
Ba1. Issues must be publicly registered or issued under Rule 144A under the
Securities Act of 1933, with a minimum issue size of $75 million (par
amount). A maximum of two issues per issuer are included in the JPMorgan
Index. Convertible bonds, preferred stock, and floating-rate bonds are
excluded from the JPMorgan Index. The Lipper High Current Yield Funds Index
tracks the results of the 30 largest mutual funds in the Lipper High
Current Yield Funds category. Lipper is an independent mutual fund research
and ranking service. One cannot directly invest in an index.
(4.) The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional and PlanAhead Class shares was 0.86%
and 1.09%, respectively. The expense ratios above may vary from the
expense ratios presented in other sections of this report that are based
on expenses incurred during the period covered by this report.
The Fund underperformed the Index over the six-month period predominately
due to issue selection and fund expenses, as sector allocation was positive.
Issue selection in the Manufacturing, Service, and Other Corporate sectors
detracted from performance for the six-month period, despite positive
contribution from issue selections in the Consumer sector.
From a sector allocation perspective, the Fund benefited from
underweighting the two worst performing sectors in the Index - Utility and
Finance, which gained 5.2% and 3.6%, respectively. Overweighting the Cable/Media
sector (up 8.6%) also benefited performance for the period. Underweighting the
Other Corporate sector and not owning Transportation sector positions hurt the
Fund's relative performance, as they were the two top performing sectors for
the period with returns of over 9%. It is important to note that any sector
over- or underweighting is a residual of the investment process and not an
active part of the Fund's strategy.
The sub-advisors' "bottom-up", research intensive investment process, which
focuses on companies with strong cash flow and fundamental credit strength,
remains in place.
Investing in debt securities entails interest rate risk which is the risk that
debt securities will decrease in value with increases in market interest rates.
Investing in high yield securities involves additional risks when compared to
investing in investment grade securities. These include a greater risk of
default or bankruptcy and an increased sensitivity to financial difficulties or
changes in interest rates.
19
PERFORMANCE OVERVIEW
AMERICAN BEACON HIGH YIELD BOND FUND(SM)
APRIL 30, 2007 (UNAUDITED)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
General Motors Acceptance Corp., 6.875%, Due 9/15/2011 1.1%
Charter Communications Holdings, 10.250%, Due 9/15/2010 1.1%
Turning Stone Resort & Casino, 9.125%, Due 12/15/2010 1.1%
UmbrellaAcquisition, Inc., 9.750%, Due 3/15/2015 1.0%
Chesapeake Energy Corp., 7.625%, Due 7/15/2013 1.0%
HCA, Inc., 9.250%, Due 11/15/2016 1.0%
PetroQuest Energy, Inc., 10.375%, Due 5/15/2012 0.9%
Insight Communications, Inc., 12.250%, Due 2/15/2011 0.8%
E*Trade Financial Corp., 8.000%, Due 6/15/2011 0.8%
Idearc, Inc., 8.000%, Due 11/15/2016 0.8%
SECTOR ALLOCATION
% OF
FIXED INCOME
------------
Corporate 100.0%
20
PERFORMANCE OVERVIEW
AMERICAN BEACON ENHANCED INCOME FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The PlanAhead Class of the Enhanced Income Fund returned 3.28% for the six
months ended April 30, 2007. Its benchmark, a blend of 75% Lehman Brothers
Aggregate and 25% Merrill Lynch All U.S. Convertibles Index, returned 3.82%. The
Fund's peer group, the Lipper Intermediate Investment Grade Index, returned
2.69% for the same period.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
---------------------------------------
SINCE
INCEP.
6 MONTHS* 1 YEAR 3 YEARS (7/1/03)
--------- ------ ------- --------
PlanAhead Class(1,4) ................. 3.28% 6.67% 4.45% 4.15%
Lipper Intermediate
Investment Grade Index (2) ........ 2.69% 7.28% 4.34% 3.53%
Linked Lehman Bros.
Aggregrate Index (2) .............. 2.59% 6.59% 3.58% 2.82%
Merrill Lynch All U.S.
Convertibles Index (2) ............ 7.40% 11.46% 8.82% 10.40%
Enhanced Income
Composite Index(3) ................ 3.82% 7.85% 4.92% 4.72%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and current performance may be lower or
higher than the performance data quoted. To obtain performance as of the
most recent month end, please visit www.americanbeaconfunds.com or call
1-800-967-9009. Fund performance in the table above does not reflect the
deduction of taxes a shareholder would pay on distributions or the
redemption of shares
(2.) The Linked Lehman Brothers Aggregate Index represents returns of the Lehman
Bros. Gov./Credit Intermediate Index ("Intermediate Index") up to October
31, 2006 and the Lehman Bros. Aggregate Index ("Aggregate Index")
thereafter. The Intermediate Index is an unmanaged index of investment
grade corporate and government debt issues with maturities between one and
ten years. The Aggregate Index is a market value weighted index of
government, corporate, mortgage-backed and asset-backed fixed-rate debt
securities of all maturities. The Merrill Lynch All U.S. Convertibles Index
is an unmanaged index of domestic securities of all quality grades that are
convertible into U.S. dollar-denominated common stock, ADRs or cash
equivalents. The Lipper Intermediate Investment Grade Index tracks the
results of the 30 largest mutual funds in the Lipper Intermediate
Investment Grade Funds category. Lipper is an independent mutual fund
research and ranking service. One cannot directly invest in an index.
(3.) To reflect the Fund's allocation of its assets between investment grade
fixed-income securities and convertible securities, the returns of the
Linked Lehman Brothers Aggregate Index and the Merrill Lynch All U.S.
Convertibles Index have been combined in a 75%/25% proportion.
(4.) The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the PlanAhead Class shares was 0.96%. The expense ratio
above may vary from the expense ratio presented in other sections of this
report that is based on expenses incurred during the period covered by this
report.
The Fund's assets have been allocated approximately 75% to American Beacon
Advisors, Inc. (the "Manager") which invests primarily in income producing,
short- and intermediate-term investment grade bonds and 25% to a sub-advisor
which invests in securities including convertible bonds, convertible preferreds,
high yield bonds, and equities in order to try to enhance the return of the
overall Fund.
During the six-month period, the investment grade bond portion of the Fund
returned 2.6% before expenses which equaled the 2.6% return for the Lehman
Brothers Aggregate Index. This portion of the Fund benefited from an overweight
position in Corporate securities. This positive performance was offset by an
underweighting in Mortgages, which detracted from relative performance.
The remaining portion of the Fund, managed by the Fund's sub-advisor,
returned 7.3% before expenses. These results slightly trailed the 7.4% return of
the Merrill Lynch All U.S. Convertibles Index ("ML Index"). This portion of the
Fund was helped by having greater equity sensitivity relative to the ML Index.
Convertible issues with higher equity sensitivity performed well, reflecting the
positive returns within the equity markets for the period. However, this portion
of the Fund also held non-convertible common stocks and corporate bonds, in an
effort to manage the risk/reward potential of the Fund. The non-convertible
holdings lagged the ML Index return and detracted from relative returns.
The Manager and the Fund's sub-advisor remain focused on the Fund's
investment objectives of generating income and capital appreciation.
21
PERFORMANCE OVERVIEW
AMERICAN BEACON ENHANCED INCOME FUND(SM)
APRIL 30, 2007 (UNAUDITED)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
U.S. Treasury Note, 4.875%, Due 8/15/2016 2.7%
Federal National Mortgage Association, Pool
#745418, 5.500%, Due 4/1/2036 2.6%
Federal National Mortgage Association, Pool
#745275, 5.000%, Due 2/1/2036 2.6%
Federal National Mortgage Association, Pool
#256022, 5.500%, Due 12/1/2035 2.6%
Federal Home Loan Mortgage Corp., Pool
G08079, 5.000%, Due 9/1/2035 2.6%
U.S. Treasury Bond, 7.875%, Due 2/15/2021 2.3%
U.S. Treasury Note, 4.000%, Due 2/15/2014 1.9%
Federal National Mortgage Association, Pool
#897820, 6.000%, Due 9/1/2036 1.8%
U.S. Treasury Note, 4.750%, Due 5/15/2014 1.5%
Citigroup, Inc., 5.125%, Due 2/14/2011 1.5%
FIXED-INCOME SECTOR ALLOCATION
% OF
FIXED INCOME
------------
Corporate Bonds 35.1%
Mortgage-Backed 28.3%
Total Convertible Bonds 16.5%
Treasury 15.3%
Asset-Backed 4.8%
EQUITY SECTOR ALLOCATION
% OF
EQUITIES
--------
Information Technology 32.3%
Financials 29.4%
Industrials 11.7%
Consumer Discretionary 9.9%
Healthcare 9.0%
Consumer Staples 7.7%
Investing in debt securities entails interest rate risk which is the risk
that debt securities will decrease in value with increases in market interest
rates.
22
PERFORMANCE OVERVIEW
AMERICAN BEACON INTERMEDIATE BOND FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the Intermediate Bond Fund returned 3.05% for
the six months ended April 30, 2007, outperforming the Lehman Brothers Aggregate
Index ("Index") return of 2.64% and the Lipper Intermediate Investment Grade
Index return of 2.69%.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
--------------------------------------
SINCE
5 INCEP.
6 MONTHS* 1 YEAR YEARS (9/15/97)
--------- ------ ----- ---------
Institutional Class(1,3) ... 3.05% 7.75% 4.84% 5.77%
Lipper Intermediate Inv.
Grade Index (2) ......... 2.69% 7.28% 4.98% 5.76%
Lehman Bros. Agg.
Index (2) ............... 2.64% 7.36% 5.06% 6.15%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and current performance may be lower or
higher than the performance data quoted. To obtain performance as of the
most recent month end, please visit www.americanbeaconfunds.com or call
1-800-967-9009. Fund performance in the table above does not reflect the
deduction of taxes a shareholder would pay on distributions or the
redemption of shares.
(2.) Since inception return for the Lehman Brothers Aggregate Index is from
8/31/97. The Lehman Brothers Aggregate Index is a market value weighted
index of government, corporate, mortgage-backed and asset-backed fixed-rate
debt securities of all maturities. The Lipper Intermediate Investment Grade
Index tracks the results of the 30 largest mutual funds in the Lipper
Intermediate Investment Grade funds category. Lipper is an independent
research and ranking service. One cannot directly invest in an index.
(3.) The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional Class shares was 0.38%. The expense
ratio above may vary from the expense ratio presented in other sections of
this report that is based on expenses incurred during the period covered by
this report.
The Fund's excess performance relative to the Index was primarily due to good
security selection in the Corporate sector. The Fund's duration overall was
similar to that of the Index over the course of the six months; however, an
overweight in intermediate maturities (2 to 4 years) added value as the yield
curve steepened during the period. Finally, the Fund was overweight versus the
Index in BBB and A quality bonds, which performed better than higher quality
bonds.
The Fund's investment managers remain focused on a conservative approach
toward investing in the bond market, focusing on issuer-specific opportunities.
TOP TEN HOLDINGS
% OF
NET
ASSETS
------
U.S. Treasury Note, 4.750%, Due 5/15/2014 5.8%
U.S. Treasury Note, 4.625%, Due 2/15/2017 3.0%
U.S. Treasury Note, 4.375%, Due 8/15/2012 2.1%
U.S. Treasury Bond, 4.500%, Due 2/15/2036 1.8%
U.S. Treasury Note, 4.875%, Due 4/30/2011 1.7%
U.S. Treasury Note, 4.625%, Due 2/29/2012 1.5%
Federal National Mortgage Association, Pool
#735224, 5.500%, Due 2/1/2035 1.3%
Federal Home Loan Mortgage Corp., 5.250%,
Due 2/24/2011 1.2%
Chase Mortgage Finance Corp., 6.060%, Due
9/25/2036 1.2%
U.S. Treasury Note, 3.875%, Due 5/15/2010 1.2%
SECTOR ALLOCATION
% OF
FIXED
INCOME
------
Mortgage-Backed 38.2%
Corporates 29.5%
U.S. Treasury 26.0%
U.S. Agency 3.8%
Asset-Backed 2.5%
Investing in debt securities entails interest rate risk which is the risk
that debt securities will decrease in value with increases in market interest
rates.
23
PERFORMANCE OVERVIEW
AMERICAN BEACON SHORT-TERM BOND FUND(SM)
APRIL 30, 2007 (UNAUDITED)
The Institutional Class of the Short-Term Bond Fund returned 3.11% for the
six months ended April 30, 2007, which outperformed the Merrill Lynch 1-3 Year
Gov/Corp Index (the "Index") return of 2.42% and the Lipper Short Investment
Grade Bond Funds Index ("Lipper") return of 2.51%.
ANNUALIZED TOTAL RETURNS
PERIODS ENDED 4/30/07
---------------------------------------
6 MONTHS* 1 YEAR 5 YEARS 10 YEARS
--------- ------ ------- --------
Institutional Class(1,3) ....... 3.11% 6.05% 3.58% 4.91%
PlanAhead Class(1,3) ........... 2.73% 5.50% 3.01% 4.39%
Lipper Short Inv. Grade
Index (2) ................... 2.51% 5.40% 3.13% 4.50%
Merrill Lynch 1-3 Yr.
Gov./Corp. Index(2) ......... 2.42% 5.32% 3.34% 4.98%
* Not annualized
(1.) Performance shown is historical and may not be indicative of future
returns. Investment returns and principal value will vary, and shares may
be worth more or less at redemption than at original purchase. Performance
shown is as of date indicated and may be lower or higher than the
performance data quoted. To obtain performance as of the most recent month
end, please visit www.americanbeaconfunds.com or call 1-800-967-9009. Fund
performance in the table above does not reflect the deduction of taxes a
shareholder would pay on distributions or the redemption of shares. A
portion of the fees charged to the PlanAhead Class of the Fund has been
waived. Performance prior to waiving fees was lower than the actual returns
shown.
(2.) The Merrill Lynch 1-3 Yr. Gov./Corp. Index is a market value weighted
performance benchmark for government and corporate fixed-rate debt
securities with maturities between one and three years. The Lipper Short
Investment Grade Bond Funds Index tracks the results of the 30 largest
mutual funds in the Lipper Short Investment Grade Bond Funds category.
Lipper is an independent mutual fund research and ranking service. One
cannot directly invest in an index.
(3.) The total annual Fund operating expense ratio set forth in the most recent
Fund prospectus for the Institutional and PlanAhead Class shares was 0.36%
and 0.91%, 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.
A majority of the Fund's outperformance during the period was attributable
to class action settlement proceeds that the Fund received in December 2006 that
were related to investment activity in 2002.
The Fund's remaining outperformance during the period was due to its
overweight positions in the Corporate and Asset-Backed sectors - both of which
outperformed Treasuries and Agencies during the period. The Fund's duration was
neutral to the Index during the period and did not play a significant role in
its relative total returns.
The Fund benefited from an overweight position in the Corporate sector,
which produced the highest returns of the major sectors. Despite a volatile
interruption from Asia, credit spreads ended the period essentially unchanged
allowing Corporates to outperform Treasuries and Agencies due to their
incremental yield to maturity. The Fund did not have exposure to the sub-prime
mortgage industry, which also helped relative total returns during the period.
The Fund also maintained its overweight position in the Asset-Backed
sector, including Credit Cards and Autos, which outperformed Treasuries and
Agencies due to its incremental yield to maturity.
The Fund's duration was gradually moved towards neutral after the Federal
Reserve Bank (the "Fed") stopped raising interest rates in June 2006. Since
then, short-term interest rates have been in a fairly narrow range, the economic
data has been mixed and the Fund's duration has been neutral. As the economic
situation develops, the Fund's duration will likely be adjusted to take
advantage of potential moves by the Fed.
24
PERFORMANCE OVERVIEW
AMERICAN BEACON SHORT-TERM BOND FUND(SM)
APRIL 30, 2007 (UNAUDITED)
TOP TEN HOLDINGS
% OF
NET ASSETS
----------
General Electric Capital Corp.,
5.875%, Due 2/15/2012 3.4%
Banc of America Securities Auto Trust,
4.080%, Due 4/18/2010 3.3%
HSBC Automotive Trust, 4.350%,
Due 6/18/2012 3.3%
DaimlerChrysler Auto Trust, 3.28%,
Due 12/8/2009 3.3%
Merrill Lynch & co., Inc., 6.00%,
Due 2/17/2009 2.8%
Wachovia Corp., 6.400%, Due 4/1/2008 2.8%
John Deere Capital Corp., 4.125%,
Due 1/15/2010 2.7%
Comerica Bank, 6.000%, Due 10/1/2008 2.5%
MBNA Corp., 7.500%, Due 3/15/2012 2.4%
Washington Mutual, Inc., 8.250%,
Due 4/1/2010 2.4%
SECTOR ALLOCATION
% OF
FIXED INCOME
------------
Corporate Bonds 72.2%
Asset-Backed 21.5%
Mortgage-Backed 6.3%
Investing in debt securities entails interest rate risk which is the risk
that debt securities will decrease in value with increases in market interest
rates.
25
FUND EXPENSES - ACTUAL
APRIL 30, 2007 (UNAUDITED)
FUND EXPENSE EXAMPLE
As a shareholder of a Fund, you incur two types of costs: (1) transaction
costs, including redemption fees if applicable, and (2) ongoing costs, including
management fees, administrative service fees, and other Fund expenses. The
examples below are intended to help you understand the ongoing cost (in dollars)
of investing in a particular Fund and to compare these costs with the ongoing
costs of investing in other mutual funds. The examples are based on an
investment of $1,000 invested at the beginning of the period in each Class and
held for the entire period from November 1, 2006 through April 30, 2007.
ACTUAL EXPENSES
The following tables provide information about actual account values and
actual expenses. You may use the information on this page, together with the
amount you invested, to estimate the expenses that you paid over the period.
Simply divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the "Expenses Paid During
Period" for the applicable Fund to estimate the expenses you paid on your
account during this period. Shareholders of the PlanAhead and Institutional
Classes that invest in a Fund through an IRA may be subject to a custodial IRA
fee of $12 that is typically deducted each December. If your account was subject
to a custodial IRA fee during the period, your costs would have been $12 higher.
SMALL CAP HIGH
LARGE CAP MID-CAP VALUE EMERGING YIELD SHORT-TERM
BALANCED GROWTH VALUE OPPORTUNITY MARKETS BOND INTERMEDIATE BOND
INSTITUTIONAL CLASS FUND FUND FUND FUND FUND FUND BOND FUND FUND
- ------------------- --------- --------- --------- ----------- --------- --------- ------------ ----------
Beginning Account Value 11/1/06 ...... $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Ending Account Value 04/30/07 ........ $1,077.51 $1,060.05 $1,103.94 $1,076.41 $1,187.62 $1,063.18 $1,030.50 $1,031.12
Expenses Paid During Period
11/1/06 - 04/30/07* ............... $ 2.88 $ 4.75 $ 4.90 $ 5.41 $ 8.14 $ 4.40 $ 1.71 $ 1.76
Annualized Expense Ratio ............. 0.56% 0.90% 0.94% 1.05% 1.50% 0.84% 0.34% 0.35%
SMALL CAP
MID-CAP VALUE EMERGING HIGH ENHANCED
BALANCED VALUE OPPORTUNITY MARKETS YIELD INCOME SHORT-TERM
PLANAHEAD CLASS FUND FUND FUND ** FUND BOND FUND FUND BOND FUND
- --------------- --------- --------- ----------- --------- --------- --------- ----------
Beginning Account Value 11/1/06 ...... $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Ending Account Value 04/30/07 ........ $1,076.14 $1,102.19 $1,074.37 $1,185.23 $1,062.03 $1,032.84 $1,027.29
Expenses Paid During Period
11/1/06 - 04/30/07 * .............. $ 4.27 $ 6.31 $ 6.63 $ 10.02 $ 5 .52 $ 4.74 $ 4.37
Annualized Expense Ratio ............. 0.83% 1.21% 1.29% 1.85% 1 .08% 0.94% 0.87%
BALANCED
SERVICE CLASS FUND
- ------------- ---------
Beginning Account Value 11/1/06 .. $1,000.00
Ending Account Value 04/30/07 .... $1,074.50
Expenses Paid During Period
11/1/06 - 04/30/07 * .......... $ 5.61
Annualized Expense Ratio ......... 1.09%
BALANCED LARGE CAP MID-CAP EMERGING
AMR CLASS FUND GROWTH FUND VALUE FUND MARKETS FUND
- --------- --------- ----------- ---------- ------------
Beginning Account Value 11/1/06 .. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Ending Account Value 4/30/2007 ... $1,078.26 $1,061.21 $1,104.11 $1,188.55
Expenses Paid During Period
11/1/06 - 04/30/07 * .......... $ 1.60 $ 3.07 $ 4.07 $ 6.67
Annualized Expense Ratio ......... 0.31% 0.60% 0.78% 1.23%
- ----------
* Expenses are equal to the Fund's annualized expense ratios for the
six-month period multiplied by the average account value over the period,
multiplied by the number derived by dividing the number of days in the most
recent fiscal half-year (181) by days in the year (365) to reflect the
half- year period.
See accompanying notes
26
FUND EXPENSES - HYPOTHETICAL
April 30, 2007 (Unaudited)
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The following tables provide information about hypothetical account values
and hypothetical expenses based on a Fund's actual expense ratio and an assumed
5% per year rate of return before expenses (not the Fund's actual return). You
may compare the ongoing costs of investing in a particular Fund with other funds
by contrasting this 5% hypothetical example and the 5% hypothetical examples
that appear in the shareholder reports of the other funds. The hypothetical
account values and expenses may not be used to estimate the actual ending
account balance or expenses you paid for the period. Shareholders of the
PlanAhead and Institutional Classes that invest in a Fund through an IRA may be
subject to a custodial IRA fee of $12 that is typically deducted each December.
If your account was subject to a custodial IRA fee during the period, your costs
would have been $12 higher.
You should also be aware that the expenses shown in the table highlight
only your ongoing costs and do not reflect any transaction costs charged by a
Fund, such as redemption fees as applicable. Similarly, the expense examples for
other funds do not reflect any transaction costs charged by those funds, such as
sales charges (loads), redemption fees or exchange fees. Therefore, the
following tables are useful in comparing ongoing costs only and will not help
you determine the relative total costs of owning different funds. If you were
subject to any transaction costs during the period, your costs would have been
higher.
SMALL CAP HIGH SHORT-
LARGE CAP MID-CAP VALUE EMERGING YIELD TERM
BALANCED GROWTH VALUE OPPORTUNITY MARKETS BOND INTERMEDIATE BOND
INSTITUTIONAL CLASS FUND FUND FUND FUND FUND FUND BOND FUND FUND
- ------------------- --------- --------- --------- ----------- --------- --------- ------------ ---------
Beginning Account Value
11/1/06 .................. $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Ending Account Value
04/30/07 ................. $1,022.02 $1,020.18 $1,020.13 $1,019.59 $1,017.36 $1,020.53 $1,023.11 $1,023.06
Expenses Paid During Period
11/1/06-04/30/07 * ....... $ 2.81 $ 4.66 $ 4.71 $ 5.26 $ 7.50 $ 4.31 $ 1.71 $ 1.76
Annualized Expense Ratio .... 0.56% 0.90% 0.94% 1.05% 1.50% 0.84% 0.34% 0.35%
SMALL CAP
MID-CAP VALUE EMERGING ENHANCED
BALANCED VALUE OPPORTUNITY MARKETS HIGH YIELD INCOME SHORT-TERM
PLANAHEAD CLASS FUND FUND FUND ** FUND BOND FUND FUND BOND FUND
- --------------- --------- --------- ----------- --------- ---------- --------- ----------
Beginning Account Value
11/1/06 .................. $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00
Ending Account Value
04/30/07 ................. $1,020.68 $1,018.79 $1,018.40 $1,015.62 $1,019.44 $1,020.13 $1,020.48
Expenses Paid During Period
11/1/06-04/30/07 * ....... $ 4.16 $ 6.06 $ 6.46 $ 9.25 $ 5.41 $ 4.71 $ 4.36
Annualized Expense Ratio .... 0.83% 1.21% 1.29% 1.85% 1.08% 0.94% 0.87%
BALANCED
SERVICE CLASS FUND
- ------------- ---------
Beginning Account Value
11/1/06 .................. $1,000.00
Ending Account Value
04/30/07 ................. $1,019.39
Expenses Paid During Period
11/1/06-04/30/07 * ....... $ 5.46
Annualized Expense Ratio .... 0.83%
LARGE CAP EMERGING
BALANCED GROWTH MID-CAP MARKETS
AMR CLASS FUND FUND VALUE FUND FUND
- --------- --------- --------- ---------- ---------
Beginning Account Value
11/1/06 .................. $1,000.00 $1,000.00 $1,000.00 $1,000.00
Ending Account Value
04/30/07 ................. $1,023.26 $1,021.82 $1,020.93 $1,018.70
Expenses Paid During Period
11/1/06-04/30/07 * ....... $ 1.56 $ 3.01 $ 3.91 $ 6.16
Annualized Expense Ratio .... 0.31% 0.60% 0.78% 1.23%
- ----------
* Expenses are equal to the Fund's annualized expense ratios for the
six-month period multiplied by the average account value over the period,
multiplied by the number derived by dividing the number of days in the most
recent fiscal half-year (181) by days in the year (365) to reflect the
half- year period.
See accompanying notes
27
AMERICAN BEACON BALANCED FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
COMMON STOCKS - 59.11%
CONSUMER DISCRETIONARY - 7.07%
AUTO COMPONENTS - 0.18%
Magna International, Inc. ...................... 25,900 $ 2,050
-----------
HOTELS, RESTAURANTS & LEISURE - 1.14%
Carnival Corp. ................................. 105,600 5,163
McDonald's Corp. ............................... 24,600 1,188
Wyndham Worldwide Corp. ## ..................... 126,660 4,382
Yum! Brands, Inc. .............................. 30,200 1,868
-----------
12,601
-----------
HOUSEHOLD DURABLES - 2.11%
Centex Corp. + ................................. 169,200 7,575
Fortune Brands, Inc. ........................... 50,800 4,069
Koninklijke (Royal) Philips Electronics NV ..... 30,531 1,253
Lennar Corp. + ................................. 96,600 4,126
Newell Rubbermaid, Inc. ........................ 56,500 1,733
Pulte Homes, Inc. .............................. 172,900 4,651
-----------
23,407
-----------
MEDIA - 1.33%
CBS Corp. ...................................... 80,400 2,554
Idearc, Inc. + ................................. 59,646 2,073
The Interpublic Group of Companies, Inc. ## + .. 238,700 3,027
R.H. Donnelley Corp. ## + ...................... 53,200 4,154
The Walt Disney Company Ltd. ................... 83,700 2,928
-----------
14,736
-----------
MULTILINE RETAIL - 1.22%
Federated Department Stores, Inc. + ............ 113,454 4,983
Target Corp. ................................... 61,300 3,639
Wal-Mart Stores, Inc. .......................... 103,000 4,936
-----------
13,558
-----------
SPECIALTY RETAIL - 1.09%
Gap, Inc. ...................................... 3,800 68
The Home Depot, Inc. ........................... 261,500 9,903
Liz Claiborne, Inc. ............................ 48,200 2,156
-----------
12,127
-----------
TOTAL CONSUMER DISCRETIONARY ...................... 78,479
-----------
CONSUMER STAPLES - 3.80%
BEVERAGES - 0.52%
Constellation Brands, Inc. ## + ................ 22,700 509
Diageo plc, ADR ................................ 62,700 5,292
-----------
5,801
-----------
FOOD & DRUG RETAILING - 0.17%
Safeway, Inc. .................................. 53,000 1,924
-----------
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
FOOD PRODUCTS - 0.84%
General Mills, Inc. ............................ 36,900 $ 2,210
Kraft Foods, Inc. .............................. 150,493 5,037
Unilever plc, ADR + ............................ 64,480 2,019
-----------
9,266
-----------
TOBACCO - 2.27%
Altria Group, Inc. ............................. 131,200 9,042
Gallaher Group plc, ADR ........................ 20,900 1,897
Imperial Tobacco Group plc, ADR ................ 112,200 9,807
UST, Inc. + .................................... 78,300 4,438
-----------
25,184
-----------
TOTAL CONSUMER STAPLES ............................ 42,175
-----------
ENERGY - 4.57%
OIL & GAS - 4.57%
Chevron Corp. .................................. 86,228 6,708
ConocoPhillips ................................. 243,676 16,899
Devon Energy Corp. ............................. 104,000 7,578
Duke Energy Corp. .............................. 206,700 4,241
Occidental Petroleum Corp. ..................... 145,600 7,382
Petro-Canada ................................... 39,400 1,747
Royal Dutch Shell plc, ADR + ................... 58,300 4,122
Sunoco, Inc. ................................... 27,400 2,070
-----------
TOTAL ENERGY ...................................... 50,747
-----------
FINANCIALS - 17.33%
BANKS - 4.75%
Bank of New York, Inc. ......................... 41,000 1,660
Bank of America Corp. .......................... 410,596 20,899
Comerica, Inc. ................................. 31,400 1,944
First Horizon National Corp. + ................. 28,300 1,110
KeyCorp ........................................ 64,700 2,308
SunTrust Banks, Inc. ........................... 11,100 937
U.S. Bancorp ................................... 118,360 4,066
UnionBanCal Corp. .............................. 16,000 984
Wachovia Corp. . ............................... 80,400 4,465
Washington Mutual, Inc. + ...................... 191,400 8,035
Wells Fargo & Co. .............................. 178,200 6,395
-----------
52,803
-----------
DIVERSIFIED FINANCIALS - 6.21%
The Bear Stearns Cos., Inc. .................... 22,900 3,565
Capital One Financial Corp. + .................. 41,700 3,097
Citigroup, Inc. ................................ 304,842 16,346
Federal Home Loan Mortgage Corp. ............... 94,000 6,089
Federal National Mortgage Association .......... 49,900 2,940
The Goldman Sachs Group, Inc. .................. 19,700 4,307
JP Morgan Chase & Co. .......................... 293,534 15,293
Merrill Lynch & Co., Inc. ...................... 46,300 4,178
See accompanying notes
28
AMERICAN BEACON BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Morgan Stanley Dean Witter & Co. ............... 58,600 $ 4,923
SLM Corp. ...................................... 152,000 8,182
-----------
68,920
-----------
INSURANCE - 6.03%
ACE Ltd. ....................................... 81,800 4,864
The Allstate Corp. ............................. 93,700 5,839
American International Group, Inc. ............. 109,800 7,676
AON Corp. ...................................... 32,100 1,244
Assurant, Inc. ................................. 17,000 978
Conseco, Inc. ## + ............................. 95,000 1,681
Genworth Financial, Inc. ....................... 171,400 6,254
The Hartford Financial Services Group, Inc. .... 21,200 2,145
MetLife, Inc. .................................. 143,880 9,453
MGIC Investment Corp. + ........................ 53,100 3,272
Prudential Financial, Inc. ..................... 12,800 1,216
The Travelers Companies, Inc. .................. 180,700 9,776
UnumProvident Corp. + .......................... 182,700 4,546
XL Capital Ltd. ................................ 102,900 8,024
-----------
66,968
-----------
REAL ESTATE - 0.34%
The St. Joe Co. + .............................. 67,800 3,839
-----------
TOTAL FINANCIALS .................................. 192,530
-----------
HEALTH CARE - 5.06%
HEALTH CARE EQUIPMENT & SUPPLIES - 0.56%
Baxter International, Inc. ..................... 109,800 6,218
-----------
HEALTH CARE PROVIDERS & SERVICES - 1.47%
Cigna Corp. .................................... 32,500 5,057
Omnicare, Inc. ................................. 6,400 212
Tenet Healthcare Corp. ## + .................... 274,000 2,033
UnitedHealth Group, Inc. ....................... 53,000 2,812
WellPoint, Inc. ## ............................. 79,600 6,286
-----------
16,400
-----------
PHARMACEUTICALS - 3.03%
Bristol-Myers Squibb Co. ....................... 268,300 7,743
Eli Lilly & Co. ................................ 61,900 3,660
Johnson & Johnson .............................. 26,000 1,670
Merck & Co., Inc. .............................. 27,000 1,389
Pfizer, Inc. ................................... 408,500 10,809
Schering-Plough Corp. .......................... 155,800 4,944
Wyeth Corp. .................................... 61,700 3,424
-----------
33,639
-----------
TOTAL HEALTH CARE ................................. 56,257
-----------
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
INDUSTRIALS - 7.56%
AEROSPACE & DEFENSE - 1.67%
The Boeing Co. ................................. 56,800 $ 5,282
Northrop Grumman Corp. ......................... 78,800 5,803
Raytheon Co. ................................... 73,900 3,957
United Technologies Corp. ...................... 52,500 3,524
-----------
18,566
-----------
AIR FREIGHT & COURIERS - 0.21%
FedEx Corp. .................................... 22,000 2,320
INDUSTRIAL CONGLOMERATES - 3.24%
3M Co. ......................................... 51,400 4,254
General Electric Co. ........................... 221,200 8,154
Honeywell International, Inc. .................. 205,600 11,139
Textron, Inc. .................................. 33,800 3,437
Tyco International Ltd. ........................ 274,900 8,970
-----------
35,954
-----------
MACHINERY - 1.87%
Caterpillar, Inc. .............................. 71,100 5,163
Flowserve Corp. ................................ 70,300 4,289
Illinois Tool Works, Inc. + .................... 132,400 6,793
ITT Industries, Inc. ........................... 70,800 4,518
-----------
20,763
-----------
RENTAL AUTO/EQUIPMENT - 0.06%
Avis Budget Group, Inc. ........................ 24,630 693
-----------
TRANSPORTATION INFRASTRUCTURE - 0.51%
Burlington Northern Santa Fe Corp. ............. 64,600 5,655
-----------
TOTAL INDUSTRIALS ................................. 83,951
-----------
INFORMATION TECHNOLOGY - 5.35%
COMMERCIAL SERVICES & SUPPLIES - 0.36%
First Data Corp. ............................... 124,600 4,037
-----------
COMMUNICATIONS EQUIPMENT - 0.48%
Nokia Corp., ADR ## ............................ 211,100 5,330
-----------
COMPUTERS & PERIPHERALS - 1.55%
Hewlett-Packard Co. ............................ 214,700 9,047
International Business Machines Corp. .......... 79,600 8,136
-----------
17,183
-----------
IT CONSULTING & SERVICES - 0.89%
Computer Sciences Corp. ## + ................... 32,000 1,777
Electronic Data Systems Corp. .................. 278,200 8,135
-----------
9,912
-----------
See accompanying notes
29
AMERICAN BEACON BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 0.22%
Intel Corp. .................................... 115,000 $ 2,473
-----------
SOFTWARE - 1.85%
BMC Software, Inc. ## .......................... 56,300 1,822
CA, Inc. ....................................... 377,574 10,293
Microsoft Corp. ................................ 279,200 8,359
-----------
20,474
-----------
TOTAL INFORMATION TECHNOLOGY ...................... 59,409
-----------
MATERIALS - 2.26%
CHEMICALS - 1.48%
Air Products & Chemicals, Inc. ................. 29,200 2,234
Dow Chemical Co. ............................... 46,900 2,092
E. I. du Pont de Nemours & Co. ................. 50,200 2,468
Eastman Chemical Co. + ......................... 37,400 2,532
Lyondell Chemical Co. + ........................ 156,900 4,883
PPG Industries, Inc. ........................... 30,600 2,252
-----------
16,461
-----------
METALS & MINING - 0.54%
Alcoa, Inc. .................................... 168,996 5,998
-----------
PAPER & FOREST PRODUCTS - 0.24%
Weyerhaeuser Co. ............................... 32,800 2,598
-----------
TOTAL MATERIALS ................................... 25,057
-----------
TELECOMMUNICATION SERVICES - 2.31%
DIVERSIFIED TELECOMMUNICATION - 2.31%
AT&T, Inc. ..................................... 371,477 14,384
Verizon Communications, Inc. ................... 294,428 11,241
-----------
TOTAL TELECOMMUNICATION SERVICES .................. 25,625
-----------
UTILITIES - 3.80%
ELECTRIC UTILITIES - 3.57%
CenterPoint Energy, Inc. + ..................... 131,600 2,478
Dominion Resources, Inc. ....................... 52,200 4,760
DTE Energy Co. ................................. 40,000 2,023
Entergy Corp. .................................. 68,700 7,773
Exelon Corp. ................................... 226,200 17,058
FPL Group, Inc. ................................ 62,900 4,049
Public Service Enterprise Group, Inc. .......... 17,200 1,487
-----------
39,628
-----------
GAS UTILITIES - 0.23%
Spectra Energy Corp. ........................... 98,300 2,566
-----------
TOTAL UTILITIES ................................... 42,194
-----------
TOTAL COMMON STOCKS ............................... 656,424
-----------
PAR AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
CORPORATE OBLIGATIONS - 7.03%
BANKS - 1.22%
Banco Popular North America, Inc.,
4.25%, Due 4/1/2008 ......................... $ 500 $ 493
Bank of America Corp.,
5.375%, Due 8/15/2011 ....................... 1,015 1,027
7.80%, Due 9/15/2016 ........................ 1,000 1,169
