REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 | ☒ | |
Pre-Effective Amendment No. | ☐ | |
Post-Effective Amendment No. 412 | ☒ | |
and/or | ||
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 | ☒ | |
Amendment No. 412 | ☒ | |
(Check appropriate box or boxes.) |
☐
|
immediately
upon filing pursuant to paragraph (b) |
☒
|
on
|
☐
|
60
days after filing pursuant to paragraph (a)(1) |
☐
|
on
(date) pursuant to paragraph (a)(1) |
☐
|
75
days after filing pursuant to paragraph (a)(2) |
☐
|
on
(date) pursuant to paragraph (a)(2) of Rule 485 |
☐
|
This
post-effective amendment designates a new effective date for a previously filed post-effective amendment.
|
American Beacon
|
|
Share Class
|
||||||
|
A
|
C
|
Y
|
R6
|
Advisor
|
R5
|
Investor
|
American Beacon Balanced Fund
|
ABFAX
|
ABCCX
|
ACBYX
|
ABLSX
|
AADBX
|
AABPX
|
|
American Beacon Garcia Hamilton Quality Bond Fund
|
|
|
GHQYX
|
GHQRX
|
|
GHQIX
|
GHQPX
|
American Beacon International Equity Fund
|
AIEAX
|
AILCX
|
ABEYX
|
AAERX
|
AAISX
|
AAIEX
|
AAIPX
|
American Beacon Large Cap Value Fund
|
ALVAX
|
ALVCX
|
ABLYX
|
AALRX
|
AVASX
|
AADEX
|
AAGPX
|
American Beacon Small Cap Value Fund
|
ABSAX
|
ASVCX
|
ABSYX
|
AASRX
|
AASSX
|
AVFIX
|
AVPAX
|
Back Cover
|
|
American Beacon
Balanced FundSM |
Share Class
|
A
|
C
|
Y
|
Advisor
|
R5
|
Investor
|
Maximum sales charge imposed on purchases (as a percentage of offering price)
|
%
|
|
|
|
|
|
Maximum deferred sales charge (as a percentage of the lower of original offering price or redemption proceeds)
|
%
1
|
%
|
|
|
|
|
|
||||||
Share Class
|
A
|
C
|
Y
|
Advisor
|
R5
|
Investor
|
Management Fees
|
%
|
%
|
%
|
%
|
%
|
%
|
Distribution and/or Service (12b-1) Fees
|
%
|
%
|
%
|
%
|
%
|
%
|
Other Expenses
|
%
|
%
|
%
|
%
|
%
|
%
|
Acquired Fund Fees and Expenses
|
%
|
%
|
%
|
%
|
%
|
%
|
Total Annual Fund Operating Expenses2
|
%
|
%
|
%
|
%
|
%
|
%
|
1 |
2 |
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
A
|
$
|
$
|
$
|
$
|
C
|
$
|
$
|
$
|
$
|
Y
|
$
|
$
|
$
|
$
|
Advisor
|
$
|
$
|
$
|
$
|
R5
|
$
|
$
|
$
|
$
|
Investor
|
$
|
$
|
$
|
$
|
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
C
|
$
|
$
|
$
|
$
|
■
|
above-average earnings growth potential,
|
■
|
below-average price to earnings ratio,
|
■
|
below-average price to book value ratio, and
|
■
|
above-average dividend yields.
|
■
|
Develop an overall investment strategy, including a portfolio duration target, by examining the current trends in the U.S. economy.
|
■
|
Set desired portfolio duration structure by comparing the differences between corporate and U.S. Government securities of similar duration to judge their potential for optimal return in accordance with the target duration benchmark.
|
■
|
Determine the weightings of each security type by analyzing the difference in yield spreads between corporate and U.S. Government securities.
|
■
|
Select specific debt securities within each security type.
|
■
|
Review and monitor portfolio composition for changes in credit, risk-return profile and comparisons with benchmarks.
|
■
|
Search for eligible securities with a yield to maturity advantage versus a U.S. Government security with a similar duration.
|
■
|
Evaluate credit quality of the securities.
|
■
|
Perform an analysis of the expected price volatility of the securities to changes in interest rates by examining actual price volatility between U.S. Government and non-U.S. Government securities.
|
■
|
Common Stock Risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company.
|
■
|
Depositary Receipts and/or U.S. Dollar-Denominated Foreign Stocks Traded on U.S. Exchanges Risk. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency exchange rate fluctuations, political and financial instability in the home country of a particular depositary receipt or foreign stock, less liquidity, more volatility, less government regulation and supervision and delays in transaction settlement.
|
■
|
Master Limited Partnerships (“MLPs”) Risk. Investing in MLPs involves certain risks related to investing in the underlying assets of the MLPs and risks associated with pooled investment vehicles. Investments held by MLPs may be relatively illiquid, limiting the MLPs’ ability to change their portfolios promptly in response to changes in economic or other conditions. MLPs may have limited financial resources, their securities may trade infrequently and in limited volume, they may be difficult to value, and they may be subject to more abrupt or erratic price movements than securities of larger or more broadly based companies. Holders of units in MLPs have more limited rights to vote on matters affecting the partnership and may be required to sell their common units
|
at an undesirable time or price. The Fund’s investments in MLPs will be limited to no more than 25% of its assets in order for the Fund to meet the requirements necessary to qualify as a “regulated investment company” under the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”).
|
■
|
Real Estate Investment Trusts (“REITs”) Risk. Investments in REITs are subject to the risks associated with investing in the real estate industry, including, among other risks: adverse developments affecting the real estate industry; declines in real property values; changes in interest rates; defaults by mortgagors or other borrowers and tenants; lack of availability of mortgage funds or financing; extended vacancies of properties, especially during economic downturns; casualty or condemnation losses; regulatory limitations on rents and operating expenses; and other governmental actions, such as changes to tax laws, zoning regulations or environmental regulations. REITs also are dependent upon the skills of their managers and are subject to heavy cash flow dependency or self-liquidation. Regardless of where a REIT is organized or traded, its performance may be affected significantly by events in the region where its properties are located. REITs may not be diversified geographically or by property or tenant type. Domestic REITs could be adversely affected by failure to qualify for tax-free “pass-through” of distributed net income and net realized gains under the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”), or to maintain their exemption from registration under the Investment Company Act of 1940, as amended (“Investment Company Act”). REITs typically incur fees that are separate from those incurred by the Fund. Accordingly, the Fund’s investment in REITs will result in the layering of expenses such that shareholders will indirectly bear a proportionate share of the REITs’ operating expenses, in addition to paying Fund expenses. The value of REIT common stock may decline when interest rates rise. REITs tend to be small- to mid-capitalization securities and, as such, are subject to the risks of investing in small- to mid-capitalization securities.
|
■
|
Recent Market Events Risk. Both U.S. and international markets have experienced significant volatility in recent months and years. As a result of such volatility, investment returns may fluctuate significantly. Moreover, the risks discussed herein associated with an investment in the Fund may be increased.
|
Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the Federal Reserve and certain foreign central banks began to raise interest rates as part of their efforts to address rising inflation. It is difficult to accurately predict the pace at which interest rates may continue to increase, the timing, frequency or magnitude of any such increases, or when such increases might stop. Additionally, various economic and political factors could cause the Federal Reserve or another foreign central bank to change their approach in the future and such actions may result in an economic slowdown in the U.S. and abroad. Unexpected increases in interest rates could lead to market volatility or reduce liquidity in certain sectors of the market. Deteriorating economic fundamentals may, in turn, increase the risk of default or insolvency of particular issuers, negatively impact market value, cause credit spreads to widen, and reduce bank balance sheets. Any of these could cause an increase in market volatility, reduce liquidity across various markets or decrease confidence in the markets. Additionally, high public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty.
|
In March 2023, the shutdown of certain financial institutions in the U.S. and questions regarding the viability of other financial institutions raised economic concerns over disruption in the U.S. and global banking systems. There can be no certainty that the actions taken by the U.S. or foreign governments will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. and global banking systems.
|
Some countries, including the U.S., have in recent years adopted more protectionist trade policies. Slowing global economic growth; risks associated with a trade agreement between the United Kingdom and the European Union; the risks associated with ongoing trade negotiations with China; and the possibility of changes to some international trade agreements; political or economic dysfunction within some nations, including major producers of oil; and dramatic changes in commodity and currency prices could have adverse effects that cannot be foreseen at the present time.
|
Tensions, war, or open conflict between nations, such as between Russia and Ukraine, in the Middle East or in eastern Asia could affect the economies of many nations, including the United States. The duration of ongoing hostilities in the Middle East and between Russia and Ukraine, and any sanctions and related events cannot be predicted. Those events present material uncertainty and risk with respect to markets globally and the performance of the Fund and its investments or operations could be negatively impacted.
|
Regulators in the U.S. have proposed and recently adopted a number of changes to regulations involving the markets and issuers, some of which apply to the Fund. The full effect of various newly-adopted regulations is not currently known. Additionally, it is not clear whether the proposed regulations will be adopted. However, due to the broad scope of the new and proposed regulations, certain changes could limit the Fund’s ability to pursue its investment strategies or make certain investments, or may make it more costly for the Fund to operate, which may impact performance.
|
Economists and others have expressed increasing concern about the potential effects of global climate change on property and security values. Certain issuers, industries and regions may be adversely affected by the impacts of climate change, including on the demand for and the development of goods and services and related production costs, and the impacts of legislation, regulation and international accords related to climate change, as well as any indirect consequences of regulation or business trends driven by climate change.
|
■
|
Collateralized Mortgage Obligation (“CMOs”) Risk. CMOs may offer a higher yield than U.S. government securities, but they may also be subject to greater price fluctuation and credit risk. In addition, CMOs typically will be issued in a variety of classes or series, which have different maturities and are retired in sequence. In the event of a default by an issuer of a CMO, there is no assurance that the collateral securing such CMO will be sufficient to pay principal and interest. It is possible that there will be limited opportunities for trading CMOs in the OTC market, the depth and liquidity of which will vary from time to time.
|
■
|
Commercial Mortgage-Backed Securities (“CMBS”) Risk. CMBS reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants. CMBS may not be backed by the full faith and credit of the U.S. Government and are subject to risk of default on the underlying mortgages, particularly during periods of economic downturn. CMBS are subject to a greater degree of prepayment and extension risk than many other forms of fixed-income securities, and CMBS may be less liquid and exhibit greater price volatility than other types of mortgage- or asset-backed securities. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of CMBS.
|
■
|
Government Money Market Funds Risk. Investments in government money market funds are subject to interest rate risk, credit risk, and market risk. Interest rate risk is the risk that rising interest rates could cause the value of such an investment to decline. Credit risk is the risk that the issuer, guarantor or insurer of an obligation, or the counterparty to a transaction, may fail or become less able or unwilling, to make timely payment of interest or principal or otherwise honor its obligations, or that it may default completely.
|
■
|
Financials Sector Risk. Companies in the Financials sector are subject to extensive governmental regulation and intervention, which may result in financial penalties and limits on the scope of their activities, the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, the scope of their activities, the prices they can charge, the amount of capital they must maintain and, potentially, their size. The impact of recent or future regulation on the Financials sector, including more stringent capital requirements, cannot be predicted. In addition, fiscal, regulatory and monetary policies, economic conditions, interest rate changes, credit rating downgrades, and decreased liquidity in the credit markets may cause an adverse impact in a broad range of markets, including U.S. and international credit and interbank money markets, thereby affecting a wide range of companies in the Financials sector. Cybersecurity incidents and technology malfunctions and failures have become increasingly frequent and have caused significant losses to companies in this sector, which also may negatively impact the Fund.
|
|
|
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Investor Class
|
|
|
|
|
Returns Before Taxes
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions and Sales of Fund Shares
|
|
%
|
%
|
%
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Share Class (Before Taxes)
|
|
|
|
|
A
|
|
%
|
%
|
%
|
C
|
|
%
|
%
|
%*
|
Y
|
|
%
|
%
|
%
|
Advisor
|
|
%
|
%
|
%
|
R5
|
|
%
|
%
|
%
|
* | As noted above, the 10-year performance for C Class shares reflects the conversion of C Class shares to A Class shares after 8 years. If C Class shares were not converted to A Class shares after 8 years, and were instead held for the full 10-year period, performance would have been 5.64%. |
|
1 Year
|
5 Years
|
10 Years
|
Index (Reflects no deduction for fees, expenses, or taxes)
|
|
|
|
Balanced Composite Index (40% Bloomberg US Aggregate Bond Index/60% Russell 1000® Value Index)
|
%
|
%
|
%
|
Bloomberg US Aggregate Bond Index
|
%
|
%
|
%
|
Russell 1000® Value Index
|
%
|
%
|
%
|
■
|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
■
|
Hotchkis and Wiley Capital Management, LLC
|
American Beacon Advisors, Inc.
|
Paul B. Cavazos
Senior Vice President & Chief Investment Officer Since 2016 Kirk L. Brown
Senior Portfolio Manager Since 2016 |
Samuel Silver
Vice President, Fixed Income Investments Since 2014 Erin Higginbotham
Senior Portfolio Manager Since 2011 |
Barrow, Hanley, Mewhinney & Strauss, LLC
|
Mark Giambrone
Portfolio Manager/Senior Managing Director Since 2015 J. Scott McDonald
Portfolio Manager/Senior Managing Director Co-Head of Fixed Income Since 1998 Justin Martin
Portfolio Manager/Director Since 2021 |
Deborah A. Petruzzelli
Portfolio Manager/Managing Director Since 2003 Matthew Routh
Portfolio Manager/Director Since 2021 |
Hotchkis and Wiley Capital Management, LLC
|
George Davis
Principal, Portfolio Manager, and Executive Chairman Since 1989 Scott McBride
Portfolio Manager and Chief Executive Officer Since 2004 |
Judd Peters
Portfolio Manager Since 2003 Patricia McKenna
Principal and Portfolio Manager Since 1995 |
Internet
|
www.americanbeaconfunds.com
|
|
Phone
|
To reach an American Beacon representative call 1-800-658-5811, option 1
Through the Automated Voice Response Service call 1-800-658-5811, option 2 (Investor Class only)
|
|
Mail
|
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
|
Overnight Delivery:
American Beacon Funds
430 W. 7th Street, Suite 219643
Kansas City, MO 64105-1407
|
|
New Account
|
Existing Account
|
|
Share Class
|
Minimum Initial Investment Amount
|
Purchase/Redemption Minimum by Check/ACH/Exchange
|
Purchase/Redemption Minimum by Wire
|
C
|
$1,000
|
$50
|
$250
|
A, Investor
|
$2,500
|
$50
|
$250
|
Advisor
|
$2,500
|
$50
|
None
|
Y
|
$100,000
|
$50
|
None
|
R5
|
$250,000
|
$50
|
None
|
American Beacon
Garcia Hamilton Quality Bond FundSM |
Share Class
|
Y
|
R6
|
R5
|
Investor
|
Maximum sales charge imposed on purchases (as a percentage of offering price)
|
|
|
|
|
Maximum deferred sales charge (as a percentage of the lower of original offering price or redemption proceeds)
|
|
|
|
|
|
||||
Share Class
|
Y
|
R6
|
R5
|
Investor
|
Management Fees
|
%
|
%
|
%
|
%
|
Distribution and/or Service (12b-1) Fees
|
%
|
%
|
%
|
%
|
Other Expenses
|
%
|
%
|
%
|
%
|
Total Annual Fund Operating Expenses
|
%
|
%
|
%
|
%
|
Fee Waiver and/or expense reimbursement1
|
(
%)
|
(
%)
|
(
%)
|
(
%)
|
Total Annual Fund Operating Expenses after fee waiver and/or expense reimbursement
|
%
|
%
|
%
|
%
|
1 | American Beacon Advisors, Inc. (the “Manager”) has contractually agreed to waive fees and/or reimburse expenses of the Fund’s Y Class, R6 Class, R5 Class, and Investor Class shares through |
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
Y
|
$
|
$
|
$
|
$
|
R6
|
$
|
$
|
$
|
$
|
R5
|
$
|
$
|
$
|
$
|
Investor
|
$
|
$
|
$
|
$
|
■
|
Recent Market Events Risk. Both U.S. and international markets have experienced significant volatility in recent months and years. As a result of such volatility, investment returns may fluctuate significantly. Moreover, the risks discussed herein associated with an investment in the Fund may be increased.
|
Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the Federal Reserve and certain foreign central banks began to raise interest rates as part of their efforts to address rising inflation. It is difficult to accurately predict the pace at which interest rates may continue to increase, the timing, frequency or magnitude of any such increases, or when such increases might stop. Additionally, various economic and political factors could cause the Federal Reserve or another foreign central bank to change their approach in the future and such actions may result in an economic slowdown in the U.S. and abroad. Unexpected increases in interest rates could lead to market volatility or reduce liquidity in certain sectors of the market. Deteriorating economic fundamentals may, in turn, increase the risk of default or insolvency of particular issuers, negatively impact market value, cause credit spreads to widen, and reduce bank balance sheets. Any of these could cause an increase in market volatility, reduce liquidity across various markets or decrease confidence in the markets. Additionally, high public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty.
|
In March 2023, the shutdown of certain financial institutions in the U.S. and questions regarding the viability of other financial institutions raised economic concerns over disruption in the U.S. and global banking systems. There can be no certainty that the actions taken by the U.S. or foreign governments will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. and global banking systems.
|
Some countries, including the U.S., have in recent years adopted more protectionist trade policies. Slowing global economic growth; risks associated with a trade agreement between the United Kingdom and the European Union; the risks associated with ongoing trade negotiations with China; and the possibility of changes to some international trade agreements; political or economic dysfunction within some nations, including major producers of oil; and dramatic changes in commodity and currency prices could have adverse effects that cannot be foreseen at the present time.
|
Tensions, war, or open conflict between nations, such as between Russia and Ukraine, in the Middle East or in eastern Asia could affect the economies of many nations, including the United States. The duration of ongoing hostilities in the Middle East and between Russia and Ukraine, and any sanctions and related events cannot be predicted. Those events present material uncertainty and risk with respect to markets globally and the performance of the Fund and its investments or operations could be negatively impacted.
|
Regulators in the U.S. have proposed and recently adopted a number of changes to regulations involving the markets and issuers, some of which apply to the Fund. The full effect of various newly-adopted regulations is not currently known. Additionally, it is not clear whether the proposed regulations will be adopted. However, due to the broad scope of the new and proposed regulations, certain changes could limit the Fund’s ability to pursue its investment strategies or make certain investments, or may make it more costly for the Fund to operate, which may impact performance.
|
Economists and others have expressed increasing concern about the potential effects of global climate change on property and security values. Certain issuers, industries and regions may be adversely affected by the impacts of climate change, including on the demand for and the development of goods and services and related production costs, and the impacts of legislation, regulation and international accords related to climate change, as well as any indirect consequences of regulation or business trends driven by climate change.
|
■
|
Mortgage Pass-Through Securities Risk. Mortgage pass-through securities provide for the “pass through” of the monthly payments made by individual borrowers on their residential or commercial mortgage loans, net of any fees by the security issuer and guarantor, as applicable, to the holder of the security. Mortgage pass-through securities are sensitive to interest rate changes, and small movements in interest rates, both increases and decreases, may quickly and significantly affect the value of certain mortgage pass-through securities. Mortgage pass-through securities involve interest rate risk, credit risk, prepayment risk and extension risk.
|
■
|
Government Money Market Funds Risk. Investments in government money market funds are subject to interest rate risk, credit risk, and market risk. Interest rate risk is the risk that rising interest rates could cause the value of such an investment to decline. Credit risk is the risk that the issuer, guarantor or insurer of an obligation, or the counterparty to a transaction, may fail or become less able or unwilling, to make timely payment of interest or principal or otherwise honor its obligations, or that it may default completely.
|
■
|
Financials Sector Risk. Companies in the Financials sector are subject to extensive governmental regulation and intervention, which may result in financial penalties and limits on the scope of their activities, the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, the scope of their activities, the prices they can charge, the amount of capital they must maintain and, potentially, their size. The impact of recent or future regulation on the Financials sector, including more stringent capital requirements, cannot be predicted. In addition, fiscal, regulatory and monetary policies, economic conditions, interest rate changes, credit rating downgrades, and decreased liquidity in the credit markets may cause an adverse impact in a broad range of markets, including U.S. and international credit and interbank money markets, thereby affecting a wide range of companies in the Financials sector. Cybersecurity incidents and technology malfunctions and failures have become increasingly frequent and have caused significant losses to companies in this sector, which also may negatively impact the Fund.
|
|
|
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
Since Inception
|
Investor Class
|
|
|
|
|
Returns Before Taxes
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions
|
|
%
|
-
%
|
-
%
|
Returns After Taxes on Distributions and Sales of Fund Shares
|
|
%
|
-
%
|
-
%
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
Since Inception (04/04/2016)
|
Share Class (Before Taxes)
|
|
|
|
|
Y
|
|
%
|
%
|
%
|
R6
|
|
%
|
%
|
%
|
R5
|
|
%
|
%
|
%
|
|
1 Year
|
5 Years
|
Since Inception (04/04/2016)
|
Index (Reflects no deduction for fees, expenses, or taxes)
|
|
|
|
Bloomberg US Aggregate Bond Index
|
%
|
%
|
%
|
Garcia Hamilton & Associates, L.P.
|
Gilbert Andrew Garcia, CFA
Managing Partner, Chief Investment Officer Since Fund Inception (2016) Karen H. Tass, CFA (MBA)
Partner, Co-Deputy CIO, Portfolio Manager Since 2024 |
Jeffrey D. Detwiler, CFA (MS)
Partner, Co-Deputy CIO, Portfolio Manager Since 2024 Nancy Rodriguez
Partner, Portfolio Manager Since Fund Inception (2016) |
Internet
|
www.americanbeaconfunds.com
|
|
Phone
|
To reach an American Beacon representative call 1-800-658-5811, option 1
Through the Automated Voice Response Service call 1-800-658-5811, option 2 (Investor Class only)
|
|
Mail
|
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
|
Overnight Delivery:
American Beacon Funds
430 W. 7th Street, Suite 219643
Kansas City, MO 64105-1407
|
|
New Account
|
Existing Account
|
|
Share Class
|
Minimum Initial Investment Amount
|
Purchase/Redemption Minimum by Check/ACH/Exchange
|
Purchase/Redemption Minimum by Wire
|
Investor
|
$2,500
|
$50
|
$250
|
Y
|
$100,000
|
$50
|
None
|
R5
|
$250,000
|
$50
|
None
|
R6
|
None
|
$50
|
None
|
American Beacon
International Equity FundSM |
Share Class
|
A
|
C
|
Y
|
R6
|
Advisor
|
R5
|
Investor
|
Maximum sales charge imposed on purchases (as a percentage of offering price)
|
%
|
|
|
|
|
|
|
Maximum deferred sales charge (as a percentage of the lower of original offering price or redemption proceeds)
|
%
1
|
%
|
|
|
|
|
|
|
|||||||
Share Class
|
A
|
C
|
Y
|
R6
|
Advisor
|
R5
|
Investor
|
Management Fees
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Distribution and/or Service (12b-1) Fees
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Other Expenses
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Acquired Fund Fees and Expenses
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Total Annual Fund Operating Expenses2
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Fee Waiver and/or expense reimbursement3
|
%
|
%
|
%
|
(
%)
|
%
|
%
|
%
|
Total Annual Fund Operating Expenses after fee waiver and/or expense reimbursement
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
1 |
2 |
3 | American Beacon Advisors, Inc. (the “Manager”) has contractually agreed to waive fees and/or reimburse expenses of the Fund’s R6 Class shares, through |
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
A
|
$
|
$
|
$
|
$
|
C
|
$
|
$
|
$
|
$
|
Y
|
$
|
$
|
$
|
$
|
R6
|
$
|
$
|
$
|
$
|
Advisor
|
$
|
$
|
$
|
$
|
R5
|
$
|
$
|
$
|
$
|
Investor
|
$
|
$
|
$
|
$
|
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
C
|
$
|
$
|
$
|
$
|
■
|
above-average return on equity or earnings growth potential,
|
■
|
below-average price to earnings or price to cash flow ratio,
|
■
|
below-average price to book value ratio, and
|
■
|
above-average dividend yields.
|
■
|
Foreign Currency Forward Contracts Risk. Foreign currency forward contracts, including non-deliverable forwards (“NDFs”), are derivative instruments pursuant to a contract where the parties agree to a fixed price for an agreed amount of foreign currency at an agreed date or to buy or sell a specific currency at a future date at a price set at the time of the contract and include the risks associated with fluctuations in currency. There are no limitations on daily price movements of forward contracts. There can be no assurance that any strategy used will succeed. Not all forward contracts, including NDFs, require a counterparty to post collateral, which may expose the Fund to greater losses in the event of a default by a counterparty. The use of foreign currency forward contracts may expose the Fund to additional risks, such as credit risk, liquidity risk, and counterparty risk, that it would not be subject to if it invested directly in the securities or currencies underlying the foreign currency forward contract.
|
■
|
Futures Contracts Risk. Futures contracts are derivative instruments pursuant to a contract where the parties agree to a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose the Fund to additional risks, such as credit risk, liquidity risk, and counterparty risk, that it would not be subject to if it invested directly in the securities underlying those derivatives. There can be no assurance that any strategy used will succeed. There may at times be an imperfect correlation between the movement in the prices of futures contracts and the value of their underlying instruments or indexes. There also can be no assurance that, at all times, a liquid market will exist for offsetting a futures contract that the Fund has previously bought or sold, and this may result in the inability to close a futures contract when desired. Futures contracts may experience potentially dramatic price changes, which will increase the volatility of the Fund and may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract). Futures contracts on indices expose the Fund to volatility in an underlying index. Foreign currency futures contracts expose the Fund to risks associated with fluctuations in the value of foreign currencies. Foreign currency futures contracts are similar to foreign currency forward contracts, except that they are traded on exchanges (and may have margin requirements) and are standardized as to contract size and delivery date. The Fund may use foreign currency futures contracts for the same purposes as foreign currency forward contracts, subject to Commodity Futures Trading Commission (“CFTC”) regulations.
|
■
|
Swap Agreements Risk. Swap agreements or “swaps” are transactions in which the Fund and a counterparty agree to pay or receive payments at specified dates based upon or calculated by reference to changes in specified prices or rates or the performance of specified securities, indices or other assets based on a specified amount (the “notional” amount). Swaps can involve greater risks than a direct investment in an underlying asset, because swaps typically include a certain amount of embedded leverage and as such are subject to leverage risk. If swaps are used as a hedging strategy, the Fund is subject to the risk that the hedging strategy may not eliminate the risk that it is intended to offset, due to, among other reasons, the occurrence of unexpected price movements or the non-occurrence of expected price movements. Swaps also may be difficult to value. Swaps may be subject to liquidity risk and counterparty risk, and swaps that are traded over-the-counter are not subject to standardized clearing requirements and may involve greater liquidity and counterparty risks. The Fund may invest in the following types of swaps:
|
•
|
Currency swaps, which may be subject to currency risk and credit risk.
|
■
|
Common Stock Risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company.
|
■
|
Depositary Receipts and/or U.S. Dollar-Denominated Foreign Stocks Traded on U.S. Exchanges Risk. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency exchange rate fluctuations, political and financial instability in the home country of a particular depositary receipt or foreign stock, less liquidity, more volatility, less government regulation and supervision and delays in transaction settlement.
|
■
|
European Securities Risk. The Fund’s performance may be affected by political, social and economic conditions in Europe, such as growth of economic output (the gross national product of the countries in the region), the rate of inflation, the rate at which capital is reinvested into European economies, the success of governmental actions to reduce budget deficits, the resource self-sufficiency of European countries, the monetary exchange rates between European countries, and conflict between European countries. The European financial markets have experienced and may continue to experience volatility and adverse trends due to concerns relating to economic downturns; rising government debt levels and the possible default on government debt; national unemployment in several European countries; public health crises; political unrest; economic sanctions; inflation; energy crises; and war and military conflict, such as the Russian invasion of Ukraine. A default or debt restructuring by any European country could adversely impact holders of that country’s debt and sellers of credit default swaps linked to that country’s creditworthiness, which may be located in other countries. Such a default or debt restructuring could affect exposures to European countries. In addition, issuers have faced difficulties obtaining credit or refinancing existing obligations, and financial markets have experienced extreme volatility and declines in asset values and liquidity. These events have affected the exchange rate of the Euro and may continue to significantly affect European countries.
|
Responses to financial problems by European governments, central banks, and others, including austerity measures and other reforms, may not produce the desired results, may result in social unrest and may limit future growth and economic recovery or may have unintended consequences. The Fund makes investments in securities of issuers that are domiciled in member states of the European Union (the “EU”). The economies and markets of European countries are often closely connected and interdependent, and events in one country in Europe can have an adverse impact on other European countries. One or more countries may abandon the Euro and/or withdraw from the EU. The impact of these actions, especially if they occur in a disorderly fashion, could be significant and far-reaching. The United Kingdom’s withdrawal from the EU could be an indication that one or more other countries may withdraw from the EU and/or abandon the Euro. These events and actions have affected, and may in the future affect, the value and exchange rate of the Euro and may continue to significantly affect the economies of every country in Europe, including countries that do not use the Euro and non-EU member states.
|
The continuing effects on the economies of European countries of the Russia/Ukraine war and Russia’s response to sanctions imposed by the U.S., EU, UK and others, are impossible to predict, but have been and could continue to be significant. For example, exports in Eastern Europe have been disrupted for certain key commodities, pushing commodity prices to record highs. Also, both wholesale energy prices and energy prices charged to consumers in Europe have increased significantly.
|
■
|
United Kingdom Securities Risk. The Fund’s exposure to issuers located in, or with economic ties to, the United Kingdom, could expose the Fund to risks associated with investments in the United Kingdom to a greater extent than more geographically diverse funds. Investments in United Kingdom issuers may subject the Fund to regulatory, political, currency, security, and economic risks specific to the United Kingdom. The United Kingdom has one of the largest economies in Europe, and the United States and other European countries are substantial trading partners of the United Kingdom. As a result, the United Kingdom economy may be impacted by changes to the economic condition of the United States and other European countries.
Increasing commodity prices and rising inflation levels caused or exacerbated by the war between Russia and Ukraine recently prompted the United Kingdom government to implement significant policy changes. It is difficult to predict what effects such policies (or the suggestion of such policies) may have and the duration of those effects, which may last for extended periods. These effects may negatively impact broad segments of business and the population and have a significant and rapid negative impact on the performance of the Fund’s investments. Additionally, the transitional period following the United Kingdom’s departure from the European Union (commonly referred to as “Brexit”) ended on December 31, 2020 and European Union law ceased to have effect in the United Kingdom except to the extent retained by the United Kingdom by unilateral act. The United Kingdom and the European Union then reached a trade agreement that was ratified by all applicable United Kingdom and European Union governmental bodies. The economic effects of Brexit, including certain negative impacts on the ability of the United Kingdom to trade |
seamlessly with the European Union, are becoming clearer but some political, regulatory and commercial uncertainty in relation to the longer term impacts nevertheless remains to be resolved. Accordingly, there remains a risk that the aftermath of Brexit, including its ongoing effect on the United Kingdom’s relationships with other countries, including the United States, and with the European Union, may negatively impact the value of investments held by the Fund. Although a sub-advisor may hedge the Fund’s currency exposures back to the U.S. dollar, a depreciation of the British pound sterling and/or the Euro in relation to the U.S. dollar could adversely affect the Fund’s investments denominated in British pound sterling or Euros that are not fully hedged regardless of the performance of the underlying issuer.
|
■
|
Recent Market Events Risk. Both U.S. and international markets have experienced significant volatility in recent months and years. As a result of such volatility, investment returns may fluctuate significantly. Moreover, the risks discussed herein associated with an investment in the Fund may be increased.
|
Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the Federal Reserve and certain foreign central banks began to raise interest rates as part of their efforts to address rising inflation. It is difficult to accurately predict the pace at which interest rates may continue to increase, the timing, frequency or magnitude of any such increases, or when such increases might stop. Additionally, various economic and political factors could cause the Federal Reserve or another foreign central bank to change their approach in the future and such actions may result in an economic slowdown in the U.S. and abroad. Unexpected increases in interest rates could lead to market volatility or reduce liquidity in certain sectors of the market. Deteriorating economic fundamentals may, in turn, increase the risk of default or insolvency of particular issuers, negatively impact market value, cause credit spreads to widen, and reduce bank balance sheets. Any of these could cause an increase in market volatility, reduce liquidity across various markets or decrease confidence in the markets. Additionally, high public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty.
|
In March 2023, the shutdown of certain financial institutions in the U.S. and questions regarding the viability of other financial institutions raised economic concerns over disruption in the U.S. and global banking systems. There can be no certainty that the actions taken by the U.S. or foreign governments will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. and global banking systems.
|
Some countries, including the U.S., have in recent years adopted more protectionist trade policies. Slowing global economic growth; risks associated with a trade agreement between the United Kingdom and the European Union; the risks associated with ongoing trade negotiations with China; and the possibility of changes to some international trade agreements; political or economic dysfunction within some nations, including major producers of oil; and dramatic changes in commodity and currency prices could have adverse effects that cannot be foreseen at the present time.
|
Tensions, war, or open conflict between nations, such as between Russia and Ukraine, in the Middle East or in eastern Asia could affect the economies of many nations, including the United States. The duration of ongoing hostilities in the Middle East and between Russia and Ukraine, and any sanctions and related events cannot be predicted. Those events present material uncertainty and risk with respect to markets globally and the performance of the Fund and its investments or operations could be negatively impacted.
|
Regulators in the U.S. have proposed and recently adopted a number of changes to regulations involving the markets and issuers, some of which apply to the Fund. The full effect of various newly-adopted regulations is not currently known. Additionally, it is not clear whether the proposed regulations will be adopted. However, due to the broad scope of the new and proposed regulations, certain changes could limit the Fund’s ability to pursue its investment strategies or make certain investments, or may make it more costly for the Fund to operate, which may impact performance.
|
Economists and others have expressed increasing concern about the potential effects of global climate change on property and security values. Certain issuers, industries and regions may be adversely affected by the impacts of climate change, including on the demand for and the development of goods and services and related production costs, and the impacts of legislation, regulation and international accords related to climate change, as well as any indirect consequences of regulation or business trends driven by climate change.
|
■
|
Government Money Market Funds Risk. Investments in government money market funds are subject to interest rate risk, credit risk, and market risk. Interest rate risk is the risk that rising interest rates could cause the value of such an investment to decline. Credit risk is the risk that the issuer, guarantor or insurer of an obligation, or the counterparty to a transaction, may fail or become less able or unwilling, to make timely payment of interest or principal or otherwise honor its obligations, or that it may default completely.
|
|
|
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Investor Class
|
|
|
|
|
Returns Before Taxes
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions and Sales of Fund Shares
|
|
%
|
%
|
%
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Share Class (Before Taxes)
|
|
|
|
|
A
|
|
%
|
%
|
%
|
C
|
|
%
|
%
|
%*
|
Y
|
|
%
|
%
|
%
|
R6
|
|
%
|
%
|
%
|
Advisor
|
|
%
|
%
|
%
|
R5
|
|
%
|
%
|
%
|
* | As noted above, the 10-year performance for C Class shares reflects the conversion of C Class shares to A Class shares after 8 years. If C Class shares were not converted to A Class shares after 8 years, and were instead held for the full 10-year period, performance would have been 2.11%. |
|
1 Year
|
5 Years
|
10 Years
|
Index (Reflects no deduction for fees, expenses, or taxes, other than withholding taxes, as noted)
|
|
|
|
MSCI® EAFE Index (Net)*
|
%
|
%
|
%
|
MSCI® EAFE Value Index (Net)*
|
%
|
%
|
%
|
* | Reflects the reinvestment of dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident individuals who do not benefit from double taxation treaties. |
■
|
American Century Investment Management, Inc.
|
■
|
Causeway Capital Management LLC
|
■
|
Lazard Asset Management LLC
|
American Beacon Advisors, Inc.
|
Paul B. Cavazos
Senior Vice President & Chief Investment Officer Since 2016 Robyn A. Serrano
Portfolio Manager Since 2023 |
Kirk L. Brown
Senior Portfolio Manager Since 1994 |
American Century Investment Management, Inc.
|
Bert Whitson
Portfolio Manager and Senior Investment Analyst Since 2023 |
Jonathan Veiga
Portfolio Manager and Senior Investment Analyst Since 2020 |
Causeway Capital Management LLC
|
Sarah H. Ketterer
Chief Executive Officer Since 2001 Jonathan P. Eng
Director Since 2006 Harry W. Hartford
President Since 2001 Brian Cho
Director Since 2021 |
Conor Muldoon
Director Since 2010 Alessandro Valentini
Director Since 2013 Ellen Lee
Director Since 2015 Steven Nguyen
Director Since 2019 |
Lazard Asset Management LLC
|
Michael G. Fry
Managing Director Since 2005 Paul Selvey-Clinton
Portfolio Manager/Analyst Since 2022 |
Michael A. Bennett
Managing Director Since 2003 Michael Powers
Senior Advisor Since 2003 Giles Edwards
Portfolio Manager/Analyst Since 2020 |
Internet
|
www.americanbeaconfunds.com
|
|
Phone
|
To reach an American Beacon representative call 1-800-658-5811, option 1
Through the Automated Voice Response Service call 1-800-658-5811, option 2 (Investor Class only)
|
|
Mail
|
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
|
Overnight Delivery:
American Beacon Funds
430 W. 7th Street, Suite 219643
Kansas City, MO 64105-1407
|
|
New Account
|
Existing Account
|
|
Share Class
|
Minimum Initial Investment Amount
|
Purchase/Redemption Minimum by Check/ACH/Exchange
|
Purchase/Redemption Minimum by Wire
|
C
|
$1,000
|
$50
|
$250
|
A, Investor
|
$2,500
|
$50
|
$250
|
Advisor
|
$2,500
|
$50
|
None
|
Y
|
$100,000
|
$50
|
None
|
R5
|
$250,000
|
$50
|
None
|
R6
|
None
|
$50
|
None
|
American Beacon
Large Cap Value FundSM |
Share Class
|
A
|
C
|
Y
|
R6
|
Advisor
|
R5
|
Investor
|
Maximum sales charge imposed on purchases (as a percentage of offering price)
|
%
|
|
|
|
|
|
|
Maximum deferred sales charge (as a percentage of the lower of original offering price or redemption proceeds)
|
%
1
|
%
|
|
|
|
|
|
|
|||||||
Share Class
|
A
|
C
|
Y
|
R6
|
Advisor
|
R5
|
Investor
|
Management Fees
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Distribution and/or Service (12b-1) Fees
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Other Expenses
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Total Annual Fund Operating Expenses
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
1 |
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
A
|
$
|
$
|
$
|
$
|
C
|
$
|
$
|
$
|
$
|
Y
|
$
|
$
|
$
|
$
|
R6
|
$
|
$
|
$
|
$
|
Advisor
|
$
|
$
|
$
|
$
|
R5
|
$
|
$
|
$
|
$
|
Investor
|
$
|
$
|
$
|
$
|
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
C
|
$
|
$
|
$
|
$
|
■
|
above-average earnings growth potential,
|
■
|
below-average price to earnings ratio,
|
■
|
below-average price to book value ratio, and
|
■
|
above-average dividend yields.
|
■
|
Common Stock Risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company.
|
■
|
Depositary Receipts and/or U.S. Dollar-Denominated Foreign Stocks Traded on U.S. Exchanges Risk. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to,
|
currency exchange rate fluctuations, political and financial instability in the home country of a particular depositary receipt or foreign stock, less liquidity, more volatility, less government regulation and supervision and delays in transaction settlement.
|
■
|
Recent Market Events Risk. Both U.S. and international markets have experienced significant volatility in recent months and years. As a result of such volatility, investment returns may fluctuate significantly. Moreover, the risks discussed herein associated with an investment in the Fund may be increased.
|
Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the Federal Reserve and certain foreign central banks began to raise interest rates as part of their efforts to address rising inflation. It is difficult to accurately predict the pace at which interest rates may continue to increase, the timing, frequency or magnitude of any such increases, or when such increases might stop. Additionally, various economic and political factors could cause the Federal Reserve or another foreign central bank to change their approach in the future and such actions may result in an economic slowdown in the U.S. and abroad. Unexpected increases in interest rates could lead to market volatility or reduce liquidity in certain sectors of the market. Deteriorating economic fundamentals may, in turn, increase the risk of default or insolvency of particular issuers, negatively impact market value, cause
|
credit spreads to widen, and reduce bank balance sheets. Any of these could cause an increase in market volatility, reduce liquidity across various markets or decrease confidence in the markets. Additionally, high public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty.
|
In March 2023, the shutdown of certain financial institutions in the U.S. and questions regarding the viability of other financial institutions raised economic concerns over disruption in the U.S. and global banking systems. There can be no certainty that the actions taken by the U.S. or foreign governments will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. and global banking systems.
|
Some countries, including the U.S., have in recent years adopted more protectionist trade policies. Slowing global economic growth; risks associated with a trade agreement between the United Kingdom and the European Union; the risks associated with ongoing trade negotiations with China; and the possibility of changes to some international trade agreements; political or economic dysfunction within some nations, including major producers of oil; and dramatic changes in commodity and currency prices could have adverse effects that cannot be foreseen at the present time.
|
Tensions, war, or open conflict between nations, such as between Russia and Ukraine, in the Middle East or in eastern Asia could affect the economies of many nations, including the United States. The duration of ongoing hostilities in the Middle East and between Russia and Ukraine, and any sanctions and related events cannot be predicted. Those events present material uncertainty and risk with respect to markets globally and the performance of the Fund and its investments or operations could be negatively impacted.
|
Regulators in the U.S. have proposed and recently adopted a number of changes to regulations involving the markets and issuers, some of which apply to the Fund. The full effect of various newly-adopted regulations is not currently known. Additionally, it is not clear whether the proposed regulations will be adopted. However, due to the broad scope of the new and proposed regulations, certain changes could limit the Fund’s ability to pursue its investment strategies or make certain investments, or may make it more costly for the Fund to operate, which may impact performance.
|
Economists and others have expressed increasing concern about the potential effects of global climate change on property and security values. Certain issuers, industries and regions may be adversely affected by the impacts of climate change, including on the demand for and the development of goods and services and related production costs, and the impacts of legislation, regulation and international accords related to climate change, as well as any indirect consequences of regulation or business trends driven by climate change.
|
■
|
Government Money Market Funds Risk. Investments in government money market funds are subject to interest rate risk, credit risk, and market risk. Interest rate risk is the risk that rising interest rates could cause the value of such an investment to decline. Credit risk is the risk that the issuer, guarantor or insurer of an obligation, or the counterparty to a transaction, may fail or become less able or unwilling, to make timely payment of interest or principal or otherwise honor its obligations, or that it may default completely.
|
■
|
Financials Sector Risk. Companies in the Financials sector are subject to extensive governmental regulation and intervention, which may result in financial penalties and limits on the scope of their activities, the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, the scope of their activities, the prices they can charge, the amount of capital they must maintain and, potentially, their size. The impact of recent or future regulation on the Financials sector, including more stringent capital requirements, cannot be predicted. In addition, fiscal, regulatory and monetary policies, economic conditions, interest rate changes, credit rating downgrades, and decreased liquidity in the credit markets may cause an adverse impact in a broad range of markets, including U.S. and international credit and interbank money markets, thereby affecting a wide range of companies in the Financials sector. Cybersecurity incidents and technology malfunctions and failures have become increasingly frequent and have caused significant losses to companies in this sector, which also may negatively impact the Fund.
|
|
|
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Investor Class
|
|
|
|
|
Returns Before Taxes
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions and Sales of Fund Shares
|
|
%
|
%
|
%
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Share Class (Before Taxes)
|
|
|
|
|
A
|
|
%
|
%
|
%
|
C
|
|
%
|
%
|
%*
|
Y
|
|
%
|
%
|
%
|
R6
|
|
%
|
%
|
%
|
Advisor
|
|
%
|
%
|
%
|
R5
|
|
%
|
%
|
%
|
* | As noted above, the 10-year performance for C Class shares reflects the conversion of C Class shares to A Class shares after 8 years. If C Class shares were not converted to A Class shares after 8 years, and were instead held for the full 10-year period, performance would have been 7.45%. |
|
|
1 Year
|
5 Years
|
10 Years
|
Index (Reflects no deduction for fees, expenses, or taxes)
|
|
|
|
|
Russell 1000® Value Index
|
|
%
|
%
|
%
|
■
|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
■
|
Hotchkis and Wiley Capital Management, LLC
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Massachusetts Financial Services Company
|
American Beacon Advisors, Inc.
|
Paul B. Cavazos
Senior Vice President & Chief Investment Officer Since 2016 Robyn A. Serrano
Portfolio Manager Since 2023 |
Kirk L. Brown
Senior Portfolio Manager Since 2016 |
Barrow, Hanley, Mewhinney & Strauss, LLC
|
Mark Giambrone
Portfolio Manager/Senior Managing Director Since 2015 |
|
Hotchkis and Wiley Capital Management, LLC
|
George Davis
Principal, Portfolio Manager, and Executive Chairman Since 1989 Scott McBride
Portfolio Manager and Chief Executive Officer Since 2004 |
Judd Peters
Portfolio Manager Since 2003 Patricia McKenna
Principal and Portfolio Manager Since 1995 |
Massachusetts Financial Services Company
|
Katherine Cannan
Investment Officer and Portfolio Manager Since 2019 |
Nevin Chitkara
Investment Officer and Portfolio Manager Since 2010 |
Internet
|
www.americanbeaconfunds.com
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Phone
|
To reach an American Beacon representative call 1-800-658-5811, option 1
Through the Automated Voice Response Service call 1-800-658-5811, option 2 (Investor Class only)
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Mail
|
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
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Overnight Delivery:
American Beacon Funds
430 W. 7th Street, Suite 219643
Kansas City, MO 64105-1407
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New Account
|
Existing Account
|
|
Share Class
|
Minimum Initial Investment Amount
|
Purchase/Redemption Minimum by Check/ACH/Exchange
|
Purchase/Redemption Minimum by Wire
|
C
|
$1,000
|
$50
|
$250
|
A, Investor
|
$2,500
|
$50
|
$250
|
Advisor
|
$2,500
|
$50
|
None
|
Y
|
$100,000
|
$50
|
None
|
R5
|
$250,000
|
$50
|
None
|
R6
|
None
|
$50
|
None
|
American Beacon
Small Cap Value FundSM |
Share Class
|
A
|
C
|
Y
|
R6
|
Advisor
|
R5
|
Investor
|
Maximum sales charge imposed on purchases (as a percentage of offering price)
|
%
|
|
|
|
|
|
|
Maximum deferred sales charge (as a percentage of the lower of original offering price or redemption proceeds)
|
%
1
|
%
|
|
|
|
|
|
|
|||||||
Share Class
|
A
|
C
|
Y
|
R6
|
Advisor
|
R5
|
Investor
|
Management Fees
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Distribution and/or Service (12b-1) Fees
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Other Expenses
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Acquired Fund Fees and Expenses
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
Total Annual Fund Operating Expenses2
|
%
|
%
|
%
|
%
|
%
|
%
|
%
|
1 |
2 |
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
A
|
$
|
$
|
$
|
$
|
C
|
$
|
$
|
$
|
$
|
Y
|
$
|
$
|
$
|
$
|
R6
|
$
|
$
|
$
|
$
|
Advisor
|
$
|
$
|
$
|
$
|
R5
|
$
|
$
|
$
|
$
|
Investor
|
$
|
$
|
$
|
$
|
Share Class
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
C
|
$
|
$
|
$
|
$
|
■
|
above-average earnings growth potential,
|
■
|
below-average price to earnings ratio,
|
■
|
below-average price to book value ratio
|
■
|
below-average price to revenue ratio, and
|
■
|
above average free cash flow yield and return on capital.
|
■
|
Common Stock Risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company.
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■
|
Real Estate Investment Trusts (“REITs”) Risk. Investments in REITs are subject to the risks associated with investing in the real estate industry, including, among other risks: adverse developments affecting the real estate industry; declines in real property values; changes in interest rates; defaults by mortgagors or other borrowers and tenants; lack of availability of mortgage funds or financing; extended vacancies of properties, especially during economic downturns; casualty or condemnation losses; regulatory limitations on rents and operating expenses; and other governmental actions, such as changes to tax laws, zoning regulations or environmental regulations. REITs also are dependent upon the skills of their managers and are subject to heavy cash flow dependency or self-liquidation. Regardless of where a REIT is organized or traded, its performance may be affected significantly by events in the region where its properties are located. REITs may not be diversified geographically or by property or tenant type. Domestic REITs could be adversely affected by failure to qualify for tax-free “pass-through” of distributed net income and net realized gains under the Internal Revenue Code of 1986, as amended (“Internal Revenue Code”), or to maintain their exemption from registration under the Investment Company Act of 1940, as amended (“Investment Company Act”). REITs typically incur fees that are separate from those incurred by the Fund. Accordingly, the Fund’s investment in REITs will result in the layering of expenses such that shareholders will indirectly bear a proportionate share of the REITs’ operating expenses, in addition to paying Fund expenses. The value of REIT common stock may decline when interest rates rise. REITs tend to be small- to mid-capitalization securities and, as such, are subject to the risks of investing in small- to mid-capitalization securities.
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|
Recent Market Events Risk. Both U.S. and international markets have experienced significant volatility in recent months and years. As a result of such volatility, investment returns may fluctuate significantly. Moreover, the risks discussed herein associated with an investment in the Fund may be increased.
|
Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the Federal Reserve and certain foreign central banks began to raise interest rates as part of their efforts to address rising inflation. It is difficult to accurately predict the pace at which interest rates may continue to increase, the timing, frequency or magnitude of any such increases, or when such increases might stop. Additionally, various economic and political factors could cause the Federal Reserve or another foreign central bank to change their approach in the future and such actions may result in an economic
|
slowdown in the U.S. and abroad. Unexpected increases in interest rates could lead to market volatility or reduce liquidity in certain sectors of the market. Deteriorating economic fundamentals may, in turn, increase the risk of default or insolvency of particular issuers, negatively impact market value, cause credit spreads to widen, and reduce bank balance sheets. Any of these could cause an increase in market volatility, reduce liquidity across various markets or decrease confidence in the markets. Additionally, high public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty.
|
In March 2023, the shutdown of certain financial institutions in the U.S. and questions regarding the viability of other financial institutions raised economic concerns over disruption in the U.S. and global banking systems. There can be no certainty that the actions taken by the U.S. or foreign governments will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. and global banking systems.
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Some countries, including the U.S., have in recent years adopted more protectionist trade policies. Slowing global economic growth; risks associated with a trade agreement between the United Kingdom and the European Union; the risks associated with ongoing trade negotiations with China; and the possibility of changes to some international trade agreements; political or economic dysfunction within some nations, including major producers of oil; and dramatic changes in commodity and currency prices could have adverse effects that cannot be foreseen at the present time.
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Tensions, war, or open conflict between nations, such as between Russia and Ukraine, in the Middle East or in eastern Asia could affect the economies of many nations, including the United States. The duration of ongoing hostilities in the Middle East and between Russia and Ukraine, and any sanctions and related events cannot be predicted. Those events present material uncertainty and risk with respect to markets globally and the performance of the Fund and its investments or operations could be negatively impacted.
|
Regulators in the U.S. have proposed and recently adopted a number of changes to regulations involving the markets and issuers, some of which apply to the Fund. The full effect of various newly-adopted regulations is not currently known. Additionally, it is not clear whether the proposed regulations will be adopted. However, due to the broad scope of the new and proposed regulations, certain changes could limit the Fund’s ability to pursue its investment strategies or make certain investments, or may make it more costly for the Fund to operate, which may impact performance.
|
Economists and others have expressed increasing concern about the potential effects of global climate change on property and security values. Certain issuers, industries and regions may be adversely affected by the impacts of climate change, including on the demand for and the development of goods and services and related production costs, and the impacts of legislation, regulation and international accords related to climate change, as well as any indirect consequences of regulation or business trends driven by climate change.
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■
|
Government Money Market Funds Risk. Investments in government money market funds are subject to interest rate risk, credit risk, and market risk. Interest rate risk is the risk that rising interest rates could cause the value of such an investment to decline. Credit risk is the risk that the issuer, guarantor or insurer of an obligation, or the counterparty to a transaction, may fail or become less able or unwilling, to make timely payment of interest or principal or otherwise honor its obligations, or that it may default completely.
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■
|
Financials Sector Risk. Companies in the Financials sector are subject to extensive governmental regulation and intervention, which may result in financial penalties and limits on the scope of their activities, the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, the scope of their activities, the prices they can charge, the amount of capital they must maintain and, potentially, their size. The impact of recent or future regulation on the Financials sector, including more stringent capital requirements, cannot be predicted. In addition, fiscal, regulatory and monetary policies, economic conditions, interest rate changes, credit rating downgrades, and decreased liquidity in the credit markets may cause an adverse impact in a broad range of markets, including U.S. and international credit and interbank money markets, thereby affecting a wide range of companies in the Financials sector. Cybersecurity incidents and technology malfunctions and failures have become increasingly frequent and have caused significant losses to companies in this sector, which also may negatively impact the Fund.
|
|
|
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Investor Class
|
|
|
|
|
Returns Before Taxes
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions and Sales of Fund Shares
|
|
%
|
%
|
%
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Share Class (Before Taxes)
|
|
|
|
|
A
|
|
%
|
%
|
%
|
C
|
|
%
|
%
|
%*
|
Y
|
|
%
|
%
|
%
|
R6
|
|
%
|
%
|
%
|
Advisor
|
|
%
|
%
|
%
|
R5
|
|
%
|
%
|
%
|
* | As noted above, the 10-year performance for C Class shares reflects the conversion of C Class shares to A Class shares after 8 years. If C Class shares were not converted to A Class shares after 8 years, and were instead held for the full 10-year period, performance would have been 6.22%. |
|
|
1 Year
|
5 Years
|
10 Years
|
Index (Reflects no deduction for fees, expenses, or taxes)
|
|
|
|
|
Russell 2000® Value Index
|
|
%
|
%
|
%
|
■
|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
■
|
Brandywine Global Investment Management, LLC
|
■
|
DePrince, Race & Zollo, Inc.
|
■
|
Hotchkis and Wiley Capital Management, LLC
|
■
|
Newton Investment Management North America, LLC
|
American Beacon Advisors, Inc.
|
Paul B. Cavazos
Senior Vice President & Chief Investment Officer Since 2016 Robyn A. Serrano
Portfolio Manager Since 2021 |
Colin J. Hamer
Senior Portfolio Manager Since 2018 |
Barrow, Hanley, Mewhinney & Strauss, LLC
|
James S. McClure, CFA
Portfolio Manager/Managing Director Since 2003 DJ Taylor, CFA, CAIA
Portfolio Manager/Managing Director Since 2022 |
W. Coleman Hubbard, CFA
Portfolio Manager/Managing Director Since 2020 |
Brandywine Global Investment Management, LLC
|
Henry F. Otto
Portfolio Manager/Managing Director Since Fund Inception (1998) Michelle K. Bevan, CFA
Portfolio Manager Since 2022 |
Steven M. Tonkovich
Portfolio Manager/Managing Director Since Fund Inception (1998) |
DePrince, Race & Zollo, Inc.
|
Gregory Ramsby
Portfolio Manager Since 2022 |
Randy Renfrow
Portfolio Manager Since 2022 |
Hotchkis and Wiley Capital Management, LLC
|
David Green
Principal, Portfolio Manager Since Fund Inception (1998) |
Jim Miles
Principal, Portfolio Manager Since Fund Inception (1998) |
Newton Investment Management North America LLC
|
Joseph M. Corrado
Senior Portfolio Manager Since 2004 |
Andrew Leger
Senior Portfolio Manager Since 2022 |
Internet
|
www.americanbeaconfunds.com
|
|
Phone
|
To reach an American Beacon representative call 1-800-658-5811, option 1
Through the Automated Voice Response Service call 1-800-658-5811, option 2 (Investor Class only)
|
|
Mail
|
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
|
Overnight Delivery:
American Beacon Funds
430 W. 7th Street, Suite 219643
Kansas City, MO 64105-1407
|
|
New Account
|
Existing Account
|
|
Share Class
|
Minimum Initial Investment Amount
|
Purchase/Redemption Minimum by Check/ACH/Exchange
|
Purchase/Redemption Minimum by Wire
|
C
|
$1,000
|
$50
|
$250
|
A, Investor
|
$2,500
|
$50
|
$250
|
Advisor
|
$2,500
|
$50
|
None
|
Y
|
$100,000
|
$50
|
None
|
R5
|
$250,000
|
$50
|
None
|
R6
|
None
|
$50
|
None
|
■
|
The American Beacon Balanced Fund’s investment objective is income and capital appreciation.
|
■
|
The American Beacon Garcia Hamilton Quality Bond Fund’s investment objective is high current income consistent with preservation of capital.
|
■
|
The American Beacon International Equity Fund’s investment objective is long-term capital appreciation.
|
■
|
The American Beacon Large Cap Value Fund’s investment objective is long-term capital appreciation and current income.
|
■
|
The American Beacon Small Cap Value Fund’s investment objective is long-term capital appreciation and current income.
|
■
|
The American Beacon Garcia Hamilton Quality Bond Fund has a non-fundamental policy to invest under normal circumstances at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in investment grade bonds.
|
■
|
The American Beacon International Equity Fund has a non-fundamental policy to invest under normal circumstances at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in common stocks and securities convertible into common stocks of issuers based in at least three different countries located outside the United States.
|
■
|
The American Beacon Large Cap Value Fund has a non-fundamental policy to invest under normal circumstances at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in equity securities of large market capitalization U.S. companies.
|
■
|
The American Beacon Small Cap Value Fund has a non-fundamental policy to invest under normal circumstances at least 80% of its net assets (plus the amount of any borrowings for investment purposes) in equity securities of small market capitalization U.S. companies.
|
■
|
develops overall investment strategies for each Fund,
|
■
|
selects and changes sub-advisors,
|
■
|
allocates assets among sub-advisors,
|
■
|
monitors and evaluates the sub-advisors’ investment performance,
|
■
|
monitors the sub-advisors’ compliance with each Fund’s investment objectives, policies and restrictions,
|
■
|
oversees a Fund’s securities lending activities and actions taken by the securities lending agent to the extent applicable,
|
■
|
directs the investment of the portion of Fund assets that the sub-advisors determine should be allocated to short-term investments, and
|
■
|
manages directly a portion of the assets of the American Beacon Balanced Fund.
|
■
|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
■
|
Hotchkis and Wiley Capital Management, LLC
|
■
|
American Century Investment Management, Inc.
|
■
|
Causeway Capital Management LLC
|
■
|
Lazard Asset Management LLC
|
■
|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
■
|
Hotchkis and Wiley Capital Management, LLC
|
■
|
Massachusetts Financial Services Company
|
■
|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
■
|
Brandywine Global Investment Management, LLC
|
■
|
DePrince, Race & Zollo, Inc
|
■
|
Hotchkis and Wiley Capital Management, LLC
|
■
|
Newton Investment Management North America, LLC
|
■
|
Futures Contracts. To gain market exposure on cash balances held in anticipation of liquidity needs or to reduce market exposure in anticipation of liquidity needs, a Fund may purchase and sell non-commodity-based index futures contracts on a daily basis that relate to securities in which it may invest directly. An index futures contract is a contract to purchase or sell the cash value of an index, at a specified future date at a price agreed upon when the contract is made. Upon the expiration of the contract, settlement is made by exchanging cash in an amount equal to the difference between the contract price and the closing price of the index at expiration, net of any initial and variation margin that was previously paid. As cash balances are invested in securities, a Fund may invest simultaneously those balances in index futures contracts until the cash balances are delivered to settle the securities transactions. This exposes a Fund to the market risks associated with the purchased securities and the index, so the Fund may have more than 100% of its assets exposed to the markets. This can magnify gains and losses in a Fund. A Fund also may have to sell assets at inopportune times to satisfy its settlement or margin obligations. The risks associated with the use of index futures contracts also include that there may be an imperfect correlation between the changes in market value of the securities held by a Fund and the prices of futures contracts or the movement in the prices of futures contracts and the value of their underlying indices and that there may not be a liquid secondary market for a futures contract.
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■
|
Government Money Market Funds. A Fund may invest cash balances in government money market funds that are registered as investment companies under the Investment Company Act, including a government money market fund advised by the Manager, with respect to which the Manager also receives a management fee. If a Fund invests in government money market funds, the Fund becomes a shareholder of that investment company. As a result, Fund shareholders will bear their proportionate share of the expenses, including, for example, advisory and administrative fees of the government money market funds in which a Fund invests, such as advisory fees charged by the Manager to any applicable government money market funds advised by the Manager, in addition to the fees and expenses Fund shareholders directly bear in connection with a Fund’s own operations. Shareholders also would be exposed to the risks associated with government money market funds and the portfolio investments of such government money market funds, including the risk that a government money market fund’s yield will be lower than the return that a Fund would have received from other investments that provide liquidity. Investments in government money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
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■
|
Currency Swaps
|
■
|
Foreign Currencies
|
■
|
Foreign Currency-Denominated Securities
|
■
|
Foreign Currency Forward Contracts
|
■
|
Foreign Currency Forward Contracts. Foreign currency forward contracts are two-party contracts pursuant to which one party agrees to pay the counterparty a fixed price for an agreed-upon amount of foreign currency at an agreed-upon future date, which may be any fixed number of days from the date of the contract agreed upon by the parties. A foreign currency forward contract may be a non-deliverable forward contract (“NDF“), which is a forward contract where there is no physical settlement of the two currencies at maturity. Rather, on the contract settlement date, a net cash settlement will be made by one party to the other based on the difference between the contracted forward rate and the prevailing spot rate, on an agreed notional amount.
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■
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Futures Contracts. A futures contract is a contract to purchase or sell a particular asset, or the cash value of an asset, such as a security, commodity, currency or an index of such assets, at a specified future date, at a price agreed upon when the contract is made. Under many such contracts, no delivery of the actual underlying asset is required. Rather, upon the expiration of the contract, settlement is made by exchanging cash in an amount equal to the difference between the contract price and the closing price of the asset (e.g., a security or an index) at expiration, net of initial and variation margin that was previously paid. Foreign currency futures contracts are based on the value of foreign currencies. Foreign currencies may decline in value relative to the U.S. dollar and affect a Fund’s investment in securities or derivatives that provide exposure to foreign (non-U.S.) currencies. A Fund also may have to sell assets at inopportune times to satisfy its settlement or collateral obligations. The risks associated with the use of futures contracts also include that there may be an imperfect correlation between the changes in market value of the futures contracts and the assets underlying such contracts, and that there may not be a liquid secondary market for a futures contract.
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■
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Swap Agreements. A swap is a transaction in which a Fund and a counterparty agree to pay or receive payments at specified dates based upon or calculated by reference to changes in specified prices or rates (e.g., interest rates in the case of interest rate swaps) or the performance of specified securities, indices or other assets based on the nominal or face amount of a reference asset. Payments are usually made on a net basis so that, on any given day, the Fund would receive (or pay) only the amount by which its payment under the swap is less than (or exceeds) the amount of the other party’s payment. The terms of the swap transaction are either negotiated by a sub-advisor and the swap counterparty or established based on terms generally available on an exchange or contract market. Nearly any type of derivative, including forward contracts, can be structured as a swap.
|
•
|
Currency Swaps. A Fund may enter into currency swaps to hedge foreign currency exchange risk. A currency swap involves the exchange of payments denominated in one currency for payments denominated in another. Payments are based on a notional principal amount, the value of which is fixed, in exchange rate terms, at the swap’s inception.
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|
Common Stock. Common stock generally takes the form of shares in a corporation which represent an equity or ownership interest. Holders of common stock generally have voting rights in the issuer and are entitled to receive common stock dividends when, as and if declared by the company’s board of directors. Returns on common stock investments consist of any dividends received plus the amount of appreciation or depreciation in the value of the stock. Common stock normally occupies the most subordinated position in an issuer’s capital structure. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. Common stock may be traded via an exchange or over-the-counter. Over-the-counter stock may be less liquid than exchange-traded stock.
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■
|
Depositary Receipts and/or U.S. Dollar-Denominated Foreign Stocks Traded on U.S. Exchanges. ADRs are U.S. dollar-denominated receipts representing interests in the securities of a foreign issuer. ADRs typically are issued by domestic banks and trust companies and represent the deposit with the bank of
|
the securities of a foreign issuer. GDRs may be offered in one or more foreign countries and represent the deposit with a foreign bank of securities of a foreign issuer. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges entails substantially the same risks as direct investment in foreign securities. In addition, a Fund may invest in unsponsored depositary receipts, which are implemented by a depositary bank with no direct involvement of the foreign issuers, and the issuers are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle a Fund to the same benefits and rights as ownership of the underlying securities or of sponsored depositary receipts, which are implemented in collaboration with the foreign issuers.
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■
|
Master Limited Partnerships. MLPs are limited partnerships (or similar entities) in which the ownership units (e.g., limited partnership interests) are publicly traded and units are freely traded on a securities exchange or in the over-the-counter market. The majority of MLPs operate in oil and gas related businesses, including energy processing and distribution. As partnerships, MLPs may be subject to less regulation (and less protection for investors) under state laws than corporations. An MLP is an investment that combines the tax benefits of a limited partnership with the liquidity of publicly traded securities. Many MLPs are pass-through entities that generally are taxed at the security holder level and generally are not subject to federal or state income tax at the partnership level. Annual income, gains, losses, deductions and credits of an MLP pass through directly to its security holders. Distributions from an MLP may consist in part of a return of capital. A Fund’s investments in MLPs will be limited by tax considerations. Generally, an MLP is operated under the supervision of one or more managing general partners. Limited partners are not involved in the day-to-day management of the MLP.
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■
|
Real Estate Investment Trusts (“REITs”). Real estate investment trusts (“REITs”), which primarily invest in real estate or real estate-related loans, may issue equity or debt securities. Equity REITs own real estate properties, while mortgage REITs hold construction, development and/or long-term mortgage loans. Hybrid REITs own both. The values of REITs may be affected by changes in the value of the underlying property of the trusts, the creditworthiness of the issuer, property taxes, interest rates, tax laws and regulatory requirements, such as those relating to the environment. Both types of REITs are dependent upon management skill and the cash flows generated by their holdings, the real estate market in general and the possibility of failing to qualify for any applicable pass-through tax treatment or failing to maintain any applicable exemptive status afforded under relevant laws.
|
■
|
Corporate Debt and Other Fixed-Income Securities. Corporate debt securities are fixed-income securities issued by businesses to finance their operations. Corporate debt securities include bonds, notes, debentures and commercial paper issued by companies to investors with a promise to repay the principal amount invested at maturity, with the primary difference being their maturities and secured or unsecured status. The broad category of corporate debt securities includes debt issued by domestic or foreign companies of all kinds, including companies of all market capitalizations. Corporate debt may be rated investment grade or below investment grade and may carry fixed or floating rates of interest. Corporate bonds typically carry a set interest or coupon rate, while commercial paper is commonly issued at a discount to par with no coupon. The perceived ability of the company to meet its principal and interest payment obligations is referred to as its creditworthiness, and it may be supplemented by collateral securing the company’s obligations. Debentures are unsecured, medium- to long-term debt securities protected only by the general creditworthiness of the issuer, not by collateral. Because of the wide range of types and maturities of corporate debt securities, as well as the range of creditworthiness of their issuers, corporate debt securities have widely varying potentials for return and risk profiles. For example, commercial paper issued by a large established domestic corporation that is rated investment grade may have a modest return on principal, but carries relatively limited risk. On the other hand, a long-term corporate note issued by a small foreign corporation from a developing market country that has not been rated may have the potential for relatively large returns on principal, but carries a relatively high degree of risk. Typically, the values of fixed-income securities change inversely with prevailing interest rates. In addition, in the event of bankruptcy, holders of higher-ranking senior securities may receive amounts otherwise payable to the holders of more junior securities.
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Government-Sponsored Enterprises and U.S. Government Agencies. A Fund may invest in debt obligations of U.S. government agencies, such as the Government National Mortgage Association (“Ginnie Mae” or “GNMA”) and Export-Import Bank of the United States (“ExImBank”), and government-sponsored enterprises, such as the Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”), Federal Agricultural Mortgage Corporation (“Farmer Mac”), Federal Home Loan Bank system (“FHLBs”) and the Federal Farm Credit Banks Funding Corporation (“FFCB”). Although chartered or sponsored by Acts of Congress, debt obligations issued by such entities, other than Ginnie Mae and ExImBank, are not backed by the full faith and credit of the U.S. Government. Debt obligations issued by Fannie Mae, Freddie Mac, Farmer Mac, FHLBs, and FFCB are supported by the issuers’ right to borrow from the U.S. Treasury, the discretionary authority of the U.S. Treasury to lend to the issuers and the U.S. Treasury’s authority to purchase the issuer’s securities.
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Investment Grade Securities. Investment grade securities that a Fund may purchase, either as part of its principal investment strategy or to implement its temporary defensive policy, include securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities, as well as securities rated in one of the four highest rating categories by a rating organization rating that security (such as S&P Global Ratings, Moody’s Investors Service, Inc., or Fitch, Inc.) or comparably rated by a sub-advisor if unrated by a rating organization. A Fund, at the discretion of a sub-advisor, may retain a security that has been downgraded below the initial investment criteria.
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U.S. Government Securities. U.S. Government securities may include U.S. Treasury securities and securities backed by the full faith and credit of the United States, and securities issued by other U.S. government agencies and instrumentalities which have been established or sponsored by the U.S. government and that issue obligations which may not be backed by the full faith and credit of the U.S. government. U.S. Treasury obligations include Treasury Bills, Treasury Notes, and Treasury Bonds. Treasury Bills have initial maturities of one year or less; Treasury Notes have initial maturities of one to ten years; and Treasury Bonds generally have initial maturities of greater than ten years.
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CMBSs. CMBS include securities that reflect an interest in, and are secured by, a mortgage loan or pool of mortgage loans on commercial real estate property, such as industrial and warehouse properties, office buildings, hotels, retail space and shopping malls, mixed use properties, multifamily properties and cooperative apartments. Interest and principal payments from the underlying loans are passed through to the Fund according to a schedule of payments. Credit quality of the security depends primarily on the quality of the loans themselves and on the structure of the particular deal. CMBS are structured similarly to mortgage-backed securities in that both are backed by mortgage payments. However, CMBS involve loans related to commercial property, whereas mortgage-backed securities are based on loans relating to residential property. Commercial mortgage loans generally lack standardized terms, which may complicate their structure and tend to have shorter maturities than residential mortgage loans. Commercial properties themselves tend to be unique and are more difficult to value than single-family residential properties. In addition, commercial properties, particularly industrial and warehouse properties, are subject to environmental risks and the burdens and costs of compliance with environmental laws and regulations. CMBS may be structured with multiple tranches, with subordinate tranches incurring greater risk of loss in exchange for a greater yield. The degree of subordination is determined by the ratings agencies that rate the individual classes of the structure. The commercial mortgage loans that underlie CMBS often are structured so that a substantial portion of the loan principal, rather than being amortized over the loan term, is instead payable at maturity (as a “balloon payment”). Repayment of a significant portion of loan principal thus often depends upon the future availability of real estate financing (to refinance the loan) and/or upon the value and saleability of the real estate at the relevant time.
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CMOs. CMOs and interests in real estate mortgage investment conduits (“REMICs”) are debt securities collateralized by mortgages or mortgage pass-through securities. A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. CMOs divide the cash flow generated from the underlying mortgages or mortgage pass-through securities into different groups referred to as “tranches,” which are then retired sequentially over time in order of priority. Under the traditional CMO structure, the cash flows generated by the mortgages or mortgage pass-through securities in the collateral pool are used to first pay interest and then pay principal to the CMO bondholders. The bonds issued under such a CMO structure are retired sequentially as opposed to the pro-rata return of principal found in traditional pass-through obligations. Subject to the various provisions of individual CMO issues, the cash flow generated by the underlying collateral (to the extent it exceeds the amount required to pay the stated interest) is used to retire the bonds. Under the CMO structure, the repayment of principal among the different tranches is prioritized in accordance with the terms of the particular CMO issuance. The “fastest pay” tranche of bonds would initially receive all principal payments. When that tranche of bonds is retired, the subsequent tranches specified in the CMO prospectus receive all of the principal payments until they are retired. The sequential retirement of tranches continues until the last tranche is retired. CMOs also issue sequential and parallel pay classes, including planned amortization and target amortization classes, and fixed and floating rate CMO tranches. Parallel pay CMOs are structured to provide payments of principal on each payment date to more than one class, concurrently on a proportionate or disproportionate basis. Sequential pay CMOs generally pay principal to only one class at a time while paying interest to several classes.
CMOs may be collateralized by whole mortgage loans but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by Ginnie Mae, Fannie Mae and Freddie Mac and their income streams. The issuers of CMOs are structured as trusts or corporations established for the purpose of issuing such CMOs and often have no assets other than those underlying the securities and any credit support provided. A REMIC is a mortgage securities vehicle that holds residential or commercial mortgages and issues securities representing interests in those mortgages. A REMIC may be formed as a corporation, partnership, or trust. A REMIC itself is generally exempt from federal income tax, but the income from its mortgages is taxable to its investors. For investment purposes, interests in REMIC securities are virtually indistinguishable from CMOs. |
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Mortgage Pass-Through Securities. Mortgage pass-through securities are securities representing interests in “pools” of mortgages in which payments of both interest and principal on the securities are generally made monthly, in effect “passing through” monthly payments made by the individual borrowers on the residential mortgage loans that underlie the securities (net of fees paid to the issuer or guarantor of the securities). They are issued by governmental, government-related and private organizations which are backed by pools of mortgage loans. Payment of principal and interest on some mortgage pass-through securities (but not the market value of the securities themselves) may be guaranteed by the full faith and credit of the U.S. Government, as in the case of securities guaranteed by GNMA, or guaranteed by government-sponsored enterprises, as in the case of securities guaranteed by FNMA or FHLMC, which are supported only by the discretionary authority of the U.S. Government to purchase the agency’s obligations. Mortgage pass-through securities created by nongovernmental issuers (such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers and other secondary market issuers) may be supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance and letters of credit, which may be issued by governmental entities, private insurers or the mortgage poolers. The pools underlying privately-issued mortgage pass through securities consist of mortgage loans secured by mortgages or deeds of trust creating a first lien on commercial, residential, residential multi-family and mixed residential/commercial properties. These mortgage pass-through securities do not have the same credit standing as U.S. government guaranteed securities and generally offer a higher yield than similar securities issued by a government entity. The timely payment of interest and principal on mortgage loans in these pools may be supported by various other forms of insurance or guarantees, including individual loan, pool and hazard insurance, subordination and letters of credit. Some mortgage pass-through securities issued by private organizations may not be readily marketable, may be more difficult to value accurately and may be more volatile than similar securities issued by a government entity. Transactions in mortgage pass-through securities often occur through to-be-announced (“TBA”) transactions.
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Government Money Market Funds. A Fund can invest free cash balances in registered open-end investment companies regulated as government money market funds under the Investment Company Act to provide liquidity or for defensive purposes. A Fund could invest in government money market funds rather than purchasing individual short-term investments. If a Fund invests in government money market funds, shareholders will bear their proportionate share of the expenses, including for example, advisory and administrative fees, of the government money market funds in which a Fund invests, including advisory fees charged by the Manager to any applicable government money market funds advised by the Manager. Although a government money market fund is designed to be a relatively low risk investment, it is not free of risk. Despite the short maturities and high credit quality of a government money market fund’s investments, increases in interest rates and deteriorations in the credit quality of the instruments the government money market fund has purchased may reduce the government money market fund’s yield and can cause the price of a government money market security to decrease. In addition, a government money market fund is subject to the risk that the value of an investment may be eroded over time by inflation.
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Risk
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American Beacon Balanced Fund
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American Beacon Garcia Hamilton Quality Bond Fund
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American Beacon International Equity Fund
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American Beacon Large Cap Value Fund
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American Beacon Small Cap Value Fund
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Allocation Risk
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X
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Asset-Backed Securities Risk
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X
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Asset Selection Risk
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X
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Callable Securities Risk
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X
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Convertible Securities Risk
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X
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X
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Counterparty Risk
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X
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X
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X
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Credit Risk
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X
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X
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X
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Currency Risk
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X
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Cybersecurity and Operational Risk
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X
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X
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X
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X
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X
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Debentures Risk
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X
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X
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Derivatives Risk
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X
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X
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X
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X
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X
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Dividend Risk
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X
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X
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X
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X
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Environmental, Social, and/or Governance Investing Risk
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X
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X
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X
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X
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X
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Equity Investments Risk
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X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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Focused Holdings Risk
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X
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Foreign Exposure Risk
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X
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X
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Foreign Investing Risk
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X
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Futures Contracts Risk
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X
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X
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X
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Geographic Concentration Risk
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X
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X
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X
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Hedging Risk
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X
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High Portfolio Turnover Risk
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X
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Interest Rate Risk
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X
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X
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Investment Risk
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X
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X
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X
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X
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X
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Issuer Risk
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X
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X
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X
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X
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X
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Large-Capitalization Companies Risk
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X
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X
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X
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Liquidity Risk
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X
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X
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Market Risk
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X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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Market Timing Risk
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X
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Micro-Capitalization Companies Risk
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X
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Risk
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American Beacon Balanced Fund
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American Beacon Garcia Hamilton Quality Bond Fund
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American Beacon International Equity Fund
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American Beacon Large Cap Value Fund
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American Beacon Small Cap Value Fund
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Mid-Capitalization Companies Risk
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X
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X
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X
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X
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Model and Data Risk
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X
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Mortgage-Backed and Mortgage-Related Securities Risk
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X
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X
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X
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X
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X
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Multiple Sub-Advisor Risk
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X
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X
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X
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X
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Other Investment Companies Risk
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X
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X
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X
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X
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X
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X
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X
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X
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X
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X
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Preferred Stock Risk
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X
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Prepayment and Extension Risk
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X
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X
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Quantitative Strategy Risk
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X
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Redemption Risk
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X
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X
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X
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Sector Risk
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X
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X
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X
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X
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X
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X
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X
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X
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Secured, Partially Secured and Unsecured Obligation Risk
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X
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X
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Securities Lending Risk
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X
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X
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X
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X
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Securities Selection Risk
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X
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X
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X
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X
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X
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Segregated Assets Risk
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X
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X
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Small-Capitalization Companies Risk
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X
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X
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X
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U.S. Government Securities and Government Sponsored Enterprises Risk
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X
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X
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U.S. Treasury Obligations Risk
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X
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Valuation Risk
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X
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Value Stocks Risk
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X
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X
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X
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X
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Variable and Floating Rate Securities Risk
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X
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X
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Foreign Currency Forward Contracts Risk. Foreign currency forward contracts, including NDFs, are derivative instruments pursuant to a contract where the parties agree to pay a fixed price for an agreed amount of foreign currency at an agreed date or to buy or sell a specific currency at a future date at a price set at the time of the contract. The use of foreign currency forward contracts may expose a Fund to additional risks, such as credit risk, liquidity risk, and counterparty risk, that it would not be subject to if it invested directly in the securities or currencies underlying the foreign currency forward contract. Foreign currency forward transactions, including NDFs, and forward currency contracts include risks associated with fluctuations in currency, and other risks inherent in trading derivatives. There are no limitations on daily price movements of forward contracts. Not all forward contracts, including NDFs, require a counterparty to post collateral, which may expose a Fund to greater losses in the event of a default by a counterparty. There may at times be an imperfect correlation between the price of a forward contract and the underlying currency, which may increase the volatility of a Fund. A Fund bears the risk of loss of the amount expected to be received under a forward contract in the event of the default or bankruptcy of a counterparty. If such a default occurs, a Fund will have contractual remedies pursuant to the forward contract, but such remedies may be subject to bankruptcy and insolvency laws which could affect a Fund’s rights as a creditor. There can be no assurance that any strategy used will succeed.
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Futures Contracts Risk. Futures contracts are derivative instruments pursuant to a contract where the parties agree to a fixed price for an agreed amount of securities or other underlying assets at an agreed date. The use of such derivative instruments may expose a Fund to additional risks, such as credit risk, liquidity risk, and counterparty risk, that it would not be subject to if it invested directly in the instruments underlying those derivatives. There can be no assurance that any strategy used will succeed. There may at times be an imperfect correlation between the movement in the prices of futures contracts and the value of their underlying instruments or index. Futures contracts may experience dramatic price changes (losses) and imperfect correlations between the price of the contract and the underlying security, index or currency, which may increase the volatility of a Fund. Futures contracts may involve a small investment of cash (the amount of initial and variation margin) relative to the magnitude of the risk assumed (the potential increase or decrease in the price of the futures contract). There can be no assurance that, at all times, a liquid market will exist for offsetting a futures contract that a Fund has previously bought or sold and this may result in the inability to close a futures contract when desired. When a Fund purchases or sells a futures contract, it is subject to daily variation margin calls that could be substantial. If a Fund has insufficient cash to meet daily variation margin requirements, it might need to sell securities at a time when such sales are disadvantageous. Futures contracts on indices expose the Fund to volatility in an underlying index. Foreign currency futures contracts expose a Fund to risks associated with fluctuations in the value of foreign currencies.
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Swap Agreements Risk. Swap agreements or “swaps” are transactions in which a Fund and a counterparty agree to pay or receive payments at specified dates based upon or calculated by reference to changes in specified prices or rates (e.g., interest rates in the case of interest rate swaps) or the performance of specified securities, indices or other assets based on a specified amount (the “notional” amount). Swaps can involve greater risks than a direct investment in an underlying asset, because swaps typically include a certain amount of embedded leverage and as such are subject to leveraging risk. If swaps are used as a hedging strategy, a Fund is subject to the risk that the hedging strategy may not eliminate the risk that it is intended to offset, due to, among other reasons, a lack of correlation between the swaps and the portfolio of assets that the swaps are designed to hedge or replace. Swaps also may be difficult to value. Swaps may be subject to liquidity risk and counterparty risk. The value of swaps may be affected by changes in overall market movements and changes in interest rates and currency exchange rates. Some swaps are now executed through an organized exchange or regulated facility and cleared through a regulated clearing organization. A highly liquid secondary market may not exist for certain swaps, and there can be no assurance that one will develop. The use of an organized exchange or market for swap transactions may result in certain trading and valuation efficiencies for swaps, however, this may not always be the case. The absence of an organized exchange or market for swaps transactions may result in difficulties in trading and valuation, especially in the event of market disruptions. Swaps that are traded over-the-counter also are not subject to standardized clearing requirements and the direct oversight of self-regulatory organizations. Swaps may involve greater liquidity and counterparty risks, including settlement risk, as well as collateral risk (i.e., the risk that the swap will not be properly secured with sufficient collateral), legal risk (i.e., the risk that a swap will not be legally enforceable on all of its terms) and operational risk (i.e., the risk of processing and human errors, inadequate or failed internal or external processes, failures in systems and technology errors or malfunctions). A Fund may invest in the following types of swaps, which may be subject to the risks discussed above, as well as the additional risks as described below:
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•
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Currency
swaps, which may be subject to foreign
exchange, currency, market, and credit risks.
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Common Stock Risk. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, exchange rates or industry regulation. Companies that pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. In the event of an issuer’s bankruptcy, there is substantial risk that there will be nothing left to pay common stockholders after payments, if any, to bondholders and preferred stockholders have been made.
