UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-09018
AMERICAN BEACON MILEAGE 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: December 31, 2009
Date of reporting period: December 31, 2009
ITEM 1. REPORT TO STOCKHOLDERS.
GUIDANCE | VISION | EXPERIENCE
(AMERICAN BEACON MILEAGE FUNDS(SM) LOGO)
Annual Report
(GRAPHIC)
December 31, 2009
MONEY MARKET MILEAGE FUNDS
ABOUT AMERICAN BEACON ADVISORS
Since 1986, American Beacon Advisors has offered a variety of products and
investment advisory services to numerous institutional and retail clients,
including a variety of mutual funds, corporate cash management, and separate
account management.
Our clients include defined benefit plans, defined contribution plans,
foundations, endowments, corporations, financial planners, and other
institutional investors. With American Beacon Advisors, you can put the
experience of a multi-billion dollar asset management firm to work for you.
CONTENTS
PRESIDENT'S MESSAGE................................................ 1
FINANCIAL HIGHLIGHTS
MONEY MARKET MILEAGE FUND....................................... 11
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO.......................................... 13
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 Money Market Mileage Fund December 31, 2009
(PHOTO OF GENE L. NEEDLES, JR.)
Fellow Shareholders,
As an introduction to the American Beacon Money Market Mileage Fund Annual
Report for the 12-month period ended December 31, 2009, please let me take a
moment to tell you how pleased I am to have been serving as President and CEO of
American Beacon Advisors since April 15, 2009. I consider it a privilege to hold
this position, and I take its responsibilities quite seriously.
I've enjoyed a long, successful career in the investment business, and I'm
no stranger to the ups and downs that markets can deliver. As a fellow investor
and shareholder, I experience these trends in much the same way you do. The
majority of 2008 was difficult in many ways. However, when I took the helm at
American Beacon, I already had many reasons to be optimistic about what might
develop in 2009. As of December 31, 2009, my optimism has been largely
confirmed.
For the one-year period (as of 12/31/09), the American Beacon Money Market
Mileage Fund reported a total return of 0.04% for the period. Of course, one
year of performance doesn't tell the whole story, especially when you're
investing for the long term.
While this 12-month period began amid a frightening recessionary
environment, we finished the year with increasing confidence that markets have
begun to stabilize, that liquidity has returned to the debt markets and that
equity markets have had a substantial recovery.
I know as well as you do that maintaining a long-term perspective and doing
the right thing according to your risk tolerance and time horizon is not always
easy. But the professionals at American Beacon are dedicated to working hard to
help investors succeed.
Just as you maintain a commitment to your goals--and to those who inspire
you to create your goals--we maintain a strong commitment to due diligence and
oversight. That commitment is one of the key reasons I am honored to serve as
President and CEO, and pleased to be able to share my enthusiasm about the path
ahead with you.
A financial advisor can be an important ally in creating investment
success, so--as you review the enclosed annual report--please feel free to
discuss your thoughts and concerns with a trusted advisor. And, as always, the
professionals associated with the American Beacon Funds are grateful for the
opportunity to serve you.
Best Regards,
/s/ Gene L. Needles, Jr.
Gene L. Needles, Jr.
President
American Beacon Mileage Funds
1
ECONOMIC OVERVIEW
DECEMBER 31, 2009 (UNAUDITED)
The economic recovery continued to gain momentum during 2009. The pace of
job losses declined, unsold home inventory levels declined and consumer spending
increased. In addition, financial market conditions continued to improve as
equity prices rose and credit spreads tightened. Many major financial
institutions were able to raise capital during the year and pay back funds
received under the Troubled Asset Relief Program (TARP). In addition, the
Federal Reserve Board (the "Fed") announced in December that it anticipated most
of its special liquidity facilities would expire on February 1, 2010 - including
the Asset-backed commercial Paper Money Market Mutual Fund Liquidity Facility
(AMLF), the Commercial Paper Funding Facility (CPFF), the Primary Dealer Credit
Facility (PDCF), and the Term Securities Lending Facility (TSLF). The Fed
believed these liquidity programs would no longer be needed as a result of the
"substantial improvement in the functioning of financial markets".
Despite these improvements, challenges remain. Unlike past recoveries where
consumers were the primary drivers of growth, much of the current recovery has
been driven by unprecedented fiscal stimulus. As a result, there is a concern
about the strength of the recovery without government programs. For example,
improvements in the fragile housing market could be impaired by the wind-down of
the Fed's purchases of mortgage-backed securities (MBS) and the expiration of
the homebuyer tax credit. Furthermore, without targeted fiscal stimulus such as
the cash for clunkers program, consumer spending is expected to be moderate in
the coming quarters. Tight bank lending standards and continued concerns over
the labor market are expected to dampen consumer demand unless additional
stimulus is introduced. So while it appears that the economic recovery will be
sustainable and fears of a double dip recession have abated, the economic
recovery remains fragile.
The Fed left the target range of the federal funds rate unchanged at
0.0-0.25% at the December 16th Federal Open Market Committee meeting. The
Committee noted the improvement in economic activity but stated that "...low
rates of resource utilization, subdued inflation trends and stable inflation
expectations are likely to warrant exceptionally low levels of the federal funds
rate for an extended period".
While it is expected that the Fed will keep the fed funds rate unchanged
for most if not all of 2010, it is likely that they will begin to gradually
reduce monetary accommodation in other ways. During the crisis, the Fed employed
quantitative easing tactics to flood the financial markets with liquidity. In
order to avoid stimulating inflation as the economic recovery gains ground, the
Fed will need to implement an exit strategy to reduce liquidity. The Fed has
numerous tools available in its arsenal to drain excess liquidity from the
system including terming out bank reserve deposits, commencing reverse
repurchase agreements, and outright sale of securities purchased during the
crisis. In all likelihood, reverse repos (which the Fed has already begun
testing) and term deposits will be the Fed's most important tools for draining
bank reserves. Outright asset sales, particularly MBS, are less likely given the
fragility of the housing market. All in all, the timing of the exit strategy
will be tricky. If the Fed removes accommodation too quickly, it could hamper
the recovery, but if they move too slowly, inflationary pressure could build.
2
PERFORMANCE OVERVIEW
AMERICAN BEACON MONEY MARKET MILEAGE FUND(SM)
DECEMBER 31, 2009 (UNAUDITED)
Although the economy began to show signs of recovery during the year in
jobs, home sales, and consumer spending, the Federal Open Market Committee
(FOMC) maintained its 0% to 0.25% fed funds target throughout 2009. In addition,
the FOMC stated at its last meeting of the year that "...stable inflation
expectations are likely to warrant exceptionally low levels of the federal funds
rate for an extended period." With credit quality and liquidity continuing to be
a priority, the American Beacon Money Market Mileage Fund's primary strategy for
the year was to buy high quality, short-dated commercial paper, certificates of
deposit and overnight repurchase agreements collateralized by non-government
securities. The strategies implemented during the year enabled the Fund to
remain competitive to its Lipper peer group.