Bank One Corp.,
5.90%, Due 11/15/2011 ....................... 835 858
4.90%, Due 4/30/2015 ........................ 450 434
Citigroup, Inc.,
5.125%, Due 2/14/2011 ....................... 2,500 2,504
Credit Suisse First Boston,
6.50%, Due 5/1/2008 + ++ .................... 750 757
ING Bank, NV,
5.125%, Due 5/1/2015 ++ ..................... 450 444
JPMorgan Chase & Co.,
6.75%, Due 2/1/2011 ......................... 1,200 1,262
National City Bank,
4.50%, Due 3/15/2010 ........................ 1,500 1,472
Synovus Financial Corp.,
4.875%, Due 2/15/2013 ....................... 450 443
Wachovia Corp.,
5.70%, Due 8/1/2013 ......................... 585 600
Washington Mutual Finance Corp.,
6.875%, Due 5/15/2011 ....................... 660 702
Washington Mutual, Inc.,
8.25%, Due 4/1/2010 ......................... 500 540
4.625%, Due 4/1/2014 ........................ 950 888
-----------
13,593
-----------
BASIC MATERIALS - 0.10%
Alcoa, Inc.,
5.90%, Due 2/1/2027 ......................... 360 358
BHP Billiton Finance USA Ltd.,
4.80%, Due 4/15/2013 ........................ 450 439
Weyerhaeuser Co.,
5.95%, Due 11/1/2008 ........................ 340 343
-----------
1,140
-----------
COMMUNICATIONS - 0.33%
Comcast Cable Communications Holdings, Inc.,
8.375%, Due 3/15/2013 ....................... 950 1,090
Comcast Corp.,
5.30%, Due 1/15/2014 ........................ 710 704
5.875%, Due 2/15/2018 ....................... 345 348
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017 ++ ...................... 1,180 1,187
See accompanying notes
30
AMERICAN BEACON BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Time Warner, Inc.,
6.50%, Due 11/15/2036 ....................... $ 370 $ 370
-----------
3,699
-----------
CONSUMER DISCRETIONARY - 0.17%
Costco Wholesale Corp.,
5.50%, Due 3/15/2017 ........................ 680 686
Wal-Mart Stores, Inc.,
4.55%, Due 5/1/2013 ......................... 635 616
7.55%, Due 2/15/2030 ........................ 450 545
-----------
1,847
-----------
ENERGY - 0.22%
Apache Corp.,
5.25%, Due 4/15/2013 ........................ 545 546
Canadian Natural Resources Ltd.,
5.70%, Due 5/15/2017 ........................ 400 401
6.25%, Due 3/15/2038 ........................ 500 497
EOG Resources, Inc.,
4.75%, Due 3/15/2014 ++ ..................... 425 411
Pemex Project Funding Master Trust,
8.50%, Due 2/15/2008 + ...................... 610 624
-----------
2,479
-----------
FINANCE - 0.97%
American General Finance Corp.,
5.375%, Due 9/1/2009 ........................ 1,090 1,095
4.875%, Due 5/15/2010 ....................... 500 499
Ameriprise Financial, Inc.,
5.35%, Due 11/15/2010 ....................... 975 983
The Bear Stearns Cos., Inc.,
2.875%, Due 7/2/2008 ........................ 800 778
Capital One Financial Corp.,
5.70%, Due 9/15/2011 ........................ 750 757
General Electric Capital Corp.,
4.375%, Due 3/3/2012 ........................ 995 967
The Goldman Sachs Group, Inc.,
4.75%, Due 7/15/2013 ........................ 400 387
Hartford Financial Services Group, Inc.,
5.375%, Due 3/15/2017 ....................... 540 537
HSBC Finance Corp.,
5.25%, Due 1/14/2011 + ...................... 2,000 2,001
International Lease Finance Corp.,
6.375%, Due 3/15/2009 ....................... 1,025 1,048
Lehman Brothers Holdings, Inc.,
4.25%, Due 1/27/2010 + ...................... 450 441
Merrill Lynch & Co., Inc.,
5.45%, Due 7/15/2014 ........................ 400 402
6.11%, Due 1/29/2037 ........................ 500 497
SLM Corp.,
5.45%, Due 4/25/2011 ........................ 335 323
-----------
10,715
-----------
PAR AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
INDUSTRIALS - 1.13%
Caterpillar Financial Services Corp.,
4.15%, Due 1/15/2010 ........................ $ 500 $ 489
Con-way, Inc.,
8.875%, Due 5/1/2010 ........................ 1,850 2,013
CRH America, Inc.,
6.00%, Due 9/30/2016 ........................ 435 445
CSX Corp.,
6.75%, Due 3/15/2011 ........................ 500 525
DaimlerChrysler NA Holding Corp.,
7.75%, Due 1/18/2011 ........................ 1,000 1,081
5.875%, Due 3/15/2011 ....................... 450 458
5.75%, Due 9/8/2011 ......................... 550 558
John Deere Capital Corp.,
4.125%, Due 1/15/2010 ....................... 1,250 1,221
5.40%, Due 10/17/2011 ....................... 655 663
Martin Marietta Materials, Inc.,
6.90%, Due 8/15/2007 ........................ 200 201
Masco Corp.,
6.125%, Due 10/3/2016 ....................... 430 434
Nissan Motor Acceptance Corp.,
5.625%, Due 3/14/2011 ++ .................... 500 504
Norfolk Southern Corp.,
8.625%, Due 5/15/2010 ....................... 500 547
Unilever Capital Corp.,
7.125%, Due 11/1/2010 ....................... 2,000 2,123
Union Pacific Corp.,
3.875%, Due 2/15/2009 ....................... 775 758
6.50%, Due 4/15/2012 ........................ 450 472
-----------
12,492
-----------
INSURANCE - 0.83%
Aegon Funding Corp.,
5.75%, Due 12/15/2020 ....................... 450 459
American International Group, Inc.,
6.25%, Due 5/1/2036 ......................... 450 477
ASIF Global Financing,
3.90%, Due 10/22/2008 ++ .................... 700 687
The Hartford Financial Services Group, Inc.,
5.25%, Due 10/15/2011 ....................... 1,150 1,155
John Hancock Global Funding II,
7.90%, Due 7/2/2010 ++ ...................... 1,375 1,486
Liberty Mutual Insurance Co.,
7.875%, Due 10/15/2026 + ++ ................. 1,500 1,702
Lincoln National Corp.,
4.75%, Due 2/15/2014 ........................ 200 193
MetLife, Inc.,
5.375%, Due 12/15/2012 ...................... 660 668
5.00%, Due 6/15/2015 ........................ 485 473
See accompanying notes
31
AMERICAN BEACON BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Metropolitan Life Global Funding I,
4.625%, Due 8/19/2010 ++ .................... $ 700 $ 694
Prudential Financial, Inc.,
4.50%, Due 7/15/2013 ........................ 400 386
5.10%, Due 9/20/2014 ........................ 535 526
Willis North America, Inc.,
6.20%, Due 3/28/2017 ........................ 360 361
-----------
9,267
-----------
PHARMACEUTICALS - 0.25%
Abbott Laboratories,
5.60%, Due 5/15/2011 ........................ 510 520
Amgen, Inc.,
4.00%, Due 11/18/2009 ....................... 540 526
Hospira, Inc.,
6.05%, Due 3/30/2017 ........................ 360 364
Schering-Plough Corp.,
6.75%, Due 12/1/2033 ........................ 525 586
Wyeth Corp.,
5.50%, Due 2/1/2014 ......................... 780 789
-----------
2,785
-----------
REAL ESTATE - 0.35%
Equity Residential,
5.125%, Due 3/15/2016 ....................... 385 376
iStar Financial, Inc.,
5.85%, Due 3/15/2017 ........................ 750 748
ProLogis Trust,
7.10%, Due 4/15/2008 ........................ 470 475
ProLogis,
5.50%, Due 4/1/2012 ......................... 450 455
5.625%, Due 11/15/2016 + .................... 450 454
Simon Property Group LP,
6.375%, Due 11/15/2007 ...................... 400 402
5.375%, Due 6/1/2011 ........................ 450 453
5.75%, Due 12/1/2015 ........................ 560 570
-----------
3,933
-----------
TECHNOLOGY - 0.15%
Cisco Systems, Inc.,
5.25%, Due 2/22/2011 ........................ 950 957
5.50%, Due 2/22/2016 ........................ 725 729
-----------
1,686
-----------
TELEPHONE - 0.63%
America Movil, S.A. de C.V.,
6.375%, Due 3/1/2035 ........................ 675 683
AT&T, Inc.,
5.10%, Due 9/15/2014 ........................ 625 614
5.625%, Due 6/15/2016 ....................... 995 1,002
6.80%, Due 5/15/2036 + ...................... 225 244
PAR AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Cingular Wireless Services, Inc.,
8.75%, Due 3/1/2031 ........................ $ 445 $ 582
Deutsche Telekom AG,
8.00%, Due 6/15/2010 ........................ 380 411
Nextel Communications, Inc.,
6.875%, Due 10/31/2013 ...................... 615 632
Sprint Capital Corp.,
8.375%, Due 3/15/2012 ....................... 450 501
Telecom Italia S.p.A.,
4.00%, Due 11/15/2008 ....................... 580 570
Telefonica Emisiones SAU,
5.984%, Due 6/20/2011 ....................... 380 390
Verizon Communications, Inc.,
5.50%, Due 4/1/2017 ......................... 500 498
Vodafone Group plc,
6.15%, Due 2/27/2037 ........................ 840 828
-----------
6,955
-----------
UTILITIES - 0.68%
Columbus Southern Power Co.,
5.50%, Due 3/1/2013 ......................... 830 836
Dominion Resources, Inc.,
Series A, 5.60%, Due 11/15/2016 ............. 345 346
Duke Energy Indiana, Inc.,
6.05%, Due 6/15/2016 + ...................... 520 538
FPL Group Capital, Inc.,
5.625%, Due 9/1/2011 ........................ 1,025 1,043
MidAmerican Energy Holdings Co.,
5.875%, Due 10/1/2012 ....................... 1,070 1,105
6.125%, Due 4/1/2036 ........................ 450 457
Public Service Enterprise Group, Inc.,
6.95%, Due 6/1/2012 ......................... 925 989
Puget Sound Energy, Inc.,
6.274%, Due 3/15/2037 ....................... 370 380
Southern Power Co.,
6.25%, Due 7/15/2012 ........................ 690 719
Xcel Energy, Inc.,
5.613%, Due 4/1/2017 ++ ..................... 1,089 1,087
-----------
7,500
-----------
TOTAL CORPORATE OBLIGATIONS ....................... 78,091
-----------
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 1.23%
COMMERCIAL MORTGAGE-BACKED SECURITY - 0.75%
Banc of America Commercial Mortgage, Inc.,
2005-6, 5.001%, Due 9/10/2047 ............... 829 825
Bear Stearns Commercial Mortgage Securities,
Inc.,
2006-T22 A2, 5.633%, Due 4/12/2038 .......... 590 597
2006-PW13 A4, 5.54%, Due 9/11/2041 .......... 1,260 1,274
See accompanying notes
32
AMERICAN BEACON BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
2004-PWR5 A4, 4.831%, Due 7/11/2042 ......... $ 1,015 $ 993
2005-T20 A2, 5.127%, Due 10/12/2042 ......... 690 689
Citigroup Commercial Mortgage Trust,
2004-C2 A3, 4.38%, Due 10/15/2041 ........... 805 781
General Electric Capital Commercial
Mortgage Corp.,
2003-C2 A2, 4.17%, Due 7/10/2037 ............ 430 422
JP Morgan Chase Commercial Mortgage
Securities Corp.,
2004-CBX A4, 4.529%, Due 1/12/2037 .......... 555 541
2005-LDP1 A2, 4.625%, Due 3/15/2046 ......... 845 833
JPMorgan Chase Commercial Mortgage
Securities Corp.,
2005-LDP3 A1, 4.655%, Due 8/15/2042 ......... 328 325
2005-LDP4 A1, 4.613%, Due 10/15/2042 ........ 260 258
LB-UBS Commercial Mortgage Trust,
2004-C1 A4, 5.424%, Due 2/15/2040 ........... 750 752
-----------
8,290
-----------
WHOLE LOAN COLLATERALIZED MORTGAGE
OBLIGATIONS - 0.48%
Banc of America Mortgage Securities, Inc.,
2004-8 3A1, 5.25%, Due 10/25/2019 ........... 1,161 1,155
Chase Mortgage Finance Corp.,
2006A1 A1, 6.06%, Due 9/25/2036 # ........... 1,255 1,259
Chase Mortgage Financial Trust,
2004-S1 A3, 5.50%, Due 2/25/2019 ............ 142 142
Prime Mortgage Trust,
2005-2, 5.25%, Due 7/25/2020 ................ 1,863 1,862
Wells Fargo Mortgage Backed Securities Trust,
2006-11 A8, 6.00%, Due 9/25/2036 ............ 963 966
-----------
5,384
-----------
TOTAL NON-AGENCY MORTGAGE-BACKED OBLIGATIONS ...... 13,674
-----------
ASSET-BACKED SECURITIES - 0.54%
American Express Credit Account Master Trust,
2006-2 A, 5.35%, Due 1/15/2014 .............. 2,000 2,032
Capital Auto Receivables Asset Trust,
2006-SN1A A4A, 5.32%, Due 3/20/2010 ++ ...... 1,500 1,503
Capital One Multi-Asset Execution Trust,
2006-A10 A10, 5.15%, Due 6/15/2014 .......... 1,450 1,463
Volkswagen Auto Loan Enhanced Trust,
2005-1 A4, 4.86%, Due 4/20/2012 ............. 1,000 996
-----------
TOTAL ASSET-BACKED SECURITIES ..................... 5,994
-----------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 7.29%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 3.22%
Pool # E90777, 5.50%, Due 8/1/2017 ............. 74 74
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Pool # G11295, 5.50%, Due 9/1/2017 ............. $ 363 $ 365
Pool # E97381, 5.50%, Due 6/1/2018 ............. 161 161
Pool # E01492, 5.50%, Due 10/1/2018 ............ 1,344 1,349
Pool # E01602, 4.50%, Due 3/1/2019 ............. 999 970
Pool # G11879, 5.00%, Due 10/1/2020 ............ 1,414 1,395
Pool # G11994, 5.50%, Due 5/1/2021 ............. 853 854
Pool # G12486, 5.00%, Due 7/1/2021 ............. 2,002 1,975
Pool # G18139, 5.50%, Due 9/1/2021 ............. 441 442
Pool # G12603, 5.50%, Due 4/1/2022 ............. 570 570
Pool # C26472, 6.50%, Due 5/1/2029 ............. 70 72
Pool # C27089, 6.50%, Due 6/1/2029 ............. 12 13
Pool # C00835, 6.50%, Due 7/1/2029 ............. 224 232
Pool # G01457, 6.00%, Due 8/1/2029 ............. 117 119
Pool # C01598, 5.00%, Due 8/1/2033 ............. 1,808 1,752
Pool # C01786, 5.50%, Due 2/1/2034 ............. 3,023 2,995
Pool # C01796, 5.00%, Due 3/1/2034 ............. 1,418 1,373
Pool # C01848, 6.00%, Due 6/1/2034 ............. 1,096 1,108
Pool # G08006, 6.00%, Due 8/1/2034 ............. 1,004 1,015
Pool # A28109, 5.50%, Due 10/1/2034 ............ 990 981
Pool # A30948, 5.50%, Due 1/1/2035 ............. 846 839
Pool # A45500, 5.50%, Due 6/1/2035 ............. 3,670 3,634
Pool # G08072, 5.00%, Due 8/1/2035 ............. 1,258 1,217
Pool # G08079, 5.00%, Due 9/1/2035 ............. 1,795 1,736
Pool # A54039, 6.00%, Due 11/1/2036 ............ 2,167 2,185
Pool # 1G1389, 5.897%, Due 12/1/2036 # ......... 2,161 2,179
Pool # 1B3208, 5.861%, Due 1/1/2037 # .......... 2,720 2,747
Pool # A56051, 6.00%, Due 1/1/2037 ............. 942 950
Pool # 1B3314, 5.791%, Due 3/1/2037 # .......... 1,548 1,561
Pool # 1G1916, 5.267%, Due 4/1/2037 # .......... 890 888
-----------
35,751
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.33%
Pool # 488099, 5.50%, Due 2/1/2014 ............. 236 237
Pool # 323789, 6.00%, Due 6/1/2014 ............. 300 305
Pool # 535846, 6.00%, Due 4/1/2016 ............. 425 433
Pool # 254545, 5.00%, Due 12/1/2017 ............ 1,053 1,041
Pool # 555549, 5.00%, Due 6/1/2018 ............. 2,179 2,153
Pool # 254865, 4.50%, Due 9/1/2018 ............. 1,643 1,595
Pool # 747844, 5.50%, Due 12/1/2018 ............ 102 102
Pool # 837219, 4.00%, Due 8/1/2020 ............. 1,197 1,131
Pool # 745562, 5.50%, Due 4/1/2021 ............. 1,323 1,325
Pool # 252211, 6.00%, Due 1/1/2029 ............. 636 646
Pool # 555880, 5.50%, Due 11/1/2033 ............ 1,369 1,357
Pool # 725238, 5.00%, Due 3/1/2034 ............. 1,875 1,816
Pool # 725866, 4.50%, Due 9/1/2034 ............. 1,056 993
Pool # 815762, 6.50%, Due 3/1/2035 ............. 343 353
Pool # 828377, 5.50%, Due 6/1/2035 ............. 1,803 1,785
Pool # 838607, 5.50%, Due 9/1/2035 ............. 273 270
Pool # 844809, 5.00%, Due 11/1/2035 ............ 915 885
Pool # 850280, 5.50%, Due 12/1/2035 ............ 461 457
Pool # 849299, 5.50%, Due 1/1/2036 ............. 1,663 1,647
See accompanying notes
33
AMERICAN BEACON BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Pool # 866593, 5.50%, Due 1/1/2036 ............. $ 2,662 $ 2,635
Pool # 256101, 5.50%, Due 2/1/2036 ............. 1,119 1,108
Pool # 879518, 5.50%, Due 3/1/2036 ............. 395 391
Pool # 745418, 5.50%, Due 4/1/2036 ............. 1,805 1,787
Pool # 868495, 6.50%, Due 4/1/2036 ............. 677 692
Pool # 872306, 6.50%, Due 5/1/2036 ............. 720 735
Pool # 872317, 6.50%, Due 5/1/2036 ............. 1,357 1,386
Pool # 884032, 6.50%, Due 5/1/2036 ............. 733 749
Pool # 886395, 6.00%, Due 8/1/2036 ............. 715 721
Pool # 745822, 6.00%, Due 9/1/2036 ............. 1,294 1,304
Pool # 893523, 6.00%, Due 9/1/2036 ............. 250 252
Pool # 893688, 6.00%, Due 10/1/2036 ............ 1,564 1,576
Pool # 831806, 6.50%, Due 10/1/2036 ............ 235 240
Pool # 905058, 6.00%, Due 11/1/2036 ............ 4,025 4,056
Pool # 908084, 6.50%, Due 12/1/2036 ............ 222 227
Federal National Mortgage Association,
5.00%, Due TBA .............................. 650 628
-----------
37,018
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 0.74%
Pool # 780400, 7.00%, Due 12/15/2025 ........... 373 392
2006-9 A, 4.201%, Due 8/16/2026 ................ 846 828
Pool # 780615, 6.50%, Due 8/15/2027 ............ 452 466
Pool # 780680, 6.50%, Due 11/15/2027 ........... 442 456
Pool # 780936, 7.50%, Due 12/15/2028 ........... 348 364
Pool # 781288, 6.50%, Due 5/15/2031 ............ 273 282
Pool # 781589, 5.50%, Due 4/15/2033 ............ 1,414 1,408
Pool # 781636, 5.50%, Due 7/15/2033 ............ 1,179 1,174
Pool # 781690, 6.00%, Due 12/15/2033 ........... 1,271 1,292
Pool # 003515, 5.50%, Due 2/20/2034 ............ 1,563 1,553
-----------
8,215
-----------
TOTAL U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS ..... 80,984
-----------
U.S. AGENCY OBLIGATIONS - 5.86%
FEDERAL HOME LOAN BANK - 0.33%
5.00%, Due 10/16/2009 + ........................ 2,280 2,276
5.25%, Due 11/3/2009 ........................... 1,360 1,363
-----------
3,639
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 3.38%
Federal Home Loan Mortgage Corp.,
5.191%, Due 5/14/2007 ## +++ ............ 650 649
5.25%, Due 2/24/2011 + ......................... 2,860 2,867
5.875%, Due 3/21/2011 .......................... 610 633
4.50%, Due 1/15/2015 + ......................... 34,290 33,376
-----------
37,525
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 2.15%
4.375%, Due 9/7/2007 ........................... 9,260 9,232
5.125%, Due 1/2/2014 + ......................... 820 823
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
6.25%, Due 5/15/2029 + ......................... $ 12,200 $ 13,816
-----------
23,871
-----------
TOTAL U.S. AGENCY OBLIGATIONS ..................... 65,035
-----------
U.S. TREASURY OBLIGATIONS - 11.74%
9.125%, Due 5/15/2018 + ........................ 1,750 2,409
7.875%, Due 2/15/2021 + ........................ 950 1,238
6.25%, Due 8/15/2023 + ......................... 1,050 1,211
6.875%, Due 8/15/2025 + ........................ 1,580 1,957
5.25%, Due 11/15/2028 + ........................ 1,950 2,045
5.25%, Due 2/15/2029 + ......................... 30,585 32,076
6.25%, Due 5/15/2030 + ......................... 1,550 1,844
4.50%, Due 2/15/2036 + ......................... 5,625 5,334
4.625%, Due 3/31/2008 + ........................ 14,825 14,779
4.875%, Due 8/15/2009 + ........................ 8,975 9,033
3.50%, Due 11/15/2009 + ........................ 5,850 5,703
4.25%, Due 1/15/2011 + ......................... 4,500 4,461
4.875%, Due 4/30/2011 + ........................ 4,750 4,812
4.625%, Due 2/29/2012 + ........................ 6,805 6,836
4.50%, Due 3/31/2012 + ......................... 1,320 1,319
4.375%, Due 8/15/2012 + ........................ 6,100 6,068
4.75%, Due 5/15/2014 + ......................... 14,800 14,959
4.125%, Due 5/15/2015 + ........................ 3,000 2,905
4.875%, Due 8/15/2016 + ........................ 3,050 3,106
4.625%, Due 2/15/2017 + ........................ 8,240 8,236
-----------
TOTAL U.S. TREASURY OBLIGATIONS ................... 130,331
-----------
SHARES
------------
SHORT TERM INVESTMENTS - 6.94%
American Beacon Money Market Select Fund @@ ... 71,626,313 71,626
PAR
AMOUNT
------------
United States Treasury Bill,
5.01%, Due 6/7/2007 +++ @ ............... $ 5,490 5,462
-----------
TOTAL SHORT TERM INVESTMENTS ...................... 77,088
-----------
SHARES
------------
SECURITIES LENDING COLLATERAL - 18.52%
American Beacon Cash Plus Trust @@ ............. 121,319,691 121,320
American Beacon Money Market Select Fund @@ .... 84,371,810 84,372
-----------
TOTAL SECURITIES LENDING COLLATERAL ............... 205,692
-----------
TOTAL INVESTMENTS 118.26% - (COST $1,135,490) ..... 1,313,313
LIABILITIES, NET OF OTHER ASSETS - (18.26%) ....... (202,739)
-----------
TOTAL NET ASSETS - 100.00% ........................ $ 1,110,574
===========
See accompanying notes
34
AMERICAN BEACON BALANCED FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $10,462 or 0.94% of net
assets. The Fund has no right to demand registration of these
securities.
# The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the final maturity date.
+++ Rates represent discount rate.
@@ The Fund/Trust is affiliated by having the same investment advisor.
@ At April 30, 2007, security pledged as collateral for open futures
contracts.
FUTURES CONTRACTS
(DOLLARS IN THOUSANDS)
UNREALIZED
NUMBER OF EXPIRATION MARKET APPRECIATION/
CONTRACTS DATE VALUE (DEPRECIATION)
--------- ---------- ------- --------------
Emini S&P 500 Index .......... 968 Jun 2007 $72,039 $2,706
See accompanying notes
35
AMERICAN BEACON LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
COMMON STOCKS - 97.72%
CONSUMER DISCRETIONARY - 15.36%
AUTO COMPONENTS - 0.10%
ArvinMeritor, Inc. + ........................... 5,200 $ 107
-----------
AUTOMOBILES - 0.91%
Harley-Davidson, Inc. + ........................ 14,773 936
-----------
HOTELS, RESTAURANTS & LEISURE - 2.27%
Carnival Corp. ................................. 600 29
Marriott International, Inc. ................... 24,400 1,103
McDonald's Corp. ............................... 23,344 1,127
Starwood Hotels & Resorts Worldwide, Inc. ...... 1,200 81
-----------
2,340
-----------
HOUSEHOLD DURABLES - 0.02%
Dolby Laboratories, Inc. ## .................... 700 25
-----------
INTERNET & CATALOG RETAIL - 0.11%
Amazon.com, Inc. ## + .......................... 1,300 80
eBay, Inc. ## .................................. 900 30
-----------
110
-----------
LEISURE EQUIPMENT & PRODUCTS - 0.09%
Mattel, Inc. ................................... 3,200 91
-----------
MEDIA - 4.06%
CBS Corp. ...................................... 26,545 843
The DIRECTV Group, Inc. ## + ................... 28,996 691
The McGraw-Hill Companies, Inc. ................ 100 7
Omnicom Group, Inc. ............................ 8,354 875
Time Warner, Inc. .............................. 53,200 1,097
The Walt Disney Company Ltd. ................... 19,200 672
-----------
4,185
-----------
MULTILINE RETAIL - 3.39%
IAC/InterActiveCorp ## + ....................... 11,300 431
J.C. Penney Company, Inc. ...................... 10,552 834
Kohl's Corp. ## ................................ 11,424 846
Nordstrom, Inc. ................................ 16,291 895
Wal-Mart Stores, Inc. .......................... 10,300 493
-----------
3,499
-----------
SPECIALTY RETAIL - 3.25%
American Eagle Outfitters, Inc. + .............. 32,450 956
American Greetings Corp. + ..................... 4,700 120
AutoNation, Inc. ## ............................ 6,501 133
AutoZone, Inc. ## .............................. 300 40
Best Buy Company, Inc. ......................... 18,065 843
Dick's Sporting Goods, Inc. ## + ............... 300 17
Lowe's Companies, Inc. + ....................... 28,181 861
OfficeMax, Inc. ................................ 600 29
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
RadioShack Corp. ............................... 5,800 $ 169
The TJX Companies, Inc. ........................ 6,600 184
-----------
3,352
-----------
TEXTILES & APPAREL - 1.16%
Coach, Inc. ## ................................. 6,400 312
Nike, Inc. ..................................... 16,460 887
-----------
1,199
-----------
TOTAL CONSUMER DISCRETIONARY ...................... 15,844
-----------
CONSUMER STAPLES - 7.48%
BEVERAGES - 2.92%
The Coca-Cola Co. .............................. 39,851 2,080
Molson Coors Brewing Co. ....................... 500 47
PepsiCo, Inc. .................................. 13,492 892
-----------
3,019
-----------
FOOD & DRUG RETAILING - 2.50%
CVS Caremark Corp. + ........................... 29,441 1,067
The Kroger Co. ................................. 10,100 298
Safeway, Inc. .................................. 10,300 374
Walgreen Co. ................................... 19,118 839
-----------
2,578
-----------
FOOD PRODUCTS - 0.12%
Tyson Foods, Inc. .............................. 5,700 120
-----------
PERSONAL PRODUCTS - 0.94%
Alberto-Culver Co. ............................. 800 19
Colgate-Palmolive Co. .......................... 12,880 873
The Estee Lauder Companies, Inc. + ............. 1,500 77
-----------
969
-----------
TOBACCO - 1.00%
Loews Corp. - Carolina Group ................... 600 46
UST, Inc. + .................................... 17,400 986
-----------
1,032
-----------
TOTAL CONSUMER STAPLES ............................ 7,718
-----------
ENERGY - 3.20%
ENERGY EQUIPMENT & SERVICES - 1.82%
Cameron International Corp. ## ................. 14,040 907
Dresser-Rand Group, Inc. ## .................... 200 6
FMC Technologies, Inc. ## ...................... 100 7
GlobalSantaFe Corp. ............................ 500 32
Halliburton Co. ................................ 27,483 873
SEACOR Holdings, Inc. ## ....................... 600 57
-----------
1,882
-----------
OIL & GAS - 1.38%
Devon Energy Corp. ............................. 2,100 153
Exxon Mobil Corp. .............................. 11,600 921
See accompanying notes
36
AMERICAN BEACON LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Holly Corp. .................................... 5,300 $ 337
Tesoro Corp. ................................... 100 12
-----------
1,423
-----------
TOTAL ENERGY ...................................... 3,305
-----------
FINANCIALS - 9.12%
BANKS - 0.13%
East West Bancorp, Inc. ........................ 400 16
Hudson City Bancorp, Inc. + .................... 6,900 92
Wachovia Corp. ................................. 400 22
-----------
130
-----------
DIVERSIFIED FINANCIALS - 4.96%
AmeriCredit Corp. ## + ......................... 5,600 141
Blackrock, Inc. + .............................. 800 120
Citigroup, Inc. ................................ 1,400 75
Federated Investors, Inc. + .................... 1,600 61
Franklin Resources, Inc. ....................... 7,955 1,045
JP Morgan Chase & Co. .......................... 10,500 547
Merrill Lynch & Co., Inc. ...................... 3,400 307
Moody's Corp. .................................. 6,500 430
Morgan Stanley Dean Witter & Co. ............... 16,732 1,406
T Rowe Price Group, Inc. + ..................... 18,142 901
Total System Services, Inc. + .................. 1,400 43
The Western Union Co. .......................... 1,900 40
-----------
5,116
-----------
INSURANCE - 3.06%
American International Group, Inc. ............. 12,685 887
Loews Corp. .................................... 15,800 747
MBIA, Inc. + ................................... 8,095 563
The PMI Group, Inc. ............................ 600 29
The Progressive Corp. + ........................ 40,530 935
-----------
3,161
-----------
REAL ESTATE - 0.97%
Douglas Emmett, Inc. ........................... 800 21
Jones Lang LaSalle, Inc. ....................... 5,800 623
ProLogis ....................................... 400 26
Public Storage, Inc. ........................... 200 19
SL Green Realty Corp. .......................... 2,200 310
-----------
999
-----------
TOTAL FINANCIALS .................................. 9,406
-----------
HEALTH CARE - 17.81%
BIOTECHNOLOGY - 3.02%
Amgen, Inc. ## ................................. 13,100 840
Biogen Idec, Inc. ## ........................... 900 43
Celgene Corp. ## + ............................. 4,700 287
Genzyme Corp. ## ............................... 1,100 72
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Gilead Sciences, Inc. ## ....................... 21,878 $ 1,788
Millennium Pharmaceuticals, Inc. ## + .......... 7,600 84
-----------
3,114
-----------
HEALTH CARE EQUIPMENT & SUPPLIES - 2.09%
Applera Corp - Applied Biosystems Group ........ 9,200 287
Becton, Dickinson and Co. ...................... 11,441 900
C.R. Bard, Inc. ................................ 800 67
Medtronic, Inc. ................................ 2,500 132
Stryker Corp. .................................. 300 20
Zimmer Holdings, Inc. ## ....................... 8,300 751
-----------
2,157
-----------
HEALTH CARE PROVIDERS & SERVICES - 3.39%
AmerisourceBergen Corp. ........................ 19,700 985
Health Management Associates, Inc. + ........... 4,400 47
Humana, Inc. ## ................................ 10,300 651
McKesson Corp. ................................. 14,720 866
UnitedHealth Group, Inc. ....................... 16,303 865
WellCare Health Plans, Inc. ## + ............... 1,000 81
-----------
3,495
-----------
PHARMACEUTICALS - 9.31%
Abbott Laboratories ............................ 1,600 91
Cephalon, Inc. ## .............................. 900 72
Eli Lilly & Co. ................................ 15,680 927
Forest Laboratories, Inc. ## ................... 16,100 857
Johnson & Johnson .............................. 25,011 1,606
Medco Health Solutions, Inc. ## ................ 3,100 242
Merck & Co., Inc. .............................. 39,760 2,045
Mylan Laboratories, Inc. + ..................... 42,062 922
Pfizer Inc. .................................... 66,984 1,772
Schering-Plough Corp. .......................... 3,500 111
Wyeth Corp. .................................... 17,306 961
-----------
9,606
-----------
TOTAL HEALTH CARE ................................. 18,372
-----------
INDUSTRIALS - 17.52%
AEROSPACE & DEFENSE - 4.49%
The Boeing Co. ................................. 19,958 1,856
Lockheed Martin Corp. .......................... 11,838 1,138
Northrop Grumman Corp. ......................... 5,500 405
Raytheon Co. ................................... 6,100 326
United Technologies Corp. ...................... 13,535 909
-----------
4,634
-----------
AIR FREIGHT & COURIERS - 0.85%
FedEx Corp. .................................... 8,260 871
-----------
BUILDING PRODUCTS - 0.68%
American Standard Companies, Inc. .............. 12,500 688
See accompanying notes
37
AMERICAN BEACON LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Crane Co. ...................................... 400 $ 17
-----------
705
-----------
COMMERCIAL SERVICES & SUPPLIES - 2.12%
Convergys Corp. ## ............................. 7,000 177
ITT Educational Services, Inc. ## .............. 800 78
Manpower, Inc. ................................. 24,011 1,927
-----------
2,182
-----------
CONTAINERS & PACKAGING - 0.00%
Crown Holdings, Inc. ## ........................ 100 2
-----------
ELECTRICAL EQUIPMENT - 0.93%
Emerson Electric Co. ........................... 20,506 964
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.58%
Energizer Holdings, Inc. ## .................... 5,400 525
Varian, Inc. ## ................................ 1,300 75
-----------
600
-----------
INDUSTRIAL CONGLOMERATES - 3.69%
3M Co. ......................................... 16,583 1,372
General Electric Co. ........................... 36,050 1,329
Honeywell International, Inc. .................. 19,064 1,033
Textron, Inc. .................................. 100 10
Tyco International Ltd. ........................ 1,900 62
-----------
3,806
-----------
MACHINERY - 3.02%
AGCO Corp. ## + ................................ 19,500 814
Cummins, Inc. .................................. 1,800 166
Illinois Tool Works, Inc. + .................... 16,920 868
PACCAR, Inc. ................................... 11,000 924
SPX Corp. + .................................... 4,800 340
-----------
3,112
-----------
MARINE - 0.47%
Overseas Shipholding Group, Inc. + ............. 6,900 489
-----------
ROAD & RAIL - 0.65%
CSX Corp. ...................................... 14,600 630
Kansas City Southern ## + ...................... 1,100 41
-----------
671
-----------
TRADING COMPANIES & DISTRIBUTORS - 0.02%
W.W. Grainger, Inc. ............................ 300 25
-----------
TRANSPORT-TRUCK - 0.02%
Landstar System, Inc. ## ....................... 400 19
-----------
TOTAL INDUSTRIALS ................................. 18,080
-----------
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
INFORMATION TECHNOLOGY - 22.27%
COMMERCIAL SERVICES & SUPPLIES - 0.04%
First Data Corp. ............................... 1,400 $ 45
-----------
COMMUNICATIONS EQUIPMENT - 2.94%
Cisco Systems, Inc. ## ......................... 109,685 2,933
Motorola, Inc. ................................. 200 4
Polycom, Inc. ## ............................... 2,800 93
-----------
3,030
-----------
COMPUTERS & PERIPHERALS - 6.61%
Apple Computer, Inc. ## ........................ 6,500 649
EMC Corp. ## ................................... 3,800 58
Hewlett-Packard Co. ............................ 56,129 2,365
International Business Machines Corp. + ........ 9,199 940
Lexmark International, Inc. ## + ............... 13,200 719
NVIDIA Corp. ## ................................ 30,466 1,002
Sun Microsystems, Inc. ## ...................... 32,800 171
Western Digital Corp. ## ....................... 52,137 922
-----------
6,826
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.39%
Arrow Electronics, Inc. ## ..................... 1,000 40
Avnet, Inc. ## ................................. 1,900 78
Waters Corp. ## ................................ 4,800 285
-----------
403
-----------
INTERNET SOFTWARE & SERVICES - 0.34%
Google, Inc. ## ................................ 750 354
-----------
IT CONSULTING & SERVICES - 0.91%
Accenture Ltd. ................................. 22,200 868
Automatic Data Processing, Inc. ................ 1,500 67
-----------
935
-----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 5.54%
Analog Devices, Inc. ........................... 400 15
Applied Materials, Inc. + ...................... 47,704 917
Atmel Corp. ## ................................. 42,500 226
Intel Corp. .................................... 19,700 424
Lam Research Corp. ## .......................... 18,300 984
MEMC Electronic Materials, Inc. ## ............. 20,950 1,150
Novellus Systems, Inc. ## + .................... 28,800 932
Teradyne, Inc. ## .............................. 1,001 18
Texas Instruments, Inc. ........................ 30,500 1,048
-----------
5,714
-----------
SOFTWARE - 5.50%
BMC Software, Inc. ## .......................... 1,400 45
Intuit, Inc. ## ................................ 7,200 205
Mentor Graphics Corp. ## ....................... 2,300 37
Microsoft Corp. ................................ 90,174 2,700
See accompanying notes
38
AMERICAN BEACON LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Oracle Corp. ## ................................ 51,186 $ 962
Symantec Corp. ## .............................. 55,200 972
Synopsys, Inc. ## .............................. 27,200 752
-----------
5,673
-----------
TOTAL INFORMATION TECHNOLOGY ...................... 22,980
-----------
MATERIALS - 3.41%
CHEMICALS - 1.04%
International Flavors & Fragrances, Inc. ....... 400 20
Monsanto Co. ................................... 2,600 153
Praxair, Inc. .................................. 13,914 898
-----------
1,071
-----------
CONSTRUCTION MATERIALS - 0.36%
Vulcan Materials Co. ## ........................ 3,000 371
-----------
METALS & MINING - 1.93%
Freeport-McMoRan Copper & Gold, Inc. + ......... 14,437 970
Newmont Mining Corp. ........................... 1,500 63
Nucor Corp. .................................... 15,088 957
-----------
1,990
-----------
PAPER & FOREST PRODUCTS - 0.08%
Weyerhaeuser Co. ............................... 1,100 87
-----------
TOTAL MATERIALS .................................... 3,519
-----------
TELECOMMUNICATION SERVICES - 1.29%
DIVERSIFIED TELECOMMUNICATION - 1.12%
AT&T, Inc. ..................................... 22,895 887
Citizens Communications Co. .................... 13,000 202
Sprint Nextel Corp. ............................ 3,500 70
-----------
1,159
-----------
WIRELESS TELECOMMUNICATION SERVICES - 0.17%
Telephone and Data Systems, Inc. + ............. 2,100 119
US Cellular Corp. ## ........................... 700 51
-----------
170
-----------
TOTAL TELECOMMUNICATION SERVICES 1,329
-----------
UTILITIES - 0.26% ELECTRIC UTILITIES - 0.26%
NRG Energy, Inc. ## ............................ 200 16
PG&E Corp. + ................................... 100 5
TXU Corp. ...................................... 3,800 249
-----------
TOTAL UTILITIES ................................... 270
-----------
TOTAL COMMON STOCKS ............................... 100,823
-----------
SHORT TERM INVESTMENTS - 6.06%
American Beacon Money Market Select Fund ++ .... 5,801,783 5,802
PAR AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
United States Treasury Bill,
5.01%, Due 6/7/2007 # @ ............... $ 450 $ 447
-----------
TOTAL SHORT TERM INVESTMENTS ...................... 6,249
-----------
SHARES
------------
SECURITIES LENDING COLLATERAL - 12.98%
American Beacon Cash Plus Trust ++ ............. 7,899,217 7,899
American Beacon Money Market Select Fund ++ .... 5,493,513 5,494
-----------
TOTAL SECURITIES LENDING COLLATERAL ............... 13,393
-----------
TOTAL INVESTMENTS 116.76% - (COST $110,332) ....... 120,465
LIABILITIES, NET OF OTHER ASSETS - (16.76%)........ (17,288)
-----------
TOTAL NET ASSETS - 100.00% ........................ $ 103,177
===========
See accompanying notes
39
AMERICAN BEACON LARGE CAP GROWTH FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ The Fund/Trust is affiliated by having the same investment advisor.
# Rates represent discount rate.
@ At April 30, 2007, security pledged as collateral for open futures
contracts.