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Depositary Receipts Risk. A Fund may invest in securities issued by foreign companies through ADRs and GDRs. These securities are generally subject to many of the same risks of investing in the foreign securities that they evidence or into which they may be converted, including, but not limited to, currency exchange rate fluctuations, political and financial instability in the home country of a particular depositary receipt, less liquidity, more volatility, less government regulation and supervision and delays in transaction settlement. There may be an imperfect correlation between the market value of depositary receipts and the underlying foreign securities.
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U.S. Dollar-Denominated Foreign Stocks Traded on U.S. Exchanges Risk. Foreign (non-U.S.) companies that list their stocks on U.S. exchanges may be exempt from certain accounting and corporate governance standards that apply to U.S. companies that list on the same exchange. Foreign stocks traded on U.S. exchanges transact and settle in U.S. dollars, but performance of these stocks can be impacted by political and financial instability in the home country of a particular foreign company. To the extent a Fund invests in U.S. dollar-denominated foreign stocks traded on U.S. exchanges, delisting of these stocks could impact a Fund‘s ability to transact in such securities and could significantly impact their liquidity and market price. In addition, a Fund would have to seek other markets in which to transact in such securities which would also increase a Fund’s costs.
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Master Limited Partnerships (“MLPs”) Risk. Investing in MLPs involves certain risks related to investing in the underlying assets of the MLPs and risks associated with pooled investment vehicles. Investments held by MLPs may be relatively illiquid, limiting the MLPs’ ability to change their portfolios promptly in response to changes in economic or other conditions. MLPs may have limited financial resources, their securities may trade infrequently and in limited volume, they may be difficult to value, and they may be subject to more abrupt or erratic price movements than securities of larger or more broadly based companies. Holders of units in MLPs have more limited rights to vote on matters affecting the partnership and may be required to sell their common units at an undesirable time or price. A Fund invests as a limited partner, and normally would not be liable for the debts of an MLP beyond the amounts a Fund has contributed but it would not be shielded to the same extent that a shareholder of a corporation would be. In certain instances, creditors of an MLP would have the right to seek a return of capital that had been distributed to a limited partner. The right of an MLP’s creditors would continue even after a Fund had sold its investment in the partnership. MLPs typically invest in real estate, oil and gas equipment leasing assets, but they also finance entertainment, research and development, and other projects. A Fund’s investments in MLPs will be limited to no more than 25% of its assets in order for a Fund to meet the requirements necessary to qualify as a “regulated investment company” under the Internal Revenue Code of 1986, as amended. Distributions from an MLP may consist in part of a return of the amount originally invested, which would not be taxable to the extent the distributions do not exceed the investor’s adjusted basis on its MLP interest. These reductions in a Fund’s adjusted tax basis in the MLP securities will increase the amount of gain (or decrease the amount of loss) recognized by a Fund on a subsequent sale of the securities. MLPs holding credit-related investments are subject to interest rate risk and the risk of default on payment obligations by debt issuers. MLPs that concentrate in a particular industry or a particular geographic region are subject to risks associated with such industry or region.
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Real Estate Investment Trusts (“REITs”) Risk. REITs or other real estate-related securities are subject to the risks associated with direct ownership of real estate, including, among other risks: adverse developments affecting the real estate industry; declines in real property values; changes in interest rates; risks related to general and local economic conditions; defaults by mortgagors or other borrowers and tenants; lack of availability of mortgage funds or financing; increases in property taxes and other operating expenses; overbuilding in their sector of the real estate market; fluctuations in rental income; extended vacancies of properties, especially during economic downturns; casualty or condemnation losses; changes in tax and regulatory requirements; losses due to environmental liabilities; and governmental actions, such as changes to tax laws, zoning regulations or environmental regulations. All REITs are dependent on management skills, are subject to heavy cash flow dependency or self-liquidation and generally are not diversified. Regardless of where a REIT is organized or traded, its performance may be affected significantly by events in the region where its properties are located. Equity REITs are affected by the changes in the value of the properties owned by the trust. Mortgage REITs are affected by the quality of the credit extended. Equity, mortgage and hybrid REITs may not be diversified with regard to the types of tenants, may not be diversified with regard to the geographic locations of the properties, and are subject to cash flow dependency and defaults by borrowers. Any domestic REIT could be adversely affected by failure to qualify for tax-free “pass-through” of distributed net income and net realized gains under the Internal Revenue Code, or to maintain its exemption from registration under the Investment Company Act. REITs typically incur fees that are separate from those incurred by a Fund. Accordingly, a Fund’s investment in REITs will result in the layering of expenses such that shareholders will indirectly bear a proportionate share of the REITs’ operating expenses, in addition to indirectly paying Fund expenses. The value of REIT common stock may decline when interest rates rise. REITs tend to be small- to mid-capitalization securities and, as such, are subject to the risks of investing in small- to mid-capitalization securities.
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European Securities Risk. A Fund’s performance may be affected by political, social and economic conditions in Europe, such as growth of economic output (the gross national product of the countries in the region), the rate of inflation, the rate at which capital is reinvested into European economies, the success of governmental actions to reduce budget deficits, the resource self-sufficiency of European countries, interest rates in European countries, monetary exchange rates between European countries, and conflict between European countries. Most developed countries in Western Europe are members of the European Union (“EU”) and many are also members of the Economic and Monetary Union (“EMU” or “Eurozone”). European countries can be significantly affected by the tight fiscal and monetary controls that the EMU imposes on its members and with which candidates for EMU membership are required to comply.
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While certain EU countries continue to use their own currency, Eurozone countries use the Euro as their currency. Changes in imports or exports, changes in governmental or EU regulations on trade, changes in the exchange rate of the Euro and the currencies of other EU countries which are not in the Eurozone, the threat of default or actual default by one or more EU member states on its sovereign debt, and/or an economic recession in one or more EU member states may have a significant adverse effect on the economies of other EU member states and their trading partners, including non-EU European countries. A breakup of the Eurozone, particularly a disorderly breakup, would pose special challenges for the financial markets and could lead to exchange controls and/or market closures. The economies and markets of European countries are often closely connected and interdependent, and events in one country in Europe can have an adverse impact on other European countries.
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The European financial markets have experienced and may continue to experience volatility and adverse trends due to concerns relating to economic downturns; rising government debt levels and the possible default on government debt; national unemployment in several European countries; public
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health crises; political unrest; economic sanctions; inflation; energy crises; the future of the Euro as a common currency; and war and military conflict, such as the Russian invasion of Ukraine. These events have affected the exchange rate of the Euro and may continue to significantly affect European countries. Responses to financial problems by European governments, central banks, and others, including austerity measures, interest rate rises and other reforms, may not produce the desired results, may result in social unrest and may limit future growth and economic recovery or may have unintended consequences. Many European nations are susceptible to economic risks associated with high levels of debt. Non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts, and other issuers have faced difficulties obtaining credit or refinancing existing obligations. A default or debt restructuring by any European country could adversely impact holders of that country’s debt and sellers of credit default swaps linked to that country’s creditworthiness, which may be located in other countries. Such a default or debt restructuring could affect exposures to other European countries and their companies as well. In addition, issuers have faced difficulties obtaining credit or refinancing existing obligations, and financial markets have experienced extreme volatility and declines in asset values and liquidity. Furthermore, certain European countries have had to accept assistance from supranational agencies such as the International Monetary Fund, the European Stability Mechanism or others. There can be no assurance that any creditors or supranational agencies will continue to intervene or provide further assistance, and markets may react adversely to any expected reduction in the financial support provided by these creditors.
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The United Kingdom has withdrawn from the EU, and one or more other countries may withdraw from the EU and/or abandon the Euro. These events and actions have affected, and may in the future affect, the value and exchange rate of the Euro and may continue to significantly affect the economies of every country in Europe, including countries that do not use the Euro and non-EU member states. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching.
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The national politics of European countries have been unpredictable and subject to influence by disruptive political groups and ideologies. European governments may be subject to change and such countries may experience social and political unrest. Unanticipated or sudden political or social developments may result in sudden and significant investment losses. Russia’s war with Ukraine has negatively impacted European economic activity. The effects on the economies of European countries of the Russia/Ukraine war and Russia’s response to sanctions imposed by the U.S., the EU, UK and others are impossible to predict but have been and could continue to be significant and have a severe adverse impact on the region, including significant impacts on the regional, European, and global economies and the markets for certain securities and commodities, such as oil and natural gas. For example, exports in Eastern Europe have been disrupted for certain key commodities, pushing certain commodity prices to record highs. Also, both wholesale energy prices and energy prices charged to consumers in Europe have increased significantly.
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United Kingdom Securities Risk. Exposure to issuers located in, or with economic ties to, the United Kingdom, could expose a Fund to risks associated with investments in the United Kingdom to a greater extent than more geographically diverse funds, including regulatory, political, currency, security, and economic risks specific to the United Kingdom. The United Kingdom has one of the largest economies in Europe, and the United States and other European countries are substantial trading partners of the United Kingdom. As a result, the United Kingdom economy may be impacted by changes to the economic condition of the United States and other European countries.
Increasing commodity prices and rising inflation levels caused or exacerbated by the war between Russia and Ukraine recently prompted the United Kingdom government to implement significant policy changes. It is difficult to predict what effects such policies (or the suggestion of such policies) may have and the duration of those effects, which may last for extended periods. These effects may negatively impact broad segments of business and the population and have a significant and rapid negative impact on the performance of a Fund’s investments. In September 2022, the unexpected announcement by the United Kingdom government to propose spending pledges and tax cuts as part of the mini-budget, caused government bond prices to fall sharply, sparking a liquidity and valuation crisis among certain pension funds, and a fear that interest rates might rise at a faster rate than had been anticipated. The Bank of England subsequently launched an emergency intervention to stabilize the United Kingdom’s economy. The uncertainty also resulted in the British pound sterling falling to a historic low against the dollar, though there was some recovery shortly thereafter. The United Kingdom’s government subsequently reversed proposing some of the spending pledges and tax cuts; however, there continues to be considerable uncertainty surrounding these plans, which may continue to have a destabilizing effect on the United Kingdom economy. Additionally, the transitional period following the United Kingdom’s departure from the European Union (commonly referred to as “Brexit”) ended on December 31, 2020 and European Union law ceased to have effect in the United Kingdom except to the extent retained by the United Kingdom by unilateral act. The United Kingdom and the European Union then reached a trade agreement that was ratified by all applicable United Kingdom and European Union governmental bodies. The economic effects of Brexit, including certain negative impacts on the ability of the United Kingdom to trade seamlessly with the European Union, are becoming clearer but some political, regulatory and commercial uncertainty in relation to the longer term impacts nevertheless remains to be resolved. Accordingly, there remains a risk that the aftermath of Brexit, including its ongoing effect on the United Kingdom’s relationships with other countries, including the United States and the European Union, may negatively impact the value of investments held by the Fund. Although a sub-advisor may hedge Fund currency exposures back to the U.S. dollar, a depreciation of the British pound sterling and/or the Euro in relation to the U.S. dollar could adversely affect Fund investments denominated in British pound sterling or Euros that are not fully hedged regardless of the performance of the underlying issuer. |
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Recent Market Events Risk. Both U.S. and international markets have experienced significant volatility in recent months and years. As a result of such volatility, investment returns may fluctuate significantly. Moreover, the risks discussed herein associated with an investment in a Fund may be increased. Deteriorating economic fundamentals may increase the risk of default or insolvency of particular issuers, negatively impact market value, increase market volatility, cause credit spreads to widen, reduce bank balance sheets and cause unexpected changes in interest rates. Any of these could cause an increase in market volatility, reduce liquidity across various sectors or markets or decrease confidence in the markets. Historical patterns of correlation among asset classes may break down in unanticipated ways during times of high volatility, disrupting investment programs and potentially causing losses.
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Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the U.S. Federal Reserve and certain foreign central banks began to raise interest rates as part of their efforts to address rising inflation. In addition, ongoing inflation pressures could continue to cause an increase in interest rates and/or negatively impact issuers. It is difficult to accurately predict the pace at which interest rates may increase, the timing, frequency or magnitude of any such increases in interest rates, or when such increases might stop. Additionally, various economic and political factors, such as rising inflation rates, could cause the Federal Reserve or other foreign banks to change their approach in the future as such actions may result in an economic slowdown both in the U.S. and abroad. Unexpected increases in interest rates could lead to market volatility or reduce liquidity in certain sectors of the market. Also, regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. Over the longer term, rising interest rates may present a greater risk than has historically been the case due to the prior period of relatively low rates and the effect of government fiscal and monetary policy initiatives and potential market reaction to those initiatives, or their alteration or cessation. It is difficult to predict the impact on various markets of significant rate increases or other significant policy changes.
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In March 2023, the shutdown of certain financial institutions in the U.S. and questions regarding the viability of other financial institutions raised economic concerns over disruption in the U.S. and global banking systems. There can be no certainty that the actions taken by the U.S. or foreign governments will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. and global banking systems.
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Some countries, including the U.S., have in recent years adopted more protectionist trade policies. Slowing global economic growth; the rise in protectionist trade policies; changes to international trade agreements; risks associated with the trade agreement between the United Kingdom and the European Union and the risks associated with ongoing trade negotiations with China; political or economic dysfunction within some nations, including major producers of oil; and dramatic changes in commodity and currency prices could have adverse effects that cannot be foreseen at the present time. Tensions, war or open conflict between nations, such as between Russia and Ukraine, in the Middle East or in eastern Asia could affect the economies of many nations, including the United States. The duration of ongoing hostilities and any sanctions and related events cannot be predicted. Those events present material uncertainty and risk with respect to markets globally and the performance of a Fund and its investments or operations could be negatively impacted.
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Regulators in the U.S. have proposed and recently adopted a number of changes to regulations involving the markets and issuers, some of which apply to a Fund. The full effect of various newly-adopted regulations is not currently known. Additionally, it is not clear whether the proposed regulations will be adopted. However, due to the broad scope of the new and proposed regulations, certain changes could limit a Fund’s ability to pursue its investment strategies or make certain investments, or may make it more costly for a Fund to operate, which may impact performance. Further, advancements in technology may also adversely impact market movements and liquidity and may affect the overall performance of a Fund. For example, the advanced development and increased regulation of artificial intelligence may impact the economy and the performance of a Fund. As artificial intelligence is used more widely, the value of a Fund’s holdings may be impacted, which could impact the overall performance of a Fund.
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High public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty. There is no assurance that the U.S. Congress will act to raise the nation’s debt ceiling; a failure to do so could cause market turmoil and substantial investment risks that cannot now be fully predicted. Unexpected political, regulatory and diplomatic events within the U.S. and abroad may affect investor and consumer confidence and may adversely impact financial markets and the broader economy.
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Certain illnesses spread rapidly and have the potential to significantly and adversely affect the global economy. The impact of epidemics and/or pandemics that may arise in the future could negatively affect the economies of many nations, individual companies and the global securities and commodities markets, including their liquidity, in ways that cannot necessarily be foreseen at the present time and could last for an extended period of time. China’s economy, which has been sustained through debt-financed spending on housing and infrastructure, appears to be experiencing a significant slowdown and growing at a lower rate than prior years. Due to the size of China’s economy, such a slowdown could impact financial markets and the broader economy.
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Economists and others have expressed increasing concern about the potential effects of global climate change on property and security values. Impacts from climate change may include significant risks to global financial assets and economic growth. A rise in sea levels, an increase in powerful windstorms and/or a climate-driven increase in sea levels or flooding could cause coastal properties to lose value or become unmarketable altogether. Certain issuers, industries and regions may be adversely affected by the impacts of climate change, including on the demand for and the development of goods and
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services and related production costs, and the impacts of legislation, regulation and international accords related to climate change, as well as any indirect consequences of regulation or business trends driven by climate change. Regulatory changes and divestment movements tied to concerns about climate change could adversely affect the value of certain land and the viability of industries whose activities or products are seen as accelerating climate change. Losses related to climate change could adversely affect, among others, corporate issuers and mortgage lenders, the value of mortgage-backed securities, the bonds of municipalities that depend on tax or other revenues and tourist dollars generated by affected properties, and insurers of the property and/or of corporate, municipal or mortgage-backed securities.
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Collateralized Mortgage Obligation (“CMOs”) Risk. Investments in CMOs are subject to the same risks as direct investments in the underlying mortgage-backed securities. In addition, CMOs may be less liquid and exhibit greater price volatility than other types of mortgage-backed or asset-backed securities. CMOs may offer a higher yield than U.S. government securities, but they may also be subject to greater price fluctuation and credit risk, and may be highly sensitive to changes in interest rates. In addition, CMOs typically will be issued in a variety of classes or series, which have different maturities and are retired in sequence. While CMO collateral is generally issued by the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Association, the CMO itself may be issued by a private party, such as a brokerage firm, that is not covered by any government guarantees. Privately issued CMOs are not U.S. government securities nor are they supported in any way by any U.S. government agency or instrumentality. In the event of a default by an issuer of a CMO, there is no assurance that the collateral securing such CMO will be sufficient to pay principal and interest, and a Fund could experience delays in liquidating its position. It is possible that there will be limited opportunities for trading CMOs in the over-the-counter market, the depth and liquidity of which will vary from time to time.
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Commercial Mortgage-Backed Securities (“CMBS”) Risk. CMBS are subject to the risks generally associated with mortgage-backed securities and reflect the risks of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real
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estate markets, the ability of tenants to make loan payments, increases in interest rates, real estate tax rates and other operating expenses, changes in government rules, regulations and fiscal policies, and the ability of a property to attract and retain tenants. CMBS may not be backed by the full faith and credit of the U.S. Government and are subject to risk of default on the underlying mortgages, particularly during periods of economic downturn. CMBS may be less liquid and exhibit greater price volatility than other types of mortgage- or asset-backed securities. Furthermore, CMBS issued by non-government entities may offer higher yields than those issued by government entities, but also may be less liquid and subject to greater volatility than government issues. CMBS are subject to a greater degree of prepayment and extension risk than many other forms of fixed-income securities and, therefore, CMBS may react differently to changes in interest rates than other bonds and the prices of CMBS may reflect adverse economic and market conditions. Small movements in interest rates (both increases and decreases) may quickly and significantly reduce the value of CMBS. CMBS held by the Fund may be subordinated to one or more other classes of securities of the same series for purposes of, among other things, establishing payment priorities and offsetting losses and other shortfalls with respect to the related underlying mortgage loans. There can be no assurance that the subordination will be sufficient on any date to offset all losses or expenses incurred by the underlying trust.
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Mortgage Pass-Through Securities Risk. Mortgage pass-through securities are sensitive to interest rate changes, and small movements in interest rates, both increases and decreases, may quickly and significantly affect the value of certain mortgage pass-through securities. Mortgage-backed securities tend to increase in value less than other debt securities when interest rates decline, but are subject to similar or greater risk of decline in market value during periods of rising interest rates. Certain of the mortgage pass-through securities in which a Fund may invest in are issued or guaranteed by agencies or instrumentalities of the U.S. government but are not backed by the full faith and credit of the U.S. government. There can be no assurance that the U.S. government would provide financial support to its agencies or instrumentalities where it was not obligated to do so, which can cause a Fund to lose money or underperform. The risks of investing in mortgage pass-through securities include, among others, interest rate risk, credit risk, prepayment risk and extension risk, as well as risks associated with the nature of the underlying mortgage assets and the servicing of those assets. These securities are subject to the risk of default on the underlying mortgages, and such risk is heightened during periods of economic downturn. Transactions in mortgage pass-through securities often occur through to-be-announced (“TBA”) transactions. If a TBA counterparty defaults or goes bankrupt a Fund may experience adverse market action, expenses, or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in a TBA transaction which can cause a Fund to lose money or underperform.
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Government Money Market Funds Risk. Investments in government money market funds are subject to interest rate risk, credit risk, and market risk. Interest rate risk is the risk that rising interest rates could cause the Fund’s investment to lose value. A decline in short-term interest rates or a low interest rate environment would lower a government money market fund’s yield and the return on the Fund’s investment. Credit risk is the risk that the issuer, guarantor or insurer of an obligation, or the counterparty to a transaction, may fail or become less able or unwilling, to make timely payment of interest or principal or otherwise honor its obligations, or that it may default completely. There is the risk that the issuers or guarantors of securities owned by a government money market fund, including securities issued by U.S. Government agencies, which are not backed by the full faith and credit of the U.S. Government, will default on the payment of principal or interest or the obligation to repurchase securities from the government money market fund. This could cause the government money market fund’s NAV to decline below $1.00 per share, which would cause the Fund’s investment to lose value.
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Financials Sector Risk. Companies in the Financials sector are subject to extensive governmental regulation and intervention, which may result in financial penalties and limits on the amounts and types of loans and other financial commitments they can make, the interest rates and fees they can charge, the scope of their activities, the prices they can charge and the amount of capital they must maintain, and, potentially, their size. Governmental regulation may change frequently and may have significant adverse consequences for companies in the Financials sector, including effects not intended by such regulation. The impact of recent or future regulation, including more stringent capital requirements, cannot be predicted. Profitability is largely dependent on the availability and cost of capital funds and can fluctuate significantly. In addition, fiscal, regulatory and monetary policies, economic conditions, interest rate changes, loan losses, credit rating downgrades, and decreased liquidity in the credit markets may cause an adverse impact in a broad range of markets, including U.S. and international credit and interbank money markets, thereby affecting a wide range of financial institutions and markets.
Securities of financial services companies may experience a dramatic decline in value when such companies experience substantial declines in the valuations of their assets, take action to raise capital (such as the issuance of debt or equity securities), or cease operations. Companies in the Financials sector are exposed directly to the credit risk of their borrowers and counterparties, who may be leveraged to an unknown degree, including through swaps and other derivatives products. In addition, financial services companies may have concentrated portfolios, such as a high level of loans to one or more industries or sectors, which makes them vulnerable to economic conditions that affect such industries or sectors. Credit losses resulting from financial difficulties of borrowers and financial losses associated with investment activities can negatively impact the sector. Cybersecurity incidents and technology malfunctions and failures have become increasingly frequent in this sector and have reportedly caused losses to companies in this sector, which may negatively impact a Fund. |
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Russell 1000® Value Index is a registered trademark of Frank Russell Company. The Russell 1000® Value Index is an unmanaged index of those stocks in the Russell 1000® Index with lower price-to-book ratios and lower forecasted growth values.
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The Bloomberg US Aggregate Bond Index is a broad-based benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes components for Treasuries, government-related and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis.
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The Bloomberg US Aggregate Bond Index is a broad-based benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes components for Treasuries, government-related and corporate securities, mortgage pass-through securities, and asset-backed securities. These major sectors are subdivided into more specific indices that are calculated and reported on a regular basis.
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The MSCI® EAFE Index (Net) is designed to represent the performance of large- and mid-capitalization securities across 21 developed markets countries, including countries in Europe, Australasia and the Far East, and excluding the U.S. and Canada. It covers approximately 85% of the free float-adjusted market capitalization in each country.
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The MSCI® EAFE Value Index (Net) captures large and mid-cap securities exhibiting overall value style characteristics across Developed Markets countries around the world, excluding the US and Canada. The value investment style characteristics for index construction are defined using three variables: book value to price, 12-month forward earnings to price and dividend yield.
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Russell 1000® Value Index is a registered trademark of Frank Russell Company. The Russell 1000® Value Index is an unmanaged index of those stocks in the Russell 1000® Index with lower price-to-book ratios and lower forecasted growth values.
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The Russell 2000® 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 lower price-to-book ratios and lower forecasted growth values. The Russell 2000® Index is an unmanaged index comprised of approximately 2,000 smaller-capitalization stocks.
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American Beacon Fund
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Aggregate Management and Investment Advisory Fees
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American Beacon Balanced Fund
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0.52%
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American Beacon Garcia Hamilton Quality Bond Fund
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0.33%
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American Beacon International Equity Fund
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0.59%
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American Beacon Large Cap Value Fund
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0.55%
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American Beacon Fund
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Aggregate Management and Investment Advisory Fees
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American Beacon Small Cap Value Fund
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0.70%
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American Beacon Fund
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A Class
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C Class
|
Y Class
|
R6 Class
|
Advisor Class
|
R5 Class
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Investor Class
|
American Beacon Garcia Hamilton Quality Bond Fund
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n/a
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n/a
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0.51%
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0.41%
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n/a
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0.45%
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0.83%
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American Beacon International Equity Fund
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n/a
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n/a
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n/a
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0.69%
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n/a
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n/a
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n/a
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American Beacon Funds
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Team Members
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American Beacon Balanced Fund
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Kirk L. Brown, Paul B. Cavazos, Erin Higginbotham, Samuel Silver
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American Beacon International Equity Fund and American Beacon Large Cap Value Fund
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Kirk L. Brown, Paul B. Cavazos, Robyn A. Serrano
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American Beacon Funds
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Team Members
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American Beacon Small Cap Value Fund
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Paul B. Cavazos, Colin J. Hamer, Robyn A. Serrano
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How long you expect to own the shares;
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How much you intend to invest;
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Total expenses associated with owning shares of each class;
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Whether you qualify for any reduction or waiver of sales charges;
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Whether you plan to take any distributions in the near future; and
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Availability of share classes.
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Amount of Sale/Account Value
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As a % of Offering Price
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As a % of Investment
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Dealer Commission as a % of Offering Price
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Less than $50,000
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5.75%
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6.10%
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5.00%
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$50,000 but less than $100,000
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4.75%
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4.99%
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4.00%
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$100,000 but less than $250,000
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3.75%
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3.90%
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3.00%
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$250,000 but less than $500,000
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2.75%
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2.83%
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2.05%
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$500,000 but less than $1 million
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2.00%
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2.04%
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1.50%
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$1 million and above
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0.00%
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0.00%†
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‡
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† | No initial sales charge applies on purchases of $1,000,000 or more. A CDSC of 0.50% of the offering price will be charged on purchases of $1,000,000 or more that are redeemed in whole or in part within eighteen (18) months of purchase. |
‡ | See “Dealer Concessions on A Class Purchases Without a Front-End Sales Charge.” |
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The Manager or its affiliates;
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Present and former directors, trustees, officers, employees of the Manager, the Manager’s parent company, and the American Beacon Funds (and their ‘‘immediate family’’ as defined in the SAI), and retirement plans established by them for their employees;
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Registered representatives or employees of intermediaries that have selling agreements with the Funds;
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Shares acquired through merger or acquisition;
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Insurance company separate accounts;
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Employer-sponsored retirement plans;
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Dividend reinvestment programs;
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Purchases through certain fee-based programs under which investors pay advisory fees that may be offered through selected registered investment advisers, broker-dealers, and other financial intermediaries;
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Shareholders that purchase a Fund through a financial intermediary that offers our A Class shares uniformly on a ‘‘no load’’ (or reduced load) basis to you and all similarly situated customers of the intermediary in accordance with the intermediary’s prescribed fee schedule for purchases of fund shares;
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Mutual fund shares exchanged from an existing position in the same fund as part of a share class conversion instituted by an intermediary; and
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Reinvestment of proceeds within 90 days of a redemption from A Class account (see Redemption Policies for more information).
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Accounts owned by you, your spouse or your minor children under the age of 21, including trust or other fiduciary accounts in which you, your spouse or your minor children are the beneficiary;
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UTMAs/UGMAs;
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IRAs, including traditional, Roth, SEP and SIMPLE IRAs; and
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Coverdell Education Savings Accounts or qualified 529 plans.
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shares acquired by the reinvestment of dividends or other distributions;
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other shares that are not subject to the CDSC;
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shares held the longest during the holding period.
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The redemption is due to a shareholder’s death or post-purchase disability;
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The redemption is from a systematic withdrawal plan and represents no more than 10% of your annual account value;
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The redemption is a benefit payment made from a qualified retirement plan, unless the redemption is due to the termination of the plan or the transfer of the plan to another financial institution;
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The redemption is for a “required minimum distribution” from a traditional IRA as determined by the Internal Revenue Service;
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The redemption is due to involuntary redemptions by a Fund as a result of your account not meeting the minimum balance requirements, the termination and liquidation of a Fund, or other actions;
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The redemption is from accounts for which the broker-dealer of record has entered into a written agreement with the Distributor (or Manager) allowing this waiver;
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The redemption is to return excess contributions made to a retirement plan; or
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The redemption is to return contributions made due to a mistake of fact.
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New Account
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Existing Account
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Share Class
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Minimum Initial Investment Amount
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Purchase/Redemption Minimum by Check/ACH/Exchange
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Purchase/Redemption Minimum by Wire
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C
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$1,000
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$50
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$ 250
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A, Investor
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$2,500
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$50
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$ 250
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Advisor
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$2,500
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$50
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None
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Y
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$100,000
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$50
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None
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R5
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$250,000
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$50
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None
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R6
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None
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$50
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None
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• Your name/account registration
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• Your account number
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• Type of transaction requested
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• Fund name(s) and fund number(s)
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• Dollar amount or number of shares
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Internet
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www.americanbeaconfunds.com
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Phone
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To reach an American Beacon representative call 1-800-658-5811, option 1
Through the Automated Voice Response Service call 1-800-658-5811, option 2 (Investor Class Only)
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Mail
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American Beacon Funds
PO Box 219643
Kansas City, MO 64121-9643
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Overnight Delivery:
American Beacon Funds
430 W. 7th Street, Suite 219643
Kansas City, MO 64105-1407
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ABA# 0110-0002-8; AC-9905-342-3,
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Attn: American Beacon Funds,
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the fund name and fund number, and
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shareholder account number and registration.
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New Account
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Existing Account
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Share Class
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Minimum Initial Investment Amount
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Purchase/Redemption Minimum by Check/ACH/Exchange
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Purchase/Redemption Minimum by Wire
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C
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$1,000
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$50
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$ 250
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A, Investor
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$2,500
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$50
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$ 250
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Advisor
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$2,500
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$50
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None
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Y
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$100,000
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$50
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None
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R5
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$250,000
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$50
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None
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R6
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None
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$50
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None
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with a request to send the proceeds to an address or commercial bank account other than the address or commercial bank account designated on the account application, or
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for an account whose address has changed within the last 30 days if proceeds are sent by check.
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Share Class
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Account Balance
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A
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$2,500
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C
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$1,000
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Y
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$25,000
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R6
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$0
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Advisor
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$2,500
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R5
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$75,000
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Investor
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$2,500
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The Funds, their officers, trustees, employees, or agents are not responsible for the authenticity of instructions provided by telephone, nor for any loss, liability, cost or expense incurred for acting on them.
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The Funds employ procedures reasonably designed to confirm that instructions communicated by telephone are genuine.
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Due to the volume of calls or other unusual circumstances, telephone redemptions may be difficult to implement during certain time periods.
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liquidate a shareholder’s account at the current day’s NAV per share and remit proceeds via check if the Funds or a financial institution is unable to verify the shareholder’s identity within three business days of account opening,
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seek reimbursement from the shareholder for any related loss incurred by a Fund if payment for the purchase of Fund shares by check does not clear the shareholder’s bank, and
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reject a purchase order and seek reimbursement from the shareholder for any related loss incurred by a Fund if funds are not received by the applicable wire deadline.
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Send a letter to American Beacon Funds via the United States Post Office.
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Speak to a Customer Service Representative on the phone after you go through a security verification process. For residents of certain states, contact cannot be made by phone but must be in writing or through the Funds’ secure web application.
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Access your account through the Funds’ secure web application.
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Cashing checks that are received and are made payable to the owner of the account.
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American Beacon Funds
P.O. Box 219643 Kansas City, MO 64121-9643 1-800-658-5811 www.americanbeaconfunds.com |
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shares acquired through the reinvestment of dividends and other distributions;
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systematic purchases and redemptions;
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shares redeemed to return excess IRA contributions; or
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certain transactions made within a retirement or employee benefit plan, such as payroll contributions, minimum required distributions, loans, and hardship withdrawals, or other transactions that are initiated by a party other than the plan participant.
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American Beacon Fund
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Dividends Paid
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Other Distributions Paid
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American Beacon Balanced Fund
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Quarterly
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Annually
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American Beacon Garcia Hamilton Quality Bond Fund
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Monthly
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Annually
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American Beacon International Equity Fund
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Annually
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Annually
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American Beacon Large Cap Value Fund
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Annually
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Annually
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American Beacon Small Cap Value Fund
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Annually
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Annually
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Reinvest All Distributions. You can elect to reinvest all distributions by a Fund in additional shares of the distributing class of that Fund.
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Reinvest Only Some Distributions. You can elect to reinvest some types of distributions by a Fund in additional shares of the distributing class of that Fund while receiving the other types of distributions by that Fund by check or having them sent directly to your bank account by ACH (“in cash”).
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Receive All Distributions in Cash. You can elect to receive all distributions in cash.
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Reinvest Your Distributions in shares of another American Beacon Fund. You can reinvest all of your distributions by a Fund on a particular class of shares in shares of the same class of another American Beacon Fund that is available for exchanges. You must have an existing account in the same share class of the selected fund.
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Type of Transaction
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Federal Tax Status
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Dividends from net investment income*
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Ordinary income**
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Distributions of the excess of net short-term capital gain over net long-term capital loss*
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Ordinary income
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Distributions of net gains from certain foreign currency transactions*
|
Ordinary income
|
Distributions of the excess of net long-term capital gain over net short-term capital loss (“net capital gain”)*
|
Long-term capital gains
|
Redemptions or exchanges of shares owned for more than one year
|
Long-term capital gains or losses
|
Redemptions or exchanges of shares owned for one year or less
|
Net gains are taxed at the same rate as ordinary income; net losses are subject to special rules
|
* | Whether reinvested or taken in cash. |
** | Except for dividends that are attributable to ‘‘qualified dividend income,’’ if any. |
American Beacon Balanced FundSM
|
|||||
|
A Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$11.69
|
$14.31
|
$12.39
|
$14.33
|
$14.38
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.23
|
0.25
|
0.11
|
0.15
|
0.22
|
Net gains (losses) on investments (both realized and unrealized)
|
0.05
|
(1.50
)
|
3.71
|
(0.71
)
|
1.07
|
Total income (loss) from investment operations
|
0.28
|
(1.25
)
|
3.82
|
(0.56
)
|
1.29
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.22
)
|
(0.19
)
|
(0.25
)
|
(0.21
)
|
(0.22
)
|
Distributions from net realized gains
|
(1.16
)
|
(1.18
)
|
(1.65
)
|
(1.17
)
|
(1.12
)
|
Total distributions
|
(1.38
)
|
(1.37
)
|
(1.90
)
|
(1.38
)
|
(1.34
)
|
Net asset value, end of period
|
$10.59
|
$11.69
|
$14.31
|
$12.39
|
$14.33
|
Total returnB
|
2.44
%
|
(9.49
)%
|
33.39
%
|
(4.49
)%
|
10.54
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$12,917,238
|
$13,482,666
|
$13,922,687
|
$12,863,938
|
$16,228,685
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.09
%
|
1.04
%
|
1.02
%
|
1.21
%
|
1.01
%
|
Expenses, net of reimbursements and/or recoupments
|
1.09
%
|
1.04
%
|
1.02
%
|
1.21
%
|
1.01
%
C
|
Net investment income, before expense reimbursements and/or recoupments
|
1.80
%
|
1.22
%
|
1.04
%
|
1.46
%
|
1.88
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.80
%
|
1.22
%
|
1.04
%
|
1.46
%
|
1.88
%
|
Portfolio turnover rate
|
48
%
|
30
%
|
37
%
|
82
%
|
68
%
|
A | On January 23, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
C | This ratio does not include a voluntary reimbursement of service fees as included in the prior year. |
American Beacon Balanced FundSM
|
|||||
|
C Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$11.87
|
$14.49
|
$12.53
|
$14.48
|
$14.55
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.12
B
|
0.06
B
|
0.04
B
|
0.05
|
0.10
|
Net gains (losses) on investments (both realized and unrealized)
|
0.08
|
(1.41
)
|
3.72
|
(0.70
)
|
1.09
|
Total income (loss) from investment operations
|
0.20
|
(1.35
)
|
3.76
|
(0.65
)
|
1.19
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.13
)
|
(0.09
)
|
(0.15
)
|
(0.13
)
|
(0.14
)
|
Distributions from net realized gains
|
(1.16
)
|
(1.18
)
|
(1.65
)
|
(1.17
)
|
(1.12
)
|
Total distributions
|
(1.29
)
|
(1.27
)
|
(1.80
)
|
(1.30
)
|
(1.26
)
|
Net asset value, end of period
|
$10.78
|
$11.87
|
$14.49
|
$12.53
|
$14.48
|
Total returnC
|
1.68
%
|
(10.11
)%
|
32.32
%
|
(5.09
)%
|
9.63
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$11,669,906
|
$16,173,837
|
$23,737,711
|
$23,951,798
|
$30,848,500
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.83
%
|
1.78
%
|
1.75
%
|
1.95
%
|
1.76
%
|
Expenses, net of reimbursements and/or recoupments
|
1.83
%
|
1.78
%
|
1.75
%
|
1.95
%
|
1.76
%
D
|
Net investment income, before expense reimbursements and/or recoupments
|
1.04
%
|
0.47
%
|
0.32
%
|
0.72
%
|
1.13
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.04
%
|
0.47
%
|
0.32
%
|
0.72
%
|
1.13
%
|
Portfolio turnover rate
|
48
%
|
30
%
|
37
%
|
82
%
|
68
%
|
A | On January 23, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund. |
B | Per share amounts have been calculated using the average shares method. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
D | This ratio does not include a voluntary reimbursement of service fees as included in the prior year. |
American Beacon Balanced FundSM
|
|||||
|
Y Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$14.20
|
$17.07
|
$14.46
|
$16.47
|
$16.31
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.29
|
0.21
|
0.20
|
0.25
|
0.33
|
Net gains (losses) on investments (both realized and unrealized)
|
0.08
|
(1.68
)
|
4.35
|
(0.86
)
|
1.20
|
Total income (loss) from investment operations
|
0.37
|
(1.47
)
|
4.55
|
(0.61
)
|
1.53
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.24
)
|
(0.22
)
|
(0.29
)
|
(0.23
)
|
(0.25
)
|
Distributions from net realized gains
|
(1.16
)
|
(1.18
)
|
(1.65
)
|
(1.17
)
|
(1.12
)
|
Total distributions
|
(1.40
)
|
(1.40
)
|
(1.94
)
|
(1.40
)
|
(1.37
)
|
Net asset value, end of period
|
$13.17
|
$14.20
|
$17.07
|
$14.46
|
$16.47
|
Total returnB
|
2.68
%
|
(9.25
)%
|
33.66
%
|
(4.17
)%
|
10.75
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$24,304,867
|
$30,273,662
|
$40,858,765
|
$43,550,846
|
$62,956,422
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.84
%
|
0.80
%
|
0.77
%
|
0.96
%
|
0.74
%
|
Expenses, net of reimbursements and/or recoupments
|
0.84
%
|
0.80
%
|
0.77
%
|
0.96
%
|
0.74
%
|
Net investment income, before expense reimbursements and/or recoupments
|
2.01
%
|
1.46
%
|
1.31
%
|
1.71
%
|
2.15
%
|
Net investment income, net of reimbursements and/or recoupments
|
2.01
%
|
1.46
%
|
1.31
%
|
1.71
%
|
2.15
%
|
Portfolio turnover rate
|
48
%
|
30
%
|
37
%
|
82
%
|
68
%
|
A | On January 23, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund. |
B | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
American Beacon Balanced FundSM
|
|||||
|
Advisor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$12.86
|
$15.59
|
$13.35
|
$15.34
|
$15.29
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.15
|
0.15
B
|
0.15
|
0.18
B
|
0.26
|
Net gains (losses) on investments (both realized and unrealized)
|
0.15
|
(1.54
)
|
3.97
|
(0.81
)
|
1.11
|
Total income (loss) from investment operations
|
0.30
|
(1.39
)
|
4.12
|
(0.63
)
|
1.37
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.20
)
|
(0.16
)
|
(0.23
)
|
(0.19
)
|
(0.20
)
|
Distributions from net realized gains
|
(1.16
)
|
(1.18
)
|
(1.65
)
|
(1.17
)
|
(1.12
)
|
Total distributions
|
(1.36
)
|
(1.34
)
|
(1.88
)
|
(1.36
)
|
(1.32
)
|
Net asset value, end of period
|
$11.80
|
$12.86
|
$15.59
|
$13.35
|
$15.34
|
Total returnC
|
2.35
%
|
(9.62
)%
|
33.17
%
|
(4.65
)%
|
10.41
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$960,288
|
$1,124,266
|
$2,120,450
|
$1,760,622
|
$6,039,168
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.24
%
|
1.19
%
|
1.16
%
|
1.36
%
|
1.14
%
|
Expenses, net of reimbursements and/or recoupments
|
1.24
%
|
1.19
%
|
1.16
%
|
1.36
%
|
1.14
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.66
%
|
1.05
%
|
0.91
%
|
1.29
%
|
1.76
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.66
%
|
1.05
%
|
0.91
%
|
1.29
%
|
1.76
%
|
Portfolio turnover rate
|
48
%
|
30
%
|
37
%
|
82
%
|
68
%
|
A | On January 23, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund. |
B | Per share amounts have been calculated using the average shares method. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
American Beacon Balanced FundSM
|
|||||
|
R5 ClassA
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020B
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$14.07
|
$16.93
|
$14.35
|
$16.36
|
$16.20
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.24
|
0.11
|
0.19
|
0.20
|
0.31
|
Net gains (losses) on investments (both realized and unrealized)
|
0.15
|
(1.56
)
|
4.34
|
(0.80
)
|
1.23
|
Total income (loss) from investment operations
|
0.39
|
(1.45
)
|
4.53
|
(0.60
)
|
1.54
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.26
)
|
(0.23
)
|
(0.30
)
|
(0.24
)
|
(0.26
)
|
Distributions from net realized gains
|
(1.16
)
|
(1.18
)
|
(1.65
)
|
(1.17
)
|
(1.12
)
|
Total distributions
|
(1.42
)
|
(1.41
)
|
(1.95
)
|
(1.41
)
|
(1.38
)
|
Net asset value, end of period
|
$13.04
|
$14.07
|
$16.93
|
$14.35
|
$16.36
|
Total returnC
|
2.80
%
|
(9.20
)%
|
33.80
%
|
(4.14
)%
|
10.89
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$10,827,923
|
$12,977,305
|
$22,687,613
|
$22,476,942
|
$46,593,155
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.78
%
|
0.72
%
|
0.70
%
|
0.88
%
|
0.66
%
|
Expenses, net of reimbursements and/or recoupments
|
0.78
%
|
0.72
%
|
0.70
%
|
0.88
%
|
0.66
%
|
Net investment income, before expense reimbursements and/or recoupments
|
2.10
%
|
1.51
%
|
1.37
%
|
1.82
%
|
2.24
%
|
Net investment income, net of reimbursements and/or recoupments
|
2.10
%
|
1.51
%
|
1.37
%
|
1.82
%
|
2.24
%
|
Portfolio turnover rate
|
48
%
|
30
%
|
37
%
|
82
%
|
68
%
|
A | Prior to February 28, 2020, the R5 Class was known as Institutional Class. |
B | On January 23, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
American Beacon Balanced FundSM
|
|||||
|
Investor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$11.74
|
$14.35
|
$12.43
|
$14.36
|
$14.41
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.11
|
0.15
B
|
0.22
|
0.03
|
0.18
|
Net gains (losses) on investments (both realized and unrealized)
|
0.17
|
(1.39
)
|
3.61
|
(0.58
)
|
1.11
|
Total income (loss) from investment operations
|
0.28
|
(1.24
)
|
3.83
|
(0.55
)
|
1.29
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.22
)
|
(0.19
)
|
(0.26
)
|
(0.21
)
|
(0.22
)
|
Distributions from net realized gains
|
(1.16
)
|
(1.18
)
|
(1.65
)
|
(1.17
)
|
(1.12
)
|
Total distributions
|
(1.38
)
|
(1.37
)
|
(1.91
)
|
(1.38
)
|
(1.34
)
|
Net asset value, end of period
|
$10.64
|
$11.74
|
$14.35
|
$12.43
|
$14.36
|
Total returnC
|
2.46
%
|
(9.40
)%
|
33.32
%
|
(4.41
)%
|
10.50
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$46,044,377
|
$54,447,528
|
$85,251,213
|
$68,284,615
|
$96,065,263
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.04
%
|
1.03
%
|
0.99
%
|
1.20
%
|
0.97
%
|
Expenses, net of reimbursements and/or recoupments
|
1.04
%
|
1.03
%
|
0.99
%
|
1.20
%
|
0.97
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.84
%
|
1.22
%
|
1.07
%
|
1.47
%
|
1.92
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.84
%
|
1.22
%
|
1.07
%
|
1.47
%
|
1.92
%
|
Portfolio turnover rate
|
48
%
|
30
%
|
37
%
|
82
%
|
68
%
|
A | On January 23, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund. |
B | Per share amounts have been calculated using the average shares method. |
C | Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions. |
American Beacon Garcia Hamilton Quality Bond FundSM
|
|||||
|
Y Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$8.36
|
$9.86
|
$10.27
|
$10.05
|
$9.79
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.37
|
0.22
|
(0.00
)
A
|
0.13
|
0.24
|
Net gains (losses) on investments (both realized and unrealized)
|
(0.46
)
|
(1.51
)
|
(0.08
)
|
0.25
|
0.25
|
Total income (loss) from investment operations
|
(0.09
)
|
(1.29
)
|
(0.08
)
|
0.38
|
0.49
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.28
)
|
(0.21
)
|
(0.14
)
|
(0.16
)
|
(0.23
)
|
Distributions from net realized gains
|
–
|
–
|
(0.19
)
|
–
|
–
|
Total distributions
|
(0.28
)
|
(0.21
)
|
(0.33
)
|
(0.16
)
|
(0.23
)
|
Net asset value, end of period
|
$7.99
|
$8.36
|
$9.86
|
$10.27
|
$10.05
|
Total returnB
|
(1.27
)%
|
(13.24
)%
|
(0.81
)%
|
3.83
%
|
5.09
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$48,666,569
|
$29,473,503
|
$21,340,613
|
$18,928,869
|
$17,927,537
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.75
%
|
0.73
%
|
0.74
%
|
0.74
%
|
0.73
%
|
Expenses, net of reimbursements and/or recoupments
|
0.51
%
|
0.51
%
|
0.52
%
C
|
0.55
%
|
0.55
%
|
Net investment income (loss), before expense reimbursements and/or recoupments
|
3.23
%
|
1.10
%
|
(0.38
)%
|
1.03
%
|
2.14
%
|
Net investment income (loss), net of reimbursements and/or recoupments
|
3.47
%
|
1.32
%
|
(0.16
)%
|
1.22
%
|
2.32
%
|
Portfolio turnover rate
|
72
%
|
158
%
|
71
%
|
122
%
|
58
%
|
A
|
Amount represents less than $0.01 per share.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
C
|
Expense ratios may exceed stated expense caps in Note 2 in the Annual Shareholder report due to the change in the contractual expense caps on February 28, 2021.
|
American Beacon Garcia Hamilton Quality Bond FundSM
|
|||||
|
R6 Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
February 28, 2019A to October 31, 2019
|
Net asset value, beginning of period
|
$8.36
|
$9.85
|
$10.26
|
$10.04
|
$9.87
|
Income from investment operations:
|
|
|
|
|
|
Net investment income (loss)
|
0.32
|
0.17
|
(0.01
)
B
|
0.14
|
0.17
|
Net gains (losses) on investments (both realized and unrealized)
|
(0.40
)
|
(1.44
)
|
(0.06
)
|
0.25
|
0.17
|
Total income (loss) from investment operations
|
(0.08
)
|
(1.27
)
|
(0.07
)
|
0.39
|
0.34
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.29
)
|
(0.22
)
|
(0.15
)
|
(0.17
)
|
(0.17
)
|
Distributions from net realized gains
|
–
|
–
|
(0.19
)
|
–
|
–
|
Total distributions
|
(0.29
)
|
(0.22
)
|
(0.34
)
|
(0.17
)
|
(0.17
)
|
Net asset value, end of period
|
$7.99
|
$8.36
|
$9.85
|
$10.26
|
$10.04
|
Total returnC
|
(1.17
)%
|
(13.11
)%
|
(0.70
)%
|
3.97
%
|
3.44
%
D
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$200,499,044
|
$191,990,607
|
$166,304,291
|
$141,893,384
|
$130,208,195
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.65
%
|
0.63
%
|
0.64
%
|
0.64
%
|
0.66
%
E
|
Expenses, net of reimbursements and/or recoupments
|
0.41
%
|
0.41
%
|
0.41
%
|
0.41
%
|
0.41
%
E
|
Net investment income (loss), before expense reimbursements and/or recoupments
|
3.31
%
|
1.14
%
|
(0.28
)%
|
1.13
%
|
1.90
%
E
|
Net investment income (loss), net of reimbursements and/or recoupments
|
3.55
%
|
1.36
%
|
(0.05
)%
|
1.36
%
|
2.15
%
E
|
Portfolio turnover rate
|
72
%
|
158
%
|
71
%
|
122
%
|
58
%
F
|
A
|
Commencement of operations.
|
B
|
Based on average shares outstanding for the period.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
D
|
Not annualized.
|
E
|
Annualized.
|
F
|
Portfolio turnover rate is for the period from February 28, 2019 through October 31, 2019 and is not annualized.
|
American Beacon Garcia Hamilton Quality Bond FundSM
|
|||||
|
R5 ClassA
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$8.37
|
$9.85
|
$10.27
|
$10.05
|
$9.79
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income (loss)
|
0.30
B
|
0.06
|
(0.01
)
B
|
0.11
|
0.24
|
Net gains (losses) on investments (both realized and unrealized)
|
(0.37
)
|
(1.33
)
|
(0.08
)
|
0.28
|
0.26
|
Total income (loss) from investment operations
|
(0.07
)
|
(1.27
)
|
(0.09
)
|
0.39
|
0.50
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.29
)
|
(0.21
)
|
(0.14
)
|
(0.17
)
|
(0.24
)
|
Distributions from net realized gains
|
–
|
–
|
(0.19
)
|
–
|
–
|
Total distributions
|
(0.29
)
|
(0.21
)
|
(0.33
)
|
(0.17
)
|
(0.24
)
|
Net asset value, end of period
|
$8.01
|
$8.37
|
$9.85
|
$10.27
|
$10.05
|
Total returnC
|
(1.08
)%
|
(13.04
)%
|
(0.84
)%
|
3.93
%
|
5.20
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$15,104,966
|
$134,519,084
|
$192,774,622
|
$172,774,140
|
$316,582,604
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.69
%
|
0.66
%
|
0.67
%
|
0.68
%
|
0.66
%
|
Expenses, net of reimbursements and/or recoupments
|
0.45
%
|
0.45
%
|
0.45
%
|
0.45
%
|
0.45
%
|
Net investment income (loss), before expense reimbursements and/or recoupments
|
3.20
%
|
1.06
%
|
(0.32
)%
|
1.15
%
|
2.18
%
|
Net investment income (loss), net of reimbursements and/or recoupments
|
3.44
%
|
1.27
%
|
(0.10
)%
|
1.38
%
|
2.39
%
|
Portfolio turnover rate
|
72
%
|
158
%
|
71
%
|
122
%
|
58
%
|
A
|
Prior to February 28, 2020, the R5 Class was known as Institutional Class.
|
B
|
Per share amounts have been calculated using the average shares method.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Garcia Hamilton Quality Bond FundSM
|
|||||
|
Investor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$8.36
|
$9.85
|
$10.26
|
$10.05
|
$9.79
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income (loss)
|
0.21
|
0.09
|
(0.04
)
A
|
0.13
A
|
0.21
|
Net gains (losses) on investments (both realized and unrealized)
|
(0.33
)
|
(1.40
)
|
(0.07
)
|
0.22
|
0.26
|
Total income (loss) from investment operations
|
(0.12
)
|
(1.31
)
|
(0.11
)
|
0.35
|
0.47
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.25
)
|
(0.18
)
|
(0.11
)
|
(0.14
)
|
(0.21
)
|
Distributions from net realized gains
|
–
|
–
|
(0.19
)
|
–
|
–
|
Total distributions
|
(0.25
)
|
(0.18
)
|
(0.30
)
|
(0.14
)
|
(0.21
)
|
Net asset value, end of period
|
$7.99
|
$8.36
|
$9.85
|
$10.26
|
$10.05
|
Total returnB
|
(1.59
)%
|
(13.47
)%
|
(1.11
)%
|
3.54
%
|
4.80
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$740,628
|
$853,503
|
$991,788
|
$365,190
|
$14,904,591
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.17
%
|
1.13
%
|
1.29
%
|
1.20
%
|
1.04
%
|
Expenses, net of reimbursements and/or recoupments
|
0.83
%
|
0.83
%
|
0.83
%
|
0.83
%
|
0.83
%
|
Net investment income (loss), before expense reimbursements and/or recoupments
|
2.78
%
|
0.63
%
|
(0.91
)%
|
0.90
%
|
1.81
%
|
Net investment income (loss), net of reimbursements and/or recoupments
|
3.12
%
|
0.93
%
|
(0.45
)%
|
1.27
%
|
2.02
%
|
Portfolio turnover rate
|
72
%
|
158
%
|
71
%
|
122
%
|
58
%
|
A
|
Based on average shares outstanding for the period.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon International Equity FundSM
|
|||||
|
A Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$14.13
|
$20.06
|
$14.55
|
$17.85
|
$18.50
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.34
|
0.33
|
0.36
B
|
0.21
|
0.45
|
Net gains (losses) on investments (both realized and unrealized)
|
2.40
|
(4.36
)
|
5.38
|
(3.04
)
|
0.36
|
Total income (loss) from investment operations
|
2.74
|
(4.03
)
|
5.74
|
(2.83
)
|
0.81
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.37
)
|
(0.56
)
|
(0.23
)
|
(0.47
)
|
(0.32
)
|
Distributions from net realized gains
|
–
|
(1.34
)
|
–
|
–
|
(1.14
)
|
Total distributions
|
(0.37
)
|
(1.90
)
|
(0.23
)
|
(0.47
)
|
(1.46
)
|
Net asset value, end of period
|
$16.50
|
$14.13
|
$20.06
|
$14.55
|
$17.85
|
Total returnC
|
19.55
%
|
(22.00
)%
|
39.65
%
|
(16.37
)%
|
5.46
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$8,977,482
|
$7,205,251
|
$10,017,801
|
$9,512,972
|
$13,973,709
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.19
%
|
1.14
%
|
1.13
%
|
1.13
%
|
1.15
%
|
Expenses, net of reimbursements and/or recoupments
|
1.19
%
|
1.14
%
|
1.13
%
|
1.13
%
|
1.15
%
|
Net investment income, before expense reimbursements and/or recoupments
|
2.15
%
|
1.80
%
|
1.83
%
B
|
1.35
%
|
2.50
%
|
Net investment income, net of reimbursements and/or recoupments
|
2.15
%
|
1.80
%
|
1.83
%
B
|
1.35
%
|
2.50
%
|
Portfolio turnover rate
|
46
%
|
38
%
|
41
%
|
77
%
|
36
%
|
A
|
On January 29, 2020, Templeton Investment Counsel, LLC, was terminated and ceased managing assets of the Fund. On January 30, 2020, American Century Investment Management, Inc. began managing assets of the Fund.
|
B
|
Net investment income includes significant dividend payment from Vivendi SE amounting to $0.0643.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon International Equity FundSM
|
|||||
|
C Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$13.53
|
$19.27
|
$13.99
|
$17.18
|
$17.84
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.10
|
0.16
|
0.19
B
|
0.01
|
0.29
|
Net gains (losses) on investments (both realized and unrealized)
|
2.41
|
(4.14
)
|
5.19
|
(2.86
)
|
0.37
|
Total income (loss) from investment operations
|
2.51
|
(3.98
)
|
5.38
|
(2.85
)
|
0.66
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.24
)
|
(0.42
)
|
(0.10
)
|
(0.34
)
|
(0.18
)
|
Distributions from net realized gains
|
–
|
(1.34
)
|
–
|
–
|
(1.14
)
|
Total distributions
|
(0.24
)
|
(1.76
)
|
(0.10
)
|
(0.34
)
|
(1.32
)
|
Net asset value, end of period
|
$15.80
|
$13.53
|
$19.27
|
$13.99
|
$17.18
|
Total returnC
|
18.66
%
|
(22.55
)%
|
38.56
%
|
(16.98
)%
|
4.69
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$2,608,270
|
$2,842,235
|
$4,317,179
|
$3,431,934
|
$6,174,460
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.96
%
|
1.89
%
|
1.86
%
|
1.86
%
|
1.87
%
|
Expenses, net of reimbursements and/or recoupments
|
1.96
%
|
1.89
%
|
1.86
%
|
1.86
%
|
1.87
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.41
%
|
1.08
%
|
1.14
%
B
|
0.61
%
|
1.73
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.41
%
|
1.08
%
|
1.14
%
B
|
0.61
%
|
1.73
%
|
Portfolio turnover rate
|
46
%
|
38
%
|
41
%
|
77
%
|
36
%
|
A
|
On January 29, 2020, Templeton Investment Counsel, LLC, was terminated and ceased managing assets of the Fund. On January 30, 2020, American Century Investment Management, Inc. began managing assets of the Fund.
|
B
|
Net investment income includes significant dividend payment from Vivendi SE amounting to $0.0667.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon International Equity FundSM
|
|||||
|
Y Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$15.03
|
$21.18
|
$15.36
|
$18.81
|
$19.42
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
1.22
|
1.53
|
1.83
B
|
0.36
|
0.54
|
Net gains (losses) on investments (both realized and unrealized)
|
1.76
|
(5.74
)
|
4.27
|
(3.28
)
|
0.37
|
Total income (loss) from investment operations
|
2.98
|
(4.21
)
|
6.10
|
(2.92
)
|
0.91
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.42
)
|
(0.60
)
|
(0.28
)
|
(0.53
)
|
(0.38
)
|
Distributions from net realized gains
|
–
|
(1.34
)
|
–
|
–
|
(1.14
)
|
Total distributions
|
(0.42
)
|
(1.94
)
|
(0.28
)
|
(0.53
)
|
(1.52
)
|
Net asset value, end of period
|
$17.59
|
$15.03
|
$21.18
|
$15.36
|
$18.81
|
Total returnC
|
20.01
%
|
(21.71
)%
|
39.99
%
|
(16.09
)%
|
5.83
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$87,634,823
|
$95,663,172
|
$233,692,916
|
$659,159,857
|
$896,442,437
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.86
%
|
0.81
%
|
0.79
%
|
0.80
%
|
0.80
%
|
Expenses, net of reimbursements and/or recoupments
|
0.86
%
|
0.81
%
|
0.79
%
|
0.80
%
|
0.80
%
|
Net investment income, before expense reimbursements and/or recoupments
|
2.43
%
|
2.03
%
|
2.01
%
B
|
1.77
%
|
2.87
%
|
Net investment income, net of reimbursements and/or recoupments
|
2.43
%
|
2.03
%
|
2.01
%
B
|
1.77
%
|
2.87
%
|
Portfolio turnover rate
|
46
%
|
38
%
|
41
%
|
77
%
|
36
%
|
A
|
On January 29, 2020, Templeton Investment Counsel, LLC, was terminated and ceased managing assets of the Fund. On January 30, 2020, American Century Investment Management, Inc. began managing assets of the Fund.
|
B
|
Net investment income includes significant dividend payment from Vivendi SE amounting to $0.0243.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon International Equity FundSM
|
|||||
|
R6 Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$14.35
|
$20.35
|
$14.76
|
$18.08
|
$18.73
|
Income from investment operations:
|
|
|
|
|
|
Net investment income
|
0.40
|
0.41
|
0.45
B
|
0.39
|
0.51
|
Net gains (losses) on investments (both realized and unrealized)
|
2.46
|
(4.41
)
|
5.44
|
(3.16
)
|
0.39
|
Total income (loss) from investment operations
|
2.86
|
(4.00
)
|
5.89
|
(2.77
)
|
0.90
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.44
)
|
(0.66
)
|
(0.30
)
|
(0.55
)
|
(0.41
)
|
Distributions from net realized gains
|
–
|
(1.34
)
|
–
|
–
|
(1.14
)
|
Total distributions
|
(0.44
)
|
(2.00
)
|
(0.30
)
|
(0.55
)
|
(1.55
)
|
Net asset value, end of period
|
$16.77
|
$14.35
|
$20.35
|
$14.76
|
$18.08
|
Total returnC
|
20.15
%
|
(21.62
)%
|
40.20
%
|
(15.93
)%
|
5.98
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$290,693,353
|
$296,382,124
|
$397,732,934
|
$294,708,893
|
$179,802,437
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.77
%
|
0.71
%
|
0.71
%
|
0.72
%
|
0.70
%
|
Expenses, net of reimbursements and/or recoupments
|
0.69
%
|
0.69
%
|
0.70
%
D
|
0.69
%
|
0.66
%
|
Net investment income, before expense reimbursements and/or recoupments
|
2.54
%
|
2.22
%
|
2.30
%
B
|
1.88
%
|
3.09
%
|
Net investment income, net of reimbursements and/or recoupments
|
2.62
%
|
2.24
%
|
2.31
%
B
|
1.91
%
|
3.13
%
|
Portfolio turnover rate
|
46
%
|
38
%
|
41
%
|
77
%
|
36
%
|
A
|
On January 29, 2020, Templeton Investment Counsel, LLC, was terminated and ceased managing assets of the Fund. On January 30, 2020, American Century Investment Management, Inc. began managing assets of the Fund.
|
B
|
Net investment income includes significant dividend payment from Vivendi SE amounting to $0.0738.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
D
|
Expense ratios may exceed stated expense caps in Note 2 in the Annual Shareholder report due to security lending expenses.
|
American Beacon International Equity FundSM
|
|||||
|
Advisor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$14.62
|
$20.68
|
$14.94
|
$18.31
|
$18.93
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.43
|
0.29
|
0.41
B
|
0.37
|
0.43
|
Net gains (losses) on investments (both realized and unrealized)
|
2.39
|
(4.46
)
|
5.48
|
(3.29
)
|
0.39
|
Total income (loss) from investment operations
|
2.82
|
(4.17
)
|
5.89
|
(2.92
)
|
0.82
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.35
)
|
(0.55
)
|
(0.15
)
|
(0.45
)
|
(0.30
)
|
Distributions from net realized gains
|
–
|
(1.34
)
|
–
|
–
|
(1.14
)
|
Total distributions
|
(0.35
)
|
(1.89
)
|
(0.15
)
|
(0.45
)
|
(1.44
)
|
Net asset value, end of period
|
$17.09
|
$14.62
|
$20.68
|
$14.94
|
$18.31
|
Total returnC
|
19.45
%
|
(22.01
)%
|
39.53
%
|
(16.43
)%
|
5.38
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$12,257,174
|
$13,706,977
|
$18,745,607
|
$16,387,094
|
$45,797,068
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.27
%
|
1.20
%
|
1.20
%
|
1.20
%
|
1.20
%
|
Expenses, net of reimbursements and/or recoupments
|
1.27
%
|
1.20
%
|
1.20
%
|
1.20
%
|
1.20
%
|
Net investment income, before expense reimbursements and/or recoupments
|
2.08
%
|
1.67
%
|
1.79
%
B
|
1.34
%
|
2.40
%
|
Net investment income, net of reimbursements and/or recoupments
|
2.08
%
|
1.67
%
|
1.79
%
B
|
1.34
%
|
2.40
%
|
Portfolio turnover rate
|
46
%
|
38
%
|
41
%
|
77
%
|
36
%
|
A
|
On January 29, 2020, Templeton Investment Counsel, LLC, was terminated and ceased managing assets of the Fund. On January 30, 2020, American Century Investment Management, Inc. began managing assets of the Fund.
|
B
|
Net
investment income includes significant dividend payment from Vivendi SE amounting to $0.0709.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon International Equity FundSM
|
|||||
|
R5 ClassA
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020B
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$14.31
|
$20.31
|
$14.73
|
$18.06
|
$18.71
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.56
|
0.39
|
0.45
C
|
0.36
|
0.55
|
Net gains (losses) on investments (both realized and unrealized)
|
2.28
|
(4.40
)
|
5.43
|
(3.15
)
|
0.34
|
Total income (loss) from investment operations
|
2.84
|
(4.01
)
|
5.88
|
(2.79
)
|
0.89
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.43
)
|
(0.65
)
|
(0.30
)
|
(0.54
)
|
(0.40
)
|
Distributions from net realized gains
|
–
|
(1.34
)
|
–
|
–
|
(1.14
)
|
Total distributions
|
(0.43
)
|
(1.99
)
|
(0.30
)
|
(0.54
)
|
(1.54
)
|
Net asset value, end of period
|
$16.72
|
$14.31
|
$20.31
|
$14.73
|
$18.06
|
Total returnD
|
20.09
%
|
(21.69
)%
|
40.18
%
|
(16.04
)%
|
5.94
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$413,488,011
|
$891,001,265
|
$1,329,626,349
|
$968,859,543
|
$1,499,867,401
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.79
%
|
0.72
%
|
0.73
%
|
0.72
%
|
0.73
%
|
Expenses, net of reimbursements and/or recoupments
|
0.79
%
|
0.72
%
|
0.73
%
|
0.72
%
|
0.73
%
|
Net investment income, before expense reimbursements and/or recoupments
|
2.30
%
|
2.17
%
|
2.31
%
C
|
1.83
%
|
2.93
%
|
Net investment income, net of reimbursements and/or recoupments
|
2.30
%
|
2.17
%
|
2.31
%
C
|
1.83
%
|
2.93
%
|
Portfolio turnover rate
|
46
%
|
38
%
|
41
%
|
77
%
|
36
%
|
A
|
Prior to February 28, 2020, the R5 Class was known as Institutional Class.
|
B
|
On January 29, 2020, Templeton Investment Counsel, LLC, was terminated and ceased managing assets of the Fund. On January 30, 2020, American Century Investment Management, Inc. began managing assets of the Fund.
|
C
|
Net investment income includes significant dividend payment from Vivendi SE amounting to $0.0746.
|
D
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon International Equity FundSM
|
|||||
|
Investor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$14.16
|
$20.11
|
$14.57
|
$17.87
|
$18.52
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.72
|
0.35
|
0.38
B
|
0.40
|
0.49
|
Net gains (losses) on investments (both realized and unrealized)
|
2.04
|
(4.37
)
|
5.38
|
(3.22
)
|
0.33
|
Total income (loss) from investment operations
|
2.76
|
(4.02
)
|
5.76
|
(2.82
)
|
0.82
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.38
)
|
(0.59
)
|
(0.22
)
|
(0.48
)
|
(0.33
)
|
Distributions from net realized gains
|
–
|
(1.34
)
|
–
|
–
|
(1.14
)
|
Total distributions
|
(0.38
)
|
(1.93
)
|
(0.22
)
|
(0.48
)
|
(1.47
)
|
Net asset value, end of period
|
$16.54
|
$14.16
|
$20.11
|
$14.57
|
$17.87
|
Total returnC
|
19.64
%
|
(21.93
)%
|
39.72
%
|
(16.33
)%
|
5.55
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$63,864,486
|
$81,694,109
|
$126,691,864
|
$92,817,287
|
$221,043,036
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.12
%
|
1.07
%
|
1.06
%
|
1.07
%
|
1.05
%
|
Expenses, net of reimbursements and/or recoupments
|
1.12
%
|
1.07
%
|
1.06
%
|
1.07
%
|
1.05
%
|
Net investment income, before expense reimbursements and/or recoupments
|
2.61
%
|
1.84
%
|
1.98
%
B
|
1.35
%
|
2.59
%
|
Net investment income, net of reimbursements and/or recoupments
|
2.61
%
|
1.84
%
|
1.98
%
B
|
1.35
%
|
2.59
%
|
Portfolio turnover rate
|
46
%
|
38
%
|
41
%
|
77
%
|
36
%
|
A
|
On January 29, 2020, Templeton Investment Counsel, LLC, was terminated and ceased managing assets of the Fund. On January 30, 2020, American Century Investment Management, Inc. began managing assets of the Fund.
|
B
|
Net investment income includes significant dividend payment from Vivendi SE amounting to $0.0785.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Large Cap Value FundSM
|
|||||
|
A Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$22.86
|
$27.37
|
$20.96
|
$25.66
|
$26.00
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.30
B
|
1.05
|
0.24
B
|
0.20
|
0.40
|
Net gains (losses) on investments (both realized and unrealized)
|
0.08
|
(2.51
)
|
9.68
|
(2.29
)
|
1.59
|
Total income (loss) from investment operations
|
0.38
|
(1.46
)
|
9.92
|
(2.09
)
|
1.99
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.38
)
|
(0.27
)
|
(0.40
)
|
(0.51
)
|
(0.47
)
|
Distributions from net realized gains
|
(2.39
)
|
(2.78
)
|
(3.11
)
|
(2.10
)
|
(1.86
)
|
Total distributions
|
(2.77
)
|
(3.05
)
|
(3.51
)
|
(2.61
)
|
(2.33
)
|
Net asset value, end of period
|
$20.47
|
$22.86
|
$27.37
|
$20.96
|
$25.66
|
Total returnC
|
1.79
%
|
(5.96
)%
|
52.15
%
|
(9.65
)%
|
9.72
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$11,986,577
|
$16,953,764
|
$12,661,833
|
$25,792,400
|
$39,157,098
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.00
%
|
0.89
%
|
0.96
%
|
1.00
%
|
1.01
%
|
Expenses, net of reimbursements and/or recoupments
|
1.00
%
|
0.89
%
|
0.96
%
|
1.00
%
|
1.01
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.42
%
|
1.24
%
|
0.98
%
|
1.52
%
|
1.68
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.42
%
|
1.24
%
|
0.98
%
|
1.52
%
|
1.68
%
|
Portfolio turnover rate
|
25
%
|
25
%
|
23
%
|
67
%
|
23
%
|
A
|
On January 17, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund.
|
B
|
Per share amounts have been calculated using the average shares method.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Large Cap Value FundSM
|
|||||
|
C Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$22.52
|
$27.07
|
$20.74
|
$25.43
|
$25.71
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.15
B
|
0.07
|
0.16
|
0.08
|
0.26
|
Net gains (losses) on investments (both realized and unrealized)
|
0.09
|
(1.71
)
|
9.49
|
(2.32
)
|
1.57
|
Total income (loss) from investment operations
|
0.24
|
(1.64
)
|
9.65
|
(2.24
)
|
1.83
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.16
)
|
(0.13
)
|
(0.21
)
|
(0.35
)
|
(0.25
)
|
Distributions from net realized gains
|
(2.39
)
|
(2.78
)
|
(3.11
)
|
(2.10
)
|
(1.86
)
|
Total distributions
|
(2.55
)
|
(2.91
)
|
(3.32
)
|
(2.45
)
|
(2.11
)
|
Net asset value, end of period
|
$20.21
|
$22.52
|
$27.07
|
$20.74
|
$25.43
|
Total returnC
|
1.11
%
|
(6.74
)%
|
51.05
%
|
(10.26
)%
|
8.94
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$3,842,593
|
$5,508,217
|
$6,898,120
|
$4,687,004
|
$6,811,169
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.70
%
|
1.69
%
|
1.68
%
|
1.68
%
|
1.70
%
|
Expenses, net of reimbursements and/or recoupments
|
1.70
%
|
1.69
%
|
1.68
%
|
1.68
%
|
1.70
%
D
|
Net investment income, before expense reimbursements and/or recoupments
|
0.71
%
|
0.40
%
|
0.22
%
|
0.84
%
|
0.99
%
|
Net investment income, net of reimbursements and/or recoupments
|
0.71
%
|
0.40
%
|
0.22
%
|
0.84
%
|
0.99
%
|
Portfolio turnover rate
|
25
%
|
25
%
|
23
%
|
67
%
|
23
%
|
A
|
On January 17, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund.
|
B
|
Per share amounts have been calculated using the average shares method.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
D
|
This ratio does not include a voluntary reimbursement of service fees as included in the prior year.
|
American Beacon Large Cap Value FundSM
|
|||||
|
Y Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$25.92
|
$30.68
|
$23.16
|
$28.10
|
$28.20
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.45
|
0.37
|
0.38
|
0.39
|
0.56
|
Net gains (losses) on investments (both realized and unrealized)
|
0.06
|
(1.98
)
|
10.73
|
(2.63
)
|
1.72
|
Total income (loss) from investment operations
|
0.51
|
(1.61
)
|
11.11
|
(2.24
)
|
2.28
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.41
)
|
(0.37
)
|
(0.48
)
|
(0.60
)
|
(0.52
)
|
Distributions from net realized gains
|
(2.39
)
|
(2.78
)
|
(3.11
)
|
(2.10
)
|
(1.86
)
|
Total distributions
|
(2.80
)
|
(3.15
)
|
(3.59
)
|
(2.70
)
|
(2.38
)
|
Net asset value, end of period
|
$23.63
|
$25.92
|
$30.68
|
$23.16
|
$28.10
|
Total returnB
|
2.09
%
|
(5.81
)%
|
52.47
%
|
(9.35
)%
|
10.05
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$181,490,071
|
$188,140,776
|
$258,183,363
|
$178,065,442
|
$301,457,382
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.71
%
|
0.70
%
|
0.69
%
|
0.70
%
|
0.70
%
|
Expenses, net of reimbursements and/or recoupments
|
0.71
%
|
0.70
%
|
0.69
%
|
0.70
%
|
0.70
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.70
%
|
1.38
%
|
1.21
%
|
1.84
%
|
1.98
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.70
%
|
1.38
%
|
1.21
%
|
1.84
%
|
1.98
%
|
Portfolio turnover rate
|
25
%
|
25
%
|
23
%
|
67
%
|
23
%
|
A
|
On January 17, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Large Cap Value FundSM
|
|||||
|
R6 Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$26.21
|
$30.99
|
$23.36
|
$28.31
|
$28.41
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.48
|
0.45
|
0.36
|
0.56
|
0.61
|
Net gains (losses) on investments (both realized and unrealized)
|
0.05
|
(2.05
)
|
10.88
|
(2.78
)
|
1.71
|
Total income (loss) from investment operations
|
0.53
|
(1.60
)
|
11.24
|
(2.22
)
|
2.32
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.43
)
|
(0.40
)
|
(0.50
)
|
(0.63
)
|
(0.56
)
|
Distributions from net realized gains
|
(2.39
)
|
(2.78
)
|
(3.11
)
|
(2.10
)
|
(1.86
)
|
Total distributions
|
(2.82
)
|
(3.18
)
|
(3.61
)
|
(2.73
)
|
(2.42
)
|
Net asset value, end of period
|
$23.92
|
$26.21
|
$30.99
|
$23.36
|
$28.31
|
Total returnB
|
2.19
%
|
(5.72
)%
|
52.65
%
|
(9.23
)%
|
10.15
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$1,143,016,407
|
$1,094,080,159
|
$1,242,662,760
|
$1,008,088,807
|
$739,517,062
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.61
%
|
0.60
%
|
0.60
%
|
0.62
%
|
0.60
%
|
Expenses, net of reimbursements and/or recoupments
|
0.61
%
|
0.60
%
|
0.60
%
|
0.59
%
|
0.58
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.80
%
|
1.49
%
|
1.31
%
|
1.90
%
|
2.07
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.80
%
|
1.49
%
|
1.31
%
|
1.93
%
|
2.09
%
|
Portfolio turnover rate
|
25
%
|
25
%
|
23
%
|
67
%
|
23
%
|
A
|
On January 17, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Large Cap Value FundSM
|
|||||
|
Advisor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$22.80
|
$27.36
|
$20.97
|
$25.68
|
$25.95
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.26
|
0.14
|
0.26
|
0.24
|
0.47
|
Net gains (losses) on investments (both realized and unrealized)
|
0.10
|
(1.65
)
|
9.62
|
(2.36
)
|
1.52
|
Total income (loss) from investment operations
|
0.36
|
(1.51
)
|
9.88
|
(2.12
)
|
1.99
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.31
)
|
(0.27
)
|
(0.38
)
|
(0.49
)
|
(0.40
)
|
Distributions from net realized gains
|
(2.39
)
|
(2.78
)
|
(3.11
)
|
(2.10
)
|
(1.86
)
|
Total distributions
|
(2.70
)
|
(3.05
)
|
(3.49
)
|
(2.59
)
|
(2.26
)
|
Net asset value, end of period
|
$20.46
|
$22.80
|
$27.36
|
$20.97
|
$25.68
|
Total returnB
|
1.69
%
|
(6.17
)%
|
51.89
%
|
(9.73
)%
|
9.64
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$41,289,229
|
$47,185,316
|
$63,521,926
|
$46,049,690
|
$66,077,449
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.11
%
|
1.10
%
|
1.10
%
|
1.10
%
|
1.10
%
|
Expenses, net of reimbursements and/or recoupments
|
1.11
%
|
1.10
%
|
1.10
%
|
1.10
%
|
1.10
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.31
%
|
0.98
%
|
0.81
%
|
1.42
%
|
1.58
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.31
%
|
0.98
%
|
0.81
%
|
1.42
%
|
1.58
%
|
Portfolio turnover rate
|
25
%
|
25
%
|
23
%
|
67
%
|
23
%
|
A
|
On January 17, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Large Cap Value FundSM
|
|||||
|
R5 ClassA
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020B
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$26.21
|
$30.99
|
$23.36
|
$28.32
|
$28.41
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.51
|
0.50
|
0.59
|
0.65
|
0.63
|
Net gains (losses) on investments (both realized and unrealized)
|
0.02
|
(2.11
)
|
10.64
|
(2.89
)
|
1.69
|
Total income (loss) from investment operations
|
0.53
|
(1.61
)
|
11.23
|
(2.24
)
|
2.32
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.43
)
|
(0.39
)
|
(0.49
)
|
(0.62
)
|
(0.55
)
|
Distributions from net realized gains
|
(2.39
)
|
(2.78
)
|
(3.11
)
|
(2.10
)
|
(1.86
)
|
Total distributions
|
(2.82
)
|
(3.17
)
|
(3.60
)
|
(2.72
)
|
(2.41
)
|
Net asset value, end of period
|
$23.92
|
$26.21
|
$30.99
|
$23.36
|
$28.32
|
Total returnC
|
2.16
%
|
(5.75
)%
|
52.60
%
|
(9.29
)%
|
10.14
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$1,040,466,568
|
$1,218,988,715
|
$1,682,465,233
|
$1,807,587,315
|
$3,137,789,485
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.64
%
|
0.63
%
|
0.63
%
|
0.63
%
|
0.63
%
|
Expenses, net of reimbursements and/or recoupments
|
0.64
%
|
0.63
%
|
0.63
%
|
0.63
%
|
0.63
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.78
%
|
1.45
%
|
1.30
%
|
1.90
%
|
2.07
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.78
%
|
1.45
%
|
1.30
%
|
1.90
%
|
2.07
%
|
Portfolio turnover rate
|
25
%
|
25
%
|
23
%
|
67
%
|
23
%
|
A
|
Prior to February 28, 2020, the R5 Class was known as Institutional Class.
|
B
|
On January 17, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Large Cap Value FundSM
|
|||||
|
Investor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020A
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$23.30
|
$27.88
|
$21.32
|
$26.06
|
$26.33
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.27
|
0.25
|
0.20
|
0.29
|
0.41
|
Net gains (losses) on investments (both realized and unrealized)
|
0.14
|
(1.76
)
|
9.88
|
(2.41
)
|
1.63
|
Total income (loss) from investment operations
|
0.41
|
(1.51
)
|
10.08
|
(2.12
)
|
2.04
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.35
)
|
(0.29
)
|
(0.41
)
|
(0.52
)
|
(0.45
)
|
Distributions from net realized gains
|
(2.39
)
|
(2.78
)
|
(3.11
)
|
(2.10
)
|
(1.86
)
|
Total distributions
|
(2.74
)
|
(3.07
)
|
(3.52
)
|
(2.62
)
|
(2.31
)
|
Net asset value, end of period
|
$20.97
|
$23.30
|
$27.88
|
$21.32
|
$26.06
|
Total returnB
|
1.88
%
|
(6.04
)%
|
52.04
%
|
(9.59
)%
|
9.77
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$525,063,555
|
$649,409,067
|
$821,099,597
|
$707,970,431
|
$1,124,625,846
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.94
%
|
0.95
%
|
0.98
%
|
0.96
%
|
0.96
%
|
Expenses, net of reimbursements and/or recoupments
|
0.94
%
|
0.95
%
|
0.98
%
|
0.96
%
|
0.96
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.48
%
|
1.13
%
|
0.93
%
|
1.57
%
|
1.74
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.48
%
|
1.13
%
|
0.93
%
|
1.57
%
|
1.74
%
|
Portfolio turnover rate
|
25
%
|
25
%
|
23
%
|
67
%
|
23
%
|
A
|
On January 17, 2020, Brandywine Global Investment Management, LLC was terminated and ceased managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Small Cap Value FundSM
|
|||||
|
A Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022A
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$24.87
|
$29.12
|
$18.47
|
$21.64
|
$24.65
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.21
|
0.10
|
0.06
|
0.12
|
0.14
|
Net gains (losses) on investments (both realized and unrealized)
|
(1.26
)
|
(1.07
)
|
10.72
|
(2.95
)
|
(0.24
)
|
Total income (loss) from investment operations
|
(1.05
)
|
(0.97
)
|
10.78
|
(2.83
)
|
(0.10
)
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.27
)
|
(0.12
)
|
(0.13
)
|
(0.18
)
|
(0.07
)
|
Distributions from net realized gains
|
(3.57
)
|
(3.16
)
|
-
|
(0.16
)
|
(2.84
)
|
Total distributions
|
(3.84
)
|
(3.28
)
|
(0.13
)
|
(0.34
)
|
(2.91
)
|
Net asset value, end of period
|
$19.98
|
$24.87
|
$29.12
|
$18.47
|
$21.64
|
Total returnB
|
(4.50
)%
|
(3.88
)%
|
58.57
%
|
(13.38
)%
|
1.56
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$37,440,788
|
$48,515,547
|
$63,024,594
|
$46,067,043
|
$63,246,155
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.21
%
|
1.21
%
|
1.24
%
|
1.26
%
|
1.26
%
|
Expenses, net of reimbursements and/or recoupments
|
1.21
%
|
1.21
%
|
1.24
%
|
1.26
%
|
1.26
%
|
Net investment income, before expense reimbursements and/or recoupments
|
0.81
%
|
0.42
%
|
0.21
%
|
0.59
%
|
0.64
%
|
Net investment income, net of reimbursements and/or recoupments
|
0.81
%
|
0.42
%
|
0.21
%
|
0.59
%
|
0.64
%
|
Portfolio turnover rate
|
52
%
|
72
%
|
48
%
|
61
%
|
48
%
|
A
|
On February 8, 2022, Foundry Partners, LLC and Hillcrest Asset Management, LLC, were terminated and ceased managing assets of the Fund. On March 10, 2022, DePrince, Race & Zollo, Inc., began managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Small Cap Value FundSM
|
|||||
|
C Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022A
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$23.27
|
$27.51
|
$17.47
|
$20.51
|
$23.60
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income (loss)
|
0.02
|
(0.14
)
|
(0.22
)
|
(0.17
)
|
(0.01
)
B
|
Net gains (losses) on investments (both realized and unrealized)
|
(1.14
)
|
(0.94
)
|
10.26
|
(2.66
)
|
(0.24
)
|
Total income (loss) from investment operations
|
(1.12
)
|
(1.08
)
|
10.04
|
(2.83
)
|
(0.25
)
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.14
)
|
-
|
-
|
(0.05
)
|
-
|
Distributions from net realized gains
|
(3.57
)
|
(3.16
)
|
-
|
(0.16
)
|
(2.84
)
|
Total distributions
|
(3.71
)
|
(3.16
)
|
-
|
(0.21
)
|
(2.84
)
|
Net asset value, end of period
|
$18.44
|
$23.27
|
$27.51
|
$17.47
|
$20.51
|
Total returnC
|
(5.23
)%
|
(4.54
)%
|
57.47
%
|
(14.00
)%
|
0.85
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$6,883,174
|
$8,859,738
|
$11,261,210
|
$8,057,935
|
$12,619,613
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.93
%
|
1.93
%
|
1.95
%
|
1.96
%
|
1.95
%
|
Expenses, net of reimbursements and/or recoupments
|
1.93
%
|
1.93
%
|
1.95
%
|
1.96
%
|
1.95
%
D
|
Net investment income (loss), before expense reimbursements and/or recoupments
|
0.09
%
|
(0.29
)%
|
(0.50
)%
|
(0.10
)%
|
(0.06
)%
|
Net investment income (loss), net of reimbursements and/or recoupments
|
0.09
%
|
(0.29
)%
|
(0.50
)%
|
(0.10
)%
|
(0.06
)%
|
Portfolio turnover rate
|
52
%
|
72
%
|
48
%
|
61
%
|
48
%
|
A
|
On February 8, 2022, Foundry Partners, LLC and Hillcrest Asset Management, LLC, were terminated and ceased managing assets of the Fund. On March 10, 2022, DePrince, Race & Zollo, Inc., began managing assets of the Fund.