For the twelve months ended December 31, 2009, the total return of the
Mileage Class was 0.04%. The Fund underperformed the Lipper Money Market Funds
Average return of 0.17% by 13 basis points (0.13%). Based on annualized total
returns, Lipper, Inc. ranked the Mileage Class of the Fund 230 among 296, 89
among 257, and 58 among 202 Money Market Funds for the one-year, five-year, and
ten-year periods ended December 31, 2009, respectively.
The Lipper Money Market Funds Average is calculated by taking an arithmetic
average of the returns of the mutual funds in the Lipper Money Market Funds
category. Lipper is an independent mutual fund research and ranking service that
ranks mutual funds in various categories by making comparative calculations
using total returns.
(PERFORMANCE GRAPH)
ANNUALIZED TOTAL RETURNS
AS OF 12/31/2009
---------------------------
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
Mileage Class (1, 2)...... 0.04% 2.84% 2.69%
(1) Performance shown is historical and may not be indicative of future
returns. Investment returns will vary, and shares may be worth more or less
at redemption than at original purchase. An investment in this Fund is
neither insured nor guaranteed by the Federal Deposit Insurance Corporation
or any other government agency. Although the Fund seeks to preserve the
value of an investment at $1.00 per share it is possible to lose money by
investing in the Fund. 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 total annual Fund operating expense ratio set forth in the most recent
prospectus for the Fund was 0.66%. The expense ratio above may vary from
the expense ratio presented in other sections of this report that are based
on expenses incurred during the period covered by this report.
PORTFOLIO STATISTICS AS OF DECEMBER 31, 2009
MILEAGE
CLASS
-------
7-day Current Yield* 0.01%
7-day Effective Yield* 0.01%
30-day Yield* 0.01%
Weighted Avg. Maturity 14 Days
* Annualized. You may call 1-800-967-9009 to obtain the Fund's current seven
day yields. Yield is a more accurate reflection of the Fund's current
earnings than total returns. A portion of the fees charged to the Fund was
waived. Yields in absence of fee waivers would have been negative.
TOP TEN ISSUERS AS OF DECEMBER 31, 2009
% OF
NET ASSETS*
-----------
Allied Irish Banks PLC...................... 5.0%
Bank of Ireland N.Y......................... 5.0%
FCAR Owner Trust............................ 5.0%
Toyota Credit Canada, Inc................... 4.9%
CBA (Delaware) Finance, Inc................. 4.9%
Edison Asset Securitization LLC............. 4.9%
Surrey Funding Corp......................... 4.9%
Old Line Funding LLC........................ 4.9%
Solitaire Funding LLC....................... 4.9%
Societe Generale N.Y........................ 4.9%
* Percent of net assets of American Beacon Master Money Market Portfolio.
ASSET ALLOCATION AS OF DECEMBER 31, 2009
% OF
NET ASSETS**
------------
Commercial Paper............................ 48.72%
Repurchase Agreements....................... 34.85%
Time Deposits............................... 9.99%
Short-Term Investments...................... 6.45%
Liabilities, Net of Other Assets............ -0.01%
** Percent of net assets of American Beacon Master Money Market Portfolio.
3
PERFORMACE OVERVIEW
AMERICAN BEACON MONEY MARKET MILEAGE FUND(SM)
DECEMBER 31, 2009 (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, and other Fund expenses. The examples below are intended to help you
understand the ongoing cost (in dollars) of investing in the Fund and to compare
these costs with the ongoing costs of investing in other mutual funds. The
examples are based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from July 1, 2009 through December 31,
2009.
ACTUAL EXPENSES
The "Actual" line of the table provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the "Actual" line under the heading "Expenses Paid During Period" to estimate
the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The "Hypothetical" line of the table provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed 5% per year rate of return before expenses (not the
Fund's actual return). You may compare the ongoing costs of investing in the
Fund with other funds by contrasting this 5% hypothetical example and the 5%
hypothetical examples that appear in the shareholder reports of the other funds.
The hypothetical account values and expenses may not be used to estimate the
actual ending account balance or expenses you paid for the period.
You should also be aware that the expenses shown in the table highlight
only your ongoing costs and do not reflect any transaction costs charged by the
Fund. Similarly, the expense examples for other funds do not reflect any
transaction costs charged by those funds, such as sales charges (loads),
redemption fees or exchange fees. Therefore, the "Hypothetical" line of the
table is useful in comparing ongoing costs only and will not help you determine
the relative total costs of owning different funds. If you were subject to any
transaction costs during the period, your costs would have been higher.
Beginning Ending Expenses
Account Account Paid During
Value Value Period*
7/1/2009 12/31/09 7/1/09-12/31/09
--------- --------- ---------------
MILEAGE CLASS
Actual................ $1,000.00 $1,000.05 $2.12
Hypothetical (5%
return before
expenses).......... $1,000.00 $1,023.09 $2.14
* Expenses are equal to the Fund's annualized expense ratio for the six-month
period of 0.42%, multiplied by the average account value over the period,
multiplied by the number derived by dividing the number of days in the most
recent fiscal half-year (184) by days in the year (365) to reflect the
half-year period.