FUTURES CONTRACTS
(DOLLARS IN THOUSANDS)
UNREALIZED
NUMBER OF EXPIRATION MARKET APPRECIATION/
CONTRACTS DATE VALUE (DEPRECIATION)
--------- ---------- ------ --------------
Emini S&P 500 Index .......... 83 Jun 2007 $6,177 $211
====== ====
See accompanying notes
40
AMERICAN BEACON MID-CAP VALUE FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
COMMON STOCKS - 90.09%
CONSUMER DISCRETIONARY - 22.42%
AUTO COMPONENTS - 4.28%
Advance Auto Parts, Inc. ....................... 53,300 $ 2,196
Lear Corp. ## .................................. 59,200 2,174
Magna International, Inc. ...................... 26,250 2,078
-----------
6,448
-----------
AUTOMOBILES - 0.42%
Winnebago Industries, Inc. + ................... 19,900 638
-----------
HOTELS, RESTAURANTS & LEISURE - 1.21%
Royal Caribbean Cruises Ltd. + ................. 43,800 1,821
-----------
HOUSEHOLD DURABLES - 6.05%
Black & Decker Corp. ........................... 33,550 3,044
The Stanley Works + ............................ 37,000 2,156
Whirlpool Corp. + .............................. 37,050 3,928
-----------
9,128
-----------
LEISURE EQUIPMENT & PRODUCTS - 1.12%
Hasbro, Inc. + ................................. 53,500 1,691
-----------
MEDIA - 1.08%
Idearc, Inc. + ................................. 46,900 1,630
-----------
MULTILINE RETAIL - 1.38%
Family Dollar Stores, Inc. ..................... 65,200 2,076
-----------
SPECIALTY RETAIL - 5.90%
AutoZone, Inc. ## .............................. 11,975 1,593
Hanesbrands, Inc. ## + ......................... 47,700 1,268
Regis Corp. .................................... 33,675 1,288
Rent-A-Center, Inc. ## + ....................... 81,100 2,258
The Sherwin-Williams Co. ....................... 20,100 1,282
The TJX Companies, Inc. + ...................... 43,425 1,211
-----------
8,900
-----------
TEXTILES & APPAREL - 0.98%
Sealy Corp. + .................................. 86,825 1,480
-----------
TOTAL CONSUMER DISCRETIONARY ...................... 33,812
-----------
CONSUMER STAPLES - 4.90%
FOOD PRODUCTS - 1.35%
Del Monte Foods Co. + .......................... 176,100 2,043
-----------
TOBACCO - 3.55%
Loews Corp. - Carolina Group ................... 31,700 2,426
Reynolds American, Inc. + ...................... 32,900 2,114
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
UST, Inc. + .................................... 14,300 $ 810
-----------
5,350
-----------
TOTAL CONSUMER STAPLES ............................ 7,393
-----------
ENERGY - 1.82%
OIL & GAS - 1.82%
El Paso Corp. + ................................ 46,200 693
Murphy Oil Corp. ............................... 36,900 2,046
-----------
TOTAL ENERGY ...................................... 2,739
-----------
FINANCIALS - 24.06%
BANKS - 5.21%
Comerica, Inc. + ............................... 29,225 1,809
New York Community Bancorp, Inc. + ............. 52,500 917
People's United Financial, Inc. + .............. 101,954 2,030
Popular, Inc. + ................................ 41,750 702
The South Financial Group, Inc. + .............. 44,500 1,007
UnionBanCal Corp. .............................. 22,725 1,397
-----------
7,862
-----------
DIVERSIFIED FINANCIALS - 0.57%
The First Marblehead Corp. + ................... 23,900 867
-----------
INSURANCE - 14.90%
AON Corp. + .................................... 40,225 1,559
Axis Capital Holdings Ltd. ..................... 44,100 1,636
Delphi Financial Group, Inc. + ................. 18,800 803
The First American Corp. + ..................... 38,325 1,974
IPC Holdings Ltd. + ............................ 41,950 1,258
Old Republic International Corp. ............... 80,387 1,710
Protective Life Corp. + ........................ 45,975 2,156
Radian Group, Inc. + ........................... 33,200 1,929
RenaissanceRe Holdings Ltd. + .................. 39,675 2,148
Torchmark Corp. + .............................. 35,875 2,450
Willis Group Holdings Ltd. ..................... 53,500 2,195
XL Capital Ltd. ................................ 33,950 2,647
-----------
22,465
-----------
REAL ESTATE - 3.38%
American Financial Realty Trust + .............. 118,100 1,252
American Home Mortgage Investment Corp. + ...... 38,100 944
Annaly Capital Management, Inc. + .............. 102,200 1,626
First Industrial Realty Trust, Inc. + .......... 29,100 1,274
-----------
5,096
-----------
TOTAL FINANCIALS .................................. 36,290
-----------
See accompanying notes
41
AMERICAN BEACON MID-CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
HEALTH CARE - 11.93%
BIOTECHNOLOGY - 1.03%
Charles River Laboratories International,
Inc. ## + ................................... 32,775 $ 1,552
-----------
HEALTH CARE EQUIPMENT & SUPPLIES - 2.68%
Hillenbrand Industries, Inc. ................... 36,475 2,230
IMS Health, Inc. + ............................. 61,800 1,813
-----------
4,043
-----------
HEALTH CARE PROVIDERS & SERVICES - 7.53%
AmerisourceBergen Corp. + ...................... 24,600 1,230
Coventry Health Care, Inc. ## + ................ 39,900 2,308
HealthSouth Corp. ## + ......................... 55,579 1,167
McKesson Corp. ................................. 23,425 1,378
Omnicare, Inc. + ............................... 51,400 1,705
Quest Diagnostics, Inc. + ...................... 27,600 1,349
Triad Hospitals, Inc. ## + ..................... 41,700 2,216
-----------
11,353
-----------
PHARMACEUTICALS - 0.69%
Valeant Pharmaceuticals International + ........ 58,100 1,047
-----------
TOTAL HEALTH CARE ................................. 17,995
-----------
INDUSTRIALS - 10.54%
AEROSPACE & DEFENSE - 3.13%
Goodrich Corp. ................................. 42,300 2,404
L-3 Communications Holdings, Inc. + ............ 25,800 2,320
-----------
4,724
-----------
AIR FREIGHT & COURIERS - 1.13%
Ryder System, Inc. + ........................... 32,400 1,706
-----------
COMMERCIAL SERVICES & SUPPLIES - 2.72%
Kelly Services, Inc. + ......................... 43,575 1,251
Mastercard, Inc. + ............................. 11,000 1,228
United Stationers, Inc. ## + ................... 27,250 1,622
-----------
4,101
-----------
DIVERSIFIED MANUFACTURING - 1.09%
Kennametal, Inc. ............................... 23,175 1,635
-----------
MACHINERY - 1.78%
Briggs & Stratton Corp. + ...................... 35,600 1,056
ITT Industries, Inc. ........................... 25,500 1,627
-----------
2,683
-----------
TRADING COMPANIES & DISTRIBUTORS - 0.69%
Genuine Parts Co. .............................. 21,000 1,038
-----------
TOTAL INDUSTRIALS ................................. 15,887
-----------
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
INFORMATION TECHNOLOGY - 7.12%
COMMUNICATIONS EQUIPMENT - 1.32%
Alcatel-Lucent, ADR + .......................... 149,898 $ 1,986
-----------
IT CONSULTING & SERVICES - 4.56%
Affiliated Computer Services, Inc. ## .......... 44,500 2,666
Computer Sciences Corp. ## + ................... 28,350 1,575
Fidelity National Information Services, Inc. +.. 28,500 1,440
Tech Data Corp. ## + ........................... 33,735 1,199
-----------
6,880
-----------
SOFTWARE - 1.24%
CA, Inc. + ..................................... 68,500 1,867
-----------
TOTAL INFORMATION TECHNOLOGY ...................... 10,733
-----------
UTILITIES - 7.30%
ELECTRIC UTILITIES - 4.83%
CenterPoint Energy, Inc. + ..................... 43,300 815
Pinnacle West Capital Corp. + .................. 41,500 2,004
Wisconsin Energy Corp. + ....................... 47,325 2,309
Xcel Energy, Inc. + ............................ 89,100 2,147
-----------
7,275
-----------
GAS UTILITIES - 2.47%
MDU Resources Group, Inc. . .................... 67,850 2,056
Sempra Energy .................................. 26,375 1,674
-----------
3,730
-----------
TOTAL UTILITIES ................................... 11,005
-----------
TOTAL COMMON STOCKS ............................... 135,854
-----------
SHORT TERM INVESTMENTS - 12.52%
American Beacon Money Market Select Fund ++ .... 17,657,253 17,657
PAR
AMOUNT
------------
United States Treasury Bill,
5.01%, Due 6/7/2007 # @ ............... $ 1,235 1,229
-----------
TOTAL SHORT TERM INVESTMENTS ...................... 18,886
-----------
SHARES
------------
SECURITIES LENDING COLLATERAL - 17.96%
American Beacon Cash Plus Trust ++ ............. 15,972,352 15,972
American Beacon Money Market Select Fund ++ .... 11,107,976 11,108
-----------
TOTAL SECURITIES LENDING COLLATERAL ............... 27,080
-----------
TOTAL INVESTMENTS 120.57% - (COST $168,768) ....... 181,820
LIABILITIES, NET OF OTHER ASSETS - (20.57%) ....... (31,020)
-----------
TOTAL NET ASSETS - 100.00% ........................ $ 150,800
===========
See accompanying notes
42
AMERICAN BEACON MID-CAP VALUE FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ The Fund/Trust is affiliated by having the same investment advisor.
# Rates represent discount rate.
@ At April 30, 2007, security pledged as collateral for open futures
contracts.
FUTURES CONTRACTS
(DOLLARS IN THOUSANDS)
UNREALIZED
NUMBER OF EXPIRATION MARKET APPRECIATION/
CONTRACTS DATE VALUE (DEPRECIATION)
--------- ---------- ------- --------------
Emini S&P 400 Index ........ 212 Jun 2007 $18,618 $422
======= ====
See accompanying notes
43
AMERICAN BEACON SMALL CAP VALUE OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
COMMON STOCKS - 96.10%
CONSUMER DISCRETIONARY - 15.37%
HOTELS, RESTAURANTS & LEISURE - 2.33%
Domino's Pizza, Inc. + ......................... 1,980 $ 64
Jack in the Box, Inc. ## ....................... 1,295 86
Landry's Restaurants, Inc. + ................... 960 29
Ruby Tuesday, Inc. + ........................... 1,250 33
-----------
212
-----------
HOUSEHOLD DURABLES - 0.83%
Tupperware Corp. + ............................. 2,700 76
-----------
SPECIALTY RETAIL - 7.56%
Asbury Automotive Group, Inc. .................. 1,345 39
Charming Shoppes, Inc. ## + .................... 4,875 61
Ethan Allen Interiors, Inc. + .................. 995 35
Genesco, Inc. ## + ............................. 1,525 77
Group 1 Automotive, Inc. + ..................... 1,040 43
Insight Enterprises, Inc. ## ................... 3,030 60
The Men's Wearhouse, Inc. + .................... 1,060 46
Payless Shoesource, Inc. ## .................... 2,650 84
Regis Corp. + .................................. 1,655 63
Rent-A-Center, Inc. ## + ....................... 2,720 76
Tween Brands, Inc. ## + ........................ 1,090 43
United Auto Group, Inc. + ...................... 3,110 63
-----------
690
-----------
TEXTILES & APPAREL - 4.65%
Brown Shoe Company, Inc. ....................... 2,115 57
Hartmarx Corp. ## + ............................ 4,905 32
Movado Group, Inc. + ........................... 1,595 53
Perry Ellis International, Inc. ## ............. 2,624 87
Phillips-Van Heusen Corp. ...................... 920 52
Unifirst Corp. ................................. 1,435 60
The Warnaco Group, Inc. ## ..................... 2,950 83
-----------
424
-----------
TOTAL CONSUMER DISCRETIONARY ...................... 1,402
-----------
CONSUMER STAPLES - 2.64%
FOOD & DRUG RETAILING - 2.64%
The Andersons, Inc. + .......................... 1,509 70
Casey's General Stores, Inc. + ................. 1,790 45
Ruddick Corp. + ................................ 1,325 40
Spartan Stores, Inc. ........................... 3,315 85
-----------
TOTAL CONSUMER STAPLES ............................ 240
-----------
ENERGY - 3.52%
ENERGY EQUIPMENT & SERVICES - 2.57%
Oil States International, Inc. ## + ............ 1,685 57
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Parker Drilling Co. ## ......................... 9,415 $ 102
Trico Marine Services, Inc. ## + ............... 1,950 76
-----------
235
-----------
OIL & GAS - 0.95%
Comstock Resources, Inc. ## .................... 1,340 38
Swift Energy Co. ## ............................ 1,190 48
-----------
86
-----------
TOTAL ENERGY ...................................... 321
-----------
FINANCIALS - 30.68%
BANKS - 8.36%
BankUnited Financial Corp. + ................... 2,100 45
Boston Private Financial Holdings, Inc. + ...... 2,365 66
Central Pacific Financial Corp. ................ 1,885 65
Corus Bankshares, Inc. + ....................... 2,660 45
First Community Bancorp, Inc. + ................ 1,440 79
FirstFed Financial Corp. ## + .................. 1,460 90
Franklin Bank Corp. ## + ....................... 2,720 42
Hanmi Financial Corp. + ........................ 2,340 38
Irwin Financial Corp. + ........................ 3,610 58
Pacific Capital Bancorp + ...................... 1,595 43
Provident Bankshares Corp. + ................... 580 19
Sterling Bancshares, Inc. + .................... 2,217 25
Sterling Financial Corp. ....................... 2,175 64
TierOne Corp. + ................................ 1,620 39
Umpqua Holdings Corp. + ........................ 1,755 44
-----------
762
-----------
DIVERSIFIED FINANCIALS - 4.41%
Advanta Corp., Class A Shares .................. 380 16
Advanta Corp., Class B Shares .................. 1,205 55
Cash America International, Inc. ............... 1,295 56
CompuCredit Corp. ## + ......................... 1,695 61
Investment Technology Group, Inc. ## + ......... 1,090 41
MCG Capital Corp. + ............................ 2,955 52
Ocwen Financial Corp. ## + ..................... 1,240 18
SWS Group, Inc. ................................ 2,450 64
World Acceptance Corp. ## + .................... 920 40
-----------
403
-----------
INSURANCE - 6.87%
Argonaut Group, Inc. ## ........................ 2,550 86
Delphi Financial Group, Inc. + ................. 2,100 90
FPIC Insurance Group, Inc. ## .................. 1,735 80
Harleysville Group, Inc. ....................... 2,025 62
LandAmerica Financial Group, Inc. + ............ 635 51
The Navigators Group, Inc. ## .................. 1,460 74
Ohio Casualty Corp. ............................ 1,560 49
The Phoenix Companies, Inc. .................... 1,869 28
SeaBright Insurance Holdings, Inc. ## .......... 1,620 30
See accompanying notes
44
AMERICAN BEACON SMALL CAP VALUE OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Stewart Information Services Corp. + ........... 1,190 $ 48
Triad Guaranty, Inc. ## + ...................... 650 29
-----------
627
-----------
REAL ESTATE - 11.04%
Arbor Realty Trust, Inc. + ..................... 1,295 40
Ashford Hospitality Trust, Inc. ................ 5,380 65
Capital Trust, Inc. ............................ 830 39
DiamondRock Hospitality Co. + .................. 4,015 73
Entertainment Properties Trust + ............... 485 29
Equity Inns, Inc. + ............................ 4,005 68
Equity Lifestyle Properties, Inc. + ............ 530 29
FelCor Lodging Trust, Inc. ..................... 3,775 96
Gramercy Capital Corp. + ....................... 1,230 40
Highland Hospitality Corp. ..................... 5,555 106
LaSalle Hotel Properties + ..................... 1,440 67
Nationwide Health Properties, Inc. ............. 1,240 40
NorthStar Realty Finance Corp. + ............... 3,705 55
PS Business Parks, Inc. ........................ 485 33
RAIT Financial Trust + ......................... 1,560 44
Redwood Trust, Inc. ............................ 1,235 62
Senior Housing Properties Trust ................ 1,620 37
Sunstone Hotel Investors, Inc. + ............... 2,025 58
Tanger Factory Outlet Centers, Inc. + .......... 635 26
-----------
1,007
-----------
TOTAL FINANCIALS .................................. 2,799
-----------
HEALTH CARE - 5.22%
HEALTH CARE EQUIPMENT & SUPPLIES - 0.44%
STERIS Corp. ................................... 1,555 40
-----------
HEALTH CARE PROVIDERS & SERVICES - 2.93%
Centene Corp. ## ............................... 1,965 41
Gentiva Health Services, Inc. ## ............... 3,730 70
Owens & Minor, Inc. + .......................... 1,525 54
PSS World Medical, Inc. ## ..................... 2,295 46
Res-Care, Inc. ## .............................. 3,165 56
-----------
267
-----------
PHARMACEUTICALS - 1.85%
NBTY, Inc. ## .................................. 1,720 85
Sciele Pharma, Inc. ## + ....................... 3,380 84
-----------
169
-----------
TOTAL HEALTH CARE ................................. 476
-----------
INDUSTRIALS - 12.40%
BUILDING PRODUCTS - 2.40%
Griffon Corp. ## + ............................. 2,675 64
Lennox International, Inc. ..................... 1,695 57
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
NCI Building Systems, Inc. ## + ................ 1,090 $ 55
Universal Forest Products, Inc. ................ 920 43
-----------
219
-----------
COMMERCIAL SERVICES & SUPPLIES - 3.03%
Consolidated Graphics, Inc. ## + ............... 880 66
eFunds Corp. ## ................................ 840 23
Ennis, Inc. .................................... 3,280 80
Kelly Services, Inc. + ......................... 1,250 36
Korn/Ferry International ## + .................. 1,165 28
United Stationers, Inc. ## ..................... 725 43
-----------
276
-----------
DIVERSIFIED MANUFACTURING - 2.76%
Acuity Brands, Inc. + .......................... 425 25
Applied Industrial Technologies, Inc. + ........ 1,880 50
Barnes Group, Inc. + ........................... 1,875 46
Kennametal, Inc. ............................... 1,395 98
Myers Industries, Inc. ## ...................... 1,412 32
-----------
251
-----------
ELECTRICAL EQUIPMENT - 1.26%
AO Smith Corp. ................................. 1,170 45
Belden CDT, Inc. + ............................. 885 49
Regal-Beloit Corp. ............................. 460 21
-----------
115
-----------
RENTAL AUTO/EQUIPMENT - 1.29%
Dollar Thrifty Automotive Group, Inc. ## + ..... 1,180 55
United Rentals, Inc. ## ........................ 1,865 63
-----------
118
-----------
ROAD & RAIL - 1.11%
Celadon Group, Inc. ## + ....................... 1,825 30
Saia, Inc. ## .................................. 2,550 72
-----------
102
-----------
TRANSPORT-SERVICES - 0.55%
Bristow Group, Inc. ## + ....................... 1,340 50
-----------
TOTAL INDUSTRIALS ................................. 1,131
-----------
INFORMATION TECHNOLOGY - 12.86%
COMMUNICATIONS EQUIPMENT - 1.58%
Black Box Corp. + .............................. 1,010 37
CommScope, Inc. ## + ........................... 2,295 107
-----------
144
-----------
COMPUTERS & PERIPHERALS - 0.29%
Komag, Inc. ## + ............................... 960 26
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 3.82%
Anixter International, Inc. ## + ............... 1,240 89
Benchmark Electronics, Inc. ## ................. 1,940 41
Checkpoint Systems, Inc. ## + .................. 2,195 48
See accompanying notes
45
AMERICAN BEACON SMALL CAP VALUE OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
CTS Corp. + .................................... 2,175 $ 29
MTS Systems Corp. + ............................ 1,060 45
Park Electrochemical Corp. + ................... 1,560 43
Technitrol, Inc. ............................... 2,015 54
-----------
349
-----------
IT CONSULTING & SERVICES - 3.51%
Agilysys, Inc. ................................. 2,425 51
CACI International, Inc. ## + .................. 860 39
MPS Group, Inc. ## + ........................... 4,815 66
Ness Technologies, Inc. ## + ................... 4,645 62
Perot Systems Corp. ## ......................... 3,520 63
SYKES Enterprises, Inc. ## ..................... 2,115 39
-----------
320
-----------
SEMICONDUCTOR EQUIPMENT & PRODUCTS - 2.95%
Advanced Energy Industries, Inc. ## ............ 1,795 44
ON Semiconductor Corp. ## + .................... 9,245 99
Photronics, Inc. ## + .......................... 4,700 71
Standard Microsystems Corp. ## ................. 1,730 55
-----------
269
-----------
SOFTWARE - 0.71%
JDA Software Group, Inc. ## .................... 3,645 65
-----------
TOTAL INFORMATION TECHNOLOGY ...................... 1,173
-----------
MATERIALS - 6.52%
CHEMICALS - 0.66%
H.B. Fuller Co. ................................ 2,340 60
-----------
CHEMICALS-PLASTICS - 0.40%
Spartech Corp. ................................. 1,305 36
-----------
CONSTRUCTION MATERIALS - 0.62%
Texas Industries, Inc. + ....................... 745 57
-----------
CONTAINERS & PACKAGING - 2.68%
AptarGroup, Inc. ............................... 820 60
Greif, Inc. + .................................. 1,780 99
Jarden Corp. ## + .............................. 800 34
Silgan Holdings, Inc. + ........................ 910 52
-----------
245
-----------
METALS & MINING - 1.70%
AMCOL International Corp. + .................... 1,315 32
Carpenter Technology Corp. ..................... 195 24
Commercial Metals Co. + ........................ 1,715 57
NN, Inc. ....................................... 3,540 42
-----------
155
-----------
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
PAPER & FOREST PRODUCTS - 0.46%
Potlatch Corp. ................................. 960 $ 42
-----------
TOTAL MATERIALS ................................... 595
-----------
TELECOMMUNICATION SERVICES - 2.04%
DIVERSIFIED TELECOMMUNICATION - 2.04%
General Communication, Inc. ## ................. 1,875 27
Golden Telecom, Inc. ........................... 1,525 89
Premiere Global Services, Inc. ## + ............ 5,720 70
-----------
TOTAL TELECOMMUNICATION SERVICES .................. 186
-----------
UTILITIES - 4.85%
ELECTRIC UTILITIES - 3.99%
Black Hills Corp. + ............................ 930 37
Cleco Corp. + .................................. 1,525 43
CMS Energy Corp. + ............................. 1,175 22
El Paso Electric Co. ## ........................ 2,525 66
The Empire District Electric Co. ............... 2,590 64
PNM Resources, Inc. + .......................... 2,705 88
Portland General Electric Co. .................. 1,490 43
-----------
363
-----------
GAS UTILITIES - 0.86%
Atmos Energy Corp. ............................. 1,160 37
Southwest Gas Corp. ............................ 1,105 42
-----------
79
-----------
TOTAL UTILITIES ................................... 442
-----------
TOTAL COMMON STOCKS ............................... 8,765
-----------
SHORT TERM INVESTMENTS - 4.07%
American Beacon Money Market Select Fund ++ .... 43,109 43
iShares Russell 2000 Value Index Fund + ........ 4,013 328
-----------
TOTAL SHORT TERM INVESTMENTS ...................... 371
-----------
SECURITIES LENDING COLLATERAL - 24.83%
American Beacon Cash Plus Trust ++ ............. 1,335,753 1,336
American Beacon Money Market Select Fund ++ .... 928,950 929
-----------
TOTAL SECURITIES LENDING COLLATERAL ............... 2,265
-----------
TOTAL INVESTMENTS 125.00% - (COST $10,857) ........ 11,401
LIABILITIES, NET OF OTHER ASSETS - (25.00%) ....... (2,280)
-----------
TOTAL NET ASSETS - 100.00% ........................ $ 9,121
===========
See accompanying notes
46
AMERICAN BEACON SMALL CAP VALUE OPPORTUNITY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ The Fund/Trust is affiliated by having the same investment advisor.
See accompanying notes
47
AMERICAN BEACON EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
ARGENTINA - 0.32%
COMMON STOCKS - 0.32%
Banco Macro S.A., ADR .......................... 10,800 $ 391
Petrobras Energia Participaciones S.A.,
ADR ## + .................................... 19,400 206
-----------
TOTAL ARGENTINA ................................... 597
-----------
AUSTRIA - 0.45%
COMMON STOCKS - 0.45%
Erste Bank der oesterreichischen
Sparkassen AG ## ............................ 5,388 432
Raiffeisen International Bank-Holding AG ....... 2,986 411
-----------
TOTAL AUSTRIA ..................................... 843
-----------
BRAZIL - 12.08%
COMMON STOCKS - 8.27%
Banco Bradesco S.A., ADR + ..................... 8,864 188
Banco Itau Holding Financeira S.A., ADR ........ 29,816 1,150
Banco Nossa Caixa S.A. ......................... 13,500 209
Brasil Telecom Participacoes S.A., ADR + ....... 9,230 489
Braskem S.A., ADR + ............................ 3,300 55
Centrais Eletricas Brasileiras S.A. ## ......... 7,948,000 180
Companhia Brasileira de Distribuicao Group,
ADR ## + .................................... 23,760 757
Companhia de Saneamento Basico do Estado de
Sao Paulo, ADR + ............................ 8,100 280
Companhia Energetica de Minas Gerais, ADR + .... 12,309 639
Companhia Vale do Rio Doce, ADR ................ 80,344 2,747
CPFL Energia S.A. .............................. 14,800 230
Cyrela Brazil Realty S.A. ## ................... 28,088 295
Empresa Brasileira de Aeronautica S.A.
(Embraer), ADR .............................. 10,310 484
Gafisa S.A., ADR ## + .......................... 7,500 210
Gerdau S.A., ADR + ............................. 16,725 335
Grendene S.A. .................................. 38,400 474
Petroleo Brasileiro S.A., ADR .................. 25,431 2,574
Petroleo Brasileiro S.A., A Shares, ADR ........ 18,550 1,655
Unibanco - Uniao de Bancos Brasileiros S.A. .... 15,378 149
Unibanco - Uniao de Bancos Brasileiros
S.A., ADR ................................... 19,782 1,920
Usinas Siderurgicas de Minas Gerais S.A. ....... 3,494 194
Votorantim Celulose e Papel S.A., ADR + ........ 17,330 346
-----------
TOTAL COMMON STOCKS ............................... 15,560
-----------
PREFERRED STOCKS - 3.81%
All America Latina Logistica S.A. .............. 33,500 391
Banco Itau Holding Financeira S.A. ............. 7,824 301
Braskem S.A. ................................... 64,400 550
Centrais Eletricas Brasileiras S.A. ## ......... 17,320,400 408
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Companhia de Tecidos Norte de Minas ............ 4,589,900 $ 752
Companhia Energetica de Minas Gerais ........... 8,915,119 315
Companhia Paranaense de Energia ................ 21,973,900 281
Companhia Vale do Rio Doce, A Shares ........... 3,752 130
Gerdau S.A. .................................... 11,150 228
Itausa - Investimentos Itau S.A. ............... 76,062 416
Klabin S.A. .................................... 70,400 217
Lojas Americanas S.A. .......................... 7,932,401 504
Net Servicos de Comunicacao S.A. ## ............ 22,338 342
Petroleo Brasileiro S.A. ....................... 7,160 159
Tele Norte Leste Participacoes S.A., ADR + ..... 85,990 1,408
Telemig Celular Participacoes S.A. ............. 197,143,389 436
Telesp - Telecommunicacoes de Sao Paulo
S.A. ......................................... 8,492 225
Usinas Siderurgicas de Minas Gerais S.A. ....... 2,066 98
-----------
TOTAL PREFERRED STOCKS ............................ 7,161
-----------
TOTAL BRAZIL ...................................... 22,721
-----------
CHILE - 0.27%
COMMON STOCKS - 0.27%
United Breweries Co, Inc., ADR ................. 14,500 505
-----------
COLOMBIA - 0.05%
COMMON STOCKS - 0.05%
Bancolombia S.A., ADR .......................... 3,400 95
-----------
CZECH REPUBLIC - 1.29%
COMMON STOCKS - 1.29%
Central European Media Enterprises Ltd. ## ..... 11,184 1,008
CEZ, A.S. ## ................................... 19,600 958
Zentiva NV ## .................................. 6,426 463
-----------
TOTAL CZECH REPUBLIC .............................. 2,429
-----------
EGYPT - 0.45%
COMMON STOCKS - 0.45%
El Ezz Steel Rebars Co. ## ..................... 15,260 142
Orascom Telecom Holding S.A.E. ## .............. 10,588 709
-----------
TOTAL EGYPT ....................................... 851
-----------
HONG KONG/CHINA - 11.44%
COMMON STOCKS - 11.44%
Bank of China Ltd. ## + ........................ 844,000 417
Brilliance China Automotive Holdings Ltd. + .... 756,000 158
China Coal Energy Ltd. ## ...................... 979,000 957
China Communications Construction Co. Ltd. ## .. 629,000 814
China Construction Bank Corp. + ++ ............. 1,765,000 1,071
China Life Insurance Co. Ltd. .................. 50,000 154
China Mobile Ltd. .............................. 127,000 1,145
See accompanying notes
48
AMERICAN BEACON EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
China Molybdenum Co. Ltd. ## ++ ................ 7,000 $ 11
China Netcom Group Corp. (Hong Kong) Ltd. ## ... 223,000 550
China Ping'an Insurance Co. Ltd. ............... 85,000 451
China Power International Development Ltd. + ... 1,433,000 743
China Resources Power Holdings Co. ............. 294,000 517
China Shipping Development Co. Ltd. ## + ....... 456,000 855
China Telecom Corp. Ltd. ....................... 2,011,100 949
CNOOC Ltd. + ................................... 1,880,400 1,617
COSCO Pacific Ltd. ## .......................... 150,000 362
Denway Motors Ltd. + ........................... 1,856,700 735
Dongfeng Motor Group Co. Ltd. ## ............... 750,000 397
Global Bio-chem Technology Group Co. Ltd. + .... 1,169,800 498
GOME Electrical Appliances Holdings Ltd. + ..... 668,000 1,023
Harbin Power Equipment Co. Ltd. + .............. 468,000 545
Huandian Power International Corp. ## + ........ 1,069,800 463
Huaneng Power International, Inc. + ............ 511,900 519
Maanshan Iron & Steel Co. Ltd. ................. 1,133,000 776
Moulin Global Eyecare Holdings Ltd. ## # ....... 96,000 --
PetroChina Co. Ltd. ............................ 853,000 958
PICC Property and Casualty Co. Ltd. ## + ....... 898,000 537
Shanghai Forte Land Co. ## + ................... 112,000 50
Shanghai Industrial Holdings Ltd. .............. 306,900 804
Shenzhen Investment Ltd. ....................... 701,000 416
Sinotrans Ltd. ................................. 1,298,000 509
Texwinca Holdings Ltd. + ....................... 554,000 393
TPV Technology Ltd. ............................ 968,000 648
Weiqiao Textile Co. Ltd. ....................... 481,600 859
Yanzhou Coal Mining Co. Ltd. ................... 599,800 619
-----------
TOTAL HONG KONG/CHINA ............................. 21,520
-----------
HUNGARY - 0.95%
COMMON STOCKS - 0.95%
Magyar Telekom Telecommunications plc .......... 99,450 577
OTP Bank ## .................................... 23,832 1,212
-----------
TOTAL HUNGARY ..................................... 1,789
-----------
INDIA - 6.62%
COMMON STOCKS - 6.62%
Aban Offshore Ltd. ## .......................... 5,000 315
ABB Ltd. ....................................... 5,100 503
Andhra Bank ## ................................. 54,110 106
Bharat Heavy Electricals Ltd. .................. 10,900 655
Bharat Petroleum Corp. Ltd. .................... 94,793 763
Bharti Airtel Ltd. ## .......................... 48,700 955
Cipla Ltd. ..................................... 37,375 191
Container Corp. of India Ltd. ## ............... 5,900 295
Deccan Chronicle Holdings Ltd. ## .............. 55,000 271
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
GAIL India Ltd. ## ............................. 33,200 $ 240
GAIL India Ltd., GDR ++ ........................ 5,710 243
Glenmark Pharmaceuticals Ltd. .................. 21,100 339
HCL Technologies Ltd. ## ....................... 45,600 363
HDFC Bank Ltd. ................................. 15,300 378
Hero Honda Motors Ltd. ......................... 4,778 79
Hindalco Industries Ltd. ....................... 61,440 217
Hindalco Industries Ltd., ADR ++ ............... 19,250 34
Hindalco Industries Ltd., GDR ++ ............... 162,100 575
Hindustan Petroleum Corporation Ltd. ## ........ 112,160 733
ICICI Bank Ltd., ADR + ......................... 14,300 585
Infosys Technologies Ltd. ## ................... 21,800 1,081
Infosys Technologies Ltd., ADR + ............... 5,300 277
ITC Ltd. ....................................... 39,000 150
Mahanagar Telephone Nigam Ltd. ................. 126,680 452
Mahindra & Mahindra Ltd. ....................... 1,700 32
Maruti Udyog Ltd. ## ........................... 15,000 292
Oil & Natural Gas Corp. Ltd. ................... 29,801 656
Reliance Energy Ltd. ## ........................ 20,325 249
State Bank of India Ltd., GDR ++ ............... 15,700 1,075
UTI Bank Ltd. .................................. 31,000 350
-----------
TOTAL INDIA ....................................... 12,454
-----------
INDONESIA - 1.93%
COMMON STOCKS - 1.93%
PT Astra International Tbk ..................... 237,900 374
PT Bank Central Asia Tbk ....................... 508,500 294
PT Bank Mandiri (Persero) Tbk .................. 472,500 158
PT Bank Rakyat Indonesia Tbk ................... 472,500 271
PT Gudang Garam Tbk ............................ 431,800 511
PT Indocement Tunggal Prakarsa Tbk ............. 1,500 1
PT Indofood Sukses Makmur Tbk .................. 767,000 137
PT Indosat Tbk ................................. 416,900 309
PT International Nickel Indonesia Tbk .......... 36,500 243
PT Telekomunikasi Indonesia Tbk ................ 923,000 1,063
PT United Tractors Tbk ......................... 309,000 266
-----------
TOTAL INDONESIA ................................... 3,627
-----------
ISRAEL - 1.51%
COMMON STOCKS - 1.51%
Bank Hapoalim B.M. ............................. 143,310 748
Check Point Software Technologies Ltd. ## ...... 15,020 354
Israel Discount Bank Ltd. ## ................... 114,146 240
Taro Pharmaceutical Industries Ltd. ## + ....... 11,100 64
Teva Pharmaceutical Industries Ltd., ADR ....... 37,250 1,427
-----------
TOTAL ISRAEL ...................................... 2,833
-----------
See accompanying notes
49
AMERICAN BEACON EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
MALAYSIA - 2.27%
COMMON STOCKS - 2.27%
AMMB Holdings Bhd .............................. 291,600 $ 338
Gamuda Bhd ..................................... 148,000 337
Kuala Lumpur Kepong Bhd ........................ 54,000 205
Malayan Banking Bhd ............................ 371,900 1,293
PLUS Expressways Bhd ........................... 163,700 144
Proton Holdings Bhd ............................ 65,800 122
Resorts World Bhd ## ........................... 665,800 631
Sime Darby Bhd ................................. 405,100 1,083
YTL Corporation Bhd ............................ 57,000 121
-----------
TOTAL MALAYSIA .................................... 4,274
-----------
MEXICO - 6.69%
COMMON STOCKS - 6.69%
America Movil, S.A.B. de C.V., ADR ............. 64,565 3,392
Cemex, S.A.B. de C.V. ## + ..................... 191,868 623
Coca-Cola Femsa, S.A. de C.V., ADR + ........... 23,375 909
Controladora Commercial Mexicana,
S.A. de C.V. ................................ 265,000 684
Corp GEO, S.A. de C.V. ## + .................... 77,099 423
Embotelladoras Arca, S.A. + .................... 40,830 145
Gruma, S.A. de C.V. ............................ 85,900 287
Grupo Continential, S.A. ....................... 266,350 588
Grupo Financiero Banorte, S.A. de C.V. ......... 150,900 656
Grupo Televisa, S.A., ADR ...................... 65,419 1,835
Kimberly-Clark de Mexico, S.A. de C.V. + ....... 73,600 329
Telefonos de Mexico, S.A. de C.V., ADR ......... 22,250 760
Urbi Desarrollos Urbanos, S.A. de C.V ## ....... 69,185 289
Wal-Mart de Mexico, S.A.B. de C.V. ............. 338,120 1,327
Wal-Mart de Mexico, S.A.B. de C.V., ADR ........ 8,448 332
-----------
TOTAL MEXICO ...................................... 12,579
-----------
MOROCCO - 0.46%
COMMON STOCKS - 0.46%
Banque Marocaine du Commerce Exterieur ......... 1,690 520
Douja Promotion Groupe Addoha S.A. ## .......... 1,000 349
-----------
TOTAL MOROCCO ..................................... 869
-----------
PERU - 0.19%
COMMON STOCKS - 0.19%
Credicorp Ltd. ................................. 6,646 347
-----------
PHILIPPINES - 0.74%
COMMON STOCKS - 0.74%
ABS-CBN Broadcasting Corp. ..................... 281,700 178
Ayala Corp. .................................... 16,980 213
Bank of the Philippine Islands ................. 287,523 389
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Manila Electric Co. ............................ 143,000 $ 215
Philippine Long Distance Telephone Co. ## ...... 3,800 201
SM Prime Holdings, Inc. ........................ 318,000 76
Union Bank of the Philippines ## ............... 93,200 125
-----------
TOTAL PHILIPPINES .................................. 1,397
-----------
POLAND - 3.03%
COMMON STOCKS - 3.03%
Bank Handlowy w Warszawie S.A. ................. 16,111 546
Bank Millennium S.A. ........................... 163,496 633
Bank Pekao S.A. ................................ 11,457 1,069
Bank Zachodni WBK S.A. ......................... 5,108 555
Budimex S.A. ## ................................ 3,887 174
Multimedia Polska S.A. ## ...................... 65,213 308
PBG S.A. ## .................................... 1,269 195
Polimex Mostostal S.A. ......................... 3,000 283
Polski Koncern Naftowy Orlen S.A. .............. 16,870 275
Telekomunikacja Polska S.A. .................... 90,670 725
TVN S.A. ## .................................... 96,494 936
-----------
TOTAL POLAND ...................................... 5,699
-----------
RUSSIA - 8.39%
COMMON STOCKS - 8.39%
Cherepovets MK Severstal, GDR ++ ............... 8,110 108
CTC Media, Inc. ## + ........................... 31,409 819
Evraz Group S.A., GDR .......................... 16,996 599
JSC Surgutneftegaz, ADR + ...................... 4,700 305
LUKOIL Oil Co., ADR ............................ 34,058 2,725
Mechel OAO, ADR ................................ 8,241 269
Mining and Metallurgical Company Norilsk
Nickel, ADR ................................. 5,982 1,166
NovaTek OAO, GDR + ............................. 15,371 789
RAO Gazprom, ADR ............................... 48,498 1,933
RAO Gazprom, ADR + ............................. 36,049 1,413
Sberbank RF, GDR ## ............................ 4,173 2,201
TMK OAO, GDR ## + .............................. 5,665 207
Trubnaya Metallurgicheskaya Kompaniya
OAO, GDR ## ++ .............................. 17,494 637
Unified Energy System, GDR + ................... 13,053 1,671
Wimm-Bill-Dann Foods, ADR + .................... 11,707 944
-----------
TOTAL RUSSIA ...................................... 15,786
-----------
SINGAPORE - 0.02%
COMMON STOCKS - 0.02%
Straits Asia Resources Ltd. ## ................. 54,000 36
-----------
SOUTH AFRICA - 7.50%
COMMON STOCKS - 7.21%
Alexander Forbes Ltd. .......................... 204,487 478
See accompanying notes
50
AMERICAN BEACON EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Aspen Pharmacare Holdings Ltd. ................. 114,400 $ 624
Aveng Ltd. ..................................... 40,062 272
Barloworld Ltd. ................................ 15,869 441
Bidvest Group Ltd. ............................. 23,584 491
Ellerine Holdings Ltd. ......................... 26,050 353
Group Five Ltd. ................................ 50,511 373
Massmart Holdings Ltd. ......................... 52,700 730
Mittal Steel South Africa Ltd. ................. 26,300 474
Mr Price Group Ltd. ............................ 117,800 537
MTN Group Ltd. ................................. 140,100 2,044
Murray & Roberts Holdings Ltd. ................. 49,397 425
Nampak Ltd. .................................... 247,620 800
Naspers Ltd. ................................... 27,043 683
Nedbank Group Ltd. ............................. 78,110 1,667
Sanlam Ltd. .................................... 295,970 995
Sappi Ltd. ..................................... 40,190 714
Sasol Ltd. ..................................... 18,240 626
Steinhoff International Holdings Ltd. .......... 175,359 618
Woolworths Holdings Ltd. ....................... 60,500 204
-----------
TOTAL COMMON STOCKS 13,549
-----------
PREFERRED STOCKS - 0.29%
Allied Electronics Corp. Ltd. ## ............... 86,508 552
-----------
TOTAL SOUTH AFRICA 14,101
-----------
SOUTH KOREA - 15.24%
COMMON STOCKS - 15.04%
Amorepacific Corp. ............................. 583 376
Cheil Communications, Inc. ..................... 1,088 284
Cheil Industries, Inc. ......................... 13,980 527
Daelim Industrial Co. Ltd. ..................... 394 46
Doosan Infracore Co. Ltd. ...................... 12,140 386
GS Engineering & Construction Corp. ............ 6,700 665
Hana Financial Group, Inc. ..................... 4,720 247
Hanwha Chemical Corp. .......................... 20,340 341
Honam Petrochemical Corp. ...................... 2,230 185
Hynix Semiconductor, Inc. ## ................... 8,930 306
Hyundai Department Store Co. Ltd. .............. 5,787 593
Hyundai Development Co. ........................ 2,772 159
Hyundai Engineering & Construction
Co. Ltd. ## ................................. 5,120 305
Hyundai Heavy Industries ....................... 1,630 413
Hyundai Mipo Dockyard Co. Ltd. ................. 2,969 599
Hyundai Mobis .................................. 11,527 922
Hyundai Motor Co. Ltd. ......................... 16,116 1,021
Hyundai Steel Co. .............................. 10,260 424
Kookmin Bank ................................... 24,821 2,227
Kookmin Bank, ADR .............................. 5,050 454
Korea Electric Power Corp. ..................... 21,225 859
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Korea Electric Power Corp., ADR ................ 7,200 $ 149
KT Corp. ....................................... 4,850 218
KT Corp., ADR .................................. 42,260 958
Kumho Tire Co., Inc. ........................... 57,770 722
Kumho Tire Co., Inc., GDR ++ ................... 10,200 61
LG Chemical, Ltd. .............................. 6,130 357
LG Corp. ....................................... 6,480 237
LG Electronics, Inc. ........................... 16,361 1,093
LG Petrochemical Co. Ltd. ...................... 6,790 228
LG Philips LCD Co. Ltd. ## ..................... 10,480 426
Lotte Shopping Co. Ltd. ........................ 2,674 1,002
NHN Corp. ...................................... 4,090 639
Orion Corp. .................................... 1,706 464
POSCO .......................................... 2,199 924
Samsung Electronics Co. Ltd. ................... 5,688 3,483
Samsung Fire & Marine Insurance Co. Ltd. ....... 2,794 496
Samsung SDI Co. Ltd. ........................... 3,559 208
Samsung Securities Co. Ltd ..................... 14,406 842
Shinhan Financial Group Co. Ltd. ............... 26,790 1,508
Shinsegae Co. Ltd. ............................. 860 584
SK Telecom Co. Ltd. ............................ 2,011 423
SK Telecom Co. Ltd., ADR ....................... 32,020 795
S-Oil Corp. .................................... 3,714 287
SSCP Co. Ltd. ## ............................... 4,150 117
Woongjin Coway Co. Ltd. ........................ 21,840 732
-----------
TOTAL COMMON STOCKS 28,292
-----------
PREFERRED STOCKS - 0.20%
Samsung Electronics Co. Ltd. ................... 798 375
-----------
TOTAL SOUTH KOREA 28,667
-----------
TAIWAN - 10.00%
COMMON STOCKS - 10.00%
AU Optronics Corp. ## .......................... 244,000 387
Benq Corp. ..................................... 1,045,550 398
Cathay Financial Holding Co. Ltd. .............. 179,910 364
China Motor Corp. .............................. 507,707 437
Chinatrust Financial Holding Co. Ltd. .......... 1,033,149 811
Chunghwa Telecom Co. Ltd., ADR ................. 57,340 1,141
Compal Electronics, Inc. ....................... 1,677,065 1,523
Delta Electronics, Inc. ........................ 196,966 615
Eternal Chemical Co. Ltd. ...................... 272,000 455
Evergreen Marine Corp. ......................... 343,000 209
Everlight Electronics Co. Ltd. ................. 104,140 358
Far Eastern Textile Co. Ltd. ................... 179,140 163
First Financial Holding Co. Ltd. ............... 1,391,506 957
Formosa Chemicals & Fibre Corp. ................ 116,000 215
Foxconn Technology Co. Ltd. .................... 42,000 394
Fubon Financial Holding Co. Ltd. ............... 429,000 372
See accompanying notes
51
AMERICAN BEACON EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
High Tech Computer Corp. ....................... 17,200 $ 256
HON HAI Precision Industry Co. Ltd. ............ 17,006 112
InnoLux Display Corp. ## ....................... 69,000 196
MediaTek, Inc. ................................. 58,300 725
Mega Financial Holding Co. Ltd. ................ 274,000 174
Nan Ya Printed Circuit Board Corp. ............. 66,000 383
Nien Hsing Textile Co. Ltd. .................... 317,000 201
Nien Made Enterprise Co. Ltd. .................. 225,380 214
Optimax Technology Corp. ....................... 39,090 22
Powerchip Semiconductor Corp. .................. 289,000 175
Quanta Computer, Inc. .......................... 877,113 1,255
Radiant Opto-Electronics Corp. ................. 129,650 203
Siliconware Precision Industries Co. Ltd. ## ... 147,000 279
SinoPac Financial Holdings Co. Ltd. ............ 2,303,987 996
Taiwan Cement Corp. ............................ 244,827 217
Taiwan Semiconductor Manufacturing Co. Ltd. .... 95,000 194
Tatung Co Ltd. ## .............................. 767,000 323
Transcend Information, Inc. .................... 85,485 285
Tripod Technology Corp. ........................ 61,820 230
TXC Corp. ...................................... 77,000 139
United Microelectronics Corp. .................. 4,040,106 2,326
United Microelectronics Corp., ADR + ........... 23,024 76
Yaego Corp. ## ................................. 1,453,000 572
Yang Ming Marine Transport Corp. ............... 711,000 463
-----------
TOTAL TAIWAN ...................................... 18,815
-----------
THAILAND - 1.83%
COMMON STOCKS - 1.83%
Bangkok Bank PCL ............................... 203,700 657
Charoen Pokphand Foods PCL # ................... 2,802,600 366
CP Seven Eleven PCL # .......................... 863,400 184
Delta Electronics PCL .......................... 300,100 134
Italian-Thai Development PCL ................... 923,900 137
Kasikornbank PCL ............................... 350,000 710
Krung Thai Bank PCL ............................ 1,298,200 405
PTT PCL ........................................ 67,200 414
Siam Commercial Bank PCL ....................... 117,100 219
Siam Makro PCL ................................. 61,200 135
Thai Union Frozen Products PCL ................. 136,100 86
-----------
TOTAL THAILAND .................................... 3,447
-----------
TURKEY - 2.33%
COMMON STOCKS - 2.33%
Aksigorta A.S. ................................. 56,990 266
BIM Birlesik Magazalar A.S. ## ................. 8,580 541
Coca-Cola Icecek A.S. ## ....................... 51,900 374
Petrol Ofisi A.S. .............................. 40,630 178
Turkcell Iletisim Hizmetleri A.S. .............. 116,430 645
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Turkiye Garanti Bankasi A.S. ................... 164,542 $ 794
Turkiye Is Bankasi (Isbank) .................... 225,796 1,067
Yapi ve Kredi Bankasi A.S. ## .................. 241,914 524
-----------
TOTAL TURKEY ...................................... 4,389
-----------
UNITED KINGDOM - 0.09%
COMMON STOCKS - 0.09%
JKX Oil & Gas plc ## ........................... 24,980 158
-----------
SHORT TERM INVESTMENTS - 4.06%
American Beacon Money Market Select
Fund +++ ................................ 7,122,868 7,123
PAR AMOUNT
------------
United States Treasury Bill,
5.01%, Due 6/7/2007 @@ @ .................... $ 515 512
-----------
TOTAL SHORT TERM INVESTMENTS ...................... 7,635
-----------
SHARES
------------
SECURITIES LENDING COLLATERAL - 9.69%
American Beacon Cash Plus Trust +++ ........ 10,750,736 10,751
American Beacon Money Market Select
Fund +++ ................................ 7,476,602 7,476
-----------
TOTAL SECURITIES LENDING COLLATERAL ............... 18,227
-----------
TOTAL INVESTMENTS 109.89% - (COST $157,671) ....... 206,690
LIABILITIES, NET OF OTHER ASSETS - (9.89%) ........ (18,608)
-----------
TOTAL NET ASSETS - 100.00% ........................ $ 188,082
===========
See accompanying notes
52
AMERICAN BEACON EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $3,815 or 2.03% of net
assets. The Fund has no right to demand registration of these
securities.