|
B
|
Per share amounts have been calculated using the average shares method.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
D
|
This ratio does not include a voluntary reimbursement of service fees as included in the prior year.
|
American Beacon Small Cap Value FundSM
|
|||||
|
Y Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022A
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$26.36
|
$30.68
|
$19.44
|
$22.76
|
$25.77
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.30
|
0.22
|
0.16
|
0.22
|
0.26
|
Net gains (losses) on investments (both realized and unrealized)
|
(1.34
)
|
(1.16
)
|
11.28
|
(3.11
)
|
(0.27
)
|
Total income (loss) from investment operations
|
(1.04
)
|
(0.94
)
|
11.44
|
(2.89
)
|
(0.01
)
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.39
)
|
(0.22
)
|
(0.20
)
|
(0.27
)
|
(0.16
)
|
Distributions from net realized gains
|
(3.57
)
|
(3.16
)
|
-
|
(0.16
)
|
(2.84
)
|
Total distributions
|
(3.96
)
|
(3.38
)
|
(0.20
)
|
(0.43
)
|
(3.00
)
|
Net asset value, end of period
|
$21.36
|
$26.36
|
$30.68
|
$19.44
|
$22.76
|
Total returnB
|
(4.19
)%
|
(3.55
)%
|
59.15
%
|
(13.06
)%
|
1.93
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$355,150,002
|
$427,638,978
|
$255,837,301
|
$170,726,299
|
$254,599,477
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.86
%
|
0.86
%
|
0.89
%
|
0.89
%
|
0.90
%
|
Expenses, net of reimbursements and/or recoupments
|
0.86
%
|
0.86
%
|
0.89
%
|
0.89
%
|
0.90
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.15
%
|
0.79
%
|
0.56
%
|
0.96
%
|
1.00
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.15
%
|
0.79
%
|
0.56
%
|
0.96
%
|
1.00
%
|
Portfolio turnover rate
|
52
%
|
72
%
|
48
%
|
61
%
|
48
%
|
A
|
On February 8, 2022, Foundry Partners, LLC and Hillcrest Asset Management, LLC, were terminated and ceased managing assets of the Fund. On March 10, 2022, DePrince, Race & Zollo, Inc., began managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Small Cap Value FundSM
|
|||||
|
R6 Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022A
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$26.85
|
$31.19
|
$19.75
|
$23.12
|
$26.14
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.36
|
0.25
|
0.19
|
0.22
|
0.26
|
Net gains (losses) on investments (both realized and unrealized)
|
(1.40
)
|
(1.18
)
|
11.48
|
(3.14
)
|
(0.25
)
|
Total income (loss) from investment operations
|
(1.04
)
|
(0.93
)
|
11.67
|
(2.92
)
|
0.01
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.41
)
|
(0.25
)
|
(0.23
)
|
(0.29
)
|
(0.19
)
|
Distributions from net realized gains
|
(3.57
)
|
(3.16
)
|
-
|
(0.16
)
|
(2.84
)
|
Total distributions
|
(3.98
)
|
(3.41
)
|
(0.23
)
|
(0.45
)
|
(3.03
)
|
Net asset value, end of period
|
$21.83
|
$26.85
|
$31.19
|
$19.75
|
$23.12
|
Total returnB
|
(4.09
)%
|
(3.45
)%
|
59.38
%
|
(12.98
)%
|
2.01
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$1,583,343,034
|
$1,509,127,442
|
$1,830,192,124
|
$1,187,578,766
|
$1,308,284,613
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.76
%
|
0.77
%
|
0.79
%
|
0.79
%
|
0.80
%
|
Expenses, net of reimbursements and/or recoupments
|
0.76
%
|
0.77
%
|
0.79
%
|
0.79
%
|
0.80
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.25
%
|
0.86
%
|
0.66
%
|
1.06
%
|
1.08
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.25
%
|
0.86
%
|
0.66
%
|
1.06
%
|
1.08
%
|
Portfolio turnover rate
|
52
%
|
72
%
|
48
%
|
61
%
|
48
%
|
A
|
On February 8, 2022, Foundry Partners, LLC and Hillcrest Asset Management, LLC, were terminated and ceased managing assets of the Fund. On March 10, 2022, DePrince, Race & Zollo, Inc., began managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Small Cap Value FundSM
|
|||||
|
Advisor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022A
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$25.13
|
$29.34
|
$18.60
|
$21.79
|
$24.77
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.18
|
0.06
|
0.17
|
0.15
|
0.14
|
Net gains (losses) on investments (both realized and unrealized)
|
(1.25
)
|
(1.07
)
|
10.69
|
(3.01
)
|
(0.25
)
|
Total income (loss) from investment operations
|
(1.07
)
|
(1.01
)
|
10.86
|
(2.86
)
|
(0.11
)
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.28
)
|
(0.04
)
|
(0.12
)
|
(0.17
)
|
(0.03
)
|
Distributions from net realized gains
|
(3.57
)
|
(3.16
)
|
-
|
(0.16
)
|
(2.84
)
|
Total distributions
|
(3.85
)
|
(3.20
)
|
(0.12
)
|
(0.33
)
|
(2.87
)
|
Net asset value, end of period
|
$20.21
|
$25.13
|
$29.34
|
$18.60
|
$21.79
|
Total returnB
|
(4.57
)%
|
(3.96
)%
|
58.56
%
|
(13.40
)%
|
1.48
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$25,580,739
|
$32,662,818
|
$32,801,309
|
$42,987,242
|
$61,618,406
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.28
%
|
1.28
%
|
1.29
%
|
1.25
%
|
1.34
%
|
Expenses, net of reimbursements and/or recoupments
|
1.28
%
|
1.28
%
|
1.29
%
|
1.25
%
|
1.34
%
|
Net investment income, before expense reimbursements and/or recoupments
|
0.75
%
|
0.36
%
|
0.20
%
|
0.60
%
|
0.56
%
|
Net investment income, net of reimbursements and/or recoupments
|
0.75
%
|
0.36
%
|
0.20
%
|
0.60
%
|
0.56
%
|
Portfolio turnover rate
|
52
%
|
72
%
|
48
%
|
61
%
|
48
%
|
A
|
On February 8, 2022, Foundry Partners, LLC and Hillcrest Asset Management, LLC, were terminated and ceased managing assets of the Fund. On March 10, 2022, DePrince, Race & Zollo, Inc., began managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Small Cap Value FundSM
|
|||||
|
R5 ClassA
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022B
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$26.85
|
$31.19
|
$19.76
|
$23.13
|
$26.14
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.31
|
0.31
|
0.25
|
0.26
|
0.26
|
Net gains (losses) on investments (both realized and unrealized)
|
(1.35
)
|
(1.25
)
|
11.40
|
(3.18
)
|
(0.25
)
|
Total income (loss) from investment operations
|
(1.04
)
|
(0.94
)
|
11.65
|
(2.92
)
|
0.01
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.40
)
|
(0.24
)
|
(0.22
)
|
(0.29
)
|
(0.18
)
|
Distributions from net realized gains
|
(3.57
)
|
(3.16
)
|
-
|
(0.16
)
|
(2.84
)
|
Total distributions
|
(3.97
)
|
(3.40
)
|
(0.22
)
|
(0.45
)
|
(3.02
)
|
Net asset value, end of period
|
$21.84
|
$26.85
|
$31.19
|
$19.76
|
$23.13
|
Total returnC
|
(4.09
)%
|
(3.49
)%
|
59.26
%
|
(13.00
)%
|
2.01
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$1,851,818,875
|
$2,233,390,067
|
$3,380,005,813
|
$2,799,722,660
|
$4,073,332,655
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
0.79
%
|
0.79
%
|
0.81
%
|
0.82
%
|
0.83
%
|
Expenses, net of reimbursements and/or recoupments
|
0.79
%
|
0.79
%
|
0.81
%
|
0.82
%
|
0.83
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.23
%
|
0.84
%
|
0.65
%
|
1.04
%
|
1.07
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.23
%
|
0.84
%
|
0.65
%
|
1.04
%
|
1.07
%
|
Portfolio turnover rate
|
52
%
|
72
%
|
48
%
|
61
%
|
48
%
|
A
|
Prior to February 28, 2020, the R5 Class was known as Institutional Class.
|
B
|
On February 8. 2022, Foundry Partners, LLC and Hillcrest Asset Management, LLC, were terminated and ceased managing assets of the Fund. On March 10, 2022, DePrince, Race & Zollo, Inc., began managing assets of the Fund.
|
C
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
American Beacon Small Cap Value FundSM
|
|||||
|
Investor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023
|
Year Ended October 31, 2022A
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$25.51
|
$29.78
|
$18.88
|
$22.12
|
$25.12
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.18
|
0.19
|
0.20
|
0.21
|
0.22
|
Net gains (losses) on investments (both realized and unrealized)
|
(1.24
)
|
(1.17
)
|
10.85
|
(3.08
)
|
(0.29
)
|
Total income (loss) from investment operations
|
(1.06
)
|
(0.98
)
|
11.05
|
(2.87
)
|
(0.07
)
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.31
)
|
(0.13
)
|
(0.15
)
|
(0.21
)
|
(0.09
)
|
Distributions from net realized gains
|
(3.57
)
|
(3.16
)
|
-
|
(0.16
)
|
(2.84
)
|
Total distributions
|
(3.88
)
|
(3.29
)
|
(0.15
)
|
(0.37
)
|
(2.93
)
|
Net asset value, end of period
|
$20.57
|
$25.51
|
$29.78
|
$18.88
|
$22.12
|
Total returnB
|
(4.41
)%
|
(3.81
)%
|
58.74
%
|
(13.30
)%
|
1.67
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$252,350,988
|
$284,880,016
|
$367,726,622
|
$302,626,954
|
$424,569,237
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.13
%
|
1.12
%
|
1.15
%
|
1.15
%
|
1.14
%
|
Expenses, net of reimbursements and/or recoupments
|
1.13
%
|
1.12
%
|
1.15
%
|
1.15
%
|
1.14
%
|
Net investment income, before expense reimbursements and/or recoupments
|
0.89
%
|
0.50
%
|
0.32
%
|
0.70
%
|
0.76
%
|
Net investment income, net of reimbursements and/or recoupments
|
0.89
%
|
0.50
%
|
0.32
%
|
0.70
%
|
0.76
%
|
Portfolio turnover rate
|
52
%
|
72
%
|
48
%
|
61
%
|
48
%
|
A
|
On February 8, 2022, Foundry Partners, LLC and Hillcrest Asset Management, LLC, were terminated and ceased managing assets of the Fund. On March 10, 2022, DePrince, Race & Zollo, Inc., began managing assets of the Fund.
|
B
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
By Telephone:
|
Call
1-800-658-5811 |
By Mail:
|
American Beacon Funds
P.O. Box 219643 Kansas City, MO 64121-9643 |
By E-mail:
|
americanbeaconfunds@ambeacon.com
|
On the Internet:
|
Visit our website at www.americanbeaconfunds.com
Visit the SEC website at www.sec.gov |
American Beacon is a registered service mark of American Beacon Advisors, Inc. The American Beacon Funds, American Beacon Balanced Fund, American Beacon Garcia Hamilton Quality Bond Fund, American Beacon International Equity Fund, American Beacon Large Cap Value Fund, and American Beacon Small Cap Value Fund are service marks of American Beacon Advisors, Inc.
|
■
|
Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs.
|
■
|
Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same Fund (but not any other fund within the same fund family).
|
■
|
Shares exchanged from Class C shares of the same fund in the month of or following the 7-year anniversary of the purchase date. To the extent that this prospectus elsewhere provides for a waiver with respect to exchanges of Class C shares or conversion of Class C shares following a shorter holding period, that waiver will apply.
|
■
|
Employees and registered representatives of Ameriprise Financial or its affiliates and their immediate family members.
|
■
|
Shares purchased by or through qualified accounts (including IRAs, Coverdell Education Savings Accounts, 401(k)s, 403(b) TSCAs subject to ERISA and defined benefit plans) that are held by a covered family member, defined as an Ameriprise financial advisor and/or the advisor’s spouse, advisor’s lineal ascendant (mother, father, grandmother, grandfather, great grandmother, great grandfather), advisor’s lineal descendant (son, step-son, daughter, step-daughter, grandson, granddaughter, great grandson, great granddaughter) or any spouse of a covered family member who is a lineal descendant.
|
■
|
Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e. Rights of Reinstatement).
|
■
|
Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing share of the same fund
|
■
|
Shares purchased by employees and registers representatives of Baird or its affiliate and their family members as designated by Baird
|
■
|
Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same accounts, and (3) redeemed shares were subject to a front-end or deferred sales charge (known as rights of reinstatement)
|
■
|
A shareholder in the Fund’s Investor C shares will have their share converted at net asset value to Investor A shares of the fund if the shares are no longer subject to CDSC and the conversion is in line with the policies and procedures of Baird
|
■
|
Employer-sponsored retirement plans or charitable accounts in a transactional brokerage account at Baird, including 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs or SAR-SEPs
|
■
|
Shares sold due to death or disability of the shareholder
|
■
|
Shares sold as part of a systematic withdrawal plan as described in the Fund’s Prospectus
|
■
|
Shares bought due to returns of excess contributions from an IRA Account
|
■
|
Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 72 as described in the Fund’s prospectus
|
■
|
Shares sold to pay Baird fees but only if the transaction is initiated by Baird
|
■
|
Shares acquired through a right of reinstatement
|
■
|
Breakpoints as described in this prospectus
|
■
|
Rights of accumulation which entitles shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Baird. Eligible fund family assets not held at Baird may be included in the rights of accumulations calculation only if the shareholder notifies his or her financial advisor about such assets
|
■
|
Letters of Intent (LOI) allow for breakpoint discounts based on anticipated purchases within a fund family through Baird, over a 13-month period of time
|
■
|
Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family).
|
■
|
Shares purchased by employees and registered representatives of Janney or its affiliates and their family members as designated by Janney.
|
■
|
Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within ninety (90) days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (i.e., right of reinstatement).
|
■
|
Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans.
|
■
|
Shares acquired through a right of reinstatement.
|
■
|
Class C shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Janney’s policies and procedures.
|
■
|
Shares sold upon the death or disability of the shareholder.
|
■
|
Shares sold as part of a systematic withdrawal plan as described in the fund’s Prospectus.
|
■
|
Shares purchased in connection with a return of excess contributions from an IRA account.
|
■
|
Shares sold as part of a required minimum distribution for IRA and other retirement accounts due to the shareholder reaching age 70½ as described in the fund’s Prospectus.
|
■
|
Shares sold to pay Janney fees but only if the transaction is initiated by Janney.
|
■
|
Shares acquired through a right of reinstatement.
|
■
|
Shares exchanged into the same share class of a different fund.
|
■
|
Breakpoints as described in the fund’s Prospectus.
|
■
|
Rights of accumulation (“ROA”), which entitle shareholders to breakpoint discounts, will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Janney. Eligible fund family assets not held at Janney may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
|
■
|
Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Janney Montgomery Scott may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
|
■
|
Shares of mutual funds available for purchase by employer-sponsored retirement, deferred compensation, and employee benefit plans (including health savings accounts) and trusts used to fund those plans provided the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan. For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans
|
■
|
Shares purchased through a Merrill investment advisory program
|
■
|
Brokerage class shares exchanged from advisory class shares due to the holdings moving from a Merrill investment advisory program to a Merrill brokerage account
|
■
|
Shares purchased through the Merrill Edge Self-Directed platform
|
■
|
Shares purchased through the systematic reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same mutual fund in the same account
|
■
|
Shares exchanged from level-load shares to front-end load shares of the same mutual fund in accordance with the description in the Merrill SLWD Supplement
|
■
|
Shares purchased by eligible employees of Merrill or its affiliates and their family members who purchase shares in accounts within the employee’s Merrill Household (as defined in the Merrill SLWD Supplement)
|
■
|
Shares purchased by eligible persons associated with the fund as defined in this prospectus (e.g. the fund’s officers or trustees)
|
■
|
Shares purchased from the proceeds of a mutual fund redemption in front-end load shares provided (1) the repurchase is in a mutual fund within the same fund family; (2) the repurchase occurs within 90 calendar days from the redemption trade date, and (3) the redemption and purchase occur in the same account (known as Rights of Reinstatement). Automated transactions (i.e. systematic purchases and withdrawals) and purchases made after shares are automatically sold to pay Merrill’s account maintenance fees are not eligible for Rights of Reinstatement
|
■
|
Shares sold due to the client’s death or disability (as defined by Internal Revenue Code Section 22I(3))
|
■
|
Shares sold pursuant to a systematic withdrawal program subject to Merrill’s maximum systematic withdrawal limits as described in the Merrill SLWD Supplement
|
■
|
Shares sold due to return of excess contributions from an IRA account
|
■
|
Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the investor reaching the qualified age based on applicable IRS regulation
|
■
|
Front-end or level-load shares held in commission-based, non-taxable retirement brokerage accounts (e.g. traditional, Roth, rollover, SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans) that are transferred to fee-based accounts or platforms and exchanged for a lower cost share class of the same mutual fund
|
■
|
Breakpoint discounts, as described in this prospectus, where the sales load is at or below the maximum sales load that Merrill permits to be assessed to a front-end load purchase, as described in the Merrill SLWD Supplement
|
■
|
Rights of Accumulation (ROA), as described in the Merrill SLWD Supplement, which entitle clients to breakpoint discounts based on the aggregated holdings of mutual fund family assets held in accounts in their Merrill Household
|
■
|
Letters of Intent (LOI), which allow for breakpoint discounts on eligible new purchases based on anticipated future eligible purchases within a fund family at Merrill, in accounts within your Merrill Household, as further described in the Merrill SLWD Supplement
|
■
|
Employer-sponsored retirement plans (e.g., 401(k) plans, 457 plans, employer-sponsored 403(b) plans, profit sharing and money purchase pension plans and defined benefit plans). For purposes of this provision, employer-sponsored retirement plans do not include SEP IRAs, Simple IRAs, SAR-SEPs or Keogh plans
|
■
|
Morgan Stanley employee and employee-related accounts according to Morgan Stanley’s account linking rules
|
■
|
Shares purchased through reinvestment of dividends and capital gains distributions when purchasing shares of the same fund
|
■
|
Shares purchased through a Morgan Stanley self-directed brokerage account
|
■
|
Class C (i.e., level-load) shares that are no longer subject to a contingent deferred sales charge and are converted to Class A shares of the same fund pursuant to Morgan Stanley Wealth Management’s share class conversion program
|
■
|
Shares purchased from the proceeds of redemptions within the same fund family, provided (i) the repurchase occurs within 90 days following the redemption, (ii) the redemption and purchase occur in the same account, and (iii) redeemed shares were subject to a front-end or deferred sales charge.
|
■
|
Employer-sponsored retirement, deferred compensation and employee benefit plans (including health savings accounts) and trusts used to fund those plans, provided that the shares are not held in a commission-based brokerage account and shares are held for the benefit of the plan
|
■
|
Shares purchased by or through a 529 Plan
|
■
|
Shares purchased through an OPCO affiliated investment advisory program
|
■
|
Shares purchased through reinvestment of capital gains distributions and dividend reinvestment when purchasing shares of the same fund (but not any other fund within the fund family)
|
■
|
Shares purchased form the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same amount, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Restatement).
|
■
|
A shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of OPCO
|
■
|
Employees and registered representatives of OPCO or its affiliates and their family members
|
■
|
Directors or Trustees of the Fund, and employees of the Fund’s investment adviser or any of its affiliates, as described in this prospectus
|
■
|
Death or disability of the shareholder
|
■
|
Shares sold as part of a systematic withdrawal plan as described in the Fund’s prospectus
|
■
|
Return of excess contributions from an IRA Account
|
■
|
Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching age 70½ as described in the prospectus
|
■
|
Shares sold to pay OPCO fees but only if the transaction is initiated by OPCO
|
■
|
Shares acquired through a right of reinstatement
|
■
|
Breakpoints as described in this prospectus.
|
■
|
Rights of Accumulation (ROA) which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at OPCO. Eligible fund family assets not held at OPCO may be included in the ROA calculation only if the shareholder notifies his or her financial advisor about such assets.
|
■
|
Shares purchased in an investment advisory program.
|
■
|
Shares purchased within the same fund family through a systematic reinvestment of capital gains and dividend distributions.
|
■
|
Employees and registered representatives of Raymond James or its affiliates and their family members as designated by Raymond James.
|
■
|
Shares purchased from the proceeds of redemptions within the same fund family, provided (1) the repurchase occurs within 90 days following the redemption, (2) the redemption and purchase occur in the same account, and (3) redeemed shares were subject to a front-end or deferred sales load (known as Rights of Reinstatement).
|
■
|
A shareholder in the Fund’s Class C shares will have their shares converted at net asset value to Class A shares (or the appropriate share class) of the Fund if the shares are no longer subject to a CDSC and the conversion is in line with the policies and procedures of Raymond James.
|
■
|
Death or disability of the shareholder.
|
■
|
Shares sold as part of a systematic withdrawal plan as described in the fund’s prospectus.
|
■
|
Return of excess contributions from an IRA Account.
|
■
|
Shares sold as part of a required minimum distribution for IRA and retirement accounts due to the shareholder reaching the qualified age based on applicable IRS regulations as described in the fund’s prospectus.
|
■
|
Shares sold to pay Raymond James fees but only if the transaction is initiated by Raymond James.
|
■
|
Shares acquired through a right of reinstatement.
|
■
|
Breakpoints as described in this Prospectus.
|
■
|
Rights of accumulation which entitle shareholders to breakpoint discounts will be automatically calculated based on the aggregated holding of fund family assets held by accounts within the purchaser’s household at Raymond James. Eligible fund family assets not held at Raymond James may be included in the calculation of rights of accumulation only if the shareholder notifies his or her financial advisor about such assets.
|
■
|
Letters of intent which allow for breakpoint discounts based on anticipated purchases within a fund family, over a 13-month time period. Eligible fund family assets not held at Raymond James may be included in the calculation of letters of intent only if the shareholder notifies his or her financial advisor about such assets.
|
ACH
|
Automated Clearing House
|
|
ADRs
|
American Depositary Receipts
|
|
American Beacon or Manager
|
American Beacon Advisors, Inc.
|
|
Beacon Funds
|
American Beacon Funds
|
|
Board
|
Board of Trustees
|
|
Brexit
|
The United Kingdom’s departure from the European Union
|
|
CAIA
|
Chartered Alternative Investment Analyst
|
|
Capital Gains Distributions
|
Distributions of realized net capital gains
|
|
CDSC
|
Contingent Deferred Sales Charge
|
|
CFTC
|
Commodity Futures Trading Commission
|
|
CMO
|
Collateralized Mortgage Obligation
|
|
Denial of Services
|
A cybersecurity incident that results in customers or employees being unable to access electronic systems
|
|
Dividends
|
Distributions of most or all of a Fund’s net investment income
|
|
DRD
|
Dividends-received deduction
|
|
Equity REIT
|
Income producing real estate that are owned and often operated by a REIT
|
|
ESG
|
Environmental, Social, and/or Governance
|
|
ETF
|
Exchange-Traded Fund
|
|
EU
|
European Union
|
|
Fannie Mae
|
Federal National Mortgage Association
|
|
FFCB
|
Federal Farm Credit Banks
|
|
FHLB
|
Federal Home Loan Bank
|
|
FINRA
|
Financial Industry Regulatory Authority
|
|
Forwards
|
Forward Currency Contracts
|
|
Freddie Mac
|
Federal Home Loan Mortgage Corporation
|
|
GDR
|
Global Depositary Receipts
|
|
Ginnie Mae or GNMA
|
Government National Mortgage Association
|
|
Holdings Policy
|
Policies and Procedures for Disclosure of Portfolio Holdings
|
|
Hybrid REIT
|
The combination of equity REITs and mortgage REITs
|
|
Internal Revenue Code
|
Internal Revenue Code of 1986, as amended
|
|
Investment Company Act
|
Investment Company Act of 1940, as amended
|
|
IPOs
|
Initial Public Offerings
|
|
IRA
|
Individual Retirement Account
|
|
IRS
|
Internal Revenue Service
|
|
Junk Bonds
|
High yield, non-investment grade bonds
|
|
LIBOR
|
ICE LIBOR
|
|
LOI
|
Letter of Intent
|
|
LSEG
|
London Stock Exchange Group
|
|
Management Agreement
|
The Fund’s Management Agreement with the Manager
|
|
MLPs
|
Master limited partnerships
|
|
Moody’s
|
Moody’s Investors Service, Inc.
|
|
Mortgage REIT
|
Mortgage secured by loans on income producing real estate
|
|
NAV
|
Fund’s net asset value
|
|
NDF
|
Non-deliverable forward contract
|
|
NYSE
|
New York Stock Exchange
|
|
Other Distributions
|
Distributions of net gains from foreign currency transactions
|
|
OTC
|
Over-the-Counter
|
Proxy Policy
|
Proxy Voting Policy and Procedures
|
|
QDI
|
Qualified Dividend Income
|
|
REIT
|
Real Estate Investment Trust
|
|
S&P Global
|
S&P Global Ratings
|
|
SAI
|
Statement of Additional Information
|
|
SEC
|
Securities and Exchange Commission
|
|
SOFR
|
Secured Overnight Financing Rate
|
|
State Street
|
State Street Bank and Trust Company
|
|
Subsidiary
|
A wholly owned subsidiary that is organized under the laws of the Cayman Islands
|
|
SVP
|
Signature Validation Program
|
|
Trust
|
American Beacon Funds
|
|
UGMA
|
Uniform gifts to minor
|
|
UK
|
United Kingdom
|
|
UTMA
|
Uniform transfers to minor
|
|
|
Ticker
|
||||||
Share Class
|
A
|
C
|
Y
|
R6
|
Advisor
|
R5
|
Investor
|
American Beacon Balanced Fund
|
ABFAX
|
ABCCX
|
ACBYX
|
|
ABLSX
|
AADBX
|
AABPX
|
American Beacon Garcia Hamilton Quality Bond Fund
|
|
|
GHQYX
|
GHQRX
|
|
GHQIX
|
GHQPX
|
American Beacon International Equity Fund
|
AIEAX
|
AILCX
|
ABEYX
|
AAERX
|
AAISX
|
AAIEX
|
AAIPX
|
American Beacon Large Cap Value Fund
|
ALVAX
|
ALVCX
|
ABLYX
|
AALRX
|
AVASX
|
AADEX
|
AAGPX
|
American Beacon Small Cap Value Fund
|
ABSAX
|
ASVCX
|
ABSYX
|
AASRX
|
AASSX
|
AVFIX
|
AVPAX
|
Strategy/Risk
|
American Beacon Balanced Fund
|
American Beacon Garcia Hamilton Quality Bond Fund
|
American Beacon International Equity Fund
|
American Beacon Large Cap Value Fund
|
American Beacon Small Cap Value Fund
|
Asset-Backed Securities
|
X
|
||||
Borrowing Risks
|
X
|
X
|
X
|
X
|
X
|
Callable Securities
|
X
|
X
|
|||
Cash Equivalents and Other Short-Term Investments
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
|
X
|
X
|
X
|
X
|
X
|
Collateralized Bond Obligations, Collateralized Debt Obligations, and Collateralized Loan Obligations
|
X
|
||||
Contingent Convertible Securities (“CoCos”)
|
X
|
||||
Convertible Securities
|
X
|
X
|
X
|
||
Corporate Actions
|
X
|
X
|
X
|
X
|
X
|
Cover and Asset Segregation
|
X
|
X
|
X
|
X
|
X
|
Currencies Risk
|
X
|
||||
Cybersecurity and Operational Risk
|
X
|
X
|
X
|
X
|
X
|
Debentures
|
X
|
X
|
|||
Derivatives
|
X
|
X
|
X
|
X
|
|
|
X
|
||||
|
X
|
||||
|
X
|
X
|
X
|
X
|
|
|
X
|
X
|
X
|
||
|
X
|
||||
|
X
|
||||
|
X
|
X
|
X
|
||
Equity Investments
|
X
|
X
|
X
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X
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Strategy/Risk
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American Beacon Balanced Fund
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American Beacon Garcia Hamilton Quality Bond Fund
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American Beacon International Equity Fund
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American Beacon Large Cap Value Fund
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American Beacon Small Cap Value Fund
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X
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X
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X
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X
|
|
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X
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X
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X
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X
|
|
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X
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X
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X
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X
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|
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X
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X
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|||
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X
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X
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X
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||
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X
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||||
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X
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||||
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X
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||||
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X
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X
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X
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X
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|
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X
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X
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X
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X
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ESG Considerations
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X
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X
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X
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X
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X
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Expense Risk
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X
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X
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X
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X
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X
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Fixed Income Investments
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X
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X
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X
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X
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X
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Foreign Securities
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X
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X
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X
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||
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X
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||||
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X
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||||
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X
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Growth Companies
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X
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X
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X
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X
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Illiquid and Restricted Securities
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X
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X
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X
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X
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X
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Inflation-Indexed Securities
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X
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X
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Interfund Lending
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X
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X
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X
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X
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X
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Investment Grade Securities
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X
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X
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Issuer Risk
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X
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X
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X
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X
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X
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Large-Capitalization Companies Risk
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X
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X
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X
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X
|
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Loan Interests, Participations and Assignments
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X
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Micro-Capitalization Companies Risk
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X
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X
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X
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X
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Mid-Capitalization Companies Risk
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X
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X
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X
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X
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Model and Data Risk
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X
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X
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X
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X
|
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Mortgage-Backed Securities
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X
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X
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|||
|
X
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||||
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X
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||||
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X
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||||
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X
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X
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X
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Municipal Securities
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X
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X
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X
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||||
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X
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X
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X
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Other Investment Company Securities and Exchange-Traded Products
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X
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X
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X
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X
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X
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X
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||||
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X
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X
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|||
|
X
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X
|
X
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X
|
X
|
Strategy/Risk
|
American Beacon Balanced Fund
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American Beacon Garcia Hamilton Quality Bond Fund
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American Beacon International Equity Fund
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American Beacon Large Cap Value Fund
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American Beacon Small Cap Value Fund
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Pay-in-Kind Securities
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X
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X
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Preferred Stock
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X
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X
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X
|
||
Quantitative Strategy Risk
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X
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||||
Real Estate Related Investments
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X
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X
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X
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X
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Separately Traded Registered Interest and Principal Securities and Zero Coupon Obligations
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X
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X
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Small-Capitalization Companies Risk
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X
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X
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X
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X
|
|
Sovereign and Quasi-Sovereign Government and Supranational Debt
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X
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Supranational Risk
|
X
|
||||
Trust Preferred Securities
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X
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X
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U.S. Government Agency Securities
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X
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X
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X
|
X
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X
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U.S. Treasury Obligations
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X
|
X
|
X
|
X
|
X
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Valuation Risk
|
X
|
X
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|||
Value Companies Risk
|
X
|
X
|
X
|
X
|
|
Variable or Floating Rate Obligations
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X
|
X
|
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When-Issued and Forward Commitment Transactions
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X
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Bank Deposit Notes. Bank deposit notes are obligations of a bank that provide an alternative to certificates of deposit. Similar to certificates of deposit, deposit notes represent bank level investment and, therefore, are senior to all holding company corporate debt. Bank deposit notes rank junior to domestic deposit liabilities of the bank and pari passu with other senior, unsecured obligations of the bank. Typically, bank deposit notes are not insured by the Federal Deposit Insurance Corporation or any other insurer.
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Bankers’ Acceptances. Bankers’ acceptances are short-term credit instruments designed to enable businesses to obtain funds to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then “accepted” by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an earning asset or it may be sold in the secondary market at the going rate of discount for a specific maturity. Most acceptances have maturities of six months or less. Bankers’ acceptances rank junior to domestic deposit liabilities of the bank and pari passu with other senior, unsecured obligations of the bank.
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Bearer Deposit Notes. Bearer deposit notes, or bearer bonds, are bonds or debt securities that entitle the holder of the document to ownership or title in the deposit. Such notes are typically unregistered, and whoever physically holds the bond is presumed to be the owner of the instrument. Recovery of the value of a bearer bond in the event of its loss or destruction usually is impossible. Interest is typically paid upon presentment of an interest coupon for payment.
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CDs. CDs are negotiable certificates issued against funds deposited in an eligible bank (including its domestic and foreign branches, subsidiaries and agencies) for a definite period of time and earning a specified rate of return. U.S. dollar denominated CDs issued by banks abroad are known as Eurodollar CDs. CDs issued by foreign branches of U.S. banks are known as Yankee CDs.
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Commercial Paper. Commercial paper is a short-term debt security issued by a corporation, bank, municipality, or other issuer, usually for purposes such as financing current operations. A Fund may invest in commercial paper that cannot be resold to the public without an effective registration statement under the Securities Act. While some restricted commercial paper normally is deemed illiquid, in certain cases it may be deemed liquid.
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Eurodollar and Yankee CD Obligations. Eurodollar obligations are U.S. dollar obligations issued outside the United States by domestic or foreign entities, while Yankee CDs are U.S. dollar obligations issued inside the United States by foreign entities. There is generally less publicly available information about foreign issuers and there may be less governmental regulation and supervision of foreign stock exchanges, brokers and listed companies. Foreign issuers may use different accounting and financial standards, and the addition of foreign governmental restrictions may affect adversely the payment of principal and interest on foreign investments. In addition, not all foreign branches of United States banks are supervised or examined by regulatory authorities as are United States banks, and such branches may not be subject to reserve requirements. Eurodollar (and, to a limited extent, Yankee dollar) obligations are subject to certain sovereign risks. One such risk is the possibility that a sovereign country might prevent capital, in the form of dollars, from flowing across its borders. Other risks include adverse political and economic developments; the extent and quality of government regulation of financial markets and institutions; the imposition of foreign withholding taxes; and the expropriation or nationalization of foreign issuers.
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Government Money Market Funds. A Fund may invest cash balances in money market funds that are registered as investment companies under the Investment Company Act, including money market funds that are advised by the Manager. Money market funds invest in highly-liquid, short-term instruments, which include cash and cash equivalents, and debt securities with high credit ratings and short-term maturities, such as U.S. Treasuries. A “government money market fund” is required to invest at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are fully collateralized by government securities or cash. Government securities include any security issued or guaranteed as to principal or interest by the U.S. government and its agencies or instrumentalities. By investing in a money market fund, a Fund becomes a shareholder of that money market fund. As a result, Fund shareholders indirectly bear their proportionate share of the expenses of the money market funds in which a Fund invests in addition to any fees and expenses Fund shareholders directly bear in connection with a Fund’s own operations. These expenses may include, for example, advisory and administrative fees, including advisory fees charged by the Manager to any applicable money market funds advised by the Manager. These other fees and expenses are reflected in the Fees and Expenses Table for a Fund in its Prospectus, if applicable. Shareholders also would be exposed to the risks associated with money market funds and the portfolio investments of such money market funds, including that a money market fund’s yield will be lower than the return that a Fund would have derived from other investments that would provide liquidity. Although a money market fund is designed to be a relatively low risk investment, it is not free of risk.
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Despite the short maturities and high credit quality of a money market fund’s investments, increases in interest rates and deteriorations in the credit quality of the instruments the money market fund has purchased can cause the price of a money market security to decrease and may reduce the money market fund’s yield. In addition, a money market fund is subject to the risk that the value of an investment may be eroded over time by inflation. Factors that could adversely affect the value of a money market fund’s shares include, among other things, a sharp rise in interest rates, an illiquid market for the securities held by the money market fund, a high volume of redemption activity in a money market fund’s shares, and a credit event or credit rating downgrade affecting one or more of the issuers of securities held by the money market fund. There can be no assurance that a money market fund will maintain a $1.00 per share net asset value (“NAV”) at all times. The failure of an unrelated money market fund to maintain a stable NAV could create a widespread risk of increased redemption pressures on all money market funds, potentially jeopardizing the stability of their NAVs. Certain money market funds have in the past failed to maintain stable NAVs, and there can be no assurance that such failures and resulting redemption pressures will not impact money market funds in the future. In the event of negative gross yields as a result of persistent negative interest rates, government money market funds may consider various options including but not limited to (1) the implementation of a reverse distribution or share cancellation mechanism (that would periodically reduce the number of the fund’s outstanding shares) to maintain a stable net asset value per share or (2) the potential conversion to a floating net asset value per share money market fund. Certain money market funds may impose a fee upon sale of shares or may temporarily suspend the ability to sell shares of the money market fund if the money market fund’s liquidity falls below required minimums because of market conditions or other factors, at the determination of the money market fund’s board. Such a determination may conflict with the interest of a Fund. Government money market funds are generally not permitted to impose liquidity fees or temporarily suspend redemptions. However, government money market funds typically offer materially lower yields than other money market funds. Money market funds and the securities they invest in are subject to comprehensive regulations. The enactment of new legislation or regulations, as well as changes in interpretation and enforcement of current laws, may affect the manner of operation, performance and/or yield of money market funds. An investment in a money market fund is not a bank deposit and is not insured or guaranteed by any bank, the FDIC or any other government agency.
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Government Obligations. Government obligations may include U.S. Treasury securities, Treasury inflation-protected securities, and other debt instruments backed by the full faith and credit of the United States, or debt obligations of U.S. Government-sponsored entities.
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Repurchase Agreements. Repurchase agreements are agreements pursuant to which a Fund purchases securities from a bank that is a member of the Federal Reserve System (or a foreign bank or U.S. branch or agency of a foreign bank), or from a securities dealer, that agrees to repurchase the securities from a Fund at a higher price on a designated future date. Repurchase agreements generally are for a short period of time, usually less than a week. Costs, delays, or losses could result if the selling party to a repurchase agreement becomes bankrupt or otherwise defaults.
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Short-term Corporate Debt Securities. Short-term corporate debt securities are securities and bonds issued by corporations with shorter terms to maturity. Corporate securities generally bear a higher risk than U.S. government bonds.
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Time Deposits. Time deposits, also referred to as “fixed time deposits,” are non-negotiable deposits maintained at a banking institution for a specified period of time at a specified interest rate. Time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a beneficial interest in a time deposit to a third party, although there is no market for such deposits.
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Forward Contracts. A Fund may enter into forward contracts. Forward contracts are a type of derivative instrument that obligate the purchaser to take delivery of, or cash settle a specific amount of, a commodity, security or obligation underlying the contract at a specified time in the future for a specified price. Likewise, the seller incurs an obligation to deliver the specified amount of the underlying asset against receipt of the specified price. Generally, forward contracts are traded through financial institutions acting as market-makers, on certain securities exchanges, or over-the-counter, and the protections afforded to investors may vary depending on the trading environment. This is distinguishable from futures contracts, which are traded on U.S. and foreign commodities exchanges.
Forward contracts are often negotiated on an individual basis and are not standardized. The market for forward contracts is substantially unregulated, as there is no limit on daily price movements and speculative position limits are not applicable. The principals who deal in certain forward contract markets are not required to continue to make markets in the underlying reference assets in which they trade and these markets can experience periods of illiquidity, sometimes of significant duration. There have been periods during which certain participants in forward contract markets have refused to quote prices for certain underlying references or have quoted prices with an unusually wide spread between the price at which they were prepared to buy and that at which they were prepared to sell. At or prior to maturity of a forward contract, a Fund may enter into an offsetting contract and may incur a loss to the extent there has been adverse movement in forward contract prices. The liquidity of the markets for forward contracts depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants make or take delivery, liquidity in the market for forwards could be reduced. A relatively small price movement in a forward contract may result in substantial losses to a Fund, exceeding the amount of the margin paid. Forward contracts can increase a Fund’s risk exposure to underlying reference assets and their attendant risks. A Fund bears the risk of loss of the amount expected to be received under a forward contract in the event of the default or bankruptcy of a counterparty. If such a default occurs, a Fund may have contractual remedies pursuant to the forward contract, but such remedies may be subject to bankruptcy and insolvency laws which could affect a Fund’s rights as a creditor. |
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Forward Foreign Currency Contracts. A Fund may enter into forward foreign currency contracts (“forward currency contracts”), which are a type of derivative instrument, for a variety of reasons. A forward currency contract involves an obligation to purchase or sell a specified currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties at a price set at the time of the contract. Because these forward currency contracts normally are settled through an exchange of currencies, they are traded in the interbank market directly between currency traders (usually large commercial banks) and their customers.
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Forward currency contracts may serve as long hedges. For example, a Fund may purchase a forward currency contract to lock in the U.S. dollar price of a security denominated in a foreign currency that it intends to acquire. Forward currency contract transactions also may serve as short hedges. For example, a Fund may sell a forward currency contract to lock in the U.S. dollar equivalent of the proceeds from the anticipated sale of a security or from a dividend or interest payment on a security denominated in a foreign currency.
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A Fund may enter into forward currency contracts to sell a foreign currency for a fixed U.S. dollar amount approximating the value of some or all of its respective portfolio securities denominated in such foreign currency. In addition, a Fund may use forward currency contracts when a sub-advisor wishes to “lock in” the U.S. dollar price of a security when a Fund is purchasing or selling a security denominated in a foreign currency or anticipates receiving a dividend or interest payment denominated in a foreign currency.
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A Fund may enter into forward currency contracts for the purchase or sale of a specified currency at a specified future date either with respect to specific transactions or with respect to portfolio positions in order to minimize the risk to a Fund from adverse changes in the relationship between the U.S. dollar and foreign currencies.
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A Fund may use forward currency contracts to seek to hedge against, or profit from, changes in the value of a particular currency by using forward currency contracts on another foreign currency or a basket of currencies, the value of which a sub-advisor believes will have a positive correlation to the values of the currency being hedged. When hedging, use of a different foreign currency magnifies the risk that movements in the price of the forward contract will not correlate or will correlate unfavorably with the foreign currency being hedged.
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In addition, a Fund may use forward currency contracts to shift exposure to foreign currency fluctuations from one country to another. For example, if a Fund owned securities denominated in a foreign currency that a sub-advisor believed would decline relative to another currency, it might enter into a forward currency contract to sell an appropriate amount of the first foreign currency, with payment to be made in the second currency. Transactions that involve two foreign currencies are sometimes referred to as “cross hedging.” Use of a different foreign currency magnifies a Fund’s exposure to foreign currency exchange rate fluctuations.
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A Fund also may enter into forward currency contracts for non-hedging purposes if a foreign currency is anticipated to appreciate or depreciate in value, but securities denominated in that currency do not present attractive investment opportunities and are not held in a Fund’s investment portfolio.
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The cost to a Fund of engaging in forward currency contracts varies with factors such as the currency involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts usually are entered into on a principal basis, no fees or commissions are involved. When a Fund enters into a forward currency contract, it relies on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. Failure by the counterparty to do so would result in the loss of any expected benefit of the transaction.
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Sellers or purchasers of forward currency contracts can enter into offsetting closing transactions, similar to closing transactions on futures, by purchasing or selling, respectively, an instrument identical to the instrument sold or bought, respectively. Secondary markets generally do not exist for forward currency contracts, however, with the result that closing transactions generally can be made for forward currency contracts only by negotiating directly with the counterparty. Thus, there can be no assurance that a Fund will in fact be able to close out a forward currency contract at a favorable price prior to maturity. In addition, in the event of insolvency of the counterparty, a Fund might be unable to close out a forward currency contract at any time prior to maturity. In either event, a Fund would continue to be subject to market risk with respect to the position, and would continue to be required to maintain a position in the securities or currencies that are the subject of the hedge or to maintain cash or securities.
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The precise matching of forward currency contract amounts and the value of securities whose U.S. dollar value is being hedged by those contracts involved generally will not be possible because the value of such securities, measured in the foreign currency, will change after the forward currency contract has been established. Thus, a Fund might need to purchase or sell foreign currencies in the spot (cash) market to the extent such foreign currencies are not covered by forward contracts. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain.
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A Fund bears the risk of loss of the amount expected to be received under a forward currency contract in the event of the default or bankruptcy of a counterparty. If such a default occurs, a Fund may have contractual remedies pursuant to the forward currency contract, but such remedies may be subject to bankruptcy and insolvency laws which could affect a Fund’s rights as a creditor.
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At the maturity of a forward contract, a Fund may sell the portfolio security and make delivery of the foreign currency, or it may retain the security and either extend the maturity of the forward contract (by “rolling” that contract forward) or may initiate a new forward contract. If a Fund retains the portfolio security and engages in an offsetting transaction, a Fund will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If a Fund engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign currency.
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Should forward prices decline during the period between a Fund’s entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, a Fund will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, a Fund will suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell.
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Forward currency contracts in which a Fund may engage include foreign exchange forwards. The consummation of a foreign exchange forward requires the actual exchange of the principal amounts of the two currencies in the contract (i.e., settlement on a physical basis). Because foreign exchange forwards are physically settled through an exchange of currencies, they are traded in the interbank market directly between currency traders (usually large commercial banks) and their customers. A foreign exchange forward generally has no deposit requirement, and no commissions are charged at any stage for trades; foreign exchange dealers realize a profit based on the difference (the spread) between the prices at which they are buying and the prices at which they are selling various currencies. When a Fund enters into a foreign exchange forward, it relies on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. Failure by the counterparty to do so would result in the loss of any expected benefit of the transaction.
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A Fund may be required to obtain the currency that it must deliver under the foreign exchange forward through the sale of portfolio securities denominated in such currency or through conversion of other assets of a Fund into such currency. When a Fund engages in foreign currency transactions for hedging purposes, it will not enter into foreign exchange forwards to sell currency or maintain a net exposure to such contracts if their consummation would obligate a Fund to deliver an amount of foreign currency materially in excess of the value of its portfolio securities or other assets denominated in that currency.
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Futures Contracts. A Fund may enter into futures contracts. Futures contracts are a type of derivative instrument that obligate the purchaser to take delivery of, or cash settle a specific amount of, a commodity, security or other obligation underlying the contract at a specified time in the future for a specified price. Likewise, the seller incurs an obligation to deliver the specified amount of the underlying obligation against receipt of the specified price. Futures are traded on both U.S. and foreign commodities exchanges. The purchase of futures can serve as a long hedge, and the sale of futures can serve as a short hedge.
No price is paid upon entering into a futures contract. Instead, at the inception of a futures contract, a Fund is required to deposit “initial margin” consisting of cash, U.S. Government securities, suitable money market instruments, or liquid, high-grade debt securities in an amount set by the exchange on which the contract is traded and varying based on the volatility of the underlying asset. Margin must also be deposited when writing a call or put option on a futures contract, in accordance with applicable exchange rules. Unlike margin in securities transactions, initial margin on |
futures contracts does not represent a borrowing, but rather is in the nature of a performance bond or good-faith deposit that is returned to a Fund at the termination of the transaction if all contractual obligations have been satisfied. Under certain circumstances, such as periods of high volatility, a Fund may be required by a futures exchange to increase the level of its initial margin payment, and initial margin requirements might be increased generally in the future by regulatory action. Subsequent “variation margin” payments (sometimes referred to as “maintenance margin” payments) are made to and from the futures broker daily as the value of the futures position varies, a process known as “marking-to-market.” Variation margin does not involve borrowing, but rather represents a daily settlement of a Fund’s obligations to or from a futures broker. When a Fund purchases or sells a futures contract, it is subject to daily, or even intraday, variation margin calls that could be substantial in the event of adverse price movements. If a Fund has insufficient cash to meet daily or intraday variation margin requirements, it might need to sell securities at a time when such sales are disadvantageous.
Purchasers and sellers of futures contracts can enter into offsetting closing transactions, by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Positions in futures contracts may be closed only on a futures exchange or board of trade that trades that contract. A Fund intends to enter into futures contracts only on exchanges or boards of trade where there appears to be a liquid secondary market. However, there can be no assurance that such a market will exist for a particular contract at a particular time. In such event, it may not be possible to close a futures contract. Although many futures contracts by their terms call for the actual delivery or acquisition of the underlying asset, in most cases the contractual obligation is fulfilled before the date of the contract without having to make or take delivery of the securities or currency. The offsetting of a contractual obligation is accomplished by buying (or selling, as appropriate) on a commodities exchange an identical futures contract calling for delivery in the same month. Such a transaction, which is effected through a member of an exchange, cancels the obligation to make or take delivery of the securities or currency. Since all transactions in the futures market are made, offset or fulfilled through a clearinghouse associated with the exchange on which the contracts are traded, a Fund will incur brokerage fees when it purchases or sells futures contracts. If an offsetting purchase price is less than the original sale price, a Fund realizes a capital gain, or if it is more, a Fund realizes a capital loss. Conversely, if an offsetting sell price is more than the original purchase price, a Fund realizes a capital gain, or if it is less, a Fund realizes a capital loss. The Funds has no current intent to accept physical delivery in connection with the settlement of futures contracts. Under certain circumstances, futures exchanges may establish daily limits on the amount that the price of a futures contract can vary from the previous day’s settlement price; once that limit is reached, no trades may be made that day at a price beyond the limit. Daily price limits do not limit potential losses because prices could move to the daily limit for several consecutive days with little or no trading, thereby preventing liquidation of unfavorable positions. If a Fund were unable to liquidate a futures contract due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. A Fund would continue to be subject to market risk with respect to the position. In addition, a Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the futures contract or option thereon or to maintain cash or securities in a segregated account. The ordinary spreads between prices in the cash and futures markets, due to differences in the nature of those markets, are subject to distortions. First, all participants in the futures market are subject to initial deposit and variation margin requirements. Rather than meeting additional variation margin deposit requirements, investors may close futures contracts through offsetting transactions that could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of speculators, the margin deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may cause temporary price distortions. Due to the possibility of distortion, a correct forecast of securities price or currency exchange rate trends by a sub-advisor may still not result in a successful transaction. Futures contracts also entail other risks. Although the use of such contracts may benefit a Fund, if investment judgment about the general direction of, for example, an index is incorrect, a Fund’s overall performance would be worse than if it had not entered into any such contract. There are differences between the securities and futures markets that could result in an imperfect correlation between the markets, causing a given transaction not to achieve its objectives. The degree of imperfection of correlation depends on circumstances such as variations in speculative market demand for futures, including technical influences in futures trading, and differences between the financial instruments being hedged and the instruments underlying the standard contracts available for trading in such respects as interest rate levels, maturities, and creditworthiness of issuers. A decision as to whether, when and how to hedge involves the exercise of skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of market behavior or unexpected interest rate trends. |
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Rights. Rights are options to purchase an issuer’s securities at a stated price during a stated term, usually at a price below the initial offering price of the securities and before the securities are offered to the general public. Rights are similar to warrants but typically have a shorter duration. Rights are usually freely transferable, but may not be as liquid as exchange-traded options. In addition, the terms of a right may limit a Fund’s ability to exercise the right at such time, or in such quantities, as a Fund would otherwise wish. Rights usually have no voting rights, pay no dividends and have no rights with respect to the assets of the corporation issuing them. A right ceases to have value if it is not exercised prior to its expiration date. As a result, rights may be considered more speculative than certain other types of investments.
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Swap Agreements. A swap is a transaction in which a Fund and a counterparty agree to pay or receive payments at specified dates based upon or calculated by reference to changes in specified prices or rates (e.g., interest rates in the case of interest rate swaps) or the performance of specified securities or indices based on a specified amount (the “notional” amount). Nearly any type of derivative, including forward contracts, can be structured as a swap. See “Derivatives” for a further discussion of derivatives risks. Swap agreements can be structured to provide exposure to a variety of different types of investments or market factors. For example, in an interest rate swap, fixed-rate payments may be exchanged for floating rate payments; in a currency swap, U.S. dollar-denominated payments may be exchanged for payments denominated in a foreign currency; and in a total return swap, payments tied to the investment return on a particular asset, group of assets or index may be exchanged for payments that are effectively equivalent to interest payments or for payments tied to the return on another asset, group of assets, or index. Swaps may have a leverage component, and adverse changes in the value or level of the underlying asset, reference rate or index can result in gains or losses that are substantially greater than the amount invested in the swap itself. Some swaps currently are, and more in the future will be, centrally cleared. Swaps
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that are centrally-cleared are exposed to the creditworthiness of the clearing organizations (and, consequently, that of their members - generally, banks and broker-dealers) involved in the transaction. For example, an investor could lose margin payments it has deposited with the clearing organization as well as the net amount of gains not yet paid by the clearing organization if it breaches its agreement with the investor or becomes insolvent or goes into bankruptcy. In the event of bankruptcy of the clearing organization, the investor may be able to recover only a portion of the net amount of gains on its transactions and of the margin owed to it, potentially resulting in losses to the investor. Swaps that are not centrally cleared involve the risk that a loss may be sustained as a result of the insolvency or bankruptcy of the counterparty or the failure of the counterparty to make required payments or otherwise comply with the terms of the agreement. If a counterparty’s creditworthiness declines, the value of the swap might decline, potentially resulting in losses to a Fund. Changing conditions in a particular market area, whether or not directly related to the referenced assets that underlie the swap agreement, may have an adverse impact on the creditworthiness of a counterparty. To mitigate this risk, a Fund will only enter into swap agreements with counterparties considered by a sub-advisor to present minimum risk of default, and a Fund normally obtains collateral to secure its exposure. Swaps involve the risk that, if the swap declines in value, additional margin would be required to maintain the margin level. The seller may require a Fund to deposit additional sums to cover this, and this may be at short notice. If additional margin is not provided in time, the seller may liquidate the positions at a loss, which may cause a Fund to owe money to the seller. The centrally cleared and OTC swap agreements into which a Fund enters normally provide for the obligations of a Fund and its counterparty in the event of a default or other early termination to be determined on a net basis. Similarly, periodic payments on a swap transaction that are due by each party on the same day normally are netted. The use of swap agreements requires special skills, knowledge and investment techniques that differ from those required for normal portfolio management. Swaps may be considered illiquid investments, and a Fund may be unable to sell a swap agreement to a third party at a favorable price; see “Illiquid and Restricted Securities” for a description of liquidity risk.
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Currency Swaps. A currency swap involves the exchange of payments denominated in one currency for payments denominated in another. Payments are based on a notional principal amount, the value of which is fixed in exchange rate terms at the swap’s inception. Currency swap agreements may be entered into on a net basis or may involve the delivery of the entire principal value of one designated currency in exchange for the entire principal value of another designated currency. In such cases, the entire principal value of a currency swap is subject to the risk that the counterparty will default on its contractual delivery obligations. Currency swaps are subject to currency risk.
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Warrants. Warrants are options to purchase an issuer’s securities at a stated price during a stated term, usually at a price below the initial offering price of the securities and before the securities are offered to the general public. If the market price of the underlying common stock does not exceed the warrant’s exercise price during the life of the warrant, the warrant will expire worthless. As a result, warrants may be considered more speculative than certain other types of investments. Warrants usually have no voting rights, pay no dividends and have no rights with respect to the assets of the corporation issuing them. The percentage increase or decrease in the value of a warrant may be greater than the percentage increase or decrease in the value of the underlying common stock. Warrants may be purchased with values that vary depending on the change in value of one or more specified indices (“index warrants”). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of the exercise. Warrants may also be linked to the performance of oil and/or the GDP of specific emerging markets. Warrants are usually freely transferable, but may not be as liquid as exchange-traded options, and the market for warrants may be very limited and it may be difficult to sell them promptly at an acceptable price.
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Common Stock. Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or traded over-the-counter. OTC stock may be less liquid than exchange-traded stock.
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Depositary Receipts. A Fund may invest in depositary receipts, which represent ownership interests in securities of foreign companies (an “underlying issuer”) that have been deposited with a bank or trust and that trade on an exchange or OTC. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted, and they are subject to the risk of fluctuation in the currency exchange rate. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers, and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in a Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the issuers of unsponsored depositary receipts are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle a Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security. Please see “Foreign Securities” below for a description of the risks associated with investments in foreign securities. A Fund may invest in the following type of depositary receipts:
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ADRs. ADRs are depositary receipts for foreign issuers in registered form, typically issued by a U.S. financial institution, traded in U.S. securities markets.
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EDRs. EDRs, which are sometimes called Continental Depositary Receipts, are issued in Europe in bearer form and are traded in European securities markets.
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GDRs. GDRs are in bearer form and traded in both the U.S. and European securities markets.
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NVDRs. NVDRs represent financial interests in an issuer but the holder is not entitled to any voting rights.
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Income Deposit Securities. A Fund may purchase IDSs. Each IDS represents two separate securities, shares of common stock and subordinated notes issued by the same company, that are combined into one unit that trades like a stock on an exchange. Holders of IDSs receive dividends on the common shares and interest at a fixed rate on the subordinated notes to produce a blended yield. An IDS is typically listed on a stock exchange, but the underlying securities typically are not listed on the exchange until a period of time after the listing of the IDS or upon the occurrence of certain events (e.g., a change of control of the issuer of the IDS). When the underlying securities are listed, the holders of IDSs generally have the right to separate the components of the IDSs and trade them separately.
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There may be a thinner and less active market for IDSs than that available for other securities. The value of an IDS will be affected by factors generally affecting common stock and subordinated debt securities, including the issuer’s actual or perceived ability to pay interest and principal on the notes and pay dividends on the stock.
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The federal income tax treatment of IDSs is not entirely clear and there is no authority that directly addresses the tax treatment of securities with terms substantially similar to IDSs. Among other things, although it is expected that the subordinated notes portion of an IDS will be treated as debt, if it is characterized as equity rather than debt, then interest paid on the notes could be treated as dividends (to the extent paid out of the issuer’s earnings and profits).
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Income Trusts. A Fund may invest in shares of income trusts, including Canadian royalty trusts. An income trust is an investment trust which holds income-producing assets and generally distributes the income generated by such assets on to its security holders. Income trusts also may include royalty trusts, a particular type of income trust whose securities are listed on a stock exchange and which controls an underlying company whose business relates to, without limitation, the acquisition, exploitation, production and sale of oil and natural gas. The main attraction of an income trust is its ability to generate constant cash flows. Income trusts have the potential to deliver higher yields than bonds. During periods of low interest rates, income trusts may achieve higher yields compared with cash investments. During periods of increasing rates, the opposite may be true. Income trusts may experience losses during periods of both low and high interest rates.
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Income trusts generally are structured to avoid income taxes at the entity level. In a traditional corporate tax structure, net income is taxed at the corporate level and again when distributed as dividends to its shareholders. Under current law, an income trust, if properly structured, should not be subject to federal income tax. This flow-through structure means that the distributions to income trust investors are generally higher than dividends from an equivalent corporate entity.
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Despite the potential for attractive regular payments, income trusts are equity investments, not fixed-income securities, and they share many of the risks inherent in stock ownership, including operating risk based on the income trusts’ underlying assets and their respective businesses. Such risks may include lack of, or limited, operating histories. In addition, an income trust may lack diversification and potential growth may be sacrificed because revenue is passed on to security holders, rather than reinvested in the business. Because income trusts may pay out more than their net income, the unitholder equity (capital) may decline over time. Income trusts often grow through acquisition of additional assets, funded through the issuance of additional equity or, where the trust is able, additional debt. Income trusts do not guarantee minimum distributions or even return of capital; therefore, if the business of a trust starts to lose money, the trust can reduce or even eliminate distributions. The tax structure of income trusts described above, which would allow income to flow through to investors and be taxed only at the investor level, could be challenged under existing law, or the tax laws could change. Royalty trusts and income trusts frequently are found in Canada, and an investment in a Canadian trust will be subject to certain additional risks of investing in foreign securities.
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Initial Public Offerings. A Fund can invest in IPOs. By definition, securities issued in IPOs have not traded publicly until the time of their offerings. Special risks associated with IPOs may include, among others, the fact that there may only be a limited number of shares available for trading. The market for those securities may be unseasoned. The issuer may have a limited operating history. These factors may contribute to price volatility. The limited number of shares available for trading in some IPOs may also make it more difficult for a Fund to buy or sell significant amounts of shares without an unfavorable impact on prevailing prices. In addition, some companies initially offering their shares publicly are involved in relatively new industries or lines of business, which may not be widely understood by investors. Some of the companies involved in new industries may be regarded as developmental state companies, without revenues or operating income, or the near-term prospects of them. Many IPOs are by small- or micro-cap companies that are undercapitalized. IPOs may adversely impact a Fund’s performance. However, the impact of IPOs on a Fund’s performance will likely decrease as a Fund’s asset size increases.
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Master Limited Partnerships. A Fund may invest in publicly traded partnerships such as MLPs. MLPs issue units that are registered with the SEC and are freely tradable on a securities exchange or in the OTC market. An MLP may have one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. The general partner or partners are jointly and severally responsible for the liabilities of the MLP. An MLP also may be an entity similar to a limited partnership, such as an LLC, which has one or more managers or managing members and non-managing members (who are like limited partners). A Fund will invest in an MLP as a limited partner, and normally would not be liable for the debts of an MLP beyond the amount that a Fund has invested therein. However, as a limited partner, a Fund would not be shielded to the same extent that a stockholder of a corporation would be. In certain instances, creditors of an MLP would have the right to seek a return of capital that had been distributed to a limited partner. This right of an MLP’s creditors would continue even after a Fund had sold its investment in the partnership. Holders of MLP units have more limited rights to vote on matters affecting the partnership than owners of common stock. MLPs typically invest in real estate and oil and gas equipment leasing assets, but they also finance entertainment, research and development, and other projects.
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Corporate Debt and Other Fixed-Income Securities. Typically, the values of fixed income securities change inversely with prevailing interest rates. Therefore, a fundamental risk of fixed income securities is interest rate risk, which is the risk that their value generally will decline as prevailing interest rates rise, which may cause a Fund’s NAV to likewise decrease, and vice versa. How specific fixed income securities may react to changes in interest rates will depend on the specific characteristics of each security. For example, while securities with longer maturities tend to produce higher yields, they also tend to be more sensitive to changes in prevailing interest rates. They are therefore more volatile than shorter-term securities and are subject to greater market fluctuations as a result of changes in interest rates. Fixed income securities are also subject to credit risk, which is the risk that the credit strength of an issuer of a fixed income security will weaken and/or that the issuer will be unable to make timely principal and interest payments, and that the security may go into default.
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Master Demand Notes. Master demand notes are direct arrangements, between a lender and a corporate borrower, that permit the investment of fluctuating amounts of money at varying rates of interest. They permit daily changes in the amounts borrowed. The lender has the right to increase or decrease the amount it lends under the note at any time, up to the full amount provided by the note agreement. The borrower may prepay up to the full amount of the note without penalty. These notes may or may not be backed by bank letters of credit.
These notes are direct lending arrangements between the lender and borrower, and there is no secondary market for them. The principal plus accrued interest is redeemable at any time, however. This right to redeem the notes depends on the ability of the borrower to make the specified payment on demand. The sub-advisors will consider the earning power, cash flow and other liquidity ratios of an issuer, and its ability to pay principal and interest on demand, including a situation in which all holders of such notes make demand simultaneously. Investments in master demand notes may be subject to limited liquidity. |
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Emerging Market Securities. A Fund may invest in emerging market securities. A Fund may consider a country to be an emerging market country based on a number of factors including, but not limited to, if the country is classified as an emerging or developing economy by any supranational organization such as the World Bank, International Finance Corporation or the United Nations, or related entities, or if the country is considered an emerging market country for purposes of constructing emerging markets indices. Investments in emerging market country securities involve special risks. The economies, markets and political structures of a number of the emerging market countries in which a Fund can invest do not compare favorably with the United States and other mature economies in terms of wealth and stability. Therefore, investments in these countries may be riskier, and will be subject to erratic and abrupt price movements. These risks are discussed below.
Economies: The economies of emerging market countries may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, currency depreciation, reliable access to capital, capital reinvestment, resource self-sufficiency, balance of payments and trade difficulties. Some economies are less well developed and less diverse (for example, Latin America, Eastern Europe and certain Asian countries), and may be heavily dependent upon international trade, as well as the economic conditions in the countries with which they trade. Such economies accordingly have been, and may continue to be, adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist or retaliatory measures imposed or negotiated by the countries with which they trade. Similarly, many of these countries have historically experienced, and may continue to experience, high rates of inflation, high interest rates, exchange rate fluctuations, large amounts of national and external debt, severe recession, and extreme poverty and unemployment. The economies of emerging market countries may be based predominately on only a few industries or may be dependent on revenues from participating commodities or on international aid or developmental assistance. Emerging market economies may develop unevenly or may never fully develop. Investments in countries that have recently begun moving away from central planning and state-owned industries toward free markets, such as the Eastern European, Russian or Chinese economies, should be regarded as speculative. Governments: Emerging markets may have uncertain national policies and social, political and economic instability. While government involvement in the private sector varies in degree among emerging market countries, such involvement may in some cases include government ownership of companies in certain sectors, wage and price controls or imposition of trade barriers and other protectionist measures. In the past, governments of such nations have expropriated substantial amounts of private property, and most claims of the property owners have never been fully settled. There is no assurance that such expropriations will not reoccur. In addition, there is no guarantee that some future economic or political crisis will not lead to price controls, forced mergers of companies, confiscatory taxation or creation of government monopolies to the possible detriment of a Fund’s investments. In such event, it is possible that a Fund could lose the entire value of its investments in the affected markets. Emerging market countries may have national policies that limit a Fund’s investment opportunities such as restrictions on investment in issuers or industries deemed sensitive to national interests. Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some emerging market countries. In addition, if a Fund invests in a market where restrictions are considered acceptable, a country could impose new or additional repatriation restrictions after investment that are unacceptable. This might require, among other things, applying to the appropriate authorities for a waiver of the restrictions or engaging in transactions in other markets designed to offset the risks of decline in that country. Further, some attractive securities may not be available, or may require a premium for purchase, due to foreign shareholders already holding the maximum amount legally permissible. In addition to withholding taxes on investment income, some countries with emerging capital markets may impose differential capital gain taxes on foreign investors. An issuer or governmental authority that controls the repayment of an emerging market country’s debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt. A debtor’s willingness or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, and, in the case of a government debtor, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a |
whole and the political constraints to which a government debtor may be subject. Government debtors may default on their debt and may also be dependent on expected disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. Holders of government debt may be requested to participate in the rescheduling of such debt and to extend further loans to government debtors. There may be limited legal recourse against the issuer and/or guarantor. Remedies must, in some cases, be pursued in the courts of the defaulting party itself, and the ability of the holder of foreign government fixed-income securities to obtain recourse may be subject to the political climate in the relevant country. In addition, no assurance can be given that the holders of commercial bank debt will not contest payments to the holders of other foreign government debt obligations in the event of default under their commercial bank loan agreements.
Capital Markets: The capital markets in emerging market countries may be underdeveloped. They may have low or non-existent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities, as compared to securities from more developed capital markets. Emerging market securities may be substantially less liquid and more volatile than those of mature markets, and securities may be held by a limited number of investors. This may adversely affect the timing and pricing of a Fund’s acquisition or disposal of securities. There may be less publicly available information about emerging markets than would be available in more developed capital markets, and such issuers may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those to which U.S. companies are subject. In certain countries with emerging capital markets, reporting standards vary widely. As a result, traditional investment measurements used in the U.S., may not be applicable. Investing in certain countries with emerging capital markets may entail purchasing securities issued by or on behalf of entities that are insolvent, bankrupt, in default or otherwise engaged in an attempt to reorganize or reschedule their obligations, and in entities that have little or no proven credit rating or credit history. In any such case, the issuer’s poor or deteriorating financial condition may increase the likelihood that the investing Fund will experience losses or diminution in available gains due to bankruptcy, insolvency or fraud. There may also be custodial restrictions or other non-U.S. or U.S. governmental laws or restrictions applicable to investments in emerging market countries. Practices in relation to settlement of securities transactions in emerging markets involve higher risks than those in developed markets, in part because a Fund may use brokers and counterparties that are less well capitalized, and custody and registration of assets in some countries may be unreliable. Supervisory authorities also may be unable to apply standards comparable to those in developed markets. Thus, there may be risks that settlement may be delayed and that cash or securities belonging to a Fund may be in jeopardy because of failures of or defects in the systems. In particular, market practice may require that payment be made before receipt of the security being purchased or that delivery of a security be made before payment is received. In such cases, default by a broker or bank (the “counterparty”) through whom the transaction is effected might cause a Fund to suffer a loss. There can be no certainty that a Fund will be successful in eliminating counterparty risk, particularly as counterparties operating in emerging market countries frequently lack the substance or financial resources of those in developed countries. There may also be a danger that, because of uncertainties in the operation of settlement systems in individual markets, competing claims may arise with respect to securities held by or to be transferred to a Fund. Regulatory authorities in some emerging markets currently do not provide the Public Company Accounting Oversight Board with the ability to inspect public accounting firms as required by U.S. law, including sufficient access to inspect audit work papers and practices, or otherwise do not cooperate with U.S. regulators, which potentially could expose investors to significant risks. Legal Systems: Investments in emerging market countries may be affected by the lack, or relatively early development, of legal structures governing private and foreign investments and private property. Such capital markets are emerging in a dynamic political and economic environment brought about by events over recent years that have reshaped political boundaries and traditional ideologies. Many emerging market countries have little experience with the corporate form of business organization and may not have well-developed corporation and business laws or concepts of fiduciary duty in the business context. The organizational structures of certain issuers in emerging markets may limit investor rights and recourse. A Fund may encounter substantial difficulties in obtaining and enforcing judgments against individuals and companies located in certain emerging market countries, either individually or in combination with other shareholders. It may be difficult or impossible to obtain or enforce legislation or remedies against governments, their agencies and sponsored entities. Additionally, in certain emerging market countries, fraud, corruption and attempts at market manipulation may be more prevalent than in developed market countries. Shareholder claims that are common in the U.S. and are generally viewed as determining misconduct, including class action securities law and fraud claims, generally are difficult or impossible to pursue as a matter of law or practicality in many emerging markets. The laws in certain countries with emerging capital markets may be based upon or be highly influenced by religious codes or rules. The interpretation of how these laws apply to certain investments may change over time, which could have a negative impact on those investments and a Fund. Russia launched a large-scale invasion of Ukraine on February 24, 2022. The extent and duration of the military action, resulting sanctions and resulting future market disruptions, including declines in its stock markets and the value of the ruble against the U.S. dollar, are impossible to predict, but could be significant. Any such disruptions caused by Russian military action or other actions (including cyberattacks and espionage) or resulting actual and threatened responses to such activity, including purchasing and financing restrictions, boycotts or changes in consumer or purchaser preferences, sanctions, tariffs or cyberattacks on the Russian government, Russian companies or Russian individuals, including politicians, may impact Russia’s economy and Russian issuers of securities in which a Fund invests. Actual and threatened responses to such activity, including purchasing restrictions, sanctions, tariffs or cyberattacks on the Russian government or Russian companies, may impact Russia’s economy and Russian issuers of securities in which a Fund invests. Actual and threatened responses to such military action may also impact the markets for certain Russian commodities, such as oil and natural gas, as well as other sectors of the Russian economy, and may likely have collateral impacts on such sectors globally, and may negatively affect global supply chains, inflation and global growth. These and any related events could significantly impact a Fund’s performance and the value of an investment in a Fund, even if a Fund does not have direct exposure to Russian issuers or issuers in other countries affected by the invasion. Governments in the United States and many other countries (collectively, the “Sanctioning Bodies”) have imposed economic sanctions, which can consist of prohibiting certain securities trades, certain private transactions in the energy sector, asset freezes and prohibition of all business, against certain Russian individuals, including politicians, and Russian corporate and banking entities. The Sanctioning Bodies, or others, could also institute broader sanctions on Russia, including banning Russia from global payments systems that facilitate cross-border payments. These sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse |
consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities and/or funds invested in prohibited assets, impairing the ability of a Fund to buy, sell, receive or deliver those securities and/or assets. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian securities.
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European Securities. A Fund’s performance may be affected by political, social and economic conditions in Europe, such as growth of economic output (the gross national product of the countries in the region), the rate of inflation, the rate at which capital is reinvested into European economies, the success of governmental actions to reduce budget deficits, the resource self-sufficiency of European countries, interest rates in European countries, monetary exchange rates between European countries, and conflict between European countries. Most developed countries in Western Europe are members of the European Union (“EU”), and many are also members of the European Economic and Monetary Union (“EMU” or “Eurozone”). The EMU is comprised of EU members that have adopted the Euro currency. As part of EMU membership, member states relinquish control of their own monetary policies to the European Central Bank. The EMU requires Eurozone countries to comply with restrictions on interest rates, deficits, debt levels, and inflation rates; fiscal and monetary controls; and other factors. Although the EMU has adopted a common currency and central bank, there is no fiscal union; therefore, money does not automatically flow from countries with surpluses to those with deficits. These restrictions and characteristics may limit the ability of EMU member countries to implement monetary policy to address regional economic conditions and significantly impact every European country and their economic partners, including those countries that are not members of the EMU. In addition, those EU member states that are not currently in the Eurozone (except Denmark) are required to seek to comply with convergence criteria to permit entry to the Eurozone. The economies and markets of European countries are often closely connected and interdependent, and events in one country in Europe can have an adverse impact on other European countries. Changes in imports or exports, changes in governmental or European regulations on trade, changes in the exchange rate of the Euro, the threat of default or actual default by one or more European countries on its sovereign debt, and/or an economic recession in one or more European countries may have a significant adverse effect on the economies of other European countries and their trading partners.
The European financial markets have experienced and may continue to experience volatility and adverse trends due to concerns relating to economic downturns; national unemployment; ageing populations; rising government debt levels and the possible default on government debt in several European countries; public health crises; political unrest; economic sanctions; inflation; energy crises; the future of the Euro as a common currency; and war and military conflict, such as the Russian invasion of Ukraine. These events have affected the exchange rate of the Euro and may continue to significantly affect European countries. Responses to financial problems by European governments, central banks, and others, including austerity measures and other reforms, may not produce the desired results, may result in social unrest and may limit future growth and economic recovery or may have unintended consequences. In order to prevent further economic deterioration, certain countries, without prior warning, can institute “capital controls.” Countries may use these controls to restrict volatile movements of capital entering and exiting their country. Such controls may negatively affect a Fund’s investments. In addition, one or more countries may abandon the Euro and/or withdraw from the EU. The impact of these actions, especially if they occur in a disorderly fashion, could be significant and far-reaching. Many European nations are susceptible to economic risks associated with high levels of debt. Non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts, and other issuers have faced difficulties obtaining credit or refinancing existing obligations. A default or debt restructuring by any European country could adversely impact holders of that country’s debt and sellers of credit default swaps linked to that country’s creditworthiness, which may be located in other countries. Such a default or debt restructuring could affect exposures to other European countries and their companies as well. Further defaults on, or restructurings of, the debt of governments or other entities could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, issuers have faced difficulties obtaining credit or refinancing existing obligations; financial institutions have in some cases required government or central bank support, have needed to raise capital and/or have been impaired in their ability to extend credit; and financial markets in Europe and elsewhere have experienced extreme volatility and declines in asset values and liquidity. Furthermore, certain European countries have had to accept assistance from supranational agencies such as the International Monetary Fund, the European Stability Mechanism or others. The European Central Bank has also intervened to purchase Eurozone debt in an attempt to stabilize markets and reduce borrowing costs. There can be no assurance that any creditors or supranational agencies will continue to intervene or provide further assistance, and markets may react adversely to any expected reduction in the financial support provided by these creditors. Certain European countries have experienced negative interest rates on certain fixed-income instruments. A negative interest rate is an unconventional central bank monetary policy tool where nominal target interest rates are set with a negative value (i.e., below zero percent) intended to help create self-sustaining growth in the local economy. Negative interest rates may result in heightened market volatility and may detract from a Fund’s performance to the extent a Fund is exposed to such interest rates. Certain European countries have also developed increasingly strained relationships with the U.S., and if these relationships were to worsen, they could adversely affect European issuers that rely on the U.S. for trade. In addition, the national politics of European countries have been unpredictable and subject to influence by disruptive political groups and ideologies. Secessionist movements, as well as government or other responses to such movements, may create instability and uncertainty in a country or region. European governments may be subject to change and such countries may experience social and political unrest. Unanticipated or sudden political or social developments may result in sudden and significant investment losses. The occurrence of terrorist incidents throughout Europe also could impact financial markets, as could military conflicts. The impact of these or other events is not clear but could be significant and far-reaching and materially impact the value and liquidity of a Fund’s investments. Russia’s war with Ukraine has negatively impacted European economic activity. The Russia/Ukraine war and Russia’s response to sanctions imposed by the U.S., EU, UK and others have and could continue to severely impact the performance of the economies of European and other countries, including adverse effects to global financial and energy markets, global supply chains and global growth, and inflation. Certain countries have applied to become new member countries of the EU, and these candidate countries’ accessions may become more controversial to the existing EU members. Some member states may repudiate certain candidate countries joining the EU due to concerns about the possible economic, immigration and cultural implications. Also, Russia may be opposed to the expansion of the EU to members of the former Eastern Bloc (i.e. ex-Soviet Union-controlled countries in Europe) and may, at times, take actions that could negatively impact European economic activity. The United Kingdom withdrew from the European Union on January 31, 2020 and entered into a transition period, which ended on December 31, |
2020. The longer term economic, legal, and political framework between the United Kingdom and the EU is still developing and may lead to ongoing political and economic uncertainly and periods of increased volatility in the United Kingdom, Europe, and the global market. Investments in companies with significant operations and/or assets in the United Kingdom could be adversely impacted by the new legal, political, and regulatory environment, whether by increased costs or impediments to the implementation of business plans. The uncertainty resulting from any further exits from the EU, or the possibility of such exits, would also be likely to cause market disruption in the EU and more broadly across the global economy, as well as introduce further legal, political, and regulatory uncertainty in Europe.
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Pacific Basin Securities. Many Asian countries may be subject to a greater degree of social, political and economic instability than is the case in the U.S. and Western European countries. Such instability may result from, among other things, (i) authoritarian governments or military involvement in political and economic decision-making, including changes in government through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic and social conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; and (v) ethnic, religious and racial disaffection. In addition, the Asia-Pacific geographic region has historically been prone to natural disasters. The occurrence of a natural disaster in the region, including the subsequent recovery, could negatively impact the economy of any country in the region. The existence of overburdened infrastructure and obsolete financial systems also presents risks in certain Asian countries, as do environmental problems.
The economies of most of the Asian countries are heavily dependent on international trade and are accordingly affected by protective trade barriers and the economic conditions of their trading partners, principally, the U.S., Japan, China and the EU. The enactment by the U.S. or other principal trading partners of protectionist trade legislation, reduction of foreign investment in the local economies and general declines in the international securities markets could have a significant adverse effect upon the securities markets of the Asian countries. The economies of certain Asian countries may depend to a significant degree upon only a few industries and/or exports of primary commodities and, therefore, are vulnerable to changes in commodity prices that, in turn, may be affected by a variety of factors. In addition, certain developing Asian countries, such as the Philippines and India, are especially large debtors to commercial banks and foreign governments. Many of the Pacific Basin economies may be intertwined, so an economic downturn in one country may result in, or be accompanied by, an economic downturn in other countries in the region. Furthermore, many of the Pacific Basin economies are characterized by high inflation, underdeveloped financial services sectors, heavy reliance on international trade, frequent currency fluctuations, devaluations, or restrictions, political and social instability, and less efficient markets. The securities markets in Asia are substantially smaller, less liquid and more volatile than the major securities markets in the U.S., and some of the stock exchanges in the region are in the early stages of their development, as compared to the stock exchanges in the U.S. Equity securities of many companies in the region may be less liquid and more volatile than equity securities of U.S. companies of comparable size. Additionally, many companies traded on stock exchanges in the region are smaller and less seasoned than companies whose securities are traded on stock exchanges in the U.S. A high proportion of the shares of many issuers may be held by a limited number of persons and financial institutions, which may limit the number of shares available for investment by a Fund. In some countries, there is no established secondary market for securities. Therefore, liquidity of securities may be generally low and transaction costs generally high. Similarly, volume and liquidity in the bond markets in Asia are less than in the U.S. and, at times, price volatility can be greater than in the U.S. A limited number of issuers in Asian securities markets may represent a disproportionately large percentage of market capitalization and trading value. The limited liquidity of securities markets in Asia may also affect a Fund’s ability to acquire or dispose of securities at the price and time it wishes to do so. In addition, the Asian securities markets are susceptible to being influenced by large investors trading significant blocks of securities. |
The legal systems in certain developing market Pacific Basin countries also may have an adverse impact on a Fund. For example, while the potential liability of a shareholder in a U.S. corporation with respect to acts of the corporation is generally limited to the amount of the shareholder’s investment, the notion of limited liability is less clear in certain Pacific Basin countries. Similarly, the rights of investors in Pacific Basin companies may be more limited than those of shareholders of U.S. corporations. It may be difficult or impossible to obtain and/or enforce a judgment in a Pacific Basin country.
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Many stock markets are undergoing a period of growth and change which may result in trading volatility and difficulties in the settlement and recording of transactions, and in interpreting and applying the relevant law and regulations. With respect to investments in the currencies of Asian countries, changes in the value of those currencies against the U.S. dollar will result in corresponding changes in the U.S. dollar value of a Fund’s assets denominated in those currencies. Certain developing economies in the Asia-Pacific region have experienced currency fluctuations, devaluations, and restrictions; unstable employment rates; rapid fluctuation in, among other things, inflation and reliance on exports; and less efficient markets. Currency fluctuations or devaluations in any one country can have a significant effect on the entire Asia Pacific region. Holding securities in currencies that are devalued (or in companies whose revenues are substantially in currencies that are devalued) will likely decrease the value of a Fund’s investments. Some developing Asian countries prohibit or impose substantial restrictions on investments in their capital markets, particularly their equity markets, by foreign entities such as a Fund. For example, certain countries may require governmental approval prior to investments by foreign persons or limit the amount of investment by foreign persons in a particular company or limit the investment by foreign persons to only a specific class of securities of a company which may have less advantageous terms (including price and shareholder rights) than securities of the company available for purchase by nationals of the relevant country. There can be no assurance that a Fund will be able to obtain required governmental approvals in a timely manner. In addition, changes to restrictions on foreign ownership of securities subsequent to a Fund’s purchase of such securities may have an adverse effect on the value of such shares. Certain countries may restrict investment opportunities in issuers or industries deemed important to national interests.