4
AMERICAN BEACON MONEY MARKET MILEAGE FUND(SM)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of
American Beacon Money Market Mileage Fund:
We have audited the accompanying statement of assets and liabilities of American
Beacon Money Market Mileage Fund (the "Fund") as of December 31, 2009, and the
related statement of operations for the year then ended, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Fund's internal control over financial
reporting. Our audits included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Fund's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights, assessing the accounting principles used
and significant estimates made by management, and evaluating the overall
financial statement presentation. Our procedures included confirmation of
securities owned as of December 31, 2009, by correspondence with the Master
Portfolio. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
American Beacon Money Market Mileage Fund at December 31, 2009, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for each
of the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/Ernst & Young LLP
Dallas, Texas
February 26, 2010
5
AMERICAN BEACON MONEY MARKET MILEAGE FUND(SM)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2009 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS:
Investment in Portfolio, at value ..................................... $ 28,657
Prepaid expenses ...................................................... 13
-----------
TOTAL ASSETS ....................................................... 28,670
-----------
LIABILITIES:
Payable for fund shares redeemed ...................................... 9
Distribution fees payable (Note 2) .................................... 6
Administrative service and service fees payable (Note 2) .............. 3
Professional fees payable ............................................. 12
Prospectus and shareholder reports payable ............................ 6
Other liabilities ..................................................... 3
-----------
TOTAL LIABILITIES .................................................. 39
-----------
NET ASSETS ............................................................ $ 28,631
===========
ANALYSIS OF NET ASSETS:
Paid-in-capital .................................................... 28,631
-----------
NET ASSETS ............................................................... $ 28,631
===========
SHARES OUTSTANDING (NO PAR VALUE):
Mileage Class ......................................................... 28,630,764
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE:
Mileage Class ......................................................... $ 1 .00
===========
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2009 (IN THOUSANDS)
INVESTMENT INCOME ALLOCATED FROM PORTFOLIO:
Dividend income ....................................................... $ 16
Interest income ....................................................... 169
Portfolio expenses .................................................... (48)
----
NET INVESTMENT INCOME ALLOCATED FROM PORTFOLIO ..................... 137
----
FUND EXPENSES:
Administrative service fees (Note 2) .................................. 33
Transfer agent fees ................................................... 6
Professional fees ..................................................... 16
Registration fees and expenses ........................................ 24
Distribution fees ..................................................... 83
Prospectus and shareholder reports .................................... 10
Other expenses ........................................................ 4
----
TOTAL FUND EXPENSES ................................................ 176
----
Less reimbursement of fund expense (Note 2) ........................... (52)
----
NET FUND EXPENSES .................................................. 124
----
NET INVESTMENT INCOME .................................................... 13
----
REALIZED GAIN ALLOCATED FROM PORTFOLIO
Net realized gain on investments ...................................... 4
----
NET GAIN ON INVESTMENTS ............................................ 4
----
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................... $ 17
====
See accompanying notes
See accompanying Financial Statements of the American Beacon Money Market
Portfolio
6
AMERICAN BEACON MONEY MARKET MILEAGE FUND(SM)
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Year Ended
December 31,
-------------------
2009 2008
-------- --------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income.................................................. $ 13 $ 1,022
Net realized gain on investments....................................... 4 2
-------- --------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ 17 1,024
-------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income............................................... (13) (1,022)
Net realized gain on investments.................................... (4) (2)
-------- --------
DISTRIBUTIONS TO SHAREHOLDERS....................................... (17) (1,024)
-------- --------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sales of shares.......................................... 5,485 7,454
Reinvestment of dividends and distributions............................ 17 1,012
Cost of shares redeemed................................................ (17,553) (15,601)
-------- --------
NET DECREASE IN NET ASSETS.......................................... (12,051) (7,135)
-------- --------
NET DECREASE IN NET ASSETS................................................ (12,051) (7,135)
-------- --------
NET ASSETS:
Beginning of period.................................................... 40,682 47,817
-------- --------
END OF PERIOD.......................................................... $ 28,631 $ 40,682
======== ========
See accompanying notes
See accompanying Financial Statements of the American Beacon Money Market
Portfolio
7
AMERICAN BEACON MONEY MARKET MILEAGE FUND(SM)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The American Beacon Money Market Mileage Fund (the "Fund") is organized as
a Massachusetts business trust and is registered under the Investment Company
Act of 1940 as amended (the "Act"), as a diversified, no load, open-end
management investment company.
American Beacon Advisors, Inc. (the "Manager") is a wholly-owned subsidiary
of Lighthouse Holdings, Inc., and was organized in 1986 to provide business
management, advisory, administrative and asset management consulting services to
the Trust and other investors.
The Fund invests all of its investable assets in the Money Market Portfolio
of the American Beacon Master Trust (the "Portfolio"), an open-end diversified
management investment company.
AMERICAN BEACON: (ARROW) invests assets in (ARROW) AMERICAN BEACON MASTER TRUST:
- ---------------- -----------------------------
Money Market Mileage Fund Money Market Portfolio
The Fund has the same investment objectives as the Portfolio, and the value
of such investment reflects the Fund's proportionate interest in the net assets
of the Portfolio (3.98% at December 31, 2009). The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The following is a summary of the significant accounting policies followed
by the Fund.
Security Valuation and Valuation Inputs
The Fund records its investment in the Portfolio at fair value. Valuation
of securities as well as the inputs used to value the Portfolio's net assets is
discussed in Note 1 of the Portfolio's Notes to Financial Statements, which are
included elsewhere in this report.
Investment Income and Dividends to Shareholders
The Fund records its share of net investment income (loss) and realized
gain (loss) in the Portfolio each day. All net investment income (loss) and
realized gain (loss) of the Portfolio are allocated pro rata among the Fund and
other investors in the Portfolio at the time of such determination. The Fund
generally declares dividends daily from net investment income and net short-term
capital gain, if any, payable monthly.
Dividends to shareholders are determined in accordance with federal income
tax principles that may treat certain transactions differently than U.S.
generally accepted accounting principles.
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.
Other
Under the Fund's organizational documents, its officers and directors are
indemnified against certain liability arising out of the performance of their
duties to the Fund. In the normal course of business, the Fund enters into
contracts that provide indemnification to the other party or parties against
potential costs or liabilities. The Fund's maximum exposure under these
arrangements is dependent on claims that may be made
8
AMERICAN BEACON MONEY MARKET MILEAGE FUND(SM)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
in the future and, therefore, cannot be estimated. The Fund has had no prior
claims or losses pursuant to any such agreement.
2. TRANSACTIONS WITH AFFILIATES
Administrative Services Agreement
The Manager and the Trust entered into an Administrative Services Agreement
that obligates the Manager to provide or oversee administrative and management
services to the Fund. As compensation for performing administrative duties
required under the Agreement, the Manager receives an annualized fee of 0.10% of
the average daily net assets of the Fund.
Distribution Plan
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Act. Under the Plan, as compensation for distribution
assistance, the Manager receives an annualized fee of 0.25% of the average daily
net assets. 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. In adopting the Plan, the Fund's Board
of Trustees determined that there was a reasonable likelihood that the Plan
would benefit the Fund and the shareholders.
Reimbursement and Waiver of Expenses
The Manager voluntarily reimbursed distribution and other expenses totaling
$51,561 for the year ended December 31, 2009.
Expense Reimbursement Plan
The Fund has adopted an Expense Reimbursement Plan whereby the Manager may
seek recoupment of fees waived or expenses reimbursed for a period of up to
three years. However, recoupment will occur only if the Class average net assets
have grown or expenses have declined sufficiently to allow recoupment without
causing its expense ratio to exceed the previously agreed upon contractual
expense limit. For the year ended December 31, 2009, there are no fees subject
to recoupment.
3. FEDERAL INCOME 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.
The Fund does not have any unrecognized tax benefits in the accompanying
financial statements. Each of the tax years in the four year period ended
December 31, 2009 remains subject to examination by the Internal Revenue
Service. If applicable the Fund recognizes interest accrued related to
unrecognized tax benefits in interest expense and penalties in "Other expense"
on the Statement of Operations.
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.
9
AMERICAN BEACON MONEY MARKET MILEAGE FUND(SM)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
The tax character of distributions paid during the years ended December 31,
2009 and December 31, 2008 were as follows (in thousands):
MONEY MARKET MILEAGE
---------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2009 2008
------------ ------------
DISTRIBUTIONS PAID FROM ORDINARY INCOME:
Mileage Class............................................. $17 $1,024
--- ------
TOTAL DISTRIBUTIONS.......................................... $17 $1,024
=== ======
* For tax purposes short-term capital gains distributions are considered
ordinary income distributions.