# Valued at fair value pursuant to procedures approved by the Board of
Trustees.
+++ The Fund/Trust is affiliated by having the same investment advisor.
@@ Rates represent discount rate.
@ At April 30, 2007, security pledged as collateral for open futures
contracts.
FUTURES CONTRACTS
(DOLLARS IN THOUSANDS)
UNREALIZED
NUMBER OF EXPIRATION MARKET APPRECIATION/
CONTRACTS DATE VALUE (DEPRECIATION)
--------- ---------- ------- --------------
Emini S&P 500 Index .......... 130 Jun 2007 $11,014 $282
======= ====
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
(DOLLARS IN THOUSANDS)
SETTLEMENT MARKET UNREALIZED
DATE VALUE GAIN/(LOSS)
---------- ------ -----------
CONTRACTS TO DELIVER
12,698 South African Rand .... 5/16/2007 $1,736 $(64)
TOTAL CONTRACTS TO DELIVER
------ ----
(RECEIVABLE AMOUNT $1,672) ... $1,736 $(64)
------ ----
NET CURRENCY FLUCTUATION ........ $(64)
====
SECTOR DIVERSIFICATION
Percent of
Net Assets
----------
Communications .................................................... 2.71%
Consumer Discretionary ............................................ 10.82%
Consumer Staples .................................................. 4.30%
Energy ............................................................ 9.35%
Financials ........................................................ 22.08%
Health Care ....................................................... 1.92%
Industrials ....................................................... 10.97%
Information Technology ............................................ 9.75%
Materials ......................................................... 7.85%
Telecommunication Services ........................................ 11.61%
Utilities ......................................................... 4.78%
Short Term Investments ............................................ 13.75%
Liabilities, Net of Other Assets .................................. (9.89)%
------
100.00%
======
See accompanying notes
53
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
CORPORATE OBLIGATIONS - 94.49%
AUTO COMPONENTS - 3.37%
The Goodyear Tire & Rubber Co.,
11.25%, Due 3/1/2011 ........................ $ 1,000 $ 1,093
Pep Boys, Inc., 7.50%, Due 12/15/2014 .......... 1,135 1,112
Stanadyne Corp., 10.00%, Due 8/15/2014 ......... 1,000 1,070
Tenneco, Inc.,
10.25%, Due 7/15/2013 ....................... 1,400 1,535
8.625%, Due 11/15/2014 + .................... 750 797
TriMas Corp., 9.875%, Due 6/15/2012 ............ 1,250 1,297
TRW Automotive, Inc.,
7.00%, Due 3/15/2014 ++ ..................... 2,000 1,980
7.25%, Due 3/15/2017 ++ ..................... 900 893
United Components, Inc., 9.375%, Due
6/15/2013 ................................... 2,250 2,340
-----------
12,117
-----------
AUTO LOAN - 3.21%
Ford Motor Credit Co. LLC,
5.625%, Due 10/1/2008 ....................... 400 394
7.375%, Due 10/28/2009 ...................... 1,000 1,001
9.75%, Due 9/15/2010 ........................ 1,700 1,799
9.875%, Due 8/10/2011 ....................... 1,900 2,023
8.105%, Due 1/13/2012 # ..................... 1,300 1,282
8.00%, Due 12/15/2016 ....................... 1,000 978
General Motors Acceptance Corp.,
6.875%, Due 9/15/2011 ....................... 4,050 4,063
-----------
11,540
-----------
AUTOMOBILES - 1.45%
Ford Motor Co.,
8.875%, Due 1/15/2022 ....................... 200 177
7.45%, Due 7/16/2031 + ...................... 725 574
General Motors Corp.,
7.70%, Due 4/15/2016 + ...................... 1,200 1,110
8.25%, Due 7/15/2023 ........................ 700 633
7.40%, Due 9/1/2025 ......................... 500 419
United Auto Group, Inc., 7.75%,
Due 12/15/2016 ++ ........................... 2,250 2,284
-----------
5,197
-----------
BASIC MATERIALS - 2.16%
Georgia-Pacific Corp., 7.00%, Due
1/15/2015 ++ ................................ 1,575 1,583
Huntsman International LLC, 7.875%,
Due 11/13/2014 ++ ........................... 800 836
Johnson Diversey, Inc., 9.625%, Due 5/15/2012 .. 500 524
Lyondell Chemical Co.,
8.00%, Due 9/15/2014 ........................ 1,200 1,257
8.25%, Due 9/15/2016 + ...................... 1,250 1,338
MacDermid, Inc., 9.50%, Due 4/15/2017 ++ ....... 300 311
PNA Group, Inc., 10.75%, Due 9/1/2016 ++ ....... 1,075 1,182
See accompanying notes
54
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Verso Paper Holdings LLC, 9.125%,
Due 8/1/2014 ++ ............................. $ 700 $ 737
-----------
7,768
-----------
CASINO/GAMING - 0.06%
Pinnacle Entertainment, Inc.,
8.25%, Due 3/15/2012 ........................ 100 103
8.75%, Due 10/1/2013 ........................ 100 105
-----------
208
-----------
COMMERCIAL SERVICES - 1.56%
Aramark Corp.,
8.50%, Due 2/1/2015 ++ ..................... 900 942
8.86%, Due 2/1/2015 ++ # ................... 1,000 1,027
Iron Mountain, Inc.,
6.625%, Due 1/1/2016 ........................ 750 727
8.75%, Due 7/15/2018 + ...................... 1,550 1,682
Valassis Communications, Inc.,
8.25%, Due 3/1/2015 + ++ .................... 1,250 1,228
-----------
5,606
-----------
COMMUNICATIONS - 11.13%
Cadmus Communications Corp.,
8.375%, Due 6/15/2014 ....................... 1,700 1,734
CanWest Media, Inc., 8.00%, Due 9/15/2012 ...... 800 830
Cch I LLC 1100% Due 10/1/2015 .................. 900 956
Charter Communications Holdings,
10.25%, Due 9/15/2010 ....................... 3,800 4,047
CSC Holdings, Inc.,
8.125%, Due 7/15/2009 ....................... 1,000 1,040
7.625%, Due 4/1/2011 ........................ 200 206
7.625%, Due 7/15/2018 ....................... 800 816
Dex Media, Inc.,
12.125%, Due 11/15/2012 ..................... 500 545
9.875%, Due 8/15/2013 ....................... 200 218
Zero Coupon, Due 11/15/2013 ## # ............ 2,750 2,592
Digicel Group Ltd., 8.875%, Due 1/15/2015 ++ ... 800 785
Echostar DBS Corp.,
6.375%, Due 10/1/2011 ....................... 100 101
7.00%, Due 10/1/2013 ........................ 2,000 2,077
6.625%, Due 10/1/2014 ....................... 1,500 1,523
7.125%, Due 2/1/2016 ........................ 700 729
FTD, Inc., 775%, Due 2/15/2014 ................. 923 928
Insight Communications Co., Inc.,
12.25%, Due 2/15/2011 ....................... 2,875 3,004
Intelsat Intermediate Holding Co. Ltd.,
Zero Coupon, Due 2/1/2015 ## # .............. 500 420
Intelsat Subsidiary Holding Co. Ltd.,
8.25%, Due 1/15/2013 ........................ 1,200 1,248
iPCS, Inc., 7.48%, Due 5/1/2013 ++ # ........... 1,000 1,005
L-3 Communications Corp., 6.125%,
Due 7/15/2013 ............................... 1,100 1,086
Lamar Media Corp., 7.25%, Due 1/1/2013 ......... 800 818
Liberty Media LLC, 5.70%, Due 5/15/2013 ........ 900 860
LIN Television Corp., 6.50%, Due 5/15/2013 ..... 800 788
MasTec, Inc., 7.625%, Due 2/1/2017 ++ .......... 1,000 1,010
See accompanying notes
55
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Network Communications, Inc., 10.75%,
Due 12/1/2013 ............................... $ 1,000 $ 1,025
Quebecor Media, Inc., 7.75%, Due 3/15/2016 ..... 100 105
Qwest Communications International, Inc.,
7.50%, Due 2/15/2014......................... 1,200 1,239
Radio One, Inc., 6.375%, Due 2/15/2013 ......... 800 779
The Readers Digest Association, Inc.,
9.00%, Due 2/15/2017 ++ ..................... 1,750 1,715
Umbrella Acquisition, Inc., 9.75%,
Due 3/15/2015 ++ ............................ 3,700 3,714
West Corp., 9.50%, Due 10/15/2014 ++ ........... 1,900 2,009
-----------
39,952
-----------
CONSTRUCTION & ENGINEERING - 1.23%
Beazer Homes USA, Inc.,
8.375%, Due 4/15/2012 + ..................... 1,050 1,042
8.125%, Due 6/15/2016 ....................... 200 198
KB Home,
7.75%, Due 2/1/2010 ......................... 1,000 1,010
9.50%, Due 2/15/2011 + ...................... 1,200 1,235
6.25%, Due 6/15/2015 ........................ 600 558
7.25%, Due 6/15/2018 ........................ 400 380
-----------
4,423
-----------
CONSUMER DISCRETIONARY - 1.48%
Commercial Vehicle Group, Inc., 8.00%,
Due 7/1/2013 ................................ 400 408
Fresenius Medical Care Capital Trust IV, 7.875%,
Due 6/15/2011 ............................... 700 740
Levi Strauss & Co., 12.25% Due 12/15/2012 ...... 1,500 1,639
OSI Restaurant Partners LLC, 9.625%,
Due 5/15/2015 ............................... 300 309
Simmons Co., 7.875%, Due 1/15/2014 ............. 2,000 2,055
Spectrum Brands, Inc., 7.375%, Due 2/1/2015 .... 200 158
-----------
5,309
-----------
CONSUMER STAPLES - 3.88%
Alion Science and Technology Corp., 10.25%,
Due 2/1/2015 ++ ............................. 600 631
Blyth, Inc., 5.50%, Due 11/1/2013 .............. 1,500 1,313
Jarden Corp., 7.50, Due 5/1/2017 ............... 1,400 1,433
Payless Shoesource, lnc., 8.25%, Due 8/1/2013 .. 1,500 1,579
Pilgrims Pride Corp,.,
9.625%, Due 9/15/2011 ....................... 2,348 2,448
8.375%, Due 5/1/2017 + ...................... 1,200 1,215
Prestige Brands, Inc., 9.25% Due 4/15/2012 ..... 2,000 2,070
Rafaella Apparel Group, Inc., 11.25%,
Due 6/15/2011 ............................... 1,341 1,368
Rental Service Corp., 9.50%, Due 12/1/2014 ++ .. 800 850
Smithfield Foods, Inc., 7.75%, Due 5/15/2013 ... 1,000 1,040
-----------
13,947
-----------
ELECTRIC/GAS - 0.92%
Aquila, Inc., 9.95%, Due 2/1/2011 .............. 900 986
Hanover Compressor Co., 7.50%, Due 4/15/2013 ... 800 820
Midwest Generation LLC, 8.75%, Due 5/1/2034 .... 800 884
TXU Corp., 5.55%, Due 11/15/2014 ............... 700 6268
-----------
3,318
-----------
See accompanying notes
56
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
ENERGY - 9.62%
AmeriGas Partners, L.P.,
7.25%, Due 5/20/2015 ........................ $ 1,225 $ 1,246
7.125%, Due 5/20/2016 ....................... 1,150 1,164
Aventine Renewable Energy Holdings, Inc.,
10.00%, Due 4/1/2017 ++ ..................... 1,000 1,040
Chesapeake Energy Corp.,
7.625%, Due 7/15/2013 ....................... 3,400 3,604
6.625% Due 1/15/2016 ........................ 900 914
Cie Generale de Geophysique-Veritas, 7.75%,
Due 5/15/2017 ............................... 300 317
Complete Production Services, Inc., 8.00%,
Due 12/15/2016 ++ ........................... 1,500 1,551
Copano Energy LLC, 8.125%, Due 3/1/2016 ........ 800 834
Dynegy Holdings, Inc., 8.375%, Due 5/1/2016 .... 900 948
Holly Energy Partners, 6.25% Due 3/1/2015 ...... 1,900 1,824
Inergy L.P./Inergy Finance Corp., 6.875%,
Due 12/15/2014 .............................. 2,224 2,196
Mariner Energy, Inc., 7.50%, Due 4/15/2013 ..... 900 893
MarkWest Energy Partners LP, 6.875%,
Due 11/1/2014 ............................... 800 786
Massey Energy Co., 6.875%, Due 12/15/2013....... 2,500 2,413
Mirant Americas Generation LLC, 8.30%,
Due 5/1/2011 ................................ 1,700 1,798
Mirant North America LLC, 7.375%,
Due 12/31/2013 .............................. 100 106
NRG Energy, Inc.,
7.25%, Due 2/1/2014 ......................... 300 310
7.375%, Due 2/1/2016 ........................ 1,900 1,974
7.375%, Due 1/15/2017 ....................... 1,750 1,813
Peabody Energy Corp.,
6.875%, Due 3/15/2013 ....................... 300 304
7.375%, Due 11/1/2016 ....................... 700 739
PetroHawk Energy Corp., 9.125% Due 7/15/2013 ... 1,125 1,205
PetroQuest Energy, Inc., 10.375%,
Due 5/15/2012 ............................... 3,000 3,150
Swift Energy Co.,
7.625%, Due 7/15/2011 ....................... 900 918
9.375%, Due 5/1/2012 ........................ 750 784
Tenaska, Inc., 6.528%, Due 12/30/2014 ++ ....... 1,260 1,246
Williams Cos., Inc., 8.75%, Due 3/15/2032 ...... 400 466
-----------
34,543
-----------
FINANCE - 4.36%
American Real Estate Partners, L.P., 7.125%,
Due 2/15/2013 ++ ............................ 2,750 2,709
CPI International, Inc., 11.151%,
Due 2/1/2015 # .............................. 1,750 1,807
E*Trade Financial Corp., 8.00%, Due 6/15/2011... 2,775 2,917
Hawker Beechcraft Acquisition Co. LLC, 8.50%,
Due 4/1/2015 ++ ............................. 800 844
KAR Holdings, Inc., 9.355%, Due 5/1/2014 ++ #.. 1,000 1,022
National Health Investors, Inc., 7.30%,
Due 7/16/2007 ............................... 1,000 1,001
Petroplus Finance Ltd., 6.75%, Due 5/1/2014 ++.. 300 302
Pinnacle Foods Finance LLC/Pinnacle Foods
Finance Corp.,
9.25%, Due 4/1/2015 ++ ..................... 1,400 1,400
10.625%, Due 4/1/2017 + ++ .................. 850 852
See accompanying notes
57
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Rainbow National Services LLC, 10.375%,
Due 9/1/2014 ++ ............................. $ 750 $ 845
Residential Capital Corp., 7.19%,
Due 4/17/2009 ++ # .......................... 1,000 995
Thornburg Mortgage, Inc., 8.00%,
Due 5/15/2013 ............................... 960 955
-----------
15,649
-----------
FOOD & DRUG RETAILING - 0.57%
Rite Aid Corp., 8.125%, Due 5/1/2010 ........... 2,000 2,065
-----------
FOOD/RESTAURANT - 0.49%
Cott Beverages USA, Inc., 8.00%,
Due 12/15/2011 .............................. 1,700 1,743
-----------
HEALTH CARE - 5.85%
Centene Corp., 7.25%, Due 4/1/2014 ++ .......... 1,200 1,218
DaVita, Inc.,
6.625%, Due 3/15/2013 ....................... 625 627
7.25%, Due 3/15/2015 ........................ 2,375 2,428
HCA, Inc.,
9.125%, Due 11/15/2014 ++ ................... 500 540
6.50%, Due 2/15/2016 ........................ 1,000 871
9.25%, Due 11/15/2016 + ++ .................. 3,200 3,488
Interactive Health, 8.00%, Due 4/1/2011 + ++ ... 1,259 1,032
Omnicare, Inc.,
6.75%, Due 12/15/2013 ....................... 500 498
6 875% Due 12/15/2015 ....................... 1,550 1,544
Skilled Healthcare Group, Inc., 11.00%,
Due 1/15/2014 ++ ............................ 1,300 1,453
Tenet Healthcare Corp.,
6.375%, Due 12/1/2011 ....................... 100 94
9.875%, Due 7/1/2014 ........................ 1,100 1,127
United Surgical Partners International, Inc.,
9.25%, Due 5/1/2017 ++ ...................... 400 412
US Oncology Holdings, Inc., 9.797%,
Due 3/15/2012 ++ # .......................... 2,100 2,126
US Oncology, Inc.,
9.00%, Due 8/15/2012 ........................ 1,500 1,598
10.75% Due 8/15/2014 ........................ 1,000 1,118
Vanguard Health Holding Co. II LLC, 9.00%,
Due 10/1/2014 ............................... 800 829
-----------
21,003
-----------
HOTELS, RESTAURANTS & LEISURE - 5.21%
AMF Bowling Worldwide, Inc., 10.00%,
Due 3/1/2010 ................................ 1,950 2,028
Cinemark, Inc., Zero Coupon,
Due 3/15/2014 ## # .......................... 1,350 1,242
Host Hotels & Resorts LP., 6.875%,
Due 11/1/2014 ............................... 800 819
Host Marriott LP, 7.125%, Due 11/1/2013 ........ 400 412
Majestic Star Casino LLC, 9.50%,
Due 10/15/2010 .............................. 1,500 1,579
MGM Mirage,
6.75%, Due 4/1/2013 ......................... 2,250 2,230
6.625%, Due 7/15/2015 ....................... 1,500 1,455
Royal Caribbean Cruises Ltd., 7.25%,
Due 3/15/2018 ............................... 1,200 1,243
San Pasqual Casino Development Group, 8.00%,
Due 9/15/2013 ++ ............................ 1,800 1,854
See accompanying notes
58
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Station Casinos, Inc.,
6.875%, Due 3/1/2016 ........................ $ 800 $ 752
7.75%, Due 8/15/2016 ........................ 200 208
Travelport LLC, 9.985%. Due 9/1/2014 ++ # ...... 1,050 1,084
Turning Stone Casino Resort, 9.125%,
Due 12/15/2010 ++ ........................... 3,710 3,784
-----------
18,690
-----------
INDUSTRIALS - 15.45%
Allied Waste North America, Inc.,
6.875%, Due 6/1/2017 ........................ 800 811
Alpha Natural Resources, LLC, 10.00%,
Due 6/1/2012 ................................ 2,000 2,160
Altra Industrial Motion, Inc.,
9.00%, Due 12/1/2011 ........................ 1,100 1,140
9.00%, Due 12/1/2011 ++ ..................... 500 518
BE Aerospace, Inc., 8.875%, Due 5/1/2011 ....... 1,250 1,287
Berry Plastics Holding Corp.,
8.875%, Due 9/15/2014 ....................... 1,300 1,339
Case New Holland, Inc.,
9.25%, Due 8/1/2011 ......................... 2,725 2,865
7.125%, Due 3/1/2014 ........................ 600 630
Clarke American Corp., 1.00%,
Due 5/15/2015 ++ # .......................... 1,500 1,500
Clean Harbors, Inc., 11.25%, Due 7/15/2012 ..... 650 722
Coleman Cable, Inc.,
9.875% Due 10/1/2012 ++ ..................... 1,000 1,047
Communications & Power Industries, Inc.,
8.00%, Due 2/1/2012 ......................... 1,500 1,537
Crown Americas LLC, 7.75%, Due 11/15/2015 ...... 800 846
DRS Technologies, Inc.,
6.875%, Due 11/1/2013 ....................... 600 606
7.625%, Due 2/1/2018 ........................ 200 209
Dycom Industries, Inc.,
8.125%, Due 10/15/2015 ...................... 1,500 1,583
Equistar Chemicals, LP,
10.625%, Due 5/1/2011 ....................... 1,250 1,319
GenCorp, Inc., 9.50%, Due 8/15/2013 ............ 1,500 1,609
GST Equipment Funding, Inc., 13.25%,
Due 5/1/2007 ### @@ ..................... 2,500 --
Impress Holdings BV, 8.481%,
Due 9/15/2013 ++ # .......................... 1,400 1,431
Intertape Polymer US, Inc., 8.50%,
Due 8/1/2014 ................................ 1,300 1,168
Jefferson Smurfit Corp., 8.25%,
Due 10/1/2012 + ............................. 1,300 1,315
Johnsondiversey Holdings, Inc., Zero Coupon,
Due 5/15/2013 ## # .......................... 100 104
NBTY, Inc., 7.125%, Due 10/1/2015 .............. 1,800 1,822
Nell AF SARL, 8.375%, Due 8/15/2015 ++ ......... 1,500 1,560
Nortek, Inc., 8.50%, Due 9/1/2014 .............. 900 889
Nova Chemicals Corp., 8.502%,
Due 11/15/2013 # ............................ 2,070 2,106
Novelis, Inc., 7.25%, Due 2/15/2015 ............ 800 843
Owens-Brockway Glass Containers, Inc.,
8.75%, Due 11/15/2012 ....................... 1,500 1,581
8.25%, Due 5/15/2013 ........................ 1,750 1,846
6.75%, Due 12/1/2014 ........................ 1,000 1,006
Pipe Acquisition Finance plc, 11.604%,
Due 12/15/2010 ++ # ......................... 1,100 1,132
Plastipak Holdings, Inc., 8.50%,
Due 12/15/2015 ++ ........................... 1,475 1,578
Polypore, Inc., 8.75%, Due 5/15/2012 + ......... 725 748
See accompanying notes
59
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
RBS Global, Inc., 9.50%, Due 8/1/2014 .......... $ 900 $ 963
Sanmina-SCI Corp., 8.125% Due 3/1/2016 ........ 800 783
Smurfit Kappa Funding plc, 7.75%, Due
4/1/2015 .................................... 800 820
Solectron Corp., 8.00%, Due 3/15/2016 .......... 800 808
Stewart & Stevenson LLC, 10.00%, Due
7/15/2014 ++ ................................ 1,000 1,053
Superior Essex Communications, 9.00%, Due
4/15/2012 ................................... 2,400 2,496
Terex Corp., 7.375%, Due 1/15/2014 + ........... 1,760 1,839
Titan International, Inc., 8.00%, Due
1/15/2012 ++ ................................ 1,250 1,294
TransDigm, Inc., 7.75%, Due 7/15/2014 ++ ....... 800 830
United Rentals North America, Inc.,
6.50%, Due 2/15/2012 ........................ 1,800 1,818
7.75%, Due 11/15/2013 ....................... 800 832
WCA Waste Corp., 9.25%, Due 6/15/2014 .......... 1,000 1,065
-----------
55,458
-----------
MATERIALS - 3.69%
Compass Minerals International, Inc., Zero
Coupon, Due 6/1/2013 ## # .................. 1,825 1,788
Hercules, Inc., 6.75%, Due 10/15/2029 .......... 1,750 1,750
Hexion US Finance Corp., 9.75%, Due
11/15/2014 ++ ............................... 1,000 1,080
Ineos Group Holdings Plc, 8.50%, Due
2/15/2016 + ++ .............................. 1,725 1,669
Nalco Co., 8.875%, Due 11/15/2013 .............. 900 963
Neenah Paper, Inc., 7.375%, Due 11/15/2014 ..... 2,450 2,376
The Newark Group, Inc., 9.75% Due
3/15/2014 ................................... 2,200 2,280
Phibro Animal Health Corp., 10.00%, Due
8/1/2013 ++ ................................. 1,250 1,330
-----------
13,236
-----------
MEDIA - 4.45%
Advanstar Communications, Inc.,
10.75%, Due 8/15/2010 ....................... 1,500 1,631
12 00%, Due 2/15/2011 ....................... 1,375 1,435
Allbritton Communications Co., 7.75%, Due
12/15/2012 .................................. 1,608 1,652
Idearc, Inc., 8.00%, Due 11/15/2016 ++ ......... 2,750 2,867
IESY Repository GmbH, 10.375%, Due
2/15/2015 ++ ................................ 1,500 1,586
Kabel Deutschland GmbH, 10.625%, Due 7/1/2014 .. 1,156 1,292
LBI Media, Inc., 10.125%, Due 7/15/2012 ........ 1,000 1,053
R.H. Donnelley Corp., 8.875%, Due 1/15/2016 .... 1,200 1,302
The Sheridan Group, Inc., 10.25%, Due
8/15/2011 ................................... 2,125 2,213
WMG Acquisition Corp., 7.375%, Due 4/15/2014 ... 1,000 960
-----------
15,991
-----------
METALS & MINING - 0.89%
Freeport-McMoRan Copper & Gold, Inc.,
8.25%, Due 4/1/2015 ......................... 2,250 2,433
8.375%, Due 4/1/2017 ........................ 700 765
-----------
3,198
-----------
OIL & GAS - 1.70%
Pogo Producing Co.,
7.875%, Due 5/1/2013 ........................ 300 304
See accompanying notes
60
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
6.875% Due 10/1/2017 ........................ $ 500 $ 490
Regency Energy Partners LP, 8.375%, Due
12/15/2013 ++ ............................... 2,750 2,833
Stone Energy Corp., 8.106%, Due
7/15/2010 ++ # .............................. 1,912 1,912
Williams Cos., Inc.,
7.625%, Due 7/15/2019 ....................... 200 218
7.875%, Due 9/1/2021 ........................ 300 332
-----------
6,089
-----------
PHARMACEUTICALS - 1.75%
Angiotech Pharmaceuticals, Inc., 9.11%, Due
12/1/2013 ++ # .............................. 1,750 1,793
Elan Finance PLC/Elan Finance Corp.,
8.875%, Due 12/1/2013 ++ .................... 1,800 1,854
9.485%, Due 12/1/2013 ++ # .................. 1,075 1,094
PTS Acquisition Corp., 9.50%, Due
4/15/2015 ++ ................................ 1,500 1,534
-----------
6,275
-----------
REAL ESTATE - 0.17%
Forest City Enterprises, Inc., 7.625%, Due
6/1/2015 .................................... 600 615
-----------
RETAIL - 2.12%
Jostens Holding, 10.25%, Due 12/1/2013 # ....... 1,900 1,767
Jostens IH Corp., 7.625%, Due 10/1/2012 ........ 900 921
Michaels Stores, Inc., 10.00%, Due
11/1/2014 ++ ................................ 800 873
Phillips-Van Heusen Corp.,
8.125%, Due 5/1/2013 ........................ 735 775
7.75%, Due 11/15/2023 ....................... 1,800 1,908
Susser Holdings LLC, 10.625%, Due 12/15/2013 ... 1,236 1,357
-----------
7,601
-----------
SERVICES - 0.70%
Knowledge Learning Corp, Inc., 7.75%, Due
2/1/2015 ++ ................................. 2,500 2,500
-----------
TECHNOLOGY - 3.39%
Amkor Technology, Inc., 7.75%, Due 5/15/2013 ... 2,000 1,980
Celestica, Inc., 7.875%, Due 7/1/2011 .......... 1,600 1,576
Freescale Semiconductor, Inc.,
8.875%, Due 12/15/2014 ++ ................... 1,400 1,402
9.125%, Due 12/15/2014 ++ ................... 1,400 1,393
9.23%, Due 12/15/2014 ++ # .................. 1,250 1,250
NXP b.v., 7.875%, Due 10/15/2014 ++ ............ 1,000 1,040
Sungard Data Systems, Inc.,
9.125%, Due 8/15/2013 ....................... 1,950 2,091
10.25%, Due 8/15/2015 ....................... 1,300 1,430
-----------
12,162
-----------
TELECOMMUNICATION SERVICES - 3.26%
Block Communications, Inc., 8.25%, Due
12/15/2015 ++ ............................... 2,000 2,050
Cablevision Systems Corp., 8.00%, Due
4/15/2012 ................................... 300 308
See accompanying notes
61
AMERICAN BEACON HIGH YIELD BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Dobson Cellular Systems, Inc.,
8.375%, Due 11/1/2011 ....................... $ 500 $ 533
9.875%, Due 11/1/2012 ....................... 2,100 2,294
Inmarsat Finance PLC, Zero Coupon, Due
11/15/2012 ## # ............................ 300 285
Intelsat Bermuda Ltd., 9.25%, Due 6/15/2016 ... 1,600 1,760
Millicom International Cellular SA, 10.00%,
Due 12/1/2013 ............................... 800 878
Rural Cellular Corp., 8.25%, Due 3/15/2012 ..... 1,750 1,846
Stratos Global Corp., 9.875%, Due 2/15/2013 .... 750 812
Wind Acquisition Finance SA, 10.75%, Due
12/1/2015 ++ ................................ 800 924
-----------
11,690
-----------
TOBACCO - 0.37%
Reynolds American, Inc., 7.625%, Due 6/1/2016 .. 1,200 1,313
-----------
TOTAL CORPORATE OBLIGATIONS .................... 339,206
-----------
SHARES
------------
SHORT TERM INVESTMENTS - 5.52%
American Beacon Money Market Select Fund @ ..... 19,794,486 19,795
-----------
SECURITIES LENDING COLLATERAL - 5.42%
AIM Short-Term Investment Company Liquid Asset
Fund ........................................ 553,147 553
PAR
AMOUNT
------------
Citigroup Global Markets, Inc. Master Note ..... $ 10,000 10,000
Merrill Lynch Pierce Fenner & Smith, Inc. Tri
Party Repo +++............................... 2,500 2,500
Mica Funding LLC ## ............................ 6,410 6,410
-----------
TOTAL SECURITIES LENDING COLLATERAL ............ 19,463
-----------
TOTAL INVESTMENTS - 105.43% (COST $371,183) ....... $ 378,464
LIABILITIES, NET OF OTHER ASSETS - (5.43%) ........ (19,485)
-----------
TOTAL NET ASSETS - 100.00% ........................ 358,979
===========
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $97,446 or 27.15% of net
assets. The Fund has no right to demand registration of these securities.
# The coupon rate shown on floating or adjustable rate securities represents
the rate at period end. The due date on these types of securities reflects
the final maturity date.
### In Default
@@ Valued at fair value pursuant to procedures approved by the Board of
Trustees.
@ The Fund/Trust is affiliated by having the same investment advisor.