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Collateralized Mortgage Obligations (“CMOs”). A CMO is a debt obligation of a legal entity that is collateralized by mortgages or mortgage-related assets. These securities may be issued by U.S. Government agencies, instrumentalities or sponsored enterprises such as Fannie Mae or Freddie Mac or by trusts formed by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage bankers, commercial banks, insurance companies, investment banks and special purpose subsidiaries of the foregoing. CMOs divide the cash flow generated from the underlying mortgages or mortgage pass-through securities into different groups referred to as “tranches,” which are typically retired sequentially over time in order of priority. Interest and prepaid principal is paid, in most cases, on a monthly basis. CMOs may be collateralized by whole mortgage loans or private mortgage bonds, but they are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA; FHLMC and FNMA (each a government-sponsored enterprise and may be owned entirely by private shareholders); and their income streams.
The issuers of CMOs are structured as trusts or corporations established for the purpose of issuing such CMOs and often have no assets other than those underlying the securities and any credit support provided. Although payment of the principal of, and interest on, the underlying collateral securing privately issued CMOs may be guaranteed by the U.S. Government or government-sponsored enterprises, these CMOs represent obligations solely of the private issuer and are not insured or guaranteed by the U.S. Government, any government-sponsored enterprise, or any other person or entity. Prepayments could cause early retirement of CMOs. Payment of interest or principal on certain tranches of CMOs may be subject to contingencies, and certain tranches may bear some or all of the risk of default on the underlying mortgages. CMO tranches are generally retired in sequence as the underlying mortgage loans in the mortgage pool are repaid. If enough mortgages are repaid ahead of schedule, the CMO tranches with the earliest maturities generally will be retired prior to their stated maturity date. Thus, the early retirement of particular tranches of a CMO would have a similar effect as the prepayment of mortgages underlying other MBS. Conversely, slower than anticipated prepayments can extend the effective maturities of CMOs, subjecting them to a greater risk of decline in market value in response to rising interest rates than traditional debt securities, and therefore, potentially increasing the volatility of a Fund’s investments in CMOs. An increase or decrease in prepayment rates (resulting from a decrease or increase in mortgage interest rates) will affect the yield, average life, and price of CMOs. Under certain CMO structures, certain tranches have priority over others with respect to the receipt of repayments on the mortgages. Therefore, depending on the type of CMOs in which a Fund invests, the investment may be subject to a greater or lesser risk of prepayment than other types of mortgage-related securities. The prices of certain CMOs, depending on their structure and the rate of prepayments, can be volatile. Some CMOs may also not be as liquid as other securities. |
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Commercial Mortgage-Backed Securities (“CMBSs”). CMBS include securities that reflect an interest in, and are secured by, mortgage loans on commercial real estate property. CMBS are generally multi-class or pass-through securities backed by a mortgage loan or a pool of mortgage loans secured by commercial property, such as industrial and warehouse properties, office buildings, retail space and shopping malls, multifamily properties and cooperative apartments. The commercial mortgage loans that underlie CMBS are generally not amortizing or not fully amortizing. That is, at their maturity date, repayment of the remaining principal balance or “balloon” is due and is repaid through the attainment of an additional loan or sale of the property. Many of the risks of investing in CMBS reflect the risk of investing in the real estate securing the underlying mortgage loans. These risks reflect the effects of local and other economic conditions on real estate markets, the ability of tenants to make loan payments, and the ability of a property to attract and retain tenants. CMBS may be less liquid and exhibit greater price volatility than other types of mortgage- or asset-backed securities.
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Mortgage Dollar Rolls. A Fund may enter into mortgage dollar rolls in which a Fund sells mortgage-backed securities for delivery in the current month and simultaneously contracts with the same counterparty to repurchase fungible securities (e.g., same type, coupon, and maturity) on a specified future date at a pre-determined price. During the roll period, a Fund would lose the right to receive principal (including prepayments of principal) and interest paid on the securities sold. However, a Fund would benefit to the extent of any difference between the price received for the securities sold and the lower forward price for the future purchase (often referred to as the “drop”) or fee income plus the return earned on the cash proceeds of the securities sold until the settlement date of the forward purchase. If such benefits do not exceed the income, capital appreciation and gain due to mortgage prepayments that would have been realized on the securities sold as part of the mortgage dollar roll, the Fund would incur a loss.
A Fund only enters into covered dollar rolls, which means that a Fund will earmark cash or liquid securities to secure its obligation for the forward commitment to buy mortgage-backed securities plus any accrued interest, marked-to-market daily. Mortgage dollar roll transactions may be considered a borrowing under certain circumstances. Since a Fund may reinvest the cash proceeds from the sale, the transactions may involve leverage. Each mortgage dollar roll transaction is accounted for as a sale or purchase of a portfolio security and a subsequent purchase or sale of a substantially similar security in the forward market. Mortgage dollar roll transactions may result in higher transaction costs, increase interest rate risk or result in an increased portfolio turnover rate. Mortgage dollar rolls involve the risk that the market value of the securities subject to a Fund’s forward purchase commitment may decline below, or the market value of the securities subject to a Fund’s forward sale commitment may increase above, the exercise price of the forward commitment. Additionally, because dollar roll transactions do not require the purchase and sale of identical securities, the characteristics of the security delivered to a Fund may be less favorable than the security delivered to the dealer. The successful use of dollar rolls may depend upon a sub-advisor’s ability to correctly predict interest rates and prepayments, depending on the underlying security. There is no assurance that dollar rolls can be successfully employed. In addition, in the event the buyer of the securities under a mortgage dollar roll files for bankruptcy or becomes insolvent, a Fund’s use of the proceeds of the sale portion of the transaction may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Fund’s obligation to purchase the similar securities in the forward transaction. |
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Mortgage Pass-Through Securities. Mortgage pass-through securities are securities representing interests in “pools” of mortgages in which payments of both interest and principal on the securities are generally made monthly, in effect “passing through” monthly payments made by the individual borrowers on the residential mortgage loans that underlie the securities (net of fees paid to the issuer or guarantor of the securities). There are generally three types of mortgage pass-through securities: (1) those issued by the U.S. government or one of its agencies or instrumentalities, such as GNMA, FNMA, and FHLMC; (2) those issued by private issuers that represent an interest in or are collateralized by pass-through securities issued or guaranteed by the U.S. government or one of its agencies or instrumentalities; and (3) those issued by private issuers that represent an interest in or are collateralized by whole mortgage loans or pass-through securities without a government guarantee but that usually have some
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form of private credit enhancement.
The rate of pre-payments on underlying mortgages will affect the price and volatility of a mortgage-related security, and may have the effect of shortening or extending the effective duration of the security relative to what was anticipated at the time of purchase. To the extent that unanticipated rates of pre-payment on underlying mortgages increase the effective duration of a mortgage-related security, the volatility of such security can be expected to increase. Government and Government-Related Mortgage Pass-Through Securities. Payment of principal and interest on some mortgage pass-through securities (but not the market value of the securities themselves) may be guaranteed by the full faith and credit of the U.S. Government, as in the case of securities guaranteed by GNMA, or guaranteed by government-sponsored enterprises, as in the case of securities guaranteed by FNMA or FHLMC, which are supported only by the discretionary authority of the U.S. Government to purchase the agency’s obligations. There are a number of important differences among the agencies of the U.S. government and government-sponsored enterprises that issue mortgage-related securities and among the securities that they issue. Such agencies and securities include: |
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GNMA Mortgage Pass-Through Certificates (“Ginnie Maes”) — GNMA is a wholly owned U.S. Government corporation within the U.S. Department of Housing and Urban Development. Ginnie Maes represent an undivided interest in a pool of mortgages that are insured by the Federal Housing Administration or the Farmers Home Administration or guaranteed by the Veterans Administration. Ginnie Maes entitle the holder to receive all payments (including prepayments) of principal and interest owed by the individual mortgagors, net of fees paid to GNMA and to the issuer that assembles the mortgage pool and passes through the monthly mortgage payments to the certificate holders (typically, a mortgage banking firm), regardless of whether the individual mortgagor actually makes the payment. Because payments are made to certificate holders regardless of whether payments are actually received on the underlying mortgages, Ginnie Maes are of the “modified pass-through” mortgage certificate type. GNMA guarantees the timely payment of principal and interest on Ginnie Maes. GNMA’s guarantee is backed by the full faith and credit of the United States, and GNMA has unlimited authority to borrow funds from the U.S. Treasury to make payments under the guarantee. The market for Ginnie Maes is highly liquid because of the government guarantee, the size of the market, and the active participation in the secondary market of security dealers and a variety of investors.
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FHLMC Mortgage Participation Certificates (“Freddie Macs”) — FHLMC is a government-sponsored enterprise owned by stockholders; it is similar to Fannie Mae. FHLMC issues participation certificates that represent interests in mortgages from its national portfolio. Freddie Macs are not guaranteed by the United States and do not constitute a debt or obligation of the United States. Freddie Macs represent interests in groups of specified first lien residential conventional mortgages underwritten and owned by FHLMC. Freddie Macs entitle the holder to timely payment of interest, which is guaranteed by FHLMC. FHLMC guarantees either ultimate collection or timely payment of all principal payments on the underlying mortgage loans. In cases where FHLMC has not guaranteed timely payment of principal, FHLMC may remit the amount due because of its guarantee of ultimate payment of principal at any time after default on an underlying mortgage, but in no event later than one year after it becomes payable.
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FNMA Guaranteed Mortgage Pass-Through Certificates (“Fannie Maes”) — FNMA is a government-sponsored enterprise owned by stockholders; it is similar to Freddie Mac. It is subject to general regulation by the Federal Housing Finance Authority (“FHFA”). Fannie Maes entitle the holder to timely payment of interest, which is guaranteed by FNMA. FNMA guarantees either ultimate collection or timely payment of all principal payments on the underlying mortgage loans. In cases where FNMA has not guaranteed timely payment of principal, FNMA may remit the amount due because of its guarantee of ultimate payment of principal at any time after default on an underlying mortgage, but in no event later than one year after it becomes payable. Fannie Maes represent an undivided interest in a pool of conventional mortgage loans secured by first mortgages or deeds of trust, on one family or two to four family, residential properties. FNMA is obligated to distribute scheduled monthly installments of principal and interest on the mortgages in the pool, whether or not received, plus full principal of any foreclosed or otherwise liquidated mortgages.
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The U.S. Treasury has historically had the authority to purchase obligations of Fannie Mae and Freddie Mac. However, in 2008, due to capitalization concerns, Congress provided the Treasury with additional authority to lend Fannie Mae and Freddie Mac emergency funds and to purchase their stock. In September 2008, the Treasury and the FHFA announced that FNMA and FHLMC had been placed in conservatorship. Since that time, FNMA and FHLMC have received significant capital support through Treasury preferred stock purchases, as well as Treasury and Federal Reserve purchases of their mortgage - backed securities. The FHFA and the U.S. Treasury (through its agreement to purchase FNMA and FHLMC preferred stock) have imposed strict limits on the size of their mortgage portfolios. While the mortgage-backed securities purchase programs ended in 2010, the Treasury continued its support for the entities’ capital as necessary to prevent a negative net worth. When a credit rating agency downgraded long-term U.S. Government debt in August 2011, the agency also downgraded FNMA and FHLMC’s bond ratings, from AAA to AA+, based on their direct reliance on the U.S. Government (although that rating did not directly relate to their mortgage-backed securities). In August 2012, the Treasury amended its preferred stock purchase agreements to provide that FNMA’s and FHLMC’s portfolios will be wound down at an annual rate of 15 percent (up from the previously agreed annual rate of 10 percent), requiring them to reach the $250 billion target by December 31, 2018. FNMA and FHLMC were below the $250 billion cap for year-end 2018.
On December 21, 2017, a letter agreement between the Treasury and Fannie Mae and Freddie Mac changed the terms of the senior preferred stock certificates issued to the Treasury to permit the GSEs each to retain a $3 billion capital reserve, quarterly. Under the 2017 letter, each GSE paid a dividend to Treasury equal to the amount that its net worth exceeded $3 billion at the end of each quarter. On September 30, 2019, the Treasury and the FHFA, acting as conservator to Fannie Mae and Freddie Mac, announced amendments to the respective senior preferred stock certificates that will permit the GSEs to retain earnings beyond the $3 billion capital reserves previously allowed through the 2017 letter agreements. Fannie Mae and Freddie Mac are now permitted to maintain capital reserves of $25 billion and $20 billion, respectively. In late 2020, the FHFA issued a new capital rule requiring Fannie Mae and Freddie Mac to hold $283 billion in unadjusted total capital as of June 30, 2020, based on their assets at the time. In January 2021, the FHFA and the U.S. Treasury agreed to amend the preferred stock purchase agreements for the shares in Fannie Mae and Freddie Mac that the federal government continues to hold. The amendments permit Fannie Mae and Freddie Mac to retain all earnings until they have reached the requirements set by the 2020 capital rule. The problems faced by FNMA and FHLMC, resulting from their being placed into federal conservatorship and receiving significant U.S. Government |
support, sparked serious debate among federal policymakers regarding the continued role of the U.S. Government in providing liquidity for mortgage loans. In December 2011, Congress enacted the Temporary Payroll Tax Cut Continuation Act of 2011 which, among other provisions, requires that FNMA and FHLMC increase their single-family guaranty fees by at least 10 basis points and remit this increase to the Treasury with respect to all loans acquired by FNMA or FHLMC on or after April 1, 2012 and before January 1, 2022. There have been discussions among policymakers, however, as to whether FNMA and FHLMC should be nationalized, privatized, restructured or eliminated altogether. FNMA and FHLMC also are the subject of several continuing legal actions and investigations over certain accounting, disclosure or corporate governance matters, which (along with any resulting financial restatements) may continue to have an adverse effect on the guaranteeing entities.
Under the direction of the FHFA, FNMA and FHLMC jointly developed a common securitization platform for the issuance of a uniform mortgage-backed security (“UMBS”) (the “Single Security Initiative”) that aligns the characteristics of FNMA and FHLMC certificates. In June 2019, under the Single Security Initiative, FNMA and FHLMC started issuing UMBS in place of their prior offerings of TBA-eligible securities. The Single Security Initiative seeks to support the overall liquidity of the TBA market by aligning the characteristics of FNMA and FHLMC certificates. The effects that the Single Security Initiative may have on the market for TBA and other mortgage-backed securities are uncertain. |
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Mortgage Pass-Through Securities Issued by Private Organizations — The pools underlying privately-issued mortgage pass-through securities consist of mortgage loans secured by mortgages or deeds of trust creating a first lien on commercial, residential, residential multi-family and mixed residential/commercial properties. Pools created by non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government guarantees of payments in such pools. The timely payment of interest and principal on mortgage loans in these pools may be supported by various other forms of insurance or guarantees, including individual loan, pool and hazard insurance, subordination and letters of credit. Such insurance and guarantees may be issued by private insurers, banks and mortgage poolers. There is no assurance that private guarantors or insurers, if any, will meet their obligations. Timely payment of interest and principal of these pools also may be partially supported by various enhancements such as over-collateralization and senior/subordination structures and by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance. The insurance and guarantees are issued by government entities, private insurers or the mortgage poolers. These mortgage pass-through securities do not have the same credit standing as U.S. government guaranteed securities and generally offer a higher yield than similar securities issued by a government entity. Some mortgage pass-through securities issued by private organizations may not be readily marketable, may be more difficult to value accurately and may be more volatile than similar securities issued by a government entity.
Many transactions in the fixed-rate mortgage pass-through securities occur through the use of TBA transactions. TBA transactions are generally conducted in accordance with widely-accepted guidelines that establish commonly observed terms and conditions for execution, settlement and delivery. In a TBA transaction, the buyer and seller decided on general trade parameters, such as agency, settlement date, par amount and price. The actual pools delivered generally are determined two days prior to settlement date. Default by or bankruptcy of a counterparty to a TBA transaction would expose a Fund to possible loss because of adverse market action, expenses or delays in connection with the purchase or sale of the pools of mortgage pass-through securities specified in the TBA transaction. |
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Stripped Mortgage-Backed Securities (“SMBSs”). SMBS are derivative multi-class mortgage securities. SMBS are created when a U.S. government agency or a financial institution separates the interest and principal components of a MBS and sells them as individual securities. SMBS may be issued by agencies or instrumentalities of the U.S. Government, or by private originators of, or investors in, mortgage loans, including savings and loan associations, mortgage banks, commercial banks, investment banks and special purpose entities of the foregoing. SMBS are usually structured with two classes that receive different proportions of the interest and principal distributions on a pool of mortgage assets. A common type of SMBS will have one class receiving some of the interest and most of the principal from the mortgage assets, while the other class will receive most of the interest and the remainder of the principal. In the most extreme case, one class will receive all of the interest (the interest-only or “IO” class), while the other class will receive the entire principal (the principal-only or “PO” class). A Fund may invest in both the IO class and the PO class. The prices of stripped MBS may be particularly affected by changes in interest rates and the rate of principal payments (including prepayments) on the related underlying mortgage assets. As interest rates fall, prepayment rates tend to increase, which tends to reduce prices of IOs and increase prices of POs. Rising interest rates can have the opposite effect. The yield to maturity on an IO class is extremely sensitive to the rate of principal payments (including pre-payments) on the related underlying mortgage assets, and a rapid rate of principal payments in excess of that considered in pricing the securities may have a material adverse effect on a Fund’s yield to maturity from these securities. If the underlying mortgage assets experience greater than anticipated pre-payments of principal, a Fund may fail to recoup some or all of its initial investment in these securities even if the security is in one of the highest rating categories. In addition, there are certain types of IOs that represent the interest portion of a particular class as opposed to the interest portion of the entire pool. The sensitivity of this type of IO to interest rate fluctuations may be increased because of the characteristics of the principal portion to which they relate. The secondary market for stripped MBS may be more volatile and less liquid than that for other MBS, potentially limiting a Fund’s ability to buy or sell those securities at any particular time.
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Commercial Paper. Commercial paper, the interest on which is exempt from federal income tax, is issued by municipalities to help finance short-term capital or operating needs in anticipation of future tax or other revenue.
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General Obligation Bonds. General obligation bonds are secured by the pledge of the issuer’s full faith, credit, and usually, taxing power and are payable from and backed only by the issuer’s general unrestricted revenues and not from any particular fund or source. The characteristics and method of enforcement of general obligation bonds vary according to the law applicable to the particular issuer, and payment may be dependent upon appropriation by the issuer’s legislative body. The taxing power may be an unlimited ad valorem tax or a limited tax, usually on real estate and personal property. Most states do not tax real estate, but leave that power to local units of government.
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Revenue Obligations. Revenue obligations, such as industrial development bonds, are backed by the revenue cash flow of a project or facility. The interest on such obligations is payable only from the revenues derived from a particular project, facility, specific excise tax or other revenue source. Revenue obligations are not a debt or liability of the local or state government and do not obligate that government to levy or pledge any form of taxation or to make any appropriation for payment.
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BDCs. BDCs are a specialized form of closed-end fund that invest generally in small developing companies and financially troubled businesses. The Investment Company Act imposes certain restraints upon the operation of a BDC. For example, BDCs are required to invest at least 70% of their total assets primarily in securities of private companies or thinly traded U.S. public companies, cash, cash equivalents, U.S. government securities and high quality debt investments that mature in one year or less. As a result, BDCs generally invest in private companies and thinly traded securities of public companies, including debt instruments. Generally, little public information exists for private and thinly traded companies and there is a risk that investors may not be able to make fully informed investment decisions. Many debt investments in which a BDC may invest will not be rated by a credit rating agency and will be below investment grade quality. Risks faced by BDCs include competition for limited BDC investment opportunities; the liquidity of a BDC’s private investments; uncertainty as to the value of a BDC’s private investments; risks associated with access to capital and leverage; and reliance on the management of a BDC. A Fund’s investments in BDCs are similar and include portfolio company risk, leverage risk, market and valuation risk, price volatility risk and liquidity risk. Historically, shares of BDCs have frequently traded at a discount to their net asset value, which discounts have, on occasion, been substantial and lasted for sustained periods of time.
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ETFs. A Fund may purchase shares of ETFs. ETFs trade like a common stock and passive ETFs usually represent a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. Typically, a Fund would purchase passive ETF shares to obtain exposure to all or a portion of the stock or bond market. As a shareholder of an ETF, a Fund would be subject to its ratable share of the ETF’s expenses, including its advisory and administration expenses. An investment in an ETF generally presents the same primary risks as an investment in a conventional mutual fund (i.e., one that is not exchange traded) that has the same investment objective, strategies, and policies. The price of an ETF can fluctuate within a wide range, and a Fund could lose money investing in an ETF if the prices of the securities owned by the ETF decline in value. In addition, ETFs are subject to the following risks that do not apply to conventional mutual funds: (1) the market price of the ETF’s shares may trade at a discount or premium to their NAV per share; (2) an active trading market for an ETF’s shares may not develop or be maintained; or (3) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
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Money Market Funds. A Fund can invest free cash balances in registered open-end investment companies regulated as money market funds under the Investment Company Act, to provide liquidity or for defensive purposes. A Fund would invest in money market funds rather than purchasing individual short-term investments. Although a money market fund is designed to be a relatively low risk investment, it is not free of risk. Despite the short maturities and high credit quality of a money market fund’s investments, increases in interest rates and deteriorations in the credit quality of the instruments the money market fund has purchased may reduce the money market fund’s yield and can cause the price of a money market security to decrease. In addition, a money market fund is subject to the risk that the value of an investment may be eroded over time by inflation. If the liquidity of a money market fund’s portfolio deteriorates below certain levels, the money market fund may suspend redemptions (i.e., impose a redemption gate) and thereby prevent a Fund from selling its investment in the money market fund, or impose a fee of up to 2% on amounts redeemed from the money market fund.
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1 | Engage in dollar rolls or purchase or sell securities on a when-issued or forward commitment basis. The purchase or sale of when-issued securities enables an investor to hedge against anticipated changes in interest rates and prices by locking in an attractive price or yield. The price of when-issued securities is fixed at the time the commitment to purchase or sell is made, but delivery and payment for the when-issued securities takes place at a later date, normally one to two months after the date of purchase. During the period between purchase and settlement, no payment is made by the purchaser to the issuer and no interest accrues to the purchaser. Such transactions therefore involve a risk of loss if the value of the security to be purchased declines prior to the settlement date or if the value of the security to be sold increases prior to the settlement date. A sale of a when-issued security also involves the risk that the other party will be unable to settle the transaction. Dollar rolls are a type of forward commitment transaction. Purchases and sales of securities on a forward commitment basis involve a commitment to purchase or sell securities with payment and delivery to take place at some future date, normally one to two months after the date of the transaction. As with when-issued securities, these transactions involve certain risks, but they also enable an investor to hedge against anticipated changes in interest rates and prices. Forward commitment transactions are executed for existing obligations, whereas in a when-issued transaction, the obligations have not yet been issued. |
2 | Invest in other investment companies (including affiliated investment companies) to the extent permitted by the Investment Company Act, or exemptive relief granted by the SEC. |
3 | Loan securities to broker-dealers or other institutional investors. Securities loans will not be made if, as a result, the aggregate amount of all outstanding securities loans by a Fund exceeds 33¹/3% of its total assets (including the market value of collateral received). For purposes of complying with a Fund’s investment policies and restrictions, collateral received in connection with securities loans is deemed an asset of a Fund to the extent required by law. |
4 | Enter into repurchase agreements. A repurchase agreement is an agreement under which securities are acquired by a Fund from a securities dealer or bank subject to resale at an agreed upon price on a later date. The acquiring Fund bears a risk of loss in the event that the other party to a repurchase agreement defaults on its obligations and a Fund is delayed or prevented from exercising its rights to dispose of the collateral securities. However, the Manager or the sub-advisors, as applicable, attempt to minimize this risk by entering into repurchase agreements only with financial institutions that are deemed to be of good financial standing. |
5 | Purchase securities sold in private placement offerings made in reliance on the “private placement” exemption from registration afforded by Section 4(a)(2) of the Securities Act and resold to qualified institutional buyers under Rule 144A under the Securities Act. A Fund will not invest more than 15% of its net assets in Section 4(a)(2) securities and illiquid securities unless the Manager or the sub-advisor, as applicable, determines that any Section 4(a)(2) securities held by such Fund in excess of this level are liquid. |
1 | Each Fund, except American Beacon Garcia Hamilton Quality Bond Fund: Purchase or sell real estate or real estate limited partnership interests, provided, however, that a Fund may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein when consistent with the other policies and limitations described in the Prospectus. American Beacon Garcia Hamilton Quality Bond Fund: Purchase or sell real estate or real estate limited partnership interests, provided, however, |
that the Fund may dispose of real estate acquired as a result of the ownership of securities or other instruments and invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein when consistent with the other policies and limitations described in the Prospectus. |
2 | Invest in physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent a Fund from purchasing or selling foreign currency, options, futures contracts, options on futures contracts, forward contracts, swaps, caps, floors, collars, securities on a forward-commitment or delayed-delivery basis, and other similar financial instruments). |
3 | Engage in the business of underwriting securities issued by others, except to the extent that, in connection with the disposition of securities, a Fund may be deemed an underwriter under federal securities law. |
4 | Each Fund, except American Beacon Garcia Hamilton Quality Bond Fund: Lend any security or make any other loan except (i) as otherwise permitted under the Investment Company Act, (ii) pursuant to a rule, order or interpretation issued by the SEC or its staff, (iii) through the purchase of a portion of an issue of debt securities in accordance with a Fund’s investment objective, policies and limitations, or (iv) by engaging in repurchase agreements with respect to portfolio securities. American Beacon Garcia Hamilton Quality Bond Fund: Lend any security or make any other loan except (i) as otherwise permitted under the Investment Company Act, (ii) pursuant to a rule, order or interpretation issued by the SEC or its staff, (iii) through the purchase of a portion of an issue of debt securities in accordance with a Fund’s investment objective, policies and limitations, or (iv) by engaging in repurchase agreements. |
5 | Issue any senior security except as otherwise permitted (i) under the Investment Company Act or (ii) pursuant to a rule, order or interpretation issued by the SEC or its staff. |
6 | Borrow money, except as otherwise permitted under the Investment Company Act or pursuant to a rule, order or interpretation issued by the SEC or its staff, including (i) as a temporary measure, (ii) by entering into reverse repurchase agreements, and (iii) by lending portfolio securities as collateral. For purposes of this investment limitation, the purchase or sale of options, futures contracts, options on futures contracts, forward contracts, swaps, caps, floors, collars and other similar financial instruments shall not constitute borrowing. |
7 | Invest more than 5% of its total assets (taken at market value) in securities of any one issuer, other than obligations issued by the U.S. Government, its agencies and instrumentalities, or purchase more than 10% of the voting securities of any one issuer, with respect to 75% of a Fund’s total assets. |
8 | Each Fund, except American Beacon Garcia Hamilton Quality Bond Fund: Invest more than 25% of its total assets in the securities of companies primarily engaged in any one industry provided that: (i) this limitation does not apply to obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities; and (ii) municipalities and their agencies and authorities are not deemed to be industries. For purposes of this restriction, the Fund will regard only tax-exempt securities issued by municipalities and their agencies not to be an industry. |
American Beacon Garcia Hamilton Quality Bond Fund: Invest more than 25% of its assets in the securities of companies primarily engaged in any particular industry or group of industries provided that this limitation does not apply to (i) obligations issued by or guaranteed by the U.S. Government, its agencies or instrumentalities; and (ii) tax exempt securities issued by municipalities and their agencies and authorities.
|
1 | Invest more than 15% of its net assets in illiquid securities, including time deposits and repurchase agreements that mature in more than seven days; or |
2 | Each Fund, except American Beacon Garcia Hamilton Quality Bond Fund: Purchase securities on margin or effect short sales, except that a Fund may obtain such short term credits as may be necessary for the clearance of purchases or sales of securities. |
American Beacon Garcia Hamilton Quality Bond Fund: Purchase securities on margin, except that (1) the Fund may obtain such short term credits as necessary for the clearance of transactions, and (2) the Fund may make margin payments in connection with foreign currency, futures contracts, options, forward contracts, swaps, caps, floors, collars, securities purchased or sold on a forward-commitment or delayed-delivery basis or other financial instruments. |
1 | a complete list of holdings for each Fund on an annual and semi-annual basis in the reports to shareholders within sixty days of the end of each fiscal semi-annual period and in publicly available filings of Form N-CSR with the SEC within ten days thereafter (available on the SEC’s website at www.sec.gov); |
2 | a complete list of holdings for each Fund as of the end of each fiscal quarter in publicly available filings of Form N-PORT with the SEC within sixty days of the end of the fiscal quarter (available on the SEC’s website at www.sec.gov); |
3 | a complete list of holdings for each Fund as of the end of each month on the Funds’ website (www.americanbeaconfunds.com) approximately twenty days after the end of the month; and |
4 | ten largest holdings for each Fund as of the end of each calendar quarter on the Funds’ website (www.americanbeaconfunds.com) and in sales materials approximately fifteen days after the end of the calendar quarter. |
Service Provider
|
Service
|
Holdings Access
|
Manager
|
Investment management and administrator
|
Complete list on intraday basis with no lag
|
Sub-Advisor
|
Investment management
|
Holdings under sub-advisor’s management on intraday basis with no lag
|
State Street Bank and Trust Co. (“State Street”) and its designated foreign sub-custodians
|
Securities lending agent for Funds that participate in securities lending, Funds’ custodian and foreign custody manager, and foreign sub-custodians
|
Complete list on intraday basis with no lag
|
PricewaterhouseCoopers LLP
|
Funds’ independent registered public accounting firm
|
Complete list on annual basis with no lag
|
Abel Noser Corp.
|
Trade execution analysis for a sub-advisor
|
Complete list on daily basis with no lag
|
ACA Performance Services
|
GIPS verification firm for a sub-advisor
|
Complete list on a monthly basis with lag
|
Advent/Tamale
|
Research management system for a sub-advisor
|
Complete list on a daily basis with lag
|
Ashland Partners
|
Performance verification for a sub-advisor
|
Complete list on periodic basis with lag
|
BBH Infomediary
|
SWIFT messaging service provider for a sub-advisor
|
Complete list on daily basis with no lag
|
BizAnalytica, LLC
|
Consulting Service
|
Complete list on daily basis with no lag
|
Bloomberg, L.P.
|
Performance and portfolio analytics reporting
|
Complete list on daily basis with no lag
|
BondEdge
|
Financial analytic database
|
Partial list on a daily basis with lag
|
Broadridge/ProxyEdge
|
Proxy voting research provider for a sub-advisor
|
Complete list on a daily basis with lag
|
Brown Brothers Harriman
|
Corporate Action Management for a sub-advisor
|
Complete List on a daily basis with no lag
|
Charles River Systems
|
Trade order management for sub-advisors
|
Complete list on daily basis with no lag
|
Chicago Clearing
|
Class Actions
|
Complete list on a quarterly basis with no lag
|
Commcise
|
Transaction cost analysis, trade execution analysis for a sub-advisor
|
Partial list on daily basis with no lag
|
DTCC
|
Trade settlement services for a sub-advisor
|
Partial list on daily basis with no lag
|
Eagle Investment Systems Corp.
|
Portfolio accounting system for a sub-advisor
|
Complete list on a daily basis with no lag
|
Electra
|
Reconciliation System for sub-advisors
|
Complete list on daily basis with no lag
|
Eze Castle
|
Trade order management for sub-advisors
|
Complete list on a daily basis with no lag
|
FactSet Research Systems, Inc.
|
Performance and portfolio analytics reporting for the Manager and sub-advisors
|
Complete list on daily basis with no lag
|
FIS
|
Portfolio Accounting for a sub-advisor
|
Complete list on daily basis with no lag
|
Fiserv
|
Portfolio Accounting
|
Complete list on daily basis with no lag
|
FXTransparency
|
Trade Execution Assessment
|
Complete list on weekly basis with no lag
|
Glass Lewis & Co
|
Proxy voting services for sub-advisor
|
Partial list on a periodic basis with lag
|
IEX Data Analytics LLC (IEX Astral)
|
Analytical and reporting tool for a sub-advisor
|
Partial list on daily basis with no lag
|
Institutional Shareholder Services (“ISS”)
|
Proxy voting research provider to sub-advisors, and share recall services provider to the Manager
|
Complete list on daily basis with no lag
|
Investment Technology Group, Inc.
|
Fair valuation of portfolio securities for Funds with significant foreign securities holdings; transaction cost analysis for sub-advisor
|
Complete list on daily basis with no lag and more frequently when the Manager seeks advice with respect to certain holdings
|
KPMG International
|
Service provider to State Street
|
Complete list on annual basis with lag
|
LexisNexis
|
OFAC compliance service for a sub-advisor
|
Complete list on a weekly basis with lag
|
MSCI Barra, Inc.
|
Analytics platform to support portfolio risk management for a sub-advisor
|
Complete list on daily basis with no lag
|
Northern Trust
|
Back Office Operation for a sub-advisor
|
Complete list on a daily basis with no lag
|
Omgeo LLC
|
Automated trade matching service for sub-advisors
|
Partial list on a daily basis with no lag
|
Parametric Portfolio Associates LLC
|
Provides certain administrative services related to the equitization of cash balances for certain Funds
|
Partial list on a daily basis with no lag
|
Portia
|
Portfolio Accounting for a sub-advisor
|
Complete list on a daily basis with no lag
|
Russell
|
Ratings Agency
|
Complete list on a daily basis with lag
|
Service Provider
|
Service
|
Holdings Access
|
SS&C Advent
|
Portfolio Accounting for a sub-advisor
|
Complete list on a daily basis with lag
|
SS&C Eze
|
Trading and Order Management for a sub-advisor
|
Complete list on a daily basis with no lag
|
SS&C Vision FI
|
Client and investor reporting system for a sub-advisor
|
Complete list on a daily basis with no lag
|
Street Account
|
Investment research for a sub-advisor
|
Partial list on a periodic basis with lag
|
Trading Technologies International, Inc.
|
Trade execution analysis for a sub-advisor
|
Complete list on daily basis with no lag
|
Varden Technologies, Inc.
|
Client and investor reporting system
|
Complete list on a daily basis with no lag
|
Virtu ITG LLC
|
Transaction cost analysis Trade execution analysis for a sub-advisor
|
Partial list on a daily basis with lag
|
1 | Recipients of portfolio holdings information must agree in writing to keep the information confidential until it has been posted to the Funds’ website and not to trade based on the information; |
2 | Holdings may only be disclosed as of a month-end date; |
3 | No compensation may be paid to the Funds, the Manager or any other party in connection with the disclosure of information about portfolio securities; and |
4 | A member of the Manager’s Compliance staff must approve requests for nonpublic holdings information. |
Name and Year of Birth*
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
|
INTERESTED TRUSTEE
|
|||
Eugene J. Duffy
(1954)** |
Trustee since 2008
|
Trustee since 2017
|
Managing Director, Global Investment Management Distribution, Mesirow Financial Administrative Corporation (2016-Present); Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-2016); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
|
NON-INTERESTED TRUSTEES
|
|||
Gilbert G. Alvarado
(1969) |
Trustee since 2015
|
Trustee since 2017
|
Chief Financial Officer, The Conrad Prebys Foundation (2022-Present); President, SJVIIF, LLC, Impact Investment Fund (2018-2022); Director, Kura MD, Inc. (local telehealth organization) (2015-2017); Senior Vice President/CFO, Sierra Health Foundation (health conversion private foundation) (2006-2022); Senior Vice President/CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-2022); Director, Sacramento Regional Technology Alliance (2011-2016); Director, Valley Healthcare Staffing (2017–2018); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
|
Joseph B. Armes
(1962) |
Trustee since 2015
|
Trustee since 2017
|
Director, Switchback Energy Acquisition (2019-2021); Chairman & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2015-Present); Chairman of the Board of Capital Southwest Corporation, predecessor to CSW Industrials, Inc. (investment company) (2014-2017); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-2018); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
|
Gerard J. Arpey
(1958) |
Trustee since 2012
|
Trustee since 2017
|
Partner, Emerald Creek Group (private equity firm) (2011-Present); Director, S.C. Johnson & Son, Inc. (privately held company) (2008-Present); Director, The Home Depot, Inc. (NYSE: HD) (2015-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
|
Name and Year of Birth*
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
|
Brenda A. Cline
(1960) |
Chair since 2019
Vice Chair 2018
Trustee since 2004
|
Chair since 2019
Vice Chair 2018
Trustee since 2017
|
Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Tyler Technologies, Inc. (public sector software solutions company) (2014-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Trustee, Cushing Closed-End (2) and Open-End Funds (3) (2017-2021); Chair, American Beacon Sound Point Enhanced Income Fund (2019-2021), Vice Chair (2018), Trustee (2018-2021); Chair, American Beacon Apollo Total Return Fund (2019-2021), Vice Chair (2018), Trustee (2018-2021).
|
Claudia A. Holz
(1957) |
Trustee since 2018
|
Trustee since 2018
|
Independent Director, Blue Owl Capital Inc. (2021-Present); Partner, KPMG LLP (1990-2017); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
|
Douglas A. Lindgren
(1961) |
Trustee since 2018
|
Trustee since 2018
|
Director, JLL Income Property Trust (2022-Present); CEO North America, Carne Global Financial Services (2016-2017); Consultant, Carne Financial Services (2017-2019); Managing Director, IPS Investment Management and Global Head, Content Management, UBS Wealth Management (2010-2016); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
|
Barbara J. McKenna
(1963) |
Trustee since 2012
|
Trustee since 2017
|
President/Managing Principal, Longfellow Investment Management Company (2005-Present, President since 2009); Member, External Diversity Council of the Federal Reserve Bank of Boston (2021-Present); Member, Federal Reserve Bank of Boston CEO Roundtable (2021-Present); Board Advisor, United States Tennis Association (2021-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
|
* | The Board has adopted a retirement policy that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 75. |
** | Mr. Duffy is deemed to be an “interested person” of the Trust, as defined by the Investment Company Act of 1940, as amended, by virtue of his position with Mesirow |
Financial, Inc., a broker-dealer. |
INTERESTED TRUSTEE
|
|
American Beacon Fund
|
Duffy
|
American Beacon Balanced Fund
|
None
|
American Beacon Garcia Hamilton Quality Bond Fund
|
None
|
American Beacon International Equity Fund
|
None
|
American Beacon Large Cap Value Fund
|
None
|
American Beacon Small Cap Value Fund
|
None
|
Aggregate Dollar Range of Equity Securities in all Trusts (27 Funds as of December 31, 2023)
|
Over $100,000
|
NON-INTERESTED TRUSTEES
|
|||||||
American Beacon Fund
|
Alvarado
|
Armes
|
Arpey
|
Cline
|
Holz
|
Lindgren
|
McKenna
|
American Beacon Balanced Fund
|
None
|
None
|
Over $100,000
|
Over $100,000
|
None
|
None
|
None
|
American Beacon Garcia Hamilton Quality Bond Fund
|
None
|
None
|
None
|
None
|
$10,001- $50,000
|
None
|
None
|
American Beacon International Equity Fund
|
$10,001- $50,000
|
None
|
Over $100,000
|
$50,001 - $100,000
|
None
|
None
|
None
|
American Beacon Large Cap Value Fund
|
None
|
None
|
None
|
None
|
$10,001- $50,000
|
None
|
None
|
American Beacon Small Cap Value Fund
|
None
|
None
|
None
|
None
|
$10,001- $50,000
|
None
|
None
|
Aggregate Dollar Range of Equity Securities in all Trusts (27 Funds as of December 31, 2023)
|
Over $100,000
|
Over $100,000
|
Over $100,000
|
Over $100,000
|
Over $100,000
|
Over $100,000
|
Over $100,000
|
The following table shows total compensation (excluding reimbursements) paid by the Trusts to each Trustee for the fiscal year ended October 31, 2023.
|
||
Name of Trustee
|
Aggregate Compensation from the Trust
|
Total Compensation from the Trusts
|
INTERESTED TRUSTEE
|
||
Eugene J. Duffy
|
$189,994
|
$201,000
|
NON-INTERESTED TRUSTEES
|
||
Gilbert G. Alvarado
|
$209,135
|
$221,250
|
Joseph B. Armes
|
$202,282
|
$214,000
|
Gerard J. Arpey
|
$201,337
|
$213,000
|
Brenda A. Cline1
|
$250,490
|
$265,000
|
Claudia A. Holz
|
$218,115
|
$230,750
|
Douglas A. Lindgren
|
$218,115
|
$230,750
|
Barbara J. McKenna
|
$209,135
|
$221,250
|
1 | Upon her retirement from the Board, Ms. Cline is eligible for flight benefits afforded to Eligible Trustees who served on the Boards prior to September 12, 2008 as described below. |
Name and Year of Birth
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
|
OFFICERS
|
|||
Jeffrey K. Ringdahl
(1975) |
President
since April 2022 Vice President
2010-2022 |
President
since April 2022 Vice President
2017-2022 |
Director (2015-Present), President (2018-Present), Chief Executive Officer (2022-Present), Chief Operating Officer (2010-2022), American Beacon Advisors, Inc.; Director (2015-Present), President (2018-Present), Resolute Investment Holdings, LLC; Director (2015-Present), President (2018-Present), Resolute Topco, Inc.; Director (2015-Present), President (2018-Present), Resolute Acquisition, Inc.; Director (2015-Present), President (2018-Present), Chief Executive Officer (2022-Present), Chief Operating Officer (2018-2022), Resolute Investment Managers, Inc.; Director (2017-Present), President and Chief Executive Officer (2022-Present), Executive Vice President (2017-2022), Resolute Investment Distributors, Inc.; Director (2017-Present), President (2018-Present), Chief Executive Officer (2022-Present), Chief Operating Officer (2018-2022), Resolute Investment Services, Inc.; President (2022-Present), Senior Vice President (2017-2022), Manager (2015-Present), American Private Equity Management, L.L.C.; Trustee, American Beacon NextShares Trust (2015-2020); Director and Executive Vice President & Chief Operating Officer, Alpha Quant Advisors, LLC (2016-2020); Director, Shapiro Capital Management, LLC (2017-Present); Director and Executive Vice President, Continuous Capital, LLC (2018-2022); Director, RSW Investments Holdings, LLC (2019-Present); Manager, SSI Investment Management, LLC (2019-Present); Director, National Investment Services of America, LLC (2019-Present); Director (2014-Present), President (2022-Present) and Vice President (2014-2022), American Beacon Cayman Managed Futures Strategy Fund, Ltd.; Director (2018-Present) and, President (2022-Present), Vice President (2018-2022), American Beacon Cayman TargetRisk Company, Ltd.; Director and President, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Director and President, American Beacon Cayman Trend Company, Ltd. (2023-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Rosemary K. Behan
(1959) |
Vice President, Secretary and Chief Legal Officer
since 2006 |
Vice President, Secretary and Chief Legal Officer
since 2017 |
Senior Vice President (2021-Present), Vice President (2006-2021), Secretary and General Counsel (2006-Present), American Beacon Advisors, Inc.; Secretary, Resolute Investment Holdings, LLC (2015-Present); Secretary, Resolute Topco, Inc. (2015-Present); Secretary, Resolute Acquisition, Inc. (2015-Present); Senior Vice President (2021-Present), Vice President (2015-2021), Secretary and General Counsel (2015-Present), Resolute Investment Managers, Inc.; Secretary, Resolute Investment Distributors, Inc. (2017-Present); Senior Vice President (2021-Present), Vice President (2017-2021), Secretary and General Counsel (2017-Present), Resolute Investment Services, Inc.; Secretary, American Private Equity Management, LLC (2008-Present); Secretary and General Counsel, Alpha Quant Advisors, LLC (2016-2020); Vice President and Secretary, Continuous Capital, LLC (2018-2022); Secretary, Green Harvest Asset Management, LLC (2019-2021); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Secretary, American Beacon Cayman TargetRisk Company, Ltd (2018-Present); Secretary, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Secretary, American Beacon Cayman Trend Company, Ltd. (2023-Present); Vice President, Secretary, and Chief Legal Officer, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, Secretary, and Chief Legal Officer, American Beacon Apollo Total Return Fund (2018-2021).
|
Paul B. Cavazos
(1969) |
Vice President
since 2016 |
Vice President
since 2017 |
Chief Investment Officer and Senior Vice President, American Beacon Advisors, Inc. (2016-Present); Vice President, American Private Equity Management, L.L.C. (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Name and Year of Birth
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
|
Erica B. Duncan
(1970) |
Vice President
since 2011 |
Vice President
since 2017 |
Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, Resolute Investment Managers, Inc. (2018-Present); Vice President, Resolute Investment Services, Inc. (2018-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Rebecca L. Harris
(1966) |
Vice President
Since 2022 |
Vice President
Since 2022 |
Senior Vice President (2021-Present), Vice President (2011-2021), American Beacon Advisors, Inc.; Senior Vice President (2021-Present), Vice President (2017-2021), Resolute Investment Managers, Inc.; Senior Vice President (2021-Present), Vice President (2017-2021), Resolute Investment Services, Inc.; Vice President, Alpha Quant Advisors, LLC (2016-2020); Vice President (2018-2022), Director (2022) Continuous Capital, LLC; Director (2022-Present) National Investment Services of America, LLC; Director (2022-Present) RSW Investments Holdings LLC; Director (2022-Present) Shapiro Capital Management LLC; Director (2022-Present) SSI Investment Management LLC; Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-2021); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-2021); Assistant Secretary, American Beacon Funds (2010 – 2022); Assistant Secretary, American Beacon Select Funds (2010 – 2022); Assistant Secretary, American Beacon Institutional Funds Trust (2017 – 2022).
|
Terri L. McKinney
(1963) |
Vice President
since 2010 |
Vice President
since 2017 |
Senior Vice President, (2021-Present) Vice President, (2009-2021), American Beacon Advisors, Inc.; Senior Vice President (2021-Present), Vice President (2017-2021), Resolute Investment Managers, Inc.; Senior Vice President (2021-Present), Vice President (2018-2021), Resolute Investment Services, Inc.; Vice President, Alpha Quant Advisors, LLC (2016-2020); Vice President, Continuous Capital, LLC (2018-2022); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Samuel J. Silver
(1963) |
Vice President
since 2011 |
Vice President
since 2017 |
Vice President (2011-Present), Chief Fixed Income Officer (2016-Present), American Beacon Advisors, Inc.; Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Melinda G. Heika
(1961) |
Vice President
since 2021 |
Vice President
since 2021 |
Senior Vice President (2021-Present), Treasurer and CFO (2010-Present), American Beacon Advisors, Inc.; Treasurer, Resolute Topco, Inc. (2015-Present); Treasurer, Resolute Investment Holdings, LLC (2015-Present); Treasurer, Resolute Acquisition, Inc. (2015-Present); Senior Vice President (2021-Present), Treasurer and CFO (2017-Present), Resolute Investment Managers, Inc.; Senior Vice President (2021-Present), Treasurer and CFO (2017-Present), Resolute Investment Services, Inc.; Treasurer, American Private Equity Management, L.L.C. (2012-Present); Treasurer and CFO, Alpha Quant Advisors, LLC (2016-2020); Treasurer, Continuous Capital, LLC (2018-2022); Director (2014-Present), Vice President (2022-Present) and Treasurer (2014-2022), American Beacon Cayman Managed Futures Strategy Fund, Ltd.; Director and Vice President (2022-Present), and Treasurer (2018-2022), American Beacon Cayman TargetRisk Company, Ltd.; Director and Vice President, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Director and Vice President, American Beacon Cayman Trend Company, Ltd. (2023-Present); Principal Accounting Officer and Treasurer, American Beacon Funds (2010-2021); Principal Accounting Officer and Treasurer, American Beacon Select Funds (2010-2021); Principal Accounting Officer and Treasurer, American Beacon Institutional Funds Trust (2017-2021); Principal Accounting Officer and Treasurer (2018-2021), Vice President (2021), American Beacon Sound Point Enhanced Income Fund; Principal Accounting Officer and Treasurer (2018-2021), Vice President (2021), American Beacon Apollo Total Return Fund (2018-2021).
|
Gregory Stumm
(1981) |
Vice President
since 2022 |
Vice President
since 2022 |
Senior Vice President, American Beacon Advisors, Inc. (2022-Present); Senior Vice President, Resolute Investment Managers, Inc. (2022-Present); Senior Vice President, Resolute Investment Services, Inc. (2022-Present); Director and Senior Vice President, Resolute Investment Distributors, Inc. (2022-Present).
|
Name and Year of Birth
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
|
Sonia L. Bates
(1956) |
Principal Accounting Officer and Treasurer
since 2021 |
Principal Accounting Officer and Treasurer
since 2021 |
Assistant Treasurer, American Beacon Advisors, Inc. (2023-Present); Vice President, Fund and Tax Reporting (2023-Present), Director, Fund and Tax Reporting (2011-2023), Resolute Investment Services, Inc; Assistant Treasurer, American Private Equity Management, L.L.C. (2012-Present); Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2022-Present); Treasurer (2022-Present) and Assistant Treasurer (2018-2022), American Beacon Cayman TargetRisk Company, Ltd.; Treasurer, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Treasurer, American Beacon Cayman Trend Company, Ltd. (2023-Present); Assistant Treasurer (2018-2021), Principal Accounting Officer and Treasurer (2021), American Beacon Sound Point Enhanced Income Fund; Assistant Treasurer (2019-2021), Principal Accounting Officer and Treasurer (2021), American Beacon Apollo Total Return Fund; Assistant Treasurer, American Beacon Funds (2011-2021); Assistant Treasurer, American Beacon Select Funds (2011-2021); Assistant Treasurer, American Beacon Institutional Funds Trust (2017-2021).
|
Christina E. Sears
(1971) |
Chief Compliance Officer
since 2004 Assistant Secretary since 1999 |
Chief Compliance Officer and Assistant Secretary
since 2017 |
Chief Compliance Officer (2004-Present), Vice President (2019-Present), American Beacon Advisors, Inc.; Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Distributors, Inc. (2017-Present); Vice President, Resolute Investment Services, Inc. (2019-Present); Chief Compliance Officer, American Private Equity Management, LLC (2012-Present); Chief Compliance Officer, Green Harvest Asset Management, LLC (2019-2021); Chief Compliance Officer, RSW Investments Holdings, LLC (2019-Present); Chief Compliance Officer (2016-2019), Vice President (2016-2020), Alpha Quant Advisors, LLC; Chief Compliance Officer (2018-2019), Vice President (2018-2022), Continuous Capital, LLC.; Chief Compliance Officer and Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-2021); Chief Compliance Officer and Assistant Secretary, American Beacon Apollo Total Return Fund (2018-2021).
|
Shelley L. Dyson
(1969) |
Assistant Treasurer
since 2021 |
Assistant Treasurer
since 2021 |
Director Fund Tax (2024-Present), Fund Tax Manager (2020-2024), Manager, Tax (2014-2020), Resolute Investment Services, Inc.; Assistant Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2022-Present); Assistant Treasurer, American Beacon Cayman TargetRisk Company, Ltd (2022-Present); Assistant Treasurer, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Assistant Treasurer, American Beacon Cayman Trend Company, Ltd. (2023-Present); Assistant Treasurer, American Beacon Sound Point Enhanced Income Fund (2021); Assistant Treasurer, American Beacon Apollo Total Return Fund (2021).
|
Shelley D. Abrahams
(1974) |
Assistant Secretary
since 2008 |
Assistant Secretary
since 2017 |
Corporate Governance Manager (2023-Present), Senior Corporate Governance & Regulatory Specialist (2020-2023), Corporate Governance & Regulatory Specialist (2017-2020), Resolute Investment Services, Inc.; Assistant Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2022-Present); Assistant Secretary, American Beacon Cayman TargetRisk Company, Ltd (2022-Present); Assistant Secretary, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Assistant Secretary, American Beacon Cayman Trend Company, Ltd. (2023-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-2021); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-2021).
|
Teresa A. Oxford
(1958) |
Assistant Secretary
since 2015 |
Assistant Secretary
since 2017 |
Deputy General Counsel (2024-Present), Assistant Secretary (2015-Present), Associate General Counsel (2015-2024), American Beacon Advisors, Inc.; Assistant Secretary (2018-2021), Resolute Investment Distributors, Inc.; Deputy General Counsel (2024-Present), Assistant Secretary (2017-Present), Associate General Counsel (2017-2024), Resolute Investment Managers, Inc.; Deputy General Counsel (2024-Present), Assistant Secretary (2018-Present), Associate General Counsel (2018-2024), Resolute Investment Services, Inc.; Assistant Secretary (2016-2020), Alpha Quant Advisors, LLC; Assistant Secretary (2020-2022), Continuous Capital, LLC.; Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-2021); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-2021).
|
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
AMERICAN ENTERPRISE INV SVCS*
|
9.50%
|
6.39%
|
|||||
707 2ND AVE S
|
|||||||
MINNEAPOLIS MN 55402-2405
|
|||||||
CHARLES SCHWAB & CO FOR THE*
|
24.42%
|
||||||
EXCLUSIVE BENEFIT OF OUR CUSTOMERS
|
|||||||
ATTN MUTUAL FUNDS OPS
|
|||||||
9601 E PANORAMA CIR
|
|||||||
ENGLEWOOD CO 80112-3441
|
|||||||
CHARLES SCHWAB & CO INC*
|
9.35%
|
7.11%
|
|||||
SPECIAL CUST A/C
|
|||||||
EXCLUSIVE BENEFIT OF CUSTOMERS
|
|||||||
ATTN MUTUAL FUNDS
|
|||||||
211 MAIN ST
|
|||||||
SAN FRANCISCO CA 94105-1901
|
|||||||
LPL FINANCIAL*
|
27.71%
|
44.28%
|
25.54%
|
4.93%
|
32.12%
|
||
4707 EXECUTIVE DR
|
|||||||
SAN DIEGO CA 92121-3091
|
|||||||
MERRILL LYNCH PIERCE FENNER &*
|
5.54%
|
||||||
SMITH INC (HOUSE ACCOUNT)
|
|||||||
THE AMERICAN BEACON FUNDS
|
|||||||
4800 DEER LAKE DR EAST
|
|||||||
JACKSONVILLE FL 32246-6484
|
|||||||
MORGAN STANLEY SMITH BARNEY LLC*
|
17.46%
|
7.68%
|
|||||
FOR THE EXCLUSIVE BENE OF ITS CUST
|
|||||||
1 NEW YORK PLZ FL 12
|
|||||||
NEW YORK NY 10004-1965
|
|||||||
NATIONAL FINANCIAL SERVICES LLC*
|
5.90%
|
9.81%
|
38.71%
|
18.26%
|
26.73%
|
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
FOR EXCLUSIVE BENEFIT OF OUR
|
|||||||
CUSTOMERS
|
|||||||
ATTN MUTUAL FUNDS DEPT 4TH FLOOR
|
|||||||
499 WASHINGTON BLVD
|
|||||||
JERSEY CITY NJ 07310-1995
|
|||||||
PERSHING LLC*
|
5.70%
|
4.99%
|
|||||
1 PERSHING PLZ
|
|||||||
JERSEY CITY NJ 07399-0001
|
|||||||
RAYMOND JAMES*
|
6.41%
|
8.39%
|
|||||
OMNIBUS FOR MUTUAL FUNDS
|
|||||||
ATTN COURTNEY WALLER
|
|||||||
880 CARILLON PKWY
|
|||||||
ST PETERSBURG FL 33716-1100
|
|||||||
UBS WM USA*
|
14.06%
|
4.99%
|
|||||
OMNI ACCOUNT M/F
|
|||||||
SPEC CDY A/C EBOC UBSFSI
|
|||||||
1000 HARBOR BLVD
|
|||||||
WEEHAWKEN NJ 07086-6761
|
|||||||
WELLS FARGO CLEARING SERVICES LLC*
|
12.66%
|
20.19%
|
|||||
SPECIAL CUSTODY ACCT FOR THE
|
|||||||
EXCLUSIVE BENEFIT OF CUSTOMERS
|
|||||||
2801 MARKET ST
|
|||||||
SAINT LOUIS MO 63103-2523
|
|||||||
EMPOWER TRUST FBO*
|
61.72%
|
||||||
EMPOWER BENEFIT PLANS
|
|||||||
8515 E ORCHARD RD 2T2
|
|||||||
GREENWOOD VILLAGE CO 80111-5002
|
|||||||
G & L FAMILY PARTNERS LTD
|
14.10%
|
||||||
PO BOX 219643
|
|||||||
KANSAS CITY, MO 64121-9643
|
|||||||
MATRIX TRUST COMPANY CUST. FBO
|
8.61%
|
||||||
TRUTAG TECHNOLOGIES 401(K) PLAN
|
|||||||
717 17TH STREET
|
|||||||
SUITE 1300
|
|||||||
DENVER CO 80202-3304
|
|||||||
NATIONWIDE TRUST COMPANY FSB
|
8.72%
|
9.52%
|
|||||
C/O IPO PORTFOLIO ACCOUNTING
|
|||||||
PO BOX 182029
|
|||||||
COLUMBUS OH 43218-2029
|
|||||||
VANTAGEPOINT TRADITIONAL IRA
|
6.13%
|
||||||
C/O MISSIONSQUARE RETIREMENT
|
|||||||
777 NORTH CAPITOL STREET, NE
|
|||||||
WASHINGTON DC 20002-4239
|
* | Denotes record owner of Fund shares only |
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
Y CLASS
|
R6 CLASS
|
R5 CLASS
|
Investor CLASS
|
CHARLES SCHWAB & CO INC*
|
43.54%
|
21.16%
|
22.18%
|
||
SPECIAL CUST A/C
|
|||||
EXCLUSIVE BENEFIT OF CUSTOMERS
|
|||||
ATTN MUTUAL FUNDS
|
|||||
211 MAIN ST
|
|||||
SAN FRANCISCO CA 94105-1901
|
|||||
LPL FINANCIAL*
|
11.46%
|
||||
4707 EXECUTIVE DR
|
|||||
SAN DIEGO CA 92121-3091
|
|||||
NATIONAL FINANCIAL SERVICES LLC*
|
43.28%
|
70.37%
|
|||
FOR EXCLUSIVE BENEFIT OF
|
|||||
OUR CUSTOMERS
|
|||||
ATTN MUTUAL FUNDS DEPT 4TH FLOOR
|
|||||
499 WASHINGTON BLVD
|
|||||
JERSEY CITY NJ 07310-1995
|
|||||
CAPINCO
|
37.61%
|
||||
C/O US BANK NA
|
|||||
PO BOX 1787
|
|||||
MILWAUKEE WI 53201-1787
|
|||||
KEYBANK NA
|
5.71%
|
||||
CLE FDN PARADIGM INV CUST PRI USD
|
|||||
PO BOX 94871
|
|||||
CLEVELAND OH 44101-4871
|
|||||
KEYBANK NA
|
13.71%
|
||||
PF-SCATTERGOOD BEHAV HEALTH CUST PR
|
|||||
PO BOX 94871
|
|||||
CLEVELAND OH 44101-4871
|
|||||
LINCOLN RETIREMENT SERVICES COMPANY
|
17.87%
|
||||
FBO:GARCIA HAMILTON & ASSOC LP 401K
|
|||||
PO BOX 7876
|
|||||
FORT WAYNE IN 46801-7876
|
|||||
UBATCO & CO
|
83.38%
|
99.56%
|
|||
FBO COLLEGE SAVINGS GROUP
|
|||||
PO BOX 82535
|
|||||
LINCOLN NE 68501-2535
|
* | Denotes record owner of Fund shares only |
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
R6 CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
AMERICAN ENTERPRISE INV SVCS*
|
5.44%
|
7.43%
|
20.98%
|
|||||
707 2ND AVE S
|
||||||||
MINNEAPOLIS MN 55402-2405
|
||||||||
CHARLES SCHWAB & CO FOR THE*
|
35.47%
|
|||||||
EXCLUSIVE BENEFIT OF OUR CUSTOMERS
|
||||||||
ATTN MUTUAL FUNDS OPS
|
||||||||
9601 E PANORAMA CIR
|
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
R6 CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
ENGLEWOOD CO 80112-3441
|
||||||||
CHARLES SCHWAB & CO INC*
|
7.79%
|
30.24%
|
10.06%
|
35.37%
|
||||
SPECIAL CUST A/C
|
||||||||
EXCLUSIVE BENEFIT OF CUSTOMERS
|
||||||||
ATTN MUTUAL FUNDS
|
||||||||
211 MAIN ST
|
||||||||
SAN FRANCISCO CA 94105-1901
|
||||||||
LPL FINANCIAL*
|
18.77%
|
|||||||
OMNIBUS CUSTOMER ACCOUNT
|
||||||||
ATTN MUTUAL FUND TRADING
|
||||||||
4707 EXECUTIVE DR
|
||||||||
SAN DIEGO CA 92121-3091
|
||||||||
NATIONAL FINANCIAL SERVICES LLC*
|
4.94%
|
13.92%
|
9.44%
|
30.10%
|
29.80%
|
|||
FOR EXCLUSIVE BENEFIT OF OUR
|
||||||||
CUSTOMERS
|
||||||||
ATTN MUTUAL FUNDS DEPT 4TH FLOOR
|
||||||||
499 WASHINGTON BLVD
|
||||||||
JERSEY CITY NJ 07310-1995
|
||||||||
RAYMOND JAMES*
|
5.39%
|
|||||||
OMNIBUS FOR MUTUAL FUNDS
|
||||||||
ATTN COURTNEY WALLER
|
||||||||
880 CARILLON PKWY
|
||||||||
ST PETERSBURG FL 33716-1100
|
||||||||
COLORADO RETIREMENT ASSOCIATION FBO
|
48.24%
|
|||||||
CRA 401A & 457 PLANS
|
||||||||
C/O FASCORE LLC
|
||||||||
8515 E ORCHARD RD 2T2
|
||||||||
GREENWOOD VILLAGE CO 80111-5002
|
||||||||
DCGT AS TTEE AND/OR CUST
|
6.07%
|
|||||||
FBO PLIC VARIOUS RETIREMENT PLANS
|
||||||||
OMNIBUS
|
||||||||
ATTN NPIO TRADE DESK
|
||||||||
711 HIGH STREET
|
||||||||
DES MOINES IA 50392-0001
|
||||||||
EMPOWER TRUST FBO*
|
5.91%
|
|||||||
EMPLOYEE BENEFITS CLIENTS 401K
|
||||||||
8515 E ORCHARD RD 2T2
|
||||||||
GREENWOOD VILLAGE CO 80111-5002
|
||||||||
EMPOWER TRUST FBO*
|
16.55%
|
|||||||
EMPOWER IRA ADVANTAGE
|
||||||||
C/O FASCORE LLC
|
||||||||
8515 E ORCHARD RD 2T2
|
||||||||
GREENWOOD VILLAGE CO 80111-5002
|
||||||||
NABANK & CO.*
|
8.28%
|
|||||||
PO BOX 2180
|
||||||||
TULSA OK 74101-2180
|
||||||||
NATIONWIDE TRUST COMPANY FSB
|
81.20%
|
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
R6 CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
C/O IPO PORTFOLIO ACCOUNTING
|
||||||||
PO BOX 182029
|
||||||||
COLUMBUS OH 43218-2029
|
||||||||
PIMS/PRUDENTIAL RETIREMENT
|
21.57%
|
|||||||
AS NOMINEE FOR THE TTEE/CUST PL 820
|
||||||||
MHI GROUP 401(K) PLAN
|
||||||||
20 GREENWAY PLZ STE 600
|
||||||||
HOUSTON TX 77046-2019
|
||||||||
STATE STREET BANK TTEE CUSTODIAN
|
8.19%
|
|||||||
CUST FBO ADP ACCESS 401K PLAN
|
||||||||
401(K) PLAN
|
||||||||
1 LINCOLN STREET
|
||||||||
BOSTON MA 02111-2901
|
||||||||
VOYA RETIREMENT INSURANCE & ANNUITY*
|
6.52%
|
|||||||
COMPANY
|
||||||||
ATTN MICHAEL KAMINSKI
|
||||||||
1 ORANGE WAY
|
||||||||
WINDSOR CT 06095-4773
|
||||||||
VRSCO
|
7.88%
|
|||||||
FBO VTC CUST TTEE FBO
|
||||||||
MIAMI JEWISH HEALTH SYSTEM 403B
|
||||||||
2727-A ALLEN PARKWAY, 4-D1
|
||||||||
HOUSTON TX 77019-2107
|
* | Denotes record owner of Fund shares only |
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
R6 CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
CHARLES SCHWAB & CO FOR THE*
|
26.13%
|
|||||||
EXCLUSIVE BENEFIT OF OUR CUSTOMERS
|
||||||||
ATTN MUTUAL FUNDS OPS
|
||||||||
9601 E PANORAMA CIR
|
||||||||
ENGLEWOOD CO 80112-3441
|
||||||||
CHARLES SCHWAB & CO INC*
|
4.98%
|
5.66%
|
10.95%
|
|||||
SPECIAL CUST A/C
|
||||||||
EXCLUSIVE BENEFIT OF CUSTOMERS
|
||||||||
ATTN MUTUAL FUNDS
|
||||||||
211 MAIN ST
|
||||||||
SAN FRANCISCO CA 94105-1901
|
||||||||
LPL FINANCIAL*
|
13.08%
|
51.29%
|
21.84%
|
|||||
4707 EXECUTIVE DR
|
||||||||
SAN DIEGO CA 92121-3091
|
||||||||
MERRILL LYNCH PIERCE FENNER &*
|
5.22%
|
11.52%
|
||||||
SMITH INC (HOUSE ACCOUNT)
|
||||||||
THE AMERICAN BEACON FUNDS
|
||||||||
4800 DEER LAKE DR EAST
|
||||||||
JACKSONVILLE FL 32246-6484
|
||||||||
MORGAN STANLEY SMITH BARNEY LLC*
|
5.75%
|
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
R6 CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
FOR THE EXCLUSIVE BENE OF ITS CUST
|
||||||||
1 NEW YORK PLZ FL 12
|
||||||||
NEW YORK NY 10004-1965
|
||||||||
NATIONAL FINANCIAL SERVICES LLC*
|
45.19%
|
50.38%
|
13.80%
|
42.38%
|
38.19%
|
54.45%
|
49.01%
|
|
FOR EXCLUSIVE BENEFIT OF OUR
|
||||||||
CUSTOMERS
|
||||||||
ATTN MUTUAL FUNDS DEPT 4TH FLOOR
|
||||||||
499 WASHINGTON BLVD
|
||||||||
JERSEY CITY NJ 07310-1995
|
||||||||
PERSHING LLC*
|
5.53%
|
|||||||
1 PERSHING PLZ
|
||||||||
JERSEY CITY NJ 07399-0001
|
||||||||
RAYMOND JAMES*
|
8.05%
|
|||||||
OMNIBUS FOR MUTUAL FUNDS
|
||||||||
ATTN COURTNEY WALLER
|
||||||||
880 CARILLON PKWY
|
||||||||
ST PETERSBURG FL 33716-1100
|
||||||||
UBS WM USA*
|
7.44%
|
|||||||
OMNI ACCOUNT M/F
|
||||||||
SPEC CDY A/C EBOC UBSFSI
|
||||||||
1000 HARBOR BLVD
|
||||||||
WEEHAWKEN NJ 07086-6761
|
||||||||
WELLS FARGO CLEARING SERVICES LLC*
|
15.23%
|
|||||||
SPECIAL CUSTODY ACCT FOR THE
|
||||||||
EXCLUSIVE BENEFIT OF CUSTOMERS
|
||||||||
2801 MARKET ST
|
||||||||
SAINT LOUIS MO 63103-2523
|
||||||||
DCGT AS TTEE AND/OR CUST
|
6.22%
|
|||||||
FBO PLIC VARIOUS RETIREMENT PLANS
|
||||||||
OMNIBUS
|
||||||||
ATTN NPIO TRADE DESK
|
||||||||
711 HIGH STREET
|
||||||||
DES MOINES IA 50392-0001
|
||||||||
EMPOWER TRUST FBO*
|
9.13%
|
|||||||
EMPLOYEE BENEFIT CLIENTS 401K
|
||||||||
8515 E ORCHARD RD 2T2
|
||||||||
GREENWOOD VILLAGE CO 80111-5002
|
||||||||
EMPOWER TRUST FBO*
|
48.34%
|
|||||||
EMPOWER BENEFIT PLANS
|
||||||||
8515 E ORCHARD RD 2T2
|
||||||||
GREENWOOD VILLAGE CO 80111-5002
|
||||||||
JOHN HANCOCK TRUST COMPANY LLC*
|
6.16%
|
|||||||
200 BERKELEY ST STE 7
|
||||||||
BOSTON MA 02116-5038
|
||||||||
MASSACHUSETTS MUTUAL INSURANCE CO*
|
15.38%
|
|||||||
1295 STATE ST MTP C105
|
||||||||
SPRINGFIELD MA 01111-0001
|
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
R6 CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
MATRIX TRUST COMPANY CUST FBO
|
7.77%
|
|||||||
NATIONAL PETROLEUM COUNCIL RETIREME
|
||||||||
PO BOX 52129
|
||||||||
PHOENIX AZ 85072-2129
|
||||||||
VRSCO
|
5.17%
|
|||||||
FBO VTC CUST TTEE FBO
|
||||||||
NASSAU HEALTHCARE CORPORATION 457
|
||||||||
2727-A ALLEN PARKWAY, 4-D1
|
||||||||
HOUSTON TX 77019-2107
|
* | Denotes record owner of Fund shares only |
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
R6 CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
AMERICAN ENTERPRISE INV SVCS*
|
8.92%
|
|||||||
707 2ND AVE S
|
||||||||
MINNEAPOLIS MN 55402-2405
|
||||||||
CHARLES SCHWAB & CO INC*
|
17.60%
|
6.72%
|
5.99%
|
26.82%
|
24.22%
|
|||
SPECIAL CUST A/C
|
||||||||
EXCLUSIVE BENEFIT OF CUSTOMERS
|
||||||||
ATTN MUTUAL FUNDS
|
||||||||
211 MAIN ST
|
||||||||
SAN FRANCISCO CA 94105-1901
|
||||||||
LPL FINANCIAL*
|
26.20%
|
60.80%
|
||||||
4707 EXECUTIVE DR
|
||||||||
SAN DIEGO CA 92121-3091
|
||||||||
MERRILL LYNCH PIERCE FENNER &*
|
7.76%
|
|||||||
SMITH INC (HOUSE ACCOUNT)
|
||||||||
THE AMERICAN BEACON FUNDS
|
||||||||
4800 DEER LAKE DR EAST
|
||||||||
JACKSONVILLE FL 32246-6484
|
||||||||
NATIONAL FINANCIAL SERVICES LLC*
|
36.60%
|
6.27%
|
13.51%
|
39.95%
|
3.20%
|
37.98%
|
48.79%
|
|
FOR EXCLUSIVE BENEFIT OF OUR
|
||||||||
CUSTOMERS
|
||||||||
ATTN MUTUAL FUNDS DEPT 4TH FLOOR
|
||||||||
499 WASHINGTON BLVD
|
||||||||
JERSEY CITY NJ 07310-1995
|
||||||||
DCGT AS TTEE AND/OR CUST
|
13.88%
|
19.52%
|
||||||
FBO PLIC VARIOUS RETIREMENT PLANS
|
||||||||
OMNIBUS
|
||||||||
ATTN NPIO TRADE DESK
|
||||||||
711 HIGH STREET
|
||||||||
DES MOINES IA 50392-0001
|
||||||||
EMPOWER TRUST FBO*
|
20.16%
|
5.06%
|
||||||
EMPLOYEE BENEFIT CLIENTS 401K
|
||||||||
8515 E ORCHARD RD 2T2
|
||||||||
GREENWOOD VILLAGE CO 80111-5002
|
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
A CLASS
|
C CLASS
|
Y CLASS
|
R6 CLASS
|
Advisor CLASS
|
R5 CLASS
|
Investor CLASS
|
LINCOLN RETIREMENT SERVICES COMPANY
|
6.79%
|
|||||||
FBO BCPS 403B
|
||||||||
PO BOX 7876
|
||||||||
FORT WAYNE IN 46801-7876
|
||||||||
NATIONWIDE TRUST COMPANY FSB
|
7.10%
|
|||||||
C/O IPO PORTFOLIO ACCOUNTING
|
||||||||
PO BOX 182029
|
||||||||
COLUMBUS OH 43218-2029
|
||||||||
RELIANCE TRUST COMPANY FBO*
|
10.42%
|
|||||||
T ROWE PRICE RETIREMENT
|
||||||||
PLAN CLIENTS
|
||||||||
PO BOX 78446
|
||||||||
ATLANTA GEORGIA 30357
|
||||||||
TALCOTT RESOLUTION LIFE INSURANCE
|
13.78%
|
|||||||
COMPANY
|
||||||||
PO BOX 5051
|
||||||||
HARTFORD CT 06102-5051
|
||||||||
VOYA INSTITUTIONAL TRUST COMPANY
|
10.08%
|
|||||||
ONE ORANGE WAY B3N
|
||||||||
WINDSOR CT 06095-4773
|
||||||||
VOYA RETIREMENT INSURANCE & ANNUITY*
|
7.71%
|
|||||||
COMPANY
|
||||||||
ATTN MICHAEL KAMINSKI
|
||||||||
1 ORANGE WAY
|
||||||||
WINDSOR CT 06095-4773
|
* | Denotes record owner of Fund shares only |
American Century Investment Management, Inc. (“American Century”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
American Century Companies, Inc.
|
Parent Company
|
Holding Company
|
Stowers Institute for Medical Research
|
Ownership of Parent Company
|
Medical Research
|
Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
Perpetual Limited
|
Parent Company
|
Financial Services
|
Brandywine Global Investment Management, LLC (“Brandywine Global”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
Legg Mason, Inc.
|
Direct Owner
|
Financial Services
|
Franklin Resources, Inc.
|
Indirect Owner
|
Financial Services
|
Causeway Capital Management LLC (“Causeway”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
Causeway Capital Holdings LLC
|
Parent Company
|
Parent Company
|
DePrince, Race & Zollo, Inc. (“DRZ”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
Victor A. Zollo, Jr.
|
*Indirect Majority Shareholder / Officer
|
Individual
|
John D. Race
|
*Indirect Majority Shareholder / Officer
|
Individual
|
Kelly W. Carbone
|
*Indirect Minority Shareholder / Management Committee
|
Individual
|
Gregory T. Ramsby
|
*Indirect Minority Shareholder / Management Committee
|
Individual
|
Angela Johnston
|
Chief Financial Officer / Management Committee
|
Individual
|
Adelbert Sanchez
|
Chief Compliance Officer
|
Individual
|
* | This individual’s respective equity ownership of DePrince, Race & Zollo, Inc. is directly held by a trust, wholly owned and controlled by the individual. |
Garcia Hamilton & Associates, L.P. (“Garcia Hamilton”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
New Southwest GP Holdings, Inc.
|
General Partner, wholly owned by Gilbert Andrew Garcia
|
Financial Services
|
Hotchkis and Wiley Capital Management, LLC (“Hotchkis”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
HWCap Holdings, LLC
|
Majority Owner
|
Financial Services
|
Stephens-H&W, LLC
|
Minority Owner
|
Financial Services
|
Lazard Asset Management LLC (“Lazard”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
Lazard Freres & Co. LLC
|
Parent Company
|
Financial Services
|
Massachusetts Financial Services Company (“MFS”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
Sun Life Financial, Inc
|
Majority Owner
|
Financial Services
|
Newton Investment Management North America, LLC (“NIMNA”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
Bank of New York Mellon Corporation
|
Parent Company
|
Financial Services
|
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity’s Business
|
Resolute Topco, Inc.
|
Parent Company
|
Holding Company – Founded in 2015
|
First $15 billion
|
0.35%
|
Next $15 billion
|
0.325%
|
Over $30 billion
|
0.30%
|
First $5 billion
|
0.35%
|
Next $5 billion
|
0.325%
|
Next $10 billion
|
0.30%
|
Over $20 billion
|
0.275%
|
■
|
complying with reporting requirements;
|
■
|
corresponding with shareholders;
|
■
|
maintaining internal bookkeeping, accounting and auditing services and records;
|
■
|
supervising the provision of services to the Trust by third parties; and
|
■
|
administering the interfund lending facility and lines of credit, if applicable.
|
Management Fees Paid to American Beacon Advisors, Inc. (Gross)
|
|||
Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$659,962
|
$557,973
|
$466,356
|
American Beacon Garcia Hamilton Quality Bond Fund
|
$1,272,684
|
$1,418,724
|
$1,085,007
|
American Beacon International Equity Fund
|
$8,961,334
|
$6,115,636
|
$3,905,678
|
American Beacon Large Cap Value Fund
|
$14,897,334
|
$12,744,518
|
$11,152,815
|
American Beacon Small Cap Value Fund
|
$21,141,368
|
$18,029,676
|
$15,897,278
|
Sub-Advisor Fees (Gross)
|
|||
Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$300,641
|
$265,063
|
$206,610
|
0.17%
|
0.17%
|
0.17%
|
|
American Beacon Garcia Hamilton Quality Bond Fund
|
$727,476
|
$811,192
|
$620,004
|
0.20%
|
0.20%
|
0.20%
|
|
American Beacon International Equity Fund
|
$6,533,628
|
$4,387,673
|
$3,133,428
|
0.26%
|
0.26%
|
0.26%
|
|
American Beacon Large Cap Value Fund
|
$8,420,545
|
$7,321,565
|
$6,360,972
|
0.20%
|
0.20%
|
0.20%
|
|
American Beacon Small Cap Value Fund*
|
$23,358,692
|
$18,405,314
|
$15,888,739
|
0.38%
|
0.36%
|
0.35%
|
* | Sub-Advisor Fees includes fees paid to Foundry Partners LLC (“Foundry”) and Hillcrest Asset Management, LLC (“Hillcrest”), each formerly a sub-advisor of the American Beacon Small Cap Value Fund (“Small Cap Value Fund”), for the fiscal year ended October 31, 2023. On February 8, 2022, Foundry and Hillcrest were terminated as sub-advisors to the Small Cap Value Fund, and the assets previously managed by Foundry and Hillcrest were allocated among the remaining sub-advisors. On March 10, 2022, DePrince, Race & Zollo, Inc. was appointed as a sub-advisor to the Small Cap Value Fund. |
Management Fees (Waived)/Recouped*
|
|||
Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$0
|
$0
|
$0
|
American Beacon Garcia Hamilton Quality Bond Fund
|
$(720,361)
|
$(773,688)
|
$(670,072)
|
American Beacon International Equity Fund
|
$(2,734)
|
$(37,459)
|
$(206,621)
|
American Beacon Large Cap Value Fund
|
$0
|
$0
|
$0
|
American Beacon Small Cap Value Fund
|
$0
|
$0
|
$0
|
* | The sub-advisors for the Funds have not waived fees during the three most recent fiscal years ended October 31. |
A Class
|
|
Fund
|
Distribution Fee
|
American Beacon Balanced Fund
|
$34,424
|
American Beacon International Equity Fund
|
$19,975
|
American Beacon Large Cap Value Fund
|
$33,113
|
American Beacon Small Cap Value Fund
|
$105,096
|
C Class
|
|
Fund
|
Distribution Fee
|
American Beacon Balanced Fund
|
$146,122
|
American Beacon International Equity Fund
|
$31,298
|
American Beacon Large Cap Value Fund
|
$50,298
|
American Beacon Small Cap Value Fund
|
$82,251
|
Advisor Class
|
|
Fund
|
Distribution Fee
|
American Beacon Balanced Fund
|
$2,441
|
American Beacon International Equity Fund
|
$36,163
|
American Beacon Large Cap Value Fund
|
$111,427
|
American Beacon Small Cap Value Fund
|
$75,508
|
A Class
|
|||
Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$11,684
|
$11,322
|
$11,896
|
American Beacon International Equity Fund
|
$16,348
|
$12,849
|
$11,183
|
American Beacon Large Cap Value Fund
|
$21,723
|
$3,073
|
$18,126
|
American Beacon Small Cap Value Fund
|
$124,070
|
$101,226
|
$80,529
|
C Class
|
|||
Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$18,636
|
$15,253
|
$12,414
|
American Beacon International Equity Fund
|
$4,715
|
$3,895
|
$3,548
|
American Beacon Large Cap Value Fund
|
$5,423
|
$5,488
|
$4,423
|
American Beacon Small Cap Value Fund
|
$15,153
|
$11,540
|
$9,725
|
Advisor Class
|
|||
Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$4,618
|
$3,381
|
$2,257
|
American Beacon International Equity Fund
|
$46,182
|
$39,395
|
$36,056
|
American Beacon Large Cap Value Fund
|
$147,343
|
$137,060
|
$111,682
|
American Beacon Small Cap Value Fund
|
$130,077
|
$86,310
|
$75,523
|
Investor Class
|
|||
Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$255,866
|
$206,334
|
$149,923
|
American Beacon Garcia Hamilton Quality Bond Fund
|
$1,645
|
$3,571
|
$3,311
|
American Beacon International Equity Fund
|
$404,950
|
$361,759
|
$359,278
|
American Beacon Large Cap Value Fund
|
$3,146,405
|
$2,540,172
|
$1,991,555
|
American Beacon Small Cap Value Fund
|
$1,423,149
|
$1,105,627
|
$996,291
|
Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$2,237
|
$355
|
$426
|
American Beacon Garcia Hamilton Quality Bond Fund
|
-
|
-
|
-
|
American Beacon International Equity Fund
|
$113,627
|
$38,911
|
$26,768
|
American Beacon Large Cap Value Fund
|
$59,470
|
$7,248
|
$20,493
|
American Beacon Small Cap Value Fund
|
$121,008
|
$17,746
|
$14,838
|
American Beacon Balanced Fund
|
American Beacon International Equity Fund
|
American Beacon Large Cap Value Fund
|
American Beacon Small Cap Value Fund
|
|
Gross income earned by the fund from securities lending activities
|
$28,778
|
$647,252
|
$1,329,125
|
$701,845
|
Fees and/or compensation paid by the fund for securities lending activities and related services:
|
||||
Fees paid to securities lending agent from a revenue split
|
$426
|
$26,768
|
$20,493
|
$14,838
|
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split
|
$515
|
$8,998
|
$23,623
|
$12,001
|
Administrative fees not included in revenue split
|
$0
|
$0
|
$0
|
$0
|
Indemnification fee not included in revenue split
|
$0
|
$0
|
$0
|
$0
|
Rebate (paid to borrower)
|
$23,784
|
$340,457
|
$1,094,959
|
$544,905
|
Other fees not included in revenue split (administrative and oversight functions provided by the Manager)
|
$426
|
$26,768
|
$20,493
|
$14,838
|
Aggregate fees/compensation paid by the fund for securities lending activities
|
$25,151
|
$402,991
|
$1,159,568
|
$586,582
|
Net income from securities lending activities
|
$3,627
|
$244,261
|
$169,557
|
$115,263
|
American Beacon Fund
|
Sales Charge Revenue
|
Deferred Sales Charge Revenue
|
|||
Fiscal Year
|
Amount Paid to Distributor
|
Amount Retained by Distributor
|
Amount Paid to Distributor
|
Amount Retained by Distributor
|
|
American Beacon Balanced Fund
|
2023
|
$17,553
|
$2,044
|
$947
|
-
|
2022
|
$28,664
|
$5,051
|
$862
|
-
|
|
2021
|
$20,321
|
$2,699
|
$485
|
-
|
|
American Beacon Garcia Hamilton Quality Bond Fund
|
2023
|
-
|
-
|
-
|
-
|
2022
|
-
|
-
|
-
|
-
|
|
2021
|
-
|
-
|
-
|
-
|
|
American Beacon International Equity Fund
|
2023
|
$10,400
|
$2,595
|
$18
|
-
|
2022
|
$3,363
|
$518
|
$77
|
-
|
|
2021
|
$2,725
|
$202
|
$7
|
-
|
|
American Beacon Large Cap Value Fund
|
2023
|
$5,531
|
$589
|
$66
|
-
|
2022
|
$8,323
|
$1,413
|
$315
|
-
|
|
2021
|
$48,853
|
$6,094
|
$1,063
|
-
|
|
American Beacon Small Cap Value Fund
|
2023
|
$11,215
|
$1,294
|
$109
|
-
|
2022
|
$16,350
|
$1,392
|
$583
|
-
|
|
2021
|
$19,446
|
$723
|
$132
|
-
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
American Beacon Advisors, Inc.