As of December 31, 2009, the components of distributable earnings on a tax
basis were the same as book. The cost basis of investments for federal income
tax purposes was also the same as the book basis.
The Fund did not have capital loss carryforwards as of December 31, 2009.
4. SUBSEQUENT EVENTS
Management has evaluated the possibility of subsequent events existing in
the Funds' financial statements through February 26, 2010. Management has
determined that there are no material events that would require disclosure in
the Funds' financial statements through this date.
10
AMERICAN BEACON MONEY MARKET MILEAGE FUND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
Mileage Class
Year Ended December 31,
------------------------------------------------
2009 2008 2007 2006 2005
------- ------- ------- ------- -------
Net asset value, beginning of period ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Income from investment operations:
Net investment income (A) ................................ - B 0.02 0.05 0.05 0.03
Net realized gain on investments ......................... - B - B - B - B - B
------- ------- ------- ------- -------
Total income from investment operations ..................... 0.00 0.02 0.05 0.05 0.03
------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income ..................... - B (0.02) (0.05) (0.05) (0.03)
Distributions from net realized gains on securities ...... - B - B - B - B - B
------- ------- ------- ------- -------
Total distributions ......................................... 0.00 (0.02) (0.05) (0.05) (0.03)
------- ------- ------- ------- -------
Net asset value, end of period .............................. $ 1.00 $ 1.00 $ 1 .00 $ 1.00 $ 1 .00
======= ======= ======= ======= =======
Total return ................................................ 0.04% 2.21% 4.68% 4.61% 2.75%
======= ======= ======= ======= =======
Ratios and supplemental data:
Net assets, end of period (in thousands) ................. $28,631 $40,682 $47,817 $47,960 $50,684
Ratios to average net assets (annualized):(A)
Expenses, net of waivers ................................. 0.51% 0.64% 0.72% 0.57% 0.58%
Expenses before waivers .................................. 0.67% 0.64% 0.75% 0.57% 0.58%
Net investment income, net of waivers .................... 0.04% 2.21% 4.59% 4.52% 2.73%
Net investment income (loss), before waivers ............. (0.11)% 2.21% 4.56% 4.52% 2.73%
- ----------
(A) The per share amounts and ratios reflect income and expenses assuming
inclusion of the Fund's proportionate share of income and expenses of the
American Beacon Master Money Market Portfolio.
(B) Amount is less than $.01 per share.
11
AMERICAN BEACON MASTER MONEY MARKET PORTFOLIO
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Trustees of
American Beacon Money Market Portfolio:
We have audited the accompanying statement of assets and liabilities of American
Beacon Money Market Portfolio (the "Portfolio"), including the schedule of
investments, as of December 31, 2009, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. We were
not engaged to perform an audit of the Portfolio's internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Portfolio's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2009, by correspondence with the
custodian and brokers or by other appropriate auditing procedures where replies
from brokers were not received. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
American Beacon Money Market Portfolio at December 31, 2009, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with U.S. generally
accepted accounting principles.
/s/Ernst & Young LLP
Dallas, Texas
February 26, 2010
12
AMERICAN BEACON MASTER MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS
DECEMBER 31, 2009
PAR AMOUNT VALUE
----------- --------
(DOLLARS IN THOUSANDS)
COMMERCIAL PAPER - 48.72%
Calyon North America, Inc., 0.265%, Due 3/1/2010 ......................................... $ 35,000 $ 34,985
CBA (Delaware) Finance, Inc., 0.27%, Due 1/15/2010 ....................................... 35,000 34,996
Edison Asset Securitization LLC, 0.52%, Due 1/14/2010 #................................... 35,000 34,994
FCAR Owner Trust, 0.40%, Due 1/6/2010 .................................................... 36,000 35,998
National Australia Funding (Del) Inc., 0.21%, Due 2/18/2010 #............................. 35,000 34,990
Old Line Funding LLC,
0.65%, Due 1/8/2010 #.................................................................. 20,000 19,997
0.28%, Due 1/12/2010 #................................................................. 5,000 5,000
0.50%, Due 2/1/2010 #.................................................................. 10,000 9,996
Societe Generale N.Y., 0.245%, Due 2/3/2010 .............................................. 35,000 34,992
Solitaire Funding LLC, 0.31%, Due 1/27/2010 #............................................. 35,000 34,992
Surrey Funding Corp., 0.24%, Due 2/1/2010 #............................................... 35,000 34,993
Toyota Credit Canada, Inc., 0.23%, Due 1/13/2010 ......................................... 35,000 34,997
--------
TOTAL COMMERCIAL PAPER 350,930
--------
TIME DEPOSITS - 9.99%
Allied Irish Banks PLC, 0.65%, Due 1/13/2010 ............................................. 36,000 36,000
Bank of Ireland N.Y., 0.40%, Due 1/7/2010 ................................................ 36,000 36,000
--------
TOTAL TIME DEPOSITS 72,000
--------
SHARES
-----------
SHORT-TERM INVESTMENTS - 6.45%
AIM Short-Term Investment Company Liquid Asset Fund....................................... 26,685,528 26,686
DWS Money Market Series 23................................................................ 1,091,499 1,091
RBC Prime Money Market Fund............................................................... 18,691,630 18,692
--------
TOTAL SHORT-TERM INVESTMENTS 46,469
--------
PAR AMOUNT
-----------
REPURCHASE AGREEMENTS - 34.85%
Barclays Capital, Inc., 0.463%, Due 1/4/2010 (Held at Bank of New York Mellon,
Collateralized by Corporate Obligations valued at $39,600, 5.45% - 7.0%, 9/15/2014 -
12/31/2099)............................................................................. $ 36,000 36,000
RBC Capital Markets Corp., 0.263%, Due 1/4/2010 (Held at Bank of New York Mellon,
Collateralized by Equity Securities valued at $37,805).................................. 36,000 36,000
J.P. Morgan Clearing Corp., 0.313%, Due 1/4/2010 (Held at JPMorgan Chase, Collateralized
by Equity Securities valued at $36,750)................................................. 35,000 35,000
BNP Paribas Securities Corp., 0.413%, Due 1/4/2010 (Held at Bank of New York Mellon,
Collateralized by Corporate Obligations valued at $39,600, Zero Coupon - 11.625%,
1/15/2010 - 2/15/2035).................................................................. 36,000 36,000
Morgan Stanley & Co., Inc., 0.313%, Due 1/4/2010 (Held at JPMorgan Chase, Collateralized
by Equity Securities valued at $37,800)................................................. 36,000 36,000
Wells Fargo Securities LLC, 0.363%, Due 1/4/2010 (Held at Bank of New York Mellon,
Collateralized by Corporate Obligations valued at $37,800, Zero Coupon - 17.0%,
2/25/2010 - 11/15/2056)................................................................. 36,000 36,000
Merrill Lynch, Pierce, Fenner & Smith, Inc., 0.263%, Due 1/4/2010 (Held at Bank of New
York Mellon, Collateralized by Equity Securities valued at $39,600)..................... 36,000 36,000
--------
TOTAL REPURCHASE AGREEMENTS 251,000
--------
TOTAL INVESTMENTS - 100.01% (COST $720,399) $720,399
LIABILITIES, NET OF OTHER ASSETS - (0.01%) (106)
TOTAL NET ASSETS - 100.00% $720,293
========
Percentages are stated as a percent of net assets.