+++ Held at Chase NYC, Collateralized by Corporate Obligations valued at
$2,551, 4.85% - 7.858%, 3/15/2011 - 3/1/2033
See accompanying notes
62
AMERICAN BEACON ENHANCED INCOME FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
COMMON STOCKS - 5.78%
CONSUMER DISCRETIONARY - 0.84%
SPECIALTY RETAIL - 0.46%
The Home Depot, Inc. ........................... 11,500 $ 436
IAC/InterActive Corp., Warrant, Warrant ## ..... 4,000 28
-----------
464
-----------
TEXTILES & APPAREL - 0.38%
Coach, Inc. ## ................................. 8,030 392
-----------
TOTAL CONSUMER DISCRETIONARY ...................... 856
-----------
CONSUMER STAPLES - 0.64%
BEVERAGES - 0.64%
The Coca-Cola Co. + ............................ 7,060 369
Molson Coors Brewing Co. + ..................... 2,930 276
-----------
TOTAL CONSUMER STAPLES ............................ 645
-----------
FINANCIALS - 0.86%
DIVERSIFIED FINANCIALS - 0.86%
Franklin Resources, Inc. ....................... 2,450 322
The Goldman Sachs Group, Inc. + ................ 2,500 546
-----------
TOTAL FINANCIALS .................................. 868
-----------
HEALTH CARE - 0.30%
PHARMACEUTICALS - 0.30%
Pfizer, Inc. ................................... 11,500 305
-----------
INDUSTRIALS - 0.47%
COMMERCIAL SERVICES & SUPPLIES - 0.47%
ITT Educational Services, Inc. ## + ............ 4,920 478
-----------
INFORMATION TECHNOLOGY - 2.67%
COMMUNICATIONS EQUIPMENT - 0.56%
Cisco Systems, Inc. ## + ....................... 21,180 566
-----------
CONSUMER SERVICES - 0.01%
Expedia, Inc., Warrant ## ...................... 4,000 12
-----------
IT CONSULTING & SERVICES - 1.27%
Accenture Ltd. + ............................... 7,470 292
Cognizant Technology Solutions Corp. ## + ...... 4,000 357
Infosys Technologies Ltd., ADR + ............... 12,200 639
-----------
1,288
-----------
SOFTWARE - 0.83%
Microsoft Corp. ................................ 15,500 464
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Oracle Corp. ## + .............................. 20,000 $ 376
-----------
840
-----------
TOTAL INFORMATION TECHNOLOGY ...................... 2,706
-----------
TOTAL COMMON STOCKS ............................... 5,858
-----------
CONVERTIBLE PREFERRED STOCKS - 2.52%
FINANCIALS - 1.58%
DIVERSIFIED FINANCIALS - 0.90%
Lazard Ltd. + .................................. 10,250 474
Lehman Brothers Holdings, Inc. + ............... 15,300 431
-----------
905
-----------
INSURANCE - 0.68%
MetLife, Inc. .................................. 21,000 691
-----------
TOTAL FINANCIALS .................................. 1,596
-----------
HEALTH CARE - 0.44%
PHARMACEUTICALS - 0.44%
Schering-Plough Corp. + ........................ 6,200 447
-----------
INDUSTRIALS - 0.50%
General Motors Corp. ........................... 22,000 506
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS ................ 2,549
-----------
PAR
AMOUNT
------------
CORPORATE OBLIGATIONS - 29.69%
BANKS - 6.60%
Banco Popular North America, Inc.,
4.25%, Due 4/1/2008 ......................... $ 300 296
Bank of America Corp.,
7.80%, Due 9/15/2016 ........................ 600 701
Bank One Corp.,
4.90%, Due 4/30/2015 ........................ 350 338
Citigroup, Inc.,
5.125%, Due 2/14/2011 ....................... 1,500 1,503
Credit Suisse First Boston,
6.50%, Due 5/1/2008 ++ ...................... 500 504
ING Bank, NV,
5.125%, Due 5/1/2015 ++ ..................... 300 296
JPMorgan Chase & Co.,
6.75%, Due 2/1/2011 ......................... 800 841
National City Bank,
4.50%, Due 3/15/2010 ........................ 900 883
Synovus Financial Corp.,
4.875%, Due 2/15/2013 ....................... 350 345
Washington Mutual, Inc.,
8.25%, Due 4/1/2010 ......................... 300 324
See accompanying notes
63
AMERICAN BEACON ENHANCED INCOME FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
4.625%, Due 4/1/2014 ........................ $ 700 $ 654
-----------
6,685
-----------
BASIC MATERIALS - 0.34%
BHP Billiton Finance USA Ltd.,
4.80%, Due 4/15/2013 ........................ 350 342
-----------
BEVERAGES - 0.30%
Constellation Brands, Inc.,
7.25%, Due 9/1/2016 ......................... 300 305
-----------
COMMUNICATIONS - 1.40%
Comcast Cable Communications Holdings, Inc.,
8.375%, Due 3/15/2013 ....................... 700 803
DirecTV Holdings LLC/DirecTV Financing Co.,
8.375%, Due 3/15/2013 ....................... 300 316
Time Warner Cable, Inc.,
5.85%, Due 5/1/2017 ++ ...................... 300 302
-----------
1,421
-----------
CONSUMER DISCRETIONARY - 0.91%
Supervalu, Inc.,
7.50%, Due 11/15/2014 ....................... 325 339
Wal-Mart Stores, Inc.,
7.55%, Due 2/15/2030 + ...................... 350 424
Wesco Distribution, Inc.,
7.50%, Due 10/15/2017 ....................... 150 154
-----------
917
-----------
CONSUMER SERVICES - 0.31%
Expedia, Inc.,
7.456%, Due 8/15/2018 ....................... 300 315
-----------
CONSUMER STAPLES - 0.28%
Dole Food Co., Inc.,
8.875%, Due 3/15/2011 + ..................... 142 144
Hanesbrands, Inc.,
8.735%, Due 12/15/2014 ++ # ................. 140 144
-----------
288
-----------
ENERGY - 0.63%
Canadian Natural Resources Ltd.,
6.25%, Due 3/15/2038 ........................ 300 298
EOG Resources, Inc.,
4.75%, Due 3/15/2014 ++ ..................... 350 338
-----------
636
-----------
FINANCE - 4.72%
American General Finance Corp.,
4.875%, Due 5/15/2010 ....................... 300 299
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
The Bear Stearns Cos., Inc.,
2.875%, Due 7/2/2008 ........................ $ 800 $ 779
Capital One Financial Corp.,
5.70%, Due 9/15/2011 ........................ 450 454
E*Trade Financial Corp.,
7.875%, Due 12/1/2015 ....................... 300 324
The Goldman Sachs Group, Inc.,
4.75%, Due 7/15/2013 ........................ 350 339
HSBC Finance Corp.,
5.25%, Due 1/14/2011 + ...................... 1,200 1,201
International Lease Finance Corp.,
6.375%, Due 3/15/2009 ....................... 725 741
Lehman Brothers Holdings, Inc.,
4.25%, Due 1/27/2010 + ...................... 350 343
Merrill Lynch & Co., Inc.,
6.11%, Due 1/29/2037 ........................ 310 308
-----------
4,788
-----------
HEALTH CARE - 0.70%
AmeriPath, Inc.,
10.50%, Due 4/1/2013 ........................ 400 435
Tenet Healthcare Corp.,
9.25%, Due 2/1/2015 + ....................... 275 275
-----------
710
-----------
INDUSTRIALS - 4.41%
Caterpillar Financial Services Corp.,
4.15%, Due 1/15/2010 + ...................... 300 294
CSX Corp.,
6.75%, Due 3/15/2011 ........................ 310 325
DaimlerChrysler NA Holding Corp.,
5.875%, Due 3/15/2011 ....................... 350 356
5.75%, Due 9/8/2011 ......................... 250 254
Equistar Chemicals, LP,
10.625%, Due 5/1/2011 ....................... 400 422
Ford Motor Credit Co. LLC,
8.625%, Due 11/1/2010 + ..................... 285 292
Gardner Denver, Inc.,
8.00%, Due 5/1/2013 ......................... 300 318
The Goodyear Tire & Rubber Co.,
7.857%, Due 8/15/2011 ....................... 300 314
John Deere Capital Corp.,
4.125%, Due 1/15/2010 ....................... 750 733
NBTY, Inc.,
7.125%, Due 10/1/2015 ....................... 150 152
Nissan Motor Acceptance Corp.,
5.625%, Due 3/14/2011 ++ .................... 300 302
Norfolk Southern Corp.,
8.625%, Due 5/15/2010 ....................... 310 339
See accompanying notes
64
AMERICAN BEACON ENHANCED INCOME FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Union Pacific Corp.,
6.50%, Due 4/15/2012 ........................ $ 350 $ 367
-----------
4,468
-----------
INSURANCE - 3.84%
Aegon Funding Corp.,
5.75%, Due 12/15/2020 ....................... 350 357
American International Group, Inc.,
6.25%, Due 5/1/2036 ......................... 350 371
ASIF Global Financing,
3.90%, Due 10/22/2008 ++ .................... 500 491
The Hartford Financial Services Group, Inc.,
5.25%, Due 10/15/2011 ....................... 700 703
John Hancock Global Funding II,
7.90%, Due 7/2/2010 ++ ...................... 850 919
Lincoln National Corp.,
4.75%, Due 2/15/2014 ........................ 200 192
Metropolitan Life Global Funding I,
4.625%, Due 8/19/2010 ++ .................... 500 496
Prudential Financial, Inc.,
4.50%, Due 7/15/2013 ........................ 375 262
-----------
3,891
-----------
MEDIA - 0.29%
Idearc, Inc.,
8.00%, Due 11/15/2016 ++ .................... 285 297
-----------
REAL ESTATE - 1.89%
iStar Financial, Inc.,
5.85%, Due 3/15/2017 ........................ 450 449
ProLogis,
5.50%, Due 4/1/2012 ......................... 350 354
5.625%, Due 11/15/2016 + .................... 350 353
Simon Property Group LP,
6.375%, Due 11/15/2007 ...................... 400 402
5.375%, Due 6/1/2011 ........................ 350 352
-----------
1,910
-----------
TECHNOLOGY - 0.86%
Cisco Systems, Inc.,
5.25%, Due 2/22/2011 ........................ 350 352
Sungard Data Systems, Inc.,
9.125%, Due 8/15/2013 ....................... 300 322
Syniverse Technologies, Inc.,
7.75%, Due 8/15/2013 ........................ 200 196
-----------
870
-----------
TELEPHONE - 1.86%
America Movil, S.A. de C.V.,
6.375%, Due 3/1/2035 ........................ 350 354
AT&T, Inc.,
5.625%, Due 6/15/2016 + ..................... 350 352
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
6.80%, Due 5/15/2036 + ...................... $ 175 $ 190
Sprint Capital Corp.,
8.375%, Due 3/15/2012 ....................... 350 390
Verizon Communications, Inc.,
5.50%, Due 4/1/2017 ......................... 300 299
Vodafone Group plc,
6.15%, Due 2/27/2037 ........................ 300 296
-----------
1,881
-----------
UTILITIES - 0.35%
MidAmerican Energy Holdings Co.,
6.125%, Due 4/1/2036 ........................ 350 356
-----------
TOTAL CORPORATE OBLIGATIONS ....................... 30,080
-----------
CONVERTIBLE OBLIGATIONS - 13.91%
BANKS - 0.55%
Bank of America Corp.,
0.25%, Due 2/15/2012 ........................ 270 284
Wachovia Corp.,
0.25%, Due 12/15/2010 ....................... 280 279
-----------
563
-----------
COMMUNICATIONS - 1.47%
Juniper Networks, Inc.,
Zero Coupon, Due 6/15/2008 ## + ............. 292 345
Liberty Media LLC,
0.75%, Due 3/30/2023 ........................ 505 612
Omnicom Group, Inc.,
Zero Coupon, Due 7/1/2038 ## + .............. 495 535
-----------
1,492
-----------
CONSUMER DISCRETIONARY - 0.64%
Carnival Corp.,
2.00%, Due 4/15/2021 ........................ 510 645
-----------
ELECTRIC UTILITIES - 0.30%
CenterPoint Energy, Inc.,
3.75%, Due 5/15/2023 ........................ 185 309
-----------
ENERGY - 1.27%
Cameron International Corp.,
2.50%, Due 6/15/2026 + ...................... 275 317
Nabors Industries, Inc.,
Zero Coupon, Due 6/15/2023 ## + .............. 280 298
Schlumberger Ltd.,
2.125%, Due 6/1/2023 ........................ 210 392
SESI LLC,
1.50%, Due 12/15/2026 ++ .................... 270 279
-----------
1,286
-----------
See accompanying notes
65
AMERICAN BEACON ENHANCED INCOME FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
FINANCE - 0.77%
American Financial Group, Inc.,
1.486%, Due 6/2/2033 ........................ $ 625 $ 387
Elf Special Financing Ltd.,
5.705%, Due 6/15/2009 ++ # .................. 100 124
Lehman Brothers Holdings, Inc.,
0.25%, Due 2/16/2012 ........................ 270 270
-----------
781
-----------
HEALTH CARE - 0.29%
Medtronic, Inc.,
1.50%, Due 4/15/2011 + ...................... 280 296
-----------
INDUSTRIALS - 2.70%
Alliant Techsystems, Inc.,
2.75%, Due 9/15/2011 ++ ..................... 320 359
Danaher Corp.,
Zero Coupon, Due 1/22/2021 ## ............... 320 334
Fisher Scientific International, Inc.,
3.25%, Due 3/1/2024 + ....................... 560 810
Lockheed Martin Corp.,
5.11%, Due 8/15/2033 + # .................... 515 703
The Walt Disney Co.,
2.125%, Due 4/15/2023 + ..................... 435 532
-----------
2,738
-----------
INFORMATION TECHNOLOGY - 0.44%
Electronic Data Systems Corp.,
3.875%, Due 7/15/2023 + ..................... 425 442
-----------
INSURANCE - 0.93%
Fortis Insurance NV,
7.75%, Due 1/26/2008 ++ ..................... 275 399
Prudential Financial, Inc.,
2.60%, Due 11/15/2035 # ..................... 510 541
-----------
940
-----------
PHARMACEUTICALS - 1.24%
Charles River Laboratories International, Inc.,
2.25%, Due 6/15/2013 + ...................... 273 312
Gilead Sciences, Inc.,
0.50%, Due 5/1/2011 ++ ...................... 550 645
Mylan Laboratories, Inc.,
1.25%, Due 3/15/2012 ........................ 270 296
-----------
1,253
-----------
REAL ESTATE - 0.24%
GSC Holdings Corp.,
8.00%, Due 10/1/2012 ........................ 225 240
-----------
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
SERVICES - 0.65%
priceline.com, Inc.,
0.50%, Due 9/30/2011 + ++ ................... $ 160 $ 231
2.25%, Due 1/15/2025 + ...................... 140 218
Quanta Services, Inc.,
3.75%, Due 4/30/2026 ++ ..................... 150 208
-----------
657
-----------
TECHNOLOGY - 1.88%
Cadence Design Systems, Inc.,
1.375%, Due 12/15/2011 ++ ................... 305 357
DRS Technologies, Inc.,
2.00%, Due 2/1/2026 ++ ...................... 255 263
EMC Corp.,
1.75%, Due 12/1/2011 + ...................... 380 425
Intel Corp.,
2.95%, Due 12/15/2035 ....................... 301 274
Linear Technology Corp.,
3.00%, Due 5/1/2027 ++ ...................... 138 142
McDATA Corp.,
2.25%, Due 2/15/2010 + ...................... 265 265
ON Semiconductor Corp.,
2.625%, Due 12/15/2026 ++ ................... 140 175
-----------
1,901
-----------
TELEPHONE - 0.54%
NII Holdings, Inc.,
2.75%, Due 8/15/2025 ++ ..................... 335 553
-----------
TOTAL CONVERTIBLE OBLIGATIONS ..................... 14,096
-----------
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 1.54%
COMMERCIAL MORTGAGE-BACKED SECURITY - 1.54%
Banc of America Commercial Mortgage, Inc.,
2005-6, 5.001%, Due 9/10/2047 ............... 663 660
JPMorgan Chase Commercial Mortgage
Securities Corp.,
2005-LDP3 A1, 4.655%, Due 8/15/2042 ......... 255 253
2005-LDP4 A1, 4.613%, Due 10/15/2042 ........ 202 200
LB-UBS Commercial Mortgage Trust,
2004-C1 A4, 5.424%, Due 2/15/2040 ........... 450 451
-----------
TOTAL NON-AGENCY MORTGAGE-BACKED OBLIGATIONS ...... 1,564
-----------
ASSET-BACKED SECURITIES - 4.07%
American Express Credit Account Master
Trust,
2006-2 A, 5.35%, Due 1/15/2014 .............. 1,200 1,219
Capital Auto Receivables Asset Trust,
2006-SN1A A4A, 5.32%, Due 3/20/2010 ++ ...... 900 902
Capital One Multi-Asset Execution Trust,
2006-A10 A10, 5.15%, Due 6/15/2014 .......... 1,000 1,009
See accompanying notes
66
AMERICAN BEACON ENHANCED INCOME FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Volkswagen Auto Loan Enhanced Trust,
2005-1 A4, 4.86%, Due 4/20/2012 ............. $ 1,000 $ 996
-----------
TOTAL ASSET-BACKED SECURITIES ..................... 4,126
-----------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 22.41%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 7.78%
Pool # G11911, 5.00%, Due 2/1/2021 .......... 1,484 1,464
Pool # G12200, 4.50%, Due 4/1/2021 .......... 1,351 1,309
Pool # G12410, 5.00%, Due 5/1/2021 .......... 1,393 1,374
Pool # G12454, 5.50%, Due 11/1/2021 ......... 1,126 1,127
Pool # G08079, 5.00%, Due 9/1/2035 .......... 2,692 2,605
-----------
7,879
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 11.91%
Pool # 545759, 6.50%, Due 7/1/2032 .......... 539 556
Pool # 555531, 5.50%, Due 6/1/2033 .......... 1,139 1,129
Pool # 255225, 5.50%, Due 6/1/2034 .......... 584 579
Pool # 256022, 5.50%, Due 12/1/2035 ......... 2,678 2,651
Pool # 745275, 5.00%, Due 2/1/2036 .......... 2,742 2,652
Pool # 745418, 5.50%, Due 4/1/2036 .......... 2,708 2,681
Pool # 897820, 6.00%, Due 9/1/2036 .......... 1,812 1,826
-----------
12,074
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.72%
2006-9 A, 4.201%, Due 8/16/2026 ............. 658 644
Pool # 781564, 6.00%, Due 2/15/2033 ......... 1,142 1,160
Pool # 781603, 5.00%, Due 5/15/2033 ......... 980 954
-----------
2,758
-----------
TOTAL U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS ..... 22,711
-----------
U.S. TREASURY OBLIGATIONS - 12.91%
7.875%, Due 2/15/2021 + ..................... 1,750 2,281
6.25%, Due 8/15/2023 + ...................... 650 750
6.875%, Due 8/15/2025 + ..................... 1,000 1,238
5.25%, Due 11/15/2028 + ..................... 1,150 1,206
5.375%, Due 2/15/2031 + ..................... 800 857
4.375%, Due 8/15/2012 + ..................... 500 497
4.00%, Due 2/15/2014 + ...................... 2,000 1,934
4.75%, Due 5/15/2014 + ...................... 1,550 1,567
4.875%, Due 8/15/2016 + ..................... 2,700 2,750
-----------
TOTAL U.S. TREASURY OBLIGATIONS ................... 13,080
-----------
SHARES
------------
SHORT TERM INVESTMENTS - 6.42%
American Beacon Money Market Select
Fund +++ ................................. 6,502,850 6,503
-----------
SECURITIES LENDING COLLATERAL - 25.39%
American Beacon Cash Plus Trust +++ ....... 15,176,375 15,176
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
American Beacon Money Market Select
Fund +++ ................................ $ 10,554,41 $ 10,555
-----------
TOTAL SECURITIES LENDING COLLATERAL ............... 25,731
-----------
TOTAL INVESTMENTS 124.64% - (COST $123,043) ....... 126,298
LIABILITIES, NET OF OTHER ASSETS - (24.64%) ....... (24,968)
-----------
TOTAL NET ASSETS - 100.00% ........................ $ 101,330
===========
See accompanying notes
67
AMERICAN BEACON ENHANCED INCOME FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
Percentages are stated as a percent of net assets.
## Non-income producing security.
+ All or a portion of this security is on loan at April 30, 2007.
++ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $8,726 or 8.61% of net
assets. The Fund has no right to demand registration of these
securities.
# The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the final maturity date.
+++ The Fund/Trust is affiliated by having the same investment advisor.
See accompanying notes
68
AMERICAN BEACON INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
CORPORATE OBLIGATIONS - 28.38%
BANKS - 5.58%
Banco Popular North America, Inc., 4.25%,
Due 4/1/2008 ................................ $ 200 $ 197
Bank of America Corp.,
5.375%, Due 8/15/2011 ....................... 385 389
7.80%, Due 9/15/2016 ........................ 400 468
Bank One Corp.,
5.90%, Due 11/15/2011 ....................... 440 452
4.90%, Due 4/30/2015 ........................ 200 193
Citigroup, Inc., 5.125%, Due 2/14/2011 + ....... 1,000 1,002
Credit Suisse First Boston, 6.50%,
Due 5/1/2008 ++ ............................. 350 353
ING Bank, NV, 5.125%, Due 5/1/2015 ++ .......... 250 246
JPMorgan Chase & Co., 6.75%, Due 2/1/2011 ...... 500 526
National City Bank, 4.50%, Due 3/15/2010 ....... 600 589
Synovus Financial Corp., 4.875%,
Due 2/15/2013 ............................... 200 197
Wachovia Corp., 5.70%, Due 8/1/2013 + .......... 245 251
Washington Mutual Finance Corp., 6.875%,
Due 5/15/2011 ............................... 230 245
Washington Mutual, Inc.,
8.25%, Due 4/1/2010 ......................... 200 216
4.625%, Due 4/1/2014 + ...................... 350 327
-----------
5,651
-----------
BASIC MATERIALS - 0.53%
Alcoa, Inc., 5.90%, Due 2/1/2027 ............... 130 129
BHP Billiton Finance USA Ltd., 4.80%,
Due 4/15/2013 ............................... 200 195
Weyerhaeuser Co., 5.95%, Due 11/1/2008 ......... 210 212
-----------
536
-----------
COMMUNICATIONS - 1.31%
Comcast Cable Communications Holdings, Inc.,
8.375%, Due 3/15/2013 ....................... 350 401
Comcast Corp.,
5.30%, Due 1/15/2014 + ...................... 220 218
5.875%, Due 2/15/2018 ....................... 135 136
Time Warner Cable, Inc., 5.85%, Due
5/1/2017 ++ .................................. 435 438
Time Warner, Inc., 6.50%, Due 11/15/2036 ....... 130 130
-----------
1,323
-----------
CONSUMER DISCRETIONARY - 0.75%
Costco Wholesale Corp., 5.50%, Due 3/15/2017 ... 245 247
Wal-Mart Stores, Inc.,
4.55%, Due 5/1/2013 ......................... 280 272
7.55%, Due 2/15/2030 + ...................... 200 242
-----------
761
-----------
ENERGY - 1.02%
Apache Corp., 5.25%, Due 4/15/2013 ............. 190 190
Canadian Natural Resources Ltd.,
5.70%, Due 5/15/2017 ........................ 140 140
See accompanying notes
69
AMERICAN BEACON INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
6.25%, Due 3/15/2038 ........................ $ 200 $ 199
EOG Resources, Inc., 4.75%, Due 3/15/2014 ++ ... 225 218
Pemex Project Funding Master Trust, 8.50%,
Due 2/15/2008 + ............................. 275 281
-----------
1,028
-----------
FINANCE - 4.07%
American General Finance Corp.,
5.375%, Due 9/1/2009 + ...................... 385 387
4.875%, Due 5/15/2010 ....................... 200 199
Ameriprise Financial, Inc., 5.35%,
Due 11/15/2010 .............................. 335 338
The Bear Stearns Cos., Inc., 2.875%,
Due 7/2/2008 ................................ 400 389
Capital One Financial Corp., 5.70%,
Due 9/15/2011 ............................... 300 303
General Electric Capital Corp., 4.375%,
Due 3/3/2012 ................................ 350 340
The Goldman Sachs Group, Inc., 4.75%,
Due 7/15/2013 ............................... 250 242
Hartford Financial Services Group, Inc., 5.375%,
Due 3/15/2017 ............................... 195 194
HSBC Finance Corp., 5.25%, Due 1/14/2011 + ..... 800 800
International Lease Finance Corp., 6.375%,
Due 3/15/2009 + ............................. 250 256
Lehman Brothers Holdings, Inc., 4.25%,
Due 1/27/2010 + ............................. 200 196
Merrill Lynch & Co., Inc.,
5.45%, Due 7/15/2014 + ...................... 160 161
6.11%, Due 1/29/2037 ........................ 190 189
SLM Corp., 5.45%, Due 4/25/2011 + .............. 125 120
-----------
4,114
-----------
INDUSTRIALS - 3.01%
Caterpillar Financial Services Corp., 4.15%,
Due 1/15/2010 + ............................. 200 196
CRH America, Inc., 6.00%, Due 9/30/2016 ........ 135 138
CSX Corp., 6.75%, Due 3/15/2011 ................ 190 199
DaimlerChrysler NA Holding Corp.,
5.875%, Due 3/15/2011 + ..................... 200 204
5.75%, Due 9/8/2011 ......................... 200 203
John Deere Capital Corp.,
4.125%, Due 1/15/2010 ....................... 500 488
5.40%, Due 10/17/2011 ....................... 235 238
Martin Marietta Materials, Inc., 6.90%,
Due 8/15/2007 ............................... 300 301
Masco Corp., 6.125%, Due 10/3/2016 ............. 135 136
Nissan Motor Acceptance Corp., 5.625%,
Due 3/14/2011 ++ ............................ 200 201
Norfolk Southern Corp., 8.625%, Due 5/15/2010 .. 190 208
Union Pacific Corp.,
3.875%, Due 2/15/2009 ....................... 335 328
6.50%, Due 4/15/2012 ........................ 200 210
-----------
3,050
-----------
INSURANCE - 3.02%
Aegon Funding Corp., 5.75%, Due 12/15/2020 ..... 200 204
American International Group, Inc., 6.25%,
Due 5/1/2036 ................................ 200 212
ASIF Global Financing, 3.90%,
Due 10/22/2008 ++ ........................... 300 294
The Hartford Financial Services Group, Inc.,
5.25%, Due 10/15/2011 ....................... 450 452
See accompanying notes
70
AMERICAN BEACON INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
John Hancock Global Funding II, 7.90%,
Due 7/2/2010 ++ ............................. $ 500 $ 540
Lincoln National Corp., 4.75%, Due 2/15/2014 ... 100 96
MetLife, Inc.,
5.375%, Due 12/15/2012 + .................... 240 243
5.00%, Due 6/15/2015 ........................ 170 166
Metropolitan Life Global Funding I, 4.625%,
Due 8/19/2010 ++ ............................ 300 298
Prudential Financial, Inc.,
4.50%, Due 7/15/2013 ........................ 225 217
5.10%, Due 9/20/2014 + ...................... 210 207
Willis North America, Inc., 6.20%,
Due 3/28/2017 ............................... 130 130
-----------
3,059
-----------
PHARMACEUTICALS - 1.04%
Abbott Laboratories, 5.60%, Due 5/15/2011 ...... 170 173
Amgen, Inc., 4.00%, Due 11/18/2009 ............. 210 205
Hospira, Inc., 6.05%, Due 3/30/2017 ............ 130 131
Schering-Plough Corp., 6.75%, Due
12/1/2033 + ................................. 185 207
Wyeth Corp., 5.50%, Due 2/1/2014 ............... 335 339
-----------
1,055
-----------
REAL ESTATE - 1.66%
Equity Residential, 5.125%, Due 3/15/2016 ...... 185 181
iStar Financial, Inc., 5.85%, Due 3/15/2017 + .. 300 299
ProLogis,
5.50%, Due 4/1/2012 ......................... 200 202
5.625%, Due 11/15/2016 + .................... 200 202
ProLogis Trust, 7.10%, Due 4/15/2008 ........... 220 222
Simon Property Group LP,
6.375%, Due 11/15/2007 ...................... 200 201
5.375%, Due 6/1/2011 ........................ 200 202
5.75%, Due 12/1/2015 ........................ 170 173
-----------
1,682
-----------
TECHNOLOGY - 0.69%
Cisco Systems, Inc.,
5.25%, Due 2/22/2011 ........................ 425 428
5.50%, Due 2/22/2016 ........................ 270 272
-----------
700
-----------
TELEPHONE - 2.79%
America Movil, S.A. de C.V., 6.375%,
Due 3/1/2035 ................................ 295 298
AT&T, Inc.,
5.10%, Due 9/15/2014 ........................ 220 216
5.625%, Due 6/15/2016 + ..................... 395 398
6.80%, Due 5/15/2036 + ...................... 100 109
Cingular Wireless Services, Inc., 8.75%,
Due 3/1/2031 ................................ 170 222
Deutsche Telekom AG, 8.00%, Due 6/15/2010 ...... 150 162
Nextel Communications, Inc., 6.875%,
Due 10/31/2013 .............................. 290 298
Sprint Capital Corp., 8.375%, Due 3/15/2012 .... 200 223
See accompanying notes
71
AMERICAN BEACON INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Telecom Italia S.p.A., 4.00%, Due 11/15/2008 ... $ 220 $ 216
Telefonica Emisiones SAU, 5.984%,
Due 6/20/2011 + ............................. 160 164
Verizon Communications, Inc., 5.50%,
Due 4/1/2017 + .............................. 200 199
Vodafone Group plc, 6.15%, Due 2/27/2037 ....... 320 316
-----------
2,821
-----------
UTILITIES - 2.91%
Columbus Southern Power Co., 5.50%,
Due 3/1/2013 ................................ 320 322
Dominion Resources, Inc., Series A, 5.60%,
Due 11/15/2016 .............................. 135 135
Duke Energy Indiana, Inc., 6.05%,
Due 6/15/2016 + ............................. 205 212
FPL Group Capital, Inc., 5.625%, Due
9/1/2011 + .................................. 390 397
MidAmerican Energy Holdings Co.,
5.875%, Due 10/1/2012 + ..................... 405 418
6.125%, Due 4/1/2036 ........................ 200 203
Public Service Enterprise Group, Inc., 6.95%,
Due 6/1/2012 ................................ 355 380
Puget Sound Energy, Inc., 6.274%,
Due 3/15/2037 ............................... 160 164
Southern Power Co., 6.25%, Due 7/15/2012 ....... 270 282
Xcel Energy, Inc., 5.613%, Due 4/1/2017 ++ ..... 431 431
-----------
2,944
-----------
TOTAL CORPORATE OBLIGATIONS .................... 28,724
-----------
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 6.63%
Banc of America Commercial Mortgage, Inc.,
2005-6, 5.001%, Due 9/10/2047 ............... 331 330
Banc of America Mortgage Securities, Inc.,
2004-8 3A1, 5.25%, Due 10/25/2019 ........... 667 664
Bear Stearns Commercial Mortgage Securities,
Inc.,
2006-T22 A2, 5.633%, Due 4/12/2038 .......... 265 268
2006-PW13 A4, 5.54%, Due 9/11/2041 .......... 95 96
2004-PWR5 A4, 4.831%, Due 7/11/2042 ......... 535 524
2005-T20 A2, 5.127%, Due 10/12/2042 ......... 430 429
Chase Mortgage Finance Corp., 2006A1 A1, 6.06%,
Due 9/25/2036 # ............................. 1,199 1,203
Chase Mortgage Financial Trust, 2004-S1 A3,
5.50%, Due 2/25/2019 ........................ 266 265
Citigroup Commercial Mortgage Trust, 2004-C2 A3,
4.38%, Due 10/15/2041 ....................... 470 456
General Electric Capital Commercial Mortgage
Corp., 2003-C2 A2, 4.17%, Due 7/10/2037 ..... 312 307
JP Morgan Chase Commercial Mortgage Securities
Corp.,
2004-CBX A4, 4.529%, Due 1/12/2037 .......... 255 249
2005-LDP1 A2, 4.625%, Due 3/15/2046 ......... 505 498
JPMorgan Chase Commercial Mortgage Securities
Corp.,
2005-LDP3 A1, 4.655%, Due 8/15/2042 ......... 146 144
2005-LDP4 A1, 4.613%, Due 10/15/2042 ........ 116 114
LB-UBS Commercial Mortgage Trust, 2004-C1 A4,
5.424%, Due 2/15/2040 ....................... 300 301
Prime Mortgage Trust, 2005-2, 5.25%,
Due 7/25/2020 ............................... 452 451
Wells Fargo Mortgage Backed Securities Trust,
2006-11 A8, 6.00%, Due 9/25/2036 ............ 413 415
-----------
TOTAL NON-AGENCY MORTGAGE-BACKED OBLIGATIONS ... 6,714
-----------
ASSET-BACKED SECURITIES - 2.44%
American Express Credit Account Master Trust,
2006-2 A, 5.35%, Due 1/15/2014 .............. 800 813
See accompanying notes
72
AMERICAN BEACON INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Capital Auto Receivables Asset Trust, 2006-SN1A
A4A, 5.32%, Due 3/20/2010 ++ ................ $ 600 $ 601
Capital One Multi-Asset Execution Trust,
2006-A10 A10, 5.15%, Due 6/15/2014 .......... 550 555
Volkswagen Auto Loan Enhanced Trust, 2005-1 A4,
4.86%, Due 4/20/2012 ........................ 500 498
-----------
TOTAL ASSET-BACKED SECURITIES .................. 2,467
-----------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 30.02%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 10.43%
Pool # G11295, 5.50%, Due 9/1/2017 .......... 242 243
Pool # E01602, 4.50%, Due 3/1/2019 .......... 666 646
Pool # G11879, 5.00%, Due 10/1/2020 ......... 665 656
Pool # G12486, 5.00%, Due 7/1/2021 .......... 578 570
Pool # G12454, 5.50%, Due 11/1/2021 ......... 469 470
Pool # G12603, 5.50%, Due 4/1/2022 .......... 50 50
Pool # C00647, 6.50%, Due 9/1/2028 .......... 97 100
Pool # G01457, 6.00%, Due 8/1/2029 .......... 335 340
Pool # C01598, 5.00%, Due 8/1/2033 .......... 822 796
Pool # G08006, 6.00%, Due 8/1/2034 .......... 590 597
Pool # A30948, 5.50%, Due 1/1/2035 .......... 915 907
Pool # G01824, 6.50%, Due 4/1/2035 .......... 51 53
Pool # A45500, 5.50%, Due 6/1/2035 .......... 928 919
Pool # G08072, 5.00%, Due 8/1/2035 .......... 539 522
Pool # G08079, 5.00%, Due 9/1/2035 .......... 449 434
Pool # A54039, 6.00%, Due 11/1/2036 ......... 929 937
Pool # 1G1389, 5.897%, Due 12/1/2036 # ...... 632 638
Pool # 1B3208, 5.861%, Due 1/1/2037 # ....... 793 801
Pool # 1B3314, 5.791%, Due 3/1/2037 # ....... 564 569
Pool # 1G1916, 5.267%, Due 4/1/2037 # ....... 310 309
-----------
10,557
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 17.35%
Pool # 488099, 5.50%, Due 2/1/2014 .......... 326 327
Pool # 545449, 6.50%, Due 2/1/2017 .......... 312 320
Pool # 545823, 5.50%, Due 8/1/2017 .......... 415 417
Pool # 254545, 5.00%, Due 12/1/2017 ......... 1,053 1,041
Pool # 254865, 4.50%, Due 9/1/2018 .......... 704 683
Pool # 747824, 5.50%, Due 11/1/2018 ......... 191 192
Pool # 747844, 5.50%, Due 12/1/2018 ......... 176 176
Pool # 811383, 5.00%, Due 3/1/2020 .......... 235 232
Pool # 837219, 4.00%, Due 8/1/2020 .......... 513 485
Pool # 745562, 5.50%, Due 4/1/2021 .......... 21 21
Pool # 555880, 5.50%, Due 11/1/2033 ......... 1,075 1,066
Pool # 725238, 5.00%, Due 3/1/2034 .......... 1,035 1,002
Pool # 725866, 4.50%, Due 9/1/2034 .......... 568 535
Pool # 735224, 5.50%, Due 2/1/2035 .......... 1,308 1,297
Pool # 844809, 5.00%, Due 11/1/2035 ......... 915 885
See accompanying notes
73
AMERICAN BEACON INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
Pool # 850280, 5.50%, Due 12/1/2035 ......... $ 466 $ 461
Pool # 849299, 5.50%, Due 1/1/2036 .......... 853 845
Pool # 866593, 5.50%, Due 1/1/2036 .......... 851 842
Pool # 879518, 5.50%, Due 3/1/2036 .......... 711 704
Pool # 745418, 5.50%, Due 4/1/2036 .......... 903 894
Pool # 868495, 6.50%, Due 4/1/2036 .......... 316 322
Pool # 872306, 6.50%, Due 5/1/2036 .......... 321 328
Pool # 884032, 6.50%, Due 5/1/2036 .......... 1,025 1,047
Pool # 745822, 6.00%, Due 9/1/2036 .......... 555 559
Pool # 893688, 6.00%, Due 10/1/2036 ......... 9 9
Pool # 898307, 6.00%, Due 11/1/2036 ......... 873 880
Pool # 905058, 6.00%, Due 11/1/2036 ......... 867 874
Pool # 902784, 6.00%, Due 12/1/2036 ......... 866 873
5.00%, Due TBA .............................. 255 246
-----------
17,563
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 2.24%
2006-9 A, 4.201%, Due 8/16/2026 ............. 376 368
Pool # 780747, 6.50%, Due 3/15/2028 ......... 557 576
Pool # 781273, 6.00%, Due 4/15/2031 ......... 646 657
Pool # 003515, 5.50%, Due 2/20/2034 ......... 670 666
-----------
2,267
-----------
TOTAL U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS .. 30,387
-----------
U.S. AGENCY OBLIGATIONS - 3.67%
FEDERAL HOME LOAN BANK - 1.24%
5.00%, Due 10/16/2009 + ..................... 1,005 1,003
5.25%, Due 11/3/2009 ........................ 250 251
-----------
1,254
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 1.89%
Federal Home Loan Mortgage Corp., 5.191%,
Due 5/14/2007 + @ ..................... 255 254
5.25%, Due 2/24/2011 + ...................... 1,260 1,263
5.875%, Due 3/21/2011 ....................... 380 394
-----------
1,911
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.54%
5.125%, Due 1/2/2014 ........................ 545 547
-----------
TOTAL U.S. AGENCY OBLIGATIONS .................. 3,712
-----------
U.S. TREASURY OBLIGATIONS - 24.98%
4.875%, Due 8/15/2009 + ..................... 725 730
3.50%, Due 11/15/2009 + ..................... 1,000 975
3.875%, Due 5/15/2010 + ..................... 1,200 1,178
4.875%, Due 4/30/2011 + ..................... 1,700 1,722
4.625%, Due 2/29/2012 + ..................... 1,535 1,542
4.50%, Due 3/31/2012 + ...................... 365 365
4.375%, Due 8/15/2012 + ..................... 2,100 2,089
4.75%, Due 5/15/2014 + ...................... 5,770 5,832
See accompanying notes
74
AMERICAN BEACON INTERMEDIATE BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
4.125%, Due 5/15/2015 + ........................ $ 1,000 $ 968
4.875%, Due 8/15/2016 + ........................ 1,000 1,018
4.625%, Due 2/15/2017 + ........................ 3,015 3,014
9.125%, Due 5/15/2018 + ........................ 300 413
7.875%, Due 2/15/2021 + ........................ 750 978
6.25%, Due 8/15/2023 + ......................... 650 749
6.875%, Due 8/15/2025 + ........................ 370 458
5.25%, Due 11/15/2028 + ........................ 550 577
6.25%, Due 5/15/2030 + ......................... 750 893
4.50%, Due 2/15/2036 + ......................... 1,875 1,778
-----------
TOTAL U.S. TREASURY OBLIGATIONS ................... 25,279
-----------
SHARES
------------
SHORT TERM INVESTMENTS - 3.22%
American Beacon Money Market Select Fund @@ .... 3,262,543 3,262
-----------
SECURITIES LENDING COLLATERAL - 25.50%
American Beacon Cash Plus Trust @@ ............. 15,220,090 15,220
American Beacon Money Market Select Fund @@ .... 10,584,815 10,585
-----------
TOTAL SECURITIES LENDING COLLATERAL ............ 25,805
-----------
TOTAL INVESTMENTS - 124.84% (COST $126,582) ....... $ 126,350
LIABILITIES, NET OF OTHER ASSETS - (24.84%) ....... (25,143)
-----------
TOTAL NET ASSETS - 100.00% ........................ $ 101,207
===========
Percentages are stated as a percent of net assets.
+ All or a portion of this security is on loan at April 30, 2007.
++ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $3,620 or 3.58% of net
assets. The Fund has no right to demand registration of these
securities.
# The coupon rate shown on floating or adjustable rate securities
represents the rate at period end. The due date on these types of
securities reflects the final maturity date.
@ Rates represent discount rate.
@@ The Fund/Trust is affiliated by having the same investment advisor.
See accompanying notes
75
AMERICAN BEACON SHORT-TERM BOND FUND
SCHEDULE OF INVESTMENTS
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
CORPORATE OBLIGATIONS - 65.18%
BANKS - 18.74%
Bank One Corp., 6.00%, Due 8/1/2008 ............ $ 2,000 $ 2,015
Citigroup, Inc.,
4.125%, Due 2/22/2010 ....................... 1,000 978
4.625%, Due 8/3/2010 + ...................... 1,000 989
Comerica Bank, 6.00%, Due 10/1/2008 ............ 2,200 2,221
HSBC Bank USA NA, 3.875%, Due 9/15/2009 ........ 2,000 1,946
National City Bank, 4.50%, Due 3/15/2010 ....... 2,000 1,962
National Westminster Bank plc, 7.375%, Due
10/1/2009 ................................... 2,000 2,098
Wachovia Corp., 6.40%, Due 4/1/2008 ............ 2,500 2,521
Washington Mutual, Inc., 8.25%, Due 4/1/2010 ... 2,000 2,159
-----------
16,889
-----------
COMMUNICATIONS - 2.25%
Comcast Cable Communications, Inc., 6.20%, Due
11/15/2008 .................................. 2,000 2,029
-----------
ELECTRIC/GAS - 2.18%
MidAmerican Energy Holdings Co., 3.50%, Due
5/15/2008 ................................... 2,000 1,964
-----------
FINANCE - 19.78%
The Bear Stearns Cos., Inc., 2.875%, Due
7/2/2008 .................................... 2,000 1,946
Capital One Financial Corp., 5.70%, Due
9/15/2011 ................................... 1,500 1,513
Countrywide Home Loans, Inc., 3.25%, Due
5/21/2008 ................................... 2,000 1,955
Credit Suisse USA, Inc., 4.70%, Due
6/1/2009 + .................................. 2,000 1,990
General Electric Capital Corp., 5.875%, Due
2/15/2012 ................................... 3,000 3,095
Goldman Sachs Group, Inc., 6.65%, Due
5/15/2009 .................................. 1,000 1,030
Lehman Brothers Holdings, Inc., 4.25%, Due
1/27/2010 + ................................. 1,600 1,570
MBNA Corp., 7.50%, Due 3/15/2012 ............... 2,000 2,200
Merrill Lynch & Co., Inc., 6.00%, Due
2/17/2009 ................................... 2,500 2,536
-----------
17,835
-----------
INDUSTRIALS - 8.19%
Bunge Limited Finance Corp., 4.375%, Due
12/15/2008 .................................. 1,000 985
Caterpillar Financial Services Corp., 4.15%, Due
1/15/2010 ................................... 2,000 1,957
DaimlerChrysler NA Holding Corp., 5.75%, Due
9/8/2011 .................................... 1,000 1,015
John Deere Capital Corp., 4.125%, Due
1/15/2010 ................................... 2,500 2,442
Nissan Motor Acceptance Corp., 4.625%, Due
3/8/2010 ++ ................................. 1,000 980
-----------
7,379
-----------
INSURANCE - 7.33%
ASIF Global Financing, 3.90%, Due
10/22/2008 ++ ............................... 2,000 1,963
The Hartford Financial Services Group, Inc.,
5.25%, Due 10/15/2011 ....................... 700 703
ING Security Life Institutional Funding, 4.25%,
Due 1/15/2010 ++ ............................ 1,500 1,469
Metropolitan Life Global Funding I, 4.625%, Due
8/19/2010 ++ ................................ 1,500 1,488
Monumental Global Funding II, 4.625%, Due
3/15/2010 ++ ................................ 1,000 988
-----------
6,611
-----------
See accompanying notes
76
AMERICAN BEACON SHORT-TERM BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
PAR
AMOUNT VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
REAL ESTATE - 3.34%
iStar Financial, Inc., 5.375%, Due 4/15/2010 ... $ 1,000 $ 999
Simon Property Group LP, 6.375%, Due
11/15/2007 .................................. 2,000 2,009
-----------
3,008
-----------
TELEPHONE - 3.37%
AT&T Corp., 6.00%, Due 3/15/2009 ............... 2,000 2,028
Vodafone Group plc, 5.50%, Due 6/15/2011 + ..... 1,000 1,011
-----------
3,039
-----------
TOTAL CORPORATE OBLIGATIONS .................... 58,754
-----------
NON-AGENCY MORTGAGE-BACKED OBLIGATIONS - 1.66%
Banc of America Commercial Mortgage, Inc.,
2005-6, 5.001%, Due 9/10/2047 ............... 663 661
Wachovia Bank Commercial Mortgage Trust,
2006-C23 A1, 5.203%, Due 1/15/2045 .......... 840 838
-----------
TOTAL NON-AGENCY MORTGAGE-BACKED OBLIGATIONS ... 1,499
-----------
ASSET-BACKED SECURITIES - 19.45%
Banc of America Securities Auto Trust, 2005-WF1
A4, 4.08%, Due 4/18/2010 .................... 3,000 2,962
Capital Auto Receivables Asset Trust,
2006-SN1A A4A, 5.32%, Due 3/20/2010 ++ ...... 2,000 2,004
2006-1 A4, 5.04%, Due 5/17/2010 ............. 250 250
CarMax Auto Owner Trust, 2005-3 A4, 4.91%, Due
1/18/2011 ................................... 1,200 1,196
Chase Manhattan Auto Owner Trust, 2006-A A4,
5.36%, Due 1/15/2013 ........................ 2,000 2,014
DaimlerChrysler Auto Trust, 2004-C A4, 3.28%,
Due 12/8/2009 ............................... 3,000 2,958
HSBC Automotive Trust, 2005-1 A4, 4.35%, Due
6/18/2012 ................................... 3,000 2,961
Volkswagen Auto Loan Enhanced Trust, 2005-1 A4,
4.86%, Due 4/20/2012 ........................ 1,500 1,495
Wells Fargo Financial Auto Owner Trust, 2004-A
A4, 2.67%, Due 8/16/2010 .................... 1,708 1,689
-----------
TOTAL ASSET-BACKED SECURITIES .................. 17,529
-----------
U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS - 4.01%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.91%
Pool # 313522, 7.00%, Due 5/1/2012 ............. 272 279
Pool # 323980, 6.00%, Due 4/1/2014 ............. 296 301
Pool # 545038, 6.00%, Due 9/1/2014 ............. 241 245
-----------
825
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION - 3.10%
2006-18 A, 4.968%, Due 9/15/2008 ............... 958 952
2006-9 A, 4.201%, Due 8/16/2026 ................ 1,879 1,840
-----------
2,792
-----------
TOTAL U.S. AGENCY MORTGAGE-BACKED OBLIGATIONS ..... 3,617
-----------
SHARES
------------
SHORT TERM INVESTMENTS - 8.63%
American Beacon Money Market Select Fund # ..... 7,778,061 7,778
-----------
See accompanying notes
77
AMERICAN BEACON SHORT-TERM BOND FUND
SCHEDULE OF INVESTMENTS - CONTINUED
April 30, 2007 (Unaudited)
SHARES VALUE
------------ -----------
(DOLLARS IN THOUSANDS)
SECURITIES LENDING COLLATERAL - 3.90%
American Beacon Cash Plus Trust # .............. $ 2,075,446 $ 2,076
American Beacon Money Market Select Fund # ..... 1,443,369 1,443
-----------
TOTAL SECURITIES LENDING COLLATERAL ............ 3,519
-----------
TOTAL INVESTMENTS - 102.83% (COST $92,787) ........ $ 92,696
LIABILITIES, NET OF OTHER ASSETS - (2.83%) ........ (2,550)
-----------
TOTAL NET ASSETS - 100.00% ........................ $ 90,146
===========
Percentages are stated as a percent of net assets.