|
||||||
Kirk L. Brown
|
1 ($0.5 bil)
|
None
|
3 ($12.2 bil)
|
None
|
None
|
None
|
Paul B. Cavazos
|
2 ($0.9 bil)
|
1 ($0.5 bil)
|
3 ($12.2 bil)
|
None
|
None
|
None
|
Colin J. Hamer
|
2 ($0.9 bil)
|
1 ($0.5 bil)
|
2 ($11.7 bil)
|
None
|
None
|
None
|
Erin Higginbotham
|
None
|
None
|
4 ($11.35 bil)
|
None
|
None
|
None
|
Robyn A. Serrano
|
None
|
1 ($0.5 bil)
|
2 ($1.2 bil)
|
None
|
None
|
None
|
Samuel Silver
|
None
|
None
|
None
|
None
|
None
|
None
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
American Century Investment Management, Inc.
|
||||||
Jonathan Veiga
|
1 ($529 mil)
|
None
|
2 ($116 mil)
|
None
|
None
|
None
|
Bert Whitson
|
1 ($529 mil)
|
None
|
2 ($116 mil)
|
None
|
None
|
None
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
||||||
Mark Giambrone
|
6 ($2.3 bil)
|
1 ($160.2 mil)
|
28 ($6.1 bil)
|
None
|
None
|
None
|
W. Coleman Hubbard
|
2 ($7.3 mil)
|
1 ($21 mil)
|
7 ($272 mil)
|
None
|
None
|
None
|
Justin Martin
|
1 ($51.2 mil)
|
1 ($26.8 mil)
|
11 ($827 mil)
|
None
|
None
|
None
|
James S. McClure
|
2 ($7.3 mil)
|
1 ($21 mil)
|
7 ($272 mil)
|
None
|
None
|
None
|
J. Scott McDonald
|
1 ($51.2 mil)
|
1 ($26.8 mil)
|
14 ($856.6 mil)
|
None
|
None
|
None
|
Deborah A. Petruzzelli
|
1 ($47.8 mil)
|
1 ($26.8 mil)
|
7 ($402.2 mil)
|
None
|
None
|
None
|
Matthew Routh
|
1 ($51.2 mil)
|
1 ($26.8 mil)
|
11 ($827 mil)
|
None
|
None
|
None
|
DJ Taylor
|
2 ($7.3 mil)
|
1 ($21 mil)
|
7 ($272 mil)
|
None
|
None
|
None
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Brandywine Global Investment Management, LLC
|
||||||
Michelle K. Bevan
|
None
|
3 ($156 mil)
|
1 ($147 mil)
|
None
|
None
|
None
|
Henry F. Otto
|
8 ($4.7 bil)
|
8 ($220 mil)
|
42 ($824 mil)
|
None
|
None
|
2 ($936 mil)
|
Steven M. Tonkovich
|
8 ($4.9 bil)
|
8 ($234 mil)
|
42 ($845 mil)
|
None
|
None
|
2 ($936 mil)
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Causeway Capital Management LLC
|
||||||
Sarah H. Ketterer
|
15 ($13.1 bil)
|
15 ($3.7 bil)
|
131 ($19.5 bil)
|
None
|
None
|
3 ($1.6 bil)
|
Harry W. Hartford
|
15 ($13.1 bil)
|
15 ($3.7 bil)
|
103 ($19.2 bil)
|
None
|
None
|
3 ($1.6 bil)
|
Jonathan P. Eng
|
15 ($13.1 bil)
|
15 ($3.7 bil)
|
96 ($19.2 bil)
|
None
|
None
|
3 ($1.6 bil)
|
Conor Muldoon
|
15 ($13.1 bil)
|
15 ($3.7 bil)
|
99 ($19.2 bil)
|
None
|
None
|
3 ($1.6 bil)
|
Ellen Lee
|
15 ($13.1 bil)
|
15 ($3.7 bil)
|
90 ($19.2 bil)
|
None
|
None
|
3 ($1.6 bil)
|
Alessandro Valentini
|
15 ($13.1 bil)
|
15 ($3.7 bil)
|
91 ($19.2 bil)
|
None
|
None
|
3 ($1.6 bil)
|
Steven Nguyen
|
15 ($13.1 bil)
|
15 ($3.7 bil)
|
91 ($19.2 bil)
|
None
|
None
|
3 ($1.6 bil)
|
Brian Cho
|
15 ($13.1 bil)
|
15 ($3.7 bil)
|
91 ($19.2 bil)
|
None
|
None
|
3 ($1.6 bil)
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
DePrince, Race & Zollo, Inc.
|
||||||
Gregory Ramsby
|
None
|
2 ($141.2 mil)
|
23 ($800 mil)
|
None
|
None
|
4 ($316 mil)
|
Randy Renfrow
|
None
|
2 ($141.2 mil)
|
28 ($968 mil)
|
None
|
None
|
4 ($316 mil)
|
Number of Other Accounts Managed
and Assets by Account Type |
Number of Accounts and Assets for which
Advisory Fee is Performance-Based |
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Garcia Hamilton & Associates, L.P.
|
||||||
Gilbert Andrew Garcia
|
None
|
2 ($65.9 mil)
|
387 ($19.6 bil)
|
None
|
None
|
3 ($275.9 mil)
|
Karen H. Tass*
|
None
|
2 ($67.2 mil)
|
382 ($19.7 bil)
|
None
|
None
|
3 ($242.5 mil)
|
Jeffrey D. Detwiler*
|
None
|
2 ($67.2 mil)
|
382 ($19.7 bil)
|
None
|
None
|
3 ($242.5 mil)
|
Nancy Rodriguez
|
None
|
2 ($65.9 mil)
|
387 ($19.6 bil)
|
None
|
None
|
3 ($275.9 mil)
|
* | As of December 31, 2023. |
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Hotchkis and Wiley Capital Management, LLC
|
||||||
George Davis
|
22 ($16.7 bil)
|
10 ($1.8 bil)
|
55 ($6 bil)
|
2 ($11.3 bil)
|
1 ($49.5 mil)
|
4 ($688.9 mil)
|
Scott McBride
|
22 ($16.7 bil)
|
10 ($1.8 bil)
|
55 ($6 bil)
|
2 ($11.3 bil)
|
1 ($49.5 mil)
|
4 ($688.9 mil)
|
Patricia McKenna
|
22 ($16.7 bil)
|
10 ($1.8 bil)
|
55 ($6 bil)
|
2 ($11.3 bil)
|
1 ($49.5 mil)
|
4 ($688.9 mil)
|
Judd Peters
|
22 ($16.9 bil)
|
10 ($1.8 bil)
|
55 ($6 bil)
|
2 ($11.3 bil)
|
1 ($49.5 mil)
|
4 ($688.9 mil)
|
David Green
|
23 ($16.9 bil)
|
10 ($1.8 bil)
|
55 ($6 bil)
|
2 ($11.3 bil)
|
1 ($49.5 mil)
|
4 ($688.9 mil)
|
Jim Miles
|
23 ($16.9 bil)
|
10 ($1.8 bil)
|
55 ($6 bil)
|
2 ($11.3 bil)
|
1 ($49.5 mil)
|
4 ($688.9 mil)
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Lazard Asset Management LLC
|
||||||
Michael A. Bennett
|
10 ($10.8 bil)
|
14 ($4.9 bil)
|
145 ($18.2 bil)
|
1 ($4.9 bil)
|
None
|
3 ($239.7 mil)
|
Giles Edwards
|
5 ($6.2 bil)
|
8 ($1.3 bil)
|
108 ($10.6 bil)
|
1 ($4.9 bil)
|
None
|
3 ($239.7 mil)
|
Michael G. Fry
|
5 ($6.2 bil)
|
8 ($1.3 bil)
|
108 ($10.6 bil)
|
1 ($4.9 bil)
|
None
|
3 ($239.7 mil)
|
Michael S. Powers
|
8 ($6.3 bil)
|
8 ($1.3 bil)
|
107 ($10.6 bil)
|
1 ($4.9 bil)
|
None
|
3 ($239.7 mil)
|
Paul Selvey-Clinton
|
5 ($6.2 bil)
|
15 ($1.9 bil)
|
115 ($11.1 bil)
|
1 ($4.9 bil)
|
None
|
3 ($239.7 mil)
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Massachusetts Financial Services Company
|
||||||
Katherine Cannan
|
10 ($63.2 bil)
|
3 ($5.3 bil)
|
16 ($5.7 bil)
|
None
|
None
|
None
|
Nevin Chitkara
|
10 ($63.2 bil)
|
3 ($5.3 bil)
|
16 ($5.7 bil)
|
None
|
None
|
None
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for Which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Manager
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other accounts
|
Newton Investment Management North America, LLC
|
||||||
Joseph M. Corrado
|
3 ($15.1 bil)
|
3 ($25.4 mil)
|
9 ($731 mil)
|
None
|
None
|
None
|
Andrew Leger
|
7 ($4.3 bil)
|
9 ($283.0 mil)
|
23 ($2.0 bil)
|
None
|
None
|
3 ($98.3 mil)
|
1 | Similar Accounts may have investment objectives, strategies and risks that differ from those of the Fund. In addition, the Fund is subject to different regulations than certain of the Similar Accounts and, consequently, may not be permitted to invest in the same securities, exercise rights to exchange or convert securities or engage in all the investment techniques or transactions, or to invest, exercise or engage to the same degree, as the Similar Accounts. For these or other reasons, the portfolio managers may purchase different securities for the Fund and the corresponding Similar Accounts, and the performance of securities purchased for the Fund may vary from the performance of securities purchased for Similar Accounts, perhaps materially. |
2 | Conflicts of interest may arise with both the aggregation and allocation of securities transactions and allocation of limited investment opportunities. Lazard may be perceived as causing accounts it manages to participate in an offering to increase Lazard’s overall allocation of securities in that offering, or to increase Lazard’s ability to participate in future offerings by the same underwriter or issuer. Allocations of bunched trades, particularly trade orders that were only partially filled due to limited availability, and allocation of investment opportunities generally, could raise a potential conflict of interest, as Lazard may have an incentive to allocate securities that are expected to increase in value to preferred accounts. Initial public offerings, in particular, are frequently of very limited availability. A potential conflict of interest may be perceived to arise if transactions in one account closely follow related transactions in a different account, such as when a purchase increases the value of securities previously purchased by the other account, or when a sale in one account lowers the sale price received in a sale by a second account. |
3 | Portfolio managers may be perceived to have a conflict of interest because of the large number of Similar Accounts, in addition to the Fund, that they are managing on behalf of Lazard. Although Lazard does not track each individual portfolio manager’s time dedicated to each account, Lazard periodically reviews each portfolio manager’s overall responsibilities to ensure that he or she is able to allocate the necessary time and resources to effectively manage the Fund. As illustrated in the table above, most of the portfolio managers manage a significant number of Similar Accounts in addition to the Fund. |
4 | Generally, Lazard and/or its portfolio managers have investments in Similar Accounts. This could be viewed as creating a potential conflict of interest, since certain of the portfolio managers do not invest in the Fund. |
5 | The table above notes the portfolio managers who manage Similar Accounts with respect to which the advisory fee is based on the performance of the account, which could give the portfolio managers and Lazard an incentive to favor such Similar Accounts over the Fund. |
6 | Portfolio managers may place transactions on behalf of Similar Accounts that are directly or indirectly contrary to investment decisions made for the Fund, which could have the potential to adversely impact the Fund, depending on market conditions. In addition, if the Fund’s investment in an issuer is at a different level of the issuer’s capital structure than an investment in the issuer by Similar Accounts, in the event of credit deterioration of the issuer, there may be a conflict of interest between the Fund’s and such Similar Accounts’ investments in the issuer. If Lazard sells securities |
short, including on behalf of a Similar Account, it may be seen as harmful to the performance of the Fund to the extent it invests “long” in the same or similar securities whose market values fall as a result of short-selling activities. |
7 | Investment decisions are made independently from those of the Similar Accounts. If, however, such Similar Accounts desire to invest in, or dispose of, the same securities as the Fund, available investments or opportunities for sales will be allocated equitably to each. In some cases, this procedure may adversely affect the size of the position obtained for or disposed of by the Fund or the price paid or received by the Fund. |
8 | Under Lazard’s trade allocation procedures applicable to domestic and foreign initial and secondary public offerings and Rule 144A transactions (collectively herein a “Limited Offering”), Lazard will generally allocate Limited Offering shares among client accounts, including the Fund, pro rata based upon the aggregate asset size (excluding leverage) of the account. Lazard may also allocate Limited Offering shares on a random basis, as selected electronically, or other basis. It is often difficult for the Adviser to obtain a sufficient number of Limited Offering shares to provide a full allocation to each account. Lazard’s allocation procedures are designed to allocate Limited Offering securities in a fair and equitable manner. |
Portfolio Manager
|
Benchmark(s)
|
Katherine Cannan
|
Russell 1000® Value Index
|
Nevin Chitkara
|
Russell 1000® Value Index
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon Balanced Fund
|
American Beacon International Equity Fund
|
American Beacon Large Cap Value Fund
|
American Beacon Small Cap Value Fund
|
American Beacon Advisors, Inc.
|
||||
Kirk L. Brown
|
None
|
$100,001- $500,000
|
$100,001- $500,000
|
N/A
|
Paul B. Cavazos
|
None
|
$100,001- $500,000
|
$100,001- $500,000
|
$100,001- $500,000
|
Colin J. Hamer
|
N/A
|
N/A
|
N/A
|
$50,001- $100,000
|
Erin Higginbotham
|
None
|
N/A
|
N/A
|
N/A
|
Robyn A. Serrano
|
N/A
|
$10,001-$50,000
|
$10,001-$50,000
|
$10,001-$50,000
|
Samuel Silver
|
None
|
N/A
|
N/A
|
N/A
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon International Equity Fund
|
American Century Investment Management, Inc.
|
|
Jonathan Veiga
|
None
|
Bert Whitson
|
None
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon Balanced Fund
|
American Beacon Large Cap Value Fund
|
American Beacon Small Cap Value Fund
|
Barrow, Hanley, Mewhinney & Strauss, LLC
|
|||
Mark Giambrone
|
None
|
None
|
N/A
|
W. Coleman Hubbard
|
N/A
|
N/A
|
None
|
Justin Martin
|
None
|
N/A
|
N/A
|
James S. McClure
|
N/A
|
N/A
|
None
|
J. Scott McDonald
|
None
|
N/A
|
N/A
|
Deborah A. Petruzzelli
|
None
|
N/A
|
N/A
|
Matthew Routh
|
None
|
N/A
|
N/A
|
DJ Taylor
|
N/A
|
N/A
|
$1-$10,000
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon Small Cap Value Fund
|
Brandywine Global Investment Management, LLC
|
|
Michelle K. Bevan
|
None
|
Henry F. Otto
|
Over $1,000,000
|
Steven M. Tonkovich
|
$100,001 - $500,000
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon International Equity Fund
|
Causeway Capital Management LLC
|
|
Sarah H. Ketterer
|
None
|
Harry W. Hartford
|
None
|
Jonathan Eng
|
None
|
Conor Muldoon
|
None
|
Ellen Lee
|
None
|
Alessandro Valentini
|
None
|
Steven Nguyen
|
None
|
Brian Cho
|
None
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon Small Cap Value Fund
|
DePrince, Race & Zollo, Inc.
|
|
Gregory Ramsby
|
$100,001-$500,000
|
Randy Renfrow
|
None
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon Garcia Hamilton Quality Bond Fund
|
Garcia Hamilton & Associates, L.P.
|
|
Gilbert Andrew Garcia
|
Over $1,000,000
|
Karen H. Tass*
|
None
|
Jeffrey D. Detwiler*
|
$500,001-$1,000,000
|
Nancy Rodriguez
|
None
|
* | As of December 31, 2023. |
Name of Investment Advisor and Portfolio Managers
|
American Beacon Balanced Fund
|
American Beacon Large Cap Value Fund
|
American Beacon Small Cap Value Fund
|
Hotchkis and Wiley Capital Management, LLC
|
|||
George Davis
|
None
|
None
|
N/A
|
David Green
|
N/A
|
N/A
|
None
|
Scott McBride
|
None
|
None
|
N/A
|
Patricia McKenna
|
None
|
None
|
N/A
|
Jim Miles
|
N/A
|
N/A
|
None
|
Judd Peters
|
None
|
None
|
N/A
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon International Equity Fund
|
Lazard Asset Management LLC
|
|
Michael A. Bennett
|
None
|
Giles Edwards
|
None
|
Michael G. Fry
|
None
|
Michael Powers
|
None
|
Paul Selvey-Clinton
|
None
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon Large Cap Value Fund
|
Massachusetts Financial Services Company
|
|
Katherine Cannan
|
None
|
Nevin Chitkara
|
None
|
Name of Investment Advisor and Portfolio Managers
|
American Beacon Small Cap Value Fund
|
Newton Investment Management North America, LLC
|
|
Joseph M. Corrado
|
None
|
Andrew Leger
|
None
|
American Beacon Fund
|
Amount Received
|
American Beacon Balanced Fund
|
$851
|
American Beacon Garcia Hamilton Quality Bond Fund
|
-
|
American Beacon International Equity Fund
|
$6
|
American Beacon Large Cap Value Fund
|
-
|
American Beacon Small Cap Value Fund
|
$66,859
|
American Beacon Fund
|
2021
|
2022
|
2023
|
American Beacon Balanced Fund
|
$47,789
|
$31,042
|
$31,814
|
American Beacon Garcia Hamilton Quality Bond Fund
|
$0
|
$0
|
$0
|
American Beacon International Equity Fund
|
$1,466,713
|
$988,348
|
$928,099
|
American Beacon Large Cap Value Fund
|
$1,264,057
|
$730,929
|
$757,891
|
American Beacon Small Cap Value Fund
|
$4,421,838
|
$5,066,612
|
$4,603,699
|
American Beacon Fund
|
Amounts Directed
|
Amounts Paid in Commissions
|
American Beacon Balanced Fund
|
$343,517,595
|
$301,921
|
American Beacon Garcia Hamilton Quality Bond Fund
|
$0
|
$0
|
American Beacon International Equity Fund
|
$1,223,305,829
|
$434,985
|
American Beacon Large Cap Value Fund
|
$625,017,034
|
$342,087
|
American Beacon Small Cap Value Fund
|
$4,410,765,784
|
$1,867,045
|
American Beacon Fund
|
Broker
|
Affiliated With
|
2021 Commissions
|
2022 Commissions
|
2023 Commissions
|
American Beacon Small Cap Value Fund
|
Keybanc Capital Markets (cleared with affiliate Pershing)
|
Newton Investment Management North America
|
$74,614
|
$89,171
|
$53,206
|
American Beacon Small Cap Value Fund
|
Leerink Partners LLC (cleared with affiliate Pershing)
|
Newton Investment Management North America
|
$18,551
|
$14,782
|
$3,408
|
American Beacon Small Cap Value Fund
|
Needham & Company (cleared with affiliate Pershing)
|
Newton Investment Management North America
|
$1,249
|
$0
|
$0
|
American Beacon Small Cap Value Fund
|
Berenberg Capital Markets (cleared with affiliate Pershing)
|
Newton Investment Management North America
|
$4,071
|
$19,568
|
$0
|
American Beacon Small Cap Value Fund
|
Piper Jaffray Ltd. (cleared with affiliate Pershing)
|
Newton Investment Management North America
|
$167,908
|
$146,624
|
$92,901
|
Regular Broker-Dealers
|
American Beacon Fund
|
Aggregate Value of Securities
(000’s) |
Bank of America Corp
|
American Beacon Balanced Fund
|
$239
|
State Street Corp
|
American Beacon Balanced Fund
|
$472
|
Goldman Sachs Group Inc
|
American Beacon Balanced Fund
|
$597
|
BNY Mellon
|
American Beacon Balanced Fund
|
$650
|
Citigroup Inc
|
American Beacon Balanced Fund
|
$1,119
|
Wells Fargo & Co
|
American Beacon Balanced Fund
|
$1,826
|
Citigroup Inc
|
American Beacon Garcia Hamilton Quality Bond Fund
|
$5,028
|
UBS Group
|
American Beacon International Equity Fund
|
$1,435
|
Barclays PLC
|
American Beacon International Equity Fund
|
$14,401
|
Bank of America Corp
|
American Beacon Large Cap Value Fund
|
$7,333
|
State Street Corp
|
American Beacon Large Cap Value Fund
|
$14,359
|
Morgan Stanley
|
American Beacon Large Cap Value Fund
|
$16,325
|
Regular Broker-Dealers
|
American Beacon Fund
|
Aggregate Value of Securities
(000’s) |
Goldman Sachs Group
|
American Beacon Large Cap Value Fund
|
$18,657
|
BNY Mellon
|
American Beacon Large Cap Value Fund
|
$20,259
|
JP Morgan Chase & Co
|
American Beacon Large Cap Value Fund
|
$39,316
|
Stifel Financial Corp
|
American Beacon Small Cap Value Fund
|
$12,574
|
■
|
individual-type employee benefit plans, such as an IRA, individual 403(b) plan or single-participant Keogh-type plan;
|
■
|
business accounts solely controlled by you or your immediate family (for example, you own the entire business);
|
■
|
trust accounts established by you or your immediate family (for trusts with only one primary beneficiary, upon the trustor’s death the trust account may be aggregated with such beneficiary’s own accounts; for trusts with multiple primary beneficiaries, upon the trustor’s death the trustees of the trust may instruct the Funds’ transfer agent to establish separate trust accounts for each primary beneficiary; each primary beneficiary’s separate trust account may then be aggregated with such beneficiary’s own accounts);
|
■
|
endowments or foundations established and controlled by you or your immediate family; or
|
■
|
529 accounts, which will be aggregated at the account owner level (Class 529-E accounts may only be aggregated with an eligible employer plan).
|
■
|
for a single trust estate or fiduciary account, including employee benefit plans other than the individual-type employee benefit plans described above;
|
■
|
made for two or more employee benefit plans of a single employer or of affiliated employers as defined in the Investment Company Act, excluding the individual-type employee benefit plans described above;
|
■
|
for nonprofit, charitable or educational organizations, or any endowments or foundations established and controlled by such organizations, or any employer-sponsored retirement plans established for the benefit of the employees of such organizations, their endowments, or their foundations; or
|
■
|
for individually established participant accounts of a 403(b) plan that is treated similarly to an employer-sponsored plan for sales charge purposes (see “Purchases by certain 403(b) plans” under “Sales Charges” above), or made for two or more such 403(b) plans that are treated similarly to employer-sponsored plans for sales charge purposes, in each case of a single employer or affiliated employers as defined in the Investment Company Act. Purchases made for nominee or street name accounts (securities held in the name of a broker-dealer or another nominee such as a bank trust department instead of the customer) may not be aggregated with those made for other accounts and may not be aggregated with other nominee or street name accounts unless otherwise qualified as described above.
|
1 | current or retired trustees, and officers of the American Beacon Funds family, current or retired employees and directors of the Manager and its affiliated companies, certain family members and employees of the above persons, and trusts or plans primarily for such persons; |
2 | currently registered representatives and assistants directly employed by such representatives, retired registered representatives with respect to accounts established while active, or full-time employees (collectively, “Eligible Persons”) (and their spouses, and children, including children in step and adoptive relationships, sons-in-law and daughters-in-law, if the Eligible Persons or the spouses or children of the Eligible Persons are listed in the account registration with the spouse or parent) of broker-dealers who have sales agreements with the Distributor (or who clear transactions through such dealers), plans for the dealers, and plans that include as participants only the Eligible Persons, their spouses and/or children; |
3 | companies exchanging securities with the Funds through a merger, acquisition or exchange offer; |
4 | insurance company separate accounts; |
5 | accounts managed by the Manager, a sub-advisor to the Funds and their affiliated companies; |
6 | the Manager or a sub-advisor to the Funds and their affiliated companies; |
7 | an individual or entity with a substantial business relationship with, which may include the officers and employees of the Funds’ custodian or transfer agent, the Manager or a sub-advisor to the Funds and their affiliated companies, or an individual or entity related or relating to such individual or entity; |
8 | full-time employees of banks that have sales agreements with the Distributor, who are solely dedicated to directly supporting the sale of mutual funds; |
9 | directors, officers and employees of financial institutions that have a selling group agreement with the Distributor; |
10 | banks, broker-dealers and other financial institutions (including registered investment advisors and financial planners) that have entered into an agreement with the Distributor or one of its affiliates, purchasing shares on behalf of clients participating in a fund supermarket or in a wrap program, asset allocation program or other program in which the clients pay an asset-based fee; |
11 | clients of authorized dealers purchasing shares in fixed or flat fee brokerage accounts; |
12 | Employer-sponsored defined contribution - type plans, including 401(k) plans, 457 plans, employer sponsored 403(b) plans, profit-sharing and money purchase pension plans, defined benefit plans and non-qualified deferred compensation plans, and IRA rollovers involving retirement plan assets invested in a Fund in the American Beacon Funds fund family; and |
13 | Employee benefit and retirement plans for the Manager and its affiliates. |
■
|
redemption proceeds from a non-retirement account (for example, a joint tenant account) used to purchase Fund shares in an IRA or other individual-type retirement account;
|
■
|
“required minimum distributions” (as described in Section 401(a)(9) of the Internal Revenue Code) from an IRA or other individual-type retirement account used to purchase Fund shares in a non-retirement account; and
|
■
|
death distributions paid to a beneficiary’s account that are used by the beneficiary to purchase Fund shares in a different account.
|
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Any partial or complete redemption following death or “disability” (as defined in the Internal Revenue Code) of a shareholder (including one who owns the shares with his or her spouse as a joint tenant with rights of survivorship) from an account in which the deceased or disabled is named. The Manager or a Fund’s transfer agent may require documentation prior to waiver of the charge, including death certificates, physicians’ certificates, etc.
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Redemptions from a systematic withdrawal plan. If the systematic withdrawal plan is based on a fixed dollar amount or number of shares, systematic withdrawal redemptions are limited to no more than 10% of your account value or number of shares per year, as of the date the Manager or a Fund’s transfer agent receives your request. If the systematic withdrawal plan is based on a fixed percentage of your account value, each redemption is limited to an amount that would not exceed 10% of your annual account value at the time of withdrawal.
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Redemptions from retirement plans qualified under Section 401 of the Internal Revenue Code. The CDSC will be waived for benefit payments made by American Beacon Funds directly to plan participants. Benefit payments include, but are not limited to, payments resulting from death, “disability,” “retirement,” “separation from service” (each as defined in the Internal Revenue Code), “required minimum distributions” (as described in Section 401(a)(9) of the Internal Revenue Code), in-service distributions, hardships, loans and qualified domestic relations orders. The CDSC waiver will not apply in the event of termination of the plan or transfer of the plan to another financial institution.
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Redemptions that are required minimum distributions from a traditional IRA as required by the Internal Revenue Service.
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Involuntary redemptions as a result of your account not meeting the minimum balance requirements, the termination and liquidation of the Fund, or other actions by the Fund.
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Distributions from accounts for which the broker-dealer of record has entered into a written agreement with the Distributor (or Manager) allowing this waiver.
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To return excess contributions made to a retirement plan.
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To return contributions made due to a mistake of fact.
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Derive at least 90% of its gross income each taxable year from (1) dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities or foreign currencies (together with Qualifying Other Income (as defined below), “Qualifying Income”), or other income, including gains from options, futures or forward contracts, derived with respect to its business of investing in securities or those currencies (“Qualifying Other Income”) and (2) net income derived from an interest in a “qualified publicly traded partnership” (“QPTP”) (“Gross Income Requirement”). A QPTP is a “publicly traded partnership” (that is, a partnership the interests in which are “traded on an established securities market” or “readily tradable on a secondary market (or the substantial equivalent thereof)” (a “PTP”)) that meets certain qualifying income requirements other than a partnership at least 90% of the gross income of which is Qualifying Income;
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Diversify its investments so that, at the close of each quarter of its taxable year, (1) at least 50% of the value of its total assets is represented by cash and cash items, Government securities, securities of other RICs, and other securities, with those other securities limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of the Fund’s total assets and that does not represent more than 10% of the issuer’s outstanding voting securities (equity securities of QPTPs being considered voting securities for these purposes), and (2) not more than 25% of the value of its total assets is invested in (a) the securities (other than Government securities or securities of other RICs) of any one issuer, (b) the securities (other than securities of other RICs) of two or more issuers the Fund controls (by owning 20% or more of their voting power) that are determined to be engaged in the same, similar or related trades or businesses, or (c) the securities of one or more QPTPs (“Diversification Requirements”); and
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Distribute annually to its shareholders at least the sum of 90% of its investment company taxable income (generally, net investment income, the excess (if any) of net short-term capital gain over net long-term capital loss, and net gains and losses (if any) from certain foreign currency transactions, all determined without regard to any deduction for dividends paid) and 90% of its net exempt interest income (“Distribution Requirement”).
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1. Routine Matters
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a. Election of Directors
(1) Generally. The Advisor will generally support the election of directors that result in a board made up of a majority of independent directors. In general, the Advisor will vote in favor of management’s director nominees if they are running unopposed. The Advisor believes that management is in the best possible position to evaluate the qualifications of directors and the needs and dynamics of a particular board. The Advisor of course maintains the ability to vote against any candidate whom it feels is not qualified or if there are specific concerns about the individual, such as allegations of criminal wrongdoing or breach of fiduciary responsibilities. Additional information the Advisor may consider concerning director nominees include, but is not limited to, whether (1) there is an adequate explanation for repeated absences at board meetings, (2) the nominee receives non-board fee compensation, or (3) there is a family relationship between the nominee and the company’s chief executive officer or controlling shareholder. When management’s nominees are opposed in a proxy contest, the Advisor will evaluate which nominees’ publicly-announced management policies and goals are most likely to maximize shareholder value, as well as the past performance of the incumbents. (2) Committee Service. The Advisor will withhold votes for non-independent directors who serve on the audit, compensation, and/or nominating committees of the board. (3) Classification of Boards. The Advisor will support proposals that seek to declassify boards. Conversely, the Advisor will oppose efforts to adopt classified board structures. (4) Majority Independent Board. The Advisor will support proposals calling for a majority of independent directors on a board. The Advisor believes that a majority of independent directors can help to facilitate objective decision making and enhances accountability to shareholders. (5) Majority Vote Standard for Director Elections. The Advisor will vote in favor of proposals calling for directors to be elected by an affirmative majority of the votes cast in a board election, provided that the proposal allows for a plurality voting standard in the case of contested elections. The Advisor may consider voting against such shareholder proposals where a company’s board has adopted an alternative measure, such as a director resignation policy, that provides a meaningful alternative to the majority voting standard and appropriately addresses situations where an incumbent director fails to receive the support of the majority of the votes cast in an uncontested election. (6) Withholding Campaigns. The Advisor will support proposals calling for shareholders to withhold votes for directors where such actions will advance the principles set forth in paragraphs (1) through (5) above. |
b. Ratification of Selection of Auditors
The Advisor will generally rely on the judgment of the issuer’s audit committee in selecting the independent auditors who will provide the best service to the company. The Advisor believes that independence of the auditors is paramount and will vote against auditors whose independence appears to be impaired. The Advisor will vote against proposed auditors in those circumstances where (1) an auditor has a financial interest in or association with the company, and is therefore not independent; (2) non-audit fees comprise more than 50% of the total fees paid by the company to the audit firm; or (3) there is reason to believe that the independent auditor has previously rendered an opinion to the issuer that is either inaccurate or not indicative of the company’s financial position. |
2. Compensation Matters
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a. Executive Compensation
(1) Advisory Vote on Compensation. The Advisor believes there are more effective ways to convey concerns about compensation than through an advisory vote on compensation (such as voting against specific excessive incentive plans or withholding votes from compensation committee members). The Advisor will consider and vote on a case-by-case basis on say-on-pay proposals and will generally support management proposals unless specific concerns exist, including if the Advisor concludes that executive compensation is (i) misaligned with shareholder interests, (ii) |
unreasonable in amount, or (iii) not in the aggregate meaningfully tied to the company’s performance. (2) Frequency of Advisory Votes on Compensation. The Advisor generally supports the triennial option for the frequency of say-on-pay proposals, but will consider management recommendations for an alternative approach.
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b. Equity Based Compensation Plans
The Advisor believes that equity-based incentive plans are economically significant issues upon which shareholders are entitled to vote. The Advisor recognizes that equity-based compensation plans can be useful in attracting and maintaining desirable employees. The cost associated with such plans must be measured if plans are to be used appropriately to maximize shareholder value. The Advisor will conduct a case-by-case analysis of each stock option, stock bonus or similar plan or amendment, and generally approve management’s recommendations with respect to adoption of or amendments to a company’s equity-based compensation plans, provided that the total number of shares reserved under all of a company’s plans is reasonable and not excessively dilutive. The Advisor will review equity-based compensation plans or amendments thereto on a case-by-case basis. Factors that will be considered in the determination include the company’s overall capitalization, the performance of the company relative to its peers, and the maturity of the company and its industry; for example, technology companies often use options broadly throughout its employee base which may justify somewhat greater dilution. Amendments which are proposed in order to bring a company’s plan within applicable legal requirements will be reviewed by the Advisor’s legal counsel; amendments to executive bonus plans to comply with IRS Section 162(m) disclosure requirements, for example, are generally approved. The Advisor will generally vote against the adoption of plans or plan amendments that: |
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Provide for immediate vesting of all stock options in the event of a change of control of the company without reasonable safeguards against abuse (see “Anti-Takeover Proposals” below);
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Reset outstanding stock options at a lower strike price unless accompanied by a corresponding and proportionate reduction in the number of shares designated. The Advisor will generally oppose adoption of stock option plans that explicitly or historically permit repricing of stock options, regardless of the number of shares reserved for issuance, since their effect is impossible to evaluate;
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Establish restriction periods shorter than three years for restricted stock grants;
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Do not reasonably associate awards to performance of the company; or
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Are excessively dilutive to the company.
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3. Anti-Takeover Proposals
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In general, the Advisor will vote against any proposal, whether made by management or shareholders, which the Advisor believes would materially discourage a potential acquisition or takeover. In most cases an acquisition or takeover of a particular company will increase share value. The adoption of anti-takeover measures may prevent or frustrate a bid from being made, may prevent consummation of the acquisition, and may have a negative effect on share price when no acquisition proposal is pending. The items below discuss specific anti-takeover proposals.
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a. Cumulative Voting
The Advisor will vote in favor of any proposal to adopt cumulative voting and will vote against any proposal to eliminate cumulative voting that is already in place, except in cases where a company has a staggered board. Cumulative voting gives minority shareholders a stronger voice in the company and a greater chance for representation on the board. The Advisor believes that the elimination of cumulative voting constitutes an anti-takeover measure. |
b. Staggered Board
If a company has a “staggered board,” its directors are elected for terms of more than one year and only a segment of the board stands for election in any year. Therefore, a potential acquiror cannot replace the entire board in one year even if it controls a majority of the votes. Although staggered boards may provide some degree of continuity and stability of leadership and direction to the board of directors, the Advisor believes that staggered boards are primarily an anti-takeover device and will vote against establishing them and for eliminating them. However, the Advisor does not necessarily vote against the re-election of directors serving on staggered boards. |
c. “Blank Check” Preferred Stock
Blank check preferred stock gives the board of directors the ability to issue preferred stock, without further shareholder approval, with such rights, preferences, privileges and restrictions as may be set by the board. In response to a hostile takeover attempt, the board could issue such stock to a friendly party or “white knight” or could establish conversion or other rights in the preferred stock which would dilute the common stock and make an acquisition impossible or less attractive. The argument in favor of blank check preferred stock is that it gives the board flexibility in pursuing financing, acquisitions or other proper corporate purposes without incurring the time or expense of a shareholder vote. Generally, the Advisor will vote against blank check preferred stock. However, the Advisor may vote in favor of blank check preferred if the proxy statement discloses that such stock is limited to use for a specific, proper corporate objective as a financing instrument. |
d. Elimination of Preemptive Rights
When a company grants preemptive rights, existing shareholders are given an opportunity to maintain their proportional ownership when new shares are issued. A proposal to eliminate preemptive rights is a request from management to revoke that right. While preemptive rights will protect the shareholder from having its equity diluted, it may also decrease a company’s ability to raise capital through stock offerings or use stock for acquisitions or other proper corporate purposes. Preemptive rights may therefore result in a lower market value for the company’s stock. In the long term, shareholders could be adversely affected by preemptive rights. The Advisor generally votes against proposals to grant preemptive rights, and for proposals to eliminate preemptive rights. |
e. Non-targeted Share Repurchase
A non-targeted share repurchase is generally used by company management to prevent the value of stock held by existing shareholders from |
deteriorating. A non-targeted share repurchase may reflect management’s belief in the favorable business prospects of the company. The Advisor finds no disadvantageous effects of a non-targeted share repurchase and will generally vote for the approval of a non-targeted share repurchase subject to analysis of the company’s financial condition.
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f. Increase in Authorized Common Stock
The issuance of new common stock can also be viewed as an anti-takeover measure, although its effect on shareholder value would appear to be less significant than the adoption of blank check preferred. The Advisor will evaluate the amount of the proposed increase and the purpose or purposes for which the increase is sought. If the increase is not excessive and is sought for proper corporate purposes, the increase will be approved. Proper corporate purposes might include, for example, the creation of additional stock to accommodate a stock split or stock dividend, additional stock required for a proposed acquisition, or additional stock required to be reserved upon exercise of employee stock option plans or employee stock purchase plans. Generally, the Advisor will vote in favor of an increase in authorized common stock of up to 100%; increases in excess of 100% are evaluated on a case-by-case basis, and will be voted affirmatively if management has provided sound justification for the increase. |
g. “Supermajority” Voting Provisions or Super Voting Share Classes
A “supermajority” voting provision is a provision placed in a company’s charter documents which would require a “supermajority” (ranging from 66 to 90%) of shareholders and shareholder votes to approve any type of acquisition of the company. A super voting share class grants one class of shareholders a greater per-share vote than those of shareholders of other voting classes. The Advisor believes that these are standard anti-takeover measures and will generally vote against them. The supermajority provision makes an acquisition more time-consuming and expensive for the acquiror. A super voting share class favors one group of shareholders disproportionately to economic interest. Both are often proposed in conjunction with other anti-takeover measures. |
h. “Fair Price” Amendments
This is another type of charter amendment that would require an offeror to pay a “fair” and uniform price to all shareholders in an acquisition. In general, fair price amendments are designed to protect shareholders from coercive, two-tier tender offers in which some shareholders may be merged out on disadvantageous terms. Fair price amendments also have an anti-takeover impact, although their adoption is generally believed to have less of a negative effect on stock price than other anti-takeover measures. The Advisor will carefully examine all fair price proposals. In general, the Advisor will vote against fair price proposals unless the Advisor concludes that it is likely that the share price will not be negatively affected and the proposal will not have the effect of discouraging acquisition proposals. |
i. Limiting the Right to Call Special Shareholder Meetings.
The corporation statutes of many states allow minority shareholders at a certain threshold level of ownership (frequently 10%) to call a special meeting of shareholders. This right can be eliminated (or the threshold increased) by amendment to the company’s charter documents. The Advisor believes that the right to call a special shareholder meeting is significant for minority shareholders; the elimination of such right will be viewed as an anti-takeover measure and the Advisor will generally vote against proposals attempting to eliminate this right and for proposals attempting to restore it. |
j. Poison Pills or Shareholder Rights Plans
Many companies have now adopted some version of a poison pill plan (also known as a shareholder rights plan). Poison pill plans generally provide for the issuance of additional equity securities or rights to purchase equity securities upon the occurrence of certain hostile events, such as the acquisition of a large block of stock. The basic argument against poison pills is that they depress share value, discourage offers for the company and serve to “entrench” management. The basic argument in favor of poison pills is that they give management more time and leverage to deal with a takeover bid and, as a result, shareholders may receive a better price. The Advisor believes that the potential benefits of a poison pill plan are outweighed by the potential detriments. The Advisor will generally vote against all forms of poison pills. The Advisor will, however, consider on a case-by-case basis poison pills that are very limited in time and preclusive effect. The Advisor will generally vote in favor of such a poison pill if it is linked to a business strategy that will – in our view – likely result in greater value for shareholders, if the term is less than three years, and if shareholder approval is required to reinstate the expired plan or adopt a new plan at the end of this term. |
k. Golden Parachutes
Golden parachute arrangements provide substantial compensation to executives who are terminated as a result of a takeover or change in control of their company. The existence of such plans in reasonable amounts probably has only a slight anti-takeover effect. In voting, the Advisor will evaluate the specifics of the plan presented. |
l. Reincorporation
Reincorporation in a new state is often proposed as one part of a package of anti-takeover measures. Several states (such as Pennsylvania, Ohio and Indiana) now provide some type of legislation that greatly discourages takeovers. Management believes that Delaware in particular is beneficial as a corporate domicile because of the well-developed body of statutes and case law dealing with corporate acquisitions. The Advisor will examine reincorporation proposals on a case-by-case basis. Generally, if the Advisor believes that the reincorporation will result in greater protection from takeovers, the reincorporation proposal will be opposed. The Advisor will also oppose reincorporation proposals involving jurisdictions that specify that directors can recognize non-shareholder interests over those of shareholders. When reincorporation is proposed for a legitimate business purpose and without the negative effects identified above, the Advisor will generally vote affirmatively. |
m. Confidential Voting
Companies that have not previously adopted a “confidential voting” policy allow management to view the results of shareholder votes. This gives management the opportunity to contact those shareholders voting against management in an effort to change their votes. Proponents of secret ballots argue that confidential voting enables shareholders to vote on all issues on the basis of merit without pressure from management to influence their decision. Opponents argue that confidential voting is more expensive and unnecessary; also, holding shares in a nominee name maintains shareholders’ confidentiality. The Advisor believes that the only way to insure anonymity of votes is through confidential voting, and |
that the benefits of confidential voting outweigh the incremental additional cost of administering a confidential voting system. Therefore, the Advisor will generally vote in favor of any proposal to adopt confidential voting.
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n. Opting In or Out of State Takeover Laws
State takeover laws typically are designed to make it more difficult to acquire a corporation organized in that state. The Advisor believes that the decision of whether or not to accept or reject offers of merger or acquisition should be made by the shareholders, without unreasonably restrictive state laws that may impose ownership thresholds or waiting periods on potential acquirors. Therefore, the Advisor will generally vote in favor of opting out of restrictive state takeover laws. |
4. Transaction Related Proposals The Advisor will review transaction related proposals, such as mergers, acquisitions, and corporate reorganizations, on a case-by-case basis, taking into consideration the impact of the transaction on each client account. In some instances, such as the approval of a proposed merger, a transaction may have a differential impact on client accounts depending on the securities held in each account. For example, whether a merger is in the best interest of a client account may be influenced by whether an account holds, and in what proportion, the stock of both the acquirer and the acquiror. In these circumstances, the Advisor may determine that it is in the best interests of the accounts to vote the accounts’ shares differently on proposals related to the same transaction.
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5. Other Matters
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a. Proposals Involving Environmental, Social, and Governance (“ESG”) Matters
The Advisor believes that ESG issues can potentially impact an issuer’s long-term financial performance and has developed an analytical framework, as well as a proprietary assessment tool, to integrate risks and opportunities stemming from ESG issues into our investment process. This ESG integration process extends to our proxy voting practices in that our ESG Proxy Team analyzes on a case-by-case basis the financial materiality and potential risks or economic impact of the ESG issues underpinning proxy proposals and makes voting recommendations based thereon for the Advisor’s consideration. The ESG Proxy Team will generally recommend support for well-targeted ESG proposals if it believes that there is a rational linkage between a proposal, its economic impact, and its potential to maximize long-term shareholder value. Where the economic effect of such proposals is unclear and there is not a specific written client-mandate, the Advisor believes it is generally impossible to know how to vote in a manner that would accurately reflect the views of the Advisor’s clients, and, therefore, the Advisor will generally rely on management’s assessment of the economic effect if the Advisor believes the assessment is not unreasonable. Shareholders may also introduce proposals which are the subject of existing law or regulation. Examples of such proposals would include a proposal to require disclosure of a company’s contributions to political action committees or a proposal to require a company to adopt a non-smoking workplace policy. The Advisor believes that such proposals may be better addressed outside the corporate arena and, absent a potential economic impact, will generally vote with management’s recommendation. In addition, the Advisor will generally vote against any proposal which would require a company to adopt practices or procedures which go beyond the requirements of existing, directly applicable law. |
b. Anti-Greenmail Proposals
“Anti-greenmail” proposals generally limit the right of a corporation, without a shareholder vote, to pay a premium or buy out a 5% or greater shareholder. Management often argues that they should not be restricted from negotiating a deal to buy out a significant shareholder at a premium if they believe it is in the best interest of the company. Institutional shareholders generally believe that all shareholders should be able to vote on such a significant use of corporate assets. The Advisor believes that any repurchase by the company at a premium price of a large block of stock should be subject to a shareholder vote. Accordingly, it will generally vote in favor of anti-greenmail proposals. |
c. Indemnification
The Advisor will generally vote in favor of a corporation’s proposal to indemnify its officers and directors in accordance with applicable state law. Indemnification arrangements are often necessary in order to attract and retain qualified directors. The adoption of such proposals appears to have little effect on share value. |
d. Non-Stock Incentive Plans
Management may propose a variety of cash-based incentive or bonus plans to stimulate employee performance. In general, the cash or other corporate assets required for most incentive plans is not material, and the Advisor will vote in favor of such proposals, particularly when the proposal is recommended in order to comply with IRC Section 162(m) regarding salary disclosure requirements. Case-by-case determinations will be made of the appropriateness of the amount of shareholder value transferred by proposed plans. |
e. Director Tenure
These proposals ask that age and term restrictions be placed on the board of directors. The Advisor believes that these types of blanket restrictions are not necessarily in the best interests of shareholders and therefore will vote against such proposals, unless they have been recommended by management. |
f. Directors’ Stock Options Plans
The Advisor believes that stock options are an appropriate form of compensation for directors, and the Advisor will generally vote for director stock option plans which are reasonable and do not result in excessive shareholder dilution. Analysis of such proposals will be made on a case-by-case basis, and will take into account total board compensation and the company’s total exposure to stock option plan dilution. |
g. Director Share Ownership
The Advisor will generally vote against shareholder proposals which would require directors to hold a minimum number of the company’s shares to serve on the Board of Directors, in the belief that such ownership should be at the discretion of Board members. |
h. Non-U.S. Proxies
The Advisor will generally evaluate non-U.S. proxies in the context of the voting policies expressed herein but will also, where feasible, take into consideration differing laws, regulations, and practices in the relevant foreign market in determining if and how to vote. There may also be |
circumstances when practicalities and costs involved with non-U.S. investing make it disadvantageous to vote shares. For instance, the Advisor generally does not vote proxies in circumstances where share blocking restrictions apply, when meeting attendance is required in person, or when current share ownership disclosure is required. Restrictions apply, when meeting attendance is required in person, or when current share ownership disclosure is required.
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C. Use of Proxy Advisory Services
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The Adviser may retain proxy advisory firms to provide services in connection with voting proxies, including, without limitation, to provide information on shareholder meeting dates and proxy materials, translate proxy materials printed in a foreign language, provide research on proxy proposals and voting recommendations in accordance with the voting policies expressed herein, provide systems to assist with casting the proxy votes, and provide reports and assist with preparation of filings concerning the proxies voted. Prior to the selection of a proxy advisory firm and periodically thereafter, the Advisor will consider whether the proxy advisory firm has the capacity and competency to adequately analyze proxy issues and the ability to make recommendations based on material accurate information in an impartial manner. Such considerations may include some or all of the following (i) periodic sampling of votes cast through the firm’s systems to determine that votes are in accordance with the Advisor’s policies and its clients best interests, (ii) onsite visits to the proxy advisory firm’s office and/or discussions with the firm to determine whether the firm continues to have the resources (e.g. staffing, personnel, technology, etc.) capacity and competency to carry out its obligations to the Advisor, (iii) a review of the firm’s policies and procedures, with a focus on those relating to identifying and addressing conflicts of interest and monitoring that current and accurate information is used in creating recommendations, (iv) requesting that the firm notify the Advisor if there is a change in the firm’s material policies and procedures, particularly with respect to conflicts, or material business practices (e.g., entering or exiting new lines of business), and reviewing any such change, and (v) in case of an error made by the firm, discussing the error with the firm and determining whether appropriate corrective and preventative action is being taken. In the event the Advisor discovers an error in the research or voting recommendations provided by the firm, it will take reasonable steps to investigate the error and seek to determine whether the firm is taking reasonable steps to reduce similar errors in the future. While the Advisor takes into account information from many different sources, including independent proxy advisory services, the decision on how to vote proxies will be made in accordance with these policies.
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D. Monitoring Potential Conflicts of Interest
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Corporate management has a strong interest in the outcome of proposals submitted to shareholders. As a consequence, management often seeks to influence large shareholders to vote with their recommendations on particularly controversial matters. In the vast majority of cases, these communications with large shareholders amount to little more than advocacy for management’s positions and give the Advisor’s staff the opportunity to ask additional questions about the matter being presented. Companies with which the Advisor has direct business relationships could theoretically use these relationships to attempt to unduly influence the manner in which the Advisor votes on matters for its clients. To ensure that such a conflict of interest does not affect proxy votes cast for the Advisor’s clients, our proxy voting personnel regularly catalog companies with whom the Advisor has significant business relationships; all discretionary (including case-by-case) voting for these companies will be voted by the client or an appropriate fiduciary responsible for the client (e.g., a committee of the independent directors of a fund or the trustee of a retirement plan). In addition, to avoid any potential conflict of interest that may arise when one American Century fund owns shares of another American Century fund, the Advisor will “echo vote” such shares, if possible. Echo voting means the Advisor will vote the shares in the same proportion as the vote of all of the other holders of the fund’s shares. So, for example, if shareholders of a fund cast 80% of their votes in favor of a proposal and 20% against the proposal, any American Century fund that owns shares of such fund will cast 80% of its shares in favor of the proposal and 20% against. When this is not possible (as in the case of the “NT” funds, where the other American Century funds are the only shareholders), the shares of the underlying fund (e.g. the “NT” fund) will be voted in the same proportion as the vote of the shareholders of the corresponding American Century policy portfolio for proposals common to both funds. For example, NT Growth Fund shares will be echo voted in accordance with the votes of the Growth Fund shareholders. In the case where the policy portfolio does not have a common proposal, shares will be voted in consultation with a committee of the independent directors.
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The voting policies expressed above are of course subject to modification in certain circumstances and will be reexamined from time to time. With respect to matters that do not fit in the categories stated above, the Advisor will exercise its best judgment as a fiduciary to vote in the manner which will most enhance shareholder value. Case-by-case determinations will be made by the Advisor’s staff, which is overseen by the General Counsel of the Advisor, in consultation with equity managers. Electronic records will be kept of all votes made.
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Research on corporate governance, financial statements, business, legal and accounting risks,
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Proxy voting recommendations, including environmental, social, and governance (“ESG”) voting Guidelines,
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Portfolio accounting and reconciliation of shareholdings for voting purposes,
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Proxy voting execution, record keeping, and reporting services.
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Barrow Hanley’s Proxy Oversight Committee is responsible for implementing and monitoring this proxy voting Policy, procedures, disclosures, and recordkeeping.
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The Proxy Oversight Committee conducts periodic reviews of proxy votes to ensure that the Policy is observed, implemented properly, and amended or updated, as appropriate.
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The Proxy Oversight Committee is comprised of the CCO, the Responsible Investing Committee Lead, the Head of Investment Operations, the ESG Research Coordinator, and an At-Large Portfolio Manager.
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Proxy Coordinators are responsible for organizing and reviewing the data and recommendations of Glass Lewis.
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Proxy Coordinators are responsible for ensuring that the proxy ballots are routed to the appropriate research analyst based on industry sector coverage.
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Research Analysts are responsible for review and evaluate proposals and make recommendations to the Proxy Voting Committee to ensure that votes are consistent with the Firm’s analysis.
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Equity Portfolio Managers are members of the Proxy Voting Committee.
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Equity Portfolio Managers vote proposals based on our Guidelines, internal research recommendations, and the research from Glass Lewis. Proxy votes must be approved by the Proxy Voting Committee before submitting to Glass Lewis.
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Proxies for the Diversified Small Cap Value accounts are voted in accordance with the Glass Lewis’ recommendations for the following reasons:
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Investment selection is based on a quantitative model,
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The holding period is too short to justify the time for analysis necessary to vote.
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Clients elect to participate in securities lending arrangements; in such cases, the votes follow the shares. Barrow Hanley is not a party to the client’s lending arrangement and typically does not have information about shares on loan. Under these circumstances the proxies for those shares may not be voted.
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If/when a proxy voting issue is determined to be financially material, the Firm makes a best-efforts attempt to alert clients and their custodial bank to recall shares from loan to be voted. In this context, Barrow Hanley defines a financially material issue to be issues deemed by our investment team to have significant economic impact. The ultimate decision on whether to recall shares is the responsibility of the client.
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Barrow Hanley invests in equity securities of corporations who are also clients of the Firm. In such cases, the Firm seeks to mitigate potential conflicts by:
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Making voting decisions for the benefit of the shareholder(s), our clients,
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Uniformly voting every proxy based on Barrow Hanley’s internal research and consideration of Glass Lewis’ recommendations, and
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Documenting the votes of companies who are also clients of the Firm.
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If a material conflict of interest exists, members from the Proxy Voting and Oversight Committees will determine if the affected clients should have an opportunity to vote their proxies themselves, or whether Barrow Hanley will address the specific voting issue through other objective means, such as voting the proxies in a manner consistent with a predetermined voting policy or accepting the voting recommendation of Glass Lewis.
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A proxy card or voting instruction form contains a list of voting options, including For, Against, Abstain, and/or Withhold. A vote to Abstain or Withhold is effectively a vote against the proposal. Barrow Hanley assesses each vote, the intended impact of our vote, and the rule(s) that apply to the vote and may select any of these options when casting the vote. Barrow Hanley sends a daily electronic transfer of equity positions to Glass Lewis.
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Glass Lewis identifies accounts eligible to vote for each security and posts the proposals and research on its secure, proprietary online system.
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Barrow Hanley sends a proxy report to clients at least annually and/or as requested by client, listing the number of shares voted and disclosing how proxies were voted.
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Barrow Hanley retains voting records in accordance with the Firm’s Books and Records Policy. Glass Lewis retains the Firm’s voting records for seven years.
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Proxy Coordinators are responsible for retaining the following proxy records:
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These policies, procedures, and amendments;
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Proxy statements regarding our clients’ securities;
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A record of each proxy voted;
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Proxy voting reports that are sent to clients annually;
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Internal documents related to voting decisions; and
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Records of clients’ requests for proxy voting information and/or correspondence about votes.
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Board of Directors
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Independent Auditors
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Compensation Issues
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Corporate Structure and Shareholder Rights
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Shareholder Proposals and ESG Issues
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Voting of Non-U.S./Foreign Shares
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A slate of nominees comprised of a two-thirds majority of independent directors.
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Nominees for Audit, Compensation and/or Nominating committees who are independent of management.
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Nominees who we believe have the required skills and diverse backgrounds to make informed judgments about the subject matter for which the committee is responsible.
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We attempt to target board diversity of at least 30%.
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A slate of nominees that results in a majority non-independent directors.
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Nominees for Audit, Compensation and/or Nominating committees who are not independent of management.
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Incumbent board members who failed to attend at least 75% of board and applicable committee meetings.
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Nominees who have served on boards or as executives of companies with records of poor performance, inadequate risk oversight, excessive compensation, audit, or accounting-related problems and/or other indicators of mismanagement or actions against the interests of shareholders.
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Nominees whose actions on other committees demonstrate serious failures of governance, which may include acting to significantly reduce shareholder rights, or failure to respond to previous vote requests for directors and shareholder proposals.
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An independent director who has in the past three years, had a material financial, familial, or other relationship with the company or its executives.
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Members of a Nominating committee where the board has an average tenure of over ten years and has not appointed a new member to the board in at least five years
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Members of a Nominating committee where the board lacks diversity.
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Stock-Based Compensation Plans
Stock-based compensation plans should be administered by an independent committee of the board and approved by shareholders. Barrow Hanley opposes compensation plans that substantially dilute a shareholder’s ownership interest, provides participants with excessive awards, and/or have other objectionable features. Compensation proposals are evaluated on a case-by-case basis using the following factors: |
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The company’s industry group, market capitalization, and competitors’ compensation plans.
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Requirements for senior executives to hold a minimum amount/percentage of company stock.
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Requirements for minimum holding periods for stock acquired through equity awards.
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Performance-vesting awards, indexed options, and/or other grants linked to the company’s performance.
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Requirements that limit the concentration of equity grants to senior executives and provide for a broad-based plan.
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Requirements for stock-based compensation plans as a substitute for cash compensation to deliver market-competitive total compensation.
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Bonus Plans
Bonus based compensation plans should include the following features: |
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Periodic shareholder approval to properly qualify for deductions under Internal Revenue Code Section 162(m).
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Performance measures relating to key value drivers of the company’s business.
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Maximum award amounts expressed in dollar amounts.
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Bonus plans should not include excessive awards in both absolute and relative terms.
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Executive Compensation Plans (Say on Pay)
Say on Pay type of executive compensation programs can effectively link pay and performance and provide competitive compensation opportunities. Say on Pay type plans should state the amount of compensation at risk and the amount of equity-based compensation linked to the company’s performance and include adequate disclosure about the overall compensation structure. Say on Pay type plans should not include significant compensation guarantees and/or compensation that is not sufficiently linked to performance. |
Recoupment Provisions (Clawbacks)
Executive compensation programs should be clearly tied to performance and include the following: |
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Detailed bonus recoupment policies to prevent executives from retaining performance-based awards that were not truly earned.
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Clawback triggers in the event of a restatement of financial results or similar revision of performance indicators upon which bonuses were based.
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Policies allowing board reviews of performance-related bonuses and awards paid to senior executives during the period covered by a restatement that allows the company to recoup such bonuses if performance goals were not actually achieved.
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Clawback policies that limit discretion and ensure the integrity of such policies.
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Executive Severance Agreement (Golden Parachutes)
Executive compensation should be designed as an incentive for continued employment and include reasonable severance benefits, and the executive’s termination should be limited to three times salary and bonus, referred to as double-trigger plans. |
Guaranteed severance benefits that exceed three times salary and bonus should be disclosed and should require shareholder approval.
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Barrow Hanley does not support guaranteed severance benefits without a change in control or arrangements that does not require the executive’s termination, referred to as single-trigger plans.
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Employee Stock Purchase Plans
Employee stock purchase plans are effective ways to increase employees’ ownership in the company’s stock. Such plans should not allow for purchases below 85% of current market value and should limit shares reserved under the plan to 5% or less of the outstanding shares of the company. |
Shareholder Right Plans (Poison Pills)
Poison pill plans can erode shareholder value by limiting a potential acquirer’s ability to purchase a controlling interest in the company without the approval of its board of directors, and/or can serve to entrench incumbent management and directors. |
Shareholder rights plans should be designed to enables the board to take appropriate to defensive actions, and should require the following:
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Shareholder approval within a year of its adoption.
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Timing limited to 3-5 years.
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Requirement for shareholder approval for renewal.
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Reviews by a committee of independent directors at least every three years, referred to as TIDE provisions.
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Permitted bid or qualified offer features requiring shareholder votes under specific conditions referred to as chewable pills.
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Reasonable ownership triggers of 15-20%.
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Highly independent, non-classified boards.
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Shareholder rights plans should avoid the following:
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Long-term defensive features of 5 or more years.
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Automatic renewals without shareholder approval.
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Ownership triggers of less than 15%.
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Classified boards.
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Boards with limited independence.
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Political Contributions and Lobbying
Barrow Hanley evaluates an issuer’s policy and procedures governing political spending and lobbying. Proposals demonstrating insufficient or absent policies and disclosure are opposed. |
An Increase in Authorized Shares
Proposals for increases in authorized share amounts should not expose shareholders to excessive dilution and should be limited to increases of up to 20% of the current share authorization. |
Cumulative Voting
Cumulative voting should be proportional to the shareholders’ economic investment in the company. |
Supermajority Vote Requirements
Shareholders’ rights to approve or reject proposals should be based on a simple majority. |
Confidential Voting
Shareholder voting should be conducted in a confidential manner. |
Dual Classes of Stock
Barrow Hanley opposes dual-class capitalization structures that provide disparate voting rights to shareholders with similar economic interests. Proposals to create separate share classes with different voting rights are opposed. Proposals to dissolve separate share classes are approved. |
A. has specifically authorized Brandywine Global to vote proxies in the applicable investment management agreement or other written instrument; or
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B. without specifically authorizing Brandywine Global to vote proxies, has granted general investment discretion to Brandywine Global in the applicable investment management agreement.
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A. Procedures for Identifying Conflicts of Interest
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Brandywine Global relies on the procedures set forth below to seek to identify conflicts of interest with respect to proxy voting.
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1. Brandywine Global’s Compliance Department annually requires each Brandywine Global employee to complete a questionnaire designed to elicit information that may reveal potential conflicts between the employee’s interests and those of Brandywine Global clients.
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2. Brandywine Global treats client and wrap sponsor relationships as creating a material conflict of interest for Brandywine Global in voting proxies with respect to securities issued by such client or its known affiliates.
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3. As a general matter, Brandywine Global takes the position that relationships between a non-Brandywine Global Franklin Resources business unit and an issuer (e.g., investment management relationship between an issuer and a non-Brandywine Global Franklin Resources-owned asset manager) do not present a conflict of interest for Brandywine Global in voting proxies with respect to such issuer because Brandywine Global operates as an independent business unit from other Franklin Resources business units and because of the existence of informational barriers between Brandywine Global and certain other Franklin Resources business units.
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B. Procedures for Assessing Materiality of Conflicts of Interest
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1. All potential conflicts of interest identified pursuant to the procedures outlined in Section V.A.1. must be brought to the attention of the Investment Committee for resolution.
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2. The Investment Committee shall determine whether a conflict of interest is material. A conflict of interest shall be considered material to the extent that it is determined that such conflict is likely to influence, or appear to influence, Brandywine Global’s decision-making in voting the proxy. All materiality determinations will be based on an assessment of the particular facts and circumstances. A written record of all materiality determinations made by the Investment Committee shall be maintained.
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3. If it is determined by the Investment Committee that a conflict of interest is not material, Brandywine Global may vote proxies following normal processes notwithstanding the existence of the conflict.
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C. Procedures for Addressing Material Conflicts of Interest
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1. With the exception of those material conflicts identified in A.2. which will be voted in accordance with paragraph C.1.b., if it is determined by the Investment Committee that a conflict of interest is material, the Investment Committee shall determine an appropriate method or combination of methods to resolve such conflict of interest before the proxy affected by the conflict of interest is voted by Brandywine Global. Such determination shall be based on the particular facts and circumstances, including the importance of the proxy issue, the nature of the conflict of interest, etc. Such methods may include:
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a. confirming that the proxy will be voted in accordance with a stated position or positions set forth in Appendix A;
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b. confirming that the proxy will be voted in accordance with the recommendations of an independent proxy service firm retained by Brandywine Global;
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c. in the case of a conflict of interest resulting from a particular employee’s personal relationships or circumstances, removing such employee from the decision-making process with respect to such proxy vote;
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d. disclosing the conflict to clients and obtaining their consent before voting;
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e. suggesting to clients that they engage another party to vote the proxy on their behalf; or
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f. such other method as is deemed appropriate given the particular facts and circumstances, including the importance of the proxy issue, the nature of the conflict of interest, etc.
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2. A written record of the method used to resolve a material conflict of interest shall be maintained.
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A. Share Blocking
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Proxy voting in certain countries requires “share blocking.” This means that shareholders wishing to vote their proxies must deposit their shares shortly before the date of the meeting (e.g. one week) with a designated depositary. During the blocking period, shares that will be voted at the meeting cannot be sold until the meeting has taken place and the shares have been returned to client accounts by the designated depositary. In deciding whether to vote shares subject to share blocking, Brandywine Global will consider and weigh, based on the particular facts and circumstances, the expected benefit to client accounts of voting in relation to the potential detriment to clients of not being able to sell such shares during the applicable period.
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B. Securities on Loan
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Certain clients of Brandywine Global, such as an institutional client or a registered investment company for which Brandywine Global acts as a sub-adviser, may engage in securities lending with respect to the securities in their accounts. Brandywine Global typically does not direct or oversee such securities lending activities. To the extent feasible and practical under the circumstances, Brandywine Global may request that the client recall shares that are on loan so that such shares can be voted if Brandywine Global believes that the expected benefit to the client of voting such shares outweighs the detriment to the client of recalling such shares (e.g., foregone income). The ability to timely recall shares for proxy voting purposes typically is not entirely within the control of Brandywine Global and requires the cooperation of the client and its other service providers. Under certain circumstances, the recall of shares in time for such shares to be voted may not be possible due to applicable proxy voting record dates and administrative considerations.
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A. Proxy Voting Independence and Intent
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Brandywine Global exercises its proxy voting authority independently of other Franklin Resources-owned asset managers. Brandywine Global and its employees shall not consult with or enter into any formal or informal agreements with Brandywine Global’s ultimate parent, Franklin Resources, Inc., any other Franklin Resources business unit, or any of their respective officers, directors or employees, regarding the voting of any securities by Brandywine Global on behalf of its clients.
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Brandywine Global and its employees must not disclose to any person outside of Brandywine Global, including without limitation another investment management firm (affiliated or unaffiliated) or the issuer of securities that are the subject of the proxy vote, how Brandywine Global intends to vote a proxy without prior approval from Brandywine Global’s Chief Compliance Officer.
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If a Brandywine Global employee receives a request to disclose Brandywine Global’s proxy voting intentions to, or is otherwise contacted by, another person outside of Brandywine Global (including an employee of another Franklin Resources business unit) in connection with an upcoming proxy voting matter, the employee should immediately notify Brandywine Global’s Chief Compliance Officer.
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If a Brandywine Global portfolio manager wants to take a public stance with regards to a proxy, the portfolio manager must consult with and obtain the approval of Brandywine Global’s Chief Compliance Officer before making or issuing a public statement.
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B. Disclosure of Proxy Votes and Policy and Procedures
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Upon Brandywine Global’s receipt of any oral or written client request for information on how Brandywine Global voted proxies for that client’s account, Brandywine Global must promptly provide the client with such requested information in writing.
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Brandywine Global must deliver to each client, for which it has proxy voting authority, no later than the time it accepts such authority, a written summary of this Proxy Voting policy and procedures. This summary must include information on how clients may obtain information about how Brandywine Global has voted proxies for their accounts and must also state that a copy of Brandywine Global’s Proxy Voting policy and procedures is available upon request.
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Brandywine Global must create and maintain a record of each written client request for proxy voting information. Such record must be created promptly after receipt of the request and must include the date the request was received, the content of the request, and the date of Brandywine Global’s response. Brandywine Global must also maintain copies of written client requests and copies of all responses to such requests.
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C. Delegation of Duties
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Brandywine Global may delegate to non-investment personnel the responsibility to vote proxies in accordance with the guidelines set forth in Appendix A. Such delegation of duties will only be made to employees deemed to be reasonably capable of performing this function in a satisfactory manner.
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A. a copy of this Policy and Procedures, including any and all amendments that may be adopted;
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B. a copy of each proxy statement that Brandywine Global receives regarding client securities;
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C. a record of each vote cast by Brandywine Global on behalf of a client;
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D. documentation relating to the identification and resolution of conflicts of interest;
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E. any documents created by Brandywine Global that were material to a proxy voting decision or that memorialized the basis for that decision;
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F. a copy of each written client request for information on how Brandywine Global voted proxies on behalf of the client, and a copy of any written response by Brandywine Global to any (written or oral) client request for information on how Brandywine Global voted proxies on behalf of the requesting client; and
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G. records showing whether or not Brandywine Global has proxy voting authority for each client account.
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A. We vote for non-employee director stock options, unless we consider the number of shares available for issue excessive. We may consider current and past stock option grants in determining whether the cumulative dilution is excessive.
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B. We vote for employee stock purchase programs. Normally, these programs allow all employees to purchase company stock at a price equal to 85% of current market price. Usually, we will still vote for these employee programs even if we vote against a non-employee or executive-only stock purchase program because of excessive dilution.
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C. We vote for compensation plans that are tied to the company achieving set profitability hurdles. Plans are structured this way to comply with IRS laws allowing for deductibility of management compensation exceeding $1 million.
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D. We vote against attempts to re-price options. Also, we vote against the re-election of incumbent Directors in the event of such a re-pricing proposal.
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E. We vote against attempts to increase incentive stock options available for issuance when the shares underlying such options would exceed 10% of the company’s outstanding shares.
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F. We vote against stock option plans allowing for stock options with exercise prices less than 100% of the stock’s price at the time of the option grant.
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G. We vote against stock option plans allowing for very large allocations to a single individual because we generally believe that stock option plans should provide for widespread employee participation.
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H. We vote against proposals to authorize or approve loans to company executives or Board members for personal reasons or for the purpose of enabling such persons to purchase company shares.
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A. We vote for proposals to separate the Chief Executive Officer and Chairman of the Board positions.
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B. We vote against “catch-all” authorizations permitting proxy holders to conduct unspecified business that arises during shareholder meetings.
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A. Staggered Boards of Directors (for example, where 1/3 of a company’s Board is elected each year rather than the entire Board each year).
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B. Super-Majority Voting Measures (for example, requiring a greater than 50% vote to approve takeovers or make certain changes).
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C. Poison Pills, which are special stock rights that go into effect upon a takeover offer or an outsider acquiring more than a specified percentage of a company’s outstanding shares.
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A. We vote for non-employee director stock options, unless we consider the number of shares available for issue excessive.
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B. We vote for employee stock purchase programs. Normally, these programs allow all employees to purchase company stock at a price equal to 85% of current market price. Usually, we will still vote for these employee programs even if we vote against a non-employee or executive-only stock purchase program because of excessive dilution.
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C. We vote for measures that give shareholders a vote on executive compensation.
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D. We vote for compensation plans that are tied to the company achieving set profitability hurdles. We vote against compensation metrics that are not easily measurable and where long-term incentives are not tied to operating performance metrics. This is to comply with IRS laws to allow for deductibility of management compensation exceeding $1 million.
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E. We vote against any attempt to re-price options. Also, we vote against the re- election of incumbent Directors in the event of such a re-pricing proposal.
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F. We vote against attempts to increase incentive stock options when we determine they are excessive, either in total or for one individual.
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G. We vote against stock option plans allowing for stock options with exercise prices less than 100% of the stock’s price at the time of the option grant.
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A. We vote for cumulative shareholder voting.
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B. We vote against “catch-all” authorizations permitting proxy holders to conduct unspecified business that arises during shareholder meetings.
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C. We vote against related-party transactions involving directors, senior members of company management or other company insiders.
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D. We vote for proposals to separate the Chief Executive Officer and Chairman of the Board positions.
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A. Staggered Boards of Directors (for example, where 1/3 of a company’s Board is elected each year rather than the entire Board each year).
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B. Super-Majority Voting Measures (for example, requiring a greater than 50% vote to approve takeovers or make certain changes).
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C. Poison Pills, which are special stock rights that go into effect upon a takeover offer or an outsider acquiring more
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a specified percentage of a company’s outstanding shares.
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D. Change-of-Control Contracts, which grant benefits to company personnel (typically members of senior company management) in the event the company is acquired or is otherwise subject to a change of control.
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A. We vote for non-employee director stock options, unless we consider the number of shares available for issue excessive.
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B. We vote for employee stock purchase programs. Normally, these programs allow all employees to purchase company stock at a price equal to 85% of current market price. Usually, we will still vote for these employee programs even if we vote against a non-employee or executive-only stock purchase program because of excessive dilution.
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C. We vote for measures that give shareholders a vote on executive compensation.
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D. We vote for compensation plans that are tied to the company achieving set profitability hurdles. This is to comply with IRS laws to allow for deductibility of management compensation exceeding $1 million.
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E. We vote against any attempt to re-price options. Also, we vote against the re- election of incumbent Directors in the event of such a re-pricing proposal.
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F. We vote against attempts to increase incentive stock options when we determine they are excessive, either in total or for one individual.
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G. We vote against stock option plans allowing for stock options with exercise prices less than 100% of the stock’s price at the time of the option grant.
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A. We vote for cumulative shareholder voting.
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B. We vote against “catch-all” authorizations permitting proxy holders to conduct unspecified business that arises during shareholder meetings.
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A. Staggered Boards of Directors (for example, where 1/3 of a company’s Board is elected each year rather than the entire Board each year).
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B. Super-Majority Voting Measures (for example, requiring a greater than 50% vote to approve takeovers or make certain changes).
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C. Poison Pills, which are special stock rights that go into effect upon a takeover offer or an outsider acquiring more than a specified percentage of a company’s outstanding shares.
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distributions of income
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appointment of auditors
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director compensation, unless deemed excessive
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boards of directors – Causeway generally votes for management’s slate of director nominees. However, it votes against incumbent nominees with poor attendance records, or who have otherwise acted in a manner Causeway believes is not in the best interests of shareholders. Causeway recognizes that, in certain jurisdictions, local law or regulation may influence Board composition.
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financial results/director and auditor reports
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share repurchase plans
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changing corporate names and other similar matters
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amendments to articles of association or other governing documents
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changes in board or corporate governance structure
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changes in authorized capital including proposals to issue shares
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compensation – Causeway believes that it is important that a company’s equity-based compensation plans, including stock option or restricted stock plans, are aligned with the interests of shareholders, including Causeway’s clients, and focus on observable long-term returns. Causeway evaluates compensation plans on a case-by-case basis, with due consideration of potential consequences of a particular compensation plan. Causeway generally opposes packages that it believes provide excessive awards or create excessive shareholder dilution. Causeway generally opposes proposals to reprice options because the underlying stock has fallen in value.
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social and environmental issues – Causeway believes that it is generally management’s responsibility to address such issues within the context of increasing long-term shareholder value. To the extent that management’s position on a social or environmental issue is inconsistent with increasing long-term shareholder value, Causeway may vote against management or abstain. Causeway may also seek to engage in longer-term dialogue with management on these issues, either separately or in connection with proxy votes on the issue.
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debt issuance requests
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mergers, acquisitions and other corporate reorganizations or restructurings
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changes in state or country of incorporation
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• related party transactions
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anti-takeover mechanisms – Causeway generally opposes anti-takeover mechanisms including poison pills, unequal voting rights plans, staggered boards, provisions requiring supermajority approval of a merger and other matters that are designed to limit the ability of shareholders to approve merger transactions.
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If a “for” or “against” or “with management” guideline applies to the proposal, Causeway will vote in accordance with that guideline.
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If a “for” or “against” or “with management” guideline does not apply to the proposal, Causeway will follow the recommendation of an independent third party such as ISS. If Causeway seeks to follow the recommendation of a third party, the Chief Operating Officer will assess the third party’s capacity and competency to analyze the issue, as well as the third party’s ability to identify and address conflicts of interest it may have with respect to the recommendation.
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An investment adviser must disclose to clients how they can obtain information on how client proxies were voted.
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A concise summation of the proxy voting process, rather than a reiteration of the adviser’s proxy voting policy and procedures must also be disclosed and that upon client request, the adviser will provide a copy of the policies and procedures.
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Proxy Voting Policies and Procedures;
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Proxy Statements Received Regarding Client Securities;
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Records of Votes Cast on Behalf of Clients;
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Records of Client Requests for Proxy Voting Information; and
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Any Documents Prepared by the Adviser that were Material to Making a Decision how to Vote, or that were Prepared by the Adviser to Memorialize the Basis for the Decision.
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DRZ does not maintain a written proxy voting policy as required by Rule 206(4)-6.
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Proxies are not voted in clients’ best interests.
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Proxies are not identified and voted in a timely manner.
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Conflicts between DRZ’s interests and the client are not identified; therefore, proxies are not voted appropriately.
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Proxy voting records and client requests to review proxy votes are not maintained. DRZ has established the following guidelines as an attempt to mitigate these risks.
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1 | DRZ shall maintain a list of all clients for which it votes proxies. The list will be maintained electronically and will be updated by the Compliance department who will obtain proxy voting information from client agreements. Notice of new accounts to be added to the proxy service must be sent to the Proxy Administrator no later than ten (10) days from the date a new account starts trading. Alternatively, DRZ’s Operations Department, as part of the account opening procedure, will inform the Proxy Administrator that DRZ will vote proxies for the new client. |
2 | DRZ shall work with the client to ensure that the Proxy Administrator is the designated party to receive proxy voting materials from companies or intermediaries. To that end, new account forms of broker- dealers/custodians will state that the Proxy Administrator should receive this documentation. The designation may also be made by telephoning contacts and/or Client Service Representatives at broker- dealers/custodians. These intermediaries will be informed to direct all proxy materials to DRZ’s designated Proxy Administrator. |
3 | DRZ shall work with the Proxy Administrator to ensure that the Proxy Administrator is properly instructed on the manner and direction to vote each client’s account based upon the type of client and specific voting instructions received from the client, if any. DRZ has established proxy voting policies with the Proxy Administrator in the interest of maximizing shareholder value. However, DRZ has instructed the Proxy Administrator to alert DRZ to certain issues that DRZ believes require an additional level of consideration. |
4 | The Proxy Administrator shall receive all proxy voting materials and will be responsible for ensuring that proxies are voted and submitted in a timely manner. DRZ’s Compliance Department shall receive and review current proxy information from the Proxy Administrator on a routine basis to ensure that all proxies are being received and voted. |
5 | The Proxy Administrator will review the list of clients and compare the record date of the proxies with a security holdings list for the security or company soliciting the proxy vote. For any client who has provided specific voting instructions, the Proxy Administrator shall vote that client’s proxy in accordance with the client’s written instructions. Proxies received for client’s who have elected to have their proxies voted by a third party outside of the proxy voting services DRZ provides, and whose proxies were received by DRZ, shall be forwarded back to the client for voting and submission. Proxies received after the termination date of a client relationship will not be voted. Such proxies should be delivered to the last known address of the former client or to the intermediary who distributed the proxy with a written or oral statement indicating that the advisory relationship has been terminated and that the proxies should be forwarded to the last known address of the former client. The statement should further indicate that future proxies for the named former client should not be delivered to DRZ or to the Proxy Administrator, but directly to the former client. |
6 | Proxy issues not covered by DRZ’s guidelines will be forwarded to the appropriate DRZ investment team for consideration and submission of a vote. |
7 | It is DRZ’s policy to abstain from voting proxy ballots over which the issuer has implemented a share blocking policy. Share blocking policies are generally implemented by issuers whose securities are traded in limited markets outside the United States. Under a “share blocking policy” voting any proxies on the ballot would prohibit trading shares of the issuer for a pre-determined period of time. DRZ typically invests in securities that have unrestricted liquidity and therefore DRZ will generally choose to avoid circumstances that would hinder DRZ’s ability to manage portfolio positions. DRZ will document exceptions or deviations from this policy. |
8 | DRZ shall compare the cost of voting the proxy to the benefit to the client. In the event that the costs of voting appear to outweigh the benefits, DRZ shall document such rationale and maintain the documentation in the permanent file (for example, voting a foreign security may require additional costs that overshadow the benefits) in accordance with DRZ’s record retention policy. |
9 | The Proxy Administrator and/or the CCO or CA will reasonably try to assess any material conflicts between DRZ’s interests and those of its clients with respect to proxy voting by considering the situations identified in the Conflicts of Interest section of this document. |
10 | So long as there is no material conflicts of interest identified, the Proxy Administrator will vote proxies according to the guidelines set forth above. DRZ may also elect to abstain from voting if it deems such abstinence in its clients’ best interests. The rationale for the occurrence of voting that deviates from the guidelines will be documented and the documentation will be maintained in the permanent file in accordance with DRZ’s record retention policy. |
11 | If the Proxy Administrator, the CCO or the CA (interchangeably referred to as the “Compliance Officer”) detects a conflict of interest, the following process will be followed: |
a. In cases where the Proxy Administrator is the party identifying the conflict, they have been instructed to contact DRZ’s CCO or ACO as soon as reasonably practicable.
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b. The CCO and a member of the DRZ Proxy Voting Committee (the “Committee”) will determine the appropriate method of resolution considering the nature of the conflict of interest, the proxy voting deadline, the number of clients involved, and other material information related to the matter.
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c. The CCO will either (i) with the assistance of the appropriate investment personnel, contact the client(s) directly for discussion of the matter and determine if the client(s) desire to vote the proxy directly or provide its vote to DRZ to vote on their behalf, or (ii) will convene the Committee, as appropriate.
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d. If the CCO elects to contact the client(s) directly and the client(s) desire to vote the proxy or provide DRZ with their vote, the CCO and the Proxy Administrator will provide the client(s) with the proxy and related information to enable the client(s) to make an informed decision.
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e. Alternatively, if the CCO concludes the matter should go before the Committee, they will immediately convene the Committee. Members of the Committee include the persons listed on Attachment A. A majority of the Committee members shall constitute a quorum at a meeting of the Committee, but in no event shall a quorum consist of less than one-third of the Committee. The CCO will serve as chairperson. The CCO, at inception of the Committee meeting, will appoint a Secretary, whose role it will be to keep careful and detailed minutes.
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f. The CCO will identify for the Committee the issuer and proposal to be considered. The CCO will also identify the conflict of interest that has been detected.
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g. The members of the Committee will then consider the proposal by reviewing the proxy voting materials and any additional documentation a member(s) feels necessary in determining the appropriate vote. Members of the Committee may wish to consider the following questions:
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Whether adoption of the proposal would have a positive or negative impact on the issuer’s short term or long-term value.
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Whether the issuer has already responded in some appropriate manner to the request embodied in a proposal.
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Whether the proposal itself is well framed and reasonable.
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Whether implementation of the proposal would achieve the objectives sought in the proposal.
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Whether the issues presented would best be handled through government or issuer-specific action.
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h. Upon the provision of a reasonable amount of time to consider the proposal, each member of the Committee will in turn announce to the Committee their decision on whether DRZ will vote for or against the proposal. Attending members of the Committee are prohibited from abstaining from the Committee vote and are prohibited from recommending that DRZ refrain from voting on the proposal, although “abstain” votes are permitted. The Secretary of the Committee will record each member’s vote and the rationale for their decision.
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i. After each member of the Committee has announced their vote, the Secretary will tally the votes. The tally will result in one of the following two outcomes:
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If all members of the Committee have voted in the same direction on the proposal, all of DRZ’s proxies for that proposal will be voted in such direction. The CCO will document the unanimous vote and all notes of the meeting, if created, will be maintained in the permanent file in accordance with the DRZ’s proxy recordkeeping policy described herein.