# Security exempt from registration under the Securities Act of 1933. These
securities may be resold to qualified institutional buyers pursuant to Rule
144A. At the period end, the value of these securities amounted to $174,962
or 24.29% of net assets. The Fund has no right to demand registration of
these securities.
13
AMERICAN BEACON MASTER MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2009 (IN THOUSANDS)
ASSETS:
Investment in securities at value (cost - $469,399) ...................... $469,399
Repurchase agreement (cost - $251,000) ................................... 251,000
Dividends and interest receivable ........................................ 31
Prepaid expenses ......................................................... 11
--------
TOTAL ASSETS .......................................................... 720,441
--------
LIABILITIES:
Management and investment advisory fees payable (Note 2) ................. 59
Professional fees payable ................................................ 41
Trustee fees payable ..................................................... 17
Other liabilities ........................................................ 31
--------
TOTAL LIABILITIES ..................................................... 148
--------
NET ASSETS APPLICABLE TO INVESTORS' BENEFICIAL INTERESTS .................... $720,293
========
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2009 (IN THOUSANDS)
INVESTMENT INCOME:
Dividend income .......................................................... $ 385
Interest income .......................................................... 4,231
------
TOTAL INVESTMENT INCOME ............................................... 4,616
------
EXPENSES:
Management and investment advisory fees (Note 2) ......................... 834
Custodian fees ........................................................... 68
Professional fees ........................................................ 47
Insurance fees ........................................................... 174
Trustee expenses ......................................................... 62
------
TOTAL EXPENSES ........................................................ 1,185
------
NET INVESTMENT INCOME ....................................................... 3,431
------
REALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ......................................... 85
------
NET GAIN ON INVESTMENTS ............................................... 85
------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................ $3,516
======
See accompanying notes
14
AMERICAN BEACON MASTER MONEY MARKET PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(IN THOUSANDS)
Year Ended December 31,
---------------------------
2009 2008
----------- -------------
INCREASE IN NET ASSETS:
OPERATIONS:
Net investment income ................................... $ 3,431 $ 330,834
Net realized gain on investments ........................ 85 197
----------- -------------
TOTAL INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ........................................ 3,516 331,031
----------- -------------
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS:
Contributions ........................................... 877,408 125,022,264
Withdrawals ............................................. (1,122,919) (137,575,006)
----------- -------------
NET DECREASE IN NET ASSETS RESULTING FROM
TRANSACTIONS IN INVESTORS' BENEFICIAL
INTERESTS ......................................... (245,511) (12,552,742)
----------- -------------
NET DECREASE IN NET ASSETS ........................... (241,995) (12,221,711)
----------- -------------
NET ASSETS:
Beginning of period ..................................... 962,288 13,183,999
----------- -------------
END OF PERIOD ........................................... $ 720,293 $ 962,288
=========== =============
FINANCIAL HIGHLIGHTS
Year Ended December 31,
--------------------------------
2009 2008 2007 2006 2005
---- ---- ---- ---- ----
Total return ..................................... 0.42% 2.75% 5.33% 5.09% 3.25%
Ratios to average net assets (annualized):
Expenses....................................... 0.14% 0.11% 0.11% 0.11% 0.11%
Net investment income.......................... 0.41% 2.94% 5.19% 5.03% 3.20%
See accompanying notes
15
AMERICAN BEACON MASTER MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
American Beacon Money Market Portfolio (the "Portfolio") is a series of the
American Beacon Master Trust (the "Trust"), which is registered under the
Investment Company Act of 1940, as amended, as a no load, open-end management
investment company that was organized as a trust under the laws of the
Commonwealth of Massachusetts pursuant to a Declaration of Trust dated as of
November 1, 2004. The objective of the Portfolio is current income, liquidity
and the maintenance of a stable price of $1.00 per share.
American Beacon Advisors, Inc. (the "Manager") is a wholly-owned subsidiary
of Lighthouse Holdings, Inc. and was organized in 1986 to provide business
management, advisory, administrative and asset management consulting services.
The following is a summary of the significant accounting policies followed
by the Portfolio.
Affiliated Ownership
At December 31, 2009, 100% of the Portfolio was held by affiliated funds.
Valuation of Investments
Securities of the Portfolio are valued at amortized cost, which
approximates fair value. In the event that a deviation of 1/2 of 1% or more
exists between the $1.00 per share price of the Portfolio, calculated at
amortized cost, and the price per share calculated by reference to market
quotations, or if there is any other deviation that the Trust's Board of
Trustees (the "Board") believes would result in a material dilution to
shareholders or purchasers, the Board will promptly consider the appropriate
action that should be initiated.
Valuation Inputs
Various inputs may be used to determine the fair value of the Portfolio's
investments. These inputs are summarized in three broad levels for financial
statement purposes. The inputs or methodologies used to value the securities are
not necessarily an indication of the risk associated with investing in those
securities. For example, money market securities are valued using amortized
cost, in accordance with rules under the Investment Company Act of 1940.
Generally, amortized cost approximates the current fair value of a security, but
since the value is not obtained from a quoted price in an active market, such
securities are typically reflected as Level 2.
Level 1 - Quoted prices in active markets for identical securities.
Level 2 - Prices determined using other significant observable inputs.
These may include quoted prices for similar securities, interest rates,
prepayment speeds, credit risk, and others.
Level 3- Prices determined using significant unobservable inputs.
Unobservable inputs reflect the Portfolio's own assumptions about the
factors market participants would use in pricing an investment, and would
be based on the best information available.
The Portfolio's investments are summarized by level based on the inputs
used to determine their values and at December 31, 2009, were classified as
follows: (in thousands)
Level 1 Level 2 Level 3 Total
------- -------- ------- --------
Asset Description:
Commercial Paper........................................ $ -- $350,930 $-- $350,930
Time Deposits........................................... -- 72,000 -- 72,000
Short-Term Investments.................................. 46,469 -- -- 46,469
Repurchase Agreements................................... -- 251,000 -- 251,000
------- -------- --- --------
Total Investments in Securities...................... $46,469 $673,930 $-- $720,399
======= ======== === ========
16
AMERICAN BEACON MASTER MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
Security Transactions and Investment Income
Security transactions are recorded on the trade date of the security
purchase or sale. Interest income is earned from settlement date, recorded on
the accrual basis, and adjusted, if necessary, for amortization of premiums or
accretion of discounts on investment grade short-term securities and zero coupon
instruments. For financial and tax reporting purposes, realized gains and losses
are determined on the basis of specific lot identification.