+ All or a portion of this security is on loan at April 30, 2007.
++ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $8,892 or 9.86% of net
assets. The Fund has no right to demand registration of these securities.
# The Fund/Trust is affiliated by having the same investment advisor.
See accompanying notes
78
(This page intentionally left blank)
AMERICAN BEACON FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 2007 (UNAUDITED) (IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
BALANCED LARGE CAP MID-CAP
FUND GROWTH FUND VALUE FUND
----------- ----------- ----------
ASSETS:
Investments in unaffiliated securities, at value
A D ......................................... $ 1,035,995 $ 101,270 $ 137,083
Investments in affiliated securities, at value
B ........................................... 277,318 19,195 44,737
Foreign currency, at value C ................... -- -- --
Cash ........................................... -- 9 --
Receivable for investments sold ................ 541 -- 203
Dividends and interest receivable .............. 4,936 69 148
Receivable for fund shares sold ................ 971 354 576
Receivable for tax reclaims .................... -- -- --
Receivable for expense reimbursement ........... -- -- 3
Prepaid Expenses ............................... 37 1 18
----------- ----------- ----------
TOTAL ASSETS ................................ 1,319,798 120,898 182,768
----------- ----------- ----------
LIABILITIES:
Payable for investments purchased .............. 1,683 -- --
Payable upon return of securities loaned ....... 205,691 13,393 27,080
Payable for fund shares redeemed ............... 284 4,101 4,260
Payable for variation margin on open futures
contracts ................................... 658 56 274
Dividends payable .............................. -- -- --
Payable under excess expense reimbursement
plan ........................................ 2 -- 15
Management and investment advisory fees payable
(Note 2) .................................... 694 139 298
Administrative service and service fees
payable ..................................... 80 -- 13
Net unrealized depreciation on foreign currency
contracts ................................... -- -- --
Other liabilities .............................. 132 32 28
----------- ----------- ----------
TOTAL LIABILITIES ........................... 209,224 17,721 31,968
----------- ----------- ----------
NET ASSETS ........................................ $ 1,110,574 $ 103,177 $ 150,800
=========== =========== ==========
ANALYSIS OF NET ASSETS:
Paid-in-capital ................................... 905,612 94,066 133,979
Undistributed net investment income ............... 8,276 209 699
Accumulated net realized gain (loss) .............. 16,158 (1,442) 2,648
Unrealized appreciation (depreciation) of
investments, futures contracts, and foreign
currency .................................... 180,528 10,344 13,474
----------- ----------- ----------
NET ASSETS ........................................ $ 1,110,574 $ 103,177 $ 150,800
=========== =========== ==========
Shares outstanding (no par value):
Institutional Class ............................ 3,379,510 15,860 468,583
=========== =========== ==========
PlanAhead Class ................................ 11,497,747 N/A 2,890,938
=========== =========== ==========
Service Class .................................. 302,620 N/A N/A
=========== =========== ==========
AMR Class ...................................... 57,812,282 14,097,190 9,629,984
=========== =========== ==========
Net asset value, offering and redemption price per
share:
Institutional Class ............................ $ 15.86 $ 7.27 $ 11.58
=========== =========== ==========
PlanAhead Class ................................ $ 14.89 N/A $ 11.54
=========== =========== ==========
Service Class .................................. $ 14.76 N/A N/A
=========== =========== ==========
AMR Class ...................................... $ 15.24 $ 7.31 $ 11.63
=========== =========== ==========
A Cost of investments in unaffiliated securities .. $ 858,172 $ 91,137 $ 124,031
B Cost of investments in affiliated securities .... $ 277,318 $ 19,195 $ 44,737
C Cost of foreign currency ........................ $ -- $ -- $ --
D Market value of securities on loan .............. $ 219,918 $ 12,977 $ 26,811
See accompanying notes
80
SMALL CAP
VALUE EMERGING ENHANCED
OPPORTUNITY MARKETS HIGH YIELD INCOME INTERMEDIATE SHORT-TERM
FUND FUND BOND FUND FUND BOND FUND BOND FUND
----------- ---------- ----------- ---------- ------------ ----------
ASSETS:
Investments in unaffiliated securities, at value
A D ......................................... $ 9,093 $ 181,340 $ 358,669 $ 94,064 $ 97,283 $ 81,399
Investments in affiliated securities, at value
B ........................................... 2,308 25,350 19,795 32,234 29,067 11,297
Foreign currency, at value C ................... -- 2,115 -- -- -- --
Cash ........................................... -- -- 7 -- -- --
Receivable for investments sold ................ -- 729 1,011 -- -- --
Dividends and interest receivable .............. 6 365 7,334 796 966 751
Receivable for fund shares sold ................ -- 289 741 193 92 227
Receivable for tax reclaims .................... -- 7 -- -- -- --
Receivable for expense reimbursement ........... 3 -- -- -- -- 1
Prepaid Expenses ............................... 5 65 19 12 10 15
-------- ---------- ----------- ---------- ----------- ----------
TOTAL ASSETS ................................ 11,415 210,260 387,576 127,299 127,418 93,690
-------- ---------- ----------- ---------- ----------- ----------
LIABILITIES:
Payable for investments purchased .............. -- 1,292 2,975 -- 245 --
Payable upon return of securities loaned ....... 2,264 18,227 19,517 25,731 25,805 3,519
Payable for fund shares redeemed ............... 8 2,011 5,089 71 129 --
Payable for variation margin on open futures
contracts ................................... -- 88 -- -- -- --
Dividends payable .............................. -- -- 371 -- -- --
Payable under excess expense reimbursement
plan ........................................ -- 8 3 -- -- --
Management and investment advisory fees payable
(Note 2) .................................... 13 453 503 94 21 19
Administrative service and service fees
payable ..................................... 2 6 79 39 -- 4
Net unrealized depreciation on foreign currency
contracts ................................... -- 65 -- -- -- --
Other liabilities .............................. 7 28 60 34 11 2
-------- ---------- ----------- ---------- ----------- ----------
TOTAL LIABILITIES ........................... 2,294 22,178 28,597 25,969 26,211 3,544
-------- ---------- ----------- ---------- ----------- ----------
NET ASSETS ........................................ $ 9,121 $ 188,082 $ 358,979 $ 101,330 $ 101,207 $ 90,146
======== ========== =========== ========== =========== ==========
ANALYSIS OF NET ASSETS:
Paid-in-capital ................................... 8,529 122,718 353,540 96,605 109,583 99,141
Undistributed net investment income ............... 12 642 530 305 500 (170)
Accumulated net realized gain (loss) .............. 36 15,479 (2,371) 1,164 (8,644) (8,734)
Unrealized appreciation (depreciation) of
investments, futures contracts, and foreign
currency .................................... 544 49,243 7,280 3,256 (232) (91)
-------- ---------- ----------- ---------- ----------- ----------
NET ASSETS ........................................ $ 9,121 $ 188,082 $ 358,979 $ 101,330 $ 101,207 $ 90,146
======== ========== =========== ========== =========== ==========
Shares outstanding (no par value):
Institutional Class ............................ 791,870 965,311 26,753,839 N/A 10,038,495 9,591,203
======== ========== =========== ========== =========== ==========
PlanAhead Class ................................ 37,764 418,285 7,613,083 9,786,220 N/A 654,965
======== ========== =========== ========== =========== ==========
Service Class .................................. N/A N/A N/A N/A N/A N/A
======== ========== =========== ========== =========== ==========
AMR Class ...................................... N/A 9,061,045 N/A N/A N/A N/A
======== ========== =========== ========== =========== ==========
Net asset value, offering and redemption price per
share:
Institutional Class ............................ $ 11.00 $ 17.92 $ 10.44 N/A $ 10.08 $ 8.80
======== ========== =========== ========== =========== ==========
PlanAhead Class ................................ $ 10.94 $ 17.73 $ 10.45 $ 10.35 N/A $ 8.81
======== ========== =========== ========== =========== ==========
Service Class .................................. N/A N/A N/A N/A N/A N/A
======== ========== =========== ========== =========== ==========
AMR Class ...................................... N/A $ 18.03 N/A N/A N/A N/A
======== ========== =========== ========== =========== ==========
A Cost of investments in unaffiliated securities .. $ 8,549 $ 132,321 $ 351,388 $ 90,809 $ 97,515 $ 81,490
B Cost of investments in affiliated securities .... $ 2,308 $ 25,350 $ 19,795 $ 32,234 $ 29,067 $ 11,297
C Cost of foreign currency ........................ $ -- $ 2,112 $ 0 $ -- $ -- $ --
D Market value of securities on loan .............. $ 2,176 $ 17,514 $ 18,950 $ 25,197 $ 25,396 $ 3,456
See accompanying notes
81
AMERICAN BEACON FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 2007 (IN THOUSANDS) (UNAUDITED)
LARGE CAP MID-CAP
BALANCED GROWTH VALUE
FUND FUND FUND
-------- --------- -------
INVESTMENT INCOME:
Dividend income from unaffiliated
securities (net of foreign taxes) A ....... $ 6,622 $ 570 $ 1,009
Dividend income from affiliated securities ... 1,907 160 389
Interest income .............................. 9,103 10 30
Income derived from securities lending, net .. 137 7 12
------- ------ -------
TOTAL INVESTMENT INCOME ................ 17,769 747 1,440
------- ------ -------
EXPENSES:
Management and investment advisory fees
(Note 2) .................................. 1,385 241 440
Administrative service fees (Note 2):
Institutional Class ....................... 50 -- 5
PlanAhead Class ........................... 167 -- 38
Service Class ............................. 4 -- --
Transfer agent fees:
Institutional Class ....................... 1 -- --
PlanAhead Class ........................... 14 -- 3
AMR Class ................................. 30 4 3
Custody and fund accounting fees ............. 58 5 7
Professional fees ............................ 18 13 14
Registration fees and expenses ............... 22 -- 18
Service fees:
PlanAhead Class ........................... 167 -- 38
Service Class ............................. 4 -- --
Distribution fees- Service Class (Note 2) .... 4 -- --
Prospectus and shareholder reports ........... 26 7 5
Other expenses ............................... 56 8 10
------- ------ -------
TOTAL EXPENSES ......................... 2,006 278 581
------- ------ -------
Net (fees waived and expenses
reimbursed)/recouped by Manager (Note 2) .. 1 -- (16)
------- ------ -------
NET EXPENSES ........................... 2,007 278 565
------- ------ -------
NET INVESTMENT INCOME ........................... 15,762 469 875
------- ------ -------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain from: B
Investments ............................... 19,818 2,200 2,163
Commission recapture ...................... 10 13 22
Foreign currency transactions ............. -- -- --
Futures contracts ......................... 3,083 206 1,568
Change in net unrealized appreciation or
depreciation of: C
Investments ............................... 39,143 2,752 7,592
Foreign currency translations ............. -- -- --
Futures contracts ......................... 63 158 (90)
------- ------ -------
NET GAIN ON INVESTMENTS ................ 62,117 5,329 11,255
------- ------ -------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................... $77,879 $5,798 $12,130
======= ====== =======
A Foreign taxes ................................. $ 7 $ -- $ 3
B Net of foreign withholding taxes on capital
gains ........................................ $ -- $ -- $ --
C Net of unrealized appreciation of foreign
withholding taxes on capital gains ........... $ -- $ -- $ --
See accompanying notes
82
SMALL CAP HIGH
VALUE EMERGING YIELD ENHANCED
OPPORTUNITY MARKETS BOND INCOME INTERMEDIATE SHORT-TERM
FUND FUND FUND FUND BOND FUND BOND FUND
----------- -------- ------- -------- ------------ ----------
INVESTMENT INCOME:
Dividend income from unaffiliated
securities (net of foreign taxes) A ....... $ 58 $ 1,646 $ -- $ 121 $ -- $ --
Dividend income from affiliated securities ... 3 196 499 90 82 133
Interest income .............................. -- 15 13,682 2,240 2,407 1,825
Income derived from securities lending, net .. 1 32 32 11 16 1
----- ------- ------- ------ ------ ------
TOTAL INVESTMENT INCOME ................ 62 1,889 14,213 2,462 2,505 1,959
----- ------- ------- ------ ------ ------
EXPENSES:
Management and investment advisory fees
(Note 2) .................................. 20 731 870 192 122 105
Administrative service fees (Note 2):
Institutional Class ....................... 9 22 318 -- -- --
PlanAhead Class ........................... -- 9 97 135 1 9
Service Class ............................. -- -- -- -- -- --
Transfer agent fees:
Institutional Class ....................... -- 3 36 -- 3 2
PlanAhead Class ........................... -- 4 -- 4 1 3
AMR Class ................................. -- 5 -- -- -- --
Custody and fund accounting fees ............. -- 289 25 8 7 6
Professional fees ............................ 8 12 13 12 11 11
Registration fees and expenses ............... 17 12 22 8 15 13
Service fees:
PlanAhead Class ........................... -- 8 97 135 1 9
Service Class ............................. -- -- -- -- -- --
Distribution fees- Service Class (Note 2) .... -- -- -- -- -- --
Prospectus and shareholder reports ........... 1 11 13 3 4 5
Other expenses ............................... 4 13 14 11 4 4
----- ------- ------- ------ ------ ------
TOTAL EXPENSES ......................... 59 1,119 1,505 508 169 167
----- ------- ------- ------ ------ ------
Net (fees waived and expenses
reimbursed)/recouped by Manager (Note 2) .. (20) -- (23) -- (1) (2)
----- ------- ------- ------ ------ ------
NET EXPENSES ........................... 39 1,119 1,482 508 168 165
----- ------- ------- ------ ------ ------
NET INVESTMENT INCOME ........................... 23 770 12,731 1,954 2,337 1,794
----- ------- ------- ------ ------ ------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain from: B
Investments ............................... 35 15,889 1,377 1,718 505 333
Commission recapture ...................... 1 -- -- -- -- --
Foreign currency transactions ............. -- 558 -- -- -- --
Futures contracts ......................... -- 453 -- -- -- --
Change in net unrealized appreciation or
depreciation of: C
Investments ............................... 394 11,016 6,482 (15) 120 394
Foreign currency translations ............. -- 1,784 -- -- -- --
Futures contracts ......................... -- (81) -- -- -- --
----- ------- ------- ------ ------ ------
NET GAIN ON INVESTMENTS ................ 430 29,619 7,859 1,703 625 727
----- ------- ------- ------ ------ ------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................... $ 453 $30,389 $20,590 $3,657 $2,962 $2,521
===== ======= ======= ====== ====== ======
A Foreign taxes ................................. $ -- $ 193 $ -- $ -- $ -- $ --
B Net of foreign withholding taxes on capital
gains ........................................ $ -- $ 57 $ -- $ -- $ -- $ --
C Net of unrealized appreciation of foreign
withholding taxes on capital gains ........... $ -- $ 77 $ -- $ -- $ -- $ --
See accompanying notes
83
AMERICAN BEACON FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Balanced Fund Large Cap Growth Fund Mid-Cap Value Fund
--------------------- --------------------- ---------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
April October April 30, October April 30, October
30, 2007 31, 2006 2007 31, 2006 2007 31, 2006
----------- -------- ----------- -------- ----------- --------
(unaudited) (unaudited) (unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............ $ 15,762 $ 26,125 $ 469 $ 628 $ 875 $ 647
Net realized gain (loss) on
investments, futures contracts,
and foreign currency
transactions .................. 22,911 44,566 2,419 3,826 3,753 2,249
Change in net unrealized
appreciation or depreciation of
investments, futures contracts,
and foreign currency
translations .................. 39,206 42,383 2,910 3,999 7,502 6,534
---------- -------- -------- -------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS .............. 77,879 113,074 5,798 8,453 12,130 9,430
---------- -------- -------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Institutional Class ........... (762) (359) (1) (1) (22) (9)
PlanAhead Class ............... (3,106) (2,286) -- -- (206) --
Service Class ................. (43) -- -- -- -- --
AMR Class ..................... (23,927) (20,180) (737) (376) (563) (481)
Net realized gain on investments:
Institutional Class ........... (1,300) (674) -- -- (86) (136)
PlanAhead Class ............... (5,825) (4,591) -- -- (706) --
Service Class ................. (77) -- -- -- -- --
AMR Class ..................... (38,430) (35,228) -- -- (1,766) (9,132)
---------- -------- -------- -------- -------- --------
NET DISTRIBUTIONS TO
SHAREHOLDERS ............ (73,470) (63,318) (738) (377) (3,349) (9,758)
---------- -------- -------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares .... 131,709 118,740 30,158 24,244 55,157 59,595
Reinvestment of dividends and
distributions ................. 72,959 62,858 738 376 3,346 9,756
Cost of shares redeemed .......... (51,822) (91,106) (14,931) (13,832) (13,486) (16,516)
Redemption fees .................. -- -- -- -- 76 77
---------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN
NET ASSETS FROM CAPITAL
SHARE TRANSACTIONS ...... 152,846 90,492 15,965 10,788 45,093 52,912
---------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN
NET ASSETS ....................... 157,255 140,248 21,025 18,864 53,874 52,584
---------- -------- -------- -------- -------- --------
NET ASSETS:
Beginning of period .............. 953,319 813,071 82,152 63,288 96,926 44,342
---------- -------- -------- -------- -------- --------
END OF PERIOD * .................. $1,110,574 $953,319 $103,177 $ 82,152 $150,800 $ 96,926
========== ======== ======== ======== ======== ========
*Includes undistributed net
investment income (loss) of ...... $ 8,276 $ 19,982 $ 209 $ 479 $ 699 $ 479
========== ======== ======== ======== ======== ========
See accompanying notes
84
Small Cap Value
Opportunity Fund Emerging Markets Fund High Yield Bond Fund Enhanced Income Fund
--------------------- --------------------- ---------------------- ---------------------
From
Six Months March Six Months Year Six Months Year Six Months Year
Ended 31 to Ended Ended Ended Ended Ended Ended
April 30, October April 30, October April 30, October April 30, October
2007 31, 2006 2007 31, 2006 2007 31, 2006 2007 31, 2006
----------- -------- ----------- -------- ----------- --------- ----------- --------
(unaudited) (unaudited) (unaudited) (unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income ............ $ 23 $ 4 $ 770 $ 1,361 $ 12,731 $ 23,830 $ 1,954 $ 3,578
Net realized gain (loss) on
investments, futures contracts,
and foreign currency
transactions .................. 36 8 16,900 22,344 1,377 (3,640) 1,718 335
Change in net unrealized
appreciation or depreciation of
investments, futures contracts,
and foreign currency
translations .................. 394 150 12,719 14,943 6,482 6,615 (15) 3,410
------ ------ -------- -------- -------- --------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ..... 453 162 30,389 38,648 20,590 26,805 3,657 7,323
------ ------ -------- -------- -------- --------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Institutional Class .............. (17) -- (101) (163) (9,792) (16,799) -- --
PlanAhead Class .................. -- -- (15) (36) (2,907) (7,065) (2,367) (3,905)
Service Class .................... -- -- -- -- -- -- -- --
AMR Class ........................ -- -- (1,130) (1,551) -- -- -- --
Net realized gain on investments:
Institutional Class .............. (9) -- (2,407) (1,683) -- (2,254) -- --
PlanAhead Class .................. -- -- (922) (425) -- (1,092) (74) (14)
Service Class .................... -- -- -- -- -- -- -- --
AMR Class ........................ -- -- (19,268) (14,022) -- -- -- --
------ ------ -------- -------- -------- --------- -------- --------
NET DISTRIBUTIONS TO
SHAREHOLDERS .................. (26) -- (23,843) (17,880) (12,699) (27,211) (2,441) (3,919)
------ ------ -------- -------- -------- --------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares .... 4,598 4,644 18,672 34,209 83,364 161,075 8,287 30,206
Reinvestment of dividends and
distributions ................. 26 -- 23,764 17,795 10,562 23,167 2,441 3,919
Cost of shares redeemed .......... (693) (43) (18,463) (22,127) (54,815) (208,965) (36,529) (23,955)
Redemption fees .................. -- -- 24 90 -- -- -- --
------ ------ -------- -------- -------- --------- -------- --------
NET INCREASE (DECREASE) IN NET
ASSETS FROM CAPITAL SHARE
TRANSACTIONS .................. 3,931 4,601 23,997 29,967 39,111 (24,723) (25,801) 10,170
------ ------ -------- -------- -------- --------- -------- --------
NET INCREASE (DECREASE) IN
NET ASSETS .................... 4,358 4,763 30,543 50,735 47,002 (25,128) (24,585) 13,574
------ ------ -------- -------- -------- --------- -------- --------
NET ASSETS:
Beginning of period .............. 4,763 -- 157,539 106,804 311,977 337,105 125,915 112,341
------ ------ -------- -------- -------- --------- -------- --------
END OF PERIOD * ..................... $9,121 $4,763 $188,082 $157,539 $358,979 $ 311,977 $101,330 $125,915
====== ====== ======== ======== ======== ========= ======== ========
* Includes undistributed net
investment income (loss) of ...... $ 12 $ 7 $ 642 $ 1,129 $ 530 $ 499 $ 305 $ (1,012)
====== ====== ======== ======== ======== ========= ======== ========
See accompanying notes
85
AMERICAN BEACON FUNDS
STATEMENTS OF CHANGES IN NET ASSETS (IN THOUSANDS)
Intermediate Bond Fund Short-Term Bond Fund
---------------------- ----------------------
Six Months Year Six Months Year
Ended Ended Ended Ended
April 30, October April 30, October
2007 31, 2006 2007 31, 2006
----------- -------- ----------- --------
(unaudited) (unaudited)
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income .................................... $ 2,337 $ 4,299 $ 1,794 $ 2,997
Net realized gain (loss) on investments, futures
contracts, and foreign currency transactions .......... 505 (987) 333 (294)
Change in net unrealized appreciation or depreciation
of investments, futures contracts, and foreign
currency translations ................................. 120 1,283 394 952
-------- -------- ------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .. 2,962 4,595 2,521 3,655
-------- -------- ------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income:
Institutional Class ................................... (2,361) (4,367) (1,850) (3,409)
PlanAhead Class ....................................... (13) (41) (150) (375)
Net realized gain on investments:
-------- -------- ------- --------
NET DISTRIBUTIONS TO SHAREHOLDERS .................. (2,374) (4,408) (2,000) (3,784)
-------- -------- ------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares ............................ 12,738 18,558 13,654 13,507
Reinvestment of dividends and distributions .............. 2,373 4,405 1,996 3,775
Cost of shares redeemed .................................. (12,737) (19,229) (6,631) (24,812)
-------- -------- ------- --------
NET INCREASE (DECREASE) IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS ...................... 2,374 3,734 9,019 (7,530)
-------- -------- ------- --------
NET INCREASE (DECREASE) IN NET ASSETS ....................... 2,962 3,921 9,540 (7,659)
-------- -------- ------- --------
NET ASSETS:
Beginning of period ...................................... 98,245 94,324 80,606 88,265
-------- -------- ------- --------
END OF PERIOD * .......................................... $101,207 $ 98,245 $90,146 $ 80,606
======== ======== ======= ========
*Includes undistributed net investment income (loss) of ..... $ 500 $ 502 $ (170) $ (304)
======== ======== ======= ========
See accompanying notes
86
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
American Beacon Funds (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940 (the
"Act"), as amended, as a no load, diversified, open-end management investment
company. These financial statements and notes to the financial statements relate
to the American Beacon Balanced Fund, the American Beacon Large Cap Growth Fund,
the American Beacon Mid-Cap Value Fund, the American Beacon Small Cap Value
Opportunity Fund, the American Beacon Emerging Markets Fund, the American Beacon
High Yield Bond Fund, the American Beacon Enhanced Income Fund, the American
Beacon Intermediate Bond Fund and the American Beacon Short-Term Bond Fund (each
a "Fund" and collectively, the "Funds"), each a series of the Trust.
American Beacon Advisors, Inc. (the "Manager"), is a wholly-owned
subsidiary of AMR Corporation, the parent company of American Airlines, Inc.
("American"), and was organized in 1986 to provide business management,
advisory, administrative and asset management consulting services to the Trust
and other investors.
Class Disclosure
Each Fund, except the Enhanced Income Fund, has multiple classes of shares
designed to meet the needs of different groups of investors; however, not all
Funds offer all classes. The following table sets forth the differences amongst
the classes:
CLASS: OFFERED TO: SERVICE AND DISTRIBUTIONS FEES:
- ------ ----------- -------------------------------
INSTITUTIONAL CLASS Investors making an initial investment of $2 million Administrative Service Fee - 0.25%
PLANAHEAD CLASS General public and investors investing through an Administrative Service Fee - 0.25%
intermediary Service Fee - 0.25%
SERVICE CLASS Investors investing through an intermediary Administrative Service Fee - 0.25%
Service Fee - 0.25%
Distribution Fee - 0.25%
AMR CLASS Investors in the tax-exempt retirement and benefit N/A
plans of AMR Corporation and its affiliates
Investment income, net capital gains (losses) and all expenses incurred by
the Funds are allocated based on the relative net assets of each class, except
for service fees and certain other fees and expenses related solely to one class
of shares.
Effective February 28, 2007, the PlanAhead Class of the Intermediate Bond
Fund was closed.
Security Valuation
Investments are valued at the close of the New York Stock Exchange (the
"Exchange"), normally 4 p.m. ET, each day that the Exchange is open for
business. Equity securities for which market quotations are available are valued
at the last sale price or official closing price (closing bid price or last
evaluated quote if no sale has occurred) on the primary market or exchange on
which they trade.
Debt securities (other than short-term securities) normally are valued on
the basis of prices provided by an independent pricing service and may take into
account appropriate factors such as institution-size trading in similar groups
of securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data. When a price is unavailable from a
pricing service or when the price provided by the pricing service is deemed not
to represent fair value, the prices of debt securities may be determined using
quotes obtained from brokers.
87
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
Investments in mutual funds are valued at the closing net asset value per
share of the mutual fund on the day of valuation. Investment grade short-term
obligations with 60 days or less to maturity are valued using the amortized cost
method, which approximates market value.
Securities for which the market prices are not readily available or are not
reflective of the fair value of the security, as determined by the Manager, will
be priced at fair value following procedures approved by the Board of Trustees
(the "Board").
Most foreign markets close before the Exchange. Developments that could
affect the values of securities that occur between the close of a foreign market
and the close of the Exchange normally will not be reflected in security
valuations. If such developments are so significant such that they will, in the
judgment of the pricing committee of the Funds, clearly and materially affect
the value of securities, the previous closing prices may be adjusted to reflect
the fair value of the securities as of the close of the Exchange, as determined
in good faith and pursuant to procedures approved by the Board. Adjustments to
closing prices to reflect fair value on affected foreign securities may be
provided by an independent pricing service.
Security Transactions and Investment Income
Security transactions are recorded on the trade date of the security
purchase or sale.
The Funds may purchase securities with delivery or payment to occur at a
later date. At the time the Funds enter into a commitment to purchase a
security, the transaction is recorded and the value of the security is reflected
in the net asset value. The value of the security may vary with market
fluctuations.
Dividend income, net of foreign taxes, is recorded on the ex-dividend date
except certain dividends from foreign securities which are recorded as soon as
the information is available to the Funds. Interest income is earned from
settlement date, recorded on the accrual basis, and adjusted, if necessary, for
accretion of discounts and amortization of premiums. For financial and tax
reporting purposes, realized gains and losses are determined on the basis of
specific lot identification.
Currency Translation
All assets and liabilities initially expressed in foreign currency values
are converted into U.S. dollar values at the mean of the bid and ask prices of
such currencies against U.S. dollars as last quoted by a recognized dealer.
Income, expenses and purchases and sales of investments are translated into U.S.
dollars at the rate of exchange prevailing on the respective dates of such
transactions. The effect of changes in foreign currency exchange rates on
investments is separately identified from the fluctuations arising from changes
in market values of securities held and is reported with all other foreign
currency gains and losses in the Funds' Statement of Operations.
Forward Foreign Currency Contracts
The Emerging Markets Fund may enter into forward foreign currency contracts
to hedge the exchange rate risk on investment transactions or to hedge the value
of fund securities denominated in foreign currencies. Forward foreign currency
contracts are valued at the forward exchange rate prevailing on the day of
valuation. The Fund bears the market risk that arises from changes in foreign
exchange rates, and accordingly, the unrealized gain (loss) on these contracts
is reflected in the accompanying financial statements. The Fund also bears the
credit risk if the counterparty fails to perform under the contract.
Repurchase Agreements
Under the terms of a repurchase agreement, securities are acquired by a
Fund from a securities dealer or a bank which are subject to resale at a later
date. Repurchase agreements are fully collateralized. The
88
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
collateral is monitored daily by each Fund so that the collateral's market value
equals or exceeds the carrying value of the repurchase agreement, including
accrued interest.
Futures Contracts
Futures contracts are contracts to buy or sell a standard quantity of
securities at a specified price on a future date. The Balanced, Large Cap
Growth, Mid-Cap Value, Small Cap Value Opportunity, Emerging Markets, High Yield
Bond and Enhanced Income 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 Fund is required to set aside or
deposit with a broker an amount, termed the initial margin, which typically
represents 5% of the face value of the futures contract. The Funds reflect this
amount on the Schedules of Investments as a U.S. Treasury Bill held as
collateral for futures contracts or as a Deposit with broker for futures
contracts 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.
Dividends to Shareholders
Dividends from net investment income of the Balanced, Large Cap Growth,
Mid-Cap Value, Small Cap Value Opportunity and Emerging Markets Funds normally
will be declared and paid annually. The High Yield Bond, Enhanced Income,
Intermediate Bond and Short-Term Bond Funds generally declare dividends from net
investment income daily, payable monthly. Distributions, if any, of net realized
capital gains are generally paid annually and recorded on the ex-dividend date.
Commission Recapture
The Funds have established brokerage commission recapture arrangements with
certain brokers or dealers. If a Fund's investment advisor chooses to execute a
transaction through a participating broker, the broker rebates a portion of the
commission back to the Fund. Any collateral benefit received through
participation in the commission recapture program is directed exclusively to the
Fund. These amounts are reported with the net realized gains in the Fund's
Statement of Operations.
Allocation of Income, Expenses, Gains and Losses
Income, expenses (other than those attributable to a specific class), gains
and losses are allocated daily to each class of shares based upon the relative
proportion of net assets represented by such class. Operating expenses directly
attributable to a specific class are charged against the operations of that
class.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles 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.
89
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
Redemption Fees
The Institutional, PlanAhead and AMR Classes of the Emerging Markets Fund
impose a 2% redemption fee on certain shares held for less than 90 days, and the
AMR Class of the Mid-Cap Value Fund imposes a 2% redemption fee on certain
shares held for less than 180 days. The fee is deducted from the redemption
proceeds and is intended to offset the trading costs, market impact and other
costs associated with short-term trading activity in the Funds. The "first-in,
first-out" method is used to determine the holding period. Through April 30,
2006, the fee was retained by the class that imposed the fee. Effective May 1,
2006, the fee is allocated to all classes of each Fund pro-rata based on their
respective net assets.
Recently Issued Accounting Pronouncements
On July 13, 2006, the Financial Accounting Standards Board ("FASB")
released FASB Interpretation No. 48 "Accounting for Uncertainty in Income Taxes"
("FIN 48"). FIN 48 provides guidance for how uncertain tax positions should be
recognized, measured, presented and disclosed in the financial statements. FIN
48 requires the evaluation of tax positions taken or expected to be taken in the
course of preparing each Fund's tax returns to determine whether the tax
positions are "more-likely-than-not" of being sustained by the applicable tax
authority. Tax positions not deemed to meet the more-likely-than-not threshold
would be recorded as a tax benefit or expense in the current year. Adoption of
FIN 48 is required for fiscal years beginning after December 15, 2006 and is to
be applied to all open tax years as of the effective date. At this time, the
Manager is evaluating the implications of FIN 48 and its potenetial impact on
the financial statements has not yet been determined.
In September 2006, the FASB issued Statement on Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This standard
clarifies the definition of fair value for financial reporting, establishes a
framework for measuring fair value and requires additional disclosures about the
use of fair value measurements. FAS 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim periods
within those fiscal years. The Manager is evaluating the impact of FAS 157;
however, it is not expected to have material impact on the Funds' net assets or
results of operations.
Other
Under the Trust's organizational documents, its officers and directors are
indemnified against certain liability arising out of the performance of their
duties to the Trust. In the normal course of business, the Trust enters into
contracts that provide indemnification to the other party or parties against
potential costs or liabilities. The Trust's maximum exposure under these
arrangements is dependent on claims that may be made in the future and,
therefore, cannot be estimated. The Trust has had no prior claims or losses
pursuant to any such agreement.
2. TRANSACTIONS WITH AFFILIATES
Management Agreement
The Trust and the Manager are parties to a Management Agreement that
obligates the Manager to provide or oversee the provision of all administrative,
investment advisory, fund management and securities lending services. Investment
assets of the Balanced, Large Cap Growth, Mid-Cap Value, Small Cap Value
Opportunity, Emerging Markets, High Yield Bond, Enhanced Income and Intermediate
Bond Funds are managed by one or more investment advisors which have entered
into separate investment advisory agreements with the Manager. As compensation
for performing the duties required under the Management Agreement, the Manager
receives from the Balanced Fund, Large Cap Growth Fund, Mid-Cap Value Fund,
Small Cap Value Opportunity Fund, Emerging Markets Fund, High Yield Bond Fund
and Enhanced Income Fund an annualized fee equal to 0.10% of the average daily
net assets plus amounts paid by the Manager to the investment advisors hired by
the Manager to direct investment activities of the Funds. The Manager receives
an annualized fee of 0.25% of the
90
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
average daily net assets of the Intermediate Bond Fund and pays a portion of
their fee to an investment advisor hired by the Manager to direct investment
activities of a portion of the Fund. The Manager serves as the sole investment
advisor to the Short-Term Bond Fund. Pursuant to the Management Agreement, the
Manager receives from the Fund an annualized fee equal to 0.25% of the average
daily net assets of the Short-Term Bond Fund. Management fees paid during the
six months ended April 30, 2007 were as follows (dollars in thousands):
NET
AMOUNTS
AMOUNTS PAID RETAINED
MANAGEMENT MANAGEMENT TO INVESTMENT BY
FEE RATE FEE ADVISORS MANAGER
----------- ---------- ------------- --------
Balanced ..................... 0.225%-0.70% $1,385 $877 $508
Large Cap Growth ............. 0.35%-0.55% 241 194 47
Mid-Cap Value ................ 0.35%-1.10% 440 376 64
Small Cap Value Opportunity .. 0.45%-0.55% 20 17 3
Emerging Markets ............. 0.79%-1.20% 731 644 87
High Yield Bond .............. 0.52% 870 703 167
Enhanced Income .............. 0.25%-0.85% 192 138 54
Intermediate Bond ............ 0.25% 122 39 83
As compensation for services provided by the Manager in connection with
securities lending activities, the lending Fund pays to the Manager, with
respect to cash collateral posted by borrowers, a fee up to 25% of the net
monthly interest income (the gross interest income earned by the investment of
cash collateral, less the amount paid to borrowers and related expenses) from
such activities and, with respect to loan fees paid by borrowers when a borrower
posts collateral other than cash, a fee up to 25% of such loan fees. This fee is
netted against securities lending income in the Statements of Operations. During
the six months ended April 30, 2007, securities lending fees paid to the Manager
were as follows (in thousands):
Balanced ................................................................. $22
Large Cap Growth ......................................................... 1
Mid-Cap Value ............................................................ 2
Emerging Markets ......................................................... 5
High Yield Bond .......................................................... 4
Enhanced Income .......................................................... 2
Intermediate Bond ........................................................ 3
Administrative Services Agreement
The Manager and the Trust entered into an Administrative Services Agreement
which obligates the Manager to provide or oversee administrative and management
services to the Funds. As compensation for performing the duties required under
the Administrative Services Agreement, the Manager receives an annualized fee of
0.25% of the average daily net assets of the Institutional, PlanAhead and
Service Classes of each of the Funds.
Distribution Plans
The Trust, except for the Service Class of the Funds, has adopted a
"defensive" Distribution Plan (the "Plan") in accordance with Rule 12b-1 under
the Act, pursuant to which no fees may be charged to the Funds for distribution
purposes. However, the Plan authorizes the management fees received by the
Manager and the investment advisors hired by the Manager to be used for
distribution purposes. Under this Plan, the Trust does not intend to compensate
the Manager or any other party, either directly or indirectly, for the
distribution of Trust shares.
A separate Distribution Plan (the "Distribution Plan") has been adopted
pursuant to Rule 12b-1 under the Act for the Service Class of the Funds. Under
the Distribution Plan, as compensation for distribution assistance, the Manager
receives an annual fee of 0.25% of the average daily net assets of the Service
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.
91
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
Service Plans
The Manager and the Trust entered into Service Plans that obligate the
Manager to oversee additional shareholder servicing of the PlanAhead and Service
Classes. As compensation for performing the duties required under the Service
Plans, the Manager receives 0.25% of the average daily net assets of the
PlanAhead and Service Classes of each Fund.
Brokerage Commissions
Affiliated entities of a subadvisor to the Large Cap Growth Fund and the
Emerging Markets Fund received net commissions on purchases and sales of the
Fund's portfolio securities totaling $634 and $326, respectively for the six
months ended April 30, 2007.
Investment in Affiliated Funds
The Funds are permitted, pursuant to an exemptive order by the Securities
and Exchange Commission ("SEC") and procedures approved by the Board, to invest
up to 25% of its total assets in the American Beacon Money Market Select Fund
(the "Select Fund"). Cash collateral received by certain Funds in connection
with securities lending may be invested in the Select Fund and the American
Beacon Cash Plus Trust (the "Cash Trust") (collectively, the "Affiliated
Funds"). The Funds and the Affiliated Funds have the same investment advisor and
therefore, are considered to be affiliated. The Manager serves as investment
advisor to the Affiliated Funds and receives from each Affiliated Fund an
annualized fee equal to 0.10% of its average daily net assets. During the six
months ended April 30, 2007, fees earned by the Manager from the Affiliated
Funds were as follows:
DIRECT INVESTMENT SECURITIES LENDING
IN AFFILIATED COLLATERAL INVESTED
FUNDS IN AFFILIATED FUNDS TOTAL
----------------- ------------------- --------
Balanced ..................... $36,226 $99,721 $135,947
Large Cap Growth ............. 948 5,404 6,352
Mid-Cap Value ................ 7,392 11,466 18,858
Small Cap Value Opportunity .. 66 920 986
Emerging Markets ............. 3,722 7,050 10,772
High Yield Bond .............. 9,475 -- 9,475
Enhanced Income .............. 1,708 13,296 15,004
Intermediate Bond ............ 1,558 12,202 13,760
Short-Term Bond .............. 2,524 1,484 4,008
Interfund Lending Program
Pursuant to an exemptive order by the SEC, the Funds, along with other
registered investment companies having management contracts with the Manager,
may participate in an interfund lending program as a borrower. This program
provides an alternative credit facility allowing the Funds to borrow from other
participating Funds. For the six months ended April 30, 2007, the following
Funds had borrowings:
WEIGHTED
DAYS INTEREST AVERAGE DEBT AVERAGE
OUTSTANDING CHARGES UTILIZED INTEREST RATE
----------- -------- ------------ -------------
Enhanced Income .............. 11 $4,612 $2,844,306 5.38%
Reimbursement of Expenses
The Manager agreed to reimburse the following Funds to the extent that
total annual fund operating expenses exceed the Fund's expense cap. For the
period ended April 30, 2007, the Manager waived or reimbursed expenses as
follows:
92
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
Expense Cap
-----------------
11/1/06 3/1/07 WAIVED OR
TO TO REIMBURSED
FUND CLASS 2/28/07 4/30/07 EXPENSES
- ---- ------------- ------- ------- ----------
Large Cap Growth ............. Institutional 0.90% 0.90% $ 74
Mid-Cap Value ................ Institutional 1.01% 0.90% 2,213
Mid-Cap Value ................ PlanAhead 1.23% 1.23% 13,844
Small Cap Value Opportunity .. Institutional 1.06% 1.05% 19,854
Small Cap Value Opportunity .. PlanAhead 1.31% 1.30% 571
Intermediate Bond ............ PlanAhead 0.95% N/A 783
Short-Term Bond .............. PlanAhead 0.87% 0.87% 2,081
Expense Reimbursement Plan
The Funds have adopted an Expense Reimbursement Plan whereby the Manager
may seek repayment of fees waived or expenses reimbursed for a period of up to
three years. However, reimbursement will occur only if the Class' average net
assets have grown or expenses have declined sufficiently to allow reimbursement
without causing its expense ratio to exceed the previously agreed upon
contractual expense limit.