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If a unanimous decision cannot be reached by the Committee, DRZ will, at its expense, engage the services of an outside proxy voting service or consultant who will provide an independent recommendation on the direction in which DRZ should vote on the proposal. The proxy voting service’s or consultant’s determination will be binding on DRZ.
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a. The name of the issuer of the portfolio security;
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b. The exchange ticker symbol of the portfolio security;
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c. The Council on Uniform Securities Identification Procedures (“CUSIP”) number for the portfolio security;
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d. The shareholder meeting date;
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e. The number of shares DRZ is voting on firm-wide;
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f. A brief identification of the matter voted on;
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g. Whether the matter was proposed by the issuer or by a security holder;
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h. Whether or not DRZ cast its vote on the matter;
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i. How DRZ cast its vote (e.g., for or against proposal, or abstain; for or withhold regarding election of directors);
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j. Whether DRZ cast its vote with or against management; and
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k. Whether any client requested an alternative vote of its proxy.
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Conflict: DRZ retains an institutional client, or is in the process of retaining an institutional client, that is affiliated with an issuer that is held in DRZ’s client portfolios. For example, DRZ may be retained to manage XYZ’s pension fund. XYZ is a public company and DRZ client accounts hold shares of XYZ. This type of relationship may influence DRZ to vote with management on proxies to gain favor with management. Such favor may influence XYZ’s decision to continue its advisory relationship with DRZ.
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Conflict: DRZ retains a client, or is in the process of retaining a client, that is an officer or director of an issuer that is held in DRZ’s client portfolios. The similar conflicts of interest exist in this relationship as discussed above.
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Conflict: DRZ’s employees maintain a personal and/or business relationship (not an advisory relationship) with issuers or individuals that serve as officers or directors of issuers. For example, the spouse of a DRZ employee may be a high-level executive of an issuer that is held in DRZ’s client portfolios. The spouse could attempt to influence DRZ to vote in favor of management.
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Conflict: DRZ or an employee(s) personally owns a significant number of an issuer’s securities that are also held in DRZ’s client portfolios. For any number of reasons, an employee(s) may seek to vote proxies in a different direction for his/her personal holdings than would otherwise be warranted by the proxy voting policy. The employee(s) could oppose voting the proxies according to the policy and successfully influence the Proxy Administrator to vote proxies in contradiction to the policy.
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Conflict: DRZ or its affiliates has a financial interest in the outcome of a vote, such as when DRZ receives distribution fees (i.e., Rule 12b-1 fees) from mutual funds that are maintained in client ac- counts and the proxy relates to an increase in 12b-1 fees.
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Any request, whether written (including e-mail) or oral, received by any employee of DRZ, must be promptly reported to the CCO. All written requests must be retained in the permanent file in accordance with DRZ’s record retention policy.
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The CCO will record the identity of the client, the date of the request, and the disposition (e.g., pro-vided a written or oral response to client’s request, referred to third party, not a proxy voting client, other dispositions, etc.).
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DRZ will make every effort to fulfill each individual client request for Proxy Voting information in the client’s prescribed format.
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Furnish the information requested, free of charge, to the client within a reasonable time period (with-in 10 business days). Maintain a copy of the written record provided in response to client’s written or oral request. The written response should be attached and maintained with the client’s written re-quest, if applicable, and maintained in the permanent file in accordance with the recordkeeping policy.
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Clients are permitted to request any and all proxy voting records that have been retained in accordance with DRZ’s record retention policy.
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This Proxy Voting Policy and Procedures and previous versions of DRZ’s adopted Proxy Voting Policy and Procedures, if any, in accordance with DRZ’s record retention policies.
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DRZ’s annual Form ADV Part 2A containing a concise summary of Proxy Policy and Procedures and offer of the record to clients.
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DRZ’s Proxy Administrator receives proxies directly from the clients’ custodians. In the event DRZ receives a proxy that is not reflected on the Proxy Administrator’s system, DRZ will copy or print a sample of the proxy statement or card and maintain the copy in a central file along. DRZ will vote the proxy in accordance with these policies. Documentation of the process will be maintained in accordance with DRZ’s proxy recordkeeping policies.
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Note: DRZ is permitted to rely on proxy statements filed on the SEC’s EDGAR system instead of keeping its own copies. Proxy voting records:
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DRZ Proxy Voting Record. The proxy ballot, date, issuer, and vote cast, if applicable.
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Documentation or notes or any communications received from third parties, other industry analysts, third party service providers, company’s management discussions, etc., that were material in the basis for the decision.
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DRZ will ensure that Form ADV, Part 2A is updated as necessary to reflect: (i) all material changes to DRZ’s Proxy Voting Policy and Procedures; and (ii) regulatory requirements.
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Takes responsibility for voting client proxies in accounts comprised solely of fixed income and cash equivalent holdings, which holdings are very, very rarely associated with proxies, only in instances when the client has specifically assigned voting authority to GH&A for securities held in the account.
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Votes
all proxies in the best interests of its clients as shareholders, i.e., to maximize economic value.
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Evaluates all factors it deems relevant when reviewing a proxy received for an account.
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Provides all clients, upon request, with copies of this Proxy Policy and related reports, with such frequency as required to fulfill obligations under applicable law or as reasonably requested by clients.
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Reviews regularly the voting record to ensure that proxies are voted in accordance with this Proxy Policy; and ensures that procedures, documentation, and reports relating to the voting of proxies are promptly and properly prepared and disseminated.
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Boards and Directors
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Environmental and Social Matters
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Auditors and Related Matters
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Shareholder Rights
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Capital and Restructuring
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Executive and Board Compensation
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Routine and Miscellaneous Matters
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1. Overview and Governance
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Lazard’s proxy voting process is administered by members of its Operations Department (“the Proxy Administration Team”). Oversight of the process is provided by Lazard’s Legal & Compliance Department and by a Proxy Committee comprised of senior investment professionals, members of the Legal & Compliance Department, the firm’s Co-Heads of Sustainable Investment & Environmental, Social and Corporate Governance (“ESG”) and other personnel. The Proxy Committee meets regularly, generally on a quarterly basis, to review this Policy and other matters relating to the firm’s proxy voting functions. Meetings may be convened more frequently (for example, to discuss a specific proxy agenda or proposal) as needed. A representative of Lazard’s Legal & Compliance Department will participate in all Proxy Committee meetings.
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A quorum for the conduct of any meeting will be met if a majority of the Proxy Committee’s members are in attendance by phone or in person. Decisions of the Proxy Committee will be made by consensus and minutes of each meeting will be taken and maintained by the Legal & Compliance Department. The Proxy Committee may, upon consultation with Lazard’s Chief Compliance Officer, General Counsel or his/her designee, take any action that it believes to be necessary or appropriate to carry out the purposes of the Policy. The Chief Compliance Officer, General Counsel or his/her designee, is responsible for updating this Policy, interpreting this Policy, and may act on behalf of the Proxy Committee in circumstances where a meeting of the members is not feasible.
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2. Role of Third Parties
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Lazard currently subscribes to advisory and other proxy voting services provided by Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co. (“Glass Lewis”). These proxy advisory services provide independent analysis and recommendations regarding various companies’ proxy proposals. While this research serves to help improve our understanding of the issues surrounding a company’s proxy proposals, Lazard’s Portfolio Manager/Analysts and Research Analysts (collectively, “Portfolio Management”) are responsible for providing the vote recommendation for a given proposal except when the Conflicts of Interest policy applies (see Section F).
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ISS provides additional proxy-related administrative services to Lazard. ISS receives on Lazard’s behalf all proxy information sent by custodians that hold securities on behalf of Lazard’s clients and sponsored funds. ISS posts all relevant information regarding the proxy on its password-protected website for Lazard to review, including meeting dates, all agendas and ISS’ analysis. The Proxy Administration Team reviews this information on a daily basis and regularly communicates with representatives of ISS to ensure that all agendas are considered and proxies are voted on a timely basis. ISS also provides Lazard with vote execution, recordkeeping and reporting support services. Members of the Proxy Committee, along with members of the Legal & Compliance Team, conducts periodic due diligence of ISS and Glass Lewis consisting of an annual questionnaire and, as appropriate, on site visits.
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The Proxy Committee believes that the Policy is consistent with the firm’s Corporate Governance Principals and ESG and Climate Change Policies at https://www.lazardassetmanagement.com/about/esg.
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3. Voting Process
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The Proxy Committee has approved proxy voting guidelines applicable to specific types of common proxy proposals (the “Approved Guidelines”). As discussed more fully below in Section D of this Policy, depending on the proposal, an Approved Guideline may provide that Lazard should vote for or against the proposal, or that the proposal should be considered on a case-by-case basis.
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For each shareholder meeting the Proxy Administration Team provides Portfolio Management with the agenda and proposals, the Approved Guidelines, independent vote recommendations from Glass Lewis and ISS and supporting analyses for each proposal. Unless Portfolio Management disagrees with the Approved Guideline for a specific proposal, or where a potential material conflict of interest exists, the Proxy Administration Team will generally vote the proposal according to the Approved Guideline. In cases where Portfolio Management recommends a vote contrary to the Approved Guideline, a member of the Proxy Administration Team will contact a member of the Legal & Compliance Department advising the Proxy Committee. Such communication, which may be in the form of an e-mail, shall include: the name of the issuer, a description of the proposal, the Approved Guideline, any potential conflict of interest presented and the reason(s) Portfolio Management believes a proxy vote in this manner is in the best interest of clients In such cases, the Proxy Committee and the Legal & Compliance Department will review the proposal and make a determination.
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Where the Approved Guideline for a particular type of proxy proposal is to vote on a case-by-case basis, Lazard believes that Portfolio Management is best able to evaluate the potential impact to shareholders resulting from a particular proposal. Similarly, with respect to certain Lazard strategies, as discussed more fully in Sections F and G below, the Proxy Administration Team will consult with Portfolio Management to determine when it would be appropriate to abstain from voting. The Proxy Administration Team seeks Portfolio Management’s recommendation on how to vote all such proposals. The Proxy Administration Team may also consult with Lazard’s Chief Compliance Officer, General Counsel or his/her designee, and may seek the final approval of the Proxy Committee regarding a recommendation by Portfolio Management.
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As a global firm, we recognize that there are differing governance models adopted in various countries and that local laws and practices vary widely. Although the Approved Guidelines are intended to be applied uniformly world-wide, where appropriate, Lazard will consider regional/local law and guidance in applying the Policy.
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D. Specific Proxy Items
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Shareholders receive proxies involving many different proposals. Many proposals are routine in nature, such as a change in a company’s name. Others are more complicated, such as items regarding corporate governance and shareholder rights, changes to capital structure, stock option plans and other executive compensation/ issues, election of directors, mergers and other significant transactions and social or political issues. Lazard’s Approved Guidelines for certain common agenda items are outlined below. The Proxy Committee will also consider any other proposals presented and determine whether to implement a new Approved Guideline.
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Certain strategy-specific considerations may result in Lazard voting proxies other than according to the Approved Guidelines, not voting shares at all, issuing standing instructions to ISS on how to vote certain proxy matters on behalf of Lazard, or taking other action where unique circumstances require special voting efforts or considerations. These considerations are discussed in more detail in Section G, below.
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1. Routine Items
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Lazard generally votes routine items as recommended by the issuer’s management and board of directors, based on the view that management is generally in a better position to assess these matters. Lazard considers routine items to be those that do not change the structure, charter, bylaws, or operations of an issuer in any way that is material to long-term shareholder value. Routine items generally include:
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issues relating to the timing or conduct of annual meetings;
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provisionary financial budgets and strategy for the current year;
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proposals that allow votes submitted for the first call of the shareholder meeting to be considered in the event of a second call;
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proposals to receive or approve of variety of routine reports (Lazard will generally vote FOR the approval of financial statements and director and auditor reports unless there are concerns about the accounts presented or audit procedures used or the company is not responsive to shareholder questions about specific items that should be publicly disclosed); and
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changes to a company’s name.
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2. Amendments to Board Policy/Charter/Regulation:
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Proposals to amend a company’s Articles of Association and other bylaws are commonly seen at shareholder meetings. Companies usually disclose what is being amended, or the amended bylaws, or both in their meeting circulars. Amendments are nearly always bundled together as a single voting resolution, and Lazard’s general approach is to review these amendments on a case-by-case basis and to oppose article amendments as a whole when they include changes Lazard opposes. Lazard has Approved Guidelines generally to vote FOR bylaw amendments that are driven by regulatory changes and are technical in nature or meant to update company-specific information such as address and/or business scope. Lazard has Approved Guidelines generally to vote AGAINST bylaw amendments if
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there is no disclosure on the proposed amendments or full text of the amended bylaw; or
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the amendments include increase in the decision authority of what is considered “excessive” and the company fails to provide a compelling justification.
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3. Corporate Governance and Shareholder Rights
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Many proposals address issues related to corporate governance and shareholder rights. These items often relate to a board of directors and its committees, anti-takeover measures, and the conduct of the company’s shareholder meetings.
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a. Board of Directors and its Committees
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Lazard votes in favor of provisions that it believes will increase the effectiveness of an issuer’s board of directors.
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Lazard has Approved Guidelines generally to vote FOR the following:
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the establishment of an independent nominating committee, audit committee or compensation committee of a board of directors;
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a requirement that a substantial majority (e.g., 2/3) of a company’s directors be independent;
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a proposal that a majority of the entirety of the board’s committees be comprised of independent directors;
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proposals seeking to de-classify a board;
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the implementation of director stock retention/holding periods;
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proposals relating to the establishment of directors’ mandatory retirement age and age restrictions for directors especially where such proposals seek to facilitate the improvement of the diversity of the board; and
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changes to the articles of association and other relevant documents which are in the long-term interests of shareholders;
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the appointment or (re)election of internal statutory auditors/fiscal council members unless (a) the name of the management nominees are not disclosed in a timely manner prior to the meeting, (b) there are serious concerns about statutory reports presented or the audit procedures used, (c) questions exist concerning any of the auditors, (d) the auditors have previously served the company in an executive capacity (or are otherwise considered affiliated) or (e) minority shareholders have presented timely disclosure of minority fiscal council nominee(s) to be elected under separate elections.
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Lazard has Approved Guidelines generally to vote on a CASE by CASE Basis for the following:
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proposals to require an independent board chair or the separation of chairman and CEO; and
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establishment of shareholder advisory committees.
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Lazard has Approved Guidelines generally to vote AGAINST the following:
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proposals seeking to classify a board
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the election of directors where the board does not have independent “key committees” or sufficient board independence;
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non-independent directors who serve on key committees that are not sufficiently independent;
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proposals relating to cumulative voting;
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proposals where the names of the candidates (in the case of an election) or the principles for the establishment of a committee (where a new committee is being created) have not been disclosed in a timely manner;
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release of restrictions on competitive activities of directors2 if (a) there is a lack of disclosure on the key information including identities of directors in question, current position in the company and outside boards they are serving on or (b) the non-nomination system is employed by the company for the director election; and
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the discharge of directors, including members of the management board and/or supervisory board and auditors, unless there is reliable information about significant and compelling concerns that the board is not fulfilling its fiduciary duties; and
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the chair of the board’s nominating committee, or all incumbent nominating committee members in the absence of the chair, if there is not at least one female on the board of directors.
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US Listed Corporates
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Given the governance practices unique to the United States market, Lazard has adopted the following principles-based approach to proxy voting that is designed to address:
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Board effectiveness – supporting board structure, diversity of cognitive thought, independence and avoiding over- boarding.
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Accountability – in conjunction with the immediately preceding bullet point, emphasizing individual account- ability, for example holding the Chair of the Nomination Committee accountable where weaknesses and conflicts have been identified.
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b. Anti-takeover Measures
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Certain proposals are intended to deter outside parties from taking control of a company. Such proposals could entrench management and adversely affect shareholder rights and the value of the company’s shares.
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Consequently, Lazard has adopted Approved Guidelines to vote AGAINST:
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proposals to adopt supermajority vote requirements or increase vote requirements;
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proposals seeking to adopt fair price provisions and on a case-by-case basis regarding proposals seeking to rescind them; and
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“blank check” preferred stock.
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Lazard has adopted Approved Guidelines to vote on a CASE by CASE basis regarding other provisions seeking to amend a company’s by-laws or charter regarding anti-takeover provisions or shareholder rights plans (also known as “poison pill plans”).
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Lazard has adopted an Approved Guideline to vote FOR proposals that ask management to submit any new poison pill plan to shareholder vote.
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c. Conduct of Shareholder Meetings
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Lazard generally opposes any effort by management to restrict or limit shareholder participation in shareholder meetings, and is in favor of efforts to enhance shareholder participation.
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Lazard has therefore adopted Approved Guidelines to vote AGAINST:
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proposals to adjourn US meetings;
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proposals seeking to eliminate or restrict shareholders’ right to call a special meeting;
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efforts to eliminate or restrict right of shareholders to act by written consent; and
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proposals to adopt supermajority vote requirements, or increase vote requirements.
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Lazard has adopted Approved Guidelines to vote on a CASE by CASE basis on changes to quorum requirements and FOR proposals providing for confidential voting.
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4. Changes to Capital Structure
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Lazard receives many proxies that include proposals relating to a company’s capital structure. These proposals vary greatly, as each one is unique to the circumstances of the company involved, as well as the general economic and market conditions existing at the time of the proposal. A board and management may have many legitimate business reasons in seeking to effect changes to the issuer’s capital structure, including investing in financial products and raising additional capital for appropriate business reasons, cash flow and market conditions. Lazard generally believes that these decisions are best left to management but will monitor these proposals closely to ensure that they are aligned with the long-term interests of shareholders.
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Lazard has adopted Approved Guidelines to vote FOR:
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management proposals to increase or decrease authorized common or preferred stock (unless it is believed that doing so is intended to serve as an anti-takeover measure);
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stock splits and reverse stock splits;
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investments in financial products unless the company fails to provide meaningful shareholder vote or there are significant concerns with the company’s previous similar investments;4
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requests to reissue any repurchased shares unless there is clear evidence of abuse of authority in the past;
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management proposals to adopt or amend dividend reinvestment plans; and
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dividend distribution policies unless (a) the dividend payout ratio has been consistently below 30% without adequate explanation or (b) the payout is excessive given the company’s financial position.
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Lazard has adopted Approved Guidelines to vote on a CASE by CASE basis for:
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matters affecting shareholder rights, such as amending votes-per-share;
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management proposals to issue a new class of common or preferred shares (unless covered by an Approved Guideline relating to the disapplication of pre-emption rights); • the use of proceeds and the company’s past share issuances5;
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proposals seeking to approve or amend stock ownership limitations or transfer restrictions; and • loan and financing proposals. In assessing requests for loan financing provided by a related party the following factors will be considered: (a) use of proceeds, size or specific amount of loan requested, interest rate and relation of the party providing the loan.
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Lazard has adopted Approved Guidelines to vote AGAINST:
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changes in capital structure designed to be used in poison pill plans or which seeks to disregard pre-emption rights in a way that does not follow guidance set by the UK Pre-Emption Group’s Statement of Principles;
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the provision of loans to clients, controlling shareholders and actual controlling persons of the company; and
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the provision of loans to an entity in which the company’s ownership stake is less than 75% and the financing provision is not proportionate to the company’s equity stake.
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Lazard has Approved Guidelines generally to vote FOR:
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employee stock purchase plans, deferred compensation plans, stock option plans and stock appreciation rights plans that are in the long-term interests of shareholders;
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proposals to submit severance agreements to shareholders for approval;
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annual advisory votes on compensation outcomes where the outcomes are considered to be aligned with the interest of shareholders; and
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annual compensation policy votes where the policy structures are considered to be aligned with the interest of shareholders.
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Lazard has Approved Guidelines generally to vote on a CASE by CASE basis regarding:
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restricted stock plans that do not define performance criteria; and
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proposals to approve executive loans to exercise options.
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Lazard has Approved Guidelines generally to vote AGAINST:
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proposals to re-price underwater options;
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annual advisory votes on remuneration outcomes where the outcomes are considered not to be in the interests of shareholders; and
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annual remuneration policy vote where the policy structures are considered not to be in the interests of shareholders.
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US Listed Corporates
Given the governance practices unique to the United States market, Lazard maintains the view that votes regarding Say on Pay should in principle, support fair and transparent remuneration. In addition, we also consider: |
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the level of dissent on previous Say on Pay votes; and
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individual accountability, for example holding the Chair of the Compensation Committee accountable where weaknesses have been identified.
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Lazard’s Approved Guidelines are structured to evaluate many environmental, social and corporate governance proposals on a case-by-case basis.
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However, as a guide, Lazard will generally vote FOR proposals:
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asking for a company to increase its environmental/social disclosures (e.g., to provide a corporate sustainability report);
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seeking the approval of anti-discrimination policies;
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which are considered socially responsible agenda items;
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which improve an investee company’s ESG risk management and related disclosures; and
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deemed to be in the long-term interests of shareholders.
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Lazard has Approved Guidelines generally to vote FOR shareholder proposals which:
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seek improved disclosure of an investee company’s ESG practices over an appropriate timeframe;
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seek improved transparency over how the investee company is supporting the transition to a low carbon economy;
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seek to improve the diversity of the board;
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seek improved disclosures on the diversity of the board and the wider workforce;
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seek to establish minimum stock-ownership requirements for directors over an appropriate time frame;
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seek to eliminate or restrict severance agreements, or
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are deemed to be in the long-term interests of shareholders including Lazard’s clients.
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Lazard has Approved Guidelines generally to vote AGAINST shareholder proposals which:
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seek to infringe excessively on management’s decision-making flexibility;
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seek to establish additional board committees (absent demonstrable need);
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seek to establish term limits for directors if this is unnecessary;
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seek to change the size of a board (unless this facilitates improved board diversity);
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seek to require two candidates for each board seat; or
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are considered not to be in the long-terms interests of shareholders.
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Lazard Frßres & Co. LLC (“LF&Co.”), Lazard’s parent company and a registered broker- dealer, or a financial advisory affiliate, has a relationship with a company the shares of which are held in accounts of Lazard clients, and has provided financial advisory or related services to the company with respect to an upcoming significant proxy proposal (i.e., a merger or other significant transaction);
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Lazard serves as an investment adviser for a company the management of which supports a particular proposal;
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Lazard serves as an investment adviser for the pension plan of an organization that sponsors a proposal; or
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A Lazard employee who would otherwise be involved in the decision-making process regarding a particular proposal has a material relationship with the issuer or owns shares of the issuer.
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a. Where Approved Guideline Is For or Against
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Lazard has an Approved Guideline to vote for or against regarding most proxy agenda/proposals. Generally, unless Portfolio Management disagrees with the Approved Guideline for a specific proposal, the Proxy Administration Team votes according to the Approved Guideline. It is therefore necessary to consider whether an apparent conflict of interest exists when Portfolio Management disagrees with the Approved Guideline. The Proxy Administration Team will use its best efforts to determine whether a conflict of interest or potential conflict of interest exists. If conflict appears to exist, then the proposal will be voted according to the Approved Guideline. Lazard also reserves its right to Abstain.
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In addition, in the event of a conflict that arises in connection with a proposal for Lazard to vote shares held by Lazard clients in a Lazard mutual fund, Lazard will typically vote each proposal for or against proportion to the shares voted by other shareholders.
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b. Where Approved Guideline Is Case-by-Case
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In situations where the Approved Guideline is to vote case-by-case and a material conflict of interest appears to exist, Lazard’s policy is to vote the proxy item according to the majority recommendation of the independent proxy services to which we subscribe. Lazard also reserves the right to Abstain.
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1. Issues Relating to Management of Specific Lazard Strategies
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Due to the nature of certain strategies managed by Lazard, there may be times when Lazard believes that it may not be in the best interests of its clients to vote in accordance with the Approved Guidelines, or to vote proxies at all. In certain markets, the fact that Lazard is voting proxies may become public information, and, given the nature of those markets, may impact the price of the securities involved. Lazard may simply require more time to fully understand and address a situation prior to determining what would be in the best interests of shareholders. In these cases the Proxy Administration Team will look to Portfolio Management to provide guidance on proxy voting rather than vote in accordance with the Approved Guidelines, and will obtain the Proxy Committee’s confirmation accordingly.
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Additionally, Lazard may not receive notice of a shareholder meeting in time to vote proxies for or may simply be prevented from voting proxies in connection with a particular meeting. Due to the compressed time frame for notification of shareholder meetings and Lazard’s obligation to vote proxies on behalf of its clients, Lazard may issue standing instructions to ISS on how to vote on certain matters.
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Different strategies managed by Lazard may hold the same securities. However, due to the differences between the strategies and their related investment objectives, one Portfolio Management team may desire to vote differently than the other, or one team may desire to abstain from voting proxies while the other may desire to vote proxies. In this event, Lazard would generally defer to the recommendation of the Portfolio Management
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teams to determine what action would be in the best interests of its clients. The Chief Compliance Officer or General Counsel, in consultation with members of the Proxy Committee will determine whether it is appropriate to approve a request to split votes among one or more Portfolio Management teams.
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2. Stock Lending
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As noted in Section B above, Lazard does not generally vote proxies for securities that a client has authorized their custodian bank to use in a stock loan program, which passes voting rights to the party with possession of the shares. Under certain circumstances, Lazard may determine to recall loaned stocks in order to vote the proxies associated with those securities. For example, if Lazard determines that the entity in possession of the stock has borrowed the stock solely to be able to obtain control over the issuer of the stock by voting proxies, or if the client should specifically request Lazard to vote the shares on loan, Lazard may determine to recall the stock and vote the proxies itself. However, it is expected that this will be done only in exceptional circumstances. In such event, Portfolio Management will make this determination and the Proxy Administration Team will vote the proxies in accordance with the Approved Guidelines.
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ADRs
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American Depositary Receipts
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Advisers Act
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Investment Advisers Act of 1940, as amended.
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American Beacon or the Manager
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American Beacon Advisors, Inc.
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BDCs
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Business Development Companies
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Beacon Funds
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American Beacon Funds
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Board
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Board of Trustees
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Brexit
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The United Kingdom’s departure from the European Union.
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CCO
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Chief Compliance Officer
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CD
|
Certificate of Deposit
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CDSC
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Contingent Deferred Sales Charge
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CFTC
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Commodity Futures Trading Commission
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Denial of Services
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A cybersecurity incident that results in customers or employees being unable to access electronic systems.
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Dividends
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A Fund’s distributions from net investment income.
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Dodd-Frank Act
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Dodd-Frank Wall Street Reform and Consumer Protection Act
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DRD
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Dividends-received deduction.
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EMU
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The European Union’s Economic and Monetary Union
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ETF
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Exchange-Traded Fund
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EU
|
European Union
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Fannie Mae
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Federal National Mortgage Association
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FHFA
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Federal Housing Finance Agency
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FHLMC
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Federal Home Loan Mortgage Corporation
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FINRA
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Financial Industry Regulatory Authority, Inc.
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Floaters
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Floating rate debt instruments
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FNMA
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Federal National Mortgage Association
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Forwards
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Forward Currency Contracts
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Freddie Mac
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Federal Home Loan Mortgage Corporation
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GDR
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Global Depositary Receipt
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Ginnie Mae
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Government National Mortgage Association
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GNMA
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Government National Mortgage Association
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Holdings Policy
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Policies and Procedures for Disclosure of Portfolio Holdings
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Internal Revenue Code
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Internal Revenue Code of 1986, as amended
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Investment Company Act
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Investment Company Act of 1940, as amended
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IPO
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Initial Public Offering
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IRA
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Individual Retirement Account
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IRS
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Internal Revenue Service
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ISS
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Institutional Shareholder Services
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LIBOR
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ICE LIBOR
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LLC
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Limited Liability Company
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LOI
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Letter of Intent
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Management Agreement
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The Fund’s Management Agreement with the Manager.
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Manager
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American Beacon Advisors, Inc.
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MLP
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Master Limited Partnership
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Moody’s
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Moody’s Investors Service, Inc.
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NAV
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Net asset value
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NDF
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Non-deliverable forward contracts
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NYSE
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New York Stock Exchange
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OTC
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Over-the-Counter
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Proxy Policy
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Proxy Voting Policy and Procedures
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QDI
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Qualified Dividend Income
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REIT
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Real Estate Investment Trust
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REMICs
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Real Estate Mortgage Investment Conduits
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RIC
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Regulated Investment Company
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S&P Global
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S&P Global Ratings
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SAI
|
Statement of Additional Information
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SEC
|
Securities and Exchange Commission
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Securities Act
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Securities Act of 1933, as amended
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State Street
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State Street Bank and Trust Co.
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STRIPS
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Separately traded registered interest and principal securities
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TBA
|
To be announced security
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Trust
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American Beacon Funds
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Trustee Retirement Plan
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Trustee Retirement and Trustee Emeritus and Retirement Plan
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UK
|
United Kingdom
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UMBS
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Uniform mortgage-backed security
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Voluntary Action
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When a Fund voluntarily participates in corporate actions (for example, rights offerings, conversion privileges, exchange offers, credit event settlements, etc.) where the issuer or counterparty offers securities or instruments to holders or counterparties, such as the Fund, and the acquisition is determined to be beneficial to Fund shareholders.
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American Beacon
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Share Class
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||
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Y
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R5
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Investor
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American Beacon EAM International Small Cap Fund
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TOVYX
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TOVIX
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TIVFX
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Back Cover
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American Beacon
EAM International Small Cap FundSM |
Share Class
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Y
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R5
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Investor
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Maximum sales charge imposed on purchases (as a percentage of offering price)
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|
|
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Maximum deferred sales charge (as a percentage of the lower of original offering price or redemption proceeds)
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|
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Share Class
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Y
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R5
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Investor
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Management Fees
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%
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%
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%
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Distribution and/or Service (12b-1) Fees
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%
|
%
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%
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Other Expenses
|
%
1
|
%
|
%
1
|
Acquired Fund Fees and Expenses
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%
|
%
|
%
|
Total Annual Fund Operating Expenses2
|
%
|
%
|
%
|
Fee Waiver and/or expense reimbursement3
|
(
%)
|
(
%)
|
(
%)
|
Total Annual Fund Operating Expenses after fee waiver and/or expense reimbursement
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%
|
%
|
%
|
1 | Other Expenses for the Y Class and Investor Class shares include 0.01% securities lending expenses. |
2 |
3 | American Beacon Advisors, Inc. (the “Manager”) has contractually agreed to waive fees and/or reimburse expenses of the Fund’s Y Class, R5 Class and Investor Class shares, as applicable, through |
Share Class
|
1 Year
|
3 Years
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5 Years
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10 Years
|
Y
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$
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$
|
$
|
$
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R5
|
$
|
$
|
$
|
$
|
Investor
|
$
|
$
|
$
|
$
|
■
|
the company’s security is primarily listed for trading in a non-United States market;
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■
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the company is headquartered in a non-United States country; or
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■
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the company has at least half of its assets or derives at least half of its revenues outside the United States.
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■
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Common Stock Risk. The value of a company’s common stock may fall as a result of factors affecting the company, companies in the same industry or sector, or the financial markets overall. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company.
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Depositary Receipts and/or U.S. Dollar-Denominated Foreign Stocks Traded on U.S. Exchanges Risk. Depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges are subject to certain of the risks associated with investing directly in foreign securities, including, but not limited to, currency exchange rate fluctuations, political and financial instability in the home country of a particular depositary receipt or foreign stock, less liquidity, more volatility, less government regulation and supervision and delays in transaction settlement.
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■
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European Securities Risk. The Fund’s performance may be affected by political, social and economic conditions in Europe, such as growth of economic output (the gross national product of the countries in the region), the rate of inflation, the rate at which capital is reinvested into European economies, the success of governmental actions to reduce budget deficits, the resource self-sufficiency of European countries, the monetary exchange rates between European countries, and conflict between European countries. The European financial markets have experienced and may continue to experience volatility and adverse trends due to concerns relating to economic downturns; rising government debt levels and the possible default on government debt; national unemployment in several European countries; public health crises; political unrest; economic sanctions; inflation; energy crises; and war and military conflict, such as the Russian invasion of Ukraine. A default or debt restructuring by any European country could adversely impact holders of that country’s debt and sellers of credit default swaps linked to that country’s creditworthiness, which may be located in other countries. Such a default or debt restructuring could affect exposures to European countries. In addition, issuers have faced difficulties obtaining credit or refinancing existing obligations, and financial markets have experienced extreme volatility and declines in asset values and liquidity. These events have affected the exchange rate of the Euro and may continue to significantly affect European countries.
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Responses to financial problems by European governments, central banks, and others, including austerity measures and other reforms, may not produce the desired results, may result in social unrest and may limit future growth and economic recovery or may have unintended consequences. The Fund makes investments in securities of issuers that are domiciled in member states of the European Union (the “EU”). The economies and markets of European countries are often closely connected and interdependent, and events in one country in Europe can have an adverse impact on other European countries. One or more countries may abandon the Euro and/or withdraw from the EU. The impact of these actions, especially if they occur in a disorderly fashion, could be significant and far-reaching. The United Kingdom’s withdrawal from the EU could be an indication that one or more other countries may withdraw from the EU and/or abandon the Euro. These events and actions have affected, and may in the future affect, the value and exchange rate of the Euro and may continue to significantly affect the economies of every country in Europe, including countries that do not use the Euro and non-EU member states.
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The continuing effects on the economies of European countries of the Russia/Ukraine war and Russia’s response to sanctions imposed by the U.S., EU, UK and others, are impossible to predict, but have been and could continue to be significant. For example, exports in Eastern Europe have been disrupted for certain key commodities, pushing commodity prices to record highs. Also, both wholesale energy prices and energy prices charged to consumers in Europe have increased significantly.
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■
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Japan Investment Risk. The Japanese economy may be subject to economic, political and social instability, which could have an adverse effect on the Japanese securities held by the Fund. The Japanese economy, which is heavily dependent upon international trade, may be adversely affected by global competition, trade tariffs, other government interventions and protectionist measures, excessive regulation, changes in international trade agreements, the economic conditions of its trading partners, the performance of the global economy, and regional and global conflicts. Political tensions between Japan and its trading partners could adversely affect the economy, especially the export sector, and destabilize the region as a whole. The domestic Japanese economy faces several concerns, including large government deficits, a declining domestic population and low birth rate, workforce shortages, and inflation. The Japanese government’s fiscal and monetary policies may have negative impacts on the Japanese economy. Japan is also heavily dependent on oil and other commodity imports, and higher commodity prices could therefore have a negative impact on the Japanese economy. Currency fluctuations, which have been significant at times, can have a considerable impact on exports and the overall Japanese economy. The Japanese yen may be affected by currency volatility elsewhere in Asia, especially Southeast Asia. Japanese intervention in the currency markets could cause the value of the yen to fluctuate sharply and unpredictably and could cause losses to investors. Natural disasters such as earthquakes, volcanic eruptions, typhoons or tsunamis, could occur in Japan and surrounding areas and may have a significant impact on the business operations of Japanese companies in the affected regions and Japan’s economy. These and other factors could have a negative impact on the Fund’s performance and increase the volatility of an investment in the Fund.
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■
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Recent Market Events Risk. Both U.S. and international markets have experienced significant volatility in recent months and years. As a result of such volatility, investment returns may fluctuate significantly. Moreover, the risks discussed herein associated with an investment in the Fund may be increased.
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Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the Federal Reserve and certain foreign central banks began to raise interest rates as part of their efforts to address rising inflation. It is difficult to accurately predict the pace at which interest rates may continue to increase, the timing, frequency or magnitude of any such increases, or when such increases might stop. Additionally, various economic and political factors could cause the Federal Reserve or another foreign central bank to change their approach in the future and such actions may result in an economic slowdown in the U.S. and abroad. Unexpected increases in interest rates could lead to market volatility or reduce liquidity in certain sectors of the market. Deteriorating economic fundamentals may, in turn, increase the risk of default or insolvency of particular issuers, negatively impact market value, cause credit spreads to widen, and reduce bank balance sheets. Any of these could cause an increase in market volatility, reduce liquidity across various markets or decrease confidence in the markets. Additionally, high public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty.
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In March 2023, the shutdown of certain financial institutions in the U.S. and questions regarding the viability of other financial institutions raised economic concerns over disruption in the U.S. and global banking systems. There can be no certainty that the actions taken by the U.S. or foreign governments will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. and global banking systems.
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Some countries, including the U.S., have in recent years adopted more protectionist trade policies. Slowing global economic growth; risks associated with a trade agreement between the United Kingdom and the European Union; the risks associated with ongoing trade negotiations with China; and the possibility of changes to some international trade agreements; political or economic dysfunction within some nations, including major producers of oil; and dramatic changes in commodity and currency prices could have adverse effects that cannot be foreseen at the present time.
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Tensions, war, or open conflict between nations, such as between Russia and Ukraine, in the Middle East or in eastern Asia could affect the economies of many nations, including the United States. The duration of ongoing hostilities in the Middle East and between Russia and Ukraine, and any sanctions and related events cannot be predicted. Those events present material uncertainty and risk with respect to markets globally and the performance of the Fund and its investments or operations could be negatively impacted.
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Regulators in the U.S. have proposed and recently adopted a number of changes to regulations involving the markets and issuers, some of which apply to the Fund. The full effect of various newly-adopted regulations is not currently known. Additionally, it is not clear whether the proposed regulations will be adopted. However, due to the broad scope of the new and proposed regulations, certain changes could limit the Fund’s ability to pursue its investment strategies or make certain investments, or may make it more costly for the Fund to operate, which may impact performance.
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Economists and others have expressed increasing concern about the potential effects of global climate change on property and security values. Certain issuers, industries and regions may be adversely affected by the impacts of climate change, including on the demand for and the development of goods and services and related production costs, and the impacts of legislation, regulation and international accords related to climate change, as well as any indirect consequences of regulation or business trends driven by climate change.
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■
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Government Money Market Funds Risk. Investments in government money market funds are subject to interest rate risk, credit risk, and market risk. Interest rate risk is the risk that rising interest rates could cause the value of such an investment to decline. Credit risk is the risk that the issuer, guarantor or insurer of an obligation, or the counterparty to a transaction, may fail or become less able or unwilling, to make timely payment of interest or principal or otherwise honor its obligations, or that it may default completely.
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|
|
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Investor Class
|
|
|
|
|
Returns Before Taxes
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions
|
|
%
|
%
|
%
|
Returns After Taxes on Distributions and Sales of Fund Shares
|
|
%
|
%
|
%
|
|
Inception Date of Class
|
1 Year
|
5 Years
|
10 Years
|
Share Class (Before Taxes)
|
|
|
|
|
Y
|
|
%
|
%
|
%
|
R5
|
|
%
|
%
|
%
|
|
1 Year
|
5 Years
|
10 Years
|
Index (Reflects no deduction for fees, expenses, or taxes, other than withholding taxes, as noted)
|
|
|
|
MSCI® EAFE Index (Net)*
|
%
|
%
|
%
|
MSCI® ACWI ex USA Small Cap Index (Net)*
|
%
|
%
|
%
|
* | Reflects the reinvestment of dividends after the deduction of withholding taxes, using a tax rate applicable to non-resident individuals who do not benefit from double taxation treaties. |
EAM Global Investors LLC
|
Travis Prentice
Chief Investment Officer and Portfolio Manager Since 2024 Joshua Moss
Managing Director and Portfolio Manager Since 2023 |
John Scripp
Managing Director and Portfolio Manager Since 2023 |
Internet
|
www.americanbeaconfunds.com
|
|
Phone
|
To reach an American Beacon representative call 1-800-658-5811, option 1
Through the Automated Voice Response Service call 1-800-658-5811, option 2 (Investor Class only)
|
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Mail
|
American Beacon Funds
P.O. Box 219643
Kansas City, MO 64121-9643
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Overnight Delivery:
American Beacon Funds
430 W. 7th Street, Suite 219643
Kansas City, MO 64105-1407
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New Account
|
Existing Account
|
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Share Class
|
Minimum Initial Investment Amount
|
Purchase/Redemption Minimum by Check/ACH/Exchange
|
Purchase/Redemption Minimum by Wire
|
Investor
|
$2,500
|
$50
|
$250
|
Y
|
$100,000
|
$50
|
None
|
R5
|
$250,000
|
$50
|
None
|
■
|
develops overall investment strategies for the Fund,
|
■
|
selects and changes sub-advisors,
|
■
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allocates assets among sub-advisors,
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■
|
monitors and evaluates the sub-advisor’s investment performance,
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■
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monitors the sub-advisor’s compliance with the Fund’s investment objective, policies and restrictions,
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■
|
oversees the Fund’s securities lending activities and actions taken by the securities lending agent to the extent applicable, and
|
■
|
directs the investment of the portion of Fund assets that the sub-advisor determines should be allocated to short-term investments.
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■
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Government Money Market Funds. The Fund may invest cash balances in government money market funds that are registered as investment companies under the Investment Company Act, including a government money market fund advised by the Manager, with respect to which the Manager also receives a management fee. If the Fund invests in government money market funds, the Fund becomes a shareholder of that investment company. As a result, Fund shareholders will bear their proportionate share of the expenses, including, for example, advisory and administrative fees of the government money market funds in which the Fund invests, such as advisory fees charged by the Manager to any applicable government money market funds advised by the Manager, in addition to the fees and expenses Fund shareholders directly bear in connection with the Fund’s own operations. Shareholders also would be exposed to the risks associated with government money market funds and the portfolio investments of such government money market funds, including the risk that a government money market fund’s yield will be lower than the return that the Fund would have received from other investments that provide liquidity. Investments in government money market funds are not insured or guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency.
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■
|
Foreign Currencies
|
■
|
Foreign Currency-Denominated Securities
|
■
|
Common Stock. Common stock generally takes the form of shares in a corporation which represent an equity or ownership interest. Holders of common stock generally have voting rights in the issuer and are entitled to receive common stock dividends when, as and if declared by the company’s board of directors. Returns on common stock investments consist of any dividends received plus the amount of appreciation or depreciation in the value of the stock. Common stock normally occupies the most subordinated position in an issuer’s capital structure. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. Common stock may be traded via an exchange or over-the-counter. Over-the-counter stock may be less liquid than exchange-traded stock.
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■
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Depositary Receipts and/or U.S. Dollar-Denominated Foreign Stocks Traded on U.S. Exchanges. ADRs are U.S. dollar-denominated receipts representing interests in the securities of a foreign issuer. ADRs typically are issued by domestic banks and trust companies and represent the deposit with the bank of the securities of a foreign issuer. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted. Investing in depositary receipts and U.S. dollar-denominated foreign stocks traded on U.S. exchanges entails substantially the same risks as direct investment in foreign securities. In addition, the Fund may invest in unsponsored depositary receipts, which are implemented by a depositary bank with no direct involvement of the foreign issuers, and the issuers are not obligated to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of the underlying securities or of sponsored depositary receipts, which are implemented in collaboration with the foreign issuers.
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■
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Government Money Market Funds. The Fund can invest free cash balances in registered open-end investment companies regulated as government money market funds under the Investment Company Act to provide liquidity or for defensive purposes. The Fund could invest in government money market funds rather than purchasing individual short-term investments. If the Fund invests in government money market funds, shareholders will bear their proportionate share of the expenses, including for example, advisory and administrative fees, of the government money market funds in which the Fund invests, including advisory fees charged by the Manager to any applicable government money market funds advised by the Manager. Although a government money market fund is designed to be a relatively low risk investment, it is not free of risk. Despite the short maturities and high credit quality of a government money market fund’s investments, increases in interest rates and deteriorations in the credit quality of the instruments the government money market fund has purchased may reduce the government money market fund’s yield and can cause the price of a government money market security to decrease. In addition, a government money market fund is subject to the risk that the value of an investment may be eroded over time by inflation.
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■
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Common Stock Risk. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, exchange rates or industry regulation. Companies that pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock generally is subordinate to preferred stock upon the liquidation or bankruptcy of the issuing company. In the event of an issuer’s bankruptcy, there is substantial risk that there will be nothing left to pay common stockholders after payments, if any, to bondholders and preferred stockholders have been made.
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■
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Depositary Receipts Risk. The Fund may invest in securities issued by foreign companies through ADRs. These securities are generally subject to many of the same risks of investing in the foreign securities that they evidence or into which they may be converted, including, but not limited to, currency exchange rate fluctuations, political and financial instability in the home country of a particular depositary receipt, less liquidity, more volatility, less government regulation and supervision and delays in transaction settlement. There may be an imperfect correlation between the market value of depositary receipts and the underlying foreign securities.
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■
|
U.S. Dollar-Denominated Foreign Stocks Traded on U.S. Exchanges Risk. Foreign (non-U.S.) companies that list their stocks on U.S. exchanges may be exempt from certain accounting and corporate governance standards that apply to U.S. companies that list on the same exchange. Foreign stocks traded on U.S. exchanges transact and settle in U.S. dollars, but performance of these stocks can be impacted by political and financial instability in the home country of a particular foreign company. To the extent the Fund invests in U.S. dollar-denominated foreign stocks traded on U.S. exchanges, delisting of these stocks could impact the Fund‘s ability to transact in such securities and could significantly impact their liquidity and market price. In addition, the Fund would have to seek other markets in which to transact in such securities which would also increase the Fund’s costs.
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■
|
European Securities Risk. The Fund’s performance may be affected by political, social and economic conditions in Europe, such as growth of economic output (the gross national product of the countries in the region), the rate of inflation, the rate at which capital is reinvested into European economies, the success of governmental actions to reduce budget deficits, the resource self-sufficiency of European countries, interest rates in European countries, monetary exchange rates between European countries, and conflict between European countries. Most developed countries in Western Europe are members of the European Union (“EU”) and many are also members of the Economic and Monetary Union (“EMU” or “Eurozone”). European countries can be significantly affected by the tight fiscal and monetary controls that the EMU imposes on its members and with which candidates for EMU membership are required to comply.
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While certain EU countries continue to use their own currency, Eurozone countries use the Euro as their currency. Changes in imports or exports, changes in governmental or EU regulations on trade, changes in the exchange rate of the Euro and the currencies of other EU countries which are not in the Eurozone, the threat of default or actual default by one or more EU member states on its sovereign debt, and/or an economic recession in one or more EU member states may have a significant adverse effect on the economies of other EU member states and their trading partners, including non-EU European countries. A breakup of the Eurozone, particularly a disorderly breakup, would pose special challenges for the financial markets and could lead to exchange controls and/or market closures. The economies and markets of European countries are often closely connected and interdependent, and events in one country in Europe can have an adverse impact on other European countries.
|
The European financial markets have experienced and may continue to experience volatility and adverse trends due to concerns relating to economic downturns; rising government debt levels and the possible default on government debt; national unemployment in several European countries; public health crises; political unrest; economic sanctions; inflation; energy crises; the future of the Euro as a common currency; and war and military conflict, such as the Russian invasion of Ukraine. These events have affected the exchange rate of the Euro and may continue to significantly affect European countries. Responses to financial problems by European governments, central banks, and others, including austerity measures, interest rate rises and other reforms, may not produce the desired results, may result in social unrest and may limit future growth and economic recovery or may have unintended consequences. Many European nations are susceptible to economic risks associated with high levels of debt. Non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts, and other issuers have faced difficulties obtaining credit or refinancing existing obligations. A default or debt restructuring by any European country could adversely impact holders of that country’s debt and sellers of credit default swaps linked to that country’s creditworthiness, which may be located in other countries. Such a default or debt restructuring could affect exposures to other European
|
countries and their companies as well. In addition, issuers have faced difficulties obtaining credit or refinancing existing obligations, and financial markets have experienced extreme volatility and declines in asset values and liquidity. Furthermore, certain European countries have had to accept assistance from supranational agencies such as the International Monetary Fund, the European Stability Mechanism or others. There can be no assurance that any creditors or supranational agencies will continue to intervene or provide further assistance, and markets may react adversely to any expected reduction in the financial support provided by these creditors.
|
The United Kingdom has withdrawn from the EU, and one or more other countries may withdraw from the EU and/or abandon the Euro. These events and actions have affected, and may in the future affect, the value and exchange rate of the Euro and may continue to significantly affect the economies of every country in Europe, including countries that do not use the Euro and non-EU member states. The impact of these actions, especially if they occur in a disorderly fashion, is not clear but could be significant and far reaching.
|
The national politics of European countries have been unpredictable and subject to influence by disruptive political groups and ideologies. European governments may be subject to change and such countries may experience social and political unrest. Unanticipated or sudden political or social developments may result in sudden and significant investment losses. Russia’s war with Ukraine has negatively impacted European economic activity. The effects on the economies of European countries of the Russia/Ukraine war and Russia’s response to sanctions imposed by the U.S., the EU, UK and others are impossible to predict but have been and could continue to be significant and have a severe adverse impact on the region, including significant impacts on the regional, European, and global economies and the markets for certain securities and commodities, such as oil and natural gas. For example, exports in Eastern Europe have been disrupted for certain key commodities, pushing certain commodity prices to record highs. Also, both wholesale energy prices and energy prices charged to consumers in Europe have increased significantly.
|
■
|
Japan Investment Risk. The Fund’s investments in the securities of Japanese issuers, mean that the Fund is susceptible to changes in Japanese economic and political conditions, the reliability of financial information available concerning these issuers, and the legal, tax and regulatory environment surrounding these issuers. The Japanese economy, which is heavily dependent upon international trade, may be adversely affected by global competition, trade tariffs, embargos, boycotts and other government interventions and protectionist measures, excessive regulation, changes in international trade agreements, impacts of the COVID-19 pandemic, including supply chain issues, the economic conditions of its trading partners, the performance of the global economy, and regional and global conflicts. The domestic Japanese economy faces several concerns, including large government deficits, a declining domestic population and low birth rate, workforce shortages and inflation. Japan also has an aging workforce and has experienced a significant population decline in recent years. Japan’s labor market appears to be undergoing fundamental structural changes, as a labor market traditionally accustomed to lifetime employment adjusts to meet the need for increased labor mobility, which may adversely affect Japan’s economic competitiveness. Japan’s financial system faces several concerns, including extensive cross-ownership by major corporations, a changing corporate governance structure, and large government deficits, each of which may cause a slowdown of the Japanese economy. In addition, the Japanese economic growth rate could be impacted by Bank of Japan monetary policies, rising interest rates, tax increases, budget deficits, consumer confidence and volatility in the Japanese yen. The Japanese government tax and fiscal policies may also have negative impacts on the Japanese economy. Currency fluctuations, which have been significant at times, can have a considerable impact on exports and the overall Japanese economy. The Japanese yen may be affected by currency volatility elsewhere in Asia, especially Southeast Asia. In addition, the yen has had a history of unpredictable and volatile movements against the U.S. dollar. Japanese intervention in the currency markets could cause the value of the yen to fluctuate sharply and unpredictably and could cause losses to investors. Japan is located in a part of the world that has historically been prone to natural disasters such as earthquakes, tsunamis, typhoons and volcanic eruptions, which may have a significant impact on the business operations of Japanese companies in the affected regions and Japan’s economy. Japan also faces risks associated with climate change and transitioning to a lower-carbon economy. Relations with its neighbors, particularly China, North Korea, South Korea and Russia, have at times been strained due to territorial disputes, historical animosities and defense concerns. Political tensions between Japan and its trading partners could adversely affect the economy, especially the export sector, and destabilize the region as a whole. Japan is also heavily dependent on oil and other commodity imports, and higher commodity prices could therefore have a negative impact on the Japanese economy. These and other factors could have a negative impact on the Fund’s performance and increase the volatility of an investment in the Fund.
|
■
|
Recent Market Events Risk. Both U.S. and international markets have experienced significant volatility in recent months and years. As a result of such volatility, investment returns may fluctuate significantly. Moreover, the risks discussed herein associated with an investment in the Fund may be increased. Deteriorating economic fundamentals may increase the risk of default or insolvency of particular issuers, negatively impact market value, increase market volatility, cause credit spreads to widen, reduce bank balance sheets and cause unexpected changes in interest rates. Any of these could cause an increase in market volatility, reduce liquidity across various sectors or markets or decrease confidence in the markets. Historical patterns of correlation among asset classes may break down in unanticipated ways during times of high volatility, disrupting investment programs and potentially causing losses.
|
Although interest rates were unusually low in recent years in the U.S. and abroad, in 2022, the U.S. Federal Reserve and certain foreign central banks began to raise interest rates as part of their efforts to address rising inflation. In addition, ongoing inflation pressures could continue to cause an increase in interest rates and/or negatively impact issuers. It is difficult to accurately predict the pace at which interest rates may increase, the timing, frequency or magnitude of any such increases in interest rates, or when such increases might stop. Additionally, various economic and political factors, such as rising inflation rates, could cause the Federal Reserve or other foreign banks to change their approach in the future as such actions may result in an economic slowdown both in the U.S. and abroad. Unexpected increases in interest rates could lead to market volatility or reduce liquidity in certain sectors of the market. Also, regulators have expressed concern that rate increases may cause investors to sell fixed income securities faster than the market can absorb them, contributing to price volatility. Over the longer term, rising interest rates may present a greater risk than has historically been the case due to the prior period of relatively low rates and the effect of government fiscal and monetary policy initiatives and potential market reaction to those initiatives, or their alteration or cessation. It is difficult to predict the impact on various markets of significant rate increases or other significant policy changes.
|
In March 2023, the shutdown of certain financial institutions in the U.S. and questions regarding the viability of other financial institutions raised economic concerns over disruption in the U.S. and global banking systems. There can be no certainty that the actions taken by the U.S. or foreign governments will be effective in mitigating the effects of financial institution failures on the economy and restoring public confidence in the U.S. and global banking systems.
|
Some countries, including the U.S., have in recent years adopted more protectionist trade policies. Slowing global economic growth; the rise in protectionist trade policies; changes to international trade agreements; risks associated with the trade agreement between the United Kingdom and the European Union and the risks associated with ongoing trade negotiations with China; political or economic dysfunction within some nations, including major producers of oil; and dramatic changes in commodity and currency prices could have adverse effects that cannot be foreseen at the present time. Tensions, war or open conflict between nations, such as between Russia and Ukraine, in the Middle East or in eastern Asia could affect the economies of many nations, including the United States. The duration of ongoing hostilities and any sanctions and related events cannot be predicted. Those events present material uncertainty and risk with respect to markets globally and the performance of the Fund and its investments or operations could be negatively impacted.
|
Regulators in the U.S. have proposed and recently adopted a number of changes to regulations involving the markets and issuers, some of which apply to the Fund. The full effect of various newly-adopted regulations is not currently known. Additionally, it is not clear whether the proposed regulations will be adopted. However, due to the broad scope of the new and proposed regulations, certain changes could limit the Fund’s ability to pursue its investment
|
strategies or make certain investments, or may make it more costly for the Fund to operate, which may impact performance. Further, advancements in technology may also adversely impact market movements and liquidity and may affect the overall performance of the Fund. For example, the advanced development and increased regulation of artificial intelligence may impact the economy and the performance of the Fund. As artificial intelligence is used more widely, the value of the Fund’s holdings may be impacted, which could impact the overall performance of the Fund.
|
High public debt in the U.S. and other countries creates ongoing systemic and market risks and policymaking uncertainty. There is no assurance that the U.S. Congress will act to raise the nation’s debt ceiling; a failure to do so could cause market turmoil and substantial investment risks that cannot now be fully predicted. Unexpected political, regulatory and diplomatic events within the U.S. and abroad may affect investor and consumer confidence and may adversely impact financial markets and the broader economy.
|
Certain illnesses spread rapidly and have the potential to significantly and adversely affect the global economy. The impact of epidemics and/or pandemics that may arise in the future could negatively affect the economies of many nations, individual companies and the global securities and commodities markets, including their liquidity, in ways that cannot necessarily be foreseen at the present time and could last for an extended period of time. China’s economy, which has been sustained through debt-financed spending on housing and infrastructure, appears to be experiencing a significant slowdown and growing at a lower rate than prior years. Due to the size of China’s economy, such a slowdown could impact financial markets and the broader economy.
|
Economists and others have expressed increasing concern about the potential effects of global climate change on property and security values. Impacts from climate change may include significant risks to global financial assets and economic growth. A rise in sea levels, an increase in powerful windstorms and/or a climate-driven increase in sea levels or flooding could cause coastal properties to lose value or become unmarketable altogether. Certain issuers, industries and regions may be adversely affected by the impacts of climate change, including on the demand for and the development of goods and services and related production costs, and the impacts of legislation, regulation and international accords related to climate change, as well as any indirect consequences of regulation or business trends driven by climate change. Regulatory changes and divestment movements tied to concerns about climate change could adversely affect the value of certain land and the viability of industries whose activities or products are seen as accelerating climate change. Losses related to climate change could adversely affect, among others, corporate issuers and mortgage lenders, the value of mortgage-backed securities, the bonds of municipalities that depend on tax or other revenues and tourist dollars generated by affected properties, and insurers of the property and/or of corporate, municipal or mortgage-backed securities.
|
■
|
Government Money Market Funds Risk. Investments in government money market funds are subject to interest rate risk, credit risk, and market risk. Interest rate risk is the risk that rising interest rates could cause the Fund’s investment to lose value. A decline in short-term interest rates or a low interest rate environment would lower a government money market fund’s yield and the return on the Fund’s investment. Credit risk is the risk that the issuer, guarantor or insurer of an obligation, or the counterparty to a transaction, may fail or become less able or unwilling, to make timely payment of interest or principal or otherwise honor its obligations, or that it may default completely. There is the risk that the issuers or guarantors of securities owned by a government money market fund, including securities issued by U.S. Government agencies, which are not backed by the full faith and credit of the U.S. Government, will default on the payment of principal or interest or the obligation to repurchase securities from the government money market fund. This could cause the government money market fund’s NAV to decline below $1.00 per share, which would cause the Fund’s investment to lose value. The SEC has proposed rule amendments that, if adopted, among other changes, may require government money market funds to convert to a floating net asset value per share in a negative interest rate environment.
|
■
|
The MSCI® EAFE Index (Net) is designed to represent the performance of large- and mid-capitalization securities across 21 developed markets countries, including countries in Europe, Australasia and the Far East, and excluding the U.S. and Canada. It covers approximately 85% of the free float-adjusted market capitalization in each country. The MSCI® EAFE Index (Net) returns reflect invested dividends net of withholding taxes, but reflect no deduction for fees, expenses, or other taxes.
|
■
|
The MSCI® ACWI (All Country World Index) ex USA Small Cap Index (Net) is a market capitalization-weighted index designed to measure the investable equity market performance for global investors of small cap stocks in developed and emerging markets, excluding the United States.
|
American Beacon Fund
|
Y Class
|
R5 Class
|
Investor Class
|
American Beacon EAM International Small Cap Fund
|
1.10%
|
0.89%
|
1.30%
|
■
|
How long you expect to own the shares;
|
■
|
How much you intend to invest;
|
■
|
Total expenses associated with owning shares of each class;
|
■
|
Whether you plan to take any distributions in the near future; and
|
■
|
Availability of share classes.
|
|
New Account
|
Existing Account
|
|
Share Class
|
Minimum Initial Investment Amount
|
Purchase/Redemption Minimum by Check/ACH/Exchange
|
Purchase/Redemption Minimum by Wire
|
Investor
|
$2,500
|
$50
|
$250
|
Y
|
$100,000
|
$50
|
None
|
R5
|
$250,000
|
$50
|
None
|
• Your name/account registration
|
• Your account number
|
• Type of transaction requested
|
• Fund name(s) and fund numbers
|
• Dollar amount or number of shares
|
Internet
|
www.americanbeaconfunds.com
|
|
Phone
|
To reach an American Beacon representative call 1-800-658-5811, option 1
Through the Automated Voice Response Service call 1-800-658-5811, option 2 (Investor Class Only)
|
|
Mail
|
American Beacon Funds
PO Box 219643
Kansas City, MO 64121-9643
|
Overnight Delivery:
American Beacon Funds
430 W. 7th Street, Suite 219643
Kansas City, MO 64105-1407
|
■
|
ABA# 0110-0002-8; AC-9905-342-3,
|
■
|
Attn: American Beacon Funds,
|
■
|
the fund name and fund number, and
|
■
|
shareholder account number and registration.
|
|
New Account
|
Existing Account
|
|
Share Class
|
Minimum Initial Investment Amount
|
Purchase/Redemption Minimum by Check/ACH/Exchange
|
Purchase/Redemption Minimum by Wire
|
Investor
|
$2,500
|
$50
|
$250
|
Y
|
$100,000
|
$50
|
None
|
R5
|
$250,000
|
$50
|
None
|
■
|
with a request to send the proceeds to an address or commercial bank account other than the address or commercial bank account designated on the account application, or
|
■
|
for an account whose address has changed within the last 30 days if proceeds are sent by check.
|
Share Class
|
Account Balance
|
Investor
|
$ 2,500
|
Y
|
$25,000
|
R5
|
$75,000
|
■
|
The Fund, its officers, trustees, employees, or agents are not responsible for the authenticity of instructions provided by telephone, nor for any loss, liability, cost or expense incurred for acting on them.
|
■
|
The Fund employs procedures reasonably designed to confirm that instructions communicated by telephone are genuine.
|
■
|
Due to the volume of calls or other unusual circumstances, telephone redemptions may be difficult to implement during certain time periods.
|
■
|
liquidate a shareholder’s account at the current day’s NAV per share and remit proceeds via check if the Fund or a financial institution is unable to verify the shareholder’s identity within three business days of account opening,
|
■
|
seek reimbursement from the shareholder for any related loss incurred by the Fund if payment for the purchase of Fund shares by check does not clear the shareholder’s bank, and
|
■
|
reject a purchase order and seek reimbursement from the shareholder for any related loss incurred by the Fund if funds are not received by the applicable wire deadline.
|
■
|
Send a letter to American Beacon Funds via the United States Post Office.
|
■
|
Speak to a Customer Service Representative on the phone after you go through a security verification process. For residents of certain states, contact cannot be made by phone but must be in writing or through the Fund’s secure web application.
|
■
|
Access your account through the Fund’s secure web application.
|
■
|
Cashing checks that are received and are made payable to the owner of the account.
|
American Beacon Funds
P.O. Box 219643 Kansas City, MO 64121-9643 1-800-658-5811 www.americanbeaconfunds.com |
■
|
shares acquired through the reinvestment of dividends and other distributions;
|
■
|
systematic purchases and redemptions;
|
■
|
shares redeemed to return excess IRA contributions; or
|
■
|
certain transactions made within a retirement or employee benefit plan, such as payroll contributions, minimum required distributions, loans, and hardship withdrawals, or other transactions that are initiated by a party other than the plan participant.
|
American Beacon Fund
|
Dividends Paid
|
Other Distributions Paid
|
American Beacon EAM International Small Cap Fund
|
Annually
|
Annually
|
■
|
Reinvest All Distributions. You can elect to reinvest all distributions by the Fund in additional shares of the distributing class of the Fund.
|
■
|
Reinvest Only Some Distributions. You can elect to reinvest some types of distributions by the Fund in additional shares of the distributing class of the Fund while receiving the other types of distributions by the Fund by check or having them sent directly to your bank account by ACH (“in cash”).
|
■
|
Receive All Distributions in Cash. You can elect to receive all distributions in cash.
|
■
|
Reinvest Your Distributions in shares of another American Beacon Fund. You can reinvest all of your distributions by the Fund on a particular class of shares in shares of the same class of another American Beacon Fund that is available for exchanges. You must have an existing account in the same share class of the selected fund.
|
Type of Transaction
|
Federal Tax Status
|
Dividends from net investment income*
|
Ordinary income**
|
Distributions of the excess of net short-term capital gain over net long-term capital loss*
|
Ordinary income
|
Distributions of net gains from certain foreign currency transactions*
|
Ordinary income
|
Distributions of the excess of net long-term capital gain over net short-term capital loss (“net capital gain”)*
|
Long-term capital gains
|
Redemptions or exchanges of shares owned for more than one year
|
Long-term capital gains or losses
|
Redemptions or exchanges of shares owned for one year or less
|
Net gains are taxed at the same rate as ordinary income; net losses are subject to special rules
|
* | Whether reinvested or taken in cash. |
** | Except for dividends that are attributable to ‘‘qualified dividend income,’’ if any. |
American Beacon EAM International Small Cap FundSM
|
|||||
|
Y Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023I
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
January 22, 2019A to October 31, 2019
|
Net asset value, beginning of period
|
$13.46
|
$19.54
|
$15.56
|
$15.64
|
$14.78
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.20
B,C
|
0.04
|
0.59
D
|
0.05
|
0.23
|
Net gains (losses) on investments (both realized and unrealized)
|
1.84
|
(5.36
)
|
3.49
|
0.25
|
0.63
|
Total income (loss) from investment operations
|
2.04
|
(5.32
)
|
4.08
|
0.30
|
0.86
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.26
)
|
(0.76
)
|
(0.10
)
|
(0.38
)
|
–
|
Total distributions
|
(0.26
)
|
(0.76
)
|
(0.10
)
|
(0.38
)
|
–
|
Net asset value, end of period
|
$15.24
|
$13.46
|
$19.54
|
$15.56
|
$15.64
|
Total returnE
|
15.21
%
|
(28.31
)%
|
26.25
%
|
1.84
%
|
5.82
%
F
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$62,512,548
|
$96,269,149
|
$160,793,226
|
$136,563,697
|
$229,275,205
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.26
%
|
0.95
%
|
0.98
%
|
0.99
%
|
0.98
%
G
|
Expenses, net of reimbursements and/or recoupments
|
1.26
%
|
0.95
%
|
0.98
%
|
0.99
%
|
0.98
%
G
|
Net investment income, before expense reimbursements and/or recoupments
|
1.24
%
C
|
1.21
%
|
3.40
%
D
|
0.78
%
|
2.10
%
G
|
Net investment income, net of reimbursements and/or recoupments
|
1.24
%
C
|
1.21
%
|
3.40
%
D
|
0.78
%
|
2.10
%
G
|
Portfolio turnover rate
|
292
%
|
21
%
|
34
%
|
28
%
|
35
%
H
|
A
|
Commencement of operations.
|
B
|
Per share amounts have been calculated using the average shares method.
|
C
|
Net investment income includes a significant dividend payment from Keppel Corp, Ltd. amounting to $0.0439.
|
D
|
Net investment income includes a significant dividend payment from Vivendi SE amounting to $0.3834.
|
E
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
F
|
Not annualized.
|
G
|
Annualized.
|
H
|
Portfolio turnover rate is for the period from January 22, 2019 through October 31, 2019 and is not annualized.
|
I
|
On January 20, 2023 Tocqueville Asset Management LP was terminated and ceased managing assets of the Fund. On January 21, 2023, EAM Global Investors, LLC began managing assets of the Fund.
|
American Beacon EAM International Small Cap FundSM
|
|||||
|
R5 ClassA
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023K
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
January 22, 2019B to October 31, 2019
|
Net asset value, beginning of period
|
$13.47
|
$19.56
|
$15.58
|
$15.65
|
$14.78
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.15
C,D
|
0.20
|
0.60
E
|
0.03
|
0.21
|
Net gains (losses) on investments (both realized and unrealized)
|
1.96
|
(5.53
)
|
3.50
|
0.29
|
0.66
|
Total income (loss) from investment operations
|
2.11
|
(5.33
)
|
4.10
|
0.32
|
0.87
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.27
)
|
(0.76
)
|
(0.12
)
|
(0.39
)
|
–
|
Total distributions
|
(0.27
)
|
(0.76
)
|
(0.12
)
|
(0.39
)
|
–
|
Net asset value, end of period
|
$15.31
|
$13.47
|
$19.56
|
$15.58
|
$15.65
|
Total returnF
|
15.75
%
|
(28.31
)%
|
26.38
%
|
1.94
%
|
5.89
%
G
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$6,316,496
|
$13,963,043
|
$20,907,091
|
$20,327,704
|
$37,138,368
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.21
%
|
0.90
%
|
0.92
%
|
0.91
%
|
0.93
%
H
|
Expenses, net of reimbursements and/or recoupments
|
0.89
%
|
0.89
%
|
0.91
%
I
|
0.89
%
|
0.89
%
H
|
Net investment income, before expense reimbursements and/or recoupments
|
0.63
%
D
|
1.30
%
|
3.14
%
E
|
0.84
%
|
2.18
%
H
|
Net investment income, net of reimbursements and/or recoupments
|
0.95
%
D
|
1.31
%
|
3.15
%
E
|
0.86
%
|
2.22
%
H
|
Portfolio turnover rate
|
292
%
|
21
%
|
34
%
|
28
%
|
35
%
J
|
A
|
Prior to February 28, 2020, the R5 Class was known as Institutional Class.
|
B
|
Commencement of operations.
|
C
|
Per share amounts have been calculated using the average shares method.
|
D
|
Net investment income includes a significant dividend payment from Keppel Corp, Ltd. amounting to $0.0312.
|
E
|
Net investment income includes a significant dividend payment from Vivendi SE amounting to $0.3366.
|
F
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
G
|
Not annualized.
|
H
|
Annualized.
|
I
|
Expense ratios may exceed stated expense caps in Note 2 in the Annual Shareholder report due to security lending expenses.
|
J
|
Portfolio turnover rate is for the period from January 22, 2019 through October 31, 2019 and is not annualized.
|
K
|
On January 20, 2023 Tocqueville Asset Management LP was terminated and ceased managing assets of the Fund. On January 21, 2023, EAM Global Investors, LLC began managing assets of the Fund.
|
American Beacon EAM International Small Cap FundSM
|
|||||
|
Investor Class
|
||||
For a share outstanding throughout the period:
|
Year Ended October 31, 2023E
|
Year Ended October 31, 2022
|
Year Ended October 31, 2021
|
Year Ended October 31, 2020
|
Year Ended October 31, 2019
|
Net asset value, beginning of period
|
$13.51
|
$19.59
|
$15.60
|
$15.61
|
$15.06
|
Income (loss) from investment operations:
|
|
|
|
|
|
Net investment income
|
0.48
A
|
0.65
|
0.76
B
|
0.25
|
0.40
C
|
Net gains (losses) on investments (both realized and unrealized)
|
1.55
|
(6.04
)
|
3.29
|
0.01
|
0.34
|
Total income (loss) from investment operations
|
2.03
|
(5.39
)
|
4.05
|
0.26
|
0.74
|
Less distributions:
|
|
|
|
|
|
Dividends from net investment income
|
(0.21
)
|
(0.69
)
|
(0.06
)
|
(0.27
)
|
(0.19
)
|
Total distributions
|
(0.21
)
|
(0.69
)
|
(0.06
)
|
(0.27
)
|
(0.19
)
|
Net asset value, end of period
|
$15.33
|
$13.51
|
$19.59
|
$15.60
|
$15.61
|
Total returnD
|
15.06
%
|
(28.49
)%
|
26.01
%
|
1.63
%
|
5.03
%
|
Ratios and supplemental data:
|
|
|
|
|
|
Net assets, end of period
|
$60,994,147
|
$72,187,362
|
$180,324,267
|
$198,905,986
|
$355,423,059
|
Ratios to average net assets:
|
|
|
|
|
|
Expenses, before reimbursements and/or recoupments
|
1.46
%
|
1.18
%
|
1.20
%
|
1.18
%
|
1.29
%
|
Expenses, net of reimbursements and/or recoupments
|
1.46
%
|
1.18
%
|
1.20
%
|
1.18
%
|
1.18
%
|
Net investment income, before expense reimbursements and/or recoupments
|
1.10
%
A
|
1.03
%
|
2.81
%
B
|
0.63
%
|
1.42
%
|
Net investment income, net of reimbursements and/or recoupments
|
1.10
%
A
|
1.03
%
|
2.81
%
B
|
0.63
%
|
1.53
%
|
Portfolio turnover rate
|
292
%
|
21
%
|
34
%
|
28
%
|
35
%
|
A
|
Net investment income includes a significant dividend payment from Keppel Corp, Ltd. amounting to $0.0406.
|
B
|
Net investment income includes a significant dividend payment from Vivendi SE amounting to $0.3074.
|
C
|
Net investment income per share is calculated using the ending balance prior to consideration or adjustment for permanent book-to-tax differences.
|
D
|
Based on net asset value, which does not reflect the sales charge, redemption fee, or contingent deferred sales charge, if applicable. May include adjustments in accordance with U.S. GAAP and as such, the net asset value for reporting purposes and the returns based upon those net asset values may differ from the net asset value and returns for shareholder transactions.
|
E
|
On January 20, 2023 Tocqueville Asset Management LP was terminated and ceased managing assets of the Fund. On January 21, 2023, EAM Global Investors, LLC began managing assets of the Fund.
|
By Telephone:
|
Call
1-800-658-5811 |
By Mail:
|
American Beacon Funds
P.O. Box 219643 Kansas City, MO 64121-9643 |
By E-mail:
|
americanbeaconfunds@ambeacon.com
|
On the Internet:
|
Visit our website at www.americanbeaconfunds.com
Visit the SEC website at www.sec.gov |
American Beacon is a registered service mark of American Beacon Advisors, Inc. The American Beacon Funds and the American Beacon EAM International Small Cap Fund are service marks of American Beacon Advisors, Inc.
|
ACH
|
Automated Clearing House
|
|
ADRs
|
American Depositary Receipts
|
|
Advisers Act
|
Investment Advisers Act of 1940, as amended
|
|
American Beacon or Manager
|
American Beacon Advisors, Inc.
|
|
Beacon Funds or the Trust
|
American Beacon Funds
|
|
Board
|
Board of Trustees
|
|
Brexit
|
The United Kingdom’s departure from the European Union
|
|
Capital Gains Distributions
|
Distributions of realized net capital gains
|
|
CFTC
|
Commodity Futures Trading Commission
|
|
Denial of Services
|
A cybersecurity incident that results in customers or employees being unable to access electronic systems
|
|
Dividends
|
Distributions of most or all of the Fund’ s net investment income
|
|
DRD
|
Dividends-received deduction
|
|
EMU
|
Economic and Monetary Union
|
|
ETF
|
Exchange-Traded Fund
|
|
EU
|
European Union
|
|
Forwards
|
Forward Currency Contracts
|
|
Internal Revenue Code
|
Internal Revenue Code of 1986, as amended
|
|
Investment Company Act
|
Investment Company Act of 1940, as amended
|
|
IRA
|
Individual Retirement Account
|
|
IRS
|
Internal Revenue Service
|
|
Management Agreement
|
The Fund’s Management Agreement with the Manager
|
|
NAV
|
Fund’s net asset value
|
|
NYSE
|
New York Stock Exchange
|
|
OTC
|
Over-the-Counter
|
|
Other Distributions
|
Distributions of net gains from foreign currency transactions
|
|
QDI
|
Qualified Dividend Income
|
|
REIT
|
Real Estate Investment Trust
|
|
SAI
|
Statement of Additional Information
|
|
SEC
|
Securities and Exchange Commission
|
|
Securities Act
|
Securities Act of 1933, as amended
|
|
State Street
|
State Street Bank and Trust Company
|
|
SVP
|
Signature Validation Program
|
|
Trust
|
American Beacon Funds
|
|
UK
|
United Kingdom
|
|
|
Ticker
|
||
Share Class
|
Y
|
R5
|
Investor
|
American Beacon EAM International Small Cap Fund
|
TOVYX
|
TOVIX
|
TIVFX
|
■
|
Bank Deposit Notes. Bank deposit notes are obligations of a bank that provide an alternative to certificates of deposit. Similar to certificates of deposit, deposit notes represent bank level investment and, therefore, are senior to all holding company corporate debt. Bank deposit notes rank junior to domestic deposit liabilities of the bank and pari passu with other senior, unsecured obligations of the bank. Typically, bank deposit notes are not insured by the Federal Deposit Insurance Corporation or any other insurer.
|
■
|
Bankers’ Acceptances. Bankers’ acceptances are short-term credit instruments designed to enable businesses to obtain funds to finance commercial transactions. Generally, an acceptance is a time draft drawn on a bank by an exporter or an importer to obtain a stated amount of funds to pay for specific merchandise. The draft is then “accepted” by a bank that, in effect, unconditionally guarantees to pay the face value of the instrument on its maturity date. The acceptance may then be held by the accepting bank as an earning asset or it may be sold in the secondary market at the going rate of discount for a specific maturity. Most acceptances have maturities of six months or less. Bankers’ acceptances rank junior to domestic deposit liabilities of the bank and pari passu with other senior, unsecured obligations of the bank.
|
■
|
Bearer Deposit Notes. Bearer deposit notes, or bearer bonds, are bonds or debt securities that entitle the holder of the document to ownership or title in the deposit. Such notes are typically unregistered, and whoever physically holds the bond is presumed to be the owner of the instrument. Recovery of the value of a bearer bond in the event of its loss or destruction usually is impossible. Interest is typically paid upon presentment of an interest coupon for payment.
|
■
|
CDs. CDs are negotiable certificates issued against funds deposited in an eligible bank (including its domestic and foreign branches, subsidiaries and agencies) for a definite period of time and earning a specified rate of return. U.S. dollar denominated CDs issued by banks abroad are known as Eurodollar CDs. CDs issued by foreign branches of U.S. banks are known as Yankee CDs.
|
■
|
Commercial Paper. Commercial paper is a short-term debt security issued by a corporation, bank, municipality, or other issuer, usually for purposes such as financing current operations. The Fund may invest in commercial paper that cannot be resold to the public without an effective registration statement under the Securities Act. While some restricted commercial paper normally is deemed illiquid, in certain cases it may be deemed liquid.
|
■
|
Government Money Market Funds. The Fund may invest cash balances in money market funds that are registered as investment companies
|
under the Investment Company Act, including money market funds that are advised by the Manager. Money market funds invest in highly-liquid, short-term instruments, which include cash and cash equivalents, and debt securities with high credit ratings and short-term maturities, such as U.S. Treasuries. A “government money market fund” is required to invest at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are fully collateralized by government securities or cash. Government securities include any security issued or guaranteed as to principal or interest by the U.S. government and its agencies or instrumentalities. By investing in a money market fund, the Fund becomes a shareholder of that money market fund. As a result, Fund shareholders indirectly bear their proportionate share of the expenses of the money market funds in which the Fund invests in addition to any fees and expenses Fund shareholders directly bear in connection with the Fund’s own operations. These expenses may include, for example, advisory and administrative fees, including advisory fees charged by the Manager to any applicable money market funds advised by the Manager. These other fees and expenses are reflected in the Fees and Expenses Table for the Fund in its Prospectus, if applicable. Shareholders also would be exposed to the risks associated with money market funds and the portfolio investments of such money market funds, including that a money market fund’s yield will be lower than the return that the Fund would have derived from other investments that would provide liquidity. Although a money market fund is designed to be a relatively low risk investment, it is not free of risk. Despite the short maturities and high credit quality of a money market fund’s investments, increases in interest rates and deteriorations in the credit quality of the instruments the money market fund has purchased can cause the price of a money market security to decrease and may reduce the money market fund’s yield. In addition, a money market fund is subject to the risk that the value of an investment may be eroded over time by inflation. Factors that could adversely affect the value of a money market fund’s shares include, among other things, a sharp rise in interest rates, an illiquid market for the securities held by the money market fund, a high volume of redemption activity in a money market fund’s shares, and a credit event or credit rating downgrade affecting one or more of the issuers of securities held by the money market fund. There can be no assurance that a money market fund will maintain a $1.00 per share net asset value (“NAV”) at all times. The failure of an unrelated money market fund to maintain a stable NAV could create a widespread risk of increased redemption pressures on all money market funds, potentially jeopardizing the stability of their NAVs. Certain money market funds have in the past failed to maintain stable NAVs, and there can be no assurance that such failures and resulting redemption pressures will not impact money market funds in the future. In the event of negative gross yields as a result of persistent negative interest rates, government money market funds may consider various options including but not limited to (1) the implementation of a reverse distribution or share cancellation mechanism (that would periodically reduce the number of the fund’s outstanding shares) to maintain a stable net asset value per share or (2) the potential conversion to a floating net asset value per share money market fund. Certain money market funds may impose a fee upon sale of shares or may temporarily suspend the ability to sell shares of the money market fund if the money market fund’s liquidity falls below required minimums because of market conditions or other factors, at the determination of the money market fund’s board. Such a determination may conflict with the interest of the Fund. Government money market funds are generally not permitted to impose liquidity fees or temporarily suspend redemptions. However, government money market funds typically offer materially lower yields than other money market funds. Money market funds and the securities they invest in are subject to comprehensive regulations. The enactment of new legislation or regulations, as well as changes in interpretation and enforcement of current laws, may affect the manner of operation, performance and/or yield of money market funds. An investment in a money market fund is not a bank deposit and is not insured or guaranteed by any bank, the FDIC or any other government agency.
|
■
|
Government Obligations. Government obligations may include U.S. Treasury securities, Treasury inflation-protected securities, and other debt instruments backed by the full faith and credit of the United States, or debt obligations of U.S. Government-sponsored entities.
|
■
|
Repurchase Agreements. Repurchase agreements are agreements pursuant to which the Fund purchases securities from a bank that is a member of the Federal Reserve System (or a foreign bank or U.S. branch or agency of a foreign bank), or from a securities dealer, that agrees to repurchase the securities from the Fund at a higher price on a designated future date. Repurchase agreements generally are for a short period of time, usually less than a week. Costs, delays, or losses could result if the selling party to a repurchase agreement becomes bankrupt or otherwise defaults.
|
■
|
Short-term Corporate Debt Securities. Short-term corporate debt securities are securities and bonds issued by corporations with shorter terms to maturity. Corporate securities generally bear a higher risk than U.S. government bonds.
|
■
|
Time Deposits. Time deposits, also referred to as “fixed time deposits,” are non-negotiable deposits maintained at a banking institution for a specified period of time at a specified interest rate. Time deposits may be withdrawn on demand by the investor, but may be subject to early withdrawal penalties which vary depending upon market conditions and the remaining maturity of the obligation. There are no contractual restrictions on the right to transfer a beneficial interest in a time deposit to a third party, although there is no market for such deposits.
|
■
|
Forward Contracts. The Fund may enter into forward contracts. Forward contracts are a type of derivative instrument that obligate the purchaser to take delivery of, or cash settle a specific amount of, a commodity, security or obligation underlying the contract at a specified time in the future for a specified price. Likewise, the seller incurs an obligation to deliver the specified amount of the underlying asset against receipt of the specified price. Generally, forward contracts are traded through financial institutions acting as market-makers, on certain securities exchanges, or over-the-counter, and the protections afforded to investors may vary depending on the trading environment. This is distinguishable from futures contracts, which are traded on U.S. and foreign commodities exchanges.