Federal Income Taxes
The Portfolio will be treated as a partnership for federal income tax
purposes. As such, each investor in the Portfolio will be taxed on its share of
the Portfolio's ordinary income and capital gains. It is intended that the
Portfolio's assets will be managed in such a way that an investor in the
Portfolio will be able to satisfy the requirements of subchapter M of the
Internal Revenue Code.
The Portfolio does not have any unrecognized tax benefits in the
accompanying financial statements. Each of the tax years in the four year period
ended December 31, 2009 remains subject to examination by the Internal Revenue
Service. If applicable, the Portfolio recognizes interest accrued related to
unrecognized tax benefits in interest expense and penalties in "Other expense"
on the Statement of Operations.
Repurchase Agreements
Under the terms of a repurchase agreement, securities are acquired by the
Portfolio from a securities dealer or a bank that are subject to resale at a
later date. Repurchase agreements are fully collateralized by government or
non-government securities. All collateral is valued at cost, which approximates
market value and is held at the custodian bank. The collateral is monitored
daily by the Manager so that the collateral's market value exceeds the carrying
value of the repurchase agreement plus accrued interest.
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.
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 investment
advisory and portfolio management services. The Manager serves as the sole
investment advisor to the Portfolio. As compensation for performing the duties
required under the Management Agreement, the Manager receives 0.09% of the
average daily net assets of the Portfolio.
17
AMERICAN BEACON MASTER MONEY MARKET PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2009
Administrative Services Agreement
The Manager and the Trust entered into an Administrative Services Agreement
that obligates the Manager to provide or oversee administrative and management
services to the Portfolio. As compensation for performing the duties required
under the Administrative Services Agreement, the Manager receives an annualized
fee of 0.01% of the average daily net assets of the Portfolio.
Interfund Lending Program
Pursuant to an exemptive order by the Securities and Exchange Commission,
the Portfolio, along with other registered investment companies having
management contracts with the Manager, may participate in an interfund lending
program. This program provides an alternative credit facility allowing the
Portfolio to lend money to other participating series managed by the Manager.
For the year ended December 31, 2009 the Portfolio earned $916 under the credit
facility. This amount is included in interest income on the Statement of
Operations.
3. SUBSEQUENT EVENTS
Management has evaluated the possibility of subsequent events existing in
the Portfolio's financial statements through February 26, 2010. Management has
determined that there are no material events that would require disclosure in
the Portfolio's financial statements through this date.
18
AMERICAN BEACON MILEAGE FUNDS
PRIVACY POLICY AND FEDERAL TAX INFORMATION
(UNAUDITED)
PRIVACY POLICY
The American Beacon Mileage Funds recognizes and respects the privacy of
our shareholders. We are providing this notice to you so you will understand how
shareholder information may be collected and used.
We may collect nonpublic personal information about you from one or more of
the following sources:
- information we receive from you on applications or other forms;
- information about your transactions with us or our service
providers; and
- information we receive from third parties.
We do not disclose any nonpublic personal information about our customers
or former customers to anyone, except as permitted by law.
We restrict access to your nonpublic personal information to those
employees or service providers who need to know that information to provide
products or services to you. To ensure the confidentiality of your nonpublic
personal information, we maintain safeguards that comply with federal standards.
FEDERAL TAX INFORMATION
We are providing this information as required by the Internal Revenue Code.
The amounts shown may differ from those in other areas of this report because of
differences between tax and financial reporting requirements.
The distributions to shareholders during the tax year ended December 31,
2009 include short-term capital gains of $3,454 for the Money Market Mileage
Fund.
We are required by Internal Revenue Code to advise you within 60 days of
the Funds' fiscal year end as to the federal tax status of dividends paid by the
Funds during its fiscal year ended December 31, 2009. For purposes of preparing
your annual federal income tax returns, you should report the amounts reflected
on your Form 1099-DIV, Box 1a.
19
TRUSTEES AND OFFICERS
AMERICAN BEACON MILEAGE FUNDS AND AMERICAN BEACON MASTER TRUST
(UNAUDITED)
The Trustees and officers of the American Beacon Mileage Funds (the
"Trust") and the American Beacon Master Trust are listed below, together with
their principal occupations during the past five years. Unless otherwise
indicated, the address of each person listed below is 4151 Amon Carter
Boulevard, MD 2450, Fort Worth, Texas 76155. Each Trustee oversees nineteen
funds in the fund complex that includes the Trust, the American Beacon Master
Trust, the American Beacon Funds, and the American Beacon Select Funds. The
Trust's Statement of Additional Information contains additional information
about the Trustees and is available without charge by calling 1-800-658-5811.
POSITION, TERM OF
OFFICE AND LENGTH
OF TIME SERVED PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
NAME, AGE AND ADDRESS WITH THE TRUST AND CURRENT DIRECTORSHIPS
- ------------------------- ------------------- ------------------------------------------------------------------------
INTERESTED TRUSTEES
Term
Lifetime of Trust
until removal,
resignation or
retirement*
Alan D. Feld** (73) Trustee since 1996 Sole Shareholder of a professional corporation which is a Partner in the
law firm of Akin, Gump, Strauss, Hauer & Feld, LLP (1960-Present);
Director, Clear Channel Communications (1984-2008); Trustee, CenterPoint
Properties (1994-2006); Member, Board of Trustees, Southern Methodist
University; Member, Board of Visitors, M.D. Anderson Hospital; Board of
Visitors, Zale/Lipshy Hospital; Trustee, American Beacon Funds
(1996-Present); Trustee, American Beacon Select Funds (1999-Present)
NON-INTERESTED TRUSTEES Term
W. Humphrey Bogart (65) Trustee since 2004 Board Member, Baylor University Medical Center Foundation (1992-2004);
Consultant, New River Canada Ltd. (mutual fund servicing company)
(1998-2003); President and CEO, Allmerica Trust Company, NA (1996-1997);
President and CEO, Fidelity Investments Southwest Company (1983-1995);
Senior Vice President of Regional Centers, Fidelity Investments
(1988-1995); Trustee, American Beacon Funds (2004-Present); Trustee,
American Beacon Select Funds (2004-Present)
Brenda A. Cline (49) Trustee since 2004 Executive Vice President, Chief Financial Officer, Treasurer and
Secretary, Kimbell Art Foundation (1993-Present); Trustee, Texas
Christian University (1998-Present); Trustee, W.I. Cook Foundation, Inc.