The activity related to repayment of prior year fee waivers and expense
reimbursements during the six months ended April 30, 2007 was as follows:
Balanced- Service Class
LIABILITY LIABILITY
EXPIRATION AT AT
YEAR 10/31/06 ACCRUED EXPIRED RECOUPED 4/30/07
- ---------- --------- ------- ------- -------- ---------
2007 $ -- $-- $-- $-- $ --
2008 1,650 -- -- 77 1,573
2009 13 -- -- -- 13
------ --- --- --- ------
$1,663 $-- $-- $77 $1,586
====== === === === ======
Emerging Markets- PlanAhead Class
LIABILITY LIABILITY
EXPIRATION AT AT
YEAR 10/31/06 ACCRUED EXPIRED RECOUPED 4/30/07
- ---------- --------- ------- ------- -------- ---------
2007 $ 399 $-- $-- $399 $ --
2008 5,148 -- -- 415 4,734
2009 2,926 -- -- -- 2,926
------ --- --- ---- ------
$8,473 $-- $-- $814 $7,660
====== === === ==== ======
Mid-Cap Value- AMR Class
LIABILITY LIABILITY
EXPIRATION AT AT
YEAR 10/31/06 ACCRUED EXPIRED RECOUPED 4/30/07
- ---------- --------- ------- ------- -------- ---------
2007 $11,997 $-- $-- $6,430 $ 5,567
2008 7,258 -- -- -- 7,258
2009 2,537 -- -- -- 2,537
------- --- --- ------ -------
$21,792 $-- $-- $6,430 $15,362
======= === === ====== =======
High Yield Bond-Institutional Class
LIABILITY LIABILITY
EXPIRATION AT AT
YEAR 10/31/06 ACCRUED EXPIRED RECOUPED 4/30/07
- ---------- --------- ------- ------- -------- ---------
2007 $34,513 $-- $22,697 $9,354 $2,461
2008 62 -- -- -- 62
2009 -- -- -- --
------- --- ------- ------ ------
$34,575 $-- $22,697 $9,354 $2,524
======= === ======= ====== ======
The remaining Funds have not recorded a liability for potential
reimbursement, due to the current assessment that a reimbursement is unlikely.
93
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
Other
At April 30, 2007, AMR Corporation and subsidiary companies and employee
benefit trusts thereof owned the following percentage of each Fund:
% OWNERSHIP
-----------
Balanced ........... 79%
Large Cap Growth ... 100%
Mid-Cap Value ...... 75%
Emerging Markets ... 87%
High Yield Bond .... 28%
Intermediate Bond .. 98%
Short-Term Bond .... 90%
3. FEDERAL INCOME AND EXCISE TAXES
It is the policy of each of the Funds to comply with the requirements of
Subchapter M of the Internal Revenue Code and to distribute substantially all
net investment income as well as any net realized capital gains on the sale of
investments. Therefore, no federal income or excise tax provision is required.
Dividends are categorized in accordance with income tax regulations which
may treat certain transactions differently than U.S. generally accepted
accounting principles. Accordingly, the character of distributions and
composition of net assets for tax purposes may differ from those reflected in
the accompanying financial statements.
The tax character of distributions paid during the six months ended April
30, 2007 and fiscal year ended October 31, 2006 were as follows (in thousands):
BALANCED LARGE CAP GROWTH MID-CAP VALUE
------------------------------ ------------------------------ ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2007 2006 2007 2006 2007 2006
---------------- ----------- ---------------- ----------- ---------------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
DISTRIBUTIONS PAID FROM:
ORDINARY INCOME*
Institutional Class .......... $ 906 $ 405 $ 1 $ 1 $ 84 $ 114
PlanAhead Class .............. 3,751 2,594 -- -- 718 --
Service Class ................ 52 -- -- -- -- --
AMR Class .................... 28,153 22,546 737 376 1,844 7,556
LONG-TERM CAPITAL GAIN
Institutional Class .......... 1,156 629 -- -- 24 31
PlanAhead Class .............. 5,180 4,282 -- -- 194 --
Service Class ................ 68 -- -- -- -- --
AMR Class .................... 34,174 32,862 -- -- 485 2,057
------- ------- ---- ---- ------ ------
TOTAL DISTRIBUTIONS PAID .. $73,470 $63,318 $738 $377 $3,349 $9,758
======= ======= ==== ==== ====== ======
* For tax purposes, short-term capital gains are considered ordinary income
distributions.
94
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
SMALL CAP VALUE OPPORTUNITY EMERGING MARKETS HIGH YIELD BOND
------------------------------ ------------------------------ ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2007 2006 2007 2006 2007 2006
---------------- ----------- ---------------- ----------- ---------------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
DISTRIBUTIONS PAID FROM:
ORDINARY INCOME*
Institutional Class .......... $25 $-- $ 419 $ 416 $ 9,792 $16,799
PlanAhead Class .............. 1 -- 137 100 2,907 7,065
Service Class ................ -- -- -- -- -- 1
AMR Class .................... -- -- 3,676 3,660 -- --
LONG-TERM CAPITAL GAIN
Institutional Class .......... -- -- 2,089 1,430 -- 2,254
PlanAhead Class .............. -- -- 800 361 -- 1,092
Service Class ................ -- -- -- -- -- --
AMR Class .................... -- -- 16,722 11,913 -- --
--- --- ------- ------- ------- -------
TOTAL DISTRIBUTIONS PAID .. $26 $-- $23,843 $17,880 $12,699 $27,211
--- --- ------- ------- ------- -------
* For tax purposes, short-term capital gains are considered ordinary income
distributions.
ENHANCED INCOME INTERMEDIATE BOND SHORT-TERM BOND
------------------------------ ------------------------------ ------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31, APRIL 30, OCTOBER 31,
2007 2006 2007 2006 2007 2006
---------------- ----------- ---------------- ----------- ---------------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
DISTRIBUTIONS PAID FROM:
ORDINARY INCOME*
Institutional Class .......... $ -- $ -- $ -- $4,367 $ -- $3,409
PlanAhead Class .............. 2,367 3,905 13 41 150 375
AMR Class .................... -- -- -- -- -- --
LONG-TERM CAPITAL GAIN .......... -- 2,361 1,850
Institutional Class .......... -- -- -- -- -- --
PlanAhead Class .............. 74 14 -- -- -- --
AMR Class .................... -- -- -- -- -- --
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS PAID .. $2,441 $3,919 $2,374 $4,408 $2,000 $3,784
------ ------ ------ ------ ------ ------
* For tax purposes, short-term capital gains are considered ordinary income
distributions.
As of April 30, 2007, the components of distributable earnings on a tax basis
were as follows (in thousands):
SMALL CAP
LARGE CAP MID-CAP VALUE EMERGING
BALANCED GROWTH VALUE OPPORTUNITY MARKETS
---------- --------- -------- ----------- --------
Cost basis of investments for federal income tax purposes $1,139,877 $110,488 $169,194 $10,856 $158,967
Unrealized appreciation 178,884 10,798 15,087 855 49,807
Unrealized depreciation (5,448) (821) (2,461) (310) (2,084)
---------- -------- -------- ------- --------
Net unrealized appreciation/(depreciation) 173,436 9,977 12,626 545 47,723
Undistributed ordinary income 14,658 208 1,593 32 3,716
Undistributed long-term gain/(loss) 16,840 (1,075) 2,062 15 13,916
---------- -------- -------- ------- --------
Distributable earnings $ 204,934 $ 9,110 $ 16,821 $ 592 $ 65,355
========== ======== ======== ======= ========
95
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
HIGH YIELD ENHANCED INTERMEDIATE SHORT-TERM
BOND INCOME BOND BOND
---------- -------- ------------ ----------
Cost basis of investments for federal income tax purposes $371,275 $123,320 $126,586 $93,493
Unrealized appreciation 8,356 3,454 453 192
Unrealized depreciation (1,167) (476) (689) (989)
-------- -------- -------- -------
Net unrealized appreciation/(depreciation) 7,189 2,978 (236) (797)
Undistributed ordinary income 902 1,172 500 536
Undistributed long-term gain/(loss) (2,280) 575 (8,640) (8,734)
-------- -------- -------- -------
Distributable earnings $ 5,811 $ 4,725 $ (8,376) $(8,995)
======== ======== ======== =======
Financial reporting records are adjusted for permanent book/tax differences
to reflect tax character. Financial records are not adjusted for temporary
differences. The temporary differences between financial reporting and tax-basis
reporting of unrealized appreciation/(depreciation) are attributable primarily
to the tax deferral of losses from wash sales, the realization for tax purposes
of unrealized gains/(losses) on certain derivative instruments, book
amortization for premiums, the realization for tax purposes of unrealized
gains/(losses) on investments in passive foreign investment companies,
reclassifications of income from real estate investment securities, and income
adjustments associated with contingent payment debt instruments.
Due to inherent differences in the recognition of income, expenses and
realized gains/losses under U.S. generally accepted accounting principles and
federal income tax regulations, permanent differences between book and tax
reporting have been identified and appropriately reclassified on the Statements
of Assets and Liabilities.
Accordingly, the following amounts represent current year permanent
differences derived from reclassifications of income from real estate investment
securities, foreign currency, book amortization of premium, pay down reclasses,
income adjustments associated with contingent payment debt instruments, and
dividend reclasses that have been reclassified as of April 30, 2007 (in
thousands):
LARGE MID- SMALL CAP HIGH SHORT-
CAP CAP VALUE EMERGING YIELD ENHANCED INTERMEDIATE TERM
BALANCED GROWTH VALUE OPPORTUNITY MARKETS BOND INCOME BOND BOND
-------- ------ ----- ----------- -------- ----- -------- ------------ ------
Paid-in-capital .............. $ 1 $(3) $ (1) $-- $ -- $ 1 $(1,176) $ 3 $ 1
Undistributed net investment
income .................... 370 (1) 136 (1) (11) (1) 1,730 35 340
Accumulated net realized gain
(loss) .................... (371) 6 (135) 1 10 -- (555) (37) (341)
Unrealized appreciation
(depreciation) of
investments, futures
contracts and foreign
currency .................. -- (2) -- -- 1 -- 1 (1) --
At April 30, 2007 capital loss carry forward positions for federal income
tax purposes were as follows (in thousands):
FUND 2007 2008 2009 2010 2011 2012 2013 2014 2015 TOTAL
- ---- ------ ------ ---- ---- ---- ---- ------ ------ ---- ------
Large Cap Growth ...... $ -- $ -- $-- $401 $674 $ -- $ -- $ -- $-- $1,075
High Yield Bond ....... -- -- -- -- -- -- -- 2,280 -- 2,280
Intermediate Bond ..... -- 6,897 -- 328 -- -- 318 1,097 -- 8,640
Short-Term Bond ....... 1,991 1,218 -- 913 161 800 1,256 2,387 8 8,734
The Large Cap Growth Fund and the High Yield Bond Fund utilized 2,527 and
1,336 respectively, of net capital loss carryovers and the Short-Term Bond Fund
had $470 of expired capital loss carryovers for the six months ended April 30,
2007.
4. INVESTMENT TRANSACTIONS
The aggregate cost of purchases and proceeds from sales and maturities of
long-term investments during the six months ended April 30, 2007 were as follows
(in thousands):
96
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
SMALL
LARGE CAP HIGH SHORT
CAP MID-CAP VALUE EMERGING YIELD ENHANCED INTERMEDIATE TERM
BALANCED GROWTH VALUE OPPORTUNITY MARKETS BOND INCOME BOND BOND
-------- ------- ------- ----------- -------- -------- -------- ------------ -------
Purchases (excluding U.S.
government securities) ...... $162,812 $59,296 $56,458 $5,676 $70,345 $177,151 $48,957 $23,423 $25,969
Sales and maturities (excluding
U.S. government
securities) ................. 117,602 40,249 1,007 177 65,833 139,217 55,013 23,837 21,143
Purchases of U.S. government
securities .................. 97,048 -- -- -- -- -- 17,563 20,648 --
Sales and maturities of U.S.
government securities ....... 60,798 -- -- -- -- -- 32,049 14,579 --
A summary of the Funds' direct transactions in Affiliated Funds for the six
months ended April 30, 2007 is set forth below (in thousands):
OCTOBER 31, 2006
SHARES/MARKET APRIL 30, 2007
AFFILIATE VALUE PURCHASES SALES SHARES/MARKET VALUE
------------ ---------------- --------- -------- -------------------
Balanced ....................... Select Fund $64,379 $242,438 $235,191 $71,626
Large Cap Growth ............... Select Fund 4,783 53,008 51,989 5,802
Mid-Cap Value .................. Select Fund 15,621 94,070 92,034 17,657
Small Cap Value Opportunity .... Select Fund 49 3,880 3,886 43
Emerging Markets ............... Select Fund 8,172 47,064 48,113 7,123
High Yield Bond ................ Select Fund 13,082 118,625 111,912 19,795
Enhanced Income ................ Select Fund 11,924 36,332 41,753 6,503
Intermediate Bond .............. Select Fund 2,890 21,860 21,488 3,262
Short-Term Bond ................ Select Fund 2,054 18,097 12,373 7,778
5. SECURITIES LENDING
Each 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 and initially in an amount at least
equal to 102% of the fair value of domestic securities loaned or 105% of the
fair value of international securities loaned. Collateral is marked to market
and monitored daily. To the extent that a loan is collateralized by cash, such
collateral shall be invested by the securities lending agent (the "Agent") in
short-term instruments, money market mutual funds, and such other short-term
investments, provided the investments meet certain quality and diversification
requirements.
The Funds, the Agent and the Manager retain 65%, 25% and 10%, respectively,
of the income generated from the investment of cash collateral, less negotiated
rebate fees paid to participating brokers and transaction costs. To the extent
that a loan is secured by non-cash collateral, brokers pay the Fund negotiated
lenders' fees, which are divided between the Fund, the Agent and the Manager
65%, 25% and 10%, respectively. The Fund also continues to receive income on the
securities loaned, and any gain or loss in the market price of securities loaned
that may occur during the term of the loan.
Risks to the Fund in securities lending transactions are that the borrower
may not provide additional collateral when required or return the securities
when due, and that the value of the short-term investments will be less than the
amount of cash collateral required to be returned to the borrower.
At April 30, 2007, the value of outstanding securities on loan and the
value of collateral was as follows (in thousands):
97
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
MARKET VALUE OF NON-CASH
FUND SECURITIES ON LOAN COLLATERAL CASH COLLATERAL
- ---- ------------------ ---------- ---------------
Balanced ...................... $219,918 $18,907 $205,692
Large Cap Growth .............. 12,977 -- 13,393
Mid-Cap Value ................. 26,811 707 27,080
Small Cap Value Opportunity ... 2,176 -- 2,266
Emerging Markets .............. 17,514 347 18,227
High Yield Bond ............... 18,950 -- 19,517
Enhanced Income ............... 25,197 -- 25,731
Intermediate Bond ............. 25,396 -- 25,805
Short-Term Bond ............... 3,456 -- 3,519
Cash collateral for each Fund, other than High Yield Bond, was invested in
a joint investment account, which is comprised of an investment in the
Affiliated Funds. The allocated amounts have been included as investments in
each Fund's Schedule of Investments and Statement of Assets and Liabilities.
Income earned on these investments is reported as Income derived from securities
lending in the Statements of Operations.
Non-cash collateral received by the Funds may not be sold or repledged;
therefore, non-cash collateral is not included on the Funds' Schedule of
Investments or Statement of Assets and Liabilities.
6. CAPITAL SHARE TRANSACTIONS
The tables below summarize the activity in capital shares for each Class of
the Funds (shares and dollars in thousands):
SIX MONTHS ENDED APRIL 30, 2007
INSTITUTIONAL
CLASS PLANAHEAD CLASS SERVICE CLASS AMR CLASS
---------------- ----------------- ---------------- -----------------
BALANCED FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------- ------ ------- ------ -------- ------ ------- ------ --------
Shares sold .......................... 2,071 $32,041 4,819 $ 70,048 241 $3,427 1,762 $ 26,193
Reinvestment of dividends ............ 133 2,010 596 8,472 8 120 4,292 62,357
Shares redeemed ...................... (252) (3,880) (1,416) (20,584) (52) (744) (1,780) (26,614)
----- ------- ------ -------- --- ------ ------ --------
Net increase in shares outstanding ... 1,952 $30,171 3,999 $ 57,936 197 $2,803 4,274 $ 61,936
===== ======= ====== ======== === ====== ====== ========
INSTITUTIONAL
CLASS AMR CLASS
--------------- -----------------
LARGE CAP GROWTH FUND SHARES AMOUNT SHARES AMOUNT
- --------------------- ------ ------ ------ --------
Shares sold .......................... -- $ 1 4,285 $ 30,157
Reinvestment of dividends ............ -- 1 106 737
Shares redeemed ...................... -- (2) (2,104) (14,929)
--- --- ------ --------
Net increase in shares outstanding ... -- $-- 2,287 $ 15,965
=== === ====== ========
INSTITUTIONAL
CLASS PLANAHEAD CLASS AMR CLASS
---------------- ---------------- -----------------
MID-CAP VALUE FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------ ------ ------- ------ ------- ------ --------
Shares sold .......................... 172 $ 1,918 480 $ 5,356 4,285 $ 47,883
Reinvestment of dividends ............ 10 106 85 911 215 2,329
Shares redeemed ...................... (27) (298)* (196) (2,158)* (969) (10,954)*
--- ------- ---- ------- ----- --------
Net increase in shares outstanding ... 155 $ 1,726 369 $ 4,109 3,531 $ 39,258
=== ======= ==== ======= ===== ========
* Net of Redemption Fees
98
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
INSTITUTIONAL
CLASS PLANAHEAD CLASS
SMALL CAP VALUE OPPORTUNITY ---------------- ---------------
FUND SHARES AMOUNT SHARES AMOUNT
- --------------------------- ------ ------- ------ ------
Shares sold .................. 384 $4,129 43 $ 469
Reinvestment of dividends .... 3 25 -- 1
Shares redeemed .............. (559) (559) (12) (134)
---- ------ --- -----
Net increase (decrease) in
shares outstanding ........ (172) $3,595 31 $ 336
==== ====== === =====
INSTITUTIONAL
CLASS PLANAHEAD CLASS AMR CLASS
---------------- ---------------- -----------------
EMERGING MARKETS FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- --------------------- ------ ------- ------ ------- ------ --------
Shares sold .................. 100 $ 1,688 111 $ 1,937 871 $ 15,047
Reinvestment of dividends .... 149 2,456 56 910 1,235 20,398
Shares redeemed .............. (234) (3,930)* (88) (1,479)* (757) (13,030)*
---- ------- ---- ------- ----- --------
Net increase in shares
outstanding ............... 15 $ 214 79 $ 1,368 1,349 $ 22,415
==== ======= ==== ======= ===== ========
* Net of Redemption Fees
INSTITUTIONAL
CLASS PLANAHEAD CLASS
----------------- -----------------
HIGH YIELD BOND FUND SHARES AMOUNT SHARES AMOUNT
- -------------------- ------ -------- ------ --------
Shares sold .................. 1,462 $ 68,222 6,602 $ 15,142
Reinvestment of dividends .... 277 7,698 744 2,864
Shares redeemed .............. (1,992) (34,226) (3,306) (20,589)
------ -------- ------ --------
Net increase (decrease) in
shares outstanding ........ (253) $ 41,694 4,040 $ (2,583)
====== ======== ====== ========
PLANAHEAD CLASS
-----------------
ENHANCED INCOME FUND SHARES AMOUNT
- -------------------- ------ --------
Shares sold .................. 805 $ 8,287
Reinvestment of dividends .... 237 2,441
Shares redeemed .............. (3,537) (36,529)
------ --------
Net (decrease) in shares
outstanding ............... (2,495) $(25,801)
====== ========
INSTITUTIONAL
CLASS PLANAHEAD CLASS
----------------- -----------------
INTERMEDIATE BOND FUND SHARES AMOUNT SHARES AMOUNT
- ---------------------- ------ -------- ------ --------
Shares sold .................. 1,260 $ 12,670 7 $ 68
Reinvestment of dividends .... 235 2,361 1 12
Shares redeemed .............. (1,168) (11,722) (100) (1,015)
------ -------- ---- -------
Net increase (decrease) in
shares outstanding ........ 327 $ 3,309 (92) $ (935)
====== ======== ==== =======
INSTITUTIONAL
CLASS PLANAHEAD CLASS
----------------- -----------------
SHORT-TERM BOND FUND SHARES AMOUNT SHARES AMOUNT
- -------------------- ------ -------- ------ --------
Shares sold .................. 1,307 $11,478 248 $ 2,176
Reinvestment of dividends .... 210 1,849 17 147
Shares redeemed .............. (324) (2,839) (431) (3,792)
------ ------- ---- -------
Net increase (decrease) in
shares outstanding ........ 1,193 $10,488 (166) $(1,469)
====== ======= ==== =======
99
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2007 (UNAUDITED)
PERIOD ENDED OCTOBER 31, 2006
INSTITUTIONAL
CLASS PLANAHEAD CLASS SERVICE CLASS AMR CLASS
----------------- ----------------- --------------- -----------------
BALANCED FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------- ------ -------- ------ -------- ------ ------ ------ --------
Shares sold .................. 557 $ 8,501 3,407 $ 48,140 110 $1,538 4,199 $ 60,561
Reinvestment of dividends .... 68 982 474 6,468 -- -- 3,986 55,408
Shares redeemed .............. (139) (2,075) (2,500) (34,990) (5) (72) (3,776) (53,969)
---- ------- ------ -------- ---- ------ ------ --------
Net increase in shares
outstanding ............... 486 $ 7,408 1,381 $ 19,618 105 $1,466 4,409 $ 62,000
==== ======= ====== ======== ==== ====== ====== ========
INSTITUTIONAL
CLASS AMR CLASS
----------------- -----------------
LARGE CAP GROWTH FUND SHARES AMOUNT SHARES AMOUNT
- --------------------- ------ -------- ------ --------
Shares sold .................. 3 $ 17 3,677 $ 24,227
Reinvestment of dividends .... -- 1 57 375
Shares redeemed .............. (4) (25) (2,103) (13,807)
--- ---- ------ --------
Net increase (decrease) in
shares outstanding ........ (1) $ (7) 1,631 $ 10,795
=== ==== ====== ========
INSTITUTIONAL
CLASS PLANAHEAD CLASS AMR CLASS
----------------- ----------------- -----------------
MID-CAP VALUE FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ------------------ ------ -------- ------ -------- ------ --------
Shares sold .................. 379 $3,963 2,542 $26,510 2,787 $ 29,122
Reinvestment of dividends .... 15 142 -- -- 1,008 9,614
Shares redeemed .............. (80) (910)* (20) (213)* (1,477) (15,316)*
---- ------ ----- ------- ------ --------
Net increase in shares
outstanding ............... 314 $3,195 2,522 $26,297 2,318 $ 23,420
==== ====== ===== ======= ====== ========
* Net of Redemption Fees
INSTITUTIONAL
CLASS PLANAHEAD CLASS
SMALL CAP VALUE OPPORTUNITY ----------------- -----------------
FUND SHARES AMOUNT SHARES AMOUNT
- --------------------------- ------ -------- ------ --------
Shares sold .................. 460 $4,562 8 $ 82
Reinvestment of dividends .... -- -- -- --
Shares redeemed .............. (3) (28) (2) (15)
--- ------ --- ----
Net increase in shares
outstanding ............... 457 $4,534 6 $ 67
=== ====== === ====
INSTITUTIONAL
CLASS PLANAHEAD CLASS AMR CLASS
----------------- ----------------- -----------------
EMERGING MARKETS FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- --------------------- ------ -------- ------ -------- ------ --------
Shares sold .................. 385 $ 6,392 304 $ 4,929 1,407 $ 22,888
Reinvestment of dividends .... 123 1,788 30 434 1,066 15,573
Shares redeemed .............. (176) (2,856)* (168) (2,645)* (1,016) (16,536)*
---- ------- ---- ------- ------ --------
Net increase in shares
outstanding ............... 332 $ 5,324 166 $ 2,718 1,457 $ 21,925
==== ======= ==== ======= ====== ========
* Net of Redemption Fees
INSTITUTIONAL CLASS PLANAHEAD CLASS SERVICE CLASS
------------------- ----------------- ---------------
HIGH YIELD BOND FUND SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- -------------------- ------- --------- ------ -------- ------ ------
Shares sold .................. 12,050 $ 121,776 3,864 $ 39,258 4 $ 41
Reinvestment of dividends .... 1,484 15,060 798 8,106 -- 1
Shares redeemed .............. (12,034) (121,828) (8,570) (87,093) (4) (44)
------- --------- ------ -------- --- ----
Net increase (decrease) in
shares outstanding ........ 1,500 $ 15,008 (3,908) $(39,729) -- $ (2)
======= ========= ====== ======== === ====
100
AMERICAN BEACON FUNDS
NOTES TO FINANCIAL STATEMENTS - CONTINUED
October 31, 2006
PLANAHEAD CLASS
-------------------
ENHANCED INCOME FUND SHARES AMOUNT
- -------------------- ------- ---------
Shares sold .................. 3,012 $ 30,206
Reinvestment of dividends .... 389 3,919
Shares redeemed .............. (2,376) (23,955)
------ --------
Net increase in shares
outstanding ............... 1,025 $ 10,170
====== ========
INSTITUTIONAL CLASS PLANAHEAD CLASS
------------------- ---------------
INTERMEDIATE BOND FUND SHARES AMOUNT SHARES AMOUNT
- ---------------------- ------- --------- ------ ------
Shares sold .................. 1,863 $ 18,474 8 $ 84
Reinvestment of dividends .... 440 4,367 4 38
Shares redeemed .............. (1,912) (18,979) (25) (250)
------ -------- --- -----
Net increase (decrease) in
shares outstanding ........ 391 $ 3,862 (13) $(128)
====== ======== === =====
INSTITUTIONAL CLASS PLANAHEAD CLASS
------------------- -----------------
SHORT-TERM BOND FUND SHARES AMOUNT SHARES AMOUNT
- -------------------- ------- --------- ------ --------
Shares sold .................. 724 $ 6,305 825 $ 7,202
Reinvestment of dividends .... 391 3,407 42 368
Shares redeemed .............. (1,819) (15,869) (1,024) (8,943)
------ -------- ------ -------
Net (decrease) in shares
outstanding ............... (704) $ (6,157) (157) $(1,373)
====== ======== ====== =======
101
AMERICAN BEACON BALANCED FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class
-------------------------------------------------------
Six Months
Ended Year Ended October 31
April 30, ------------------------------------------
2007 2006 2005 2004 2003 2002
----------- ------- ------- ------ ------ ------
(unaudited)
Net asset value, beginning of
period .................... $ 15.83 $ 15.00 $ 14.31 $12.99 $10.97 $12.07
------- ------- ------- ------ ------ ------
Income from investment
operations:
Net investment
income(A), (B) ......... 0.26 0.39 0.36 0.29 0.31(C) 0.11
Net gains (losses) on
securities (both
realized and
unrealized)(B) ......... 0.91 1.54 1.11 1.36 1.84(C) (0.69)
------- ------- ------- ------ ------ ------
Total income (loss) from
investment operations ..... 1.17 1.93 1.47 1.65 2.15 (0.58)
------- ------- ------- ------ ------ ------
Less distributions:
Dividends from net
investment income ...... (0.42) (0.38) (0.31) (0.33) (0.13) (0.44)
Distributions from net
realized gains on
securities ............. (0.72) (0.72) (0.47) -- -- (0.08)
------- ------- ------- ------ ------ ------
Total distributions .......... (1.14) (1.10) (0.78) (0.33) (0.13) (0.52)
------- ------- ------- ------ ------ ------
Net asset value,
end of period ............. $ 15.86 $ 15.83 $ 15.00 $14.31 $12.99 $10.97
======= ======= ======= ====== ====== ======
Total return ................. 7.75%(D) 13.60% 10.53% 10.53% 19.77% (5.14)%
======= ======= ======= ====== ====== ======
Ratios and supplemental data:
Net assets, end of period
(in thousands) ............ $53,590 $22,587 $14,122 $8,378 $9,041 $8,994
Ratios to average net
assets (annualized):
Expenses, net of
waivers(B) ............. 0.56% 0.59% 0.56% 0.63% 0.63% 0.62%
Expenses, before
waivers(B) ............. 0.56% 0.59% 0.56% 0.63% 0.63% 0.62%
Net investment income, net
of waivers(B) .......... 2.88% 2.81% 2.45% 2.15% 2.74% 3.12%
Net investment income
(loss), before
waivers(B) ............. 2.88% 2.81% 2.45% 2.15% 2.74% 3.12%
Portfolio turnover
rate(F) ................ 19%(D) 59% 58% 62% 69% 84%
PlanAhead Class
-----------------------------------------------------------
Six Months
Ended Year Ended October 31
April 30, ----------------------------------------------
2007 2006 2005 2004 2003 2002
----------- -------- ------- ------- ------- -------
(unaudited)
Net asset value, beginning of
period .................... $ 14.91 $ 14.20 $ 13.62 $ 12.40 $ 10.81 $ 11.88
-------- -------- ------- ------- ------- -------
Income from investment
operations:
Net investment
income(A), (B) ......... 0.22 0.35 0.34 0.27 0.28(C) 0.41
Net gains (losses) on
securities (both
realized and
unrealized)(B) ......... 0.86 1.44 1.01 1.25 1.74(C) (0.99)
-------- -------- ------- ------- ------- -------
Total income (loss) from
investment operations ..... 1.08 1.79 1.35 1.52 2.02 (0.58)
-------- -------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment income ...... (0.38) (0.36) (0.30) (0.30) (0.43) (0.41)
Distributions from net
realized gains on
securities ............. (0.72) (0.72) (0.47) -- -- (0.08)
-------- -------- ------- ------- ------- -------
Total distributions .......... (1.10) (1.08) (0.77) (0.30) (0.43) (0.49)
-------- -------- ------- ------- ------- -------
Net asset value,
end of period ............. $ 14.89 $ 14.91 $ 14.20 $ 13.62 $ 12.40 $ 10.81
======== ======== ======= ======= ======= =======
Total return ................. 7.61%(D) 13.31% 10.12% 12.44% 19.36% (5.18)%
======== ======== ======= ======= ======= =======
Ratios and supplemental data:
Net assets, end of period
(in thousands) ............ $171,226 $111,837 $86,875 $21,571 $13,332 $10,561
Ratios to average net
assets (annualized):
Expenses, net of
waivers(B) ............. 0.83% 0.85% 0.86% 0.93% 0.94% 0.90%
Expenses, before
waivers(B) ............. 0.83% 0.85% 0.86% 0.93% 0.94% 0.90%
Net investment income, net
of waivers(B) .......... 2.64% 2.55% 2.14% 1.84% 2.40% 2.83%
Net investment income
(loss), before
waivers(B) ............. 2.64% 2.55% 2.14% 1.84% 2.40% 2.83%
Portfolio turnover
rate(F) ................ 19%(D) 59% 58% 62% 69% 84%
(A) Class expenses per share were subtracted from net investment income per
share for the Fund before class expenses to determine net investment per
share.
(B) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the AMR Investment Services Balanced Portfolio through February 28, 2002.
(C) For the year ended October 31, 2003, the net investment income and net
gains (losses) on securities (both realized and unrealized) has been
restated 0.30 and 1.85, respectively for Institutional Class and 0.36 and
1.66, respectively for PlanAhead Class.
(D) Not annualized.
(F) The Balanced Fund invested all of its investable assets in its
corresponding Portfolio through February 28, 2002. Portfolio turnover rate
through February 28, 2002 was that of the Portfolio.
(E) Annualized.
(G) Portfolio turnover rate is for the period from November 1, 2004 through
October 31, 2005.
102
Service Class AMR Class
------------------------------- -------------------------------------------------------------
Six Months Year May 31 Six Months
Ended Ended to Ended Year Ended October 31
April 30, October October April 30, ------------------------------------------------
2007 31, 2006 31, 2005 2007 2006 2005 2004 2003 2002
----------- -------- -------- ----------- -------- -------- -------- -------- --------
(unaudited) (unaudited)
Net asset value, beginning of
period .................... $14.83 $14.16 $ 13.96 $ 15.27 $ 14.49 $ 13.87 $ 12.60 $ 10.98 $ 12.06
------ ------ -------- -------- -------- -------- -------- -------- --------
Income from investment
operations:
Net investment
income(A), (B) ......... 0.31 0.38 0.09 0.25 0.45 0.39 0.32 0.34 0.48
Net gains (losses) on
securities (both
realized and
unrealized)(B) ......... 0.74 1.35 0.11 0.89 1.46 1.05 1.31 1.78 (1.01)
------ ------ -------- -------- -------- -------- -------- -------- --------
Total income (loss) from
investment operations ..... 1.05 1.73 0.20 1.14 1.91 1.44 1.63 2.12 (0.53)
------ ------ -------- -------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net
investment income ...... (0.40) (0.34) -- 0.45 (0.41) (0.35) (0.36) (0.50) (0.47)
Distributions from net
realized gains on
securities ............. (0.72) (0.72) -- (0.72) (0.72) (0.47) -- -- (0.08)
------ ------ -------- -------- -------- -------- -------- -------- --------
Total distributions .......... (1.12) (1.06) -- (1.17) (1.13) (0.82) (0.36) (0.50) (0.55)
------ ------ -------- -------- -------- -------- -------- -------- --------
Net asset value,
end of period ............. $14.76 $14.83 $ 14.16 $ 15.24 $ 15.27 $ 14.49 $ 13.87 $ 12.60 $ 10.98
====== ====== ======== ======== ======== ======== ======== ======== ========
Total return ................. 7.45%(D) 13.01% 1.43%(D) 7.83%(D) 13.98% 10.63% 13.13% 20.06% (4.71)%
====== ====== ======== ======== ======== ======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period
(in thousands) ............ $4,468 $1,562 $ 1 $881,290 $817,333 $712,073 $636,420 $557,612 $487,526
Ratios to average net
assets (annualized):
Expenses, net of
waivers(B) ............. 1.09% 1.22% 1.09%(E) 0.31% 0.33% 0.33% 0.37% 0.38% 0.35%
Expenses, before
waivers(B) ............. 1.06% 1.22% 360.24%(E) 0.31% 0.33% 0.33% 0.37% 0.38% 0.35%
Net investment income, net
of waivers(B) .......... 2.32% 2.18% 1.52%(E) 3.18% 3.08% 2.70% 2.40% 2.98% 3.39%
Net investment income
(loss), before
waivers(B) ............. 2.36% 2.17% (357.63)%(E) 3.18% 3.08% 2.70% 2.40% 2.98% 3.39%
Portfolio turnover
rate(F) ................ 19%(D) 59% 58%(G) 19%(D) 59% 58% 62% 69% 84%
103
AMERICAN BEACON LARGE CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class
-------------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, -----------------------------------------------
2007 2006 2005 2004 2003 2002
----------- ------ ------- -------- ------ --------
(unaudited)
Net asset value, beginning of period ............. $ 6.89 $ 6.18 $ 5.82 $ 5.47 $ 4.53 $ 5.66
------ ------ ------ ------- ------ --------
Income from investment operations:
Net investment income(A) ...................... 0.02 0.04 0.04 0.02 0.02 0.03
Net gains (losses) on securities (both
realized and unrealized)(A) ................ 0.39 0.70 0.37 0.35 0.94 (1.16)
------ ------ ------ ------- ------ --------
Total income (loss) from investment operations ... 0.41 0.74 0.41 0.37 0.96 (1.13)
------ ------ ------ ------- ------ --------
Less distributions:
Dividends from net investment income .......... (0.03) (0.03) (0.05) (0.02) (0.02) --
Distributions from net realized gains on
securities ................................. -- -- -- -- -- --
------ ------ ------ ------- ------ --------
Total distributions .............................. (0.03) (0.03) (0.05) (0.02) (0.02) --
------ ------ ------ ------- ------ --------
Net asset value, end of period ................... $ 7.27 $ 6.89 $ 6.18 $ 5.82 $ 5.47 $ 4.53
====== ====== ====== ======= ====== ========
Total return ..................................... 6.00%(B) 12.04% 7.06% 6.71% 21.15% (19.96)%
====== ====== ====== ======= ====== ========
Ratios and supplemental data:
Net assets, end of period (in thousands) ...... $ 116 $ 110 $ 105 $ 1 $ 1 $ 1
Ratios to average net assets (annualized):(A)
Expenses, net of waivers ...................... 0.90% 0.90% 0.89% 0.84% 0.87% 0.87%
Expenses, before waivers ...................... 1.03% 0.99% 4.64% 13.22% 0.87% 0.87%
Net investment income (loss), net of waivers .. 0.74% 0.56% (0.18)% 0.18% 0.18% 0.06%
Net investment income (loss), before waivers .. 0.61% 0.48% (3.93)% (12.20)% 0.18% 0.06%
Portfolio turnover rate(C) .................... 46%(B) 181% 164% 131% 138% 135%
(A) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the AMR Investment Services Large Cap Growth Portfolio through February 28,
2002.
(B) Not annualized.
(C) The Large Cap Growth Fund invested all of its investable assets in its
corresponding Portfolio through February 28, 2002. Portfolio turnover rate
through February 28, 2002 was that of the Portfolio.
104
AMR Class
------------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, ----------------------------------------------
2007 2006 2005 2004 2003 2002
----------- ------- ------- ------- ------ -------
(unaudited)
Net asset value, beginning of period ............. $ 6.95 $ 6.21 $ 5.84 $ 5.48 $ 4.54 $ 5.67
-------- ------- ------- ------- ------ -------
Income from investment operations:
Net investment income(A) ...................... 0.04 0.05 0.06 0.02 0.02 0.02
Net gains (losses) on securities (both
realized and unrealized)(A) ................ 0.38 0.73 0.36 0.36 0.93 (1.14)
-------- ------- ------- ------- ------ -------
Total income (loss) from investment operations ... 0.42 0.78 0.42 0.38 0.95 (1.12)
-------- ------- ------- ------- ------ -------
Less distributions:
Dividends from net investment income .......... (0.06) (0.04) (0.05) (0.02) (0.01) (0.01)
Distributions from net realized gains on
securities ................................. -- -- -- -- -- --
-------- ------- ------- ------- ------ -------
Total distributions .............................. (0.06) (0.04) (0.05) (0.02) (0.01) (0.01)
-------- ------- ------- ------- ------ -------
Net asset value, end of period ................... $ 7.31 $ 6.95 $ 6.21 $ 5.84 $ 5.48 $ 4.54
======== ======= ======= ======= ====== =======
Total return ..................................... 6.12%(B) 12.52% 7.22% 6.88% 21.09% (19.85)%
======== ======= ======= ======= ====== =======
Ratios and supplemental data:
Net assets, end of period (in thousands) ...... $103,061 $82,042 $63,183 $55,121 $48,926 $28,017
Ratios to average net assets (annualized):(A)
Expenses, net of waivers ...................... 0.60% 0.59% 0.64% 0.71% 0.68% 0.67%
Expenses, before waivers ...................... 0.60% 0.59% 0.64% 0.71% 0.68% 0.67%
Net investment income (loss), net of waivers .. 1.01% 0.88% 0.98% 0.34% 0.40% 0.30%
Net investment income (loss), before waivers .. 1.01% 0.88% 0.98% 0.34% 0.40% 0.30%
Portfolio turnover rate(C) .................... 46%(B) 181% 164% 131% 138% 135%
105
AMERICAN BEACON FUNDS MID-CAP VALUE FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class PlanAhead Class
----------------------------------- -----------------------------------
Six Months Ended November 30 to Six Months Ended February 28 to
April 30, 2007 October 31, 2006 April 30, 2007 October 31, 2006
---------------- ---------------- ---------------- ----------------
(unaudited) (unaudited)
Net asset value, beginning of period ........ $10.81 $12.09 $ 10.80 $ 9.80
------ ------ ------- -------
Income from investment operations:
Net investment income .................... 0.07 0.21 0.06 0.01
Net gains on securities (both realized and
unrealized) ........................... 1.03 1.25 1.02 0.99
------ ------ ------- -------
Total income from investment operations ..... 1.10 1.46 1.08 1.00
------ ------ ------- -------
Less distributions:
Dividends from net investment income ..... (0.07) (0.16) (0.08) --
Distributions from net realized gains on
securities ............................ (0.26) (2.58) (0.26) --
------ ------ ------- -------
Total distributions ......................... (0.33) (2.74) (0.34) --
------ ------ ------- -------
Redemption fees added to beneficial
interests ................................ -- -- -- --
Net asset value, end of period .............. $11.58 $10.81 $ 11.54 $ 10.80
====== ====== ======= =======
Total return ................................ 10.39%(C) 15.30% 10.22%(C) 10.20%
====== ====== ======= =======
Ratios and supplemental data:
Net assets, end of period (in
thousands) ............................ $5,427 $3,396 $33,361 $27,240
Ratios to average net assets (annualized):
Expenses, net of waivers ................. 0.94% 1.19% 1.21% 1.49%
Expenses, before waivers ................. 1.04% 1.19% 1.30% 1.61%
Net investment income, net of waivers .... 1.34% 1.11% 1.09% 0.57%
Net investment income, before waivers .... 1.24% 1.11% 0.99% 0.44%
Portfolio turnover rate .................. 9% 42%(E) 9% 42%(E)
(A) On November 30, 2005, the Mid-Cap Value Fund's Institutional Class of
shares was renamed the AMR Class and the Fund began offering a new class of
shares known as the Institutional Class.