Forward contracts are often negotiated on an individual basis and are not standardized. The market for forward contracts is substantially unregulated, as there is no limit on daily price movements and speculative position limits are not applicable. The principals who deal in certain forward contract markets are not required to continue to make markets in the underlying reference assets in which they trade and these markets can experience periods of illiquidity, sometimes of significant duration. There have been periods during which certain participants in forward contract markets have refused to quote prices for certain underlying references or have quoted prices with an unusually wide spread between the price at which they were prepared to buy and that at which they were prepared to sell. At or prior to maturity of a forward contract, the Fund may enter into an offsetting contract and may incur a loss to the extent there has been adverse movement in forward contract prices. The liquidity of the markets for forward contracts depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants make or take delivery, liquidity in the market for forwards could be reduced. A relatively small price movement in a forward contract may result in substantial losses to the Fund, exceeding the amount of the margin paid. Forward contracts can increase the Fund’s risk exposure to underlying reference assets and their attendant risks. The Fund bears the risk of loss of the amount expected to be received under a forward contract in the event of the default or bankruptcy of a counterparty. If such a default occurs, the Fund may have contractual remedies pursuant to the forward contract, but such remedies may be subject to bankruptcy and insolvency laws which could affect the Fund’s rights as a creditor. |
■
|
Forward Foreign Currency Contracts. The Fund may enter into forward foreign currency contracts (“forward currency contracts”), which are a type of derivative instrument, for a variety of reasons. A forward currency contract involves an obligation to purchase or sell a specified currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties at a price set at the time of the contract. Because these forward currency contracts normally are settled through an exchange of currencies, they are traded in the interbank market directly between currency traders (usually large commercial banks) and their customers.
|
Forward currency contracts may serve as long hedges. For example, the Fund may purchase a forward currency contract to lock in the U.S. dollar price of a security denominated in a foreign currency that it intends to acquire. Forward currency contract transactions also may serve as short hedges. For example, the Fund may sell a forward currency contract to lock in the U.S. dollar equivalent of the proceeds from the anticipated sale of a security or from a dividend or interest payment on a security denominated in a foreign currency.
|
The Fund may enter into forward currency contracts to sell a foreign currency for a fixed U.S. dollar amount approximating the value of some or all of its respective portfolio securities denominated in such foreign currency. In addition, the Fund may use forward currency contracts when the sub-advisor wishes to “lock in” the U.S. dollar price of a security when the Fund is purchasing or selling a security denominated in a foreign currency or anticipates receiving a dividend or interest payment denominated in a foreign currency.
|
The Fund may enter into forward currency contracts for the purchase or sale of a specified currency at a specified future date either with respect to specific transactions or with respect to portfolio positions in order to minimize the risk to the Fund from adverse changes in the relationship between the U.S. dollar and foreign currencies.
|
The Fund may use forward currency contracts to seek to hedge against, or profit from, changes in the value of a particular currency by using forward currency contracts on another foreign currency or a basket of currencies, the value of which the sub-advisor believes will have a positive correlation to the values of the currency being hedged. When hedging, use of a different foreign currency magnifies the risk that movements in the price of the forward contract will not correlate or will correlate unfavorably with the foreign currency being hedged.
|
In addition, the Fund may use forward currency contracts to shift exposure to foreign currency fluctuations from one country to another. For example, if the Fund owned securities denominated in a foreign currency that the sub-advisor believed would decline relative to another currency, it might enter into a forward currency contract to sell an appropriate amount of the first foreign currency, with payment to be made in the second currency. Transactions that involve two foreign currencies are sometimes referred to as “cross hedging.” Use of a different foreign currency magnifies the Fund’s exposure to foreign currency exchange rate fluctuations.
|
The Fund also may enter into forward currency contracts for non-hedging purposes if a foreign currency is anticipated to appreciate or depreciate in value, but securities denominated in that currency do not present attractive investment opportunities and are not held in the Fund’s investment portfolio.
|
The cost to the Fund of engaging in forward currency contracts varies with factors such as the currency involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts usually are entered into on a principal basis, no fees or commissions are involved. When the Fund enters into a forward currency contract, it relies on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. Failure by the counterparty to do so would result in the loss of any expected benefit of the transaction.
|
Sellers or purchasers of forward currency contracts can enter into offsetting closing transactions, similar to closing transactions on futures, by purchasing or selling, respectively, an instrument identical to the instrument sold or bought, respectively. Secondary markets generally do not exist for forward currency contracts, however, with the result that closing transactions generally can be made for forward currency contracts only by negotiating directly with the counterparty. Thus, there can be no assurance that the Fund will in fact be able to close out a forward currency contract at a favorable price prior to maturity. In addition, in the event of insolvency of the counterparty, the Fund might be unable to close out a forward currency contract at any time prior to maturity. In either event, the Fund would continue to be subject to market risk with respect to the position, and would continue to be required to maintain a position in the securities or currencies that are the subject of the hedge or to maintain cash or securities.
|
The precise matching of forward currency contract amounts and the value of securities whose U.S. dollar value is being hedged by those contracts involved generally will not be possible because the value of such securities, measured in the foreign currency, will change after the forward currency contract has been established. Thus, the Fund might need to purchase or sell foreign currencies in the spot (cash) market to the extent such foreign currencies are not covered by forward contracts. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain.
|
The Fund bears the risk of loss of the amount expected to be received under a forward currency contract in the event of the default or bankruptcy of a counterparty. If such a default occurs, the Fund may have contractual remedies pursuant to the forward currency contract, but such remedies may be subject to bankruptcy and insolvency laws which could affect the Fund’s rights as a creditor.
|
At the maturity of a forward contract, the Fund may sell the portfolio security and make delivery of the foreign currency, or it may retain the security and either extend the maturity of the forward contract (by “rolling” that contract forward) or may initiate a new forward contract. If the Fund retains the portfolio security and engages in an offsetting transaction, the Fund will incur a gain or a loss (as described below) to the extent that there has been movement in forward contract prices. If the Fund engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the foreign currency.
|
Should forward prices decline during the period between the Fund’s entering into a forward contract for the sale of a foreign currency and the date it enters into an offsetting contract for the purchase of the foreign currency, the Fund will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the Fund will suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell.
|
Forward currency contracts in which the Fund may engage include foreign exchange forwards. The consummation of a foreign exchange forward requires the actual exchange of the principal amounts of the two currencies in the contract (i.e., settlement on a physical basis). Because foreign exchange forwards are physically settled through an exchange of currencies, they are traded in the interbank market directly between currency traders (usually large commercial banks) and their customers. A foreign exchange forward generally has no deposit requirement, and no commissions are charged at any stage for trades; foreign exchange dealers realize a profit based on the difference (the spread) between the prices at which they are buying and the prices at which they are selling various currencies. When the Fund enters into a foreign exchange forward, it relies on the counterparty to make or take delivery of the underlying currency at the maturity of the contract. Failure by the counterparty to do so would result in the loss of any expected benefit of the transaction.
|
The Fund may be required to obtain the currency that it must deliver under the foreign exchange forward through the sale of portfolio securities denominated in such currency or through conversion of other assets of the Fund into such currency. When the Fund engages in foreign currency transactions for hedging purposes, it will not enter into foreign exchange forwards to sell currency or maintain a net exposure to such contracts if their consummation would obligate the Fund to deliver an amount of foreign currency materially in excess of the value of its portfolio securities or other assets denominated in that currency.
|
■
|
Futures Contracts. The Fund may enter into futures contracts. Futures contracts are a type of derivative instrument that obligate the purchaser to take delivery of, or cash settle a specific amount of, a commodity, security or other obligation underlying the contract at a specified time in the future for a specified price. Likewise, the seller incurs an obligation to deliver the specified amount of the underlying obligation against receipt of the specified price. Futures are traded on both U.S. and foreign commodities exchanges. The purchase of futures can serve as a long hedge, and the sale of futures can serve as a short hedge.
No price is paid upon entering into a futures contract. Instead, at the inception of a futures contract, the Fund is required to deposit “initial margin” consisting of cash, U.S. Government securities, suitable money market instruments, or liquid, high-grade debt securities in an amount set by the exchange on which the contract is traded and varying based on the volatility of the underlying asset. Margin must also be deposited when writing a call or put option on a futures contract, in accordance with applicable exchange rules. Unlike margin in securities transactions, initial margin on futures contracts does not represent a borrowing, but rather is in the nature of a performance bond or good-faith deposit that is returned to the Fund at the termination of the transaction if all contractual obligations have been satisfied. Under certain circumstances, such as periods of high volatility, the Fund may be required by a futures exchange to increase the level of its initial margin payment, and initial margin requirements might be increased generally in the future by regulatory action. Subsequent “variation margin” payments (sometimes referred to as “maintenance margin” payments) are made to and from the futures broker daily as the value of the futures position varies, a process known as “marking-to-market.” Variation margin does not involve borrowing, but rather represents a daily settlement of the Fund’s obligations to or from a futures broker. When the Fund purchases or sells a futures contract, it is subject to daily, or even intraday, variation margin calls that could be substantial in the event of adverse price movements. If the Fund has insufficient cash to meet daily or intraday variation margin requirements, it might need to sell securities at a time when such sales are disadvantageous. Purchasers and sellers of futures contracts can enter into offsetting closing transactions, by selling or purchasing, respectively, an instrument identical to the instrument purchased or sold. Positions in futures contracts may be closed only on a futures exchange or board of trade that trades that contract. The Fund intends to enter into futures contracts only on exchanges or boards of trade where there appears to be a liquid secondary market. However, there can be no assurance that such a market will exist for a particular contract at a particular time. In such event, it may not be possible to close a futures contract. |
Although many futures contracts by their terms call for the actual delivery or acquisition of the underlying asset, in most cases the contractual obligation is fulfilled before the date of the contract without having to make or take delivery of the securities or currency. The offsetting of a contractual obligation is accomplished by buying (or selling, as appropriate) on a commodities exchange an identical futures contract calling for delivery in the same month. Such a transaction, which is effected through a member of an exchange, cancels the obligation to make or take delivery of the securities or currency. Since all transactions in the futures market are made, offset or fulfilled through a clearinghouse associated with the exchange on which the contracts are traded, the Fund will incur brokerage fees when it purchases or sells futures contracts. If an offsetting purchase price is less than the original sale price, the Fund realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an offsetting sell price is more than the original purchase price, the Fund realizes a capital gain, or if it is less, the Fund realizes a capital loss. The Fund has no current intent to accept physical delivery in connection with the settlement of futures contracts.
Under certain circumstances, futures exchanges may establish daily limits on the amount that the price of a futures contract can vary from the previous day’s settlement price; once that limit is reached, no trades may be made that day at a price beyond the limit. Daily price limits do not limit potential losses because prices could move to the daily limit for several consecutive days with little or no trading, thereby preventing liquidation of unfavorable positions. If the Fund were unable to liquidate a futures contract due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Fund would continue to be subject to market risk with respect to the position. In addition, the Fund would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the futures contract or option thereon or to maintain cash or securities in a segregated account. The ordinary spreads between prices in the cash and futures markets, due to differences in the nature of those markets, are subject to distortions. First, all participants in the futures market are subject to initial deposit and variation margin requirements. Rather than meeting additional variation margin deposit requirements, investors may close futures contracts through offsetting transactions that could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of speculators, the margin deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may cause temporary price distortions. Due to the possibility of distortion, a correct forecast of securities price or currency exchange rate trends by the sub-advisor may still not result in a successful transaction. Futures contracts also entail other risks. Although the use of such contracts may benefit the Fund, if investment judgment about the general direction of, for example, an index is incorrect, the Fund’s overall performance would be worse than if it had not entered into any such contract. There are differences between the securities and futures markets that could result in an imperfect correlation between the markets, causing a given transaction not to achieve its objectives. The degree of imperfection of correlation depends on circumstances such as variations in speculative market demand for futures, including technical influences in futures trading, and differences between the financial instruments being hedged and the instruments underlying the standard contracts available for trading in such respects as interest rate levels, maturities, and creditworthiness of issuers. A decision as to whether, when and how to hedge involves the exercise of skill and judgment, and even a well-conceived hedge may be unsuccessful to some degree because of market behavior or unexpected interest rate trends. |
■
|
Warrants. Warrants are options to purchase an issuer’s securities at a stated price during a stated term, usually at a price below the initial offering price of the securities and before the securities are offered to the general public. If the market price of the underlying common stock does not exceed the warrant’s exercise price during the life of the warrant, the warrant will expire worthless. As a result, warrants may be considered more speculative than certain other types of investments. Warrants usually have no voting rights, pay no dividends and have no rights with respect to the assets of the corporation issuing them. The percentage increase or decrease in the value of a warrant may be greater than the percentage increase or decrease in the value of the underlying common stock. Warrants may be purchased with values that vary depending on the change in value of one or more specified indices (“index warrants”). Index warrants are generally issued by banks or other financial institutions and give the holder the right, at any time during the term of the warrant, to receive upon exercise of the warrant a cash payment from the issuer based on the value of the underlying index at the time of the exercise. Warrants may also be linked to the performance of oil and/or the GDP of specific frontier and emerging markets. Warrants are usually freely transferable, but may not be as liquid as exchange-traded options, and the market for warrants may be very limited and it may be difficult to sell them promptly at an acceptable price.
|
■
|
Common Stock. Common stock generally takes the form of shares in a corporation which represent an ownership interest. It ranks below preferred stock and debt securities in claims for dividends and for assets of the company in a liquidation or bankruptcy. The value of a company’s common stock may fall as a result of factors directly relating to that company, such as decisions made by its management or decreased demand for the company’s products or services. A stock’s value may also decline because of factors affecting not just the company, but also companies in the same industry or sector. The price of a company’s stock may also be affected by changes in financial markets that are relatively unrelated to the company, such as changes in interest rates, currency exchange rates or industry regulation. Companies that elect to pay dividends on their common stock generally only do so after they invest in their own business and make required payments to bondholders and on other debt and preferred stock. Therefore, the value of a company’s common stock will usually be more volatile than its bonds, other debt and preferred stock. Common stock may be exchange-traded or traded over-the-counter. OTC stock may be less liquid than exchange-traded stock.
|
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Depositary Receipts. The Fund may invest in depositary receipts, which represent ownership interests in securities of foreign companies (an “underlying issuer”) that have been deposited with a bank or trust and that trade on an exchange or OTC. Depositary receipts may not be denominated in the same currency as the securities into which they may be converted, and they are subject to the risk of fluctuation in the currency exchange rate. Investing in depositary receipts entails substantially the same risks as direct investment in foreign securities. There is generally less publicly available information about foreign companies and there may be less governmental regulation and supervision of foreign stock exchanges, brokers, and listed companies. In addition, such companies may use different accounting and financial standards (and certain currencies may become unavailable for transfer from a foreign currency), resulting in the Fund’s possible inability to convert immediately into U.S. currency proceeds realized upon the sale of portfolio securities of the affected foreign companies. In addition, the issuers of unsponsored depositary receipts are not obligated
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to disclose material information about the underlying securities to investors in the United States. Ownership of unsponsored depositary receipts may not entitle the Fund to the same benefits and rights as ownership of a sponsored depositary receipt or the underlying security. Please see “Foreign Securities” below for a description of the risks associated with investments in foreign securities. The Fund may invest in the following type of depositary receipts:
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ADRs. ADRs are depositary receipts for foreign issuers in registered form, typically issued by a U.S. financial institution, traded in U.S. securities markets.
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EDRs. EDRs, which are sometimes called Continental Depositary Receipts, are issued in Europe in bearer form and are traded in European securities markets.
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GDRs. GDRs are in bearer form and traded in both the U.S. and European securities markets.
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NVDRs. NVDRs represent financial interests in an issuer but the holder is not entitled to any voting rights.
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Income Deposit Securities. The Fund may purchase IDSs. Each IDS represents two separate securities, shares of common stock and subordinated notes issued by the same company, that are combined into one unit that trades like a stock on an exchange. Holders of IDSs receive dividends on the common shares and interest at a fixed rate on the subordinated notes to produce a blended yield. An IDS is typically listed on a stock exchange, but the underlying securities typically are not listed on the exchange until a period of time after the listing of the IDS or upon the occurrence of certain events (e.g., a change of control of the issuer of the IDS). When the underlying securities are listed, the holders of IDSs generally have the right to separate the components of the IDSs and trade them separately.
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There may be a thinner and less active market for IDSs than that available for other securities. The value of an IDS will be affected by factors generally affecting common stock and subordinated debt securities, including the issuer’s actual or perceived ability to pay interest and principal on the notes and pay dividends on the stock.
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The federal income tax treatment of IDSs is not entirely clear and there is no authority that directly addresses the tax treatment of securities with terms substantially similar to IDSs. Among other things, although it is expected that the subordinated notes portion of an IDS will be treated as debt, if it is characterized as equity rather than debt, then interest paid on the notes could be treated as dividends (to the extent paid out of the issuer’s earnings and profits).
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Income Trusts. The Fund may invest in shares of income trusts, including Canadian royalty trusts. An income trust is an investment trust which holds income-producing assets and generally distributes the income generated by such assets on to its security holders. Income trusts also may include royalty trusts, a particular type of income trust whose securities are listed on a stock exchange and which controls an underlying company whose business relates to, without limitation, the acquisition, exploitation, production and sale of oil and natural gas. The main attraction of an income trust is its ability to generate constant cash flows. Income trusts have the potential to deliver higher yields than bonds. During periods of low interest rates, income trusts may achieve higher yields compared with cash investments. During periods of increasing rates, the opposite may be true. Income trusts may experience losses during periods of both low and high interest rates.
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Income trusts generally are structured to avoid income taxes at the entity level. In a traditional corporate tax structure, net income is taxed at the corporate level and again when distributed as dividends to its shareholders. Under current law, an income trust, if properly structured, should not be subject to federal income tax. This flow-through structure means that the distributions to income trust investors are generally higher than dividends from an equivalent corporate entity.
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Despite the potential for attractive regular payments, income trusts are equity investments, not fixed-income securities, and they share many of the risks inherent in stock ownership, including operating risk based on the income trusts’ underlying assets and their respective businesses. Such risks may include lack of, or limited, operating histories. In addition, an income trust may lack diversification and potential growth may be sacrificed because revenue is passed on to security holders, rather than reinvested in the business. Because income trusts may pay out more than their net income, the unitholder equity (capital) may decline over time. Income trusts often grow through acquisition of additional assets, funded through the issuance of additional equity or, where the trust is able, additional debt. Income trusts do not guarantee minimum distributions or even return of capital; therefore, if the business of a trust starts to lose money, the trust can reduce or even eliminate distributions. The tax structure of income trusts described above, which would allow income to flow through to investors and be taxed only at the investor level, could be challenged under existing law, or the tax laws could change. Royalty trusts and income trusts frequently are found in Canada, and an investment in a Canadian trust will be subject to certain additional risks of investing in foreign securities.
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Initial Public Offerings. The Fund can invest in IPOs. By definition, securities issued in IPOs have not traded publicly until the time of their offerings. Special risks associated with IPOs may include, among others, the fact that there may only be a limited number of shares available for trading. The market for those securities may be unseasoned. The issuer may have a limited operating history. These factors may contribute to price volatility. The limited number of shares available for trading in some IPOs may also make it more difficult for the Fund to buy or sell significant amounts of shares without an unfavorable impact on prevailing prices. In addition, some companies initially offering their shares publicly are involved in relatively new industries or lines of business, which may not be widely understood by investors. Some of the companies involved in new industries may be regarded as developmental state companies, without revenues or operating income, or the near-term prospects of them. Many IPOs are by small- or micro-cap companies that are undercapitalized. IPOs may adversely impact the Fund’s performance. However, the impact of IPOs on the Fund’s performance will likely decrease as the Fund’s asset size increases.
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Master Limited Partnerships. The Fund may invest in publicly traded partnerships such as MLPs. MLPs issue units that are registered with the SEC and are freely tradable on a securities exchange or in the OTC market. An MLP may have one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. The general partner or partners are jointly and severally responsible for the liabilities of the MLP. An MLP also may be an entity similar to a limited partnership, such as an LLC, which has one or more managers or managing members and non-managing members (who are like limited partners). The Fund will invest in an MLP as a limited partner, and normally would not be liable for the debts of an MLP beyond the amount that the Fund has invested therein. However, as a limited partner, the Fund would not be shielded to the same extent that a stockholder of a corporation would be. In certain instances, creditors of an MLP would have the right to seek a return of capital that
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had been distributed to a limited partner. This right of an MLP’s creditors would continue even after the Fund had sold its investment in the partnership. Holders of MLP units have more limited rights to vote on matters affecting the partnership than owners of common stock. MLPs typically invest in real estate and oil and gas equipment leasing assets, but they also finance entertainment, research and development, and other projects.
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African Securities. The Fund may invest in securities of issuers in African countries that involve heightened risks of political instability, civil war, armed conflict, social instability as a result of religious, ethnic and/or socio-economic unrest, authoritarian and/or military involvement in governmental decision-making, corruption, expropriation and/or nationalization of assets, confiscatory taxation, genocidal warfare in certain countries, and other risks. Many under-developed African countries have less developed capital markets that do not contain the safeguards inherent in those of developed countries and, consequently, the risks of investing in foreign securities are magnified in such countries. Risks of investing in such markets include heightened volatility, smaller investor base, fewer brokerage firms, heightened counterparty risk, inconsistent and rapidly changing regulation, lower market capitalization and trading volume, illiquidity, inflation, uncertainty regarding the existence of trading markets, governmental control and heavy regulation of labor and industry, and the risk that trading on African securities markets may be suspended altogether. Some markets of the countries in Africa in which the Fund may invest are in only the earliest stages of development with less liquidity, fewer and less well capitalized securities brokers, fewer issuers and more capital market restrictions than developed markets. To the extent the Fund effects securities transactions through these brokerage firms, the Fund is subject to the risk that these brokerage firms will not be able to fulfill their obligations to the Fund (i.e., counterparty risk). This risk is magnified to the extent that the Fund effects securities transactions through a single brokerage firm or a small number of brokerage firms. In addition, there may be no single centralized securities exchange on which securities are traded in certain countries in Africa. There may be less financial and other information publicly available to investors, and the information that is provided may lack integrity. Uniform accounting, auditing and financial reporting standards may not exist.
In addition, the governments of certain countries may exercise substantial influence over many aspects of the private sector, including ownership or control of companies. Government actions in the future could have a significant economic impact. In particular, changes in investment policies or shifts in the prevailing political climate could result in the introduction of changes to government regulations with respect to price controls, export and import controls, income and other taxes, foreign ownership restrictions, foreign exchange and currency controls and labor and welfare benefit policies. Unexpected changes in these policies or regulations could lead to increased investment, operating or compliance expenses. Investments in certain countries may require the Fund to adopt special procedures, seek local government approvals or take other actions, each of which may involve additional costs to the Fund. Certain African countries may unpredictably restrict or control the extent to which foreign investors may invest in securities of issuers located in those countries, and governments may limit the repatriation of investment proceeds to foreign countries. Regulation may require governmental approval or special licenses for foreign investors and limitations could be placed on investment practices regarding share-class ownership, shareholder rights and title to securities. A delay in obtaining a government approval or a license would delay investments in a particular country, and, as a result, the Fund may not be able to invest in certain securities while approval is pending. The government of a particular country may also withdraw or decline to renew a license that enables the Fund to invest in such country. A Fund could be adversely affected by delays in, or a refusal to grant required governmental approval for repatriation of capital, as well as by the application to the Fund of any restrictions on investment. Additionally, withholding or other taxes may be levied on foreign investors, and while portions of these taxes may be recoverable, any non-recovered portions will reduce the income received from investments in such countries. During periods of instability or upheaval, a country’s government may act in a detrimental or hostile manner toward private enterprise or foreign investment. Securities laws in many countries in Africa are relatively new and unsettled and, consequently, there is a risk of rapid and unpredictable change in laws regarding foreign investment, securities regulation, title to securities and shareholder rights. Accordingly, foreign investors may be adversely affected by new or amended laws and regulations. In addition, the systems of corporate governance to which issuers located in countries in Africa are subject may be less advanced than those systems to which issuers located in more developed countries are subject, and, therefore, shareholders of issuers located in such countries may not receive many of the protections available to shareholders of issuers located in more developed countries. The legal systems, and the unpredictability thereof, in certain countries in the region also may have an adverse impact on the Fund and may expose the Fund to significant liabilities. Even in circumstances where adequate laws and shareholder rights exist, it may not be possible to obtain timely and |
equitable enforcement of the law.
African countries historically have suffered from underdeveloped infrastructure, high unemployment rates, a comparatively unskilled labor force, and inconsistent access to capital, which have contributed to economic instability and stifled economic growth in the region. Many countries in Africa are heavily dependent on international trade and are subject to trade barriers, embargoes, exchange controls, currency valuation adjustments and other protectionist measures. These countries also have been and may continue to be adversely affected by economic conditions in the countries with which they trade. A primary source of revenue for these countries is the export of commodities including precious minerals and metals such as gold, silver, copper and diamonds, agricultural products and energy products, such as oil. The countries are, therefore, more vulnerable to changes in commodity prices, interest rates, or sectors affecting a particular commodity, such as drought, floods, weather, embargoes, tariffs, international economic, political and regulatory developments, and any weakening in global demand for these products. Certain African countries have currencies pegged to the U.S. dollar or euro rather than free-floating exchange rates determined by market forces. Although intended to stabilize the currencies, these pegs, if abandoned, may cause sudden and significant currency adjustments, which may adversely impact investment returns. Certain issuers located in countries in Africa in which the Fund may invest may operate in, or have dealings with, countries subject to sanctions and/or embargoes imposed by the U.S. government and the United Nations, and/or countries identified by the U.S. government as state sponsors of terrorism. As a result, an issuer may sustain financial penalties and damage to its reputation if it is identified as an issuer which operates in, or has dealings with, such countries. The Fund, as an investor in such issuers, will be indirectly subject to those risks. In addition, disease epidemics are more likely to affect trade practices and international dealings with certain African countries. Political instability and protests in North Africa and the Middle East have caused significant disruptions to many industries. Political and social unrest can spread quickly through the region, and developments in one country can influence the political events in neighboring countries. Protests may turn violent, and civil war and political reconstruction in certain countries pose a risk to investments in the region. Continued political and social unrest, including ongoing warfare and terrorist activities in the Middle East and Africa, may negatively affect the value of an investment in the Fund. Although geographically remote from the conflict in Ukraine, African countries are subject to the adverse effect Russia’s invasion of Ukraine brought to the global economy. Surging oil and food prices are straining the external and fiscal balances of commodity-importing countries and have increased food security problems in these regions. These economic disruptions may undermine a Fund’s investment in these countries. All of these risks, among others, could adversely affect the Fund’s investments in African countries. Any particular country in Africa may be subject to the foregoing risks in greater or lesser degrees relative to other countries in Africa, and as a result, circumstances that may positively affect a country in Africa in which the Fund is not invested may not have a corresponding positive effect on other countries in Africa in which the Fund is invested. |
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Chinese Company Securities. Investing in China, Hong Kong and Taiwan involves a high degree of risk and special considerations not typically associated with investing in other more established economies or securities markets. Such risks may include: (a) the risk of nationalization or expropriation of assets, or confiscatory taxation; (b) greater social, economic and political uncertainty (including the risk of war); (c) dependency on exports and the corresponding importance of international trade; (d) increasing competition from Asia’s other low-cost emerging economies; (e) greater price volatility, substantially less liquidity and significantly smaller market capitalization of securities markets, particularly in China; (f) currency exchange rate fluctuations and the lack of available currency hedging instruments; (g) higher rates of inflation; (h) controls on foreign investment and limitations on repatriation of invested capital and on the Fund’s ability to exchange local currencies for U.S. dollars; (i) greater governmental involvement in and control over the economy, and greater intervention in the Chinese financial markets, such as the imposition of trading restrictions; (j) the risk that the Chinese government may decide not to continue to support economic reform programs currently in place and could return to the completely centrally planned economy that was in place prior to 1978; (k) the fact that Chinese companies, particularly those located in China, may be smaller, less seasoned and newly-organized; (l) the difference in, or lack of, auditing and financial reporting standards that may result in unavailability of material information about issuers, particularly in China; (m) the fact that statistical information regarding the Chinese economy may be inaccurate or not comparable to statistical information regarding the U.S. or other economies; (n) the less extensive, and still developing, regulation of the securities markets, business entities and commercial transactions; (o) the fact that the settlement period of securities transactions in foreign markets may be longer; (p) uncertainty surrounding the willingness and ability of the Chinese government to support the Chinese and Hong Kong economies and markets; (q) the risk that it may be more difficult or impossible, to obtain and/or enforce a judgment than in other countries; (r) the rapidity and erratic nature of growth, particularly in China, resulting in inefficiencies and dislocations; (s) more frequent (and potentially widespread) trading suspensions and government interventions with respect to Chinese issuers; (t) limitations on the use of brokers (or action by the Chinese government that discourages brokers from serving international clients); and (u) the risk that, because of the degree of interconnectivity between the economies and financial markets of China, Hong Kong and Taiwan, any sizable reduction in the demand for goods from China, or an economic downturn in China could negatively affect the economies and financial markets of Hong Kong and Taiwan, as well. In addition, the China Securities Regulatory Commission recently met with local law firms and asked them to tone down negative descriptions of China’s policies in prospectuses of companies going public outside the mainland in markets such as Hong Kong and the United States. Comments in IPO listing documents that misrepresent or disparage laws and policies, the business environment and judicial situation of China are now barred. Such new listing regime would inevitably deny approval for offshore listing applications and further dampen the stock market sentiment, which in turn negatively affects markets and the value of the Fund’s investments. China’s economy has transitioned from a rigidly central-planned state-run economy to one that has been only partially reformed by more market-oriented policies. Although the Chinese government has implemented economic reform measures, reduced state ownership of companies and established better corporate governance practices, a substantial portion of productive assets in China are still owned by the Chinese government. The government continues to exercise significant control in regulating industrial development and, ultimately, control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. The Chinese government has from time to time taken actions that influence the prices at which certain goods may be sold, encourage companies to invest or concentrate in particular industries, induce mergers between companies in certain industries and induce private companies to publicly offer their securities to increase or continue the rate of economic growth, control the rate of inflation or otherwise regulate economic expansion. Investments in China involve risk of a total loss due to government action or inaction. China continues to limit direct foreign investments generally in industries deemed important to national interests. Foreign investment in domestic securities are also subject to substantial restrictions. Some believe that China’s currency is undervalued. Currency fluctuations could significantly affect China and its trading partners. China continues to exercise control
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over the value of its currency, rather than allowing the value of the currency to be determined by market forces. This type of currency regime may experience sudden and significant currency adjustments, which may adversely impact investment returns.
For decades, a state of hostility has existed between Taiwan and the People’s Republic of China. Beijing has long deemed Taiwan a part of the “one China” and has made a nationalist cause of recovering it. This situation poses a threat to Taiwan’s economy and could negatively affect its stock market. By treaty, China has committed to preserve Hong Kong’s autonomy and its economic, political and social freedoms until 2047. However, if China would exert its authority so as to alter the economic, political or legal structures or the existing social policy of Hong Kong, investor and business confidence in Hong Kong could be negatively affected, which in turn could negatively affect markets and business performance. In addition, the Hong Kong dollar trades within a fixed trading bond rate to (or is “pegged” to) the U.S. dollar. This fixed exchange rate has contributed to the growth and stability of the Hong Kong economy. However, some market participants have questioned the continued viability of the currency peg. It is uncertain what affect any discontinuation of the currency peg and the establishment of an alternative exchange rate system would have on capital markets generally and the Hong Kong economy. As demonstrated by protests in Hong Kong in 2019 and 2020 over political, economic, and legal freedoms, and the Chinese government’s response to the protests, there continues to be a great deal of political unrest, which may result in economic disruption. China could be affected by military events on the Korean peninsula or internal instability within North Korea. North Korea and South Korea each have substantial military capabilities, and historical tensions between the two countries present the risk of war. Any outbreak of hostilities between the two countries could have a severe adverse effect on the South Korean economy and securities market. These situations may cause uncertainty in the Chinese market and may adversely affect performance of the Chinese economy. In addition, China has strained international relations with Japan, India, Russia and other neighbors due to territorial disputes, historical animosities and other defense concerns. China is also alleged to have participated in state-sponsored cyberattacks against foreign companies and foreign governments. Actual and threatened responses to such activity and strained international relations, including purchasing restrictions, sanctions, tariffs or cyberattacks on the Chinese government or Chinese companies, may impact China’s economy and Chinese issuers of securities in which the Fund invests. Investment in China, Hong Kong and Taiwan is subject to certain political risks. The current political climate has intensified concerns about trade tariffs and a potential trade war between China and the United States, despite the United States signing a partial trade agreement with China that reduced some U.S. tariffs on Chinese goods while boosting Chinese purchases of American goods. However, this agreement left in place a number of existing tariffs, and it is unclear whether further trade agreements may be reached in the future. The ability and willingness of China to comply with the trade deal may determine to some degree the extent to which its economy will be adversely affected, which cannot be predicted at the present time. Future tariffs imposed by China and the United States on the other country’s products, or other escalating actions, may trigger a significant reduction in international trade, the oversupply of certain manufactured goods, substantial price reductions of goods and possible failure of individual companies and/or large segments of China’s export industry with a potentially negative impact to the Fund. On June 3, 2021, President Biden issued an executive order prohibiting U.S. persons from entering into transactions in publicly traded securities, as well as derivatives and securities designed to provide investment exposure to, any securities of any issuers designated “Chinese Military-Industrial Complex Companies,” as designated by the Department of the Treasury’s Office of Foreign Assets Control. This executive order superseded a prior similar order from then-President Trump. Continued ownership of such securities by U.S. persons is prohibited after June 3, 2022, following a one-year divestment period. A number of Chinese issuers have been designated under this program and more could be added. Certain implementation matters related to the scope of, and compliance with, the executive order have not yet been resolved, and the ultimate application and enforcement of the executive order may change. Under current guidance, U.S. investors may purchase interests in an investment fund that does not make any new purchases of designated securities and is “seeking to” divest its holdings of such securities during the divestment period. As a result, the executive order and related guidance may significantly reduce the liquidity of such securities, force the Fund to sell certain positions at inopportune times or for unfavorable prices, and restrict future investments by the Fund. U.S. investment advisers are permitted to advise non-U.S. funds and non-U.S. persons that purchase and sell such prohibited securities, provided this activity does not indirectly expose U.S. persons to such companies. The Holding Foreign Companies Accountable Act (“HFCAA”), requires the SEC to identify reporting public companies that use public accounting firms with a branch or office located in a foreign jurisdiction that the Public Company Accounting Oversight Board (“PCAOB”) determines that it is unable to inspect or investigate completely because of a position taken by a governmental entity in that jurisdiction (“Commission-Identified Issuers”). If an issuer is identified as a Commission-Identified Issuer for three consecutive years, the issuer’s shares will be prohibited in U.S. exchange and over-the-counter markets. On March 8, 2022, pursuant to the implementing regulations established by the SEC as required by the HFCAA, the SEC began to identify companies as provisional Commission-Identified Issuers. On August 26, 2022, the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China (“PRC”), which marked the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely in accordance with U.S. law. However, as this development is relatively recent, the implementation of the Statement of Protocol remains to be tested. Audits performed by PCAOB registered accounting firms in mainland China and Hong Kong may be less reliable than those performed by firms subject to PCAOB inspection. Accordingly, information about the Chinese securities in which the Fund invest may be less reliable or complete. Listing and other regulatory requirements applicable to foreign issuers, including Chinese issuers, is evolving and any future legislation, regulations or rules may require the Fund to change its investment process, which could result in substantial investment losses. China has often restricted U.S. regulators’ access to information and limited regulators’ ability to investigate or pursue remedies with respect to China-based issuers, generally citing to state secrecy and national security laws, blocking statutes, or other laws or regulations. In addition, according to Article 177 of the PRC Securities Law, which became effective in March 2020, no overseas securities regulator can directly conduct investigations or evidence collection activities within China and no entity or individual in China may provide documents and information relating to securities business activities to overseas regulators without Chinese government approval. The SEC, U.S. Department of Justice, and other U.S. authorities face substantial challenges in bringing and enforcing actions against China-based issuers and their officers and directors. As a result, the Fund may not benefit from a regulatory environment that fosters effective enforcement of U.S. federal securities laws. From time to time and in recent years, China has experienced outbreaks of infectious illnesses and the country may be subject to other public health threats, infectious illnesses, diseases or similar issues in the future. Any spread of an infectious illness, public health threat or similar issue, or the government response thereto, could reduce consumer demand or economic output, result in market closures, travel restrictions or quarantines, and generally have a significant impact on the Chinese or global economy, which in turn could adversely affect the Fund’s investments. |
For purposes of raising capital offshore on exchanges outside of China, including on U.S. exchanges, many Chinese-based operating companies are structured as Variable Interest Entities (“VIEs”). In this structure, the Chinese-based operating company is the VIE and establishes an entity, which is typically offshore in a foreign jurisdiction, such as the Cayman Islands. The offshore entity lists on a foreign exchange and enters into contractual arrangements (“VIE Agreements”) with the VIE. This structure allows Chinese companies, in particular those in which the government restricts foreign ownership to raise capital from foreign investors. While the offshore entity has no equity ownership of the VIE, these VIE Agreements permit the offshore entity to consolidate the VIE’s financial statements with its own for accounting purposes and provide for economic exposure to the performance of the underlying Chinese-based operating company. Therefore, an investor in the listed offshore entity, such as the Fund, will have exposure to the Chinese-based operating company only through contractual arrangements and has no ownership in the Chinese-based operating company. Furthermore, because the offshore entity only has specific rights provided for in these VIE Agreements with the VIE, its abilities to control the activities at the Chinese-based operating company are limited and the Chinese-based operating company may engage in activities that negatively impact investment value. While the VIE structure has been widely adopted, it is not formally recognized under Chinese law and therefore there is a risk that the Chinese government could prohibit the existence of such structures or negatively impact the VIE’s contractual arrangements with the listed offshore entity by making them invalid. If these VIE Agreements were found to be unenforceable under Chinese law, investors in the listed offshore entity, such as the Fund, may suffer significant losses with little or no recourse available. If the Chinese government determines that the VIE Agreements establishing the VIE structures do not comply with Chinese law and regulations, including those related to restrictions on foreign ownership, it could subject a Chinese-based issuer to penalties, revocation of business and operating licenses, or forfeiture of ownership interest. Any change in the operations of entities in a VIE structure, the status of VIE contractual arrangements or the legal or regulatory environment in China or in the U.S. could result in significant losses to the Fund. The listed offshore entity’s control over a VIE may also be jeopardized if a natural person who holds the equity interest in the VIE breaches the terms of the VIE Agreement, is subject to legal proceedings or if any physical instruments for authenticating documentation, such as chops and seals, are used without the Chinese-based issuer’s authorization to enter into contractual arrangements in China. Chops and seals, which are carved stamps used to sign documents, represent a legally binding commitment by the company. Moreover, any future regulatory action may affect the ability of the offshore entity to receive the economic benefits of the Chinese-based operating company, which may cause the value of the Fund’s investment in the listed offshore entity to suffer a significant loss. For example, in 2021, the Chinese government placed various restrictions on after-school tutoring companies. Such restrictions adversely affected the financial performance of those listed offshore entities associated with a Chinese-based operating company in the after-school tutoring industry. There is no guarantee that the Chinese government will not place similar restrictions on other industries and therefore jeopardize the financial performance of the corresponding listed offshore entities.
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Eastern European and Russian Securities. In addition to the risks listed under “Foreign Securities - Frontier and Emerging Market Securities, “ investing in Russian and other Eastern European issuers presents additional risks. Investing in the securities of Eastern European and Russian issuers is highly speculative and involves risks not usually associated with investing in the more developed markets of Western Europe, the U.S. or other developed countries. Political and economic reforms have not yet established a definite trend away from centrally planned economies and state-owned industries. Investments in Eastern European countries may involve risks of nationalization, expropriation, and confiscatory taxation. Many Eastern European countries continue to move towards market economies at different paces with different characteristics. Most Eastern European markets suffer from thin trading activity and less reliable investor protections. Additionally, because of less stringent auditing and financial reporting standards as compared to U.S. companies, there may be little reliable corporate information available to investors. As a result, it may be difficult to assess the value or prospects of an investment in Eastern European and Russian companies. Further, information and transaction costs, differential taxes, and sometimes political or transfer risk give a comparative advantage to the domestic investor rather than the foreign investor. In addition, these markets are particularly sensitive to social, political, economic, and currency events in Western Europe and Russia and may suffer heavy losses as a result of their trading and investment links to these economies and currencies. Additionally, Russia may continue to attempt to assert its influence in the region through economic or even military measures, as evidenced by its invasion of Ukraine in February 2022 and the ongoing conflict in that region.
The United States and the EU historically have imposed economic sanctions on certain Russian individuals and companies, including certain financial institutions, and have limited certain exports and imports to and from Russia. Sanctions, or even the threat of further sanctions, may result in the decline of the value and liquidity of Russian securities, a weakening of the ruble or other adverse consequences to the Russian economy. These sanctions could also result in the immediate freeze of Russian securities, either by issuer, sector or the Russian markets as a whole, impairing the ability of the Fund to buy, sell, receive or deliver those securities. In such circumstances, the Fund may be forced to liquidate non-restricted assets in order to satisfy shareholder redemptions. Such liquidation of Fund assets could result in the Fund receiving substantially lower prices for its securities. Sanctions could also result in Russia taking counter measures or retaliatory actions which may further impair the value and liquidity of Russian securities. As a result, the Fund’s performance may be adversely affected. The potential impact of sanctions imposed in response to Russia’s invasion of Ukraine in February 2022 are discussed below. In some of the countries of Eastern Europe, there is no stock exchange or formal market for securities. Such countries may also have government exchange controls, currencies with no recognizable market value relative to the established currencies of Western market economies, little or no experience in trading in securities, no accounting or financial reporting standards, a lack of banking and securities infrastructure to handle such trading and a legal tradition that does not recognize rights in private property. Credit and debt issues and other economic difficulties affecting Western Europe and its financial institutions can negatively affect Eastern European countries. Eastern European economies may also be particularly susceptible to the volatility of the international credit market due to their reliance on bank related inflows of foreign capital, and their continued dependence on the Western European zone for credit and trade. Accordingly, the European crisis may present serious risks for Eastern European economies, which may have a negative effect on the Fund’s investments in the region. Compared to most national stock markets, the Russian securities market suffers from a variety of problems not encountered in more developed markets. There is little long-term historical data on the Russian securities market because it is relatively new and a substantial proportion of securities transactions in Russia are privately negotiated outside of stock exchanges. The inexperience of the Russian securities market and the limited volume of trading in securities in the market may make obtaining accurate prices on portfolio securities from independent sources more difficult than in more developed markets. Poor accounting standards, inept management, pervasive corruption, insider trading and crime, and inadequate regulatory |
protection for the rights of all investors all may pose additional risks, including to foreign investors.
Because of the relatively recent formation of the Russian securities market as well as the underdeveloped state of the banking and telecommunications systems, settlement, clearing and registration of securities transactions are subject to significant risks not normally associated with securities transactions in the United States and other more developed markets. Prior to 2013, there was no central registration system for equity share registration in Russia and registration was carried out by either the issuers themselves or by registrars located throughout Russia. Such registrars were not necessarily subject to effective state supervision nor were they licensed with any governmental entity, thereby increasing the risk that the Fund could lose ownership of its securities through fraud, negligence, or even mere oversight. With the implementation of the National Settlement Depository (“NSD”) in Russia as a recognized central securities depository, title to Russian equities is now based on the records of the NSD and not the registrars. Although the implementation of the NSD is generally expected to decrease the risk of loss in connection with recording and transferring title to securities, issues resulting in loss still might occur. In addition, issuers and registrars are still prominent in the validation and approval of documentation requirements for corporate action processing in Russia. Because the documentation requirements and approval criteria vary between registrars and/or issuers, there remain unclear and inconsistent market standards in the Russian market with respect to the completion and submission of corporate action elections. Significant delays or problems may occur in registering the transfer of securities, which could cause the Fund to incur losses due to a counterparty’s failure to pay for securities the Fund has delivered or the Fund’s inability to complete its contractual obligations because of theft or other reasons. To the extent that the Fund suffers a loss relating to title or corporate actions relating to its portfolio securities, it may be difficult for the Fund to enforce its rights or otherwise remedy the loss. In addition, there is the risk that the Russian tax system will not be reformed to prevent inconsistent, retroactive, and/or exorbitant taxation, or, in the alternative, the risk that a reformed tax system may result in the inconsistent and unpredictable enforcement of the new tax laws. |
The Russian economy is heavily dependent upon the export of a range of commodities including most industrial metals, forestry products, oil, and gas. Accordingly, it is strongly affected by international commodity prices and is particularly vulnerable to any weakening in global demand for these products. Decreases in the price of commodities, which have in the past pushed the whole economy into recession, have demonstrated the sensitivity of the Russian economy to such price volatility. Russia continues to face significant economic challenges, including weak levels of investment and a sluggish recovery in external demand. Over the long-term, Russia faces challenges including a shrinking workforce, a high level of corruption, and difficulty in accessing capital for smaller, non-energy companies and poor infrastructure in need of large investments.
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Foreign investors also face a high degree of currency risk when investing in Russian securities and a lack of available currency hedging instruments. In the past, the Russian ruble has been subject to significant devaluation pressure as a result of the imposition of sanctions by the United States and the European Union and the decline in commodity prices and the value of Russian exports. Although the Russian Central Bank has spent a significant amount of its foreign exchange reserves in an attempt to maintain the ruble’s value, there is a risk of significant future devaluation. In addition, there is the risk that the Russian government may impose capital controls on foreign portfolio investments in the event of extreme financial or political crisis. Such capital controls may prevent the sale of a portfolio of foreign assets and the repatriation of investment income and capital. These risks may cause flight from the ruble into U.S. dollars and other currencies.
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In February 2022, Russia launched a large-scale invasion of Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict and could have a severe adverse effect on the regional and the global financial markets and economies (including in Europe and the U.S.), companies in other countries (including those that have done business in Russia), and various sectors, industries and markets for securities and commodities. Actual and threatened responses to such military action have impacted, and may continue to impact, the markets for certain Russian commodities, such as oil and natural gas. In addition, tensions have increased between Russia’s neighbors and Western countries, which may adversely affect the region’s economic growth. Moreover, disruptions caused by Russian military action or other actions (including cyberattacks and espionage) or resulting actual and threatened responses to such activity, including purchasing and financing restrictions, boycotts or changes in consumer or purchaser preferences, sanctions, tariffs or cyberattacks on the Russian government, Russian companies or Russian individuals, including politicians, may impact Russia’s economy and Russian issuers of securities in which the Fund invests. The extent and duration of the military action, the resulting sanctions or other punitive actions, and the resulting future market disruptions, are impossible to predict but have been and could continue to be significant.
Russia’s actions have induced the United States and other countries (collectively, the “Sanctioning Bodies”) to impose economic sanctions on Russia, Russian individuals, and Russian corporate and banking entities, which can consist of prohibiting certain securities trades and private transactions in the energy sector, asset freezes and prohibition of all business with such persons and entities. The sanctions have included a commitment by certain countries and the EU to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications, commonly called “SWIFT,” the electronic network that connects banks globally, and the imposition of restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. A number of large corporations and U.S. states have also divested or announced plans to divest interests or otherwise curtail business dealings with certain Russian businesses. The Sanctioning Bodies may impose additional sanctions in the future. Such sanctions, or even the threat of further sanctions, may impact many sectors of the Russian economy and related markets. Current and potential future sanctions, or the threat of sanctions, and Russia’s response, as discussed below, may cause any of the following: (a) a decline in the value and liquidity of Russian securities; (b) a weakening or devaluation of the ruble; (c) a downgrade in Russia’s credit rating and/or its default on sovereign obligations; (d) increased volatility of Russian securities; (e) the immediate freeze of Russian securities and/or funds invested in prohibited assets; or (f) additional counter measures or retaliatory actions. In response to the sanctions, the Russian Central Bank raised its interest rates, suspended the sales of Russian securities by non-residents of Russia on its local stock exchange, prohibited the repatriation of Russian assets by foreign investors, and barred Russian issuers from participating in depositary receipt programs. Russia may take additional countermeasures or retaliatory actions in the future, including, for example, restricting gas exports to other countries, seizing U.S. and European residents’ assets, imposing capital controls to restrict movements of capital entering and existing the country, or undertaking or provoking other military conflict elsewhere in Europe. The Russian invasion, sanctions in response, and any related events may adversely and significantly affect the performance of the Fund and its ability |
to achieve its investment objectives by restricting or prohibiting the Fund’s ability to gain exposure to Russian issuers or other affected issuers. To the extent that the Fund has direct exposure to Russian or Eastern European issuers, these events may also make it difficult for the Fund to sell, receive or deliver securities or assets to realize the value of that exposure.
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European Securities. The Fund’s performance may be affected by political, social and economic conditions in Europe, such as growth of economic output (the gross national product of the countries in the region), the rate of inflation, the rate at which capital is reinvested into European economies, the success of governmental actions to reduce budget deficits, the resource self-sufficiency of European countries, interest rates in European countries, monetary exchange rates between European countries, and conflict between European countries. Most developed countries in Western Europe are members of the European Union (“EU”), and many are also members of the European Economic and Monetary Union (“EMU” or “Eurozone”). The EMU is comprised of EU members that have adopted the Euro currency. As part of EMU membership, member states relinquish control of their own monetary policies to the European Central Bank. The EMU requires Eurozone countries to comply with restrictions on interest rates, deficits, debt levels, and inflation rates; fiscal and monetary controls; and other factors. Although the EMU has adopted a common currency and central bank, there is no fiscal union; therefore, money does not automatically flow from countries with surpluses to those with deficits. These restrictions and characteristics may limit the ability of EMU member countries to implement monetary policy to address regional economic conditions and significantly impact every European country and their economic partners, including those countries that are not members of the EMU. In addition, those EU member states that are not currently in the Eurozone (except Denmark) are required to seek to comply with convergence criteria to permit entry to the Eurozone. The economies and markets of European countries are often closely connected and interdependent, and events in one country in Europe can have an adverse impact on other European countries. Changes in imports or exports, changes in governmental or European regulations on trade, changes in the exchange rate of the Euro , the threat of default or actual default by one or more European countries on its sovereign debt, and/or an economic recession in one or more European countries may have a significant adverse effect on the economies of other European countries and their trading partners.
The European financial markets have experienced and may continue to experience volatility and adverse trends due to concerns relating to economic downturns; national unemployment; ageing populations; rising government debt levels and the possible default on government debt in several European countries; public health crises; political unrest; economic sanctions; inflation; energy crises; the future of the Euro as a common currency; and war and military conflict, such as the Russian invasion of Ukraine. These events have affected the exchange rate of the Euro and may continue to significantly affect European countries. Responses to financial problems by European governments, central banks, and others, including austerity measures and other reforms, may not produce the desired results, may result in social unrest and may limit future growth and economic recovery or may have unintended consequences. In order to prevent further economic deterioration, certain countries, without prior warning, can institute “capital controls.” Countries may use these controls to restrict volatile movements of capital entering and exiting their country. Such controls may negatively affect the Fund’s investments. In addition, one or more countries may abandon the Euro and/or withdraw from the EU. The impact of these actions, especially if they occur in a disorderly fashion, could be significant and far-reaching. Many European nations are susceptible to economic risks associated with high levels of debt. Non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts, and other issuers have faced difficulties obtaining credit or refinancing existing obligations. A default or debt restructuring by any European country could adversely impact holders of that country’s debt and sellers of credit default swaps linked to that country’s creditworthiness, which may be located in other countries. Such a default or debt restructuring could affect exposures to other European countries and their companies as well. Further defaults on, or restructurings of, the debt of governments or other entities could have additional adverse effects on economies, financial markets and asset valuations around the world. In addition, issuers have faced difficulties obtaining credit or refinancing existing obligations; financial institutions have in some cases required government or central bank support, have needed to raise capital and/or have been impaired in their ability to extend credit; and financial markets in Europe and elsewhere have experienced extreme volatility and declines in asset values and liquidity. Furthermore, certain European countries have had to accept assistance from supranational agencies such as the International Monetary Fund, the European Stability Mechanism or others. The European Central Bank has also intervened to purchase Eurozone debt in an attempt to stabilize markets and reduce borrowing costs. There can be no assurance that any creditors or supranational agencies will continue to intervene or provide further assistance, and markets may react adversely to any expected reduction in the financial support provided by these creditors. Certain European countries have experienced negative interest rates on certain fixed-income instruments. A negative interest rate is an unconventional central bank monetary policy tool where nominal target interest rates are set with a negative value (i.e., below zero percent) intended to help create self-sustaining growth in the local economy. Negative interest rates may result in heightened market volatility and may detract from the Fund’s performance to the extent the Fund is exposed to such interest rates. Certain European countries have also developed increasingly strained relationships with the U.S., and if these relationships were to worsen, they could adversely affect European issuers that rely on the U.S. for trade. In addition, the national politics of European countries have been unpredictable and subject to influence by disruptive political groups and ideologies. Secessionist movements, as well as government or other responses to such movements, may create instability and uncertainty in a country or region. European governments may be subject to change and such countries may experience social and political unrest. Unanticipated or sudden political or social developments may result in sudden and significant investment losses. The occurrence of terrorist incidents throughout Europe also could impact financial markets, as could military conflicts. The impact of these or other events is not clear but could be significant and far-reaching and materially impact the value and liquidity of the Fund’s investments. Russia’s war with Ukraine has negatively impacted European economic activity. The Russia/Ukraine war and Russia’s response to sanctions imposed by the U.S., EU, UK and others have and could continue to severely impact the performance of the economies of European and other countries, including adverse effects to global financial and energy markets, global supply chains and global growth, and inflation. Certain countries have applied to become new member countries of the EU, and these candidate countries’ accessions may become more controversial to the existing EU members. Some member states may repudiate certain candidate countries joining the EU due to concerns about the possible economic, immigration and cultural implications. Also, Russia may be opposed to the expansion of the EU to members of the former Eastern Bloc (i.e. ex-Soviet Union-controlled countries in Europe) and may, at times, take actions that could negatively impact European economic activity. The United Kingdom withdrew from the European Union on January 31, 2020 and entered into a transition period, which ended on December 31, |
2020. The longer term economic, legal, and political framework between the United Kingdom and the EU is still developing and may lead to ongoing political and economic uncertainly and periods of increased volatility in the United Kingdom, Europe, and the global market. Investments in companies with significant operations and/or assets in the United Kingdom could be adversely impacted by the new legal, political, and regulatory environment, whether by increased costs or impediments to the implementation of business plans. The uncertainty resulting from any further exits from the EU, or the possibility of such exits, would also be likely to cause market disruption in the EU and more broadly across the global economy, as well as introduce further legal, political, and regulatory uncertainty in Europe.
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Frontier and Emerging Market Investments. The Fund may invest in frontier and emerging market securities. The Fund may consider a country to be a frontier or emerging market country based on a number of factors including, but not limited to, if the country is classified as an emerging or developing economy by any supranational organization such as the World Bank, International Finance Corporation or the United Nations, or related entities, or if the country is considered an emerging market country for purposes of constructing emerging markets indices. Investments in frontier and emerging market country securities involve special risks. The economies, markets and political structures of a number of the frontier and emerging market countries in which the Fund can invest do not compare favorably with the United States and other mature economies in terms of wealth and stability. Therefore, investments in these countries may be riskier, and will be subject to erratic and abrupt price movements. These risks are discussed below.
Economies. The economies of frontier and emerging market countries may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rate of inflation, currency depreciation, reliable access to capital, capital reinvestment, resource self-sufficiency and balance of payments and trade difficulties. Some economies are less well developed and less diverse (for example, Latin America, Eastern Europe and certain Asian countries), and may be heavily dependent upon international trade, as well as the economic conditions in the countries with which they trade. Such economies accordingly have been, and may continue to be, adversely affected by trade barriers, exchange controls, managed adjustments in relative currency values and other protectionist or retaliatory measures imposed or negotiated by the countries with which they trade. Similarly, many of these countries have historically experienced, and may continue to experience, high rates of inflation, high interest rates, exchange rate fluctuations, large amounts of national and external debt, severe recession, and extreme poverty and unemployment. Emerging market countries may also experience a higher level of exposure and vulnerability to the adverse effects of climate change. This may be attributed to both the geographic location of emerging market countries and/or a country’s lack of access to technology or resources to adjust and adapt to its effects. An increased occurrence and severity of natural disasters and extreme weather events such as droughts and decreased crop yields, heat waves, flooding and rising sea levels, and increased spread of disease, could cause harmful effects to the performance of affected economies. The economies of frontier and emerging market countries may be based predominately on only a few industries or may be dependent on revenues from participating commodities or on international aid or developmental assistance. Frontier and emerging market economies may develop unevenly or may never fully develop. Investments in countries that have recently begun moving away from central planning and state-owned industries toward free markets, such as the Eastern European, Russian or Chinese economies, should be regarded as speculative. Governments. Frontier and emerging markets may have uncertain national policies and social, political and economic instability. While government involvement in the private sector varies in degree among emerging market countries, such involvement may in some cases include government ownership of companies in certain sectors, wage and price controls or imposition of trade barriers and other protectionist measures. In the past, governments of such nations have expropriated substantial amounts of private property, and most claims of the property owners have never been fully settled. There is no assurance that such expropriations will not reoccur. In addition, there is no guarantee that some future economic or political crisis will not lead to price controls, forced mergers of companies, confiscatory taxation or creation of government monopolies to the possible detriment of the Fund’s investments. In such event, it is possible that the Fund could lose the entire value of its investments in the affected markets. Frontier and emerging market countries may have national policies that limit the Fund’s investment opportunities such as restrictions on investment in issuers or industries deemed sensitive to national interests. Repatriation of investment income, capital and the proceeds of sales by foreign investors may require governmental registration and/or approval in some frontier and emerging market countries. In addition, if the Fund invests in a market where restrictions are considered acceptable, a country could impose new or additional repatriation restrictions after investment that are unacceptable. This might require, among other things, applying to the appropriate authorities for a waiver of the restrictions or engaging in transactions in other markets designed to offset the risks of decline in that country. Further, some attractive securities may not be available, or may require a premium for purchase, due to foreign shareholders already holding the maximum amount legally permissible. In addition to withholding taxes on investment income, some countries with frontier and emerging capital markets may impose differential capital gain taxes on foreign investors. An issuer or governmental authority that controls the repayment of a frontier or emerging market country’s debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt. A debtor’s willingness or ability to repay principal and interest due in a timely manner may be affected by, among other factors, its cash flow situation, and, in the case of a government debtor, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole and the political constraints to which a government debtor may be subject. Government debtors may default on their debt and may also be dependent on expected disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. Holders of government debt may be requested to participate in the rescheduling of such debt and to extend further loans to government debtors. There may be limited legal recourse against the issuer and/or guarantor. Remedies must, in some cases, be pursued in the courts of the defaulting party itself, and the ability of the holder of foreign government fixed-income securities to obtain recourse may be subject to the political climate in the relevant country. In addition, no assurance can be given that the holders of commercial bank debt will not contest payments to the holders of other foreign government debt obligations in the event of default under their commercial bank loan agreements. Capital Markets. The capital markets in frontier and emerging market countries may be underdeveloped. They may have low or non-existent trading volume, resulting in a lack of liquidity and increased volatility in prices for such securities, as compared to securities from more developed capital markets. Frontier and emerging market securities may be substantially less liquid and more volatile than those of mature markets, and securities may be held by a limited number of investors. This may adversely affect the timing and pricing of the Fund’s acquisition or disposal of securities. There may be less publicly available information about issuers in frontier and emerging market countries than would be available in more developed |
capital markets, and such issuers may not be subject to accounting, auditing and financial reporting standards and requirements comparable to those to which U.S. companies are subject. In certain countries with emerging capital markets, reporting standards vary widely. As a result, traditional investment measurements used in the U.S., may not be applicable. Investing in certain countries with emerging capital markets may entail purchasing securities issued by or on behalf of entities that are insolvent, bankrupt, in default or otherwise engaged in an attempt to reorganize or reschedule their obligations, and in entities that have little or no proven credit rating or credit history. In any such case, the issuer’s poor or deteriorating financial condition may increase the likelihood that the investing Fund will experience losses or diminution in available gains due to bankruptcy, insolvency or fraud. There may also be custodial restrictions or other non-U.S. or U.S. governmental laws or restrictions applicable to investments in frontier or emerging market countries.
Practices in relation to the clearing or settlement of securities transactions in frontier and emerging markets involve higher risks than those in developed markets, in part because the Fund may use brokers and counterparties that are less well capitalized, and custody and registration of assets in some countries may be unreliable. Supervisory authorities also may be unable to apply standards comparable to those in developed markets. Thus, there may be risks that settlement may be delayed and that cash or securities belonging to the Fund may be in jeopardy because of failures of or defects in the systems. In particular, market practice may require that payment be made before receipt of the security being purchased or that delivery of a security be made before payment is received. In such cases, default by a broker or bank (the “counterparty”) through whom the transaction is effected might cause the Fund to suffer a loss. There can be no certainty that the Fund will be successful in eliminating counterparty risk, particularly as counterparties operating in frontier and emerging market countries frequently lack the substance or financial resources of those in developed countries. There may also be a danger that, because of uncertainties in the operation of settlement systems in individual markets, competing claims may arise with respect to securities held by or to be transferred to the Fund. |
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Latin American Securities. Investments in securities of Latin American issuers involve risks that are specific to Latin America, including certain legal, regulatory, political and economic risks. Most Latin American countries have experienced, at one time or another, severe and persistent levels of inflation, including, in some cases, hyperinflation, as well as high interest rates. This has at time led to extreme government measures to keep inflation in check, and a generally debilitating effect on economic growth. Although inflation in many countries has lessened, there is no guarantee it will remain at lower levels.
Political Instability. Certain Latin American countries have historically suffered from social, political, and economic instability and volatility, currency devaluations, government defaults and high unemployment rates. For investors, this has meant additional risk caused by periods of regional conflict, political corruption, totalitarianism, protectionist measures, nationalization, hyperinflation, debt crises, sudden and large currency devaluation, and intervention by the military in civilian and economic spheres. However, in some Latin American countries, a move to sustainable democracy and a more mature and accountable political environment is under way. Domestic economies have been deregulated, privatization of state-owned companies is almost completed and foreign trade restrictions have been relaxed. Nonetheless, there can be no guarantee that such trends will continue or that the desired outcomes of these developments will be successful. In addition, to the extent that events such as those listed above continue in the future, they could reverse favorable trends toward market and economic reform, privatization, and removal of trade barriers, and result in significant disruption in securities markets in the region. Investors in the region continue to face a number of potential risks. Governments of many Latin American countries have exercised and continue to exercise substantial influence over many aspects of the private sector. Governmental actions in the future could have a significant effect on economic conditions in Latin American countries, which could affect the companies in which the Fund invests and, therefore, the value of Fund shares. Additionally, an investment in Latin America is subject to certain risks stemming from political and economic corruption, which may negatively affect the country or the reputation of companies domiciled in a certain country. For certain countries in Latin America, political risks have created significant uncertainty in the financial markets and may further limit the economic recovery in the region. Dependence on Exports and Economic Risk. Certain Latin American countries depend heavily on exports to the U.S., investments from a small number of countries, and trading relationships with key trading partners, including the U.S., Europe, Asia and other Latin American countries. Accordingly, these countries may be sensitive to fluctuations in demand, protectionist trade policies, exchange rates and changes in market conditions associated with those countries. Additionally, in Mexico, the long-term implications of the United States-Mexico-Canada Agreement, the 2020 successor to NAFTA, are yet to be determined. This uncertainty may have an adverse impact on Mexico’s economic outlook and the value of Fund investments in Mexico. |
The economic growth of most Latin American countries is highly dependent on commodity exports and the economies of certain Latin American countries, particularly Mexico and Venezuela, are highly dependent on oil exports. As a result, these economies are particularly susceptible to fluctuations in the price of oil and other commodities and currency fluctuations.
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The prices of oil and other commodities experienced volatility driven, in part, by a continued slowdown of growth in China and the effects of the COVID-19 pandemic. If growth in China remains slow, or if global economic conditions worsen, prices for Latin American commodities may experience increased volatility and demand may continue to decrease. Although certain of these countries have recently shown signs of recovery, such recovery, if sustained, may be gradual. In addition, prolonged economic difficulties may have negative effects on the transition to a more stable democracy in some Latin American countries.
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Trade Agreements. Certain Latin American countries have entered into regional trade agreements that are designed to, among other things, reduce trade barriers between countries, increase competition among companies, and reduce government subsidies in certain industries. No assurance can be given that these changes will be successful in the long term, or that these changes will result in the economic stability intended. There is a possibility that these trade arrangements will not be fully implemented, or will be partially or completely unwound. It is also possible that a significant participant could choose to abandon a trade agreement, which could diminish its credibility and influence. Any of these occurrences could have adverse effects on the markets of both participating and non-participating countries, including sharp appreciation or depreciation of participants’ national currencies and a significant increase in exchange rate volatility, a resurgence in economic protectionism, an undermining of confidence in the Latin American markets, an undermining of Latin American economic stability, the collapse or slowdown of the drive towards Latin
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American economic unity, and/or reversion of the attempts to lower government debt and inflation rates that were introduced in anticipation of such trade agreements. Such developments could have an adverse impact on the Fund’s investments in Latin America generally or in specific countries participating in such trade agreements.
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Sovereign Debt. Latin American economies generally are heavily dependent upon foreign credit and loans, and may be more vulnerable to diplomatic developments, the imposition of economic sanctions against a particular country or countries, changes in international trading patterns, trade barriers, and other protectionist or retaliatory measures. In addition to risk of default, debt repayment may be restructured or rescheduled, which may impair economic activity. Moreover, the debt may be susceptible to high interest rates and may reach levels that would adversely affect Latin American economies. In addition, certain Latin American economies have been influenced by changing supply and demand for a particular currency, monetary policies of governments (including exchange control programs, restrictions on local exchanges or markets and limitations on foreign investment in a country or on investment by residents of a country in other countries), and currency devaluations and revaluations. A relatively small number of Latin American companies represents a large portion of Latin America’s total market and thus may be more sensitive to adverse political or economic circumstances and market movements. A number of Latin American countries are among the largest debtors of developing countries and have a history of reliance on foreign debt and default. The majority of the region’s economies have become dependent upon foreign credit and loans from external sources to fund government economic plans. Historically, these plans have frequently resulted in little benefit accruing to the economy. Most countries have been forced to restructure their loans or risk default on their debt obligations. In addition, interest on the debt is subject to market conditions and may reach levels that would impair economic activity and create a difficult and costly environment for borrowers. Accordingly, these governments may be forced to reschedule or freeze their debt repayment, which could negatively affect local markets. While the region has recently had mixed levels of economic growth, recovery from past economic downturns in Latin America has historically been slow, and such growth, if sustained, may be gradual. The ongoing effects of the European debt crisis, the effects of the COVID-19 pandemic, and persistent low growth in the global economy may reduce demand for exports from Latin America and limit the availability of foreign credit for some countries in the region. As a result, the Fund’s investments in Latin American securities could be harmed if economic recovery in the region is limited.
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Middle East Securities. Many Middle Eastern countries are prone to political turbulence, and the political and legal systems in such countries may have an adverse impact on the Fund. Certain economies in the Middle East are highly reliant on income from the exports of primary commodities, such as oil, or trade with countries involved in the sale of oil, and their economies are therefore vulnerable to changes in the market for oil and foreign currency values. As global demand for oil fluctuates, many Middle Eastern economies may be significantly impacted. Additionally, the economies of many Middle Eastern countries are largely dependent on, and linked together by, certain commodities (such as gold, silver, copper, diamonds, and oil). As a result, Middle Eastern economies are vulnerable to changes in commodity prices, and fluctuations in demand for these commodities could significantly impact economies in these regions. A downturn in one country’s economy could have a disproportionally large effect on others in the region.
Many Middle Eastern governments have exercised and continue to exercise substantial influence over many aspects of the private sector. In certain cases, a Middle Eastern country’s government may own or control many companies, including some of the largest companies in the country. Accordingly, governmental actions in the future could have a significant effect on economic conditions in Middle Eastern countries, and a country’s government may act in a detrimental or hostile manner toward private enterprise or foreign investment. This could affect private sector companies and the Fund, as well as the value of securities in the Fund’s portfolio. Certain Middle Eastern markets are in the earliest stages of development and may be considered “frontier markets.” Financial markets in the Middle East generally are less liquid and more volatile than other markets, including markets in developed and other emerging economies. As a result, there may be a high concentration of market capitalization and trading volume in a small number of issuers representing a limited number of industries, as well as a high concentration of investors and financial intermediaries. Brokers in Middle Eastern countries typically are fewer in number and less well-capitalized than brokers in the United States. Since the Fund may need to effect securities transactions through these brokers, the Fund is subject to the risk that these brokers will not be able to fulfill their obligations to the Fund (i.e., counterparty risk). This risk is magnified to the extent that the Fund effects securities transactions through a single broker or a small number of brokers. In addition, securities may have limited marketability and be subject to erratic price movements. The legal systems in certain Middle Eastern countries also may have an adverse impact on the Fund. For example, the potential liability of a shareholder in a U.S. corporation with respect to acts of the corporation generally is limited to the amount of the shareholder’s investment. However, the concept of limited liability is less clear in certain Middle Eastern countries. The Fund therefore may be liable in certain Middle Eastern countries for the acts of a corporation in which it invests for an amount greater than its actual investment in that corporation. Similarly, the rights of investors in Middle Eastern issuers may be more limited than those of shareholders of a U.S. corporation. It may be difficult or impossible to obtain or enforce a legal judgment in a Middle Eastern country. Some Middle Eastern countries prohibit or impose substantial restrictions on investments in their capital markets, particularly their equity markets, by foreign entities such as the Fund. For example, certain countries may require governmental approval prior to investment by foreign persons or limit the amount of investment by foreign persons in a particular issuer. Certain Middle Eastern countries may also limit the investment by foreign persons to a specific class of securities of an issuer that may have less advantageous terms (including price) than securities of the issuer available for purchase by nationals of the relevant Middle Eastern country. The manner in which foreign investors may invest in issuers in certain Middle Eastern countries, as well as limitations on those investments, may have an adverse impact on the operations of the Fund. For example, in certain of these countries, the Fund may be required to invest initially through a local broker or other entity and then have the shares that were purchased re-registered in the name of the Fund. Re-registration in some instances may not be possible on a timely basis. This may result in a delay during which the Fund may be denied certain of its rights as an investor, including rights as to dividends or to be made aware of certain corporate actions. There also may be instances where the Fund places a purchase order but is subsequently informed, at the time of re-registration, that the permissible allocation of the investment to foreign investors has been filled and, consequently, the Fund may not be able to invest in the relevant company. Substantial limitations may exist in certain Middle Eastern countries with respect to the Fund’s ability to repatriate investment income or capital gains. The Fund could be adversely affected by delays in, or a refusal to grant, any required governmental approval for repatriation of capital, as well as by the application to the Fund of any restrictions on investment. Certain Middle Eastern countries may be heavily dependent upon international trade and, consequently, have been and may continue to be negatively affected by trade barriers, exchange controls, managed adjustments in relative |
currency values and other protectionist measures imposed or negotiated by the countries with which they trade. These countries also have been and may continue to be adversely impacted by economic conditions in the countries with which they trade. In addition, certain issuers located in Middle Eastern countries in which the Fund invests may operate in, or have dealings with, countries subject to sanctions and/or embargoes imposed by the U.S. government and the United Nations, and/or countries identified by the U.S. government as state sponsors of terrorism. As a result, an issuer may sustain damage to its reputation if it is identified as an issuer which operates in, or has dealings with, such countries. The Fund, as an investor in such issuers, will be indirectly subject to those risks.
Certain Middle Eastern countries have strained relations with other Middle Eastern countries due to territorial and sovereignty disputes, historical animosities, international alliances, religious tensions or defense concerns, which may periodically become violent and may adversely affect the economies of these countries. Certain Middle Eastern countries experience significant unemployment as well as widespread underemployment. Many Middle Eastern countries periodically have experienced political, economic and social unrest as protestors have called for widespread reform. Some of these protests have resulted in a governmental regime change, internal conflict or civil war. In some instances where pro-democracy movements successfully toppled regimes, the stability of successor regimes has at times proven weak, as evidenced, for example, in Egypt. In other instances, these changes have devolved into armed conflict involving local factions, regional allies or international forces, and even protracted civil wars. If further regime change were to occur, internal conflicts were to intensify, or a civil war were to continue in any of these countries, such instability could adversely affect the economies of these Middle Eastern countries in which the Fund invests and could decrease the value of the Fund’s investments. Middle Eastern economies may be subject to acts of terrorism, political strife, religious, ethnic or socioeconomic unrest, conflict and violence and sudden outbreaks of hostilities with neighboring countries. There has been an increase in recruitment efforts and an aggressive push for territorial control by terrorist groups in the region, which has led to an outbreak of warfare and hostilities. Such hostilities may continue into the future or may escalate at any time due to ethnic, racial, political, religious or ideological tensions between groups in the region or foreign intervention or lack of intervention, among other factors. These developments could adversely affect the Fund. |
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Pacific Basin Securities. Many Asian countries may be subject to a greater degree of social, political and economic instability than is the case in the U.S. and Western European countries. Such instability may result from, among other things, (i) authoritarian governments or military involvement in political and economic decision-making, including changes in government through extra-constitutional means; (ii) popular unrest associated with demands for improved political, economic and social conditions; (iii) internal insurgencies; (iv) hostile relations with neighboring countries; and (v) ethnic, religious and racial disaffection. In addition, the Asia-Pacific geographic region has historically been prone to natural disasters. The occurrence of a natural disaster in the region, including the subsequent recovery, could negatively impact the economy of any country in the region. The existence of overburdened infrastructure and obsolete financial systems also presents risks in certain Asian countries, as do environmental problems.
The economies of most of the Asian countries are heavily dependent on international trade and are accordingly affected by protective trade barriers and the economic conditions of their trading partners, principally, the U.S., Japan, China and the EU. The enactment by the U.S. or other principal trading partners of protectionist trade legislation, reduction of foreign investment in the local economies and general declines in the international securities markets could have a significant adverse effect upon the securities markets of the Asian countries. The economies of certain Asian countries may depend to a significant degree upon only a few industries and/or exports of primary commodities and, therefore, are vulnerable to changes in commodity prices that, in turn, may be affected by a variety of factors. In addition, certain developing Asian countries, such as the Philippines and India, are especially large debtors to commercial banks and foreign governments. Many of the Pacific Basin economies may be intertwined, so an economic downturn in one country may result in, or be accompanied by, an economic downturn in other countries in the region. Furthermore, many of the Pacific Basin economies are characterized by high inflation, underdeveloped financial services sectors, heavy reliance on international trade, frequent currency fluctuations, devaluations, or restrictions, political and social instability, and less efficient markets. The securities markets in Asia are substantially smaller, less liquid and more volatile than the major securities markets in the U.S., and some of the stock exchanges in the region are in the early stages of their development, as compared to the stock exchanges in the U.S. Equity securities of many companies in the region may be less liquid and more volatile than equity securities of U.S. companies of comparable size. Additionally, many companies traded on stock exchanges in the region are smaller and less seasoned than companies whose securities are traded on stock exchanges in the U.S. A high proportion of the shares of many issuers may be held by a limited number of persons and financial institutions, which may limit the number of shares available for investment by the Fund. In some countries, there is no established secondary market for securities. Therefore, liquidity of securities may be generally low and transaction costs generally high. Similarly, volume and liquidity in the bond markets in Asia are less than in the U.S. and, at times, price volatility can be greater than in the U.S. A limited number of issuers in Asian securities markets may represent a disproportionately large percentage of market capitalization and trading value. The limited liquidity of securities markets in Asia may also affect the Fund’s ability to acquire or dispose of securities at the price and time it wishes to do so. In addition, the Asian securities markets are susceptible to being influenced by large investors trading significant blocks of securities. |
The legal systems in certain developing market Pacific Basin countries also may have an adverse impact on the Fund. For example, while the potential liability of a shareholder in a U.S. corporation with respect to acts of the corporation is generally limited to the amount of the shareholder’s investment, the notion of limited liability is less clear in certain Pacific Basin countries. Similarly, the rights of investors in Pacific Basin companies may be more limited than those of shareholders of U.S. corporations. It may be difficult or impossible to obtain and/or enforce a judgment in a Pacific Basin country.
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Many stock markets are undergoing a period of growth and change which may result in trading volatility and difficulties in the settlement and recording of transactions, and in interpreting and applying the relevant law and regulations. With respect to investments in the currencies of Asian countries, changes in the value of those currencies against the U.S. dollar will result in corresponding changes in the U.S. dollar value of the Fund’s assets denominated in those currencies. Certain developing economies in the Asia-Pacific region have experienced currency fluctuations, devaluations, and restrictions; unstable employment rates; rapid fluctuation in, among other things, inflation and reliance on exports; and less efficient markets. Currency fluctuations or devaluations in any one country can have a significant effect on the entire Asia Pacific region. Holding securities in currencies that are devalued (or in companies whose revenues are substantially in currencies that are devalued) will likely decrease the value of the Fund’s investments. Some developing Asian countries prohibit or impose substantial restrictions on investments in their capital markets,
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particularly their equity markets, by foreign entities such as the Fund. For example, certain countries may require governmental approval prior to investments by foreign persons or limit the amount of investment by foreign persons in a particular company or limit the investment by foreign persons to only a specific class of securities of a company which may have less advantageous terms (including price and shareholder rights) than securities of the company available for purchase by nationals of the relevant country. There can be no assurance that the Fund will be able to obtain required governmental approvals in a timely manner. In addition, changes to restrictions on foreign ownership of securities subsequent to the Fund’s purchase of such securities may have an adverse effect on the value of such shares. Certain countries may restrict investment opportunities in issuers or industries deemed important to national interests.
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BDCs. BDCs are a specialized form of closed-end fund that invest generally in small developing companies and financially troubled businesses. The Investment Company Act imposes certain restraints upon the operation of a BDC. For example, BDCs are required to invest at least 70% of their total assets primarily in securities of private companies or thinly traded U.S. public companies, cash, cash equivalents, U.S. government securities and high quality debt investments that mature in one year or less. As a result, BDCs generally invest in private companies and thinly traded securities of public companies, including debt instruments. Generally, little public information exists for private and thinly traded companies and there is a risk that investors may not be able to make fully informed investment decisions. Many debt investments in which a BDC may invest will not be rated by a credit rating agency and will be below investment grade quality. Risks faced by BDCs include competition for limited BDC investment opportunities; the liquidity of a BDC’s private investments; uncertainty as to the value of a BDC’s private investments; risks associated with access to capital and leverage; and reliance on the management of a BDC. The Fund’s investments in BDCs are similar and include portfolio company risk, leverage risk, market and valuation risk, price volatility risk and liquidity risk. Historically, shares of BDCs have frequently traded at a discount to their net asset value, which discounts have, on occasion, been substantial and lasted for sustained periods of time.
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ETFs. The Fund may purchase shares of ETFs. ETFs trade like a common stock and passive ETFs usually represent a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. Typically, the Fund would purchase passive ETF shares to obtain exposure to all or a portion of the stock or bond market. As a shareholder of an ETF, the Fund would be subject to its ratable share of the ETF’s expenses, including its advisory and administration expenses. An investment in an ETF generally presents the same primary risks as an investment in a conventional mutual fund (i.e., one that is not exchange traded) that has the same investment objective, strategies, and policies. The price of an ETF can fluctuate within a wide range, and the Fund could lose money investing in an ETF if the prices of the securities owned by the ETF decline in value. In addition, ETFs are subject to the following risks that do not apply to conventional mutual funds: (1) the market price of the
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ETF’s shares may trade at a discount or premium to their NAV per share; (2) an active trading market for an ETF’s shares may not develop or be maintained; or (3) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally.
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Money Market Funds. The Fund can invest free cash balances in registered open-end investment companies regulated as money market funds under the Investment Company Act, to provide liquidity or for defensive purposes. The Fund would invest in money market funds rather than purchasing individual short-term investments. Although a money market fund is designed to be a relatively low risk investment, it is not free of risk. Despite the short maturities and high credit quality of a money market fund’s investments, increases in interest rates and deteriorations in the credit quality of the instruments the money market fund has purchased may reduce the money market fund’s yield and can cause the price of a money market security to decrease. In addition, a money market fund is subject to the risk that the value of an investment may be eroded over time by inflation. If the liquidity of a money market fund’s portfolio deteriorates below certain levels, the money market fund may suspend redemptions (i.e., impose a redemption gate) and thereby prevent the Fund from selling its investment in the money market fund, or impose a fee of up to 2% on amounts redeemed from the money market fund.
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1 | Engage in dollar rolls or purchase or sell securities on a when-issued or forward commitment basis. The purchase or sale of when-issued securities enables an investor to hedge against anticipated changes in interest rates and prices by locking in an attractive price or yield. The price of |
when-issued securities is fixed at the time the commitment to purchase or sell is made, but delivery and payment for the when-issued securities takes place at a later date, normally one to two months after the date of purchase. During the period between purchase and settlement, no payment is made by the purchaser to the issuer and no interest accrues to the purchaser. Such transactions therefore involve a risk of loss if the value of the security to be purchased declines prior to the settlement date or if the value of the security to be sold increases prior to the settlement date. A sale of a when-issued security also involves the risk that the other party will be unable to settle the transaction. Dollar rolls are a type of forward commitment transaction. Purchases and sales of securities on a forward commitment basis involve a commitment to purchase or sell securities with payment and delivery to take place at some future date, normally one to two months after the date of the transaction. As with when-issued securities, these transactions involve certain risks, but they also enable an investor to hedge against anticipated changes in interest rates and prices. Forward commitment transactions are executed for existing obligations, whereas in a when-issued transaction, the obligations have not yet been issued. |
2 | Invest in other investment companies (including affiliated investment companies) to the extent permitted by the Investment Company Act, or exemptive relief granted by the SEC. |
3 | Loan securities to broker-dealers or other institutional investors. Securities loans will not be made if, as a result, the aggregate amount of all outstanding securities loans by the Fund exceeds 33¹/3% of its total assets (including the market value of collateral received). For purposes of complying with the Fund’s investment policies and restrictions, collateral received in connection with securities loans is deemed an asset of the Fund to the extent required by law. |
4 | Enter into repurchase agreements. A repurchase agreement is an agreement under which securities are acquired by the Fund from a securities dealer or bank subject to resale at an agreed upon price on a later date. The acquiring Fund bears a risk of loss in the event that the other party to a repurchase agreement defaults on its obligations and the Fund is delayed or prevented from exercising its rights to dispose of the collateral securities. However, the Manager or the sub-advisor, as applicable, attempts to minimize this risk by entering into repurchase agreements only with financial institutions that are deemed to be of good financial standing. |
5 | Purchase securities sold in private placement offerings made in reliance on the “private placement” exemption from registration afforded by Section 4(a)(2) of the Securities Act and resold to qualified institutional buyers under Rule 144A under the Securities Act. The Fund will not invest more than 15% of its net assets in Section 4(a)(2) securities and illiquid securities unless the Manager or the sub-advisor, as applicable, determines that any Section 4(a)(2) securities held by the Fund in excess of this level are liquid. |
1 | Purchase or sell real estate or real estate limited partnership interests, provided, however, that the Fund may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein when consistent with the other policies and limitations described in the Fund’s Prospectus. |
2 | Invest in physical commodities unless acquired as a result of ownership of securities or other instruments (but this shall not prevent the Fund from purchasing or selling foreign currency, options, futures contracts, options on futures contracts, forward contracts, swaps, caps, floors, collars, securities on a forward-commitment or delayed-delivery basis, and other similar financial instruments). |
3 | Engage in the business of underwriting securities issued by others, except to the extent that, in connection with the disposition of securities, the Fund may be deemed an underwriter under federal securities law. |
4 | Lend any security or make any other loan except (i) as otherwise permitted under the Investment Company Act, (ii) pursuant to a rule, order or interpretation issued by the SEC or its staff, (iii) through the purchase of a portion of an issue of debt securities in accordance with the Fund’s investment objective, policies and limitations, or (iv) by engaging in repurchase agreements with respect to portfolio securities. |
5 | Issue any senior security except as otherwise permitted (i) under the Investment Company Act or (ii) pursuant to a rule, order or interpretation issued by the SEC or its staff. |
6 | Borrow money, except as otherwise permitted under the Investment Company Act or pursuant to a rule, order or interpretation issued by the SEC or its staff, including (i) as a temporary measure, (ii) by entering into reverse repurchase agreements, and (iii) by lending portfolio securities as collateral. For purposes of this investment limitation, the purchase or sale of options, futures contracts, options on futures contracts, forward contracts, swaps, caps, floors, collars and other similar financial instruments shall not constitute borrowing. |
7 | Invest more than 5% of its total assets (taken at market value) in securities of any one issuer, other than obligations issued by the U.S. Government, its agencies and instrumentalities, or purchase more than 10% of the voting securities of any one issuer, with respect to 75% of the Fund’s total assets. |
8 | Invest more than 25% of its assets in the securities of companies primarily engaged in any particular industry or group of industries provided that this limitation does not apply to: (i) obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities; and (ii) tax-exempt securities issued by municipalities and their agencies and authorities. |
1 | Invest more than 15% of its net assets in illiquid securities, including time deposits and repurchase agreements that mature in more than seven days; or |
2 | Purchase securities on margin or effect short sales, except that the Fund may obtain such short-term credits as may be necessary for the clearance of purchases or sales of securities. |
1 | a complete list of holdings for the Fund on an annual and semi-annual basis in the reports to shareholders within sixty days of the end of each fiscal semi-annual period and in publicly available filings of Form N-CSR with the SEC within ten days thereafter (available on the SEC’s website at www.sec.gov); |
2 | a complete list of holdings for the Fund as of the end of each fiscal quarter in publicly available filings of Form N-PORT with the SEC within sixty days of the end of the fiscal quarter (available on the SEC’s website at www.sec.gov); |
3 | a complete list of holdings for the Fund as of the end of each calendar quarter on the Fund’s website (www.americanbeaconfunds.com) approximately sixty days after the end of the calendar quarter; and |
4 | ten largest holdings for the Fund as of the end of each calendar quarter on the Fund’s website (www.americanbeaconfunds.com) and in sales materials approximately fifteen days after the end of the calendar quarter. |
Service Provider
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Service
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Holdings Access
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Manager
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Investment management and administrator
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Complete list on intraday basis with no lag
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Sub-Advisor
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Investment management
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Holdings under sub-advisor’s management on intraday basis with no lag
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State Street Bank and Trust Co. (“State Street”) and its designated foreign sub-custodians
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Securities lending agent for Funds that participate in securities lending, Fund’s custodian and foreign custody manager, and foreign sub-custodians
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Complete list on intraday basis with no lag
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Chicago Clearing
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Class Action Services to sub-advisor
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Complete list quarterly with no lag
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PricewaterhouseCoopers LLP
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Fund’s independent registered public accounting firm
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Complete list on annual basis with no lag
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FactSet Research Systems, Inc.