(d/b/a Cook Children's Health Foundation) (2001-2006); Director,
Christian Church Foundation (1999-2007); Trustee, American Beacon Funds
(2004-Present); Trustee, American Beacon Select Funds (2004-Present)
Eugene J. Duffy (55) Trustee since 2008 Principal and Executive Vice President, Paradigm Asset Management
(1994-Present); Director, Sunrise Bank of Atlanta (2008-Present);
Chairman, Special Contributions Fund Board of Trustees, National
Association for the Advancement of Colored People (2007-Present);
Trustee, National Association for the Advancement of Colored People
(2000-Present); Board of Visitors, Emory University (2006-Present);
Trustee, Atlanta Botanical Garden (2006-Present); Board Member, Willie
L. Brown Jr. Institute on Politics and Public Service (2001-Present);
Chair, National Association of Securities Professionals (2000-2002);
Deputy Chief Administrative Officer, City of Atlanta (1985-1990);
Trustee, American Beacon Funds, (2008-Present); Trustee, American Beacon
Select Funds (2008-Present)
Thomas M. Dunning (67) Trustee since 2008 Consultant, (2008-Present); Chairman (1998-2008) and Chief Executive
Officer (1998-2007), Lockton Dunning Benefits (consulting firm in
employee benefits); Director, Oncor Electric Delivery Company LLC
(2007-Present); Board Member, Baylor Health Care System Foundation
(2007-Present); Vice Chair, State Fair of Texas (1987-Present); Board
Member, Southwestern Medical Foundation(1994-Present); Board Member,
John Tower Center for Political Studies/SMU (2008-Present); Board
Member, University of Texas Development Board (2008-Present); Trustee,
American Beacon Funds, (2008-Present); Trustee, American Beacon Select
Funds (2008-Present)
20
TRUSTEES AND OFFICERS
AMERICAN BEACON MILEAGE FUNDS AND AMERICAN BEACON MASTER TRUST
(UNAUDITED)
POSITION, TERM OF
OFFICE AND LENGTH
OF TIME SERVED PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
NAME, AGE AND ADDRESS WITH THE TRUST AND CURRENT DIRECTORSHIPS
- ------------------------- ------------------- ------------------------------------------------------------------------
NON-INTERESTED TRUSTEES
(CONT.)
Richard A. Massman (66) Trustee since 2004 Consultant and General Counsel Emeritus (2009-Present) and Senior Vice
Chairman since 2008 President and General Counsel (1994-2009), Hunt Consolidated, Inc.
(holding company engaged in oil and gas exploration and production,
refining, real estate, farming, ranching and venture capital
activities); Chairman (2007-Present) and Director (2005-Present), The
Dallas Opera Foundation; Chairman (2006-2009) and Director
(2005-Present), Temple Emanu-El Foundation; Trustee, Presbyterian
Healthcare Foundation (2006-Present); Trustee, American Beacon Funds
(2004-Present); Trustee, American Beacon Select Funds (2004-Present)
R. Gerald Turner (64) Trustee since 2001 President, Southern Methodist University (1995-Present); Director,
225 Perkins Admin. Bldg. ChemFirst (1986-2002); Director, J.C. Penney Company, Inc.
Southern Methodist Univ. (1996-Present); Director, California Federal Preferred Capital Corp.
Dallas, Texas 75275 (2001-2003); Director, Kronus Worldwide Inc. (chemical manufacturing)
(2003-Present); Director, First Broadcasting Investment Partners, LLC
(2003-2007); Member, Salvation Army of Dallas Board of Directors;
Member, Methodist Hospital Advisory Board; Co-Chair, Knight Commission
on Intercollegiate Athletics; Trustee, American Beacon Funds
(2001-Present); Trustee, American Beacon Select Funds (2001-Present)
Paul J. Zucconi,CPA (68) Trustee since 2008 Director, Affirmative Insurance Holdings, Inc. (producer of nonstandard
automobile insurance) (2004-Present); Director, Titanium Metals
Corporation (producer of titanium melted and mill products and sponge)
(2002-Present); Director, Torchmark Corporation (life and health
insurance products) (2002-Present); Director, National Kidney Foundation
serving North Texas (2003-Present); Director, Dallas Chapter of National
Association of Corporate Directors (2004-Present); Partner, KPMG
(1976-2001); Trustee, American Beacon Funds, (2008-Present); Trustee,
American Beacon Select Funds (2008-Present)
OFFICERS Term
One Year
William F. Quinn (62) Executive Vice Executive Chairman (2009-Present), Chairman (2006-2009) CEO (2006-2007),
President from President (1986-2006) and Director (2003-Present), American Beacon
2007 to 2008 and Advisors, Inc.; Chairman (1989-2003) and Director (1979-1989,
2009-Present 2003-Present), American Airlines Federal Credit Union; Director Hicks
President from Acquisition I, Inc. (2007-2009); Director, Crescent Real Estate
1987 to 2007 Equities, Inc.(1994-2007); Director, Pritchard, Hubble & Herr, LLC
Trustee from (investment advisor) (2001-2006); Director of Investment Committee,
1995 to 2008 Southern Methodist University Endowment Fund (1996-Present); Member,
Southern Methodist University Cox School of Business Advisory Board
(1999-2002); Member, New York Stock Exchange Pension Manager Committee
(1997-1998, 2000-2002, 2006-Present); Chairman (2007-Present) and Vice
Chairman (2004-2007), Committee for the Investment of Employee Benefits;
Director, United Way of Metropolitan Tarrant County (1988-2000,
2004-Present); Trustee, American Beacon Funds (1987-2008); Trustee,
American Beacon Select Funds (1999-2008); Trustee, American Beacon
Master Trust (1995-2008)
Gene L. Needles, Jr. (55) President since President, CEO and Director (2009-Present), American Beacon Advisors,
2009 Inc.; President (2008-2009), Touchstone Investments; President
Executive Vice (2003-2007), CEO (2004-2007), Managing Director of Sales (2002-2003),
President 2009 National Sales Manager (1999-2002), and Regional Sales Manager
(1993-1999), AIM Distributors.
21
TRUSTEES AND OFFICERS
AMERICAN BEACON MILEAGE FUNDS AND AMERICAN BEACON MASTER TRUST
(UNAUDITED)
POSITION, TERM OF
OFFICE AND LENGTH
OF TIME SERVED PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
NAME, AGE AND ADDRESS WITH THE TRUST AND CURRENT DIRECTORSHIPS
- ------------------------- ------------------- ------------------------------------------------------------------------
Rosemary K. Behan (51) VP, Secretary and Vice President, Legal and Compliance, American Beacon Advisors, Inc.
Chief Legal (2006-Present); Assistant General Counsel, First Command Financial
Officer since 2006 Planning, Inc. (2004-2006); Attorney, Securities and Exchange Commission
(1995-2004)
Brian E. Brett (49) VP since 2004 Vice President, Director of Sales and Marketing, American Beacon
Advisors, Inc. (2004-Present); Regional Vice President, Neuberger
Berman, LLC (investment advisor) (1996-2004)
Wyatt L. Crumpler (43) VP since 2007 Vice President, Asset Management, American Beacon Advisors, Inc.