(B) Based on average shares outstanding.
(C) Not annualized.
(D) Annualized.
(E) Portfolio turnover rate is for the period from November 1, 2005 through
October 31, 2006.
106
AMR Class (formerly Institutional
Class prior to December 1, 2005)(A)
----------------------------------------------------
Year Ended
October 31 June 30 to
Six Months Ended ------------------- October 31
April 30, 2007 2006 2005 31, 2004
---------------- -------- -------- -----------
(unaudited)
Net asset value, beginning of period ........ $ 10.87 $ 11.72 $ 10.27 $ 10.00
-------- ------- ------- -------
Income from investment operations:
Net investment income .................... 0.07 0.12 0.13 0.02(B)
Net gains on securities (both realized and
unrealized) ........................... 1.03 1.75 1.37 0.25
-------- ------- ------- -------
Total income from investment operations ..... 1.10 1.87 1.50 0.27
-------- ------- ------- -------
Less distributions:
Dividends from net investment income ..... (0.08) (0.14) (0.05) --
Distributions from net realized gains on
securities ............................ (0.26) (2.58) -- --
-------- ------- ------- -------
Total distributions ......................... (0.34) (2.72) (0.05) --
-------- ------- ------- -------
Redemption fees added to beneficial
interests ................................ -- -- -- --
Net asset value, end of period .............. $ 11.63 $ 10.87 $ 11.72 $ 10.27
======== ======= ======= =======
Total return ................................ 10.41%(C) 19.16% 14.63% 2.70%(C)
======== ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in
thousands) ............................ $112,012 $66,290 $44,342 $25,546
Ratios to average net assets (annualized):
Expenses, net of waivers ................. 0.78% 0.97% 1.01% 1.14%(D)
Expenses, before waivers ................. 0.78% 0.92% 1.02% 1.34%(D)
Net investment income, net of waivers .... 1.49% 1.38% 0.92% 0.73%(D)
Net investment income, before waivers .... 1.49% 1.42% 0.91% 0.53%(D)
Portfolio turnover rate .................. 9% 42% 298% 6%(C)
107
AMERICAN BEACON FUNDS SMALL CAP VALUE OPPORTUNITY FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class
--------------------------------------
Six Months Ended March 31 to
April 30, 2007 October 31, 2006(A)
---------------- -------------------
(unaudited)
Net asset value, beginning of period ........ $10.26 $10.00
------ ------
Income from investment operations:
Net investment income .................... 0.03 0.01
Net gains on securities (both realized and
unrealized) ........................... 0.75 0.25
------ ------
Total income from investment operations ..... 0.78 0.26
------ ------
Less distributions:
Dividends from net investment income ..... (0.03) --
Distributions from net realized gains on
securities ............................ (0.01) --
------ ------
Total distributions ......................... (0.04) --
------ ------
Net asset value, end of period .............. $11.00 $10.26
====== ======
Total return ................................ 7.64%(B) 2.60%
====== ======
Ratios and supplemental data:
Net assets, end of period
(in thousands) ........................ $8,708 $4,693
Ratios to average net assets (annualized):
Expenses, net of waivers ................. 1.05% 1.03%
Expenses, before waivers ................. 1.60% 6.12%
Net investment income, net of waivers .... 0.61% 0.30%
Net investment income (loss), before
waivers ............................... 0.06% (4.80)%
Portfolio turnover rate .................. 24%(B) 32%
(A) March 31, 2006 is the inception date of the Small Cap Value Opportunity
Fund.
(B) Not annualized.
108
PlanAhead Class
--------------------------------------
Six Months Ended March 31 to
April 30, 2007 October 31, 2006(A)
---------------- -------------------
(unaudited)
Net asset value, beginning of period ........ $10.26 $ 10.00
Income from investment operations:
Net investment income .................... 0.06 0.01
Net gains on securities (both realized and
unrealized) ........................... 0.69 0.25
------ -------
Total income from investment operations ..... 0.75 0.26
------ -------
Less distributions:
Dividends from net investment income ..... (0.06) --
Distributions from net realized gains on
securities ............................ (0.01) --
------ -------
Total distributions ......................... (0.07) --
------ -------
Net asset value, end of period .............. $10.94 $ 10.26
====== =======
Total return ................................ 7.44%(B) 2.60%
====== =======
Ratios and supplemental data:
Net assets, end of period
(in thousands) ........................ $ 413 $ 70
Ratios to average net assets (annualized):
Expenses, net of waivers ................. 1.29% 1.28%
Expenses, before waivers ................. 1.81% 20.05%
Net investment income, net of waivers .... 0.30% 0.21%
Net investment income (loss), before
waivers ............................... (0.22)% (18.56)%
Portfolio turnover rate .................. 24%(B) 32%
109
AMERICAN BEACON FUNDS EMERGING MARKETS FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class
--------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, -------------------------------------------
2007 2006 2005 2004 2003 2002
----------- ------- ------ ------ ------ ------
(unaudited)
Net asset value, beginning of
period .......................... $ 17.42 $ 15.10 $12.64 $10.62 $ 7.20 $ 6.64
------- ------- ------ ------ ------ ------
Income from investment operations:
Net investment income(A) ........ 0.06 0.11 0.15 0.07 0.04 0.09
Net gains on securities (both
realized and unrealized)(A) .. 3.03 4.63 3.45 2.01 3.43 0.56
------- ------- ------ ------ ------ ------
Total income from investment
operations ...................... 3.09 4.74 3.60 2.08 3.47 0.65
------- ------- ------ ------ ------ ------
Less distributions:
Dividends from net investment
income ....................... (0.10) (0.21) (0.06) (0.06) (0.05) (0.09)
Distributions from net realized
gains on Securities .......... (2.49) (2.21) (1.08) -- -- --
------- ------- ------ ------ ------ ------
Total distributions ................ (2.59) (2.42) (1.14) (0.06) (0.05) (0.09)
------- ------- ------ ------ ------ ------
Redemption fees added to beneficial
Interests ....................... --(B) -- --(B) --(B) -- --
Net asset value, end of period ..... $ 17.92 $ 17.42 $15.10 $12.64 $10.62 $ 7.20
======= ======= ====== ====== ====== ======
Total return ....................... 18.76%(C) 34.49% 30.11% 19.65% 48.45% 9.80%
======= ======= ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in
thousands) ................... $17,301 $16,552 $9,348 $7,282 $3,557 $1,769
Ratios to average net assets
(annualized):
Expenses, net of waivers(A) ..... 1.50% 1.56% 1.52% 1.85% 1.76% 1.51%
Expenses, before waivers(A) ..... 1.50% 1.56% 1.52% 1.85% 1.76% 1.51%
Net investment income (loss), net
of waivers(A) ................ 0.64% 0.80% 1.22% 0.74% 0.62% 1.11%
Net investment income (loss),
before waivers(A) ............ 0.64% 0.80% 1.22% 0.74% 0.62% 1.11%
Portfolio turnover rate(E) ...... 40%(C) 67% 63% 76% 80% 94%
(A) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the AMR Investment Services Emerging Markets Portfolio through February 28,
2002.
(B) Amounts represent less than $0.01 per share.
(C) Not annualized.
(D) Annualized.
(E) The Emerging Markets Fund invested all of its investable assets in its
corresponding Portfolio through February 28, 2002. Portfolio turnover rate
through February 28, 2002 was that of the Portfolio.
(F) Portfolio turnover rate is for the period from November 1, 2001 through
October 31, 2002.
110
PlanAhead Class
-----------------------------------------------------------
Six
Months October
Ended Year Ended October 31 01 to
April 30, ---------------------------------- October
2007 2006 2005 2004 2003 31, 2002
----------- ------ ------ ------ ------ --------
(unaudited)
Net asset value, beginning of
period .......................... $ 17.22 $14.98 $12.53 $10.55 $ 7.19 $ 6.86
------- ------ ------ ------ ------ ------
Income from investment operations:
Net investment income(A) ........ 0.02 0.09 0.15 0.04 0.09 --
Net gains on securities (both
realized and unrealized)(A) .. 3.02 4.55 3.41 1.99 3.34 0.33
------- ------ ------ ------ ------ ------
Total income from investment
operations ...................... 3.04 4.64 3.56 2.03 3.43 0.33
------- ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income ....................... (0.04) (0.19) (0.03) (0.05) (0.07) --
Distributions from net realized
gains on Securities .......... (2.49) (2.21) (1.08) -- -- --
------- ------ ------ ------ ------ ------
Total distributions ................ (2.53) (2.40) (1.11) (0.05) (0.07) --
------- ------ ------ ------ ------ ------
Redemption fees added to beneficial
Interests ....................... --(B) -- --(B) --(B) --(B) --
Net asset value, end of period ..... $ 17.73 $17.22 $14.98 $12.53 $10.55 $ 7.19
======= ====== ====== ====== ====== ======
Total return ....................... 18.52%(C) 34.16% 29.95% 19.33% 48.07% 4.81%(C)
======= ====== ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in
thousands) ................... $ 7,417 $5,841 $2,592 $1,214 $ 492 $ 1
Ratios to average net assets
(annualized):
Expenses, net of waivers(A) ..... 1.85% 2.04% 1.75% 2.14% 2.08% 1.87%(D)
Expenses, before waivers(A) ..... 1.85% 1.91% 2.01% 2.20% 2.08% 1.87%(D)
Net investment income (loss), net
of waivers(A) ................ 0.32% 0.49% 1.16% 0.37% 0.57% (0.25)%(D)
Net investment income (loss),
before waivers(A) ............ 0.32% 0.62% 0.90% 0.31% 0.57% (0.25)%(D)
Portfolio turnover rate(E) ...... 40%(C) 67% 63% 76% 80% 94%(F)
AMR Class
---------------------------------------------------------
Six
Months
Ended Year Ended October 31
April --------------------------------------------
30, 2007 2006 2005 2004 2003 2002
----------- -------- ------- ------- ------- -------
(unaudited)
Net asset value, beginning of
period .......................... $ 17.52 $ 15.17 $ 12.68 $ 10.66 $ 7.22 $ 6.65
-------- -------- ------- ------- ------- -------
Income from investment operations:
Net investment income(A) ........ 0.07 0.15 0.24 0.10 0.07 0.09
Net gains on securities (both
realized and unrealized)(A) .. 3.08 4.65 3.42 2.00 3.44 0.59
-------- -------- ------- ------- ------- -------
Total income from investment
operations ...................... 3.15 4.80 3.66 2.10 3.51 0.68
-------- -------- ------- ------- ------- -------
Less distributions:
Dividends from net investment
income ....................... (0.15) (0.24) (0.09) (0.08) (0.07) (0.11)
Distributions from net realized
gains on Securities .......... (2.49) (2.21) (1.08) -- -- --
-------- -------- ------- ------- ------- -------
Total distributions ................ (2.64) (2.45) (1.17) (0.08) (0.07) (0.11)
-------- -------- ------- ------- ------- -------
Redemption fees added to beneficial
Interests ....................... --(B) -- -- -- -- --
Net asset value, end of period ..... $ 18.03 $ 17.52 $ 15.17 $ 12.68 $ 10.66 $ 7.22
======== ======== ======= ======= ======= =======
Total return ....................... 18.86%(C) 34.87% 30.43% 20.00% 48.84% 10.10%
======== ======== ======= ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in
thousands) ................... $163,364 $135,146 $94,864 $74,199 $51,498 $32,731
Ratios to average net assets
(annualized):
Expenses, net of waivers(A) ..... 1.23% 1.30% 1.25% 1.59% 1.50% 1.26%
Expenses, before waivers(A) ..... 1.23% 1.30% 1.25% 1.59% 1.50% 1.26%
Net investment income (loss), net
of waivers(A) ................ 0.93% 1.01% 1.60% 1.01% 0.92% 1.35%
Net investment income (loss),
before waivers(A) ............ 0.93% 1.01% 1.60% 1.01% 0.92% 1.35%
Portfolio turnover rate(E) ...... 40%(C) 67% 63% 76% 80% 94%
111
AMERICAN BEACON FUNDS HIGH YIELD BOND FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class
-------------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, ------------------------------------------------
2007 2006(A) 2005 2004 2003 2002
---------- -------- -------- -------- -------- --------
(unaudited)
Net asset value, beginning of period ............ $ 10.20 $ 10.22 $ 10.86 $ 10.73 $ 9.63 $ 9.82
-------- -------- -------- -------- -------- --------
Income from investment operations:
Net investment income ........................ 0.40 0.88 0.76 0.78 0.78 0.80
Net gains (losses) on securities
(both realized and unrealized) ............ 0.24 0.09 (0.84) 0.27 1.10 (0.19)
-------- -------- -------- -------- -------- --------
Total income (loss) from investment operations .. 0.64 0.97 (0.08) 1.05 1.88 0.61
-------- -------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ......... (0.40) (0.88) (0.76) (0.78) (0.78) (0.80)
Distributions from net realized gains
on securities ............................. -- (0.11) 0.20 (0.14) -- --
-------- -------- -------- -------- -------- --------
Total distributions ............................. (0.40) (0.99) (0.56) (0.92) (0.78) (0.80)
-------- -------- -------- -------- -------- --------
Net asset value, end of period .................. $ 10.44 $ 10.20 $ 10.22 $ 10.86 $ 10.73 $ 9.63
======== ======== ======== ======== ======== ========
Total return .................................... 6.32%(B) 8.78% 3.03% 10.19% 20.11% 6.28%
======== ======== ======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (in thousands) ..... $279,428 $231,693 $216,744 $241,777 $161,380 $104,813
Ratios to average net assets (annualized):
Expenses, net of waivers ..................... 0.84% 0.85% 0.84% 0.88% 0.90% 0.90%
Expenses, before waivers ..................... 0.85% 0.85% 0.84% 0.92% 1.00% 0.98%
Net investment income, net of waivers ........ 7.71% 7.55% 7.24% 7.27% 7.51% 8.02%
Net investment income, before waivers ........ 7.69% 7.55% 7.24% 7.23% 7.41% 7.94%
Portfolio turnover rate ...................... 44%(B) 88% 128% 138% 114% 163%
(A) Franklin Advisers, Inc. was added as an investment advisor to the Heigh
Yield Bond Fund on September 12, 2006.
(B) Not annualized.
(C) Annualized.
(D) Portfolio turnover rate is for the period from November 1, 2001 through
October 31, 2002.
112
PlanAhead Class
--------------------------------------------------------------
Six
Months March
Ended Year Ended October 31 01 to
April 30, ------------------------------------- October
2007 2006A 2005 2004 2003 31, 2002
---------- ------- -------- -------- -------- --------
(unaudited)
Net asset value, beginning of period ............ $ 10.21 $ 10.22 $ 10.87 $ 10.73 $ 9.63 $10.10
------- ------- -------- -------- -------- ------
Income from investment operations:
Net investment income ........................ 0.39 0.85 0.74 0.74 0.75 0.50
Net gains (losses) on securities
(both realized and unrealized) ............ 0.24 0.10 (0.85) 0.28 1.10 (0.47)
------- ------- -------- -------- -------- ------
Total income (loss) from investment operations .. 0.63 0.95 (0.11) 1.02 1.85 0.03
------- ------- -------- -------- -------- ------
Less distributions:
Dividends from net investment income ......... (0.39) (0.85) (0.74) (0.74) (0.75) (0.50)
Distributions from net realized gains
on securities ............................. -- (0.11) 0.20 (0.14) -- --
------- ------- -------- -------- -------- ------
Total distributions ............................. (0.39) (0.96) (0.54) (0.88) (0.75) (0.50)
------- ------- -------- -------- -------- ------
Net asset value, end of period .................. $ 10.45 $ 10.21 $ 10.22 $ 10.87 $ 10.73 $ 9.63
======= ======= ======== ======== ======== ======
Total return .................................... 6.20%(B) 8.63% 2.69% 9.94% 19.57%(B) (0.26)%(B)
======= ======= ======== ======== ======== ======
Ratios and supplemental data:
Net assets, end of period (in thousands) ..... $79,551 $80,284 $120,360 $148,266 $125,654 $4,029
Ratios to average net assets (annualized):
Expenses, net of waivers ..................... 1.08% 1.08% 1.08% 1.20% 1.24% 1.27%(C)
Expenses, before waivers ..................... 1.08% 1.08% 1.08% 1.20% 1.24% 1.27%(C)
Net investment income, net of waivers ........ 7.48% 7.33% 7.00% 6.95% 7.11% 7.20%(C)
Net investment income, before waivers ........ 7.48% 7.33% 7.00% 6.95% 7.11% 7.20%(C)
Portfolio turnover rate ...................... 44%(B) 88% 128% 138% 114% 163%(D)
113
AMERICAN BEACON FUNDS ENHANCED INCOME FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PlanAhead Class
---------------------------------------------------
Six
Months June
Ended Year Ended October 31 30 to
April 30, ---------------------------- October
2007 2006 2005 2004 31, 2003
----------- -------- -------- -------- --------
(unaudited)
Net asset value, beginning of period .................... $ 10.25 $ 9.98 $ 10.16 $ 9.96 $ 10.00
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ................................ 0.17 0.33 0.29 0.26 0.07(A)
Net gains (losses) on securities (both realized and
unrealized) ....................................... 0.17 0.29 (0.16) 0.20 (0.04)
-------- -------- -------- -------- --------
Total income from investment operations ................. 0.34 0.62 0.13 0.46 0.03
-------- -------- -------- -------- --------
Less distributions:
Dividends from net investment income ................. (0.23) (0.35) (0.31) (0.26) (0.07)
Distributions from net realized gains on securities .. (0.01) -- -- -- --
-------- -------- -------- -------- --------
Total distributions ..................................... (0.24) (0.35) (0.31) (0.26) (0.07)
-------- -------- -------- -------- --------
Net asset value, end of period .......................... $ 10.35 $ 10.25 $ 9.98 $ 10.16 $ 9.96
======== ======== ======== ======== ========
Total return ............................................ 3.28%(B) 6.36% 1.32% 4.70% 0.32%(B)
======== ======== ======== ======== ========
Ratios and supplemental data:
Net assets, end of period (in thousands) ............. $101,330 $125,915 $112,341 $103,897 $101,072
Ratios to average net assets (annualized):
Expenses ............................................. 0.94% 0.93% 0.92% 1.00% 0.93%(C)
Net investment income ................................ 3.63% 3.21% 2.79% 2.54% 2.20%(C)
Portfolio turnover rate .............................. 63%(B) 65% 41% 72% 57%(B)
(A) Based on average shares outstanding.
(B) Not annualized.
(C) Annualized.
114
AMERICAN BEACON INTERMEDIATE BOND FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class (formerly AMR Class prior to 3/1/05)
---------------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, -------------------------------------------------
2007 2006 2005(A) 2004 2003 2002
----------- ------- ------- ------- -------- --------
(unaudited)
Net asset value, beginning of period ........... $ 10.02 $ 10.01 $ 10.33 $ 10.24 $ 10.22 $ 10.30
-------- ------- ------- ------- -------- --------
Income from investment operations:
Net investment income(B) .................... 0.24 0.46 0.42 0.40 0.45 0.53
Net gains (losses) on securities
(both realized and unrealized)(B) ........ 0.06 0.02 (0.29) 0.14 0.02 (0.08)
-------- ------- ------- ------- -------- --------
Total income from investment operations ........ 0.30 0.48 0.13 0.54 0.47 0.45
-------- ------- ------- ------- -------- --------
Less distributions:
Dividends from net investment income ........ (0.24) (0.47) (0.45) (0.45) (0.45) (0.53)
Distributions from net realized gains
on securities ............................ -- -- -- -- --
-------- ------- ------- ------- -------- --------
Total distributions ............................ (0.24) (0.47) (0.45) (0.45) (0.45) (0.53)
-------- ------- ------- ------- -------- --------
Net asset value, end of period ................. $ 10.08 $ 10.02 $ 10.01 $ 10.33 $ 10.24 $ 10.22
======== ======= ======= ======= ======== ========
Total return ................................... 3.05%(C) 4.96% 1.26% 5.38% 4.62% 4.57%
======== ======= ======= ======= ======== ========
Ratios and supplemental data:
Net assets, end of period (in thousands) .... $101,207 $97,319 $93,270 $96,242 $131,927 $144,098
Ratios to average net assets (annualized):
Expenses, net of waivers(B) ................. 0.34% 0.35% 0.31% 0.34% 0.32% 0.30%
Expenses, before waivers(B) ................. 0.34% 0.35% 0.31% 0.34% 0.32% 0.30%
Net investment income, net of waivers(B) .... 4.79% 4.64% 4.12% 3.97% 4.32% 5.23%
Net investment income, before waivers(B) .... 4.79% 4.64% 4.12% 3.97% 4.32% 5.23%
Portfolio turnover rate(D) .................. 40%(C) 122% 119% 106% 187% 185%
(A) On March 1, 2005, the existing Institutional Class shares were terminated
and exchanged for AMR Class shares at a conversion rate of 1.0202.
Following this exchange, the former AMR Class Shares were re-named
Institutional Class.
(B) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the AMR Investment Services Intermediate Bond Portfolio through February
28, 2002
(C) Not annualized.
(D) The Intermediate Bond Fund invested all of its investable assets in its
corresponding Portfolio through February 28, 2002. Portfolio turnover
rate through February 28, 2002 was that of the Portfolio.
115
AMERICAN BEACON SHORT-TERM BOND FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Institutional Class (formerly AMR Class prior to 3/1/05)
---------------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, -------------------------------------------------
2007 2006 2005(A) 2004 2003 2002
----------- ------- ------- ------- ------- -------
(unaudited)
Net asset value, beginning of period ........... $ 8.74 $ 8.75 $ 9.07 $ 9.31 $ 9.44 $ 9.60
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income (loss)(B) ............. 0.19(E) 0.32(E) 0.29 0.27 0.42 0.44
Net gains (losses) on securities
(both realized and unrealized)(B) ........ 0.08 0.07 (0.20) (0.05) (0.07) (0.11)
------- ------- ------- ------- ------- -------
Total income from investment operations ........ 0.27 0.39 0.09 0.22 0.35 0.33
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ........ (0.21) (0.40) (0.41) (0.46) (0.48) (0.49)
Distributions from net realized gains
on securities ............................ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions ............................ (0.21) (0.40) (0.41) (0.46) (0.48) (0.49)
------- ------- ------- ------- ------- -------
Net asset value, end of period ................. $ 8.80 $ 8.74 $ 8.75 $ 9.07 $ 9.31 $ 9.44
======= ======= ======= ======= ======= =======
Total return ................................... 3.11%(C) 4.56% 1.00% 2.39% 3.82% 3.60%
======= ======= ======= ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in thousands) .... $84,375 $73,417 $79,683 $80,504 $91,911 $89,932
Ratios to average net assets (annualized):
Expenses, net of waivers(B) ................. 0.35% 0.35% 0.33% 0.33% 0.33% 0.30%
Expenses, before waivers(B) ................. 0.35% 0.35% 0.33% 0.33% 0.33% 0.30%
Net investment income, net of waivers(B) .... 4.33% 3.64% 3.15% 3.00% 4.54% 4.63%
Net investment income, before waivers(B) .... 4.33% 3.64% 3.15% 3.00% 4.54% 4.63%
Portfolio turnover rate(D) .................. 27%(C) 48% 38% 41% 81% 63%
(A) On March 1, 2005, the existing Institutional Class shares were terminated
and exchanged for AMR Class shares at a conversion rate of 1.0014.
Following this exchange, the former AMR Class Shares were re-named
Institutional Class.
(B) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of the income and expenses of
the AMR Investment Services Short-Term Bond Portfolio through February 28,
2002.
(C) Not annualized.
(D) The Short-Term Bond Fund invested all of its investable assets in its
corresponding Portfolio through February 28, 2002. Portfolio turnover rate
through February 28, 2002 was that of the Portfolio.
(E) Based upon average shares outstanding.
116
PlanAhead Class
--------------------------------------------------------
Six
Months
Ended Year Ended October 31
April 30, ------------------------------------------
2007 2006 2005 2004 2003 2002
----------- ------ ------ ------ ------ ------
(unaudited)
Net asset value, beginning of period ........... $ 8.76 $ 8.77 $ 9.09 $ 9.33 $ 9.45 $ 9.62
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income (loss)(B) ............. 0.17 0.27 0.28 0.25 0.39 0.43
Net gains (losses) on securities
(both realized and unrealized)(B) ........ 0.07 0.07 (0.24) (0.07) (0.08) (0.14)
------ ------ ------ ------ ------ ------
Total income from investment operations ........ 0.24 0.34 0.04 0.18 0.31 0.29)
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income ........ (0.19) (0.35) (0.36) (0.42) (0.43) (0.46)
Distributions from net realized gains
on securities ............................ -- -- -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions ............................ (0.19) (0.35) (0.36) (0.42) (0.43) (0.46)
------ ------ ------ ------ ------ ------
Net asset value, end of period ................. $ 8.81 $ 8.76 $ 8.77 $ 9.09 $ 9.33 $ 9.45
====== ====== ====== ====== ====== ======
Total return ................................... 2.73%(C) 4.01% 0.46% 1.84% 3.38% 3.16%
====== ====== ====== ====== ====== ======
Ratios and supplemental data:
Net assets, end of period (in thousands) .... $5,771 $7,189 $8,582 $7,781 $5,783 $3,520
Ratios to average net assets (annualized):
Expenses, net of waivers(B) ................. 0.87% 0.88% 0.87% 0.87% 0.86% 0.73%
Expenses, before waivers(B) ................. 0.93% 0.90% 0.94% 0.87% 0.86% 0.77%
Net investment income, net of waivers(B) .... 3.79% 3.10% 2.59% 2.44% 4.00% 4.16%
Net investment income, before waivers(B) .... 3.73% 3.08% 2.52% 2.44% 4.00% 4.12%
Portfolio turnover rate(D) .................. 27%(C) 48% 38% 41% 81% 63%
117
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT AGREEMENT
AND INVESTMENT ADVISORY AGREEMENTS OF THE FUNDS
(UNAUDITED)
In prior years, the Board of Trustees ("Board" or "Trustees") typically has
considered the annual renewal of the existing Management Agreement between
American Beacon Advisors, Inc. (the "Manager") and the American Beacon Funds
(the "Trust"), on behalf of the Balanced, Large Cap Growth, Mid-Cap Value, Small
Cap Value Opportunity, Emerging Markets, High Yield Bond, Enhanced Income,
Intermediate Bond and Short-Term Bond Funds (each, a "Fund" and collectively,
the "Funds"), and each Investment Advisory Agreement between the Manager and a
sub-advisor at the Board meeting held in the first quarter of each year. At the
November 15, 2006 meeting, the Board decided to conduct these annual renewals at
their second quarter meeting each year to enable the Trustees to consider more
year-end data in their deliberations. At the March 8, 2007 Board meeting, the
Board considered renewal of the Management and Investment Advisory Agreements on
an interim basis until the Board meeting scheduled for the second quarter, at
which meeting the Board would perform a comprehensive review of factors relevant
to an annual renewal.
In connection with the interim renewal, the Board, with the assistance of
independent legal counsel, requested and received certain relevant information
from the Manager. Further, the Board took into consideration information
furnished for the Board's review and consideration throughout the year at
regular Board and Investment Committee meetings. The Trustees considered, among
other materials, responses by the Manager to inquiries requesting:
- an explanation, if applicable, of any deterioration in longer-term
performance by a Fund or sub-advisor since the last contract renewal
and any remedial measures the Manager has taken or intends to take;
- the Manager's and each sub-advisor's fee rate schedule for a Fund and
whether the Manager intends to continue any current fee waivers or
reimbursements;
- an explanation of any significant change in a Fund's expense ratio
since the last contract renewal and any actions the Manager has taken
or intends to take;
- a description of any significant changes (actual or anticipated) to
personnel and the reasons for such changes;
- a discussion of any material developments at the Funds' sub-advisors
relevant to the Funds;
- a discussion of any material compliance problems encountered by the
Manager or the sub-advisors and remedial actions;
- a summary of any material past, pending or anticipated litigation or
regulatory proceedings involving the firm or its personnel, including
the results of any recent regulatory examination or independent audit;
- information regarding material changes to the Manager's and
sub-advisors' codes of ethics and insider trading policies; and
- any material changes to the Manager's or sub-advisors' information
provided in connection with the last annual contract renewal.
The Trustees also received a memorandum from their legal counsel detailing the
Board's responsibilities pertaining to the renewal of the Management and
Investment Advisory Agreements. This memorandum explained the regulatory
requirements surrounding the Trustees' process for evaluating investment
advisors and the terms of the contracts.
Provided below is an overview of the primary factors the Board considered at its
March 2007 meeting. The Board did not identify any particular information that
was most relevant to its consideration to renew the Management and Investment
Advisory Agreements, and each Trustee may have afforded different weight to the
various factors. The Board determined that certain factors typically considered
in connection with an annual renewal were not material with respect to an
interim renewal. As such, the following factors were not considered by the Board
and were deferred to the next regular Board meeting to be considered in
connection with the annual renewal:
- the profits realized by the Manager and the sub-advisors and their
affiliates from their relationship with a Fund;
118
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT AGREEMENT
AND INVESTMENT ADVISORY AGREEMENTS OF THE FUNDS
(UNAUDITED)
- the extent to which economies of scale may be realized as a Fund
grows;
- whether the level of fees reflects those economies of scale for the
benefit of a Fund's investors;
- comparisons of services and fees with contracts entered into by the
Manager and a sub-advisor or their affiliates with other clients (such
as pension funds and other institutional investors); and
- ancillary benefits to be realized by the Manager and the sub-advisors
as a result of the relationship with the Funds.
Considerations and Conclusions with Respect to All Funds
In determining whether to renew the Management and Investment Advisory
Agreements on an interim basis, the Trustees considered the best interests of
each Fund separately. The following considerations and conclusions are
applicable to all Funds.
Cost of Services. With respect to the Management Agreement, the Board noted that
the Manager proposed to continue most of the expense waivers and reimbursements
that were in place for each applicable Fund's 2006 fiscal year as well as
implement additional waivers and/or reimbursements. The Board considered that,
in many cases, the Manager has negotiated the lowest sub-advisory fee a
sub-advisor charges for any comparable client accounts. In determining whether
to renew the Investment Advisory Agreements, the Board considered that for
purposes of determining the fee charged to the Funds, the fee schedule to each
Investment Advisory Agreement specifies that all other assets managed by a
sub-advisor on behalf of AMR Corporation and its pension plans shall be
considered where applicable. Thus, the Funds are able to receive additional
break point benefits resulting from the sub-advisor's management of a larger
pool of assets. For the Funds listed below under Additional Considerations and
Conclusions with Respect to Certain Funds, the Board also considered information
regarding changes in the Fund's fees and expenses since the last contract
renewal.
Nature, Extent and Quality of Services. With respect to the renewal of the
Management Agreement, the Trustees considered that the Manager continues to
provide high-quality services to each Fund at a low cost to investors and
provides a comprehensive compliance program for each Fund. Additionally, the
Manager manages a portion of the assets of certain Funds and allocates the
assets of certain Funds among itself and the Funds' sub-advisors, if applicable,
and monitors and evaluates the performance of the sub-advisors. Based on this
information, the Board concluded that the nature, extent and quality of the
management and advisory services provided by the Manager and each sub-advisor
were appropriate for each Fund and, thus, supported a decision to renew the
Management and each Investment Advisory Agreement on an interim basis.
Investment Performance. The Board considered the performance reports and
discussions with management at Board and Committee meetings throughout the year.
For the Funds listed below under Additional Considerations and Conclusions with
Respect to Certain Funds, the Board also considered information provided by the
Manager regarding significant deterioration in a Fund's or sub-advisor's
longer-term performance as a result of significant underperformance for the 2006
calendar year.
Additional Considerations and Conclusions with Respect to Certain Funds
In considering the renewal of the Management Agreement with the Manager and the
Investment Advisory Agreement with Hotchkis and Wiley Capital Management, LLC
("Hotchkis") on behalf of the Balanced Fund, the Trustees considered that
Hotchkis underperformed its benchmark index for the 2006 calendar year, but that
the Fund's performance exceeded that of its Lipper Index.
In considering the renewal of the Management Agreement with the Manager and the
Investment Advisory Agreement with Goldman Sachs Asset Management, L.P. ("GSAM")
on behalf of the Large Cap Growth Fund, the Trustees considered that GSAM
underperformed its benchmark index for the 2006 calendar year, but that the
Fund's overall performance exceeded that of its Lipper Index.
119
DISCLOSURE REGARDING THE BOARD OF TRUSTEES' APPROVAL OF THE MANAGEMENT AGREEMENT
AND INVESTMENT ADVISORY AGREEMENTS OF THE FUNDS
(UNAUDITED)
In considering the renewal of the Management Agreement with the Manager and the
Investment Advisory Agreements with Barrow, Hanley, Mewhinney & Strauss, Inc.
("Barrow") and Pzena Investment Management, Inc. ("Pzena") on behalf of the
Mid-Cap Value Fund, the Trustees considered that Barrow and Pzena underperformed
their benchmark index for the 2006 calendar year, but that the Fund's overall
performance exceeded that of its Lipper Index.
In considering the renewal of the Management Agreement with the Manager and the
Investment Advisory Agreement with PanAgora Asset Management, Inc. ("PanAgora")
on behalf of the Small Cap Value Opportunity Fund, the Trustees considered that
PanAgora underperformed its benchmark index for the 2006 calendar year, but that
the Fund's overall performance exceeded that of its Lipper Index.
In considering the renewal of the Management Agreement with the Manager and the
Investment Advisory Agreement with The Boston Company Asset Management, LLC
("TBCAM") on behalf of the Emerging Markets Fund, the Trustees considered that
TBCAM underperformed its benchmark index for the 2006 calendar year, but that
the Fund's overall performance exceeded that of its Lipper Index.
In considering the renewal of the Management Agreement with the Manager and the
Investment Advisory Agreements with Post Advisory Group, LLC ("Post") and
Franklin Advisers, Inc. ("Franklin") on behalf of the High Yield Bond Fund, the
Trustees considered that Post and Franklin underperformed their benchmark index
for the 2006 calendar year, and the Fund's overall performance trailed that of
its Lipper Index. The Fund's performance trailed for the three-year period and
exceeded for the five-year period that of its Lipper Index.
In considering the renewal of the Investment Advisory Agreement with Barrow,
sub-advisor to the Balanced, Mid-Cap Value, and Intermediate Bond Funds, the
Trustees considered that Barrow had eliminated the last break point on its fee
rate schedule, but that Barrow's combined fee rate for each Fund under its
management was still among the lowest fees charged by a sub-advisor.
In considering the renewal of the Investment Advisory Agreement with Pzena,
sub-advisor to the Mid-Cap Value Fund, the Trustees considered that Pzena's
combined fee rate had increased as a result of expiration of a reduced fee rate
schedule, but that increased assets in the Mid-Cap Value Fund had resulted in a
lower overall expense ratio for the Mid-Cap Value Fund.
In considering the renewal of the Management Agreement with the Manager for the
remaining Funds and the Investment Advisory Agreements with the sub-advisors to
those Funds, the Trustees considered that 1) the Funds and sub-advisors
outperformed or only slightly underperformed the respective benchmark index for
the 2006 calendar year, and 2) the fee rate schedules for the Manager and each
sub-advisor had not changed since the last contract renewal.
Based on these considerations and those noted above with respect to all Funds,
the Trustees determined that the Funds and their shareholders would benefit from
the Manager's and, where applicable, the sub-advisors' continued management of
the Funds until the next regular Board meeting and approved the renewal of the
Agreements with respect to each of the Funds on an interim basis until the next
regular Board meeting.
120
(This page intentionally left blank)
(AMERICAN BEACON FUNDS(SM) LOGO)
DELIVERY OF DOCUMENTS
To reduce expenses, your financial institution may mail only one copy of the
Prospectus, Annual Report and Semi-Annual Report to those addresses shared by
two or more accounts. If you wish to receive individual copies of these
documents, please contact your financial institution. Delivery of individual
copies will commence thirty days after receiving your request.
If you invest in the Fund through a financial institution, you may be able to
receive the Fund's regulatory mailings, such as the Prospectus, Annual Report
and Semi-Annual Report, by e-mail. If you are interested in this option, please
go to www.icsdelivery.com and search for your financial institution's name or
contact your financial institution directly.
TO OBTAIN MORE INFORMATION ABOUT THE FUND:
(GRAPHIC) (GRAPHIC)
BY E-MAIL: ON THE INTERNET:
american_beacon.funds@ambeacon.com Visit our website at
www.americanbeaconfunds.com
(GRAPHIC) (GRAPHIC)
BY TELEPHONE: BY MAIL:
Institutional Class American Beacon Funds
Call (800) 658-5811 P.O. Box 219643
AMR Class(SM) Kansas City, MO 64121-9643
Call (800) 345-2345
PlanAhead Class(R) and Service Class
Call (800) 388-3344
AVAILABILITY OF QUARTERLY AVAILABILITY OF PROXY VOTING
PORTFOLIO SCHEDULES POLICY AND RECORDS
In addition to the Schedule of A description of the policies and
Investments provided in each procedures the Fund uses to determine
semi-annual and annual report, the how to vote proxies relating to
Fund files a complete schedule of its portfolio securities is available in the
portfolio holdings with the Fund's Statement of Additional
Securities and Exchange Commission Information, is available free of charge
("SEC") on Form N-Q as of the first on the Fund's website
and third fiscal quarters. The Fund's (www.americanbeaconfunds.com) and by
Forms N-Q are available on the SEC's calling 1-800-967-9009 or by accessing
website at www.sec.gov. The Forms N-Q the SEC's website at www.sec.gov. The
may also be reviewed and copied at Fund's proxy voting record for the most
the SEC's Public Reference Room, 450 recent year ended June 30 is filed
Fifth Street, NW, Washington, DC annually with the SEC on Form N-PX. The
20549. Information regarding the Fund's Forms N-PX are available on the
operation of the SEC's Public SEC's website at www.sec.gov. The Fund's
Reference Room may be obtained by proxy voting record may also be obtained
calling 1-800-SEC-0330. A complete by calling 1-800-967-9009.
schedule of the Fund's portfolio
holdings is also available on the
Funds' website
(www.americanbeaconfunds.com)
approximately thirty days after the
end of each month.
FUND SERVICE PROVIDERS:
CUSTODIAN TRANSFER AGENT INDEPENDENT REGISTERED DISTRIBUTOR
STATE STREET BOSTON FINANCIAL PUBLIC ACCOUNTING FIRM FORESIDE FUND
BANK AND TRUST DATA SERVICES ERNST & YOUNG LLP SERVICES
Boston, Kansas City, Dallas, Texas Portland, Maine
Massachusetts Missouri
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.
American Airlines, Inc. is not responsible for investments made in the American
Beacon Funds. American Beacon Funds is a service mark of AMR Corporation.
American Beacon Balanced Fund, American Beacon Large Cap Growth Fund, American
Beacon Mid-Cap Value Fund, American Beacon Small Cap Value Opportunity Fund,
American Beacon Emerging Markets Fund, American Beacon High Yield Bond Fund,
American Beacon Enhanced Income Fund, American Beacon Intermediate Bond and
American Beacon Short-Term Bond Fund are service marks of American Beacon
Advisors, Inc.
SAR 04/07
539889
ITEM 2. CODE OF ETHICS.
The Trust did not amend the code of ethics that applies to its principal
executive and financial officers (the "Code") nor did it grant any waivers to
the provisions of the Code during the period covered by the shareholder reports
presented in Item 1.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not Applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The schedules of investments for each series of the Trust are included in the
shareholder reports presented in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Trust has made no material changes to the procedures by which shareholders
may recommend nominees to the Trust's Board of Trustees since the Trust last
disclosed such procedures in Schedule 14A.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon an evaluation within 90 days of the filing date of this
report, the principal executive and financial officers concluded that
the disclosure controls and procedures of the Trust are effective.
(b) There were no changes in the Trust's internal control over financial
reporting during the second fiscal quarter of the period covered by
this report that has materially affected, or is reasonably likely to
materially affect, the Trust's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the Trust as required by Rule
30a-2(a) under the Investment Company Act of 1940 is attached hereto
as EX-99.CERT.
(a)(3) Not applicable.
(b) The certifications required by Rule 30a-2(b) under the Investment
Company Act of 1940 are attached hereto as EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): American Beacon Funds
By /s/ Douglas G. Herring
--------------------
Douglas G. Herring
President
Date: July 3, 2007
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/ Douglas G. Herring
--------------------
Douglas G. Herring
President
Date: July 3, 2007
By /s/ Rebecca L. Harris
---------------------
Rebecca L. Harris
Treasurer
Date: July 3, 2007