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Performance and portfolio analytics reporting for the Manager and sub-advisor
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Complete list on daily basis with no lag
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KPMG International
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Service provider to State Street
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Complete list on annual basis with lag
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Institutional Shareholder Services Inc.
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Proxy voting research provider to sub-advisor
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Complete list on daily basis with no lag
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The Northern Trust Company
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Service provider to the sub-advisor
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Complete list on a daily basis with no lag
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1 | Recipients of portfolio holdings information must agree in writing to keep the information confidential until it has been posted to the Fund’s website and not to trade based on the information; |
2 | Holdings may only be disclosed as of a month-end date; |
3 | No compensation may be paid to the Fund, the Manager or any other party in connection with the disclosure of information about portfolio securities; and |
4 | A member of the Manager’s Compliance staff must approve requests for nonpublic holdings information. |
Name and Year of Birth*
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Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
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Position and Length of Time Served on the American Beacon Institutional Funds Trust
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Principal Occupation(s) and Directorships During Past 5 Years
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INTERESTED TRUSTEE
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Eugene J. Duffy
(1954)** |
Trustee since 2008
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Trustee since 2017
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Managing Director, Global Investment Management Distribution, Mesirow Financial Administrative Corporation (2016-Present); Managing Director, Institutional Services, Intercontinental Real Estate Corporation (2014-2016); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
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NON-INTERESTED TRUSTEES
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Gilbert G. Alvarado
(1969) |
Trustee since 2015
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Trustee since 2017
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Chief Financial Officer, The Conrad Prebys Foundation (2022-Present); President, SJVIIF, LLC, Impact Investment Fund (2018-2022); Director, Kura MD, Inc. (local telehealth organization) (2015-2017); Senior Vice President/CFO, Sierra Health Foundation (health conversion private foundation) (2006-2022); Senior Vice President/CFO, Sierra Health Foundation: Center for Health Program Management (California public benefit corporation) (2012-2022); Director, Sacramento Regional Technology Alliance (2011-2016); Director, Valley Healthcare Staffing (2017–2018); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
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Joseph B. Armes
(1962) |
Trustee since 2015
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Trustee since 2017
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Director, Switchback Energy Acquisition (2019-2021); Chairman & CEO, CSW Industrials f/k/a Capital Southwest Corporation (investment company) (2015-Present); Chairman of the Board of Capital Southwest Corporation, predecessor to CSW Industrials, Inc. (investment company) (2014-2017); President & CEO, JBA Investment Partners (family investment vehicle) (2010-Present); Director and Chair of Audit Committee, RSP Permian (oil and gas producer) (2013-2018); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
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Gerard J. Arpey
(1958) |
Trustee since 2012
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Trustee since 2017
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Partner, Emerald Creek Group (private equity firm) (2011-Present); Director, S.C. Johnson & Son, Inc. (privately held company) (2008-Present); Director, The Home Depot, Inc. (NYSE: HD) (2015-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
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Brenda A. Cline
(1960) |
Chair since 2019
Vice Chair 2018
Trustee since 2004
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Chair since 2019
Vice Chair 2018
Trustee since 2017
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Chief Financial Officer, Treasurer and Secretary, Kimbell Art Foundation (1993-Present); Director, Tyler Technologies, Inc. (public sector software solutions company) (2014-Present); Director, Range Resources Corporation (oil and natural gas company) (2015-Present); Trustee, Cushing Closed-End (2) and Open-End Funds (3) (2017-2021); Chair, American Beacon Sound Point Enhanced Income Fund (2019-2021), Vice Chair (2018), Trustee (2018-2021); Chair, American Beacon Apollo Total Return Fund (2019-2021), Vice Chair (2018), Trustee (2018-2021).
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Claudia A. Holz
(1957) |
Trustee since 2018
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Trustee since 2018
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Independent Director, Blue Owl Capital Inc. (2021-Present); Partner, KPMG LLP (1990-2017); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
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Douglas A. Lindgren
(1961) |
Trustee since 2018
|
Trustee since 2018
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Director, JLL Income Property Trust (2022-Present); CEO North America, Carne Global Financial Services (2016-2017); Consultant, Carne Financial Services (2017-2019); Managing Director, IPS Investment Management and Global Head, Content Management, UBS Wealth Management (2010-2016); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
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Name and Year of Birth*
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
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Barbara J. McKenna
(1963) |
Trustee since 2012
|
Trustee since 2017
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President/Managing Principal, Longfellow Investment Management Company (2005-Present, President since 2009); Member, External Diversity Council of the Federal Reserve Bank of Boston (2021-Present); Member, Federal Reserve Bank of Boston CEO Roundtable (2021-Present); Board Advisor, United States Tennis Association (2021-Present); Trustee, American Beacon Sound Point Enhanced Income Fund (2018-2021); Trustee, American Beacon Apollo Total Return Fund (2018-2021).
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* | The Board has adopted a retirement policy that requires Trustees to retire no later than the last day of the calendar year in which they reach the age of 75. |
** | Mr. Duffy is deemed to be an “interested person” of the Trust, as defined by the Investment Company Act of 1940, as amended, by virtue of his position with Mesirow |
Financial, Inc., a broker-dealer. |
INTERESTED TRUSTEE
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American Beacon Fund
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Duffy
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Aggregate Dollar Range of Equity Securities in all Trusts (27 Funds as of December 31, 2023)
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Over $100,000
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NON-INTERESTED TRUSTEES
|
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American Beacon Fund
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Alvarado
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Armes
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Arpey
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Cline
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Holz
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Lindgren
|
McKenna
|
Aggregate Dollar Range of Equity Securities in all Trusts (27 Funds as of December 31, 2023)
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Over $100,000
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Over $100,000
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Over $100,000
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Over $100,000
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Over $100,000
|
Over $100,000
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Over $100,000
|
The following table shows total compensation (excluding reimbursements) paid by the Trusts to each Trustee for the fiscal year ended October 31, 2023.
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Name of Trustee
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Aggregate Compensation from the Trust
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Total Compensation from the Trusts
|
INTERESTED TRUSTEE
|
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Eugene J. Duffy
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$189,994
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$201,000
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NON-INTERESTED TRUSTEES
|
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Gilbert G. Alvarado
|
$209,135
|
$221,250
|
Joseph B. Armes
|
$202,282
|
$214,000
|
Gerard J. Arpey
|
$201,337
|
$213,000
|
Brenda A. Cline1
|
$250,490
|
$265,000
|
Claudia A. Holz
|
$218,115
|
$230,750
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Douglas A. Lindgren
|
$218,115
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$230,750
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Barbara J. McKenna
|
$209,135
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$221,250
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1 | Upon her retirement from the Board, Ms. Cline is eligible for flight benefits afforded to Eligible Trustees who served on the Boards prior to September 12, 2008 as described below. |
Name and Year of Birth
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
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OFFICERS
|
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Jeffrey K. Ringdahl
(1975) |
President
since April 2022 Vice President
2010-2022 |
President
since April 2022 Vice President
2017-2022 |
Director (2015-Present), President (2018-Present), Chief Executive Officer (2022-Present), Chief Operating Officer (2010-2022), American Beacon Advisors, Inc.; Director (2015-Present), President (2018-Present), Resolute Investment Holdings, LLC; Director (2015-Present), President (2018-Present), Resolute Topco, Inc.; Director (2015-Present), President (2018-Present), Resolute Acquisition, Inc.; Director (2015-Present), President (2018-Present), Chief Executive Officer (2022-Present), Chief Operating Officer (2018-2022), Resolute Investment Managers, Inc.; Director (2017-Present), President and Chief Executive Officer (2022-Present), Executive Vice President (2017-2022), Resolute Investment Distributors, Inc.; Director (2017-Present), President (2018-Present), Chief Executive Officer (2022-Present), Chief Operating Officer (2018-2022), Resolute Investment Services, Inc.; President (2022-Present), Senior Vice President (2017-2022), Manager (2015-Present), American Private Equity Management, L.L.C.; Trustee, American Beacon NextShares Trust (2015-2020); Director and Executive Vice President & Chief Operating Officer, Alpha Quant Advisors, LLC (2016-2020); Director, Shapiro Capital Management, LLC (2017-Present); Director and Executive Vice President, Continuous Capital, LLC (2018-2022); Director, RSW Investments Holdings, LLC (2019-Present); Manager, SSI Investment Management, LLC (2019-Present); Director, National Investment Services of America, LLC (2019-Present); Director (2014-Present), President (2022-Present) and Vice President (2014-2022), American Beacon Cayman Managed Futures Strategy Fund, Ltd.; Director (2018-Present) and, President (2022-Present), Vice President (2018-2022), American Beacon Cayman TargetRisk Company, Ltd.; Director and President, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Director and President, American Beacon Cayman Trend Company, Ltd. (2023-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Rosemary K. Behan
(1959) |
Vice President, Secretary and Chief Legal Officer
since 2006 |
Vice President, Secretary and Chief Legal Officer
since 2017 |
Senior Vice President (2021-Present), Vice President (2006-2021), Secretary and General Counsel (2006-Present), American Beacon Advisors, Inc.; Secretary, Resolute Investment Holdings, LLC (2015-Present); Secretary, Resolute Topco, Inc. (2015-Present); Secretary, Resolute Acquisition, Inc. (2015-Present); Senior Vice President (2021-Present), Vice President (2015-2021), Secretary and General Counsel (2015-Present), Resolute Investment Managers, Inc.; Secretary, Resolute Investment Distributors, Inc. (2017-Present); Senior Vice President (2021-Present), Vice President (2017-2021), Secretary and General Counsel (2017-Present), Resolute Investment Services, Inc.; Secretary, American Private Equity Management, LLC (2008-Present); Secretary and General Counsel, Alpha Quant Advisors, LLC (2016-2020); Vice President and Secretary, Continuous Capital, LLC (2018-2022); Secretary, Green Harvest Asset Management, LLC (2019-2021); Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2014-Present); Secretary, American Beacon Cayman TargetRisk Company, Ltd (2018-Present); Secretary, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Secretary, American Beacon Cayman Trend Company, Ltd. (2023-Present); Vice President, Secretary, and Chief Legal Officer, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, Secretary, and Chief Legal Officer, American Beacon Apollo Total Return Fund (2018-2021).
|
Paul B. Cavazos
(1969) |
Vice President
since 2016 |
Vice President
since 2017 |
Chief Investment Officer and Senior Vice President, American Beacon Advisors, Inc. (2016-Present); Vice President, American Private Equity Management, L.L.C. (2017-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Erica B. Duncan
(1970) |
Vice President
since 2011 |
Vice President
since 2017 |
Vice President, American Beacon Advisors, Inc. (2011-Present); Vice President, Resolute Investment Managers, Inc. (2018-Present); Vice President, Resolute Investment Services, Inc. (2018-Present); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Name and Year of Birth
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
|
Rebecca L. Harris
(1966) |
Vice President
Since 2022 |
Vice President
Since 2022 |
Senior Vice President (2021-Present), Vice President (2011-2021), American Beacon Advisors, Inc.; Senior Vice President (2021-Present), Vice President (2017-2021), Resolute Investment Managers, Inc.; Senior Vice President (2021-Present), Vice President (2017-2021), Resolute Investment Services, Inc.; Vice President, Alpha Quant Advisors, LLC (2016-2020); Vice President (2018-2022), Director (2022) Continuous Capital, LLC; Director (2022-Present) National Investment Services of America, LLC; Director (2022-Present) RSW Investments Holdings LLC; Director (2022-Present) Shapiro Capital Management LLC; Director (2022-Present) SSI Investment Management LLC; Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-2021); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-2021); Assistant Secretary, American Beacon Funds (2010 – 2022); Assistant Secretary, American Beacon Select Funds (2010 – 2022); Assistant Secretary, American Beacon Institutional Funds Trust (2017 – 2022).
|
Terri L. McKinney
(1963) |
Vice President
since 2010 |
Vice President
since 2017 |
Senior Vice President, (2021-Present) Vice President, (2009-2021), American Beacon Advisors, Inc.; Senior Vice President (2021-Present), Vice President (2017-2021), Resolute Investment Managers, Inc.; Senior Vice President (2021-Present), Vice President (2018-2021), Resolute Investment Services, Inc.; Vice President, Alpha Quant Advisors, LLC (2016-2020); Vice President, Continuous Capital, LLC (2018-2022); Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Samuel J. Silver
(1963) |
Vice President
since 2011 |
Vice President
since 2017 |
Vice President (2011-Present), Chief Fixed Income Officer (2016-Present), American Beacon Advisors, Inc.; Vice President, American Beacon Sound Point Enhanced Income Fund (2018-2021); Vice President, American Beacon Apollo Total Return Fund (2018-2021).
|
Melinda G. Heika
(1961) |
Vice President
since 2021 |
Vice President
since 2021 |
Senior Vice President (2021-Present), Treasurer and CFO (2010-Present), American Beacon Advisors, Inc.; Treasurer, Resolute Topco, Inc. (2015-Present); Treasurer, Resolute Investment Holdings, LLC (2015-Present); Treasurer, Resolute Acquisition, Inc. (2015-Present); Senior Vice President (2021-Present), Treasurer and CFO (2017-Present), Resolute Investment Managers, Inc.; Senior Vice President (2021-Present), Treasurer and CFO (2017-Present), Resolute Investment Services, Inc.; Treasurer, American Private Equity Management, L.L.C. (2012-Present); Treasurer and CFO, Alpha Quant Advisors, LLC (2016-2020); Treasurer, Continuous Capital, LLC (2018-2022); Director (2014-Present), Vice President (2022-Present) and Treasurer (2014-2022), American Beacon Cayman Managed Futures Strategy Fund, Ltd.; Director and Vice President (2022-Present), and Treasurer (2018-2022), American Beacon Cayman TargetRisk Company, Ltd.; Director and Vice President, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Director and Vice President, American Beacon Cayman Trend Company, Ltd. (2023-Present); Principal Accounting Officer and Treasurer, American Beacon Funds (2010-2021); Principal Accounting Officer and Treasurer, American Beacon Select Funds (2010-2021); Principal Accounting Officer and Treasurer, American Beacon Institutional Funds Trust (2017-2021); Principal Accounting Officer and Treasurer (2018-2021), Vice President (2021), American Beacon Sound Point Enhanced Income Fund; Principal Accounting Officer and Treasurer (2018-2021), Vice President (2021), American Beacon Apollo Total Return Fund (2018-2021).
|
Gregory Stumm
(1981) |
Vice President
since 2022 |
Vice President
since 2022 |
Senior Vice President, American Beacon Advisors, Inc. (2022-Present); Senior Vice President, Resolute Investment Managers, Inc. (2022-Present); Senior Vice President, Resolute Investment Services, Inc. (2022-Present); Director and Senior Vice President, Resolute Investment Distributors, Inc. (2022-Present).
|
Sonia L. Bates
(1956) |
Principal Accounting Officer and Treasurer
since 2021 |
Principal Accounting Officer and Treasurer
since 2021 |
Assistant Treasurer, American Beacon Advisors, Inc. (2023-Present); Vice President, Fund and Tax Reporting (2023-Present), Director, Fund and Tax Reporting (2011-2023), Resolute Investment Services, Inc; Assistant Treasurer, American Private Equity Management, L.L.C. (2012-Present); Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2022-Present); Treasurer (2022-Present) and Assistant Treasurer (2018-2022), American Beacon Cayman TargetRisk Company, Ltd.; Treasurer, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Treasurer, American Beacon Cayman Trend Company, Ltd. (2023-Present); Assistant Treasurer (2018-2021), Principal Accounting Officer and Treasurer (2021), American Beacon Sound Point Enhanced Income Fund; Assistant Treasurer (2019-2021), Principal Accounting Officer and Treasurer (2021), American Beacon Apollo Total Return Fund; Assistant Treasurer, American Beacon Funds (2011-2021); Assistant Treasurer, American Beacon Select Funds (2011-2021); Assistant Treasurer, American Beacon Institutional Funds Trust (2017-2021).
|
Name and Year of Birth
|
Position and Length of Time Served on the American Beacon Funds and American Beacon Select Funds
|
Position and Length of Time Served on the American Beacon Institutional Funds Trust
|
Principal Occupation(s) and Directorships During Past 5 Years
|
Christina E. Sears
(1971) |
Chief Compliance Officer
since 2004 Assistant Secretary since 1999 |
Chief Compliance Officer and Assistant Secretary
since 2017 |
Chief Compliance Officer (2004-Present), Vice President (2019-Present), American Beacon Advisors, Inc.; Vice President, Resolute Investment Managers, Inc. (2017-Present); Vice President, Resolute Investment Distributors, Inc. (2017-Present); Vice President, Resolute Investment Services, Inc. (2019-Present); Chief Compliance Officer, American Private Equity Management, LLC (2012-Present); Chief Compliance Officer, Green Harvest Asset Management, LLC (2019-2021); Chief Compliance Officer, RSW Investments Holdings, LLC (2019-Present); Chief Compliance Officer (2016-2019), Vice President (2016-2020), Alpha Quant Advisors, LLC; Chief Compliance Officer (2018-2019), Vice President (2018-2022), Continuous Capital, LLC.; Chief Compliance Officer and Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-2021); Chief Compliance Officer and Assistant Secretary, American Beacon Apollo Total Return Fund (2018-2021).
|
Shelley L. Dyson
(1969) |
Assistant Treasurer
since 2021 |
Assistant Treasurer
since 2021 |
Director Fund Tax (2024-Present), Fund Tax Manager (2020-2024), Manager, Tax (2014-2020), Resolute Investment Services, Inc.; Assistant Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2022-Present); Assistant Treasurer, American Beacon Cayman TargetRisk Company, Ltd (2022-Present); Assistant Treasurer, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Assistant Treasurer, American Beacon Cayman Trend Company, Ltd. (2023-Present); Assistant Treasurer, American Beacon Sound Point Enhanced Income Fund (2021); Assistant Treasurer, American Beacon Apollo Total Return Fund (2021).
|
Shelley D. Abrahams
(1974) |
Assistant Secretary
since 2008 |
Assistant Secretary
since 2017 |
Corporate Governance Manager (2023-Present), Senior Corporate Governance & Regulatory Specialist (2020-2023), Corporate Governance & Regulatory Specialist (2017-2020), Resolute Investment Services, Inc.; Assistant Secretary, American Beacon Cayman Managed Futures Strategy Fund, Ltd. (2022-Present); Assistant Secretary, American Beacon Cayman TargetRisk Company, Ltd (2022-Present); Assistant Secretary, American Beacon Cayman Multi-Alternatives Company, Ltd. (2023-Present); Assistant Secretary, American Beacon Cayman Trend Company, Ltd. (2023-Present); Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-2021); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-2021).
|
Teresa A. Oxford
(1958) |
Assistant Secretary
since 2015 |
Assistant Secretary
since 2017 |
Deputy General Counsel (2024-Present), Assistant Secretary (2015-Present), Associate General Counsel (2015-2024), American Beacon Advisors, Inc.; Assistant Secretary (2018-2021), Resolute Investment Distributors, Inc.; Deputy General Counsel (2024-Present), Assistant Secretary (2017-Present), Associate General Counsel (2017-2024), Resolute Investment Managers, Inc.; Deputy General Counsel (2024-Present), Assistant Secretary (2018-Present), Associate General Counsel (2018-2024), Resolute Investment Services, Inc.; Assistant Secretary (2016-2020), Alpha Quant Advisors, LLC; Assistant Secretary (2020-2022), Continuous Capital, LLC.; Assistant Secretary, American Beacon Sound Point Enhanced Income Fund (2018-2021); Assistant Secretary, American Beacon Apollo Total Return Fund (2018-2021).
|
Shareholder Address
|
Fund Percentage (listed if over 25%)
|
Y CLASS
|
R5 CLASS
|
Investor CLASS
|
AMERICAN ENTERPRISE INV SVCS*
|
16.42%
|
|||
707 2ND AVE S
|
||||
MINNEAPOLIS MN 55402-2405
|
||||
CHARLES SCHWAB & CO INC*
|
8.91%
|
21.85%
|
||
SPECIAL CUST A/C
|
||||
EXCLUSIVE BENEFIT OF CUSTOMERS
|
||||
ATTN MUTUAL FUNDS
|
||||
211 MAIN ST
|
||||
SAN FRANCISCO CA 94105-1901
|
||||
MERRILL LYNCH PIERCE FENNER &*
|
25.91%
|
|||
SMITH INC (HOUSE ACCOUNT)
|
||||
THE AMERICAN BEACON FUNDS
|
||||
4800 DEER LAKE DR EAST
|
||||
JACKSONVILLE FL 32246-6484
|
||||
MORGAN STANLEY SMITH BARNEY LLC*
|
9.60%
|
|||
FOR THE EXCLUSIVE BENE OF ITS CUST
|
||||
1 NEW YORK PLZ FL 12
|
||||
NEW YORK NY 10004-1965
|
||||
NATIONAL FINANCIAL SERVICES LLC*
|
28.80%
|
24.33%
|
36.62%
|
|
FOR EXCLUSIVE BENEFIT OF
|
||||
OUR CUSTOMERS
|
||||
ATTN MUTUAL FUNDS DEPT 4TH FLOOR
|
||||
499 WASHINGTON BLVD
|
||||
JERSEY CITY NJ 07310-1995
|
||||
PERSHING LLC*
|
16.25%
|
6.18%
|
||
1 PERSHING PLZ
|
||||
JERSEY CITY NJ 07399-0001
|
||||
FIRST STATE TRUST COMPANY FBO NBT 3
|
7.92%
|
|||
2 RIGHTER PARKWAY
|
||||
WILMINGTON DE 19803-1532
|
||||
RELIANCE TRUST CO FBO
|
6.31%
|
|||
COMERICA EB R/R
|
||||
PO BOX 570788
|
||||
ATLANTA GA 30357-3114
|
||||
UMB AS CUSTODIAN FOR E-VALUATOR
|
8.79%
|
|||
928 GRAND BOULEVARD
|
||||
10TH FLOOR
|
||||
MAIL STOP 1011001
|
||||
KANSAS CITY MO 64106-2008
|
* | Denotes record owner of Fund shares only |
EAM Global Investors LLC (“EAM”)
|
||
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity Business
|
Travis T. Prentice
|
EAM Employee/Owner
|
Managing Director of the Board of Managers, CEO
|
Montie L. Weisenberger
|
EAM Employee/Owner
|
Director on the Board of Managers
|
Frank P. Hurst
|
EAM Employee/Owner
|
Director on the Board of Managers, President
|
Byron Roth
|
Owner
|
Director on the Board of Managers
|
Gordon Roth
|
Director
|
Director on the Board of Managers
|
Derek J. Gaertner
|
Officer
|
Chief Operating Officer
|
EAM Investors, LLC
|
Direct Majority Owner
|
Financial Services
|
WACO Limited, LLC
|
Indirect Majority Owner
|
Financial Services
|
CR Financial Holdings, Inc.
|
Parent Company
|
Financial Services
|
Controlling Person/Entity
|
Basis of Control
|
Nature of Controlling Person/Entity’s Business
|
Resolute Topco, Inc.
|
Parent Company
|
Holding Company – Founded in 2015
|
First $5 billion
|
0.35%
|
Next $5 billion
|
0.325%
|
Next $10 billion
|
0.30%
|
Over $20 billion
|
0.275%
|
■
|
complying with reporting requirements;
|
■
|
corresponding with shareholders;
|
■
|
maintaining internal bookkeeping, accounting and auditing services and records;
|
■
|
supervising the provision of services to the Trust by third parties; and
|
■
|
administering the Fund’s interfund lending facility and lines of credit, if applicable.
|
Management Fees Paid to American Beacon Advisors, Inc. (Gross)
|
|||
Fund
|
2021
|
2022
|
2023
|
American Beacon EAM International Small Cap Fund
|
$1,382,514
|
$951,334
|
$578,819
|
Sub-Advisor Fees (Gross)
|
|||
2021
|
2022
|
2023
|
|
American Beacon EAM International Small Cap Fund
|
$1,496,658
|
$1,078,047
|
$649,238
|
0.40%
|
0.40%
|
0.40%
|
Management Fees (Waived)/Recouped
|
|||
2021
|
2022
|
2023
|
|
American Beacon EAM International Small Cap Fund
|
$0
|
$0
|
($19,760)
|
Sub-Advisor Fees (Waived)
|
|||
2021
|
2022
|
2023
|
|
American Beacon EAM International Small Cap Fund
|
$0
|
$0
|
$0
|
Service Plan Fees
|
|||
2021
|
2022
|
2023
|
|
Investor Class
|
$699,268
|
$391,337
|
$206,196
|
Securities Lending Fees
|
2021
|
2022
|
2023
|
$72,989
|
$5,208
|
$10,846
|
American Beacon EAM International Small Cap Fund
|
|
Gross income earned by the fund from securities lending activities
|
$160,596
|
Fees and/or compensation paid by the fund for securities lending activities and related services:
|
|
Fees paid to securities lending agent from a revenue split
|
$10,846
|
Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split
|
$1,527
|
Administrative fees not included in revenue split
|
$0
|
Indemnification fee not included in revenue split
|
$0
|
Rebate (paid to borrower)
|
$51,562
|
Other fees not included in revenue split (administrative and oversight functions provided by the Manager)
|
$10,846
|
Aggregate fees/compensation paid by the fund for securities lending activities
|
$74,781
|
Net income from securities lending activities
|
$85,815
|
Number of Other Accounts Managed and Assets by Account Type
|
Number of Accounts and Assets for Which Advisory Fee is Performance-Based
|
|||||
Name of Investment Advisor and Portfolio Managers
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
Registered Investment Companies
|
Other Pooled Investment Vehicles
|
Other Accounts
|
EAM Global Investors LLC (“EAM”)
|
||||||
Josh Moss
|
None
|
3 ($337 mil)
|
9 ($313 mil)
|
None
|
None
|
None
|
John Scripp
|
None
|
3 ($337 mil)
|
9 ($313 mil)
|
None
|
None
|
None
|
Travis Prentice*
|
5 ($282.5 mil)
|
8 ($1.1 bil)
|
17 ($723.5 mil)
|
None
|
None
|
None
|
* | As of December 31, 2023. |
Name of Investment Advisor and Portfolio Managers
|
American Beacon EAM International Small Cap Fund
|
EAM Global Investors LLC
|
|
Josh Moss
|
None
|
John Scripp
|
$100-001-$500,000
|
Travis Prentice*
|
None
|
* | As of December 31, 2023. |
American Beacon Fund
|
Amounts Directed
|
Amounts Paid in Commissions
|
American Beacon EAM International Small Cap Fund
|
$0
|
$0
|
American Beacon Fund
|
2021
|
2022
|
2023
|
American Beacon EAM International Small Cap Fund
|
$428,404
|
$279,541
|
$539,122
|
■
|
Derive at least 90% of its gross income each taxable year from (1) dividends, interest, payments with respect to securities loans and gains from the sale or other disposition of securities or foreign currencies (together with Qualifying Other Income (as defined below), “Qualifying Income”), or other income, including gains from options, futures or forward contracts, derived with respect to its business of investing in securities or those currencies (“Qualifying Other Income”) and (2) net income derived from an interest in a “qualified publicly traded partnership” (“QPTP”) (“Gross Income Requirement”). A QPTP is a “publicly traded partnership” (that is, a partnership the interests in which are “traded on an established securities market” or “readily tradable on a secondary market (or the substantial equivalent thereof”) (a “PTP”)) that meets certain qualifying income requirements other than a partnership at least 90% of the gross income of which is Qualifying Income;
|
■
|
Diversify its investments so that, at the close of each quarter of its taxable year, (1) at least 50% of the value of its total assets is represented by cash and cash items, Government securities, securities of other RICs, and other securities, with those other securities limited, in respect of any one issuer, to an amount that does not exceed 5% of the value of the Fund’s total assets and that does not represent more than 10% of the issuer’s outstanding voting securities (equity securities of QPTPs being considered voting securities for these purposes), and (2) not more than 25% of the value of its total assets is invested in (a) the securities (other than Government securities or securities of other RICs) of any one issuer, (b) the securities (other than securities of other RICs) of two or more issuers the Fund controls (by owning 20% or more of their voting power) that are determined to be engaged in the same, similar or related trades or businesses, or (c) the securities of one or more QPTPs (“Diversification Requirements”); and
|
■
|
Distribute annually to its shareholders at least the sum of 90% of its investment company taxable income (generally, net investment income, the excess (if any) of net short-term capital gain over net long-term capital loss, and net gains (if any) from certain foreign currency transactions, all determined without regard to any deduction for dividends paid) and 90% of its net exempt interest income (“Distribution Requirement”).
|
■
|
EAM subscribes to the services of an unaffiliated third-party proxy vendor that provides in-depth analysis of shareholder meeting agendas and vote recommendations. The proxy vendor maintains written guidelines to reflect their current vote recommendations. EAM has provided the proxy vendor with instructions on when the proxy vendor should vote proxies according to their written guidelines and when the proxy vendor must contact EAM for a vote decision. EAM may, in some cases, vote a proxy contrary to the proxy vendor’s guidelines if we determine that this action is in the best interests of clients.
|
■
|
In cases where sole proxy voting authority rests with EAM for plans governed by ERISA, EAM will vote or direct the proxy vendor to vote proxies in accordance with their guidelines unless outlined otherwise in the plan’s governing documents and subject to the fiduciary responsibility standards of ERISA.
|
■
|
If the person(s) responsible for voting proxies becomes aware of any type of potential or actual conflict of interest relating to a proxy proposal, they will promptly report the conflict to our Chief Compliance Officer and Chief Investment Officer. Conflicts will be handled in a number of ways depending on the type and materiality. The method selected by EAM will depend upon the facts and circumstances of each situation and the requirements of applicable laws and will always be handled in the client’s best interest.
|
■
|
EAM may also choose not to vote proxies in certain situations or for certain accounts, for example, where a client has retained the right to vote the proxies or where a proxy is received for a client account that has been terminated.
|
■
|
Clients may direct the vote of their proxy regarding particular solicitations. To do so, the client must contact EAM at our office with specific voting instructions in advance of the proxy voting deadline so that we have sufficient time to contact the third party with the instruction. If the client does not provide adequate advance notice, we may not be able to accommodate the vote request.
|
ADRs
|
American Depositary Receipts
|
American Beacon or the Manager
|
American Beacon Advisors, Inc.
|
Beacon Funds
|
American Beacon Funds
|
Board
|
Board of Trustees
|
Brexit
|
The United Kingdom’s departure from the European Union
|
CCO
|
Chief Compliance Officer
|
CD
|
Certificate of Deposit
|
CFTC
|
Commodity Futures Trading Commission
|
Covered Shares
|
Fund shares that the shareholder acquired or acquires after 2011
|
CPO
|
Commodity Pool Operator
|
Denial of Services
|
A cybersecurity incident that results in customers or employees being unable to access electronic systems
|
Dividends
|
Distributions of most or all of the Fund’s net investment income
|
Dodd-Frank Act
|
Dodd-Frank Wall Street Reform and Consumer Protection Act
|
DRD
|
Dividends-received deduction
|
ETF
|
Exchange-Traded Fund
|
EU
|
European Union
|
FINRA
|
Financial Industry Regulatory Authority, Inc.
|
Forwards
|
Forward Currency Contracts
|
Holdings Policy
|
Policies and Procedures for Disclosure of Portfolio Holdings
|
Internal Revenue Code
|
Internal Revenue Code of 1986, as amended
|
Investment Company Act
|
Investment Company Act of 1940, as amended
|
IPO
|
Initial Public Offering
|
IRS
|
Internal Revenue Service
|
ISS
|
Institutional Shareholder Services
|
Junk Bonds
|
High yield, non-investment grade bonds
|
Management Agreement
|
The Fund’s Management Agreement with the Manager
|
Moody’s
|
Moody’s Investors Service, Inc.
|
NAV
|
Net asset value
|
NDF
|
Non-deliverable forward contracts
|
NYSE
|
New York Stock Exchange
|
OTC
|
Over-the-Counter
|
PCAOB
|
Public Company Accounting Oversight Board
|
Proxy Policy
|
Proxy Voting Policy and Procedures
|
QDI
|
Qualified Dividend Income
|
REIT
|
Real Estate Investment Trust
|
RIC
|
Regulated Investment Company
|
S&P Global
|
S&P Global Ratings
|
SAI
|
Statement of Additional Information
|
SEC
|
Securities and Exchange Commission
|
Securities Act
|
Securities Act of 1933, as amended
|
State Street
|
State Street Bank and Trust Company
|
Trust
|
American Beacon Funds
|
Trustee Retirement Plan
|
Trustee Retirement and Trustee Emeritus and Retirement Plan
|
|
|
UK
|
United Kingdom
|
Number
|
Exhibit
Description | |
(a)
|
(1)
|
Amended
and Restated Declaration of Trust,
dated August 20, 2019, is incorporated by reference to Post-Effective Amendment
No. 355, filed October 25, 2019 (“PEA No. 355”) |
|
(2)(i)
|
Certificates
of Designation for American Beacon
AHL Managed Futures Strategy Fund and American Beacon Global Evolution
Frontier Markets Income Fund, are incorporated by reference to Post-Effective Amendment No. 208, filed December
19, 2014 |
|
(2)(ii)
|
Certificate
of Designation for American Beacon
Frontier Markets Income Fund, is incorporated by reference to Post-Effective
Amendment No. 317, filed July 31, 2018 |
|
(2)(iii)
|
Amendment
to Designation of Series for American
Beacon Developing World Income Fund, dated January 4, 2023, is
incorporated by reference to Post-Effective Amendment No. 401, filed February 27, 2023 (“PEA No. 401”) |
|
(3)(i)
|
Certificates
of Designation for American Beacon
Bridgeway Large Cap Growth Fund and American Beacon Sound Point
Floating Rate Income Fund, are incorporated by reference to Post-Effective Amendment No. 239, filed December
23, 2015 |
|
(3)(ii)
|
Amendment
to Designation of Series for American
Beacon FEAC Floating Rate Income Fund, dated January 3, 2023,
is incorporated by reference to PEA No. 401 |
|
(4)
|
Certificate
of Designation for American Beacon
Garcia Hamilton Quality Bond Fund, is incorporated by reference to Post-Effective
Amendment No. 253, filed April 1, 2016 |
|
(5)
|
Certificate
of Designation for American Beacon
ARK Disruptive Innovation Fund, is incorporated by reference to Post-Effective
Amendment No. 266, filed November 9, 2016 |
|
(6)
|
Certificate
of Designation for American Beacon
TwentyFour Strategic Income Fund, is incorporated by reference to Post-Effective
Amendment No. 286, filed March 30, 2017 |
|
(7)
|
Certificate
of Designation for American Beacon
ARK Transformational Innovation Fund, is incorporated by reference to
Post-Effective Amendment No. 291, filed May 26, 2017 |
|
(8)
|
Certificate
of Designation for American Beacon
Shapiro Equity Opportunities Fund and American Beacon Shapiro SMID
Cap Equity Fund, is incorporated by reference to Post-Effective Amendment No. 297, filed September 11, 2017
|
|
(9)(i)
|
Certificate
of Designation for American Beacon
Tocqueville International Value Fund and American Beacon AHL TargetRisk
Fund, dated September 10, 2018, is incorporated by reference to Post-Effective Amendment No. 321, filed
October 17, 2018 |
|
(9)(ii)
|
Certificate
of Designation for American Beacon
AHL Target Risk Fund, dated June 6, 2018, is incorporated by reference
to Post-Effective Amendment No. 348, filed April 30, 2019 (“PEA No. 348”) |
|
(9)(iii)
|
Amendment
to Designation of Series for American
Beacon EAM International Small Cap Fund, dated January 23, 2023,
is incorporated by reference to PEA No. 401 |
|
(10)
|
Certificate
of Designation for American Beacon
SSI Alternative Income Fund, dated March 5, 2019, is incorporated by
reference to PEA No. 348 |
|
(11)(i)
|
Certificate
of Designation for American Beacon
TwentyFour Short Term Bond Fund, dated December 2, 2019, is incorporated
by reference to Post-Effective Amendment No. 358, filed December 23, 2019 |
|
(11)(ii)
|
Amended
Certificate of Designation for American
Beacon TwentyFour Sustainable Short Term Bond Fund, dated October
7, 2021, is incorporated by reference to Post-Effective Amendment No. 391, filed October 28, 2021 (“PEA No.
391”) |
|
(12)
|
Certificate
of Designation for American Beacon
NIS Core Plus Bond Fund, dated August 17, 2020, is incorporated by
reference to Post-Effective Amendment No. 377, filed September 10, 2020 (“PEA No. 377”) |
|
(13)
|
Certificate
of Designation for American Beacon
AHL Multi-Alternatives Fund, dated May 25, 2023, is incorporated by
reference to Post-Effective Amendment No. 407, filed August 16, 2023 (“PEA No. 407”) |
(b)
|
|
Amended
and Restated By-Laws, effective as
of August 20, 2019, is incorporated by reference to PEA No. 355 |
(c)
|
|
Rights
of holders of the securities being registered are contained in Articles III, VIII, X, XI and XII of the Registrant’s Amended
and Restated Declaration of Trust and
Articles II, III, VI, VII and VIII of the Registrant’s Amended
and Restated By-Laws
|
(d)
|
(1)(A)(i)
|
Management
Agreement by and among American Beacon
Funds, American Beacon Select Funds and American Beacon
Advisors, Inc., dated December 29, 2023, is incorporated by reference to Post-Effective Amendment No. 411,
filed February 9, 2024 (“PEA No. 411”) |
|
(1)(A)(ii)
|
First
Amendment to Management Agreement Schedule
B by and among American Beacon Funds, American Beacon
Select Funds and American Beacon Advisors, Inc., dated January 9, 2024, is incorporated by reference to PEA
No. 411 |
Number
|
Exhibit
Description | |
|
(1)(A)(iii)
|
Second Amendment to Management Agreement Schedule B by and among American Beacon Funds, American Beacon
Select Funds and American Beacon Advisors, Inc., dated January 26, 2024 - (filed herewith) |
|
(1)(B)(i)
|
Interim
Management Agreement by and among American
Beacon Funds and American Beacon Advisors, Inc., dated
December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(1)(B)(ii)
|
First
Amendment to Interim Management Agreement
Schedule B by and among American Beacon Funds and American
Beacon Advisors, Inc., dated January 9, 2024, is incorporated by reference to PEA No. 411 |
|
(1)(B)(iii)
|
Second Amendment to Interim Management Agreement Schedule B by and among American Beacon Funds and American
Beacon Advisors, Inc., dated January 26, 2024 - (filed herewith) |
|
(1)(C)
|
Management
Agreement between American Beacon Cayman
Managed Futures Strategy Fund, Ltd. and American Beacon
Advisors, Inc., dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(1)(D)
|
Management
Agreement between American Beacon Cayman
TargetRisk Company, Ltd. and American Beacon Advisors,
Inc., dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(1)(E)
|
Management
Agreement between American Beacon Cayman
Multi-Alternatives Company, Ltd. and American Beacon
Advisors, Inc., dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(A)(i)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Barrow, Hanley,
Mewhinney & Strauss, LLC for the American Beacon Balanced Fund, dated December 29, 2023, is incorporated
by reference to PEA No. 411 |
|
(2)(A)(ii)
|
Interim
Investment Advisory Agreement among
American Beacon Funds, American Beacon Advisors, Inc., and Barrow,
Hanley, Mewhinney & Strauss, LLC for the American Beacon Large Cap Value Fund and American Beacon Small
Cap Value Fund, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(B)
|
Interim
Investment Advisory Agreement among
American Beacon Funds, American Beacon Advisors, Inc., and Brandywine
Global Investment Management, LLC, dated December 29, 2023, is incorporated by reference to PEA No.
411 |
|
(2)(C)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Causeway Capital
Management LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(D)(i)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Hotchkis and Wiley
Capital Management LLC for the American Beacon Balanced Fund, dated December 29, 2023, is incorporated
by reference to PEA No. 411 |
|
(2)(D)(ii)
|
Interim
Investment Advisory Agreement among
American Beacon Funds, American Beacon Advisors, Inc., and Hotchkis
and Wiley Capital Management LLC for the American Beacon Large Cap Value Fund and American Beacon
Small Cap Value Fund, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(E)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Lazard Asset Management
LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(F)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Strategic Income
Management, LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(G)
|
Interim
Investment Advisory Agreement among
American Beacon Funds, American Beacon Advisors, Inc., and Massachusetts
Financial Services Company, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(H)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Stephens Investment
Management Group, LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(I)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Bridgeway Capital
Management, Inc., dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(J)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and The London Company
of Virginia, LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(K)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Global Evolution
USA, LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(L)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and AHL Partners LLP,
dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(M)
|
Investment
Advisory Agreement among American Beacon
Cayman Managed Futures Strategy Fund, Ltd., American Beacon
Advisors, Inc., and AHL Partners LLP, dated December 29, 2023, is incorporated by reference to PEA No. 411
|
|
(2)(N)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and Garcia Hamilton
& Associates, L.P., dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(O)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and ARK Investment
Management LLC, dated January 9, 2024, is incorporated by reference to PEA No. 411 |
|
(2)(P)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc., and TwentyFour Asset
Management (US) LP, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
Number
|
Exhibit
Description | |
|
(2)(Q)
|
Interim
Investment Advisory Agreement among
American Beacon Funds, American Beacon Advisors, Inc., and Shapiro
Capital Management, LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(R)
|
Interim
Investment Advisory Agreement among
American Beacon Funds, American Beacon Advisors, Inc., and Newton
Investment Management North America, LLC, dated December 29, 2023, is incorporated by reference to PEA
No. 411 |
|
(2)(S)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc. and abrdn Investments
Limited, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(T)
|
Investment
Advisory Agreement among American Beacon
Cayman TargetRisk Company, Ltd., American Beacon Advisors,
Inc., and AHL Partners LLP, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(U)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc. and SSI Investment
Management LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(V)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc. and American Century
Investment Management, Inc., dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(W)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc. and National Investment
Services of America, LLC, dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(X)
|
Interim
Investment Advisory Agreement among
American Beacon Funds, American Beacon Advisors, Inc. and DePrince,
Race & Zollo, Inc., dated December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(Y)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc. and EAM Global Investors
LLC, effective December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(Z)
|
Investment
Advisory Agreement among American Beacon
Funds, American Beacon Advisors, Inc. and First Eagle Alternative
Credit, LLC, effective December 29, 2023, is incorporated by reference to PEA No. 411 |
|
(2)(AA)
|
Investment
Advisory Agreement among American Beacon
Cayman Multi-Alternatives Company, Ltd., American Beacon
Advisors, Inc., and AHL Partners LLP, dated December 29, 2023, is incorporated by reference to PEA No. 411
|
(e)
|
|
Distribution
Agreement among American Beacon Funds,
American Beacon Select Funds and Resolute Investment Distributors,
Inc., dated December 29, 2023, is incorporated by reference to PEA No. 411 |
(f)
|
|
Bonus,
profit sharing or pension plans – (none) |
(g)
|
(1)
|
Custodian
Agreement between Registrant and State
Street Bank and Trust Company, dated December 1, 1997, is incorporated
by reference to Post-Effective Amendment No. 24, filed February 26, 1998 |
|
(2)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated May 9, 2019,
is incorporated by reference to Post-Effective Amendment No. 353, filed May 30, 2019 |
|
(3)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated May 13,
2019, is incorporated by reference to PEA No. 355 |
|
(4)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated October
15, 2019, is incorporated by reference to Post-Effective Amendment No. 357, filed November 22, 2019 (“PEA
No. 357”) |
|
(5)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, effective January
22, 2020, is incorporated by reference to Post-Effective Amendment No. 362, filed February 14, 2020 |
|
(6)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated April 15,
2020, is incorporated by reference to Post-Effective Amendment No. 368, filed May 28, 2020 (“PEA No. 368”)
|
|
(7)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated July 31, 2020,
is incorporated by reference to Post-Effective Amendment No. 374, filed August 28, 2020 (“PEA No. 374”) |
|
(8)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated August 27,
2020, is incorporated by reference to PEA No. 377 |
|
(9)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated October
8, 2020, is incorporated by reference to Post-Effective Amendment No. 381, filed October 28, 2020 (“PEA No.
381”) |
|
(10)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, effective November
2, 2020, is incorporated by reference to Post-Effective Amendment No. 383, filed December 14, 2020 (“PEA
No. 383”) |
|
(11)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, effective August
3, 2021, is incorporated by reference to Post-Effective Amendment No. 389, filed August 27, 2021 (“PEA No.
389”) |
|
(12)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated February
14, 2023, is incorporated by reference to PEA No. 401 |
|
(13)
|
Amendment
to Custodian Agreement between Registrant
and State Street Bank and Trust Company, dated August 4,
2023, is incorporated by reference to PEA No. 407 |
Number
|
Exhibit
Description | |
(h)
|
(1)(A)
|
Transfer
Agency Services Agreement between SS&C GIDS,
Inc. and American Beacon Funds, effective February 1, 2023,
is incorporated by reference to Post-Effective Amendment No. 402, filed March 22, 2023 |
|
(1)(B)
|
First
Amendment to Transfer Agency Services Agreement
between SS&C GIDS, Inc. and American Beacon Funds, effective
August 3, 2023, is incorporated by reference to PEA No. 407 |
|
(2)(A)
|
Sub-Administrative
Services Fee Agreement between American
Beacon Funds, American Beacon Select Funds, American
Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund, American Beacon
Apollo Total Return Fund, and American Beacon Advisors, Inc., dated April 30, 2017, is incorporated by reference
to PEA No. 407 |
|
(2)(B)
|
First
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American Beacon
Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund,
American Beacon Apollo Total Return Fund, and American Beacon Advisors, Inc., dated May 8, 2018, is incorporated
by reference to PEA No. 381 |
|
(2)(C)
|
Second
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American
Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income
Fund, American Beacon Apollo Total Return Fund, and American Beacon Advisors, Inc., dated August 26, 2018,
is incorporated by reference to PEA No. 381 |
|
(2)(D)
|
Third
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American Beacon
Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund,
American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., dated March 26, 2019, is incorporated
by reference to PEA No. 381 |
|
(2)(E)
|
Fourth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American Beacon
Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund,
American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., dated October 15, 2019, is incorporated
by reference to PEA No. 381 |
|
(2)(F)
|
Fifth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American Beacon
Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund,
American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., dated January 13, 2020, is incorporated
by reference to PEA No. 381 |
|
(2)(G)
|
Sixth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American Beacon
Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund,
American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., effective April 30, 2020, is incorporated
by reference to PEA No. 381 |
|
(2)(H)
|
Seventh
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American
Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income
Fund, American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., effective July 31, 2020,
is incorporated by reference to PEA No. 381 |
|
(2)(I)
|
Eighth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American Beacon
Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund,
American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., effective September 10, 2020,
is incorporated by reference to PEA No. 381 |
|
(2)(J)
|
Ninth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American Beacon
Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund,
American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., effective September 30, 2020,
is incorporated by reference to PEA No. 381 |
|
(2)(K)
|
Tenth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American Beacon
Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income Fund,
American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., effective November 2, 2020, is
incorporated by reference to PEA No. 383 |
|
(2)(L)
|
Eleventh
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American
Beacon Select Funds, American Beacon Institutional Funds Trust, American Beacon Sound Point Enhanced Income
Fund, American Beacon Apollo Total Return Fund and American Beacon Advisors, Inc., effective August 2, 2021,
is incorporated by reference to PEA No. 389 |
|
(2)(M)
|
Twelfth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American
Beacon Select Funds, American Beacon Institutional Funds Trust and American Beacon Advisors, Inc., effective
May 23, 2022, is incorporated by reference to Post-Effective Amendment No. 395, filed May 27, 2022 |
|
(2)(N)
|
Thirteenth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American
Beacon Select Funds, American Beacon Institutional Funds Trust and American Beacon Advisors, Inc., effective
January 31, 2023, is incorporated by reference to PEA No. 401 |
|
(2)(O)
|
Fourteenth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American
Beacon Select Funds, American Beacon Institutional Funds Trust and American Beacon Advisors, Inc., effective
as of August 15, 2023, is incorporated by reference to PEA No. 407 |
Number
|
Exhibit
Description | |
|
(2)(P)
|
Fifteenth
Amendment to the Sub-Administrative Services Fee Agreement
between American Beacon Funds, American
Beacon Select Funds, American Beacon Institutional Funds Trust and American Beacon Advisors, Inc., effective
as of January 19, 2024, is incorporated by reference to PEA No. 411 |
|
(3)(A)
|
Securities
Lending Authorization Agreement between
the American Beacon Funds and State Street Bank and Trust Company,
dated February 16, 2017, is incorporated by reference to Post-Effective Amendment No. 300, filed October
23, 2017 (“PEA No. 300”) |
|
(3)(B)
|
Joinder
and First Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State
Street Bank and Trust Company, dated June 21, 2017, is incorporated by reference to PEA No. 300 |
|
(3)(C)
|
Second
Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State
Street Bank and Trust Company, dated September 18, 2017, is incorporated by reference to PEA No. 300 |
|
(3)(D)
|
Third
Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State Street
Bank and Trust Company, dated December 31, 2018, is incorporated by reference to Post-Effective Amendment
No. 351, filed May 15, 2019 |
|
(3)(E)
|
Fourth
Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State Street
Bank and Trust Company, dated September 6, 2019, is incorporated by reference to PEA No. 374 |
|
(3)(F)
|
Fifth
Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State Street
Bank and Trust Company, dated May 12, 2020, is incorporated by reference to PEA No. 368 |
|
(3)(G)
|
Sixth
Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State Street
Bank and Trust Company, dated May 27, 2020, is incorporated by reference to Post-Effective Amendment No.
370, filed June 18, 2020 |
|
(3)(H)
|
Seventh
Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State
Street Bank and Trust Company, dated November 29, 2022, is incorporated by reference to Post-Effective Amendment
No. 399, filed December 23, 2022 (“PEA No. 399”) |
|
(3)(I)
|
Eighth
Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State Street
Bank and Trust Company, effective January 31, 2023, is incorporated by reference to PEA No. 401 |
|
(3)(J)
|
Ninth
Amendment to Securities Lending Authorization Agreement
between the American Beacon Funds and State Street
Bank and Trust Company, effective August 4, 2023, is incorporated by reference to PEA No. 407 |
|
(4)
|
Administration
Agreement between American Beacon Cayman
Managed Futures Strategy Fund, Ltd. and American Beacon
Advisors, Inc., dated April 30, 2015, is incorporated by reference to Post-Effective Amendment No. 269, filed
December 23, 2016 |
|
(5)(A)
|
Administrative
Services Agreement by and among American
Beacon Funds, American Beacon Institutional Funds Trust,
American Beacon Advisors, Inc. and Parametric Portfolio Associates LLC, dated June 10, 2019, is incorporated by
reference to PEA No. 357 |
|
(5)(B)
|
First
Amendment to Administrative Services Agreement
by and among American Beacon Funds, American Beacon Institutional
Funds Trust, American Beacon Advisors, Inc. and Parametric Portfolio Associates LLC, effective April 30, 2020,
is incorporated by reference to PEA No. 368 |
|
(5)(C)
|
Second
Amendment to Administrative Services Agreement
by and among American Beacon Funds, American Beacon
Institutional Funds Trust, American Beacon Advisors, Inc. and Parametric Portfolio Associates LLC, dated August
19, 2022, is incorporated by reference to PEA No. 399 |
|
(5)(D)
|
Third
Amendment to Administrative Services Agreement
by and among American Beacon Funds, American Beacon Institutional
Funds Trust, American Beacon Advisors, Inc. and Parametric Portfolio Associates LLC, dated October 25,
2022, is incorporated by reference to PEA No. 399 |
|
(5)(E)
|
Fourth
Amendment to Administrative Services Agreement
by and among American Beacon Funds, American Beacon
Institutional Funds Trust, American Beacon Advisors, Inc. and Parametric Portfolio Associates LLC, effective as
of August 9, 2023, is incorporated by reference to PEA No. 407 |
|
(6)
|
Service
Plan Agreement for the American Beacon
Funds Investor Class, dated March 6, 2009, is incorporated by reference
to Post-Effective Amendment No. 77, filed August 3, 2009 |
|
(7)
|
Service
Plan Agreement for the American Beacon
Funds Advisor Class (formerly known as the AAdvantage Funds Service
Class), dated May 1, 2003, is incorporated by reference to Post-Effective Amendment No. 45, filed May 1, 2003
(“PEA No. 45”) |
|
(8)(A)
|
Service
Plan Agreement for the American Beacon
Funds A Class, dated February 16, 2010, is incorporated by reference
to Post-Effective Amendment No. 84, filed March 16, 2010 |
|
(8)(B)
|
Amended
and Restated Schedule A to the Service
Plan Agreement for the American Beacon Funds A Class, effective
August 4, 2023, is incorporated by reference to PEA No. 407 |
|
(9)(A)
|
Service
Plan Agreement for the American Beacon
Funds C Class, dated May 25, 2010, is incorporated by reference to
Post-Effective Amendment No. 90, filed June 15, 2010 (“PEA No. 90”) |
|
(9)(B)
|
Amended and Restated Schedule A to the Service Plan Agreement for the American Beacon Funds C Class, effective
December 29, 2023 — (filed herewith) |
Number
|
Exhibit
Description | |
|
(10)(A)
|
Fee
Waiver/Expense Reimbursement Agreement
for American Beacon NIS Core Plus Bond Fund, American Beacon ARK
Transformational Innovation Fund, American Beacon SSI Alternative Income Fund, American Beacon Shapiro Equity
Opportunities Fund, American Beacon Shapiro SMID Cap Equity Fund, American Beacon TwentyFour Strategic
Income Fund, American Beacon TwentyFour Sustainable Short Term Bond Fund, American Beacon Garcia Hamilton
Quality Bond Fund, American Beacon International Equity Fund, American Beacon EAM International Small
Cap Fund, American Beacon AHL TargetRisk Fund, American Beacon Bridgeway Large Cap Growth Fund, American
Beacon Stephens Mid-Cap Growth Fund, American Beacon Stephens Small Cap Growth Fund, effective December
15, 2023, is incorporated by reference to PEA No. 411 |
|
(10)(B)
|
Fee
Waiver/Expense Reimbursement Agreement
for American Beacon FEAC Floating Rate Income Fund, American Beacon
SiM High Yield Opportunities Fund and American Beacon The London Company Income Equity Fund, effective
January 1, 2024, is incorporated by reference to Post-Effective Amendment No. 410, filed December 29, 2023
(“PEA No. 410”) |
|
(10)(C)
|
Investment
Adviser Fee Waiver Agreement for American
Beacon SSI Alternative Income Fund, effective December 29,
2023, is incorporated by reference to PEA No. 411 |
|
(10)(D)
|
Fee Waiver/Expense Reimbursement Agreement for American Beacon AHL Multi-Alternatives Fund, effective August 15, 2023, is incorporated by reference to PEA No. 407 |
(i)
|
|
Opinion and consent of counsel — (filed herewith) |
(j)
|
|
Consent of Independent Registered Public Accounting Firm — (filed herewith) |
(k)
|
|
Financial
statements omitted from prospectus — (none) |
(l)
|
|
Letter
of Investment Intent, is incorporated
by reference to Post-Effective Amendment No. 23, filed December 18, 1997
|
(m)
|
(1)
|
Distribution
Plan pursuant to Rule 12b-1 for the
Advisor Class (formerly known as the Service Class), dated May 1, 2003,
is incorporated by reference to PEA No. 45 |
|
(2)(A)
|
Distribution
Plan pursuant to Rule 12b-1 for the
A Class, dated February 16, 2010, is incorporated by reference to Post-Effective
Amendment No. 88, filed May 17, 2010 |
|
(2)(B)
|
Amended
and Restated Schedule A to the Distribution
Plan pursuant to Rule 12b-1 for the A Class, effective August
4, 2023, is incorporated by reference to PEA No. 407 |
|
(3)(A)
|
Distribution
Plan pursuant to Rule 12b-1 for the C Class,
dated May 25, 2010, is incorporated by reference to PEA No.
90 |
|
(3)(B)
|
Amended
and Restated Schedule A to the Distribution
Plan pursuant to Rule 12b-1 for the C Class, effective August
4, 2023, is incorporated by reference to PEA No. 407 |
(n)
|
|
Amended
and Restated Plan Pursuant to Rule
18f-3, dated November 12, 2019, is incorporated by reference to PEA
No. 391 |
(p)
|
(1)
|
Code
of Ethics of American Beacon Advisors,
Inc., American Beacon Funds, American Beacon Select Funds, American
Beacon Institutional Funds Trust, and Resolute Investment Distributors, Inc., dated August 11, 2023, is incorporated
by reference to PEA No. 407 |
|
(2)
|
Code
of Ethics of Barrow, Hanley, Mewhinney
& Strauss, Inc., revised December 31, 2022, is incorporated by reference
to PEA No. 411 |
|
(3)
|
Code
of Ethics of Brandywine Global Investment
Management, LLC, dated February 2023, is incorporated by reference
to PEA No. 411 |
|
(4)
|
Code
of Ethics of Causeway Capital Management
LLC, dated April 25, 2005, as revised December 30, 2022, is incorporated
by reference to PEA No. 411 |
|
(5)
|
Code
of Ethics of Hotchkis and Wiley Capital
Management, LLC, dated September 1, 2021, is incorporated by reference
to Post-Effective Amendment No. 393, filed February 22, 2022 (“PEA No. 393”) |
|
(6)
|
Code
of Ethics and Personal Investment Policy
of Lazard Asset Management LLC, is incorporated by reference to PEA
No. 393 |
|
(7)
|
Code
of Conduct for The Bank of New York
Mellon Corporation, parent company of Newton Investment Management
North America, LLC, dated 2022, is incorporated by reference to PEA No. 411 |
|
(8)
|
Code
of Ethics of Strategic Income Management,
LLC, dated February 2023, is incorporated by reference to PEA No.
410 |
|
(9)
|
Code
of Ethics of Massachusetts Financial
Services Co., dated December 8, 2022, is incorporated by reference to PEA
No. 401 |
|
(10)
|
Code
of Ethics for Stephens Investment Management
Group, LLC, dated February 2023, is incorporated by reference
to Post-Effective Amendment No. 403, filed April 27, 2023 (“PEA No. 403”) |
|
(11)
|
Code
of Ethics for Bridgeway Capital Management,
Inc., dated April 1, 2021, is incorporated by reference to Post-Effective
Amendment No. 394, filed April 29, 2022 |
|
(12)
|
Code
of Ethics for The London Company of
Virginia, LLC, is incorporated by reference to PEA No. 410 |
Number
|
Exhibit
Description | |
|
(13)
|
Code
of Ethics for Global Evolution USA,
LLC, dated January 2021, is incorporated by reference to Post-Effective Amendment
No. 388, filed May 27, 2021 |
|
(14)
|
Code
of Ethics for AHL Partners LLP, amended
February 2022, is incorporated by reference to PEA No. 403 |
|
(15)
|
Code
of Ethics for Garcia Hamilton &
Associates, L.P., dated February 2023, is incorporated by reference to PEA No. 411
|
|
(16)
|
Code
of Ethics for ARK Investment Management
LLC, adopted June 30, 2014, as amended June 1, 2021, is incorporated
by reference to Post-Effective Amendment No. 397, filed October 28, 2022 (“PEA No. 397”) |
|
(17)
|
Code
of Ethics for TwentyFour Asset Management
(US) LP, is incorporated by reference to PEA No. 410 |
|
(18)
|
Code
of Ethics for Shapiro Capital Management,
LLC, is incorporated by reference to PEA No. 410 |
|
(19)
|
Code
of Ethics for abrdn Investments Limited,
is incorporated by reference to Post-Effective Amendment No. 404, filed
May 25, 2023 (“PEA No. 404”) |
|
(20)
|
Code
of Ethics for SSI Investment Management
LLC, dated June 28, 2022, is incorporated by reference to PEA No. 397
|
|
(21)
|
Code
of Ethics for American Century Investment
Management, Inc., dated October 29, 1999, as revised September 1,
2023, is incorporated by reference to PEA No. 411 |
|
(22)
|
Code
of Ethics for National Investment Services
of America, LLC, dated May 2022, is incorporated by reference to PEA
No. 404 |
|
(23)
|
Code
of Ethics for DePrince, Race &
Zollo, Inc., dated August 2023, is incorporated by reference to PEA No. 411 |
|
(24)
|
Code
of Ethics for EAM Global Investors
LLC, effective October 31, 2022, is incorporated by reference to Post-Effective
Amendment No. 400, filed December 30, 2022 |
|
(25)
|
Code
of Ethics for First Eagle Alternative
Credit, LLC, effective April 2012 and revised January 1, 2023, is incorporated
by reference to PEA No. 410 |
Other
Exhibits | ||
|
|
Powers
of Attorney for Trustees of American
Beacon Funds, American Beacon Select Funds and American Beacon Institutional
Funds Trust, effective as of January 31, 2024, is incorporated by reference to PEA No. 411 |
(a)
Subject to the exceptions and limitations contained in paragraph (b) below: |
(i)
every person who is, or has been, a Trustee or officer or employee of the Trust or is or was serving at the request of the Trust as a
trustee, director, officer, employee or
agent of another organization in which the Trust has an interest as a shareholder, creditor or otherwise (“Covered Person”)
shall be indemnified by the Trust and each series to the fullest extent permitted by law, including the 1940 Act and the rules and regulations
thereunder as amended from time to time and interpretations thereunder, against liability and against all expenses reasonably incurred
|
or
paid by him or her in connection with any claim, action, suit or proceeding in which he or she becomes involved as a party or otherwise
by virtue of his or her being or having
been a Covered Person and against amounts paid or incurred by him or her in the settlement thereof; |
(ii)
subject to the provisions of this Section 2, each Covered Person shall, in the performance of his or her duties, be fully and completely
justified and protected with regard to
any act or any failure to act resulting from reliance in good faith upon the records, books and accounts of the Trust or,
as applicable, any Series, upon an opinion or other advice of legal counsel, or upon reports made or advice given to the Trust or, as
applicable, any Series, by any Trustee
or any of its officers, employees, or a service provider selected with reasonable care by the Trustees or officers of the Trust,
regardless of whether the person rendering such report or advice may also be a Trustee, officer or employee of the Trust or, as applicable,
any Series. |
(iii)
as used herein, the words “claim,” “action,” “suit,” or “proceeding” shall apply
to all claims, actions, suits or proceedings (civil, criminal, investigative
or other, including appeals), actual or threatened, and the words “liability” and “expenses” shall include,
without limitation, attorneys’ fees,
costs, judgments, amounts paid in settlement, fines, penalties and other liabilities whatsoever. |
(b)
To the extent required under the 1940 Act and the rules and regulations thereunder as amended from time to time and interpretations thereunder,
but only to such extent no indemnification shall be provided hereunder to a Covered Person: |
(i)
who shall have been adjudicated by a court or body before which the proceeding was brought to be liable to the Trust or its Shareholders
by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of his or her office; or |
(ii)
in the event of a settlement, unless there has been a determination that such Covered Person did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office: (A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither interested persons of the Trust nor are parties to the matter based upon
a review of readily available facts (as
opposed to a full trial type inquiry); or (C) by written opinion of independent legal counsel based upon a review of
readily available facts (as opposed to a full trial type inquiry). |
(c)
The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not
be exclusive of or affect any other rights
to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be such Covered
Person and shall inure to the benefit of the heirs, executors and administrators of such Covered Person. Nothing contained herein shall
affect any rights to indemnification to
which any Covered Person or other person may be entitled by contract or otherwise under law or prevent the Trust
from entering into any contract to provide indemnification to any Covered Person or other Person. |
(d)
To the extent that any determination is required to be made as to whether a Covered Person engaged in conduct for which indemnification
is not provided as described herein, or
as to whether there is reason to believe that a Covered Person ultimately will be found entitled to indemnification, the
Person or Persons making the determination shall afford the Covered Person a rebuttable presumption that the Covered Person has not engaged
in such conduct and that there is reason
to believe that the Covered Person ultimately will be found entitled to indemnification. |
(e)
To the maximum extent permitted by applicable law, including Section 17(h) of the 1940 Act and the rules and regulations thereunder as
amended from time to time and interpretations
thereunder, expenses in connection with the preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in paragraph (a) of this Section 2 shall be paid by the Trust or the applicable Series from
time to time prior to final disposition
thereof upon receipt of an undertaking by or on behalf of such Covered Person that such amount will be paid over by him
or her to the Trust or a Series, as applicable, if it is ultimately determined that he or she is not entitled to indemnification under
this Section 2; provided, however, that
any such advancement will be made in accordance with any conditions required by the Commission. |
(a)
Notwithstanding anything in this Agreement to the contrary, Resolute shall not be responsible for, and the Client shall on behalf of each
applicable Fund or Class thereof, indemnify
and hold harmless Resolute, its employees, directors, officers and managers and any person who controls Resolute
within the meaning of section 15 of the Securities Act or section 20 of the Securities Exchange Act of 1934, as amended, (for purposes
of this Section 4.2(a), “Resolute
Indemnitees”) from and against, any and all losses, damages, costs, charges, reasonable counsel fees, payments, liabilities
and other expenses of every nature and character (including, but not limited to, direct and indirect reasonable reprocessing costs) arising
out of or attributable to all and any of
the following (for purposes of this Section 4.2(a), a “Resolute
Claim”) |
(i)
any material action (or omission to act) of Resolute or its agents taken in connection with this Agreement; provided, that such action
(or omission to act) is taken in good faith
and without willful misfeasance, negligence or reckless disregard by Resolute, or its affiliates, of its duties and
obligations under this Agreement; |
(ii)
any untrue statement of a material fact contained in the Registration Statement or arising out of or based upon any alleged omission to
state a material fact required to be stated
therein or necessary to make the statements therein not misleading, unless such statement or omission was made
in reliance upon, and in conformity with, information furnished to the Client in connection with the preparation of the Registration Statement
or exhibits to the Registration Statement by or on behalf of Resolute; |
(iii)
any material breach of the Clients’ agreements, representations, warranties, and covenants in Sections 2.9 and 5.2 of this Agreement;
or |
(iv)
the reliance on or use by Resolute or its agents or subcontractors of information, records, documents or services which have been prepared,
maintained or performed by the Client or
any agent of the Client, including but not limited to any Predecessor Records provided pursuant to Section
2.9(b). |
(b)
Resolute will indemnify, defend and hold the Client and their several officers and members of their Governing Bodies and any person who
controls the Client within the meaning
of section 15 of the Securities Act or section 20 of the Securities Exchange Act of 1934, as amended, (collectively,
the “Client Indemnitees” and, with the Resolute Indemnitees, an “Indemnitee”), free and harmless from and
against any and all claims, demands, actions,
suits, judgments, liabilities, losses, damages, costs, charges, reasonable counsel fees and other expenses of every nature and character
(including the cost of investigating or defending such claims, demands, actions, suits or liabilities and any reasonable counsel fees
incurred in connection therewith), but
only to the extent that such claims, demands, actions, suits, judgments, liabilities, losses, damages, costs, charges, reasonable
counsel fees and other expenses result from, arise out of or are based upon all and any of the following (for purposes of this Section
4.2(c), a “Client Claim”
and, with a Resolute Claim, a “Claim”): |
(i)
any material action (or omission to act) of Resolute or its agents taken in connection with this Agreement, provided that such action
(or omission to act) is taken in good faith
and without willful misfeasance, negligence or reckless disregard by Resolute, or its affiliates, of its duties and
obligations under this Agreement. |
(ii)
any untrue statement of a material fact contained in the Registration Statement or any alleged omission of a material fact required to
be stated or necessary to make the statements
therein not misleading, if such statement or omission was made in reliance upon, and in conformity with, information
furnished to the Client in writing in connection with the preparation of the Registration Statement by or on behalf of Resolute; or
|
(iii)
any material breach of Resolute’s agreements, representations, warranties and covenants set forth in Section 2.4 and 5.1 hereof.
|
(c)
The Client or Resolute (for purpose of this Section 4.2(d), an “Indemnifying Party”) may assume the defense of any suit
brought to enforce any Resolute Claim or
Client Claim, respectively, and may retain counsel chosen by the Indemnifying Party and approved by the other Party, which approval
shall not be unreasonably withheld or delayed. The Indemnifying Party shall advise the other Party that it will assume the defense of
the suit and retain counsel within ten
(10) days of receipt of the notice of the claim. If the Indemnifying Party assumes the defense of any such suit and retains
counsel, the other Party shall bear the fees and expenses of any additional counsel that they retain. If the Indemnifying Party does not
assume the defense of any such suit, or
if other Party does not approve of counsel chosen by the Indemnifying Party, or if the other Party has been advised that
it may have available defenses or claims that are not available to or conflict with those available to the Indemnifying Party, the Indemnifying
Party will reimburse any Indemnitee named
as defendant in such suit for the reasonable fees and expenses of any counsel that the Indemnitee retains.
An Indemnitee shall not settle or confess any claim without the prior written consent of the applicable Client, which consent shall not
be unreasonably withheld or delayed.
|
(d)
An Indemnifying Party’s obligation to provide indemnification under this section is conditioned upon the Indemnifying Party receiving
notice of any action brought against an
Indemnitee within twenty (20) days after the summons or other first legal process is served. Such notice shall refer to the
Person or Persons against whom the action is brought. The failure to provide such notice shall not relieve the Indemnifying Party of any
liability that it may have to any Indemnitee
except to the extent that the ability of the party entitled to such notice to defend such action has been materially adversely
affected by the failure to provide notice. |
(e)
The provisions of this section and the parties’ representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any
investigation made by or on behalf of any Indemnitee and shall survive the sale and redemption of any Shares made pursuant to subscriptions
obtained by Resolute. The indemnification provisions of this section will inure exclusively to the benefit of each person that may be
an Indemnitee at any time and their respective
successors and assigns (it being intended that such persons be deemed to be third party beneficiaries under
this Agreement). |
(a)
Neither Party shall be liable for losses, delays, failure, errors, interruption or loss of data occurring directly or indirectly by reason
of circumstances beyond its reasonable
control, including, without limitation, acts of God; action or inaction of civil or military authority; public enemy; war; terrorism;
riot; fire; flood; sabotage; epidemics;
labor disputes; civil commotion; interruption, loss or malfunction of utilities, transportation, computer or communications
capabilities; insurrection; or elements of nature; |
(b)
Neither Party shall be liable for any consequential, special or indirect losses or damages suffered by the other Party, whether or not
the likelihood of such losses or damages
was known by the Party; |
(c)
No affiliate, director, officer, employee, manager, shareholder, partner, agent, counsel or consultant of either Party shall be liable
at law or in equity for the obligations
of such Party under this Agreement or for any damages suffered by the other Party related to this Agreement; |
(d)
There are no third-party beneficiaries of this Agreement; |
(e)
Each Party shall have a duty to mitigate damages for which the other Party may become responsible; |
(f)
The assets and liabilities of each Fund are separate and distinct from the assets and liabilities of each other Fund, and no Fund shall
be liable or shall be charged for any debt,
obligation or liability of any other Fund, whether arising under this Agreement or otherwise; and in asserting any rights
or claims under this Agreement, Resolute shall look only to the assets and property of the Fund to which Resolute’s rights or claims
relate in settlement of such rights or
claims; and |
(g)
Each Party agrees promptly to notify the other party of the commencement of any litigation or proceeding of which it becomes aware arising
out of or in any way connected with the
issuance or sale of Shares. |
Name;
Current Position with American Beacon Advisors, Inc. |
Other
Substantial Business and Connections |
Patrick
J. Bartels; Director |
Managing
Member, Redan Advisors LLC |
Sonia
L. Bates; Assistant Treasurer, Vice President, Tax and Fund Reporting
|
Principal
Accounting Officer and Treasurer, American Beacon Funds Complex; Vice
President, Fund and Tax Reporting, Resolute Investment Services, Inc.; Vice President,
Fund and Tax Reporting, Resolute Investment Managers, Inc.; Assistant
Treasurer, American Private Equity Management, LLC; Assistant Treasurer,
American Beacon Cayman Transformational Innovation Company, Ltd.;
Treasurer, American Beacon Cayman Managed Futures Strategy Fund, Ltd.; Treasurer,
American Beacon Cayman TargetRisk Company, Ltd.; Treasurer, American
Beacon Cayman Trend Company, Ltd. |
Rosemary
K. Behan; Senior Vice President, Secretary and General Counsel
|
Vice
President, Secretary, and Chief Legal Officer, American Beacon Funds Complex;
Secretary, Resolute Investment Holdings, LLC; Secretary, Resolute Topco,
Inc.; Secretary, Resolute Acquisition, Inc.; Senior Vice President, Secretary, and
General Counsel, Resolute Investment Managers, Inc.; Secretary, Resolute Investment
Distributors, Inc.; Senior Vice President, Secretary, and General Counsel,
Resolute Investment Services, Inc.; Secretary, American Private Equity Management,
L.L.C.; Vice President and Secretary, Continuous Capital, LLC; Secretary,
American Beacon Cayman Managed Futures Strategy Fund, Ltd.; Secretary,
American Beacon Cayman TargetRisk Company, Ltd.; Secretary, American
Beacon Cayman Trend Company, Ltd. |
Melinda
S. Blackwill; Assistant Treasurer, Vice President and Controller
|
Vice
President and Controller, Resolute Investment Managers, Inc.; Vice President and
Controller, Resolute Investment Services, Inc.; Assistant Treasurer, Continuous
Capital, LLC |
Paul
B. Cavazos; Senior Vice President and Chief Investment Officer
|
Vice
President, American Beacon Funds Complex; Vice President, American Private
Equity Management, L.L.C. |
Jame
Donath; Director |
Chairman,
Greenscape Financial Group; Senior Advisor, Orange Grove Bio; President
of the Board, 114 Tenants Corp; Co-Founder, Norwood UK Restructuring
Dinner |
Erica
B. Duncan; Vice President, Marketing |
Vice
President, American Beacon Funds Complex; Vice President, Marketing, Resolute
Investment Managers, Inc.; Vice President, Marketing, Resolute Investment
Services, Inc. |
Richard
M. Goldman; Director |
Founder
and Managing Partner, Becket Capital; Director, AlphaTrai Asset Management;
Independent Corporate Director, Marblegate Acquisition Corporation
|
Name;
Current Position with American Beacon Advisors, Inc. |
Other
Substantial Business and Connections |
Rebecca
L. Harris; Senior Vice President, Product Management and
Corporate Development |
Vice
President, American Beacon Funds Complex; Senior Vice President, Resolute Investment
Managers, Inc.; Senior Vice President, Resolute Investment Services, Inc.;
Director and Vice President, Continuous Capital, LLC; Director, National Investment
Services of America, LLC; Director, RSW Investments Holdings LLC; Director,
Shapiro Capital Management LLC; Director, SSI Investment Management
LLC |
Melinda
G. Heika; Senior Vice President, Treasurer and Chief Financial
Officer |
Vice
President, American Beacon Funds Complex; Treasurer, Resolute Investment Holdings,
LLC; Treasurer, Resolute Topco, Inc.; Treasurer, Resolute Acquisition, Inc.;
Senior Vice President and Treasurer, Resolute Investment Managers, Inc.; Senior
Vice President and Treasurer, Resolute Investment Services, Inc.; Treasurer, American
Private Equity Management, L.L.C.; Treasurer, Continuous Capital, LLC; Director
and Vice President, American Beacon Cayman Managed Futures Strategy
Fund, Ltd.; Director and Vice President, American Beacon Cayman TargetRisk
Company, Ltd.; Director, American Beacon Cayman Multi-Alternatives Company,
LTD.; Vice President, American Beacon Cayman Trend Company, Ltd. |
Kirstin
Hill; Director |
President
& COO, Social Finance |
Terri
L. McKinney; Senior Vice President, Enterprise Services |
Vice
President, American Beacon Funds Complex; Senior Vice President, Enterprise
Services, Resolute Investment Managers, Inc.; Senior Vice President, Enterprise
Services, Resolute Investment Services, Inc.; Vice President, Continuous
Capital, LLC |
Teresa
A. Oxford; Assistant Secretary and Deputy General Counsel
|
Assistant
Secretary, American Beacon Funds Complex; Assistant Secretary and Deputy
General Counsel, Resolute Investment Managers, Inc.; Assistant Secretary
and Deputy General Counsel, Resolute Investment Services, Inc.; Assistant
Secretary, Continuous Capital, LLC |
Bo
Ragsdale; Vice President, Information Technology |
Vice
President, Information Technology, Resolute Investment Managers, Inc., Vice
President, Information Technology, Resolute Investment Services, Inc. |
Jeffrey
K. Ringdahl; Director, President and Chief Executive Officer
|
President,
American Beacon Funds Complex; Director and President, Resolute Investment
Holdings, LLC; Director and President, Resolute Topco, Inc.; Director and
President, Resolute Acquisition, Inc.; Director, President, and CEO, Resolute Investment
Managers, Inc.; Director, President, and CEO, Resolute Investment Distributors,
Inc.; Director, President, and CEO, Resolute Investment Services, Inc.;
Manager and President, American Private Equity Management, L.L.C.; Director,
Shapiro Capital Management LLC; Director and Executive Vice President,
Continuous Capital, LLC; Director and President, American Beacon Cayman
Managed Futures Strategy Fund, Ltd.; Director and President, American Beacon
Cayman TargetRisk Company, Ltd.; Director, American Beacon Cayman Multi-Alternatives
Company, LTD.; President, American Beacon Cayman Trend Company,
Ltd.; Director, RSW Investment Holdings LLC; Manager, SSI Investment Management
LLC; Director, National Investment Services of America, LLC |
Christina
E. Sears; Vice President and Chief Compliance Officer |
Chief
Compliance Officer and Assistant Secretary, American Beacon Funds Complex;
Vice President and Chief Compliance Officer, Resolute Investment Managers,
Inc.; Vice President, Resolute Investment Distributors, Inc.; Vice President
and Chief Compliance Officer, Resolute Investment Services, Inc.; Chief Compliance
Officer, American Private Equity Management, L.L.C.; Vice President, Continuous
Capital, LLC; Chief Compliance Officer, RSW Investments Holdings LLC
|
Samuel
J. Silver; Vice President and Chief Fixed Income Officer |
Vice
President, American Beacon Funds Complex |
Claire
L. Stervinou; Assistant Treasurer and Corporate Tax Manager
|
Assistant
Treasurer, Resolute Investment Managers, Inc.; Assistant Treasurer, Resolute
Investment Services, Inc. |
Gregory
Stumm; Senior Vice President, Distribution |
Vice
President, American Beacon Funds Complex; Senior Vice President, Resolute Investment
Managers, Inc.; Senior Vice President, Resolute Investment Services, Inc.;
Senior Vice President, Resolute Investment Distributors, Inc. |
1 | American Beacon Funds |
2 | American Beacon Select Funds - American Beacon U.S. Government Money Market Select Fund |
Name
|
Address
|
Position
with Underwriter |
Position
with Registrant |
Jeffrey
K. Ringdahl |
220
E. Las Colinas Blvd, STE 1200, Irving, TX 75039
|
Director,
President and CEO |
President
|
Gregory
Stumm |
220
E. Las Colinas Blvd, STE 1200, Irving, TX 75039
|
Director
and Senior Vice President |
Vice
President |
Rosemary
K. Behan |
220
E. Las Colinas Blvd, STE 1200, Irving, TX 75039
|
Secretary
|
Vice
President, Chief Legal Officer and Secretary
|
Christina
E. Sears |
220
E. Las Colinas Blvd, STE 1200, Irving, TX 75039
|
Vice
President |
Chief
Compliance Officer and Assistant Secretary
|
By: | /s/ Jeffrey K. Ringdahl | ||
Jeffrey K. Ringdahl President |
Signature | Title | Date | |
/s/ Jeffrey K. Ringdahl | President (Principal Executive Officer) | February 23, 2024 | |
Jeffrey K. Ringdahl | |||
/s/ Sonia L. Bates | Treasurer (Principal Financial Officer and Principal Accounting Officer) | February 23, 2024 | |
Sonia L. Bates | |||
Gilbert G. Alvarado* | Trustee | February 23, 2024 | |
Gilbert G. Alvarado | |||
Joseph B. Armes* | Trustee | February 23, 2024 | |
Joseph B. Armes | |||
Gerard J. Arpey* | Trustee | February 23, 2024 | |
Gerard J. Arpey | |||
Brenda A. Cline* | Chair and Trustee | February 23, 2024 | |
Brenda A. Cline | |||
Eugene J. Duffy* | Trustee | February 23, 2024 | |
Eugene J. Duffy | |||
Claudia A. Holz* | Trustee | February 23, 2024 | |
Claudia A. Holz | |||
Douglas A. Lindgren* | Trustee | February 23, 2024 | |
Douglas A. Lindgren | |||
Barbara J. McKenna* | Trustee | February 23, 2024 | |
Barbara J. McKenna | |||
* | By: | /s/ Rosemary K. Behan | ||
Rosemary K. Behan Attorney-In-Fact |
Type
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Description
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99.(d)(1)(A)(iii)
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99.(d)(1)(B)(iii)
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99.(h)(9)(B)
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99.(i)
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99.(j)
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