(2007-Present); Managing Director of Corporate Accounting (2004-2007),
Director of IT Strategy and Finance (2002-2004), American Airlines, Inc.
Michael W. Fields (56) VP since 1989 Vice President, Fixed Income Investments, American Beacon Advisors, Inc.
(1988-Present); Director American Beacon Global Funds SPC
(2002-Present); Director, American Beacon Global Funds plc (2007-2009).
Melinda G. Heika (48) Treasurer since Vice President, Finance and Accounting (2010-Present), Controller
2010 (2005-2009), Assistant Controller (1998-2004), American Beacon Advisors,
Inc.
Terri L. McKinney (46) VP since 2010 Vice President, Enterprise Services (2009-Present), Managing Director
(2003-2009), Director of Marketing and Retail Sales (1996-2003),
American Beacon Advisors, Inc.; Vice President, Board of Trustees
(2008-Present), Trustee (2006-2008) Down Syndrome Guild of Dallas
Jeffrey K. Ringdahl (34) VP since 2010 Chief Operating Officer, American Beacon Advisors, Inc. (2010-Present);
Vice President Product Management, Touchstone Advisors, Inc.
(2007-2010); Senior Director, Business Integration, Fidelity Investments
(2005-2007)
Christina E. Sears (38) Chief Compliance Chief Compliance Officer, (2004-Present); Senior Compliance Analyst
Officer since 2004 (1998-2004), American Beacon Advisors, Inc.
and Asst.
Secretary since
1999
* The Board has adopted a retirement plan that requires Trustees to retire no
later than the last day of the calendar year in which they reach the age of
72, provided, however, that the Board may determine to grant one or more
annual exemptions to this requirement.
** Mr. Feld is deemed to be an "interested person" of the Trust and Master
Trust, as defined by the 1940 Act. Mr. Feld's law firm of Akin, Gump,
Strauss, Hauer & Feld LLP has provided legal services within the past two
fiscal years to the Manager.
22
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25
(AMERICAN BEACON MILEAGE 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.
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:
(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 Fund's 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 FIRM FORESIDE FUND SERVICES,
TRUST SERVICES ERNST & YOUNG LLP LLC
Boston, Massachusetts Kansas City, Missouri Dallas, Texas Portland, Maine
This report is prepared for shareholders of the American Beacon Mileage Funds
and may be distributed to others only if preceded or accompanied by a current
prospectus.
American Beacon Mileage Funds, Mileage Class, and American Beacon Money Market
Mileage Fund are service marks of American Beacon Advisors, Inc.
AR 12/09
00072610
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.
The Trust's Board of Trustees has determined that Mr. Paul J. Zucconi, CPA, a
member of the Trust's Audit and Compliance Committee, is an "audit committee
financial expert" as defined in Form N-CSR. Mr. Paul J. Zucconi is
"independent" as defined in Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a)
<Table>
<Caption>
Audit Fees Fiscal Year Ended
- ---------- -----------------
$10,763 12/31/2008
$11,587 12/31/2009
(b)
<Table>
<Caption>
Audit-Related Fees Fiscal Year Ended
- ------------------ -----------------
$0 12/31/2008
$0 12/31/2009
(c)
<Table>
<Caption>
Tax Fees Fiscal Year Ended
- -------- -----------------
$2,031 12/31/2008
$0 12/31/2009
(d)
<Table>
<Caption>
All Other Fees Fiscal Year Ended
- -------------- -----------------
$0 12/31/2008
$0 12/31/2009
(e)(1) Pursuant to its charter, the Trust's Audit and Compliance Committee
shall have the following duties and powers pertaining to pre-approval
of audit and non-audit services provided by the Trust's principal
accountant:
- to approve, prior to appointment, the engagement of auditors to
annually audit and provide their opinion on the Trusts' financial
statements, and, in connection therewith, reviewing and evaluating
matters potentially affecting the independence and capabilities of
the auditors;
- to approve, prior to appointment, the engagement of the auditors to
provide non-audit services to the Trusts, an investment adviser to
any series of the Trusts or any entity controlling, controlled by,
or under common control with an investment adviser ("adviser
affiliate") that provides ongoing services to the Trusts, if the
engagement relates directly to the operations and financial
reporting of the Trusts;
- to consider whether the non-audit services provided by a Trust's
auditor to an investment adviser or any adviser affiliate that
provides ongoing services to a series of the Trusts, which services
were not pre-approved by the Committee, are compatible with
maintaining the auditor's independence;
- to review the arrangements for and scope of the annual audit and
any special audits; and
- to review and approving the fees proposed to be charged to the
Trusts by the auditors for each audit and non-audit service.
The Audit and Compliance Committee may delegate any portion of its authority,
including the authority to grant pre-approvals of audit and permitted
non-audit services, to a subcommittee of one or more members. Any decisions
of the subcommittee to grant pre-approvals shall be presented to the full
committee at its next regularly scheduled meeting.
(e)(2) None of the fees disclosed in paragraphs (b) through (d) above were
approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of
Rule 2-01 of Regulation S-X.
(f) Not Applicable.
(g)
<Table>
<Caption>
Aggregate Non-Audit Fees for Services Rendered to the:
- ------------------------------------------------------
Adviser's Affiliates Providing
Registrant Adviser Ongoing Services to Registrant Fiscal Year Ended
- ---------- ------- ------------------------------ -----------------
$2,032 $0 N/A 12/31/2008
$ 0 $0 N/A 12/31/2009
(h) Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The schedules of investments for each series of the Trust are included in the
shareholder reports presented in Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Trust has made no material changes to the procedures by which shareholders
may recommend nominees to the Trust's Board of Trustees since the Trust last
disclosed such procedures in Schedule 14A.
ITEM 11. CONTROLS AND PROCEDURES.
(a) Based upon an evaluation within 90 days of the filing date of this
report, the principal executive and financial officers concluded that
the disclosure controls and procedures of the Trust are effective.
(b) There were no changes in the Trust's internal control over financial
reporting during the second fiscal quarter of the period covered by
this report that has materially affected, or is reasonably likely to
materially affect, the Trust's internal control over financial
reporting.
ITEM 12. EXHIBITS.
(a)(1) Filed herewith as EX-99.CODE ETH.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the Trust as required by Rule
30a-2(a) under the Investment Company Act of 1940 is attached
hereto as EX-99.CERT.
(a)(3) Not Applicable.
(b) The certifications required by Rule 30a-2(b) under the Investment
Company Act of 1940 are attached hereto as EX-99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): American Beacon Mileage Funds
By /s/ Gene L. Neeldes, Jr.
--------------------
Gene L. Needles, Jr.
President
Date: March 5, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on
the dates indicated.
By /s/ Gene L. Needles, Jr.
--------------------
Gene L. Needles, Jr.
President
Date: March 5, 2010
By /s/ Melinda G. Heika
---------------------
Melinda G. Heika
Treasurer
Date: March 5, 2010